SPEAKER_00: Can I tell you a funny story? So I was in, I was in and then when I landed, there was an assistant message on the plane. And then the pilots text me like, hey, bad news. We're not going to be able to take you tomorrow. There's an error message. And if we can't resolve it, we can't fly. I was like, okay. So I text Saks. I'm like, hey, dude, I'm in a really tough spot. Is there any way that I could catch a flight with you? Tomorrow. Absolute dead silence. Three hours later, Paul, pilot Paul texts me and says, good news. Cleared us. We're going tomorrow. I text Saks right away. Hey, no worries. It's all resolved. In eight seconds, he responds. Awesome. With an exclamation mark. Yeah. No, he texted the delay. Also.

SPEAKER_09: He had zero intention of bringing me and my family with him. Zero. I filibustered. He filibustered.

SPEAKER_14: No, the truth is the plane was with me. I was using it. I'd be happy to let you borrow the plane if I'm not using it.

SPEAKER_16: Here's Saks the last time we went to dinner. Ready? The check comes. Miller and Lux lands on the table. Here's Saks. What you're seeing? See that? You know what that is? Saks going for his wallet. You can just count it.

SPEAKER_20: It's almost there. This is ironic because I can't remember the last time. He's going. He's almost there. I can't remember the last time you picked up a check, J. Cal.

SPEAKER_21: What are you? Every time I pick it up on the way in. Maybe for a slice of pizza.

SPEAKER_22: Come on. Saks is one of the most generous people I know.

SPEAKER_00: I remember we went to a bar once. We barely had time to get a glass of Stillwater, a Diet Coke, and some of the free nuts. And then J. Cal was like, guys, it's on me.

SPEAKER_24: I pulled out a 20. I gave it right to the bartender. That's true. My turn.

SPEAKER_26: My turn.

SPEAKER_24: I got it. My turn.

SPEAKER_28: Jamath, you got the white truffles and the filet mignon last week. I think these bar nuts are on me. It's only fair.

SPEAKER_32: Yeah, throw in some cashews, too. Throw in the cashews and raisins. The trail mix. I'll get the trail mix because you got the truffles last time, Jamath.

SPEAKER_34: Oh, my God.

SPEAKER_39: All right, everybody. Welcome to the All In Podcast. We're still here. Episode 105. I don't know if you saw it, boys. Last week, the pod hit a new high-water mark.

SPEAKER_44: 16th overall in the world. So, congratulations.

SPEAKER_46: That's incredible. I thought we peaked at 14, actually.

SPEAKER_49: Was it 14?

SPEAKER_46: 14, yeah.

SPEAKER_48: People listen to this pod.

SPEAKER_50: When I was in D.C. this week, I had a bunch of meetings, and so many of the staffers listened to the pod. And they came up to me. They're like, hey, love you guys. Listen every week. It's really crazy, actually, the reach of this thing. It's really cool.

SPEAKER_54: Now, when you were in D.C., how gleeful were they about Sachs' absolute shellacking last week? That must have been high fives all over. The Dems, like, they won twice. Trump announced and Sachs lost.

SPEAKER_56: Listen, we talked a lot about-

SPEAKER_14: How nervous are they about SBF and how much money he gave them in order to stop that red wave? Oh, oh, oh, oh, oh, red wave.

SPEAKER_00: Oh, take it easy. I talked to a lot of folks, and what I would say is we talked a lot about energy policy, life sciences, obviously, two areas that I invest a lot of money in, and foreign policy. And actually, David, you'd be surprised by how many fans you have there.

SPEAKER_63: Cool. Well, I mean, like General Milley, like we talked about last week, he's come around. Jake Sullivan, just this week, said that he told us.

SPEAKER_14: He told the Ukrainians it was reported that they can't have Crimea back, get realistic. So Jake Sullivan and Milley are like the voices of reason now in the administration on this. And they're just saying the same thing I've been saying, for which I was excoriated by the foreign policy establishment.

SPEAKER_63: And I got into a little Twitter spat with Ian Bremner this week, because all of a sudden he posts that, oh, everybody has been privately saying that we need to negotiate. No, no, you haven't. You were criticizing. You were denouncing Elon as a Kremlin agent when he posted that Twitter poll suggesting that the Ukrainians should negotiate. So you were publicly denouncing those of us who are calling for negotiations. And now all of a sudden you're saying, well, this has always been the position. But I think what's significant about that is the guy is just a weathervane for the blob and the foreign policy establishment. And so the weathervane is now pointing towards negotiations. So that's the good news here.

SPEAKER_58: Do you think that if DeSantis wins the presidency, you will be nominated as a secretary of state?

SPEAKER_67: Treasury? What would you take? Treasury? No, no, no, no. State. Sachs, if you were offered a cabinet position, would you take it?

SPEAKER_13: He should. You should take it.

SPEAKER_63: What you have to understand is that my position on foreign policy or Ukraine specifically is not adopted by either party. I mean, McConnell and the Senate Republican leadership are very much on board with the Biden administration's policy on this.

SPEAKER_70: They are very, very hawkish. It's really the uniparty on this issue. There's really just one consolidated blob.

SPEAKER_44: OK, but back to the question. Would you would it be a dream of yours? Would you find great joy in having a White House position to serve DeSantis goes in to serve your country?

SPEAKER_78: Would you serve?

SPEAKER_63: Would I serve if if if the president of the United States calls you up and asks you to do something?

SPEAKER_81: Obviously, you have to have to serve your country, but it's not something I'm looking for.

SPEAKER_84: That's a yes.

SPEAKER_85: What if he asked you to serve as the U.S. ambassador to Burkina Faso?

SPEAKER_87: Where? What?

SPEAKER_85: The ambassador roles are so funny. It's like you have to compete for the good ones and then some people get stuck with the bad ones. Those are available for purchase.

SPEAKER_63: Yeah, yeah, exactly. You know, there's like a there's like a menu of these things, like these ambassadorships, like I don't think it's like written down anywhere, but it's kind of like unspoken. It's like if you want the ambassador ship to the U.K., that's like 10 million dollars.

David Sacks: And then, you know, like affordable. No, no, no.

SPEAKER_50: The thing with the U.K. and France, it's every every embassy, every ambassadorship comes with an annual budget. But the cost of actually running that embassy and really throwing the parties is much more. So for the U.K. and France, the gap is 10 million a year that you have to fund out of pocket. So you got to be really willing, you know, to put the money up. Oh, you got to pay for the parties? My friend was the ambassador to the U.K. under Obama, and I went to a party there. It's unbelievable.

SPEAKER_58: And he has the best life because, like, you know, he was meeting everybody in the world, you can imagine, goes through the U.K. and then wants to meet the U.S. ambassador.

SPEAKER_00: It was a great job for him.

SPEAKER_14: Right. But the money I'm talking about is the cost of buying one of these sinecures. You have to typically raise that much money. You got to bundle. This is what I've heard. I mean, I don't know. This is what I've heard is that.

SPEAKER_48: Well, does that mean that SBF's parents, if Elizabeth Ward wins a presidency, SBF's parents are going to get his ambassadorship?

SPEAKER_98: Right now, the Illuminati right now just revoked all of our Illuminati cards.

SPEAKER_100: We're not supposed to talk about this, guys, that you can buy an ambassadorship. But speaking of buying politicians and coverage, let's get an update on FTX.

SPEAKER_101: Wait, what about Trump? Speaking of politics, I mean, do you want to talk about it?

SPEAKER_104: Because if I bring it up, I didn't want to tilt sacks in the first five minutes.

SPEAKER_63: The only thing I want to bring up is I think I'm entitled to, and I told you so on this. There was a story where the FBI said that the reason why Trump kept the boxes in his basement, they've now, the FBI has definitively said, it's because he was just trying to preserve mementos, not try to sell state secrets to the Saudis or something like that, like some people were making wild conspiracy theories about.

SPEAKER_14: So, Jake, it looks like I was right about that. In fact, I think we had that very discussion on this pod.

SPEAKER_54: Yeah, I mean, I said I thought he was keeping it for, like, keepsakes, like mementos. That was my position, too, because he's a hoarder.

SPEAKER_55: You didn't support the Saudi conspiracy theory?

SPEAKER_63: Let me ask you a question, because I mean, I wouldn't put it past him. He's a maniac. I think if you believe that this was about mementos, which the FBI has now said it was, I think you also have to say that the FBI's approach in raiding his home with armed soldiers was heavy-handed. Now, I'm not saying they didn't have the legal right to do it. I'm sure they checked all the right boxes, but it was heavy-handed. But look, that brings me to another point. Why do they do it? I actually suspect now that what the Biden administration is trying to do is keep Trump in the news. I think they actually want to provoke him. They want him to run. They want him to ask. It's the exact same thing. Remember the 50 million that went into Republican primaries to support the election denier candidate? Turns out that was a successful strategy for them, as much as I hate to admit it. As reckless as I think that was and hypocritical, because I don't think you can be out there claiming that these candidates are a threat to democracy at the very same time you're funding them. So I think it was completely hypocritical and sort of Machiavellian, but it worked. And I think in a similar way, what the Democrats are going to try to do over the next year is keep Trump in the news as much as possible. And in fact, CNN ran his entire speech announcing last Tuesday, I think, for this reason.

SPEAKER_50: If Trump wins the Republican nomination, he's going to, then he will lose the presidency. Because if you look at all of these exit polls that came out of these midterms, he's just so massively unfavorable. But that's not what's going to be, you know, litigated in the primaries. In the primaries, it's just Republican on Republican. And there are a non-trivial number of paths where Trump actually beats DeSantis. And I think that's very scary to the Republicans who want to just move on and have a chance of actually consolidating power. And it's gleefully blissful for the Democrats. Because if, again, and we saw this, look, if the Democrats were able to fund and field MAGA candidates in the Republican primaries that then lost in the general election, well, the best MAGA candidate of all is Trump. So, David Sachs is completely right. Now, like, the balance of power here should be, if you're the Democrats, whatever you can do to keep him in the news, whatever you can do to induce him to run, makes a lot of sense because he will cripple the Republican Party. He'll split and fracture the vote.

SPEAKER_63: Look at how J. Cow's got a big grin. He's admitting to the hypocrisy, which is for years, he's been screaming about what a threat. This is your boy. He has how he's secretly on the payroll of the Kremlin or foreign governments. And yet, and yet, you want to keep him in the news. You want him to be the nominee.

SPEAKER_121: And you Republicans don't have the common sense to kick him out of the party. No, I do. You're cowards. Kick him out.

SPEAKER_122: Come on. I was on the DeSantis train before the midterms election. But you won't kick Trump out.

SPEAKER_123: You on this pod will never kick him out of the party. You should say. How am I supposed to kick him out?

SPEAKER_16: I think we, you guys should all disavow him.

SPEAKER_63: Publicly disavow him. How? I've already said I support DeSantis. I said it before the midterms. What else do you want me to do? But by the way, I don't think.

SPEAKER_122: I'm talking about the party writ large.

SPEAKER_63: I think, I think you're, I think you and many other people on the Democratic side and the media are being very hypocritical about this because you want to claim that he's this unique threat to democracy while playing this game where you want to keep him in the news. You want to basically provide him with as much oxygen as possible because you think he's more beatable. And by the way, I agree that he's less electable than DeSantis, which is why part of the reason why I'm on the DeSantis train. I also think DeSantis would get more done. But look, I don't think it's a foregone conclusion that he's going to be the nominee. Did you see the new polling that came out after the midterms? DeSantis is now the favorite in among Republican primary voters among every different slicing that you want to do of whether it's likely Republican voters, primary voters, whether it's Fox News viewers and on and on and on.

SPEAKER_131: DeSantis is now ahead of Trump by about 14 points. Okay, wait, hold on.

SPEAKER_54: I need to be able to state my position because Sax interrupted me seven times. So I just would like to get my position out here. Number one, you all backed somebody who is a horrible human being who made terrible decisions. And now you guys keep supporting him. At some point, you have to put your foot down and say, listen, we don't want this guy. You have to publicly say, January 6th, you know, and this guy's approach, the election denial. You guys have to come out and just say, we don't want this person to run. I think you've been hedging too much. I think that's the problem. Now, I am not. How can I be clear? I think the Republican Party. Now, you always were a little bit like, because I did ask you on this very pod. Hold on, hold on. On this very pod, I asked you, if he run, would you support him? Would you ever vote for him again? And you were like, well, and you would vote for him again.

