How good do I look? I'm so sunkissed. How many buttons down are you? Oh, my God, I have three buttons. OK, three buttons. No, look, look, look, look. Is there a button below that we can't see? No pants! No pants either? Are you free buttoning and free balling it?

Is both happening or what? I'm going all in. Don't let your winners ride. Rainman David Sasson. I'm going all in. And it said, we open sourced it to the fans and they've just gone crazy with it. Love you guys. Ice Queen of Kinwan. I'm going all in. Hey, everybody.

Welcome back to the All In Pod. This week, our hostess with the mostest, Jkal is out with COVID, getting treated, spending the day in bed. We wish him well. We wish him a speedy recovery. We are going to plow forward like all championship teams do. This week, I think we're going to kick it off with a conversation about the election update.

Obviously, Harris came out, guns ablazing in the media. The accolades seem to be flying. And the polling data is starting to become worrisome, it seems, for the Republicans. Just this week, Nate Silver released his newest model update. The Silver Bulletin, I think he's got it trademarked as nowadays. And in the model, he tries to estimate what does the polling data show us with respect to the Electoral College and the popular vote in the upcoming presidential election?

Harris currently has a 42.5% probability of winning the Electoral College. Trump, 56.9%. Kennedy coming in at 0%. On the popular vote, Harris has a 57.1% probability of winning the popular vote, 42.9% probability for Trump. I guess I'll start it off with David Sachs. Sachs, given the momentum coming out of the gate since the announcement of Harris as the Democratic nominee and this recent polling data, what's your read on the landscape today?

What's your read on where we stand and what's ahead here? And what do you take away from these polls? Well, look, I think what happened is that Biden dropped out of the race, he abdicated, Harris took over, and it created a sense of euphoria on the part of the left because they thought they had a surefire loser with Biden and they were divided.

And then once Harris replaced him, they thought, OK, now we got a shot and we can fully unify and get behind this new candidate. So what you've seen is over the past couple of weeks, the mainstream media has gone all out on behalf of Kamala Harris. And yes, this has led to a rise in the polls, but I think that the highs that Trump were at were always a little bit artificial in the sense that if the Democrats could field a candidate who could campaign, it was always gonna be a close election.

Biden was artificially depressed in the polling because he just couldn't campaign. He could barely read from a prompter, he couldn't do interviews. So I think you're seeing the race normalizing. This is gonna be a close one. It's gonna be a nail biter. But I think the question about this honeymoon period that Harris has right now is whether it's sustainable.

I mean, she has not done any press interviews. She has not done any press conferences. She's not answered one question. She's not been asked one tough question by the media. She has only read from a teleprompter. She's only done scripted appearances. And yet at the same time, she's basically been changing all of her policy positions and running from every position she ever stood for.

So for example, she said that she was in favor of single payer. Now she's against it. She said she was in favor of court packing. Now she's against it. She said she was against fracking. Now she's in favor of it. On the border, she said that we should consider abolishing ICE.

Now all of a sudden, she's in favor of more funding for border patrol. On crime, she used to take kind of the BLM position that cops don't make us safer to now she's saying that she's a cop and prosecutor herself. She used to be in favor of federal gun buybacks.

Now she's against them. It just goes on and on. I mean, in the 2020 riots, she raised money for the legal defense of rioters. Now she's distancing herself from those positions. My point is this, is that after spending really her whole career staking out positions on the far left, she has now dropped all of these positions for political expediency.

And the question is, what does she stand for at all? Does she just kind of blow with the wind and say whatever helps her win whatever the next election is? I mean, I think that's basically what's going on here. And normally what happens is the press would ask you that question, but she's been getting a free pass because the mainstream media has basically been operating as a division of the DNC and they're not holding her to account in any way.

They're not requiring her to answer any questions. And as a result, yes, you're seeing this bounce in the polls. But I think the question is, can she sustain this for 100 days? Can she really get through the entire election without having gone through a primary, without ever having to explain her positions on issues?

And she just does these short scripted appearances. I just think that at some point over the next 100 days, that approach is just gonna fall apart. She's gonna have to do a debate. She's gonna have to answer questions. At that point, I think the bloom will come off the rose a little bit here and you'll see the polls normalize.

- Do you think that J.D. Vance has negatively affected the interest in Trump, that he, you know, there's a lot of media coverage about J.D. Vance being potentially the wrong pick for vice president and that he's creating more of a challenge for the president's campaign than a boom? - No, listen, anyone who Trump chose was gonna be absolutely smeared by the other side and by the media.

If it had been Doug Burgum, there would have been nonstop coverage of the six week abortion bill that he signed. - Right. - You could go down the list. I mean, look, what Democrats will say is we just wanna see a moderate Republican, but when Mitt Romney ran, they were calling him a fascist.

So the reality is that the mainstream media and the DNC, but I repeat myself, are gonna smear anyone who's picked. At the end of the day, I don't think that it matters. What matters is the top of the ticket. - Jamal, what do you think about the Harris campaign, how it's going and the momentum that is being projected in the media and the polling data is clearly demonstrating an improvement over Biden's standings in the polls?

- I mean, I think we had a situation where one candidate was not real. And so Sachs is right that a lot of the polling up until basically last week is not really reliable. Now you have this snapback effect, which is more about a lot of people that were coming around to this idea of voting for Trump because Biden was such a bad option, now flip-flopping.

And so I think that's what explains the snapback. But Sachs is right, 100 days is a really long time. And what Nate Silver's poll essentially shows is if she wants to win, not the popular vote, because at this point now, three or four elections in a row, that just doesn't matter anymore.

If you wanna win the electoral college and be the president, you gotta go and win five states. And in order to do that, you have to be very precise on about four or five specific issues. And in the absence of her defining herself on those four or five issues, she's not gonna win.

She'll win the popular vote. But again, when people win the popular vote and lose the electoral college, we've now gone through that enough times where that's just a fait accompli inside of American electoral politics. So I think that the Trump campaign and the Harris campaign need to agree on some schedule of debates.

I hope that they do two, and ideally three, and that they both get after it in front of each other so that those five states that are really going to decide this election has an opportunity to make a decision on behalf of the rest of the country. - Yeah, Nick, if you pull that chart back up again, based on Nate Silver's model of polls, where he takes all the polling data that's been collected by different third parties, he weights them based on the performance of those polls in terms of predictive power historically, and he creates this kind of macro model.

That's the Nate Silver approach here. He's estimating that within the 80% bound, every state on this list is up for grabs, as you can see with the gray lines shown there. There's a very slight margin on the average in Wisconsin for Trump, in Michigan for Harris, in Pennsylvania for Trump, in Nevada for Trump, in North Carolina for Trump, in Virginia for Harris, and so on.

But each of those margins is so slim that there's still quite a lot of decision-making ahead for voters. So pretty clearly on point that this is still very much an open election. I'll give you guys my read. I think that there's five camps of voters going into this when Biden was a candidate.

The first is anti-Biden, anything but Biden. The second is anything but Trump. The third is pro-Biden. The fourth is pro-Trump. And then the fifth is the other. And I think that that entire bucket of anything but Biden just became available once Biden dropped out of the race. And it was a pretty sizable bucket, that there's a large number of voters out there that felt pretty strongly that Biden poses such a significant risk for leadership in this country because of the mental issues and the performance issues that we had seen that as much as people didn't love Trump, they were willing to vote for him because he's not Biden.

Now that camp has an option, and that option is Harris. So some percentage of that camp, and I would say probably a super majority of that camp, is now switching into the Harris bucket. The pro-Trump bucket doesn't move. The pro-Biden bucket probably doesn't move, it sticks with Harris. And the anything but Trump bucket doesn't move, it sticks with Harris.

