I'm so fucking tired. I've slept six hours in three and a half days. Six hours. Wait, seven hours to the world series of poker with Helmut. So you spent no, no, no. First of all, I flew public took Southwest. What? Yeah, cost me. Yeah, cuz I got a ticket for 49 bucks.

It's like so fucking incredible. Did you sit in seat a one also known as J cows reserve seat that has my name on it. I was in the front row. Yeah, you it's great. Like Southwest has these numbers and first class on Southwest. No, no, no, no premium. Plus, he was in the front row.

No, there's like these signs that that like have a number that attaches to your ticket and then you stand in that line and then you go on in this orderly way. And so I was I had like a five or something. So I was like the fifth person on and then I sat in the front and I put my bags up top.

Yeah, you carried your bags. Yeah. An hour later, I was in Vegas. It was so easy. Southwest is phenomenal. And then I flew back anyways. And after after losing as much money as I did, it felt good to fly for $49. I gotta be honest with you. Well, austerity measures have you can sleep better at night with austerity measures.

And did you go to the all you can eat buffet and take it to go as well? No, I'd never do that. You never know. Rain Man David Sacks. Why did you fly Southwest? Why did I fly Southwest? Well, the planes in Europe was not that's number one. And then two, I just wanted some flexibility to get in and out depending on when I busted these tournaments.

So let me tell you about these tournaments. The 100k is literally like a murderer's row of like every great poker pro. So it was like 96 of us or something. I got to be honest with you. It was so much fun. So much fun. Why? How so? You know that we play 40 minute levels, and you have to really get the chips moving, which means that there's only so much like, you know, Game Theory optimal poker, you can play and at some point, you just got to gamble it up and you got to take your shots and you have to be willing to bluff and, you know, you have to bet for thin equity.

It's so much fun. And then you see some of these guys that just lose their minds. Anyways, it was it was really, really a lot of fun. I finished in the middle of the pack, like 42nd or something. So that was brutal. But then the thing that I'm the most proud of is and I went from that and I hopped in the 3k six six handed right afterwards, and there was like 1250 people in that and I got to 81st and whoa, the problem was like just couldn't get anything going.

I couldn't get any real car like you need some card distribution like you have to at some point. Yes, make some hands you can't just, you know, I could bluff my way to 81st but I needed hands to really, to really, really have a chance to chip up and run it.

Then I played in the Razz, which is seven card stud low. There's 126 people now when I finished in the middle of the pack there and then this 10k bounty there was about 600 people and I finished like 150. Those are all respectable. I mean, I know play tournaments.

I have no idea how to play tournament to be honest. I know how to play poker. I know how to play cash games, but tournaments are very different. So I feel like I was very ill prepared, but I had so much fun and you know the crazy thing is when you're playing for 12 hours a day, you are focused for 12 hours.

The thing that I forgot is that you end up I ended up losing like two and a half pounds. Oh wow. If your brain is going going going for eight hours a day, biggest **** thing and I was I was mentally devastated at the end of each night. You're just lying in bed eyes awake.

Yep. And then you can't sleep and so then you know you go and you play craps and **** break the casino for a couple 100 times a night there and then go back to bed. It's great. Sounds like a great week. The good news is is Phil was live blogging for you on your behalf from from Vegas over your shoulder.

Oh, by the way, the other thing was I brought my phone, but I don't have anything on my phone like I don't have Twitter. I don't have any of that stuff. so I was just totally in the zone. It felt so great to not be connected to social flow experience.

It's a flow experience when you can turn everything off and just be in the moment. Congratulations on the on the you know coming in the 10% of the field in the 3000 or 8% of the field. That's incredible dude. If I really practice at these tournaments, I think I would bank a couple, but I just don't have the time.

The paradox there is that you did best in the largest field. If you can do this for three or four years and you go into those Raz fields when it's 100 or those 25K 100 Ks when it's 100200 people in the 100 K. There's 999596 people like you really do have about a 1% shot of winning the thing, which is pretty incredible.

Yeah. Raz too. Raz is always 100. I love tournament poker. That was my that was my game back in the day. It's because it's because you're afraid to lose money. so it's perfect for you put up a small amount of money and you can play for many hours. You're probably in your mind.

You're probably dividing the number of hours by your buy in so that you can think about what your hourly cost is. I actually like tournament poker because when you lose you lose like you can't just yeah, rebuy and basically and then there's a broader macro strategy. You start to play the chips against the other players because you know how everyone else is playing based on how many chips they have in front of them.

It's a great point. This theory of ICM, which is like independent chip model is exactly what you just said. The craziest thing freeberg happens right at the money bubble. These guys start. I've never seen this before. They ultra tank ultra tank. Oh yeah, they go in the tank for two minutes and then they fold so obnoxious when I used to play tournament poker.

I'd sit I'd fold Ace King suited. You'd fold pocket Queens. You'd fold everything if you're on the bubble of getting into the money or you're on the bubble of getting to the final table. It just doesn't matter because if there's three guys with you that have smaller chip stacks, let them get blinded off and now you're in the money or now you're on the final table and then you'll play poker.

It's like go get up go have some dinner. Come back in an hour. Don't even look at your cards. If you can cruise your way there, it's a totally different kind of game. Totally different. There's a guy that was tanking. He's a really lovely guy. British guy. I offered him the min cash just to not take.

I was like, please stop taking for four minutes and folding your head. I'll just meet it as action. I had a guy do this in a tournament and I timed it with the rest of the table. I took out my phone. I timed it and I said, whatever number of seconds you do, I'm doubling and I just did that.

It was so obnoxious that the entire table like the guy finally stopped. Well, in the in the 100k, we actually had a better setup which is that we had these iPads on the table and everybody gets a 30 second shot clock. So, you can't really **** around but then in these big field events, they're not going to have iPads on 100 tables obviously.

Yes. And so instead, people just tank forever and then you have to call the floor and you have to call time on these folks. The funniest thing though is like the last tournament I bought in for was a 10k secret bounty which means that on day two, when you knock somebody out, you actually, everybody stops the action.

You go up on stage and you pull like out of, it's like treasure hunting. Yeah. And some of these bounties can be like a million bucks. And obviously, there's a lot of people there that kind of recognize me and when they saw me in the 10k secret bounty, there was like a movement.

It was so funny. They were like, if you win the secret bounty and you win the million, we're going to revolt and burn the Paris Paris to the ground. It would have been so and I and I thought, you know, it's true. It'd be patently unfair if I was the one that won that million dollar secret about it.

How many selfies did you take on Southwest? That's the question everybody wants to know how many people recognize you on Southwest and what was the shame that you felt was great. I'm gonna fly I'm gonna fly Southwest to Vegas all the time now. It's fucking great. It literally was honestly to get from my house to the gate where you stand to get into the plane.

It was like plus or maybe 15 minutes more than just driving on the tarmac like it was a nothing burger. J. Co. It's amazing what a down market can do to people. This is what is it Brad? This is the victory of the age of fitness. Absolutely. Southwest you were in the first row.

You were the front row South by all right, listen, there's a big docket today. We've got a lot on the plate. David Sacks is busy in a star chamber right now selecting the next president of the United States. He's picking a VP and the cabinet for whoever's going to win.

So he couldn't make it today. So we brought the fifth bestie Brad Gerstner back and great timing because the Fed decided to pause rate hikes in just yesterday, I guess and this would have been the 11th consecutive rate hike. Is that about right? That's right. And they anticipated two more 25 basis hikes before the end of the year.

So here's just the Fed funds effective rate. So you can all can see it here over time. And there was also some big news this week. A couple of 2023 IPO candidates started to be floated. Obviously, we've been hearing about Reddit and Shripe for a while but arm confidentially filed for an IPO back in April.

And they're seeking to raise between eight and 10 billion later this year. And that would be a pretty big deal for SoftBank, which owns the firm. And that could I guess save SoftBank, which has had a just a brutal run with the two different save SoftBank, the arm deal is being done is what's the valuation that's being done at SoftBank acquired on for 32 billion in 2016.

They don't know the valuation right now. They haven't put that out there yet. I mean, they were originally looking for anywhere from 30 to 70. But I mean, Brad, where do you think that comes out? I have no idea. I think that you know, they're shopping to get these anchor tenants into arm.

If the IPO market was super hot, and this was really easy to get done, this would have been done, you know, so I think, you know, they're tiptoeing out because they need to get it into the public market. But, you know, I think that anybody who does an IPO today, okay, is going to demand a, you know, a rate of return into that offering.

That is a significant margin of safety relative to all deals that were done in 2021. And what that means is, on the roadshow investment banks go and they try to drum up demand, they want to have anchors in the IPO book, they call firms like ours, they call strategic investors, they want to size up what that is.

And, you know, they give you their expectation of fair value or where they think the IPO will trade to, of course, you meet with management, you ascertain and develop your own expectations of fair value. What I'm saying is, maybe in the peak, you know, in 2021, people were getting thinner and thinner in terms of the margin of safety they demand I my expectations, whether it's arm, whether it's Databricks, or other companies that are starting to queue up.

And these are fantastic companies, right? Make no mistake about it. Nvidia tried to buy arm and, you know, Databricks is doing over a billion in revenue growing extraordinarily fast, led by an incredible team. But in order to get into the public markets, they have to, you know, step in with a bigger discount than they would have, you know, pre this correction.

And just to put some numbers on it, arm had agreed to be acquired by Nvidia for 40 billion before the talks fell through. That was due to regulatory scrutiny. Bloomberg says arm is aiming for a valuation of 70 billion. Obviously, there's no confirmation about that. That's just the news, hopefully intelligently speculating about it.

What exactly would you be buying for $70 billion? I thought they missed it. Yeah. arm had a window where they had to make some really important product decisions to be able to actually have reference designs that actually made sense beyond just simple mobile processors and CPUs. And they don't have any of that.

So they have a good cash cow business, it's probably worth 25 billion. They paid 30 some odd 32. Yeah, they could have gotten it out for 40 something, but it's a mid 20s billion dollar company. No more. And if you're in if you buy it at the 20s, you're buying a cash flow yielding asset, and the good luck to all the players, I guess is what I would say.

Clearly, it's a function of softbank seeking liquidity, right? I mean, they have this position for how many years now? Four years? No more. I think this was six, maybe six years. Yeah. When did they buy it? Was it 2016? I think it was longer. Yeah, 2016. They bought it.

So this has been in the fiscal year ending March, the vision fund alone took a $32 billion write down. Obviously, softbank has a big chunk of division fund, but this is not in division. It's not a division fund. Exactly. So this is on the balance sheet. Yeah. But it's clearly liquidity driver for them.

I don't think that this is, you know, first of all, Jason, I don't think the point about softbank needs saving is necessarily true. It's not a company that needs saving, but they've certainly taken some hits. Well, they could use a win is what my point. Yeah. Yeah, they could use a win.

But the last two quarterly calls, you know, Masayoshi-san was pretty repentant and humble. Right. In fact, he used that exact line, which we talked about it here. So this big liquidity need at some point for the business, so they can get this thing out and get liquid on it.

It would certainly support the balance sheet more than anything. You know, the market is on a tear this year, Brad, is there now that everybody's buying back into tech stocks, I guess, two questions. Why is everybody suddenly buying into tech stocks when people think there's going to be a recession, and consumers have run out of money?

And yeah, what's the thinking here of why so much money has gone to tech and this incredible rally? It's great to watch, but people seem to be perplexed by the rally. And then the Fed, even though they didn't do a rate hike, seem to put cold water on and say, Hey, listen, don't get ahead of yourselves.