SPEAKER_132: If he wins the nomination, you'll vote for him. That's the truth. Republicans will still vote for him.

SPEAKER_63: Look, you know that before it was popular, before the midterms, I was on the DeSantis train. I was saying so on this pod for over a year when it was very unpopular, certainly in the area in which I live. And so, you know, and there are a lot of Republicans now, most Republicans now agree with me on this issue, according to the polling that just took place. But if he wins the nomination, you will vote for him. The issue, Jason, is that you want us to buy into every bullshit narrative that you've ever told about this issue. January 6th is bullshit?

SPEAKER_144: No, it was election denial is bullshit. Let him finish. Let him finish. Let him finish.

SPEAKER_147: He's interrupting me every two seconds. Stay out of it, Freeberg.

SPEAKER_85: Oh, I just want you guys to guys. I just want you guys to speak and then let the other person speak. That's it. I don't.

SPEAKER_63: I'm not on any side. The point is just here we go again. I don't want to rehash every single thing in the past. But look, the point is that I think we have more electable candidates. I think we have candidates that would get more done in office. But and I've already said so. But I, you know, but that doesn't mean I believe this whole like threat to democracy thing. I think that is massive inflation of the actual threat. But but look, if you want me to say that we have more electable candidates, we have candidates who will get more done, who frankly would be less alienating to moderates and independents and could even win over some moderate Democrats the way that DeSantis did in Florida to win by 19 points. Yes. Happy to say that. And I've been saying that I will just say if I, if I, if I'm, if Freeberg allows me to

SPEAKER_132: make a point, I would like to say it is a threat to democracy, January 6th and election denial. Those two things are acute.

SPEAKER_63: Why did the Democratic Party fund over $50 million to those candidates?

SPEAKER_44: Cynical because they wanted to win cynicism, pure cynicism.

SPEAKER_157: Okay. We're on the same page about that.

SPEAKER_44: Yeah. Yeah. It's pure cynicism. But do you, let me ask you a question. It's uncomfortable for Freeberg to watch mommy and daddy fight. Um, I know we're triggering some childhood trauma, I know this has to do with some childhood

SPEAKER_161: trauma. It's cool. It's okay. Mommy and daddy still love each other. Even if we fight sometimes. It just makes me want to turn the volume down. Go ahead.

SPEAKER_163: We're almost done.

SPEAKER_54: Anyway, I do think fielding moderate candidates is the path. And I think you brought this up a ton of times who it's the race to whoever can get that moderate middle. And I hope that they field better candidates. But do you think Sachs, he's running. This is one of the cynical takes is that he's running because it will help all the legal cases against him. Do you think there's anything to that?

SPEAKER_63: My guess is that that they see him as an easier candidate to beat and they're going to do everything they can to try and keep him in the news. And I don't, I actually, I don't think that's your position. I actually think that you're being sincere that you don't want him to win a second term. I mean, remember, like we don't know, I think we all believe that we're going to have a pretty severe recession next year. So just because the Democrats cynical strategy in the midterms of promoting, you know, what they called election deniers in the primary that happened to work. But just because it worked last time doesn't mean it's going to work next time.

SPEAKER_94: And abortion absolutists and a whole bunch of other things.

SPEAKER_50: I think, I think the point is pretty much this, which is that people gave Trump a lot of credit for being an idiot savant, but it looks like he's more of an idiot savant minus the savant. Okay, this is a, this is kind of a goofball, who has a brilliant media strategy, and he had his finger on the pulse in a moment. And then he just couldn't execute, couldn't put two and two together, couldn't put one foot in front of the other. And he was way too divisive, and he got booted out, and he lost fair and square. And now what the Republicans have to realize is if they don't figure out how to field somebody out of the primaries that is different than Trump, the Democrats will win. Because if it is Trump, whoever the Democratic candidate is, I don't think it really matters, will crush Trump.

SPEAKER_81: Yeah, look, I, I think that's likely correct.

SPEAKER_63: I mean, I think, I think that we talked about it last week, you cannot win the presidency with call it 45% of the vote. I mean, Trump is capped at that amount.

SPEAKER_50: And the scary thing for Republicans, by the way, is Trump does a much better job than anybody else in getting his base activated. So the thing that all these polls get wrong, and I think they've consistently gotten wrong,

SPEAKER_66: and as a result, have underestimated him, is they don't give him the credit he deserves, duly, for being able to curate a fervent base of that 30 or 40% of America that will show up for him.

SPEAKER_50: And even if they didn't show up as much in the midterms, they sure as hell showed up in the primaries for his candidates, oftentimes. So I just think it's a very dangerous cocktail that you can't sleep on. So the Republicans have to take this really serious. Moderate Republicans want to have a chance of winning. You guys have to figure out how to beat Trump in a ground game. Because if his base shows up, he has a decent chance of winning the nomination, but then you will lose the general.

SPEAKER_14: Yeah, I think that's, I think that's pretty much spot on. I think Republicans really have to be smart and disciplined and think about,

SPEAKER_63: we have to nominate the most electable candidate. But here's the thing is we're not even debating policy right now. No one really says that, hey, on a policy basis, there's a huge difference between, say, Trump and DeSantis or some other folks. It's all about personal style. And is it really worth it to the Republicans to potentially lose the next election based on personal, based on style points. It's a silly reason to lose. You know, William F. Buckley a long time ago said that he would always support the most electable conservative candidate. He didn't always go with the most conservative candidate. He wanted to go with the most electable candidate who met a basic policy bar. And he sometimes got in trouble for that. For example, he supported Bush 41 over Jack Kemp. I know I'm going back a long way. But in any event, you know, thinking about electability is just really important.

SPEAKER_132: There's one civil lining here. The head of the Republican Party, Rupert Murdoch, has absolutely dissed Trump. I don't know if you saw the New York Post, but he put on the cover of the New York Post, a little lower, like 10th Florida man makes announcement.

SPEAKER_175: And on page 26, he had the announcement of Trump running for president.

SPEAKER_06: And the funny thing was the last- You lose Rupert Murdoch. He didn't even name Trump as the presidential. The absolute last line of that column. And he said, oh, and he also happened to be the 45th president of the United States. Yeah. It was very funny.

SPEAKER_14: What you're seeing a lot of Republicans saying, I think correctly, is that if you want to win elections, you have to look out the windshield,

SPEAKER_63: you know, not in the rearview mirror. And what we saw in the midterms is that even talking about 2020 was at minimum a giant waste of time and a distraction and at maximum potentially cause these candidates to lose. I mean, the fact of the matter is that a lot of candidates, including some I support it, in battleground states who got lured into trying to relitigate 2020, they all got vaporized. And I just think it's stupid to be talking about the past. Voters want you to focus on the future.

SPEAKER_122: And especially when there's no policy outcome that matters, that's at stake for you to be talking about a past election instead of the future.

SPEAKER_34: Let me ask Freiberg a question. It's just, it's politically stupid.

SPEAKER_183: Freiberg, if I may bring you into this discussion uncomfortably, as it might, as uncomfortable as it might be, would you vote for Biden, incredibly old? I don't know, it's gonna be 81 or 82 in the next election. Would you vote for Biden or DeSantis?

SPEAKER_85: As I go through the list of things I'm most concerned about in the world today, number one is the debt and spending cycle of the federal government in the US. I think it's the most kind of scary set of facts and conditions that we're getting set up for kind of a major crisis 10 to 15 years from now. Because you can't afford all the debt that we've taken on as a country, as well as the entitlement, as well as defense. And so something's got to give. And there's a bunch of paths that could emerge from that set of conditions that are all really scary paths and not good. I'm more concerned about that than I am about nuclear war or climate change. Just to be clear, because I think that the social effects and the global geopolitical effects that arise from the US kind of destructuring because of our debt and spending cycle that we're in right now are far more significant than what we'll experience over the same period of time. And again, I do think that technology is going to resolve a lot of our issues of climate change. And I think nuclear war, cool heads will prevail. Everyone's got a family. So that's what I'm most concerned about. So any kind of voting decision I make is made with that lens, which is what's the best path to supporting some, some sort of responsibility, setback or step back to resolve those issues. As Charlie Munger said so well in this interview that was published this week. And I've said it a few times on the show, but he did, he's a much better speaker than I uses far fewer words. But, you know, in democracy, eventually the populace realizes they can vote themselves all the money. And, you know, that's what we see happen in an accelerated way in Latin America. We've seen that with a lot of these democracies that ultimately resolve to kind of socialism. And in the US, we're seeing a lot of this behavior where we're kind of voting ourselves all the money we're putting in place politicians and the populace is saying, I want, I want, I want, and more money comes out and it, it, um, it totally decreases the strength and the resiliency of our nation and our economy. And it's the most concerning thing to me because the, the incredible innovation and economic engine that is the United States is threatened and it really threatens a lot of stability, uh, in the world today.

SPEAKER_191: Yeah, Chamath, any, any final thoughts here as we wrap up the political discussion?

SPEAKER_183: I mean, I think they're obviously a Democrat, so you're voting for Biden, but you also care about fiscal responsibility. So where are you at with your vote for 2024?

SPEAKER_58: I don't think that we know who's actually running on either ticket yet, just to be completely honest. So that's my perspective. My other comment is I think what David said is so spot on.

SPEAKER_50: The single biggest issue that we have is that we have made a huge decision to de-globalize and that de-globalization has the risk of introducing a hyperinflation loop. And we won't know how bad that is for another year or two.

SPEAKER_196: Why would it do that? Why would it? Well, think about it this way. De-globalization costs hyperinflation. Explain that.

SPEAKER_50: So today, let's just say you buy a chip to make the iPhone. You buy that chip from, you know, TSMC that makes it in Taiwan, ships it to China, and the entire world is serviced with that supply chain that keeps that chip as cheap as possible. Now, with the Chips Act as an example, we will build resilient supply chains where now instead of one place, it'll come from six places, five of those six will be in allied territories, the United States, Western Europe, potentially Mexico. The thing with that is that that now is 6x more equipment that you're buying, right? Instead of one machine, you now have six machines. Instead of one person operating the machine in one country, you have six people in six countries. As you can imagine, when you layer up all these costs, there is no world in which that chip is as cheap as it was before. And so the cost of that has to be born either by the consumer who pays a higher price, that's measured as inflation, or by the government who subsidizes it at the point of import, that'll be measured by debt. And so one way or the other, in our path now towards more resiliency and national security, which by the way, I think is the absolute right decision, okay, energy independence, all of this stuff we have to do today, we are at risk of a hyperinflationary loop, if not managed well. And so you have to be really on the levers of the economy, and you have to understand it deeply. The person that deserves the most credit of preventing this hyperinflationary loop right now is Joe Manchin. And hopefully the history books, whatever Jay Powell does, I think has been good. But the fact that Manchin prevented $6 trillion more of being pumped into the economy in the last two years, is probably the single thing that prevented inflation, instead of being peaking at nine, from peaking at 15 or 16. I think it would have been a national disaster without that.

SPEAKER_14: Tim Cynova is right. That extra $6 trillion that Manchin thought would have been a national disaster, but let's also give credit to every Republican, because they also voted against it. I mean, the fact of the matter is that-

SPEAKER_66: Yeah, but Manchin, the pressure was on Manchin to do the thing and see the forest from the trees, and he did that.

SPEAKER_63: Yeah, no, look, I agree, I agree that- Profile and courage, that's a profile and courage. I agree that he was in the hot seat. Well, so was Sinema, by the way. Sinema didn't go for the $3.5 trillion build back better. But then Manchin, he went along with the $750 billion version of BBB, which they renamed the Inflation Reduction Act. That was kind of a disappointment. So, frankly, I give more credit to the Republicans. They were against all of it, and the Democrats jammed it through. So if you're worried about all of this trillions and trillions of unnecessary spending, why don't you give the Republicans a chance?

SPEAKER_50: I'm talking about the delta between what was spent and what could have been. The entirety of the gap really was prevented by Joe Manchin.

SPEAKER_208: I know, but it was Joe Manchin siding with the Republicans.

SPEAKER_63: My point is just, look, neither party is perfect on spending. They both want to spend too much money. But at this particular moment in time, the Republicans are more restrained about spending than the Democrats.

SPEAKER_211: Let's go to number one issue for each person, Holden. Number one issue for Freeberg is fiscal responsibility. I was going to say the same thing. It is my number one issue in this next election. I want to see austerity, fiscal responsibility,

SPEAKER_213: and get this spending under control so that our kids do not inherit stagflation, hyperinflation, or whatever cocktail of disastrous economic policies we are handing to them.