So the fact that there is probably such a sizable number of voters in the anything but Biden camp is what's probably helping Harris at this point and creates a bit of a handicap for Trump going into this last stretch of the campaign. That's my real, 'cause I know a lot of people with that point of view.

- That's an interesting point of view, and let me just respond to that for a second. So one of our critiques of Biden, not just in this election cycle, but probably going back a year, is that Biden had become basically a figurehead president, almost a construct, and he was fronting for a shadow cabinet or a group of powerful staffers who were really running the country, basically because of his cognitive decline.

And we sort of joke that whoever the White House intern was who was running the social media accounts or the staffer who was running the teleprompter was basically the president because they could dictate what Biden said. Now, I think the question to ask is, has anything changed? Kamala Harris refuses to do any interviews.

She doesn't wanna do any unscripted appearances. She's abandoned all of her policy positions that have been longstanding and were the reason why she ran for president in the first place in 2020. So the question to ask is, do we still have a construct as the president? I mean, the Biden staffers who are running Biden are now just running Harris.

We don't know what she stands for. We don't have her appearing in unscripted natural appearances. We don't have her being challenged by the press. She's not willing to do what Trump did. Trump just walked into the lion's den yet again at the NABJ. - National Association of Black Journalists.

- Right, exactly. Trump walks into a very hostile interview at NABJ. Harris was supposed to come and she didn't come. She would have gotten a very softball interview. She's not even willing to do that. I think that in substantive terms, I don't think that much has changed this election.

The Biden staff is still running for president. I mean, that's what you're voting for. - I would disagree on this because I think in the last two weeks, what I've seen is statements coming out of the Harris camp that clearly distinguish her and her campaign from Biden's policy positions and Biden's campaign rhetoric historically.

Most particularly Sachs is on Israel. When Netanyahu came to visit the United States, she put out a very pro-Israel statement that we all know the Biden camp has largely avoided doing because of the concern over the pro-Palestinian rights movement's reaction to the Biden campaign pro-Israel. And the Harris statement was pretty finely worded and pretty strongly worded that she is very much in favor of Israel defending itself.

She acknowledged that there's a loss of Palestinian life that matters and we need to acknowledge and address it, but she was very much in support of Israel, which is not a position we've seen the Biden camp take. And I think that we're starting to see what is a little bit more of a fracturing between Harris being allowed to be free and being allowed to have an opinion outside of the party line dictated by the Biden camp.

And I think we'll probably see more of that in the next couple of weeks. And we'll probably see her starting to be a little bit more refined in what differentiates her from Biden. Because I do think that's what's gonna allow her to win this election is she's gonna stand up and say, here's why I am not Joe Biden.

And here's what makes me different from that individual. I respect him, I love him, he helped me, but let me tell you why I'm different and why that should matter. - She snubbed Netanyahu, Freeberg. I don't know what you're talking about. She snubbed Netanyahu. - I think you're an example of the people that want to give her the benefit of the doubt.

- Okay. - I think there's a large fraction of those people. - That's not true. No, that's not a fair way to characterize me at all. I'm simply pointing out that she made a statement. I'm pointing out that she made a statement that's different than what Biden said. That's it, that's all I'm saying.

- Hold on a second. I think on Israel, so first of all, she didn't write that statement, the staff did, okay? Now, what is the staff trying to accomplish on Israel? They actually have a genuine dilemma on the whole Israel-Palestine issue because the Democrat party is very much split on this.

The Democrat establishment is pro-Israel, but the progressive base is very pro-Palestine. And even polling among youth shows significant support for Hamas even. And a lot of these people are very much within the sort of hardcore left-wing base of the Democrat party. So what the Biden administration has been doing and what I think Harris is continuing is a process of talking out of both sides of their mouth.

Biden went to Israel, bear hug, BB, basically supported his policy, but then gave some lip service to the idea that he would limit the weapons that Israel is able to use. Harris puts out this very pro-Israel statement, but then snubs Netanyahu at that speech he gave before Congress. So look, the Democrats are trying to have it both ways.

They have a base that is fractured on this issue. And so they're trying to thread that needle. Now, you're right that, let's just up a level. Let's move off the Israel issue for a second. There's no question that Harris wants to run from her record as being Biden's vice president.

There's a good reason for that. The Biden-Harris administration is historically unpopular. What you have to ask though is whether it's credible. Harris suddenly is in favor of more money for border patrol. Why didn't she advocate for that when she was Biden's border czar? The media is fiercely scrubbing its websites to remove references.

Hold on, they're removing historical references from during the Biden administration when she was openly called the border czar. They're trying to memory hole that. So look, I have no doubt that the Harris campaign wants to drop every substantive policy position she's ever taken because they just want her to be a construct.

They just want people to be excited because. - I do think that what you're saying is exactly what she needs to answer to in public in the next couple of weeks to earn credibility on what is she different from the Biden administration on in terms of policy. And why did she not make that clear when she was in the Biden administration?

And she can say, "I didn't agree with it." Or she can say, "I've changed my mind." And I think both of those might end up being where she needs to go to. But you're right, she does need to answer to that. - I don't think it's clear she has to do any of that.

- You think she can just hide out and coast? - No, right now the calculation is to get as many people to basically move into the not Trump voting stance. And they're giving as much time as possible to measure that and see if it's a winning strategy. But again, and I think we just talked about this.

Mathematically, it can win the popular vote but it will not win the electoral college. So she is going to have to appear and be in a position where she's confronted on about four or five key issues. And that's where this presidency is going to get decided. Four or five issues in four or five states and we'll all know where she stands.

On the border, on the economy. By the way, the problem is, and if you look at what's happening now, we are in a recessionary stance. There's going to be a lot of ink that gets spilled starting in September on the fact that X of a handful of companies were basically in a recession.

So that's gonna have to get put on the feet of the sitting president and the sitting vice president. So there's a whole set of complicated issues. I think it's smart actually for her to strategically kind of stay quiet right now and just kind of see all the goodwill that's pent up to the not Trump candidate is going to flow her way.

The problem is that that's not enough to sustain yourself for a hundred days. And so she's just going to have to take a point of view. - Well, it might be if the press lets her get away with it. - No, because I think, David, I think you're right.

Because when you go into a debate or when you go into these places, people will want to know the answers to these questions. And if the media tries to memory hold this thing, I think the thing that they most don't want, which is another Trump victory will actually happen because of it.

Because people will come in, this kind of like ambivalent group of folks that are or independent group of folks that are looking for very clear point of view on four or five issues, maybe we'll come to a rally. And instead of that, they'll hear Megan Thee Stallion and they'll wonder to themselves, well, this is not what I came for.

I came to know where you stand on these four or five issues. So if the media actually, in order to give her the best chance of getting elected, and this is counterintuitive to them, which is why they probably won't do it, they'll have to confront her on these issues.

- Yeah, I think that's fair. And that's why I invite Vice President Harris onto the "All In" podcast to join us for a conversation. I think we all really enjoy that. And just to declare my position, I am in camp five, the other camp. I am not pro or anti either of these candidates.

I obviously have issues that I think are far more existential to the longevity of the United States and the Republic that need to be addressed, that don't seem to be a priority for either candidate or either party. As I've mentioned many times on the show, that's where I stand.

Let's move on. Sax, I just wanna ask, do you think that Trump is at risk of shooting himself in the foot by being too public, too open and too engaging? If we take a look at what happened this week, the National Association of Black Journalists had a convention on Wednesday.

