E163: Market rips, Media RIFs, Texas defies Biden, Fintech reckoning, ARkStorm 2.0 & more

00:00:00.000 | It's a real picture

00:00:04.000 | Recognize the gut very

00:00:13.280 | Don't think you guys know there's a treasure trove you go to Google Images

00:00:33.880 | You type in Phil's name and WSOP is the last thing I would ever do dozens of these dozens

00:00:39.480 | Every year he dresses up in some outfit. Oh my god. Let me see which ones I like. Yeah the plunging V lines a little much

00:00:45.900 | He does have a perky C cup so

00:00:50.820 | Oh

00:00:52.820 | No, wait, it's Poseidon's well, it's no no, it's

00:01:13.500 | Phil we love you. We love you. We love you

00:01:17.740 | And Phil loves attention

00:01:19.900 | All right, everybody welcome to episode 163 of the all in podcast with me, of course the Sultan of beep

00:01:43.620 | Science we'll find out his crop soon David Freeberg and David Sachs the rain man himself, and of course chairman dictator

00:01:50.100 | It's a mouthful. Yeah, let's get to work boys

00:01:52.220 | Tons and tons of interesting topics on the docket markets are ripping jobs and inflation looking good as the Dow hits an all-time high

00:02:00.580 | forget about soft landings boys a

00:02:03.660 | Sentiment is now flipping to a market meltup in 2024 the GDP numbers that just came out smashed at 3.3 percent year-over-year in the fourth

00:02:11.740 | quarter expectations were just 2%

00:02:13.740 | Dow and S&P 500 both hit all-time highs in the past week

00:02:17.700 | That was above 38,000 first time in history

00:02:20.660 | CPI number reasonable up 30 basis points month over month

00:02:24.660 | 3.4 percent from last year getting close to that 2% target and

00:02:29.220 | The jobs data beat expectations 2023 jobs

00:02:33.800 | Not so bad at 2.7 million. It's the fifth strongest year for job increases since 2020 real test will be of course this year

00:02:41.380 | We've seen a bunch of layoffs. We'll get to that later gas prices plummeted 40% for $5 a gallon in the summer of 2022

00:02:47.140 | now just $3 a gallon and

00:02:49.340 | Consumers are apparently feeling great about the economy University of Michigan, which is the most respected

00:02:55.980 | report on consumer sentiment

00:02:58.900 | said it increased in the past two months the most since 1991 and

00:03:04.260 | the Federal Reserve Bank of New York survey found that Americans

00:03:09.460 | Inflation expectations have reached their lowest point in three years

00:03:12.180 | Call she is a prediction market. I like to use and it says 37% chance of a cut by March

00:03:17.940 | That's dropped. So people are thinking the rate cuts are gonna get pushed back and prediction markets

00:03:22.660 | Also think four to five rate cuts still in 2024

00:03:26.180 | But again, people seem to think they're gonna get pushed towards the spring or second half Chamath you alluded to this melt-up

00:03:32.460 | I don't know. Was it like three or four episodes ago that we might have a chance of a market melt-up

00:03:38.740 | Everything seems to be aligning here. What do you think? I

00:03:40.740 | Think the important thing to note is that Tesla put out a pretty

00:03:46.020 | important

00:03:48.460 | Missive at the end of market close yesterday, which essentially said that

00:03:52.260 | Expect a very different demand curve in q1. Hmm and

00:03:57.260 | You have to understand that Tesla has done

00:04:00.700 | the best job of

00:04:05.540 | Understanding supply demand and their pricing power and the pricing elasticity of their cars

00:04:10.980 | And so the fact that they put this out

00:04:14.260 | To me says that we are now really in the belt-tightening phase

00:04:21.460 | Of this kind of like economic process, so I think that the next probably six to nine months are

00:04:31.940 | More of these kinds of things where folks realize that the amount of discretionary income that people had is less

00:04:38.740 | They will either lower prices or lower expectations and

00:04:45.220 | So the the thing is then what happens to the market? This is sort of why?

00:04:50.420 | About a month ago when we on the pot

00:04:53.940 | I was kind of like we're gonna be in a melt-up and it's because the economy will cool demand will cool

00:05:00.460 | inflation cools

00:05:01.900 | Rate cuts come in again. It's not really worth debating whether it happens in six months or nine months

00:05:06.300 | But when we look back 18 to 24 months from now

00:05:09.340 | The market will probably be materially higher

00:05:12.620 | Because there's just so much money on the sidelines and that just continues to grow and grow and grow so trillions of dollars on the sidelines

00:05:20.060 | cooling economic consumption

00:05:22.940 | actually on the ground meets

00:05:26.100 | Reasonable to resetting to lower expectations for some of these companies

00:05:29.220 | I think that all roads lead to a continued melt-up

00:05:33.820 | It's actually were just at the prediction show saying hey, maybe it's gonna be a little bumpy

00:05:38.500 | So and again, this isn't none of this is investment advice with four dudes talking

00:05:43.540 | but what are your thoughts on the the economic data and the

00:05:46.620 | Melt-up scenario versus the soft landing versus the rocky landing. Well, Jason, we're only three weeks into the new year

00:05:53.620 | So there's plenty of time for bumps here. But this report was good. I mean the GDP growth was good inflation continues to come down

00:05:59.620 | So, you know, we are on track here for a soft landing. It seems like

00:06:03.540 | But yeah, there's definitely potential storm clouds on the horizon like Chamath mentioned. There's some

00:06:09.100 | Data points out there suggesting that the consumer may not stay as strong as the consumer has over the past year

00:06:16.420 | There's a few other things so that are kind of going on the Fed has announced that they're gonna end

00:06:22.060 | BTFP that bank term funding program on March 11th

00:06:24.780 | That could reveal weakness in the regional banking system. Remember we had a banking crisis in

00:06:30.500 | March of last year that BTFP sort of papered over you also have

00:06:36.620 | What looks like a crash happening in China the Chinese government took some actions to prop up the stock market there

00:06:43.740 | Which is a pretty negative signal that mainly impacts the Chinese economy

00:06:48.100 | Not us, but it will have an impact on the global economy if China has, you know a big crash

00:06:52.980 | And then we still have a lot of geopolitical risks

00:06:55.780 | I mean, I still think we get an oil shock in the Middle East if this

00:06:58.540 | Situation broadens into a larger regional war maybe with Iran

00:07:03.220 | You could get you know a shock in the price of oil and then that could have a big impact on the economy

00:07:08.060 | So look, I think the baseline is that the economic outlook is good

00:07:12.940 | But there's definitely potential for things to still go wrong

00:07:17.660 | free break we've talked about the

00:07:19.660 | debt here in this country 35 trillion now or so, what are your thoughts in terms of

00:07:26.540 | how politicians are going to look at the future now and spending when

00:07:31.540 | they keep spending and markets keep going up and

00:07:34.780 | Maybe it's good for

00:07:37.420 | Elections and getting votes as well. I put a

00:07:39.780 | Chart from Paul Krugman here. He put out this tweet analyzing unemployment against inflation

00:07:47.620 | over the last 20 years and plotted

00:07:50.260 | On a graph how they're related and as you can see, there's a pretty linear relationship

00:07:55.860 | between unemployment and inflation except

00:07:58.860 | for the last couple of years since Kovac where inflation has

00:08:03.340 | Spiked completely off the charts while unemployment has remained low and I think if you look at what's happened

00:08:09.540 | From a federal debt perspective over this period of time

00:08:14.020 | We've seen US federal debt climb from 22 trillion dollars at the end of 2019

00:08:20.540 | to 34 trillion dollars

00:08:22.500 | Which is where it sits today an extraordinary increase in in federal debt in the last couple of years

00:08:28.420 | Which largely explains what happened?

00:08:30.900 | we effectively took this massive hole in the economy that arose from the pandemic and

00:08:36.260 | The shutdowns around the pandemic and we filled that hole with money and we took on debt to fill that hole

00:08:43.380 | And as we filled that hole assets inflated

00:08:46.540 | Financial assets inflated so the stock market went up

00:08:49.860 | even as you know core

00:08:52.860 | Inflation and economic growth meant that we were paying more for less

00:08:57.860 | So things look good the stock market as an indicator looks good, but it's largely been filled

00:09:04.420 | By the capital that we've now taken on

00:09:08.060 | Into the economy through fiscal and monetary policy over the last couple of years

00:09:11.340 | Which has driven up inflation over this period of time and now at some point?

00:09:15.060 | We're gonna have to pay the cost for the hole in the economy over the last couple of years

00:09:18.660 | So we bridge the gap, but we've got a bigger problem looming on the horizon if rates don't decline fast enough

00:09:25.180 | I think I tried to do the math on this every day that interest rates are off are

00:09:29.600 | 1% higher based on the current federal debt level. We're paying an incremental billion dollars in interest payments per day

00:09:37.460 | The u.s. Is that makes sense? I mean actually let's pull up this chart real quick

00:09:41.260 | I think the average interest rate on our debt is now around 3% that's up from about one and a half percent in

00:09:48.860 | 2020 so during the the ZURP period and

00:09:53.300 | The tenure is still at what for four point one percent

00:09:57.140 | So there's still room for that number to move up

00:09:59.940 | even with rate cuts on the front end of the curve and you can see that if you annualize the q4 interest that we paid and

00:10:07.220 | It's around a trillion dollars

00:10:09.220 | Which makes sense right you got about 34 trillion of debt about to be 35 trillion 3% is 1 trillion and

00:10:16.700 | So free bird to your point 1 billion a day 365 billion a year. Yeah, that's basically 1% of a 35 trillion dollar debt number

00:10:24.980 | So yeah, that makes sense

00:10:26.380 | you know, it's pretty scary because

00:10:28.380 | It's already consuming a large chunk of the federal outlay and we're still running two trillion dollar deficits and not a single person

00:10:35.140 | Is talking about how we end that why is it important?

00:10:37.100 | We have to keep the stock market up

00:10:38.740 | We have to keep financial asset prices up because we're so heavily levered and if they fell down

00:10:43.700 | pensions

00:10:45.420 | Retirement funds everyone's housing value where most people have most of their net worth tied up

00:10:50.340 | Collapses it creates a cataclysmic effect

00:10:53.260 | So we had to inflate all these assets and that's what happened

00:10:56.140 | We filled that hole over the last couple of years

00:10:57.700 | Now we've got the quandary of how do we get out of the hole that we're gonna have to pay back over time

00:11:02.580 | Yeah, and we cut these rates to lower our interest payments

00:11:06.380 | What's gonna happen?

