SPEAKER_00: All right, everybody. Welcome. It is the podcast you've been waiting for the all in pod emergency

SPEAKER_13: episode 20. The number 11 podcast in the world number one in tech number 11 overall. Joe Rogan sway pivot NPR Rachel Maddow left in the dust. Welcome to the number 11 podcast in the world. Can you believe it besties with us the queen of kin why himself David Friedberg rain man David Sachs hot off the banger by young Spielberg closing up episode 19 and of course the dictator

SPEAKER_16: Chamath polyhapitiya how we doing boys? Lovely. How are you? Lovely. Friedberg. Lovely. Lovely. It's a

SPEAKER_13: lovely Tuesday emergency pod and nice to be with you guys. Um retired from craft ventures to pursue

SPEAKER_11: his dream of being a Fox news host. How's that going for you Sachs now that you've got full media

SPEAKER_19: blitz? Well yeah I've been I've been invited I was on Bloomberg I've been invited on CNBC tomorrow I

SPEAKER_21: might even be on Fox on Thursday so everybody maybe Tucker everybody wants a piece of the besties

SPEAKER_13: everybody wants a piece. Unbelievable. We're pariahs in our own industry and now we've transcended tech and taken our rightful position I got invited on CNN which is crazy. On what show? On what show? The guy with the British accent he kind of does um Piers Morgan? No there's another guy who does CNN international and they were doing like a whole thing. Oh that guy yeah yeah yeah you know the guy with the

SPEAKER_31: glasses. He's funny. He's pretty funny. Yeah. I didn't do it. Um I really do not want to speak for Robin Hood but uh we do need to pick up where we left off in episode 19 which a lot of people were

SPEAKER_39: wondering Chamath are we still friends? Are we still besties? We are um but I do want to say one thing um Jason and I talked this weekend and he said something to me which I actually thought about a lot which is that hey Chamath when you get that emotional you know I think the the point of what you're saying gets lost and um I had I had a lot of time to think about that um so one I wanted to say J. Cal if if anything I said um you know hurt your feelings uh I want to say I'm sorry I think you are the most incredibly loyal person and that you know spans friendship to being an investor too so I just wanted to say I'm sorry to you and to be quite honest with you when I when I listened to a couple of my comments I was like wow you know I was a little emotional um and I think uh it didn't need to be that super extreme I think you know the thing that it touches for me is like I forget sometimes maybe where I'm at today and I go back to where I was 20 years ago or how I felt as a 16 year

SPEAKER_42: old and I channeled that a little bit so anyways Jake I just want to say I love you with all my heart and

SPEAKER_31: I'm sorry I love you too Chamath and you know it it did get a little bit personal and we were all passionate about you know our positions and you know it was a little difficult for me because I'm trying to give my guys my team Robin Hood the benefit of the doubt um and it wasn't an easy week obviously to do that but just to to recap here Sunday Vlad was on Clubhouse with Elon Musk our pal who almost blew up Clubhouse and uh there were so many people trying to get into that room and I think it tops out at 5,000 on Clubhouse that people were holding their phones up to their YouTube accounts I think that's probably how most of us listened to it was the YouTube people were just syndicating it live to YouTube but uh Elon did a tremendous job interviewing Vlad uh which is leads to a really interesting topic David about subjects just routing around the press and going directly I mean Elon is now the best interviewer in the business um and he basically said listen did you have a gun to your head

SPEAKER_45: and I think it was pretty much that uh according to the reports that have come out the depository and trust and clearing corporation which is wall street's main clearing house for stock trades demanded three billion dollars in addition collateral from Robin Hood which they said was an order of magnitude more

SPEAKER_31: than usually required we all know they raised 2.4 billion this week on top of the 1 billion from Wednesday on top of the 600 million dollar credit line that's 4 billion in cash apparently the requirement for them went from 3 billion to 700 million so it seems like that's there's some equaling out of uh what they have to cover and uh the gme short interest dropped in half today it's monday i'm sorry it's tuesday but yesterday had dropped in half the squeeze seems to have settled down wall street bets has

SPEAKER_39: clearly won and of course um episode did uh jason did supernova i i didn't listen to it but did um do you guys think that uh elon and vlad got to the truth like was it clear sacks well let's get an

SPEAKER_55: independent part of your sex yeah so um i thought that the interview was was a bit curious um because

SPEAKER_21: uh it it took elon several tries to get vlad to say the the quite frankly the obvious answer um elon set it up saying you know what what i think all of us were thinking which is look were you either forced to do this or is it an action that you decided to take and if so why and you know and and and elon kept trying to get him to say yeah we were forced to do this and vlad wouldn't quite say that he gave these very vague ambiguous answers which is why elon finally said listen did you have a gun to your head or not blink twice you know yeah um and so it was i don't know whether it was um a function of miscommunication or whether we just don't know all the facts yet but i don't feel like the interview put everything to rest the way that it easily could have um and and i and you look i don't want to be i don't want to pile on to the situation i you know i'm i'm pro founder i'm going to give vlad and robin hood the benefit of the doubt here i think probably they were compelled in some way to do this i don't think they wanted to do it but you know if we're going to make this a teaching moment what i would say is like to any founder if you're ever in the position of having to take an action that is inimical to your stated mission right and their stated mission is freedom to trade what was the word you used inimical inimical anathema sure yeah if you're going to basically violate your stated mission you either need to post the government order that required you to do that or you need to post a very well-reasoned blog explaining why you're doing that and you know if i were robin hood and i got a call in the middle of the night saying that you have to basically take this trade offline i would say well give that to me in writing because i'm gonna have to post that on my website right if i don't have a choice about that i you know i need to be able to refer back to this industry order that i'm receiving and the fact they didn't do that and the fact that they didn't post a blog explaining the reasons behind the choice and in fact vlad's now had to go back three times to explain it i think that's created this world of problems for them there's a difference

SPEAKER_60: between this being a regulatory requirement and a commercial requirement correct like if you think

SPEAKER_66: about the you know the the the law um the regulatory body um that oversees the law that that that kind of oversees what they're doing business-wise the sec or whomever could have come in and said here's the here's what i'm telling you you have to do i'm your regulator um but what happened was there there are these clearing firms that they partner with that said i need you to post more capital and rather than post more capital or take the risk of going bankrupt they said we are going to restrict trading to minimize the capital requirements that we have on

SPEAKER_69: our book and so if you think about what that decision comes down to it's a decision of either our customers are going to lose money or we're going to lose money and um and i know that it's not

SPEAKER_66: that black and white but you know it's very difficult to kind of explain the nuance of what took place there um but it really was a point of like we are going to lose money or we are going to go bankrupt or our customers are going to have to lose money and that's such a tough decision i can't imagine any executive any of us being in that situation and deciding you protect your shareholders or do you protect your customers and how much do you let your shareholders lose how much do you let your customers lose and it was a very complicated situation that they found themselves in because their business model was predicated on this clearing you know on this model that they ran that uh when suddenly a lot of risk came on the book they didn't have the capital to cover it and and they had to basically uh you know limit their their customers as a result it was a pretty ugly

SPEAKER_72: situation but but david well can i just say one thing i actually think that if the choice is simply

SPEAKER_21: between you losing money you the company or your customers or lose your users losing money i think that's an easy choice i think the company eats it look what airbnb did during covet right when they had a whole ton of cancellations because of covet they ate that the they ate all those deposits they

SPEAKER_74: made good on that and i actually think if that's all that was involved that was a big mistake i think

SPEAKER_75: robin hood should have eaten it chamath you want to chime in here as we go around the horn look i think

SPEAKER_42: here's what we've learned which is that there's all kinds of ways in which this financial

SPEAKER_39: infrastructure works that none of us really understand um it turns out that it may have also included the people running robin hood to be quite honest um and so you know we know what payment for order flow is now we know that you know some companies like public have completely issued it um you know folks like robin hood make a ton of money from it i think it's clear that you know elizabeth warren to aoc to whomever are going to now spend a bunch of time talking about it it may or may not change but before the problem with the whole situation of game stop actually doesn't really surround that because it's more of a symptom the real problem was what led up to it and what led up to it was you know the insistence that a bunch of organizations needed access to a