We're gonna probably do rate hikes later in the year. We all have short memories. You know, tech had a devastating year in 2022. So this is a bit of a reversion to the meat. Right? If you remember the chart, we, you know, we showed a lot on this pod last year, at the end of starting at the end of 2021, was that we were trading at, you know, multiples that were, you know, 50 to 70% above their 10 year average.

And at the trough, we were trading about 30 to 40% below the 10 year average, right? So the market corrected, it overshoots on the upside, because rates went to zero. And by the end of 2022, when you had Larry Summers and others who are going out and saying, we don't know what the upper bound of inflation and rates is, that's really scary to the markets.

And so you add this overshoot to the downside, we're still trading below the 10 year average for internet and software companies based upon our numbers. And so when you look at this, as we said, at the end of last year, the framework changed early in this year, all of 22 was about two things is inflation going higher, and our rates going higher.

And those things are debilitating for growth assets and growth multiples. By the beginning of this year, we started to have confidence that inflation had peaked, which meant that rates were largely in kind of, you know, spitting distance of their final destination. And the framework shift to economy, are we going to have a hard landing?

Now remember, at the start of the year, Mike Wilson from Morgan Stanley, who may give him credit made the call in 2022. He said 22 was going to be awful. He was right. But he stayed in that bearish position at the beginning of 2021, said the economy is going to hit the skids in q1.

And that we're going to revisit 3000 or 3200 on the S&P. Instead, we're sitting at 4300. So he was tragically wrong at the beginning of this year, because again, he was fighting, I think the last battle that he that was one, as opposed to looking ahead and saying, this is no longer about rates and inflation.

So the NASDAQ has moved 30%. To start this year, you know, the Fed said yesterday, we're hitting pause, you know, the quote from Chairman Powell that has everybody a little bit perplexed, is on the one hand, he says, we're data dependent. On the other hand, he said, we're likely to have more rate hikes, right?

And that rates are going to stay high for a couple years. Well, if we're data, you can't have a both ways. If we're data dependent, we have a hard landing, like Stan Druckenmiller thinks we're going to have in q4 this year, then rates are going to get caught. But the market seems to like this.

And let's talk about where we are. The 10 years at about three, seven, the S&P is basically flat in terms of where it was and where it was before and where it was after the rate hike announcement. The economy appears to be reasonably good 80% of earnings in q1 beat, the guides were okay.

Stan Druckenmiller said I shifted, you know, he pulled forward when he thought we're going to have a hard landing based upon the bank crisis, which now feels like it's a distant memory for many. And he's now calling for potentially a hard landing in q4. So the Fed just came out and said, No, we're not going to have a hard landing in q4, we think we're going to have 1% growth.

They think that inflation to end the year is going to be at 3.2% versus the 3.7% Goldman consensus. What I would say is, you know, we've moved, but we're still below the 10 year average. But you have to start paying attention now to individual stocks that have likely gotten ahead of themselves or where they've taken an example of that.

A lot of the return. Facebook, Apple, no, you know, I think a lot of the AI related stocks are now at or within 10% of our end of year price target. And when you when you see that take something like Nvidia, if I'm playing at home, or I'm a, you know, a professional investor, I may say, Oh, I'm going to go sell some long dated calls to buy a little protection to the downside.

I don't think there's any problems with Nvidia, I think they're going to continue to perform, I think they're beat their numbers for the balance of the year. But you know, remember, at the start of the year, people thought they were going to miss their numbers for data center, people thought data center revenues this year, we're going to be negative.

And they just revised their guide from 7 billion in q2 to to 11 billion in q2. So they've absolutely blistered their numbers, and the stocks gone from $125 you know, to over $400. So when you have those parabolic moves, just like we did with rates last year, I think it's wise to say it's a fantastic company, we want to be involved, it's going to continue to be one of our larger positions.

But if I can lock in 20% yield, by selling calls six months out, I think that's a reasonable risk reward. So you know, I think that's where we are. And now the question really becomes and it's unknown and unknowable. Right? Are we going to have a soft landing, a medium landing, a hard landing in q4 and rolling into next year.

And I would say as an investor, I'm very data dependent. You know, we're talking to companies, we're looking at a point should we all be looking at at this point, Shamath, you think jobs, unemployment, just the stocks and their multiples, and how are you looking at it as a capital allocator tomorrow?

Still on the sidelines? What have I said like a broken record rates are going to be higher than you want, and they're going to be around for longer than you like. And now, Powell is basically telling you the same thing. So we're almost at the end of, I think the bottoming, though.

I don't agree with Druckenmiller. I think he's wrong on which part that doesn't be a hard landing in q4. Yeah, and the reason there's not going to be a hard landing is you just saw China today basically say we're going to start to rip in trillions of dollars, they're going to stimulate the economy.

You can't have a hard landing when China's printing trillions of dollars, not possible. So I think that what Powell was forecasting is that if China starts to basically turn on the money printer and go through a huge spate of quantitative easing, it's going to just inflate everything. Because they're just such a critical artery to the world economy.

And so you just have to get prepared for rates just being sticky, and inflation being sticky. And I think that that's probably the most reasonable base case for the rest of the decade, rest of the decade, seven more years. Yeah, yeah. And so in that environment, the problem is that now you have the seven or eight most valuable tech stocks priced to perfection yet again.

If you look at their enterprise value over their net income, these things are trading at astronomical yields that are less than half of the two year note, and now approaching sometimes less than half of the 10 year note, government bonds, that makes no sense. And if you subtract out those seven or eight biggest companies in the S&P 500, the S&P is not been a great asset.

So the I think the equal weighted index, Brad, you probably know the exact number, the equal weighted index is just shit. So what does all this mean? I think it means that people are psychologically exhausted with having lost money. They are psychologically wanting to will the market up, they want to psychologically believe whatever will allow them to influence rates getting cut.

But I think the most reasonable bear cases rates aren't getting cut. And whatever hope you had of rates getting cut just went out the window today, because there is no world in which you cut rates when China is going to print a trillion dollars or free bird, a lot of people seem to think that this big run up in the markets is AI related.

Everybody's got an angle for their company, some of them super valid, like Microsoft and Google. Other ones feels kind of speculative. We talked about BuzzFeed talked about having AI journalists in their stock, which looks like it's going to be delisted, got a quick pop. Do you think the AI AI actually coming to market driving efficiency, driving revenue for companies is going to happen in the short to midterm?

Or is it more like midterm to long term? In other words, is the AI rally overheated and fake? I don't know if I would assume that the pricing of equities is entirely driven by AI. I think there's a lot of factors and including a lot of folks maybe being on the sidelines for too long and needing to come and buy in at the same time.

But I do think that there's a radical realization underway that a lot of businesses that are dependent on services that might be replaced by AI don't necessarily have the longevity today. Those are businesses that have been severely hurt by the point of view of what AI could bring to market and bring to industry.

So there's a lot of stuff happening on the short side. On the long side, I think it's a distribution curve on like how quickly different industries will be affected in a positive way by AI. Certainly, the most obvious is demand for chips, because all this infrastructure is being built out.

So that's the first. And so, you know, with a high discount rate, which is the environment we're in today, you can more quickly bet on those opportunities. And so you see a disproportionate bubbling and valuation and multiples on businesses like that. There are other businesses that are further down like services businesses, how long until lawyers are able to leverage AI how long until banks, investment banks are going to be leveraging AI to create new products and improve their margins.

There's a lot of speculation, a lot of ideas, but the discount rate is quite high right now. And that's probably a few years out, to the point that the fuzziness wipes out the potential value. What do you mean by the discount rate in this context? So let's say that I think that investment banks are going to be severely changed in seven to 10 years, that's the time horizon, I think that their business is going to improve because of AI, as an example, or, you know, factory machinery automation, right manufacturing businesses, probably 10 to 15 years.

So I can't really give them that much credit today. And so I apply a higher discount rate there. But there are other industries that are certainly being affected much more quickly. And you know, I'm sure Brad and his, his team of finance wizards probably have a board, you know, where they have this list of all the industries are going to be affected and what time horizon, I mean, that's the way you could kind of think about this.

And over different time horizons, you could kind of accrue some net improvement to earnings and say, okay, you apply a discount rate to that, here's how much the stock should trade up and, and, you know, that's one way to kind of think about this. I don't think it's everything everywhere all at once.

Great drop. Great reference, Brad. Great. By the way, I gotta tell you, I just saw that movie. I have to reference it because I saw it over the weekend. Have you seen that movie? Of course, of course. Yeah. What was your what an unbelievable film. I had not seen that film.

I had carried kind of postponing it. Incredible. Anyway, what is it? What movie? It's a everything everywhere all at once. It won Best Picture at the Oscars last year. I don't trust the Best Picture Awards at the Oscars for a few years. I've just been duped by that award.

Like you get some really crappy, like badass movies that are like, watch this movie and then report back. Let's I won't even say anymore, politically correct or whatever. And then there's a little virtue signaling they were doing a little catch up because of Oscar so white the movement to try to balance things out.

In fact, people well, that doesn't exactly reinforce trust that actually destroys complete trust and reputational credibility. Yes, their virtues. And actually, that was something people said that everything everywhere all at once was possibly because it's an Asian guy. I don't even know what is it? What is it? It's a sci fi adventure, surrealist kind of romp.

Michelle Yo is in it. She's very famous from crouching tiger hidden dragon. Correct. Quan is in it, who played short round in Indiana Jones. Jones. And I don't do my impersonation, but I would get canceled for doing the impersonation of him. In that fact, I must be like fucking 70 years old.

Yeah, yeah. No, he's like, she's like, something but it's pretty great because he also won Best Actor Best Supporting Actor. And there are all these pictures of him with Harrison Ford and Steven Spielberg. The guys that made it are like music video directors. You got to go see this film.

It's really good. It's a theater you have to go to watch it on Apple TV in one of your theaters tonight. Go to your theaters. Go to the theater on your plane and watch it. The theater is literally actually will do that. I'll do that. When I'm on the plane I ever had.

I go to the bathroom. And it's a long flight back from Italy. So I'm taking my time. And I see that a sub a sub soap that I can't afford. It's like 100. Yeah, that one. So I see that and I'm like, wait a second. So I look in the cabinet underneath.

I'm like, if there's two up here, there's got to be six down below. So I check in the galley. Of course, there's six down there. I put two I boost to my back, which I'm still not in my bathroom here. I check out he's got a TV setup. So I'm like, Oh, I wonder what movies are on here.

And it's Netflix. He's got so much bandwidth on that frickin plane. That is on the plane. You don't have to download your movies before you take off on Chamath's plane. All right, let's get back to work here. By the way, have you seen that movie? Yeah, it's incredible. He's got to watch it.

It's not the best film of the that was tar but I don't want to get into it with Chamath. Oh my god, I tried to watch tar. That movie sucks. It was so boring and fucking self absorbed and contrived. It is a little self absorbed. I'll admit. But I like about it.

For anybody that has sleeping issues and otherwise needs to use a sleeping aid. I would just put that movie on because, you know, once you see Cate Blanchett, blathering on and walking back and forth from her kids fucking school and then some crappy piano play you'll fall asleep. And then what puts you to bed faster?

Chamath Ambien tar or science corner science corner which one I love. I actually love science corner. I don't take I don't take sleep aids. I've taken Ambien three times in my life. Yeah, but that was recreationally during the day. That's no, no, it was prescribed to me because I wanted to try it.

