All-In with Chamath, Jason, Sacks & Friedberg

Industry veterans, degenerate gamblers & besties Chamath Palihapitiya, Jason Calacanis, David Sacks & David Friedberg cover all things economic, tech, political, social & poker.

E105: Trump enters 2024 race, fiscal responsibility, big tech austerity measures, more FTX chaos

E105: Trump enters 2024 race, fiscal responsibility, big tech austerity measures, more FTX chaos

Sat, 19 Nov 2022 10:04

0:00 Bestie intros!

2:19 Trump announces 2024 presidential bid

26:07 Each bestie names their most important policy issue for 2024

59:03 Big tech belt-tightening, activist investor calls out Google, professional-managerial class culture

1:17:23 SBF's leaked DMs, Elon's culture shift

1:38:22 Sacks's big chess victory, Friedberg's public company analysis, and more

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Can I tell you a funny story? So I was in, I was in, and then when I landed, there was a, a system message on the plane. And then the pilot texted me like, Hey, bad news. We're not going to be able to take you to tomorrow. There's an air message. And if we can't resolve it, we can't fly. I was like, OK, so I text Zach. I'm like, Hey, dude, I'm in a really tough spot. Is there any way that I, you know, I could catch a flight, you know, with you tomorrow? Absolute dead silence. Three hours later, Paul, pilot, Paul text me and says, good news, cleared us. We're going tomorrow. I text Zach's right away. Hey, no worries. It's all resolved in eight seconds. He responds, awesome, with an exclamation mark. Yeah. Yeah. No, he texted the link. Also, he had zero intention of bringing me in my family with it. Zero. I fell a buster. He fell a buster. No, the truth is the plane was with me. I was using it. I'd be happy to let you borrow the plane if I'm not using it. Here's Zach's the last time we went to dinner. Ready? The check comes. Miller locks lands on the table. Here's Zach's. What you're seeing? See that? You know what that is? Zach's going for his wallet. You can just count it. It's all ironic, because I can't remember the last time. He's almost there. I can't remember the last time you picked up a check, J.K.L. What are you every time I pick it up on the way in? Maybe for a slice of pizza. Come on. Zach's one of the most generous people I know. I remember we went to a bar once. We barely had time to get a glass of still water, a diet coke, and some of the free nuts. And then J.K.L. was like, guys, it's on me. But we actually... I told out it's 20. I gave it right to the bartender. That's true. My turn. My turn. I got it. My turn. Jama, you got the white truffles and the flaming yon last week. I think these bar nuts are on me. It's only fair. It's only fair. Yeah, throwing some cashews too. Throwing the cashews in. I'm gonna get the cashews and raisins, the trail mix. I'll get the trail mix. Because you got the truffles last time, Jama. Oh my god. Oh my god. We're like your winners, ride. Rainman, David, Simon, Simon. I'm going home. And I said we open source into the fans and they've just gone crazy with me. WS, I'm Queen of Kenwam. I'm going home. All right, everybody. Welcome to the All-in podcast. We're still here. Episode 105. I don't know if you saw it, boys. Last week, the pod hit a new high water mark. 16 overall in the world. So congratulations. I thought we picked it 14 actually. Was it 14? 14, yeah. People listen to this pod. When I was in DC this week, I had a bunch of meetings and so many of the staffers listen to the pod. And they came up to me. They're like, hey, love you guys. Listen every week. It's really crazy, actually, the reach of this thing. It's really cool. Now, when you were in DC, how gleeful were they about SACS' absolute shellacking last week? That must have been high fives all over the dams. Like, they won twice. Trump announced and SACS lost. Listen, we talked about- How nervous are they about SBF and how much money he gave them in order to stop that red wave? Oh, take it easy. I talked to a lot of folks and what I would say is we talked a lot about energy policy. Life science is obviously two areas that I invest a lot of money in. And foreign policy and, actually, David, you can be surprised about how many fans you have there. Well, I mean, like General Milley, like we talked about last week, he's come around. Jake Sullivan just this week said that he told the Ukrainians it was reported that they can't have Crimea back, get realistic. So Jake Sullivan and Milley are like the voices of reason now in the administration on this. And they're just saying the same thing I've been saying for which I was excoriated by the foreign policy establishment. And I got into a little Twitter spat with Ian Bremner this week because all of a sudden he post that, oh, everybody has been privately saying that we need to negotiate. No, no, you haven't. You were criticizing. You were denouncing Elon as a Kremlin agent when he posted that Twitter poll suggesting that the Ukrainians should negotiate. So you were publicly denouncing those of us who were calling for negotiations. And now all of a sudden you're saying, well, this has always been the position. But I think what's significant about that is the guy is just a weather vane for the blob and the foreign policy establishment. And so the weather vane is not pointing towards negotiations. So that's the good news here. Do you think that if a dissentist wins the presidency, you will be nominated as a second of a state? Treasury, what would you take? Treasury? No, I don't understand. State. If you were offered a cabinet position, would you take it? He should. You should take it. What I understand is that my position on foreign policy or Ukraine specifically is not, it's not a doctor by either party. I mean, McConnell and the center of public and leadership are very much on board with the Biden administration's policy on this. They are very, very hawkish. It's really the uniparty on this issue. There's really just one consolidated blob. Okay. But back to the question, would you, would it be a dream of yours? Would you find great joy in having a White House position to serve them to San Disco's end? To serve your country. Would you serve? What I serve, if the president of the United States calls you up and asks you to do something obviously, you have to serve your country. But it's not something I'm actually looking for. That's yes. What if you asked you to serve as the U.S. ambassador to Burkina Faso? Where? Not. What? The ambassador rolls are so funny. It's like you have to compete for the good ones and then some people get stuck with the bad ones. Those are available for purchase. Yeah. Yeah, exactly. You know, there's like a menu of these things, like these ambassadorships. Like, I don't think it's like written down anywhere, but it's kind of like unspoken. It's like, if you want the ambassador ship to the UK, that's like $10 million. And then, you know, like affordable France. Yes. The thing with UK and France, it's every embassy, every ambassador ship comes with an annual budget. But the cost of actually running that embassy and really throwing the parties is much more. So for the UK and France, the gap is $10 million a year that you have to fund out of pockets. So you got to be really willing, you know, to put the money up. But apparently, my friend was the ambassador to the UK under Obama and I went to a party there. It's unbelievable. And he has the best life because like, you know, he was meeting everybody in the world. You can imagine goes through the UK and then wants to meet the US ambassador. It was a great job for him. Right. But the money I'm talking about is the cost of buying one of these sinecures. You have to typically raise that much money. You have a bundle. Yeah. You bundle that much money for whoever. This is what I've heard. I mean, I don't know. This is what I've heard is that. Does that mean that SPF's parents, if Elizabeth Ward wins a presidency? That's the SPF's certificate of best for ship right now, the Illuminati right now just revoked all of our Illuminati cards. We're not supposed to talk about this guys that you can buy an ambassador ship. But speaking of buying politicians and coverage, let's get an update on FGX. So I'm a firm. I'm a firm. Speaking of politics, I mean, you bring it up. If I bring it up, I didn't want to tell you. I'll bring it up in a minute. The only thing I want to bring up is, I think I'm entitled to and I told you so on this, there was a story where the FBI said that the reason why Trump kept the boxes in his basement, they've now, the FBI has definitively said it's because he was just trying to preserve mementos, not try to sell state secrets to the Saudis or something like that, like some people were making wild conspiracy theories about. So Jake, it looks like I was right about that. In fact, I think we had that very discussion on this pod. Yeah. I mean, I said I thought he was keeping it for like keepsakes like mementos. That was my position too, because he's a great. You didn't support the Saudi conspiracy theory. Let me ask the question, because I mean, I wouldn't put it past him. He's a maniac. I think if you believe that this was about mementos, which the FBI has now said it was, I think you also have to say that the FBI's approach in rating his home with armed soldiers was heavy-handed. Now, I'm not saying that any of the legal right to do it. I'm sure they checked all the right boxes, but it was heavy-handed. But look, that brings me to another point. Why do they do it? I actually suspect now that what the Biden administration is trying to do is keep Trump in the news. I think they actually want to provoke. They want him to run. They want to. They want to. It's the exact same thing. Remember, the 50 million that went into Republican primaries to support the election denier candidate? Turns out that was a successful strategy for them, as much as I hate to admit it. It's as reckless as I think that was and hypocritical, because I don't think you can be out there claiming that these candidates are threatened to democracy at the very same time you're funding them. I think it was completely hypocritical and sort of Machiavellian, but it worked. I think in a similar way what the Democrats are going to try to do over the next years is keep Trump in the news as much as possible. In fact, CNN ran his entire speech announcing last Tuesday, I think, for this reason. If Trump wins the Republican nomination, he's going to, then he will lose the presidency. If you look at all of these exit polls that came out of these midterms, he's just so massively unfavorable. That's not what's going to be litigated in the primaries. The primaries, it's just Republican on Republican, and there are a non-trivial number of paths where Trump actually beats Decentis. I think that's very scary to the Republicans who want to just move on and have a chance of actually consolidating power. It's gleefully blissful for the Democrats, because if, again, we see that, we see that we saw this. Look, if the Democrats were able to fund and field mega-candidates in the Republican primaries that then lost in the general election, well, the best mega-candidate of all is Trump. David Sacks is completely right. Now, like the balance of power here should be, if you're the Democrats, whatever you can do to keep him in the news, whatever you can do to induce him to run makes a lot of sense because he will cripple the Republican party. He'll split, he'll split, and he'll look at it. Look at how Jake House got a big read. He's admitting to the hypocrisy, which is for years. He's just screaming about what a threat to democracy is, how he's secretly on the payroll of the Kremlin or foreign governments. And yet, and yet you want to keep him in the news, you want it to be the nominee. And you Republicans don't have to comment since to kick him out of the party. No, I do. I do. Kick him out. Come on. I was on the Decentis train before the midterms election. But you will kick him out. You on this pod will never kick him out of the party. You should say, how much does it kick him out? You guys should all disavow him. Publicly disavow him. How? I've already said I support Decentis. I said it before the midterms. What else do you want me to do? But by the way, I don't think you're large. I think, I think you and many other people on the Democratic side in the media are being very hypocritical about this because you want to claim that he's this unique threat to democracy while playing this game where you want to keep him in the news. You want to base it with as much oxygen as possible because you think he's more beatable. And by the way, I agree that he's less electable than Decentis, which is why part of the reason why I'm on the Decentis train. I also think Decentis would get more done. But look, I don't think it's a foregone conclusion that he's going to be the nominee. Did you see the new polling that came out after the midterms? Decentis is now the favorite among Republican primary voters. Among every different slicing that you want to do of whether it's likely Republican voter, primary voters, whether it's Fox News viewers and on and on and on. Decentis is now ahead of Trump. I hope that I need to be able to state my position because it's actually a rough time. So I just would like to get my position on here. Number one, you all backed somebody who is a horrible human being who made terrible decisions. And now you guys keep supporting him. At some point you have to put your foot down and say, listen, we don't want this guy. You have to publicly say January 6th, you know, and this guy's approach, the election denial, you guys have to come out and just say we don't want this person to run. I think you've been hedging too much. I think that's the problem now. Who has? I am not. I think the Republican Party. Yeah. Now, you always wear a little bit like because I did. No, you're on this very poll. Hold on. Hold on. And this very pot, I asked you, if he run, would you support him? Would you ever vote for him again? And you were like, well, and you would vote for him again. If he wins a nomination, you'll vote for him. That's the truth. This