SPEAKER_00: Sax is old d-d-d-d-d-d-d. Sax is old d-d-d-d-d-d-d. Raleigh is old, d-d-d-d-d. He's almost dead. J. Cal's fat d-d-d-d-d-d. J. Cal's fat d-d-d-d-d-d-d-d. J. Cal's not fat anymore.

SPEAKER_02: He's gettin' the cannons back.

SPEAKER_03: Freeberg's not human d-d-d-d-d-d. He's a robot d-d-d-d-d-d-d.

SPEAKER_07: He's a robot d-d-d-d-d-d-d-d. he's a robot. Don't quit your day job to moth. That's all I can

SPEAKER_10: say, bro. You don't remember baby shark. I mean, how many know he doesn't know his kids first names for birthdays. How does he

SPEAKER_15: know baby shark? Hey, everybody. Welcome to episode 55 of the

David Friedberg: all in podcast with us again this week, the dictator himself Chamath Palihapitiya, the queen of quinoa David Friedberg and coming back from Portugal and the Solana conference riding

SPEAKER_22: his heroin and prostitution are legal. Well, we were gonna we

SPEAKER_24: were gonna double click on that. But you jumped the gun here on the docket. So David, how was the heroin in Portugal?

David Sacks: Great. Great. Okay. I was I was fully drinking the Kool Aid at the Solana conference. It wasn't heroin. It was Kool Aid. It

SPEAKER_33: was literally Kool Aid. How many people were at the Solana conference in Portugal? Why is it in Portugal? What happens at a Solana crypto conference? I think there were 1000s of people

SPEAKER_38: there. And it was, I mean, easily. And I mean, it was kind of a madhouse and people were trying to get in last minute. Nobody could get in because the conference was like totally sold

David Sacks: out. It was a lot of crypto developers, a lot of people with projects. And why Portugal? I think because there's a lot of conferences happening in Portugal right now because they are

SPEAKER_38: easier on the COVID restrictions and a lot of other countries. So you can actually get in there and host a conference.

SPEAKER_40: What was it? Just indoors with no masks?

SPEAKER_38: Um, I can't remember if like masks were required. And I did see

David Sacks: people wearing masks indoors. So were you required to be

SPEAKER_41: vaccinated? They do? I think I did show a vaccine pass. So when I checked in, I just did my booster. I'm gonna do my

SPEAKER_43: booster. It kind of it kind of it was a little I would say the same kind of shitty feeling as the second one. I just got fired. I mean, I had the first two are Pfizer. So I took Pfizer. She was the nurse actually gave me a choice. She's like, you can do whatever you want Pfizer, Moderna or J&J. I just I didn't know any better. I texted my doctor. So I just took Pfizer. Although the interesting thing is Moderna is the only one that's dose regulated for the third dose. So there's a they actually give you less specifically, but Pfizer is the same for all

SPEAKER_33: I think we talked about this on the pod. There's one theory which they told you get whatever one you can get was the

SPEAKER_54: instructions because it's more important to just get one than which one you get. But they said there's a Swiss cheese theory which is if you took two slices of Swiss cheese from two different bricks of it, the holes would not be the same. And therefore you overlap them. So whichever deficiencies each one had, maybe the other one doesn't. So I should have gotten modern is what you're saying that would be I if you believe in the Swiss cheese there. I don't know free burger or science

SPEAKER_56: guy. I should ask Aaron Rodgers what he thinks. I mean, he

SPEAKER_54: just straight up lied about being vaccinated, huh? I think so.

SPEAKER_57: And I think the NFL is not doing anything about it. Yeah.

SPEAKER_33: That's not cool. I why would you lie about it? I mean, he's not he would have still been allowed to play. So there was no reason to lie about it. I'm not totally up on that story. The rumor is

SPEAKER_54: that Kyrie is going to be playing basketball soon. Because

SPEAKER_60: Eric Adams is going to lift the vaccine restrictions. You will

SPEAKER_61: not need to be show a vaccine card or wear a mask. Bro, I don't

SPEAKER_43: think it's gonna matter because the Warriors are shooting the lights out and clay hasn't even come back yet. And so that Gary

SPEAKER_66: Payton, the second you see Gary. Did you see Gary Payton? Yeah, Junior. That was clips of the second. I mean, I mean, he

SPEAKER_68: is like living above the rim and oh my gosh, weissman is weissman

SPEAKER_33: back and then Wiggins is playing great basketball. I mean, the Warriors are going to win this year. I don't know. Steph is

SPEAKER_71: otherworldly right now. Yeah, I think stuff's got something to prove. Even though he doesn't, but he's playing like he's got something to prove. Okay. So do we want to just cover the

SPEAKER_74: elephant in the room there? The last episode, I think we should get out of the way because it relates to Solana there was, we took something out of the last podcast. So people understand we have an agreement between the four of us. If there's something that somebody doesn't want in the pot after we record it, we'll take it out because we don't want anybody. I mean, I think the philosophy haven't said this out loud is we

SPEAKER_54: don't want anybody to say something they regret that could cause damage to other people or to themselves. So if they want to take something out that they said, that's fine with all of us. And basically, each of us has veto right on something. So last week, two people took their veto right on something and we took something out you want to explain our thinking on that sax and why we're reversing?

David Sacks: Yeah, okay. So a few weeks ago on the pod, there was an oblique reference between me and Chamath regarding Solana. And so and

SPEAKER_38: so some internet theorists claim that we were trying to engineer a pump and dump in Solana, which if you actually listen to what we said, it certainly is not a pump. Let me explain what it was. So Kraft is the beneficiary because we invest we're the first investors in multi coin, we were kind of like their seed investor invested in there, we put in something like 40% of the money for their special opportunity fund. They were one of the first investors in Solana. So we are the beneficiary of about a billion dollars of Solana. So thank you

SPEAKER_77: multi coin. At some point, well, so they have started doing distributions. But at the time I texted Chamath, they hadn't really started doing distributions. I didn't know how deep and liquid the market for Solana was. I just asked Chamath, like I'd heard that Chamath may have said something that he was long Solana one to accumulate. So I sent him a text saying, Hey, are you interested? You know, I thought maybe we could do an OTC transaction at some point when we get our Solana. He basically, you know, we had a brief exchange about that. And then he mentioned on the pot, that was the extent of it. What I didn't know at the time, but learned subsequently is that the

SPEAKER_38: market for Solana is very deep, about three and a half billion notional is traded every day. So there's no need even if we wanted to fully get out of our Solana position, which by the way, we don't even have, you know, multi coin still has most of it. We it's not necessary to do an OTC transaction, we could just

David Sacks: sell it. Explain what OTC transaction is just means over

SPEAKER_38: the counter. It just means that instead of going to like an exchange, you would deal with like a trading desk or it could

SPEAKER_77: just be direct like for me to Chamath. So that was basically the exchange it Chamath and I talked about it for maybe two minutes, and then it came up on the pod for 20 seconds. So then some internet theorists basically clipped it and try to accuse us of organizing a pump and dump. Well, obviously, if you're talking about selling something, it's not a pump. It's also not a dump either. So anyway, the reason why we said cut it out last week is because we didn't want to give oxygen to this stupid, like conspiracy theory that somebody had invented on the internet with like no basis whatsoever. Because you could spend all day trying to like shoot this stuff down. But then at the Solana conference enough told me enough

SPEAKER_82: people told me that this was becoming a meme that I thought was worth addressing. And what and look, what you have to understand with crypto is that for every cryptocurrency like Solana, there are haters, because they're invested in

SPEAKER_85: it's very tribal or everybody's talking up their books.

David Friedberg: They're pumping dumps. And there are armies of anonymous Twitter accounts that will coordinate attacks and or memes, etc.

SPEAKER_92: Right. So they're trying to spread the rumor that like VCs are big

SPEAKER_77: holders in Solana and are going to dump it. The reality is that multi coin has a large position, but they have LPs, they are slowly distributing their positions to LPs. We will the

SPEAKER_93: forms of the tokens, they're not giving you the tokens, you get to decide what you do.

SPEAKER_77: Yes. And by the way, that's what we'd like to do as well. We're currently working through those mechanics because it's actually

David Sacks: complicated for a VC firm to distribute, you know, in kind

SPEAKER_93: through tokens. But if you had to give them to your LPs,

SPEAKER_97: that's what I would like to do. Exactly. So people are doing that with Coinbase. So Coinbase is providing that as a service now, from my understanding.

SPEAKER_38: Right. So we're so we have to work through with our LPs. That's what we're going to try to do is distributed in kind so everyone can make their own decision.

SPEAKER_66: I, um, I have a couple things to say. So I've only been a buyer I've never, um, I haven't sold a single Solana token. And so we are, you know, net buyers, and we're buying a bunch of stuff. But

SPEAKER_43: I hate acknowledging that. And this is why, you know, my tone was more noncommittal when we did the pod, is that I really don't like this culture that's emerged via Twitter, mostly, where you

SPEAKER_22: all of a sudden have to be this maximalist that basically falls on their sword and never sells in order to be legitimate. And I think that that's a really dangerous place to be. So, you

SPEAKER_43: know, look, if I take a why is that dangerous? Well, if I take a much, much bigger step back, let me put Solana in the context of crypto. And let me put crypto in the context of the markets and where we are today at the end of the week, after you know, Q3 earnings. In November of 2021, we have the stock market at absolute all time highs. Ripping, we have crypto at absolute all time highs. Ripping, we have the art markets. I don't know if you guys saw Phillips and Christie's and Sotheby's this past week, at absolute all time highs, sold another people for 25 million, we have inflation at a 30 year high. We have 10 year break evens at a 25 year high. We have, you know, one point, some odd trillion dollars that we just approved last week, and we're still horse trading on another three, you know, $1.8 trillion of stimulus that we're going to put in. And so when you and then you have I and I think the the most important thing, which is the two

SPEAKER_22: most important founders of our generation, the two smartest people who have really consistently won, Elon Musk and Jeff Bezos have collectively sold more than $11 billion of

SPEAKER_43: their holdings this year alone. And if you can't take all of that, and decide for yourself what's right for you and your family, you're doing yourself a disservice. I think it's important for me to never sort of like, you know, be forced to tell folks whether I'm buying or selling, although I'm willing to do it in moments where I think it's important. But I think it's really important to understand the context. And so I think like these folks that like think derisively about individuals who are managing risk, I think it's really naive. And I think it's, it creates a lot of missed opportunity for them as well. If the smartest people in the world are now selling their core holdings that they told you they would never sell, and you are not reconsidering your position on things. You're either much

SPEAKER_22: smarter than them. Or you're being really, really reckless. Right? There you have it.

