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.

E88: First principle politics, China chaos & outlook, state of private/public markets & more

E88: First principle politics, China chaos & outlook, state of private/public markets & more

Fri, 22 Jul 2022 04:54

0:00 Bestie intros

1:45 First principle politics, analyzing each party's cynicism

48:07 Chaos in China: bank protests, housing protests, slowing economic and population growth, future outlook

1:09:21 Automation and the impact of the information economy

1:16:31 BlackRock loses $1.7T of investor money during H1 2021, state of private and public markets

1:36:36 Amazon acquires One Medical

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Two days ago, here we go in the Piazzetta I got into a fight. You got into a fight. I got into a fight. Like a physical altercation. The physical altercation, really? This chick shows up wearing a white wife beater, talking all kinds of ****. And I said, listen lady, you zip it. And she just kept jawing and jawing and here she is again, she's back for more. And so I was like, listen now, have you ever seen this? Have you ever seen A1A onesie wife beater? Look at that, little sweetie. And just be sure you sit there, and then you just sit there. And then look, there's your cold open everybody. That's the good stuff right there, everybody. I know I'm not a Beagle. I know I'm not a Beagle, but I'm even better. I have my own thoughts, sacks, what you're seeing here is called affection between a parent and a child. Just let me know when it's over. You're the worst human being in the world. I don't need to watch Chamath boost his Q rating by using his kids as props, OK? Of freeberg, where's your puppy that you saved from being tortured with Kim Kardashian's lip gloss? Nick, we gotta get this guy in because he hasn't been in the show in a while. There he is. There he ohh Monty Ohm your belly rub. Got the props out of the shot. Let your winners ride. Man David. We open sources to the fans and they've just gone crazy. Weed. Stocks? What's up with JD Vance in Ohio? Is he gonna pull this thing off or is he getting beat up? I read an article about him. Getting beat up with the Peter Keel connection being he got physically beat up. No, no. Like in the no. No, no, no, no. I think JD should win. He's gonna win, right? Yeah, I think so. And what about Blake masters? These are the two guys that TL was backing. Should we start the show? We kind of did. Yeah. Your question. If any of us entered **** wouldn't one of our names be Blake Masters? Like, it's just wouldn't it be on the list? Like, doesn't it sound like a great isn't it a great name for ****? It's a great name. Blake masters. It's a great name. And and JD Steele. I'm sorry, Vance. Yeah. Go ahead. Explain what's going on with this measuring candidate, would you, would you accuse him of without any evidence? What would you not using anybody of anything? I'm just saying, tell us about your mentoring candidates. Go ahead. Well, so JD's already won the primaries, and I expect he will win. I mean, it's gonna be, I think, a red wave in November, and Ohio is a pretty RedState these days. Blake says to win the primary in Arizona. It's a little bit more of a toss up, but I think he'll do well. Alright, well, I had a follow-up question, but I'm not allowed to mention the keyword. So let's just get started. Why is this such a big deal that like Peter supports candidates? You got all these like crazy left wing radicals like, it's interesting. Soros gives unlimited amounts of money to, you know, crazy progressives like Gascon and LA and a zillion others. I mean, why? Why is this such an obsession that we have to focus on who Peter supports? No, no. I just think it's fascinating that he has articulated his rationale for supporting these candidates and his objective. You know, changing government in a way that he. Things would benefit the country, and Peter's been generally right. What is the thesis Rehberg I think, part of, if you watched his speech from the RNC during the the last Trump cycle, I think he did a good job kind of articulating that there's a lot of inefficiencies in government and there's a lot of, call it, accumulated fat. And we need someone to go in and we need people to go in and really cut this up because so much of politics is driven by what else I'm going to give you, not about what I'm going to fix. That's already being spent in in in an inefficient way. And as a result, we see debt climb, we see taxes climb. We see efficiency continue to decline of every dollar invested by the government and I think that's a really important pieces to see someone actually try and execute against because more precisely very few people are in the position that he's in to actually be able to like make that sort of statement. Everyone wants something more from their government versus trying to fix the government. I think his views are more extreme than that. I think his views are more that Orthodoxy is ruining in America and so you need forms of heterodoxy to basically reset totally fair status quo and I and I think that's what he believes. More than what you just said, I think that you need a wholesale reset and in order to have a wholesale reset, you need to have these very disruptive candidates that basically start to change the norms. I mean, if you if you think about what Trump did in one election cycle is he's completely sucked an entire cohort of people, Hispanics and you know, moderates and now you know a lot of immigrants towards the right because the Democrats have vacated. All of that space in having this massive Trump derangement syndrome and tacking extremely to the left. And even if Peter, we'll never know believed in Trump or didn't believe in Trump, it didn't matter. But the process of him getting that candidate elected over the long arc of history may actually serve to pull America back to the center. Pretty good outcome. Yeah. And look at the the reason why I support JD and Blake, for that matter, is they are, they represent this more populist working class wing of the Republican Party, and they're dragging the Republican Party in a more working class direction. I think that's the future of the party. I think that's the opportunity for the party to chamas point. The Democrats have ceded all the sort of this working class territory by becoming this elite Progressive Party. And the face of the party right now, the Democratic Party is Paul Pelosi. You know, let's talk about this. It's blatant and out in the open. He's trading on ship stocks like NVIDIA and Intel and so forth. Like the week before, the house is going to vote on a $52 billion subsidy for chip. Be more precise the week before his wife decides when critical legislation. Goes to the floor of the house to be voted upon. So you have the speaker of the house, who's the third most important person in government, introducing legislation on her timetable. Her husband trades in those specific equities days, and maybe even the same day of that. They make three times her annual salary just in one day. And then she and her husband decide to then fly, not asked by the United States government or the State Department, to Taiwan. To then talk about God knows what, which would have created an international uproar, the Biden administration and Tony Blinken had to basically call her and say stand down, you should not go. We are not asking you to go. It is not on the United States agenda for you to go. And all that would have happened is an entire process and loop where she controls the legislative agenda, her husband controls their private stock account and. He's such a graphics in the names. Yeah. And then they go to Taiwan to whip up the furor, which would have actually positively impacted those same names even more. It's inexcusable, that kind of behavior. I mean, after 40 years, just she is so past the line and she doesn't realize it. And by the way, sorry, let me just wait. Hold on. And then on top of that, Jason, the mainstream media doesn't say ****. Now, by the way, I'm not a Trump supporter. I think he's a complete goofball. But if Trump had tried to pull this stuff in 2016 or 2017 or 2018? Could you imagine how much media coverage there would be? And today, how much of that is covered by the mainstream media? Zero. Was it mentioned on MSNBC? Nope. Was it mentioned in any of the press? No. Let me just set the stage so people don't know we're talking about. So on Tuesday, the Senate advanced a slim down version of the original chips bill. If you don't know what that is, it's basically a bill that's going to provide $52 billion in subsidies to move chip manufacturing here to the United States, something we really need to do. It's a bipartisan bill. Everybody kind of agrees on this, but this is. Being kind of stuck in committee for a little bit, it comes a year after the center first approved the $250 billion bill to reinforce your ship making to compete with China. The reason why this is strategically important is because we have a huge chip dependency on Taiwan, which is under threat from China. So if chips are the new oil, you know Taiwan is the new Middle East or the new Persian Gulf. And it is a very dangerous situation for us to be completely dependent on Taiwan. Well, not completely, but like for over half our chips, so. Onshoring advanced Chip manufacturing makes sense, but I think this is an example of how you start with a legitimate objective in Washington and very rapidly it turns into corporate welfare and graph by politicians. I mean, yeah, I mean, just because we need to ensure manufacturing doesn't mean that you give Intel and NVIDIA giant handouts and then you got Paul Pelosi making millions trading in video options, and this is something that is what would you have done to support onshoring of? Hey, conductor manufacturing, who would you give the money to and how would it be kind of dulled out? What would the terms of it be? I don't know that you just give these companies money. I mean, I think maybe what you do is you give them tax breaks or various kinds of breaks, but I, you know, I don't like the idea they need capital to support that investment. Because, you know, if you look at the kind of ROI C on these companies, I would even look, but I'm guessing they're in the high teens or something, mid to high teams and they're not going to be able to invest in some new fangled, you know? A project that may or may not actually have customers at the end of the day their their board would never approve that on an independent basis. They define our OIC freeberg return on invested capital. So if you're a big industrial business you know one of the key metrics that your shareholders look at is the the the ultimate kind of profit profits that are generated from a big investment you might make. And so you know you kind of look at that over time, you look at the invested money over time and the cash returned overtime and you come up with this metric. And so it's a key metric for particularly capital intensive businesses. And so business like Intel or NVIDIA, I would imagine, is going to have a pretty tough time selling their board on some speculative onshoring fab project that there really does need to be capital and acceleration of capital. Who who feeds you this ******** propaganda? Intel in 2020 approved a share purchase plan where these guys had a hold of $110 billion. And have spent all of it except for 7.2 billion. They have 6 billion left on the balance sheet. I get it, but they're not gonna put that money at risk, right? Like, like, imagine you're on the Board of Intel and they're like the government. OK, so basically, hold on. But I make a ton of money. Yeah, this is where it all comes from, right? I make a ton of money. I have no better ideas of how to do it, including, theoretically building a chip factory. So I'm going to go to the government for a handout. Meanwhile, I'm gonna take all the money that I had, which I could have used to fund this thing, and I'm going to give it away to people who I don't know what they're gonna do with it. I would reframe it. I would say that the government wants to see our industry onshore semiconductor manufacturing, and they are going to the companies, not the companies going to the government. They're saying we want you to onshore semiconductor manufacturing. Do that for us. Now, like in World War Two, we went to the automobile manufacturers and said, the government said we want you to make airplanes. Here's a bunch of money make airplanes. And that's, you know, but who does? Who else would you give that money to besides the two best chip makers in the world? David's right. If you just give us a CapEx subsidy that's a one time effect that helps you in a moment. It doesn't help your business. Any reasonable investor who can actually use a simple calculator sees through that nonsense. So what David's right is if you had given them sustained tax breaks for being able to build the business line that then supplies things for the duration. 