was all vote for him. Look, you know that before it was popular, before the midterms I was on the Dessence Train. I was staying so on this pot for over a year when it was very unpopular, certainly in the area in which I live. And so, you know, and there are a lot of Republicans now, most Republicans now agree with me on this issue, according to the polling that just took place. But if you win, the nomination you will vote for. But if you win, the nomination you will vote for. But if you win, the nomination you will vote for. The issue is that you want us to buy into every bullshit narrative that you've ever told about this issue about. January 6th, a bullshit? No. I'm going to let him finish. Let him finish. Let him finish. Let him finish. He's addressing me every two seconds. Stay out of it, freeberg. Oh, I just want you guys to speak and then let the other person speak. That's it. I don't come out any second. Listen. My point is just, I don't want to rehash every single thing in the past. But look, the point is that I think we have more electable candidates. I think we have candidates that would get more done in office. But, and I've already said so. But I, you know, but I, that doesn't mean I believe this whole like threat to democracy thing. I think that is massive inflation of the actual threat. But, but look, if you want me to say that we have more electable candidates, we have candidates who will get more done, who frankly would be less alienating to moderate and independence and could even win over some moderate Democrats the way that the census didn't Florida to win by 19 points. Yes. Happy to say that. And I've been saying that. I will just say if I, if I, if I'm, if freeberg allows me, to make a point, I would like to say it is a threat to democracy, January 6th and election denial. Those two things are a few. Why do I want to party fun over $50 million to those candidates? cynical because they wanted to win cynicism, pure cynicism. Okay. We're on the same page about that. Yeah. Pure cynicism. But do you, let me ask you a question. And then we'll wrap on this because I know it's uncomfortable for freeberg to watch mommy and daddy fight. Bobby daddy still love each other. Even if we fight sometimes, it just makes me want to turn the volume down. Go ahead. We're almost done. Anyway, I do think fielding moderate candidates is the path. And I think, I think, you brought this up a ton of times. Who it's the race to whoever can get that moderate middle. And I hope that they feel better candidates. But do you think, Sachs, he's running. This is one of the cynical takes. Is that he's running because it will help all the legal cases against him. Do you think there's anything to that? My guess is that they see him as an easier candidate to beat and they're going to do everything they can to try and keep him in the news. And I don't, actually, I don't think that's your position. I actually think that you're being sincere that you don't want him to win a second term. I mean, remember, like we don't, I think we all believe that we're going to have a pretty severe recession next year. So just because the Democrats' cynical strategy in the midterms are promoting what they call election deniers in the primary, that happened to work. But just because it worked last time, doesn't mean it's going to work next time. And abortion absolutist and a whole bunch of other things. I think the point is pretty much this, which is that people gave Trump a lot of credit for being an idiot's subent. But it looks like he's more of an idiot's subent minus the subent. Okay. This is kind of a goofball who has a brilliant media strategy and he had his finger on the pulse in a moment. And then he just couldn't execute, couldn't put two and two together, couldn't put one foot in front of the other. And he was way too divisive and he got booted out and he lost fair and square. And now what the Republicans have to realize is if they don't figure out how to field somebody out of the primaries that is different than Trump, the Democrats will win. Because if it is Trump, whoever the Democratic candidate is, I don't think it really matters, will crush Trump. Yeah. Look, I think that's likely correct. I mean, I think that we talked about it last week. You cannot win the presidency with, call it 45% of the vote. I mean, Trump is capped at that amount. And the scary thing for Republicans, by the way, is Trump does a much better job than anybody else in getting his base activated. So the thing that all these polls get wrong, and I think they've consistently gotten wrong. And as a result, an underestimated him is they don't give him the credit he deserves duly for being able to curate a fervent base of that 30 or 40% of America that will show up for him. And even if they didn't show up as much in the midterms, they sure as hell showed up in the primaries for his candidates oftentimes. So I just think it's a very dangerous cocktail that you can't sleep on. So the Republicans have to take this really serious moderate Republicans want to have a chance of winning. You guys have to figure out how to be Trump in a ground game. Because if his base shows up, he has a decent chance of winning the nomination. But then you will lose the general. Yeah, I think that's pretty much spot on. I think Republicans really have to be smart and disciplined and think about we have to nominate the most electable candidate. But here's the thing is we're not even debating policy right now. No one. No. On a policy basis, there's a huge difference between say Trump and his answers to some other folks. It's all about personal style. And is it really worth it to their Republicans to potentially lose the next election based on personal, based on style points? It's a silly reason to lose. You know, William F. Buckley a long time ago said that he would always support the most electable conservative candidate. He didn't always go with the most conservative candidate. He wanted to go with the most electable candidate who met a basic policy bar. And he sometimes got in trouble for that. For example, he supported Bush 41 over Jack Kemp. I know I'm going back a long way. But in any event, you know, having, thinking about electability is just really important. There's one subaligning here. The head of the Republican Party, Rupert Murdoch, has absolutely dist. Trump, I don't know if you saw the New York Post, but he put on the cover of the New York Post a little lower like 10 Florida man makes an outsmit on page 26 at the announcement of Trump running for president. And the funny thing was the last Rupert Murdoch. He didn't even name Trump as the president of the absolute last line of that column. And he said, oh, and he also happened to be the 45th president of the United States. Yeah. It was very funny. You're seeing a lot of Republicans saying, I think correctly, is that if you want to win elections, you have to look out the windshield, you know, not in the rear view mirror. And what we saw in the midterms is that even talking about 2020 was at minimum, a giant waste of time and a distraction and at maximum, potentially, causes candidates to lose. I mean, the fact of the matter is that a lot of candidates, including some I supported in battleground states who got lured into trying to relitigate 2020, they all got vaporized. And I just think it's stupid to be talking about the past. The voters want you to focus on the future. And especially when there's no policy outcome, that matters. That's at stake for you to be talking about a past election instead of the future and the current election year. Let me ask free-barge question. It's just free-barge. Free-barge, if I may bring you into this discussion uncomfortably as it might, as uncomfortable as it might be, would you vote for Biden, incredibly old? I don't know. It's going to be 81 or 82 in the next election. Would you vote for Biden or DeSantis? As I go through the list of things I'm most concerned about in the world today, number one is the debt and spending cycle of the federal government in the U.S. I think it's the most kind of scary set of facts and conditions that we're getting set up for kind of a major crisis 10 to 15 years from now. Because you can't afford all the debt that we've taken on as a country, as well as the entitlement as well as defense. And so something's got to give. And there's a bunch of paths that could emerge from that set of conditions that are all really scary paths and not good. I'm more concerned about that than I am about nuclear war or climate change, just to be clear. Because I think that the social effects and the global geopolitical effects that arise from the U.S. kind of destructuring because of our debt and spending cycle that we're in right now are far more significant than what we'll experience over the same period of time. I do think that technology is going to resolve a lot of our issues of climate change. And I think nuclear war cool heads will prevail. Everyone's got a family. So that's what I'm most concerned about. So any kind of voting decision I make is made with that lens, which is what's the best path to supporting some some sort of responsibility setback or step back to resolve those issues. As Charlie Munger said so well in this interview that was published this week. And I said it a few times on the show, but he did he's a much better speaker than I used his far fewer words, but you know in democracy eventually the populace realizes they can vote themselves all the money. And you know that's what we see happen in an accelerated way in Latin America. We've seen that with a lot of these democracies and ultimately resolved to kind of socialism. And in the U.S. we're seeing a lot of this behavior where we're kind of voting ourselves all the money. We're putting in place politicians and the populace is saying I want I want I want and more money comes out. And it it it totally decreases the strength and the resiliency of our nation and our economy. And it's the most concerning thing to me because the incredible innovation and economic engine that is the United States is threatened and it really threatens a lot of stability in the world today. Trauma any any final thoughts here as we wrap up the political discussion. I obviously a Democrat so you're voting for Biden, but you also care about fiscal responsibility. So where are you at? With your vote for 2024. I don't think that we know who's actually running on either ticket yet just to be completely honest. So that's my perspective. My other comment is I think what David said is so spot on the single biggest issue that we have is that we have made a huge decision to declobalize and that declobalization has the risk of introducing a hyperinflation loop. And we won't know how bad that is for another year or two. Why would it do that? Why would it? What if this is an inflation cost? Today, so today let's just say you buy a chip to make the iPhone. You buy that chip from you know, TSMC that makes it in Taiwan, ships it to China. And the entire world is serviced with that supply chain that keeps that chip as cheap as possible. Now with the chip stack as an example, we will build resilient supply chains where now instead of one place it will come from six places. Five of those six will be in allied territories, the United States, Western Europe, potentially Mexico. The thing with that is that that now is six X more equipment that you're buying, right? Instead of one machine you now have six machines. Instead of one person operating the machine in one country, you have six people in six countries. As you can imagine when you layer up all these costs, there is no world in which that chip is as cheap as it was before. And so the cost of that has to be born either by the consumer who pays a higher price. That's measured as inflation or by the government who subsidizes it at the point of import, that will be measured by debt. And so one way or the other in our path now towards more resiliency and national security, which by the way I think is the absolute right decision. Okay. The independence, all of this stuff we have to do today, we are at risk of a hyperinflationary loop if not managed well. And so you have to be really on the levers of the economy and you have to understand it deeply. The person that deserves the most credit of preventing this hyperinflationary loop right now is Joe Manchin. And hopefully the history books, whatever Jay Powell does I think has been good. But the fact that Manchin prevented $6 trillion more of being pumped into the economy in the last two years is probably the single thing that prevented inflation instead of being peaking at nine from peaking at 15 or 16. I think it would have been a national disaster without that. Timothy Smith is right. That extra $6 trillion that Manchin's not would have been a national disaster. But let's also give credit to every Republican because they also voted against it. I mean, the fact that matter is that the pressure was unmanaged to do the thing and see the force from the trees and he did that. Yeah, no, look, I agree. I agree that I agree that he was in the hot seat. Well, so was cinema, by the way, cinema didn't go for the three and a half trillion build back better. But then Manchin, you went along with the $750 billion version of BBB, which they renamed the inflation reduction act. That was kind of a disappointment. So frankly, like I give more credit to the Republicans here against all of it and the Democrats jammed it through. But if you're worried about all of this trillions and trillions of unnecessary spending, why don't you give the Republicans a chance? David, I'm talking about the delta between what was spent and what could have been the entirety of the gap is really was prevented by Joe Manchin. I know, but it was Joe Manchin's siding with the Republicans. My point is just look, we got you on the point. We got you on the point. We got you on the point. We got you on the point. On spending, they both want to spend too much money. But at this particular moment in time, the Republicans are more restrained about spending than the Democrats. Let's go to number one issue for each person. Number one issue