SPEAKER_00: my body is a wonderland if that wonderland is white soft and mushy sure and hairy too

SPEAKER_04: you know the worst thing about skin on skin sleeping with the newborn is that you know sometimes she roots and she goes after the man the male nip i know problem is my nipples

SPEAKER_09: covered in hair it's really awkward for everybody just start gagging i'll tell telly that story when

SPEAKER_16: she's 18 or at her wedding it'll be even better hey everybody welcome to another episode of the

SPEAKER_23: all in podcast i am wearing a blue shirt i am a pasty white old greek man who's balding and obnoxious

SPEAKER_25: and uh with me today is uh no no no you have to you have to say your pronoun bro am i oh and my pronouns are uh oh wait what are my pronouns my pronouns are beep beep and most people just call

SPEAKER_29: me a jerk with me today of course is my sri lankan urkel looking hello wearing a furry sweater hello

Chamath Palihapitiya: everybody my name is chamath i have uh salt and pepper black hair brown eyes uh i am tall uh six foot two

SPEAKER_04: i go by the pronouns we king and stud muffin and uh uh i'm here to talk to you about uh internet

SPEAKER_34: security protocols i look like urkel i think people should just come up and say well i don't look like

SPEAKER_36: urkel the closest i don't look like urkel i look like a bollywood when you put your glad

SPEAKER_21: you're kind of like the sri lankan urkel to us welcome to the all in podcast two out of the four

SPEAKER_39: of us are canceled next up for cancellation sax yes i'm coming to you here from the floor of the

SPEAKER_42: new york stock exchange which was once land that belonged to the mohegan the montauk the oneida the

SPEAKER_46: irian iroquois tribes since time immemorial you forgot the irish we own the seven points oh my god

SPEAKER_55: you really did it you went for it sex i love you i'm isn't it important that we at any moment

David Sacks: that we're successful we have to flagellate ourselves or remind ourselves about at one time all this land was owned by somebody else we stole it also the greeks conquered

SPEAKER_25: the romans and so i'd like to apologize but you forgot to mention you're also wearing a brooks brother's shirt that is four sizes too large this is my slim fit so that slim fit oh no here we

SPEAKER_68: go again sacks has been upgrading the wardrobe he's changing it up wait wait before freebird does the

SPEAKER_04: intro uh jika you want to tell them why we're we're doing these intros like this yeah i gotta pause

SPEAKER_21: before all kids okay yesterday on the internet emerged a series of videos that were clipped of microsoft presenting their new suite of developer tools yada yada and corporate people got up and without any explanation started describing their physical appearance their pronouns their ethnicity their skin tone and their hairstyles and the entire internet was like oh my god this is crazy wokeism like what what is happening here this no i thought it was a skit i thought it was a saturday of life skit and

SPEAKER_73: so right and so then as soon as they got called out by the entire internet they claimed that they

SPEAKER_75: were doing this for visually impaired people which kind of begs the question of why visually impaired people need to know what race you are like it's still playing into this like crazy weight race

David Sacks: consciousness but then on top of it it wasn't just that we we know it's not that because then they

SPEAKER_79: start doing no no but hold on yeah also if you if you're blind and technically can't see

SPEAKER_08: you may not even know what blue means because you will have never seen the color blue or blonde

SPEAKER_75: okay right right but they were also identifying their races which kind of begs the question of

SPEAKER_08: why that's important but if you were born blind you would not know what that means either you're

SPEAKER_85: literally colorblind people i think it's about putting you on the same footing as people who are

SPEAKER_08: not visually impaired i'm saying i'm saying if you're visually impaired you're using the wrong

David Sacks: language that language is for the sighted people okay but i i'm just calling on their stated explanation that it has anything to do with visually impaired because then they went on to basically recite the names of 10 tribes native american tribes and no ones ever heard of on on which the microsoft campus it used to belong to so which is why i was kind of making fun of that in my initial statement but so look this is just woke capitalism this is wokeism out of control

SPEAKER_89: obviously they didn't see the election results earlier in the week it's clearly there was some

SPEAKER_23: level of virtue signaling i think in their defense they were trying to do it i think for the visually

SPEAKER_93: impaired the problem was they didn't explain the context and they didn't give instructions to the

SPEAKER_95: people on what to do so the people came out but jacal that video that was a clip pulled out of a broader context too right so like apparently this is common on campus or common there that this is happening all over so we just know it isn't common because i asked people online well it was optional

SPEAKER_23: it was optional it's optional apparently to the common point i think the reason the internet reacted the way it was was i asked every single person who came at me because the woke left came at me i just said

SPEAKER_100: can you show me another clip of this on youtube of any event where this occurred and nobody could

SPEAKER_98: so i think this was kind of a first when did you stop being a member of that the woke left jacal

SPEAKER_23: what was the moment like the historical side i've never been for bernie i've never been for elizabeth warden i've always been moderate always wait can i hear freeberg's intro yeah freeberg can we hear

SPEAKER_103: yours my identity is an illusion it's an illusion created by the viewer and you can call me whatever

SPEAKER_95: you want i sit on the ground where during the haitian period there was lava and magma and nothing but co2 and methane and i represent those gases that are now lost to the oxygenation and the cyanobacteria that swarmed over this earth and took everything over and led to the formation of eukaryotic life and

SPEAKER_106: here we all sit today in our privileged existence thank you are you saying that you want to freeberg

SPEAKER_89: is just electrons hitting neurons in interesting ways yeah no he's like exactly yeah he's like it

SPEAKER_110: it yeah his pronouns are his pronouns are proton atom dark matter biochemical quantum bath buzz quantum

SPEAKER_23: foam is my pronoun so would you like to formally apologize for colonizing the dark matter during the big bang now or would you like to i feel it was inappropriate it wasn't fair when the cyanobacteria

SPEAKER_117: took over the the face of the earth and sucked up all the co2 and created all the oxygen and and for

SPEAKER_110: that we all apologize for the genocide of the for the genocide of of co2 and methane i mean those molecules were really happy and you know they had a very kind of like peaceful existence on this earth and you know cyanobacteria just came in and ripped it away just took it all away from there and you

SPEAKER_124: know and then the offspring ended up being us and here we are so apologies all right all right

SPEAKER_34: welcome to episode 54 everybody's canceled the final episode everybody's horrible

SPEAKER_110: i don't think that the microsoft thing was that when you hear the broader context it was like you know that's just you know i think it's a reasonable thing that visually impaired people i'm still long

SPEAKER_136: microsoft and google and short the rest of big tech so i'm fine with it there you go back to the

SPEAKER_95: stock price did i actually i jama do you think that the google long netflix short play is the right

SPEAKER_136: play i think the best i think the best trade on the best trade on the internet the most obvious simple money-making trade is long microsoft google short big tech short the rest of big tech short ibm

SPEAKER_08: short netflix no no no no short short no no meaning you can you can very comfortably short apple facebook amazon netflix and be long microsoft google so as a spread tree right right it's the most it's

SPEAKER_04: the best risk parity trade on the internet right now i mean period in the markets can you explain explain the spreadsheet so look look i i tweeted this a while ago but it's like and and again the i i think like well let me be constructive and say the people on twitter that respond to these threads are not totally stupid although i think they're kind of idiotic um i said you know here's how you can effectively you know i i said something about you know big tech and i said oh i can comfortably put

SPEAKER_08: my short on and i'm kind of trolling people when i do that because i'm not telling them the full trade and the real trade whenever you put anything on in my opinion is all about managing risk and the best thing about the internet and the stock market is that you know when you're betting on internet

SPEAKER_04: stocks you don't necessarily have to be naked long or naked short which comes with a lot more risk

SPEAKER_08: than if you're long one security and short another against it so for example over the last 10 years you would have made a lot of money by being long amazon and short a basket of traditional commerce

SPEAKER_04: companies offline commerce i'm going to make up a basket but macy's jc penny you know kmart sears right so if you're short those and long amazon that's what's called a spread trade you're basically playing the

SPEAKER_145: gap between your lawns and your shorts it's independent of where the market generally trades it's one of the irrelevant of the market where you're basically saying those stocks could go up

SPEAKER_149: but just not really anywhere near amazon yeah when you put that trade on for example it's i'm going to

SPEAKER_04: bet that if everything goes up amazon will go up more than kmart walmart sears and if the stock market

SPEAKER_08: goes down amazon won't go down that much but these ones will go down a lot and you you're playing the

SPEAKER_04: spread so just just to be very explicit you know there was a very and i talked about this last week but uh i that this idea wasn't mine it's a borrowed trade from somebody who's a very well-known hedge fund manager who put it on in massive size and you know to be honest not knowing much of anything i just

SPEAKER_08: copied it but he's his initial trade was long google short facebook and that trade basically was at parity which meant that the long and the short cancelled each other out for about the last four years until the last year it completely blew out and it returned about 80 85 percent so if you had put a hundred dollars

SPEAKER_04: in you would have made about 85 uh 85 bucks on this trade by being long google short facebook the the bigger trade at scale is actually long google and microsoft and short the rest of big tech and there's a lot of vagaries why that this idea makes a lot of sense but what you're saying is