10s of years, you're absolutely right, investors would laud it. It would make a ton of sense. They would be over earning over a long enough period of time where people would have to bake that into their cash flow estimates, where when you discounted it back it would make the enterprise of Intel and NVIDIA worth more and then people would then want to own that stock more. Giving a CapEx subsidy is a meaningless way in which you basically hand out good money to organizations who have otherwise misallocated. With money that they've already had, yeah, there's a much simpler solution to to sack this point of like, how do you do this? And giving free money is not the way to do it. The best way to do is to give an incredibly low. Interest rate loan, like a 304050 year loan that maybe has some warrants in it. Just like a, you know, a Silicon Valley bank or a Comerica might give in a venture debt loan where the government actually could make money from this. And then you incent them with something that is just too good not to take a 50 year loan of $5 billion to build factories. You have to use it for that. So it's use it or lose it and then you slowly pay the government back and then maybe we get some warrants in Intel or whoever we give the money to. This is something that Obama did with silandra. Solyndra, which didn't work out, but he also did it with Tesla. And Tesla paid all that money back early, so these loans that the Department of Energy did really did. And you gotta give Barack Obama a lot of credit for this. It really did help. Drive, even though it wasn't by the way when did drive a lot of EV adoption it did really help Tesla become the company it is today. Sorry let me just respond because you know I don't know how much we've we've gone through the details of the bill but there are several components to this bill including and and I just want to highlight if I'm on the Board of Intel, I'm not going to make a $10 billion fab investment because you know there's there may or may not be you know profits down the road to justify that size of an investment. So if the government comes along and says we will support, we will cover X percent of that investment. I can take on more risk and I am more willing to make that investment. And theoretically I can afford to pay people a higher wage or a higher salary because I now have more capital freed up to support to do that. And so there is an effect that that arises by having the government come in, put some money into these projects, accelerate their outcomes. And it gives the the business more free. It should it be freeberg free money or in the form of a loan. So what should the financial device be, I think is the question that you ask sacks, if I'm interpreting correctly, yeah, I'm not sure that the loan because the loan doesn't resolve the fact that they're having to put up money, right. And so they're not necessarily going to make this onshoring investment. But the the rational capitalist decision is to offshore manufacturing for Intel. It is irrational for them from a business perspective, from a board perspective, from fiduciary perspective to onshore manufacturing. So the. The reason they're going to do it is not because they're getting a loan where the interest rate is low. That doesn't really solve the problem. It's the government saying we're gonna put a $10 billion facility, we want you to build it and manage it for us, and that's effectively what's happening. And now by building this $10 billion facility, we've created security for the rest of the US industry. It's worth it to the government to put that money up and create security for our economy. No, it won't. Wait, why wouldn't it create security if we if we have more onshoring of chips, by the way, creates more security? I'll say one more thing. There's also an investment tax credit built into this bill sacks, which does provide, over time, a bunch of incentives to continue to support and drive the Onshoring work that's proposed in the bill. If you want the United States point of personal privilege, can I request that chamath add just one button to his shirt? Is it true distracting for you? You can't take the glare. You can hear your OHP. Jeez, first I had to watch Jason do the gun show. Now I gotta watch chamath, you know, show us your guns. Come on, pull up that sleeve and show us what you what, old man, are you gonna? I wanna say one more thing about the Pelosi stuff. So here's the data. I don't know if you guys have looked at the full history of the Pelosi trading data. Here's the link. This is all the trading that's happened over the last couple of years. And over the past year, he has bought NVIDIA four different times, each time in the same kind of. Volume range. So the timing certainly may appear suspect and it's certainly a terrible kind of thing to see. He's also bought Apple in the last month. Microsoft, sorry, he sold Apple. He bought Microsoft. He bought Alliance Bernstein earlier in the year. He's made a few trades this year, but NVIDIA, he's actually bought on four different occasions over the past 12 months for whatever that's worth, right? I'm not not trying to defend it, but I think we should be intellectually honest about the fact that this guy, you know, does take points of view in certain companies. He trades and useful of companies. Are we only to be intellectually? Honest enough to think that a husband talks to his wife and vice versa? Yeah. Or does that not happen anymore? Depends on the husband and wife. But yeah, I think this is blatant and out in the open. I mean, it looks really at a minimum. The appearance is of graft and corruption. Yeah, the appearance of impropriety is impropriety. They shouldn't be allowed to trade. They should have to put their stuff into blind trusts. Or they should maybe trade once a year and they should have to announce their trades before the trades happen. Hey, here's what I'm planning on doing. Just like a CEO is planning on doing this stuff. It's ridiculous that they can do this and if I'm in the mainstream media, cover this. They had Jason, Jason, do you think, do you think that if Trump, if this had happened during Trump, we it would have a lot more coverage than this? Pelosi, remember a lot of coverage on Trump, it really doesn't get covered. I mean if you just search for it today, you'll see basically the only media outlets covering it are like Fox News and then zero hedge, you know, that's it. I mean that's how I found out about it is like the zerohedge tweets about it. Me too. So Daily Beast, you know, headline you can. 7 hours ago Dems quietly tried to jam Pelosi on stock trading ban. But if you're asking me, you ask me a question chamath is the media largely biased against Trump and gives a free pass to the Dems? Yes. I would say that that is the trend. Yes, I think that is intellectually honest of you. Well, no, I I mean, I think the media is bankrupt. They're just going for clicks. And I think, you know, we've talked about this before they saw. Trump is an existential risk and they just did whatever it took to get him out of office even. But in doing so, they completely burned all of their credibility. They lost a lot of credibility, and now the Dems are starting to become increasingly detached and out of touch and maybe hated. But then the result is that the mainstream media is just no longer trusted. The media and the Democratic Party both have the same problem, which is they suffer from what the democratic political scientist Roy Tushara is called professional class at Gemini. I mean they are. Populated by college graduates with degrees who basically have this very elitist progressive agenda. And that is what is causing the democratic, the working class to defect from the Democratic Party, their historical base in droves. Look at Hispanics. Well, first of all, if you go to the latest Biden polling numbers, he's down to 31% approval, 60% disapprove. OK, so the trends is getting worse there, but you look at Hispanics, it's down to 19% approval, 70% disapproval. It's an even more intense version of the same problem. You had Mira Flores get elected in that Texas seat. This is a district that went. It's basically a predominantly Mexican American district. They went for Biden by 18 points just, you know, two years ago, and now they're voting for her by over 10 points. So you're Republicans winning that seat for the first time. So you have these huge defections now. Why? Why is that happening? Because the Democrats are appealing to the donor class on issues like border. On issues like crime and on issues like CRT and schools, I mean, you know the. Working class people in this country, they don't want open borders, they want crime to be prosecuted and cracked down on, and they do not want an ideological education for their kids. OK, it's very simple, but that basically is why they don't cry. Party is losing. Losing votes. Now let me give you a couple other examples of the Democrats cynically appealing to this sort of donor class. So. You recently there's an article about the Democrats have spent 44. $1,000,000 this election cycle, basically running ads in favor of the crazy MAGA candidate in primaries. There's been a bunch of reports of this where in competitive Republican primaries, the Democrats will actually spend money on behalf of the sort of the more perceived crazy Republican that magazine Trump, the election denier and so forth because of the perception they'll be easier to beat in the general. But I think this is a case to be careful what you wish for because, you know, if we have a red wave. November, you're gonna end up with more of these candidates basically winning. So it's a very cynical strategy. The other example I think of a very cynical strategy is you saw there was a vote in the House this past week on gay marriage and the House voted to repeal DOMA. The Defense of Marriage Act and support basically codify Obergefell, right? The Supreme Court's decision on on gay marriage. Something like, you know, 60 Republicans voted for it. Look, I would have liked to have seen more Republicans vote for this. I think it should be like, you know, majority of the public should be voting for this. But the point is that is there any intention of the Democrats to bring this up in the Senate and pass it and codify Obergefell when they have a chance? I think the answer is no. Why? Because the Democrats are other fundraise off this issue. The same thing was true about Roe. The Democrats had super majorities in the Senate. Under Obama, they could have codified Roe. They never took the chance. Why? Because they would rather fundraise off this issue from progressive elites, the donor class in California and New York. So This is why they're not going to. Absolutely. Obama said it on the record. Obama was asked, why will you not? He campaigned on codifying Roe V Wade and then very quickly into it he was asked when he had the supermajority and built the house and the Senate. Will you act on Roe V Wade? He goes no, it is not a priority anymore. That's a quote. It absolutely could have been codified just like a branch fell could be codified tomorrow. Tomorrow, Seneca. But look, there are there are ten Republican votes. There are ten Republican votes at least for this in the Senate. You have a a filibuster proof supermajority in the Senate. Who would support this? The same Republicans who supported the gun restriction bill that Biden just signed and that supported the infrastructure bill. You think they could codify abortion rights in this country right now if they wanted? No, no. That that moment has passed. That moment has passed. I'm not saying Republicans would never give women the right. No, no, no. But there's also a majority in the Senate anymore for for codifying wrote there is a supermajority right now for codifying Obergefell. They could do that right now and they're not chamath. You've been a donor to the Democratic Party, do you believe that million? Do you do you believe that the the abortion issue drove you and others to put more money in and that maybe not because because the leadership of the Democratic Party? Focused on Trump. In the last big cycle, it was all Trump, Trump, Trump, Trump, Trump. Do I think that more grassroots fundraising focuses on that? Or gun rights, or abortion? Back to saying is true, that they actually held off on trying to codify row so that they could continue to support fundraising. I'm just, I'm just gonna give you the quote because it there's there's no opinion