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.

E20: Robinhood wrap up, Insiders vs. Outsiders, California's failing report card & how to fix it

E20: Robinhood wrap up, Insiders vs. Outsiders, California's failing report card & how to fix it

Wed, 03 Feb 2021 05:58

Follow the besties:

Follow the pod:

Intro Music Credit:

Intro Video Credit:

Referenced in the show:

The Insiders' Game by David Sacks

ABC News - CA EDD admits paying as much as $31 billion in unemployment funds to criminals

Forbes - Why California Is In Trouble – 340,000 Public Employees With $100,000+ Paychecks Cost Taxpayers $45 Billion

Rescue California - Recall Gavin Newsom

Show Notes:

0:00 Wrapping up the Robinhood situation: major lessons learned, Elon’s Clubhouse interview with Vlad, is the cash infusion to Robinhood a trade of the year candidate in 2021?

20:21 Understanding short positions - why do firms short, more transparency & margin requirements

26:08 Sacks on the growing insider vs. outsider theme in politics & finance, importance of institutions in chaos

31:45 Breaking down California’s report card, why the state is such a mess, what structural problems plague it & how to fix them

1:02:04 Chamath’s Aziz Ansari story, Governor potential, top ways to save California

Listen to Episode

Copyright © <> - all rights reserved

Read Episode Transcript

I'm going to wake you. 50s. Let your winners ride, Rain Man, David sat. We open sources to the fans and they've just gone crazy. We can. Alright, everybody, welcome. It is the podcast you've been waiting for. The all in pod emergency episode 20. The number 11 podcast in the world. Number one in tech. #11 overall. Joe Rogan, sway, pivot. NPR's Rachel Maddow left in the dust. Welcome to the number 11 podcast in the world. Can you believe it? Besties with us, the Queen of Kiwi himself. David Friedberg Rain Man. David Sachs hot off the banger by young Spielberg, closing up episode 19. And of course the dictator Chamath Polly. Hypatia. How we doing boys? Lovely. How are you? Friedberg, lovely, lovely to lovely Tuesday, emergency pod. And sex with you guys. Retired from craft ventures to pursue his dream of being a Fox News host. How's that going for his acts now that you've got full media blitz? Well, yeah, I've been. I've been invited. I was on Bloomberg. I've been invited on CNBC tomorrow. I might even be on Fox on Thursday. So everybody maybe Tucker, everybody wants a piece of the besties. Everybody wants a piece. Unbelievable. You were pariahs in our own industry, and now we've transcended. Pack taking our rightful position. I got invited on CNN, which is crazy. On what show? On which show? The guy with the British accent. He kind of does the Piers Morgan. No, there's another guy who does CNN International, and they were doing, like, a whole that guy. Yeah, yeah, yeah. You know, the guy with the glasses. He's funny. He's pretty funny. Yeah, I I didn't do it. I really do not want to speak for Robin Hood, but we do need to pick up where we left off in episode 19. Which a lot of people were wondering, shamatha we still friends or we're still besties? We are. But I do want to say one thing. Jason and I talked this weekend and he said something to me which I actually thought about a lot. Which is a TH moth when you get that emotional, you know, I think the the point of what you're saying gets lost and I had, I had a lot of time to think about that. So one I wanted to say jakal if if anything I said. You know, hurt your feelings. I wanna say I'm sorry. I think you are the most incredibly loyal person and that, you know, spans friendship to being an investor too. So I just wanted to say. I'm sorry to you. And to be quite honest with you, when I, when I listen to a couple of my comments, I was like, wow, you know, I was a little emotional and I think it didn't need to be that super extreme. I think, you know, the thing that it touches for me is like, I forget sometimes maybe where I'm at today and I go back to where I was 20 years ago or how I felt as a 16 year old. And I channeled that a little bit. So anyways, Jake, I just want to say I love you with all my heart and I'm sorry. I love you too, chamath and you know it. It did get a little bit personal and we were all passionate about, you know, our positions. And you know, it was a little difficult for me because I'm trying to give my guys, my team, Robin Hood, the benefit of the doubt. And it wasn't an easy week, obviously to do that. But just to to recap here. Sunday, Vlad was on clubhouse with Elon Musk, our pal. Who almost blew up clubhouse and there were so many people trying to get into that room and I think it tops out in 5000 on clubhouse that people were holding their phones up to their YouTube accounts. I think that's probably how most of us listen to it was the YouTube people were just syndicating it live to YouTube. But Elon did a tremendous job interviewing Vlad, which is leads to a really interesting topic, David, about subjects just routing around the press and going directly. I mean, Elon is now the best interviewer. In the business. And he basically said, listen, did you have a gun to your head? And I think. It was pretty much that, according to the reports that have come out, the depository and trust and Clearing Corporation, which is Wall Street's been clearing house for stock trades, demanded $3 billion in additional collateral from Robin Hood, which they said was an order of magnitude more than usually required. We all know they raised 2.4 billion this week on top of the 1 billion from Wednesday. On top of the $600 million credit line. That's 4 billion in cash. Apparently the requirement for them went from 3 billion to 700 million, so it seems like that's there's some equalling out of what they have to cover. And the GM short interest dropped in half today. It's Monday. I'm sorry it's Tuesday, but yesterday had dropped in half. The squeeze seems to have settled down. Wall Street bets has clearly won, and of course episode did. Jason did supernova. I didn't listen to it, but did. Do you guys think that Elon and Vlad got to the truth? Like, was it clear, sacks? Well, let's get an independent party here. Sex? Yeah. So I I thought that the interview was was a bit curious because it it took Elon several tries to get Vlad to say the the quite frankly, the obvious answer. Elon set it up saying, you know what? What I think all of us were thinking, which is look where you either forced to do this. Or is it an action that you decided to take? And if so, why? And you know, and and and Elon kept trying to get him to say, yeah, we were forced to do this. And Vlad wouldn't quite say that he gave these very vague, ambiguous answers. Which is why Elon finally said, listen, did you have a gun to your head or not? Blink twice, you know? And so it was, I don't know whether it was a function of miscommunication or whether we just don't know all the facts yet, but I don't feel like the interview put everything to rest. The way that it easily could have and and I and look, I I don't want to be, I don't want to pile on to this situation. I you know, I'm. I'm profounder. I'm going to give Vlad and Robin Hood the benefit of the doubt here. I think probably they were compelled in some way to do this. I don't think they wanted to do it. But you know, if we're going to make this a teaching moment, what I would say is like to any founder, if you're ever in the position of having to take an action that is inimical to your stated mission, right. And their stated mission is freedom to trade. What was the word you used? Animal. Animal? Anathema? Sure, yeah. If if you're going to basically violate your state admission, you either need to post the government order that required you to do that or you need to post a very well reasoned blog explaining why you're doing that. And you know, if I were Robin Hood and I got a call in the middle of the night saying that you have to basically take this trade offline, I would say, well, give that to me in writing because I'm gonna have to post that on my website, right, if I don't have a choice. About that I, you know, I need to be able to refer back to this industry order that I'm receiving and the fact they didn't do that and the fact that they didn't post A blog explaining the reasons behind the choice and in fact vlads now had to go back three times to explain it. I think that's created this world of problems for them. There's a difference between this being a regulatory requirement and a commercial requirement, correct. Like if you think about the, you know the, the, the, the law, the the regulatory body that overseas. The law that that that kind of overseas what they're doing business wise the SEC or whoever could have come in and said here's the, here's what I'm telling you you have to do. I'm your regulator. But what happened was there are there are these clearing firms that they partner with that said, I need you to post more capital and rather than post more capital or take the risk of going bankrupt, they said we are going to restrict trading to minimize the capital requirements that we have on our book. And so if you think about what that decision comes down to, it's a decision of either our customers are going to lose. Way or we're going to lose money and and I know that it's not that black and white but you know it's very difficult to kind of explain the nuance of what took place there. But it really was a point of like we are going to lose money or we are going to go bankrupt or our customers are going to have to lose money and that's such a tough decision. I can't imagine any executive any of us being in that situation and deciding do you protect your shareholders or do you protect your customers and how much do you let your shareholders lose? How much do you let your customers lose. And it was a very complicated. Situation that they found themselves in because their business model was predicated on this clearing, you know on this model that they ran that when suddenly a lot of risk came on the book, they didn't have the capital to cover it and and they had to basically, you know, limit their their customers as a result. It was a pretty ugly situation. But but David, well, because to say one thing I actually think that if the choice is simply between you losing money, you the company or your customers or you lose your users losing money, I think that's an easy choice. I think the company. Eats it. Look what Airbnb did during COVID, right when they had a whole ton of cancellations because of COVID they ate that, the they ate all those deposits. They made good on that. And I actually think if that's all that was involved, that was a big mistake. I think Robin