SPEAKER_00: it is a full news day my favorite day of the week is when i get to do tons of news and we do a quick update on nicola and trevor milton's situation it is not looking good for this company or for trevor then i'm going to react to a video of jordan peterson getting orange pilled which i first saw

Chamath Palihapitiya: on the palm podcast basically he is amazed by how bitcoin works and turns energy into actual money and then we're going to talk about el salvador's bitcoin city built through the power of a volcano

SPEAKER_00: and a bond partnered with bitfinex the whole thing seems pretty red flaggy to me and we're going to wrap with another segment of we live in the future with another speeder bike type product this one comes out of japan and it is wild okay stick with us this week in startups is brought to

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Chamath Palihapitiya: get 15 off for the first four weeks okay we've got a nicola fraud update the electric car maker is

SPEAKER_07: expecting 125 million dollar fine and trevor milton their former disgraced ceo is scheduled to start his trial in april their market cap has crashed massively from 34 billion dollars to now under 5 billion to catch you up on what's happened since he was on the podcast milton was indicted on three counts of fraud in july by the department of justice each count carries a maximum jail sentence of between 20 and 25 years according to reuters that's a you know a total of up to 75 years in prison if they were served sequentially i'm not sure about the law if those would be served concurrently or sequentially um but let's just

SPEAKER_10: break down the crazy year and a half that nicola had to refresh everybody in the audience they spacked

SPEAKER_07: on june 3rd and they started trading as nkla you can search for nkla in google and get their stock history or in your iphone app and if you look at that history it is dismal here's a chart for those of you watching the youtube video at youtube.com slash this week in and it has been a massive fall from grace

Chamath Palihapitiya: in late june nicola peaked at 34 billion dollars uh as a market cap they were trading at about 70 dollars a share now they're trading on 11 dollars a share and they're worth 4.5 billion approximately i think with no product and no revenue this is a 450 million dollar company uh maximum i don't know what their cash position is but i would give them like one million dollars above their cash position because they're going to be embattled in lawsuits they might even be better off just giving everybody their cash back right now so they're worth 4.5 billion right now the cash positions around 500 million i would give them a valuation of 1 million dollars above their 500 million dollar cash position uh because they're going to burn through 100 million on legal fees no doubt it's going to be a complete disaster this company will probably be a zero uh be taken private uh and or just be delisted that's my best prediction and i'm pretty good at these things so uh we had trevor milton on episode 1090 back in july of 2020 you all remember that episode if you haven't seen it it is uh if i'm if i dare say a virtuoso performer performance uh by me as an interviewer because i kind of got the sense that this kid was full of shit and i just let him talk and some people are like you're being too easy on him i made a strategic decision that me confronting him would not be as effective as letting him talk

SPEAKER_07: because the more he talked the wilder it got and uh it got pretty wild i had heard somebody as an interviewer say a famous interview at some point said you know just ask a very basic question and let the person talk is probably the best interview technique that always stuck with me uh at the time nicolo was trading at 30 a share and then about a 13 billion dollar market cap milton uh if you remember was ousted in september of 2020 after activist short seller hindenburg research they name these things wonderfully uh published a report alleging that nicola's contracts and progress were greatly exaggerated and it turns out that was true uh we covered this on episode 11 12 in september 2020 after the hindenburg report was released now in july of 2020 milton was indicted by a federal grand jury on three counts of fraud you can see episode 1256 for that one quote from a u.s attorney that worked on the case via the department of justice press release and i'm quoting here as alleged trevor milton brazenly

Chamath Palihapitiya: and repeatedly used social media and appearances and interviews on television podcasts and in print to make false and misleading claims about the status of nicholas trucks and technology they definitely

SPEAKER_15: watched our podcast but one time i'll take a shout out from the department of justice and be really

SPEAKER_16: thrilled about it uh they definitely watch our podcast and again trevor milton's trial is scheduled to

Chamath Palihapitiya: start on april 4th 2022 in new york please let that one be uh televised and i guess if it's a federal

SPEAKER_17: one my understanding is federal trials are not televised and then it's up to the local jurisdictions if they will be televised that's why theranos is not televised according to a freight waves article

Chamath Palihapitiya: milton requested the trial be moved from new york to arizona a federal judge denied this request

SPEAKER_12: because milton bought and sold shares on the new york-based nasdaq makes sense his defense as per the

SPEAKER_05: freight waves dot com article quote milton claimed he should not have been charged in new york for

Chamath Palihapitiya: securities fraud and wire fraud because his alleged illegal behavior occurred in arizona where nicholas headquartered or utah where he lives i guess he wanted the home court uh advantage and he is not

