E161: US strikes Houthis, market instability, Q1 rate cuts in doubt, Carta's major mishap, DEI

00:00:00.000 | Nick, can you cue the tape?

00:00:01.120 | This is now the worst form of a shot. Oh my god.

00:00:04.880 | I mean, the fact that he hit the rim is a miracle.

00:00:09.840 | The most unathletic, what is, oh god.

00:00:12.720 | Wish we could get slow motion on that.

00:00:15.760 | Look at his hand, look at the right hand, look.

00:00:21.440 | What is that about?

00:00:24.560 | One hand is.

00:00:25.840 | I mean, that has nothing to do with basketball.

00:00:29.840 | It was the most unnatural basketball/athletic movement I've seen.

00:00:35.680 | Come on, wasn't that bad?

00:00:36.800 | I mean, the lean forward too.

00:00:41.280 | The lean forward, the kind of like sassy jump, you know, the sassy jump.

00:00:46.400 | A little sashay.

00:00:47.600 | He little sashayed on the side there. It's nice.

00:00:50.000 | All right, everybody, welcome to the all-in podcast with me again,

00:01:12.000 | the chairman dictator Chamath Palihapitiya, David Freeberg, the sultan of science,

00:01:18.240 | and the rain man himself named Sachs.

00:01:20.880 | Our first topic, we'll go to our war correspondent.

00:01:24.080 | The US and its allies have struck Houthi targets in Yemen. Sachs?

00:01:28.800 | Well, we talked about this two weeks ago on the show, and we talked about it as a

00:01:33.120 | escalatory risk in the Middle East back then, and I think that that is playing out now.

00:01:37.520 | We fired, I don't know, maybe 100 rockets and missiles at Yemen last night.

00:01:45.760 | The purpose of the strike is to restore deterrence and, I guess, try and prevent the Houthis from

00:01:53.040 | attacking commercial shipping in the Red Sea, but that deterrence is not working.

00:01:58.800 | I mean, there was already a new attack by the Houthis this morning of a commercial ship in the

00:02:05.040 | Red Sea. So, I don't think this is going to have any impact other than to escalate the conflict in

00:02:09.760 | the Middle East and put us on a path to war with Iran, which is really where the neocons want to

00:02:17.440 | take us. You've heard, obviously, the warmongers like Lindsey Graham are calling for that, but

00:02:22.720 | even Speaker Mike Johnson is talking about that. I think that's where this is all headed is a

00:02:27.520 | larger war in the Middle East that features the US and Israel going to war with Iran.

00:02:31.920 | I think we should all be very concerned about that, actually.

00:02:33.920 | >> But, I mean, you have to be fair. It's not just the US, right? It's now the US, the UK,

00:02:40.480 | Israel, Qatar, UAE, and Saudi against the Houthi rebels. That's a big alliance,

00:02:47.680 | and you've got to think that Iran will think very carefully about how close they want to get to the

00:02:54.800 | Houthis in the middle of all of this because that's a huge armada, if you will, of countries

00:03:01.040 | that I don't think you really want to cross as a group.

00:03:03.920 | >> Well, I think Saudi Arabia and UAE are playing this very carefully, I think. They did not

00:03:09.440 | participate in the strikes. They did allow the US to fly overhead or to use its territory,

00:03:16.000 | but they released a statement calling for restraint and de-escalation. So I think they're

00:03:22.160 | very nervous about this blowing up into a wider regional war. I don't think they want that.

00:03:27.840 | The allies who participated in the campaign of airstrikes were UK, Australia, Canada,

00:03:33.840 | Netherlands, and Bahrain, but I don't think they actually did anything. I don't think

00:03:37.680 | they contributed any assets. They just provided their names to this operation

00:03:41.840 | and provided some diplomatic cover. Freeberg, any thoughts?

00:03:45.760 | >> Well, Sax, you posted a comment on Twitter, which I wanted to respond to,

00:03:51.680 | where you said China has the largest shipping volume through the Red Sea,

00:03:57.600 | and they're staying out of this conflict, letting the US do the dirty work. But the Houthis didn't

00:04:03.680 | attack Chinese ships. They specifically attacked Western ships. Isn't that correct? I mean,

00:04:07.760 | this is a very targeted, disruptive event that the Houthis have been undertaking for some time now.

00:04:12.560 | And they're using these very interesting tactics with drones that can be very destructive and very

00:04:18.160 | hard to block, and doing it not at Chinese ships, but at a very targeted enemy.

00:04:22.320 | >> Right. Well, what the Houthis have said is that they're only attacking ships that are either

00:04:26.800 | Israeli or going to Israel. But in reality, they've attacked a much wider range than that.

00:04:33.280 | >> But not Chinese.

00:04:34.320 | >> It may be true that they haven't attacked ships that are declaring themselves to be

00:04:40.080 | Chinese ships or Russian ships. However, there are more Chinese shipping containers

00:04:46.400 | on all of the ships that are going through the Red Sea and the Suez Canal than any other country.

00:04:51.600 | So there's no question that if we're talking about the disruption of global trade,

00:04:55.200 | this is going to have a big impact on Chinese trade, whether it's on Chinese ships or not.

00:05:01.040 | >> Or it could benefit them, because they can get through that shipping lane and the West cannot.

00:05:05.000 | >> Their own ships can get through, but foreign ships, European ships that have

00:05:09.600 | Chinese shipping containers on them are not getting through. So their trade is still getting

00:05:13.920 | disrupted. And nevertheless, they don't feel the need to engage in this militaristic response or

00:05:20.640 | participate in that.

00:05:20.960 | >> So in terms of understanding implications of the escalation in this conflict, let's just

00:05:25.760 | quickly talk about, number one, I'm assuming shipping prices are going to go up, freight

00:05:31.040 | prices are going to go up. But hold on a second. We talked about this with Ryan. Remember the

00:05:34.720 | question that I asked him. This is really an issue for Europe. It's not an issue for the United

00:05:38.480 | States, because there are alternative routes. You can go through the Pacific and you can go down

00:05:42.560 | through the bottom of Africa. And all that does is add like a 5% or 10% increase. So what we're

00:05:49.200 | really debating is what is the risk of inflation and a backup of goods and shipping rates into

00:05:56.080 | Europe? And this is why I don't understand why America needs to even get involved. I understand

00:06:01.280 | why the Netherlands and the UK and France and all these folks need to send resources to unclog this.

00:06:07.440 | That makes a lot of sense. But I don't see why the U.S. needs to be involved. Other than

00:06:14.000 | providing moral support or logistical support, what is the point?

00:06:17.680 | >> Well, Chamath, this is exactly my point, is the number one type of trade that's going

00:06:23.120 | through the Red Sea are shipping containers from China going to European ports. And as

00:06:30.480 | a result of what the Houthis are doing, it's having to go around the Horn of Africa, it's

00:06:33.920 | adding two or three weeks to the trip, and it's raising the cost of a shipping container from

00:06:38.640 | China from, say, $1,500 to $3,000. It's Europe and China who are impacted the most. But for some

00:06:45.840 | reason, it's the U.S. that decides it has to take the lead in doing this. And the problem is that,

00:06:50.720 | first of all, the action is futile. I mean, the Houthis have been at war on and off with the

00:06:57.680 | Saudis for a decade, and the Saudis have been backed by Western weapons. And we have not been

00:07:03.040 | able to defeat the Houthis. So this missile strike last night is not going to deter them. It's not

00:07:08.560 | going to stop them. They're very determined, very tough fighters. Second, they are going to be

00:07:13.360 | looking for retaliation. They're going to be looking for blowback. And Chamath, to your point,

00:07:18.960 | they're not going to be looking for retaliation against China or Europe. They're going to be

00:07:22.480 | looking at it against the United States. So we're incurring this cost and risk onto ourselves.

00:07:28.560 | So let me put this question to you, then. We have no obvious economic incentive to get involved,

00:07:35.920 | because we can sustain our economy through different shipping ports that at best raise

00:07:41.280 | rates 5% or 10%, right? We can absorb that in the economy. 100%, which could drive inflation,

00:07:46.480 | is a European problem. So there's no economic incentive necessarily to get involved. So

00:07:51.360 | what is the incentive? It feels like, not to play conspiracy theorist, but like a

00:07:57.280 | wag the dog moment, another distraction to add to the plate.

00:08:01.920 | What do you think about that line of thinking? I tweeted something just like that.

00:08:07.200 | This does feel... It's a wag the dog in the sense that the Biden administration was looking...

00:08:12.880 | You want to explain the reference for folks that may not get it?

00:08:14.720 | Yeah. There's a movie called Wag the Dog that came out in the early '90s, where

00:08:18.240 | the president is up for re-election, and there's a horrible scandal that's about to come out,

00:08:24.560 | like a Monica Lewinsky-type scandal. This is before Monica Lewinsky, by the way, but it really

00:08:29.600 | was sort of one of those movies that kind of predicted the future. But in any event, the

00:08:34.640 | president's trying to avoid this Monica Lewinsky-type scandal. And so the political aides and advisors

00:08:42.080 | decide the way to do that is to start a war. But they don't start a real war. They basically

00:08:47.040 | manufacture a fake war on a soundstage and in a movie studio. And it's pretty hilarious how

00:08:53.440 | they keep the whole thing going. David Mamet, who's a brilliant, brilliant writer, wrote that

00:08:57.600 | script. But this movie came out right around the time of the Lewinsky scandal with Clinton.

00:09:03.280 | And so therefore, it took on this larger political and cultural significance.

00:09:06.560 | Yeah. It's been used...

00:09:07.360 | So, yeah. So, Wag the Dog is, you know, you basically start a war because of the political

00:09:12.400 | benefits as opposed to the real necessity of going to war. And I think you can make that

00:09:17.920 | accusation here, Chamath, because I think that the Biden administration was looking impotent. I mean,

00:09:22.400 | they were basically telling the Houthis to stop. They were pleading with them to stop interfering

00:09:26.240 | with international shipping. The Houthis weren't listening. By the way, the reason why the Houthis

00:09:31.280 | are doing this is they're doing it in solidarity with the Palestinians in Gaza. They've demanded

00:09:36.000 | that the Israeli invasion of Gaza stop and humanitarian aid be let in. And they're not

00:09:40.880 | going to stop interfering with global trade until that happens. So, that's the Houthis position.

00:09:45.360 | The Biden administration has been telling them to stop. And I think that they were looking

00:09:50.560 | increasingly feckless and impotent. And that's why they did this strike.

00:09:55.760 | Well, is it that...

00:09:56.320 | The problem is that the strike's not going to have any impact. And so, what's the point?

00:10:02.000 | Well, is it that or is it that I think if you take the Wag the Dog analogy

00:10:06.080 | to the limit, I think maybe a different interpretation, I'm not saying that they

00:10:10.560 | did this, but a different interpretation of that analogy would be that they are struggling

00:10:15.520 | domestically. And I think J-Cal tweeted this, but if you look at the polls and you look at

00:10:19.760 | Dean Phillips all of a sudden, and you look at what's happening on the Republican side,

00:10:23.360 | there's so much activity and momentum, frankly, for non-Biden candidates all across the board

00:10:33.920 | that that would be the most Wag the Dog explanation, in my opinion, which is like

00:10:39.520 | to distract folks from the domestic malaise by pointing someplace far away and saying,

00:10:45.280 | "We're doing something very righteous here. Let's all get on the same page and support us."

00:10:49.360 | How does that logically make sense, Jamal, if the US is against wars and people are tired of wars?

00:10:55.360 | Like, what would be the... This is the only problem I have with the logic of the Wag the Dog theory

00:11:00.160 | is nobody wants wars.

00:11:02.320 | Who's against wars, Jason?

00:11:04.080 | The American people. They've been very much against starting foreign wars. We've talked

00:11:08.240 | about it here, so...

00:11:09.120 | Let's talk about the people that run the country.

00:11:11.360 | No, I know that. So, but if you're saying they're doing it, the logic here is Wag the Dog is to

00:11:16.000 | curry favor. Sax, you said they're rallying. This is to rally the American people around like a

00:11:21.680 | patriotic cause. But this isn't like a 9/11 situation where Bush got a lot of credibility

00:11:29.040 | for saying, "Hey, we're going to go get these terrorists." Americans don't want more wars

00:11:33.280 | right now. The polling is very specific on that. So then, I guess, Sax, what is the

00:11:37.040 | logic there to Wag the Dog if this is something American people don't want?

00:11:43.120 | Well, I think you're right, Jason, in the sense that the American people are exhausted by wars,

00:11:48.080 | especially Middle Eastern wars. We've just gotten out of two decades of endless forever wars in the

00:11:53.520 | Middle East, and I don't think the majority of the American people want to get back in.

00:11:58.800 | So, I think you're right on that level. And it's true that if you were to poll the American people

00:12:03.600 | and ask them, "Are you in favor of getting in more wars?" They would say, "No." The problem is

00:12:08.080 | that with every war, the mainstream media starts propagandizing for the wars, and they'll basically

00:12:13.600 | demonize whoever it is that we're going to go to war with and explaining why they're a huge

00:12:19.280 | threat. They'll engage in threat inflation. And so, the American people end up supporting it.

