E156: Ivy League antisemitism, macro, SaaS recovery, Gemini, Figma deal delay + big Friedberg update

00:00:00.000 | sacks, how are you doing with your Tucker afterglow? Amazing

00:00:04.000 | episode, the feedback is the number one episode of the year

00:00:07.680 | after the vape, I think in trending to be maybe a million

00:00:11.560 | views on YouTube. So how's the afterglow?

00:00:14.680 | Yeah, I did notice there's one particular clip that's going

00:00:17.640 | viral where he calls you stupid.

00:00:19.560 | Yes, there's that.

00:00:20.720 | I thought Tucker was incredible. I found him so intellectually

00:00:26.200 | interesting. And it's not always the case that great moderators

00:00:31.240 | and interviewers make great guests, but he is so

00:00:34.400 | intellectually curious and has unique points of view that you

00:00:38.440 | want to hear them out. And his style of talking I find also,

00:00:42.800 | like very easy to listen to. I thought he was really impressive,

00:00:46.440 | really, really impressive. You don't have to agree with

00:00:48.600 | everything he says quite honestly. And some people

00:00:51.800 | probably won't. But I found it really compelling. I don't agree

00:00:55.440 | with half of stuff he said or maybe a third. But I too enjoyed

00:00:59.400 | it very much. I thought he was great sacks. I got you know, as

00:01:02.960 | the person people believe has Trump derangement syndrome,

00:01:06.320 | thank you for your trade. You know, or the person people

00:01:09.240 | consider like the far left, they're like, why aren't you

00:01:11.360 | pushing back? Why aren't you pushing back and this has

00:01:13.920 | become a MAGA takeover. You had Jared Kushner, he didn't get

00:01:16.480 | pushed back, you didn't get pushed back to Tucker. You know,

00:01:19.040 | one of the things we're trying to do here, I'm speaking for

00:01:21.000 | myself, is to let people talk, let them put out their position.

00:01:24.840 | And if you do that, and we did that with the presidential

00:01:27.480 | candidates, exceptionally, I think, then you can decide for

00:01:31.200 | yourself. And yes, we'll ask a hard question here or there, or

00:01:34.520 | maybe, you know, push them a little bit. But we don't want to

00:01:37.160 | make it uncomfortable to come here and make it like they come

00:01:40.680 | here and we take the 10 worst things about the person or the

00:01:43.600 | 10 criticisms and run through them. You can get that on cable

00:01:46.240 | news, you can get that on either side of the aisle. What I want

00:01:49.000 | to do is let them talk. And then actually interesting things come

00:01:52.440 | up.

00:01:52.640 | Why do you always get this feedback?

00:01:54.560 | Because people perceive me because you say I have Trump

00:01:57.280 | derangement syndrome as the token left guy. That's all. And

00:01:59.960 | I'm a moderate and I try to keep saying that but people keep

00:02:02.080 | wanting to say I'm like, for our left, I just want folks to

00:02:04.720 | realize that we're going to go and have more guests, especially

00:02:08.080 | if we can learn from those folks. And especially if hearing

00:02:11.040 | them out can expand how we think about what's going on in the

00:02:14.680 | world. So get over it. And it's about learning and being

00:02:19.040 | curious. Hard conversations will be the norm here on the pod.

00:02:23.280 | We're going to have any guests we damn well, please. And some

00:02:26.840 | people will choose to not ask hard questions. I will choose to

00:02:29.040 | ask hard questions, but I won't hijack the show. And so please

00:02:32.400 | don't email me and tell me I didn't do my job fighting for

00:02:35.320 | the left or whatever. That's not my job. I'm going to ask a hard

00:02:37.920 | question when I want to on the show. But I'm not going to

00:02:40.520 | hijack the show with 20.

00:02:41.640 | Bravo to you. I suspect you're getting a lot of pressure from

00:02:44.960 | the private equity wives.

00:02:46.040 | Yes.

00:02:47.120 | What a great moment. What a great moment.

00:02:50.960 | People on SSRIs Jason are blowing up your inbox.

00:02:54.400 | Well, the conversation that everybody's going wild with so

00:03:14.080 | let's just get into it is these college anti semitism hearings.

00:03:17.160 | On Tuesday, the House Education Committee spoke with the

00:03:20.480 | presidents of Harvard, Penn, MIT. And they faced a lot of

00:03:25.680 | tough questions. Many of the videos went viral. And I guess

00:03:30.520 | the part that specifically went most viral was the presidents of

00:03:35.760 | these organizations refusing to specify whether or not the calls

00:03:40.040 | for mass murder of a particular group genocide of students were

00:03:44.840 | or were not against the codes of conduct against bullying and

00:03:48.040 | harassment at places like Harvard, Claudia and gay

00:03:50.080 | specifically, was asked over and over again, whether chance of

00:03:53.920 | intifada were violations of Harvard's code of conduct. She

00:03:57.960 | didn't give a great answer. I'm just curious, sacks. Obviously,

00:04:01.160 | you're Jewish, you went to the Ivy League, passionate about

00:04:03.680 | free speech. And you've talked about surplus politics. He is.

00:04:10.160 | What's your take here? Should students be allowed to march

00:04:13.760 | around campus, chanting from the river to the sea, intifada,

00:04:19.320 | etc. Because of free speech? Or, you know, did these code of

00:04:24.440 | conducts come into play? And what was your reaction when you

00:04:26.360 | saw their answers? Because obviously, there's a nuanced

00:04:28.720 | issue?

00:04:29.040 | Well, look, I mean, I have a very high bar for free speech. So

00:04:32.320 | I would allow, you know, almost everything. The problem that

00:04:36.520 | these university presidents have is that's not their position.

00:04:39.160 | They're trying to wrap themselves in the cloak of

00:04:40.880 | freedom of speech and academic freedom. But that has not been

00:04:43.920 | their practice on campus for many years. On a previous

00:04:47.600 | program, we talked about that fire survey, which polled

00:04:51.120 | students about how free they feel to express opinions on

00:04:54.960 | campus. The results were dismal for the Ivy League, the Ivy

00:04:58.600 | League scored way worse than state schools. And in fact,

00:05:02.000 | remember that Harvard got the blue Tarski is 0.0.

00:05:08.560 | Their last place,

00:05:09.960 | students there reported that speakers were shouted down,

00:05:13.600 | they weren't even invited, they weren't allowed to, to continue

00:05:16.920 | and finish their speeches. So Harvard has an abysmal record on

00:05:20.760 | freedom of speech. So it's hard to believe the president of

00:05:24.160 | Harvard when she claims that she's standing up for freedom of

00:05:27.480 | speech. And in fact, if you were to apply that same standard to

00:05:31.520 | other groups, do you really believe I mean, imagine if the

00:05:35.080 | representatives at that hearing had said to the president of

00:05:38.040 | Harvard, you know, are you allowed to advocate for

00:05:42.920 | genocide of black people or trans people? I mean, would the

00:05:48.360 | answer have been the same? I don't think so. I agree. I

00:05:50.880 | think absolutely not. So the question is, why are Jews being

00:05:55.920 | treated differently than these other groups? And I think this

00:05:58.680 | all goes back to kind of woke identity politics, where in the

00:06:04.000 | woke ideology, there are certain groups that are victim groups.

00:06:07.960 | And there are certain groups that are oppressor groups. And

00:06:10.960 | if you're in a victim group, then you get special

00:06:14.600 | protections. And if you're in an oppressor group, then it's just

00:06:18.200 | assumed that you can't really suffer discrimination or, you

00:06:21.880 | know, injustice in that same way. And I think that Jews have

00:06:28.440 | basically been put in an oppressor group, they basically

00:06:32.120 | are being put in the same group as, as all white people. And I

00:06:35.600 | think this has come as a great surprise to a lot of donors to

00:06:39.480 | these university campuses, who I think, were okay with woke

00:06:44.120 | identity politics to some degree when they believed that Jewish

00:06:48.600 | people were a potential victim group, and that anti semitism

00:06:53.680 | was being treated as real. And lo and behold, they have found

00:06:57.680 | out that no, they're an oppressor group, and they're not

00:07:00.560 | protected. And even very explicit cases of anti

00:07:04.880 | semitism are not being recognized by these universities

00:07:07.840 | because, again, it doesn't match up with this woke ideology. I

00:07:12.880 | think it would have been a lot better for a lot of these

00:07:15.760 | donors to realize that woke identity politics was a

00:07:20.200 | cul-de-sac. It was something that they should not have wanted

00:07:23.240 | to participate in. But I think they're now waking up to the

00:07:27.720 | realization that in this, again, oppressor, oppressed dichotomy,

00:07:34.720 | they're on the wrong side of that.

00:07:35.840 | I think you're exactly they don't like that realization.

00:07:38.800 | Exactly correct. Identity politics road to nowhere.

00:07:41.720 | Freeberg, you gave a passionate speech here about being forced

00:07:45.000 | to pick a side when we're talking about the conflict in

00:07:48.480 | the Middle East. And I guess there's underpinnings here of

00:07:52.080 | your discussion, anti Zionism, anti semitism, and where's the

00:07:57.700 | line between is just caring about humans and children being

00:08:01.720 | killed versus maybe harassment, etc. I'm curious when you saw

00:08:08.400 | these answers, what was your reaction? And yeah, how do you

00:08:12.040 | feel about it?

00:08:12.520 | I was surprised that the Congress people didn't ask the

00:08:20.520 | university presidents, what would your reaction be? If they

00:08:26.380 | started to burn crosses, and say something about white

00:08:33.880 | supremacy, black people don't belong in the US immigrants

00:08:40.540 | don't belong in the US if you picked another ethnic group and

00:08:45.160 | made statements that have traditionally been deemed

00:08:48.840 | threatening and harassing? Would they have made a difference of

00:08:53.640 | judgment? And if so, what's the difference between what's gone

00:08:57.620 | on this week, or in recent weeks, and what's gone on in

00:09:03.240 | other civil rights actions that have taken place in educational

00:09:07.920 | institutions. And I think that would have been like a really

00:09:11.260 | kind of telling understanding of the discernment that's that's

00:09:15.700 | being made on campus today, versus in the past. It is

00:09:21.320 | interesting to see that there's clearly a sense of being torn

00:09:25.540 | with respect to allowing the freedom of expression about

00:09:31.400 | groups that feel oppressed to be allowed to happen on campus,

00:09:36.140 | because that is probably a majority opinion. And that's why

00:09:41.660 | I think this is particularly difficult for these presidents

00:09:44.860 | to handle the situation. And I'm not excusing their behavior or

00:09:48.460 | their actions or their comments yesterday. But there's clearly

00:09:53.200 | something underlying this that I think we need to just

00:09:56.140 | acknowledge, which is that there is a large number of people,

00:09:59.660 | perhaps the majority of people that feel that there is some

00:10:03.340 | oppression going on, and that that oppression has a right to

00:10:06.900 | be spoken for, and that this behavior is the only way the

00:10:10.380 | Boston Tea Party did not follow convention, the Boston Tea Party

00:10:14.380 | was a rebellion against an institution that was oppressive

00:10:19.180 | and the Boston Tea Party was the only action that was going to

00:10:22.260 | make a change that could have driven a change and rebellion

00:10:26.460 | against an institution or an establishment that causes

00:10:30.140 | oppression isn't supposed to have rules. It isn't supposed to

00:10:36.540 | follow convention, it isn't supposed to be a discourse. And

00:10:39.220 | so I think that that sentiment is where a lot of this conflict

00:10:43.700 | is coming from for the presidents in making these

00:10:45.740 | decisions that they see that the majority of people truly

00:10:48.300 | believe that there's oppression that this is the course to speak

00:10:51.860 | up for that oppression, and that they can't step on that because

00:10:55.100 | if they did, they would be causing more disruption to more

00:10:58.140 | people than allowing it and it's a very difficult situation that

00:11:02.020 | they find themselves in. So I'm not excusing it, but I'm trying

00:11:04.660 | to frame up why I think

00:11:05.820 | smart people might be acting this way. Frankly, I think it's

00:11:10.540 | worth asking what would be the case if this were other ethnic

00:11:14.900 | groups or other people that were being kind of, you know, told,

00:11:19.380 | hey, we're gonna have an intifada against x or y or z,

00:11:23.220 | where the actions have been the same.

00:11:24.620 | Chabot, if they were asked that same question, is calling for

00:11:28.420 | the genocide of black Americans, Asian Americans, Indian

00:11:33.340 | Americans, trans Americans, harassment or bullying? What do

00:11:39.180 | you think their answers would have been? And then where do you

00:11:41.060 | think this has gone?

00:11:41.740 | I don't know what their answers would have been. But obviously,

00:11:44.100 | it's morally unacceptable. As best as I can tell, they were

00:11:48.220 | coached by lawyers before they appeared in front of Congress.