SPEAKER_74: Yeah, no, you're right. We just people also know inside baseball, we have a docket of stories that we talk about on our group chat

SPEAKER_54: that make up the docket for the show. But I'll bring stuff up. And I didn't bring that up in some way to cause trouble or anything. I thought you guys would want to clear the air about it. And I understand your position of, hey, you don't want to give these oxygen or whatever. But I think I didn't

SPEAKER_117: even know that we needed to clear the air until you know, I went to the conference and enough people mentioned it.

SPEAKER_43: So but what's so funny is half the people on Twitter spend all their time in crypto land saying things like never gonna make it have fun staying poor. They're extremely Jason, as you said, tribal, I'm not sure that they're doing first principles analysis

SPEAKER_52: of these things. They're gone. They've got to exceptionally

SPEAKER_43: lucky. Yeah, some of them are exceptionally good. But many people, broadly speaking, have gotten exceptionally lucky. And I think a little bit of it is getting to their head where they become, you know, very virulent against people that they think, you know, whose perspectives may actually be negatively affecting their position without actually understanding what David said, which is these are incredibly deep liquid markets. And one person's opinion is can't do much of anything.

David Sacks: Right. I mean, it's a really good point. I mean, I'd like to give my opinion on Solana. But the thing or just crypto in general, the thing that's like hard about it is that it's hard to talk about the benefits of say, the Solana blockchain without being seen as a pumper of Sol or a dumper of ETH or whatever, because all these things are so intrinsically connected. I mean, I learned a lot of really bullish things about Solana, you know, at this conference. I mean, the biggest thing is, I mean, there's basically a battle for the hearts and minds of developers going

SPEAKER_77: on right now between Solana and Ethereum. That's why Solana has raced up to, you know, over 200. I don't know what like 7000% increase or some, something incredible like that. The reason is because Solana as a blockchain gives confirmations back in something like 400 milliseconds, whereas Ethereum takes, you know, minutes, and, you know, transaction that might cost 10s of dollars, 10, 20, 30, $50 of gas on Ethereum cost pennies on Solana. And so that's, yeah, yeah, exactly. It's also, you know, a lot of developers feel like the tools, the developer tools that they've created are easier than building on solidity. The thing that Solana gives up the trade off that it makes is decentralization. There's basically basically that transactions are processed by 20 validators, and they're a top 20 based on holdings of soul. So it's kind of like this proof of stake model. So anyway, there's some trade offs there, I can tell you that, you know, it's a view of, you know, our friends at multi coin. And, you know, I heard a lot of this views at the conference, although obviously, you have taken with a grain of salt, because these are the biggest believers, but their view is that Solana over the next year will flip Ethereum based

SPEAKER_126: on developer activity, that there's real

SPEAKER_52: to your point, we spend a lot of time actually before we do

SPEAKER_66: anything is that's the only thing we've been looking at, you know, and syndica fractal. A lot of the stuff that we've done D. So is

SPEAKER_43: purely driven by developer interest when we see developers in the open source ecosystem building things on top of this stuff, making stuff that's composable and usable by other people and building infrastructure. You know, we don't really second guess that because they are spending their the most important currency, which is not monetary capital, but human capital. Yeah, their time, their time and their skill and

SPEAKER_129: their reputation for another project. Yeah. And so when

SPEAKER_43: enough developers, so I've always thought you just follow the developers. And as more and more projects get started, you just have to unemotionally support that I think the writing is on the wall, which is Bitcoin is gold, Ethereum looks like it's trending to be silver. And Solana could be the first but there will be others that come after it, of real developer ecosystems that can be built on top of it. The other the other thing that I would offer up to people for them to think about is before you blindly go and rush into crypto. One way in which I try to think about these things is in the following way. You see these projects get started all the time. And I would view each of these projects as a mini economy, and really try to think what is the economic value of what's happening under the hood. So simple example, you know, helium is an interesting project that's trying to build a completely decentralized, you know, 5g infrastructure, right? Render is a really interesting project that's trying to build a completely decentralized, you know, graphical processing infrastructure, right GPUs, essentially, in both of those things, you can quantifiably economically measure what the value is that people get, right? In the case of render, you're basically displacing an AWS instance. And so that has a price and a value. And so you know, for render to be valuable, there's an economic value that it replaces. If you're joining a hotspot that has an economic value where you had necessarily have to pay, you know, to get internet connectivity, if you all of a sudden are on the helium network, that displaces a measurable economic quantum. Understanding that is probably and taking the absolute value that is the best way of really understanding which projects have potential. So if you take those two ideas and

SPEAKER_22: marry them together, where is their developer interest? And where is their measurable economic activity at the intersection of those I think are the really compelling projects that can win.

SPEAKER_74: Well, and the thing that complicates all of this is that the developers are not just picking based on which language or technology or stack they think has the most potential. They also have acquired economic stakes in it. So a developer who might be objective and say, Hey, this new platform is better than Ethereum, might be sitting on millions of dollars in Ethereum. And they're like, I want to keep my bet going here. And I'm going to keep

David Sacks: talking my book possibly but I but I do think that developers in general will choose the platform that's easiest and cheapest and

SPEAKER_38: fastest for them to develop on, which would mean the list on coin

David Friedberg: market cap of market cap ones that has been static for a decade of

SPEAKER_74: crypto almost, you know, we're largely the top 10 doesn't change that much. It's xrp, it's stellar, Ethereum, Bitcoin, tether, that could be up for grabs. That whole thing could change now that people are actually building projects and the projects are getting competitive with each other. And that's that flipping we're talking about correct sex.

SPEAKER_38: Yeah, I think that what's tricky here, again, is I never want to give anyone investment advice. I mean, that's just not my

David Sacks: job. And if there's anyone out there listening to the show, because they're trying to get like tips or tricks, whatever for investment, like I'm not really comfortable telling people what to do. So you know, everyone just has to understand that I did I

SPEAKER_77: do feel like what I saw at this conference over the past week in terms of developer enthusiasm, activity was very bullish. Actually, it was a lot like I went to the Ethereum conference, I think it was back in 2017, several years ago, and it felt a little bit like that. Although I would say that this time it felt less academic, like several years ago, it felt more like white papers. Now it actually feels like real projects and businesses that people are trying to create infrastructure and

SPEAKER_142: less applications or more applications mentioned mentioned a

SPEAKER_77: couple of them. So there's helium, which is creating a decentralized network for Wi Fi, there's render, which is creating a decentralized network for GPU. There's one called hive mapper, I met the founder, it's a decentralized network for people to map the world, you can think of, you know, the concept of a minor that Bitcoin invented, think of them more as like a resource provider to a network. So with Bitcoin, you know, we call them miners, but they're the validators of transactions. And we're trying to incentivize them through block rewards, basically through small bits of Bitcoin that get released, to, to provide these valuable computing resources to the network. And so people are figuring out now, how to create massively decentralized networks where you have, you know, 1000s or millions of resource providers provide a little bit of something to the network for everyone's benefit in exchange, they get some coin. That's like a really interesting model that couldn't exist before crypto. And so yeah, I mean, I think it's very interesting. But you know, in order for that to work, you have to have, like, very, you need fast, efficient, scalable blockchains. And the feeling as I mean, I'll give credit here to Tushar, who's

SPEAKER_82: one of the GPs at Multicoin, his view is that this was the iPhone moment for blockchain that that what Solana has built, because it's massively scalable, and also very cheap. I mean, again, you can run a lot of transactions for pennies. Now, all of that is obviously very bullish for Solana. The thing I wrestle with is, and Chamath kind of alluded to this is I think everything's kind of in a bubble right now because of monetary and fiscal policy. And so you know, I guess I, you could say that I'm long Solana versus ETH, but I do kind of worry that the whole world right now is very bubbly. And so as a GP, like, what do you do about that? I can tell you right now, like this second, we are sitting on Solana that we have not sold. So you know, I am long

SPEAKER_143: in that sense. However, sometime over the next whatever number of years, we will distribute out our position of Solana to LPs.

SPEAKER_118: And then the LPs will make their decisions. And then they will make their decisions might specialize in crypto and want to

SPEAKER_74: keep it. Other ones might not want to hold assets and need that money to fund their endowment to give scholarships to students or whatever your LPs, right? Well, yeah, I mean, and so I guess to the issue of hey, we're not giving investment advice here, we are all capital allocators and startup creators. So we're talking about our day to day lives here. Nobody should interpret this as investment advice. And especially not in a world now. I don't know if you guys saw what happened with Rivian this week. I don't know how we don't talk about a company with essentially no public sales. They've sold 148 cars to their employees is worth $120 billion. Any at Freiburg, did you see this IPO? Any thoughts on it?

SPEAKER_150: Um, seems like, do you have investment advice for the audience that you'd like to give? Tell me what Rivian does?

SPEAKER_152: Can you play that video that you found that you shared with

SPEAKER_154: everyone? You have that video? You know, Okay, well, I we we do have it. I can we queue it up. Did you see this yet? So is this guy?

SPEAKER_92: No, I haven't? Oh, that? Yeah, yeah. Well, but just so I don't

SPEAKER_77: want to beat this point to death. But I just see it's so

David Sacks: important for the audience that what they should be getting out of the show if they're fans is maybe like advice on how to

SPEAKER_155: not think critical things, critical thinking and how we think about investors, not principle tips. Exactly. So

SPEAKER_77: look, if you want to invest in crypto, first of all, like go understand like what all these different projects or blockchains do and figure out what is the purpose of the token in that system? What are the token? Yeah, does it even make sense? Or is it just a scam? Then if it's a if it's something like a blockchain, go research how many projects are have developers on them? And how much code is being checked in?

SPEAKER_24: And maybe open a wallet and buy some NFTS and buy some ETH and transfer it and learn just how to set up your internet

SPEAKER_157: connection? Right, right. This was 1995.

SPEAKER_82: Right, exactly. And then on top of all that, you got to consider

SPEAKER_77: macro forces because I mean, and I think, you know, my friends at multi coin would fully concede this, that, you know, it could be the case that if there's a crypto bust over the next year, and this thing, your crypto has gone through boom and started, it's the standard. So you could have a situation in which for example, Solana flips ETH and yet still goes down in value, because there's an overall bus cycle. So you know, you have to concern the macroeconomic factors as well. So there's a lot of things to consider here. And then you also have to consider your own risk tolerance. And you know, what is appropriate for your portfolio? And it may be

SPEAKER_22: different money? Are you a 25 year old? Everything is at all time highs, and the two smartest men in the world are selling?

