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.

E65: VC markup dynamics, Russia/US tensions over Ukraine, Altos Labs raises $3B, Stripe mafia & more

E65: VC markup dynamics, Russia/US tensions over Ukraine, Altos Labs raises $3B, Stripe mafia & more

Sat, 29 Jan 2022 06:35

0:00 Chamath's preferred cosplay

1:35 Reflecting on bad investment decisions and markup dynamics

15:20 Rising tensions between US and Russia over Ukraine, Putin's demands, NATO negotiations as the underreported key piece, Obama's savvy Russia dealings

39:16 Bill Ackman buys the Netflix dip, Tesla and Microsoft crush earnings, the Fed signals rate hikes

55:18 Altos Labs raises $3B in the largest Seed round ever, incredible Yamanaka factors breakthrough, dynamics of a richly capitalized bio-moonshot

1:04:08 The Stripe Mafia, Bolt CEO punches up, reflecting on old emails

Follow the besties:

Follow the pod:

Intro Music Credit:

Intro Video Credit:

Referenced in the show:

Listen to Episode

Copyright © <> - all rights reserved

Read Episode Transcript

We don't want to talk about Andrew. I think that guy Palmer Luckey is super fascinating. The Oculus. Why do you want to talk about that company? Because I think he's launching a syndication. No. Why are you an investor? I'm a lucky hates me. He won't come on this week. And startups. He literally. What did you call him? Parma. Lucky Hammer, lucky cosplay Palmer. He's a cosplayer. I like the fact that he does. What is that? That's when you dress up as comic book or like superhero characters and go to conventions. You know how you dress up in the clothes of old Italian women. He dresses up like a superhero. These are called open folks. I I do dress like a matrona sometimes. Yeah, right. I'm, I'm making Tony. Tony with the vodka says I'll make it for you in in in in in Italy. There's like a culture like in the in the olden days, like it's like you used to have these things called salotti, which basically meant like all the decisions of the country were made by these people in the living rooms after dinner. And, you know, the the most powerful people in the salotti were these women who were married to these men, and they would be the architects of all these. Especially in the I don't like him and I never finished the pasta. He always leave us so much on the plate, and people and people would call them patronas, so I I'd probably be a matrona. I've always felt you were like the old Italian lady in our group. You know what? Your winner. Rain Man, David Saxon. We open sources to the fans and they've just gone crazy. Hey everybody, welcome to another episode of the All In podcast. Yes, we're still publishing. Yes, we haven't been cancelled, but it's early in the show, so you never know with me again. The dictator himself, Jamal. The Sultan of Science, David Friedberg, whatever beverage you like, he'll make it for you right now in his replicator. And of course, yeah, the Rain Man himself. Yeah, definitely going to win the midterms. Yeah, David sacks. Everybody have a great week getting their ***** kicked in the market. I'm pretty good. You're OK. Everybody OK? Nobody check out a window. I can't look at My Portfolio anymore. I just stopped checking it. I am not a fan of the color red. Actually, I I've been using this period to kind of desensitize myself. I went back and I started to think about like all of the. Sort of errors of Commission that I've done in like the last decade. And I, I was able to look at like four or five specific trading moments where I was like, wow, what did I do that for? And I came away with two things. One was if I confuse an investment with a trade. I'm done for meaning like there are things that you invest in that you just want to own forever. And then then there are things that are trades that are just speculative and you know at the end of the day you have a sense that it could be up in the short term. If I confuse those two, I've made huge mistakes. And then the other one is I would always get really emotional and panic at the lows. And so I was like, you know, in early December or November when I wrote that letter on Twitter and we talked about it and I sold a bunch of stuff after Jeff and and Elon were selling. Raise some cash and I was like, OK now. I have enough buffer here. The whole point from here on out is to basically, like, insulate myself from my own emotional turmoil. Stocks go down and so far so good. And my litmus test if, when I go home at the end of every day, you know, I check in with Nat and I'm like, am I an *******? Because if I when I guess, what does that have to do with what I get? Question the market. I tend to. I tend to take it out of my friends and my loved ones, honestly, because I'm just. When your socks are down and you're just like, Oh my God, it. Once that's it, I'm popping the blinds up. I can't take it anymore. You remember last year, time off during the the market collapse when at the start of COVID and you decided you didn't care about having nice jeans anymore? And then you Fast forward to December and you were proclaiming the virtue of a $5000 fresh alpaca sweater or whatever. I think. I think another another indicator of sentiment in the market for you is your clothing. Choice, but this is a this is a really nice cashmere ribbed sweater from Loro Piana. OK, well, we're back in the game. It's good to see we're back to normal now. Yeah, let me ask you then. I'm going to put a couple of items out there. Is Bitcoin a trade for you or an investment for you? Or was it? And is it now? Well, I invested it in 2011 at $80.00. Yeah, yeah, yeah. I wrote an op-ed in that same year in Bloomberg, which I hope at some point they take off the paywall. And the whole thing was you should have 1% of your net worth in this thing, yeah. It's remained an investment ever since. So still an investment. Yeah. I've structured it so that I don't hold any Bitcoin personally myself, because I don't want to have the pressure and the risk of keys and coins and wallets and this and that. But I still really believe in Bitcoin in the long term. Got it, sacks, how do you how do you deal with the emotional turmoil of opening up your stocks, crypto whatever wallet and seeing red and then going to work every day? Or you just curled up in a ball playing chess with Peter till at this point? Yeah, I mean, you just gotta try and ignore it. OK, try, try. Was a keyword in that sentence. It doesn't really affect me that much. I mean, so I run the avoidance acceptance function. I have removed my emotions. No, look, there are there are countervailing benefits. So when exit prices are great, entry prices are lousy? And when. When entry prices are great, exit prices are lousy. So there's an inverse relationship. So in other words all the the companies that I mean the the public markets have massively corrected and though and and now finally, you know we talked about this a few months ago, those new price levels have trickled their way down into venture markets and so finally you know venture deals are starting to price at more reasonable prices so. In terms of harvesting gains from old investments, obviously it's not as attractive as it was three months ago, but in terms of making new investments is much more attractive and for a relatively. Young venture firm, which is what we are, you know we yes we do have some investments that are kind of in the harvesting stage, but you know we're only a four or five year Old Firm. We're still the bulk of our activity is making new investments so. You know, it's not, it's it's all just kind of part of the game and I'm not really that worried about it, said another way, fortunes are made in the down market, they're collected in the up market. Is the way I always phrase it, but it's true. Things are gonna be on sale right now. We saw Bill Ackman, I think, who I think is a friend of the pod. Any questions? Yeah. Super, Super, super smart, brilliant guy. Yeah. And I just, I just want to emphasize because I don't want founders to get the wrong idea. It's not like we're trying to pull one over on founders and get some sort of sweetheart deal or something like that. My view of like, our role as VC's is just to be a price taker of whatever prices the market sets. We don't try and negotiate something better than market, really. We just take the market price. And we picked the companies we want to be in. So that's our job is really just to pick not really to negotiate that much. You're not, you're not able to haggle. It's not like you can go to exactly the market supermarket like, ohh, bananas are a dollar a pound, I'll take them for $0.50. They're like, Sir, this is a Whole Foods, we don't negotiate, right? So we're, we're, we're, we're a price taker in in good markets or bad markets. And it's just that I think that the prices now are coming down because what I've heard is that the crossover investors like Tiger, like CO2 are deploying all this money. They've really. Uh, slow down now. I think they're all kind of licking their wounds. And so, like all this money that was flooding into the venture space is kind of on pause right now. And that's caused the price levels to to drop the end of last year in Q4. My public portfolio really started to turn over. Took a huge amount of losses going into the end of the year. And then I, I took an accounting obviously of like the entire book and, uh, the public portfolio, every single thing that I owned ultimately basically broke even last year. Somewhere up I made some early sales. Some were way down. By the end of the year, net, net, I kind of broke even. But my private book was up a billion dollars and I told the team I'm like, uh, no, this is not real. So we have to take those marks because