Check out you have a really long nose hair. Thank you on your on your left. That's what I'm here this side Yeah, okay. Hold on. You see it Nick you see it see that you can see it. Take care of it every show We have this issue every show.

He's got all this like I'm getting old man hairs. I feel like sex You gotta get a grooming tool. I am tired of treasure hunting. I'm a lawyer for what he is a lawnmower It's Kate makes one. I'm gonna get it. Yeah, just look in the mirror, bro Can you come over on the way to Parker Freeburg and help me man skip?

Yeah, you're not coming to poker. Don't come to poker You just if I manscape can I come to poker? Okay, so Jake out you're gonna be a participant today The world's greatest moderator is taking a week off to allow his voice to recoup to recover to yes So he can come back blaring with his usual mid-sentence interruptions and Excellent moderating tactics next week.

We with his foghorn leghorn moderation. We are gonna we are gonna miss you at the moderation Welcome to the top 20 sacks. You're welcome. Welcome to the top 20 podcasts in the world. Okay, hold on Who should be thinking whom I mean you've been doing this for 10 years I walk in here off the street all of a sudden.

We're top 20. Yeah, let me explain something No, I created with my guys and gadget. Okay top 5 magazine in the world Then I do a podcast with you three idiots and all of a sudden I drop down to top 20 in this medium So drop what are you talking about?

Yeah, exactly. I drop this has been a be tested No, I mean this week it started busy You but look at twist ratings compared to ours this week and startups is a bout startups It is a niche audience by design and it's the number one startup podcast in the world That's what you wanted this show to be right in this show is about all topics All time you every time we try to talk politics.

You're like it's too much politics axe. I think you're talking about free bird I think you're talking about free bird. Let's focus on narrow Legalistic issues true you we had this discussion sacks and I said we should always do the top story of the week Even if it's politics and now you're taking credit for my insight about McLaughlin group.

I saw you on some pod Who was it? I absolutely designed this pot around McLaughlin the fact Group, I'm glad McLaughlin group. Okay, it's possible for two people to have the same idea sacks. We both grew up on McLaughlin group That's why we're both can tankers assholes moderator intervention cut it out No one is individually responsible for this podcast.

It was Tim Ferriss. Yeah, Tim Ferriss. Here's what happened So I was on YouTube and you know, I'm not gonna watch some two-hour like podcast with J Cal, of course, but J Cal and the video is called the origin of the all-in podcast. I can't stand what he does.

Oh god. Here we go I can't stand what he does that. Yeah, so I'm like, okay I gotta watch this in the partnership agreement. He said here's the the party line and J Cal will not stick with yeah We're going to recreate this. I gotta see this alternative reality that J Cal is trying to create about the origin of the all-in podcast I wrote I wrote in our legal agreement.

Yes, and I changed it. No the origin story that you signed up to Are you saying you change the origin story? Remains the same. No, it does you call me after CMBC The origin story that he told Tim Ferriss, which is like a 10-minute story of how he created the whole thing The concept was his it's based on McLaughlin group Which I'm the moderation concept is now obviously by default how I moderate the program is by my design Yes, you didn't come up with this concept your chagrin.

Of course. I did. No, of course. I did not design my moderation Who's a mother was the first one who said we should record us having conversations at the poker table? No, that idea came from him, right? That's why it's called the all-in pod No I came up with the name all in number one Number two was his idea to tape a pod because he came out of CBC.

Anyway, who cares the pods here. It's successful Why do you keep going on podcast telling everyone that you're the mastermind of the all-in pod? People are saying you Jake out the game other podcasters I'll explain to you other podcasters are in all of my ability to moderate you three malcontents You did not have the idea for the foursome based on McLaughlin group that happened that happened Spontaneously as a result of the fact that no freeberg was I think the first guest I was the second guest then we did The four of us together.

Okay, that was That worked out, okay fine the way the way I moderate this is of note to the world's greatest podcasters They want to know Jake out. How do you take three? misanthropic malcontents And make them actually palatable to the world and I say, you know What because I am the world's greatest moderator and someone like Tim Ferriss wants to know is me.

Excuse me What makes me a misanthropic malcontent? Exactly your behavior and worldview What is it? And what is my worldview your absolute contempt for humanity Everybody No Amazing. I'm it's a joke. It's called a job. It's called a joke. Oh now you set him off Jake Oh, you really that hurt you should apologize.

It's called a joke. I think you guys are wonderful. I think you guys are wonderful I mean, I may be misanthropic but malcontent. I'm not no sax and free burger the malcontents for sure I'm pretty damn happy. You're happy the last descriptor anybody who knows you would ascribe to Friedberg was happy No, I would say no.

I think he's happy. He's anxious, but he's happy. Yeah, he's anxious, but happy. Did you see the roast? That was not a happy man. That was tearing you up. That was funny. Yeah, that was Yeah, that was venting he was yeah that was a rage Rage, no, I think I think when free work tries to be funny it comes out kind of mean.

Yeah, maybe that's a rage The only person that sets me off into making me unhappy is you Jake out Go to therapy or we could keep recording this podcast every week Which is cheaper. I think it's cheaper for us to just record the pod You know what? I for one am thankful to whoever gave you whatever sickness you have that causes you to not be able to talk this week Okay, great.

Yeah, you're talking a lot for a guy who can't talk Coming at me. I'm sick. Be nice to me while we're talking about all kinds of random stuff The number two thing that I see in the what's happening tab on Twitter right now is how Ron DeSantis is getting blasted for banning AP African-american studies because he thinks it falls under the stop woke act.

That's this the headlines. It's going Absolutely nuclear on Twitter right now. Here's some of the quotes shocking Ron DeSantis has banned all caps the teaching of AP African American studies in Florida Florida has gone from don't say gay to don't say black next tweet Claiming it violates the stop woke act and has no educational value Florida governor Ron DeSantis has banned AP African American studies from schools.

Let me make a prediction right now This will all redound to his advantage The same people who said that he was death Santas for basically not instituting kovat lockdowns He was proven correct Then they said that this bill that prohibited the teaching of gender fluidity to five-year-olds They claim try to claim that was a don't say gay bill 70% of Florida supports that that redoubted his advantage.

I don't know the story behind this particular course But if the question is whether CRT is gonna be funded by the state and he's preventing that again I think I'll be a 70% popular issue. So let's just wait and see how this plays out fair enough I just want to claim that my spread trade maybe it's tough to be the leader in The Republican nomination process in January of 2022.

It's starting Runner runner in either party, but I'd say the bigger threat to the Santas is a new poll Where Trump came out on top so Trump still his biggest threat. Yeah, so unfortunately Jay cow may be right that the Republicans may do something stupid here and Nominate a candidate who's I think less electable than to Santa's actually don't take any joy in it I actually I think Nikki Haley's gonna come out of nowhere and win this thing.

Well, it's possible I you know, I really would like to see some non political non career politicians run for office the Bloomberg, you know sort of category it feels like these career politicians are Just really really bad at executing and scumbags, you know, yeah who likes Nikki Haley who?

Democrats Democrats guys. Why why do we like her? I'm a polarizing. She's polar. Oh, she's a safe establishment Republican who basically is not gonna put up any fierce resistance to what the Davos crowd wants to do I don't think that's true. I think she was pretty she's not gonna win the Republican nomination I don't think she cares about Davos people to save her life I think that she is a moderate reasonable person who had to govern in a southern state and got everybody on board That's that's pretty crazy.

She's a pro-life person who? negotiated a 20-week support for abortion in 2014 so this is a person that knows how to get stuff done South Carolina happens to be the state that's actually at the leading edge of climate transition she's had more jobs and more money come in into a southern red state of People and companies willing to build for climate change than any other state in the country.

Do you like her? No, she's just she's so I just think that she's actually like normal and sane and not an idiot Would you vote for absolutely over Biden? Absolutely. Absolutely Interesting. So I understand. Yeah, look if you're really willing to vote for them, that's interesting Really? I would she's you know, she's young her parents had a small business.

She was a small business person it's tough to be a winner at all of those levels and She managed to do it. I mean, how do you as a brown woman get elected to governor of South Carolina and Do a lot of really good stuff. That's kind of tough Yeah, so I don't know.

I think she deserves a close look and she's the only one that didn't kowtow to Trump She was able to play the game Manipulate him get him to be on her side and then still told him to go pounce in that's pretty cool Well a lot of a lot of governors managed to do that.

I'm saying I'm saying she got she went to the United Nations She did what she needed to do there That was an important role at that time Actually Nikki Haley expressly has said she will not run if Trump runs so she's kowtow to Trump, too She wanted to be his VP right like she was trying to shank Pence, right?

That was her plan Maybe it's a smart strategy but she said she will not run against Trump the main alternative to Trump in the Republican Party is to Santas and then I'd say The number three in the Republican Party after Trump and to Santa's Glenn Youngkin right now Based on what metrics based on interest in the party and you know I've talked to people and I think the polling will eventually reflect this.