00:12:24.240 | So, we're against war in the abstract, but in every particular case, we end up supporting it.

00:12:29.120 | That's what happened with Ukraine. It's even happening right now. If you look at polling

00:12:32.880 | for this Hootie conflict, I think most Americans believe it's a good thing to strike the Hooties.

00:12:38.560 | So, yeah, they're against it in the abstract, but in each particular case,

00:12:43.040 | the media is able to manufacture consent for the U.S. involvement.

00:12:48.480 | So, just to challenge that as well. So, now our theory is, or your theory is, the media plus the

00:12:57.600 | Biden administration are in cahoots to wag the dog, create this support of a war in order to

00:13:05.280 | distract from domestic issues in order to curry favor with the American public that doesn't really

00:13:11.680 | want more wars. That's where I'm saying, like, I think wag the dog might have been something 20

00:13:15.520 | years ago, like you're saying, that could work as a technique, but I can't imagine anybody would

00:13:22.160 | want to do more military action at this point in time when the American public is exhausted from

00:13:28.960 | it, which is what you've said for the last six months on this podcast. Yeah, look, I tweeted

00:13:33.360 | exactly that sentiment is that I don't think wagging the dog is going to work. I think there'll

00:13:37.280 | be a short-term rally around the flag effect, but I think that overall, if this conflict is still

00:13:44.880 | going on in November, it's going to weaken Biden by making him look like a president who's lost

00:13:49.840 | control of events. So, I agree with you that ultimately the perpetuation of this conflict

00:13:56.240 | is not ultimately in Biden's interest. Now, nonetheless, it may factor into their

00:14:01.760 | political calculation that in the short-term, they think this makes them look good.

00:14:06.000 | - That would seem super incompetent as, like, a political strategy to me.

00:14:10.080 | - Well, I mean, this is not, I mean, despite the fact that this administration claimed to be the

00:14:14.480 | foreign policy grown-ups, they haven't shown a lot of competence. They couldn't even find

00:14:18.560 | Lloyd Austin, who was the Secretary of Defense for five days. I mean, no one knew where he was.

00:14:22.320 | - That's the one that happened.

00:14:23.520 | - No, he checked into the hospital for a procedure and no one could find him for several days.

00:14:29.120 | And there was an article, I think, on CNN talking about how he was managing

00:14:32.480 | this Hootie strike from his hospital bed.

00:14:34.320 | - Yeah, that was weird.

00:14:37.200 | - I hope the man's okay. I don't want, you know, but…

00:14:39.600 | - He's got prostate cancer.

00:14:41.280 | - I know. It's, that's sad, but…

00:14:42.880 | - And he had a UTI. He had a UTI. That's why he was in the hospital.

00:14:45.360 | - But fair enough, but no one in the White House,

00:14:47.600 | the White House couldn't find him for a couple of days.

00:14:49.440 | - Is that true, they couldn't find him?

00:14:51.200 | - Yes.

00:14:51.440 | - I mean, having a UTI is a very benign kind of thing, right?

00:14:54.640 | - Well, he had a prostatectomy and then he got discharged from the hospital.

00:14:59.680 | And somewhere along the way, he got a UTI, which was severe, apparently.

00:15:05.440 | - Oh, okay.

00:15:05.840 | - Went back to Walter Reed. And yeah, in those three or four days,

00:15:09.520 | the handoff of power to his deputy happened. She was on vacation on a beach somewhere.

00:15:16.880 | So, and you're right, the, and the problem was that the other person,

00:15:21.840 | the chief of staff had the flu. So, they couldn't escalate to the White House. So,

00:15:26.320 | it was like a comedy of errors, but I don't think it was anything.

00:15:29.760 | - But I mean, imagine if you were like a C-level executive at a company,

00:15:35.520 | and you're going to be out of the office for a few days and unreachable,

00:15:39.760 | you would set up a clear chain of command. You'd have a deputy who the CEO could get

00:15:44.880 | ahold of if necessary. In this case, you've got the Secretary of Defense who,

00:15:49.840 | if the United States was attacked in some way, is part of the chain of command. The president

00:15:54.560 | would need that person in the situation room. So, the fact that they couldn't find him for

00:15:58.240 | a couple of days is really, I think, unforgivable. How does that even happen?

00:16:02.480 | - Is that really true that they couldn't find him? Like, they literally could not call-

00:16:05.840 | - They didn't know where he was for a couple of days. This was widely reported.

00:16:08.400 | - But they couldn't call him on his cell phone or his chief of staff or the-

00:16:12.880 | - Nobody knew where he was.

00:16:15.040 | - Ah, wow. Yeah, okay.

00:16:17.840 | - All right. Very good.

00:16:19.120 | - Having kept up on the details of his UTI and his cancer, I hope he's okay.

00:16:24.240 | So, segwaying into markets, the likelihood of a Q1 rate cut is not looking good. We had a slightly

00:16:32.400 | hotter than expected December CPI interest rates hit a 22-year high in July, as everybody knows,

00:16:37.920 | when the Fed raised the range from 5.25 to 5.5. But they've left rates unchanged,

00:16:43.520 | if you haven't been following it, as inflation has cooled. But in December, the CPI rose 3.4%

00:16:51.920 | from a year earlier. That was just a slight tick above. And, of course, markets are wondering,

00:16:57.920 | is this going to be a glide path into a soft landing, or could it be choppy going forward?

00:17:05.440 | Freeberg, higher for longer interest rates, you think that's still going to be the case?

00:17:10.960 | And what are your thoughts going into the new year?

00:17:13.520 | - Well, Larry Summers put out a note saying that he thinks that the rates are going to stay higher

00:17:20.240 | than the market is predicting based on the yield curve right now. So, I think the market's

00:17:26.080 | currently saying no cuts in March and high probability of cuts in June. But some folks

00:17:36.560 | like Larry are saying it might be longer because inflation is very sticky. And if you look at the

00:17:42.080 | breakdown on the drivers of inflation, you start to think about what's the underlying business

00:17:48.640 | activity that's going on, like car insurance went up by 20%, which was one of the key drivers.

00:17:55.360 | And car insurance has always been this lagging indicator, but it does ultimately drive costs up

00:18:03.440 | later. The reason car insurance rates go up is because the cost to repair a car goes up and the

00:18:08.080 | cost for medical care goes up. When that happens, the insurance companies actually have to file with

00:18:12.480 | state regulators to get approval to raise their rates. And it can take over a year for the

00:18:17.200 | regulators to then approve those raising of rates. So, by the time the rates get raised,

00:18:22.640 | the other factors have maybe leveled out, but you're still going to have some elements of

00:18:27.840 | costs that are going to continue to climb for some period of time after you get the core engine

00:18:32.880 | tuned down. So, these are the sorts of things that I think we're seeing in the current CPI data

00:18:39.440 | is that there are some of these lagging effects of an overheated economy or overstimulated economy

00:18:44.480 | that are now starting to play through. And so, there's a number of these, it's not just car

00:18:49.280 | insurance, but there's a lot of things that are going to linger for a while, and they're going

00:18:51.680 | to be very hard to work their way through the system very quickly. And as a result,

00:18:55.680 | it may be the case that rates are going to need to stay higher for longer.

00:18:58.480 | I think the thing with inflation that is worth noting is that

00:19:01.440 | a couple of things are true at the same time, which I think is interesting.

00:19:05.280 | I think we were the ones in May of 21 that started getting very antsy around inflation,

00:19:13.200 | and we started to look at the five and 10 year break evens. Do you guys remember that we would

00:19:17.840 | like to look at that chart a lot? And I think it was very predictive. We also used to look at the

00:19:24.720 | future oil curve, not that we're macro economists, but I think it's useful if average everyday

00:19:31.840 | people can have a few things to look at. If you look at those things today, it tells you

00:19:37.280 | the same picture, which is inflation has cooled, we're going through the last

00:19:43.600 | kind of like rows of some of the random variables still being a little sticky,

00:19:50.000 | but the broad trend is down. I think it's indisputable. At the same time,

00:19:55.920 | even with the conflagrations in the Middle East, if you look at what people think about the future

00:20:02.480 | price of oil, it's also down. Oil futures are, I think, about five to 10%. Future prices are about

00:20:09.920 | five to 10% lower than spot right now, for whatever that's worth. But the third thing,

00:20:14.240 | which I think is important, is we've now started to see folks come back from the new year and start

00:20:19.600 | to affect some pretty big layoffs, and they're across industries, right? Citibank today just

00:20:26.000 | announced 20,000 layoffs. That's a huge amount of people that are going to lose their jobs.

00:20:30.640 | So what does all of this mean? It's that I think that people expect that as inflation contracts,

00:20:37.680 | the money supply will expand, but demand has yet to reset properly. So that's the last thing. And

00:20:45.040 | I think Freeberg's mentioned this a bunch. Consumer spending has always been crazy,

00:20:48.880 | people living on credit, all of this stuff. That is now finally, I think, the last thing that has

00:20:55.120 | to get sorted out. So in the absence of demand, back to the way you started, Jason, companies

00:21:00.160 | will cut expenses in order to maintain profitability, because they don't really

00:21:03.200 | want to cut prices unless their product really sucks. Yeah, and just to note that Citigroup,

00:21:08.480 | as you mentioned, 20,000 cuts by 2026. Google also laid off hundreds of people, Amazon hundreds

00:21:15.680 | of people, Discord laid off 17%. And there's a viral video going around of a woman laid off by

00:21:21.280 | Cloudflare, you know, who was only on the team for like six months or something, or five months.

00:21:26.960 | And it does seem like, yeah, firing people before the holidays, laying them off is considered,

00:21:32.560 | yeah, you don't do it in the fourth quarter. So maybe there was some backed up layoffs that

00:21:37.120 | people decided to do into this year. But it certainly feels like SAC's people are,

00:21:42.480 | and you said this, I think, in the predictions episode or the recap episode, hey, you know,

00:21:47.200 | maybe it's still going to be a little bit of turbulence, and the soft landing isn't guaranteed.

00:21:51.520 | Maybe you could expand on that. Yeah, my prediction for the year was bumpy landing.

00:21:56.480 | I thought soft landing was a little too optimistic. And I also thought that this

00:22:00.480 | big stock market rally that we had in November, December was too much too soon. The market,

00:22:05.520 | starting in November, started pricing in about one and a half percent of rate cuts this year,

00:22:10.480 | believing that the inflation problem had been licked. And now what we're seeing is, first of

00:22:14.880 | all, you had a slightly hotter than expected inflation report. And now we have this escalating

00:22:19.760 | situation in Yemen, where this war in the Middle East might expand. And just so you understand,

00:22:28.000 | I mean, the Houthis have already said that if the United States attacks them and uses Saudi or UAE

00:22:35.520 | airspace to do it, that they will consider themselves at war with Saudi Arabia and UAE,

00:22:40.160 | and that they will try to do things like light the Saudi oil fields on fire. I don't think they

00:22:44.800 | have the capability to do that necessarily, but it's an indication that things are very volatile.

00:22:49.920 | Another thing I think we're likely to see in the Middle East is continued attacks on US military

00:22:55.200 | bases in Iraq and Syria. So, that whole region is a powder keg. And if it develops into a wider

00:23:02.960 | regional war, then I think you could see an oil shock. And if there's an oil shock, I think you

00:23:07.920 | can kiss rate cuts goodbye, because that's going to percolate through the whole economy and have a

00:23:12.240 | big impact on inflation. So, I just think that there's a lot of downside to these very optimistic

00:23:20.240 | projections that we're going to get these huge rate cuts. It might happen, but I just see a lot

00:23:26.960 | of risk. Yeah. Friedberg, do you think these oil shocks are here for the long term or a possibility?

00:23:32.480 | You've been talking a lot about alternative energy, nuclear, obviously. And the US has become

00:23:42.160 | a net exporter of oil. So, do you think this risk of oil disruption from the Middle East is with us

00:23:49.520 | for the long term? Or do you think that's waning now? There's definitely structural risk, because

00:23:54.800 | you have a supply chain that can get disrupted in a number of ways and limited alternative options.

00:24:05.200 | If you look at the chart I just shared, it's the US Strategic Petroleum Reserve. So, we have about

00:24:12.400 | 350 million barrels in the Strategic Petroleum Reserve today. That's down from call it early 21,

00:24:22.720 | when we were at 650 million barrels. And, you know, it was pretty much at that level for decades.

00:24:29.440 | After the buildup leading up to 1990. We haven't been at a level this low in the Strategic Petroleum

00:24:35.600 | Reserve since 1983. And so there's not a lot of levers for the government to intervene to support

00:24:44.960 | the supply, as there may have been in the last couple of years, in the case of some supply shock

00:24:50.880 | because of a conflict that arises in a major oil producing region. It's really interesting chart,

00:24:55.840 | isn't it? Because that was after the oil crisis of the 70s. And you look at how long it took to

00:25:00.560 | build it up, and how large we built it. It's a really fast. I've never seen that chart before.

