Break up Google, Starbucks CEO out, Kamala’s price controls, Boeing disaster, Kursk offensive

00:00:00.000 | All right, everybody, welcome to the number one podcast in the world.

00:00:03.740 | I am your boy, Jake.

00:00:06.340 | How the world's greatest moderator, executive producer for life with me

00:00:09.440 | again on the all in podcast is the rain man.

00:00:14.120 | David Sachs. Yeah, looking healthy, looking good, looking trim.

00:00:17.660 | The hair is great. How you feeling, brother?

00:00:19.660 | Good, good. Yeah, good, good, good haircut looks good.

00:00:23.000 | Now, do you go to the barber, the stylist?

00:00:24.560 | They come to you. Everybody wants to know.

00:00:26.900 | They come to me. Yeah, of course, of course.

00:00:30.500 | And then with us, of course, your sultan of science.

00:00:33.660 | He loves those vegetables.

00:00:35.100 | His name is David Friedberg from Berkeley to the bay.

00:00:39.600 | Our boy, how are you doing there, brother?

00:00:42.240 | Are you living the lake lifestyle?

00:00:43.540 | You have a nice restful August.

00:00:45.240 | Love and love in the outdoors.

00:00:47.580 | Good for you. You look so healthy.

00:00:49.320 | Speaking of looking healthy, celebrated birthday with Jason Kuhn yesterday.

00:00:53.480 | Happy 39th, Jason Kuhn.

00:00:55.560 | Happy 39th, Jason Kuhn.

00:00:58.000 | We did a long mountain bike ride with our other buddy, Zee,

00:01:01.260 | and had a little family barbecue last night.

00:01:04.560 | Very nice. Everyone had a good time.

00:01:06.460 | What did you do, a little portobello mushrooms?

00:01:07.940 | What did you do? You put a little zucchini on the grill?

00:01:10.240 | Let's just say I show up with my own food to a barbecue.

00:01:12.540 | Absolutely, you do.

00:01:14.300 | All right. And everybody's favorite, the chairman dictator,

00:01:18.720 | Chamath Palihapitiya, you love him, you hate him, but you can't ignore him.

00:01:23.760 | How are you doing? Look at the number of buttons here.

00:01:26.220 | You got the mouth collar on.

00:01:28.020 | And I don't think any of those buttons are buttons.

00:01:30.020 | None of them are buttons.

00:01:32.320 | You became a meme once again.

00:01:33.960 | Once again, the All In podcast creating memes.

00:01:36.100 | You were swirling.

00:01:37.100 | You were swirling a little white wand last week.

00:01:38.960 | You were in the arena.

00:01:40.640 | And I'm putting up all the numbers, going macro, and you're swirling wine.

00:01:45.140 | The audience loved it.

00:01:46.840 | What's going on today? Do you have a bottle?

00:01:48.280 | That was a 2019 Cabal Bosco.

00:01:51.920 | Really crazy.

00:01:53.040 | Can you tell us the flavor profile, the notes?

00:01:55.140 | What did you get as you were swirling?

00:01:58.020 | There was some plum.

00:01:59.120 | There's a little truffle there.

00:02:01.120 | Oh, the boys and their little boys and their little moths.

00:02:05.320 | It was a touch of inflation with a hint of unemployment.

00:02:09.300 | I don't want to be political, but.

00:02:14.200 | Let your winners ride.

00:02:18.480 | Rain Man, David Satterthwaite.

00:02:21.880 | And instead, we open source it to the fans and they've just gone crazy with it.

00:02:26.540 | Love you guys.

00:02:27.640 | Queen of Kinwam.

00:02:30.880 | Well, you know, boys, I had a big week.

00:02:32.380 | I had a big week this week.

00:02:33.980 | You know, I'm at the lake still, but I made a little trip to Silicon Valley.

00:02:37.120 | I was hanging out with Ruloff at Sequoia.

00:02:39.520 | And as I'm prone to do, I love to go to Bucs.

00:02:41.860 | You guys been to Bucs before in Woodside?

00:02:44.300 | Yeah, I went once and I and I've never been back since.

00:02:48.140 | OK, well, it's my favorite place to get breakfast or get my little tuna melt.

00:02:51.680 | I've been going there for ages.

00:02:52.580 | It's a little bit of a legendary place where Steve Jervison

00:02:55.740 | made the Hotmail investment, the Tesla investment,

00:02:58.680 | all kinds of famous stuff happens at Bucs.

00:03:00.480 | Well, it's where PayPal got its first funding round,

00:03:03.780 | where John Malloy from Nokia Ventures beamed the money to Peter and Max at Bucs

00:03:09.020 | on a Palm Pilot on Palm Pilot way back in 1999.

00:03:12.760 | Yeah, for those people who don't know, Palm Pilot was the most innovative

00:03:16.960 | and poorly designed product.

00:03:18.400 | That was J.Cow's nickname in college.

00:03:20.400 | Oh my God, well done.

00:03:24.000 | Well done, Cheboks. So good.

00:03:25.880 | So good. But, you know, I'm wearing my Bucs hat and I got my Bucs menu here.

00:03:29.640 | Boys, it was like a pinnacle of my career.

00:03:32.620 | I've been waiting for this.

00:03:35.180 | If you go to Bucs and you look at the sides,

00:03:38.080 | you can get your crispy brussel sprouts there, Freeberg.

00:03:40.160 | Get your sweet potato fries.

00:03:42.360 | But there it is.

00:03:43.020 | J.Cow's onion rings are now on the menu at Bucs.

00:03:46.360 | I have hit the big leagues, folks.

00:03:48.560 | Wait, is that is that real?

00:03:49.660 | Did you really get that?

00:03:50.860 | I did. I'm the first person, but I love onion rings.

00:03:54.160 | I love a good tuna melt.

00:03:57.140 | It's a weird sandwich, but they do it so great there.

00:03:59.500 | And I keep asking for onion rings for like a decade.

00:04:02.440 | And then we don't do onion rings.

00:04:04.240 | Tuna melts are good.

00:04:05.380 | Yeah. And so suddenly, you know, the team there comes out.

00:04:08.320 | They say, J.Cow, we have two different types of onion rings.

00:04:10.160 | Please pick which one you like best.

00:04:11.380 | I went with the panko crusted Freeberg.

00:04:13.860 | These are for you.

00:04:14.780 | Delicious panko crusted.

00:04:16.560 | And they put them on the menu.

00:04:18.300 | So I was so touched.

00:04:19.220 | Can I just say while we're on while we're on sandwiches?

00:04:22.160 | Sure. You know what I love?

00:04:24.140 | What do you love?

00:04:25.240 | A Reuben made with turkey breast instead of pastrami.

00:04:29.640 | Have you guys ever had a turkey Reuben?

00:04:31.740 | I haven't.

00:04:32.580 | Oh, it's incredible, because I think a pastrami Reuben is a little too much.

00:04:37.480 | It just feels too sclerotic.

00:04:40.080 | Too fatty, like your arteries are.

00:04:42.480 | Yeah, it's terrible.

00:04:43.280 | But like you get a good Thousand Island sauce and like the sauerkraut and some chi.

00:04:47.460 | It's amazing.

00:04:48.720 | I took my I took when I was in New York a couple of weeks ago.

00:04:50.860 | I took my daughter to Katz's Deli.

00:04:52.320 | I took her on a little tour of the Lower East Side and we made a stop at Katz's.

00:04:55.700 | What's your favorite Sammy there?

00:04:57.200 | Max's Deli, by the way, has a turkey. Max's Deli.

00:05:00.200 | Why did you do a paid promo for Bucks at Woodside?

00:05:02.540 | I don't. They gave you a hat.

00:05:04.400 | Every time they sell one of those onion rings, I get one dollar on my account.

00:05:08.280 | Of course, the grip never ends with J.Cow.

00:05:10.540 | The grip never ends.

00:05:11.740 | I don't get to sell onion rings.

00:05:14.480 | Perfect. OK, I mean, you're selling potatoes and schmatz is to sell a piano.

00:05:18.780 | So onion rings, onion rings, a little piano go high.

00:05:23.720 | We go low. I mean, they go high.

00:05:25.380 | We go low. They go low. We go high.

00:05:27.260 | All right. Listen, Schmatz bagel outcome is on the table.

00:05:30.100 | But DOJ is looking at breaking up Google.

00:05:32.720 | This is huge news in our industry.

00:05:34.160 | Last week, we talked about

00:05:36.100 | the ruling that Google had an illegal monopoly in search and advertising.

00:05:39.800 | The case was brought by Trump's DOJ back in 2020.

00:05:43.740 | Schmatz said two outcomes are possible, little O, big O.

00:05:47.580 | Little O consent decree, you know, like Microsoft did back in 2000

00:05:50.820 | with the Internet Explorer decision, the big O.

00:05:53.920 | We didn't think that was a major possibility, but here we are.

00:05:58.560 | Google getting broken up.

00:06:00.120 | DOJ is going big O.

00:06:02.260 | On Wednesday, Bloomberg reported the DOJ is considering a breakup,

00:06:05.500 | according to the article.

00:06:06.220 | Most likely breakup targets are Android OS, Google Chrome and AdWords.

00:06:10.800 | OK, last time the government tried to break up a monopoly was 20 years ago

00:06:14.660 | when they tried and failed to dismantle Microsoft.

00:06:17.540 | We know how that's gone. The company's doing great.

00:06:19.600 | So let's talk about it.

00:06:20.940 | Aside from search and advertising, there's kind of five pillars at Google.

00:06:24.480 | And you're a former Googler, so we'll go to you first, Freeberg, I think.

00:06:27.140 | Cloud, 40 billion in revenue, growing 30 percent.

00:06:29.980 | YouTube, 34 billion, growing 15 percent.

00:06:32.620 | A little volatile because it's advertising that doesn't include like premium

00:06:36.320 | YouTube TV and that stuff.

00:06:37.360 | But oh, my Lord, YouTube is up to 2.7 billion monthly active users.

00:06:42.760 | World population is 8.2, so quite significant.

00:06:45.700 | Netflix has 38 billion in revenue that they're worth almost 300 billion.

00:06:48.900 | So that's an interesting corollary.

00:06:50.600 | You got Waymo doing 50,000 paid trips a week now.

00:06:53.440 | 2.5 million a year, and that's growing quite nicely.

00:06:58.720 | You got Android, right?

00:07:01.020 | They don't disclose revenue. You got the G Suite.

00:07:02.540 | So let's start with you, Freeberg, and then I'll go to you, Chamath,

00:07:06.080 | because you made the prediction.

00:07:07.820 | What do you think would be?

00:07:10.720 | Accretive or generally increase the market cap

00:07:14.800 | and be something that Google would be happy with and the government

00:07:17.360 | would be happy with if you had to, like, maybe shed one or two properties?

00:07:20.600 | What's a possible outcome here?

00:07:22.600 | And your thoughts broadly on this?

00:07:24.300 | I'll just start by commenting.

00:07:25.780 | I'm not really sure

00:07:27.740 | what the improvement to consumer pricing

00:07:32.040 | or competition would be.

00:07:35.280 | In different breakup scenarios, I'd really like to understand

00:07:38.740 | the DOJ's analysis on that.

00:07:40.920 | How does breaking up one of these things improve

00:07:44.260 | the consumer experience?

00:07:47.520 | I could see the case for Android because Android defaults to Google search.

00:07:51.660 | But again, Android's an open source operating system.

00:07:55.300 | And so everyone has their own fork or a lot of the handset

00:07:57.900 | manufacturers will have their own fork of Android.

00:08:00.340 | Obviously, the Google fork defaults to Google search.

00:08:03.340 | So it benefits Google services quite well.

00:08:05.740 | I think that would be an analysis that the DOJ would really have to kind of prove out

00:08:09.180 | that there is real anti competition associated with Google's influence

00:08:14.420 | over the open source Android operating system fork that they manage and license out.

00:08:18.660 | I think understanding that would be good.

00:08:20.720 | I do think that there's a lot of value unlock in YouTube.

00:08:23.320 | So if Google were to just generally spin out YouTube.

00:08:26.500 | That is probably a business that on its own would attract an investor base

00:08:33.600 | that might otherwise not want to get into the conglomerate.

00:08:37.240 | And, you know, there's always this notion of what's called a conglomerate discount.

00:08:39.980 | When you put a lot of different businesses together,

00:08:42.600 | the businesses in aggregate get valued less than the individual parts

00:08:47.440 | which would be valued on their own because different investors

00:08:50.380 | interested in a business investment thesis would like to bet on cloud,

00:08:54.460 | would like to bet on YouTube, would like to bet on AI.

00:08:58.360 | And so and so each one of these kind of like segments, if they can be unlocked,

00:09:02.400 | can actually be value creating in terms of overall market cap.

00:09:06.440 | The challenge is the way YouTube's infrastructure operates.

00:09:09.640 | It operates on shared infrastructure with the rest of Google services.

00:09:12.540 | So does cloud, so to search, so does AdWords.

00:09:15.240 | So there's one common.

00:09:17.580 | A cloud infrastructure that everything runs on.

00:09:20.280 | And then there's one common advertiser pool.

00:09:24.280 | There are dedicated advertising salespeople within YouTube,

00:09:27.820 | but there's also dedicated shared infrastructure on advertising

00:09:30.600 | between YouTube and search and AdSense and so on.

00:09:32.960 | And there's ad sales teams that actually can sell across search

00:09:37.200 | and third party publisher sites and YouTube.

00:09:40.380 | And so, you know, breaking up those shared teams

00:09:43.100 | becomes a little more technically difficult.

00:09:45.240 | But YouTube certainly seems like an unlock.

00:09:47.380 | The question is, what happens with all the infrastructure layer?

00:09:50.080 | Does that go with cloud?

00:09:51.120 | And if it does, then YouTube, AdWords and search all become customers of cloud.

00:09:56.080 | So that might be one way that this could work.

00:09:58.280 | But I think net net, if this were to happen,

00:10:00.320 | there could be a lot of upside in the market cap.

00:10:03.560 | I'll also say it just feels like the tenor of all of this is anti success.

00:10:08.660 | And not anti competition and anything that's kind of successful

00:10:15.200 | or big is automatically deemed to be a monopoly.

00:10:18.600 | And I think we really have to kind of understand how our consumers

00:10:21.940 | and the market for competition being affected by having all these things together.

00:10:26.580 | And that's what should really be focused on and studied,

00:10:28.720 | not just the fact that something is big and successful.

00:10:31.280 | We'll see how that all plays out.

00:10:33.320 | All right, Chamath, you predicted the possibility of a big Oh, here we are.

00:10:37.260 | Your thoughts on what this might look like, chances of it happening.

00:10:42.220 | And then just maybe if you're interested in the anti success approach here,

00:10:47.660 | do you think this is more, you know, valid

00:10:50.560 | criticism of Google's massive search monopoly?

00:10:55.000 | Well, when I painted that series of outcomes,

00:11:01.340 | just kind of like looking forward, I really didn't think that this big

00:11:05.820 | Oh, outcomes was a very large probability.

00:11:08.580 | I was like, you know, I would have handicapped that at single digit percentages.

00:11:12.460 | And I think the reason why.

00:11:16.120 | The DOJ leaked this thing and floated this trial balloon, essentially,

00:11:20.520 | is in part, I didn't weigh enough.

00:11:23.640 | What Sachs was talking about, which is that

00:11:27.560 | there really is a massive bipartisan amount of support against Google.

00:11:34.800 | Now, it cuts on two different dimensions.

00:11:37.780 | I think that there is one dimension which is more Republican oriented,

00:11:42.180 | which is just about freedom of speech and putting your thumb on the scale.

00:11:45.960 | But if you take the Democratic point of view,

00:11:49.160 | it's more the anti successful vein that Freebird just mentioned.

00:11:54.220 | The thing is, though, that it'll make strange bedfellows

00:11:58.400 | because it unites both sides against pushing for a big outcome.

00:12:02.300 | If you go back to the last big Oh,

00:12:07.300 | outcome that we had in antitrust law, which was AT&T in the 70s and 80s.

00:12:14.640 | That lawsuit was a decade long, right?

00:12:18.280 | And essentially what happened was when.

00:12:21.460 | It looked like AT&T was going to lose the case.

00:12:25.920 | They were the ones that proposed splitting itself up.

00:12:29.560 | And so I think that it's this is going to start this really interesting

00:12:35.040 | chess game here, where obviously Google has to appeal and fight this.

00:12:39.000 | But if it looks like the political pressure is going to build

00:12:43.240 | and the courts aren't going to let them off the hook and have a little Oh, outcome.

00:12:47.840 | Probably the best thing to do is for Google to initiate it themselves,

00:12:53.080 | because they can answer a lot of the questions that Friedberg just raised.

00:12:56.620 | And they'll do it in a way where going back to.

00:13:02.220 | The people that matter, along with the customers and the employees

00:13:07.060 | are the shareholders, you can do it in a way where the sum of the parts

00:13:10.760 | will be greater than the value today of Google.

00:13:13.660 | So I think that there is a shareholder win.

00:13:16.160 | It needs to be offered by Google and then negotiated.

00:13:20.460 | But to be really honest with you, Jason, when I when I kind of was thinking

00:13:24.800 | about it last week, I really thought this was a single digit probability.

00:13:27.900 | I still think it's a single digit probability.

00:13:30.900 | And if it grows, it's the most meaningful thing

00:13:34.340 | that's happened in technology, quite honestly.

00:13:36.700 | All right, sacks from a business perspective.

00:13:38.940 | Well, actually, I agree with Chamath that Google has the opportunity

00:13:44.440 | to do something really interesting here, which is get ahead of the curve

00:13:47.740 | and break itself up before the political system forces that onto it.

00:13:52.140 | And the advantage of doing that is that it could partition the company in ways

00:13:55.740 | that are economically smart.

00:13:57.940 | The big categories would be search, advertising and YouTube.

00:14:01.640 | And I think that would have two big economic benefits for shareholders.

00:14:05.200 | One is you unlock value by deconglomerating, like Freiburg was saying.

00:14:09.480 | Second, once you break up the company into these pieces,

00:14:13.240 | there's less places for employees who aren't doing anything to hide,

00:14:17.480 | you know, for all this bureaucracy to hide.

00:14:20.340 | I mean, look, Google is famous for employees who don't do anything right.

00:14:24.280 | The guys sitting on the roof, setting themselves all day.

00:14:27.380 | If you break up the company into three or four smaller companies, right,

00:14:30.700 | there's just way less room for people to hide.

00:14:33.380 | And I think that they could all be leaner, more efficient operations,

00:14:37.140 | and that would accrue to the benefit of shareholders.

00:14:39.900 | So I think that would make a lot of sense.

00:14:41.840 | And then furthermore, I guess a third point is that you first all the possibility

00:14:46.340 | of the government doing something that could actually be very harmful.