SPEAKER_30: they'll outperform the other basket of tech on a relative basis on a relative basis so so it's not

SPEAKER_93: like you're saying airbnb can't go up or facebook can't go up it could it's not going to go as well

SPEAKER_158: he's saying that the the the trillion dollar market cap companies yeah not not the airbnb oh okay

SPEAKER_08: and the reason and the reason why focusing there makes sense is they're hyper liquid markets they

SPEAKER_04: have tremendous ways in which you can have massive size on so you could put a trade of 10 billion long versus 10 billion short i mean you can put mega size on on these things if you if you have real

SPEAKER_08: conviction and then the third thing is when the banks look at that kind of position they actually from a risk management perspective treat it differently than if you were just naked long any one of these things or naked long would be just making one bet yeah or you know or naked short which is even more

SPEAKER_95: dangerous so because if the market collapses by 30 percent both stocks might go down 30 roughly but one will go down 32 and the other one will go down 28 and so you're really only down two percent two percent as opposed to the 30 percent of the so all the market risk is taken out when you make trades like that yeah the reason it's possible also today to do so it's such a scale right chamath is interest rates are so low so when you borrow on margin to go long the rate is very low and when you short the stock if it's a highly liquid stock it doesn't cost a lot to borrow to short that's so your actual you know uh

SPEAKER_117: carrying cost on that trade ends up being pretty low relative to the upside you expect so just to

SPEAKER_136: just to give you a sense of it my um you know when i tweeted that tweet out to complete the picture

SPEAKER_04: i was actually long something against my proposed short and i put it on in pretty meaningful leverage and it's worked out really well because i was playing the spread i was basically betting that you know

SPEAKER_08: the the safest company on the internet today is google because they're both a platform company and to the extent that they're at risk at being an app company the risk is to apple but because they

SPEAKER_04: pay apple so much for search they're inoculated and so in many ways google is the safest and it's also as we've said before the purest money-making machine on the internet you're referring of course to

SPEAKER_23: google paying apple 10 billion dollars to be the default search in their own android so one

SPEAKER_08: platform and on the other platform they they pay them so much that they're going to be always

SPEAKER_04: protected and the second best company is microsoft and you we even saw it by the way this past week i don't know if you guys saw that but microsoft decided to take a broadside attack against notion yeah that is a productivity app that's been growing very well i felt this when i was on the board of slack when microsoft put its gun sights on us we always thought that they could not how compete with us and what it turns out is when you have a massive

SPEAKER_08: distribution advantage feature parity is enough and you can actually be slightly less than good enough on the features because distribution and bundling and packaging overpower a customer's desire to adopt a product so in the case of slack it was very difficult i think for us to compete against microsoft's bundling of teams with all this other software that they were selling and all the discounting that they could do made it very difficult for us to compete because we had a single product and lo and behold 18 months later the only real long-term protective solution for slack shareholders was to basically get bought by salesforce so that you could be part of a bigger whole

SPEAKER_04: this past week microsoft decided to go after notion and it's going to be i think a very similar story where you know once they decide to sort of go after this a product experience they only need to

SPEAKER_08: be 80 as good and then the distribution and bundling and packaging will take care of the other 20

SPEAKER_149: it doesn't kill the other company but it creates headwinds that massive headwinds because because a

SPEAKER_08: company like notion cannot be fully valued over long periods of time simply being an smb company you at a minimum you'll have to move into the mid market you may necessarily never have to go to the

SPEAKER_04: enterprise but you probably have to go to the mid market and in that is a very troublesome path because microsoft has so much you know uh tentac so many tentacles inside of those businesses so anyways basically the long microsoft long google is a pretty obvious kind of like monopolistic you know pair trade the question is what do you short against it so that you can take up the market volatility and you can play spread again apple has severe you know headwinds with respect to inflation pressures um and margins and supply chain issues amazon has pretty meaningful headwinds now relative to uh pricing power and competition facebook has pressure with respect to regulatory oversight i just

SPEAKER_40: came up with one what about airbnb versus the airline you're talking about trade you're talking about

SPEAKER_04: smaller rinky dink ideas well listen i'm not playing the same chip stack as you i wasn't there on

SPEAKER_177: tuesday night i'm saying i'm on a thursday night so no no no that'd be a good spread for me no that's

SPEAKER_08: a stupid idea and i'll tell you why okay if you're gonna put these things on go to where the deepest liquid markets are because those are the safest okay right like like don't try to be different

SPEAKER_181: being the same here tell me why airbnb which is a incredible margin business that's incredibly well run

SPEAKER_100: and growing versus airlines which are horribly run and low margin why wouldn't that be a good spread

SPEAKER_04: trade i'm just thinking i think it's a very i think it's a very very two you're picking two random

SPEAKER_170: companies out of a hat well no they're both in uh transportation and vacation and travel completely

SPEAKER_04: different businesses with completely different motivations with different capital pools with

SPEAKER_08: different people that own the stock there's no point trying to get cute on these things my point is

SPEAKER_04: if you really want to be hedged against market risk got it go to where it's safest find the simplest most obvious thing don't overthink it or don't put it on so another obvious one here's it here's so obvious is within big tech figure out which ones you want to be long which ones you want to be short that's a spread trade that over the next four or five years where if you expect a lot of market volatility it makes sense to maybe put some of this kind of stuff on right a different version of this idea which makes sense is in autos again trillions of dollars of market cap and you can make a decision do i want to be long tesla lucid and um rivian and short the traditional autos

SPEAKER_08: that could be a trade you know but trying to like trying to go after like let me pick airbnb versus united airlines is too random for me and i don't think they're correlated enough for it to make

SPEAKER_100: any sense all right speaking of the stock market uh sax um you've got the background of the new york stock exchange as your zoom background today what's that about yeah so bird listed on the new

SPEAKER_75: york stock exchange today this is a company that i've been involved in pretty much since the beginning we led the series a round back in 2017 it was actually the first check i wrote as a vc to lead around at craft and four years later public company on the new york stock exchange pretty amazing

SPEAKER_190: and so you're literally at the new york stock exchange as we speak first remote bestie yes and

SPEAKER_75: you can see behind me um that is the floor of the new york stock exchange it's not like you know if you see the movie trading places it's not like that anymore there are no stock brokers there's no like paper flying around got it i'm not really sure what the purpose of all those monitors are down there it feels to me a little bit like a movie set you know it's like a movie set yeah and so people like us come here to record things but um as we all know the all the trades are really happening inside

SPEAKER_194: giant machines can you turn around and just start yelling booyah just come booyah and let's see if

David Sacks: security comes in no i'm i'm in i'm i'm elevated above the floor no one can really hear me here i'm in

SPEAKER_23: like this uh sort of broadcast booth uh so take us behind the decision to go public as a four-year-old

SPEAKER_170: company we were expecting you know uh airbnb ubers and lyfts took over 10 years to go public now here

SPEAKER_200: we are sitting on a four-year-old public company is that a good thing a bad thing something in between and how does the the board and the management team make that decision to go public i think it's a good

SPEAKER_75: thing um because the company well the company wanted to i think it had the opportunity to it um it grew very very quickly before kovid then you had kovid was like sort of a huge setback they i mean basically the scooter industry just stopped for at least six months because of lockdowns but then coming out of kovid they bounced back really strongly they kind of pivoted their model to what's

David Sacks: called a fleet manager model where basically they're putting a business in a box for a local operator a local entrepreneur to buy the scooters with financing and manage it the fleet themselves so it's a much more highly virtualized model uh and so as a result of that in q2 they just did 60 million in revenue in the last quarter and i think um it was the gross profit of something like 27 and uh it was had a loss of like 12 million so they're very very close to getting to profitability and uh you know the company's only four years old you know it took uber 12 years or whatever to get to be public so it's been pretty it's been a pretty amazing ride there have been a lot of big ups and

SPEAKER_75: downs but uh so it's kind of a pretty sweet event what is it trading under now i know it was switchback

David Sacks: was like the spath name right so it's it today was the first day i started trading under the ticker symbol brds i guess all birds took bird so we took brds and um you know there's a total number of

SPEAKER_75: shares outstanding of i want to say roughly 300 million so it's about a 2.4 uh billion dollar

SPEAKER_206: market cap you know as it stands right now which you know for a series a investor is pretty great

SPEAKER_207: really happy for you sex yeah congratulations it's great congrats dude we heard last week

SPEAKER_181: sequoia is going to do the sequoia fund this evergreen fund keep owning shares now as a vc um do you distribute after four years of this investment and you made multiple investments or do you make the decision hey we think it's undervalued we have you know conviction in the company we were going to be

SPEAKER_213: in it for 10 years or do you just take the quick win and give everybody their shares well i've i'm

SPEAKER_75: going to i've agreed to be on the board for the next year so you know i'm planning to do that and we have a traditional six-month lockup and so at that point we'd have to make a decision about when or how much to distribute the shares and this is the first time you've been confronted with the decision i mean craft ventures is only a four-year-old firm and like i said this is actually the first round that i led as a vc so it's the first time we've been confronted with a distribution of this magnitude we've had some smaller distributions so yeah we still have to make

