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.

E55: Valuing crypto projects, Rivian worth $100B+, inflation: causes and corrections and more

E55: Valuing crypto projects, Rivian worth $100B+, inflation: causes and corrections and more

Sat, 13 Nov 2021 08:34

0:00 Bestie intro and Solana Breakpoint talk

4:43 Covering the censored segment from last week, how to value crypto projects and general investing, what to take away from the podcast

30:45 Rivian's >$100B valuation, greatest CNBC hit of all time

42:06 Inflation: reacting to the CPI number, problems with MMT, strategies to curb it

1:01:34 Xi Jinping becomes China's "Supreme Leader"

1:08:35 GE, Toshiba, and J&J break up into separate businesses: is this the end of the conglomerate? Insights from PayPal breaking off from eBay, what buybacks signal

1:24:44 Besties wrap the show

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Saxis old Doo Doo Doo Doo Doo Doo Doo Doo Doo Doo Doo Doo Doo Doo Doo that's almost dead. Jackals fat Doo Doo Doo Doo Doo Jay calls. Fat Doo Doo Doo Doo Doo Doo daddy Oh my God anymore he's getting the cannons back. Doo Doo Doo free burgs not human due to robot dude. Do, do, do, do, do. He's a robot. Don't quit your day job tomorrow. That's all I can say, bro. You don't remember baby shark? I mean, how many? No, he doesn't know his kids first names or birthdays. How does he know baby shark? While your winners ride. Rain Man, David. We open sources to the fans and they discover. Queen. Hey everybody, welcome to episode 55 of the All in podcast with us again this week. The dictator himself, Chamath Polly Hypatia, the Queen of quinoa, David Freedberg and. Coming back from Portugal and the Salana Conference, riding his where heroin and prostitution are legal, Davidson were gonna, we were going to double click on that but you jumped the gun here on the docket. So, David, how was the heroin in Portugal? Great, great. OK, I was, I was fully drinking the kool-aid at the Sauna conference. It wasn't heroin. It was kool-aid. It was it was literally kool-aid. How many people were at the Solana conference in Portugal? Why is it in Portugal? What happens at a Solana crypto conference? I think there were thousands of people there. And it was, I mean, easily. And I mean, it was kind of a madhouse and people were trying to get in last minute and nobody could get in because the conference was like totally sold out. It was a lot of crypto developers, a lot of people with projects. And why Portugal? I think because there's a lot of conferences having in Portugal right now, because they are easier on the COVID restrictions and a lot of other countries, so you can actually get in there and host a conference indoors with no masks. For ************? Can't remember if like masks were required or not. I did see people wearing masks indoors. So were you required to be vaccinated? They do. I don't know. So I think I did show a vaccine pass at one point when I checked in. I just did my booster. I'm going to do my booster. Kind of it kind of. It was a little, I would say the same kind of ****** feeling as the second one. Hmm. There's like a friend though. I just got fired. I mean, I had the first two were Pfizer, so I took Pfizer. She was the nurse, actually gave me a choice. She's like, you can do whatever you want. Pfizer Moderna or J&JI. Just. I didn't know any better. I texted my doctor. So I just took Pfizer, although the interesting thing is modernas the only one that's dose regulated for the third dose. So there's a they they they actually give you less specifically, but Pfizer is the same for all. I think we talked about this on the pod. There's one theory which they told you get whatever one you can get was the instructions because it's more important to just get one than which one you get. But they said there's a Swiss cheese theory which is if you took two slices of Swiss cheese from two different bricks of it, the holes would not be the same and therefore you overlap them. So whichever deficiencies each one. Add maybe the other one doesn't. So I should have gotten modern, is what you're saying. That would be if you believe in the Swiss cheese there, I don't know, free burger or science guy. You should ask Heron Rogers what he thinks. I mean, he just straight up lied about being vaccinated, huh? I think so. And I think the NFL's not doing anything about it. Yeah. That's not cool. Why would you lie about it? I mean, but he's not. He would have still been allowed to play, so there was no reason to lie about it. I I'm not totally up on that story. The rumor is that Kyrie is going to be playing basketball soon because Eric Adams is going to lift the vaccine restrictions. You will not need to be show a vaccine card or. Where a mask row? I don't think it's just a PCR test every day. I don't think it's going to matter because the Warriors are shooting the lights out and clay hasn't even come back yet and so. The second you see Gary, did you see Gary Payton? Yeah, junior, these clips. And I mean, I mean he. Animals like living above the rim and like sharing. And Weissman is Wiseman back. And then Wiggins is playing great basketball. I mean, the Warriors are going to win this year. I don't know. Steph is otherworldly right now. Yeah, I think Steph got something to prove even though he doesn't. But he's playing like he's got something to prove. OK, so. Do we want to just cover the elephant in the room there? The last episode I think we should get out of the way because it relates to Solana there was. We took something out of the last podcast so people understand we have an agreement between the four of us. If there's something that somebody doesn't want in the pot after we record it, we'll take it out because we don't want anybody. I mean, I think the philosophy, we haven't said this out loud is we don't want anybody to say something they regret that could cause damage to other people or to themselves. So if they want to take something out that they said, that's fine with all of us. And basically each of us has veto right on something. So last week, two people took their veto right on something and we took something out. You want to explain our thinking on that sax and why we're reversing? Yeah. OK. So a few weeks ago on the pod, there was an oblique reference between me and chamas. Regarding Salana and so and so some Internet theorists that claimed that we were trying to engineer a pump and dump and Solana, which if you actually listen to what we said, it certainly is not a pump. Let me explain what it was. So craft is the beneficiary because we invest, we're the first investors in Multicoin. We were kind of like their seed investor, investor in there. We put in something like 40% of the money for their special Opportunity Fund. They were one of the first investors in Solana. So we are the beneficiary of about a billion dollars of Solana. So thank you. Multicoin. At some point, well, so, so they have started doing distributions. But at the time I texted chamath, they hadn't really started doing distributions. I didn't know how deep and liquid the market for Solana was. I just asked him off like I I'd heard that Germany have said something, that he was long Swan and went to accumulate. So I sent him a text saying, hey, are you interested? You know, I thought maybe we could do an OTC transaction at some point. We get our Solana, he basically, you know, we had a brief exchange about that and then he mentioned on the pod. Was the extent of it. What I didn't know at the time, but learned subsequently is that the market for Solana is very deep. About 3 1/2 billion notional is traded every day, so there's no need, even if we wanted to fully get out of our Solana position, which by the way, we don't even have. You know, Multicoin still has most of it. We it's not necessary to do an OTC transaction. We could just sell it. Explain what OTC transaction is. It just means over the counter. It just means that instead of going to like an exchange, you would deal with like a trading desk or it could just be direct like for me to chamath. So that was basically the exchange it and I talked about it for maybe two minutes and then it came up on the pod for 20 seconds. So in some Internet theorist basically clipped it and tried to accuse us of organizing a pump and. Well, obviously if you're talking about selling something, it's not a pump. It's also not a dump either. So anyway, the reason why we said cut it out last week is because we didn't want to give oxygen to this stupid, like conspiracy theory that somebody had invented on the Internet with like no basis whatsoever because you could spend all day trying to like, shoot the stuff down. But then at the sauna conference, enough told me enough people told me that this was becoming a meme that I thought was worth addressing. And what? And they look, you understand, with crypto, is that for every cryptocurrency? Like Solana, there are haters because they're invested in tribal or talking up their books, they're pumping dumps, and there are armies of anonymous Twitter accounts that will coordinate attacks and or memes, etcetera. So they're trying to spread the rumor that like VC's are big holders and slana and are going to dump it. The reality is that Multicoin has a large position, but they have LP's. They are slowly distributing their positions to LP's. We will. Forms of the tokens, they're not selling, giving you. They're giving you the tokens you get to decide what you do. Yes. And by the way, that's what we would like to do as well. We're currently working through those mechanics because it's actually complicated for our VC firm to distribute, you know, in kind through tokens. But if you had to give them to your LP. So that's what I would like to do exactly. So people are doing that with Coinbase. So Coinbase is providing that as a service now from my understanding, right? So, so we have to work through with our P but that's we're gonna try to do is distribute it in kind so everyone can make their own decision. I have a couple things to say. So I've only been a buyer. I've never. I haven't sold a single. Cellana token. And so we are, you know, net buyers and we're buying a bunch of stuff. But I hate acknowledging that. And This is why, you know, my tone was more. Noncommittal when we did the pod is that I really don't like this culture that's emerged via Twitter mostly. Where? You all of a sudden have to be this maximalist that basically falls on their sword and never sells in order to be legitimate. And I think that that's a really dangerous place to be. So, you know, look, if I take a dangerous, well, if I take a much, much bigger step back, let me put Solana in the context of crypto and let me put crypto in the context of the markets and where we are today at the end of the week after, you know Q3 earnings in November of of 2021, we have. The stock market at absolute all time highs ripping. We have crypto at absolute all time highs. Ripping. We have the art markets. I don't know if you guys saw Phillips and Christies and Sotheby's this past week at absolute all time highs. Sold another people for 25 million. We have inflation at a 30 year high. We have 10 year break evens at a 25 year high. We have you know, one point some odd trillion dollars that we just approved last week and we're still horse trading on another three, you know, $1.8 trillion of stimulus that we're going to put in and so when you. And then you have I and I think the the most important thing, which is the two most important founders of our generation, the two smartest people who have really consistently won, Elon Musk and Jeff Bezos, have collectively sold more than $11 billion of their holdings this year alone. And if you can't take all of that and decide for yourself what's right for you and your family, you're doing yourself a disservice. I think it's important for me to never sort of like, you know, be forced to tell folks whether I'm buying or selling, although I'm willing to do it in moments where I think it's important. But I think it's really important to understand the context. And so I think like these folks that like, think derisively about individuals who are managing risk, I think it's really naive and I think it's it creates a lot of missed opportunity for them as well if the smartest people in the world. Are now selling