Hey, everybody. Hey, everybody. Welcome to another episode of the all in podcast. We have a new bestie yesti filling in for the Prince of panic attacks. The Queen of quinoa, the Sultan of science can't make it this week. I think after his incredible performance last week, and him trending on Tiktok with his incredible insights over sadly, the the potential famine that could come after this Ukraine war, he decided he would take a week off.

I think it's just a little too much attention for him. So we have a bestie yesti today. Yes, the shaman of stocks is with us. He brings the equanimity to equities, you know him, he'll bring that namaste to your payday. predictions are the anti Galloway. Brad Gerstner. Welcome back to the program.

Thanks for having me. Namaste. And also with us, of course, the rain man, man himself. He's bitter on Twitter. He's brawling on calling. He's the Bill of Rights from Pack Heights. David Sachs. Boy, you've really outdone yourself today. And the Prince of Palo Alto, the overlord of the Overton window.

Polly hop it to you. J.K.L. Are you the stinker of stonks? Oh, God, relax. You don't leave the comedy to me. All right. Let your winners ride. Rain man, David Sachs. And instead, we open source it to the fans. set to the fans and they've just gone crazy love you queen of king it's been a pretty pretty crazy couple of weeks here uh we are not a political show here but obviously when world affairs become acute as they have we cannot ignore uh the war uh that is occurring in ukraine uh we're going to talk a little bit about markets i think we'll start with those uh with brad gerson here uh the sas market and the index uh why don't you walk us through this chart here because everybody's wondering what's happening with the markets given the war given interest rate hikes and the repricing of stocks i don't know how you would look at what happened in november december january brad how do you contextualize well certainly a repricing there's certainly a repricing but i i think of it more as normalization okay right chamath was saying it november i was i was on cnbc talking about the fact that when you're doing a lot of things in the market you're doing a lot of things in the market you're doing a lot of things in the market you're doing a lot of things in the market when we got to a post-covered world rates were going to normalize go back to where they were in january 2020 that was around two percent and the growth multiples would have to come off of this historic red bull high that we were on during most of 2020 and 2021 so we were 30 to 50 percent depending upon the index above the five-year average growth multiple pre-covet so that just needed to happen like we should be celebrating in one sense that that happened because that means that we overcame a global problem and we're going to have to do something about it and we're going to have to do something about it and we're going to have to do something about it and we're going to pandemic the downside is we couldn't play with artificial money zero percent rates trillions of dollars you know of of of congressional and fed injection in order to prop up valuations and when it happened in and of itself that was going to be extraordinarily painful what i didn't anticipate and what most people didn't anticipate is that on top of that we're going to have increasing fears of hyperinflation not just getting back to normal rates and that we were going to have increasing fears of hyperinflation not just getting back to normal rates and that we were going to have increasing fears of hyperinflation not just getting back to normal rates and that we going to find ourselves in the middle of an incredibly devastating war in ukraine going to find ourselves in the middle of an incredibly devastating war in ukraine those two things added to the uncertainty the risk premiums those two things added to the uncertainty the risk premiums those two things added to the uncertainty the risk premiums um added to uncertainty around future um added to uncertainty around future um added to uncertainty around future inflation the dot plot exploded higher and inflation the dot plot exploded higher and inflation the dot plot exploded higher and expectations of forward rates went higher expectations of forward rates went higher expectations of forward rates went higher now why the hell does this matter it now why the hell does this matter it now why the hell does this matter it matters because when you take you know if matters because when you take you know if matters because when you take you know if you're looking at that chart you're looking at that chart you're looking at that chart the five-year average the 10-year was the five-year average the 10-year was the five-year average the 10-year was two and a half percent like we all got two and a half percent like we all got two and a half percent like we all got comfortable comfortable comfortable investing in this period of time the investing in this period of time the investing in this period of time the markets hate uncertainty we had a markets hate uncertainty we had a markets hate uncertainty we had a predictable way for us to estimate where predictable way for us to estimate where predictable way for us to estimate where we thought our wax should be in our we thought our wax should be in our we thought our wax should be in our discounted cash flow models discounted cash flow models discounted cash flow models all of a sudden that was thrown into uh all of a sudden that was thrown into uh all of a sudden that was thrown into uh thrown into the air oh my god look what thrown into the air oh my god look what thrown into the air oh my god look what we got going on i can't do that we got going on i can't do that we got going on i can't do that look at this oh yeah i never compete look at this oh yeah i never compete look at this oh yeah i never compete with babies or animals yeah no chance with babies or animals yeah no chance with babies or animals yeah no chance no chance hey this is talita talita no chance hey this is talita talita look at this little look at this little look at this little look at this little look at this little look at this little butterball oh my goodness lord look at butterball oh my goodness lord look at butterball oh my goodness lord look at that so so good sax that's called a that so so good sax that's called a that so so good sax that's called a child it's uh you have three of them child it's uh you have three of them child it's uh you have three of them those are babies and what you're seeing those are babies and what you're seeing those are babies and what you're seeing there is affection from a father and a there is affection from a father and a there is affection from a father and a child look at how cute this little baby child look at how cute this little baby child look at how cute this little baby is like well this is taking from my time is like well this is taking from my time is like well this is taking from my time get that baby out of here get that baby out of here get that baby out of here ah so cute so brad i guess what ah so cute so brad i guess what ah so cute so brad i guess what everybody wants to know now that we see everybody wants to know now that we see everybody wants to know now that we see this repricing occur this repricing occur this repricing occur is what do you think is going to happen is what do you think is going to happen is what do you think is going to happen in 2022 in 2022 in 2022 uh and then into 2023 so uh and then into 2023 so uh and then into 2023 so we're now multiples are now below the we're now multiples are now below the five-year average for for software we're about at the five-year average for internet we're well below the five-year average i said on twitter that the rate path last week became a lot more certain the fed said something last week that i think is still not well reported well understood the fed said at the end of the year we're going to have two percent negative real rates they said we expect inflation exiting the year to be 4.3 and we expect the tenure to be around 2.3 the reason the market exploded higher is because under the fed's prior protocol a four percent uh a four percent inflationary rate would mean that rates would have to go to four and a half and if you take rates to four and a half then growth multiples need to be about 30 below the five-year average okay so as investors whether we're investing in mid-stage venture late stage venture whether we're investing in the public markets like we need to know what exit multiples are and it was bad enough that we had to bear the drawdown coming off of you know this this red bull high of 2020 and 21 but if you think we're durably going to an inflation rate of three percent or four percent and an interest rate environment of three percent or four percent then you simply have to adjust what you're willing to pay for growth assets and so as i look ahead right we don't we don't know with certainty the question is what's the distribution of probabilities and you know just this morning city goldman sachs raised their exit year their their exit tenure for 2022 to 2.7 percent and took it as high as three and a half percent for 2023 i think it's gonna this period is going to be marked by a lot of uncertainty around inflation and rates and the way that we're going to be dealing with inflation and rates until we have more clarity and what that means is allocators of capital are going to allocate less to risk assets and they're going to pay less for risk assets but you know listen if i look out over the five ten year horizon i don't believe in global stagflation i don't believe that we're in this new hyperinflation environment um but we're going to have to get through this next uh 6 12 18 months and it's going to be filled with a lot of volatility and a lot of uncertainty jamath what rings most true about what brad just said and then what can you add to the prediction for this coming year um well i think it's going to be a lot of uncertainty this year i mean i don't know what the prediction for this year is um i i think the markets are mostly moving upwards for the short term and then i think volatility is going to come back i'm just trying to find good long-term businesses and just kind of close my eyes and not have to look at these stock prices every day and as long as i can manage my own psychology i think i'll be fine and i think that's probably the thing that most of us need to be doing the interesting thing about brad said is that um the implication of that is that it means that late stage venture is pretty badly mispriced and i think you're going to have to knock these things back by 50 60 percent i think you saw the first real big movement there um yesterday which was the instacart print right we went from a 40 billion dollar valuation uh to i think it was 24.