I also tried Lunesta once. They were they're both like, careful with that stuff, man. You'll start tweeting weird shit. Be careful. I tried those sleeping aids four times in my life and you wake up, I wake up with a it has a really bad tail effect. So like, I woke up super groggy.

I only get five or six hours of sleep with it. So anyways, I do take melatonin and that's really good. That works. That's natural. It does the trick for me and then I try to just everybody on melatonin all of a sudden, like everybody I know takes melatonin. Are you sure it's a natural way to ease into sleep?

Yeah, for me, what I do is like I use it as part of a routine where like, typically around 10 like all the, you know, devices, things get silenced and do not disturb mode and I'm in a really restful place by 10 o'clock. I mean, usually by 1015 to 1030 I'm out like a light.

I wish I just got this infrared sauna. You guys have infrared saunas. This is like the new hotness and man that is incredible. You get a heart rate goes way up and then you sleep like a baby. Okay, let's get back to AI. Brad. Are people getting too much credit in their stock prices and is the radio contrast therapy after the infrared sauna?

I don't know what contrast therapy is. What is that? Meaning when you do the hot then you jump into like an ice bath? No, I'm getting an ice bath for next for my little outdoor sauna area and I'm going to start doing that. I did that with my friend Antonio and turn it friend of the pot Antonio gracias.

He's got one of those cold plunges. We jump in the cold plunge together. He's got this thing at 45 freaking degrees. He says don't try to do too much. You'll have a heart attack. So I go in, I get 45 seconds in, I start breathing like, really heavily. And I'm like, I gotta get the hell out of here.

He does six minutes. Yeah, I do four minutes, three times a week. What temperature what temperature 42 to 44. The research paper that everybody references now, I think her name is Suzanne's Soderbergh or something like that. She's the Swedish researcher. Huberman did it on his podcast that Rogan did it anyways, the the data is like an app, like a little less than an hour of heat.

And 11 minutes of cold per week per week was shown to be physiologically optimal. So I do three times a week, 20 minutes of heat, followed by four minutes of cold plunge three times a week. Do you have like a cold plunge where you set the dial on it?

Or is it? No, no, I just I'm watering. No, I do old school. I, I use the Mr. Steam in my bathroom. Because I after I'm done working out, the last thing I want to do is schlep outside, find my slippers, put on a robe, I'm not going to do any of that.

So I walk upstairs, I do the Mr. Steam at like 110 degrees. And then while I'm working out, somebody just makes an ice bath for me and put a bunch of ice in a tub, fill it with water and just jump in it. So what do they do? Do they carve like a bunch of baby seals in ice?

And then they just when you get no, no, no, all the ice cubes were made to look like my face. So I have these shapes of yourself. So I'm like, look at myself. Yeah. No infrared gets up to like 130 140 degrees and your heart rate will go up to 140 150 degrees in this.

It's all different experience than the Mr. I was recently on a ski trip. Yeah. And it's a this extraordinary sauna. It's wood fired. Okay, tell me about this. So that so the lead guide on this trip, we go down there, he gets the thing heated up before we show up right and I show up with this great athlete down there.

And we go in the hotbox because you know, this is the thing to do. Yeah. And I look at the thermostat. I think it's broken. It shows like it's hard peg that like 225 degrees Fahrenheit. That's a lot of you walk in your I mean, you slow cook meat at 225.

That's my lips are burning, you know, and there's this person sitting in there. He's like, now this is the way you do it right? Tough guys, you know, do it at this temperature. Like, alright, so you know, we sit in there for like 1010 minutes, and then we go and we jump in, you know, in a frozen lake.

And about 10 minutes later, we're taking off, we had to leave this particular place. And, you know, people are waving goodbye. And they're looking, you know, they have to look over the sauna as they're waving goodbye. And they notice that the sauna is on fire. Ah, yeah. People are taking this a bit to the excess.

It's a little crazy. Alright, so back to back to the docket here. AI. Yeah, people getting too much credit in public markets kind of running with this before it's actually ready for primetime. Just to add to freebergs point here. There are a lot of people talking about doing things in startups.

I see people actually doing things I would say four out of five startups that we've invested in, and the majority of them that were being pitched on right now are not only talking about AI, which they were all talking about it three years ago, they're actually implementing it now because the tool sets are available.

I just had a call. Thank you freeberg for putting me in touch with the Google people. I just did a call this past week with Google and they gave me some previews of what they're working on. I can't say anything about it. But it's it's mind blowing. I think Google's not as far behind closed AI.

Brad, what's your read on Google? Now? We had a little fuffle when I when I talked about Sundar's reaction to, you know, AI and the concerns that others might have on folks talking about the company. I mean, what's your point of view on Google today? I don't know if you talked about this.

Yeah, yeah, no. Well, I mean, I think, you know, I had this, I had this dinner, this incredible dinner, actually, Thursday at the pub. And, you know, it's how I know, Silicon Valley is back, because it was just like serendipitous. We threw it together in the afternoon, you have this like, or extraordinary, you know, CEOs there.

And, you know, you had Mustafa, one of the co founders, deep mind there, and rich Barton from expedience, just just an incredible group. And the $20 trillion question is, how does the entire open architecture of the web get re architected in the age of AI? Another way of asking asking the question, because we're all kind of playing small ball, right?

We're all talking about, oh, you know, our TPUs, GPUs, you know, and what clouds going to get accelerated, that's kind of the small ball, the big ball here, the $20 trillion question that has defined the entire internet for our entire careers, has been web search. And I will tell you that the conversation around that table, there's increasing confidence that whatever comes next, right, the top of the funnel is up for grabs.

And all of those dollars over a period, again, a five years, seven years is going to get redistributed. And make no mistake, Google is well positioned to make its claim for that. But its claim is going to come at the expense of search. And so Google may create the best AI in the world.

But it's going to have to fight off the cannibalization of core search. And the question is, in this new thing, and so rich Barton, you know, an incredible product founder, right? Think about Expedia, Zillow. Yes, and Zillow. So he's founder of Expedia and founder Zillow, two vertical search engines that dominated right there particular verticals.

And the topic of the conversation was that the new UI, right, the new way you interact with your customers, right, is not optimizing a web page. It's not optimizing an application. He calls it the race to intimacy. The race to intimacy that you have to build a conversational UI.

I've run that race a few times. No, and it's related race. I think that was a sprint, not a marathon. Sometimes it's been a marathon. And the penultimate question is, who ends up on top? Are you always on top, Jamal? I run really good middle distances. And then if I need to just make it, you know, run a Boston Marathon, I can if I want, but I don't.

Okay, yeah, sure you can. Yeah. But I think, you know, I took a poll. Does he think, sorry, does he think Zillow is dead? I mean, he's no longer a shareholder, I'm guessing. I mean, he's the CEO. He's the CEO. He's the chairman. Sorry, not Zillow. Sorry, not Zillow.

Expedia. Pardon me. What does he think about Expedia and travel? Well, you know, you and I had this conversation, Gurley chimed in, the Kesh chimed in on Twitter. Well, you're not on Twitter, but they chimed in. You know, about the conversation from last week's pod, every vertical search engine and Google itself, that architecture is suspect.

Right? The question is just over what timeline is it suspect, but the world is moving past 10 blue links, information retrieval that looked like a card catalog is not where we're going. You no longer need an index, you need someone to do the retrieval from the index for you.

That's the new service. And extract the knowledge. And yeah, that's what I mean, it's personalized to you. But I think one of the questions that's still outstanding from an architectural point of view, in terms of your interaction with all the data in the world, is, are you as a user going to have a number of independent relationships with your travel search engine, your travel agent, or you're going to have a relationship with your doctor medical office, and you're going to have a separate relationship with your, you know, financial advisory type service?

Or are you going to end up seeing similar to the challenge we have in search versus vertical search today, an aggregator of services, because there's value in cross populating the data and the knowledge about you across those services. So sure, you know, it's gonna be the no, it's gonna be the former, because like, obviously, there's value to the company, because every company wants to profiteer from you and monetize you in nine different ways and maximize the equity for their employees and their founders, and their board and their shareholders.

But that's not what people want, right? So like, for example, when you go to a doctor, would your doctor be better off if, you know, she also had all of your data from, I don't know, pick your other service providers, of course, maybe you could make a claim that if they had all of your personal information, and they understood your risk factors, they could do a much better job.

But the reason you don't do that is you want some segregated relationships, it gives you some level of privacy, but mostly it gives you control in a world of AI, where you can be more conversational. The idea that humans will want to get reduced to talking to one thing for everything, I think is wrong.

I think instead, it's actually going to be hyper fragmented, because the best in class use cases are going to be the things that people want, and then be, it gives the user control. The one thing I would tell people is do not give up all of your data to one thing who's professing to be at all, they are going to lie to you and trick you.

And you're going to have a social media problem writ large all over again. There's another way to think about this, which is the reverse of the client server model, where today, you as you are the client, you are the node on the network, and you're communicating with the center of the network, which is the server, which is the service provider, and all the data sits there, and you're getting data in and out of their product to suit your particular objectives.

But the future may be that more data is aggregating and accruing about you, you end up becoming a server, you then have the option just this speaks to kind of the architecture on the internet. Imagine if every individual had their own IP address, and that individual's IP address had behind it behind your ability to control lots of information and lots of output about all your interactions across the different network of service providers that years, that's a very smart framework, I think, and that object and ultimately what you have to agree, you want to be able to rent that data to services.

I don't even think it's about rent is Yeah, as much as it is about, you should have the reason the reason rent well that then you have to rent it, you can't give it to them because that's be stupid. That's right. Your goal, your usage, like let's say the doctor says, Hey, can I can I get access to your health data, or sorry, your Apple Watch activity data for the last year, you then have the option to provide that data to them through some permission type service that you then make available.

So there will be interconnectivity amongst the service providers, but entirely gated and controlled by the user. Look, you're seeing this up front now with Reddit. When in this world, the people that create the content are actually in control of the data. And if you try to like monetize an API, without paying the people that created it or giving them control, they'll revolt.

You're seeing it happen. Now Reddit lost what 90 some odd x percent of all of their content because the mods were like, fuck you to Reddit. Well, think of that writ large where everybody is asked, Hey, great service. Hey, I'm this great service. I can solve x, y and z problem for you.

Just give me all your data. And then if you're not asking, Well, what do I get? And they're like, well, you're going to get a whiz bang service. And that's all they say you say you're being tricked. It's already happening. I mean, there's an open source lawsuit against Microsoft's GitHub co pilot, and you have the Getty lawsuit.

And you know, it, there's also a corollary for this Google tried to kill Expedia already, they tried to kill yell. And it didn't work. Folks use both services. And you know, if you if you are trying to boil the ocean, like chat, GPT might, I think it's not going to work because there's going to be so much innovation, so much community brand and all that kind of stuff.

And these llm seem to be trending towards good enough or some kind of parody that I think you're right. Some people are just not going to give their data over wholesale. I've been using the Zillow plugin to get exact. And the Zillow plugin sucks on chat. It's getting slightly better.

Well, I guess the wrong model. This will exist on Zillow site, Zillow will not let chat GPT take their business, you're going to go to Zillow site and you're gonna say, Hey, show me homes that have a sauna and an ice plunge. And that are four bedrooms and that are you know, fixer uppers or not fixer uppers and have in suite bathrooms and whatever.

And it's just going to give you that list. Why would they give that business to close down? Can you take a crack just at summarizing what we all just said? Because your initial question was, Friedberg was like, what does this mean for Google? Well, we all just said that what we're certain of is there's not going to be 10 blue links and a model of search that they have monetized in a way that has been the most prolific business model in the history of capitalism.