SPEAKER_183: What is your number one issue, Sachs, for 2024? If you had to pick a number one issue, what would it be for David Sachs?

SPEAKER_63: David Sachs Look, I think it s simple. The president s job is to ensure peace and prosperity. So you guys are talking about the prosperity side.

SPEAKER_14: I think we do need fiscal responsibility. We need to have a good economy. There s like a bundle of policies that go into that, starting with, I think, greater fiscal restraint. And then on the peace side, I think we need to adjust America s foreign policy

SPEAKER_63: to be less interventionist. We re involving ourselves here, there, and everywhere all over the world. And I'm hopeful that what I'm hearing out of the administration in the last couple of weeks from Jake Sullivan, from Milley, these are some good things that I'm hearing. But, you know, I would like to see us dial back on the foreign interventionism.

SPEAKER_79: If you had to 60-40 that or whatever, is one more important than the other? Or are they both equal? And then we'll go to Chamath. Both equal for you? Which one's more important?

SPEAKER_14: They're both, I mean, look, how can you have a successful United States

SPEAKER_63: if we're either in a recession or at war? You don't want any, either of those situations.

SPEAKER_79: Okay, so those are your top two equally. What is it for you, Chamath? What are the reasons for you?

SPEAKER_63: There's also a third one, which is culture, J. Cal. So this one's a little bit harder to categorize. But I do think culture matters. And, you know, I want us to have a culture of excellence. I want in the schools, for example, I think schools should have grades. They should have advanced math. We should hold our kids to a high standard. I think that we want to have safe cities. We want to, you know, have cities where crime's not out of control. We need to have, you know, a sound border policy. So I think there's like a collection of policies there under, you know, schools, crime, border that are sort of broadly cultural, I guess. But, or maybe you could call them quality of life issues. So, you know, yeah, we need to have a good economy. We need to stay out of foreign wars, but also we need to have a high quality of life.

SPEAKER_50: Can I steel man something for you? Because I really agree with those three things, David, that you said. But I've spent a lot of time thinking about this. And my formation is that there's one thing that allows us to solve all three, if you bear with me for a second. And I think that that is the energy independence of the United States. If you look inside of what's happening in the US today, the cost of generating energy is effectively as cheap as it's ever been, and as close to zero as it ever has been. And it's only going to get cheaper. The problem that we have is that we have all of these decrepit laws and infrastructure and regulatory capture that causes us to always be in an imbalance. And as a result, we do all kinds of crazy things. We borrow enormous amounts of money to create subsidies. We go and we fight all of these, you know, foreign wars that don't make any sense. We wrap the energy problem and set in climate change language, which causes this cultural division. But my belief, quite honestly, is that the reason the IRA was so important is it is the most clarified piece of legislation we've seen that essentially puts all forms of energy on a level playing field and has the chance to get America to permanent energy independence. And if the cost of energy is zero, and we can abundantly create it in the United States, what I think happens, David, is we have energy to rebuild our supply chain much cheaper. So inflation gets under control, we don't borrow as much. We have a completely different lens on foreign policy, so that this interventionism and fighting over resources is much harder to justify. And we put the climate change language aside, and we use energy independence as a form of national security, which gives us the courage to battle all these other cultural taboos that we otherwise have to say we agree with, even if they don't necessarily make any sense. And there's a bunch of them. So I don't know, my answer to your question, Jason, is that one thing, if we accomplish in the next five to 10 years, has a chance to really change the course of the United States.

SPEAKER_213: Right, and then, so I'm guessing then Biden's your vote, because if it is, in fact, Biden, because Biden is the one who pushed for these

SPEAKER_132: clean energy tax credits and this policy in it.

SPEAKER_63: Yeah, but he also canceled our energy independence. I mean, look, we were energy independent based on fracking. You may not like fracking, but it did get us energy independent. You may think that there's environmental consequences to it that you don't like and that have to be balanced, but we did have energy-

SPEAKER_165: I've never been against fracking. I believe in nat gas. I believe in coal,

SPEAKER_50: actually, as a bridge fuel. I believe in all of these things. I believe that these are all more important than going off to all of these foreign lands and trying to justify spending trillions of dollars and putting tens of thousands of American lives at

SPEAKER_208: risk, essentially for resources that we can actually create for ourselves at home. Well, I agree with you on that, 100%.

SPEAKER_226: I'm fine with, I mean, I'll tell you, like, clean fracking as a way, as a bridge, go ahead,

SPEAKER_227: to getting to, you know, more independence through nuclear and renewables. Go ahead, Freeberg.

SPEAKER_85: Like I said before, China's declared that they're building 450 nuclear power plants. The net cost, effective cost of electricity production out of a nuclear power plant is somewhere between one and five cents per kilowatt hour. The US on average is paying 11 to 15 cents per kilowatt hour. Nuclear is just-

SPEAKER_229: Through utilities, Freeberg. That's with all the regulatory capture and all that

SPEAKER_50: trash that you have to spend. For example, we have to spend $220 billion a year to replace the power lines in America by law. That's $2.2 trillion just there.

SPEAKER_85: Right. And so the cost for solar and wind off grid, I think is around three to seven cents a kilowatt hour in that range, right? So it gets nowadays, it's gotten much more competitive. But I think that the nuclear solution is just not even being engaged in the conversation. Now, I want to go back to the previous point, which is because I didn't state the numbers before. So I just want to state them because they're so shocking. And this is what shocks me. The current federal debt is $30 trillion. Our GDP is around 23 trillion. 5% interest rates on $30 trillion is $1.5 trillion in interest payments alone every year. And our social security, so $1.5 trillion, I mean, that alone is about 6%, 7% of GDP. So you have to tax every transaction in the country by 6% or 7% just to pay the interest payments on the debt. And then we have Medicare and social security.

SPEAKER_00: That math is wrong. Because you have maturities of all different types with different yield to maturities and different coupons.

SPEAKER_192: Right. So that's it's not today's numbers. It's what's happening over time. So as you look out,

SPEAKER_85: and you look at the the yield on treasuries, and you apply that to the current debt level and the increment in the debt level, you'll get to that level, right, you'll get to a trillion five a year in interest payments that need to be made, plus another call it three, four or $5 trillion a year in mandatory spending. And so that's where the country starts to run into a problem. Because at some point when you have to tax so much to cover the cash payments that need to be made by the federal government, the economy really gets hurt, and things start to cripple. And then if you were to take those entitlements away, Social Security, Medicare, you have a real problem with people's ability to support themselves in an economy where they're not working. These are elderly retired people. So there is a mate at work to pay these expensive medical bills. So there's a major crash coming, if we don't figure out how to bridge our way to this gap. So if someone wants my vote, and they're going to run for president, they would put up a simple chart like Bill Clinton used to do, and show me a 10 to 30 year plan and just say, here's where we're headed. And here's what we're going to do to make sure that doesn't happen. And that chart alone, I think can win the vote.

SPEAKER_79: Okay, let's pull up the chart then. So here is the federal debt total public debt as a percentage of gross

SPEAKER_238: domestic product. As you can see, in the 70s and 80s, we were at under 50%. The 90s, we started, you know, growing.

SPEAKER_50: I don't think this matters. I think everybody, every self proclaimed intellectual looks at this chart and says, Oh, my God, we've exceeded 100%. You know, the the empire is going to go to ruin. That's not why the empire goes to ruin, we have the reserve currency of the of the world. And there's an enormous amount of power that comes from that position. So what the right number is, is TBD. That's the most honest way to think about it. It was 100. It's at 150. It could go to 200. Many countries operated levels above us and still haven't imploded per se. The real thing is what part of what Friedberg said is, look, if you really want to look at what we pay, today, we pay 400 billion dollars this year, that's the interest payments, okay, that's when you calculate all of the different maturities we have, with all of the different coupons we have, that's what we owe today. And David is right mathematically that if interest rates go to 5% and stay there forever. But we know that that's not how economies work, they ebb and flow. Okay. So the real problem that we have to understand is how do you actually create enough growth. And then the next time that we have a meaningful fall in interest rates, like every other person does, you know, look, a lot of people in America know how to refi their credit cards, refi their home loans, refi their mortgages. The United States could have had a much more aggressive and thoughtful strategy of refi by pushing out these maturities way into the future. And again, Trump actually suggested that but because he sounded like a goofball, everybody said absolutely no way. But in hindsight, that one move would have saved us trillions of dollars over the next decade if we had done it. And this time around, we have to have politicians who are smart enough and have the wherewithal to say, it doesn't matter where this idea came from. It's really smart. Rates are now back to 2% or one and a half percent. Let's now issue 50 and 100 year bonds. And let's refi this problem out into the future that makes a ton of sense and we have to do it.

SPEAKER_238: The refi makes a ton of sense. Just to pull up a chart here. And to counter your position there

SPEAKER_213: that it doesn't matter to mouth. Maybe you can respond to if you look at GDP ratios here. Number one,

SPEAKER_227: two and three, Japan, Venezuela, Greece, Sudan, and you know, you know, some smaller countries

SPEAKER_243: there. But United States currently, none of these countries, none of these countries look, this entire

SPEAKER_50: world runs on the US dollar complex. Whenever we raise rates, yes, it is true that on the one hand, our interest payments go up. But proportionately and on a relative basis, I think maybe let me take a step back. Look, one of the most important things in investing, which is appropriate here, is that people ask, what is the price of a stock? Well, before you go public, you're calculating what the intrinsic value of a company is, okay, all the things that they do, all the money that they make, here's what we think it's theoretically work worth. But the minute it goes public, the intrinsic value no longer matters. It's what is it valued relative to everything else. Okay. The United States is a relative, if it's a stock, if all these countries are stocks, we are valued relatively to others, not not intrinsically. And the reason why we have so much power is because everybody else is actually valued relative to us. So this is why I think the right thing to look at Jason is the rate of change of debt to GDP for the entire G8, or G20, or the rest of the world. And what you'll see is something that goes up into the right. Nobody in the world has been rewarded for not investing in their populations and button basically borrowing from tomorrow to invest in today's human capital.

SPEAKER_211: Okay, so we have a disagreement here. Freeberg, you think this is a major issue?

SPEAKER_85: Yeah, because I think it's manageable. Freeberg. Yeah, for I think there's two things that are missing. One is the inflationary effect. So you look at that list of countries that are there, they're paying higher interest, and they're paying in the form of inflation. So they have less that they can spend on their people. And ultimately, what ends up happening, it's just simple arithmetic, it's not about relative value of a currency. It's the arithmetic that we have a check we have to write every month to pay for Medicare and Social Security, and it is written into law, what that check needs to be. And the rate at which we're having to write those checks, the increment of those checks is going up so significantly that when you add on the interest payments, and you look at those checks, and then you add on defense, something's got to give because you cannot raise taxes in the amount that's needed to fund all of that outlay, without this causing either number one, massive inflation, if you just take on more debt, or number two, you know, significant loss of services, either Social Security, Medicare or defense,

SPEAKER_22: and so something's going to give and the distribution I think is not being discussed. Mark Benthien, Ph.D.: Sorry, just one just one point, the President's budget,

SPEAKER_50: anybody who is a President of the United States gets hold of their annual budget, it's about five and a half trillion dollars this year. So you're talking about interest payments

SPEAKER_58: that are still less than 10% of their total budget. Now that includes the entitlement payments, okay, so about $3 billion, $3 trillion, sorry, three and a half trillion is what you have to pay for

SPEAKER_50: 20%. Mark Benthien, Ph.D.: No, $3 trillion is the sum of Medicare and Social Security. Mark Benthien, Ph.D.: Okay, so the President still has one and a half to $2 trillion of leeway, of which a quarter are debt payments. So my perspective, quite honestly, is mathematically, there's a lot of room to run here, before these things get really out of control. And even if they do, I think the relative problem is for the rest of the world will be so egregious, that the ability for the United States to go to those banks and those economies, and basically sell in more US debt is quite high, because they cannot afford to own debt in their own country. So if you think that the United States is bad, go back to that list. Guess what, those central banks in those countries are going to be buying US dollars faster than they can go out of stock unless we see some

SPEAKER_85: union of India, China, Saudi Arabia, Russia, Japan, Brazil, obviously not Japan, but some some of that consortia will become a closer trading partner, and perhaps could cause a shift in the balance of the dominance of the US dollar. And that's one path to, to consider.