He's very talented Jake how you talk about appealing to independence? He was able to win a blue state Remember Virginia went for Biden by 10 points and young who was able to win that state if you ever listening Kim campaign He's a very talented campaigner. I think young Ken is very very talented Don't get me wrong, and I think that he would be an extremely credible candidate for president Here's the thing that young Ken will get destroyed on is he's literally not been in the job for but for a few You know 18 months so he hasn't done anything and I think that if it does boil down now it may not matter Right because look Obama was a senator for two years or whatever, right?

So it may not matter but to the extent that Republicans demand some bona fides. I think that you'll see Trump and DeSantis attack young Ken more viciously in a presidential primary than they attack Haley on that dimension of you have no experience and it'll be hard for him to back it up just one final point You know, man the other side that final final point we got it We got to get started final point Virginia has this wonky one term term limit on governor.

So You know, he's got no choice but to make a play in 2024 because he's gonna be termed out. Anyway, okay J Cal as a lifelong independent who's only ever voted Democrat Which of these are 75%? Republican to be clear Republican one time is 12. Yeah. No, I voted three times.

You like Glenn young Ken three times. I'm a Republican I Would like somebody who's younger and actually I've been quite influenced by Your framing of a person who can control the budget and reduce spending cuz I think it's kind of the most existential Risk we have right now. So I might be moving to more of a single Issue vote for this presidential election.

I love that issue. I love that about you Which is I just think like we have to have somebody younger Who is not going to bankrupt the company and the more these candidates talk about social issues and not economic ones I think it's a tell that they're not the right person for the job That's where I'm personally at is like this country has a serious financial existential Crisis on its hands and we have to get off social issues and we have to get on to financial Points, so I assume then you support the Republicans in this looming budget showdown Actually do yes.

I do think we should hold the line on Spending so you support the Republicans? Voting no on raising the debt ceiling. Yeah, I actually do I think we should start pumping the brakes on spending and I do think the Tea Party Now that doesn't mean I like those candidates are kind of whack jobs actually, but you think George Santos is a whack job Listen, it's the whack pack.

The Republican Party has turned into some crazy Howard Stern whack pack Sacks is appalled by it. He just can't some elements of both parties look that way Would you would you ever invite tomorrow Santos to your house? Who would you invite? Okay, actually Not a fundraising dinner, but just invite to the house you can pick between two people Oh No, Alexandra Ocasio-Cortez or George Campos Who would you pick?

I'd rather probably meet and talk to AOC. Of course, it would be interesting. Do I want to fundraise for or no, but no No, I'm not asking fundraising who just let in the door front door unlock the front door for unlock AOC George would you not even return the email if he said David I'm in town I wouldn't let him in my house dinner.

Don't let me Yeah, you might you might steal the silverware or something I mean, it's so nuts Hold on. Hold on. Hold on. We got to get started as your moderator. I'm gonna try and keep us on track. Good luck Yeah, no, look, it's a it's an energetic day.

I appreciate I appreciate my co-hosts and their enthusiasm Mission for supporting the Republicans in this budget showdown. I mean, I'm like blown away by this. I think it's great I think it's great as you guys know just to restate. It's my number one concern on earth today Yeah And I think that the importance of this topic Really needs to kind of rise above politics of all the things you said freeberg in the last like six months on this program It's the one thing that stuck with me and it's one thing that has like actually now I realize is the most important thing for this country is fiscal responsibility austerity measures and looking at how we're spending money and looking at immigration and looking at economic velocity and employment and Competing on the world stage with a solid balance sheet is the balance sheet is how you compete The balance sheet is how you compete.

I think it rises above social issues and it rises above climate change It's not you you cannot address climate change or social issues or infrastructure or unemployment Unless we have the ability to operate as a country over the long term and have the ability To have the continuing credit of the United States dollar and that's why I think it's so important free break I'm dealing this with with startups I have right now and I tell them the balance sheet is how you compete If your balance sheet is flipped upside down and you're gonna be out of business in nine months You're not competing with these two other companies in your sector you have to have a strong balance sheet take the austerity measures make the cuts and Then compete with a strong balance sheet It's just so obvious this country's balance sheet is getting flipped upside down and we are gonna have so many Yeah, very complex second and third order effects with the interest payments if you value austerity if you value a sturdy if you look back in history, and you actually ask of the Prime ministers or presidents of various countries particularly first world countries that have actually had an impact in implementing austerity You know what the unifying thing that I can say is women do a much better job than men Okay, you want austerity you're better off with it with Margaret Thatcher Margaret thatcher within with a dude aka Nikki Haley interesting It's a very hard position to be in as a politician because you have to position Your objective as one of taking things away and the primary way to get elected in a democracy Just like in junior high when you run for president of the junior high class is I'm gonna make the vending machines free You get elected and when you run in politics You always promise your constituents what they're gonna get that they don't have today and that's the model for getting elected Whatever the issue is of the day, whatever the issue de jure to decade, whatever It's all about what I'm gonna give you that you don't have today And so to flip that conversation around we all have to sacrifice together for the long-term Reliability of our economic prosperity we need to do we need to give up the following things That is a very hard platform to running on When someone on the other side of the podium on the other side of the stage is saying I'm gonna give you these ten Things and it's very hard to get like it and that's why democracies ultimately eat themselves and I forgot who said it but ultimately all democracies end up realizing they can vote themselves all the money and Then you have this big cycle Republicans did the most brilliant thing ever recently.

They moved from stop the steal to stop the spend. This is a genius Thing they stumbled into nobody wants to hear them talking about the election being stolen. That's complete nonsense But stop the spend we all understand that everybody is seeing it in their own personal balance sheets are seen in their companies They're seeing it in their families.

They're seeing it with their mortgage payment. They're looking at their you know, college tuition bills They're looking at their Car payments going from 400 to 700 dollars and they're seeing what variable interest does we have variable interest debt? this stuff is gonna skyrocket whether it's Elon's payments for Twitter or your payments for your mortgage or Our country's payments for our debt.

We have to stop the spend effective interest rates guys, let's just continue the conversation and Talk a little bit about this World Economic Forum Gathering that took place in Davos. I know you guys wanted to talk about it this week. I just applaud Jake I was intellectual honesty. I'm like blown away right now because he's sick.

Okay, so look When I'm trying to get the best out of you sex The budget conversation is an important one as it relates also to the global economy and growth So Davos took place, you know over this past week just so everyone knows and I remember You know working at Google 2004 I remember like how exciting it was for the executives to kind of start to transition into the Davos stage It became this moment where you're kind of finally on the world stage It's an exciting moment for CEOs for world leaders for global economists to get together talk about the state of the global economy where the world is headed what we can and should be doing about it and Davos is also this this place of pride and prestige for being invited and being a part of the party the global Elite party as some people are now calling it and that's what I think is the important conversation Is that the World Economic Forum gathering in Davos has recently been cast as this gathering of the global elites?

Those who are trying to take control and run the world as they see fit and sacks I'd love your point of view on how that transition has happened because one of the important ways that the Davos gathering has been cast in the World Economic Forum has been cast is in the negative light of being globalists and Globalism has had a really important role in driving global economic growth and prosperity And it has had these adverse effects in the US as we've seen with wealth inequality loss of jobs offshoring Gutting of industries and so on I think that there's a really important way that Davos has been politicized But the risk of that is significant because if we do Lean into this globalist notion and say it's all about elites trying to take control of our world and we all become Relationists that countries around the world can suffer deeply from the economic consequences of that shift So maybe sex you can kick this off and especially in light of our Conversation today about the need for economic growth and the reduction of global debt to support, you know a more prosperous world in the future This idea that right now we're talking about Davos and the World Economic Forum as a gathering of global elites and maybe sacks you can Kind of give us the history and the point of view on how that position has come about Well, it's a meeting of global business and government leaders.

So they are the elites I mean you add them all together and they do control a substantial portion of the world economy and most of the You know nations with the biggest economies So there's no question These are some of the most important people in the world a bunch of the articles coming out of Davos Reported the somber mood and tone of the conference the level of anxiety and worry was very high and I think that For a brief moment It looked like these people were staring in the mirror and realizing that their management of the global economy over the last couple of decades Has been a bit of a disaster I mean you do have ruinous deficits and debts piling up in But the US and across the world something like 350 percent debt to GDP globally So we've talked about that You've got this war in Ukraine that I and many people around the world think was easily avoidable and was a diplomatic failure You're coming off of two years of badly botched kovat Mismanagement where the government's the world pursued a horrible policy on kovat and made everything worse.

You've got decades of energy policy Promoted by the World Economic Forum where they want to get people off fossil fuels and natural gas and get them on to Less dense less reliable energy including promoting things like organic farming in Sri Lanka Which we talk on the show cause their economy to collapse You've got the World Economic Forum promoting ideas like you're gonna own nothing in the year 2030 And you're gonna be eating insects because no one should be eating meat.

