E126: Big Tech blow-out, Powell’s recession warning, lab-grown meat, RFK Jr shakes up race & more

00:00:00.000 | I can't wait to talk about lab grown meat. I have been trying

00:00:03.560 | to get people to

00:00:04.320 | please, let's not get canceled.

00:00:12.200 | The four of us are functional again, we'd like each other we

00:00:17.120 | enjoy we look forward to doing the show again, everything

00:00:19.880 | styled in

00:00:20.800 | is your lab grown meat is that use hormones?

00:00:23.400 | My lab grown meat was a little

00:00:24.840 | let me ask you this about your lab grown meat. Do you have to

00:00:29.560 | say age? No, no, no, no. You know, I was told that my lab

00:00:39.160 | grown meat was a little

00:00:40.080 | I've injected some flavors of tobacco, black cherry, some

00:00:47.040 | notes, some notes, or Simmons

00:00:57.400 | rain man David. So let's go to big tech earnings, Google stock

00:01:12.480 | is up 5%. After beating on the top line and bottom line

00:01:15.960 | estimates some high level takeaways Google announced a

00:01:18.640 | $70 billion stock buyback plan, and that their cloud unit was

00:01:23.720 | profitable for the first time in its history. So we mentioned

00:01:26.400 | last week, Sundar officially announced that deep mind was

00:01:29.640 | merging with brain. This is kind of controversial because it's

00:01:34.920 | really hard, according to some sources for Sundar to get all

00:01:39.160 | his lieutenants to work together and row in the right direction.

00:01:42.360 | Google's q1 search revenue up year over year 2% down 5%

00:01:46.680 | quarter of a quarter kind of to be expected because of

00:01:50.400 | seasonality and because we're in a down market right now

00:01:54.520 | obviously with the recession. YouTube down 2.5% year over year

00:01:59.520 | down 16% quarter of a quarter other bets which is like nest

00:02:03.840 | and some other products down 35% year over year, net income $15

00:02:08.760 | billion. Any thoughts freeberg on what is a mixed quarter by

00:02:15.840 | Google? And I guess the wider macro environment?

00:02:20.480 | What was so striking about the earnings call is not

00:02:22.720 | necessarily what was presented, but what was not presented,

00:02:25.360 | which was a stronger voice and a strategic plan going forward

00:02:29.680 | for dealing with two major issues at the company. One is

00:02:33.040 | the operating cost model. And the second is the AI strategy

00:02:36.840 | and the response to this evolution in AI. I've heard from

00:02:39.880 | a lot of folks that the AI strategy in particular, it's

00:02:44.400 | almost like Google already has this in the bag, but they just

00:02:47.880 | haven't kind of let it out of the bag. It's like they've got

00:02:49.880 | the Tasmanian devil and they're ready to go with it. And there's

00:02:53.240 | from from my read, an incredible amount of confidence that

00:02:56.120 | there's something that's going to happen. And a set of things

00:02:59.320 | that are going to happen, they're going to be very

00:03:00.360 | profound and powerful. I even heard some anecdotal stories

00:03:04.080 | about, hey, you know, we don't have this feature in this

00:03:07.840 | product, but chat GPT does. And then people basically showed up

00:03:11.960 | to this meeting. And there was all this debate about, well, we

00:03:14.560 | can't let it out, because we're not sure you know, the classic

00:03:16.640 | kind of like we're scared of doing doing wrong, versus

00:03:19.640 | leaning forward and taking risk. Don't be evil, you're

00:03:22.080 | referencing. No, it was just more about regulatory concern

00:03:25.600 | and getting things wrong and making a mistake. And so there's

00:03:28.080 | this total fear of like, again, you know, regulatory and fear.

00:03:31.040 | So someone kind of slammed the table and said, let's just put

00:03:32.960 | it out the next day, they put it out. So there's definitely a

00:03:34.640 | cultural change happening internally, is what I've heard

00:03:37.080 | anecdotally, but what was really missing, which is what Wall

00:03:39.440 | Street needed to hear what investors and shareholders

00:03:41.280 | needed to hear is what's the strategy there? How are you

00:03:43.480 | going to compete? How are you going to resolve what's going to

00:03:45.120 | go forward? And secondly, what are you going to do about the

00:03:47.160 | cost structure of the company, because everyone else, you know,

00:03:50.200 | in contrast to meta being up 11 12%, after hours, with their

00:03:53.520 | cost cutting model and demonstrating that they're going

00:03:55.720 | to start pulling cash out of this business, Google's top, you

00:03:58.480 | know, kind of top story was, hey, we're stopped serving peanut

00:04:01.360 | M&Ms in the cafeteria or something ridiculous. And, you

00:04:04.680 | know, that doesn't really address the real structural

00:04:06.480 | question. So I think the stock buyback, the $70 billion stock

00:04:11.440 | buyback is an authorization to repurchase, it's not a plan to

00:04:14.240 | repurchase. So it's unclear if when or how that capital does

00:04:18.400 | actually get deployed in the market to buy back stock. And so

00:04:21.640 | there is also this big kind of shareholder sentiment of being

00:04:24.360 | let down, that there isn't an improvement in either cash

00:04:27.960 | coming out of the business, or in cash being used in a smart

00:04:31.000 | way with the business. And it was the silence in the earnings

00:04:35.180 | call that I think really stunned a lot of people, which is why

00:04:37.800 | you didn't see a lot of stock movement, despite the actual

00:04:40.520 | business numbers being better than expected. And so there's

00:04:44.200 | a lot that Google, I think, still has to catch up to with

00:04:47.640 | respect to their peers, both on a product and strategy point of

00:04:50.640 | view, but also on a cost cutting and a communication of that cost

00:04:55.200 | cutting point of view to the market and to the street.

00:04:57.560 | Otherwise, shareholders are going to start to lose faith if

00:05:00.520 | they're not already, and are going to start to put their

00:05:02.520 | capital with other folks who they feel are better leading and

00:05:05.360 | leaning into this new evolution of technology like Microsoft and

00:05:10.640 | Apple, and meta, which is really where those big capital

00:05:14.360 | allocators end up picking stuff to go. One final thing I'll say,

00:05:17.840 | it's extraordinarily important to note that I think Google has

00:05:24.000 | such an incredible AI advantage over Microsoft. And you know,

00:05:28.320 | Microsoft is almost solely dependent on open AI, this small

00:05:31.400 | startup company, and all of Bing chat is powered by it. And

00:05:35.320 | Microsoft hasn't built out the the infrastructure, the team,

00:05:38.920 | the rigor, the depth, the models that Google has, and Google made

00:05:43.800 | a few strategic blunders, you know, they shouldn't have been

00:05:47.160 | as open with the transformer work that they did and shared

00:05:49.560 | that publicly, it certainly enabled open AI and others to

00:05:52.160 | compete. But Google certainly has an incredible set of tools

00:05:56.000 | and capabilities that is leap years ahead of Microsoft,

00:05:58.920 | they're in a position to really compete, they just have to have

00:06:01.840 | the will and the leadership to do it, slam the table, say,

00:06:04.520 | here's, we're gonna stop wasting money. And we're gonna start

00:06:06.640 | leading and driving this, this industry forward. And this, this

00:06:10.080 | could be a quick turnaround story for the stock, and for

00:06:12.560 | this company. And I hope it'll happen.

00:06:14.960 | Chamath, what are your thoughts on Google's leadership

00:06:18.680 | specifically? Is Sundar the right person to run the company

00:06:21.840 | going forward? Does he have the founder authority to get the

00:06:25.960 | ship and to get the lieutenants all kind of rowing in the same

00:06:29.120 | direction? Does it need to be a leadership change, which is the

00:06:31.680 | big discussion of topic in Silicon Valley right now?

00:06:33.880 | I think he's very capable. That's an amorphous organization

00:06:37.760 | of so many different competing interests. The thing that

00:06:42.600 | doesn't add up about the Google earnings release, but then also

00:06:48.000 | what freebird just mentioned is, there was this article that kind

00:06:52.440 | of tried to paint Sundar as sort of a caretaker CEO, right, where

00:06:56.640 | Larry was the actual shadow CEO. Well, if that's true, you know,

00:07:01.320 | Larry has more incentive than anybody else to kind of force

00:07:05.240 | change. And there was all these kind of like gripes and

00:07:09.320 | complaints that were articulated, and I don't put

00:07:11.200 | much stock in all of this stuff. I think that he is the right

00:07:15.520 | person for the job. And I think what they have to do is just do

00:07:19.240 | the simple basic things like it doesn't take a CEO change for a

00:07:24.520 | board of directors to have the emotional wherewithal to

00:07:28.560 | authorize a 15 or 20% reduction in force for a company that is

00:07:34.000 | so profitable, that clearly is not yet humming on all cylinders.

00:07:38.920 | And so you don't need to go through all of this drastic

00:07:42.760 | change to do these simple, obvious things. My takeaway

00:07:47.240 | across all of these four big companies is we are in a really

00:07:52.040 | unique moment to observe something that may sound

00:07:55.800 | controversial or hurt people's feelings that like these

00:07:58.520 | companies. But I think we're now well past peak big tech. Their

00:08:04.440 | valuations may still go up because they generate such an

00:08:07.560 | enormous amount of cash flow. But these are exactly those

00:08:11.200 | kinds of businesses. Now they are x growth, large cash flow

00:08:15.480 | businesses, blue chip, you might say, while they were always blue

00:08:19.000 | chip, but the way that they grow is not through innovation. If you

00:08:22.160 | look at Google, Facebook, Microsoft and Apple, and ask

00:08:26.880 | yourself, when was the last hugely disruptive thing that

00:08:30.120 | they've created? You're hard pressed to find something that

00:08:33.720 | was even done in the 2010s. Yeah, actually, that's a good

00:08:36.400 | thought. I mean, the iPhone for Apple, iPhone was 2007. Yep.

00:08:40.440 | Microsoft was in the 1990s. Google was in 1998. With core

00:08:45.040 | search. Maybe there was maps and Gmail and tooth in the 2000s.

00:08:49.400 | Chrome, Android, they bought some of that Facebook, it was

00:08:52.720 | the core service that we built in the 2000s. And then they

00:08:55.440 | acquired brilliantly, right. So I'm not saying that they didn't

00:08:58.360 | acquire. Well, yeah, my point is that core organic innovation

00:09:02.800 | hasn't been there for a long time. So this is a moment to

00:09:05.320 | just be reflective of the fact that these are some incredible

00:09:08.080 | companies with ginormous cash flows. But now you've had this

00:09:13.720 | foundational platform shift, which exposes the fact that they

00:09:18.040 | really aren't good at innovating. And at times when

00:09:21.680 | they've tried to organically innovate, they've massively

00:09:25.360 | misallocated capital. Either through this would be the

00:09:28.840 | example of either through a bloated balance sheet. So

00:09:31.080 | someone claimed that Google overspends, or through just pure

00:09:33.920 | misallocation by starting projects that just are not large,

00:09:36.920 | but consume large amounts of cash. That would be the Facebook

00:09:39.160 | VR example. But in all of this, I think, when you cut staff and

00:09:44.400 | expenses as a way to meet and beat, and top line growth is in

00:09:51.240 | the low single digits, it's an important moment to recognize

00:09:54.840 | that these companies have now transitioned to being cash cows.