00:25:05.200 | But if you look at the, you know, I don't know if you guys remember the oil lines, did you have

00:25:09.680 | them in Canada, Shama? Where in I remember in Brooklyn, you had an even number, odd number,

00:25:14.560 | license plate thing, if you wanted to get gas, you know, some days was the even number some days was

00:25:19.840 | the odd number, I remember my parents getting online for gas and waiting for two hours or three

00:25:23.280 | hours to get gas. Yeah, by the way, I'll say this is not a real cost today that we're experiencing.

00:25:28.640 | But as Saxe is pointing out, there's a number of ways that this can become a real cost. I was in

00:25:33.600 | Austin this week. And the thing that shocked me the most was how cheap gas was the gas station,

00:25:39.040 | you can get gas for like, two bucks and 25 cents a gallon. Pretty awesome.

00:25:43.520 | It's like $6 when you're in Lake Tahoe.

00:25:46.160 | Yeah, just so everyone understands how the SPR got depleted last year, when inflation was the

00:25:52.320 | top story, you know, on the front page of every newspaper, and gas prices were hitting what seven

00:25:57.120 | or $8. The administration started releasing crude from the SPR to try and bring the price down. And

00:26:04.960 | they did that for about a year, and they were basically subsidizing the price of oil. Now,

00:26:10.240 | that's why our stockpile is low. And that was a really great political strategy. But if we end up

00:26:16.000 | in a real crisis, we're going to have less dry powder to deal with it. So, you know, we could

00:26:21.600 | have a perfect storm of things coming together here, where at precisely the time we end up

00:26:27.680 | getting involved in a big war in the Middle East, our tools to mitigate the oil shock that would

00:26:34.000 | create have been reduced by what the administration has done over the past year. Now, I don't know

00:26:40.000 | that that's going to happen. I mean, I still think we're several steps away from a regional war. But

00:26:45.280 | you look at how many fronts now we have conflict in the Middle East, there's about five different

00:26:50.640 | fronts, where there's conflict, you've obviously got Israel's war in Gaza, you've got Hezbollah

00:26:57.600 | in the north, basically firing rockets, you've got US bases in Syria and Iraq coming under attack.

00:27:05.520 | And now we have the US striking Yemen. So there's just so many ways that this could

00:27:10.960 | spiral out of control.

00:27:12.000 | Jared Ranere isn't the SPR designed so that when we have an economic crisis like this to use it,

00:27:16.080 | like I mean, it's Yeah, you're the Biden administration does a lot to dip in,

00:27:19.440 | by the way, you have to give credit to the Biden administration in one,

00:27:22.160 | in one form. It's not necessarily skilled per se. But when you look at the SPR depletion,

00:27:29.520 | they were selling at incredible moments in the market. And the Energy Department, I actually I

00:27:34.800 | think they they just announced that they're buying another, you know, four or $8 billion

00:27:40.560 | to replenish the SPR. So they'll be doing that now. But they were selling if you look at these

00:27:46.560 | price points here, they were selling when prices were 80 and $90 a barrel, and now they're buying

00:27:52.000 | it back at 70. So at least the United States can take some solace in the fact that we are doubt

00:27:57.680 | a few billion dollars for treasure. I wonder how the SPR relates to consumption, you know,

00:28:03.600 | we see this chart, but it's in the number of barrels, right? 350 million barrels or something

00:28:08.880 | like that. Is that what the chart says? And then it peaked at six or 700,000? I wonder what it

00:28:13.280 | needs to be Chamath or Freiburg on as a percentage of our consumption as more EVs hit the market,

00:28:19.040 | right. And as the number of miles per gallon goes up, so I couldn't find a chart for that. I tried

00:28:25.120 | to find if anybody in the audience knows, the SPR in relation to consumption, that would be a

00:28:30.080 | very important chart. No, I think they're pretty independent, Jason. How so like, we just build it

00:28:36.400 | up independent of what we need. No, the the strategic petroleum reserve is is essentially

00:28:41.040 | that it's it's not meant to be something that's, that's meant to bookend usage, you know, if in a

00:28:49.120 | highly functioning market, there's theoretically an infinite amount of oil that's available. And

00:28:53.920 | so if there's more consumption, you'll be able to find more oil, you'll just have to pay a different

00:28:58.240 | price for it. This SPR is meant to be used in very different kinds of situations. This one is

00:29:03.120 | interesting. Yeah, right. Like when there's a disruption, when there's an acute disruption,

00:29:07.120 | it's supposed to be break glass in case of emergency. Exactly. But how many days is it

00:29:11.280 | supposed to last is what I'm sort of getting at, like, that's what I wonder, because over time,

00:29:15.600 | are we consuming more oil now as a country? Or are we consuming less? I would think consuming

00:29:20.240 | more, but but the thing you have to keep in mind is that even in acute shock, what you can't just

00:29:25.280 | look at the SPR, because we have now domestic oil capability. Right. And a lot of that developed

00:29:31.600 | under two presidents, Obama and Trump. And both of them deserve a lot of credit, because we have a

00:29:35.840 | capability now to be self sufficient. And we are a net exporter because of the work that happened

00:29:43.920 | neck during that time. Yeah, not guess. Oh, my gosh, do you guys see all of this machina with

00:29:49.520 | Carta this week? Crazy? Absolutely. Actually, it's on the docket. So those of you who don't

00:29:54.880 | know Carta is cap table software. If you don't know what the cap and cap table is, which many

00:29:59.840 | of you might not stands for capitalization. What is it? It's a Google or an Excel sheet that says

00:30:05.440 | who owns the number of shares in a company, this gets very complex and private companies.

00:30:09.280 | And they've made quite a business out of it. Wait, wait, wait, can I pause you there? There

00:30:13.200 | was a lot of comments that said exactly that it gets very complicated. I apologize. I've owned

00:30:18.480 | equity in companies for 20 years. What the hell is exactly complicated? Well, I don't understand

00:30:24.720 | that statement. I'm not I'm not directing it to you, Jason. Yeah, but I want I can tell you.

00:30:28.320 | Yeah. Because I feel like that is like some BS statement. Yeah, it's not the thing is you as

00:30:35.040 | acting as a price round individual. In a lot of these cases, it was very simple to do a price

00:30:40.800 | round. But when you inserted safes into this, you know, a simple agreement for future equity that

00:30:47.360 | Y Combinator created, and you put capital convertible notes into this founder started

00:30:53.840 | doing like dozens of these Chamath and at the early stages, the cleanup work and understanding

00:30:59.040 | how many shares people owned, especially with a J Cal, what I'm saying is,

00:31:02.560 | what, like, okay, tell me, let me stop. Let me ask a different way.

00:31:06.720 | Yeah, sure. We did this with spreadsheets.

00:31:09.440 | Let me answer your question. Okay. So in a private company, let's say a company issues

00:31:14.400 | options to an employee, they don't have a good record of that. The employee executes the options,

00:31:18.880 | they now believe that they own shares. Unlike in a public company, where there's a broker of record,

00:31:24.880 | every share is registered in a public company, you know, who owns the shares, you know, what

00:31:28.800 | broker is holding those shares, and every share is traded through a public exchange. So there's a

00:31:33.440 | record of every transaction that takes place with every share in a public company. In a private

00:31:38.400 | company, there's no independent legal regulator that tracks all the shares. So you could issue

00:31:44.720 | options to an employee, and forget that you did that, put the document in a drawer, and the

00:31:50.240 | employee shows up five years later, and they're like, wait, or I've experienced this, I've had

00:31:54.560 | advisors show up, be like, look, here's my advisory agreement, I was given options. I'm

00:31:59.200 | asking a different question. You're saying something great. I get that. I'll tell you

00:32:03.120 | what I think the killer feature was. Why is that complicated to implement in software? I don't

00:32:07.760 | understand. I think the killer feature for Carta, it was called eShares back then, was getting the

00:32:12.720 | shareholder to sign for their stock certificates. So to Freeburg's point, in the old world, where

00:32:18.160 | it was all done by email and a spreadsheet, they would literally have to send you a paper stock

00:32:22.720 | certificate that you put in a file cabinet somewhere. And if you lost it, you had to sign

00:32:25.280 | a document with a lawyer saying, oh, I lost my certificate, I promise you I lost it, all that

00:32:31.520 | sort of stuff. So I think the killer feature was digitizing the stock certificates, and then you

00:32:35.440 | would sign for them using like an e-signature, you know, on Carta, and they would just keep it

00:32:41.760 | for you. No, I get it. I'm not debating the value, guys. You're saying why is the software

00:32:46.560 | complicated? Yeah, why is the software complicated? This is not complicated. Nothing you guys have

00:32:50.000 | said is complicated. But what happened was, because I remember when like the market tipped,

00:32:54.640 | right, is I got one email from a company that was using eShares back then, and I would just do the

00:33:01.840 | digital signature, and I started getting a few more and a few more. Pretty soon, there was a

00:33:06.320 | network effect. Like, I don't want to have to wonder where my digital stock certificates are.

00:33:12.240 | I just know that they're all at Carta. That's very convenient for me as an investor. I think

00:33:16.880 | it's very convenient for the company to be able to manage all this stuff digitally. So look, I mean,

00:33:20.720 | DocuSign is not a complicated technology either, and that is, what, a multi-billion dollar company

00:33:26.160 | because there's a very strong network effect. You don't want to have to have all of your signatures

00:33:30.000 | at a whole bunch of different companies. So I think that's how it kind of got off to the races.

00:33:35.360 | And then since then, they've been able to add more workflows. They've been able to add fund

00:33:39.760 | management. They've been able to add a number of things to make it stickier and more feature-rich.

00:33:45.680 | And it's not that expensive. It's like $10,000 a year or something like that.

00:33:49.200 | It's kind of getting very expensive for startups. We're talking-

00:33:52.560 | $10,000 a year is expensive? I mean, for a seed state startup,

00:33:56.160 | it's a lot. And then we invested in a company called Cake Equity that's doing it for like

00:34:00.240 | $1,000 a year. To Chamath's point, you tweeted, "Why can't this be $1,000 a year? Go to Cake

00:34:04.800 | Equity. You'll see." Well, can we just go to my tweet? I was confused by all of this stuff.

00:34:09.760 | Well, we haven't even gotten to the story yet. So just, sorry, Jason, go ahead.

00:34:12.160 | Yeah, yeah, sorry, Jason, go ahead. So anyway, what you're hearing is

00:34:15.200 | this software is very integrated into startup culture. We all have a lot of opinions on it

00:34:20.400 | because the cap table is where all the value is recorded. The cap tables have gotten much

00:34:26.240 | more complicated, but this is not like building the TikTok algorithm or chat GPT. To be clear,

00:34:31.840 | to Chamath's point, this is not really hard software to build. So correct on that.

00:34:36.640 | And Saxe, correct to your point, it's super convenient if everybody uses the same platform.

00:34:41.600 | And for a Series A, B, C company, spending $10,000, $20,000 a year on this is not

00:34:46.240 | that big of a deal, although there are cheaper options.

00:34:48.640 | And VCs and investors use it too to track their portfolios.

00:34:51.360 | Absolutely. And so...

00:34:53.280 | It grew from one to the other, just to be clear. So, I mean, first,

00:34:56.080 | companies started using it for their cap tables, then they got into the fund management business.

00:35:00.320 | So if you were a fund, you were receiving all of your stock certificates, then you started using

00:35:04.720 | it to communicate with your LPs. So we've started doing that. And it's very convenient for that.

00:35:09.120 | So it's a real, it's more of a network effect business than a hard software business,

00:35:13.040 | I think is Saxe's point.

00:35:13.760 | Totally. Totally. Because it's super network.

00:35:15.600 | This business has benefited from the network effects.

00:35:17.760 | So they had such strong network effects. Here's the brouhaha,

00:35:22.000 | the Donniebrook that came up this past week.

00:35:25.760 | Donniebrook.

00:35:26.800 | So you can look it up.

00:35:27.840 | I like that word.

00:35:30.720 | Yeah, me too.

00:35:31.840 | Yeah.

00:35:32.560 | So the company...

00:35:34.160 | I bet you knew a lot of Donnies in Brooklyn.

00:35:37.120 | I was involved in a couple of Brooks, if I'm being honest, and they escalated from brouhahas,

00:35:42.720 | typically. Not unlike an average episode of this podcast. And so...

00:35:47.200 | There are probably some Donniebrooks involving guys named Donnie.

00:35:50.000 | Yeah, Donnie was typically the guy who started...

00:35:52.560 | This episode is going to be named the Donniebrook episode, please.

00:35:55.040 | So the company had a massive violation of trust. As they were expanding to figure out other

00:36:02.480 | businesses to come into, they got into what's called the secondary market. For those of you

00:36:07.040 | who don't know what the secondary market is, people like to trade stocks of private companies.

00:36:11.600 | You may have heard people buying and selling Stripe or SpaceX. And so employees, early investors

00:36:17.520 | might sell their shares to other people. Now, this is not happening as a primary offering from

00:36:21.600 | the company where they raise money and issue new shares. This is people who have shares.

00:36:25.120 | Carta was in a great position to do this because they had the cap table.

00:36:29.200 | Now, on your cap table might be 100 investors. 30 of them might be your friends, family,

00:36:34.480 | very quiet. It could be Jeff Bezos, who was a seed investor in Google.