Hood should have eaten it. Jamath, you want to chime in here as we go around the look, I think here's what we've learned, which is that there's all kinds of ways in which this financial infrastructure works that none of us really understand. It turns out that it may have also included the people running Robin Hood, to be quite honest. And so, you know, we know what payment for order flow is. Now, we know that, you know, some companies like public have completely issued it. You know, folks like Robin Hood make a ton of money from it. I think it's clear that, you know. Elizabeth Warren to AOC, to whomever are going to now spend a bunch of time talking about it. It may or may not change, but before, the problem with the whole situation of GameStop actually doesn't really surround that because it's more of a symptom. The real problem was what led up to it, and what led up to it was, you know, the insistence that a bunch of organizations needed access to a preferential set of data so that they could theoretically participate in that order flow before. And the second was that the rules for, you know, certain organizations are different than those for banks. And so, you know, hedge funds can leverage themselves up to such a massive degree that you create that, you know, LTCM type of issue where, you know, you take 5 billion and all of a sudden you have 1.5 trillion so that that that shouldn't happen, right. So we need to figure out how we can actually deal with those systemic issues upstream and then we need to have better disclosure downstream so that consumers could choose. Hey, listen, if you want, you know PF. By the way, as I've learned in the last couple of days, payment for order flow is actually not necessarily such a bad thing in certain cases because it actually guarantees better price execution in some cases. But that's not always true for options. I think it's somewhat more true for stocks. There are, you know, for example, like Jason, when you ask me, you know, I asked the team at so far, like, you know, what's the, how much, how much is how much is made on payment for order flow and the answer was $1.5 million. And the forecast for next year was like 400K. So that's materially different than $400 million, right. So you start to figure out like, OK, how should we think about these problems? And I think that's what we have to face. We have to get answers to these questions, though. Yeah, there's definitely going to be a lot of investigations into this and thinking it through, I think there are kind of three possibilities here. When you when we analyze this now that we're a week out from it, I think all going down, which is was there poor communications or other non disclosures in place, right, we're trying to figure that out with Robin Hood. It feels like there's both right there. There could very well be nondisclosures with this private company, the DTCC and obviously they could have optimized communications. And then was this a Black Swan event or to your point is it poor preparedness jamath we have to figure that out and how prepared are these companies to deal with this kind of stuff and then is it? Really bad optics, that citadel and all these people are involved? Or is it a conspiracy, a grand conspiracy? And then if there's going to be an investigation, it's going to be pretty hard to cover up any conspiracy, right canal for one idea. I think that there are certain there are certain parts of the economy or, you know, the way in which the world works, where you you can't distinguish. You know, bad operational capability and Black Swan events. I'll give you an example. Airplanes. There is just no situation where you can say a plane crash was a Black Swan event and you move on, right. And we we decided that a long time ago. And so as a result just the amount of risk management and compliance is so high that every time something like that happens, it's it's an enormous process. And we've seen that in the 737 thing for Boeing 737 Max by the way, it just got settled too for just to discuss billion, which is kind of crazy. Those planes are back on and nobody went to jail, right. So that that's an example. At the other end of the example, you know, we have things that have happened like on Facebook and Twitter and Instagram and Snapchat, which is like, hey, all of a sudden, like, you know, certain kinds of content or certain things happened like the Christchurch, mass shooting. The the, the societal judgment there was that that was a Black Swan event. You know, we don't need rules and regulations. And so I think that another important question that we have to ask is, is the financial plumbing. That, you know, sort of allows the capital markets to work and specifically the financial plumbing that allows retail normal folks to participate in order to try to make money and get ahead should that be deemed more like. What you said, Jason, Black Swan like infrastructure where it's like sometimes **** happens and we just move on or is it more like an airplane crashing where you say none of this stuff should be allowed to happen. Can I can I add one more point to that, which is I I think that it's frankly spin to be trying to characterize concerns about what happened as a conspiracy theory. You know, I heard Vlad used that word and Jason, now you're you're echoing the company's talking points. The reason this is not a conspiracy. Is because Citadel is on both sides of the trade. It's a conflict of interest. We should be using the word conflict, not conspiracy. Now the question is, how do we interpret that conflict of interest? You have company, you have Citadel providing payment for order flow. So they're basically executing Robin Hood's trades. They're their biggest customer, and then at the same time, they're moving in and they're backing up Citron and Melvin. So they're on both sides of this trade. How does that work? How can we not have questions about that? And to then characterize that, oh, it's a conspiracy theory if you have questions about it, really? No, I'm totally fine with people having. Investigating if there is a conspiracy, right and the conspiracy that people were floating is Robin Hood was told to stop trading these stocks by Citadel. That did not happen. If that did happen, that would be explosive and impossible to cover up what it was is this is DTCC have some influence or does Citadel have influence on the DTCC. You know that those are the questions that I think remain unanswered. The DTC is a is a cooperative, so it's a collection of its member organizations. So by so I think what we're. We'll we'll find out which organizations were part of DC who made the decision who then told Robin Hood you know we'll also find out by the way who put in the money to Robin Hood you know did they have a direct beneficial interest in them having these DTCC make that decision and so I think we're David's right is like imagine this conflict of interest I now let's just use me as an example I as social capital. I am buying their order flow. I am also a member of the cooperative. I'm also backstopping their investment. And now all of a sudden you would say, whoa, chamath, your hands are way too messy here, right? Like your your fingers are in a lot of pots and how do I know what you know, exploding message on signal wasn't sent. You don't know. You don't know. Yeah, all, all, all, all we do know is that you had all these insiders, right? You had, you had Citadel, you had, you know, this industry consortium, whether it's the collective or citadel, individually, they were under pressure by the industry. And at the same time, you had these outsiders, you had these Reddit kids who had basically taken them for $20 billion, right. They had finally figured out a way to beat the insiders at their own game and just. At the moment that these outsiders were winning and about to deliver the coup de grace and bust these guys out of the business for good, somehow the insiders managed to tip the board over and start a new game. That is what people are reacting to. And look, I mean, you know, I'm not saying that I don't know why Vlad would have done it unless he was frankly forced to do it right, because why would he? So I'm not blaming him, but there is something fundamentally very corrupt at the way that the system and these insiders who have all the power and all the money. When they finally got threatened, they basically figured out a way to turn the board over. But the outsiders, by the way, the the other thing that isn't getting covered, and this is going to be the tragedy of this, is none of us really knows the cost of the $3.4 billion that they took in. I'll tell you the only group of people that are for sure going to get completely creamed in this, which are employees. Right. And we know that you think they're gonna get too much preference stack because they got they got diluted. Ohh my gosh, they. I mean, how do you not put three? Do you put $3.4 billion in at par? Who would do that? Yeah, I think that's what exactly happened. I don't have inside information, but I think that's exactly what happened. Yeah, that's my. I mean, I think that or perhaps a discount to the IPO, which is eminent from what I've been reading online. Yeah, talk about terrible timing too, right. I mean, they were trying to go public this year, like maybe terrible timing or maybe perfect timing. I mean it may be that. If it turns out that they were able to, I mean, then it then it creates a whole host of issues, which is how stupid are these investors. But if if that is in fact what happened, if you look at the, for example, the the pound of flesh that you know, Silverlight got out of Airbnb, what a brilliant trade. I mean like if there was one organ, explain it to you that that was my deal of the year from last year from our, from our Bessie Awards. Yeah, go ahead, explain a free bird. Yeah. They put in debt and then they got warrants and and the warrants ended up making them silverwork. Forex. It's insane. They made, they made like 3-4. Billion dollars, right. But the company is worth over 100 billion now. So as as downside protection during a pandemic that could have gone on for three years. No, no. But that's the whole point. If you think about, if you think about the trade of the great financial crisis, it was Warren Buffett putting capital into Goldman Sachs, which was and sweet three, he didn't see steel. Yeah, he did 55 billion into each of them the same weekend. Exactly. And he said, hey guys, everything is fine. These guys are going to be fine. They're backed by by Berkshire and it turned out everything was fine. And you know he made, he made an incredible. Fortune, and I think, I mean on top of his already