needed. OK? April 29th of 2009, President Barack Obama says on Wednesday he favored abortion rights for women, but that passing a law guaranteeing these rights were not as Trump's top priority. I believe that women should have the right to choose, Obama told a news conference marking his first 100 days in office, again when he had super majorities in both the House of the Senate. But I think that the most important thing we can do to tamp down some of the anger surrounding this issue is to focus on those areas we can't agree on. So you make a promise. You get into the seat of power, you have the decision on what your legislative agenda should be, and he made that calculation. And David is right, sadly, that it was in a moment where we had a clear line of sight to codifying many of these rights. Yeah, but the question for the whole hold on, that's not the question that freeberg is asking. He's saying, do you think that they specifically did this to keep it as an open issue, to raise money off it? I don't think that's believable. Yeah, absolutely. No way. No way. Absolutely. If you want to talk about cynicism, sacks, the truly cynical move was, you know, Trump saying I am going to get this evangelical vote to win the primaries, to get those 20% who want to take away the right for women to have an abortion, and I'm going to stack the Supreme Court to actually. Hold on a second. Let me just find terms, all of the political stuff. OK, let's let's define term political. And so hold on a second. Hold on a second. Let let's define terms. So you may be opposed to what Trump did, but there wasn't that wasn't cynical. He stated what he was going to do when he ran for office and then he did it. He lived up to his promise somebody he did not. He did. He did not believe in that. He did it specifically to get those votes. We all know he didn't believe in it. We all know he believes in a women's right to choose. Jason. He he created a platform to get elected. And then he was elected, he executed on that platform. I think what David Sacks is saying is Obama had a platform to get him elected and when Obama chose, had the choice, he chose to not execute on the platform. And that is also true. And all I'm just saying is we owe it to ourselves to be intellectually honest about what happened. That is what happened. OK. Both of these two guys made claims. Hold on one second. Both of these two guys made claims acting in your own self-interest. I understand. But please, I want this on the record. Both of these two guys made claims to become president. It turns out that Trump actually did execute on most of his claims, as abhorrent as they were to some. Yeah. And Obama on some of the most important issues of our jatai did not. Look. What Trump did was just simple coalition politics. He thought it was important to win the religious right. He basically appealed to them. He said that if you vote for me, I will nominate these judges and representatives office. He delivered. He delivered. He didn't believe in it himself, right? So that's what I'm talking about. A certain point doesn't matter. That's why people should have for sure have principles. That's our principles. But it matters to me that people have. But Jason, what does it mean to have the principle of saying that he's going to, he's going to pass and codify Roe V Wade and not do it? What is that then? I think he well, listen, I the quote you gave doesn't give why he didn't do it. He didn't make it a priority. It could also. Hold on, let me finish. It could also be that he believed that it would not get overturned. So he should spend his time on Obamacare and other things. I'm saying cynicism is when you believe one thing and then you do something to act in your own self-interest. And that's what I think. It's what I think Trump did. Hold on a second. We don't need to go back all the way to the Obama administration because the issue I'm talking about today is that in the past week they had a vote codifying Obergefell on gay marriage and repealing DOMA. OK, so now listen, I actually think there were so many Republican votes in the house, even though I would have liked to seen more. There were enough that that this might shame Schumer into bringing up the vote because it's going to be so obvious. If he doesn't that he is doing this for a reason, right? Because they have the votes. They can pass this just like they passed the gun bill a few weeks ago, right? Just like they passed the infrastructure bill. So if he if Schumer doesn't bring this up, it's a very cynical move. If you think it's strategically to have that as an issue to phrase funding, I I get it. If you and it's really proof. Listen, do you think both sides are cynical? Of course, both sides engage in politics. However, however, what I'm talking about is the typist anism. So I think that there's a lot of issues on which the Democrats would rather appeal to the donor class basically that lives on the coast in New York, California and be able to keep fundraising on that issue and basically scare Monger on that issue instead of just winning the issue. They can just win this issue right now. Come on. Do you have less interest in supporting the Democratic Party based on the principle you stated that in the past there have been kind of promises and capital raised against, you know, codifying Roe and then it not. Happening. Well, they never made those promises to me. So I never felt like they lied to me. Mm-hmm. I want to be very clear. So they nobody. And I never asked for that to be a precondition of my donation. Again, my capital was focused on one thing, which is I thought that President Trump was not the right person to lead this country. And I thought very clearly that the right Democrat could do a much, much better job. And I am glad that Biden won. And I'm glad that the money that I put in maybe in no in any small. Today, but hopefully in some reasonable non trivial way helped and I'm glad that that money helped even out the Senate. I'm glad all of those things happened and so I want to be clear. They've never made those kinds of promises to be, nor have I ever asked. I make a high level decision on who I think the best candidate should be and support the party that will get that best candidate affected. What I was just trying to make clear to you guys. Is that sometimes even a Democrat? It's important for us to be intellectually honest about what has happened. It's very easy to look at the other guy and find all the ways in which they screwed up or tried to screw you or, you know, is, you know, lacks empathy or lack sympathy. All of these things. It's much harder oftentimes to look at your own team and say, wait a minute, why didn't XY&Z happen? And the reason I'm bringing up what happened in 2009 is I think David is right. We have a moment in time. Where the leadership of the Democratic Party. Can codify rights that should be codified and they should have. In hindsight, they should have done it. And just to be clear, no, it is still open. We can do it. I'm talking about Roe V Wade and yes. And for the for the issue we're talking about now, it should be codified. Absolutely. And just to be clear, I'm an independent. I would vote for a Republican who was socially progressive and fiscally conservative. As long as they're for gay marriage, as long as they're pro women's right to choose and they were fiscally conservative, I would vote for a Republican. I'm a moderate independent. I want to see less government and more efficient. Government. And I want people. I want the government out of people's personal lives. And I think that's where sex and I are, exactly the same we both want. I mean, sacks, do you want the government involved in people's personal lives? You're a classic Republican, by the way. According to the Monmouth poll from a few weeks ago, you represent 4% of the voting base. I do. That's an extreme. Yeah, that's an extreme minority. The, the, the, the the lowest. Self identifying quadrant of fiscal conservative versus kind of fiscal liberal, social conservative, social liberal is the fiscal conservative, social liberal. What are we all here? We're, I think we all fit this profile fiscally. We want the government to be run conservatively, you know, and with less government and we want progressive social change, right? I mean I think we all feel that way. Don't put me in a government of people's personal. I don't know, I'm just asking, I'm asking you guys. If we were all insane, I wouldn't define my cultural positions as progressive social change. The change that progressives are trying to do right now is radical. What I favor is social tolerance. I think we need to be tolerant, think we need to be a tolerant society. America is a very broad, diverse country. We need to find ways to live together and find accommodation on issues that are very contentious. So that includes tolerance for gay marriage. So look, I'm on board with that. But you know this radical, progressive agenda of social change, which includes. Upending the the criminal justice system in favor of you know, not mosque in favor of that. Yeah. What's happening in the schools with CRT and the sort of hyper ideologies education look they should be teaching the basics reading. Leave it up to parents to do the other stuff. Yeah exactly. I agree. So on down the line well maybe progressive is the wrong term because that that now has been Co opted. Less government involved in your personal life and tolerance. I think we all agree on that, and I think we're tolerance is a great word. Everybody agrees with tolerance. It's a privileged position to want to have less government involved in your life, right? I mean, many people in the United States have been able to thrive and survive because of the role that government has played in their lives. And there's. Obviously, on one end of the spectrum, extreme grift. And on the other end of the spectrum, extreme need that is being met by the wealthiest government in the world. And it is a, you know, it is in that middle where all of where do you stand for? How would you describe your politics in these two dynamics, right? Are you also in this 4%? Free bird. Yeah. Yeah. Yeah. No, I'm. I'm here. I'm trying to be thoughtful about this because I, you know, I think it's the idea. Yeah. I think that the government's role is to support those in need, not those in want. And I think that the government should be held accountable for performing that role. And I think that those of us who can that are sitting in privileged positions and seats should enable the government to perform that role well and we should be positive. Actors meaning we should support, we should pay taxes, and we should help people and and institutions in need. And that are, you know, kind of for the greater good. And then we should be holding ourselves, our government and our our politicians to account for inefficiencies. And the biggest concern I have is less about are the people in need needs being met as much as are we holding our government to account for the performance of its services and duties to the American people? And I really like this. I like this want need concept here. Can you give an example of where the government like, people need something, but then there's another group that wants something and maybe we're overstretching and. And, you know, giving in to wants when we should be focused on needs and efficiency. Yeah, I'll give you a pretty. An example I know reasonably well, which is the farm bill passes every four years. And the farm bill in order to get it passed in both the House and the Senate. It has components that serve both farmers and support the the food stamp program. So the food stamp program obviously supports millions of Americans that are in need of food, can't afford food, they get EBT cards, they get support and buying food, and there's a lot of programs and access that are enabled by that program. But in order. But that mostly services the needs of urban areas of cities. So it passes that that that element of the bill is attractive and appealing to the representatives of cities found in the House. On the other side, in order to get it passed in the Senate, where the majority of senators come from rural states which are have significant farming populations, the farming subsidies are planted in that same bill. And as a result, because everyone's getting something, that bill as a whole has now grown to a multi $100 billion bill. It gets passed every few years because in order for the Senate to pass it, the House says, OK, we'll give you all these farm subsidies in order for the House to pass it. The Senate says, well, sorry, it's and vice versa, right. We'll give you all these food stamp. But but both of them now have incredible, what do they call