SPEAKER_42: preferential set of data so that they could theoretically participate in that order flow before

SPEAKER_39: and the second was that the rules for you know certain organizations are different than those for banks and so you know hedge funds can leverage themselves up to such a massive degree that you create that you know ltcm type of issue where you know you take 5 billion and all of a sudden you have 1.5 trillion so that that that shouldn't happen right so we need to figure out how we can actually deal with those systemic issues upstream and then we need to have better disclosure downstream so that consumers could choose hey listen if you want you know pfo f by the way as i've learned in the last couple days payment for order flow is actually not necessarily such a bad thing in certain cases because it actually guarantees better price execution in some cases but that's not always true for options i think it's somewhat more true for stocks there are you know for example like jason when you asked me you know i asked the team at sofa like you know what's the how much how much is uh how much is made on payment for order flow and the answer was 1.5 million

SPEAKER_42: dollars and the forecast for next year was like 400k so that's materially different than 400 million dollars right so you start to figure out like okay how should we think about these problems and i think

SPEAKER_80: that's what we have to face we have to get answers to these questions now yeah there's definitely going

SPEAKER_75: to be a lot of investigations into this and thinking it through i think there are kind of three

SPEAKER_45: possibilities here when you when we analyze this now that we're a week out from it i think uh all going down which is was there poor communications or other non-disclosures in place right we're trying to figure that out with robin hood it feels like there's both right there there could very well be non-disclosures with this private company the dtcc um and obviously they could have optimized communications and then was this a black swan event or to your point is it poor preparedness chamath we have to figure that out how prepared are these companies to deal with this kind of stuff

SPEAKER_81: and then is it really bad optics that's sitting down and all these people are involved or is it a conspiracy a grand conspiracy and then if there's going to be an investigation it's going to be pretty

SPEAKER_57: hard to uh cover up any conspiracy right can i offer one idea i think that there are certain

SPEAKER_39: there are certain parts of the economy or you know the way in which the world works where you you can't distinguish you know bad operational capability and black swan events i'll give you an example airplanes there is just no situation where you can say a plane crash was a black swan event and you move on right and we we decided that a long time ago and so as a result just the amount of risk

SPEAKER_42: management and compliance is so high that every time something like that happens it's it's an enormous

David Friedberg: process and we've seen that in the 737 thing for boeing right 737 max by the way that just got

SPEAKER_84: settled too for just 2.5 billion which is kind of crazy those planes are back on and nobody went to

SPEAKER_42: jail right so that's an example at the other end of the example you know we have things that have happened like on facebook and twitter and instagram and snapchat which is like hey all of a sudden

SPEAKER_39: like you know certain kinds of content or certain things happened like the christ church mass shooting the the the societal judgment there was that that was a black swan event you know we don't need rules and regulations and so i think that another important question that we have to ask is is the financial plumbing that you know sort of allows the capital markets to work and specifically the financial plumbing that allows retail normal folks to participate in order to try to make money

SPEAKER_42: and get ahead should that be deemed more like what you said jason black swan like infrastructure where it's like sometimes should happens and we just move on or is it more like an airplane crashing where you say none of this stuff should be allowed to happen okay can i can i add one one more point to

SPEAKER_21: that which is i i think that um it's frankly spin to be trying to characterize uh concerns about what happened as a conspiracy theory you know i heard uh vlad use that word and jason now you're you're echoing the company's talking points the reason this is not a conspiracy is because citadel is on both sides of the trade it's a conflict of interest we should be using the word conflict not conspiracy now the question is how do we interpret that conflict of interest you have company you have citadel providing payment for order flow so they're basically executing uh robin hood's trades they're their biggest customer and at the same time they're moving in um and they're backing up citron and uh melvin so they're on both sides of this trade how does that work how can we not have questions about

SPEAKER_89: that and to then characterize that oh it's a conspiracy theory if you have questions about it

SPEAKER_31: really no no i'm totally fine with people having investigating if there is a conspiracy right and the conspiracy that people were floating is robin hood was told to stop trading these stocks by citadel that did not happen if that did happen that would be explosive and impossible to cover up what it was is does this dtcc have some influence or does citadel have influence on the dtcc you know that those are the questions that i think remain unanswered the dtcc is is a cooperative

SPEAKER_39: so it's a collection of its member organizations so by so i think but we'll we'll find out which organizations were part of dtcc who made the decision who then told robin hood you know we'll also find out by the way who put in the money to robin hood you know did they have a direct beneficial interest in them having these dtcc make that decision and so i think where david's right is like imagine this conflict of interest i now let's just use me as an example i as social capital i am buying their order flow i am also a member of the cooperative i'm also backstopping their investment and now all of a sudden you would say whoa chamath your hands are way too messy here right like your your fingers are in a lot of pots and how do i know what you know exploding message

SPEAKER_97: on signal wasn't sent you don't know you don't know um yeah all all we do know is that you had all

SPEAKER_21: these insiders right you had um you had citadel you had you know this industry consortium whether it's the collective or citadel individually they were under pressure by the industry and at the same time you had these outsiders you had these reddit kids who had basically taken them for 20 billion dollars right they had finally figured out a way to beat the insiders at their own game and just at the moment that these outsiders were winning and about to deliver the coup de gras and bust these guys out of the business for good somehow the insiders managed to tip the board over

SPEAKER_98: and start a new game that is what people are reacting to and look i mean you know i i'm not saying that i i don't know why vlad would have done it unless he was frankly forced to do it right

SPEAKER_21: because why would he um so i'm not blaming him but there is something fundamentally very corrupt at the way that the system and these insiders who have all the power and all the money when they finally got threatened they basically figured out a way to turn the board over and prevent the outsiders

SPEAKER_42: by the way the the other thing that isn't getting covered and this is going to be the tragedy of this is none of us really knows the cost of the 3.4 billion dollars that they took in i'll tell you the only group of people that are for sure going to get completely creamed in this which are employees

David Friedberg: right i mean we know that you think they're going to get too much preference stack because

SPEAKER_39: they got they got diluted oh my gosh i mean how do you not put three do you put 3.4 billion dollars in at par who would do that yeah i think that's what's exactly happened i don't have inside

SPEAKER_107: information but i think that's exactly what happened yeah that's my guess i mean if i think that or

SPEAKER_31: perhaps a discount to the ipo which is imminent from what i've been reading online yeah talk about

SPEAKER_66: terrible timing too right i mean they were trying to go public this year my god maybe terrible timing

SPEAKER_57: or maybe perfect timing i mean it may be that jason if it turns out that they were able to

SPEAKER_39: i mean then it then it creates a whole host of issues which is how stupid are these investors but um if if that is in fact what happened because you look at the for example the the pound of flesh that you know silver lake got out of airbnb what a brilliant trade i mean so like if there was one

SPEAKER_60: organization that came out looking that that was my deal of the year from last year from our from our

SPEAKER_69: bestie awards yeah go ahead explain it freeberg yeah they put in debt and then they got warrants and and the warrants ended up making them silver lake forex it's insane they made they made like three four

SPEAKER_117: billion dollars right but the company's worth over a hundred billion now so as downside protection during a

SPEAKER_84: pandemic that could have gone on for three years no no but that's the whole point if you think about

SPEAKER_42: if you think about the trade of the great financial crisis it was warren buffett putting capital into

SPEAKER_112: goldman sachs which was and swissery he did the same deal yeah he did five billion into each of them the

SPEAKER_39: same weekend exactly and he said hey guys everything is fine these guys are going to be fine they're backed by by berkshire and it turned out everything was fine and you know he made he made an incredible fortune and i think i mean on top of his already fortune so the point is he made a great trade uh i think that in the in the silver lake example they did the exact same thing they were like hey guys we believe in this everything's going to be fine and when all of us were literally losing our mind because we were stuck in our apartments and houses thinking the world was going to end silver lake saw they had clarity they did a deal which was the trade of the year david's right and so similarly you would have thought

SPEAKER_91: that this moment was the opportunity for the trade of the year of 2021 i mean we're early on but all i