if you look at from february of last year which was really the high for all of us right that's when we all thought we could do no wrong you know the comps to uh instacart are off anywhere between 50 and 70 percent you know takeaway is off 70 percent uber's down 60 percent doordash was down 55 so these are some big moves and so you know uh it made sense that instacart had to get kind of like reset the problem that it has is that it's now the nth player trying to get public into a space with many players who've guzzled up a lot of capital in a low rate environment and so if you think about company building this is why entrepreneurs have to pay attention to this stuff you want to get money when money is cheap but the problem is you can't control that timing and so if you can't control your operating margins and your profitability then you're gonna have to go and basically pay somebody an enormously high price to get their money and i think that's what setting itself up to have happened in a bunch of these markets i think enterprise sas has always claimed long-term profitability um the thing is when you look at sort of like the real long-term companies they've built some enormous moats right like if you look at a service now or a sales force at the high end and then there's a crop of a couple of companies like palo alto networks who are the next ones coming after who seemed like behemoths in the making but everybody else i think people have to really question like where the long-term profitability going to come from and so if that's true then the late stage private sas companies are in trouble similarly in places like delivery where again you've had a bunch of comps come out they've been curing in the public markets for years you know uber doordash there's a couple of these behemoths getting built doordash being the most obvious and then there's a bunch of more kind of question mark business models including uber which is not really hanging together in the public markets so i think the real question for entrepreneurs is if you have the nth business and the business business is not going to be the same business as the nth business and so i think the real question is if you have the nth business and the business business is not going to be the same business as the nth business being not the first not the second but you're the seventh or eighth or tenth trying to go public and all the seven or eight before you are gas guzzling machines you're going to pay a very heavy price to get public um and i think that that's the reckoning that we're starting to see so i'm really interested to see how that plays out you know the instacart valuation could easily be cheap at 24 but it could just as easily be overpriced by another 10 billion dollars depending on how people think about it about who the last buyer of resort is in the public markets sax did uh instacart missed their window to go public and then what does this say about the backlog of hundreds of unicorns that the venture community is investing heavily in some of them are probably gonna have to ipo at down rounds um i think that's sort of the takeaway explain what that is to uh to neophytes well it just means that they're gonna have to go public at a valuation lower than what the last private round was so all these late-stage private investors who assumed that they would always make money in investing in a company in the last private round before went public they they thought that was sort of an automatic gain an arbitrage and it's not and there's going to be some disappointment there brad's been sharing these charts with me since i guess what december brad um where then the charts basically show uh public sas valuations as a multiple of arr and then he's got a similar chart for it sort of the internet companies that sort of non-sas internet companies as a function of revenue and we've been looking at these charts you know once brad showed these to me again four months ago it became so obvious what was going on which is that valuations were reverting back to the historical mean if you look at you know during the two-year period during covet the they the multiples had risen to some insane level right and because of all the liquidity that had been pumped into the system so as soon as you saw the the charts that way you could just see where things were headed which is back to historical average is now we're below those averages um partly because no no no no not really the multiples are can i summarize brad's chart because it is extremely elegant and simple for the layman to understand so here's the layman's understanding of of brad's uh uh analysis technical analysis and and and balance sheet and p l analysis which is accurate when rates are zero typically people are willing to pay eight times revenue for a company okay so if you're generating 100 million revenue top line revenue you're generating 100 million dollars revenue in your reasonably high margin reasonably high growth software business that's worth 800 million dollars in the public markets for every 100 basis point increase in rates you decrease the valuation between 15 and 20 percent so if you think rates are 2.75 the price is somewhere between 30 to 40 percent cheaper than what it was when rates were at zero so if you go back and you look at every tech crunch article and every bloomberg article and every information article and you look at all those headline valuations when rates were at zero we all just said rates are going to be somewhere between you know 2.5 to 3 percent at the end of this year at a minimum you have to haircut those things by 30 to 40 percent steady state meaning the company is continuing to execute on all of the values that are in the stock market and that's what we're going to do in the next couple of years on all cylinders if they have a downtick in their performance then it it increases that discount if rates go higher it increases the discount but the basic way to think about this is for every hundred basis point increase in rates you got to down take that valuation by 15 to 20 percent and i think you know just to be fair i think i don't think there's any daylight between you and sax on this what what's actually saying is the 40 percent just giving the numerical rule that that's right i think you're right that is the that is the the the correlation and so this idea listen we all get paid to find good companies and avoid bad companies that's generally what we get paid to do we're decent at it all of a sudden in fact most fundamental investors say hey i'm not a macro expert i don't know where inflation's going i don't know where interest rates going i just find good companies we've had a decade or longer where that was okay to do that was easy to do because guess what inflation was at two and we had two and a half percent tenure when all of a sudden you have massive volatility in that it's not acceptable as an investor just to say well none of this matters because it does matter right price matters because what you can exit for is essential to the game and there are a lot of people invest in 2013 14 and 15 when when the cost of entry was low and exited when the cost of entry was high multiple expansion hides many sins right and now just the opposite is happening in a dramatic and historic way in that multiples were higher than they've ever been caused by a global pandemic and the exit rate for a lot of those companies right is going to be very painful i think that saxe's point about down round ipos i don't think this is the exception david no reddit right i think the vast majority of companies that come public in the next 12 months are going out below their last rounds valuation yes the reddit rumor was that goldman put a 10 billion dollar price on the cover and that you know it effectively been cut in half again these are all rumors so these could completely not be true i don't i don't have any knowledge one way or the other uh to five billion and that may actually end up being too expensive it just depends on where the market is well just so people are clear when investors sophisticated investors make these late stage valuations at very high multiples like they have they do have some downside protections in other words they cannot lose more than the money that was put in when this thing ipos or they may get kickers of additional shares so maybe now these ipo no no in fairness you're talking about something very important but they're very rarely in these high price rounds because most of these high price rounds are in go-go companies where all of those rights get stripped away this is why i do think jason what you're actually bringing up is in in the last innings of a bull market you have incredibly irresponsible behavior by a bunch of these investors and that's also going to get exposed as well so jason what you're talking about is what's called an ipo ratchet yeah which means i'm giving you this money at this price but if you can't ipo at this price then you're going to give me an equivalent number of shares that makes me whole right right so it's as if i am i am indifferent to what price you ipo at that's extremely dilutive to really one really important class of individual which is the employees of the company it's also really dilutive to other investors who've come in before them and so but jason you're probably right to the extent that there were ipo ratchets they'll get triggered but i think in many of these go-go companies and you know brad and sax can confirm but i see it all those rights get stripped away it's like come in at this crazy price yeah we're not negotiating it this is your chance no governance get our get our logo on your fundraising deck for the next round and so this is the price of the capital it's been a little bit of sloppy behavior just so people understand this if the reddit valuation was 10 billion somebody put in you know 100 million in this late stage round if it came out at 5 billion they would get twice as many shares to make up for that difference that doesn't exist in the case of reddit jcal you know it was fidelity who led that last round so they're going to be price takers at whatever price the company comes public what does that mean explain that price takers so you know if they come public at five billion dollars and you put in a hundred million dollars your stake is now worth 50 million right right so you lost 50 million didn't they have the discipline to put in these protective provisions and you know they're going to be a little bit more expensive than they were before but you know they're going to be a little bit more expensive than they were before but you know they're going to be a little bit more expensive than they were before but you know they're going to be a little bit more expensive than they were before but you know they're going to be a little bit more expensive than they were before but you know they're going to be a little bit more expensive than they were before but you know they're going to be a little bit more expensive than they were before but you know they're going to be a little bit more expensive than they were before but you know they're going to be a little bit more expensive than they were before but you know they're going to be a little bit more expensive than they were before but you know they're going to be a little bit more expensive than they were before but you know they're going to be a little bit more expensive know that groupon raised it 20 billion dollars went public and a year later is worth 2 billion i mean it's not as though this hasn't happened before uh but yes uh people people got a little lackadaisical i just wanted to i just want to say one other thing though because multiples coming down is a problem what this really reveals is the importance of stock and company selection right because if you were a shitty company with an unproven business model way out on the risk curve okay and you had a super high valuation last year and you don't you know there's a good chance you never grow in it grow into it you never get back to that valuation example your example your growth will de-sell well give us an example company okay discord ripple in the 15-minute delivery space in europe go puff you know i i i would say gopuff is one of the best of them there are a lot of startups that got funded with billions of dollars in europe unfortunately they're not going to be able to get back to the market in the next 15 years i'm not saying that's the case but i'm saying that's the case because you know unproven business models burning tremendous amount of cash right like i don't know why they need to exist i don't think they're going to get funded right maybe one or two of them do but when you have doordash and uber that are free cash flow positive that have strong brands and that can redeploy those profits back in to compete in those markets i think it's very tough neobanks are another example neobanks you know the number of neobanks that have been funded at exorbitant valuations where um you know the profit margin is going to be higher than the net profit margin and so you know the number of neobanks that have been funded at exorbitant valuations are going to be higher than the net profit margin and so you know the number of neobanks that have been funded at exorbitant valuations are going to be higher than the net profit margin and so the problem is all of and so you know the number of neobanks that have been funded at exorbitant valuations are going to these financial services companies are essentially an arbitrage on rates right when rates are zero they take that money at zero percent and then they can go and execute a business model you know and sell that money at one percent and take the difference but when their cost of capital is two or two and a half or three percent the whole business implodes on them so you're going to see a bunch of these financial services companies get under pressure another example jason is like all the low-end you know bottoms-up sas companies and the reason is because they spend their time inside of google and facebook doing customer acquisition and managing this very intricate dance of ltv to cac and when all of those input costs go up their business implodes because you can't raise rates faster or you can't raise prices i would say faster than the input costs are and then all of a sudden your unit economics blow up and in all of this what is the salvation in a moment like this it's being healthy gross margins healthy contribution margins and a and a realistic path to profitability which means being ebit deposited this year or within the next two years said another way if you're profitable you're not going to go away if you can't if you can't show that you're you know to use the famous paul graham adage default alive in a moment like this then you are a price taker which means that you will have to pay probably a very high cost of capital to raise incremental capital to support a fundamentally fragile and non-resilient business model here's the issue here sax that when you see the getter gorillas zap all these instant delivery companies get funded at exorbitant prices and they're the seventh eighth ninth as chamath is pointing out no no instacart was the seventh those are like the 10th 11th okay so now here we are this to me seems like the fault of poor judgment by capital allocator sacks are there two many venture funds chasing too few deals and not thinking through what investing in the 10th 11th or 12th player in a market is going to be able to do is it too much i think part i think part of what's going on with the companies you mentioned is that they're physical world companies they are very capital intensive they burn a lot of money they're operationally intensive i have sort of sour i soured on those businesses years ago and that's why i just focus on sas because they're basically perfect gross margin businesses um they are very they can be very capital efficient if the founders want to run them that way so what we're doing now is telling founders lengthen your runway be more capital efficient you need to understand that you know multiples if you raise last year at 100 times arr you need to understand that the next time you raise it maybe at 20 times arr so now you can grow into that right if you're tripling and then triple again the next year you'll be able to grow into that valuation but you know make your money last two three four years instead of you know burning it in 12 to 18 months unless you want a down round i think this is this is the point that now allocators venture capitalists are going to spend the next six months thinking about what's in bucket one low quality companies burning a lot of cash that may very well not make it across the chasm no path to profitability what are the high quality companies that yeah the multiples down because public market multiples are down risk premiums have changed inflation change but they have plenty of cash on the balance sheet and think about it this way snowflake became a poster child in the public markets of a high-priced uh sas business snowflake this year will grow its free cash flow at over a hundred percent a year next year probably you know 80 or 90 percent free cash flow not just revenue free cash flow in q4 i think they booked 1.4 billion of revenue q4 on a business that entirely in last year did 1.2 billion in revenue right it's a lot of money to think about that the incremental was more than what they had generated in the prior many years that business so let's say we reduce the multiple by 50 percent but the company's growing top line and free cash flow by a hundred percent doesn't take you very long to grow through the multiple compression so snowflake's multiple is plummeting for two reasons one because the stock price came down number two because right their growth rate and free cash flow growth is so high and so now i'm going to go ahead and talk about the increase in cash flow and the increase in cash flow and the increase in cash flow and the increase in cash flow and the increase in cash flow if you look at the multiple it's similar to what we would expect of a regression of the five-year analysis unless these companies unless these private companies want to go dark for the next three to five years meaning nine you know no sophisticated late stage investor doing around or going public they'll be okay but otherwise they're going to have to reckon with a version of what brad just said which is the high the flight to quality problem you know when in moments of uncertainty and high volatility it's just more and more and more and more and more and more straightforward to go to the things that are reliable and so you know when you think in the public tech markets what is a reliable must-own company well i would put snowflake in the list of these must-own high growth software businesses right you know the fangs tend to be in the must-own category but then there are all these other businesses that then get orphaned because they're kind of nice to own would love to own would be great in any other circumstance and that gets even more exacerbated in the in the private markets you have to remember right now like the private markets cannot really exist without an incremental buyer of equity right aka bag holder somebody has somebody needs to be the bag somebody needs to be the bag holder after you and the problem right now is that those folks have a lot more credible safe durable assets that they can own and they're not going to have to deal with all the crazy anxiety that comes with owning something that's that's high volatility like or chamath correct me if i'm wrong or brad if they don't want to even be involved in this mashogana they could just be in cash and the interest rates are going up so maybe they could say you know what i'll just sit this out for a year is that also happening with those folks well is that too hard to do because of inflation knows a bunch of these folks but like take for example d1 you know it's uh dan sunheim's great investor i mean my understanding is that they are sort of off privates completely because why invest in a private company at x times ar when you can invest in a public sas company for six times so they've substituted i think tiger is still in market with a gigantic fund for privates but the valuations have come down so they're essentially re pricing everything i think those are probably the two broad reactions you could have right brad certainly i i would say this broadly speaking the late stage private financing market in venture is clearly a big part of the market and i think that's a big part of the market right and so i think that's a big part of the market and i think that's a big part of the market right and so i think that's a big part of the market and i think that's a big part of the market closed um because there hasn't been closed um because there hasn't been right we're in this this buyer seller standoff right we're in this this buyer seller standoff sellers aren't to the point where they're sellers aren't to the point where they're willing to accept that a new rate a new willing to accept that a new rate a new regime of multiples exist right it's regime of multiples exist right it's painful we saw you know the instacart painful we saw you know the instacart news here recently but i think you know news here recently but i think you know like listen we're not even 10 or 20 percent like listen we're not even 10 or 20 percent of the way into the psychic reset that of the way into the psychic reset that needs to occur in order for us to see real needs to occur in order for us to see price discovery that's not going to price discovery that's not going to occur until these companies need money or that's not going to occur until these companies need money or want to go public that's right this fall is when we'll start to see real price need money or want to go public that's right this fall is when we'll start to see real price discovery you couldn't pry a late stage discovery you couldn't pry a late stage dollar out of my hand right now because i dollar out of my hand right now because i don't think we have real price discovery don't think we have real price discovery going on early stage venture if we're discovery going on early stage venture if we're investing in an incredible you know investing in an incredible you know software business at 300 million 400 software business at 300 million 400 million 500 billion we think can be worth million 500 billion we think can be worth tens of billions you can withstand a tens of billions you can withstand a little inflation but the later you get in little inflation but the later you get in the life cycle of a business it's about the life cycle of a business it's about irrs and irrs in late stage at last year's irrs and irrs in late stage at last year's valuations relative to today's public market valuations that is a negative arbitrage explain irr why that matters yeah just for the language you know we expect just for the language you know we expect our herder rate in the public markets is our herder rate in the public markets is a 20 risk-adjusted rate of return so if a 20 risk-adjusted rate of return so if i'm you know like i'm you know like you know you look at these late stage you know you look at these late stage private valuations from last year i mean private valuations from last year i mean you know sachs just talked about companies you know sachs just talked about repricing down 40 or 50 or 60 percent so repricing down 40 or 50 or 60 percent so if they haven't done that if they haven't done that now you can't even have a conversation now you can't even have a conversation just to uplevel this what brad is saying just to uplevel this what brad is saying is the following jason is the following jason any person can wake up tomorrow and by any person can wake up tomorrow and by the s p index right what buffett would the s p index right what buffett would tell you to do just by the s p 500 index tell you to do just by the s p 500 index that historically that historically has compounded at around eight percent a year if you reinvest the dividends so year if you reinvest the dividends so you can do nothing you can do nothing right get a basket of the 500 best right get a basket of the 500 best companies in the world that are companies in the world that are automatically selected for you based on automatically selected for you based on revenue and profitability you don't have revenue and profitability you don't have to do anything to do anything and that'll compound at eight percent and that'll compound at eight percent that is effectively the risk-free rate that is effectively the risk-free rate if you want to own an equity if you want to own an equity so if you're going to step into the late so if you're going to step into the late stage private markets and you know stage private markets and you know buy some shares and you know dingdong buy some shares and you know dingdong.com you got to be you got to be rewarded for that which typically means that there is a premium above the eight percent and what brad is saying like you know it's it's actually more than double in his case what he's saying is it's two and a half times you know you've got to clear 20 to you otherwise you're better off on a risk adjusted basis is what's likely to happen i'm looking here at a list gopuff at 40 billion canva at 40 billion gopuff at 40 billion canva at 40 billion clarna at 45 billion discord at 15 billion ripple at 15 billion these grammarly at 13 billion these don't make sense given that if they were public they would be trading at well here's what you would be trading at well here's what you can say 50 of that here's what you can say if if everything is held equal if everything is held equal just with the rise of rates you have to reset those valuations between probably 15 and 40 percent okay at a minimum minimum but what brad said is also true which is if they then keep growing at a superior rate they can get back to even so meaning 18 months they could also show up again at 40 and be net net awash they could get unstuck but a lot of hard work will need to happen underneath the covers of these businesses in the next two years okay for that to happen and that's what's going to happen with a lot of these early stage private companies right is let's say the error multiple has gone from 100 times to 20 or 30 times they have to grow their ar 5x to get the same valuation so the question is can they grow their ar 5x before having to return to market that's just to get a flat round now if they are tripling this year and then doubling next year then that's six x growth in arr so even if you know the multiple has gone down 5x they could still get a slight up round so that's the game i think all these companies are going to be playing is lengthen your runway so that you can grow into your valuation and not take a down round because the problem is if you're ever in a situation where you take a down round it's way worse than just the dilution because now the psychology of everyone in the company changes everyone has to worry that you're gone sideways it's hard to recruit but here's the thing this is difficulty of what sax is saying though in order to grow revenue you have to invest right you have to invest in sales people and account management functions in engineers and product managers right and all of those people uh need to exist which actually increases opex right it increases burn it doesn't maintain burn and so this is the death spiral jason you're talking about which is in order to actually grow by those multiples you actually don't have more fuel you got to increase your speed burn more fuel you don't actually have the money to to withstand two or three years the altitude you're now so it's going to be a very precarious balancing act of trying to figure out how these companies actually get to the other side because again i think the the buyers in this case will be will drive a hard bargain you know i mean like look organizations like you know durable d1 tiger altimeter these guys are the smartest of the smart they're not dumb and so you know the price of capital is going up in that case and so you know they're going to strike really good opportunities for their investors right for their lps i don't know if you're in the same boat as i am but i think it's going to be a big deal for them and they're going to be a big deal for the next generation of companies because they're going to be a big deal for the next generation of companies and they're going to be a big deal for the next generation of companies right and so you know the price of capital is going to be a big deal for them and so you know that's what i'm saying it's not a big deal for them it's a big deal for the next generation of companies but i think it's going to be a big deal for the next generation of companies and so i think that's a big deal for the next generation of companies and i think that's a big deal for the next generation of companies and i think that's a big deal for the next generation of companies and i think that's a big deal for the next generation of companies and i think that's a big deal for the next generation of companies and i think that's a big deal for the next generation of companies and i think that's a big deal for the next generation of companies and i think that's a big deal for the next generation of companies and i think that's a big deal for the next generation of companies and i think that's a big deal for the next generation of companies and i think that's a big deal for the next generation of companies and i think that's a big deal for the next generation of companies and i think that's a big deal for the next generation of companies and i think that's a big deal for the next generation of companies and i think that's a big deal for the next generation of companies and i think that's a big deal for the next generation of companies and i think that's a big deal for the Up markets- Layoffs.