SPEAKER_79: Sachs, what do you think of the balance sheet here? Obviously, we have two opposing opinions here from Chamath and Freeburg. Where do you stand on the United States balance sheet? Are we

SPEAKER_14: over our skis? Yes, the balance sheet is a disaster. What are we at? Like 130% of debt to GDP? I mean,

SPEAKER_63: we have like 30, 30 trillion of, sorry. Yeah, it's not even stable. I mean,

SPEAKER_85: we keep adding to it. Our spending is 27% of GDP right now. 27%. It should be 15%.

SPEAKER_259: Right? So the spending is... Where does that number come from? Why? There's a,

SPEAKER_260: there's a bunch of economists who have shared these papers. They're morons, morons, morons,

SPEAKER_149: fake experts. All right, listen, fake experts. No, no, no, no, hold on, hold on. If you look at, if you look at government tax receipts over time, with all different kinds of tax rates,

SPEAKER_63: including very, very different top marginal tax rates, what you see is that federal tax receipts as a percentage of GDP is in the 17 to 19% range. And like the best years you make 19%, it's usually in a good economy and in a bad economy, it's like 17%. And it really, it doesn't matter whether Reagan was president or Clint, Bill Clinton, and so on. So there's only so much blood you can get from a stone and historically spending was around 19% of GDP. And so you would have a one or 2%, you know, deficit every year. And that really accelerated. First, you had the financial crisis of 2008, and then you had COVID. And Freeburg's right, you know, we went from call it, you know, 20% of GDP spending to roughly 30% or more during COVID as kind of this emergency measure. But like everything else in government, you know, the emergency measure becomes a permanent program. So now we're at 27%. It doesn't seem to be going down. And the Democrats want a lot more. I mean, we talked about it build back better would have been three and a half trillion, instead of 750 billion, if they just had one or two more votes. So hold on. So So Freeburg is right, there's like nothing stable about the point we're at, it's the point we're at is bad on its own terms, having 30 trillion of debt, let's say that interest rates stabilize at 3%. That's still a trillion a year of debt service, which is more than not a trillion. If interest rates stabilize at 3%, which is optimistic, and we're servicing a trillion, sorry, 30 trillion of debt, that's roughly a billion dollars a year of debt service payments. That could be spent on other things.

SPEAKER_265: You guys keep saying billion when it's a trillion.

SPEAKER_50: The average yield to maturity needs to be factored in there. So over a 15 year period, David, you would be right mathematically, if all matured. But that's not what this is, because you'd have to refi and reissue a bunch of debt that is at lower yield right now at these interest rates. I want to be

SPEAKER_198: clear. I don't understand how any of this is good. I mean, remember, Hold on, hold on, hold on. I understand. All right, let your mouth say why it's good or controllable.

SPEAKER_50: I'm not saying that this is a good or it's a trend. What I'm saying is I have this issue that all of a sudden people make up, and you guys are doing it now, an arbitrary number with no rooting in history or fact and say, this is bad. And all I'm saying is, I know it feels bad to us. And I think we would all run this country differently if we could control of the balance sheet. I would as well. I would try to get debt way, way down. I would try to get deficits way, way down. But all I'm saying is using this justification of an arbitrary number, always falls flat. So I'm encouraging us all, let's find a better model of reasoning. Because every time we point to some rando's book and say 127% is bad. Nobody listens. And I think the message that you should take away is, is because it's imprecise, and it's not rooted

SPEAKER_54: in any actual logic. And if there's a better building, the reason I believe that this is concerning is, I look at the top 10 countries that have, you know, debt ratios that seem out of whack. And I think, wow, what is their fortune been for the last 10 years vis-a-vis Japan and

SPEAKER_246: Venezuela? That's not the right comparison. The right comparison will get to go back and say,

SPEAKER_50: look at the British Empire. And when, and what was the debt to GDP when it started to actually fall off? Does anybody of us know? Yeah, the British Empire collapsed.

SPEAKER_280: It collapsed. It collapsed. No, I'm saying, was it triggered by debt to GDP? And I think your answer will be- In part.

SPEAKER_283: Again, I just think- No, they took on ruinous, they took on ruinous debt, and they couldn't maintain their empire anymore, and the whole thing collapsed.

SPEAKER_286: I'm just asking for some numerical specificity. All right. Listen, we're not going to get there right now.

SPEAKER_292: The last time that we were- Yes, there was a lot of numerical specificity. There is a ton of work that's been done on this. It's not people pulling shit out of their ass. So tell us- The work shows that historically, the best way to manage the growth in a country is to have deficit spending be equal to or less than the growth rate of the economy of that country. So for example, if your income, the tax revenue that's being generated by the government is equal to say 15% of GDP, you do not want your spending to be more than 17 or 18% if the economic growth rate is 2 to 3%. That's it. If you do anything more than that- So what happens? No. If you do anything more than that, you're borrowing from the future to pay for today. That's the simple truth. Okay. So what happens? And when you do that, the rates go up, and the prices go up, and eventually, your currency doesn't work anymore. What does eventually mean? So you're making a bet. Read the book that I talked about last year. What book? The most recent Ray Dalio book. He goes through six stories with the economic data to prove it, the factual data, the history of what's happened with six empires over the last 500 years, where this exact same scenario has played out. This isn't some random arbitrary story. I read that book. And everyone had the exact same perspective that you have when they were living in those days, and they said, you know what? We're going to be okay, because we're the reserve currency, and the world loves us, and we're the empire, and we have influence everywhere. And they all lost

SPEAKER_298: primacy, and their currencies collapsed, and they all broke apart. And that was it.

SPEAKER_280: I'm not saying that that can't happen in America. What I'm saying is, you get so full throated. I read that book. It's great narrative, but the numbers are brittle.

SPEAKER_50: Okay, they're fragile, and they're mostly made up. Everyone can read it and make their own opinion on that. So all I'm saying is, in the absence of numerical specificity, I agree with you that this trend is alarming, and it's bad. I agree with you, and I agree that we should spend a lot less. What I'm saying is, when you say to the world, stop spending because XYZ number is bad, you have no credibility, because it's not something that you can actually back up. And all I'm saying is,

SPEAKER_301: if you could find a better logical argument, you would probably get a lot more people to convince a lot more people. I showed it to you.

SPEAKER_257: You're just being ignorant. You're ignoring it. You're saying you don't want to actually believe it. The numbers are there. Show me the numbers. And I'm not saying ignorant in a disparaging way. I'm saying you're literally just ignoring the data.

SPEAKER_305: Show me the numbers. Show them to me. And Saks, they get upset at us for fighting. I'll make you a PDF, Chamath. I'll send it to you tonight. I promise.

SPEAKER_85: And I'll post it on our frigging thing so people can watch it.

SPEAKER_310: All right. Well, listen, the group chat's going to be off fire this weekend. Saks, final word for you. Okay, final word. Okay. Final word, please.

SPEAKER_314: Chamath and I've never gotten into it before like this, but obviously we're on opposite sides. I think it's great. I still respect and love you, Chamath. Go ahead.

SPEAKER_63: If you go back in history and look at debt to GDP levels, the only other time where anything remotely like the level we're at right now is right after World War II, when we had just saved the world from Nazism, okay? That was worth going into debt for. You look today, what is it that we've gotten into this 130% debt to GDP? What is this $30 trillion of debt for? What have we bought with all that money? Huge amounts of it have been squandered. You're right. And Biden wanted more. If the courts didn't stop him, he would have spent a trillion-

SPEAKER_283: David, your argument?

SPEAKER_315: Hold on, forgiving a bunch of student loans for basket weaving degrees or liberal studies or what

SPEAKER_320: have you. David, fight the real enemy. Graduate degrees at Brown.

SPEAKER_283: All right, hold on. Let me finish. That's point number one is that this money is being squandered

SPEAKER_122: at levels we've never seen before. And the squandering is continuing. It's not like we've reached a steady state. It just keeps going and going and it will break at some point. The grift goes on. I can't precisely say when it's going to break, but I do know it's going to break.

SPEAKER_63: The other thing, the point number two is about consequences today. There is a phenomenon economists call crowding out where when interest rates go up, more and more money flows into the risk-free rate of return. And then that crowds out investment capital. And we've talked about it on the last pod where if the risk-free rate is 5% and then like high-quality corporate bonds are

SPEAKER_122: offering 8% to 10%, now equity investments must generate 15% and VC must generate 20%. And there are very few VC investments that can generate that kind of IRR. So what happens? The money flows out of VC and there's less money for risk capital. What drives our economy? Risk-taking and entrepreneurship. Can I just say- Hold on a second. So this massive debt service that we have, which drives up interest rates will crowd out the very kind of economic activity that the United States needs to stay on

SPEAKER_50: the cutting edge. Rebuttal to the rebuttal to the rebuttal. No, you're so right. So why don't you just bookend the argument exactly the way you just did? My point is not that you said it just before that we don't know at what upper bound these things break or don't break. And all I'm saying is every time you throw up a random number, you guys sound like the boy who cries wolf. Okay, and you're shouting into a vacuum. It's just the advice that I'm trying to give you guys. I agree with you. I spend my entire days investing in and trying to figure out what is the risk adjusted rate of return of the things that I'm doing. And I'm trying to tell you as somebody with some reasonable financial numeracy, every time I hear you or Ray Dalio or somebody else say, this number is where it all breaks and it doesn't, you lose a little bit of credibility. Then you go to this number and you're like, oh, at 127% of breaks. Okay, we get your point, Chamath. Let me put it back to you, Chamath. No, let me put it back to you, Chamath.

SPEAKER_305: No, let me put it back to you, Chamath. How much is too much? How much debt can we handle and how much spending as a percent of GDP should we handle? What is the limit in your mind? And how do you decide

SPEAKER_48: what that limit can or should be? I think the honest answer is every time that I have been

SPEAKER_50: alarmed that we had hit a threshold that was meaningful. So for example, like I think under Obama, we passed 100. And it felt very scary, because I was like, wow, that seems like a demarcation. It turned out to not be a demarcation at all. Because it's relative to every other country and what they're going through. And I understand that you don't want to believe that. But I do think that America's economic vitality is not an independent function, it is a dependent function on everybody else. We are relative to everybody else. If there's a different cosmos and a different planet somewhere, maybe this will all reset. But right now it's not. And so we all trade relative to the United States. And in as much, I would like to just say, I don't know enough to guess what this number is. And I'd rather focus on what David said, which is, there are things that we need to do that we need to incentivize people to invest in extreme risk taking that create new businesses that move the world forward. You can have that conversation without bellyaching and crying to mommy about a GD debt to GDP number because every time you throw it out there, nobody knows what you're talking about. Nobody knows what reaction to have and everybody feels over time, David Friedberg that you're crying wolf. So all I'm saying is, I get that it's concerning to you and it creates anxiety. But every time you and you probably this is not the first time you've had anxiety, you probably had anxiety at 50 75 100 125. Guess what, I bet you'll have anxiety at 150. I don't know what it means. I do know what SACS means though, which is that right now we have a risk free rate that's going to five. We have corporate bonds that'll be at 10. We have equity investing at the most risk taking, which is the early stage venture that has to return 25. And that is an incredibly high bar. But we need to do it. And we need to do maybe fewer investments, quite honestly, with fewer participants with less dollars that are more effectively put to work. Okay, maybe this is a good jumping off point to talk about all the

SPEAKER_280: waste in Silicon Valley. And that stuff can happen without debating incessantly, this debt to GDP number, which honestly, this is subjective.

SPEAKER_310: One thing I agree with you, Chamath. All right, Freeburg, SACS, and then we're going to move.

SPEAKER_85: Go. I agree with you. I've never had anxiety about debt to GDP. It's never been anything on my radar. The conversation I'm trying to have today is the amount of spending the federal spending, including interest payments, as a percent of the GDP as a percent of how much we can tax to pay all those to make all those payments every year. And so what I'm concerned about is the ballooning cost of paying out all the obligations the federal government has to pay out every year.

SPEAKER_198: You're saying something different than what you were just saying. That's if you were cared about

SPEAKER_270: only that, then refinancing the debt is an equally valid proposition and changing the duration.

SPEAKER_292: It's not the only expense. It's not the only expense. So interest payments are ballooning.

SPEAKER_85: In addition to interest payments, Social Security and Medicare payments are also ballooning

SPEAKER_338: and defends out of control spending. Everybody has their hand out.

SPEAKER_257: Everybody wants an airdrop. When you add those four big categories together, you don't have any room left over to do all the stuff you're talking about.