So you've got these like wacky extreme, you know environmentalist ideas and Anti-capitalist anti-property ideas coming out of Davos So I think the whole thing's been a bit of a disaster and for a brief moment. It looked like these people Again, we're self-reflecting on their role in creating these disasters.

But of course the tone quickly shifted to blaming Disinformation on social media as the root cause of all these problems as opposed to their decades of decision-making Running, you know the leading nations of the world and the leading companies of the world and I think that the blame is properly put not on social media, but on These leaders for making you know bad decisions.

Do you believe in the benefits of global trade? where countries trade with one another and shift the sourcing of supply and labor to the cheaper source so that the buyer can benefit from having things at a lower price and ultimately the global economy grows as Kind of being beneficial to the US over the last 30 years or net negative because we talked, you know about the the obvious consequences of global trade where we've had industries gutted in the United States and now we're trying to onshore them again and build redundancy and so on but that's becoming very expensive and ultimately leads to the inflation of goods and services and So as you look at kind of the yeah the positive agenda of the World Economic Forum over the last 30 years being about Improving global trade and global relations to enable global trade.

Are you an anti globalist? and you know, do you start to see yourself falling more in that camp as You see and hear more of what comes out of Davos and from these organizations like them Well, look all economic prosperity comes from trade if we didn't have trade then we would all be subsistence farmers and hunters and gatherers so we Basically specialize in something and then create an overabundance of that and trade it for the rest of our necessities.

The issue is that trade Not only creates prosperity it creates dependencies because you're dependent on the people you're trading with and also it has distributional effects in terms of geopolitical consequences, so Trade with China has created some prosperity, but it's also hollowed out the American manufacturing Sector while also making China very rich, which has basically turned China into a major geopolitical competitor for the United States So I'm not like a free trade fanatic I mean, I understand the ways that trade creates wealth But I think it can also create these downsides that have to be managed and the fact the matter is that this unfettered free trade ideology contained the seeds of its own destruction because all the revisionist powers who are seeking to revise the u.s.

Led global order they were basically enriched and built up by the very free trade ideology that neoliberals were promoting So this neoliberal world world order has kind of created the seeds of its own destruction I think that it would have been much smarter for us two decades ago To be much more restrained in the China trade and to not throw open our markets to Chinese products We basically gave them MFN status.

This is back in the early 2000s and it was a bipartisan project and a bipartisan decision But the result of that has been the rapid rise of China at the expense of our manufacturing sectors And to the benefit of our consumer class, right? I mean we do have $600 iPhones because of it and we do have cheap TVs and there has been a consumer market that's demanded These low-priced goods to yeah Right.

Like so yeah, but so everyone gets cheap goods at Target, but in exchange for that We now have a real peer competitor to the United States Which is capable of disrupting? Let's say our primacy in East Asia and you know, it's creating a much more challenging world So look I can understand the reasons why people bought into this two decades ago But I think that if we had it to do all over again I think most people would recognize that we should not have given China permanent MFN status and we should have been more temperate in our Willingness to throw open our markets to these countries to mock.

Do you think that the World Economic Forum has kind of? transitioned into this kind of neoliberal Organization now that's promoting these neoliberal beliefs that aren't really tied to the original construct of Global enabling and supporting global trade and Supporting the global economy and creating more prosperity and security around the world.

I think it appeals to the insecure overachiever elite Yeah, you know nobody building anything really gives a shit about Davos. Nobody is thinking what's going on. Nobody even knows when it happens, right? so who cares about it people who like status and went to fancy schools and Wants to feel like they're in the club and that's how they've made it is going to this place which underneath is A membership organization where people pay based on the number of people that get to go So is it really that important?

substantively, no but Overachieving surplus elites in the West really value the signal that it represents to other overachieving surplus elites in the West So that's what Davos is. That's what the Allen and company conference has become a lot of these things started off Much purer than what they are today, but these are all membership driven revenue generating efforts in 30 or 40 years the all in summit will probably become that - It's just the nature of things so I wouldn't spend so much time focused on a Group of people getting together the funniest thing about Davos that I saw was zero hedge Which said that the amount of prostitution is at record levels in Davos?

And so it just kind of boils down to what it is, which is like any other conference It just happens to be with more security guards and less security guards and the same stupid stuff happens that Davos that happens in Vegas at name your conference. CES. It's just a different kind of attendee.

So I think the bigger thing is that We are learning that the world tends to have these policy perspectives that swing in a pendulum and the problem with the pendulum is that it is at extremes and Saks is right. We went from an extreme where we were very closed off and We were essentially subsistence farmers all of us were and then the pendulum has essentially peaked probably in the mid-teens of this decade Or this century where we realized too much globalization actually hollows out local economies So we need to find the equilibrium point and that inherently has more inflation that inherently has higher prices and that inherently has slower progress But more consistent progress that benefits more people and this is what is so Ideologically Disruptive to again surplus elites because they need the $600 iPhone the idea that they can't upgrade every year Drives them into such a tizzy that they need to export all the jobs whereas a thousand dollar iPhone or a $1,500 iPhone may just mean that your upgrade cycle is two years and just ask yourself How many times have you upgraded as soon as the phone came out to realize man?

this phone is actually worse than the previous version and I probably could have just waited and There's a lot of work that actually goes into building these things to actually make them better So all you're doing is you're giving up optionality You're allowing your brothers and sisters to struggle to basically feed the profit motives of one company That in hindsight doesn't need to happen.

So there's an equilibrium and I think that these next few decades Will be about finding it. We have decided it's categorical that that level of globalization that we have had this unitary singular monocultural way of thinking about things is over and David's right. It's because that system has created too many threats to the hegemony that brought us there Jk.

And you that's a good thing. I think in general, it'll be it'll be more prosperity for more people, but it'll be slower and It will create points of friction that are represented in inflation and higher prices, right? That's right So as J Cal as you know, Chamath points out like if you're upgrading every two years instead of one year Your economy doesn't grow as fast.

You have less spending Yeah, if the price of things go up you have inflation the net cost of Globalization is higher prices and lower economic growth. That's just fundamental kind of macroeconomics. No, that's not true That's not true Because the D globalization in an individual economy will actually create GDP because you'll have to rebuild the things that I used to import That's right.

Yeah and over a period of time theoretically you could catch up and accelerate but Jk. Like when you weigh this conversation about Davos and globalization and US security against the one we just had which is why I wanted to talk about this We're running into a debt crisis We have limited spending capacity We have a significant amount of investment needed if we are going to Cut global trade ties that we've depended on historically and start to build redundancy Can we afford this as a country?

Can the West afford this given the economic slowdowns and inflation right now and You know, how do we balance kind of these conversations against our domestic challenges? Davos has a pretty serious PR problem. They have Dubbed themselves like essentially a self-appointed Illuminati for the rest of us and that they're gonna set some global agenda I think this year's agenda was like Finding the future or defining the future nobody asked these people to be in charge and if you look at what's happened in the world the chaos of kovat and You look at what's happened in terms of energy policy in Europe And then this obsession with social issues and being told you know, these farmers these truckers you're bad people You're not woke whatever it is I think the public looks at Davos as the manifestation of these global elites Who are lording over them some master plan whether it's real or not that they're not part of and that doesn't take them into consideration and that takes into consideration only their profits and When you actually peel it back as Chamath correctly pointed out Davos is a huge grift.

They they recruited me to be part of their world leaders 15 years ago after I'd sold did you go second company and I met Claus the guy who runs it at some New York Four Seasons event and Then I got the bill and to be a world leader Was forty fucking thousand dollars and I was like what a global future leader.

I don't know what that means But I'm not giving you forty thousand dollars and then you had to pay You had to pay to be a global what future leader and you didn't have to pay for a six thousand dollar TED ticket at the time this was 40 large and I just thought you know, this is not for me And what a joke, I think people would much rather see some resiliency in the supply chain and they would rather see the origins of kovat and why we spent two years in a lockdown and Was that a cover-up of the United States funding?

gain of research You know being done in Wuhan like and and why are we shutting down Nuclear power plants and what exactly is the energy policy in Germany people are looking at incompetent elites going to Davos having a big party and then setting an agenda for them that they don't understand or want and I think this is where you know the the the contempt for Davos is peaking this year and it should if you're being invited to Davos and Other people are not being invited and they don't have a seat at the table in a voice at the table You can tell that all the journalists there are on an access journalism pass.

What does that mean access journalism? They get to come there and they get to hang out with elites if and only if their coverage fits a certain Profile and if you find me the top 10 most critical Anti-globalization journalists in the world I can guarantee you that they don't have credentials.

I think it's like a bankrupt organization They should just be shut down and the people who are going there are involved. No, I think it's culturally bankrupt I have so much distinct. It's interesting. No, I do Not what the world wants right now the world wants transparency and the world wants ownership of all the screw-ups You know from kovat.

Yeah to energy policy We want ownership of those issues not a bunch of elites drinking champagne I'd rather spend a week with entrepreneurs or frankly spend a week with my kids or Frank Yes, and a week playing poker with my friend. Of course, let's do it They're they're like umpteen things that are above the list.

