E104: FTX collapse with Coinbase CEO Brian Armstrong + election results, macro update & more

00:00:00.000 | Saks, the United States is maybe not going to send weapons to

00:00:04.440 | Ukraine indefinitely. And they're asking them to sit down

00:00:07.620 | and negotiate something that people on the left started to do

00:00:11.340 | and got a got smashed for something you've been pushing

00:00:13.740 | for. So I guess mini victory lap for you, Saks. What's the end

00:00:17.700 | game here?

00:00:18.140 | Well, yeah, I mean, I've been talking common sense about this

00:00:20.300 | for months to saying that we need to be open to diplomacy,

00:00:22.620 | because total defeat for Russia also means a maximum risk of

00:00:27.120 | nuclear war. I mean, these things go hand in hand. That's

00:00:29.220 | the paradox of this war is that if Russia faces the prospect of

00:00:33.540 | a total defeat, that's when they're most likely to escalate

00:00:36.180 | this conflict into something much, much worse. So therefore,

00:00:39.340 | we need to be open to diplomacy. But it was good to hear

00:00:42.580 | administration officials over the past week say things that

00:00:45.860 | I've been saying for months, and that I've been accused of being

00:00:49.180 | like a Putin sympathizer for. So apparently, there's a bunch of

00:00:51.940 | Putin sympathizers in the administration. And just to read

00:00:55.140 | you some of these remarks, actually, I want to play like a

00:00:57.140 | fun game with you guys instead of just Oh, really? Yeah. So I'm

00:01:00.540 | just mentioning these quotes. I want to get a game called Millie

00:01:05.020 | or sacks. So I want you guys to guess, okay, whether it was

00:01:09.380 | General Millie who said the quote, or whether I said the

00:01:11.860 | quote, okay, does that sound like a fair, fair game? Yes.

00:01:14.740 | Fair game. Let's put some game show music here.

00:01:17.060 | Milly or sacks.

00:01:19.660 | I'm going to read you like four or five quotes. And you guys are

00:01:22.460 | gonna say whether it was Millie or sacks who said it

00:01:25.140 | first quote, who said it General Millie, or sacks.

00:01:28.420 | One of the lessons that should have been learned from World War

00:01:31.340 | One is that European powers refusal to negotiate compounded

00:01:35.020 | the human suffering and led to millions more dead. Milly or

00:01:37.620 | sacks,

00:01:38.140 | sacks. I'm going sacks. I'm going sacks. It's a very

00:01:41.500 | historic

00:01:42.180 | Millie said, Oh, next one. Next one. Go, go, go. Okay. A

00:01:46.140 | regional war turned into the First World War because all

00:01:49.380 | parties made maximalist demands and assumed others were

00:01:52.300 | bluffing. It can happen again.

00:01:53.860 | Sack Millie or sack going sack because you said bluffing that

00:01:57.180 | bluffing is a word that you would use.

00:01:58.660 | All right, that was sacks.

00:01:59.660 | That was sacks. maximalist. Yes. Okay. I would never say

00:02:02.340 | maximalist. Yes, he would never say bluffing. Yeah, go ahead.

00:02:04.940 | Well, there's an opportunity to negotiate when peace can be

00:02:07.940 | achieved. Seize it. Milly, Milly or sacks. Milly, Milly. It's

00:02:11.020 | very pithy. It's pithy like Millie.

00:02:12.700 | All right. That was Millie.

00:02:13.500 | Yes. I'm up to and one to and one me and you. I'm two for one.

00:02:17.300 | It's deeply irresponsible not to try for diplomacy when the

00:02:20.420 | stakes are so high.

00:02:21.420 | sacks. sacks. That's an emotional statement. I go

00:02:24.540 | mills.

00:02:25.100 | It was sacks.

00:02:25.900 | Damn it. Two and two, three.

00:02:28.900 | There has to be a mutual recognition that military

00:02:33.140 | victory is probably in the true sense of the word may not be

00:02:35.820 | achievable through military means and therefore you need to

00:02:38.100 | turn to other means.

00:02:39.020 | That's Millie. It's a word salad. I go Millie word salad.

00:02:41.620 | Hold on. Hold on. It's a Millie word salad. It's too too

00:02:46.100 | convoluted for sacks.

00:02:47.340 | sacks. I go Millie. I go Millie.

00:02:48.940 | I think it's Millie.

00:02:49.660 | That's Millie.

00:02:50.500 | Yeah. Word salad Millie. That's it. I caught up now I'm three

00:02:54.180 | and two tied with Chema.

00:02:55.660 | Last one.

00:02:56.340 | Last one. Okay.

00:02:57.380 | It must be our objective now to help achieve a ceasefire and

00:03:00.220 | negotiate a peace rather than protract the conflict.

00:03:02.780 | Hmm. Wow. It's so formal.

00:03:05.500 | Millie.

00:03:06.180 | So formal. It feels like somebody said that on the steps

00:03:08.500 | of like a building outside. It's very formal. It's well

00:03:13.260 | spoken. It's crisp. Can we hear it one more time? May we hear it

00:03:17.580 | one more time?

00:03:18.500 | It must be our objective now to help achieve a ceasefire and

00:03:22.500 | negotiate a peace rather than protract the conflict.

00:03:25.220 | Millie. It's a little too formal for a podcast. But in a tweet,

00:03:30.460 | it wouldn't be so it could be a sex tweet, but I'm thinking so

00:03:34.540 | pocket. I gotta go Millie. I gotta go Millie.

00:03:36.420 | sacks.

00:03:37.220 | You can't tell Millie from sacks is what we've learned. What a

00:03:43.620 | great game. Right now we're gonna play the next game. This

00:03:46.980 | is called Bernie Madoff or SP Bernie Madoff or SP

00:03:54.060 | Alright, everybody, welcome to the all in pod with us again,

00:04:16.700 | the dictator in a beautiful purple sweater sweater, Karen,

00:04:21.100 | man, it's the fall season. So the triggering will be inside

00:04:24.900 | the inside of this is suede. Oh, very nice. Very nice. So

00:04:29.660 | multiple animals killed. I mean, your pleasure. Yeah. All

00:04:35.020 | right. What animal do they kill to make suede? Like a type of

00:04:38.260 | leather or what is that? I hope it's an endangered one.

00:04:44.580 | Actually, that version of sway that he's wearing is from a

00:04:47.020 | white rhino. So they just take the hide and they throw

00:04:50.180 | everything else away. Oh my god. So

00:04:51.820 | can we take this out of the show? These are ivory buttons.

00:04:59.460 | I think it's baby seal fur around the

00:05:05.180 | how many baby seals were killed to make your outfit?

00:05:09.900 | Right? Also with us is the Sultan of Science, David

00:05:12.780 | freeberg racing from the airport. How was a jet blue

00:05:15.700 | mint? I heard you upgraded to mint. No comment.

00:05:18.420 | What you don't want to talk about the $1200 upgrade you did

00:05:21.780 | to your jet blue ticket. You don't want to talk about jet

00:05:24.140 | blue mint. Why? Are you embarrassed to fly commercial?

00:05:27.620 | What did you eat?

00:05:28.660 | Are you embarrassed to fly J cow? Yeah.

00:05:32.660 | I'm the president. I'm like, hold on mint coming through.

00:05:40.020 | Then I start spreading out. I think Jake out classes like the

00:05:42.780 | seat by the bathroom.

00:05:43.820 | In the back. Hey, did you save 150 bucks each way? What is jet

00:05:49.220 | blue mint the name of like jet blue mint is their first class?

00:05:51.980 | Coast to coast. It is so delightful. They just have

00:05:57.980 | figured out a way to make like sleeper seats, you know, that

00:06:00.580 | are very nice. And that's great. upgraded service where they they

00:06:03.580 | put like a little wall between you and everybody else. It's

00:06:05.980 | kind of like having a private plane if you didn't and sax is

00:06:09.620 | here. The whole cruise here basically. We'll have a surprise

00:06:13.340 | bestie guestie jumping in in the middle of this. I'm not gonna

00:06:16.420 | tell you who will because nothing's going on this way.

00:06:18.220 | Nothing is going on this week. I mean, there's so much to talk

00:06:20.300 | about. Let's just start with the elections. And then we have to

00:06:23.700 | start with my mayor culpa. Usually this is like throwing

00:06:26.580 | red meat to sacks. But I mean, at this point, alright, so

00:06:29.500 | DeSantis won by double digits in Florida, he got a huge amount of

00:06:32.580 | the vote, but all the Trump high profile Trump back candidates

00:06:35.220 | seem to have lost Dr. Oz, Dan Cox, just, it was a shellacking,

00:06:41.220 | I guess, or the red wave became like a puddle, or like an

00:06:45.140 | eyedropper or something. But some of the Trump back

00:06:48.220 | candidates did win some of the Peter Thiel collection, JD Vance

00:06:52.900 | one. So I guess that's a big win for Trump candidate, though,

00:06:57.420 | because if you remember when Trump went to stump for JD

00:07:00.100 | Vance, he forgot his name.

00:07:04.220 | So when you're on your side, you don't need friends.

00:07:07.020 | Anybody that Trump actually cared about, turned out to be

00:07:10.460 | just a complete dud and lost. And everybody that kind of, you

00:07:13.940 | know, had to keep him somewhat around just so that he didn't

00:07:16.900 | throw bombs actually did decently. But I mean, Trump is

00:07:21.660 | a just a weight on the neck of the Republican Party. And it's

00:07:25.900 | time to just get rid of them.

00:07:27.500 | Saks, what happened? Your red wave?

00:07:32.140 | Yeah, listen, I got this wrong. I think there's a few reasons

00:07:35.500 | for it. So I think when you get an election wrong, you have to

00:07:38.140 | admit it and figure out what you've what you what your

00:07:40.660 | mistake was. Otherwise, you're not going to improve. I mean,

00:07:42.620 | number one, I was looking at, you know, the RCP polling this

00:07:45.940 | real clear politics where they take an average of all the

00:07:48.740 | different polls, they were adding a factor to it, they were

00:07:51.220 | showing, by the way, plus three or plus four in the Senate for

00:07:54.340 | Republicans. But they were adding a factor to it based on

00:07:57.340 | the underweighting that the pollsters did in the last

00:08:00.340 | election cycle. And it turns out that the pollsters I think did a

00:08:03.580 | pretty decent job correcting their polls. And so the RCP

00:08:06.780 | overweight turned out to be just basically completely wrong. The

00:08:09.900 | other thing that I got wrong was I was looking at the

00:08:12.300 | fundamentals. I mean, three quarters of Americans think

00:08:14.620 | we're on the wrong track. And we're in a recession. So based

00:08:17.860 | on that, you would think that this would be a great year for

00:08:22.020 | Republicans. And in fact, the out of power party usually wins

00:08:26.140 | in a midterm and Biden's popularity is at historic lows

00:08:29.900 | at like 41 42%. So everything was teed up for the Republicans.

00:08:35.260 | So what went wrong, I think a couple of things. Number one,

00:08:38.100 | two days before the election, Trump basically comes out and

00:08:41.060 | pre announces that he's running. Oh, yeah. You know, this

00:08:44.100 | basically plays into the narrative that has already

00:08:47.060 | created that this is a, this is not a referendum on Biden. It's

00:08:51.220 | a referendum on democracy. And basically, Trump made it into a

00:08:54.580 | choice election, who do you like better Biden or Trump. And the

00:08:57.180 | fact of the matter is, if you look at the exit polling, as

00:08:59.980 | unpopular as Biden is, Trump is even more unpopular. So that did

00:09:04.740 | absolutely nothing to help the Republicans. And I think it

00:09:07.580 | really hurt them at the margins. The other thing that turned out

00:09:10.380 | I think the other big thing that helped Democrats was Dobbs. And

00:09:14.060 | I never thought that it wouldn't be a factor. But if you looked

00:09:16.700 | at the polling before the election, 15% of likely voters

00:09:21.460 | said that it was their number one issue. If you looked at exit

00:09:23.860 | polling, after the election, it was 28%. So Dobbs turned out to

00:09:27.700 | be twice as significant as what the early polling was showing.

00:09:30.700 | And if you remember, Jason, go back to the episode we did on

00:09:33.140 | abortion. I said the shrewd play for Republicans here was the

00:09:36.940 | Roberts compromise. What did Roberts want to do, he basically

00:09:39.660 | was going to allow the 15 week restriction on abortion, but not

00:09:44.300 | have the headline of Roe v. Wade overturned. And that basically

00:09:48.940 | is what to Santa's implemented in Florida, he basically

00:09:52.020 | restricted abortion after 15 weeks. It's the purple state

00:09:54.900 | compromise. It's where I think the purple states and where most

00:09:58.260 | of the country's going to end up. And the sooner Republicans

00:10:01.380 | get their heads wrapped around that fact, the better they're

00:10:04.140 | going to be long term.

00:10:05.420 | Yes, you one question there, sex. Who stacked the Supreme

00:10:08.420 | Court deliberately to turn over Roe v. Wade?

00:10:11.180 | Listen, I mean, there, this was a long term priority of

00:10:15.060 | Republicans.