00:36:39.200 | Some folks at Carta who were in the secondary business violated the trust and the privacy of

00:36:47.040 | companies who had angel investors or early stage investors on their cap table and started contacting

00:36:51.840 | them directly saying, "Hey, do you want to sell your shares in company A to this person? We're

00:36:57.040 | trying to create a market for it." They got called out publicly. The CEO, Henry Ward, who is a unique

00:37:04.480 | individual, as many CEOs are, tried to do some comms. It was a disaster of comms for a couple

00:37:12.720 | of days while they tried to explain basically breaking their own terms of service. And it all

00:37:19.440 | ended up with them selling the secondary business, which I understand was a tiny business for them.

00:37:24.720 | Overall, your thoughts, gentlemen. I don't know if anybody has strong thoughts.

00:37:27.200 | Why did you say he was an interesting individual? Do you mean?

00:37:30.320 | He communicates directly in a very effervescent, candid way, like some founders do.

00:37:39.040 | Effervescent. Wow, that's a nice, nice. Effervescent.

00:37:42.000 | I mean, I'm just trying to- What I was saying, he's sparkling?

00:37:45.280 | I think he is bad at PR, but entertaining to listen to, right? I think maybe they should have

00:37:53.520 | had a little bit of a slightly more thoughtful approach to this, but it all happened in real

00:37:57.600 | time. So it's very difficult to deal with the crisis in real time, I think.

00:38:00.160 | I have two comments. The first is I actually disagree with David Sacks. I think that there's

00:38:06.960 | literally no concept of network effects in this business, and it makes no sense here.

00:38:11.200 | And the reason is that when you look at the public markets, which are infinitely larger,

00:38:16.240 | we have a vibrant public stock market that has no concept of this, and it works.

00:38:21.280 | Where you have companies like ComputerShares, you have companies like SS&C, there's just a

00:38:28.160 | plethora of providers that do fund administration, and frankly, I'm glad that there's a plethora of

00:38:33.120 | providers. I use some of them, and I trade one against the other to get a constantly cheaper

00:38:37.840 | price. We use the distribution agents, and depending on which bank I'm working with on

00:38:45.120 | whatever deal, I have shares at multiple different agents. And they also cost virtually nothing, and

00:38:51.680 | I don't see a world where that deflationary cost reduction doesn't come to this market either,

00:38:58.400 | because I don't see this as a defensible area of software. I think it's a necessary piece of

00:39:04.080 | software. So I kind of like randomly tweeted out just kind of like, "Oh," because I was just

00:39:09.200 | watching from the sidelines. Now, in full disclosure, I was a Carta investor. I sold all

00:39:14.400 | my equity in a secondary transaction, actually. Speaking of secondary transactions, was that a

00:39:18.880 | good trade? Yeah, I sold it all two and a half years ago. So I have no opinion one way or the

00:39:24.160 | other on this company. I understand process automation, but I don't think process automation is

00:39:29.200 | defensible. So if you build software around process automation, you will be competing in a race to the

00:39:36.320 | bottom on price. That is, and I have not seen a single example of a company that's proven this

00:39:41.360 | otherwise. There are different companies that create real lock-in because of what they build.

00:39:46.080 | That isn't one. So I tweeted this out. Some person sent me this, and Jason, to your point, the two

00:39:51.840 | most prevalent competitors that they showed me were Mantle and Pulley. I think one is a YC company,

00:39:59.120 | and one is not, but Mantle and Pulley I think were the two that came up the most often. And Jason,

00:40:04.160 | to your point, what they both told me was Carta is like 10K a year, 12K a year, and these guys are

00:40:11.120 | 90% discounted at a 10th of the price, which again, proves there is not a lot of super compelling

00:40:18.160 | software lock-in here. It's useful stuff, but that useful stuff is eventually going to get as

00:40:23.600 | close to free as possible. These guys are proving it. And then last night while we were at poker,

00:40:28.400 | I got this thing. Somebody in two days built an open source competitor and just put the code out

00:40:35.920 | there and said, "Here you go. Take it." Isn't that incredible? Guys, that happened in two days from

00:40:43.120 | that tweet. How crazy is that? If I got a stock certificate from, what's the name of this thing?

00:40:52.800 | Open source clone. Buybycarta.com. I'd groan. I'd be like, "Oh, here we go. I've got to find my

00:41:01.040 | certs in five different sites, and this thing's probably going to go out of business in six

00:41:04.640 | months." Come on. That's not true, and you know it. You know it. You don't know where the certs

00:41:08.320 | are. You don't care. It'd be seriously annoying to have to deal with something new. I can actually

00:41:12.000 | tell you what's happening in the market with startups. Startups are looking at the alternatives.

00:41:16.240 | They want to save money. The bigger companies are probably not as price sensitive, Chamath. So

00:41:22.320 | spending $20,000 as a Series B company, nobody cares. But for the startups, they tend to find

00:41:28.480 | the most efficient software, and you're exactly right, Chamath, on that.

00:41:32.560 | Yeah. My comment is less about Carta itself and its price point. My observation is twofold. One is

00:41:40.320 | software that doesn't have a fundamental lock-in does not have pricing power,

00:41:47.520 | number one, and number two, we are almost at the tipping point of a set of tools that will

00:41:53.280 | allow competitors in a matter of days to compete with an 80% feature-complete solution at a fraction

00:41:58.880 | of the price. That's my generalized observation as manifested in this Carta example in less than a

00:42:05.360 | week. Well, what do you do with some observation like this? If you have this 80% observation,

00:42:09.440 | is there anything you could... So then I was like, "Well, you know what? I'm just going to go for it."

00:42:12.560 | So I'm starting this thing, and I've been working on this idea for a little bit,

00:42:18.960 | and I've been experimenting with it with some of my companies. But then I was like, "You know what?

00:42:22.960 | We should just do this." So the concept here is we're going to build this incubator. It's called

00:42:27.360 | 80/90. I have a team. I have a bunch of developers offshore, and we are going to

00:42:32.880 | basically create a hit list of software that we think is relatively straightforward

00:42:40.720 | and mispriced and could be built much more efficiently in 2024 using all of these co-pilots

00:42:46.480 | and tools. Our boundary conditions will be, "Can we deliver 80% of the functionality

00:42:53.200 | at 10% of the price?" So at a 90% discount. So 80/90 is sort of where you're going?

00:42:59.040 | 80/90 is what the name of the incubator is. And what was interesting is when I tweeted this out,

00:43:03.600 | we had 1,200 people essentially give us a product roadmap. They told us the software

00:43:09.920 | that they would want. They told us the features that they need. They told us the things that

00:43:13.040 | they don't need. And so the idea here, Jason, I think is I'm just going to build this in the wild.

00:43:17.920 | I'll create the list of companies. We'll publish that out, let people vote on it. Then we'll

00:43:23.040 | publish the PRDs of what the 80% version is, and we're going to work backwards with my team

00:43:29.040 | in South Asia to try to build these things at a 10% price point.

00:43:34.880 | So Sax, your thoughts, you're a SaaS investor. You're vertical. Your thoughts on Chamath's plan

00:43:40.880 | to be the most hated person in Silicon Valley by underpricing every piece of SaaS software by 90%

00:43:47.600 | in real time. Can he do it in your estimation?

00:43:52.240 | Yeah. Well, I think there probably are categories where you could do that.

00:43:55.200 | But in general, what I would say is that it always looks easier from the outside

00:44:02.480 | than from the inside, meaning that you look at any particular SaaS category leader,

00:44:07.680 | and you're like, "This is easy. I could do this." And then when you actually get into it,

00:44:12.560 | you realize that, "Okay, the product I'm seeing is kind of an iceberg. I'm just seeing the tip

00:44:17.120 | of the iceberg. Below the waterline is all the business logic that's been written into the

00:44:20.960 | system. There's a much deeper and longer list of features." Not in every category. You might be

00:44:26.480 | right that in some categories, you don't need the product depth. But in many other categories,

00:44:30.960 | there's just a lot of subtle features, usability issues have been figured out, integrations

00:44:35.360 | with other- Ongoing support.

00:44:38.960 | Ongoing support. Training.

00:44:40.320 | And then you have the whole sales and marketing component to it. So what ends up happening is

00:44:44.720 | you attack a category saying, "Oh, this is going to be easy." A year or two into it, you're like,

00:44:50.400 | "Wow, the category leader, we're not even close to where it is in terms of table stakes here."

00:44:56.240 | And it ends up being more of a slog than you thought. And then you find out the market

00:45:00.560 | doesn't actually have as much of an incentive to switch. I'm not saying it can't be done.

00:45:04.320 | There are categories where I think the category leader has become stagnant

00:45:09.840 | and has stopped innovating. And I think those are ripe for disruption. I mean, look,

00:45:14.160 | I'm kind of trying in a way we're going to be launching my Slack killer soon.

00:45:17.760 | I feel a lot better about that because Slack Ad Acquire hasn't really innovated in a few years.

00:45:23.840 | And Salesforce, by the way, just announced zero hiring in 2024. And the Slack teams were like,

00:45:29.520 | "What? How are we supposed to hit our roadmap without more people? What's going on here?"

00:45:33.200 | Right.

00:45:33.520 | So there is that.

00:45:34.800 | Look, I definitely think it can be done. But I don't know. I think you got to choose

00:45:39.440 | carefully the categories where the iceberg isn't bigger than you think, basically.

00:45:44.800 | Do you think that there's a shift in the business model for SaaS companies

00:45:49.120 | that emerges from what Chamath is talking about, where I think right now sales and

00:45:53.600 | marketing costs as a percent of revenue on average for a scaling enterprise software

00:45:58.000 | company around 55% of revenue, or something in that range? Does that number get compressed

00:46:04.240 | by bringing price down? So you bring price down, but you need fewer people to go in and do the

00:46:08.880 | selling, fewer folks to do marketing?

00:46:10.320 | I don't think so. That has not been the pattern. I mean, look, everyone was saying things like this

00:46:14.640 | when enterprise software shifted from on-prem to the cloud. When we went from Oracle and

00:46:20.480 | Siebel to Salesforce.com, people would say, "Oh, it's going to fundamentally change the business.

00:46:25.760 | Sales won't become that important. Product's going to be all-important."

00:46:28.480 | It was true to some degree. I mean, I do think that-

00:46:31.360 | You tried to do it. That was what you pioneered at Yammer. You tried to do bottom-up sales.

00:46:35.520 | Yeah. So there was product-led growth became a thing, and a very important thing. And I still

00:46:40.960 | think that's the best way to build a SaaS company is you let the users just try it on a freemium

00:46:45.520 | basis as opposed to having sales knock on the CIO's door, let the employees pull the product

00:46:51.280 | into the company, then go close the deal. So it did make important changes, but it did not get

00:46:56.400 | rid of sales. I mean, what I believed doing this stuff way back in 2008 is we'd be able to get rid

00:47:01.840 | of sales and just make enterprise products completely self-distributing. That never

00:47:06.560 | happened. People have been predicting the death of sales for a long time, and it's never happened.

00:47:11.440 | I think your vision is absolutely right. And I think this, in a world of auto GPTs,

00:47:16.000 | it's going to happen. And I think the way that it's roughly going to happen is as follows.

00:47:20.000 | I think what happens is that, and Zoho is another good example of how you can do this, which is

00:47:25.120 | what you need are a small set of tools that provide useful capability for a company that

00:47:30.960 | work elegantly together. Now, when you work elegantly together, there's a bunch of things

00:47:35.040 | that you need. You need security, you need handoffs and handshakes, you need different

00:47:39.120 | ways of handling exceptions, you need a common kind of data model. All of those things can

00:47:45.520 | actually be configured on the fly dynamically by in between two sets of software if you let the AI

00:47:52.480 | actually run and auto configure itself. And so I think the experimentation is as follows. You have

00:47:58.240 | product A and product B, you want to adopt them both. They have elements of an agent that can go

00:48:03.440 | and auto configure themselves to each other. Separately, I think what the CFO or the CEO does

00:48:10.240 | is allocate a budget. And that budget is an agent. And what that agent does is it works with these

00:48:16.320 | other agents to say, okay, great, I can spend money on these features. That is the thing we've

00:48:20.880 | not explored. We've always taken software that we build, and all of a sudden pause automation

00:48:27.280 | and hand it over to people to run it through a relatively archaic go to market process.

00:48:32.480 | And I think what's worth trying to figure out in 2024 and beyond is how to use these tools

00:48:38.720 | to automate all of the low level negotiation that happens before you can adopt software,

00:48:43.600 | I just think it's totally unnecessary. And I think that this is where software can do

00:48:48.400 | a very powerful job on behalf of the salesperson. Does it mean the salesperson is totally out of

00:48:53.680 | the loop? No. But I do think that if these tools are lightweight enough, especially the young,

00:49:00.000 | nimble companies will actually say, great, my procurement person is actually an AI agent with

00:49:06.000 | a budget. And it's the products that then figure out how to negotiate for the share of that budget,

00:49:11.280 | and then configure how to work amongst itself. That is the key innovation that I think someone

00:49:16.960 | will figure out that is the Zoho 2.0. Right? That is the Salesforce 2.0. It's sort of this

00:49:24.240 | app App Store, common data bus, kind of an idea that that I think somebody will build,

00:49:29.120 | I would like to try to help people have started building into math, because you're starting to

00:49:34.000 | see the features overlap in many programs, you're seeing HubSpot, Salesforce, Zendesk,

00:49:38.480 | they're all kind of getting into each other's business.