Well, in an up market or a boom market, the three things that matter are growth, growth, and growth. In a down market, the three things that matter are growth, burn, and margins. It's not that growth stops mattering, it's just that burn and margins also matter. And now there's going to have to be real trade-offs.

Before, it was just how much money can we spend how quickly to get growth. Now it's, wait a second, is this growth efficient? And will we have enough runway to get to the next round without having to take a down round? Brad, when we saw at the peak of the pandemic, some leadership, I'd say, you know, seasoned or well informed leadership, Airbnb and Uber come to mind, cut their staffs massively.

They use that crisis to reset their cost structure and get to profitability quicker. Those were money losing businesses for a long time, maybe, you know, taking advantage of these hot markets. Is that what needs to happen here? Are we going to see a cascade of companies lowering their valuation, lowering their costs, sharpening their pencils, cutting staff, and then becoming more and more?

Yeah, I think that's a great question. I think that's a great question. I think that's a great question. I think that's a great question. And more ruthless at, you know, the sixth, seventh, eighth product, they're launching saying, Hey, let's go to the core product and make it sing, make it profitable.

You know, Frank Slootman has said that Silicon Valley is full of companies that are walking dead, and they don't even know it. Right? You know, Frank is, you know, he says in tape socks, he says, Listen, I'm a wartime CEO, not a peacetime CEO. Right? He came into he came into snowflake when it was growing over 300%.

And he, you know, he reconstituted what what that culture was about to prepare for wartime. Right? Because he says, when wartime comes, right, and it gets challenging, I want to run the field. Right? I don't want to be laying off employees, I want to be that's the time to hire.