SPEAKER_181: those decisions we haven't decided yet what we're going to do if you if the stock is up let's say meaningfully in the next six months and you get to that you know six months and a day and you have

SPEAKER_100: the ability to distribute and it's up 25 and you're looking at it business is thriving you're on the board do you consider holding for a year or two so that you can distribute at 16 25 or whatever

SPEAKER_75: your price target is maybe i mean we haven't we haven't gotten to that point yet so yeah i mean i

David Sacks: guess what i would say is that our bias would be to distribute shares to our lps so that they can make their own decisions about whether they're told or not um as long as we think the stock is

SPEAKER_75: you know priced fairly if for some reason we thought it wasn't then there'd be an additional

SPEAKER_108: reason to hold on to it and make the distribution later chamath what are your thoughts on this given

SPEAKER_100: it's come up before and a number of us are going to be faced with this decision and then we see sequoia

SPEAKER_04: has got lp buy-in for an evergreen fund well i think an evergreen fund is different from having to figure out how to do distributions so um they're they're solving for two different ideas the evergreen fund is really good because you don't have to do this continual fundraising process and you can basically roll gains back into um the next tranche of invested companies in an easier way i like that idea it was pretty rare at the time i remember when i was starting social capital the only fund that did it really well with sutter hill um and for a whole host of reasons i decided to not do an evergreen fund in hindsight i think for me that turned out to be better because then it was easier for me to wind down and have a clear demarcation of when it was just myself and other lps versus when it was just my capital but there were some really good reasons to do it the hardest thing i think that sequoia is going to find in this new iteration is at some point somebody's reputation will be on the line for judging public equities and it's still not clear to me that people who live and breathe venture can context switch well enough to then live and breathe public equity so just the best example i would say is like tiger global when you look inside that organization which is incredibly well run there are two superb investors that carve the universe up right you have chase coleman that runs a public book and you have scott schleifer that runs a private book what does it prove to me it proves that it's just very hard to find a person that can do both and the context switching is very complicated so maybe sequoia finds an incredible public market strategist that can then manage these positions otherwise but

SPEAKER_117: they've done this for a few years right they've um sequoia i don't know people realize this they set up the heritage fund and they set it up with only gps money it's got billions under management and it's been making late stage private but mostly public equity investing i know but that's a fund of

SPEAKER_04: funds what i'm saying is i'll be very honest with you if i was an lp of sequoia i would want the money back and the reason is i'm not sure that sequoia can compound money in the public markets anywhere near

SPEAKER_117: what i could so do you buy the point that they make that like exiting some of these left most of the you know kind of value creation on the table no no i think what they're saying something much more

SPEAKER_04: subtle which is they exited and they have regrets for selling you have to remember when sequoia

SPEAKER_08: distributed google every single partner got google shares now had they held those shares they

SPEAKER_188: wouldn't be saying any of this and famously i'll tell you when i and they held their shares well i know that well i actually do fair enough but maybe they did maybe they didn't but let's just

SPEAKER_04: let's just put it out there that for example i know explicitly when i almost merged social capital with kleiner perkins like six years ago i spent so much time with john door the most incredible thing

SPEAKER_08: that i was so impressed with door was he was he told me he had never sold a single share of amazon that was distributed to him and he had only sold a handful of shares of google only to fund future

SPEAKER_04: capital requirements of at kleiner at the time so i just think that ultimately i think probably what

SPEAKER_08: sequoia was saying is man i wish i had not sold my google shares when they were distributed to me because otherwise they wouldn't make that claim no i think what they're saying is more subtle i think

SPEAKER_100: they're saying you as our lps should have held them we are on the board of these companies from day

SPEAKER_96: one we have better insights in the second decade than in the first production board founder david friedberg how do you think about early exits distributing capital because you do have also with a startup studio structure which you should explain to the audience how a startup studio works because you create companies which is you know was a terrible place to be maybe five or ten years ago but it turns out you're in the best place because zero to one is where all the value is created

SPEAKER_181: explain the two things what a startup studio is for people who don't know and then what's your view of

SPEAKER_227: selling early if a company of yours goes uh public i think there's a big um there's a bigger kind of

SPEAKER_117: framing here which is a lot of um investors uh you know professional money managers have tried to find ways to create what is called permanent capital which is a vehicle whereby they can continuously make investments decide when to sell those investments and recycle the capital into new investments with the idea being that over time they're not at risk of capital outflows meaning investors pull their money out and they're not at risk of uh you know needing to kind of go out and raise more money and they can they can share in the value creation as they grow their book value over time years ago a bunch of hedge funds set up public reinsurance companies dan loeb did this um uh what's his name einhorn did this blackman did it and basically bill ackman did it what they did is they set up a public company and new public company a reinsurer and then they used that that reinsure to underwrite reinsurance and when you underwrite reinsurance you get all this capital that you can then go invest and then the hedge fund managed that investment and because it's actually a public company it's got a balance sheet the um the shareholders can't pull their money out right it's just got a balance sheet and the hedge fund was managing that balance sheet and you know generating good returns and this is effectively what warren buffett does and everyone looks to berkshire hathaway and warren buffett it's kind of the you know the the the key kind of long term here um which is uh hey look if you can keep investing and keep compounding value this thing can grow you know exponentially over time so you know the way we set up the production board i had the option of raising a fund and being a fund manager i chose to set up the production board because i was much more interested in i think the similar sort of vein of what sequoia is saying which is like how do you become a longer term uh builder and a longer term holder and where you don't have these incentives to return capital because you only get paid if and when you return capital and um you know and then you're kind of making these decisions to you know because your shareholders are saying well you had a good return quickly give me the shares back and let me and mark your profit and take your share and i was also more interested in look the fact is over time there's always going to be opportunities to chase with the capital so if we have a great gain if something works out really well we can take the the gain and we can reinvest that capital and building new things there's no shortage of opportunities to pursue for the rest of my life so that's why i set up the production board initially in partnership with alphabet and then later on we brought in you know bill gates and other allen and co and other kind of investors that have a similar sort of mindset which is like let's just if we have an exit recycle that capital and continuously because they're not looking for a quick win they don't have pension payments to make right they don't have a reason to distribute cash and so same with me like i don't have a reason to take cash out so the objective was just build this thing over time and grow value over time and that's why i set it up the way i did and i think it allows us to make you know really long-term bets that are super risky most of what we're doing is super technical and difficult and may be very hard to pull off

SPEAKER_95: many of which are still after many years in a very early stage very patient capital patient capital and also the the you know the preference for not trying to find exits but i have found this i'll tell you one thing i have been through a number of circumstances where i have seen businesses i've

SPEAKER_117: been an investor in or involved in that have traded long-term value for short-term opportunity meaning there's an opportunity to make a business that you can then go raise capital against you change your strategy to do that then you go raise vc funding and now the business looks like it's working but the 10x or 100x opportunity was taken off the table because you ended up going down this different path that was a sure thing that was more likely to work that created value in the short term that allowed you to mark up your investment or raise capital against that but you gave up the

SPEAKER_158: big long-term thing and i think that's something i've been trying to avoid with the structure and it certainly makes sense with some of these other folks and what they're trying to do so what we're

SPEAKER_100: getting at here sax is decision making by capital allocators and on behalf of their lps or letting the

SPEAKER_213: lps make those decisions inevitably the crypto world says well why aren't you just doing this in a dow and you know having some decentralized authority make the decisions i had viniling i had a conversation

SPEAKER_194: with our friend vinnie lingham uh after the solana stuff and and and multi-coin capital and we were

SPEAKER_100: talking about dow's for early stage investing or syndicates and just brainstorming hey is there a way

SPEAKER_181: to do this and the problem i came to every time was should a bunch of folks be making decisions who are not meeting with the companies or meeting with 2 000 companies a year what are your thoughts on a dow representing sort of what we collectively do but we all do it obviously in different flavors does this

SPEAKER_100: actually exist yeah well there have been dow's that have existed to vote on buying nfts so yes for

SPEAKER_75: collectibles i mean i kind of feel like i'll let you know when it actually gets here so open-minded to it but who knows yeah but i mean we talk about these things as if they already are here and they're not quite here i mean technically i know they they exist but people haven't really figured out how to use them to you know to be a fund manager for example i think david's right i think the look i i