00:49:40.560 | Yeah, those are, that's a great observation. But those are all closed products. What I mean is

00:49:45.760 | like, there is like a totally open protocol and set of standards for how product A integrates

00:49:52.880 | and interacts with product B on many levels, right from security to data model, and everything in

00:49:58.800 | between. And I think that that is what needs to get figured out and be very much an open source

00:50:03.680 | idea. The great part about this is this is going to be massive competition, it will lower prices,

00:50:08.400 | it'll add features, and the team over at 37 signals is doing something similar. If you look

00:50:14.000 | at once.com, they are also going to go after slack sacks, and they're going to just charge

00:50:19.920 | one time for the software. I think I may have mentioned it on a previous one, but their concept

00:50:23.360 | is, yeah, just my gosh, can we can we take a moment actually, can you throw up my tweet? Can

00:50:29.360 | you take a moment to just say thank you to Stuart Butterfield and what he pulled off? Thank you. As

00:50:36.640 | a series A investor, I thank you, sir. 27 times ARR is looking like a pretty great exit multiple.

00:50:44.560 | Oh, there's my reply. Oh, yeah, look at my reply. Yeah. I mean, my gosh, what a deal.

00:50:51.040 | And at the time it was, they were public and people were wondering, like,

00:50:55.520 | Hmm, which is a good deal or not, should they have stayed independent, but the product velocity

00:51:00.160 | sacks, how do you get going? How are you

00:51:02.480 | thinking about what the critical go to market MVP capability is for slack. So this year is what I'm

00:51:10.880 | curious about. There's chat, right. But the problem with chat, in my opinion, is that slack has become

00:51:20.400 | totally overrun, where you could be a five person company, and all of a sudden you have 500 channels.

00:51:24.560 | So there's no scarcity. And that scarcity is, in my opinion, what makes what makes all corporate

00:51:30.480 | chats in this modern version, teams included, totally unusable, so much noise and distraction.

00:51:37.040 | So how are you thinking about that problem? Yeah, I totally agree with that. What you hear

00:51:42.000 | from every single company that has more than I don't know, 50 employees, is that slack doesn't

00:51:48.000 | scale. Because what happens is, you have a channel get created. And there's a whole bunch of

00:51:54.800 | conversations in there that are kind of munched together. If anybody in the company wants to

00:51:58.560 | participate in any one of those conversations, they have to join that entire channel. And as a

00:52:03.360 | result, every single employee ends up in every single channel. And it's just a giant mess. And

00:52:07.440 | there's way too much noise. So I think that the channel model was beautiful in terms of letting

00:52:13.120 | people get started really easily. You just jump into a channel and start posting. That's why it

00:52:17.440 | took off. But it's not particular enough in terms of, of addressing conversations to the right

00:52:24.800 | people. So that's basically one of the problems that we're fixing. The other thing I've heard

00:52:29.440 | from people is that we love chat, but we also really liked the feed that Yammer had as a way

00:52:34.960 | to quickly scroll through new stuff. You have a top level corporate feed, people forget that there

00:52:39.680 | was like this, hey, if you want to get the pulse of the entire organization, go to this one

00:52:43.840 | corporate feed. We were the first ones to figure out that like a feed should be used inside of an

00:52:48.560 | enterprise, not just in a consumer social network. So in any event, I'd say those are like two of the

00:52:53.760 | main concepts is combining feed and chat in a way that actually makes sense and solving the noise,

00:53:00.000 | the signal noise problem. Do you have a name for it yet? Yeah, it's gonna be called glue.

00:53:04.320 | Ooh, I love that. Can I remind you, can I, can I remind you that as a, as a humble investor,

00:53:11.040 | sir, I, I think I was part of Yammer and Slack. So I can add value.

00:53:17.440 | You're in, you're in. There's just one requirement for the early investors is you guys actually have

00:53:22.640 | to use it. You got to do a rip and replace on your Slack and sure. If you're willing to do that,

00:53:27.680 | you're in. Perfect. I'll take 250, 500 K. Yeah. I'll take 500. So I think we're going to do is

00:53:35.440 | before launch, we'll do like a seed round. Right now it's all been incubated by craft. So we'll do

00:53:40.400 | a seed round. So like 6 million posts, six posts. I'll put 50 in at six pre 56 posts,

00:53:50.400 | but it won't be, it won't be a super expensive round. Cause what we want to do is incentivize,

00:53:55.920 | you know, influencers to like support the products, switch to the product.

00:54:00.720 | So it really is going to be, do you have glue.com?

00:54:04.640 | We have glue.ai. Oh, wow. Nice. I was going to get 80, 90.ai,

00:54:10.640 | but then I didn't like it. You know what I got instead. Tell me if you like this

00:54:13.520 | 80, 90.ink. So it's just 80, 90. That's fine. It doesn't matter. Everybody searches. I mean,

00:54:20.640 | eventually you fake it till you make it. If the 80, 90 domain happens, you get it,

00:54:24.960 | or you put get or go 80, 90.com. So do that before the show gets published. What is it? Get or go

00:54:30.800 | like if people have an 80, 90 or go 80, 90. So, you know, if it's a service, you say go 80, 90.

00:54:38.080 | And if it's whatever you say, get, if it's an app or something, right? Like you're just going to go

00:54:42.080 | get it here at this domain name. It's just easy to remember. I also got vc saskoboom.com.

00:54:47.120 | Oh, excellent. Well, I have wet your, people don't remember it's for a callback. I have

00:54:51.440 | wetyourbeak.com. I think it just goes to whatyourbeak.com just goes to our website.

00:54:56.800 | So that I mean, that was the basic scandal. Saks, they let the sales team doing secondary,

00:55:04.160 | apparently, or somebody broke a rule, they weren't exactly clear with it.

00:55:07.520 | It sounded to me like, you know, they didn't want to throw anybody under the bus exactly.

00:55:12.720 | But how big of a violation is it to let people go sell into the cap table, secondary shares without

00:55:22.000 | the CEO or your customer even knowing that you access that data? Where would you put that on a

00:55:25.920 | violation of trust scale? I think it was a huge issue for them because the only reason startups

00:55:31.120 | give their data to Carta is because they trust them to keep it private. Yes. And I think a big

00:55:37.040 | part of the problem with the Carta vision of creating the secondary marketplace is that

00:55:41.920 | founders don't want it. Fundamentally, that's the problem. I mean, Carta is in the perfect position

00:55:46.640 | to rationalize and make liquid the secondary market. The vision was correct in that sense.

00:55:53.760 | And the reason for that is because Carta not only has the cap table and they know who all

00:55:58.480 | the investors are, they also have all the documents. They got all of your corporate

00:56:01.680 | documents, the bylaws, all that kind of stuff. They can very easily execute these transactions.

00:56:06.560 | So Carta was in a great position to replace all of these secondary brokers who are running around

00:56:12.160 | creating books on their own. The problem they have is that at the end of the day,

00:56:16.880 | founders don't really want secondary markets to take place in their company shares.

00:56:22.800 | And I think there's a few reasons for that. One is price discovery. I think a lot of these

00:56:27.680 | startups now, if their shares were to be freely traded, would be trading below.

00:56:32.560 | Bad timing.

00:56:33.200 | Below the last round's mark. So they don't want it. Second, the founders don't necessarily want

00:56:39.920 | their investors getting out and then getting new investors on the cap table that they don't know.

00:56:43.840 | So founders are somewhat particular about who their shareholders are. It's different than

00:56:49.040 | public companies in that way. I mean, Apple doesn't really care who its shareholders are.

00:56:52.880 | Private companies do care.

00:56:54.000 | Do you think that that's sustainable in a world where companies take 14 or 15

00:56:57.440 | years and they're trying to retain talent?

00:56:58.960 | Well, I think it would be better for everybody if there was more

00:57:03.520 | organized liquidity. I mean, one of the things I love that SpaceX has done

00:57:07.440 | is that for the last number of years now, they've had a tender offer every year.

00:57:12.560 | And not even every year, like almost every quarter, right? It's every six months, I

00:57:15.680 | think was what my understanding of it is. But yeah, I mean, it would be

00:57:19.120 | Think about that example. So with SpaceX, it's been up and to the right on a pretty

00:57:22.880 | consistent basis. So every tender round has been a bump. Sometimes it's been a small bump,

00:57:28.320 | sometimes it's been a larger bump. The company, I don't think, has gotten greedy. So they haven't

00:57:33.520 | tried to shoot the moon and raise the valuation too much. So they've been able to keep a very

00:57:37.920 | organized process. And they've had this attitude from the beginning of letting their employees

00:57:42.560 | and investors get liquidity when they need to. So it's been great. But that's very different.

00:57:47.280 | By the way, that sort of organized tender process is very different than the secondary market that

00:57:53.040 | Carta was organizing, right? Because Carta was trying to do what all these secondary brokers

00:57:57.600 | are doing, which is they hit up people one at a time, and just say, Are you looking to buy or

00:58:01.600 | sell? And they're trying to organize secondary transactions that are not part of an official

00:58:06.560 | process. And I think that's a huge part of the problem here. Freeberg, did you have thoughts

00:58:12.400 | on it? Yeah. Well, I mean, there's an element of secondary transactions and private companies

00:58:17.840 | that are unstructured, generally being a problem. The issue with Carta was was there a violation of

00:58:22.720 | trust with respect to the transparency onto the cap table that they have access to because they

00:58:27.040 | have all the data in their systems. And when I was at Google, in '04 or so, Sergey was kind of

00:58:37.680 | throwing around the idea, why don't we start a hedge fund, because we have all this data about

00:58:41.680 | what people are searching for, and we can see all of this consumer behavior. And we could trade on

00:58:46.080 | that and have a huge data advantage in the marketplace. And ultimately, whether or not

00:58:52.720 | there was an impropriety of the use of data, and even if we excluded personal data and search data,

00:58:58.960 | just using internet based traffic and internet data, the perception of the problem would have

00:59:04.080 | damaged Google's brand so much. First of all, is there an actual conflict where you're taking

00:59:07.920 | people's what they consider to be private data, and using that to make money from their data,

00:59:12.720 | without their permission or acknowledgement or explicit consent? And secondly, even if you are

00:59:19.280 | doing this in a way that doesn't use their data, because you just generally have knowledge about

00:59:22.560 | who buyers and sellers are in the market, outside of your software, the view that you may be using

00:59:28.240 | the data in conflict can damage your brand and damage your customer relationships so much.

00:59:34.240 | So it seems, in hindsight, a little silly, but I think to Jamal's point earlier,

00:59:38.320 | it may indicate the necessity for them to think about building another business on top of this

00:59:42.320 | core software business. That is a more true marketplace driven business. So they can make,

00:59:47.120 | you know, over time more money. And that's probably where this all came from. They

00:59:50.480 | saw a need to build something that was more than just monthly.

00:59:53.600 | The truth is, they weren't making money from it, and they shut it down.

00:59:57.680 | It's true that Carta is trying to become a multi product business. They started with,

01:00:03.200 | you know, start cap tables, then they added fund management, then they added this broker business.

01:00:07.760 | But if you read Henry's last blog, the secondary market is what he originally wanted to disrupt,

01:00:13.760 | is he always wanted to create the secondary market. And he created the cap table business,

01:00:19.440 | the SaaS software, as a way to get to that. I think what he's realized is that the real value

01:00:24.880 | is in the SaaS software. And this marketplace is not that valuable. I mean, the SaaS business is

01:00:30.320 | doing something like 250 million a year of revenue. And the broker business is only doing

01:00:34.720 | a few million. Yeah, 3 million. So I think the value has turned out to be in the SaaS. And moreover,

01:00:40.000 | this broker business was compromising the trust and safety or the perception of trust

01:00:46.400 | that the company has from customers. The problem with that SaaS revenue is if you

01:00:50.640 | look at mantle and pulley, that 250 million could be 25 million.

01:00:56.160 | And cake. My investment. Yeah.

01:00:58.480 | And cake. Sorry. Yeah, and cake. But But the point is, the fact that there are there are many

01:01:04.080 | competitors, I think is a sign of the of a low barrier to entry, and a lack of a true fundamental

01:01:10.880 | lock in. Let's say you are an investor, and you're looking at pulley or mantle,

01:01:14.720 | why would you even think that's an attractive company to invest in if success looks like

01:01:20.560 | you're compressing a $250 million market down to 25 million? Like, what's the point?

01:01:24.960 | Well, I think a lot of these competitors got funded during the whole Zerp era,

01:01:28.720 | where everything got funded. I mean, if you were to if you were to look at that

01:01:32.320 | market today, why would you even fund a disruptor?