00:10:15.620 | That's not a question.

00:10:17.300 | Well, no, we do have to recognize that Trump said he

00:10:20.340 | would do that he did it. So this is doubly Trump's fault.

00:10:22.540 | Every party nominates justices that align with their values

00:10:25.540 | have been in cycles.

00:10:26.580 | And he's going Trump said he would specifically do it in

00:10:30.820 | order to know what the president doesn't choose who dies in the

00:10:33.980 | Supreme Court and when? Yeah, right.

00:10:36.220 | Yeah, it's also more complicated than that. Because what this

00:10:39.780 | Dobbs decision did is throw the issue back to the states. And

00:10:43.060 | the fact of the matter is that now it's up to each of these

00:10:46.460 | states to determine where they're going to come out on

00:10:48.460 | this issue. So if you look at there were ballot initiatives in

00:10:51.980 | red states like Kansas, and like Kentucky, Kentucky, that's

00:10:56.900 | right. That's what I'm saying is there are pro life ballot

00:10:58.980 | initiatives in red states that lost and so you can see all

00:11:02.780 | over the country that the Republicans tried to go too far,

00:11:06.100 | or they do try to go too far when they try to impose a total

00:11:09.180 | ban. Yeah, it seems to be popular. Is this what I'm saying

00:11:13.380 | is the purple state compromise. It's what DeSantis did in

00:11:16.540 | Florida. It seems like most of the country we talked about this

00:11:19.620 | on that episode. Yeah, most of the countries in the messy

00:11:22.300 | middle, they want abortion to be safe, legal, rare and early.

00:11:26.700 | They're willing to support it in say the first 15 weeks. But then

00:11:30.820 | after that, there needs to be some restrictions that I'm

00:11:33.140 | saying most of the country supports that. Now, it's also

00:11:36.340 | the case that Democrats though, are staking out a pretty extreme

00:11:40.180 | position too, because most of the Democrats were taking the

00:11:42.780 | position that abortion should be legal up into the ninth month,

00:11:46.340 | which is not even that's more radical than even row, row said

00:11:49.580 | that you can restrict it after 23 weeks. So you know, what we

00:11:53.060 | said on that podcast, Jason was the party that gets the middle

00:11:55.940 | first on this issue is the one that's going to do well just

00:11:59.100 | this issue. Yeah. And I think yes, I think it's true on this.

00:12:02.260 | And I think it's true on other things. So look, I think the

00:12:04.500 | Republicans can correct here pretty easily. If they listen to

00:12:08.500 | folks like DeSantis and young Ken and camp, people who

00:12:13.500 | understand that they have there's a compromise here. And

00:12:16.180 | the ones who basically insist on pushing a total ban are going to

00:12:20.500 | go down in flames.

00:12:21.380 | There's a couple of things I think that are worth looking at

00:12:24.820 | now that we have all the exit polling and the results. The

00:12:28.560 | Democrats strategy of helping to promote these extremist MAGA

00:12:34.860 | candidates in the primaries turned out to be a huge winning

00:12:37.660 | strategy because every single one that they helped put up

00:12:41.780 | against the Democrat, the Democrats won. But number two,

00:12:45.580 | so what that shows is the extreme right cannot field a

00:12:49.740 | winning candidate. But on the other side, all of these extreme

00:12:53.940 | left leaning Democrats also did not do very well either. And so

00:12:58.700 | you're back to David, what you said, which is we have been

00:13:01.660 | saying for a while, the winning strategy is that messy middle.

00:13:05.180 | It's the moderate person that kind of like tax to the center.

00:13:09.260 | And this is what you see everywhere around the country,

00:13:12.340 | all of the battle ballot initiatives, every time you had

00:13:15.340 | an extremist ballot initiative, whether it was a complete ban on

00:13:19.100 | abortion in a red state, or whether it was a tax, the rich

00:13:22.900 | policy in a blue state, they failed. And so I think the

00:13:26.980 | message that you have to take away is the extreme left doesn't

00:13:29.940 | work. The extreme right doesn't work. Right. If you look at, for

00:13:33.460 | example, like Kathy Hockel almost lost in New in New York

00:13:37.020 | State, because of who because of like AOC and all of that

00:13:41.220 | extremist progressive rank and file of that party. So people

00:13:45.580 | need to really understand and look at the data on the ground.

00:13:48.300 | If you want to win in 24, you got to be in the middle and you

00:13:50.860 | got to clean up all this extremist rhetoric,

00:13:52.740 | Freiburg, any thoughts? I think the Georgia Senate runoff race

00:13:57.140 | that we had in the 2020 election, cost the US $10

00:14:02.740 | trillion. And I think it because if you'll remember, that was the

00:14:07.300 | race that when the Democrats won, tip the power in Senate to

00:14:12.060 | the Democrats, and all this legislation for the last two

00:14:14.460 | years was passed, including a lot of the fiscal stimulus and

00:14:19.500 | spending that very likely may have faced significantly more

00:14:23.100 | opposition than could have been faced, where the Democrats have

00:14:27.060 | the White House, and the Senate in the house. And so that single

00:14:31.820 | seat and the loss of that seat in the runoff to the Democrat

00:14:35.700 | Party, I think ended up allowing a lot of loose behavior over the

00:14:41.980 | last two years, that's going to cost this country for a very

00:14:44.340 | long time. And in part, perhaps we could argue a lot of the

00:14:48.340 | inflationary pressure. And now the debt load, the US debt load

00:14:51.980 | increasing by $10 trillion in the last two years since that

00:14:54.460 | election, by the way. And so I think one of the most important

00:14:58.100 | things that perhaps people don't cognizantly recognize, but feel

00:15:02.540 | in some way, is that having a balance of power is really

00:15:05.740 | important in this country. And so to some degree, while there

00:15:08.860 | may be issues that folks can argue about disagree about,

00:15:11.340 | there may be candidates that are vile to us, I think ultimately,

00:15:15.220 | folks are recognizing the benefit and the value and having

00:15:18.300 | a good legislative debate and a good check and balance in this

00:15:22.460 | country. And so I think there's a lot of what Saks is saying

00:15:26.060 | that ties into that kind of emotional conditioning that's

00:15:29.140 | probably underway. Okay, Saks, Trump said he was going to

00:15:31.580 | announce he went after to Santa's called him to

00:15:34.180 | sanctimonious. Obviously, the Trump endorsements here didn't

00:15:37.900 | help. Roe v. Wade didn't help the situation. What is going to

00:15:43.060 | happen here? Is the Republican Party finally going to cut ties?

00:15:47.180 | Because they want to start winning? Or is Trump going to

00:15:51.060 | just announce next week and cause massive chaos? What's

00:15:53.900 | going to happen in the Republican Party in the coming

00:15:55.900 | weeks? Because we're 14 months away from Iowa, right? I mean,

00:15:58.700 | this is so now the next issue, the question comes down to do

00:16:02.380 | Republicans want to start winning elections? Yes or no.

00:16:05.180 | And freeberg brought up the right point in the last

00:16:08.140 | election cycle. He's right that the reason why we got 10

00:16:11.060 | trillion dollars of unnecessary spending is because of that

00:16:14.860 | Georgia runoff seat, we're about to have another one where Purdue

00:16:17.740 | won that seat on election night. And then we're not wanting in

00:16:21.700 | the runoff. Why did things go against Purdue? Because Trump

00:16:25.500 | had a six week hissy fit. After the election, the Georgia

00:16:28.980 | runoff happened on January 5. And then all culminated in the

00:16:32.180 | ride on January 6. So the fact of the matter is Trump has been

00:16:36.460 | having this extended hissy fit and living in denial since the

00:16:40.180 | loss in 2020. And as a result of that, we lost the Georgia

00:16:44.580 | runoff, I think we did worse than we had to in this midterm,

00:16:47.900 | I think we're going to lose the Georgia runoff again, if Trump

00:16:50.340 | continues with these antics. And so it really comes down to

00:16:53.540 | Republicans, do you want to win? And look, I know that there's

00:16:56.980 | call it 40% of the country passionately loves Trump. But

00:17:01.380 | here's the problem. He's capped at 40%. Independents and

00:17:05.220 | moderates, centrists will not give the guy another look. And

00:17:08.340 | so you cannot win a major national election in this

00:17:11.620 | country with 40% of the vote, no matter how passionate that 40%

00:17:15.620 | is, you know what 40% is 40% is Charlie quest, the guy who

00:17:19.820 | distances beat who wiped out in Florida, that was a 6040

00:17:24.260 | election. That is what a 40% of the electorate looks like

00:17:28.660 | landslide. It's a landslide. Exactly. So the bottom line is

00:17:34.140 | that who your messenger is in politics is incredibly

00:17:37.580 | important. And Trump just gives his enemies way too much to work

00:17:41.380 | with. Now, if he weren't a Republican, it might be

00:17:44.100 | different. Take Federman, for example, okay, this guy

00:17:46.420 | Federman, okay, he's being portrayed as this man of the

00:17:49.500 | people. He's got the goatee and the, the tattoos and the hoodie

00:17:53.220 | or whatever. Who is he really? He's a trust fund kid who never

00:17:56.460 | had a job until his mid 40s. But the press completely gives him a

00:17:59.780 | pass on that they would never do that for Republican and Federman

00:18:02.860 | were Republican, the press would expose him in two seconds. Now,

00:18:05.980 | that's a complaint. But the fact of the matter is Republicans

00:18:08.420 | just have to accept it. These are the rules of the game. If

00:18:10.980 | you're a Republican candidate for office, you have to be

00:18:12.940 | perfect. You have to be focused, you have to be disciplined, you

00:18:15.700 | have to be to Santa's, you cannot give your opponents

00:18:19.060 | something unnecessary to work with every fight to Santa's picks

00:18:22.900 | has been a smart fight that he's won. And same thing with Glenn

00:18:26.420 | young kid as well. He doesn't give his opponents things to

00:18:29.420 | work with. And unless Republicans realize that these

00:18:32.220 | are the kinds of candidates we need to nominate in this media

00:18:34.340 | environment, we're going to keep losing elections.

00:18:36.500 | Yeah. Tomas, any final thoughts here? As we wrap up election,

00:18:40.740 | I'm going to DC next week doing the rounds. High five and

00:18:44.580 | slapping. Yeah, just to finish the thought. One other quote

00:18:47.460 | from New Hampshire Governor Kristin Nunez, who's kind of a,

00:18:50.420 | he's a Republican who's been in spats with Trump. He said,

00:18:53.580 | Listen, the message of this election is first fix crazy,

00:18:57.900 | then fix policy. If you're coming across like you're crazy,

00:19:02.660 | their voters will reject you. Now, that doesn't mean you can't

00:19:06.540 | stand for principle. Rhonda Santa says that Florida is where

00:19:10.060 | woke goes to die. He says we will fight woke in the

00:19:12.980 | boardrooms will fight in the classrooms. This is certainly

00:19:15.140 | not a liberal position. These are pretty conservative

00:19:17.260 | positions he's taking, but he does it in a calculated

00:19:20.020 | disciplined way.

00:19:20.940 | I'll say this right now. He is a winning candidate. And the

00:19:26.340 | scale of Reagan, if the Democrats also don't figure out

00:19:30.620 | how to clean up their act, because the other message that's

00:19:33.660 | so interesting, that I took away is the legislative agenda that

00:19:38.020 | works is actually what Biden has always believed. The problem

00:19:42.860 | is that Biden seems to get distracted or confused or

00:19:45.940 | hijacked by the left wing of his party. And they introduced all

00:19:49.860 | these unbelievably crazy iterations of progressive policy

00:19:53.420 | that just are not popular, even in blue states, just look at the

00:19:57.100 | number of bills that failed. So he also has to fix what he's

00:20:02.900 | doing, by the way,

00:20:03.700 | it's he doesn't think that could fail the US judge in Texas. I'm

00:20:07.940 | not sure you can tell me if this is legit or, or not.

00:20:11.620 | No, they stayed that we should talk about that in the context

00:20:14.260 | of the economy, actually.

00:20:15.340 | That was predictable. That was predictable that the college

00:20:17.740 | loans thrown out is completely unconstitutional for a president

00:20:20.380 | to spend half a trillion dollars without Congress's approval.

00:20:23.460 | capital on Jamal's point here to Santa's one Miami Dade County,

00:20:26.980 | which went for Hillary by 30 points, okay, he showed that a

00:20:31.620 | competent executive a an energetic, youthful operator who

00:20:37.260 | actually runs the state well, okay, can win over moderate

00:20:41.260 | house and independents and Democrats. Now he's a winner.

00:20:43.900 | These are the types of candidates Republicans are. Yeah,

00:20:45.860 | he's a winner. He's a winner. We got a call breaking in here. We

00:20:49.300 | have a special bestie guest. He knows it's been a big newsweek.