SPEAKER_04: i there there are these three immutable features of web 3.0 that we're going to have to figure out over the next few years so the obvious ones are decentralization right that makes sense the second obvious one there is the level of composability which means that you're plug and play with everything um but the third one is this idea of democratization and governance right and that's where dow's come in and david's right we don't really know what the boundaries of that feature is um i think it exists in some small level scale um but we need to have many iterations of companies get built to figure out what it'll mean so i don't know i'm taking a pretty traditional approach jason which is that you know it's kind of like a crawl walk run strategy right now i'm in the crawling phase and i'm kind of saying how did web 1.0 and web 2.0 develop and i'm trying just copying it so you know in web 1.0 and 2.0 you needed companies like sun microsystems and cisco and you know all of the plumbers foundational stuff to build plumbing for the internet to allow the thousand flowers to bloom at the application level and you know we had a very good reference model by the way for web 1.0 for most people if you want to look at it it's called the osi reference stack and if you actually look at that osi stack you can translate that to all kinds of value creation over the first you know two arcs of the internet over 20 years trillions of dollars was created by just following each of those substrates um and in those transitional layers was where these great beautiful companies were built um and i think similarly we're going to do that again but we need a different stack to represent what web 3 is so yeah you know this week we did something which was pretty straightforward which was this idea that if you're going to build all these apps you're going to need a distributed compute infrastructure which means you're going to need very simple building blocks like remote procedure calls rpc that exists in web 2.0 it's kind of a not something you don't really think about but in web 3 doesn't exist and so it's all this aws you know gcp like infrastructure that has to get built and that's what syndica does and i think that's um a really very interesting uh observation

SPEAKER_181: there because everybody is trying to go to the application level and talk about the consumer experience but before you even have the ability you know we're talking about cars before we've

SPEAKER_213: even made a transmission or you know that's exactly right this is why crypto comes across as so

SPEAKER_96: delusional and strange sometimes they wrote 3000 ico papers none of them were about infrastructure they're all about some sort of end game the thing is it's a very delicate balancing act right you need

SPEAKER_08: a handful of companies that capture consumer imagination right that then incentivize all of the plumbing companies to come in and build underneath it right it's a very delicate balancing act right so you needed compu serve in order to enable a bunch of companies then you needed aol in order to enable another set then you needed yahoo then you needed google and in all of that what happened was

SPEAKER_04: people were pulled through right you needed amazon commerce to justify aws so we're in that world where

SPEAKER_08: it's going to be a little back and forth where the pendulum will swing back and forth between consumer experiences that capture imagination get to some level of scale that then create incentives for the

SPEAKER_04: developer ecosystem and the technology infrastructure to catch up uh zillow which we talked about

SPEAKER_181: previously became an eye buyer what's an eye buyer that means you buy a bunch of single family homes you know likelihood like opendoor and redfin have been doing and then you hope to flip them uh maybe improve them and uh maybe lower costs to the consumers by taking out real estate brokers this has created a lot of bad feelings amongst real estate brokers a tick tock video trended a couple of

SPEAKER_114: months ago where a broker said or accused zillow uh of buying up these homes in order to do price fixing and to corner the market on homes well uh it turns out that zillow which has an incredible ceo uh in rich barton and has done tremendously over the decades according ahead of their earnings call this week bloomberg reported zillow is trying to offload seven thousand seven thousand homes for 2.8 billion that's about a 400k average per home and uh zillow shares dropped 37 this week alone from 100 to 66 their market cap has dropped 9 billion throughout the week and they're down 70 from a peak valuation of 48 billion just in february about six months ago uh zillow is going to reduce its workforce by 25 over the next few months i'm assuming that's all those i buyers anecdotally a lot of what i'm hearing is they bought homes indiscriminately the anecdotal stories that are breaking on twitter and other forums with real estate brokers are they would look at a home they didn't know that it had a noisy neighbor or it was near power lines or whatever the people who came in bought them indiscriminately maybe too fast whereas some other companies maybe opendoor or redfin were more considered i actually had glenn from redfin on the pod not long ago and he said it's a very hard operational business you have to be very careful on what you buy in your entry price that seems to have turned out to be true what do you think friedberg rich barton who runs zillow is considered a

SPEAKER_117: legend in silicon valley you know he um uh has been involved in some of the most successful internet

SPEAKER_158: companies um and you know when he stepped back in as the founder of zillow stepped back in to run the business a few years ago it was viewed as kind of a second you know resurrection of this business and he was going to take it into new areas and then three and a half years ago he announced this ibuyer program which everyone thought was such a you know incredibly strong move and obviously chased open door which chamath is involved in and i'm sure we'll share more on um but it was such an obvious opportunity that if you could add liquidity to the real estate market the residential real estate market there's an incredible amount of value to be had now the way that they wrote about it when they talked about it initially and then the way that they've kind of talked about in their earnings report this week was that they were trying to be a quote market maker in the business and it turned out that what they were really doing was being more of a speculator right a market maker looks at bids and asks in the spread and then tries to to create a gap in that spread and make and take some share of it

SPEAKER_95: and by adding that liquidity the idea is the spreads can narrow and they can make money in this case they were looking at the historical velocity of selling prices of homes and using that as

SPEAKER_117: a way to kind of project what was going to happen which makes them much more of a speculator than a

SPEAKER_158: market maker and they clearly got this wrong and they're kind of quote unquote models on you know

SPEAKER_117: where prices headed ended up getting them in trouble there's also the inherent conflict where they are now competing in a way with the brokers that generate a lot of revenue for them and are a big part of their core business and they were clearly um you know cannibalizing their own business where the zestimate and some of the other scoring that they provide as a data and analytics platform to both sides of the existing market starts to get blown up because they're coming in and saying we're going to put our you know our foot down and say this is what the value is and it inevitably kind

SPEAKER_158: of cannibalizes the core product that they provide to to both sides of the market so you know one could argue this was flawed from the beginning the execution clearly was way off and it begs the question you know where was leadership and kind of tracking what was going on here as these guys were buying homes at market prices that are well above what they were actually selling for in the market no one was actually doing on the ground work they were all doing kind of speculative models and saying this is what we think will happen and then they woke up way too late and um lost way too much money i think they lost 300 million dollars in the quarter so um you know really a lot of questions and a lot of challenges on this um i'm sure tamath has a point of view on you know what makes open door distinct from from zillow but there's a really important kind of you know um underlying here you know the maturity yeah the maturity of a silicon valley uh entrepreneur who's crushed it so many times uh doesn't mean that

SPEAKER_213: they're perfect and you know this was a big mess you can go really too fast into a turn here and clearly they flipped the car chamath i i don't know how comfortable you are talking about this

Chamath Palihapitiya: since i'm very comfortable okay well then here we go number one you know i'm not on the board um of

SPEAKER_266: open door of open door maybe tell us about your history with open door chamath would be super look i

SPEAKER_143: look i i am one of the largest individual shareholders of that company i think somewhere between three and

SPEAKER_257: four percent of the business i owned we you know i came to own those shares with a large investment uh as well as through the transaction uh where we merged one of our spacks into it and took it

SPEAKER_04: is that ipo b yes a couple things to say the first is about the ceo and founder of open door eric wu

Chamath Palihapitiya: is special special special so let me just leave it at that uh on that topic the second is i think

SPEAKER_04: that rich barton is very special but it speaks to two big mistakes that zillow made the first is that catching a wave of disruption is very difficult when you have an old line business that is

SPEAKER_08: fundamentally competitive with the new line of business and zillow as david said had this thing called zestimate whose entire job was to directionally drive top top of funnel traffic into the rest of their media business now imagine you go to a website to look up your house value or somebody else's house value accuracy is a bug the feature that makes a zestimate work is an highly inflated house price

SPEAKER_04: right like if you go and you see a crazy house price number that's interesting that's more um click worthy than if you go in there and it shows some depressed value you think the site sucks that's the unfortunate psychological reaction so i think whether we believe it or not or whether zillow knew it or not zestimate over time basically calcified this idea of price inflation so the accuracy was never a

SPEAKER_08: goal so then if you take that business and then you try to orient it towards home buying and you use probably zestimate or some version of it to underpin how you buy and take risk

SPEAKER_04: it creates a lot of risk and i think this is essentially what played out where they were over buying homes and they didn't know how to price this stuff accurately so you know my partner ravi tweeted this out but you know uh the open door margin on average is about 10 percent the zillow margin on

SPEAKER_08: average was three percent so they had a much more razor thin margin of safety here which again speaks to pricing and then it speaks to this third thing which is that if you start doing one thing and do it really well with software the gains over years really compound and so when somebody else shows up and

SPEAKER_04: tries to pivot their business to try to copy it it's very very difficult the classic example is google

SPEAKER_08: versus yahoo yahoo yahoo had a beautiful directory driven business but when larry and sergey really larry invented page rank and then invented that first version of a google search index as we saw it play out over the next 10 or 15 years it was impossible for yahoo to really invest the technology the technical capital necessary to catch up with google and every day and every week and every year as freeberg talked about last week those technical gains compound and compound and now google is completely unassailable with respect to

SPEAKER_04: search i suspect we will look back and the ability to accurately forecast price and volatility and the ability to sell these assets at a defined margin of safety in a predictable way is something software can solve and it seems that opendoor is the first it doesn't necessarily mean it'll be the only one but it has an enormous head start now and as long as they can keep iterating those gains will compound um so that's what i think i just think this is a wonderful business run by an incredible ceo to wrap up

SPEAKER_213: this uh zillow story sax uh any thoughts on you know chuma's point here you know you're the rating agency and you add this business and the business it might be orthogonal to the existing money printing machine on a strategic basis what do you think any lessons or mistakes here uh in terms of when you handicap

