Trump's Cabinet, Google's Quantum Chip, Apple's iOS Flop, TikTok Ban, State of VC with Keith Rabois

00:00:00.000 | All right, everybody, welcome back to the number one podcast

00:00:02.700 | in the world, the all in podcast with me again today to mock

00:00:06.560 | polyhypertia. Your chairman dictator. How you doing,

00:00:10.560 | brother? How you feeling?

00:00:11.480 | Doing great. Fresh off the holiday spectacular.

00:00:14.840 | Good times. And then getting ready for a little ski. You and

00:00:19.400 | I will be doing a little skiing together with Friedberg. That'll

00:00:21.760 | be quite nice.

00:00:22.520 | Friedberg. I don't think you've skied with me and Jason. Jason

00:00:26.560 | is an excellent skier. I mean,

00:00:28.400 | I've heard his for Jason, I don't think I have. His brother

00:00:32.360 | is excellent, too. They're both Josh. The Black Bomber is good.

00:00:35.120 | Yeah, yeah. Shout out to Josh. The Black Bomber. He's got

00:00:39.920 | skiing hips. They kind of shift left, right. Yeah. It's kind of

00:00:44.600 | like when I went to the hips are wider than the shoulders. Yeah.

00:00:46.720 | It reminds me of I went to the Tom Ford. I went when I went to

00:00:51.240 | Tom Ford to get my suit. I'll do that in a second. But with us

00:00:53.720 | again, of course, you're cackling Sultan of science.

00:00:56.560 | Friedberg, how are you doing? Have you guys seen that clip of

00:00:59.040 | the guy with the fake bomb that runs around the city? Yes, with

00:01:02.280 | security guards. It's like some sort of a crypto put on or

00:01:05.000 | something. It's hilarious. He's got like a big Brazilian butt

00:01:09.760 | and he just runs around in tight catches. Can you find a clip of

00:01:13.720 | this guy? Oh my God, it's so ridiculous. So funny. All right,

00:01:16.720 | with us the cackling with his afterglow from the holiday

00:01:20.560 | spectacular. Let's call it what it is. It's the Christmas

00:01:23.160 | spectacular. We're gonna pick a side Friedberg. How did you like

00:01:27.280 | our Christmas? Are you being anti semitic? Bro? How dare you?

00:01:30.640 | How dare you? You can have the Hanukkah special with your two

00:01:33.600 | specials. And now with us in the red throne. It's fit sacks. It

00:01:39.920 | is stylish sacks. It is goes to work every day in venture sacks.

00:01:45.440 | His name is Rob boy. How are you my brother? Welcome.

00:01:50.320 | Jason. Happy to be here. You know, it's great being more fit

00:01:54.800 | and more fashionable that socks is a pretty low bar. So I'm

00:01:58.840 | really excited to be with

00:02:00.160 | rain man David.

00:02:18.000 | And as we love about you, you've got a little American

00:02:22.600 | exceptionalism supremacy. Dare I say, you don't f with

00:02:28.240 | dictators. That's true. You don't have with them. Yeah, I

00:02:31.040 | don't really love dictators. They're not good for society.

00:02:33.560 | They're not good for America. But you know, it's not always

00:02:36.440 | America's job to fix all of that. All right. Well, what

00:02:39.520 | about running companies? Should company CEOs be dictators? Yes,

00:02:43.360 | actually. So I believe in the founder mode, the Brian Chesky

00:02:46.720 | founder mode, I held a conference in New York recently

00:02:49.000 | that Brian was nice enough to speak out called hiring the art

00:02:51.800 | of hiring for founder mode. So specifically for people who

00:02:55.360 | subscribe founders that subscribe to that view, how do

00:02:58.200 | you hire people? And how is that different than what you would

00:03:00.280 | hire in a standard, you know, monstrosity of a company like

00:03:03.600 | Google or something?

00:03:04.480 | Yeah, good founder mode in New York, by the way, just as

00:03:07.440 | history as I remember correctly, lots of good founder mode in New

00:03:10.720 | York. Hey, Cal, do you want to give Keith's background? Well,

00:03:12.960 | the audience, of course, went to Stanford with the boys, sacks,

00:03:17.840 | and Peter Thiel went on to do PayPal. He had a stint at

00:03:21.240 | Square. He started a bunch of other founders fund. He was he

00:03:26.360 | worked, he went to LinkedIn. That's how it all started.

00:03:29.720 | LinkedIn was pretty key. Like read left PayPal started

00:03:32.440 | LinkedIn. So yes, that's true. And then after that, I went back

00:03:37.360 | with back selection from PayPal days to slide, which is on the

00:03:40.400 | outsheet of history. We don't have to talk about that. But

00:03:42.560 | then I did jump into Square as the 20th employee and helped

00:03:46.160 | build a pretty good company.

00:03:47.200 | Yeah. And then founders.

00:03:49.320 | became lazy, you know, decided to be VC in 2013. Spent six

00:03:56.840 | years of coastal ventures by the founders fund last year, almost

00:04:00.520 | last year now.

00:04:01.320 | Before we jump in, I actually have a question for you.

00:04:03.840 | Starting already.

00:04:05.240 | How does that happen? Keith? How do you? You're at founders?

00:04:09.840 | Sorry, and then you get what like, what pulled you to go and

00:04:15.280 | work with the note? And then what pulled you back? Like, how

00:04:17.360 | does that process work? Because these things are typically meant

00:04:20.440 | to be sort of forever jobs.

00:04:21.920 | That's true. So I, you know, had the benefit of having the note

00:04:25.040 | on the board of Square, which I think is typically how

00:04:28.360 | executives wind up turning into VCs, is you forge a relationship

00:04:33.120 | with board members. So like, for example, Roloff Bote, who runs

00:04:35.880 | Sequoia, had Mike Moritz on his board, Roloff was our CFO at

00:04:39.760 | PayPal, and Mike recruited him. So that's a very common same

00:04:43.080 | thing. Ravi at Sequoia today was the COO and CFO of Instacart.

00:04:48.240 | Again, same thing, Mike recruited him into Sequoia. So I

00:04:50.800 | think that's typically how people become VCs. I always knew

00:04:54.360 | I wanted to be a VC since 2003. I was a very active angel

00:04:57.720 | investor, as you know, even when I was, you know, concentrating

00:05:00.760 | on all these other jobs, I was writing a lot of checks. And so

00:05:03.640 | anybody who's writing a lot of active angel checks probably has

00:05:06.200 | the back of their mind one day, I might want to be a

00:05:08.160 | professional investor. We could talk about the merits or

00:05:10.400 | demerits of that, but like the goal was pretty clear in my

00:05:13.440 | mind. And then at some point, I think you have to make a

00:05:16.840 | decision. What do you want to be in life? You know, venture has

00:05:22.240 | long time horizons, it is a job for life, like 15-20 years, is

00:05:25.800 | pretty much what you have to commit to. So you don't really

00:05:27.920 | want to start venture when you get too old, because 20 years,

00:05:31.320 | you know, you'll be like Donald Trump age.

00:05:33.080 | Yeah.

00:05:35.240 | So I can run for president in 25 years or something.

00:05:39.240 | Keith, why did you leave Founders Fund to go to COSA?

00:05:42.600 | So COSA was great. I spent six years there. The truthful

00:05:46.160 | reason why I left, it's kind of funny given COVID and how

00:05:49.720 | history changes. I hated commuting a Sand Hill Road every

00:05:52.800 | day. We were one office, period, in office every single day. And

00:05:58.520 | I felt like the future of investing was more in San

00:06:01.760 | Francisco, than in Palo Alto at the time. And I just despise

00:06:06.160 | sitting in a car 45 minutes each direction. Turns out, you know,

00:06:09.400 | COVID changed everything, how people do their work, like we're

00:06:11.880 | recording this by Zoom. Before COVID, we'd probably all be in

00:06:14.880 | the same studio recording a podcast like this. And so, but

00:06:18.480 | Vinod and the team was very inflexible about it and Founders

00:06:21.400 | Fund was located in the city. Obviously, I knew Peter since

00:06:24.080 | college, as Jason alluded to. And I decided that, you know,

00:06:27.600 | it was better for me. I remember talking to Sam Altman. And I

00:06:30.400 | said, "Am I crazy for changing funds, mostly on a commute

00:06:33.240 | basis?" And Sam said, "You're human. And every single study of

00:06:36.520 | human happiness is, it's inversely correlated to your

00:06:39.200 | commute time." He's like, "There's nothing wrong with

00:06:41.080 | being human." In any event, there are a lot of similarities

00:06:44.960 | between FF and KV. Both are great funds that have put up,

00:06:48.640 | you know, incredible returns, have funded iconic founders and

00:06:52.360 | companies, but they're very different. KV is involved as

00:06:55.960 | early as possible. And FF is a momentum investor and is maybe

00:06:59.080 | the best on the planet at being a momentum investor. So almost

00:07:02.880 | every successful investment of Founders Fund over eight funds

00:07:06.960 | was invested at $500 million or more entry valuation. And almost

00:07:11.720 | every single investment at KV in eight funds was like the seed or

00:07:16.160 | Series A investment, with very few exceptions ever. And so

00:07:20.240 | Anduril and Ramp were the only exceptions at Founders Fund. And

00:07:24.280 | at KV, the only exception would be Stripe, which I led in, you

00:07:28.080 | know, 2013 or so, which was an order of magnitude higher

00:07:31.720 | valuation than any KV investment, initial investment

00:07:34.400 | ever. So KV is much more an input driven organization.

00:07:37.760 | Founders Fund is much more output driven. And you know,

00:07:40.000 | there's great technology companies that are input driven,

00:07:42.000 | think Amazon, Apple, and there's great technology companies that

00:07:44.880 | are output driven. So you can choose, but certain people are

00:07:48.160 | going to be better in some environments and other people

00:07:49.960 | are going to thrive, you know, in other environments. I fit in

00:07:53.120 | really, really well at KV.

00:07:54.880 | You enjoy the early stage, you enjoy year zero, year one, year

00:07:58.200 | two.

00:07:58.560 | Well, I am very good at it. You know, I think I prefer to invest

00:08:03.200 | as early as possible on a keynote deck only. Like, if I

00:08:06.040 | meet a founder, and there's a keynote deck, there's no

00:08:07.760 | product, there's no metrics. That's my sweet spot. Because I

00:08:10.200 | also know nobody else in venture is good at that. Nobody else is

00:08:13.240 | still active in venture.

00:08:14.640 | What's the secret? What's the secret from a keynote to a

00:08:17.360 | check?

00:08:17.640 | It comes down to founder assessment. At the end of the

00:08:19.560 | day, the only data point is, is this founder capable of building

00:08:22.880 | an iconic company, period. And I prefer to compete when there's

00:08:26.000 | no metrics, because you all the metrics reduce confuse you. That

00:08:29.200 | said, there's a lot of investors who are very good once there's

00:08:32.120 | product metrics, financial metrics. And so I can compete

00:08:34.960 | with people who are pretty good at what they do. So I'd prefer

00:08:36.920 | to go as early as possible. And then secondly, I like company

00:08:39.520 | building, like I think part of my role is to help the founder

00:08:43.160 | increase the amplitude or probability of success. And I

00:08:46.480 | enjoy that at FF, that's very controversial.

00:08:49.440 | Yeah, right. Yeah, the founder reigns supreme, and everybody

00:08:53.160 | else is there to get out of the way, right.

00:08:54.800 | I've had both KV and FF as investors, lead investors in

00:08:59.120 | both climate and at Ohalo now. So I know both firms really well.

00:09:02.640 | And it's really I always people always ask me about the

00:09:04.480 | difference between the two. That's always what I get to. It's

00:09:06.440 | like founders fund, they have this kind of mantra, they find

00:09:09.480 | great founders and just get out of the way, let them run. And

00:09:12.280 | they don't want to be helpful. That's not their objective. They

00:09:14.600 | feel like if they have to be helpful, it's not the kind of

00:09:16.360 | founder, I mean, keep obviously speaking outside of yourself.

00:09:20.000 | And then at coastal, as you know, Vinod has been extremely

00:09:23.720 | and the whole team there, especially climate and always

00:09:27.000 | have always been extremely helpful. So adding board

00:09:29.480 | members, introducing commercial partners being like very

00:09:31.960 | traditionally proactive, participatory VCs on the board,

00:09:36.440 | very different, both very valuable when I had a board

00:09:39.920 | issue at founders fund. And there were some board members

00:09:43.160 | that did not like my strategy, they had issues with what I was

00:09:46.120 | doing with the company climate corp at the time. Founders fund

00:09:50.080 | actually stepped up and protected me. And they got the

00:09:53.400 | board the rest of the board together to protect me in a way

00:09:56.080 | that was like actually at a very kind of crucial moment for the

00:09:58.640 | for the business. And as a result, we had a massive exit

00:10:01.800 | within a year.

00:10:02.360 | I saw Brian Singerman is leaving. So does anybody know

00:10:06.800 | which ambassadorship he's taking?

00:10:08.400 | I mean, the timing's a little interesting, is it not?

00:10:12.120 | I don't know. He's got to compete with our friend Kenny

00:10:14.720 | Howery. Yeah, Ken Howery. Where's he off to? Hopefully

00:10:18.880 | some great destination. I'm sure this time. Okay, Sweden's a

00:10:23.920 | little bit much. I'll send him my wishlist for you. Yeah, let's

00:10:27.560 | go. Like maybe like, is there like a Turks and Caicos or

00:10:30.680 | something? embassy tour, we should do an embassy tour this

00:10:32.760 | year. St. Barts. They have an embassy there. St. Barts. Yeah,

00:10:35.400 | that's a great idea. Don't unfortunately, it's a French

00:10:37.920 | protectorate. But

00:10:38.880 | well, you know what, everything's on the table. Now

00:10:41.720 | we could make them the 51st, second, third or fourth state

00:10:44.520 | and we're in the game right now. Canada's coming on board.

