SPEAKER_00: sex is there something you object to here the poker one and net worth no i mean it's fine i don't give

SPEAKER_01: a shit about longevity or quantum computing but here's the good news david it's not all about you

SPEAKER_04: there's four people you could have two people who like the topic and then you could just ask

SPEAKER_05: them a probing that's fine that's fine just just tell me when it's over i'll do you know

SPEAKER_17: hey everybody hey everybody welcome to the all in podcast i'm jason calacanis and with us today

SPEAKER_21: again the queen of quinoa david friedberg sans his dog in the background sorry for those of you who love his dog he's on a walk he'll be back in like 10 minutes he'll be back and he'll be in the seat uh and the rain man himself david sax ultra focused on sass and marketplace startups and involved in some illegal trafficking of red pills straight up from honduras to cuba and then through miami making the red pills making their way to california and finally daddy's back the spac master

SPEAKER_04: himself bestie c the dictator is replenished bank account replenished you've been rebillionized by

SPEAKER_26: firing on all cylinders oh it's so so you know live by the spac die by the smack that's what they always

SPEAKER_27: say in this business but you know what we have been absolutely inundated with i kid you not hundreds

SPEAKER_29: of questions from you our loyal audience and when this thing is over we are going on world tour we'll see you in vegas we'll see you uh in uh at the royal abert hall in uh london and miami all

SPEAKER_30: cities are on the agenda let's take our first question from you the audience to what extent are

SPEAKER_33: you guys wait wait how's everyone doing i thought we didn't get into the questions but i mean look at this guy he got his ass kicked in his back i'm doing really really great what about the rest of

David Friedberg: you guys you guys played poker this week we played poker it was a bloodbath well although you know it's

Chamath Palihapitiya: so funny because like we played i played uh a very big game the week before and then we step into our game which is like i think still quite big but i could not rub two cards together to make a hand and i

SPEAKER_42: uh i went off like a rocket ship i just lost it somewhere along the way just and just despite

SPEAKER_27: that despite that every time i chamath and i were heads up in hand he just smashed absolutely smashed me smash and then i was like you know what i'm not going to be bullied anymore and then i stand up to

SPEAKER_45: him and he's got the nuts each time uh i was down i did take out i did run you over i mean the number of just complete bluff i ran on you oh that's crazy and i'm just like oh he's totally got my number

SPEAKER_49: tonight bluff after bluff after bluff after bluff and then i showed him the nuts five times in a

SPEAKER_50: row it was beautiful so i'm stuck a model y and i come back and i win a used prius i'm just

SPEAKER_52: leaving it at that i lost a mid-sized home in phoenix arizona i think you lost a betley okay don't

SPEAKER_53: cancel us uh please uh sacks did you play i wasn't there in that game but i played in uh l.a

SPEAKER_54: game a couple of nights ago and uh any celebrities yeah me me sax and oh god you guys don't have

David Friedberg: names you're podcasters no there was one there was one unnamed celebrity we can't say what what an

SPEAKER_61: actor no we can't say but we all won well just give us a genre i mean an athlete athlete okay

SPEAKER_57: yeah i won in in that game but i lost uh i lost a different game this past week and it wasn't pretty

SPEAKER_64: yeah wait sexy sexy are you what game you're playing yeah i think he may be playing actually

SPEAKER_70: i mean beep that out would you nick beep it out but we can all laugh at him for being so precious oh you i'm sorry do you lps think you're supposed to be in san francisco investing in startups no

SPEAKER_72: no they they know i go wherever the deals are oh really miami what are you going to deal would

SPEAKER_73: you get a deal on some croquettes and a cuban sandwich two for one there's no copies there

SPEAKER_76: when do you think you'll make an investment in a miami-based company you think that'll happen

SPEAKER_25: anytime oh it's happened already has it happened are you in the new free are you in the new

SPEAKER_81: i've invested in a miami company i've got like six yeah i well there are some companies that are moving to miami that i'm already in you know chamath and i are both in pipe right and and uh part at

SPEAKER_83: least the ceo of the company just moved to miami so that's two of four two of four besties in pipe

David Sacks: thanks by the way how did you miss that jcal they they advertise on your show and you didn't

SPEAKER_29: think to try and he said that the lp beep that we all share wanted everything and he couldn't fit me in and i was like how about a slice and he's like is that lp me no there's another lp that sax and i share who got their beak significantly doused in that one but i'm just gonna i'm gonna get the kid

SPEAKER_30: to give me a 25 basis points in a advisor share so i'm getting a slice no matter what yeah good

SPEAKER_96: good luck with that good luck with that good luck the train's off the station the train's off the

David Friedberg: station dude that that company's worth a couple billion dollars in less than two years of its

SPEAKER_30: existence good luck with that jason okay well it's we call it a maker i don't know what you guys are seeing but my god early stage valuations went bonkers i had one company that raised that don't

SPEAKER_50: front run it i have all kinds of data okay right so today we're going to do some audience questions and

SPEAKER_29: then we're going to do the state of vc we're running through a deck we're running through everything that is changing right now in venture capital and early stage investing and it is changing very quickly here's a question from leonard uh oh music to what extent are you guys interested

SPEAKER_30: in longevity in your opinion what technologies could help us live longer and healthier lives

SPEAKER_76: friedberg that's got your name on it why don't we start with you um on this one i would uh point folks

SPEAKER_103: to read the book lifespan by david sinclair who's a researcher at harvard and he's done a lot of kind of leading work on um on uh uh basically calling aging a disease and life extension so the book lifespan highlights i think a lot of his research and findings and paths forward uh for um for improving

SPEAKER_76: longevity and basically you know comes down to what he defines as kind of an early switch that

SPEAKER_103: evolved in evolutionary biology in every cell on every living organism where the cell is either in growth mode or repair mode and the trick is can you get the gene to switch on that puts the cell into repair mode and if you do that the cell fixes itself and you and the cell lasts longer and the organism lives longer and so they've identified a number of genes that trigger this and a number of compounds that trigger expression of those genes and there's a number of things you can do lifestyle wise uh to trigger these genes basically to get yourself to live longer so fasting is a good one and then there's a bunch of compounds that you can take that mimic fasting on a cellular level like uh metformin and rapamycin i'm on metformin i think a couple of you guys are on metformin right

SPEAKER_76: yeah um and then and then the nad plus supplements um which you can buy us you say mnn substance yeah nmn

SPEAKER_103: nmn and nad plus um so there's two there's two compounds nmn like nancy mike nancy um and then nr um and those uh you can buy a product called true niagen on amazon which which has those compounds and you take about a thousand milligrams a day and um anyway all of this stuff's laid out in his books and it supports a lot of the research that's being done obviously fasting and exercise also trigger this gene expression and enable kind of um measures of longevity uh to kind of be showing up biologically

SPEAKER_76: but um i think i think it's a it's an emerging field and there's a lot of deep work going on and as people have highlighted the the process of aging is a biological process that theoretically we can stop and potentially reverse and there's a lot of new work that's being done in stem cell therapy that may kind of elicit some new paths forward here so arguably someone is alive on planet

SPEAKER_109: earth today that could live past the age of 200. so it's an exciting field and lots of kind of paths

SPEAKER_110: forward i'll uh i'll tell you for what it's worth my regimen um and oh god here we go thirst trap photo coming in no uh so so i i do uh the the following so um i take uh a statin now it was 10

SPEAKER_42: milligrams now i'm at 20 milligrams um i take metformin and all of this i take sort of in a preventative posture um because my cholesterol wasn't super high but it wasn't super low it was like sort of like in the 160 170 180 but now it's sort of like 120 um and then metformin i take preventatively as well i'm not pre-diabetic um and then a couple of vitamin d and some other stuff but then here are