SPEAKER_50: You're talking about discipline in spending in defense. Great. I agree. You're talking about discipline and capping health care costs. Great. I agree. What does that have to do with this other orthogonal thing you've been talking about,

SPEAKER_197: which is this random number debt to GDP? Let's move on from that discussion.

SPEAKER_262: Let me make one final point and then we can move on.

SPEAKER_341: Okay. Six time for the final point. Go. It's an important discussion apparently.

SPEAKER_63: Okay. Look, in the interest of Bestie Harmony, I will partially agree with the point that Chamath is making, which is that for a long time in American politics, people have sort of cried wolf about debt to GDP. For example, if you remember way back in 1992, Ross Perot basically based his candidacy on the idea that the US was racking up way too much debt. You know what debt to GDP was in 1992? 41%. Okay. So people used to care a lot about this. I remember when Reagan was president and jet to GDP was 30%, people were saying that he was this like, you know, wild spender. Okay. But I think that precisely because nothing broke at 30, 40, 80%, 100%, you then had the rise of this theory called MMT or modern monetary theory, which said that the debt to GDP, debts don't matter. If you're

SPEAKER_122: the reserve currency, you can print as much money as you want. And so people started indulging in this. And so now I actually think we are at a point, I can't say precisely where it breaks, but I do think that because debt to GDP didn't seem to matter for so long, I actually think we got carried away. And now we're at levels, which are just going to be ruinous if for no other reason than our debt service is going

SPEAKER_63: to crowd out whether you want more guns or more butter in our federal budget. If you want more defense spending, you want more entitlements, you want more discretionary spending. There's no

SPEAKER_344: question that debt service is getting bigger and bigger is going to crowd out those programs.

SPEAKER_01: There's no question we need to spend less. I a hundred percent agree with you. Okay. But all I'm saying is we should spend less on defense because we have different ways of defending

SPEAKER_50: ourselves. That should be the logical argument for less. And your energy independence is defense and a

David Friedberg: balanced budget could be defense as well. If you look at the IRA, that was less than a trillion

SPEAKER_50: dollars over a decade. Okay. That has the potential to shift trillions of dollars a year in defense

SPEAKER_198: spending. Yes. Okay. Okay. So let me wrap. Okay. Let me wrap here for a second. Thank you.

SPEAKER_351: You can look at these bills in and of themselves and try to actually do the right thing for the

SPEAKER_284: country without wrapping up all of these random arguments. And I, by the way, just to be clear, I don't believe in it. Don't do it. Don't do it. The world's worst moderator. Come on.

SPEAKER_122: I want to go back to actually during the Obama presidency, we had a thing called the sequester. I don't know if you guys remember this. Yeah. Republicans and Democrats agreed

SPEAKER_63: that basically that because we had just had like these trillion dollar deficits because of the 2008 global financial crisis, they got together and said, listen, we're going to hold the line on spending and there'll be no increase on defense spending in exchange for no increase in discretionary spending, social programs. And for a few years, we held the line on spending actually. And then of course, both Democrats, Republicans didn't want that for different reasons. And the sequester went away. We need to go back to something like that.

SPEAKER_50: Yeah, there are two things. One detail, like when you go and send a bill. So look, the way you pass a bill, right, you have to send it to the CBO to get scored. One of the things that I learned this week is that sometimes the CBO and they're not really empowered to actually tell you how things get offset. So for example, like if you have a medicine, what they will do is say, well, we'll look at the population level, how much would this medicine cost if it's taken by the population. But if that medicine then all of a sudden has the potential to actually off ramp you over here, those savings are not really factored in as well. So David, to your point, another way that we can refine how we build budgets to make sure that we're not overspending is to actually improve the toolkit and the data that like the CBO is given so that when they score things, they can actually look at the total impact, like for example, like the IRA. Again, one of the biggest benefits will be to defend spending. If we choose to make those cuts, you will be able to do it differently once we have no reliance on foreign energy. Okay, to wrap this segment, the first segment,

SPEAKER_361: which took 57 minutes, it's obviously a really, well, I think it's an important discussion. Hey, J. Cal, would you vote for DeSantis to be promised his fiscal responsibility?

SPEAKER_213: Well, here's the thing. I am going to take a look at the candidates. I'm going to make the best decision in terms of what I think is the best for the country. I'm answering like you,

SPEAKER_366: I'm answering like you, I'm giving no answers. What bullshit is this? Yeah. It depends on-

SPEAKER_367: If DeSantis gives you everything you want on fiscal policy, why wouldn't you vote for him?

SPEAKER_369: If he stays out, if he's in favor of a woman's right to choose-

SPEAKER_63: For the first 15 weeks, that's Florida policy. Are you, yes.

SPEAKER_370: You know, I would take a look. I would take a look. I honestly would take a look.

SPEAKER_63: What would cause you not to vote for him? 15 weeks, right to choose, combined with fiscal responsibility.

SPEAKER_106: I'm voting for a moderate this time. And tax cuts. And tax cuts.

SPEAKER_373: Okay. But to wrap up here, the two things that matter, I believe, and based on our panel's

SPEAKER_338: discussion, austerity and excellence are what are going to get us out of this mess. Here is what the platform seems to be shaping up. Our 2024 platform, control spending. Everybody here thinks that's important. Energy independence. Everybody here thinks that's super important. Stop fighting unnecessary wars and maybe rethinking our foreign policy. I think we all agree on that. And the cultural focus on excellence, not excess. This is shaping up to be a little bit of an all-in platform here. Great discussion, everybody. Speaking of austerity measures,

SPEAKER_373: I think, you know, we should just talk right up top here about what's going on at Google. Chris Hone, I believe is how you pronounce his name? Chris Hone. Chris Hone. He sent a letter to Google and Amazon. Amazon today, after already announcing 10,000 layoffs, they just said again, Andy said, prepare for more layoffs in 2023. And these are not factory workers. These are white-collar, high-paying jobs that are being laid off here. They're surplus elites. surplus elites. It is definitely a part of the zeitgeist right now. So they're going to reduce

SPEAKER_338: headcount massively. But in this letter to shareholders, he points out, notably, not just, hey, Google needs to do a riff, a reduction in force, but he points out a more granular point that I want the panel to talk about here, which is, he says, hey, you need to reduce the actual salaries at Google, the average salary being $296,000, 67% higher than an incredibly well-paying workforce Microsoft. Quote, we acknowledge that Alphabet employs some of the most talented and brightest computer scientists and engineers, but these represent only a fraction of the employee base. Many employees are performing general sales marketing and administrative jobs who should be compensated in line with other technology companies. And he says, we need to establish an EBITDA margin target, as you can see in this chart, and reduce the losses on other bets, perhaps increasing share buybacks as well. So what we're looking at here now, after what an incredible business, my God, I mean, the business is nuts. Freeberg, you worked there. What in this rings true to you? And then how many people does Google need to employ to operate the business and invest in the future of the business in your mind, they have 187,000 employees at Google, it's grown 24.5% rounded up 25%

SPEAKER_381: year over year, they grew 25% year over year, in their business. How many people need to run this

SPEAKER_85: business to have it aggressively grow? Look, I think there are two main drivers of the issue that Google, maybe meta, maybe Twitter, prior to Elon's involvement, and really Silicon Valley as a whole, the bigger companies have faced the first is the war for talent. The war for talent started, I mentioned this last time around 2004 2005. Because prior to that, there weren't as many grads coming out of undergrad with computer science degrees, right? I think 10% of grads in the Bay Area schools were finishing with computer science degrees. Today, the number is like 60%. So you know, around that time, the war for talent led organizations, particularly Google, down a path of offering more perks and benefits to their employees, to create a workplace that was more competitive. And that ends up being a slippery slope, because then other organizations try and find parity, and then other organizations try and overdo it and push it even further. So this leads to both wage inflation across the, the ecosystem, but it's also led to almost like the acceptance or the allowance for degrees of complacency. And so I'm not saying that the workforce is all complacent. But I do think that complacency is forgiven, some amount of complacency, I'm going to take a Friday off, I'm going to take two Fridays off, all of a sudden, I'm not working any Fridays. The other thing that's happened is as this workforce has aged, I worked at Google 20 years ago. And a lot of the folks I work with almost all of them now have families at the time, everyone was young. And as the demographics of Silicon Valley has matured, you have more people that are less about killing themselves and giving everything that they have to their organization. And they're more interested in being with their families and now spending less time at work, especially in light of the fact that compensation has ballooned to a point that you can now live a very, very comfortable lifestyle. And you don't need to have a big payday in order to be able to take really good care of your family, which was the case as a startup. And then the other issue is just one of innovation. At Google, if you work on a new project, and it doesn't work, there's no loss, you still have your job. And they've started programs, or they'll give you equity and new startup ideas, or they'll give you all the stuff. So they'll give you upside if you win, they'll give you bonuses if it succeeds. But there's no downside. And so the pain and the burn that you would feel as a startup founder, or as someone building a new business isn't experienced or realized. And I cannot I don't need to tell you guys this. But for anyone else that's listening, that may not really be fully aware, the lack of pain, the lack of risk, the lack of downside, the lack of having no safety net and, and falling through the pits, removes all so much of the incentive to succeed, and to drive and to innovate. And I think that's become part of the complacency problem. That's caused larger organizations to simply say, let's throw more heads at the problem. And when you just throw more heads at the problem, you have more of kind of talent war problem that I mentioned, number one,

David Friedberg: what is the average salary 280,000 300,000 rounded up? Yeah. That doesn't class I don't know if that

SPEAKER_191: includes benefits, whatever, let's just call 300,000. Yeah.

SPEAKER_85: And by the way, that doesn't mean that those people should all get fired. But I don't speak it speaks to the fact I think they're wonderful people there. Some of my best friends work at Google. It's a great organization, people do incredible work there. But in terms of return of dollars invested, as a shareholder, that's the question. That's the that's the analysis. That's the scope that the shareholder is looking at is do I want to spend $1 to make $1.05? Or do I only want to spend $1 where I know I'm going to get $1.80 back? And so if you just bucketed where the dollars are going, you would end up saying, you know what, I'd rather just focus on the places where I spend $1 and I get $2 back or $1.80 back. And I don't want to do any of the stuff where I spend $1 and make $1.05 back. And that's called ROIC or return on invested capital. And that includes return on invested human capital. And so the analyst in the stock that that's an investor in the stock will look at it through that lens. Whereas everyone that's working there is still contributing meaningfully, they're still doing valuable work. But in terms of return on invested capital, a good chunk of the projects are not driving the majority of the value, a minority of the projects and minority that count is driving almost all the value.

SPEAKER_58: I mean, if you sensitize that to what you said, David, a, if it was just 75 or a half that number, then, you know, the stock goes up 35% overnight. And if it goes up to the full number, the stock goes up 65% overnight.

SPEAKER_85: I think that's totally feasible. And then and then I think what you do is you take $10 billion a year, and you have a high accountability model that you speak to the street about. And you say, here's how we're going to hold ourselves accountable to investing this $10 billion every year, and not just have everything be a nebulous 15 year project. And then it's always a 15 year project, and you're always just burning cash to go after those projects that are highly nebulous.

SPEAKER_243: If you had to steel man the other side, I think the argument would be, I would say they would make probably three arguments. Argue number one is like, look,

SPEAKER_50: don't get overly distracted by other bets, because it's a small category of spend. And we've contained that cost, pretty rationally, relative to the rest of the core business. The second thing that they would probably say is, there's an enormous amount of work that is never seen by Wall Street, that explains how good our services, whether that's, you know, in early iterations of, you know, technical capability, like GFS and Bigtable to things like TPU to things like TensorFlow, and all of that builds up all the things that deep mind does all the compute we have to throw against search to support that. So I think they would probably say, well, people probably don't have a great sense of today, that it's not just 25% of the team that's required. And then the third thing is, what they would probably say is, it's very hard to explain. But Google has all kinds of other things that they do for free to create the ecosystem so that the internet works. Well, you know, I heard this one thing where somebody was explaining that Google is like, you know, the DNS server, right, Google is the time server, and all of this stuff they do for free. And all of it is just about making the internet work more efficiently. And that has some costs. So that's probably how they would steel man how to build back up to some number. But it's probably there's still a gap between that number, David, and what

SPEAKER_85: their prevailing headcount is. Yeah, I think I think that's that's totally true. Because the infrastructure team led by Earth is the most remarkable engineering organization on planet Earth, in my opinion. And they have laid fiber lines across the Atlantic, they have built their own data center infrastructure, their own switches, their own silicon, like everything is built by this team from the ground up from first principles, and it gives extraordinary moats and advantages to the business, it makes the internet a better place, it allows, you know, ultra fast, super cheap, YouTube video viewing across the internet. I mean, there's just so much of these core advantages in the business. But if you look at the headcount over time, you have to ask yourself the question, you know, how many of these investments that are core are really, you know, captured in the headcount that blossomed from 2013, 47,000 people so that the business has gone up in headcount by 4x in the last nine years, one of the things that Jeff Bezos was always so incredible at, and I saw him give a speech on this at one point, Bezos gave a speech that I saw. And he said, we are really good at failing. And he showed all these projects that Amazon tried. And he said, we tried a nine, we tried to do our own search, we tried to build our own cell phone, the fire phone, we tried to do this, we tried to do that. When they don't work, we kill them. And when they did work, they became 100 multi hundred billion dollar enterprise value creators for them, like AWS, which was one of these projects. And so Amazon was so good at taking the stuff that wasn't working, knowing when it wasn't working and ending it, and they were still able to drive an innovation engine. One of the challenges I see with Alphabet is that they are so good at bringing the best talent to work on these innovation problems. But where they're not good is saying, you know what, this isn't working, it's time to move on. And if they did just that, if they added that one disciplinary capability, then I think this, as you said, the market cap would go up by $600 billion.