00:11:52.460 | And they found some verbal gymnastics, maybe to try to

00:11:59.540 | defend their point of view. And in it, they lost all moral

00:12:04.220 | clarity. Because to your point, Jason, if and to Friedberg's

00:12:07.340 | point, if you just replaced the Jewish people with any other

00:12:12.700 | people, maybe in this moment, it was harder to see. But it's

00:12:15.940 | like, these should not be debatable, difficult moral

00:12:18.660 | questions. So how did we get here? I think that over the last

00:12:26.380 | 40 years, and to be honest, it started when the US News and

00:12:31.020 | World Report started to rank universities. They gamified the

00:12:41.540 | desire for these universities to get at the top of the list,

00:12:44.660 | which allowed them to theoretically get better

00:12:47.500 | recruits. But really, what it did was allow them to build

00:12:50.460 | massive asset management businesses that ultimately

00:12:55.300 | consume these schools. And now what you find is that the

00:13:00.660 | learning process has gotten totally perverted, because it

00:13:04.020 | became a second order priority to being able to raise money and

00:13:10.500 | to manage assets. I think Harvard Management Company at

00:13:13.300 | one point was one of the largest owners of forestry in America,

00:13:18.140 | you know, the other large owner was john Malone, a rapacious

00:13:21.620 | capitalist. So what this shows you is that the mission of these

00:13:26.060 | universities, which is to actually celebrate free speech

00:13:30.500 | and to teach kids to think critically has been lost. And I

00:13:34.420 | think that this was a very simple way of seeing it. And it

00:13:39.780 | should be disturbing to people that this happened, that the

00:13:44.580 | places where you send our 18 and 19 and 20 year old kids cannot

00:13:50.220 | at a very simple level, teach the moral clarity to say

00:13:53.140 | teaching or supporting even the concept of genocide should is

00:13:57.900 | wrong. Can you teach it in a historical context, obviously,

00:14:02.140 | but that's not what they even said there. Right. So they got

00:14:05.580 | into a level of verbal gymnastics, which I think is

00:14:07.940 | really, it should be viewed by everybody is pretty morally

00:14:10.540 | unacceptable.

00:14:11.220 | I think it's well said, and it's clearly bullying or harassment,

00:14:14.660 | if you're going to chase Jewish students around campus. And I

00:14:18.900 | think that's what we saw. Now, if you were to come off or sacks,

00:14:23.380 | or maybe sacks best since you're super, you have a super high

00:14:26.540 | benchmark freedom of speech. If these were students in a debate

00:14:30.460 | club, or in a lecture hall, giving their position taking

00:14:34.740 | hard questions, people opting into it, wouldn't feel like

00:14:37.740 | bullying harassment. Yet, the hypocrisy is so thick that the

00:14:43.020 | you know, they chase people like Ben Shapiro, off campus, etc.

00:14:46.540 | When they had something controversial to say at many of

00:14:49.860 | these schools. But I think we can all agree, chanting about

00:14:54.140 | genocide, and chasing students around campus and disrupting the

00:14:57.180 | campus. That feels like bullying harassment. I don't know that

00:15:00.580 | and I agree with you, Chamath this mental gymnastics that they

00:15:02.700 | went through. But the statements, it's just very easy

00:15:05.500 | to say, yes, that's harassment. Yes, that's bullying. Now, if

00:15:08.380 | you did it in a lecture hall, and you or you wrote a paper,

00:15:11.940 | sacks, maybe doesn't feel like bullying harassment feels like

00:15:15.300 | freedom of speech. Yeah.

00:15:16.060 | Yeah, look, I mean, we can, you can always debate the hard cases

00:15:22.500 | and in free speech and where the lines should be. And again, I

00:15:26.220 | would draw the lines in a way that makes most speech

00:15:30.060 | permissible. But when you're talking about chasing students

00:15:33.220 | around campus to yell in their face, that clearly is bullying

00:15:36.140 | or harassment. And there's no reason to ever allow something

00:15:39.700 | like that. But again, the point I would make is that what you're

00:15:42.300 | gonna see in the wake of this is that a lot of Jewish people are

00:15:48.300 | realizing that they don't have a home on the left anymore. And I

00:15:52.260 | expect that many Jews are going to start shifting right and into

00:15:55.980 | the Republican Party to a place where I've been for a while. And

00:16:00.540 | and I think this goes back a long way. So if you go all the

00:16:03.260 | way back to the original civil rights movement, the 1960s, I

00:16:06.260 | think that many Jews were an integral part of that movement.

00:16:09.860 | And they felt a great solidarity with the original civil rights

00:16:13.580 | movement, civil rights leaders, because they felt like they had

00:16:16.780 | a shared history of persecution that blacks in America had

00:16:21.220 | suffered from racism. Jews around the world felt like that

00:16:24.060 | stuff from anti semitism. And they basically believe that all

00:16:27.620 | people should be treated equally that we should have individual

00:16:30.220 | rights. And basically, they were advocating for a colorblind

00:16:34.100 | standard, right, a colorblind treatment of all people. And so

00:16:37.540 | I think that Jews historically have wanted to be on the left

00:16:41.460 | for that reason. But I think what's happened over the last

00:16:44.380 | few decades is that the civil rights movement, in particular,

00:16:48.260 | and the left have moved to this woke ideology where it's no

00:16:51.940 | longer about colorblindness. It's more about identity groups.

00:16:56.380 | And instead of trying to get past racial differences, it's

00:17:01.700 | been about accentuating them. And so we've had this whole

00:17:04.460 | equity agenda, which is really defined as redistribution from

00:17:09.220 | one racial group to another racial group. I think that for

00:17:12.780 | whatever reason, a lot of Jews just hadn't confronted the

00:17:15.500 | reality that the left had really changed in this way. And again,

00:17:19.940 | I think it goes back to the fact that they thought that, oh, well,

00:17:22.540 | if we're going to be defining identity groups in this, you

00:17:26.580 | know, woke way, you know, Jews obviously should be one of these

00:17:29.380 | victim groups, but they're waking up to the fact that Jews

00:17:32.820 | are not, you know, Jews are just in the minds of kind of woke

00:17:36.700 | ideology. Jews are just white people. Okay, successful white

00:17:40.260 | people with two white people with a Jewish background. And as

00:17:44.540 | a result, they're part of an oppressor class. And I think

00:17:48.420 | that for a lot of Jewish people who are waking up to this are

00:17:51.580 | realizing, wait a second, this is actually a very destructive

00:17:54.260 | ideology. And it makes us the bad guys. And so I would expect

00:18:00.420 | that, again, a lot of Jewish people are waking up to the ways

00:18:04.580 | in which the left has changed. And they're realizing that that

00:18:08.820 | is not a hospitable place in the political spectrum for them to

00:18:12.100 | be. And I would expect there to be kind of a pilgrimage now, of

00:18:18.500 | more Jews in America towards the right, as opposed to remaining

00:18:21.940 | on the left where they've always been.

00:18:23.140 | Yeah, the left needs to remember, people should be

00:18:26.980 | judged, not by the color of their skin or their ethnicity,

00:18:29.860 | but the content of their character. It's a quoting MLK

00:18:35.700 | can get you canceled right now, I think, to actually say that

00:18:39.100 | people should be judged by their color blindness is considered.

00:18:41.780 | You know, a lot of people call that racism. Now that's like,

00:18:45.780 | by the way, that that is the mainstream conservative view on

00:18:49.740 | civil rights related issues is that colorblindness should be

00:18:52.420 | the standard, right? I want to treat everyone used to be the

00:18:54.380 | same as individuals. Yes, exactly. But that was the

00:18:57.700 | liberal point of view. This was the civil rights movements.

00:19:00.180 | Basic tenant. Yeah, we've lost it all. By the way, I think

00:19:04.740 | there is just one other caveat we have to say about this whole

00:19:07.180 | issue, which is that it should be possible to criticize the

00:19:12.220 | State of Israel or Netanyahu, whose government or the bombing

00:19:15.340 | campaign they're conducting in Gaza, or the actions that led up

00:19:19.260 | to this event, there should be room to criticize Israel without

00:19:23.380 | being called an anti Semite. I want to be like really clear

00:19:25.860 | about that. And there needs to be a pretty wide latitude to

00:19:30.700 | have that conversation. And I do think that one of the mistakes

00:19:35.140 | that's happened for a while now is that Jewish groups have been

00:19:40.900 | a little too quick on the trigger to call people anti

00:19:43.940 | Semites for criticizing the policies of the Israeli

00:19:47.860 | government. And again, I think there needs to be wide latitude

00:19:50.980 | to do that. However, I don't think that's the type of speech

00:19:54.180 | that we're talking about here, Jason, I think you framed it up

00:19:56.980 | pretty well. This is people who have veered off of legitimate

00:20:02.300 | criticism, whether you agree with or not the legitimate

00:20:05.420 | criticism about the Israeli government's action into this

00:20:09.180 | sort of genocidal rhetoric. And that's what we're talking about

00:20:12.740 | here. Absolutely. Any final thoughts from the rest of the

00:20:15.540 | panelists before we move on to business?

00:20:17.700 | You guys think that they're going to get fired? Or what do

00:20:19.900 | you think is the right consequence for this?

00:20:21.500 | I think they're getting fired. I think the money, as you pointed

00:20:25.380 | out in your tweets, or is going to cause that they're going to

00:20:28.140 | lose a lot of donations.

00:20:29.180 | What do you think? I'm not tied into these like donor groups.

00:20:32.700 | It's the donor groups that are going to drive the decision

00:20:34.660 | because they're going to call the boards. And so I think it's

00:20:37.500 | really board dependent. Obviously, Ackman is a big donor

00:20:40.500 | at Harvard, and he's been very vocal about what he wants to see

00:20:44.100 | Harvard's board do. I think this is going to drive a big change.

00:20:50.740 | Whether individuals get fired. I really don't know. I think of

00:20:55.140 | the four, if I were to just have to make a bet, I'd say probably

00:20:58.180 | at least one of them is getting fired. It's like, but it's

00:21:01.740 | certainly going to change a lot.

00:21:02.700 | Matthew, you think they're gonna get fired? What do you think as

00:21:04.540 | you wrap final alert tomorrow?

00:21:05.860 | Yeah, I think I think free burgers, right, you have to

00:21:07.900 | follow the money. And I think the money has been very clear

00:21:10.340 | that this can't stand. And I think that that's good, because

00:21:12.940 | I think the people who've been donating have enough moral

00:21:17.100 | clarity on these kinds of topics to say this is unacceptable. So

00:21:20.380 | how long will it take to filter through the decision making? I

00:21:22.980 | don't know, because I also don't know how this machinery works.

00:21:25.660 | But I think what people have to decide immediately right now is

00:21:29.900 | all the kids that are applying for early access and early

00:21:33.700 | decision. Do you really want to go to these schools? And the

00:21:38.620 | parents? Do you want your kids to be going to these schools? So

00:21:42.700 | I think that's that's a kind of a decision that can probably

00:21:45.700 | happen right now or needs to happen right now. While all of

00:21:49.820 | this other kind of like donation driven asset manager driven

00:21:53.540 | decision making, take shape.

00:21:55.500 | All right, let's get into the state of the economy. It's a

00:21:59.060 | really interesting story I sent to the group chat from the

00:22:01.420 | Financial Times about tribalism now impacting how people view

00:22:06.460 | the economy. It's called expressive responding,

00:22:09.580 | basically, how you feel about the economy is based on which

00:22:12.780 | tribe you're in. Here's a quick snapshot of what's going on. If

00:22:17.380 | you're a Republican, and you were doing really well under

00:22:21.460 | Biden, you're going to say things are terrible in the

00:22:23.380 | economy during Trump, Dems were doing awesome, like everybody

00:22:26.300 | else. But because they hated Trump, they said the economy was

00:22:28.500 | trash. Here's the chart that explains that. And then I'll

00:22:33.420 | give you a couple quick bullet points of where the economy is.

00:22:35.380 | But you see the divergent there in the charts and based on the

00:22:40.100 | different administrations being in power. And if you look at the

00:22:43.300 | second chart, it's pretty telling this isn't happening.

00:22:46.340 | This tribalism is not happening in other countries, you can see

00:22:48.900 | France, Germany, UK, people feel about the economy, how the

00:22:53.500 | economy is actually doing pretty wild data. And I'll let you

00:22:57.860 | respond to that in just a second. I'm just gonna give you

00:22:59.900 | eight quick hits on what's going on the economy credit card debt

00:23:03.620 | is reaching all time highs. We surpassed 1 trillion back in

00:23:06.660 | July keeps rising. People are taking money out of their 401k

00:23:10.140 | is hardship distributions increased 13% between q2 and q3

00:23:14.340 | super spending just collapsed in October growing only point 2%

00:23:17.540 | last month versus 7% in September, but November year

00:23:21.980 | over year increases in Black Friday and Cyber Monday spending.

00:23:25.380 | So maybe that's a head fake. I don't know maybe people are

00:23:27.900 | bargain hunting, hunting consumer prices rose just 3.2%

00:23:32.180 | year over year in October versus 9.1% in June of 2022. Home

00:23:37.340 | sell 13 year low in October. Most folks are betting interest

00:23:41.820 | rate increases are over and summer betting interest rate

00:23:45.220 | cuts will start as early as q1 call she's forecast say we

00:23:48.580 | should expect to see and that's a prediction market to quarter

00:23:51.740 | point cuts by July sacks. We've been bearish on consumers. And

00:23:56.820 | all this crazy debt. Is this the beginning of the end? Is this

00:24:01.540 | the end? Where are we at in the consumer spending cycle?