SPEAKER_45: know is i've been getting increasing offers for my robin hood shares in the secondary market you know throughout two questions here we have been having a hard time understanding who's short what that short

SPEAKER_31: interest is there's a bunch of like data companies that are providing estimates and maybe the data is

SPEAKER_39: only clear best you're right the best source of data that i have access to is a company called market m-a-r-k-i-t they're they're they're quite large um but as of this friday the short interest was still i think about 50 percent um in gamestop and so it's been it's been ebbing down i didn't

SPEAKER_31: check today well the the report was it got cut in half um again uh and that there was a very small

SPEAKER_66: short interest now but the stock dropped another 60 percent today so obviously if you're short the stock you may start buying and taking your profit and your gains and going home at this point and moving

SPEAKER_81: on so do we need to is this going to start a discussion of transparency and shorting and

SPEAKER_31: should all that information be short should you be allowed to short more than the shares that are

SPEAKER_124: available or that are available in the float i think and should we readdress shorting in general

SPEAKER_39: no there's a sim there's an even i think shorting is a healthy component of the market and i wouldn't i would leave it alone because there i think there are some legitimate organizations that short for three reasons reason number one is that they are developing a market neutral strategy for their clients and people are should be allowed to pay for that right number two is people are directionally betting on a trend or investing on a trend and they are trading that against potentially some other position where they are long so that's an explicit view less about being market neutral and then the third is that some people see outright frauds and they're trying to vote loudly that hey listen there's something untoward happening here so i think shorting is really good i actually think the simpler solution and listen and tell me if you guys agree is just go to t plus zero settlement why all these margin requirements go away all together the problem the reason why we have all these margin requirements is all of a sudden you have this weird 48 hour period that you know it's like oh wait who's got the shares do i have the shares no do you have the share so they did i lend them to you did you lend them to me are you going to pay me first am i going to pay you first and instead you know this is the kind of thing where it's like in 2021 this should be real time and automatic every share should be id'd

SPEAKER_66: right and then you should know exactly where it is you know by the way there's another point that there's another point that chamat didn't make which is that there is a benefit to the long holders

SPEAKER_69: and equities um when there is shorting of that equity in the market which is that they're getting paid borrow on those shares so for folks that don't realize or their broker is but you can access that borrow if you own shares in a company that you're going to keep holding let's say you own some shares in amazon and someone else wants to short amazon they have to borrow those shares from someone and they're paying a fee an interest rate to borrow those shares and so the cost to short a

SPEAKER_112: stock is actually not zero you have to pay a borrow to borrow someone else's shares so if you're holding those shares in amazon you can actually make money um if you have the appropriate broker relationship for those shares being sold short by someone else and so this isn't just a people are coming in the market and slamming down stocks they are paying the people that are along the stock for the right to borrow their shares and and and sell them ahead of you know buying them back later and so in the case of gamestop i think the cost of borrow got so high uh that you're basically paying 30 40 50 60 percent you know interest rate to borrow gamestop shares to sell them short because you know there is a market dynamic in in the cost to sell short that um you know that doesn't uh

SPEAKER_128: come at a at a kind of negligible or free cost the my initial my introduction to shorting uh in that

SPEAKER_39: example was when i first bought tesla um that you know my broker said you know chamath if you lend

SPEAKER_42: your shares out you can make 24 i remember this conversation 24 a year interest right and i thought oh my

SPEAKER_39: god and then i said well what what am i really doing and he's like well you're allowing people to bet against tesla and i said no and i just kept the shares and i was like i'm never going to allow people to really and since then to be clear i've never i've never ever ever allowed my shares to be borrowed ever and it's just a philosophical decision i don't like shorting um but i believe

SPEAKER_69: that you should be allowed to do it i mean if you're going to be a long holder anyway you're saying

SPEAKER_112: i'm going to hold these shares for five years ten years whatever i just you know it's a way to juice your returns it's true it's how a lot of people think about especially mutual funds that own it's large positions and stocks they'll they'll make really good juice returns because they're getting

SPEAKER_101: paid to borrow david it gets even better if you're if you're running a levered book because then you know

SPEAKER_39: you take a buck you spin it up to six bucks you buy six bucks a tesla now all of a sudden you're earning 24 on six shares even though you've notionally bought one share right i've still never done it i can't i can't bring myself to do it i just feel like it's just so i just can't do it i just like it's like how can you be long and then bet against your own company i guess well yeah it doesn't make

SPEAKER_45: sense but i'm sorry sax should we limit the amount of shares that can go short against a company in

SPEAKER_31: some way and should we add a transparency where if you short more than x percentage of those shares we know your short position because that seems to be also very confusing here there are people speculating on twitter that the wall street bets crew and i have no knowledge of this or other hedge funds came in and saw this mess and that what we've seen the last couple of days were other people shorting at 300 or it could have even been the same traders or some portion of the traders who ran this up with the short squeeze then flip their position from long to short yeah i look i i clearly

SPEAKER_72: we need more transparency we need to resolve some of these conflicts of interest prevent them from

SPEAKER_74: happening i think a lot of the the um users of robin hood didn't understand that they were the

SPEAKER_21: product not the customer uh that that is a real issue but let me let me kind of up level this and speak to the politics of this because something really interesting happened you had everybody from aoc to ted cruz basically denouncing what happened here taking the side of wall street bets against these wall street moguls and so what you're seeing now is a new fault line in american politics in the post trump era it's not just about left and right anymore it's about insider versus outsider and i think this is going to be a major major theme that we see and let me actually i want to i want to share something you know i just wrote a blog post called the insider's game about this idea and uh i found a passage in elizabeth warren elizabeth warren's book which is really interesting because it describes how the insider's game works and the person who described it to to warren is um larry's not no no yeah none other than larry summers who was uh the former treasury secretary under obama he was president of harvard he's the consummate insider and he taught the insider's game to generations of harvard students so here's what he said he he presented warren with a choice he said to uh to her well she she said i could be an insider or i could be an outsider this is from her uh memoir in 2014 a fighting chance she she wrote outsider recording larry summers outsiders can say whatever they want but people on the inside don't listen to them insiders however get lots of access and a chance to push their ideas people powerful people listen to what they have to say but insiders also understand one unbreakable rule they don't criticize other insiders that is the insider's

SPEAKER_98: game it's a protection racket where these powerful insiders these powerful elites of wall street of uh big business big media and politics they get together and they protect each other no matter how incompetent they are how corrupt they are silicon valley silicon valley they're involved in this too but big tech and this is the revolution i think that's going to happen i think trump was kind of a a forerunner of that is that we are going to see a movement of people across this country who are sick and tired of the insiders game and they're going to rise up and vote these insiders out of office and put in some new people who aren't beholden to these powerful special interests what you're speaking to is populism

SPEAKER_148: right sax you can call it populism i call it insiders versus outsiders i think it's uh it's going

SPEAKER_39: to be very important for folks to not be a career anything meaning career executive career politician um career regulator career what if ever you're in sort of like if you can put that word in front of your sort of existence i think what people will see is someone who as you said thrives on being an insider

SPEAKER_42: and i think that there's just going to be a ton of distrust career school administration official

SPEAKER_39: you know career admissions person career anything now is not what you want to be you want to be sort of a little bit more dynamic because you can have multiple arcs to your life and you're not beholden to

SPEAKER_66: anybody i mean i think it's a it's not as black and white as institutions are bad or institutions are good there are there are many examples where uh the institutional framework allows for continuity and

SPEAKER_153: performance over time you know a lot of trump's rhetoric uh and i you know i know that we're um

SPEAKER_66: we're past the trump era at this point but um there was a lot of conversation about this notion of a deep state because there was frustration with how some or many of these institutions government institutions were operating but if not for that deep state we may have found ourselves in a lot of very ugly situations over the last four years that there really were layers and layers of career public servants that did incredible and incredibly heroic things to preserve democracy to preserve the rights that we all hold dear in the constitution and those were um you know really important roles and the institution played a really important role in in providing continuity and providing trust and and security um and so i i think it's easy to bash institutions when things aren't working perfectly but we also have to keep in mind that it's not that all institutions are always bad it is absolutely true that there is corruption but there are certainly benefits that we have to kind of not not allow populism to become