SPEAKER_45: these things that i do that i think could be valuable for some folks listening uh there are these places now that exist they're popping up one company that you can check out is called prenuvo p-r-e-n-u-v-o um they're in vancouver they're in la they're in uh redwood city so mid peninsula for those in silicon valley and what you can do is you can get a head to toe uh mri so you know there's no radiation you know you could do these things you know every other week if you wanted to it takes about an hour and what happens is they can basically uh look through your entire body um your musculature your organs um from that literally from the tip of your head all the way down to your ankles and they can spot a lot of stuff that may not otherwise uh be seen and so you know every three or four years to get one of these scans you could see a lesion um you could see the beginnings of a tumor um you know i did one a few weeks ago touch wood it was great nothing nothing so much doesn't cost um there's

Chamath Palihapitiya: a range of prices um and i think those prices will come down the range of prices are from like 1500 to

SPEAKER_45: 2500 so it's not expensive it's not cheap sorry um but here's what they're able to do they're building a corpus of all these images where they're running uh machine learning on it and they're getting better and better at identifying anomalies and so as a result of that they're able to actually take the mri images and they can do fewer and fewer scans to get the equivalent resolution so two things will happen one is the scan time will come down right so it was an hour and a half now it's sort of right under an hour it can probably be as low as 40 minutes which is relatively tolerable for most people and then the cost will come down into the hundreds of dollars because you'll be able to very rapidly assess um so i do that and then the second thing is for anybody with heart disease in their

Chamath Palihapitiya: family i really implore you one of my friends actually is flying down from toronto i'm taking him to my cardiologist in la and there's a thing called heart flow and what heart flow is is a contrast ct which basically means they inject a dye and then they put you under a ct and they they map out your heart and you can literally see the calcium build up you can see the state of your arteries um and you know what probably people don't know is when you have a calcium score you know most of us it's zero but when it starts to be non-zero it doubles every year and by the time it gets into the thousands you're basically guaranteed to get some form of cardiac issue um and so it doesn't seem like anything if your cardiac score is 20 except it goes to 40 80 160 and all of a sudden within five six years you're really in the red zone for a heart attack or something um i've done it twice now um

SPEAKER_42: every five years i do it um and touch wood you know my my calcium score is still zero um but in any

Chamath Palihapitiya: event uh that's what i do for longevity i kind of preventatively at the cellular level with some drugs and then just trying to catch cancer and heart disease on the front end uh otherwise eat three

SPEAKER_117: balanced meals and exercise and sleep alone sax uh you obviously don't care about longevity

SPEAKER_119: uh any thoughts here i mean sax has looked like he's a thousand years old since he was seven no

SPEAKER_121: he was when he was in 12th grade he looked like he was a vice president united states yeah guys just

SPEAKER_124: just let just let me know when this conversation is over i've been doing my email

SPEAKER_128: oh it's so great all right here we go i can end my life now i hate it you don't you guys like i just

SPEAKER_29: lost two years right now sax has got an early spot both on the rocket ship to mars and he's got

SPEAKER_46: an inside vip to peter thiel's blood boy project and so either way he's getting off the planet or he's

SPEAKER_29: gonna refresh his blood or both so he's good all right action bias asks please debate decentralization of monetary value ultimate threat for insiders power erosion i interpret this as a as a bitcoin question

David Sacks: so yeah i think one of the most interesting things happening in the world today is this is what's happening with bitcoin right it's and and you're seeing the price go up because a bunch of institutional investors on wall street are all getting into it now it's gone from retail to institutional and the

SPEAKER_81: narrative basically it's a really profound narrative which is it's the separation of money and state so if you think about like one of the most important events in human history was the separation of church and state where we no longer look to the state to determine you know what religion everyone was going

SPEAKER_143: to be well what crypto is introducing is this idea that the government cannot control the money supply i think that's what he's talking about with the decentralization is that you could have a currency that everybody in the world believes in that no government can control that's the separation of money and state now this is just really a narrative right now um i mean and who knows if it will actually come true but the interesting thing is that if everybody does believe in it it will come true and so bitcoin's been sort of described as the bubble that never ends because if everyone kind of buys into this bubble it actually comes true so i think it's very interesting and you're seeing um because bitcoin is kind of perceived as the antidote to inflation and money printing by the government i think you're seeing it take on new urgency now because the government just keeps printing trillions and trillions of dollars of of new money doesn't this threaten government so if government um

SPEAKER_76: doesn't have control over monitoring financial transactions and have control over the accounts in which the financial assets sit which is effectively the notion of decentralized anonymized wallets then um how does the government secure taxation which is requisite for their ability to fund

SPEAKER_145: well the good to fund the state right and so what happens to the state well so there's an enormous

Chamath Palihapitiya: amount of leakage that happens today in assets that actually get financialized but in the gray market

SPEAKER_45: and i think the the beautiful thing is on the one hand you know we become less focused on like the m1 and the m2 money supply like the physical printable distributable money that we can see and touch and it gets replaced with virtual currencies that are tied to other things i think what the the the the the person who wrote the question is asking really is more about defy and what's

Chamath Palihapitiya: happening sort of like on the ethereum you know 2.0 erc 20 contracts all that stuff which is sort of much more next gen i think than bitcoin and i think at some point we should deep dive into it but

SPEAKER_45: what i would say friedberg is all the leakage you have today goes away in a world of defy because you will financialize every single asset possible you know you'll financialize your homes you'll financialize your cars your watches your jewelry your art you'll financialize every random thing maybe even your career and how people will trade it absolutely your career and and the thing is by by monetizing it and financializing it you can borrow against it you can trade it you can pull forward value into the future against it but it'll all be tracked and so as long as a government then says listen we're going to enable it all but there needs to be an off-ramp to taxation and that's pretty

SPEAKER_149: simple because a physical house exists in the world you can't hide the existence of a physical

SPEAKER_145: house but it's not anonymized right chamath and so i you know if you want to track it i mean

SPEAKER_76: that's the challenge as if no i'm saying if it is anonymized then the government can't track it and

SPEAKER_149: the government can't actually these are these are two separate things some assets will live anonymously

SPEAKER_45: and those are the assets that don't need to exist in the real world but i think what this will create is a world where all of these assets that actually truly exist in the real world it'll be fine that it exists and that people get taxed on it but it'll be much more legitimate and i think it'll be simpler and so i think people will trade off incremental taxation for incremental monetize ability i'll give you an example um let's use real estate there is no reason why every single piece of land everywhere around the world isn't written into a ledger with knowledge of who owns it such that the person that

David Friedberg: owns it could trade it could borrow against it um could sell it uh could finalize it fractionalize it

SPEAKER_121: even if you can't fractionalize in the real world because your neighbors won't let you set it up into four lots you could do that online online and so today what will happen is that you know that

SPEAKER_45: person has a level of wealth and what they do instead take the united states is they lobby lobby lobby to create all this convoluted real estate tax law to make their life simpler but if you actually

SPEAKER_149: unlocked the ability to focus on revenue versus expenses you just wouldn't focus as much on the taxation because you'd say well it can make so much more money if you judge just to you know sort of

SPEAKER_156: answer the question here from the from the reader from the listener i think you can really judge this

SPEAKER_29: based upon how much it's being pumped by the people who own it and they are absolutely dogged religious about this it's like talking to and you know a person who's you know met jesus and now everybody has to be a christian um and you can also look at uh the people who are opposing it i don't know if you saw yellen um and then um christine lagarde she came out against it yellen's come out against it india might ban it and then you have obviously china's coming out their digital wants so i think it's going to be there's going to be a dogfight here where governments are not going to easily give up their control of this and there's many ways they can make a bunch of red tape to slow this down and in countries that are authoritarian they can outright ban it let's take another question

SPEAKER_76: here by the way there's like three outcomes here right i mean you could either see bitcoin for example you know being banned and that's going to be ugly um and obviously there would be significant financial loss at this point i mean to sax's point at some point there's so much asset value tied up in

SPEAKER_36: bitcoin it's it's too big to fail so david banned by who oh that's chinese government this is what they're trying to do on some of the states right and they're trying to make it illegal for citizens to

SPEAKER_76: transfer money in and out of the asset class i think i think it's i think it's a bigger threat to

SPEAKER_81: countries that want to impose export or currency controls and export restrictions but but frankly if you're a country that's not afraid of currency movements because you're not trying to do something oppressive to your people i don't think you have that much to fear here i mean there are other ways