00:20:51.740 | It's not just the elections, FTX, crypto exchange went belly

00:20:55.380 | up. And we thought, well, let's bring somebody in who's super

00:20:57.900 | credible in crypto. And that's friend of the pod. He's credible

00:21:01.300 | because he's wearing a tie. Yeah. Hey, Brian Armstrong. How

00:21:03.660 | are you doing? Brian Armstrong? You look fantastic. What are you

00:21:06.100 | testifying today? I'm doing great. It's not it's not Mon

00:21:09.460 | Claire. And it's not Laura Piana. But normally, I just I

00:21:14.620 | just wear the black t shirt and the hoodie. But you know, when

00:21:17.580 | times like this, I got to go talk to media policymakers,

00:21:20.420 | regulators, and it's a it's a good time to, you know, spruce

00:21:23.940 | up the image. This is a week to break out the tie. Yeah. Hey,

00:21:27.180 | listen, men's warehouse. It never looked better. You look

00:21:29.660 | great. Thank you. I see a red tie. And I think fiscally

00:21:32.100 | responsible.

00:21:35.980 | I guess Brian just to kick it off. FTX in spectacular fashion

00:21:40.460 | blew up this week. And it's pretty gnarly. You run an

00:21:43.980 | exchange as well. What's your take on what happened with FTX?

00:21:47.180 | And then what is your position in terms of making sure your

00:21:50.620 | customers understand that Coinbase is not going to have a

00:21:53.660 | similar fate to all the other exchanges that seem to be

00:21:56.020 | blowing up every couple of months? Yeah.

00:21:57.780 | Well, first of all, I mean, I think we were all shocked that

00:22:00.900 | somebody like Sam, who seemingly is so smart and and capable,

00:22:06.260 | ended up in this really the situation where he appears to

00:22:08.860 | have done something quite unethical and illegal. So you

00:22:12.620 | know, my job right now this week has been to go out there and

00:22:14.860 | just help people understand that Coinbase is not like that we've

00:22:18.140 | been pursuing a different strategy for the last 10 years.

00:22:20.500 | We're a public company, we're we're regulated, our financial

00:22:24.220 | statements are audited, they can show that, you know, customer

00:22:27.060 | funds are segregated, they're backed one to one, we're not

00:22:29.620 | investing customer assets without their explicit

00:22:32.140 | direction. And so that's been the first step is just to make

00:22:34.980 | sure people understand that. But then after that, we need to kind

00:22:38.180 | of think about how we go forward as an industry here and both

00:22:41.900 | take a long term perspective, make sure the good companies in

00:22:45.220 | the space aren't allowing one or two bad actors to kind of mess

00:22:48.340 | it up for everybody else. And it feeds into the whole regulatory

00:22:51.660 | story too, because companies like Coinbase are already

00:22:54.780 | regulated, but we're regulated like a traditional financial

00:22:56.900 | service business. But we don't have clarity about the crypto

00:23:00.540 | specific regulations, like what's a commodity, what's the

00:23:02.940 | security. And that lack of regulatory clarity, I believe

00:23:06.540 | has pushed a lot of this business offshore to these less

00:23:09.100 | regulated exchanges. That's part of what caused the blow up

00:23:11.820 | today. They were based in the Bahamas, you know, and they just

00:23:15.220 | there's not sophisticated financial regulators overseeing

00:23:17.740 | what they were doing.

00:23:18.460 | Brian, there's a lot to unpack. But maybe we can just take a

00:23:23.780 | step back and for the uninitiated, or for the person

00:23:26.940 | who's only been just following this very superficially, can you

00:23:30.660 | just in a nutshell, explain what happened?

00:23:33.860 | Yeah, so my understanding is, and again, this is from people

00:23:37.420 | I've talked to, and I spoke with Sam and CVC briefly during this,

00:23:40.420 | but I didn't get details from them. I got it from other

00:23:42.340 | people. You spoke to them this week. Yeah, I mean, this was all

00:23:45.340 | going down. I mean, I spoke to Sam about, you know, he was

00:23:48.340 | trying to raise emergency financing and things like that.

00:23:51.220 | And I spoke to CZ about why he was considering buying the asset.

00:23:54.300 | I thought it was a bad idea. But my understanding what happened

00:23:58.620 | at this point, again, I don't have all the facts. This is just

00:24:00.860 | my understanding is that, you know, FTX was in a position

00:24:05.900 | where they had this market maker Alameda that was investing in

00:24:09.580 | risky things. And that's fine, like market makers, hedge funds,

00:24:12.100 | they're designed to take more risk. It appears at this point

00:24:15.580 | that back during the last shakeup in the crypto industry,

00:24:19.180 | where you know, Terra Luna and Voyager and Celsius and three

00:24:22.740 | arrows went under, it appears that Alameda took a big loss at

00:24:26.620 | that time as well. They may have even been underwater. And instead

00:24:30.420 | of just saying, Hey, you know, this hedge funds gonna blow up

00:24:33.140 | to which would have been unfortunate people would have,

00:24:35.060 | you know, Sam would have lost money. It's embarrassing, but

00:24:37.260 | it's not illegal for a hedge fund to blow up. It happens with

00:24:40.780 | some regularity. Instead of just letting it blow up. It seems

00:24:44.180 | like at this point, he took customer funds,

00:24:46.860 | but you have to explain he also he owns both. That's for the

00:24:50.060 | people that may not understand that. Right. So it's a related

00:24:53.580 | related parts. He owns his own exchange called FT x and he owns

00:24:56.620 | his own hedge fund called Alameda,

00:24:58.180 | which operates inside of FT x as well as in other places, right.

00:25:01.780 | But again, Alameda seems to have blown up. Sorry, Brian, back to

00:25:06.500 | you. Yeah, so it seems that they had this solvency issue. And

00:25:11.140 | instead of just letting it blow up, Sam basically said, Hey, we

00:25:14.060 | have a bunch of customer assets over here at FT x, or he somehow

00:25:17.340 | basically made a loan from FT x into Alameda to try to prop it

00:25:21.660 | up. I don't know why he did that. I mean, that that's the

00:25:24.900 | moment in my mind where he crossed the line into probably

00:25:27.540 | committing fraud. And I think he probably lied to users lied to

00:25:31.660 | investors. And he went around and tried to bail out these

00:25:34.820 | different companies like like Voyager and BlockFi and to sort

00:25:38.100 | of prop up this thing and maybe he thought he could trade his

00:25:41.260 | way out of it or something. I'm not sure. But that seems to be

00:25:44.500 | where the mistake was made.

00:25:45.900 | Brian, can I ask one question, which I which I think will help

00:25:49.340 | frame the contagion risk set of questions that everyone's

00:25:52.860 | having. When people have an asset, we all talk about

00:25:56.220 | customer deposits and customer assets held at these exchanges.

00:25:59.620 | But those assets and those deposits are very often some

00:26:03.260 | form of coin, I have some amount of Bitcoin, some amount of

00:26:05.980 | ether, some amount of something else. Is it the case that there

00:26:10.100 | is an assumption of total asset value that's held in a in a

00:26:15.300 | portfolio of coins that doesn't necessarily match the

00:26:18.980 | individual users accounts. And then when one coin goes down in

00:26:23.380 | value nominally to dollars, that the whole value of the portfolio

00:26:27.060 | goes down, and now you can't actually make the customers

00:26:29.580 | whole. So in the statements that have been made by these guys and

00:26:33.540 | other exchanges, that we have enough liquidity to cover

00:26:37.660 | customers accounts, that the assumption might be we have

00:26:40.740 | enough liquidity, if you assume the current market price for a

00:26:43.940 | whole bunch of different coins. But then if one coin tanks, the

00:26:47.300 | total liquidity tanks, and they don't actually have it matched

00:26:49.780 | up correctly, because now the customer account value didn't go

00:26:52.380 | down as much as the exchange of the total asset value. Does that

00:26:56.580 | make sense? And is that part of the contagion risk that's going

00:26:59.700 | on here is that they're not matched truly between customer

00:27:02.940 | accounts, and the exchanges, you know, holding of coins.

00:27:06.220 | So not exactly. Okay, so if you're a regulated financial

00:27:09.580 | service business, that's but you're not a bank, you know,

00:27:13.100 | we're regulated as a trust company, a money transmitter,

00:27:15.500 | etc. You're required to hold customer assets one for one,

00:27:19.220 | information omitted in the the asset. So in other words, if you

00:27:22.660 | say you the customer has one Bitcoin, you have to hold one

00:27:25.420 | Bitcoin, if they say they have $100, you have to hold $100. And

00:27:28.780 | so that's the case with Coinbase. You don't have to take

00:27:30.820 | our word for it. By the way, you can look at our audited public

00:27:33.140 | financial statements as a public company with an independent, you

00:27:36.140 | know, big four accounting firm who went to go verify all of

00:27:38.540 | that. And that's what various custodians and exchanges, that's

00:27:42.300 | what they all should be doing. If by the way, if you're

00:27:44.700 | regulated as a bank, you can actually go invest some of

00:27:47.500 | those, but there's very strict regulation around that and

00:27:49.900 | capital requirements and whatnot. And we're not a bank.

00:27:52.220 | So we hold one to one. Now, if you're an investment fund, or a

00:27:56.740 | hedge fund, or or something like that, then you can try to take

00:28:00.300 | positions in different coins and different assets, and they could

00:28:03.300 | go up and they could go down, you know, you may you may lose

00:28:06.140 | your investors money, but there's no such thing as the

00:28:08.660 | customer assets being involved in that there needs to be clear

00:28:13.260 | segregation of those customer funds. And from from what an

00:28:16.940 | investment fund would be or corporate funds. And that's

00:28:19.700 | where they got in trouble. They basically co mingled customer

00:28:22.380 | funds with their hedge fund.

00:28:24.100 | Classic. Can you explain the contagion, by the way, just so

00:28:27.020 | we can, because everyone's been talking about the contagion and

00:28:29.300 | understanding what's next. So that's what I just want to Yeah,

00:28:31.980 | because I think people are gonna be asking that a lot this

00:28:33.700 | weekend.

00:28:34.060 | Yeah, so I do think there's there is some contagion risk

00:28:37.300 | here. I think there's other firms that had, first of all,

00:28:40.700 | there's firms that had money just sitting in FTX. And that's

00:28:43.060 | now going through bankruptcy court. So that's been bad. I

00:28:45.620 | mean, multi coin came out publicly and said that they had

00:28:47.860 | 10% of their portfolio sorted on FTX. There's other firms that

00:28:52.580 | Alameda may have had loans with. And those firms are probably

00:28:57.780 | struggling. I, you know, I don't want to say who, but we have

00:29:01.180 | received a couple of inbound calls from other people trying

00:29:04.060 | to get emergency financing. There's people who may have just

00:29:06.980 | totally different from FTX and Alameda, they may have just had

00:29:10.300 | their own portfolio that they took margin or leverage on to

00:29:13.260 | buy crypto. And now as the prices have come down a little

00:29:15.300 | bit, they're getting stopped out. So that's all been very

00:29:19.500 | challenging. And I again, just for the sake of clarity, I

00:29:22.260 | should say that Coinbase did not have any material exposure to

00:29:25.260 | Alameda, FTX or FTT token.

00:29:27.620 | Can we just talk about this issue of customer deposits,

00:29:29.540 | because this is really the crux of the issue from a legal

00:29:32.060 | standpoint, right? I mean, I remember when I was doing PayPal

00:29:34.900 | like 22 years ago, and the company was like six months away

00:29:38.340 | from running out of money. I remember the lawyers told us

00:29:40.260 | really clearly, you cannot use customer deposits to fund the

00:29:44.140 | operating expenses of your business. In other words, if

00:29:46.820 | this business ends up going bankrupt, you'll still have all

00:29:49.540 | the customer money there and they'll be able to get it back.

00:29:51.180 | And you know, it was really clear, like, hey, if you use

00:29:54.660 | customer funds to pay for the burn of the business to operate

00:29:58.260 | the business, that is a do not pass go go directly to jail type

00:30:02.860 | offense. And so like, that's really the heart of this. Now, I

00:30:06.540 | read in some articles covering this, that the way it worked, is

00:30:11.220 | that Alameda had a bunch of these FTT or these FTX FTF

00:30:17.180 | called FTT. And they basically use that as like a marker as

00:30:21.020 | collateral. So they basically borrowed, what is it like 6

00:30:24.900 | billion of customer funds from FTX, and then they use their own

00:30:29.700 | token to then as collateral. So I'd stop it. Yeah, exactly. And

00:30:33.820 | then what happened is apparently like CZ got wind of this, and he

00:30:38.660 | owned a whole bunch of these tokens. And he signaled that he

00:30:41.980 | was going to dump it and the price basically went down. And

00:30:44.580 | so now all of a sudden, the collateral for the customer

00:30:47.420 | loans was insufficient. And then there was a run on the bank. And

00:30:50.540 | by the way, this has happened. This happens in the public

00:30:52.740 | markets a lot as well. So like when you see heavily shorted

00:30:55.660 | names, or when you know that certain hedge funds are on the

00:30:58.700 | brink, other hedge funds will go in and essentially force a

00:31:03.420 | margin call and a stop out because then it's what causes

00:31:06.180 | all of these runs. And if you look actually inside a GameStop,

00:31:08.860 | the reason why you got all this gamification in the GameStock

00:31:12.260 | equity and a bunch of these other names was in part because

00:31:14.860 | of this dynamic folks that are highly levered folks that don't

00:31:19.180 | have the right matching of risk. And what happens is they're

00:31:24.260 | solvent, but a liquid. And then if you run the instrument into

00:31:29.980 | the ground, they both become insolvent and illiquid all at

00:31:33.900 | the same time. So Brian, the question is, now that we know

00:31:39.020 | what happened, which is all of these crazy inner party related

00:31:42.580 | transactions, and, you know, all of this stuff seems very

00:31:46.100 | illegal. There was a bankruptcy filing today. And up until

00:31:51.660 | today, it seemed like this issue was really about FTX International

00:31:57.060 | and Alameda and it didn't touch FTX us, which for a lot, a long

00:32:02.700 | time tried to position itself as, you know, well run and

00:32:06.180 | regulated as coinbase to be, you know, they tried to say that.