That's the time to press the advantage. That's the time to invest in product. That's the time to win the new customers. Unfortunately, over the course of the last 12 to 18 months, a lot of people without that experience, right took a negative signal. And the signal was money will always be available.

And it will be available at ever increasing valuations. And of course, anybody who's been at this for 20 years, like the four of us, we know that isn't true. But it's amazing. I mean, the behavioral psychology, our ability to gaslight ourselves totally in these moments and move out on the risk curve and ignore these lessons.

Right. And so I really actually hurt and I've spent a lot of time on Zooms lately, with founders and with their teams, talking them through this, because like, we talk about it in the abstract and in through the lens of a spreadsheet. But there are a lot of people's lives at stake.

If you're an employee, and you went to this company, you took everything in stock at 15 billion, that's now worth 5 billion, you're totally underwater. At the same time, the cost of buying a home and mortgage rates and everything else is going up against you. This is a massive morale problem.

Right. You know, for companies that frankly, we want to invest in these are the innovators. But this is what happens when you have government intrusion, right, that we can all debate whether or not it's worthwhile, but it was hugely distortive. What we know to be true is that we had more distortion in markets the last two years than probably any time since post World War Two.

And the consequence of that is dramatic. And you know, we all kind of saw it, but we all kind of gaslighted ourselves. As well, because you were like, well, maybe there is a new normal, maybe we have accelerated digitization. The truth of the matter is the law of economic gravity is interest rates and inflation, and it remains.

Yeah, and, and this time turns out is not really that much different. I think Jason, if you take your list of these high price startups, yep, I think it would be a good useful exercise for somebody to do somebody in the press should probably do it. But if you take that list and just rank companies based on valuation, the last announced date, yep.

And then if they are not announcing layoffs of any kind, you can probably forecast when they're going to burn through the money, especially if they're hiring. And the reason that you can probably forecast that accurately is you can pretty much predict what OpEx will be, especially knowing the fact that their input costs are actually going up.

So for example, most of these businesses that rely on Facebook and Google and Instagram for customer acquisition, those input costs are going up. And the reason you know that is that's $2 trillion of market cap that doesn't give a flying fuck what's happening in startup land. They're going to make their numbers, right?

Okay, those are the most important companies in the world, they will ratchet up the prices. And so your input costs are going up. It's not just the physical supply of materials that I think is going up. It's just the cost of customer acquisition is going to probably go up by 2030 40%.

Right. And you know this because Facebook and Google guide to where they need to perform. And so if you pass that through the venture ecosystem, that all of a sudden now upticks your burn. Yeah, if you're adding more people, it upticks your burn. Yeah. And now back to David's math, you then also have to grow five or six x that it none of this hangs together.

So we are at the beginning of probably a very complicated process of unwinding the distortion that we've lived through in the last couple years. At this point, I mean, you have to blame the capital allocators in this instance, they bought these logos, they suspended disbelief. We've had this ridiculous culture of, you know, we're going to make this money, we're going to make this money, we're going to make this money.

And so we're going to have to do this. And so we're going to have to do this. And so we're going to have to do this. And so we're going to have to do this. And so we're going to have to do this. And so we're going to have to do this.

And so we're going to have to do this. Uncapped notes, just pushing I see it on the boards I'm on you guys probably see to some people just pushing top line growth, never discussing unique economics, never discussing the bottom line. And they created these crazy fugazi markups. They raised bigger funds based on it.

And they just were never the adults in the room, the stewards of capital. It's infuriating. I'll tell you an incredible conversation I had yesterday with one of my partners. So he's been, you know, with me for 10 years. He was really the one that pushed us very early on to go into deep, deep, deep tech when nobody else is doing 3d printing of rockets, satellites, all that stuff.

And it's been so I really trust and respect his perspective. And he was telling me a story. He called a recruiter, you know, because we've been toying with, you know, helping get some folks to help us manage some of our early stage deal flow. And he asked her essentially something to the point of like, who are the types of GPS that are getting hired today in early stage.

And he said, you know, this is how we approach our business, right? We have a permanent capital balance sheet, you know, we do, you know, at most one deal a year per partner. And she said, well, you're never going to get anybody. Because a mid level executive at one of these high flying startups that then goes and joins a venture firm.

She said the consistent single thing that they make their decision on, are you ready for this is how many deals will I be allowed to do per year? What? And so you know, these people are make work construction workers, right? That's dig a ditch, fill a ditch, that is not what investing is.

That's not about having a discerning philosophy on what a business should be or a market. So if you have a bunch of capital allocators, Jason, to your point, who are unsophisticated about investing, probably very sophisticated operationally, but fundamentally don't know what they're doing. And they're coming and transforming an organization that should be an organization that should be a disciplined, discerning allocator of capital and turning them into a velocity deal machine.

This is what you're going to get. I mean, sometimes the best money sacks is money you put into a bet you've already made continuing to build the pot with a startup that's already proven themselves, correct. So I think we're gonna see we have a fall on fund. Yeah, I mean, I gotta say the things you guys are saying are making me feel great about our portfolio.

Explain. Not not because we won't get hit with the money. I mean, we're not gonna get hit with the money. We're not gonna get hit with the money. But because, you know, a few years ago, we decided we were going to invest in a certain kind of company. I mean, high margin, SaaS and marketplace businesses that were not capital intensive, we defined a new metric that didn't exist called burn multiple, which is the amount of money you burn for every dollar of incremental ARR that you generate incremental subscription revenue.

And, you know, we turned down investments that were growing fast, but they had a horrible burn multiple. And so we're going to see how we can do that. And I think that's what we're going to do. So and I do think most of our companies raised last year when, you know, they made Hey, while the sun shine, so there's gonna be, they need to manage their cash flow, so they don't have to raise too quickly.

But as long as they do that, and they keep growing, they're gonna weather the storm. What's the right number, spend $3 to make one spend $2 to add one, what's what's your ratio. So what I've said is that if you can spend a dollar or less to generate an incremental dollar of ARR, you're doing amazing.

And between one and two is good. So in other words, if you're burning 20 million in a year to add an incremental 10 million of ARR, you're doing quite well and start a plan. And then when you start getting into two and a half, three, that's a problem. And then above three is just bad.

Horrible. Spending 30 million to add 10 million in ARR. It means it takes three years or probably four or five because you'll have turn to get that money back. Yeah. And that's just a lack of discipline. And how many VCs are we on the boards? Or you know, other investors?

Are we on the board and having that nuanced of a discussion? It's always just top line, top line, top line, who's gonna be the next stakeholder? I think it's very difficult, because I think the number of qualified investors have gone way down as the surface area of investing has gone way up.

So again, just going back to this conversation, this woman is staffing most of these venture firms with their junior and mid level partners. And again, the qualification to become a venture capitalist at this point is not that you have an ability to pick or, you know, in David's case have operated it and actually run a business and then actually have developed a methodical framework or Brad's business, which is Brad had to start from literally zero in the public markets and work his way backwards to end up with 15 or 20 billion assets.

It's none of that. It's are you a VP at an XYZ unicorn that may also be poorly run. And all of a sudden, that, you know, gives you the qualification to go into a job where and it's not their fault, where what they are told is, what you want is what we're going to give you, which is the ability to write you know, X number of checks per year.

That is insanity. That's not what makes a good investor. And then your ability to then give advice, I don't know, it's probably zero, or less than zero, your ability to give advice is, I think we have to qualify bad advice is being given. So the ability to give quality advice as that was what's missing in this formula.

I just think these people are really naive, like, you know, it's not their fault. But, you know, they're given way too much rope to hang themselves with. And they're and the the unfortunate byproduct is going to be the the companies who gets bad advice or the bad businesses that get funded.

And that's not what you know, an efficient capital market should do. So one of the things I'm seeing our portfolio companies do is use burn multiple as a governor for how fast they're going to grow. So for example, they will say that the burn multiple should not exceed two in the next quarter.

So you know, we want to so the old way of doing it would be that the company is going to be the one that gets the most bad advice. And then the company would just have a forecast and say, we're going to grow three x's here, we're going to grow ARR from 10 million to 30 million.

And whatever that costs, it costs, right? That was basically how companies did it. Now, what I'm seeing from some of our portfolio companies is they are saying, yeah, our goal is to grow from 10 to 30. But we will not spend so much money that our burn multiple exceeds two.

So you know, if it turns out that there's a trade off here between growth and burn, burn is going to win, we're not going to exceed that level of that ratio of spending. And that's actually a good I mean, I've seen a few companies implement that already. And it's probably something they should all be doing.

I mean, if these are pilots, they basically created a rule to not stall the plane. Right? You got to keep a certain altitude a certain speed. So what is the opportunity here, then if we're going to have too many companies, too high valuations, if we're going to hang around the rim and try to get some rebounds here and try to find opportunities, what are the opportunities?

What are the layups here for capital? capital allocators and for founders, if we have there are no great advice for them, there's not there, there've never been layups. And the problem is, you know, in up markets, whenever we think that there are, it ends up being what causes our downfall later, because we just take the wrong signal away.

I don't think that there are, I don't want to be investing incremental capital into a late stage startup that's poorly run that doesn't have their margins in line, and then having to work it out. Why do that? Again, I can just go in the S&P 500 and get 8%.

And yeah, it's not 30%. But it's 8%. And I don't have to deal with all this nonsense, like, well, a bunch of people, because you're a crossover investor, right? I mean, you have the ability to choose between public privates or wherever you want to play. I actually think what I am is an investor, right?

You don't have LPS for a VC fund like Saxon I do. But but this but this is my point, like, I think investing irrespective of whatever stage you do, it still fundamentally comes down to the following, which is do you have the judgment to understand whether these decisions are marginally good, marginally average, or marginally destructive for the short, medium and long term of a business.

And I just don't think that enough people steep themselves in the practice that it takes to get good at that kind of a game. And I think what these moments expose is that the status games that come around investing, because it just seems like it's easy, it just seems like you don't do much work.