fortune. So the point is he made a great trade. I think that in the in the Silver Lake example, they did the exact same thing. They were like, hey guys, we believe in this, everything's going to be fine. And when all of us were literally losing our mind because we were stuck in our apartments and houses thinking the world was going to end, Silver Lake saw, they had clarity, they did a deal, which was the trade of the year, David's right. And so similarly, you would have thought that this moment was the opportunity for the trade of the year of 2021, I mean. Or or Leon, but all I know is I've been getting increasing offers from my Robin Hood chairs in the secondary market. You know, throughout two questions here, we have been having a hard time understanding who's short, what the short interest is. There's a bunch of like data companies that are providing estimates and maybe the data is only clear. You're right. The best source of data that I have access to is a company called Market Markit. They're, they're, they're, they're quite large, but as of this Friday. Short interest was still, I think, about 50% in GameStop. And so it's been it's been ebbing down. I didn't check today. Well, they the report was it got cut in half again and that there was a very small short interest now, but the stock dropped another 60% today. So obviously if you're short the stock you may start buying and and taking your profit and your gains and going home at this point and moving on. So do we need to, is this going to start a discussion of transparency and shorting and should all that information be short, should you be allowed to short more than the shares that are available or that are available in the flow, I think should we readdress shorting? In general, no, there's a, there's an even. I think shorting is a healthy component of the market and I wouldn't, I would leave it alone because there I think there are some legitimate organizations that short for three reasons. Reason #1 is that they are developing a market neutral strategy for their clients and people are should be allowed to pay for that, right #2 is people are directionally betting on a trend or investing on a trend and they are trading that against potentially some other position where they are long. So that's an explicit view, less about being market neutral. And then the third is that some people see outright frauds and they're trying to vote loudly that, hey, listen, there's something untoward happening here. So I think shorting is really good. I actually think the simpler solution and listen and tell me if you guys agree, is just go to T + 0 settlement. Why all these margin requirements go away altogether? The the reason why we have all these margin requirements is all of a sudden you have this weird 2048 hour period that, you know, it's like, oh wait, who's got the shares? Do I have the shares? No, do you have the shares? So they did I lend them to you? Did you lend them to me? Are you going to pay me first? Am I going to pay you first? And instead, you know, this is the kind of thing where it's like in 2021, this should be real time and automatic, you know? Shouldn't be. There should be every share should be added, right? And then you should know exactly where it is. You know by the way, there's another point that there's another point that Chamat didn't make which is that there is a benefit to the long holders and equities when there is shorting of that equity in the market, which is that they're getting paid borrow on those shares. So for folks that don't realize or their broker is, but you can access that borrow if you own shares in a company that you're going to keep holding, let's say you own some shares in Amazon and someone else wants to short Amazon, they have to borrow those shares. With someone and they're paying a fee, an interest rate to borrow those shares. And so the cost to short a stock is actually not zero. You have to pay a borrow to borrow someone else's shares. So if you're holding those shares in Amazon, you can actually make money if you have the appropriate broker relationship for those shares being sold short by someone else. And so this isn't just a people are coming in the market and slamming down stocks. They are paying the people that are along the stock for the right to borrow their shares and and and sell them ahead of, you know. Buying them back later. And so in the case of GameStop, I think the cost of borrow got so high that you're basically paying 3040 fifty 60% you know, interest rate to borrow GameStop shares to sell them short because there is so much interest in selling short. But there, you know there is a market dynamic in in the cost to sell short that you know that doesn't come at A at A at a kind of negligible or free cost. My initial, my introduction to shorting in that example was when I first bought Tesla. That, you know, my broker said, you know, chamath, if you lend your shares out, you can make 24%. I remember this conversation, 24% a year interest. And I thought, Oh my God. And then I said, well, what? What am I really doing? And he's like, well, you're allowing people to bet against Tesla. And I said no. And I just kept the shares and I was like, I'm never going to allow people to build. And since then, to be clear, I've never, I've never ever, ever allowed my shares to be borrowed ever. And it's just a philosophical decision I don't like. But I believe that you should be allowed to do it. I mean, if you're gonna be a long holder anyway, you're saying I'm gonna hold these shares for five years, 10 years, whatever. I just hate. It's a way to juice your returns. It's true. It's it's how a lot of people think about, especially mutual funds that own large positions and stocks. They'll they'll make really good juice returns because they're getting paid to to borrow. David, you know, it gets even better if you're if you're running a levered book, because then, you know, you take a buck, you spin it up to 6 bucks, you buy 6 bucks at Tesla, now all of a sudden you're earning 24% on 6 shares even though you've notionally bought one share, right? I've still never done it. I can't, I can't bring myself to do it. I just feel like. It's just so I just can't do it. I just like, it's like, how could you be long and then bet against your own company? I guess. Well, yeah, it doesn't make sense, but chamath, I'm sorry, sacks, should we limit the amount of shares that can go short against a company in some way? And should we add a transparency where if you short more than X percentage of those shares, we know your short position? Because that seems to be also very confusing here. There are people speculating on Twitter that the Wall Street bets crew and I have no knowledge of this or other hedge funds. Came in and saw this mess and that we've seen the last couple of days where other people shorting at 300 or it could have been even been the same traders or some portion of the traders who ran this up with the short squeeze then flip their position from long to short. Yeah, I look I, I clearly we need more transparency. We need to resolve some of these conflicts of interest, prevent them from happening. I think a lot of the the users of Robin Hood didn't understand that they were the product, not the customer that that is a real issue. But let me, let me kind of up level this and speak to the politics of this because something really interesting happened. You had everybody from AOC to Ted Cruz basically denouncing what happened here, taking the side of Wall Street bets against these Wall Street mobiles. And So what you're seeing now is a new fault line in American politics in the post Trump era. It's not just about left and right anymore. It's about insider versus outsider. And I think this is going to be a major, major theme that we see. And let me actually, I want to, I want to share something. You know, I, I just wrote a, A blog post called The Insiders Game about this idea. And I found a passage in Elizabeth Warren, Elizabeth Warren's book, which is really interesting because it describes how the insiders game works. And the person who described it to to Warren is not, yeah, none other than Larry Summers, who was the former Treasury Secretary under Obama. He was president of Harvard. He's the consummate insider, and he taught the insiders game to generations of Harvard students. So here's what he said he he presented Warren with a choice he said to to her, well, she she said, I could be an insider or I could be an outsider. This is from her memoir in 2014. Fighting chance, she she wrote. Outsider recording Larry Summers. Outsiders can say whatever they want, but people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People, powerful people listen to what they have to say, but insiders also understand one unbreakable rule. They don't criticize other insiders. That is the insiders game. It's a protection racket where these powerful insiders, these powerful leads. Of Wall Street, of Big business, Big Media and politics, they get together and they protect each other no matter how incompetent they are, how corrupt they are. Silicon Valley, Silicon Valley, they're involved in this too. But big tech and this is the revolution. I think that's going to happen. I think Trump was kind of a a forerunner of that is that we are going to see a movement of people across this country who are sick and tired of the insiders game and they're going to rise up and vote these insiders. Out of office and put in some new people who aren't beholden to these powerful special interests. What you're speaking to is populism, right? Sex. You can call it populism. I call it insiders versus outsiders. I think it's a it's going to be very important for folks to not be a career anything. Meaning career executive, career, politician, career, regulator career. What if, if ever, you're in sort of like, if you can put that word in front of your sort of existence. I think what people will see is someone who, as you said, thrives on being an insider. And I think that there's just going to be a ton of distrust career school administration official, you know, career admissions person. Career anything now is not what you want to be. You want to be sort of a little bit more dynamic because you can have multiple arcs to your life and you're not beholden to anybody. I mean I think it's a, it's not as black and white as institutions are bad or institutions are good. There are, there are many examples where the institutional framework allows for continuity and performance over time. You know, a lot of Trump's rhetoric and I, you know, I I know that we're we're past the Trump era at this point, but there there was a lot of conversation