00:09:58.280 | And if you look at sort of how financial markets value cash

00:10:03.280 | cows, they're very valuable. But it's not where you look for

00:10:07.440 | growth. And so in a world where rates eventually get cut, and we

00:10:12.400 | start to come out of a recession, it tends to be that

00:10:16.240 | other people get rewarded. So that's an idea that's adding to

00:10:18.920 | your point here. They're not allowed to acquire these

00:10:21.280 | Microsoft's acquisition thing dead, dead, so they're not going

00:10:25.680 | to be allowed to buy stuff. So then you're right. What is the

00:10:28.200 | growth here? They're not able to innovate. I think these companies

00:10:31.360 | are x growth, which is why they use their cash flows to do what

00:10:34.840 | borrow money cheaply to buy back stock to manipulate their

00:10:40.280 | equity, right, you can manipulate and overcome

00:10:43.240 | dilution, you can manipulate earnings per share, you can

00:10:45.960 | manipulate the number of shares outstanding. And so just by the

00:10:50.280 | nature of that whole game, a bunch of passive investors will

00:10:53.560 | end up buying more, which helps the active investors who own

00:10:56.080 | that stock. So it's a game. So if we're not in the world,

00:10:59.240 | financial engineering would be the I mean, the most charitable

00:11:02.720 | way to say it, we're in the financial engineering phase,

00:11:04.680 | which is fine. And by the way, you can make a lot of money

00:11:06.680 | Facebook's up 90%. So there's a lot of there's a lot of meaning

00:11:11.200 | just this just this year. Oh, yes. So there's a lot of room

00:11:14.840 | for financial engineering, but it's not where you need to look

00:11:18.320 | to figure out where these big improvements and uses of this

00:11:23.560 | next generation platform technology are going to come

00:11:25.480 | from most likely

00:11:26.360 | saxes is a fair assessment in your mind looking at, you know,

00:11:29.800 | the the major tech companies, the fangs? Yeah, I mean, their

00:11:32.160 | growth is down to single digits. So I think Microsoft had 7%

00:11:35.960 | year over year revenue growth. Google was at 3%. I think

00:11:40.120 | Facebook was for sales rose to 3% from a year earlier, but at

00:11:46.240 | least that was an improvement because it's actually gone down

00:11:48.880 | for three straight quarters. So yeah, but you're down to, you

00:11:52.280 | know, single digit year over year growth rates. Nevertheless,

00:11:55.600 | most of these companies beat expectations. So Microsoft

00:11:59.360 | shares rose 9%. Meta jump 12% might be up more now.

00:12:06.160 | And I guess Google got a little bit of a bounce and they all

00:12:09.560 | gave a pretty upbeat forecast. The only one that wasn't upbeat

00:12:12.680 | was Google where the CFO Ruth Porat said that the outlook

00:12:18.640 | remains uncertain. But all the other ones seem to indicate that

00:12:22.080 | things are going to get better. So I think what's interesting

00:12:26.120 | about that is just the mismatch that we have between how well

00:12:29.840 | these companies did in this quarter versus how uncertain the

00:12:33.520 | rest of the economy is looking right now.

00:12:35.320 | And maybe the feds behavior.

00:12:36.800 | Yeah, so maybe this is the flip side, which Martha saying is

00:12:40.040 | they're not growing very fast, but they are profitable machines

00:12:43.360 | generating a lot of earnings. And they seem to be pretty

00:12:46.280 | immune from what's happening in the economy right now. Or at

00:12:49.480 | least that's what they're saying. Now, you're right in a

00:12:52.040 | parallel track, there was an interesting interview that pal

00:12:56.840 | did. So Jerome Powell gave an interview, it was actually kind

00:13:00.840 | of like one of these hoax calls where a couple of people

00:13:04.200 | pretending to be Salon ski engagement and interview.

00:13:07.520 | Oh my god, that was crazy.

00:13:09.280 | That reference.

00:13:11.600 | They've done this a number of times where they've gotten, you

00:13:15.680 | know, major leaders, I think they did this to Macron some

00:13:17.920 | other people where they pretend to be Zalinski and they do an

00:13:20.400 | interview. It's like Ali G. Yeah, but they played it

00:13:23.400 | straight. I don't care that he was fooled into giving the

00:13:25.400 | interview. It's like, who cares. But some of the things he said

00:13:27.680 | were really interesting. I mean, number one,

00:13:31.120 | pal said that the economic outlook for the year was looking

00:13:34.680 | pretty uncertain. And he said the most likely scenarios were

00:13:38.200 | either sub 1% growth. So staying out of recession, but just

00:13:42.560 | barely, or he said going into recession. So he thought that

00:13:46.560 | was roughly about equally likely he admitted that we had the

00:13:49.560 | worst inflation in 40 years. And that's why interest rates were

00:13:51.840 | necessary. And he said that it was necessary to slow the

00:13:54.920 | economy in order to combat inflation. And he then even went

00:13:58.160 | further and said that it was necessary to cool off the labor

00:14:02.160 | market, and even to cool off wages specifically, because

00:14:05.840 | that's how you combat inflation. That's the only thing we know

00:14:07.960 | how to do in a situation like this. So I think this is

00:14:12.680 | certainly a political mistake for pal to say that his

00:14:15.200 | objective here is to hurt the wages, the American people, and

00:14:18.880 | to basically cause a recession. But that is his view,

00:14:21.800 | apparently. And I think that we are headed for it seems like a

00:14:25.680 | recession. I'm a little surprised that the earnings

00:14:27.880 | reports for these tech companies are so good, because or at

00:14:30.080 | least their forecasts are so good.

00:14:31.840 | Well, they can cut spending. And we talked about this last year

00:14:34.280 | when we were trying to predict what would happen. I remember

00:14:37.320 | saying, Well, I think Chamath and I were talking about this.

00:14:39.400 | And I said, Well, Chamath was saying, hey, earnings are going

00:14:41.480 | to go down. And there's a PE. And I said, What if they just

00:14:43.400 | stop spending or they make a lot of cuts? Well, here we are,

00:14:46.360 | people are just saying, you know what, we're going to cut our way

00:14:49.240 | to and do stock buybacks. And that's another way of financial

00:14:54.200 | engineering to route around the Fed, right. And to make the

00:14:59.160 | stock go up. worked incredible for Facebook. I mean, my lord,

00:15:04.560 | they were at $91 a share, and now they're over 200.

00:15:06.880 | Right, but just to bring it back to the economy. So look, I think

00:15:10.640 | we agree that these tech companies seem to be pretty

00:15:14.040 | immune, they've got a large cushion in terms of their

00:15:16.640 | ability to consume generating earnings because of all the

00:15:18.880 | bloat that that actually gives them like a margin of error

00:15:21.880 | where they can just keep cutting to prop up earnings. I'm a

00:15:24.640 | little surprised that they think their revenue forecasts are

00:15:26.760 | going to be so positive, because again, they were guiding

00:15:28.920 | upwards, generally. So they seem to think they're not gonna be

00:15:31.680 | impacted by the recession. And maybe they won't be. Again, I

00:15:34.640 | think what was interesting from Powell is the way that he seemed

00:15:38.920 | to think that the only thing we know how to do this is basically

00:15:42.160 | what he said, the only thing we know how to do in this situation

00:15:43.960 | with inflation is to kill the economy is to slow the economy,

00:15:48.360 | and specifically to kill jobs and wages. And that was pretty

00:15:52.400 | remarkable to me, because there are other things we could do,

00:15:54.960 | such as, okay, well, one thing is that you don't have to print

00:15:59.240 | so much money, cut spending austerity. So yes, our fiscal

00:16:01.880 | policy remains completely out of whack. We're running $2 trillion

00:16:05.640 | annual deficits right now, past COVID. So he could have said,

00:16:10.000 | Listen, we could get off this reckless fiscal policy and be

00:16:12.840 | more restrained, but he didn't want to go there. The other

00:16:16.200 | thing he could have done was address the supply side. One of

00:16:19.800 | the ways that you can reduce inflation, it's not just to kill

00:16:21.800 | demand, you could actually affect supply chains. So like

00:16:24.840 | cost of energy, for example, energy is a huge input into the

00:16:27.560 | economy. And one of the things that happened at the beginning

00:16:30.520 | of this administration is they made it much harder to drill for

00:16:34.160 | oil and gas. And I think Biden sort of reversed course on that

00:16:37.440 | at the State of the Union. Remember, he had that line where

00:16:39.160 | he said, we can't get off oil and gas for 10 years, and the

00:16:42.920 | audience started laughing. But in any event, the point is just

00:16:45.600 | that it's too little too late, they could have done more on

00:16:48.840 | energy to keep costs low. And then there's a whole bunch of

00:16:51.600 | other critical inputs into the economy besides labor. And what

00:16:54.320 | you could do is, I think you could go category by category,

00:16:58.160 | and say, how do we get the price of these key inputs into our

00:17:01.800 | economy down? How do we resolve supply chain bottlenecks? How do

00:17:04.920 | we make it, you know, easier to get access to whatever the key

00:17:09.120 | commodity is? And I think there's things they could do if

00:17:11.720 | they're just willing to work at it. Maybe this isn't the Fed's

00:17:13.800 | job, this is more the administration. But what you

00:17:17.120 | could do is say, listen, we're going to make it easier for

00:17:18.880 | people to produce and create supply. And if you have a higher

00:17:22.320 | supply of goods and services, then you will start to bring

00:17:27.360 | inflation down because inflation is just the amount of money in

00:17:30.640 | the system, divided by the amount of goods and services.

00:17:33.920 | And when the amount of goods and services hasn't gone up, but the

00:17:37.000 | money supply has gone up tremendously, you're gonna have

00:17:39.040 | inflation. And that's why I think it's a little bit

00:17:40.960 | misplaced to be killing demand the way they're killing it is

00:17:43.400 | because fundamentally, the problem here is they flooded the

00:17:47.520 | economy with money, both through government stimulus and through

00:17:51.520 | quantitative easing. And then also, they made it harder on the

00:17:54.840 | supply side to produce certainly with energy. So it seems to me

00:17:58.200 | that the approach they're taking for us to get out of this, it's

00:18:00.440 | like taking a meat cleaver to the economy, or a sledgehammer,

00:18:04.960 | really. And it's the most violent possible way that they

00:18:07.880 | could solve the problem they previously created of too much

00:18:11.800 | inflation.

00:18:12.800 | And the other thing, obviously, is jobs, we're still sitting

00:18:15.520 | here with close to 10 million job openings. And the thing I'm

00:18:19.440 | hearing from the streets is that unemployment hacking is become a

00:18:26.440 | high art. And so labor force participation remains low. It's

00:18:30.440 | nowhere near the historic highs. We have been very permissive

00:18:34.040 | during COVID for good reasons to give people very extended

00:18:37.000 | benefits, people have now learned is my understanding. And

00:18:41.200 | this is something that's happening on a regional level

00:18:43.760 | state by state level. People are learning how to hack

00:18:47.320 | unemployment and not going to work and people are just not

00:18:49.520 | taking the jobs that are open, which are service industry jobs.

00:18:52.760 | Americans don't want to work on we don't want to let people into

00:18:55.160 | the country got wrecked wrecked low people coming into the

00:18:57.400 | country. It seems to me that would be a much more productive

00:19:00.240 | way to do this, right?

00:19:00.920 | So yes, I think it's an excellent point. Because exactly

00:19:04.320 | what you're doing there is addressing the supply side,

00:19:06.080 | which is you're unlocking the supply of a key input into the

00:19:09.120 | economy, which is all this unused labor, it's all these

00:19:12.040 | people aren't working, you're right, the labor force

00:19:13.920 | participation rate is still much lower than it could be. So if

00:19:17.280 | you get more people into the economy, then that helps

00:19:20.160 | alleviate the cost of labor, it helps fill these jobs, but it

00:19:24.080 | doesn't kill the economy. So it would be a much more positive

00:19:27.680 | way to address this. So I just think it showed a lack of

00:19:30.240 | creativity for him to say that the only thing we can do in this

00:19:33.840 | situation is not just to raise rates, he did say that, but but

00:19:37.800 | to go further, and cool off the job market, increase

00:19:43.080 | unemployment and cool off wages. I mean, that's gonna be a very

00:19:47.520 | unpopular thing to say, I think, because we're basically saying

00:19:50.480 | is you're gonna hurt the wages, the American people, who wants

00:19:53.200 | that?