00:24:04.940 | It's hard to know because there's so many mixed signals.

00:24:07.940 | Kobayashi letter had a great tweet on this. There's a lot of

00:24:12.820 | mixed economic data right now. But I mean, the economy seems to

00:24:16.060 | be doing fairly well, but the electorate doesn't feel it. And

00:24:20.060 | you're seeing in recent weeks, you're seeing a lot of

00:24:24.300 | commentary by pundits trying to convince the American people

00:24:28.940 | that the economy is better than people evidently feel that it

00:24:32.940 | is. And I think that one of the big reasons for this gap is

00:24:40.100 | that over the last few years, we've had a lot of inflation.

00:24:43.940 | And the rise in price levels has not been matched by the rise in

00:24:49.260 | people's incomes. So people simply feel worse off because

00:24:53.300 | their spending powers diminish. Now, it's true that the current

00:24:57.380 | inflation rate is going down. But all that means is that the

00:25:01.660 | price level now is growing at, call it 3% issue year, it's

00:25:05.980 | still growing. It's not like prices have come down. They're

00:25:08.940 | just rising at a slower rate. So you know, last year, we had a 9%

00:25:13.740 | in inflation. And inflation has been high the last couple of

00:25:18.020 | years, the rate of increase is slowing down. But people's

00:25:21.140 | wages, if you're working class have simply not kept up with

00:25:26.180 | the price of goods and services. And so I think people feel worse

00:25:31.140 | off than they did a few years ago. And you can try to convince

00:25:35.340 | them till you're blue in the face that actually, the economic

00:25:38.740 | data is great. But if you're somebody whose wages have not

00:25:42.580 | kept pace with price levels, you're not going to feel better

00:25:45.180 | off.

00:25:45.620 | Jamal, on your first point, I think that there is this thing

00:25:51.780 | that we've grown accustomed to, which is how you feel about

00:25:58.020 | what's happening versus what the data may say. And I think that

00:26:01.860 | the press and journalists in a pretty untrustworthy way, amplify

00:26:09.580 | this separation. So we hear about the economy doing well,

00:26:14.940 | maybe it's not doing well, we hear how the economy is not

00:26:17.620 | doing well, and it actually is doing well. Nobody wants to

00:26:21.140 | write about the data, people want to write about their

00:26:23.260 | feelings. And their feelings largely are more defined by the

00:26:27.100 | people around them and what they feel. So simple example, Nick,

00:26:30.540 | if you just want to throw this up, but there was a this is the

00:26:32.580 | Federal Reserve's data, this is not anybody else's data. But you

00:26:35.540 | would think that the wealth gap is being exacerbated. And you

00:26:39.820 | would think that wealth gains are going to a few. And again,

00:26:42.980 | without having an opinion, the data shows something truly

00:26:46.380 | incredible, which is that the American dream is not hanging on

00:26:50.060 | by a lifeline. But more and more American families are achieving

00:26:54.980 | it. You know, 12% of American families are now considered

00:26:58.820 | millionaire households, 8% are considered multi millionaire

00:27:01.900 | households. That's incredible. But what's even more impressive

00:27:05.180 | is that even as they do well, the cohort underneath them, the

00:27:09.980 | folks that make 150 to 250 k a year are the ones that are

00:27:14.980 | absolutely crushing, and they're making more than the top 10% of

00:27:19.740 | all families. So I think Jason, the the broader economic

00:27:24.340 | takeaway I have is unless you're willing to look at the raw data,

00:27:27.460 | the risk is high, that you will be fed an emotional perspective

00:27:35.700 | that amplifies your bias, or causes you to reject that view,

00:27:40.140 | because it just seems so untrustworthy. And it doesn't

00:27:42.340 | map to what you're seeing. It's very, very hard to tell the

00:27:45.060 | truth. That is Federal Reserve data that tells the truth about

00:27:48.060 | the US economy. And it turns out that, you know, the economy is

00:27:51.220 | pretty good and doing a lot for a lot of people.

00:27:54.580 | Freiburg, where do you sit, you've brought up the issue of

00:27:59.020 | credit card debt as a leading indicator, it's continues to

00:28:02.220 | surge. But there is some inkling that consumers may be tapped out

00:28:06.740 | IE tapping their 401ks. So what's your take on the consumer

00:28:11.660 | and this tribalism that we're seeing in the interpretation of

00:28:15.780 | data and how people feel about the economy?

00:28:17.780 | No, I mean, I think if people don't feel like they're

00:28:20.620 | progressing on the order of 10% a year, in terms of income

00:28:27.020 | adjusted for purchasing power, they're generally going to be

00:28:31.180 | unhappy, and they're going to project that as a general

00:28:33.340 | statement about quote, the economy. And so the more people

00:28:37.380 | that that's the case, the more you see that happening. And so

00:28:40.220 | while there may be, you know, a minority of people that are

00:28:43.740 | seeing great economic mobility, if a large enough percentage of

00:28:48.580 | people I don't see it, roughly call it 10% increase in

00:28:52.100 | lifestyle ability year to year. That's going to, you know, catch

00:28:57.740 | up to these overall scores of consumer sentiment. I think the

00:29:00.820 | way that economists measure the economy is a lot different than

00:29:03.180 | the average person measures the economy, which is really their

00:29:05.300 | own, you know, purchasing power and income.

00:29:07.780 | Saks your thoughts.

00:29:08.660 | Look, at the end of the day, the question that people ask

00:29:12.460 | themselves, which is the question that Ronald Reagan as

00:29:14.900 | voters in 1980 is, are you better off than you were four

00:29:17.300 | years ago. And I think that a lot of people, particularly

00:29:20.340 | working class people don't feel better off, because mainly their

00:29:23.940 | wages have not kept pace with the overall inflation level, not

00:29:29.180 | just measured on a one year basis, but over a four year

00:29:32.540 | basis. And I do think this could explain some of the tribalism

00:29:35.860 | Jason is that we've talked about this before that the biggest gap

00:29:39.140 | in the electorate is between professional class and working

00:29:42.300 | class. If you're a professional class, meaning you have a at

00:29:45.380 | least one college degree, by more than 30 points, you're

00:29:49.020 | likely to be a democrat. And if you're working class, which just

00:29:52.620 | means, you know, no college degree, let's say high school

00:29:55.260 | educated, you're much more likely to be a Republican, the

00:29:57.900 | parties have sort of flipped, the Republican Party is now a

00:29:59.940 | working class party, I think a lot of people find that very

00:30:02.100 | surprising. It's not the party of, you know, fat cat bankers

00:30:05.660 | anymore. And you know, the fortune 500. So the parties have

00:30:09.060 | really flipped. And I do think that working class people are

00:30:13.420 | most impacted by inflation. If you're kind of in lower to mid

00:30:19.060 | income, and your wages, the wages of labor have not gone up

00:30:22.980 | and prices have then you're going to be worse off. I do

00:30:26.220 | think that is a big part of it. And I think the media is sort of

00:30:29.380 | working on overdrive right now to convince people that they

00:30:32.500 | should think that their circumstances are better than

00:30:34.940 | they actually are. And, and maybe look, maybe the overall

00:30:40.140 | economic data right now is mixed to positive. I'll certainly

00:30:44.220 | concede that. But I think for the average person, what they

00:30:47.700 | care about their pocketbook, and it's far from clear that they're

00:30:50.300 | better off now than they were four years ago. Jason, what do

00:30:52.900 | you think,

00:30:53.220 | I think is a very important segment, because you're correct.

00:30:56.540 | sacks in a very nuanced point, multiple things true at once

00:30:59.900 | here, there is still sticker shock from inflation. I went to

00:31:03.300 | buy birthday cake, $47 for a cake. I was shocked. How does

00:31:07.220 | perfect it goes for you? So now is it made of cocaine? No, no, I

00:31:11.260 | just put the cocaine all over the top. But yeah, that's, you

00:31:13.940 | know, I got truffle shaved on it. I really felt like it was a

00:31:16.740 | white truffle cake. And this was a small cake. It was nuts.

00:31:19.860 | Anyway, there is sticker shock. The truth is, though, wages are

00:31:24.140 | very strong right now. And wages are slightly outpacing inflation.

00:31:27.940 | But that is a new phenomenon. Correct sacks. That is a new

00:31:30.780 | phenomenon. So people are still feeling the sticker shock. But

00:31:34.180 | at the same time, unemployment and wages drive how people feel

00:31:38.740 | and people are feeling obviously very confident as you see in the

00:31:42.140 | credit card debt when you're confident to trumat point about

00:31:45.380 | just follow the money and look at the actual numbers. People

00:31:47.860 | would not be taking out credit card debt, they wouldn't tap the

00:31:49.980 | 401k if they felt they've got great job prospects. They have

00:31:53.700 | options for jobs. It's a 50 year low in unemployment, which is

00:31:57.380 | unbelievable that that's continued. And wages are

00:32:00.540 | increasing. Uber drivers are now making 30 for $36. And listen,

00:32:05.100 | I've been tracking how much they think from the beginning, it was

00:32:07.180 | $15, then $20 and $25. So wages are increasing massively, the

00:32:13.100 | GDP is 5%, or something like that. And unemployment is low.

00:32:16.140 | So the economy is actually doing extraordinary. That's just the

00:32:19.740 | fact but the sticker shock is very, very real. So I think we

00:32:23.500 | can wrap it there unless anybody wants to add

00:32:25.900 | well, by the way, just over the last month, there's been a huge

00:32:29.860 | rally in stocks, especially growth stocks, Bitcoin is now

00:32:32.620 | rallied to 44,000. What? Yeah, that's nuts. A firm is up like

00:32:38.260 | 20% today. That's you know, the buy now pay later company

00:32:41.980 | because on strong Christmas spending, like you're saying

00:32:44.740 | all the stocks, sacks that bottomed because of interest

00:32:48.340 | rates have now just started to massively rally, massively. So

00:32:52.580 | all the secular

00:32:53.500 | this is all based on expectations of rate cuts

00:32:56.300 | coming sooner than people thought. And I think Bill

00:32:58.980 | Ackman has really led this trade and he timed it perfectly

00:33:02.260 | apparently, by basically going long the bottom market like a

00:33:07.740 | month ago, 10 years at 417 411. Sorry. We're off like, you know,

00:33:13.260 | 80 basis points in like a couple months. It's not

00:33:16.060 | right. But all this euphoria, we've gone from fear to greed.

00:33:19.980 | And, you know, really in one or two months, it's all driven by

00:33:23.460 | rate expectations that people are expecting a rate cut in q1.

00:33:27.740 | And so far, that's not really justified by the feds. hawkish

00:33:32.260 | rhetoric, but people nevertheless seem to think it's

00:33:34.500 | coming. I think that this could be a do I put on my tinfoil?

00:33:38.660 | conspiracy.

00:33:42.220 | I think there will be a rate cut in q1. And I think this is the

00:33:50.380 | Biden bailout. Let's I think this is I think this is a Biden

00:33:53.980 | bailout by the Fed. Because if they cut rates in q1, that's

00:33:58.740 | going to make everyone feel really flush. It takes about six

00:34:00.860 | months to work its way into the system. But that's going to give

00:34:03.620 | a big boost to the Biden campaign.

00:34:05.700 | If you see a quarter point rate cut in q1. A trillion of the 5.7

00:34:11.220 | trillion in money market accounts will rip into the

00:34:13.500 | market.

00:34:13.980 | Oh, wow, that'll be nuts.

00:34:17.580 | Just people knowing that they're on the way down that they peeked

00:34:20.500 | in on the way down is gonna unlock a lot of capital.

00:34:22.860 | It's gonna unlock a lot of capital. And to be clear, it's a

00:34:25.940 | small group of people who believe it's coming in the first

00:34:28.020 | quarter, Bill Ackman and David Sachs. The majority according to

00:34:31.700 | prediction markets think we'll have two of them, you know, by

00:34:34.660 | the summer,

00:34:35.260 | without debating whether it happens in first quarter or

00:34:38.020 | second quarter. The more fundamental thing is, if you

00:34:40.700 | look two years out, you probably see rates around two and a half

00:34:45.900 | percent. And that's 160 basis points from here. That's the

00:34:50.820 | big, big change that I think helps all of us quite honestly.

00:34:54.220 | Yeah. And let's segue here. Great segment, by the way,

00:34:58.660 | gentlemen. Because in our backyard, what we do every day

00:35:02.620 | in terms of capital allocation and building companies, the

00:35:06.140 | cleanup work continues. It was a rager folks, people partied

00:35:09.740 | well into the next day. And we're still seeing seeing the

00:35:13.300 | cleanup Carta has some great data. And this is data amongst

00:35:16.980 | Carter users, which is a subset of users willing to pay an

00:35:21.220 | expensive price to manage their cap tables, the number of

00:35:24.540 | companies that shut down after raising 10 million, which is a

00:35:27.660 | very high benchmark that's up 238% in 2023. From 47 companies

00:35:34.340 | last year to 112 this year, also VC firms, and I'm seeing this

00:35:38.900 | very quietly happening. This isn't reported on VC firms are

00:35:42.060 | very opaque about laying people off or reshuffling the deck, but

00:35:45.820 | a firm called Openview out of Boston just abruptly shut down

00:35:50.260 | they had 70 plus employees, they just raised about 600 million of

00:35:54.380 | an $800 million target for their fund. There were reports about

00:35:58.420 | great cost, not hitting their target and reshuffling a bit

00:36:01.220 | that might have been overstated to be honest. But on the bright

00:36:04.580 | side, we're seeing some rebounding in a RR of the public

00:36:08.700 | SAS companies that started to rebound in q3. Here's the chart

00:36:11.700 | from altimeter. Looks like we hit bottom in q1 of 2023.

