Mag 7 sell-off, Wiz rejects Google, UBI, Kamala in, China's nuclear buildout, Sacks responds to PG

00:00:00.000 | Oh no, gosh, I'm having some technical difficulties, Freeberg.

00:00:03.200 | There's something happening.

00:00:04.880 | Oh, you got a bit?

00:00:05.760 | Oh, something's breaking in.

00:00:07.520 | What's happening?

00:00:08.320 | Oh no, my camera, it's not working.

00:00:10.720 | But I sense something is happening, guys.

00:00:12.560 | It's like a transformation I'm going through.

00:00:15.360 | You're not going to believe it.

00:00:16.320 | Yes, it is I, Nostrakalus, I am here.

00:00:19.680 | I am here, Nostrakalus has arrived.

00:00:22.560 | I have predicted the hot swap, Sax.

00:00:26.960 | Can I get my flowers now from you, Sax?

00:00:30.000 | You need to bring--

00:00:30.560 | Yeah, I absolutely give you credit for that.

00:00:32.800 | You also predicted a speedrun primary, which is the opposite of what happened.

00:00:36.000 | So one out of two is not bad, though.

00:00:38.960 | Nostrakalus did not account for the Democratic Party being run by the Deep State.

00:00:45.840 | I'm having a vision.

00:00:48.480 | Producer Nick, there's a vision for you coming in to view.

00:00:56.640 | Yes, your uncle has been bought out of the All In podcast that's going full maga.

00:01:02.240 | And he got the $25 million buyout deal.

00:01:06.480 | And he gave you 20%.

00:01:08.240 | We're leaving.

00:01:08.880 | We're going to start a new podcast.

00:01:10.960 | And Jared Kushner is the new moderator here.

00:01:13.920 | Oh, no, wait, it's JD--

00:01:15.760 | No, it's Alex Jones.

00:01:17.440 | Starting next week, Alex Jones, the new host.

00:01:20.720 | Oh, wait, I'm going away.

00:01:22.640 | Nostrakalus is being pulled away.

00:01:25.680 | All right, let's get started here.

00:01:44.800 | We've got a full docket.

00:01:46.480 | We've got Civil Wars.

00:01:48.000 | Everything is going down in All In Land.

00:01:51.840 | It is episode 189.

00:01:53.920 | You're not done with us yet, folks.

00:01:55.520 | The world's number one podcast is still publishing.

00:01:59.120 | The world is still spinning.

00:02:00.880 | Hey, did you announce that you've moved to Texas?

00:02:03.680 | I did, I did.

00:02:04.400 | I did a little tweet.

00:02:05.360 | We moved to Austin a little earlier this year.

00:02:09.040 | We have a horse ranch.

00:02:10.080 | And we've always wanted to move to Austin.

00:02:12.960 | We looked during the pandemic.

00:02:14.080 | Thanks for asking, Chamath.

00:02:15.360 | And we wanted to have a ranch and horses and live a more homesteading lifestyle.

00:02:20.400 | And obviously, a lot of our friends are in Austin.

00:02:23.920 | So I'll still be spending a lot of time in the Valley in New York, like I always do in Miami.

00:02:27.600 | But the home base and the girls are going to school in Austin.

00:02:33.440 | How is it going so far?

00:02:35.040 | It's super hot.

00:02:35.760 | No, isn't it?

00:02:36.560 | Summers are hot, but most people de-camp.

00:02:39.600 | So we'll de-camp for Tahoe or Park City or something during the summer months and the

00:02:44.400 | winter months to go skiing and get a little lake time or whatever.

00:02:47.520 | And yeah, we're really, really excited.

00:02:50.720 | We found an incredible horse farm, and we're going to raise animals and horses and just

00:02:55.760 | enjoy these last years with the girls.

00:02:57.440 | While some big announcements coming in terms of my accelerator and my investing in startups

00:03:04.960 | in Austin.

00:03:05.760 | So I'll save those announcements for maybe the fourth quarter.

00:03:08.720 | Some big announcements will happen.

00:03:10.880 | And yeah, I'm just super excited.

00:03:13.200 | Obviously, I'm going to miss the weekly poker game, but I will be back on the regular.

00:03:18.480 | And we'll just do a double session, play Friday, Saturdays.

00:03:21.200 | We'll do you got to get for two days in a row and just do a full Friday session.

00:03:25.680 | Everybody take my Fridays.

00:03:27.120 | I'm sad to see you go.

00:03:28.240 | The one thing I'm sad about is like missing the Thursday game, but I'll be back regular.

00:03:33.680 | Don't forget Science Corner today.

00:03:35.120 | We got a great Science Corner lined up.

00:03:36.800 | Absolutely.

00:03:37.360 | I'm looking forward to it.

00:03:38.880 | Sax is in Texas all week about it.

00:03:40.720 | He's like, I can't wait for Science Corner.

00:03:42.320 | I'm thrilled.

00:03:42.880 | He was shaking nervously.

00:03:44.080 | He's ready.

00:03:47.600 | Sax does not look amused.

00:03:50.400 | All right, let's get started.

00:03:51.920 | Wiz has declined Google's $23 billion offer, and it intends to IPO.

00:03:56.640 | Some big news there.

00:03:57.840 | Last week, we talked about Google offering to acquire this cloud security startup for

00:04:02.160 | $23 billion.

00:04:02.960 | CNBC reported Wiz declined Google's offer.

00:04:05.360 | Wow.

00:04:06.640 | That's big time because Wiz was valued at $12 billion in its most recent funding round.

00:04:11.440 | They've got about $500 million in ARR.

00:04:14.000 | So this $23 billion is a massive, massive 50 times current revenue, 23 or so times

00:04:21.520 | forward-looking revenue.

00:04:24.240 | They think they'll hit a billion in ARR.

00:04:26.240 | This is a company that was founded in 2020.

00:04:28.000 | And just so if you don't know what they do, they help people secure their data in clouds

00:04:32.880 | like AWS, Azure, Google Cloud, all that good stuff.

00:04:35.520 | But high growth SaaS businesses are trading at a 10x forward revenue multiple.

00:04:41.040 | There's the chart.

00:04:42.240 | This is obviously an absurd premium and two potential reasons that I can think of, and

00:04:48.960 | I'm curious your positions, gentlemen, of why they would do this.

00:04:53.680 | I guess, Chamath, there's two reasons.

00:04:56.320 | One, they think they can grow this company at a high percentage, maybe fill in that premium

00:04:59.840 | Google was willing to pay.

00:05:01.280 | Or maybe they're scared that they can't get this deal through regulators.

00:05:07.280 | What's your take here?

00:05:08.320 | And then we'll go talk about the wider cloud and Google Cloud and AWS in a moment.

00:05:13.520 | What's your initial take here of why they would do this, Chamath?

00:05:16.640 | I actually wonder whether this deal would have had more probability of happening had

00:05:24.560 | the whole AT&T snowflake leak not happened.

00:05:29.360 | Because I think that when you have moments like this, there's a non-trivial possibility

00:05:37.840 | that it supercharges sales even more.

00:05:41.840 | I think the reality is that if you're a hyperscaler, so if you're Amazon or Google or Microsoft,

00:05:46.800 | your business is pretty fragile and brittle if the services you provide or the services

00:05:55.360 | that third parties like Snowflake provide through you are not reliable.

00:05:59.520 | And so I've never heard of a business that has generated so much ARR so quickly, I mean,

00:06:04.160 | from zero to half a billion dollars in four or five years.

00:06:08.160 | I mean, how do you even build the product surface area quick enough to capture that

00:06:12.800 | much revenue?

00:06:13.920 | I think it just goes to show you how bad security is in the cloud and how needed it is.

00:06:19.440 | So it doesn't surprise me that Google wouldn't buy something like this.

00:06:24.880 | I think Amazon and Microsoft would probably want something like it as well.

00:06:28.880 | I suspect that if you had to guess why they said no is because they thought that they

00:06:33.680 | could grow revenue much faster because of recent events, as well as their own just natural

00:06:40.160 | momentum.

00:06:40.880 | And I think that if this thing had not happened, I wonder whether they wouldn't have just sold.

00:06:46.160 | All right.

00:06:46.480 | Sax, I want to get your take on this after showing you a couple of charts here.

00:06:49.680 | Google's cloud revenue growth has been absolutely stunning.

00:06:55.360 | Here is a chart.

00:06:57.440 | They're going to hit, gosh, in the first half, they did almost 20 billion.

00:07:01.600 | So they're on a run rate of $40 billion this year.

00:07:04.960 | Last year, they did 33.

00:07:06.640 | Back in 2017, they only did four.

00:07:08.960 | And if you compare this to Amazon's AWS, again, these are cloud services.

00:07:12.480 | People can buy, compute in the cloud.

00:07:14.480 | AWS, if you look at those first seven years, the crack all in research team put these side

00:07:21.280 | by side.

00:07:21.840 | Google is tracking almost identical in revenue to AWS's.

00:07:28.240 | Interestingly, Meta and Apple do not have a competitor here.

00:07:31.360 | You said on this podcast, Chamath, I think last year, that would be a pretty bold move

00:07:36.080 | by Apple to have a cloud computing platform since they have all the app developers.

00:07:40.320 | Sax, what do you think of this just tremendous run by Google

00:07:44.960 | cloud, also known as GCP in the industry?

00:07:48.480 | Well, all the cloud service providers are doing extremely well.

00:07:51.680 | I mean, cloud is still the future of software and the cloud service providers are still

00:07:55.840 | growing really strongly.

00:07:57.520 | On Wiz, I think the most likely explanation is that they just want to keep building this

00:08:02.160 | as a standalone company.

00:08:03.200 | I think they're probably also worried that they can't get the deal through.

00:08:05.840 | The multiples that we have right now are not that insane.

00:08:08.640 | I mean, I think the long term median software multiple is around a seven.

00:08:13.200 | So, you know, you see here the mid-growth median 7.7.

00:08:16.720 | We're about tracking at the historical pre-COVID mean.

00:08:22.400 | And we had that really frothy, bubbly period in 2020 and 2021, and that's clearly over.

00:08:29.760 | Now, in terms of how our friends at Altimeter break this down, I think that high growth

00:08:36.640 | means a 30% or greater growth rate.

00:08:39.600 | And then I think the mid-tier is more like, what is it, like 10 or 15% to 30%.

00:08:45.280 | And then the low growth is like, you know, under 10.

00:08:50.000 | Yeah.

00:08:51.360 | So my point is, if Wiz is growing at--

00:08:54.640 | 100%.

00:08:55.140 | 100%.

00:08:56.720 | I mean, I don't know if it's still growing at 100%, but I mean, I guess they're projecting--

00:09:00.640 | Even 50%, yeah, would be.

00:09:02.000 | Yeah, they're projecting a billion in ARR next year up from, what is it, roughly 500.

00:09:08.160 | Like, that offer may not be that crazy.

00:09:12.880 | Again, you know, you're getting 10 times at a 30% average growth rate.

00:09:16.800 | So, you know, let's say they get to a billion in ARR next year, and then they're forecasting,

00:09:21.440 | you know, whatever it is the year after.

00:09:24.320 | You know, the 23 may be reasonable.

00:09:27.200 | So I can see why these guys would just want to go for it if they think they're building

00:09:30.800 | a big standalone company.

00:09:32.080 | Freeberg, let's talk a little, since you were a Googler at some point, this GCP product,

00:09:38.640 | maybe you could tell us a little bit about, and I know you know some of the people running it,

00:09:44.000 | how meaningful this is becoming to Google, or how much of a priority it is.

00:09:48.480 | YouTube, obviously, Android priority is there at the company.

00:09:51.200 | Then you have, like, the next year down, Nest, Waymo, you know, some of those other projects.

00:09:56.000 | But how important is GCP right now to Google?

00:09:58.160 | Well, GCP in the last quarter did $10.3 billion in revenue, which is up from $8 billion in

00:10:06.240 | revenue the year before, in the same quarter the year before.

00:10:08.880 | And importantly, in this past quarter, they're running at a $1.2 billion operating profit.

00:10:13.760 | It out of GCP.

00:10:14.800 | So, you know, if you kind of think about what cloud margin should be over time, and kind

00:10:20.160 | of call it 20 to 30% margin, this cloud business could be generating $20 to $30 billion a year

00:10:26.160 | of free cash flow.

00:10:26.960 | Now, in the last year, if you kind of look at, or even if you look at the last quarter

00:10:33.280 | annualized, Google is generating currently about $60 billion a year in free cash flow

00:10:38.240 | as an overall organization, Alphabet is.

00:10:41.440 | And they have over $100 billion in cash.

00:10:43.200 | So, you know, what can I do to accelerate this cloud outcome, given the risks, the challenges,

00:10:50.880 | the slowdown with respect to the core consumer business, cloud and AI-based tools really

00:10:57.280 | is where it's at.

00:10:58.160 | And so Google's asking this important strategic question, I would imagine, what can we do

00:11:04.240 | to accelerate outcomes in the cloud?

00:11:05.920 | And what can we do that is going to be big enough to matter?

00:11:11.120 | And what can we do that is going to pass antitrust muster?

00:11:14.960 | So we can actually get it through antitrust authorities.

00:11:17.600 | So cloud security kind of comes top of mind.

00:11:19.920 | It's a fast growing segment as evidenced by the results with with Wiz.

00:11:24.080 | And it's a an opportunity for Google to cross sell and to secure more enterprise customers

00:11:29.920 | and theoretically cross sell more enterprise revenue by getting folks on a platform that

00:11:36.240 | Google could now offer.

00:11:38.080 | I would imagine that what Saks is saying is probably right.

00:11:40.720 | I have absolutely no sense of what these individuals and board members at Wiz are thinking.

00:11:44.960 | But I think what Saks is saying is right.

00:11:46.480 | This is an incredibly fast growing business.

00:11:48.320 | Peter Thiel made the comment once, which I think is totally right.

00:11:51.840 | Either the buyer pays way too much, or the seller sells way too early.

00:11:57.600 | When you have a fast growing business like this, it's really an important question to

00:12:02.240 | kind of acknowledge that if Wiz continues to grow at this rate, it's conceivable they

00:12:06.560 | could be in the range of a Palo Alto Networks $100 billion market cap in a couple of years.

00:12:10.640 | You know, given given this momentum, and if you if you progress it forward.

00:12:15.600 | So if I was them, I would ask that question.

00:12:17.280 | Could we reach 100 billion if we feel reasonable, reasonably confident?

00:12:20.480 | This may be a risk worth taking.

00:12:23.040 | And what's the downside, right?

00:12:24.080 | The downside is they go public next year anyway.

00:12:26.320 | And maybe they're only valued at 15 billion or 20 billion.

00:12:28.960 | There's not a lot of downside from this offer, and certainly seems to be quite a bit of upside.

00:12:33.200 | But I think for cloud, the thing to watch is what they're going to do next.