00:10:47.160 | Yeah, Keith, did you not want to roll in the administration

00:10:49.880 | yourself?

00:10:50.120 | Oh, you know, the thinking I love politics. If you follow my

00:10:53.640 | Twitter feed, I pay a lot of attention. I used to be

00:10:56.160 | involved in politics before I got into tech. However, what I

00:10:59.880 | realized about where I am in my career in tech is if I stopped

00:11:04.160 | doing what I do, I'm never going to come back. Like technology

00:11:07.920 | is rapidly emerging. We're going to talk about all the latest

00:11:10.040 | developments this week. Like you can't take your foot off the

00:11:12.760 | gas in the network building parts of venture for two to five

00:11:16.240 | years and come back when you're like 50 years old. I felt like

00:11:20.400 | I'm not ready to give up on venture. I'm in the prime of my

00:11:22.880 | venture career. I'm only 12 years in actually Chamath. So

00:11:25.840 | figure five or 10 more years is the sweet spot. I'd like to see

00:11:30.200 | the companies that I was involved in grow up, become

00:11:32.400 | public companies, et cetera. I didn't feel like I could ever

00:11:35.640 | come back if I quit. At some point, would I like to get

00:11:38.160 | involved in politics? Probably yes. But it's a decade out.

00:11:42.960 | Well, the households involved, big announcement, your husband

00:11:47.360 | Jacob is joining the administration. You can tell us

00:11:50.600 | a little bit about that. Yes, Jacob's very proud of that.

00:11:53.560 | Yeah, it's extremely exciting for him, obviously, for the

00:11:57.600 | country, I think, which is he's going to be the chief economic

00:12:01.280 | officer really for the for the for the country. His job is to

00:12:05.800 | build foreign policy from the business standpoint, which if

00:12:09.440 | you think about it, what's the foundation of power in the

00:12:11.920 | world? It's economic success. Why did the United States win

00:12:14.640 | World War Two is we had an economic engine that could out

00:12:17.560 | compete Germany plus Russia plus Japan, we could build more

00:12:21.040 | tanks, you know, blah, blah, blah, blah, et cetera. And so

00:12:23.480 | the economic engine is critical to this administration.

00:12:26.360 | Obviously, Trump understands that we had a great three years

00:12:29.600 | under his first administration, as he likes to say, best

00:12:32.400 | economy ever before COVID, which may or may be true. And we need

00:12:36.280 | to rebuild American strength. And Jacob's job is to export

00:12:39.080 | that, you know, philosophy. And sometimes you can build

00:12:42.360 | economic strength through working through foreign affairs.

00:12:45.240 | And so that's his main job is to be the primary point person

00:12:49.440 | under secretary of economic affairs. And then they've got a

00:12:52.960 | bunch, the Democrats and the woke people added a bunch of

00:12:55.600 | other things to the title, it used to be just undersecretary

00:12:58.000 | of state for economic affairs. And they added like, you know,

00:13:01.360 | environment and all these politically correct things. So

00:13:03.200 | hopefully, they'll subtract all that stuff and just go back to

00:13:05.600 | undersecretary of state for economic affairs.

00:13:08.240 | And interestingly, what's turning out to be interesting as

00:13:12.600 | Trump assembles this group, I'd love to get the panel's

00:13:14.720 | thoughts on it is not everybody thinks the same. Jacob's

00:13:18.840 | position on Tick Tock, which we'll get to in this show, very

00:13:21.800 | different than some other people in the administration, even

00:13:24.800 | Trump himself flip flopped a little bit on that. So what are

00:13:28.800 | your thoughts as we get started here, just on that assembly of

00:13:34.440 | people, you know, including sacks, obviously, who couldn't

00:13:36.600 | be here this week, but we'll be on future episodes. There's your

00:13:39.920 | announcement, folks. What are your thoughts on that this sort

00:13:42.560 | of diversity and opinion in the administration and how that all

00:13:47.320 | sorts out? Because some people are extremely exciting.

00:13:49.640 | I think it's very obvious watching from afar, that the way

00:13:52.600 | Trump's makes decision is he likes to ask a lot of people a

00:13:55.160 | lot of different questions. And then he makes the decision.

00:13:58.360 | That's why he's, to some people, the media, and he's very

00:14:02.480 | unpredictable, is he doesn't just take one source of input.

00:14:06.680 | And so you can never totally predict the output. But he

00:14:10.160 | arrays an interesting cast of characters and listens to them.

00:14:14.120 | Like so for example, I haven't spent that much time with him.

00:14:17.000 | But insofar as I have, he would go around the room and ask every

00:14:20.160 | single person at dinner, what's your view on X and literally go

00:14:24.240 | around a room of 28 people and listen to every single person.

00:14:27.960 | So I think that's how he makes decisions.

00:14:29.680 | x being a topic, not the website. x.

00:14:32.400 | Not actually. Yeah, everybody knows what I think he likes.

00:14:35.480 | Chamath, any thoughts on this? The wider team as we see it get

00:14:39.760 | assembled. We obviously don't have sacks here. He joined the

00:14:41.760 | team. What's your thoughts on the collection of characters and

00:14:47.280 | executives?

00:14:48.040 | Here's an interesting tweet that I saw, Nick, can you just share

00:14:51.160 | it with the with the guys?

00:14:52.480 | Oh, net worth of each one.

00:14:53.680 | Now, the reason why it was interesting to me was not the

00:14:58.360 | net worth per se. But I think this is the first time that I

00:15:02.320 | can remember. In modern history, at least that I've been in the

00:15:06.760 | United States and following US politics where such an enormous

00:15:10.960 | number of business people have been motivated to come and work

00:15:15.680 | inside of the administration. And I think that it creates this

00:15:20.160 | very interesting contrast and compare. I think that the

00:15:24.600 | Democrats would never have assembled a group of people like

00:15:27.840 | this, even though the Democratic Party has a version of this

00:15:31.880 | chart that they could have made. There's a lot of extremely

00:15:34.760 | talented business people that support the Democratic Party.

00:15:38.200 | The problem is that they believe it's deeply unfashionable to get

00:15:44.160 | strong, competent business people to take a pause in their

00:15:47.560 | business career and come work in government. And you almost

00:15:49.960 | look down on people that are successful. Whereas the

00:15:52.840 | Republican alternative here, if it creates a movement, so to

00:15:58.320 | speak, so that subsequent presidents tap folks on the

00:16:01.920 | shoulder, I think we'll be much better off. And the reason is

00:16:05.160 | pretty simple. I think that the United States economy is too

00:16:08.600 | complicated to be managed by theoreticians, by folks with

00:16:13.600 | random PhDs and absolutely no working experience in the real

00:16:18.280 | world. And when you bring those people in to oversee those PhDs

00:16:23.000 | I think you probably get better outcomes. So I hope this becomes

00:16:26.440 | a standard which is asked these very talented, clearly

00:16:30.000 | demonstrated, successful people with judgment to hit the pause

00:16:34.640 | for a year or three or five, whatever it is, step into

00:16:38.440 | government, help the country and then go back.

00:16:40.760 | And this was what the founding fathers Dave actually

00:16:46.120 | prescribed. This is what they wanted. They wanted people who

00:16:49.200 | are in business to do a tour of duty to serve their country and

00:16:52.040 | then to get out they were not interested in career

00:16:54.680 | politicians, correct.

00:16:55.920 | I've said this a number of times, but all of the founding

00:16:59.520 | fathers had jobs had professions and they stepped in to serve

00:17:04.080 | their country as a civic duty, participated in the process of

00:17:09.640 | executing the the responsibilities of government

00:17:13.600 | and then stepped out and went back to their private lives. I

00:17:16.360 | think it is such a more powerful model for government than people

00:17:21.080 | who choose to to be politicians to represent people as a living

00:17:25.760 | because it creates extraordinarily nasty incentive

00:17:29.120 | structures if that's the model, which is, for example, to curry

00:17:32.840 | favor with private industry participants and then go cash

00:17:36.560 | that favor in after you leave. And I think that this

00:17:39.600 | alternative where you have people who are everyone looks at

00:17:41.960 | them and oh, they're all billionaires and so on. They're

00:17:44.120 | actually as because they're independently wealthy, and they

00:17:46.320 | have enough money than they'll ever spend. I think Larry Page

00:17:48.440 | once said, you can never spend more than a billion dollars in

00:17:51.040 | your life that no matter how hard you try, it's literally

00:17:53.120 | impossible. People think like, oh, you could spend all that

00:17:55.440 | money. Actually, when you buy stuff, most of the stuff you buy

00:17:57.520 | are capital assets that you end up selling later. It's very hard

00:18:00.280 | to spend at that level. So when you have people that are truly

00:18:03.760 | independently wealthy, their motivation is actually quite

00:18:07.040 | different than someone who's trying to make it from 100k to

00:18:10.440 | 500k of net worth or 50k to a million of net worth. And I

00:18:14.240 | think it actually creates a higher degree of freedom. And it

00:18:17.440 | aligns the people much more in the long term outcome of

00:18:20.880 | government rather than their own personal and, and they're just

00:18:24.360 | smarter. So I'll give you a simple example. Maybe we'll talk

00:18:28.480 | about this later. J. Cal, I'm not sure. But when I saw the DOJ

00:18:32.720 | theoretical guidance on the Google antitrust matter, their

00:18:38.840 | idea is to divest the browser. And I kind of scratched my head

00:18:44.480 | thinking, would any reasonable business person think that that

00:18:48.680 | was the right remedy? Meanwhile, three weeks later, Google's

00:18:52.360 | like, here's a super chip in quantum computing, that breaks

00:18:57.200 | the world. And I thought, how is it that these folks are so

00:19:00.960 | disconnected from reality that they don't understand what's

00:19:03.760 | actually sitting inside this company. And I think it's in

00:19:06.080 | part, because they don't know the right questions to ask. And

00:19:09.600 | the reason they don't know what the right questions is asked is

00:19:11.760 | they've never worked in the real working world.

00:19:14.800 | We have a professional class of politicians and their

00:19:17.720 | understanding is 10 years old.

00:19:19.520 | But it's not just politicians. This is also bureaucrats. So my

00:19:22.440 | point is, these folks need to get off the sideline and work in

00:19:26.760 | a company for a while know the bowels, they'll be much better

00:19:30.760 | able to guide these regulatory agencies if they actually just

00:19:34.480 | know what's going on. So if the right answer is some antitrust

00:19:39.040 | issue with a company where you need to divest, wouldn't it be

00:19:43.160 | great? We're like 100 smart businessmen looked at that said

00:19:46.240 | that makes sense.

00:19:47.360 | But let me give you the counter to that. Because the counter to

00:19:50.080 | that, which comes up a lot, just so you can, like frame the

00:19:53.040 | response is, why are all these people coming out of pharma

00:19:56.320 | companies to regulate pharma? Why are all these people coming

00:19:58.440 | out of big ag companies to regulate big ag? Why are all

00:20:00.640 | these people that come from energy companies coming to

00:20:03.000 | regulate energy, the common refrain is business people are

00:20:07.400 | basically bringing business interests into the government by

00:20:10.600 | transporting themselves into these regulatory bodies, versus

00:20:14.200 | having career politicians or what you call bureaucrats, be

00:20:17.040 | kind of independent regulatory authority. So what's the

00:20:19.040 | response in that context, to that, that refrain?

00:20:22.320 | They're absolutely right. And that's how it should work. The

00:20:25.080 | United States can no longer afford to be a bleeding piggy

00:20:29.440 | bank for bad ideas. So yeah, like if a bureaucrat thinks the

00:20:34.920 | right thing to do is to divest a random browser to fix Google's

00:20:39.520 | monopolistic tendencies. That's not a remedy

00:20:42.760 | or spend 10s of billions of dollars on a super on a high

00:20:46.320 | speed rail like we were talking about earlier this week,

00:20:48.280 | this is not logical. It's not meaningful. It's misguided. So

00:20:53.120 | if what we want is kindergarten soccer, where everybody gets to

00:20:57.400 | touch the ball, that's what we are getting right now, which is

00:21:00.760 | it's not useful. So I would rather have a business person

00:21:05.080 | with a direct point of view. And by the way, with the level of

00:21:08.480 | transparency, the big issue, I guess, free book that that would

00:21:11.000 | create is, could these people advantage themselves somehow to

00:21:15.120 | make more wealth. But the reality is, that would be so

00:21:19.680 | obvious and laid bare what happens today is they burrow

00:21:23.320 | with this mid level of an organization and they do exactly

00:21:26.400 | this, but it's not laid bare. Yep. So I'd rather be a

00:21:29.400 | transparent where some guy tries to take the government for $500

00:21:33.080 | million, and we castigate that person, then what's happening

00:21:36.600 | today, which is you slip in the back door, you get paid for 500

00:21:41.320 | grand from a company, then you come back to the government,

00:21:43.680 | then you go back, nobody knows who these people are. Nobody

00:21:46.920 | knows the decisions they're making. And they're altogether

00:21:49.680 | misguided, because they're not grounded in an understanding of

00:21:53.080 | the real economy.

00:21:54.320 | Keith, where do you fall? Yeah.