you know, you have other venture firms that are pricing these deals and we get audited OK ones. And so we have to take the up billion. But I'm, I told them you should consider this that we had basically a down you know. So net, net our returns were like, you know, we were up like 15% and I said this is not real. We were at at best break even and probably we lost money. But you can't, you can't not take these marks because like you know, you have an entire. Fund complex that lives on these marks. Yeah. And it doesn't affect my compensation at all, but I have to take it freeburg then sacks, good friend. That's a really important point because I think we talked about this one or two episodes ago. But there's a significant disincentive for venture firms to take markdowns to raise capital into a private business at a price that's lower than the prior round. Because when they do that, the the the market value of their portfolio goes down and then it makes it harder for that venture firm to go out and raise the next fund that they're going to try and raise from their LP's. Because it looks like they're not good investors. And the reality is, and so in every round, as as everyone on this pod knows, there's always an incentive and a push to see can you get the valuation higher even if the business performance didn't meet the objectives of the prior round and things have gone sideways a bit doesn't necessarily mean that it's a bad business, but it doesn't necessarily mean that it should always be getting an up around just because it's being kept alive and there is this artificial. Pressure in private equity and venture to always drive the value up or to run away from the company because otherwise you're going to have this markdown and you don't be putting money in a markdown that looks like a loser and so on. And if you look at the public markets, every successful company has had significant downturns in their stock for significant periods of time, from Facebook and Google to Facebook to Amazon to Netflix. And all of those businesses were sound businesses. It's just that for whatever reason, there were perturbations. Markets, perturbations in the business, but the long term value creation was still there and so I think we need to kind of you know be really thoughtful. You know, and and and entrepreneurs should be very thoughtful not to give in to the venture mandate to always drive value up, but to be really thoughtful about getting the right valuation for your business and getting the capital you need with the right partners. Can I say something about this? It's so important. What you said. One of the tactics that I started three years ago was I run my own shadow portfolio where I don't take the Marks and I just keep them at my cost basis and I'm not allowed to use that for anything. I don't, you know, I can't use that. Obviously, I would never use that for compensation with my team or anything else. But I use it in my own head to say, OK, if I invested a dollar, let's not think about what somebody else may think about what that dollar's worth. Let's just keep it at a dollar unless it's impaired. But I don't take the markups and I look at My Portfolio that way. But it's a very difficult thing to do and the reason I do that is because I don't have the pressure to raise incremental funds. But if I did, I wouldn't be able to play that game and I'd be very. Focus on making sure other VC's marked up my deals because to your point, it takes 1012 years to drive liquidity, literally. That's the key here. Yeah. And So what are you supposed to do if you're a venture business in year three or four, except raise money on markups. Paper markups are the, they're the, they're the lifeblood of industry going. Yeah. Well, I mean, the the interesting thing for me is I LP a couple of these small, like emerging fund managers, you know, micro funds, 10 million or so, 3,000,000. And they were sending like a lot of updates and so I'm in some top tier venture firms that some of you are in and they send you an audit every year and they send you a distribution cash on cash, here's where you're. And then I was getting like quarterly emails as everything was going up. These new fund managers are like, we're at 100 IRR. We're at 200% IRR because this crypto investment we did got marked up. And I was just thinking about what Bill Gurley would always say, which I think is a Howard marks quote. You can't eat IRR. Like, what are we doing here? Like why, why is there such a focus on this is because you want to raise your next fund? And then the other game people were playing was and I got into this because people were like, oh, you know, you're grossly undervaluing. Your funds, because Robin Hood is trading at $30 a share on the private markets, COM is trading at this in the private markets and the second people were using secondary market transactions as their mark. So I'm curious, sacks, how do you think about if you invested in a company, the Series B was $100 a share, but then somebody bought it at 150 a share in the private markets. Where do you like to mark that in your funds or how do you think about that and getting ahead of your skis in terms of valuing your private funds well to the most points we have? Accounting rules around this, so we can't like subjectively decide like what mark to set for each company for you know obvious reasons are LP's want like a like a predictable accounting. So the way it generally works is that you the mark is set by the most recent private you know, financing. This is the way it works, and if people want to discount it from there, they certainly can. You know, what about a secondary transaction? Is there any more complicated rules around that? Because it's a different class of stock. So it's some combination of sometimes we use a four and a, sometimes it's the latest preferred round. It's. You know it. Just there's like complicated rules around it. By the way, I'll I'll just to rehash what was already said and just to say it one more time to. Matt pointed out that it typically takes 12 years to liquidity from the time it startup is initially funded to the time that you sell it or or go public. Show me one public company that has had 12 years of consistent gain in its stock price. It doesn't exist. And so, again, like this, this notion that, you know, every startup is seeing some perpetual, persistent increase in value is an artifice that doesn't really represent it doesn't. It doesn't exist in tech. And that's the that's a feature, not a bug, right? Meaning, the things that can go up predictably for 11:50 years are not necessarily businesses that they don't take risk. They're not dynamic. That's yeah. Sacks, can you define perturbation for the audience? I heard Freeberg say that a couple of times. Perturbation would be perturbation changes. What, like volatility, basically, yeah, rapid change, anxiety, mental uneasiness. OK, A cause of anxiety or uneasiness? OK, I got it. I thought you were setting another word. You don't use the word perturbation. I I thought you said another word. What word was in your brain? I thought I heard ************. I was ************ but that's just what exactly did he say about the markets? Speaking of markets. We were on a text on our text thread talking about if we were. About to have the start of World War three. And then. Maybe this is not in the news now. How did we look at the UK, Russia situation in the Ukraine? Obviously 100,000 troops are amassing on a border. And what is the goal here? Because Biden is saying, hey, listen. If anything happens, we're going to go to war. And there's a lot of Saber rattling here. I don't exactly understand what Putin's goal or motivation is. And that's I think what I'm not hearing in the news is exactly what is his goal? What are your thoughts on what's happening in the Ukraine and Russia? Sex. OK. Well, I think first of all, we have to kind of level set in historical terms about how unusual and unprecedented it would be for us to send troops to fight, you know, potentially Russia in a border conflict. With Ukraine. With and by the way, the Biden put 8500 troops on alert for deployment this week. It's really without historical precedent during the Cold War. You know, in 1956, Soviet tanks rolled into Hungary to crush rebels there. Eisenhower did nothing. 1968 Soviet tanks rolled into Czechoslovakia to crush the Prague Spring. LBJ did nothing. 