Right? So that's a problem for them, you know, from a business model perspective. So they're going to have to reinvent their business, that's going to be hard to do. It's like rebuilding the plane on the fly. But then if you just go to the two models that we outlined here, on the one hand, Chema said, you know, you're going to work with all of these agents.

That's exactly what Mark Zuckerberg said on Lex. He's like, you're not going to have one super agent, you're going to have, you know, hundreds of agents. And he thinks of WhatsApp and all of his platforms as the new open web, where all of these agents will live and you'll interact with them.

You'll interact with your Zillow agent there, you'll interact with your booking agent, your Expedia agent there, etc. On the other hand, Chad GPT, Hyatt, Inflection, Reid Hoffman, and Mustafa, and many others think that the benefits of general intelligence, this will be the first time that we solve vertical problems horizontally, right?

And their metaphor, the compare there is, we all don't have 100 personal assistants in our office, you have one that gets to know you really well, they get to know what you like to wear, how you like to travel, the things you like to eat the things you like in your house, how many kids you have.

So there's real leverage in that, in that horizontal knowledge that can then be applied to these different verticals. I think the answer lies in between, your personal assistant will do a lot of the general stuff, okay, whether it's pie, chat, GPT, whatever googs comes up with, etc. But I think they will subcontract the work, whether they chain it out via, you know, behind the scene, you know, mechanism to other agents.

So for example, if you're interested in traveling to this undisclosed location that I'm at in Europe right now, you know, my, my assistant doesn't know anything about this place. So she may interact with a specialist for this particular place to get you that magical experience. So, you know, I don't think you have to pick one or the other, but architecturally, $20 trillion of value on the web is built around web pages, advertising, and e commerce, right and sending traffic to those other places.

And what we're all saying, unequivocally, is it's moving to knowledge extraction, and intelligent agents. And I think that's tech Tom, but I still think there'll be clicks. I you know, I have been using BARD a whole bunch, and they have made massive rapid progress just to give you but one example here, I'll share my screen, it is pretty extraordinary how quickly they're figuring this out.

And I did this just in the search while we're talking about the five best Greek restaurants in the Bay Area obviously came up with coca and you know, other ones. And then I asked it like, hey, what are the top items on each of these menus, they started putting images in and linking to Yelp.

And then I said, Hey, tell me the most expensive wines and it actually got that from Kokari they have a Chateau Margaux 2009 for 1500 Chamath I don't think it's good enough for you. But what year is it? It looks like 2009. Yeah, they have Screaming Eagle 2013. I don't know if that's a no go Harlan 2014.

No, no, no, no. Yeah. But anyway, Harlan's good. Harlan's good. Okay, good. So we got to save. Anyway, this I did the same exact search like four weeks ago, it didn't have images, and it couldn't get me the items on the menus. And these could all be links. And these could all be paid links.

So in these results, there's nothing to stop Google from saying, Hey, Yelp, if you want, we'll put your information here or not up to you. You choose do robots.txt except when to call it AI dot txt, you tell us what you want to be included. And if you want to be included, we want, you know, it's a marketplace for clicks will include three of your images with clicks, and we'll call it sponsored, they are going to be able to insert ads into here that are better than the current ads, and that will perform at a higher level.

And they're going to know us, this could actually be the reverse of what everybody's thinking. This could lead to higher CPMs and higher cost per click because of intent. By the way, I mean, the the 2014 is actually, I think, underrated, and it's very highly rated, but I think it is an excellent one.

That's an excellent. Jason, as to your point, I think all of that. I mean, that's impressive. It's true. You can also do it on chat GPT. I'll just say the number of people I interact with on a global basis who talk about chat GPT versus Bard is like 10 to one today.

Now Google is not that's going to change real fast. So it's got massive distribution power. Let me tell you what I what I also think. But to your point, Brad, about this, I just want to I want to respond to your barred versus GPT for that's people are not paying attention.

And when Google puts this on the homepage, yeah, and start sending 5% of users to it, and obviously, it's expensive to do it, our people are going to have their eyes jump out of their head. I think Google's going to be chat GPT for I'm saying it right here right now.

I think they're going to beat them because I think that they're better at indexing all this information and understanding it than anybody on the planet. And they have the largest ad network. If they get this done in the next six months, I think it's going to increase the cost per click, because they're going to know so much about each user continue, Brad.

I know I'm in the minority here. No, no, I mean, listen, I think a lot of Google's revenue comes from de facto navigation of the web, they turn they turn the URL into a navigation box. There are a bunch of ads there that, you know, people click on, they don't even know they're clicking on ads.

And, you know, they generate a lot of revenue off of that. But let's be clear, Google is firing at this. I just don't think it's going to be as monopolistic as they are in search. I think there are going to be other competitors who are going to be well financed, you're going to have access to the data.

And today, you have well north of 100 million people who are paying to, you know, a huge percentage of those to use chat GPT. And I think this, you know, it's the first competition, but, you know, Friedberg knows he and I had the back and forth, they reported earnings, stock was flat, I said on CNBC that we had sold our shares, we bought back some of the shares around Google IO, because we do think they're going to be a player, we think they're going to be a beneficiary.

But I would say as I sit here today, the distribution of potential for them is less than it was before chat GPT, you know, the distribution of upside, they have some competitors now, who are going to be vying for this next new thing. And I wonder whether or not, you know, as they try to navigate, you know, you're saying they're going to take some of this traffic from search and feed it into this other thing, this other thing better monetize as well as search, or by definition, that means revenue goes down.

It feels like Google is so close to figuring this out. I mean, I've been doing some barred searches. Jake, how much Google do you own? How much Google? Not enough, not enough. I've just been playing with the J, on my J trading.com. He's thinking of adding this. Like a buy in or two.

But let's pivot over to this Reddit thing because it's super important that people understand this. I'm gonna buy 17 more shares. I'm gonna buy like a Harlan 2014 equivalent insurance. No, my J trading is up right now. J trading.com. Shout out to my trades. I did it as for fun.

I'm at like 20% return. 6% Well, Jake, you're kind of quiet for a while. So when you're down, you don't talk about it. No, I had a thing. I liked and I didn't want to change them. Do you track them and exit or what do you do with I'm going to track the exits, but I haven't exited any.

If you go to J trading.com, you can play along. But how can you only be up 20% when Facebook has doubled? Oh, sorry. 22.43. Yeah, but Facebook doubled off the bottom. The whole goal of trading J cow is to maximize your highest conviction. Maximize your highest conviction. What do you do?

Put a nickel to put 5% into Facebook. I don't know. I just I just bought companies. I know. When you talked about it on group chat, I made the train companies. You got to put a lot of chips on the table. I mean, you have that's I think what's the optimal number as a day trader, Brad, what's the optimal number of names I should have?

You're not a day trader. You don't trade. As a long trader, what's the number of names I should be? You have too many. I think with your level of insight, you know, on the things that you really believe in, there was such asymmetry in that position at the time that you bought it, it was your best idea, you should have put at least 30% of whatever you're going to allocate to this.

That's what I'll do. Yeah. I mean, it's done. Okay. I mean, listen, I'm up. What did I buy? But 500 shares and my basis is 47. I'm at 140. So it was a good trade. Now imagine if you could, you know, 10 or 20 x. Yeah, that's what I should have done.

Yeah. All right. Jason, how wait, hold on. How much have you put into all those stocks? 1.5 million. I basically took I had some money in an index fund laying around and I was like, let me do this 5 million. I did J trading as a blatant attempt to get a sponsor for this weekend startups.

So I was like, Robin Hood or E trade will sponsor this and I'll make it like a segment. So I was like, let me do like a segment where I trade and see if I can secure the bag and it you know, the markets are so crushed that nobody's spending advertising from Robin Hood or E trade or interactive brokers or Bloomberg but I also did it because I wanted to become better at public market trading to your point to last week's conversation conversation to mom is under understanding when to sell and when to go long when you get distributions as a VC.

That was really the reason I tried to do it was just to try to have skin in the game. You know, just like learning to play PLO or you playing the Razz tournament. I just wanted to it's very it's very easy. Once you get shares distributed to you immediately sell them.

And then and then hold on. And then re underwrite from scratch from there. Okay, once the money is sitting in your account, even if it takes a day, a week a month, it's not like the stocks going to rip and triple on you over the next 30 days. re underwrite it from scratch.

And then see if you have that much conviction when you see the money in your bank account. I like it. I would just tell you guys the distributions, you know, there were a lot of firms that rode, you know, a lot of these big names, right all the way down.

You know, that they got public, but they didn't distribute much if any. And it's really don't say the names, but what do they rhyme with? I'll start I'll start. But what's my boy? Yeah, go ahead. You go you go next. You pick one. Not doing it. Bliger bliger. Dreeson borrow.

It's Malander's blonde. Freebird just dropped off. With this conversation. All right, listen, we all got our asses kicked. Except for me. uber's up 67% this year. Oh, come on. Come on. Let me what what I was doing. Andresen Blore. It's all of it. What tends to happen is things hit the bottom.

So little bit. And people are so relieved that they bounced a little bit today, immediately start distributing because LPs are hammering them. LPs are like, why did you not send us this, you know, snowflake when it was at $400 a share? Why did you not send us this door dash?

Why did you go through any name, you know that you can think of, but then people compound the mistake, I think that as soon as they get a little relief, boom, it's out the door. And then the thing doubles on them. And I just think, you know, part of the benefit of me having to get up every day, 5am deal with public markets, and think about long or short, it's what we're talking about in the fall of 2021, around the table before the poker games, which is the public market is tilty, it doesn't feel good.

And that, you know, we stopped making venture investments in October of 21. Principally, because of how we felt about public markets at that point in time. And so I think a discipline, in fact, I was meeting with a managing partner of a very big venture firm in Silicon Valley this week, they just started about a year ago, or six months ago, doing public market investing.

And they said it was incredibly valuable to how they think about distributions and what they're doing in the venture. But that's what it's been for me, I have now started to learn how these things are priced. And I just think it's great as a learning thing. For me, I have to make two decisions when to distribute to my LPs, which I just give them the shares the second I have them and let them make the decision.

But that is also personally for me, do I want to hold it or do I not? I like your suggestions. Nice punch up Chamath of looking at the cash and then deciding if you want to read. Did you guys see this crazy thing from calipers where they were like, yeah, they were they were down like, four, I mean, horrible returns on the venture side.

And so their decision was to double down. Well, they didn't have they took like a decade off from venture, the returns of what they did invest in venture were atrocious. To be fair, I don't know how the board has changed to calipers, but calipers brought in a new CIO, an entire new team.

And so they can't be held liable for, you know, that track record, I did kind of see something on Twitter about I was shocked, it would be very difficult to manufacture that bad a track record, if what I saw was accurate. However, I would say the team that is there now the portfolio that they're putting together, and doubling down where I think venture is kind of at the bottom or bottom third, and this is the bottom, I think, bottom third, I don't know, bottom half, you know, listen, in venture, you got to find three things.

You got to find, you know, you don't want to invest all your money at the top. So you got to get the bot, you know, bottom third, none of us can call the bottom. But you know, last year, at the end of 22, we were certainly in the bottom third evaluations, then you want to be early in a major platform disruption.

