Listen to Episode

Read Episode Transcript

Actually, the funny story from the from Art Basel. So I was hanging with with Jay Cal and we're talking to people. Yeah. And for some reason, Jakhal is being nice to me. And he said to people, he said, do you know who this guy is? This guy is a legend in Silicon Valley. You know, he introduces me. And then I said to Jason, I'm like, you know, this is people. And he who just sold like $260,000,000, like NFT's, I'm like, this guy's a legend, too. And without missing a beat, Jakal says. Well, maybe for the next year. Let your winners ride. Rain Man David Santa. We open sources to the fans and they've just gone crazy. Weed. Hey everybody, welcome to episode 58 of the All in podcast. Yes, the podcast. I don't know if you guys have been watching. I'm drinking voice. I'm drinking. It's a Friday. We're we're filming late on a Friday. You can tell from the backyard behind chamath that it's the evenings and he's cracked open. A little something something a little little little delicious. Poops. Bond 2002 sanib. Hmm. That's a that's a label of bond, correct? Yes, Sir. Bond. St Eden, 2002. Ohh, very nice. Thanks for the invite. I'll be right over. Episode 58 Last Week, Episode 57 peaked at #40 episodes in the world. So thank you to the fans. We broke 125. 1000 subscribers on YouTube and the pods over there are getting 150,000 views. So thank just thank you to the fans. A lot of questions about the all in summit. I went to see the locations when I was in Miami. We've got the location we want. We're working on dates and you'll have more information soon about that. So welcome back to the program. With us today, as always is the Sultan of science. The Queen of Kiwi himself. David Friedberg, the Rain Man. Yeah. He's definitely back from our basil. Of course. He went to Art Basel and I don't know if you bought any art, but I was on his boat with him or his rented boat. David Sacks and I were on a boat and boat. Well, I mean he hasn't bought 1 yet, but I think he's moving there. And then of course the dictator himself. Chamale Poly. Hypatia. Here. Somali with. Noxiously expensive sweater. Tell us about that. Yes, yes can I? Everybody wants to know is killed to make that warming animal was killed for that horrible Ernie sweater. This this is a collection God of the foreskins of some white tigers. Come out, come out. I mean, it is incredibly soft and smooth. I literally got a complaint like foreskins are. Oh God, I just really going in a bad direction, right? We breaking sacks are like, what are they talking about? I literally got a complaint on DM about jamats. What do they do with consumption of his sweaters and they and she was like, listen, I don't mean to tell you your business, but I think chamath is turning off the audience with these letters. Is it an angry mid level white? But a very, extremely successful one. I'll leave it at that anyway. Really? Really, every week? Really, really. We have to go through Tremont sweater. Does she pay? Does she pay attention when I put in $700 million a year to climate change? How has she put in that much with her ****** sweaters? OK, listen, enough. It's gonna be 1. Just checking if we're going to, if we're going to start moral virtue signaling over here. All right. Well, this we got a lot to cover. I mean, this is just absolutely crazy. Finish a glass of wine real quick and then roll into the show. This is this is going in. The show is gonna go off the route. I've already lost control of the show, all right? We got to start with inflation and the economy while sacks and I were in. Miami for our bazal. There was an absolute panic going on 2/3 in the morning. People checking their Robin Hood and Coinbase accounts to figure out how much they lost in their crypto holdings. But today I lost more in the Robin Hood stock than I have in the Robin Hood app. That's too soon, bro. That's too soon for me. I'm about to distribute. I'm like. Do I distribute now or wait, first, that thing has been a stone sinking to the floor of the ocean. Well, I mean, it's pretty crazy found. No, I mean, listen, it's seventeen, $18 billion, pretty great valuation right now. I think it's an opportunity for people, but I'll leave it at that. Let's talk about inflation. Information, but we're not dispensing stock price stock advice, but I'm not selling any of my shares. I'm telling you right now, before I distribute square stock and mark my capital gains, I'd like to advocate to people. I'm going to just ask you don't show up drunk for the next episode, my Lord. Can't even get through the first story here. OK, inflation rose. Does this woman even own a casual sweater that she has to get off of? Who is this person? **** person? Please be that God. God almighty. Alright? What a ******* loser. Stop. I'm glad to hear you're doing something with all those foreskins because we don't want them to go to waste. They do. It's the foreskins, all those circumcisions. And I would love for you to just drive here and touch this sweater. I mean, I can't. I'm like, this is something to do on a Friday night, all right? Inflation numbers. This is important, folks. Inflation year over year. Sorry, but excuse me, but if you're if you're spending your time working in biotech, working in crypto, and fighting climate change. It's wrong to be a cashmere sweater. Like all of a sudden he's wrong. You also have to look like a homeless *******. You know, lumbering was. We have to start the show because being ugly is so cool. Now the idea was, do we have to start the show with your fashion use choices? You started with that ******** statement by this person. Who better be good looking or well dressed? Otherwise, they have no right to make this claim. Alright, calm down, Tremont. Let's get to the show. You insulted his sweater game. That's the difference. Really. Now we know he's most sensitive. Honestly, you might as well have called me. Ohh dude. You might as well moved too hot. Stop it. Just a sweater comment and just conspicuous consumption. Is that what she's really trying to say? She's trying to. Maybe she's trying to, you know, because you brought it up. Who is it out? Her. I'm not out. Let's cancel her. We're not getting. Nobody's getting canceled for pointing out that you're talking about $4000 chinchilla sweaters. Never said how much they cost. We beefed it out. I've never said how much this one do you want a sweater worth more than $4000? Or now? Of course I do. I rest my case. I own many, but that's what the point guilty on all charges, because the biggest consumption CPI the past three months today was 6.8 year over year. It's the largest increase since 1982. We're getting back to the post Jimmy Carter era and when Reagan got in there, inherited that mess. September was 5.4 October 6.2 November 6.8 points up .6, or approximately 10% over October. 1.4% over September. And here's the chart for those of you watching on the YouTube channel. This all started in March of 2021. That was the first month with the CPI rose over 2%. And who was wrong on inflation will? the Fed chairman, Jerome Powell, called the transitory numerous times over the past two years Treasury Secretary Janet Yellen. In her Senate confirmation hearing in December of 2020, Yellen said she believed the Fed and Biden admin could take advantage of interest rates being near 0 and spend more on stimulus. Economist Paul Krugman thought it was transitory in his op-ed. How not to panic about inflation that did not age well. Quote our businesses actually starting to set prices and wages based on the expectation of high future inflation. If they aren't, and my bet is they won't be, then the lesson of 2010 to 2011 will remain. Don't panic. My God, he could not have been more wrong. Who was right on inflation? Jamie Dimon in March. I would suspect there is a pretty good chance you're going to see rates going up and people are starting to worry about that. The American public, specifically Genz, has been on top of this issue. 77% of Americans were either somewhere. We're somewhat, we're very concerned about inflation back in March. And Gen Z, people aged 18 to 24 had the highest rate of very concerned about inflation at 52%. Larry Summers also got this right. Sachs, what are your thoughts on inflation, which now seems acute and permanent, right? Well, it's definitely not transitory. Remember when it was at about 5.1% over the summer that the administration said no big deal? This is transitory. Don't panic. Then it went to 6.2. Now it's 6.8. Looks like it's headed to 7%. And the the real problem here is that these guys, the administration, have not adjusted course in light of this data. What they've tried to do instead is now Speciously claimed that the same bills that they had written and conceived the bill back better bill somehow, even though it was conceived at a time that was really deflationary, that somehow this is going to fight inflation. They're essentially repurposing. They're just changing the arguments they're using as opposed to changing their their legislative priorities. And just today we got a report. From CBO saying that this build back better bill wasn't going to cost 2 trillion like the administration said is going to cost 5 trillion and add 3 trillion to the deficit for 10 years, correct, over 10 years if those programs are not sunsetted. So there's a bunch of budgetary gimmicks that were put in the bill. Basically a lot of the programs would sunset after one year or three-year or six years. And so that's the only way they've gotten into this, you know, $1.9 trillion price tag. The reason why that's a gimmick is because once the programs are created, there's going to be it will create a special interest or constituency who is now dependent on those programs, and no one's ever going to want to cut them. Milton Friedman's Milton Friedman famously said that there's nothing quite so permanent as a temporary government program. So that is the game that progresses are playing is they're going to create the dependent, the dependency, the constituency who, once they receive the program, is never going to want to give it up. And they're counting on the fact that these programs will not sunset, which means they will cost 5 trillion and it will add 3 trillion to the to the debt to the deficit. So, you know, the problem is it'd be one thing if we were in a deflationary