So it's kind of like let them get together I think it's fine for them to get together. They should do it I just think that if you're not there I would not weigh these things so heavily because it speaks more to your own insecurity Than it does to their actual influence on things.

Yeah, the term elite is an interesting one You you companies need a CEO to run the company. It's not run by 10,000 employees and Governments need a president to oversee the government and I think the idea that some small number of people that are in charge getting together is now being cast as an Elite gathering and elitism in itself is the failure Is I don't think it's an elite gathering.

I think it's very important to get this nuance, right? It's a gathering of elites and that's very different than an elite gathering an elite gathering is when like Michael Jordan and LeBron James and Steph Curry get together and work on their basketball game. That's an elite gathering a Gathering of elites is what's happening in the host.

That's fair point But they are the presidents of their companies and the president of their countries So I would differentiate between the people who are merely attending or paying the $40,000 I probably a bunch of hangers on it's not 250 by the way $250,000. Yeah. Anyone willing to pay that is like, you know, totally an insecure, you know surplus elite by the way I just got back from Davos.

Oh you did. Okay. Well, congratulations Looks good on you, though Your own money or your LP's money Person that went to Davos that spent their own money. It's like probably not right exactly So then there's the the hangers on you're spending $250,000 to feel important But then there's the people who are invited who probably don't spend any money We're basically speaking right and you got to say that the the group of people who are speaking at Davos individually and collectively are quite influential they are the leaders of Countries and and fortune 500 companies sure, but you can agree that they literally don't say anything That's noteworthy because they're not allowed to they're not saying anything That's that different of what they would say the previous week or the following week.

So but it's a forum It's a platform for it's a yeah, it's a Yeah to get together Look in terms of the critique of it Freeberg you asked how far back does this go? It's this is not like a new thing The the term Davos man was coined back in 2004 by a Harvard professor named Sam Huntington Who wrote a book called clash civilizations?

He's the professor of international relations at Harvard and he coined the term Davos man to refer to a globalist Who quote had little need for national loyalty who viewed national boundaries as obstacles that are thankfully vanishing? that's how Huntington defined Davos man and There's been a reaction to these Davos men that's been growing for a couple of decades.

I mean obviously the election of Trump was a reaction to that Brexit was a huge reaction to that and I think that the Resistance to the imposition of their again their globalist policies, which I guess you could define as believing in this like borderless world You know economically and politically I think that's been receding in favor of more nationalist leaders Who want to promote their own country's interests and I think that that trend is going to continue Well, come off.

Let's let's transition this to the broader question that I think We got into it a couple episodes ago on How can we? afford this transition if there is this mounting kind of trend against globalization this mounting globalization movement and effort particularly in the US and again a sacks pointed out global debt to GDP is something like 300 to 350 percent depending on how you count and We're running into a debt ceiling here in the US.

I Guess the question is how do we afford to build the infrastructure redundancy and make the investments at home? To replace global trade. Can we afford to do it? And how's this gonna play out as we run into this, you know debt ceiling vote? I don't think that's the right question I think it's the inverse of that question How can we afford not to with the amount of discontent and the amount of economic strain that people feel?

If you want to really call populism, you're gonna have to create economic vibrancy at home when people are making money and they find Purpose, they're less agitated. They're not storming the capital. They're not electing fringe candidates They're not doing domestic terrorism. They're just going to work and building a life, right?

We know that so How can we afford not to how can we afford not to like bring back jobs to the heartland of America? so the reality that I have and I think a lot of people have is that this debt to GDP thing is a bit of an intellectual red herring and The reason is people talk about this thing constantly in these absolute terms With no historical precedent that relates well to our current moment.

There is no magic number at which thing this Experiment that's called America fails So I think that you have to be a little bit more intellectually honest and say that at best it's a relative problem and it's relative to the countries that have already established dominance of which there are eight or nine and Then the emerging economies and then thinking about what critical things will they bring to the table in 15 or 20 years from now?

And in that context, I think that people will him and ha But ultimately they'll capitulate they will raise the debt ceiling and they'll continue to fund This transition away from globalism and I think that's the argument that will get the Republicans over the line Because it's gonna bring a lot of spending and stimulus and jobs - frankly a lot of red states that would otherwise kind of continue to wither and die on the vine I think here's my biggest concern we're either trying to walk a tightrope or there's no tightrope to walk and If we make these investments and they're not economically viable investments It's a path to ruin and what I mean by that is if we're building factories manufacturing facilities infrastructure that relies on yesteryear's technology and systems of production and and kind of economic systems and There are alternatives that are competing on a global stage that are better more productive more advanced Then we lose and we've made an investment in a negative ROI way, but hold on a second Can I ask you a question?

Yeah, see when you say that though, you're making a very basic assumption Which I think you can question which is you are underpinning that on Fundamental economics that can change if we choose to for example, let's take like natural resources Okay Every time you do a plan the industry and I define the industry is every for-profit company and Wall Street and the debt markets They refuse to underwrite this thing at a higher cost of capital.

They use a whack of Six or seven or eight and they will fight tooth and nail to use the smallest discount rate possible Because it allows them to capture more of the profit dollars But if you actually had a realistic whack of like 10% on an on a massive infrastructure project Guess what?

You're actually pretty equivalent to a government and in fact in many cases a government becomes cheaper So I think the thing that is worth debating and I'd like your reaction to this. It's not about what you're saying It's we refuse to change the guardrails on our profit-making ability And if you extended the window if you change the discount rate if you said PEs can be different You would have a very different economic justification for what you just said It completely changes a hundred basis points changes everything you're saying by tens of years one way to describe that.

Yeah is Another way to reframe what you just said is that the useful Lifespan of an investment isn't 40 years or 50 years but it may be 12 years and If you if you recast the investment decision as this has to be a 12-year return Instead of allowing it to be modeled as a 40-year return Then you start to really filter out a lot of the nonsense and you can actually see real payback It doesn't make sense to spend a hundred billion dollars on a train to take people from LA to Fresno Or whatever craziness the California high-speed rail program has turned into it was originally like a billion dollars to go from LA to San Francisco there was economic justification to get payback on a hundred billion dollars or whatever.

It's ballooned into The whole system should be shut down So I guess there's a from a policy perspective and accountability framing that's missing But also bringing in the time horizon on which we need to get paid back for these things My point was that in China and I've made this point many times But I just think it's a really important one that'll play out over the next couple of years.

They're building 450 nuclear power plants They're gonna get the cost of industrial power below five cents or four cents a kilowatt hour and they're electrifying all their factories As they do that, it's no longer a unit of human labor that's needed to produce goods It's a unit of electricity and if they're driving down the cost of electricity and all products can be made using electricity You have a huge economic advantage.

It's not the cure-all that you think that is even if you have free energy You have to think about the inputs and the thing that China but no, sorry. I'm not talking about energy I'm just saying a general framing like no, I understand I my point being like the investments we should be making or where is the puck headed not where has the puck been?

No, so I just I just wanted to comment on where the puck is heading even if energy is zero in China, you have to think about inputs meaning factories make things with inputs and If you look for example in natural resources the inputs by and large don't exist in China and so all I'm saying is that all of these inputs whether Again, you can take natural resources that proliferate massively in the United States.

It turns out that India is Utterly utterly utterly poorly addressed in a geographical survey perspective and we're finding that India's raw resources are off the charts Okay, there are certain places in Africa tons of stuff in Indonesia and Australia all of those things may not have to go to China because there are subsidies or There are equivalently cheaper decisions that governments can make so that they choose not to send it and all of a sudden all of that Spending doesn't matter as much because the Australian government makes a trade-off that says, you know what?

I'd rather have these jobs here and I'm willing to have a longer payback cycle for these jobs to be here Then instead of ship it to China and he'd they tell that they tell the Australian citizens I'm sorry guys, but you're gonna have to replace your car every seven years as opposed to every five I hope you're okay with that, but that'll mean full employment and it'll prevent fringe candidates and populism and Let's go forward.

Where do you invest? I am I am investing a lot of money In those places that control the natural resources that are poorly understood meaning there are places like India where our geological survey capacity is relatively naive and it turns out that in critical parts of the energy supply chain or other places They can play a huge role and the Indian government's cost of capital Has an element they're sophisticated enough to add a an element to the formula that accounts for full employment If I build it in this state and if I try to get this many jobs created The full circle feedback of that allows me to actually transfer price it into the Indian market at this price Which is cheaper than anything that China can do even at zero energy That's the kind of sophisticated decision-making that is emerging because of this deglobalization trend and it's happening everywhere So the Indians are doing it the Germans are doing it and then the US is doing it and then on top of that What they're what they're doing in terms of game theory, which I think is even more sophisticated is They're not letting China be alone.