00:14:49.700 | And, you know, the piece here

00:14:52.200 | is that I guess the DOJ is talking about spinning up

00:14:56.800 | Android and Chrome, and I think it's worth pointing out

00:15:00.600 | that those aren't really businesses in and of themselves.

00:15:03.800 | The reason why Google developed Android and Chrome

00:15:07.340 | was to prevent anybody from getting upstream of them, right?

00:15:10.580 | They saw what Microsoft did in terms of capturing the operating system

00:15:14.500 | and then capturing the browser.

00:15:15.880 | And they didn't want to potentially allow Microsoft or anyone else to essentially

00:15:20.600 | win the high ground, capture the high ground upstream of them

00:15:24.500 | and be able to divert traffic away from search to their own search engine

00:15:28.300 | or someone else's search engine.

00:15:29.880 | So they began the strategy of commoditizing those layers of the stack.

00:15:34.100 | And it worked brilliantly.

00:15:36.080 | I mean, Android and Chrome have become very popular,

00:15:39.540 | and it guarantees that nobody else can get upstream of them

00:15:43.240 | and then disintermediate them.

00:15:44.500 | But the problem is, if those things get spun out

00:15:47.280 | and have to become businesses on their own, how would they function as businesses?

00:15:51.700 | It's not clear to me that there's an obvious strategy there.

00:15:54.380 | I would like to ask Freeberg, Freeberg, do you see a way that Chrome

00:15:59.580 | and Android could be spun out and become viable businesses on their own?

00:16:05.380 | Or do you agree that they were essentially created to commoditize layers

00:16:10.180 | of the stack rather than become profitable businesses on their own?

00:16:13.100 | Yeah, so they were both created to avoid third parties

00:16:18.180 | blocking access to Google search.

00:16:20.540 | That's why they were both started.

00:16:22.040 | And remember, Sundar was the product manager on Chrome originally.

00:16:24.980 | That was his big kind of product that he ran for quite some time.

00:16:28.400 | So Android was all about making sure that the handset manufacturers

00:16:32.740 | didn't basically default consumers to do search

00:16:36.100 | and use the Internet in a way that would disadvantage Google.

00:16:38.800 | So Google said, you know what, just like Zuck is doing currently with Lama,

00:16:43.040 | Google said, let's make an open source mobile operating system

00:16:47.480 | that's better than any other mobile operating system.

00:16:49.680 | And we'll make sure that consumers have choice

00:16:51.840 | and they have the ability to go where they want to go.

00:16:53.380 | And it's not just defaulted by the telcos or the handset manufacturers.

00:16:56.980 | So that was the reason.

00:16:58.440 | And obviously, they ended up making their own fork of Android,

00:17:01.200 | which is the most popular fork of Android that has Google as a default search engine.

00:17:04.840 | So, yeah, and they get license fees from that.

00:17:07.500 | But fundamentally, it's really just in service of making sure that people go to Google search.

00:17:11.840 | So where that ends up sitting in a split up company, I have no idea.

00:17:17.980 | And Chrome, similarly, you know, Google originally supported Firefox

00:17:22.780 | and gave a lot of money to Firefox.

00:17:24.240 | And then Firefox just wasn't moving fast enough.

00:17:26.380 | So Google started hiring Firefox engineers and built Chrome in house

00:17:29.740 | as a way to keep Netscape and Internet Explorer

00:17:33.180 | from blocking access to Google search and defaulting.

00:17:35.840 | And they built a default to Google search, obviously.

00:17:38.300 | What do you think, Jacob?

00:17:40.000 | You know, I have a long relationship with Google as a content creator,

00:17:43.800 | and they they do have a massive monopoly in search.

00:17:46.400 | That's absolutely true.

00:17:47.540 | And the Justice Department, I think,

00:17:49.240 | is well within their rights to take a deep dive on that.

00:17:52.780 | They don't have it in ads.

00:17:55.080 | If you look at the competition for Google in advertising, you got Meta, TikTok and Amazon,

00:17:59.440 | which have very, very significant advertising businesses.

00:18:01.940 | And then like a bunch of new players,

00:18:04.180 | which are referred to basically as the shopping cart and networks.

00:18:07.680 | That's Uber, Instacart, DoorDash, etc.

00:18:10.680 | And so when you look at this, it's kind of paradoxical that

00:18:14.540 | it really does rhyme with what happened with Microsoft.

00:18:17.480 | They're two decades late on this.

00:18:19.180 | The search monopoly has been squeezed for every dollar

00:18:23.740 | and to build every subcomponent of Google's monopoly.

00:18:30.080 | Flights, shopping, all of these things put into Google search

00:18:33.620 | and put at the top above organic search has basically killed

00:18:37.480 | hundreds, hundreds of startups over the decades.

00:18:41.040 | And so I actually don't think this is going to do much if they do a breakup.

00:18:45.280 | The easy solution for Google, and I agree with, I think, people who said that here,

00:18:50.180 | is to just spin out YouTube and Waymo.

00:18:52.240 | Those two are perfect standalone businesses.

00:18:54.420 | Yeah, there are some back end stuff, but like you said, Freeberg,

00:18:56.820 | they could become customers of the ad network of the cloud for some number of years.

00:19:01.820 | But YouTube and Waymo, those should be like a $400 billion company,

00:19:05.080 | a $50 billion company.

00:19:06.580 | And those are right in the zeitgeist of the future

00:19:09.580 | and what advertisers want.

00:19:10.880 | So I think offering those two up would unlock massive shareholder value.

00:19:15.080 | The most damaging one would be Android.

00:19:17.380 | If they force them to sell Android, that is going to be massively damaging

00:19:21.820 | because an independent Android company could then, you know,

00:19:24.620 | give their search default to Bing and Microsoft would happily bid for that.

00:19:29.080 | Not could, not could, they must in order to capture maximum economic value.

00:19:34.480 | They would auction it, right.

00:19:36.080 | And so, I mean losing every... On Google's fork of Android, right?

00:19:39.580 | Correct, and so that is the dominant player.

00:19:42.080 | And then they have handsets, so that Android company...

00:19:44.080 | How much is that worth?

00:19:45.080 | How much is that worth?

00:19:46.080 | Because maybe that does make Android a viable business on its own.

00:19:48.580 | You know, it would be probably worth...

00:19:50.080 | It's probably $30 billion of revenue a year.

00:19:52.080 | Okay, great. So let's do it.

00:19:53.580 | I take back what I said.

00:19:54.580 | It can survive as an independent business.

00:19:56.580 | Chrome can't, right? Chrome can't.

00:19:58.580 | But maybe Android and Chrome go together.

00:20:00.580 | That would be incredibly damaging to Google.

00:20:03.580 | That's the most damaging.

00:20:05.080 | The easiest is YouTube and Waymo in this whole mix.

00:20:08.580 | But I'll give you the wild card in all of this.

00:20:10.580 | Think about the math. Sorry, just real quick.

00:20:12.580 | Think about the math on that.

00:20:13.580 | So let's say it spins out and it generates $30 billion of revenue a year.

00:20:16.580 | And Google owns the majority of it.

00:20:18.580 | And eventually, they'll sell it down.

00:20:20.080 | But that business will be valued on the money that Google's paying.

00:20:23.080 | So Google will make that equity value back because they own the shares.

00:20:25.580 | And they will lose one third of their revenue to that new company.

00:20:29.080 | Now, of course, they'll get it back in the equity.

00:20:30.580 | But then they don't have it because about a third of searches are mobile now.

00:20:34.080 | And that's increasing.

00:20:35.580 | The big wild card in all this is Apple.

00:20:38.080 | When I was doing Mahalo, which was a human-powered search over 10 years ago,

00:20:42.080 | that's Sequoia back, I emailed it to Steve Jobs.

00:20:45.580 | He opened it. He played with it a bunch.

00:20:47.580 | I won't talk about anything else in that regard.

00:20:51.080 | But they had a search project in the works when Steve Jobs was in charge over there.

00:20:55.580 | They were looking at search because he had such an axe to grind with Eric Schmidt

00:21:01.080 | because they launched Android.

00:21:02.080 | And he kicked Eric Schmidt off the board.

00:21:04.080 | And there was a lot of hand-wringing there.

00:21:06.080 | I think Apple is, and I've heard this from folks around Apple,

00:21:10.080 | that they're looking at search again.

00:21:12.080 | And there's DuckDuckGo and there's a company called Brave that has their own search engine,

00:21:16.080 | search API that's gotten very popular.

00:21:18.080 | I believe Apple is going to launch their own search engine and compete heads up with Google.

00:21:23.080 | And so I think that's going to be the very interesting thing that happens in this market.

00:21:27.080 | The question then becomes, Chama, does this distract management to a level like it did Microsoft,

00:21:34.080 | and you have a lost decade and it takes their eyes off the prize of AI?

00:21:40.080 | No. And the reason I say no is that I think that people's reaction to these things

00:21:47.080 | become more sophisticated in time because folks go back and actually study

00:21:53.080 | what happened in the Ma Bell situation, AT&T in the R-Box, what happened in Microsoft.

00:22:01.080 | And so I suspect that they know how to shield the rank and file employee

00:22:06.080 | from whatever is going to happen.

00:22:08.080 | So I think that that's less likely.

00:22:12.080 | I've always referred to management, you know.

00:22:15.080 | Do you think it distracts management from running the business, Chama?

00:22:20.080 | I don't think so either, because I think that these things get put into a very tight group of people,

00:22:26.080 | mostly lawyers, who then go and deal with this issue.

00:22:30.080 | I think that there's an acute moment where if they think that they're going to lose an appeal

00:22:36.080 | or that appeal is not going to get heard, then yeah, I do think management and the board are brought together.

00:22:42.080 | And again, if history is a guide, they should want to propose the terms on which they break their own company up.

00:22:51.080 | Because I think if the government tries to decide,

00:22:55.080 | there's going to be so much imprecision that they'll break the company.

00:22:59.080 | And I think that would be a shame because, I mean, look, take a step back.

00:23:03.080 | The breaking up of Google is great for competition and for startups.

00:23:09.080 | But let's not forget, Google is an incredible company that has created enormous amounts of good.

00:23:15.080 | They have done way more good than bad, way more, like three, four or five orders of magnitude more good than bad.

00:23:23.080 | And to break a company like that, I think would be a really bad outcome.

00:23:31.080 | From a competitive dynamics perspective and game theory, it's pretty reasonable to hobble them.

00:23:36.080 | That's why I think the small o outcome is much more palatable and seems more fair to me.

00:23:43.080 | A breakup is a really draconian action.

00:23:45.080 | And I'm not sure that when you look at Google versus AT&T and the Babybels, I don't think it's anywhere near the same.

00:23:54.080 | But if there's the political will, they'll be able to craft and change some of the laws that allow these folks to just keep going after them.

00:24:04.080 | And if that happens, I think it's going to be really important for Google to define the terms of their own breakup.

00:24:10.080 | I want to just underline what Shamoff said real quick.

00:24:12.080 | Being big can be very good in the sense that it can drive an ability to invest in innovation that is not possible without the scale and the significant cash flow that's being generated by being that big.

00:24:26.080 | And AT&T is a great example.

00:24:28.080 | Bell Labs, so the way AT&T was set up is there was all the local telephone companies under this Bell system that AT&T owned.

00:24:35.080 | And then Western Electric was the company that manufactured all the telephone equipment that was put into the telephone system.

00:24:42.080 | And then Bell Labs was the third entity.

00:24:45.080 | It was the research arm.

00:24:46.080 | And all that they did at Bell Labs was do research.

00:24:48.080 | And they were fully funded.

00:24:50.080 | They had all this cash flow pouring into them.

00:24:52.080 | So they could discover and work on and invent whatever they wanted.

00:24:55.080 | With that capital, Bell Labs is so insane.

00:24:59.080 | If you guys haven't read any of the books on Bell Labs and what was discovered there and how it operated, it truly is like the most innovative center ever in human history.

00:25:08.080 | But they invented like antenna arrays.

00:25:10.080 | They invented microwaves.

00:25:11.080 | They invented radar.

00:25:12.080 | They invented the transistor.

00:25:14.080 | They invented information theory, which was the basis for everything in the internet.

00:25:19.080 | There was even some efforts to try and invent a nuclear bomb before the Manhattan Project started.

00:25:24.080 | They invented integrated circuits and on and on and on and on.

00:25:28.080 | And that's because they could invest all this money in doing this research that would have been very difficult for a small startup or a company that's trying to grow and is barely profitable to be able to do.

00:25:37.080 | At Google, they've invested billions of dollars in Waymo.

00:25:39.080 | And I think, as we all know, Waymo really was, if not the leader, but the inspiration for a whole generation of autonomous driving that ultimately will come to market and will really transform our lives in a meaningful way.

00:25:51.080 | In the same way, Amazon and Microsoft and Meta have all invested tens of billions of dollars in innovation.

00:25:57.080 | Look at what Zuck is doing at Meta with the open sourcing of the Lama models.

00:26:01.080 | It's incredible.

00:26:02.080 | That would have never been possible if you had a small company that was trying to get profitable.

00:26:07.080 | So I just want to highlight like these businesses, just because they're big and successful, doesn't necessarily mean that they're stifling innovation.

00:26:14.080 | In fact, they may be accelerating innovation and enabling progress.

00:26:17.080 | I'm just pointing out that the cash flows that are being generated and the way they're investing those cash flows is pretty, pretty impressive.

00:26:24.080 | And we lose that if we end up going after every big company just because they're big and saying, Hey, we should take away their ability to do this.

00:26:30.080 | I'm going to take the other side of that.

00:26:32.080 | I think that what they can do with their massive amount of power is destructive to competition in the marketplace.

00:26:40.080 | If you look at self driving, we have had 10s of billions of dollars invested without Waymo, it would have been just fine.

00:26:46.080 | There have been so much money, Tesla, Uber, you know, a cruise GM, there's plenty of people out there.

00:26:53.080 | There's plenty of capital out there from around the world.

00:26:56.080 | And I think when these companies and Facebook's one, I think proves my point, what you're saying here is.

00:27:01.080 | I think it would be better that you didn't have these companies that could put $20 billion into something.

00:27:06.080 | And you had 50 startups go after it rather than these giant companies just steal it and overpower them, flooding them with capital.

00:27:13.080 | It makes the world less dynamic that Zuck can just, and Google can keep taking the next category from the marketplace.

00:27:20.080 | Go ahead, Sax, you had a point.

00:27:22.080 | If you break Google up from a conglomerate of, let's call it four monopolies or duopolies or companies with extraordinary market power into four separate companies,

00:27:31.080 | they're still going to be generating extraordinary profits.

00:27:33.080 | And those could still be invested in a Waymo.

00:27:36.080 | So I don't know that it stops the innovation.

00:27:38.080 | Our workshopping this issue has pretty much convinced me that it should be four companies.

00:27:42.080 | Search, advertising, YouTube, and Android.

00:27:45.080 | Because I think Android could be a standalone business because of the value of the search default.

00:27:52.080 | Cloud isn't search or advertising.

00:27:54.080 | That's got to be figured out.

00:27:56.080 | I don't know the answer to that.

00:27:57.080 | Yeah.

00:27:58.080 | So, I mean, I guess it's a negotiation now.

00:28:00.080 | Maybe they put up one or two to be spun out and then the negotiation happens.

00:28:03.080 | And who knows, you could have regime change in Washington.

00:28:06.080 | Okay, let's keep moving through this incredibly juicy docket.

00:28:10.080 | Starbucks CEO is out after a year and a half of underperformance.

00:28:14.080 | Starbee's CEO, Laxman Narasim, stepped down after just 16 months on the job.

00:28:20.080 | I'll break down what went wrong and get your reaction to all this.

00:28:23.080 | I know you have some strong feelings on it.

00:28:24.080 | Freeberg as well.

00:28:25.080 | Earlier this week, Starbucks shares were down 20% year to date.

00:28:28.080 | Compared to the S&P, up 12%.

00:28:31.080 | Companies are two straight quarters of declining revenue.

00:28:33.080 | The definition of a recession, in fact.

00:28:35.080 | They've had to raise prices massively due to inflation that has annoyed customers.

00:28:40.080 | And customers have been irate about the weight, which has been caused by two things.

00:28:45.080 | One, they have a broken staffing algorithm.

00:28:47.080 | That's led to massive understaffing.

00:28:49.080 | And then the app has become, the Starbee's app is incredibly complex and you can order ridiculous drinks.

00:28:56.080 | That's causing a massive...

00:28:57.080 | Why do you keep saying Starbee's?

00:29:00.080 | It's what the kids call it.

00:29:01.080 | It's what the kids call it.

00:29:02.080 | Starbee's.

00:29:03.080 | Oh, that's part of the problem.

00:29:04.080 | I've never heard of that.

00:29:05.080 | Kids are addicted to this.

00:29:06.080 | That's what kids call it?

00:29:07.080 | Kids are addicted to it.

00:29:08.080 | Yeah, and they've added all these fruity drinks and stuff that would be along the boba lines

00:29:13.080 | that have become incredibly popular with millennials and Gen Z.

00:29:17.080 | So anyway, Laxman was the handpicked successor by Howard Schultz.

00:29:22.080 | And Schultz helped prep and train Laxman, but he's been super critical of him recently.

00:29:27.080 | Kind of like the Bob Iger, Bob Chapek relationship we saw play out in 2022 over at Disney.

00:29:32.080 | Brian Nichol, the current CEO of Chipotle, is going to take over at the end of August.

00:29:36.080 | Investors love this move.

00:29:37.080 | Shares jumped 25% on Tuesday.

00:29:39.080 | Sorry, what did you call it?

00:29:41.080 | It's called Chipotle.

00:29:43.080 | Normal people call it Chipotle.

00:29:44.080 | Sorry, Brian Nichol, the current CEO of Chipotle.

00:29:46.080 | Chipotle?

00:29:47.080 | No.

00:29:48.080 | Chipotle.

00:29:49.080 | CEO of Chipotle.

00:29:50.080 | No, Chipotle.

00:29:51.080 | Chipotle.

00:29:52.080 | Chipotle?

00:29:53.080 | Chipotle.

00:29:54.080 | CEO of Chipotle.

00:29:55.080 | Chipotle.

00:29:56.080 | Who knows?

00:29:57.080 | I don't eat at this place.

00:29:58.080 | Anyway, Starbucks jumped 25% on Tuesday.

00:30:01.080 | 25% on Tuesday, largest day increase, yada, yada.

00:30:04.080 | Meanwhile, Chipotle dropped 8%.

00:30:07.080 | Nichol is on a heater.

00:30:08.080 | When he switches teams, the odds go with him.

00:30:10.080 | And Starbucks has a bunch of activist investors who are winning massively as part of putting

00:30:16.080 | pressure on this.

00:30:17.080 | Freeberg, Starbucks, and Nike, both iconic global brands.

00:30:20.080 | Both have faltered.

00:30:21.080 | What's your take?