It sent interview requests to both President Trump and Vice President Harris, and Trump accepted and went in person. Harris said she couldn't do it in person or via Zoom. And according to the National Association of Black Journalists, Harris is in talks to do a Q&A session with them at some point in September.

There were two moments that are making a lot of news. One was the first question, Nick, can you play this? Where ABC's Rachel Scott went after Trump. - A lot of people did not think it was appropriate for you to be here today. You have pushed false claims about some of your rivals, from Nikki Haley to former President Barack Obama, saying that they were not born in the United States, which is not true.

You have told four congresswomen, women of color, who were American citizens, to go back to where they came from. You have used words like animal and rabbit to describe black district attorneys. You've attacked black journalists, calling them a loser, saying the questions that they ask are, quote, stupid and racist.

You've had dinner with a white supremacist at your Mar-a-Lago resort. So my question, sir, now that you are asking black supporters to vote for you, why should black voters trust you after you have used language like that? - Well, first of all, I don't think I've ever been asked a question so, in such a horrible manner, a first question.

(audience laughing) You don't even say, hello, how are you? Are you with ABC? Because I think they're a fake news network, a terrible network. (audience laughing) And I think it's disgraceful that I came here in good spirit. I love the black population of this country. I've done so much for the black population of this country, including employment, including Opportunity Zones with Senator Tim Scott of South Carolina, which is one of the greatest programs ever for black workers and black entrepreneurs.

I've done so much. And you know, when I say this, historically black colleges and universities were out of money. They were stone cold broke. And I saved them and I gave them long-term financing and nobody else was doing it. I think it's a very rude introduction. I don't know exactly why you would do something like that.

And let me go a step further. I was invited here and I was told my opponent, whether it was Biden or Kamala, I was told my opponent was going to be here. It turned out my opponent isn't here. You invited me under false pretense. And then you said, you can't do it with Zoom.

Well, you know, where's Zoom? She's gonna do it with Zoom and she's not coming. And then you were a half an hour late, just so we understand. I have too much respect for you to be late. They couldn't get their equipment working or something was wrong. - Mr. President, I would love- - I think it's a very nasty question.

I have answered the question. - Zacks, is he shooting himself in the foot by agreeing to show up? He showed up to the Bitcoin conference, which obviously went phenomenally well. But Zacks, is he shooting himself in the foot by being too open and engaging too much? And should he lay low?

- No, I mean, look, what kind of president do you want? I mean, I want the president who is fearless and willing to walk into the lion's den over and over again and answer tough questions. What you saw in that soundbite here is that Rachel Scott, the interviewer, that whatever she was doing is not journalism.

This is supposed to be a journalism association. She turned that interview into an ambush. It was hostile, what she did, and right out of the gate. I mean, the first question, she's attacking him, and he pushed back on it. I mean, I think you saw him push back on the media in a way that only Trump can do.

Now, you also heard there, I think, a really key point, that Harris basically passed on the opportunity to attend when she was originally supposed to. That would have been a softball interview for her, but she is not willing to do any kind of interview right now. No questions, no unscripted appearances.

She just wants to read from a teleprompter. That rally she did in Atlanta that had Megan Thee Stallion perform, so it was a free concert, that drew out a huge number of people. Then Harris spoke for 17 minutes, and people were leaving five minutes in because they were just there for the concert.

I guess the question that people need to ask, I understand why this is strategic for her. I mean, obviously, it's better for you if you don't have to take any positions whatsoever, and you can just abandon all of your previous positions without any explanation whatsoever, and the media gives you a free pass on that.

I can understand why that's strategic, but I think that voters need to ask the question, who do you want representing the United States right now in a world that's on fire? Who do you want to stand up to Putin or Xi or make peace with them? Who do you want to stand up to or be allies with Netanyahu, for example?

The United States right now is in a very difficult situation. We can't have a teleprompter president. We need a strong president. I appreciate the fact that Trump is willing to take on all challengers. I just think it's manifestly clear that these are the qualities and traits you want in a president of the United States.

- Okay, so your opinion is Trump needs to continue to engage openly and publicly. It shows strength, and it shows a capacity to deal with adversity and conflict. Point taken. So let's pull up the next clip where Scott then asked Trump if Harris was a DEI candidate, and here's his answer.

- I've known her a long time indirectly, not directly very much, and she was always of Indian heritage, and she was only promoting Indian heritage. I didn't know she was black until a number of years ago when she happened to turn black, and now she wants to be known as black.

So I don't know, is she Indian or is she black? - She is always identified as a black when she went to a historically black college. - I respect either one, but she obviously doesn't, because she was Indian all the way, and then all of a sudden she made a turn, and she went, she became a black person.

- Just to be clear, sir, do you believe that she's- - And I think, I think somebody should look into that too when you ask, continue in a very hostile, nasty tone. - Timoth, let me ask for your response. Did Trump shoot himself in the foot with that comment?

And maybe you can give us your read on how he's doing with respect to this, you know, active engagement with obviously adverse, let's call them, you know, journalists and interviews and forums. - Well, I'd love to hear from the Caucasians. What do you guys think about that? Yeah, I'm not talking about the answer itself.

I'm talking more about Trump getting out there and like engaging in this way. - Yeah, here's what I will say. I think that from now until the end of time with social media tools replacing traditional media, and then with AI tools that are going to create enormous amounts of very sophisticated misinformation and disinformation, I think the only strategy for politicians from here on out is to leave zero ambiguity between what you think and what you say.

And so without judging the quality of the answer, I think the thing that is going to be the most critical for people is to know that the person that you're voting for is in charge. And you get a great chance to vote this person up or down. And the more content that that person puts out directly, the less likely it is that this ambiguity exists that can then get exploited, whether it's by internal people inside of a country or whether it's foreign adversaries.

And so my perspective is it's pretty fearless of somebody to just constantly say what they think. And again, I'll just go back to what I said before with respect to the Harris campaign. I think that Americans were smart enough, and I think you did a good job of dissecting the electorate into five groups.

Americans were smart enough to basically say never Biden because of the risk it represented to not know what one was voting for, irrespective of whatever your historic allegiances were. I think they're smart enough now to demand answers to the four or five questions that really matter. And I think if Harris wants to really win this and give it a legitimate shot, she's gonna have to take a point of view on these five things.

And she's gonna have to step into the lion's den and be asked very tough questions by a lot of different people. And she's going to have to leave no ambiguity that can be then exploited by misinformation and disinformation between now and the election. So that's honestly my reaction. Zach, final word?

- Yeah, look, I would say that in that clip and other clips from that event, I think you should pay a lot of attention to the audience's reaction because what do they do in that moment when Trump was supposedly committing a faux pas or getting into dangerous territory? They laughed.

You know, when Mitt Romney spoke to this group a number of years ago when he was running for president, he got booed. Trump never got booed. He got a lot of laughter. There was a lot of appreciation. Why? 'Cause Trump is always authentic. He's always who he is. Whereas Mitt Romney always appears to be scripted and frankly sort of patronizing.

So I think the audience appreciated Trump for who he is. I think that when Trump goes into these areas, there's always a grain of truth to what he's saying. I think that Harris has leaned into different parts of her heritage for different audiences. But I do think that this is ground he should get off of.

And I think a much better line of attack is to talk about the fact that she has dropped all of her left-wing policy positions and refuses to answer questions or do unscripted appearances without having a teleprompter in front of her. I think that's a much better line of attack.