00:11:08.220 | People will take money that's sitting in cash as you've pointed to Chamath is trillions of dollars sitting in cash

00:11:13.220 | And they want to look for some returns some alpha they're gonna put it into

00:11:18.180 | Markets and so then we have a rush into the magnificent seven and maybe even you know, the next year of stocks

00:11:25.340 | yeah, I think that's what's gonna exacerbate all of this because

00:11:29.980 | You can't correlate stock market returns with

00:11:34.420 | The number of people that are actually making money. So even though the top seven stocks are going up

00:11:40.940 | Those holdings may actually be concentrated enough

00:11:46.100 | That it's not the case that the millions of market participants are actually seeing those gains

00:11:52.660 | It's just that a smaller percentage that's going to further exacerbate

00:11:56.180 | The sense of FOMO that everybody has because they own all of these other stocks

00:12:00.620 | Let's just take the top 500. So even if you own the S&P 500 or some component of it

00:12:05.660 | There are 493 other companies that people just don't care about right now

00:12:10.860 | And that's crazy. So all of that pressure is just going to create a lot of psychological

00:12:15.820 | Necessity in people's minds at some point where they just see these things going up

00:12:20.940 | Where they say I need to be a part of this and I think that's what unlocks a lot of this

00:12:25.980 | Money on the sidelines and then as long as you have rate cuts and a reasonable inflation and reasonable growth

00:12:32.540 | There's no reason to think that the that people will not reinflate risk assets

00:12:37.500 | And just so people know about 60% of Americans own equities. It always goes between 50 and 60%

00:12:43.700 | Interestingly, it kind of parallels the home ownership in the country, which is also low 60%

00:12:50.620 | It went as high as I think 67 68% home ownership right before the Great Recession. So 2006 2007, it kind of peaked

00:12:58.140 | So now everybody Chamath runs into equities, those go up, and then consumers maybe some percentage of them feel affluent, they feel rich again, and they start spending again, and then the inflation might kick back up. Is that the cycle we might see here?

00:13:13.820 | I don't think so. I think that rates are probably

00:13:18.460 | I think that we're in a much more interesting

00:13:21.020 | And non obvious trend that I think is worth talking about, which is that for most of us forget boomers for a second. So take people that are 50 years and down

00:13:32.100 | We've spent 20 years of our productive economic lives. So for us, Jason, that's

00:13:39.380 | Two thirds of our productive economic life as workers for younger people. It's 100% of their productive economic life as a worker in a zero rate environment. And we adjusted, and we made decisions

00:13:52.220 | Because of some variables that were true that may fundamentally no longer be true. And one of the things that I think we've never really understood is how to build a business in the face of sustained rates that are not zero

00:14:05.340 | That are not always getting cut that don't have trillions of dollars of stimulus because of government stepping in as Friedberg well said to fill these holes

00:14:13.940 | If that doesn't happen over the next 10 or 15 years, we're in a different phase, which we've not really seen for our generation

00:14:22.380 | And I think that's really what is worth debating is are we at this inflection point where rates will always be between two and 4% for a very long time

00:14:31.180 | And then, you know, we said this last week. This is why there will be gross margin decay. This is why governments will step in to

00:14:38.700 | Make sure that winners don't get much, much bigger. All of these things are about using the tools of capitalism to basically reallocate who the winners and losers are and to reallocate

00:14:48.300 | What the risk free rate of return will be in a world where it's just very different than what it was. And I thought that's, that's the really big question that I have in my mind.

00:14:57.740 | Yeah, and if we were to look at the Fed funds rate, we've lived since 2010 with almost no Yes, 0% interest rates essentially. But if you go back to the 80s and 90s, when we were first starting our careers, it was a much different situation for mortgages and for this is the Fed funds rate

00:15:15.740 | mortgages, you can add a couple points to this to get the equivalent. So what do you think that'll be sacks, if we're going to be operating businesses differently in this environment? What is the new discipline going to be here? Or do you think we're going to get right back to, you know, when interest rates come down to 3%, or 2%, or whatever, we're gonna just get back to the party?

00:15:33.980 | I don't think it's ever going to be quite the party that it was in 2020. And 2021, where both the Fed and the federal government were just airdropping money into the economy, that that beginning of COVID, the economy was contracting an annual rate of about 30%. And we ended up adding what, 7 trillion or so to the national debt to basically paper over that problem that we largely created through the lockdowns.

00:15:57.980 | So in any event, it's never going to be like that, again, because we're never gonna have that magnitude of money airdropped on the economy. But will things get a little bit frothier if rates go down? Absolutely. Yeah. But I think that just because short rates come down, meaning the Fed drops the Fed funds rate, from where's it now, like five and a half to, I guess, expect to come down to four doesn't mean that the long term rates called the 10 year will come down much. I mean, normally, the yield curve is

00:16:27.460 | upward sloping. So, you know, in a normal economy, it's not clear that the 10 years going to be going to be going back down to two, 3%, where it was during the ZURP period, it probably will be around 4%, plus or minus. So just capital will be a little bit scarcer, and valuations will be lower, more normal. But things could pick up for sure, relative to where they've been the last couple of years.

00:16:53.980 | Last couple years been brutal. But yeah, I'm with the rest of the panel here. I don't think we're gonna see I don't think in our lifetime, we're gonna see that 2020 2021. Again, I don't think that's happening for 20 years or so. All right, listen, speaking of like the economy, layoffs have continued, not just at tech companies. But I wanted to point out just how brutal this has been for media companies recently. In 2023 20,000 job cuts. That's on top of 30,000 during the COVID era. And it's not stopping Business Insider just announced

00:17:23.740 | 8% cuts, LA Times cut over 100 people, the billionaire owner of the LA Times says he's getting close to a billion lost owning that asset, use air quotes on the term asset. Condé Nast cutting 300 people. And all of this is happening while unions are hosting what I'll just

00:17:44.740 | call meaningless protests. Sports Illustrated and Pitchfork to really well respected brands. Obviously, they're done. Basically, they're cutting 100 severs Sports Illustrated box cut another 4% Jezebel shut down. Vice went bankrupt last year. It's just absolute complete chaos. And Bill Ackman is loving it. Business Insider is a sleazy, unethical defamer of some of our greatest heroes. It's a worthless peel has rag run by the lowest of the low in journalism. It is a stain upon humanity

00:18:14.420 | was his quote today, his commentary on the press,

00:18:17.420 | Jason, you've run like these media businesses before, like, what's the underlying economic condition here? That's changed in the last couple of years that's causing all these layoffs to happen? Like what? What do you think's actually? Yeah, going on? Like financially with these businesses? Is it

00:18:35.140 | advertisers running away? Or what is it

00:18:37.940 | advertising and classified businesses got gutted? And obviously print got gutted over the last 20 years, Google and Facebook, all the gains in advertising have gone to those two firms and now tick tock, obviously, and Amazon, Uber building respectable ad businesses as well. So all of that takes ads out of publications and puts it closer to the point of purchase, right? You're on Amazon, you're right there with the buy button. So would you advertise in the New York Times are there?

00:19:05.140 | So if you were to look at, like, say, a journalist salary, pick 100,000 all in fully baked, most journalists are at 50 60k in the United States, you know, get up to 80 90 100k would not be abnormal. Well, your overhead is going to typically be two or three times that. So you can put that journalist at two or $300,000 in cost. You look at that, what can a journalist do in terms of the number of stories a week, if you had them as a beat reporter, maybe two stories a week, you do two stories a week.

00:19:34.020 | If you're

00:19:34.740 | you know, 100k salary, and you have like, maybe two or 300, fully baked with overhead and managers and salespeople. That means each story is costing about 1000 bucks. If you were to do a $10 CPM or RPM on that, that means every story to break even. In today's market, we need 100,000 people 150,000 people to read it, obviously, that's not happening. So these publications are just hemorrhaging hemorrhaging cash. If you were to put that same journalist on a subscriber platform,

00:20:03.180 | that means they got to get like 1520 subscribers per story for a year to hit their just their salary. So the economics are just hugely broken except for subscription businesses, a ton of other nuance, but I could drone on and on about it. But the the math basically does not work at the same time sacks, you have experts right, who are now going direct. So if you want Draymond green and JJ erratic to tell you about basketball, you can watch them talk about it. Yeah, I did a tweet on this the other day. Or if you want, this is just not to toot our own horn here.

00:20:33.100 | But we're the number one business and tech podcast. And we do this as experts in the field. We're not journalists, obviously. So that's probably I would say experts encroaching and people going direct to sources, that's probably taking 20 to 30% of an already crippled business. So it's gonna get worse and worse. And of course, having unions and going on strike freeberg at the same time, is like literally the kitchen staff on the Titanic, you know, like, I just think doing a walkout after the Titanic's hit an iceberg, like it's completely meaningless.

00:21:01.180 | I think that there's this like,

00:21:02.540 | slow attrition over time away from centralized sourcing of data, and centralized analysis of that data to a more decentralized sourcing of data and then distributed analysis of the data, which is the evolution of the internet is enabled that to compete. Traditional media has largely had to create sensationalist approaches to taking the data that's out there and creating stories around it that are more sensational that bring emotion and bring emotion to the data that's out there.

00:21:29.540 | And creating stories around it that are more sensational that bring emotion that make people upset that make people happy, that drive an emotional reaction. If you look at the New York Times, and you can look at these archives online from the 1960s. The articles are so damn boring. Like you read them, it's like literally just reading a ticker tape of information. There's nothing that we see today, represented in the media of old, which was really the source of data. It was now it's had to have become a narrative, it's had to have become a storytelling

00:21:59.060 | operation, in order to keep people's attention and to drive clicks. The problem with that is that over time, the media businesses have lost the trust and faith of the viewership and the readership, because they see how much of this is biased and opinionated. And they don't just get pure analysis and pure data. So in the current model, which you've described, well, I think it's more about the fact that you've got all these crowdsourced citizen journalism type systems, whether it's Wikipedia, or WikiLeaks, or Twitter, where people are, or YouTube, people are putting direct video

00:22:28.900 | direct evidence, direct data, direct documents on the internet. And then analysts, like we're a good example of four people on a friggin podcast that just talk about stuff that we're reading, and data that we're picking up. And we analyze it in a way that people then choose which analysts do they want to go to, for which understanding of data that's out there. And that model totally breaks the old media model, which unfortunately, is evolved into this like untrustworthy, biased and opinionated source to keep the business alive. So it's definitely a breaking that's happening. I think it's very hard for that model of

00:22:58.340 | centralized sourcing of data, and centralized analysis of data to happen in one place to continue in that old form. And this is definitely the breaking of the old

00:23:06.260 | I went to trends.google.com. And I just compared wsj.com to bi.com to twitter.com to New York Times calm. And what's incredible is two takeaways. The first is that media is really the least relevant it's ever been. And they really are on a lifeline. That's number one. And second is if you just scroll down a little bit, Nick, Twitter is really like a universally relied upon resource in the United States. The WSJ actually also does a pretty good job. But if you

00:23:36.180 | look at, for example, Business Insider, it's really three states, Texas, California and New York. And if you look at the New York Times a little bit further down, it's a bunch of the traditional democratic states. So what you have is this regional kind of segregation that's happening in terms of information. But for the most part, nobody cares about these print outlets. And I think that that explains why you're forced to lie.