00:30:23.080 | Well, the one argument is there's a founder-led problem here, which is when the founder steps

00:30:28.080 | out and professional management takes over and you have the same expectations that you

00:30:33.080 | had when the founder was leading, things go sideways.

00:30:38.080 | But Starbucks faces many more kind of macroeconomic challenges.

00:30:42.080 | Nick, if you pull up Starbucks financial report, so here you can see that their net revenue

00:30:47.080 | growth was only 1% year over year, but their operating margin's been on the decline.

00:30:53.080 | So they have not really been able to boost their operating margin very much in the past

00:30:56.080 | five years.

00:30:58.080 | So while they've raised prices, they've had a really hard time making more money.

00:31:03.080 | And that's because the cost of food and the cost of labor and the cost of rent and the

00:31:08.080 | capital expenditures needed to upgrade stores has far exceeded the ability for them to grow

00:31:14.080 | revenue and compete.

00:31:15.080 | And now revenue is flatlining because consumers are getting tapped out with respect to how

00:31:20.080 | much they can spend.

00:31:21.080 | And there's only so much innovation you can really do to charge more, get people to come

00:31:26.080 | in the store more and drive up revenue.

00:31:29.080 | Brian Nickel has an incredible reputation.

00:31:32.080 | Prior to Chipotle, he ran Taco Bell.

00:31:35.080 | And he ran Taco Bell for several years and made it one of the most profitable QSR, quick

00:31:41.080 | serve restaurants in the world.

00:31:43.080 | He did this by focusing on every nickel.

00:31:45.080 | He is notorious for being a cost cutter, for being an efficiency driver, for being a productivity

00:31:51.080 | hound.

00:31:52.080 | He goes into the business and he figures out every step in the supply chain, every step

00:31:56.080 | of the operating activities of the employees in the stores, and figures out ways to make

00:32:00.080 | sure--

00:32:01.080 | Wait.

00:32:02.080 | Did you say that Brian Nickel focuses on every nickel?

00:32:04.080 | Was that--

00:32:05.080 | He did say that.

00:32:06.080 | I didn't want to say it.

00:32:07.080 | He did say it.

00:32:08.080 | He did say, don't interrupt him.

00:32:11.080 | He doesn't like to be interrupted.

00:32:13.080 | No, no.

00:32:14.080 | Sorry.

00:32:15.080 | Keep going.

00:32:16.080 | That was good.

00:32:17.080 | And so he was recruited heavily.

00:32:18.080 | I don't know if you guys remember Chipotle's founder was running Chipotle.

00:32:21.080 | And at the time, there was a lot of investor activism around Chipotle because they were

00:32:25.080 | wasting money like no one's business.

00:32:27.080 | The guy had a private jet.

00:32:28.080 | He was flying his management team back and forth between Denver and New York.

00:32:32.080 | They were spending money on crazy projects.

00:32:34.080 | And the board fired the CEO, founder of Chipotle, brought in Nickel.

00:32:38.080 | Nickel came in and made Chipotle an incredibly profitable, growing business.

00:32:42.080 | And the expectation is he'll come in and do the same here, that maybe over the years,

00:32:46.080 | Starbucks' success has bred laziness.

00:32:49.080 | Starbucks' success has bred fat, slowness, productivity decline, and that this guy is

00:32:56.080 | the right guy to come in and find all the nickels.

00:32:59.080 | And Brian Nickel is probably the right guy, which is why you're seeing the stock rally

00:33:02.080 | as hard as it has.

00:33:04.080 | Sax or Chamath, anybody have strong feelings here?

00:33:06.080 | Yeah, I would just add something here, which is I do think that macroeconomic forces played

00:33:11.080 | a huge role here.

00:33:12.080 | We've seen that we have had tremendous amount of inflation over the last few years, and

00:33:16.080 | Starbucks has gotten more expensive.

00:33:18.080 | And if you're a worker whose wages have not kept up with inflation, do you really want

00:33:22.080 | to spend $10, $15 on a cup of coffee?

00:33:27.080 | I mean, it's a pretty fancy cup of coffee.

00:33:28.080 | I'm not saying it's not.

00:33:30.080 | But when you could just go to your commissary at work and pour yourself a cup of coffee

00:33:34.080 | for free, do you really want to work roughly an hour every day to pay for your coffee fix?

00:33:40.080 | And I think more and more consumers are just saying that this is a luxury good.

00:33:44.080 | I'm looking to cut costs.

00:33:46.080 | When I go to the grocery store and buy groceries, they're 30% more expensive than they were

00:33:51.080 | a few years ago.

00:33:52.080 | I got to cut somewhere.

00:33:54.080 | And a luxury cup of coffee just seems like a really easy place to cut.

00:33:57.080 | So I think that's a huge part of this.

00:33:59.080 | And I don't know how Brian Nickel is going to fix that.

00:34:01.080 | It's a macroeconomic force.

00:34:03.080 | Chamath, your thoughts?

00:34:04.080 | I have a couple.

00:34:05.080 | The first is that I think Starbucks is actually an incredible brand.

00:34:09.080 | And it's actually a really good business.

00:34:13.080 | And the mistakes here have nothing to do with the product, per se.

00:34:18.080 | Meaning, Chipotle, if you remember, someone got poisoned there.

00:34:23.080 | There was botulism.

00:34:24.080 | The chicken was bad.

00:34:25.080 | So there was a core product problem.

00:34:27.080 | But that's not the case here.

00:34:31.080 | If you unpack what Starbucks is, I think that they are a premium product.

00:34:36.080 | And that's reinforced by what Sachs said, which is they price in such a way because

00:34:43.080 | they believe that they are a premium product.

00:34:46.080 | The problem is they are not a premium brand.

00:34:49.080 | And the difference is Hermes, as an example, is a premium brand.

00:34:53.080 | They can charge whatever they want under all weather conditions.

00:34:57.080 | They have pricing power.

00:34:59.080 | So if their inputs go up, they can make sure they maintain margin by changing the final

00:35:04.080 | price that the customer paid.

00:35:06.080 | Starbucks doesn't have that power.

00:35:08.080 | So they charge like a premium product, but they're not a premium brand that has pricing power.

00:35:13.080 | And that's why you've seen this compression.

00:35:16.080 | So very specifically, when the new CEO came in, he, I think, made one important mistake,

00:35:25.080 | which is he came in on the heels of a very rosy set of projections that Howard Schultz

00:35:30.080 | and the board put out to the street.

00:35:33.080 | And I think that he had an opportunity then and there to just cut it because they saw

00:35:39.080 | inflation, they saw what it was doing.

00:35:42.080 | And if you just looked around the corner, you would have seen that there would have

00:35:46.080 | been this compression in the product.

00:35:48.080 | And I think what he should have done is just cut the analyst projections and the forecast

00:35:54.080 | to give him room and time.

00:35:56.080 | He didn't do that.

00:35:58.080 | And by the way, when you bring in somebody who ran Taco Bell, that is proving that this

00:36:03.080 | is neither a premium product nor a premium brand anymore.

00:36:06.080 | It is a mass market product that will ebb and flow cyclically with the vicissitudes

00:36:12.080 | of inflation.

00:36:13.080 | That doesn't mean it's a bad business.

00:36:15.080 | I'm just saying it's just an observation.

00:36:17.080 | I expect that Brian Nickell, if he is smart, will look at this forecast and shred it to

00:36:26.080 | give himself time.

00:36:27.080 | So that's the sort of the short term thing.

00:36:30.080 | The long term thing, though, is in the following image, which I just sent to Nick.

00:36:35.080 | I think there's a real question mark on this company over the medium to long term.

00:36:41.080 | And I think it's best represented in this graphic.

00:36:43.080 | Starbucks is a sugar company.

00:36:45.080 | So, for example, a caramel macchiato, 32 grams of sugar, a mocha frappuccino, 60 grams of

00:36:54.080 | sugar.

00:36:55.080 | That's three times what you're supposed to have as a human in a day.

00:36:58.080 | A frappuccino, 53 grams of sugar.

00:37:01.080 | A caramel ribbon crunch frappuccino, 62 grams of sugar.

00:37:05.080 | And these products also average four to 500 calories per drink.

00:37:11.080 | So the real issue is that more consumers, as they question the repercussions of consuming

00:37:19.080 | a lot of sugar, what will they do?

00:37:22.080 | As more consumers get on GLP ones, what will they do?

00:37:26.080 | As more people think about the fact that fat was never an enemy.

00:37:30.080 | In fact, fats are actually really good for you.

00:37:33.080 | The problem was that the sugar lobby convinced us that fat was bad and sugar was okay.

00:37:38.080 | What will consumers do?

00:37:40.080 | And I think that's a really big strategic question mark because the company has to embrace

00:37:45.080 | where the world is going.

00:37:47.080 | The world is going away from sugar.

00:37:50.080 | And I think as consumers become smarter, they're going to have to really figure out what to

00:37:55.080 | do.

00:37:56.080 | Could Starbucks introduce a line of low-calorie drinks that use sugar substitutes to achieve

00:38:01.080 | the same flavor?

00:38:02.080 | They've done it, but it didn't have uptake.

00:38:04.080 | They've already got that, yeah.

00:38:05.080 | When you open the app, every single syrup comes in sugar-free and regular.

00:38:11.080 | So when I go there, now that I'm on GLPs and I've lost all this weight and I drink less,

00:38:15.080 | I just get the nitro cold brew.

00:38:17.080 | It's got zero calories or five calories.

00:38:19.080 | I might throw a little cold foam on it.

00:38:21.080 | And then my kids, I do...

00:38:22.080 | That's not what the kids want.

00:38:23.080 | That's not what the kids want.

00:38:24.080 | No, I know.

00:38:25.080 | And with the kids, it's critical.

00:38:26.080 | What I do with my kids is I do low sweet or like one-third sweet.

00:38:29.080 | I order one giant one.

00:38:31.080 | I pour it into three glasses at home with ice and I cut it with water because it is

00:38:36.080 | like drinking an unbelievable amount of sugar.

00:38:41.080 | It is nuts.

00:38:42.080 | It's like a milkshake basically.

00:38:43.080 | I'm going to go get an espresso after this.

00:38:45.080 | This is making me want an espresso.

00:38:46.080 | That's the thing about coffee.

00:38:47.080 | Coffee is supposed to have zero calories and you put a little half and half in it and you

00:38:50.080 | get the fat and you're good.

00:38:51.080 | No, but I mean, here's what happened.

00:38:52.080 | The thing about Starbucks, I studied Starbucks and I've spent some time with Howard Schultz

00:38:56.080 | actually a couple of years ago.

00:38:57.080 | Well, you did retail, right?

00:38:58.080 | Maybe you could talk about your EatSex thing.

00:38:59.080 | I did a little retail.

00:39:00.080 | You did a little retail side quest.

00:39:02.080 | But the thing about Starbucks is they realized early on that when you can customize a consumer

00:39:08.080 | experience, the consumer comes back more frequently.

00:39:10.080 | So when you see your name written on that cup, you feel like you're getting your product.

00:39:14.080 | You're not buying an off-the-shelf product.

00:39:16.080 | You're getting a custom personalized experience.

00:39:18.080 | What that led to is people customizing their drinks.

00:39:21.080 | And what did they find that they liked when they customized their drinks?

00:39:24.080 | Sugary sweet atoms.

00:39:26.080 | And then that became more and more of the standard menu.

00:39:28.080 | And then that just kept evolving.

00:39:29.080 | And that's just the consumer feedback mechanism working, which is to Chamath's point, led

00:39:34.080 | to 60 gram sugar drinks that are now the standard product at Starbucks, not an espresso or a

00:39:40.080 | cappuccino, which is how they started.

00:39:42.080 | And it's really unfortunate.

00:39:44.080 | I don't think that Brian Nichols is going to focus on that, to be honest, given his

00:39:47.080 | background with Taco Bell and Chipotle.

00:39:49.080 | No, no.

00:39:50.080 | And to your point, he'll be able to plug the leaks.

00:39:53.080 | My question is just more, what does a company that's selling a product that people are learning

00:40:00.080 | is worse and worse for them?

00:40:01.080 | What do they do?

00:40:02.080 | They have to embrace a different alternative.

00:40:05.080 | But I think it can be very hard because it may be so disruptive to the core product that

00:40:10.080 | they sell.

00:40:11.080 | Yeah.

00:40:12.080 | So what do you think?

00:40:13.080 | I mean, what do you think about Starbucks?

00:40:14.080 | Well, I mean, I and my kids love Starbucks.

00:40:17.080 | We are regular consumers.

00:40:18.080 | The app is extraordinary.

00:40:21.080 | And I think the key issue here is obviously the inputs in inflation.

00:40:25.080 | That's a major driver.

00:40:27.080 | But wage inflation is a critical piece of this.

00:40:30.080 | Here's a chart for you, just in terms of weekly earnings of full-time workers since Q4 2019.

00:40:36.080 | Starbucks started having a lot of labor movements, a lot of unionization, a lot of complaints

00:40:41.080 | from the green aprons, and they have massively raised salaries.

00:40:45.080 | They were at $15, $16, $17.

00:40:48.080 | A lot of people were going into gig work, door dashing, Uber.

00:40:53.080 | And so this competition for entry rung employees forced Starbucks, and I know this from the

00:40:59.080 | Uber experience and then DoorDash, people wanted to set their own schedules, not be

00:41:03.080 | like in a shift work.

00:41:05.080 | And so you could make 20 bucks working for Uber and DoorDash.

00:41:09.080 | You're making 15, and you have to drag your ass into Starbucks at 5, 6, 7 a.m. and work

00:41:14.080 | a shift and not be able to pick up your kids.

00:41:16.080 | That led them to go to like $20, $22 per hour for these baristas.

00:41:22.080 | And they continue to raise those rates.

00:41:25.080 | They've been very generous with employees.

00:41:27.080 | And so I think that's a key piece of it.

00:41:29.080 | I think the big story here is going to be automation.

00:41:32.080 | I think you're going to see a lot more robotics in these.

00:41:36.080 | If you look at, I just had the CEO of, what's the salad company?

00:41:41.080 | Sweet Greens.

00:41:42.080 | Yeah.

00:41:43.080 | I just had the CEO of Sweet Greens on this week in startups, and he is all in on automation

00:41:47.080 | and they are making salad robots and they've already got two or three stores with them.

00:41:51.080 | And his whole concept is it's going to take $3 out of every salad.

00:41:54.080 | We have an investment in a company called Cafe X, Nick, you can play a clip of it.

00:41:58.080 | These two machines in FSO have broke a million dollars a year in revenue.

00:42:02.080 | They are serving a massive number of them and they've sold a dozen of these to other people.

00:42:06.080 | So I think automation is what's going to come to this.

00:42:08.080 | I don't think you can sustain it.

00:42:10.080 | And the money has to come out of somewhere.

00:42:12.080 | And the two big costs it can come out of is the real estate and the employees.

00:42:16.080 | And I think that's what we're going to see in the very near future is Dunkin.

00:42:21.080 | I will predict.

00:42:23.080 | You were doing it at Eats, right?

00:42:25.080 | Yeah, we had automation.

00:42:26.080 | I actually worked on an automation project with Jonathan at Sweet Green and Starbucks and Chipotle.

00:42:31.080 | So I knew them all.

00:42:32.080 | Yeah.

00:42:33.080 | And then the Chipotle CEO got fired.

00:42:34.080 | We were going to roll out automation with Chipotle.

00:42:37.080 | And he got fired and nickel came in and our deal blew up.

00:42:41.080 | It killed the deal.

00:42:42.080 | So explain how that might work and impact a business like that.

00:42:45.080 | Oh, my God.

00:42:46.080 | So it was going to take out basically these businesses today are running a call at 30% EBITDA margins at peak performance.

00:42:53.080 | That's like Chipotle's best class by taking out labor.

00:42:57.080 | You could probably take out another 20 points of cost, which could translate into lower prices for consumers, higher throughput, lower wait times.

00:43:04.080 | All of these kind of experiential differentiators are going to be significant.

00:43:08.080 | Certainly true for Starbucks.

00:43:09.080 | Certainly true for Sweet Green.

00:43:11.080 | I would expect that with nickel coming in, you'll see some experimental stores.

00:43:15.080 | As you point out, Jekyll, that'll be more highly automated.

00:43:18.080 | But we'll also, I think one of the first things you're going to see from nickel within the first year at Starbucks is a reduction in the complexity of the menu.

00:43:25.080 | This is something he's done historically.

00:43:27.080 | And he focuses, like he did at Taco Bell, he creates a couple of key highlight products and creates these innovative product ideas.

00:43:34.080 | And then those become the banners that bring people into the store.

00:43:37.080 | But it's a simpler menu with kind of more attractive, interesting products that bring people in.

00:43:42.080 | And then if you couple automation to reduce some of the cost, you can bring that labor cost down.

00:43:46.080 | Yeah, and this is a key point.

00:43:48.080 | The order complexity is what's killing the baristas there.

00:43:52.080 | There's four quintillion ordering options at Starbucks today.

00:43:56.080 | And so the expectation has always been that that is what brings people coming back to the store.

00:44:02.080 | But what nickel has shown in the past with Chipotle and with Taco Bell is you can actually have a simpler menu with a few points of customization.

00:44:09.080 | You don't need to have infinite customization around everything.

00:44:12.080 | Which is what Steve Jobs did, right, with his four quadrants when he took back over.

00:44:16.080 | He was like, listen, what's business, what's consumer, what's high end, what's low, what's portable, what's desktop.

00:44:21.080 | I forgot what the four quadrants were, but he did it.

00:44:23.080 | And if you look, Freiburg, to your point of the cost savings, right now, the majority of orders in Starbucks, I believe, are coming in through the app.

00:44:30.080 | And what I was told, you know, and some of the buzz I heard from baristas was that they are prioritizing mobile orders to punish the people online to get them to the app.

00:44:42.080 | Because that gets rid of cashiers.

00:44:44.080 | And McDonald's has no cashiers in a lot of restaurants right now.

00:44:47.080 | You just order at a giant touch screen.

00:44:49.080 | So the cashiers will be gone, the cooks will be gone, and eventually the baristas will be gone, and it'll just be a couple of people.

00:44:54.080 | The cashier problem also creates a wait time problem, because it's a serial ordering process.

00:44:59.080 | Everyone stands in line, they order one at a time, and there's only one.

00:45:02.080 | All of these are really good points.

00:45:06.080 | I just think that the CEO would not have gotten fired had he just moved the forecast down by 20% when he came in as CEO.

00:45:12.080 | Also, did you see this incredible clip of him saying he doesn't want anybody working past 6pm?

00:45:16.080 | Play this clip.

00:45:17.080 | This is like the previous Starbucks CEO.

00:45:22.080 | I mean, this clip is so brutal.

00:45:24.080 | We should talk about this in the context of Eric Schmidt's interview as well, J. Cal.