- Well, I do agree. - And I think that's what the campaign will be about from here. You know, I don't think we want this campaign to be about identity. - I do think that the rise of the authentic politician, the rise of the authentic CEO/typically founder, the rise of the authentic celebrity is definitely the trend that we're seeing, which is that authenticity counts for more than anything, regardless of one's position.

And, you know, obviously having trust in the individual is rooted in the authentic capacity of the individual rather than the teleprompter CEO or the teleprompter politician or the teleprompter or buttoned-up or image-managed celebrity. And that's definitely been a trend that's been building over the last 10 years, culminating in a lot of these changes that we're now seeing.

- Totally. I mean, look, just think about what's gonna happen over the next four years if Harris is elected. I mean, you're gonna have a prompter president. I mean, she's just never gonna be off-prompter. It's gonna be, like, Biden at least tried to go off-prompter. Whenever he did, it was a disaster, but at least he tried.

- By the way, I mean, this is one of the criticisms of a lot of hired large enterprise CEOs is that they come in, they have all their words written for them by a media team. They have all of their communications scripted, managed. Every press interview is with the right journalist said in the right way.

And the CEOs that seem to build the greatest value are those who are typically founders because they're willing and able to be authentic because they weren't hired by the board. It's their business that they built. And so they're willing to be authentic. And the CEOs who operate at scale with authenticity build the greatest market value.

- I agree with you that whether you're a CEO or you're a politician, authenticity counts. But I think this election's gonna be a test of what people want in their president. I mean, do you think the president needs to be a chief executive who at some level is calling the shots, or do you think it's good enough for the presidency to essentially be a construct and to be a manifestation of the staff, right?

- I think voters look at policy sacks and they look at character. And with respect to character, there's a certain value that they ascribe to this authenticity component, which is typically lacking in most politicians. And Trump delivers that authentic component in how he talks and how he's off the cuff and so on.

He's got other character issues, which I think hurt him. And on the policy side, people really kind of look at those objectively, those points, what's your policy? And do I trust you as your character? - Right, but see, I think it's more than that, because I think any large organization needs a chief executive.

What happens when you don't have a chief executive or you don't have a strong chief executive? You get drift. The organization strategically drifts. - 100%, yeah, it gets driven from the bottom instead of from the top. - Yeah, the decisions that get made are the result of bureaucracy and political infighting and staffers, exactly.

You need someone to control that. And I think it's really interesting that when Biden was still the candidate, but everyone could tell that he was sort of impaired, that the arguments you started hearing from Democrat partisans and the media is that, well, you're voting for a team. You're not just voting for a president, right?

You're voting for a shadow cabinet. Exactly the thing that we criticized on this pod for the last year. My point is that you're still voting for a shadow cabinet. Unless Harris is willing to get out there and answer questions and be unscripted, you're just voting for a staff. And I don't think that's good enough.

When we're in a world where we're in a proxy war with Russia and we could be in a war with China and we have these problems in the Middle East, I want a decider. I want to know that the buck stops here, not the buck stops wherever. - Let's shift topics.

I'd like to talk about what's been, I think, a lot of chatter amongst friends of ours who are active in the market that at a policy meeting on Wednesday, the Fed held rates steady. Jerome Powell said, quote, "A reduction in our policy rate could be on the table "in September if inflation continues to fall." He said, "We're getting closer to the point "at which it'll be appropriate to reduce our policy rate, "but we're not quite at that point." The next Fed meeting where this rate cut could happen is September 17th and 18th.

And if you look at the futures markets today, the market is now estimating a 20% probability of a 50-bit rate cut in the September meeting, 80% probability of a 25-bit rate cut and basically no probability of no rate cut anymore in September. Chamath, is that your read on where we're at?

And is the Fed appropriately reading the economic tea leaves given the recessionary indicators that you just mentioned earlier? And what else we're seeing that the Fed's mandate, obviously, is meant to support both the monetary policy, but also employment in this country? - I think we're in a recession. And I think the problem with a recession is even as inflation diminishes, if your purchasing power is shrinking faster and prices fall, it still feels like prices are going up.

I don't know if you guys have been reading the Wall Street Journal, but the last couple of days, they've been doing a whole series on people that have been left behind by inflation. And I was really surprised as I read those articles, just the sheer quantity of impact in terms of the number of people it's touching independent of salary.

And so my takeaway kind of just reinforced the fact that we've sort of looked past the problem because of the stock market going up for the last few quarters because of seven companies. And now that people are sobering up to the reality that even they don't have an answer for all the money they're spending, the stock market's down next to those seven businesses.

And I think that you're gonna start to see some real pain in the fall. So Jerome Powell is probably gonna cut 25. And I think that if they get to him, he'll try to cut 50. But the problem is it won't solve the problem. And I think if this is again, where Kamala Harris has to be, she's gonna have to make a very difficult calculation here, which is she's going to have to throw Joe Biden and the economic team in the White House under the bus here and say, that was them.

Yes, they screwed it up. It was against my wishes. And here's my vision for how we fix this because otherwise the Republicans will be all over it. And I think if you have a bad economy, like what it looks like going into November, it's gonna be very difficult for the Democrats to win the White House.

- Well, without bringing it back to politics, Sachs, economy, good or bad? And is Jerome Powell gonna cut rates 25 bips, 50 bips? Do you agree with what the market's forecasting? - I guess what I would say about the economy is that in nominal terms, we're not in a recession according to the data that's come out.

The Q2 GDP was roughly 2% GDP growth. However, I think there's a couple of problems. One is that what we've seen over the past year or so is that the economic data that comes out keeps getting re-forecast down. So they put out a provisional number or an estimate, and then when they finalize the number three months or six months later, it always seems to go in one direction.

We've seen this over and over again with new jobs being re-forecast down. And we saw this with the Q1 GDP where initially they were reporting, I think it was like a 1.8% number, and then it got restated down to 1.3%. So the Q2 GDP number was around 2%, it was good, but again, it's a provisional number, and let's see where it actually ends up.

The bigger problem is government spending. The deficit is running at 6% of GDP, whereas economic growth is at, let's call it charitably 2%. Well, government spending is included in GDP. So if you were to balance the budget, let's say that you were to make government live within its means and not have a deficit, we'd have negative 4% GDP growth.

So the only reason why we're in positive GDP growth territory is because of massive government spending that we know is not sustainable. And at some point, the bill is gonna come due for that. So I'd have to say that, you asked me, is this a good economy? I mean, it's not the worst, but there's definitely unsustainable things propping it up.

And I do think that the bill will come due at some point for this. - It's not just fully supported, it's overly supported by the federal government in the United States. And I mentioned this last week, federal government spending is over 2x the sum of all state spending. Federal government spending into the next year with the Biden budget proposal, $7.3 trillion.

That's like 30% of GDP. And I think you guys may remember this analysis I pulled together a couple months ago, where I estimate something close to 30% of US employment is either direct government employment or indirect government employment through government payments to third parties that are employing those individuals.

So the government is becoming an integral part of maintaining the flow of dollars in the economy because they are such an integral buyer and seller within the economy and an integral employer within the economy. And so to reverse that trend is what I worry about more than anything, as I've shared many times, which is why I question whether either political candidate actually solves this problem for us.

And we're almost like, you know, arguing over which marbles I get while the Titanic is sinking, that there is a real fundamental issue with how this economy is structured. I will tell you anecdotally, I have a lot of conversations with folks that work in the agriculture industry, in the food industry, in the industrial industry, many of these industries that have a very different capital flow cycle than we all deal with typically in Silicon Valley and software.