it, pork or fat or whatever. The amount of money that's wasted that isn't actually servicing the original intention and need of either of the parties that are represented by that bill is extraordinary. And I've spent a lot of time in the farm bill. I actually went with lobbyists years ago. DC and I actually met with the Senate and House ad committees. I've gone very deep into the bill and some of the programs in that bill and it's just shocking to me in the same way that Palmer Luckey shared in our all in summit, how shocking it is how defense spending works in this country. It's shocking to me how some of the. The programs work in the farm bill, how much money and how much waste there is and how much grift there is. And so yes we are meeting the needs of populations in need in this country. But so much more of the bill now is about people wanting more in order to pass the bill. And it's and it's bloated and he's going to come in and fix it because where's the incentive for anyone to come in and cut that bill up? Where's the incentive to fix? If both sides are barrelling the grift then there's no incentive they're they're they're in a dance to to maximize the grift. Where do you stand now if we, if we were to sort of look at politics without the Biden and Trump Derangement syndrome, without the the, the tribalism, just in terms of first principles, I think what we're seeing here is we all want to see radical competence in the government's social issues, you know, and fiscally how we run the country. Where where do you stand? How would you describe yourself now? Look, I mean, I think of things in terms of risk. Here's what I see. I see that there are a handful of issues that remain in terms of social policy that just need to get codified. Gay marriage is an example of 1 abortion rights as an example of the other. Then and and I think like those are like really. To my to my perspective. Speak about human individual liberty, which I think should Trump everything. So everybody should be allowed to kind of pursue the best version of themselves. However, that manifests in the person you married to in the gender you express, not. These are like things where what you do to be happy you should be allowed to do. Period. End of story. Then there are issues where I think are much thornier, and as I get older, I become increasingly ambivalent or confused. Actually is a better word, and gun control is a perfect example of that. Where? I don't know. What my right is to go and adjudicate a change to the Constitution that's been there since the founding of this country. That's a much more complicated issue. And so I think we have to basically devolve that right to the states. Where individual states will have very different laws, and part of how you choose to express where you live will be defined by some of those rules. So that's the social side. Extreme tolerance is really how I would sum it up. Economically so, but but I think that the risk to America. Imploding quote UN quote because of an issue in that surface area, in my opinion is extremely limited. If I look on the economic lens, however, I think there are enormous risks. To American leadership and exceptionalism. And we need a wholesale reset of how we create incentives, of how government should work, of how regulatory capture should work, of how the capital markets work. These rules are way too perverted. And it's creating enormous stress in a system. And again, I go back to the example I used last episode. The thing that if you look for example, like, you know in that example of Sri Lanka, Singapore, Jamaica and how there were these three completely different outcomes. Underneath the most successful outcome was an incredibly clear, transparent and simple financial framework. You cannot spend more than you have. You need to invest in long term programs like education and healthcare. You need to make them broadly available. And then you have an absolute free market that gets the best ideas to the top of the funnel. And if you can just incorporate those things, the tax law could be 4 pages. You know. The the the number of regulations could be 50 pages. You know the simple rule that says to the Federal Reserve you can't just print free money ad hoc. So I'm I'm much more concerned about the fiscal future of America. I I think that there's so much. Movement and progress on the social side, including the freedom of movement of people to different states. It is an important set of issues, but in terms of what drives the outcome and future success for our kids and our kids as kids. People should not sleep on the economy because if we get this wrong that will be the tinderbox that lights everything on fire. Sax, when you hear everybody sort of explain their basic belief system, how far apart do you think we all are on this podcast? Because I think that's been an issue. We see a lot of the fans discussing you and I discussing it feels like on most of these issues and I think that's people ask me how I'm friends with you all the time and I'm sure you get that question as well. Yeah, and I love you thinking about other and no, I I love sex like a brother. And anytime we talk about basic issues, we're very much In Sync. And then when we talk about politics, it feels like we're super, you know? You know, as opposed, you know, and and in opposition to each other when you hear that we all have essentially the same stack of fundamental beliefs. How do you interpret this in terms of politics and in America writ large and and and how do we get consensus in this country to be more effective in running the country for the citizens? I think the media drives a lot of polarization, right, because they're feeding us a bunch of bogus narratives. You look at the polling around the trust in the traditional media has absolutely plummeted through the floor. I mean, they basically have, instead of just reporting objectively the facts, they, I think the audience has recognized that they are activists. They are basically pushing an agenda and they're pushing a bunch of bogus narratives. And I think it does drive the polarization. So that's part of it. To go back to, you know what? What are the core issues that motivate me? And like, who I support, look, I think we could probably agree on a lot of stuff. I want us to pursue more of an internationally cautious, you know, agenda, less interventionist, because it really hasn't worked out for us very well over the last 20 years with all these wars that failed. I want us to be fiscally responsible and promote a healthy economy to to what Chammas said. And then third, I'd like us to be socially tolerant. Now why does that leave me in this current environment to support Republicans? Well, on international, on internal sort of foreign policy, neither party is really very good. Both parties are sort of pushing some version of book Bush doctrine light, where we're basically over involving ourselves in all these countries all over the world. But the Republicans at least have a faction that's in favor of realism and restraint. So I'm trying to help kind of push that direction within the party. The Democrats just are still very much in this liberal interventionist mode on fiscal issues. Both parties are guilty of overspending and creating this ruinous federal debt and deficits that we have. However, there's no way to avoid the fact that the Democrats are just worse. I mean, Biden wanted an extra 4 trillion of spending on this whole build back better on top of the four trillion yet. So listen. I know the Republicans don't have clean hands on this issue, but the progressives are just worse. And as long as the progressives are calling the shots the Democratic Party, they're just worse on spending. And then you got social tolerance. Listen on the issues, on these sort of key rights issues that have been the kind of the old social issues the last 50 years. By and large, not on all these things. By and large, I'm with you guys that I'm in favor of sort of the the the socially tolerant position. But look at who is pushing social intolerance today. I mean, the progressives are the most intolerant group in America. They're the ones pushing cancel culture. They're the ones trying to shove their positions down the throats of ordinary Americans. This is what's creating the backlash. You look at issues today like CRT, like the progressive approach on crime, on borders. The progressives are trying to promote, I think, a social policy that is fundamentally intolerant and and doesn't accord any respect or room for traditional Americans to live their lives the way they want to. And you have to be tolerant of them as well. We're not going to have peace in our society without some. Of trenchless. OK, let's wrap on this chamath and then move to China. I I sent you guys a this is a a quote by Mike Solana. A tweet from Mike Solana. The caption is, I've been wondering how they were going to spin this, and this builds exactly on David just said here. When the Quinnipiac Quinnipiac poll came out and about, approved disapprove. About President Biden. You know, the big outlier was the Hispanic population. 19% approve, 70% disapprove. And the the article in the Washington Post, which tries to kind of. Sort of like clean this all up and whitewash it says fake news speaks many languages, but it's particularly fond of Spanish. Essentially saying that, you know, the the fake news problem in in the Spanish language has basically gotten so bad that, you know, this sort of explains why Hispanics have have moved in droves and it's like a whole race baiting cheap shot article. But the point of all of this is just to show that the left, this is what really does kind of bum me out. They are. They are probably more intolerant. Than they've ever been. They are the intellectual dishonesty. Like if Rachel Maddow really wanted to increase her standing in position, she would just start the next program with Nancy Pelosi trades and say, Listen, we all know, let's call this what it is. It's not cool. And here's how it should change. She'll never do it. I know. And I think that's the disappointing part about all this. OK, so let's shift now. I think we just, what can I say, one final thing about this whole thing we can move on is I I think, I think if you are sort of purple and centrist, I think the first two years of the Biden administration were really a missed opportunity. Because I think there's sort of this conventional wisdom that the parties are so polarized they can't get anything done. I think we saw actually there's enough Republican votes, or there were in the in the previous Congress, this, this current Congress, they got the infrastructure bill done. They got the gun bill done. You know, with the red flag laws and so forth that we talked about. They can get codification of gay marriage done if they want to. They could have gotten the electoral Count Act reform. So if Biden hadn't gone all the way with his progressive voting rights agenda and just. Focused on reforming the electoral count act. Then you could have prevented a situation like we had on January 6 that that what was happening inside the capital, not outside. So there was a lot of stuff they could have passed and they didn't. Why? Because the in the in the first half of his administration by it's been completely captive to the progressives. There's another thing as well. You could get a child tax credit passed. You could get Romney would basically be the floor leader on that in the Senate. They could pass a child tax credit that's the most popular. Part of BBB. Why don't they peel that off and vote on it? You know, they went to the whole thing. They went, the progressives are holding it hostage saying that we're not gonna give that to you unless you do the whole enchilada. And, of course, there's no votes for that. So I think there's and and and. And so who ultimately is the culprit for allowing this to happen? Well, partly buying, but also Ron Klain, the chief of staff. I mean, they've made instead of triangulating to the center, they should have realized, hey, we're at 5050 president, right? I mean, we have a 5050 Senate. We should be triangulating. We should be building a centrist. Coalition. Ron claims great has been letting moderate in the train. Biden had a clear path to go right to the center pull everybody in, pull the working class in. That's been his supporting base, who's the working class and so he is and and he blew it by going too far to the left. If he wants to save this Presidency he should go straight to the middle and get all the working class behind him to be reasonable guy that went to some elite you know East Coast liberal arts school where he got a masters and you know. Fine Arts and his 400,000 in debt. That's not Joe Biden, but he's