They're actually now slowing China down Because China turns out actually needs inputs from these Western economies and they're like we're just not going to give them to you anymore So do the best you can for example in semiconductors the Dutch the Germans the Americans We've now essentially embargoed all of our most sophisticated equipment from ever getting in there That will increase even with zero energy the cost of what comes out of there and that will Balance the playing field so that the Germans the Dutch the Americans can bring other partners in at a different cost of capital To make it economically neutral and at parity and the reason they'll do it is to create jobs for Americans Or the Dutch or for the Germans?

Okay, I think the most yeah, go ahead I just I think the most important thing here isn't like energy. I don't think it's infrastructure I don't think it's natural resources at least for America it's entrepreneurs and that's what it's always been for this country and it's immigration is the silver bullet here and inspiration and the freedom that this country has For entrepreneurs and founders to pursue a vision to start a company that's why we've won so big historically is the the combination of immigration and the inspiration that these entrepreneurs Do on a global basis to get more entrepreneurs to come to this country to go to Stanford to start companies And that's why China is now losing they cribbed this incredible formula.

We had of letting Jack Ma do Alibaba and then they decided to for whatever, you know insecure or stupid reason or pragmatic reason to Consolidate power and that's what will push the world forward and make our country thrive. We have to fix immigration We have to keep letting entrepreneurs Define the future because the government can do so much they can underwrite a couple of chip factories here or there Sure, we could put money into nuclear or fission or fusion and whatever the next technology is but you need a singular person who wants to make it their life's mission who wants to have their Sense of pride and innovation push the world forward and those people are rare and we are in a competition Globally that we are not focused on That we need to get refocused on to recruit the greatest minds in the world who want to change the world to do it on American soil.

I do not disagree with you J Cal I think you know to my earlier comment about how do we walk the tightrope of the debt burden the deglobalization and populism movements and The and the challenges and opportunities ahead it has to come through innovation I think that's how you you have to invent a new tightrope.

Basically. I think the challenge though is freeberg that It takes a recognition that there are singular individuals in the world One in a million one in ten million one in a hundred thousand whatever it is Who can just drive an entire economy forward whether it's gates with Microsoft or Steve Jobs with Apple There are singular individuals who come to this country Bam Bam Brogan with the tunneling company Nice Paul, nobody knows what you're talking about except for me There are people who will push these things forward and and take risk and we have to yeah Recognize that it's a small number of individuals backed by a large amount of capital That create massive jobs and great prosperity It's an uncomfortable conversation for people to realize that it might just be a couple of dozen people a year Immigrating to this country that change the fate of this country Yeah, why do you need to allow three million migrants to stream across the southern border every year because you don't know which one It's gonna be That's why really That's that's your immigration policy is open border so that one million I said recruitment That's how you're Explain that it's a great question sex.

There are there are two things to look at here. There is a pragmatic Jason, let me finish my sentence No, I'm just gonna ask you to just get a fire You say it's your are you saying that the PhD student that starts Google is streaming across the border or actually applying for?

No, absolutely not We parse it for you there's immigration and then there's recruitment and if we frame this process with those two different words There are people who are yes immigrating streaming across the border. However, you want to frame it sacks I don't look at it in a political way and then there's recruiting the most elite talent in the world We can do both of these things one of them, you know helps Farmers have people to work the fields to have people take entry-level jobs to work in the service industry We should bring in two or three million of those people per year We should make it legal and we should celebrate it because we have so many of those positions open that Americans don't want to take We should then also in Parallel and without confusing the issue for political reasons Recruit people to come to our universities and when they graduate Have their citizenship staple to that diploma and not let them leave the company country and let them start companies here Instead what we do is we make them fight to stay here We should be recruiting the smartest most talented people that will be hundreds of thousands of people per year low hundreds of thousand Okay, so we should have millions coming across the border sick.

J Cal is very reasonable. No, yeah Yeah, I think that's better when he doesn't moderate. Yeah. Yeah, go ahead sex, you know, I'm an immigrant You know my dad came over yeah, my dad came over in 1977 when I was five years old, of course, he had an MD.

He was a doctor he actually had like skills and wasn't immediately can become a net government dependent, so I Think that it makes sense to allow immigrants who can actually add something into our economy and bring skills and all the rest of it But the problem we have is that if you want to take that reasonable position You're told that you basically have to accept a situation of de facto open borders, which is ridiculous No, you don't these are two separate things and The number one party that conflates these two issues, you know, they're two separate issues our party has conflated these issues Okay, both parties are conflating them here at the all-in podcast.

Can we agree? They yeah, let's people could recruit People allow Service jobs But but look let me tie this back to Davos man, what was the definition of Davos man? It was somebody who is pushing This ideology of free trade and open borders to such an extent that it creates a nationalist Backlash or populist backlash enough.

Yeah, that's exactly what's happened at our southern border is you have the people who believe in immigration? Push that ideology to such an extent that they won't create a rational sensible Southern border and process at our southern border. It's chaos down there Dream team. Yeah, I'm favor bringing the dream team But the response of open borders is the creation of this nationalist movement, right?

The nationalist movement only exists in the face of open borders. I think that's that's the point right like the extreme Bears the extreme I think the immigration system should be based on points Well, just like those men don't if the Davos men don't start taking in start taking into account these national considerations around the defense of their borders and These issues around trade hollowing out the middle class Then there's going to be an intense backlash and I don't think those elites have been managing the situation very well It would have been better for them to pursue the more nuanced policy.

You're talking about. Why are we conflating the issue then? Why do the Democrats and the Republicans sacks make this such a polarizing issue instead of stating it the way I did Recruitment, it's so it's southern because it's so easy You know, no, you know when you when you conflate them you can incite an emotional response from your voting base That's it.

That's why these issues. That's why all of these issues get based out They get based out to the point that then you can drive someone to vote for you Because you've now framed the other side is this extreme side and that's how you earlier said Hold on before you got suddenly very reasonable.

You said that we have to allow this reason where you haven't listened Well, I'm gonna quote something you just said a minute ago. You said that we had to allow million two to three million completely destitute Practically illiterate migrants to stream across our border because one in a million of them might be an Elon Musk No, no, there you said no.

No, hold on. I was talking No immigration typically includes when you say that word The corpus of people coming in for education and the people coming across the southern border So if you were to say immigration, most people are reasonably say that's both of those buckets I separated them out here so we can have a reasonable discussion recruitment of higher education talented people with low education Migrant workers they are two different buckets and you have to be able to say these are two different buckets And that we should have a point based system if and this is the conversation that doesn't happen amongst politicians But can happen here look at Canada.

Look at Australia. They have what's called a point based immigration system They give you points for everything that you bring to the country if you bring money if you Speak the native language if you have a degree if you have a higher education degree or you have skills that that country needs Our country needs to move to a point based system If you're coming across the board and you don't speak the language and you don't have an education You have zero points if you have a master's degree We just speak like yes, we were three points and you can let in buckets of people based on compassion Based on any service workers and based on needing the next Elon Musk or the next David Sachs or trim off poly hop atia I think the the argument J Cal is that the compassion argument falls on deaf ears In a time where people feel we cannot afford it and it's a luxury to embrace that's a little of immigration right now Just pick a number we can reasonably absorb.

This is what Phil look at the southern border and see chaos Obviously, they want to get that under control before they're gonna adopt your you know point based system You do things at once we could do another point based System so I like the idea of I don't know if my points was your points but in concept I like on your points No, no, we don't need to I like the idea of admitting Immigrants based on skills the country actually needs great and a simple recognition That's better to bring in people who are immediately productive Hold on and can add to our economy as opposed to being net government recipients dependents.

We're done. We're done. There are countries I just want to put there are countries the Scandinavian country specifically that have said we can accept up to this many Folks who are uneducated who don't speak the language because we have this many teachers and this many slots in school And so if you anything was Finland and Sweden They said we can accept 50,000 per year of this type of immigration based on compassion That's the reasonable discussion that has to happen here, but Jake I'll do you say did you say that we have to do these two things at the same time meaning that until we impose a An overhaul of our entire immigration system to be based on skills and points that we can't enforce the southern border No, I think you can't enforce the southern border and do it Canada and Australia already doing it Let me just tell you there's not gonna be a broad-based constituency in this country for the type of immigration reform you're talking about Until you get the southern border under control because people look at that on the news and see chaos And there's no excuse for that.

They should be thoughtful They should be awful and they should just look at what Canada and Australia have done Those countries have actually controlled this and it's not a polarizing issue there. It's a pragmatic issue. Okay guys, I'm gonna move us forward to the The banning of tick-tock. So I want to kind of change the tone a little bit this story recently Is that tick-tock has been banned for use on the campus Wi-Fi network?

Let's go at a number of universities including UT Austin Auburn Boise State the University of Oklahoma So college students can't access the app when they're on the campus network This is following 19 states that recently banned tick-tock and government devices as everyone knows tick-tock is a product from byte dance, which is a Chinese based company and there's been quite a lot of Political and regulatory huffs and gruffs about byte dance having this level of insight and access to users in the United States with the assumption being that much of the data that they're pulling out of the app is Available to the Chinese Communist Party, which creates a security threat to the United States That's one argument.