SPEAKER_202: zillow or do you want to just move on and talk politics i mean look i'm a i was a c investor in open door because ravoy invited me into the seed round so you know i'm a little biased here but i think

SPEAKER_75: it's pretty obvious what happened uh zillow tried to copy them the business is much more operationally

David Sacks: complicated than they realized it's a low business low margin business with the top which requires a ton of capital so if you're off a little bit the losses can be huge and zillow couldn't figure it out they underestimate the difficulty that's what frequently happens when a big company tries to

SPEAKER_75: copy a smaller sort of upstart company so i mean that to me is what happened in a nutshell quite frankly we're an hour into this pod and we haven't discussed issues any issue that i think is broadly relevant to most americans i think this is one of our worst episodes we're going to bore everyone to tears i frankly don't understand what the you're doing i don't even know why we have a topic list

SPEAKER_89: when you start pulling out of your ass like dowels and i don't know what the else all right

SPEAKER_284: all right fine we'll talk about politics i thought the doubt question sucked all right i'm just giving

SPEAKER_287: you the opportunity that we shouldn't even be talking about cut it out of the show cut this whole

SPEAKER_291: episode should be cut jesus christ i think this is like one of the stupidest episodes you've ever done yeah i agree i think we should cut all that it's going great what are you talking about jason i agree

SPEAKER_284: that that part where we cut it that's all right fine you got some loser i'm trying to give you guys

SPEAKER_281: the benefit of the doubt to just because it was like no one cares all right fine calm down everybody you want to talk about politics we talk about politics it's okay sax go ahead tell us about the

David Sacks: election okay i'll just rattle off some of the key results here from blue states we have a woke lash going on

SPEAKER_301: all across the country that's the important thing in virginia a state that biden won by 10 he's cranky

David Sacks: huge upset republican glenn youngkin beat terry mccall a former governor there he was this was a huge upset mccall was supposed to win youngkin 15148 so that's a 13 point swing uh versus where biden was uh just a year ago in new jersey a state that biden won by 16 points the democrat held on to it but only by 1.5 points and i bet you anything the rnc is kicking itself they didn't give any money to chattarelli who's the challenger who i think almost who came very very close and there were down ticket seats that went republican so that the um this is really interesting in south jersey which is

SPEAKER_301: a blue-collar bastion for democrats sweeney versus burr that's right the democratic state senate leader steve sweeney lost to a truck driver named ed durer who spent a grand total of 153 dollars on his campaign

SPEAKER_306: okay so those were some and then we had some other write-in like he was printing out to say write me

SPEAKER_307: in i think i don't think there's a writing but but any event so so implications for 2022 dave wassman of cook political report calculates somewhere between a 44 and 51 c game from the gop they only need five c's to win the majority so it's looking very bleak for the democrats in 2022 and then i think you also had some very interesting local elections in minneapolis voters rejected a proposal to defund the police with 56 of the vote uh they there was a ballot proposition to change the police department into some sort of larger public safety group voters were having none of it in seattle which is a very liberal city they voted for a literal republican as city attorney which is the office that prosecutes

SPEAKER_309: misdemeanors so against a police abolitionist who said she would stop prosecuting misdemeanors

SPEAKER_79: you're forgetting that in virginia it wasn't just glenn youngkin that won but basically it was terry

SPEAKER_04: mcauliffe and then a lieutenant governor who is some milquetoast individual and an attorney general candidate who was caught in blackface which by the way there is no more racist thing you can do just to let you guys let everybody all the non-colors okay that guys please don't do blackface or brown face it's such a bad it's just not it's no you're right it was a sweep so so the lieutenant and and

SPEAKER_314: youngkin and it was a it was a black female lieutenant governor and a latino attorney general that's right

David Sacks: and they swept right that's right that's right so the lieutenant governor was winsome sears uh she's a a black woman republican if you've seen the photo of her she's frequently photographed with a giant assault rifle in her hands uh that's her and then uh a hispanic attorney general jason miyari's uh one as well so yeah it was a huge sweep and then you know in long island and staten island which again are blue counties you had two republican prosecutors beat the local sort of uh

SPEAKER_301: incumbent democrat decarcerationist da's red just i think i think this is very clear yeah which is um

SPEAKER_04: uh trump was behaviorally extreme and after four years people were sick of it nobody wanted that behavioral extremism because it was unpredictable and people felt frankly in danger and i think that that was legitimate he also turned out to be extremely lazy and probably pretty dumb now what we're realizing is the different form of extremism which is policy extremism will also be met with the same response which is that you you can't sustain election results and wins right so people care consistently about three things they care about the economy they care about the education of their children and they care about safety and the thing that glenn youngkin did which i thought was at least a playbook for centrists and the right and it's also a playbook for the democrats if they choose to embrace it is to understand that these things are reaching a tipping point where you know again we've said this before it is possible to live in a state of mind where you believe in black lives matter and you believe in law and order right and and when you try to pit those two things against each other for example like you would have thought the one place where they would have basically defunded the

SPEAKER_08: police in its entirety would have been minneapolis after george floyd but instead even they drew the line and

SPEAKER_04: said no or new york or new york there was a there was a really compelling quote actually by this woman i think it was in the new york times um and what she said was i didn't elect joe biden to be fdr i elected him to tack to the middle and just calm things down so that everybody could exhale so that

David Sacks: we could reset same with me and what's yeah that was abigail smanberger actually she's a virginia democrat yeah she's a virginia democrat who won a seat in one of those blue counties that just flipped red to vote for youngkin and since she got elected i guess she got elected last year she's been telling the democrat but she's the one who called out pelosi in that you know caucus meeting saying i don't ever want to hear the words defund the police again that is electoral poison and then she said yes nobody elected biden to be fdr they elected him to be normal and stop the chaos and so yeah certainly my vote yeah yeah there's a big backlash going on because biden has decided to start governing like

SPEAKER_194: bernie sanders no one elected him to do that so sex is the lesson dems learned this time around is

SPEAKER_100: it's very easy to beat trump but it's very hard to beat a moderate republican no no it's not that it's

SPEAKER_149: that you just have to be a rational normal person that's what i mean by a moderate republican well you just have to be moderate i don't think it matters but this is but this is the key

SPEAKER_08: takeaway dams it was so easy for them to use trump and be trump you know but these three topics are not a republican tentpole nor are they a democratic temple they are the tentpole of reasonable people yes meaning which most people are reasonable hey guys get out of the way so that we can you know have a reasonable life in an economy hey folks please make sure my kids when i send them to school for eight hours a day come back reasonably educated and please keep my streets safe and i'm not really willing to decarcerate ad hoc to such a degree that all of a sudden crime gets out of control those are not democratic or republican tentpoles those are just moderate centrist rational things

SPEAKER_176: to believe in yeah being and also behave normally like i i think whatever happened with these

SPEAKER_213: progressives where they couldn't pass you know the stimulus bills and things that almost everybody

SPEAKER_04: agreed on glenn youngkin was not behaviorally extremist yes and and from a policy perspective was pretty much down the middle eric adams eric adams is not behaviorally extreme and he is politically

SPEAKER_08: down the middle the mayor of buffalo who got re-elected is not behaviorally extreme and he's politically down the middle do you start to see a pattern here yeah nobody wants aoc bernie elizabeth

SPEAKER_149: warren or trump i think it's not it's not a question of aoc or bernie or trump it's just that

SPEAKER_04: right now the temperature of america is let's just all exhale and just re-center ourselves as a country yeah and so moderation and centrism is actually what calls for today i don't know how to predict what happens in 15 or 20 years and maybe aoc is the canary in the coal mine for where the country goes by a plurality of people in 15 or 20 years but what's clear is it's not where it goes today and i think that we it all behooves us to just take a real step back and exhale and just read the tea leaves because every single thing that the democrats tried to do to sort of like make this extreme really didn't work the race baiting all of that stuff really kind of failed and i think that that's important to listen to you know because you had a lot of black indian chinese families that just showed up hispanics you know that again reliable democratic voters and voted for glenn youngkin in a way that was surprising to me right and then so if you compare new jersey and and um virginia biden won virginia by 10 he the the democratic nominee lost biden won new jersey by 16 and phil murphy barely squeaked by it was like 10 000 votes jerry she's always

SPEAKER_213: had a uh a republican kind of uh leaning group uh they're very uh tuned by one by 16 this should

SPEAKER_93: have been a cake yeah but i think that 16 how much of that is get trump out of office is what we i think the democrats need to parse and they blew it by going too radical we're repudiating

SPEAKER_04: behavioral extremism and policy extremism so i think we just need to realize rational normal chill people who can do reasonable things get our kids educated so for example on the education front i don't know if you guys saw this because i tweeted and you can put this nick in the group chat but in california right now there's a battle over math class ridiculous right where the title i'm just going to read the title because it sets it off california tries to close the gap in math but sets off a

SPEAKER_08: backlash proposed guidelines in the state would de-emphasize calculus reject the idea that some children are naturally gifted and build a connection to social justice critics say math shouldn't be

SPEAKER_187: political well of course the way that those articles are always written it's always about the backlash