00:19:53.700 | Here's the chart for job openings, we thought this would

00:19:56.160 | collapse, it went down, certainly, as we you know, I

00:20:00.000 | don't want to obsess over macro stuff, but it's still way up

00:20:02.960 | there. And so the fact that we can't get people to take these

00:20:06.200 | jobs, I don't know, Chamath, what do you think about the

00:20:08.560 | employment and participation such situation and how that

00:20:12.760 | might unlock things I also wanted to know from you, Chamath,

00:20:15.160 | this concept of the Fed is reacting to data just so slowly,

00:20:21.200 | and then you have these companies that maybe are more

00:20:23.800 | nimble, and they have better data than the Fed.

00:20:25.760 | I think that that's a truism. And I don't think anything about

00:20:29.360 | that is going to change. I mean, I think we talked about how

00:20:32.160 | these folks calculate nonfarm payrolls, or how they calculate

00:20:35.280 | CPI. It's incredibly outdated, right? It's people with

00:20:39.600 | clipboards, walking around talking to people and checking

00:20:42.480 | boxes and filling out forms. Can that change? Probably, it could

00:20:48.520 | will it change? It probably won't. And so they're going to

00:20:52.640 | focus on the most simple but most powerful measure that they

00:20:56.680 | have, which is controlling the money supply, kind of what Saks

00:20:59.440 | talked about. So they're going to manipulate the money supply

00:21:02.720 | to either put more liquidity in the system, in which case

00:21:06.160 | markets go up and asset prices go up, but then inflation goes

00:21:09.320 | up, or constrain liquidity, which then causes markets to go

00:21:12.920 | down, asset prices to go down and inflation eventually to go

00:21:16.040 | down. The thing that we're facing today, when you look at

00:21:19.240 | this labor market chart is a couple of things that I think

00:21:22.200 | we've talked about before. And I just want to reiterate them,

00:21:24.320 | which is you have to remember that we are in this new world

00:21:28.640 | order, which is the x China world order. And in that there

00:21:34.160 | is no more unitary economy that can do things cheaper, faster

00:21:37.400 | and better globally around the world. Right? So we're going to

00:21:40.960 | near shore or onshore all kinds of things that used to be done

00:21:44.480 | by the Chinese, they'll sit in Mexico, or they'll sit in

00:21:48.360 | Central America, maybe in some cases, they'll sit in Canada,

00:21:51.400 | and all of that will feed into the United States. The problem

00:21:55.440 | with all of that is that that will keep costs higher, because

00:21:58.720 | it'll be naturally more inefficient, it will naturally

00:22:03.520 | take more money. And that will naturally cause the prices of

00:22:07.560 | those things to be higher, which means that terminal inflation, I

00:22:10.600 | think is just roughly higher. As a result, I think that more

00:22:17.000 | power, if you will, goes to labor. So in this constant

00:22:22.280 | tension that we have in an economy between labor and

00:22:24.640 | capital, the people that own the factories, or the businesses and

00:22:27.560 | the people that run them and work inside of them, we've been

00:22:30.320 | in this position where the pendulum has swung so far

00:22:32.960 | towards capital, the owners, the shareholders, that all this

00:22:36.760 | financial engineering has tremendous upside, right? That's

00:22:39.960 | why companies engage in it. But when you show that chart, Jason,

00:22:44.200 | what it means is, it's just really hard to find people. And

00:22:46.320 | so the only way you're going to get people off their butt, to go

00:22:49.080 | into work to sit in a chair to do a job that you need them to

00:22:51.680 | do is to pay them more. And in finding that wages will have to

00:22:56.120 | go up. The counterbalance of that is what AI will do, which I

00:23:00.880 | think we all agree is to say, that is the key. Yeah, which is

00:23:04.560 | massively deflationary. So that is going to be the tension that

00:23:08.320 | we're in now for a really long time as we explore this. I don't

00:23:10.600 | know if you guys saw today, but Sequoia led a $20 million round

00:23:14.120 | in this thing called Harvey dot AI, the legal, yeah, which is

00:23:18.200 | like a legal super wizard for law firms. Yeah, we knew that

00:23:21.200 | was coming. And my partners and I were debating it. And what we

00:23:25.440 | thought of was, well, how much do you pay out of the 800 or

00:23:29.400 | $1,000 an hour that you charge to Harvey dot AI, maybe you're

00:23:33.320 | willing to pay 5% or 10%. But then the reality is that one of

00:23:37.960 | the most powerful things it does is is able to go into Westlaw,

00:23:41.680 | find all these cases, and say, yeah, this is germane to the

00:23:45.760 | thing that you're working on right now. That's a very useful

00:23:48.080 | thing. But the end plus first law firm will also use that tool

00:23:51.600 | and instead of charging $800 an hour, they'll say, well, we'll

00:23:54.280 | charge 600 bucks an hour, and we're still willing to give you

00:23:56.480 | five or 10%. So I just don't see a world where, on the one hand,

00:24:01.480 | physical labor will continue to be more expensive, they'll

00:24:05.560 | demand more and more money to do the job that they're asked to do.

00:24:09.480 | And the knowledge work will become increasingly more

00:24:12.840 | deflationary, because so much of it will be automated by AI, that

00:24:16.480 | those folks will charge less and less. And there's going to be

00:24:18.880 | attention there. And I don't exactly know what's going to

00:24:20.760 | happen. I did a couple of experiments. This week, I've

00:24:23.560 | been rolling up my sleeves and playing with these tools. It's

00:24:27.280 | pretty amazing. And I've been trying to use them for actual

00:24:31.400 | tasks in our companies. What have you learned? What did you

00:24:34.200 | do? And what have you learned? So I got on the open AI plugins,

00:24:38.880 | Greg, thank you, I sent him my email, and he got me onto that.

00:24:42.320 | And you can connect it to Zapier. So I have two projects

00:24:46.960 | I'm working on currently, one of them I was as since I'm raised,

00:24:50.040 | so raising launch one for and I'm actually going out to people

00:24:52.360 | not just taking inbound. I was like, Hey, can I get the names

00:24:55.440 | of all the major LPS and start doing some research, they're

00:24:57.880 | putting a table stuff that sacks did when he does blog post. But

00:25:01.560 | then I started connecting it with finding people's Twitter

00:25:05.400 | handles finding their LinkedIn profiles. And then the next

00:25:10.040 | piece I'm working on is automatically following them DM

00:25:13.240 | ing them on Twitter, let's say, or following them on and doing

00:25:16.640 | an in message saying, Hey, we haven't met. Here's the deal

00:25:19.960 | memo for my next fund would love to, you know, get together.

00:25:22.800 | This is sent from Jason's AI script, I was gonna like

00:25:26.080 | actually tell them, but here's my real email if after you read

00:25:28.720 | the summary of the next fund you want to meet. And then I was

00:25:32.280 | going to pair that and this is a piece I'm going to probably need

00:25:34.960 | a developer to do with our internal LP database to not

00:25:37.680 | email people who already duplicates. And then inside with

00:25:41.520 | newsletters, I have it building a database of every newsletter

00:25:45.920 | we've ever sent the writing style, and then I'm having it go

00:25:50.040 | find in real time news stories that we should be including in

00:25:53.240 | the newsletters, which I think will make the writers right now

00:25:55.720 | a third more productive. But these are things that would cost

00:26:00.000 | 4050 bucks an hour 30 bucks an hour for you know, college

00:26:04.000 | educated Americans and Canadians. And I have already

00:26:07.720 | figured out and I'm not a developer anymore, I had a

00:26:10.400 | script them and I'm actually thinking about learning to code

00:26:13.280 | again, just so I can do this myself. And so on Saturday, I'm

00:26:17.240 | going to do a little coding with a friend of mine and get back up

00:26:19.720 | to speed on that. I think about 30% of what knowledge workers

00:26:23.880 | do right now is possible. So I put every single person at both

00:26:28.720 | companies on chat GPT for and the sand the playground about 30%

00:26:34.960 | of what knowledge workers at both firms can do currently is

00:26:40.240 | doable if you can figure out and this stuff is not perfectly

00:26:43.240 | scripted yet. So I've been doing some stuff in travel as well

00:26:46.120 | playing with the kayak interface, Expedia interface,

00:26:51.080 | etc. To look at travel planning, and it's pretty good as well. So

00:26:55.680 | it's, it's this is the real deal, folks, I think by the end

00:27:01.160 | of this year, 30% of knowledge work could be done by this. And

00:27:04.880 | then additionally, on Monday, I went back to work in person. And

00:27:09.880 | I went to I hosted our accelerator in person. And then

00:27:14.120 | I hosted found a university in person in the city, the city was

00:27:17.360 | absolutely dead. But we had 100 people fly in from around the

00:27:21.320 | world for our founding university and a lot of them are

00:27:23.280 | working on AI projects. And what's very interesting is like

00:27:27.160 | there's this big debate going on. Friedberg between is this

00:27:32.040 | going to be built into chat GPT for or barred or you know, Poe

00:27:35.320 | or whatever it is, or should I even bother? So should I bother

00:27:38.760 | building, you know, a verticalized app. And it turns

00:27:42.440 | out like I think you should do the verticalized app. And you're

00:27:46.520 | going to be able to put together multiple of these AI eyes that

00:27:50.960 | have different specialties. So I'm super stoked about it. But I

00:27:55.240 | do think if you're not using this, if you hear my voice right

00:27:58.200 | now, and you're a white collar worker, a knowledge worker, and

00:28:00.480 | you're not using this this year and getting up to speed on it, I

00:28:04.280 | think you'll be out of a job within the next two.

00:28:06.040 | She's Wow.

00:28:08.160 | I just don't think you'll compete. It would be like

00:28:11.120 | trying to compete without knowing how to use Microsoft

00:28:13.600 | Office 20 years ago. Right? Like, could you work and not no

00:28:17.000 | email? Remember when we came into the workforce 30 years ago,

00:28:20.520 | and some people knew office and email, and web research, and

00:28:24.760 | then other people didn't, those other people retired, they were

00:28:27.560 | phased out, if you didn't know how to use a computer, and type

00:28:30.360 | and use an Excel spreadsheet or do a PowerPoint, you were done.

00:28:33.120 | I think there's two possible ways you can interpret what

00:28:35.360 | you're saying. So in terms of the economic impact, so one is

00:28:39.520 | that you could say, well, the AI is going to do 30% of the

00:28:42.520 | knowledge work, therefore, 30% of the knowledge workers are

00:28:44.720 | going to be put out of work. I think that a different way to

00:28:48.080 | put it would be every knowledge worker can get 30% more work

00:28:51.240 | done. Correct. So if that's the case, then they're more

00:28:55.760 | productive. And we're just talking about the problem of how

00:28:58.240 | do you increase real wages in the economy without having

00:29:01.080 | inflation? Well, the way to do that is for every worker be more

00:29:04.160 | productive. So if every worker is 30% more productive, in

00:29:07.240 | theory, their wages should be able to go up by up to 30%.

00:29:10.360 | That's how you get wage growth. Now, maybe there will be some

00:29:14.200 | companies that don't need all those employees, because now

00:29:18.200 | they're able to get, you know, whatever, a third more done. But

00:29:21.000 | there'll be other companies who can hire them, they can go off

00:29:22.800 | and do other jobs for other companies, especially when

00:29:25.240 | you've got this backlog of like you said, eight or 10 million

00:29:27.880 | new, you know, jobs that are on those jobs are all service

00:29:30.680 | though. You know, they're not you're actually gonna have this

00:29:33.840 | big group of knowledge workers, there's just nothing for them to

00:29:37.080 | do. Oh, no, I just don't.

00:29:38.080 | I agree with you. But I think there's going to be a group of

00:29:40.120 | knowledge workers who do not embrace this and do not make the

00:29:42.360 | transition because it is, it's going to require an upscaling.

00:29:46.960 | Like, I think you're actually going to need to know how to do

00:29:49.120 | some basic programming and coding to really take advantage

00:29:52.160 | of these at least like scripting level stuff.