environment, if the economy was in the tank, but these guys are continuing to pump more and more stimulus into an economy that has enough. And really, Larry Summers made this point all the way back in February. I think this is worth reading what he said. He said there's a chance that macroeconomic stimulus on a scale closer to World War Two. Levels, the normal recession levels were set off inflationary pressures by kind we have not seen in a generation. He said this in February. Everyone in the administration dismissed him. All the liberal economists that you mentioned basically derided him. He turned out to be exactly right, and he was just saying this about. The the one point roughly 2 trillion they passed back in February for of COVID stimulus and you know since then they passed 1.2 trillion for infrastructure and now it's this another 5 trillion for build back better. So you know the the real problem here is that they are not adjusting course in light of this data that keeps coming out that inflation is a bigger and bigger what's the right thing to do in your mind sacks and then you said it can this bill we don't need it. This is not what Biden was elected to do. You know he was elected to provide normalcy, stop the chaos and he never got a mandate for this kind of you know whatever $10 trillion tax is wanting to do an infrastructure bill for a long time, but we didn't that was prior to pumping so much stimulus into the system. So on the infrastructure bill and not the build back better. It would have been one thing, but we're this is basically the the third hyper stimulatory bill that that they've sought to pass first they did the COVID release. The bill at a time when really? The economy didn't need that stimulus. I mean drug, just dovetailing, vesselina chamath involved in this is the jobs report. November Non farm payrolls increased only 210. They expected it to be 573. So it's a big miss, however, kind of a mixed bag because there's over 11 million job openings and we're now at 4.2% unemployment rate, which is the lowest, which which is getting towards the pandemic lows. And you know, this is like before the 2008 financial crisis. Chamath, how do you reconcile inflation along with this crazy, bizarre job situation where people will not go back to work, people are planning on resigning, there continues to be resignations and there's too many job openings and people are raising salaries and still can't hire people. Well, I think we did a pretty good job of unpacking the great resignation. I think it was last pod. So right, remember, like, yeah, there are three structural issues at play in the jobs front. One is that you have this really meaningful. Under immigration, that's happened because of Trump. The second was you've had a big mismatch between the degreed classes in America and the jobs that they can have for what they think they should earn. Meaning you go to school, you get into all this debt, you try to become a teacher or something, and then you realize you can make more at an Amazon warehouse. Crazy strange. And then the 4th is you have all these boomers with an enormous amount of savings, 30, forty, $50 trillion. Who are pulling forward their retirement and also subsidizing their kids? You put it all together, there's less of an incentive to be in the job force unless you pay higher wages now. Let's just put a pin in that for a second. I think the thing that Sachs talked about is really important, which is that we have to really figure out whether inflation is transitory or it's persistent and it's here. And I just want to bring up all of Nick, I'll send you these text, these, the, the, the Twitter links to this. But Bill Ackman tweeted out these two things today, which is that if you fan of the pod, brilliant investor by the way, a great human being, brilliant investor, 2 very specific things. He actually called out something that we've we also mentioned before, which is that. DPI is horribly calculated and it's really imprecise. And if you unpack CPI, there's something nice index, the consumer price index, there's something in there, a component of it that's very important, which is called the owners equivalent rent, right? How much can somebody basically charge rent to other people? The way that they calculate that, which is 30% of the uh, 30% of the calculation, is they just survey a handful of people. The problem is you don't need to survey because the actual exact data is available. From single family rentals that report this number. So their survey showed basically a much, much smaller increase than what the actual increase is. And let me just give it. So the largest owners of nationwide single family rentals are reporting a 17% year over year rent increase. Wow. The the O ER that was calculated quote UN quote by survey and the CPI was 3.5%. If you flow that through, it means that core CPI actually went from 4.9% today. To actually 9%. And the CPI print which was 6.8%. Was actually 10.1%. So it just goes to show you we have sources of data that the government is not in a position to collect or measure. We have horribly inaccurate econometric models that we use. You know, you know that phrase sort of **** in, **** out. So unfortunately, you get very bad garbage usage. You get very bad, crappy data. And now all of a sudden, we're printing numbers. We're supposed to make policy against those numbers, but the numbers that underlie this decision making is fundamentally flawed, and it's flawed in the wrong direction. OK, let's bring Freeburg in Freeburg. What do you think is happening here? Visa V also the creation of companies and entrepreneurship, because one of the weird things that's occurring is we're starting to hit a record number of LLC S Corp C Corps being created. It seems like a lot of people are becoming freelance nation, hundreds of thousands of new companies during the pandemic. Started that is probably one of many places where the water is flowing when you fill my cup and it's shell overfloweth. I was talking to a guy this week. It's not that. Yeah, yeah. No, no, no. Let him drink the wine free. Drink and drink fast. This guy has a multibillion dollar consumer credit portfolio and subprime, which means, you know, he's got the a bunch of consumers owe him money that generally there's going to be a high default rate and his. No comment not. And he said that this year the portfolio performed beyond like the one percentile of the model distribution of what they expected to happen. They they had the yield on the portfolio be 40% higher than they thought it would be. Because there's so much liquidity in the hands of individuals. And so I think, you know, Jason, while you might make the argument that companies and jobs are being created, that is one of many places where, like, you know, you overflow a river and lots of streams start to flow. You know, we're seeing asset bubbles everywhere, in NFTS, in crypto, in startups, in new startups and new ideas, in home prices and everything. Now, the problem with inflation is, you know, it's a definitional. We all use this term and we throw it about. But like, inflation is really the measure of price. Going up over a period of time and generally you want to have inflation of some amount that allows you to see economic growth and expansion that allows you to fund the debt that you used to create that growth in the 1st place. And so without, without some sort of an inflationary pressure, which is the output of economic growth, you end up, you know, being unable to meet your debt obligations and then things get really ugly and the system as it was constructed because most of these governments and systems like we have today are funded by debt. So, Umm, you know, Stan Druckenmiller gave a good interview in Q2. He was kind of on a roadshow, you know, sounding the alarm bells around what was going on. He was saying the market is not speaking right now because basically the Fed kept canceling the market signals with their, with their interest rate policy and by canceling those market signals, it seemed like we had a free for all at the government level to keep spending. And so I I do think that these two are pretty interrelated. The fact that we've kept interest rates low have allowed policymakers. Say, you know what the cost of debt for this government is? Zero. We can do anything we want. Just like consumers are saying we can do anything we want, we can buy anything we want, we can spend anyway we want. And as a result, we're kind of seeing this, you know, inflationary pressure persist. Now the problem is if you then raise rates and you can't borrow that money and suddenly people have to start to pay that debt down with without economic growth having occurred, the business goes, the whole system goes bankrupt. So the challenge that the Fed has is how do we raise rates without triggering an economic recession? And if people are now have over suspended and are over levered once again and rates go up, it's going to get really ugly really fast. And so that that that this is a first derivative balancing act and and yeah there's there's no simple and easy solution unfortunately. Meanwhile technology is causing deflationary pressures which is exactly you know maybe what you don't want to see happen when you're trying to realize economic growth. And that's yeah the other thing that we talked about is that the the Fed basically changed the OR. The government changed the rules on the percentage. Basically what qualifies as a conforming mortgage? Remember that. And so now that's basically at A at $1,000,000 and if you think about it, most Americans you know 80 to 90% of their true underlying wealth is their home to the extent that they've built, you know, positive net worth. And if you all of a sudden, you know, push up the upper bound on what a conforming mortgage is to a million, $1,000,000, that effectively means it's and it's roughly about 20%. That effectively means that you're moving people's net worth up by about four or 5%. That's right. So and so if they take that and then they take that money out of their home via a HELOC or an equity line of credit, right, home equity line of credit. And then, you know, to your point, Friedberg, they spend it or they invest it or they, you know, it could be a real disaster scenario in five or six years, by the way. No, no, this is more like 