David Sacks: you know they don't talk about what what the people in charge are trying to do to basically degrade the curriculum of course there's a backlash because parents don't like what the people on these school boards are doing this was the sleeper issue in virginia was the school board issue you had um you know parents were already angry that the teachers unions had kept the schools closed for a year and a half during covet and while their kids were at home you know work doing classes over zoom parents got a good look at what some of their kids were learning and didn't like what they saw i mean we're talking about lessons plans that incorporated crt and you know the 1619 project view of america singling out kids by their race making them focus on difference and then there were some you know rather explicit materials at young grade levels about you know lgbt issues and so this led to a whole bunch of

SPEAKER_307: confrontations at school board meetings where parents of all races objected to you know the least lesson plans for for their kids and the school boards and administrators just dismissed their complaints out of hand and you know their message was well we're not teaching crt to your kids but if we were it's a good thing and only white supremacists would object so you know that was sort of what was happening in the background and then mcauliffe comes along and makes this gigantic gaffe in the last debates about two weeks for the election where he says i don't think parents should be telling the schools what to teach and what yes this is with the customer no he said that

SPEAKER_309: on a debate and he said that debate about two weeks for the election mcauliffe was leading through this

SPEAKER_307: whole thing until that debate where and this was sort of a kinsley gaffe in the sense that you know michael kinsley said a gaff is when a candidate inadvertently uh says something true you know this is mccullough's view is that the teachers union should be controlling the schools not the parents well um yes so this is what young can uh jumped all over all of his ads in the last two weeks of the campaign really focused on this issue you know poured gasoline on a fire and then the most tone-deaf thing mccullough did is he had randy weingarten who is the head of the uh the big teachers union come in and campaign for him at the 11th hour well of course that's not going to save him because people are sick and tired of the teachers unions so you know this was basically the big sleeper issue crt and the schools in virginia and you know this is this i think specifically

SPEAKER_345: is what the democratic party has to wake up to is that these progressive ideologies are not popular

SPEAKER_79: the other thing i'll say about glenn youngkin is that this is another thing that the that the

SPEAKER_04: republicans should hopefully pay attention to which is you can look normal act normal be normal you know this is not an extremist in any way this guy was the co-ceo of carlisle which is a huge and very successful private equity firm so this is a very rational reasonable person who um you know didn't

SPEAKER_08: embrace anything that was really that pro trump and that should be a real wake-up call to the republicans which is hey let's just run a fleet of normal people i think what you saw i think chamath is

David Sacks: right that what you saw in virginia is that the playbook that gavin newsom just used to defeat the recall in california did not work in virginia which is he tried to uh paint youngkin as a trump proxy and youngkin very definitely you know avoided that he got trump's yes he got trump's endorsement but very

SPEAKER_307: early in the process he did not have trump come to the state um and you'd have to say it also helped youngkin a lot that social media that trump wasn't all over social media because he's been banned so you know in a weird way facebook and twitter deserve an assist here um because they helped keep trump out of the virginia race so you know this playbook that that newsom defined that worked very effectively from california which is simply to keep running against trump i think democrats thought they'd be able to win elections for years based on that that playbook didn't even last two months so you know so i think democrats are gonna have to find a new playbook here okay so friedberg uh on this

SPEAKER_213: california issue around education one of the key or most controversial um concepts is detracking in other words instead of having high performing students go to a high performing track and then everybody else stay behind maybe keeps in not all cases but keep some of the students together because there is some research that shows if done right if you track people together the higher performing students will pull up the ones who are slightly behind other people say we're basically uh throttling people who could be the next einstein or or the next world-class leader in science math etc uh any thoughts on the concept of detracking since i'm assuming you were in the high-speed track in science and math

SPEAKER_95: maybe we should get rid of like jv and varsity sports teams as well and you know triple a baseball

SPEAKER_117: and major league baseball as well and you know any distinction of performance um or exceptionalism goes away you know and and that is kind of the the key social question is are we going to give up exceptionalism um to minimize uh the distance uh between the exceptional and the average and that

SPEAKER_353: seems to be what's happening makes people makes people feel bad but i've said this point before

SPEAKER_117: you know we're doing it when we try and think about you know the billionaire tax or what have you as soon as you start to limit progress um you reduce inequality but you limit progress and the same will be true not just in science not just in business uh but also in sports and athletics and um and any other kind of system where you will have exceptionalism you will have an average you will have a distribution amongst human performance and as soon as we try and limit the difference in that distribution

SPEAKER_354: we move the entire curve to the left here's the counter friedbert um what some studies have shown

SPEAKER_213: is yes you will uh throttle the high performers but we're seeing uh along race lines certain

SPEAKER_181: demographics being left behind other ones excelling and that you can get yeah it's an ethics and values

SPEAKER_117: question right like do you think that individual freedom and the opportunity to pursue your opportunity your your exceptionalism um should be taken away from you such that others who aren't as exceptional as you are given um you know greater progress than they would have had on their own um and that's the key crux of what all of these social systems are grappling with whether it's in sports or business or finance or or um or education is what's the right thing to do and that ethics question is going to be defined by the social agenda of the moment and you know the means of the moment and what we all think is is the right thing to do and it's different all over the world and it's different within political systems but it's a very divisive point that i think folks who find themselves on one end of that exceptional spectrum in different aspects are going to have one point of view and folks on the other end of that exceptional spectrum are going to have other points of view and everyone's going to be sensitively tuned to where they fall in that spectrum i will say one thing though on that spectrum exceptionalism is rarer than the average therefore it is likely the case that over the next years and decades we will see the um the idea that we should remove exceptionalism in business and exceptionalism and education exceptionalism in sports because it benefits the majority and um and and no one kind of recognizes and a lot of folks don't recognize the progress that is made by exceptionalism and um and that's and then we're gonna wake up one day and be like oh wait a second we don't have the the best sports teams winning all the gold medals we don't have the smartest kids we don't have the best businesses china and europe and brazil and whomever else the emerging markets are gonna india are gonna start to have them such a good point

David Sacks: i think this is a very old debate it's the debate between equality of opportunity and equality of results yeah and the progressive left is absolutely obsessed with equality of results or outcomes which they now call equity which is we're going to take people at the finish line and we're going to move them around we're going to redistribute the the outcomes to achieve a more proportional representation

SPEAKER_307: or something more fair as opposed to giving everybody as much opportunity at the outset as possible that is the fixation right now that is why they're taking out advanced math in the schools they're trying to level people it's not going to work it doesn't lead to a more we want to have an exceptional society where i think we should be focusing is creating as much opportunity for everybody the way to do that would be to let every child go to the school of their choosing so that we would stop trapping kids in bad schools but back to kind of bring this back to the election for a second because i think it is a very clear repudiation of this progressive mindset and i think there's essentially two sets of reactions to it if you look at sort of all the left-wing commentators the the one who i thought seemed to get it the most was cnn's van jones actually had i thought you know a rare moment of introspection where he said this was the the results were a five alarm fire he said it was a big big wake-up call for the democrats to stop annoying voters with woke hectoring um he actually advised biden to start triangulating against the woke left in the way that bill clinton did i mean which is something that i've been suggesting on this this pod so you're saying something super important the game

SPEAKER_136: theory now is for biden to put to the test the progressive left because now he can go firmly to the

SPEAKER_04: center and he can put all of the pressure on the progressive left in the house and uh warren and bernie sanders in the senate well he's right that's the first thing he should do is he should

SPEAKER_366: he should pull a sister soldier on bernie sanders he he can't keep delegating the domestic agenda to

SPEAKER_307: bernie sanders he if he wants to save his presidency he'll start triangulating in the way that bill clinton did i'm not sure he's going to i think there's already a misperception that the reason

David Sacks: why they lost selection is because they didn't deliver the goodies in this house reconciliation

SPEAKER_252: bill um that in other words i don't think the public cares about the goodies i mean they care

David Sacks: about this normalcy and centrism yeah there's a part of the democratic base that does want the what's

SPEAKER_307: in that house reconciliation bill but but here's the thing democratic turnout in this election was extremely high the democratic turnout for macauliffe was higher than the democratic turnout four years ago for the democrat who won the the turnout that uh in new jersey was higher than what murphy got four years ago when he won the problem the democrats have is that republican turnout was extremely high even without trump showing that trump doesn't matter that much uh to turn out and the independence came out in a big way for republicans so this idea that democrats can just win elections by delivering you know uh programs for their base that's not going to work so i think that's a misperception i think van jones has the right idea they need to triangulate but you turn the channel to msnbc and they were just

SPEAKER_371: blaming the whole thing on white supremacy basically hysterical um just on the detracking thing this shows

SPEAKER_96: to me a severe lack of creativity you if you look at what happened in the nba they had this developmental league which they didn't kind of run then became the g league they now have the ability

SPEAKER_181: to bring players fluidly from the warriors g league team up to the warriors or the next team up to the next what this means is you don't have to say there's two different tracks and the the two never shall meet in the season they can move up and down in math a very easy solution to this would be to have the high track for high performers have the regular track and then spend with all this money we have say hey every school is going to be open from three to five o'clock four days a week if anybody wants to attempt to get into a higher track of math just stay after school for two hours anybody can