That's what ruins it. These periods and the implications I think, as Brad said, is really right. It affects the employees, it affects the entrepreneurs, it affects the startup culture, it affects the incremental desire for people to take a shot at things. You can overcome all of it we have and we will again.

But I really think like to the entrepreneur, the messages if you're, you know, taking a term sheet, I think you have to have better judgment to really look at that on that investor and say, Is this person really qualified to help me? Because in these moments, in the app sense of help, you're probably going to basically have a valuation reset at the minimum case and the worst cases you go out of business.

What's insightful about what you said, Shamath, and I'll hand it to you, Brad, is that a lot of the founders picked based on the highest valuation who their next investor should be. And now we see what a trap that is, Brad. You know, the takeaway for me is we return to a place we've always been, which is about selection.

Look at the mean returns for ventures for 20 years. They're lousy. Lousy. Right. 90% of the of the spoils. They barely barely map to the public market. 5 to 10% of the investments. And that's the way it's always been. Look at look at Buffett, right? By superior companies at good prices.

What are the two technology companies Buffett bought in the public markets? Apple. Right. Apple and Snowflake. Snowflake. Apple and Snowflake. He doesn't own a broad basket of long tail internet or long tail software. And so I think what you're going to see, and to Sax's point, I think even running a recipe on software as though all ARR is created equal.

I mean, I can show you five companies each with 100 million of ARR, each growing at 30%. And there's massive dispersion in future outcomes. Yeah. Right. And so like, I just think that this at the end of the day is a craft business. It's an essentialist business. It's about finding and identifying those very, very, very few companies that ever are durably are worth more than $10 billion.

You know, on my screen today, Chamath was just talking. There are four internet companies that are green today. Amazon, Google, Apple and Facebook. Everything else on my screen is bleeding. Must own. Must own versus? Everything else is red and my growth internet stocks are down 400 basis points. Right?

The market is voting with its wallet where it wants to sit on the risk curve. Right? And I think we're just going to go there's no new normal here. This is just back to the future, right? This is what we've always done. And you know, the reset is always painful.

The only surprising thing is how often we have to go through it. If opportunities do arise, where will they where will they be bred? I mean, I was watching Peloton, I always loved that company. I see the change in management, I see the management, you know, thinking about profitability, thinking about creating it into a marketplace, maybe having more hardware available, disconnected from the software, etc.

Do you think there's opportunities there? Or there will be opportunities over the next year to buy some of the names that aren't the fangs? What we do in the first instance, Jason, and listen, we outperformed last year, because we owned quality and we're short, lower quality stuff. Unfortunately, this year, the market said, Guess what, it's all overvalued quality, low quality doesn't matter.

We're taking it all lower. And so for us in moments like this, and I've lived probably through five of a million years, I've lived probably five of a million years, I've lived probably five of a million years, I've lived probably five of a million years, I've lived probably five of a million years, in the public markets, we always do the same thing.

D gross, take risk down. First thing is, like have less chits on the board. Number two, reduce the number of outliers pull in the risk curve. Right? For me, I want to own five or six things. Because remember, I'm the biggest LP in the fund. This is my money, I want to sleep well at night, and I want to protect the foundations, the endowments, the good causes we represent, I can't do that.

I can't do that. I can't do that. I can't do that with a company that has an unproven business model. I may think that it's going to be great in the future, but I don't know. So the problem with for the pelotons of the world, right, they may be incredible returners.

But what every portfolio manager on the planet is doing today is compressing the number of names in their portfolio, saying what are the companies I know with absolute certainty, whether rates are two and a half, three and a half, four and a half, five and a half is going to be worth more over the course of the next two to three years.

That's what I want to own. Right. And so wait, what I was just gonna say, not to interrupt, Brad, but Jason, what you're talking about is what a lot of people do. You see a lot on Twitter, and I call it clapping as a strategy. What about this? And what about that?

And what about if they do this? And what about clapping is not a strategy. clapping is something people do with the blackjack table. It turns out it doesn't actually influence the cards. Sure. And so I think you have to stop with the clapping strategy. That's not my strategy. I was asking that as the moderator.

Is there? Just to be clear, I'm not advising that as a strategy. I'm saying I think you're representing a psychological reaction that a lot of people have. And I think what Brad is trying to tell you is clapping is not a strategy. I'm asking that on behalf of the audience is not my belief, just to be clear.

My commentary to the audience is clapping is not a strategy. Yes, correct. Yes. If enough people though, do what you're saying, Brad, and they just retreat to quality at some point that quality those quality companies with then become fully valued, maybe even overvalued. And thus the cycle begins again or not.

So how long does that take? No, you nailed it. What happened last year 2021 dispersion collapsed. Go check out jam and ball who does incredible software analysis on our team. dispersion collapse between the best cohort and the worst cohort of software companies last year. The first thing that happened is dispersion returns, we pay a higher price for the best shit, we pay a lower price for the local.

Quality stuff, right? Then when we start to recover, when there's more predictability in the world, when we resolve the war, when we understand the path of inflation, right, the stuff close in on the risk curve, that'll start being fully valued. So then we will be brave enough to walk a little further out on the ice on the lake, testing it, is it safe to walk here, and then you walk out a little further and sadly, right, eventually, we're in the exact same patterns we've been before, which is, we'll know we're at a market top five or six or seven years from now, when we repeat the same asinine behavior that we just went through when everybody becomes complacent again, and overbidding this stuff way out on the risk curve.

I'm just suggesting to you the number one question I get from GPS venture capitalists and others right now is when are we going to bounce back? Let me be absolutely clear. There is no bouncing back to where we were the last 18 months. That was the outlier. That was the make believe.

What I hope and expect is that we're going to bounce back. expect is that we can back bounce back to the five year average. But even to durably trade at the five year average, we have to have a lot more clarity on the war in Ukraine on inflation and rates.

So that's a perfect place to pivot sacks. We are now here and I think this is the fourth or fifth episode where we've been discussing the war and we flipped it today just to do markets first for a little change of pace. And since we had Brad here, where are we at with the war?

And what are your what is your expectation of it right now? Is it wrapping up or it escalating? Well, actually, there's a tweet storm this morning that Matthew sent to the group that from a Russian official and it seemed to indicate well indicate what we've kind of known for a few weeks now, which is what the broad contours of what a peace deal would look like, which is there's three main pieces.

neutrality for Ukraine, the Russians insist that it not be part of NATO. They get to keep Crimea which they annexed in 2014. That's been a fait accompli. And then some version of independence for these sort of breakaway territories in eastern Ukraine, the in the Donbas region, everyone kind of knows that's the the broad strokes of the deal, then there's, you know, a lot of details are going to matter a lot to the people who live there, like is there this land bridge from Crimea to Donbas, but frankly, don't matter as much to all of us the United States of America.

So the question is, you know, what is the administration going to do about it? Biden just went to Europe. He's going to go to the United States. He's going to go to the United States. And, you know, my concern is that no one in Washington, I talked about this last week seems to be pushing for a ceasefire.

It seems like their preferred position is for Russia to bleed out as long as possible in Ukraine for the US to fund an insurgency Allah Afghanistan, where you know, these fighters in eastern Ukraine are sort of like the muzhar. Insurgency? Is that the right word? Well, sure. Because, you know, if they're defending Ukraine, they're defending Ukraine.

They're defending their own land. And so we're the mujahideen. I mean, I know, but why would you call it an insurgency? Well, because if the government of Ukraine falls, then it becomes an insurgency. So the point is that the administration, the question is, what's the administration's endgame here? Do they want to lead the world to a ceasefire?

Or do they want to protract the conflict to impose on the Russian state, a Afghan style, you know, debilitating defeat to destabilize the Russian regime? Neil Ferguson had a column this week in his Bloomberg column. He's from the Brookings Institute at Stanford? No, he's from he's from Hoover. Hoover, rather.

Sorry. Yeah. So I'll read I'll read this part. Hoover is at it. Can you just explain to people what the Hoover Institute is and how that leans? Hoover Institution for War and Peace, I would say it sort of leans idealistic and foreign policy. I would describe Neil as sort of the most realistic idealist.

Got it. Okay. So context, but he's quite well sourced, I think. And I think that's a good point. With, you know, and with, you know, various people in Washington and Europe, and what he wrote is, the US intends to keep this war going, the administration will continue to supply the Ukrainians with anti aircraft stingers, anti tank javelins, explosive switchblade drones, it will keep trying to persuade other NATO governments supply heavier defensive weaponry, and so on.

He says Washington will revert to the Afghanistan after 1979 playbook of supplying an insurgency, only if the Ukrainian government loses the conventional war. So the concern here is that the US government has an incentive, actually, that they don't want a quick end to this war is basically the theory is they want the Russian state to bleed out and be destabilized.

In a way, it's the one chance we have for like regime change there without us actually starting a war is that they have this self inflicted wound. That is the theory. Yeah. And I think a lot of people are saying that that is what a lot of people want in Washington.

I don't you know, this is not like conspiracy theory, people are saying this is our chance to topple the Russian state destabilize it. There was a Rand Corporation. How do you survey years ago, hold on, there's a rent corporation study done a few years ago, that was commissioned by somebody probably in our State Department, or someone like that, where they talked about this, that if we want to destabilize the Russian regime, Ukraine is the way to do it.

Right, they would fall for it, right, they would actually fight that fight, that is an unwinnable fight, we would basically be putting an F, we'd be surprised if we were supporting an Afghanistan like path for them to go down like we did. And they did previously to that. Right.

And the problem, the problem that I see is just this, which is we've discussed on on this program, the downsides of this war. First, it's a humanitarian disaster. Second, we've talked about the risks of recession later in the year. Third, Freeberg talked about famine, the risk of famine later this year, if the spring planning doesn't happen.

And then fourth, we have this always we have this risk that the war spins out of control, right, and leads into war three, those are some vital American interests to avoid all of those scenarios. I don't see an equivalent vital American interest in determining the exact nuances of who rules the Donbass.