00:45:27.080 | Let's show the clip and then let's show Eric Schmidt and talk about work culture in America.

00:45:33.080 | I think this is a really important point.

00:45:35.080 | Fantastic side quest.

00:45:36.080 | Let's do it.

00:45:37.080 | All right, so there's a big culture thing going on here, Freeberg, of hard work in corporations.

00:45:42.080 | I don't know if you saw Eric Schmidt at Stanford.

00:45:44.080 | They took this talk down, and Eric Schmidt is walking the comments back.

00:45:48.080 | But here we go, folks.

00:45:49.080 | This is the money clip from Eric Schmidt.

00:45:51.080 | Google decided that work-life balance and going home early and working from home was more important than winning.

00:46:02.080 | And the reason startups work is because the people work like hell.

00:46:07.080 | And I'm sorry to be so blunt.

00:46:09.080 | But the fact of the matter is if you all leave the university and go found a company, you're not going to let people work from home and only come in one day a week.

00:46:20.080 | Can you show the Starbucks clip?

00:46:23.080 | Well, it's self-evidently true.

00:46:25.080 | I mean he's basically making a point similar to what I said about Google is so large that employees can hide and not do very much.

00:46:32.080 | It's not just Google.

00:46:35.080 | It's pervasive.

00:46:37.080 | Yeah, let's pull up the Starbucks CEO.

00:46:41.080 | I'm very disciplined about balance.

00:46:43.080 | If there's anything after 6 p.m. and if I'm in town, it's got to be a pretty high bar to keep me away from the family.

00:46:49.080 | Anybody who gets a minute of time after that better be sure that it's important because if not, it'll just wait for another day.

00:46:56.080 | This makes me so uncomfortable just hearing that I feel.

00:46:59.080 | Holy ****.

00:47:00.080 | I mean, retire, bro.

00:47:01.080 | Just retire.

00:47:02.080 | What does America value is the real question.

00:47:05.080 | Does America value success performance or does America value comfort?

00:47:10.080 | And the problem is American American work culture has shifted to value and comfort.

00:47:15.080 | And that is the inevitable outcome of decades of extraordinary success.

00:47:21.080 | And now the performance culture is losing to the comfort culture.

00:47:26.080 | And I think you guys are putting a lot of things together.

00:47:29.080 | The problem is that I don't think that that's his truth, actually.

00:47:33.080 | I think that this guy's clip sounds very inauthentic.

00:47:36.080 | I think what probably happened is the PR and policy group of Starbucks says, hey, listen, here's the average age of your employee and here's what they value.

00:47:46.080 | And he probably spouted some politically correct nonsense to try to inspire the troops.

00:47:51.080 | I think a lot of CEOs do this.

00:47:53.080 | Like, I think we're seeing in modern media today that a lot of CEOs have actually become the least version of their authentic self.

00:48:03.080 | They are being packaged by people to dress and act and say things in a certain way.

00:48:10.080 | And I think what happens as a result of that is that you have a wayward culture where nobody knows what people stand for.

00:48:17.080 | That's when the corrosiveness of folks not working at all or having jobs at two different companies comes in.

00:48:27.080 | Like, that's a total moral and ethical breach that happens because people think it's acceptable.

00:48:34.080 | And I think people think it's acceptable because it's not in the talking points of how the CEOs are trying to package themselves to tens of thousands of employees.

00:48:44.080 | So, you think this was a PR design genuflect?

00:48:47.080 | I like that insight.

00:48:48.080 | Sax, your thoughts overall.

00:48:50.080 | Well, it could be a genuflect.

00:48:52.080 | I don't know.

00:48:53.080 | Look, I would say that there are a lot of Americans who do feel that way about work.

00:49:00.080 | But I think it's not appropriate in two cases.

00:49:03.080 | Number one is if you're ambitious and you really want to rise in your organization, then you got to have more of the J-Cal attitude, which is I'm going to be the first to work and the last one to leave.

00:49:14.080 | And I'm going to show my boss.

00:49:15.080 | I'm going to get promoted.

00:49:16.080 | So, if you want to be ambitious in your career, that's not a good attitude to have.

00:49:21.080 | And then on the other extreme, if you're the CEO of the company, your attitude has got to be I'm 24/7 with this shit.

00:49:27.080 | It's like I'm always online.

00:49:28.080 | I'm always reachable.

00:49:30.080 | The buck stops with me.

00:49:31.080 | Now, obviously, you're going to cut out time to be protected that you can spend with your family, but your attitude's always got to be that I'm available.

00:49:40.080 | I don't turn off my phone.

00:49:41.080 | I don't do any of that stuff.

00:49:43.080 | I just think that if you're running an organization, you can't take this attitude that, oh, it's 6 p.m., I'm switched off.

00:49:50.080 | It just doesn't work that way.

00:49:52.080 | Yeah, especially if you're running one of them.

00:49:54.080 | I don't think that's – yeah.

00:49:56.080 | I just don't think it's an appropriate thing for someone like that to say when he's the CEO of a multinational corporation.

00:50:01.080 | Yeah, I think that is the key insight, Saxon, with you on this, which is leadership starts at the top.

00:50:07.080 | If the leader says, hey, listen, don't bother me after 6, I'll talk to you at 9 a.m., then that's just going to go through the entire organization, and it's already hard enough to run these organizations.

00:50:18.080 | Now, if you run a lifestyle business as your local cafe and you want to do that and you're running it at a break-even, that's fine.

00:50:23.080 | This is a publicly traded company with shareholders, with massive competition.

00:50:27.080 | Who could get taken out by all these other brands that are trying to compete with it?

00:50:31.080 | You have to have – this is a war.

00:50:34.080 | We are at war.

00:50:35.080 | We have to figure out how to lower prices.

00:50:37.080 | We need to grind every nickel from the supply chain, rent.

00:50:40.080 | We have to renegotiate contracts.

00:50:42.080 | And then just to speak on the work ethic issue, this country is in a very significant war about going back to work and work ethic.

00:50:52.080 | You mentioned over-employed and the ethics around that, Chamath.

00:50:56.080 | And then there's a group of Americans, and I've been studying this a bit, that are opting out of capitalism or hacking capitalism.

00:51:03.080 | There's a very interesting movement.

00:51:04.080 | It's called FIRE, Financial Independence Retire Early.

00:51:07.080 | And if you look at the two subreddits, over-employed and the FIRE subreddit, young people are saying capitalism is there to be hacked.

00:51:16.080 | And my way of hacking it is I'm going to have two jobs.

00:51:18.080 | And I had a startup come to me and say, "We've got this great engineer, literally from Google, who wants to work for us, and he's making $400K.

00:51:25.080 | We can get him for $1.50."

00:51:27.080 | And I said, "Oh, wow, that's great.

00:51:28.080 | Why would he do that?

00:51:29.080 | Is he independently wealthy?"

00:51:30.080 | They said, "No, he's keeping his job at Google.

00:51:32.080 | He says it takes 10, 20 hours a week, and he's going to work 60 hours a week for us."

00:51:35.080 | And I said, "Is that ethical or legal?"

00:51:38.080 | And they're like, "I don't know.

00:51:39.080 | That's why we're asking you.

00:51:40.080 | These are 20-year-old founders we had backed."

00:51:42.080 | And I was like, "This is incredibly unethical, and you're going to get us in a lawsuit.

00:51:45.080 | Don't do it."

00:51:46.080 | But that is what's the give and take.

00:51:49.080 | And if you look at what happened with Dell this past six months -- have you been following that, Freeberg, the Dell story?

00:51:54.080 | No.

00:51:55.080 | It's pretty incredible.

00:51:56.080 | They told everybody, "We're coming back to office."

00:51:58.080 | People were like, "Yeah, I don't want to come back to office."

00:52:00.080 | Okay, reasonable.

00:52:01.080 | You think you'd do a better job at home.

00:52:02.080 | I get it.

00:52:03.080 | What they said was, "If you want to work from home, you can't get a promotion, and you can't get a salary increase."

00:52:08.080 | And do you know what an employee said?

00:52:10.080 | "Okay, I don't want an increase.

00:52:12.080 | My choice is stay at home and have no salary increase, and I don't care about a raise.

00:52:17.080 | I don't care about a promotion."

00:52:19.080 | Then they said, "You know what?

00:52:20.080 | We're cutting 12,000 people.

00:52:22.080 | You have to come back to office."

00:52:24.080 | Jay Penske and his company told everybody, "You have to come back to office."

00:52:27.080 | So now that you have this era of being fit and you don't need as many people from AI,

00:52:32.080 | I think everybody's coming back to the office, unless you are part of the 20% of truly elite workers.

00:52:39.080 | Thanks for coming to my TED Talk.

00:52:40.080 | Even then, though, I struggle to understand why anybody who has any ambition would think that they're going to achieve the same amount of stuff working by themselves

00:52:53.080 | than they will by working with a group of colleagues that you respect in a physical space together.

00:52:59.080 | Well, influence our culture.

00:53:01.080 | But I'm saying, when you look at the great things that the world needs, that we are building and should be building,

00:53:09.080 | I don't see many good examples where those things are done in a remote way.

00:53:15.080 | I see the necessity of people to be together, whether it's to design something together, to talk about something together,

00:53:22.080 | to debate something together, to learn from each other, to grow as a person.

00:53:28.080 | And you're robbing yourself of all of that.

00:53:32.080 | And so I just think that it is a short-term optimization that a lot of people will regret, not necessarily in the moment,

00:53:39.080 | but when their career doesn't go where they want to, or the company they work at doesn't go where it should go to or is capable of going to,

00:53:47.080 | they'll start to look for a scapegoat.

00:53:50.080 | But the real reason is that they've abandoned the idea that they need to be together.

00:53:57.080 | And I just think that that's a tragedy.

00:54:00.080 | And as it turns out, the best of our companies, like when I rank my portfolio,

00:54:06.080 | the ones that are doing the best are in total different industries,

00:54:10.080 | but the single consistent theme is we are all back together in person.

00:54:16.080 | Isn't that interesting?

00:54:17.080 | Makes total sense.

00:54:18.080 | It's much more productive because I think innovation happens as a team.

00:54:24.080 | We need collaboration, and it's way easier to do that when everyone is together in the same place.

00:54:30.080 | There's more room for spontaneity, more spontaneous interactions.

00:54:33.080 | The reason why Steve Jobs designed the spaceship campus in that famous circle was because it maximized the opportunity for serendipity, right?

00:54:43.080 | Like there's no --

00:54:44.080 | Bell Labs did the same thing.

00:54:46.080 | Bell Labs had a quad that you had to walk through to go from meeting to meeting, so everyone interacted.

00:54:51.080 | The technical term for that is collisions, and there's been a lot of research on random collisions, and I agree wholeheartedly with it.

00:54:58.080 | Yeah, and look, I just want to underscore this point.

00:55:01.080 | I think there's nothing wrong if somebody says, "Look, my family is the most important thing in my life.

00:55:06.080 | I only want to work 40 hours a week.

00:55:08.080 | I'm going to do a 9-to-6 job with an hour lunch break that's 40 hours.

00:55:12.080 | Don't call me after 6 p.m."

00:55:14.080 | You can design your career that way, but that is not a career that's going to enable you to either run a company as a CEO or be a founder of a startup or be on a track to one day being a founder or a CEO.

00:55:29.080 | It's just not compatible.

00:55:31.080 | Or even just a senior executive.

00:55:33.080 | Right, exactly.

00:55:34.080 | So you have to decide what track you're going to be on, and I think there's a lot of millennial Gen Z types who are confused about this,

00:55:40.080 | and they have the entitlement of saying, "Well, I want to just do the 40-hour-a-week thing,

00:55:44.080 | but then I also expect to rise rapidly and be an executive and be a founder or be a CEO one day."

00:55:50.080 | And have it both ways.

00:55:51.080 | That's the point.

00:55:52.080 | That's not going to work.

00:55:53.080 | Yeah, it's not going to work.

00:55:54.080 | And in fairness, I think a lot of young people have not been mentored because they came up in the COVID generation,

00:56:00.080 | and we're now four years later, and they just haven't had the chance to be mentored or be in an office,

00:56:05.080 | and a lot of senior executives and CEOs are not coming to the office.

00:56:09.080 | A part of my move to Austin is I'm building a theater to record the podcast in,

00:56:15.080 | and I'm building an incubator space, and we're moving back to in-person.

00:56:18.080 | I grant for the existing employees, and I'm only hiring people in person now,

00:56:22.080 | because I feel something very big has been lost in terms of meeting the founders in person

00:56:27.080 | and young people seeing me interact and my other senior team members with those founders in person during a pitch meeting,

00:56:34.080 | during a product jam session, during a fundraising review.

00:56:38.080 | Go ahead, Shama.

00:56:39.080 | Can I just say something about mentoring?

00:56:42.080 | I also think mentoring can be described as capital M, mentoring, and small m, mentoring.

00:56:47.080 | Capital M is where some person is assigned to you,

00:56:52.080 | and they're going to imbue some magical phrase or saying or thing,

00:56:57.080 | and all of a sudden, everything is going to work out for you.

00:57:01.080 | That form of capital M mentoring doesn't exist and has never worked for those that have tried it.

00:57:08.080 | The thing that's really productive is small m mentoring,

00:57:12.080 | and that happens when you model behaviors of really smart people

00:57:16.080 | and really capable people, really ethical people.

00:57:19.080 | Again, that happens because you're seeing them on a day-to-day basis,

00:57:23.080 | not just in a meeting, but in the gaps between meetings.

00:57:28.080 | They'll include you in certain things, or you'll have lunch with them.

00:57:32.080 | This is what I mean by all of these people that are looking for an accelerant in their career,

00:57:39.080 | they've robbed themselves of the most powerful accelerant possible,

00:57:44.080 | which is capable people to surround themselves with.

00:57:48.080 | Yeah, I think it's so well said.

00:57:50.080 | They are going to look back on these decisions, and they're going to regret them.

00:57:54.080 | I agree 100%. One of my first jobs working at Land Systems,

00:57:58.080 | my mentor, Mike Savino, was always working late.

00:58:00.080 | He was trying to move up in the organization, and I wouldn't leave before he left.

00:58:04.080 | Then he would walk by and he'd say, it was in New York City,

00:58:07.080 | "Hey, what are you working on?" I'm reading these Novell networking books.

00:58:10.080 | I'm trying to get my certification. I'm trying to learn more.

00:58:12.080 | I want to get out of hardware and get into software.

00:58:14.080 | He'd say, "Oh, I'm going to get some dinner. You want to come?"

00:58:17.080 | Now, he was four levels above me in the organization.

00:58:20.080 | I was the lowest. He was second to the highest.

00:58:22.080 | Then I got to go to dinner with him.

00:58:24.080 | Then I got to hear about all the big clients.

00:58:26.080 | I got to hear how they were doing the pitches.

00:58:30.080 | Then he started including me in pitches.

00:58:32.080 | All of a sudden, I went from four degrees from him to reporting into him.

00:58:35.080 | That's how I learned.

00:58:37.080 | Look at the person on the left. Look at the person on the right.

00:58:39.080 | Were you a CME?

00:58:41.080 | I don't think I was. Yeah, I was actually.

00:58:44.080 | I was a certified network engineer.

00:58:46.080 | I was a certified Novell engineer as well.

00:58:48.080 | I did it when I was 16.

00:58:50.080 | Shout out to Eric Schmidt.

00:58:52.080 | I mean, if you had that in the '90s,

00:58:55.080 | you could make $50,000, $75,000, $100,000.

00:58:59.080 | Well, the person that helped me, little Ann, mentored me.

00:59:02.080 | He's like, "Listen, man. I'm not going to tell you how to do pitches or whatever,

00:59:05.080 | but I'm going to teach you how to install this.

00:59:08.080 | I'm going to teach you how to manage it."

00:59:10.080 | That was mentoring. That was really valuable.

00:59:13.080 | I sat beside this guy.

00:59:16.080 | It made a huge difference in my career.

00:59:18.080 | Absolutely. And if you want to be a freelancer, be a freelancer.

00:59:20.080 | Okay, let's go to our little election update

00:59:23.080 | and some news about Kamala

00:59:26.080 | and a little bit of socialism coming.

00:59:29.080 | So here's how I set it up today.

00:59:31.080 | We'll see how this goes.

00:59:32.080 | 2024 election update is here.

00:59:34.080 | I'm going to do two things, gentlemen.

00:59:36.080 | I'm going to just tee up the latest polls,

00:59:38.080 | and then I asked our crack all-in research team

00:59:41.080 | to just give me the top couple of issues

00:59:44.080 | in the principal's own words,

00:59:46.080 | the principals being the press on either side

00:59:49.080 | and the four people who are running for office.

00:59:52.080 | So let's just go through the numbers here.

00:59:53.080 | Nate Silver, a friend of the pod,

00:59:55.080 | now has Kamala Harris at 57% favorite

00:59:58.080 | to win the Electoral College.

01:00:00.080 | There's your first chart.

01:00:01.080 | You can compare this to what happened with Biden

01:00:04.080 | before the hot swap.

01:00:06.080 | Trump had a 73% probability to win the Electoral College.

01:00:10.080 | So that is the swing of all swings.

01:00:12.080 | And obviously, a lot has happened since then,

01:00:14.080 | assassination attempt on Trump.

01:00:17.080 | Massive swing for Harris,

01:00:18.080 | as you can see in Nate Silver's chart.

01:00:20.080 | He's doing something called Silver Bulletin.

01:00:22.080 | He's not a 538 anymore,

01:00:23.080 | but this is the most telling chart.

01:00:24.080 | You can see Biden-Trump there,

01:00:26.080 | and it's almost a clean sweep in red.

01:00:29.080 | And then you go to Harris-Trump,

01:00:30.080 | and the shift has been 100% blue.

01:00:34.080 | Pretty dramatic.

01:00:36.080 | Harris has flipped, according to Silver,

01:00:39.080 | Pennsylvania, Wisconsin, Arizona,

01:00:40.080 | Michigan, Nevada, and Virginia.

01:00:42.080 | Here's a couple of quotes,

01:00:43.080 | and then we'll get into it.

01:00:44.080 | The big critique from Republicans this past week

01:00:46.080 | is that Harris won't do interviews.

01:00:49.080 | God, it's just ridiculous

01:00:50.080 | that they have not sat for interviews.

01:00:52.080 | And meanwhile, Trump is doing every podcast

01:00:55.080 | and Twitter spaces on the planet.

01:00:57.080 | But the big news is that this might have changed

01:01:00.080 | by the time you listen to this podcast.

01:01:02.080 | Everybody knows we tape out Thursdays

01:01:03.080 | for the world's number one podcast,

01:01:04.080 | and it comes out on Fridays.

01:01:07.080 | Washington Post, Jeff Stein,

01:01:08.080 | reported that Kamala Harris

01:01:10.080 | will propose the first-ever federal ban

01:01:13.080 | on corporate price gouging

01:01:15.080 | for food enclosures on Friday.