let all these people run over the White House. And it's too late now because I think what's gonna happen. Is it too late? Yeah, well, the Republicans are gonna win the house. How much time? How much time did we spend talking about canceling student debt? For who? Yeah, no, for a bunch of elite illegal rich graduate degrees from. Yeah, it's a listen. There's grifters on both sides. It's disgusting. And we need to get to a version of politics that maybe is more like our conversations here. But let's let's pivot to another society that we thought was going to roll over ours but and that we were in, we were behind on in terms of competition. China's in chaos right now, apparently, in terms of slowing economic growth. Bank protests, mortgage protests, exactly what I predicted last year when you guys were talking about China was going to dunk on us. And I said, you know, it's very hard to run these authoritarian countries and the citizens like to protest when they get the short end of the stick. And here we go. Chinese economy is, is growing very slowly. They were going to do 5 1/2% this year. They were only .4% in Q2. COVID has a lot to do with this, but there's been a series of bank protests. And the media has been trying to figure out exactly what's going on here. To just set the stage here, rural banks in China in a couple of provinces froze a bunch of peoples, uh, withdrawals in April. OK sounds like the crypto contagion in many ways. They had been offering unusually high interest rates. Also sounding like the Dphi Griff going on here. No, I think it's, I think it's more like 2008, Jason. I think the financial, I think it's more like the financial crisis in 2008 that was driven by the real estate bubble. Yes, they've got their own real estate bubble, which is collapsing there. Correct. And so there's there's multiple things going on at once. The authorities haven't said how much money is frozen. Uh protesters claim is billions of won, but it's hundreds of 1,000,000 in the US. After weeks without a resolution, customers have been began protesting. Plainclothes thugs have been hitting and kicking the protesters, and as of Wednesday, a video went viral of the CCP bringing in tanks to protect the banks. Very evocative of Tiananmen Square. Have a question? So go ahead. Yeah, so China has a very explicit 0 tolerance policy on COVID. Why do you guys think? They are so extreme in that policy like any any ideas? Like have they explained why it has to be 0 tolerance? They have not explained that. And if you believe that they are the origin of COVID, maybe they have some insider information about long haul COVID and that was something I want to talk to freedberg about if he thinks this you know? Long term COVID stuff is a really acute issue, but freeberg, what do you think? Yeah, I don't let me. I don't want to answer. Can I answer that? If you don't want to listen, I think the answer is very simple, which is talk about the Chinese economy. She likes to turn over to, yeah, this is a complex issue. There's a lot more going on there. So on, on 0 COVID, I think this is coming directly from Shi. This is his policy. And I think that earlier in the pandemic, they were hailing their response, which they saw as orderly and effective at controlling COVID. And they were contrasting that with the chaotic Western response. And so I think that the credibility of the C P&G himself got tied up in this idea. Of stopping COVID entirely of 0 COVID. And so I think this is coming directly from the top and is having a huge impact on their economy. And I think this is one of the dangerous aspects of an autocratic system is you've got one guy at the top making the decisions and if he's wrong, there's not really a great feedback and nobody can question him. Meaning the God king. Yeah. You know, it's sort of recalls a situation in China. I think it's about 500 years ago there was a Chinese emperor who banned shipbuilding and banning having a Navy. And because of that, China shut itself off from global trade and it fell well behind the West, which then explored and captured the new world. There's this question about, you know, the Chinese, Chinese culture and civilization was much more advanced than the West, than Europe 1000 years ago. But basically it fell behind and. A big reason is because this unilateral decision by 1 emperor to basically close themselves off from the rest of the world. So you have to wonder, does this autocratic move by G basically doom their economy to a recession? It seems like they're not learning from our experience, these lockdowns didn't work. I mean, you can't stop the virus. It's eventually going to get out even. I saw Biden got the virus this week. I mean it's out, right? It's endemic now. Everybody's going to get it is basically what's been making a bunch of heavy-handed decisions like this. So you have besides lockdowns it was. It's also the crackdowns. It's the crackdown on the tech industry. Yeah, the tech contract funding has plummeted, and so has. So LP's are no longer investing in funds there, with the exception of Sequoias, which seems to be struggling but is still able to raise some money. And then additionally, founders can't raise money and founders are questioning when they meet with VC's if they can. Actually, if the VC's are just meeting with them theatrically, the story that came out this week in the FT, if they're meeting with them theatrically. Because. They want to still hold out hope that they'll be a venture capital industry, but there may not be a VC industry in China anymore. Let me just give you the housing stuff and then freeberg, I know you wanna chime in on this. So there's also mortgage boycotts happening at the same time as this fugazi bank stuff happened. The bank stuff seems to be not the national banks. These are local banks that apparently could have been running some kind of grift where people deposited the money and they ran away. It looks a lot like the savings and loan kind of behavior in the 90s and in the US and these are. Digital banks, to be clear, this is in the national banks. And so at the same time, the mortgage boycotts are happening in three at 301 unfinished developments in 91 cities, homeowners are accusing developers are failing to deliver the apartments they've already paid for. According to Bloomberg, 70% of household wealth in China's tied up in property much higher than the US this is downstream of the whole ever grant thing, right? You got ever grant ever grand basically defaulted. And there are a whole bunch of people who prepaid for their homes. And so they're already paying mortgage. But Evergreen never finished the homes and now they're rising up because they're saying, why should we pay for a home that was never delivered? Right, I just want to like take a zoom out because I think it's worth. You know, we can focus on any one of these particular things that are happening and try and diagnose them and dissect them. But if you zoom out a little bit, I think it paints a more interesting picture. Over the last 30 years, right, the Chinese economy grew from 318 billion. To in 1990 to 10 1/2 trillion in 2020, right. Incredible growth, GDP per capita. You know, grew. Kind of in a similar ratio right now from 318 bucks per person to $12,500 and 30 years. I mean really unprecedented in the history of humanity. China now accounts for 20% of global GDP from less than 2% in 1990. Now if you look at historically what drove that growth, we all talk about manufacturing, right? Manufacturing accounts for about 1/3 of the economy and manufacturing as a sector was growing in China 25% year over year in 2008 and then only grew 6% in 2022. Like basically you know kind of reaching an all time low in in recent years. So that's historically been the driver for growth of this economy. And so much of the you know the, the, the, the bargain between the people and the Chinese Communist Party has been keep giving us a better life, keep growing our economy, keep giving us more housing, more stuff, more food, more safety, more security. We'll support the CCP. And the challenge that the CCP is having is that a lot of that growth the core growth engine is starting to slow. So manufacturing is slowing then real estate. Was growing and so real estate accounts for 7% of the Chinese economy. And I've got a good start for you guys here in 2000. And five 250,000,000 square meters of real estate was sold in China in 2020. One 1.5 billion was sold every year. It's been incrementing. So the amount of real estate that's being produced and sold was increasing like crazy. This year it's collapsed. So it's all, it's down like you know, forecast to be about 1.25 billion now, so the first decline in real estate building and sales. So that part of the driver of the of the economy in China is now collapsing. And then the financial services sector accounts for 8% of the economy and that's been growing because it's leveraged off manufacturing and real estate and all the capital that's flown in. All of which is slowing down and stopping, you know this $58 trillion of assets in China generating about $700 billion of annual profits for the financial services industry, insurance, banking, lending and so on. So a lot of the conflict and the things that are starting to fall apart, which may just be the tip of the iceberg is a function of a fundamentally. Slowing economy and the forecast and the outlook for an economy that doesn't have the drivers that's had historically and things are starting to come off, the wheels are starting to come off a bit. And so you know look the advantage they have is central planning, long term investments, being able to kind of be thoughtful about this. But in order to do that there's certainly going to be a need for the CCP to keep people in line as some of the long term bets hopefully play out for them. As they would say in order to do that they're going to have lockdowns and other sorts of mechanisms of regulatory control. Over the people, but really this could be the beginning of some of the unwinding and real concern about, you know, is there a core economic growth engine in China that can save them and what will it be? I think all of this, if we look at what's happening in the economy writ large chamath. You know, the global slowdown plus inflation is now causing a stress test on every country. Sri Lanka stress tests, you know, showed us what's happening with their farming issues and with corruption. And here in China it the stress test, I think you would agree is showing what's going on in terms of. You know, banking, mortgages, real estate and obviously this surging middle class and what their expectations of life are. So what's your take on what's happening in China and are they, you know, how does this add up in terms of our rivalry with them as our contemporary? At a very macro level, China has. One massive, massive, massive problem, which is one of population. It's hard to get an accurate count, but it is an aggressively aging population which was the result of the one the one child policy. For a very long time China has sort of been on their heels trying to adapt that policy, but really the the last data I saw, I tweeted this out. It was a little while ago next, so maybe hard for you to find in my Twitter feed, but it was a projection of China's population which essentially showed a contracting by almost 50% by 2100. So in the end, so it that's a really, really bad situation. Now when you have a slowing population then the economy has to morph. Why is that when you have a young population? So for example take what China was 20 years ago when it entered the WTO or what India is today. When you have lots of thoughts of young people you can on ramp them into economically productive activities like manufacturing. The problem with those folks accumulate middle class income and wealth is that they age out of those kinds of jobs like they did in America. And what we seek are services and service level jobs. And you spend more money. You spend it in a different way. So as populations age, your economy has to turn over. Unless you have a large bulwark of young people that is constantly growing to take up more of the slack, the economic slack, to pay for these folks who have different lifestyles, more savings and different needs, specifically healthcare, that's China's enormously big problem. So when you see them talking about 6% GDP targets and you think. How does a country that big even grow at 6%? It's because they're reverse engineering for what they need to create economic vibrancy in that country. And so when you start to look at 2%, which in America you'd say 2% is great, we would like high fiving each other for 2%. That's not a sustainable level of growth for what's happening inside that