about this notion of a deep state because there was frustration with how some or many of these institutions, government institutions. We're operating. But if not for that deep state, we may have found ourselves in a lot of very ugly situations over the last four years, that there really were layers and layers of career public servants that did incredible and incredibly heroic things to preserve democracy, to preserve the rights that we all hold dear in the Constitution. And those were, you know, really important roles, and the institution played a really important role in in providing continuity and providing trust. And and and security and so I I think it's easy to bash institutions when things aren't working perfectly. But we also have to keep in mind that it's not that all institutions are always bad. It is absolutely true that there is corruption, but there is certainly benefits that we have to kind of not, not allow populism to become a runaway framework for how we deal with everything we're frustrated with. I'm not saying that I think, I think what I'm saying is institutions are critically important, but now I think we have to change the rules for how you can be a part of them and then how long you can stay. So for example like if the rule was you know you can only be a two term politician. Wow. That would be what a cleansing effect that would have on anybody that chose to serve in politics up and down the board. You know at the federal level, at the state level, 2 terms in and out, California, California has that you know we have a 12 year limit right in the the State Assembly and Senate and so you know I think we're seeing that happen in progressive places like California. Umm, you know, obviously a good segue, but very. I I think very much agree that that the notion that there needs to be, you know we talked about this last time, we need to ensure that the institutions don't become beholden to special interests and and that there is an accountability because the failure, the, the, the lack of accountability is really where things bloat over time because you just add stuff on. You don't ever take stuff apart and and ultimately you have kind of an inept nonfunctioning institution. So let me give you the report card on California and then we can figure out if term limits can't fix it, what can fix it. So here's just some some data points. 1st I'll do one section first section #1 economy and jobs. Nearly the highest unemployment rate in the US and 8% plus highest poverty rate in the US 18 1/2% of all Californians. Highest income taxes in the US 13.3 percent, $30 billion of potential fraudulent unemployment benefits from 2020. 11 billion already determined fraudulent doubled. The doubled the oil and gas drilling permits. Instead of incentivizing, you know, maybe climate or biotech or tech jobs at 227. Billion dollar spending plan spending plan for 2021 in terms of quality of life, highest homelessness in the country, worst graduation rate in the country. Around 17% of students in California don't graduate. The worst slash, highest cost of living in the country and the worst wildfires in the country. 1.8 million plus acres burned on COVID-19 third highest rate of COVID-19 infections in the world, 658 cases per 100,000 people and then the worst vaccination deployment in the US around 50%. And then culturally. I didn't know this. I don't know if you guys know this, but here are the number of companies. This is just a subset that have left California Toyota, Charles Schwab, Tesla, and Oracle in some way, shape or form, which is estimated now to have cost California $77 billion of future revenues and 300,000 jobs. Over the past few years, nearly 3 million people have left the state. 53% of Californians want to leave the state, and 63% of Californians believe the American Dream is dead. OK, so. If let's let's go and figure out, OK, so if if if term limits at 12 years don't work, what do we do? Well, I think I think we have to have politicians who stand up to special interests aren't in the pocket of special interests. I mean the problem we have in California the biggest problem the reason why California is such a mess is that we have government of the special interest by the special interest for the special interests I mean the politicians and Sacramento that we have a one party state effectively and. They are beholden completely to these special interests. Look at the deals they make. I mean so example in California we have over 340,000 public employees who make over $100,000 a year that cost taxpayers over 45 billion, OK? And you know we have lifeguards making a quarter, $1,000,000 a year. It's crazy, right? I mean because. The people making these deals are, are in the pocket of these of these government unions. They're the biggest contributors to California politicians. And you know, this is my fundamental, I guess, concern or or or beef with with Gavin Newsom is that, you know, fundamentally, you know, he's worked his way up the the ladder of California politics by, you know, by basically benefiting from these special interests throughout his rise, you know. You step by step, he's never challenged the insiders or any special interests. He just kind of caters to this political class. And so that's why I think fundamentally he's not going to be part of the solution. It just feels like every job he's had in politics, it's just a stepping stone to the get to the next step. And even the governorship now is just his stepping stone to get to whatever's next. And I think, you know, Californians are tired of being stepped on in this way. There's, I mean, there are some structural challenges. In the state, right guys? I mean like we should not for forget the fact. That there are some voter mandated supported propositions that have passed over the last couple of decades that really create a structural challenge in terms of how do you allocate resources and capital and how can you effectively govern in this state. You know the the three that are often highlighted is Prop 13 which passed in 1978, which is the state property tax limits that we've talked about. That one I believe in the past. There was a Proposition 4 in 1979. It limits the amount of money that states can appropriate that the state can appropriate. And then Prop 98, which passed in 1988, and this is the big one, Prop 98 has been challenged in courts and there have been, you know, many, many kind of. Efforts at finding loopholes and getting around it and and litigating it. But it mandates funding levels in the state from pre-K through community colleges and it creates a a structure that is really difficult to navigate around and really difficult to operate or manage. It's almost as if you guys were running a private company and your board said here's how much you as the CEO have to spend this year and here's how you have to spend it. It is such a difficult decision, you know, for the for the governor. You have to kind of say, well, you know, I'm going to make some changes to that because he'll end up in court. And so, you know, I wanna just kind of highlight that there there are structural challenges to the way the state operates and obviously to get a lot of things done you still have to pass through the State assembly and the state Senate. And it's not as as simple as making you know, better decisions and the governor's mansion. I think there's a there's a lot that we have to kind of resolve structurally in the state that's going to take a long friggin time and a lot of cooperating parties to get there. And so, you know, I know for those of us who are very much. Making fast, quick and accurate decisions, you know, good decisions. This is a really difficult place to do that. This state, the way the way the laws have been set up and and the way that that the legislature has oversight. Well, I mean, look, you're you're right, but This is why we need real leadership. We need somebody who's going to come forward and say, listen, we need to change this proposition. Another one needs to change is Prop 47 that decriminalized a whole bunch of behavior. I mean, crime is exploding in the state. That proposition needs to be looked at as well, right? I mean, we we need somebody who's going to. Combat government from a completely different perspective, which is to think about the citizens of California, first of all to pay attention to the middle class of California and to think about us as consumers of government services who need to be satisfied. And right now we have, if you were to think about the services governments providing, people are churning off of it. We had net immigration of 135,000 people, net left, the state right, you know, 40,000 families in California. Pay about half the taxes. If say 10,000 of them leave, we've got a giant hole in the budget that no one knows how to replace and we have no idea how many people have even left, how many families have left the state. So we really need leadership here to to not just go along with the special interests who are in power and who are willing to stand up and and push for some of these, these reforms. By the way, I think it's worth just highlighting some of these numbers because they they also speak to the structural challenge in the state, the state of California. Generates about $140 billion in revenue, 70% of that comes from personal income tax and as Sachs pointed out, half of that comes from the top 1% or 40,000 households. It is a, it is a, you know, a heavy weighting on. And by the way that that top tax rate of 13.3% applies to households over $1,000,000 of income. And for those that don't know, you know there's income strata that are defined by the state and depending on what strata you and you, you, you pay a different tax rate. Highest strata is making over $1,000,000 a year where you pay 13.3% and that's where these 40,000 households cover most of that budget and 20% the sales and use tax and 10% is corporate tax. To speak to the corporate tax rate for a second, you know that's 10% of our revenue as a state. We charge a 9% average corporate tax rate in the state to operate. That's incredibly high and it's one of the reasons besides kind of the challenge that that Elon and others kind of made very public here over the past year, but that that. Corporate tax rate makes it very difficult to operate in the state relative to other states that are offering no tax rate, lower employment, lower cost of of Labor and less of a regulatory burden to operate. And that's why we're seeing an exodus not just of people from the state because the services are obviously not being well managed, but also of businesses being a better place to operate in. In Canada. There is an approach that