SPEAKER_162: Not just not just them, by the way, there are other guys that are heavily on the other side waiting for this whole thing to go, like Druckenmiller has been very vocal about this. And he's, he's been the best macro trader in the last 30 years. So his position is what exactly that we're printing too much money, and we're in a lot of trouble. So you know, look, I mean,

SPEAKER_165: generally, there is, I think a good point of view being shared here, which is, you know, understanding how to think about what you're investing in and what your your expectations are, versus relying on someone's advice or opinion on what to do. If you have to rely on someone else's advice or opinion on what to do, you're gonna eventually lose money.

SPEAKER_162: You should not be in that investment. You should not be in the market, because guess what, anyone that's giving you advice or opinions is going to make money if you do what they tell you to do, you do what they tell you to do, end of story. So at

SPEAKER_165: some point, they're gonna all make money, and you're gonna end up losing money. And it's a it's, you know, it's, it's, it's a better game to play, to learn how to kind of be thoughtful about where's your money going, what are you investing in, and it takes a lot of time and a lot of money. I've been sitting here silently, as you guys have been talking deeply about Solana and Ethereum and Bitcoin and the crypto markets, because I realized so much of, you know, what's needed to be successful in entering this market is a depth of understanding a depth of knowledge, my time is highly limited, I have spent no time understanding crypto markets, because it's so deep, and it's so fluid, it's changing every day, it's changing every week. So if I can't get smart enough to feel confident about the opinions and decisions that I would be making as an investor, I decide not to invest and I stay out. And so I'm not an active crypto

SPEAKER_169: investor, you're a specialist, and you're on the razor's edge on

David Friedberg: synthetic biology and so many other

SPEAKER_165: whatever it is, there are other areas where it's better for me to spend my time and my energy. And I've chosen to do that versus being drawn into what view what feels like a very exciting, kind of, you know, turbulent time. There are other areas that I kind of spend my time on. And I just kind of try to recognize that maybe I don't know what I'm doing if I were to try and get involved here. And so I'd rather stay out. And I think that's counsel forever for anyone, you know, if you're gonna make an investment, it's important to feel confident about the knowledge and the depth needed to kind of be different than the

SPEAKER_43: I'll build on your point. Like when I when I started doing my specs, I started to write these one pagers. And those one pages were artifacts for me to hold myself accountable for how I saw something in a moment in time, and then to be able to see

SPEAKER_52: whether it was tracking to that. And then also to share it to other people, a starting point, as David said, a journey where they should then if they're curious, go and do their own

SPEAKER_43: work. It turned out not enough people were doing the work. So then I had to start adding disclaimers to these things saying, Hey, guys, I'm not telling you to buy this, please

SPEAKER_105: be abundantly clear. These next backs that I will eventually launch, you're gonna see an entire like in red block letters like please don't buy this, right? Because to your point, it doesn't matter what you say people want a lazy, easy way out. And so I just want to reiterate what all of you guys said, none of us are dispensing advice, we are not telling you to do anything. Please do your own work. And please come to

SPEAKER_52: your own conclusion. It is your responsibility. And if you're not sure, go and look at your children in the face, or your significant other in the face, you're responsible to them. And

SPEAKER_178: so do your own work.

SPEAKER_165: I'll say one more point on where I sit as an investor, I choose to only participate in investing in what I call productive assets. That is you put some money into something and whatever that thing is, is generating money in some way, or is trying to generate value through a set of activities, like a business, or owning an apartment building where you're making rent, you know, anything that or you know, a group of people that are trying to have some breakthrough or some discovery. Those are productive assets. There's a lot of what's going on now. That is what I would call speculative assets, which is the only way you make money is if someone else pays more in the future, versus what you're

SPEAKER_180: paying. And there isn't an underlying productive asset to what you're putting money into are describing every ICO or

SPEAKER_165: every ICO, every NFT and the art market, right? These are these are examples of unproductive assets. They're speculative assets in the sense that you're speculating that at some point, the price of them are going to go up and someone somebody wants that NFT more than someone down the road will pay more for that asset than what you paid. But that underlying asset that capital that you just put in, didn't go in to build something. It basically went into someone else's pocket that sold that asset to you. And you're eventually going to try and sell it to someone else. And so you know, there's a there's a real attraction here. Because what we just talked about is really hard to do having fundamental analysis and understanding of businesses, and a fundamental understanding of what's working and what's not and when to shift and oh my gosh, you know, are things different? Or are they not? To do that is really hard. So people end up relying on opinions of others, or they end up running into speculative markets and the speculative markets are easy to understand. Someone just paid more for x than the other person did. Therefore, there's a trend line, it's

SPEAKER_171: going up. It's like playing roulette. And you know, black keeps coming up. And you're like, Okay, it's gonna be black again, it has to be black. There were seven, correct? There

SPEAKER_165: were seven blacks. And so I think that that's a really important kind of takeaway for for folks that might be new as investors.

SPEAKER_66: We're all susceptible. We're all susceptible to this. Like I was just looking, you know, at my own performance coming into the end of this year. And, you know, I did a lot of SPACs this year. But I also did these pipes, which are these third party

SPEAKER_43: deals, private investment in public entities, exactly other people's deals that they were bringing to the market where they said, Chamath, do you want to be a part of it? And, you know, and I did. And part of it was I was looking at these things. And, you know, free bird doing my work. But in the end, it turned out, I didn't do nearly as much as I probably should have. Because I ended up sitting on top of other people's work versus the original or underwriting that I would do if it was my own deal itself, right? Anyways, the net net of it all is like, you know, that was very inefficient capital deployment. And as I look at it now, it's like, you know, I'm down, well, I'm, I'm technically up 19%. But that's really because of one deal. If I

SPEAKER_22: take that one deal out, which is a total outlier, I'm down 17% on about $200 million of when you are a fast follower, not the

David Friedberg: originator, it wasn't your idea. This is critically important. There are many different ways to make money. But you have to specialize and you have to first I didn't and your knowledge, I

SPEAKER_43: trusted other people. I did the same thing that I that I'm saying to other people not to do do not just copy other people, you have to do your own principle work. And even when you do your own principle work, it may not be enough. And you have to be willing to basically see the forest from the trees and walk away. And so all these pipes, I'm in the midst of sort

SPEAKER_105: of cleaning up and selling down. And they've been a just a kind

SPEAKER_195: of a disaster for me, you know, I hold on, I want to build on

SPEAKER_74: this for a second, because I think it's critically important what you said as well, Friedberg, you have to be comfortable with the investment you're making, I look at these companies, and I look at the underlying customer, the product, you know, and what kind of revenue it's going to

David Friedberg: generate. And people thought I was dunking on Rivian yesterday. And I said, Listen, you know, when Tesla went public, people forget their valuation was 1.5 billion,

SPEAKER_198: 1.7, 1.7, so 1.7 billion, when they went public. Now, they already had 1000s of Roadsters, and they had already had the

SPEAKER_200: know they had 93 93 million of revenue in year one.

SPEAKER_198: So this was dramatically different than what Rivian had Rivian is being valued at, you know, whatever that is 120 billion, I think yesterday, Rivian has 17 billion cash, somebody asked me at the poker game last night, what I value Rivian at, I said, 17 plus three 17 million in cash plus 3 billion, double roughly what Tesla's was the markets hotter right now, whatever. But I put them at 20 billion. And people are giving a hard time about I said, I think that's actually the realistic valuation for this company. And we are in a very dangerous moment in time right now where I think people are whether it's meme stocks or crypto, or NF T's, suspending disbelief, in some cases, SPACs, because they're not all created equal. And certainly in private companies, we're seeing this, where people are giving people an amount of credit, which makes no logical sense, and is getting further and further disconnected in from reality. So as an investor, you have a choice, either you take you have your fundamentals, which I'm not going to change my fundamentals, I'm going to focus on the fundamentals that got me where I am. And I'm not going to be involved in $100 billion market cap company that hasn't launched a product yet, let alone $120 billion one, I'll stay focused on

SPEAKER_162: startups. But what you're saying is also important, because you're

SPEAKER_165: highlighting, how you value that company, you individually said, I think that company's worth some multiple of how many cars have been sold in the past, Elon sold, you know, 1000s of cars, he was worth 1.7 billion, these guys have sold, and other people are coming in and looking at this company and saying they've built facilities, they've built assembly lines, and they've got pre orders and bookings for lots and lots of cars down in the future. And clearly, they've gone in and you know, some people have gone in and seen these plants and seen these cars actually working. So you know, it's really important to take note that your point of view is one point of view in a very diverse market with many points of view, and everyone's going to come into this market. And that's why unless you individually as an investor, have a strong point of view and can show that you can apply your unique insights to consistently beat the market making decision investment decisions like that, you're eventually going to lose because those other points of view will be a bigger view of the truth and you'll lose money. And that's why and that by the way, that's why picking stocks is ultimately a

SPEAKER_162: losers game, unless you have some unique ability and inside for most people historically, and in an upmarket, right, you need to

SPEAKER_204: have an edge and the public markets are hard to say that there's some competency. Yeah, there's some unique competency

David Friedberg: that you need. I mean, if we double click on what you just said, as the things that would be reasons to embed on Rivian. Number one, they have 48,000 orders of pickup trucks.

SPEAKER_206: Against the f 150, which is now electric from Ford and a million.

SPEAKER_167: I don't know why I don't know why you're arguing this, right? Like you're just making a point that we don't have someone on the on the on the panel right now. But someone else could come in and argue.

SPEAKER_43: Okay, so much. And I would just say, this is the part of the conversation. To be honest, Jason, to give you feedback, I don't like because Rivian it just in defense of Rivian for a second. What I have heard is that it's a it's a well engineered car or truck rather. They've done a very smart path to market, which is essentially to, you know, build these delivery trucks for Amazon that allowed them to even frankly, you know, be default alive. Sure. Versus, you know, to use the Paul Graham term instead of default dead. I think the point that's more important here is that it doesn't affect you. So let Rivian do well, you know, and this is part of the cycle, we shouldn't have an opinion publicly. No, no, no, I'm just saying this is the part of the cycle that I don't understand where people legitimately have these zero some points of view about companies. And this is where I think Freeburg is more right than anybody else, which is there are the market is the sum of all

SPEAKER_211: these collective points of view. Sure. And I think I think it's fine to have

SPEAKER_43: one. I think it's a little superficial, your point of view, because it's not really how so you know, sitting on top of a model or anything else. And I think it's the same kind of superficiality that the Tesla Q guys had about Tesla for many years as well. It takes a long time as somebody that does this every day. And I just want to point this out, it takes an enormous amount of time, an

SPEAKER_210: enormous amount of work to be 55% right in 350 companies. I meet with no in the

David Friedberg: public markets, Jason, it's different. My companies are going public now. So I take exception to what you're saying. I know a fraud when I see it. I've seen them before. That's a really big statement. That's not a fraud. No, but the

SPEAKER_206: distance between the valuation and reality is in the 50 to $100 billion range.