for freeberg is fiscal responsibility. I was going to say the same thing. It is my number one issue in this next election. I want to see austerity, fiscal responsibility, and get this spending under control so that our kids do not inherit, you know, stagnation, hyperinflation or whatever cocktail of disastrous economic policies we are handing to them. What is your number one issue, SACs for 2024? If you had to pick a number one issue, what would it be for David SACs? Look, I think it's simple. The president's job is to ensure peace and prosperity. So you guys are talking about the prosperity side. I think we do need fiscal responsibility. We need to have a good economy. There's like a bundle of policies that go into that starting with, I think, greater fiscal restraint. And then on the peace side, I think we need to adjust America's foreign policy to be less interventionist. We're, you know, we're involving ourselves here and everywhere all over the world. And I'm hopeful that what I'm hearing out of the administration in the last couple of weeks from Jake Sullivan, from Millie, these are some good things that I'm hearing. But, you know, I would like to see as dial back on the foreign interventionism. If you had to 60, 40 that or whatever is one more important, the other are they both equal and then we'll go to Chimoff. Both equal for you, which one's important? I'm the person that both, I mean, look, how can you have a successful United States if we're either in a recession or at war? You don't want any, either of those situations. Okay. So those are your top two equally. What is it for you, Chimoff? What do you, what do you, there? There's also a third one, which is culture, Jake Al. So this one's a little bit hard to categorize, but I do think culture matters. And, you know, I want us to have a culture of excellence. I want in the schools, for example, I think schools should have grades. They should have advanced math. We should hold our kids to a high standard. I think that we want to have cities. We want to, you know, have cities where crime's not out of control. We need to have, you know, a sound border policy. So I think there's like a collection of policies there under, you know, schools, crime, border that are sort of broadly cultural, I guess, but, or maybe you could call them quality of life issues. So, you know, yeah, we need to have a good economy. We need to stay out of foreign wars, but also we need to have a high quality of life. Can I steal man something for you? Because I, I really agree with those three things, David, that you said, but I've, I've spent a lot of time thinking about this in my formation is that there's one thing that allows us to solve all three. If you bear with me for a second. And I think that that is the energy independence of the United States. If you look inside of what's happening in the US today, the cost of generating energy is effectively as cheap as it's ever been and as close to zero as it ever has been. And it's only going to get cheaper. The problem that we have is that we have all of these decrepit laws and infrastructure and regulatory capture that causes us to always be in an imbalance. And as a result, we do all kinds of crazy things. We borrow enormous amounts of money to create subsidies. We go and we fight all of these foreign wars that don't make it any sense. We wrap the energy problem in setting climate change language, which causes this cultural division. But my belief, quite honestly, is that the reason the IRA was so important is as it is the most clarified piece of legislation we've seen that essentially puts all forms of energy on a level playing field and has the chance to get America to permanent energy independence. And if the cost of energy is zero and we can abundantly create it in the United States, what I think happens, David, is we have energy to rebuild our supply chain much cheaper. So inflation gets under control. We don't borrow as much. We have a completely different lens on foreign policy so that this interventionism and fighting over resources is much harder to justify. And we put the climate change language aside and we use energy independence as a form of national security, which gives us the courage to battle all these cultural taboos that we otherwise have to say we agree with even if they don't necessarily make any sense. And there's a bunch of them. So I don't know. My answer to your question, Jason, is that one thing, if we accomplish in the next five to 10 years, has a chance to really change the course of the United States? Right. I'm guessing then, Biden's your vote because if it is, in fact, Biden, because Biden is the one who pushed for these clean energy tax credits and this policy in it. Free, free, free, whatever you think. Yeah, but he also canceled. He also canceled our energy independence. I mean, look, we were energy independent based on fracking. You may not like fracking, but it did get us energy independent. You may think that there's environmental consequences to it that you don't like and that have to be balanced, but we did have energy. I never been against fracking. I believe in that gas. I believe in coal actually as a bridge fuel. I believe in all of these things. I believe that these are all more important than going off to all of these foreign lands and trying to justify spending trillions of dollars and putting tens of thousands of American lives at risk, essentially for resources that we can actually create for ourselves at home. Well, I agree with you on that. 100%. I'm fine with, I mean, I'm telling you like clean fracking as a way, as a bridge. Go ahead to getting to, you know, more independence through nuclear and renewable, little scratch rebirx, like I said before, China is declared that they're building 450 nuclear power plants. The net cost, effective cost of electricity production out of a nuclear power plant is somewhere between one and five cents per kilowatt hour. The US on average is paying 11 to 15 cents per kilowatt hour. Nuclear is just through utilities, so freeberg. That's with all the regulatory capture and all that trash that you have to spend. For example, we have to spend 220 billion dollars a year to replace the power lines in America by law. $2.2 trillion is just there. Right. And so the cost for solar and wind off grid, I think is around three to seven cents a kilowatt hour in that range, right? So it gets, it's now a day, it's it's gotten much more competitive. But I think that the nuclear solution is just not even being engaged in the conversation. Now I want to go back to the previous point, which is, because I didn't state the numbers before. So I just want to state them because they're so shocking and this is what, what shocks me. The current federal debt is $30 trillion. Our GDP is around 23 trillion. Five percent interest rates on $30 trillion is one and a half trillion dollars in interest payments alone every year. And our social security, so one and a half trillion dollars, I mean, that alone is about six percent, seven percent of GDP. So you have to tax every transaction in the country by six or seven percent just to pay the interest payments on the debt. And then we have Medicare and social security, which I have to say that math is wrong. Because you have maturities of all different types with different yield to maturities and different coupons. Right. So it's not today's numbers. It's what's happening over time. So as you look out and you look at the yield on treasuries and you apply that to the current debt level and the increment in the debt level, you'll get to that level, right? You'll get to a trillion five a year in interest payments that need to be made. That's another call it three, four, five trillion dollars a year in mandatory spending. And so that's where the country starts running to a problem. Because at some point when you have to tax so much to cover the cash payments that need to be made by the federal government, the economy really gets hurt and things start to cripple. And then if you were to take those entitlements away, social security, Medicare, you have a real problem with people's ability to support themselves in an economy where they're not working. These are elderly retired people. So there is a mate at work to pay these expensive medical bills. So there's a major crash coming if we don't figure out how to bridge our way to this gap. So if someone wants my vote and they're going to run for president, they would put up a simple chart like Bill Clinton used to do and show me a 10 to 30 year plan and just say, here's where we're headed. And here's what we're going to do to make sure that doesn't happen. And that chart alone, I think, can win the vote. Okay. Let's pull up the chart then. So here is the federal debt, total public debt as a percentage of gross domestic product. As you can see in the 70s and 80s, we were at under 50 percent. The 90s, we started growing. I don't think this matters. I think everybody, every self proclaimed intellectual looks at this chart and says, oh my God, we've exceeded 100 percent. You know, the empire is going to go to ruin. That's not why the empire goes to ruin. We have the reserve currency of the world. And there's an enormous amount of power that comes from that position. So what the right number is is TBD. That's the most honest way to think about it. It was 100. It's at 150. It got to 200. Many countries operated levels above us and still haven't imploded per se. The real thing is what part of what Friedberg said is, look, if you really want to look at what we pay, today we pay $400 billion this year. That's the interest payments. Okay. That's when you calculate all of the different maturities we have with all of the different coupons we have. That's what we owe today. And David is right mathematically that if interest rates go to 5 percent and stay there forever, but we know that that's not how economies work. They have been flown. Okay. So the real problem that we have to understand is how do you actually create enough growth? And then the next time that we have a meaningful fall in interest rates, like every other person does, you know, look, a lot of people in America know how to refy their credit cards, refy their home loans, refy their mortgages. The United States could have had a much more aggressive and thoughtful strategy of refying by pushing out these maturities way into the future. And again, Trump actually suggested that, but because he sounded like a goofball, everybody said absolutely no way. But in hindsight, that one move would have saved us trillions of dollars over the next decade if we had done it. And this time around, we have to have politicians who are smart enough and have the where we'll fail to say, it doesn't matter where this idea came from. It's really smart. Rates are now back to 2 percent or 1.5 percent. It's now issue 50 and 100 year bonds. And let's refy this problem out into the future. That makes a ton of sense and we have to do it. The refy makes a ton of sense. Just to pull up a chart here and to counter your position there that it doesn't matter, Chimath. Maybe you can respond to, if you look at GDP ratios here, number one, two, and three, Japan, Venezuela, Greece, Sudan, and, you know, some smaller countries there. But the United States currently in these countries. None of these countries. Look, this entire world runs on the US dollar complex. Whenever we raise rates, yes, it is true that on the one hand, our interest payments go up. But proportionately and on a relative basis, I think maybe let me take a step back. What are the most important things in investing, which is appropriate here, is that people ask, what is the price of a stock? Well, before you go public, you're calculating what the intrinsic value of a company is. All the things that they do, all the money that they make, here's what we think it's theoretically work worth. But the minute it goes public, the intrinsic value no longer matters. It's what is it valued relative to everything else. Okay? The United States is a relative, if it's a stock, if all these countries are stocks, we are valued relatively to others, not intrinsically. And the reason why we have so much power is because everybody else is actually valued relative to us. So this is why I think the right thing to look at Jason is the rate of change of debt to GDP for the entire G8 or G20 or the rest of the world and what you'll see is something that goes up into the right. Nobody in the world has been rewarded for not investing in their populations and basically borrowing from tomorrow to invest in today's human capital. Okay. So, I think you're right. I think you're right. I think you're right. I think you're right. You think it's manageable. Freeberg is for. I think there's two things that are missing. One is the inflationary effect. So you look at that list of countries that are there. They're paying higher interest and they're paying in the form of inflation. So they have less that they can spend on their people. And ultimately, what ends up happening, it's just simple arithmetic. It's not about relative value of a currency. It's the arithmetic that we have a check we have to write every month to pay for Medicare and social security. And it is written into law what that check needs to be and the rate of which we're having to write those checks, the increment of those checks is going up so significantly that when you add on the interest payments and you look at those checks and then you add on defense, something's got to give because you cannot raise taxes in the amount that's needed to fund all of that outlay without this causing either number one massive inflation. If you just take on more debt or number two, you know, significant loss of services, either social security, Medicare or defense. And so something's going to give and the distribution, I think, is not being discussed. Sorry, just one point. The president's budget can't be any anybody who is a president of the United States gets hold of their annual budget. It's about five and a half trillion dollars this year. So you're talking about interest payments that are still less than 10% of their total