00:32:09.220 | But now if you look inside the Wall Street Journal, all the

00:32:12.380 | articles say that this is actually FTX group. So the whole

00:32:15.180 | thing seems to be imperiled. Can you just help us explain that

00:32:18.540 | because there now that's a lot of us people that were following

00:32:22.260 | the rules thinking that this thing was matched one to one

00:32:24.620 | that may be also affected? Yeah. So, look, I don't know who

00:32:29.900 | inside FTX is and its orbit of companies actually knew that the

00:32:33.980 | fraud had been taking place. I, it would not surprise me. I have

00:32:38.260 | no idea, to be honest, but it would not surprise me if FTX us

00:32:41.860 | people and employees had no idea that this was happening. I'm

00:32:44.900 | imagining if Sam was doing when he when he started doing this,

00:32:47.820 | he probably wanted to keep it to a very small group. Otherwise,

00:32:50.100 | this is the kind of thing that leaks and the whole thing blows

00:32:52.420 | up. Now, that being said, I don't necessarily think FTX us

00:32:57.180 | is worth anything as a business right now because of the brand

00:33:00.180 | being so tainted. And there probably was not great

00:33:03.780 | separation of these entities in the sense of, you know, like,

00:33:07.420 | did they have truly separate boards and beneficial owners and

00:33:10.820 | governance and it Sam seems to have, you know, it appears that

00:33:15.940 | they didn't FTX didn't really have a CFO or maybe even like a

00:33:19.180 | real board or anything like that. And so it's hard to match.

00:33:23.380 | We found on red, there was an article that appeared that said

00:33:26.700 | that the head of compliance at FTX was also the head of

00:33:30.740 | compliance at a poker site called ultimate bet, which in

00:33:34.420 | the 2010s, did this exact thing, apparently some version of this

00:33:38.740 | where they went in and they looked at whole cards of poker

00:33:42.260 | players. And then a few employees inside the business

00:33:45.300 | would basically play against these folks knowing what the

00:33:47.540 | whole cards were, ran this cheat stole millions of dollars.

00:33:51.180 | Somehow that person found a way to be head of compliance at FTX

00:33:55.780 | Yeah, 10 years later, which is incredible. But back to this

00:33:59.460 | question. So So now what happens now is you have the

00:34:02.300 | international business, and the US business and Alameda research

00:34:06.180 | all rolled up into this one frozen entity, right? With now

00:34:11.660 | regulators having to so do you know what happens in a process

00:34:14.780 | like this? Like, is it that the DOJ and the SEC get priority?

00:34:18.940 | Or is there some international monetary like who, who's who

00:34:23.300 | unwinds all of this? How do people get their money back if

00:34:27.300 | at all?

00:34:27.820 | Yeah, so I'm not an expert at this. But my high level

00:34:30.900 | understanding is that the bankruptcy courts will

00:34:33.460 | essentially, and I believe they filed bankruptcy in the US,

00:34:36.380 | which is an interesting thing. I didn't know why they did that

00:34:38.500 | versus Bahamas. But anyway, the bankruptcy court will basically

00:34:41.700 | go through and try to find any assets of value. So I mean, they

00:34:45.220 | must they still have some tokens and value, they have a venture

00:34:48.020 | portfolio, they you know, I think Sam owns 9% of Robin Hood,

00:34:52.060 | there's various things that they may own. And then they'll kind

00:34:54.620 | of auction those off to various bidders on distressed assets,

00:34:57.980 | and then try to distribute those funds to the customers. I don't

00:35:00.940 | know the exact process beyond that, though.

00:35:02.580 | I mean, if you remember the Madoff, wind down took many

00:35:05.340 | years. And for years, he was trying to find assets, and then

00:35:08.980 | he found a market sold them. There's this the trustee, I

00:35:11.380 | think he's still active. And then, you know, it's tried to

00:35:14.380 | redistribute the funds, obviously, so many more

00:35:16.100 | customers here than there was with Madoff. But it can be a

00:35:18.740 | very long and winding process to identify all the assets, then

00:35:21.980 | run the market sale process on them, then figure out who gets

00:35:24.900 | what first, and then distribute.

00:35:26.820 | There was an interesting thing that Larry Summers did, I think

00:35:29.660 | for Bloomberg, where he was asked whether this was Lehman or

00:35:34.020 | Enron. And he said, it seems more like an Enron than it is a

00:35:38.380 | Lehman. And Brian, I'm just curious how you think about it.

00:35:41.420 | Like, is this sort of a fraud perpetuated by a group of

00:35:44.540 | executives to essentially take advantage of a situation? Or do

00:35:49.420 | you think that this is more like a Lehman situation, which is a

00:35:52.020 | well run business, I guess that just, you know, got caught in a

00:35:55.620 | liquidity trap?

00:35:56.540 | I think it's my guess is it's a little more like Enron in the

00:36:00.940 | sense that I mean, yes, they were over levered and that kind

00:36:03.340 | of thing. But the minute that they moved customer funds in

00:36:07.140 | some way, shape or form to backstop the hedge fund that that

00:36:11.340 | was, in my mind, fraud. And you know, that's more like Enron.

00:36:14.820 | Do you think now that we have to open the gates on regulation,

00:36:17.940 | like the whole point of crypto in some ways was, you know,

00:36:21.140 | trust nobody. And, you know, decentralization is the key. But

00:36:26.540 | here, what we see is a lot of people were tricked into trusting

00:36:30.380 | FTX and having their deposits there. And it was a centralized

00:36:34.300 | exchange, which caused all these problems. So it's like, it

00:36:37.140 | almost violates the principles of what the whole product market

00:36:39.860 | fit was supposed to be. So what what should sort of the observer

00:36:45.180 | expect? And what do you expect as a business in terms of how

00:36:48.380 | governments now react to all of this?

00:36:50.460 | Yeah, I think it's really important to distinguish between

00:36:54.180 | the centralized players in crypto, which are custodians,

00:36:56.900 | exchanges, etc. Coinbase has a big business there. And the

00:37:00.860 | decentralized players, which are, you know, self custodial

00:37:03.940 | wallets, defy protocols, web three, that whole world. So the

00:37:08.820 | centralized players should be regulated. And today, they're

00:37:12.740 | regulated already, like, like kind of traditional financial

00:37:15.300 | service businesses. But they don't have the regulation clear

00:37:19.140 | when it comes to the crypto aspects. So for instance, in the

00:37:21.740 | US, we actually don't still have clarity about what is a

00:37:24.260 | commodity, what's the security? Should which one should CFTC

00:37:27.500 | regulator versus SEC, that kind of thing. And that lack of

00:37:30.500 | regulatory clarity, and frankly, the the climate of regulation by

00:37:34.660 | enforcement, the negative rhetoric from you know, chair

00:37:37.580 | guns, Lord in particular, has created this sort of chilling

00:37:39.780 | effect in the US that has pushed a lot of that centralized

00:37:42.820 | actors activity offshore. In fact, 95% of the trading volume

00:37:47.580 | in crypto is now outside the United States. And it's come

00:37:50.140 | down a lot since the beginning of this year, even now, the

00:37:53.340 | decentralized players, self custodial wallets, defy web

00:37:56.420 | three. This is where crypto really has an opportunity to

00:37:59.860 | make a more fair and free and transparent system because you

00:38:03.780 | can go look at any smart contract to see exactly what

00:38:06.340 | it's doing. Anybody can audit the code. If you have a self

00:38:09.460 | custodial wallet, you can just trust yourself, you don't have

00:38:11.940 | to trust any other into intermediary out there. And

00:38:15.540 | that's where you get true decentralization. And I think

00:38:18.540 | that's actually now those areas still have a couple of their own

00:38:21.900 | challenges. You know, sometimes people will lose their password

00:38:24.780 | or their phone, and they'll lose their own money. So if you're

00:38:27.020 | if you're trusting yourself, you still have the you have to trust

00:38:29.620 | you know, that you're going to do that piece correctly. But

00:38:31.700 | there's a lot of good things we can do there around making

00:38:34.180 | social recovery mechanisms and NPC wallets and things like

00:38:37.100 | that. We remember just a couple of months ago, Gary Gensler

00:38:40.980 | started saying, Hey, these things are all securities. And

00:38:43.660 | you went and visit the SEC a couple years ago, or you try to

00:38:46.700 | they wouldn't meet with you. You were very public, you did a

00:38:49.060 | tweet storm. We talked about this on my other pod, that hey,

00:38:51.460 | like we want to meet, we want to talk about that. Now we're still

00:38:54.660 | in a position where the SEC is position is these are all

00:38:57.540 | securities, which means the anything that's trading, it

00:39:00.780 | would have to be limited to accredited investors, etc. What

00:39:04.060 | should the United States do here? And how close are we to

00:39:07.260 | getting clarity? Because I know you're trying to talk to the SEC

00:39:10.380 | directly about can we just get some clarity here? Can people

00:39:13.500 | buy these tokens or not? What is the status of Are they tokens?

00:39:17.300 | Are they securities? Or are they not here in the United States?

00:39:19.940 | Yeah. So luckily, since then, we have had a lot of productive

00:39:23.980 | dialogue with both the SEC and the CFTC and Treasury and all

00:39:27.980 | kinds of people in Congress. And I do think the US is making some

00:39:31.340 | steps in the right direction. There was actually there was a

00:39:33.740 | bill going through Congress recently called the DC CPA or

00:39:36.820 | the stab now Bozeman bill. Although it's having some

00:39:39.420 | challenges now, frankly, due to this FTX blow up because SBF was

00:39:43.260 | one of the people sort of pushing that bill forward. But

00:39:45.820 | regardless of that, the sort of system that we should have is

00:39:49.500 | there should be a clear designation between what is a

00:39:52.380 | crypto commodity, and that can be regulated by the CFTC. And

00:39:56.980 | what is a crypto security? Now this is one of those legal, by

00:39:59.980 | the way, what is also a stable coin and artwork and other

00:40:02.660 | things that are not any of those things. The challenge lies in

00:40:07.260 | that there's kind of a fuzzy line between what is a commodity

00:40:10.620 | and what is a security and a lot of this law is based around the

00:40:14.020 | Howie test, which says a security is an investment in a

00:40:17.780 | common enterprise with an expectation of profit. And so

00:40:22.340 | it's basically a point based system. And in the absence of

00:40:25.340 | really getting a clear list between the CFTC and the SEC or

00:40:28.100 | in this turf battle, I would love it if you know, they could

00:40:30.860 | basically put out a list, get their heads together and put out

00:40:33.180 | a list, hey, CFTC is going to do these SEC is going to do these a

00:40:36.620 | bunch maybe are in the middle, let's let the courts figure that

00:40:38.860 | out or whatever. But that just hasn't happened. And it's a it's

00:40:41.940 | a missed opportunity in the US.

00:40:43.540 | So if the Howie test is not perfect, given the dynamic

00:40:47.420 | nature of cryptocurrencies and all the innovation, if Brian

00:40:50.740 | Armstrong was going to say, hey, this is in the best interest of

00:40:53.420 | Americans, balancing, you know, some amount of security and

00:40:57.780 | safety for people making bets on this currency, and allowing

00:41:01.900 | innovation, what would you say is the best definition, the best

00:41:05.380 | way for us to regulate crypto coins, putting NF T's aside

00:41:11.100 | putting down site just specifically,

00:41:12.420 | hold on, let me just tweak your question. Sure, build on it,

00:41:15.740 | because we because we should switch to SPF as well. And just

00:41:18.140 | talk about the person. But to me, it seems the whole issue if

00:41:21.380 | you come back, like, what is the first string that you pulled

00:41:23.740 | that unraveled the sweater was the fact that these tokens were

00:41:27.340 | created out of thin air, they had no meaningful value,

00:41:30.780 | somebody prescribed a value. And all of a sudden, everybody else

00:41:34.340 | in the economy all of a sudden said, Yeah, I'll take that as

00:41:36.540 | collateral. Look, you cannot do that in the regular world. I

00:41:39.820 | can't call JP Morgan and say, I've invented this thing. It's

00:41:43.300 | called a share in XYZ. And I'd like you to margin loan, you

00:41:47.460 | know, give me a loan against it. So Brian, explain like, there's

00:41:50.620 | a ton of these tokens that have been engineered, right? And

00:41:53.780 | there's been a ton of these tokens that have been sold. So

00:41:56.700 | what should people do that own these things thinking that there

00:42:01.300 | was going to be some safety or value or, you know, like, how do

00:42:05.260 | you think about all of these tokens that are that that could

00:42:07.780 | be as basically as as fragile and shitty and worthless as FTT?