SPEAKER_43: That's not in control of reviews. That's not in their control. Okay, that's in a bunch of external market participants control. So you can't pin that on

SPEAKER_88: them. My point is pin it on is at the market right now seems dysfunctional.

SPEAKER_43: It's not properly measured. But throwing shade that you then you should throw shade at Tiro fidelity, all these people that are bidding up your companies, by the way, because they are the ones that are taking Rivian 220 billion. It's not

SPEAKER_222: Rivian's fault. And Jason, what's really going on in the market? It was

SPEAKER_162: public speculators. No, what's really going on is not that you can't sell $16 billion of in an IPO to speculators. This is a much lower price. These are institutionally placed trade orders. But regardless, the market is clearly right

SPEAKER_165: now in productive assets, businesses, the market is looking at a time horizon that has never looked at before, which is making bets that are at 10, 15, 20 years in the future. And that's because of the condition that we're in right now from a monetary policy point of view, interest rates are so low, there's nowhere to get yield in other assets. So you have to look further and further out to find value.

SPEAKER_162: I accept the market, the market is betting is making 10 year bets, which is like a VC type more than a 10 year bet.

SPEAKER_207: Yeah, and Jason, sorry, I can I just can I just finish my last point? Because

SPEAKER_105: you before you interrupt me. My issue, Jason is, I think you are an exceptional angel investor, but just the same way you derided a bunch of late stage guys,

SPEAKER_43: remember last night at poker, when we were talking about late stage folks, entering into the angel market, and the series A, you were extremely dismissive because you know, what the job is to be done to do that job well, and they have a different skill set. Similarly, what I would just offer for you to think about is the people that really underwrite public market stocks, well, do things and have a skill set that is extremely specific, and it is well trained as well. And I think

SPEAKER_229: that. Okay, no, I accept that. I'll defend me. Let me jump into Jake.

SPEAKER_231: Since you want to defend me. And that's the people are in shock right now.

SPEAKER_234: So get yourself back in the game. The sky is purple. The sky is purple. The moon is set.

SPEAKER_92: Hell is freezing over right now.

SPEAKER_239: Hell is freezing over.

SPEAKER_92: Okay. So here's where I think Jake, I don't know anything about this review and company. But where I think Jake, I was right is we've seen over and over

David Sacks: again, that when a company gets when a startup gets a billion dollar plus valuation, without a product, invariably, it's ends up somewhere between a disappointment and outright fraud,

SPEAKER_77: whether you know, it was Theranos or magic leap or Quibi or whatever. I'm not saying they're all frauds. I mean, I think just Theranos frauds, whatever. So I think it's reasonable for any, let's say seed or early venture investor to develop the heuristic, that I'm not going to invest in anything with a billion dollar with basic unicorn valuation, without seeing the product first, because we've learned, we've got our hands burnt so many times from these overhyped companies. And here's where I agree, if I can't see and use the product,

SPEAKER_98: I'm not investing, I'll invest in a seed stage, but I will not invest in a unicorn stage. No way.

SPEAKER_43: I agree with that. But what I'm saying is when a company is going public like that,

SPEAKER_52: there is demonstrable proof of concept there. Okay, the only market in which that's not true is in biotechnology.

SPEAKER_169: Well, I would say for Fisker and Nicola, two related companies, those ones seem very, very shaky.

SPEAKER_43: You can debate about the scalability of these things. And you can debate that people didn't do the diligence, but they had to at least put a proof of concept out there for you to judge. If people don't do the work, I agree with you, like if you're rolling down a hill, sure. Yeah, outright fraud. No, but my point is, if you were there, and you did your work, you would have seen what you needed to see. What I have heard from people who were investors in both Lucid and Rivian, is that they have sat in the cars, they've driven the cars, they've spent time with them, they've seen the factories. And it's very much real. Now what they're debating is ramp and velocity and scale. I don't know, I don't have a position in either. Neither do I. I have the bigger macro point of view, which is important to me, which is, it's just because these things are in the public markets, I think people think it's easy to

SPEAKER_52: judge. And I think actually modeling them and making good decisions is just as hard as it is for private companies.

David Friedberg: Okay, we need to roll this clip because there is somebody who is giving exceptional advice on CNBC. Let's roll the clip.

SPEAKER_249: Yeah, so well, up starts up about 25% just in four days since we since we bought, we bought it on about four days ago. So that's actually made a nice little move in the short term, probably a little extended right now. But longer term, that that's a that's a good looking name. Very powerful, very strong earnings. These stocks are they do? What do

SPEAKER_255: they do? Excuse me? What does upstart do? What kind of company is it? Yeah, you're breaking

SPEAKER_257: up. Oh, brutal. Who is this guy? Who is he? I have no idea. Jake, how is that? Is that

SPEAKER_152: like your uncle or something? Who is that guy? Listen, yeah, I mean, just to the point,

SPEAKER_267: CNBC? Well, you know, the guy's been on many times. But doesn't this prove what we were saying,

SPEAKER_43: which is that you've got to do your own principal work here. That that is why we wanted to

SPEAKER_162: play. Here's a talking head who's probably getting paid for selling some books and giving advice. Who knows nothing about what he's telling you? You can join his membership club for 1000 a month. I'm sure he's publishing lots of papers that show that he's a highly successful, profitable investor. And look how smart he is. He doesn't even know the company just promoted on CNBC. It's incredible.

SPEAKER_74: On a mechanical basis here, Chamath, you and I've been on CNBC many times. In that moment,

SPEAKER_277: what is going on? What do you think is going on in the host's mind? And the the producer

SPEAKER_169: who has to dump this call? Was there watching this? Let's move on. I just the breakdown when

SPEAKER_283: he says, I'm sorry. I have no idea. What do they do? I think the point's been made. I think the point's been made. Oh, my Lord. Well, everybody should do their own work. Yeah, do. Let's keep work.

SPEAKER_287: Zach, you look like you want to say something.

SPEAKER_29: I mean, I just shows the agenda. Yeah, look, I mean, there is a massive agenda in corporate

David Sacks: journalism. There's an agenda by the people on these shows to promote positions. There's an agenda by the reporters themselves, and on and on and on it goes. So to Chamath's point, if you just take value, you're and you don't do your own work, then you're buying into someone else's agenda.

SPEAKER_74: Trust yourself. Okay. One thing that we are trying to all understand is inflation. The CPI has gone up 6.2% in October, highest jump in 31 years since 1990. According to the Wall Street Journal of fifth largest straight month, fifth straight month of inflation above 5%. You know, somebody tweeted out, we'll pull it up here. Denver Bitcoin, put out a year over year commodity chart, get throw up on the screen. And then I think, Friedberg, you shared in the chat, the average weekly retail prices around fertilizer. What are our thoughts on the nature of inflation and how that affects our investment? I think it's persistent. And the reason I think it's

SPEAKER_124: persistent is that there's a the all of these things are intertwined. And so do you know, if you want to just bear with me for a second, like when when this, let's just go to the the entry level

SPEAKER_43: economic job, right? So you're a barista at Starbucks, or you work at McDonald's, and you're making 17 to $20 an hour. What that does is it shifts labor. And eventually, there are other people that are entering the workforce or, you know, may shift jobs. And essentially, it just causes this leaky bucket effect where everybody else has to then accommodate itself. So you know, you have a guy like, you know, you have a company like Amazon, which is now going to pay 25 or $30 to keep folks, right? Because otherwise, they may say, Oh, you know, if I make 15 or $16 an hour, I'd rather work at McDonald's, it's simply college, it's not backbreaking work, blah, blah, blah. So then they start to increase the amount that they pay, they increase their benefits and the like, didn't I saw this thing this week, there's a crazy thing that's happening, though, which is it's now pulling people from non traditional job classes into those jobs, there are teachers that are leaving teaching to go work at an Amazon warehouse, there are firefighters that are quitting being a firefighter to go work at an Amazon warehouse, because you make the same or more, plus you have all of these other benefits, and the job is structurally a lot easier. And so people are making different optimizations. And to that point, I think we talked about this and Nick, you can put it in the group chat. In Reddit, as an example, there is more engagement in the sub Reddit around having a simple work life than there is now in Wall Street bets, right? So there's been a structural cultural change where people need to get paid more to do the same amount of work. And then at the same time, you have all of the all of the supply side getting more expensive. Fertilizer makes corn more expensive, lumber makes house prices more expensive chip prices makes the iPhone and cars more expensive or completely backlogged. You know, yesterday at poker, Sonny was showing us he bought a Tesla. And the delivery period is October of 2022. Yeah, it's frickin crazy. So I think that it's a it's this is the

SPEAKER_299: beginning of a persistence. I think those are all like really valid points. The thing I'm seeing now is I

SPEAKER_74: think we've moved into what I'll call a contagion phase of inflation, which is people are hearing about inflation, they're seeing it in some places, my guests went up a little bit, my milk went up a

David Friedberg: little bit, whatever. And they're saying, Well, I guess if everybody's raising prices, I need to raise the prices as well of whatever I provide in the world. So I can just keep up with everybody else. And they're not looking at their inputs necessarily and saying I need to charge more or that's the best business decision. They're just saying, everything's going up around me. And so they raise prices. I've literally have this happened three or four times. And I went to buy a car. And they

SPEAKER_74: wanted 15k over sticker. And I didn't buy it based on principle. But I'm sitting here going like,

SPEAKER_140: maybe I'm an idiot. Maybe I should just pay the 15k over sticker. What are your thoughts sacks on

SPEAKER_92: inflation? And the contagion? My thoughts are I told you guys like six months ago about this? Yeah. Can we just replay what I said on episode 32? It's got some researchers in the background

SPEAKER_302: giving written down what you said on our episode? No, this guy's in the fucking debate club,

SPEAKER_304: Stanford debate club. Some of us when we make predictions take them seriously. So you know,

SPEAKER_306: was that a dig at Professor ice? I'll give you guys a link to a prediction that was made.