1981, The Soviets crushed the solidarity movement in Poland. Ronald Reagan did nothing, even though he had campaigned on getting tough with the Soviets. And then more recently in 2008. When Russia invaded Georgia at George W Bush did not intervene militarily and in 2014 when Putin. Occupy Crimea. Obama did nothing. And so this idea and and the reason for that in all of those cases is because America has a vital national interest in avoiding war with the nuclear armed Russia and we did not have a vital national interest in defending the territorial sovereignty of those nations. That's the bottom line. And so for us to be now beating the drums of war and talking about sending troops into a war zone with Russia is just it's unbelievably irresponsible. Friedburg 1 might speculate if they were cynical, some sort of wag. The dog situation here? Biden's not doing well. He's lowest popularity ever. Midterms are coming up. Is there any political motivation here, do you think? And what Biden's actions are? You know, given the context of what Saxist outlined, I I think that there is. This is like showing up to the, you know, the last 20 minutes of a 2 hour movie and then saying, Oh my gosh, what's this guy doing? He's so crazy. There's a long narrative that precedes the current news cycle on what's happening with Putin and the Ukraine. You know, in large part the United States helped to start the fuel. The expansion of NATO in the 90s and the intention was to make NATO as a Western allied kind of organization contain Russia, step up right to their borders, get very close and and ultimately make these kind of. You know areas free liberal democracies that are aligned with the West and put them right on Russia's border and and that is obviously. Antagonistic, if anyone tried to do that to the United States like Russia did with the Cuban missile crisis. We would view that as a hostile act and we would react accordingly. And for years the pressure has been building and and has been mounting as Putin has started to kind of solidify his political power at home and his allies abroad in trying to figure out ways to push back on this wall that has been built around him and his nation. And you know, to some degree I think we look at this as like his aggressive behavior, but to some extent it is a defensive behavior over a very longer. Michael when, when? When viewed that way. And again, like, remember the US had this Monroe Doctrine which President Monroe put in place and I don't know, 18, some 1800 something that said, you know, anyone that comes into our territory and tries to influence nations around us to be hostile towards us is, is a hostile act in and of itself. Anytime someone tries to influence our politics, it's hostile. And I think Russia viewed our behavior and NATO's behavior this way. And so his primary demand is and has always been that the Ukraine cannot and will not and should not join NATO. And the US response has and continues to be. And and the EU and the EU and we're saying, look. We, we believe in the sovereignty of the Ukraine and we want the Ukraine to make their own decision about where they go and what they do. But the reality is for us this is a key part of a very long term strategy to keep Russia contained. Now meanwhile, there's this beautiful backdrop of what's going on with China. And if I'm China, I would love to see the US and Russia in conflict because it will weaken the US. And if I'm Russia, I would love to see the US and China in conflict because it will weaken the US. the US is in a very precarious situation right now and for us to actually end up in conflict. Gonna weaken our position with one of these other two emerging, you know, challenging, you know, superpowers. And this is a a really precarious time. I think the sax is point, it's it's highly unlikely we're gonna end up sending military, but the posturing is such that we need to kind of hold our line until the very last minute. We'll see what happens. I did say you know at the end of the year I do think that we're in this kind of economic status right now that. If there were an opportunity for conflict, we're probably more likely to want to engage in conflict than not because it does create something that we all get behind. It creates, you know, kind of a political unity, it creates economic unity, it creates driving forces that maybe might help us through what is clearly a very volatile and difficult time at home. So let's see what happens. I think Obama has already given us the end game. I just think we have to go through the machinations to get there, he said to the Atlantic, I think it was in 2016 or 17. He said the fact is that Ukraine, which is a non NATO. Country is going to be vulnerable to military domination by Russia, and no matter what we do. And you know, every time there was this brinksmanship, we effectively blinked, and rightfully so, because it didn't necessarily make sense to to all of a sudden engage the war machine to go to war in Eastern Europe. The thing that's interesting about what happened here, though, was that this was a slow moving train wreck that was really visible years and years ago. Why is that? Well, if you look at what was really happening, this is really a European issue and you got to think, well, why is America being the leading actor here when you know, where's Europe and all of this? Well, it turns out that. You know, the strongest power in Europe? Germany. Is in a really difficult situation because they rely on Russian energy. 50% of the Nat gas that comes in, over 50% of the energy I think that comes into Germany is from Russia. And they've in fact been building an entire pipeline system from Russia that bypasses the Ukraine and goes straight to Germany. And so when all of the Saber rattling was happening, Germany basically had to blink because they need Russia's energy. And why did they need Russia's energy while they needed Russia's energy? Because 20 years ago the environmentalists in Germany won and they started decommissioned all their nuclear reactors. And so ridiculous there was no so that somewhere along the way nobody took a science class in Germany and figured out that nuclear was built safer and cleaner instead. Burning fossil fuels is the answer. Wiser to not have a dependency and after the Fukushima they went turned them all off, they accelerated it. Yeah, it made more sense to burn fossil fuels #1. And then to. Get those folks officials from Russia. So unfortunately we are in this state of affairs where you know Germany has said I at least that's been reported that they would shut down this pipeline Nord Stream two if if Russia did something. But the reality is I think Obama basically told us that you know it's going to be very difficult for us to justify and act like this especially against somebody who is fortified and clever and smart. This is not like invading the Middle East and so this is a massive this if this happens the the stock markets. We'll just go absolutely to zero. I mean, if you could have negative stock prices, this may be a good catalyst to take these Netflix shares, please. It's unbelievable. It's it's really, really crazy. This is, it seems like a situation where we're assured not to get into, to mix it up with him. Like, I I don't understand Putin, I don't understand Biden saying that he's absolutely going to react to this. Because we're not. We can't afford to get into a war right now. That's nobody. And and if that is true, then you know, US dominance, the US ability to hold the line starts to decline. And I don't know if I agree with that because yeah, I think we could diffuse this crisis very easily. Yeah, which was the exit ramp. Yeah. Tell us, well, the the exit ramp here is what is Putin demanding? Putin is demanding that we affirm that Ukraine will not be part of NATO. In my view, that in my view, that's giving him the sleeves off our vest because we should not want to add Ukraine or Georgia to NATO. That would do nothing to enhance the security of the United States. We wouldn't get anything out of it, but we would be obligated under Article 5 of exactly to defend them. So. Admitting Ukraine or Georgia or Moldova could ultimately bring us into a war with Russia, too. Exactly. So to free to Freeberg's point earlier, we have been poking the bear for two decades with our expansion of NATO right up to Russia's front porch. And if you go all the way back to 1990, when George Herbert Walker Bush was president and James Baker was Secretary of State. There was an assurance made by James Baker that that, you know, basically they had gone to to Gorbachev and said we want to you know, we for help in reunifying Germany. And the promise made that famously that James Baker said is that what Gorbachev said is we don't want NATO expansion. And Baker apparently said not one inch eastward was the line. And and we, we think back to how well Herbert Walker Bush and James Baker managed the end of the Cold War. How did they do that? They they did that. By making assurances to Russia that we would not bring NATO up to their front front porches well, which is what we did in 2000, we've now added something like 14 countries in Eastern Europe to. You know, two NATO, including in 2004, the the Baltic countries. And that decision by George W Bush really is the thing that pretty much severed our relationship with Putin. You have to remember that Putin is he is fairly popular in Russia because he Stokes Russian nationalism. And what is the source of that nationalism? It is because a single tree organization, NATO, now has this huge contiguous border with Russia. They now feel encircled. And if we were to add Ukraine to to that organization, there'd be a 1200 mile again border, which that Russia would have with, with just this one. This one alliance, it would be akin to imagine if we were still in the Cold War and Canada were added to the Warsaw Pact, right? I mean, we would be incredibly threatened by that, so and so. But but, you know, you never hear Jacob, you never hear any of this on the news. All you hear is the beating of the war drums. And Putin is portrayed as this mad dictator. He has no legitimate concerns. Now, look, Putin is an authoritarian and you could describe him as a bully and a thug, and he has provoked this. He has provoked. The situation certainly OK, but. You know, we treat him as if he has no valid concerns whatsoever. And I think the simplest thing to do to defuse this crisis would simply be to say, yes, we have no intention of adding Ukraine to NATO and then we will find out if Putin is a liar or not. Well, that would be a great move. Like it's a that would be like, hey, let's take a 5 year pause. OK, you know what? We'll negotiate with you. We'll take five years. We won't put him in NATO. Give give a little bit of a concession because their country is not doing well. Their GDP trials, China and the United States, their GDP per. You know, each citizen is incredibly low compared to the West, like, and then we could just work with Germany