00:36:17.020 | Another bright spot public firms that are continuing to downsize

00:36:20.860 | are getting rewarded by the public market Spotify just did a

00:36:24.260 | third layoff 17% throughout 1500 employees. So I guess sacks

00:36:29.900 | everybody was thinking SAS was over it was the end of days we

00:36:33.900 | talked about not a recession SAS but a depression and I think

00:36:38.420 | that was accurate. How are you feeling about the private

00:36:41.500 | company market and maybe stabilization or the return of

00:36:44.740 | growth in SAS companies?

00:36:46.660 | Well, what I've been saying for the past year, year and a half

00:36:51.340 | is that we've been in a software recession, the overall economy

00:36:54.580 | may not have been in a recession because the consumer has stayed

00:36:58.420 | strong, as you said, consumer spending has stayed strong. So

00:37:01.380 | the BTC part has held up the economy. But I think in B2B, and

00:37:06.260 | particularly in software, there has absolutely been a recession.

00:37:09.380 | It started in the first half of 2022. With rate hikes, there was

00:37:13.900 | a huge revaluation of growth stocks. And you saw multiples

00:37:20.540 | come down on SAS valuations from in the public markets as high as

00:37:24.900 | 35 down to seven or eight, something like that. In private

00:37:29.700 | VC world, we saw valuations go from called 100 times ARR to

00:37:35.060 | something more like 30 times ARR. So the first half of 2022,

00:37:38.620 | we saw a valuation correction. But then around mid 2022, what I

00:37:42.900 | started seeing in all my board meetings was every startup

00:37:45.900 | started missing its sales forecast, and they started

00:37:48.420 | reforecasting down. And that process really continued for a

00:37:51.980 | year. And we saw the exact same thing in the public markets in

00:37:55.700 | public SAS companies as well. And it's really remarkable how

00:37:59.540 | the data from the public stocks that our friend Jammin' Ball

00:38:04.660 | from Altimeter has been publishing, you know, regularly,

00:38:09.420 | how that has matched up with what I've seen kind of

00:38:12.780 | anecdotally, in board meetings, and you know, in conversations

00:38:17.260 | super healthy, correct, that the, the CEOs and the boards

00:38:22.020 | understand, hey, these private market valuations have to in

00:38:24.900 | some way, be informed by public, this is a very short because the

00:38:28.220 | public stocks are the exit comps. Right. So you know, if

00:38:32.100 | the public stocks are worth, I don't know, a third of what they

00:38:35.580 | used to be, then private valuations have to reflect that.

00:38:38.620 | But in any event, I want to go beyond just talking about

00:38:40.780 | valuations here, I want to talk about the business results. And

00:38:44.460 | again, for this time period from call it mid 2022, to mid 2023,

00:38:51.140 | there was a software session, software companies were cutting

00:38:54.740 | jobs, they were reforecasting down, they were growing slower,

00:38:58.180 | and many cases, they're actually shrinking. I mean, some

00:39:00.740 | companies lost AR are because of churn, you know, a lot of their

00:39:06.340 | customers were shutting down, or sharpening their pencils, they

00:39:09.540 | were consolidating vendors. The last year has been a really,

00:39:13.340 | really tough time in the software space. But I think now

00:39:16.100 | we've turned a corner I started seeing in the last couple of

00:39:19.820 | months, I started seeing green shoots, and some my board

00:39:22.760 | meetings. And now here we have this chart from jamming that can

00:39:25.780 | you just put this on the screen again, where we saw that finally

00:39:29.100 | in q3, we went from four quarters of negative growth in

00:39:34.740 | net new AR are to finally a quarter of positive growth. Now,

00:39:38.500 | 2% is not a great number, but at least we are finally positive, as

00:39:43.340 | opposed to negative, which means that net new AR was shrinking. I

00:39:46.780 | think again, the the software session, I'm calling an end to

00:39:50.060 | the software recession.

00:39:51.220 | And is it an official breaking breaking news? SACS has called

00:39:55.420 | an end. So let's let the party begin, I think software revenues

00:39:59.580 | are going to rebound. I think the open question that's

00:40:03.220 | remaining then is will valuations rebound? Or will you

00:40:06.780 | have to grow into the last valuation or some truncated

00:40:10.980 | valuation? And this is where, you know, even if rates go to 2%

00:40:15.420 | are people going to be as excited again, to bring the

00:40:19.860 | public markets back to 15 and 20 times forward ARR. And that's an

00:40:24.820 | open question. I think the market says no, which means that

00:40:28.260 | even as growth comes back, you still have a valuation reset,

00:40:32.460 | that may actually explain why startups are shutting down. Why

00:40:37.060 | venture firms that you know, if you looked at that firm in

00:40:40.460 | Boston that shut down, they had some seemingly very good

00:40:43.060 | companies in their portfolio. So there should be nothing stopping

00:40:45.500 | them from continuing to raise capital and invest. But I just

00:40:49.380 | suspect the the end market that they operate in is going to be

00:40:53.260 | value constrained if they pay top dollar for things that are

00:40:57.580 | now just worth a lot less, even if they double revenue. I'll

00:41:01.220 | give you an example. We talked to the private equity guys a lot

00:41:03.500 | just because we try to understand where they are buyers,

00:41:06.580 | right? Why is that important? explain why private equity

00:41:09.300 | versus public markets and how they think about businesses?

00:41:11.860 | Because I think it's a very important point that you've made

00:41:13.540 | to me privately. I think that when you look at the ecosystem,

00:41:18.140 | the ecosystem doesn't work. If you never get liquidity to your

00:41:24.060 | employees and to your shareholders. So liquidity

00:41:28.220 | happens in one of two ways. It can go in the public markets, or

00:41:32.900 | you can transact to private equity. Why? Because they have

00:41:35.900 | almost as much money and frankly, more in many cases to

00:41:39.420 | pay than a public market can give you via a traditional IPO.

00:41:44.700 | So I think that they are a pretty rational buyer. And they

00:41:48.020 | do a very good job. Because they are a concentrated buyer of

00:41:52.820 | finding a very fair price, what is the real honest market

00:41:55.980 | clearing price. And so if you don't want to look at the market

00:41:59.060 | through rose colored glasses, and you want sobriety, ask a

00:42:03.220 | private equity investor what they would buy your position

00:42:05.460 | for. That's why I spend a lot of time talking to them because I

00:42:08.460 | want to know what this stuff is really worth. And what I would

00:42:11.860 | tell you is that even for companies that are in the

00:42:14.100 | hundreds of millions of ARR, the premiums that they're willing to

00:42:19.140 | pay are between three and five times ARR at the high end. And

00:42:24.140 | that a lot of deals get transacted between one and three

00:42:26.700 | times ARR. That may not be what people want to hear. But that's

00:42:30.060 | because when you look at the underlying ability to generate

00:42:32.500 | cash flow, many of these businesses haven't proved it

00:42:36.020 | yet. And so they want to buy things in a margin of safety

00:42:40.260 | where they can come in and cut certain expenses, while still

00:42:44.660 | helping to grow in certain markets. All of that used to be

00:42:49.940 | a 10x multiple in the public markets. So private equities

00:42:52.860 | buying for three to five times and really one to three times.

00:42:55.660 | It's going to be hard for the public market buyer to be paying

00:43:00.580 | a lot more than that.

00:43:01.420 | Got it. Can I build on that? This is a chart that was

00:43:03.740 | published on December 1 by jamming at altimeter. And I do

00:43:08.820 | think it speaks to the valuation question quite well. You can

00:43:13.660 | see here that there's this line at 7.8 times, which I think

00:43:19.740 | refers to 7.8 times next 12 months revenue. That is the

00:43:24.700 | long term pre COVID average. So that is where the average SAS

00:43:28.540 | stock has traded over a long period of time.

00:43:32.100 | Eight years.

00:43:32.620 | Currently, as of December 1, we're at 5.8. I think it's

00:43:35.820 | probably a little higher now because the markets pretty much

00:43:38.380 | rallied over the last five days. But you can see that we're still

00:43:42.300 | trading below the long term average in terms of multiples.

00:43:47.580 | And part of that is because interest the 10 year is still at

00:43:51.500 | 4.3%. Although it's come down quite a bit, you can see a peak

00:43:55.100 | there around 5%. Now it's at 4.3. If you believe that the 10

00:44:01.300 | year is going to go back down to I don't know this two and a half

00:44:03.940 | 3% range. And if you believe that growth is re accelerating,

00:44:09.140 | then I think there is room, you know, for this number, the 5.8

00:44:15.380 | number to at least grow into the long term average, which is 7.8.

00:44:21.660 | So there there is room there, I think that as the stocks are

00:44:26.300 | priced today, it doesn't feel like they're overpriced. Let's

00:44:30.860 | put it that way. And I never want to tell anyone what to

00:44:33.900 | buy. But you can see here that we are still trending below the

00:44:36.980 | long term average,

00:44:37.900 | he should pull this number back to 2010. Interesting. So at the

00:44:41.820 | start of the super cycle, after the Great Recession, yeah, not a

00:44:45.340 | bad point, but and probably pull it back, frankly, all the way to

00:44:47.700 | 2005 2006. Because you had enough companies there that were

00:44:51.740 | public that were sassy software companies, including Salesforce

00:44:55.140 | might be a six instead of 7.8. And we might be at the 20 year

00:44:57.860 | average is a really good point. I'll ask Brad to do that

00:44:59.780 | freeberg. Switching to you, you have been a capital allocator

00:45:04.540 | and company formation, executive for the last close, getting

00:45:09.060 | close to a decade. And you made big news this week, instead of

00:45:13.180 | doing more funds, which I know you had a lot of people

00:45:15.820 | interested in backing your funds, you decided you're going

00:45:18.980 | all in, and that you are choosing to take the highest

00:45:23.180 | performer most promising company in your portfolio and become CEO

00:45:26.540 | of that company explain your decision because I think it does

00:45:29.340 | relate exactly because you're got skin in the game here the

00:45:32.860 | most skin possible, which is your time. You've decided to go

00:45:35.820 | the CEO route put all your eggs in one basket explain your

00:45:38.060 | thinking.

00:45:38.380 | We started a business at the production board, which is my

00:45:41.500 | firm. Four years ago with Judd Ward, who's the CTO and co

00:45:47.740 | founder of this business who came up with some pretty novel

00:45:51.300 | ideas on how we could use gene editing to make incredible

00:45:55.540 | transformations in agriculture reality. The conversation

00:45:58.820 | originally started from a paper I read. In January of 2019, I

00:46:02.820 | reached out to Judd and said, Hey, we should talk about this

00:46:05.060 | paper. And we started brainstorming and Judd came up

00:46:08.220 | with this concept for this business. And it was really a,

00:46:11.860 | you know, call it a moonshot that they undertook, and we've

00:46:16.700 | put 10s of millions of dollars of capital into this project

00:46:20.180 | over the last four years and been operating in stealth. And

00:46:23.220 | the team had some pretty significant breakthroughs this

00:46:25.740 | year that make the whole thing a reality. Now, the potential of

00:46:28.580 | the business is so significant, that I really don't have a

00:46:32.980 | choice. But to go all in on this, it's a no brainer, as, as

00:46:37.260 | I said, in the tweet, I put out, I could spend a bunch of my time

00:46:40.340 | as you said, like, starting other businesses or making

00:46:43.180 | investments, but at the end of the day, you know, investing a

00:46:49.100 | cruise to a power law, where if you have something that's going

00:46:52.980 | to be transformative, it could be many multiples on all the

00:46:57.860 | other stuff you do. And so it only made sense for me to say,

00:47:00.660 | Look, I've, I've got to dedicate my time, attention and energy to

00:47:04.060 | making sure that this business realize its potential, I'm going

00:47:07.100 | to go in full time as CEO. So it's pretty exciting, you know,

00:47:10.620 | gene editing, I'll talk a little bit about it. But I can't share

00:47:12.820 | too many details. gene editing, as you guys know, was discovered

00:47:17.580 | it's controversial whether it was discovered first by George

00:47:20.180 | church and the group at the at the Broad in Harvard, or Jennifer

00:47:23.420 | Doudna and her group at Berkeley. But CRISPR cast nine

00:47:28.260 | is the system that allowed us for the first time ever to go in

00:47:32.820 | and make specific edits to DNA. Historically, any work we've

00:47:37.180 | done in the genome has been, you know, very ad hoc haphazard,

00:47:42.580 | throwing large amounts of DNA into a cell to try and get that

00:47:46.220 | cell to do something. But CRISPR really unlocked this call it

00:47:49.900 | search and replace function in DNA. And that capability has

00:47:55.340 | allowed researchers to make novel therapeutics to create

00:47:58.460 | have new discoveries in biology, and it's really unlocked an

00:48:01.940 | entirely new era in biology. One application of gene editing is

00:48:06.660 | in agriculture, where we can look specifically at the genes

00:48:10.220 | and plants and what they do to the plant. And if we can make

00:48:14.180 | specific changes that you would otherwise see in nature, through

00:48:18.020 | traditional plant breeding and mutations happen over time

00:48:21.140 | through plant breeding, can you accelerate those changes? And

00:48:24.100 | can you make a set of changes? Rather than spend millennia

00:48:27.140 | breeding plants, can you make a specific set of changes that

00:48:30.140 | will cause the plant to do something very novel, and as a

00:48:33.220 | result, get the plant to be more successful. And by editing the

00:48:36.820 | DNA of the plant to make it more successful, its yield goes up,

00:48:39.620 | it can generate more food with less water, more food with less

00:48:42.980 | land, more food with less labor, etc, etc. That's the general

00:48:47.620 | premise on how we can use gene editing to drive productivity in

00:48:51.300 | agriculture.