I think is really useful here, which is that, you know the Canadian government. Offers credits called Shred credits. I can't remember if it's at the federal level, but it's definitely in the state of Ontario because I've used this for for some of our companies, you hire engineers and you can basically capitalize their salary and you can offset their cost so that when you're a young company you're effectively paying zero tax or if you're a small company you effectively pay 0 tax. And that seems really right. You know where you're a small business person and you know you're holding, you know 510 employees and you're making. You know, 1,000,000 bucks a year in revenue, whether you're a restaurant or a software company, you basically pay nothing. But then at the other end of the spectrum, you know when those credits, when those credits burn off, theoretically if you're a Facebook or a Google or an Amazon, now all of a sudden you know, you can pay a much larger percentage of of of what to do. And I think that there's all kinds of progressive tax schemes that work on the corporate side. There's a bunch of tax credits that you can use to sort of incentivize certain kinds of jobs and. I I think you're just much better off because then you know these companies can't leave if all the people want to stay in one place. I want to highlight one more structural problem. So even if you do resolve that, even if you do resolve these propositions that have passed that have passed in the past and are causing us problems in terms of budgeting and and and ability to budget adequately going forward. One of the other challenge and and even if you do resolve the tax structure to generate a more balanced revenue model that allows for innovation and allows for employment, allows for opportunity we have a a this is an interesting stat. Found this week. How, what, what, how many Americans? I'll just say the number one out of nine Californians are a member of a public pension fund in the state of California. One out of nine. And the public pension funds in California, as of the last reporting, are roughly $250 billion underfunded relative to the payment obligations they have to their members. Think about that for a second. So not only does the state have a lot of debt, we've got a $250 billion hole for paying. People money that they believe they're owed in the future. And that is creating a massive problem where the state needs to figure out how do we fill that hole, how do we meet these obligations to our citizens who worked, who earned what they believe to be a fair income stream for the rest of their lives that they may not ever get, you know. And so, so we, we've got both the, the the the legislative problem in terms of how the state is structured. We've got these propositions that have passed that kind of, you know, buckle down the governor and buckle down the decision makers in terms of what they can and can't do legally. We've got an income generation problem with respect to concentration, and we've got some of these, you know, heavy burdens on us like health services, but also this underfunded pension liability that is almost like such a priority. And no one's really paying attention to it because the sirens are going off and meanwhile the service providers in the state are completely ****** up the service that they're supposed to be providing. You know, Tomov highlighted a bunch of great ones in terms of fire response and whatnot at the beginning. And obviously the vaccine rollout we know is, is, is just completely flawed, but. You know, here's another interesting stat, the California EDD. This is the the link I just sent out, by the way, on our on our zoom chat. But there's $114 billion in unemployment claims paid since COVID. This is an insane statistic, but it looks like roughly 27% or $30 billion of fraudulent claims were paid by the EDD on those unemployment claims. So the folks that are actually running these institutions themselves aren't even operating well, you know, not to mention the actual huge liabilities the state. Accrued over the years and the structural deficiencies. So as much as I would love to, you know, kind of propose that we could all come up with a simple solution, this is a complex frigging set of problems that probably require several books to resolve. And I just want us to be honest and real about that, that this is, you know, this is going to be a challenging issue probably for decades to come for this state to get itself out of the holes that's dug itself into. You know, one thing else is, as goes California, so goes every other state and so goes America, because if there is one state that theoretically you think would have been positioned. Human capital perspective to figure these out and political will. It's this state and if this state can't figure it out, we're in a whole ******* of trouble. Well, we're we're we're not doing a very good job figuring it out right now. That's why we need to make a change. I mean, David, you're right about the magnitude of the problems, the challenges, but it all starts with some sort of, you know, outside of rebellion. And that's what's going on with this recall. That's why we have to support it. That's why I support it. It's not going to be the end of the the it's not the it's the beginning of the solution, not the beginning of the beginning. The beginning. It's a beginning of the beginning. But we need to create an institution to solve the problems over time. Right. It's it. It's gonna be it's gonna be the coalescence of what you're pointing out. Sax, which is the the the you know the the the will of the strong the will of the the rebellion to figure this out and and resolve the the the institution may be the all in part but, but, but but let me let me build already. Yeah, but let me let me build on. Yeah. Actually, Jake, how you posted a tweet saying what should we call our party. And anyway, my suggestion was the outsider. Party, party. But let me, let me build, let me build on, on freeberg's point about the pensions. OK, where did these giant, underfunded pension obligations come from? I think this is a really important point to explain. So here's what what basically happens if you're a government worker in California, you could typically retire after 20 years with all of your benefits and and and not just 100% of your salary, but the the salary you made in your last year. And So what happens is. When people get to that 20 year mark, they get a lot of overtime. And so that's why I've seen articles about people retiring, you know, after, you know, if you're retiring after 20 years, you could be in your 40s. OK? Well, when you're pay for your pension, so they double up their overtime, they get to 250 K then they get a pension of 125. You don't get your full salary in retirement. Yeah, there's a there's a complicated formula, but the point is you can stuff it with overtime and it's very generous and then they can go because they're still in their 40s, they can go get a another government job somewhere else and then stack that pension. The top. And then by the way, it doesn't just last until they die, but it lasts until their spouse dies. So now there was a proposal years ago to move this whole system to like a 401K type of system, and it was squashed by who the unions and Newsom opposed it because, you know, he doesn't do anything to the unions don't want. And so we have these completely unsustainable pension liabilities. Everybody can see this train wreck coming, but nobody has the guts to stand up the unions and do something. Yeah, I mean, there's very few careers that still offer pensions. Even the New York Times, you know, over a decade ago got rid of their pension because people live too long, they retire too early. And then the cost of Healthcare is just so ginormous here that it's going to crush any pension fund. So you have to move to a 401K. And we're we're it's kind of hard to say to a cop or a firefighter who's running into a burning building or putting themselves in harm's way that they don't get one because it's such a high risk job. But we really do need to think of something more. Reasonable, like a 401K, and that's coming from my entire family is you know, cops and firefighters and of service in New York City and they all have pensions. And you are right, David, there is a tradition of trying to get a little extra overtime because they average out usually your last three or four years to give your average salary the to base your pension off them. And then of course you can do another job or go work, go from a firefighter to a cop, vice versa. Garbage, sanitation worker to get those things. We didn't talk about the Nimbyism. And how extraordinarily hard it is to build homes here and how extremely expensive it is. A lot of the young people who are thinking of coming to California are looking at the housing prices. They want to come here to start companies. They love the California vibe, but the the housing is a nonstarter. You can't live in the peninsula or anywhere in the the wider Bay Area unless you are, you know, a dual household income with what, 405 hundred $600,000? Minimum? Minimum, minimum. And that's not even counting private school, but you're talking about where are there sub $1,000,000 homes within the proximity of the Bay Area. They don't exist. You go to Austin and I've been looking at Austin Real Estate just coincidentally and there are many homes that are $300,000 that are $400.00 a square foot everywhere within 3040 minutes of downtown Austin and that's where young people are going. And then finally if we look at our to to law and order, David, we are not treating. Fentanyl, like the Super drug it is, you know, it's it's one thing to have drug reform and to have. Prison Reform, we we know these are important, but you can keep that in your mind that we want to make a more just legal system while at the same time not allowing people to deal fentanyl. And if you just type into Google Fentanyl versus heroin lethal dose and click on the image search, you will see two vials. And it's a very famous photo where there's like, you know, a pinch of, you know, heroin, that's the lethal dose and then in the other vial. There are like 7 grains of fentanyl, and that's the lethal dose. And we are conflating a homeless problem with a Superdrug. Yeah. Can I, can I, can I add to that? So, so, so, you know, I was on the side of decriminalizing cannabis, and I think that there were, and I think that there we, we overcharge too many people for drug crimes when they were just users and should have been in treatment. And that's why I think there's been a reaction against over incarceration. And I understand that. But I agree