to get on sustainables, which is what their goal is, and we could economically continue to trounce them because, as you point out, every week, chamath, they're not an important economy. Here's what Obama said about Putin. Obama said the truth is actually Putin in all of our meetings, is scrupulously polite, very frank. Our meetings are very businesslike. He never keeps me waiting 2 hours like he does a bunch of these other folks. He's constantly. Interested in being seen as our peer? And as working with us, because he's not completely stupid, he understands that Russia's overall position in the world is significantly diminished. Yeah, he's not crazy, he's not dumb. And by the way, nationalism, as Sachs points out, which is a a primary. You know, drum call for for Putin is not a novel sense. We we are a nationalist country. Nationalism is, you know, pride and and wanting to make sure that your country is treating with, treated with respect and has sovereignty. And so I don't think that Putin is an irrational actor. His behavior is very rational in response to what's gone on for 30 years. And his requests are that he is feeling threatened and he is trying to avoid military conflict as much as he can. And we portray him as being an aggressor that's demanding military. Conflict. And at the end of the day, our behavior over a long period of time as a country has driven us to the brink here. And I think Sachs is right, you know, the, the the right decision may very well be to to kind of, you know, leave the region alone and focus on issues that matter more deeply to us and our higher priority rather than drawing us into this. But a better investment would be in sustainable energy. I think the economic seed is planted for us to be in some sort of conflict this year. So, you know, we're going to explain about that freeberg economic seed to be in some sort of conflict, I think that. You know, generally if if you're not gonna see home grown. You know, economic productivity gains and you're suffering trade issues like, we're going to suffer this year given the supply chain problems globally. We're going to look for some place to manufacture growth. And there's no better way to manufacture growth than through the dog, through conflict. The foreign policy establishment of Washington, you know, the neocons, the, you know, the so-called Washington BLOB. I mean, here they are beating the drums for war. We haven't been in a war for, what, six months? We just got out of Afghanistan and now they want us back in another war and and the media just keeps. Fueling and fermenting this. And they don't, you know, their coverage of it is. Well, it's exactly what we talked about last week, jakal, when I pointed out that your your rhetoric, your humanitarian rhetoric, as noble as the sentiments are, when it gets whipped up into a lather in a frenzy by the media, it blunders us into a bunch of stupid foreign intervention. Let's call it beliefs. My beliefs are not rhetoric, but I I get your point is there we are, one week later and exactly what I said. The risk of this is has now materialized. Clearly you're blaming my position on human rights. I'm saying is that what I'm saying is that this type of rhetoric is used by the military industrial complex and the washer BLOB and the neocons to Stampede us into wars that don't make any sense. That's where I predicted a week ago. That's or that was my concern. Later, and we're in exactly that situation. It is our most successful export. It is our most successful export jakkal really important. It's the difference between there's a difference between belief. And how do you act on that belief and what are your actions based on belief? Yeah. And I think that a big part of what's gone on, and this hearkens back to a few episodes ago when we all got in trouble. There was an attempt at canceling us after we we spoke about this, but but when those beliefs are, sacks pointed out, harnessed in a way that is ultimately Co opted in a way to to to fuel and to drive. You know, conflict it it obviously goes beyond belief and it starts to move into an area where there is a very wide spectrum of action and it's very easy to tip yourself onto the one side of the spectrum and as a result, cause a lot of harm and a lot of damage like we've done in Afghanistan, like we've done in Iraq. Here's a great lens. What is the cost of going to war in the Ukraine versus whatever human rights or sovereignty issues they have? Hundreds of thousands of troops going to war is going to result in more human suffering than what's currently. For Ukraine, it's sort of it's exactly they're gonna, they're gonna be in the middle of a the war is gonna happen on their turf, the humanitarian interest is in diffusing the situation and and the way the way to do it, in a way, is to. Is to, you know, exceed to this one demand that that Putin has about not admitting Ukraine to NATO, which just to say something more about why we shouldn't want that. The problem in Ukraine and Georgia and Moldova, first of all, these are not North Atlantic countries, right? This is mission creep by NATO. They're in the caucuses and the problem they have is they're sort of these breakaway, you know, Russian republics, but inside of these countries there's breakaway. Provinces. You know, there there are ethnically Russian areas within these countries that want to break away from them. So you have a breakaway within the breakaway, and so you've got these powerful forces complicated. It's very complicated. So for example, in Georgia in 2008, when there was a war there and Russia did invade Georgia, but it was on behalf of these breakaway provinces of South Ossetia and Abkhazia and then in. In Ukraine they've got the Donbass and and Crimea and it was now been annexed by Russia, which are these majority ethnically Russian areas. You know, and and same same problem in Moldova. So the problem is you've got these, like, incredibly complicated border disputes within these countries based on ethno nationalist tribalism and, you know, sounds familiar, right? the US does not have a vital national interest in getting involved in those disputes. And by admitting these countries into NATO, they could pull us into those disputes because the key provision, Article 5 of NATO, says an attack on one is an attack on all. We're obligated to go to the defense of those nations. How is the security of the United States? Enhanced by that requirement, they get a lot out of it. We don't get anything out of it. This is clearly, this is a distinctly different than say, Taiwan is an issue, but let's put that aside and we'll get to that in a second. If China and Russia and the United States are in this very complicated chess board, is there a way not only to diffuse the situation, but is there a way, and I know this sounds like a crazy hell Mary, to deepen the relationship with Putin and make Russia and the United States in some way allies against this relationship with China because the Russia China relationship is also very complex is is there some path to us having a better relationship? She's holding a summit. The last person he saw in real life was the. Leader of Pakistan in 2020, before the pandemic started. Do you know who he's meeting with in two weeks before the Olympics start or in a week it's put yeah. In person. And then the there's gonna be a tripartite alliance conference between China, Russia and Iran. Great, so I think this idea that. That all of a sudden somebody's gonna find some holier than thou perspective on what the right thing to do is for other people is going to be challenged, so those guys are going to think about themselves. And they're creating alliances to basically further advance their own objectives. And so I think we have to as well. The thing here, I think what de escalates all of this is economic sanctions and monetary impact because if Nord Stream 2 doesn't get turned on, which is in Germany's control, that has a huge economic impact to Russia. Explain what it is, North Stream 2 is that pipeline that I just talked about, the Nat gas pipeline that that basically double s the amount of Nat gas flowing from Russia into Germany and essentially. Into all of Europe. But hasn't Jeremy said if they invade the Ukraine? They haven't said, they haven't said it on the record they it it is it. It is thought that Chancellor Schultz that that that it's theoretically on the table but it hasn't been officially declared Biden today. Said that he's talked or somebody in the White House. Has talked to all the major banks in the US about crippling economic sanctions. So I I do think the way this gets deescalated is through money. And if you you know, if you severely impinge Russia's ability to sort of grow their economy, that foments a lot of, you know, anger at home. And I don't think that, you know that'll probably weaken and destabilize Putin more than. You know, trying to sort of have a, I don't know, some kind of like. Get together and hug it out. Session with him. Yeah, I mean, so, so, Jason, you raise a good point with, you know, can we improve our relations with Putin? Obama tried, right? We had the whole reset. And ultimately, it wasn't tremendously successful. But I think a lot of it has to do with the way that the foreign policy establishment, Washington sort of reacts. And Obama had some really good quotes about this. I think it was in that Atlantic article where, you know, first he described that, you know, that Russia has a vital interest in Ukraine in a way we don't because it's right there. It's on their border. They've been attacked, Russia has through the Ukraine, you know, throughout history. So again, it's just a primary interest of theirs and so after