country. It does not create enough of expansion economically to cover all these folks. That is a really, really big issue. So as that happens, I think what we need to do is figure out how to be competitive. Now this goes all the way back to our first conversation. Subsidies don't make us more competitive. Things that governments can do to make us more competitive are long term drawn out tax incentives that change the earnings capacity of companies. Why? Because in the capital markets reward those businesses. Jason, you just mentioned it. Why is the Chinese capital markets in difficulty? Nobody knows what the long term earnings are. How do you forecast it? It's not simple anymore. It's not a model, it's not an interest rate, it's not a discounted set of cashflows. Right. And so that's how they need to refactor themselves. They need to have a much larger population. If you don't have that, you have to figure out how to do it with immigration if you don't have that. What China has done is they've tried to go to Southeast Asia and to Africa. And they've tried to create that synthetic form of a growing pyramid, right? Now that can work as long as the balance sheet of the country supports that because ultimately you're still talking about moving money offshore, OK. So I think they're in a little bit of a, they're in a pretty difficult spot. The most difficult spot is the one that she put them in. If you get rid of entrepreneurship, if you get rid of high growth companies that create the opportunity on a global scale and then you, you know, take DD off the public markets, you don't let education companies become public or you and you basically get rid of their little. Co opting of capitalism and venture capital their whole their whole society is going to become slow growth and slow growth in a country that doesn't have safety Nets is really dangerous. Sacks, your thoughts in terms of competition versus America. OK, let me get to the the competition in a second. Just to build on which Moss said the the birth rate the OR the fertility rate in China slipped to just 1.15 in 2021. So last year it takes 2.1 just to maintain your population or replacement level. So and this is lower than even Japan. Which is also shrinking as a chimpanzee, but 1.3 the US, Australia are 1.6, but we get above 2.1 because of immigration, and China doesn't have that. So they've got a huge demographic prompt Tomas Point. It's going to be something like. Well, the population is shrinking by 40% with every generation. That's what these numbers imply. Insane. The numbers are it's gonna be under 600 million by the year 2100. But I would, I don't understand how it wouldn't even be less than that if it keeps going at this rate. So there and the the the commentator Peter Zeihan has. I don't know if that's the right way passing Peter Zeihan or something. Anyway, he's pointed out that China is facing demographic collapse in the next decade or so on top of that. Like you're saying, Jason. That you've got G emphasizing Maoist economics, he basically says he thinks that the Chinese economy again he stresses the need for. Socialist characteristics and he seems to be bringing back that sort of communist ideology to their economy and they've basically. Really cracked down on entrepreneurship and venture capital. It's really a self owned. I mean they've moved away from the policies that have made them so successful economically over the last 40 years. And then on top of that, you got this debt crisis and this housing crisis. So it really looks like the deck is stacked against all of them. And you're asking what does this mean for us? Well, I think it depends on whether you look at it economically or geopolitically. I think if you look at it economically, you'd say that it's bad for us because our two economies are economically linked. There's a lot of. Dependency. They've evolved together for a long period of time and they're if China has a collapse then that they're so big now that that's going to have, I think, global repercussions. There's going to be contagion. But the truth is, if you look at it geopolitically and geopolitics is more of a zero, the balance of power is a 0 sum game. Economics can be a positive sum game, but but the balance of power is definitely not a positive. Some game you'd have to say it's good for us because the reason why China has become such a threat is because of its. Growing economy over the last 40 years? Yep. And look, I mean, what they've done and what they've been doing over the last decade or so is translating their economic might into military might. And that has given them the capability to now threaten their neighbors to become more belligerent. To basically rattle the Saber against Taiwan, and if their growth, if they're impressive economic growth, continues for the next couple of decades as it has until now, there's no question that they will. They will basically try to assert their hegemony over East Asia, and Taiwan will be a huge flashpoint. But there's also flashpoints in the East China Sea with Japan over the they're going to bankroll to do that. So if they don't, if their economy is not growing, they don't have the bankroll to do it. They're going to have to look inward. And say, hey, we gotta fix these domestic problems, we gotta get people stop protesting these streets. We need to this middle class is demanding of jobs. The great news for what's happened in China, and I think This is why the people there are very happy, is the number of people living in poverty has plummeted. You know, when they started tracking this data in the 80s, you know, high 90% of people were living in extreme poverty or poverty. 99% of people were in poverty on the on the global definition of it. And now, you know, it's just plummeted to, you know, a couple of 100 million people. So couple of charts through here, but just and the data is obviously it's very hard to understand what's going in China because a lot of it is opaque. But just the number of people on a percentage basis living in poverty has gone and now the number of people who are in the middle class has surged. That creates another dynamic. Those people want to have a great life, they want better jobs, they don't want to work in factories. They want to have a a more information based economy and and and and a better job than 60 hours a week in a in a factory. That's why they're moving their factories to Africa and other places. I mean I don't know if that's absolutely true. I think that China's manufacturing sector is is aiming to evolve. So you know China has about 3,000,000 factories or manufacturing facilities throughout the country employing about 112 million people. the US has about 300,000 factories and employing about 12 and a half million people. The output of our factories is about 70% of the output of of China's factories. In, in aggregate, sorry, the total production output of all the factories, so we have very high value outputs coming out of our factories and high leverage. China is observing and obviously recognizes that there's an opportunity probably to evolve their manufacturing capacity to be higher leverage, higher value output. And so there is going to be you know from the long range perspective planning and investment in technology that allows those factories to become much more sophisticated. And create much more higher value products moving up from what is effectively just cheap labor putting things together in an assembly plant to being things like additive manufacturing, 3D printing, automated manufacturing, bio manufacturing, et cetera. And I think this is particularly going to be realized because China announced that they're building 400 nuclear power plants that drops the cost of electricity to under $0.05 a kWh in the US manufacturing electricity. Typically cost around $0.11 per kWh, $0.12 per kWh in that range. So if factories become much more automated, they start to become a function of the price of electricity in terms of what they can output. China is going to have a huge advantage as these nuclear power plants come online over the next couple of decades and these facilities get upgraded. So there is a plan, right? Remember, this is just a plan, and in the the reason they have that plan, there, there there is. There is a question of do they get there fast enough to drive economic growth that actually supports. All these other industries like real estate and finance, they become critically dependent on because those industries only work if there's a core economic driver, core economic engine that's working here. So this energy infrastructure, this new manufacturing infrastructure, these are things that by the way they can do really effectively because they're not working on four year and six year political cycles. They can take a 510 and 30 year outlook and make a make a plan and and and invest against it what they did from night. So I wouldn't count them out, but there's certainly a lot of challenges they're facing right now. It's a big question mark. Right now, what's going to happen? Well, and to your point, factories in China are, you know, factory workers getting paid over 6 bucks an hour now in Vietnam, 3 in India, even less. And that's why you're seeing a lot of folks. I don't know if you're seeing it in your portfolios, but. We've seen a lot of folks looking at India, Vietnam and moving factories there. And obviously Japan has been incentivizing China is not going to just lose their manufacturing edge. They're not just going to say, hey, we give up, let let everyone be on. They're gonna try and upgrade the capability of those factories and say, hey, instead of just putting together, you know, parts for with $6 an hour human labor, let's start to do the more sophisticated than free browser. The next card that turns is, well, what happens to those factory workers if they've been automated out? What do you do with hundreds of millions of people working in factories who now have been turned into robots? And then if they're going to be in, the answer is information economy. If it's gonna be an information economy, you need venture capital and you need new companies to create those jobs and they just killed that. So I don't know what strategy she is pursuing here, but it seems like a bad one. We could talk about this one at length, but we were going to bring this up. But you know, generally speaking, technology drives productivity gains, but it's it's deflationary. Explain what that means on in like a practical sense. Maybe. You know that the technology. So let's say let's say that you have to pay a bunch of people to make a T-shirt, and then a machine is built that makes the T-shirt. The cost of the T-shirt goes down because one machine can just print out 100 T-shirts an hour, whereas it would take five people, you know, 10 hours to make those hundred T-shirts or whatever it is, right? So a technology of kind of emerges and those people are now theoretically out of jobs, but what ends up happening is those people transition into new jobs. That didn't exist before and we end up seeing higher order work take place. Think about the the world 200 years ago, do you think we would have had any concept of people being Uber drivers or people, you know, creating crafts and selling them on Etsy or contact people being teachers or yoga or, yeah, yoga teachers, therapists. OK, well, there you go. Dog walkers or all of these these service businesses? Or, you know, industries that simply did not exist before. And so the labor that those that that percentage of the population was involved in historically has gone away because it's been automated. As that automation has happened, it's allowed higher order services jobs to emerge and that will be the progression of humanity forever. I will tell you guys I was going to mention this. Have you guys played with Dolly too? The other day I got the the log in, I was my brother-in-law was visiting. We were playing with Dolly too and making funny. Explain what it is. Yeah. So so Dolly two is developed by open AI. We all know Sam Altman. He's been leading that organization to great effect over the last couple of years. And and what they're doing is they they've basically scanned the web for images, tag them, and then applied, you know, machine learning to, you know, to to basically allow natural language creation of images from scratch. So the AI can generate an image and you can go to the Internet and look at a bunch of these, but the imageries. Incredible. I mean the the the creative output what what feels like creative output from the system where you just say, hey, you know, make me an image of four guys doing a podcast on zoom in the style of Van Gogh and it creates this image that is unique, has never been created or seen on Earth