SPEAKER_48: What about this? I just want your reaction to this thing that

SPEAKER_50: a lot of people whisper in Silicon Valley, which is part of what the big companies should do, it's part of the positive game theory is to not let these talented people actually leave, it's better to pay them 300,000 or 200,000 or whatever, and stay at Microsoft and meta. And Google or whatnot, then go off and startup, build a startup that could actually then disrupt them. And so you know, it's it's a cost worth bearing because it's actually mitigating strategy as

SPEAKER_85: it's a blocker strategy. What do you think about that? Super interesting idea.

SPEAKER_403: I think that the people that are likely going to actually be able to execute on that are going to

SPEAKER_298: leave and do it anyway. Right? They're surely aggressive entrepreneurs are not going to be blocked. Look, I was not super I had made a little money when I worked at Google, but I was not super

SPEAKER_85: wealthy. And I left the last the vast majority of my stock options and RSUs on the table when I left Google in 2006. Here's our climate core because I could not help but do that. I could not help myself. I had to go do that thing. Of course. And I think the kinds of people that are going to succeed in entrepreneurism cannot help themselves. It doesn't matter how much money is

SPEAKER_213: being thrown at them. Here's the chart. Basically, these companies have been correlating their spend and their headcount to their revenue, not what's necessary. You look at alphabet total employee

SPEAKER_183: change since 2018. 95.36%. I mean, I don't know that looks pretty good to revenue 132%.

SPEAKER_22: It doesn't look like they were massively overhiring. If you ask me, totally. So what are you guys

SPEAKER_85: talking about? So maybe I'm wrong. I will say look a big part of Larry Page's decision to shift the company from Google to alphabet was he believed that the core business at some point would ultimately be disrupted that the core advertising engine was going to be disrupted. And there wasn't going to be the sustaining long term growth advantage in that business. Maybe he's been disproven, or maybe the it hasn't been just it hasn't been proven yet. But the concept was we need to find the next Google, and we need to build the next Google. And so we want to allocate capital within a portfolio of bets, and have some number of those things, maybe not all of them, maybe not even a lot of them, maybe just one or two of them turn into the next 100 billion dollar revenue line for us. Now, he always

SPEAKER_50: said that that's going to take a long time. He definitely underestimated the quality of Google search and the dominance of it. Now, it's probably it probably stands to reason that if we have enough innovation at the fundamental model level in AI, particularly like a bunch of really powerful multimodal models, the new form of search can disrupt Google. But the problem is, they are so ahead of everybody else with respect to those models as well. So the real question is, even that next big leapfrog isn't going to happen without billions of dollars of capital invested. And you know, the most likely folks that are able to do it, I think open AI at some level, but again, they're going to always have to raise money from other folks, Google can self fund it, and it makes an enormous amount of sense to drive that technical moat. So it just seems like Larry may have just been wrong.

SPEAKER_226: What do we think is going to happen here? And any, are they going to make the cuts or not?

SPEAKER_213: You think they'll make do they have the ability to not make cuts and just ignore a 6% shareholder Chamath? Or are they just going to make them and then we're going to go on to you?

SPEAKER_85: I'll tell you the dynamic, the dynamic will be how much Ruth is able to convey Ruth Porat is the CFO. And she's hardcore. She's hardcore. She's incredibly everyone on that leadership team is incredibly impressive. But she has a very particular lens, a Wall Street lens, and she understands what the shareholders are thinking and looking at. And she will convey these points to the board. And, and there will be engineers and Sundar is an engineer, and he will, and he's a very good, good, he's very good at gathering the different points of view and having balance around this. And he will share his points of view at the board. And I think ultimately, it will come down to my guess is like we just talked about some portfolio allocation decisions, which is how much risk and how much beta how much alpha, and do we have the right mix in our portfolio, and it is inevitable, there's going to be some cutting. So I think that there will likely be some reduction.

SPEAKER_226: 5%, 10%, 10,000 employees, that seems like the number that people are going with.

SPEAKER_213: Yeah, yeah, yeah, let's see. That'd be my guess. Okay, Sachs, what's your take on austerity measures and moving to an age of excellence and efficiency, which is happening inside of the tech industry as we speak?

SPEAKER_70: I think Freeberg's right that these companies could operate a lot more efficiently. I think

SPEAKER_63: there's an economic argument there, but I want to up level it and talk about the cultural aspect of this for a second, and also bring in two of the huge stories this week, the, um, the SBF story, the interviews he did with the New York Times and Vox, and then this hysteria around, you know, what's happening at, at, at Twitter. Look, I think that there, something clearly has hit a nerve here in this last week, where you have all of these employees who have voluntarily left creating all of this drama. And, you know, Antonio Garcia Martinez had a good quote about this. He said, what Elon is doing is a revolt by entrepreneurial capital against a professional managerial class regime that otherwise everywhere dominates. And that same PMC, which includes the media, is treasoning it as an act of les majesté. There's another version of this that came out a couple weeks

SPEAKER_420: ago. And by the way, les majesté just means like you're insulting the monarch, the ruling class,

SPEAKER_63: that treason. Yeah, you're insulting the crown. There's a good one here. Uh, there's an article on compact magazine a couple of weeks ago where the editor, Jeff Schellenberger tweeted, the layoffs at Twitter are no different than what's happening across Silicon Valley, but because the ideological antagonism of the professional left, uh, Musk, they make clear what's at stake, the collapse of a jobs program for surplus elites. And then, um, and then there's a great quote from this article,

SPEAKER_422: which again, that's, that's so hard hitting. I know it's, no, it's, it's a deep nerve. I'll get

SPEAKER_63: into one differently. Yeah, exactly. So a quote from this article said, one of the biggest and least talked about social questions in the West is how to economically provide for our own modern version of France's impecunious nobles. That is how to prop up high status people who can't really do much economically productive work. Uh, wow. I mean, like this was, this was very brutal. Yeah. Yeah. I think this is really hitting a nerve because the fundamental quid pro quo of our civilization is that in order to achieve economic and social advancement, you go to college and get a degree and you submit to voluntary re-education of yourself at one of these woke madrasas, one of

SPEAKER_428: these re-education camps. That's the quid pro quo. And you get a degree. Now, some people, did your punch up guy write that intro? No, no, this is, this is what I believe for a while now.

SPEAKER_63: There are some number of people who get useful degrees like computer science or engineering, but huge numbers of people get degrees in, like we talked about it, the basket weaving or whatever the politically correct degree is. And they graduate with a quarter million dollars in debt and no marketable skills. Right. And right. And what was propping up all of these people were these fantastically wealthy monopolies, tech companies that were hiring huge numbers of these people. Now, all of a sudden we get to a point where we're in an economic recession and these companies are starting to do layoffs and they're starting to do a little bit more soul searching about who's really adding value and people are starting to get laid off. And I think that this hysteria

SPEAKER_122: is coming from a place of deep insecurity. You had all these people go to college. They did not learn critical thinking skills. What they learned was that, listen, if we pay lip service to the right platitudes, then we will have career advancement. And now they're learning that that may not be true. And actually the person who's pulled the mask off this entire regime is none other than SPF. And he did it in an interview with Vox and we have to go to this. Okay. This was deranged. He said, he's the devil, but he basically pulled the mask off this whole civilizational quipro quo. That is a sham. Okay. And here's what he said that the Vox reporter said, you were really good about talking about ethics for someone who kind of saw it all as a game with winners and losers. What did SPF said? Yeah, he, he, I had to be. It's what reputations are made of to some extent. I feel bad for those who get fucked by it. Basically all these people who incurred a quarter million dollars in debt and think they can just spouse the right, you know, platitudes. He says, by this dumb game, we woke Westerners play where we say all the rights should molest. So everyone likes us. How stupid does the New York times feel right now? How stupid do all these nonprofits and foundations who received all this money from SPF. He played them. All he had to do was say the right words that say the magic woke words, and they would basically cover for the most enormous grift that's ever been perpetrated. That is basically the quipro quo of our civilization is be woke and you will have indefinite career opportunities. No matter how, how, I mean,

SPEAKER_213: both virtue signaling would be another way to say it. I mean, it doesn't necessarily have to be the woke ideology, but virtue signal and give donations to people. This has been a playbook of grifters for a long time. Bernie Madoff gave a ton of, you know, donations and he used the same playbook.

SPEAKER_419: How many donations did he give to the Republican party? None. They're not part of the regime.

SPEAKER_315: How many, how many conservative? I'm not sure this is a political point. I'm not making a political

SPEAKER_63: point. I'm making a cultural point. Okay. Who were the charities that he donated to? It was all the right woke causes, not, you know, it was not. Well, the pandemic one was not woke. He was passionate

SPEAKER_342: about the pandemic stuff. Are you kidding me? Freaking out about the pandemic? No, no,

SPEAKER_419: he wanted to do pandemic prevention as he explained it to me. It was absolutely the neurosis. It was the

SPEAKER_213: No, no, no. That was not what he was funding, Sachs. I actually talked to him about this when I interviewed him. He said he wanted to do pandemic prevention and early warning systems and wanted to invest in strategies to fight the next pandemic. Listen, indefinitely freaking out

SPEAKER_28: about COVID was the central neurosis of the professional managerial class for the last couple of

SPEAKER_122: years. No, but that's not what he was funding. I just want to make that point. Yeah. Whatever. He wanted to do prevention. I mean,

SPEAKER_373: you could frame it as not, but I actually literally talked to him about it. He wanted to

SPEAKER_63: do pandemic prevention in the future, but I think your point. No, no, no. He wants to steal money from California taxpayers via a ballot initiative to fund his brother's organization, which would have dispersed the money in who knows what ways, probably not legitimate, out of a professed concern about the next pandemic. Why? Because the PMC is neurotic about the last pandemic. Come on. This is all part of our soul. Oh, you're saying he's pandering to them. I understand what your point is. Of course. Yes. Thank you. It's pandering. I understand. It's absolutely pandering. Now, listen, why, well, hold on a second. Why did this work? Why did this work, virtue signaling work? And again, why were they only charities and causes that appeal to the sort of the left? It's because they're the ones with the power in our society and in our culture to define what virtue is. When you're virtue signaling, who are you signaling to?

SPEAKER_122: The people with the power to decide what is virtue and what is vice, right? That is why people go to work at the New York times. That is why they basically go into, you know, all these influential jobs at nonprofits and foundations. They're the ones deciding what virtue is. They're the dupes. They're the ones who are fooled. And now what's happening is there's an economic consequence to it, which is it is coming out. These people have no marketable skills and companies are tightening their

SPEAKER_107: belts. And now all of a sudden they're starting to become deeply insecure about their own future.