SPEAKER_69: a runaway framework for how we deal with everything we're frustrated with i'm not saying that i think i

SPEAKER_48: think what i'm saying is institutions are critically important but now i think we have to change the rules

SPEAKER_39: for how you can be a part of them and then how long you can stay so for example like if the rule was you know you can only be a two-term politician wow that would be what a cleansing effect that would have on anybody that chose to serve in politics up and down the board you know at the federal level at the

SPEAKER_66: state level two terms in and out california california has that you know we have a 12-year limit right um in the the state uh assembly and senate um and so you know i think we're seeing that happen in progressive places like california um you know obviously a good segue uh but uh very um i think very much agree that uh that the notion that there needs to be um you know we talked about this last time we need to ensure that the institutions don't become beholden to special interests and um uh and that there isn't accountability because because the failure the lack of accountability is really um where things bloat over time because you just add stuff on you don't ever take stuff apart and uh and

SPEAKER_156: ultimately you have kind of an inept non-functioning institution so let me give you the report card on

SPEAKER_42: california and then we can figure out if term limits can't fix it what can fix it so here's just some

SPEAKER_39: some data points uh first i'll do one section first section number one economy and jobs nearly the

SPEAKER_42: highest unemployment rate in the us at eight percent plus highest poverty rate in the us 18 and a half percent of all californians highest income taxes in the us 13.3 percent 30 billion dollars of potential fraudulent unemployment benefits from 2020 11 billion already determined fraudulent doubled the oil doubled the oil and gas drilling permits instead of incentivizing you know maybe uh climate or biotech or tech jobs a 227 billion dollar spending pan spending plan for 2021 in terms of quality of life highest homelessness in the country worst graduation rate in the country around 17 of students in california don't graduate the worst slash highest cost of living in the country and the worst wildfires in the country 1.8 million plus acres burned on covet 19 third highest rate of covet 19 infections in the world 658 cases per 100 000 people and then the worst vaccination deployment in the us around 50 and then culturally i didn't know this i don't know if you guys know this but um here are the number of

SPEAKER_39: companies this is just a subset that have left california toyota charles schwab tesla and oracle in some way shape or form which is estimated now to have cost california 77 billion dollars of

SPEAKER_42: future revenues and 300 000 jobs over the past few years nearly 3 million people have left the state 53 percent of californians want to leave the state and 63 percent of californians believe the american

SPEAKER_39: dream is dead okay so if let's let's go and figure out okay so if if if term limits at 12 years

SPEAKER_74: don't work what do we do well i think i think we have to have politicians who stand up to special interests aren't in the pocket of special interests i mean the problem we have in california the biggest problem the reason why uh california is such a mess is that we have government of the special

SPEAKER_21: interest by the special interest for the special interests i mean the politicians in sacramento that we have a one-party state effectively and they are beholden completely to these special interests look at the deals uh they make i mean so example in california we have uh over 340 000 public employees who make over a hundred thousand dollars a year that cost taxpayers over 45 billion okay and you know we have lifeguards making a quarter million dollars a year it's crazy right i mean because the people making these deals um are are in the pocket of these of these government unions they're the biggest contributors to california politicians and you know this is my uh fundamental i guess concern or or beef with with gavin newsom um is that you know fundamentally you know he's worked his way up the the ladder of california politics by you know by basically benefiting from these special interests throughout his rise you know you step by step he's never challenged the insiders or any special interests um he just kind of caters to this political class and so that's why i think fundamentally he's not going to be part of the solution uh it just feels like every job he's had in politics is just a stepping stone to get to the next step and even the governorship now is just his stepping stone to get

SPEAKER_98: to whatever's next and i think you know californians are tired of being stepped on in this way there's

SPEAKER_60: i mean there are some structural challenges in the state right guys i mean like we should not

SPEAKER_66: for forget the fact that there are some um voter mandated uh supported propositions that have passed over the last couple of decades um that really create a structural challenge in terms of how do you allocate resources and capital and how can you effectively govern in this state um you know the

SPEAKER_153: the three that are often highlighted is prop 13 which passed in 1978 which is the state uh property tax uh limits we've talked about that one uh i believe in the past there was a proposition four

SPEAKER_69: in 1979 that limits the amount of money that states uh can appropriate uh um that the state can appropriate and then prop 98 which passed in 1988 and this is the big one um prop 98 has been challenged

SPEAKER_66: in courts and there have been you know many many kind of um uh efforts at finding loopholes and getting around it and and litigating it but it mandates funding levels in the state from pre-k through community

SPEAKER_112: colleges um and it creates a structure that is really difficult to navigate around and really difficult to operate or manage it's almost as if you guys were running a private company and your board said here's how much you as the ceo have to spend this year and here's how you have to spend it it is

SPEAKER_66: such a difficult decision um uh you know for the uh for the governor to have to kind of say well you know i'm gonna make some changes to that because he'll end up in court um and so you know i want to just kind of highlight that there are structural challenges to the way the state operates and obviously to get a lot of things done you still have to pass through the state assembly and the state senate um and it's not as as simple as making you know better decisions in the governor's mansion i think there's uh there's a lot that we have to kind of resolve structurally in the state that's going to take a long freaking time and a lot of cooperating parties um to get there and so you know i know for those of us who are very much about making fast quick um and accurate decisions you

SPEAKER_153: know good decisions this is a really difficult place to do that uh this state the way the way the laws have been set up and the way that uh that the legislature has oversight well i mean look you're

SPEAKER_74: you're right but this is why we need real leadership we need somebody who's going to come forward and say listen we need to change this proposition another one we need to change is prop 47 that decriminalized a whole bunch of behavior i mean crime is exploding in the state

SPEAKER_21: that proposition needs to be looked at as well right i mean we we need somebody who's gonna come at government from a completely different perspective which is to think about the citizens of california first of all to pay attention to the middle class of california and to think about us as consumers of government services uh who need to be satisfied and right now we have uh if you were to think about uh the services government's providing people are churning off of it we had uh net immigration of 135 000 people net left the state right you know 40 000 families in california pay about half the taxes if say 10 000 of them leave we've got a giant hole in the budget that no one knows how to replace and we have no idea how many people have even left how many families have left the state so we really need leadership here to to not just go along with the special interests who are

SPEAKER_98: in power and who are willing to stand up and and push for some of these these reforms by the way i

SPEAKER_146: think it's worth just highlighting some of these numbers because they also speak to the structural

SPEAKER_66: challenge in the state the state of california generates about 140 billion dollars in revenue 70 percent of that comes from personal income tax and as sacks pointed out half of that comes from

SPEAKER_112: the top one percent or 40 000 households um it is uh it is a you know a heavy weighting on and by the way that um that top tax rate of 13.3 applies to households over a million dollars of

SPEAKER_66: income and for those that don't know you know there's income strata that are defined by the state and depending on what strata you and you you pay a different tax rate the highest strata is making over a million dollars a year where you pay 13.3 percent and that's where these 40 000 households

SPEAKER_112: cover most of that budget um and 20 percent to sales and use tax and 10 is corporate tax to speak to the corporate tax rate for a second you know that's 10 of our revenue as a state we charge a nine percent average corporate tax rate in the state to operate that's um incredibly

SPEAKER_66: high and it's one of the reasons besides kind of the challenge that that elon and others kind of made very public here over the past year um but uh that that corporate tax rate um makes it very difficult to operate in the state relative to other states that are offering no tax rate lower employment

SPEAKER_153: lower cost of uh of labor um and less of a regulatory burden to operate and it's why we're seeing an exodus not just of people from the state because the services are obviously not being well managed but also um of businesses you know finding a better place to operate in in canada um there's an approach

SPEAKER_39: that i think is really useful here which is that um you know the canadian government um uh offers credits called shred credits i can't remember if it's at the federal level but it's definitely