00:24:06.100 | If telling the truth, which is basically a commodity, it's weird, but it actually is a commodity. It's just there. The truth is there. And you can't build the business by telling the truth. You have two choices. One is to opine on the truth opinion, but that then is a function of, frankly, to be honest, your intellect and how interesting you are as a person and how you relay that information. And you see the people that do that. Well, you can

00:24:36.020 | debate the truthfulness of all of these people, but the Rachel Maddow's and the Ben Shapiro's of the world, Tucker, Tucker, they're just extremely eloquent, interesting arbiters of information. They may take spicy takes on the truth. Yeah, but they don't outright lie. And then you have everybody else who's frankly, not nearly as good as them. And the choice is to lie. And that's why Ackman can say this about Business Insider, because Business Insider doesn't have a Rachel Maddow, nor do they have a

00:25:05.860 | Tucker Carlson, or a Ben Shapiro. And so what choice do they have, except to lie. And so for all of us, it's a very simple litmus test. You're better off trusting a really opinionated, articulate person. Why? Because the thing that they probably don't want to lose is their fame. But the anonymous person at Business Insider has gone into a totally different direction. They've decided to lie as a service.

00:25:35.140 | And so you just have to ignore it all. Yeah, because you can't rely on. That's my simple takeaway. Looking. Yeah, I like it. It's good tech hot take spicy.

00:25:43.900 | Yeah, I mean, look, I think there's several things going on here. One is that outlets like Business Insider have an incentive to be sensational and to either lie or to cherry pick in the way that your mouth is saying and basically they put out a lot of clickbait defamation. I mean, that's basically what Ackman is saying.

00:26:01.580 | Second, I think there's a glut of a lot of mainstream media publications all putting out the same thing. And it's not the truth. It's the official narrative. So you know, how many political reporters do we need just being stenographers for the White House kind of party line? And if you're not going to actually dig deeper to expose how the official narrative they're telling you is not the truth, if you're simply going to print whatever they tell you to print, then why do we need so

00:26:31.260 | many of you? So I think that there's a glut of publications is all putting out the same official narrative. I think the third thing is there is a go woke go broke dynamic going on. I mean, you talk about like the LA Times. The reason why they're losing so much money is that family that bought it. They put their woke daughter in charge of it. And this is basically like a woke nepo baby on steroids, basically an Alexander Soros type who's made the LA Times the most radical woke

00:26:59.960 | publication, you know, within the range of the mainstream media. Remember, they're the ones who put out that ridiculous story on Larry Elder called the face of white supremacy or something. Yeah. In the case of Sports Illustrated, they they basically pulled a Bud Light and they lost a lot of subscribers when they put a trans person on the cover. I mean, look,

00:27:18.400 | they had a formula that worked there. What their audience wants is Christie Brinkley on the cover, not Dylan Mulvaney. Okay. I'm not mean to offend anyone by saying that is just the truth. And then I think the last thing is, Jason, what you're saying about the experts, I do think that the gel man amnesia effect may be wearing off. Remember what Michael Crichton said about the gel man amnesia effect, where you read one part of the paper where you actually know something about the subject matter, and you realize it's all

00:27:48.320 | just lies or lazy reporting. But then you turn the page to some other part of the paper, you don't know as much about you just assume it's true. I think because experts are able to go direct for every section of the paper. Now people are realizing that the whole thing is bogus. And I think gel man amnesia is starting to wear off and people are realizing that they should just go around these official channels and get their news direct. So it's not because these publications are telling us the truth in a boring way that they're losing readership. I think they're losing

00:28:17.960 | readership because they're just not telling us the truth at all. And I think a boring version of the truth would sell better than what they're doing right now.

00:28:24.160 | This is why I think subscriptions are starting to work. People are doing subscription, podcast subscription, newsletters, you know, it's a little bit of back to the future. But you can lower your overhead, have one person doing real journalism, and there you could actually thread the needle, you could get 1000 people to give you 100 bucks, you can get to 3000 people to give you 100 bucks or 200 bucks. And that's enough to cover a couple of solid legit

00:28:47.360 | journalists doing legit journalism.

00:28:49.200 | I have a question for you, Doug, you think there's a business opportunity to actually build like an AP news, which is just basically like, there's no byline. And they just write the truth. And they make it super cost effective for anybody else to just license the truth so that they

00:29:07.320 | know it. Why do you need an arbitrator?

00:29:08.960 | Well, somebody got to be boots on the ground to go somebody on the ground to just tell the truth.

00:29:13.440 | Doesn't the distributed model work for that people just post?

00:29:16.280 | You don't know. I mean, listen, we all the time have this when we're building the docket, like Kane Cola, you know, random Twitter account, or, you know, Tyler Durden, you know, zero hedge, like, who are these people? What are their motivation, you don't even know their names, that doesn't mean they don't get stuff

00:29:32.720 | right. But you may want to have somebody actually go check that this person exists in the real world. So to your answer your question, you know, you would need people to subscribe to that service.

00:29:42.320 | An economist, AP news, and Reuters are the closest to what you described, the economist doesn't use people's bylines, they have people work on the story together. And the economist is the brand AP and Reuters obviously do typically have the journalist names on it. But she's describing news wires. They're, they're not great businesses.

00:29:59.920 | I think AP and Reuters are just as bad as everything else. I think what I'm saying is like, you know, maybe Twitter should have like a news service, which is just like, here's the truth.

00:30:07.280 | I'll argue that page rank, which is Google's algorithm for determining which sites to rank higher or lower. And the protocol for Bitcoin, and other systems that operate on the internet, have all kind of followed the same model where there's some system for scoring or for voting, the quality of the site in page ranks case, it's how many links come in, in Bitcoin, there's a voting system that determines whether or not the transaction

00:30:36.480 | should be approved. And I think in Twitter, the number of followers seems to be a proxy for the quality of the account. There's some version of that chamath that I think just naturally evolves on the internet versus saying, let's pick the arbiter of the data, and let that state be static versus let it be dynamic, and let the system of consumers dynamically vote on what is the arbiter of the data, which seems to be working with Wikipedia seems to be working with page rank, and other systems

00:31:02.000 | fairly well, unless you look at your own Wikipedia page, and you realize it's completely biased. And yeah, is the function of the people trying to say something that happened to your know, something bad on your Wikipedia page. I went to the early Wikipedia conferences in the first couple of years of Wikipedia, and the bios of living people, BLPS were the biggest problem they had, because you had people like, let's say, you know, you had a company fail or something, somebody was an investor in it. You know, they're motivated to write something on your

00:31:31.760 | Wikipedia page, you fired somebody, whatever. And so the people who have the wherewithal to edit your Wikipedia page, if you're a human alive today, sometimes is your detractors. And that's just Yeah, but over time, if you're doing that, and you get downvoted, you no longer have authority on Wikipedia. That's part of how that system works. I think

00:31:50.240 | that doesn't work very well. It's been totally, it's been totally weaponized. Yeah, it's weaponized. It's been weaponized by people with money. I think it's been weaponized by interest groups. Yes, mainly left wing interest groups, activists who are well funded. And it's their full time job to basically disseminate their propaganda on sites like

00:32:09.680 | that. Ideally, that becomes a temporal phenomenon that they're because if you picked an arbiter, and you said, this is my source of news, my source of data, my source of truth, over time, that source becomes hacked, it becomes biased in some way. And so I think having a system that's dynamic, where those who are doing the editing, those who can be voted up and down, and ultimately, the system can be voted on by the consumers of the system. So anyway, I just think that's naturally how the internet's gonna evolve. Anyway,

00:32:35.360 | I think it's crazy to rely on one source, especially Wikipedia, although I do use Wikipedia for some things. But I guess what I do is I try to triangulate to the truth based on having a number of sources. I mean, isn't that the best technique? And that's why x, you know, formerly Twitter is the best way to get news. It's the main way I get my information is because I can triangulate towards the truth by looking at my feet, and I'm following a couple 100 people who I take seriously. And you can kind of figure it out.

00:33:02.560 | Well, yeah, because if you saw a business insider story over here, and then you hear Bill Ackman give his side of the story. Now you've got the principle in the story, going direct. And I think that's where going direct and experts have created that triangulation, you can listen to this podcast, you go to direct to Wikipedia and check our facts, you could look at people criticizing us or creating derivative podcasts of this one, of which there are many. And like, you can kind of get all these different vectors and angles to kind of find the truth. But your answer to math,

00:33:32.320 | rich people, you can't get rich doing what you're describing and running a company. So smart people are looking for opportunities to maximize their compensation. And that's, it's kind of like teachers, it's, we don't pay teachers enough, you can't pay journalists enough, because the system is broken. Therefore, you're just getting lower and lower quality people in the profession who the smartest people leave and become venture capitalists, marketing, communications, people, developers, whatever, or they do solo stuff. So I think the solo journalism,

00:34:02.200 | the independent voices is going to wind up being the solution, because nobody's going to want to try to hire 1000 journalists for 100k each. And then if they get really smart, what do they do, they get hired by somebody like you, right, Shama? They'll come work for one of us or come work for one of our companies. When they get to the ceiling of what they can do at Business Insider, or vice or wherever, they're going to go try to look for a $200,000 a year job.

00:34:24.440 | I think this is important for the following reason, I think that society, if society doesn't have a good way of getting to the truth, it just ends up really decaying in very bad directions. And there's all kinds of truths that are out there that we ignore, because people can actually just totally change it where I would rather be in a place is there's the truth, then there's the opinion on the truth. And then there's fiction.