00:12:36.960 | Google wants to accelerate beyond AWS.

00:12:39.120 | They want to become the leader.

00:12:40.480 | And they're going to look for other sizable transactions that will pass antitrust muster.

00:12:44.320 | And so I think you could see them perhaps looking at some public M&A in the same space.

00:12:49.920 | And I wouldn't be surprised to see them start to get active in that sense.

00:12:53.200 | YouTube and GCP are the are the two money printing machines inside the organization

00:12:57.440 | that have actually paid off.

00:12:58.800 | Android's paid off in terms of dumping more search from the default search buttons or boxes.

00:13:05.040 | But I guess to steel man the other side, if you're on the board and you want your cash,

00:13:10.000 | you get 100% of it.

00:13:13.280 | You take no risk.

00:13:14.240 | And what if Google decides they're going to make this product free and bundle it,

00:13:18.560 | as we saw Microsoft do in a number of cases?

00:13:20.720 | And they just Microsoft Teams this or Internet Explorer it.

00:13:23.680 | I guess that would be the risk is if Google feels some vendetta here and puts this product

00:13:28.720 | out for free.

00:13:29.360 | As you alluded to Chamath, it was a big week for cyber security CrowdStrike had a really

00:13:36.000 | rough week last week, when they knocked out eight and a half million Windows machines.

00:13:40.640 | Just to briefly explain what happened here.

00:13:43.440 | Obviously, Wiz is cyber security.

00:13:46.160 | And so it's CrowdStrike.

00:13:47.120 | CrowdStrike instead of working on data sets in the cloud, they work on securing your laptop,

00:13:52.320 | your desktop, your servers, all that kind of stuff for threats.

00:13:55.680 | And they did an update.

00:13:57.040 | And when they did their update, a sensor configuration update, as they called it,

00:14:01.040 | to Windows machines, they basically brick them.

00:14:03.840 | And this wasn't a cyber attack.

00:14:06.400 | They're a cyber security company.

00:14:07.680 | They weren't attacked.

00:14:08.480 | They updated it, and it crashed all these machines.

00:14:11.440 | And these machines all needed to have a hard reset by IT.

00:14:14.880 | It wasn't something that could just be field swapped.

00:14:16.960 | Apparently, people had to go back to their offices.

00:14:19.520 | In some cases, Delta was hit hardest.

00:14:21.360 | They canceled over 6,000 flights.

00:14:24.080 | And there's a Department of Transportation investigation going on now.

00:14:27.520 | Shares are down 25% since Friday.

00:14:29.760 | So that represents $24 billion in market cap.

00:14:34.480 | CrowdStrike CEO has been clowned for his apology and explanation.

00:14:40.000 | And the good news, though, is they sent everybody an Uber Eats gift card.

00:14:43.040 | So I'm super happy about that.

00:14:45.280 | Chamath Sachs, looking at this and dovetailing with the last story.

00:14:49.600 | This is going to be an ongoing story.

00:14:53.360 | And one of the big trends in our industry.

00:14:55.200 | Yeah.

00:14:55.700 | Major outages like this.

00:14:58.800 | I think the reality is that that code is still really brittle.

00:15:02.320 | And there's gaping holes everywhere.

00:15:04.640 | And I suspect that the reason why foreign adversaries don't hack us is because we could

00:15:10.480 | hack them back.

00:15:11.360 | And so I think it's almost like a mutually assured destruction is the only reason why

00:15:15.840 | these things stay up every day.

00:15:17.200 | So at some point, we're going to write better code.

00:15:20.560 | Maybe these AI agents will do it and there won't be like memory leaks and all this other

00:15:25.200 | random stuff.

00:15:25.760 | But in the meantime, I think you just have to assume that everybody will get access to

00:15:32.640 | all of your information and that eventually everything is hacked and everything is leaked.

00:15:37.200 | Yeah.

00:15:37.520 | And act accordingly.

00:15:38.480 | And act accordingly.

00:15:39.440 | Yeah.

00:15:40.320 | Assume every the worst conversation you ever had on social media or on DMs is going to

00:15:45.840 | come out.

00:15:46.320 | All right.

00:15:47.760 | I think we've kind of finished this.

00:15:49.360 | Anybody have any thoughts on this CrowdStrike thing?

00:15:51.520 | It seems like it's over now.

00:15:52.640 | I don't have a lot to say about them except actually this is that that company has some

00:15:56.960 | murky connections to the deep state.

00:15:58.880 | Oh, right.

00:15:59.840 | And yeah.

00:16:00.960 | Well, apparently they're fingerprints were all over Hillary's bleach server.

00:16:06.000 | Then there's been other reports, which I don't know exactly what to make of.

00:16:11.120 | I can say this, that in the wake of this, Elon announced that he was removing CrowdStrike

00:16:15.120 | from any of his company's servers.

00:16:18.240 | Similarly, I had my IT department check and make sure that we didn't have it running anywhere

00:16:21.920 | and we don't.

00:16:22.400 | I'm just going to be frank.

00:16:24.080 | I don't trust this company.

00:16:25.120 | All right.

00:16:26.800 | There you have it.

00:16:27.760 | Deep state.

00:16:28.480 | Tinfoil hat.

00:16:30.640 | Deep state.

00:16:31.520 | Deep state accusation.

00:16:33.120 | I'm going to wear a tinfoil hat today.

00:16:34.480 | I forgot.

00:16:35.040 | You believe what you want.

00:16:35.920 | I don't.

00:16:37.360 | This is the first I'm hearing about it.

00:16:38.720 | I don't have my tinfoil hat here.

00:16:40.000 | But who knows?

00:16:42.080 | I guess.

00:16:42.400 | Use their products if you want to.

00:16:45.040 | Use their products if you want to.

00:16:45.760 | There you have it, folks.

00:16:47.840 | And Saksas puts his endorsement behind Palantir.

00:16:51.360 | Definitely not deep state, Palantir.

00:16:52.640 | No, Palantir.

00:16:54.880 | Look, there's no question that Palantir sells into the deep state.

00:16:58.320 | But I don't know that that makes it deep state.

00:17:00.800 | Well, I mean, they're on your team, as opposed to the other team.

00:17:03.120 | So that's a lot of numbers.

00:17:04.400 | No, hold on.

00:17:04.880 | I'm not on any team in this spectrum.

00:17:07.440 | I don't really understand what you're saying there.

00:17:10.000 | I'm just goofing.

00:17:10.560 | I have shares in the company.

00:17:12.240 | I think it's a good investment.

00:17:13.840 | Oh, okay.

00:17:14.640 | There you have it, folks.

00:17:15.600 | All right.

00:17:15.840 | Let's go to the stock market.

00:17:16.880 | He just had his first face.

00:17:18.000 | I got to get a tinfoil hat for a bit here.

00:17:20.640 | One thing I want to say.

00:17:21.440 | None of us are at any risk of running Palantir on our servers, okay?

00:17:25.760 | Absolutely.

00:17:26.000 | CrowdStrike is running in the background of many, many companies who may not even be fully

00:17:30.240 | aware of it.

00:17:31.120 | And they were certainly surprised when all those airlines' computers went down, right?

00:17:35.680 | So my only point is maybe you should make sure about whether you're running their products

00:17:40.320 | or not.

00:17:40.880 | And then make a conscious decision whether you think that's a good idea.

00:17:44.000 | That's all.

00:17:44.560 | That's all.

00:17:45.040 | Just a little tip from the more you know from David's side.

00:17:47.760 | Jake, don't move on.

00:17:49.600 | I'm trying.

00:17:50.080 | That's good.

00:17:50.400 | I'm trying my best.

00:17:51.600 | All right.

00:17:51.920 | The stock market just had its worst day since 2020 on Wednesday.

00:17:55.920 | Clearly, this is because of the January 6th insurrection, the NASDAQ, which is the most

00:18:00.160 | tech...

00:18:00.400 | I'm joking.

00:18:01.120 | The NASDAQ, which is the most tech-heavy, fell 3.6%.

00:18:03.520 | S&P down 2.3%.

00:18:05.280 | A bunch of the magnificent seven companies were in the red.

00:18:08.400 | But you got to put this in context.

00:18:10.720 | NASDAQ and S&P still up around 15% for the first half of the year.

00:18:15.680 | Record-setting territory, obviously, if that holds up or increases.

00:18:20.000 | There's a lot of theories about this, that people are rotating into the MAC-7 tech stocks,

00:18:25.520 | which were a place that maybe got a little overheated with the AI bubble.

00:18:28.960 | Here's the top gainers that are not in the MAC-7, as you can see.

00:18:36.400 | Financials, energy, materials.

00:18:39.520 | Over the last six months, S&P financials up 11%.

00:18:43.200 | S&P energy, 9%.

00:18:44.400 | S&P materials, 9% as well.

00:18:46.640 | Broader index up 11%, as we said.

00:18:48.400 | Tesla dropped 12% after missing on earnings, but they had a massive run-up earlier this year.

00:18:53.200 | Google dropped 5%.

00:18:53.920 | I guess YouTube was what most people pointed to.

00:18:58.880 | Their revenue came in lower than expected.

00:19:01.120 | So maybe some softness in the advertising market, which would then correlate with consumers.

00:19:05.440 | NVIDIA down 7%.

00:19:07.040 | Meta down 6%.

00:19:09.360 | Chamath, any thoughts here on what we're saying?

00:19:12.560 | You talked a lot about the consumer weakening on an episode about six weeks ago, I believe.

00:19:16.880 | So is this just the manifestation of that prediction you made?

00:19:20.720 | Not this specific thing.

00:19:22.240 | I think that when you see a broad-based set of revenue misses, that that will kind of mean

00:19:28.960 | that the consumer is really under pressure.

00:19:31.040 | I still think that that's more in the fall, but we're headed in that direction.

00:19:36.400 | I think what happened here is that the market is just priced to perfection.

00:19:41.360 | And all of a sudden, we had all kinds of volatility.

00:19:44.000 | You had the former president almost assassinated.

00:19:47.520 | You have the current sitting president resign.

00:19:50.400 | You have a somewhat convoluted process to pick who replaced him that at a minimum was opaque.

00:19:57.200 | And all of these things create doubt and anxiety in the people that own financial assets.

00:20:05.040 | And so if you saw the volatility index, the VIX, that has spiked.

00:20:09.040 | And so whenever you see that stuff happen, people go risk off, right?

00:20:13.440 | And when you go risk off, what do you sell?

00:20:15.440 | You sell the things that are deepest in the money where you think that they probably don't

00:20:20.240 | have that much more room to run.

00:20:21.600 | And that was the Mag 7.

00:20:23.600 | And so what you actually saw was a huge rotation out of those companies into everything but

00:20:28.320 | those seven names.

00:20:29.200 | And I think that that's a pretty reasonable thing to do.

00:20:33.840 | So I think we're in the part of the cycle where people are getting a little bit more

00:20:36.960 | sober and risk managing.

00:20:38.160 | We're also in the middle of the summer where a lot more vacation is taken, which how it

00:20:43.920 | manifests is that people tend to be, frankly, more risk off and be more liquid because a

00:20:50.160 | lot of people are in and out of the office.

00:20:51.760 | And I think the real setup is for what happens in September.

00:20:56.320 | Maybe there's a cut, which will help.

00:20:58.400 | Maybe there isn't, which won't help.

00:21:00.480 | And then the whole consumer cycle, the consumer credit cycle, that doesn't look good, to be

00:21:06.480 | honest.

00:21:06.800 | And so I think the fall is going to be complicated.

00:21:09.360 | Yeah, absolutely.

00:21:10.400 | What an eventful week on a political front.

00:21:12.240 | We'll get towards that in a moment.

00:21:14.640 | But, Freeberg, your thoughts here.

00:21:16.880 | Is it just people trimming their perfect positions and maybe a dispersion going out, people wanting

00:21:22.560 | to own some other assets that maybe have been undervalued in this market cycle?

00:21:29.040 | No, I think it's definitely this mini AI bubble deflating a bit.

00:21:34.800 | And transactions are, let me get out of some of these high multiple tech stocks that are

00:21:41.360 | expected to grow rapidly because of AI and shift more into stable market recovery.

00:21:47.760 | Interest rates are going to get cut, type trades that will benefit there.

00:21:51.040 | So I think it's just a rebalancing.

00:21:52.560 | And as a result of the high concentration of the Mag 7 and the S&P and in the Qs, the

00:21:57.360 | indices look like they're coming down.

00:21:58.880 | But yeah, there's obviously a lot of complexity in what's going on in the economy right now.

00:22:04.000 | But I do think that that's been a big trade for PMs, for portfolio managers over the last

00:22:08.320 | couple of weeks.

00:22:08.880 | Makes sense.

00:22:09.920 | Yeah.

00:22:10.080 | Sachs, if you owned a bunch of Nvidia and it ran up, Meta, Google, Apple, other companies

00:22:15.520 | that ran way up, you might want to trim your position here and deploy capital and balance

00:22:20.320 | things out.

00:22:20.720 | Yeah.

00:22:20.960 | Sure.

00:22:22.320 | I just don't want to overreact or overread into one day in the market.

00:22:26.400 | I mean, today's up, yesterday was down.

00:22:28.000 | These are blips in the grand scheme of things.

00:22:30.400 | Even a 2% to 3% move is just not that unusual.

00:22:33.440 | Yeah.

00:22:33.840 | Especially given the context.

00:22:35.440 | But definitely something worth keeping an eye on is what the earnings reports will say

00:22:42.160 | for Q3 and Q4.

00:22:44.560 | And those will come out towards the end of the year.

00:22:47.040 | Okay.

00:22:47.280 | Some interesting news.

00:22:49.520 | Sam Altman did a UBI experiment a couple of years ago.

00:22:53.200 | He put 14 of the $60 million into this experiment that was done by a firm called Open Research.

00:23:00.400 | That's a nonprofit group that was founded in 2015 out of an accelerator called Y Combinator.

00:23:07.360 | First, I'm hearing of that one.

00:23:08.480 | Well, here's the experiment they did.

00:23:09.920 | And this took place between November of 2020, October of 2023, 3,000 low-income adults in

00:23:15.520 | Texas and Illinois making just under $30,000 a year on average were selected.

00:23:21.520 | 1,000 participants received $1,000 a month for three years.

00:23:25.600 | So on top of the $30,000, they got $12,000 a year tax-free.

00:23:30.400 | So that's nearly a 50% pay increase for doing no more work.

00:23:33.520 | 2,000 controlled participants received $50 per month over the same period.

00:23:39.120 | And the research collected and studied a bunch of data.

00:23:42.800 | They did blood draws to do health impact.

00:23:45.520 | They had a custom app that tracked time usage, work, play, etc.

00:23:50.720 | And they checked everybody's credit reports and bank balances.

00:23:53.920 | So broadly speaking, the research found almost no lasting impact on everything

00:23:59.280 | they tested from overall health to work to education.