00:29:54.160 | I don't know, it's pretty easy to use. I agree with you there.

00:29:57.520 | Maybe

00:29:57.720 | writing a blog post, but the date the example I gave of like

00:30:00.600 | taking the LP database, sorting it, you know, it's not quite

00:30:04.880 | there yet.

00:30:05.160 | This is like a chatbot.

00:30:06.920 | It is like I think it takes like level two programming skills.

00:30:11.280 | No, it doesn't. No, you don't have to know the program, you

00:30:13.520 | just have to know how to prompt it in natural language. It's the

00:30:16.240 | opposite of need to learn how to code. The thing that makes

00:30:19.480 | coding hard is that you have to learn the specific commands.

00:30:22.680 | It's like its own language, you have to learn a new language.

00:30:24.880 | With this, you don't. In fact, one of the cool things about

00:30:28.000 | some of these open AI API's is that you just tell it what you

00:30:33.080 | want it to do. There's not even like a scripting language, a lot

00:30:35.440 | of it's in natural language. And that makes it incredibly easy to

00:30:39.440 | use even for developers. So I don't think this is a hard

00:30:43.560 | technology to use. I agree with you, there may be people who are

00:30:45.760 | resistant to it, because there's always people who are resistant

00:30:48.760 | to change a new technology. And you're right, if they don't

00:30:50.840 | adapt, they're going to be dinosaurs. But I don't think

00:30:53.720 | this is a hard technology to grok how to use and get benefit

00:30:57.280 | from.

00:30:57.640 | You might be right. I mean, right now, it's so new, that the

00:31:02.040 | glue between systems is just not there yet. And maybe you'll be

00:31:05.240 | able to talk to chat GPT for and it'll connect your database on

00:31:09.480 | notion, it will take a type form and a survey monkey and put it

00:31:13.160 | all together and figure that all out for you. Oh, yeah,

00:31:15.400 | that's the whole game right now is still connecting all these

00:31:17.560 | things. And that and that's what I'm talking about. And like,

00:31:19.960 | that's kind of not there yet. But in the auto GPT stuff, you

00:31:23.800 | need a developer right now. But anyway, I'm deep in it. And I am

00:31:28.240 | more excited right now. This feels to me like 2005 to 2012

00:31:33.760 | period, when you just saw Ajax and the web and speed, just all

00:31:38.720 | coming together so quickly. And the rapid iteration is just

00:31:43.600 | unbelievable. I every day I find a new use for it. I have made my

00:31:47.880 | default web page opening. Like when I open a new page on my PC,

00:31:52.560 | it just opens chat GPT for now, just so I'm forcing myself to

00:31:56.240 | use it for every possible task. And the people who work for me,

00:31:59.520 | some of them are doing it's most of them are not and I'm just

00:32:01.880 | trying to drag everybody along. And then you have at the same

00:32:06.640 | time, this remote work thing happening, where salaries I'm

00:32:12.760 | finding are starting to normalize not across cities, but

00:32:16.600 | across countries. So, you know, hiring somebody in Canada,

00:32:22.280 | Estonia, San Paolo, and then you add this AI to it. The cost to

00:32:27.640 | do things is, this is like, I don't know, I think everything's

00:32:31.120 | going to cost about 10. All this knowledge work is going to be 10%

00:32:34.720 | as expensive to do. I don't think it's 10% less Chamath or

00:32:39.120 | that, you know, I think it's like 90% 10 cents on the dollar.

00:32:42.560 | I agree. And it's not this is not a five year 10 year

00:32:47.880 | prediction. This is like, five quarter 10.

00:32:50.080 | We said that the first organizations to use this like

00:32:53.880 | the canary in the coal mine would be the consulting

00:32:56.720 | organizations. And today when Harvey got announced one of the

00:32:59.240 | things that that right on the heels of that Pricewaterhouse

00:33:01.840 | Coopers announced like a billion dollar investment into AI,

00:33:04.760 | which makes sense, because as a consulting organization full of

00:33:07.880 | lawyers and accountants and it folks, those are the services

00:33:11.480 | jobs that you get tremendous leverage. If you were to use

00:33:15.520 | these tools, freebirg, any thoughts?

00:33:17.360 | I don't know. I mean, I think we kind of beat this horse to

00:33:20.520 | death. We've talked about it for a couple months. And I think we

00:33:23.720 | just keep repeating ourselves.

00:33:25.000 | Are you doing anything when you're firsthand? Are you

00:33:27.160 | playing with it yourself? Yeah.

00:33:29.160 | Look, I tell us about that. By the way, one thing I will say,

00:33:31.840 | we all talk about cost reduction, and then oh, you

00:33:34.960 | know, knowledge work is dead, and we're going to save money

00:33:37.160 | and all this stuff. What that is always the first reaction to any

00:33:41.560 | new point of leverage realized from some novel technology. The

00:33:46.040 | second is suddenly people start doing things that use that

00:33:51.160 | leverage to do things that they couldn't have done before. So

00:33:54.480 | it's not just about dropping costs. It's about enabling new

00:33:57.440 | things that does 100 times more or unimaginable things prior.

00:34:02.080 | And I think the next phase of this AI shockwave that that kind

00:34:06.280 | of hit us and hit the world and you know, kind of hit enterprises

00:34:10.760 | is going to be the evolution of integrating those tools in a

00:34:15.160 | very unique way with other tools to drive very novel things

00:34:19.640 | forward to create new things, new projects, new progress. That

00:34:22.800 | was unfathomable before. So it's not just about cost savings,

00:34:26.160 | it's going to be about new stuff. I shared a link on

00:34:28.920 | Twitter yesterday, there was some guy, I want to quote him

00:34:33.320 | correctly. His name is McKay Wrigley. So shout out to McKay

00:34:38.960 | on his Twitter page, it says that he didn't know how to code

00:34:43.200 | in 2019. He learned how to code for the first time he taught

00:34:47.360 | himself. And he put together an object recognition tool with

00:34:54.680 | chat GPT. I saw this video crazy with his webcam. And basically

00:35:00.080 | he holds up like a diet Coke and he's like, you know, tell me how

00:35:03.280 | many calories What is this and how many calories are in it? And

00:35:05.320 | it's like, oh, there's no calories in it. It's a diet Coke.

00:35:08.520 | And he does this three different times with three different

00:35:11.200 | objects. And he hacked this thing together in a couple of

00:35:14.040 | hours. That is a product that was like, theoretically

00:35:18.160 | unfeasible, or, you know, kind of very, very difficult to kind

00:35:21.680 | of see how you would put that piece together quickly and

00:35:24.200 | easily with one person in a room in a few hours, a year ago. And

00:35:29.120 | here you see a demo of this person who didn't know how to

00:35:31.840 | code not too long ago, putting it together and creating this

00:35:34.760 | product that would have been such a profound startup. Imagine

00:35:37.800 | if you went to VCs 18 months ago, and we're like, Look, I've

00:35:40.380 | got this thing and I hold stuff up in front of it, it tells me

00:35:42.560 | all about it. And it talks to me. And I literally use my voice

00:35:45.280 | to talk to it. And he basically strung together a text to

00:35:49.120 | speech, chat, GPT, an object recognition tool, all of this

00:35:52.800 | stuff completely open source, and a plugin that does web

00:35:56.200 | browsing. And the whole thing is basically like your own

00:36:00.000 | interactive visual robot. It's an incredible product demo. And

00:36:04.200 | I thought it was so amazing and profound. I sure it's a

00:36:06.080 | prototype. And it's kind of janky, but it was done in a few

00:36:09.560 | hours on almost a no code basis. It's incredible. So what's going

00:36:13.360 | to come from that is a whole set of new products, and ideas, and

00:36:17.840 | things that we are certainly not thinking about today, but in six

00:36:20.720 | months, is going to become almost mainstay. And many new

00:36:24.200 | categories of products, many new industries, many new businesses

00:36:27.400 | are going to emerge that we're not even thinking about. So the

00:36:30.200 | Luddite argument of Oh, this is going to destroy jobs and

00:36:32.800 | destroy the economy and drop costs by 90%. lawyers are going

00:36:35.800 | to get cheaper, etc, etc. I think that doesn't even matter.

00:36:38.560 | It's the tip of the iceberg. What's more exciting is all the

00:36:41.120 | new evolutionary stuff that's going to hit the market that's

00:36:43.640 | really going to transform the things that we can do, and that

00:36:47.480 | we didn't realize we could do.

00:36:48.680 | There's an incredible analogy for this, because what you're

00:36:51.320 | really talking about is more people being able to use tools

00:36:55.440 | and be creators. And what happened in the 80s and 90s,

00:36:59.360 | when the NBA started playing exhibition games around the

00:37:02.800 | world, was more people around the world started playing

00:37:05.720 | basketball, and then you started seeing people like Luca, or

00:37:09.240 | before him, Yao Ming, Mutombo, you start to have people from

00:37:12.800 | around the world who had never been exposed to basketball, just

00:37:15.480 | incredible, Porzingis, incredible talents emerged,

00:37:19.760 | because you just had more people playing with the basketball, I

00:37:22.040 | think you're gonna have more people playing with code and

00:37:25.000 | building products. So you're gonna have incredible amounts of

00:37:28.160 | creativity from people who maybe you didn't expect, because they

00:37:32.840 | didn't go to school for coding, or have that opportunity. Hey,

00:37:36.960 | I mentioned I was in Phi Di, and I was at Fenwick's office and

00:37:43.440 | then Wilson's and Cine's offices to law firms being the law firms

00:37:47.520 | in the financial district in the market arrow, it was an absolute

00:37:51.160 | ghost town. And when I say ghost town, I mean, like serious

00:37:53.880 | ghost town, like, weird, like this is still like, being in

00:37:58.440 | some dystopian science fiction, they were the last man on earth.

00:38:01.480 | And then we saw in the group chat today, 350 California

00:38:05.920 | Street was worth $300 million four years old, that's a 22

00:38:10.400 | story glass and stone tower picture of it. It's going up

00:38:14.840 | for sale. And they believe according to the Wall Street

00:38:17.920 | Journal, that bids will come in at $60 million, an 80% decline.

00:38:23.120 | And we talked about this commercial real estate would

00:38:26.080 | have this moment, a lot of the banks, the smaller regional

00:38:29.600 | banks own this debt. Saks, what do you think is going to happen

00:38:34.240 | here? Who is the person who would buy an office tower in

00:38:39.680 | downtown, even at an 80% discount, knowing that you have

00:38:43.760 | to pay all those carrying costs? And there's so much vacant

00:38:49.080 | office space, and it's only increasing? Right? What's your

00:38:53.000 | who buys this?

00:38:54.080 | It's called land banking.

00:38:55.520 | Okay, explain.

00:38:56.440 | So in other words, okay, what I mean is, you're right, there's

00:38:59.360 | 30% vacancy in San Francisco right now, maybe going up even

00:39:02.080 | more in the next few years as leases roll, and people take

00:39:06.360 | less space, you may have a countervailing effect in terms

00:39:10.880 | of new companies moving back because of AI or expanding. So

00:39:15.160 | it's possible you start to see some growth in the office

00:39:17.320 | market in San Francisco. But the bottom line is 30% plus vacancy

00:39:21.960 | is going to take years and years of growth in order to absorb. So

00:39:27.160 | you're right, this building, they can slash it to rent, but

00:39:30.040 | they still probably can't fill it. I mean, there's just no,

00:39:32.440 | there's just no demand. So you're gonna be sitting on that

00:39:34.920 | property for five years, 10 years before the market comes

00:39:38.480 | back the way that you need it to. But there's no value, right?