SPEAKER_373: go and get one-on-one tutoring and just double the number of teachers the whole country wants excellence they don't want leveling they don't want equity they don't want a quality of results they want to have

SPEAKER_177: a quality of opportunity the whole country wants other people to move up they do want to see that's true and brown students and immigrants do better at math that's what you're missing yes and that's

SPEAKER_376: about a quality of opportunity absolutely no it's not just about a quality of opportunity they're so

SPEAKER_181: far behind statistically that you need to do something new what we're doing is not working

David Sacks: david that's why people are picking this bad yeah but they're they're they are eliminating advanced advanced math because they don't want to actually look at the the problem what do you see the problem as

SPEAKER_307: well if there's an underperformances starting group then you should work hard to raise them up not

SPEAKER_381: how would you do that give me a suggestion charters and school choice okay look i mean if you're if

SPEAKER_307: if you're going to define structural racism as conditions that that trap people of color in poverty across generations it seems like a pretty fair definition then you have to say the number one cause of structural racism is the school system education yeah it's the school system because we

SPEAKER_301: know poor kids are trapped in schools that aren't very good why because they're controlled by the education unions they don't have a choice they don't have money so who is making that argument uh on the on the side of the left no one why because everyone knows the unions especially the education unions are the number one donor to the democratic party so the democrats won't even look at this

SPEAKER_181: problem all this is the way is white supremacy could build their base is by saying we want to fix education that would be if you they are education what do you think young can just did in virginia by the

SPEAKER_301: way 55 of hispanics in virginia voted for youngkin so minorities are shifting on this issue based on

SPEAKER_388: charters and school choice yeah these are the new private chat these are the new quality of life

SPEAKER_79: issues if young can has a good four years in virginia he can run for president and crush this thing can i

SPEAKER_307: show you just one one chart and then we can get off the politics thing which is it was this chart from this guy patrick ruffini who's a pollster and i think it really illustrates the problem that progresses the democratic party has the chart for the listeners okay so what this chart shows is it basically shows where the democratic the democratic party is in the center republican party is in relation to the center of the country okay and basically as you'd expect in a democracy whichever party is closer to five wins okay so in 1994 when bill clinton was president the democratic party the center of it was smack dab as five the republicans weren't that far away they were a six so the party even though there is a lot of partisan warfare the the political differences actually weren't that great and clinton i think more accurately found that dead center okay fast forward to 2004 so george w bush is president now the democrats are at four republicans are at five that's why republicans won okay now go to 2017 this these poll numbers he did and this is a few years ago the democrats are all the way at two okay and the republicans are at six and a half so it's true that both parties have moved away from the center but republicans are one and a half points away from the center whereas democrats are three points away so the democrats have actually moved further away from the center if you look at who are the activists in the democratic party

SPEAKER_301: who is the base who is the energy who does all the work who does the contributions it is the progressives right this is why mcauliffe ran as mcauliffe is not a progressive he was the clinton democrat you know going way back to the 90s okay he was bill clinton's you know uh right-hand man in the party back in the 90s but he nevertheless ran as a progressive in virginia who supported the teachers unions why because he was appealing to the base of the party gavin newsom did the same thing in california gavin was never a bernie bro i mean he's always been liberal but he he has moved very far left and biden has moved very far left as president why is that

SPEAKER_395: because the base of the party has moved very far left so unless that gets fixed i see

SPEAKER_372: appealing to the party's base but not the country's exactly so you're going to need a strong democrat who can basically give the heisman to that part of the base or they're going to keep losing elections i think this could be a republican decade i know it doesn't seem like it right now because you had trump and the republicans lost but look how quickly the republicans turned around their electoral fortunes

SPEAKER_401: so with trump on the sidelines then that's just a huge detriment yes if trump is the nominee in 2024

SPEAKER_309: all bets are off but in 2022 he's not the nominee he's still censored from social networks

SPEAKER_136: he's really nowhere in sight and people people have a very short um memory it turns out they've moved

SPEAKER_08: on very quickly young can check the box because he felt he had to to get the nomination and to run on the republican platform but then you think young is going to talk to trump once no not once and i and

SPEAKER_301: i think and i honestly think this election is going to help republicans move past trump because what

SPEAKER_307: republican believes in um in like that the electoral system is rigged now right i mean all these blue cities and states just delivered big results for republicans so where exactly is the ballot stuffing where exactly is the stole where are the stolen elections that's gonna that's gonna stop now too they're gonna stop it's gonna stop overnight right because i mean by the way kristin cinema probably

SPEAKER_136: knows this like you know the the the funny thing about all of this is when peter teo put in 10 million dollars into this pack for blake masters who used to work for him and said you know in arizona i'm going to run this guy against you cinema attacked hard to the center instantly so she she knew too yeah

David Sacks: well so just just a small point of correction so blake is running against uh the other guy um the astronaut guy i'm spacing on his name but but yeah but but cinema is up so to speak uh in the next election cycle

SPEAKER_307: so she's got a little bit more time but you're right like cinema is attuned and mansion is attuned they are some of the few democrats that are attuned to where the center of the country is you heard mansion in the wake of this election said this is a center right country these guys better wake up um you know they should really now look i think i think what's going to happen in the wake of

SPEAKER_301: this election is that this infrastructure bill is going to sail through because one of the crazier things that the progressives were doing was holding that bill hostage it might have helped mcauliffe i don't think would i don't think mcauliffe would have won but it might have helped him by a point or two if they had gotten that infrastructure bill done because a lot of those programs are going

SPEAKER_307: to be popular in a state like virginia okay but i mean but but i think that you know this house reconciliation bill they just seemed hell-bent on jamming it through with all these tax increases i don't think that's not popular you know what the big issue in new jersey for them yeah one of the big issues in new jersey where you almost had this upset within one point was taxes you know um there was a a gaffe by murphy who said something like you know he said he said that if if taxes are someone's chief concern he said quote maybe we're not your state can you imagine that wow and he almost lost the election because of that so i don't think all these big tax increases are what the country wants and you know if biden insists on allowing bernie to dominate the agenda and warren i think it's gonna

SPEAKER_309: you're gonna see 40 to 50 seat losses by the democrats in 2022. okay moving on to our final

SPEAKER_213: topic crazy update out of china a research team has developed a method of converting carbon dioxide into starch science magazine published this paper from a research team 100 grams of catalyst converting five grams of co2 per hour into starch um and freeberg i saw you tweeted that this is 10 times more efficient

SPEAKER_181: than corn plants uh what's the impact of something like this could it hit scale would it have an impact

SPEAKER_95: on food security carbon global warming yeah so i tweeted this paper out because it's just it's a fantastic

SPEAKER_117: demonstration of what's possible in this new emerging not emerging it's been around for a long time but kind of you know in the state of art in um in bio manufacturing you know photosynthesis is the system by which most starch is produced on planet earth today that is plants convert sunlight and use water and carbon dioxide to make uh starches and starches um and and sugars which are what carbohydrates are account for 60 percent of human calories and we get all those calories from rice wheat potatoes which you know are grown on about 60 percent of our acres uh that we farm on planet earth so you know in in plants there's a series of these chemical reactions and what these guys did is they um uh isolated and um created a couple of specific proteins um which are a class of proteins called enzymes and what an enzyme is is it's a protein that can take different molecules and combine them and reinforce them to react and make something new and they identified a couple of enzymes and engineered a few enzymes and put them together in a cell-free system meaning there's no cells involved it's just a tank with a bunch of fluids in it and um and they stick in some carbon dioxide that they can suck in from the atmosphere and they um they can and they have to drive it with some hydrogen gas which we can just get from water and the system basically converts that carbon dioxide into starch uh which is uh being done at a rate that's almost 10 times higher than what we see with um with corn plants so it's it's an incredible demonstration there's there's several steps to the system like six steps and i did some back of the envelope math and my back of the envelope math on what they've demonstrated and and by the way everything they did is publicly available re for reproducibility so people are going to try open source open source so people are going to try and copy this now but my back of the envelope math is um you know uh this system can produce about 10 grams of starch per liter per day which would mean it would take about 2.7 trillion liters to suck up all of the carbon dioxide that all of humans are putting in the atmosphere every year from all of industry that would require um about 27 million tanks that are about 40 feet tall and about eight feet wide that whole all of those tanks could fit in an area about 25 by 25 miles you could attach one nuclear reactor to it to suck up the uh the water and convert into hydrogen gas and feed this system and those tanks 25 miles by 25 miles would take out all of the carbon dioxide on planet earth and convert it into usable starch and that starch by the way that system could be tuned not just to make starch for consumption it could be used to make biofuels it could be used to make bioplastics it could be used to make anything that's hydrocarbon based um and so you can kind of think about this being the entry point to a series of production systems that we could use to make stuff freebrook why did they open source it so they're they're a research team of scientists from china and they've been iterating on this this process this isn't the only process right and so what they're showing is