00:34:52.400 | And I'm fine with all of it existing, it just needs to be better arbitrated, because I think there's a lot of people who don't know any better, who should know better, and who will just make an assumption. And then that's a very limiting, limiting decision for them.

00:35:10.200 | The whole process again, super messy. But that's actually a good thing to happen. The reason it's getting messy is because people are challenging the sources of the news. So you don't just believe a politician about what's happening at the border, you don't just believe a publication about what's happening at the border. You see citizen journalists going to the border, whether it's Elon or RFK went to the border, people are going there and saying, Well, I'm gonna go check it out for myself and see what's happening there. Actually, I'm not just going to trust a publication, I'm not going to trust a politician, I'm going to go myself.

00:35:39.760 | And that messiness is now led to a more vibrant system, but it's messy.

00:35:46.520 | I think it probably also led in part to Texas suing the federal government.

00:35:50.080 | Yeah, which we'll get to in a moment. Yeah, for sure. And, you know, if you think about that, we were trying to parse the numbers here. Remember, we had the number, and we were trying to parse the number of encounters. So we never were able to get a number, we still don't have a number.

00:36:04.360 | No, people, the numbers are I didn't finish my sentence. We don't have a number knowing how many people have gotten past the border, we know how many people got intercepted. We don't have the number of the people who didn't get intercepted. By definition, we don't have that we only have the ones that are encounters. That's why they call it encounters.

00:36:21.600 | You've been running interference on this point for like a year on this pod, like saying that we don't know the numbers and Fox News is providing, you know, bias footage, and it's not really a crisis at the border.

00:36:34.640 | And I said, I said, I wanted to know the numbers. But the only numbers we can get was encounters, not how many people actually get something like 6 million encounters.

00:36:43.160 | And they finally updated those numbers that the numbers show the chart of it. It's looks like a hockey stick. Every year this last year, it wasn't that was the point when I showed it last year, every week, every month, every year is when we looked at it last year, it was flat. I'll pull up the episode wasn't. At the time, it was flat. It was it was only in the last year.

00:37:05.240 | It's like a rocket since COVID.

00:37:07.160 | We'll pull it up. We'll pull it up. So if you look at this chart, this explains this perfectly. So let I'll explain this chart.

00:37:13.680 | Where's that from?

00:37:14.600 | This is from the CBS, Border Patrol. So this is the exact chart that we pulled up last time. And as you see, yellow 2022 was essentially flat. And then the dark blue 2023 2021 spikes. See this, this chart is not correct. And then if you look the one thing

00:37:35.040 | that does look like a massive spike is 2024. So there was and I said at the time Cal it's showing from December a 50% spike. Yes, that's what I'm saying. But if you look when we looked at this last year in 2023, it was it was right there. June when we started talking about

00:37:50.920 | last year at this time, it started to spike, but the other years it was flat. It's my point. It was flat. And then it just started to not. And that's why I think even trusting the numbers is my point. Like, I mean, I don't know, numbers weren't changing.

00:38:03.480 | Back from October of 21. There was 100,000 encounters at the border to this last COVID. By the way, 300. Look at the look at the yellow line. It's like tripled since in the last two, two years. That's crazy.

00:38:18.520 | But here's another chart from the Wall Street Journal. This goes back a long way. This is from I believe, October. So it's already four months old. But zoom in on 2020. Like I said, it was at a low there. You know, under

00:38:32.800 | 1,000,000. Yeah, well, yeah. And then but even if you go back, it looks to me like since about 2010, we've been holding it to under half a million. And since 2020, basically, since Biden took over, it shot up like a rocket. And what I've been reading in recent

00:38:47.720 | articles, again, is since October, every month, every week, every day is a new high. It's not a stable number, because obviously, there are millions, hundreds of millions of people all over the world who would like to come to the United States if they

00:39:00.980 | could. Yeah. So as the word gets out that we have an open border, they're going to come. And it's gone viral is what's basically happened. And also what went viral was there are YouTube videos now of how to claim asylum. So everybody's

00:39:15.480 | kind of hacked it. It's completely, I guess we could go which way do you want to go? Do you want to go right to the border now since we've this has come up?

00:39:23.160 | Is Texas gonna secede from the Union?

00:39:26.600 | What's gonna happen? Do you want to just go? You want me to tee it up? You understand? I think we should explain it. Let's just talk about it. Last year, as everybody knows, Texas started installing razor tape razor wire along the Rio Grande near

00:39:39.440 | Evo pass, federal border agents, the feds removed it in October, Texas sued the federal government to stop them from removing in December, a federal appeals court temporarily banned the Border Patrol agents from removing the razor tape, then the Biden

00:39:51.680 | administration asked the Supreme Court to intervene. Then last week, Biden's office told SCOTUS that a couple of migrants tragically died a woman and two kids near that same area. And we got a ruling on Monday, Roberts and Amy Coney Barrett

00:40:06.920 | actually voted against party lines and supported the feds. The justices didn't explain their decisions. But this basically upheld a prior ruling that gave the federal government sole responsibility for border security, Governor Abbott has responded. And he is saying that he's

00:40:23.720 | going to challenge the Supreme Court ruling and that Texas is under invasion, and it's going to defend itself. That authority is the supreme law of the land and supersedes any federal statutes in the country, he said. So, Saks, what are your thoughts here? Is

00:40:37.120 | this? I guess there's two things I'll ask you about? Is the ruling a good ruling? And is it in terms of law and constitution? But is it a bad implementation, given the circumstance of the border?

00:40:49.680 | Well, I think Governor Abbott here is probably going to lose in a court of law, but he's going to win in the court of public opinion. The public by a huge majority wants this border enforced, they want to have border security, they can see the photos

00:41:07.440 | and the videos and the numbers and the charts of record breaking, illegal immigrants streaming into the border. And again, it's not stopping, it's growing. So I think that Governor Abbott is on his way to being a national hero for standing up to this. And it's outrageous that the border agents are actually removing the border security that Texas has added, we're supposed to have a border wall, you know, I'd rather have a wall than barbed wire. But if we can't have a wall, then you take the barbed

00:41:37.080 | wire, and they're actually cutting it down. And this is following in a pattern of the Biden administration. Remember, when Biden first came in, there were pieces of Trump's wall that hadn't been finished. And they basically stopped construction and they sold off these large pieces of wall that were just laying on the ground as scrap metal for two cents on the dollar. And remember that Robert F. Kennedy flagged this when he went to the border at the beginning of his campaign and said that it was petty and outrageous that Biden had done that. Then

00:42:07.160 | Biden changes the whole remain in Mexico policy, and he starts granting asylum to what are basically economic migrants who are streaming into the country. And what the asylum rules say is that the immigration officials are required to detain asylum applicants who are not what's called quote, clearly admissible. So if you're not clearly admissible, you're supposed to be detained, you're not supposed to be let into the country. And the Biden

00:42:35.800 | administration is basically paroled millions and millions of these economic migrants who are not clearly eligible for asylum into the country, they just hand them a ticket and say show up in court in three years, we know that's never going to happen. It's gotten to the point where the mayors of blue cities like New York and Chicago have tapped out and said we can't handle this. We've run out of space, we run out of hotel rooms, we've run out of budget to accommodate all of these migrants. And these are sanctuary cities. And yet

00:43:05.640 | the Biden administration has persisted in this policy. And now they're actually removing border security, they're actually cutting the wire. It's unbelievable. And when Texas has tried to reinstitute it, they've actually gone to the Supreme Court. I mean, to do that, Biden has to send a solicitor general to the Supreme Court to take on the state of Texas. So look, at the end of the day, Governor Abbott may lose this case, but I think he's going to win over the American people. And I can't understand why Biden in an election year,

00:43:35.560 | is pushing this, this losing argument. I mean, I think this is his worst issue. Maybe inflation is slightly worse, but there's not a worse issue for Biden and the Democrats than border security and to actively be fighting Texas on this, when Texas is just merely trying to reinstate a border. This seems to me like a crazy political strategy. And it just shows you how fanatically wedded the Biden administration is to this policy.

00:44:04.440 | Yeah, and the country is not if you look at the CBS News poll.

00:44:08.200 | This is just from September to now should be tougher. 55% to 63% just just one second here, which is just it's important to note that I don't think Biden's contesting Texas has anything to do with their desire to actually keep the border open. I think what they were saying, again, we can debate whether it's right or wrong. But what they were saying is, the federal

00:44:32.760 | government needs due access to all of these places. And we need to get we need to cut through this concertina wire to get access. And we can't now because it's wires there and the Texas National Guard and all of these folks are there. And so just give us the due authority that that we have to do what we need to do. That was what they were saying in the lawsuit. Now,

00:44:54.200 | that sounds like total nonsense to me.

00:44:56.120 | The byproduct, David is what you're saying, which is it does then facilitate more illegal migrants to be able to cross in the intervening time because I think that then what the government federal government isn't saying is here's our plan to secure the border. They're just saying we need access in order to render critical aid if one of these folks get sick or drowns or what have you. And that's why these three people died. So cut, get, you know, remove this wire so that we can do what we need to do. That's what they're saying.

00:45:23.760 | Yeah. So on the migrants who drown point, what Governor Abbott says is, look, if you actually had security along all of these points where you've put in the wire, it forces the migrants to go to the 20 something checkpoints, where you actually have an organized process, which is where you want them to go, they wouldn't be trying to swim across the Rio Grande, and enter through all these different areas, if you could funnel them through border security to the checkpoints. And the federal government does control those checkpoints. And I'm

00:45:53.560 | sure that, you know, if Republicans could control it, Republicans like Abbott, they would be detaining asylum seekers that weren't clearly admissible, but they don't control those checkpoints. So the federal government can still implement the policy at once, I actually think that fewer people will be drowning in the Rio Grande, if they were actually to, again, push everyone to these checkpoints. So I don't really buy that argument. And it looks to me like the Biden administration has now crossed over from failing to do its duty.

00:46:23.520 | Because again, it is a federal responsibility to enforce the border. And the President has a constitutional duty to enforce the laws of the land. So he's moved now from failing to do his duty to active sabotage. I mean, this is actual sabotage, where what little border security that we have in these parts of Texas, they're taking down, they're cutting the wire, I think to most Americans, they can't fathom that this is Biden's policy.

00:46:50.720 | What is the reason that this if Biden wants there to be free flowing immigration, which he says he doesn't, but if he did, why would he want that? What's the what's the reason?