SPEAKER_66: My comment is that, you know, when you look at Twitter as an example,

SPEAKER_50: Bill Gurley had a really powerful quote as well, which is when companies cut, you know, they don't cut nearly enough and they and they miss estimate and underestimate how resilient the company is back in, you know, Twitter had 200 million MAU, they had only 1000 employees. And so clearly at that point, they knew what they were doing. And now the business has, you know, increased in MAU by call it 50% to 300 million. But the employee base increased by seven and a half x. So clearly something is misaligned. And I think the thing that, you know, people are going to find out is with contractors, probably 12x. Right. So I think that well, there you go. So I think that the thing that frustrates a lot of folks that are leaving or that are trying to throw bombs is they don't want Elon to be right. Because I think to David's point, if Elon is successful, he has uncovered this very uncomfortable truth that was frankly hiding in plain sight, which is that many of these technology companies using technology, get so much operational leverage, that they have some enormous efficiencies. And then it's only a decision by the professional managerial class to reward themselves with fiefdoms, and kingdoms of employees, and you know, the surfs that work for them. I mean, it's really quite crazy, if you think

SPEAKER_205: about it.

SPEAKER_454: Well, Freberg made this, you know, early on in the history of this podcast,

SPEAKER_132: well, hold on, I want to add to your position, Freberg said something that adds to your position, which is

SPEAKER_213: early in this podcast, he said the nature of organizations is they want to grow, and that's government or even these departments are talking about. Anybody who runs a department is never

SPEAKER_132: going to say my department needs to be 20% less, so we can hit the bottom line, they're going to say, give me 20% more because everybody else is getting 20%. Go ahead.

SPEAKER_50: So the and then if you if you if you layer in the Charlie Munger quote, show me the incentive, and I'll show you the outcome, you can understand why because the professional managerial class is rewarded by compensation that is actually independent of dilution, right? Because if you look at these compensation plans, all of these professional stock owners, they complain all the time about stock based comp, right? And these companies have budgets between two and 5% a year that they give away. And so you have this situation where an engineer or an engineering manager or a sales manager or a marketing manager, in success at 1000 people can grow to 5000 or 10,000, their compensation

SPEAKER_66: doesn't change in any other organization, their compensation would change because let's say that it's a percentage of the profits that are distributed, unless the company is phenomenally

SPEAKER_50: growing. Eventually, you'll see it in the bottom line of what you take home. And so these folks are incentivized to have these status signals of value, I have a 50, you know, you guys have heard this, I have 50% team, I oversee 3500 employees and you and everybody is conditioned to think, Oh, my God, that's incredible. You must be really important. And so we're going to sort of now see in real time, a questioning of that belief system. And if Elon proves to be right, it's a really important decision point for a lot of other technology companies, because if you are an 80 to 90% gross margin business built on software, maybe you have a bigger responsibility than you've discovered to date to your shareholders and to the existing employees to find the efficient rate of return, right? What is the efficient frontier of headcount? The other thing is, it now allows let's just say that now Twitter goes to a making up a number 2000 employees after this whole Google form thing. The great thing about the 2001 employee for the 2000 employees and for the shareholders is that that 2001 new employee is 100% aligned because they're coming into something eyes wide open. And I think that that's also an interesting thing that isn't getting enough recognition is, he's putting out there what he stands for, this hardcore culture, irrespective of whether we think it's right or wrong, all the people that stay are voting that it's right. And you know, as long as it's not breaking any laws, he's allowed to do that. And so if people now want to join that organization, they should be allowed to do that,

SPEAKER_173: too, just like the people who don't want to should be allowed to leave.

SPEAKER_211: Sachs, you and I came up and we talked about this, I think on last week's show, or maybe it was two weeks ago, we talked about what the expectation was in Silicon Valley at a startup, what startup

SPEAKER_213: culture was, in terms of just the effort that was required to build a winning company. And we all said 60 hours a week was the baseline. That's something that, you know, has been, I think a lot of people,

SPEAKER_461: you mentioned this, Chamath, people working two jobs for 30 hours a week and taking two salaries from two of the fan companies, if you remember that 10 episodes ago.

Chamath Palihapitiya: Go into TikTok and search for, you know, engineering salaries, you'll see some of the craziest TikToks, kids are making 350k, working 30 hours a week, it's nuts.

SPEAKER_211: Yeah. And so I think we're going to have is a, I think we're going to have a cultural divide here, there are going to be a series of companies that say this is classic Silicon Valley, we're going to,

SPEAKER_338: we're going to crush it, we're going to work aggressively, we're going to put in 50, 60, 70 hours a week, and we're all going to benefit from that. And then there'll be another class of companies that says, Hey, no, we want to have a more lifestyle business. And if people want to work 3040 hours a week, and they contribute, we don't need to be perfectly efficient. And you know what, the playing field of entrepreneur, the playing field of capitalism, will show who is right sex.

SPEAKER_81: Yeah, I mean, look, I actually went out of town a few days ago. So I wasn't

SPEAKER_63: keeping up with, you know, every detail of what was happening at Twitter. And I started getting all these text messages about how Twitter was dead or dying or whatever, like the site had been unplugged or what have you. And I'm like, what is going on? And you know, you tweeted this morning, Hey, is this working? And I'm like, yeah, like, like, yes, it's working. Like, and

SPEAKER_468: Yeah, I tweeted this morning, is this working? Did anybody get this?

SPEAKER_469: Yeah, exactly. And so what My tweet went through.

SPEAKER_63: Yeah, so I came to learn what they're talking about is that all Elon did was give a voluntary offer that if you didn't want to stay, you could take three months severance. Now, remember, last week, they had a riff, you know, which was basically economically required, in which they gave employees three months severance, which is 50% more than what he had to it was generous. Now, it seems to me that what if you're one of the employees in the other half that made the cut, but yet you're not really motivated to stay. And maybe you don't really want to operate like a startup. I mean, Elon's basically saying we're going to go back to working and operating like a startup. That means that you might have to work nights and weekends, like a startup. What if that's not what you signed up for? You may be sitting there at Twitter, saying, Oh, man, I wish I had gotten riffed. Well, now Elon is offering you the opportunity to take the same package. Yeah. So I'm like,

SPEAKER_213: how can this possibly be a bad thing? It's actually the great management technique that Tony Hsieh, rest in peace from Zappos created, he would say when people went through their first couple of months of training, he'd say now if you don't want this job, I will pay you

SPEAKER_54: a month's salary. This is on their first day after they went through training, their first like day on the job, he said, Okay, now that you've gone through the training, I'll pay you, I think it was $5,000 or $3,000 to not take the job. And something like one out of five people would do it. And so he said, Listen, I don't have to fire them later on, this is going to make my management easier. It was it's it is actually a kind thing to do to give people the opportunity to

SPEAKER_149: leave. I don't understand how giving employees an option to opt out if they're not on board.

SPEAKER_211: Well, it's because the reason people are upset, let's be honest, Saks, is some people,

SPEAKER_338: you know, live to work and some people work to live and the people who are working to live, find it crazy that hustle culture even exists. And people who are part of hustle culture, like the four people in this podcast, find it crazy. What is hustle culture? It's just working.

SPEAKER_373: Hustle culture is working above the hours you're being paid for. That's, that's basically what

SPEAKER_475: hustle culture. That's how most people would define it. The salary is actually not you work for 40

SPEAKER_373: hours. The salary means you get your job done. Okay, that's how we look at it. That is not how

SPEAKER_149: other people look at it. Oh, my God. There's no question that Elon is going to raise the bar.

SPEAKER_478: Sorry, if we lose American primacy, it's because of that, not because I agree with you. I'm just

SPEAKER_373: what a joke. I'm still on the other side. I'm still on the other side. People look at their salary, and they look at themselves as getting compensated for 40 hours and every hour above that,

SPEAKER_482: But do you know how this generation's mind looks at it as hustle culture. There are people that are working. I'm not agreeing with it.

SPEAKER_50: There are people that are working 60, 70, 80 hours a week as a teacher to make 30, 40k firefighters, you know, working on oil rigs. And to hear somebody like hustle culture at a startup or you're making 350 grand and you're upset because like the matcha that ran out or whatever.

SPEAKER_198: It's just so out of touch. I'm not disagreeing.

SPEAKER_63: Yeah, look, my view on it is that people need to love their jobs and love what they're working on. Because I think the only way to be successful is to work hard. But the only way to work hard and be happy is to really love what you're doing. And if there's a lot of people at this company or others who don't really love it, and they are just there to pay the bills or whatever, then I actually think it's extremely generous for Elon to be offering them a package.

SPEAKER_484: It's the right thing to do. It's the right thing to do.

SPEAKER_63: I don't understand how giving them an option was anything but positive. And yet, the media has gone berserk on it. Meanwhile, while giving SBS a virtual pass on the largest, one of the largest frauds in history, a Madoff level fraud, you read the New York Times. Alleged, alleged. No, there's no alleged dude. It's come out. He loaned himself, like this is just one data point, he loaned himself a billion dollars. And he loaned the head of engineering $500 million off the balance sheet. Nothing to see here. What possible justification? And you know, an SBF.

SPEAKER_208: David, the reason, just say the words, just say the hard part out loud. The reason why these

SPEAKER_66: same publications are not covering this is because they were complicit in his reputation laundering. Yes. The New York Times, before that article, put out this other puff piece where they talked to him,

SPEAKER_50: and they were excoriated on Twitter, because it was like not a single question about the fraud, or alleged fraud.

SPEAKER_218: Yeah.

SPEAKER_50: Alleged. Alleged. Alleged fraud.

SPEAKER_63: Allegedly, obviously. Well, I think it's safe to say that when 10 billion dollars suddenly goes missing and no one knows where it is, I'm willing just to call that a fraud.

SPEAKER_197: Are you willing to jump the fence? They're busy scrambling to sort of save their own reputations, which is why they are trying to like

SPEAKER_50: hide the cheese effectively and point over here and say, hey, look at what's happening. Elon sent an email worth only one button. Yes.

SPEAKER_493: I mean, let's be intellectually honest here.

SPEAKER_149: Well, I love that meme that Elon tweeted out. Do you see that? Oh, no. The two rhinos. No, no. Please, no. Please, no. It cracked me up so much.

SPEAKER_496: No, no, don't. Oh, God. I mean, you know this is all going to get reblogged.

SPEAKER_499: It's too funny. It's just too funny. It's too good. It's too good to not put up on the screen.

SPEAKER_63: I mean, that nature photographer is the New York Times. It's. Okay. Yeah.

SPEAKER_502: For people who don't see it, there are two rhinos. Copulating. They're fornicating. Copulating. Copulating. They're copulating. They're copulating. They're copulating. But rhinos don't fornicating.

SPEAKER_505: Copulating is like, it's two 2,000 pound animals copulating. Doggy style.

SPEAKER_461: 10 feet behind a nature. Please. Behind. I'm trying to be the world's greatest. A nature photographer.

SPEAKER_439: A nature photographer with a $6,000 telephoto lens. That can shoot across the entire Serengeti.

SPEAKER_226: But he's 10 feet behind him are the two rhinos. The two rhinos, it says FTX losing over a billion dollars of client funds. And the, the photographer is center is calling for the FTC to investigate Twitter.

SPEAKER_63: But the important thing is the photographer is pointing in completely the wrong direction. The wrong direction. He's just totally missing it. You cannot see the thing that is obviously right in front of his face. Right. That he should be photographing.

SPEAKER_515: Yes. He's using that long telephone lines.

SPEAKER_63: And that is, that is the New York Times. That's Senator Warren. That's the SEC.

SPEAKER_191: Point the arrow in the right direction. Yes. Point the camera in the right direction is the point. I just want to point out.

SPEAKER_361: Can I read one Bology tweet on this, in this regard? Oh God. Bology is not capable of one tweet.

SPEAKER_518: That's going to be 76 tweets in a store. Go ahead.

SPEAKER_122: I'm going to pluck. You're right. It's a tweet store, but it's a really good one. Of course it's a tweet store. It's Bology.

SPEAKER_63: He says, think of a regulator as a binary classifier. What's their false positive and false negative rate? Bitcoin ETF blocked for years. FTX ignored for years. The actual filter is not, is this a scam? The actual filter is, is this a scam? Ooh, spicy. It's not consumer protection. It's reelection. By the way, someone needs to make a banger out of that. That's an alliteration. It rhymes.

SPEAKER_523: Can young Spielberg make a banger out of that? It is a banger. It's not consumer protection. It's reelection.

SPEAKER_63: Listen, if you are part of these interlocking power structures that we call the regime, it's the New York times. It's the regulatory state.

SPEAKER_525: It's the New York party. You get a big pass.

SPEAKER_68: Republicans. Hold on. Let's be clear. You get a pass. Your, your team now controls the house. And so.

SPEAKER_00: Whose team? David's team. Not yet.

SPEAKER_528: Oh, David's team. Not yet.

SPEAKER_50: I understand. But starting in January, you know, there's any amount of congressional oversight. How's your Hunter Biden investigation? Going back.