I Think there is also a significant tie-in to byte dance There's over eight billion dollars of capital invested in byte dance by firms that we know Well, like Sequoia Capital Tiger Global Co2, Susquehanna and others They're trying to find a way to monetize their investment in what is truly the most viral fastest growing highest revenue growing Biggest startup in the world right now in byte dance.

So there's a restructuring proposal apparently underway that's being discussed in Washington DC right now to try and restructure the organization and the ownership structure and the oversight of Tick-tock and byte dance such that US regulators and US companies can oversee the data the use of the data the algorithms Underlying tick-tock and monitor them from within the United States question for this group here on the McLaughlin group of 2023 is does that belong for you McLaughlin?

Do you guys think that that's enough? First up is a gem off. He's been silenced for a bit. I think this is really bad news for byte dance Basically, what's happening? Is that and tick-tock all the frustration that all these? legislature legislators and politicians have had over Facebook and Google and other sort of big tech companies Is going to get focused on byte dance because you have this common enemy that you can point to as a bogeyman of sorts And I'm not saying that it's right, but I think that what you're starting to see is it's much easier To pick a fight with the Chinese company and win and get broad-based support than it is to pick a fight against an American company with a bunch of American employees and American market cap and American know-how and American IP that gets impacted so I don't think this is going to end well for tick-tock and I Think the goal if I were any of these people on the cap table Would be to sell it in Secondary to somebody else and get out.

I think the next big shoe to drop is Going to be advertisers who come under a lot of pressure So for example think of all the advertisers that have left Twitter There is a point of efficiency where you can live with all of the mess that Twitter has because it comes with a lot less scrutiny and oversight and political pressure than advertising on tick-tock and That I think is the next kind of like big wave here.

So I think it's very very bad I think the enterprise value of this company is quite challenged and These guys should try to sell and get up who are the buyers in that secondary market though? I mean, that's a lot of capital. The thing is the cap tables haven't been segregated So what you own is equity and bite dance, right?

But the problem is the look-through ownership Would will discount a lot of tick-tock if they see a lot more of this stuff happening You guys have to remember this is the first three or four weeks of 2023 Wait till we're here in September and October November wait till the election year starts It's not good.

So It's a discount on bite dance that probably Takes bike dance down by 70 or 80 billion. So that's a 35 40 percent discount to their last mark So, you know if somebody can sell in the high hundred billions of dollars, I think you should I think they should probably should consider it there's It's worth it.

I think I know you got strong opinions. Well, I think you have to be incredibly pragmatic here This is the same as a 5g issue You cannot trust the Chinese government to not steal intellectual property or to put back doors into the software It is common business practice there.

Huawei was banned. They basically stole the source code from Cisco. That was proven and It was proven that they were spying on people Canada the UK the United States Vietnam. Everybody has banned using 5g technology from China for a reason because they will use it to spy on you.

This is the nature of an authoritarian government it is far too powerful to have a Not only the surveillance capabilities that are built into owning tick-tock in the hands of the Chinese Communist Party To have the ability to very in a very nuanced fashion Trends certain videos that would steer the United States in a certain direction Politically or yeah, and towards stupidity is one of course, right?

They're letting their you need only look at what that 60 minutes clip is incredible, right? It's like they show look they're showing science videos to the kids in China exactly and they're showing stupid nonsense to the kids in America What do you think over there trying to do that stuff our children versus their children?

You can be a hundred percent certain they're doing psi ops on our children as we speak They are trying to make us dumb and distracted while they get smart and sharp, by the way It's very simple if you're if you're a sucker, you know, that's not the choices of our kids The algorithm just gives you more what you want Exactly, but that's like saying if you gave kids a choice between broccoli and chocolate bars, of course Yeah, if you put the job on the supermarket and say eat They're gonna go right to the cereal the job of the parents tax is number one know their name and then number two Differentiate you need a pen and pad sacks good things and that's your question I agree with Chamath that the future is not bright For tick-tock here because it's gotten caught up in the geopolitical rivalry between China in the United States And that's only gonna keep getting more and more intense The US and China are headed for a big security competition and by dance is caught in the middle So I agree with your mouth about the future, but you know, this claim is made that Tick-tock is spyware and You know, it's listening to you.

It's surveilling you is keeping track of you like what is the evidence for that claim? I just want to understand that a little better Like has anyone ever proven that like tick-tock is spyware and if it is why does an Apple stop it? Please explain that to me. Yeah, I think that has a complicated relationship with China.

So the claim that they're not good So Jake out your claim is let me I just want to pin Jake out down this for a second Your claim is that 100%? Tick-tock is spyware and Apple is letting it happen because their relationship with the CCP I do not have the evidence of specific instances of them spying But I do know that this is what the Chinese government His aspiration is is to be able to have back doors to spy on all Americans That's why they you know are trying to get Huawei Well, you don't even need to know that because you can just open your eyes and look at and I mean That's an insult But you can just look at what tick-tock has the access to it has access to your location has access to your camera roll And it knows You know everybody in your social circle because it has your address book So by having your address book having your location and having access to your photo roll They have you compromised by default the default settings when you install tick-tock it turns on local network turns on microphone turns on camera Turns on background app refresh and turns on cell data.

So Tick-tock is no worse than anybody else in that because a lot of other apps are very Aggressively trying to harvest all that data as well sacks like it's like Alexa is always listening to you, right? but you feel but you feel safer with Alexa because it's a It's an American company or the perception of safety is there so I don't think there's a huge Thing to prove other than yeah, there's a setting that allows you to turn on the microphone It's a default and they do it but they were caught I just want to make sure you guys understand this according to the New York Times by dance the Chinese parent company of tick-tock Said on Thursday that an internal investigation found that employees had inappropriately obtained the data of US tick-tock users including That of two reporters over the summer a few employees on a bite dance team Responsible for monitoring employee conduct tried to find the source of suspected leaks of internal conversation and business documents to journalists in doing So the employees gain access to the IP addresses and other data of two reporters and a small number of people connected with the reporters By the tick-tock accounts, they were trying to determine if those individuals were within the proximity of by dance employees according to the company So there's an example of them using the technology to try to track down leaks.

Hold on a second. That's exactly what any app a Company can do the photos the screenshots we got from Twitter That were shared and all those files or whatever that happened a few weeks ago Showed that many Twitter employees were able to log in and just view the direct messages between Twitter users and that there's no necessary logging or Access privileges required to have access to that information.

There are these holes in all of these social networking and consumer Digital consumer product companies that allow individuals to go in and do things with consumer data a whole it's a feature It's a feature sure, but it doesn't reference like some systematic Even those are controlled by a government agency.

No, that's that's a key thing What Jake I'll just said is a key thing Everybody tries to get these things turned default on every app Tries to get access to your camera roll to your contacts to turn on the microphone The problem isn't that those settings exist because Apple created them and Apple created a privacy framework where you have to opt out of it Okay The issue is that that data instead of going to an American company with American on a bit with American data centers and American service it's going to somebody in China or it's the perception that that's happening that I think is a death now and This is also excluding all of the work That every single big tech company must be doing to point the finger away from them And this is something they can all agree on if you got if you got Andy Jassy and suck and Sundar and Satya Nadella In a room.

What do you think they could all agree on? Hey guys, are we better off pointing the fingers at each other or should we just point it over there to a company based in? China So do you think do you think that? Tick-tock in a way is being scapegoated here, or do you think it's a real security threat both both?

Yeah, that's yes to both and you know what? I think what we saw with the the Twitter files for me personally the one that was most concerning Was the fact that the FBI? Was being treated They didn't have control of it like the Chinese government has control over by dance at a wholesale level, but they were being given You know pretty Close to their massive privileges, but they had more influence than they should have and they should have gotten subpoenas, right?

So even in a democracy like the United States, you can see the FBI Using techniques to get employees on their side To get information on specific users Imagine if the FBI just had God mode for Twitter or Facebook like what would happen in even in a democracy? We see it happen.

We see abuse the Chinese Government is a communist party. They have no problem sucking the data down of every single person and using it. However, they want I Think the the problematic thing is that when you look at the capital structure of these Chinese companies post now G being ruler for life is The Chinese government has typically a seat on all of these boards they also typically have a golden vote and so when you think about the governance the governance of these companies has tilted far away from a normal cap table where it's one shareholder one vote - you are allowed to exist on this cap table at the benevolence of The government and so I think that you have to factor that in as well sack.

So, you know, is it amplified? Probably but is there also non trivial risk that we would never give to any other company? Absolutely, like, you know take the opposite example How would we react if the government had a golden vote and a board seat on meta? Going into an election I Mean one party would be crazy and the other party would stay mums the word That's what I mean.