00:47:03.280 | There's some arguments I've heard from economists, that the fundamental value the US can gain from the flow of immigrants across the border at an accelerated rate is to lower the cost of labor. And so you get low cost labor to participate in the labor market, we have skyrocketing costs for, you know, basic goods and services, many of which are tied ultimately to the cost of labor in the US due to the tight labor market.

00:47:31.080 | And so if you can open up more manual labor roles in the US or fill those manual labor roles, with a lower cost of labor, you can bring inflation down, you can bring the cost of goods and services down. So there's an economic argument for doing that. And it also grows the economy, because fundamentally, when you have more productivity through more participation in the labor force, you see the GDP grow, and you also increase the consumption of goods and services in the US by the immigrants that are coming across the border. So the there's an economic argument.

00:47:58.600 | That's a theory. Yeah, that's a theory that folks don't want to say out loud, they don't want to be very public about it. But there is kind of an underlying kind of economic story that behind closed doors folks are making about why you want to see this happen, particularly

00:48:10.960 | so Chamath, what do you think of that theory as proposed? I'm not saying that you're endorsing that free bird, but I have also heard people say that that's the reason. And why would Democrats be in favor of that over say, Republicans wouldn't both of them want to see the economy grow and have more labor available in record low unemployment? You know, whether you agree with her or not, so or is it just become a political weapon now? Yeah, what do you think?

00:48:37.680 | I think that theory is stupid that theory were to be valid. Let's let's try to steal man why that theory could be true, even though it's was probably thought of by a nitwit. You would want to know, first of all, all of the different types of labor shortages that exist. And then you'd want to know all of the different types of labor inputs that these people can provide. And then you'd need to know all of that

00:49:07.160 | labor demand by geography. And then you could sort of like do a reasonable job of allocating that supply and demand. So if that was really the case, it's even more reason to have an organized border. Why? Because as David said, you get them through very specific points that allow you to actually enumerate these details about these people, and then actually send them to the places

00:49:37.080 | where they're actually needed, so that then they can become a productive part of the economy, where they can lower labor costs, etc. What that explanation does is actually tell put a nice lie in front of what is the actual truth. I think that there are a lot of people who feel fundamentally guilty.

00:49:58.800 | Because a lot of the quality of their life they didn't earn necessarily. And so they have this self loathing that they feel like they can appease by allowing all of this other stuff to happen. And one of them in this weird way is immigration. But if you actually ask an immigrant, somebody like me,

00:50:20.600 | I kind of feel that it is very unfair for those of us who actually stood in line, who waited years, and in some cases, I know decades, highly skilled individuals to try to actually fill this labor gap that you talked about, who are prevented or who are slowed down from actually doing what you say that theory is all about. So I just think that this is just frankly, like a lot of folks that live in a very, very comfortable way, who

00:50:50.000 | feel fundamentally guilty. And so they're like, let me share my largesse and riches with other people. And maybe that comes from a good place. But the manifestation of that is bankrupting all of our major cities, and it's creating an enormous security vulnerability for this country.

00:51:08.520 | Yeah, I mean, you could describe it to having an open heart and wanting more people to come into the country. But it's crazy, because you have to have at least some control over this.

00:51:17.760 | So we talked about this control. What about just documentation and awareness?

00:51:22.320 | Of course, yes. I mean, terrorists can be flowing across the border right now.

00:51:26.200 | But Jason, what about what about something even as simple as like communicable diseases?

00:51:32.600 | I mean, yeah, members, the cartels,

00:51:35.960 | gang members, and criminals also like we should, we we've talked about this before point based systems and merit based immigration.

00:51:42.160 | Yeah, we could have a skills based system. But that wouldn't get in as many people as quickly as just having an open border. And look, I think there was an economic rationale for this a while ago.

00:51:53.640 | Yeah, we talked about that. Yeah, Republicans were in favor of it. 20 years ago,

00:51:56.960 | Wall Street Journal editorial page, like 30 years ago, wanted to support a constitutional amendment to have an open border. I mean, they just saw the world purely in economic terms. And having free trade, free movement of capital and free movement of labor was all part of that conception. I think it was naive in a lot of ways. And I think now, if you're still supporting it, I don't think it's for economic reasons. I think it's mostly for political reasons. And

00:52:23.240 | look, there's this clip from Tucker that would just went viral today, explaining it. I mean, if you want to play it,

00:52:28.960 | the numbers you need to understand, Yale University released a study last week by three researchers, all the liberal, I believe, who concluded that the actual number of illegal aliens in this country is not 11 million. It's north of 22 million 22 million. Fact one, fact two, the Democratic Party is now as a matter of policy calling for the legalization of all illegals in this country, citizenship voting rights, 22 million new voters. Fact three, the overwhelming majority of first time immigrant voters vote Democrat. Fact four, the largest

00:52:58.400 | margin in American presidential history was 17 million votes 1980 election, nice rather 1984 election between Mondale and Reagan and Reagan. Yeah. 17 million, you would add to our voter rolls. 22 million at least permanent electoral majority in perpetuity. That's what this is about. It's not about making the country better serving our labor needs helping the population. It's about putting Democrats in power.

00:53:22.480 | So how do you how do you react to that? How do I react to it? Yeah. So the question like, why would the democrats want to do this? That's, that's a theory votes, basically, to get votes is what he's saying.

00:53:35.760 | We just had a conversation here that just I think was on the predictions episode that we all felt that more immigrants, people of color were going into the Republican Party. So there's only that I don't think all 22 become magically liberals, we talked to or democrats here. So I don't know if that part of the argument.

00:53:53.760 | I think what I think what Tucker is saying effectively, is that if, if 22 million people are converted to us citizens by a given political group, they will be rewarded by the vast majority of those people with at least one cycle vote in their favor.

00:54:09.520 | You believe it tomorrow? You believe that that's why Biden's has an open borders to get votes?

00:54:13.600 | No, I think that actually, my opinion is what I just stated, which is, I think that highly over educated, liberal elites have a certain amount of self loathing about their lifestyle that they believe is not earned. And so they have this weird thing of like, they need to feel better.

00:54:35.920 | Well, instead of just like looking at the truth, which is, yeah, they didn't earn it, and a lot of it was given to them by their rich parents and just move on and do something good with their life. They want to just destroy it.

00:54:45.920 | Sachs, you believe it? You believe Tucker's argument there that this is a democratic vote getting conspiracy?

00:54:52.080 | Well, I don't think it's a conspiracy. I mean, or strategy. Democrats have actually said on a number of occasions that this type of immigration is good for the country, because a diversity, and B, these people will eventually vote democratic, or, you know, when they get citizenship, or they'll have kids. And because of birthright citizenship, they are more likely to be democrats. Democrats will say this and say it's a good thing. But then when someone like Tucker says it, they'll basically say it's great replacement theory. It's a conspiracy. It's racist.

00:55:21.040 | No, he's saying the same thing that you're saying. He's just saying it's a bad thing. And you're saying it's a good thing. So I never said it's a good thing. And say it's a good or bad. No, I'm talking about other people. Okay. So I didn't get my opinion yet. What do you think? Well, I wanted to hear Sachs. Sachs, Sachs, do you agree with him that this is a strategic move by Biden to get more votes?

00:55:39.840 | I think it's like a lot of things. It's an issue where the party that's championing it can claim that it's kind of like doing well and doing good. They think that they're doing good, but it's also highly motivated by their own desire to benefit themselves.

00:55:55.280 | Dual function. Yeah. Yeah, I'm the rest of the country, we should have an orderly process here. And it should be merit based. I've said that 1000 times on this podcast, that we should be a point based system. And we should be recruiting people, we should have some compassionate slots, and then everything else should be a waitlist. And we can, we should pick a number of how many people we could absorb, based on the labor markets and do it very thoughtfully. Maybe we need a half million teachers.

00:56:19.920 | No, you've described your solution many times. We're asking for your opinion on what Tucker just said.

00:56:24.640 | I would go with Sachs's position that it's probably convenient that you yeah, it might go 60 4070 30 for votes. I don't think it's 100% of them are going to vote there. I think this could blow up in Democrats faces if it is their strategy. Because a lot of people who are coming here immigrants don't want to be part of the Democratic and the liberal woke Democratic Party. They want to be part of the Republican hardworking party.

00:56:49.920 | I want to go two for two last week, Sachs, I mean, Friedberg pulled up stats that showed that a bunch of people got really angry and quit the pod. When I said that Andreessen basically put in the money to generate AUM. And we were joking in our group chat that it was all the VCs that stopped listening.

00:57:09.520 | They all hit the stop button at once.

00:57:13.920 | Yeah, because it was again, the truth, the uncomfortable based truth. So I want to ask you guys, I just a reaction to my comment that there is an amount of self loathing amongst liberal elites that causes them to embrace some of these ideas that are not rooted in actual logic, but are rooted, I think, in their own insecurity. Can I just get your reaction to that? You guys think that's true?

00:57:34.640 | I think that among this elite, this call it woke elite, who defines their politics in terms of social justice, which basically means you divide the world into oppressor and oppressed groups. And you try to figure out with every issue, who the oppressed group is, you take their side. That's basically how politics works for this group. So in their view of the world, all these poor migrants are streaming across the border, they're the oppressed group. And so we should help them, we should

00:58:04.560 | let them in. And you saw Gavin Newsom in California just extended healthcare to illegal immigrants. So all these government services basically being provided, and they think that's a good thing. That's official policy. So I do think that there is this ideological view that we should be doing as much as we can to provide help and benefits to these people. I think that at a certain point, it gets to a place where the system breaks. And again, you have mayors of New York, Chicago, other blue cities saying, it's breaking,

00:58:34.320 | we can't afford this, there has to be some common sense around what we can afford. You know, can we afford the social services, the hospitals, the schools, the infrastructure, do we have enough housing for all these people? And I think we've just like become completely unmoored from common sense. Now, I think that's the ideological people in the party. But I don't know, if that's Biden, the Biden administration, I do think that for the administration, they think more about some of these other calculations.

00:59:04.160 | But even so, I don't really understand their motivations and their actions. Because recruiting more democratic voters is more of a long term proposition. It's something that they can achieve over the next couple of decades. But Biden could lose the election this year, over this issue. I mean, this is his

00:59:21.920 | worst issue. And he's shining a spotlight on this. I mean, he's actually sending his solicitor general to the Supreme Court to get permission to cut the wire at the border, right. And, you know, again, he's shining a spotlight on an issue where the vast majority of the country and even I think half of the Democrats don't agree with this policy. So I just don't, I don't get it.

