SPEAKER_00: we don't want to talk about andrew i think that guy palmer lucky is super fascinating the oculus

SPEAKER_02: why do you want to talk about that company because i think he's launching a syndication no i are you an investor lucky hates me he won't come on this week in startups he literally what did you call him parma lucky palmer lucky cosplay palmer he's a cosplayer i like the fact that he

SPEAKER_08: does cause what is that that's when you dress up as comic book or like superhero characters and go

SPEAKER_10: to conventions you know how you dress up in the clothes of old italian women he dresses up like

SPEAKER_13: a superhero he's a cold open folks i i do dress like a matrona sometimes yeah right oh i'm with

SPEAKER_20: a ciabatta i'm making you in italy there's like a culture like uh in the in the olden days like it's like you used to have these things called salotti which basically meant like all the decisions of the country were made by these people in the living rooms after dinner and you know the the most

SPEAKER_25: powerful people in the salotti were uh these women who were married to these men and they would be

SPEAKER_27: the architects of all these decisions i don't like him he never finished the pasta he always

SPEAKER_28: leave us so much on the plate and people and people would call them matronas so i'd proudly be a matrona

SPEAKER_35: i've always felt you were like the old italian lady in our group hey everybody welcome to another

SPEAKER_08: episode of the all in podcast yes we're still publishing yes we haven't been canceled but it's early in the show so you never know uh with me again the dictator himself the sultan of science david friedberg whatever beverage you like he'll make it for you right now in his replicator and of course yeah the rain man himself yeah definitely going to win the midterms yeah david sachs everybody have a great week getting their asses kicked in the market

David Sacks: i'm pretty good you're okay everybody okay nobody i can't look at my portfolio anymore i just stopped

SPEAKER_49: checking it i uh not a fan of the color red i actually um i i've been using this period to kind of desensitize myself um i went back and i started to think about like all of the sort of errors of

SPEAKER_52: commission that i've done in like the last decade and i i was able to look at like four or five specific trading moments where i was like wow what did i do that for and i came away with two

SPEAKER_20: things one was if i confuse an investment with a trade i'm done for meaning like there are things

SPEAKER_52: that you invest in that you just want to own forever and then there are things that are trades that are just speculative and you know at the end of the day you have a sense that it could be up in the short term if i confuse those two i've made huge mistakes and then the other one is i would always get really emotional and panic at the lows and so i was like you know in early december or november when i wrote that letter on twitter and we talked about it and i sold a bunch of stuff after jeff and and elon were selling raised some cash and i was like okay now i have enough buffer here the whole point from here on out is to basically like insulate myself from my own emotional turmoil

Chamath Palihapitiya: stocks go down and so far so good and my litmus test if when i go home uh at the end of every day you know i check in with nat and i'm like am i an asshole because if i when i guess what does

SPEAKER_28: that have to do with investing when i get crushed in the market i tend to i tend to take it out of my friends and my loved ones honestly because i'm just we come to your poker game when your socks are down

SPEAKER_61: and you're just like oh my god at once that's it i'm popping the blinds up i can't take it anymore

SPEAKER_63: do you remember last year came up during the uh the market collapse uh when at the start of covet and you decided you didn't care about having nice jeans anymore and then you fast forward to december

SPEAKER_64: and you were proclaiming the virtue of a five thousand dollar fresh alpaca sweater or whatever i think i think another another indicator of sentiment in the market for you is your clothing um oh my god uh choice but this is a this is a really nice cashmere ribbed sweater from loropeana

SPEAKER_08: okay well we're back in the game it's good to see we're back to normal now yeah let me ask you then

SPEAKER_02: i'm going to put a couple of uh items out there is bitcoin a trade for you or an investment for you

SPEAKER_53: or was it and is it now well i invested it in 2011 at 80 dollars yeah yum yum i wrote an op-ed in that

SPEAKER_52: same year in bloomberg which i hope at some point they take off the paywall yeah and the whole thing was you should have one percent of your net worth in this thing yeah it's remained an investment ever since so still an investment yeah i've structured it so that i don't hold any bitcoin personally myself because i don't want to have the pressure and the risk of keys and coins and wallets and

SPEAKER_53: this and that but uh i still really believe in bitcoin in the long term got it sax how do you how

SPEAKER_76: how do you deal with the emotional turmoil of opening up your stocks crypto whatever wallet

SPEAKER_08: and seeing red and then going to work every day or you just curled up in a ball playing chess with

SPEAKER_80: peter kill at this point yeah i mean you just gotta try and ignore it okay try was a key word in that sentence it doesn't really affect me that much i mean so i run the avoidance acceptance function

SPEAKER_86: i have removed my emotions no look there are there are countervailing benefits so when exit prices are great entry prices are lousy and when when entry prices are great exit prices are lousy so there's an inverse relationship so in other words all the the companies that i mean the public markets have massively corrected and though and now finally you know we talked about this few few months ago those new price levels have trickled their way down into venture markets and so finally you know venture deals are starting to price at more reasonable prices so in terms of harvesting gains from old investments um obviously it's not as attractive as it was three months ago but in terms of making new investments is much more attractive and for a relatively young venture firm which is what we are you know we yes we do have some investments that are kind of in the harvesting stage but you know we're only a four or five year old firm we're still the bulk of our activity is making new investments so you know it's not it's um it's all just kind of part of the game and i'm not really that worried about

SPEAKER_88: it said another way fortunes are made in the down market they're collected in the up market

SPEAKER_08: is the way i always phrase it but it's true things are going to be on sale right now we saw bill ackman i think uh who i think is a friend of the pod i think listens yeah super super super super

David Sacks: smart brilliant yeah and i just i just want to emphasize because i don't want founders to get the

SPEAKER_86: wrong idea it's not like we're trying to pull one over on founders and get some sort of sweetheart deal or something like that my view of like our role as vcs is just to be a price taker of whatever prices the market sets we don't try and negotiate something better than market really we just take the market price and we pick the companies we want to be in so that's our job is really just to pick not

SPEAKER_07: really to negotiate that much you're not you're not able to haggle it's not like you can go yeah

SPEAKER_76: exactly the market supermarket like oh bananas are a dollar a pound i'll take them for 50 cents they're like right sir this is a whole foods we don't negotiate right so we're we're a price taker in

SPEAKER_102: in good markets or bad markets and um it's just that i think that the prices now are coming down

SPEAKER_86: because what i've heard is that the crossover investors like tiger like koto who are deploying all this money they've really uh slowed down now i think they're all kind of licking their wounds and uh so like all this money that was flooding into the venture space is kind of on pause right now and

SPEAKER_49: that's caused the price levels to to drop the end of last year in q4 my public portfolio really started

SPEAKER_52: to turn over took a huge amount of losses going into the end of the year and then i took an accounting obviously of like the entire book and uh the public portfolio every single thing that i owned ultimately

SPEAKER_25: basically broke even last year some were up i made some early sales some were way down by the end of the year net net i kind of broke even but my private book was up a billion dollars and i told the team i'm

SPEAKER_52: like uh no this is not real so we have to take those marks because you know you have other venture firms that are pricing these deals and we get audited k-1s and so we have to take the up billion but i told them you should consider this that we had basically a down you know so net net our returns were like you know we were up like 15 and i said this is not real we were at best break even and probably lost money but you can't you can't not take these marks because like you know you have an entire fund complex that lives on these marks yeah and by the way it doesn't affect my compensation

SPEAKER_62: at all but i have to take it freeberg then sax go that's it's a really important point because i