00:24:01.680 | And here are the quotes directly from the paper.

00:24:05.200 | And I'll get the gentleman's take on this.

00:24:06.960 | UBI, super fascinating, obviously.

00:24:08.640 | "The cash transfer resulted in large but short-lived improvements in stress and food security.

00:24:13.200 | We find no effect of the transfer across several measures of physical health.

00:24:17.520 | We also find that the transfer did not improve mental health after the first year.

00:24:21.760 | And by year two, we can again reject very small improvements."

00:24:27.200 | Final quote.

00:24:27.920 | "We also find precise null effects on self-reported access to health and physical activity and sleep."

00:24:33.360 | I find this so fascinating and reinforces a bunch of intuition that I think we would

00:24:39.840 | probably all have.

00:24:41.120 | Have you guys seen these studies where when somebody has an amputation or they get paralyzed,

00:24:48.080 | they study their free levels of happiness, their interim level of happiness, and then

00:24:54.160 | they just kind of mean revert to their natural state of happiness,

00:24:57.280 | independent of what physical calamity they may have gone through.

00:25:02.080 | And when you were talking about it, Jake, I was reacting in the same way,

00:25:06.080 | which is in the absence of, I think, purpose and community, I think children in many cases,

00:25:13.920 | it just doesn't meaningfully shift any of these curves that really matter.

00:25:19.600 | I think your happiness levels mean revert.

00:25:21.520 | I think your health levels mean revert.

00:25:24.080 | So it's great to kind of confirm at least my intuition, which is that UBI is a

00:25:34.000 | wonderful idea that I think doesn't really understand how humans are both motivated and

00:25:41.920 | wired.

00:25:42.420 | Freberg, your thoughts?

00:25:44.080 | Yeah, so I definitely agree.

00:25:46.560 | I think I've talked about this.

00:25:47.600 | We talked a little bit about it with Jonathan Haidt.

00:25:49.760 | There's some great studies that have shown in the past that the change in income is a

00:25:53.040 | better predictor of happiness than absolute income.

00:25:55.600 | Eventually, everything normalizes.

00:25:57.440 | So I think UBI makes no sense for three reasons.

00:26:00.720 | The first is this normalization of spending levels.

00:26:03.360 | So once you've kind of had this increase, you have a moment of happiness.

00:26:06.880 | And then you actually start spending differently or spending more.

00:26:10.000 | And effectively, every human has one innate trait, desire.

00:26:14.480 | And desire is what drives humanity.

00:26:17.840 | It's what drives progress.

00:26:18.960 | It's what pushes us forward.

00:26:20.320 | Because no matter what our absolute condition, it's our relative condition that matters,

00:26:24.240 | relative to others, or relative to ourselves in the past, or prospectively in the future.

00:26:29.360 | And so we always want to improve our condition.

00:26:32.240 | So a UBI-based system basically gives a flat income.

00:26:35.280 | So the only way for it to really work is if you increase the income automatically by,

00:26:39.760 | say, 10% a year.

00:26:41.120 | So in a UBI world, no amount of money will actually make someone satisfied or meet their

00:26:46.320 | minimum thresholds, because those minimum thresholds will simply shift.

00:26:50.080 | And the second issue is just the net economic effect.

00:26:54.160 | If we gave 350 million Americans $1,000 a month, that's $350 billion a month.

00:27:01.600 | That's $4 trillion a year.

00:27:03.200 | Our prospective budget for next year is $7.3 trillion at the federal level.

00:27:08.640 | So that's already more than 50% of the total projected federal budget next year.

00:27:13.920 | Finding the mechanism for funding this at scale is not what this study actually looked

00:27:19.840 | at.

00:27:20.000 | Because if you look at it, the net effect would be inflationary.

00:27:23.520 | And that's the third major reason, is that ultimately, this would have an inflationary

00:27:26.800 | effect.

00:27:27.520 | Anytime we've stimulated the economy with outside money, with government-driven money,

00:27:33.520 | we see many bubbles emerge, and we see an inflationary effect.

00:27:36.240 | So look at COVID.

00:27:37.280 | There were all these little bubbles that popped up in the financial markets.

00:27:40.000 | We had NFTs.

00:27:40.720 | We had crypto.

00:27:41.680 | We had all these sort of new places that money found its way to.

00:27:44.880 | And then we had an aggregate inflationary effect.

00:27:46.880 | Food prices are still up 30%, 40% since COVID.

00:27:50.400 | And so net-net, I think that the study provides an interesting insight into the micro effects,

00:27:55.760 | the psychological effects, the social effects.

00:27:57.840 | But the macro effects are what is so, like, simply arithmetically obvious, which is inflation

00:28:03.520 | and an inability to actually fund this at scale.

00:28:06.640 | And fundamentally, people want to work.

00:28:08.560 | So they'll take that money, and then they'll go find ways to work and generate more money.

00:28:12.640 | And you have this inflationary effect.

00:28:13.840 | So I think net-net, UBI does not make sense.

00:28:16.560 | SACs participants were 5% more likely to start a business by the third year.

00:28:20.960 | Maybe that was the most encouraging part of this.

00:28:23.360 | People worked slightly less, 2% decrease in labor participation, but that seems negligible.

00:28:28.320 | People in their 20s had a 2% increase in enrolling in post-secondary education.

00:28:33.840 | Again, very tiny impact.

00:28:35.200 | There were major benefits to stress and mental health in year one.

00:28:39.040 | But by year two, as we talked about, it reverted to the baseline.

00:28:41.840 | How do you think about UBI in a world where, let's say, I don't know,

00:28:47.520 | we lost a large amount of jobs in a short period of time because of AI?

00:28:52.000 | So in that hypothetical situation, and we hit 20% or 25% unemployment from the

00:28:56.160 | historic low we're at now, how might you think about UBI?

00:29:00.880 | Well, that's positing a future that I don't think is going to happen.

00:29:03.920 | At least, that's why I'm trying to give you a hypothetical.

00:29:07.440 | Yeah, no, I don't really buy that.

00:29:09.440 | And so I think this whole idea of UBI is premature and very expensive.

00:29:14.320 | And it doesn't work.

00:29:15.120 | I mean, I think what we saw from the study, just to echo what Freeberg said,

00:29:17.920 | is that cash transfers don't work.

00:29:20.960 | We saw this in the Great Society.

00:29:22.160 | Just handing people money doesn't solve poverty.

00:29:25.040 | It actually traps people in conditions of dependence.

00:29:28.800 | We also saw during COVID that all those STEMI checks, it might have had a macro effect in the

00:29:33.600 | economy of kind of boosting the economy during what could have been a COVID depression.

00:29:38.480 | However, at an individual level, what did we see?

00:29:42.640 | We saw people quitting or quite quitting their jobs.

00:29:45.680 | They spent more on leisure, alcohol, and meme stocks.

00:29:50.000 | In other words, it wasn't tremendously productive.

00:29:52.000 | So I think that what we've seen in the past is just handing people money

00:29:56.800 | doesn't create the types of outcomes that people want.

00:30:01.280 | Is all this virtue signaling, Sax?

00:30:04.880 | Is it virtue signaling?

00:30:06.080 | Kind of.

00:30:06.880 | Kind of.

00:30:07.440 | I'm kind of getting that tone from you.

00:30:09.280 | Yeah, I think it's a combination of virtue signaling combined with let's assume that

00:30:15.040 | you want to become the first AI trillionaire and people are concerned about job loss.

00:30:21.840 | You're going to virtue signal in the direction of, well, let's just give everyone money.

00:30:25.200 | And a lot of people in power will love that because it creates a lot of dependence.

00:30:32.000 | So it serves the interests of tech moguls and people in the government.

00:30:39.440 | But I don't think it serves society.

00:30:41.120 | And I think one of the most interesting data points in the study,

00:30:43.680 | please confirm if I get this right, but what it said is that the people who got the thousand

00:30:48.240 | a month UBI saw their incomes rise to $45,000 on average, while the control group who only

00:30:54.560 | got $50 a month increased their average income to 50,000, actually just shy of 51,000.

00:30:59.840 | So the people who didn't get the larger stimmy actually genuinely bettered themselves over

00:31:07.600 | the course of the study, while the ones who got the 12,000 a year stayed in place.

00:31:12.320 | And that's kind of what you'd expect, right?

00:31:14.080 | Which is if you just hand people money without having to work,

00:31:16.800 | it doesn't motivate them to work harder.

00:31:19.360 | It actually motivates them to do less.

00:31:21.920 | And let's say that you're in a point in your career where you need to learn,

00:31:25.360 | you need to get mentorship, you need to advance yourself.

00:31:27.920 | By giving people UBI, you could be kicking out those bottom rungs of the ladder where

00:31:32.160 | the work isn't necessarily that fun, but you're picking up very important skills

00:31:36.320 | that are going to help you rise up in the ladder.

00:31:38.160 | Yeah, being a cashier, like sending your kids to be a cashier at a restaurant,

00:31:41.920 | or a busboy, or a waiter, like that teaches them a work ethic.

00:31:45.680 | I was a dishwasher.

00:31:46.800 | I did hard work as a child.

00:31:48.640 | I was a bartender.

00:31:49.360 | I mean, look, these are all jobs that have dignity.

00:31:52.480 | I mean, I think work has dignity, and you need people to start somewhere.

00:31:57.680 | And if you just give them the stimmy or the UBI,

00:32:01.040 | it demotivates them from starting their careers.

00:32:04.800 | And you trap people at this lower level.

00:32:07.040 | So I just don't think you're doing anyone any favors by doing this.

00:32:11.120 | And I just want to say, my production company's in full swing, and we are actually working on

00:32:15.360 | a remake of Cheers with David Sacks.

00:32:17.920 | Yeah, as the bartender, as the lead character.

00:32:20.320 | It's a really great show.

00:32:23.040 | Looking at the back of the envelope math here, I had the crack research team take a look at this

00:32:29.680 | welfare, $1.1 trillion budget in 2023, eight different federal agencies, Medicare, I'm sorry,

00:32:35.520 | Medicaid was in there as well.

00:32:37.520 | Unemployment, $33 billion paid across, 1.8 million participants last year.

00:32:42.640 | Food stamp safety, $113 billion.

00:32:45.280 | We put all those numbers together, and we've got about 100 million people participating

00:32:50.560 | in these programs in some way for $1.2 trillion per year.

00:32:54.000 | This is all back of the envelope.

00:32:55.280 | It's imperfect.

00:32:55.920 | But that turns out to be about $12K each, which is exactly what the study did.

00:33:01.760 | So not perfect math.

00:33:02.800 | But that's totally reasonable.

00:33:04.000 | I grew up on welfare, and we needed it to make ends meet.

00:33:07.840 | And we would have completely fallen through the cracks without it.

00:33:11.680 | And so I'm glad that I was able to be raised in a country that has welfare.

00:33:18.000 | I guess my question to you, Chamath, is do you think all these agencies put together,

00:33:24.400 | with all this administration and all this complexity, would it be better if we take

00:33:30.400 | something from this UBI and maybe consolidating down?

00:33:32.960 | No, no, no, no.

00:33:34.880 | Because I think you need to be motivated, as Zach said.

00:33:38.720 | And so even though we got support from, I grew up in Canada, so the Canadian government,

00:33:45.680 | there was still an expectation where certain things were not covered, and you still had

00:33:50.800 | to work.

00:33:51.120 | And so you had to find motivation to pick yourself up and go out and get a job.

00:33:55.760 | And it just so happened that in our situation, even welfare and what my mom made as a housekeeper,

00:34:02.400 | and then as a nurse aide wasn't enough, and my dad didn't have a job.

00:34:05.440 | So I went and I started working at Burger King.

00:34:08.000 | And to Sax's point, it's pretty eye-opening when you're 14 years old, and you're working

00:34:14.480 | the night shift, and people come in after going to the bars, they're drunk, they're

00:34:18.720 | puking all over the place.

00:34:20.000 | Sometimes you see people that go to your own high school, and it's a little bit embarrassing

00:34:25.040 | because you're working while they're going out.

00:34:27.040 | But at the end of the day, it was very motivating.

00:34:28.880 | And I think Sax is right.

00:34:29.840 | If you take that away from people, I think that you end up with the worst society.

00:34:34.080 | I don't think that you have a motivated group of people that want to go and better themselves.

00:34:38.560 | I think they just become really lazy.

00:34:40.880 | I think it's well stated.

00:34:42.400 | And I think the pressure cooker that immigrants are under, or people who have tough situations,

00:34:48.880 | it can create the diamonds.

00:34:51.040 | And man, I do think a lot of the folks here on this podcast went through that pressure

00:34:55.520 | cooker, and it does create a chip on your shoulder.

00:34:58.400 | And when people criticize these entry level jobs, and they're, oh, they're not sustainable.

00:35:03.040 | Well, there, we do have a safety net in both countries, can I think that that's not I think

00:35:07.280 | the problem is not the entry level job.

00:35:09.120 | I think it's the expectation of people.

00:35:10.960 | And Friedberg just mentioned this, but what you have is that there is this desire doom

00:35:17.680 | loop that we've fallen ourselves into, where what social media does is amplify, in many

00:35:26.160 | cases, a fake perception of what your neighbor has that you don't have.

00:35:30.640 | And so you're in this constant desire doom loop.

00:35:33.200 | So if you go to a job, and you're expected to work for four years, I'm just going to

00:35:37.520 | make up a number before you get promoted.

00:35:39.200 | And the perception is that your neighbor is getting promoted after eight months, you're

00:35:43.520 | going to be mad, and you're going to be angry, and you're going to feel like life isn't working

00:35:47.280 | out for you.

00:35:47.760 | And we have to figure out a way of resetting that back to normal, so that you know that

00:35:52.960 | that is a lie that is being told to get clicks and likes.

00:35:57.280 | And the real truth is, you're going to have to just put your nose down and grind at something

00:36:01.920 | to get what you want.

00:36:02.800 | And life is not perfect, and it's complicated, and it's messy.

00:36:05.520 | And we need to do a better job of that.

00:36:08.480 | Let me ask you a question, Friedberg.

00:36:09.760 | If you were going to do a 2.0 of this study, I was thinking about it, you know, where do

00:36:14.400 | you go from here?

00:36:15.200 | I just had this idea like, well, what if you put like, half of the money into like a perfect

00:36:21.040 | portfolio, Wealthfront, one of those services, and allow people to take out maybe 5% of it

00:36:26.720 | every year, some sustainable amount, so they see, you know, and get some education around

00:36:31.360 | that.

00:36:31.520 | Or maybe put the money into a business formation fund, people can apply to get grants to, you

00:36:37.920 | know, maybe form a business, and you kind of reframe how this UBI is distributed with

00:36:43.920 | milestones and maybe some education baked into it.

00:36:47.840 | That was my thought on where to go next with it.

00:36:49.760 | Do you have any thoughts of where you would do a 2.0 test of this?