SPEAKER_307: Here's I mean, I just want to replay the 20 seconds. Here we go. The two Davids dueling

SPEAKER_74: again, just like in the group chat. Here's Friedberg. January 1 2021. If you don't think inflation is already here, you missed what happened to the stock market companies aren't performing better. We're just inflating everything financial assets first, everything else will follow.

SPEAKER_313: That was a good one. So just make your point. Just make your point.

SPEAKER_315: Just add the clip. I'm beginning to wonder if Biden's going to be a Jimmy Carter here because frankly, all he had to do was leave things well enough alone. COVID was winding down. We had a vaccine. All they had to do was distribute it to as many people as possible and COVID let the recovery take shape. And instead they pushed this insane $10 trillion agenda is going to backfire massively. Look, if the economy turns, we were set for a post COVID boom. And right now that is all at risk because Jamal, like you're saying, they're keeping the economy closed or parts of it way too long.

SPEAKER_318: They then overcompensate for that by printing a ton of money. And then they overcompensate for that

SPEAKER_207: by raising taxes too much. Just to build on that. So that second step of they're overcompensating

SPEAKER_43: their inability to open with money is so true. Because then what happens is your labor force stays impaired because people make enough money by not working.

SPEAKER_238: It was true. And I said it may. It's even more true now. He said it was, there was inflation. Okay. So there's inflation. Okay. So now great. Good job.

SPEAKER_322: Somebody made a prediction. It was proven true.

SPEAKER_171: Yeah. I made one in January that said the same thing. Now look, you can do three things to, you can do three things to curb inflation, raise rates, right? When you raise interest rates,

SPEAKER_165: you slow spending, prices come down, inflation slows. But the issue when you raise rates is obviously you see things like job loss and economic growth declines, and it can very quickly spiral the other way. This is the big challenge of Fed tapering. The other option, as we've seen a significant attempt at lately is to raise revenue, right? So increase tax rates, tax a broader swath of people at a higher rate or a broader swath of business at a higher rate. So it's very likely that, you know, tax revenue could kind of present itself again, as a driver if inflation continues to spiral up. And the third, which is the least likely is cut spending, right? The federal government spending the way it does right now makes a very inefficient way of kind of putting capital into the system and inflating. We've seen historically that anything the federal government spends money on like healthcare and education, the costs very quickly spiral out of control, super inefficient, why not just give that money to the free market to make decisions on how to spend it, it would be more efficient, etc. And the market would effectively find balance where buyers and sellers are equivalent, as opposed to having the federal government driving the price of everything up. The fourth option that people don't talk about, which I think may end up becoming an important option, not kind of oblique option, but more kind of backdrop is to start a war. And you know, when you start a dog, wag the dog. Yeah, when you start a war, you stimulate the economy without needing to pump additional capital in so you can increase growth and avoid the risk of stagflation. And you can source resources that otherwise wouldn't be kind of flowing in the trade, or basically in a land grab type situation. But it doesn't necessarily mean that policymakers would say, hey, let's go start a war to decrease inflation, Taiwan. But the premise that conflict can improve the economy is a important backdrop that starts to play into policy decisions that might get made over the next couple of months and quarters. And that's really important, whether or not the posturing is one of partnership, and reducing the tension with foreign nations, or one of increasing the tension, it's more likely that we would want to increase the tension when we're in an inflationary environment. So that's quite a conspiracy. There's what do you think sex? Okay, well, we got to go back

David Sacks: first principles on this thing. We're not going to start a war to tame inflation. Okay, but let me just

SPEAKER_77: explain what inflation is, because I'm not sure people like fully understand like how this works. Inflation is very simple. It's too much money chasing too few goods. Okay. And we have both sides of the equation going on right now. On the supply side, on the good side, we've got shortages, we've got the ports backed up, we've got paying people not to work, we still have the $2 trillion of COVID relief passed earlier this year, which was responding to a problem that was largely winding down. So we have these labor short, we have people dropping out of the workforce and record numbers in the number that just came out showed in more people quitting their jobs than ever before. So we have a shortage in terms of the production of goods and services that people want. At the same time, we have this monetary and fiscal expansion coming out of Washington, you've got, you know, again, they did the 1.9 trillion of COVID relief, they did 1.2 trillion of infrastructure, Biden's still talking about another 2 trillion of social welfare, you have the Fed still printing money with QE. So you've got this massive expansion in the amount of money. So look, too much money chasing too few goods creates this problem. And it was very predictable. And so what I said back in May, this is what I was warning about. And it goes back to the Druckenmiller clip that we that we were talking about all the way back in May, he said the same thing that we had a reckless fiscal and monetary expansionary policy coming out of Washington, at a time we didn't need it. Because if you looked at like retail spending, back in May, it was back to above trend. So you know, in other words, like there was no demand problem. The economy was back. And they've just been pumping and pumping out of Washington.

SPEAKER_118: We made a we had a we had good intent. We wanted to make people not suffer. We wanted to get the economy on tap. We may have just made a bigger bet than we needed to overdid it. We overdid it

SPEAKER_334: clearly a little bit. But look, who wants to be the politician, quite frankly? Yeah, it's not

SPEAKER_77: going to get you who ends the who ends the eviction moratorium, right? The gravy train? Yeah, nobody well, nobody wants to be the politician who says, Okay, now you suddenly have to pay your rent. But obviously, people have to pay their rent. And we're taking away your bonus unemployment. I

SPEAKER_74: mean, people have to go back to work at some point, when there's 10 million jobs open, just as a I've been watching the Taiwan situation like a hawk. And I don't know if you saw this this week to go off on another tangent, but the US is testing Israelis, Iron Dome and Guam as a defense against

SPEAKER_54: Chinese cruise missiles. Obviously, for possible deployment in Taiwan. And I don't know if you're watching and it's cancer in the NBA. But he has been going on CNN and stuff like that now talking about

SPEAKER_165: China. Pretty amazing. I predict escalating global conflict. That'll be my prediction to mark the q4.

David Sacks: Well, I think that's, I think actually, that's a pretty valid prediction. But I just think it's a

SPEAKER_162: little bit separate than inflation. Like I said, it's not an explicit decision. But I do think that in the backdrop of an inflationary environment where you have something that can temper the condition at home,

SPEAKER_165: that at the same time, you know, might sell politically. But we don't need that it's not

SPEAKER_77: going to solve anything politically. Okay, I mean, World War Two, you know, famously got us out of the Great Depression, because that did stimulate demand. But in the situation we're in today, we have too much demand, we have retail is trending way above curve, we have as a supply shortage, and devoting resources, taking them away from the productive economy, to go to war would only exacerbate the problem and make it even worse. What we need right now actually is for Washington to back off to stop pumping demand with this with you know, now they're still talking about this machine, so the money printing,

SPEAKER_345: that's what we need to stop these disincentives for production and work.

SPEAKER_77: So you have me I mean, Manchin was exactly right about this. Okay, do you remember when Manchin, when he was resisting this $2 trillion social welfare bill? I mean, the things he said are already coming true. I mean, he said this months ago, he said that we should take a strategic pause, because he said this is a quote, by all accounts, the threat posed by record inflation to the American people is not transitory, and is instead getting worse. From the grocery store to the gas pump, Americans know that the inflation tax is real. And DC can no longer ignore the economic pain Americans feel every day. That's what he was saying this past summer, several months ago, and they rolled right over him.

SPEAKER_195: The psychology of this could be could be self fulfilling as well. Because what's going to

SPEAKER_74: happen is, you're going to have everybody raise prices because it's now become an escalation, you know, your hairdresser, your, you know, whatever, you know, services you're using, whatever product you're buying, whatever restaurant you're going to is going to put $2 on every appetizer and five bucks on every entree, everything is just going to keep going up. And then what happens is, people who are in the middle class, or, you know, who are consumers of products in a large way will say, you know what, I'm going to put off buying a car, then we're going to be driving all

David Friedberg: this supply up. And then people are going to say, you know what, fuck it, I'll just drive this one for two

SPEAKER_349: more years, right, that's going to cause stagnation. And it's called inflation. It's what we had in the 1970s.

SPEAKER_77: And you're right, it's called an inflationary spiral, which is the future expectations of increasing prices means that people start increasing them now. And that feeds on itself. Yeah. And that's what we had in the late 1970s. And the thing that broke that was Paul Volcker jacking up interest rates, it was very painful, it caused a very severe recession in the early 1980s. But then the economy came roaring out of that by 83, it got Reagan elected in 84. And you had 30 straight years of declining interest rates. And that led to a stock market boom. So the problem we have now, okay, here's the problem we have is there's going to be no Paul Volcker why we can't afford to jack up rates, because the federal government's debt is so much bigger than it used to be not on a fixed rate, we're on a variable rate, all the debt we take the average maturity of government debt right now is five years. Okay, so that I mean, that means the whole debt rolls over within five years. So if they jack up interest rates, we have almost 30 trillion of US federal debt right now. So every 1% that they increase interest rates, that means another 300 billion a year of debt service payments. Yeah, exactly. So there's going to be enormous pressure on the Fed not to raise rates, you already are hearing Biden rattling the saber saying that Powell may not be his choice for a second term, by the way, Powell is very dovish, he's basically saying, we can't raise rates right now because of this and that. So and the Biden administration that nobody in Washington ever wants rates to go up, right, they want to keep these low rates forever. This is the problem is look at the end of the day, I don't know what the inflation picture is going to look like next year. But what concerns me is, we don't have effective tools to fight it anymore. Because we've given up our ability to raise rates because it would it would increase the cost of the debt so much. And I mean, so we just one article just to share with you guys is this again, my one of my favorite sources of economic information is the the Fred blog, which is from the St. Louis Fed, okay, so we wrote a blog talking about two tails of federal debt, okay. And the article is about here's why there's so much disagreement on whether the federal government debt is too high. So the first chart shows debt to GDP. This was always the way of looking at government debt was simply looking at the ratio of debt to GDP. It's now something like 125% in peacetime, I don't think we've had a higher peacetime ratio, that would tell you things were out of control. But for the last decade, while it's been going on, you had this whole school of thought, the MMT, modern monetary theory, all these economists and experts, and politicians in the media were eager to buy in, because they want to spend the money. Okay, and what they said is no, it's not debt to GDP, you should look at debt service to GDP. This is the second chart on that blog. And so debt service to GDP was staying constant or even going down as the debt to GDP was going up. Why? Because interest rates were so low. The problem is, what was so foolish about this point of view is, it is assumed that interest rates were going to last forever. Well, if that was your point of view, why didn't you do what Trump actually suggested several years ago when he suggested having 100 year T-bills? They should have locked in much, much longer duration, maturities on the federal debt. And instead, and Yellen rejected this, okay. And so you've got a five year average duration,

SPEAKER_356: which means that if interest rates go back up, the debt service cost is going to explode.