00:59:47.120 | 100% right on sacks. This is like, for Republican, this is abortion is to Republicans as the border to Democrats, you have to solve this problem. Look at this chart, to be so disconnected from the populace. Only 7% of people reported and this is a recent poll. This is from this year that it's not much of a problem the situation the border 45% and 30% very serious or a crisis that 75% think it's a crisis or very serious. And then 18% thing is so mysterious. That is the majority

01:00:16.100 | overwhelming majority of Americans in you just have to change your policy here. This is just too many people flooding across the border, period, full stop, right? Just like for Republicans, like they shouldn't have to overturn Roe v. Wade, and we should shut down the border, you know, on the Democratic side, but I come from a blue collar family, I can tell you, there are two Democratic parties right now. There's the the working class Democratic Party that totally doesn't understand what Biden is doing with the border, because they want to see wages increase, they

01:00:45.960 | want to see low unemployment, they want to see their wages increase and not have to deal with illegal immigrants, you know, fighting for jobs, that's a real thing, wages have gone up in this country because of low unemployment, that's great for the bottom half of the country. And they live in New York, and New Yorkers want to see services for their families, not for families that are streaming across the border. It's that simple. And so what you're saying, Chamath about like woke liberals, that's not the

01:01:15.800 | majority of people in New York, that's like a really elite control the Democratic Party. That's the thing. They control it for now. They control for now. But I think they're losing control.

01:01:24.400 | And this is why Biden did that huge debt forgiveness program that the Supreme Court found unconstitutional is because of course, professional elites, college graduates, and specifically Ivy League graduates, are the people who run the Democratic Party, as well as the media and all these other professional

01:01:39.360 | institutions. They're the center of gravity and the power within the party. And the blue collar, the lunch pail type Democrats, the union rank and file, not the leadership, they are starting to move to the Republican Party, the working class, in bigger and bigger numbers. And I think that's Trump's appeal is he actually knows how to appeal to those those people.

01:01:58.360 | Absolutely. Knowing a lot of both my experience is there's a lot less self loathing amongst Republicans right now than than there is among Democrats.

01:02:05.760 | 100% of my middle class family does not want an open border.

01:02:09.520 | They may move to the Republicans one day, Jason.

01:02:11.560 | Oh, I know they are. They are literal people in New York proving my Brooklyn in, you know, the boroughs who are looking at it saying like, I don't understand this world crazy ideology. I don't want any part of it. And they might they might vote Republican.

01:02:26.920 | Shabbath is right. It is self hating. It's self destructive. It's the same thing that we have with these DAs, you know, who are letting all the criminals out of prison. You know, the decarceration movement.

01:02:36.440 | No, law and order, Jason, you keep saying nobody wants that. But I think the people that are making these decisions live in high rises that are 50 stories up where there's doormen and security or they're living behind a gate with private security. And so they can make these decisions because they don't feel the impact.

01:02:53.360 | Not yet. This is why what's happening in these elite cities is so important. Because for the first time, the broad infrastructure of a city is getting crippled in a way where these folks have to live with the implication of their decision and actually understand for themselves. Why did I endorse something that is so fundamentally destructive to me and the people around me.

01:03:15.880 | And this is the first time and so in many ways, what the southern states have been doing by sending migrants to all of these major cities is it is actually allow the leadership of the liberal elite in these cities to confront. Why have I been proposing these programs and these solutions in this way, they've never

01:03:37.120 | had the exact same thing that's happening to the Republican Party as well, their leadership, Nikki Halley, etc. The the neocon warmongering Republican Party is now losing to Trump as well. Everybody's going populist now that you need only look at the statistics, the majority of people want the border closed. That is across both parties. The majority of people don't want to be involved in foreign wars. That's across both parties. And that's why, you know, Trump and RFK are just crushing it in the polls.

01:04:06.720 | And that's why they're both having such a great show. And it's because they're appealing to the majority of Americans. And the majority of Americans don't want to be involved in foreign wars. It's not a Republican position. Republican position is the opposite. They're neocons. They want to go to war.

01:04:18.280 | Let's go to fintech on the topic of fintech and more journalism. A bunch of news has been leaked. Recently, we can get into that aspect of the story as well. Confidential financial data from Brexan and tropic were leaked this week. If you don't know Brex, they offer credit card and expense management software. It's pretty dope, actually very hot startup, they raised a billion five between 2017 and 22.

01:04:44.680 | And they were last valued at $12 billion. Earlier this week, it was reported that Brex was burning 17 million a month 200 million a year on net revenues of 280. These are select leaks, we don't have like the full P&L here. So we can't tell you exactly what's reality or what parts of this are true. But later that same day, after the leak, Brex announced it was cutting 20% of its staff 300 jobs, which it said would help it extend its runway by two years. And tropic, one of the breakout AI companies that's building a proprietary

01:05:14.480 | large language model called quad. It's really dope, actually, as well. Another cool product.

01:05:18.560 | They've raised over 7 billion at a $19 billion valuation recently. And their gross margin was leaked this week to anonymous sources said it was between 50 and 55%. Obviously, we talked here about SAS software, being a 70 to 80% margin business. So free bird, you want to maybe, I don't know which way you want to go with this stuff being leaked by the press, or the finance side.

01:05:41.760 | I wanted to ask you guys your opinion. Do you think it's almost like the gossip version of business when you get private companies financials and report on it with like an angle of being effectively disparaging towards the business, look how much they're burning, look how bad the business is. It hurts employees, it hurts shareholders, any one of us who have been investors in or involved in or on the board of a company, where the press then writes an article where they got the hand on confidential

01:06:11.680 | financial information about the business always hurts the business. It's almost like taking photographers outside of celebrities homes and taking photos of them through their windows. I don't understand the true newsworthiness. And I just like to take a step back, because we always kind of dive into these conversations and treat it as totally appropriate, when private confidential information about businesses is leaked and discussed like this. And we kind of have accepted it as the standard. But, you know, do we really identify the newsworthiness in this? Or is this really just like, the gossip

01:06:41.520 | fodder for hurting businesses? And it's the kind of sensationalism that we've kind of come you gotten used to in in in the news in general, who does the reporting benefit?

01:06:49.960 | What the journalists would say is, it gives the public the ability to understand business and trends at a deeper level. And that's good in a free society. That's what they would say. But you could argue like, what's the point of this?

01:07:02.600 | Isn't it a sensational story? It's like, Oh, look how much money this company is burning. Oh, wow, that's why we should all talk about it. Like,

01:07:08.080 | they would say maybe it's like, look at the mega yacht that the billionaire is on, you know, or like, look at the Yeah, look at the celebrity at the beach, you know, like, look at how they're dressed.

01:07:16.520 | The journalists who reported this would say it's no different than us talking about the ZURP era or overspending. And it's just part of the reporting.

01:07:23.800 | That's a general framing of, like, I don't know, I just think like going in and getting confidential financial info, it hurts the employees, it hurts the shareholders, it hurts the board, it hurts the company, and the customers of the company that ended up

01:07:35.920 | questioning the business from a journalistic perspective. There's nothing about this that to me seems to benefit the public at large by revealing all of this salacious information. It's a private business that's not required to disclose their

01:07:47.240 | financials, and all of their shareholders privately own the stock. And someone took some private company data and leaked it.

01:07:52.800 | I can tell you, in you know, when we ran and gadget 90% of the leaks 95% of the leaks were calls from within the building. So this is disgruntled employees.

01:08:02.440 | I think in this case, it's actually an investor who doesn't want to see them burning 17 million a month and wants the runway to go further. And they leak this because that's who would have access to it. The accountants and lawyers would have access to it, but that would be the end of their careers in their firms if they did leak it.

01:08:16.640 | So somebody who has a financial interest in this typically an earlier stage investor, or an investor who's frustrated with the management that they won't cut the burn, leak this in order to create pressure. So in other words, the press is just a tool being used by the insiders.

01:08:31.320 | And that's how this went down 95% of the time,

01:08:34.240 | I think is more likely to be a low level employee. I think that's typically where this comes from. A board member has a fiduciary duty to basically keep proprietary data secret. I really don't see most investors wanting to take the chance of it coming back on them by again, violating their Delaware obligations, their fiduciary

01:08:57.040 | duties. Furthermore, I think even passive investors who aren't on the board generally don't want to hurt their investments. I think it's generally disgruntled employees who do this, I'd say lower level disgruntled employees. And the reason they do it is that either they feel like the management, the company is asking them to do something unethical or is non responsive to their concerns. So I think it is the motivations you're talking about, Jake out. But my view on it is that

01:09:26.960 | lower level employees have less

01:09:28.280 | like, what do you think the journalists like objectives are besides sensationalist headlines on like, what's the newsworthiness to the public on reporting these stories?

01:09:38.720 | Well, I mean, you talk about how damaging these stories are, and they hurt the company. So why would the reporters do it? And the reporters are like, right, they're not there to help companies, they are there to hurt companies and sell clicks by doing it. So now, is it newsworthy? What I would say is it's

01:09:55.280 | annoying, when the media gets a hold of proprietary information, and puts it out. But it's hard to argue that it's not newsworthy. I wish the media would do it in a non clickbait way, like, they're going to put out some numbers. Don't cherry pick one or two.

01:10:11.720 | So by that vein, shouldn't a journalist go out and try and get the private financials of every private company in Silicon Valley?

01:10:18.920 | They would if they could,

01:10:20.560 | and just publish it on our website.

01:10:22.040 | Okay, but if they did ask for that explicitly, that would be illegal. So they can take inbound, but they can't go out and try to steal it themselves, obviously.

01:10:29.600 | So right. So why wouldn't someone just set up a wikileaks for private financial information?

01:10:33.680 | If you look at every journalist now, they have a PGP key or whatever, they have a phone number, they say anonymous, hit me on these anonymous services. And that's how this is done. Having been on the other side of it. It's back in the gadget days, people used Yahoo, I think they use proto.

01:10:47.960 | I don't know, I just reacted kind of negatively when I see these stories. And I'm always like, what's the point here? Why are we reporting and hurting companies based on like reporting financials?

01:10:57.040 | That is the point to hurt them? Well, but the media has a different incentive than you to get a subscriber.

01:11:02.160 | If you put this behind a paywall, and you have all the salacious details, and you have one story like this every week, then you know, the fifth time somebody comes to the paywall, they're like, you know what? Yeah, this is great insider information. I'm getting smarter because of it. I'll pay the 25 bucks a month.