01:01:17.080 | I'm going to hand that off to you, Freeberg,

01:01:19.080 | to detail.

01:01:20.080 | I'm going to throw up.

01:01:21.080 | Take it easy.

01:01:22.080 | We're going to get there.

01:01:24.080 | You're going to get your rare vegetables in a second.

01:01:27.080 | [laughter]

01:01:30.080 | So, the other big...

01:01:32.080 | You're going to get your...

01:01:33.080 | [laughter]

01:01:34.080 | You're going to get your veggies sashimi soon.

01:01:37.080 | All right, from the J.D. Vance corner,

01:01:40.080 | he is questioning Tim Walz's service.

01:01:44.080 | Here's the quote.

01:01:45.080 | "Well, I wonder, Tim Walz,

01:01:46.080 | when were you ever in war?

01:01:48.080 | When was this Harris campaign?"

01:01:50.080 | Responding, "In his 24 years of service,

01:01:52.080 | the governor carried, fired, and trained others

01:01:54.080 | to use weapons in war innumerable times."

01:01:59.080 | Yada, yada, yada.

01:02:00.080 | A lot of back and forth there about that issue.

01:02:03.080 | But let's get to...

01:02:05.080 | And it was an incredible two-hour spaces.

01:02:08.080 | Audio was a little rough,

01:02:10.080 | but the content was great.

01:02:12.080 | Elon had a conversation with Trump,

01:02:14.080 | and they talked about nuclear power.

01:02:17.080 | Elon offered his services two or three times to Trump.

01:02:20.080 | Saks to do efficiency in the government

01:02:25.080 | and maybe cut some costs.

01:02:26.080 | But that's what happened notably in the last week.

01:02:29.080 | Freeberg, what's your take on this reported

01:02:34.080 | by The Washington Post,

01:02:35.080 | and I think confirmed by Politico,

01:02:37.080 | move by Kamala Harris to Price Fix?

01:02:40.080 | Thank you for asking.

01:02:41.080 | Do you have any feelings on it?

01:02:42.080 | Yes, yeah.

01:02:43.080 | I unequivocally hate socialism.

01:02:48.080 | Socialism destroys innovation,

01:02:51.080 | destroys productivity,

01:02:52.080 | and destroys individual liberties.

01:02:55.080 | Agriculture and food markets

01:02:57.080 | have insanely competitive dynamics

01:03:00.080 | because there are commodity markets,

01:03:01.080 | there are tons of competitors,

01:03:03.080 | there is no monopoly in making food,

01:03:05.080 | there is no monopoly in making CPG products,

01:03:07.080 | there is no monopoly in retail,

01:03:09.080 | there is no monopoly in grocery stores.

01:03:11.080 | It is a small margin, highly competitive,

01:03:14.080 | highly fragmented free market.

01:03:16.080 | And the free market works

01:03:18.080 | in that everyone is always competing with each other,

01:03:20.080 | creating new productivity improvements,

01:03:22.080 | and as a result, over time, prices come down,

01:03:26.080 | except when the government intervenes and gets involved.

01:03:30.080 | So I would argue that the real cause

01:03:33.080 | of price inflation in food

01:03:35.080 | is not the supposed price gouging

01:03:37.080 | by corporate players in the ag and food industry,

01:03:40.080 | all of whom are deeply competitive with one another,

01:03:42.080 | but rather is the result of the inflation

01:03:46.080 | associated with government spending and stimulus

01:03:48.080 | coming out of COVID.

01:03:49.080 | Nick, Exhibit 1, the Fed balance sheet.

01:03:54.080 | From COVID to today,

01:03:55.080 | the Fed balance sheet grew from $4.2 trillion

01:03:58.080 | to $7.2 trillion,

01:03:59.080 | a growth of 70%.

01:04:02.080 | The Federal Reserve went out

01:04:03.080 | and they bought assets,

01:04:05.080 | and they issued debt to banks

01:04:07.080 | and introduced liquidity into the system.

01:04:09.080 | If you go to the next slide,

01:04:10.080 | as a result, the M2 money supply

01:04:12.080 | increased from $15 trillion

01:04:14.080 | to $21 trillion since COVID,

01:04:16.080 | a 40% increase.

01:04:18.080 | Okay, so now there is more money in the system,

01:04:21.080 | so the cost of everything should go up,

01:04:23.080 | which is exactly what we've seen.

01:04:24.080 | We can walk through a couple

01:04:25.080 | of the other commodity price charts

01:04:27.080 | from the St. Louis Fed.

01:04:29.080 | Here is the price of electricity.

01:04:31.080 | As an example, the price of electricity

01:04:33.080 | has gone up a little bit less

01:04:34.080 | than the M2 money supply.

01:04:35.080 | But the truth is,

01:04:36.080 | when you start to actually look at

01:04:38.080 | ag commodity prices over time,

01:04:40.080 | what's happened is there was certainly

01:04:41.080 | a boost coming from COVID,

01:04:43.080 | but the competition and the challenges

01:04:45.080 | in overproduction in the ag markets

01:04:47.080 | has started to hit

01:04:48.080 | and started to bring prices back down.

01:04:50.080 | So here's the price of strawberries.

01:04:51.080 | Strawberries today are selling

01:04:53.080 | for less than they were pre-COVID.

01:04:55.080 | Potatoes are now back to where they were pre-COVID.

01:04:58.080 | Now, let me give you some statistics

01:05:00.080 | on some of the supposed price-gouging companies

01:05:03.080 | in the industry.

01:05:05.080 | Kraft Heinz stock pre-COVID

01:05:07.080 | was $29 a share.

01:05:09.080 | Today, Kraft Heinz stock is $34 a share.

01:05:11.080 | 2019 revenue of $25 billion.

01:05:14.080 | 2023 revenue of $26 billion.

01:05:16.080 | EBITDA in 2019 of $6.1 billion.

01:05:19.080 | EBITDA in 2023 of $6.3 billion.

01:05:22.080 | There's not a lot of profit gouging.

01:05:24.080 | In fact, Kraft Heinz has not been able to keep up

01:05:26.080 | with the inflation.

01:05:28.080 | Starbucks, which we just talked about,

01:05:30.080 | their stock was at $90 pre-COVID

01:05:32.080 | and today, $93.

01:05:34.080 | 2019 revenue of $26 billion.

01:05:36.080 | Operating income of $4.1 billion.

01:05:38.080 | 2023 revenue of $36 billion,

01:05:40.080 | but operating income only $5.9.

01:05:42.080 | Margins have come down in Starbucks.

01:05:45.080 | Nick, if you pull up the McKinsey chart,

01:05:48.080 | this is a study of the grocery industry.

01:05:50.080 | The state of grocery in North America,

01:05:52.080 | in 2023 by McKinsey.

01:05:54.080 | Accelerating pressures on profitability

01:05:56.080 | to cope with the pandemic's upheaval,

01:05:58.080 | grocers have had to dramatically increase

01:06:00.080 | capex, increase supplies.

01:06:02.080 | As a result, they've seen a significant

01:06:04.080 | impact on margins.

01:06:06.080 | Here's the margin profile pre-pandemic

01:06:08.080 | and today.

01:06:09.080 | Gross margin has declined by two points,

01:06:12.080 | from 47.6 to 45.6.

01:06:15.080 | EBITDA margin has declined by 1.5 points.

01:06:17.080 | And now let's just go to the final chart,

01:06:19.080 | which is CPG companies,

01:06:21.080 | that make food and sell it to consumers.

01:06:23.080 | As you can see, during the COVID era,

01:06:27.080 | the three-year rolling TSR has declined

01:06:30.080 | since COVID across the board.

01:06:32.080 | So food companies are seeing food prices

01:06:34.080 | come down.

01:06:35.080 | So farmers are really suffering.

01:06:36.080 | Labor costs have tripled since the pandemic,

01:06:38.080 | but they're still having to sell products

01:06:40.080 | at the same price.

01:06:42.080 | CPG companies have lower margins,

01:06:44.080 | and supermarkets have lower margins.

01:06:46.080 | So there is nowhere in the ag or food

01:06:48.080 | supply chain that we are seeing

01:06:50.080 | fundamentally price gouging or profit-taking

01:06:52.080 | happening.

01:06:53.080 | What has happened is the cost of labor,

01:06:55.080 | the cost of moving stuff around,

01:06:57.080 | the cost of fuel, the cost of electricity,

01:06:59.080 | the cost of goods has all risen with

01:07:01.080 | inflation because of the increase in the

01:07:03.080 | money supply and federal spending,

01:07:05.080 | and the stimulus associated with the

01:07:07.080 | Federal Reserve buying assets onto their

01:07:09.080 | balance sheet.

01:07:10.080 | So arguably, I would say that trying to

01:07:12.080 | step in and cap prices will reduce

01:07:14.080 | competition, and as a result, will reduce

01:07:16.080 | investment in improving productivity.

01:07:18.080 | And we have seen this countless times

01:07:20.080 | with every socialist experiment in human

01:07:22.080 | history has started with caps on food,

01:07:24.080 | and it has resulted in bread lines like

01:07:26.080 | you see in the image behind me today,

01:07:28.080 | as we can see in Soviet Russia.

01:07:30.080 | This is a mistake.

01:07:31.080 | It is a problem.

01:07:32.080 | It is anti-American.

01:07:33.080 | It is anti-free market.

01:07:34.080 | It is anti-innovation.

01:07:35.080 | It is anti-productivity.

01:07:36.080 | And ultimately, it's anti-liberty,

01:07:38.080 | and I cannot stand it.

01:07:40.080 | That's my rant.

01:07:41.080 | Okay.

01:07:42.080 | Thanks for coming to Freeberg's TED Talk.

01:07:44.080 | Chamath, yes, you're nodding strongly

01:07:46.080 | in agreement.

01:07:47.080 | This is just dumb and pandering.

01:07:48.080 | Am I correct?

01:07:50.080 | There is no sustainable solution

01:07:52.080 | to inflation

01:07:54.080 | if you

01:07:56.080 | cap what a company can charge

01:07:58.080 | because what they'll do

01:08:00.080 | is they'll just stop producing.

01:08:03.080 | They'll manage to a margin that

01:08:05.080 | they'll just stop.

01:08:06.080 | And the reason they can stop

01:08:08.080 | is that they would rather contract and

01:08:10.080 | maintain their profitability

01:08:12.080 | than lose money.

01:08:13.080 | And then what happens is

01:08:15.080 | there's less products in the market,

01:08:17.080 | and so the prices go up.

01:08:18.080 | So I think it stands to reason

01:08:20.080 | that the Harris campaign has access

01:08:22.080 | to some reasonably smart people.

01:08:25.080 | They also have access

01:08:27.080 | to really smart people

01:08:28.080 | like Larry Summers.

01:08:30.080 | And so I think if they just make a few phone calls,

01:08:33.080 | they'll figure out that this is a really terrible idea.

01:08:35.080 | Sachs, any thoughts?

01:08:37.080 | Overall election and this specific issue.

01:08:40.080 | You take it either way you like.

01:08:41.080 | Yeah, so this story

01:08:43.080 | was reported by the Washington Post

01:08:45.080 | and by Bloomberg and others.

01:08:47.080 | So it appears to be

01:08:49.080 | more than just a rumor or conjecture.

01:08:52.080 | I mean, these are publications

01:08:54.080 | that are apparently well-sourced

01:08:55.080 | within the Harris campaign.

01:08:56.080 | So I think it is fair game for us to

01:08:59.080 | comment on this policy proposal

01:09:02.080 | that she apparently will be coming out with.

01:09:05.080 | Look, I think Freeberg is right about the policy.

01:09:08.080 | The idea of price controls

01:09:10.080 | is widely discredited across the political spectrum.

01:09:14.080 | I mean, I think virtually all economists agree on this.

01:09:17.080 | This was pried extensively in the 1970s,

01:09:21.080 | not just under Jimmy Carter,

01:09:23.080 | but Nixon tried wage and price controls

01:09:25.080 | and Gerald Ford had this whole program

01:09:28.080 | called Whip Inflation Now

01:09:29.080 | where they printed out these buttons

01:09:31.080 | called these wind buttons,

01:09:33.080 | and then Carter extended it.

01:09:35.080 | That's why we had huge lines in the gas pumps

01:09:37.080 | is because we had price controls on gas

01:09:40.080 | and those lines of the pump went away

01:09:42.080 | almost overnight when Ronald Reagan came in

01:09:44.080 | and removed the price caps on gas.

01:09:47.080 | So we've tried price controls before.

01:09:50.080 | It didn't work.

01:09:51.080 | And it is remarkable that

01:09:54.080 | she would be proposing here potentially

01:09:57.080 | as her first major policy proposal

01:10:00.080 | on the economy

01:10:01.080 | to go back to this 1970s-era failed policy.

01:10:05.080 | And I think it's really tipping her hand

01:10:08.080 | in terms of where her economic proposals

01:10:11.080 | are going to come from

01:10:12.080 | and what she really thinks.

01:10:13.080 | Keep in mind that

01:10:15.080 | throughout the Biden presidency,

01:10:18.080 | he rhetorically would blame corporate greed

01:10:21.080 | for the rise in inflation we saw

01:10:23.080 | as like a scapegoat

01:10:24.080 | because he didn't want to blame himself

01:10:25.080 | for all the spending.

01:10:27.080 | But she's going further now

01:10:28.080 | and actually instituting this as policy.

01:10:31.080 | - Yeah, and so just to be clear with everybody,

01:10:33.080 | we don't have the actual policy here,

01:10:35.080 | but it's been reported.

01:10:36.080 | Seems like it's true.

01:10:37.080 | Maybe it's not.

01:10:38.080 | Maybe they step it back.

01:10:39.080 | We don't know the details of this at all,

01:10:42.080 | but we do know it's been tried before.

01:10:44.080 | What we do know is

01:10:45.080 | there are times when you could,

01:10:47.080 | like in an economic emergency,

01:10:49.080 | like during,

01:10:51.080 | what was the giant hurricane or wars?

01:10:54.080 | You know, you can keep your eye on this.

01:10:56.080 | But the truth is,

01:10:57.080 | as we just talked about with Starbucks,

01:11:00.080 | you know,

01:11:01.080 | Sachs is like,

01:11:02.080 | "I got a free cup of coffee,"

01:11:03.080 | or close to free.

01:11:04.080 | "I make my own cold brew."

01:11:06.080 | Shout out Cafe Du Monde

01:11:07.080 | because I don't want to pay $8 for it.

01:11:09.080 | The market responds.

01:11:11.080 | And when you put your thumb on capitalism,

01:11:13.080 | when you put 12 thumbs on capitalism

01:11:15.080 | and on the scale,

01:11:16.080 | all kinds of weird behaviors occur.

01:11:18.080 | It does not work.

01:11:19.080 | And consumers can just simply opt out.

01:11:22.080 | They can make breakfast at home.

01:11:23.080 | They can brown bag their lunch.

01:11:25.080 | And you know what?

01:11:26.080 | - It's a great point.

01:11:27.080 | - Then companies are going to be like,

01:11:28.080 | "Holy (beep)."

01:11:29.080 | People are not buying $8 coffees.

01:11:31.080 | Let's make a cheaper Happy Meal.

01:11:33.080 | - To support your point

01:11:34.080 | and what Chamath was messaging on our chat,

01:11:37.080 | look at Walmart stocks up 7% today

01:11:39.080 | because they offer lower priced solutions to consumers

01:11:43.080 | and Dollar General and Dollar Tree are rallying as well.

01:11:46.080 | When the market competes,

01:11:48.080 | consumers benefit

01:11:49.080 | and there are companies that will win.

01:11:51.080 | And the companies that try to price gouge

01:11:53.080 | and the companies that try to charge too much

01:11:55.080 | will lose.

01:11:56.080 | Starbucks has been trying to charge too much for sugar water.

01:11:59.080 | They have a real problem they are now tackling.

01:12:02.080 | Walmart is trying to bring value to consumers.

01:12:05.080 | They are winning.

01:12:06.080 | That is how free markets work.

01:12:07.080 | When the government steps in and says,

01:12:09.080 | "Here's how much margin you can make

01:12:10.080 | or here's how much prices should be,"

01:12:12.080 | it ruins everything.

01:12:13.080 | And the entire incentive structure goes away

01:12:16.080 | and you end up with bread lines.

01:12:18.080 | - Saxy Pooh, what do you got?

01:12:19.080 | - Well, there was a really interesting story

01:12:22.080 | in the Wall Street Journal this week

01:12:24.080 | called "Kamala Harris's Economic Team and Agenda

01:12:27.080 | Start to Take Shape."

01:12:28.080 | And it was interesting because it said here

01:12:31.080 | in the first paragraph that the challenge

01:12:33.080 | of her economics team is, quote,

01:12:36.080 | "differentiating the candidate," which is Harris,

01:12:38.080 | "from her unpopular boss," which is Biden,

01:12:42.080 | "without abandoning his policies."

01:12:44.080 | And the problem that they have is that

01:12:46.080 | for the last three and a half years,

01:12:48.080 | there has been no daylight between Harris and Biden.

01:12:51.080 | And in fact, Corinne Jean-Pierre said exactly that

01:12:54.080 | in the article.

01:12:55.080 | There's been no daylight.

01:12:56.080 | They've been highly aligned.

01:12:57.080 | Now, in response to that, what the campaign

01:12:59.080 | has been trying to do is, A, not say anything

01:13:02.080 | about policy, just try to redefine the candidate

01:13:05.080 | based on biography.

01:13:06.080 | She's done no interviews with the media.

01:13:09.080 | She's done no sort of unscripted speaking appearances.

01:13:12.080 | And the media has cooperated with this so far.

01:13:15.080 | The most egregious example was that

01:13:17.080 | Time Magazine cover story, which was this

01:13:20.080 | really gauzy profile that was a hagiography,

01:13:23.080 | even though she refused to even do an interview

01:13:26.080 | with Time Magazine in that story.

01:13:27.080 | So strategy number one has been just to kind of

01:13:30.080 | hide from the media in terms of what

01:13:32.080 | she would really do.

01:13:33.080 | Strategy number two was adopting some of

01:13:36.080 | Donald Trump's most popular policies.

01:13:38.080 | So she just announced no tax on tips.

01:13:41.080 | She was, I think, widely kind of criticized

01:13:43.080 | for being a copycat on that.

01:13:45.080 | And now we finally have strategy number three,

01:13:47.080 | which is to tiptoe into the campaign with

01:13:50.080 | her own original proposal on price controls,

01:13:53.080 | which I think is being roundly criticized,

01:13:56.080 | but it shows where her policy instincts

01:13:58.080 | are coming from.

01:13:59.080 | I mean, this is somebody who has always been

01:14:01.080 | on the progressive left.