1929, kind of. Yeah. By the way, if you go back to the remember when we were in like the depths of the market collapsing and everything, when basically the economy shut down with lockdowns, when COVID started, and I was speaking to a senior banker at that like that day, and he told me, look, it's pretty simple what's going to happen. The Fed's going to drop interest rates to zero and they're going to pump money into the system. Because that's the only way you're gonna be able to keep asset prices from collapsing. And we're going to artificially inflate asset prices and we're going to do it for a long time because then people look at the stock market and they say, Oh my gosh, stocks are going up. Oh my gosh, revenue is going up. Everything gets inflated by pumping money into the system. And the problem is while there's a, you know, a perceived, you keep saying the home price goes up and I keep saying stocks go up, but the the purchasing power that arises when the inflation is higher than what those things are going up at indicates. Economic recession underlying that inflationary bubble. And the circumstance needs to be analyzed, unfortunately, a little bit more deeper than that, which is it's not just about inflation. It's about, have we pumped enough money into trigger economic growth that we can come to balance where the growth can outpace the inflation and we're not there? Well, superimposed on this, because I think about it, sorry, let me say, let me just say one simple analogy. Let's say I've got 50 clams and, you know, there's suddenly a bunch of clams come into the clam market. Now I got 100 clamps. And if the number of clamps has gone up by three X, my purchasing power has actually gone down. A third, while it might look like I've now got twice as many clams, I can only buy 1/3 as much as I could buy before because there's so many more clamps floating around. And that's the problem. Clams. You love clams. Clams, clams. You like them just alright. Listen, I did a little bit of math. I've been watching the price to sales ratios of some of the top companies. We can pull this up on the screen. And. The price to sales of companies, including Zoom, obviously was ridiculous during the pandemic that was a pandemic stock. So on top of all of this money being printed into the system, you had the participation of a bunch of stonk traders, you know, and that whole movement buying up meme stocks or others we had. The price sales ratio of zoom. In other words, the value of the enterprise versus their actual sales was at 123. It's now at 14.7. Peloton was another one of those at 23, now down to 3X, down 87%. Coinbase. Square also it drops off pretty significantly here, but you can also we looked at the peak price to sales and how much larger it is then and so some of these are now off 8X4X and then it drops off to 2X1X. But it's quite a, I don't know if you guys are looking at the numbers or if you have any thoughts on this, but we're really, it seems like there was a mispricing of certain equities and it wasn't a mispricing the Federal Reserve. Forced a lot of institutional investors to be out as long dated as possible. Uh, in buying earnings, because if you have to remember, it's not just that real rates were effectively 0, but if you wanted to own inflation protected securities, it was actually a negative yield. So we were destroying people's savings. And there are a lot of individuals, sorry, well, not individuals, institutions that must own some of these inflation protected assets. So we were already in a negative yield environment. What are those folks supposed to do if they have to fund an 8% return a year to pay the pensions of? You know, good people, firefighters, teachers, you know, it's, you name it, policemen, et cetera, right? They were forced to invest in the kinds of funds that would then go out further and further out into the future to buy the promise of future cash flows. And when all of a sudden a whole bunch of other assets that that they held. Which were supposed to be safe implodes on them. Right, because all of a sudden inflation changes and the front end of the yield curve goes woof. And all of a sudden all these assets, when yields go up, prices go down. Now the fireman's pension is like, Oh my gosh, we just lost all this money we never thought we were going to lose. And we're long all these, you know, crazy tech stocks. And so then they're forced to sell so that their overall exposure goes down. That's called grossing. OK. And we've been going through a very painful process of this digressing hedge funds are doing it. In droves. Can I ask you a question then, drama, I'm sorry to interrupt, but should they not have looked at these multiples and said, you know what? Maybe this one's out of whack and I should buy the ones that are not as out of whack? Because this to me seems not really. Because for the last 15 years, if you had, you know, the the problem with being a value investor over the last 15 years since 2008 is you were basically a dumpster diver and you got paid. Absolutely. You know, you didn't make anything because. Because they misunderstood what value was. Value isn't necessarily things that are cheap. Value is things that are things that are valuable. And over the last 15 or 20 years, what was once a question? Is now definitive, which is that the things that are valuable tend to be technological because they're super high margin. They grow really quickly, they compound, they create enormous cash flows that scale. So great. The point is you couldn't own that stuff and if you sat on the sidelines, you weren't meeting your 8% hurdle, you were all of a sudden looking at some risk of defaulting on your pension obligations. So this is how this whole cycle brought us to today's. What you're saying is, if I can summarize, there's nowhere else for them to put their money sacks. Price matters though. So is this just bad capital allocation? People weren't thinking about the the entry price of their investments? We're giving too much credit. Well, I think, I think what happened is that you had a liquidity. The old boom going on, So what we've seen over the past four or five weeks about the first week in November, most the market basically peaked and at least growth stocks did and SAS companies did. If you look kind of November 8th was sort of the beginning of the downturn and since then most of these growth stocks are down about 30% plus. Crypto is down now. I mean it's sliding as we speak 3040% off of off of peak around the same time. What happened around the first week in November, well, you had three fed. Governors come out and make very hawkish statements about the fact that the Fed was going to need to double the speed of its taper and that you're going to have two, three rate increases next year. And so basically we went from being in a low interest rate environment, which has been the case, not only does low interest rate environment, low interest rates with massive stimulus and pumping out of Washington by both the Fed and by by Congress, OK. And so you went from that environment to all of a sudden an environment if now we're expecting to have rate increases. And that's going to suck the liquidity out of the system. The the amazing thing that I'm seeing right now is that every investor I know is having the same conversation. It doesn't matter whether you're assassin investor or a real estate investor or a crypto investor, they're all having the same conversation, which is what are interest rates going to do? How much liquidity is that going to suck out of the system? And how much are the boom that we've experienced over the last couple of years has been because of this unnatural liquidity that's been pumped into the system. And so I've never seen. I've never seen it be the case that investors across every asset category are having that macro conversation as opposed to talking about like micro stuff, right, like which company, the product, who they're beating the market share. Nobody's talking about that like what building do I buy or what's asking me to invest in. It's all about what what is happening in the macro picture. And this is where I think what Biden is doing is so unbelievably off base is OK. Look, he didn't start trillion dollar deficits. You know, that happened in the previous president. I'm not saying that was good, but but now what we have is a situation here of of the Fed is getting extremely hawkish of tightening. We're seeing inflation now out of control and yet there's been no adjustment whatsoever on a policy basis. Wait, let's just let's just call. Let's just call a spade a spade at this point, because I think we can. I think, and I think Biden was, is and will ever be a really moderate down the middle centrist. I don't think there has ever been an extreme bone in that man's body. He has always come off at. Like, you know, the word that I think when I've always thought of Biden, even now is equanimity. The guys are really down the middle person. He's not an extreme individual. I think that's the only kind of personality, by the way, that could have thrived for eight years as a VP with Obama and had been in every room in every meeting. The problem, sacks in tell me if you think this is totally off base, is that there was a head fake after he won the presidency where there was this fake lurch to the progressive Left. And it turned out that it was a complete head fake because that whole cohort of people just totally jumped the shark. Because all that rhetoric then, unfortunately turned out to be not worth much. It started to blow up in their face in every single election that's happened since then, at the local level, in cities, at the state level, in places like Virginia. And in the middle of all of that, I actually think what happened was that faction tried to push an extremely aggressive legislative agenda to paint Biden as the next Roosevelt, which maybe he didn't even have the the desire to be. Because I I think that he seems a very low ego kind of person. And now we're actually realizing, Oh my gosh, this makes no sense. And so the part of why I think the markets are kind of like hand wringing is you would expect at this point. The federal bureaucracy to actually step in, but I think there's like a real lack of confidence because for example, today when there's a CPI print of somewhere between 