SPEAKER_63: think we talked about this one or two episodes ago um but there's a significant disincentive for venture firms to take markdowns to raise capital into a private business at a price that's lower than the prior round because when they do that the the marked value of their portfolio goes down and then it makes it harder for that venture firm to go out and raise the next fund that they're going to try and raise from their lps because it looks like they're not good investors and the reality is and so in every round as everyone on this pod knows there's always an incentive and a push to see can you get the valuation higher even if the business performance didn't meet the objectives of the prior round and things have gone sideways a bit doesn't necessarily mean that it's a bad business but it doesn't necessarily mean that it should always be getting an up round just because it's being kept alive and there's this artificial um pressure in private uh equity uh in venture to always drive the value up or to run away from the company because otherwise you're going to have this markdown and you don't want to be putting money in a markdown that looks like a loser and so on and if you look at the public markets every successful company has had significant downturns in their stock for um significant periods of time from facebook to facebook to amazon to netflix and all of those businesses were sound businesses it's just that for whatever reason there were perturbations in markets perturbations in the business but the long-term value creation was still there and so i think we need to kind of you know be really thoughtful you know and and entrepreneurs should be very thoughtful not to give in uh to the venture mandate to always drive value up but to be really thoughtful about getting the right valuation for your business and getting the capital you need with the right partners

SPEAKER_52: can i say something about this it's so important what you said one of the tactics that i started three years ago was i run my own shadow portfolio where i don't take the marks and i just keep them at my cost basis and i'm not allowed to use that for anything i don't you know i can't use that obviously i would never use that for compensation with my team or anything else but i use it in my own head to say okay if i invested a dollar let's not think about what somebody else may think about what that dollar's worth let's just keep it at a dollar unless it's impaired but i don't take the markups and i look at my portfolio that way but it's a very difficult thing to do and the reason i do that

SPEAKER_25: is because i don't have the pressure to raise incremental funds but if i did i wouldn't be able to play that game and i'd be very focused on making sure other vcs marked up my deals because to your

Chamath Palihapitiya: point it takes 10 12 years to drive liquidity literally that's the key here and so what are you

SPEAKER_52: supposed to do if you're a venture business in year three or four except raise money on markups paper markups are the they're the they're the that's the lifeblood of a venture industry going

SPEAKER_121: yeah totally well i mean the interesting thing for me is i lp'd a couple of these small like emerging

SPEAKER_08: fund managers you know micro funds 10 million or so 3 million and they were sending like a lot of updates and so i'm in some top tier venture firms that some of you are in and they send you an audit every year and they send you a distribution cash on cash here's where you're at and then i was getting like quarterly emails as everything was going up these new fund managers are like we're at 100 ir we're at 200 ir because this crypto investment we did got marked up and i was just thinking about what bill gurley would always say which i think is a howard marx quote you can't eat ir like what are we doing here like why is there such a focus on this is because you want to raise your next fund and then the other game people were playing was and i got into this um because people were like oh you know you're grossly undervaluing your uh funds because robin hood is trading at 30 a share on the private markets com is trading at this in the private markets and the second people were using secondary market transactions as their mark so i'm curious sacks how do you think about if you invested in a company the series b was a hundred dollars a share but then somebody bought it at 150 a share in the private markets where do you like to mark that in your funds or how do you think about that and getting ahead of your skis in terms of valuing your private funds well to jama's points

SPEAKER_86: we have accounting rules around this so we can't like subjectively decide like what mark to set for each company for you know obvious reasons our lps want like a predictable accounting so the way it generally works is that you the mark is set by the most recent private you know financing this is the way it works and if people want to discount it from there they certainly can

SPEAKER_113: you know what about a secondary transaction is there any more complicated rules around

SPEAKER_86: that because it's a different class of stock so um it's some combination of sometimes we use a foreign a sometimes it's the latest preferred round it's um you know it just uh there's like

SPEAKER_62: complicated rules around it by the way i'll just to rehash what was already said and just to say it

SPEAKER_63: one more time to mark pointed out that it typically takes 12 years to liquidity from the time a startup is initially funded to the time that you sell it or go public show me one public company that has had 12 years of consistent gain in its stock price it doesn't exist and so again like this this notion that you know every startup is seeing some perpetual persistent increase in value uh is an artifice

SPEAKER_25: that um well it doesn't really represent it doesn't it doesn't exist in tech and that's that that's a

SPEAKER_52: feature not a bug right meaning the things that can go up predictably for 10 to 12 years

SPEAKER_134: are not necessarily businesses disruptive they don't take risk they're not dynamic no they don't take risk

SPEAKER_08: yeah uh sax can you define perturbation for the audience i i've heard freeberg say that a couple of

SPEAKER_136: times perturbation would be perturbation changes what like volatility basically yeah rapid change anxiety

SPEAKER_137: mental uneasiness okay a cause of anxiety or uneasiness okay i got it i thought you were saying

SPEAKER_134: another word you don't use the word perturbation i i thought you said another word what word was in

SPEAKER_143: your brain i thought i heard masturbation i was like masturbate what exactly did he say about the markets

SPEAKER_144: and speaking of markets we were on a text on our text thread talking about if we're about to have

SPEAKER_08: the uh start of world war three and then maybe this is not in the news now how do we look at the uk russia situation in the ukraine obviously 100 000 troops are amassing on a border and what is the goal here um because biden is saying hey listen if anything happens we're going to go to war and there's a lot of saber rattling here i don't exactly understand what putin's goal or motivation is and that's i think what i'm not hearing in the news is exactly what is his goal what are your thoughts

SPEAKER_43: on what's happening in uh the ukraine and russia uh sex okay well i think first of all we have to

David Sacks: kind of level set in historical terms about how unusual and unprecedented it would be for us to send

SPEAKER_86: troops to fight you know potentially russia in a border conflict with ukraine with and by the way the biden put 8 500 troops on alert for deployment this week it's really without historical precedent

SPEAKER_102: uh during the cold war you know in 1956 soviet tanks rolled into hungary to crush rebels air eisenhower did nothing 1968 soviet tanks rolled into czech slovakia to crush the prog spring lbj did nothing 1981 the soviets um crushed the solidarity movement in poland roald reagan did nothing even though he had campaigned on getting tough with the soviets and then more recently in 2008 when russia invaded uh georgia george w bush did not intervene militarily and in 2014 when putin occupied crimea obama did nothing and so this idea and the reason for that in all those cases is because america has a vital national interest in avoiding war with a nuclear armed russia and we did not have a vital national interest in defending the territorial sovereignty of those nations that's the bottom line and so for us to be now beating the drums of war and talking about sending troops into a war zone with russia is just it's

SPEAKER_08: unbelievably irresponsible friedberg uh one might speculate uh if they were cynical some sort of wag the dog situation here biden's not doing well he's lowest popularity ever midterms are coming up is there any political motivation here do you think in what biden's actions are you know given the

SPEAKER_152: context of what sacks just outlined i think that there's um this is like showing up to the you know