SPEAKER_12: going to get it on july 29th milton surrendered to authorities pled not guilty to the charges and was freed on a hundred million dollars in bail quite a bail payment interestingly he used two properties in utah as collateral for bail according to cnbc he bought a 2 000 acre riverside estate in utah

Chamath Palihapitiya: for 32.5 million in november of 2019 pretty good looking house i might put a bid in on this when it

SPEAKER_12: goes to um when this goes to auction i i'm yeah i could put 20 million on that one and i could have all the noti gang come over and we'll have a big party for this we can start us at that 2000 acre

Chamath Palihapitiya: estate that's pretty good this was after he sold secondary shares during a 250 million dollar raise

SPEAKER_07: that valued nicola at 3.2 billion dollars in september of 2019 so you can check out milton's

SPEAKER_12: estate according to the late times it's the most expensive residential purchase in utah history which is surprising because i think 32 million is the average apartment in manhattan right now

Chamath Palihapitiya: and the average starter home in la he's also facing civil securities for our charges from the sec milton sold another 70 million dollars worth of stock in the pipe that's the private investment in a public entity when you do a spac you can also put together a pipe letting private investors uh invest in that public entity and i asked him about this on episode 10 90. uh you can check out his answer in this two minute and 30 second clip from our interview i'll play the whole thing uh so you can

SPEAKER_26: hear it the spac puts the money in you have a pipe a private investment in a public entity that occurs at the same time but then you sell 70 million dollars in shares at that same time is that correct yeah yeah so how do you i mean that's something people were really critical of like why if you're so long the vision would you take 70 million off the table in you know before the products even launched that that was a red flag of red flags for me and for others yeah there's a lot of people have

SPEAKER_31: asked me and criticized me and here's here's the real answer to it when we did um when we were going through this the pipe put in all their money at ten dollar you know at the ten dollar share um price essentially which is the pre-ipo price for everybody um the spac put in the thing at ten dollars as well and the and the the the pipe these big funds like fidelity um p sam you know all these different groups that were in that are in here um blackrock all these other groups they came in they said look you got too much control way too much um you own the board you own what was your

SPEAKER_26: ownership at that point percentage-wise ballpark well i gave up a lot so i had 70 of the company and i

SPEAKER_31: gave about 30 to my employees um i wanted them to all become rich and so i gave i wanted them all become you know i don't want all the money myself i want to share it with i want to share with people

SPEAKER_26: that are that you created a 30 employee stock option pool and well i gave away probably about

SPEAKER_31: 15 directly and then the other 15 through the option so it was almost it was over 30 of my stock was diluted it was taken off 30 of the top to to those guys and i still had 40 of the company yeah and and i'll make you know hundreds of people wealthy in their generations to come after it and that's what i like in life but the answer to why the stock was sold is they came to me they said look we want you to we don't want you to be the ceo and the executive chairman you got to choose one or the other and i said and i asked them why i said what's your reason and they said well it's not healthy to have one voice everywhere to control everything and i said i can see that that's actually some wisdom in that and they said we want you to have a we want you to be locked up longer we want you to be here for a long period of time we want you to take one dollar salary and also the whole executive team this is what's not this is what no one ever reported on all they did is report on the bad right because it gets headlines so the entire executive team came in and said okay we're going to take one dollar salary and that's and we get stock bonuses that's it and they said trevor we want you to reduce down some of the some of that controlling and they said we'll buy some of those shares from you so you can live on this you're not focused on money during the time that you are running this company we want you to have some money out now is smart and we want you to focus on nikola not focus on how you're going to pay your bills or pay for your house or whatever else

SPEAKER_16: all right i'm getting a lot of grant cardone vibes from that guy or like billy mcfarland he's great polls from my noti chat room now telling me uh who that guy who does that guy remind

SPEAKER_39: you of when he talks my god it seems like he is uh yeah he just seems like he is working you in the

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Chamath Palihapitiya: up for free today all right remember jason's rule if a company is ever uh valued over a billion dollars before they have a product in market it's likely a fraud and i use the word likely there it's not always theranos magic leap we don't know about magic leap we'll see nicola uh just so many companies uh when they get valued it's either a fraud or it's going to be a failure what was the famous video site that raised two billion dollars and was worth a bunch of money quibi let's just pause for a second if uh

SPEAKER_07: nicola does get 125 million dollars civil penalty and they're burning a bunch of money and they have 586 million dollars in cash as of september 30th they're going to run out of money right quick quote