saying that. Obama, then, you know, he he basically got attacked. You know, by, you know, in a but it was some of it was partisan. But and then he responded to the attacks by saying if there's someone in this town, Washington DC, that would claim that we would consider going to war with Russia over Crimea and eastern Ukraine, they should speak up and be very clear about it that he challenged. And then he said so, so, so the issue and no one did right. Noah is willing to just come right out and say that we should go to war over this. And that's how he diffused the attacks on himself. And then Obama continued. He said there's a playbook in Washington. That president was supposed to follow, and the playbook prescribes responses to different events, and these responses tend to be militarized responses. You are judged harshly if you don't follow the playbook, even if there are good reasons. So what Obama is saying is that no one would defend. A more militarized posture and and going to war against Russia over the Crimea. And yet he was somehow portrayed as suspect, you know, by not being tough enough on Russia and. So, you know, if you're Putin and you see constantly the foreign policy establishment, you know, reacting in this way, it's it's not a problem that even one President can just fix overnight. You know what would change this is if when we send 100,000 troops over there, it's a draft. And, you know, it's not an all paid military. The fact that these people in Washington who got their kids in Georgetown or Harvard or wherever they are at Stanford don't have to send their kids over there to fight this war is one of the reasons they can write these documents and have these doctrines that, hey, you got to send all these troops into harm's way. Harm's way, like if they had to send their sons and daughters, it would be a much different discussion of like, where we're going to start a war, whether it's Afghanistan or the Ukraine, right? Let's go to markets. Bill Ackman came over the top. He's buying a ton of Netflix and Tesla, just absolutely. Flipped to becoming a money printing machine and had a ridiculous quarter. Revenues up 53 to 53 billion, up 71% year over year. Q4 revenue 17 billion, 65% year over year. And they increased their deliveries by 71% and now you're all of a sudden to start seeing some? You know, income coming into the company, so flipping from money losing to break even to now printing a ton of money, Microsoft had an absurd quarter. Their revenue hit 51.7 billion, up 20% in the quarter. 20% year over year. Pays for $200 billion in revenue in 2022 and their net income was also up 20 plus percent at 18.8 billion. So the money printing machine in these companies is just extraordinary. Chamath, what are your thoughts? I think you're you're you forgot a couple of key things which is that the FOC meeting happened this week in Powell basically said look we're going to start tightening in March. I think the way that he said it, you know all of these words tend to be so scrutinized and over analyzed but the instead of figuring out. What people thought, I think their actions post the FMC, are important, which is that, you know, we effectively now started to price in about 5 rate hikes this year, so probably 525 point rate hikes effectively. That's what that's what the. That's what the yield curve tells us if you take a big step back. I just want to remind people like it's really hard to live through volatility, right? And we're in the phase of it now. But typically these big drawdowns are like, you know, when stocks go down, it actually precedes so it comes before the actual starting of a rate hike cycle and so if you go back to the, you know, from 1950 onwards today. Every time the government has started to raise rates or the Federal Reserve has started to raise rates, the stock markets have actually rallied now. Why is that? It's typically that they see through the end of the rate hike cycle. And they start to price the business as if these rate hikes are done and to to rebase things. And on average, I think the stock markets go up between 7:00 and 8%, so call it seven and a half, 8 1/2%. And so what's interesting to me is now we're finally starting the process of these hikes and the real question is going to be how data dependent do these guys get. And what I mean by that is so you know we talked about this before, but you know China cut rates this past weekend, actually Germany decreased their GDP forecast. And so you're starting to see two huge countries already say, hey, wait a minute, we need to be, you know, we need to be more realistic about what long-term growth looks like here. It's inconceivable in my mind that those countries are slowing down and we won't. And so I think what happens in these other huge GDP drivers of world GDP will affect us. And so, you know, sax and I have said this before, but the marginal risk will be that we overcorrect and actually create a recession that doesn't need to be one. So we slam on the brakes too hard. And another way of saying it is the rain hikes are, the market is a leading indicator of what's going to happen post the rate hikes. We had a nice relief rally going until I think some of the words that Paul used was that there was plenty of room for rate hikes, meaning that because unemployment's at 3 1/2% that, you know, we're at full employment. And that means that the Fed can, you know, has this dual mission of keeping inflation low and, you know, keeping employment high. So if employment is high, then they've got more room to raise rate anyway. It was that language around the plenty of room that freaked markets out, and it triggered a huge sell off. I think to Tamara's point I. Don't see how you could have this much wealth destroyed so quickly and have it not impact the real economy. There's a lot of people out there who feel a lot poorer because their portfolios have gotten slashed in value. I mean, anybody with L tightening, they'll clench, not spend as much money on a vacation, not buy a TV or a car. So these wait lists for cars might get, you know, become sales. The luxury markets of the economy. The optional purchases start to really slow down and so. I think that the risk of recession now is much higher than it was even a month ago. Now you know, it's going to be hard to know. So. So basically I think what we're saying is it's going to be very hard for the Fed to engineer a soft landing here where we don't trigger a recession in the process of stopping inflation. And look what will Judge Powell's performance, you know, at the end of this, you know, we're not going to know. I think it's, but I but I think that he's turned out to be much more hawkish. In his statements then, markets were expecting again and in 2018, you know, he was probably overly hawkish and he actually created effectively a little mini recession. We we didn't pay attention enough to it because, you know, Trump made it impossible to see the signal from the noise. But it did happen, and it was Powell being a little too trigger happy and so. You know, we have to remember that, you know, the Fed has $9 trillion of assets on their balance sheet. And so, you know, if they start to take $9 trillion of cash out of the system by selling these assets into the market, right, you're taking the money out, right? You're getting money back. That's going to have an enormous, huge impact as well. So if you think about what happens when you just finished, one second, one second, let me finish, please. So you know, so when you have these two things happening at the same time, you have a potential rate hike cycle which makes the the cost of a used car. More expensive. The cost of your credit card balance is more expensive. The obligations you have to pay just become naturally more expensive. You feel poorer, so you spend less. And then separately in the financial markets, you actually take liquidity out of the system and so people value, you know, liquidity more. It becomes, it becomes worth more you, you, you value current cash more. I mean, we're putting ourselves in a really delicate position. So he's got a a delicate balancing actor. He is definitely on a tightrope. So if we pull 9 trillion out, we've been talking about this deficit. If he starts selling all of those assets, does that mean on the United States balance sheet that will reduce our national debt? Where does the money go? We're getting 9 trillion of cash, right? You sell an asset, you get cash for it, right? And so it pulls money out of the economy in the same way that economy it, yeah, it created liquidity when they were buying assets, right? When they were buying this debt, it would put push money out. If they're selling the debt, it pulls money back in. What happens to those dollars is my point. Like, what is the impact of the dollar staying around in the United States Bank? The dollar, the dollar stays in the US USA's bank account, but the obligation, the note exists in some financial intermediary. It holds it. Clearly, Powell does not want to be remembered as the Fed chief that let inflation slip the leash, right, I mean. He he's gotten religion now around the idea that this inflation is not transitory, which was his position for months. I think that now bid him and the risk is potentially an overcorrection, but he's not going to let inflation help. Then he'll be the first Fed governor to have caused 2 recessions. I think it's like a a serious risk and and by the way these market levels that we're at right now I mean look 60% correction and growth stocks, OK, but this is with that's still in a good economy in peacetime conditions and now we have a risk of recession and war. So, you know, there's still room for. You know, a