SPEAKER_63: the last 20 minutes of a two-hour movie and then saying oh my gosh what's this guy doing he's so crazy there's a long narrative that precedes the current news cycle on what's happening with putin and the ukraine you know in large part the united states helped to start the fuel um the expansion of nato in the 90s and um the intention was to make nato as a western allied uh kind of organization contain russia step up right to their borders get very close and um and ultimately make these kind of you know areas free liberal democracies that are aligned with the west and put them right on russia's border and and that is obviously antagonistic if anyone tried to do that to the united states like russia did with the cuban missile crisis we would view that as a hostile act and we would react accordingly and for years the pressure has been building and and has been mounting as putin has started to kind of solidify uh his political power at home and his allies abroad in trying to figure out ways to push back on this wall that has been built around him and his nation and you know to some degree i think we look at this as like his aggressive behavior but to some extent it is a defensive behavior over a very longer cycle when when viewed that way and again like remember the u.s had this monroe doctrine um which president monroe put in place in i don't know 18 something 1800 something that said you know anyone that comes into our territory and tries to influence nations around us to be hostile towards us is it's a hostile act in and of itself anytime someone tries to influence our politics it's hostile and i think russia views our behavior and nato's behavior this way and so his primary demand is and has always been that the ukraine cannot and will not and should not join nato and the us response has and continues to be and and the eu and the eu and we're saying look we we believe in the sovereignty of the ukraine and we want the ukraine to make their own decision about where they go and what they do but the reality is for us this is a key part of a very long-term strategy to keep russia contained now meanwhile there's this beautiful backdrop of what's going on with china and if i'm china i would love to see the us and russia in conflict because it will weaken the us and if i'm russia i would love to see the us and china in conflict because it will weaken the us the us is in a very precarious situation right now and for us to actually end up in conflict is going to weaken our position with one of these other two emerging you know challenging you know superpowers and this is a a really precarious time i think to sax's point it's highly unlikely we're going to end up sending

SPEAKER_62: military but the posturing is such that we need to kind of hold our line until the very last minute we'll see what happens i did say you know at the end of the year i do think that we're in this kind

SPEAKER_156: of economic status right now that if there were an opportunity for conflict we're probably more likely to want to engage in conflict than not because it does create something that we all get

SPEAKER_63: behind it creates you know kind of a political unity it creates economic unity it creates driving forces that uh maybe might help us through what is clearly a very volatile and difficult time at home um so

SPEAKER_52: let's see what happens i think obama's already given us the end game i just think we have to go through the machinations to get there he said to the atlantic i think it was in 2016 or 17 he said the fact is that ukraine which is a non-nato country is going to be vulnerable to military domination by russia no matter what we do and you know every time there was this brinksmanship we effectively blinked and rightfully so because it didn't necessarily make sense to to all of a sudden engage the war machine to go to war in eastern europe the thing that's interesting about what happened

SPEAKER_25: here though was that this was a slow moving train wreck that was really visible years and years ago

SPEAKER_52: why is that well if you look at what was really happening this is really a european issue and you got to think well why is america being the leading actor here when you know where's europe in all of

SPEAKER_25: this well it turns out that you know the strongest power in europe germany is in a really difficult

SPEAKER_52: situation because they rely on russian energy 50 of uh the nat gas that comes in or 50 of the energy i think that comes into germany is from russia and they've in fact been building an entire pipeline system um from russia that bypasses the ukraine and goes straight to germany and so when all of the saber rattling was happening germany basically had to blink because they need russia's energy

SPEAKER_164: and why did they need russia's energy well they needed russia's energy because 20 years ago the environmentalists in germany won and they started to decommission all their nuclear reactors so ridiculous

Chamath Palihapitiya: so at summer along the way nobody took a science class in germany and figured out that nuclear was

SPEAKER_167: both safer and cleaner instead burning fossil fuels wiser to not have a dependency and after the fukushima they went turned them all off they accelerated it yeah it made more sense to burn fossil fuels number one

SPEAKER_52: and then to get those fossil fuels from russia so unfortunately we are in the state of affairs where you know germany has said i at least it's been reported that they would shut down this pipeline nordstrom 2 if uh if russia did something but the reality is i think obama basically told us that you know it's going to be very difficult for us to justify an act like this especially against somebody who is fortified and clever and smart this is not like invading the middle east and so this is a massive

SPEAKER_20: if this happens the uh the stock markets will just go absolutely to zero i mean if you could have negative stock prices this may be a good catalyst we'll pay you to take these netflix shares please

SPEAKER_08: that's unbelievable it's it's really really crazy this is it seems like a situation where we're assured not to get into to mix it up with him like i i don't understand putin i don't understand biden saying that he's absolutely going to react to this because we're not we can't afford to get into a war

SPEAKER_63: right now that's right and if and if that is true then you know us dominance the us ability to hold

SPEAKER_86: the line starts to decline and i don't i don't know if i agree with that because um i think we could diffuse this crisis very easily yeah which is the exit ramp yeah tell us well the the exit ramp here is what is putin demanding putin is demanding that we affirm that ukraine will not be part of nato in my view that in my view that's giving him the sleeves off our vest because we should not want

SPEAKER_102: to add ukraine or georgia to nato that would do nothing to enhance the security of the united states we wouldn't get anything out of it but we would be obligated under uh article five of exactly to defend them so admitting ukraine or georgia or moldova could ultimately bring us into a war with russia exactly so to free to freeberg's point earlier we have been poking the bear for two

SPEAKER_86: decades with our expansion of nato right up to russia's front porch and if you go all the way back to 1990 when george herbert walker bush was president and james baker was secretary of state there was an assurance made by james baker that that you know basically they had gone to to gorbachev and said we want to you know we for help in reunifying germany and the promise made that famously that james baker said is that what gorbachev said is we don't want nato expansion and baker apparently said not one inch eastward was the line and um and we we think back to how well uh herbert walker bush and james baker managed the end of the cold war how did they do that they they did that by making assurances to russia that we would not bring nato up to their front porch as well which is what we did in 2000 we've now added something like 14 countries in eastern europe to um you know to nato including in

SPEAKER_102: 2004 the the baltic countries and that decision by george w bush really is the thing that pretty much severed our relationship with with putin you have to remember that putin is he is fairly popular in russia because he stokes russian nationalism and what is the source of that nationalism it is because a single treaty organization nato now has this huge contiguous border with russia they now feel encircled and if we were to add ukraine to to that organization there'd be a 1200 mile again border which um that russia would have with with just this one this one alliance it would be akin to imagine if we were still in the cold war and canada were added to the warsaw pact right i mean we would be incredibly threatened by that so and so but but you know you never hear jake you never hear any of this on the news all you hear is the beating of the war drums and putin is portrayed as this mad dictator he has no legitimate concerns now look putin is an authoritarian and you could describe him as a bully and a thug and he has provoked a dictator he has provoked this situation certainly okay but you know we treat him as if he has no valid concerns whatsoever and i think the simplest thing to do to diffuse this crisis would simply be to say yes we have no intention of adding ukraine to nato and then we will find out if putin is a liar or not well that would be a great move like it's a that would be

SPEAKER_188: like hey let's take a five-year pause okay you know what we'll negotiate with you we'll take five years

SPEAKER_08: we won't put him in nato give give a little bit of a concession because their country is not doing well their gdp trails china and the united states their gdp per you know uh each citizen is incredibly low compared to the west like and then we could just work with germany to get on sustainables which is what their goal is and we could economically continue to trounce them because as you point out

SPEAKER_191: every week chamov they're not an important economy here's what obama said about putin obama said the

SPEAKER_25: truth is actually putin in all of our meetings is scrupulously polite very frank our meetings are very business-like he never keeps me waiting two hours like he does a bunch of these other folks he's constantly interested in being seen as our peer and as working with us because he's not completely stupid he understands that russia's overall position in the world is significantly

