E96: Adobe acquires Figma for $20B, TPB SPAC, FedEx CEO's recession warning, macro picture & more

i literally don't want to talk about brigading guys though only because it's getting crazy and i had to like mod my stuff so start the recording please start the recording i'm gonna strike it by brigades you mean like maga brigades all right listen it no i'm serious do you think because i can call them off hold on hey donnie hey donnie yeah jake alice said he's being brigaded by maga yeah yeah yeah he can't handle it he's tapping out i tap out i tap out the dogs okay all right it's all good it's all good it's it's over they're not gonna they're not gonna brigade anymore the psyop is over thank you thank you it was getting pretty it was getting pretty acute yeah it's done don't worry about it let your winners ride brain man david sasad and instead we open source it to the fans and they've just gone crazy with it love you all right everybody welcome to episode 96 of the all in podcast we had a bomb drop just yesterday uh with adobe agreeing to acquire figma uh the design tool we'll get into that in a minute what it actually does for 20 billion dollars this is just astounding for this to happen period full stop it's the largest private company purchase uh i believe in history this company if you don't know it helps you design web apps or user interfaces so if you're a designer we used to make mock-ups we'd send them around in the industry as images or pdfs and then like google docs where you can put comments on somebody else's words and you can collaborate in real time we call it multiplayer mode figma is multiplayer mode the company is just a juggernaut if you work in startups you get figma designs all day and adobe stock got crushed because of this was down as much as 18 on thursday figma's most recent valuation was 10 billion dollars in june of 2021 their series e so peak market they had raised 200 million at that time there's a lot of details to get into here but you know listen let's uh ask the sultan of sas here what you think of this because it's double what was an incredible market last year that was overheated so what does this say about the market figma you know figma itself or maybe adobe's you know jumping the fence or being skittish how do we reconcile this sax well if you judge adobe stock price the other day the market hated the deal i mean the uh adobe stock price went down like 15 and that's 150 billion dollar company roughly so they lost almost the entire purchase price in the market capitalization of figma i think that's that's basically an overreaction i you know i i don't think that's a good thing i'm i know all the news is basically on how adobe is paying 50 times and that's no longer the multiple the multiple is more like you know eight nine ten times for high growth sas companies there is truth to that but but i think it misses some important details about how fast figma is growing can we actually throw up on the the screen the ar history of this company so and for people who know the multiple is the multiple times top line revenue is really okay so explain that to folks yeah well arr is just the annually recurring revenue it's subscription revenue sometimes people will look at next 12 months revenue which is a similar concept not quite the same but sort of in the ballpark so you know what's interesting about this company i think was founded 2011 2012.

it had a very long wilderness period that's what i call the period where the founders are trying to figure out what the product's gonna be uh really for almost five years they finally found out that figma was going to be a global market shareholder and they finally launched a private beta in 2015.

they then opened it up to public launch in 2016 and they didn't turn on monetization until 2017 so five years into the company that hadn't made a dime so you know it's roughly a 10 year old company and for the first five years didn't make any money and then they started to make money five years ago and then in 2018 i think they turned on the enterprise tier uh and then it's been kind of off to the races that's incredible yeah what i what i can tell you looking at these numbers by the way so i don't know if these numbers are perfectly correct this is sort of i would call this scuttlebutt numbers these are numbers that um i believe to be true but it's not like these are numbers that the company's confirmed or anything like that this is just me gathering you know intelligence from talking to people in silicon valley so this is what i believe to be the case can you read the numbers for people that aren't on youtube watching this yeah so in 2017 again the first year they monetized they did seven hundred thousand they ended the year with seven hundred thousand of of arr remember that arr is kind of a point in time metric it's the amount of subscription revenue your annual run rate subscription revenue at that time so they ended 2017 with 700 000 2018 they ended with 4 million 2019 they ended with 23 million 2020 they ended with 77 million 2021 210 million and then the estimated number for this year is 450.

so you've seen in the press i think it has been publicly reported a 400 million dollar ar numbers currently where they're at i've heard that they're going to end with something more like 450 this year and then the their forecast for next year is or was at some point in time when somebody heard this 800 million you know forecast for 2023 so my point is i've seen a lot of sas metrics and i can tell you this ar ramp is phenomenal you know i'm sure people have kind of heard about the triple triple double double that's kind of what vcs want you to do they want you to triple two years in a row then they want you to double two years in a row and so forth this company did way better than that i mean 700k to 4 million is a really fast ramp and then 4 million to 23 million is incredible that's like you know over a 5x and then they did over a 3x going from 23 to 77 million i can tell you that is super hard i think most companies even the ones that hit you know low 20s tripling year over year they tend to decelerate to two and a half times or something like that this company was still growing over 3x then they roughly tripled again to get to 210 and then since they got a question yeah so now they're double that do you think the triple in 2020 was a covet pull forward or do you think that that was a natural like a zoom or not that's what i was gonna i mean yeah it's possible but um because people were collaborating i'm not i don't see i mean so far in the numbers i don't see a huge slowdown here um i mean look once the numbers get into hundreds of millions it's really hard to maintain the same growth rate but i think it's a really good thing that we're seeing that we're seeing that we're seeing that we're seeing that we're seeing that we're seeing that we're seeing growth right you're compounding off such a large base that it's just inevitable you can't keep growing 3x year over year once you're at you know 200 million of arr but the fact they got first from 23 to 77 and then 77 to 210 and now 210 they're at let's say they're at 400 now and they're going to be at 450 by the end of the year plus it's um it's pretty amazing and so okay so yeah so adobe's paying 50 times current arr but if you believe this they're only paying 25 times current arr but if you believe this they're only paying divided by two they're paying 25 times end of next year so like 18 months from now and then you figure you know within say two years after that they're going to be you know at somewhere between one and a half and two billion yeah of arr and there yes as you guys know there just aren't that many sas companies that even get to a billion of arr so so i i don't think adobe's making a bad deal here there i think there's a question about is there any point at which this product hits some sort of market saturation but adobe's in a good position to know that because they understand this market they are in this market it feels to me like i don't know i've been using adobe photoshop right around when it first came out like 1992 and this product i've used it it was built web first it was built for collaborative use and photoshop over the years they've really tried to take what is a desktop installed software application and then try and create cloud-based features and it's a terrible terrible user experience at least from my perspective having grown up on using adobe photoshop but what's most important i think is a lot of people think about this on is it the right price to pay for the company but at the end of the day the right price to pay for the company is what adobe views to be the risk and reward for their business and they effectively um paid roughly 12 dilution of their company to do this deal so they're saying let's take 12 of our company and i and effectively de-risk the biggest risk to our business take out the biggest threat to our business for 12 of our company not 12 percent was it 12 you have to factor in the actual drawdown of the stock as well so it's about 33 they they effectively well i'm talking about like assume take take the price of the stock aside the number of shares they're they're issuing because by the way the deal value went down with the stock so i read the the merger terms last night and there's a couple billion of cash and i'm like oh my god i'm gonna have to do this and i'm gonna have to do this cash, and then a good chunk of it is in stock, and it's, it's 10 billion of cash, and it's 10 billion of shares at the price when the deal was announced into your point.