SPEAKER_143: of trying to hide assets or hide money besides bitcoin and every transaction every bitcoin transaction is written into the ledger i think you have to be pretty dumb to try and commit a crime with bitcoin because there's going to be a permanent record in the blockchain forever of that transfer and then

David Sacks: there's companies that that provide that do kind of sleuthing and try to you know unravel

SPEAKER_76: you think tax evasion in the united states is going to be difficult um with bitcoin if i accrue a bunch of value in bitcoin am i going to be able to evade paying taxes on those gains and convert that

SPEAKER_103: bitcoin into physical assets by purchasing it from another bitcoin wallet holder i mean how realistic is tax evasion going to be uh and how much would because that's ultimately what the us government

David Sacks: would mostly well so you would convert cash into bitcoin and then you want to sell your bitcoin at some point you're gonna have to sell it i mean there would be a uh there'd be a a realization of

SPEAKER_145: what i'm saying transfer to a seller of an asset of another asset that's willing to accept bitcoin

David Sacks: in receipt and so to anonymize wallets i don't know i mean that that transaction is going to live on

SPEAKER_143: the blockchain forever and it's going to live in the books of whoever the seller is what are they selling you a car or a house whatever i mean that that transit watch i mean look if it's a personal item maybe but if we're talking about a substantial asset like a house or a company or something they're going to need to the other side of the transaction is going to need to report the realization event so you're going to have to have two people collude to engage in tax evasion seems like a really stupid

SPEAKER_76: thing to do legally incorporated businesses are going to be mandated to do effectively identity verification much like we have to do under the patriot act with all the the financial totally

SPEAKER_167: totally yeah ultimately how the compromise arises right yeah i'm not i i'm not that worried about i

SPEAKER_143: feel like this whole like silk road type bitcoin will be used illegally thing is like kind of a old meme about it that i think that the fears are like greatly exaggerated but the thing that jumps out at me about all the critics of bitcoin and i'm not like a pump or whatever but i do i do own some um is the the thing that like all these like critics don't seem to understand is the technology that's the common denominator whether it's like howard marx or warren buffett or charlie munger whoever they're they're all like great investors or whatever but they're not technologists and line spot it's a blind spot and the thing they don't understand about the technology is that bitcoin is the first digital asset to ever be created that you can't create infinite copies of right so think about like a song or a photo or a video or whatever anything that's digital you've always been able to make an infinite number of copies isn't that what the word digital means is that it's infinitely copyable so how do you have digital money that can't just be infinitely copied obviously that would destroy the value and that was the genius of bitcoin is that every transaction is written into this ledger the blockchain is decentralized and nobody over the last decade or so has figured out how to counterfeit bitcoin how to make a duplicate how to double spend bitcoin as long as that remains true then bitcoin can serve as money if everyone believes in it the day that someone figures

SPEAKER_168: out how to counterfeit a bitcoin how to double spend it it's all worthless but a lot of people have been trying over the last 10 years they've never figured out how to crack it by the way that's

SPEAKER_167: a great it's a great transition to the next question sorry interrupt here but no it's a perfect

SPEAKER_30: transition and uh next up adil says can one of the besties explain the power of quantum computing and how

SPEAKER_156: it can change industries like medical pharmaceuticals any good companies that are leaders in quantum

SPEAKER_179: computing uh i'll i'll i'll take a cut at this one so um and the reason um i pointed it out is because

SPEAKER_76: a lot of people do talk about quantum computing uh potentially being a path to cracking the hashing functions in bitcoin mining and potentially overwhelming the network and effectively counterfeiting the the bitcoin uh ledger um and so uh technically a quantum computer is a computer that uses qubits uh which is a a storage of a quantum state versus a storage of a binary state which is uh a a binary uh binary digit which is called a bit in traditional computing classical computing

SPEAKER_103: a one and a zero a one and a zero and a quantum or qubit a quantum state can uh be a much more dynamic function and so it's a it's a state that is uh it's very analog and very representative of kind of a a much more kind of broader condition than just a one or a zero it could be a one a zero or

SPEAKER_76: neither right it can have neither state as well about it as a wave function and um and so a qubit can only exist in a in a piece of matter uh where you can hold the fidelity of a quantum state meaning it can't be disturbed so right now all quantum computing gets disturbed it all has some error prone uh context to it and so in order to use qubits to do calculations we use what's called quantum error correction on those qubits and so we adjust the the qubits and the output to try and resolve it a qubit with no errors is called a logical qubit and the logical qubit has not been built it would require very very very low error rates um and there's a bunch of uh and and there's a bunch of theories around when this is going to happen when are we going to have truly logical qubits um when does the error rate get low enough that these qubits are are truly kind of useful now there is an estimate that the number of logical qubits needed to crack rsa 2048 which is the big kind of encryption standard um which could kind of break the whole crypto currency model um it would require about 4011 logical qubits um today the largest um the largest quantum computer has about 100 qubits that are very noisy and so it's less than one logical qubit and so we would need somewhere between a hundred thousand and a million qubit computer to be able to have enough quantum um supremacy to be

SPEAKER_103: able to tackle a project like cracking rsa 2048 and by some estimates and some people have tried to

SPEAKER_76: estimate when this would happen and the estimate currently by some researchers is that this there's a less than five percent chance this happens before the year 2040 so we're talking somewhere between the year 2040 and the 2060 when we get a quantum computer that has enough logical qubits to be able to crack a problem like um you know rsa 2048 and basically make all crypto fail and between now and then a lot of people are working on quantum cryptography which is new methods of encryption that are kind of built for the quantum era and the quantum frontier now what's more interesting is that over the next hundred next 10 years or so the current super noisy super low fidelity quantum computers can be used to simulate quantum states which is the condition of atoms and molecules and use that to do better modeling of physio chemical properties of material that's where the breakthroughs will happen in the next decade so all the hard discrete problems that we kind of theorize about cryptography and other stuff that's decades away in this decade we are already going to start to see quantum computers have breakthroughs in how material how atoms and molecules interact with each other for example finding proteins that can do a better job of having an enzymatic reaction in the physical world where we can now potentially pull nitrogen out of the atmosphere to make fertilizer or or drugs or um or specific protein targets that can go in the human body and have specific functions by modeling what we can't do with traditional computers today modeling the quantum properties of those molecules and how they interact with other molecules and then building really cool predictive models that we can then turn into products and that's going to be chased really hard this decade everyone's going to be going after it and we already have enough compute power i don't think that there's any leader in quantum computing today these are all still science experiments they're all breadboards ibm google microsoft a bunch of research labs a bunch of startups are all kind of basically doing the same thing with different types of qubit technology but they all have very high errors they all have very low qubit computers and so it's still unresolved who's going to come out with something company two companies to follow

SPEAKER_30: are d-wave which was started in 99 so just to give you an idea of how long people have been working on this 22 year old company i know uh steve jervison's been backing it for now in its third decade and then ionic is that the other one i-o-n-q i i think like quantum act right quantum computing is like

Chamath Palihapitiya: fusion yes it's like it's like a technical problem that has attracted people who've had

SPEAKER_45: more money than common sense um and it just basically a way to burn an enormous amount of

SPEAKER_149: money over 20 or 30 years and the problem with that is that you start to build in technical cruft anything that is still in r d phase 20 years in needs to get scrapped and rebuilt from scratch because everything has changed including the people even the 20 year olds that started are now in

SPEAKER_65: their 40s and have kids and just have a comparative demand it's a great point samat and so and so like

SPEAKER_45: you got to just scrap these projects and start all over again because the the problem is you need somebody completely naive to look at this problem in 2021 and say well okay how are we actually going to really solve like the coherence problem i don't know how are we going to build a gatorade i don't know and you have these very um formulaic ways that we knew based on what technologies were available in 99 or 2000 to start with and i think that's probably part of why we framed the problem as largely sort of this thing of like okay maybe there's like a integer factorization thing you can do and it's like