01:11:15.760 | Right? If people in our industry didn't want to see this happen, they shouldn't subscribe to the publications that do this. freebird. Did you read the article?

01:11:22.200 | Yeah, it's just got some numbers. I mean, I got it.

01:11:25.120 | So you did read it? Yeah. Yeah. So they accomplished their goal.

01:11:29.280 | Oh, I read it because you guys sent it to me. But I hate all these articles that I see on the internet that do you subscribe to the publications that no, no, no, I don't subscribe to any of that.

01:11:38.120 | No, I don't. I don't want to read about every startup is a challenge. Every startup is a disaster until it's suddenly not like that's reality. And it's really awful for years to have seen like tech reporter after tech reporter who's supposed to be kind of covering the news, the innovation, the progress in the industry, target and focus on the inevitable failure that every business is dealing with on a frequent basis, and make that the headline story, which just ultimately hurts the business hurts the employees hurts the ecosystem hurts progress

01:12:07.640 | doesn't really benefit anyone except their viewership.

01:12:09.840 | I thought you wanted to talk about the quality of these businesses. Let's talk about the quality of businesses.

01:12:13.920 | I think it's hard to have a conversation about the quality of businesses based on a couple of these data points, because I think they could be cherry picked. I think one of the problems these articles is you don't get the PNL you just get like one or two numbers. I can't tell you based on

01:12:26.240 | yeah, I mean, look, 17 million a burn is not good. That's almost always a red flag. But I don't know if that was one month or like the steady state. I need to see the PNL five minutes if it's a good business or not by looking at the PNL.

01:12:39.920 | Yeah. In the Brex case, if we for those of us that know the the founders, they're really sharp guys. Enrique is a really, really sharp guy. So

01:12:49.080 | are you guys in that company? Anyone?

01:12:51.760 | I'm not.

01:12:52.320 | No, but I'm friends with Enrique. And I think he's wonderful.

01:12:54.800 | If they're cutting the burn by 20%. Who knows? We don't like sex is saying we don't know the denominator here. We don't know the total spend. We don't know how net revenue is defined. It's just

01:13:04.680 | what are your views on fintech? Go ahead.

01:13:06.320 | Is fintech a great business or not? I mean, is it a tech based business? Do you believe in the category?

01:13:12.440 | So I started metromile, which was an online auto insurance business with a telematics device that plugged in the cars back in 2010. And the term fintech wasn't used at that time. And in the years that followed fintech became a term where it was like

01:13:27.080 | technology companies or software companies reinventing financial services in different ways. And, you know, so we're now 14 years past that. And a lot of quote fintech businesses are looking like fin businesses without the

01:13:39.320 | tech, meaning their margins, and their LTV to CAC or their return on invested capital. It looks the same or in some cases worse than the traditional financial services businesses that they're meant to disrupt. And so this spans insurance, to

01:13:54.920 | lending, to banking, because the technology advantage was meant to accrue either a better margin or, you know, better return profile, or a better call it LTV to CAC, meaning you can acquire customers for less, or you can get more money from those customers by

01:14:11.800 | retaining them longer and get more money over time. I always used to sit at the board meetings at metromile. And I would scream, guys, if we don't demonstrate margin advantage, the business will eventually trade like the market trades, which is one times

01:14:24.080 | revenue. And if we trade at one times revenue, we're already overvalued. And we've burned so much money, it was always a challenging conversation about pulling up the margin pulling out the LTV to CAC numbers. The truth is, over the years, a lot of fintech

01:14:37.840 | companies fell into the same trap that DTC businesses did, which is to grow, they started acquiring customers through Facebook and Google. And Facebook and Google became all the page views on the internet. And they ultimately got competed away, and the price went up, and the conversion rates went down. And so the CAC went through the roof. There was a lending company I was involved in early on, as a main shareholder. And we were spending $4 to acquire a customer making 12 bucks a month in gross profit. Fast forward 24

01:15:07.320 | months, and it was costing north of 30 to $60 to acquire a customer, and gross profit per month declined to two to $4. So you know, this this margin advantage went away as the business scaled, and the CAC went up. And so the LTV to CAC ratio started to look worse than traditional lenders. So what are the fintech companies do in response when this happens, which many of them faced is they had some inherent margin advantage or some inherent growth advantage that over time got competed away? Well, they start giving product away for free. In fintech,

01:15:37.200 | it's really easy to grow by giving away $1 for 90 cents. So you could drop the price of auto insurance, and suddenly everyone buys your auto insurance, and your revenue growth goes through the roof. But your margin profile is terrible, you'll lose money over time, because you'll have higher loss ratios. And same in lending. In lending, you can offer people a lower rate, revenue goes through the roof, everyone signs up for loans from you. And over time, you end up having defaults that eat away your gross profit, and you end up losing money on that product. So many of these fintech companies, it takes a couple of years for those economics to play out, are now

01:16:07.080 | starting to run into that headwind, which is they couldn't just grow through some unique margin, or CAC advantage, they acquire traffic. And when they couldn't acquire traffic with a good LTV to CAC ratio, they have to start doing this give stuff away. And then the margins get eaten up over time, or the business gets unprofitable, and they can't get out of that cycle. So I think we're in this kind of like realizing the truth, which is that a lot of fintech businesses are just thin businesses. There are a few that are doing great. But many of them, for many years, I think masqueraded as having some unique tech advantage until those numbers

01:16:37.000 | started to play out, which demonstrated that in fact, they did not.

01:16:39.920 | Yeah, and you can understand the customer acquisition costs. That's what CAC stands for, for those of you who don't know, very easily, because I was an investor in Robin Hood. And one of the genius things they did was a give to get program, it's called in the referral space, if you if I get you to sign up with my referral code, they would give me a share of a company, and they would give you a share of a company. So you get a free share, but you have to then sign up, you know, and put your bank account in and all that kind of stuff. They'll pay a

01:17:06.600 | referral program, a couple 100 bucks, he trades, etc, of the world's to get a funded customer. Robin Hood was able to do it for giving away two fractions of a share, and you weren't getting like a $300, you know, Tesla share, you were getting a whatever 1% of that you get $3 worth of Tesla shares or whatever. And they did it with a little device like a mystery box. So it was quite addictive. And in the mystery box, they would have dollar shares, $2 shares, whatever, and they would and they would net that out to be well below 10s of dollars instead of hundreds of dollars. And I

01:17:36.560 | maxed out the program, because I tweeted it and got 250 people. Now they're doing one where if you move your money into the account, they give you 1%. So if you remove a million dollars of shares, and they'll give you like $10,000 to build up their assets under management. So you need to have something that is cheaper than what's in the market. Like TV is very expensive to

01:17:54.560 | I'll say two things which are build on what I've said before. And maybe I'll try to make the point clearer. Do you guys know what the average gross margin is of the S&P 500? And how it's changed over time?

01:18:05.880 | My guess is gross margin. Yeah, my guess is 28%.

01:18:14.520 | Wrong, but it's a good guess. It's about 43% over the last kind of 25 years, except in two years. And those two years were on the tail end of the web 1.0 bubble bursting. So the average is about 43%. In 20 2002, it went to 30% 2003, it went down to 23%. So a half, right of the steady state average.

01:18:41.720 | That's one comment. But the second comment is when you actually look at the S&P 500, right, so it has all of these different sectors. But this is the 500 best companies in the world, right? Everything else is much worse than this. And you look at who has the highest probability, and the highest correlation over long periods of time of generating high gross margins. It's actually the companies in the markets with the lowest gross margins.

01:19:08.120 | So if you put these two things together, what is it saying? It's saying that high gross margin companies are rewarded for growth. But they generally speaking have a very poor rack track record of two things. One is generating profitability. And two is actually doing it in a consistent manner. And so I think this is just a way of saying what I said last week. But I'm just going to keep harping on this because I think this is a huge trend over the next decade is technology,

01:19:37.160 | Friedberg to your point, is no longer a definable sector. I know that we want to point to a company and say it's the tech company. But I think it's much, you'll be much safer if you say this is a tech enabled version of x. And x is all of these other historical sectors of the economy that have existed energy, consumer staples, consumer discretionary materials, it industrials, real estate, utilities, whatever it is, it's actually that company.

01:20:07.080 | And those companies have a prevailing gross margin, a prevailing gross profitability, a prevailing ability to convert gross margin to gross profit. And that has not changed that much. And so all of these companies that are massive outliers to these trends are going to go through a process of getting refactored. And maybe your example of fintech being more fin than tech is a very early sign of what may be happening to the rest of all of these

01:20:36.120 | companies that we point to and say, that is a tech company. Actually, that may just be a real estate company that's tech enabled.

01:20:43.240 | Yeah, it used to be the case that tech companies sold technology to traditional companies. And now, traditional companies are getting rebuilt, quote, as technology companies, but maybe don't have as big of an advantage as the incumbents who can easily adopt technology themselves. So it becomes ubiquitous that technology is, you know, the way the market evolves.

01:21:03.080 | But could you imagine if we have a mean reversion to the average gross margin profile? Oh, by the way, the other thing was, a gentleman made a very, I think, misguided comment when we posted the pod last week about how gross margins can never change. And this is crazy. And I just wanted to explain that for a second. Let's just say you have a software company that has 80% gross margins. But you have an accounting rule. Now, all of a sudden, that changes the capitalization of R&D.

01:21:32.280 | I think, Saxe, you said it last week, but I'll reiterate it. If all of a sudden, these companies go totally pear weight pear shape, because of these kinds of accounting rules, where you can't capitalize these investments over five years, but now you can only you pay for them upfront, but you can deduct them over 15 or 20 years, which is what is happening right now.

01:21:53.640 | Companies will lobby the standards bodies to change the definition of gross margins, so that those gross margins look very different, because they'll want to deduct them immediately. And now you'll see gross margins decay by 1000 and 2000 basis points. All of this is to say that this may not be new and different, it just may be a rhyming version of the past. And we know what that past look like. And the new the numbers are kind of unavoidable.