So it's a fixed number of shares. Just thought it's a fixed number of shares. It's not a fixed. It's not a fixed monetary value. So it's down 20% from the deal announcement. So that 10 billion of stock is now actually 8 billion of stock. So, no, the whole deal is now 18 billion.

Not what the 10 billion a cash to month the 10 billion cash? Yeah. And then there's 2 billion of there's 2 billion of deferred RSUs and stock based compensation. But there but I mean, if you think about it, at the time of the merger, they're they're either, you know, I think they have, they're going to use some term loan that they have to get the cash.

But they're effectively issuing, you know, 10 divided by their total share count, which is roughly 6% of their total shares outstanding. So you know, they're kind of taking 6%, or let's just aggregate the two together and say they're taking roughly 12% dilution. Sure, like the value of the stock goes down.

So look, I think like this deal is really interesting. So first, let's just give huge kudos to the CEO and the team and the investors. What an enormous win for all those folks. That's awesome. It keeps Silicon Valley kind of going right. And that's just awesome to see these kind of big wins.

I read this incredible profile about the founder. And he sounded like such a fascinating person. He basically, it would the profile basically said that he was spending months and months on a company. And he was spending months and months, going from office to office all around the world, meeting customers, sitting with customers reading trouble tickets, that's what he would do, you know, reading help desk tickets about the product on vacation.

Whenever you see a CEO that is so customer obsessed, typically, there's good outcomes. And so this is just another validating point on that theme. Now, let's just put Figma aside. And let's just talk about Adobe for a second. What is so incredible is you have a company. So let's just talk about Adobe.

So Adobe is a huge company. And they spent $20 billion, or whatever, 18 billion now. But the way that they did it is really interesting. If you go back to Zendesk, and SurveyMonkey, when those guys announced that merger, it was above a threshold of stock, where you have to go to a shareholder vote.

And because there was so much turbulence in the market, whether the industrial logic of that deal made sense or not, didn't matter as much to shareholders when it came down. Right. So interestingly, Adobe was very clever, they said, I'm going to do half cash half stock so that I'm below the threshold, we are below the threshold where it goes to a shareholder vote.

Okay, interesting. But then you have to factor in the dilution, not just the dilution of the stock, but then the re rating of the stock. And this is where you know, you lose 20% of your market cap. And then you tack on this, you're talking about, you know, a 40 30 $40 billion price tag to get the deal done.

And I think that's where the head scratcher was in the public markets where folks basically rebuilt their model and said, hold on a second, you know, you've been telling me that this problem is a solved problem. But when you pay such a premium, not only does it mean that this product is clearly materially growing and disrupting, but the existing revenue base that I was counting on in my model must be wrong as well.

And that's the actual flywheel that now Adobe is in where people are trying to really figure out how under pressure are those existing cash flows. And then if you compound that with something else, which is nothing specific to Adobe, but to the whole market, which is now interest rates are going up behind the scenes, you have this sort of parade of terrible for Adobe that they're going to have to navigate, right, they have a very large portion of cash, they have a large portion of stock, they have decaying earnings in their core business that they now have to explain.

And then they don't really have a lot of earnings, I think Shantanu said that it's going to be year three before it's accretive, which is typically a way of saying we're going to lose money. And then in year three, we'll make at least a penny. That's what accretive means doesn't mean you're going to make billions necessarily.

And so these guys have to find a way for figma to drop about a billion and a half dollars of free cash flow into the business for this to kind of make sense in the short term. So I think those are all the mechanics that sort of putting a lot of pressure on the Adobe stock, but it just goes to show you the amount of disruption that happens in the market.

And it's not just the fact that the market is so big, it's the fact that the market is so small, it's the fact that it's so big, it's the fact that the market is so big, it's the fact that it's so big, it's the fact that the market is so big, it's the fact that the market is so big, it's the fact that the market is so big, it's the fact that the market is so big, it's the fact that the market is so big, it's the fact that the market is so big, it's the fact that the market is so big, it's the fact that the market is so big, it's the fact that the market is so big, it's the fact that the market is so big, it's the fact that the market is so big, it's the fact that the same way the WhatsApp deal was for Facebook, it removes one of the two existential threats to Adobe.

And it turns Adobe, I guess into a growth story now, as pointed out, Adobe's product was single player mode, and Adobe grows at about 12 or 13% quarter right now, and now you have a company that doubles. And they really have been facing three paradigm shifts in the last five or so years, obviously, you pointed out one Freedberg desktop software downloading it versus cloud based software.

Well, here they go. Now they've got experts in cloud. And then the second one, yeah, but they have a thing called Creative Cloud. And they are slowly trying to figure that it's a paradigm shift inside the company. They've really struggled. So now they have somebody who's cloud first trim off.

Do you guys ever use those products? We have, but let me finish here. There's three paradigm shifts here feature for feature. They look very similar. No. So these these three paradigm shifts, the one is the desktop versus the web. The other one is subscription. So Adobe was charging $1,000 a year for the Creative Cloud.

Now they charge 25 bucks a month for it. They successfully did that. Now they've successfully, I think have figured out collaboration software. But he has one thing that they have not done, which I think is the real reason they had to buy Figma. Adobe, see, this is the problem with these big public companies.

Adobe and all of their investors got very addicted to the free cash flow generation of that stock. And it's been an incredible performer. And let's just be honest, Shantanu is one of the best CEOs of the last few decades in the public markets, period, end of story. Okay. Since 2007, he has just run a masterful playbook.

At the tail end of that, though, you know, in 2022, this is a company that has I think six or seven, maybe I think maybe $8 billion of free cash flow. It is a gargantuan money making business. And so they refused in Creative Cloud to go to that free tier that Figma has.

And if you look at all of the stories around Figma, one of the most powerful things they did was basically allow people to use this for free effectively forever. Yeah, bottom up sass. Yeah. And the problem with Adobe is like, that's a business model disruption that they could not afford in the public markets.

Because if you condition a set of institutional investors to be expecting seven to $8 billion of annual free cash flow, and all of a sudden, you're willing to torch it to take a quarter of that and make it free. That is probably the biggest reason why they had to buy this thing, which was that they needed to tuck it in.

And they're like, how can I do it? Well, I just have to do it by diluting the stock. One time that was one time stock insurance. Yeah, that was it. It was a one time 12% diluted still, and then there it's one and done. It's one more to go.

The point the point you guys are making is more broad, which is it's not just about Adobe. This is the classic innovators dilemma, right? Like any big company that reaches maturity in their market, and has some kind of value, and has scale and has cash flows, you have a different shareholder base, you move over from growth to value.