SPEAKER_192: i don't know i'm uh i'm deeply skeptical yeah well i agree and by the way this is why sorry can i just

Chamath Palihapitiya: say one last thing this is why alpha fold beat quantum computers to the solution of protein folding uh

SPEAKER_45: and and the reason was they were just like we'll just take a different run at it completely different

Chamath Palihapitiya: people a completely different technical framework and modality and a completely different risk profile

SPEAKER_30: and age as well a company to keep an eye on in the uh fusion space commonwealth fusion systems um i just

SPEAKER_124: had bob mum guard exactly what were you going to say what i was going to say is that the main thing i

David Sacks: was thinking about while you were giving that dissertation on qubits or god knows what is that

SPEAKER_197: is i would never invest in this that's all i was thinking is i would never invest in this yes

SPEAKER_201: you're focused on sass and marketplace no it's exactly what yeah it's exactly what jama said definitely seven queens and eight kings and five aces yeah look these are science fair experiments

SPEAKER_81: you know with indefinite time frames this is basic r d that should be done at universities these concepts

SPEAKER_123: are not ready for commercialization exactly what they said about uh ai and then now it's infected every company so no that's not true jason because there was like they were saying this about

SPEAKER_210: ai 10 years no jason couldn't get funded i completely disagree with you deep mine could not get funded in the beginning no complete completely disagree with you because okay

SPEAKER_149: there was there was a practical commercial revenue generating opportunity for ai and machine learning literally from the start of computing it took several iterations there's no use case for fusion energy

SPEAKER_214: i mean of course there is no i'm not no but it's it's still at the basic r d stage basic r and

SPEAKER_143: i will yeah i will i'll partially agree with you jason in the sense that i was not investing in ai 10 years ago because i thought at that stage it was still in the realm of science fiction but we just announced two deals the last two days to see deals viable which is basically an ai voice of the customer it slurps in all of your customer feedback and then gives you answers and then the other one is a copywriting one it's a copywriting ai called copy.ai which literally writes your site trying to get a slice right now yeah not yeah we might give you a slice jason stop being so skeptical but uh but yeah but but here's here's what's changed right is these are seed companies with just a handful of employees they're built on gpt3 so you had this like basic like r d done it creates this platform called gpt3 it's like now aws right yeah yeah you can now build companies on top of that so i mean look in it you know what i invest in are the commercialization of of of new technology waves um those technology waves happen because of deeper r d what do you think about vr and ar

SPEAKER_204: because there's the same conversation with vr and ar like are these worthy investments or not

SPEAKER_76: i think i think sax's point is such a good one because what he's saying is um is what i think has happened over the last century the government the best role the government can provide is to take on that technology risk that large capital intense technology risk this was the case with the manhattan project and we got nuclear energy out of it it was the case with apollo project we have the space industry as a result now and it's what happened with the human genome project and now we have an incredible genomics revolution and arpanet and and that that expense of early stage de-risking requires an

SPEAKER_103: incredible amount of capital that's very low returning it doesn't return anything it's what what sax is saying is later is that is the the commercialization where do we have um uh a heuristic

SPEAKER_46: a theory a best practice around when something goes from a research project to being commercially

SPEAKER_01: viable are there signals i mean platform platformification seems like one that you pointed out david if it's a platform and you can use it easily yeah i think i i think i think you can tell

SPEAKER_81: when the amount of capital required to get it off the ground goes to something reasonable like a few million dollars as opposed to hundreds of millions of dollars whenever and jason you've talked about

SPEAKER_143: this that any company that's trying to raise hundreds of millions of dollars or you know has a billion dollar plus like evaluation before shipping a product is presumptively fraud there's still too much r d involved i mean look venture capital is a milestone milestone based investing model you take a little bit of seed money you create a prototype you get some proof then you raise a series a you get 10 million you get some customers then you raise 25 million and you scale the company and it's based on milestones it's actually a very efficient way of investing and when somebody wants to skip over all those milestones they say no we need hundreds of millions of dollars to launch this thing you have to ask why is this is this idea really ready for commercialization what's chamath's

SPEAKER_222: response to that because you've done deep tech investing and you've done i mean virgin

SPEAKER_04: galactic would fall into that or no yeah so like how do you think about deep tech investing

SPEAKER_76: chamath and like where we're like there's a role for venture capital private market you know dollars

Chamath Palihapitiya: yeah i've done i've done a lot of deep tech investing and my whole thing was i've always looked at at the point where something is completely de-risked technically and it's about then the exploitation of

SPEAKER_45: a market otherwise it's exactly what david said so i'll give you an example um a company called relativity space is now the second most valuable private space flight company after spacex okay yc company i led the series a um what were they trying to do their they their their stated goal at the time was we want to 3d print the entire rocket and the entire engine and i said wow okay well when we did the math and we tried to figure this out and have the same launch capability as spacex all of it comes down to

SPEAKER_149: okay well how do you want to de-risk this and what tim and jordan's first idea was well first we want to

SPEAKER_45: basically prove that we can actually get a certain printing capability done because you're talking about these extremely you know energy intensive extremely technical printers and effectively writing printer drivers right and to be doing it at a scale where you can hand that off to nasa and they can take that engine literally strap it down with chains called the hold down test fire the engine and say it works doesn't blow up doesn't blow up and i said to tim how much does that take and tim was like i can probably do that on 10 million bucks i said you're done on 10 million dollars yeah and so it was a

SPEAKER_149: hundred million hundred the only person that would have written a hundred million dollar check to de-risk that doesn't understand what they're trying to prove at that point in time because what he was trying to prove was the the ability to use the printer he wasn't saying i'm trying to build a next generation rocket motor right so similarly with virgin you know virgin got to a point where it's like it had flown demonstrably in the air so what did it prove it proved the flight profile worked it proved the engine worked it proved all the navigational componentry work and it proved the safety envelope work which means that it could basically act as a glider under all kinds of boundary conditions that's an

David Friedberg: enormous amount of technical progress and then at that point there i'm willing to invest billions of

SPEAKER_46: dollars and so to david's point you have to have a new model early too like that's one of the things about being an entrepreneur is figuring out how you stay alive while you answer these questions and you

SPEAKER_83: came up with a brilliant one or whoever was doing virgin galactic which is people will overpay no but

SPEAKER_149: virgin was a 15 year process where richard branson to his credit did exactly what david said here's 10 million dollars get to milestone one here's 25 million dollars get to milestone two he did the exact venture capital model it's just that he did it by himself i think what david is saying which i agree with is you should never short circuit that and say here's 500 million dollars pre-series a yeah i agree with that sure otherwise you'll be working at something for 20 years with nothing to show for it as in fusion as in quantum computing all right you end up with like you end up with a

SPEAKER_81: magic leap or theranos theranos or even theranos is a frame it looks like it's a fraud but magic leap just

SPEAKER_239: looks like it's technically incompetent or it's too hard of a technical problem to solve in the amount of time and the amount right technical incompetence well i don't know if it's incompetence

SPEAKER_121: just might be a it might be a 20-year problem as opposed to a five no but why are you taking this

SPEAKER_230: emotionally technical incompetence is the opposite of technical competence competence means you can do it

SPEAKER_239: technical incompetence okay i thought you were saying that that group of people is incompetent

SPEAKER_121: i'm saying the word saying the window followed by the word incompetence technical incompetence okay when you're saying it i'm think you're describing the person not the problem it could have been too hard

SPEAKER_29: to lift for them so yeah okay well the last question is about access to private equity but let's just go into this deck here now one of the things we wanted to talk to today chamath had a good idea venture capital is changing rapidly the last decade has seen more change in venture capital than i would argue the four decades or five decades that venture capital has existed in other words more change and we're going to go through some of those changes how it affects the entrepreneur how it

SPEAKER_210: affects the investor chamath was nice enough to put a deck together and then i guess jason will figure out a way to post this into the youtube or something like that yeah you know what we'll put in the show

SPEAKER_46: notes a link to this google presentation and nick can pull up the slides when we're talking about them