00:39:42.320 | Oh, it's going to trade way below its replacement costs,

00:39:44.880 | right? If you were to build that building today, it would cost

00:39:47.920 | you many times what they're going to pay for it. The problem

00:39:50.600 | is you can't finance that purchase with debt, because the

00:39:53.800 | building is not going to generate enough revenue. So

00:39:56.040 | that's what I mean by land banking, it's gonna have to be

00:39:57.960 | an equity investor, who's willing to think long term, and

00:40:01.720 | say, I'm going to buy this at a super distressed price, and I'm

00:40:04.680 | just going to sit there and hold it and wait. carry it, like you

00:40:08.560 | said, bear the carrying costs until the market comes back.

00:40:10.960 | But J kal, I want to say something, I think it's a great

00:40:13.760 | analogy, because public growth stocks have declined 70 plus

00:40:17.320 | percent, right since the market started to decline. And we've

00:40:21.880 | talked a lot about the statistic that I've shared a bunch

00:40:25.680 | publicly on how 70% of publicly traded companies that have gone

00:40:30.080 | public since 2020 are trading below their total cash invested

00:40:33.800 | since since founding, which should translate to an estimate

00:40:37.080 | that call it somewhere on the order of 70% of private

00:40:39.800 | companies are probably worth less than their preference

00:40:41.640 | stack. And so they're not worthless companies, they just

00:40:45.400 | have a capital structure that is upside down, those companies are

00:40:48.520 | making products for customers as product, those customers are

00:40:51.480 | paying money for those products, there's value there, there's

00:40:54.040 | real value there, the value has just been reset. And so it's

00:40:57.400 | interesting, it's not just the asset class of growth stocks and

00:41:00.360 | the asset class of private companies or private tech. It's

00:41:03.320 | also you know, in commercial real estate, we we try and treat

00:41:06.560 | each of these as if they were in isolation. But the problem is

00:41:10.400 | many of these assets were funded with some degree of leverage

00:41:15.560 | preferred stock is leverage. And you know, it is a form of debt

00:41:20.480 | because it has a preference over the shareholders, the common

00:41:22.880 | shareholders, the equity holders. And the same is true

00:41:26.000 | with this commercial real estate market that there was a certain

00:41:28.280 | amount of debt. So the availability of low cost capital

00:41:31.840 | and securitized against some asset in the form of debt or in

00:41:34.560 | the form of preferred stock in a private company has the same

00:41:37.560 | effect, which it allowed the valuations to balloon on the

00:41:40.640 | equity. And now that the market has re rationalized, the price

00:41:43.880 | is down 70 plus percent across all three of these connected,

00:41:47.480 | but you know, somewhat disparate asset classes, you're kind of

00:41:49.600 | having this big reset moment. And funny enough, the other

00:41:52.640 | statistic is the cell phone traffic down 70% in downtown SF,

00:41:56.200 | right. So it's funny, all four of these numbers are pretty much

00:41:58.960 | on track.

00:42:00.240 | It is this chart is crazy. It's literally like, you have some

00:42:04.440 | cities that have more cell phone traffic than they did last year,

00:42:08.480 | or a couple years ago. And

00:42:10.200 | this is downtown, by the way.

00:42:11.240 | And Sam, I mean, the wider Bay Area is, is I don't want to say

00:42:16.240 | booming, but it's vibrant. Yeah, I said on last week's show, I

00:42:19.480 | was looking for a place to host the accelerator in San Mateo

00:42:23.200 | area, I got dozens of people contacting me hundreds of

00:42:27.200 | locations, and offers at 25% of what their carrying cost is, or

00:42:33.560 | like the other carrying costs, the rent was, and people

00:42:36.800 | offering me major companies offering me free space, just

00:42:40.600 | because they would like to have founders hanging around. And

00:42:43.080 | there was one project that I was like, I'll give it to you for

00:42:46.520 | whatever, just because I want to get more people to downtown San

00:42:48.840 | Mateo. So that does sort of prove the point that there is a

00:42:54.560 | what I and I saw this in New York City during the 90s. When

00:42:58.200 | things were so cheap, people just got creative with space. It

00:43:01.200 | inspired people to say, I'm going to create an art gallery,

00:43:03.880 | I'm going to create a performance space. And I don't

00:43:06.840 | know when that happens in San Francisco with these spaces, but

00:43:09.400 | feels like it's going to be a while. I don't know what you

00:43:13.840 | when do you think there would be demand for this space, sex? If

00:43:17.560 | you had to pick a year over and give us an over under?

00:43:21.000 | I mean, five years plus, I mean, just to give you some numbers, I

00:43:25.920 | think a healthy vacancy rate and an office market is five to 10%.

00:43:30.240 | A high vacancy rate in a city was considered like 15%. Like

00:43:35.520 | you wouldn't want to be an office investor in a market that

00:43:38.720 | have 15% vacancy, five to 10% was sort of the normal range. If

00:43:42.120 | you're under 5%, it was a super hot market. And then 10 to 15

00:43:45.520 | was sort of a not great market from an investor standpoint. So

00:43:49.880 | there are 30% plus. And like I said, it could get worse before

00:43:54.240 | it gets better. Because as leases roll, people are going to

00:43:56.560 | shed more space that they might not already be subleasing. So

00:44:00.880 | the real number might be like 40%. So I think it's like, yeah,

00:44:06.960 | it doesn't seem like a decade. It's a decade assuming that San

00:44:11.280 | Francisco gets his house in order. And companies come back

00:44:14.320 | speaking of new companies are created. And they don't

00:44:17.320 | completely wreck it. It's not clear to me that like things

00:44:19.320 | will go in the right direction.

00:44:20.360 | I mean, speaking of that, do we want to bring up this horrific

00:44:24.640 | bear spray attack now? You want to cue that up, Saks? I mean,

00:44:28.440 | we're like in full on Gotham City. Now. Now we have

00:44:31.760 | vigilantes.

00:44:32.680 | There was a story of a fire commissioner named Don

00:44:37.280 | Carminiani, who was beaten with a metal pipe by a gang of

00:44:41.800 | homeless addicts who were encamped in front of his

00:44:45.000 | mother's house. And apparently, they were harassing her and they

00:44:48.200 | were doing drugs, smoking drugs or whatever, right in front of

00:44:51.920 | not not pot. It was like,

00:44:53.320 | fentanyl, whatever, fentanyl, or meth or crack, something like a

00:44:57.360 | hard drug. And so what we know is he went down there, had words

00:45:02.640 | with them, but a beep, but a boop, you know, and they bashed

00:45:07.680 | him upside the head with a pipe. And now it turns out that he was

00:45:13.080 | accused by the defendant's lawyer, the one who assaulted

00:45:16.440 | him, so we don't really know what's true here, of using bear

00:45:19.320 | spray on them first. So the DA dropped charges. The lawyer for

00:45:23.320 | the defendant in that case is saying that he apparently was

00:45:26.320 | the perpetrator of these bear spray attacks on on homeless

00:45:31.440 | people going back a number of years, I guess there's a, like

00:45:34.520 | you said, pretty gnarly video of

00:45:36.240 | we don't know that.

00:45:39.240 | But obviously, the DA thought something was kind of hinky

00:45:43.800 | because they dropped charges against the the guy who

00:45:46.320 | assaulted him.

00:45:47.080 | Shouldn't the person who sprays the bear spray and the person

00:45:50.520 | who beat somebody with a pipe? Shouldn't both people?

00:45:53.000 | Yeah, yeah. Yeah, of course. Listen, there's video of

00:45:57.720 | somebody bear spraying homeless people. And that's clearly

00:45:59.560 | wrong. However, that was from a couple of years ago, the one

00:46:02.160 | that was released from 2021. We have video from the night that

00:46:06.640 | carbon Yanni was assaulted, that they were chasing him down there

00:46:12.040 | chasing him down. Yes, this is a metal pipe. And even if even if

00:46:15.960 | they were acting in self defense, you can't go chasing

00:46:18.360 | the guy to self defense more damage on exactly. That's

00:46:21.520 | vengeance. That's not self defense. Yes. So they took it

00:46:24.160 | out of that zone of self defense. And they were chasing

00:46:27.160 | after him. And if you saw what he looked like, after the

00:46:30.360 | attack, using deadly force, he could have been killed. And you

00:46:34.320 | know, if Donna gotten killed by the metal pipe, I don't think

00:46:38.080 | it'd be a defense that he bear sprayed them first. No, it just

00:46:41.720 | seems to me that would have been an excessive use of force. So

00:46:44.240 | yeah, but in any event, I mean, where the DA ended up on this,

00:46:46.880 | it was just a drop charges from that night. But they're gonna

00:46:51.720 | drop those charges. I think that that's going to be untenable.

00:46:54.360 | No, they're ready. They're ready to drop the charges. They have

00:46:56.760 | to. I mean, justice has to be blind. Correct. I mean, you're

00:47:01.320 | you're a trained lawyer here, we have to apply the law equally to

00:47:05.720 | the sadistic insane person who, wait a second, they arrested the

00:47:09.800 | guy who hosed the person down. Didn't they arrest them as well?

00:47:12.320 | I remember seeing a perp walk. Talked about that on a pre

00:47:14.360 | show. Anyway, it's Gotham City, folks. This has gone to pure

00:47:17.720 | Yeah, I don't think this just proves anything. I mean, again,

00:47:20.200 | what they're trying to say now is that because of the actions

00:47:23.440 | that Don took that San Francisco is safe, there's nothing to

00:47:26.520 | worry about. And these addicts, people who are encamped on the

00:47:29.760 | sidewalks doing drugs doing hard drugs, there's nothing to worry

00:47:32.840 | about, because somehow they were provoked by carbon Yanni. And I

00:47:36.960 | just think I agree with you that this is part of an overall

00:47:39.320 | pattern of chaos and lawlessness in the city. It is like Gotham

00:47:43.440 | City. So you know, it doesn't make me feel a lot better about

00:47:47.560 | what's happening on the streets.

00:47:48.640 | It's nuts.

00:47:49.880 | Timothy, you want to add something?

00:47:51.960 | I want free bird to riff on lab meat.

00:47:55.160 | Yes. Well, there was actually a story about this. I guess

00:47:59.000 | there's two types of lab. There's two types of mock meats.

00:48:02.440 | I've had the impossible burger. I've never craved an impossible

00:48:06.980 | burger. There's so many great burgers, you can get out there

00:48:08.880 | Shake Shack, five guys in and out. Why would I go to get this

00:48:11.200 | impossible burger unless I was doing it like vegan stuff. But

00:48:13.680 | then there was also supposed to be 3d printed meats. And this

00:48:16.560 | stuff seems to be taking forever. Where's this ad because

00:48:19.200 | there was a story in the Wall Street Journal about how poorly

00:48:21.920 | this is apparently going.

00:48:23.080 | So there's three categories of these alternative proteins to

00:48:31.000 | traditional animal protein. The first is these call it

00:48:36.320 | alternative proteins where you use things like soy protein, or

00:48:42.320 | pea protein beyond burger is a good example, they have a pea

00:48:44.920 | protein based burger. And so that category was kind of hot

00:48:50.600 | for a minute where everyone was like, oh, it's a it's an

00:48:52.480 | eco conscious decision, people will make the shift. And you

00:48:56.120 | know, beyond meat had this massive IPO and the stock went

00:48:58.760 | crazy. And someone said it was the biggest return ever for

00:49:01.120 | Kleiner Perkins, but it really was just taking plant protein,

00:49:04.560 | processing it and trying to make it sort of mimic the

00:49:06.800 | texture and flavor and taste of animal protein. And it's more

00:49:10.640 | expensive. So I've generally been fairly negative on whether

00:49:14.200 | that really moves the needle, right? The needle for me is can

00:49:17.080 | you replace animal proteins, traditionally, and stop using

00:49:20.480 | all this land and putting all this carbon into the atmosphere

00:49:23.280 | and all this water and all these resources that we use to make

00:49:25.600 | all these animal proteins, which I think is both kind of ethically

00:49:28.760 | incorrect, but also extraordinarily environmentally

00:49:30.840 | costly.