with you that fentanyl is in a separate category. It is the Super drug. And here's the problem. It is so powerful. It is so addictive. It is so destructive. Nobody can hold down a job and get off that drug. Once they start, once they start taking it, I mean, it's just game over. So they end up living in the streets and turning to crime and petty theft to support their habit. And that's the situation we're in today. And we have this growing mass, this massive numbers of people living in the streets, addicted to this super drug. And we gotta stop it. We gotta get tough on this because it's just, you know, right now the, the, the, the solution that our our DA seems to be pushing, whether it's Gascon in LA or chase a buddy in San Francisco, is there just not prosecuting anything. You know, we had Prop 47 downgrade a whole bunch of property felonies to misdemeanors, and now the DA's aren't prosecuting the misdemeanors, so they basically just decriminalized burglary. And so you've got all these, you know, drug addicts living on the streets, committing these crimes, and they need to be in treatment. So I think part of what we need to do here, I actually think this is a big investment in California, is to make we need giant treatment centers to address this problem. And if somebody gets caught committing a crime and they they're they're addicted to drugs, I don't want to send them to jail, but I would make him go to treatment. We have to think about true compassion, true compassion for somebody who is addicted to fentanyl is getting them off the street and getting them into a rehab program or giving them the choice of going to jail for the crimes they may have committed so that there is this. Pressure to go into treatment. Just to give you a stat, in 1999 we had like 18,000 overdoses. We're now over 70,000. And if you look just in San Francisco, we're talking four or five times the number of overdose, overdose deaths to COVID deaths. This is a level of human suffering that just makes no sense. And it's such a nuanced discussion, right? You can't, you can. You have to be able to hold into your brain that cannabis, you know, psychedelics, MDMA, silybin one class of truck, you have a long list. I have a long list here of the good that you ought to be recreational. You're the drugs I'm a fan of. Good. Here are the drugs that I don't take. Bad no fentanyl. I think you have to look at the the chance of recovery and the chance of addiction. And fentanyl and heroin aren't just tragedies. Tragedies. And you have to. We also have to, like, have the courage to actually not look at just the symptom. Like, I think treatment centers are a great idea. I think not sending people to jail is, like, an obvious idea. I also think if you take two or three steps back and you think about what are the two things. That sent people off the rails. Number one, I think is lack of a job and then #2 is a lack of mental health resources. You put those two things together, it's you're done. It's like, it's like kindling and it's like kerosene and a match all in one and boom, it goes. And you know, we didn't need to know that answer because you saw that over the last decade building up in the Rust Belt. So we knew that that was the, those are the boundary conditions for this. So how do you get people back to work? How do you actually give some, you know, the, the crazy thing about Reagan, I mean, we all forget, but Reagan was the one that defunded. All of the mental health institutions, you know, when he was Governor of California and sent all these folks spilling into the streets, well, think about how many jobs that would create if we brought back, you know, psychiatric facilities and made them free. This is where, if we look at healthcare, not having a national healthcare program, especially for mental health, is costing us more. On the other side when it comes to suicide point, like, if we're going to spend money and if we're going to be in debt, be in debt for the right reasons, like, sure, find a way to be accountable and transparent. They spend money. That's fine. Spending money is fine. Government should not be for profit. You know, government should. I don't even think government should be breaking even. I think that government should be generally running at a loss. And then the net GDP, as long as that's positive and accretive, we're doing right as a society. Right. So government should be doing the things that that they need to do for people to have an even starting line. Yeah, go ahead. Sorry. No, I was just going to say that that's where we get it wrong because, like, we, you know, we, we, we like pat ourselves on the back when the government turns a surplus. And then, you know, we like explode when the government runs a deficit. Instead, they're managing to the political theater of a number instead of really understand how to run a business. But I just want to be clear, like the entire premise of how that is run and how we think about this from an economic point of view is that we have to have GDP growth. And if you don't have GDP growth, the whole formula fails. So let's just break this down in a simple way. If I'm. I'm working and I'm making 60 grand a year. I can take out some credit card debt knowing that I'm going to make an extra 10% next year, an extra 10% the year after. If I know my income is gonna climb, I can afford to take on some debt, which means spending more than I'm making right now, because I know that in the future I'll be making more than I am today and I'll be able to pay down that debt. And so the whole premise of how we run government is we should run at a deficit, we should accrue debt, we should build infrastructure. But in order for that work to work, I have to increase my tax revenue in the future. And there's two ways to do that. Raise taxes or see significant GDP growth. And if you raise taxes, you suffer the problem that California may be suffering now, which is very high net worth people leaving the state, which is going to cause a collapse in the revenue stream, and the whole system fails. If you want GDP growth, well, you have to kind of enable the system to allow for GDP growth, which means reducing taxes and growing housing. But the problem is the life that people want to live doesn't necessarily mean that we need to have. And so this goes back to the housing question. Do we need to have more business growth in this state? Therefore, do we need to reduce tax rates to encourage business growth? And by doing so, we have to also build more housing. And the reason people want to build more housing is because they want to see more business here. And the whole premise is kind of flawed. If at the end of the day, getting more business here means you also have to lower tax rates and cause all those problems, it's also how you have community and it's also how you have diversity. Like nobody wants to live in a model. Culture where everybody's really, really poor or everybody's really, really rich. I grew up, it's so sickening. I grew up in a place where everybody was really, really poor. I now live in a place where everybody is really, really rich and the monoculture sucks. And instead what you want is you want transitions, you want people moving up, you want people moving down, you want the hard luck story, you want the got lucky story, you want it all. And this is this is where we've lost it. I'm going to ask you a question, freeberg. Are you saying that if 40,000 people left California? We would blow a $70 billion hole in the budget. No, we would. We would blow a. Yeah, about 40,000 count for half the income tax. So it's about 35% of 140. Yeah. So we would, we would blow a fifty $60 billion hole in the budget, 40,000 people, 40,000, yeah. Out of 60,040,000 homes. 40,000 homes out of 60 million. Forty million out of 40 million, yeah. Yeah, 40,000. Similar thing happened to New Jersey and Connecticut when they had everybody moving down to Florida. And so this is not unprecedented, especially with hedge funds and really high taxpayers, you know? So what I yeah, what what I'm asking is, is there a better way where you don't have to depend on GDP growth to balance your budget and to provide the social services you want to provide to the state? No, of course, of course not. Yet all it all starts with having a healthy economy. I mean, always, right? Because that that's what generates the the prosperity to pay for all the social programs and it's to pay ahead of the curve, right? That's my point, is like we're always paying ahead of the curve, which forces us to find GDP growth, which is how we get stuck in these cycles and these problems. And this is true not just of the state. Of nations as well. the US faces this and and others, but by by spending ahead of the curve, by creating infrastructure, by creating social services, by setting up these pension obligations. The only way to get out of the debt you've just taken on is to grow. And that creates all of the systemic problems that ultimately lead to populism and all of these kind of frameworks for failure that are going to ultimately end. Here's here's hold on. Can disagree with that? Look, growth. Growth is a precondition for everything else. That's good. OK, growth. Growth. That needs to be managed. OK, but it doesn't. Growth is not the problem here. The problem is a set of policies that are actually killing growth and driving entrepreneurs and innovators out of the state. We saw Elon Musk leave the state. Why? He said that California was starting to take its success for granted and had been winning too long. OK, California needs to realize it's in a highly competitive situation now, and because of COVID, you can work from anywhere. And Austin has become a tech hub, and Miami's become a tech hub, and those states have no income tax. And we have politicians in California just keep raising taxes as if we're not competing against these other states where we are and people are leaving. We're seeing a mass exodus here. We've got to realize that we can't raise tax rates beyond the point where people are willing to bear them. This is the, this is your, I think, your best point, David, is that what the great pause did? Was it let people reassess their lives? How many people do we know who either left the state, changed job, you know, broke up with the spouse, whatever it is. People reassessed. Everything in their life. And what people uniformly came to was why am I paying this much and getting this little in the Bay Area in California, when I could get twice as much, three, basically three times as much in Austin or Miami and not pay this amount of taxes and be happier? And that is an existential problem for the Bay Area. If you know this