SPEAKER_42: in the state of ontario because i've used this for for some of our companies you hire engineers and you can basically capitalize their salary and you can offset their cost so that when you're a young company you're effectively paying zero tax or if you're a small company you effectively pay

SPEAKER_39: zero tax and that seems really right you know where you're a small business person and you know you're holding um you know five ten employees and you're making you know a million bucks a year in revenue whether you're a restaurant or a software company you basically pay nothing but then at the other end of the spectrum uh you know when those credits when those credits burn off theoretically if you're a facebook or a google or an amazon now all of a sudden you know you can pay a much larger percentage of uh of of what to do and i think that there's all kinds of progressive tax schemes that work on the corporate side there's a bunch of tax credits that you can use to sort of incentivize certain kinds of jobs and i i think you're just much better off because then you know these companies can't leave if

SPEAKER_69: all the people want to stay in one place i want to highlight one more structural problem so even if you do resolve that even if you do resolve these propositions that have passed that have passed in the past and are causing us problems in terms of budgeting and an ability to budget adequately going forward one of the other challenge and even if you do resolve the tax structure to generate a more

SPEAKER_153: balanced revenue model that allows for innovation and allows for employment allows for opportunity we have a uh this is an interesting stat i found this week um how what what how many americans i'll

SPEAKER_69: just say the number one out of nine californians are um a member of a public pension fund in the state of california one out of nine and the public pension funds in california as of the last reporting are roughly 250 billion dollars underfunded relative to the payment obligations they have to their members think about that for a second so not only does the state have a lot of debt we've got a 250 billion dollar hole for paying people money that they believe they're owed in the future and that is creating a massive problem where the state needs to figure out how do we fill that hole how do we meet these obligations to our citizens who work who earned what they believe to be a fair income stream for the rest of their lives that they may not ever get you know and so so we've got both the the the legislative problem in terms of how the state is structured we've got these propositions that have passed that kind of um you know buckle down the governor and buckle down the decision makers in terms of what they can and can't do legally we've got um an income generation problem with respect to concentration and we've got some of these you know heavy burdens on us like health and services but also this underfunded pension liability that is almost like such a priority and no one's really paying attention to it because the sirens are going off and meanwhile the service providers in the state are completely effing up the service that they're supposed to be providing you know chamoc highlighted a bunch of great ones in terms of fire response and whatnot at the beginning and obviously the vaccine rollout we know is is just completely flawed but um you know here's another interesting stat the california edd this is the the link i just sent out by the way on our on our zoom chat but there's 114 billion dollars in unemployment claims paid since covet this is an insane statistic but it looks like roughly 27 percent or 30 billion dollars of fraudulent claims were paid by the edd um on those unemployment claims so the folks that are actually running these institutions themselves aren't even operating well um you know not to mention the actual huge liabilities the state has accrued over the years and the structural deficiencies so as much as i would love to um you know kind of propose that we could all come up with a simple solution this is a complex friggin set of problems that probably require several books to resolve and i just want us to be honest and real about that that this is um you know this is going to be a challenging issue probably for decades to come for this state to get itself out of the holes it's dug itself into you know one thing i'll

SPEAKER_155: say is as goes california so goes every other state and so goes america because if there's one

SPEAKER_42: state that theoretically you think would have been positioned from a human capital perspective to figure these out and political will it's this state and if this state can't figure it out we're in a

SPEAKER_72: hole we're done a trouble well we're we're not doing a very good job figuring it out right now that's why we need to make a change i mean david you're right about the magnitude of the problems

SPEAKER_21: the challenges but it all starts with some sort of you know outsider rebellion and that's what's going on with this recall that's why we have to support it it's why i support it it's not going to be the

SPEAKER_76: end of the the it's not the it's the beginning of the solution not the beginning of the beginning

SPEAKER_112: the beginning it's the beginning of the beginning but we need to create an institution to solve the problems over time right it's it's going to be it's going to be the coalescence of what you're

SPEAKER_63: pointing out sex which is the the you know the the the will of the strong the will of the the rebellion

SPEAKER_74: uh to figure this out and resolve the the institution may be the all in pot but um but uh

SPEAKER_21: but let me let me build already yeah but let me let me build on yeah i would actually jake how you posted a tweet saying what should we call our party and uh anyway my suggestion was the outside surprise party yeah but let me let me build let me build on on freeberg's point about the pensions okay where did these giant underfunded uh pension obligations come from because i think that's a really important point to explain so here's what what basically happens if you're a government worker in california you could typically retire after 20 years with all of your benefits and um and not just 100 of your salary but the the salary you made in your last year and so what happens is uh when people get to that 20-year mark they get a lot of overtime so that's why we've seen articles about

SPEAKER_193: people retiring you know after you know if you're retiring after 20 years you could be in your 40s

SPEAKER_31: okay well wait don't you get half pay for your pension so they double up their overtime they get to 250k then they get a pension of 125. you don't get your full salary every time you get right

SPEAKER_21: yeah there's a there's a complicated formula but the point is you can stuff with overtime and it's very generous and then they can go because they're still in their 40s they can go get a another government job somewhere else and then stack that pension on top and then by the way it doesn't just last until they die but it lasts until their spouse dies so um now there was a proposal years ago to move this whole system to like a 401k type of system and it was squashed by who the unions and newsome opposed it because you know he doesn't do anything that the unions don't want and so we have these completely unsustainable pension liabilities everybody can see this train wreck coming but nobody has the guts to

SPEAKER_45: stand up the unions and do something yeah i mean there's very few careers that still offer pensions even the new york times you know over a decade ago got rid of their pension because people live too long they retire too early and then the cost of health care is just so ginormous here that it's going to crush uh any pension fund so you have to move to a 401k and we're we're it's kind of hard to say to

SPEAKER_31: a cop or a firefighter who's running into a burning building or putting themselves in the in harm's way that they don't get one because it's such a high risk job but we really do need to think of something more reasonable like a 401k and that's coming from my entire family is you know um cops and firefighters

SPEAKER_45: and of service in new york city and they all have pensions and you are right david there is uh a tradition of trying to get a little extra overtime because they average out usually the last three or four years to give your average salary the to base your pension off of and then of course you can do another job or go work go from a firefighter to a cop vice versa garbage sanitation worker to get those things we didn't talk about the nimbyism and how extraordinarily hard it is to build homes here and how extremely expensive it is a lot of the young people who are thinking of coming to california are looking at the housing prices they want to come here to start companies they love the california

SPEAKER_31: vibe but the the housing is a non-starter you can't live in the peninsula or anywhere in the the wider

SPEAKER_45: bay area unless you are you know a dual household income with what 400 500 600 000 dollars minimum minimum and that's not even counting private school but you're talking about where are their sub 1 million dollar homes within the proximity of the bay area they don't exist you go to austin and i've been looking at austin real estate just coincidentally and there are many homes that are 300 000 that are 400 a square foot everywhere within 30 40 minutes of downtown austin and that's where young people are going and then finally if we look at our to to law and order david we are not treating fentanyl like the super drug it is you know it's one thing to have drug reform and to have uh prison reform we we know these are important but you can keep that in your mind that we want to make a more just legal system while at the same time not allowing people to deal fentanyl and if you just type into google fentanyl versus heroin lethal dose and click on the image search you will see two vials and it's a very famous photo where there's like you know a pinch of you know uh heroin that's the lethal dose and then in the other vial there are like seven grains of fentanyl and that's the lethal dose and we are conflating a

SPEAKER_81: homeless problem with a super drug yeah can i can i can i add to that so yes please so

SPEAKER_74: so you know i was on the side of decriminalizing cannabis and i think that there were and i think

SPEAKER_21: that there we we overcharged too many people for drug crimes when they were just users and should have been in treatment and that's why i think there's been a reaction against over incarceration and i understand that but i agree with you that fentanyl is in a separate category it is the super drug and here's the problem it is so powerful it is so addictive it is so destructive nobody can hold down a job and get off that drug once they start once they start taking it i mean it's just game over