lot more negative news here is kind of my point. And but look, sentiments also very negative. So when sentiment is this negative, there's also the potential for markets to quickly recover if there's a sentiment. But the sentiment is there for the wrong reasons. I think. I don't think people are thinking recession. I think people are thinking, my gosh, these rate increases, my gosh, I can't own these high growth stocks anymore and none of those things are true. Those are just perceptions that get amplified by ones emotions when you're getting punched in the face, which is what happens when you wake up every day in your portfolio. By the way, 5 or 6%, it generates incredible opportunity. The, you know, the idea that markets bucket quote, UN quote growth stocks together. I think. Kind of obfuscates an important point, which is that some of the businesses in that category are real businesses that are going to succeed over the long run and some of them are speculative and are likely to fail over the short run. And you know, as you saw Netflix sell off the lackman, very smart came in and bought a bunch of the stock. I don't know if you guys remember this, but in 2011. TCV, which is traditionally a private equity investor at the time, and there wasn't a lot of crossover in public market stuff happening, they were a private investor and Netflix, Netflix stock tanked from, I think it was around $220 a share down to 70 bucks a share in a couple of months. And TCV, the $200 million pipe into Netflix and everyone was like, Oh my God, what are they doing? It's incredible. And by the way, that was on an adjusted basis, that's $10 a share in today's share price, so that. That that $200 million investment that they made went up 60 X. You know, at the peak of Netflix a few weeks ago. And so you know seeing Bill Ackman come in and and underwrite Netflix again and and make a big investment at its current market price. So Jay Hog, I think it is really highlights that there there just because the market price is down doesn't mean that a business isn't fundamentally valuable and going to grow and going to generate significant returns over time as a as an operating business and that distinction starts to present significant opportunities in a market condition like this. And the businesses we all talk about generally growth stocks are down 60% but maybe most of them. Couldn't have even been public companies in the 1st place. Maybe they should have been speculative private investments where more than 2/3 of them were likely to fail and they shouldn't be failing as public companies. And the few that are getting damaged and hit with this market sentiment shift can be picked up cheap and there's a lot of opportunity. And so I wouldn't view the market condition to be necessarily reflective again, of the economy or the condition of businesses in general. Jay Hoag was a partner at TCV. He's the founder of TV that did that deal, and he's also the one that participated and LED the billion dollar. Round into Peloton before they whiffed earnings. And got and got decapitated. But he's an incredible investor. That trade is probably one of the best trades of all time. So let's look in the good news column. Wages way up. Earnings way up? 10 million job openings in the United States. Pretty close to record low unemployment and the pandemic and ending, ending and people having record savings in their bank accounts and personal balance sheets. So how does all that good news? The pandemic hasn't ended. It's ending for people. I think it's over for people. Like I'll tell you the thing I'm most concerned about, there's a reverberation. That that persists in supply chains. I don't know how much hardware, lab, biotech, consumer goods businesses you guys are involved in. I'm involved in a number of them. Every single one of them are crippled in some way right now by supply chain issues. I mean, I'm talking about like businesses that have been operating at steady state for many, many years. When do those get worked out? We don't know. And everyone's getting surprised and hit upside the head every week with some new supply chain shortage, whether it's some chemical you need for some lab equipment or you know, the. The delivery of some big piece of equipment or even plastic bottles that we use. To kind of fill up our beverages that we ship, that's a pretty sizable business. We've never had supply chain disruption like we're seeing right now. I'd like to bleep out the name of that company. Yeah, beep, but it but it's it's like it's. Bleep this out, but it's a significantly sized business that has never had supply chain issues. It's all US based, but some of the suppliers of the suppliers have had complete failure and delivery and all of a sudden it's now reverberating through the supply chain. You guys saw that GM didn't deliver a single friggin electric vehicle last quarter because they couldn't actually get the chips that they needed to make cars. So the the real risk to the economy in my opinion right now is when and how we're going to work our way through the supply chain issues and it is so complex and there's a myriad of problems. And it is a global problem that it's really unclear how this is going to play out over the next six months and what will happen is this quarter and next quarter. Businesses that you didn't realize and didn't expect are gonna get hit with supply chain problems are suddenly gonna say guess what? Our revenues off by 2030% because we couldn't sell this product because and half our shelves are empty because product didn't show up or or whatever the the narrative might be. And so we put a real problem. I think it's a really, I think it's a great point because. You don't solve these supply chain issues with rate hikes, right? It's like nothing to do with that, nothing to do with it. So the rate hikes slowed the economy. That's why I'm I'm way more worried about this than rate hikes. Right. What does clean it up? Is capitalism the end of the story time? And the reason I'm less worried is when you actually talk to the companies that that are spending enormous amounts of money on CapEx, they've actually guided to the fact that by the end of this year and the beginning of next year, most of these things will be worked out. It's indigestion. So I think, I think we're, I think we're dealing with a, you know, 6 to 9 month issue of having turned things off. And now we're now rapidly trying to turn things back on and we can't necessarily get that timing right, but I do think it'll work itself out faster than people expect. Personally, that's what I think because the cost of Apple and Tesla. Specifically guiding to that is too enormous. You're talking about, you know, collectively almost 4 trillion of market caps. So they're not going to get something like this wrong. And they were pretty clear in the last few days that that this will be done by 2023, early 2023, sacks or chamath. I just listed all the good news to counter, you know, the, the, the slog and the and the bad news. How do you account for record low unemployment, record number of jobs, record wages going up, massive cash on people's personal balance sheet, massive amounts of? Sideline cache, massive amounts of venture funds being raised that have to be deployed in the next five years. All that good news. Where does that on this balance sheet of good versus bad, you know work out for you sex. Well, the, the negatives are that yes, the unemployment rate is very low, but a lot of people have dropped out of the labor force, so the labor participation rate is still quite low. So because of well, because I think a lot of people dropped out because of COVID, you know, yeah, everyone wants to remote and I think, you know, they got these steamy checks. And I think a lot of people got used to not working, you know, and maybe, maybe you had a household with two people used to work and now only one of them is working. You know, maybe they move to a cheaper part of the country. So, I mean, maybe it's a good thing, right? But a lot of people. Dropped out of the the labor force and they haven't come back. And so that's the negative and then you know the fact that wages are going up is good, but we don't know how much that's inflation, right. So you know those would be the the negatives. But there was a report that inventory levels did rise. In Q4 and so. The supply chain issues do seem to be ameliorating to some degree really. I was looking at cars and now a lot of the people who had. You know, there's no way to get this car now. They're like, hey, we got a couple of these cars available if you want them. And then if you look at the housing inventory, it does seem that maybe that's taking a plus too and people couldn't find houses. And now maybe even though still a housing crisis, maybe there's more available or they're staying on the market a little bit longer. Yeah, I mean it's I think it's pretty clear that economic activity is slowing and again, things like rate increases, they it increases the the cost of a mortgage, right. So. That could affect house prices. I think there's an interesting startup story. There's a private company that's doing essentially life extension that a bunch of rich people put $3 billion into. You want to tell us, Friedberg and your science segment, what is this going to make us live longer or not? Well, I think I mentioned this company. A few episodes ago. But I think they just announced their $3 billion investment and and again this goes back to the. The point I made on the prediction show so last week Altos Labs announced that they've landed $3 billion in funding, and this has been an ongoing funding that's been going on for quite a while into this