SPEAKER_45: i think i think if folks can give us feedback this is kind of a new thing for us we're trying to experiment which is sort of this is like a half teaching half discussion on something we all wanted

Chamath Palihapitiya: to talk about and hopefully you guys get some value from it but uh tell us if it's not so uh i i want to thank uh carmen collins on my team who helped put this together but let me just uh go through this state of venture capital um so a couple of high level points there's like some really important trends

SPEAKER_45: at play the first is that there really is now underneath a massive change in the players in this game um founder demographics are changing slowly but surely we're going to go into that in a second

Chamath Palihapitiya: traditional uh vc investors are getting disrupted we're going to go that we're going to go into that um and then this model which i love of let me know how i can be helpful quote unquote um basically eroding um and seeding ground to what we call solo capitalists and we'll talk about that which is

SPEAKER_45: probably the most disruptive trend in venture second we'll talk about the inflation in the amount of money that's going into these companies which really means more money at higher prices and why that's good in some ways and actually bad in some other ways this goes back to david's point of you know not being forced to generate milestones sooner uh and then the third is that it's really now a founder's market and i think this is really important because you know you've seen an enormous amount of dilution and lack of control for uh founders and employee teams and companies and i think that there are some really disruptive new ways that completely usurp traditional venture non-diluted forms of financing we'll talk about that so let me just level set for you guys i asked the following question

Chamath Palihapitiya: what are the demographics of the united states and here's what they are in the united states today 59.7 percent of people are white non-hispanic 12 and a half percent are black 5.8 are asian 18.7 percent are hispanic and 2.3 are multi-race if you map that to vc founders 77 of vc founders are white one percent are black 17.7 are asian 1.8 are hispanic and two and a half are multi-race so amongst multi-race asian and white you either are at or over indexing your representative population and blacks and hispanics this is not anything new but massively underrepresented if you take it from a gender females have lower representation among founders but it's growing so the us is basically 50 50 male female female founded companies were 23 percent of all deal activity in 2019 that's that's pretty good um up from 12 percent in 2010 although racial diversity is still pretty lacking which we know and then the young tech bro stereotype is cracking uh which is this is incredible 2019 study in the times showed that the average age of a tech founder is david sacks what do you think it is the average age of a tech

SPEAKER_81: founder median or average mean or median average well i saw i saw your deck so isn't it something

SPEAKER_119: like yeah it was surprisingly 35 40 42 42. no i'm seeing a lot i think i don't know just to pause

SPEAKER_106: here for a moment what do we think i can still found a company you can what do we think is given we you

SPEAKER_46: had the longevity question earlier and then you have people you know generating wealth and starting companies in their 40s 50s and 60s who then underwrite it themselves right until they get to product market fit and then raise money what do we think is the best zone for an entrepreneur

SPEAKER_42: in terms of having a great outcome i've always thought that the look i when i how old was i i was 31 32 when

Chamath Palihapitiya: i started social capital um i mean this is a multi-billion dollar enterprise i feel like i'm reasonably successful at it um but i was preparing for the first 13 or 14 years of my professional career i learned some good things i learned some bad things i learned tactics that worked i learned strategies that didn't so 30s or 40s or well in my 50s in my experience for me and i think it's for

SPEAKER_45: personal for everybody i was best positioned to know what to do and at least iterate in my 30s um and i think in the absence of an idea that has some network effect or something that's sort of like

SPEAKER_262: supernatural outside of your own control i think the older you are generally probably the better prepared

David Sacks: you'll be yeah i agree i mean i did paypal when i was still in my 20s but i wasn't the the founder of the company i was recruited to it at a very early stage i didn't really start yammer until well i guess i started the predecessor company genie when i was 34 and then yammer pivoted into yammer when i was 35.

SPEAKER_81: i mean absolutely that's that's like a that's like a good level of preparation you know unless you have

SPEAKER_143: a spectacular idea for a startup you should probably get some experience first 100 freeberg any thoughts

SPEAKER_156: there on what's the kill zone best time to launch companies in your mind or investing companies or where

SPEAKER_179: founders i mean look everyone's got their own path you know i mean zuck and sergey and larry and uh bill gates they started right out of college without any experience but um i mean i worked at i i had two jobs uh in tech before i started my first company in 2006. yeah um and so i had a lot to draw from and that really informed me but i think everyone's different i mean some people if you

SPEAKER_81: have the idea if you have the idea by all means do it in your 20s you know absolutely but i mean by

SPEAKER_76: by far the the greatest kind of like um measure of whether and when you're kind of prepared for this

SPEAKER_103: is your ability to continue learning you know continuous learning to me is it's one of the greatest predictors of entrepreneurial success and all the guys that have lasted for decades from bezos to zuck to you know larry and sergey you know they were continuously evolving themselves because they were continuous learners bill gates is bill gates is the penultimate example of this right i mean this guy's reinvented himself a thousand times that that what you said is so

Chamath Palihapitiya: important i'm going to change my answer i think i started social capital when i was actually the most able to get out of my own way and learn continuously yeah yeah you know what one thing

SPEAKER_81: i'd add to this is it's so much easier to be a founder now today that i mean look i i remember i joined paypal in 1999 that was my first startup it was like really hard to get into entrepreneurship in the 1990s you know the vcs had tremendous power and control they would routinely replace founder ceos

SPEAKER_143: you know everyone had to go to sandhill road to get capital it was hard to even know how to network your way to sandhill road it was just much much harder to be a founder it was much harder to raise money it was hard to know what to do and then i think actually one of the things that really changed things was with blogging emerging in the mid 2000s it led to a proliferation of information where now you know other founders started blogging um investors started blogging and there became a wealth of information out there so you could learn how to do it and then of course you had incubators and so on like yc so there became more of like a playbook for just like how you actually get a company off the ground when i graduated law school which was 1998 i i knew i wanted to get into business and entrepreneurship i really had no idea how to do it and if it wasn't for a phone call from peter teal i'm not sure i would have gotten into it you know but now now everybody knows what to do can i

Chamath Palihapitiya: ask you a question then so let me let me give you a stat and i'll ask a question what do you think that

SPEAKER_42: story would be david for somebody that wasn't a white man so here's the step here's the data

Chamath Palihapitiya: the percentage of female vc decision makers has grown by more than 2x uh what that means is about firms over a billion dollars about a quarter of them have at least two plus female decision makers but 61 of them have zero and 80 of venture firms still have no black investors how do you correlate or

SPEAKER_45: intersect that idea of ease of starting a company with the pattern recognition of those folks and the inability to sort of maybe map to people with black skin or women i mean i think that what silicon

David Sacks: valley and what venture capital represents is opportunity right and we have to extend that

SPEAKER_282: opportunity to as many people as possible i mean that's really the the key here is we do need to

SPEAKER_76: make it as widely available as possible by the way chamath i mean one way to slice things is the percent percentage of uh diverse representation within the ranks of venture and private equity

SPEAKER_103: um but there is a equivalent scaling in the number of venture firms and the amount of venture capital since you know sax and you and i and all of us kind of entered the technology industry kind of early 2000 um and the number of firms that exist today that are kind of micro firms and scaled firms i think presents um a much larger set of opportunity you're right there are still uh standards um and there are still challenges in diversity and kind of having access uh but there is so much more access than there has ever been um and that's really changed the landscape i mean folks coming out of college

SPEAKER_109: can get a million dollars that was kind of unheard of back in 1999 or or or or or the reality is like

SPEAKER_45: there's so many incubators i mean it's not as if jason or yc or any of these folks give millions of

Chamath Palihapitiya: dollars right jason like these checks are still really small so the point is you can build something

SPEAKER_46: if you have the skills to build something the the the gap right now is that there's a lot of people who have ideas about what they want to do uh but they have no skills and i think what we found in a vibrant market like today i mean this is the most vibrant i've ever seen it there's at least three or four times as many startups to choose from at the earliest stages and what we're seeing is the number of vcs has not grown at that level it has grown the number of players has grown but not at that level therefore the average quality of a deal has gone up the average quality of a funded deal has gone up but the average quality of a startup has gone down does that make sense yeah so the ones that get funded are better than ever but the one the average is lower because there's so many doing it and then just the best piece of advice i have is when we talked about continuous learning is if you are not building the product in some way or selling the product in some way then what are you doing at this startup like you either build it or you sell it like it really isn't much more there and a lot of