their core holdings that they told you they would never sell and you are not reconsidering your position on things. You're either much smarter than them, or you're being really, really reckless. All right, there you have it. Yeah. You know, I we just people also know inside baseball we have a docket of stories that we talk about on our group chat that make up the docket for the show. But I'll bring stuff up and I didn't bring that up in some way to cause trouble or anything. I thought you guys would want to clear the air about it. And I understand Charmouth position of, hey, you don't want to give these oxygen or whatever, but I think you know that we needed to clear the air until, you know, I went to the conference and enough people mentioned it. So. But what's so funny is half the people on Twitter spend all their time in crypto lens saying things like. Never gonna make it. Have fun staying poor. They're extremely, Jason, as you said, tribal. I'm not sure that they're doing first principles analysis of these things. They've gone. They've got exceptionally lucky. Yeah, some of them are exceptionally good. But many people, broadly speaking, have gotten exceptionally lucky. And I think a little bit of it is getting to their head where they become, you know, very virulent against people that they think, you know, whose perspectives may actually be negatively affecting their position without actually understanding what David said, which is these are incredibly deep liquid markets. And one person's opinion, it can't do much of anything. Right. I mean, it's a really good point. I mean, I'd like to give my opinion on Solana, but the thing or just crypto in general, the thing that's like hard about it is that it's hard to talk about the benefits of, say, the Solana blockchain without being seen as a pumper of soul or a dumper of ETH or whatever, because all these things are so intrinsically connected. I mean, I learned a lot of really bullish things about Solana, you know, at this conference. I mean, the the biggest thing is, I mean, there's basically a a battle for the hearts and minds of developers going on right now between Swan and Ethereum. That's why Solana has raced. Up to, you know, over 200, but I don't know what like 7000% increase or something incredible like that. The reason is because Solana as a blockchain gives confirmations back and something like 400 milliseconds, whereas Ethereum takes, you know, minutes and you know, transaction that might cost 10s of dollars, 1020 thirty $50.00 of gas on Ethereum cost pennies on Salana. And so that's. Yeah, exactly. It's also, you know, a lot of developers feel like the tools, the developer tools that they've created. More easier than building on solidity. The thing that Solana gives up the trade off that it makes is decentralization. There's space basically that transactions are processed by 20 validators and they're a top 20 based on holdings of soul. So it's kind of like this proof of stake model. So anyway there's some trade-offs there. I can tell you that, you know, it's the view of, you know, our friends at Multicoin and you know, I heard a lot of this views at the conference, although obviously you have to take it with a grain of salt because these are the biggest. Believers, but their view is at Solana over the next year, we'll flip Ethereum based on developer activity that there's real companies being created. We spend a lot of time actually before we do anything is that's the only thing we've been looking at, you know, and. Sindica fractal. A lot of the stuff that we've done DeSoto is purely driven by developer interest when we see developers in the open source ecosystem, building things on top of this stuff, making stuff that's composable and usable by other people, and building infrastructure. You know, we don't really second guess that because they are spending their the most important currency, which is not monetary capital, but human capital. Yeah, right. There's a time and there's skill and the reputation and other project. Yeah. And so when enough developers. So I I I've always thought you just followed the developers and as more and more projects get started, you just have to unemotionally support that. I think the writing is on the wall, which is Bitcoin is gold. Etherium looks like it's trending to be silver, and Solana could be the first, but there will be others. That come after it of real developer ecosystems that can be built on top of it. The other the other thing that I would OfferUp to people for them to think about is. Before you blindly go and rush into crypto. One way in which I try to think about these things is in the following way. You see these projects get started all the time, and I would view each of these projects as a mini economy and really try to think what is the economic value of what's happening under the hood. So, simple example, you know, helium is an interesting project that's trying to build a completely decentralized, you know, 5G infrastructure, right? Render is a really interesting project that's trying to build a completely decentralized, you know, graphical processing infrastructure. Right, GPUs essentially. In both of those things, you can quantifiably economically measure what the value is that people get right. In the case of render, you're basically displacing an AWS instance, and so that has a price and a value, and so you know for render to be valuable, there's an economic value that it replaces. If you're joining a hotspot that has an economic value where you hadn't necessarily have to pay, you know, to get Internet connectivity if you all of a sudden around the helium network, that displaces a measurable economic quantum. Understanding that is probably in taking the absolute value of that is the best way of really understanding which projects have potential. So if you take those two ideas and marry them together, where is their developer interest and where is their measurable economic activity? At the intersection of those, I think, are the really compelling projects that can win. The thing that complicates all of this is that the developers are not just picking based on which language or technology or stack they think has the most potential, they also have acquired economic stakes in it, so a developer who might be objective. Say, hey, this new platform is better than Ethereum might be sitting on millions of dollars in Ethereum and they're like, I want to keep my bet going here and I'm going to keep talking in my book. Possibly, but I but I do think that developers in general will choose the platform that's easiest and cheapest and fastest for them to develop on. Which would mean the list on coin market cap of market cap ones that has been static for a decade of crypto almost. You know, or largely the top 10 doesn't change that much. It's XRP. It's stellar. Ethereum, Bitcoin, tether? That could be up for grabs. That whole thing could change now that people are actually building projects and the the projects are getting competitive with each other. And that's that flipping we're talking about. Correct sex. Yeah, I think that what's tricky here again is I never want to give anyone investment advice. I mean, that's just not my job. And if there's anyone out there listening to the show because they're trying to get like tips or tricks, whatever, for investment, like, I'm not really comfortable telling people what to do. So, you know, everyone just has to understand that I did. I do feel like what I saw at this conference over the past week in terms of developer enthusiasm activity was very bullish actually was a lot like I went to the. Ethereum conference I think was back in 2017, several years ago, and it felt a little bit like that, although I would say that this time it felt less academic, like several years ago it felt more like white papers. Now it actually feels like real projects and businesses that people are trying to create infrastructure and less applications or more applications infrastructure mentioned a couple of them. So there's helium, which is creating a decentralized network for Wi-Fi. There's a render which is creating a decentralized network for GPU. There's one called Hive Mapper. I met the founder. It's a decentralized network for people to map the world. You can think of, you know, the concept of a minor that Bitcoin invented. Think of them more as like a resource provider to a network. So with Bitcoin, you know, we call them miners, but they're the validators of transactions, and we're trying to incentivize them through block rewards, basically through small bits of Bitcoin that get released to, to provide these valuable computing resources to the network. And so people are figuring out now how to create massively decentralized networks where you have, you know, thousands or millions of resource. Providers provide a little bit of something to the network for everyone's benefit. In exchange, they get some coin that's like a really interesting model that couldn't exist before crypto. And so, yeah, I mean, I think it's it's very interesting. But you know, in order for that to work, you have to have like very you need fast, efficient, scalable blockchains. And the feeling, as, I mean, I'll give credit here to, to Tushar, who is one of the GPS of multicoin. His view is that this was the iPhone moment. The blockchain that that what's Allana has built because it's massively scalable and also very cheap. I mean, again, you can run a lot of transactions for pennies. Now all of that is obviously very bullish. First, a lot of the thing I wrestle with is, and chamath kind of allude to this is I think everything's kind of in a bubble right now because of monetary and fiscal policy. And so, you know, I guess I you could say that I'm long Solana versus ETH, but I do kind of worry that the whole world right now is very bubbly. And so as a GP you like, what do you do about that? I can tell you right now, like this, second, we are sitting on Solana that we have not sold. So you know, I am long in that sense. However, sometime over the next, whatever number of years, we will distribute out our position of Salana to LP's will make their decision and then they make their decisions, might specialize in crypto and want to keep it. Other ones might not want to hold assets and need that money to fund their endowment, to give scholarships to students, or whatever your LP's particularly do. Well, yeah, I mean and so I guess. To the issue of, hey, we're not giving investment advice here. We are all capital allocators and startup creators, so we're talking about our day-to-day lives here. Nobody should interpret this as investment advice, and especially not in a world. Now, I don't know if you guys saw what happened with Vivian this week. I don't know how we don't talk about a company with. Essentially, no public sales. They've sold 148 cars to their employees. It's worth $120 billion. Any freeberg did you see this IPO? Any thoughts on it? Seems like you have investment advice for the audience that you'd like to give. Tell me what Rivian does. Can you play that video that you found that you shared with everyone? You have that video? Cute. OK, well, I we we do have it. Like, we queue it up. Did you see this yet? So who is this guy? No, I have it. Ohh that. Yeah, yeah. Well, but just so I don't want to beat this point to death, but I just think it's so important for the audience that what they should be getting out of this show, if they're fans is maybe like advice on how to think. Thinking about how we think about investments, first principle tips. Exactly. So look, if you want to invest in crypto, first of all like go understand like what all these different projects are blockchains do and figure out what is the purpose of the token in that system. What are the token economics? Yeah, does it even make sense or is it just a scam? Then if it's a if it's something like a blockchain, go research how many projects are have developers on them and how much code is being checked in and maybe open a wallet and buy some NFT. And buy some ETH and transfer it and learn just how to set up your Internet connection. Right. This was 1995, right? Exactly. And then on top of all that, you got to consider macro forces because, I mean, and I think, you know, my friends in multiplayer would fully concede this, that, you know, it could