before and is a function of the the learning that's been done in these neural networks to to develop this AI that can, that can create novel stuff is really amazing. And I started to think about like what are the implications for this over time. Think about, you know, the original movie Ben Hur in today's dollars would have cost a billion dollars to make. They had thousands of people, I think 10s of thousands of people on that set. It took years to make. They built giant sets. They could only, you know, make one film. It was an incredible feat in an effort. That's what movie making is, you know, still today there's there's teams of people. Now what if you could speak to the AI and say make photorealistic, you know, Jason and Chamath having a a battle on a field in the middle of nowhere and now an airplane flies over. And you can instruct the AI, and the AI can generate photorealistic visuals, audio, the AI can even generate scripts and narrative for you. It's really starts to change the role of the creator, the director. The director is no longer doing this thing. They have to get it just right, make the perfect 90 minutes and then line up all the money and all the people to do that, work on that, plan on that program. They can be much more iterative and they can be much more creative on the fly. They can create a 2 hour movie by speaking to the AI, and then edit the movie by speaking to the AI, change the actors, change the color. Change the voices, change the music. Just speaking to AI to generate creative output, and people will consume that output. And I think it's amazing to think about what creators will end up doing 10 years from now as AI and these tools proliferate. And you see version 12 of this, which is version two and what version 12 might enable. And so the role, the number of people that can do that job goes from Steven Spielberg and Bob Zemeckis and a few other people to suddenly thousands or 10s of thousands of people around the world making incredible movies. That's just weird. Bally's image it was pull it up of four guys doing a podcast so we have a ways to go, but yeah, that is four guys doing a podcast. That's awesome. Yeah, awesome. I mean, and to your point, like, you know, this is going to, we're on version this is going. So a lot of people are like, oh, is this going to wipe out graphic designers? Is it going to wipe out the creative industry? But the reality is the roles that those people are in today will absolutely be gone. But they will emerge and evolve into new roles that we never even thought imaginable. Bill, that will really transform that industry and society. And this is going to be true across everywhere. Hey, I touch it. Yeah. And you see this in China. Great. China. As China steps up their technology in manufacturing, you'll see those, you know, new markets evolved. Sorry, Jamie. Go ahead. Designers will have less leverage to ask for all this stupid snacks and offices of startups. Well, I mean, you need only look at designers are the worst. My God, they're the best I love. But anyway, in the 1940s, I mean, we there were literally hundreds of thousands of telephone operators. It was. And they're all gone now. And not only that. Have you ever met a designer that didn't take themselves incredibly seriously, that didn't have, like, you know, tea, that they would still have a bad one? You know, one team that they were seriously, they'd have like steel straws video game designers are. I'm sorry, what did you say about the steel straws that wasn't. Yeah, by the way, on eliminating waste in my life, I mentioned to you guys. Last year this video game I played over Christmas by Annapurna Pictures and the guy that runs the studio sent me a DM. He loves the pod awesomeness and they just launched a new video game which I started playing a couple of nights ago called Stray and you literally at you. You play the game as a cat lost in some crazy world. You're literally a cat. That's the. The imagery on this thing is unbelievable. It's actually my favorite game right now. Sax is. I play a cat at all. The stray cat. That's really a basic the, I, you know, it's really hard. You go play the game. Yeah, I'm gonna take a hard pass on that game where I'm a stray dog and I meet another dog and then we eat a bowl of pasta. But this long string of pasta, we each come closer and closer. Then we end up kissing. Move on to do we want to go. BlackRock has lost $1.7 trillion in six months. VC funding is down or Amazon acquires one medical for 3.9 billion, which which one do. We want to go to next anybody have a favorite here say you've been a little quiet you got one you want to go to. We can talk about the wall clock thing. This is the largest amount of money lost by a single farm over a six month period in history. BlackRock is the world's largest asset manager and it was the first firm to break $10 trillion in AUM assets under management. Not right now they're at 8.4 trillion. 2022 ranks as the worst start in 50 years for both stocks and bonds Chairman and Chief Executive Officer Larry Fink said on his earnings call at the end of June. Only about 1/4 of its assets were actively managed to beat a benchmark rather than track it seamlessly. As passive strategies are designed to do firms, passive equity holdings are now 10 times larger than its active holdings, although it does operate some active multi asset and alternative strategies that narrow the gap. Collapse in bond markets this year has shaken money out of active fixed income funds. Listen, I think there's less than meets the eye here with this. I think this was a headline that was trying to grab attention by saying biggest loss ever. Look, the reason why it was the biggest loss ever is because Black Rock is so big. I mean, and and what is Black Rock is basically at this point they're index funds, their ETF's or index funds, they just represent market indices. So you know, the reason why it went down 1.7 trillion is because it started with 10 trillion. So the average. Index is down 17%. That's all it means. We know this. The S&P 500 is down 20%, twenty, 2% for the year. The Dow Jones down 15 ish. The NASDAQ is down like 30. So this is just reflecting what we already know, which is that the stock market is down this year. Do you think it's another data point to support the idea that active managers generally speaking and maybe holistically speaking over time cannot be the, you know, the market cannot beat indices. I mean you have a point of view on that as an investor. That. Well, I think, you know you're talking about public market investors. I think it's very hard to be. I think it's very hard to beat the public markets. Over a long period of time, consistently. I just think it is, now, you know. The contradiction though is that if you have no active managers. Then the indices won't be efficient anymore, so you need the participation of the active managers to help drive the the indices and make corrections to it. So. And the fewer active strategies you have, the more inefficient the markets will become, thereby inviting active strategies. So. You know, I I think it's a good question. I I think there are some managers who are who can probably do it, but I think it's a very tough thing to do tomorrow. What do you think you're? Public investor, active selector of here's what I've been thinking a lot about this. I think that I have. Disproportionately benefited. From being at the right place at the right time. Backed by enormous amounts of central bank money. And so I think we all have been. I think it is very difficult to be a public market individual stock picker. In a world where the central banks are constantly meddling. Because when they do the best thing that you can do. Is belong the market beta? And the more concentrated you are, the better returns you would have delivered. Since 2008, when the central bank started to get very aggressively involved. When individual stock pickers reigned, the the universe was when central banks were largely on the sidelines, and so there was all kinds of dispersion right. Dispersion meaning good outcomes, bad outcomes, lots of alpha, right, meaning your performance was independent of the market. But since 2008, it's largely been beta that's driven the market and the folks that have done exceedingly well were those in tech because we delivered the best beta. And every time we confuse alpha and beta, we get over our ski tips, and there's always some big, you know, blow up. So I think my, my, my general take away is that if the central banks stay on the sidelines. Individual stock picking, reins and active management can win if they continue to be involved and do quantitative easing and all of this other stuff. Index funds that are long concentrated market beta will always outperform in the long run. I I was watching Warren Buffett answer some questions and one of the questions, and this goes to the law of big numbers like BlackRock. He was saying, listen, the reason I did better earlier in my career than later in my career on a percentage basis is because I was placing at a smaller amount of capital and I was placing it on smaller bets, smaller ideas and beams. And then as I had a bigger chip sack I had to find bigger ideas. To put more money to work and therefore more people were looking at those. And so those assets were not undervalued. And so I found that very, like, insightful in terms of when you participate in the market, if you're trying to pick between very large bets like CO2 and TPG and Tiger, we're doing in the growth space acts like now everybody knows that these companies, everybody knows stripes, a winner. Everybody knew Airbnb and Uber were winners. You know, in the late stage of the private, everybody knew Facebook was a winner. Image prime market. If you're battling that out, you know Yuri Milner is going to come over the top and pay 2 billion more than you or Masayoshi Son's gonna pay 5 or $10 billion more than you. Where is the alpha there? You know, where where is the gain, the alphas and the fees? OK, there you go. And so they were playing a different game, and I that's you know I started trading this past two weeks because I've never traded public stocks and I wanted to add it as a skill set. So I'm I put a couple million bucks into an account and I'm just trying to actively. Figure out how does value work there and. Yeah, I'm just starting to make trades that I want to hold for 10 or 20 years and we'll see if I can beat the market. That's the other thing is what do you want to spend your life doing if the index, if you can put money in a passive index and not do any work, well, you know, that's attractive as well. So sacks, what, what do you think in terms of active management? You know, in these public markets and the size of the bets. That have to be. Like I said, I think it's very hard to beat the market consistently. I think it's a very tough profession. I I'm sure there are people who can do it, but I don't know if it's easy to predict who those people are so. Look, I, you know, I, I think it's something that can be done, but I just think it's a tough, tough game. I mean, what we do as private investors is a little different, right, because not everybody is in a position to buy shares, right? So not available to you. You don't even know the company. Access is limited and information is limited. And in exchange for that sort of preferential access that we get, we have to have to do work. So when you're when, yeah, when you're a public investor in a company, Disney or whatever, you don't do any work. You're not involved at all. We do a lot of work for the companies and that's why they choose us. And so it's not, you know, it's you're not competing against the whole world. I think the public markets are just so competitive. Are you tempted though, looking at these prices? And because I was looking at a company that was trading at 50 times revenue last year, they're raising again, they doubled their revenue. So now they're at 2025 times revenue. They're raising at last year's valuation. And then I looked at the public market comps and they're trading at 6 times. So now I'm like, wait a second and obviously you got to look at the growth rate. That's three. Three, the growth rate in this example was three times fat greater than the public market comps. So how would you assess that then? Well, what we're seeing right now is that pretty good SAS companies that are growing, you know maybe on a trailing basis that grew 3 acts and you know prospectively they're growing call it 2 1/2 X. They're trading right now, not trading, but basically deals are getting done at 20 times AR20, AR this year's current run rate. Yeah the current AR, you're not getting that like bonus like here's your projected next year we're