01:01:34.800 | Well, so look, I think, man, there are other strategies to those other strategies,

01:01:38.960 | you could add on to this and adjacencies. My understanding is mantle and pulley raised in the

01:01:43.040 | low single digit millions that gives them a lot of room to run a 25 and $50 million business

01:01:49.680 | profitably and never raise any more money. The problem is on the opposite side, if you raise

01:01:54.320 | money eight or nine or $10 billion, when companies traded 20 times, and now companies traded six

01:02:00.800 | times, now all of a sudden, you have to have $1.3 billion of revenue a year to break even.

01:02:06.560 | And I think that's the real problem. So it's not that Henry hasn't built a great company,

01:02:10.960 | I think he deserves a lot of credit. The question is entry point and the question is upside.

01:02:15.680 | And the upside is governed by the difficulty of the things that you're doing and how much

01:02:21.600 | pricing power you have for those difficult things. And so I think what we're realizing

01:02:26.240 | is that there are a few difficult things in software, few, it's just like, it's just true.

01:02:31.200 | And as a result, every product, this is not a Carta thing, every product will see a ton of

01:02:36.960 | competitors. So the only thing that you can do is have an extremely leveraged OpEx and an extremely

01:02:44.960 | low cost to serve. That is the only protective, protective mechanism one has, it seems to me on

01:02:51.280 | the outside looking in. Network effects are also important. Unless you have an Instagram, you're

01:02:57.040 | right, that product is infinitely better with everybody, or a tick tock. Great. Now you can

01:03:01.680 | just you can spend as much money as you want Airbnb. But that's not what I think procedural

01:03:07.840 | software is. Yeah, I don't know. I mean, look, we're gonna just have to agree to disagree. I

01:03:13.440 | think there is some pricing risks to Carta from these competitors, but my guess is it ends up

01:03:18.880 | being stickier than that. But in any event, I mean, I do think that Henry at the end of the day

01:03:24.480 | pulled off a nice save by just getting rid of the business. I agree with that altogether. I think

01:03:28.480 | that was a smart way to respond. Clearly, the first response didn't work. No, the first response

01:03:33.920 | was sort of like a very, yeah, it was a very confusing denial where he said this isn't our

01:03:38.960 | policy. But he also blamed, he also got into it and blame the person who called him out on it was

01:03:44.960 | like, what, why are you calling us out on this? And then like, every founder was like, because

01:03:48.720 | you violated our trust. And he was like, Oh, yeah, sorry. Yeah. People are showing like email

01:03:55.440 | campaigns that have been going on for months, and it seemed much more organized. And it was very

01:03:59.680 | hard to believe that this was just an accident instead of a deliberate strategy. And you could

01:04:03.600 | see the whole startup community was, you know, evaluating its options in real time on x. Yeah.

01:04:09.840 | And that's when he came out and hit the whole thing with a sledgehammer and just said, we're

01:04:12.720 | going to get out of this business. And I think it was really smart to do that. It's kind of

01:04:16.960 | called the crisis. Like I said, I don't think this is a business that startup founders want

01:04:22.240 | their cap table software to be engaged in. No, definitely not. And just by the way,

01:04:27.680 | just a third point on that, you know, one reason was price discovery. Another reason was having

01:04:31.760 | undesirable shareholders. The third reason is just founders don't want to create a competing

01:04:36.480 | fundraising process to primary financing. Yeah, I think this is actually a really important point.

01:04:41.600 | The reason why founders don't want there to be a secondary market is because their company may

01:04:46.640 | need to raise money. You want to go to the front door to the CEO and the board, not the side door

01:04:52.320 | to get a get some, you know, exposure to the company. Well, I think I think in the ZURP era,

01:04:57.440 | where there was all this excess funding flying around, then it kind of made sense to let

01:05:02.400 | secondaries happen. But in a world in which funding is scarce, you want that money to go

01:05:07.120 | into the company, not in the pockets of the early shareholders. And so I think like the timing of

01:05:11.680 | this whole thing is like really off. It all feels like kind of a function of ZURP in its own way.

01:05:16.720 | Agreed. All right, so actually we're in the group chat talking about this

01:05:20.320 | viral clip about Star Wars. You wanted to chime in on it. Maybe you could cue it up, Nick.

01:05:25.280 | I mean, as you may recall, my pick for business loser of 2023 was Disney.

01:05:29.440 | And it seems like they haven't learned anything from the horrible year they've just had.

01:05:34.160 | What is the balance of activating a force for change, but also trying to

01:05:42.480 | permeate that patriarchy, that power structure? And is that a part of the calculation of your art

01:05:51.120 | as well? And what's been the reaction to that?

01:05:54.080 | Oh, absolutely. I like to make men uncomfortable. I enjoy making men uncomfortable.

01:06:02.960 | This is the new director of Star Wars.

01:06:06.080 | All right, your thoughts.

01:06:06.720 | Well, I saw the comment on that tweet was this is going to be the

01:06:11.520 | biggest Disney flop yet. Isn't that what it said? I mean, look, I don't know what Bob Iger is doing.

01:06:16.160 | He seems to want to burn Star Wars to the ground like the rest of the Disney brands by

01:06:21.840 | playing politics. This director doesn't seem to have had a lifelong fandom for the franchise.

01:06:29.680 | She didn't really talk about how she had grown up marinating in this universe, loving its characters.

01:06:35.280 | Her background is in documentary filmmaking, and there's nothing wrong with that. But

01:06:39.520 | there's no indication from her that she truly loves Star Wars. And in fact, the

01:06:44.400 | comments that she's making right now are indicating that she's going to politicize it.

01:06:48.560 | The patriarchy is not why anybody is a fan of Star Wars or goes to see its movies.

01:06:53.520 | So nobody wants to see that movie.

01:06:55.840 | It's the opposite.

01:06:56.880 | It's the opposite. They want to avoid it. They don't go to Star Wars movies for the politics.

01:07:00.400 | And she's also trying to solve a problem that doesn't really exist. I mean, science fiction

01:07:08.240 | may skew male in its fan base, but it's not because sci-fi franchises don't like strong

01:07:15.200 | female characters. I mean, just stepping out to the larger world for a second. You've got Ripley

01:07:19.600 | in Aliens. You've got Sarah Connor in the Terminator movies. You've got-

01:07:22.720 | Princess Leia.

01:07:23.440 | Trinity and the Matrix. You've got Princess Leia, Padme, Ahsoka in Star Wars.

01:07:30.400 | You seem to know a lot of these female characters. You're deeply in Star Wars.

01:07:33.440 | Yeah, I did as well. I'm a Star Wars geek.

01:07:35.040 | I'm a Star Wars geek.

01:07:35.680 | You've got some good pulls here. Yeah, Padme.

01:07:37.680 | This idea that there aren't strong female characters in Star Wars, that's just kind

01:07:42.560 | of a myth, right? So it's not like the universe needs to be reset in this way. And you could just

01:07:48.640 | see the whole fan community kind of groaned at this comment because they're just like,

01:07:53.760 | "Oh, here we go again. Star Wars is going to ruin another franchise by playing politics."

01:07:59.680 | And the amazing thing is that Iger just doesn't seem to learn from this at all.

01:08:04.400 | But there's nothing wrong with having a female director either, right, Alex? I mean,

01:08:09.040 | you're not saying that. You're saying that a particular person who has a political agenda

01:08:12.560 | in how they want to shape the story of Star Wars is the issue?

01:08:16.240 | Of course.

01:08:16.880 | Right.

01:08:17.200 | Of course.

01:08:17.840 | I'll also say, I think one of the core driving narratives,

01:08:20.720 | emotional narratives of Star Wars is the oppressor oppressed storyline.

01:08:25.920 | It's a highly political story.

01:08:28.960 | I've always said, I think Star Wars has been like the most anti-technology

01:08:34.160 | effector in society since the 70s. Because Star Wars is all about the, I've said this before,

01:08:39.600 | but the Ewoks destroying the Death Star and like the no-tech overcoming the oppressor big tech.

01:08:46.080 | And so we have to destroy big tech. And anyone who has the better technology

01:08:50.560 | is very likely the oppressor. And they have all the wealth, and they have all the power,

01:08:55.200 | and they have all the control. And so those who do not have the power, do not have the wealth,

01:08:59.120 | do not have the control, do not have the technology, have to go and destroy that,

01:09:03.440 | whether it's the empire or that kind of evil force. And that's the core narrative of Star Wars.

01:09:08.640 | So I do think that at its heart, Star Wars in and of itself is an oppressor oppressed

01:09:12.720 | storyline that relates very deeply to technology and wealth, and has helped shape the Western

01:09:19.440 | psyche for a couple of decades in a very meaningful way, or has really reflected maybe

01:09:23.680 | perhaps the Western psyche. What did you think of Andor?

01:09:27.120 | I think you're super imposing current day terminology on a movie that was created in

01:09:34.880 | the first one in the 1970s when intersectionality did not exist. Yes, there are political overtones

01:09:41.120 | to Star Wars. You've got the rebel alliance against the empire. That is not diversity politics.

01:09:47.040 | Sorry, it's about...

01:09:48.240 | I'm not saying diversity politics.

01:09:50.080 | It's really about the corruption of power. I mean, you know, the famous phrase by Lord Acton,

01:09:56.240 | which is power corrupts and absolute power corrupts absolutely. To me, those are the

01:10:00.240 | political overtones of Star Wars. It's not about dividing the world into intersectional categories.

01:10:06.160 | It was about war. I mean, let's be honest. Lucas was a child of the Vietnam War era,

01:10:10.720 | and he was highly influenced as was Francis Ford Coppola, and...

01:10:14.560 | Yeah, the Americans with all this wealth and power came into the jungle to try and destroy

01:10:18.800 | a peasant nation and cause death upon a peasant nation, and the peasant nation survived and won.

01:10:24.640 | And there was a narrative to that, that I think is reflected in this and is reflected very deeply

01:10:28.800 | in a lot of the stories that have come since. And I'm not saying DEI as a solution was the

01:10:34.000 | storyline out of the original Star Wars, but the original Star Wars was very much driven by

01:10:37.840 | the leverage that technology provides to those in power that gives them, you know,

01:10:43.200 | extraordinary influence over those who don't have power.

01:10:45.360 | Well, if there were political overtones to the original two trilogies,

01:10:49.200 | and actually, I think there were some really interesting themes, especially in that second

01:10:52.560 | one where Palpatine sees his power. Not even political. By the way, not even political.

01:10:56.880 | Let me just be clear. Social, right? So social systems, which...

01:11:00.320 | I understand. But my point is that Lucas didn't hit anybody over the head with those themes.

01:11:08.000 | And his goal certainly wasn't to make anyone feel uncomfortable. His goal was to entertain,

01:11:13.920 | and whatever political or social overtones there were, were very much in the background,

01:11:18.560 | because that's what good art does. One of the reasons why Hollywood produces so few really

01:11:24.800 | interesting movies these days is because the political overtones are really in the forefront,

01:11:29.680 | and they really hit you over the head with them. And so therefore, they're just not very entertaining.

01:11:34.800 | It's not very good art. And I think that's why the fan community was like, "Oh, here we go again."

01:11:40.160 | Let me just make sure people understand. This is a nine-year-old clip. And for context,

01:11:44.160 | this is probably during the early days of the DEI movement, just so we're clear on that. But

01:11:49.840 | you had another point to make. David, go ahead. Well, Sax, I think that Hollywood has imposed

01:11:54.240 | upon itself certain degrees of restriction on the artistry of the artists in the community,

01:12:00.720 | because the standards now to be nominated for Best Picture define a number of DEI representation and

01:12:07.600 | inclusion standards, and they're listed here. So in order to... And if you guys will remember it

01:12:12.320 | at our summit in LA, I asked Gwyneth Paltrow about this, and she wasn't familiar with these changes

01:12:18.000 | that had been put in place. But in order to qualify for a Best Picture nomination,

01:12:23.520 | you have to meet some of these standards. And these standards include on-screen representation,

01:12:28.960 | beams and narratives that relate to having at least one of the lead characters or significant

01:12:33.920 | supporting actors come from a minority background, including ethnic background,

01:12:40.960 | or by gender... I could get nominated for an Oscar. Look, I'm Sri Lankan. South Asian. Look,

01:12:47.600 | I'm in the Parens here. Or at least 30% of the actors in a secondary group have to be women,

01:12:56.480 | racial or ethnic group, LGBTQ+, or people with cognitive or physical disabilities,

01:13:02.000 | or who are deaf or hard of hearing. The main storyline, theme, or narrative of the film is

01:13:06.800 | centered on an unrepresented group, either women, racial or ethnic group, or LGBTQ+.

01:13:11.440 | They can meet the criteria if the creative leadership team has at least two of the

01:13:16.160 | following creative leadership positions met by one of the underrepresented groups,

01:13:19.920 | and so on and so forth. If you're an artist, a filmmaker, and you wanted to make a film,

01:13:24.880 | a World War Two biopic, which was on the front lines in World War Two and was entirely white

01:13:30.000 | males, would you have been able to be nominated for Best Picture? Or would you have had to go and,

01:13:36.160 | you know, take some actions that would have affected your artistry and your freedom of

01:13:40.400 | expression in making that film? And as a big fan of film, and you guys, I think all of us are

01:13:45.200 | probably in the same boat, at least a couple of us are. Three of us are. Three of us are.