SPEAKER_41: from their new ceo mark russell we're looking forward to bringing this chapter to a close with this potential sediment and to focusing with renewed determination on building the future good luck

Chamath Palihapitiya: with that i think they're going to run out of money uh that's the most likely scenario and who would

SPEAKER_12: pour money into this train wreck the stock is going to crash is my best guess from 11 to 1 in the next year i don't think you'll be able to short it because who on earth would take the other side of that trade but maybe you could i don't like to short things in a crazy market like this they did manage to extend their runway by pulling together two common stock equity line purchase agreements these agreements total 600 million and let nicola sell equity to tumium stone capital i've never heard of them they've already used 47 million from that one if they sell those shares and dilute the current

Chamath Palihapitiya: equity holders nicola management forecast closing the year with 831 million dollar cash penalty will be paid out over time i guess maybe not all up front but they're not going to be making revenue anytime soon so i i get the sense that this company is toast they started trial production of battery electric vehicle trucks bev in the second quarter of 2021 at their partner evico in germany they've completed eight tree bev gamma trucks what a terrible name and have started pre-series truck production in october of 2021

SPEAKER_12: whatever that means pre-series truck production when they start using these kind of weird terms as

Chamath Palihapitiya: opposed to started production or they're in pre-production you know something's up and just on branding the tree tre bev gamma trucks is a terrible brand just say gamma they started production on the gamma that's how you were branded one word cyber truck one word rivian don't give things ford names they do expect their trial of fuel cell trucks by the end of 2021 those are the ones that would

SPEAKER_12: do hydrogen refueling i don't think they're going to get any of this done i'll be honest i think this is going to be a wash and just as a note when you read about these orders i would put zero value on any

Chamath Palihapitiya: of these orders unless they've been paid in full or 50 because they can be cancelled so you know if people say they have a hundred thousand orders from amazon like uh you know one ev company is saying you know i i don't think that that matters i would say if they paid for a thousand or 25 of them then you could just take the total number 25 deposit divide by a thousand they have 250 orders that's how i would think about it so so even even with tesla if they have a million orders pre-orders for cybertruck of 500 each okay they have 500 million in cash pre-orders you know that's incredible of course and a million

SPEAKER_12: is incredible but they could be cancelled um and i would think in tesla's case 10 do get cancelled because they have such amazing products but in this crazy stuff where people have never produced a car my lord stop putting companies that haven't produced their product at sky high valuations it's a recipe for

Chamath Palihapitiya: disaster for those of you watching on youtube here is a progress picture from october 30th uh they have 50 000 square feet left to build not too inspiring when you put it against like a gigafactory or a

SPEAKER_16: tesla factory which i think this would be the reception area at a gigafactory i think this would be like the snack room at one of those giant tesla factories what a disaster uh so great to have

SPEAKER_17: him on the podcast such a great historic document for us i don't think they're going to get anything

Chamath Palihapitiya: done uh how do you avoid founders like this well it's very simple you follow the rules of silicon

SPEAKER_47: valley we have a milestone based investing program here in silicon valley in the tech industry for a reason

SPEAKER_49: you work for a year or two you get some funding you work for another 18 months you get some funding

Chamath Palihapitiya: you don't say to a person hey you have an idea we're going to take you public and give you a

SPEAKER_07: billion dollars in cash or 17 billion dollars in cash whatever it is for a company that has yet to produce the goods let's stick to what's worked up until this point in time which is milestone based funding there's no reason to give people a decade or two decades of funding in advance it's a recipe for fraud it's a recipe for people who want to get rich quick to come in raise all that money and then walk away and who gets left holding the bag all the public uh gets left holding the bag so very simple everybody don't give people money until they've proven they can do the job whether it's adam newman

Chamath Palihapitiya: who was flooded with capital by masayoshi san or it's nicola or even you know quibi or magically people should get some product to market before they get these sky high valuations is my best advice okay while

SPEAKER_41: i was uh talking about the nicola situation live one of our nodi gang members those are super fans of this

SPEAKER_07: weekend startups who have notifications turned on on youtube what that means is when i go live which is kind of random but usually in the mornings pacific coast time they get a notification on their phone they click it they get to just listen to me riff about the news and they actually get to watch me record the podcast and we're doing that increasingly with the guests as well so the guests can take live questions anywhere from 75 to 500 people show up concurrently at a time probably in cumulatively it might be over 500 but they're like the real true you know one percenters of the show you can join them at youtube.com slash this weekend you hit subscribe and then there's a little bell next to it you hit the bell now it's not just a youtube subscription but it notifies you so that's just a great thing to do with your you can have two tiers of youtube subscriptions you can have the people who you subscribe to so when you go to youtube you see their stuff but then you have the people who are like the creme de la creme that when they post a video even if it's a pre-recorded one or a live one you get an alert anyway he asks that uh what do i do here j cal you know i own the stock i said well what price do you own it adam we can pull up his question here he says his average price for nicholas 13.78 and nicholas trading at 11 so he's going to lose two dollars per share here which isn't actually that bad uh i would sell it all immediately what people do is when a stock doubles or triples they uh will