And once you've got value shareholders, I mean, I've been to these institutional meetings, when I was on the exec team at Monsanto. And you know, they wanted dividends, and they wanted stock buybacks. And they they're like, it's nice to see growth. But at the end of the day, I want to know where's my dividend going to be?

And what's my stock buyback target going to be? And then to say, hey, I got to go invest in innovating my way out of my corner. Because, you know, in this case, I'm going to be investing in a company that's going to be a big tech company. And I'm going to invest in a company that's going to be a big tech company.

And I'm going to invest in a company that's going to be a big tech company. And in this case, cloud is reinventing my marketplace, it is a very hard place for a manager of a business of that scale to be, by the way, every industry, by the way, I think there's another takeaway that's really interesting here, which is that if you look at big tech companies, I think you almost have to sort them into two buckets, at least in the enterprise and that sacks, you can tell me if you disagree.

But there's one type of enterprise company, which makes basically a single linear monolithic product, or a handful of those monolithic products, right? Think Workday, think Adobe, etc. But then there's this other type of company, which are more platform level businesses that have this, you know, mixture of things that they do relatively well integrated, maybe each product is not so great.

But together, they're pretty decent, and you have distribution leverage, and you have pricing power, think Microsoft and the totality of those products. So what's interesting to me is, you cannot effectively compete, as it turns out, against Microsoft at any point product. And Slack, I think, is the best example where, you know, Microsoft Teams was fundamentally cannibalizing this business, which is what drove slack into the arms of Salesforce.

And, you know, you could say that Teams was not as great of a product, I would have, I would make that claim. But what Microsoft had was distribution scale and pricing power where you could discount and effectively give it away for free. Adobe isn't in that situation, right? They can't do that kind of stuff.

And so when you compete against those kinds of businesses, you have a better chance of winning the takeaway, I think, for the entrepreneur, is when you're thinking about the next enterprise business to start, I would try to bucket these companies that you want to compete with and say, if I'm going to build a newer version of x, make sure that version of x is going after a company like Adobe versus a company like Microsoft, because it's much, much, much easier to build value when you're competing against a monolithic product company versus an entangled platform company.

Sachs, would you bundle if you were the CEO of Figma? Would you now I'm sorry, CEO of Adobe, would you bundle? Figma into the Creative Cloud and then just make it one subscription? Would you Microsoft teams that? Yeah, maybe I don't know. I'm not sure about that. I do think that Microsoft is a little bit unique in its ability to bundle.

So what so tremendous right about the power of the bundling, what they do is I think it's called the E five bundle. They have all these products that virtually all enterprises use from office to, you know, Active Directory to you know, there's like a whole long list of products that are going to be bundled into a whole long list of them.

And so what they've done is they've created one price for all of those products that they sell as a bundle under a wall to wall enterprise license. And what they do is when they see a new competitor come along, whether it's slack or zoom or, or Okta is they'll basically just clone it create a worse version of that product and throw it into the bundle.

And so now every single enterprise is getting the slack clone or the zoom clone or whatever for free. And so they're going to have to go back and forth between the original product and the original product. And so they're going to have to go back and forth between the original product and the original product.

And so they're going to have to go back and forth between the original product and the original product. And so they're going to have to go back and forth between the original product and the original product. And so they're going to have to go back and forth between the original product and the original product.

And so they're going to have to go back and forth between the original product and the original Microsoft is allowed to keep doing this forever because think about it. I mean, they will just every year, they will take the hot SAS company de jure clone it. It'll be a shitty version, they'll throw it into their bundle.

And now they're dumping they're dumping the product in the market. It's basically free. It's free until they basically drive and they drive out the competitor or destroy it or basically undermine this market cap to the point where it can no longer make the kinds of investments it needs to pose a real threat to the Microsoft larger entity.

Right. So think about how any competitive this is. And you don't hear a word about this from Lena Khan or Washington. They're only focused on social networks. It's so funny. It's like she's more focused on, you know, making sure Amazon doesn't buy Roomba that, you know, this stuff that's happening, Facebook doesn't buy one VR app.

It's not very sophisticated approach. This is the kind of stuff that actually really matters. I really think you nailed it on the head. Sacks, it's a it's an impossible strategy to defend against. The the other thing that is interesting, by the way, about all of this is, you know, if you think that the valuation, the takeout premium was basically two X post to post.

What that means is that if Figma was last valued at ten is now worth 20, you know, does that mean that Canva, which was last priced at 40, is worth 80? Well, potentially to potentially to Adobe. Right. And if you add those two together now, you know, what you really have is basically the the entire totality of the creative cloud for Adobe is basically.

Basically embedded now in these two businesses at an extreme premium. And so it makes it very difficult now, I think, as well for Adobe to execute a strategy here without it being forced to do some more expensive dilutive M&A. Well, and the other problem, Chamath, is this is going to ring bells.

So when I said before there were two existential threats, Canva is the other one, and that is the other paradigm shift that's occurred in computing. Is that making things radically simple? You talked about it. I mean, I think that's the problem. I think that's the problem. I think that's the problem.

I think that's the problem. I think that's the problem. I think that's the problem. I think that's the problem. I think that's the problem. I think that's the problem. I think that's the problem. I think that's the problem. I think that's the problem. I think that's the problem. I think that's the problem.

It's only called design tools because it was sold to someone that was called a designer before, and that's not the case anymore. Now it's a tool that anyone can use in the enterprise setting or in a small business setting or in an individual setting to create stuff. And that wasn't the case with Photoshop.

And I think that's what makes this arguably a very different business, a bigger business, a more transformative business and a farther reaching business and I don't think that there's necessarily a speaking of the Figma deal, right, a case to be made here that they're preventing the extinction of their monopoly, they're buying what looks like a very different business.

And it's really additive. It's a business that can turn anyone into a creator. It's really cool. Yeah, but you're kind of speaking out of both sides of your mouth now, because on the one hand, you're saying it's a different business. But on the other hand, you said that this is basically protecting them against an existential disruption to their core business.

So if it's an existential disruption to their core business, how could it not be in the same market? Of course, it's in the same market. Well, there are new entrance competitors. There are new entrance and there are different underlying technology trends. This is all about cloud. But nonetheless, I don't see how these things aren't competitors with each other to some degree.

So I don't know how this doesn't get seriously reviewed by antitrust authorities. It feels so similar to Facebook, Instagram and Google YouTube. And by the way, it's similar in both those examples in a number of ways, both Facebook. Instagram was not competing in the same product as Facebook at the time with the newsfeed or whatever.

It was a photo sharing service that clearly created a broader addressable market that got more people to use a social network and YouTube. People thought they were overpaying. Right. And then YouTube, everyone thought it was crazy. They paid a billion six for that business. And it's probably the greatest acquisition of all time.