01:13:48.880 | This would have limited a lot of the best pictures of all time, I would say,

01:13:52.160 | if you had to impose standards on what the artists were allowed to do, or how they were

01:13:58.000 | allowed to make their film. And that's really what's taken over Hollywood. So I would say it's

01:14:01.840 | not just a Bob Iger Disney thing. But this has become a standard in Hollywood, that the DEI

01:14:07.120 | movement has so deeply affected the intentionality of what has historically been a truly creative.

01:14:12.560 | I agree. If you talk to Hollywood writers, if you talk to Hollywood writers, they'll tell you that

01:14:17.600 | things have become extremely politicized, and it's a mess. Iger has been a little bit contradictory

01:14:22.000 | about this. In April of last year, there was this article saying that Iger was doubling down

01:14:27.760 | on inclusivity and diversity, and he described that at a shareholders meeting.

01:14:31.200 | By November, he was saying that Disney movies have become too focused on messaging. So it

01:14:36.800 | seemed like he was finally getting it after the horrible year they had. But then we had this Star

01:14:43.200 | Wars news, and it seemed to suggest that they were hiring a director who really wasn't right

01:14:48.160 | for the material. So we'll just have to see. My sense is that they have not made the course

01:14:54.000 | correction they need. If you want to see the peak of this, there was a bunch of blowback on Dunkirk,

01:14:59.600 | and absolutely tour de force of a film if you haven't seen it. Especially go see it in IMAX,

01:15:06.000 | just extraordinary Christopher Nolan film, that it lacked diversity and gender diversity. It's

01:15:11.600 | a war film. Historically, kind of hard to make it about anything else if it was just narrowly

01:15:18.240 | focused on a couple of battles. And so yeah, this has gotten to the point of, yeah, a little bit of

01:15:23.840 | absurdity. I relate this very much to the point that we made a couple months ago about stand up

01:15:28.560 | comics being restricted and cancelled based on the things that they say that are offensive to the

01:15:33.280 | narratives of social inclusion. And de AI, these are artists who should have freedom of expression,

01:15:40.480 | creative freedom, unlimited creative freedom, if we want to have a different set of standards for

01:15:44.480 | how we value the art that comes out of it, fine, but I don't think that it ends up being true.

01:15:50.000 | So what the peer group would otherwise recognize and say, you know, is the greatest art of the

01:15:55.600 | year is the most impressive achievement of the year, in some particular artistic discipline.

01:16:01.200 | It's really sad. There's also been this change in live performances in symphonies used to be that

01:16:08.880 | to avoid discrimination, in auditions for symphony orchestras, auditions were conducted behind a

01:16:14.560 | curtain. So the director, and those who were making the election on who would get to join

01:16:19.280 | the orchestra would listen, and they wouldn't see the person performing because they were behind a

01:16:24.720 | curtain. Recently, that trend has changed. And now those artists are required to perform not behind

01:16:30.960 | a curtain, but in front of the curtain, so that we can judge them not on their musicianship,

01:16:35.680 | and their artistry, but on their race on their gender, and on some other standards. So I think

01:16:41.120 | this is obviously part of a very broad narrative, but it's it's very deeply affecting Can I ask a

01:16:45.280 | question? Community of Art? Yeah, I was about to bring you in on this, Jamal. Yeah. Is listenership

01:16:50.880 | of the symphony gone up or down? It's a load of going down for a long time, but around the world

01:16:56.480 | are seeing decline in audience, but it's it happened before the changes. Yeah, it's been

01:17:01.280 | happening. Yeah. Has it accelerated? Or has it slowed the negative decay to zero? I'm not sure.

01:17:06.960 | I'm not sure. Yeah, to be honest. Well, if it hasn't, it hasn't made a difference, then you're

01:17:12.800 | then it has made it. I mean, I think this is part of a wider discussion of dei the goal of some of

01:17:18.720 | some forms of art, like these live performing arts may not necessarily be audience growth.

01:17:23.120 | The goal may be, you know, finding the best. But I suspected it should be to sustain itself

01:17:29.680 | indefinitely. I mean, and by the way, that's, that's a big point. I've had it, which I disagree

01:17:34.000 | with the roads, as the quality of roads, fewer people will care because there are other options

01:17:38.640 | that you can go to that are high quality. And then these things will die off. And, you know,

01:17:43.280 | maybe that's what it's supposed to happen. I mean, this is part of a wider discussion about I think

01:17:47.760 | dei facing the reality of whether it's like, I guess this whole pilot thing with Boeing and who's

01:17:54.960 | getting hired to be pilots and training and what should the focus of a company board? What should

01:18:00.080 | the focus of hiring be? The problem, I think, with the argument you guys are having, in my opinion,

01:18:05.920 | is that it's a little too premature. And the reason is that there are other people who will make

01:18:11.600 | semi credible claims, while you guys make semi credible claims, and no progress is made on this

01:18:18.960 | whole dei discussion as it touches cinema and Hollywood, or music. What's much easier if you

01:18:25.040 | want to dismantle dei, which will eventually come in, cleanse Hollywood and the symphony is if you

01:18:32.640 | go to the jobs where it's irrefutable, where even the most ardent defender of dei says, you know

01:18:39.200 | what, I can't take that risk with my own family, or with my own life and the lives of my family.

01:18:43.680 | And I think that we're, we would be better off if we just focus in a really disciplined way on those

01:18:49.360 | and get the criteria to be entirely based on skill. And then eventually,

01:18:54.640 | it'll come back in Hollywood and the symphony will also get cleansed.

01:18:59.440 | So doctors, pilots, I mean, I would say certain doctors, I would just say pilots, for sure.

01:19:05.440 | I would say surgeons, I would say that you could probably go through, I haven't thought enough

01:19:11.920 | about it to know. But you could go through and say, systematically, what are the categories

01:19:17.360 | in the professional world that we interact with every day where skill can be the only criteria

01:19:28.240 | must be because otherwise, innocent lives will be lost. That's an important question.

01:19:33.760 | I agree with you that the fundamental choice that we have a society is whether

01:19:37.760 | skills is going to be the determinant of success, skills and merit, or whether it's going to be

01:19:43.120 | about something else. You know, and as soon as you tell somebody that they can't get the job,

01:19:47.360 | even though they're the most qualified, because of their race or gender, then I think that is

01:19:53.360 | racism or sexism. So it's doubly bad. But Chamath, I think the reason why this happens is because

01:20:01.040 | people don't really have the right skin in the game. So the reason why the recent discussions

01:20:07.120 | about pilots and whether cockpits should have this sort of DEI program is that everyone can relate,

01:20:14.240 | everyone has skin in the game. If your kids are going to fly on a plane, the only determinant

01:20:20.560 | you want for who the pilot is, is skill, obviously, because you have real skin in the game.

01:20:25.520 | The problem is people will falsify their preferences when they're discussing other

01:20:30.480 | people flying on the plane. So people will start saying, Well, you know, we need to have DEI

01:20:35.280 | programs. You know, in other words, when it doesn't affect me, you're willing to basically

01:20:40.080 | virtue signal and genuflect towards these programs. And I think that that's the fundamental

01:20:46.160 | problem is that people will pretend to support something other than skill and all these contexts

01:20:52.720 | where they're not directly affected. But as a society we are, with respect to aviation,

01:20:58.160 | specifically, my thought is that this is a very easy skill to determine who is high quality,

01:21:06.720 | versus not because you have such sophisticated training apparatus and schemes, simulators,

01:21:13.760 | and all of this stuff, it's easy to know how to rank people from one through n. And I think that

01:21:19.680 | as a society, if you want an efficient transportation infrastructure and aviation

01:21:23.760 | infrastructure, where the consequences are really bad, if things go wrong, you just want the best

01:21:27.840 | period end of story. However, I think it's also fair to say that then the government owes

01:21:32.240 | the people a responsibility to advance the technology, if they actually want to have

01:21:40.000 | a multifaceted hiring criteria. So what do I mean, we can have a lot more automation in the cockpit.

01:21:47.520 | The reason we don't is because of how certain lobbies are able to affect rules inside the

01:21:57.840 | federal transportation infrastructure. And we know this because our friend has been trying to

01:22:02.560 | our friend sky Dayton, wonderful pilot has been trying to improve airline safety. And he's talked

01:22:09.520 | about this a lot. And these things get blocked by the pilots union and otherwise, because they don't

01:22:13.440 | want to get disintermediate. Okay, fair enough. That's the game. Well, if that's the game,

01:22:17.840 | at some point, we need to have a conversation as a society that says, Okay, look, if we're going to

01:22:22.560 | hire on a multifaceted basis for pilots, let's also tell Boeing and Airbus, you need to build

01:22:29.200 | even better, more automated planes. That's a fair trade off. The great irony of all this acts is

01:22:34.800 | it's illegal to hire based upon gender, race, etc. And then at the same time, people are trying to

01:22:41.200 | hold this contract of, hey, we want more diversity, we want more inclusion,

01:22:44.880 | at the same time in their heads, and we're seeing lawsuits happen. So they're, you know,

01:22:51.120 | want tech companies to report on their diversity, they want venture firms to report on,

01:22:55.040 | you know, either diversity and investment, but it's illegal. And you can be sued. If you were

01:23:02.160 | to give investment dollars based on race, gender, etc. And fierce founders, I believe, is the name

01:23:08.960 | of the firm that's being sued for only investing in a certain demographic of women. Yeah, we're

01:23:14.240 | to ask people their sexual preference. You're not allowed to ask that in an employment. I don't

01:23:17.840 | know. I've always had a problem with how do you keep these two things in your mind in our own

01:23:21.920 | venture firm. And I just said to folks, just this is considered a diversity target. And now to hire

01:23:27.120 | people, whether it's on a Hollywood film set, or in your company, you've got to go ask them what

01:23:31.360 | their sexual preferences. That's, I mean, it's crazy that we're being asked to do that. And what

01:23:37.040 | I did in our company was I said, Hey, if we don't feel we're getting enough applicants for the

01:23:41.200 | programs found university, the accelerator, we could have, you know, efforts to increase the

01:23:47.920 | number of applicants. But we can't make investment decisions based on anything other than the merit

01:23:52.960 | of the company, or we will get sued. And so this is I think, the problem in corporate America with

01:23:57.680 | these issues is how do I try to help this problem if we think there is a diversity problem in our

01:24:02.400 | particular industry, which is noble and thoughtful, and I wouldn't criticize anybody for that. But

01:24:06.960 | then the rubber meets the road at legal and then performance, right. And it's very hard for,

01:24:11.680 | I think, leaders to manage those two dichotomies. I could see a case for why barbers and priests

01:24:18.480 | should be multifaceted. Good bedside manner, crack a few jokes, be able to listen,

01:24:24.880 | relate ability, ability. But if a pilot, but the first time, like the thing is now this thing is so

01:24:32.480 | on the front burner of people's minds, that, heaven forbid, if there is an incident or a near

01:24:40.960 | incident, you're going to see lawsuits that are going to focus on this issue. Show me the training

01:24:46.400 | records of the pilots. And show me show me how they fared relative to alternative folks that you

01:24:53.040 | either did hire or didn't hire. And, you know, why was this selection, it's going to be a mess.

01:24:59.040 | We might even see that with Harvard and their selection of their president.

01:25:01.520 | Like, why was this person selected as president, right? And did we change the new one or the past

01:25:07.040 | one? Like, what was there? Did we know about the plagiarism stuff? You know, did we not know about

01:25:11.360 | it? And this is, I think, the race to nowhere when you get into identity politics. And I think this

01:25:17.600 | is why everybody, and I think Coleman Hughes said it really brilliantly when he was on this pod,

01:25:22.080 | talking about his TED talk, like, we at least want the aspiration of having a colorblind society.

01:25:27.920 | I think what Coleman said that was really, I think, profound was, well, where can we actually

01:25:32.560 | affect change that will be important? And I think that's early education, it could be providing

01:25:38.400 | pre K, it could be providing, you know, support for people with childcare, so that, you know,

01:25:43.760 | they can they can get into, you know, more job training, etc. So like, where do we where do we

01:25:49.200 | put our efforts if we do want to see a more inclusive, diverse, just world is, I think,

01:25:54.880 | the question.

01:25:55.280 | Backing up a second, I think there's a fundamental dishonesty about the DEI movement that's really

01:26:00.240 | coming to the fore right now. On the one hand, the DEI activists will explicitly say that their goal

01:26:05.840 | is to engineer job categories to explicit population numbers. But like you said,

01:26:15.120 | that's actually illegal to do. So when they get in a lawsuit, like the Harvard Affirmative Action

01:26:19.520 | case that went this from court, they'll deny that they're discriminating against Asian Americans. So

01:26:23.920 | when they're preaching for what they want to do, when they talk about, say,

01:26:27.920 | Kennedy style anti racism, they will say that the explicit goal here is proportional representation.