7:00 and 10%. The only democratic sounding, you know, the talking point was one of the squad proposing a four day workweek. I mean, that is insane, that guy. You're in crazy debt and you're like, you guys, we should spend more money and work less. When the CEO says we're about to go three more trillion into debt, the solution isn't to Fort well, it's I actually think if you want to work less, work less. You know, maybe you're lucky and your boomer parents can give you money. But there's a bunch of us like me who had to grind. I didn't have anybody to fall back on and if you all of a sudden passed the law that said, hey chamath, you can only work four days a week, I would be really angry. Because you're depriving me of 20% more of a chance to beat all those other soft ***** ***** that went to all those fancy schools that weren't willing to work. Yeah, ignore. That's a stupidest aggression me work. So I think, I think this this proposal that came out to basically this was a new proposal that they were going to limit the workweek to four days a week, wouldn't let people work five days a week. The reason why it's, well, it's a bad idea in general, but it's a particularly sort of brain dead idea to propose during. A height. You sort of this inflationary period because, again, inflation is caused by too much money chasing too few goods. Well, so you have a demand component from the pumping and the stimulus, but you also have the supply component, which is we don't have goods and services. Why? Because we've been, you know, passing out these steamy checks that that disincentivize people from working. We have problems with the ports we have. These COVID restrictions have all gone the way our closing three days a week because they can't. We've had a shortage of so we've had a shortage of goods and services. So the last thing we need is a 20%. Reduction in the number of work days and work hours that are available. So it just shows like how out of touch these progressives are. But look to your mouth to to your point about Biden. I, I look, I, I don't know. You know exactly what's in Biden's heart. To me it doesn't really matter. I think, I actually think he's pretty liberal. I he's not all the way out to where, you know, AOC is fine. Fair enough. But look at the end of the day, I think, you know this idea of Biden being a moderate, you know? Moderate is as moderate, moderate does. He is not governed like a moderate. Whether that's because, you know this moderate thing was just a marketing shtick on his part and he's actually more liberal or whether he's been cooped and taken over by the progressives. I don't really care what the reason is. The fact of the matter is he is not governed like we pull back the span, David. I mean the space we have not pulled back the spend. Well no, no, no, the original remember the original bill was gonna be times we just loaded the we put the bullet in the Chamber and loaded it from mansion. This bill is not going to happen, David, with the $3 trillion. If it increases not, I mean, but the point is that, look, if if if people like us don't speak up and say this is a reckless humpless, yes, exactly. Then you can only fly the plane so fast before the wings come off. This is too much speed for the airframe. Let's go to a clip of her friend Elon, $5 trillion bill. Let's go to this clip of Elon talking about capital allocation. It's a couple of it's like 30 seconds. And then Friedberg, I'd like you to comment on the other side. Let's go. You know, certain point really what you're doing is capital allocation. So you're you're not it's not money for personal expenditures it's what you're doing it's capital allocation and it does not make sense to take the the job of capital allocation away from people who have demonstrated great skill and capital allocation and give it to you know an entity that has demonstrated very poor skill in in capital allocation which is the government. Yeah Friedberg your thoughts on errands I've I've said it in the past. This is at a Wall Street Journal conference, by the way you can think of. A government or a nonprofit or a corporation? As an Organism, as a living Organism, and each living Organism wants to eat and grow, and there there is no such thing as an Organism that says over time I want to shrink and shrivel away and die. So the organizing principle of the people in the government is to do more for their constituents, for their owners, which are what they believe to be the taxpayers or their or their, you know, the folks that elected them to office. The, the politicians themselves, I would argue, are more actors in the Ouija board of Behavior that's going on here. And, you know, let's kind of, you know, the, the mental designer of a system that they're trying to use to infiltrate change in the world individually and conquer and gain individual power. There may be some degree of motivation there, but I think largely it's more about. The fact that that Organism, that government. Wants to grow, wants to spend more, wants to do more overtime, not less. And this is true of any business, every business wants to grow. If you're not growing, you're dying. And every nonprofit, there's no such thing as a nonprofit that says let's not fundraise and let's spend all our money and then shut down. And so I just think, like, you know, as much as we want to kind of sit here and rationalize away to better politicians that are going to better serve us, that are going to think smarter, the reality is every government, every, you know, institution of government in the history of of humankind. Let's try to grow and eventually they cycle back, you know, the United States, like I said last year, you know, maybe kind of going out with the, with a little bit of a whimper, let's have a bang. And that's going to, you know, be a function of the devaluation of currency or, you know, having less of a place in the, in the global stage and so on. But I think Elon's right, like, you know, he feels and many people in business feel like they're in competition with the government for capital. And yeah, yeah, and that that capital is the only difference is that the government can force that capital, can force that revenue. And and and no business can. And so they've got an unfair advantage in that in that, that stage of playing for capital. And this is where, you know, Bitcoin feels to a lot of people like a great equalizer. And I'm not, I'm not a huge, like I'm not a Bitcoin maximalist or anything. But I think that that's where the appeal arises, which is, you know, as Jefferson said, like every generation needs a revolution. And I think that this is the revolution that folks are looking for, which is how do we get this big monopolistic player off the playing field to let us do what we want to do. Well, I mean, it's so easy. I mean, all Biden has to do is what he was elected to. He never had a mandate for this $10 trillion of spending. I mean, the guy ran a basement campaign. I mean, his he was elected to not be Trump, OK? He was elected to stop the chaos. Not yeah, not to, not to engage this $10 trillion adults progressive agenda. You know, Elon, I think made a really good point about the couple allocation there. You know, people think, OK, Evans got all this money, so he must be enjoying this, like, incredible lifestyle. Look, he's right that once you have that. Much money. You can't spend it all on personal consumption. You invest it. And so the question is, who's going to make that investment is who's going to be better at it, Elon or the federal government? We know Elon is better at it. He creates incredible innovations. He's going to put people on Mars. I mean, he can do incredible things with that capital, and the government just squanders it. You know, there's another Elon, another really good. I think Elon actually understands economics at a macro level really well. He had a really good. There's an equally good snippet of him on the Rogan. Go, you know, corporate plenty. Plenty where he says, look, there's a lot of people out there who think the economy is just like the sworn have plenty that produces all these goods and the goods is magically appear no matter what we do. OK? And so if some people have more goods than others, it's just because they stole them from the Horn of plenty. What he actually but he said is, no, this is not the way the economy works. People actually have to make this stuff. You know, if people don't make this stuff, there is no stuff, OK? This stuff doesn't just magically appear. And the way the stuff. It's made is you have people making smart capital allocation decisions and engaging in hard work, and that's what actually produces the stuff, and it's not a 0 sum game. So if you think about like this agenda that we have in Washington, it really flips this on its head. It is doing everything it can to stop the production of the stuff, whether it's the stemmy checks or the COVID lockdowns or, you know, for men. Or just confiscating the earnings of people so that they can spend it on whatever they want. That's what exactly it's it's it's actually, it's actually putting constraints on the production, on the supply of the stuff. And then meanwhile it's just printing all this money. So then we wonder where's the inflation come from? Well, obviously it's coming from printing more money for fewer goods. That's that's basically the the problem with the agenda we have in Washington right now. The increase in the deficit is just getting stunning. Uh, if you look back on the five or six list presidents, Reagan 142% increase. He got us up to 1.42 trillion. He had to obviously combat what happened under Jimmy Carter, George Bush, George HW Bush 3036% increase. President Bill Clinton's a 1% decrease the first time we've had a stimulus. I'm sorry, a surplus in a long time. And then Bush the 2nd 57% increase. The economic results that are Bill Clinton were amazing. I've been talking about on the show before, say he's a goat. Yeah, but I mean at the time what was very interesting is politicians actually took this issue of balancing the budget very seriously. Seriously. It deadly seriously and thinking about how we would pay for things. And now we don't seem to think about who is going to pay for these things. Yes, which is going to screw our children. OK, so you have to remember that Bill Clinton was the president