It's been the greatest managed acquisition of all time, I should say. And that business similarly, I think Google recognized that people were going to move to video content as an alternative to text based web content and that it was a bigger picture opportunity than what they were pursuing and in the lane that they operated in at that time.

And they were right. And in both cases, it was more about paying whatever it took to get the deal done. Then, you know, hey, how many users do you have? How much revenue? How much EBITDA? What's your ARR? All that stuff goes out the window. When you're sitting in that strategic driver seat at that big company and you're saying this is a bigger market, these guys are transforming the market.

And ultimately, over time, that will eclipse us. And you can say, hey, you're protecting your business, but really you're protecting your market. I mean, the market is going to go away is what the vision is. Like the market that you exist in today isn't going to exist in the same way in five, ten years.

And that's what you're trying to buy your way into. I have a question and a statement. The statement is. I think Canva should absolutely go public versus sell because it seems like they'll have a much easier time competing against whomever that they compete with. I do think that, David, you're right, that there is.

A lot here for regulatory review, because if you go back and think about Visa plaid, you know, it's not dissimilar, meaning you have a young startup that has this really credible and viable technology potentially being acquired by in that case, it was one of a duopoly, but here you could make a very credible claim that it's in a market where it's roughly a monopoly because there aren't really that that many meaningful alternatives.

So I think Saks is right that there's that there's some, you know, there's a case here. Yeah, there's a case here where it just depends whether that was literally my question or this. Well, not just Roomba. How about how about that VR game that Facebook was before? Like that was a tiny acquisition that maybe have a million users.

Look, it's just exactly they are being punitive. I think I think it's. It's like favorites. Well, it seems like what the antitrust authorities are doing right now in Washington is they've got a list of companies that they think are punitively suspect and our job is to stop these companies from accumulating more power.

And it's really about seeing everything through this lens of power. But that's not what the competition authorities are supposed to do. They're supposed to ensure competition. It's about antitrust. It should be a rule book, right? And the problem with just approaching things in this way of the punitive way, we just have to stop these companies is it creates a chilling effect on on reasonable exits in Silicon Valley.

There aren't that many great exits and we want them to go through. Now, I think if monopolies need to be reined in, there are other tools to use besides just saying that those companies can't acquire other companies, no matter how unobjectionable they are. I mean, let's do things like allow side loading.

Let's basically explain what that is. That's basically a way to say that I think Google, the Android already does that, but iOS does not where you would be able to basically install an app or download an app without going through the Apple App Store. You could enable competitive app stores.

Basically, you know, I think I think it's a real issue that you have operating system monopolies. I mean, Google, Android and iOS with Apple and then Amazon with sort of, you know, white label products, those are all operating systems that are competing with apps on their own platform. And there have to be some constraints and rules around that.

Otherwise, the operating system will eventually dominate and replace any app they want to on the platform. We saw that's what the whole Microsoft thing was about. Microsoft Netscape was 100 percent about that. So I think if you can show that somebody has an operating system monopoly, there absolutely should be rules of constraints around that.

Does it mean the company should never go to buy anything? No. I mean, I think all that does is stifle innovation without really getting to the crux of what the issue is. I think you nailed it. A good first step would be allow other app stores. So Google's app store could be on iOS, iOS app store could be on another platform, et cetera.

And I mean, the other issue here is Lena Khan's been pretty clear. Her entire thesis in taking the job was, well, I want to prevent a downstream competitive issues. So future competition, there's no better example of a future competitive issue and future consumer harm, I think is how she phrases it.

Then this acquisition, if you're going to do it through the lens of future consumer harm, this creates future consumer harm because Figma is not going to compete with Adobe. You're saying that it does. It does massively, massively. I mean, this is the the the the dissonance here. It is great for consumers because they will bundle it.

They'll bundle the two things together and it'll it'll make it more valuable and reduce churn and it'll make it simple to buy. So that's good for consumers. Right. You get more free stuff, but future harm and a future competitive harm here is the marketplace will be less competitive if there is one less independent, strong company in it, that's and if you if they buy Canva, that's the definition of downstream competitive harm.

It'll be a less competitive marketplace with these two companies together. Full stop. So, Jake, do you if you're Lena Khan. You actually pay attention to this Adobe Figma thing in like a serious way, or are you still more focused on Amazon and Facebook? I would hope that they would do multiple things.

Saying, what would you do if I was her? I would create a rule book. And apply the rule book evenly and fairly. And this is the problem. This feels very political. It feels like they're going after Facebook because of the downstream political issues Facebook causes. And they're ignoring the Microsoft issue and they're ignoring issues like this.

It just feels like they have their thumb on the scale. If you look at what happened to the visa plat thing, it was an enormous blessing in disguise because, you know, the the thing went away and that was, I think, like a five billion dollar acquisition and then Platt turned around to raise money.

And it's like a multiple teens billion. It's going to be a wonderful. Independent company. To your point, Jason, that will now, you know, create more competition in a space that desperately needed. Now, in that case, that was sort of like financial payments and rails and Visa MasterCard, blah, blah, blah.

But that could also be, you know, if there is a lot of attention paid to the deal and it doesn't end up being consummated, that could be the positive outcome. But if you wanted future competition, if you asked me if I was a betting man, I think this thing is going to close.

I think it closes. Yeah. Yeah. I'm very it closes. It closes because it doesn't intrude on the hot buttons of Washington, not because the merits of the antitrust are superior to the room by deal or to that deal that Facebook wants to have. This is all about political and cultural hot buttons.

So it's so weird. Yeah, but I think we all understand what's really going on. It's all political. But I go back to your question. I think it was a really good question. I've had more chance to think about about should Adobe change the pricing of Figma? Should they basically bundle it?

I've spoken about the merits of what Microsoft does. I don't think that Figma should do that here. Now that I had a chance to think about it. The reason is this, that you have to think of pricing as not an element by itself, but as sort of the most important element of a go to market strategy.

And there's no way that you can basically reprice Figma completely as part of some other bundle and expect not to create massive disruption to your go to market. So you have to think about the benefits of that. And I think that's the key to that. And I think that's the key to that.

And I think that's the key to that. And I think that's the key to that. And I think that's the key to that. And I think that's the key to that. And I think that's the key to that. And I think that's the key to that. And I think that's the key to that.

I think what you see here is that is how efficient in a way venture capital is where it's tracking just slightly ahead of ARR. It is predicting where the hockey stick is. So first of all, look at ARR. It is as close to a pure hockey stick as I've ever seen in SaaS.

Kudos to them. I mean, the crazy thing is just how long it took for the hockey stick to get going. Why didn't you invest in this company? Did you see it? Well, no, we didn't see it. Also, look at what the late bloomer this thing is, you know, like that's incredible.