budget. Now, that includes the entitlement payments. Okay. So about three billion dollars, three trillion, sorry, three and a half trillion is what you have to pay for. 20% no, three trillion dollars is the sum of Medicare and social security. Okay. So the president still has one and a half to two trillion dollars of leeway of which a quarter are debt payments. So my perspective quite honestly is mathematically there's a lot of room to run here before these things get really out of control. And even if they do, I think the relative problem is for the rest of the world will be so egregious that the ability for the United States to go to those banks and those economies and basically sell in more US debt is quite high because they cannot afford to own debt in their own country. So if you think that the United States is bad, go back to that list. Guess what? Those central banks in those countries are going to be buying US dollars faster than they can go out of stock. Unless we see some union of India, China, Saudi Arabia, Russia, Japan, Brazil, obviously not Japan, but some of that consortia will become a closer trading partner. And perhaps could cause a shift in the balance of the dominance of the US dollar. And that's one path to consider. SACS, what do you think of the balance sheet here? Obviously we have two opposing opinions here from Tremoth and Freberg. Where do you stand on the United States balance sheet? Over our skis. Yes, the balance sheet said disaster. What do we have? Like 130% of debt to GDP. I mean, we have like 30. And our spending is really enough. That's great. Yeah, it's not even stable. I mean, we can't ask too. And there's 27% of GDP right now, 27% it should be 15%. So the spending, where does that number come from? Why? There's a bunch of economists who have shared these papers. They're more on. More on's. More on's. Faker, listen. Let's go. Hold on. If you look at government tax receipts over time with all different kinds of tax rates, including very, very different top marginal tax rates, what you see is that a federal tax receipts as a percentage of GDP is in the 17 to 19% range. And like the best years, you make 19% usually in a good economy. And in a bad economy, it's like 17%. And it really, it doesn't matter whether a regular was president or Clint, Bill Clinton, and so on. So there's only so much blood you can get from a stone. And historically spending was around 19% of GDP. And so you would have a one or two percent deficit every year. And that really accelerated. First, you had the financial crisis of 2008, and then you had COVID. And freeberg's right, we went from, call it, 20% of GDP spending to roughly 30% or more during COVID as kind of this emergency measure. But like everything else in government, the emergency measure becomes a permanent program. So now we're at 27%, it doesn't seem to be going down. And the Democrats want a lot more. I mean, we talked about it. Bill back better would have been 3.5 trillion instead of 750 billion if they just had one or two more votes in the Senate. So now have. So hold on. So freeberg is right. There's like nothing stable about the point we're at. The point we're at is bad on its own terms. Having 30 trillion of debt, let's say that interest rates stabilize at 3%, that's still a trillion a year of debt service, which is more than a trillion. If interest rates stabilize at 3%, which is optimistic, and we're servicing a trillion, sorry, 30 trillion of debt, that's roughly a billion dollars a year of debt service payments. That could be spent on other things. You guys keep saying billion when it's a trillion. The average yield to maturity needs to be factored in there. So over a 15 year period, David, you would be right mathematically. It's all matured. But that's not what this is because you'd have to re-fi and reissue a bunch of debt that is at lower yield right now at these interest rates. I want to be clear. I'm not sure if any of this is good. I mean, remember, we have it. I understand. Let your mouth say why it's good or not. I'm not saying that this is a good or it's a trend. What I'm saying is I have this issue that all of a sudden people make up, and you guys are doing it now, an arbitrary number with no rooting in history or fact and say this is bad. All I'm saying is I know it feels bad to us, and I think we would all run this country differently if we could control the balance sheet. I would as well. I would try to get debt way, way down. I would try to get deficits way, way down. But all I'm saying is using this justification of an arbitrary number always falls flat. So I'm encouraging us all. Let's find a better model of reasoning because every time we point to some Randos book and say, 127% is bad. Nobody listens. And I think the message that you should take away is because it's imprecise and it's not rooted in any actual logic. And if there's a better building, the reason I believe that this is concerning is I look at the top 10 countries that have debt ratios that seem out of whack. And I think, wow, what is there fortune been for the last 10 years, Veeze of V, Japan, and Venezuela? That's not the right comparison. The right comparison. Okay, go back and say, look at the British Empire. And what was the debt to GDP when it started to actually fall up? Does anybody who was collapsed? It collapsed. No, I'm saying was it triggered by debt to GDP? And I think your answer will be in part. Again, I just think. They took on runes. They took on runes debt and they couldn't maintain their empire anymore and the whole thing collapsed. I'm just asking for some numerical specificity. All right. And if you have, you're not going to get there right now, the last time. The last time. The last time. There is a lot of numerical specificity. There is a ton of work that's been done on this. It's up to the pulling shit out of their ass. So tell us. So let's show that historically, the best way to manage the growth in a country is to have deficit spending be equal to or less than the growth rate of the economy of that country. So for example, if you're income, the tax revenue that's being generated by the government is equal to say 15% of GDP. You do not want your spending to be more than 17 or 18%. If the economic growth rate is 2% to 3%. That's it. If you do anything more than that, you're borrowing from the future to pay for today. That's the simple truth. Okay. So what happens? That the rates go up and the prices go up and eventually your currency doesn't work anymore. So you're making a bet. Read the book that I talked about last year. The most recent radio book. He goes through six stories with the economic data to prove it, the factual data, the history of what's happened with six empires over the last 500 years where this exact same scenario has played out. This isn't some random arbitrary story. Everyone. Everyone had the exact same perspective that you have when they were living in those days. But you know what, we're going to be okay because we're the reserve currency. And the world loves us. And we're the empire. We have influence everywhere. And they all lost primacy. And their currencies collapsed and they all broke apart. And that was saying that that can't happen in America. What I'm saying is you get so full-throated. I read that book. It's great narrative. But the numbers are brittle. Okay. They're fragile and they're mostly made up. Everyone can read it. I think they're not paying on that. So all I'm saying is, in the absence of numerical specificity, I agree with you that this trend is alarming and it's bad. I agree with you. And I agree that we should spend a lot less. What I'm saying is when you say to the world, stop spending because XYZ number is bad, you have no credibility because it's not something that you can actually back up. And all I'm saying is, if you could find a better logical argument, you would probably get a lot more people to convince a lot more people. I showed it to you. You're just being ignorant. You're ignoring it. You're saying you don't want to actually believe it. The numbers are there. Show me the numbers. Show them to me. I said, they get upset at us for fighting. I'll make you a PDF, I'll send it to you tonight. I promise. And I'll post it on our friggin things of people can watch it. All right. Listen, the group chat's going to be on fire this week. Add Sacks, final word for you. Okay. Final word. Okay. Final word. Please. Come on, then I've never got an into it before like this. But yeah, this is great. I think it's great. I think it's great. I still respect and love each them up. Go ahead. If you go back in history, you can see it. I think it's great. I think it's great. I still respect and love each them up. If you go back in history and look at debt to GDP levels, the only other time where anything remotely like the level we're at right now is right after war or two, when we had just saved the world from nozzism. Okay. That was worth going into debt for. You look today, what is it that we've gotten into this 130% debt to GDP? What is the $38 trillion of debt for? What have we bought with all that money? Huge amounts of it have been squandered. You're right. And Biden wanted more. If the court didn't stop him, he would have spent a trillion. You're forgiving. You're forgiving a bunch of students loans for basking even degrees or liberal studies when it happens. You're right. It's not real that I mean. It's right. It's degrees that proud. So my heart will be finished. The last point number one is that this money is being squandered at levels we've never seen before. And the squandering is continuing. It's not like we've reached a steady state. It just keeps going and going. The rest is going on. It can't precisely solve a second. I can't precisely say when it's going to break, but I do know it's going to break. The other thing, the point number two, is about consequences today. There is a phenomenon economists call crowding out where when interest rates go up, more and more money flows into the risk-free rate of return. And then that crowds out investment capital. And we've talked about it on the last pod where if the risk-free rate is 5%, and then like high quality corporate bonds are offering 8 to 10%, now equity investments must generate 15% and VC must generate 20%. And there are very few VC investments that can generate that kind of IRR. So what happens? The money flows out of VC and there's less money for risk capital. What drives our economy? Risk taking and entrepreneurship. Can I just say? Hold on a second. So this massive debt service that we have, which drives up interest rates, will crowd out the very kind of economic activity that the United States needs to stay on the cutting edge. Just rebuttal, rebuttal to the rebuttal to the rebuttal. No, you're so right. So why don't you just book end the argument exactly the way you just did? My point is not that you said it just before that we don't know at what upper bound these things break or don't break. And all I'm saying is every time you throw up a random number, you guys sound like the boy who cries wolf. OK? And you're shouting into a vacuum is just the advice that I'm trying to give you guys. I agree with you. I spend my entire days investing in and trying to figure out what is the risk-adjusted rate of return of the things that I'm doing. And I'm trying to tell you as somebody with some reasonable financial numeracy, every time I hear you or Radalia or somebody else say, this number is worth it. It all breaks and it doesn't. You lose a little bit of credibility. Then you go to this number and you're like, oh, at 127, we get your point. Let me put it back here to making up. No, let me put it back here to make up. How much is too much? How much debt can we handle and how much spending as a percentage GDP should we handle? What is the limit in your mind? And how do you decide what that limit can or should be? I think the honest answer is every time that I have been alarmed that we had hit a threshold that was meaningful. So for example, like I think under Obama, we passed a hundred and it felt very scary because I was like, wow, that seems like a demarcation. It turned out to not be a demarcation at all because it's relative to every other country and what they're going through. I understand that you don't want to believe that, but I do think that America's economic vitality is not an independent function. It is a dependent function on everybody else. We are relative to everybody else. If there's a different cosmos and a different planet somewhere, maybe this will all reset, but right now it's not. So we all trade relative to the United States. In that as much, I would like to just say, I don't know enough to guess what this number is. Focus on what David said, which is there are things that we need to do that we need to incentivize people to invest in extreme risk taking that create new businesses that move the world forward. You can have that conversation without belly aching and crying to mommy about a GDP number because every time you throw it out there, nobody knows what you're talking about. Nobody knows what reaction to have and everybody feels over time, David Friedberg, that you're crying wolf. So all I'm saying is I get that it's concerning to you and it creates anxiety, but every time you, and you probably, this is not the first time you've had anxiety, you probably had anxiety at 50, 75, 100, 125. Guess what? I bet you'll have anxiety at 150. I don't know what it means. I do know what sax means, though, which is that right now we have a risk free rate that's going to five. We have corporate bonds that'll be at 10. We have equity investing at the most risk taking, which is the early stage venture that has to return 25 and that is an incredibly high bar, but we need to do it and we need to do maybe fewer investments, quite honestly, with fewer participants, with less dollars that are more effectively put to work. Maybe this is a good jumping off point to talk about all the waste in Silicon Valley. And that stuff can happen without debating incessantly this debt to GDP number, which honestly, this is, this is the whole exact, this is the big advantage of it. All right. Freeberg sax and that we're going to move. Go. Freeberg sax. I've never had anxiety about debt to GDP. It's never been anything on my radar. The conversation I'm trying to have today is the amount of spending, the federal spending, including interest payments as a percent of the GDP, as a percent of how much we can tax to pay all those, to make all those payments every year. And so what I'm concerned about is the ballooning cost of paying out all the obligations, the federal government has to get out of here. But now you're saying something different than what you were just saying. If you were cared about only that, then refinancing the debt is an equally valid proposition and changing the duration. It's not the only expense. It's not the only expense. So interest payments are ballooning. In addition to interest payments, social security and Medicare payments are also ballooning and defense and control spending. And everybody has to have everybody. You add those four big categories together. You don't have any room left over. I get it, but you're talking about, you're talking about discipline in spending in defense. Great. I agree. I agree. What does that have to do with this other orthogonal thing you've been talking about, which is this random number debt to GDP? It does. Okay. Okay. Okay. Let's move on from that discussion. Let me have one final point. We can move on. So look, I think it's time for the final point. Go. It's a important discussion. Apparently. Okay. Look, in the interest of Bestie Harmony, I will partially agree at the point that Jamal is making, which is that for a long time in American politics, people have sort of cried wolf about debt to GDP. For example, if you remember way back in 1992, Ross Perot, basically based his candidacy on the idea that the US was racking up way too much debt. You know what debt to GDP was in 1992? 