00:48:52.060 | Amazing. And you could, I assume, make the strawberries

00:48:55.980 | taste more delicious, like those ones from Hokkaido in Japan, as

00:48:59.740 | opposed to just making them giant flavorless softballs.

00:49:03.140 | The way gene editing has been thought about in agriculture

00:49:05.900 | over the last decade has been exactly what you're saying,

00:49:08.980 | which is to make a specific trait edit, which is one edit in

00:49:12.620 | one gene that does one specific thing to the plant. And what

00:49:16.660 | Judd and the team came up with was starting with the problem

00:49:19.380 | rather than starting with this, you know, kind of very specific

00:49:22.420 | thing that we could do. And they said, how do we get yield to go

00:49:25.780 | up significantly in plants. And they came up with this creative

00:49:29.180 | idea, which is doing a series of edits, which is called

00:49:32.420 | multiplex editing, multiple edits across multiple genes,

00:49:35.460 | that would actually change the biology of a plant in a

00:49:38.500 | fundamentally understandable way. But that would ultimately

00:49:42.060 | drive such a transformative increase in yield, it would open

00:49:46.140 | up entirely new opportunities in agriculture. And so that was the

00:49:49.500 | moonshot was the series of edits that could, you know, change how

00:49:53.180 | plants, you know, do a specific set of things that makes their

00:49:56.860 | yield go up significantly. And we weren't sure if it would work.

00:49:59.700 | First of all, we weren't sure if it was possible to do the edits.

00:50:01.900 | Editing plants is very hard, the cell wall of plants has to be

00:50:06.860 | dissolved, then you have to get the editing machinery into the

00:50:09.500 | plant into the cell. And then you have to get that cell to

00:50:12.420 | edit the right gene and not have other edits. And then you have

00:50:15.060 | to get the cell to grow back into a plant. There's so many

00:50:17.540 | complicated, difficult steps, you have to get all of them to

00:50:20.260 | work. And then we weren't even sure if making all those edits

00:50:23.180 | would cause the outcome that we expected. And it turns out that

00:50:25.780 | that it does. And that happened as of a few weeks ago, this

00:50:28.660 | company. And that's why I decided to step in because

00:50:30.980 | suddenly, it's like, oh my gosh, the moonshot is working. We put

00:50:34.180 | in a lot of capital, we spent years funding the exercise, it's

00:50:37.460 | real. And now we're going to take off. And that's why I'm

00:50:40.540 | going on this. So I'm being a little cagey with respect to the

00:50:43.540 | details. As I understand, it's top secret stuff. That's fine. I

00:50:46.700 | definitely want to talk more specifically about what the

00:50:49.140 | team's done and what we're going to do with the business, which I

00:50:51.940 | will happily do in a few months when some some things become

00:50:55.060 | public. But in the meantime, I'm excited to do it. I got to tell

00:50:58.300 | you, the last set, it's been seven years since I've been an

00:51:01.260 | operating CEO. And, you know, to some degree, there's always

00:51:06.180 | been a piece missing for me and what I do every day, that I

00:51:09.620 | haven't felt like I've had the ability to have the influence

00:51:12.900 | and make the decisions that I think need to be made. You're

00:51:15.220 | advising the CEO, you're sitting in a board seat, kind of

00:51:17.900 | encouraging them to do certain things. But then sometimes they

00:51:21.260 | listen, and sometimes they don't. So to actually be in the

00:51:24.180 | seat feels to me like the right place. It's the right place

00:51:27.180 | where I can have the influence and drive the change that I want

00:51:30.100 | to see. And I haven't done that in a very long time. And so it's

00:51:33.620 | also personally, I think the right decision for me to find,

00:51:36.700 | you know, satisfaction in the work I'm doing, not to mention

00:51:38.740 | the excitement I get out of the business.

00:51:40.140 | And you and I have talked about this privately, you know, the

00:51:43.220 | world has too much capital, there's just tons of money,

00:51:46.300 | there's too many problems to be solved. The real issue,

00:51:49.740 | especially when you're running an incubator, or a studio, you

00:51:54.460 | know, a startup studio, like some of the startup studios, is

00:51:57.420 | who is going to pilot this very fast jet fighter and the number

00:52:03.860 | of people who are ambitious, and technically know how to fly one

00:52:08.180 | of these planes, and do it at high speed, and you know, want

00:52:11.260 | to take on that dangerous cockpit is very low. And so I

00:52:14.780 | think it's very courageous of you to jump on and do this. So

00:52:16.820 | congratulations.

00:52:17.580 | The point you're making is a really good one worth talking

00:52:19.820 | about just for a second. There's been this criticism in Silicon

00:52:23.140 | Valley. And I'd love your guys's point of view on this to

00:52:27.020 | Chamath and sacks, but like, and Jacob, but like, there's been

00:52:30.060 | this criticism in Silicon Valley, which is that, you know,

00:52:32.500 | we do too much of the easy stuff. And to all the capital

00:52:36.260 | goes into the apps and stuff, you know, things that are the

00:52:38.540 | path of least resistance to making money, not into the hard

00:52:41.740 | things that are low probability require a lot of capital. It's

00:52:44.180 | not universally true, but it's generally true with respect to

00:52:47.540 | how capital is allocated. And, you know, I was kind of talking

00:52:51.100 | with a bunch of people last week about this. And I kind of

00:52:55.220 | realized that, like, there's only if you're going to do a

00:52:58.740 | difficult project that requires a lot of capital, you're going

00:53:01.820 | to want to entrust that capital to someone that has proven

00:53:05.220 | themselves. Someone who's proven themselves is generally going to

00:53:09.820 | have the choice of things they're going to want to do with

00:53:11.740 | their life. And if they've proven themselves, it usually

00:53:14.340 | means they've had some exit event or some liquidity event

00:53:16.700 | that discourages them from doing a very difficult thing and

00:53:20.260 | taking on a lot of risk and burning themselves to death

00:53:22.500 | again, when they've already made it. And the people that have

00:53:25.580 | made it usually make it in software the first time around

00:53:27.940 | because software creates a path of least resistance to

00:53:31.380 | generating returns. And then the challenging question for them is

00:53:35.980 | do you do it again, and you make easy money, you know how to do

00:53:39.380 | it? Or do you take a 5% shot or 2% shot of success 98% chance of

00:53:44.340 | failure, going after a very hard project that takes a very long

00:53:47.660 | period of time. So I think that the challenge with difficult

00:53:51.700 | technology being developed in Silicon Valley is less about a

00:53:56.820 | dearth of capital or dearth of ideas or dearth of opportunities.

00:53:59.780 | It's more about a dearth of talent, that finding the right

00:54:02.740 | folks who have the capabilities and have done this before, to

00:54:07.460 | want to step back into the saddle and take on a very large

00:54:10.340 | low probability problem is really the challenge that I see

00:54:14.340 | a lot of in getting a lot of these things kind of going and

00:54:17.460 | funded hard to get people to be in the arena. Yes, Chima, you've

00:54:20.740 | seen this in your portfolio,

00:54:21.940 | a hard problem is what I'm saying, like a 2% chance of

00:54:24.860 | success kind of problem. Like, why would I do that? When I can

00:54:27.460 | go do something that's I'm 60% likely to succeed at and do

00:54:30.340 | really well doing it.

00:54:31.180 | I find that most companies are very under managed and under

00:54:37.860 | experienced. And it's surprising for me, it lacks a level of

00:54:42.060 | sophistication that I just assumed existed. And I guess

00:54:45.780 | that's because my last experience was when I was

00:54:48.620 | helping to build a company that frankly, coming out of the great

00:54:52.140 | financial crisis, we were recruiting people at Facebook

00:54:55.500 | from Google for the most part, and then building an entire core

00:54:59.540 | of young people and grooming from within. It was, we had a

00:55:04.300 | pretty good go of it. Fast forward to 2023. And I must

00:55:09.260 | admit that the companies that I interact with when I get into

00:55:12.220 | the weeds, I think the real talent to Friedberg's point is

00:55:16.900 | spread too thin across too many businesses. And so there are

00:55:20.980 | pockets of greatness in every company, but there's no real

00:55:24.940 | gravitational pull for any of them as a result of that.

00:55:27.540 | This is an excellent point as well. When we had a SERP

00:55:30.220 | environment, so many companies got funded, an amazing CMO, CTO,

00:55:36.020 | VP of Ops, started their own company. And they were just

00:55:40.300 | their natural position was the sixth man on the bench, you

00:55:42.940 | know, on the Knicks or the Warriors, not the primary

00:55:45.780 | scorer, they weren't Steph Curry, they shouldn't be in that

00:55:48.180 | position, they should be coming off the bench and being an

00:55:50.420 | amazing contributor. This is I've concluded the best time in

00:55:53.460 | the world to start a new company. I am absolutely amazed

00:55:58.260 | by the companies coming in applying for funding for us.

00:56:01.220 | I understand because that's your business model. But what about

00:56:03.500 | encouraging people to actually join a good company and learn

00:56:05.980 | how to be a good manager?

00:56:07.100 | Absolutely. These are two, the two best options, I think, if

00:56:10.860 | you have two or three really great builders, you actually

00:56:14.420 | know how to build into two or three, you have a great idea,

00:56:17.020 | and you want to do it, I encourage you to start a

00:56:19.260 | startup. If you don't have a great idea, you don't have two

00:56:21.420 | or three co founders, you don't want to leave the thing. Find

00:56:24.060 | somebody who's just getting onto the launchpad or just getting a

00:56:27.220 | little escape velocity in their rocket, which would be defined

00:56:30.340 | as 10 to 30 employees, maybe having raised two to $20

00:56:35.820 | million, that's an ideal time to get on the rocket. And just any

00:56:40.100 | seat you can get. As Sheryl Sandberg said, famously, any

00:56:44.060 | seat on the rocket ship is a seat on the rocket ship, you

00:56:46.460 | just want to get on board. Yeah,

00:56:47.860 | I disagree with the first part of what you said. Oh, okay.

00:56:51.380 | Explain why.

00:56:51.980 | I run into two and three person teams every day that I think are

00:56:57.180 | exceptionally talented, who should be inside of a company.

00:57:00.540 | And instead, they found somebody to give them money. And so

00:57:03.220 | instead, they're starting something and they're just

00:57:04.820 | meandering. And the problem with these two and three person teams

00:57:08.260 | is that even now, if you stick the right label on it, like AI,

00:57:12.460 | you'll find five or six or $7 million of money, it won't be

00:57:17.740 | led by any single investor. So it's all done in a safe. None of

00:57:22.180 | these folks have boards. And so they come in and check in with

00:57:25.420 | me time to time. And I asked him about their progress, and it's a

00:57:28.020 | mess. And I'm shocked. And I'm like, why are you guys wasting

00:57:31.940 | your time, like you should be at a startup that's winning. And

00:57:35.220 | part of it is that they think it's the right thing to do. And

00:57:37.460 | I don't think there's any valor in being a founder. I think

00:57:41.500 | there's a lot of valor in building something that's really

00:57:44.340 | valuable for people. And if that means being a director of

00:57:46.980 | marketing, go do that instead.

00:57:48.460 | It's a valid point. I think your most valid point in that is that

00:57:53.100 | there is not governance and mentorship for during the peak

00:57:57.260 | Zerp era. We created something called founder university to

00:58:01.500 | kind of sit well, of course, where we teach people how to do

00:58:03.580 | this stuff. And then we wind up investing in about 10% of those

00:58:06.180 | companies. And it's nuts how many people are applying. And we

00:58:10.740 | tell people when you hit $255,000 in revenue, we'll start

00:58:15.420 | doing quarterly board meetings with you. And they don't even

00:58:18.820 | have to be officially board meetings, or just mentoring

00:58:20.660 | sessions for one hour where you present as if it's a board. And

00:58:24.020 | so I agree, largely the passing of the hat and doing a party

00:58:27.980 | round. And having no mentorship is a weakness in the system in

00:58:32.420 | our firm. We fixed it. We found a university

00:58:34.500 | Yeah, but isn't dropping a slightly different point?