I see it like look, look like hockey stick didn't really start inflecting until 2018, 2019, right? So it's more that your table is more striking where these guys for years were toiling away and then all of a sudden this thing just took off. Right. It's really this was such a late bloomer.

And for anyone who's doing a SaaS company and you're in it five years and you still have zero revenue and like that doesn't mean you're dead. I mean, they basically were a zero for five years. I mean, exactly. Exactly. Absolutely nothing. And now it's a $20,000 exit five years later.

You actually think I think the only hard round to invest in this company would have been if you were going to invest in I think the 2014 time period 2015 because you were investing in a company that hadn't even launched yet that had been grinding for three or four years with by the way, the founder was like 19 when he started this.

He was a teal fellow. He was one of the first, you know, 20 under 20 teal fellows. Yeah. Yeah. And he dropped out of school. He was like, I'm going to do this and you know, and they spent several years in the wilderness. I think that's when it would have been hard to invest is maybe not the first seed round because you could tell this guy was brilliant.

He had a really specific idea moving design tools to the cloud was I think like a very clear and sensible vision clear, you know, why now underlying trend. I always say my three biggest traits for entrepreneurial success. One of them is grit. I mean, you know, if you have a high index on grit, you're, you're able to grind your way there.

It's really, that's a really incredible. This chart is brilliant because you know, what we see in the seed stage is right before that series. A is where most people give up sacks. You know, you get three or four years in people aren't paying for the products. You're under resourced and they don't get the a and they got a you know, that 2013 1415 period.

They were probably trying to get an egg by to take them two years to get the a and then somebody finally decided easy for a young person to give up and go get a freaking job at Google or go back to school. And to grind it out to have the grit and the persistence and commit to your vision.

He didn't pivot away. He persisted and he executed. He clarified. He clarified, right? Yeah, but he but he didn't he didn't go five steps away and say, I'm going to do a new startup and you know, there was no rate in his business, right? And he's no credit here.

Yeah, Dylan field, by the way, is the founder. I had him on the pod back in the day and really the, you know, ultimate customer focus customer obsession. Like I said, that wins. That's you need to just have your pulse on what your customers are saying constantly because the answer is there.

You just have to develop it and give it to them. By the way, also in this chart. That's I think very interesting. Saks. I'm interested in your position on this. If you look at this chart one more time, they could have turned on monetization. I think a year or two before they did so they purposely didn't charge for it to get the network effects going.

I would love to see in here the number of users as a third vector, you know as a third line on here because I think they started getting a lot of users. In 2014 2015 2016. That's when that's why they got the seed, but they purposely did not charge to let the network refer.

Yeah, 2015 was a private beta. I don't think they were even had a product in 2014. That was usable yet. 2015 was private beta 2016 was public launch and then they turned on monetization in 2017 and then they turn on Enterprise pricing in 2018. So I think that's a pretty sound progression.

I I'm not I mean to be honest. I'm not a big fan of taking three or four years in the wilderness to build your product. I think you need to get to market. Sooner, but I do think it is a little different in a existing industry where the table stakes are high.

So, you know, Adobe is not a cloud-based product, but those were very rich client products. And so to get to the point where you could even compete with them with the classic clay Christensen Innovative's dilemma lightweight version of the product. There were significant table stakes there and it was a significant technical challenge to move design tools into the browser there to do a lot of.

Still cutting-edge browser tech. The browser wasn't ready for it. Yeah, this chart is going to be call-in in a few years. Now that I'm doing after all in 48 hours after it. I think that's correct. Come join me with that. Your questions. Spacks are back. I don't know if you saw in the news, but Freeburg launched a spec for you to go.

No, no, no, he he he announced a target and a merger agreement. Incredible. So now he goes into the D-SPAC process. Now we have two out of four besties have spacked free. I tell us about what you expect. Well, I mean, we announced that we're merging the production board spec, which is TPB acquisition Corp with Lavoro, which is the largest agricultural inputs retailer in Brazil and operates across Latin America.

You know, we've got a good slide in the presentation that I think echoes some of the points I've talked about on our podcast here about the importance of having resiliency and redundancy and global food. Supply chains and increasing famine risk. So we've got a slide that shows for about 30 years, you know, we've reduced the number of people globally that have been undernourished down to about 600 million as of about three or four years ago.

And in the last three years, we've seen that number spike back up to 800 million, which we thought we were done with global famine. And now here we are facing these issues again, climate change, the lockdown, supply chain disruption, the Ukraine war and all the other geopolitical tension issues.

So that's been a big thesis of mine individually. You guys know, we've talked offline about some investments I've made and my strong interest in the area. Brazil and Latin America is the largest ag export market in the world. So they produce calories for the rest of the world and farmers.

They're largely lag in terms of technology adoption. I've got a nice Brazilian farm as my background today, but technology adoption doesn't look like it does in the US is a huge opportunity to influence and drive productivity up in that region. And so we've got a lot of work to do.

And so we partnered with the largest ag retailer, ag retailers, the local locations that work with farmers. They have these teams called agronomists. They meet with the farmers typically weekly, help them make decisions about what products to use, what to do, how to do it. And so with the footprint and the reach that they have, I think we can really drive up productivity per acre across the region, increase total global calorie production.

And that's why I'm so excited about it. Fundamentally, it's also a great business. It's all the financials are presented in the in the investment. And so we're going to be doing a lot of the investor presentation and will be published with the SEC here in the next couple of days.

But it's a it's a scaled business. It's a profitable business and it's growing pretty significantly. So it's got great tailwinds. It's a great base business. But for me, there's huge opportunity to continue to drive with their drive technology through the platform that they've built. And that's why, you know, we're also making $100 million investment off our balance sheet into the company.

So that's big skin in the game. Big skin in the game. These founder promote shares. They're, you know, the only vest if we can hit the stock price of 1250 and 15 over the next three years. Otherwise we lose them. So we've really tried to align ourselves as shareholders and really put our money where our mouth is on this and show people that, you know, that this is a real strategic partnership for us.

It's not just, you know, an investment that we intend to kind of, you know, hold for a short period of time. This is a key platform for me, for our for our TPB business and for many of the companies that we operate. So I'm super excited. It's been a long time coming.

It's been a very hard process as Chamath can attest. And as we all talk about, capital markets are very difficult right now. Getting a transaction announced is the first step. Now there's a bigger step of getting a closed. But yeah, a lot of work, but I'm super excited about this.

And thanks for letting me talk about it. Yeah. Well, and the other thing I just want to double click on there, Chamath, this idea that two thirds of this the sponsor promote have to hit certain high. Certain hurdles. I think that's probably a pretty good thing for folks who maybe want to invest to just say, hey, yeah, this is great.

We're the there's some alignment in how these shares get distributed. Yes. I mean, I think it's a good feature. I think that the thing with SPACs in general in a moment like this is that it's it actually performs better in periods of high volatility. And the reason is because, you know, you have this redemption feature, which essentially allows you to get back your your basis.