00:36:52.720 | Or would you just...

00:36:53.520 | Well, that's not UBI, right?

00:36:55.360 | And what you're describing, I think, exists, and there are incentives and programs and

00:36:59.920 | opportunities out there.

00:37:00.880 | People can sign up with Roth IRAs, they can contribute some percentage of their paycheck

00:37:05.360 | to a 401(k) if they have a job that has a 401(k) set up for them.

00:37:09.200 | There's a lot of systems and mechanisms out there, and you get tax breaks for doing that.

00:37:13.120 | So there's mechanisms and incentives out there to do that sort of thing.

00:37:17.520 | The concept with UBI is, can you pay people a flat amount of money so that they don't

00:37:23.040 | have to work, and then they end up being able to explore and do other things with their

00:37:27.440 | life as the robots and AI does everything for them?

00:37:29.920 | And I've just always been of the belief that I don't think that there's this natural border

00:37:34.160 | that we hit beyond which humans don't work.

00:37:37.520 | I think that AI-based tools and automation tools are the same as they've always been.

00:37:42.800 | When we developed a tractor, people didn't stop farming, they could get much more leverage

00:37:46.960 | using the tractor and farm more, and new jobs and new industries emerged.

00:37:50.560 | And I expect that the same thing will happen with this next evolution of technology and

00:37:54.480 | human progress.

00:37:55.680 | Humans will find ways to create new things, to push themselves forward, to drive things

00:38:00.400 | forward.

00:38:01.200 | And for the natural market-based incentives that fundamentally are rooted in this internal

00:38:05.520 | system of desire, will create new opportunities that we're not really thinking about.

00:38:09.600 | So I don't believe in this idea of UBI and some utopian world where everyone's happy

00:38:14.000 | not working and letting machines do everything for them.

00:38:16.800 | I think that the fundamental sense of a human is to find purpose and to realize that purpose

00:38:21.680 | to drive themselves forward and progress themselves.

00:38:24.000 | And I think that that's always going to be the case.

00:38:25.520 | The closest thing to leisure and leisurely pursuits that we have today in modern society

00:38:30.880 | is the Nepo baby.

00:38:31.840 | And if you look at the Nepo baby, they're the most miserable group of people I've ever

00:38:38.160 | met.

00:38:39.600 | They're so unhappy with themselves.

00:38:41.760 | And so, and part of it is because they've only ever lived a life of leisure.

00:38:45.120 | Shout out to Alex Oros.

00:38:46.400 | No, I'm not name-checking anyone.

00:38:49.760 | I'm just saying when I, when I, when I observe it, I think that you can see it right in front

00:38:55.200 | of you, which is that there's just so much inherent unhappiness because you're not motivated

00:39:01.040 | to do anything.

00:39:01.920 | And then that's amplified typically by guilty parents because they've been working so hard.

00:39:08.080 | And I, so I don't think you need to run a second study, a different version of an idea

00:39:13.120 | that friend of the pod, Brad Gerstner is working on, which I think deserves a shout out is

00:39:19.200 | this idea of giving every kid when they're born a retirement account.

00:39:22.560 | And I think that that's an interesting idea where you give them some amount of money and

00:39:28.320 | it just matures inside of an index fund that gets unlocked for you when that kid is 65

00:39:34.160 | or 70 years old.

00:39:35.920 | That's great because it helps you have a soft landing in retirement.

00:39:40.080 | I think that that's very humane and a right thing to do, but it doesn't rob you of that

00:39:44.880 | motivation to work in your twenties, thirties, forties, and fifties.

00:39:47.600 | And that's a much better idea than UBI.

00:39:49.760 | And I think, by the way, it's really important to state that UBI can be more of a trap than

00:39:56.160 | a benefit.

00:39:56.640 | It takes away the opportunity for individuals to progress because you no longer have a system

00:40:04.240 | that says you progress, you get richly rewarded.

00:40:07.040 | It ultimately drives to an outcome where you spend all the money and distribute it equally.

00:40:11.280 | So everyone ends up having some sort of stasis.

00:40:13.600 | And I don't think that that's really human nature.

00:40:16.160 | I do think that systems and government programs that support people's ability to succeed,

00:40:21.040 | to work hard, to work smart, to progress while providing these necessary safety nets is a

00:40:25.600 | better solution.

00:40:26.720 | There's no right or wrong way.

00:40:28.480 | It's just, it's a very complicated system that's needed.

00:40:31.360 | And I don't think that there's like this UBI concept, it's fairly naive.

00:40:35.120 | And I think that you'll see it play out at both a micro and a macro scale as being, I

00:40:39.920 | think, net, net negative.

00:40:41.360 | Yeah.

00:40:42.080 | You know, just wrapping up here so we can get onto the rest of the very juicy docket

00:40:45.360 | we have today.

00:40:46.400 | It does seem demotivating to just have money drop in your head.

00:40:49.280 | That's why I like my experiment.

00:40:50.800 | I was referring to Freeberg, just forcing people, not like having these programs that

00:40:55.680 | you have to go find out about and have the social capital and fabric around you that

00:40:59.680 | you know about small business loans, et cetera, but hey, these three things are happening

00:41:03.360 | to you right now.

00:41:04.480 | This money has been put into your account automatically and you can decide what to do

00:41:08.320 | with it.

00:41:08.640 | And just raising the education level and empowering people is a much better idea.

00:41:14.480 | I feel like whatever the education system is, schools or whatever, like actually teaching

00:41:18.800 | the vocational skills or the skills on how to succeed in the workplace.

00:41:22.240 | Like, here's how you go get a job.

00:41:24.240 | Here's how you build a business.

00:41:25.840 | Here's how you start something.

00:41:27.280 | Those are the sorts of skills that are not taught in the educational system that I think

00:41:31.680 | are generally lacking.

00:41:32.640 | And then people kind of learn a bunch of history or some algebra or whatever they learn in

00:41:36.800 | school and they pop out the other end.

00:41:38.480 | And it's like, okay, go figure out how to survive.

00:41:40.800 | Go figure out how to get a job.

00:41:41.840 | Go figure out how to build a business.

00:41:43.040 | To just build on your idea.

00:41:44.080 | We need more healthcare workers.

00:41:45.520 | If you paid somebody $1,000 a month and you paid for their school for one year to become

00:41:50.000 | a nurse, doctor, nurse practitioner, whatever, that would actually have a dramatic impact

00:41:54.720 | and solve a problem for our society while not giving a handout.

00:41:58.000 | I think we all agree on this one.

00:42:00.000 | Let's keep moving through this amazingly juicy docket.

00:42:02.640 | All right.

00:42:02.960 | There is a battle right now for Rupert Murdoch's media empire.

00:42:06.560 | The Times reported on a behind the scenes fight for control of Fox News, Wall Street

00:42:12.960 | Journal, New York Post, and just tons of TV networks in Australia, the UK.

00:42:17.440 | I think we all know the News Corp holding set, a bit like the TV show Secession.

00:42:24.560 | Which makes sense because they based it on the Murdoch family.

00:42:28.000 | It turns out this article in the Times is based on a sealed court document that was

00:42:32.320 | obtained by them.

00:42:33.120 | Murdoch, to remind you, is 93 years old now, and his trust would have given control to

00:42:38.080 | his four eldest children.

00:42:40.560 | However, he changed the trust to ensure that Lachlan Murdoch, who is more conservative,

00:42:50.240 | would take over these assets as opposed to James, Elizabeth, and Prudence, who are more

00:42:56.720 | moderate than Lachlan.

00:42:58.480 | And they are engaged in a massive court case now that's going to start in September.

00:43:03.600 | The trust is irrevocable, but it contains a provision allowing for changes so long as

00:43:08.560 | they're made "in good faith and with the purpose of benefiting all members."

00:43:13.440 | So Rupert argued that the change is in the best interest of James, Elizabeth, and Prudence

00:43:18.080 | as it keeps them formally separate from Fox News without having to worry about its political

00:43:23.680 | point of view.

00:43:24.480 | Fox News obviously has massive influence and has been a bit of a disaster over the last

00:43:30.720 | couple of years.

00:43:31.760 | They did the largest settlement ever in a defamation case with Dominion, paid $787 million.

00:43:40.960 | You remember Tucker Hannity, Laura Ingram, all of them privately trashed the people who

00:43:47.200 | lied about the Dominion case on Fox News, and that all got shown in text messages, and

00:43:52.640 | it was a disaster for them.

00:43:54.800 | Sax, any thoughts on this and how this collection of assets and the GOP have collaborated over

00:44:01.440 | the years?

00:44:01.840 | I wouldn't necessarily call it collaboration.

00:44:03.840 | I call it a market position.

00:44:05.280 | I mean, Fox News has carved out a powerful and profitable market niche by being the one

00:44:10.480 | cable news network that appeals to conservatives.

00:44:13.760 | And now if, let's say, the more liberal members of the family like James take over and change

00:44:20.880 | the content and the programming to serve their own political views, they're going to lose

00:44:25.600 | viewership.

00:44:26.080 | They're going to lose their audience.

00:44:27.040 | It would be a foolish idea just from a business standpoint.

00:44:30.800 | So I think that Loughlin is the right choice.

00:44:33.440 | I've met Loughlin before, by the way.

00:44:34.960 | Nice guy.

00:44:36.020 | Look, I think a pretty mainstream conservative type of guy, he's clearly the right guy in

00:44:41.040 | the family to run this.

00:44:42.320 | And the siblings, I think, could really screw it up.

00:44:46.480 | And I'm talking about not just from a content standpoint, I'm talking about from a revenue

00:44:51.440 | and profit standpoint if they take it in a different direction.

00:44:55.760 | I would already say that Fox News has a market position problem, which is that Rupert is

00:45:04.640 | very much a neocon.

00:45:06.000 | And neoconservatism is on the way out in the Republican Party in favor of a more populist

00:45:11.600 | conservatism that you see with Trump or now his running mate, J.D. Vance.

00:45:15.760 | Rupert and Fox waged a really strong campaign to keep J.D. Vance off the ticket, obviously

00:45:22.160 | lost that battle.

00:45:22.960 | Rupert fired Tucker, by far their highest rated and most profitable host ever.

00:45:29.840 | And it was over, again, this populism versus neoconservatism direction.

00:45:35.200 | So I think that Fox already has a problem where they are becoming misaligned with their

00:45:42.720 | audience.

00:45:43.200 | And regardless of what you think of the politics, this is bad for business.

00:45:47.200 | It'll be really interesting to see if Laughlin will realign things in a more populist direction.

00:45:53.840 | But definitely going in a liberal direction that like James or the other siblings want

00:45:57.520 | to go in, that would be a disaster.

00:45:59.520 | Freeberg, Chamath, any thoughts on this media empire and secession planning?

00:46:04.640 | Man, I think probate and wills and trusts are of the devil's making.

00:46:11.760 | Nothing good comes out of these things.

00:46:14.320 | And I don't know, I just think some of these assets should just be left to shareholders.

00:46:20.560 | Or just sell them and take the money, give it to the kids.

00:46:25.920 | Hopefully you raise good kids, they can all go and pursue their own path.

00:46:29.680 | Because again, I think the point is like, the path and the journey is the fun.

00:46:36.000 | And these kinds of battles are really brutal.

00:46:41.360 | And I'll tell you, to me, the thing that I'm sad when I hear this whole thing, is like,

00:46:45.840 | you have four siblings that I'm guessing grew up together.

00:46:49.280 | And now, are they ever going to talk to each other again?

00:46:52.480 | Or is it like three versus one or two versus two or, and I just think that that's ugly

00:46:57.680 | over what power and money.

00:46:59.280 | I would have just if I was the father, I would have sold the asset given the money to the

00:47:04.160 | kids or to charity or whatever.

00:47:06.080 | And hopefully, they would have found happiness in a different way.

00:47:10.240 | But that is what they did with the Disney deal.

00:47:12.000 | They took the cash and they distributed it to the kids.

00:47:14.160 | So they each got a pretty big windfall.

00:47:16.080 | And then I think the concept was this remaining asset would be managed over the long term.

00:47:20.960 | Maybe I'm speaking out of school a bit, but I thought that's what happened there.

00:47:23.680 | They did sell Fox, the studio and.

00:47:27.280 | Yeah.

00:47:28.400 | And the library.

00:47:29.360 | Yeah, and the library.

00:47:30.000 | And that brings X-Men Fantastic Four, Wolverine back together with the Avengers, which is

00:47:35.520 | most important.

00:47:36.160 | 20th Century Fox, yeah.

00:47:36.640 | Clearly, they didn't.

00:47:38.080 | No, it's all coming back together now.

00:47:41.200 | Now, they just got to get Sony to give up.

00:47:43.040 | I mean, we are talking about interesting IP.

00:47:44.720 | Marvel just sold these characters to the highest bidder in perpetuity.

00:47:49.120 | Such a crazy, weird deal.

00:47:50.720 | But it's like it's like me saying, you know, I, I've collected some really nice belts.

00:47:56.800 | And so I'm just going to have like a death match between my five kids to see who gets

00:48:00.560 | the best belt.

00:48:01.680 | Yeah, I just I mean, and it's not it's not even about money, actually, because they have

00:48:06.240 | enough.

00:48:06.960 | It's clearly this is about power.

00:48:09.280 | No, and it's about being picked.

00:48:10.480 | Imagine if your father picks your sibling and not you.

00:48:14.400 | Why?

00:48:14.800 | Why would you?

00:48:15.440 | Why would you do that?

00:48:16.800 | Yeah.

00:48:17.200 | Like, is there is the asset so important?

00:48:19.280 | As I said, there's these are self managing because business people will make rational

00:48:24.160 | business decisions.

00:48:24.960 | So put it in the hands of a rational business person.

00:48:27.600 | Keep the family intact.

00:48:28.800 | Because if you lose the family, what do you have?

00:48:31.840 | Yes, I don't get.

00:48:33.280 | That's what I don't understand.

00:48:35.520 | We might as well just go to our next topic.

00:48:37.520 | Joe Biden has been hot swapped as new shit.

00:48:39.920 | And it's predicted the speedrun primary.

00:48:42.160 | Maybe that's been subverted.

00:48:44.080 | As we all know, Joe Biden, what's your version?

00:48:47.920 | Maybe it has been subverted, possibly could have been subverted, inadvertently knocked

00:48:53.920 | over, forgotten.

00:48:55.360 | It could be an oversight.

00:48:56.720 | Anything's possible.

00:48:57.680 | Joe Biden formerly exited the presidential race on Sunday after donors and party leadership

00:49:05.360 | politely asked him to enjoy his retirement.

00:49:07.600 | Nope, they shipped him.

00:49:09.520 | By most insider accounts, Biden was not happy about the decision and felt betrayed.