SPEAKER_358: Yeah.

SPEAKER_22: In 1980, we changed the goalposts for CPI. So even as a measurement to know what we look at, and I think Jack Dorsey tweeted this out. So Nick, you may be able to find this tweet, but you know, we changed the measurement of how CPI measures. And so if you go back to the original

SPEAKER_66: measurement, uh, it looks like inflation and CPI is, uh, much more pernicious than we would otherwise think if we just look at the, the new CPI that we, that we started to look at as of 1980. So, um,

SPEAKER_361: that's another sort of like point. We did this, we did the same thing with. I just go back to what I said early on. People who had given up.

SPEAKER_43: The two smartest people that we both know are net sellers.

SPEAKER_362: Well, they're selling some. Yeah. I mean, they're not selling anything.

SPEAKER_363: I'm just saying the two smartest people we know.

SPEAKER_364: I mean, we don't want to get financial advice here, but should everybody be moving to cash? No. Where do you put your money? I'm totally confused.

SPEAKER_152: This is, I think the admission just by productive assets, great businesses that have durability and let them ride for 20 years.

SPEAKER_74: I like your answer. The fact is we're all confounded as to what to do at this moment in time. We're all trying to figure this out and we do this for a living.

SPEAKER_165: But then you're trading the market like everyone else all the time. Like, you know, why trade the market when you can just buy great businesses, own stakes in them and let it rest. No, I'm just talking holistically where to put money.

SPEAKER_52: I mean, my practical issues that I don't have infinite money. And so in order to put my money into productive assets, I have to sell other productive assets.

SPEAKER_372: Well, if you've got other productive assets, leave them in. Why sell?

SPEAKER_22: Well, then it's like, then I'm basically, you know, doubling down on a worldview that may be old and dated, right? So if I'm long a bunch of software companies, and I really want to do something in climate science or biotech, what am I supposed to do?

SPEAKER_374: Don't try and time the market shift your assets, right? Why do you care what the process?

SPEAKER_22: I'm not trying to time the market. I'm just saying if my worldview shifts to really want to double down on climate science or alternative finance or biotech, I have to raise capital to do that.

SPEAKER_376: You have to raise capital to what you're saying.

SPEAKER_22: Right. But for me, I'm not raising it from other people. I'm raising it for myself.

SPEAKER_54: So it seems like to me, the best place to be right now is in the company formation space. Because when you create a company, like Friedberg does every three months, there is so much value being created at that moment in time, and so much further capital getting poured into it,

SPEAKER_340: that if you are the originator of the company, and you get some big slice of the cap table for doing that, which is completely valid, you originated the company,

SPEAKER_54: whether it's Munich or call in or whatever it is, man, that is a great moment of creation of wealth creation. And when you're the person putting the money in at the billion dollar valuation for the company, whatever, call in, I'm sorry, clubhouse went from 100 million to 4 billion with no revenue. I don't know what's happening in the world, but

SPEAKER_74: pretty crazy. Do you want to go on to, um,

SPEAKER_23: Xi Jinping and his, he's gonna be speaking with Biden on Monday. It's done, he got it done before his video, his zoom with Biden.

SPEAKER_362: Oh yeah, so they're doing that. He's now the supreme leader. Xi Jinping hasn't left China in 18 months. He's now the supreme leader. Explain what this means, Chamath, from the story.

SPEAKER_43: Um, I mean, I think the basic, the basic takeaway is that they've been working inside the body politic inside of China to basically reflect Xi on the same level as Mao and, um, and effectively what this means is that it, it allows him to remain, um, the leader of China indefinitely. And so, um, there is no transition of power. Typically what had happened was these, there were these 10 year windows and, you know, you, you, you go, uh, Jiang Zemin, Hu Jintao, you know, 10 year cycles, and then they pass the baton.

SPEAKER_66: But it now looks like we'll be living with Xi Jinping until, um, until, you know, he, he joins the afterworld. So, uh, he's a ruler for life of China, basically crazy.

SPEAKER_382: I don't know. That's exactly right.

SPEAKER_66: What an incredible feat of political maneuvering without judging it, just to say

SPEAKER_43: how, what a complicated Byzantine political infrastructure he must have had to navigate. I don't know how he played the three dimensional chess with all these people, the slow, systematic dismantling of the old guard, placing all of his people in, then slowly moving towards this, this kind of recognition. You know what?

SPEAKER_386: He sounds a little bit admiring Chamath.

SPEAKER_277: Yeah, no, the dictator got his name for a reason. Somewhere Donald Trump and Steve Bannon are like, what did we do wrong? We were so close January 6th. We almost, if Pence would have just played ball sacks, you'd still be in power, huh?

SPEAKER_388: Your guys dropped the ball. And we wouldn't have inflationary. Just think if Trump was leader for life.

David Sacks: You know, Jason, given how accurate my predictions have been, you should have a little bit more respect for my, uh, political positions.

SPEAKER_52: What do you guys think happens now that G basically is ruler for life?

SPEAKER_393: You know, he, I think the Chinese term for it is historic figure, which is the parlance of saying, you know, you're, you're basically, uh,

David Friedberg: you're a made man. You're basically, you can't get whacked. Nobody can touch you. You're good for life. The end.

SPEAKER_169: Nobody can question you.

SPEAKER_105: I mean, can you imagine Mao Zedong down, you know, Deng Xiaoping and now Xi Jinping incredible. Like he is at that level.

David Friedberg: Well, it means if you start a war and a, and a serious military conflict,

SPEAKER_71: that nobody can question you, right? You're the supreme leader. So it's sort of like Putin and MBS. Like MBS can go kill a journalist and he's got nobody to answer to. It means he has nobody to answer to.

SPEAKER_298: Mao Zedong initiated the revolution and, you know,

SPEAKER_43: Deng Xiaoping was really the architect of free markets that has made China. The economic powerhouse that it is today. Their internal reflection of Xi Jinping is on the same scale of that. Now. I mean, I, I can't claim to know.

SPEAKER_37: What is his vision for the future of China?

SPEAKER_38: Yeah. What is the accomplishment that's going to really put him in that league? And, and you'd have to say it's the annexation of Taiwan. I mean, that's the thing that he must be looking to do before, you know, his time.

SPEAKER_404: To reunify China.

David Sacks: That's the thing that could put him in that league. And so that, that is the trip wire. That to Freeberg's point that could lead to, you know, a conflict.

SPEAKER_105: I, I think they, you know, I hate to say that Freeberg is wrong.

SPEAKER_43: Cause I, I don't think in this case I can,

SPEAKER_22: I do think that there is some left tail risk. For like a crazy wag the dog moment in Taiwan. Here would be really scary. Really scary.

SPEAKER_54: Right now. If I was looking at the sizes of the navies, people don't know this. Japan actually has a very large defensive Navy. The UK and the United States obviously have very large ones. China's is large, but not on a tonnage basis. They have a lot of ships. But together, I don't know if you saw the military exercises going on, but. New Zealand, Australia, the United States, UK and Japan.

SPEAKER_71: Uh, we're basically, I think South Korea would, we're basically driving their ships around the South China sea. This is going to be. I, yeah.

SPEAKER_77: So, you know, I did, I, I did a really interesting interview with, um, the historian and commentator, Neil Ferguson. Yeah.

David Sacks: Uh, who is also a pretty avid China watcher. And, um, I did an interview with him actually on, on my app.

SPEAKER_77: Uh, you, you don't want me to say that, but anyway, so he, he had a really great line, which is he said that the, that the issue of Taiwan, it's basically like the issue of Cuba and Berlin and the Persian Gulf all rolled into one. So it's like Cuba and the Cuban missile crisis, because it's right there off the shore of China. It's like Berlin, you know, because that was basically the dividing line between freedom and, you know, totalitarianism, you know, where, where the, the Berlin wall got built. And it's like the Persian Gulf because the new oil are the semiconductors, the chips that are fabbed in Taiwan at TSMC. And so all the resources that we're dependent on for the new economy are all right there. So super smart framing. Yeah, it's, I thought it was a recover line.

SPEAKER_43: The thing we have to remember about Xi is that his father was, um, was a commander, uh, for Mao and was in a vice premier. And so, you know, his historical, he is the original princeling, right? Remember, you know, there, there's this context of these Chinese princelings. But he is, he is one of these originalists. And so his motivation will be, uh, it seems at least to bring China back into that spectrum of power, which is really about a consolidated country, um, and a single nation state.

SPEAKER_22: And that has to include Taiwan. It can't, it can't not. So to your point, David, it's almost more motivation for him to go off on some crazy adventure and try to reclaim it.

SPEAKER_106: That's gonna be impressive.

SPEAKER_340: It's, it's really interesting to look at the tonnage of ships and the number of ships.

SPEAKER_54: The United States has over 6,000 tons of ships, 949, according to global security.org. China has to only 2000 tons and 1000 ships have a lot of smaller ships. And then Russia, UK, India, Japan, France, Indonesia, Turkey, Germany, Italy. So warships, Jason, or?

SPEAKER_74: Yeah, this is their, their Navy warships. Um, and so they're fighting, uh, but Japan has a very large one. I wasn't aware of this because I thought they were not doing military buildup, but they have

SPEAKER_54: what's called a defensive Navy, which can do offensive stuff.

SPEAKER_74: So this is, um, I think this is really problematic.

SPEAKER_52: How many of these ships are smaller than Sax's yacht that he rented? This is.

SPEAKER_419: Yeah. Sax's tonnage would kind of put the United States over the top. I think in this.

SPEAKER_421: The gross tonnage of Sax's yacht.

SPEAKER_419: Bezos is going to be donating his new yacht.

Chamath Palihapitiya: For sure. No, for sure. It's bigger than Indonesia. I see Indonesia on this list. Turkey. I mean, how big.

SPEAKER_143: In my, in my defense, it was a starter yacht.

SPEAKER_428: In my indefensible. Next, next one. Next one will be bigger.

SPEAKER_33: Yeah. Solana is going to make sure of that, right? Yeah. You can buy yachts with Solana. All right.