SPEAKER_63: How's your Hunter Biden investigation? No, no, hold on a second. Let me say this right now. The first investigation by the house, the representatives needs to be SBF and FTX, not Hunter Biden. SBF makes Hunter Biden look like a piker. I mean, you know, Hunter Biden was what? A couple million dollars of grift. This is $10 billion plus a grift. So I think it also,

SPEAKER_218: it also touches regulators. It could touch, you know, it's, it's a big, it's a big deal. It's a systemic failure.

SPEAKER_103: But Hunter Biden knows how to party. So let's be honest here. I mean, that is the issue. I just think the quote of the week goes to John J. Ray.

SPEAKER_213: He's FTX, his new CEO. He famously oversaw the liquidation of Enron.

SPEAKER_211: And he says, I have over 40 years of legal and restructuring experience. I have been the chief restructuring officer and or chief executive officer in several of the largest corporate failures in history. I have supervised situations involving allegations of criminal activity and malfeasance, Enron. Nearly every situation in which I have been involved has been characterized by deficits of some sort in internal controls, regulatory compliance, human resources, and system integrity. Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.

SPEAKER_54: This is the person who oversaw Enron saying this is unprecedented.

SPEAKER_461: Enron was the previous unprecedented situation, which is now being framed as manageable by none other than John J. Ray. What a great name.

SPEAKER_183: Congratulations on being the chief restructuring officer of FTX.

SPEAKER_50: There was an article that showed, Nick, if you could please throw the picture up on the screen of, of all the people that invested, uh, the universe of SBF. Oh my God. Well, and they, and the article headline was, it's a who's who of VC. And my comment is actually, no, this list is a who's who of people who did no diligence.

SPEAKER_00: Yeah. So ever. And I just want to call one person, Nick, if you look at the Alameda research,

SPEAKER_205: this, uh, this firm called one inch J Cal invested in a firm named after the length of his penis.

SPEAKER_106: Come on, come on, maybe coming out of the cold plunge. Okay. But you know, that cold plunge, there's shrinkage. You know, there's shrinkage. Was that an SPV?

SPEAKER_103: A one inch SPV. Listen, I'm a shower, not, I'm a grower, not a shower. All right. Listen, you guys coming out, everybody knows coming out of the cold plunge.

SPEAKER_106: It's, it's not going to be the best performance for any of us. What a name of a fund called one inch.

SPEAKER_501: Oh God. What is that? We've lost the script on this show. Jesus, please. We got to wrap. I mean, it's just too much.

SPEAKER_85: Do you guys not think that all these investors received audited financials and, you know, they got, they had a lawyer, a legal firm that represented these financials.

SPEAKER_63: Did you guys see who FTX's auditing firm was? It's called Prager medicine that says it's based in the metaverse. This is like the Hollywood upstairs medical college of the auditing world.

SPEAKER_85: Their address was in Decentraland. Bernie Madoff. I think his brother-in-law ran the accounting firm that did their audits, right? It was like, and it was in a dead floor in the lipstick building. It was in the same building, right?

SPEAKER_549: On the lipstick building, they have like a secret floor with nobody on it.

SPEAKER_85: Look, I mean, even in that case, people relied on an audit from a CPA that said, here are the numbers. And those numbers were fraudulently conveyed. And I think that there's probably some, you know, some forgiveness necessary here that there was fraud. There may have been serious fraud that took place. And I don't want to be too disparaging of all the smart people that we know that work at these investment firms, made an investment and they all got duped and the LPs got duped. And so I don't think this is just fundamentally like a failure of diligence.

SPEAKER_206: So we were part of the process where they tried to show, again, I have to be careful.

SPEAKER_50: My lawyers reminded me that we're still under NDA actually with FTX. So, but what I can tell you is we did not get any financials. So we were verbally described what was going on. Right. When you asked for it, when you double clicked on diligence. We sent a two pager of stuff.

SPEAKER_191: Anyways, I can't say more than that. But yeah, don't get yourself in trouble.

SPEAKER_50: Oh, I want to, I want to say something else, by the way. Last Friday, David and I were at Uri Milner's birthday party and there was a chess tournament. And, uh, uh, Magnus Carlson was there. And anyways, David was in the finals. Oh, okay. It was David and his partner. Look at the smile on David. Versus, hold on. Wait, I'm getting to a great punchline. Versus Magnus Carlson and his partner. David won. Oh, wow.

SPEAKER_14: My partner was, was, uh, should I say Uri's daughter who I think is probably what? Like 10 years old. Oh, she's incredible. Yeah. She's like second in America. Yeah. She's good.

SPEAKER_63: She's good. She's incredible. Anyway. Yeah. Thank you to Uri. That was a really unique in front of me. It was partner chess. My partner was, uh, Pragnananda. Who's an Indian grandmaster. Who's like a superstar. Yeah. And look, playing, you know, with Magnus Carlson was obviously, that was a real thrill.

SPEAKER_14: Yeah, there you go.

SPEAKER_565: So when you rank this with the birth of your children, your marriage, uh, and, and this,

SPEAKER_72: where would that rank on the scale of one through five?

SPEAKER_570: This is, this is up there. Poor you poor kids. But you know what? Speaking of the pot. Look at the smile.

SPEAKER_573: Zach is happy. Oh my God. I haven't seen him that happy since, since Trump won. Guys, look at, look at that document I just sent you up. Somebody lost. Before, before.

SPEAKER_314: We gotta wrap this thing.

SPEAKER_85: But I want to show you this. Basically, I pulled all IPOs since 2020. So this excludes all SPAC mergers. And real estate, finance, material, energy, utilities are kind of the big bulky private equity type stuff. So it's, it's mostly tech consumer. 627 IPOs since 2020. More than half of them, or basically half of them, are trading at less, at 0.2 times the total cash they've burnt. So, um, there, you know, you can kind of look at total lifetime capital burnt by these companies in the retained earnings line on the balance sheet. And so when you pull out the retained earnings, it shows you right how much money they've burnt over their lifetime. And so the total money burnt by half of these companies is about 107 billion dollars. And the market cap of those companies is only 26 billion dollars in aggregate. So a point two times return on capital invested to date in terms of enterprise value, divided by total capital invested.

SPEAKER_50: And let me let me say let me say it in English. And you tell me if I said it right. So 627 non SPAC non real estate non finance companies went public. So basically 627 companies went public since 2020.

SPEAKER_01: So two years. Yep.

SPEAKER_50: And of those 627 tech companies, almost half or 300 of them, 48% of them are today worth about 0.2 times all the money that went into them. Yep.

SPEAKER_583: My gosh. Wow. Yep.

SPEAKER_314: It's tough. And then on the other half, the other half is, um, is the ones that have worked.

SPEAKER_85: So this kind of goes back to a power law point, but like as a venture industry, you think once you get a company public, it's successful. And the reality is that many of these companies from a, from an economic perspective are still not successful. It looks like half, um, and perhaps much more if you include all the SPAC mergers, which is another couple hundred. And I would guess the vast majority of those meet this criteria are trading at less than the total cash that's been invested in them. Freeberg.

SPEAKER_213: This speaks to the age of excess that we just went through. We just weren't as efficient as we needed to be in running these companies.

SPEAKER_54: And now we're in the age of efficiency, austerity, excellence. But that's this great setup for a rebound. Isn't it Freeberg? Like I would be looking through these.

SPEAKER_292: Look, I mean, one way to read this, I was speaking with someone who I, um, you can bleep him out.

SPEAKER_85: I was talking with two weeks ago, three weeks ago, and he showed me in their, um, how much should I say here? This is a big investment firm and they have a big growth portfolio. Less than, uh, they have about 160, uh, investments, 180 investments in their growth portfolio. 85% of the returns are generated by 10 companies of the 180. And that's in the growth portfolio. These are supposedly de-risk businesses. The power law exists even in growth. The power law exists in growth. And as you can see here, the power law exists quite dramatically post IPO as well. So, you know, as you can see here, only 9% of these businesses have generated positive earnings over time. Um, 43% or about half of them are worth more than the total cash that's been invested in them. And that multiple.

SPEAKER_589: This is a production board study here, by the way. This is your, done by your firm.

SPEAKER_85: Yeah. Yeah. Yeah. It's off public data. So the, um, the multiple on the value of the companies that are worth more than their, the cash invested is 5.5 times. So in aggregate IPO since 2020 are worth 4.3 times the total cash that's been invested in them over their lifetime. Um, but the crazy statistic is half of them are worth significantly less than the cash that's been invested in them only 0.2 times. So the power law dominates both early growth and, and clearly, uh, being public. But I think to your point, J Cal, it also seriously speaks to the amount of excess. And it's really going to rationalize probably based on the conversations we had today

SPEAKER_150: about Twitter, meta, Google, Amazon, Amazon, and this as well. So, um, certainly. The good, also the good news here is.

SPEAKER_213: A big change happening. Freeberg and correct me if I'm wrong here, Chamath. We want more companies to go public and have that discipline of being a public company. This was the big critique of this quiet era of companies taking 10, 12, 14 years to go public.

SPEAKER_211: This is going to be, uh, a strength for these entrepreneurs to have to fight it out in the public market under scrutiny. Correct, Chamath?

SPEAKER_243: A hundred percent.

SPEAKER_50: I think like the Chris home letter, uh, I think that there are a lot of VCs on boards of companies who would love to say the equivalent thing to their private private company. Yeah, for sure. And part of the dynamics as, as Freeberg just said, because it's such a power law and people believe that, you know, you being with other VCs are really important. It turns out that most of these VCs abandoned their role on these boards and don't really hold

SPEAKER_66: people accountable because they're worried it'll affect their deal flow.

SPEAKER_50: And so the problem is it's a negative reflexive loop it's, but so these companies do poorly. And then as a result, they're viewed is not an effective board member. And so the next deal they get is a poor and poor quality. So the highly correlated portfolios in Silicon Valley are the ones that will get torched because most of those companies will receive very poor or no advice. And then the few that will get to the end is because they have hard nosed people on the board that will force them to make really hard decisions.

SPEAKER_238: Yeah, that's it.

SPEAKER_198: Uh, Sachs, any thoughts here on the public markets? Oh, sorry, wait, last thing. And by the way, Sequoia who has had exceptional returns has always been known to be hard nosed.

SPEAKER_50: You know, a lot of people, the critique against Sequoia from founders would, would be that, oh, if I take Sequoia's money, they may fire me. Well, yeah, because if you're not good, it's the mission of the business is bigger than your ability to be the CEO. And so, you know, you just have to remember, like, there is no free lunch. We were not giving out free money here.

SPEAKER_211: The pendulum swung one direction too far. They used to, the tradition in Silicon Valley used to be, you always replaced the CEOs, the founders with a professional CEO, and Google being the turning point there,

SPEAKER_238: or maybe the last one. And then it became founders will control their companies with super voting shares forever. Hopefully the pendulum now swings to some equilibrium. Sax, what are you seeing in private markets?

SPEAKER_14: The jobs program for surplus elites is going away.

SPEAKER_238: The jobs program.

SPEAKER_14: That's the TLDR. The jobs program for surplus elites is going away.

SPEAKER_68: Professional managerial classes under pressure. Yes. That's for sure.

SPEAKER_36: If you went woke, you may go broke because you have no marketable skills.

SPEAKER_607: Man, you're a bunch of guys off-lineers. Is Dean giving you these one-liners? Who's Dean giving you these?

SPEAKER_36: You got somebody in the room with you?

SPEAKER_612: I have a bunch of guys. Dean's helping you for sure. I think he's got somebody handing them notes. I'm pushing myself up.

SPEAKER_614: Oh, come on. Jackie, the joke man, Marling, handing you little notes there?

SPEAKER_338: All right. Four, the sultan of science, David Friedberg, and also the executive producer of All In Summit 2023, and the Rain Man himself, chess master and champion, David Sachs, as well as the dictator. We're going to go on a little road trip, aren't we, dictator? A little road trip for the dictator and J-Cal. We are. We are. It's going to be fun.

SPEAKER_621: I am the world's greatest moderator who couldn't control the panel today. I'll do better next week, and we'll see you next time. Love you, guys. Happy Thanksgiving. Happy Thanksgiving podcast. Happy Thanksgiving, fam.

SPEAKER_623: Love you, boys. Bye-bye. Bye-bye.

SPEAKER_39: Rain Man, deep and sourced it to the fish.

SPEAKER_634: Merchies are back.

SPEAKER_636: I'm going.