be the case that if there's a crypto bust over the next year and this thing, you know, crypto has gone through boom and bust cycles for many, many years, you could standard. It's a standard. So you could have a situation in which, for example, Salana flips ETH and yet still goes down. Value, because there's an overall bus cycle. So you know, you have to consider the macroeconomic factors that as well. So there's a lot of things to consider here. And then you also have to consider your own risk tolerance and you know what is appropriate for your portfolio and it may be, do you need your money? Are you a 25 year old? Everything is at all time highs and the two smartest men in the world are selling. Just not just them. By the way, there are other guys that are heavily on the other side waiting for this whole thing to go. Like, Druckenmiller has been very vocal about this, and he's he's been the best macro trader in the last 30 years. So his position is what exactly? That we're printing too much money and we're in a lot of trouble. So, you know, look, I mean generally there is I think a good point of view being shared here, which is, you know, understanding how to think about what you're investing in and what your your expectations are versus relying on someone's advice or opinion on what to do. If you have to rely on someone else's advice or opinion on what to do, you're going to eventually lose money. You should not be in that. You should not be in the market because guess what, anyone that's giving you advice. Their opinions is going to make money if you do what they tell you to do, if you do what they tell you to do, end of story. So at some point they're going to make money and you're going to end up losing money. And it's a, it's, you know, it's, it's it's a better game to play to learn how to kind of be thoughtful about where's your money going, what are you investing in? And it takes a lot of time and a lot of money. I've been sitting here silently as you guys have been talking deeply about Solana and Etherium and Bitcoin and the crypto markets because I realized so much of, you know, what's needed to be successful in entering this market is a depth of understanding, a depth of knowledge. My time is highly limited. I have spent no time understanding crypto markets because it's so deep and it's so fluid. Is changing every day. It's changing every week. So if I can't get smart enough to feel confident about the opinions and decisions that I would be making as an investor, I decide not to invest and I stay out. And so I'm not an active crypto investor. You're for that list and you're on that razor's edge on synthetic biology and and so many other whatever is there are there other areas where it's better for me to spend my time and my energy and I and I've chosen to do that versus being drawn into what view, what feels like a very exciting kind of, you know, turbulent time. There are other areas that I kind of spend my time on and I just kind of. Try to recognize that maybe I don't know what I'm doing if I were to try and get involved here. And so I'd rather stay out. And I think that's council forever for anyone you know, if you're going to make an investment, it's important to feel confident about the knowledge and the depth needed to kind of be different than the build on your point. Like when I when I started doing my specs, I started to write these one pagers and those one pages were artifacts for me to hold myself accountable for how I saw something in a moment in time and then to be able to see whether it was. Tracking to that and then also to share it to other people. A starting point, as David said, a journey where they should then if they're curious, go and do their own work. It turned out not enough people were doing the work. So then I had to start adding disclaimers to these things saying, hey guys, I'm not telling you to buy this. Please be abundantly clear. These next backs that I I will eventually launch, you're gonna see an entire like inbred block letters like please don't buy this. Right? Because to your point, it doesn't matter what you say. People want a lazy, easy way out. And so I just want to reiterate what all of you guys said. None of us are dispensing advice. We are not telling you to do anything. Please do your own work and please come to your own conclusion. It is your responsibility. And if you're not sure, go and look at your children. In the face or your significant other in the face, you are responsible to them. And so do your own work. I'll say one more. Point on where I sit as an investor, I I choose. To only participate in investing in what I call productive assets. That is, you put some money into something and whatever that thing is is generating money in some way or is trying to generate value through a set of activities. Like a business or owning an apartment building where you're making rent, you know anything that or you know a a group of people that are trying to have some breakthrough or some discovery, those are productive assets. There's a lot of what's going on now. That is what I would call speculative assets, which is the only way you make money is if someone else pays more in the future versus what you're paying and there isn't an underlying productive asset to what you're putting money into are you're describing every IC, O or ship. So every NFT and the art market, right, these are, these are examples of unproductive assets. They're speculative assets in the sense that you're speculating that at some point the price of them are going to go up and someone, somebody wants that NFT more than someone down the road will pay more for that asset than what you paid. But that underlying asset, that capital that you just put in didn't go in to build something. It basically why didn't you generation, there's no IP into someone else's pocket that's sold that asset to you and you're eventually going to try and sell it to someone else and so you know they're there. There's a there's a real attraction here because what we just talked about is really hard to do, having fundamental analysis and understanding of businesses and a fundamental understanding of what's working and what's not and when to shift and, Oh my gosh, you know, are things different or are they not to do that? It's really hard. So people end up relying on opinions of others or they end up running into speculative markets. And the speculative markets are easy to understand. Someone just paid more for X than the other person did. Therefore, there's a trend line. It's going up. It's like playing roulette. And, you know, Black keeps coming up and you're like, OK, it's going to be black. Yeah, it has to be black. There were seven, correct. There were seven blacks. And so I I think that that's a really important kind of take away for for for folks that might be new as investors we're all susceptible. We're all susceptible to this. Like I was just looking you know at at at my own performance coming into the end of this year and. You know, I did a lot of spacks this year, but I also did these pipes, which are these third party deals, private investment and public entities. Exactly. Other people's deals that they were bringing to the market where they said, Chamath, do you want to be a part of it? And you know, and I did and part of it was I was. Looking at these things and, you know, freeberg doing my work, but in the end it turned out I didn't do nearly as much as I probably should have because I ended up sitting on top of other people's work versus the original or underwriting that I would do if it was my own deal itself, right? Anyways, the net net of it all, it's like, you know? That was very inefficient capital deployment. And as I look at it now, it's like, you know, I'm down, well, I'm technically up 19%, but that's really because of 1 deal. If I take that one deal out, which was a total outlier, I'm down 17% on about $200 million of invest. When you are a fast follower, not the originator, it wasn't your idea. This is critically important. There are many different ways to make money, but you have to specialize and you have to have first and your knowledge. I trusted other people. I did the same thing that I that I'm saying to other people about to do, do not just. Copy other people. You have to do your own principal work. And even when you do your own principal work, it may not be enough. And you have to be willing to basically see the forest from the trees and walk away. And so all these pipes are in the midst of sort of cleaning up and selling down. And they've been just a kind of a disaster for me. You know, hold on. I'm going to build on this for a second because I think it's critically important what you said as well, freedberg, you have to be comfortable with the investment you're making. I look at these companies and I look at the underlying customer of the product, you know, and and what kind of revenue it's going to generate and people. What? I was dunking on Rivian yesterday and I said, listen, you know, when Tesla went public, people forget their valuation was 1.5 billion, one point 71.7 so 1.7 billion. When they went public now, they already had thousands of roadsters and they had already had the no, they had 9393 million of revenue in year one. So this was dramatically different than what Rivian had rivian is being valued at, you know, whatever that is. 120 billion, I think yesterday RIVIAN has 17 billion in cash. Somebody asked me at the poker game last night. What I value rivian at, I said 17 + 317,000,000 in cash, plus 3 billion, double roughly what Tesla's was. The market's hotter right now, whatever, but I put them at 20 billion and people are giving a hard time about, I said, I think that's actually the realistic valuation for this company. And we are in a very dangerous moment in time right now where I think people are, whether it's meme stocks or crypto or NFT's, suspending disbelief in some cases spacks because they're not all created equal. And certainly in private companies we're seeing this where people are. Giving people an amount of credit which makes no logical sense and is getting further and further disconnected from reality. So as an investor you have a choice, either you have your fundamentals, which I'm not going to change my fundamentals, I'm going to focus on the fundamentals that got me where I am and I'm not going to be involved in $100 billion market cap company that hasn't launched a product yet, let alone $120 billion one. I'll stay focused on startups, but what you're saying is also important because you're highlighting. How you value that company, you individually said, I think that company's worth some multiple of how many cars have been sold in the past. Elon sold, you know, thousands of cars. He was worth 1.7 billion these guys have sold and other people are coming in and looking at this company and saying they've built facilities, they've built assembly lines and they've got pre-orders and bookings for lots and lots of cars down in the future. And clearly they've gone in and, you know, some people have gone in and seen these plants and seen these cars actually working. So, you know, it's a really important to take note that your point of view is one point of view in a very diverse. Market with many points of view and everyone's gonna come into this market. And that's why unless you individually as an investor have a strong point of view and can show that you can apply your unique insights to consistently beat the market, making decisions, investment decisions like that, you're eventually going to lose because those other points of view will be a bigger view of the truth and you'll lose money. And that's why that and that by the way, that's why picking stocks is ultimately a losers game. Unless you have some unique ability and insight for most people historically and in an up market everyone. Everyone looks like a genius, right? You need to have an edge and and the public markets are hard to say that there's something inside competency. Yeah, there's some unique competency that you need to. I mean, if we double click on what you just said as the things that would be reasons to embed on rivian, number one, they have 48,000 orders of pickup trucks. Against the F-150, which is now electric from Ford and a million. I don't know why. I don't know why you're arguing this right. Like you're just making a point that that we don't have someone on the on the on the the panel right now, but someone else could come in and argue and and I I would just say this is the part of the conversation. To be honest, Jason, to give you feedback I don't like because. Rivian just in defensive rivane for a second. What I have heard is that it's a, it's a well engineered car or truck rather. They've done a very smart path to market which is essentially to, you know, build these delivery trucks for Amazon that allowed them to even frankly, you know, be default alive versus, you know, to use the Paul Graham term instead of default dead. I think the point that's more important here is that it doesn't affect you. So let Rivian do well, you know, and this is part of the cycle and have an opinion publicly. No, no, no. I'm just saying this is the part of the cycle that I don't understand where people legitimately. Have these. 