Let's talk about but let's let's let's be pragmatic the news reports that came out this week Indicate that they're talking about restructuring by dance So let me propose this to you guys if tick tock us were set up as tick tock us Inc It's its own C Corp. It's based in the US and by dance owns Passive non-voting shares in tick-tock USA all the software all the services the algorithms are all run in the US The data is only servers in the US and the Chinese have an economic interest ultimately and what happens with that asset But that asset is entirely managed run totally fine That should be a goal in the US and I think you just shut it down and do that And if that happens rigor you trigger Cepheus, so you'd have to then make an exception That sounds like a part of the discussion that's underway right now is how do we get past this regulatory hurdle?

I don't know guys How you turn off tick-tock for a hundred million people that are using it for two hours a day guys. We're We're Instagram and YouTube replicated it we're rejecting deals left right and center at much much smaller thresholds because of Cepheus because It's we're not and we're not even dealing with China You know, you get past if you have to mark assume that there is no that thing that's a bad.

It's a bad assumption Right, but like that's obviously just eight billion dollars of capital It's gonna tell you what's in this right the minute that if you let the Chinese government Around and do an end around on Cepheus to own 30% passively Then everybody who's had a deal rejected for a much smaller threshold for a much more benign issue will sue Except that they started with this asset versus buying into it, right?

That's the difference and what they're doing is they're seeding that the difference here is they're seeding control of the asset to US investors And oversight by the US government versus the reverse which is trying to come in and buy an economic asset That's not what Cepheus adjudicates. It doesn't adjudicate.

Where was this originated adjudicates in this cap table? Does this person exist should they exist at what threshold? What do they know? And are we giving something that we shouldn't give anything? Yeah, let me give you another way of saying if the pragmatic answer is you can't just make up a bunch of stuff that blows Up a bunch of other stuff.

Let me frame it differently What if by dance sold tick tock us to a US owned private equity consortium a US run private equity consortium that effectively bought Tick tock us and operated in here in the US. That's exactly what should happen But my point is those people are smart enough to not pay full price.

They'll say you're fucked that asset is worth zero I will buy it for 10 billion dollars take it or leave it and you know what I'll have to do They'll have to take it. So my point is the equity value is so impaired in this thing Will you buy that for 10 billion?

Of course, I'm a buyer but these guys are smart enough to drive a huge bargain hard bargain So if you're existing on the cap table, and you've marked it at 320, I would be fucking selling it Okay, well, look, something like this is gonna happen. So it'll be interesting to watch and if any group of people got together and tried to actually buy it for what the fair market value is worth via a spreadsheet is a horrible investor in this moment.

You should hold a gun to their head, and you should extract a massive pound of flesh that gives you a huge margin of safety and makes you money We know people who are shareholders if they could have sold it at 320 or 120, they would have sold already Well, no, there are there are people that will buy this thing in the hundreds in size Then sell everything you can and then put it into another company Now the problem is you have to show a markdown because you've already marked it at 320.

So you gotta take a 65% discount Yeah, if you're if you're underwater, you're underwater. But for anybody who got into the sub 1 billion round, You can't eat IRR and you can't eat paper markups. You can only eat the distribution. So get the DPI and move on is what I said Get the DPI and move on is another bet you could place why try to be greedy and get the last 3x out of this investment I want to move away from software meets leisure to software meets human health and productivity A couple of weeks ago, we were going to talk about this last week, it was announced that bio and tech was buying insta deep Insta deep is a broad horizontal AI or machine learning tools company services business, they partner with big businesses to help them build out ML driven infrastructure to improve their products and their operations and their businesses.

One of their customers was bio and tech, the company that designed and owned VIP for the original Pfizer COVID vaccine, one of the original originators of mRNA based technology, bio and tech doesn't just focus on mRNA technology, they also focus on cell and gene therapies, the novel, new kind of modalities that are emerging in in therapeutics.

And, you know, it was a really interesting acquisition, it was a 250, I think, person team, that they bought the company for about $600 million, specifically to improve how AI can be used to accelerate drug discovery. I'll just make a comment on this. And then sex, I'd love to kind of hear your point of view on these types of businesses broadly.

The capabilities of machine learning when applied to a particular vertical are quite profound. I you know, I've certainly been involved in this space in agriculture, and increasingly doing more of this work in pharmaceuticals and biotech. And, you know, when you can have large, unique data sets that you can then model using these tools and these capabilities, and be predictive about what the next product iteration should be, it can really change the value and the trajectory of your business.

One of the big trends in pharma right now is to move from in vitro testing, meaning you're running biochemical experiments in labs, in assays, iterating testing, experimenting to see what molecules work or what protein does what and if it binds to the target, and doing more of this in silica, as it's being called, which is in software.

And rather than just doing testing and software, you can actually use tools like alpha fold that can be predictive of large molecules, and how they can drive outcomes to make decisions about what to put in your pipeline. So if you take 99% of the junk out of the top of your pipeline, and you only focus on the 1% that the software predicts will be more successful, you much more quickly get drug discovery through the pipeline, and you have a much higher hit rate.

So the ROI is extraordinary, particularly when you're talking about multi billion dollar revenue streams coming out the other end of that pipeline. And so I think, you know, the way this reads, these guys raised $100 million in a round last year, sold the company for 600 million, it seems very similar to deep mind being bought by alphabet a few years ago, where the application of the team is pretty broad across a number of opportunities, but bio and tech bought them to focus on the kind of pharma space.

So I guess tax, you know, in the earlier stage, and you know, I see a lot of teams now that are like, hey, we're AI for this or ml for that a lot of pharma and biotech deals have to have the catchphrase ml or AI in their writing now because of the economic improvement of those businesses.

Are you looking at enterprise software businesses that aren't necessarily about the typical subscription model where you sell a seat license and people pay for that, but have this broad tool set and toolkit where these folks are earning revenue share or participating in a services revenue stream for enhancing the value of their their their their partner in the AI or ml space?

And what's the better business model? Because I think this is where so many new teams are starting out is what's the business model? And what should we be focused on with our ml toolkit? I mean, the short answer is no, we haven't done any deals like that. Well, we were not pharma investors.

So I don't know how I'd be able to evaluate even if it is a software product. I don't know how to evaluate its effect on pharma outcomes. So I mean, we haven't done deals like that. Verticals. I mean, like, do you look at ml and AI companies that are more services or partner oriented versus just selling seat licenses to a software tool?

I mean, is that a big trend you're seeing? I don't think we have enough data to tell you what the trend is. We did a deal called Pearl, which is creating an AI for dentistry. So what it'll do is it scans in all of the x rays and you know, dental records from from dental practices.

And it gives a kind of a second opinion, it can spot things like cavities and things like that, or just changes in the condition where it's really powerful is over time, right? If it's got your last six sets of x rays over whatever six year period, it can detect changes that are probably, you know, hard for a human to see.

So they think they can get to like better than human sort of diagnosis by using computer vision. And then we invested in it sort of after that, where we realized, okay, this is kind of like a powerful application. So we invested in a company called Robo flow, which creates tools for computer vision.

So Pearl created its own tools for taking a large number of, you know, x rays and classifying them and then creating their own AI tools. Robo flow gives you that same tool set, but you can run it on any computer vision project. And they seem to be building a pretty big universe of software developers who are using their tools.

And in this case, this was a team that was bought, they bought a 250% team for $600 million that just had this capability set really and a toolkit. Does that change your outlook for investing in ml AI companies, when you see a $600 million exit for effectively a capability, they didn't have, you know, a core product that was in market, they were doing kind of these co development deals.

But I mean, how much does , that AI engineers go for 2 million each, I think is kind of your point, Dave, on an M&A basis? Yeah, I mean, you deep mind got bought for what 600 by Google. And I think they had 200 people. I think it was like 400.

Yeah, it was like, 400. Yeah. So yeah, it does seem like, and I think deep mind did not have a business concept in mind when they were funded. They just wanted to do research, right? That was kind of the only thing about that company platform capability similar to instant deep.

I mean, there's a lot of these, that's what I'm pointing out is like some of these platform capabilities end up just getting bought for, you know, huge sums. Yeah. Strategy as sex points out the amount, you can invest in a company hoping for an unreasonable acquisition, meaning unreasonable, meaning that reason will acquire.

Yeah, yeah, like unreasonable, meaning that your own metrics don't reflect that valuation as a business, you might be worth it. As a strategic acquisition of somebody else. But you you actually raised an interesting question, which is, is a seat model, the right way for one of these companies to price their product.

And you may be right that that the seat license model doesn't really work because, like, how many seats do you really need to buy for these companies? Look, I mean, one of my like, when I'm prompt engineer, you know, when I was true, like, I mean, we've seen this, we've even seen we've had these debates inside the companies I mentioned, where, like, you know, charging a $10, even $100 a month seat doesn't make nearly reflect the value of the insights that are being created.

And so yeah, there are like, you know, there, I don't think this has been figured out yet. But this is the big question in ML and AI. When I was at Monsanto, you know, we had all this IP licensing deals we do or new products would come to market.