SPEAKER_74: I think we covered enough, uh, GE and Toshiba can't run their businesses. So they're each separating into three separate. Oh, let's talk about that.

SPEAKER_305: That's interesting actually. And Johnson and Johnson. Yeah, we should talk about it today.

SPEAKER_24: All right. So on Tuesday, GE announced they were splitting into three separate companies, aviation, healthcare, and energy. Toshiba reported a similar plan.

SPEAKER_74: Johnson and Johnson today. Johnson and Johnson was today. This is, um, in direct, uh, conflict with the consolidation and the creation of conglomerates.

SPEAKER_162: And I think this is an important point. Jake out, um, you know, in the eighties and nineties, it was cool to create conglomerates,

SPEAKER_165: meaning you would kind of stick businesses together that were RJR somewhat disparate, because you could financially engineer a way to do it. That would juice shareholder returns, right? You could borrow money, add lots of scale, the cost of debt goes down, you could increase your debt load, et cetera. Um, and you know, the, the challenge is like when you're scaling a business, you either need to grow your revenue organically, or you need to acquire. And when you're acquiring, you're either acquiring horizontally, or you're acquiring vertically, meaning you're kind of integrating your supply chain, or you're integrating, um, or you're adding ancillary businesses that you can cross sell. So you're either reducing your costs or increasing your cross selling ability. So there's some inherent synergy in the acquisition. The problem with conglomerates is there is very little synergy. Meaning like when you acquire a new business, like an aviation business, it doesn't create synergy for your healthcare business. And, um, you know, there was always a rationalization that these managers of these big conglomerates had, which was like, Oh, well, we could do this. And we could do that. At the end of the day, it was financial engineering, where they simply kind of use debt to reduce, um, uh, you know, the cost of capital and increase the, uh, the shareholder returns. And now everyone's kind of waking up to the fact that you're actually decreasing value, because an investor that wants to own an aviation company doesn't also want to own a healthcare company, so the investor doesn't buy those shares. And the investor that wants to own the healthcare company is one on the aviation company, so they don't buy those shares. So the way to increase shareholder value is to actually split those businesses up. And then the investors that one on the aviation business will pay more than the investors that want to own. The healthcare business will pay more. And the overall value of those two businesses goes up by having them be separate. and that's what the market's kind of waking up to and this is kind of a trend that's been going on for years now you know going back to kind of 2013-14 um where the market started to kind of rationalize some of these silly conglomerate business ideas and break them apart into more

SPEAKER_374: kind of you know targeted businesses that can actually spin out or or yeah or break off break

SPEAKER_165: ups yeah that can basically attract shareholders to bid on each one of those businesses individually and drive value up you know we saw one business i was close to that i saw this with was dow dupont where they you know dow merged with dupont and then they split into several businesses that each were focused on a particular vertical and it made a lot of sense to drive value for uh for for the for the overall shareholders so at the end of the day you know these conglomerates are about kind of driving economic outcomes and the only folks that you see doing this well are folks like warren buffett where the job is really about capital allocation where you know you can allocate capital to the best business and that business on its own will grow organically versus taking a bunch of crappy low growth no growth businesses levering them up to kind of juice the returns on each other and we're seeing this slow unwinding happening so i think it'll it'll continue to and you could probably go and pick a bunch of these conglomerates and you'll see the activist shareholders doing this they'll they'll buy a bunch of shares they'll instigate and say hey you guys should break up the share price will go up by 20 30 percent so if you want a stock tip of the day you know go find the

SPEAKER_71: next set of conglomerates that are going to get attacked and broken up it's interesting chamath and you

SPEAKER_54: know with public markets dell is spinning out uh vmware and that's going to create a massive amount of cash and shareholder value they're doing a huge dividend so i guess my question to you chamath is

SPEAKER_74: when do we start to see this hit not from a point of weakness but from companies that are strong and see this as hey this is a way to just unlock shareholder value will we see an amazon spin at aws uh a youtube or an instagram come out of their parent companies i think it's very rare that

SPEAKER_22: these things happen on the offensive foot i think it's typically a defensive maneuver that's driven by

SPEAKER_43: really poor returns over long periods of time or activist investors who want to push for value

SPEAKER_77: totally i was about to bring that up i mean do you remember how hard that ebay and remember like john donahoe was the ceo he like fought that so hard i remember getting a phone call from him

SPEAKER_98: asking if i would support them he had rounded up read off and other people support ebay and i'm like

SPEAKER_43: no i can't wait wait wait no do you remember this we were in vegas and donahoe called and we were working on a plan and then you went and walked dono through the plan do you remember this thing we

SPEAKER_105: were no what happened we were in vegas we were gonna try to do a spin out of i can't i can't no no donahoe either called you or called me and i said you should talk to sax okay we sketched out a plan for what paypal should do i remember that and oh yeah yeah i do remember that and like on saturday afternoon we sketched out this plan yeah yeah so i i told john no i'm

SPEAKER_77: sorry i can't support you because i believe it should be spun out and so in the only two the only two people from the original paypal team who said that publicly were me and elon and we said that if you could get paypal out from under you know this you know this sort of ebay bureaucracy it could be a hundred billion dollar plus company the bar for acquisitions is extremely high like i think

SPEAKER_52: the the last really two acquisitions that were really done well was zucks acquisition of whatsapp and instagram but since then the bar is extremely high for these conglomerates so as an

SPEAKER_43: example paypal was rumored to be buying pinterest and you know there was such an incredible shareholder revolt that they had to put out a press release saying we have absolutely no interest in acquiring pinterest but what that all that did was just you know accelerate the bleeding because then people were saying wait a minute how strategically lost must you be totally that you would want to

SPEAKER_52: buy pinterest as and so then it then as a result the paypal stock price has gotten absolutely yeah it

SPEAKER_452: was over a billion dollar company you know it lost the entire value of pinterest basically here's the big

SPEAKER_43: issue that i think we have in american economics and company building you know we've gone through 20 or 30 years of really under investing in r d at the sake of share buybacks at the sake of you know market consolidation dividend private equity you know driven take privates and so all of this capital misallocation has really put us on the wrong foot and the pandemic basically showed that we were really ill position so a lot of these um conglomerates it doesn't make sense today because we've proven that

SPEAKER_105: the compensation schemes for ceos the incentives for executive management are way too perverted and they just create horrible outcomes a different example i saw uh in the last i think 15 or 20 years ibm's

SPEAKER_52: market cap has gone down to 113 billion in the meantime they've bought back 132 billion dollars of stock what could you imagine the kind of r d that ibm could have affected with that 132 billion and where

SPEAKER_165: they could be so we have they're not they're not good capital allocators well we have horrible capital misallocation so well look at apple i mean i don't think they know how to spend the money on r d yeah

SPEAKER_455: they're not they're not good at it they're not good at it they're better off they're better off

SPEAKER_77: taking those massive they're better off taking those massive r d budgets and putting it into m a budgets not for like a 50 billion dollar pinterest acquisition that doesn't make any sense has no synergies but on smaller acquisitions of teams that have built really interesting technology ibm could have

SPEAKER_460: bought a lot of different things they don't seem to innovate or operate those guys don't seem to know how

SPEAKER_43: to do anything so like my point is now we're in this cycle where these conglomerates will get ripped apart so that a brighter fresher and probably younger group of executive management can take a different the spin on these companies and actually do some so for example like the j and j spin out is really exciting because you take med devices in pharma and you separate it from a really struggling complicated consumer goods you know package business you know the shampoo the q-tips the listerine get all that off balance sheet now you can actually you know make drugs and med devices and that's a really

SPEAKER_52: interesting business that the right ceo can really do a lot of interesting things with i heard an

David Sacks: interview with us then ceo of ge i think colp who was putting forward this plan the line that i remember that kind of resonated with me he said the benefits of focus are immediate the benefits of synergy is are hypothetical and i think that's really the key point here and that's what's going to fuel all this sort of deconglomeration is that the benefits of focus to a company are so huge that you know that

SPEAKER_77: but but the reason why it doesn't happen is because of this instinct that all these managers have for empire building right so when times are good they can keep building their empires and then something badass to happen to force them to focus and by the way the motivation they're not they're not owners

SPEAKER_162: they're typically not founders and so what you end up seeing is their comp goes up linearly with market cap so the bigger exactly right and this is just just to close the thought out on that whole ebay paypal

SPEAKER_77: thing i mean it was so obvious that ebay should spin out paypal but the management the management resisted it and it took an activist shareholder i think icon came in there was icon yeah it was icon

SPEAKER_473: who came in there is in the lobby you're well but but icon shouldn't have to come in there the

SPEAKER_403: reason why there's opportunity for the managers won't do the right thing he unlocked a quarter trillion dollars of value he was incredible no i mean he's got that out for 40 or 50 billion now

SPEAKER_299: it's worth five times that amount it's a quarter trillion dollars yeah it's crazy and just to

David Friedberg: to put this all in perspective the stock buybacks that are going on right now apple did almost

SPEAKER_74: 20 billion dollars less quarter they've done 77 billion last year and you want to talk about the impact of tax policy on innovation well you've got on one hand here apple is is looking at well i'm

David Friedberg: gonna have to pay all these taxes i might as well just increase the amount on buying back and be neutral why would i want to show any kind of a profit here i'll just buy back as many shares as possible the company will eventually be private i mean it this is you got to be really careful

SPEAKER_74: with how you do this because there's no incentive for people now to put money into r d or other stuff that just buy back the stock might be the most efficient thing to do correct in terms

SPEAKER_478: of like the share if you don't know how to spend the money it's the dumbest thing to do it basically

SPEAKER_479: shows you're an idiot well it shows you got nothing better to spend the money on so maybe

SPEAKER_98: maybe maybe that's maybe buying back the stocks better than throwing it away but yeah it means

SPEAKER_24: you're out of ideas it means you're out of ideas or you or or a combination of my god this core business is throwing off so much money that we can't come up with enough ideas

SPEAKER_483: at that time i think that's no it just means you're not ambitious enough i mean what would

SPEAKER_198: you spend 20 billion on i mean zuck is having a hard time spending 10 billion on creating the metaverse a year i mean you're talking about 80 billion a year what would you put that towards what should apple

SPEAKER_43: put it towards no apple apple could even more aggressively double down to enter the car market they could have done it fair much sooner than they have they could spend 20 a year on that sure you're

SPEAKER_393: right you know easily um they could actually enter i don't know power they could um yeah i mean but