SPEAKER_63: diminished yeah he's not crazy he's not dumb and by the way nationalism as sachs points out which is a primary you know drum call for for putin it's not a novel sense we we are a nationalist country nationalism is um you know pride and and wanting to make sure that your country is treating with treated with respect and has sovereignty and so i don't think that putin is an irrational actor his behavior is very rational in response to what's gone on for 30 years and his requests are that he is feeling threatened and he is trying to avoid military conflict as much as he can and we portray him as being an aggressor that's demanding military conflict and at the end of the day our behavior over a long period of time as a country has driven us to the brink here and i think sachs is right you know the the right decision may very well be to to kind of you know leave the region alone and focus on issues that matter more deeply to us and are a higher priority rather than drawing us into this but

SPEAKER_194: a better investment would be in sustainable energy i think the economic seed is planted

SPEAKER_156: for us to be in some sort of conflict this year so you know we're gonna explain what you mean

SPEAKER_75: by that freeberg economic seed to be in some sort of conflict i think that you know generally if

SPEAKER_10: if you're not going to see homegrown you know economic productivity gains and you're

SPEAKER_63: suffering trade issues like we're going to suffer this year given the supply chain problems globally we're going to look for some place to manufacture growth and uh there's no better way to manufacture growth than through um wag the dog through conflict the foreign policy establishment in

SPEAKER_102: washington you know the neocons the you know the so-called washington blob i mean here they are beating the drums for war we haven't been in a war for what six months we just got out of afghanistan and now they want us back in another war and and the media just keeps fueling and fomenting this and they don't you know their coverage of it is well it's exactly what we talked about last week jake out when i pointed out that your your rhetoric your humanitarian rhetoric as noble as the sentiments are when it gets whipped up into a lather and a frenzy by the media it blunders us into a bunch of stupid foreign interventions i would not call it rhetoric let's call

SPEAKER_200: it beliefs my beliefs are not rhetoric but i i get your point is that here we are one week later and

SPEAKER_102: exactly what i said the risk of this is has now materialized clearly you're blaming my position on human rights no what i'm saying is that what i'm saying is that this type of rhetoric is used by the military industrial complex and the washer blob and the neocons to stampede us into wars that don't make any sense that's what i predicted a week ago that's or that was my concern death and here we are

SPEAKER_204: one week later and we're in exactly that situation it is our most successful export it is our most

SPEAKER_63: successful export jacal really important there's a difference between there's a difference between belief and how do you act on that belief and what are your actions based on that belief yeah and i think

SPEAKER_156: that a big part of what's gone on and this harkens back to a few episodes ago when we all got in

SPEAKER_62: trouble uh or there was an attempt at canceling us after we spoke about this but but when those beliefs

SPEAKER_63: are um here we go sacks pointed out harnessed in a way that um is ultimately co-opted in a way to to fuel and to drive you know conflict uh it uh it obviously goes beyond belief and it starts to move into an area where there is a very wide spectrum of action yeah and uh it's very easy to tip yourself onto the one side of the spectrum um and as a result cause a lot of harm and a lot of damage like we've done in afghanistan like we've done in iraq here's a great lens what is the cost of going to war in the

SPEAKER_140: ukraine versus whatever human rights or sovereignty issues they have hundreds of thousands of troops going to war is going to result in more human suffering than what's currently happening for ukraine it's

SPEAKER_144: sort of exactly they're going to they're going to be in the middle of the war is going to happen on

SPEAKER_86: their turf the humanitarian interest is in diffusing the situation exactly and the way the way to do it in a way is to is to you know exceed to this one demand that yes putin has about not emitting ukraine to nato which just to say something more about why we shouldn't want that the problem in ukraine and georgia and moldova first of all these are not north atlantic countries right this is mission creep by

SPEAKER_102: nato they're in the caucuses and the problem they have is they're sort of these breakaway you know russian republics but inside of these countries there's breakaway provinces you know they're they're ethnically russian areas within these countries that want to break away from them so you have a breakaway within the breakaway and so you've got these powerful forces complicated it's very

SPEAKER_86: complicated so for example in georgia in 2008 when there was a war there and russia did invade georgia but it was on behalf of these breakaway provinces of south osetia and abakazia and then in uh in ukraine they've got um the donbass and and crimea which has now been uh annexed by russia which are these

SPEAKER_102: majority ethnically russian areas you know and and same problem in moldova so the problem is you've got these like incredibly complicated border disputes within these countries based on ethno-nationalist tribalism and you know sounds familiar right the us does not have a vital national interest in getting involved in those disputes and by admitting these countries into nato they could pull us into those disputes because the key provision article 5 of nato says an attack on one is an attack on all we're obligated to go to the defense of those nations how is the security of the united states enhanced by that requirement they get a lot out of it we don't get anything out of it this is slightly this is

SPEAKER_08: a distinctly different than say taiwan as an issue but let's put that aside and we'll get to that in a second if china and russia and the united states are in this very complicated chessboard is there a way not only to diffuse this situation but is there a way and i know this sounds like a crazy hail mary to deepen the relationship with putin and make the russia and the united states in some way allies against this relationship with china because the russia china relationship is also very complex

SPEAKER_221: is is there some path to us having a better relationship she's holding a summit the last

SPEAKER_52: person he saw in real life was the leader of pakistan in 2020 before the pandemic started you know who he's meeting with in two weeks before the olympics start or in a week it's put yeah in person and then the there's going to be a tripartite uh alliance conference between uh china russia and iran great so i think this idea that um that all of a sudden somebody's going to found some holier than thou perspective on what the right thing to do is for other people is going to be challenged so those guys are going to think about themselves and they're creating alliances to basically further advance their own objectives and so i think we have to as well the thing here i i think it where what de-escalates all of this is economic sanctions and monetary impact because if nordstream 2 doesn't get turned on which is in germany's control that has a huge economic impact to russia explain what it is nordstream 2 is that pipeline that i just talked about the nat gas pipeline that that basically doubles the amount of nat gas flowing from russia into germany and essentially into all of europe

SPEAKER_180: but hasn't germany said if they invade the ukraine they haven't said they haven't said it on the

SPEAKER_52: record they it is it is thought that chancellor schultz that that it's theoretically on the table but it hasn't been officially declared biden today said that he's talked or somebody in the white house um has talked to all the major banks in the us about crippling economic sanctions so i i do think the way this gets de-escalated is through money and if you you know if you severely impinge russia's ability to sort of grow their economy that foments a lot of you know anger at home and i don't think that you know that'll probably weaken and destabilize putin more than you know uh trying to sort of have a i don't know some kind of like get together and hug it out session with him yeah i

David Sacks: mean so jason you raise a good point with you know can we improve our relation with putin obama tried

SPEAKER_86: right we had the whole reset and ultimately it wasn't tremendously successful but i think a lot of it has to do with the way that the foreign policy established from washington sort of reacts and i obama had some really good quotes about this um i think it was in that atlantic article where you know first he described that uh you know that russia has a vital interest in ukraine in a way we don't because it's right there it's on their border they've been attacked russia has through the ukraine you know throughout history so again it's just a primary interest of theirs and uh so after saying that um obama then you know he he basically got attacked you know by you know in a but it was some of it was partisan but and then he responded to the attacks by saying if there's someone in this town washington dc that would claim that we would consider going a war with russia over crimea and eastern ukraine they should speak up and be very clear about it