41%. Okay. So people used to care a lot about this. I remember when Reagan was president and debt to GDP was 30%. People were saying that he was this like, you know, wild spender. Okay. But I think that precisely because nothing broke at 30, 40, 80%, 100%, you then had the rise of this theory called MMT or Modern Monetary Theory, which said that the debts don't matter. If you're the reserve currency, you can print as much money as you want. And so people started indulging in this. And so now I actually think we are at a point. I can't say precisely where it breaks, but I do think that because debt to GDP didn't seem to matter for so long. I actually think we got carried away. And now we're at levels which are just going to be runus if for no other reason than our debt service is going to crowd out whether you want more guns or more butter in our federal budget. If you want more defense spending, more entitlements, you want more discretionary spending, there's no question that debt service is getting bigger and bigger is going to crowd out those programs. There's no question we need to spend less. I 100% agree with you. Okay. So what we're saying is we should spend less on defense because we have different ways of defending ourselves. That should be the logical argument for less defense. And your energy independence is defense and a balanced budget could be defense as well. If you look at the IRA, that was less than a trillion dollars over a decade. Okay. That matters. The potential to shift trillions of dollars a year in defense spending. Yes. Okay. Okay. Let me wrap. Okay. Let me wrap here for a second. Thank you. I'm going to go back to you. Actually during the Obama presidency, we had a thing called the sequester. I don't know if you guys remember this. Republicans and Democrats agreed that basically that because we had just had like these trillion dollars deficits because of the 2008 global financial crisis, they got together and said, listen, we're going to hold the line on spending and there'll be no increase on defense spending in exchange for no increase in discretionary spending social programs. And for a few years, we held the line on spending actually. And then of course, both Democrats and Republicans didn't want that for different reasons. And the sequester went away. We need to go back to something like that. There are two things that are just different. One detail. When you go and send a bill, so look, the way you pass a bill, right, you have to send it to the CBO to get scored. One of the things that I learned this week is that sometimes the CBO and they're not really empowered to actually tell you how things get offset. So for example, like if you have a medicine, what they will do is say, well, we'll look at the population level, how much would this medicine cost if it's taken by the population? But if that medicine, then all of a sudden has the potential to actually off-ramp you over here, those savings are not really factored in as well. So David, to your point, another way that we can refine how we build budgets to make sure that we're not overspending is to actually improve the toolkit and the data that like the CBO is given so that when they score things, they can actually look at the total impact. Like for example, like the IRA, again, one of the biggest benefits will be to defend spending. If we choose to make those cuts, you will be able to do it differently once we have no reliance on foreign energy. Okay, to wrap this segment, the first segment, which took 57 minutes. So obviously, really, well, I think it's an important discussion. Hey, Jake, how would you vote for a disantis to be promised this fiscal responsibility? Well, here's the thing. I am going to take a look at the candidates. I'm going to make the best decision in terms of what I think is that that's for the country. I'm answering like you say, I'm answering like you are giving no answers to this. It depends on if the Santas gives you everything you want, a fiscal policy. Why wouldn't you vote for him? If he stays out, if he's in favor of what we see right to choose for the first 15 weeks, that's Florida policy. Are you? Yes. You know, I would take a look. I would take a look. I honestly would take a look. I always call you not to vote for him. 15 weeks right to choose combined with fiscal responsibility. I was not to like. I'm voting for a moderate this time. I want to moderate and tax. Okay. But to wrap up here, the two things that matter, I believe, and based on our panel's discussion, the austerity and excellence are what are going to get us out of this mess. Here is what the platform seems to be shaping up. Our 2024 platform control spending. Everybody here thinks that's important. Energy independence. Everybody here thinks that's super important. Stop fighting unnecessary wars and maybe rethinking our foreign policy. I think we all agree on that. And the cultural focus on excellence, not excess. This is chipping up to be a little bit of an all in platform here. Great discussion. Everybody speaking of austerity measures, I think we should just talk right up top here about what's going on at Google. Chris Hone, I believe is how you pronounce his name. Chris Hone. He sent a letter to Google and Amazon. Amazon today, after already announcing 10,000 layoffs, they just said again, and he said, prepare for more layoffs in 2023. And these are not factory workers. These are white collar, high paying jobs that are being laid off here. They're surplus elites. surplus elites. It is definitely a part of the zeitgeist right now. So they're going to reduce headcount massively. But in this letter to shareholders, he points out, notably, not just, hey, Google needs to do a riff, a reduction in force. But he points out a more granular point that I want the panel to talk about here, which is he says, hey, you need to reduce the actual salaries at Google, the average salary being 296,000, $67% higher than an incredibly well-paying workforce. Microsoft, quote, we acknowledge that alphabet employees some of the most talented and brightest computer scientists and engineers. But these represent only a fraction of the employee-based, many employees are performing general sales marketing and administrative jobs who should be compensated in line with other technology companies. And he says we need to establish an EBITDA margin target, as you can see in this chart, and reduce the losses on other bets, perhaps increasing share buybacks as well. So what we're looking at here now after Facebook. What an incredible business, my God. I mean, the business is nuts. Freeberg, you worked there. What in this ring true to you or not? And then how many people does Google need to employ to operate the business and invest in the future of the business in your mind? They have 187,000 employees at Google. It's grown 24.5% rounded up, 25% year over year. They grew 25% year over year in their business. How many people need to run this business to have it aggressively grow? Look, I think there are two main drivers of the issue that Google, maybe Meta, maybe Twitter, prior to Elon's involvement, and really Silicon Valley as a whole, the bigger companies have faced. The first is the War for Talent. The War for Talent started, I mentioned this last time around 2004, 2005, because prior to that, there weren't as many grads coming out of undergrad with computer science degrees. I think 10% of grads in the Bay Area schools were finishing with computer science degrees. Today the number is like 60%. So around that time, the War for Talent led organizations, particularly Google, down a path of offering more perks and benefits to their employees, to create a workplace that was more competitive. And that ends up being a slippery slope, because then other organizations try and find parity. And then other organizations try and overdo it and push it even further. So this leads to both wage inflation across the ecosystem. But it's also led to almost like the acceptance or the allowance for degrees of complacency. And so I'm not saying that the workforce is all complacent, but I do think that complacency is forgiven. Some amount of complacency. I'm going to take a Friday off. I'm going to take two Fridays off. All of a sudden, I'm not working any Fridays. The other thing that's happened is as this workforce has aged, I worked at Google 20 years ago. And a lot of the folks I work with almost all of them now have families. At the time, everyone was young. And as the demographics of Silicon Valley has matured, you have more people that are less about killing themselves and giving everything that they have to their organization. And they're more interested in being with their families. And now spending less time at work, especially in light of the fact that compensation has ballooned to a point that you can now live a very, very comfortable lifestyle. And you don't need to have a big payday in order to be able to take really good care of your family, which was the case as a startup. And then the other issue is just one of innovation. At Google, if you work on a new project and it doesn't work, there's no loss. You still have your job. And they've started programs where they'll give you equity and you start up ideas or they'll give you all this stuff. So they'll give you upside if you win, they'll give you bonuses if it succeeds. But there's no downside. And so the pain and the burn that you would feel as a startup founder or as someone building a new business isn't experienced to realize. And I cannot, I don't need to tell you guys this. But for anyone else that's listening that may not really be fully aware, the lack of pain, the lack of risk, the lack of downside, the lack of having no safety net and falling through the pits, removes all so much of the incentive to succeed and to drive and to innovate. And I think that's become part of the complacency problem that's caused larger organizations to simply say, let's throw more heads at the problem. And when you just throw more heads at the problem, you have more of kind of talent or problem that I mentioned number one. What is the average salary? 280,000? 300,000. Round it up. Yeah. That doesn't, I don't know if that includes benefits, whatever. Let's just call it 300,000. Yeah. And by the way, that doesn't mean that those people should all get fired. But I think it speaks to the fact, I think they're wonderful people. Some of my best friends work at Google. It's a great organization. People do incredible work there. But in terms of return of dollars invested as a shareholder, that's the question. That's the analysis. That's the scope that the shareholder is looking at. If do I want to spend a dollar to make a dollar five or do I only want to spend a dollar where I know I'm going to get a dollar 80 back? And so if you just bucket it where the dollars are going, you would end up saying, you know what? I'd rather just focus on the places where I spend a dollar and I get two dollars back or dollar 80 back. And I don't want to do any of the stuff where I spend a dollar and make a dollar five back. And that's called ROIC or return on invested capital. And that's includes return on invested human capital. And so the analyst in the stock that that's an investor in the stock will look at it through that lens. Whereas everyone that's working there is still contributing meaningfully, they're still doing valuable work. But in terms of return on invested capital, a good chunk of the projects are not driving the majority of the value. A minority of the projects, a minority of the headcount is driving almost all the value. I mean, if you sensitized it to what you said, David, if it was just 75 or a half that number, then the stock goes up 35% overnight. And if it goes up to the full number, the stock goes up 65% overnight. I think that's totally feasible. And then I think what you do is you take $10 billion a year and you have a high accountability model that you speak to the street about. And you say, here's how we're going to hold ourselves accountable to investing the $10 billion every year. And not just have everything be a nebulous 15 year project. And then it's always a 15 year project and you're always just burning cash to go after those projects that are highly nebulous. If you had to steal man the other side, I think the