I think we all agree we're early in a major platform disruptions, probably the third of our careers. And then you want to back one of the best firms, best brands in Silicon Valley, like if you do, like and people know who those are, if you do those three things, you know, simultaneously, like you got a good shot at producing really incredible vintage, just to put some numbers on the CalPERS thing.

So you can respond to it. America's public largest public pension CalPERS, that's California's manages some 444 billion in capital on behalf of California's 1.5 million state school and public agency employees is leaning into venture. After years of bringing down its VC exposure to 1% to a 1% target, the institution investor is now looking to increase its allocation more than sixfold, obviously 6% from 800 million to 5 billion, the Financial Times reported.

So thoughts on that month? Well, I mean, this is the moment there's a lot of venture firms that are hard up for money. And so they may have a shot, they can get allocations. Now, in order to get into these funds, the problem that they have to realize is they may be buying a bunch of toxic assets or a bunch of toxic partners in the sense that a lot of these people have been getting run over for the last three or four years.

We don't know again, we've said before, most venture investors are probably unprepared for the shock because they've never lived through one. There's been a lot a lot of junior muckety mucks that were hired because they were XYZ middle level exec at rando company means nothing. So I don't know, I think it's smart that they have I mean, they have to be thought first of all, how is it that the caliph like, literally, it's like, I know, some trillions of dollars being made in your backyard and some genius was like, well, the thing that's creating all the wealth in the world, which is in our backyard, where we probably have the best pitch in order to get into these funds.

And you just come down Leonie and say, Hey, oh my god, give me the list of 10 and put money on those 10 and call it a day. Oh my god, that's unbelievable. That's unbelievably derelict. That's unbelievably sloppy and sorry, that's it. Sorry, let me just finish. That's actually that's the best word to use.

When you look back on a decision like that, there's no numerical justification that one could have made in the 2000 teens to have made that decision, except that that was an emotional decision. And when you're running a half a trillion dollar fund, there is no room for emotion, you should not be allowed, there should be some.

So I think that that shows a very hollowed out and at a minimum, imbecilic risk management infrastructure at CalPERS that needs to get fixed. So whether the allocation goes up or down, if I was a teacher, and my money was being managed by them, I say, man, these people I would want to understand how they're making decisions.

Because I don't, I would want to see the investment memo that got them to decide as an investment committee that 1% in the most important asset class that's in your backyard, that's making all the money in the world made any sense. I just want to read that memo and see, could I agree with that?

Because then I would want to do so. Hold on, then I would want to read the investment memo that says we're going to change course and get back to five or 6%. Because if that process isn't fixed, these decisions are just going to be equally bad, you're just going to compound bad on top of bad because, again, they clearly did a terrible job.

And then on top of that, they had horrible partner selection, because the people that they did invest in, because the data is public, have performed horribly. So what changes now all of a sudden, right? Because if the best firm still don't want you in increasing it from 800 million to 5 billion just means you're going to lose 4.2 billion more than you would have otherwise at 800 million.

says here, they made two bets, they had bet on looks like light speed in the last couple years, light speed and TPG. So we'll see how those go. I do have some data on this, because we've spent a lot of time talking with them. And as you know, Jason, we were just talking, you know, like talking to folks like my bottle of who I California is one of the largest sovereign wealth funds in the world, right?

This is not just a state. This is bigger than most countries, right? This is one of the biggest economies in the world. I would say that what my interactions with the new team have been very impressive. And I will tell you, they're not just looking at funds and building a new portfolio.

I think they are thinking about doubling down at the right time. And they're thinking about thematic bets against super cycles like AI to say, let's allocate this much money, who are the three or four deep strategic partnerships that we can have to drive, you know, return on that. So I think it's I think they're on their way.

But I agree with you. They're the sovereign wealth fund of the most prolific state in the world. And they should have outsized returns, not trailing. I just want to point out one thing here is the power of writing to map you decided to write your annual letter a couple years ago.

Brad, you also will write a letter, famously the Facebook getting fit one or the meta getting fit one. The power of writings and I just did this for the launch on four. And when you write a deal memo compared to doing a deck, they're the questions you get are so qualitatively different.

And the people you attract are so different. It is extraordinary. I am advising startups across the board to write really tight deal memos because I write these we make these deal memos internally when we make an investment. But man, is it great for clarity of thought and for the person on the other side to just stop and read 1000 words or 2000 words as opposed to go through some stupid performative deck.

It's just so such a better process. Maybe you could you both could speak to that or Friedberg. I don't know if you're you've been writing deal memos. But maybe for people who are listening or capital allocators and founders, I've been writing for years. Why? And what is the what is the what does it do for you?

Yeah, well, it allows you to actually find people who will critique things in a thoughtful, intelligent way. It's hard to critique decks because you use broken English, you use fancy graphics, all of a sudden, somebody that's very good at like graphical layout can dupe somebody else. And so you don't get to good outcomes because this weird groupthink effect sets in when you look at decks.

So I'm not a fan of decks, I use them, but they need to be a companion to some sort of long form narrative document. And I just think it's more useful, you get people who can really think about what they agree about what they don't agree about, it shows the intellect of the person writing it, quite honestly.

I just think it's a it's like a basic skill that people should have. It's a useful skill to teach people as well. decks are very dangerous. I think if you're going to make decisions, I would encourage you the bigger the decision, the deck is insufficient, it can be a companion piece, but it needs to be attached to long form documents.

But the long form documents don't need to be long either 2345 pages, but without it, I think you're going to allow some really bad decisions to creep into some good ones. freeberg any writing from you? For deals? Okay, he ran, he doesn't talk about writing. All right, as everybody knows, Reddit is on strike right now, I should say the mods who run Reddit are on strike.

95% of Reddits went dark, they basically turned off new posts, or they just went private. Basically, nobody could join, nobody could see the content, I believe is what that means between Monday and Wednesday. And the reason they're doing this is because Reddit decided it would start charging for its API.

So who gets impacted by using the API? It turns out apps, we saw this at Twitter as well, when Twitter started changing its pricing for its API. And this means that some of the really high end Reddit apps would have to pay $20 million a year for access to read its data.

Now, they originally had said they were changing this pricing because they were going to train AI models. And they wanted anybody using that data, i.e. Google barred or chat GPT for enclosed AI, they wanted them to pay for it. And Steve Hoffman was explained all this in a New York Times profile in April, you can go search for that Reddit wants to get paid for helping to teach big AI systems.

The largest app is called Apollo. Just so you know, if you're not into those Reddit really came out with their app. Really late. This was a function of the 2005 to 2015 timeframe. Back then. Web 2.0 startups didn't have a lot of capital. So they let other people build on their API's and build apps.

Some of those apps caught steam and are actually better than the apps developed, at least for a while, it was better than the Twitter app and the Reddit app. So thoughts on this freeberg. There's a history here is mimicked at both Facebook and Twitter, both of whom had open API's that provided access to third party app developers to build tools on top of the platform by accessing either user data or content off of the network, and then making that available via some different product function, some different UI than the native tools allowed.

If you'll remember, Facebook started to kill off its API and in the process killed a number of these third party app developers, the most prominent of which was Zynga. I think this was around the 2012 timeframe. You guys know if I'm right on that, I think it's right. Sounds right.

And you know, we saw the same thing happen in Twitter, where if you guys remember, in the early days, a lot of users accessed tweets from people that they followed through third party apps and third party apps all competed for the user. And ultimately, Twitter's management team realized that having direct access to the user, being able to control the UI, the UX and not just become a data network, but to actually become a service for users made a similar sort of change.

So you know, Reddit's motivation around AI training is an interesting one. But it does speak to this idea that the social network companies social in the sense that the users themselves are creating the value they're creating the content at both Facebook, at Twitter, and at Reddit, ultimately, the company loses the value if that data that content gets extracted, and they can't monetize it or capture the value somehow.

And it's a lot different, you know, every company ultimately wants to become a platform company, meaning that they can offer multiple products or services to users that sit on top of some, you know, network they've created, and in the process, create a network effect, because more products, more apps creates more users, more users, you know, be guts, more, more, more apps, and so on.

That works well, in some contexts, like an Apple App Store context, but in the context where there is a network unto itself, like Facebook, Twitter and Reddit, meaning that there is already a user network that is generating value in the form of the content that's being produced and consumed, you don't necessarily gain anything by then building an app network on top of it.

And I think that's been one of the kind of key learnings that's repeated itself over and over with Twitter and Facebook. The thing about Reddit, it's always been a community service. If you guys remember, like in 2014 2015, Ellen Powell stepped down after there was a Reddit revolt, she was the CEO at the time.

And she fired an employee at Reddit that ran the q&a site for Reddit mods, and their users and the network, the community was super pissed off when this happened, and they all revolted, and they were going to shut down the service. And ultimately, Ellen, you know, got removed from her role as CEO when this happened.

So you know, because so much of the value of Reddit isn't in the management team. It's not in the work that the software engineers do that run the company. It's not the VCs or the shareholders, the value of Reddit is inherent in the community. It's inherent in the individuals that build the content on that platform.

And that community has convened many times in the past at Reddit to change the rules to say this is what we want this community to become. And this is how we want this management team to operate. And so it's a really uniquely positioned business says a lot about how social networks in this kind of modern era are operating, it really speaks to how much of the value ultimately accrues to the shareholders in a business like this, when the users themselves can step in and unionize and say, Hey, you know what, we're not going to allow this much value to be pulled out of the network in this way, we want this to change.

So I think it'll it'll have a lasting effect in terms of investing in social network or social media type businesses where the users are generating so much of the value and have the ability to kind of communicate with one another and control where value ultimately falls. Tremont, you were at Facebook, I think when Zuckerberg realized enabling a bunch of folks to use the API wasn't as good as controlling the user experience, having a uniform user experience.

And it got deprecated. And I remember Zynga and a bunch of other people had games and we're sucking users off the platform. There was a LinkedIn competitor at one point that was growing at a credibly violent pace. And I guess y'all made a decision. We don't want you sucking our user base off the platform.

Maybe you could expand on what the decisions were at Facebook at the time. That was one of the things I ran, I think one of my teams was responsible for Facebook platform. Yeah, it was just a very clinical decision around enterprise value. Look, the thing with Reddit is that it's a hot mess.

And in order to try to create enterprise value, they decided to really leverage the mods so that there was some level of control. And that control was necessary so that they could basically sell ads. That's how this thing moved in lockstep. Because the minute that there was corporate venture investors and other investors and a need to generate enterprise value, and is it worth 2 billion or 5 billion or 10 billion, whatever the number was that they thought they were worth, they had to make money, right.

And Huffman was very straightforward about that. And wanting to go public and the whole nine yards. But because it was such a hot mess, the mods became this integral part of the ecosystem, so that they could actually drive reasonable revenue. But then what happened was, it also allowed them to basically take over.

And I think that it was a pretty significant miscalculation. Because I think that what they needed to do was really redefine the economics of how revenue generation splits would work before they could do all of this stuff and try to monetize the API. So I think like, they got the order of operations wrong.

But I also think it's very fixable. And I think that they have some very smart people around that table. So as long as they're, again, willing to be clinical and unemotional, like we were, they'll get to the right answer, which is, give them a healthy rev share. That's the future.

Freeberg, you know, what version of what freeberg said is true. The content creators need to get paid, you know, why, you know, you see content creators now on YouTube making millions, 10s of millions, hundreds of millions, and a few unique cases, billions. And then we are all content creators, yet most of us on these old legacy platforms make nothing.

So that that exchange has to change. Brad, any thoughts with this to rally IPO? Not on that. But I mean, I think, you know, you bring up this thing about meta, you know, did anybody pay attention to, you know, Zuck's launching project 92. Right. And project 92 is going to take on Twitter.