In other words, the broad strokes of this agreement are there. You know, what the US should be doing is leading, they should be pushing for lead not bleed lead the way to a ceasefire, not to inflict maximum damage on the Russian regime, which we don't know exactly what their intent is, because they're doing this behind closed doors.

Brad, what's your take on this? I think there Dave and I talked about this at dinner the other night, I think there's something bigger playing out here. I mean, clearly, he's the expert on real politic and, you know, but it seems to me that we have had decades of military diplomacy.

Right. And and most recently, the PAL doctrine of overwhelming force, we don't want to make the same mistake we made in Vietnam. So like, we're gonna go in with full force. And, you know, basically, the public support, you know, military adventure ism anymore. Right. And so now we have maybe we'll call it the Blinken doctrine, which is the PAL doctrine equivalent, but for economic force.

It's the nuclear economic weapon that is on full display by the West right now that I think has really significant implications. Right. It's reunited the West. And I don't think this is just about Putin. And I think the reason that the US and Western Europe is slow playing this a bit is they're sending a message to the Chinese as well, which is that we are unified, and we will use an economic weapon of mass destruction.

If, right, you don't play by global norms. And so the box I think we're in from a negotiating perspective, right, in Ukraine right now is not a box around neutrality. I mean, neutrality is already clear. I mean, we had Zelensky didn't even ask for a no fly zone. He's not even asking for NATO membership.

They've already seeded neutrality. I think the real question is sanctions. I don't think the West wants to roll back sanctions. And I think Putin saying I can't hightail it out of here, unless you roll back all the sanctions and give me a little bit of the Donbass. And so watch the next week or two like in any good negotiation.

Unfortunately, I think both sides are going to amp up their current strategies, we may see missiles coming out of Russia, and we may see European, complete European embargo of Russian oil 3 million barrels a day. Those will be the final straws right before we enter negotiations, because then they can see the last things that they took as part of the negotiation.

But this I think is going to be all about economic sanctions. And, and I think the West is playing a really strong game. What I worry about, and Sachs has talked about this at length, is that we overreach, we overplay our hand here in an effort to send a signal to other parties around the world.

Right. And that has fat tail risk associated with it. You're referencing China and Taiwan? Let me ask a question. How many of us woke up or this at the beginning of this year, or in making our New Year's resolutions and said that we need to risk recession, famine and war in order to destabilize and topple the Russian regime?

When did this become a vital American interest? No one at the beginning of year thought this was an important goal of America. What's more important is is basically getting our economy back on track and back on track after this long, this long, this this plague we've had. I mean, nobody needed this problem.

And what the administration should have done was use diplomacy and all the resources to try and prevent the conflict. And now the conflict has occurred, we should be pushing for a negotiated peace and ceasefire. We do not have a vital national interest in the details of who rules rules the Donbass.

Yeah, the problem with your setting up of that question is that we did not start the war Putin did. Shamath, you've been silent so far. What are your thoughts on this war that Jason, I'm not saying we started the war? Well, you're saying did we wake up and say that we should do this?

We did not listen. The people in the media woke up on February 24. And you think Putin went mad and there's no pre history to this conflict. Now here's the deal. Hold on a second. This is a war of Russian aggression. It's true that Putin started it. He's the invader.

However, there were things we could have done to prevent or to avoid this war, and American diplomacy completely failed. And we even discussed it the month before this war started. We talked about how the US could have given a written guarantee to Russia that Ukraine would not be part of NATO.

Just this week, Zelenskyy in an interview with Fried Zakaria admitted he was told by Blinken, you will not be part of NATO, but we don't want to admit that publicly. What games were they playing? What is the point of playing that kind of game with the grave issue of war and peace?

Why didn't Blinken say publicly what he said to Zelenskyy? This administration did not do everything it could do to prevent war. And now we are faced with all of these existential risks. Why? For what reason? The reason is that it gave the United States an opportunity to topple Russia.

I mean, exactly. Who of us thought we needed that at the beginning of this year? Well, I think that, you know, the thing to keep in mind, and again, I don't I don't, I'm not saying that this is right, but I'm just game theorizing that these are like, you know, grudges that these guys have held for a very long time.

And I think it started when they were in the Obama White House, and it carried over to now. And I think they saw an opportunity to basically execute a strategy that essentially now I think we're moving into the second phase of this war, which is effectively trying to bait Russia into doing something really egregiously bad.

And I think that's the point. And I think that's the point. And I think that's the point. And I think that's the point. And I think that's the point. And that is terrible, David, to your point, I think we're willing to, you know, sacrifice a lot. I think we've decided that implicitly by based on the actions of the American government.

And and it's weird. It's like we're trying to get Russia to react. And so the rhetoric, in fact, the rhetoric since that, do you guys remember, I think it was only 10 days ago that both Russia and Ukraine said the surface area of a deal is pretty much in sight.

David Elikwu: Oh, Friedberg from the top rope coming in. Look at you, Friedberg. I mean, like you, you look like an everyman. I mean, I'm so proud of you. Are you actually driving your own car? Friedberg: Gas guzzling car SUV in the mountains. David Elikwu: You should be you should be Friedberg: In that tank.

Is that gas? David Elikwu: I only use it. I only use ethanol I make in vats in my backyard. Friedberg: When I use solar panels that are handcrafted in my backyard. David Elikwu: I went out of my way to find find a Luke oil gas station filled up. Friedberg: What I was saying, guys, was that, you know, from the 10 days from when, you know, both sides, Russia and Ukraine were like, hey, you know, we think we're basically there, we have a deal.

The rhetoric has gotten really insane. You know, yesterday, I think it was like, the United States said, you know, we, we think that Russia should be kicked out of the G20. Then Russia responded and said, I'm only going to sell that gas and settle it in rubles. You know, all of a sudden, other actors, China and Saudi Arabia are in the game.

Now, you know, China and Saudi Arabia are negotiating settling a huge oil trade in Yuan. Why in the last 10 days of all these things happened when we were so close to getting something done? I think the best explanation is that we are willing to, I guess we've decided I mean, we, none of us have decided but American government decided that some amount of sacrifice is okay.

If it could trigger a Russian escalation, which could then further destabilize that country, and I think they believe that that's more important than anything else. Friedberg: And I think we, you know, we're in a situation where we're in a situation where we're in a situation know, from where I sit, I think we can take Putin as word that he actually cares about reunification.

And that's not to say he's crazy, David. And I don't think we can control his behavior. I think your reason we're reunification. Jason and also just today, the Russian military, the tweet that I sent you guys was from the Russian military. And that was an official statement. And I don't think he they would be allowed without Putin's explicit sign off.

They no longer talked about denazificating, Ukraine or demilitarizing Ukraine, they simply focused it on the Donbas. And to use your Sun Tzu argument, it's almost like they're trying to construct their own golden bridge to exit in a way where they can claim victory to the Russian people to explain the 10s of 1000s of, you know, Russian military people that have been killed in this whole conflict, right, because they have an explanation that they have to give.

But in all of this, I think that we're, we're probably exposing a very high risk game of poker that we're playing, which is it seems that the US government is still focused more on the destabilization of, of Russia than they are and getting this conflict behind us. I mean, he did, he did say in his speech, since time immemorial, the people living in the southwest of what has historically been Russian land have called themselves Russians and Orthodox Christians.

That's Donbas. Yeah, I know. But he there's been a Jason, there's been a civil war going on since 2014. In this Donbas region between Ukrainians and these sort of these Russian speakers. And now that civil wars as this a Balkan style civil war that is now escalated with, you know, Ukraine and Russia getting in and now the whole West potentially could get in.

This is a very dangerous situation. We should not let spin out of control. I'm agreeing with that. You guys asked me, did he ever talk about reunification? He did. He did in his speech. That was not one of his stated war objectives. Now you could keep accusing him of being a liar.

But look what his objective is just taking about his word that he believes these areas are Russian and they should be considered Donbass area where they are predominantly Russian speakers. Look, and that I'm not taking aside, I'm not taking aside in who should rule the Donbass. Okay, yeah, I think it's a complicated, ethnic strife sort of issue like we saw in the Balkans all the time between the Russians who live there and the Ukrainians who live there.

What I do know is it's not worth risking war three over an agreement on that issue. 100% agreement. 100% agreement. Sacks, let me Can I ask you a question? So how is Putin going to withdraw without 100% lifting of the sanctions? And how is the government possibly going to trust him to withdraw?

Right? Well, while taking all the sanctions off, that seems to me like, when I try to construct the Golden Bridge, in my mind, it comes down to, you know, like, how do we how do we whack up the sanctions? Do we take some of them off, say, prove to us be out for x period of time, and then we'll roll the other ones off.

Because these sanctions are not going to be rolled back in the next three months based on some ceasefire. I agree with that. I don't know that Putin can expect the sanctions to be lifted or that he can effectively negotiate for that. I think, again, where I think the the peace deal is, is that we've known all along what it's going to be Ukraine will agree to neutrality in exchange for some security guarantees from the West.

Russia will get to keep Crimea because that's been a fait accompli since the annexation 2014. And there will be some sort of regional autonomy. For these sort of Russian speaking areas in the Donbass, which by the way, we could have had that too, there was a deal called mints to since 2015, that simply hasn't been implemented.

So, you know, I think that those are the broad strokes of the deal. And then there's questions about, well, is there a land bridge from Crimea to the Donbass? And, you know, what weapons exactly does Ukraine get to get from the United States or get to keep? I mean, so look, those details matter a lot to the people who live there.

But the broad strokes of this, I think are pretty well understood. I'm not betting this way with with our book. But if I had to guess, we are going to have a period of significant escalation on both sides, before they both get to the table. Macron said this week, that we still have the Europeans have not made a decision about the embargo of Russian oil that will collapse the Russian economy and oil will go to 180 or $200 a barrel.

I think that's a real likelihood. And the second one is I think the Russians will amp up military aggression in some face saving measure and to have more to negotiate with. So maybe to answer my own question is if there is an oil embargo, then you take the oil embargo off, right as part of the economic sanction, whacking up of the sanctions, because that's really the nuclear option against the Russians economically.