And so, meanwhile, while, you know, Friedberg was hunting for a deal or whatever that cash, you know, that you've contributed into this back sits in a savings account that then actually is generating some, you know, reasonable interest as rates go up. So the whole combination of all of this stuff actually makes back a pretty good risk adjusted vehicle when the markets are highly volatile because if at any point you don't like how you feel, even if you love the deal, you just vote to redeem.

Get your $10 back and effectively when the market, right? Let's say the market goes down 30% from here to March of next year when freebergs deal closes. Well, an investor could theoretically just say, you know what? I just want my $10 back. Now, all of a sudden, they've gotten zero.

They felt zero percentage of that drawdown. And that's what's so interesting about this structure in a moment like this. So I think there's a lot of really interesting features that that's back in the future. I think we'll have to incorporate in order to in order to be a successful tool.

In the toolbox. One thing I learned from, I guess, the pattern AG company that I think you incubated as well. Or was that? Yeah, a couple. Yeah, you incubated as well. Yeah. And you you guys invested through the through your launch platform. Yeah. So we invested the syndicate is that the way this retail works is we have Farmers, but then there are these retailers or these sales reps.

I guess they call them in the industry that service the Farmers. And so that's what this is. Yeah, that's exactly what we have this technology. Yeah, that's right. They don't they don't know. How else is a farmer supposed to know what to buy and what to do? So AG retail the local retail store, the people that work there are called agronomists.

And so the agronomists are like technical sales people. They understand the science and the technology of farming. They understand what the Farmers have done in the past and then they partner with them to help them decide what to do going forward. What products to buy how to use them how to get the most out of their land.

And so when new technology when you AG technology comes to market, it's the retailer that can influence the Farmer to make a decision on making a switch or using a new tool or using some software, you know to drive that decision. And so that's why AG retail is so important and why it's critical for any new technology to get adopted in farming.

It has to go through retail. You know, there's the big AG input companies. They're the seed companies in the chemistry companies and the protection companies and the software companies. They all don't sell direct to Farmers. Typically, they're going through these retailers. And so yeah, is there a version of Lavoro that's been that's an American company that's public or not?

Yeah, it's called nutrient and so nutrient own CPS, which is the largest retail chain in the US AG retail chain in the US about I think 70 80% of nutrients business is actually fertilizer production. And then the rest is the retail business, you know, that's the key comp that we actually show in our financial presentation that we published yesterday.

So what was nutrient done just as a public market? Do people understand sort of the value that it creates in the marketplace? Yeah. So in the last year as we've talked about on the show companies that are in the fertilizer business are making money hand over fist because of the the issues with the supply chain for natural gas potash and phosphates.

And so if you have access to supply like nutrient does and various other fertilizer companies do, you are absolutely minting money this year. And so they're having record earnings right now. And you know, people are kind of estimating that the fertilizer market will kind of reset. And as a result, these companies are over earning right now, which means that they're getting low forward multiples.

But generally speaking, yeah, these businesses have done very well. And one of the you know, I would say the US is about 15 years ahead of Latin America. And remember Latin America produces and exports more calories. Then the US and their own and corn farmers in Brazil, for example, are only getting half the yield of corn farmers in America or a little more than half per acre yield per acre.

And the reason is the retailers in the US are so sophisticated that they're introducing services and they make a bunch of money selling services. Now that wasn't the case 20 years ago. So now they're offering farmers advice using software and another kind of custom, you know, soil testing services and whatnot and that's really changed agriculture.

It's given farmers. Data that they didn't have before and help them make better decisions using that data that didn't exist before and that's really, you know, I would say concentrated in the US that kind of sophisticated behavior. I think it's really important. We see it happen around the world now because we need to grow more food and we need to do it without expanding land and acreage and so on and we need to do it more sustainably.

You do which is another kind of key part of this. Did you worry a lot about like the FX risk of you know, all these inputs coming into Brazil, having to deal in local currency than having to kind of get the revenues out in into US dollars and all of that stuff.

How did you think about that? Yeah, it's a good question. So when all AG commodities around the world most commodities, right? They trade in dollars. And so, you know, if the dollar strengthens against the local currency, the ray, I the farmers actually make more money and the input companies charge more money in local currency.

So basically the entire AG market and around. The world commodity markets, generally speaking inputs and outputs trade in dollars. And so if you're all a local business, you actually make more money when your local currency goes down and you're willing to spend more money. And so businesses in a commodity cyclical business generally are currency hedged because of that because they're selling stuff in dollars.

And then as a result, the places that they're buying stuff from charge them more in their local currency. And they can still make a good spread. So, you know, there may be fluctuations in FX risk. But generally speaking, I think we see and I'm just speaking generally here not about this particular transaction.

We generally see and we saw this at Monsanto. So that's a good example. All AG input companies when the local currencies devalue in a market that they're selling into they charge more and the farmers can afford to pay more because they're making more selling their product into the market.

I am. I think this company is super interesting. So I'm rooting for you. It looks it looks really cool. And it seems like a very good entry valuation. Good margin of safety to yeah, 1.2 billion dollar 1.2 billion dollar valuation if I'm reading correctly here. So yeah, congratulations hard to get a deal done at this time for people don't know FX foreign exchange just trading one dollar or one currency for another.

Did you guys see that there was a title six lawsuit? Filed against Pfizer for some, you know, in the in the Civil Rights Act, there's something called title six, which means that if you take federal funds of any kind, you can't discriminate and Pfizer has a program to recruit African American and Latino people into the company.

And they're not being sued because you know, Pfizer takes NIH grants. They, you know, work with the US government. They work with Medicare. They work with Medicaid. And so as a result of that, it's really happening one month before something else that we talked about, which is there's the affirmative action case that's going to the Supreme Court where I think it's Harvard actually, you know, push people pushing back on Harvard's ability to have some form of race-based admissions.

So I just don't know if you guys were monitoring this for me. I just took a step back and I thought look at what has happened legislatively in 2022. We basically repealed Roe v. Wade. The Supreme Court also went after concealed carry in New York and said that New York cannot legislate against concealed carry, which had pretty big ramifications with respect to gun laws.

The consensus opinion is that we're going to repeal affirmative action in the next month or the Supreme Court is going to do that. These are three pieces of an enormous change in the United States civil society that that has happened in a really small condensed period of time. So I have these thoughts on, affirmative action, but my other thought is like it's incredible how conservatives have been able to organize and how disorganized, you know, progressive have been in order to create a counter maneuver against them.

Because this has been a systematic effort since Karl Rove literally wrote about it in the mid 2000s and said, here's what we're going to do. We're going to raise a bunch of money. We're going to redistrict everything. We're going to get the state legislators on our side. We're going to basically, you know, fund the Federalist Society.