SPEAKER_102: that he challenged and then he said so so so the issue and no one did right no one was willing to just come right out and say that we should go to war over this and that's how he diffused the attacks on himself and then obama continued he said there's a playbook in washington that presidents are supposed to to follow and the playbook prescribes responses to different events and these responses tend to be militarized responses you are judged harshly if you don't follow the playbook even if there are good reasons so what obama is saying is that no one would defend a more militarized posture and and going to war against russia over the crimea and yet he was somehow portrayed as suspect you know by not being tough enough on russia and um so you know if you're putin and you see constantly the foreign policy establishment you know reacting in this way it's it's not a problem that even one president can just fix overnight you know what would change this

SPEAKER_228: is if when we send a hundred thousand troops over there uh it's a draft and you know it's not an all

SPEAKER_08: paid military the fact that these people in washington who got their kids in georgetown or harvard or wherever they are stanford don't have to send their kids over there to fight this war is one of the reasons they can write these documents and have these doctrines that hey you gotta send all these troops into harm way harm's way like if they had to send their sons and daughters it would be a much different discussion of like where we're going to start a war whether it's

SPEAKER_76: afghanistan or the ukraine all right let's go to markets um bill ackman uh came over the top he's buying a ton of uh netflix and tesla just absolutely flipped to becoming a money printing machine

SPEAKER_08: uh and had a ridiculous quarter revenues up 53 to 53 billion up 71 percent year over year q4 revenue 17 billion 65 percent year over year and they increased their deliveries by 71 percent and uh now now you're all of a sudden to start see some uh you know income coming into the company so flipping from money losing to break even to now printing a ton of money microsoft had an absurd quarter uh their revenue hit 51.7 billion up 20 percent in the quarter 20 percent year over year pays for 200 billion dollars in revenue in 2022 and their net income was also up 20 plus percent at 18.8 billion so the money printing machine in these companies is just extraordinary chamath what are your thoughts i

SPEAKER_49: think you're you're you forgot a couple of key things which is that the fomc meeting happened this

SPEAKER_52: week and powell basically said look we're going to start tightening in march i think the way that he said it you know all of these words tend to be so scrutinized and over analyzed but the instead of figuring out what people thought i think their actions post the fomc are important which is that you know we effectively now started to price in about five rate hikes this year so probably five 25 point rate hikes effectively that's what that's what the that's what the yield curve tells us if you take a big step back i just want to remind people like it's really hard to live through volatility right and we're in the phase of it now but typically these big drawdowns so like you

SPEAKER_25: know when stocks go down it actually precedes so it comes before the actual starting of a rate hike cycle and so if you go back to the you know from 1950 onwards today every time the government has

SPEAKER_52: started to raise rates or the federal reserve has started to raise rates the stock markets have actually

SPEAKER_25: rallied now why is that it's typically that they see through the end of the rate hike cycle and they start to price the business as if these rate hikes are done and to to rebase things and on

SPEAKER_52: average i think the stock markets go up between seven and eight percent so call it seven and a half eight and a half percent and so what's interesting to me is now we're finally starting the process of these hikes and the real question is going to be how data dependent do these guys get and what i mean by that is so you know we talked about this before but you know china cut rates this past weekend actually germany decreased their gdp forecast and so you're starting to see two huge countries already say hey wait a minute we need to be you know we need to be more realistic about what long-term growth looks

SPEAKER_25: like here it's inconceivable in my mind that those countries are slowing down and we won't and so i think what happens in these other huge gdp drivers of world gdp will affect us and so you know sax and i have said this before but the marginal risk will be that we over correct and

SPEAKER_52: actually create a recession that doesn't need to be one so we slam on the brakes too hard and another

SPEAKER_08: way of saying it is the rates are the market is a leading indicator of what's going to happen post

SPEAKER_86: the rate hikes we had a nice relief rally going until i think some of the words that powell used was that there was plenty of room for rate hikes yeah meaning that because unemployment's at three and a half percent that you know we're at full employment and that means that the fed can you know has this dual mission of keeping inflation low and you know keeping employment high so if employment is high then they've got more room to raise rate anyway it was that language around the plenty of room that freaked markets out and they triggered a huge sell-off i think to jama's point i don't see how you can have this much wealth destroyed so quickly and have it not impact the real economy there's a lot of people out there who feel a lot poorer because their portfolios have gotten slashed in value i mean

SPEAKER_08: so they'll tightening they'll clench not spend as much money on a vacation not buy a tv or a car so these wait lists for cars might get you know become sales the luxury markets of the economy the

SPEAKER_86: optional purchases uh start to really slow down and so i think that the risk of recession now is much higher than it was even a month ago now you know it's going to be hard to know so basically i think what we're saying is it's going to be very hard for the fed to engineer a soft landing here where we don't trigger a recession uh in the process of stopping inflation and um look we'll judge powell's performance

SPEAKER_102: you know at the end of this you know we're not going to know i think it's but i but i think that he's turned out to be much more hawkish in his statements than markets were expecting again and in

SPEAKER_25: 2018 you know he was probably overly hawkish and he actually created effectively a little mini

SPEAKER_52: recession we we didn't pay attention enough to it because you know trump made it impossible to see the signal from the noise but it did happen and it was powell being a little too trigger happy and so you know we have to remember that you know the fed has nine trillion dollars of assets on their balance sheet and so you know if they start to take nine trillion dollars of cash out of the system

Chamath Palihapitiya: by selling these assets into the market right you're taking the money out right because you're getting money back that's going to have an enormous huge impact as well so if you think about questions about what happens one second one second let me finish please so you know so when you have these two things happening at the same time you have a potential rate hike cycle which makes the cost of

SPEAKER_52: a used car more expensive the cost of your credit card balance is more expensive the obligations you have to pay just become naturally more expensive you feel poorer so you spend less and then separately in the financial markets you actually take liquidity out of the system and so people value you know uh liquidity more it becomes it becomes worth more you you value current

SPEAKER_25: cash more i mean we're putting ourselves in a really delicate position so he's got a a delicate balancing act here he is definitely on a tightrope so if we pull nine trillion out we've been talking

SPEAKER_76: about this deficit if he starts selling all of those assets does that mean on the united states balance

SPEAKER_02: sheet that will reduce our national debt no i mean where does the money go we're getting nine trillion

SPEAKER_222: of cash right you sell an asset you get cash for it right and so it pulls money out of the economy

SPEAKER_86: it created liquidity when they were um buying assets right when they were buying this debt it would put push money out if they're selling the debt it pulls money back in what happens to those dollars is my

David Friedberg: point like what the dollar the dollar the dollar stays in the us usa's bank account but the obligation the

SPEAKER_164: note exists in some financial intermediary that holds it clearly powell does not want to be remembered

SPEAKER_86: as the fed chief that let inflation slip the leash right i mean he he's gotten religion now around the idea that this inflation is not transitory which was his position for months i think that now bit him and the risk is potentially an over correction but he's not going to let inflation he'll then he'll be the

SPEAKER_211: first fed governor to have caused two recessions i think it's like a serious risk and and by the way

SPEAKER_102: these market levels that we're at right now i mean look 60 correction in gross stocks okay but this is with that's still in a good economy in peacetime conditions and now we have a risk of recession and war

SPEAKER_86: so you know there's still room for you know a lot more negative news here is kind of my point and um but look sentiment's also very negative so when sentiment is this negative there's also the potential for markets to quickly recover but i think the sentiment is there for the wrong reasons i think i

SPEAKER_25: don't think people are thinking recession i think people are thinking my gosh these rate increases my gosh i can't own these high growth stocks anymore and none of those things are true those are just