And many of them are struggling. I mean, these are businesses where some folks have told me orders completely fell off a cliff in capital equipment, that some small business owners that sell whatever piece of equipment you wanna come up with, they are not getting orders. There's no revenue. There are massive oversupply and underpurchasing happening in the food and ag markets.

And yet folks are still trying to push up prices in order to make the debt payments that they have to make on their high interest debt now. And that creates a crippling condition for them. Across the economy, I think there's the haves and the have-nots as is indicated in this article that was just pulled up, where there are some parts of the economy where you have low debt, high margin businesses that can continue to scale and continue to raise pricing, have a lot of elasticity in pricing.

And then there are the others that operate on 1% interest rate charges, the changes drive their profit or loss for the year in a pretty meaningful way. And that's the part of the economy that's really suffering. And unfortunately, the action that will be taken to resolve this isn't necessarily a free market action.

It's gonna end up being some sort of government intervention, which furthers the government's involvement in the economy and furthers the tentacles that make it much harder to ultimately pull out of this spiral in this problem. That's my rant on this whole point, but. - Yeah, no, I agree with that.

I agree with all that. I've seen some reports that a crazy percentage of the job creation over the past year has been government jobs. - All of it, more than 100%. So basically there has been a net loss in private market jobs, net of the effect of government employment or government spending on companies that then use those dollars to go hire people.

Let's talk about the impact on markets. So, as a result of this rate cut announcement or this rate cut indication, markets have rallied a little bit, but to Chamath's point, there are definitely the haves and the have nots. AMD beat. They were up 4% after hours on improved AI chip sales.

Their revenue was $5.8 billion, up 9% year over year. Microsoft had so-so results. NVIDIA jumped 12% on some comments made by Meta and Microsoft that both said that there's increased AI demand and they're gonna continue to build that capacity. So Chamath, I know you've talked a lot about this in the past.

Maybe you can give us your read on the comments that were made this week. You've historically said that a lot of this build-out is well ahead and there's no real ROI yet, but clearly some of the buyers of this capital equipment are saying, "Hey, there is ROI. We're gonna continue to build aggressively." So maybe you can share a little bit on, is anything different or are we just kind of seeing folks justify the decision statement?

- I mean, sadly, this is another case of sell the news. These things rallied phantom in the after hours and if you look at them, they've all just given back every dollar of gains. So I think that people know that we're sort of at the tail end of the hype cycle in AI.

And every chance, every time these things spike, people take an opportunity to just massively sell. I mean, Nvidia's turned over 308 million shares today. - Yeah, it's crazy. It's literally-- - We're just at the beginning of the day. - It's trading like a penny stock. - It's going straight down like a lead balloon.

- Yeah. - Meta rallied, they've basically given up all of their gains. It's gone kind of straight down today. But the point isn't that these companies are going to zero. That's not the case. It's just the point is that right now, people are optimizing, they're selling every chance they get to kind of book the profits.

And I think that that's fair because at some point, nobody knows when all of this phantom money is gonna show up. - Right, so this is independent of what we would call the economy, independent of the recessionary conversation we just had. - The problem is that, look, I mean, I'm in the middle of this right now with 80/90.

It's been one of the joys of my career to actually start a company in the middle of what I think is the most important wave that I've ever seen professionally since social networking. And I jumped into the middle of that wave and I kind of tried to ride the best wave I could there.

I'm doing it here. But my honest takeaway after being in this thing now for seven months intensely, and I'll be into it for as many years as it takes to build a successful company, is that AI is massively deflationary. It takes not that much money and the results are really meaningful in terms of the amount of efficiency that you can capture and the costs that you can save.

And the right business people, i.e. startups that are starting from scratch like myself and my co-founders at 80/90, we will pass that on to our customers because it allows us to differentially price versus incumbent solutions. And so I don't see a path where all of a sudden a multiple of the money that's been spent shows up.

I don't see it. I do see a path where companies find tremendous, like think about it this way. If you looked in the 1980s and said, what is the most profitable operational company that existed in the '80s? I don't know what that company was, but I suspect that their EBITDA margins were roughly in the 30 or 40% range and it was probably incredible.

If you fast forward now 40 years, the most efficient company is probably sort of 50 or 60% EBITDA margins. The reality is that the best AI enabled company will probably have margins that are 70 and 80% in the next 15 or 20 years. Now that's an incredible thing. - That's a big prediction.

- But that will again spur the principle law of capitalism that everybody keeps forgetting, which is you compete out excess return. And so while you will have many companies that have 60 plus percent operating margins, they'll be in much smaller markets and there'll be thousands and thousands and thousands of them.

So I suspect what happens is that the overall market grows, but the number of companies grows by an even order, larger order of magnitude. And in all of that, the reality is that it's going to be very hard for these big folks to sort of see this value capture that makes any of this investment worthwhile.

So I think that you're going to have to have some sort of reset in terms of the CAPEX that's happened here. - I want to switch gears yet again and talk about the assassination of Ismail Haniyeh. I hope I pronounced that right, Haniyeh. He was killed by a bomb while staying in a guest house in Tehran, according to the New York Times.

Earlier reports indicated that he was in fact killed by a missile strike from Israel. But just this morning, the New York Times reported that the guest house where he stayed is run and protected by the Islamic Revolutionary Guard Corps and is part of a large compound known as Neshat in an upscale neighborhood of Northern Tehran.

And the article in the New York Times goes on to report that according to several Middle Eastern sources, a bomb, a remotely detonated bomb, was actually planted in this guest house over two months ago in anticipation of the Hamas leader's stay in this guest house. And it was then set off once he actually stayed in the guest house.

This obviously represents kind of an incredible feat in operational capacity and intelligence. I think we've known and talked a lot about, and the media has kind of covered quite a bit about the capacity of Mossad. But I just want to kind of get your guys' reaction to this. I think that there's a bigger and important story here about the strength of Israel's intelligence and military capacity in the region and what that could mean for their posturing and their demands and their activity in the region in the months and years ahead, particularly with Netanyahu still in charge.

So Sax, maybe you can kick us off with your thoughts on this article and Mossad's role in the assassination of this Hamas leader. - Well, there's no question that the Mossad established or reestablished its reputation for extreme competence here. Being able to infiltrate Iran in order to assassinate the top political leader of Hamas while Haniyeh was a guest of Iran, I mean, that's deeply humiliating to Iran.

I think he was there, Haniyeh was, for the swearing in of the new president of Iran. So for them to be able to target him while he was there and set up the bomb months in advance, I mean, that shows extraordinary planning and intelligence and a huge failure on the part of Iran.

I think in terms of the larger significance of this, you know, in the wake of October 7th on this pod, I said that I hope that Israel did not go off half-cocked, responding the way that the United States did after 9/11. And when they started bombing Gaza, I said this is gonna backfire.

And, you know, boy, was that an understatement in terms of the reaction of world opinion. I mean, Israel went into Gaza, basically leveled the place, and has alienated practically the entire world. The only country that's solidly with Israel anymore is the United States. And even within the United States, roughly half the people are now against Israel.

And I think what I said at the time was that Israel could pursue or should pursue a more targeted strategy the way that it did after the Munich Olympics. This assassination within Iran shows that the Munich Olympics strategy, I mean, they've basically shown that it's successful. They've been able to do it.

I wish they had limited their response in this more targeted way, because I think that the destruction of Gaza has created tremendous humanitarian suffering, and it's alienated just about the whole world. And what has it accomplished? I don't think they've gotten rid of Hamas. They have not been able to kill the military leader of Hamas, which is Sanwar, who was the actual military planner of the October 7th attack.