00:42:13.060 | Hmm. Yeah, well, there, there is this concept of like an

00:42:15.900 | exchange token, and there's a couple other firms out there

00:42:18.420 | that have them. And that's something we haven't done. And I

00:42:20.780 | do, I think, I think you're right, like, the actual utility

00:42:24.100 | of those things is a little questionable. And so if

00:42:26.420 | someone's going to sort of mark those up on a low supply, and

00:42:30.260 | then a low float, and then somehow leverage that, that

00:42:33.140 | that's going to get yourself into trouble. But look, I don't

00:42:35.580 | want to throw out the entire concept of people creating

00:42:37.740 | tokens, I think there's actually a lot of good stuff there. And

00:42:41.100 | it comes down to this idea of if you're trying to raise money for

00:42:44.260 | your company, and a token through a token, that's fine,

00:42:47.740 | that should be a security. And there should be a regulated way

00:42:50.780 | to do that in the US, like go register it with the SEC, you

00:42:54.220 | know, let it trade on broker dealers. That's, that's what

00:42:57.020 | we've been wanting to do for a long time. And the SEC is taking

00:42:59.820 | their time getting there. They don't, you know, get into her to

00:43:02.260 | be honest, he doesn't seem that excited about the idea of this

00:43:05.860 | whole industry existing. And so anyway, but it should it should

00:43:09.500 | exist, and it should be happening in a regulated way. So

00:43:11.460 | if people want to issue a token that's raising money for a

00:43:13.580 | company, let's regulate it as a security. If they want to issue

00:43:16.860 | a token that's truly on a decentralized protocol, or has

00:43:20.420 | some other purpose, like voting in a Dow or rewards or something

00:43:24.300 | like that, then that's probably not a security. And let's be

00:43:27.300 | honest about that and allow those things to trade in a

00:43:29.980 | different environment, a different regulator under the

00:43:31.820 | CFTC,

00:43:32.420 | we're probably running out of time with you, because you said

00:43:34.260 | you had a hard stop. So let's ask the million dollar question,

00:43:36.700 | tell us about SPF. Like, what's who is this character? When did

00:43:41.420 | you first suspect? Yeah, what's your read on the psychology that

00:43:44.220 | this wasn't legit? Do you think that it was his altruistic

00:43:47.140 | intent, that allowed himself to convince himself to do this? Or

00:43:51.300 | do you think this was like malicious the whole way? Or

00:43:53.580 | what's your sense of the guy?

00:43:54.780 | So again, I'm speculating here. I mean, I've spent time with

00:43:58.540 | I've met him a bunch of times. And I have to say, I did not see

00:44:02.380 | this coming. Like he, he appeared to me to be a very

00:44:06.420 | bright, credible, competent person, perhaps a bit young,

00:44:10.340 | perhaps, you know, a bit reckless at times, but not

00:44:13.380 | unethical and not not committing fraud. I definitely did not see

00:44:17.740 | that. You know, if I look back to see, were there any warning

00:44:20.540 | signs that I should have thought twice about it? You know, one of

00:44:24.100 | the things I noticed was that in 2021, you know, Coinbase had a

00:44:27.980 | good year, we did 7 billion in revenue for a billion of

00:44:30.580 | positive EBITDA, we went, we became public as a company. At

00:44:33.820 | that time, FTX did about 1 billion in revenue. And I knew

00:44:37.340 | how much money we had for our venture budget, and just like,

00:44:40.940 | different investments we wanted to make. And I knew their

00:44:43.540 | revenue. And I had to scratch my head a bunch of times. And I was

00:44:46.700 | like, where is this guy getting all this liquidity? Because he

00:44:49.780 | was like buying 9% of Robin Hood, he was putting like a

00:44:52.460 | billion dollars into this, he was donating to all these

00:44:54.580 | politicians. And I was like, I, it did not make sense to me

00:44:58.540 | where he was getting all this cash, people just kept telling

00:45:00.660 | me, oh, his market maker Alameda is just printing cash. I guess

00:45:03.820 | like, okay, I guess, you know, it seems like a conflict of

00:45:06.380 | interest to own an exchange to market maker. That's why we

00:45:08.340 | haven't done it. But more power to him, I guess. And so I was

00:45:12.420 | surprised I didn't speak up. I cannot I can't explain the

00:45:15.620 | psychology of it at this point, whether he's a pathological

00:45:18.820 | liar, or if he's started off good, and somehow under the

00:45:22.300 | pressure of this whole thing went bad. But the minute you

00:45:26.180 | can, you can go watch the interviews, he's, he's, he's

00:45:28.420 | lying to people about why he's, he's, you know, bailing out

00:45:32.940 | Voyager and BlockFi. And he's saying, and he knew at that

00:45:36.140 | time that most likely he knew that at that time that they were

00:45:39.260 | not solvent Alameda was not solvent. And so that's where he

00:45:42.220 | crossed a major line in my book.

00:45:44.140 | And we see it time and time again, Elizabeth Holmes, Bernie

00:45:47.260 | Madoff, I mean, once the lie gets too big, you can't get out

00:45:49.860 | of it anymore. If that's the case, really incredible.

00:45:54.100 | And the most important thing at this point, Brian, is that the

00:45:57.380 | United States makes a decision on do we want to be in crypto?

00:46:01.860 | Do we want to have a say in this and create a regulatory

00:46:04.260 | framework that entrepreneurs like yourself can deal with?

00:46:07.340 | That is the most important thing to happen in the next year. But

00:46:10.260 | you're saying the SEC is not motivated? I guess? Why are they

00:46:13.620 | not motivated? They're just cya?

00:46:15.220 | Well, they're motivated. Now. This is a political issue now.

00:46:18.020 | So they but let's hear Brian's answer here. What do you find

00:46:21.140 | out? Who did SPF give all this money to because he was touted

00:46:24.580 | as one of the future biggest donors, the Democratic Party,

00:46:27.340 | Democratic Party wants signals. So if you want signals, I would

00:46:30.860 | say there was a pretty big signals here. Number one, he

00:46:33.420 | says going to donate a billion dollars Democratic Party. And he

00:46:36.820 | kept touting this like effective altruism, whatever the saving

00:46:39.620 | the world stuff. Now, why do you need to do that? Unless your

00:46:43.980 | reputation laundering and trying to buy political protection?

00:46:47.260 | Come on, okay. You don't think that was a little bit of a

00:46:49.940 | signal? Right here? I'll tell you, I'll tell you an even more

00:46:54.140 | explicit signal. We he pitched us in that $17 billion round. And

00:46:59.420 | I did a zoom with him. And after the zoom, I'm like, this

00:47:03.180 | doesn't make much sense. But I'll have my team do some work.

00:47:05.900 | We did some work. And we sent him a two page deck. And we said,

00:47:09.060 | here are our recommendations for taking the next step. One was

00:47:13.500 | the formation of a board. The second was the creation of dual

00:47:16.780 | class doc. The third was some reps and warranties around

00:47:19.700 | affiliated transactions and related party transactions. And

00:47:23.140 | the person that worked there, called us back and literally,

00:47:26.340 | I'm not I'm not kidding, you said, go fuck yourself, was

00:47:30.660 | quote, unquote, the response to us. We're like, okay, so that

00:47:34.060 | was the easy decision. But message receives message

00:47:37.500 | received. But I still thought, okay, I'll just put that in the

00:47:40.220 | bucket of these guys are unbelievably arrogant and smug.

00:47:43.460 | But Brian, I thought what you thought, which is, maybe it's

00:47:46.740 | because they've printed, they've created some money making

00:47:49.220 | machine in the Bahamas. And so they have that level of

00:47:53.460 | confidence. You know, I, it but then to see this thing to the

00:47:58.220 | extent of which is now we're only scratching the surface,

00:48:01.900 | guys, you know that we're gonna find that stuff every day.

00:48:04.420 | The postmortem is gonna be crazy. But Brian, to the

00:48:06.820 | question I asked before about the SEC, and what should happen,

00:48:09.980 | you said, I want to pick up on what you said, which is the SEC

00:48:12.980 | doesn't seem motivated. Why is the SEC in your mind not

00:48:15.820 | motivated?

00:48:17.340 | Well, I think you're right that I hope that they use this as a

00:48:19.780 | moment to come together and help, you know, local companies

00:48:24.180 | in the US being built here to end up in a better place. And I

00:48:28.860 | do believe you know, David, I think said it's right, it is a

00:48:31.700 | political issue. At this point, there's going to be a major

00:48:34.460 | impetus to get the clarity here in the US and hopefully to help

00:48:38.220 | build the companies here in the US that are going to serve the

00:48:40.340 | rest of the world, and in every major financial hub. So we're

00:48:44.260 | committed to building that together with all the regulators

00:48:46.420 | around the world. And crypto is here to stay. This is a

00:48:49.620 | temporary setback. But I'm here to keep building and make this

00:48:52.900 | thing happen.

00:48:53.380 | All right, we really appreciate you taking the time.

00:48:56.340 | I mean, story after story here about, you know, SPF was going

00:49:04.420 | to create this billion dollar philanthropy to, you know, save

00:49:07.620 | the world improve humanities, long term prospects, number two

00:49:10.980 | donor to the entire Democratic Party, and on and on and on. And

00:49:15.220 | like, quite frankly, what this shows is you want to know what

00:49:18.700 | effective altruism means. It means that you steal other

00:49:21.580 | people's money, while bragging about saving the world, while

00:49:25.420 | taking a big chunk for yourself. That's what it means.

00:49:28.260 | There was a research paper in 2011. And this research team

00:49:32.580 | looked at drug addicts and drug abusers 4000 people. And they

00:49:36.480 | found that the biggest addicts had the highest intelligence,

00:49:40.100 | that you were twice as likely to become an abuser and addict. If

00:49:45.060 | you were any kind of intelligent, quintile, quintile,

00:49:48.380 | but they were measuring. And I someone explained this to me at

00:49:52.260 | the time, that the smarter you are, the more you can convince

00:49:56.580 | yourself that when you're doing bad things, you're actually

00:49:59.220 | doing good things. Even if you're doing bad things to

00:50:01.700 | yourself or bad things to other people that you really may

00:50:04.380 | actually care about, you can convince yourself that there's

00:50:07.340 | some reason to keep doing it. He seems like a brilliant guy. I

00:50:11.380 | think that to some extent, he may actually, I don't know the

00:50:14.580 | guy, but he may actually believe that the, you know, the the ends

00:50:19.140 | did justify the means, and he thought that he was doing good

00:50:22.520 | for the world. And this was something that had to be done in

00:50:26.040 | some way. And oh, it just got a little bit away from me. But

00:50:28.140 | it's, it's still I think the problem is bigger than FT x. And

00:50:32.860 | I'll say the uncomfortable part out loud, and nobody needs to

00:50:36.220 | necessarily comment if you don't want to. But there were an

00:50:40.140 | enormous number of venture firms that talk their their way into

00:50:46.140 | just completely doing zero work here. I mean, and the the tip of

00:50:50.700 | the spear is this thing. Who's the guy that works at founders

00:50:54.940 | fund? bulgar bull jars? zebul jar zebul. Delia. Delia. Thank

00:51:01.100 | you. Yeah, that tweet that he had where he basically took the

00:51:04.940 | snapshot of the Sequoia transcript was one of the

00:51:07.580 | funniest things that I've ever seen. I mean, this was a $215

00:51:11.660 | million decision, and Sequoia documented it and put it on

00:51:15.980 | their own website. And I think that's an example of something

00:51:19.820 | that was happening, which is people just look the other way

00:51:22.220 | and didn't even want to do the layer of work.

00:51:24.180 | Chamat, let me just string together a couple of things

00:51:27.020 | we've talked about over the past few episodes. And I think

00:51:29.540 | you'll agree with this point. But generally speaking, there

00:51:32.700 | seems to be a very heavy lack of governance in investing given

00:51:35.940 | the amount of capital and the velocity of capital in Silicon

00:51:39.620 | Valley, particularly in private markets of late. And a lot of

00:51:42.340 | the stuff that's been talked about, where last week, we

00:51:44.660 | talked about super voting shares, and the founder does

00:51:47.220 | whatever they want. And there's no governance, and there's no

00:51:49.100 | board, and there's no oversight. And particularly with this FTX

00:51:52.660 | situation, where clearly there wasn't a board that was, you

00:51:55.940 | know, getting the necessary information that had the

00:51:58.100 | necessary influence that had the necessary controls, the meta

00:52:01.380 | conversation, but all of these threads tie together the concept

00:52:05.460 | that maybe there's not a lot of governance and not a lot of

00:52:07.980 | diligence going on. And the amount of money that's flowed

00:52:10.580 | into Silicon Valley has allowed a lot of this Lucy, I'll say

00:52:13.540 | either. I agree with you. Let's thank Brian Armstrong for

00:52:17.020 | joining us. And it was very busy day. And what a great, candid,

00:52:20.180 | insightful.