00:21:55.840 | Well, I share, actually, you're both right, in some ways, if you

00:21:59.280 | look at what, who's Trump's pick these successful people, they're

00:22:02.640 | not typically being assigned to industries they came from. So

00:22:06.200 | it's not like he's taking drug, you know, he's actually taking

00:22:08.760 | the opposite, like a figure RFK, for example. So actually, I

00:22:12.880 | think you can take successful people who have proven

00:22:15.520 | themselves through merit. Like, I think what that's one of the

00:22:18.360 | other benefits of the real world is the only way you get ahead is

00:22:22.840 | you're in a Darwinistic experiment with other people

00:22:25.200 | that are comparable. And to be successful, you have to

00:22:28.320 | outthink, outwork, etc. And that shows up ultimately, in

00:22:32.720 | promotions and net worths and various other metrics. So Trump

00:22:36.520 | has taken a lot of successful people. And I think we want a

00:22:38.680 | society where we aspire for our kids to be successful, we want

00:22:42.360 | to emulate successful people that needs that will yield more

00:22:45.080 | success. Like having Elon involved in the government will

00:22:48.840 | yield more success than you know, if you penalize successful

00:22:51.960 | people, you'll get stigmatized, you get less. So I think if you

00:22:55.440 | transplant successful people into industries that they're not

00:22:58.440 | from, and that they have no interest in going to after the

00:23:01.000 | government, you might get the best of both worlds. Because I

00:23:03.960 | can see some of the critiques of, you know, you're regulating,

00:23:08.000 | you know, your friends companies, and you're gonna make

00:23:09.920 | money later. That said, most of Trump's people are not going to

00:23:12.400 | do that. You can also pass laws like, you know, you can't lobby

00:23:15.960 | you can't work for for x years after. There's also this great

00:23:19.640 | data point, I think it's the last 60 years, Trump is the only

00:23:22.600 | president whose net worth went down after office, every other

00:23:26.280 | president that, you know, took a relatively modest net worth or

00:23:30.000 | mediocre net worth, and turned it into a stratosphere. So you

00:23:33.920 | think about the President is the signature example, it's great

00:23:37.640 | that Trump like is setting the opposite illustration.

00:23:40.160 | Well, I mean, we've discussed this on the other pod, Keith, a

00:23:43.840 | couple of times, which is domain expertise can be an ankle for a

00:23:48.440 | founder, you know, you got a founding team that works in the

00:23:50.520 | hotel business, they're going to look at something like Airbnb

00:23:53.160 | and say, this will never work. You got somebody who worked in

00:23:55.520 | transportation, they're gonna look at Uber and say that I'll

00:23:57.800 | never work, they'll look at PayPal, they worked in finance,

00:23:59.960 | and they did say to you, and the team that's never going to work.

00:24:03.400 | Yeah, I mean, I think it's critical and venture to not

00:24:07.280 | really fall for that trap. I always mentioned that I don't

00:24:10.360 | like people with expertise, typically, as founders, I think

00:24:16.040 | in when I call diligence, due diligence, or call experts, I

00:24:18.960 | only ask one question, which is, what is metaphysically

00:24:21.800 | impossible about this working? Like, is there a lot of physics

00:24:25.440 | that I don't understand that makes this actually impossible?

00:24:29.040 | And if they can't isolate a very specific principle, that makes

00:24:33.280 | it or fact that makes it actually impossible, then I just

00:24:35.840 | ignore everything they're saying, you know, write a check.

00:24:38.240 | Yeah, because then it's just all vibes and opinions, etc. So

00:24:41.880 | they're experts in a prior world, right? They've learned

00:24:44.600 | why not. And this is actually like to combine a couple topics

00:24:47.480 | here. The reason why Trump is so effective. So the most

00:24:49.840 | interesting question to me over the last year was, how is this

00:24:53.120 | guy who everybody in the media and everybody in you know, the

00:24:56.800 | legal groups of various things is trying to attack and hate and

00:24:59.680 | all these people publish these books. Why is he on the

00:25:02.560 | precipice of being elected President of the United States

00:25:04.440 | twice, you must have a superpower or two. Most of us

00:25:07.840 | are not going to like the President of the United States

00:25:09.360 | twice. And most of the people who are attacked by everybody

00:25:12.120 | who has power in the establishment definitely do not

00:25:14.200 | get elected President. So what it kind of came down to, and I

00:25:17.440 | interviewed a lot of people who are critics of him, but knew him

00:25:19.720 | well, like ex cabinet people that don't like him, comes down

00:25:23.040 | to he just asked a lot of why, like, why do we do this? Why do

00:25:26.720 | we have to do it this way? Why have we done it this way? And it

00:25:29.120 | turns out in politics, and in DC, most of the answers are

00:25:31.840 | pretty mediocre or weak or poor or haven't been rethought for

00:25:34.600 | 2030 4050 6070 years. And so he just constantly dives in and

00:25:39.680 | says, why, why, why, why? And that's actually what predicts

00:25:42.280 | success for founders is in a domain, they don't know anything

00:25:45.560 | about they're just like, why, why do we take these hotel

00:25:47.920 | things for granted? The Airbnb case? Why should they be so

00:25:50.320 | expensive? Why should scarcity, you know, prevail in New York

00:25:53.320 | for four months of the year, etc, etc.

00:25:55.240 | All right, let's get to our docket. We got a ton of stuff to

00:25:58.860 | get to Google's new quantum chip is super impressive. Freeberg.

00:26:03.280 | And we're talking about that on the group chat on Monday, Google

00:26:06.720 | announced its latest quantum chip. It's called Willow. Here's

00:26:10.120 | the chip. If you haven't seen it, it's beautiful. It was

00:26:12.940 | fabricated in Google's new chip plant in Santa Barbara. They

00:26:16.320 | started this project back in 2012, their quantum computing

00:26:19.000 | project and the headline basically is Willow performed a

00:26:22.920 | standard benchmark computation under five minutes that would

00:26:25.720 | have taken today's fastest supercubers 10 septillion years

00:26:29.840 | or 10 to the 25th power, which is billions of times older than

00:26:32.760 | the universe. If you don't know what quantum computing is,

00:26:35.720 | Freeberg will expand on it. But basically, computers are binary

00:26:39.840 | you've heard this before one and zeros, quantums use qubits, you

00:26:42.960 | know, those are 01 or both at the same time. And Google got a

00:26:49.680 | 5% pop, they're up 13% in the last five days, probably on the

00:26:54.880 | other news that Gemini 2.0 is out as well, which is

00:26:57.600 | unbelievable. I've been playing with it. What do you think

00:27:00.440 | Freeberg of this big announcement?

00:27:03.480 | Google's announcement is a paper published in nature that follows

00:27:08.640 | the pre print they actually put out in August. So this news has

00:27:11.200 | been out for a little bit. There's obviously a press cycle

00:27:13.280 | this week around it, to kind of make a big thing about it. But

00:27:16.400 | it is a very kind of important milestone in the evolution of

00:27:22.360 | quantum computing. So do you want me to kind of talk about

00:27:26.160 | quantum computing? And I think we've talked about this in the

00:27:27.880 | past,

00:27:28.320 | like, I mean, maybe a brief primer for people. But like,

00:27:30.680 | what does this mean? Practically, I think what people

00:27:33.120 | want to know is when did these things actually have an impact

00:27:36.880 | in the way say, NVIDIA's GPUs have had?

00:27:39.280 | Yeah, the big breakthrough here is that the whole basis of a

00:27:43.320 | quantum computer is called a qubit or a quantum bit. It's

00:27:46.280 | radically different than a bit, a binary digit, which we use in

00:27:50.160 | traditional digital computing, which is a one or a zero, a

00:27:54.280 | quantum bit, you can kind of think about it as a wave

00:27:56.280 | function, it's sort of a quantum state of a molecule. And if we

00:28:03.400 | can contain that quantum state, and get it to interact with

00:28:07.840 | other molecules, based on their quantum state, you can start to

00:28:12.280 | gather information as an output, that can be the result of what

00:28:17.080 | we would call quantum computation. And that sounds

00:28:20.280 | complicated. But what it really means is that instead of doing

00:28:22.600 | kind of binary computation, where we're adding numbers

00:28:25.720 | together or doing kind of other traditional arithmetic, there

00:28:29.880 | are really interesting functions you can do with qubits. qubits

00:28:33.480 | can, for example, be entangled. So two of these molecules can

00:28:38.800 | actually relate to one another at a distance, they can also

00:28:42.560 | interfere with each other. So canceling out the wave function,

00:28:45.920 | and then when you read it out, you get a result that is

00:28:49.160 | basically a very, very complex problem that is solved through

00:28:54.120 | this quantum interpretation. It's really hard to kind of

00:28:58.280 | highlight how different this is from traditional computing. So

00:29:01.840 | quantum computing creates entirely new opportunities for

00:29:04.920 | algorithms that can do really incredible things that really

00:29:08.720 | don't even make sense on a traditional computer, they're

00:29:10.800 | not possible to kind of resolve on a traditional computer. And

00:29:13.600 | sorry, let me just state one thing, the quantum bit needs to

00:29:17.200 | hold its state for a period of time in order for a computation

00:29:20.560 | to be done. And so the big challenge in quantum computing

00:29:23.720 | is how do you build a quantum computer that has multiple

00:29:27.440 | qubits that hold their state for a long enough period of time

00:29:31.640 | that they don't make enough errors that you can actually do

00:29:34.960 | a computation with them. So what Google was able to demonstrate

00:29:38.520 | here is they created these call it logical qubits. So they put

00:29:43.920 | several qubits together. And by putting several qubits together,

00:29:47.200 | they were able to kind of have an algorithm that sits on top of

00:29:49.360 | it that figures out, hey, this, this group of physical qubits

00:29:52.600 | is now one logical qubit may balance the results of each one

00:29:56.680 | of them. So each one of them has some error. And as they put more

00:29:59.440 | of these together, what they were able to demonstrate for the

00:30:01.520 | first time ever, is that the error went down. So when they

00:30:05.200 | did a three by three qubit structure, the error was higher

00:30:08.800 | than when they went to five by five, and then they went to seven

00:30:10.880 | by seven, and the error rate kept going down and down and

00:30:13.160 | down. So this is an important milestone, because now it means

00:30:16.680 | that they have the technical architecture to build a chip or

00:30:20.280 | a computer using multiple qubits that can all kind of interact

00:30:23.280 | with each other with a low enough fault tolerance or low

00:30:26.120 | enough error rate that they can start to do these quantum

00:30:28.280 | calculations. This is a big area of opportunity. One of the very

00:30:32.840 | interesting areas that a lot of people are talking about is in

00:30:35.120 | cryptography. So there's an algorithm by a professor who was

00:30:40.520 | at MIT for many years named short called shores algorithm.

00:30:43.240 | And in 1994 1995, I think around that time, he basically came up

00:30:48.240 | with this idea that you could use a quantum computer to factor

00:30:52.020 | numbers almost instantly, and all modern encryption standards.

00:30:56.700 | So all of the RSA standards, everything that bitcoins

00:30:59.660 | blockchain is built on all of our browsers, all server

00:31:03.060 | technology, all computer security technology is built on

00:31:06.980 | algorithms that are based on number factorization. So if you

00:31:11.820 | can factor a very large number, a number that's 256 digits long,

00:31:15.620 | theoretically, you could break a code. And it's really impossible

00:31:20.100 | to do that with traditional computers at the scale that we

00:31:22.500 | operate our encryption standards at today. But a quantum computer

00:31:25.780 | can do it in seconds or minutes. And that's based on shores

00:31:29.300 | algorithm. And if you want, there's some great YouTube

00:31:31.460 | videos that describe shores algorithm and how it works. But

00:31:34.220 | it's like, mind blowing when you look at it. It's like this

00:31:36.860 | really like non intuitive, but simple set of steps that when

00:31:40.540 | you put them together on a quantum computer, it's like this

00:31:42.620 | thing can instantly figure out all the factors and then you can

00:31:44.780 | break a code. One of the things that this highlights that in a

00:31:46.780 | couple of years, theoretically, if Google continues on this

00:31:49.260 | track, and now they build a large scale cubic computer, they

00:31:52.260 | theoretically would be in a position to to start to run some

00:31:56.020 | of these quantum algorithms like shorts algorithm. And so we're

00:31:58.740 | now kind of spitting distance or a couple of years, it's not

00:32:01.020 | really clear as a three years, five years, seven years, but a

00:32:03.220 | couple years away from having computers that theoretically

00:32:06.180 | could crack all encryption standards. And there are a set

00:32:09.260 | of encryption standards that are called post quantum encryption.

00:32:11.620 | And all of computing and all software is going to need to

00:32:13.860 | move to post quantum encryption in the next couple years. So

00:32:16.380 | there's like this big kind of push now to like, how do we do

00:32:18.260 | that? How do we accelerate it?