Chamath Palihapitiya: sell the stock to lock in the win this is almost uh always a mistake to lock in the win uh and not let some of it ride because you want to ride your winners as we've always said google facebook there are people who sold their facebook 15 20 25 dollars famously chamat sold a bunch of his if i was talking to my brother if i was giving advice to my mom again this is not general advice but this is the advice i give to a family member that's like a quasi disclaimer uh you got to make your own decisions and be smart in life but i would say if something is going down you've lost

SPEAKER_00: face in the company the news is all bad you hate the stock get out of it sell it move on then take that money because all money has value and then figure out a plan to have that money grow what people

Chamath Palihapitiya: do is they ride it all the way down to zero i think nickel is going to be a zero maybe a dollar stock in a year i think it's a disaster uh they're going to be embroiled in all kinds of lawsuits and shenanigans is my best guess you know that's how i i phrase these things like i i add that that's my guess that's my prediction that's so you understand that i i can't be sure here but that's

SPEAKER_00: my best guess now what do i think is going to do really well well you can easily take that money

Chamath Palihapitiya: and put it into google disney facebook microsoft google you know those big names that we know 10 years from now the companies in all likelihood netflix going to be around be valuable have some giant consumer base so your money should go up greater than the inflation who knows you know long term but i like to think in 10 year then you could come down and you could look at the emerging companies that are like google was 10 years ago or amazon was 10 years ago who would i put in that bucket well if you were to look in that you know kind of 100 bill let's call it 20 billion to 100 billion range i would have put slack in there they're not they got sold i would put airbnb in there i put uber in there door dash is pretty overvalued uh you could put lift in there as a takeout candidate but i don't like buying this number two so i would say airbnb uber coinbase uh robin hood now i'm in two of those four names but that's what i do for a living i might took a take a battered uh peloton because i do

SPEAKER_07: think that that's an incredible company with a great strong base of users uh roblox is in there

SPEAKER_57: my wife owns a little bit of roblox that she bought because she likes it she doubled her money i think

Chamath Palihapitiya: she bought out the ipo those companies are like strong companies with strong user bases and strong revenue so but they're not as big as google's yet right they don't have billion trillion dollar market caps yet they have those 50 to 100 billion so then you're looking for that let's call it 5 10 20

SPEAKER_07: x uh maybe see if one of those becomes the next trillion dollar company i put stripe in there too probably i would put square in there as well those seem like really great companies don't know enough about cloudflare uh to be totally honest i think that's a commodity business like amazon's web services that they're up against in terms of caching the web so i'm not so sure about that as an

Chamath Palihapitiya: infrastructure play but you might put uh actually uh twilio in there because they own sendgrid and segment that's like a really i might swap out cloud for for that company uh just because i know the company better uh that's just me so anyway that's that's my advice to my family member if they were in the situation you're in you have to do what's best for you i would just use that as a thought experiment i would ask yourself are you riding a broken company down or are you betting on an up-and-coming company and then maybe the other option is to take that money and just put it in

SPEAKER_07: what is it qqq q is like the nasdaq or something or a vanguard fund that's very low fees or wealth front and just let it grow seven ten fifteen percent or whatever the market average is great question

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SPEAKER_07: next up in the news a really interesting uh clip i saw i actually started on pomps podcast or his live stream canadian professor and youtuber jordan peterson has been orange pilled uh and it's kind of an interesting moment uh orange pill is that moment in time because bitcoin's i guess official color like this we can start up some launches is orange uh and inside it's my favorite color it represents

SPEAKER_68: basically meaning you buy into bitcoin and you're gonna have laser eyes uh if you take the blue pill

SPEAKER_07: that means you uh like fiat money debt and you're blissfully ignorant so let's roll the tape here from

SPEAKER_41: jordan peterson if you don't know jordan peterson he's a somewhat controversial he kind of got bundled

Chamath Palihapitiya: with the alt-right professor who became famous because he got into an argument with some woke students and uh he really seems to care about young males and has created a a bit of a following with that reddit incel young male crowd that is kind of feels like they are maybe hated or told they're bad