SPEAKER_98: they're but they're you know apple their their culture is to have very few products as a company they're always very proud of that it's the steve jobs focus thing i mean i think it's worked pretty well for them i know you're second guessing it the the thing that i hear you know i just don't

Chamath Palihapitiya: like buybacks because i think it comes at the sake of r d for most companies i think obviously

SPEAKER_43: choice companies are different but everybody else what you see is r d is like one or two percent of

SPEAKER_393: of of their you know yeah it's it's a shame look apple could definitely be more aggressive but i

David Sacks: wouldn't judge the tim cook era until we see what happens with glasses because this is the product that i hear is coming is going to be their you know their ar glasses and that's going to be a new

SPEAKER_77: computing platform that they open up to developers and i guess cook's been there for what a decade but i think he doesn't want to retire until this comes out and he can see this is going to be his signature product i think but i'll tell you just the other thought that just went through my head as i saw this news about ge it really was kind of the end of an era you got to remember that back in the 80s 90s i think even as late as 2000 ge was the number one company in america by market cap it was the top of the s p 500 it later subsequently got kicked out of the the dow jones but the thing that went through my head is you know when i was a kid growing up the only two business names that i even

SPEAKER_494: knew were jack welsh and then lee iacocca you know that was it that was it you had their posters on

SPEAKER_98: the wall ge and chrysler in between the two of them it was big jack welsh and iacocca and now you don't even know the name of the the ge guy i mean like i know it because i watched some

SPEAKER_77: interview and i saw him up there but i mean you can't think of a business leader today who's not in tech and and really a tech founder or somebody who's handed the ball by the tech founder so we know tim cook because steve jobs handed him the ball but otherwise it's all tech all tech founders you don't hear about any of these old like dow jones type type companies anymore it's just the the the business the business environment the the economy has changed so much since the 80s and 90s it's all

SPEAKER_165: totally dominated by tech now but sex i would argue that the disruptive business and the disruptive business leader are always the icons back in the day the chemical companies were the icons and

SPEAKER_460: everyone knew the chemical companies and the guys running them then it was the industrial companies you know then it was kind of the financial you know then it were these guys in the 80s and 90s that

SPEAKER_505: did all the lbs coca weren't founders you know but they were in different ways tell me the uh

SPEAKER_76: two companies on r d spending top two companies without looking on r d in the world

SPEAKER_54: yeah global in the world number one number two give me number one number two

SPEAKER_515: no it depends on classification but i would say saudi aramco

SPEAKER_54: you guys need to think about who was been some of the most innovative leaders uh amazon 42 billion in 2020 no but jason that's an accounting thing if you're saying in the world saudi aramco their

SPEAKER_518: exploration their emp budget is probably 200 billion dollars a year okay i i i guess maybe because

SPEAKER_118: that's not that's a is that is that a corporate entity technically it wouldn't be on the list it's a

SPEAKER_521: public company yeah so google google's got to be spending 25 billion a second with 27 billion

David Friedberg: wow way is third 22 microsoft is fourth 19. no this is all companies samsung facebook some of this is

David Sacks: just accounting categorization counting categories anyone who because the engineering budget is is

SPEAKER_98: basically what goes into r d so the more engineers you have on staff the bigger your budget doesn't

SPEAKER_171: mean you're producing anything by the way bigger industrial companies traditional companies that

SPEAKER_165: list things as r d you know most of those dollars flow out to third-party companies like enterprise software companies services businesses so it doesn't end up it gets accounted for it's quote unquote r d because they get to capitalize it but that spend is typically um not paying in-house salaries to engineers and that's the distinction between true tech companies and other companies that are quote unquote going through a digital transformation or you know have a quote unquote r d budget they're outsourcing r d and typically paying three times as much and typically getting one-tenth in the return um and i think that's the maybe a good heuristic for how you might kind of want to look

SPEAKER_52: at what differentiates a tech a true company depending on accounting saudi aramco spends 37 and a half billion to 50 billion depending on how it's about puts them at you know probably tied with

SPEAKER_339: amazon for all intents and purposes it just means i was right jason that's what i care about

SPEAKER_535: well i mean i'm wondering well you know what the reason i think that you just might they might not be listed i'm just kidding no no it isn't it's a really good insight i was reading a buzzfeed

SPEAKER_18: article and he was barrens it was barrens but anyway putting it aside i think the the issue might

SPEAKER_74: be that they're recently public right so maybe they're uh you know they've only been filing public

SPEAKER_61: for two years or something all right i think that's everything uh how's everybody doing otherwise how's everybody's personal life are people losing their mind what's people's plans um for the end of covid i'm gonna go have beer and pizza on the beach

SPEAKER_33: nicely done so i'm ready to get out of here nice yeah i mean i'm exhausted are you guys exhausted

SPEAKER_343: this has been a crazy run i don't know what day it is anymore i'm like i'm ready to wind the year down

SPEAKER_340: i am so exhausted i mean this has been the craziest pace i've ever experienced in my life the number of

David Sacks: deals going on the amount of inbound oh my god i tell you at that conference um every single so i have all these founders come up to me and pitch me what they're doing a couple of them like that sounds

SPEAKER_77: really interesting can we participate in that it's like none of the rounds are subscribed i'm like

SPEAKER_542: why did you come to me and pitch me this then how dare you what yeah so number one i tweeted i tweeted

SPEAKER_98: a new terms of service if i this is only if i'm at a conference okay if you set up an appointment in

SPEAKER_77: my office it's fine that's like an opt-in but like if you come to me to pitch me your idea at a

SPEAKER_543: conference then and i say okay i want to invest like give me an allocation like don't come to me and

SPEAKER_118: pitch me if you're not gonna give me an allocation yeah no that's not cool that's like being like oh my god i know the best restaurant in the world it's open tonight they've got the greatest steak and

SPEAKER_200: you're like okay i'll go no reservations guys tell sacks about the white truffles from yesterday

SPEAKER_224: we had dinner at tomorrow's house last night it was incredible he got these white truffles from

SPEAKER_549: alba i've had in a year i mean it was really incredible i really appreciated it it was amazing

Chamath Palihapitiya: and 2000 like it was 1996 white burgundy uh loroy and the white burgundy 2009 yeah i'm not a wine

SPEAKER_74: drinker i'm not saying that your guy your chef beat saxes from two weeks ago saxes wasn't sax's chef

SPEAKER_555: um your old chef uh i think one of his chefs he lives in a stratosphere burn that's just at a

SPEAKER_559: different he's next level are you eating my sloppy seconds what's going on over there no no i think

SPEAKER_560: i gotta beat that one i don't know what that term means what you think it means anymore but by the way

SPEAKER_152: there was a dinner conversation last night sax to your point

SPEAKER_165: chamath it's up to you to decide if you want to disclose the dinner conversation guest but um this guy said that there's a a guy that applied to y combinator that had 750 million dollars in crypto and so he's like applying to y combinator with his 750k for 150k to give up some percent of his company seven and they're like all these stories of these guys are like i will pre-fund my own series a with 15 million dollars to create this business inside of the yc machine that that was incredible there's such an incredible like unexplicable inexplicable undescribed i think in the in the mainstream media story of crypto wealth creation that's been going on and these crypto um yeah these

SPEAKER_224: crypto 100 millionaires billionaires are emerging and doing their own kind of innovation completely

SPEAKER_293: under the radar right the smartest people that we know are selling right now

SPEAKER_74: yeah and i think they changed their conversions um for the yc safe they're now getting preferred shares

David Friedberg: they used to do common and um they now i think it happens post-conversion so they want their seven percent

SPEAKER_71: fixed you know after your next round of funding is my understanding i don't know if that's but yeah so they got more aggressive but that's brutal it's you know what's happening is like the

SPEAKER_74: accelerators have to move earlier back to incubators so the idea of somebody you know grin or some of the other companies we funded coming to the accelerator with 20 000 or 50 000 in revenue in some cases they may be able to raise money without and certainly crypto companies are raising 25 million dollars they're outpacing regular companies regular startups non-crypto startups and they raise it in 10

SPEAKER_198: seconds from a bunch of eth for buying tokens they've created a whole shadow economy yeah that doesn't have to play by any of the yeah do you really need venture anymore like well if you want to obey the

SPEAKER_270: law i guess you do but in a lot of these cases like i did this um i don't know this whole new economy

SPEAKER_374: could emerge completely offline right completely off the the current the sd and gensler do want to get

SPEAKER_124: this thing tightened up they don't want people doing this 20 20 i think it was 2015 i presented amazon

SPEAKER_52: at iris zone and one of the things that i did was we calculated what bezos's investment track record was right because he basically took all his free cash flow and reinvested it in the business and you could measure what his return on uh invested capital was and it was like 42 percent and on a really big

SPEAKER_24: number on tens of billions of dollars you're saying his irr on the money amazon deployed in r d projects

SPEAKER_23: like the kindle or aws 40 42 over like a multi-decade period and double what a venture firm would do

SPEAKER_43: or top i mean he he's in a class by itself but um my takeaway in that moment was wow this is the you know smartest investor of our generation that's what i said at bezos at the time and you know bezos had a track record of selling roughly a billion dollars of amazon stock every year and this year he you know snap sold 6.6 billion which you know when we talk about the percentage

SPEAKER_339: you're selling we're talking about selling five percent ten percent so you know they're not diluting their whole positions but these are big numbers you're right i think it's a signal jake are you

SPEAKER_584: going to close this out all right everybody it's been another amazing episode episode 55 of the all in

SPEAKER_576: podcast from uh yeah whatever we're you know where people are coming from uh the all in summit will be in the spring at some point i'm going to go to miami and look at the location

SPEAKER_269: march 11th through 15th i can't because i'm playing poker yes okay you got your poker

SPEAKER_230: trick in an undisclosed location i can go listen is there any way i can deal can i deal the game big boy you need to have a funny guy there i mean i'm not a great dealer but can i be a waiter or something i mean i think the game starts at two thousand four thousand but it could get a little

SPEAKER_10: spicier spicy you've had a good year maybe you should go yeah maybe you should solana play because let's get the solana chips oh he can play david's invited

SPEAKER_522: a lot of weak uh uh here's what you do you chip off 10 million solana you put it in llc and then you buy into the game and then that may not be enough that may not be enough all right 20

David Friedberg: whatever 20 is enough for the queen of quinoa the dictator and rain man david sacks i'm j cal we'll see

SPEAKER_607: you next time on the all in pod subscribe to the channel i'm u.s the queen of europe