01:14:02.080 | When she was a member of the Senate,

01:14:04.080 | GovTrack rated her as the most liberal

01:14:07.080 | member of the Senate, even to the left

01:14:09.080 | of Bernie Sanders and Elizabeth Warren.

01:14:12.080 | And you're now seeing this come out

01:14:13.080 | in her policy proposals.

01:14:15.080 | So, look, I think she's definitely gotten

01:14:17.080 | a bounce in the polls over the last few weeks

01:14:19.080 | because of this favorable media coverage.

01:14:21.080 | But it's a sugar high based on something

01:14:24.080 | that's not substantive.

01:14:25.080 | I mean, she didn't put forward any proposals.

01:14:28.080 | And I think that now that she finally is

01:14:30.080 | putting out policy proposals,

01:14:31.080 | that can be questioned and analyzed

01:14:33.080 | and criticized.

01:14:34.080 | I think this is going to be the beginning

01:14:36.080 | of, I would say, a big correction

01:14:38.080 | in her campaign.

01:14:40.080 | Jake, how do you agree?

01:14:41.080 | Do you think her strategy is off at this point?

01:14:44.080 | Is it starting to hurt her

01:14:45.080 | to put out these proposals?

01:14:47.080 | I remain undecided, moderate,

01:14:49.080 | left-leaning, moderate.

01:14:50.080 | I have voted Republican 35% of the time,

01:14:53.080 | Democrat 65% of the time.

01:14:55.080 | And I've been studying the strategy here.

01:14:56.080 | Her strategy is crushing Trump.

01:14:59.080 | So, obviously, it's working.

01:15:01.080 | Now, I don't like it.

01:15:03.080 | I think everybody should be doing debates.

01:15:05.080 | I was really upset that there wasn't

01:15:06.080 | a debate or a speed run primary.

01:15:08.080 | I don't like the fact that Trump and Biden

01:15:10.080 | skipped out on the primary debates.

01:15:12.080 | I think they should be forced to do debates

01:15:13.080 | and forced to do interviews.

01:15:16.080 | And so, on that front,

01:15:18.080 | I hate what this is doing to democracy.

01:15:21.080 | Now, pragmatically,

01:15:24.080 | running at the clock as a strategy

01:15:26.080 | and not defining your positions too much

01:15:30.080 | and just selling the vibes

01:15:32.080 | is a brilliant strategy,

01:15:34.080 | and it's working.

01:15:35.080 | And as Trump said,

01:15:37.080 | the VPs don't matter.

01:15:39.080 | What she did as VP doesn't really matter.

01:15:41.080 | What J.D. Vance thinks as VP doesn't matter.

01:15:43.080 | VPs don't matter.

01:15:44.080 | You're voting for the president.

01:15:45.080 | The VPs get in line.

01:15:47.080 | Trump's positions,

01:15:49.080 | J.D. Vance flipped a bunch of his positions

01:15:51.080 | to align with Trump,

01:15:52.080 | and I think Kamala did the same

01:15:53.080 | when she worked with Biden.

01:15:55.080 | That's your job is to align with the president.

01:15:57.080 | Now that she's her own,

01:15:58.080 | and Waltz is going to flip to her.

01:16:00.080 | So, I think they're putting out moderate vibes.

01:16:02.080 | I think they're kind of socialists.

01:16:04.080 | I think they're not as socialist

01:16:06.080 | as Bernie and Elizabeth Warren,

01:16:08.080 | but they're not moderates.

01:16:09.080 | But they're pretending to be moderates,

01:16:11.080 | and that is working as a strategy.

01:16:13.080 | They are demolishing Trump,

01:16:15.080 | and then Trump is, you know,

01:16:16.080 | getting bad advice around him, I think.

01:16:18.080 | You know, if I was to handicap this,

01:16:20.080 | and I'll wrap up in just one more minute.

01:16:22.080 | I think Trump was so good on all in.

01:16:24.080 | He was so good at the RNC

01:16:26.080 | for the first half of his speech.

01:16:27.080 | When he is presidential,

01:16:29.080 | when he has a big open tent,

01:16:31.080 | I love him.

01:16:32.080 | I think he's great,

01:16:34.080 | and I think he's, like, world positive.

01:16:36.080 | When he goes into grievance culture,

01:16:38.080 | when he goes after the race stuff,

01:16:39.080 | like he did with the black journalist,

01:16:41.080 | when he goes after gender,

01:16:43.080 | or J.D. does the gender stuff and the cat stuff,

01:16:45.080 | I hate that stuff.

01:16:46.080 | Moderates hate that stuff.

01:16:47.080 | Women hate that stuff.

01:16:48.080 | And the moderates and the women

01:16:50.080 | in the swing states will decide the election,

01:16:52.080 | and Trump's campaign is

01:16:54.080 | floundering right now.

01:16:55.080 | They have to flip it back to that

01:16:57.080 | Trump 2.0 I described many times,

01:16:59.080 | where he's serious, presidential,

01:17:01.080 | not bullying people,

01:17:02.080 | not doing the incel comic thing,

01:17:04.080 | just going after Waltz,

01:17:05.080 | going after cat ladies.

01:17:06.080 | It's just gross and not necessary.

01:17:08.080 | So I think, you know,

01:17:10.080 | maybe Trump after the DNC

01:17:12.080 | will go back to Trump 2.0.

01:17:14.080 | That would be much better,

01:17:15.080 | and I think Trump has a chance of winning

01:17:16.080 | if he does that.

01:17:17.080 | If Kamala goes moderate,

01:17:19.080 | I think she's going to win.

01:17:20.080 | So that's my strategic take.

01:17:22.080 | I remain undecided as a voter.

01:17:25.080 | But you just said she's a socialist,

01:17:26.080 | not a moderate.

01:17:28.080 | I think in her heart,

01:17:29.080 | she's between, like,

01:17:31.080 | if you had Clinton,

01:17:32.080 | and a great question,

01:17:33.080 | if you had Clinton and you had,

01:17:34.080 | you know, Bernie Sanders,

01:17:35.080 | I think she kind of falls

01:17:36.080 | between the two.

01:17:37.080 | But I think she's pretending

01:17:38.080 | to be a moderate to get votes.

01:17:39.080 | Right.

01:17:40.080 | You know, just like Trump will pretend

01:17:41.080 | to be super right-wing to get the,

01:17:43.080 | you know, who are packed it up,

01:17:45.080 | but he's kind of a moderate too, socially.

01:17:47.080 | I think Trump is a moderate in this race,

01:17:49.080 | and he's much more moderate than she is.

01:17:52.080 | I think that actually is true.

01:17:54.080 | Look, I think that she's pretending

01:17:55.080 | to be a lot of things.

01:17:56.080 | She's pretending to be a moderate

01:17:57.080 | when really she was the most liberal

01:17:58.080 | member of the Senate.

01:17:59.080 | She's pretending to be a change agent

01:18:01.080 | when really she's the incumbent.

01:18:03.080 | Keep in mind that she has been in office now

01:18:06.080 | for three and a half years

01:18:07.080 | as part of the Biden-Harris administration,

01:18:09.080 | and she was perceived

01:18:10.080 | within that administration

01:18:11.080 | as their emissary

01:18:12.080 | to the left wing of the party.

01:18:14.080 | I mean, remember,

01:18:15.080 | that when she was put on the ticket,

01:18:16.080 | Biden was perceived as the moderate,

01:18:18.080 | and she was perceived

01:18:19.080 | as the person on the left,

01:18:20.080 | and she was gonna basically

01:18:21.080 | help consolidate those votes.

01:18:23.080 | So she's pretending to be

01:18:24.080 | a lot of things that she isn't,

01:18:26.080 | and the reason why it's working

01:18:28.080 | is because the press is fully cooperated

01:18:30.080 | in letting her run a campaign

01:18:33.080 | without doing press interviews,

01:18:34.080 | without doing unscripted appearances,

01:18:36.080 | and the press, frankly,

01:18:38.080 | is embarrassing itself

01:18:40.080 | by revealing themselves

01:18:41.080 | to be effectively DNC operatives,

01:18:44.080 | and that "Time" magazine cover story

01:18:46.080 | was just the latest example of that.

01:18:48.080 | I do think that this strategy

01:18:50.080 | can only work for so long.

01:18:51.080 | I think that the media

01:18:52.080 | is starting to feel

01:18:53.080 | a little bit embarrassed.

01:18:55.080 | They're starting to get

01:18:56.080 | a little bit shamed

01:18:57.080 | about the fact they're letting her

01:18:59.080 | just give them the Heisman,

01:19:01.080 | and I don't think she can

01:19:02.080 | run out the clock for three months

01:19:03.080 | without doing interviews.

01:19:04.080 | I just think that --

01:19:05.080 | I think she can do this

01:19:06.080 | for another week or so.

01:19:07.080 | I think that they're gonna

01:19:08.080 | run this playbook

01:19:09.080 | through the convention,

01:19:10.080 | but eventually,

01:19:11.080 | she's gonna have to start

01:19:12.080 | doing interviews,

01:19:13.080 | and she's gonna have to start

01:19:14.080 | putting out more

01:19:15.080 | substantive policy proposals,

01:19:17.080 | and I think the fact that

01:19:18.080 | this price control proposal

01:19:20.080 | is their very first one

01:19:22.080 | that they've put out,

01:19:23.080 | I think this shows that

01:19:25.080 | this is not gonna be easy for her.

01:19:27.080 | It certainly jolted me awake, Zach,

01:19:29.080 | so I'll tell you that.

01:19:30.080 | Yeah, I mean, this idea

01:19:32.080 | that she can pretend

01:19:33.080 | to be a moderate

01:19:34.080 | and just run on vibes

01:19:35.080 | with no interviews

01:19:36.080 | and no substantive proposals,

01:19:37.080 | I don't think it's gonna work

01:19:38.080 | for three months.

01:19:39.080 | I think she's gonna reveal herself.

01:19:40.080 | I think an educated voter base

01:19:41.080 | is gonna wake up to that,

01:19:42.080 | and particularly

01:19:43.080 | in that independent segment,

01:19:44.080 | there's gonna be

01:19:45.080 | a lot of acknowledgement

01:19:46.080 | that maybe these are not

01:19:47.080 | gonna be the right policies.

01:19:49.080 | I think they're preparing

01:19:50.080 | their policies,

01:19:51.080 | and they're gonna drop them

01:19:52.080 | after the DNC.

01:19:53.080 | Chamath, what's your take

01:19:54.080 | on strategy,

01:19:55.080 | and then we'll move on

01:19:56.080 | to the next one.

01:19:57.080 | We're in the middle

01:19:58.080 | of the relief rally

01:19:59.080 | that Biden isn't in the race.

01:20:02.080 | I think that we had

01:20:03.080 | a different version

01:20:04.080 | of a relief rally

01:20:05.080 | when everybody realized

01:20:07.080 | that President Trump

01:20:08.080 | hadn't been assassinated.

01:20:10.080 | So these are the pendulum swings,

01:20:14.080 | I think,

01:20:15.080 | of an electorate

01:20:18.080 | that still hasn't been given

01:20:20.080 | a clear definition of A or B.

01:20:23.080 | In this case,

01:20:24.080 | I think what's happening is

01:20:26.080 | there's a lot of testing

01:20:28.080 | of language and ideas

01:20:29.080 | and concepts

01:20:30.080 | that both sides are doing.

01:20:31.080 | And I think we will not know

01:20:33.080 | where this election

01:20:34.080 | is going to go

01:20:35.080 | until after September the 10th

01:20:36.080 | and that first presidential debate,

01:20:37.080 | because I think that

01:20:39.080 | these big issues

01:20:40.080 | will be put to the test.

01:20:42.080 | The journalists asking

01:20:43.080 | the questions

01:20:44.080 | will corner both candidates.

01:20:45.080 | Both of them

01:20:46.080 | will have points of view.

01:20:47.080 | And then I think

01:20:48.080 | they'll have to go

01:20:49.080 | into these five states

01:20:50.080 | that matter

01:20:51.080 | on these five issues

01:20:52.080 | that matter.

01:20:53.080 | And I do think

01:20:54.080 | that this will be

01:20:55.080 | one of those issues

01:20:56.080 | because this is

01:20:57.080 | a very aggressive proposal

01:21:00.080 | that has a lot of implications

01:21:03.080 | and that has a lot

01:21:04.080 | of historical context

01:21:05.080 | of never having worked.

01:21:06.080 | Literally never.

01:21:08.080 | So it's dumb.

01:21:10.080 | We haven't seen it,

01:21:11.080 | but it seems dumb on its face.

01:21:13.080 | And just to be clear,

01:21:14.080 | there is no proposal.

01:21:15.080 | We're just commenting

01:21:16.080 | on reports of a proposal.

01:21:18.080 | The proposal will probably come out

01:21:19.080 | on Friday this weekend,

01:21:20.080 | so you can read it for yourselves.

01:21:22.080 | And we'll talk about

01:21:23.080 | the actual proposal.

01:21:24.080 | If there is one, who knows?

01:21:25.080 | It could be bad reporting,

01:21:26.080 | could all be capped.

01:21:27.080 | Freeberg, you wanted

01:21:28.080 | to talk about Boeing.

01:21:30.080 | Well, I wanted to just highlight

01:21:32.080 | the Starliner project

01:21:34.080 | and the issues.

01:21:36.080 | Unbelievable.

01:21:37.080 | Give us an overview

01:21:38.080 | and then let's chop it up

01:21:39.080 | as we wrap.

01:21:40.080 | Two NASA astronauts

01:21:41.080 | flew on the Boeing Starliner

01:21:43.080 | capsule June 5th

01:21:46.080 | and they docked with the ISS

01:21:48.080 | and they're now stuck on the ISS

01:21:49.080 | and they might be stuck there

01:21:51.080 | until February

01:21:53.080 | because the Starliner

01:21:54.080 | has a number of technical issues.

01:21:56.080 | The astronauts cannot get back

01:21:57.080 | in the Starliner

01:21:58.080 | and just fly back to Earth.

01:22:00.080 | NASA's kind of evaluating

01:22:01.080 | the options here

01:22:02.080 | on what to do

01:22:04.080 | and whether to put them

01:22:05.080 | on a SpaceX Crew Dragon capsule

01:22:06.080 | in February to get them back.

01:22:08.080 | So I just want to talk

01:22:09.080 | a little bit about

01:22:10.080 | the history of this project

01:22:12.080 | and provide a little context

01:22:15.080 | before we highlight

01:22:16.080 | the particularly acute story

01:22:18.080 | of two astronauts

01:22:19.080 | being stuck in space right now,

01:22:21.080 | which is an incredible story.

01:22:22.080 | So this is a next-gen

01:22:23.080 | space capsule

01:22:24.080 | that was designed

01:22:25.080 | to take people to and from

01:22:26.080 | low Earth orbit,

01:22:27.080 | basically to the ISS.

01:22:29.080 | And NASA,

01:22:30.080 | if you guys remember,

01:22:31.080 | in the 2000s,

01:22:32.080 | decided to stop making

01:22:33.080 | their own vessels

01:22:34.080 | and they're going to start using

01:22:35.080 | third-party contractors.

01:22:36.080 | So they went out

01:22:37.080 | and had a competitive

01:22:38.080 | bidding process

01:22:39.080 | and ultimately in 2010,

01:22:41.080 | they gave both SpaceX

01:22:44.080 | and Boeing

01:22:45.080 | the winning contracts

01:22:46.080 | to develop these commercial

01:22:47.080 | crew transportation capabilities.

01:22:50.080 | SpaceX obviously developed

01:22:51.080 | the Crew Dragon capsule.

01:22:53.080 | So it was unveiled in 2010

01:22:54.080 | as the CST-100,

01:22:56.080 | Boeing's first commercially

01:22:57.080 | developed space capsule.

01:22:59.080 | The company would take on

01:23:00.080 | all the financial risk

01:23:01.080 | for developing it

01:23:02.080 | with a fixed-price contract

01:23:03.080 | from NASA

01:23:04.080 | of $4.2 billion.

01:23:06.080 | To date, by the way,

01:23:08.080 | Boeing has taken

01:23:09.080 | a $1.6 billion financial hit

01:23:11.080 | on the development

01:23:12.080 | of this program.

01:23:13.080 | SpaceX, by the way,

01:23:14.080 | won a $2.6 billion contract

01:23:15.080 | to develop the Crew Dragon capsule.

01:23:18.080 | And just to give you guys a sense,

01:23:20.080 | the Crew Dragon capsule

01:23:22.080 | has flown 13 missions thus far

01:23:24.080 | to the ISS

01:23:25.080 | and this was the first

01:23:27.080 | crewed mission

01:23:28.080 | flown by Boeing,

01:23:29.080 | both of which got contracts

01:23:31.080 | at the same time.

01:23:32.080 | So originally,

01:23:33.080 | it was going to be

01:23:34.080 | a 2017 launch timeline

01:23:35.080 | and I just want to hit on

01:23:36.080 | some of the history

01:23:37.080 | of the Starliner problems.

01:23:38.080 | 2016, it was delayed--

01:23:39.080 | You said, just to confirm,

01:23:40.080 | you said it was $4.2 billion,

01:23:42.080 | that contract?

01:23:43.080 | That contract with Boeing.

01:23:44.080 | Wow.

01:23:45.080 | To develop the Starliner capsule.

01:23:46.080 | So the first issues arose in 2016

01:23:48.080 | when there were design problems.

01:23:50.080 | The first crewed flight

01:23:51.080 | was then pushed back

01:23:52.080 | to be scheduled for 2019.

01:23:54.080 | In 2018,

01:23:55.080 | they found issues

01:23:56.080 | with propellant leaks,

01:23:57.080 | which led to more delays.

01:23:59.080 | 2019, a test flight parachute failed.

01:24:02.080 | December of 2019,

01:24:03.080 | they had their first

01:24:04.080 | uncrewed test flight

01:24:05.080 | and there were software errors

01:24:07.080 | that would have caused

01:24:08.080 | destruction of the spacecraft.

01:24:10.080 | This led to NASA and Boeing

01:24:12.080 | submitting 80 different changes

01:24:13.080 | that needed to happen

01:24:14.080 | before they did their next

01:24:16.080 | uncrewed test flight.

01:24:18.080 | So they then pushed that

01:24:19.080 | all the way out to 2021.

01:24:21.080 | Boeing ended up saying

01:24:22.080 | it cost us half a billion dollars

01:24:23.080 | to do that.

01:24:24.080 | Then in August of 2021,

01:24:26.080 | 13 propulsion system valve issues

01:24:28.080 | were discovered on the launch pad.

01:24:31.080 | The flight was aborted

01:24:32.080 | and the capsule was returned.

01:24:34.080 | They eventually got it up again

01:24:35.080 | in space in May of 2022

01:24:38.080 | and it docked with the ISS

01:24:40.080 | and it returned back to Earth,

01:24:41.080 | even though one of the parachutes failed

01:24:43.080 | when it returned to Earth,

01:24:44.080 | it still made it down.