00:32:19.180 | I saw Sundar post it. I saw it in my feed. I ended up missing

00:32:24.300 | my next meeting. Because I had to figure out how long will it

00:32:27.500 | take for us to crack the encryption standards that we use

00:32:30.860 | for Bitcoin? Now, here's the answer, because I was so tilted

00:32:34.900 | by this idea. So if you think of willow, as essentially like one

00:32:42.180 | stable, logical qubit equivalent in a chip, we need about 4000

00:32:49.980 | to break RSA 2048. And we need about 8000 to break SHA 256,

00:32:55.020 | which is the underlying encryption framework for

00:32:57.380 | Bitcoin. So I think you're right, I think we're in the sort

00:33:01.820 | of like, the endgame two to five year shot clock. No, I mean, I

00:33:06.580 | think what will have to happen is some of these chains will

00:33:09.100 | need to obviously reimplement something at a pretty

00:33:12.900 | foundational level. The weird thing is, freebrook says is

00:33:17.620 | like, the willow chips error correction gets better, the more

00:33:22.140 | of these things you start to use together. Now, there's some

00:33:26.460 | really big problems and see inside these chips, like logical

00:33:29.540 | interconnects are very complicated. If you put two

00:33:32.060 | chips on a board, like the CTC communication is called this all

00:33:35.100 | this stuff that we haven't figured out how to do. But this

00:33:37.940 | is a big deal. I was really like, my god, what's going on

00:33:42.860 | here?

00:33:43.140 | Other projects at Google are finally landing, you have way

00:33:46.780 | more incredible and you have this now I mean, project moon

00:33:50.620 | might be gone. But you know, I think those projects, we're

00:33:54.140 | going to see a couple of them change the world. Yeah.

00:33:56.020 | Just to give you a sense on the numbers like Google's target for

00:33:59.260 | fault tolerance on a quantum chip to make it logically

00:34:02.020 | useful, is one times 10 to the negative six. Right now, this

00:34:06.940 | willow chip is kind of running at 99.7%. So it's still a few

00:34:11.300 | orders of magnitude away, they have a long way to go in getting

00:34:15.300 | the fault tolerance low enough to actually build logical gates

00:34:19.460 | using qubits that can resolve kind of computational output.

00:34:23.380 | And so there's still there's still a build cycle ahead. And

00:34:25.900 | that pathway is a little bit unclear. But what they've shown

00:34:27.700 | is, this almost feels like the Shockley transistor moment. It's

00:34:30.660 | like, you know, here's this transistor now everyone's like,

00:34:35.220 | you have a lossy transistor, and then you'll figure out p

00:34:37.500 | injunctions, you'll figure out all of these ways of just like

00:34:40.020 | getting the error correction down. But by the way, this

00:34:42.700 | reinforces what you said before, which is it's hard for an

00:34:45.820 | outsider like us to comprehend what's really happening inside

00:34:50.580 | of Google, because the business they built was able to fund

00:34:53.380 | this. I mean, and I went down a rabbit hole, because I'd never

00:34:56.460 | heard of who this guy was that that runs his helmet, Nevin.

00:34:59.460 | He's in Santa Barbara, they have a whole team in Santa Barbara,

00:35:01.780 | they've been running for like 10 years,

00:35:03.020 | he has his own law, Nevin's law. And then I went down the rabbit

00:35:06.300 | hole of that. But what's amazing is so valuable for humanity.

00:35:09.900 | Google had the money to fund him for the last 12 years.

00:35:13.180 | Exactly. And the greatest money printing machine of all time is

00:35:16.580 | paying dividends. Yeah.

00:35:17.900 | But isn't it great to know that Google takes these resources

00:35:22.820 | from search? And sure, maybe there's waste in or maybe they

00:35:26.900 | could have done better with the black George Washington, or

00:35:30.140 | maybe they could have done better with YouTube. But the

00:35:33.060 | other side is, they've been able to like, incubate and germinate

00:35:37.580 | these brilliant people that can toil away and create these

00:35:43.020 | important step function advances for humanity. It's really

00:35:47.660 | awesome.

00:35:48.100 | DeepMind is on that list as well. Keith, what are your

00:35:50.060 | thoughts?

00:35:50.380 | Yeah, so I think, first of all, I think there's a long time

00:35:55.340 | before this becomes a commercial product or application of any

00:35:58.420 | sort. So it's great that they're taking money, but think about

00:36:02.220 | it as like, almost like Stanford takes money or the US government

00:36:04.900 | funds basic research in some ways. This is at least a decade

00:36:09.260 | out kind of thing. There's another, I mean, this area way

00:36:12.500 | beyond my expertise, but I've been talking to a lot of smart

00:36:14.260 | people because I do do financial services innovation. And

00:36:16.820 | obviously, encryption is pretty critical, whether it's Bitcoin

00:36:19.020 | or other places. And there's a couple concerns. One is, it's

00:36:23.540 | not even clear that you can verify that this is true. By the

00:36:26.940 | way, like standard computing to explain sort of the magnitude of

00:36:30.260 | difference. Standard computing would take 10 to the 25th years

00:36:35.020 | to verify that what Google analysis accurate. So there's a

00:36:39.420 | chance that it's not even true.

00:36:40.860 | But for the thing for the for the sampling test, they ran.

00:36:43.540 | Yeah.

00:36:43.940 | 2050 number of years.

00:36:47.420 | That's the big I think hole in the whole RCS benchmark that

00:36:50.660 | they use that it only is. It's a it's a framework that only a

00:36:53.740 | quantum computer could theoretically even

00:36:55.780 | So how do you know the answer is correct?

00:36:57.500 | It takes that long to solve.

00:37:00.780 | And then to be practical, like, assuming you solve all this

00:37:03.900 | and it's accurate above all, you make it fast off. Second, then

00:37:07.340 | there is the post quantum computing encryption, which, you

00:37:10.500 | know, a lot of people, a lot of things, a lot of poor things

00:37:12.300 | have switched over to. So you have historical communications

00:37:15.780 | that were encrypted under an old paradigm that would be

00:37:18.620 | vulnerable. And, you know, every year that goes by, like the

00:37:21.740 | embarrassment level or the threatening level of old

00:37:24.740 | historical communications will probably have some decay

00:37:27.260 | function or some half life. So it takes another 10 years

00:37:30.340 | communications that were drafted 20 years ago. Yeah, there'll be

00:37:33.460 | some embarrassing things and blah, blah, blah, blah. But the

00:37:36.100 | more time it takes, the more safe, you know, sort of private

00:37:38.940 | communications and exchanges will be. So I think that's

00:37:42.300 | positive. Third, is there's a question of order of magnitude

00:37:48.180 | here, you mentioned you need like three words of magnitude

00:37:50.180 | sort of improvement. Is each step function, you know,

00:37:52.940 | incrementally easier and faster? Or is each step function, you

00:37:55.900 | know, 10 years, and I don't know that anybody knows the answer to

00:37:59.180 | that. That's right. That's right. Yeah, a lot more work

00:38:02.140 | here to, to be done. You're not buying any quantum computing

00:38:05.940 | stock yet. Not yet. We have looked at KB, you know, talk

00:38:10.020 | about like technology forward, you know, VCs. Over the years,

00:38:12.980 | I've sat through partner presentations, and we've never

00:38:16.060 | really pulled the trigger. There's other reasons like

00:38:19.020 | including like, even if you have quantum computing, you have to

00:38:21.620 | rewrite software on top of it. From a different, it's a

00:38:24.340 | completely different, you know, world. Nothing maps, nothing

00:38:27.340 | maps at all. Nothing. So you're starting from scratch. So you

00:38:29.780 | have an application layer, which might be actually an interesting

00:38:32.180 | business opportunity.

00:38:33.140 | Yeah, how are these things actually going to be coded and

00:38:36.980 | how our developers going to interact with them, if at all,

00:38:39.060 | maybe by that time, we'll just be AI. How do you build a

00:38:41.220 | compiler? Who the hell knows? How do you build a language

00:38:43.820 | properly? These are all complicated.

00:38:45.540 | Yeah. Who's going to write the basic? Who's going to write like

00:38:48.220 | the Microsoft basic?

00:38:49.220 | The interesting thing is there's a lot of work that's been

00:38:51.540 | done in this space, like thinking about quantum

00:38:53.700 | computing, and quantum algorithms is like an entire

00:38:56.580 | branch, people do spend a lot of time thinking about this and

00:38:59.220 | working on this. And there are ways you can kind of simulate

00:39:01.820 | and test and start to build out models for how you could

00:39:05.020 | utilize quantum computers. But obviously, we just don't have,

00:39:09.180 | you know, industrial scale systems at this point,

00:39:11.540 | there was one interstellar Marvel Easter egg in your

00:39:17.420 | announcement that I wanted to get your thoughts on freeberg.

00:39:19.980 | Google said that this massive jump in performance, quote,

00:39:23.660 | lends credence to the notion that quantum computation occurs

00:39:27.300 | in many parallel universes in line with the idea that we live

00:39:31.380 | in a multiverse. So is that somebody in PR is high AF, or

00:39:39.580 | reads too much science fiction, you know, you know, the crazy

00:39:42.300 | thing for us.

00:39:43.500 | So the crazy thing about quantum physics is such a mind. Have you

00:39:47.780 | guys taken quantum mechanics? I have not I have Yeah, I remember

00:39:51.700 | the summer I took it, like the quantum, the first quantum

00:39:54.460 | mechanics class, and I was like, glad it was a summer course,

00:39:57.220 | because you really have to like think pretty deeply about what

00:40:01.500 | you've learned in quantum mechanics, there's just nothing

00:40:03.900 | about it that's intuitive. Like the way we've kind of think

00:40:06.620 | about the world is not the way the quantum world operates. In

00:40:11.500 | the case of a qubit, as soon as you measure the qubit, it

00:40:14.700 | collapses to a value. If you try and measure it, if you try and

00:40:18.340 | look at it goes to zero or one, the probability by which it goes

00:40:21.580 | to zero or one is defined by, you know, the quantum state,

00:40:25.620 | right at the moment you observe it, it's just such a mind. So

00:40:29.140 | effectively, this thing is existing in a superposition in

00:40:32.500 | multiple states at the same time, until you try to observe

00:40:35.460 | it. And that's the case of quantum mechanics. So what's

00:40:39.140 | kind of happening, I think, in that language, J kal is nothing

00:40:42.980 | novel was kind of discovered or represented, that's just quantum

00:40:47.140 | mechanics, it's a mind. And you can go watch hours of YouTube

00:40:50.020 | videos, if you want to, like, get taken down the mind rabbit

00:40:52.980 | hole of quantum mechanics and realize, like, nothing, one

00:40:55.420 | thing I've always found fascinating about this

00:40:57.220 | discipline is that looking at a qubit changes it, like it

00:41:02.660 | understands, it's article, there's a slit experiment. And

00:41:07.020 | if you try and observe a light, as a particle versus a wave, it

00:41:12.460 | actually changes what happens what the outcome is of it being

00:41:15.620 | a particle or a wave, same with electrons. The thing about

00:41:17.780 | quantum mechanics is the observation of a particle

00:41:20.940 | changes what happens serious question.

00:41:22.940 | There's a question here comes here. When you look at the

00:41:29.220 | quantum, can you get a better idea of the scale of Uranus?

00:41:34.620 | Let's move on. No, let's move on.

00:41:39.420 | He was queuing up and joke at the same time I was, I was

00:41:42.900 | thinking about Schrodinger's cat. That's like a

00:41:45.220 | another ridiculous thought experiment that when you it's

00:41:49.420 | the same concept. It's the quantum state of the cat. Is

00:41:54.300 | it's both in the box and not in the box. And I don't know

00:41:56.500 | whether it's in the box until you open the box until you open

00:41:58.700 | the box. And then you open the box and there's a X probability

00:42:01.780 | that it's in the box X probability, it's not in the

00:42:03.140 | box. But when when you don't see it, it's both. It's both.

00:42:08.500 | And if you're a cat lady, you have three of those boxes. And

00:42:11.620 | I'm a dog person. Well, we got more engagement from Keith on

00:42:15.780 | that science corner than we have.

00:42:17.180 | I need to I need to be on your socks. They both said, this is

00:42:28.020 | stupid. And I'll never touch it except Keith was kinder and more

00:42:32.380 | articulate and getting there. He did. That's right. It's just

00:42:35.700 | been snoring. He wouldn't he would have done his move where

00:42:40.380 | he goes stupid. I mean,

00:42:41.380 | next topic,

00:42:45.380 | there's an advantage of Monday partner meetings is I get to

00:42:48.180 | watch the science fiction stuff in every week, right? If I don't

00:42:51.220 | really understand it, but like a decade of watching science

00:42:54.340 | fiction, you pick up some tricks.

00:42:56.060 | Exactly. You play chess with Peter Thiel while that

00:42:59.540 | discussion is going on.

00:43:00.420 | Actually, so I don't play chess at all. Okay. The reason why is

00:43:05.500 | if I do something, I want to be really proficient at it. I don't

00:43:07.820 | have the time.

00:43:08.380 | Got it. Got it. Also, you have a life. You have a life. Yeah.

00:43:11.500 | Other things, things in the real world, etc.

00:43:14.780 | Big, big shout out to go cash D. My, my, my Indian friend, 18

00:43:19.140 | years old new world champion. I saw world champion. Yeah, do you

00:43:24.300 | know world champion? Did was he playing Magnus?

00:43:26.620 | Every brown guy that's done any random useful thing in the world.

00:43:32.100 | We all know each other. We're in a huge group chat.

00:43:34.700 | Oh, is it? Yeah.

00:43:36.140 | The group chat isn't like the top 10 tech companies, the group

00:43:40.780 | chats name is what can Brown do for you?

00:43:42.900 | What can Brown do for you? Okay, there is also UPS is filing a

00:43:48.380 | trademark infringement case. Hey, I'm speaking of chip news.