And it was never cost plus or simple pricing, it was always about value capture. If in an enterprise setting, you know, because we sold to farmers, it's like, how much value are you delivering for the farmers, if it's $100 a profit an acre, you try and charge an incremental $30 an acre for that product.

And it was always a one third value capture model. And the same is true in biotech and pharma, the producer of the product, or the co developer of the product is often trying to value capture. And it's not a site seat license, and it's not a service fee, it's more, ultimately, we want to get a royalty on the outcome on the improvement that we can deliver to you.

And so there's all these novel business models that are emerging, at least that I'm seeing in pharma and biotech, to participate more meaningfully, ultimately, in the drug development outcome, versus just getting charged a fee for doing a service or a fee for a license to a to a software packet, the value of these companies has gone down, I was a early investor, series A investor in a company called Flatiron Health, we sold it for $1.9 billion to Roche, that's the biggest exit in this space for this machine learning enabled stuff that happened in 2018.

And so what's really happened is the value of acquisition and M&A has gone down, even as the technology capability has gone way, way up. And why is that it's because this stuff has yet to be proven to actually meaningfully improve the hit rate for these drug companies. So whether it's biotech, or Roche, or anybody else, the biggest problem we still have is getting the design space, guessing that better.

And these machines are better at doing raw calculations, but they're not necessarily better at veering towards this design space over this design space. And so as a result, you're not improving the either the slugging percentage, or the batting average of these pharma companies. And that's why they're paying less and less.

So everybody will have this capability as an adjunct. The thing that you have to do is sort of what what you guys have said, which is, if there's a company that can actually do better guessing at the top of the funnel, the thing that you should probably do is just give it away in return for a back end rev share, and a royalty.

And that business also exists. So you know, the best performing company in pharma is a company called royalty pharma. It's a 22 and a half billion dollar company that has 90% EBITDA margins. It exists in Ireland. It's run in New York by this wonderful entrepreneur, Pablo Legareta. But that's what he does.

He buys small pieces of royalties. And his whole thing is like the Paul Graham thing at YC. I'll give you just that little amount of support. And all you need is a little lift in valuation to justify giving me the 6%. And the tooling company, the AI company that does that could win who would go to Roche and buy on tech or Lily or somebody else and just say, Look, use my tools.

And whatever drug you generate off of me. I just want a 3% royalty. And all you need to do is just show a 3% lift across a portfolio of assets. That would be a killer business model. Because if you look at what Pablo has done, over a large number of successes, that's a ginormous company.

Jake, how I mean, are you investing in the seed stage ml AI companies? And are there novel business models that you're seeing? We're not seeing too many yet. To be honest, we have we are seeing people play with chat GPT, and kind of do, you know, experiments, but, you know, the more I've used chat GPT, we've connected it to our slack.

So you can actually ask a question in our slack in a channel called AI testing, and it will give the answer and everybody can see people like playing with it. You know, it's kind of like a parlor trick. Now I'm in like, that phase where I'm like, Yeah, this is impressive.

But it didn't actually solve my problem. And it's slightly faster than doing a Google search. So I am thinking there's going to be a really good business created in taking the open source projects and forking them and verticalizing them like, you know, saxes. One that's doing dental work, you know, like this makes sense to me.

Somebody should do it in accounting, somebody should learn all of gap accounting, which is pretty simple, because it's published, FASB, all of this nonsensical accounting rules, and give you 100% guarantee of no malfeasance. So for example, you guys saw this Brazilian company, you want AI accounting, that's your that's your look at this company, logistic, logistic, diligence, look at this company Americana in Brazil, which just torched $20 billion of enterprise value.

Why? Because these guys were using Excel to do a bunch of complicated capitalization and cost accounting made two or three years of mistakes, it added up to two or $3 billion. And they're basically going to file bankruptcy in the next few days. That's completely avoidable human error that should never happen.

And an AI would be perfect for that. Like this is not super controversial to just follow gap accounting. Right? Yeah, I mean, I don't know if you need AI for that. I think you just need software like a database would be good. But no, the problem is the database exists today, like everybody sits on top of Oracle GL or workday, it doesn't prevent these errors.

So my point is, you got to get humans out of the system, and the AI should be the accountant, the AI knows the rules, generates the P&L and says, this is it. And by the way, that's way better risk management for the CEO and the CFO. Because as you guys know, if you're the CEO of a public company, you have to sign your signature that these things are legitimate.

And how do you know? I would way better know that a computer did it like an open AI algorithm tells me to mop this P&L is perfect. Then some dude I don't know, at Ernst and Young. Okay. I have a question for sacks. saxy poo. Can you please explain to me why Alec Baldwin is going to get charged with manslaughter for this rust thing?

That seems really crazy. Can you say, can you explain what happens on a set with guns? And how the hell did this happen? Like what the hell is going on? Well, I've produced two movies, but neither one of them involved, you know, guns or shootouts or anything like that.

So I haven't had like firsthand experience with this. I have you're a gun owner. So you're an intersection of movie producer and gun owner. So it's a good I understand the rules of gun safety and that kind of stuff. Look, Alec Baldwin did not follow the rules of gun safety.

The first thing I would do if I was ever in handed a gun would be to clear it I'd like check it to see if it was loaded and clear it. And you never pointed at you as somebody you always treat a gun as if it's loaded, even if you think it's not, but he was in a very specific situation, which is he's on a movie set.

And the person who's handing him the gun is the armor. And someone who's and said cold gun. Yeah, exactly. It's somebody whose job it is to make sure that the gun is handled properly and unloaded and all that kind of stuff. And they're using it on a set. So I agree with you.

I don't quite understand why Alec Baldwin is liable in that situation for the gun going off the person who screwed up here. The person who screwed up is the armor. Is the armor. I have a question person whose job it was to never allow live ammunition on the set.

But to handle the guns properly. He hired this person. I thought the whole point of guns in movies was that they were finding blanks. Yeah, they were firing blanks, but they had blanks and regular ones in their kit for whatever reason, because they were shooting real ones as well.

But this is involuntary manslaughter. And I think Baldwin is also the producer of the film. So I don't know if this has to do with his hiring of the armor, you know, I'm saying that I can that I can speak to. Listen, you you frequently give stars in an independent movie a producer title.

He's not responsible for the physical production of the movie. I bet anything he's not. There's a guy called the line producers responsible for the physical production. And my guess is he wasn't even responsible for the business side of the production. They've got other producers for that. So it doesn't make sense to me if they're going to charge him for having some sort of overall liability as a producer to then not charge the other producers.

That just doesn't make any sense. So I think this producer credit things probably a red herring. Like I said, I think the armor is the person who is singularly responsible for this situation. They're the ones who screwed up. They're the ones who had a responsibility to make sure that the gun handed to an actor.

I mean, Alec Baldwin's an actor. Yeah, look, conservatives in social media are dragging the guy because they think he's a douchebag. And he doesn't know how to handle guns. But that's not his job. He doesn't ask questions. Yeah, movies. Why would you ever have live ammunition on a movie set?

You shouldn't they shouldn't have you shouldn't it's a mistake. So it's not as if like the scene is different if you have a real bullet versus a blank. No, it should. As far as I know, it should only be blanks. If I remember right, there was a story about how the gun armory people were taking members of the cast and crew.

And they were shooting guns for fun in the desk. And they were doing like they were doing like targets and messing around and teaching people gun stuff and just playing around but using live ammunition. And that that led into an accident that there wasn't good kind of transition. That's really bad.

That sounds like the kind of negligence that caused this. But unless there are facts we don't know about. I don't know why I was also being charged by the way with a yes, yes. I was being charged with the armor. That sounds totally legit to me. So guys, listen, I need to run another call.

I was going to talk about this really fantastic paper on the one of the driving forces of aging, as demonstrated by a team from Harvard, in collaboration with many others on epigenetics. And the loss of data integrity and epigenetics really being the core driver of aging in mammalian cells.

It's an incredible paper. It speaks a lot to what we talked about last year, Yamanaka factors, and partial epigenetic reprogramming of cells, how they can reverse aging, these guys have demonstrated it in a really powerful way. I'd love to spend some time on it. Maybe we pump that science corner to next week.

Wrap up for today. I think we've talked about all sorts of fun stuff. It's been a real pleasure and an honor to be in the seat of the world's greatest moderator. We miss him today. We honor him. We look forward to having his return next week. It's been a pleasure chatting with you gentlemen.

And on behalf of the all in pod and my co hosts Jamal Palihapitiya, David Sacks, Jason Kalikianis, thank you for listening. Bye bye. Love you. Bye bye. Let your winners ride. Rain Man David Sacks. We open sources to the fans and they've just gone crazy with it. Love you.

Queen of Kinwai. Besties are gone. That's my dog taking a notice in your driveway. Oh, man. We should all just get a room and just have one big huge orgy because they're all just useless. It's like this like sexual tension that they just need to release somehow. Let your beat.

Let your beat. We need to get Merchies are back. Going all in. I'm going all in. (dramatic music)