01:24:45.080 | This again led to the 2023

01:24:49.080 | first crewed launch,

01:24:51.080 | which means people are in the capsule.

01:24:53.080 | This was originally supposed

01:24:54.080 | to be in 2017

01:24:56.080 | and they kept pushing it back

01:24:57.080 | because of more issues

01:24:58.080 | with the parachute system

01:24:59.080 | and then they finally got it launched

01:25:01.080 | in June 5th of 2024

01:25:04.080 | with two astronauts on board

01:25:05.080 | to go to ISS and come back.

01:25:08.080 | On the way,

01:25:09.080 | they discovered that five

01:25:11.080 | out of the 28 maneuvering thrusters,

01:25:13.080 | which is how they can move

01:25:14.080 | this capsule through space

01:25:15.080 | to get it to dock with the ISS

01:25:17.080 | and ultimately make its way

01:25:18.080 | back to Earth,

01:25:19.080 | were malfunctioning.

01:25:20.080 | They have now discovered

01:25:21.080 | five helium leaks.

01:25:23.080 | Helium is stored

01:25:24.080 | in a pressurized system

01:25:25.080 | to actually control those thrusters

01:25:27.080 | and make it move through space

01:25:28.080 | and now they may not even be able

01:25:29.080 | to get this capsule to fly

01:25:31.080 | off of the ISS.

01:25:33.080 | So on June 28th,

01:25:34.080 | NASA announced

01:25:35.080 | that while the Starliner

01:25:36.080 | is theoretically capable

01:25:38.080 | of returning the astronauts to Earth

01:25:40.080 | in an emergency on the ISS,

01:25:42.080 | the capsule is not approved to fly

01:25:44.080 | until these thruster issues

01:25:45.080 | and the leaking helium

01:25:46.080 | are figured out

01:25:48.080 | or better understood

01:25:49.080 | and they have now pushed

01:25:50.080 | the decision to the end of August.

01:25:52.080 | It would be massively

01:25:54.080 | embarrassing for Boeing

01:25:56.080 | if these two astronauts

01:25:57.080 | had to be rescued by SpaceX.

01:26:00.080 | It's a Crew Dragon capsule

01:26:01.080 | had to find its way up to the ISS,

01:26:02.080 | they hopped on

01:26:03.080 | and they came back to Earth.

01:26:04.080 | Clearly a massive problem,

01:26:06.080 | but it's certainly a personal

01:26:07.080 | and a human story now

01:26:09.080 | with these two astronauts

01:26:10.080 | stuck on the ISS.

01:26:11.080 | And I know, Chamath,

01:26:12.080 | you've had a lot of comments

01:26:13.080 | on Boeing in the past,

01:26:14.080 | but I mean,

01:26:15.080 | does this feel like

01:26:16.080 | a continued underscoring

01:26:17.080 | of the issues at Boeing?

01:26:19.080 | And just to be clear, Chamath,

01:26:20.080 | the statistics are

01:26:21.080 | three for Starliner,

01:26:24.080 | two unmanned, one manned,

01:26:25.080 | and then for SpaceX

01:26:28.080 | with the Dragon,

01:26:29.080 | they did 11, eight

01:26:30.080 | with NASA,

01:26:31.080 | three commercially

01:26:33.080 | with other passengers, yeah?

01:26:35.080 | Yeah, so the NASA Cargo Dragon,

01:26:36.080 | which only has a cargo on it,

01:26:38.080 | not people,

01:26:39.080 | has completed nine successful missions

01:26:40.080 | to and from the ISS.

01:26:41.080 | There are six more planned.

01:26:43.080 | And they've obviously done 13 missions

01:26:45.080 | with the Crew Dragon.

01:26:47.080 | And by the way,

01:26:48.080 | I don't know if you guys know this,

01:26:49.080 | this is a surprise,

01:26:51.080 | but exciting to share

01:26:52.080 | that we are going to have

01:26:53.080 | a Crew Dragon capsule

01:26:54.080 | from SpaceX

01:26:55.080 | at the All In Summit in LA

01:26:56.080 | parked on the launch.

01:26:57.080 | You can actually go inside

01:26:58.080 | and check it out

01:26:59.080 | and take a little tour.

01:27:00.080 | It's going to be amazing.

01:27:01.080 | So thank you to the SpaceX team

01:27:02.080 | for bringing the Crew Dragon capsule.

01:27:04.080 | Chamath?

01:27:05.080 | My gosh, I mean,

01:27:06.080 | where do I begin?

01:27:07.080 | Look, Boeing is these three

01:27:09.080 | very complicated businesses

01:27:11.080 | that try to live as one.

01:27:13.080 | So you have a commercial airline business,

01:27:15.080 | you have a defense business,

01:27:17.080 | and you have the space business.

01:27:19.080 | I'll be the first one to say

01:27:21.080 | that I think it's extremely difficult

01:27:23.080 | to be good at any one

01:27:24.080 | of those three things.

01:27:26.080 | And the probability

01:27:27.080 | of getting all of those

01:27:28.080 | three things right

01:27:29.080 | is basically next to impossible.

01:27:32.080 | That's just a general comment.

01:27:33.080 | And I think that specialization

01:27:35.080 | is better.

01:27:37.080 | The second thing that I'll say

01:27:39.080 | is that I observed this company

01:27:41.080 | about five years ago,

01:27:43.080 | and I wrote about it

01:27:44.080 | in my annual letter.

01:27:45.080 | And part of the reason

01:27:46.080 | why I wrote about it

01:27:47.080 | was there was a quote.

01:27:48.080 | "I'll never be able to judge

01:27:49.080 | what motivated Dennis Mullenberger,

01:27:51.080 | whether it was a stock price

01:27:52.080 | that was going to continue

01:27:53.080 | to go up and up,

01:27:55.080 | or whether it was just

01:27:56.080 | beating the other guy

01:27:57.080 | to the next rate increase,"

01:27:59.080 | he said.

01:28:00.080 | He added later,

01:28:01.080 | "If anybody ran over the rainbow

01:28:02.080 | for a pot of gold on stock,

01:28:04.080 | it would have been him."

01:28:05.080 | Who do you think said this?

01:28:07.080 | It was the incoming CEO of Boeing.

01:28:10.080 | And I was so flabbergasted

01:28:12.080 | because I had never seen

01:28:13.080 | something like this.

01:28:14.080 | So in a company

01:28:15.080 | where safety has to be

01:28:16.080 | the number one priority,

01:28:19.080 | to have an individual

01:28:20.080 | that's characterized

01:28:21.080 | by the incoming CEO

01:28:22.080 | as solely focused

01:28:23.080 | on their compensation plan

01:28:26.080 | sort of explains

01:28:28.080 | why there's all these fissures

01:28:29.080 | in this company.

01:28:30.080 | Because again,

01:28:31.080 | going back to that

01:28:32.080 | famous Charlie Munger quote,

01:28:34.080 | "Show me the incentive,

01:28:35.080 | and I'll show you the outcome."

01:28:37.080 | If the incentive is safety

01:28:39.080 | and world-class engineering,

01:28:41.080 | that's what you'll get.

01:28:43.080 | But if the incentive is

01:28:45.080 | earnings per share growth,

01:28:47.080 | then that's what

01:28:48.080 | you will also get.

01:28:49.080 | And Boeing was a darling

01:28:50.080 | of the stock market

01:28:51.080 | for a very long time.

01:28:53.080 | And now what happens

01:28:54.080 | is underneath,

01:28:55.080 | the other things

01:28:56.080 | that actually should matter,

01:28:57.080 | i.e. safety,

01:28:59.080 | are slightly deprioritized.

01:29:02.080 | And then you have these issues.

01:29:03.080 | I really hope

01:29:04.080 | these two people get back safe.

01:29:07.080 | It seems like they're doing

01:29:08.080 | a lot of experiments

01:29:09.080 | and they love being up there.

01:29:11.080 | But it's a little bit unacceptable

01:29:12.080 | that they have to be there

01:29:13.080 | until February.

01:29:15.080 | But I do trust that

01:29:16.080 | if Elon has to go and get them,

01:29:18.080 | SpaceX will do a great job

01:29:20.080 | and they'll be home soon.

01:29:21.080 | SAC's one of the great things

01:29:22.080 | about this.

01:29:23.080 | Thank God NASA

01:29:25.080 | gave two contracts

01:29:26.080 | out of a given one.

01:29:28.080 | Oh my God.

01:29:29.080 | Could you imagine

01:29:30.080 | if that was lobbied?

01:29:31.080 | You would be asking

01:29:32.080 | the Russians to go get them.

01:29:33.080 | And then like,

01:29:34.080 | you know, we're in a little...

01:29:35.080 | I don't know if you've been

01:29:36.080 | watching this...

01:29:37.080 | This is what I thought

01:29:38.080 | we could discuss.

01:29:39.080 | It's like, you know,

01:29:40.080 | is there a benefit

01:29:41.080 | in having two?

01:29:42.080 | Being dependent on Putin

01:29:43.080 | at this moment in time

01:29:44.080 | when Ukraine is making

01:29:45.080 | massive gains

01:29:46.080 | into Russian territory.

01:29:47.080 | I know this hasn't come up

01:29:48.080 | all that much,

01:29:49.080 | but that would be

01:29:50.080 | really dangerous.

01:29:51.080 | By the way,

01:29:52.080 | just back to what

01:29:53.080 | Friedberg said before.

01:29:54.080 | Sorry to interrupt you

01:29:55.080 | before you go, Sax,

01:29:56.080 | but why is this even possible?

01:29:57.080 | We have competition.

01:29:58.080 | But why is competition possible?

01:30:00.080 | It's because of what

01:30:01.080 | Friedberg talked about before.

01:30:02.080 | We didn't have a set price.

01:30:04.080 | The government didn't come and say,

01:30:06.080 | "You will build it for X

01:30:08.080 | and I'm only doing it one time."

01:30:10.080 | The free market was able

01:30:11.080 | to solve this problem.

01:30:12.080 | And it turned out

01:30:13.080 | the more capable solution

01:30:15.080 | was 40% cheaper

01:30:18.080 | than the one that they thought

01:30:19.080 | was going to work.

01:30:20.080 | And the one that was 40% cheaper

01:30:22.080 | was also on time.

01:30:24.080 | And the other one was...

01:30:25.080 | And reliable.

01:30:26.080 | And this other one,

01:30:27.080 | 7, 8, 9, 10 years delayed.

01:30:29.080 | It's 100%.

01:30:31.080 | That's a perfect example.

01:30:32.080 | There are examples every day

01:30:34.080 | of the fact that

01:30:35.080 | these other ideas

01:30:36.080 | just don't work.

01:30:38.080 | Yeah, I think we've

01:30:39.080 | pretty much beaten

01:30:40.080 | that capitalism

01:30:41.080 | is the greatest force

01:30:42.080 | for innovation

01:30:43.080 | and lowering prices.

01:30:44.080 | Sax, your thoughts

01:30:45.080 | on this situation.

01:30:46.080 | And helping humanity.

01:30:47.080 | Yeah, God forbid

01:30:48.080 | people will get

01:30:49.080 | air conditioning

01:30:50.080 | at a lower price,

01:30:51.080 | you know,

01:30:52.080 | and smartphones,

01:30:53.080 | et cetera.

01:30:54.080 | Sax,

01:30:55.080 | your thoughts here.

01:30:57.080 | Yeah, I mean, look,

01:30:58.080 | if we're talking about capitalism,

01:31:00.080 | I think about

01:31:01.080 | what the Austrian economist

01:31:02.080 | Joseph Schumpeter said,

01:31:03.080 | which is capitalism

01:31:04.080 | is a process

01:31:05.080 | of creative destruction.

01:31:06.080 | And the creativity happens

01:31:08.080 | in the early days

01:31:09.080 | when you've got a founder

01:31:10.080 | who's creating a startup,

01:31:11.080 | and the business gets big.

01:31:13.080 | But then it gets older,

01:31:14.080 | and the founder goes away.

01:31:16.080 | And the company can drift

01:31:18.080 | and become bureaucratic.

01:31:19.080 | And sometimes it can renew itself.

01:31:22.080 | And maybe you've got

01:31:23.080 | a Brian Nicholson

01:31:24.080 | maybe to save it.

01:31:25.080 | And sometimes it doesn't.

01:31:27.080 | And the companies

01:31:28.080 | that get old

01:31:29.080 | and don't renew themselves

01:31:31.080 | eventually fade away.

01:31:33.080 | And they get destroyed

01:31:34.080 | and replaced by other startups.

01:31:36.080 | It's a system

01:31:37.080 | that has worked

01:31:38.080 | incredibly well in America.

01:31:39.080 | And that's the basis

01:31:40.080 | for all of our prosperity

01:31:42.080 | and innovation.

01:31:44.080 | When you compare that

01:31:45.080 | to the political process,

01:31:46.080 | it's very different.

01:31:47.080 | I mean, the political process

01:31:48.080 | kind of has this

01:31:49.080 | knee-jerk resistance

01:31:51.080 | to change and innovation.

01:31:52.080 | And it has an impulse

01:31:54.080 | to control things.

01:31:55.080 | It wants to control prices.

01:31:57.080 | It thinks it can solve problems

01:31:59.080 | with just top-down mandates.

01:32:01.080 | And it doesn't reform itself.

01:32:03.080 | It creates new bureaucracies

01:32:05.080 | that never gets rid of them.

01:32:06.080 | I mean, we create new departments.

01:32:08.080 | They never go away.

01:32:09.080 | They just keep getting bigger and bigger.

01:32:10.080 | There's never any creative destruction.

01:32:11.080 | It's just like a...

01:32:12.080 | - Blob.

01:32:13.080 | - It's a one-way ratchet

01:32:14.080 | of bureaucratic growth.

01:32:16.080 | So it's really clear

01:32:17.080 | what creates prosperity.

01:32:19.080 | And I do think

01:32:20.080 | we have now reached a point

01:32:21.080 | where the government

01:32:22.080 | has gotten so big

01:32:24.080 | and so out of control

01:32:25.080 | and so expensive

01:32:27.080 | that it actually is threatening

01:32:29.080 | this engine of creative destruction.

01:32:31.080 | And at some point,

01:32:32.080 | I think voters are going

01:32:33.080 | to have to make a choice

01:32:34.080 | about whether they're going

01:32:35.080 | to try and rein in

01:32:37.080 | the government

01:32:38.080 | and create more room

01:32:39.080 | for capitalism and innovation,

01:32:41.080 | or they're going to allow it

01:32:42.080 | to get overtaken.

01:32:43.080 | - I love your capitalism quote

01:32:45.080 | and it reminds me

01:32:46.080 | of the Winston Churchill one,

01:32:47.080 | which I'm sure you've heard.

01:32:48.080 | "The inherent vice of capitalism

01:32:49.080 | "is the unequal sharing of blessings.

01:32:51.080 | "The inherent virtue of socialism

01:32:53.080 | "is the equal sharing of miseries."

01:32:56.080 | It's a...

01:32:57.080 | - That's a great quote.

01:32:58.080 | Winston Churchill is strong.

01:33:00.080 | - Strong.

01:33:01.080 | I'd like to hang with that dude.

01:33:03.080 | That's a guy

01:33:04.080 | I would like to hang out with.

01:33:05.080 | - Who would I hang out with?

01:33:06.080 | - Teddy Roosevelt.

01:33:07.080 | - Oh my gosh.

01:33:08.080 | Drinking, cigars.

01:33:09.080 | - I would love to go drinking

01:33:10.080 | with Teddy and cigars, guns.

01:33:12.080 | - Wow.

01:33:13.080 | - I'd like to go hunting.

01:33:14.080 | - Churchill took a bath every day.

01:33:15.080 | - Freeberg,

01:33:16.080 | please don't bring up

01:33:17.080 | this whole thing about baths

01:33:18.080 | 'cause then you're gonna make me

01:33:19.080 | pull out of my phone

01:33:20.080 | the three or four times

01:33:21.080 | you called me from the bath

01:33:23.080 | and I took a screenshot.

01:33:24.080 | I literally...

01:33:25.080 | Freeberg's in the bath,

01:33:26.080 | he lights candles,

01:33:28.080 | he takes a picture

01:33:29.080 | of his pale stems

01:33:30.080 | and he sends it to me

01:33:32.080 | and calls me from the bathtub.

01:33:34.080 | - You can't see me

01:33:35.080 | and it's always bubbles.

01:33:36.080 | - I have PTSD.

01:33:37.080 | - He's called me from the bath.

01:33:39.080 | I know he's in the bath

01:33:40.080 | because you hear this

01:33:41.080 | kind of like echoey kind of...

01:33:42.080 | - Yes.

01:33:43.080 | - You know, so it does...

01:33:44.080 | And it's like...

01:33:45.080 | - It's like a submarine.

01:33:46.080 | - Oh my God, you're in the bathtub.

01:33:47.080 | - Yeah.

01:33:48.080 | - It's like he's calling you

01:33:49.080 | that he's in the bathroom.

01:33:50.080 | - I don't call you from the bath,

01:33:51.080 | I'll call you later.

01:33:52.080 | - All right.

01:33:53.080 | - It's so disturbing.

01:33:54.080 | - By the way, I mean,

01:33:55.080 | that invasion of Russia

01:33:56.080 | that you're talking about

01:33:57.080 | is not what you think it is.

01:33:58.080 | - Here we go.

01:33:59.080 | - Here we go.

01:34:00.080 | - So...

01:34:01.080 | - Yes, we haven't had

01:34:02.080 | a general facts update in a while.

01:34:03.080 | I actually wanna hear

01:34:04.080 | your take on this, Sax.

01:34:05.080 | Like, what is the story...

01:34:06.080 | - Yeah, talk about

01:34:07.080 | the humiliation of Putin.

01:34:08.080 | Yeah, tell us.

01:34:09.080 | - Yeah, what is the real story

01:34:10.080 | with the Ukraine

01:34:11.080 | counter-invasion to Russia?

01:34:12.080 | - I think you're falling

01:34:13.080 | for a lot of hype.

01:34:14.080 | What's happening is

01:34:15.080 | that the stage of the war

01:34:16.680 | is that the fighting

01:34:18.520 | is in the Donbass

01:34:19.880 | and along a 1,200-kilometer front

01:34:22.960 | in Ukraine,

01:34:24.440 | where the Russians

01:34:25.440 | has just been pounding

01:34:26.440 | the Ukrainians.

01:34:27.440 | The Russians have more soldiers,

01:34:29.200 | they have more artillery,

01:34:30.200 | they have more air power,

01:34:31.600 | and they have air superiority.

01:34:34.280 | And they've just been

01:34:35.280 | annihilating the Ukrainians.

01:34:36.680 | I mean, Ukrainian casualties,

01:34:38.000 | according to some sources,

01:34:39.440 | are somewhere between

01:34:40.440 | 30,000 and 60,000 a month.