But it's a you know, unfortunately, I think we have to be prepared for this to get worse before it gets better. Because it makes sense from just a game theory for both sides to grab as much as they can right before they sit down at the table. So they have more shit to give to each other.

Right. But the problem is, if both sides keep asking, I agree with that fundamental analysis is that neither Putin nor Zelensky can be trusted on their own, to basically make peace because they want to push their advantage. If either one believes that they're winning on the battlefield, they're going to push their advantage to grab as much as they can to then negotiate from a position of greater strength.

The problem is that they're in an escalatory spiral, where if you know, one or both of them miscalculate, we never get that deal. And I think the longer the war drags on, the harder it is to make a deal not easier. One of the I'd say one of the disturbing things that came out over the past week was in that interview that I mentioned, where three Zakaria interviewed Zelensky.

Zelensky said, he said that it's either going to get a peace deal or World War Three. I'm listening to this thinking, wait a second. You know, that, that is a pretty scary posture for him to be taking. And furthermore, who appointed him leader of the free world, you know, the decision to have war three is not his decision.

He is not the President United States, we did not vote for him. We may think he's heroic, we may think he deserves our support, but he does not get to turn this into war three for us. The American people did not. choose that. And this is where I go back to Biden and the administration and their leadership, what are they pushing for?

Are they pushing for a protracted, never ending Afghan style war in Ukraine? Or are they going to lead the situation to some sort of negotiation or ceasefire? And I just think if we're considering the interest of the United States, we would not let this decision purely be Zelensky. This guy's willing to entertain war three.

That can't be acceptable to us. But what what what what is his worst alternative? I mean, like he's losing his country. So of course, he wants to say the thing that would scare us into action potentially, right? So he has nothing to lose. So right. That's what that's the right to defend him to cite for us.

He's not just using he's he's using rhetoric to get us to talk about it, which he just won. Like he you can see that what he's saying is working. Yeah, because you're talking about it. So I think the I think the bigger question in all of this is, when is the United States?

When is the United States going to be able to do that? Because they're going to be able to do that? I don't know. I don't know. I think the answer is, I think the answer is that the United States is just willing to draw a really hard line. So there was a another thing that happened, which is that, you know, Biden essentially said, like, you know, if they use chemical weapons, we will react sort of in kind, right?

There was some, some version of that. It's a red line, basically, he said, yes. And, and then he also said, you know, depending on, you know, how they use nuclear weapons, we could theoretically respond. So if you had a deal in sight, just get it done. Be pregnant. Right.

But you're assuming, David, you're, you're assuming that we have the influence, you assume, David, that we have the influence to actually cut a deal. You were saying yourself for the last couple of months, that the US power has waned and that we don't have influence. So which is it?

I think you're just blaming Biden. I believe we have the influence to get facilitate a deal. You were saying, like, last couple of weeks that we lost our influence. Listen, let me give you an example. We are giving Zelensky and the Ukrainians all these incredible weapons. What are the conditions on that?

If Zelensky is unwilling to make a reasonable peace deal, do we, do we have any conditions and are giving him these weapons? Why wouldn't we insist Zelensky, listen, we support you. We basically are against this Russian aggression. You should have the right to defend your homeland and drive them out.

But we also want you to take a reasonable peace deal if one is available and we need you to specify what that is. Are we exercising that kind of discretion? I don't think so. I think you're assuming that Biden is blocking this when in fact, it might be that Putin is and I believe you're taking Putin's sort of position here over our own presidents.

I think you need to think for a second that we don't want to have this continual escalate. You actually think there's a world in which Biden wants to see this escalate? I don't think that that's the case. I think that we don't have influence. David, we do not have the influence today that we did.

It is no longer the United States, you know, gets to dictate to the world what's going on here. We no longer have that. Okay, this is not about this. Putin wants to talk to Israel. Putin wants to talk to Macron in France, not us. Because we're not seen as an honest broker.

But look, Chamath just- We don't have the influence we once had. Okay, let me explain. I'm not saying we can dictate the outcome, okay? But we can push for a negotiated settlement instead of a protracted, we can lead not bleed, okay? Chamath laid it out. Neil Ferguson laid it out.

The Rand Corporation laid it out. There is a significant chance that there are definitely actors in the State Department who, who want to see an Afghan style situation insurgency play out in Eastern Europe. That's their goal. Okay? Now, I don't know what Biden is thinking, but he has made no statement.

To the contrary, what have we done to help lead the situation to a negotiated settlement? Name one thing. Well, I don't think we're in the room, David. But Biden is in Europe, right? Why do I need to be in the room? I read all their public statements. I don't see anything.

I don't think they want to negotiate through the press with Putin. I think- I don't think they want to negotiate at all. Biden is in Europe right now. I think that says enough about what his intent is. He's in Poland, right? He's going to Poland? He's in Poland where we're scaling up our military presence.

Listen, I mean, I don't, all I'm saying is, look, I don't know exactly what Biden is saying or doing behind closed doors. What I'm saying is that the US should be playing a constructive role to get to a negotiated ceasefire, not indulging this sort of fantastical thinking that we can basically perpetrate a regime change operation in Russia.

I agree with you on that. I agree with you on that. I, I'm worried that there may be a small strain of that probability in the range of outcomes here. And I didn't think that before. I really thought that, okay, maybe we were a little bit on the outside looking in, but it looks like, you know, we're pretty close to a deal.

These guys will get in a room, they'll, you know, chop it up and it'll be done. And instead, honestly, if you just look at the headlines and the rhetoric and the words from all these three leaders in the last 10 days, it's been, it's been in the other direction.

And so you have to wonder, what is the point of all of this right now, other than it could be crescendoing like Brad said, it's a, you know, I, I, I listened to Blinken over the weekend and he talked about what I think he defined. What is this new doctrine of economic statecraft?

He said, our objective is we have the power to impose overwhelming costs on our target. Okay. Economic costs. And he said our cause Putin's actions are remembered as a strategic failure, not regime change. That's what's within our control. That is very different. Bush wanted regime change in Iraq, and we executed it through the PAL doctrine of overwhelming military force.

I think that this is a doctrine of overwhelming economic force that is meant to not only signal to the Russians, but every other rogue dictator in the world. If you go rolling into your neighbor uninvited, you can count on the fact that there's going to be massive economic sanctions because our our military deterrence is no longer a deterrent.

Everybody knows we're not going to go defend Taiwan. Everybody knows we're not going to send our military into Ukraine. So we have to demonstrate that we actually have economic resolve, not these poo poo sanctions we've been having around the world for the last 20 years. And if that is the lasting impact on this, I think you're right.

You know that we turn this into an economic nuclear weapon. Yeah. It's better than sending our kids, you know, running around the world to get killed. I think you're absolutely right. And I think Tony is very smart to say what he said. The one thing that I would want, though, on top of that, tell me if you agree, is just to ratchet down our rhetoric, which we can control.

And maybe to, I mean, why not say that, listen, we're willing to put these sanctions on the table. We're willing to basically reinstitute economic ties with Russia if we can get to a satisfactory outcome. Well, you don't want to reward them. I mean, David, the only thing I would say is we're making a big assumption to say that there's not back channel diplomacy going on from the Israelis, the Turks, the French, you know, having those conversations on our behalf.

Right. Like, I don't I honestly, I don't know that that's a high probability that we're not sending those signals. But to your point, I just don't know. I don't know. I hope that it is. I don't know either. But I don't know either. But here's what I would say is, look, I can only judge from the public statements.

And I think there is signal in these public statements. And the statements are all one way. There is no olive branch. It's all it's all basically about escalation. Just like in January before the war, what were the State Department's statements about the situation? They said that NATO's door is open and will remain open, even though they told Zelensky in private that he would not be joining NATO.

Okay, that was an astounding revelation that came out this week on the Freed Zakaria show. Number two, Blinken was saying that there was no change in the American position and there would be no change. They said these are all public statements that the US would never recognize the Russian annexation of Crimea never.

You know, he said that we went into these peace talks represent our core values. There's no change on that. So in other words, it's been the position of the United States to be hardline with Russia to basically engage in no compromise whatsoever. And it's basically to double down. It's a double down.

You assume you assume David, you don't know, those are the public statements. I know, but you're assuming that there's no back channels going on. And just to just to wrap this up, I wanted to make one quick point, Chamath, which was, you know, what if we offer to take the sanctions off, and then we are training Putin that these kind of misadventures get him something, Don Bass, etc.

And that the sanctions roll off. So isn't there a possibility Chamath that if we don't keep the sanctions up, we're actually rewarding his behavior? I'm a huge guys. Look, I've been the first person in the front of the line on sanctions. I thought it was the most brilliant approach to this whole thing.

And I still believe that sanctions work. And I think that this will cripple that country. What I'm saying, though, is that there are these moments where instead of then sticking to the rhetoric that Tony talked about, what he said, I don't know, Brad, where Tony said this, this weekend, but like, sticking to that, there are these added flourishes that I think are unnecessary.

So what I mean by that is the talk about, you know, us reacting, or retaliating for the use of chemical weapons. Biden made a campaign vow, I don't know if you guys remember this about nuclear weapons, where, you know, he was very clear that, you know, it is a mechanism to demonstrate that this deterrence exists.

And instead, he actually caved. And instead, he put out this carefully worded statement, which kind of walked back the campaign vow earlier this week, and I'll just read it to you. I'll just read what the Wall Street Journal said. It said by President Biden stepping back from a campaign vow has embraced the long standing US approach of using the threat of a potential nuclear response to deter conventional and other nuclear dangers in addition to nuclear ones.

During the 2020 campaign, Biden promised to work towards a policy in which the sole purpose of US nuclear, the nuclear arsenal would be deter or respond to an enemy nuclear attack instead. Now it holds that the fundamental role of the nuclear arsenal will be to deter, but that it leaves the opening to respond and use it in extreme circumstances.

So these are big changes. And if our whole goal is to just focus the service area to an economic set of sanctions. These are somewhat unnecessary. Would we all agree we don't need to talk about changing our nuclear policy? Yeah, Biden was right on the campaign trail, the United States of America should never use nukes, except if nukes are used on us.