00:43:51.740 | Apple is making its own AI server chips for internal use a

00:43:55.940 | report just came out that Broadcom and TSMC are helping

00:44:00.460 | them develop AI inference chips, you know, inference chips like

00:44:03.900 | rock, Hatchimals. And there are obviously GPUs like NVIDIA GPUs

00:44:09.020 | are sort of like the giant dump trucks that help you build large

00:44:11.740 | language models. These inference chips are kind of like speeder

00:44:15.020 | bikes, you know, motorcycles quickly getting you the results

00:44:17.980 | from the same ones. It's called belt for Valtra. I don't know

00:44:21.580 | what that's in reference to mass production in 2026. They don't

00:44:25.500 | plan on selling the chips. They don't plan on cloud computing.

00:44:28.660 | The reason they're doing this, obviously, is because they really

00:44:32.020 | want the iPhone to be the interface. And they have planted

00:44:36.300 | their flag, that they want to have privacy, and have AI

00:44:41.140 | working off of your local device and not having access to your

00:44:44.420 | data, but having a compelling AI experience.

00:44:47.780 | My iPhone does not work. I'm sorry, I'm just gonna say it.

00:44:50.620 | Okay, I don't know what happened in you upgraded your software

00:44:54.100 | is happy. You're on iOS 18. It doesn't work. I after three

00:44:57.460 | years, I upgraded to the newest phone, I upgraded to the newest

00:45:00.340 | OS. The phone doesn't work, meaning like to call people, I

00:45:03.940 | can't call my wife anymore. I can't call my kids anymore. The

00:45:07.060 | phone bricks constantly, my photos app doesn't work. It is

00:45:10.420 | just really bad. And I think for a company of this scale, I don't

00:45:13.900 | understand how it does not go through a more complicated test

00:45:17.300 | harness that catches all of this. I'm not trying to complain,

00:45:20.860 | but because I know it's hard for them. I know it's complicated.

00:45:23.380 | And, but it's really bad.

00:45:25.420 | You're not the only person people are freaking out about

00:45:27.940 | the interface changes on photos crashing is a major thing. And

00:45:32.700 | Apple Intelligence just doesn't work. So it does seem key that

00:45:36.500 | Apple has gotten off their game of making polished stuff to race

00:45:40.500 | to try and I guess catch up to their perception of, you know,

00:45:45.220 | AI being a disruptive force at the interface level, ie your

00:45:48.940 | phone or desktop, but what are your thoughts on this new story

00:45:52.700 | about them doing more chips, they've obviously had great

00:45:54.700 | success with the processors and phones. And now the M four,

00:45:58.140 | incredible if you haven't tried the Mac mini best computer for

00:46:01.060 | the dollar in the world right now. But what are your thoughts

00:46:03.660 | on Apple?

00:46:04.420 | So the most important thing about Apple is to remember, it's

00:46:06.780 | vertically integrated, and vertically integrated companies

00:46:09.700 | when you construct them properly, have a competitive

00:46:12.420 | advantage that really cannot be assaulted for a decade, 2030 4050

00:46:17.140 | years. And so chips, classic illustration, go all the way

00:46:20.500 | down to the metal in build a chip that's perfect for your

00:46:23.900 | desired interface, your desired use cases, your desired UI, and

00:46:28.300 | nobody's gonna be able to compete with you. And if you

00:46:30.060 | have the resources, you know, because you need balance sheet

00:46:32.300 | resources to go in the chip direction, it just gives you

00:46:36.580 | another five inch hang your sort of competitive advantage. And so

00:46:40.180 | I love vertically integrated companies, you know, I posted a

00:46:42.900 | pin tweet, I think it's still my pin tweet about vertically

00:46:45.820 | integrate is the solution to the best possible companies. But

00:46:49.460 | it's very difficult, you need different teams with different

00:46:51.300 | skill sets, and you need probably more money, truthfully,

00:46:53.460 | more capital. But Apple just going to keep going down the

00:46:56.300 | vertical integration, software, hardware, you know, all day

00:46:59.020 | long. And there's nobody else who does hardware and software

00:47:01.980 | together in the planet, which is kind of shocking in some ways.

00:47:04.580 | Is there a world class company, a company that's world class,

00:47:07.700 | it's both software and hardware, other than Tesla? Yeah, maybe

00:47:11.300 | NVIDIA could be good. Well, maybe not really. Could they do

00:47:16.260 | a world class UI, you know, maybe maybe there's a

00:47:19.100 | foundation, but you don't have a different vision, maybe a

00:47:21.300 | different team, not clear. Tesla's close, I guess. I'd say

00:47:25.460 | the software is good. If you define software as it touches a

00:47:29.700 | consumer.

00:47:30.500 | Tesla, Apple, in some ways, Google, maybe meta with the

00:47:37.780 | meta glasses, trying, trying, attempting, you can't say

00:47:41.980 | NVIDIA, because I think NVIDIA touches the consumer through an

00:47:44.940 | app that then sits on top of CUDA, which I think is that's a

00:47:47.940 | brilliant strategy for them. But it's, it's, yeah, it's a hard

00:47:52.500 | Tesla, and then a long tail of people.

00:47:54.700 | Right. So anyway, this is the point, Apple has a lot of

00:47:57.260 | competitive advantages, that, you know, been actually

00:48:00.620 | leveraging for about 15 years now. And even back then, Steve,

00:48:03.940 | there's some old great Steve videos, I'll see if I can find

00:48:06.300 | you a clip where he talks about this very intentionally from the

00:48:09.620 | 1990s. You know, he came back to Apple, he said, we're doing

00:48:13.900 | vertical integration, basically using those words of software

00:48:17.100 | and hardware, and there's gonna be nobody else that can compete

00:48:19.820 | with us. I think it's in an interview he did, it's published

00:48:22.540 | in, in the company of giants, I believe, in these perfect on

00:48:26.260 | point, just follow that strategy for the next 25 years. Now,

00:48:30.300 | you're seeing some of the manifestations, though, of a

00:48:33.100 | competitive strategy that gives you incredible advantages, is

00:48:35.980 | you get very sloppy in other places, especially over time,

00:48:38.860 | because you have such great competitive modes that you don't

00:48:41.700 | have to compete at the cutting edge of this, like the photos

00:48:43.580 | app is completely unusable. I'm the biggest Apple fanboy in the

00:48:46.620 | world. Like I remember interviewing once with a job for

00:48:49.540 | Tim Cook. And I walked in, and I said, he's like, why, you know,

00:48:52.700 | why you're interested. And I said, Well, you know, I own

00:48:55.140 | every SKU of every product you've ever produced, except I

00:48:58.340 | don't have every color of each, you know, iPod. And he was like,

00:49:02.660 | blown away. And but now like, my photos app is completely

00:49:05.380 | unusable. So I totally understand, you know, to off the

00:49:07.940 | frustration. And they are showing like the decay function,

00:49:12.220 | you know, culturally and otherwise, that eventually

00:49:15.300 | somebody will figure out an angle to rip them out. Yeah,

00:49:18.460 | I'll tell you, we talked about dictators at the beginning of

00:49:20.580 | this chamath. And obviously, this is your wheelhouse as a

00:49:23.340 | dictator yourself, is, you know, there has to be a constant fear

00:49:27.900 | that some a hole is going to come to your office and be like,

00:49:33.060 | what did you do to the photos app. And that fear does not

00:49:36.820 | exist inside of Apple. It's not like the mobile me you ever hear

00:49:40.300 | the mobile me story where he brought the mobile me team and

00:49:44.540 | said, How's mobile me supposed to work? They said, Well, it's

00:49:46.660 | supposed to back up everything when you buy your new phone, you

00:49:48.580 | get everything, you never have to worry about losing a phone,

00:49:50.300 | slammed his hand down and said, Well, why the F doesn't work

00:49:52.660 | that way. fired the person brought the next person in and

00:49:56.180 | said, Now make it the way he said it's supposed to be game

00:49:58.620 | over. I don't think Tim Cook's doing that. Johnny Ives not

00:50:01.300 | there. And obviously, Steve Jobs not there to terrorize people.

00:50:03.940 | Well, I don't think he look, you don't need to necessarily

00:50:07.340 | terrorize people. But I do think you have to go through uat. So I

00:50:11.660 | think it's pretty reasonable when you have a large footprint

00:50:14.180 | of consumers using an app to go through user acceptance testing

00:50:17.100 | is like first base. And typically, what happens is you

00:50:20.540 | can do a process of a few months where several 100,000 people get

00:50:24.740 | it all over the world. And as long as you do an okay job of

00:50:28.140 | getting a decent distribution of people, this would have come

00:50:31.140 | out. But I want to just talk about what Keith said as well.

00:50:34.380 | It's literally not just photos, it's like the phone doesn't

00:50:37.460 | work. So there are just core structural issues with this

00:50:41.700 | operating system. Now, that makes the iPhone maybe 10 to 30%

00:50:48.580 | less usable. And everything is really, everything is really

00:50:52.220 | frustrating, the command center, you know, when you pull up your

00:50:54.460 | little command center to change the brightness and your AirPods,

00:50:58.020 | it's just like, what are they doing? I mean, by the way, so do

00:51:01.020 | you need a chip? Do you need a machine learning chip to do

00:51:04.300 | inference to figure out that when you constantly run your

00:51:07.700 | phone at a certain level of brightness, you should just

00:51:10.460 | allow the phone to be at a certain level of brightness?

00:51:12.860 | Yes. Why does it read? This is not this is not complicated

00:51:18.860 | software engineering, guys.

00:51:20.100 | No, but this is my point. There's no arbiter of taste

00:51:24.540 | anymore. Taste is the backstop.

00:51:26.940 | Yeah, let me let me pause. Double click on that for a

00:51:30.980 | second. So I think taste is great if you have it, but

00:51:33.940 | there's only so many people on the planet that are going to

00:51:35.660 | have, you know, cutting edge taste and be right. If you

00:51:38.980 | don't have taste, what most tech companies do is they use

00:51:41.420 | data. Data is something that's approachable and leverageable.

00:51:45.340 | Because Apple has like this, the antibodies to using data to

00:51:49.020 | measure success with the user experience measure, whatever

00:51:51.900 | success. If you subtract taste, even by a bit, you don't have

00:51:56.380 | the scaffolding that every other company would use. And so you

00:52:00.180 | see the worst of both worlds.

00:52:01.420 | That's a great take. That's a great take. It's just go off

00:52:04.660 | the rails, right? You go off the rails. So Keith, you think that

00:52:07.380 | you think that what happened is like when Steve Jobs isn't there

00:52:10.140 | and Johnny Ive isn't there. There's still a bunch of folks

00:52:13.380 | that probably think they have taste, but the real taste folks

00:52:16.700 | left and there's really no scaffolding left to

00:52:19.700 | scaffolding you had at Facebook meta, obviously, or the Google

00:52:23.620 | uses would catch some of the stuff without a doubt, like no

00:52:26.340 | doubt about it, you know, that users are less thrilled and

00:52:28.980 | they'd use things less and you'd fix it. And maybe even you take

00:52:32.180 | that to a stream, you never develop taste. Like I could

00:52:34.780 | argue that about Google or meta. They don't really have taste.

00:52:37.220 | But like, yeah, you could, you could argue the paradigms. But

00:52:40.220 | fundamentally, if you don't have that backstop, if the taste

00:52:43.740 | subtracts, even 10%, not all the way down, you're just not going

00:52:46.940 | to catch this stuff. And I think there's only like how many

00:52:49.860 | people in the world really have cutting edge technology user

00:52:52.340 | experience case. I don't know too many, I would fund them

00:52:54.700 | right away. It's an incredible chess game. I have it.

00:52:57.300 | It's an incredible point because I if I'm being really insecure,

00:53:04.260 | I would want to say, Oh, yeah, no, we had a lot of taste at

00:53:07.020 | Facebook back in the day. But actually, we had so much

00:53:10.140 | scaffolding around data, probably because intuitively, we

00:53:13.140 | knew that that was way more reliable for us.

00:53:15.380 | It's more predictable scale. It's certainly more scalable,

00:53:17.980 | right? Like you take Steve out, you don't need a dictator, but

00:53:20.620 | you need a taste and taste is artistic. The same thing in

00:53:24.460 | venture like, you know, like scaling venture funds is really,

00:53:27.300 | really challenging. Because early stage investing is more

00:53:30.380 | like taste, then driven. And later stage, you can use data

00:53:34.620 | and scale it and scaffolding. So I think there's just fields,

00:53:38.460 | it's a little bit also you see like these sports teams, they

00:53:41.380 | just happened at Stanford when Jim Harbaugh left. It took years

00:53:45.900 | for the decay function for like the next coaching regime to show

00:53:49.700 | they were completely incompetent. Like the next year,

00:53:51.980 | they're pretty good next year, they lost one more game, they

00:53:54.020 | should have next year lost two more games, they should have a

00:53:56.220 | lot and then eventually became like horrible. And you know,

00:53:59.220 | there's a decay function with an organization when you take out

00:54:01.380 | the person who is the original thinker, or the leader or the

00:54:04.620 | dictator or whatever. And so I think some of this is showing up

00:54:08.220 | now. And then you know, playing on a field that's not favorable

00:54:12.020 | to them, which is there are advantages Apple has an AI, but

00:54:15.260 | there's some significant organizational structural

00:54:18.500 | disadvantages. And that's the field that people are going to

00:54:21.140 | be competing on for the next five years from a consumer

00:54:24.020 | perspective. And they're playing on a field where they don't have

00:54:27.420 | all the advantages in their favor.

00:54:29.060 | Yeah, yeah, true. Let's go to the app level here. Tick tock is

00:54:32.460 | scrambling right now after an appeals court upheld the January

00:54:36.100 | 19 deadline red for investment. Here we go. Here we go. I refer

00:54:42.900 | you to my Twitter feed.