0 sum points of view about companies. And this is where I think freeberg is more right than anybody else. Which is there are the market is the sum of all these collective points of view. Sure. And I think it's fine. I think it's fine to have one. I think it's a little superficial, your point of view, because it's not really how so, you know, sitting on top of a model or anything else. And I think it's the same kind of superficiality that the Tesla Q guys had about Tesla for many years as well. It takes a long time. As somebody that does this every day and I just want to point this out, it takes an enormous amount of time. An enormous amount of work to be 55%, right, 350 companies. I meet with two in the public markets, Jason. It's different in the companies are going public now. So I take exception to what you're saying. I know a fraud when I see it. I've seen them before. That's a really big season. A fraud. That's not a fraud, no. But the distance between the valuation and reality is in the 50,000 billion, that's not in control of region. That's not in their control, OK? That's in a bunch of external market participants control. So you can't pin that on them. My point is, put it on, is the market right now seems dysfunctional and decent, properly measured, but throwing shade that you then you should throw shade at Tiro, Fidelity, all these people that are bidding up your companies, by the way, because they are the ones that are taking review into 120 billion, it's not review's fault. And Jason, what's really going on in the market was public speculators. What's really going on? It's not. You can't sell $16 billion of in an IPO to speculators. This, these are much lower price, but these are institutionally, these are institutionally. They trade orders, but regardless the market is clearly right now in in productive assets businesses. The market is looking at a time horizon that it has never looked at before, which is making bets that are at 10:15 twenty years in the future and that's because of the condition that we're in right now. From a monetary policy point of view, interest rates are so low there's nowhere to get yield in other assets. So you have to look further and further out to find value. So the market, the market is betting is making 10 year bets, which is like a VC type more than a 10 year veteran and and Jason? Sorry, I can I just can I just finish my last point because before you interrupt me. My issue, Jason, is I think you are an exceptional Angel investor, but just the same way you derided a bunch of late stage guys. Remember last night at poker when we were talking about late stage folks entering into the Angel market and the Series A, you were extremely dismissive because you know what the job is to be done, to do that job well and they have a different skill set. Similarly, what I would just offer for you to think about is the people that really underwrite public market stocks well, do things and have a skill set that is extremely specific. And it is well trained as well and I think that. Except me. Jump into Jake. You wanna defend me? And that's the people are in shock right now. Something that you speak to get yourself back in the game, guys. Purple. Purple. The moon is. The moon is set. The hell is freezing over right now. It's freezing over. So here's where I think I don't know about the driving company, but where I think Jake how's Riot is we've seen over and over again that when a company gets when a startup gets a billion dollar plus valuation without a product, invariably it ends up somewhere between a disappointment and outright fraud, whether you know it was Theranos or magic Leap or quibi or whatever. I'm not saying they're all frauds, I mean. I think just Theranos was fraud, whatever. So I think it's reasonable for any, let's say seed or early venture investor to develop the heuristic. Then I'm not going to invest in anything with a billion dollar with basically Unicorn valuation without seeing the product first. Because we've learned we've got our hands burned so many times from these overhyped companies. And here's where I agree, if I can't see and use the product, I'm not an investing. I'll invest in a seat stage, but I will not invest in a Unicorn stage. No way. I agree with that. But what I'm saying is when a company is going public like that, there is demonstrable proof of concept there, OK? The only market in which that's not true is in biotechnology. Well, I would say for Fisker and Nicola 2 related companies, those ones seem very, very shaky. You can debate about the scalability of these things and you can debate that people didn't do the diligence, but they had to at least put a proof of concept out there for you to judge if people don't do the work. I agree with you, like if you're rolling a truck down a hill, sure. Outright fraud? No. But my point is if you were there and you did your work, you would have seen what you needed to see. What I have heard from people who were investors in both lucid and Rivian is that they have sat in the cars, they've driven the cars, they've spent time with them, they've seen the factories and it's very much real. Now what they're debating is ramp and velocity and scale. I don't know. I don't have a position in either. I have the bigger macro point of view, which is important to me, which is. It's it's just because these things are in the public markets. I think people think it's easy to judge and I think actually modeling them and making good decisions is just as hard as it is for private come. We need to roll this clip because there is somebody who is giving exceptional advice on CNBC. Let's roll the clip. Yeah so we'll upstarts up about 25% just in four days since we've since we bought we bought it on about four days ago. So that's actually made a a nice little move in the short term, probably a little extended right now, but longer term. That that's a that's a a good looking name. A very powerful and very strong earnings. These stocks are they. Do they know? What do they do? Excuse me, what does upstart do? Well, I'm. I'm. I'm sorry. What kind of company is it? Yeah, I'm not. You're you're breaking up. Oh well, we've got an audio problem with Mark. I'm sorry. ******* God. Brutal. Who is this guy? Who is he? I have no idea. Is that is that like your uncle or something? I just want CNBC. Well, you know, the guy's been on many times, but doesn't this prove what we were saying, which is that you've got to do your own principal work here? That that is why we wanted to play. Here's a talking head. He's probably getting paid for selling some books and giving advice. Who knows nothing about what he's telling you? You can join his membership club for 1000 a month. Yeah, I'm sure he's publishing lots of papers that show that he's a highly successful, profitable investor. And look how smart he is. He doesn't even know the company just promoted on CNBC. It's incredible. On a mechanical basis here, chamath you and I've been on CNBC many times in that moment. What? What's going on? What do you think is going on in the host mind? And the the producer who has to dump this call because they're watching this. Let's move on. I just the breakdown. When he says I'm sorry, I I I have no idea what do they do? I think the point being made. I think the point has been made. Ohh, my Lord. Well, everybody should do their own work. Yeah. Do you? Let's get work. Sacks, you look like you want to say something. I mean, it just shows the agenda. Yeah, look, I mean, there is a massive agenda in corporate journalism. There's an agenda by the people on these shows to promote positions. There's an agenda by the reporters themselves. And on and on and on it goes. It's Jim's point. If you just take them at face value, you're, and you don't do your own work, then you're buying into someone else's agenda. Trust yourself, OK? One thing that we are trying to all understand is inflation. The CPI has gone up 6.2% in October, the highest jump in 31 years since 1990, according to the Wall Street Journal. 5th largest straight month, fifth straight month of inflation above 5%. You know, somebody tweeted out, we pull it up here, Denver Bitcoin put out a year over year commodity chart we can throw up on the screen and then I think freedberg you shared in the chat the average weekly retail prices. Around fertilizer. What are our thoughts on the nature of inflation and how that affects our? Investment I I think it's persistent and for some reason I think it's persistent. Is that? There's a, the, the. All of these things are intertwined. And so, you know, if you want to just bear with me for a second, like when, when this let's just go to the. The the entry level economic job, right? So you're a barista at Starbucks or you work at McDonald's and you're making 17 to $20.00 an hour? What that does is it it shifts labor. And eventually there are other people that are entering the workforce or, you know, may shift jobs and essentially it just causes this leaky bucket effect where everybody else has to then accommodate itself. So, you know, you have a guy like, you know, you have a company like Amazon, which is now gonna pay 25 or $30.00 to keep folks, right? Because otherwise they may say, oh, you know, if I make 15 or $16.00 an hour, I'd rather work at McDonald's. It's simpler in college. It's not backbreaking work, blah, blah, blah. So then they start to increase the amount that they pay, they increase their benefits and the like. Didn't they? I saw this thing this week. There's a crazy thing that's happening, though, which is it's now pulling people from nontraditional job classes into those jobs. There are teachers that are leaving teaching to go work at an Amazon warehouse. There are firefighters that are quitting being a firefighter to go work at an Amazon warehouse because you make the same or more. Plus, you have all of these other benefits, and the job is structurally a lot easier, and so people are making different optimizations. And to that point, I think we talked about this and Nick, you can put it in the group chat. In Reddit as an example, there is more engagement in the subreddit around having a simple work life than there is now in Wall Street bets, right? So there's been a structural, cultural change where people need to get paid more to do the same amount of work. And then at the same time you have all of the all of the supply side getting more expensive. Fertilizer makes corn more expensive, lumber makes house prices more expensive, chip prices makes the iPhone and cars more expensive or completely backlogged. You know yesterday a poker Sonny was showing us he bought a Tesla and the delivery. Is October of 2022. That's freaking crazy. So I I think that it's a, it's this is the beginning of a persistence. I think those are all look really valid points. The thing I'm seeing now is I think we've moved into what I'll call a contagion. Phase of inflation, which is people are hearing about inflation, they're seeing it in some places. My guess went up a little bit, my milk went up a little bit, whatever. And they're saying, well, I guess if everybody's raising prices, I need to raise the prices as well of whatever I provide in the world so I can just keep up with everybody else. And they're not looking at their inputs necessary and saying I need to charge more or that's the best business decision. They're just saying everything's going up around