who said the era of big government is over. And when he left office, he actually bragged about reducing the federal government share of the economy from 22% to 18 1/2%. You would never hear a Democratic president. They'll never happen again. You'll never hear a Democratic president. Well, first of all, they wouldn't do it, but second, they wouldn't brag about it. You know, you can't even say something like that. Let me ask you, do you think a Republican President would? Because I'm not convinced that any party matters at this point. It feels to me like the incentive structure is such that the individuals who are representing constituents who get them elected and they can pass more dollars back to those constituents, drives the systemic model of growth for the government. And therefore the government is complete competing as a monopoly on the field for capital. Yeah. Look, I think you thought Trump was going to be this guy, and Trump came in and he ended up spending more, and I recognize they were. Animating circumstances and so on. But I thought he was gonna go in. I thought the premise was blow up the government. You know, cut all this nonsense and the deficit kind of shot up. You're you're right that Republicans have a very spotty record on on government spending and we did have trillion dollar deficits pre COVID under Trump and that was not, that was not good. But what Biden is doing now in the face of inflation is worse. And look, I mean historically the best, the only times that. You really have, it seems like fiscal responsibility is when you actually have the best track records have been you have Democratic presidents or Republican congresses, and the Republicans suddenly find their principles on spending when there's a Democrat in the White House. You're right that when? Trump was in office and had Congress, and George W Bush, you know, had Congress. Republicans spent a lot of money too. So it's absolutely a bipartisan problem. But what's happening now in Washington is under Biden is is unprecedented, is a breaking of the bank. They're talking about minting trillion dollar coins. So yes, it was a problem under Republicans, but this is even worse. And here's another thing is the Fed is now saying that they're projecting 2 to three rate increases next year. So let's call that 75 basis points. Multiply that by the close to 30 trillion of government debt that you're talking about. That's about 150 billion a year of interest payments on the debt of debt service. OK, 150 extra, extra, extra that doesn't exist today straight. By the way, this is a short term rates. It's all short term rates cause, yes. So so you're looking at 150 billion of incremental debt service costs, right? So multiply that over 10 years, that's 1.5 trillion / 10 years, that's your build back better right there. Where is this money for build back better going to come from? We have 1.5 trillion of increased interest rate costs. Starting next year and and how do we get the cycle of people wanting to go back to work and be productive? It feels to me like this could be assuages, which is what's happening, but people are still not going back to work. Have you been watching the the the the Jason bring $70,000 to be a manager of a Taco Bell and people don't understand well then you offer 75,000. I still don't think they feel it. No, I think, I think, I think I think that model is dead. I think low cost labor is inevitably the cost. If they're making 75, I think, I think the in order for for the production, I don't think they'll be labor, but it's becoming Taco Bell is going to sell burritos if they cost $6. So if they're going to have to raise labor costs, people aren't going to be buying Taco Bell, they're gonna go somewhere else. So the low cost model of consumerism in the United States, which has been a stronghold for our economy for 100 years at this point, may be coming to an end or it will accelerate the implementation of automation across that. After the economy, yeah, that's what I think that's more likely. That's more likely, yeah. By the way, one of the if you read the press release for the four days a week I pay $4.00 for Taco Bell Burrito, though gobbledigook the in the four days a week thing, it said workers for far too long have been forced to work very long hours and not get paid and. Wait, wait. They were not paid. And so the idea is just like, you know, opt out. But then if you opt out, you'll make even less. In a moment where you can actually make more, yeah. These idiots who are coming up with these ideas, the, the Chinese must be Chinese, is literally, they're just looking at these visas wrecking the American economy. But in terms of, in terms of, well, do you need to do anything? We're destroying it from the inside. Yeah, exactly. So just just in terms of what we should do here, I actually think there's a lot of strength in the economy right now. It's not all negative. I mean, the unemployment rate is down to 4 1/2%. The labor participation rate, yeah, it's it's quite low. I mean, it was 3 1/2% before COVID. So we're getting close. To where we were before COVID the labor participation rates not great. I think it's like 61% salary 63. It was 63% before COVID. So we need to get more people working. We could do that by ending the stemmy checks, OK, but the most important thing we could do right now is mansion would do Biden the biggest favor by just putting a bullet in this build back better plan because I actually think there'd be a massive relief rally and the economy would take off like a rocket next year if you just got government out of the way. They have printed enough that the best thing that could happen is they stop this pumping. Stimulus. And then the Fed doesn't have to raise rates as aggressively next year. And we could let things have more of a soft landing as opposed to this sudden austerity which is whipsaw in the economy. So just slow the plane down and then maybe break this bill into 20 component parts and and just try to get a couple of things. All the money he spent, all the money it's spent. I mean, this is a Bender of all benders and if people are refusing to go back to work, we're gonna have to, we talked about in the last episode, we're gonna have to think about generalization, Jason. I think it's a generalization. If people refuse to go back to work, I think the jobs that people had when, when their options open up to them, you know, may not be jobs they want to go back there. Correct. And I think that there's going to be a larger significant growth in a services economy that didn't exist before. Think about how many yoga instructors there are today that didn't exist 20 years ago. How many, you know, people doing here? Creators, YouTube creators, creators creator, the creator. Economy alone, right? Like Hollywood no longer has a monopoly on content and people are spending more time consuming content than ever before. So, you know, there's a services. Economy. But I don't think we really predicted or modeled. And we all seem, Oh my God, we're not going to. No one's going back to work. It's like, guess what? People are spending money and they're going to spend money on new stuff. And these new industries are going to emerge. We know creators and those creators are going to create jobs around them. You know, one amazing creator will hire 100 people to, you know, staff is videos and make his music and edit his stuff and, you know, run his business and so on. Like, it's just, it's just the way that the economy shifts. There's been a moment here that is like a Cambrian explosion of new species of industry. Where, you know, this meteorite of COVID came and hit planet Earth, there was an eradication of the old species, you know, minimum wage jobs for crappy labor, work that people don't want to do. And all of a sudden the sun came out and your stuff is emerging and new life forms are emerging, new jobs are emerging. And I think we're just, we're going through a really ugly transitory. But I think, like, like Zach said, it could be really great on the other side. And there's also a. Yeah, sorry, there's one more argument to be made, which is our friend, Brad Gerstner, sent me a note today saying, I know you guys are going to rant on your all in pod. If inflation, I want to remind you about the deflationary effect of technology and it is really being felt in the economy, I think we all see it how software alone can reduce the operating cost and the labor cost of businesses, drive up margins, increase growth. And so you know, there's a number of tailwinds here, but I think sacks is right. There's a masking going on with respect to the capital that's just being bandied about right now. And it it's it's a, it's a risky nasty kind of you know, maelstrom of a of a sea we're trying to cross right now. I want to point out too. Positive things to build on sax's positivity. Number one, I don't know if you guys were following ametron in the UK, they have record cases right now, but deaths and they're also done great with the vaccine. Obviously, a small country with a lot of resources, so they're hitting record cases for this last cycle. But deaths and hospitalizations are down and they say upward 2550% is part is now moved to Omicron and. It seems like that this could be the end game maybe. And did you ever see the the end of was it outbreak where they like, dropped that bomb? And it was like the massive bomb that takes all the air out of the room is like shock shocks everything. They're like, OK, it's over. You know, there could be this thing happening where Omicron is the, you know, the the air bomb that gets dropped clears the room and then it's all over, you know? Well, and then here's the other thing we don't know. I'm seeing the salaries going up faster than inflation people are raising. People salaries, you know, in double digits to try to get them to come to these jobs. So the people who are choosing to go back to work and people are eventually choosing that and switching jobs to to match point. I think they'll be making more money. And they're going to be more resilient and they are going to be a little more empowered and that could end up being a great thing. And then finally, in terms of technology, I have one robotic company that serves coffee and they had a record week pump it, pump it, pump it, pump, pump, pump it. No, they they broke $11,000 and people ordering from a robotic coffee machine. Previously the record was like 7 KA Week. So people are here. Tell your stupid lady friend I have an $11,000 sweater. I don't know. Please stop it. Stop it. All right, listen, I don't know if you guys saw this better.com layoffs viral video, but. Yeah, can you, can you break this down? Jackal I had, I was not following this. Very simple. There's a company called better.com. They get rid of origination fees or whatever and commissions. They try to get you faster. Mortgages, insurance, whatever. They're going to stack. SoftBank was gonna put in 1.5 billion in the pipe. Everything was going according to plan, was already in the company, right? So they were trying to get their own company out? Yeah. So obviously the market corrects. Everybody always asks us as a group what happens when the market corrects. Well, here you're about to see it. This guy decides they got to cut 10% of the company instead of having his managers go to each group. And have a logical, small discussion about how they're going to correct things and maybe some sort of thoughtful process. He decides he's going to get on zoom to the entire 900 people who were fired, and in a very bizarre say nine, 900 people were 500 people, but resume over zoom. How big is this company? 