It's a text based social network that's going to pay creators and they're courting apparently Oprah Winfrey, the Dalai Lama, and all of their creators that are already on their current sites are saying we will use this thing to interact and we will compensate you. And then on Lex Friedman's podcast, he mentioned something about, you know, having been inspired a little bit by what was going on with blue sky.

So I'm super intrigued. You know, he talked about it at this all hands meeting, I think Chris Cox talked about it. So it looks like meta may be revisiting some of these things that they shelved a while back. You know, it doesn't have any direct implications on the Reddit front.

But I think there's a suggestion here that it may be more about putting the control back in the hands of the user. From a data perspective and a monetization perspective, that would be a pretty gangster move. You know, and an interesting way to leverage the platform. And I don't really hear anybody talking about it.

There's a really easy solution here for Reddit. Those mods, most of them do it for fame, glory and affiliation community. But if some number of them wanted to monetize their activity there, why not allow people to subscribe to sub reddits and pay a membership fee and split it with the mods that that seems like it would be a high scale move, getting Patreon, you know, subscription services to let them make a little bit of money.

And then with these, it's only three apps that are being affected, they should just either buy those apps and bring those teams internal or I think it's not where they get split revenue with those apps, they could tell those apps that that's the key issue. It's like it's like if you're going to try to monetize API's on user generated content, I think what's happening here is the internet is saying, Okay, that's enough, because we're going to leak our activity someplace else where we can directly monetize it.

So that's the whole point. I think in this current version of the internet, the value is going to go and again, further, further, further erode away from the centralized apps, and more towards the individual people, or in this case, these hubbard spokes, these mods, and not to the centralized organization that that has the housing, the Reddit, the Facebook of the world.

So that's just the trend that's happening, the Instagrams of the world. And there's nothing wrong with that. YouTube as well. It's just where the pendulum is swinging. So I think that Reddit just has to cut them a deal. Pretty easy to do. Speaking of AI funding, there was a breaking news story.

Just in the last 48 hours, a startup named Mishra AI has raised 105 million seed round, they're calling it should be at about a 240 million valuation, according to reports. One of the co founders is a deep mind researcher, I guess people were saying this is insane, because they haven't written any code yet.

And they've been working on the company for a couple of weeks. Why these rounds are so big is I guess that you have to buy all these h 100s. And they're expensive. And these rigs are very expensive. I mean, you guys saw this that Nat Friedman basically published that he spent $75 million on a bunch of hardware.

And if you were one of his portfolio companies, you could use it. So getting these h 100s and a 100s to train on seems to be a non trivial task. And so and they're very expensive, even if you can get ahold of them. So I think what we're talking about is basically that these rounds have to go up my end, because if you notice, like the post, you had to raise the post, so that it wasn't so utterly dilutive as to completely disincentivize the employees.

But let's be honest here. Nobody's writing $105 million seat check that 105 million is chopped up, probably 10 ways to Sunday. So there's a bunch of people putting in fives and 10s and 15s. I'll just be honest in the round, and they said it was massively oversubscribed. Yeah, so I so it's everybody taking a little teaser bet.

The problem with these teaser bets is they never hit in the way that you think maybe you'll get your money back. With all the dilution that's going to happen, etc, etc. This is not the way to make money, guys. I'm just going to be honest with you. So whoever's putting money in thinking they know what the fuck they're doing, you might as well just light it on fire, go to Vegas and have some fun with it because you will make more you'll get more enjoyment from that than you will for making these kinds of investments.

You think that's dumb, stupid, stupid bet? Brilliant bet. Well, by the way, this has nothing to do with the company. Nothing. When you're betting 4 million in $105 million round of 240 plus you do not know what the fuck you're doing. That is not the job. So again, Mr.

There are gonna be a couple monster rounds, I think announced next week, like that are gonna make this one look like kids play. So a lot more of this is coming. You're exactly right. This is about buying h 100s and compute everything we're talking about, right and essential ingredient is compute and it's a scarce resource.

My God, these people that put the money in the seed round should have just bought Nvidia call options like you make more money. Well, and there's downside. And it's insane. Nvidia has a floor. And by the way, because in just in case Mistral doesn't work, Nvidia will sell those h 100s to somebody else.

The resale value. Yeah, they probably have the option to resell them. Crazy. I do think you're right on these teaser bets. This is a power law business. There's a massive pressure on young junior partners, principals within these firms to do something. Fire them. It's not just teaser bets. What happens in these fires, they want to get the logos because they need to explain to the company.

No, actually, no, that's even worse. The GP that can't manage their fucking principal should be fired. Right. And so I should those the young people should shut the fuck up. Okay, be lucky you have a job. Learn the craft. It'll take you a decade. And if you are proposing stupid bets like this, again, sizing matters.

Again, I'm not talking about the company here. I'm just saying when you make a $5 million $3 million deal memo for $105 million round, that is stupid. Okay. And so if you're the partnership that allows those kinds of things to leak through, you don't know what you're doing. So at some point, somebody should be held accountable for this.

And I guess what's going to happen is the returns of CalPERS are going to cascade through everybody else. Well, at least I own some, you know, h 100s for a minute. So let me stipulate I think this could do you want to take the other side? No, this is just an incredible team that's going to do you know that this may turn out to be a fantastic bet.

Or I don't know light speed or whoever led this round. Let me let me say something different. In 1997 98. We had a similar phenomenon. Everybody thought internet search was going to be huge. There was massive FOMO and chasing and everybody scrambled to get a search logo. Alta Vista, InfoSeek, Lycos, Go, Planet All, you know, GeoCities, just go through the list, you know that people were scrambling after.

And the truth of the matter is almost all those companies went to zero, even though you got a couple bets, right? You got the internet, right? You got search right. But you didn't have to invest $1 in search until 2003. And you would have captured 98 99% again, I do it again now for social networking, same thing, do it again for social networking, Brad, say all the names, say all the names.

It's the same thing. Same thing. And so, you know, when you when I look at it today, we have a huge anti portfolio for AI. It's painful. We've said no to over 60 companies, right? We, you know, but when we look around, I see a lot of our competitors doing a lot of these deals.

Maybe their teaser bets, I don't really know the size they're putting into those companies. But I suspect that if we believe this is as big as it's going to be and going to play out over decades, then putting a bunch of really small bets in order to buy a network or buy relationships or buy logos, etc.

I don't think it's going to work any better this time than it worked then around social networking. But to be clear, there are gonna be some people who lead these deals, who help these companies build incredible businesses. And those will, you know, they're going to be some winners here.

I think there's time to participate in the winners. Right now, a lot of this is unknown and unknowable, it will become more clear in the 123 years ahead. The problem is for the LPs, like if you are the LP, I am an LP and a bunch of venture funds, this stuff really turns my stomach because I'm like, wow, I am losing money every day.

When I see these things. That's why I get so emotional about this. I think to myself, if the GPS that I've given money to are doing these kinds of deals, I'm screwed. At best, maybe I'll get back 50 or 60 cents on the dollar. And I immediately start thinking to myself, I really need to write this down.

And I'm re underwriting that person and that organization, because I'm wondering, how can you let these things happen? Because if you just look back in history, you have to be really, really negligent to not learn that these things never work out the way that you think they are. And especially these kinds of rounds and this nominal ownership, the inability to defend ownership, it's just not a path to success.

I mean, also, if you think about this, Chama, you know, what company in recent history that got overfunded actually use that money logically, the magic of Silicon Valley is the milestone based funding system. And whenever you short circuit that this money becomes a huge distraction to founders, if they were to receive 10 million 25 million work for a year or two, then raise another 25 or 50 million, they don't need to raise all this money at once.

This is like taking your ABC round, putting it all in 100% is distract founders. And then everybody coming for a salary says, well, you got 105 million in the bank, I want $3 million, I want $5 million. What's the best example guys of a huge financial winner that raised these ginormous amounts of money?

What's the pre launch of a product? There's no product here. What's the best example magically? What is it? of disasters that actually No, no, no. What is the best example of a great company? I'm putting crime quotes that raise these kinds of amounts so early in the site? Quibi.

No, Brad, do you have an example? What's made? There are people who raised a lot of money over the life cycle, like an Uber. We're talking three rounds at once. What was your first seed check into Uber? What was the total seed? Right? I can tell you what Facebook's was it was $500,000.

It was 125. I think. Okay, Facebook's was $500,000. Yeah, we need a lot of money later. We needed a lot of money later. But no, it's 5 million. Sorry, 500,000 safe at five, five posts. $5 million valuation for Uber 1.25. And they went in. Here's another thing, everybody walks in, they say, well, I have to raise this much money.

And as it's good, there's a circular logic. I have to raise this money because I have to have all this compute. And I say, well, okay, you got to train it, you know, we want to have a vertically integrated model, we want to train them on it. Okay, so there's a huge upfront cost.

And they're like, but I don't want to take a lot of dilution. So I have to raise it at a really high price. And so you say, okay, well, that's, that's a challenge for you, not necessarily a good thing for us. And then they say, Oh, and I if you ask the question, is this an ongoing expense?

They're like, Oh, yeah, we're gonna have to retrain, like, we're gonna have to continue to spend this money. And I'm like, well, so if you're a software company, for example, and you say, well, what's my cogs, if all of a sudden you have an embedded cogs, that's massive and recurring, right?

For your compute costs that we haven't had in the past, then the revenue on the other side of that, it's got to be a multiple of what a traditional software company might have, in order to get back to that set of economics. So I think there's this, there's a scramble, and understandably, so if you think the big win AGI, or, you know, this autonomous agent that's going to, you know, be the top of the next funnel, that thing is going to be worth a lot.

But to me, those are lottery tickets at this at this stage. Can I tell you a little secret? Here's a little secret. When you put in $100 million into a startup to buy compute, you are not buying whiz bang next generation IP, you are subsidizing capex. And that is a job that many, many other people do at a very low hurdle rate.

And so it is a law of capitalism, that it could be the most incredibly innovative company in the world. But if you are offering money to them, to fulfill a low yield thing, you are just not going to make a lot of money. When you put money into a startup, that is their writing code to build groundbreaking IP, you own something that's really real.

But that's because 80 cents on the dollar is going to core critical R&D in that point in time. And then they raise a lot of money at a lot less dilution when 80 cents on the dollar goes to sales and marketing, then they raise a lot of even more money at an even smaller, smaller amount of dilution, you start to get to scale internationally.

So you start to see right more dollars, less return, right, you're owning less of the critical differentiation. So if everybody is like, oh, it's so expensive for compute, I need to raise 100 billion. Well, buddy, you know, that's like a leasing function. You know, you're, you're like, all of a sudden, like the best VCs in the world have become like Comerica Bank.

Yeah. I mean, they could have done it with the same structure, right? Comerica could have given them 50 million to buy these machines, and maybe they should and Comerica and JP Morgan and somebody else should basically say, Hey, you know what, here's a lease line for your H 100.

Because I know they're worth so much. And I'll just Yes, write it at 10%. And, and my point is that the fact that people don't understand this is why the money will get torched. I would love a critique that says actually, Chamath, you're an idiot. I'm right. I know that that's happening.

But here's why I still see it happening. I don't hear any of that. Here's the problem with that critique. Okay, so you asked like, what are the biggest projects in history? You know, around startups think about AWS, I don't know, they spent 400 million probably, in order to get AWS off the ground, but it wasn't done by a startup.