SPEAKER_83: people just have ideas and no ability to execute you really have to be a developer designer ux person marketer or something uh in terms of getting this product out to the world

Chamath Palihapitiya: what uh what do you guys think about this other trend which i think is really important which is the atomization of these firms so you know we're moving from a world where people used to care about name the brand sequoia excel uh and then now they they name the person right and they'll probably follow that person wherever they are so what do we think about that there's a really interesting tweet from eric torenberg he said founders don't want to raise money from institutions as much anymore they want to raise money from individuals and then if you marry that with what's happening with angel list and all this other stuff isn't that the trail of breadcrumbs for how like vc just kind of in some ways just kind of gets blown up the way that it's normally been done i remember as a

SPEAKER_76: founder um when i started my company 2006 there was a lot of this conversation in as as uh sacks

SPEAKER_103: pointed out in the blogger community blogging community and with like various websites that rated vcs and there was generally a trend in the support network among ceos adventure firms um of talking a lot about make sure you pick your partner don't pick the firm um and so this i don't know if this is necessarily a new trend shamoth it's certainly something that i remember being top of mind 15 years ago when i started my first company and so much of it was about make sure you have the right partner because that's who's going to be on your board that's who you're going to spend time with that's who's going to recruit executives with you that's who's going to be helpful in finding your next round of funding for you um and i feel like that's that's always been the case but you're right the brand value of a firm has certainly become less useful um and folks have struggled to kind of figure out i think a solution here i mean you see what andres and horowitz did they launched in 2009 and really focused on trying to be this kind of full service provider to startups and i don't know how

SPEAKER_109: much that matters as much anymore as much as making sure you've got a great partner from the firm

SPEAKER_293: that's helping you with your business i i don't know it's actually you're right freeberg that's

SPEAKER_46: a continuing trend what i'll say is the top firms are still as attractive or more attractive to founders the loser in this i believe is the mid-tier firm or the lower tier firms that actually none of the partners there are all that great the performance is not that great their value add is not that great but when you do get a sequoia or an andresen uh when i put craft in this as well when you get one of those all-star vc firms to join your board specifically that is the key when they join the board they own over 10 percent you are anointed in a way that is transcendent you will get pounded with inbound from the second tier and third tier firms who want to triple your valuation and give you 20 million bucks it happens like clockwork in fact there are a couple of firms like was it dag the

SPEAKER_27: one sacks that would always follow on sequoia deals and so there were firms that were built

SPEAKER_99: that was that was their lp pitch dag's lp pitch is we just we will mark up every sequoia deal

SPEAKER_210: exactly and so i mean one page it was one page so it's like if you can't get into sequoia and you're

SPEAKER_46: willing to wait an extra round to invest in dag well and then now i think the big trend here is those firms andresen and sequoia are now full stage where they have the late stage growth they have a scout

SPEAKER_297: program they have a seed program they have a series a program so the full life cycle it's not those guys

SPEAKER_298: also it's just it's all these other big crossover guys that have come down tiger go to durable

SPEAKER_76: i think that's the biggest trend of the last uh 15 years chamath and i think it is what has enabled the proliferation of early stage startups and enabled the valuation increment and the capital that's slowed in the early stage is the um is the scale down from the big guys i just want to kind of do a quick walk down memory lane because when you guys said you wanted to talk about this i kind of remembered i got my series b term sheet in 2008 i guess it was and um and or 2009 and i had three venture firms uh andresen was one of them that gave me a term sheet uh and the interesting thing about at that time with andresen was they gave me a term sheet i was trying to raise 30 million dollars and they said we want to give you 40 million and they upped the valuation significantly and um and there was a i ultimately went with coastal ventures but there was this trend um that andresen was kind of imparting and i heard about it a lot from other uh entrepreneurs was that they were going out and offering more money than the founder was asking for or seeking at higher valuations and it was this trend towards saying like go grab the market because the interesting thing about web scale economics and um you know web scale businesses is you get so much leverage and

SPEAKER_103: you can get extraordinarily rapid growth i mean the rate of growth could be infinite um and and the

SPEAKER_115: leverage could be infinite and so do it if you do it at the right round i think that's but so much

SPEAKER_76: of this was and and then obviously that so that was a huge step up and i remember andresen horowitz beginning 2009 kind of started to build a reputation for doing this of of kind of you know putting larger checks out and saying go scale and then the the big crazy thing was the crossover guy started coming in and offering bigger checks in kind of this proven stage growth stage kind of funding and then obviously the big step up was soft bank and soft bank with 100 billion dollar vision fund and and

SPEAKER_304: ultimately what exactly did that disrupt freeberg just hang on so when all these things happened

SPEAKER_76: those large chunks of capital became available and the valuation step ups were so significant for these later stage startups that the money flowed down and more money was raised in earlier stage venture that enabled this proliferation of capital and this proliferation of new startups and enablement of startups at the earlier stage because of all the crossover money that started to come in and the blitz scaling of proposals and lots of money that was being thrown at the later stage that to me felt like the reason all of the earlier stage stuff proliferated was because of the amount of capital

SPEAKER_305: you're a later stage you're absolutely right and now 10 years later here's where we are in early

SPEAKER_76: spax are the next step chamath because like totally i think what you did you know we pre-2009 there was 10 billion dollars a year in spax then when you started this in 2009 stepped up to 2019 it stepped up to 13 billion last year 80 billion was raised in spax this quarter 100 billion in spax and spax are that you cross over investing it's taking you know growth stage private equity style risk in the public markets with this proliferation of capital and we're seeing the benefit in the early stage and founders and entrepreneurs are seeing the benefit because there's so much access to capital on the back end you can take more risk on the early end and you can make more bets and and i think you know i think it's the next step up and we just keep seeing these step ups yeah i tend to think that the growth stage

Chamath Palihapitiya: is the most troubled and challenge because at the early stage you can get a guy like sax or jacal on your board and you can grind and i think that that's really important to get to product market fit and at the public stage you can get somebody like me and you know we can help transact and actually help optimize and run the business for scale and value but in the middle you have all these weird dynamics that no longer maybe not don't make as much sense so just to give you a sense of it the average deal size okay so the typical round is up 3x over the last 10 years 3x that that is absolutely anecdotally

SPEAKER_45: my experience uh in late stage investors are doubling and tripling down on these mega deals so

Chamath Palihapitiya: that that average round size is up 5x in the last decade um the the typical pre money on a growth stage deal in 2010 was 100 pre this is for the top quartile uh and it's now or sorry for this is for the average it's now this is for a growth stage yeah growth stage 100 pre is now 570 pre wow yeah that's getting crazy it's really it's really really getting crazy tiger it says here in the notes tiger global

SPEAKER_42: has announced the deal according to pitch book every 48 hours in 2021 that's fabulous that's

SPEAKER_81: fantastic what tiger i think has figured out is there they started as public market investors and worked their way down the stack right so they're very familiar with the public market valuations they're seeing that these sas companies are you know we i remember 10 years ago when i was doing yammer

SPEAKER_143: we thought that the best outcome that you could have as a sas company was like a one to two billion dollar exit that's why when microsoft offered us 1.2 billion in 2012 we took it right we're like we could work five more years maybe get to a two billion dollar outcome well now you're seeing what slack just got acquired by salesforce for close to 30 billion it's pretty routine to see sas companies ipoing it now 10 20 30 billion and up and so the exits are just so much bigger than anybody thought 10 years ago and we were the optimist by the way there's a good tweet on this by um it was jay malik basically he gave some stats he said that uh if you're wondering why everyone wants to invest or be a vc today the stats from pitch book provide an answer we had 43 billion in exits in 2010 we had 290 billion in exits in 2020 so we had about 7x roughly greater exits over the course of a decade now the average deal size has grown 3x and there's a lot more money going into venture capital but the reason why you're having all this money go in and all these new players is because the outcomes are so much bigger and then he said and i agree with this wouldn't be surprised if vc hits 1 trillion by 2030 so we're seeing just the i mean i remember 20 years ago when i first got into the business you know like silicon valley was this small little um concentric circle around stanford and now it's spread to san francisco and the entire bay area and to other cities