01:34:42.640 | It's massive and unsustainable.

01:34:44.880 | So what Zelensky did

01:34:45.880 | is he basically threw

01:34:46.880 | this Hail Mary,

01:34:48.240 | where he took some

01:34:49.240 | of their best forces,

01:34:50.240 | their best reserves,

01:34:51.240 | and had them attack

01:34:52.240 | this undefended part of Russia, Kursk.

01:34:55.840 | And yeah, they took

01:34:56.840 | a few hundred miles

01:34:57.840 | of undefended territory,

01:34:59.460 | but there's nothing

01:35:00.460 | strategically important there.

01:35:01.680 | And now, Russian air power

01:35:03.440 | is basically creating

01:35:04.720 | significant casualties

01:35:06.120 | among those forces,

01:35:07.760 | and the Ukrainian forces

01:35:09.200 | are now trying to figure out

01:35:10.200 | what to do.

01:35:11.200 | I mean, they're basically

01:35:12.200 | attacking this part of Russia

01:35:13.200 | like headless chickens,

01:35:14.200 | trying to figure out

01:35:15.200 | where they can dig in

01:35:16.200 | and find some

01:35:17.200 | defensive fortifications.

01:35:18.880 | I don't know what Zelensky

01:35:19.880 | is trying to accomplish.

01:35:20.880 | I guess it's kind of

01:35:21.880 | a PR offensive.

01:35:22.880 | A lot of people

01:35:23.880 | have been fooled

01:35:24.880 | into thinking

01:35:25.880 | that this is somehow

01:35:26.880 | a game changer in the war.

01:35:27.880 | It's not.

01:35:28.880 | All Zelensky has really done

01:35:29.880 | is take some of his best troops

01:35:30.880 | away from where

01:35:31.880 | the strategically

01:35:32.880 | important fighting is,

01:35:34.080 | have them attack

01:35:35.080 | this part of Russia,

01:35:36.200 | and over time,

01:35:37.720 | Russia's just gonna mop them up.

01:35:39.600 | Did the Russians get caught

01:35:40.600 | with their pants down?

01:35:41.600 | Yes, they did.

01:35:42.800 | Is that an embarrassment

01:35:43.800 | to Putin?

01:35:44.800 | I guess it can be spun that way.

01:35:45.800 | Does it change

01:35:46.800 | the outcome of this war

01:35:47.800 | in any way?

01:35:48.800 | No, it's not.

01:35:49.800 | And what we're on track for

01:35:51.120 | is at some point,

01:35:53.880 | probably next year,

01:35:55.440 | Ukraine is gonna collapse.

01:35:56.440 | I mean, their position

01:35:57.720 | in this war is unsustainable,

01:35:59.920 | and taking some

01:36:00.920 | of their top troops,

01:36:01.920 | feeding them into Kursk,

01:36:03.920 | where they can be

01:36:04.920 | easily picked off

01:36:05.920 | by the Russians,

01:36:06.920 | is only gonna accelerate

01:36:07.920 | that process.

01:36:08.920 | And then, Sax,

01:36:09.920 | what about Nord Stream?

01:36:10.920 | What have you just found out

01:36:11.920 | about Nord Stream?

01:36:12.920 | Well, the Nord Stream story

01:36:14.360 | is very strange

01:36:15.360 | 'cause we're on our

01:36:16.360 | third or fourth explanation

01:36:17.360 | here of what happened.

01:36:18.360 | I mean, it was pretty clear

01:36:20.240 | that somehow the U.S.

01:36:23.280 | was behind it,

01:36:25.120 | and they've been blaming...

01:36:27.840 | First they said

01:36:28.840 | that the Russians did it,

01:36:29.840 | right, which makes no sense.

01:36:30.840 | That'd be like the Russians

01:36:31.840 | shooting their own legs off.

01:36:35.320 | That was the first cover story.

01:36:36.840 | Then they kind of went with...

01:36:39.360 | I guess Delusione did it

01:36:40.360 | from a yacht.

01:36:41.360 | I guess that's the story

01:36:42.360 | they're on now.

01:36:43.360 | Yeah, The Wall Street Journal

01:36:44.360 | report...

01:36:45.360 | Just to give people

01:36:46.360 | the background of why

01:36:47.360 | we're talking about this,

01:36:48.360 | The Wall Street Journal

01:36:49.360 | reported that German's

01:36:50.360 | investigation into this,

01:36:51.360 | you know, the people

01:36:52.360 | who were impacted by it,

01:36:53.360 | here's the quote,

01:36:54.360 | "The whole thing was born

01:36:55.360 | out of a night of heavy boosting

01:36:56.360 | and the iron determination

01:36:57.360 | of a handful of people

01:36:58.360 | who had the guts

01:36:59.360 | to risk their lives

01:37:00.360 | for the country.

01:37:01.360 | The Ukraine operation

01:37:02.360 | cost around $300,000,

01:37:03.360 | according to people

01:37:04.360 | who participated in it.

01:37:05.360 | Bob, the small rented yacht

01:37:06.360 | with a six-member crew,

01:37:07.360 | including trained civilian divers,

01:37:09.240 | one was a woman

01:37:10.240 | whose presence helped

01:37:11.240 | create the illusion

01:37:12.240 | they were a group of friends

01:37:13.240 | on a pleasure cruise."

01:37:15.440 | So you're saying

01:37:16.440 | you don't believe

01:37:17.440 | that German report?

01:37:18.440 | Well, no.

01:37:19.440 | So this report

01:37:20.440 | about that yacht

01:37:21.440 | being used

01:37:22.440 | and how Zaluzhny

01:37:23.440 | was like the mastermind

01:37:24.880 | of this?

01:37:25.880 | Yeah.

01:37:26.880 | That report is not

01:37:27.880 | anything new.

01:37:28.880 | This has been out for,

01:37:29.880 | I don't know,

01:37:30.880 | at least six months.

01:37:31.880 | I've always been skeptical

01:37:32.880 | about this.

01:37:33.880 | The thing to understand

01:37:34.880 | about the North Stream

01:37:35.880 | pipeline is that

01:37:36.880 | it was a massive structure

01:37:38.200 | surrounded by

01:37:39.200 | huge amounts of concrete

01:37:41.120 | on the ocean floor.

01:37:42.720 | And blowing this thing up

01:37:44.760 | required some significant expertise

01:37:47.960 | in underwater demolition.

01:37:50.280 | I'm just very skeptical

01:37:51.320 | that it could be accomplished

01:37:52.600 | by six guys on a yacht

01:37:55.080 | under Zaluzhny.

01:37:56.080 | I mean,

01:37:57.080 | the Ukrainians

01:37:58.080 | have never had a Navy.

01:37:59.080 | This just doesn't seem

01:38:00.520 | like something

01:38:01.520 | that's in their

01:38:02.520 | wheelhouse of capabilities.

01:38:03.520 | It always made more sense to me

01:38:05.960 | that the U.S. was involved somehow.

01:38:07.460 | How do you think an article

01:38:09.120 | this detailed

01:38:10.120 | that points to

01:38:11.120 | the Dutch intelligence community,

01:38:16.440 | the German intelligence community,

01:38:17.840 | American intelligence,

01:38:18.840 | how does an article like this

01:38:20.080 | with this much detail

01:38:22.160 | then get written

01:38:23.480 | and put into the Wall Street Journal?

01:38:25.080 | How does that happen?

01:38:26.600 | I think intelligence sources

01:38:27.720 | want it to happen.

01:38:28.720 | I mean,

01:38:29.720 | they have to get their sources

01:38:30.720 | from somewhere, right?

01:38:31.720 | And I'm just saying

01:38:32.720 | that this story about Zaluzhny

01:38:33.720 | and the yacht has,

01:38:34.720 | this is not new.

01:38:35.720 | This has been out there

01:38:36.720 | for a long time.

01:38:37.720 | I mean,

01:38:38.720 | it could be true.

01:38:39.720 | I mean,

01:38:40.720 | I guess I don't know for sure,

01:38:41.720 | but I guess I'm also just saying

01:38:42.720 | that I'm a little bit skeptical

01:38:43.720 | about this.

01:38:44.720 | I mean,

01:38:45.720 | Seymour Hersh

01:38:46.720 | had other reporting

01:38:47.720 | from different sources

01:38:48.720 | who claimed that

01:38:49.720 | the U.S. was behind it.

01:38:51.760 | And President Biden himself

01:38:53.240 | at a press conference said

01:38:55.360 | that if Russia invades Ukraine,

01:38:56.920 | we will bring an end

01:38:57.920 | to the Nord Stream 2 pipeline.

01:38:59.320 | And when a reporter asked him,

01:39:01.160 | "How will you do that?"

01:39:02.160 | He said, "We have ways.

01:39:03.160 | We'll get it done."

01:39:04.400 | And similarly,

01:39:05.400 | Victoria Nuland warned

01:39:06.400 | at a press conference

01:39:07.400 | that Nord Stream 2

01:39:08.400 | will not move forward

01:39:09.400 | if Russia invades.

01:39:10.400 | And then lo and behold,

01:39:11.400 | the pipeline gets blown up.

01:39:13.440 | And if you're comparing

01:39:14.640 | which of these two forces

01:39:16.080 | has the capability

01:39:17.080 | to do something like this,

01:39:18.760 | I know for sure

01:39:19.760 | that the U.S. does.

01:39:20.760 | Ukraine,

01:39:21.760 | I'm just a little more skeptical of.

01:39:23.200 | Just to give you some facts,

01:39:24.200 | to introduce some facts here,

01:39:27.280 | it was only 260 feet or so down

01:39:29.760 | where they blew it up.

01:39:30.760 | I've dove to 130, 140 feet

01:39:33.560 | many times.

01:39:35.200 | You can easily dive

01:39:36.400 | three, four, 500 feet.

01:39:38.400 | This is not difficult.

01:39:39.560 | I could dive to 260 feet

01:39:41.720 | with one day of training.

01:39:43.560 | And I've done half of that.

01:39:45.600 | And I've only dived 25 times in my life.

01:39:48.680 | So this is easily accomplished, Sax.

01:39:51.120 | And so this sounds like it's dead on.

01:39:52.640 | I mean, I know you don't want to.

01:39:53.920 | - Diving?

01:39:54.920 | What about the explosives?

01:39:55.920 | - Yeah, it's very simple.

01:39:56.920 | I mean, you're literally

01:39:57.920 | attaching it to a pipe

01:39:58.920 | and you hit, boom.

01:39:59.920 | I mean, these people are...

01:40:02.240 | The Ukraine people are-

01:40:03.240 | - Are they required

01:40:04.240 | in the face of-

01:40:05.240 | - A massive amount of explosives

01:40:06.240 | to do something like this?

01:40:07.240 | - No, it does not.

01:40:08.240 | In the face of Ukraine

01:40:09.960 | defending itself against Russia,

01:40:12.280 | one of the greatest militaries

01:40:13.680 | on the planet.

01:40:15.200 | This idea that

01:40:16.200 | that same group of people

01:40:17.200 | who have held Russian at bay

01:40:18.720 | for two years plus

01:40:20.520 | can't go down 260 and blow it up

01:40:22.800 | is ridiculous.

01:40:23.800 | They could easily do this.

01:40:25.200 | This is not a difficult task.

01:40:27.800 | Super easy for the Ukraine army

01:40:28.800 | to do this.

01:40:29.800 | - I don't think you're in a position to know.

01:40:30.800 | I don't think you're in a position to know.

01:40:31.800 | - I am because I have facts.

01:40:32.800 | I've gone 260 feet down.

01:40:34.080 | I've dove to 130.

01:40:35.480 | It's very easy to go 260.

01:40:36.480 | The end.

01:40:37.480 | - But that's your facts.

01:40:38.480 | - I mean, it's just called reality, Chamath.

01:40:41.040 | I'm sorry.

01:40:42.040 | Sax is the most biased person

01:40:43.040 | in the world

01:40:44.040 | when it comes to this.

01:40:45.040 | It's hysterical to hear him frame it.

01:40:46.040 | - Jason, Jason, Jason, Jason.

01:40:48.600 | What you just said was,

01:40:50.640 | here are the facts.

01:40:52.000 | It's 260 feet down.

01:40:53.840 | I've gone to half that.

01:40:55.120 | So it's possible.

01:40:56.120 | So they did it.

01:40:57.120 | That's what you just said.

01:40:58.120 | - No, no.

01:40:59.120 | He's saying it's too deep.

01:41:00.120 | Sax's premise is,

01:41:02.400 | this is too,

01:41:03.400 | this is beyond the capability

01:41:05.120 | of the Ukraine army.

01:41:06.880 | That's ridiculous, Sax.

01:41:07.880 | - A lot of people think that.

01:41:08.880 | - It's easily.

01:41:09.880 | Well, a lot of people are dumb then.

01:41:12.480 | It is the stupidest concept.

01:41:15.000 | - You're also an explosive expert,

01:41:16.440 | as well as a professional diver.

01:41:17.440 | - I'm an expert at watching the Ukraine...

01:41:18.440 | - Well, no, no, no.

01:41:19.440 | He wants to watch the firecrackers,

01:41:20.440 | so he knows what he's talking about there, as well.

01:41:21.440 | - Dude, I bought pineapples.

01:41:22.440 | That's a quarter stick of dynamite

01:41:23.440 | when I was in Brooklyn.

01:41:24.440 | - You think six guys on a yacht did this?

01:41:25.440 | - Easily.

01:41:26.440 | Easily.

01:41:27.440 | - Okay.

01:41:28.440 | - Six Ukrainians, these are hardcore mofos.

01:41:35.840 | You think these Ukrainians are not hardcore?

01:41:37.760 | They probably did it drunk.

01:41:38.760 | - No, I do think they are hardcore.

01:41:39.960 | - They did it drunk.

01:41:41.000 | I bet you they were half in the bag

01:41:42.920 | when they blew that (beep) up.

01:41:44.920 | That's why Russia can't beat 'em.

01:41:46.800 | - I've also read the Seymour Hersh story,

01:41:48.360 | and it just makes a lot more sense to me.

01:41:49.920 | That's all I'm gonna say,

01:41:50.920 | is it just makes a lot more sense to me.

01:41:51.920 | - Okay, all right.

01:41:52.920 | - And by the way,

01:41:53.920 | I've never taken away anything

01:41:54.920 | from the Ukrainians as a fighting force.

01:41:56.160 | I mean, clearly they are fighting bravely,

01:42:00.040 | and they are hardcore.

01:42:01.040 | I've never taken that away from them.

01:42:03.000 | And I'm certainly not saying

01:42:04.240 | that they're incompetent or anything like that,

01:42:06.320 | and they've definitely been massively pussed up

01:42:07.920 | by American weapons.

01:42:08.920 | - And you'd like to see them win versus Russia

01:42:11.200 | and get Russia out of their country, right?

01:42:13.200 | - I would like to see America stay out

01:42:16.200 | of other people's wars,

01:42:17.200 | and I would have liked to have seen them agree

01:42:18.720 | to a peace deal that would have avoided this war.

01:42:21.040 | - Okay, okay.

01:42:22.360 | Who would you rather wins the war,

01:42:23.840 | Russia or Ukraine?

01:42:24.840 | If you had to pick,

01:42:25.840 | - I think we should stay out of my war.

01:42:26.840 | I don't think America should take sides

01:42:27.840 | in other people's wars.

01:42:28.840 | I think we should stay out of them,

01:42:29.840 | and I think we should agree to peace deals

01:42:31.280 | when we can,

01:42:32.280 | and not sabotage those peace deals.

01:42:33.560 | - Yeah, I'm for peace deals too.

01:42:35.680 | I'm also for democracies beating autocracies.

01:42:37.840 | Okay, everybody,

01:42:38.840 | this has been another amazing episode of-

01:42:41.840 | - So let's get canceled elections.

01:42:43.480 | - This has been another amazing episode

01:42:45.120 | of the "All In" podcast for the rain man,

01:42:48.360 | yeah, David Sachs,

01:42:49.900 | the one and only,

01:42:51.880 | Sultan of science, David Freeberg,

01:42:54.040 | getting ready for the "All In" summit sold out.

01:42:57.240 | Great speakers,

01:42:58.240 | lots of surprises for y'all.

01:43:00.360 | And our chairman dictator,

01:43:02.960 | so rested,

01:43:04.240 | so tan,

01:43:05.240 | working 15 hours a day in Italy,

01:43:09.040 | and we'll talk about wine.

01:43:10.680 | - I have a-

01:43:11.680 | - Bye bestie.

01:43:12.680 | - I have something that-

01:43:13.680 | - I have something-

01:43:14.680 | - Oh, sorry, go ahead.

01:43:15.680 | - I have something for around 80, 90

01:43:16.680 | that I'll be able to talk about,

01:43:17.680 | hopefully soonest.

01:43:18.680 | - Oh, yum, yum.

01:43:19.680 | Ooh, ooh,

01:43:20.680 | I slid a little Betsky in there.

01:43:21.680 | All right, everybody,

01:43:22.680 | this has been Sam,

01:43:23.680 | world's greatest moderator

01:43:24.680 | and the executive producer for life.

01:43:26.260 | - Love you boys.

01:43:27.260 | - See you next time, everybody, bye-bye.

01:43:28.260 | ♪ I'm going all in ♪

01:43:29.260 | ♪ We'll let your winners ride ♪

01:43:30.260 | ♪ Rain man, David Sachs ♪

01:43:31.260 | ♪ I'm going all in ♪

01:43:32.260 | ♪ And it said ♪

01:43:33.260 | ♪ We open sourced it to the fans ♪

01:43:34.260 | ♪ And they've just gone crazy with it ♪

01:43:35.260 | ♪ I'm the queen of quinoa ♪

01:43:36.260 | ♪ I'm going all in ♪

01:43:37.260 | ♪ Let your winners ride ♪

01:43:38.260 | ♪ Let your winners ride ♪

01:43:39.260 | ♪ I'm going all in ♪

01:43:40.260 | ♪ Besties are gone ♪

01:43:41.260 | ♪ We'll let your winners ride ♪

01:43:42.260 | ♪ I'm going all in ♪

01:43:43.260 | ♪ We'll let your winners ride ♪

01:43:44.260 | ♪ Let your winners ride ♪

01:43:45.260 | ♪ I'm going all in ♪

01:43:46.260 | ♪ Let your winners ride ♪

01:43:47.260 | ♪ Let your winners ride ♪

01:43:48.260 | ♪ I'm going all in ♪

01:43:49.260 | ♪ Besties are gone ♪

01:43:50.260 | ♪ I'm going all in ♪

01:43:51.260 | ♪ Let your winners ride ♪

01:43:52.260 | ♪ I'm going all in ♪

01:43:53.260 | ♪ Let your winners ride ♪

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01:43:56.260 | ♪ I'm going all in ♪

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01:45:59.260 | ♪ Besties are gone ♪

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