00:52:20.860 | Thank you. And it and insightful finish with us.

00:52:25.140 | I just want to say the second uncomfortable thing out loud,

00:52:28.620 | which is there was a lot of venture firms in Silicon Valley

00:52:32.140 | in this period of both not doing any work or diligence who

00:52:35.300 | also took the extra step and actually created classes and

00:52:40.140 | would teach teams how to create these tokens. Okay, and those

00:52:45.300 | artifacts, those video links and artifacts are sometimes on their

00:52:48.620 | website, they're still on YouTube, they're inside of

00:52:50.900 | Twitter. And what these folks would do, and we talked about

00:52:53.780 | this, the game that they played, was they would get a team, they

00:52:57.900 | would create a token, they would also buy equity at some crazy

00:53:01.900 | valuation, the equity was locked up, but the tokens were not. And

00:53:07.740 | then they would put them on an exchange and sell them to

00:53:10.220 | unsuspecting people, and they would be able to dump these

00:53:12.780 | tokens. And if you look inside of that trend, what you're going

00:53:18.740 | to see, and Brian just mentioned this, those were the sale of

00:53:22.300 | securities, except it was done in a completely unregulated way.

00:53:25.700 | So if the SEC is really and the DOJ is really going to take this

00:53:29.380 | FTT token issue seriously, and what happened to FT x, they're

00:53:34.540 | going to start to look at a bunch of other tokens, and token

00:53:38.100 | sales, and you're going to end up looking at some very well

00:53:40.980 | known venture firms inside of Silicon Valley.

00:53:42.700 | This is going to be super gnarly. And we talked about it

00:53:46.140 | before on this pod, there are people who knew better. So you

00:53:49.060 | get a bunch of kids who are living in the Bahamas in a house

00:53:51.540 | and they're, you know, winging this thing, that's one level of

00:53:55.620 | responsibility, and they'll go to jail. But when we talk about

00:53:58.460 | venture capitals, capital allocators have been at it for

00:54:00.380 | decades, to Schmott's point, and they're teaching people how to

00:54:03.500 | do this, and they're hiring attorneys and creating offshore

00:54:07.860 | patent Panama, you know, BVI, whatever places to put these

00:54:12.020 | coins, and then teaching people how to do it and then flipping

00:54:15.180 | them potentially, this is we're just peeling back the onion on

00:54:18.900 | this, I have a feeling that this is going to be the turning

00:54:21.140 | point. And all that

00:54:21.860 | token, guys, let's be honest, is not the only token that has

00:54:25.060 | been engineered by Silicon Valley venture firms. And it is

00:54:28.860 | also not the only token that's gone to zero that was engineered

00:54:31.780 | by Silicon Valley venture firms.

00:54:33.140 | Well, I mean, who knows engineered by but yeah, Jason to

00:54:37.740 | at the very least, Jason, Jason, there's videos today on some of

00:54:42.940 | the most well known venture firm sites on how to do this.

00:54:46.300 | Oh, wow, I'm gonna have to see those. Yeah. So they're basically

00:54:51.380 | your point, Chamath is they're instructing people on how to do

00:54:54.380 | this. And that is a lot of the deal. It's what it's what it's

00:54:58.620 | what they did.

00:55:00.020 | Can I ask you guys a point of view on just one big macro

00:55:03.860 | philosophical question? I'm obviously not big in the crypto

00:55:06.620 | world and haven't been but so much of the positioning has been

00:55:10.300 | that these networks get decentralized through the

00:55:13.060 | cryptographic verification systems that obviously enable,

00:55:16.660 | you know, them to operate effectively and truthfully and

00:55:19.940 | correctly and without centralized control or

00:55:22.540 | manipulation. But ultimately, while these networks themselves

00:55:26.300 | may be decentralized, the user's point of access often ends up

00:55:30.660 | being centralized as a point on the network. And it is that

00:55:34.460 | point on the network that accrues the same level of

00:55:37.580 | influence, power, control and value as what we saw in the

00:55:41.620 | prior centralized network model. You know, we had biology on last

00:55:46.100 | year. And you know, I tried to get to this point within we had

00:55:49.220 | to cut the thing cut the conversation short, but I've

00:55:52.180 | still not heard from anyone. And I've spoken with Brian separately

00:55:54.700 | about this point. And the concept I use is like, look,

00:55:58.620 | media, if you put all the YouTube videos on a

00:56:00.700 | decentralized network, and anyone can access them, and

00:56:03.260 | they're distributed everywhere, you still need to have a really

00:56:05.820 | good application. And whoever makes the best application is

00:56:08.660 | going to get all the usage. And then all the users will use that

00:56:11.660 | application. And that becomes effectively the point of control

00:56:14.860 | and influence and value once again. And so it seems to me

00:56:18.140 | like in this case, the exchange was being used as a centralized

00:56:22.220 | wallet, certainly you can do that, you know, exchange through

00:56:24.980 | the exchange. But But mechanistically, these guys were

00:56:27.900 | storing their coins, their cryptocurrency inside of FT x's

00:56:33.820 | wallets, and had control over their assets. And so the network

00:56:39.140 | centralized. And so does the decentralized model? It's a

00:56:42.660 | question I'd love to just ask you guys in your point of view

00:56:44.500 | on does this decentralized model actually ever manifest

00:56:47.780 | where everyone has their own wallet? And I know there's all

00:56:49.620 | these new protocols and these distributed wallets and defy

00:56:52.380 | things, but I don't know enough. Yeah, I don't know.

00:56:56.100 | Better, but

00:56:57.380 | this points out to me just you basically recreate an exchange

00:57:00.860 | without a regulator. And of course, someone ripped you off

00:57:03.020 | and blew up like I mean, how's it any different than what we

00:57:05.060 | had in version 1.0? And is there really a model where

00:57:08.380 | decentralized works are ultimately because of the

00:57:11.060 | network effects and the and the economy?

00:57:12.900 | Answer? Yeah, we got the question.

00:57:17.580 | No, I mean, I haven't I have I don't know the answer to free

00:57:20.340 | bird question because I don't I don't know this space well

00:57:22.700 | enough. I mean, you know, I, my, my biggest purchase ever was

00:57:28.780 | Bitcoin in 2011. You know, I've bought a bunch of these tokens

00:57:34.860 | that have massively depreciated in value. I think lots of

00:57:38.180 | investors have, you know, I kind of fell into it as well. Like I

00:57:42.820 | thought, wow, this is incredible. I get to buy these

00:57:44.540 | tokens, they do all of this cool stuff, they represent all this

00:57:46.860 | value. And my experience has been the opposite of that I've

00:57:50.500 | lost a lot of money in these things. And so you know, I

00:57:54.580 | really hope that regulators not just obviously, I hope that

00:57:57.980 | regulators do their do the best they can to get investors money

00:58:01.860 | back in FTX. But I really also hope they figure out all these

00:58:07.260 | other tokens as well, because you can just rank them in terms

00:58:10.020 | of market cap, start at the top and work your way down. And you

00:58:14.260 | will see that these were unregulated securities, Jason

00:58:16.820 | that were manufactured and sold by our brethren.

00:58:21.220 | People who understand the law around accredited investors and

00:58:25.900 | this stuff very well. Yeah, they understand it implicitly.

00:58:30.460 | Yeah. Do you guys think crypto investing is dead? Or what do

00:58:34.740 | you think? How do you think people think about that risk

00:58:37.820 | profile now inside of

00:58:39.020 | I think that investing in the tokens is going to end investing

00:58:42.100 | in the corporation is going to begin and any of the tokens are

00:58:44.860 | going to be super regulated building on what you said

00:58:47.140 | Chamath about the ultimate bet. Is it possible that Alameda the

00:58:50.900 | trading hedge fund was looking at the FTX data which they had

00:58:54.860 | insights into? And essentially, that's the same as seeing the

00:58:57.380 | whole cards and the ultimate bet. And so they're making their

00:59:00.340 | trades based on what they see the consumers are making their

00:59:02.780 | trades, front running their trades or otherwise,

00:59:05.340 | that's not illegal. You know, Citadel does this in the

00:59:07.700 | regulated market. That's what payment for order flow is. It's

00:59:10.460 | right. It's the ability to front run retail volume. And so you

00:59:15.180 | know, in dark pools, that is legal by the law in the United

00:59:20.420 | States. And that's what allows Citadel and, you know, I think

00:59:23.380 | Jane Street and Susquehanna, you know, all these folks basically

00:59:28.100 | run these dark pool exchanges for regulated securities, like

00:59:31.060 | options and bonds and, and stocks. And they get this order

00:59:35.500 | flow and they front run it by a millisecond and they just take

00:59:38.260 | small big, but they can't print the FTT tokens and otherwise

00:59:42.460 | manipulate the market to the level that I think SPL could I

00:59:45.860 | just think that there's there's there's these really strict

00:59:49.060 | walls and segregation. As you heard Brian talk about when you

00:59:53.220 | have those businesses in these regulated markets. The problem

00:59:55.740 | here is that this is totally wild west unregulated, wild,

01:00:00.220 | wild west. So who knows what's going on really?

01:00:02.460 | And we're pushing the business sacks off of the shores of the

01:00:06.500 | United States, as he said, 95% of this is happening offshore.

01:00:08.980 | What do you think should happen regulatory wise sacks in terms

01:00:12.180 | of America and competitiveness? Or do we not to be need to be

01:00:16.060 | competitive in this?

01:00:17.140 | No, I think we should be I mean, what if what if crypto is and

01:00:20.140 | defy is the future of finance? I mean, it's an important

01:00:22.660 | technology that I think we should enable through some sort

01:00:26.700 | of constructive regulatory framework. I think the

01:00:29.300 | I think the regulators should listen to Brian and help come

01:00:32.380 | with a appropriate framework. But to be clear, look, what Sam

01:00:36.180 | did is way worse than people going on an exchange and

01:00:39.740 | speculating. I mean, look, I think that people who speculated

01:00:43.180 | in the buying and selling these tokens, there, they were using

01:00:47.220 | it like a casino, okay, like, that's different than a customer

01:00:50.820 | putting their money on FTX and having their money gets stolen.

01:00:54.900 | That's a big difference. So I think there's levels here. Now,

01:00:58.100 | Jamal, to your point about who's minting these tokens, you're

01:01:00.620 | right, maybe that's like another category. But I do think that

01:01:03.780 | the reason why this is on a different level is because it

01:01:08.820 | wasn't Sam's money to give away.

01:01:10.260 | There is such an easy solution to a whole lot of data. I'm just

01:01:14.780 | traded. I agree with you on that point. But I think don't under

01:01:18.340 | play when there's an organized process to create an illegal

01:01:22.380 | security with special rules for them. That allows the liquidity

01:01:28.620 | for one class of asset and not liquidity for

01:01:31.500 | you're right. So that's a separate bucket. I don't think

01:01:33.700 | it's the same as what Sam did. And I don't think I agree. I

01:01:37.140 | agree. No, I'm saying

01:01:37.820 | that's something that needs to be looked at. And we need a

01:01:41.660 | constructive regulatory framework for that.

01:01:43.380 | There is such a simple silver bullet for all of this, which is

01:01:47.660 | these things need to be there needs to be proper governance,

01:01:52.020 | people have to have skin in the game insurance, people signing

01:01:55.180 | off on the taxes boards, not onshore here in the United

01:01:58.460 | States. And then we need to have and I'll keep saying this, a way

01:02:02.020 | for Americans to become sophisticated investors, only 6%

01:02:05.620 | of this country fall into the qualified purchaser and

01:02:08.340 | accredited if you want to trade in these things, or you want to

01:02:11.220 | trade in NF T's or private companies, we should have a

01:02:14.860 | driver's license like test a firearm test and I are on the

01:02:18.420 | same sophisticated test and the problem into it with an

01:02:21.620 | education.

01:02:22.380 | The problem is when you have guys like this, it sets that

01:02:25.700 | desire back by a decade, if not more. Okay, because it sucks. I

01:02:29.740 | agree. Because every single frustrating every single person

01:02:33.700 | inside of Washington right now, who's anywhere near this from a

01:02:38.380 | regulatory perspective or a policy perspective is meeting on

01:02:41.340 | Monday morning. Yeah, the meeting topic is how do we

01:02:44.740 | defend the mom and pop folks that lost money here? Yes, the

01:02:48.380 | only thing. So we took this out of you know, because I remember

01:02:51.660 | I remember I texted into the group chat. Hey, guys, what what

01:02:54.780 | what do we think the legal ramifications are that drive

01:02:58.220 | prosecution, and one of our friends said legal

01:03:00.820 | ramifications. These are political ramifications. Yeah,

01:03:03.900 | which means that this is going to go to the utmost level and

01:03:06.580 | it's going to have the most scrutiny. And they're going to

01:03:09.180 | act really quickly. It is going to drop a hammer instead of

01:03:12.460 | having a path to accreditation. I agree with you, they're going

01:03:15.020 | to drop the hammer, because their constituents, some

01:03:17.420 | grandma and grandpa or some people put their college

01:03:19.540 | education to some lost everything. We just need a test.