10,000 employees, and he says to them. But the last time I had to do this, I laid people off. I was, I cried. And I'm going to try to do better this time. But if you are on this call, effective immediately, you're fired. It's just another one of these crazy clips. We have to want to see it. 30 seconds chamath give me your thoughts on the side. Thank you for joining. I come to you with not great news. The market has changed, as you know, and we have to move with it in order to survive so that hopefully we can continue to thrive and deliver on our mission. This is a new that you're going to want to hear, but ultimately it was my decision and I wanted you to hear from me. It's been a really, really challenging decision to make. This is the second time in my career I'm doing this and I do not, do not. Want to do this? The last time I did it, I cried. This time I hope to be stronger. OK then, here's the second clip where he basically tells everybody over zoom. That you're not going to be able to log in and you got two weeks severance, three weeks before a month severance and it's like 3 weeks before Christmas. Go ahead. We are laying off about 15% of the company's number of reasons, the market efficiency and performances and productivity. If you're on this call, you are part of the unlucky group. You being laid off. Your employment here is terminated effective immediately. Are you kidding me? What does this mean for what's next? You're gonna get an e-mail from hr.ask.hr@better.com to your personal e-mail address regarding the details of your severance and your benefits. For all US employees, we're providing 4 weeks of severance, one month of full benefits and two months of COBRA for which we will pay the premium. So three months total benefits if you like for COBRA, alright. I mean for we've all operated business before. Does anybody I've had to do layoffs? For it is the most ******* brutal thing. Yeah. This is the exact wrong way to do it, though. Terrible. I I remember at AOL right way to do it, but I think the question with this guy is to examine. You know, the growth incentive that got him to this point. He took SoftBank money, SoftBank as you guys, as we all know. Creates a very strong incentive and capitalizes businesses to go after kind of ultra perhaps unnatural growth. And there's almost always shocks that occur after they do that. And the circumstance I think could have been avoided. Maybe he built a business a little more steady, but then his valuation would have been lower and he would have been able to access as much capital. And so, you know, unfortunately the loss of jobs is the cost of capital with these ultra high growth incentives that are kind of being structurally built into the fundraising rounds in these later stage deals lately. Don't know if you guys agree, but it's just sacks and then chamath. OK, so how would you do the sax? You're an operator. Yeah. I mean, so I've had to lay people off before, but never in this era of COVID and remote work. So the question and and look, it is miserable and I think that it is the right thing to do for him to take responsibility. If, if they're, if this restructuring was caused by a strategy that was, you know, overly prioritized growth. I think he could say something like, look, this is my fault, the companies. Fault, you know, not your fault. So I think he could exactly. I think he got a couch that I think he could take responsibility. That being said. I don't think he owed the grovelling apology that he was forced to make. Because look, here's the thing. How do you lay 900 people off in this era of remote work? I mean, they're all working from home. There's no office for them to go into where you can sit them down one-on-one like a human, like you used to be able to do and have a conversation. So they are laying people off by a zoom now. And it's unfortunate, but I think it's just this new world that we're in and I don't know that there's a much better way to do this. I think the words could be better. Maybe it could be more organized, but how do you lay off people who are working? Well, I have an idea, but your mouth let me let you go first. Any thoughts you want to add and I'll tell you how I would have done it. I remember when I had to do my first layoff at at AOL. Of course when I'm there and and there was a lot of those rifts and I remember the first one, I was in my early to mid 20s as a manager and we had three or four people or whatever. And I remember distinctly that AOL had this policy at the time because I guess they had maybe like better like 10s of thousands of people, employees, lots of call center as an example. And they've had to have rifts before. They would have security guards and they would be a security guard outside the meeting room where you would bring somebody in and talk to them. And I just remember being seared in my mind. Because never having done it before, I was like sweating profusely, really nervous. I didn't know what to say. I felt really bad. I felt very guilty. And then you learn how to do these things, and there is a very humane way to try to do these things. It's never the best thing to do, but you try to give people a fair exit package and all of these things. Let me put that aside, because I think what Friedberg said is so good and so important. The root cause of why this is here, as far as I can tell, is not a company that doesn't have consumer demand. It's a company that may have been mismanaged for growth to meet the consumer demand because of too much money. And this is a thing that isn't avoidable. Mistake. And this is where you have to figure out how much you want to basically swim with the tide and be like everybody else, which is to be able to go to the dinner party, say I raised X amount of dollars at Y valuation and just keep picking it up and taking it up. Or to actually have the discipline to hit the brakes and say I don't need it, I don't know what to do with it, I'm not ready to take it. I need to figure out my business model. Those are two different kinds of decisions. There's going to be layoffs in both. But if he actually came at it from the perspective of, listen guys, we've been growing methodically and there's just been a structural change or for example, rates are ticking up, there's a lot less demand and we have to right size the company. That's a very different statement than maybe we overgrew because we were drunk on free money and now we have to realize that we actually have too much capacity for the demand that actually exists. And those are avoidable mistakes, frankly, yeah, I've had to do layoffs. Obviously, it's it's not fun. This was executed terribly. To your point, sacks. I think a much easier way to do this would have been to go to the leaders in each group and say, hey, listen, we're going to have to do these layoffs. It's going to affect different groups. So you take your group into a subset of zoom, you explain to those people and you do it. Hey, listen, we are reorganizing because of these reasons. Chamath had some good language there. People did. But this idea of mass firing 900 people with one person. That's the critical error here. It wasn't human. That's either. That's a little megalomaniacal. That's a little insane. Almost like he wanted to talk about himself in this as opposed to taking responsibility to unpack it. Obviously when something like this happens, then the floodgates open. Forbes. Got a 2020 e-mail leak where he called his own employees. Dumped dolphins in the e-mail that's been leaked since this came out. You are cap locks on. Too damn slow. You are a bunch of dumb dolphins and dumb dolphins get caught in Nets. Eat eaten by sharks. So stop it. Cap locks on. Stop it. Stop it right now. You're embarrassing me. Is a pile for 24 hour. Yeah. No, for 24 hours. He's the incarnation of evil in the eyes of the media. And then they're gonna move on to a new person in a couple of days. So, I mean, look, I think, have you ever wrote that to him? Please, do we have an e-mail coming from. I wrote all caps, guys. I I quit the group chat for a day. You're all caps. All caps. You guys this week. Hilarious. Rage quit. Can I connect with something Chammas said? About about. OK, so that. You have this, this, this larger question about or did the company grow too fast and our founders asking the right questions about growing too fast. Let me connect that with the first conversation we had about the macroeconomic situation. I think you know every startup board right now probably needs to be having a conversation about the macro picture because there's one of two possibilities happening right now. We've already seen in the past five weeks we've seen 30 to 40% correction in the public markets for growth stocks and SAS. Companies that is absolutely gonna trickle down to venture valuations. I think it already has. If you look at the crossover guys like Tiger and CO2 and D1I guarantee you, they're all updating their models or valuation models based on the public comps. So you know we are now in a slightly different environment. I