00:49:14.240 | Nonetheless, public has backed his VP Kamala Harris, who appears to have already wrapped

00:49:21.520 | up the nomination survey conducted by AP on Monday suggested that Harris already had the

00:49:26.400 | endorsement of enough delegates to secure the nomination in the first round of convention

00:49:31.600 | voting.

00:49:32.320 | So this won't be official until the DNC that starts August 19.

00:49:35.840 | And in Chi Town, so far, no one has stepped forward as a rival for Harris.

00:49:41.280 | And in fact, many of her would be competitors have already endorsed her.

00:49:45.200 | That includes Shapiro, Pennsylvania's governor, Newsom, California's governor, Pritzker, Illinois's

00:49:51.840 | governor, and Whitmer, Michigan's governor.

00:49:54.400 | All of those, I guess, potential VP candidates.

00:49:57.200 | She is now the 90% favorite to get Democratic nomination.

00:50:04.160 | I'll stop there and ask our panelists what they think of this turn of events.

00:50:10.720 | Chamath, you want to start us off?

00:50:12.320 | I mean, I don't think the process was super open and transparent and democratic.

00:50:18.240 | But I don't think they had much of a choice.

00:50:20.160 | And I think we've talked about that because too much of the money would have had to

00:50:23.360 | essentially been returned.

00:50:25.840 | And I don't think you can fight a federal election in 2024 with one hand tied behind

00:50:30.240 | your back.

00:50:31.360 | So she was the de facto nominee when the rumor started.

00:50:37.840 | And now I think the whole point is to figure out where does she stand?

00:50:44.880 | I think the thing that she will have to overcome is that these last three years, three and

00:50:48.880 | a half years, she's been relatively under the radar.

00:50:54.640 | MIA, some might say.

00:50:56.560 | And I think that now there's just like this whole controversy.

00:50:58.880 | I don't know if you guys have seen this where like, she was named the Borders are but then

00:51:02.320 | she was not the Borders are.

00:51:03.520 | And I think there's a mainstream media is it's sort of fighting with itself from six

00:51:08.160 | months ago about the whole thing.

00:51:09.360 | But the point is that we don't know what she believes and we don't yet have a sense of

00:51:14.480 | her agenda, really, you know.

00:51:18.240 | And I think that over these next two months, it'll be up to her to really create a very

00:51:23.680 | clear case of what she believes in.

00:51:26.320 | And then it'll be really interesting to see who she picks as her VP candidate.

00:51:30.320 | And then people, I think, will be in a position to judge.

00:51:32.560 | And I think that that's what, you know, what if I've been kind of like reading the tea

00:51:36.480 | leaves from the folks that I've talked to is sort of what they say, which is TBD, and

00:51:41.120 | we need to figure out where she's at.

00:51:42.400 | Freeberg, your thoughts on this unbelievable 10 days in the history of our country where

00:51:52.880 | president was nearly murdered by an assassin.

00:51:57.040 | And Joe Biden resigns, and a 39 year old political neophyte venture capitalists is picked as

00:52:07.920 | VP.

00:52:08.720 | I mean, this is consequential.

00:52:10.560 | What are your thoughts on this?

00:52:13.280 | 10 days?

00:52:13.920 | That's a lot of stuff.

00:52:15.440 | I think we talked about that last week, but the Kamala Harris de facto nomination that

00:52:21.360 | took place over 48 hours, I think was a little bit shocking to a lot of people I've spoken

00:52:27.440 | with that there wasn't a bit more of a process to identify a nominee besides Kamala that

00:52:34.160 | effectively the party lined up.

00:52:35.440 | Now, what I think is relevant here is that for the first time, it's exposing people to

00:52:42.560 | the way the electoral process actually works in the United States, that it's not a direct

00:52:46.400 | democracy, where every individual in this country votes for their federally elected

00:52:51.520 | people.

00:52:51.760 | Remember, the United States was set up as a federated republic, that there was meant

00:52:56.160 | to be the states, the states were in a federation, and then the states would elect electors that

00:53:02.640 | would go and figure out who should be the president who should run the federal office

00:53:07.840 | and the states would elect their representatives, their Congress people to go represent them

00:53:12.560 | in the federal government.

00:53:14.000 | And so I think a lot of people, you know, whether it's just without thinking about it,

00:53:18.480 | or based on precedent, assume I get a vote and who gets to be president, what you get

00:53:24.240 | to have is a vote and who gets to be the delegate to represent your state in picking the president.

00:53:29.840 | And so this process where delegates very quickly fell behind Kamala Harris, because of the

00:53:36.080 | significant coalescing of power and influence within the parties, the two major parties

00:53:42.080 | in the United States, has, I think, exposed a lot of people to the lack of a democratic

00:53:46.960 | process for federal executive role in this country.

00:53:51.120 | And I think that's a little bit shocking to people, but it is the way that the nation

00:53:55.200 | was set up.

00:53:56.080 | And the same thing with the popular vote versus Electoral College, right?

00:54:00.080 | People keep getting confused by that.

00:54:02.240 | That's right.

00:54:02.720 | And in this very unusual condition, where a candidate who's earned all of these delegates

00:54:07.440 | drops out of the race, it's shocking and surprising to people that they don't get

00:54:11.440 | to go and make a vote again, individually.

00:54:14.000 | And I think it feels unfair.

00:54:15.200 | And I think that a lot of people are feeling that way.

00:54:18.080 | I do, however, think that pretty quickly, there's a lot of people who are anyone but

00:54:22.080 | Trump, that are going to rally behind her.

00:54:24.240 | And she seems to be pulling well in the polls that have come out in the last couple days

00:54:28.480 | here.

00:54:28.720 | So...

00:54:29.040 | All right, let me hand it off to Sachs then.

00:54:32.640 | You had a situation where Trump was the runaway favorite, and this unbelievable unity at the

00:54:41.680 | RNC.

00:54:42.240 | And immediately after the RNC, the Democratic Party hot swaps Biden for Kamala.

00:54:49.760 | And they've got a lot of great VP picks that they can choose from.

00:54:53.360 | Mark Kelly looking like the possibility, which would obviously give them a lot of support

00:54:59.120 | in Arizona.

00:55:00.240 | And with moderates and law and order folks.

00:55:02.560 | So Sachs, we're looking at essentially a dead heat.

00:55:06.960 | Some polls have them tied, some polls, Reuters, Ipsos has Harris with a 2% lead, CNN has Trump

00:55:13.520 | with a 3% lead.

00:55:14.640 | What's your take on, forget about how we got here, how does this affect the race itself?

00:55:22.160 | This is a dead heat now.

00:55:24.640 | What are your thoughts on the race going forward?

00:55:26.960 | Who's the VP pick that you're most worried about going up against the Republicans?

00:55:30.960 | Well, look, this clearly reshuffles the race to some degree.

00:55:35.360 | I don't think it's a dead heat.

00:55:37.200 | The polling shows that Trump is still ahead in most of the swing states.

00:55:40.160 | But look, Harris has more upside than Biden does because she can actually campaign.

00:55:45.920 | I mean, Biden clearly was a surefire loser.

00:55:49.120 | And that was exposed in the presidential debate.

00:55:52.240 | And that's why there was a total panic in the Democrat Party.

00:55:54.880 | After that debate, they're like, "We got to get someone new," and they drove him out.

00:55:57.920 | I do want to just say a word about that process.

00:56:00.160 | Throughout that process, remember, it started with Biden doing that Stephanopoulos interview.

00:56:04.880 | He said that even God Almighty won't get me out of this race.

00:56:09.040 | Then he said, "Nobody's pushing me out.

00:56:10.880 | I'm not going anywhere.

00:56:11.840 | I'm campaigning next week."

00:56:13.360 | He expressed that what was happening in the party was a revolt against him.

00:56:16.800 | And then, boom, all of a sudden, he's out.

00:56:20.640 | And all we really know from the public reporting is that Nancy Pelosi said, "Joe, we can do this

00:56:27.200 | the easy way or the hard way."

00:56:28.400 | And he was out, again, less than 24 hours after he said, "I'm in and I'm campaigning next week."

00:56:36.080 | And even his surrogates on the Sunday morning shows

00:56:38.560 | were saying that he's definitely in the race.

00:56:41.680 | The White House staff didn't know.

00:56:43.040 | His campaign staff didn't know.

00:56:44.560 | It kind of came out of the blue.

00:56:45.840 | It's a very strange process.

00:56:48.480 | And it happened via him just posting a photograph of a letter that was on personal stationery,

00:56:54.560 | not even an official White House memorandum.

00:56:57.520 | And we didn't get an update.

00:56:59.360 | We didn't hear directly from the president about one of the most consequential decisions

00:57:03.280 | of his life and of his presidency until Wednesday.

00:57:06.960 | Well, he did have COVID.

00:57:08.000 | So for an 80-year-old, it's pretty hard.

00:57:10.720 | Fair enough.

00:57:11.200 | That was the story.

00:57:12.880 | But still, for us to be left in the dark wondering what was really going on for three days,

00:57:17.600 | it was very strange.

00:57:19.040 | It certainly was not what you would call a democratic process.

00:57:22.160 | There was no speedrun primary, as you wanted, Jason.

00:57:24.640 | There was no open convention.

00:57:26.240 | What happened is the delegates fell in line instantly, as I predicted because I said that

00:57:30.640 | they would not be able to handle the chaos, that they wanted to basically fall in line

00:57:34.320 | immediately and end the chaos.

00:57:36.480 | And they fell in line behind Kamala Harris, who has never gotten even one primary vote.

00:57:41.760 | Who worries you most as a VP candidate?

00:57:43.520 | Give us that because we understand that.

00:57:45.520 | I'll be honest with you.

00:57:46.320 | I think that the scariest, the one I would pick is Josh Shapiro.

00:57:50.960 | He's the governor of Pennsylvania, a rising star.

00:57:54.560 | Look, if he can deliver Pennsylvania for the Democrats, that's powerful.

00:57:58.960 | Because one way for Harris to eke out a victory is if Shapiro can get her Pennsylvania, and

00:58:08.000 | then if she sort of tacks back to appealing to the Arab and Muslim vote in Michigan, to

00:58:16.400 | eke out Michigan and then ekes out Wisconsin with just one point.

00:58:19.680 | In other words, if she can hold on to the blue wall and then she loses the swing states

00:58:23.680 | that Trump is very much ahead in, like Arizona, Nevada, Georgia, North Carolina, she can still

00:58:29.280 | win this election by 270 electoral votes to 268.

00:58:32.720 | It'd be the closest margin in presidential history.

00:58:36.800 | So, that's the scenario.

00:58:38.800 | And it's probably her best path to victory is to win by one electoral vote.

00:58:44.640 | That's the scenario I'd be most worried about as a Republican.

00:58:47.600 | Now, the other candidate you hear a lot about is Mark Kelly, the senator from Arizona, who

00:58:53.280 | on paper looks fantastic.

00:58:54.800 | He's an astronaut.

00:58:56.080 | His wife was a victim of a gunshot.

00:58:59.440 | Moderate, right?

00:59:00.320 | Super moderate.

00:59:01.520 | I personally don't think he is that moderate, but I think he presents as one.

00:59:04.880 | And he's made noises.

00:59:07.200 | He comes across as tough and comes across as someone who's wanted to be tougher on the

00:59:13.360 | border, which is a huge weakness for Harris.

00:59:16.000 | If he can deliver Arizona, then he becomes a strong contender, but I'm not sure that

00:59:22.160 | he can.

00:59:22.800 | So, if it were me, I'd probably go with Shapiro.

00:59:26.160 | I mean, I hope they're not listening to me.

00:59:28.080 | I hope they go with Kelly.

00:59:29.440 | Chamatha, obviously, even in this heated thing, the good news is that both sides are going

00:59:34.480 | to accept the election results.

00:59:36.080 | We have that fairness and that honorability in both parties where we'll accept even a

00:59:41.280 | close election.

00:59:42.000 | There'll be no drama after it.

00:59:43.280 | But what's your thought on the strongest ticket?

00:59:47.040 | Do you think Shapiro?

00:59:47.840 | Do you think Kelly?

00:59:48.640 | CNN said, "Hey," and this went viral, "Do we think a Jewish vice president, the country's

00:59:55.680 | ready for it?"

00:59:56.240 | They got kind of dragged for that.

00:59:57.760 | What do you think is the right VP pick here, Chamath?

01:00:02.400 | What do you think the right VP pick here is, and which one is the scariest to a Trump/J.D.

01:00:08.080 | Vance ticket, which is a very strong ticket in and of itself?

01:00:10.640 | So, if you look at Trump's VP pick, it's about aligning a philosophy.

01:00:21.520 | Donald Trump created the MAGA movement, this populist, conservative, right-wing movement.

01:00:27.440 | And I think J.D. Vance has an opportunity now to carry that torch post-Donald Trump.

01:00:34.480 | And that is an ideology that spans states.

01:00:40.240 | I think this idea that you pick somebody because they can deliver a state is pretty misguided.

01:00:45.840 | I just don't think that that, in reality, is what happens.

01:00:49.760 | So, I think that Kamala has to decide what she stands for, and figure out whether she

01:00:55.920 | needs somebody on her flank that represents a slightly different set of ideas that will

01:01:00.080 | then maximize her appeal, or she wants to double down.

01:01:03.120 | And then she has to pick somebody that sort of, like, aligns with her philosophically.

01:01:08.640 | And again, I would just say that it's not super clear yet what she thinks.

01:01:13.280 | I think that Joe Biden was more of a traditional centrist that

01:01:17.360 | had to appeal to the progressive left in order to get his work done.

01:01:21.600 | So, that kind of makes sense.

01:01:26.640 | You can understand it, you don't have to agree with it, but it's pretty obvious.

01:01:29.840 | I don't know what she, where she's at politically.

01:01:35.200 | So, I think that that's the first thing.

01:01:36.560 | She needs to explain herself.

01:01:37.680 | Is she a centrist?

01:01:38.720 | Is she more of a moderate Democrat?

01:01:42.880 | Is she more of a progressive Democrat?

01:01:45.120 | And then we can then understand who the best person to align her with should be.

01:01:50.000 | But if I was, if I if I was in the democratic kind of like star chamber,

01:01:55.680 | yeah, I would kind of try to figure that out first, because I think the Donald Trump pick

01:01:59.840 | makes a lot of sense, because it basically moves the Republican Party in a very firm

01:02:04.320 | direction that die is cast for the Republicans for many years to come now.

01:02:08.240 | Okay, free bird, your thoughts, who is the VP candidate?

01:02:11.600 | What do you think of this race?

01:02:14.480 | And give us a prediction.

01:02:16.400 | You know, you're famous for your incredible insights and predictions in politics.

01:02:20.640 | Give us your prediction.

01:02:21.440 | Who should you pick?

01:02:23.200 | Who will she pick?

01:02:23.840 | I think there's a lot of talk about Roy Cooper in North Carolina.