SPEAKER_52: perceptions that get amplified by one's emotions when you're getting punched in the face which is what happens when you wake up every day in your portfolio by the way five or six percent it generates incredible

SPEAKER_62: opportunity the uh you know the idea that markets bucket quote unquote growth stocks together

SPEAKER_63: i think um kind of obfuscates an important point which is that some of the businesses in that category are real businesses that are going to succeed over the long run and some of them are speculative and are likely to fail over the short run and um you know as you saw netflix sell off bill ackman very smart came in and bought a bunch of the stock i don't know if you guys remember this but in 2011 tcv which is traditionally a private equity investor at the time and there wasn't a lot of crossover and public market stuff happening jayho they were a private investor in um netflix netflix stock tanked from um i think it was around 220 a share down to 70 bucks a share in a couple of months and tcv did a 200 million dollar pipe into netflix um and everyone's like oh my god what are they doing it's incredible and by the way that was uh on an adjusted basis that's 10 a share in today's share price so that that that 200 million dollar investment that they made went up 60x you know at the peak of netflix a few weeks ago and so you know seeing bill ackman come in and underwrite netflix again and make a big investment at its current market price so jay hoag i think it is really highlights that there just because the market price is down doesn't mean that a business isn't fundamentally valuable and going to grow and going to generate significant returns over time as a as an operating business and that distinction starts to present significant opportunities in a market

SPEAKER_156: condition like this and the businesses we all talk about generally growth stocks are down 60 but maybe most of them shouldn't have even been public companies in the first place maybe they should have been speculative private investments where more than two-thirds of them were likely to fail and they shouldn't be failing as public companies and the few that are getting damaged and hit with this market sentiment shift can be picked up cheap and there's a lot of opportunity and so i wouldn't view the market condition to be necessarily reflective again of the economy

SPEAKER_52: or the condition of businesses in general jay hoag was a partner at tcv he's the founder of tcv that did that deal and he's also the one that participated and led the billion dollar uh round into peloton before they uh whiffed earnings and got and got decapitated but he's an incredible investor that trade is probably one of the best trades of all time so let's look in the good news column

SPEAKER_08: um wages way up earnings way up 10 million job openings in the united states pretty close to record low unemployment and the pandemic ending ending and people having record savings in their bank accounts and personal balance sheets so how does all that good news the pandemic hasn't ended

SPEAKER_194: it's ending for people i think it's over for people like i'll tell you the thing i'm most concerned

SPEAKER_62: about there's a reverberation that that persists in supply chains i don't know how much hardware lab biotech consumer goods businesses you guys are involved in i'm involved in a number of them every single one of them are crippled in some way right now by supply chain issues i mean i'm talking

SPEAKER_63: about like businesses that have been operating at steady state for many many years when do those get worked out we don't know and everyone's getting surprised and hit upside the head every week with some new supply chain shortage whether it's some chemical you need for some lab equipment

SPEAKER_62: or you know the the delivery of some big piece of equipment or even plastic bottles that we use

SPEAKER_156: to kind of fill up our beverages that we ship that's a pretty sizable business we've never had supply chain disruption like we're seeing right now i'd like to bleep out the name of that company yeah but it but it's it's like it's a bleep this out but it's a significantly sized business

SPEAKER_63: that um has never had supply chain issues it's all us-based but some of the suppliers of the suppliers have had complete failure in delivery and all of a sudden it's now reverberating through the supply chain you guys saw the gm didn't deliver a single friggin electric vehicle last quarter because they couldn't actually get the chips that they needed to make cars so the real risk to the economy in my opinion right now is when and how we're going to work our way through the supply chain issues and it is so complex and there's a myriad of problems and it is a global problem that it's really unclear how this is going to play out over the next six months and what will happen is this quarter next quarter businesses that you didn't realize and

SPEAKER_62: didn't expect are going to get hit with supply chain problems are suddenly going to say guess what our revenue is off by 20 30 because we couldn't sell this product because and half our

SPEAKER_63: shelves are empty because product didn't show up or whatever the the narrative might be all right

SPEAKER_86: i think it's a really i think it's a great point because you don't solve these supply chain issues with rate hikes right it's like nothing to do with that nothing to do with that so the rate hike

SPEAKER_283: slow the economy that's why i'm way more worried about this than rate hikes right what does clean

SPEAKER_52: it up is capitalism the end of the pandemic time and the reason i'm less worried is when you actually talk to the companies that that are spending enormous amounts of money on capex they've actually guided to the fact that by the end of this year in the beginning of next year most of these things will be worked out it's indigestion so i think i think we're i think we're dealing with a you know six to nine month issue of having turned things off and are now rapidly trying to turn things back on and we can't necessarily get that timing right but i do think it'll work itself out faster than people expect personally that's what i think because the cost of apple and tesla specifically guiding to that is too enormous you're talking about you know collectively almost four trillion of market cap so they're not going to get something like this wrong and they were pretty clear in the last few days

SPEAKER_08: that that this will be done by 2023 early so sax or chamoff i just listed all the good news to counter you know the the the slog and the and the bad news how do you account for record low unemployment

SPEAKER_76: record number of jobs record wages going up massive cash on people's personal balance sheet massive amounts of sideline cash massive amounts of venture funds being raised that have to be deployed in the

SPEAKER_75: next five years all that good news where does that on this balance sheet of good versus bad you know

SPEAKER_243: work out for you sex well the the negatives are that yes the unemployment rate is very low but a lot of people have dropped out of the labor force so the labor participation rate is still quite low

SPEAKER_136: so because of well because i think a lot of people dropped out because of covet you know everyone

SPEAKER_86: went remote and um i think you know they got these stimmy checks and i think a lot of people got used to not working you know maybe maybe you had a household with two people used to work and now only one of them is working you know maybe they moved to a cheaper part of the country so i mean maybe it's a good thing right but a lot of people dropped out of the the labor force and they haven't come back and so that's the negative and then you know the fact that wages are going up is good but we don't know how much that's inflation right so you know those would be the negatives but there was a report that inventory levels did rise in q4 and so the supply chain issues do seem to

SPEAKER_08: be ameliorating to some totally i was looking at cars and now a lot of the people who had you know there's no way to get this car now they're like hey we got a couple of these cars available if you want them and then if you look at the housing inventory it does seem that maybe that's taking a plus two and people couldn't find houses and now maybe even though it's still a housing crisis maybe there's more available or they're staying on the market a little bit longer yeah i mean it's i think

David Sacks: it's pretty clear that economic activity is slowing um and again things like rate increases they uh it

SPEAKER_86: increases the the cost of a mortgage right so that could affect house prices i think there's an

SPEAKER_75: interesting startup story um there's a private company that's doing essentially life extension that a bunch of rich people put three billion dollars into you want to tell us friedberg and your science segment what it's just going to make us live longer or not well i think i mentioned this company