SPEAKER_145: and it just keeps getting bigger and bigger it's the digitization of every market right i mean every

SPEAKER_103: traditional business every traditional industry is being digitized in some way or another and so it's no longer a tech enabler of other industries it is the industry itself we know that the the brand

SPEAKER_46: really matters in the early stage because they anoint you and they bring so much value in terms of working with you to solve problems we know with specs whoever and ipos whoever is anointing that really matters right the sponsor but in the middle is all that cash now move to a a game of who will pay the most for the least rights in other words series b to you know when you get involved chamath is

SPEAKER_45: that just it's such a good point you're so what you're now teeing up jason is this next big category which is if it's undifferentiated capital at some point you're going to go to the logical conclusion

Chamath Palihapitiya: which is i don't want any dilution from this i'm happy to take dilution in the series a when i get you know craft or sequoia or benchmark i'm happy to take dilution in the ipo because that's sort of the necessary process of you know diversifying the stock ownership getting you know my users and my customers to be able to own the stock etc etc but in the middle now you have these companies

SPEAKER_45: like pipe and clearbank where now all of a sudden you can grow jason in your b c d rounds and you have zero dilution so if you're a founder you know the best formula is going to be take series a and seed capital from an expert single you know gp brand person who knows that business category so well right if you're starting a sas company you should probably get your seed from sax you know raise your a from some expert or what let me say differently seed from jcal a from sax and then go to pipe and

Chamath Palihapitiya: clearbank and fund it all based on your recurring revenue growth and then go public via spac so just to give you some uh data that i got from pipe which means you would just to give people an idea

SPEAKER_46: of what the cap table would look like there you would dilute 10 in your your seed round 20 in your a now you still have 70 of the company and you just sell your yearly contracts ahead of time to pipe

SPEAKER_327: and you're done by the way can i can i tell the story about pipes of pipe um yeah it's kind of

SPEAKER_121: painful thanks for including freeberg david david can i can i give the stat from pipe and then you can tell the story sorry you guys are all investors in this company no not me and you

SPEAKER_328: david they let us our beaks are dry my feet chafing beaks my beak is so wet can we get a profile that beak let's see i don't know why it is it is it is oh my lord it is people don't realize it really is

SPEAKER_333: hold on do it one more time and let me compare it to this okay it's a beautiful no i'll tell let me tell

SPEAKER_327: let me tell the pipe beak wedding story because harry harry the founders told the story he came in to

SPEAKER_143: uh meet with me in my office at craft this is pre-covered when people actually met in person um our our principal who's based in la michael tam knew harry from his previous startup and brought him in i i heard the pitch which is basically to advance the the full value of these contracts for sas companies and others but it was so obvious right because if you're a sas company you spend roughly about a year of of uh revenue on cac customer acquisition costs but the customer only wants to pay you monthly and so you have this huge negative cash flow cycle so what if you could just take that contract and monetize it right away get the full value of the contract advance then you can plow it into the next the next um you know customer acquisition cost and you don't need to dilute yourself with venture capital i said yes to harry in like 15 minutes i think it's the quickest i've ever given a term sheet we invested 2 million in the company in a 12 cap and um we did the deal that day so within

SPEAKER_42: nine months of launch pipe has connected 3 500 customers and over a billion plus of arr to investors willing to purchase that revenue uh clear to be clear it's a marketplace and so right they're

SPEAKER_46: not buying the debt anybody can go on the marketplace and say i will buy slacks revenue for 91 cents on the dollar but something more speculative they might pay 85 this is a brilliant thing is that they're not

SPEAKER_81: they're not providing the lending off their own balance as opposed to clear bank which does and

SPEAKER_339: charges six percent i'm done talking about your book unless you guys share it i'm going to go to i'm going to go i'm going to go i'm going to watch some fucking shares let's go i'm going to go ahead

SPEAKER_27: and do my email now yeah i'm good let's do it freeberg hey freeberg let's launch a bio company

SPEAKER_168: together and we'll block out these beaks go work on your life extension we're working on our monetary

SPEAKER_230: extension right here yeah you need more money you need more money so clear bank works with e-commerce

SPEAKER_45: companies so what you do is you stitch in your connections to shopify and stripe etc they're able to monitor how well you do and then they'll basically help finance you again non-dilutively so clear bank companies captured 55 more growth in 2020 than the prior year so even in the midst of covet these companies did really well they have revenue based financing they've invested a 1.6 billion dollars to date and it turns out that you know their investor composition eight times more women funded than traditional vc by the way i want to be clear i was also a series a investor in clear bank i mean i am such a believer in this middle section of venture disappearing like when you have these

SPEAKER_149: growth rounds they're undifferentiated and they shouldn't be dilutive in any way shape or form the founder should figure out how to grow non-dilutively the minute that they have some semblance of product market fit so then the diluted the diluted points are the bookends yeah this was kind of the

SPEAKER_76: idea with like indiegogo and some of the gofundme types or not gofundme the other uh things where you could basically pre-sell consumer products too right where you could get funded in a similar way and you could see the same transitioning into kind of hardware businesses and other and other consumer

SPEAKER_350: businesses right there's an even bigger there's an even bigger trend that happened that i can talk to which is equity crowdfunding cf but i don't want to take you off your deck so do you want to keep

SPEAKER_230: going on the deck or you want to stop the only the only last thing i say is that uh the other big

Chamath Palihapitiya: thing as as friedberg says is like um so let me just summarize so it's kind of like i think where we're all going to is we see the venture capitalist changing the financial stack yeah um it's going from

SPEAKER_45: organizations and these amorphous amorphous financial orgs down to individuals as that happens i think what we're all kind of stating is it's incredibly valuable at the earliest stages to align yourself with a person that knows your business or your market right and that's worth some amount of dilution it's almost like getting a quasi co-founder right so in the seed in the series a but i think so that's one really important point of what's happening in the market the second thing that i think we're all saying is why are we deluding ourselves to grow in these middle rounds if you don't have to it's

SPEAKER_149: unnecessary and there should be really clever ways of non-dilutively financing yourself and as as the market becomes more and more sophisticated there will be more companies beyond pipe and clear bank to be clear but the point is that every kind of company that has product market fit should be able to finance themselves non-dilutively in the b all the way to the d and the e and then the third thing

SPEAKER_45: which is sort of what friedberg says is this last book end is then you have sort of the path to going public and this is where the spac makes a ton of sense because you have a very certain cost of capital you can now architect a cap table where the founder remains in control where they and the

SPEAKER_149: employees are still more than 50 and you pull in the time of the ipo why is that important typically

SPEAKER_45: today these companies were taking 12 plus years to go public now with spacs they've come back in and they're closer to seven and eight years the reason is back to that argument of like if you want to be a winner take most outcome the most important thing you need at scale is money and the way that you get money is by opening the kimono on your finances and showing people who have lots of money why they should give it to you and not something else and so by going public in year six seven and eight that's where

SPEAKER_121: you pull in the billions of dollars so you can dominate what we're seeing is massive competition

SPEAKER_46: in the financing of massively competitive startup scenes in other words the entrepreneurial ecosystem has never been this vibrant and i want to point out one thing that the sec has done that has is going to change things dramatically i believe when syndicates first came out everybody said they were stupid nobody would ever do it first one we ever did famously was calm.com we put in 328 000 became worth over 100 million we're on track this year to do five deals a month 60 deals and we'll put 50 million to work this year at the syndicate.com think about that my fund is 44 million that's over three years so

SPEAKER_29: now the syndicates gotten so big um that you should just run the syndicate well exactly so i i'm going to tell my lps the next time around let's have a discussion about this but anyway i want to point out

SPEAKER_46: what republic.co happened this week republic.co is equity crowdfunding this means civilians