don't know that 100 times AR is, is, is the metric anymore as it was you know, say two months ago. I don't know where the new metric is going to land. We're going to have to see some deals get done post correction. But you know, we could be in a very different environment here. And I think, I think there's two possibilities. Either the the rate increases are coming next year are now priced in and we're going to go back into, you know, a, a mode of going back up and to the right. And especially I think if this BBB built gets killed, we'll go back and up to the right or this could be beginning to be the beginning of a protracted slide. As you know more and more market participants realize that we're in a very different kind of environment and we may not have seen the bottom. We're running a company Sachs and you had just raised that $100 million crazy round at 100 times. What do you do if you are running this company? What would you do? I just had this conversation with one of our SaaS founders. They just closed a monster round at a great valuation and it literally a few weeks ago and they have some interest for more people wanting to get into the round. And I just pointed out listen you know we may be going into a very different environment and I think the company is worth evaluation we got but you know the. If you just look at the public comps, valuations are down 3040%. So if we were to take more money into the round at the same valuation, that's kind of a good deal for the company and it gives us more runway, gives us more insurance. Yeah. So those are the types of conversations I think is prudent to be having right now. And frankly, there's a lot of investors and certainly a lot of founders who never lived throughthe.com crash and down markets and they don't know how bad it can get. They've only seen good times, right. What, 18 months of nuclear winter? No, no checks being written? Yeah. I mean, whatever you got, whatever you have in the cupboard is what you're eating for the next 18 months to 2003. You had three years of nuclear winter, pretty much. But, you know, in 2008. 2009 was about 18 months of nuclear winter. I mean, yeah, it's just it wasn't even, it wasn't even that cold. But you wanna hear a great 2008, 2009 fundraising story? Sure. I'm at Facebook market just implodes and we need we decide that we need to raise some insurance. Just a little, you know, little insurance policy, a little money, little downside protection. And I remember that we had we're having all these conversations with TCV. And you know there are, there are a really good firm, very smart and basically you know we we told them what the price was. I think it was like. $7 billion pre. Right, like $7 billion, we want to raise 500 million. Just please just do it. We we we just want to get a little margin of safety. And they came back with their model and they updated their model. David, to your point, and. They came back at like 6.8 or 6.7, something like that, 6.5. And we were like, my God, what the **** is this? Like, this is not seven. We just like, we just want to raise some money at seven. And seven was a down round because we had already taken money from Microsoft, 10 billion, not 15. So we had thought we had hit the jackpot when a year ago, a year earlier, we raised 249. $1,000,000 from Microsoft. Now, by the way, why 249? Because at 250 million, bomber would have to go to the board. So he goes 11 million under the number where bomber can sign the check himself. So we get bomber in for 249 at 15 billion. A year later, the great financial crisis happens. We are raising money. We tell TCV, please just give us 500 million at 7 or 8. Some number they come in 700 million under because their models is whatever. And I will never forget this. It was a Saturday afternoon. I was on the phone and I think it was with like, Ted Elliot, our General counsel at the time. And we got an A term sheet from a certain person, Yuri Milner at DSD. And Yuri came in, he he throws the high heater at like 8 1/2 or 9 no board seat, all comment, I mean a completely disruptive mood move and move. And all I just remember asking Ted Elliot was does he vet? Meaning like, will the wire clear, will justice let the money come into the United States not knowing, right. Because we had heard, you know. Anyways, the money cleared, we took the check, and the rest is history. I have a good story about when you are when you are facing. An enormous downturn. You have a fiduciary responsibility, David, to your point, to make sure you're well capitalized. But then on the other side, you have a really important fiduciary responsibility to you and all the employees and everybody else to run this thing properly. And you cannot get confused that value and valuation. Are not the same thing. Absolutely not. Yeah. And so the minute you conflate the two and you're like, I'm an ex billion dollar company and start behaving that way, you're dead. By the way, there's a big difference. I think it's important to note. I know it's been said many times before, but I'll, I'll say it again. There's a difference between what your responsibility is as a board and as a fiduciary to the shareholders of that individual company and what the incentives and motivations are for the big investor that just put all this money into your company for their portfolio as a whole. For their portfolio as a whole, they would rather tell everyone, go hard, go fast, spend as much money as you can. And they hope that one out of 10 companies becomes 100X from there, and it's OK if nine out of 10 die, so they don't care. If you die, they care. If one out of 10 companies goes 100X, Yep, you have a different incentive and a different motivation because if the company dies, your shareholders, you as an entrepreneur, your team lose out. And that tension needs to be understood really clearly by entrepreneurs and executives that are taking money under these conditions. Tiger global, SoftBank, CO2, they're great people. There's good people investing there, but the incentive for them is quite different than it is for you. They're betting on a big winner. Yeah, and do not, do not expect that just because they're betting on a big winner that they're expecting you will be the big winner. It's they're indifferent. As long as they have one go 100X, it's fine. Doesn't matter what happens to you. When I met Yuri Milner, he came to a certain poker game not to play, but just to say hi. And I said to him, I said, you put all that money into Facebook. There's like a week or two after it happened. He said, why didn't you take a a board seat? That's never happened. And he looked at me and he goes Justin Calacanis. You don't need to have a board seat to be influential. He was right. You could keep it going. Think this guy's gonna, like, whack me anymore? The rest is history. Don't lie to ever heard. You do not need the board seat to be influential as like, what do they use? Complement what? I don't know. I don't want to know. Cobra mad. He's got guys. And someday I'll tell the story of the three hour lunch I have. What? Your e-mail? Alright, listen for I don't know if we have anything else to clean up here. Just like. Yeah, we're talking about Juicy Smollett, the famous French juicy is it, Jesse? Alright, listen, they're famous French actors, as Dave Chappelle calls them, the famous French actor Juicy Spole. Listen, I don't even want to go there, but I there is a person who pretend this. I mean, I think it's actually worth talking about as we do go to the we do talk about race sometimes. As an actor who faked that he was attacked in a bias attack, he was found guilty of doing this. It's deranged. It's sad that I'm hanging up all issues. I'm not interested in the gossipy story. Do you guys have a good time? I'll see you guys later. Wait, wait. OK, let's move. What? What else do we got on the docket? I don't wanna lose free bricks. I don't. I miss Friedberg you to come to the party tomorrow. I wanna hug freeberg's Bony body. Why don't you come to the point? You come to the party tomorrow. Coming. What are you what? I've been trapped. Boys, boys. I was in. I did the thing with the thing of the. The thing is OK. And then I was. It's another thing, right? That's all good. OK, so don't show up. Jake said he was gonna go skiing. I said you go skiing, have a good time. No, I'm showing that this is like The Beatles. And you know what Shamat's turning into to John Lennon. He's gonna hang out. He's got some. We got, we got some buddies there. We gonna show up? Sterling Sacks, you're going, guys. You know how far it is from where I live? From I know because I play. I come to your house to play. He comes to your house every week. I know it's like that. And I love you for that. Yeah. Are you gonna go sacks? What's the chance the sack shows up? He RSVP? Are you going to go back? Should I pick up the RSVP? He didn't even do use one of his one of Freeberg's holiday party. Yeah, well, I have a came to your ohh. You have? Of course. Yeah. My God is the conflict. You need to drink some pappy. All they party tomorrow night, so wait. You're going down to first party. Can I go? I'll skip fried burks for that. Yeah, yeah, yeah. Alright, fine. Sorry for you. Fine, you wait. Why are you guys? It's all good. Besties. Why you wait a second? You're picking. Over friedberg. I mean I've gone up all day party for like the last five years or whatever it is number maybe more years than that. It's always that's what it's like. Tell us what this is a good party. When you see him, do you look him in the eyes and say what have you done for me lately? The two of them? Never. The two of them haven't looked each other in the eyes and never learned. The eyes never looked at me. I was like an accident. They when they first met, they accidentally. OK, I gotta run. What? Oh, wait. No, wait, wait, wait, wait, wait. Do the Jesse Smollett thing quickly. No, we do it last because you don't wanna talk about it better. That is the last thing. What else do we have? A new bank? IPO was huge. Complete disaster. 