00:58:36.740 | Jason's with respect? Well, I think that when you have bubbly

00:58:42.060 | funding conditions, it leads to an over fragmentation of

00:58:45.260 | talent. Sure. I mean, isn't that the point? Yes. I mean, it takes

00:58:49.260 | a certain concentration of outstanding people, not just

00:58:54.100 | founders, but also like early employees to create a great

00:58:56.780 | company. And

00:58:57.620 | now with PayPal, right? I mean, that was the greatest

00:58:59.260 | concentration of

00:59:00.140 | news in history with talent, right? You have like

00:59:02.780 | that in Google would be the two best examples. Yeah.

00:59:04.740 | Yeah. So one of the reasons why you can end up with again, an

00:59:09.620 | over fragmentation is if there is too much funding in the

00:59:12.260 | system, and everybody's getting funded for really, you know, mid

00:59:17.180 | ideas. And it prevents a congealing of great talent to

00:59:22.860 | come together at companies where to have a really big idea. If

00:59:26.140 | you believe that the startup ecosystem was overfunded during

00:59:30.340 | the ZURP bubble, which it clearly was, I mean, you don't

00:59:33.380 | just get bubbly valuations, you also get bubbly funding

00:59:36.900 | conditions, then by definition, there are companies at the

00:59:40.500 | margins, they're getting funded, that shouldn't get funded. And

00:59:42.900 | that leads to an over fragmentation of talent.

00:59:45.460 | Here's what's happening on the ground. We used to see a lot of

00:59:49.780 | solo founders outsourcing their tech, what we're seeing now is

00:59:52.820 | usually two, three, four founders getting together to do

00:59:55.220 | a company. And one of the counter prevailing forces here

01:00:01.100 | is what we saw with Spotify, just laying off 1700 people

01:00:03.900 | Google laying off 20,000 Facebook laying off, I think 25

01:00:07.580 | or 30,000, Microsoft, Uber, all these companies have laid off so

01:00:11.420 | massively, they're all on hiring freezes. So then what happens is

01:00:14.460 | there's massive amounts of talent at reasonable prices

01:00:17.500 | joining together after having worked at those companies. And

01:00:20.940 | so I would say the companies were funding at this early stage,

01:00:23.820 | we're never doing solo founders, I mean, unless it's a serial

01:00:27.340 | entrepreneur, and we're seeing two or three people who worked

01:00:29.380 | at Uber or Google or Airbnb, you know, who have like this really

01:00:33.740 | great product velocity coming together, and they have to be

01:00:36.900 | builders. So I think it's two things are true at once that the

01:00:40.020 | number of companies being funded has plummeted, I think about 75%

01:00:43.220 | sacks. But the quality and the amount of concentration of

01:00:46.940 | talent, even in those startup cohorts is really high. And they

01:00:50.420 | don't have for job offers from big tech, they're not having

01:00:53.460 | like a Salesforce $300,000 offer coming in or a Google $400,000

01:00:57.980 | offer coming in. So I think this is going to be the best vintage

01:01:00.500 | of venture in our lifetimes. That's my personal belief. I

01:01:03.380 | invested in 100 companies this year. But I could be wrong, we

01:01:07.700 | should talk about the Google Gemini launch, Google just

01:01:11.620 | dropped their chat GPT killer. And from my perspective, it's

01:01:15.140 | often awesome. Just two quick videos here. It does have very

01:01:20.220 | strong multimodal mode, if you don't know what that is, just

01:01:23.300 | means you can use images, videos, text input and output.

01:01:26.540 | In this demo that you're seeing on the screen, if you're

01:01:29.220 | watching the show, they take a picture of a physics test that

01:01:33.060 | somebody took in handwriting, they find which answers are

01:01:35.900 | wrong, they explain it lots of reasoning going on in here. And

01:01:39.820 | obviously, the multimodal means you're seeing an image and

01:01:42.500 | you're getting text back. Second video they showed in the in the

01:01:46.660 | they launched a lot of stuff today with this Gemini brand.

01:01:49.260 | They're using the classic example of doing a party,

01:01:54.180 | planning a party.

01:01:55.220 | They use my likeness in the Google video. Wait, what's

01:01:57.300 | going here? It is there's there's a chubby chema. Sorry,

01:02:00.540 | can't body shape people. Sorry, folks. There's chubby chema.

01:02:03.980 | Please strike that. Oh my god, I shouldn't have said that.

01:02:06.700 | I thought Vinnie Lingham was fat chamath.

01:02:08.700 | Vinnie Lingham has claimed fat chamath. That was that's why I

01:02:11.460 | went for chubby. I didn't want to infringe on his IP. But

01:02:15.020 | anyway, no, I'm gonna get canceled. So in this video, the

01:02:19.900 | person asked to do a kid's party, what's very unique here

01:02:22.340 | is that it does the follow up questions, which is, you know,

01:02:24.740 | really interesting and understands reasoning and

01:02:26.300 | context, but it built a dynamic interface for this use case. And

01:02:30.900 | it did like a pinboard and a kind of Google s, task lists and

01:02:36.300 | KPIs and all this other nonsense. But behind all of

01:02:39.620 | this, in the Gemini exceptionalism, I think is that

01:02:43.220 | they did all these benchmarks against a bunch of, there's a

01:02:46.380 | bunch of tests and batteries of tests that language models use

01:02:50.260 | to prove how strong they are. And Google says Gemini beat GPT

01:02:53.900 | for the latest from open AI in 30 out of 32 benchmarks, this is

01:02:58.020 | going to come in three flavors, ultra pro and nano. That's

01:03:01.420 | basically cost and strength. And there's a lot more behind this.

01:03:04.860 | But based on what I'm seeing, in my opinion, I've been looking at

01:03:07.620 | this stuff every week with Cindy and looking at all of the

01:03:12.860 | latest and greatest, this feels like it is a leapfrog by about

01:03:18.380 | 20 or 30%. If this is true, but freeberg, you looked at the

01:03:21.700 | original papers, what are your thoughts on the underpinnings? I

01:03:24.460 | talked about the UX and some of the reasoning, what are you

01:03:26.660 | seeing? And we'll consider this a flash on the fly science

01:03:31.340 | corner for all those Friedberg stands out there.

01:03:33.780 | I haven't read the whole 60 pages, but I looked at the

01:03:39.740 | performance charts, and it's pretty damn impressive. I feel I

01:03:43.300 | use the demo that I feel like you're interacting with data

01:03:47.340 | from Star Trek. Do you guys ever watch Star Trek?

01:03:50.180 | On your face? Your dream has come true from your child. I

01:03:53.700 | mean, I was like, this is a lifelong dream. I can finally

01:03:55.700 | have a chat with data. It's like conversational. It's

01:03:59.140 | predictable, in the sense that it kind of predicts the details

01:04:03.820 | that I might ask or might otherwise forget to ask fills

01:04:07.340 | them in. There's some, I think, really smart features of it. And

01:04:12.060 | I think it says a lot that Google truly does have the

01:04:17.420 | muscle to compete. And now is showing the way of us to do so

01:04:22.940 | that they're actually putting this out there, that they're

01:04:25.660 | willing to disrupt themselves cannibalize their own search

01:04:29.060 | business potentially, in a way that everyone's been worried

01:04:33.580 | they wouldn't be willing or able to do, they'll figure out a way

01:04:37.140 | to monetize it later. But they really are showing that they're

01:04:39.340 | willing to try and make the best product for users, which has

01:04:43.380 | always been a core mantra for Google from the origins of the

01:04:47.180 | business, focus on the user and all else will follow. And

01:04:50.700 | everyone's been saying the last couple years, they're too

01:04:52.620 | focused on profit, they're squeezing every nickel and dime

01:04:55.420 | out of every click, and showing that they're willing to put this

01:04:58.900 | out there says a lot about the strategic imperative of the

01:05:01.660 | board and the leadership there. So that makes a big difference.

01:05:04.420 | The product seems really good. The scoring data seems

01:05:06.780 | incredible against GPT for, which is I think the key

01:05:10.500 | benchmark, as we know, open AI has some new models that are

01:05:13.020 | coming to market. Here, let's pull up the table of results.

01:05:16.700 | But this shows Gemini's performance against GPT for

01:05:19.820 | using a number of well known metrics. I'll say that there is

01:05:24.060 | no business on earth that has more data than Google. YouTube

01:05:29.020 | is the richest data repository, digital data repository on

01:05:32.940 | earth. The YouTube data set gives Google an extraordinary

01:05:36.860 | advantage in training. And clearly, we're seeing that the

01:05:39.820 | results are getting on imaging and video here. So you know,

01:05:42.940 | big, big, big announcement for Google, I think it's definitely

01:05:45.300 | on earth, saying that they're in the game. And it's going to be

01:05:48.700 | pretty powerful to watch pretty, I think pretty important to

01:05:50.780 | watch.

01:05:51.020 | Saksis freebird said the cojones are on the table now Sundar has

01:05:55.980 | dropped the wave us. What's your take?

01:05:58.300 | I think it's pretty clear that Google's gonna be a major player

01:06:01.180 | in AI. But the question is, are they going to be dominant in AI?

01:06:05.260 | And I think one of the points that our friend backers are

01:06:07.620 | makes that's well taken about Google's market position is that

01:06:11.260 | if you look at their position and search, which is gradually

01:06:14.380 | being replaced by AI, they're absolutely dominant in search.

01:06:18.780 | So even if they turn out to be good or great, in AI, their AI

01:06:24.340 | franchises is never going to be as dominant as their search

01:06:28.020 | franchise was in that market. And so to the extent that AI is

01:06:32.100 | replacing search, and I think we're seeing that more and more

01:06:35.780 | right, if you can get the AI just to give you the answer,

01:06:38.540 | instead of a list of 10 blue links, that's a better user

01:06:41.620 | experience. So I think as more and more searches get replaced

01:06:44.860 | with AI, it's just impossible that they're going to maintain

01:06:47.940 | that same dominant share. Moreover, it's really unclear how

01:06:52.580 | you monetize those, let's call them AI searches, where it just

01:06:56.620 | gives you the answer, because nobody wants to get three ad

01:07:00.660 | links up at the top of their answer, no one's going to click

01:07:03.300 | on those. So I think look, Google is gonna be a player in

01:07:05.940 | AI. But as AI displaces search, it's going to be a real

01:07:10.260 | challenge for them as a company, I think,

01:07:11.780 | I have the opposite position, I'll explain sex. While I do

01:07:15.380 | think you're right, their dominance won't be the same.

01:07:18.460 | Having used the Google flights, AI integration, Google shopping

01:07:24.340 | and integration that's in bar right now, which is very like

01:07:27.020 | 1.0, or even point one, I think the number of searches or the

01:07:31.300 | number of interactions, the number of queries, let's call

01:07:33.740 | them questions asked, is going to go like 10 2050 100x, I think

01:07:38.380 | they're all going to be talking to their eyes all day long. And

01:07:41.260 | where I think you might be wrong is I think actually, the clicks

01:07:43.900 | are going to fit in certain categories perfectly into the

01:07:47.220 | response. So in this birthday one, if you had a bunch of

01:07:50.740 | ideas of what you could click on to purchase, if it said, Hey,

01:07:54.420 | great idea for the birthday, did you think about these hats? Did

01:07:57.020 | you think about these pinatas? Did you think about these places

01:07:59.260 | to get cake, and those were all paid and AI inform them because

01:08:02.820 | you want to do an animal based jungle party, and it showed you

01:08:05.940 | it's going to make unbelievable ad targeting that is right into

01:08:12.260 | your planning, hey, get these hats here, get this, get this

01:08:15.060 | flight here, book this restaurant, I think it could be a

01:08:17.820 | goldmine. And I think the the clickstream and the ad network

01:08:22.140 | is going to fit perfectly into it. Same thing with those

01:08:25.660 | questions being asked, you know, hey, do you want to get a math

01:08:29.660 | tutor? Do you want to buy this book, etc. So I am going to take

01:08:33.340 | the other side of it. Chamath, where do you land? Are you

01:08:35.460 | short, long or neutral Google based on this?

01:08:38.540 | I think that there's two important things to notice about

01:08:43.940 | this. The first is who is in charge of this project. And this

01:08:48.780 | is I think, after they did that reorg, the most important person

01:08:52.260 | in all of this is Jeff Dean, who, if you look back, is the

01:08:57.860 | one of the most preeminent technical lights, frankly, of

01:09:00.340 | the internet, but within Google is just a giant, right? So

01:09:05.300 | TensorFlow, MapReduce, BigTable, Spanner, the guy is just an

01:09:09.140 | absolute animal. He's proven an ability to not just

01:09:13.380 | conceptualize big ideas, but then get them to market in a way

01:09:16.820 | that can work at scale. Right? That's the first thing. The

01:09:19.900 | second thing is that this Gemini is a collaboration between

01:09:22.820 | DeepMind for the first time and Google Research and a bunch of

01:09:25.700 | other people at Google. So I think Friedberg mentioned this

01:09:28.180 | before, the test for Google is not their technical capacity,

01:09:32.060 | but their ability to organize everybody and get them to row in

01:09:35.540 | the same direction. So I think that that's, that's really

01:09:41.100 | important. My takeaway is what I kind of put out on Twitter,

01:09:46.740 | which is that I think all of this is one more brick in the

01:09:51.700 | wall on this theme of commoditization. So we have all

01:09:57.420 | of these really interesting foundational models. If you just

01:09:59.820 | look back a little bit, Llama 2's advances have been pretty

01:10:03.420 | amazing. Out of the UAE, Abu Dhabi, the government showed

01:10:09.820 | some Falcon, which showed some really interesting promise.