SPEAKER_98: so they end up living in the streets and turning to crime and petty theft to support their habit and that's the situation we're in today and we have this growing mass this massive numbers of people living in the streets addicted to this super drug and we got to stop it we got to get tough on this because it's just you know right now the the the the solution that our da seems to be pushing whether it's gas going in la or chase a booty in san francisco is they're just not prosecuting anything you know we had prop 47 downgrade a whole bunch of property felonies to misdemeanors and now the da's aren't prosecuting the misdemeanors so they basically just decriminalize burglary and so you've got all these you know drug addicts living on the streets committing these crimes and they need to be in treatment so i think part of what we need to do here i actually think this is a big investment california needs to make we need giant treatment centers to address this problem and if somebody gets caught committing a crime and they're they're addicted to drugs i don't want to send them to jail

SPEAKER_204: but i would make them go to treatment we have to think about true compassion true compassion for

SPEAKER_45: somebody who is addicted to fentanyl is getting them off the street and getting them into a rehab program or giving them the choice of going to jail for the crimes they may have committed so that there is this pressure to go into treatment just to give you a stat in 1999 we had like 18 000 overdoses we're now over

SPEAKER_31: 70 000 um and if you look just in san francisco we're talking four or five times the number of overdose overdose deaths to covet deaths this is a level of human suffering that just makes no sense and it's such a nuanced discussion right you can't you can you have to be able to hold into your brain that cannabis you know psychedelics mdma psilocybin are one class of drug you have a long list jason i have

SPEAKER_205: a long list here of the drugs of your own good that you want to be recreational here are the drugs i'm a fan of

SPEAKER_11: good here are the drugs that i don't take bad no fentanyl i think you just have to look at the the

SPEAKER_31: chance of recovery and the chance of addiction and fentanyl and heroin are just tragedies

SPEAKER_39: tragedy we also have to like have the courage to actually not look at just the symptom like i think treatment centers are a great idea i think not sending people to jail is like an obvious idea i also think if you take two or three steps back and you think about what are the two things that send people off the rails number one i think is lack of a job and then number two is a lack of mental health resources you put those two things together it's you're done it's like it's like kindling and it's like kerosene and a match all in one and boom it goes and you know we didn't need to know that answer because you saw that over the last decade building up in the rust belt so we knew that that was the those are the boundary conditions for this so how do you get people back to work how do you actually give some men you know the the crazy thing about reagan i mean we all forget but reagan was the one that defunded all of the uh mental health institutions you know when he was governor of california and sent all these folks spilling into the streets well think about how many jobs that

SPEAKER_31: would create if we brought back you know psychiatric facilities and made them free this is where if we look at health care not having a national health care program especially for mental health is costing us more on the other side when it comes to suicide if we're going to spend money and if we're going

SPEAKER_39: to be in debt be in debt for the right reasons like sure find a way to be accountable and transparently spend money that's fine spending money is fine government should not be for profit you know government should i don't even think government should be breaking even i think that government should be generally running at a loss and then the net gdp as long as that's positive and accretive we're doing right as a society right so government should be doing the things that that they need to do for people to have an even starting line but i just want to yeah go ahead sorry jamal no i was just going to say that that's where we get it wrong because like we you know we we like pat ourselves on the back when a government turns a surplus and then you know we like explode when a government runs a deficit instead they're managing to the political theater of a number instead of really

SPEAKER_150: understand how to run a business but i just want to be clear like the entire um premise

SPEAKER_66: of how that is run and how we think about this from an economic point of view is that we have to have gdp growth and if you don't have gdp growth the whole formula fails so let's just break this down in a simple way if i'm um working and i'm making 60 grand a year i can

SPEAKER_69: take out some credit card debt knowing that i'm going to make an extra 10 next year an extra 10 the year after if i know my income is going to climb i can afford to take on some debt which means spending more than i'm making right now because i know that in the future i'll be making more than i am today and i'll be able to pay down that debt and so the whole premise of how we run government

SPEAKER_112: is we should run at a deficit we should accrue debt we should build infrastructure but in order for that work to work i have to increase my tax revenue in the future and there's two ways to do that raise taxes taxes or see significant gdp growth and if you raise taxes you suffer the problem that california may be suffering now which is very high net worth people leaving the state which is going to cause a collapse in the revenue stream and the whole system fails if you want gdp growth well you have to kind of enable the system to allow for gdp growth which means reducing taxes and growing housing but the problem is the life that people want to live doesn't necessarily mean that we need to have and so so this goes back to the housing question do we need to have more business growth in the state

SPEAKER_69: therefore do we need to reduce tax rates to encourage business growth and by doing so we have to also build more housing and the reason people want to build more housing is because they want to see more business here and the whole premise is kind of flawed if at the end of the day getting more

SPEAKER_166: business here means you also have to lower tax rates and cause all those problems it's also how you

SPEAKER_42: have community and it's also how you have diversity like nobody wants to live in a model culture where

SPEAKER_39: everybody's really really poor or everybody's really really rich i grew up it's so sickening i grew up in a place where everybody was really really poor i now live in a place where everybody is really really rich and the model culture sucks and instead what you want is you want transitions you want people moving up you want people moving down you want the hard luck story you want the got lucky story you want it all and this is this is where we've lost it i'm gonna ask you a question freeberg are you saying that if 40 000 people left california we would blow a 70 billion hole in the budget

SPEAKER_63: no we would we would blow a um yeah about 40 000 count for half the income tax so it's about 35

SPEAKER_66: percent of 140 yeah so we would we would blow a 50 60 billion dollar hole in the budget 40 000 people

SPEAKER_42: 40 000 yeah out of 60 million 40 000 homes 40 000 homes out of 60 million 40 million out of 40 million

SPEAKER_45: yeah yeah 40 000 similar thing happened to new jersey and connecticut when they had everybody moving down

SPEAKER_117: to florida and so this is not unprecedented um especially with hedge funds and really high

SPEAKER_69: taxpayers you know but what yeah what i'm asking is is there a better way where you don't have to depend

SPEAKER_222: on gdp growth to balance your budget and to provide the social services you want to provide to the state

SPEAKER_74: no of course of course not yet all it all starts with having a healthy economy i mean always right because that's what generates the um the prosperity to pay for all the social programs and it's to pay

SPEAKER_69: ahead of the curve right that's my point is like we're always paying ahead of the curve which forces us to find gdp growth which is how we get stuck in these cycles and these problems and this is true not just of the state but of nations as well the u.s faces this and others but by by spending ahead of the curve by creating infrastructure by creating social services by setting up these pension obligations the only way to get out of the debt you've just taken on is to grow and that creates all of the systemic problems and ultimately lead to populism and all of these kind of frameworks for

SPEAKER_74: failure that are going to ultimately end here's here's no no no no hold on can i disagree with that look yeah growth is a precondition for everything else that's good okay growth growth needs to be managed okay but it doesn't growth is not the problem here the problem is a set of policies

SPEAKER_21: that are actually killing growth and driving entrepreneurs and innovators out of the state we saw elon musk leave the state why he said that california was starting to take its success for granted and it had been winning too long okay california needs to realize it's in a highly competitive

SPEAKER_98: situation now and because of covet you can work from anywhere and austin has become a tech hub and miami's become a tech hub and those states have no income tax and we have politicians in california just keep raising taxes as if we're not competing against these other states well we are and people are leaving we're seeing a mass exodus here we've got to realize that we can't raise tax rates beyond the point where people are willing to bear them this is the this is your i think your best

SPEAKER_81: point david is that what the great pause did was it let people reassess their lives how many people

SPEAKER_31: do we know who either left the state changed job you know broke up with the spouse whatever it is people reassessed everything in their life and what people uniformly came to was why am i paying this much and getting this little in the bay area in california when i could get twice as much three basically three times as much in austin or miami and not pay this amount of taxes and be happier and that is an existential problem for the bay area if you know this is not just elon musk or larry ellison oracle

SPEAKER_204: it's also rank and file developers and the developers don't need to be in the office so you could have this massive middle leave too that nobody anticipates and if all the developers said you know what

SPEAKER_31: i want to be on the reno side of lake tahoe you know i want to be in austin or wherever i'm paying

SPEAKER_35: less taxes and i'm making the same money and i got a better quality of life what do you guys think