01:26:33.600 | But then when that results in discrimination against groups that are basically selected

01:26:38.400 | against, they'll deny that that's what they're doing. And I think it's gotten to the point now

01:26:42.480 | where they just can't maintain both things being true. And I think we saw this in the

01:26:47.600 | dustup that just happened between Elon and Mark Cuban, where Elon was saying, "Look, we should be

01:26:53.200 | a colorblind, meritorious society. We just shouldn't discriminate for or against anybody

01:27:00.240 | on the basis of race." And then Cuban jumps in and says, "Oh, no, that's not what DEI is doing.

01:27:04.160 | DEI is just trying to expand the pool of applicants." And it's just not true. I mean,

01:27:09.440 | I don't know if he's being disingenuous. I don't know if he's virtue signaling.

01:27:12.720 | Aaron Powell: I think they were talking through each other. I mean,

01:27:15.040 | you do want to expand the pool if you're not getting a pool of diverse applicants.

01:27:19.200 | There's nothing wrong with that, expanding the pool. But what you are correct,

01:27:22.640 | there was a DEI grift that occurred. I think that's kind of what you're alluding to. And I

01:27:26.480 | can tell you the inside story on the grift. Mark Miller: I think that if you look at the

01:27:28.560 | DEI movement, it goes way, way beyond just expanding the pool of applicants. It explicitly

01:27:35.120 | puts its thumb on the scale in terms of what it's looking for in terms of hiring and promotion.

01:27:41.760 | Aaron Powell: It turned into a grift. And I can tell you the inside story on this. And it's going

01:27:45.120 | to come out eventually. But there was a, I don't know if you experienced this in any of your

01:27:50.080 | companies, or if anybody's willing to talk about it, but company has lack of diversity in their

01:27:57.120 | company. Then diversity activists, and this is, I think, where it really started to build up

01:28:03.120 | resentment. Diversity activist comes in, says, "Hey, you have problems." They call them out on

01:28:08.000 | social media. There was a Twitter brigade comes in, "Oh, my God, look how horrible this company

01:28:14.320 | is." People go, "Oh, I'm sorry, we didn't want to be horrible." And then they say, "Oh, well,

01:28:17.520 | hire us. And we'll teach you how to do DEI. And let's build a DEI group. And we want to be

01:28:22.160 | consultants. Pay us to come in, pay us to speak at your organization, to tell you what you're

01:28:26.320 | doing wrong. And then rally a reverse support of it after you've gotten paid for solving the

01:28:33.200 | problem for them." And I saw this shakedown occur. And I had people ask me for advice on like, "Hey,

01:28:38.400 | what do we do here?" And you can just imagine, you know, you're a person of good faith who

01:28:43.120 | wants to do the right thing. And then these DEI folks come in and then try to brigade you basically

01:28:49.360 | publicly shame you in order to get like rich DEI contracts. And we saw this with like the size of

01:28:55.200 | DEI groups at companies and you're wondering, "Well, what are these people actually doing? Are

01:28:58.560 | they just what does a DEI department actually do inside of a company that is a creative or

01:29:05.360 | valuable?" It creates more bureaucracy to do more DEI. Right. Exactly. And that's why I keep saying

01:29:10.960 | bigger and bigger. Did you guys see the size of the Michigan DEI group? Did you see that tweet?

01:29:14.800 | I thought that was a I thought this was a Babylon B story when I first saw it because

01:29:19.920 | there are 250 people working for DEI. 500 people at Michigan. What?

01:29:24.800 | What's the denominator? 500 out of how many people? I don't know,

01:29:29.120 | but they're spending $30 million on payroll benefits. I mean, look, big companies can

01:29:35.360 | kind of afford this stuff, but startups cannot. I mean, this is really the kiss of death for

01:29:39.680 | startups. You just can't afford to have these large bureaucracies. And then also, you know,

01:29:45.600 | when you're a startup founder, if you have six months of runway, 12 months of runway,

01:29:50.720 | you might not have the luxury to be looking at your statistics and saying, "You know what?

01:29:54.080 | We've got 10 people who are of this demographic. Statistically, we should have this. So the next

01:30:02.320 | hire we need to make our sales numbers has to be of this composure." And I've have seen people do

01:30:08.640 | this. Actually, you've probably seen it too on boards or whatever. "Hey, we need to hire more

01:30:12.480 | of this type of person, this profile." And, you know, then hiring gets slowed and, you know,

01:30:19.120 | yeah, it's challenging and it's also illegal. So, I don't know how you win in this thing

01:30:24.800 | other than have a colorblind society as a goal, at least, you know, and to put your efforts-

01:30:31.360 | Jason, are you familiar with a Mott and Bailey tactic?

01:30:34.960 | No, Tom.

01:30:36.480 | Have you heard of this? This is a rhetorical technique or fallacy?

01:30:42.000 | No, I haven't heard this one. Yeah. I love a good-

01:30:44.240 | So, this comes from medieval times. The Mott and Bailey was a type of castle where

01:30:48.640 | the Bailey was this wider area that was just defended by a wooden wall. So, it's not that

01:30:53.520 | secure. The Mott was basically the, you know, stone fortress on the hill. So, a Mott and Bailey

01:31:00.560 | tactic is when you go out and stake out a very aggressive position. You take the Bailey,

01:31:05.440 | basically. But then when you get challenged, you retreat into the Mott and pretend like you never

01:31:10.080 | took the Bailey position. The Bailey position is basically the Kendi-style anti-racism where you

01:31:17.120 | say, "Look, we have to achieve proportional representation in every job category." And

01:31:22.240 | that is what the DI movement in the main advocates for. But then when they get challenged by somebody

01:31:29.680 | like Elon or by somebody like the Supreme Court, they retreat into the Mott and just say, "No,

01:31:33.200 | no. We weren't trying to do that. We're just trying to expand the pool of qualified applicants

01:31:38.160 | because who could be against that?" And they'll claim that they were never doing the whole

01:31:42.640 | proportional representation thing. And then on top of it, they'll say, "Well, listen, obviously,

01:31:46.880 | increasing the pool of qualified applicants is so unobjectionable that if you're against that,

01:31:53.120 | then you must be racist." And then you get all the accusations. And so, this is basically the

01:31:58.480 | rhetorical technique that the movement uses to defend itself. But eventually, when this stuff

01:32:04.400 | gets litigated, as it just did at the Supreme Court, you start to pick this apart and you see

01:32:08.880 | that there's a lot of evidence that they are actually engaged in overt discrimination against

01:32:14.240 | certain groups like Asian Americans. >>No easy answers here, but I, for one,

01:32:21.280 | think that that's bad. >>Yeah. There was something really nice about a merit-based society if there

01:32:27.280 | was fairness at the starting line. But that's the thing I've learned is not everybody starts at the

01:32:31.520 | same place. And so, if you just look at, it seems to me, and listen, I'm no expert,

01:32:36.080 | but the starting line seems to matter most. So, if we could focus on making it as equal and fair

01:32:43.040 | and just when it comes to education, that seems to me to be like the quickest solution to feeling

01:32:49.440 | better about all this. I just think we should have seven-day, 365-day-a-year school available,

01:32:54.560 | public school available, competitive schools available to make the world more just and give

01:33:00.320 | people more opportunity, right, skills training, etc. >>Why do you think that having school

01:33:04.720 | 365 days a year will make the world more just? >>Well, because I do think that if you had more

01:33:12.240 | competition in schools and you had parents who care or students who care and they could get

01:33:17.680 | more education and there was more available, then you could say, "Well, how many days a week did

01:33:23.280 | you go to school? How much effort did you put in?" And there was just more high-quality school

01:33:27.920 | available. And if you look at public schools right now, there's just, it's very unjust how

01:33:31.840 | poor the schools are and how poorly run they are and what the teachers' unions have done to these

01:33:36.720 | schools in disadvantaged communities. And if I look back on my life and I look at people who

01:33:43.200 | did well, they had engaged parents and they had opportunities in education that other people

01:33:48.800 | didn't. And that seems... >>How does keeping the school open all year round change that?

01:33:53.600 | >>You think about parents who maybe don't have coverage for their kids after 2.30 or 3 o'clock,

01:33:59.600 | and then those kids, you know, we called them, we were called latchkey kids, I think,

01:34:03.520 | in the 80s and 90s. You're having the ability for them to do more enriching things, to be in chess

01:34:08.400 | club, to be in Taekwondo club, to do a little extra math, whatever it is. That could be something

01:34:14.000 | society could do for a very low cost or skills training even, right? Hey, this is a culinary

01:34:18.800 | school after school, this is a culinary school on the weekends, this is a coding school on the

01:34:22.240 | weekends. It doesn't have to be just STEM, it could be welding, it could be, like I said, you

01:34:26.720 | know, it could be design, whatever it is. More opportunities for people to learn more skills

01:34:31.520 | without, you know, having the benchmark be my parents can afford Kumon, my parents can afford

01:34:36.960 | a chess tutor, right? We live in a time of incredible privilege and all of us have unlimited

01:34:42.400 | resources and many of the people who listen to this podcast have a lot of resources to hire

01:34:46.320 | tutors for their kids and give them more opportunity. I didn't have that opportunity,

01:34:49.840 | you know, and if I had that opportunity, I would have learned chess faster, right? I would have had

01:34:55.040 | more opportunity for it, it just wasn't available to me and then there's a lot of people who started

01:34:58.720 | behind me who certainly didn't have it available, single parent, you know, and in a worse school

01:35:04.640 | environment than Brooklyn where I grew up. So, I don't know, do you disagree, Chamar?

01:35:09.040 | Would you have a better idea of how to make the world more fair and just than education

01:35:13.600 | and skills training?

01:35:15.040 | I think education is probably the most important. I do think that we need to find it fashionable

01:35:21.360 | again to have nuclear families. I think that if you look at the marriage rates of 20 and 30 year

01:35:30.880 | olds, it's meaningfully depressed relative to older cohorts including ours. We're the last

01:35:36.320 | generation where it's a structural part of our identity is being married and I think that that

01:35:42.560 | has long-term implications because when you look at the success rates of how to grow kids,

01:35:47.920 | poverty matters a lot less than having a structural nuclear family, meaning a two-parent

01:35:53.280 | household. And so, I think that there's a lot of work we need to do to figure out how to

01:35:59.360 | re-incentivize folks to want to commit to a single person, not this rampant promiscuity but

01:36:07.360 | just kind of lock down and find somebody and build a long-term partnership with them. I think that

01:36:11.440 | that's really crucial for a functioning society.

01:36:13.760 | >> Giving tax incentives is the way to do that or just cultural norms?

01:36:18.480 | >> I haven't studied the problem to have the right idea.

01:36:20.960 | >> Yeah, I've heard this before. I just don't know how that gets implemented in society,

01:36:25.280 | right? And I can think of ways that tutoring and having more education available, vouchers,

01:36:30.880 | etc. I mean, if you gave every parent under a certain dollar amount of income a year,

01:36:36.480 | a voucher to hire tutors, man, that could change the world, right? It could change a

01:36:41.600 | lot of people's fate. >> We need more two-parent households.

01:36:44.080 | >> That would certainly help more. All right, well, we really got into it here in the end,

01:36:49.200 | man. What a great episode. All right, for the rain man, David Sachs, with a tight haircut now,

01:36:56.720 | the dream is over. I mean, it's just... >> It's a new year.

01:37:00.560 | >> I don't know who got to you. >> It's a new year.

01:37:02.400 | >> It's an election year. It's a big year for you.

01:37:05.520 | >> Got to clean it up, clean it up for... >> I think it's just a huge critical mistake.

01:37:10.080 | I think you were going to a certain iconic look, and I think you've blown it. I'm going

01:37:15.680 | to take the other side of that bet. And for David Freeberg, the CEO of Ohalo,

01:37:20.400 | and Chamath Palihapitiya, the founder of the new 80/90 incubator, and the chairman dictator

01:37:28.160 | of the all-in LLC, I am the world's greatest moderator. >> Yes, you are.

01:37:33.920 | >> And angel investor, and we'll see you all next time. Bye-bye.

01:37:36.720 | >> Love you, boys. >> Bye-bye.

01:37:37.840 | >> Love you, guys. >> Bye-bye.

01:37:38.720 | [Music]

01:37:48.720 | >> Consorts it to the fans, and they've just gone crazy with it.

01:37:51.680 | >> Love you, Wesley. >> I'm the queen of quinoa.

01:37:53.600 | >> I'm going all in. >> What's your winner's line?

01:37:56.720 | What's your winner's line? >> Besties are gone.

01:38:01.600 | >> That's my dog taking a piss in your driveway. >> Oh, man.

01:38:08.960 | >> We should all just get a room and just have one big huge orgy, because they're all

01:38:14.000 | just useless. It's like this sexual tension that they just need to release somehow.

01:38:18.560 | >> Wet your beef. >> Wet your beef.

01:38:22.480 | >> Wet your beef. >> Beef, that's going to be good.

01:38:24.240 | We need to get merch. >> Besties are gone.

01:38:26.240 | >> I'm going all in. I'm going all in.

01:38:36.880 | you

01:38:37.380 | [BLANK_AUDIO]

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