01:02:28.560 | Saxon mentioned Cooper, but sounds like could be in the running and could be a leading contender

01:02:36.640 | for the slot.

01:02:38.800 | I think the Harris Trump poll is not out or there's a recent one that shows Harris Yeah,

01:02:48.160 | 4448 from in the lead in North Carolina.

01:02:51.680 | So there's some some room there.

01:02:56.720 | If you can get the governor in that spot, that's a lot of electoral votes.

01:03:00.880 | In terms of who I think should be, I'm not sure.

01:03:04.080 | But I do think that might be a top contender from folks I've talked to.

01:03:08.960 | Any thoughts on Shapiro and CNN's positioning that the country's not ready for a Jewish

01:03:14.960 | vice president.

01:03:16.000 | So, you know, I was shocked recently to hear about a board, a pretty, you know, important

01:03:22.320 | board, because it represents a large organization.

01:03:25.040 | And there was a an individual on the board who's supposed to be elected chairman, they

01:03:28.480 | went in for the for the vote.

01:03:30.080 | And in that board meeting, this individual who happens to be Jewish, there was a conversation

01:03:34.160 | that ensued about you can't be the chairman at this time, because having a Jewish chair,

01:03:38.400 | would be really difficult in this current climate.

01:03:42.000 | And I was shocked to hear this, you know, it was, it was not expected by by folks going

01:03:48.080 | into the meeting, things were supposed to be quite different in the vote.

01:03:51.280 | And ultimately, the decision was made that a Jewish person should not be the chair of

01:03:55.520 | the board at this time, Jake out to your question, I think that behind closed doors, these are

01:03:59.760 | the sorts of conversations that are going on, that there's a perception, given the Gaza

01:04:04.560 | conflict, that there is a risk of having Jewish leadership being put into powerful positions

01:04:10.720 | right now Jewish leaders being put in a powerful position.

01:04:12.720 | Wow, that is shocking.

01:04:15.200 | That's insane.

01:04:16.240 | It's just this is this is what is going what?

01:04:20.560 | This is just, yeah, it's shocking and deranged.

01:04:23.760 | And the anti semitism right now on social media.

01:04:26.960 | And what we're seeing online is just absolutely heartbreaking and infuriating in equal parts,

01:04:34.240 | sucks.

01:04:34.480 | Anything you want to add to this as we wrap up our what the

01:04:37.680 | Well, I mean, just talk about Shapiro sacks.

01:04:41.840 | Is the country ready for this that you saw the CNN clip?

01:04:45.360 | And, you know, sort of, can I just ask?

01:04:49.200 | I'm sorry.

01:04:50.000 | Go ahead.

01:04:50.800 | What does it solve?

01:04:51.680 | What does it accomplish?

01:04:54.160 | Less heat coming into that board, less protests, less less protests.

01:05:00.160 | The protesters now have, I guess what I would read into this, correct me if I'm wrong here,

01:05:05.040 | Freeberg, is the protesters have now won in that they've intimidated people to an extent

01:05:11.840 | that they don't want to go near Jewish leadership.

01:05:14.960 | Am I interpreting correctly?

01:05:16.240 | A possibility here?

01:05:18.480 | Sorry, say that again, the protesters and what?

01:05:22.400 | So these protests, the Gaza conflict have reached a point where people do not want to

01:05:30.560 | have Jewish leadership because it would be polarizing and create more protests.

01:05:35.200 | That's right.

01:05:36.400 | That's that.

01:05:36.880 | And that's the conversation that I hear going on behind closed doors or I'm hearing about.

01:05:40.960 | And so, you know, it's almost like a cancel culture against Jews because of the risk of

01:05:47.920 | a Jewish person being in a leadership position that could drive.

01:05:51.360 | Yeah, which is exactly what CNN was bringing up with the VP choice of Shapiro.

01:05:55.520 | And that's right.

01:05:56.080 | I think it's totally crazy.

01:05:57.360 | However, I definitely have seen people online.

01:06:00.560 | I mean, articles online, like saying, like, is this an issue with putting Shapiro on the ticket?

01:06:05.920 | Now, I can't believe this is a problem for the voters of the country.

01:06:09.920 | However, I think if you're one of the democratic masterminds and you're trying to engineer

01:06:15.440 | enough electoral votes for Harris to win, like I said, you're trying to win that blue wall.

01:06:20.000 | You're trying to get not just Pennsylvania, but Michigan.

01:06:22.080 | And the problem that Biden had and now Harris has in Michigan is that the large Arab and

01:06:31.360 | Muslim population of Michigan is really against the administration's support of Israel.

01:06:37.360 | Now, this is why Harris just snubbed Netanyahu when he came to Washington.

01:06:41.680 | So they are immediately trying to reposition that issue.

01:06:45.200 | And remember, the margin of error in Michigan is like 2%.

01:06:49.200 | So if they can win back that vote by seeming to be more progressive on the whole Israel-Gaza

01:06:56.640 | war, then there's a big electoral advantage for them.

01:06:59.920 | So I have to wonder if this is where this talk about, you know, is it an issue for Shapiro

01:07:05.920 | to be Jewish on the ticket or whatever?

01:07:07.760 | Again, it's nuts to me that we could be even having that conversation in this country.

01:07:12.400 | But it's possible that that is what's going on is it's like, can you win Pennsylvania,

01:07:18.400 | but not lose Michigan?

01:07:19.440 | - Well, the inevitable outcome of identity politics by giving everyone a definition on

01:07:24.560 | their race or their gender or their background or their religion is that you ultimately end

01:07:30.080 | up picking winners and losers.

01:07:31.440 | And you don't just get to pick winners.

01:07:34.080 | When you make selections or prioritize things based on identity like this, you also de facto

01:07:41.520 | pick losers.

01:07:42.240 | And that's where this unfortunate snowball.

01:07:46.000 | - When John F. Kennedy ran for president, it was a big issue that he was Catholic.

01:07:49.920 | I mean, you guys don't remember this, but-

01:07:51.120 | - I do.

01:07:51.600 | - In 1960, right?

01:07:53.200 | - It was a major thing in our family.

01:07:54.960 | There was a major point of pride that we had an Irish Catholic in the White House, yeah.

01:07:58.480 | - Yeah, and specifically what people asked is would he be loyal to the United States

01:08:02.480 | or be loyal to the Vatican and the Pope, you know, who was his ultimate authority?

01:08:06.640 | And he made it really clear, look, I'm gonna do what's right for the United States.

01:08:09.440 | And he neutralized that issue.

01:08:11.760 | I think that what matters about Shapiro or any VP is their views and their accomplishments,

01:08:17.360 | their policies, and whether he's Jewish or not really is secondary.

01:08:22.560 | Even if your principal concern is Gaza, there are still plenty of Jews who have a wide spectrum

01:08:29.760 | of views on that issue.

01:08:31.360 | So it is nuts to me that this conversation is seriously happening.

01:08:36.560 | - All right, there has been a kerfuffle, a Donnybrook online between Paul Graham and

01:08:43.360 | our bestie, David Sachs here.

01:08:45.760 | Here, Paul Graham, threatening you, Sachs on X, do you really want the full story of

01:08:52.080 | what you did to Parker being told publicly?

01:08:54.400 | Because it's the worst case of an investor maltreating a founder that I've ever heard,

01:08:59.440 | and I've heard practically all of them.

01:09:01.120 | This is Paul Graham, the founder of Y Combinator.

01:09:03.280 | I was talking recently to another investor about whether you are the most evil person

01:09:07.520 | in Silicon Valley, referring to you, David Sachs.

01:09:09.840 | He thought about it for a few seconds and agreed.

01:09:11.920 | And he couldn't think of anyone worse.

01:09:14.640 | The second tweet about you being the most evil person, David Sachs, in Silicon Valley

01:09:20.400 | has been deleted.

01:09:21.440 | - Well, that's nice to know.

01:09:22.560 | - But your response, it's nice to know, yes.

01:09:24.480 | - That's nice to know.

01:09:25.280 | There was also another unhinged tirade that he had against me a few months ago.

01:09:29.120 | - Okay.

01:09:30.000 | - Where he was commenting in the Ukraine debate and was responding to a Ukrainian partisan

01:09:37.120 | who, this guy is like a propagandist for Ukraine who was embedded in the Azov battalion.

01:09:42.080 | People may know what that is.

01:09:44.640 | In any event, Paul went out of his way.

01:09:46.480 | The thing is, I've never met Paul Graham.

01:09:49.600 | I don't know him.

01:09:50.320 | I've never done business with him.

01:09:53.520 | So it's just weird to me that he has this animus and this vitriol towards me.

01:09:58.160 | It's hard to know exactly what this is based on.

01:10:00.560 | I think that part of it is that he thinks he knows what happened at Zenefits, even though

01:10:08.080 | he wasn't involved at all.

01:10:09.360 | And he's just listening to one guy who's been nursing this vendetta for many years.

01:10:14.720 | And then other people are speculating that there could be other things involved.

01:10:17.440 | I don't quite know.

01:10:18.800 | - Do you want to set the record straight on Zenefits and just say what happened?

01:10:22.400 | - What is it that you guys want to know?

01:10:23.920 | - Parker apparently has done several public interviews where he kind of made claims.

01:10:29.120 | I think, I don't know if I've listened to him.

01:10:30.640 | I've just read the summaries.

01:10:31.520 | But Jake, you probably know that Parker's claimed that he was--

01:10:33.200 | - I just said you ran a coup on him.

01:10:34.800 | Obviously, for folks who don't know, there was an SEC investigation.

01:10:39.360 | And Parker was ousted from Zenefits as the founder CEO.

01:10:45.120 | He's very bitter about that.

01:10:46.080 | Did a revenge startup, Rippling, which is doing quite well, from what I understand.

01:10:50.640 | And he blames Sachs for all of this, even though he was sanctioned for doing essentially

01:10:55.600 | insurance fraud by helping people lie on a test for their insurance certifications.

01:11:05.520 | And he got sanctioned by the SEC for it.

01:11:08.160 | And as you pointed out, Sachs, he was the only person who was sanctioned for that.

01:11:11.440 | So he broke some rules.

01:11:13.760 | And he got a pretty serious penalty, yeah?

01:11:17.600 | Do I have that basically correct?

01:11:20.000 | - Yeah, I mean, look, that whole experience was easily the worst year of my entire professional

01:11:26.240 | career, having to deal with that mess that he created.

01:11:30.400 | And look, anybody can now say anything almost 10 years later in a podcast.

01:11:34.720 | But the situation there was thoroughly investigated by regulators who had subpoena powers, who

01:11:42.080 | did extensive discovery.

01:11:43.280 | They looked at everyone's emails throughout the whole company.

01:11:46.640 | They also interviewed something like a dozen people under oath and took witness testimony

01:11:53.200 | from them.

01:11:53.840 | And then they sanctioned him, they fined him, and they published an account of what happened.

01:11:58.000 | I personally think it's a huge waste of time to be like rehashing events that are almost

01:12:02.400 | a decade old.

01:12:03.040 | But I guess I'm being forced to by this smear campaign that he and Paul Graham have engineered

01:12:10.720 | against me.

01:12:11.680 | If you want to know what happened, just read what the SEC said.

01:12:15.760 | Read what the other regulators said.

01:12:17.520 | There was only one person who was named as being aware of the misconduct.

01:12:24.320 | And there was only one person who was fined and held accountable by regulators.

01:12:29.120 | In fact, he was fined more than the company.

01:12:31.280 | Now, if he just said, yeah, look, I learned from that mistake.

01:12:35.680 | And I made some mistakes, moved on.

01:12:37.840 | And apparently he does have a successful company.

01:12:40.000 | So I don't really understand why he's so bitter.

01:12:42.960 | He seems to have like a, you know, he's like disturbed about it.

01:12:47.040 | Then it would be fine.

01:12:48.800 | I mean, there would be no reason to be talking about this.

01:12:51.520 | But the guy refuses to admit that he did anything wrong.

01:12:55.920 | And instead, he's created this elaborate story that his departure from Zenefits wasn't related

01:13:00.800 | to massive compliance issues.

01:13:02.720 | And that somehow it was related to him seeing a sales target or being the victim of a coup.

01:13:06.960 | That's not what happened.

01:13:08.640 | This was a regulatory crisis that unfolded over many months and kept getting worse and

01:13:14.000 | worse.

01:13:14.560 | And we kept discovering new compliance violations.

01:13:18.480 | And this created a 50 state insurance investigation that could have shut the company down.

01:13:22.960 | And he controlled the board.

01:13:25.360 | He didn't have to leave if he didn't want to.

01:13:28.640 | He ultimately perceived that it was in his interest to leave and let us clean it up.

01:13:32.160 | And then he went on to go do this other startup, which I think he was planning to do all along.

01:13:36.080 | So his plan worked out for him, which is he left a big mess for us to clean up.

01:13:40.480 | And he's very successful now with the new company.

01:13:43.840 | So right, right.

01:13:44.960 | Sax, I remember, I will just say, I remember how hard you worked at that after you were

01:13:50.240 | in the CEO seat, and then you were promoted to CEO.

01:13:52.560 | And I was really impressed watching it and seeing what you did, because you chose to

01:13:57.120 | step up and take care of this company at a time where you expressed to all of us privately

01:14:02.080 | how hard it was and what a challenge this company had found itself in.

01:14:05.520 | And you had investors that were friends of yours that were involved in the company that

01:14:09.520 | were on the board.

01:14:10.240 | And I think you did what felt like at the time.

01:14:13.200 | And from my experience, interacting with you during this time, the right thing, which was

01:14:17.440 | to step up and address this rather than just throw your hands in the air and say, this

01:14:20.400 | guy screwed things up, or this company screwed up and walk away from it.

01:14:23.280 | You had personally put money in, your friends had put money in, and you worked hard to try

01:14:27.120 | and help the business recover after this miserable period of time.

01:14:30.480 | And it was really impressive to watch you do that work.

01:14:32.960 | So I just want to highlight my kind of experience watching you and knowing you during that time.

01:14:37.680 | Yeah, well, thank you.

01:14:38.160 | It was miserable and obviously pretty thankless.

01:14:40.080 | And I did it for no compensation.

01:14:42.400 | I did it because, like you said, I had a lot of friends who invested in the company.

01:14:45.040 | I just thought it was the right thing to do to do this cleanup.

01:14:48.160 | The lawyers said it would take two years.

01:14:49.920 | We managed to get it done in one year.

01:14:51.840 | We got a clean bill of health from regulators.

01:14:53.840 | We had to remediate all the compliance failures.

01:14:56.480 | And when I then handed the torch to the new CEO, we had $200 million in the bank and $60

01:15:01.520 | million of ARR with a clean bill of health.

01:15:03.840 | So, you know, but I didn't know I'd have this like crazy founder like lobbing bombs at me

01:15:09.760 | the whole time.

01:15:10.480 | And frankly, if I had known he was going to do this, I would have just said, listen, man,

01:15:15.040 | you clean up your mess.