00:54:43.860 | I mean, you and Jacob must sit. I mean, what do you do? You just

00:54:49.420 | sit at dinner and feed the kids and then talk about Tick Tock

00:54:53.140 | and China. It's

00:54:54.380 | well, I think you don't even have a conversation in my view,

00:54:58.260 | like, Tick Tock is a threat to the national security in the

00:55:02.460 | United States. And that's why

00:55:03.980 | why people who are like, it's just an app. It's just a

00:55:07.140 | hundred percent. Why? Why?

00:55:08.340 | Why? So I think there's different dimensions. One of the

00:55:10.620 | problems is there's so many things wrong with you. Actually,

00:55:13.660 | sometimes people get confused because there's not just one of

00:55:15.940 | these or sometimes it's just one that so they are definitely

00:55:18.660 | using the app to track data about Americans. And there's

00:55:22.740 | evidence that regardless of what alleged protections exist,

00:55:26.900 | there are people in China monitoring what certain people

00:55:30.740 | in the United States are doing. And the CEO lied under oath to

00:55:35.740 | congressional committees about this. And the evidence is now in

00:55:38.020 | the public domain. Hopefully, this Justice Department will

00:55:41.020 | prosecute him for lying under oath, I think setting a really

00:55:43.660 | good example that you cannot just purge yourself before

00:55:46.100 | Congress.

00:55:46.620 | Sorry, Keith, can you double click into that? So what, how

00:55:49.180 | did it come into the into the open source, that what he said

00:55:52.500 | was a lie? Like, what?

00:55:53.340 | Yeah, so there are people in China, who on the record have

00:55:57.420 | said they had access and have had access to American user

00:56:01.540 | data, which he swore to under oath to the Congress that they

00:56:05.660 | were storing the data in Texas somewhere. And that there's no

00:56:08.700 | possibility that, you know, Chinese nationals in China could

00:56:12.540 | access the data. There is now several instantiations of this

00:56:16.020 | in the public record, let alone what's privately about

00:56:18.500 | Yeah, I mean, the case specifically to back in 2022,

00:56:21.700 | by dance, the parent company of Tick Tock had used an app to

00:56:25.500 | track locations had used their app to track the location of

00:56:28.300 | journalists, because they were trying to track leaks outside.

00:56:32.380 | Then secondly, let me let me keep going here, because it's

00:56:35.500 | worse. So there's a law, the fundamental problem is in China,

00:56:38.820 | there's a law that says, if you're a Chinese company, upon

00:56:43.060 | request of the CCP, you must provide all user data. So any

00:56:47.900 | Chinese company is subject to that law, period, there's no

00:56:50.980 | court intervention, you don't need a subpoena, blah, blah,

00:56:52.900 | blah. And so it any Chinese, any executive of that company is

00:56:58.420 | subject to significant penalties on the record for not providing

00:57:03.140 | any user data at the request of the CCP. So as long as that law

00:57:07.540 | exists, there's a real structural threat to United

00:57:10.780 | States. Now, then there's the is the app being used manipulated

00:57:15.500 | on a content basis to influence, you know, policy in the United

00:57:19.340 | States to disadvantage this or that or create hostilities. I

00:57:23.540 | don't really know the answer. I think there's been studies that

00:57:26.340 | suggest that and you're pretty rigorous methodologies. But

00:57:30.020 | that's a second level. And then third is there's the why the

00:57:34.380 | hell are we allowing Chinese companies to compete with us

00:57:38.860 | when no American content based organization is allowed into the

00:57:42.060 | Chinese market, whether it's whether it's meta, Google, x,

00:57:47.540 | you know, there's a strong argument there that Reddit, if

00:57:51.940 | you don't allow our content or non, you know, non Chinese

00:57:56.300 | content into your market, why should we be enabling Chinese

00:58:00.460 | companies to be successful in quotes in the US market, and

00:58:04.020 | that's more of a fair trade free trade.

00:58:06.140 | Keith, do you think that the Pegasus spyware that can

00:58:09.820 | infiltrate WhatsApp so that you can turn on the mic and listen

00:58:12.740 | remotely, and it has no fingerprints, it's very

00:58:15.700 | difficult to detect? Do you think an equivalent? Let's call

00:58:19.420 | it a backdoor exists inside of tick tock?

00:58:22.060 | Yes. So my evidence for this that I believe is an

00:58:25.860 | interpolation of what's in the public domain, is if you looked

00:58:29.020 | at that vote to ban tick tock, it was extremely bipartisan,

00:58:32.940 | despite, you know, controversy. And what happened was that vote

00:58:37.420 | was taken a week after there was an intelligence briefing to

00:58:41.300 | both the House and Senate Intelligence Committees, that

00:58:43.780 | was that's confidential. And the votes, you know, all of a

00:58:47.460 | sudden flow through, I think there's things that are not in

00:58:50.020 | the public domain about tick tock, that spooked a lot of

00:58:53.300 | elected officials and led to this bipartisan consensus. How

00:58:56.580 | many bipartisan votes do we see on a allegedly controversial

00:59:00.340 | issue that, you know, basically, the vote was like, you know,

00:59:04.260 | like, not even close in either house 360 to 58? Yeah, when do

00:59:08.940 | you see a vote like that on something meaningful? Never?

00:59:11.460 | Yeah.

00:59:11.860 | They got they definitely got spooked. And I mean, if you just

00:59:15.180 | think about Navy SEALs, special forces, they're not allowed to

00:59:19.420 | use a lot of these apps, government officials aren't to

00:59:21.540 | use these apps, because they know that all you have to do is

00:59:24.300 | if you track somebody's child, and their tick tock usage, now

00:59:28.020 | you know what the parent is, you start thinking about the

00:59:29.860 | security and safety of individuals. It's crazy.

00:59:33.380 | So 352 votes for an incredibly popular product. Yeah, about how

00:59:39.100 | bad something has to be to get a consensus of 352 votes on an app

00:59:45.700 | that's used by you know, huge fraction of the American public

00:59:48.300 | past the Senate 79 to 18. And you are right, if you say

00:59:52.980 | you're going to ban tick tock, the vague was against tick tock,

00:59:56.300 | but then he opened one, because that's where voters are, you're

00:59:59.140 | going to lose that generation of voters are going to scare

01:00:02.060 | arguably, arguably, in theory, there's some risk, I can sum it

01:00:06.180 | back.

01:00:06.700 | Biden 10. If he's awake, extend this window by 90 days. I don't

01:00:13.900 | know if grandpa is up for it, but he could extend it a bit.

01:00:16.940 | And obviously this with the Trump campaign, you know, he

01:00:20.540 | says a lot of different things. Trump has flip flopped a couple

01:00:23.060 | of times during his first term, he tried to bandit wait till he

01:00:26.340 | gets the readout that the rest of these guys got. Yeah, well,

01:00:30.580 | and then he had mega donor and tick tock investor, Jeff Yoss

01:00:34.060 | gave PAX $50 million, and he owns 15% of it.

01:00:38.300 | When I had dinner with him, that's his This is the one of

01:00:42.380 | the things that I pointed out to him was this specific thing. I

01:00:44.620 | said, you have to look at the Pegasus like equivalent

01:00:50.340 | infant infiltration of WhatsApp, having been done on tick tock,

01:00:54.100 | because the reality is, if tick tock has 200 million users, it

01:00:58.180 | is true, that will, you know, 199,999,000 just don't matter.

01:01:06.100 | So you could turn on the microphone, you're not going to

01:01:08.540 | hear anything. But there's probably 1000 to 10,000 to 15,000

01:01:13.380 | people. And I do suspect that state actors are smart enough to

01:01:18.060 | figure out how to triangulate who you would want to be able to

01:01:22.740 | turn it on when that phone is in your pocket, or when that phone

01:01:25.740 | is on a desk. And I'm sure you will hear all kinds of random

01:01:29.540 | things. And many of those things could be quite sensitive in

01:01:33.100 | nature. So I think that this is something that the government's

01:01:37.180 | gonna have to look at really intensely.

01:01:38.900 | There's such a simple test here. What are they doing with their

01:01:41.340 | own people in China, they are in a police state there, they make

01:01:45.340 | the Stasi jealous how much they're tracking individuals in

01:01:48.940 | China. So if they'll do it to their own people, they would

01:01:51.300 | have no problem doing it to an adversary. And ask yourself, if

01:01:55.220 | the shareholders care about money, they would be willing to

01:01:58.100 | divest, right? No problem. They want to take the company public.

01:02:02.660 | So if you won't divest and get off the board as the CCP, it's

01:02:06.820 | because you see this as a valuable tool, right? I mean,

01:02:09.220 | just work through the basic logic, folks, right at some

01:02:11.900 | price point, right? What I would do if I were president, I'd say,

01:02:14.940 | you tell me the fair market price for tick tock. And I'll go

01:02:18.140 | far, you know, I'll make sure that there's buyers, right?

01:02:21.020 | Because CCB won't name any price. There is no greatest

01:02:26.300 | point, right? That'd be like giving up your nukes. I don't

01:02:30.380 | think they should have to sell at a less than fair market

01:02:32.780 | price. I think that's, you know, legit, like I believe in

01:02:35.260 | capitalism. But there any free market should allow for, you

01:02:40.220 | know, some price discovery. And if they can't name any price,

01:02:43.100 | period, that suggests that you're doing something that's

01:02:46.100 | nefarious. There's no reason by the way, come off, you probably

01:02:49.380 | know this. You know, if you meet like, at least, you know, some

01:02:52.260 | of the times I've met with the president, they take your phone

01:02:54.540 | away. Why do they take your phone away? 100%? Exactly.

01:02:58.940 | Pretty obvious. Yeah, exactly. Also, there are phones that can

01:03:02.460 | be designed to be weapons, as we've seen a number of people

01:03:05.340 | got some nutshots with their pagers recently. All right,

01:03:08.900 | let's talk about venture as we wrap up here, man, Keith, for

01:03:11.060 | boy cooking with oil, new sacks, new red meat sacks. Are you a

01:03:15.980 | steak guy too? He needs to eat a steak once in a while. Oh, of

01:03:19.340 | course. What's your cut? What's your cut? Are you cool? Ed? Are

01:03:21.980 | you a ribeye guy?

01:03:23.580 | eight to 1012 ounces max. medium, you know, solid. I don't

01:03:30.260 | really care. Yeah, but why do you all I'll be a little non

01:03:34.700 | American go Wagyu. You know, like,

01:03:36.180 | yeah, sure. All right. All right. I think just shout out to

01:03:40.320 | my friend Kimbo. You know, red meat Republic. Of course, of

01:03:43.780 | course, I'm a big fan of this cool let slash the Kanye. Oh,

01:03:47.380 | you know, you know what? Yes, I just bought recently a Denver

01:03:52.060 | cut, which I'd never tried. Incredible. Denver. All right,

01:03:56.180 | let's wrap up with a venture update here at the darkest hour

01:03:59.660 | Keith sometimes before the dawn VC deal activity has getting

01:04:05.820 | close to pre COVID numbers in 2019. Obviously, major funding

01:04:10.620 | drop off happened in 2022. Yeah, it's been a couple of years of

01:04:13.940 | this. But deals, the number of deals is coming back the amount

01:04:17.500 | being put to work coming back to I would say the steady state,

01:04:20.580 | perhaps even normal level. And but VC exits, sadly, are not

01:04:27.380 | keeping up. But we did have service now go public today up

01:04:30.500 | 50%. And the wrath of Lena Khan is officially over. She's out

01:04:36.420 | Andrew Ferguson is in this looks like a great appointment.

01:04:39.980 | Another one by Trump in the column of somebody who wants to

01:04:46.100 | allow business to occur and wants a free market. He wants to

01:04:50.460 | do basically everything Lena Khan didn't do, which is allow

01:04:53.900 | some M&A. Roy, what's your pulse like here? And what's your take

01:04:59.380 | on the venture industry, and then we'll go into M&A and exits.

01:05:02.300 | We'll start with just investing. Is it is it ramping up? You

01:05:05.140 | seeing high quality companies?

01:05:07.100 | Well, I'd say that you should cut that data by AI and non AI

01:05:10.780 | and you might see a tell two different cities. My anecdotal

01:05:14.420 | experiences, there's AI companies where the market's

01:05:17.620 | pretty hot, maybe cooling a little bit but hot and AI

01:05:21.020 | companies with the right team are getting funded, you know,

01:05:23.860 | frequently, quickly, etc. And then there's non AI companies.

01:05:27.300 | And I think you'll see a very different, you know, sort of

01:05:30.300 | chart there. I do think net net, you're probably at a steady

01:05:33.020 | state that looks reasonable across 40 years, you know, like

01:05:35.700 | etc. But it would be interesting and you know, you have to make

01:05:39.540 | some methodological decisions about what's an AI company,

01:05:41.660 | what's not, but if you could do that, it'd be interesting to see

01:05:44.580 | if the lines, you know, look similar or not. But it's pretty

01:05:48.660 | hot, like people started companies found founders are

01:05:50.940 | optimistic. Crypto companies also, you know, are back in

01:05:53.780 | vogue, obviously, due to the change in administration. I

01:05:56.980 | think a lot of people had been hesitant to start new crypto

01:05:59.460 | companies. And of course, yeah, confidence in the new

01:06:02.740 | administration, SEC, etc. So we'll see if innovation

01:06:06.100 | accelerates, you know, with all the new capital and all the new

01:06:09.020 | founders back in crypto, in enterprise software, it had been

01:06:14.820 | pretty cool, non AI based enterprise software. But, you

01:06:18.300 | know, like, as you mentioned, with the IPO this week, trading

01:06:21.900 | very aggressively, I think, you know, maybe there's some

01:06:25.140 | inspired inspiration there for, you know, more traditional,

01:06:28.540 | boring companies, Stripe, Stripe, Stripe should go public.