Come on, we know that. Yeah. And we're talking about changing that now. That's insane. No, we changed it. We changed it. Look, it shows that there there's an influence in our government, our State Department of certain hardline elements who want to have this very tough policy that includes destabilizing the Russian regime and maybe toppling Putin.

I'm just saying that objective is not worth all the existential risks that we're now facing. All right, do we want to touch on the CCP tax cuts? We want to wrap we're at 80 minutes. I mean, the the CCP tax cuts harkens me back, Brad, you can react to this because you lived it with me.

2018 19. I'll say it again, we were in this unique moment where, you know, we were not sure whether there was runaway rampant inflation, and in q4 of 2018, the Fed basically said, Okay, you got us, you know, the boogeyman exists, we're gonna go tame inflation, and they ran forward and raised rates.

And lo and behold, the Chinese economy turned over in q1 of 2019. We had like a, you know, a kind of a blippy little recession. And we had to overcome it because China became stimulative. Now, here we are, again, we're worried about this inflationary boogeyman. And the Chinese government, basically extended these tax cuts, increase the tax cuts, and essentially said, we're going to be very stimulative in the economy, especially through the back half of the year.

Now, China, again, is a massively export driven economy, right? So the reality is that as goes China, so goes the rest of our economies. And so I think that it's a setup where how can the United States be under so much inflationary pressure, where China is effectively telling you that we are in a contraction and a recessionary period.

And so if that's where China is, there's a risk that we may already be there or entering that. And so I think it's a little, you know, can you hit two really important points, Juma number one, which we didn't get to earlier. I tweeted a few weeks ago, the feds probably behind the curve on recession, not inflation.

Right? We have massive demand destruction going on right now in the US economy, massive producer define what that means, Brad, I mean, if you just think about what a $6 gas mean, what does no stimmy checks mean? What is the fact that you actually have to go and get a job again mean, you know, we're, we're rolling back trillions of dollars off the Fed balance sheet, I'll tell you what it means is that people can't spend as much money.

Just the increase in the 30 year mortgage means you're buying power in December four months ago, to buy a house and you if you could afford 1200 bucks a month, that buying power budget $350,000 house today, it buys you a $290,000 house. $35,000 house, people's ability, right to have money to spend money is getting crushed.

So I think we are going to face an economic slowdown. If you look at the PMI. So this was the inflation read in January, little people didn't really notice it. PMI in January came in at point two versus the consensus estimate estimate of point six. That means the producer level of inflation was meaningfully less than the inflation rate.

So that's a big difference. And then the second point is that the market is going to be less than we expected. If you look at consumer confidence, it's plummeted one of the four biggest drawdowns over the last 20 years, retail sales in UK this morning crashing consumer confidence in the UK crashing.

The Chinese government sees this we're we're not surprised to look at the what's going on in the world with energy prices. We've never had oil over 120 bucks and not gone into a recession. We're facing a global slowdown. That will have big implications for inflation, big implications for rates.

But China sees this coming and says we're going to get ahead of this. We've got a People's Congress in November, we promised him five and a half percent GDP growth, 3 trillion of that is export driven. That means if Europe in the United States catches a cold, they catch the flu.

Okay, so they have to do everything in their power. This is why they're not going to supply the Russians with weapons, right? Because it's economically assassinating themselves. Right? So we have this interconnected world, this idea that we're de globalizing, what we do doesn't impact anybody else like that ship is sailed a long time ago.

And the Chinese see this. That's why I think there's also a probability by the Middle East this summer, the Fed in the United States is saying we now see a balanced risk between growth and inflation. Sachs, let's get you in on this. Just as we wrap here. The Chinese Communist Party premier talked about tax costs.

And this is a quote fertilizer applied directly to the roots of the economy tax rebates look like reductions, but actually are in addition, today give back tomorrow you get more in returns. Does this mean the United States, people will go back and get jobs because they need to have more money and that maybe we should be looking at, you know, tax cuts at some point.

Listen, Jake, I think we got big problems here at home in the United States, Brad and Chamath, they've laid out these gigantic economic risks that are facing the country. You know, I tweeted at the beginning of the year, January 24, the President's main job is to ensure peace and prosperity.

And Biden's popularity was already plummeting. I think this is when his poll numbers were at 38%. But if he gets us into war and recession, he ain't seen nothing yet. This war, the longer it drags on, the longer it basically can spin out of control and become something worse that sucks us in, the longer it creates the risk of basically causing a recession in the United States.

We need the American we need the Biden administration to help try and lead to a better outcome here instead of ratcheting up the rhetoric. All right, folks, there you have it. That's your all in podcast for this week. Thanks so much to Brad Gerstner for joining us and filling in for the Sultan of Science.

BG. Thanks, bro. And a lot of great announcements here. Brad will also be joining us for the all in summit. We're about to wrap up tickets. We've announced a bunch of great speakers for the event May 15, 16 and 17 in Miami. You can just do a search for the all in summit.

We have given out. We've sent 200 emails to people who asked for scholarships and 100 of them have taken the tickets. 500 of the 650 tickets or so are accounted for. We'll be wrapping up registration in the next week or two. And we look forward to seeing you all at the New World Symphony in South Beach.

You got any announcements of people who else is appearing? Oh, my Lord, we have great announcements. Keith, her boy is coming. Joe Lonsdale is coming. Nate Silver is coming. Nate Silver. I love Nate Silver. We decided Chamath we would have people do 15 to 20 minute TED style talks like position papers.

And so who else do we have doing that? Tim Urban of Wait But Why who is a brilliant TED speaker and writer. Nate Silver is going to do that. And then Antonio is coming. He was just on and he was just on Rogan show. And so we're going to have these like 20 minute TED talks.

And then we're going to have a lot of great announcements. And then we're kind of hits, then the besties will sit with them, we'll do those back to back. Kimball musk is going to come and talk about his dow that he's doing for nonprofits, Brad, we're going to talk about what topics so we're collecting all this talent and then we'll figure out what positions are going to play in the show, and what the themes will be but the themes will match what we've been talking about here, and we don't want to pre set the themes six or seven weeks seven weeks out from the event because we don't know what the world will look like then.

And then Freeberg said he wanted to do a position paper and actually give a 20 minute talk. So besties will have that ability. And besties will start the event and end the event. Tons of different speakers rotating in and out talking about the most important topics of our time, but I would like to have Peter there.

Can you get Peter Thiel to come? He was maybe the most iconoclastic please. I'm just not I'm just not I have to get over my uncertainty that this whole conference thing is really a grift. It's great. We're putting all the money is going back into the event. And we gave 200 scholarships, there will be no profit from the other needs to be a really nice swag bag.

And I think it was already at $600 a person I just spent three or 400. What is the material of the hoodie? All right. If it's got a cashmere hoodie, if to be on brand, off brand for people need to be able to buy up to the to the special hoodie, Brad, I just spent $600,000 per gift bag for 600 gift bags.

Okay, it's like 400 grand in gift bags. And Chamath wants to put a $6,000 sweater in there. I just wanted to know what the material was of the hoodie in the bag. That's all I'm just asking a question. This is my life, Brad. I am busting my ass to put this event on and then Chamath complaining about the gift bag.

Sax is complaining on me making a dollar from it. And freebergs having a panic attack that we don't have enough great speakers and I'm doing all the work. It's my whole fucking life. I appreciate you Jay Kell. I'm going to say some nice stuff to me. You did say some nice stuff.

I want to get on board with you getting a fee for your hard work. You know, I don't need to give you like an hourly wage, you know, $15. I know I'm not your wage slave David Sachs. I'm working hard here. I'm working hard. But I just want to be appreciated.

I don't think you should have like a cotton blend is my I think it's by the way, Brad, do you have any thoughts on the sushi? Is there? Should we be using brown rice and not the two line caught tuna? No, just make sure there's gold gold leaf on the sushi.

No, literally, we're spending, I think for 300 or 14,000 per party. It's over a million dollars in parties. And I'm talking to talent. Bookers about serious talent coming to perform. Drake, can you get drink? How about that's $3 million. Dua Lipa $2 million. I'm deep in $2 million. That's what I got.

How much is don't you catch? She's great. I think those are all seven figures. I would like to anyway, what I'm trying to find while use of running while the use of that mean that would make it an incredible part. Oh, God. I mean, I really would like to get by saying how much is Drake again?

$2 million. I heard two to three million for training bags and get Drake. Yeah. Yeah. Cancel the bag. Give it all the drink. So you guys are saying and all the work I do, I should take $2 million and hand it to fucking Drake. Yes, yes. Drake is more valuable than you drink.

Five years of working on events and media Brad. And these these are my friends were like, take the two million put in your pocket and finally make a profit on your work. And just hand 2 million in a bag. I need the bag. I get a plane. I'm trying to get a jet card.

Do we get to work with Drake on which songs he's he would sing? I think he does like a medley of like three. What I would like to do is have three songs for two. Come on. I think it's basically like 100,000 a minute. I think that's what you're in for 100,000 per minute.

20 minutes. seems egregious. No, I mean, these guys get paid bank when I hired Snoop. He did like 20 songs for me. It was unbelievable. And what was that two or three hours show? 100? 250? That's because he forgot he was there. Yeah, he had a great time. Oh my god, man.

He was blowing this joint that was so powerful that I was 10 feet away and I got stoned. I mean, it was like, he walked in. It was like, I remember cloud. It was like 20 Super Bowl shows. Good stuff. All right, everybody. Love you besties. Love you, Brad.

Peace. Let your winners ride. Rain Man David Sachs. I'm going home. And it said we open source it to the fans and they've just gone crazy with it. Love you, West. I'm going home. Let your winners ride. Let your winners ride. Let your winners ride. Besties are gone. That's my dog taking a drive away.

Wait, no, no. Oh, man. The Badger will meet me at . 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, but they just have to be like, we just need to release that out.

What? You're the B. What? You're a B. You're a B. B? What? We need to get merch. Besties are back. I'm going all in. I'm going all in. you