01:15:16.560 | And he would have continued playing games and stonewalling the regulators.

01:15:19.840 | And it would have been a much worse situation for sure.

01:15:22.480 | Chamath, you want to add anything here before we wrap up on this?

01:15:25.280 | Because I have two points to make, but I'll let you go first.

01:15:28.320 | Look, I think that part of what happens in Silicon Valley is that there's these cliques,

01:15:34.240 | and there's definitely a YC clique, and they protect their own in absolute terms.

01:15:41.920 | And so I think there's a level of morality that everybody else has to live by.

01:15:45.840 | That's not necessarily the rules that apply if you're a YC CEO.

01:15:51.040 | Now, that was accepted in Silicon Valley, because in the early days,

01:15:55.520 | they were, frankly, one of a very, very small handful of games in town with respect to high

01:16:04.560 | quality deal flow when you started to do series A, B and C.

01:16:07.520 | And as a result of that, I think venture capitalists essentially looked the other way,

01:16:12.800 | because the returns were so good.

01:16:14.880 | The companies that were coming out of the incubator were so good.

01:16:18.000 | But as with all things, when you're successful and you try to scale, returns decay.

01:16:22.720 | And this is not a slight on YC's returns, but it's what happens to everybody.

01:16:28.960 | So if you look at Blackstone's returns, they were incredible when they started,

01:16:33.120 | and they're okay today.

01:16:34.720 | When you look at Sequoia's returns, they were incredible when they started.

01:16:38.400 | They're okay today.

01:16:40.320 | YC's returns were incredible when they started.

01:16:42.560 | They're okay today.

01:16:43.600 | And this is nothing against any of these folks.

01:16:46.000 | It's that in the business of building an organization and scaling, that's what happens.

01:16:50.560 | And when that happens, and a lot more competition emerges on the scene,

01:16:55.120 | the old tactics that you used to run a protection racket, if you will, just doesn't work anymore.

01:17:04.560 | And I think part of what's spilling out in public here is that that kind of immature

01:17:09.840 | form of bullying and intimidation is just kind of dumb, because it just doesn't hang

01:17:15.040 | together anymore.

01:17:15.920 | So I don't know, I thought the whole melee, if you will, ruckus, Jason, fracas, fracas,

01:17:24.160 | Donnie Brock, a clash, yeah, was more about a guy that was engaged in this trying to do

01:17:34.800 | what he perceived to be the right thing for a YC founder in his community.

01:17:40.400 | But probably just he just needs to get back to work and do something productive.

01:17:44.880 | And probably this wouldn't happen the next time.

01:17:46.560 | I'll just make two points here.

01:17:48.960 | Y Combinator has always, like much of our industry, they're not unique in this, been

01:17:54.800 | in favor of rule benders, breakers, and naughty is actually something in their interview process

01:18:01.600 | that they optimize for.

01:18:03.040 | Sam Altman has talked about this very publicly.

01:18:06.560 | I had a YC alum who was trying to get funding for me, hack my voicemail and change my outgoing

01:18:11.600 | voicemail.

01:18:12.240 | And that was like a big brouhaha on Hacker News, et cetera.

01:18:15.760 | And we kind of celebrate a little bit of bending and breaking of rules.

01:18:20.160 | And what everybody needs to understand is sometimes if you bend or break a rule, like

01:18:24.160 | insurance certification, like Parker did here, that can be fatal for a company, which it

01:18:29.680 | was.

01:18:30.080 | And it can be really, really dangerous.

01:18:33.680 | And so then you super impose on top of this, to your point, Chama, Y Combinator, very big,

01:18:40.160 | powerful organization.

01:18:41.840 | Some folks say a mafia, and they described it as a bully stack.

01:18:46.000 | Y Combinator does circle the wagons.

01:18:47.840 | They do bully people.

01:18:48.800 | And they do put out a presentation that we are the only people in Silicon Valley who

01:18:55.280 | are founder friendly, even though they're getting 7% for 125K, like we do in our accelerator,

01:19:00.400 | Techstar does, while also saying everybody else is the enemy.

01:19:04.160 | Everybody else is taking advantage of founders.

01:19:06.400 | The truth is we're all working really hard.

01:19:09.040 | Every founder is going to hack their way to success.

01:19:13.600 | Sometimes you take it too far, like Parker did here.

01:19:16.720 | He learned a lot of lessons.

01:19:18.160 | Like some people say, Uber did.

01:19:19.760 | Like some people say, Airbnb did.

01:19:21.440 | There's always been rule breaking and bending in the entrepreneurial class.

01:19:25.600 | And then you superimpose on it, Paul Graham's feelings in the Middle East, Saks, your strong

01:19:31.440 | feelings about Ukraine and politics.

01:19:33.360 | And now the footprint of Silicon Valley is just so powerful, so influential on the global

01:19:38.960 | stage when it comes to politics.

01:19:40.880 | It just reaches a level of toxicity here that it doesn't need to.

01:19:44.000 | We're all on the same team.

01:19:45.280 | Let's all build great companies.

01:19:46.960 | Let's put this ugliness behind us and get back to work.

01:19:49.680 | That's my final statement.

01:19:50.720 | Nostracanus has spoken.

01:19:51.840 | I like that statement.

01:19:53.680 | And if we were just talking about somebody who had learned their lesson, this wouldn't

01:19:58.560 | even be an issue.

01:19:59.280 | This is like events that happened a decade ago.

01:20:01.280 | Such a waste of our time and energy even be talking about it.

01:20:03.760 | The problem is that you have people, really we're talking about Parker and Paul Graham,

01:20:08.960 | who are trying to smear somebody as a way to-

01:20:12.480 | You.

01:20:12.980 | They're trying to damage your business.

01:20:15.120 | Let's be honest.

01:20:15.680 | They're trying to get founders to not work with you.

01:20:18.480 | For sure they're doing that.

01:20:19.600 | And that's bullshit, by the way.

01:20:21.440 | Look, Parker has this very complicated story and the whole purpose of it is to exonerate

01:20:26.080 | himself.

01:20:26.960 | To basically say that he didn't engage in any wrongdoing and somehow he was set up.

01:20:31.040 | Okay.

01:20:31.760 | It's ridiculous.

01:20:32.640 | I mean, I don't have that kind of power over the SEC.

01:20:34.800 | The SEC, they sent us a list of people they wanted to talk to.

01:20:38.320 | I was not on the list.

01:20:39.280 | And I was like, "Well, wait, don't they want to talk to me?

01:20:41.600 | I'm the new CEO of the company."

01:20:43.440 | And the lawyer said, "No, your discovery was clean as a whistle.

01:20:45.840 | They don't have any questions for you.

01:20:46.880 | They only want to talk to people who they saw in the discovery there was an issue."

01:20:51.360 | So the regulators prosecuted.

01:20:53.920 | They basically conducted this investigation.

01:20:56.560 | I had no impact over that.

01:20:58.640 | It was a very serious issue.

01:21:00.640 | This was not made up.

01:21:01.680 | So I just think it kind of defies belief to now say that all the regulatory compliance

01:21:07.200 | issues which played out over months were not an existential issue for the company.

01:21:10.960 | It certainly was.

01:21:12.000 | But look, we have better things to talk about.

01:21:13.520 | Do you see Ali Resnick's tweet?

01:21:15.120 | This is pretty dark.

01:21:17.040 | Ali Resnick tweeting here.

01:21:19.440 | "Paul Graham reached out to the key SV firm, Silicon Valley firms, to attempt to get Jewish

01:21:27.600 | VCs fired post-October 7th."

01:21:31.840 | No idea if that's true or not.

01:21:33.200 | But there has been this Paul Graham is anti-Semitic sort of meme going around.

01:21:41.440 | I don't think he's anti-Semitic.

01:21:42.800 | But this is a pretty bold charge here.

01:21:45.040 | And I don't know if it's true or not.

01:21:46.240 | Well, I can speak to some of it.

01:21:48.560 | OK, go ahead.

01:21:49.200 | Yeah.

01:21:49.600 | I've talked to a few people who are involved in this.

01:21:52.000 | Look, I think what happened is that in the wake of October 7th, there was obviously a

01:21:55.440 | very heated debate online.

01:21:57.360 | PG is on one side of that.

01:22:00.720 | He got into it with supporters of Israel on the other side.

01:22:03.360 | They accused him of saying anti-Semitic things.

01:22:07.760 | He took offense to that and basically went over their heads to their bosses of a couple

01:22:14.960 | of different VC firms, at least two that I know of, where he basically went to the heads

01:22:19.520 | of these firms to express his displeasure, I guess, with these exchanges.

01:22:23.440 | And I think the feeling on the part of the junior VCs, because the people he was going

01:22:28.400 | over the heads of were not senior partners or whatever.

01:22:30.960 | These were lower-level to mid-level VCs at firms.

01:22:34.000 | You can understand how they would receive that.

01:22:37.200 | The head of YC is going over--

01:22:38.800 | Yeah, Paul Graham is a giant.

01:22:40.240 | Yeah.

01:22:41.600 | He's basically going to the heads of their firm to seek a correction in their behavior,

01:22:47.600 | even though this wasn't like a workplace activity.

01:22:50.320 | And so they certainly felt intimidated and silenced by that.

01:22:54.960 | Or in the worst case, that he was trying to get them fired.

01:22:57.920 | In his case, I guess he's trying to say, "Hey, this isn't cool to call me an anti-Semite"

01:23:03.360 | on Twitter publicly.

01:23:04.480 | And the truth may be somewhere in between.

01:23:07.040 | I mean, the great irony of this, of course, is he's concerned about his reputation being

01:23:12.160 | damaged.

01:23:12.800 | And I know YC took it very seriously, the claims that they're anti-Semitic, and Paul

01:23:17.200 | Graham's anti-Semitic.

01:23:18.560 | They took that very seriously, as they should.

01:23:20.560 | But here he is out there trying to damage your reputation.

01:23:24.560 | So it's a little bit of hypocrisy here, I think, if he's outwardly trying to destroy

01:23:31.120 | your reputation with founders, and then he's concerned about his reputation.

01:23:34.240 | Well, clearly there's a double standard here, because PG doesn't like being called names

01:23:39.040 | on Twitter.

01:23:39.600 | He doesn't like his views being labeled.

01:23:42.960 | And he's willing to take those debates offline, go over the heads, not talk to the people

01:23:48.080 | who said those things, but then go to their bosses, the heads of their firm, maybe not

01:23:52.960 | threaten them, maybe not say, "I don't think he said fire this person," or whatever.

01:23:57.040 | But like you said, there's always an implication of retaliation because people understand the

01:24:02.000 | way that YC operates.

01:24:03.680 | And certainly those junior level VCs experienced it as a form of intimidation.

01:24:10.800 | I mean, this is the classic cancellation playbook, right?

01:24:13.280 | And this is what people will do to the left or the right, or they'll do it to advertisers.

01:24:17.680 | They'll try to get advertisers to cancel.

01:24:19.520 | It feels similar to that cancel culture, even if that's not how PG intended it.

01:24:24.560 | Well, it's also like rather hypocritical when he's super sensitive about this type

01:24:29.360 | of thing, but then he's instigating this pylon when on this whole Zenefits thing, he's basically

01:24:35.520 | single source from a disgruntled founder who has this vendetta, who's been nursing this

01:24:40.160 | thing for years.

01:24:41.040 | He's never talked to me.

01:24:42.240 | Like I said, he's never even met me, but he's willing to call me the most evil person in

01:24:46.960 | all of Silicon Valley.

01:24:48.160 | And then again, instigate this pylon with like all these other people from YC.

01:24:53.040 | Yeah.

01:24:53.280 | I mean, how dare him call you the most evil person?

01:24:56.640 | That's my job here on the podcast.

01:24:58.720 | Yeah, exactly.

01:24:59.680 | And then I saw like other people from YC, like Michael Siebel, who I think is actually

01:25:03.440 | a really cool guy.

01:25:04.320 | Oh, he's awesome.

01:25:05.040 | Yeah.

01:25:05.600 | Super supportive of founders.

01:25:07.040 | And then he's tweeting that like I somehow I put up my founders who were, there were

01:25:10.800 | a lot of founders who basically spoke up and actually said, including many founders who

01:25:15.440 | came out of YC say, you know, actually David's been a great VC to us.

01:25:18.560 | And he's saying, oh, Saks must've put them up to it.

01:25:21.360 | No, I never asked anybody to do that.

01:25:23.360 | And a good reason why is I don't want to trouble my founders.

01:25:27.440 | Or drag them into this.

01:25:28.560 | Yeah.

01:25:28.800 | Drag them into it.

01:25:29.440 | So I'm not going to make them do that.

01:25:30.800 | So I had nothing to do with that.

01:25:32.160 | But, but frankly, you know, old saying that every accusation is a confession.

01:25:36.320 | Maybe the reason why people at YC think that I might've done that is because that's kind

01:25:40.400 | of their playbook is they create these online mobs.

01:25:43.040 | But like what gives him the right to do that?

01:25:46.560 | I can tell you.

01:25:47.120 | Go for it.

01:25:48.400 | He doesn't have enough to do.

01:25:50.160 | He's sitting around, he's got a lot of money.

01:25:53.600 | I mean, he's been very successful.

01:25:55.680 | And as far as I can tell, he's just getting into dustups on Twitter.

01:25:59.200 | And then like, like I, there's a lot of amazing people.

01:26:03.200 | We all know them that are so good when they're under pressure focused and grinding.

01:26:07.680 | And then when you take a little bit of the pressure off, they just go crazy and they

01:26:13.600 | don't have enough to do.

01:26:14.400 | And it's amplified by money and it's amplified their own perceptions of themselves.

01:26:17.760 | So I don't know, maybe, maybe you should just go back to work.

01:26:20.880 | So everybody back to work.

01:26:23.600 | When these things get heated, here's an interesting idea for everybody.

01:26:26.640 | Go get a cup of coffee with the person you disagree with.

01:26:29.120 | Sit down like we do here at the all in podcast and have a vibrant debate.

01:26:32.800 | It makes life richer.

01:26:33.840 | It makes you smarter.

01:26:34.880 | It gives you more perspective.

01:26:36.080 | And so PG, Saks, anybody else involved and just all sit down and have a cup of coffee.

01:26:41.200 | Try to hash this out.

01:26:42.160 | Okay.

01:26:42.720 | Good coffee in San Francisco.

01:26:44.080 | That's my RX.

01:26:45.200 | Freeberg.

01:26:46.560 | I've been talking to Saks privately.

01:26:48.320 | He has been complaining to me for weeks that we've had too much politics on the program

01:26:52.640 | and not enough science corner.

01:26:54.480 | So I acquiesced to Saks' appeals to me and all of his supporters to, to get a science

01:27:01.200 | corner in today.

01:27:02.000 | Let's talk about nuclear power.