01:06:32.660 | But, you know, they don't listen to me. So

01:06:34.220 | yeah, you didn't know, why aren't they going public? Keith?

01:06:37.820 | What's what's the story with the boys over there? Why are they

01:06:40.140 | waiting to get disrupted by crypto stablecoins?

01:06:42.980 | So seriously, talk about missing your window. Get out there,

01:06:46.580 | boys.

01:06:47.140 | They bought that crypto stablecoin company for like a

01:06:49.380 | billion dollars. Yeah. And I personally believe and

01:06:52.700 | subscribe to the the company should go public as early as

01:06:54.540 | possible. And the group Bill Gurley, you know, sort of

01:06:56.740 | school thought, what amount of revenue, what amount of revenue

01:06:59.140 | for 50 million minimum, but predictability matters, you

01:07:02.060 | know, definitely. So not just 50, like, but 50 with line of

01:07:05.500 | sight to 100. And knowing 100, 200, I wrote a whole chapter in

01:07:09.580 | Ilad Gil's, you know, high growth handbook on why companies

01:07:12.020 | should go public as early as possible. So I've been on this

01:07:14.620 | crusade forever. I like accountability, transparency,

01:07:17.420 | discipline, I think are good things. And, you know, there's a

01:07:21.020 | critique that like, oh, you're not gonna be innovative

01:07:23.180 | anymore. If you look at some of the companies we've been

01:07:25.260 | talking about, what are some of the most innovative companies in

01:07:27.500 | the world? They're public companies, it just takes the

01:07:29.940 | right leader to say, I'm going to be innovative. And I don't

01:07:33.220 | care what the bureaucrats and lawyers, you know, I'm just not

01:07:35.940 | going to get distracted with that. And so I like public

01:07:39.380 | companies. And so I think you'll see a lot of the companies I am

01:07:41.900 | involved in go public at a fairly rapid clip by hysterical

01:07:46.380 | standards. Different founders, though, have different sort of

01:07:49.500 | views on this. It's very reasonable. Stripe, SpaceX, you

01:07:53.020 | know, for example, founded 2003. Who knows, you know, when it's

01:07:56.860 | going to be a public company. So you can have a very successful

01:07:59.460 | company like SpaceX or Stripe. But my preference is to go

01:08:06.140 | public early and then you have the capital resources, equity or

01:08:09.540 | capital to be strategic and per your point about potentially

01:08:12.420 | missing window, they were able to transact, you know, in that

01:08:15.340 | particular case, and get ahead of the curve, or at least not

01:08:18.500 | miss the curve. But sometimes when you're a private company,

01:08:21.300 | there are strategic assets that you can't get your hands on. And

01:08:24.900 | you know, think about Facebook buying Instagram, we talked

01:08:27.660 | about the taste issue. Instagram had taste at the time, like

01:08:31.140 | Kevin had taste. And think about where meta would be. Have they

01:08:36.660 | not been able to acquire Instagram?

01:08:38.380 | Yeah, we totally totally different timeline for the

01:08:42.380 | public currency to have bought. What's up? Yeah, well, what's

01:08:44.980 | up? So optionality increases as you have that public currency.

01:08:49.460 | If you're a private buying a private, the acquired company

01:08:52.980 | needs to believe that you're going to get it over the finish

01:08:55.100 | line, they're going to have some liquidity at some point, whereas

01:08:56.900 | with the public, I mean, they just sell within whatever their

01:08:58.900 | window is, Chamath, your thoughts?

01:09:00.300 | Well, I was just gonna ask you the question, which is what is

01:09:02.580 | the game theory behind Stripe not going out? Like, what's the

01:09:06.180 | what's the strategic rationale?

01:09:09.100 | You know, honestly, yeah, without sharing, like, you know,

01:09:12.300 | one on one conversation sort of stuff. I think the question the

01:09:15.780 | burden, they inverted the burden, which is why should we

01:09:18.460 | go public? A lot of fat, a lot of people ask the question the

01:09:21.740 | opposite way, which is, you know, why wouldn't I go public? I

01:09:26.820 | think their first principle thinkers like put put my point

01:09:29.540 | about Trump, and I think true of Elon, they asked, like, why?

01:09:32.420 | And they're like, well, what advantages would we get? And I

01:09:36.300 | actually think the M&A one is very real. I think they've been

01:09:40.580 | able to construct alternatives to most of the advantages, but

01:09:45.380 | not every company is going to be able to do that. It took a lot

01:09:47.540 | of effort, energy, and then the question is, would you substitute

01:09:50.020 | that energy into something else that might be higher value

01:09:52.860 | creation, if you weren't to like, you know, creating the

01:09:55.980 | alternatives to a public structure?

01:09:57.380 | That is a great answer. Freeberg, your thoughts here on

01:10:00.820 | public markets, M&A, the end of the wrath of Lena Khan, and what

01:10:05.180 | we might see in the new year, post January.

01:10:07.980 | I disagree with the conflation of Lena Khan into all this stuff

01:10:12.100 | too much. It's she's a big company break apart, kind of

01:10:15.620 | mandated has nothing to do with tech M&A small, like the typical

01:10:18.540 | kind of deal flow stuff that I think you're focused on. I've

01:10:20.940 | said this a number of times, so I'll just say it again. But I

01:10:23.580 | think on the on the general liquidity thing, I don't think

01:10:26.180 | that the thing holding up acquisitions and IPOs is markets.

01:10:29.260 | I actually think it's investor and board expectations on

01:10:32.660 | valuation, relative to where they put money in the last

01:10:35.380 | couple of years. So if you look at the valuations from 21 to 23,

01:10:39.740 | you know, early 23, so much money went in at such high

01:10:42.860 | prices, those investors can take those companies public today,

01:10:46.780 | there are public, there's a public market appetite at all

01:10:49.060 | times, for anything just depends on evaluation. And the real

01:10:53.860 | issue right now is that a lot of the VCs, the late stage private

01:10:58.020 | equities, the ones that did the big markups in the late stage D

01:11:00.660 | rounds, e rounds, etc. They don't want to take these things

01:11:03.780 | out and take a 60 70% haircut on the IPO, they'd rather kind of

01:11:07.740 | let this thing sit private, and see if they can earn their way

01:11:10.420 | back into the valuation that they did the market when they

01:11:12.900 | put the round together. So I 100% agree 100% agree with this.

01:11:16.860 | Yeah, I mean, there there is these overhangs are very real. I

01:11:20.500 | don't think the exit liquidity dearth fundamentally, is driven

01:11:23.460 | by markets. I think it's just driven by the the sell side and

01:11:27.420 | the investor expectations.

01:11:28.340 | There's also a culture thing I have to say, like in talking to

01:11:31.260 | a number of like, the leaders of these public companies that

01:11:34.220 | were very inquisitive and M&A, they are taking the position,

01:11:38.420 | it's easier for us to build a competing function, a competing

01:11:41.740 | adjacency than do any tuck ins. If they just told the the corp

01:11:45.340 | dev people pencils down, and they are not wanting to spend a

01:11:49.100 | year or two on a deal, when they have a breakup fee when they see

01:11:52.700 | what happened with Adobe, or they just think, well, why don't

01:11:55.300 | those are big build it ourselves? Yeah, those are big

01:11:57.700 | deals. The small deals are different. The small deals are

01:11:59.940 | more the small deals are the fact that over a couple years,

01:12:02.660 | like Google bought a cybersecurity, like there are

01:12:04.420 | these acquisitions that happened at 800 million that maybe

01:12:07.420 | should have been done at 200 to 50. And again, it's the same

01:12:10.300 | problem that the sellers of the high quality companies demand

01:12:13.060 | too high a premium, that the buyers of these rational scaled

01:12:15.860 | companies are like, that's not worth it, just like IPO

01:12:18.460 | candidates. So I don't know if you've got a

01:12:21.140 | experience. I also agree. So I used to be an antitrust

01:12:23.940 | litigator, which I know Jason knows. And I think I hate like,

01:12:28.660 | you know, the current leadership antitrust division, I called her

01:12:31.700 | a fraud. And I think she is intellectually a fraud. Why? Why

01:12:34.740 | Why? Well, she published a paper that was false, like, like,

01:12:37.980 | her whole claim to fame is this paper about Amazon. And the data

01:12:43.460 | in the Amazon, the data she used in the in the paper at Yale was

01:12:47.060 | false. And in fact, she's too smart to have done it

01:12:49.500 | accidentally. Benedict Evans wrote a good critique of it, if

01:12:52.260 | you want to read all about the data. Second thing is you look

01:12:54.260 | at Amazon, which is this alleged quintessential example. Have you

01:12:58.300 | heard of Shopify? Shopify is one of the biggest success stories

01:13:02.020 | of the last decade, right down the middle competitive with

01:13:04.620 | Amazon, and there was nothing Amazon could do. They lost the

01:13:07.380 | core market to a competitor that was started and you know, went

01:13:11.180 | public at a very low valuation. And Shopify is dominating DTC

01:13:14.500 | commerce. Nobody builds a DTC commerce brand except on

01:13:16.860 | Shopify. So everything about her is like a fraud. That said, I

01:13:22.860 | don't believe that what she's done has affected, you know,

01:13:25.660 | exits very much at all. Because like the truth is in high end

01:13:28.460 | venture, like institutional venture capital, other than the

01:13:30.980 | WhatsApp and like, maybe like a plot acquisition or something,

01:13:34.580 | you know, one every two years, you don't drive returns in

01:13:38.260 | venture to an institutional venture capital fund through an

01:13:40.740 | M&A. Like, like WhatsApp may be the only one that really drove a

01:13:44.900 | fund returning exit to a serious fund. It just doesn't happen

01:13:48.540 | that way. I need IPOs to return our funds. Our funds are like

01:13:52.500 | billions of dollars. You don't get returns on lots of

01:13:55.180 | acquisitions at $50 million to $100 million.

01:13:57.660 | Yeah, but a $300 million fund can.

01:14:00.220 | Yeah, but most funds have ballooned for lots of reasons.

01:14:04.260 | There are a lot of big ones. And that's actually led to some of

01:14:06.580 | the perversity that, you know, David talked about. If the funds

01:14:09.620 | get large, their tendency to do these things also increases. So

01:14:14.220 | yes, a seed fund can drive returns on M&A acquisitions that

01:14:19.060 | might be deterred in a bad, you know, hostile administration.

01:14:22.220 | But a venture fund of $500 million to $2 billion drive

01:14:27.140 | returns through M&A? No.

01:14:28.620 | No, I mean, they could fill in the first one x maybe.

01:14:32.340 | Yeah, I've been lobbying officials for a long time on

01:14:34.420 | this crusade. They come in and they expect that, oh, you know,

01:14:37.460 | M&A, blah, blah, blah, blah. And I'm like, No, no, no, I could

01:14:40.140 | care less. Only my most mediocre companies are quiet.

01:14:43.300 | And the IPO window has started to crack open. Just give me a

01:14:46.300 | couple more data points. Gentlemen, we ride the Chinese

01:14:48.540 | based self driving car company went public on the NASDAQ last

01:14:54.420 | month $4.5 billion market cap pony AI, another Chinese based

01:14:58.820 | self driving car company went public in November. Klarna plans

01:15:04.140 | to go public in the US. I think they quietly filed service

01:15:06.780 | Titan today, the taping of this on Thursday and sheen the fast

01:15:11.500 | fashion company.

01:15:12.500 | Well, she's gonna have some real problems in the new

01:15:14.460 | administration.

01:15:15.180 | Yeah, right tariffs. As we wrap here, that's a good place to

01:15:19.900 | wrap on. What do you think of, I guess, two issues, Keith, we'll

01:15:23.340 | end with politics as we started there. Two things seem perplexing

01:15:27.980 | to people in finance. One is tariffs and how that's going to

01:15:34.180 | work. And the other is inflation and what the impact would be on

01:15:39.700 | 15 million people being shipped out of the country and the

01:15:42.900 | impact that would have on inflation vis a vis the

01:15:47.460 | unemployment rate getting even lower than the historic low

01:15:50.500 | it's been in our lifetimes. What do you think of those two

01:15:52.740 | issues? Take either one?