argument would be, I would say they would make probably three arguments. Argument number one is like, look, don't get overly distracted by other bets because it's a small category of spend and we've contained that cost pretty rationally relative to the rest of the core business. The second thing that they would probably say is there's an enormous amount of work that is never seen by Wall Street that explains how good our service is, whether that's in early iterations of technical capability like GFS and Bigtable to things like TPU, to things like TensorFlow. And all of that builds up, all the things that DeepMind does, all the compute we have to throw again search to support that. So I think they would probably say, well, people probably don't have a great sense of today that it's not just 25% of the team that's required. And then the third thing is what they would probably say is it's very hard to explain but Google has all kinds of other things that they do for free to create the ecosystem so that the internet works well. I heard this one thing where somebody was explaining that Google is like the DNS server, Google is the time server and all of this stuff they do for free. And all of it is just about making the internet work more efficiently and that has some costs. So that's probably how they would steal man how to build back up to some number. But it's probably there's still a gap between that number and David in what they're prevailing headcount is. Yeah, I think that's totally true because the infrastructure team led by ours is the most remarkable engineering organization on planet earth in my opinion. And they have laid fiber lines across the Atlantic. They have built their own data center infrastructure, their own switches, their own silicon, like everything is built by this team from the ground up from first principles and it gives extraordinary modes and advantages to the business. It makes the internet a better place. It allows ultra fast, super cheap YouTube video viewing across the internet. I mean, there's just so much of these core advantages in the business. But if you look at the headcount over time, you have to ask yourself the question, you know, how many of these investments that are core are really, you know, captured in the headcount that blossomed from 2013, 47,000 people. So that the business has gone up in headcount by 4x in the last nine years. One of the things that Jeff Bezos was always so incredible at and I saw him give a speech on this at one point. Bezos gave a speech that I saw and he said, we are really good at failing. And he showed all these projects that Amazon tried and he said, we tried a nine, we tried to do our own search, we tried to build our own cell phone, the fire phone, we tried to do this, we tried to do that when they don't work, we kill them. And when they did work, they became 100 multi hundred billion dollar enterprise value creators for them like AWS, which was one of these projects. And so Amazon was so good at taking the stuff that wasn't working, knowing when it wasn't working and ending it. And they were still able to drive an innovation engine. One of the challenges I see with Alphabet is that they are so good at bringing the best talent to work on these innovation problems, but where they're not good is saying, you know what this isn't working, it's time to move on. And if they did just that, if they added that one disciplinary capability, then I think this, as you said, the market cap would go up by 600 billion dollars. What about this? I just want your reaction to this thing that a lot of people whisper in Silicon Valley, which is part of what the big companies should do. It's part of the positive game theory is to not let these talented people actually leave. It's better to pay them 300,000 or 200,000 or whatever and stay at Microsoft and Metta and Google or whatnot. Then go off and build a startup that could actually then disrupt them. And so, you know, it's a cost worth bearing because it's actually mitigating strategy. Yes, it's a blocker strategy. Yeah, but I think about that. Super interesting idea. I think that the people that are likely going to actually be able to execute on that are going to even do it anyway. Right. They're surely aggressive entrepreneurs are not going to be. Look, I was not super, I had made a little money when I worked at Google, but I was not super wealthy and I left the last, the vast majority of my stock options and RSUs on the table when I left Google in 2006. Here's our climate core because I could not help but do that. I could not help myself. I had to go do that thing. Of course. Kind of people that are going to succeed in entrepreneurism cannot help themselves. It doesn't matter how much money is being thrown at them. Here's the chart. Basically, these companies have been correlating their spend and their headcount to their revenue. Not what's necessary. You look at alphabet total employee changes 2018, 95.36%. I mean, I don't know. That looks pretty good to me. Revenue 132%. Yeah, but that doesn't look like they were massively overhiring if you're asking me to. Totally. What are you guys talking about? So maybe I'm wrong. I will say, look, a big part of Larry Page's decision to shift the company from Google to alphabet was he believed that the core business at some point would ultimately be disrupted, that the core advertising engine was going to be disrupted and there wasn't going to be the sustaining long term growth advantage in that business. Maybe he's been disproven or maybe it hasn't been dis, it hasn't been proven yet, but the concept was we need to find the next Google and we need to build the next Google. So we want to allocate capital within a portfolio of bets and have some number of those things. Maybe not all of them. Maybe not even a lot of them. Maybe just one or two of them turn into the next $100 billion revenue line for us. Now he always said that that's going to take a long time. He definitely underestimated the quality of Google search and the dominance of it. Now it's probably, it probably stands to reason that if we have enough innovation at the fundamental model level in AI, particularly like a bunch of really powerful multi-modal models, the new form of search can disrupt Google, but the problem is they are so ahead of everybody else with respect to those models as well. So the real question is, even that next big leapfrog isn't going to happen without billions of dollars of capital invested and the most likely folks that are able to do it, I think open AI at some level, but again, they're going to always have to raise money from other folks. Google can self-fund it and it makes an enormous amount of sense to drive that technical mode. So it just seems like very major. What are we doing? What are we doing? Are they going to make the cuts or not? You think they'll have the ability to not make cuts and just ignore a 6% shareholder trimoth or are they just going to make them and then we're going to go on to your assets? I'll tell you the dynamic. The dynamic will be how much Ruth is able to convict. Ruth Porat is the CFO and she's hardcore. She's hardcore. Incredibly, everyone on that leadership team is incredibly impressive, but she has a very particular lens, a Wall Street lens and she understands what the shareholders are thinking and looking at. She will convey these points to the board and there will be engineers and Sundar as an engineer and he's a very good, he's very good at gathering the different points of view and having balance around this and he will share his points of view at the board. I think ultimately it will come down to my guess is like we just talked about some portfolio allocation decisions, which is how much risk and how much beta, how much alpha and do we have the right mix in our portfolio and it is inevitable there's going to be some cutting. I think that there will likely be some reduction 5%, 10,000 employees. That seems like the number that people are going with. Let's see. Okay, Sachs, what you're taking on austerity measures and moving to an age of excellence and efficiency, which is happening inside of the tech industry as we speak. I think Freeberg's right that these companies could operate a lot more efficiently. I think there's an economic argument there, but I want to up level it and talk about the cultural aspect of this for a second and also bring in two of the huge stories this week, the SBF story, the interviews he did within your times and Vox and then this hysteria around what's happening at Twitter. Look, I think that there's something clearly as hit a nerve here in this last week where you have all of these employees who have voluntarily left creating all of this drama. And Antonio Garcia Martinez had a good quote about this. He said, what Elon is doing is revolve by entrepreneurial capital against the professional managerial class regime that otherwise everywhere dominates and that same PMC, which includes the media is treasoning it as an act of Les Majestes. There's another version of this that came out a couple weeks ago. And by the way, Les Majestes, Dave, just means like you're insulting the monarch. Yeah, you're insulting the crown. There was a good one here. There's an article on Compact Magazine a couple weeks ago where the editor Jeff Schill and Burger tweeted, the layoffs at Twitter are no different than what's happening across Silicon Valley. But because the ideological antagonism of the professional left to Musk, they make clear what's a stake, the collapse of a jobs program for surplus elites. And then there's a great quote from this article, which again, that's so hard hitting. I know. It's a deep nerve. It hits a deep nerve. I'll get into a lot. It hits differently. Yeah, exactly. So quote from this article said one of the biggest and least talked about social questions in the West is how to economically provide for our own modern version of Francis impacunious nobles. That is how to prop up high status people who can't really do much economically productive work. Wow. I mean, like this was this was really brittle. Yeah. Yeah. So I think this is really hitting a nerve because the fundamental quipro quo of our civilization is that in order to achieve economic and social advancement, you go to college and get a degree and you submit to voluntary reeducation of yourself at one of these woke madrasas, one of these reeducation camps. That's a good pro quote. And you get some people. Did your punch up guy write that intro? No, no. No, this is this is right. I believe for a while now there are some number of people who get useful degrees like computer science or engineering, but huge numbers of people get degrees in like we talked about the basket weaving or whatever the, you know, politically correct degrees. And they graduate with a quarter million dollars in debt and no marketable skills, right? And right. And what was popping up all of these people were these fantastically wealthy monopolies tech companies that were hiring huge numbers of these people. Now all of a sudden we get to a point where we're in an economic recession and these companies are starting to do layoffs and they're starting to do a little bit more soul searching about who's really adding value. And people are starting to get laid off and I think this hysteria is coming from a place of deep insecurity. You had all these people go to college. They did not learn critical thinking skills. What they learned was that listen, if we pay lip service to the right platitudes, then we will have career advancement. And now they're learning that that may not be true. And actually the person who's pulled the mast off this entire regime is another than S.B.F. and he did it in an interview with Vox and we have to go to this. Okay. He's been raised. He's the devil, but he basically pulled the mast off this whole civilization, quipro quo. That is a sham. Okay. And here's what he said that the Vox reporter said you were really good about talking about ethics for someone who kind of saw it all as a game with winners and losers. What did S.B.F. said? Yeah. He, he. I had to be. It's what reputations are made of to some extent. I feel bad for those who get fucked by it. Basically all these people who incurred a quarter million dollars in debt and think they can just spousal the right, you know, platitudes. He says by this dumb game, we woke Westerners play where we say all the right shabbles us so everyone likes us. How stupid does the New York Times feel right now? How stupid do all these nonprofits and foundations who received all this money from S.B.F. He played them all he had to do was say the right words that say the magic woke words. And they would basically cover for the most enormous grift that's ever been perpetrated. That is basically the quipro quo of our civilization is be woke and you will have indefinite career opportunities no matter how I mean, virtue signaling would be another way to say it. I mean, it doesn't necessarily have to be the work woke ideology, but virtue signal and give donations to people. This has been a playbook of grifters for a long time. Bernie made off gave a ton of donations and he used the same playbook. But how many donations did he give to the Republican Party? None, they're not part of the regime. How many conservative politicians? Yeah, I'm not sure this is a pollot of course. I don't know that this is not a critical point. I'm not making a political point. I'm making a cultural point. Okay, good. Who were the charities that he donated to? It was all the right woke causes. No, it was not. Well, the pandemic one was not woke. Yes, it was. It was about the pandemic stuff. Kidding me, freaking out about the pandemic. No, no, he wanted to do the pandemic. The pandemic, the lockdowns, has he explained it to me? The neurosis. It was the new news. No, no, no, that was not what he was funding. I actually talked to him about this when I interviewed him. He said he wanted to do pandemic prevention and early warning systems and wanted to invest in strategies to fight the next pandemic. Listen, and definitely freaking out about COVID is was the central neurosis of the professional managerial