me. And so they raise prices. I've literally had this happen three or four times and I went to buy a car. And they wanted 15K over sticker and I didn't buy it based on principle, but I'm sitting here going like, maybe I'm an idiot. Maybe I should just pay the 15K over sticker where your thoughts sacks on inflation and they can teach you if you're not. My thoughts are, I told you guys like six months ago about this. Yeah. Can we just replay what I said on episode 32 researchers in the background giving written down what you said on a per episode? No, this guy's in the ******* debate club, Stanford. Debate club over some of us when we make predictions take them seriously. So you know, is that a dig at Professor Ice cold tanks? I'll give you guys a link to a prediction that was made. Here's I'll I mean I just want to replay the 20 seconds I said about this. You can may. Here we go. The two Davids dueling again. Just like in the group chat. I'm not dealing. Here's Friedberg, January 1st, 2021. If you don't think inflation is already here, you missed what happened to the stock market. Companies aren't performing better. We're just inflating everything. Financial assets first. Everything else will follow. That was a good one, sack. Just make your point. Just make your point. Just add the clip. I'm beginning to wonder if Biden's going to be a Jimmy Carter here. Because. Frankly, all he had to do was leave things well enough alone. COVID was winding down, we had a vaccine. All they had to do was distribute it to as many people as possible and COVID let the recovery take shape and instead they push this insane $10 trillion agenda. He's going to backfire massively. Look, if the economy turns, we were set for a post COVID boom. And right now that is all at risk. Because tomorrow, like you're saying, they're keeping the economy closed, or part parts of it, way too long. They then overcompensate for that by printing a ton of money, and then they overcompensate for that by raising taxes too much just to build on that. So that second step of their overcompensating, their inability to open with money, is so true because then what happens is your labor force stays impaired because people make enough money by not working. It was true, and I said it may. It's even more true now. He said. It was there was inflation. OK, there was inflation. OK, so now great. Good job. True. Yeah. I made one in January that said the same thing. Now, look, you can do three things to you could do three things to curb inflation, raise rates, right? When you raise interest rates, you slow spending. Prices come down, inflation slows, but the issue when you raise rates is obviously you see things like job loss and economic growth declines and it can very quickly spiral the other way. This is the the big challenge of Fed tapering. The other option is we've seen a a significant attempt at lately is to raise revenue, right. So increased tax rates tax a broader swath of people at a higher rate or a broader swath of business at a higher rate. So it's very likely that, you know, tax revenue could kind of present itself again as a driver if inflation continues to spiral up. And the third which is the least likely is cut spending, right. The the the federal government spending the way it does right now makes a very inefficient way of kind of putting capital into the system and inflating it. We've seen historically that anything the federal government spends money on like healthcare and education, the costs very quickly spiral out of control. Super inefficient. Why not just give that money to the free market to make decisions on how to spend it? It would be more efficient, etcetera. And the market would effectively find balance where buyers and sellers are equivalent as opposed to having the federal government driving the price of everything up the fourth option that people don't talk about, which I think may end up becoming an important option. Not kind of oblique option, but more kind of backdrop. So it's to start a war and you know, when you start a war like the dog, yeah, when you start a war, you stimulate the economy without needing to pump additional capital in. So you can increase growth and avoid the risk of stagflation and you can source resources that otherwise wouldn't be kind of flowing in the trade or basically in a in a land grab type situation. But it doesn't necessarily mean that policymakers would say, hey, let's go start a war to decrease inflation Taiwan. But the premise that conflict can improve the economy is a important backdrop that starts to play into policy decisions that might get made over the next couple of months and quarters. And that's really important. Whether or not the posturing is one of partnership and and reducing the tension with foreign nations or one of increasing the tension, it's more likely that we would want to increase the tension when we're in an inflationary environment. So quite a conspiracy there where you think sex, OK. We gotta go back to first principles on this thing. We're not going to start a war to tame inflation. OK, but let me just explain what inflation is, because I'm not sure people like, fully understand, like, how this works. Inflation is very simple. It's too much money chasing too few goods, OK? And we have both sides of the equation going on right now on the supply side. On the good side, we've got shortages, we've got the ports backed up where we've got paying people not to work. We still have the two trillion of COVID relief passed earlier this year. Which was responding to a problem that was largely winding down. So we have these labor shortage of people dropping out of the the workforce. And record numbers in the the number that just came out showed in more people quitting their jobs than ever before. So we have a shortage in terms of the production of goods and services that people want. The same time we have this monetary and fiscal expansion coming out of Washington, you've got, you know, again, they did the 1.9 trillion of COVID relief. They did 1.2 trillion of infrastructure. Biden still talking about another 2 trillion of social welfare. You have the Fed still printing money with QE, so you've got this massive expansion in the amount of money. So look, too much money chasing too too few goods creates this problem and it was very predictable. And So what I said back in May, this is what I was warning about. And it goes back to the Druckenmiller clip that we that we were talking about all the way back in May. He said the same thing, that we had a reckless fiscal and monetary expansionary policy coming out of Washington at a time we didn't need it. Because if you look at like retail spending back in May, it was back to above trend. So you know, in other words, like there was no demand problem, the economy was back and they've just been pumping and pumping out of Washington. We made it, we had. We had good intent. We wanted to make people not suffer. We wanted to get the economy on top. We may have just made a bigger bet than we needed to overdid it. We overdid it, clearly. But look, who wants to be the politician? Quite frankly, he's not going to get you who elects The Who ends the eviction moratorium, right? Nobody. Well, nobody wants to be the politician who says, OK, now you suddenly have to pay your rent. But obviously people have to pay their rent and we're taking away your bonus unemployment. I mean, people have to go back to work at some point when there's 10 million. Jobs open just as a. I've been watching the Taiwan situation like a hawk, and I don't know if you saw this this week to go off on another tangent, but the US is testing Israelis, Iron Dome and Guam as a defense against Chinese cruise missiles. Obviously. For possible deployment in Taiwan, and I know if you're watching and it's can't turn the NBA, but he has been going on CNN and stuff like that now talking about China. Pretty amazing. Maybe you should shift. I, I predict escalating global conflict, that'll be my prediction to mark the Q4. Well, I think that's I think actually that's a pretty valid prediction, but I just think it's a little bit separate than inflation. Like I said, it's not an explicit decision, but I do think that in the backdrop of an inflationary environment where you have something that can temper the condition at home that at the same time, you know, might sell politically. But we don't need, but it's not going to solve anything politically, OK. I mean World War Two, you know, famously got us out of the Great Depression because that did stimulate demand. But in this situation we're in today, we have too much demand. We have retail is trending way above curve. We have as a supply shortage and devoting resources taking them away from the productive economy to go to war would only exacerbate the problem, make it even worse. What we need right now actually is for Washington to back off, to stop pumping demand with this. You're still talking about this $2 trillion machine, so the money printing, that's what we see. To, to, to stop these disincentives for production and work. So you have. Man. I mean, mansion was exactly right about this. OK. Do you remember when mansion when he was resisting this $2 trillion social welfare bill? I mean, the things he said are already coming true. I mean, he said this months ago. He said that we should take a strategic pause because he said this is a quote. By all accounts, the threat posed by record inflation to the American people is not transitory and is instead getting worse. From the grocery store to the gas pump, Americans know that the inflation tax is real and DC can no longer ignore the economic pain Americans feel every day. That's what he was saying this past summer several months ago, and they rolled right over him. The psychology of this could be, could be self fulfilling as well because what's going to happen is you're going to have everybody raise prices because it's now become an escalation. You know, your hairdresser, your, you know, whatever, you know, services you're using, whatever product you're buying, whatever restaurant you're going to is going to put $2.00 on every appetizer and five bucks on every entree. Everything is just gonna keep going up and then what happens is people who are in the middle class. Or, you know, who are consumers of products. In a large way, we'll say, you know what? I'm gonna put off buying a car, then we're going to be driving all this supply up and then people gonna say, you know what? **** it, I'll just drive this one for two more years, right? That's gonna cause stagnation. And this big reflection, that's what we had in the 1970s. And you're right, it's called an inflationary spiral, which is the future expectations of increasing prices means that people start increasing them now, and that feeds on itself. And that's what we had in the late 1970s. And the thing that broke that was Paul Volcker jacking up interest rates. It was very painful. It caused a very severe recession in the early 1980s, but then the economy came roaring out of that by 83. It got Reagan elected in 84 and you had 30 straight years of declining interest rates and that led to a stock market boom. So the problem we have now, OK, here's the problem we have, is there's going to be no Paul Volcker. Why we can't afford to Jack up rates because the federal government's debt is so much bigger than it used are not on a fixed rate. We're on a variable rate. All of the debt we take the average. Security of government debt right now is 5 years, OK? So that, I mean, that means the whole debt rolls over within five years. So if they Jack up interest rates, we have almost 30 trillion of U.S. Federal debt right now. So every 1% that they increase interest rates, that means another 300 billion a year of debt service payments. Exactly. Exactly. So there's going to be enormous pressure on the Fed not to raise rates. You already are hearing Biden rattling the sabers saying that Powell may not be. This choice for a second term, by the way, Powell is very dovish. He's basically saying we can't raise rates right now because of this and that. So and and the Biden administration, nobody in Washington ever wants rates to go up, right? They want to keep these low rates forever. This is the problem is, look, at the end of the day, I don't know what the inflation picture