SPEAKER_95: that this is possible and what i think we will see is a lot of people rattling their brains now saying not only do we use proteins and enzymes that we find in nature but we're going to start to engineer our own proteins and our own enzymes that are even more efficient than what we see in nature and

SPEAKER_117: that's what's starting to happen this system alone what i just described this 25 mile by 25 mile system which is tiny is the equivalent of starch production from 42 us corn belts if you took all the corn growing

SPEAKER_95: in the united states it's 42 times that um is what it would produce that's my back of the envelope math of kind of what these guys did um and so i think what they're showing is this incredibly yeah yeah and the implications we could go in 100 directions and we could talk for an hour about what this means and what you could do with it but i think it it really catalyzes this this point that that that that we're kind of everyone's always like how are we going to get all this carbon out of the atmosphere what are we going to do with this where there's a will there's a way the science is here today 27 million tanks made out of plastic you could probably get that stuff produced you know a couple billion dollars find a piece of land that's 25 by 25 miles that's near some water and put a nuclear power plant there and you could suck up all the co2 in the atmosphere anybody want to take anyone but

SPEAKER_426: you want to take a guess of how many people on the team were in advanced math courses

SPEAKER_04: the funny thing about this that i think is really interesting is that it came at the same week where

Chamath Palihapitiya: we were ending you know what was this political theater of cop 26 you know greta thunberg

SPEAKER_274: uh who's you know how dare you how dare you she had this she was she had this very funny comment

Chamath Palihapitiya: which is like uh you know it was a bunch of corporate nonsense and the same old blah blah blah was her description of cop 26 you know we had this great trickle of like you know agreements there was like on monday there was an agreement to stop deforestation uh and then you realize it's a non-binding agreement and you're like oh okay well i guess we're not going to stop deforesting we're just going to keep you know doing that and all of this stuff just kind of like took a lot of my enthusiasm um and i was a little despondent about what was going on and then when i saw this thing i was i was really quite impressed i will say that there's a very tricky thing happening right now which is that developing countries basically said listen if you want us to go after climate change we want 1.3 trillion dollars a year to support us and so you know the western world will have to figure out whether we're willing to pay you know what is the equivalent of you know six or seven percent of us gdp to a whole bunch of other countries every year for them to slow down and if we don't make these payments to india and china and a bunch of other developing nations they they have said we're

SPEAKER_354: just going to continue to do what we're going to here's an idea take half of that money and put it

SPEAKER_117: towards science yeah take half that money and go build a plant that uses this system that was just demonstrated and put it in south texas and suck up ocean water and convert that ocean water into hydrogen gas great jobs by the way ocean water can be turned into hydrogen gas by running electricity through it so you're putting a nuclear power plant to make the electricity you run it through ocean water you create hydrogen gas you pump it into these friggin tanks and it sucks up all the co2 and it makes stuff that humans can consume and that we can use and suddenly you have this abundance of material you have this abundance of food and um you can turn this and jobs and you can turn this into a lot of different things and you know this kind of goes to the point i've been making for a while if we want to invest in infrastructure this is the sort of thing that both solves climate change creates jobs and has extraordinary economic return potential built into it so politicians reelected

SPEAKER_95: you know i think the private market may come after this stuff i'll be honest i'm you know i'm like i'm talking to people looking at this being like why don't we make a plant that we can make biofuels and bioplastics and food and other stuff out of this uh this technique and there's going to be other iterations of this technique um but it's such a no brainer cost like a functional prototype of this

SPEAKER_234: like a small prototype nothing right i mean a couple million bucks yeah like nothing so um you know

SPEAKER_136: the other thing that happened this week beyond this request for 1.3 trillion dollars is that you know

Chamath Palihapitiya: we're now seriously considering carbon tariffs and we talked about this on a pod before but you know i've said i think this is the most disruptive thing in the capital markets and and geopolitics that can happen in the next 10 or 20 years is an effective carbon tariff which is to say that when a good or service enters the borders of a country they will levy some tax that they think represents its drag on the environment and so you know the simple example would be a car you know

SPEAKER_04: you make a car you make a tesla in texas but the minute it crosses the border to canada canada says well here's the true carbon intensity of this car all of the energy that you put into the aluminum to the batteries you know to the to the buildings where the engineer sat that were that were building fsd and uh you know i'm going to charge an eight thousand dollar tax on this car or iphones coming out of china yeah that's happening i think that's coming so i think that you know the combination of tariffs and these transfer payments is going to create a real economic incentive for folks to make these kinds of big technological leaps so i'm pretty bullish on all of that i'm less bullish on politicians ability to organize because unfortunately again this is the first time i really

Chamath Palihapitiya: paid attention to cop and it just looked like a bunch of really you know useless political theater

SPEAKER_252: it's just a lot of political theater sacks does this uh science conversation about saving the planet

SPEAKER_65: do anything for you would you like to get back no i mean i think it's the way to solve the problem

SPEAKER_75: is you have to figure out new technologies to actually take carbon out of the atmosphere

David Sacks: because you're not going to do it through you know these political programs i mean you know china india paying them and another developing nations 1.3 trillion a year i mean foreign aid already is one of the least popular parts of of the uh government's budget you're going to now pay 1.3 trillion to these countries so that they it's nonsense and you're going to pay put that money into

SPEAKER_444: our education system nobody's great science and technology that solves the problem nobody's going to stand for that yeah and you know the the taxes our education system right pour it in yeah i don't

SPEAKER_75: think there's a political solution to this problem that's going to be powerful to people i think it's going to have to be solved through new technology now let me ask you a question freeberg you said

SPEAKER_213: there's a six-step process given your experience building science and technology products is it

SPEAKER_181: possible for each of those six steps to get but 20 more efficient a year yeah look i mean um i just say

SPEAKER_117: that to describe that there's a series of steps in the system it you know um but uh at the end of the day this is a demonstration of science that has been you know probably funded to some small amount but you know if you start to iterate on this approach and think big picture and think infrastructure solution here uh there's a lot of room for improvement i'm sure so in other words

SPEAKER_96: you're back of the envelope 25 by 25 mile if this is getting 50 more efficient 25 more efficient year over year we could see it becoming you know uh twice as efficient every two to three years and your 25 mile might be a five mile radius city i mean think about going to mars right what are we

SPEAKER_103: going to do in mars we're not going to grow grow freaking fields of corn and grow cows and stuff

SPEAKER_117: right you're going to need a system that literally takes the molecules that are in the atmosphere there uses some electricity that's probably going to be produced by a nuclear power plant and convert those molecules into what you want to make and consume and that's what we can do on earth today the systems are going to get better they're going to get cheaper they're going to get faster and that's why i'm highly optimistic about solutions to climate change in the century it's not about an if it's about a when and you know the when is going to be defined by the willpower

SPEAKER_166: of how we are going to allocate our people and our capital resources to solve these problems in the

SPEAKER_417: near term we have the tools to do it i love the fact that we're sort of hitting this fork in the road where it's like do we just want to give the money to a bunch of governments to pretend

SPEAKER_213: they're going to solve this and grifters or do we want to put it into science technology innovation

SPEAKER_371: and entrepreneur hand entrepreneurs that execute execute right what'd you say i picked the former

David Friedberg: we should yeah let's give it to politicians who don't know what the they're doing i mean it really is like when you know i don't know if you saw elon say like yeah if you want to

SPEAKER_100: solve world hunger can you make us can you make a spreadsheet let's talk about that that's just so

SPEAKER_117: beautiful i thought that was like the greatest that's dunk of the week nothing nothing gets me up in the morning like funding shenanigans right jay tell the stories i mean just somebody was like

SPEAKER_460: oh elon you know made more money tesla stocks no no an article it was an article that was written sure and then he's like well if you want to solve world hunger i'm willing to sell shares can you

SPEAKER_222: describe it you're doing such a shitty job today as a moderator what are you talking about all i did was

SPEAKER_462: put a sis in your hands you guys dunked everything that's it i'm out but to the audience there's an

SPEAKER_464: article voice dude in his voice yeah hey guys and there was an article sound there was an article

Chamath Palihapitiya: that was written that basically said you know um you know 6.8 billion dollars uh which is you know what elon made like in a day or something could cure world hunger and uh then the head of the you know uh un world food program retweeted that again trying to further dunk on elon and then um elon responded well if you can just show me a plan and just please reply in line here on twitter and it's credible and detailed i'll just sell you know this talk and i'll give it to you and uh everybody was like oh my god there was this oh my god moment like wow can this really happen ending world hunger sounds like a beautiful idea it can only does only cost you know 6.8 billion dollars and obviously it went nowhere because the guy didn't have a plan and it was just a complete joke but that's what happened yeah

SPEAKER_469: and uh he's like yeah just put all of your uh put all of your expenses out there show us your

SPEAKER_93: plan and it was like oh crickets nothing all right everybody on behalf of the dictator chamath polyhapitiya the queen of quinoa the sultan of science david friedberg and for the rain man himself reporting from definitely reporting from yeah he's reporting from the new york stock exchange

SPEAKER_474: congratulations again to my bestie david sacks on the triumphant ipo of bird we'll see you all next

SPEAKER_486: time on the online podcast bye bye