class for the last couple of years. It is not what he was funding. I just want to make that point. Whatever. I mean, he wanted to prevention. You could frame it as not, but I actually literally talked to him about it. He wanted to do pandemic prevention. The future is still money. He wanted to steal money from California taxpayers via ballot initiative to fund his brothers organization, which would have dispersed the money in. Who knows what ways, probably not legitimate, out of a profess concern about the next pandemic. Why? Because the PMC is neurotic about the last pandemic. Come on. Thank you. I just have a point. Of course. Yes. Thank you. It's pandering. I understand. It's absolutely pandering. Now listen, why did this work? Why did this work virtue signaling work? And again, why were they only charities and causes that appeal to the sort of the left? It's because they're the ones with the power in our society and in our culture to define what virtue is. When you're virtue signaling, who are you signaling to? The people with the power to decide what is virtue and what is vice. What is why people go to work at the New York Times? That is why they basically go into all these influential jobs at nonprofits and foundations. They're the ones deciding what virtue is. They're the doomsethe ones who are full. And now what's happening is there's an economic consequence to it, which is it is coming out. These people have no marketable skills and companies are tightening their belts. And now all of a sudden they're starting to become deeply insecure about their own future. My comment is that when you look at Twitter as an example, Bill Gurley had a really powerful quote as well, which is when companies cut, they don't cut nearly enough and they estimate and underestimate how resilient a company is. Back in Twitter had 200 million MAU, they had only a thousand employees. And so clearly at that point they knew what they were doing. And now the business has increased in MAU by, call it 50% to 300 million, but the employee base increased by seven and a half X. So clearly something is misaligned. And I think the thing that people are going to find out is, by the way, with contractors probably 12 X. So I think that, well, there you go. So I think that the thing that frustrates a lot of folks that are leaving or that are trying to throw bombs is they don't want Elon to be right. Because I think to David's point, if Elon is successful, he has uncovered this very uncomfortable truth that was frankly hiding in plain sight, which is that many of these technology companies using technology get so much operational leverage that they have some enormous efficiencies. And then it's only a decision by the professional managerial class to reward themselves with fiefdoms and kingdoms of employees and the serfs that work for them. I mean, it's really quite crazy if you think about it. Well, Friberg made this early on in the history of this podcast. Well, hold on, I want to add to your position. Friberg says something that adds to your position, which is early in this podcast, he said, the nature of organizations is they want to grow. And that's government or even these departments you're talking about. Anybody who runs a department is never going to say, my department needs to be 20% less so we can hit the bottom line. They're going to say, give me 20% more because everybody else is getting 20%. Go ahead, Jim. And then if you if you if you layer in the Charlie Munger quote, show me the incentive and I'll show you the outcome, you can understand why because the professional managerial class is rewarded by compensation that is actually independent of delusion, right? Because if you look at these compensation plans, all of these professional stock owners, they complain all the time about stock base comp, right? And these companies have budgets between two and five percent a year that they give away. And so you have this situation where an engineer or an engineering manager or a sales manager or a marketing manager in success at a thousand people can grow to 5,000 or 10,000. Their compensation doesn't change in any other organization. Their compensation would change because let's say that it's a percentage of the profits that are distributed unless the company is phenomenally growing. Eventually, you'll see it in the bottom line of what you take home. And so these folks are incentivized to have these status signals of value. I have a 50, you know, you guys have heard this. I have 50 percent team. I have a 100 percent team. I oversee 3,500 employees and everybody is conditioned to think, oh my God, that's incredible. You must be really important. And so we're going to sort of now see in real time a questioning of that belief system. And if Elon proves to be right, it's a really important decision point for a lot of other technology companies because if you are an 80 to 90 percent gross margin business built on software, maybe you have a bigger responsibility than you've discovered to date to your shareholders and to the existing employees to find the efficient rate of return, right? What is the efficient frontier of headcount? The other thing is it now allows, let's just say that now Twitter goes to a making up a number 2000 employees after this whole Google form thing. The great thing about the 2001 employee for the 2000 employees and for the shareholders is that that 2001 employee is a 100 percent aligned because they're coming into something eyes wide open. And I think that that's also an interesting thing that isn't getting enough recognition is he's putting out there what he stands for, this hardcore culture irrespective of whether we think it's right or wrong, all the people that stay are voting that it's right. And you know, as long as it's not breaking any laws, he's allowed to do that. And so if people now want to join that organization, they should be allowed to do that too, just like the people who don't want to should be allowed to leave. Sachs, you and I came up and we talked about this. I think on last week's show, or maybe it was two weeks ago, we talked about what the expectation was in Silicon Valley, at a startup, what startup culture was, in terms of just the effort that was required to build a winning company. And we all said 60 hours a week was the baseline. That's something that has been, I think a lot of people, you mentioned this, Trimoff, people working two jobs for 30 hours a week and taking two salaries from two of the fan companies out of around that. Check out. Go into TikTok and search for engineering salaries. You'll see some of the craziest TikToks kids are making 350K, working 30 hours a week, it's nuts. And so I think we're going to have, is that I think we're going to have a cultural divide here. There are going to be a series of companies that say this is classic Silicon Valley. We're going to, we're going to crush it. We're going to work aggressively. We're going to put in 50, 60, 70 hours a week and we're all going to benefit from that. And then there'll be another class of companies that says, hey, no, we want to have a more lifestyle business. And if people want to work 30, 40 hours a week and they contribute, we don't need to be perfectly efficient. And you know what? The playing field of, the playing field of capitalism will show who is right, Sachs. Yeah. I mean, look, I actually went out town a few days ago so I wasn't keeping up with every detail of what was happening at Twitter. And I started getting all these text messages about how Twitter was dead or dying or whatever, like the site had been unplugged or what have you. And I'm like, what is going on? And you know, you tweeted this morning, hey, is this working? And I'm like, yeah, like, yes, it's working. Like, yeah, this morning is this working? Did I really get this? And so my tweet went through. Yeah. So I came to learn what they're talking about is that all Elon did was give a voluntary offer that if you didn't want to stay, you could take three months' severance. Now remember, last week they had a riff, you know, which was basically economically required in which they gave employees three months' severance, which is 50% more than what he had to. It was generous. Now, it seems to me that what if you're one of the employees in the other half that made the cut, but yet you're not really motivated to stay? And maybe you don't really want to operate like a startup. I mean, Elon's basically saying we're going to go back to working and operating like a startup. That means that you might have to work nights and weekends like a startup. What if that's not what you signed up for? You may be sitting there at Twitter saying, oh, man, I wish I got a riff. Well now Elon is offering you the opportunity to take the same package. Yeah. So I'm like, how can this possibly be a bad thing? It's actually the great management technique that Tony Shay, Rustin Peez from Zappos, created. He would say when people went through their first couple of months of training, he'd say, now, if you don't want this job, I will pay you. A month's salary. This is on their first day after they went through training their first day on the job. He said, okay, now that you've gone through the training, I'll pay you. I think it was $5,000 or $3,000 to not take the job. And something like one out of five people would do it. And so he said, listen, I don't have to fire them later on. This is going to make my management easier. It was it's actually a kind thing to do to give people the opportunity to read. I understand how giving employees an option to opt out. Well, it's because you don't want it on on board. The reason people are upset, let's be honest, Zach, is some people live to work and some people work to live. And the people who are working to live find it crazy that hustle culture even exists. And people who are part of hustle culture, like the Four People of this podcast find it crazy. It's just working. Hustle culture is working above the hours you're being paid for. That's basically what hustle culture is. That's what you're getting paid for. That's when you're getting paid to sell. That's how most people would define it. It's actually not you work for 40 hours. The salary means you get your job done. Okay. That's how we look at it. That is not how other people look at it. And you'll do. Oh my god. Look, there's no question that Elon is going to raise the whole world. If we lose American primacy, it's because of that. Not because of debt to GDP. I agree with you. I'm just giving. I'm still me on the other side. I'm still me on the other side. People look at their salary and they look at themselves as getting compensated for 40 hours in every hour above that. But do you know how this generation's mind looks at it as hustle. It's all culture. There are people that are working with it. There are people that are working 60, 70, 80 hours a week as a teacher to make 30, 40K firefighters working on oil rigs. And to hear somebody hustle culture at a startup where you're making 350 grand and you're upset because the matcha let ran out or whatever, it's just so out of touch. I'm not disagreeing. Yeah. Look, my view on it is that people need to love their jobs and love what they're working on. way to be successful is to work hard, but the only way to work hard and be happy is to really love what you're doing. And if there's a lot of people at this company or others who don't really love it and they are just there to pay the bills or whatever, then I actually think it's extremely generous for Elon to be offering them a package. It's the right thing to do. It's the right thing to do. I don't understand how giving them an option was anything but positive and yet the media has gone berserk on it. Meanwhile, while giving SBS a virtual pass on the largest one of the largest frauds in history, it made off level fraud. You read the newer times. A legend. No, there's no a legend, it's come out. He loaned himself like this is just one data point. He loaned himself a billion dollars and he loaned the head of engineering $500 million off the balance sheet. Nothing to see here. What possible justification and you know an SBA for the reason to say the word to say the hard part out loud the reason why these same publications are not covering this is because they were complicit in his reputation laundering. The New York Times before that article put out this other puff piece where they talked to him and they were excoriated on Twitter because it was like not a single question about the fraud or ledger fraud. A legend. A legend. A legend. A legend. A legend. A legend of obviously a legend. A legend. A legend. A legend of obviously a billion dollars. suddenly goes missing and no one knows where it is. I'm only just to call that a fraud. You're like to jump the fence. They're busy scrambling to sort of save their own reputations, which is why they are trying to like hide the cheese effectively and point over here and say, hey, look at what's happening. Elon sent an email where it's only one button. Yes. I mean, let's be interesting. I love that meme that Elon tweeted out. Do you see that? No, no, no. No, no. No, no. No, no. Oh God. You know, this is all going to get re-blogged. It's too funny. It's too funny. It's too good. It's too good to not put up on the screen. I mean, that nature photographer is the New York Times. It's... Okay, yes. People we don't see it. There are two rhinos that are fornicating. And they're fornicating. And copulating. Yeah, the copulating. But right now, fornicating is like it's two two thousand pound animals copulating 10 feet behind a nature. Please, it's your mom. You're making it worse. Behind, I'm trying to be the word. A nature photographer. A nature photographer with a $6,000 tell of, you know, photo lens that can shoot across the entire South of the city. But he's 10 feet behind him are the two rhinos. The two rhinos that says FTX losing over a billion dollars of client funds. And the photographer is centers calling for the FTC to investigate. No, but the important thing is the photographer is pointing in completely the wrong direction. You're wrong direction. He's totally missing the thing that is