01:15:53.940 | Well, I think first of all, the Treasury Secretary understands

01:15:56.740 | this, like I think Scott actually, from everybody I've

01:15:59.220 | talked to, I don't know him. But I've interviewed about 10 or 12

01:16:02.260 | people that are very successful Wall Street, and every single

01:16:04.740 | one of them universally has a claim for him. And they've all

01:16:07.900 | made points to me that these kind of subtleties, he really

01:16:12.100 | does grok. And so when he when he says you can raise tariffs

01:16:16.220 | without inflation, he understands how all this

01:16:19.260 | substitution works and is running an equation in his

01:16:22.020 | brain. He's a very successful trader. And that's a really good

01:16:24.620 | skill. Also, Chamath's earlier points about Darwinistic

01:16:28.500 | evolution of brilliant people being successful, understanding

01:16:31.100 | how the economy actually works. He's perfect. So I think you're

01:16:34.900 | going to see real tariffs, like especially against China. And

01:16:39.260 | the Trump administration is completely committed to reducing

01:16:42.500 | inflation, the cost of eggs, you know, and groceries. And I think

01:16:45.860 | those things can be reconciled. I know, amateur economists, you

01:16:49.420 | know, with random degrees from Warren don't think so. But as

01:16:52.580 | Trump pointed out in the debate, and you know, JD Vance pointed

01:16:55.340 | out with some research, his first administration imposed all

01:16:59.580 | these tariffs, and there was no inflation. And then JD Vance

01:17:03.900 | pointed out that the Fed Reserve has a study that says, you know,

01:17:07.100 | housing prices, which are primary driver of affordability

01:17:10.540 | for a normal American are inflated because of illegal

01:17:13.660 | immigration. So I think this administration

01:17:16.700 | and not making more units, I mean,

01:17:18.260 | well, I think this administration, there is

01:17:21.140 | substitution, right? If the price of one good goes up,

01:17:23.300 | consumers typically have, you know, like people on this

01:17:26.220 | podcast, typically have a limited budget. And at the end

01:17:29.580 | of the day, if one price goes up, you have to substitute

01:17:31.980 | somewhere else. So the debt deflation might be negative,

01:17:34.540 | even. So in any event, this administration is not naive. And

01:17:38.140 | the people that Trump has put in place to drive this in Treasury,

01:17:42.340 | the National Economic Council absolutely understand this. And

01:17:45.260 | they're committed to driving down actual prices, the hardest

01:17:48.740 | area is going to be healthcare, that is really, really

01:17:51.300 | difficult. And it is a major driver of cost to a normal

01:17:55.100 | person. And Obamacare has been a disaster. The question is, what

01:17:58.100 | do you do about that? And I don't have an answer for you

01:18:00.100 | right away. I have some ideas.

01:18:01.940 | Jamal, your thoughts on tariffs and or immigration and

01:18:07.060 | inflation. And that seems to be a place where even across the

01:18:10.780 | aisle, you got people debating,

01:18:12.020 | I think he said it pretty well, which is that we do have a lot

01:18:14.940 | of experience with how tariffs can be implemented, and that the

01:18:19.380 | practical experience is not what the fear mongering is about.

01:18:24.940 | That being said, I think the devil will be in the details,

01:18:27.580 | which markets for which goods, what is the tariff and why. What

01:18:32.460 | I hope happens is that if we can really study the second and

01:18:36.340 | third order degree impacts of some of these markets, what the

01:18:41.780 | tariff does is it acts almost as a reverse subsidy for American

01:18:45.980 | companies to compete. I'll give you one very narrow example. If

01:18:50.740 | you believe in electrifying the American economy, one of the

01:18:56.540 | underlying things that you need are electric motors, right

01:18:58.940 | electric motors and electric batteries. And just to double

01:19:01.700 | click on electric motors for a second, electric motors needs a

01:19:05.460 | permanent magnet. If you look inside of a permanent magnet,

01:19:08.540 | there are these rare earths that are just required to make these

01:19:12.020 | magnets. But as it turns out, it is impossible for any company

01:19:17.580 | that is not a Chinese company, to be able to manufacture these

01:19:21.980 | magnets in an economically viable way. And the reason is

01:19:27.100 | because not only can China make it, and they can make it in the

01:19:30.260 | absence of a lot of environmental controls, they'll

01:19:33.220 | also subsidize. So if anybody tries to compete, they'll just

01:19:36.300 | inject a subsidy into that economic supply chain, where

01:19:39.460 | they're always cheaper. So what do you do, Jason, if you can

01:19:43.180 | observe that, and realize that we want supply chain diversity,

01:19:48.100 | what the tariff does is it starts to push back on those

01:19:51.780 | kinds of activities, because it doesn't allow it to continue to

01:19:54.500 | work. Then if you take that with what the United States

01:19:58.500 | government already does through the DOE, which is through

01:20:01.700 | subsidies and underwriting, this is what I mean by it could be a

01:20:06.140 | really amazing new moment for the American economy. And that

01:20:09.940 | would please a lot of people, including a lot of people on the

01:20:12.340 | left, if they just took the time to understand what's being

01:20:15.260 | proposed.

01:20:15.740 | I mean, look at rare earths, you mentioned them, we have some of

01:20:19.500 | the great deposits in the world in our country, why largest

01:20:24.380 | lithium deposits in the world, it's because of environmental

01:20:27.060 | regulations. And it's the same thing with Starship going up.

01:20:30.060 | We got a lot of regulations this country, I understand people

01:20:32.540 | want to do the right thing. But we also have a lot of debt. And

01:20:34.820 | if we could start mining rare earth metals here, and maybe

01:20:38.820 | loosen the regulations,

01:20:39.940 | the lithium supply chain is another really good one that's

01:20:44.020 | emblematic of all of this. But there are so many other markets

01:20:46.700 | like I'm sure that if you looked in something that's a little bit

01:20:49.340 | more down the middle, like appliances, what you would also

01:20:52.780 | see is the same thing where Whirlpool will try to make an

01:20:55.780 | appliance or Bissell will try to make a vacuum cleaner, and the

01:21:00.380 | Chinese equivalent makes it almost like fighting uphill. And

01:21:05.900 | there has to be a way to course correct that.

01:21:07.740 | But I mean, look at BYD, some of these cars, they're just copying

01:21:11.180 | wholesale, everything Tesla has done in their design and feature

01:21:16.460 | set, and they're half the price. And so they're selling really

01:21:19.460 | well in countries that allow them and they would decimate us

01:21:22.580 | automakers, and German automakers, if by the way,

01:21:25.140 | different a different version of this, I wrote this in my weekly

01:21:28.820 | newsletter, but I was curious why these Chinese models are so

01:21:32.420 | good. And I was like, the training of these models seems

01:21:35.700 | to be quite fast, the quality of these models are really good,

01:21:38.300 | the Alibaba model, etc. And part of what you realize is when they

01:21:43.420 | do their training runs, the Chinese models have no guard

01:21:47.300 | rails, in the sense that there's no copyright checks. No, there's

01:21:52.220 | just none of these things that otherwise slow down an American

01:21:54.780 | company to make a useful model. They don't have any of those

01:21:58.140 | things. So that's another example where maybe there's not

01:22:00.780 | an economic tariff, but there has to be a simple reciprocity.

01:22:05.140 | And in the absence of reciprocity, I think it's

01:22:08.620 | reasonable to say that there needs to be checks and balances.

01:22:11.380 | Freeberg, anything to add there on tariffs, or okay, for

01:22:15.380 | jamaath palya hapatia, your chairman, dictator, the Sultan

01:22:18.420 | of science, and new sacks, better BMI hates dictators,

01:22:23.780 | what's your take on Ukraine? Maybe we could fire up.

01:22:26.820 | Discussion.

01:22:27.300 | By the time you have me back, hopefully that's solved.

01:22:37.100 | Hopefully that's up day one. We're gonna solve it on day one.

01:22:40.740 | Okay. Keith, you were excellent. You're tremendous. Keith.

01:22:44.060 | Excellent husband. Very, very effective. Great, great

01:22:48.980 | American great hosts. Great. Awesome. On you may have heard

01:22:52.580 | of two words all in. Okay, you may have heard of it. David

01:22:56.020 | Sachs, brilliant crypto. I mean, we didn't even dive into

01:22:59.740 | crypto. I mean, people are going a little bit on this. What do

01:23:05.180 | you think about all this crazy crypto going on here, Keith,

01:23:07.740 | everything spiking back up XRP, Bitcoin? What do you think of

01:23:12.260 | sailor? I know the sailor fans are like obsessing about him

01:23:16.820 | coming on the pod. What do you think of sailor taking these

01:23:19.620 | loans to buy Bitcoin and then other people are following suit

01:23:22.500 | to put it in their treasury?

01:23:23.780 | Well, short version on crypto generally is I still think the

01:23:26.420 | primary use case is speculation. And not that there's anything

01:23:29.220 | wrong with that people speculate on stocks, retail trading,

01:23:31.940 | people speculate on football games, gambling, like the

01:23:35.060 | natural tendency for humans to want to speculate is very real.

01:23:38.380 | The the art to me is because everybody's now a node connected

01:23:43.540 | into these crypto, let's call Bitcoin, you know, can you build

01:23:47.060 | an application on top that would have too much inertia, too much

01:23:51.220 | friction to start from scratch, but it has real value. And I

01:23:54.260 | think it's possible because so many people are now connected

01:23:56.980 | based upon speculation initially. So that's what's

01:24:00.220 | exciting to me. But, you know, we've watched speculation before

01:24:05.180 | in crypto markets. And, you know, it's very volatile. So

01:24:08.780 | hopefully someone builds real layers of productivity or

01:24:12.780 | utility on top, it takes advantage of the network. It's a

01:24:15.660 | little bit like back in your days at Facebook tomorrow, you

01:24:18.420 | know, you had the social graph and you'd say, you know, you

01:24:20.260 | could build applications on top of the social graph. But if you

01:24:22.460 | had to create a social graph from scratch, that was a heroic

01:24:24.780 | effort and nobody else is going to do it. That was like

01:24:26.500 | literally, the Facebook monopoly story. And so I think that's

01:24:29.820 | true of crypto. There's lots of nodes, someone's got a social

01:24:33.060 | graphic, and there's no Zuckerberg to rug pull and say

01:24:35.540 | you can't use it. Someone's got to build the application on top,

01:24:38.460 | and then it'd be extremely exciting.

01:24:40.180 | What do you think, Freeberg? You you were monitoring this sailor

01:24:43.820 | situation, the Mr. MicroStrategy.

01:24:46.540 | The way it seems, well, I think the way the sailor financial

01:24:51.900 | structure is set up, is it looks a lot like a synthetic call

01:24:55.900 | option on Bitcoin, you get a convertible note, so you earn a

01:25:00.380 | coupon on the note. And then you have a conversion price, which

01:25:03.660 | is a premium to the stock price, which you can translate. If you

01:25:06.460 | look at the book value, or the net asset value of the stock,

01:25:09.420 | that's how much Bitcoin there is. And the premium is two to

01:25:14.220 | one, I think, or two and a half to one. Yeah, the premium that

01:25:16.900 | the conversion price is at tells you what Bitcoin needs to be for

01:25:20.140 | you to have equity upside. So it's effectively a convertible

01:25:23.980 | note, you're in a coupon, and then you have a conversion

01:25:26.300 | premium that you can kind of convert to equity, which

01:25:29.540 | basically gives you a call option, you're saying, the

01:25:33.140 | premium you're paying is the price for the call option,

01:25:35.420 | effectively. And you're earning this kind of coupon in the

01:25:38.100 | meantime. So it's a way for some people to kind of trade the

01:25:40.740 | price of Bitcoin. Seems like this guy said a lot of hedge

01:25:43.740 | funds. And I don't know if you guys saw the CNBC article that

01:25:46.180 | it's kind of like we're Bloomberg, it's like the hottest

01:25:48.060 | trade in hedge fund land right now, is to buy up these

01:25:51.060 | convertible notes that he's issuing. So if you actually were

01:25:53.860 | to sit down and do the black souls modeling of the value of

01:25:59.780 | the synthetic call option that he's selling you with the

01:26:01.940 | convertible note, there's a reason people are paying for it,

01:26:04.860 | they think that there's value there. So there's certainly

01:26:07.220 | something to the structure that makes sense.

01:26:09.340 | All right. So for your Sultan of science, the dictator and fit

01:26:13.820 | sacks, fit sacks here, low BMI, low heart rate, what's the heart

01:26:18.060 | rate at right now?

01:26:18.740 | 40 to 42. Like by measure by age, sleep, typical.

01:26:24.180 | Oh, it's the one what do you think of our next by the way?

01:26:27.180 | Oh, well, we'll see. I don't know if I would have made that

01:26:30.540 | trade, honestly, but

01:26:31.780 | for Carl Anthony Towns, really? Yeah. Fascinating. He's playing

01:26:34.980 | so good.

01:26:35.620 | I know. But like, I think you had the chemistry all dialed in

01:26:38.660 | and hopefully they get billed back better, you know, like,

01:26:42.420 | All right, listen, we'll see you all next time. Don't worry,

01:26:46.740 | sacks isn't going anywhere. It's just a little bit busy right

01:26:49.100 | now. There's a transition going on. sacks is transitioning. And

01:26:53.500 | we'll see the pot will transition as well. We'll see

01:26:55.580 | what it looks like in the new year.

01:26:56.820 | We have a good lineup of co hosts,

01:26:59.980 | we're going to do eight weeks, it's going to be all in idle,

01:27:04.140 | all in idle is occurring. We're rotating people in and you get

01:27:07.700 | to vote on it. That was great. Thank you. You did great. Thank

01:27:10.580 | you. Thank you for joining us. Really? Okay, guys.

01:27:16.100 | Love you, boys.

01:27:17.420 | Let your winners ride.

01:27:22.140 | Rain Man David.

01:27:24.700 | We open source it to the fans and they've just gone crazy.

01:27:31.420 | Love you as a queen.

01:27:33.700 | Wow.

01:27:34.220 | Besties are gone.

01:27:42.100 | That is my dog taking a notice in your driveway.

01:27:45.660 | We should all just get a room and just have one big huge orgy

01:27:54.020 | because they're all just useless. It's like this like

01:27:55.860 | sexual tension that they just need to release somehow.

01:27:59.300 | What you're about to be. We need to get Merck.

01:28:06.100 | I'm going all in.

01:28:07.900 | I'm going all in.

01:28:15.900 | (upbeat music)

Trump's Cabinet, Google's Quantum Chip, Apple's iOS Flop, TikTok Ban, State of VC with Keith Rabois

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