SPEAKER_55: and don't have a lot of uh let's call it guidance in the world and this clip comes from an interview

SPEAKER_12: he did with doctors safedin amos uh safedin i hope i'm pronouncing your name correct safedin is the author

SPEAKER_07: of the bitcoin standard the decentralized alternative to central banking which was published in 2018 he's also a professor at columbia university yeah to get electricity from the north of ontario to toronto

SPEAKER_72: needs a lot of wires or you need to you know if it was gas you need to put it on tankers or on trains or in pipelines all of that stuff is pretty expensive but with bitcoin you just need an internet connection you take the bitcoin miners to where that energy is and then you can monetize

SPEAKER_74: that energy and turn it into bitcoin it's magic so what's the what's the net effect of that on the price of electricity worldwide is that deflationary with regards to electricity cost i think so i think

SPEAKER_72: this is this is a point that i make in the fiat standard which is that you know we've had fiat subsidize all these dysfunctional forms of energy over the last 50 years that have led to the grid

SPEAKER_78: becoming unreliable and we have bitcoin like the vigilante savior that it is coming in and providing a global subsidy for anybody who can make electricity at a cheap rate to monetize that that's absolutely

SPEAKER_81: mind-boggling it'll take me like five years to think that through it's so and it seems to completely contradict the idea that bitcoin is a waste of the world's resources it's a complete opposite if that if this monetization idea is actually true all right so what you're having

Chamath Palihapitiya: happen there is this epiphany uh with jordan peterson which of course bitcoin people are going to just you know going to be like yes you understand it what they're saying there is it starts with um this realization that well why would you set up 350 000 in mining rigs to mine bitcoin to get 350 000 if you just go on coinbase and buy it you you would have had to wait for the servers to come set them up so all things being equal if you could buy 350 000 worth of servers and then turn it into 350 000 worth of bitcoin eventually let's assume you don't get the servers back after that in this thought experiment why wouldn't you just buy it so it's like of course i would but then he says wait but if you can buy electricity cheaper which we all know nuclear hydro if you're stealing the energy like people were in authoritarian places reportedly like china people would roll these things up to a hydro plant that was throwing off more energy than it could actually send through the cables or some people talk about with natural gas sometimes there's more you know gas coming off of these pipes and gas refineries they can actually be used but they still have to burn it and so it's kind of wasted and they need to ship it somewhere that excess energy can be turned into money okay that we all understand

SPEAKER_00: but the next piece is wait a second if i'm making energy and i can make money from it and i don't have to send it over a cable well that's an incredible thing but that doesn't take into account is should we do that should we do that and the issue there is we shouldn't waste energy in other words we shouldn't build up production certainly if it was dirty energy gas coal anything like that we should not

Chamath Palihapitiya: be making bitcoin from dirty energy i think everybody can agree with that that's what's being left out of this and the incentive obviously if you can make money and not bother building the cables to send it to somebody's home or a factory where it's needed wow we're destroying the environment we're burning carbon and spewing you know uh all kinds of horrible pollutants into the air burning the ozone creating global warming and destroying uh the ecosystem just to make a quick buck so that's the problem is we we haven't sort of put that in here but let's play the next clip why

SPEAKER_91: wouldn't they just buy bitcoin it seems to be to be a lot simpler than mining it that if it costs 350

SPEAKER_81: 000 to make 350 000 why bother with the mining the short answer is if you have a way of securing

SPEAKER_72: electricity at less than five cents per kilowatt hour then you should get into bitcoin mining business which is you know lower than most rates everywhere in the world so if you have a source of energy that's isolated from the grid or if you have a cheap way of securing energy then mining bitcoin is great so

SPEAKER_81: does that mean that bitcoin is a very good way of moving resources from places that can produce electricity very cheaply to other places where electricity is more expensive it makes the cheap

SPEAKER_98: electricity much more valuable absolutely it's uh this is weird that's a weird thing it's it's very

SPEAKER_72: weird i think it's going to have a very profound impact on the global energy market because for the first time in history we have a way to sell energy that is location independent a lot of places in the world have a lot of energy but it's very expensive to get that to the population center so the north

SPEAKER_98: of canada hasn't so you don't need wires exactly jesus that's weird the problem with this is i don't