Right? You think about what Zuck's spending on the metaverse, it's not being done right by a startup. The truth of the matter is the hyper can go back to a p a ws AWS was dog fooded on Amazon retail, of course, of course. And Oculus was done on Kickstarter, and the cash flow of Amazon retail, fed the development of AWS.

Correct. My point is that when you think about what these hyper scalers are going to do, they're not going to spend a billion, they're not gonna spend 10 billion, they'll spend $100 billion, right in order to be in this race. And so if you're backing a startup that says I'm going to build a better chat GPT, right, just like open AI discovered themselves, they sold 51% or 50% of the company to Microsoft for a reason.

They had to, they had to have the data and they had to have the compute. This is a nuclear arms race around compute. And so but I think it's, this is it's financially illiterate, for someone to think that they are actually doing anything other than subsidizing capex when you're giving $100 million to a startup to literally buy chips and servers and rack and stack up 40% of their equity.

That's the other thing this equity is so valuable. Why would you want to give 40% of it when you could get an equipment lease and keep it? You can't get those you can't get I mean, if the VC is put in 50 million instead of 105 you don't think America would come on the back end with 25 million of course they would Brad is right this happened in 98 99 2000 where all of this money was getting flushed down the drain going into buying data center capacity where I remember even at Facebook like we were racking and stacking our own servers.

And then we then we ultimately got big enough where we actually built out our east coast and west coast data centers and data centers all around the world but it was very expensive and in that moment again, all of those companies just lit all that money on fire it they torched it there was no remnant equity value for that capital.

And so I guess I guess I guess I'm just I'm just questioning like what does a GP think they're actually buying Well 80% 80% of it's going to hardware I mean they're buying the other 20% buying chips I mean it doesn't make sense and that's going to get I want to make one point here and freeberg I want I want to get your input on this as well it constraint is important for founders and the thing that I find really troubling about this is and putting this startup aside because crypto people also went through this for the last three or four years where they were overfunded how did that turn out it was 10s of billions of dollars burnt of LP monies people's retirements and college endowments and it's going to be quite a postmortem but look at say you invoked meta it's important for people who don't know this to know that that was a kickstarter shout out to Palmer lucky he raised a couple of million dollars in 2011 I think it was on a kickstarter pre selling the devices right constraint makes for great art constraint makes for great startups you need to have pressure on a startup for them to deliver you cannot give startups five years of runway and expect it's going to work it just doesn't work and I've seen this movie so many times but now we've gone through 18 months of nobody doing anything I guess in VC land so folks on Santa Rosa are itchy they want to justify why they should still be drawing 2% on the full fund they want to try to show activity so that they can raise the next fund and continue to stack fees and all of these sort of leads to these suspension of financial logic but it gets replaced with financial illiteracy which is why there's an optimal fund size right and this is why the people that pay the price are ultimately the LPs and it may be the case that CalPERS maybe actually avoids a lot of these pitfalls because by missing yeah they missed all the returns but then they missed writing the mega follow on checks for all of these folks that they and then they would have torched okay I'm going to take the other side of that go ahead Brett I think it's nearly impossible to conceive that all of these bets that are currently being made are bad bets I think is major platform disruption but I you know instead I think the right way to think about it is it's about pacing and if you're trying to if everybody thinks they're going to build the next Google they're going to build the next autonomous agent that's going to sit on top of the funnel that's going to be worth a trillion and therefore they can burn a billion dollars training models that's not we're not going to have 10 of those winners okay but at the same time there's a lot of stuff getting funded that is in the application layer that is in the tool layer and these are not the big headlines that you're reading about but these are really interesting businesses that are solving real problems in the software and tooling layer here you know in the smaller model layer vertically oriented things around life sciences or you know targeting you know financial services or things in the application layer you know like character.ai etc so I do think there are a lot of good things getting funded that will deliver real value but I agree with you the problem that there's a there's a second problem to this Chamath if you drop a billion or 2 billion or 3 billion into something you have not only a a product challenge you have a distribution challenge right we know all the hyper scalers are going to play Google is going to play meta is going to play and so you got to compete and then beat them and it used to be that you would say well if I get a lot of traction they'll buy me if I'm Instagram or WhatsApp like they'll buy me well we have such a regulatory nightmare in Washington DC today no hyper scaler can spend over a billion dollars to buy any AI company not even that 400 million gifts get what is a giphy I was even in the United States today we replaced mergers and acquisition right with copy and compete because we've said to hyper scalers you're not allowed to acquire any of these companies so the unintended consequence of the regulation in Washington is that entrepreneurs and founders and venture capitalists who might otherwise have had a good idea built something with some traction they can't find a home for it in the way you know that WhatsApp found a home or isn't that a good thing Instagram is that a good thing I don't think I don't think no public and be independent is a better presupposes that everything can become a big and profitable business there are a lot of net net can would ever become a big and profitable business now on its own no chance well it's still not a big and profitable business okay so that's what I'm saying so maybe I should have died I mean maybe it's being kept alive but I mean it's actually don't you think it's great for the market I think it's great and it got it was it was innovative technology it was yeah it you know you you were able to back it with some good funding and I think what's coming is going to be really exciting but it took a really long runway a lot of capital a lot of intelligence in order to build unfortunately we've killed that so you have a two sided problem we're spending more than ever to fund and start these companies and we you know have undermined a lot of the downside protection free bird your thoughts so if you look at how the capital is being deployed if it's mostly being deployed to train models then the question has to be is there really a sustainable advantage that arises by being the first to train the models and then being able to persist an advantage by training new models from that foundational model going forward and the reason that that matters so much is because you have to really have a deep understanding if you're going to invest a lot of capital here you have to have a deep understanding for how quickly model development and training is accelerating and how quickly the costs are reducing so something that costs like we said open AI spent $400 million training models for GPT for if they spent $400 million in the last couple of years you could probably assume that doing the same trading exercise could be done for five to $10 million 18 months from now to generate the same model that's a you know 100 x cost reduction and I'm just ballparking it here but if that's really where things are headed then does the $100 million to train models today really make sense if trading those same models can be done for $5 million in 18 to 24 months and that's where it becomes a really difficult investment exercise and one that you have to really critically understand how cost curves are moving in AI the same thing was true in DNA sequencing in the early days and it's following by the way a similar cost curve is DNA sequencing which is actually greater than Moore's law greater than a 2x cost reduction every 18 months we're seeing something much greater than that in machine learning right now in terms of cost reduction and model training so ultimately the business model has to have some advantage that by being the first to market you can then generate new data that gives you a persisting advantage and no one can catch up with you and my guess is if you get under the hood of the business models it's unlikely going to be the case and it's very likely going to be the case that you don't know when the market advantage will lie when you will be able to kind of create a persisting mode a mode that expands as you get more data and can train more and this is why it's so hard to invest generally in technology is because you don't know the point at which the market tips relative to the point at which the technology tips so there's a moment where the technology gets so cheap and then the market maybe adopts after the technology gets cheap and at that point it's a totally different game remember in the mid 2000s where we had memory shortages and we used to have to buy ram yeah i mean it's just like it's all this stuff and it's like if vcs are funding this stuff just you just like like the equity on fire guys not going to be worth anything brad's point is right which is the question is what's possible now where can you build a sustaining advantage now rather than go after big model development cycles where the cost curve is going to come down by 100 fold in some period of time in the near future is there a business model advantage you can build by being in the market first building a customer base accelerating your features getting user feedback and that certainly exists in the application and the tools layer as brad is talking about that seems like such a no brainer for disruption across many different segments many different verticals many different markets right now versus trying to compete further down the stack where it takes hundreds of millions of dollars of capital and in a couple of months that hundred millions of dollars of capital can be replaced with 5 million bucks of training exercise and compute can I take the other side of that yeah all that coordination makes no money today so to your point when you cut the actual input cost by 100 fold the coordination cost goes from being zero to being worth less than zero right I don't see any money being made there either and all the people that say I'm sure there's going to be some genius in the comments but what about open source it's like what about it opening I also just gave an update on their cost structure for their API and they just dropped it 25 to 75% again this is after the tenfold drop they did last year play this out 100 million dollars of capital spent training today is a million dollars spent doing training in a three years yeah three years 18 18 to 36 months somewhere in that time frame is likely the time frame so why would you spend all this money today when an 18 to 24 month things are gonna get so much cheaper you know I think the further up the value stack you go the more of an opportunity to truly kind of innovate disrupt and make capital as possible what happens in 24 months so when you've made a bunch of hundred million dollar investments and they're all zeros you get fired maybe unfortunately as an investor to mop is that what you're asking at some point you don't get invited to join the next fund think about the alternative investment strategy with lots of capital where the cost curve is not coming down as quickly in terms of where that capital is being deployed for example building rockets to go to space or building infrastructure to transport power or building roads you could raise a billion dollars to build a tollbooth system or port let's use a port a shipping port is a good example you could spend a billion dollars to build a shipping port it's not that the cost of building a shipping port is going to come down by 10x in 18 months so it makes sense to raise a billion dollars and build a friggin shipping port and charge my boy to come out vcs thought they were underwriting IP instead they're just actually subsidizing capex it's a building for thing it's the craziest thing Brad is this a problem of the optimal venture fund size that Fred Wilson talks about that Bill Gurley talks about a lot of the OGs say hey 250 400 600 million there's an optimal size here for four or five partners in a venture fund to put money to work is this part of the problem right now which also happened in crypto is you had billion dollar $2 billion fund sitting around and different venture brand names having four or five of these multi billion dollar funds burning a hole in their pocket and getting frisky over this you know 18 month pause and is this about optimal fund size making bad you know we have over a billion dollar fund so if I if I if I take the other side of that the people are going to say you're talking your book but I don't think this is about large funds I think this is about good and bad decisions at the end of the day some of these decisions will pay off like for example what's the largest bet size from a billion dollar fund that you've made or will make I think out of that fund would be $100 million most likely but we may cross it over other funds and have you know bigger bets certainly that happened two or three times that would you do it all at once like this or might it happen over you know a series ABC kind of situation where you build a position I would say you know we're not writing I you know we haven't written $100 million check into a series day and I don't think most of people to Chamas point that you're talking about are writing $100 million checks into those series days the mistral round that you reference I imagine the lead check into that was maybe 50 maybe 50.

So listen larger fund sizes enable you to participate in companies that require more capital and and these companies do require more capital. So you may take the position that all these companies are going to zero that's not my position my position simply is that I do believe there is a bit of over exuberance that too many things are getting funded right and that's you know like the margin of safety the margin of return being required is probably lower than it should be but there's no doubt out of this vintage in my mind that you're going to have some epic companies now I don't know if what Mustafa and Reid Hoffman are doing at inflection is you know building pie to take on chat GPT and to take on bar to be the intelligent assistant.

The ambition is extraordinary. The cost of compute is high but the first mover advantage is also high right because whoever secures this position you know Bill Gates said he's been playing around with it it's one of his favorite agents or whatever that's an interesting comment I think it's pretty good but I think chat GPT is out in front in this regard.

I think a lot of people are going to try to compete for that space but you know I can't imagine that all these researchers leaving deep mind right are going to be able to compete for the most sophisticated model to answer general purpose questions so I don't think it's the large fund size.

I think it's just a lot of exuberance to participate in what everybody perceives to be a massive platform disruption. I think that can be true just like the internet was in 1997 and a lot of these bets can can and will likely go to zero. How great is America you just rent other people's money they pay you 2% and then you're allowed to get exuberant yet keep your job when you lose it.