SPEAKER_63: a few episodes ago but i think they just announced their um three billion dollar investment um and and again this goes back to the um the point i made on the prediction show so last week altos labs announced that they've landed three billion dollars in funding and this has been an ongoing funding that's been going on for quite a while into this business but this business was set up uh to commercialize yamanaka factor-based cellular reprogramming for age reversal and there was a paper published just yesterday i'll put a link in the show notes that if people are interested in reading a scientific paper they can take a look incredible results scientists took mice gave those mice short bursts of these yamanaka factors and then measured all the biomarkers all of the chemical signatures in the blood of those mice to determine their age because there are known ways that we can measure the age of an organism by looking in their blood at measuring certain biomarkers and with just a few short bursts for about a week of these drugs these um uh these yamanaka factors the mice all of their age signals reversed to making it look like they were very young again and it did not do what the challenge has been with yamanaka factors in the past is if you put too much of it in in a body in an organism the cells rejuvenate to becoming stem cells which is kind of like what a fetus might have and starts to grow a lot of tumors they were able to avoid having tumors show up in the mice and the mice in fact all looked extremely young from a biomarker basis so an incredible result an incredible paper whether or not it gets repeated and shown by others but i think this speaks to the quality of the science that's underlying the three billion dollar investment that was just made

SPEAKER_62: in altos labs which is probably one of the biggest seed investments ever no it clearly is the biggest

SPEAKER_230: seed investment ever in a startup and i think it speaks to what i highlighted as what i what what

SPEAKER_62: will be the new frontier in biotech and will completely rewrite like you know the course of humanity

SPEAKER_63: is if we can take drugs and for a short period of time completely reverse the age of ourselves and it sounds so crazy and so wacky but it's being now proven in in a single week we've now had an amazing paper published and we've seen the startup announce their three billion dollars of funding to pursue commercialization of this technology and this is going to be the year i think this will be the front cover of a lot of magazines this year as people realize the that this is real and that

SPEAKER_109: it's getting commercialized why do you think why do you think they have to start with three billion

SPEAKER_52: dollars and i'll tell you why i asked the question yeah whenever i see these grandiose prognostications of future progress and then see these companies raise exorbitant amounts of money i have never found a single example where it's ever worked ever in fact every time i see a company raise an exorbitant amount of money in a series a i write them off in my head yeah sure yeah so why why should i not in this case so or it's more actually actually a better question why would somebody listening to this pod go work there and by the way i by the way the same has been done and

SPEAKER_62: can be said about calico which is alphabet subsidiary that's that's pursuing similar research

SPEAKER_63: where billions of dollars have gone into that business and there's a similar sort of research track underway and i think the general principle chamath is they don't know what the product is they don't know the way to market they don't know you know what area they need to explore

SPEAKER_62: but the underlying principle is proven the underlying principle is something that people believe in this science is proven this science is real we don't know the commercial path and we have to try lots of different things and run lots of different research programs in parallel to figure it out and each of those research programs is like a hundred million dollar biotech startup

SPEAKER_156: and so i think that the principle is let's put a lot of shots on goal all at once in parallel and make sure because if any of these shots on goal work this is going to be worth many many billions of dollars so i think that's generally the idea it's almost like having a three billion dollar venture fund but the venture fund is targeted at one core area of interest that we believe is real and i think that's the way a lot of these things are being set up but i'm asking this question have

SPEAKER_52: you ever seen a company try to do 30 different things and it works no no yeah i mean it's not the

SPEAKER_08: typical capital allocation milestone based funding scheme i have a theory but it's not a product market

SPEAKER_63: fit thing right it's it's a it's a research program and it's a series of research programs but i mean look you let me reframe it for each month have you ever seen a three billion dollar venture fund

SPEAKER_62: that makes a hundred bets with smart people at the helm with smart people working at the individual

SPEAKER_25: businesses fail right like yes and in fact i've never seen a three billion dollar venture fund do

SPEAKER_152: much more than return two x of money yeah well look let's see i mean it's a it's a big bet and obviously there's some people making nice management fees and nice carry on this thing i'm not

SPEAKER_319: trying to be a wet blanket i'm just curious you know why do it that way meaning you know every startup let's get bob nelson on he'll talk about it he'll get it up yeah every startup i think

SPEAKER_52: is forced in some ways by the market to make an educated guess about where product market fit lies and to try to build some minimum viable product that that tends to be how value is created i mean you could have said that you know google could have had 90 different algorithms but you know larry page started with background that's how it started he had to make an educated guess that he had to make

SPEAKER_25: decisions and that's what startups about you have to make decisions and you have to make a bet on your

SPEAKER_319: on your own intellectual why don't you put all your capital into one company oh because mostly the

SPEAKER_52: companies won't let me but i would if i could oh interesting so i i think that what's happening here

SPEAKER_223: if i could i would but they don't let me you could buy you could put all your money back into

SPEAKER_156: facebook or back into forget facebook i know you got issues but what about alphabet or amazon just put all

SPEAKER_62: your capital in one bet and just you know write it out right but then it comes to what i think

SPEAKER_52: where i can generate the best return meaning you know i think that i could generate much higher returns than what i think google will give me yeah that's why i do it well well here's what i think

SPEAKER_08: is happening here there are a lot of rich people who are going to die soon and they're counting down like bezos and they're saying if why not if i'm worth 100 billion put one two three billion into this and have them go for it because i've got nothing to lose because i'm dying in 20 years this is a fear of death by billionaire bet which is exactly what i think happened with the google

SPEAKER_63: guys they were just like to say the team involved in these projects are not first-time founders or people that are great pitch men it's people that are repeated tried and true entrepreneur success stories that have done this over and over in biotech and they're the ones that are being drawn into working on these projects and they're saying look because we've got the people that have done it over and over give them the capital i mean no i believe that's a good argument yeah no i believe in yamanaka

SPEAKER_25: factors and i believe that there will be innovation my only question is is the innovation going to come

SPEAKER_52: through a small team that raises a small quantum of capital with one very focused idea that gets it right or this sort of you know monte carlo simulation approach to product innovation and all i'm saying is just an observation that historically it's been very difficult for these monte carlo simulations to ever work either to generate product market fit and an innovation and to make money now hopefully these

SPEAKER_53: guys are the exception that proves the rule because i think we'd all want this to work no it's a it's a

SPEAKER_63: great point and i hope you're right and i hope to start that small project and why now you're

Chamath Palihapitiya: saying the key thing because despite the three billion dollars you're still going to go after it which implicitly is your way of saying i'm short that company and i'm long my own company and this is this is the point i was trying to get to which is when when really really smart people see these things they tend to look at it with a grain of salt thinking it's very difficult to build a startup

SPEAKER_25: as it is yeah sometimes it's kind of like growing great wine you need to have a little

SPEAKER_53: pain and suffering along the way and when you have three billion dollars it's the opposite of pain and

SPEAKER_62: something totally true and i'll also say what let me just support your point which is the people i see get hired to big projects like this and there are a number of them that get funded not just also in in other kind of deep tech stuff they hire the tried and true experienced executives who generally have older kids and live in a nice house and have made a bunch of money and the earnestness the motivation the hunger uh the fuel the the creativity because they know what they know and they're not willing to accept that they don't know what they don't know

SPEAKER_63: those folks generally are less likely to succeed than the folks who are doing this maybe for the first time for that very reason when you're doing something innovative so i totally support your point and uh and i really do hope you're right but i thought jason when you were talking about

SPEAKER_291: talking about startups i thought we were going to talk about bolt and the stripe mafia fiasco this

SPEAKER_112: wow that's a good story it's a pretty crazy story where does everyone fall what side does everyone

SPEAKER_200: fall out on that does anybody have any equity positions in either company let's start there

SPEAKER_337: no no stripe holders no sax sax are you an lp in any firms that have a i'm an lp i'm an lp in funds

SPEAKER_338: that have exposure to it absolutely yeah for sure i'm an lp and a fund that has exposure