00:49:31.320 | Sorry, can I ask a question? qualifying? Do you think it's

00:49:33.680 | also important for it to not just replace natural products,

00:49:38.960 | despite all of those externalities you talked about

00:49:41.200 | with artificial products with chemicals and sugar?

00:49:43.720 | So, first of all, everything is a chemical. So that, you know,

00:49:47.640 | that I think the the categorization of, you know, all

00:49:51.320 | chemicals are bad is silly, because everything is made of

00:49:53.640 | chemicals. I think it's a question of are there bad things

00:49:56.760 | that are being put in there that's not good for your health

00:49:58.680 | to make it flavorful or whatever. And that that may or

00:50:01.800 | may not be the case. It's really product dependent. I don't think

00:50:03.760 | it's a good generalization.

00:50:04.920 | But do you so you think when I eat a salad, I'm just eating

00:50:07.800 | chemicals? It is chemicals. Yeah. Got it. But but happy

00:50:11.920 | ones, right? healthy chemicals.

00:50:13.560 | There's good in there are bad. Yeah, for sure.

00:50:16.240 | And then bad chemicals are in like sugary cereal.

00:50:18.960 | Like refined sugar is bad for sure. Right? That's a bad

00:50:21.400 | chemical.

00:50:22.000 | And I know I'm just I just want to understand how you just view

00:50:24.560 | it as a spectrum of chemicals, some good, some bad.

00:50:26.600 | Yeah, there's things that are good for you. There's good fats,

00:50:29.120 | there's bad fats, there's, there's, you know, and even in

00:50:31.880 | the category of sugar, some people say all sugars are bad.

00:50:34.040 | Some people say some sugars are better than others, as measured

00:50:37.520 | by the glycemic index, all you know, there's a lot of ways to

00:50:39.800 | kind of look at this stuff is beyond meat and these P ones.

00:50:42.560 | They're all processed, highly processed. They got a lot of

00:50:46.760 | salt, they got a lot of fat, right? They're not good for you.

00:50:49.480 | So the way that beyond and impossible and others have tried

00:50:52.800 | to make it taste good for people is they've added a lot of, you

00:50:55.920 | know, saturated fats, which is a way to drive the mouthfeel and

00:50:59.240 | make it taste good. But then a lot of doctors, the American

00:51:02.960 | Heart Association came out and said that those fats are really

00:51:05.200 | bad for your heart, and you shouldn't eat them. And also,

00:51:08.200 | there's been a general kind of consumer sentiment shift. So a

00:51:12.200 | couple years ago, these were the hottest products, it was like

00:51:14.640 | all the food ingredient companies were shifting to

00:51:16.920 | plant based proteins, and they were building plant based

00:51:19.360 | protein business categories. And it was this big hot thing. And

00:51:22.600 | then they came out and they're like, wait a second, this isn't

00:51:24.760 | going as we thought. What happens is people try them out.

00:51:27.760 | And they're like, yeah, that's a cool thing. I want to do good

00:51:29.760 | for the planet. But would I rather pay five bucks for a do

00:51:32.800 | good for the planet burger that kind of doesn't taste that good?

00:51:35.720 | Or would I rather pay three bucks for a burger that tastes

00:51:38.240 | really good? And what happens is,

00:51:39.920 | be be I've choose option B.

00:51:42.600 | Yeah. And so to most people, right. And so almost all people

00:51:45.360 | and I've that's the point of view I've always shared, I said,

00:51:47.440 | it's just, it's not going to win the hearts and minds of the

00:51:49.760 | world unless it's cheaper, and it's tastes better and

00:51:52.120 | healthier. And it's identical. Yeah. And doesn't damage your

00:51:54.600 | health doesn't make you worse. Exactly. So the more challenging

00:51:58.320 | technical solution is the other two categories. The second

00:52:01.120 | category is can you synthesize animal proteins using recombinant

00:52:05.680 | DNA. So this is where you take the DNA that codes for the

00:52:09.300 | protein, whether it's the milk protein, or the egg protein, or

00:52:12.320 | the cheese protein, and you put it in a bacterial cell or a yeast

00:52:15.840 | cell that are used to ferment that we used to make wine that

00:52:18.660 | we used to make beer, and they eat sugar, and then they spit

00:52:21.600 | out a product. And in the case of wine and beer, they eat

00:52:24.160 | sugar from grapes or for from malt or whatever, and they spit

00:52:27.560 | out alcohol, ethanol. And genetic was the first company to

00:52:31.920 | really pioneer recombinant DNA at a mass scale, they basically

00:52:35.400 | use recombinant DNA to make insulin. So they took the DNA

00:52:38.800 | from humans that codes for insulin, the gene for insulin,

00:52:41.680 | they put it in E. coli bacteria, and then they put the E. coli

00:52:44.600 | bacteria in a big tank, and the E. coli start to duplicate and

00:52:47.840 | they make all this insulin. And that's how we make all the

00:52:50.000 | world's insulin today is using that bio manufacturing process.

00:52:53.400 | And it's how we make all of biologic drugs, all antibody

00:52:56.240 | drugs are made this way. It's a $300 billion a year market just

00:52:59.520 | in biologic drugs. So when CRISPR kind of came about, in

00:53:03.360 | 2012, suddenly, the toolkit to go in and do a much better job

00:53:07.600 | and a much cheaper job of editing the genomes of little

00:53:10.240 | microbes to make a more efficient at making these

00:53:12.440 | proteins became standard. And everyone said, let's go use this

00:53:16.440 | new category of what's being called synthetic biology or

00:53:18.680 | symbiote to make all these animal proteins that we use

00:53:22.320 | animals to get today. So can I just ask the question is the

00:53:25.200 | idea that if you use recombinant DNA in this process, it would

00:53:28.720 | taste better and be healthier and all this chemically

00:53:31.120 | identical. So it's the exact same protein as you get.

00:53:34.680 | And I understand it. Yeah, the exact same under a microscope or

00:53:37.840 | whatever, but would it taste the same taste exact same totally

00:53:40.880 | exact same. So that's the whole doing. Do we know that? Or was

00:53:43.760 | that that was the guess? No, we know that it's the same protein

00:53:46.640 | to mod. So whether you get the protein from the cow, you get

00:53:48.880 | the protein from the yeast. So what's the issue? It's too

00:53:51.960 | expensive to do this process. So the key metric in that second

00:53:55.680 | category is productivity grams per liter per day, how well can

00:54:01.040 | you get that little microorganism to make that

00:54:03.200 | protein, the more protein it makes per day, the cheaper the

00:54:06.000 | price per protein, and we're still a far ways off from

00:54:09.080 | getting this to be price competitive. So that's a

00:54:11.880 | challenge category right now. There's a lot of I'm invested in

00:54:15.280 | a couple of companies in the space where we're trying to make

00:54:17.600 | it faster and cheaper to do that strain engineering to edit the

00:54:20.560 | genome up front and make them make those little cells more

00:54:23.160 | productive to bring the price per gram down and hopefully make

00:54:25.880 | it compete ultimately with the traditional market for eggs,

00:54:28.720 | cheese, milk, etc.

00:54:29.840 | But what is the constraint? Is it an energy constraint? Or is

00:54:32.840 | it natural biological incapability?

00:54:34.880 | No. So the great thing is, on a first principles basis, the

00:54:37.920 | biophysics indicates that this should make proteins cheaper.

00:54:41.600 | And that is good for the planet. It's good for human health. It's

00:54:44.120 | good for everything. We should be able to make eggs, cheese,

00:54:46.800 | milk, all this stuff exactly the same as what you get from an

00:54:49.280 | animal without the animal, because the biophysics of a

00:54:52.280 | single cell making it is better than the biophysics of a whole

00:54:54.880 | animal. Think about a chicken. It grows feathers, it clucks, it

00:54:58.200 | walks around, it has energy, it makes heat. So the chicken as a

00:55:01.400 | system is not that energy efficient. But a little cell

00:55:04.480 | that just eat sugar, and it's programmed to do one thing and

00:55:06.840 | one thing only eat sugar, make protein, eat sugar, make protein

00:55:09.680 | and spit as much of it out. You theoretically can make it way

00:55:12.320 | more efficient. Exactly. Now, we're making great progress, but

00:55:15.760 | we're not there yet. We're not a commodity price point.

00:55:17.840 | Why I'm trying to ask why where's the failure point?

00:55:20.520 | There's two failure points. Sorry, I should I should say

00:55:22.920 | there's three. The first is strain engineering, which is you

00:55:25.480 | want to shuffle all the other genes in the organism to stop

00:55:28.480 | doing things like growing a bigger cell wall. Or you know,

00:55:32.160 | taking your time to duplicate you want to change the genome of

00:55:35.000 | the cell to get it to do stuff faster. The second stage is

00:55:37.760 | process engineering. When you put that cell in a tank, you're

00:55:41.160 | changing the sugar, the methanol, the co2, the oxygen,

00:55:44.520 | the pH, everything about that tank and the condition of the

00:55:47.120 | tank has to be adjusted. So there's about 60 variables. And

00:55:50.320 | those 60 variables all need to be tuned and tweaked before you

00:55:53.200 | optimize the performance of production. The third category

00:55:56.560 | is the hardest which is scale manufacturing. There's about 100

00:56:00.160 | million liters of biomanufacturing capacity on

00:56:02.920 | earth today. 95 million liters is owned and operated by

00:56:06.680 | companies that use and when I say by manufacturing capacity,

00:56:09.440 | I'm talking about big stainless steel tanks, you pour water, you

00:56:12.720 | pour sugar, you pour your cells in, they make copies and they

00:56:15.520 | make your stuff. Of that 100 million liters 95 million is

00:56:19.000 | owned and operated by companies. 5 million is available for rent

00:56:22.480 | of that 5 million liters. 4 million is rented for its entire

00:56:26.160 | lifespan by some company, usually a biologic drug company,

00:56:28.800 | because very little of this is being done in food today. So

00:56:31.360 | there's only a million liters left to rent. And there's 200

00:56:34.160 | sin bio startups trying to make animal proteins. And they've all

00:56:37.000 | competed for this this capacity. So the capacity cost has gone up

00:56:40.280 | by about fourfold.

00:56:41.360 | But it sounds like the latter two, you can overcome with

00:56:45.560 | capital. But the first one is really bounded by science.

00:56:48.160 | It's more engineering, because what you track is kind of what's

00:56:51.240 | called the titer curve, which is grams per liter. And the more

00:56:54.000 | experiments you do, the higher that number goes. And so if you

00:56:57.320 | can increase your experimental rate,

00:56:58.880 | and the few the few grams that it does produce today, when when

00:57:02.040 | a normal person tastes it, they're like, Yep, this tastes

00:57:04.480 | the same as a Wagyu ribeye.

00:57:08.360 | No. So remember, I'm talking about proteins right now. I'm

00:57:11.200 | not talking about cellular meat, I want to talk about cellular

00:57:13.480 | meat last, which is the hardest category, which is what you're

00:57:16.760 | talking about. I'm talking about taking that protein and then

00:57:19.560 | using it to make a product like like a cheese, or, you know,

00:57:22.800 | using it as an egg replacer, that kind of stuff. It's the

00:57:24.600 | same protein as what you would get from eggs or milk or what

00:57:26.680 | have you. This all just sounds so hard. Well, it's a big

00:57:29.720 | problem. And it's a lot of money. So is it a problem? eggs

00:57:32.800 | alone are $200 billion a year. I mean, the methane released from

00:57:36.440 | cows is one of the largest contributors to global warming.