And they have radicalized. Whatever part of the Palestinian population was not radicalized has been radicalized. And they've turned so much of the Middle East and the world against them in such a strong way that, again, I wish that they had pursued the more measured strategy. It's still a tough strategy.

I mean-- - Let me put you in Netanyahu's seat. You are leading Israel. Hamas comes into your country, attacks, kills lots of people. What is your measured response to that attack from Hamas, given the capacity you have? The Israeli Air Force, by the way, is second only to the United States.

Just to give you some statistics, the Israeli Air Force has 90,000 active and reserve personnel and 614 aircraft. Israel is reported to have up to 400 nuclear weapons. And they have this extraordinary technical capacity with Mossad and operational capacity that is kind of unrivaled pretty much anywhere in the world, it seems.

What do you do if you're sitting in Netanyahu's seat that provides a more kind of measured response? And how do you kind of lead your nation? - Well, first of all, I'm not, obviously, sitting in that seat. I don't live in Israel and I don't have skin in the game that way.

So I think the first thing that they would say is, you're not us, you're not sitting here dealing with all of our enemies in the region. And they would have a point. But what I advocated, I think, months ago was to take a more targeted, measured strategy that I think the assassination of Haniyeh shows that they could have executed.

And I understand why they went into Gaza and why they felt they needed to go into Gaza. But I just, this is not an anti-Israel statement. It's just a questioning of the strategy. I just don't see that it's produced much good. I don't think they've solved their Hamas problem.

They have not gotten Sinwar. And they've lost a meaningful amount of global support. - Yeah, Chamath, do you have a read? - I think that it was, in hindsight, a pretty big miscalculation by Netanyahu to pursue the strategy that they did. And I would have much preferred what you're seeing now, which is a very targeted approach.

I think it preserves, and it would have preserved, not just world political support, but just individual people's support, where instead of going into Gaza, leveling the place, creating all of this death and destruction, and amplifying and confusing people where they now all of a sudden had to make a decision between these two groups and now get confused with anti-Semitic sentiment.

That should never have happened. It's clear that Mossad is incredibly competent and incredibly capable. I do believe that sovereign countries have the right to defend themselves. But then there was a bridge too far, and I think the Israeli government has crossed it. In hindsight, and I think I told you this story, and I may have relayed this in confidence, but I'll just say it again.

On October the 8th, what was offered, and I'm not gonna say by who, was sort of a meeting of the right political leadership from the Middle East, Israel, and the United States, where they were all willing to sort of come, and the idea would have been to extend some sort of structured solution for the Palestinian people.

Now, that would have been so unintuitive and unexpected. I think everybody would have been a little bit on their heels, but I think what it would have done is it would have passed Netanyahu in an incredible light. It would have passed Israel in an incredible light. They would have still preserved the ability to go and kill the individual leaders that they wanted to, but it was rejected.

And I think that when we look back, these are the kinds of decisions that hopefully history documents accurately so that folks who are in the seat, to your point, Freeberg, the next time around can make a different calculation. I see, you see the pictures, and there's just no way that you can turn them off.

You know what I mean? - I think Israel's biggest asset is probably also their biggest liability, which is their military and intelligence strength. And it emboldens them in a way that they can be more aggressive than perhaps they need to be with respect to maintaining the security of the state, but perhaps being vengeful and vindictive.

And I know that that's a very controversial statement to be made. I wanna underscore the strength of this military and this intelligence. Do you guys remember the Stuxnet worm from a number of years ago? - Yeah. - That story was incredible. The New York Times broke this story in 2012.

Stuxnet was a malicious computer worm, and I'm reading off of Wikipedia 'cause there's a lot of reporting that has different opinions on this, that was first uncovered in 2010 and was thought to have been in development since at least 2005. Now, this computer worm was supposedly developed by Mossad and the NSA.

And it was a malicious computer worm that ultimately allowed intrusion into the control systems of the centrifuges of Iran's uranium refining systems. And they basically were then able to make those centrifuges go haywire and destroyed themselves. And they did this over and over for several years, and the Iranians could not figure out what was going on or why.

They kept it completely secret. Ultimately, it was revealed that there was this operation organized by the United States called Operation Olympic Games that was a cyber disruption operation, and that Mossad had a critical role in. By the way, there are two other stories that build on top of this that are tangential but related.

One is that there was a nuclear engineer that Israel felt should be unlid. And the way that they did it was via some remote control machine gun that they planted off of a highway where the car egressed off the highway, and then all of a sudden, the thing was shot up.

A different example was there's a story about how they figured out that Yasser Arafat was sick because they were able to collect a stool sample from a pipe that left his home, and they were able to kind of diagnose that A, it was his stool, and then B, he had some chronic illness.

My point, I think, in all of this is kind of where you're going, which is that when you have such capability and such precision, to go to the other end of the spectrum, you really have to be sure that you're right. And as Zach said, I think we're looking back, and it's clear that the support around the world, it just isn't there for that kind of mass casualty and that kind of like-- - If Israel could actually destroy Hamas and achieve its military objective in Gaza, that'd be one thing.

But I think we've seen that that's impossible. I mean, Hamas basically bleeds in with the population. It's indistinguishable. And the leadership is hidden deep underground, and the Israelis have not been able to root them out against the war, has not been found. And so you've destroyed Gaza, but you have not achieved your objective of eliminating Hamas.

And in the process, you've deeply alienated most of the world, and you made the situation worse, basically. - It's like the Russians and the Americans trying to chase the Taliban in Afghanistan forever. This is not a group of individuals that once they're gone, everything is fixed. - Everything's just worse.

I mean, you still have the same problem. In fact, now the entire Palestinian population is radicalized. In fact, the whole Arab and Muslim population in the Middle East is more radicalized against you than they were before. I mean, I know there was already a significant amount of hatred, but now it's worse.

And you haven't fundamentally solved the underlying issue. I think the 9/11 analogy is apt. I mean, we went off after 9/11, half cocked into all these wars in the Middle East. I think that going into Afghanistan, I think you could, that was justified because they were harboring al-Qaeda. But then we went into Iraq because really members of the Bush administration had a pre-existing agenda, and then they lied us into it, saying that Saddam was connected somehow to 9/11.

And we began a 20-year process of just plunging ourselves into all these wars. It only made everything worse. One of the reasons why Iran is in such a strong position today in the Middle East is because we took out Iraq. We basically created a power vacuum in the Middle East that they ended up filling.

- I recently heard that after Israel struck the embassy in Damascus a few months ago, you may remember this, Iran launched a counterattack. And you remember there were all these like drones that they sent hundreds of them into Israel, but there was supposedly a forewarning that these drones were on the way, there was notice given, and it was like, this is it, this is our proportional response, and we're done.

- That's right, that's right. - What I heard was that Netanyahu did not wanna stop. He wanted to escalate after that response from Iran. Now, that coupled with what's going on in the West Bank right now, where there is a restricted movement of Palestinians within the West Bank and continued development of Jewish settlements, I think really represents a major risk to the region, the Middle East region, that we could see an escalation beyond the response that may be mandated or necessary to secure the state that makes things much, much worse in the region and could isolate Israel even further and ultimately draw a lot of powers to that region to try and figure out what side are you on and how do we resolve this?

And that could lead to something much bigger and much nastier. So I think while we all observe this and watch this, the behavior of the targeted attack in Hamas, for me, it's not the issue as much as indicating the capacity of this military and this intelligence that means that they probably feel highly emboldened to take whatever steps individuals feel are necessary to secure the state for the long run, which could mean an increased escalation in conflict.