We're going to and they did it and in 20 years they've created. An enormous amount of change that I'm not sure all Americans agree with. Meanwhile, the progressives are just kind of like navel gazing at each other. I mean, and then you left off this past week Chamath that it seems like the gay marriage bill is going to be put to a vote and that they're not going to be able to find.

I didn't see that. What? Yeah. Yeah. And Ted Cruz said he's not going to vote for it because it's attacking religious freedom. So we had talked on a previous episode and I think it's actually said you didn't think gay marriage would come up and well, you know, if I had to guess what the political gamesmanship is here because they think it's not going to pass.

They want to bring it up for a vote because it preserves the issue. It intensifies the wedge issue when it looked like they had enough votes. They weren't going to put it up for a vote. So I don't know. I think it's a lot of gamesmanship here. Look, I think enough Republicans should vote for this just to pass it.

I don't know. Why wouldn't they? Yeah. Well, I think there I think there's some issues with the way the bill is written in terms of maybe requiring religious organizations to perform gay marriages. I think that somebody should just make an amendment to clarify. That's not the case to solve this religious freedom issue.

I think if that happened, then you get more Republicans on board or at least it wouldn't have an excuse. But yeah, look, I would like to see enough Republicans vote for this to take it off the issue. I don't think gay marriage is in at any risk of being overturned by the Supreme Court.

Remember it was Gorsuch who wrote that opinion. So I think this is a scare tactic. That progressives are able to use to fundraise off, you know, their their base. Nonetheless, it'd be nice if enough Republicans would vote to canonize, you know, marriage equality so that they wouldn't be able to do that.

That's the smart play here for Republicans. Yeah, it looks like either by the way breaking news in the Washington Post Democrats have postponed the same-sex marriage vote until after the midterms. So but I mean you can understand why people are going to be nervous about this after well, but maybe they're doing that because they want to, they want to run on it as an issue.

They want to have that as an issue. Yeah, I mean, I've been smart enough to force it. The 70% of people are in favor, right? 80% are in favor. If Republicans want to be smart, find 10 Republicans in the Senate who can support this. Announce now that you're going to support it.

Come on, Republicans have a brain. Don't let them change the issue from this economy that's spiraling out of control. I mean, the Republicans are clueless. What do you guys think is going on there? Oh, right. Yeah. So FedEx stock has been going up. Has dropped 25 as much as 25% as we're taping this is Friday after the CEO after a little, I don't know if you saw the video I sent to the group chat, but Kramer Jim Kramer was kind of pushing him.

Do you think this recession do the recession? He finally said yes, I think there's a global recession. They missed on revenue and they have cut their predictions for next year severely and the stock's way down. I think based on what I heard on CNBC from and reading some stories right before this breaking news, is happening.

Some people think this is 6040 market versus management. But either way, I think the feds interest rates are doing their job and less packages are being shipped because people are Chamath. You would think spending less money and that was the whole point of this exercise was to slow the economy down free birth.

I think this is a little bit of a head scratcher. This is a new CEO. So I think the game theory on this is that it made a lot of sense for him to reset expectations. I get that. And I think that, that's a, that's a reasonably smart thing to do when you're incoming, you know, leader of a very complicated organization.

That really is at the end of the bullwhip, so to speak on on consumer demand. The problem is there's just so much conflicting data, you know, retail sales was pretty reasonable. You know, China actually looked a little bit stronger than people expected just this past week on some data that came out there.

It looks like Europe is going to really draw a hard line and make sure that they spend whatever it takes to have enough energy so that they are productivity doesn't fall off a cliff. All of those signals would say that, you know, we're not at the precipice of this kind of like cratering of demand.

And then you have Powell basically saying, yeah, we're going to go another 75 and you know, we're going to take rates to probably somewhere between four and five percent. So the the FedEx data point was pretty starkly in contrast with at least some of the data that we've seen over the last few weeks.

So I don't know. It was a bit of a head scratcher. They got three things working against them. Number one, Amazon just continues to build out local delivery infrastructure at an incredible pace. At the end of 2020, Amazon was already up to 25% market share, which put them ahead of both FedEx and UPS and FedEx has seen their market share decline for the past eight or nine years now.

So that's kind of, you know, a key point. Number two is people are just shipping less stuff, doing more stuff digitally. And number three is this recession impact where they obviously have key economic indicators that allow them to do a better job forecasting deliveries than most companies, I would imagine.

And so they can see order volume and trading volume and use that as a predictor for, you know, for what volume for shipping is going to be in the future. And I would guess that all three continue to work against them. It's not like they have a lot of diversified diversified.

In the business and other ways to expand out into. So you've got a key vertically integrated player, namely Amazon that is investing heavily to replace whatever they use you for. I think as of a few years ago, Amazon was only like 2% or 3% of FedEx is revenue anyway.

But still, I would imagine Amazon is playing a key role here. Your first your first comment to me is is now that sounds like the most credible explanation and you know to blame a recession is sort of a little bit of hiding the cheese. It's probably fair to say that their lunches get eaten by Amazon.

So I can understand why FedEx is under a lot of pressure because of that. But if you just compare it to just all the other data, it doesn't seem like this whole thing makes any sense. What you just said about competition makes to me a lot more sense. And yeah competition with digital and and Amazon.

I mean digital like how much do you guys sign letters today versus e-sign? I mean, there's just a lot and you know, I'm giving an example. Maybe that's a 1% impact and there's probably a few more things. And these things all layer up where they could be losing market share while still growing because e-commerce is growing so violently in the world.

But Sax, what do you think? I think what's going on here is that whatever the issues of FedEx and no matter how overstated these warnings may have been, I think they're directionally corrected. He's saying that the world's headed for a global recession and directionally. He appears to be right.

I mean things look really grim. We just had this inflation report that was much worse than what people were expecting. It was inflation was supposed to go down to 8.0% and actually it was 8.3%. That's why the stock market cratered a few days ago. It's like the worst day in the stock market.

I think maybe all year or certainly since June. We're almost towards the June lows. Now this FedEx executive is saying we're headed for global recession. So it seems to me that the economic news is just pretty grim. Here and we're in a we're in stagflation. The Fed has to keep raising interest rates at the same time that we have persistent high chronic inflation and you have to wonder, you know, I tweeted a few months ago that the White House economic advisor Brian Deese.

He said that in this interview with CNN that the Biden administration was willing to endure a global recession in order to keep Russia from controlling the Donbass region Ukraine. Well mission accomplished. It looks like it's getting its wish. The administration's made some progress in the Donbass, but we are also having a global recession.

So this percentage of this what percent of the recession inflation has to do with the Russian invasion of Ukraine. I think it's meaningful. It's meaningful. We know it's a huge exacerbator of all these problems. If you were going to put a number on it. Listen, I don't think the economy is going to get better with the risk of war three hanging over our heads.