SPEAKER_39: happens though jcal what what happens to california or connecticut or new jersey and what happens to

SPEAKER_31: florida just tell me what i think it's i think it's a death spiral for new york and for california where

SPEAKER_45: unless the representatives in government start to represent the people who are voting and living there and voting their interests as opposed to the special interest to david's point about the insiders

SPEAKER_31: we have disconnected what the citizens of california want from what the government officials are providing they're just not in sync they're basically kowtowing to teachers unions or special interests and not the people who are building companies or just people living here people want to build housing and they won't let them you can't build apartments in palo alto or you know

SPEAKER_74: anywhere in the city i mean this is crazy you're right the only middle class that's going to be left in california pretty soon uh it are government workers i mean that's it that's the only people

SPEAKER_98: gonna be making over a hundred thousand dollars a year in california are the government workers because everyone who's middle class who's running a business is just is finding it too difficult and um too difficult to earn with the level of taxation that's run their business and they're

SPEAKER_140: regulation regulation and they're leaving i mean just think about the regulation issues of doing any real world i mean you've done construction in san francisco we've had businesses that are real

SPEAKER_31: world businesses with storefronts it's it's jumping over hurdle after hurdle after hurdle i have an

SPEAKER_42: idea shut down it's brutal what if uh whenever you started a company in california you got you know three or four years worth of tax credits for engineers in return for one percent of the equity that california was not allowed to sell sure i mean some equity upside would be great i have an

SPEAKER_238: idea chamath how about you run for governor yeah chamath there's an idea why don't you isn't that why we're doing the emergency pod sax sax sax i think you should run we'll be right behind you have we

SPEAKER_166: disparaged you too much or has this been too difficult yeah let me let speaking of politics though i do i do

SPEAKER_39: i do need to tell the story um this is a complete complete non sequitur in 2012 12 or 13 i can't remember which year mike bloomberg invites a bunch of us from technology to uh to the white house correspondence center we're like yes the white house correspondence center did you go that's awesome of course i went once here so you know myself uh ian osborn hossein ramon the founder of jawbone and i have two amazing stories about this my experience at the white house correspondence room number one well three number one is like the dinner itself is kind of like a prom just because there's just so many people right and so you know you have to have a rubber chicken dinner because there's like a thousand people in the room but the second was that ella mcpherson was there and i've never seen more incredible hair in my life just i have this image of this person's hair and it was like

David Friedberg: the thickest like it was like curly but like it looks so soft and this is the most incredible hair i've ever seen i think those are called extensions or a wig but go ahead it didn't look like that it

SPEAKER_39: looked like real hair but it just looked incredible uh like like a lion like the mane of a lion and then the third story is i we're in a reception there's an after party at the french ambassador's place i start talking to this person randomly and there's like all these stars everywhere but i just start talking to this to this person and you know she she's very chatty and i'm chatty chatty chatty blah blah blah blah we're talking talking to them and then at the end of this like sort of like five minute conversation and we had not really introduced each other she just kind of said hey and i said hi and so we started

Chamath Palihapitiya: talking and she says to me um you mind if we take a picture and i'm like yeah of course and i and i had no idea what was coming so i was like so we take a picture and she serves to me and she says you

SPEAKER_255: know i think you're really fantastic in parks and recreation oh my lord and i thought so hard

SPEAKER_256: you thought i was aziz i'm sorry jesus christ how does this happen uh at least she didn't call you urkel

SPEAKER_261: that was her second choice oh my gosh i love you in parks and rec anyways that's my that's my

SPEAKER_263: interaction with politics i think you're ready for politics because you just avoided the question

SPEAKER_264: no no no look let's let's let's be really honest like i i'm not ready to to do any of that i what

SPEAKER_39: i need to do is i need to figure out you know a my business and where it's going and then b i do think it's worth figuring out what are the conflict of interest laws and what do you have to do if all of this were to come to pass because i could not make a credible decision unless i knew that uh because i i just have things that i want to do and that that to me are the most important things like i'll just be really honest with you like i'm working on something in batteries that i think is it's important for a lot of places much you know more than just california and so like if i have to

SPEAKER_94: abandon this battery project i wouldn't do it you know just that simple so i got to figure that out

SPEAKER_270: and you got to write down all the illegal things you've done on a piece of paper and all the illegal things you're doing on a daily basis and then we got to make sure you have a

SPEAKER_271: you have a case of moleskins because i could start for chamath i could start filling that in

SPEAKER_274: they're never going to get uncovered yeah the oppo research has begun right

SPEAKER_66: that's that's what the dinner on thursday should be about should start the oppo research program

SPEAKER_277: oh my gosh that's a that's a long program but there's certainly there's certainly a groundswell

SPEAKER_66: in interest right sax and there's certainly oh yeah it's crazy like i think i think chamath has um um a lot of folks that that love his passion and the way he speaks to them and that uh you know he has a real um sense for what i think people are feeling and um can speak to that and obviously has experience in kind of making decisions and allocating resources right so you know i think there's a lot of interest chamath and a lot of uh drive to see you here's here's what i'll say

SPEAKER_48: shit or get off the pot here's what i'll say here's what i'll say i've grown up

SPEAKER_101: with nothing and getting to the other side i'm completely convinced that poverty is a disease

SPEAKER_39: that it is except in this disease it is systematically um reinforced you know what i mean so jason stopped

SPEAKER_283: talking job is good yeah and i would like to say all americans and the citizens of california i came

SPEAKER_45: from nothing i came from nothing i would eat rice three days a week and then i would eat the plate the

SPEAKER_101: other four by the way the the the reality is that if if i were to do it if like all the checks came

SPEAKER_39: back and it seemed like it was a plausible thing i would only do it for the 18 months and just kind of you know but you'd have to get elected on a mandate where it was so clear that it's like all of california wanted these five or six laws to pass like i think it's like you're not running a candidate you're running a platform so it doesn't matter who it is you know whoever goes in it could be me but it could be frankly kim kardashian or the rock or david sacks i think what's really important is we should get alignment on a handful of laws that change the trajectory of the state and the reason why that's important is if those laws can pass and the state turns around then that's the road map for the other 49 states and i think that's a big deal that's a really big deal i think it's about

SPEAKER_66: a getting adoption of a playbook a playbook a playbook to fix california and if that playbook is something that a group of people from different parties and different backgrounds can coalesce around and you know publish that playbook in a way that's easily understood and um and you can take

SPEAKER_45: it and run it let's let's pick what our top item would be for me it's the building of uh multi-family

SPEAKER_294: unit housing i think would be in my top three what's in your top three sax well if if if i were to uh

SPEAKER_74: write a a met a a sort of catchphrase for for a campaign uh it would not be make make california great again but it would be something more like tough and tolerant because that's what i think california

SPEAKER_21: wants so tolerant on lgbtq rights um you know tolerant towards people of different nationalities towards immigration um you know tolerant on social issues but i think what california is really want now is tough on crime tough on hard drugs uh negotiate tougher deals with these unions and special

SPEAKER_98: interests who are just pillaging the state um we and then you know and frankly tougher on the politicians

David Sacks: because they're making it too tough on the people to you know to to live and to run their businesses and you know we need to make it easier on the people and tougher on the politicians

SPEAKER_31: freeberg what do you got in your top three items if you if we if we could only put three items on the docket you know one two and three i think from creating much more affordable housing through multi-family you know going up as opposed to building out and just allowing you know anybody who wants to add a couple of stories add a couple stories and just more housing would lower the price of housing and maybe we have to change you know the um taxation and maybe re-evaluate the value of homes because right now you buy a home in 1970 for 50k you're paying one percent of that for the rest of your life right which then makes it impossible to move and you got two people living in a five

SPEAKER_117: thousand five bedroom square foot home because they can't move because their tax basis is so low on it

SPEAKER_66: right what do you got freeberg i mean look the challenge is with any one of these things you have to balance it it's like we talked about last time um you know we talked about adding a transaction

SPEAKER_153: tax to to trading on markets but you also have to get rid of the capital gains tax right if you're gonna