00:57:38.600 | It's a it's a real problem. Also, we're going to need to

00:57:42.040 | solve this jamath. If we're going to a lot of resource

00:57:43.920 | constraints, we're going to colonize Uranus, we're going to

00:57:46.600 | need to get food there. I just asked a question like if you if

00:57:49.840 | you go after the high emission categories first, do you give

00:57:52.680 | yourself room to leave these things because you're doing so

00:57:55.640 | much already? Just a question. Animal agriculture emissions are

00:58:00.440 | one of the largest and unfortunately, one of the

00:58:03.600 | biggest drivers because as people's GDP per capita

00:58:06.080 | increments, the first thing they spend money on is

00:58:08.320 | protein. I get it. I'm saying something different, which is if

00:58:10.560 | we just invented better heat pumps, you'd have industrial

00:58:13.200 | heating and cooling, which represents like almost a third

00:58:15.320 | of all greenhouse gas emissions, you get that off. And you give

00:58:19.280 | yourself a lot of time and space and room. And maybe you'd let

00:58:22.520 | the cows roam and belch and burp. Because the tape the meat

00:58:26.000 | just tastes better. And you don't have to spend a bunch of

00:58:27.800 | time and effort. I don't think it's an or I think it's an

00:58:29.480 | antelope. I think we should be doing all these things. And I

00:58:32.480 | think that I'm a big believer as you guys know, in markets. So

00:58:35.960 | I'm not a believer in transition for the sake of, you know,

00:58:40.120 | carbon saving, because people aren't going to pay a premium as

00:58:42.600 | we've seen with the kind of alternative meat. $15 people

00:58:46.840 | want cheaper hamburgers are not markets want cheaper, cheaper,

00:58:49.160 | cheaper. So if you can make protein cheaper, it's also a

00:58:51.920 | great ROI, you can make money doing this. And the market will

00:58:55.440 | buy it because it's cheaper protein. I just want to I just

00:58:59.160 | want to hit on this because we keep sidetracking a little bit.

00:59:01.080 | The third category is the one that the article was about,

00:59:03.240 | which is cellular meat. So cellular meat is where you're

00:59:06.000 | trying to make your Wagyu or your shrimp or your fish, you're

00:59:08.920 | trying to make cells, not just proteins, but entire cells. And

00:59:12.560 | those cells stick together and they look and cook and feel and

00:59:15.800 | taste like cellular meat, like like muscle, like what you eat

00:59:19.160 | when you eat fish or beef or whatever. And the problem there

00:59:23.800 | is you're trying to take a cell and cells normally grow on, you

00:59:28.000 | know, bones and on tissue. And so there's scaffolding and all

00:59:30.960 | these systems that hold all the cells together. And so to get

00:59:33.880 | cells to grow in a tank, and stick together and replicate

00:59:37.760 | without other cells signaling them turns out to be really

00:59:40.440 | expensive. There was an executive at Merck I spoke to a

00:59:42.600 | few months ago, and he said, we're going to sell fetal bovine

00:59:45.640 | serum, which is basically like this liquid that they get from

00:59:49.240 | the fetuses of cows. And this is how cellular meat started, they

00:59:53.040 | took a cell from a cow and they put it in a tank with fetal

00:59:55.600 | bovine serum, and the cell started to replicate and

00:59:58.040 | duplicate. And then they could take those cells and try and

01:00:00.320 | turn them into a beef into a burger and sell it or try it.

01:00:03.600 | That was the million dollar burger if you remember that a

01:00:05.480 | couple years ago. And fetal bovine serum market has gone

01:00:08.560 | through the roof because so many companies are trying to make

01:00:10.400 | cellular meat. And the Merck exec was like, we're going to

01:00:13.040 | sell a billion dollars of fetal bovine serum, and then we're

01:00:14.960 | going to sell zero, because no one's gonna be able to make

01:00:17.280 | money doing this. It's just impossible. You're not gonna

01:00:19.080 | sell $500 burgers. So the technical challenge there is you

01:00:22.640 | have to edit the cells to get them to duplicate, you have to

01:00:25.280 | get them to grow in suspension, meaning in a tank, instead of

01:00:28.400 | growing on bones and growing next to each other and

01:00:30.240 | scaffolding. And then you have to change the feedstock so that

01:00:33.520 | you're creating all these other proteins and signaling factors

01:00:36.120 | and hormones that you pour into the tank that trigger those

01:00:39.160 | cells to grow. Is there any chance that after all this, it's

01:00:41.600 | it actually just tastes slightly different, or better? It may?

01:00:45.440 | Yeah, it may, but likely not. I mean, let's be honest, these

01:00:48.360 | are you're taking a cow cell or a salmon cell. Now, the reason I

01:00:52.360 | say this is that I don't know if you I mean, you don't eat meat.

01:00:54.880 | So maybe you don't know this. But depending on where the water

01:00:59.440 | that they drink, the actual grass that they eat, the meat

01:01:02.840 | does taste different. And that's part of the

01:01:05.920 | whether the cow is massage.

01:01:07.800 | I mean, look at the acorn fed cows that we used to have at

01:01:12.840 | poker before austerity measures life was so good in 2021. Well,

01:01:17.160 | that's that. No, we can't get it anymore. Yeah, I know. We're on

01:01:20.800 | a budget. I get it. No, not us. We can't get it anymore. Because

01:01:23.600 | they sell it through one channel. But yeah, like, so good.

01:01:28.120 | Yeah, the variation you're talking about is obviously at an

01:01:31.200 | echelon and a class of eating Chamath. It's probably not

01:01:33.640 | mainstay, like, you know, the $30,000 a year McDonald's burger

01:01:37.920 | and nugget eater is probably happy to take a chicken nugget

01:01:42.000 | that tastes I disagree with you. Because if you go into Whole

01:01:43.840 | Foods, and you actually buy like a USDA top sirloin, there's a

01:01:47.640 | certain taste that it has that things that are not USDA don't

01:01:51.800 | have. So even even at like the most basic layer of the food

01:01:55.640 | pyramid, you can differentiate on taste based on the same. This

01:01:59.720 | is why I'm saying I think it's just a very complicated, long

01:02:03.280 | drawn out process. And I just wonder if the people that are in

01:02:05.840 | these businesses, if they actually love food or not, I

01:02:09.080 | understand why they love the science, I get it. And why they

01:02:11.880 | would love to save the planet. I get that too. But unless some of

01:02:15.200 | these people are, are also food lovers, they're going to miss I

01:02:18.800 | think the thing where it all dies. Anyways,

01:02:20.520 | I just want to restate again, for the final time, these are

01:02:24.640 | these are identical cells and identical proteins to what you're

01:02:28.600 | getting from the animal. So they are not like what we talked

01:02:31.120 | about in that first category, where you're trying to get other

01:02:33.480 | stuff to sort of taste like meat, you're literally trying to

01:02:36.520 | create the meat and create the protein using these systems. And

01:02:41.240 | we're just trying to tell you that salmon, two pieces of

01:02:44.080 | salmon can taste totally different depending on where it

01:02:46.320 | swam. Right. And I guess what I could say is, yeah, you could

01:02:50.000 | probably adjust the conditions in the tank if needed to change

01:02:52.560 | the characteristic.

01:02:54.160 | This is my point, like you don't even know where to start. How is

01:02:56.920 | it the fucking kelp in the Atlantic Ocean? Like, what are

01:03:00.200 | you changing?

01:03:00.800 | Look, I don't know what kelp effects on the salmon. I don't

01:03:03.600 | know if salmon,

01:03:04.440 | but this is my point. Nobody does Atlantic Ocean. This is why

01:03:07.600 | we pay so much for the acorn fed beef.

01:03:09.720 | I get it. But most beef is not kelp from the Atlantic Ocean fed

01:03:13.800 | salmon. It's animals grown in very large feedlots fed corn and

01:03:17.480 | water. That's it. Let me just say that again. 90% 95% of

01:03:21.560 | animal protein consumed is cows, pigs and chickens grown in

01:03:25.920 | feedlots fed corn and soybeans and water. And that's it.

01:03:28.960 | Right. But if you if you go to different countries and taste

01:03:31.880 | the meat that's fed in that exact same way, it tastes

01:03:34.400 | different. So for example, if you go to Argentina,

01:03:36.680 | I appreciate what you're saying. But the point you can recreate

01:03:41.440 | whatever the system is that you're talking about. So I want

01:03:43.600 | to just get back to the unit economics, the cost per

01:03:46.040 | kilogram or the cost per gram of the protein, we are still many

01:03:49.680 | orders of magnitude away on cellular meat. So the problems

01:03:52.440 | you're laying out are really down the road problems of

01:03:55.040 | optimization. Right now we've got more fundamental problems on

01:03:57.960 | how do you actually get this stuff to be cost competitive.

01:04:00.040 | Now fortunately, the tools of CRISPR and since CRISPR Cas9

01:04:03.160 | came out 10 years ago, there are now hundreds of variants that

01:04:06.120 | are open source, IP free royalty free and use very broadly and

01:04:10.040 | generally and DNA sequencing costs continue to decline. Those

01:04:12.960 | are the two basic tools that are being used by biochemists and

01:04:16.720 | engineers to do rapid evolutionary iteration needed to

01:04:20.840 | produce the recombinant production of proteins to

01:04:23.280 | produce the new cells to produce the feedstock for those tanks.

01:04:25.920 | And there's a cost curve that we're trying to get over. It's

01:04:29.040 | not happening overnight, hundreds of millions of dollars

01:04:31.960 | and in several cases, billions of dollars have gone into these

01:04:34.160 | systems. And it's very likely that these companies may need

01:04:37.160 | several more years and several billion dollars, we are going to

01:04:40.200 | get there, the technology is progressing, the rate of

01:04:43.080 | progress is a little slower. And it's a little more challenged,

01:04:46.040 | I think, then the first round of investors had hoped. But I do

01:04:49.840 | think that scientifically and first principles, it is

01:04:52.440 | absolutely feasible. It's a function of engineering our way

01:04:55.080 | there to giving Chamath and everyone else that eats burgers

01:04:58.320 | and chicken nuggets, everything that they want, hopefully at a

01:05:00.720 | lower price.

01:05:01.320 | If you put it on the curve of self driving cars, you know, we

01:05:04.440 | have crews doing some automated taxis in like a very constrained

01:05:08.200 | area in San Francisco, but we don't have it everywhere. Where

01:05:11.640 | do you put this on the curve?

01:05:12.680 | It's a great question. So so what's happened, by the way, as

01:05:15.440 | we've gotten down the cost curve, we are unlocking new

01:05:18.800 | markets. So new products are being produced existing proteins

01:05:22.920 | that are come from animals. There's a good example of a

01:05:24.880 | product called pepsin. It's, it's extracted from pigs today,

01:05:29.040 | it's very expensive, similar to how we used to make insulin. And

01:05:31.840 | we're replacing the sourcing of that product, we replaced

01:05:34.600 | insulin, which we used to get from pig spleens, we now make it

01:05:38.040 | recombinantly, we're now replacing pepsin, we're

01:05:40.640 | replacing the the rennet that's used to make cheese. So as we

01:05:44.480 | move down the cost curve, these high were called high value

01:05:47.040 | proteins are the first to fall those markets collapse because

01:05:50.280 | we now make them recombinantly, they were sorry, they collapse

01:05:52.680 | in price, because they're now cheaper using recombinant

01:05:55.520 | systems instead of taking them from animals. And eventually

01:05:58.040 | we'll get to that cost curve where they're ubiquitous for all

01:06:00.200 | proteins, or for all types of cells. In the meantime, they're

01:06:03.120 | pretty sizable markets to go after these are multi billion

01:06:06.120 | dollar markets that are getting knocked down. We don't talk

01:06:08.400 | about it every day, it doesn't show up in the news. But it's

01:06:10.880 | really profound and interesting to see that this technology is

01:06:14.160 | working. It's overturning multi billion dollar markets. It's

01:06:17.600 | making progress. And you know, hopefully it'll, it'll get to

01:06:20.440 | the point that you know, everything from the chicken

01:06:22.480 | nugget to the kelp fed salmon can have you guys tried to be on

01:06:27.280 | burger or an impossible burger? I've had it. I've tried them a

01:06:30.520 | long time ago, but I've not tried them recently. They're

01:06:33.320 | like, it's like eating something mushy. That's 60% of average

01:06:38.920 | hamburger, it's not worth paying double for certainly, for

01:06:43.160 | somebody who's a hamburger eater. So while we were talking,

01:06:47.960 | by the way, Amazon's results came out, they crushed it.