And that's, I think, a real kind of point of concern. And that's the one of the black swan events, I think, that's still outstanding right now. Because if that does happen, if there is, for example, an unraveling of the West Bank, you could see one of these sorts of events that everyone gets drawn like a magnet to the Middle East and you end up with a major global conflict that becomes a problem for markets, it becomes a problem for the world.

And that could be the catalyzing event that I don't think any of us wanna see. - To use your logic from before, the thing that may plunge the world into having to have a point of view on this may actually be a political calculus that Netanyahu has to engage in, which is around keeping small factions of his coalition government in place, which may not actually represent the full view of the Israeli people.

That's what's even more tragic. So it's not, obviously the Palestinians don't want it, but many Israelis may not want it either. And there may be no avenue if he wants to remain in power. And that's what's so scary. - Look, I think there's no question that we're on a path here where we could have a regional war in the Middle East.

Remember that after Israel hit the Iranian general in Lebanon, the Iranians responded two weeks later with that massive drone and missile attack. Most of the missiles were intercepted by Iron Dome. And I think America participated in that as well. I think one or two of them got through. And then Israel launched kind of a weak missile attack on Iran, and that was kind of the final word on it.

There were people in Netanyahu's cabinet, like Smotrych and Ben-Gavir, sort of the more hardline radical right-wingers, who I think publicly tweeted that they thought Israel's final word on it was weak. And they clearly wanted to do more. So I think the point is just that when we had this last exchange between Israel and Iran, it felt like it was on the verge of tipping over into a regional war.

But I think partly due to the efforts of the United States, we were able to help tamp that down. I think now Iran's promising revenge for what just happened in Tehran, and this could set that escalatory spiral off again. - Totally. - If you were to place odds on this, I'd say it's at least 50/50 that things escalate into a regional war.

- It's not as much of a black swat, yeah. And by the way, there's no such thing as a regional war in the Middle East, because every one of those countries has significant allies in Russia, in the United States, in China. What is Saudi Arabia gonna do? Jordan is gonna end up in a situation where they may end up having to defend the Palestinians in the West Bank, which puts them across the shooting fields from the Israelis.

And the United States is an ally to both Israel and Jordan. What are we gonna end up doing? And that's why this whole situation is not just about a regional conflict, it actually draws the whole world back to the Middle East in a real kind of escalatory scenario. - This is why the counterfactual of what could have happened on October 8th is so important, because that would have been UAE, United States, Saudi.

- Qatar was involved, wasn't it? - And Israel. No, just those four. And let's put Qatar in the mix as well. But my point is like, my gosh, it could have rewritten world history in such a profound way. It would have just taken some restraint and proportionality. - Turn the cheek the other way, kind of.

- Yeah, it would require incredible forbearance on the part of a population that just been attacked. - Attacked and attacked and attacked. - With massive atrocities on civilians. - But not just this attack, like under attack for generations in a region that has been all about conflict and secularity and all of the kind of identity drivers that make this so deeply personal and rooted in history, not just in a moment or an event.

- Look, when it happened to us on 9/11, we lashed out. - Yeah, exactly. - But the results were not good. - Yeah, well, look, let's move on. I'm not trying to judge anyone's behavior. I'm just trying to shine a light on the strength of Israel's capacity and what that may mean for their proclivity for escalatory behavior, which is really scary given that this is not just a regional issue, it becomes a global issue when it does happen.

Sorry, go ahead. - I thought you were going somewhere else with it, which is I was just gonna say in any other simulation, the capability of the Mossad is fodder for incredible movies, like it's out of a movie. - Right, right. - You read these articles and they just don't seem like they're real.

- Incredible, incredible. - It's like, what do you mean you smuggle the bomb into the safe house in Iran where all the VIP stay? - Two months ago, two months ago. - Two months ago, how does that happen? What does it mean that you actually develop-- - An encetype.

- Yeah, an encetype. What does it mean that you developed a virus that you were able to get into the actual working computers of the Iranian nuclear complex? - The control units, by the way, the control units. Yeah, the control boards of the equipment made by Siemens, of the equipment made by Siemens that was shipped to Iran.

Yeah. - That's not like you tell that into something, you know what I mean? Like that means that there was a person physically there that then found a way to essentially get this firmware implanted. And it's like, this is insane. - No, you know what happened? I remember the story.

They actually did not. What happened was they let the virus circulate in the world for years before someone randomly had it on a USB drive that didn't know they had it, randomly plugged it into a computer in the centrifuge facility. Then it infected, sent out a notice, I'm in here.

And then after years, it was finally in there through the random movement of this virus that no one, isn't that incredible? Anyway. - That's incredible. - Yeah, well, let's wrap up with the Bill Ackman story. - Sorry, before you do that. - Yeah. - I hate to make this political, but I just have to observe.

I mean, look at this situation in the world. I mean, the Middle East is on the verge of regional war. We could be in a war there. I should say there could be a regional war there by January 20th when the next president is sworn in. You've got the United States in a proxy war with Ukraine.

You have major tensions with China in East Asia. I mean, is this really the time where you wanna put in place an inexperienced president whose policy positions are unclear, who's untested, was never even tested by a primary, who the media refuses to test now, who's basically a media construct?

This seems to me like a really bad idea. - All right, so political pitch in from David Sacks. We don't have Jake out here to give the other side, but let's keep going. So Bill Ackman's withdrawn his plans to IPO Pershing Square. You know, Chamath, do you wanna just give us kind of the background on what he was trying to do?

And obviously this was an attempted $25 billion raise as an IPO. He recently reduced the raise target to 2 billion. And when the order book came in, I believe at less than a billion, he scrapped the plans entirely and just announced yesterday that he's pulling the IPO. So can you just explain a little bit about what this IPO was and then we'll talk a little bit about why we think it fell apart.

- I can only repeat what I read, but I'll try to kind of like translate it into non-Wall Street speak. So basically he has a company, but what that company does is it gets investors to give it/him money. And then they invest it in all kinds of things that they deem worthwhile.

It could be bonds, it could be stocks, it could be currencies, it could be derivatives. They generate a return, and then they give those returns back to their investors. So that is a hedge fund. The Holy Grail has always been trying to figure out how can an organization that has-- - Those funds are raised and distributed back, right?

I mean, I think you should-- - Exactly. - I don't want to mean to interrupt, but yeah, just go ahead and say that, yeah. - But the Holy Grail for someone who runs those businesses is when they realize, well, listen, I get paid a great profit share from those funds when I'm successful.

I'm also allowed to take a 2% per year management fee, but I believe I'm building equity. And can I get somebody else to recognize the fact that I'm building equity? And that's no different than a startup, right? So, you know, Freeberg, you're building O'Halo. You believe that you're building all kinds of really interesting things rooted in science, and you want other people to judge the value of that as measured by your equity, right?

Independent of your revenues and profits today, they want to project into the future. The problem is that hedge funds have not found a very elegant way to demonstrate that they have any equity value. And there's only been a few, and the formula has been the same. So companies like Blackstone, companies like KKR, companies like Apollo, what have they proven?

They've proven that they can raise enormous amounts of money. So most of these organizations now are approaching a trillion dollars of capital raised. And they tell investors, well, look, don't worry about the returns anymore. Worry about the 2%, because that's like our revenue. And we're generating $20 billion a year of revenue that'll grow at some rateable proportion.

We'll manage the teams, we'll compensate them well, but there'll be lots of profitability. And people have bought that story. So I think a lot of smaller organizations who aspire to be like a Blackstone or an Apollo have tried to get people to buy into this story. And I think what Bill Ackman was trying to do was some version of that, which is to say, I'm going to build an enterprise here.