01:03:22.860 | Let people prove they're sophisticated and let them

01:03:25.020 | participate. Well, first and only if they get a license,

01:03:27.900 | haven't you been a proponent for letting people invest in

01:03:31.100 | startups that are just moms and pops and democratizing access?

01:03:34.500 | I'm only allowed to do that with accredited investors. I would

01:03:37.780 | like there to be a test and I actually teach a course Angel

01:03:40.100 | University six times a year for charity. I do it for charity.

01:03:43.380 | It's a four hour course where you learn about diversification

01:03:46.940 | you learn about the asset class you learn about 70 80% go to

01:03:49.980 | zero we teach you about the power law. I try to teach

01:03:52.380 | people about this stuff so that they can participate

01:03:54.900 | intelligently it would it would be the equivalent freeberg and

01:03:57.140 | thank you for asking the question. The it would be

01:03:59.380 | equivalent if we had a poker test and to play in the World

01:04:02.020 | Series of poker, you had to go to a five hour seminar, and you

01:04:05.060 | had to take a practical test and you had to say, you know, a

01:04:07.540 | flush beats a straight and you had to just prove that you had

01:04:10.580 | some level of knowledge of how to play the game. It's such an

01:04:12.980 | obvious path to removing these problems while staying

01:04:16.980 | competitive as a country. And instead we're letting people do

01:04:19.700 | this offshore like CZ with no rules, or whatever rules he

01:04:23.260 | chooses. It's just infuriating. It's so stupid. Our politicians

01:04:27.260 | in Washington are so dumb.

01:04:29.140 | Can I just say something? I think the challenge is there's

01:04:31.740 | always a spectrum of understanding. And you'll always

01:04:35.020 | end up seeing the people on the wrong end of the spectrum

01:04:37.660 | getting taken advantage of there's this notion of adverse

01:04:40.100 | selection. distributions are not equal. People will end up, you

01:04:45.100 | know, kind of opting in to spend money on things or making

01:04:49.060 | investments that they think are good investments, but they're

01:04:50.860 | actually getting taken advantage of, because they're not savvy

01:04:53.300 | enough, or they miss an important angle or important

01:04:56.180 | perspective about the person or the thing that they're giving

01:04:58.820 | their money to. And there will always be some number of those.

01:05:01.220 | And the way that regulation has worked historically, is not by

01:05:04.020 | first saying, Hey, let's figure out the right way to create a

01:05:06.620 | framework for operating. It's that some sort of people got

01:05:09.500 | advantaged. That story then becomes the regulatory

01:05:11.980 | framework. And that story has repeated itself for 500 years

01:05:15.140 | across capital markets.

01:05:16.300 | We're talking about a multi layered thing here. We want to

01:05:18.340 | see crypto have a framework, we want it to blossom here in the

01:05:22.020 | United States. And then there's multiple level of people who are

01:05:25.340 | causing chaos in this ecosystem in this very promising

01:05:29.300 | technology with their goddamn grifts, whether it's VCs,

01:05:32.460 | grifting, or SPF, or incompetence, we just need to

01:05:36.020 | clean this framework up if people sometimes people I

01:05:38.700 | understand in DC listen to this podcast, if they're listening,

01:05:41.460 | it's essential that America be competitive here, it's essential

01:05:44.620 | that everybody participate in risk capital and get educated.

01:05:47.740 | Let's clean it up and make a framework that allows all

01:05:50.820 | Americans to participate and educates them and then stops

01:05:54.420 | these grifters from doing stupid things. If people were

01:05:57.060 | educated. That's the first step. And it's the best about the

01:06:00.620 | economy. Sure, you want to talk about Facebook with 11,000. You

01:06:04.140 | want to talk about the market popping at the beginning of

01:06:07.420 | October? Yeah, I think what we basically said, kind of

01:06:11.060 | generally speaking is markets up, right markets went from

01:06:14.140 | nibbling to being constructively positive and basically being

01:06:17.100 | positioned long. Here's this really interesting setup. We

01:06:22.060 | have a bunch of very positive news that I think we all have to

01:06:25.900 | process. First positive news was that inflation ticked down. Now

01:06:30.540 | here's what I'll tell you, there's a caveat here, I talked

01:06:32.620 | to a bunch of pretty smart sharps on Wall Street. And, oh,

01:06:36.460 | two things. Number one is they all gave credit to David Sachs

01:06:39.260 | and they said Sachs is totally right, double dip recession is

01:06:42.500 | coming. But then they said tell Sachs that we think that these

01:06:46.580 | are the sharps, we think that there's a double hump in

01:06:49.220 | inflation coming, which means it's coming down to come back

01:06:53.060 | up. And there's a bunch of reporting vagaries that may

01:06:56.500 | cause that so keep that in the back of your mind but positive

01:06:59.460 | news. Number one is inflation ticking down. Number two, Jason

01:07:05.980 | we talked about this, a federal judge basically stayed Biden's

01:07:10.900 | attempt at giving student loan relief. Now, that would have

01:07:15.620 | been a $500 billion transfer payment from the government into

01:07:19.620 | the hands of individuals. It is deflationary to not put give

01:07:24.260 | that money to people it's effectively taking stimulus away

01:07:26.660 | from folks. Number three, it looks like we're headed towards

01:07:30.540 | a split government, which means that we are not probably going

01:07:34.820 | to see any more stimulus over the next two years. Number four,

01:07:39.060 | Ukraine wins and occurs on. I hope I'm pronouncing that right.

01:07:43.820 | Number five, the United States announced yesterday through the

01:07:48.380 | Wall Street Journal, that they had essentially said no to

01:07:51.500 | Ukraine's request for advanced drones. And they said to Ukraine

01:07:55.220 | essentially, you need to go and negotiate an endgame here. And

01:07:59.300 | number six, China has started to relax his COVID policies and G

01:08:04.060 | is pivoting to economy first. So if you took all the weight take

01:08:07.900 | seven, don't forget seven, Facebook, which would not take

01:08:10.940 | the medicine, they refuse Brad Gerson's letter, cut 11,000

01:08:15.100 | people 48 hours ago, I don't think Facebook matters that

01:08:18.500 | much, to be honest. Well, but it matters that big tech is and

01:08:21.860 | they're taking matters. But it doesn't matter to the economy to

01:08:24.780 | be complete. I think it does, if people are gonna start cutting

01:08:26.980 | jobs, but okay, keep going.

01:08:27.900 | My point is, these seven things are macro level things that

01:08:31.220 | affect everybody. Yep. And I think if you take them together,

01:08:34.620 | what it says is that, wow, there's there's the potential

01:08:37.580 | for a lot of great positive developments over the next six

01:08:40.140 | or nine months. And I don't think that that was adequately

01:08:42.900 | priced in the market. But here's the problem. And this is what

01:08:45.740 | why we've been rallying. The problem is that most of this

01:08:49.220 | rallying has been because of a bunch of short covering by folks

01:08:54.820 | that who were pretty pessimistic and negative after the last few

01:08:58.700 | inflation prints. So this is not really net new buying that we

01:09:02.540 | saw over the last couple days. So you take it all together. I'm

01:09:06.820 | like, it's still going to probably trend up a little bit.

01:09:09.820 | But then again, you know, we talked about this, Jason, when

01:09:11.980 | the VIX gets into the low 20s, or the high teens, that's

01:09:15.900 | probably the short term top and then it turns around. And

01:09:18.340 | unfortunately, we're here. The low 20s, high teens. So that's

01:09:23.860 | kind of my thought on things right now.

01:09:25.260 | Okay, freeberg, any thoughts on the inflation print?

01:09:27.020 | Yeah, so I think there's two things, one of which I'll give

01:09:30.500 | credit to a guy named Carl. Chu. I hope I pronounced Carl's name

01:09:35.700 | right. He's from William Blair, he puts out these excellent

01:09:37.500 | research reports. And we used one of his graphics a few weeks

01:09:40.300 | ago. So I put it up here. And basically, he showed that with

01:09:43.420 | the the NASDAQ move that we saw this week. So you can see this

01:09:46.500 | here, he basically tracked the move in the 10 year Treasury

01:09:50.100 | against the one day move in the NASDAQ. And he said that it

01:09:55.060 | really indicates a unique sentiment shift, whereas in

01:09:58.220 | other times, you've seen big moves in the NASDAQ that weren't

01:10:01.500 | really seeing significant moves in the Treasury rate at the

01:10:05.180 | same on the same trading day. And that this is such an

01:10:08.060 | outlier what happened this week. The only other time that we've

01:10:12.260 | seen anything like it was when the Bank of England issue

01:10:15.060 | happened back at the end of September, in the last, you

01:10:17.900 | know, 20 times that we've seen this big of a move in the NASDAQ

01:10:21.060 | in a single day. And so we saw 31 basis point move in 10 year

01:10:25.300 | Treasuries in a single day at the same time that we saw what a

01:10:27.780 | seven point move in the NASDAQ. So he said, because you don't

01:10:31.180 | normally see the bond market and the equity market trade in this

01:10:33.260 | way together, it really speaks to a big shift in sentiment. Now,

01:10:37.260 | at the same time, what is that shift in sentiment, that there

01:10:40.860 | is going to be less of a driver for the Fed to raise interest

01:10:44.260 | rates at this point, because it seems like the inflation print

01:10:47.140 | indicates that inflation is coming under control faster than

01:10:50.700 | what folks had otherwise anticipated. And so there may

01:10:53.820 | not be as many rate hikes as quickly as folks were

01:10:56.700 | anticipating, which will, you know, benefit, benefit equities

01:10:59.980 | and the bond market traded that that with that perspective as

01:11:02.380 | well. Now, the counter narrative, which I just put a

01:11:06.220 | tweet by a guy who I've never heard of before. But someone

01:11:09.260 | shared this with me, his name is Gordon Johnson. And he said,

01:11:11.820 | the CPI surprise may actually be due to a technical print that

01:11:17.060 | within the CPI, one of the biggest indicators is health

01:11:19.660 | insurance cost. And, you know, it, the health insurance cost

01:11:24.420 | plunged by 4% October to September, but healthcare costs

01:11:31.220 | didn't actually magically collapse, there was just an

01:11:33.660 | accounting difference in how they're shifting how they're

01:11:35.820 | accounting for healthcare costs that took place during the

01:11:38.740 | month. And if you did not, if you assume that that was flat,

01:11:42.660 | month over month, you would end up actually with a 6.7% year

01:11:47.020 | over year print, which was higher than expected. So there

01:11:49.740 | is a counter narrative going on in the market. I don't know how

01:11:52.500 | significant this guy is, or how much of a voice he has. But I

01:11:56.140 | don't know if we're out of the woods yet by some folks are

01:11:58.100 | saying that the market is saying, we're feeling a lot

01:12:00.540 | better. But there are still analysts that are indicating

01:12:03.420 | that maybe there is still risk to be had ahead of us.

01:12:06.780 | I think the sharps tend to be on that second, second perspective.

01:12:11.260 | And by the way, I'll say this week, I heard five and a half

01:12:13.300 | points, even after that print. So is where we're gonna get to

01:12:16.500 | I think consensus we have here is is that we're in the endgame

01:12:19.980 | now maybe what two quarters, three quarters, four quarters of

01:12:22.780 | choppiness. Chamath, what would your gut tell you if you I've

01:12:26.620 | been telling all of our startups that you need to plan to have

01:12:29.980 | money through the first quarter of 2025? You must Yeah, okay,

01:12:35.740 | absolutely must. And the way that I have cash, okay, the way

01:12:40.380 | that I framed that out to them is nine. Yeah, eight or nine

01:12:43.740 | quarters of cash. Ideally nine. And the reason is that we have

01:12:49.900 | all of this positive news in the offing. But But the but the

01:12:53.380 | problem is, again, there is still a lot of risk to the

01:12:57.420 | downside, we haven't seen David second, you know, dip in the

01:13:00.780 | recession, right. So that double dip is going to be expensive.

01:13:03.580 | And again, the sharps think that inflation will come back at

01:13:07.580 | some point in the next six months, that will keep the feds

01:13:11.820 | foot on the gas. Maybe it's two or three more 50 basis point

01:13:15.260 | hikes. The point is, Jason, you could be at five and a half.

01:13:18.060 | Again, we said this last week, we're going to get to a point

01:13:20.860 | that's probably higher than what people expect. That's probably

01:13:24.220 | around five and a half. And we'll stay there longer than

01:13:27.420 | people want. That's probably through the middle part of 24.

01:13:31.660 | And if you don't prepare for that worst case scenario, you're

01:13:35.420 | doing yourself a disservice. I think the market can start to

01:13:38.060 | rebound in the second half of 24. But if you're a company, you

01:13:41.500 | need to balance and plan for the first quarter of 25. Because,

01:13:46.460 | you know, again, most venture investors are going to want to

01:13:49.580 | see six months of data on the ground that things are better

01:13:52.220 | before their sentiment changes. Yeah. And we're just starting

01:13:56.700 | to see the drawdowns. We're just starting to see the impacts in

01:14:00.780 | people's portfolios that will drive behavior change. I mean,

01:14:04.460 | this SPF thing is the tip of the iceberg in terms of the money

01:14:08.620 | at risk. You know, I went in, by the way, I did it in analysis.