Chamath Palihapitiya: think it is true we really do not want to incentivize people to not send the electricity to a city and instead just burn it to make bitcoin to make money because again we're burning natural resources to do it the only time we would really want to do this is if it was a very low cost natural source of energy like hydro wind solar sure why not monetize the excess there and then use it for those folks to then uh invest in more renewables and that is the positive effect so what should happen on a global basis is we should ban bitcoin miners from using non-renewable sources of energy perhaps if this does become an acute issue there's no way to know uh exactly what's the total footprint of the energy usage right now i know some people have tried to make estimates about that we really should think about either bitcoin has to figure out a way to re uh organize itself in other words do an update

SPEAKER_07: to use less energy i think they've tried to do that uh over time and maybe they have somebody can fact check me on that producers at this week and startups.com if we ever get something wrong we'll correct ourselves and we'd love to you know get sources of good information so if there is a source of how much energy is being used and the percentage of energy being used from non-renewable to renewables

Chamath Palihapitiya: we should just ban any bitcoin miners from using coal gas oil whatever is dirty because that's not

SPEAKER_07: good for society bitcoin doesn't provide enough value for society to use that kind of uh non-renewables well with renewables you know hey that's actually pretty awesome and maybe this will drive the price down if there is demand for energy and bitcoin miners can figure out how to use solar wind and they put some of that money into actually creating energy sources that's what i would love to see if it is in fact the future of society that energy equals money which is kind of what we're saying here well then it would be pretty great for somebody to come up with a fusion reactor or a nuclear reactor or some you know amazing new solar technology that was super cheap to build and that we could

Chamath Palihapitiya: in fact turn into money that then could be put back into doing it i think by the time this all gets hashed out maybe bitcoin will use less energy and we'll have renewable technology that will continue to lower the cost per gigalot whatever so an interesting moment in time i thought i'd share that clip uh and again i saw pomp was reacting to that person so just give pomp a little credit for surfacing for me

SPEAKER_07: he's uh anthony popliano's guess he's 90 in bitcoin he's a maniac and he's really interesting guy and we're going to do a collaboration with uh my guy pomp where we stream to his audience on his youtube channel and my audience on my youtube channel hopefully the subscribers cross over and we share some audience

SPEAKER_57: together that's kind of the idea i did with justin khan it was quite fun actually because we got his audience answering questions my audience and asking questions and then we answer them together

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SPEAKER_104: okay in our next story as an example of renewable energy uh in bitcoin el salvador wants to create a

Chamath Palihapitiya: crypto-funded bitcoin city you're a volcano according to their president naib bukele i hope i got your name correct naib uh just like the last segment we talked about this project is hoping to use the volcano as a cheap source of geothermal energy remember back in september el salvador was the first country to adopt bitcoin as a national legal tender whatever that means uh the verge noted that this makes it cheaper and easier for migrants to send money back home to el salvador and could improve citizens access to financial services according to cnbc in 2020 el salvador received nearly 6 billion in remittances which was 23 percent of its gdp so western union other transfer fees have a material impact on their economy yeah you know the craziness here is you could lose half your value in bitcoin right we saw bitcoin have multiple instances where it went down 25 to 75 percent over the years pullbacks are the norm do you really want to tie your currency to that kind of volatility well an established stable country does not want to put themselves on a decentralized crazy you know imaginary money store of value concept here that is uncontrollable but an emerging country with nothing to lose that already is dealing with issues maybe for them it's not such a risk because they're already in a risky currency their own nbc reported that the bitcoin city will have residential areas and commercial areas like restaurants and an airport okay obviously if it works they would do that the only tax collected in the zone will be a value-added tax of that so if you don't know what a value-added tax is uh because

SPEAKER_07: it is foreign to most americans uh investopedia which does a really good job of defining these things they define it as a vat is collected on a product at every stage of its production during which value is added to it from its initial production to the point of sale the amount of that that the user pays is based on the cost of the product less any cost of materials used in the product that have already been taxed at a previous stage uh the value-added tax is a type of consumption tax obviously uh key takeaways a value-added tax or vat is added to a product at every point on the supply chain

Chamath Palihapitiya: for value is added advocates of that vats claim that they raise government revenues without punishing the wealthy by charging them more through an income tax critics say that vats place an undue economic burden on lower income taxpayers although many industrialized countries have value-added taxation

SPEAKER_07: the united states is not one of them so super super confusing for americans to understand it to fund the city el salvador is planning to raise 1 billion via a bitcoin bond in partnership the digital assets

Chamath Palihapitiya: infrastructure company blockstream according to cnbc the bond offering would happen in 2022 entirely in bitcoin that's a savvy move because all these people around the world who are bitcoin advocates