Pershing Square is going to be a standalone business. It's going to have enterprise value. And you're gonna measure that based on the assets that I manage. And it's going to be much greater than what I manage today. And I think he manages roughly 10 billion today, but he thought he was gonna raise another 25 in this IPO, and then in very short order, be at 50 billion.

And so he got people to invest in that business on that premise. And I think folks put in around a billion dollars, and they valued that entity at 10 billion. And so he tried to go and raise his fund. He thought it was gonna be 25. And it turned out, I thought it was two, but Friedberg, you just said it's less than one.

I didn't, I guess, or around one. I just heard that. I'm just hearing that from you for the first time. So I guess, what is the takeaway? Like, Samath, real quick. This was a closed-end fund he was trying to raise. No, but I think he's also said that Pershing Square eventually has a path to go public.

That's how he sold the billion of equity at 10 billion in the master LP. - Yeah, but this IPO was just for a fund. It was just a- - No, no, I know. It was the IPO of the fund, and then they were planning afterwards, the IPO- - They were planning afterwards, yes, which he didn't do.

- My only point was that the fund was, basically, it's launching a fund, and then the goal is not the fund itself. The goal is to buttress the underlying logic to take the whole thing public, the management. - Okay, okay. - And that's what I mean by taking a company public in finance is next to impossible.

- Yeah. - So the whole point is like, what are these businesses in the business of doing? They're in the business of making bets. The problem is that those bets are short-term anomalous events. Sometimes they work, sometimes they don't work. And the problem with that is that investors who are trying to underwrite 20 or 30 years of returns don't know how that's predictable over that period of time.

Like for example, you're genetically engineering all kinds of produce that we are going to ingest. If that stuff works at scale, you will have built an enterprise that theoretically has the potential, unless it's disrupted by something else, to make revenue for 20 or 30 years. So people can underwrite that.

Google makes a search engine. It's going to last for 20 or 30 years. Facebook makes a social network. It can last for 20 or 30 years. The business of making bets is typically something that can only be measured in days or weeks. Maybe months at best. And so I think what he ran into was that realization.

It's very hard to get people to value an institution in this way. And so the thing did not work. He'll go back and he'll retool. The thing that I give Bill Ackman an enormous amount of credit for is he is one of the most resilient individuals I've ever seen in high finance, but generally as a business person.

This guy has, he surfed some really big waves. He's landed some really good sets. He's also gotten crushed a few times and the guy just keeps coming back and he seems to be getting more and more refined and capable as a business person. So, you know, he'll probably figure out a way.

This is not the first time he's publicly dealt with things that have not worked. But I think it just goes to show you that in finance, these entities that try to sell a piece of the "general partner" as a company, I just think that it's, frankly, that it doesn't work.

And this is just, you know, an example, yet another example that there's not a lot of equity value in these businesses. - Sax, some reports indicate that investors pulled out of the Pershing Square IPO because of the current market conditions that a lot of market indices have stormed higher and that there is now less upside and it's not a great time to be entering the equity markets.

Other reports indicate that investors lost interest in Ackman's fund because of his activity on X or Twitter. Have you, do you have a point of view? Do you think that folks pulled out, investors have pulled out? You're obviously a fund manager who is very active and opinionated on X or Twitter.

Like, you know, do you think, has this affected your relationship with raising capital? If you're willing to talk about it or maybe just comment on the Ackman, you know, issue that he ran into, why did this fail? - I just don't know. I honestly haven't followed his IPO process at all.

I would say that the market we have right now, it's not the best it's been, but it's also not the worst. So I'm always reluctant to blame macro conditions without having a more specific explanation. - Do you have a point of view on investors having an issue with Ackman because of his outspokenness on various social and political issues over?

- I can't imagine, no, I can't imagine that. - I don't think so. Investors care about making money and Bill Ackman's a moneymaker. Like that's undeniable. The guy takes some losses, but his wins are way bigger than his losses. And he is a proven moneymaker. The problem is that I think the way in which he was trying to monetize the business is just a hard thing to do.

You have to have an organization of hundreds approaching thousands of people that are raising all manner of funds. And those funds just deliver very consistent returns, not great, but they never lose money. And that's how you get towards a trillion dollars. And that's how you make it a company and not a great hedge fund.

- Yeah, let me also just say, I think he's very thoughtful on Twitter. I've gotten into some disagreements with him on Twitter, other things I've agreed with, but overall I think he makes a strong case for himself. I haven't heard him say anything out of bounds on Twitter, whether you agree with it or not.

So I can't imagine that that's a problem. - Some people would disagree. They think he's had a lot of comments on wokeism, as he would call it, and DEI topics, and Donald Trump. - Well, I agree with him on that. And I think the vast majority of the country agrees that woke has jumped the shark.

- Yeah, but I think some people highlight. - If woke is so great, why is Kamala Harris trying to distance herself from every previous comment she's ever made about wokeism or DEI? The point is more about like what we talked about earlier, which is kind of having an authentic voice and speaking what you believe and speaking what your opinion is, versus remaining buttoned up and not speaking what you believe and toeing the line.

- He's in the only industry where his performance is measurable every day in precision. So what I would say is, it's irrelevant what he says on Twitter, meaning the quality of his decisions are independent of what he says, because they're measurable and they are not something you can gain.

And the reality is that over the last few years, particularly starting in COVID, he has gotten better and better and he's played a very good hand. I think he's an exceptional risk manager and he's timed it. And so the people that say that to you, to be very honest, they're somewhat, they're portraying their lack of financial sophistication.

- Yeah, and actually, can I go further? And I actually think that Ackman's presence on TwitterX is a huge positive for him. It's an asset because he has a gigantic followership and he's able to speak directly to his audience in the way that we do. And I think the reason why people say these things is because they don't have a direct strategy.

And so they want to basically bad mouth people who do. But again, if you don't go direct to your audience, then you have to go through the media and then they get to define you. - And it creates ambiguity. - Exactly. So I think the fact that he's got what, like a million plus followers and everything he puts out gets tens of thousands of likes, it's a huge positive.

- Huge positive. And I think that the part of his business that he hasn't gone back to, which if he does in this chapter of his career with the following that he has, is the activism part. And I think there are two people who I think are incredible at this and where both the written and the spoken word, they have such a mastery of.

Ackman is one, Dan Loeb is the other. And I think that in this world where you have the ability to go direct in a way that you've never had before is actually the realm of a different form of activism that I think could be extremely economically rewarding and valuable in society.

All right, gentlemen, this has been a great episode of "The All In Pod". We missed our comedian in residence, Jason Calacanis. Nostrocanis, nostril, anus. We miss him. We wish him well, speedy recovery. This has been an episode without the usual humor and flamboyancy that we've all come to know and love.

But I think it was great to chat this afternoon and we will see you all next week. Bye-bye. - Love you, boys. - Bye. - I gotcha. (upbeat music) ♪ We'll let your winners ride ♪ ♪ Rain Man, David Sachs ♪ ♪ I'm going all in ♪ ♪ And it said ♪ ♪ We open sourced it to the fans ♪ ♪ And they've just gone crazy with it ♪ ♪ Love you, Eskimo ♪ ♪ I'm the queen of quinoa ♪ ♪ I'm going all in ♪ ♪ We'll let your winners ride ♪ ♪ We'll let your winners ride ♪ ♪ We'll let your winners ride ♪ ♪ Besties are gone ♪ - That is my dog taking a notice in your driveway.

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