01:06:51.040 | earnings per share of 31 cents, versus 11. And stocks, 10%, 10%

01:06:59.320 | off hours, and it was up 4% today, where the insider

01:07:03.000 | traders make sense. How do you feel about your recession

01:07:05.280 | prediction?

01:07:05.800 | I'm sticking by it. I think we're still going to recession,

01:07:10.080 | but it is an interesting paradox here. So I think there's only a

01:07:13.400 | couple of possibilities either. Tech is sort of immune, or they

01:07:19.120 | forecast down so much they were so conservative in their

01:07:22.040 | forecast thinking we're going to be in a recession that it was

01:07:25.000 | easy to beat. Or look, I could be wrong about the recession,

01:07:28.760 | but palacing it. And palacing if it's not a recession, it's gonna

01:07:32.840 | be less than 1% growth. It's gonna be around a year to

01:07:35.240 | recession. So it's not credible. So I'm not revising my

01:07:38.720 | forecast. Well, I think pal is credible when he's giving us bad

01:07:42.920 | news, because their incentive is always to fluff it up and make

01:07:46.000 | it sound better than it is. So when he's telling you, things

01:07:48.680 | look bad, maybe they're looking really bad.

01:07:50.560 | I don't know, man.

01:07:53.160 | But look, it's a tale of two cities right now. I mean, the

01:07:55.840 | big tech companies seem to be doing really well. So it's

01:07:58.800 | definitely a paradox.

01:07:59.880 | Yeah. All right, everybody.

01:08:02.640 | Well, the whole RFK thing.

01:08:03.880 | Okay, that's a good topic. Yeah, great topic. Go ahead. I

01:08:07.120 | think we should tell people like what he's about. Where are all

01:08:10.400 | yours? I think he gave a terrific announcement speech.

01:08:13.440 | Okay. And just to give you some background for the younger

01:08:15.600 | viewers who may not know. So Robert F. Kennedy, his father

01:08:20.520 | ran for the Democratic nomination in 1968. After his

01:08:23.200 | brother, john F. Kennedy had been president was assassinated

01:08:26.120 | as we know, in the early 1960s. What happened is at this time,

01:08:31.200 | before the 1968 election, Linda B. Johnson was the incumbent

01:08:34.440 | Democratic president. And everyone thought that he'd be

01:08:37.840 | the party's nominee, and he was going to get reelected. And he

01:08:40.320 | was brought down by an extremely unpopular war, the Vietnam War.

01:08:43.600 | And it was RFK Jr. His father, who was a great critic of the

01:08:47.760 | Vietnam War, and he ran for the Democratic nomination. And I

01:08:51.200 | think that he very likely would have gotten it on the night that

01:08:54.120 | he won the California primary, he was assassinated by Sir Hans

01:08:57.960 | Sirhan. Right? Yeah, if you go back and look at the things that

01:09:00.600 | he was saying in that campaign, he really was saying a lot of

01:09:04.520 | beautiful things that are in his son's ad that I think would be

01:09:08.920 | worth playing here. But I think you have maybe the setup for a

01:09:12.400 | similar situation here. You've got an incumbent Democratic

01:09:14.920 | president, who is sort of not that popular. He's sort of old

01:09:19.440 | and out of it and incoherent. He's presiding over a war that

01:09:22.600 | is rapidly becoming a debacle. You don't hear so much about the

01:09:26.120 | spring counter offensive anymore. These new Pentagon

01:09:29.160 | papers that were leaked show that the Ukrainian casualties

01:09:32.240 | are at least five times greater than they've been publicly

01:09:34.840 | admitting. It looks like Russia certainly not losing the war the

01:09:38.560 | way they used to be they've captured 90% of Bokmah, which

01:09:41.280 | has been the most violent, bloody battle of the war. And

01:09:44.360 | Biden at this point has no strategy to bring that to an

01:09:46.480 | end. In fact, he's rejected multiple attempts at a peace

01:09:51.560 | deal. And so now it looks like it's the Chinese who are in the

01:09:54.720 | driver's seat, potentially putting together some sort of

01:09:57.200 | dramatic settlement. So I think listen, if the economy ends up

01:10:00.800 | going into recession, and this war ends up becoming the fiasco

01:10:03.800 | that it's increasingly looking like you could have a setup

01:10:06.280 | like 1968, where people are wondering why the hell is this

01:10:09.720 | guy or nominee. And let me tell you, RFK juniors already pulling

01:10:13.360 | at 19%, which I think is pretty good, considering he just came

01:10:16.920 | out of the gate, and people don't even know the substance of

01:10:19.560 | his campaign yet. Marianne Williamson's at 9%. So if she

01:10:22.960 | dropped out, you'd be at 28% for the alternative. And I think he

01:10:27.360 | could go up from here. And I think if you if you watch the

01:10:30.160 | speech he gave, I thought there was a lot of really beautiful

01:10:34.200 | sentiments in there. He's very good. He said that Biden has

01:10:37.080 | made Ukraine a pawn in a geopolitical battle that has

01:10:40.600 | put the flower of Ukraine's youth into an abattoir of death

01:10:43.640 | in order to exhaust Russia. He channeled America's anti war

01:10:47.920 | traditions, he quoted john Quincy Adams, that America should

01:10:50.960 | not go abroad in search of monsters to destroy. He quoted

01:10:53.960 | Martin Luther King Jr. There is a direct link between poverty

01:10:57.280 | and violence and oppression at home and war abroad. He talked

01:11:02.000 | about the role of the CIA during his uncle's administration

01:11:06.600 | where he said that john F. Kennedy eventually realized that

01:11:11.280 | the purpose the CIA had become to create a steady pipeline of

01:11:15.000 | wars to feed the military industrial complex. And he talks

01:11:18.320 | about how JFK came to distrust the CIA and realize that it was

01:11:23.040 | lying to him. And the biggest applause line of his speech was

01:11:26.360 | when he quoted JFK approvingly saying that he wanted to take

01:11:29.960 | the CIA and shatter it into 1000 pieces and scatter it to the

01:11:33.520 | winds. And this very same week that he gave the speech, we

01:11:36.360 | found out that five former CIA directors had participated in a

01:11:41.400 | giant hoax on the American people by claiming that this

01:11:44.160 | Hunter Biden story was Russian disinformation. They knew it was

01:11:47.560 | not. They knew it was not. The information on the hard drive

01:11:51.200 | was real. It showed that Hunter Biden received multimillion

01:11:54.400 | dollar payments from foreign governments, including China and

01:11:58.720 | Ukraine. Okay. And regardless of what you think of that story,

01:12:03.120 | it should not have been suppressed by social media. And

01:12:05.400 | it certainly should not have been suppressed in a psyop by 51

01:12:09.680 | former intelligence officials, including five former directors

01:12:14.120 | of the CIA. And if that's the way they're going to behave,

01:12:16.400 | they're going to meddle in American politics that way. I

01:12:18.880 | think we do need to start over we do need to ask what's going

01:12:21.080 | on with the security state. They're not supposed to be

01:12:22.480 | meddling in American politics that way. So I think if this is

01:12:26.840 | the way they're going to act, I say shatter away, scatter that

01:12:29.960 | thing into 1000 pieces.

01:12:31.600 | Hey, it's Catholic. I'll vote for him.

01:12:33.280 | And he's called out the insanity of COVID lockdowns and man.

01:12:39.440 | And that's the thing that he's I guess that's the big

01:12:42.000 | controversy is he's anti he's an anti vaxxer. I guess that's

01:12:45.360 | the one thing they're trying to position him as and he does a

01:12:48.160 | little bit of conspiracy theories. So listen, if you go

01:12:52.360 | back and look at his record, he was an environmental activist

01:12:54.840 | for most of his career. He did the worst project in New York

01:12:57.240 | where they basically bought the land along the Hudson. I

01:12:59.920 | remember I've had some events for it. They wanted to clean the

01:13:02.600 | Hudson up. And they just bought the land and didn't people

01:13:06.120 | donated the land and they bought it, they raised money. And the

01:13:08.960 | Hudson today has like, you know, it's it's flourishing. And he's

01:13:14.920 | directly responsible for that.

01:13:16.080 | He was a big critic of the way that corporate greed could lead

01:13:18.560 | certain big companies to engage in environmental pollution. And

01:13:21.680 | at a certain point, he realized that big pharma had a similar

01:13:24.800 | incentive. Now, I don't know if he is right about those

01:13:27.240 | vaccines. But I do know that he's right in the case of COVID.

01:13:29.840 | They had incentive to push this dubious RNA shot on us so that

01:13:35.480 | we get boosted a zillion times. And he's right about that. He

01:13:38.720 | was right about the fact that this should never have been

01:13:40.440 | mandated. We shouldn't have the lockdowns. And you know what in

01:13:43.080 | his nomination speech, or his declaration, the word vaccine

01:13:47.200 | was only mentioned once. So this is not what his campaign is

01:13:49.680 | about. I look forward to having a month.

01:13:51.320 | Yeah. And to be honest, I mean, look at all the other things

01:13:55.640 | that were deemed to be conspiracy theories that ended

01:13:57.760 | up being true. Oh, yeah.

01:13:59.040 | Last monster.

01:14:00.600 | Not that

01:14:02.400 | he go either way. It could be embarrassing. Let me ask you

01:14:06.360 | this, axe. If it was him versus Trump, who do you vote for?

01:14:08.720 | Well, I'm gonna I'm gonna reserve versus Trump sex. I'm

01:14:13.920 | not gonna take position on the general yet. But but in in the

01:14:16.360 | democratic primary, I'm definitely endorsing RFK Jr. in

01:14:19.760 | the democratic primary.

01:14:20.600 | Okay, I'm

01:14:22.760 | voting the democratic primary.

01:14:24.480 | I would if I could, I'll do an event.

01:14:26.960 | All right, everybody. All the amazing people who got together

01:14:30.600 | for the episode 125. Unbelievable over 40 or 50 of

01:14:34.760 | them. Ray, great job.

01:14:35.880 | Shout out to Ray.

01:14:37.320 | Shout out to Ray.

01:14:38.160 | I dialed into a bunch of them. And I think

01:14:40.760 | it's great Europe and I don't know all over the place.

01:14:44.920 | No one got robbed or mugged or bear.

01:14:46.680 | Hopefully I don't know if they did any in San Francisco. There's

01:14:49.000 | no bear spray in since that's good.

01:14:51.400 | They turn up to Marina.

01:14:53.320 | For the Sultan of science, the dictator himself and the

01:15:00.400 | mouthfeel.

01:15:01.840 | And rain man, I am the world's greatest moderator. We'll see

01:15:08.000 | you next time. Everybody.

01:15:09.160 | Love you boys. Bye bye.

01:15:10.520 | Rain Man David

01:15:20.480 | We open sources to the fans and they've just gone crazy.

01:15:23.320 | Love you.

01:15:24.320 | Westside queen of

01:15:25.320 | besties are

01:15:33.560 | dog taking a notice your driveway.

01:15:37.520 | We should all just get a room and just have one big huge orgy

01:15:45.920 | because they're all just like this like sexual tension that

01:15:48.800 | they just need to release.

01:15:50.680 | What you're about to be your feet.

01:15:54.480 | Feet.

01:15:55.760 | We need to get merch.

01:15:57.960 | I'm going all in. I'm going all in.

01:16:07.760 | [THEME MUSIC]

01:16:09.500 | [BLANK_AUDIO]

E126: Big Tech blow-out, Powell’s recession warning, lab-grown meat, RFK Jr shakes up race & more

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