SPEAKER_07: and ship their bitcoin to them pretty easily so it sounds almost like a dow and a bond is kind of like a dow when you think about it it's like a structure uh just not a decentralized one it's a centralized one 500 million would be used to purchase bitcoin 500 million will go to harnessing the

Chamath Palihapitiya: energy from the volcano and mining that's a kind of interesting split i wonder how they came up with that that when you see an interesting number split like that that's indicative of maybe a money grab and people haven't actually thought this through like is it exactly 500 million to get the energy from the volcano mining like is it 276 276 million it's really exactly 500 million and they're just rounding it up where they're rounding it up to a billion kind of weird according to blockworks which i've never heard of the bitcoin bond will have special dividends dispersed on an annual basis generated by

SPEAKER_41: the staggered liquidation of bitcoin so they will sell bitcoin each year to pay for their bond holders interestingly el salvador picked bitfinex securities to issue the bond the same company behind tether what

Chamath Palihapitiya: could go wrong oh my lord if you didn't know this uh the new president of el salvador uh has a very mixed reputation some people consider him a dictator uh and they uh think he stole uh power this is probably not the person that you want to uh and he actually refers to himself as the world's coolest dictator but this is probably not the person that any project technology or otherwise would want to tie themselves to except for maybe bitcoin laser eyes have fun staying poor it's pretty toxic to put yourself in alignment with this individual but it's going to be an interesting experiment so i'm i'm i'm here for it if they are able to raise a billion dollars in bitcoin from the bunch of crazy bitcoin you know billionaires out there and then they get payback and they're able to build the city based on it sure secure the bag el salvador get that money build 10 cities if you can get 10 billion let's go if you've got other places to get free energy let's go their ability to execute on this their partnership with bitfinex there's so many red flags here that this looks like a mini golf location like this is red flags everywhere

SPEAKER_55: stay the heck out of here i would not go near this project how is this better than people just

Chamath Palihapitiya: investing in bitcoin directly is of course what you'd ask yourself well maybe the bonds um will be more acceptable into the financial system you know the guy michael sailor who has the laser eyes from

SPEAKER_07: microstrategy which was i think a failed company that had a checkered past he just decided to turn it into a bitcoin holding company essentially and he just bought as much bitcoin as possible he's the guy who famously said sell everything you own buy bitcoin get loans buy bitcoin just do everything you can is his thesis um which i'll be honest uh you know he's been quite right for some period of time uh when the market pulls back of course he looks like a moron and then when the bitcoin doubles he looks like a genius and that is the nature of you know this new imaginary monetary system that is highly speculative and um i think fairly obvious to everybody a bubble some people think it's not a bubble but they're usually the ones who have a vested interest in getting the next person to buy bitcoin in that way bitcoin has a very mlm nature to it pretty obvious once you own bitcoin you really want to tell people buy it buy buy it listen i own seven figures worth of bitcoin bought at 100 to 200 hundred dollars a coin and but i'm not sitting here telling you to buy it because i don't know where it's

SPEAKER_55: going to go i think it could go back down to 30 as easily as it could go up to 300. i will say

Chamath Palihapitiya: in bitcoin's defense my number one issue with bitcoin was like the manipulation of it and the fact that it could be hacked at some point it's becoming i i believe less manipulated as more people hold it and don't sell it because there's less opportunity to manipulate it because there's a fixed amount of circulation and these big players seem to be buying it and not selling it so then how do you manipulate it if there's just big holders right it'll be kind of hard to manipulate it and then two shockingly with all this money at stake nobody has figured out a way to hack the bitcoin network you can hack people's wallets obviously you put a gun to somebody's head and ask them to put your atm code in as well but i gotta give bitcoin credit for those two issues um so uh do you think the lack of transparency in crypto could lead to more crime is another question that people have asked me uh well el salvador has nothing to lose here they have one of the highest crime rates in latin america over 1300 homicides in 2020 they've got some serious gang problems and the prisons are controlled by gangs just type in el salvador amnesty international and or el salvador human rights or el salvador dictator

SPEAKER_57: and get educated i think this guy from el salvador is a really bad actor um and uh he's just glomming on to the bitcoin you know community in order to you know work them i think literally the bitcoin community is being worked by a bad actor here and the bitcoin community is so desperate for any pump

Chamath Palihapitiya: moment that will make them you know make this the bitcoin go up that they're like oh there's a country that's buying into it they really never double clicked and drill down to find out that this guy's really a bad individual like do your diligence folks as of this morning bitcoin's at 57k uh it's far off its new all-time high which it hit on november 10 12 days ago of 68k so people are dumping it again uh but 57 is an incredible return from the three thousand dollars i think it bottomed out at uh after it peaked at 20k which was the other previous high so it's trending up and