God bless America. Well I mean the the issue Chamath is it takes 10 years to prove you're bad at this job. No no no no no it takes 10 years to prove you're good and it takes 20 to prove to prove that you can be consistently good and didn't get lucky but it in a few years you can tell that somebody sucks.

Can LPs tell? Well I'm not sure that they get the visibility because when LPs interact with GPS, they're grinned fucked for the most part. So I don't know probably not but when I interact with them just as a peer to peer level and I see the deals that get done it's pretty easy to understand that some people just suck.

They don't know how to make money I guess is the point which in the job that's the job is to make money to consistently make money. Okay Brad take care and let's go to science corner. Bill Gates wants to genetically modify mosquitoes. Is this fake news or real? Incorrect fake news.

It's fake news. Okay. Explain. The reference is from RFK Jr's tweet that he sent out where he retweeted someone talking about this mosquito factory in Colombia and this guy basically put out a tweet saying oh look Bill Gates has a mosquito factory in Colombia it's the largest in the world 30 million genetically modified mosquitoes are released every week into 11 countries because Bill knows better than nature what could possibly go wrong RFK Jr then took it upon himself to retweet and say should Bill Gates be releasing 30 million genetically modified mosquitoes into the wild part of the mentality of earth as engineering object what could possibly go wrong.

So I really wanted to take issue with this because I do think that this is the sort of misinformation that both create scientific illiteracy and damages and impacts negatively some of the significant progress that can be made in medicine and in science. So I want to speak very clearly as to what is going on what the science is behind it why this is super important and then we can speak philosophically if you guys are interested on kind of should we be doing this sort of stuff and why so what's real here like what what are actual facts versus fake news maybe that's a good place to start the most common disease carrying mosquitoes are called edis Egypt Egyptia.

It's a species of mosquito that carry yellow fever, dengue, Zika, a number of viruses that obviously are pretty adverse to human health. Each year about 400 million people are infected with dengue virus via this mosquito vector 100 million become ill and 21,000 deaths are attributed to dengue globally 200,000 cases of yellow fever each year causing 30,000 deaths.

These are pretty significant health concerns and it turns out that in mosquito populations not in this particular species that carry these viruses but in other species of mosquito there's a bacteria a natural bacteria called Wolbachia and this bacteria exists in nature and sometimes these mosquitoes get infected with this bacteria so they carry this this bacterial bug and this bacteria is really interesting because it causes what's called cytoplasmic instability in the mosquito cells which actually makes the mosquito largely resistant to a lot of viruses and there's a bunch of theories for this mechanism and why this is the case but it causes the mosquito to not be able to carry and spread these viruses that are super adverse to human health.

So number one there's a natural bacteria that's found in nature and up to 40% of mosquitoes are already infected with it. Number two is it's not common in the mosquito species that is common in these areas that are spreading these awful viruses to humans and so there's been a project that's been going on now for 12 plus years where they're taking large amounts of mosquitoes and breeding them specifically to have this bacteria in the mosquitoes and then they release those mosquitoes into the wild and over time the bacterial infected mosquitoes start to become a larger percentage of the population and as a result the vector of carrying these awful viruses into humans goes way down.

There was a study done in Indonesia where they took these Wolbachia infected mosquitoes and they released them into the wild and they looked at a population that was in a region where they released them in a population that they didn't. In the region where they didn't release them 9.4% of people ended up getting infected with dengue fever and where they did release them only 2.3% were infected.

So it was an amazing 75% reduction in the infection of people by these mosquitoes and so the whole point is just to kind of you know move the mosquito populations in a way without doing any sort of genetic modification but by exposing them to this bacteria so that they don't carry these viruses into people but you know, because that's a nuanced point there, Friedberg, the it's not genetic modification or it is it's not I just explained it's a bacteria and they just expose the mosquitoes they're exposing the so that they end up getting infected with this bacteria and then as they breed the mosquitoes breed in this facility, you have you have to have to an infected male and an infected female for the offspring to have the bacteria if you have an infected male, they're actually infertile, they can only fertilize an infected female.

So unless you do this breeding work, you don't end up seeing this happen naturally in the environment where the Wolbachia starts to spread. Where's the genetic modification misinformation coming from? Whereas from from from the presidential candidate, RFK Jr, who just propagated it. And so this is why I want to make this point because this whole idea that oh should we be engineering the earth?

Let me just say something about engineering the earth. Humans used to wander around the earth or proto humans did without access to food. And until we realized that we could plant a seed in the ground and grow crops and started to engineer the earth in the form of farming, we did not have access to a reliable source of calories.

Human ingenuity, human engineering gave us the ability to do this gave us the ability to feed ourselves. Similarly, humans got infected by viruses by bacteria by fungus and died at a young age over and over again. And when humans began to engineer medicine and engineer unnatural substances, because he makes this point, oh, should we be interfering in the natural world?

What is natural is for people to get infected with viruses or bacteria and die. And if not for the advent of our engineering and our ingenuity and our ability as a species to create solutions through science, which allows us to do discovery, and then through engineering, which allows us to make solutions that solve problems that humans face, we would all be dead at a young age, and we would not have realized the progress that we've had as a species.

So I really get ticked off when I see guys like RFK, Jr. And others not just propagate this, this BS misinformation spiel about Oh, genetically modified this and that science is bad. But to then say, should we be messing with the natural world? Because I would say to him, what about when your kid got infected, and you gave your kid antibiotics, maybe you shouldn't have done that.

And this is a group of people who are saying that you shouldn't do that, right? There is a movement to stop taking antibiotics because it's making it because it's it's having an I'll tell you a couple things. There are bad pesticides that impact human health and cause damage to our DNA.

There is bad sunscreen that is endocrine disruptors and can damage human health. There are plenty of chemical products that are made that we use in everyday products that cause cancer. There is an endless string of things that are wrong with the system of engine, the systems of engineering that we do use.

That doesn't mean that they're all bad. That doesn't mean that we then say, hey, you know what, let's not do anything. Let's not do any engineering. Let's not use any antibiotics. Let's not use any technology in food. And that's the challenge is, you know, getting into the details on like, I'll tell you, I don't use any sunscreen products with myself or my kids.

I only use zinc. And I have a similar sort of nuanced approach to understanding what things we should or shouldn't use in our lives. Because of a pause, can you please explain that? Because I didn't know this. What am I doing? Am I getting what? Explain? Yeah. So there's a number of substances, which are known endocrine disruptors that are found in sunscreen.

I think it's like one of the craziest things that we haven't made these products illegal at this point. But the only sunscreen that you should use is natural mineral sunscreen. This Sorry, I shouldn't say that you should I should say this is what I chose to do based on the data that I've seen.

What's a good brand? What brand any brand that sinks just zinc sunscreen, just look at the back. If there's anything but zinc in it, don't use it. Zinc oxide. Is that? Yes, I totally refer to zinc oxide sunscreen. Yeah. That's the ingredient in it. So I don't know what you guys.

Wow. But here, let me just send you this. But are you saying that you're not allowed to have any other ingredient like there's no stabilizers? There's nothing else? No, no, that it's it's the principle ingredient has to be zinc oxide versus some other chemical you're saying? Yeah, so oxybenzone.

I don't use any products with oxybenzone. That's like the most common sunscreen ingredient. octinox eight is the other one homo salate and the parabens all of those product categories, which are the most common products used in sunscreen. They're absorbed by your skin, they go into your bloodstream and their endocrine disruptors.

Now the problem with the zinc sunscreen and the mineral sunscreen is it actually stays on your skin. So you look like you're wearing it's really hard to rub it in. You gotta really really rub it in. So they're actually not popular from a cosmetic point of view. People don't like wearing them because they look like idiots and it's really hard to.

Yeah, that's the stuff I use in the summer that is it drives me crazy because I look like this weird ghost shiny ghost thing. I know but I do use that. That's like really hardcore about that. So that's an example of understanding nuance, right? It doesn't mean all sunscreens are bad.

And it doesn't mean that we shouldn't use sunscreen. But understanding what the risk factors are that are associated with different ingredients or different engineering that's been done to make sunscreens available is important. But that's so many levels deep. It's a really difficult thing. So then people end up being scientifically illiterate and being wrong.

Because someone like RFK Jr. comes along and says, Hey, should we really be engineering the earth with genetically modified mosquitoes? And then people have this call to action, shut those things down, shut those things down. And they're incredibly beneficial and effective. They're not taking any sort of genetic editing to market.

They're not doing anything that people might consider risky. And we can have a separate conversation about the risks and benefits of genome editing. That's another topic. But how much of this? freeberg Archima as we get ready to wrap here is a reaction to what happened with COVID-19. And people's fear now of and getting sort of educated on gain of function research.

And, you know, this sort of recency effect of my Lord, doing some of this science feels like it's too dangerous, certainly too dangerous to do inside a city. And what's the point of taking bats out of caves and doing gain of function research? How much of it has to do with that right now?

And it's a sort of the downside to questioning that technology can can be asymmetric, you can have like nuclear weapons can wipe out the world, they can wipe out the whole population. Yeah, you know, Tala makes this point on his argument against GMOs, which I would argue against him on this point, but we can do that another time.

If he's willing to come on. I'd be super happy to debate him on this point. But the idea being that there's super asymmetric downside. And so you know, what happens is people see incremental improvements from technology, and they don't really praise those incremental improvements. They assume that to be the case, it's a linear step function.

But when something goes wrong, it's a big step down. And then people are like, Oh, wow. And then people get scared of technology. And then people want to step away from it. And this is true in anything that relates to your health, to food systems, to the environment now.

Now, it doesn't mean that all technology is bad, or all engineering is bad. But you know, as mistakes are made in the system, as new things are discovered, we have to retrench and change what we're doing. But it doesn't mean that we should stop progress. And it doesn't mean that the whole system of humans figuring out how to engineer ourselves of the world around us, to benefit the health to benefit the planet to benefit other species on the planet, isn't a critical mission and effort that we should be undertaking.

Well, the sunscreen thing is really tilting. I mean, I just, I need to make sure I'm pretty sure we have a good one. But I don't. Yeah, I'm on this right now. I'm at this has got me a little nervous with my kids. I like these. Like, I have all my kids have long sleeve sunshirts.

And I try to do that, I think is like the key thing. And because I, my family has skin cancer, I have to do that since I'm dark skinned, free bird. I mean, do you want to avoid skin cancer? I mean, I don't know. Yeah, I wouldn't wear like a rash guard thing, you know?

Yeah, you know, it's a summertime, you're in the bed, you know, you want to show you want to show off your revenge body. I get it. I get it. All right, everybody, on behalf of sacks. Let me just say Ukraine, Ukraine, Ukraine, Biden, Biden, Biden, and Francis. Mayor Francis is now in the race.

So I guess we'll have him on the pod. We already talked to him. Oh, okay. So yeah, at the summit last year. And also, we're doing a survey for the podcast all in podcast.co slash survey, all in podcast.co slash su r v. Why if you got to this point in the podcast, please fill out our survey or listener survey.

And we will see you all next time. On the all in. Bye bye. Let your winners ride. Rain Man David Sacks. And it said we open source it to the fans and they've just gone crazy with it. I love you. West Coast Queen of Kinwam. I'm going all in.

Let your winners ride. Let your winners ride. Besties are gone. That is my dog taking a notice in your driveway. Oh, man. My avatar will meet me at the We should all just get a room and just have one big huge orgy because they're all just useless. It's like this like sexual tension that they just need to release somehow.

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