is not just Elon Musk or Larry Ellison and Oracle, it's also rank and file developers. And the developers don't need to be in the office. So you could have this massive middle leave too, that nobody anticipates. And if all the developers said, you know what? I want to be on the Reno side of Lake Tahoe, you know, I want to be in Austin or wherever. I'm paying less taxes and I'm making the same money and I got a better quality of life. What do you guys think happens though jacal? What what happens to California or Connecticut or New Jersey and what happens to Florida? Just tell me what I think. It's a death spiral for New York and for California where it unless the. Representatives in government start to represent the people who are voting and living there and voting their interests, as opposed to the special interest, to David's point, about the insiders. We have disconnected what the citizens of California want from what the government officials are providing. They're just not In Sync. They're basically kowtowing to. Teachers unions or special interests and not the people who are building companies or just people living here. People want to build housing and they won't let them. You can't build apartments in Palo Alto or, you know, Anywhere City. I mean, this is crazy. And the only middle class is going to be left in California pretty soon. It Our government workers. I mean, that's it. That's the only people can be making over $100,000 a year in California are the government workers. Because everyone who's middle class, who's running a business is just. Is finding it too difficult and too difficult to earn with the level of taxation and to run their business and their relation regulation and they're leaving. I mean just think about the regulation issues of doing any real world. I mean you've done construction in San Francisco, we've had businesses that are real world businesses with storefronts. It's it's jumping over hurdle after hurdle after hurdle. I haven't shut down. It's brutal. What if whenever you started a company in California, you got, you know, three or four years worth of tax credits for engineers in return for 1% of the equity that California was not allowed to sell? Sure. I mean some equity upside would be great. I have an idea. Chamath, how about you run for governor? Idea. Why, don't you? Isn't that why we're doing the emergency pod? Sad sack sacks. I think you should run. We'll be right behind you. Have we disparaged you too much, or is this been too difficult? I yeah, yeah. Let me, let let. Speaking of politics, though I do. I do need to tell the story. This is a complete, complete non sequitur in 2000 and 1212 or 13. I can't remember which year Mike Bloomberg invites a bunch of us from technology to to the White House correspondents dinner. We're like, yes, the White House correspondents dinner. Where did you go? But it's awesome, of course. I went once a year, so hilarious. You know myself, Ian Osborne, Hosain Rahman, the founder of Jawbone, and I have two amazing stories about this. My experience at the White House correspondents. Number one, well, 3 #1, it's like the dinner itself is kind of like a prob just because there's just so many people, right? And so, you know, you have to have a rubber chicken dinner because there's like, 1000 people in the room. But the second was that Ella McPherson was there. And I've never seen more incredible hair in my life, just that I have this image of this person's hair. And it was, like the thickest. Like it was like Curly, but like it looks so soft. And this is the most incredible hair I've ever seen. I think those are called extensions or a wig, but go ahead. It didn't look like that. It looked like real hair, but it just it looked incredible, like like a lion, like the mane of a lion. And then the third story is I we're in a reception. There's an after party at the French ambassadors place. I start talking to this person randomly and there's like all these stars everywhere, but I just start talking to this, to this person. And you know, she, she, she's very chatty and I'm. Chatty, chatty, chatty, blah, blah, blah. We're talking, talking, talking. And then at the end of this like sort of like 5 minute conversation and we had not really introduced each other. She just kind of said hey and I said hi. And so we started talking and she says to me, you mind if we take a picture? And I'm like, yeah, of course. And I and I and I had no idea what was coming. So I was like, so we take a picture and she searched me and she says, you know, I think you're really fantastic in Parks and Recreation. Ohg my Lord and I fought so hard. Your mom thought I was Aziz Ansari. Jesus Christ, how does this happen? They shouldn't call you Urkel. That was her second choice. Oh my gosh, I love you in Parks and rec anyways. That's my that's my interaction with politics. I think you're ready for politics because you just avoided the question. So look let's let's let's let's be really honest like I I'm not ready to to do any of that. I what I need to do is I need to figure out you know a my business and where it's going and then BI do think it's worth figuring out what are the conflict of interest laws and what do you have to do if if all of this were to come to pass. Because I could not make a credible decision unless I knew that. Because I I just have things that I want to do and that that to me are the most important things. Like I'll just be really honest with you like I'm working on something in batteries that I think is. It's important for a lot of places, much more than just California. And so, like if I have to abandon this battery project. I wouldn't do it, you know, just that simple. So I got to figure that out. And you got to write down all the illegal things you've done on a piece of paper and all the illegal things you're doing on a daily basis. And then we gotta make sure you have the mayor have an extra, you have a case of moleskins cause, you know, for like, it's our filling that in. They're never gonna get uncovered. Yeah, the Oppo research has begun, right that's that's where the dinner on Thursday should be about, should start the Oppo research program. Oh my gosh, that's a that's a that's a long program. But there's certainly, there's certainly a groundswell and interest, right, sex. And there's certainly, Oh yeah, it's crazy. Like, I think, I think Chamath has a lot of folks that that love his passion and the way he speaks to them and that, you know, he has a real sense for what I think people are feeling and can speak to that and obviously has experience and kind of making decisions and allocating resources. Right. So, you know, I think there's a lot of interest to math and a lot of drive to see you here's here's, you know, **** or get off the pot. Here's what I'll say, here's what I'll say. I've grown up. With nothing and getting to the other side, I'm completely convinced that poverty is a disease. That it is, except in this disease it is systematically. Reinforced, you know what I mean? So Jason stopped that. Talking to Bob is good. Yeah. And I would like to say all Americans and the citizens of California. I came from nothing. I came from there. I would eat rice three days a week and then I would eat the plate. The other four, by the way, the, the, the, the reality is that if, if I were to do it, if like, all the checks came back and it seemed like it was a plausible thing, I would only do it for the 18 months and just kind of, you know. But you'd have to get elected on a mandate where it was so clear that it's like all of California wanted these five or six laws to pass. Like, I think it's like. You're not running a candidate, you're running a platform. So it doesn't matter who it is, you know, whoever goes in it. It could be me, but it could be, frankly, Kim Kardashian or the Rock or David Sacks. I think what's really important is we should get alignment on a handful of laws that change the trajectory of the state. And the reason why that's important is if those laws can pass and the state turns around, then that's the road map for the other 49 States and I think that's a big deal. That's a really big deal. I think it's about a getting adoption of a playbook, a playbook, a playbook to fix California. And if that playbook is something that a group of people from different parties and different backgrounds can coalesce around and you know publish that playbook in a way that's easily understood and and you could take it and run it, let's let's pick what our top item would be. For me it's the building of multifamily unit housing I think would be in my top three. What's in your top three sacks? Well if if if I were to write a a a sort of catch phrase for. For a campaign, it would not be making make California great again, but it would be something more like tough and tolerant. Because that's why I think California wants so tolerant on LGBTQ rights. You know, tolerant towards people of different nationalities, towards immigration, you know, tolerant on social issues. But I think what California's really want now is tough on crime, tough on hard drugs, negotiate tougher deals with these. Unions and special interests who are just pillaging the state. We. And then, you know, and frankly tougher on the politicians because they're making it too tough on the people to, you know, to to live and to run their businesses. And, you know, we need to make it easier on the people and tougher on the politicians. Free bird what do you got in your top three items if you if we if we could only put three items on the docket you know 1/2 and three. I think creating much more affordable housing through multifamily you know going up as opposed to building out and just allowing you know anybody who wants to add a couple of stories, add a couple of stories and just more housing would lower the price of housing and maybe we have to change you know the taxation and maybe re evaluate the value of homes because right now you buy a home in 1970 for 50. That you're paying 1% of that for the rest of your life, right, which then makes it impossible to move and you've got two people living in 5005 bedroom square foot home because they can't move because there are tax bases is so low on it, right? What do you got Freeburg? I mean look the challenge is with any one of these things you have to balance it. It's like we talked about last time, you know, we talked about adding a transaction tax to to trading on markets, but you also have to get rid of the capital gains tax. Right. If you're going to get rid of that, you know that that proposition that locks in the property tax rate, I think it's a Prop 13, right? Sex. If you're going to get rid of Prop 13, you've