is going to look like next year, but what concerns me is we don't have effective tools to fight it anymore because we've given up our ability to raise rates because it would, it would increase the cost of the debt so much. And I mean, so we just one article just to share with you guys is this again my favorite source of economic information is the the Fred blog, which is from the from the Saint Louis Fed. OK. Wrote a blog talking about two tales of federal debt. OK. And and the article is about here's why there's so much disagreement on whether the federal government debt is too high. So the first chart shows debt to GDP. This is always the way of looking at government debt was simply looking at the ratio of debt to GDP. It's now something like 125% in peacetime. I don't think we've had a higher peacetime ratio that would tell you things were out of control. But for the last decade while this has been going on, you had this whole school of thought, the MMT, modern monetary theory, all these economists and experts and politicians in the media were eager to buy in because they want to spend the money. OK, and what they said is no, it's not debt to GDP. You should look at debt service to GDP. This is the second chart on that blog. And so debt service to GDP was was staying constant or even going down as the debt to GDP. Is going up. Why? Because interest rates were so low. The problem is we're so foolish about this point of view is it is assumed that interest rates are going to last forever. Well, if that was your point of view, why didn't you do what Trump actually suggested several years ago when he suggested having hundred year T-bills? They should have walked in much much longer duration maturities on the federal debt and instead and yelling rejected this. OK, and so you've got a 5 year average duration, which means that if interest rates go back up the debt service. Boss is going to explode, yeah. In 1980 we changed the goal posts for CPI so even as a measurement to know what we look at and I think Jack Dorsey tweeted this out. So Nick, you may be able to find this tweet, but. You know, we changed the measurement of how CPI measures and so if you go back to the original measurement. It looks like inflation and CPI is much more pernicious than we would otherwise think it if we just look at the the new CPI that we that we started to look at as of 1980. So that's another sort of like point we did this. We did the same thing with I just go back to what I said early on had given up looking two smartest people that we both know are net sellers. Well, they're selling some, yeah. I mean, they're not selling. I'm just saying the two smartest people we know. I mean, we don't want to get financial advice here, but should everybody be moving to cash? No. Where do you put your money? I'm just saying to do totally confused. This is, I think, the admission just by productive assets, great businesses that have durability and let them ride for 20 years. I like your answer. The fact is we're all confounded as to what to do at this moment in time. We're all trying to figure this out and we do this for a living. But then you're trading the market like everyone else all the time. Like, you know, why trade the market where you can just buy great businesses own stakes in them. And let it rest. I'm just talking about money. I mean, my practical issues that I don't have infinite money. And so in order to put my money into productive assets, I have to sell other productive assets. Well, you've got other productive assets. Leave them in. Why so? Well then it's like, then I'm basically, you know, doubling down on a worldview that may be old and dated, right? So if I'm long a bunch of software companies and I really want to do something in climate science or biotech, what am I supposed to do? Don't try, don't try and time the market. Shift your assets, right? Why do you care? What the. No, I'm not trying to. I'm not trying, trying to time the market. I'm just saying if if my worldview shifts to really want to double down on climate science or alternative finance or biotech, I have to raise capital to do that. They have to raise capital. So you're saying, right, but but for me, I'm not raising it from other people. I'm raising it for myself. So I have to sell things to me. The best place to be right now is. In the company formation space. Because when you create a company like Friedberg does every three months, there are so much value being created at that moment in time and so much further capital getting poured into it. But if you are the originator of the company and you get some big slice of the cap table for doing that, which is completely valid, you originated the company, whether it's unique or call in or whatever it is. Man, that is a great moment of creation, of wealth creation. And when you're the person putting the money in at the billion dollar valuation before the company, whatever call in, I'm sorry, Clubhouse went from 100 million to 4 billion. With no revenue. I don't know what's happening in the world, but. Pretty crazy. Do you want to go on to Xi Jinping and his he's going to be speaking with Biden on Monday. That's done. He had he got it done before his his video, his zoom with Biden. Ohh yeah, so they're doing this now. The supreme leading hasn't left the supreme leader. Explain what this means from the story. I mean, I think the basic, the basic take away is that they've been working inside the body politic inside of China. To basically reflect G on the same level as Mao and. And effectively what this means is that it allows him. To remain the leader of China indefinitely. And so there is no transition of power. Typically what had happened was these, there were these 10 year windows and you know, you, you, you go Xiang Zimin, Hu Jintao, you know, 10 year cycles and then they passed the baton. But it now looks like we'll be living with Xi Jinping until until, you know, he he joins the afterworld so he's a ruler for life of China. Basically crazy. What an incredible feat of political maneuvering without judging it just to say. How, what a complicated Byzantine political infrastructure he must have had to navigate. I don't know how he played the three-dimensional chess with all these people. The slow systematic dismantling of the old guard, placing all of his people in, then slowly moving towards this, this kind of recognition for him. He's just admiring chamath. Yeah, no, the dictator got his name for a reason somewhere. Donald Trump and Steve Bannon are like, what did we do wrong? We were so close January 6th, we almost if Pence would have just played. Ball sacks, you'd still be in power, huh? Your guys dropped the ball and we wouldn't have inflationary. Just think if Trump was leader for life, you know, Jason, given how accurate my predictions have been, you should have a little bit more respect for my political positions. What do you guys think happens now? The G basically is ruler for life. You know, he I think the Chinese term for it is historic figure, which is that parlance of saying, you know, you're, you're basically, you're a made man, basically you can't get whacked. Nobody can touch you. You're good for life. The end. Nobody can question you. I mean Can you imagine Mao Zedong, you know, dunk shopping and how Xi Jinping incredible like he is at that level? Well, it means if you start a war and a in a serious military conflict that nobody can question you, right? You're the supreme leader, so. It's sort of like Putin and MBS like MBS can go kill a journalist and. He's got nobody to answer to. It means he has nobody to answer to. My was a Dong, initiated the revolution and, you know, done shopping, was really the architect of free Market, said has made China the economic powerhouse that it is today. Their internal reflection is Jinping is on the same scale of that now. I mean, I, I can't claim to know the situation for the future. Well, what? Yeah. What, what is the accomplishment that's gonna really put him in that league? And and you'd have to say it's the annexation of Taiwan. I mean, that's the thing that he must be looking to do before, you know, his time to reunify China. That could put him in that league. And so that that is the tripwire that to freeburg's point that could lead to, you know, a conflict. I think they, you know, I hate to say that freeberg. Is wrong because I don't think in this case I can. I do think that there is some left tail risk. For like a crazy wag the dog moment in Taiwan, it would be really scary. Really scary right now. If I I was looking at the sizes of the navies, people don't know this. Japan actually has a very large defensive Navy. The UK and the United States obviously have very large ones. China's is large, but not on a tonnage basis. They have a lot of ships, but together. I don't know if you saw the military exercises going on, but. New Zealand, Australia, the United States, UK and Japan were basically I think South Korea would were basically driving their ships around the South China Sea. This is going to be, I think you know, I did. I did a really interesting interview with the historian and commentator Neil Ferguson, who is also a pretty avid China watcher and I did an interview with him actually on on my app. You don't want me to say that shall not be named but anyway, so he. Hit a really great line, which is he said that the that the issue of Taiwan, it's basically like the issue of. Cuba and Berlin and the Persian Gulf all rolled into one. So it's like Cuba and the Cuban missile crisis, because it's right there off the shore of China. It's like Berlin. You know, because that was basically the dividing line between freedom and, you know, totalitarianism, you know, where, where the the Berlin Wall got built. And it's like the Persian Gulf because the new oil are the semiconductors, the chips that are fabbed in Taiwan at TSMC. And so all the resources that were dependent on for the new economy are all right there. So super smart framing. Yeah, it's, I thought it was a clever line. The thing we have to remember about G is that his father was. Was a commander of for Mao and was in a vice premier. And so, you know his historical he is the original princeling, right? Remember, you know, there there's this context of these Chinese princelings. But he is he is one of these originalists, and so his motivation will be, it seems at least. To bring China back into that. Spectrum of power, which is really about a consolidated country and a single nation state, and that has to include Taiwan. It can't. It can't. Not. So to your point, David, it's almost more motivation for him to go off on some crazy adventure and try to reclaim it. That's right. Now it's it's really interesting to look at the tonnage of ships and the number of ships. the United States has over 6000 tons of ships, 949 according to China has to only 2000 tons and 1000 ships have a lot of smaller ships. And then Russia, UK, India, Japan, France, Indonesia, Turkey, Germany, Italy, warships, Jason or yeah this is their their Navy warships and so they're fighting, but Japan has a very large one. I I wasn't aware of this because I thought they were not doing military buildup, but they have what's called a defensive Navy. Which can do offensive stuff. So this is uhm, I think this is really problematic. How many of these ships are smaller than sacks's yacht that he rented this? Yeah, SACC is tonnage would kind of put the United States over the top I think in this tonnage of sex is, yeah, this is going to be donating his, your should be no for sure. It's bigger than Indonesia. I see Indonesia on this list, Turkey, I mean how big? Once it was a starter yacht. In my indefensible. Next. Next one. Next one will be bigger. Yeah, Salon is going to make sure of that, right? Yeah, you can buy yachts with Salana. Alright. I think we covered enough. GE and Toshiba can't run their businesses, so they're each separating into three separate. Let's talk about that. That's interesting actually. And Johnson and Johnson. Yeah, we should talk about today. Alright, so on Tuesday, GM announced they were splitting into three separate companies, aviation, healthcare and energy. Toshiba reported a similar plan. Johnson and Johnson today. Johnson and Johnson was today and this is. In direct conflict with the consolidation and the creation of