01:27:04.560 | Everybody's got nuclear power on their mind.

01:27:06.640 | Obviously, China's doing a really good job of executing on it.

01:27:10.800 | And there's some new science here.

01:27:12.560 | So fill us in.

01:27:13.440 | Saks looks so engaged.

01:27:16.960 | Let's go.

01:27:17.360 | Well, Saks might like it because it's, it's a bit of an economic story and a bit of a

01:27:21.760 | China competitive story, which I think is the main point here.

01:27:25.840 | The story is rooted in a paper that was published out of China on their new high temperature

01:27:31.920 | gas cooled pebble bed reactor, which is a new type of nuclear reactor technology that

01:27:37.200 | shows that this thing cannot melt down, which is an amazing new technology.

01:27:40.640 | But I want to just take a step back and talk about general electricity production in the

01:27:45.280 | US versus China and where it's headed.

01:27:47.440 | So today, the US has roughly one terawatt of total electricity production capacity.

01:27:53.120 | China today has about three terawatts of total electricity production capacity.

01:27:58.400 | And about, you know, two to 3% of that is nuclear today for China.

01:28:03.360 | So by 2050, the US is projected to build out an additional terawatt to getting us to two

01:28:08.720 | terawatts of capacity.

01:28:09.760 | So we're going to double our total electricity output by 2050.

01:28:13.840 | China, meanwhile, has a plan stated to increase electricity production to 8.7 terawatts.

01:28:19.840 | So basically tripling between now and 2050.

01:28:22.880 | 88% of their power by 2050 will be renewables.

01:28:26.480 | And by 2060, they've stated this goal that they want about 18% of their overall power

01:28:32.480 | to come from nuclear reactors.

01:28:34.400 | They currently have 26 nuclear reactors in the construction phase.

01:28:38.000 | They've got planning going on around building 300 of these.

01:28:42.000 | And they've already got stated plans around 500 gigawatts of capacity.

01:28:45.920 | Just to give you a sense of that 500 gigawatts, which is what China's got plans for is half

01:28:50.800 | of the total US electricity production today.

01:28:54.480 | That's in their nuclear build out today, just to give you a sense of the relative cost of

01:28:59.040 | electricity.

01:29:00.000 | China is about seven to 9 cents a kilowatt hour.

01:29:02.400 | The US is 17 to 25 cents a kilowatt hour.

01:29:06.800 | And China is projected to drop their price to less than six cents due to the expansion

01:29:12.480 | of renewables and nuclear power in the country.

01:29:15.840 | So the US cost is about triple what it is in China to build out new electricity capacity.

01:29:20.720 | That's a really important point.

01:29:22.320 | So currently, we have about a third of what China has.

01:29:24.240 | China is going to triple, we're going to double by 2050.

01:29:28.320 | Their cost is already lower than ours, and it's going to get lower.

01:29:31.200 | And their cost to build out new electricity is a fraction of what it is in the US.

01:29:37.520 | So this is a massive difference.

01:29:39.280 | The International Energy Agency estimates that the electricity from nuclear power cost

01:29:43.440 | 65 bucks per megawatt hour in China compared to 105 in the US and 140 in the EU.

01:29:50.240 | And recent data has US costs looking like they might be anywhere from five to up to

01:29:55.040 | 10 times what it costs to build out in China.

01:29:57.440 | So this is a real important, long term competitive point.

01:30:02.960 | China has more electricity production, it's cheaper to make electricity and it's cheaper

01:30:06.800 | to build new capacity.

01:30:08.080 | And they're building at an accelerated rate.

01:30:09.680 | And this really highlights the industrial challenge the United States is going to have

01:30:14.160 | in the decades ahead.

01:30:15.360 | We talk a lot about wanting to onshore manufacturing in the US, build out new manufacturing

01:30:19.920 | technologies, but ultimately, all of these industries, particularly AI, are going to

01:30:24.400 | be driven by the cost of power.

01:30:26.640 | So, Nick, if you pull up this chart, so what's going on in nuclear?

01:30:30.080 | Well, there's effectively considered to be four generations of nuclear reactors.

01:30:35.120 | The first generation was all the early prototypes.

01:30:37.360 | And I've got an image up here to show to show this comes from the Department of Energy.

01:30:42.080 | The second generation, which was the first kind of commercial power reactor started to

01:30:45.360 | get built out in the 1960s, 70s, 80s.

01:30:48.080 | And then these Gen three reactors were these lighter weight reactors that were kind of

01:30:52.480 | more advanced.

01:30:53.920 | Gen four is the next generation of nuclear power reactors.

01:30:58.400 | And they're next generation because they're meant to be much more safe, where they cannot

01:31:02.320 | theoretically have a meltdown.

01:31:03.840 | You can't have a nuclear meltdown like you had with Fukushima or with Three Mile Island.

01:31:09.040 | And to be clear, Fukushima was generation two.

01:31:11.440 | Those are the boiling water reactors.

01:31:13.120 | Yeah.

01:31:13.620 | Yeah.

01:31:14.240 | And so these old reactors have this risk where you pump water in to cool down the reactor

01:31:21.920 | and to drive the turbine.

01:31:23.520 | And if the water pumping system fails, and you can't get the rods out of the reactor,

01:31:29.440 | then the reactor keeps reacting, the uranium keeps having this kind of chain reaction gets

01:31:35.280 | hotter and hotter and eventually gets so hot, it melts all the walls and all the surrounding

01:31:39.760 | materials of the reactor.

01:31:41.280 | And all of the nuclear rods start to evaporate and all this nuclear material is released

01:31:46.400 | into the environment.

01:31:47.440 | That's the risk of a meltdown.

01:31:48.800 | Ultimately, this is not a nuclear bomb.

01:31:50.880 | Just to be clear, it's just about really high temperatures melting the facility, and then

01:31:54.560 | radioactive material escapes the facility.

01:31:56.960 | The Gen Four reactors are designed where that isn't possible.

01:32:00.720 | And so one of the first, if you go to this next slide, you'll see just kind of an image

01:32:04.560 | here.

01:32:04.800 | This is the new reactor called the Pebble Bed Reactor.

01:32:07.840 | China started this facility.

01:32:09.440 | I don't want to butcher the name, but I think I will.

01:32:12.720 | It's at the Shiedawan site in Shandong province.

01:32:16.160 | It's a 210 megawatt electricity production reactor.

01:32:20.480 | They started construction in 2012.

01:32:22.640 | They finished and started doing operational tests in December of '22.

01:32:27.280 | They ran all the safety tests in the summer of '23, where they turned off the cooling

01:32:32.240 | and basically simulated that the system failed to see if it would melt down.

01:32:37.200 | And that's the results that they just published, which was the test they ran last summer.

01:32:40.960 | And even when they turned everything off, the system did not fail.

01:32:43.600 | It did not have a meltdown.

01:32:45.120 | It maintained its ability to control its temperature and not have a meltdown.

01:32:50.000 | And the way it works, as you can see here, is that these little pebbles, they're kind

01:32:53.920 | of like billiard ball-sized pebbles, have uranium in their core.

01:32:56.880 | These pebbles kind of drop into the center reactor chamber.

01:33:00.880 | And when the uranium is close to other uranium, a chain reaction starts to generate heat.

01:33:05.440 | That heat is actually, in this reactor concept, captured by helium gas that's circulated

01:33:11.920 | inside around the reactor.

01:33:13.440 | That hot helium gas heats up water, turns a turbine, generates electricity.

01:33:17.760 | And then these billiard balls fall out the bottom.

01:33:19.760 | So what they did is they simulated that the system stopped circling, that the power went

01:33:24.320 | out, and measured what happened.

01:33:25.680 | Ultimately, it was able to recover.

01:33:27.840 | It didn't melt down.

01:33:29.040 | And this is quite different, Nick, if you show an old model of an old nuclear rod system.

01:33:33.280 | So here's nuclear rods.

01:33:34.400 | They're made of uranium.

01:33:35.840 | They go inside these chambers that have other uranium.

01:33:38.640 | And when they touch each other or get close to each other, they heat up.

01:33:41.120 | And you have water that has to be pumped continuously to keep it cool to maintain a low

01:33:46.080 | temperature.

01:33:46.960 | What happened in Fukushima and other facilities where we've had meltdowns is that the water

01:33:51.280 | stopped pumping.

01:33:52.160 | Everything kind of evaporated away.

01:33:54.800 | And the rods didn't get pulled.

01:33:56.000 | If the rods can't get pulled out and the water can't keep pumping, you have a meltdown.

01:33:59.920 | When things get so hot, it melts everything around it and collapses.

01:34:03.600 | So this Chinese site just demonstrated this pebble bed reactor, which is a Gen 4 reactor.

01:34:09.040 | And it has extraordinary safety profile.

01:34:12.880 | There's basically no condition where the system would have a meltdown.

01:34:18.720 | So these Gen 4 reactors are smaller.

01:34:20.640 | They're more modular.

01:34:21.840 | They're much, much safer.

01:34:22.960 | They're more efficient.

01:34:23.920 | They have much less waste.

01:34:25.440 | You still have to store those used billiards somewhere.

01:34:28.240 | So you still have to kind of take them and put them somewhere and keep them underground

01:34:31.760 | for 10,000 years.

01:34:33.200 | But compared with previous reactors, this plant is designed to be much more efficient,

01:34:39.280 | much safer.

01:34:40.480 | And they completed the safety test.

01:34:41.680 | They published the results on the safety test.

01:34:43.360 | And I think it really shows the performance is there.

01:34:46.880 | And this was always meant to be future technology, these Gen 4 reactors.

01:34:50.560 | China opened up commercial operations of this reactor in December of 2023.

01:34:54.480 | So it's running, producing power.

01:34:56.160 | It's on the grid.

01:34:56.800 | And, you know, this design, funny enough, was first proposed in the 1940s.

01:35:02.000 | And it took us nearly 100 years to get it to market, which makes me also point out why

01:35:07.200 | I'm so optimistic 100 years from now on fusion technology, which seemed crazy.

01:35:10.640 | But today, and this this sort of technology seemed crazy at the time.

01:35:14.240 | But, you know, 80 years later, we've gotten there.

01:35:16.240 | So, you know, this was an exciting outcome.

01:35:18.480 | But I really do want to highlight the competitiveness with China, lower cost to produce,

01:35:23.680 | lower cost to run, and they're expanding like crazy.

01:35:27.200 | And the downstream is they can power more H100s.

01:35:30.880 | And this is why I asked Donald Trump when he came on the show.

01:35:34.480 | And I want to make my passionate plea.

01:35:36.160 | This is why investing in and deregulating nuclear reactor technology in the United States

01:35:41.120 | to enable a competitive playing field with the United States and China in the decades

01:35:44.800 | ahead is so critical.

01:35:45.840 | Because if we don't, China will beat the United States industrially.

01:35:49.040 | And we will eventually find ourselves in a greater point of conflict with respect to

01:35:52.960 | this rising power that is going to be driven by low cost, highly abundant power.

01:35:58.240 | And the United States does not have that.

01:35:59.920 | Power equals AI.

01:36:01.520 | You don't think that distributed energy can basically deliver effectively energy at a

01:36:08.640 | marginal cost of zero?

01:36:09.840 | Yeah, so the solar buildout, Shamak, is in the US forecast where we could get in an optimistic

01:36:16.800 | scenario, a doubling of power output from one terawatt to two.

01:36:20.720 | That's in the system today in the forecast.

01:36:23.440 | But how do we get to nine?

01:36:25.040 | That's where China is going to be at by 2050.

01:36:27.680 | And we have to have this ability to more rapidly kind of accelerate, you know, high power output

01:36:33.280 | systems like nuclear, because while solar is great, it's a low power output, you need,

01:36:38.000 | you know, much more volume.

01:36:39.120 | So this is a highly concentrated system.

01:36:41.040 | And the cost per megawatt hour, you know, can be significantly competitive if you use

01:36:45.520 | these small modular reactors and accelerate.

01:36:47.760 | What about carbon based solutions as a fallback?

01:36:51.520 | Difficult to scale.

01:36:53.520 | I mean, we're not going to open up 500 more coal power plants in the next couple of years.

01:36:57.440 | What about oil and nat gas?

01:36:58.800 | Yeah, so today, nat gas is 44% of US power production capacity.

01:37:05.280 | And we are going to build out and we are building out new nat gas facilities, but that's in

01:37:09.360 | the forecast.

01:37:10.160 | So all of our forecasts today for the US are mostly nat gas going out and a lot of solar

01:37:15.360 | and wind going out to 2050 to double our capacity.

01:37:19.200 | And it's already a stretch for us to be able to double our capacity.

01:37:21.920 | So the only solution is to rewrite the regulation.

01:37:25.440 | We have to get nuclear going in the United States.

01:37:29.120 | And these systems are safe.

01:37:31.200 | They are scalable.

01:37:32.480 | And if the United States embrace this, and we took a public policy perspective that this

01:37:36.480 | is about competitiveness with China.

01:37:38.240 | It's about national security.

01:37:39.840 | I'm hopeful that whoever comes in to lead the executive branch in this next administration

01:37:44.560 | will be really thoughtful and make this a top priority.

01:37:46.560 | So that's my plea and my reason for going through this today.

01:37:48.640 | Yeah, I agree.

01:37:51.040 | Yeah, this has been another amazing episode of the all in podcast for what have we learned,

01:37:57.520 | Jason, it's important to have a job.

01:37:59.520 | Otherwise, everything just goes to pot.

01:38:01.520 | Yeah, do not retire.

01:38:02.640 | Keep your mind sharp and shout out to our friend Phil Helmuth doing really great at

01:38:08.080 | the World Series of Poker.

01:38:09.440 | Happy birthday Xander.

01:38:10.880 | Happy birthday to our guy Xander, yada yada.

01:38:13.760 | And for the German dictator, the Sultan of science and your rain man architect.

01:38:19.920 | Yeah, David Sachs.

01:38:21.760 | I am the world's most moderate moderator.

01:38:24.320 | We'll see you all next time.

01:38:25.360 | I will let your winners ride.

01:38:28.560 | Rain Man, David Sachs.

01:38:31.440 | And instead, we open source it to the fans and they've just gone crazy with it.

01:38:38.560 | Love you, queen of Kinhwa.

01:38:40.480 | Besties are gone.

01:38:48.480 | That is my dog taking a notice in your driveway.

01:38:53.120 | Oh, man.

01:38:55.760 | We should all just get a room and just have one big huge orgy because they're all just

01:39:01.120 | useless.

01:39:01.680 | It's like this, like sexual tension that they just need to release somehow.

01:39:04.560 | What the beep beep, what the beep beep, we need to get merch.

01:39:12.560 | I'm going all in.

01:39:20.560 | I'm going all in

01:39:22.560 | you

Mag 7 sell-off, Wiz rejects Google, UBI, Kamala in, China's nuclear buildout, Sacks responds to PG

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