01:10:13.420 | Obviously, OpenAI is doing some great work with GPT-4 and GPT-5.

01:10:18.820 | Now you see Gemini and the results that they're generating.

01:10:25.100 | There's going to be a proliferation of foundational

01:10:27.260 | models, the cost of those models will go to zero. And so why is

01:10:33.540 | why is that an important thing? Well, one, it's good for the

01:10:36.060 | ecosystem. Two, it's really good for developers. And three, it

01:10:42.060 | allows us to then figure out where the real value is going to

01:10:44.500 | be made. And I think the value is in taking these models and

01:10:47.740 | wrapping them with cheap, abstracted hardware, right? You

01:10:51.580 | can't have an economy get built in AI when you have year long

01:10:56.340 | waiting lists for H100s and A100s from NVIDIA. That's not

01:11:00.220 | possible. So that entire layer as well will get commoditized. So

01:11:04.420 | the folks that are the AWSs, the Azures and the GCPs of the world

01:11:08.100 | or these next generation entrants, who are building AI

01:11:13.060 | clouds, those folks, I think will make money and then the

01:11:16.300 | apps will make money. So I think it's a very good thing. I think

01:11:20.180 | that you don't want a lot of the lock in that NVIDIA was trying

01:11:23.300 | to create, they were trying to create essentially a walled

01:11:25.380 | garden where you have to use CUDA in order to basically

01:11:28.460 | compile to these, these miles to their chips. It's going to break

01:11:32.660 | all of that. So I'm generally quite constructive. I think that

01:11:35.860 | this is a really good step in democratizing this whole thing,

01:11:40.380 | and letting the value agreed to the ends. It's a barbell,

01:11:45.260 | infrastructure providers and app builders. That's my best guess

01:11:48.220 | of where money gets made here.

01:11:49.820 | All right, Adobe's $20 billion acquisition of Figma is stalled

01:11:54.300 | right now. UK CMA stands for competition and markets

01:11:58.820 | authority. It's effectively blocked this acquisition for a

01:12:03.540 | couple of obvious reasons. One reduces innovation to it

01:12:07.980 | eliminates competition between two top competitors and product

01:12:10.740 | design. And three removes Figma as a threat to Adobe's

01:12:14.140 | Photoshop in Illustrator products. CMI a mentioned some

01:12:19.940 | potential remedies divesting of overlapping operations in each

01:12:23.620 | market where the deal could cause less competition, or just

01:12:28.340 | prohibiting the merger entirely feels like that's what's going

01:12:32.460 | to happen. And also actually, I have to take a sharp right,

01:12:37.060 | there was a peak Zerp deal.

01:12:38.180 | I have to take issue with you said that they are doing this

01:12:41.860 | for obvious reasons. I don't think these reasons are obvious

01:12:45.780 | in the sense that I don't think I don't think they speak for

01:12:47.660 | themselves. I think they have to be defended. And I don't think

01:12:51.620 | these are good reasons.

01:12:52.660 | Oh, yeah, no, I, the I'm when I say obvious reasons, I'm not

01:12:57.020 | endorsing them. I'm just saying the standard reasons of lack of

01:13:00.700 | competition, and consolidation of competitors. So but yeah,

01:13:05.860 | expand on your point, and you think it should not be stopped

01:13:10.780 | this merger? Well, first of all, this merger was originally

01:13:15.260 | announced, I think back on September 15 of 2022. Over a

01:13:19.460 | year ago, what is that? That's almost 15 months ago. Yeah. So

01:13:25.020 | this is a ridiculous amount of time for regulators to take to

01:13:28.420 | figure out whether they're going to approve the deal. That's no

01:13:30.420 | good for anybody. I think businesses, whether you're

01:13:33.540 | Adobe, whether you're Figma have a right to have these questions

01:13:36.780 | answered much more quickly. So what are the regulators doing?

01:13:40.100 | So that's point number one. Point number two is that it's

01:13:43.900 | mostly the UK regulator, which is called the CMA or competition

01:13:47.300 | and markets authority. They're the ones who are dragging their

01:13:51.180 | feet and holding this up. So figment Adobe have to get the

01:13:55.180 | approval of three different regulatory bodies, they have to

01:13:58.820 | get approval in the United States, from I think the DOJ,

01:14:02.060 | they have to get approval from the EU with Brussels. And now

01:14:06.460 | because of thanks to Brexit, they also have to get approved

01:14:10.140 | by the UK. And to me, it's a little crazy that one country's,

01:14:15.700 | you know, competition authority, the UK, which is not in the

01:14:18.940 | grand scheme of things, that big a market can hold up this entire

01:14:22.620 | deal. You know, it should be faster, of course, right? They

01:14:25.780 | should not just start number I question whether like one

01:14:29.020 | country, the UK should be able to hold up a deal if the US and

01:14:32.860 | the EU approve it. And one thing I would say to startups is,

01:14:36.580 | if the CMA is going to start holding up deals for a bunch of

01:14:41.180 | novel reasons, meaning, you know, reasons that haven't

01:14:44.540 | previously been articulated before in an antitrust law, why

01:14:47.700 | in the world do you would you want to create nexus with the UK?

01:14:50.860 | I think this pertains to all the startup ecosystem because look,

01:14:53.780 | I remember when I was doing Yammer, we decided to open an

01:14:56.540 | office in Europe, and we decided to settle in London, and we

01:14:59.900 | created a pretty big office in London, we thought that was the

01:15:02.980 | best place for a startup to locate. If you had told me at

01:15:06.820 | the time, that that was subject our acquisition by Microsoft to

01:15:11.460 | the CMA over there, and that they would take some novel

01:15:14.740 | interpretation and hold up my deal. There's no way I would

01:15:17.980 | have wanted to open an office in the UK. So let's be clear about

01:15:21.580 | that. Now, I want to move on just quickly to the argument,

01:15:25.060 | the CMA is making and I do think it's a novel argument. They're

01:15:29.020 | not saying that Adobe and Figma are competitive today. And

01:15:33.940 | actually, I think they are operating in different markets.

01:15:36.300 | Figma is a product for web designers, and web developers.

01:15:41.860 | And the end state of a figment design is code. If you look at

01:15:46.140 | Adobe's products like Photoshop, the end state is marketing

01:15:49.700 | collateral. It's it's a marketing design product. Nobody

01:15:53.340 | uses Figma to create marketing collateral, they use Photoshop

01:15:59.260 | and nobody who's using Photoshop is using that to build websites.

01:16:04.900 | Okay, these are in practice pretty distinct markets. And I

01:16:09.260 | think the CMA has conceded that they're distinct and separate

01:16:13.420 | markets. But what the CMA is trying to say is that at some

01:16:17.260 | point in the future, if we block this deal, Figma might compete,

01:16:21.980 | might compete with Adobe, they might create a competitor to

01:16:27.140 | Photoshop. And that is a bogus rationale for blocking a deal.

01:16:31.260 | Because first of all, I think we all know that Figma has no

01:16:34.540 | interest in competing with Photoshop, they're not going to

01:16:37.500 | compete, they're much more interested in AI, they're much

01:16:40.700 | more interested in doing things like prompt to design to code,

01:16:44.060 | they're not interested in building, you know, a Photoshop

01:16:47.780 | competitor. And there's no reason to believe that they

01:16:50.100 | would do that. Moreover, that is not an objective standard.

01:16:53.340 | Think about it. If you can block a deal on the grounds that

01:16:56.660 | these two companies don't compete today, but might one day

01:16:59.940 | compete in the future, it gives the regulators a veto over any

01:17:03.660 | deal. And that is not the way antitrust is supposed to work.

01:17:06.420 | The way that antitrust is historically worked is you

01:17:09.460 | define what market these companies are in, and you add

01:17:13.740 | their market share together, if they're both in the same market

01:17:17.060 | to see if it would create an undue monopoly or oligopoly

01:17:22.020 | something some dynamic like that it was a market share test,

01:17:25.260 | which is an objective test. This is not an objective test. This

01:17:29.340 | is a regular saying, Hmm, you know, we know you don't compete

01:17:31.900 | today, but like one day in the future, you might, that is

01:17:34.980 | bogus. So if you allow the CMA to block this deal on that

01:17:38.380 | ground, they can block any deal for any reason. And then on top

01:17:41.420 | of it, they've taken 15 months to come down with this opinion.

01:17:45.180 | I think this is gonna have a very chilling effect on M&A

01:17:48.460 | activity for for not a good reason, for not a good reason.

01:17:52.260 | And that is the last thing the startup ecosystem needs right

01:17:54.620 | now.

01:17:55.140 | I'm going to agree about the time, I'm going to agree that we

01:18:02.300 | should let a little more M&A happen. I'll disagree. Adobe has

01:18:05.660 | a product XD competes directly with Figma. And then I've gotten

01:18:09.060 | multiple designers who have included me in Figma designs for

01:18:13.620 | things that are other than interfaces. They're using it for

01:18:16.500 | decks, they're using it for marketing collateral. And if you

01:18:19.980 | go look at figmas templates offering, they are all

01:18:23.540 | Photoshop, Illustrator key functions. So in the market,

01:18:26.900 | even though the products were not designed as competitors,

01:18:29.220 | designers are starting with Figma for many design projects

01:18:32.460 | in my direct experience and by looking at the templates. So

01:18:35.260 | I'll disagree on that third point.

01:18:36.460 | Well, hold on, I gotta do a fact check on one thing. You're right

01:18:40.420 | that Adobe had a competitive product to Figma called XD, they

01:18:43.540 | shut it down. They shut it down. Yeah, it was a failure. So they

01:18:48.220 | are out of the market for a web design tool. They're out. So

01:18:52.900 | that argument no longer exists. And I don't know if they shut it

01:18:55.540 | down because of this deal or because it was failing anyway.

01:18:58.060 | But they solve that problem. Now with respect to these use cases

01:19:02.780 | where Okay, yeah, you're talking anecdotally, Jason about, you've

01:19:06.460 | seen some web designer, no, I'm talking, go look at the

01:19:11.300 | templates. I just put the link in there. It's still anecdotal.

01:19:13.820 | It's not based on a market share test. If you want to make this

01:19:16.300 | argument that Figma and Photoshop are competitive

01:19:20.380 | products, break it down in terms of market share. That's my

01:19:23.340 | point, add up figmas market share in the market for

01:19:26.300 | marketing collateral, and see if that would create undue

01:19:29.180 | concentration. Fair enough. My objection is that they're not

01:19:32.300 | basing this decision. If it can even be called a decision, I

01:19:36.260 | think it's more like just concerns and dragging their

01:19:38.900 | feet. But they are basing their concerns on something that's

01:19:43.620 | unquantifiable. And I do think that anti stress decisions

01:19:47.300 | should be quantifiable. The concerning thing here is that

01:19:51.460 | this is on the heels of Activision and Microsoft, which

01:19:54.580 | was equally protracted and drawn out. I don't I think it's bad

01:19:58.020 | for capital markets, when deals that are offered up just linger

01:20:03.260 | for 1518 months. I don't think that that's healthy. It causes a

01:20:08.740 | lot of pause amongst investors. And it probably freezes both

01:20:13.820 | Adobe and Figma from investing the way that they would if they

01:20:18.580 | knew that this thing was voted up or down in three months or

01:20:20.900 | whatever. So I think that I totally agree with you that

01:20:24.780 | there needs to be an SLA around these things. And you can't take

01:20:28.900 | this much time. I breezed through the CMA report. My gosh,

01:20:34.980 | it's 400 pages, which is like, that's insane. A 400 page

01:20:39.220 | document is like it's a little outlandish. But I wanted to call

01:20:42.380 | out two parts of that document. One is in support, sacks of what

01:20:47.100 | you said, Nick, you can just throw it up here. What they said

01:20:50.100 | was that in assessing the competitive effects of the

01:20:52.460 | merger, we must decide whether there is an expectation, i.e.

01:20:56.100 | more than 50% chance that the merger will result in diminished

01:20:59.460 | competition. Now, that's like a little nuts, because David, as

01:21:03.460 | you said, it's like, we're going to take an expected probability

01:21:06.420 | and a guess into the future about what we think will happen.