conglomerates, and I think this is an important point. Jakal, you know, in the 80s and 90s it was cool to create conglomerates, meaning you would kind of stick businesses together that were RJR, somewhat disparate because you could financially engineer a way to do it that would juice shareholder returns, right. You could borrow money, add lots of scale, the cost of debt goes down, you could increase your debt load, etcetera. And you know the. The challenge is like when you're scaling a business, you either need to grow your revenue organically or you need to acquire. And when you're acquiring, you're either acquiring horizontally or you're acquiring vertically, meaning you're kind of integrating your supply chain or you're integrating or you're adding ancillary businesses that you can cross sell. So you're either reducing your costs or increasing your cross selling ability. So there's some inherent synergy and the acquisition. The problem with conglomerates is there is very little synergy, meaning like when you acquire a new business like an aviation business, it doesn't create synergy for your healthcare. And, you know, there was always a rationalization that these managers of these big conglomerates had, which was like, Oh well, we could do this and we could do that. At the end of the day, it was financial engineering where they simply kind of used debt to reduce, you know, the cost of capital and increase the the shareholder returns. And now everyone's kind of waking up to the fact that you're actually decreasing value because an investor that wants to own an aviation company doesn't also want to own a healthcare company. So the investor doesn't buy those shares and the investor that wants to own the health care company doesn't own the aviation company, so they don't buy those shares. So the way to increase shareholder value is to actually split those businesses up and then the investors that want to own the aviation business will pay more and the investors that want to own the health care business will pay more. And the overall value of those two businesses goes up by having them be separate. And that's what the markets kind of waking up to. And this is kind of a trend that's been going on for years now. You know going back to kind of 2013 fourteen where the market started to kind of rationalize some of these silly conglomerate business ideas and break them apart into more kind of you know targeted businesses that can actually. Spin out to or or or. Yeah, or break off break ups. Yeah, that can basically attract shareholders to bid on each one of those businesses individually and drive value up. You know we saw one business I was close to that. I saw this what was Dow DuPont where they, you know, down merged with DuPont and then they split into several businesses that each were focused on a particular vertical. And it made a lot of sense to drive value for, for, for the for the overall shareholders. So at the end of the day, you know these conglomerates are about kind of driving economic outcomes and the only folks that you see doing this well. For folks like Warren Buffett where the job is really about capital allocation, where you know you can allocate capital to the best business and that business on its own will grow organically versus taking a bunch of crappy low growth, no growth businesses levering them up to kind of juice their returns on each other. And we're seeing the slow unwinding happening. So I think it'll, it'll continue to and you could probably go and pick a bunch of these conglomerates and you'll see the activist shareholders doing this, they'll, they'll they'll buy a bunch of shares they'll instigate and say, hey, you guys should break up, the share price will go up by 2030%. So if you want to start tip of the day, you know, go find the next set of conglomerates that are going to get attacked and broken up. It's interesting shamatha and you know, with public markets, Dell is spinning out VMware and that's going to create a massive amount of cash and shareholder value. They're doing a huge dividend. So I guess my question to you chamath is when do we start to see this hit, not from a point of weakness, but from companies that are strong and see this as, hey, this is a way to just unlock shareholder value. What we see and Amazon spin out a WS, a a YouTube or an Instagram come out of their parent companies. I think it's very rare that these things happen on the offensive foot. I think it's typically a defensive maneuver that's driven by. Really poor returns over long periods of time or activist investors who want to push for value, like basically like, you know, like eBay, paper. Totally. I was about to bring that up. I mean, do you remember how hard that eBay and remember, like, John Donahue was the CEO. He like, fought that so hard. I remember getting a phone call from him asking if I would support them. He had rounded up, read off and other people support eBay. And I'm like, no, I can't wait. No, that. Do you remember this? We were in Vegas and Donahoe called and we were working on a plan and then you went and. Walked on out through the plan. Do you remember this thing? We were. No. What happened? We were in Vegas. We're gonna try. We were in Vegas. Spin out of. I can't. I can't. No, no. Donahoe either called you or called me and I said you should talk to sax. OK you sketched out a plan for what PayPal should do. And, Oh yeah, yeah, I do remember that Saturday afternoon we sketched out this plan. Yeah. So I told John, No, I'm sorry, I can't support you because I believe it should be spun out. And so in the only two, the only two people from the original PayPal team who said that publicly were me and Elon. And we said that if you could get PayPal out from under, you know, this, you know, this sort of eBay bureaucracy, it could be $100 billion plus company. Acquisitions is extremely high like I think the the last really 2 acquisitions that were really done well was Zacks acquisition of. What's happened? Instagram. But since then the bar is extremely high for these conglomerates. So as an example, PayPal was rumoured to be buying Pinterest and. You know it. There was such an incredible shareholder revolt that they had to put out a press release saying we have absolutely no interest. In acquiring Pinterest, but what that all that did was just, you know. Accelerate the bleeding because then people were saying, wait a minute, how strategically lost must you be totally that you would want to buy Pinterest as and so then it then as a result the the PayPal stock price has gotten absolutely yeah it was over $3 billion company and now it it lost the entire value of Pinterest. Basically. Here's the big issue that I think we have in American. Economics and company building, you know we've gone through 20 or 30 years of really under investing in R&D at the sake of share buybacks, at the sake of you know market consolidation, private equity, you know driven take privates. And so all of this capital misallocation has really put us on the wrong foot, and the pandemic basically showed that we were really ill positioned. So a lot of these conglomerates, it doesn't make sense that it because we've proven that the compensation schemes for CEO's, the incentives for executive management are way too perverted and they just create. Horrible outcomes. A different example I saw in the last I think 15 or 20 years Ibms market CAP has gone down to 113 billion. In the meantime they've bought back $132 billion of stock. Could you imagine the kind of R&D that IBM could have affected with that 132 billion and where they could be so we have they're not, they're not good capital allocators. Well, we have horrible capital misallocation. So, well look at Apple, I mean. Spend the money in R&D. Yeah, they're not, they're not good at it. That's not good at it. They're better off, they're better off taking those massive. They're better off taking those massive R&D budgets and putting it into M&A budgets, not for like a $50 billion Pinterest acquisition that doesn't make any sense as those synergies, but on smaller acquisitions of teams that have built really into technology and I could have bought a lot of different things with 100 or operate. Those guys don't seem to know how to do anything. My point is now we're in the cycle where these conglomerates will get ripped apart so that. A brighter, fresher and probably younger group of executive management. You can take a different the spin on these companies and actually do some. So for example, like the J&J spin out is really exciting because you take Med devices in pharma and you separate it from a really struggling complicated consumer goods, you know, package business, you know, the shampoo, the Q-tips, the Listerine get all that off balance sheet. Now you can actually, you know, make drugs and Med devices and that's a really interesting business at the right. CEO can really do a lot of interesting things with I heard an interview with us, then CEO of GE, I think Culp, who was putting forward this plan. Line that I remember that kind of resonated with me, he said. The benefits of focus are immediate. The benefits of synergy is are hypothetical. And I think that's really the key point here and that's what's going to fuel all this sort of decolonization, is that the benefits of focus to a company are so huge that you know that. But but the reason why it doesn't happen is because of this instinct that all these managers have for empire building rights. When times are good, they can keep building their empires. And that's something ****** to happen to force them to focus. And by the way, the motivation, they're not, they're not owners, they're typically not founders. And So what you end up seeing is they're comp goes up linearly with market cap. So the bigger exactly, not more money, right. And this is just a just a close of the thought out on that whole eBay PayPal thing. I mean it was so obvious that eBay should spin out PayPal, but the management, the management resisted it and it took an activist shareholder. I think Icahn came in there. It was Icon who came in there, and it's in the lobby. You're ******. Well, but but icons shouldn't have to come in there. The reason why there's opportunity for the managers won't do the right thing unlocked 1/4 trillion dollars of value. He was incredible. No, I mean, he's credible for 40 or 50 billion now. It's worth five times that amount. It's a quarter trillion dollars. Yeah, it's crazy. And just to, to put this all in perspective, the stock buybacks that are going on right now, Apple did almost $20 billion less square. They've done 77 billion last year. And you want to talk about the impact of tax policy on innovation? Well, you've got on one hand here. Apple is is looking at, well, I'm gonna have to pay all these taxes. I might as well just increase the amount on buying back and be neutral. Why would I want to show any kind of a profit here? I'll just buy back as many shares as possible. The company will eventually be private. I mean, this is you got to be really careful with how you do this because there's no incentive for people now to put money into R&D or other stuff. They're just buy back the stock. Might be the most efficient thing to do, correct? In terms of like the share. I don't know how to spend the money. The dumbest thing to do. It basically shows you're an idiot. Well, it shows you got enough thing better to spend the money. So maybe, maybe, maybe that's maybe Biden back to stocks better than frittering it away. But yeah, it means you're out of ideas. It means you're out of ideas. Or you or or a combination of, my God, this core business is throwing off so much money that we can't come up with enough ideas at that time. I think that's just means you're not ambitious enough. I mean, what would you spend 20 billion on? I mean, Zuck is having a hard time spending 10 billion on creating the Metaverse a year. I mean, you're talking about 80 billion a year. What would you put that towards? What should apple? Put it towards no apple. Apple could even more aggressively double down to enter the car market. They could have done it much sooner than they have. They could spend 20 a year on that. Sure, you're right. You know, easily they could actually enter, I don't know, power. They could. Yeah, I mean, but they're, but they're you