SPEAKER_29: can invest there used to be a cap on an equity crowdfunding of one million dollars every year and there's a lot of auditing and financial review you have to do and you pay six percent to whoever

SPEAKER_46: raised the money but it's it's um there is no sponsor involved in this so as an investor you don't get me as a lead or chamath as your sponsor or sacks on your cap table but you can go on to republic now which has a hundred thousand investors on it and gumroad which is doing ten million dollars a year just raised five million in one day sahil who was also running a rolling fund with angel list and he has eight thousand six hundred fifty six investors which means people are putting in under a thousand dollars each amazing and it's capped at five million now then arlen hamilton who runs backstage capital did a very non-traditional i'll say raise she's not raising for her fund she sold 10 ownership whereas in the process of selling 10 ownership in her venture capital fund startup studio at a 50 million dollar valuation she's selling 10 of it if you buy shares in that you don't get carry but you get

SPEAKER_83: 10 of her carry and management fees forever so it'd be like buying 10 of craft or whatever the point is

SPEAKER_46: you the vcs get uh boxed out of this and this imagine if airbnb or uber decided fuck it we're going to let our drivers buy shares through this and they said we're starting this crowdfunding for five million and they did it every year because you can do the five million every single year

SPEAKER_83: so every year you just allow folks who are in your stakeholder pool you email them and then they buy

SPEAKER_237: in it's just absolutely extraordinary can you explain the arlen thing so she sorry she sold

SPEAKER_46: 10 it's a little complicated if you page down to the future earnings yes so if you go to the flow of funds and that link i sent republic.co backstage she has took all of her different funds and said you can

SPEAKER_83: buy 10 for five million dollars you own 10 of essentially sequoia capital uh or y-combinator or whatever you want to refer to her um you know company as her holding company then every time she gets management fees every time she has distributions from her carry she's going to give 10 of that to

SPEAKER_46: these folks forever i don't know if that's a great idea but it's a a new idea um and i don't know if

SPEAKER_123: the investors in that are going to get a massive return or they're doing it because they want to

Chamath Palihapitiya: support the cause that's incredible my gosh it's so weird so disruptive it's so disruptive wow it's

SPEAKER_81: incredible well because it lets anybody really spin up a new venture firm basically because there are some startup costs to spinning up a new venture remember she's been in she's been doing this for

SPEAKER_46: 10 years and really has gotten good i will have to say not a lot of traction um you know from the the classic lps of the world um but now just like we saw at gamestop just like we see with bitcoin just like we see with nfts and robin hood day traders there are new entrants here and i think there's going to be a world where i will be able to fire up a syndicate and say i would like to raise 10 million but i'm limiting it to 1 000 per person and 10 000 people uh invest or i'm limiting it to 500 so instead of you know going away for the weekend or going to vegas and blowing a thousand dollars somebody could say you know what i'll go to vegas and blow 500 but i'm gonna put 500 in the next startup i see and this is a democratization that could change everything and make america so much more competitive with what we're seeing in china with jack ma disappearing and well look i've said

Chamath Palihapitiya: this before like like what's what's crazy is like if you talk about like systemic inequality and poverty it's like the government loves to give poor people casinos sports betting and lottery tickets yep but the idea that they could invest a hundred dollars into a startup is illegal even though startups generate 15 of your cager so even if what you did was you generate you invested in the market beta of startups let's just say that degrades it would still probably be close to 10 percent

SPEAKER_230: and so the markets yeah you'd be you'd be at the s p returns you know over many many years eight

SPEAKER_119: percent so i mean 25 better it's it would be incredible but with by the way 25 better chamath with the outside chance of hitting a home run a grand slam and and that's why i love this um all right so

SPEAKER_210: do we want to wrap here or anybody have any closing thoughts well i i just think it's like if you think of

Chamath Palihapitiya: like that thing of like all the money flows changing the other thing is like all the people are changing and then what sac said before it's much much easier because the technologies are changing you put these three things in a soup and it just seems like our best days are ahead of us i think it's going to be

SPEAKER_312: amazing for entrepreneurship all the answers are out there if you want to start a company all the

SPEAKER_46: skills are freely available to you uh you can learn anything online i think the message i really want people to understand is you know you may you may believe that the world is uh filled with inequality and racism and bad actors and you would be right but what's also right is that every skill can be learned capital is available now more than ever and there is a clear path for you if you just stop watching

SPEAKER_83: television and learn to be a ux designer a sales executive a marketing or growth executive or a developer you can change the world and change your lot in life and be really rich don't buy into

SPEAKER_46: this victim mentality it's complete utter nonsense that crazy lefties are saying everybody's stupid

SPEAKER_50: and nobody can learn and i got a bag of red pills here and i have been pounding them the world is a giant opportunity for all of you go get it i think it's time to announce freebrook and i would like

Chamath Palihapitiya: to announce that um we've started a combination uh incubator and uh early stage venture firm we call

David Friedberg: it paunch draft and uh it's play on the words launch and craft i think the punch is the punch is more

SPEAKER_119: just a homage to you when we're going to launch our first syndicate we got to get a deal here

SPEAKER_36: somebody's got to find it i just i i never get the middle calls you guys are doing deals left and

Chamath Palihapitiya: right jason jason you need to assign somebody to figure this the out because i think there's there are people there there there are there are there are folks listening to this podcast who have

SPEAKER_45: great businesses what we should commit to them is we will help you be the least deluded and we will try to share the beak wedding amongst all the other folks listening to this so if you have a great company and you're thinking of raising capital come to the one of the four of us and we will hand roll a solution for you yes okay let's just do it it's like it doesn't have to be systematic domain go to

SPEAKER_230: wet your beak okay hand roll hand roll we will hand roll a solution that will allow the four of us

SPEAKER_45: plus everybody else in the syndicate to invest and then we will help you non-dilutively grow your

SPEAKER_46: business for as long as possible and then take it public okay i am setting up wet your beak.com which is currently redirecting to the all in podcast it's going to be a type form and the type form is going to

SPEAKER_381: let you i will dilute your business but uh the rest of you guys can do it anyway go to wet your beak.com

SPEAKER_119: and fill out the form tell us a little bit about your business and what and it will go to all four besties in the database we'll share it wet your beak is the new database i bought the domain wet your beak.com from one of them yes you just said it now this is the 10th time you've said it i get it we

SPEAKER_79: collectively we own it i i this podcast is rapidly turning into a commercial for uh i think we have good

SPEAKER_138: information no this is this is jacal's attempt to divert and steal my deal flow yeah so it's talking

SPEAKER_203: about we're partners you're a oh we're partners though we are who did i just bring six seven companies to the other day craftventures.com do not that's the that's the website that's the website all right

SPEAKER_04: yeah okay don't email me give me a break man come on man how many deals are we in back at you all right

SPEAKER_21: listen i got you we love all of the audience and uh we love our besties love you bestie chamath love you guys love you friedberg i gotcha love you saxipu when are we playing cards come on let's play

SPEAKER_394: cards tomorrow monday done done i'm sending the invitation all right everybody it's another all in

SPEAKER_04: podcast if you want to rate and subscribe or do anything like that sure why not uh and uh shout

SPEAKER_83: out young spielberg thank you for making all of our great tracks uh do a search for young y-u-n-g spielberg in your pot uh in spotify buy his songs like his songs and uh he's the greatest

SPEAKER_46: uh if you want series a funding or seed funding david sachs if you want a spac chamath and if you want to fold some proteins and um cubits yeah you want to do some cubits uh get email friedberg somebody told me that the quality of the show he calls it the friedberg index

SPEAKER_400: if freeberg talks a lot it's a great episode when freeberg demurs and doesn't talk a lot it's a

SPEAKER_402: shit episode say it say the word again say the demur demur it's french for sleep

SPEAKER_50: it means you went took a nap it's french for sleep you're just such a even more more as in more day day

SPEAKER_296: as in sleep day more you could say demure yeah he demured okay everybody we'll see you next time

SPEAKER_405: on the all in podcast love you guys