01:21:09.740 | And I think that that's not a fair way of doing business. I

01:21:13.900 | think that you have to look at what will happen when this

01:21:16.220 | happens. And judge on its face. You can't say, well, also, by

01:21:20.500 | the way, I expect that you guys will be intelligent and really

01:21:23.620 | execute. So that'll just increase the odds. That's not

01:21:25.980 | right. That's, that's what business is. So if I had to

01:21:29.620 | steel man, the pro figma side, I would say that that's

01:21:31.780 | unreasonable. The second side on the pro figma side is there's

01:21:34.940 | this long point here, I think it's like number 27 or 28 in

01:21:38.460 | this document. And this is what's crazy. It's it basically

01:21:41.580 | says, like, hey, we went through document discovery, we found

01:21:45.860 | some emails that basically said, by Adobe, that said, we did

01:21:50.700 | market analyses, we didn't think we were doing very well. And I

01:21:55.020 | think it's important to note for the CMA that this is what 100

01:21:59.140 | years of MBA classes have taught people to do. I mean, you teach

01:22:03.060 | executives that go work at companies to do what's called a

01:22:07.220 | SWOT analysis to figure out what are the risks and opportunities

01:22:10.500 | for your business and then to go and invest to fix them. That's

01:22:14.980 | capitalism. And that's business theory. And we've taught

01:22:18.540 | executives at every single company to do this. That can't

01:22:22.340 | be illegal. Meaning to use your brain inside of a business to

01:22:25.740 | realize that what you did isn't working. So that would that's

01:22:28.740 | also I would say, sacks in support of what you're saying,

01:22:31.340 | which is, it's taking too long. It's speculative. And you're

01:22:36.060 | punishing people for actually being good business people. And

01:22:38.220 | I don't think that makes sense. What's the number six months,

01:22:40.860 | just to add to that, you know, again, like an important overlay

01:22:45.540 | here is that the CMA is the UK regulator, and they're the

01:22:50.820 | smallest market, the GDP of the UK is 3 trillion, the GDP of the

01:22:55.020 | US 16 trillion, the GDP of the US is, I forget, it's in the

01:22:59.100 | 2025 trillion range. So you've got the toughest regulator, who

01:23:04.300 | is coming up with no novel legal theory,

01:23:06.340 | I think it's worth exploring that these regulators, I think,

01:23:10.620 | are working in conjunction. And those fingerprints looked a

01:23:15.500 | little bit more obvious. I'm not playing conspiracy theorists,

01:23:18.020 | but it looks like the EU, the FTC, and the CMA did work

01:23:24.260 | together. I don't know how officially or not in Microsoft

01:23:27.540 | Activision, it looked relatively coordinated. I suspect that it

01:23:31.860 | stands to reason that they're in touch. And they talk about

01:23:34.180 | these deals and their combined perspectives. I don't know how

01:23:37.340 | else you just generate a 400 page report with this kind of

01:23:39.780 | specificity, unless there's some amount of collaboration and,

01:23:43.020 | and sharing, which, by the way, I think does make sense. I think

01:23:45.780 | it does make sense to coordinate your point of view. But I think

01:23:49.900 | I agree with you, David, that

01:23:51.220 | we don't know that for sure. I mean, like, all I know is that

01:23:55.020 | in the press reports, it's been about the CMA, it's possible

01:23:58.380 | that the EU or I don't think us will do this, because that would

01:24:01.980 | just be like inventing a wholly new antitrust law, right? Where

01:24:04.980 | I understand, I'm just saying that my point of view is that as

01:24:09.060 | a business owner, my response to this would be to gatekeep the

01:24:12.700 | app in these geographies, so that I don't create a nexus if I

01:24:16.620 | ever get bought. Bingo. That's my point. That's exactly my

01:24:18.940 | point is that the smallest market is creating the most

01:24:22.140 | problems for this merger. So assuming they're kind of on

01:24:26.780 | their own in this, and the EU doesn't just copy it, if you if

01:24:29.700 | you're right, if they copy it, then figment Adobe have a bigger

01:24:32.420 | problem. But I think that's what's going to happen. Right?

01:24:35.420 | Then maybe the EU does copy. But right now, the CMA is way ahead

01:24:39.220 | of any other regulator in terms of a novel theory. So So what

01:24:42.740 | I'm saying is, if you're a company, why would you subject

01:24:44.820 | yourself to green when it's so easy to avoid their market? I

01:24:47.500 | think I think it fundamentally hurts UK productivity over the

01:24:51.260 | long run, because I don't see how companies if they can't a get a

01:24:55.300 | reasonable SLA for a response, and then be get a reasonable

01:25:00.340 | document, that's not going to require $50 million of, of

01:25:04.300 | lawyers and consultants to read. To do business in a country

01:25:08.020 | just goes down the incentives to do business. So now if you

01:25:11.660 | steelman, the other side, I actually think it's very

01:25:16.000 | difficult to steel man, why this is bad for competition. I think

01:25:19.420 | the only steel man is more from the economic shareholder

01:25:22.180 | perspective of Adobe, which is good, they have paid a different

01:25:24.300 | price. What does that because I think it's a mixture of cash and

01:25:27.300 | stock. So that's changed because Adobe's rallied a lot. And is

01:25:30.780 | that price worth it? But that's, again, not a reason to use a

01:25:34.580 | regulator to run a deal to the ground, right? Adobe should just

01:25:40.060 | man up and talk to Dylan and say, here's the new price.

01:25:42.700 | Otherwise, here's a billion dollars.

01:25:44.100 | I don't think Adobe is driving in that way. I mean, by all

01:25:47.260 | accounts, Sigma as a business is still doing very well, even if

01:25:50.060 | they paid too high a price 15 months ago, they've grown,

01:25:53.660 | they've partially grown into that valuation already. I don't

01:25:56.420 | think Adobe is driving this. I really think that the CMA is

01:25:59.540 | driving this. I think there's a regulator who wants to pioneer a

01:26:02.460 | novel legal theory. And in a weird way, I mean, it's not. Have

01:26:06.420 | you ever seen like a pack of dogs where you've got like a

01:26:08.780 | Great Dane and a Doberman and then a Chihuahua and the Chihuahua

01:26:12.740 | is trying to leave the pack. The CMA is like the dog and it's

01:26:17.140 | like barking the loudest and trying to shepherd all the other

01:26:19.780 | dogs. You got a yappy little Chihuahua here. The issue that

01:26:24.940 | you bring up is a great day and then the EU is a is a is a big

01:26:28.980 | dog. And yeah, but if the EU and the United States follow suit,

01:26:34.620 | it will, it's just death by 1000 cuts, meaning it will require a

01:26:38.340 | Brad Smith like character inside of this company, who can go and

01:26:44.060 | work with regulators to really get it done. And this is the

01:26:47.660 | brilliance of of him at Microsoft is it when you look at

01:26:52.900 | the track record of his ability post this consent decree to get

01:26:57.220 | deals done inside of Microsoft. It's truly incredible. There is

01:27:01.420 | nothing that they've really tried to buy, whether it's

01:27:03.900 | nuance or whether it's Mojang, or whether it's GitHub.

01:27:09.260 | Activision, they've linked in, they've got around the table,

01:27:15.060 | do we really want to create an economic system where whether a

01:27:18.740 | deal gets through is completely arbitrary, because there's no

01:27:21.220 | longer a quantitative test, the regulators can just pause it,

01:27:23.980 | that at some point in the future, these companies may be

01:27:26.020 | competitive. No, the and it takes and furthermore, in order

01:27:29.220 | to get past the regulators who have a completely subjective

01:27:33.660 | standard, you need like a political genius like a Brad

01:27:36.620 | Smith. I mean, that is like the definition of crony capitalism,

01:27:41.100 | right is that you get your deal done if you got a Brad Smith,

01:27:44.540 | and you don't get it done. If you're a startup like Figma,

01:27:47.300 | that's not the system we want to be in.

01:27:49.020 | Absolutely not. Three important things. One future competition

01:27:53.380 | is a stupid test. Number two, just put six months on it. It's

01:27:57.220 | not even future. It's their assessment of the probability of

01:28:00.380 | future competition, which is just dumb. It's this is pre cogs in

01:28:04.540 | minority report,

01:28:05.500 | Figma could sign an affidavit today, saying that we're not

01:28:10.860 | making a list. We're not building it. Yeah, it's not. It's

01:28:13.500 | not our roadmap. It's not even an affidavit. It's you could go

01:28:16.260 | through, you could conduct discovery on the question of

01:28:20.740 | whether Figma has ever even discussed internally, whether

01:28:24.020 | they should compete with Photoshop, right? Because you

01:28:26.140 | don't just launch a Photoshop competitor out of the blue, you

01:28:28.780 | probably discuss it for a while. So they could conduct discovery

01:28:32.100 | on that question. I guarantee you Figma does not have robust

01:28:36.140 | conversations in discovery about competing with Photoshop. That's

01:28:39.340 | not where their interest is.

01:28:41.460 | And then also, they should be just have a six, they should

01:28:44.260 | have a six month clock to do this. And then if I'm Adobe and

01:28:48.500 | Figma, I would say, I would pull a Zuck when they came out Zuck

01:28:52.620 | and said, you have to pay for news in Australia, you have to

01:28:54.980 | pay for news in Canada. Remember these two government

01:28:58.180 | overreaches, that you can even put a link to a news story.

01:29:01.260 | He's like, okay, fine, we're just going to not include links

01:29:03.300 | to the New York Times and feeds that's not allowed. They should

01:29:06.060 | just say anybody who's in the UK, you can no longer we're

01:29:10.260 | going to look at your IP addresses, we're going to look

01:29:11.700 | at your address, you can't buy Figma, you can't buy Adobe,

01:29:14.380 | we're going through with this. So if you don't want consumers

01:29:16.980 | to have this product, you don't have to have it. And then people

01:29:19.140 | have to get a VPN to use these products, like I would call

01:29:21.620 | their bluff on it. Kind of overreaching. I agree. Okay.

01:29:25.420 | Freeberg, any last thoughts as we wrap up?

01:29:28.260 | Jake out in order to have a healthy startup ecosystem, we

01:29:31.060 | need exits. That's the big picture. Yes. When you put this

01:29:35.220 | kind of chilling effect on M&A, because think about it. If

01:29:38.460 | you're either an acquirer, or your target, you're thinking

01:29:41.060 | about doing a deal, and you know, that it will take you at

01:29:44.700 | least or it could take you 15 months to get it's not worth it.

01:29:48.540 | You children and the standard for whether it gets approved is

01:29:51.140 | completely arbitrary. That's going to have a dampening or

01:29:54.260 | chilling effect on M&A activity, which means fewer good exits for

01:29:57.500 | the ecosystem, which means that less risk capital will want to

01:30:00.900 | go into the ecosystem to begin with.

01:30:03.220 | And a fair thing. I'll run this up the flagpole. So you think

01:30:05.780 | sex? Why don't they say if they're really concerned about

01:30:08.160 | the top 10 companies, hey, the top 10 companies, the trillion

01:30:11.280 | dollar crowd, right, the Microsoft, the Google, etc,

01:30:14.700 | Apple, they have a different standard than the mid market. So

01:30:18.120 | if you really were concerned about consolidation in the in

01:30:20.740 | the top 10 companies, just say they're not allowed to buy these

01:30:24.340 | companies without going through the scrutiny. But anybody under

01:30:26.860 | 250 billion dollars, they can merge, they can buy each other,

01:30:30.900 | they can do whatever they want. They're exempt from this kind of

01:30:33.740 | review and just let the free market decide because then that

01:30:36.060 | would build up the mid market, right sex,

01:30:37.720 | I'm concerned about the power of big tech companies. Okay, but I

01:30:42.120 | would deal with that by targeting anti competitive

01:30:44.940 | tactics, interoperability. Yeah, require interoperability, don't

01:30:48.800 | let them bundle things like that. Don't invent some wholly

01:30:52.980 | new arbitrary subjective tests for whether a company can be

01:30:56.400 | acquired. We have a good standard around that, which has

01:30:59.520 | to do with market share.

01:31:00.520 | Hey, shout out Lena Khan come on the pod anytime. All right,

01:31:03.280 | everybody. This has been an and sincerely Lena Khan come on the

01:31:07.520 | pod. Let's talk about this has been another amazing episode of

01:31:09.920 | the all in podcast for the dictator. Chama polyhypertia. The

01:31:13.960 | rain man, David Sachs, and El Capitan, the pilot, Sultan of

01:31:19.540 | science and CEO, David Freeberg. I am the world's greatest

01:31:23.520 | moderator. Love you besties. We'll see you next time.

01:31:26.680 | Back at you.

01:31:30.240 | Let your winners ride.

01:31:31.520 | Rain Man David Sachs.

01:31:34.360 | We open source it to the fans and they've just gone crazy.

01:31:40.760 | Love you.

01:31:41.760 | Besties are

01:31:50.960 | dog taking a notice your driveway.

01:31:58.800 | My avatar should all just get a room and just have one big huge

01:32:03.120 | orgy because they're all like this like sexual tension that

01:32:06.280 | they just need to release.

01:32:07.200 | You're about to be

01:32:10.320 | waiting to get

01:32:15.320 | our

01:32:15.560 | going all in. All in.

01:32:25.280 | [Music]

E156: Ivy League antisemitism, macro, SaaS recovery, Gemini, Figma deal delay + big Friedberg update

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