01:14:12.540 | I shared it in the group chat. Hopefully, we can show this up.

01:14:15.340 | Brad has a little chart. Nick, maybe you can throw up the the

01:14:19.100 | the historic drawdowns. So, for people that care about early

01:14:22.460 | stage technology, since 2018 through 2021, and including an

01:14:31.340 | estimate for 2022, we have injected 1 trillion dollars

01:14:36.060 | into venture capital. And if you look at historically how

01:14:42.620 | money has been lost in periods like this, and you layer that

01:14:46.140 | into 2018 to now, what it basically tells you is about

01:14:50.140 | 500 billion dollars of that trillion from 18, 19, 20, 21,

01:14:56.540 | and 22 is going to be destroyed. We haven't even

01:15:00.140 | started to see that yet, right? And then if you factor in

01:15:03.740 | another 100 billion or so from older vintages, we're talking

01:15:06.620 | about a 600 or 700 billion dollar destruction of paid in

01:15:12.700 | capital. So there's still for all the good news, there's still

01:15:17.020 | a bunch of these unfortunate pieces of bad news that have to

01:15:19.740 | work its way through the system. Yeah. And for people

01:15:22.540 | who are looking at the chart right now, and you can see the

01:15:25.260 | charts on Spotify, or if you search for all in on YouTube,

01:15:27.980 | we have a video version there. You just take a look at 1997,

01:15:31.100 | the peak TVPI was, you know, seven and a half x seven and a

01:15:34.140 | half times, you know, cash on cash money. And what actually

01:15:37.260 | got realized was five x, right? So what paper said and what got

01:15:40.380 | distributed were two different things. Anecdotally, what I'm

01:15:44.780 | seeing in the startup world, Chamath is people are taking the

01:15:47.900 | medicine and a lot of people are shutting their companies

01:15:50.380 | down. They're giving up on raising money, and then asking

01:15:53.580 | me which portfolio company can I get a job at because I on my

01:15:57.180 | personal balance sheet have been you know, taking a 5k draw a

01:16:01.100 | month and I have two kids I need a job, can you get me a job at

01:16:04.780 | Amazon or another portfolio company. And a lot of acquirers

01:16:09.740 | have started to happen. And so what's happening is the

01:16:12.380 | consolidation of talent, people who would be a great number

01:16:15.820 | three or four person, but maybe they weren't suited to be the

01:16:18.540 | number one person are now consolidating into startups.

01:16:22.220 | With these layoffs at meta and other corporations, we're

01:16:25.900 | starting to see very talented people who had peak comp of

01:16:28.940 | 300 700 k a year are going to go to startups or smaller

01:16:32.620 | companies. And that is also positive, more consolidation of

01:16:36.540 | talent, stronger companies. Did you guys hear the story

01:16:39.180 | yesterday that Nick, if you could just be about the name

01:16:43.020 | told about his friend, his friend basically makes $140,000

01:16:46.780 | working for a tech startup, and then also makes $280,000

01:16:50.700 | working for meta. And so and he's been working at both of

01:16:54.060 | those companies virtually for the last two years, the guy

01:16:56.780 | makes 400 $450,000 a year and nobody knows and he says he

01:17:00.380 | works about 2022 hours a week on both combined. So the 80

01:17:05.260 | hours and remember when we started in startups in the night

01:17:08.540 | late 90s and into the turn of the century. The number of

01:17:12.860 | hours that was expected at a startup was what sacks when you

01:17:15.900 | were at 60 hours a week, I would say 6060 day I was

01:17:18.860 | expecting baseline. Yeah, 60 baseline. Yeah. baseline 10

01:17:21.980 | hours a day plus coming on the weekend for a couple hours.

01:17:24.060 | Yes. Yeah, for sure. Easily. He probably more early days of

01:17:29.100 | Facebook, our executive management meetings wouldn't

01:17:31.820 | start till 9pm. Yeah, it's this is I think, Elon's gonna be a

01:17:37.420 | trailblazer in a lot of ways on this Twitter thing. You know,

01:17:40.380 | first he did the big headcount reduction, but then he also just

01:17:43.500 | this past week, everyone needs to come to the office. And if

01:17:46.460 | you don't come to the office, you don't have to come to the

01:17:48.220 | office, you have a good excuse. If you're an exceptional

01:17:49.900 | performer, and you've got a good reason, they don't have to

01:17:52.300 | but the baseline is everyone comes to the office. By the way,

01:17:56.300 | just to put this point into focus, Nick, can you just throw

01:17:58.700 | up this chart for these guys to see because I think it's just

01:18:00.780 | ridiculous. So this is basically what we're dealing

01:18:04.140 | with, which is like if you look at and these are just a couple

01:18:06.780 | of examples, but this is meta Amazon snowflake data dog

01:18:11.180 | versus Gilead, Raytheon and Exxon. What is the point of

01:18:15.260 | this? The point of this is just to show you that we have had a

01:18:19.020 | massive rotation away from our industry is the point, right?

01:18:23.420 | Where normally, the things that we would work on were just so

01:18:27.100 | well received by so many different kinds of investors

01:18:29.660 | that unfortunately just isn't the case anymore. And I think

01:18:33.180 | it just goes to show you that the reason why this is

01:18:35.660 | happening is because people are hedging their bets about how

01:18:39.580 | long the economic pain lasts. That's why you know, they'd

01:18:43.580 | rather be long healthcare stocks, you know, industrial

01:18:46.940 | defense companies and oil companies, because at the end

01:18:50.220 | of the day, they're banking on oil and war and sickness, you

01:18:54.540 | know, versus social media and e commerce and software. And if

01:18:59.580 | we look at this chart, just no matter how good by the way, so

01:19:02.060 | this is not an indictment on these companies go watch the

01:19:04.620 | prediction episode from last year. I think that was a

01:19:06.700 | prediction episode. Yeah, we you and I nailed it on crypto.

01:19:09.100 | We both said crypto is going to crater these four horsemen here

01:19:11.740 | data dog meta Amazon snowflake down 23 to 27%. And then the

01:19:17.180 | Gilead Raytheon Exxon cohort 8 to 28% up. I think Chamath what

01:19:22.380 | this says also is, we don't think your management style and

01:19:26.300 | how you're running these businesses is appropriate for

01:19:29.580 | this moment in time, please consider some austerity

01:19:33.500 | measures and some thoughtfulness in how you treat

01:19:36.780 | shareholders. Well, I mean, it's just watching the number,

01:19:42.060 | you know how people are running companies. I think we took it

01:19:45.900 | too far in Silicon Valley, we took it too far, whether it's

01:19:48.620 | a cow, I know that I know it's sort of a pet issue of ours,

01:19:52.300 | because we have to deal with some incredible hubris and

01:19:55.660 | arrogance sometimes on the boards of these companies,

01:19:58.300 | because folks don't want to listen to reasonable advice,

01:20:01.180 | and we come off as wet blankets. But that chart, to be

01:20:05.020 | honest, is is because of what we explained last week, which

01:20:08.460 | is the when rates go up, the value of a dollar that you

01:20:13.260 | earned today is just meaningly meaningfully more worthwhile

01:20:16.620 | than a dollar that you may earn even two or three years in the

01:20:19.660 | future. That's why that chart looks the way that it does. And

01:20:22.940 | if you believe that David's forecast of a double dip

01:20:25.900 | recession is accurate, which again, most of the sharps do.

01:20:29.980 | And then you also layer in this idea that inflation could come

01:20:33.580 | back, you have to be really defensively positioned, you

01:20:37.180 | know, you can't take a lot of risk, which is why startups

01:20:39.980 | have to expect that if that's the dynamic, and $600 billion

01:20:45.580 | is going to get destroyed in venture capital portfolios, how

01:20:49.500 | open our VC is going to be for business, they're probably not

01:20:52.940 | going to be that open. And so you have to plan, I think, for

01:20:56.700 | the middle for the early part of 25.

01:20:58.860 | If Amazon, and how do you get incremental dollars in these

01:21:03.980 | tech companies, Amazon does a riff, some austerity measures,

01:21:07.740 | they raise prices a little bit, if they can, you know, maybe you

01:21:10.460 | see more incremental dollars coming today. And maybe that

01:21:13.180 | incentivizes people look what happened. We were at $89 for

01:21:17.020 | Facebook shares last week, tomorrow, when he made the riff

01:21:20.060 | 107, he went up like 15 $20. What does that tell you?

01:21:24.780 | I mean, I think it tells you that a lot of people were short

01:21:27.420 | going into that, and they were probably cut off side a little

01:21:29.900 | bit by the magnitude of it. I think that that's good. The, the

01:21:34.140 | issue that a lot of these companies have, even in the face

01:21:37.100 | of riffs is that you have to reset expectations now on

01:21:41.340 | earnings. And if you do that, the problem is that when you

01:21:44.620 | flow that through to what people think the SMP will look like in

01:21:48.060 | a year, there's some real issues. So this is not free, you

01:21:52.860 | know, it's really hard treading. And I just I would I would just

01:21:56.620 | encourage people, it feels wonderful to have a few days of

01:21:59.820 | like, it's like a respite in the middle of a huge storm, right?

01:22:02.140 | It feels like we've been getting whipsawed back and forth, and

01:22:05.100 | it's nice. I came out, and the wind came out. I would just

01:22:08.780 | really encourage people in this moment to reset your energy,

01:22:11.900 | which I think is good. But you got to go back into that office,

01:22:15.100 | and you got to find the money and the wherewithal, I think to

01:22:18.620 | last through 24. If possible, it's grind time, Facebook, by

01:22:23.020 | the way, 27 months, 27, at least two years, two years. 24

01:22:27.820 | months is the new Yeah, now quarters is the new six quarters.

01:22:31.980 | And by the way, you know, the thing that employees need to do

01:22:34.700 | now in this moment is to hold the management teams of your

01:22:37.580 | companies accountable, because in those q&a is, hopefully,

01:22:40.460 | you're not just glad handing talking about bullshit, you

01:22:43.500 | actually go and ask the question, how much money do we

01:22:45.660 | have? What decisions are you going to make to get this

01:22:48.220 | company to be, you know, in a position to survive? That is

01:22:52.380 | really what's at stake here for the venture capital industry is

01:22:55.660 | just survival of as many of these companies as possible

01:22:59.580 | through these next two years, the conversation has to shift

01:23:02.540 | from like culture and features to like the bottom line, and

01:23:07.580 | grinding it out and just proving it to Wall Street and to the

01:23:10.620 | investment community that your business is worthy of

01:23:13.100 | investment. As you're saying the dollars today matter. All

01:23:15.500 | right. It's been a crazy week. Thank you to David Friedberg

01:23:18.540 | for showing up. Unfortunately, no time for science corner

01:23:21.420 | apologies to the Friedberg stands who are many and we'll

01:23:24.700 | see you in the YouTube comments for the dictator himself to my

01:23:28.300 | poly hop at a with just a wonderful sweater going into

01:23:31.740 | the strong November strong showing for November with that

01:23:34.380 | purple sweater. I don't know if it's mauve or purple, whatever

01:23:36.700 | you got going there looks wonderful. Thank you for team

01:23:39.580 | Moncler. sassel himself. David Sachs people don't understand

01:23:45.180 | what you're saying when you say that Jason. Oh, they know

01:23:47.900 | you're an asshole. They they're no, that's what they think

01:23:50.140 | you're saying. They don't know. They don't know that we're

01:23:52.300 | adding the sass to it. Yes. So David also is a great executive

01:23:56.540 | in software as a service in addition to being an asshole.

01:23:59.100 | So you put the two together and you get sassel. No, I'm just

01:24:01.820 | joking. David's a wonderful person. People are really

01:24:03.740 | excited that you and I are friends again. It's an amazing

01:24:07.260 | moment. That was your chance to make a joke. So actually missed

01:24:11.260 | it. Throw it up there for you. I threw up the softball for you

01:24:13.900 | and say you're not we're not friends. Alright, we'll see you

01:24:16.620 | all next time. Bye bye. We'll let your winners ride. Rain Man

01:24:22.540 | David Sachs.

01:24:25.260 | And it said we open source it to the fans and they've just

01:24:29.120 | gone crazy with it. Love you. Queen of Kinwan.

01:24:34.560 | What your winners ride.

01:24:39.320 | Besties are gone. That's my dog taking a notice in your

01:24:43.640 | driveway.

01:24:46.120 | Oh man. My avatar will meet me at. We should all just get a

01:24:50.600 | room and just have one big huge orgy because they're all just

01:24:53.080 | useless. It's like this like sexual tension that they just

01:24:55.560 | need to release somehow.

01:24:58.600 | What your beat. We need to get merch.

01:25:06.200 | (upbeat music)

01:25:08.800 | ♪ I'm going all in ♪

01:25:15.460 | (fading out)

E104: FTX collapse with Coinbase CEO Brian Armstrong + election results, macro update & more

Chapters