know, Apple, they're their culture is to have very few products as a company. They're always very proud of that. It's the Steve Jobs focus thing. I mean, I think it's worked pretty well for them. I know you're second guessing it the the thing that I hear, I just don't like buybacks because I think it comes at the sake of R&D. For most companies, I think obviously the choice of no, there's a big tech companies are different, but everybody else, what you see is R&D is like one or 2% of of of their, you know, it's it's a shame. Look, Apple could definitely be more aggressive, but I wouldn't judge that Tim Cook Air until we see what happens with glasses because this is the product that I hear is coming, is going to be their, you know, their AR glasses. And that's going to be a new computing platform that they open up to developers. And I guess Cook's been there for about a decade, but I think he doesn't want to retire until this comes out and he can. This is going to be his signature product, I think. But I'll tell you just the other thought that this went through my head as I saw this news about GE. It really was kind of the end of an era. You got to remember that back in the 80s nineties, I think even as late as 2000, GE was the number one company in America by market cap. It was the top of the S&P 500 at the later subsequently got kicked out of the the Dow Jones. But the thing that went through my head is, you know, when I was a kid growing up, the only two business names that I even knew were Jack Welch and then Lee Iacocca. You know, that was it. They had their posters on your wall, GE and Chrysler, Farrah Fawcett in between the two of them. It was Big Jack Welsh and Iacocca. And now you don't even know the name of the the GE guy. I mean like, I know it because I watched him interview and I saw him up there. But I mean you can't think of a business leader today who's not in tech and and really a tech founder or somebody who's handed the ball by the tech founder. So we know Tim Cook because Steve Jobs handed him the ball, but otherwise it's all tech, all tech founders. You don't hear about any of these old. Like Dow Jones type type companies anymore, is this the, the, the business, the business environment, the the economy has changed so much since the 80s and 90s. It's all totally dominated by tech now. But I would argue that the disruptive business and the disruptive business leader are always the icons back in the day the chemical companies where the icons and everyone knew the chemical companies and the guys running and then it was the industrial companies. You know, then it was kind of the financial, you know then it with these guys in the 80s and 90s that did all the BS. They weren't founders, you know, but they were in different ways. Tell me, the two companies on R&D spending top two companies without looking on R&D in the world? Yeah, global in the world. #1, #2, give me #1 #2, I said once. Classification. No, it depends on classification, but I would say Saudi Aramco. Free bird, what do you got? Yeah, I I would probably put Exxon up there. You guys need to think about who it was been some of the most innovative leaders Amazon, 42 billion in 2020. But Jason that's an accounting thing if you're saying in the world Saudi Arabia though their exploration, their EP budget is probably $200 billion a year. OK. I I I guess maybe because that's not that's that's is that a corporate entity technically would be on the list of public company. Yeah. So it Google Google's got to be spending 25 billion second with 27 billion. Ohh off. Wowi is 3rd 22. Microsoft is 4th, 1915. No, this is all companies, Samsung, Facebook, some of this is just accounting categorization. Accounting categorization because the engineering budget is is basically what goes into R&D. So the more engineers you have on staff, the bigger your R&D budget doesn't mean you're producing anything. By the way, bigger industrial companies, traditional companies that list things as R&D, you know most of those dollars flow out to third party companies like enterprise software. Company services businesses. So it doesn't end up, it gets accounted for, it's quote UN quote R&D because they get to capitalize it. But that span is typically not paying in-house salaries to engineers. And that's the distinction between true tech companies and other companies that are quote UN quote going through digital transformation or you know, have a quote UN quote R&D budget. They're outsourcing R&D and typically paying three times as much and typically getting 110th in the return. And I think that's the maybe a a good heuristic. How you might kind of want to look at what differentiates detect a true technique depending depending on counting Saudi Aramco spends 37 1/2 billion to 50 billion depending on how you count puts them at you know probably tied with Amazon for all intents and purposes means I was right Jason that's what I care about. Well I mean I'm wondering well you know what the reason I think that you this might they might not be listed is because it's getting. No no it isn't it's a really good thing how was reading a BuzzFeed article and he knows parents anyway putting it aside I think they're the issue might be that they recently public right so maybe they're. You know, they've only been filing public for two years or something. All right. I think that's everything. How's everybody doing otherwise? How's everybody's personal life? Are people losing their mind? What's people's plans? For the end of COVID, I'm going to go have beer and pizza on the beach. Nicely done. So I'm ready to get out of here. Nice. Yeah, I mean, I'm exhausted. Are you guys exhausted? And this has been a ******* crazy run. I don't know what day it is anymore. I'm like, I'm learning to wind the year down. I'm so exhausted. I mean, this has been the craziest pace I've ever experienced in my life, the number of deals going on. The amount of inbound. Oh my God, I tell you at that conference, every single. So I have all these founders come up to me and pitch me what they're doing. A couple of them like that sounds really interesting. Can we participate in that? Is like none of the rounds are subscribed. I'm like, why did you come up to me and pitch me this then how dare you rule? #1I tweeted. I tweeted a new terms of service. If I. This is only from out of conference. OK. If you set up an appointment in my office is fine. That's like an opt in. But like if you come to me to pitch me your idea to conference then and I say, OK, I want to invest. Like give me an allocation. Like, don't come between pitch me, not give me an option. No, that's not cool. That's like being like, Oh my God, I know the best restaurant in the world. It's open tonight. They've got the greatest steak and they're like, Jason, Jason, no reservations, guys. Tell sacks about the white truffles from yesterday. We, we we had dinner at Timothy House last night. It was incredible. He got these white truffles from Alba. I've had in a year. I mean, it was really incredible. I really appreciated it. It was amazing. And 2000, like it was 1996, White Burgundy, Leroy and the 1009. Not a wine drinker, we saying that your guy, your chef beat Sachs from 2 weeks ago. Sax is wasn't saxes chef your old chef? Uh, I think one of his sessions. David lives in a stratosphere of bird. He lives in a stratosphere of burn that's just at a different he's next level. Are you eating my sloppy seconds? What's going on over there? I don't know that term means what you think it means anymore, sacks, but by the way, there was a there. There was a dinner conversation last night. Sex to your point. You might, it's up to you to decide if you want to disclose the dinner conversation guests. But this guy said that there was a a guy that applied to why Combinator that had $750,000,000 in crypto and so he's like applying to why Combinator with his 750K for 150K to give up some percent of his company. Like all these stories of these guys are like I will pre fund my own Series A with $15 million to create this business inside of the YC machine. That there was incredible. There is such an incredible like unexplicably. The inexplicable, undescribed, I think, in the in the mainstream media story of crypto wealth creation that's been going on and these crypto, you know, these crypto 100 millionaires, billionaires are emerging and doing their own kind of innovation completely under the radar right now. Smartest people that we know are selling right now. Yeah, and I think they changed their conversions for the YC safe. They're now getting preferred shares. They used to do common. And. They now I think it happens post conversion, so they want their 7% fixed you know after your next round of funding is my understanding. I don't know if that's but yeah, so they got a more aggressive, but that's brutal. It's a you know, what's happening is like the accelerators have to move earlier back to incubators. So the idea of somebody, you know, grin or some of the other companies we funded coming to the accelerator with 20,000 and or 50,000 in revenue, in some cases they may be able to raise money without. And certainly the crypto companies are raising $25 million. They're outpacing regular companies, regular startups, non crypto startups and they raised it in 10 seconds from a bunch of ETH for buying tokens. They've created a whole shadow economy that doesn't have to play by. Any of the yeah. Do you really need venture anymore? Like, well, if you want to obey the law, I guess you do. But in a lot of these cases, like I did this, I don't think this whole new economy could emerge completely offline, right, completely off the the current. The Silicon Valley counselor do want to get this thing tightened up. They don't want people doing this. It was 2015. I presented Amazon at Iris Zone, and one of the things that I did was we calculated what Bezos's investment track record was, right? Because he basically took all his free cash flow and reinvested it in the business and you could measure. What is return on invested capital was and it was like 42% and on a really big number on 10s of billions of there are on the money Amazon deployed in R&D projects like the Kindle or is it a forty 4042% over like a multi decade. And double what a venture firm would do or top and he he's in a class by itself but. My take away in that moment was, wow, this is the. You know, smartest investor of our generation. That's what I said a basis at the time. And you know, basis had a track record of selling roughly a billion dollars of Amazon stock every year. And this year he, you know, snap sold 6.6 billion. Which, you know, when we talk about the percentage you're selling, we're talking about selling 5 percent, 10%, so. You know, they're not doing their positions, but these are big numbers. You're right, I think it's a signal. JK, You gotta close this out. Alright, everybody, it's been another amazing episode, episode 55 of the All in podcast from. Yeah, whatever. We're, you know, where people are coming from. The all in summit will be in the spring. At some point I'm going to go to Miami and look at the location. March 11th through 15th. I can't because I'm playing poker. Yes, OK. You got your poker training undisclosed location by big time. I can go listen, is there anyway? Big boy, you need to have a funny guy there. I mean, I'm not a great dealer, but can I be a waiter or something? I mean, I think the game starts at 2004 thousand, but it could get a little spicier. Free spicy sack. You got a good year. Maybe you should go. Yeah, maybe you should. Solana play because get the Solana chips and he can play David. Big question for you. Do you chip off 10 million Salana, you put it in LLC and then you buy into the game and then I'll be in. That may not be enough. Alright, 20, whatever, 20 is enough for the Queen of quinoa, the dictator and Rain Man. David Sacks, I'm Jay call. We'll see you next time on the subscribe to the channel. Let your winners ride Rain Man David Sassoon. We open sources to the fans and they've just gone crazy with it. Why? Besties? That is my dog taking out your driveway. Ohh man. We should all just get a room and just have one big huge **** because they're always useless. It's like this, like sexual tension that they just need to release stuff out there. B. See what we need to get merchants?