SPEAKER_12: down but generally up and we'll see if that continues i'm going to continue to hold my bitcoin

Chamath Palihapitiya: i think it's like one of those bets i made with a very small fraction of our net worth or should say

SPEAKER_07: my wife made and i supported it's a very small fraction of our net worth i think only one or two percent of your network and bitcoin or any cryptocurrencies maybe even up to five percent if you like to speculate nothing wrong with that if you've done your homework and you actually understand these

SPEAKER_57: projects and you want to go up 20 30 40 50 percent and it was your full-time job like i could see people doing that uh i could understand people doing that it's not for me but i can tell you like my

Chamath Palihapitiya: net worth is over 50 percent in tech startups yeah and uh it's because it's my job right you'd be surprised if it wasn't right so uh and it's very hard for me to get out of them because what am i going to do

SPEAKER_12: sell my shares in square or uber or you know com.com or robinhood no i still believe in these companies

SPEAKER_17: like is there a better place for me to put my money no these companies are fantastic so i stick with them

Chamath Palihapitiya: all right all right everybody loves our segment w-l-i-t-f we live in the future well here it is a japanese drone startup is building a hover bike i kid you not for those people watching here you go

SPEAKER_07: this looks like something out of star wars or tron two giant blades spinning with a bunch of smaller ones and there's person on the top sitting on the top of it looks like a speeder bike with these giant fans and it is hovering almost perfectly um it's got a little bit of yaw to it going left and right and uh there they go they're hovering around so it is um not far from being reality that instead of

Chamath Palihapitiya: riding on roads we'll be riding on air these hover bikes could they look like spinners from blade runner to be honest but more like a motorcycle as opposed to sitting in them the spinner from blade runner uh will be here in our lifetime and uh you're going to see people playing with these things on tracks the first part uh is cgi so just for clarity uh there is a small part of this in the first part where it lifts off the ground that's cgi i'm not sure why they cgi'd it that's kind of a bummer but the ceo daisuke katano said the bikes will not be able to fly over japan's pack roads in the near future

SPEAKER_12: nor will they be allowed on the roads i'll be honest according to reuters they are targeting supercar

SPEAKER_49: fanatics as their customers here's a picture of the ceo posing with it it's pretty good looking looks

Chamath Palihapitiya: like it's going to be a lot of fun according to pitch book uh the company uh ali technologies has investors including mitsubishi and they've raised 28 million since 2017 those numbers tend to be low because they're gonna be financings that you don't know about uh recent ones but if you compare uh this specs and pricing to the jetson one which we covered on episode 1322 in earlier in november uh if you check out the split screen video here uh while i read off the comparisons uh the ex turismo is 680 000 the jetson 192 so obviously jetson one gets that one ex turismo is a conventional engine plus for battery powered motors so i guess that means gasoline jetson one is eight electric motors flight time ex turismo is 40 minutes because it's using gas obviously jetson one only 20 minutes so half and they both interestingly go uh about 62 63 miles an hour you know in terms of which one's cooler or which one will be street legal none of these things are going to be street legal until you can prove the safety of them i.e they're not going to fall on somebody's head but you could see these uh very easily be being used in theme parks or on racetracks and people loving to go out and spend their time using them you're not going to see these in cities uh but it is possible that on country roads or something like that they could get an exception to drive them on roads but then what's the point you can easier drive in a car so these are limited use until maybe 10 20 years from now when you can be guaranteed that if they fly over cars on a highway like the 10 freeway they're not going to land on them in order for them to not land on those they're going to have to have massive redundancy be proven in the field have much better battery life like maybe triple quadruple and they're going to need to have somewhere to land so these are really interesting i wonder how high they'll eventually able to go uh you know is 10 feet realistic five feet because they would need to clear other vehicles uh this is really interesting i think they're going to be a lot of fun to drive and i think they'll be for entertainment value search and rescue comes to mind maybe policing the border you could see people zipping along uh you know the perimeter of some you know campus or

SPEAKER_07: something with these but private use private roads or areas yeah could it be used in ski rescue maybe i don't know how they would deal with snow and wind on a mountain probably not well

Chamath Palihapitiya: i don't think these can go across water but maybe eventually they will that would be interesting if they did work across water you could see people you know uh using them to go across the east river hudson river sydney bay melbourne any of those bay cities like we talked about for vtols so these are kind of like vtols but they're closer to the ground anyway we are living in the future

SPEAKER_00: and it's pretty freaking awesome we'll see you next time on this week in startups bye bye