SPEAKER_340: i am as well i'm as well but it doesn't it's minuscule that doesn't affect minuscule doesn't

SPEAKER_08: matter minuscule for me too okay here we go so for people who don't know bolt is like one click

SPEAKER_76: checkout software they compete in some ways with stripes payment api the ceo ryan breslau did a tweet thread basically saying that yc and stripe are the mob bosses of silicon valley it was pretty charged obviously uh stripe and yc work together uh stripe is the biggest company to come out of yc ever i guess along with airbnb he claims that a lot of the top vcs were blocked as a strategy by stripe and i think there is some truth to this when you invest in one company you don't invest in the competitor i don't know if that happened here as a strategy but it is a viable strategy that other people have used where bolt claimed stripe got all the top investors therefore they couldn't raise money he also was saying they were voting things up and down on y combinators hacker news as if that matters yada yada yada it was kind of a uh weak argument in my view i'll give you my

SPEAKER_52: result in a bunch of vcs dunking on hold on i'll give i'll give you my hot take so first of all bolt is now a 14 billion dollar company or something okay so the you know these guys i think this was a very brilliant pr strategy and it worked what do i mean by this this was a company that most people didn't know about until this past week they went and they punched up which is a pretty tried and true

SPEAKER_25: pr strategy always fight up always fight up you pick the big guy who's an incredibly pristine

SPEAKER_52: extremely well-run company that is sucking up most of the talented you know people in silicon valley to work for is a you know centicorn could be a trillion dollar company over some lifetime so they went and they punched up and what happened everybody fell for it they baited all of these

Chamath Palihapitiya: folks and then all of these folks had to come out on twitter and lambast them and basically the net

SPEAKER_25: result of it is if one person knew about bolt before now hundreds and thousands of people know about bolt afterwards so not only do they not know them they're now they're contemporary just in terms of

SPEAKER_109: the practical reality they are now part of a discussion and in a framework of companies in this

SPEAKER_200: space that they were never a part of before this is steve jobs's move with a 1984 commercial he said ibm and then microsoft our big brother we're going to attack them join the rebel alliance be part of apple

SPEAKER_08: and of course apple and ibm responded and that was the big mistake and mark andreason sequoia a bunch of different venture firms responded sax what's your take on this i see you're chomping at the bit or

SPEAKER_86: maybe you're biting your tongue which is no i so i agree with jimoth that it was kind of a brilliant pr move if that's what it was i i do like startups punching up and he took a punch at stripe which is the big company in the space so and then yeah stripe stripe didn't respond directly the call since didn't respond but their surrogates did and then that looks like punching down and it draws more attention to it so i get the pr strategy i would say that as to the merits of the allegation i do i i it's interesting that you know he didn't get into yc because i think that he is a very talented founder and um you know we looked at this company pretty yeah pretty early on it was for like sort of a mid-stage growth round and it was like one of the toughest decisions we uh we face i'd say the toughest decisions as a vc are when you actually want to invest in the company but the valuation is like 2x what you think it should be and that was kind of the situation at the time when we looked at it is i think we actually would have invested this is the valuation was too high so it would have been a great bet for you yeah he grew into it and so it would have been a great bet so it was a bad decision on your part yeah yeah clearly we should have invested it's just that you know at the time you invest you have to have some basis for valuation and and that's the sense in which i think you know maybe ryan's accusations don't totally make sense is that he's been able to raise a lot of rounds at really high valuations and so he he hasn't had a problem you know raising a lot of money at you know great prices and you know it almost feels like a slap in the face to his investors where

SPEAKER_355: like what's the complaint i didn't get any tier one investors or that it was just hard to meet with

SPEAKER_276: investors and that stripe called the investors and told them not to invest that that was the allegation

David Sacks: yeah no i mean yeah i i can't really speak to that but i mean he was clearly able to raise

SPEAKER_25: uh great rounds so can i read to you an email exchange between me and ryan breslow

SPEAKER_52: oh dramatic reading from 2015. oh here we go h moth hopes all all's well um fyi things fell too rushed on our end so we're toning down our series a discussions for a couple months and this was this was in july of 2015. i'm reading you my answer because it's so fabulous hi ryan after a wholly unsuccessful few weeks of attempting to win a world series of poker

SPEAKER_20: bracelet i'm back at home licking my wounds how about we talk in a week or two so not only did i have a chance to win a world series of poker bracelet according to this exchange which i

SPEAKER_109: didn't win obviously duh i had a chance to do the series a in a 14 billion dollar company screwed

SPEAKER_324: screwed that one up too big dummies i mean the the things we miss are there's like 20 things you miss as

SPEAKER_20: an investor for everything you hit so i might i i've interacted with ryan back in the day and i just remember him being super super smart and i do think that you know there's a lot of very smart people now around the table at bolt including joanne bradford so i don't think that this was something that wasn't planned and i just think that they executed it well and it worked and i think a

David Friedberg: lot of people know this company that didn't know before now they still have to execute and build a product and scale it and do all of these things but yeah and i think that the response he provoked

SPEAKER_86: i mean since i was a little bit critical of what he said let me just say that one of the vcs who responded said that the reason they didn't invest was because the numbers weren't good that was not my experience when we looked at this company they had great numbers it's just the valuation was ahead of those numbers but the numbers were always great i actually responded to that and that was sequoia

SPEAKER_02: partner sean mcguire who said that and i responded to him like hey dude vc code is you don't reveal the numbers on things you learn confidentially what are you doing like and uh he's like well they said some bs about strive i was like yeah it still doesn't change vc code that if you learn something under nda friend da essentially in a meeting you're not supposed to weaponize that again unless unless

SPEAKER_344: you unless you have a 30 billion dollar position i still think well whatever i still think it's like

SPEAKER_365: i've never seen a vc honestly it's the first time i've ever seen a vc jason jason come on i i don't i

SPEAKER_52: think it's pretty i think we all knew where he was coming from he's defending an enormous position

SPEAKER_200: of his in sequoids you do that jason you've always been never released inside information is my point you didn't say inside information information he made a general statement he made a general statement

SPEAKER_370: they met with them but he was conflicted out so why would he meet with them hey guys nick just texted

SPEAKER_52: that i uh had i had i found a way to get off my lazy ass not be playing poker and do that deal i would

SPEAKER_367: have generated a 222x on my investment which would have been 15 million times 222 well we screwed it

SPEAKER_105: up too i think i think around we looked at when like a 400 million dollar valuation or something like

SPEAKER_49: that or something in that range and my gosh what would the series a have been i mean the series a

SPEAKER_86: would have been at like 23 63 million according to pitch book oh yeah 63 million you know it was one of those meetings we came out of where it's like that's a super interesting founder so yeah me too

SPEAKER_379: and that's what i remember too from ryan yeah super super super interesting founder write the check

SPEAKER_86: i said earlier in the program that like our philosophy now is just to be price takers and just to pick the companies that we want to be in and then the market sets the price the biggest mistakes i've made as an investor we should have done that with bolt this was the decision we faced was like a few years ago and so we just shouldn't have worried about valuation by the way sorry jacal as

SPEAKER_52: soon as you said it was 63 million you know what my reptilian brain said oh that feels so expensive even now knowing that the outcome is 14 billion and so to your point david it's a really good lesson

SPEAKER_49: for for investors to learn is just you're a price taker totally get behind these really interesting people that are world beaters and just let them do the work place the bet yeah all right so there

SPEAKER_153: you have it uh this has been another amazing episode of the all in podcast bye bye bye bye love you