SPEAKER_66: get rid of that um uh you know that that proposition that locks in the property tax rate i i think it's uh prop 13 right sex if you're gonna get rid of prop 13 you've got to phase it out over time but to create the opportunity on the other side which means how do you create more affordable housing at the same time that you get rid of prop 13 you've got to enable as you pointed out um the ability for more rapid housing to to be developed and dropping regulatory constraints and maybe removing some of the union pricing and some of the work that gets done in the supply chain and so on and so you know i think it's about the balance trade-off amongst these things you know if we're going to talk about trying to keep the the top 40 000 households in california and you're going to drop the tax rate on them to keep them here which is an extremely controversial anti-populist move and you know right now you'd have to find another way to kind of resolve um resolve that gap or at the same time kind of reduce the cost of our top cost is education so you need education reform our second top cost is health care um and and and other related services and and how do you resolve that um that there's a lot of structural things in there it's probably a checklist of 10 things that you would say let's go negotiate better prescription drug prices let's make um you know the services more efficient meaning how many patients does a doctor get to see per hour per day per year per week whatever there's all these things that you kind of go through and you can make each one of those dollars that are being spent more efficient so as much as i'd love to kind of rattle it up to three different things uh this is a management problem and you know as as those of us who have run businesses that are struggling or challenged have experienced there isn't one thing to do to fix a problem when something is not operating well um but you really it really does come down to talent and so you know i would think that the people um that are sitting in those assembly and senate seats need to be the right people and the person sitting in the governor's mansion needs to be the right person who will surround him or herself with the right people who are operators and managers and leaders who know how to resolve these problems and go through and do just like that guy did and dave with the napkin and you know write out look here's the 10 simple things we can do to fix hhs and here's the 10 simple things we can do to fix higher education and go in and cut half the expense and if you cut half the expense you have a lot of things you can start to do and so yeah i i i don't have a simple answer for you jacal but i think it comes down to balance would you say and i school vouchers since you brought

SPEAKER_31: up education are the quickest solution there to create more competition quickly by giving parents the ability to take their voucher and go to whatever school they want i'll be honest i haven't read

SPEAKER_156: enough on school vouchers to know the ramifications of the program uh programs that have been proposed so i'm not

SPEAKER_55: going to be very well very thoughtful on that well i'll i'll speak in favor of the idea of giving

SPEAKER_74: parents more choice i mean these schools are being are they being run for the students or for the special interest because right now the parents don't really get any choice i mean look if we can

SPEAKER_21: recall the governor why can't we why can't the parents of a school recall the headmaster i mean why don't we give them the ability to circulate a petition if they're unhappy i think in the case of the governor recall if we get 12 percent of voters to sign the recall petition then you get a recall election so what if you had a a system where the parents of a school could sign a petition and then

SPEAKER_302: they vote and if the majority of the parents yeah i mean majority of the parents vote to recall a

SPEAKER_98: school then they can basically replace the headmaster and run it in a different way why shouldn't they have that choice it's crazy to me well they're paying for who's that's why yeah yeah but yeah let me

SPEAKER_21: give you let me give you a little math i just did on my on my calculator here so the average student in california costs 18 000 a year roughly okay and we have a classroom size on average of about 25

SPEAKER_98: students it's actually higher than the national average so you multiply 18 000 by 25 that's 450 000 per classroom okay now how much does a teacher cost i mean okay no that's the average in california for teachers it's fine let's let's say let's say let's say that we paid teachers extremely well let's say we paid the teachers 100 000 a year because we all believe in having great teachers okay that would still leave 350 000 left over and remember you don't have the real estate cost right the state already owns all these schools so where is the money going we've systematically entrenched

SPEAKER_42: poverty um i think that what happened to you friedberg or sax or me or jcal i don't think it's possible

SPEAKER_39: anymore and i think that we are aberrations and i think that folks that are younger than us would look at us um and they look at us i think in part because they're like god i i would love to have that

SPEAKER_42: shot and i don't think they know where to start and i think they also see a system that feels very

SPEAKER_140: much rigged against them so just buy bitcoin i mean this is why they're attracted to buying bitcoin or doing what they did with gamestop and why wall street insiders versus outsiders they feel like they

SPEAKER_45: have this opportunity to show the man and they don't this is why they don't want to take on school

SPEAKER_31: debt there i mean i i don't blame millennials for being disgruntled if they got a hundred or 200k in

SPEAKER_232: debt and they were told this degree would get them you know uh this would be their ticket and it was

SPEAKER_208: it's alive and disconnected it's a lie it's a great lie it's a great lie and so you know yeah that's

SPEAKER_39: that's one of the big lies and and i think we're sacrificing it now because like you know we're we're we're making this great sacrifice because we're exposing these lies to be exactly as they are so i mean if you if i had to pick a couple things jaykel i would say the most important thing for me is school vouchers tied to in like i would increase public school

SPEAKER_42: salaries you pick your number i don't really care what it is 100 grand 125 grand but you need to tie it to school vouchers so that any parent can put their kid into the best school that is for them

SPEAKER_81: or start their own school like there needs to be competition or start five parents get together

SPEAKER_31: and they each get an 18 18k voucher they can spend a hundred thousand on a teacher to teach five students and if they hit their goals like they're going to do better what what five parents even the

SPEAKER_45: you know the most disadvantaged parents would take advantage of this to me that would be the that's

SPEAKER_39: like the first above all else because i think it creates accountability and it allows our kids to have a decent shot the second thing i would probably do is i would actually just cut all taxes to zero

SPEAKER_42: on the personal side but i would introduce a progressive taxation system for corporations and i would try some of these novel things like getting equity in turn for in turn for credits and allowing

SPEAKER_39: folks to capitalize certain expenses i mean these are like i know people think that's all so stupid but like you know if all we did was just own one percent of apple google facebook you'd have three trillion dollars four trillion dollars trillion with a t you know what i mean well not not you that's four trillion a market cap but you know you know what i'm trying to say like if you control one percent of that it goes a long way um so there's that and then i do think that there's something that we need to do for people to be able to live i i remember interviewing somebody and you know he's what he said to me just made me so sad he's like i you know he drives an hour and a half into work every day and then drives an hour and a half home and i was like how how is this possible and and i just thought to myself like what does that do to you and your family he goes i don't see my family and and i'm like well can't we just increase your salary and you know that's not possible because of the job that he had and then he couldn't afford to live and so all these

SPEAKER_42: things just build up in the system so um those would be my three things it sounds like we have a

SPEAKER_74: bestie platform uh we we we uh need to figure out who the bestie candidate is going to be hopefully we can convince them off to do it but the next thing but the first thing we got to do is uh we got to make sure this recall happens there's another five weeks or so to gather signatures

SPEAKER_21: so everybody should check out the website it's rescue california.org to rescue california.org if you have the means to donate please do i donated fifty thousand dollars to it they are taking donations and even if you're out of state but believe in this cause like jama said what happens in california or as california goes so goes the nation you know it would be a really good thing to send a message even if you're out of state to these special interests who are ruining the state that this isn't going to be tolerated because every politician in the country is going to hear that and they're going to start realizing oh i can't just pay attention to the insiders i need to start paying attention to the outsiders to the majority of citizens who've never been organized before but now they are getting organized and so we need to send this message that is the first step we're not going to get any positive change in this state until the politicians are held accountable and this

SPEAKER_310: recall is the starting point for that and if you take a picture with the form and cc your besties we'll

SPEAKER_31: follow you back or retweet you or like you some combination of that i saw a couple people did it

SPEAKER_101: after the last pod so print out the form and go ahead and take the next the next um podcast um just for everybody to know uh episode 21 we are going to start by reading mean tweets there have been some there have been some unbelievably vicious tweets targeted you typically at jason well and then and then at me a little bit of david sachs but finally oh really they went after the queen we've broken the

SPEAKER_254: seal and the queen has been targeted really he was called he was called sanctimonious he was called

SPEAKER_328: sanctimonious on twitter we are going to make him read his meme tweet to kick off episode 21.

SPEAKER_338: and we will see you all next time on the all in podcast love you guys