business. But this business was set up to commercialize Yamanaka factor based cellular reprogramming for age. Reversal, and there was a paper published just yesterday. I'll put a link in the show notes that if people are interested in reading a scientific paper, they can take a look. Incredible results. Scientists took mice, gave those mice short bursts of these Yamanaka factors, and then measured all the biomarkers, all of the chemical signatures, and the blood of those mice to determine their age. Because there are known ways that we can measure the age of an Organism by looking in their blood at measuring certain biomarkers. And with just a few short bursts for about a week of these drugs, these these Yamanaka factors, the mice, all of their age signals reversed to making it look like they were very young again. And it did not do what the challenge has been. Yamanaka factors in the past is, if you put too much of it in, in a body, in an Organism, the cells rejuvenate to becoming stem cells, which is kind of like what a fetus might have and starts to grow a lot of tumors. They were able to avoid having tumors show up in the mice, and the mice in fact, all looked extremely young from a biomarker basis. So an incredible result, an incredible paper, whether or not it gets repeated and shown by others. But I think this speaks to the quality of the science that's underlying the $3 billion investment that was just made in Altos. Which is probably one of the biggest seed investments ever and clearly is the biggest seed investment ever in a start. And I think it speaks to what I highlighted as what I what, what what will be the new frontier in biotech and will completely rewrite. Like, you know, the course of humanity is if we can take drugs and for a short period of time completely reverse the age of ourselves. And it sounds so crazy and so wacky, but it's being now proven in, in a single week. We've now had an amazing paper published and we've seen the startup announced their $3 billion of funding to pursue commercialization of this technology. And this is going to be the year, I think this will be the front cover of a lot of magazines. This year, as people realize that that this is real and that it's getting commercialized, why do you think, why do you think they have to start with $3 billion? And I'll tell you why I asked the question. Yeah, whenever I see these grandiose prognostications of future progress and then see these companies raise exorbitant amounts of money. I have never found a single example where it's ever worked. Ever. In fact, every time I see a company raise an exorbitant amount of money in a Series A, I write them off in my head. Yeah, sure. Yeah, so why? Why should I not in this case so? Or it's actually actually better question, why would somebody listening to this pod go work there and take the series. By the way, by the way, the same has been done and can be said about Calico, which is Alphabet subsidiary that's that's pursuing similar research where billions of dollars have gone into that business and there's a similar sort of research track underway. And I think the general principle chamath is they don't know what the product is, they don't know the way to market. They don't know, you know, what area they need to explore, but the underlying principle is proven. The underlying principle is something that people believe in. This science is proven, this science is real. We don't know the commercial path and we have to try lots of different things and run lots of different research programs in parallel to figure it out. And each of those research programs is like $100 million biotech startup. And so I think that the the principle is let's put a lot of shots on goal all at once in parallel and make sure because if any of these shots on goal work, this is going to be worth many, many billions of dollars. So I think that's generally the idea. It's almost like having a $3 billion venture fund, but the venture fund is targeted at one core area of interest. We believe it's real. And I think that's the way a lot of these things are being set up. But I'm, I'm asking this question. Have you ever seen a company try to do 30 different things and it works? No, no, yeah. I mean it's not the typical capital allocation milestone based funding scheme. I have it there. It's not a product market fit thing, right? It's it's it's a it's a research program and it's a series of research programs. But I mean, look, let me reframe it for you tomorrow. Have you ever seen a $3 billion venture fund that makes 100 bets with smart people at the helm, with smart people working at the individual? Businesses fail, right? Like, yes. And in fact, I've never seen a $3 billion venture fund do much more than return two extra money. Yeah, well, look, let's see. I mean, it's a, it's a big bet and obviously there's some people making nice management fees and nice carry on this thing. I'm not trying to be a wet blanket. I'm just curious, you know, why do it that way? Meaning, you know, every startup, let's get Bob Nelson on, he'll talk about it. So he set it up. Every startup I think is forced in some ways by the market. To make an educated guess about where product market fit lies and to try to build some minimum viable product that that tends to be how value is created. I mean you could have said that, you know, Google could have had 90 different algorithms, but you know Larry Page started with backroom. That's how it started. He had to make an educated guess that they had to make decisions. And that's what startups about. You have to make decisions and choices. Well, you have to make a bet on your on your own intellectual property. Why don't you put all your capital into one company? Ohh because mostly the companies won't let me, but I would. I could. Oh, interesting. So I I think that what's happening here, I mean, you're absolutely right. If I could, I would, but they don't let me. You could buy you could put all your money back into Facebook or back into forget Facebook. I know you got issues, but what about Alphabet or Amazon? Just put all your capital in one bed and just, you know, write it out. Right. But then it comes to what I think where I can generate the best return. Meaning, you know, I think that I could generate much higher returns than what I think Google will give me. Yeah. That's why I do it. Well, here's what I think is happening here. There are a lot of rich people. Who are going to die soon and they're counting down like Bezos and they're saying if why not if I'm worth 100 billion, put 123 billion into this and have them go for it because I've got nothing to lose because I'm dying in 20 years. This is a fear of death by billionaire bet, which is exactly what I think happened with the Google guys. They were just also say that the team involved in these projects are not first time founders or people that are great pitch men. It's people that are repeated, tried and true entrepreneurs. Best stories that have done this over and over in biotech and they're the ones that are being drawn into working on these projects. And they're saying, look, because we've got the people that have done it over and over, give them the capital. I mean, do I have a good argument too much? Yeah. No, I I believe in Yamanaka factors and I believe that there will be innovation. My only question is, is the innovation going to come through a small team that raises a small quantum of capital with one very focused idea that gets it right or this sort of, you know, Monte Carlo simulation approach to product innovation and. All I'm saying is just an observation that historically it's been very difficult for these Monte Carlo simulations to ever work either to generate product market fit and an innovation and to make money. Now, hopefully these guys are the exception that proves the rule, because I think we'd all want this to work. No, it's a it's a great point and I hope you're right and I hope to start that small project and wipe. But that's right. Now you're saying the key thing because despite the $3 billion, you're still going to go after it, which implicitly is your way of saying, I'm short that. Company and along my own company, and this is this is the point I was trying to get to, which is when when was really, really smart people see these things, they tend to look at it with a grain of salt, thinking it's very difficult to build a startup as it is. Yeah, sometimes it's kind of like growing great wine. You need to have a little. Pain and suffering along the way. And when you have $3 billion, it's the opposite of pain itself. Totally true. And I'll also say, well, let me just support your point, which is the people I see get hired to big projects like this. And there are a number of them that get funded, not just also in, in other kind of deep tech stuff. They hire the tried and true experienced executives who generally have older kids and live in a nice house and have made a bunch of money and the earnestness, the motivation, the hunger, the fuel, the the creativity. Because they know what they know and they're not willing to accept that they don't know what they don't know. Those folks generally are less likely to succeed than the folks who are doing this maybe for the first time, for that very reason when you're doing something innovative. So I totally support your point. And and I really do hope you're right. But I thought, Jason, when you were talking about talking about startups, I thought we were gonna talk about Bolt and the stripe mafia fiasco. This well, that's a good story. It's a pretty crazy story. Where does everyone follow? What side does everyone fall out on that? Equity positions in either company. Let's start