01:22:22.600 | Saxe, any thoughts on this fintech, reckoning, bubble, or some other perspective, you might have,

01:22:29.880 | I think you're right, it is a reckoning. And the reason for that is because fintech was one of the hottest spaces during the bubble. I have the saying that the hotter they are, the harder they fall. And so when a space gets really frothy and speculative, obviously, the reckoning is going to be that much bigger. In terms of your question about revenue multiples, and how to think about that, I agree that it's a big

01:22:52.120 | mistake to think of fintech revenue as having the same quality as say, SAS revenue. I mean, the gross margin profiles of fintech businesses typically are very different. A good software business 70 80% gross margin, fintech businesses typically have transaction costs on every transaction that are pretty high. So like Friedberg mentioned, if you're making loans, you're going to have a loss rate on that portfolio. If you're doing

01:23:21.560 | insurance, you're going to have claims payouts, if you're doing payments, you're going to have transaction fees that you pay to save Visa, MasterCard. And certainly we saw this at PayPal, where the margin on any particular payment was pretty low. And I do think that investors who are putting 100 times plus multiples on fintech revenue, definitely we're not taking the margin profile into account.

01:23:48.360 | You know, another mistake that I think investors make is, they'll think in term, this is certainly true with payments companies. I mean, I could, I saw this all the time, after PayPal is that people will confuse gross payment volume and revenue with a payments company. What you have to understand is, you know, take a payments business that's doing maybe a billion dollars in payment revenue. That sounds like a lot, right? But if they charge two and a half percent transaction fees on that,

01:24:18.240 | that's only 25 million in revenue. Okay, now, let's say that of that two and a half percent, one and a half percent on average goes to Visa, MasterCard and another 50 basis points is fraud losses. And another quarter point is customer support costs on transactions where there's a problem. Okay, now, your real margin, your real gross profit on that transaction is 25 basis points 10%. So really, of your 25 million of revenue, you only have two and a half million of true net

01:24:47.760 | revenue. And then you have to use all of that revenue to pay off all the overhead of the company, all the r&d, all the sales and marketing, all the the g&a, the overhead, cars. Yeah, exactly. So you very quickly shrink from a company that's doing a billion dollars in payment volume, to one that really is only doing two and a half million of net revenue. So I mean, unless you're a company, like, I don't know, like only fans is able to charge 10% transaction fees, but they're rare, you know, and they tend to be kind of in these,

01:25:18.720 | you know, subprime or kind of sketchy spaces. So people just don't really understand that the scale that you need to make a payments company work. I mean, it needs to be not just like a billion is not enough, you need to be doing trillions or hundreds of billions of volume to make these businesses like exciting at all. And I think there's something probably pretty analogous with some of these other areas, like loans of various kinds, or

01:25:47.880 | insurance, because of the losses. The margins are just way smaller than people think. And therefore, you just need huge volumes to make them interesting. Yeah. So I think that's part of what's going on here.

01:25:59.440 | Yeah, and people conflate the numbers, especially in the early stage of startups, people were referring to Airbnb and Uber and DoorDash is revenue as the gross market. You know, transactions and like, well,

01:26:12.960 | yeah, Airbnb is taking what, like a 15% rake? Yeah, all margin. Yeah. But you know, people would take the whole, you know, five day stay and attribute that to like, oh, this is the revenue of Airbnb. It's just intellectually dishonest. All right,

01:26:27.160 | Friedberg. I have been seeing a bunch of tweets about this arc storm hitting California. Is this going to be amazing snow? Is this going to be floods and disasters? Is this the day after? What's reality here?

01:26:40.120 | Yeah, there's this like rumor that is, you know, not corroborated by science that this arc storm event is going to hit us in the next week or two in California, which is this massive storm. Nick, if you pull up that tweet that I sent you last night. So this is the 200 mile cross Pacific jet

01:27:00.640 | scream. Oh, yeah, I saw that with a, you know, very hot and moist Pacific. So a lot of energy, but the ocean temperatures are hotter than they've ever been on record. So this causes the air to move more quickly, it causes more moisture to go into the air. And then it gets moved and pushed all the way to the western

01:27:18.640 | United States. And so some people have said, Wait, this is going to lead to an arc storm event. So what's an arc storm event? In 1861 to 1862, in California, there was a atmospheric river event for 43 days. So water poured down for 43 days straight, completely flooded the Central Valley, Sacramento, Los Angeles, all of these regions were underwater for six months, at the time causing $100 million in damage. And the USGS, the United

01:27:48.160 | States Geological Survey did a analysis and what they projected would happen if such an event were to happen again, this day and age, these sorts of events are predicted historically to happen every 150 to 200 years. But based on the warm temperature in the oceans, we see it's now predicted that these will happen every call it 25 to 50 years or much sooner. And these high temperatures are driving a higher increased frequency and severity of these sorts of events. So the most recent model called arc storm 2.0, which was an analysis done by the USGS

01:28:17.740 | showed that if this sort of an event were to occur again, would drive over a trillion dollars in damages in California. So based on the image that you just saw, which showed this massive 200 mile an hour, hot, wet jet stream plowing towards the western US, a lot of people on Twitter started speculating, it's arc storm 2.0, it's coming our way. And a lot of meteorologists have looked at the ensemble, which is the simulation model forecasts and said, You know what, it's not going to be arc storm 2.0, it's going to be wet. Over the next couple of weeks, it

01:28:47.620 | could be very wet. But this isn't the big mega flood event that everyone's been worried about. So rest assured, it's not imminent. I know a lot of people are talking about it saying it is imminent, but I do think it's worth being aware of and cognizant of this arc storm 2.0 type scenario. And you know, it's the kind of thing that folks are waiting for. And now, you know, predicting every other week is about to happen when these sorts of things happen.

01:29:08.920 | Last year, they refer to the storms we had in California as atmospheric river and the arc the AR in in arc storm is for atmospheric river, I see. So last year, we had flooding, we had damage to our house, I think like $50,000 in damage.

01:29:22.880 | Yeah, the snow in Tahoe, the floods in the Bay Area. It was crazy.

01:29:28.680 | It was it was bonkers. And how many days was that? It was only like 10 days.

01:29:31.800 | So basically, it's going to be like wet, warm, moist. But it's really not going to be like dripping. And like, I got it. It's not gonna be drenched. It's not gonna be drenched, it's gonna be wet, but not drenched.

01:29:50.160 | It's gonna be wet for 25 days.

01:29:53.760 | 25 days. There you go. Anyway, it's worth being cognizant. We talked about the hurricane event in the Pacific a couple weeks ago, these sorts of events more frequent, more scary, more significant, hotter oceans are driving these events. But this doesn't seem to be the mega flood event. But it could happen. Some point got to be cognizant. That's the reality.

01:30:15.520 | There are people are buying like sandbags and stuff like that and putting things around their homes these days to to prevent this kind of stuff. So yeah. And then hopefully it hits.

01:30:23.920 | I got a leak in my office here right now. I got a tarp on my roof.

01:30:26.720 | You got a tarp on your roof? This is at your house? Or this is at your office?

01:30:30.320 | My house, my office at my house. Your home started leaking. It's like water was pouring in through the roof. The other day.

01:30:36.200 | Do you have wood shingles? Or do you have other

01:30:38.920 | I've got composite shingles. But apparently underneath it, there's some holes, they got to redo the roof. Anyway,

01:30:44.960 | I have to take I have to take the wood shingles off because we can't get the insurance people to

01:30:50.200 | Yeah, sure. It's no longer because of fires in California. And you can replace up to 30% of them is what I was told. And so you can do like patchwork Chamath. But if you want to, at a certain point, they won't let you do it. And you just have to replace the whole damn thing. This

01:31:04.600 | happened to me in Brentwood. And those wood shakes that you have, the sun dries them, and they become like tinder, basically. So you actually don't want to have those those shake grooves anymore. Super.

01:31:13.480 | No, no, I think that I think they're treated to be fire retardant. But they look so beautiful. And now we have to replace them with composite shingles or like, you know, yeah, anyways, we're about to start but we don't we can't even get five days straight of good weather for the folks to come in. So that's what's so crazy about this thing is we be sitting six months from now.

01:31:31.800 | And have 25 days of moisture. Yeah.

01:31:33.920 | I mean, 40 days, I'm going to tell them that 40 days straight of wet moisture, wet and moist. Yeah. But not dripping, not drenched. No 40 days.

01:31:45.640 | Consistently 40 days in which

01:31:47.640 | consistent 40 days of just, yes, wet and warm moisture. And listen, if you were up in Tahoe would be flurries and yeah, soft powder, which is what I'm hoping for. All right, everybody. Why is he laughing? Keep it together, please. For the dictator

01:32:10.520 | Chumonth Palihapitiya. And is there when we look at these atmospheric things that occurred anyway, does this have any kind of gravitational pull?

01:32:20.360 | Multiplanetary effects.

01:32:21.560 | Freeberg, any planetary effects that might pull the oceans out like the gravity of the moon or

01:32:27.480 | I'm turning off my microphone.

01:32:29.040 | Mars Uranus.

01:32:30.360 | Uranus. Nothing. None of those would cause this. All right, everybody.

01:32:34.880 | Goodbye.

01:32:35.280 | For consultant of science David Freeberg, the dictator, chairman dictator Chumonth Palihapitiya. And David Sacks.

01:32:43.640 | I love you, man.

01:32:44.400 | Yeah.

01:32:44.960 | Love you, besties. We'll see you next time. Bye-bye.

01:32:46.160 | See you tonight. Bye-bye.

01:32:47.360 | Bye-bye.

01:32:48.080 | I'm going all in. We'll let your winners ride.

01:32:52.480 | Rain man David Sacks.

01:32:54.680 | I'm going all in.

01:32:56.800 | And instead, we open source it to the fans and they've just gone crazy with it.

01:33:00.840 | Love you, besties.

01:33:01.800 | I'm queen of quinoa.

01:33:03.000 | I'm going all in.

01:33:04.200 | Let your winners ride.

01:33:05.800 | Let your winners ride.

01:33:08.120 | I'm going all in.

01:33:09.720 | Besties are gone.

01:33:12.400 | That's my dog taking a notice in your driveway, Sacks.

01:33:17.600 | Oh, man.

01:33:18.320 | My avatar will meet me at.

01:33:20.120 | We should all just get a room and just have one big huge orgy because they're all just useless.

01:33:24.040 | It's like this, like sexual tension that they just need to release somehow.

01:33:28.160 | What? You're a bee.

01:33:29.920 | What? You're a bee.

01:33:31.720 | Bee.

01:33:33.400 | We need to get merch.

01:33:34.600 | Besties are gone.

01:33:35.800 | I'm going all in.

01:33:37.680 | I'm going all in.

01:33:44.760 | (upbeat music)

E163: Market rips, Media RIFs, Texas defies Biden, Fintech reckoning, ARkStorm 2.0 & more

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