80% of people already in their spec. BuzzFeed is circling the drain. What a disaster. The end. Thank you for tuning in to the all in podcast. That's all we have on the docket today. Jamal is ready, man. Only Chamath is loose. Lucy goosey. He's a little Lucy he wants to go for. I've been working, I've been working, so I'm working hard this week. Traveling all week. I'm exhausted. I got people in town. I gotta run. OK? Feel free, burgo. We'll just go for five months. I'm going to go tomorrow, Freeburg. I'm not selling you out like these other two. And love you free burgers. Love you guys. We'll see you later. Bye. And over here I'm going to tell you about my poker game on Monday. Ohhh my God. Poker game. Thanks for the invite. Oh my God it. We lost our minds. And there was, there was some there Big Al story, there was some enormous carnage. Wires were initiated today so everything is settled. I will you carnage. Nope. Ohh, I did a little bit of this. I did a little chewing of the carcasses. You're like one of those was there a whale? And you're just like a great white shark, just taking bites after the whale's dead of the blubber. We could at 3:00 AM and it was it was nice. That is crazy. Alright. So for Jessie Small and now that Freeburger gone, yeah, I mean, it's just very weird. I mean, I think on a race issue, this is like the worst possible thing to happen because we do have instances of Asian hate, of, you know, people being beaten up before the color of their skin for their sexual preference, whatever it is. And then this person is so mentally deranged that they set up. A bias race attack, apparently. Am I correct that he did this in order to get sympathy so that his acting career would do better, or do we not? Cheating his contract and he's worried about getting cut from the show. He was on the show empire and he's worried about getting cut from cut from the show. But look I I to me so this hold on explain that to me. He's worried about getting from the show. So the logic jump is if I had a race attack they can't fire me. No play the sympathy card. Sympathy card. I got it. Yeah. I just wanna make sure I'm understanding it and I'm not crazy. He he made himself into a cause celeb of the woke left. This is an early 2019 when everyone was worried about you know Trump. So he claimed that he was beaten by two Maga you know, haters who tied a noose. On his neck and poured bleach on him. I'm not sure what the bleach was about. I think maybe that was to make even more something he said. What? It was two white dudes, OK? And then and then at one point he in the in the interview when they he, the, the interrogators or the investigators were pressing, Are you sure they were white? He said. Well, you know, I don't want to be racist. Light. And then it turned out the two dudes were black. Like, I mean, like from Nigeria. He hired them. He hired them, and he paid them by check. So this is not like a master criminal. There's no lex Luther. No, no. But look, I I think this story, what it's really about, it's not just a story about one sociopath doing this crazy thing. It's really more a media story. This is about how the media covered it. They loved it. And I think this wall to wall coverage, and I think this reflects all the worst. All these are the media #1 rush to judgment. They immediately bought into the story and they were attacking the Trump administration for creating the hate and the Maga people. So there was a feeding frenzy #2 there was no. And this goes with the Russian judgment. They didn't do any fact checking whatsoever, right? Because the story was too good if it all their priors. Just like the Rolling Stone ivermectin hoax about, you know, the Maga people, you know, in Oklahoma hospitals or whatever. That story was too good. And Rolling Stone and Rachel Maddow bought them. Fact checking out the hoax, hook, line, sinker. Because they didn't do the fact checking and then #3 no corrections. None of these sources ever apologized to the mea culpa, issued a correction. There's just an eerie silence coming out of all the sources who pumped the story like crazy. You have to Nick, please put it in the show, notes the there's got to be a YouTube clip of the Chappelle joke around Juicy Smollett and the basic joke is like every colored person stayed silent. All the blacks, all the Browns. And the joke, the punchline of the joke is because we were all like, he's probably did it, you know, like, why aren't you defending juicy bullet? And the whole point is right. Looks kind of guilty to us. Well, I mean, he's incredibly funny if you let's just play 15 seconds of this a deep linked to his first interview. I think this is his first full interview. Just play 10 seconds of that because this is of Jesus. Yeah. I noticed the rope around my neck and I started screaming and I said there's a. Rope around my neck. Did you get any kind of description of the attack? I gave a body description. And I, you know, because I saw this but and, you know, right here or whatever, but I didn't see. I can't tell you what color their eyes were. I can't tell you. And I did not see anything except the second person I saw running away. And the first person, yeah, I saw saw his stature. I gave the description as best as I could. You have to understand also that it's Chicago in winter. People can wear ski masks and nobody's gonna question that. It's just so deranged. I mean, the the poker towels are flying off of him. He's like thinking like, does this make him a bad actor? Actor? I just want to know, David as a producer, are you hiring him now or not? Maybe that will hire him. Actually working for you. Finally got his. Oh my God. Sorry. Too soon. But the crazy thing here is that a lot of people, all the liberal elites, basically fell for this hook, line, and sinker. President Biden, vice President Harris, Pelosi, they all jumped the gun on this, and we're basically denouncing where they bought into the story they were denouncing this racist attack and blaming Trump and the administration for the new policy. I wait until the court case is over to comment on these crazy things. I don't want to comment on a Twitter. I don't want to. Like it or retweet it, we have it. Justice system. If this stuff is hit in the justice system, just let the process happen because. Right. The velocity of social media is such that if we talk about algorithms all the time, that if something like this happens, it's going to become the number one Serena billion people are going to see it. And then there's fallout. And the fallout here is it just divides like everybody shut up and wait. The same thing happened on the Rittenhouse case, right? Absolutely massive rush to judgment. They have this kid being a white supremacist attacker. So basically, like a school shooter, it turned out to be totally false. But, you know, the court systems have been doing an amazing job. When you think about the cases, I think the courts have been on quite a run in, I think, contradistinction to the media keeps getting it wrong. Right. So you think about it. So Derek Chauvin, convicted. Jesse Smollett, convicted the the three killers of Amaud Arbery, convicted, but Colorado house not guilty. Kenneth Walker not guilty. This was Brianna Taylor's boyfriend who killed a cop. When they killed her, we remember they busted the apartment. He basically pleads his case. He pleads self-defense because he didn't know who was shooting at them and he he got no not just weren't. Yeah, he got off just like how Rittenhouse did. So you know, people I think are jumping the gun on a lot of these cases, actually an enormous amount of justice. America is an incredible country. We don't get that. Mostly finds a way to get to the right place. Obviously there are moments where we completely. Get it wrong? But David, to your point, those are some really powerful examples in modern history with a lot of scrutiny where our peers, American jurors, found the way to get to the right answer. Feels great. Yeah. Bravo to America. Bravo to those folks. Good job, good job. By the by the way, the Brianna Taylor example is a really wonderful example in the Marbury thing. Was really important to me as well. Thank you for bringing it up. I appreciate it. Well, you know, because because I think, you know, when the Rittenhouse verdict came down, a lot of people were saying, well, look, if if Kyle Rittenhouse had been black, he wouldn't have gotten this self-defense as justice. Well, Kenneth Walker, actually, that case was a self-defense case and he killed a single article in the mainstream media to basically actually defend Kenneth Walker. Yeah. And he he actually shot a cop, right. And but and he still got off because when they bust into that apartment, the jury thought it was reasonable. Very, very practical self-defense. Very tragic that that that that the officer died and I'm sorry for the family, but but I really hope that Kenneth Walker has a a really amazing productive life from here. Yeah. I mean it's a terrible situation alone of like are these no knock warrants even warranted? Like what what are we doing? Like I don't know if necessary if Kenneth Walker lives a productive. If and does good in the world from here, he does a small up out to kind of make up for that injustice of Brianna Taylor and probably. You know, kind of create some positive karma for the family of the officer that passed away. And that's the best that you can do. It would just be great if as Americans, we could start looking at these issues and saying, like, justice is worth pursuing, the truth is worth pursuing, and we're all in it together. the United States, like we talked about in the economy also, we got it right in places that the elite coasts. Kind of point to and look down on. We got it right in places like Georgia and deep parts of Georgia, you know, and and and and I think that that's something for us to also think about it. It is the a virulent strain of the liberal elite that really do judge the rest of the country for being in a way that is actually not true. They got it. They got it right in Kenosha, Georgia, Kentucky, Illinois. Just to be just to put it on the record, we'll see you all next time on the island podcast for the Dictator, Rain Man and the Queen of Kinowa. We'll see you all next time. Bye, bye. Let your winners ride, Rain Man, David sat. We open sources to the fans and they've just gone crazy with it. Why? Best. That is my dog taking out in your driveway tax. Ohh man. We should all just get a room and just have one big huge **** because they're all like this, like sexual tension that they just need to release stuff out there. B. Your feet. We need to get marches on.