there. No. No stripe holders. No sacks. Sacks people. Are you an LP in any firms that have a I am an LPN. I'm an LP in funds that have exposure to it? Absolutely. For sure I'm an LP and a fund that has exposure as well as well, but it doesn't. It doesn't affect miniscule. Doesn't matter miniscule for me too. OK, here we go. So people don't know. Bolt is like one click checkout software. They compete in some ways with stripes Payment API. The CEO, Ryan Breslaw. Did a tweet thread basically saying that YC and Stripe are the mob bosses of Silicon Valley. It was pretty charged. Obviously Stripe and YC work together. Uh, Stripe is the biggest company to come out of YC ever, I guess along with Airbnb. He claims that a lot of the top VC's were blocked as a strategy by Stripe. And I think there is some truth to this. When you invest in one company, you don't invest in the competitor. I don't know if that happened here as a strategy, but it is a a viable strategy that other people have used where. Bold claims stripe got all the top investors, therefore they couldn't raise money. He also is saying they were voting things up and down on why combinators, Hacker News, as if that matters, yadda yadda yadda. It was kind of a weak argument in my view. A bunch of VCs dunking on him. I'll give. I'll give you my heart, ****. So first of all, Bolt is now a $14 billion company or something, OK, so the, you know these guys. I think this was a very brilliant PR strategy and it worked. What do I mean by this? This is a company that most people didn't know about until this past week. They went and they punched up, which is a pretty tried and true PR strategy. Always fight up. You pick the big guy who's an incredibly pristine, extremely well run company that is sucking up most of the talented. You know people in Silicon Valley to work for is a you know sent to corn. Could be a trillion dollar company over some lifetime. So they went and they punched up and what happened? Everybody fell for it. They baited all of these folks and then all of these folks had to come out on Twitter and lambast them. And basically the net result of it is if one person knew about both before, now hundreds and thousands of people know about Bolt afterwards. So not only do they not know them, they're now they're contemporary. Just in terms of the practical reality, they are now part of a discussion and in a framework of companies. In this space that they were never a part of before, says Steve Jobs is moved with the 1984 commercial. He said IBM and then Microsoft, our Big Brother, we're gonna attack them, join the Rebel alliance, be part of Apple. And of course Apple and IBM responded, and that was the big mistake. And Mark Andreessen, Sequoia, a bunch of different venture firms, responded. Sacks, what's your take on this? I see you're chomping at the bit, or maybe you're biting your tongue, which is no I. So I agree with Tamas that it was kind of a brilliant PR move. If if that's what it was. I I do like startups punching up and he took a punch at Stripe, which is the big company in the space, so. And then, yeah, Stripe, stripe didn't respond directly. The Carlsons didn't respond, but their surrogates did. And then that looks like punching down and it draws more attention to it. So I get the PR strategy, I would say that as to the merits of the allegation. I do. I it's interesting that you know he didn't get into YC because I think that he is a very talented founder and you know we we looked at this company pretty, yeah, pretty early on. It was for like sort of a mid stage growth round and it was like one of the toughest decisions we we face. I'd say the toughest decisions as a VC are when you actually want to invest in the company, but the valuation is like 2X what you think it should be and that was kind of the situation. At the time when we looked at it is, I think we actually would have invested this as the valuation was too high. So it would have been a great bet for you. Yeah, he grew into it and so it would have been a great bet. So it was a bad decision on your part. Yeah. Yeah, clearly, we should have invested. It's just that, you know, at the time you invest, you have to have some basis for valuation. And and that's the sense in which I think, you know, maybe Ryan's accusations don't totally make sense is that he's been able to raise a lot of rounds at really high valuations. And so he he hasn't had a problem, you know, raising a lot of money at, you know, great prices and, you know, it's almost feels like a slap in the face to his investors where like, what's the complaint? I didn't get any Tier 1. Investors or that it was just hard to meet with investors and that stripe called the investors and told them not to invest that. That was the allegation. Yeah, no, I mean, yeah, I I can't really speak to that, but I mean, he was clearly able to raise great rounds. So can I read to you an e-mail exchange between me and Ryan Breslow? Ohh, dramatic reading from 2015. Ohh here we go. H Moth hopes all all as well. FYI, things felt too rushed on our end so we're toning down our Series 8 discussions for a couple of months. And this was this was in July of 2015. I'm, I'm reading you my answer because it's so fabulous. Hi, Ryan. After a wholly unsuccessful few weeks of attempting to win a World Series of Poker bracelets, come back at home Licking my moons. How about we talk in a week or two? So not only did I have a chance to win a World Series of Poker bracelet according to this exchange, which I didn't win, obviously. Duh. I had a chance to do this Series A in a $14 billion company, and screw screwed that one up too. Big dummies. That many of the things we miss are there's like 20 things you miss as an investor for everything you hit. So I might I, I've, I've interacted with Ryan back in the day and I just remember him being super, super smart. And I do think that, you know, there's a lot of very smart people now around the table at Bolt, including Joanne Bradford. So I don't think that this was something that wasn't planned and I just think that they executed it well and it worked. And I think a lot of people know this company that didn't know before. Now they still have to execute and build a product and scale it and do all of these things. But. Yeah. And I think that the response you provoked, I mean, since I was a little bit critical of what he said, let me just say that one of the VC's who responded said that the reason they didn't invest was because the numbers weren't good. That was not my experience. When we looked at this company, they had great numbers. This is the valuation was ahead of those numbers, but the numbers were always great. I actually responded to that and that was Sequoia partner Sean Maguire who said that. And I responded to him like, hey dude, VC code is you don't reveal the numbers on things you learn. Confidentially, what are you doing? Like, and he's like, well, they said some BS about Stripe. I was like, yeah, it still doesn't change VC code that if you learn something under NDA, friend DA, essentially in a meeting. You're not supposed to weaponize that against unless you unless you have a $30 billion position. I still think, well, whatever. I still think it's like, I've never seen a VCD. Honestly, it's the first time I've ever seen a VC. Jason, Jason, come on. I I don't. I think it's pretty. I think we all knew where he was coming from. He's defending an enormous position of his and Sequoia. Yeah, Jason, you've always been. You've always been. Yeah, everybody never released inside information as my point didn't say any inside information information. That statement he made a general state, met with them, but he was conflicted out. So why would he meet with them? Hey guys, Nick just texted that I had, I had I found a way to get off my lazy *** not be playing poker and do that deal. I would have generated A222X on my investment, which would have been 15 million * 222 two I think. I think around we looked at when a like a $400 million valuation or something like that or something in that range. And my gosh, well the Series A bit. I mean the series would have been at like 23 million according to Pitchbook. Yeah, 63 million. Know it. It was one of those meetings we came out of where it's like, that's a super interesting founder. So I give me too, that's what I remember too from Ryan. Yeah, super, super, super interesting founder write the check. I said it earlier in the program that like our philosophy now is just to be price takers and just to pick the companies that we want to be in and then the market sets the price. The biggest mistakes I've made as an investor, I got two. We should have done that with Bolt. This was the decision we faced was like a few years ago. And so we just shouldn't have worried about valuation by the way. Sorry. Check out as soon as you said it was 63 million. You know what my reptilian brain said. Oh that feels so expensive even now knowing that the outcome is 14 billion. And so to your point David, that's a really good lesson for for investors to learn is just you're a price taker. Totally get behind these really interesting people that are world beaters and just let them do the place the bet. Yeah. Alright so there you have it. This has been another amazing episode of the All in podcast. Love you, bassist. Let your winners ride, Rain Man, David sat. We open sources to the fans and they've just gone crazy with it. Besties are. My dog taking notice your driveway. Man. We should all just get a room and just have one big huge order because they're all this useless. It's like this, like sexual tension, but they just need to release stuff out there. The beat, beat. See what? Where did you get merch? Please.