got to phase it out over time. But to create the opportunity on the other side, which means how do you create more affordable housing at the same time that you get rid of Prop 13, you've got to enable, as you pointed out, the ability for more rapid housing to to be developed and dropping regulatory constraints and maybe removing some of the Union pricing and some of the work that gets done and the supply chain. And so on. And so you know I think it's about the the balance trade off amongst these things. You know if we're going to talk about trying to keep the the top 40,000 households in California and you're gonna drop the tax rate on them to keep them here which is an extremely controversial anti populist movement. And you know right now you'd have to find another way to kind of resolve resolve that gap or at the same time kind of reduce the cost of our top cost is education. So you need education reform. Our second top cost is healthcare and and and and other related services. And how do you resolve that, that there's a lot of structural things in, there's probably a checklist of 10 things that you would say, let's go negotiate better prescription drug prices, let's make, you know, the services more efficient, meaning how many patients does a doctor get to see per hour, per day, per year, per week, whatever. There's all these things that you kind of go through and you can make each one of those dollars that are being spent more efficient. So as much as I'd love to kind of rattle it up to three different things, this is a management problem. And, you know, as as those of us who have run businesses that are struggling or challenged. I have experienced that there isn't one thing to do to fix a problem when something is not operating well, but you really, it really does come down to talent. And so, you know, I would think that the people that are sitting in those assembly and Senate seats need to be the right people. And the person sitting in the governor's mansion needs to be the right person who will surround him or herself with the right people who are operators and managers and leaders who know how to resolve these problems and go through and do just like that guy did. And Dave with the napkin and, you know, right out, look, here's the 10 simple things we can do to. Highs. And here's the 10 simple things we can do to fix higher education and go in and cut half the expense. And if you cut half the expense, you have a lot of things you can start to do. And so yeah, I I don't have a simple answer for you, jakal, but I think it comes down to balance. Would you say and I school vouchers, since you brought up education, are the quickest solution there is to create more competition quickly by giving parents the ability to take their voucher and go to whatever school they want. I'll be honest, I haven't read enough on school vouchers to know that the ramifications of the program programs that have been proposed. So I'm not going to be very well. Very thoughtful on that. Well, I'll speak in favor of the idea of giving parents more choice. I mean, these schools are being are they being run for the students or for the special interest? Because right now the parents don't really get any choice. I mean, look, if we can recall the governor, why can't we? Why can't the parents of a school recall the headmaster? I mean, why don't we give them the ability to circulate a petition if they're unhappy? I think in the case of the governor recall, if we get 12% of voters to sign. The recall petition. Then you got a recall election. So what if you had a a system where the parents of a school could sign a petition and then they vote? And if the majority of the parents? 30 of the parents vote to recall a school. Then they can basically replace the headmaster and run it in a different way. Why shouldn't they have that choice? It's crazy to me for who's that's yeah. Yeah, let me give you, let me give you a little math. I just did on my, on my calculator here. So the average student in California costs $18,000 a year roughly. OK. And we have a classroom size on average of about 25 students. It's actually higher than the national average. So you multiply 18,000 by 25, that's $450,000 per classroom. OK. Now how much does a teacher cost? I mean, OK, that's the average in California. For teachers, it's like, let's let's let's let's say, let's say that we paid teachers extremely well. Let's say we paid the teachers 100,000 a year because we all believe in having great teachers. OK, that would still leave $350,000 left over. And remember, you don't have the real estate cost, right? The state already owns all these schools. So where is the money going? We've systematically entrenched poverty. I think that what happened to you, Friedberg or sacks or me or Jackal? I don't think it's possible anymore, and I think that we are aberrations and I think that. Folks that are younger than us would look at us and they look at us, I think in part because they're like, God, I I would love to have that shot and I don't think they know where to start. And I think they also see a system that feels very much rigged against them just by Bitcoin. I mean, This is why they're attracted to buying Bitcoin. We're doing what they did with GameStop and why Wall Street insiders versus outsiders, they feel like they have this opportunity to show the man and and they don't. That's why they don't take on school debt. I mean, I I don't blame millennials for being disgruntled if they. Got 100 or 200K in debt? And they were told this degree would get them, you know, this would be their ticket. And it was it's been disconnected. It's a lot. It's a it's a great lie. It's a great lie. And so, you know, that's that's one of the big lies. And and I think we're sacrificing it now because like you know, we're, we're we're we're making this great sacrifice because we're exposing these lies to be exactly as they are. So, I mean, if you if I had to pick a couple things, Jackal, I would say the most important thing for me is school vouchers tied to like I would increase public school salaries. You pick your number. I don't really care what it is. 100 grand. 125 grand. But you need to tie it to school vouchers so that any parent can put their kid into the best school that is for them. Or start their own school. Like there needs to be competition or start five parents get together and they each get an 18K voucher. They can spend 100,000 on a teacher to teach five students. And if they hit their goals like they're going to do better. What? What? Five parents? Even the, you know, the most disadvantaged parents would take advantage of this. To me, that would be the that's like the first above all else because I think it creates accountability and it allows our kids to have a decent shot. The second thing I would probably do is I would actually just cut all taxes to zero on the personal side. But I would introduce a progressive taxation system for corporations. And I would try some of these novel things like getting equity in turn for intern for credits and allowing folks to capitalize certain expenses. I mean, these are like, I know people think that's also stupid, but like, you know, if all we did was just own 1% of Apple, Google, Facebook, you'd have $3 trillion. $4 trillion trillion with the T you know what I mean? Well, not not you. That's 4 trillion market cap. But you know, you know what I'm trying to say? Like if you control 1% of that, it goes a long way. So there's that and then. I do think that there's something that we need to do for people to be able to live. I I remember interviewing somebody and, you know, he's what he said to me just made me so sad. He's like, I, you know, he drives an hour and a half into work every day and then drives an hour and a half home. And I was like, how, how, how is this possible? And and I just thought to myself, like, what does that do to you and your family? Because I don't see my family and and I'm like, well, can't we just increase your salary? And, you know, that's not possible because of the job that he had and then he couldn't afford to live. And so all these things just build up in the system. So those would be my three things. It sounds like we have a bestie platform. We we we need to figure out who the best candidate is going to be. Hopefully we can convince truth to do it, but the next thing, but the first thing we got to do is we got to make sure this recall happens. There's another five weeks or so to gather signatures, so everybody should check out the website It's rescue if you have the means to donate. Please do. I donated $50,000 to it. They are taking donations. And even if you're out of state but believe in this cause, like Thomas said, what happens in California or as California goes, so goes the nation. You know, it would be a really good thing to send a message, even if you're out of state to these special interests who are ruining the state, that this isn't going to be tolerated because every politician in the country is going to hear that and they're going to start realizing, oh, I can't just pay attention to the insiders. I need to start. Paying attention to the outsiders, to the majority of citizens who've never been organized before, but now they are getting organized and so we need to send this message. That is the first step. We're not going to get any positive change in this state until the politicians are held accountable, and this recall is the the starting point for that. And if you take a picture with the form and CC your besties, we'll follow you back or retweet you or like you, some combination of that. I saw a couple of people did it after the last pod. So print out the form and go ahead and take the next and the next, the next podcast, just for everybody to know. Episode 21, We are going to start by reading mean tweets. There have been some. There have been some unbelievably vicious tweets targeted. You typically at Jason and then and then at me a little bit at David Sacks, but finally we really went after the Queen. We've broken the seal and the Queen has been targeted really why he was called he was called sanctimonious. He was called sanctimonious on Twitter. We are going to make him read his mean tweet to kick off episode 21 and we will see you all next time on the All in podcast. Love you guys. Let your winners ride Rain Man David Sasson. We open sources to the fans and they've just gone crazy with it. I'm going. Besties are. My dog's driveway. Ohh man. You should all just get a room and just have one big huge order because they're always useless. It's like this, like sexual tension that they just need to release them out. Your beat beat your feet. We need to get merchants.