obviously right in front of his face. Right. That he should be photographing. Yes. He's using that long telephone. And that is that is the New York Times that Senator Warren. That's the point. The point the arrow in the right direction. Yes. Point the camera in the right direction is the point. I just want to point out my one biology tweet on this in this regard. Oh God. I did. The cable of one fleet. That's going to be 76 tweets in a storm. I'm going to pluck your right. It's really good. Of course it's a tweet. It's biology. He says, think of a regulator as a binary classifier. What's their false positive and false negative rate? BTF, Bitcoin ETF blocked for years FTX ignored for years. The actual filter is not, is this a scam? Who's spicy? It's not consumer protection. It's reelection. Oh, that one is a big banger. That's another one. Ryan. Can young Spielberg make a banger out of that? It is a banger. It's not consumer protection. It's reelection. Listen, if you are part of these interlocking power structures that we call the regime, it's the New York Times, it's the regulatory state, it's a democratic party, you get a big pass. Hold on. Let's be clear. You're your team now controls the house. Your team now controls the house. Who's team? David. David. David. David. I understand. But starting in January, there's any amount of congressional. How's your hunter buy investigation? You're right. Let's do it. Hold on a second. Let me say this right now. The first investigation by the house of representatives needs to be SBF and FTX, not Hunter Biden. SBF makes Hunter Biden look like a piker. I mean, Hunter Biden was what a couple million dollars of grift. This is 10 billion dollars plus a grift. So I think it's good. It also touches regulators. It could touch. It's a big. It's a big. It's a sweat failure. It's a sweat failure. It's a sweat failure. It's a sweat failure. It knows how to party. So let's be honest here. I mean, that is the issue. I just think the quote of the week goes to John J. Ray. He's FTX's new CEO. He famously oversaw the liquidation of Enron. And he says, I have over 40 years of legal and restructuring experience. I have been the chief restructuring officer and or chief executive officer in several of the largest corporate valuation history. I have supervised situations involving allegations of criminal activity and malfeasance and run nearly every situation in which I have been involved has been characterized by deficits of some sort in internal control. Shrugger joint clients, humor resource, and sister-tary, never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. This is the person who oversaw Enron saying this is unprecedented. Enron was the previous unprecedented situation, which is now being framed as manageable by none other than John J. Ray. What a great name. Congratulations on being the chief restructuring officer of FTX. There was an article that showed Nick, if you could please throw the picture up on the screen of all the people that invested the universe of SBF. Oh my god. And the article headline was, it's a who's who of VC. In my comment is actually, no, this list is a who's who of people who did no diligence. Yeah. So ever. And I just want to call one person Nick. If you look at the Alameda research, this this firm called One-inch J. Cal invested in a firm named after the length of his penis. Come on. Come on. Maybe come out of the cold pledge. Okay. But you're that cold pledge. This shrinkage. Shrugger. You know this shrinkage. Was that an S.P.V.? Why did you ask P.V.? Listen, I'm a shower, not I'm a grower, not a shower. All right. Listen, you guys coming at everybody knows coming out of the cold plunge. It's it's not going to be the best performance for any of us. What a name. What is that? We've lost the script on the show. Jesus, please. We got a rap. I mean, it's just too much. Do you guys not think that all these investors receive audited financials and you know, they got they had a lawyer, a legal firm that represented these financials? Did you guys see who FTX's auditing firm was? It's called Prager Metis and it says it's based on the metaverse. This is like the Hollywood upstairs medical college of the auditing world. Their address was in Decentral land. Bernie Madoff, I think his brother-in-law ran the accounting firm that did their audits, right? It was like and it was in the dead floor in the lipstick building. It was in the same building, right? On the lipstick building. They have like a secret floor with nobody on it. I like look, I mean, even in that case, people relied on an audit from a CPA that said here are the numbers and those numbers were fraudulently conveyed and I think that there's probably some you know, some forgiveness necessary here that there was maybe. There may have been serious fraud that took place and I don't want to be too disparaging of all of this. I agree with Fred Bergen. That work of these investment firms made an investment and they all got duped and the LP's got duped and so I don't think this is just fundamental. I can't say you're a diligent. So we we we were part of the process where they tried to show. Yeah, I have to be careful. My lawyers remind to be that we're still under NDA actually with FDX. So but what I can tell you is we did not get any financials. So we were verbally. When you asked for it, we sent a two-pageer of stuff. Anyways, I can't say more than that. Okay. Yeah. Don't get yourself in trouble. Well, I want to say something else, by the way. Last Friday, David and I were at Uri Millner's birthday party and there was a chest tournament and Magnus Carlson was there and anyways, David was in the finals. Okay. It was David and his partner. Look at the smile on David. Hold on. Wait, I'm getting to a great punchline versus Magnus Carlson and his partner. David won. Oh, wow. My partner was, was I say Uri's daughter who I think is probably what like ten dollars. Oh, she's incredible. Yeah, she's like sucking in the America. Yeah, she's good. She's incredible. Anyway, yeah, thank you to Uri. That was a really unique in front of anyone's partner. Chest. My partner was Pogna Nanda, who's an Indian grandmaster, who's like a superstar. Yeah. And look, playing, you know, with Magnus Carlson was obviously, that was a real thrill. Yeah, there you go. So when you rank this with the birth of your children and your marriage and this, where would that rank on the scale of one through five? This is a part of your part, kids. But you know what? We can get the smile. Sack just happy. Oh my God. I haven't seen him that happy since. Since Trump. Guys, look at, look at that document. I just say a lot before, before we got a wrap to say, but I want to show you this. Basically, I pulled all IPO since 2020. So this excludes all SPAC mergers and real estate finance, material, energy, utility. So kind of the big bulky private equity type stuff. So it's mostly tech consumer 627 IPO since 2020. More than half of them are basically half of them are trading at less at point two times the total cash they've burnt. So they're, you know, you can kind of look at total lifetime capital burned by these companies in the retained earnings line on the balance sheet. And so when you pull out the retained earnings that shows you write how much money they've burnt over their lifetime. And so the total money burnt by half of these companies is about $107 billion. And the market cap of those companies is only $26 billion in aggregate. So a point two times return on capital invested two date in terms of enterprise value divided by total capital invested in. Let me say, let me say, let me say it in English and you tell me if I said it right. So 627 non SPAC non real estate non finance companies went public. So basically 627 start companies went public since 2020. So two years. Yep. And of those 627 tech companies almost half or 300 of them 48% of them are today worth about point two times all the money that went into them. Yep. Yeah. Wow. Yeah. It's tough. And then on the other half, the other half is is the ones that have worked. So this kind of goes back to a power law point. But like as a venture industry, you think once you get a company public, it's successful. And the reality is that many of these companies from a from an economic perspective are still not successful. It looks like half and perhaps much more if you include all the SPAC mergers, which is another couple hundred. And I would guess the vast majority of those need this criteria are trading at less than the total cash that's been invested in them. Freeberg. This speaks to the age of excess that we just went through. We just weren't as efficient as we needed to be in running these companies. And now we're in the age of efficiency, austerity, excellence. But it's also constant. That's this great setup for a rebound, isn't it freeberg? Like I don't know. But look, I mean, one way to read this, I was speaking with someone who I, you can bleep him out. I was talking with two weeks ago, three weeks ago. And he showed me in their, how much should I say here? This is a big investment firm and they have a big growth portfolio. Less than they have about 160 investments, 180 investments in their growth portfolio. 85% of the returns are generated by 10 companies of the 180. And that's in the growth portfolio. These are supposedly de-risk businesses. The power law exists even in the power law exists in growth. And as you can see here, the power law exists quite dramatically post IPO as well. So, as you can see here, only 9% of these businesses have generated positive earnings over time. 43% or about half of them are worth more than the total cash that's been invested in them. And that multiple of the cash is- This is a production more study here, by the way. This is your done by your firm. Yeah, yeah, yeah, it's off public data. So the, the multiple on the value of the companies that are worth more than the cash invested is 5.5 times. So in aggregate IPO since 2020 are worth 4.3 times the total cash that's been invested in them over their lifetime. But the crazy statistic is half of them are worth significantly less than the cash that's been invested in them, only 0.2 times. So the power law dominates both early growth and clearly being public. But I think to your point, Jake, it also seriously speaks to the amount of excess and it's really going to rationalize probably based on the conversations we had today about Twitter, Meta, Google, Amazon, Amazon, and this as well. So certainly- The good, also the good news series- I think that's happening. Freeberg and correct me if I'm wrong here at your mouth. We want more companies to go public and have that discipline of being a public company. This was the big critique of the squiret era of companies taking 10, 12, 14 years to go public. This is going to be a strength for these entrepreneurs to have to fight it out in the public market, under scrutiny. Correct, Jamoth? 100%. I think like the Chris Hone letter, I think that there are a lot of VCs on boards of companies who would love to say the equivalent thing to their private company. Private company, yeah. And part of the dynamics, as Freeberg just said, because it's such a power law and people believe that you being with other VCs are really important, it turns out that most of these VCs abandon their role on these boards and don't really hold people accountable because they're worried they'll affect their deal flow. And the problem is it's a negative reflexive loop. So these companies do poorly and then as a result their viewed is not an effective board member, and so the next deal they get is a poor and poor quality. So the highly correlated portfolios in Silicon Valley are the ones that will get torched because most of those companies will receive very poor or no advice. And then the few that will get to the end is because they have hard nosed people on the board that will force them to make really hard decisions. Yeah, that's it. Uh, sacks, any thoughts here on the public market? Sorry, wait, last thing. And by the way, Sequoia, who has had exceptional returns, has always been known to be hard-nosed. You know, a lot of people, the critique against Sequoia from founders would, would be that, oh, if I take Sequoia's money, they may fire me. Well, yeah, because if you're not good, it's the mission of the business is bigger than your ability to be the CEO. And so, you know, you just have to remember like there is no free lunch. We were not giving out free money here for you to go and swung one direction too far. They used to, the tradition in Silicon Valley used to be, you always replaced the CEOs, the founders with a professional CEO and Google being the turning point there or maybe the last one. And then it became founders will control their companies with super voting shares forever. Hopefully the pendulum now swings to some equilibrium sacks. What are you seeing in private markets? The, the start program for surplus elites is going away. The jobs. The TLDR, the jobs program. The, the, the professional managerial class is under pressure. Yes, that's for sure. If you went woke, you may go broke because you have no marketable skills. Man, you're a bunch of guys. I'm sorry. He's made me. These one liners. Of course, you got somebody in the room with that. I was a bunch of guy. Dean's, I think he's got somebody standing on myself up. Who Jackie, the joke, like Jackie, the joke man, Marling, handing you a little note. All right, four. The Sultan of science, David Friedberg and also the executive producer of all in summit 2023 and the rainman himself, chess master and champion David sacks as well as the dictator. I'm going to go on a little road trip. Aren't we dictator? A little road trip for the dictator and J. Cal. Yeah. It's going to be fun. I am the world's greatest moderator who couldn't control the panel today. I'll do better next week and we'll see you next time. I'm happy. Thanks. Thanks, Kevin. Thank you. Thanks, Kevin. Bye. Bye. Bye. Oh, man. I'm going to have to ask you to meet me at the police station. I'll just get a room and just have one big huge or two because they're all just like this like sexual tension but we just need to