How does that work? Yeah, but what percent of the economic issue do you think is percentage-wise impact? I don't think we're in a recession. Maybe you answer. I don't think we're in a recession yet. You know, retail sales is still quite strong. There's just a lot of signals that tell us that people are still consuming a lot of things and jobs to be and that GDP is pretty reasonable and then jobs and wages, you know, are pretty much, you know, quite full.

So I think sacks you are right that we will be there because you can only bring rates up so high until you break things. Do you see there's a tweet by I think a Charles Schwab analyst today about that issue of wages. And she was tweeting off to find it that for the second year in a row.

We now have because of inflation. We now have real wage decreases. So you may be right about like where things stand today, but this is about the trajectory right now of the economy and the trajectory is not good. Inflation is not coming down as fast as people were anticipating.

It's worse than expected. You have the situation Ukraine where listen, we can all cheer on Ukrainians for this counteroffensive. That appear to be successful, but we are playing with fire over there. I mean, I don't recall a time during the Cold War where we did anything remotely this risky.

You have America. Listen, we have American generals, American generals were taking credit for this counteroffensive. Do you see this New York Times story where they talk about the inside moment of this Ukraine counteroffensive? So you now have America. America is now giving Ukraine more and more advanced weapons. Okay, this sort of the the long-range artillery.

Telling them where to point the weapons are giving them the intelligence for it. They're training them on how to use it. They've got commanders on the ground there and and they actually are hand correcting the battle plans. The Ukrainians had a counteroffensive plan. The Americans said that's not good enough and they rewrote it.

So the Americans are now doing everything in this war except pulling the triggers and taking the bullets and I don't want to minimize the sacrifice. The Ukrainians are making because they are dying in huge numbers and you know, we can all respect and admire the sacrifice they're making for their own country.

But this is a very risky strategy for the United States of America to be pursuing. I mean we are we are basically playing with fire in we are, you know this close to being at war with a nuclear-armed Russia and we never came close to this type of behavior during the Cold War.

And I don't understand what's changed so much that we have to take this kind of risk now at the beginning of this conflict. I said that I was open to arming the Ukrainians under Cold War rules. Cold War rules meaning covertly like we did in Afghanistan. We now have multiple examples of the administration boasting and taking credit taking credit for the counteroffensive for the sinking of the Mosfet for killing Russian generals.

This seems very risky to me. So Sacks a court premise of the discussions we've had here is that the United States screwed up the negotiation with Putin by not taking NATO off the table. Reuters reported that Putin rejected a Ukrainian peace deal at the start of the war at the start of the war Russian chief envoy on Ukraine told Putin that a provisional deal with Kiev had been struck deal would have satisfied Russia's demand that Ukraine stay out of NATO.

Two of three sources said the push to get a deal finalized occurred immediately after Russia's February 24th invasion. Does that change any of your thinking on what's happened here and Putin's culpability? I think it's a data point, you know, but then let me explain why I don't think it's just positive.

And by the way, I saw the article every neocon on Twitter was basically tweeting this trying to prove that this yeah, I was CC it on everybody's seeing your Shimer analysis. Let me tell you why it does them. Okay. First of all, if you read the article closely this offer did not come until after the invasion started.

Okay, and we already knew Zelensky was publicly saying in the early weeks of the war that they were willing to take Ukraine off the NATO off the table. So this isn't that much news. It happened after. The other key point here is I know we didn't happen too late, but also the offer did not come from the Americans.

This is a really important point to understand about the Russian position on this. And I'm just saying this based on all their public pronouncements. The Russians made an ultimatum in December and then Lavrov negotiate with Lincoln in January. They were absolutely insistent that they would accept nothing less but a written guarantee from Washington.

Why is that? Well, the written guarantee was necessary. Because they've always claimed that James Baker you could Gorbachev over, you know, German reunification and not one inch Eastward. So they've always demanded a written assurance from the Americans. And the reason they wanted from America and not Europe is because they know that Europe are America's poodles and Ukraine is a client state of America.

So listen, they wanted a written guarantee from America before the war started. They never got that. Now, if your point is to Putin do everything he could to avoid this war. Absolutely not. I will absolutely grant you that but we already knew that the question is did the US State Department do everything they could to avoid this war?

And my point is absolutely not. They should have taken this Ukraine issue off the table in writing before the invasion. Got it. Okay. And if you're talking about Ukraine, no, I just it was major news and we have an obligation. I think to close the loop on it. I'm glad to yeah, we have an obligation to this.

People are taking this one article in this one day. There I think it's going to talk about it because listen, I've seen it all over Twitter that people take this one article and they're like see there's nothing to this. Or giving you the opportunity sex. Now, let me ask another question for freeberg freeberg.

The other follow-up people would like us to have made here is we predicted famine and massive disruption in food. We debated that here. You were pretty clear that this was going to be or could be disastrous. It hasn't turned out to be disastrous yet. What's the update on you know, fertilizer?

Shipping not shipping. Are we going to have global famine? Are we not going to have global famine? What's the update there based on this conflict? Yeah, we have a massive starvation problem. The UN told told everyone. I mean, no one writes about this stuff because it's seemingly not interesting and mainstream media, which I don't friggin understand.

But the UN thinks that 345 million people now are incrementally marching towards starvation. And so I think they did. This at their meeting. Yesterday because of the war in the Ukraine. So David Beasley whom who I know well, he's the executive director of the UN World Food Program. He told the UN Security Council yesterday that 345 million people are now facing acute food insecurity in 82 countries where the UN operates, which is two and a half times the number of acutely food insecure people that existed before the pandemic hit.

And so this is. This is a huge problem. And so we're creating like we talked about these rippling effect in terms of initially it was fertilizer cost, which means less food is being produced locally. Then there was the acute crisis of getting food out of the Ukraine. And now it's less planted acres and less yield getting out of those acres, which I, you know, we said was going to start to happen in the back half of this year.

And if you look at the price, you know, a good proxy for this is the price for corn. We're at near record highs. You know, for the last couple of years. The pre futures pricing for next December for corn is at 620 a bushel. You know, and it kind of peaked out right around the middle part of the the Ukraine crisis in April at 673.

So we're getting right back to that high point. And so this is a major problem that's brewing. And as I highlighted at the beginning of our talk today, which I show in the presentation for the the lavoro transaction I talked about earlier. We have done an incredible job building a resilient food supply and excellent global supply chains to feed people around the world going back 30 years.

And we've been able to steadily decrease the number of people that are food insecure or facing famine and famine in the UN definition is less than 1200 calories per day on average for a year. And so we went from like a billion people around the world facing famine about 30 years ago and got that number.

And so we've been able to do that. And so we've been able to do that. And so we've been able to do that. And so we've been able to do that. And so we've been able to do that. And so we've been able to do that. And so we've been able to do that.

E96: Adobe acquires Figma for $20B, TPB SPAC, FedEx CEO's recession warning, macro picture & more

Chapters

Transcript