going to give it based on that. This is current, no current AR is about twenty 2223 * R. From what last year 100, it was like 100 times was the rule of thumb. Yeah. So now there are some where there are, you know deals are getting done in the high 20s I'd say or even 30 if they're if you believe that by the end of the year it'll be more like 20. So but I I think the new levels are landing at 2020 something times AR now why does that make sense relative to the public SAS company as well? Like you said, the SAS index is trading at roughly 6 times, but that's only 20% average. Growth, right. And so you know, if you're going through 10 times the growth, right, and the high growth SaaS companies are trading at like 7 times. That's for like a 40% grower. We've talked about this before. So listen, if you're tripling year over year and you pay 20 times, that'll be a 7 times next year. But if you're growing 2, two and a half, 3X next year, that's way faster. So I think there's actually an arbitrage there. I mean, This is why we like doing private SAS investing right now. Deals are getting done, I will say that. The people who I'm seeing who are really struggling Freeburg are the people who didn't turn on. I'm sorry about the very early stage. They didn't turn on revenue. They were making progress in team building and culture and features, but they just weren't focused on the revenue side. And my Lord, people got a lot of credit. I mean, fifty million, $100 million evaluations without the revenue turned on and that now they're faced with not being able to raise money. What are you seeing on your side freeberg in terms of deal flow in the private markets? Yeah, it's and raising money because you have to raise money for your company. It's not easy. Unpack it. What's not, you know, well, what are the conversations like? Give us the anecdotal information. I mean, I've seen a number of terms sheets get pulled. So I think really, yeah, we've heard a lot about. Companies that kind of during the Q1, early Q2 timeframe had term sheets weren't closing got delayed out. And there's a number of. Kind of examples of repricing where the investors come back, markets have changed. Let's reprice the thing or, hey, we're not going to do this deal anymore. We're going to sit on the sidelines and wait till the market settles or RLP's actually aren't going to let us fund new stuff. So there's a lot of those. That last one for people. What does that mean? You know, investor, you know, investors have LP's, they have investors themselves, and their LP's are coming to them and saying do not put more money out right now. We are telling you. You're not going to wire our money to you. We need you to wait until even though they're contractually obligated to, they're telling you medically they don't and may not be contractually obligated to. But obviously these are long term partnerships and so when an LP you know or a group of LP says guys we're not comfortable with you deploying money right now. You know you're in a 10 year partnership, 15 year partnership with them, you're going as an as an investor, as a fund. You're going to say OK, I'm going to kind of listen to that right now. Now the the the bigger issues in series BC&D where companies you know. Have some traction, have some performance, have raised a bunch of capital. I've done a bunch of work and investors don't know what they're worth. They're like, hey, is this thing worth 25 million or 125 million or 500 million? Last year, you could raise money at 500 million. I mean, look at what happened with one of those crypto things, those crypto trading platforms. They raised $500 million last July and they just sold the business for a reported $25 million after being valued at 5 billion a year ago. Yeah. So the whole and the truth might have been more like 275 million. Some news that got. Yeah and and so but but series, Series A, people seem to be pretty active again and so active again. But the price is now for seed rounds. Yeah but it's a lot easier happening 6 to 15. Series A is happening 15 to 25. It's a lot easier to get a deal done in a Series A because people say, hey look I'm going to give you this. You say, OK, I'll take it. I need the money. Series BC&D is where there's this whole fight because there's existing investors, existing shareholders who are saying I don't want to take a 50% right down to 70% write down, a 30% write down over the last round. And fighting and then doing inside rounds and bridge notes and all sorts of other shenanigans to not have to take a negative comic book. Yeah, one thing, one thing is interesting here is that you think about like where the opportunity is in the market right now. And I think one of the things that happened in the boom is that everyone got pushed to go earlier and earlier because deals were so competitive. And so, you know in the SAS business normally 1,000,000 of RR was considered the rule of thumb for getting a series for basic graduating to a Series A that you already. To go from C to Series A when he had a million of R as we know during the boom last year that number kept going down you know 500, three, 100,000 and then you would see crazy deals get done that were pre revenue with price at 100 plus. We never did any of those kinds of deals. We just thought too crazy but they definitely happen. Well think about the dynamic now which is let's say that that SAS startup that has a million of RR, they can do a Series A at 50 or we can just wait until they get to 5,000,000 of AR. And then pay 20 times and do it at 100 free. Which of those is the better risk adjusted return? Let me tell you there's a lot of risk in going from 1,000,000 AR to 5,000,000 ARS as it's hard. There's a lot of things to go off the rails, you're just you're not doing it through the founders. You need to start scaling A-Team. You need a real sales capacity, but also a lot of startups that could sort of hack together and cobble together 1,000,000 of RR based on non scalable techniques that various startup incubators teach like. You know, don't be scared. Don't scale at it, right? It's OK to do that from zero to one, but not one to 10, right? Well, well, or it's it's not that it's not OK, it's just that it doesn't work right. Like you're not able to cobble together 5,000,000 of R you can cobble together 1,000,000 of R you can use the cheat code to get there. So what I'm saying is there's a lot of risk in going from one to five. You find out whether the products really scalable. So what is the better deal? Wait till 100, wait till it's priced at 100 or 120 million pre or doing the deal at 40 to 50. Now, if you love the, if you love the company, you want to get in as early as possible. But I think you're going to start seeing a dynamic where in the same way that last year everyone went earlier and earlier, you're going to see VC start to sit back and go a little later and later prove it to us. A dead man's zone. Nobody should be putting money into deals right now. What is it? Why? What? What does it do? Unless unless you're in the business, unless you're in the business of running a fee generating machine. If you're really trying to generate alpha, you have to have a sense of what's actually happening in the world right now if you're just trying to deliver the market beta and run an index. Then yeah, you're right, you should ignore this idea that there could be more price adjustments. But if you look at the public markets, which is again the ultimate terminal buyer, they have more cash than they ever had since 2008, which means that there is no reason to buy. You're talking about private companies. It ultimately ends up in the public markets. And so if the public markets are saying there is no reason to buy this stuff. It trickles down South. Then the crossover investor, who has a public, private business, says, you know what? On the public side, I'm completely derisked and in cash. And so on the private side, I'll just be a little bit more circumspect and weight. As David said, I'll just wait six months and put even more money in later. I'll actually have a better IRR and I'll make the same profit dollars. So then the series B&C firm who used to feed those deals to the crossover folks are like, Oh well, if you're waiting, I don't want to have to write a check to support these folks. My whole point was to have you mark up the deal so I could raise a new fund, they slow down and then that goes back to the series. If person who's like, well, wait a minute, you know the reason I paid it at 50 pre was because I thought you'd step in and buy it at 100. And these are then they slow down. So all I'm saying is I think that we are at the point of the cycle where Constipation is setting it. Hmm. And This is why you're seeing such a downtick in deal velocity and dollars put to work. This is a great advice I want everybody to take. I'm going to take the opposite advice and I'm going to do twice as many deals in the seed stage as everybody else. But I encourage every venture capitalist and seed fund to take chamotte advice. I'm doing the opposite because a five person company, this is an advice. This is just a market. Observation. I'm just telling you, observation. I I hope everybody takes that as the truth, because what I'm seeing is the founders who are raising and who have real businesses are so sharp right now and so focused on costs and profits and what matters, and they have eliminated all the **** that doesn't. There's a whole contingent. I don't know if you're seeing it sucks. I'd say it's one out of five, one out of four that are like, I understand what's happening here and I'm going to take advantage of this moment in time and I'm going to just drive revenue and profit. What happens to the $250 billion? Has been put to work in the last two years that need to get up rounds. Yeah, it doesn't matter to me. All I care about is meeting young companies that are growing with revenue. But I think they're they're just trying to have. I'm trying to have a conversation if you want to. Yeah. No, I so I'm just that's a lot of indigestion. Yeah. They could have to cut their staff by half and get to profitability. Ultimately, the way that valuations matter or price levels matter is there's an entry price and an exit price. And ideally, if you can time it right, you want to invest when valuation levels are low and you want to exit. The valuation levels are high. If you were a VC last year you should been realizing as much as you can because valuation levels are really high. There was a good tweet by one of precursors colleagues at altimeter basically saying she was talking to LP's and asking what they care about. And what she reported LP's is saying is that if you're a fund that's more than five years old and you didn't distribute during the best window ever, which was 2018 to 2021, it's a hard no. You know, we're not going to be re upping with you. Get even more if you're if you're a venture investor who took a longitudinal view on public market stocks and then have now seen 60 to 70% write downs of those same stocks that you could have distributed, you should still have something to answer to that makes no sense. It turns out that the skill of private market investing and the skill of public market investing are different. Even if all you're doing is delivering the market beta, it's still different. And we should have just remember I was saying, should I distribute the shares of Robin Hood? Could I hold them? What should I be doing? We told you to distribute and I distributed. I distributed everything you know and and in terms of secondary, I feel you feel like a genius now because your LP should say thank you Jason. They should be sending you something. Are saying that. What I feel smart about, I'll be honest is we had, I think let's just say I'm making up a number of four to five times. We were offered the opportunity to trim our positions and secondary with our winners from people who wanted to buy secondary shares. I did it probably 4 out of five times and I'm just taking myself. I didn't do it the 5th or I didn't. Ask if they would take more, because, my God, we were able to clear some positions at very high valuations that are now lower than that in the private markets and send cash to our LP's and get our, you know, get over our hurdles in our first two funds. Which, you know, I feel smart about. I think that you should feel so, so good about that, huh? That is that is really hard, what you did. And I think people underestimate. How hard it is. It is really hard to actually return more money than you have taken in. Yeah, I mean, that's what I'm just that simple statement. And and by the way, it was hard in the last 10 years where we've had basically a massive up market in the four of us frankly benefited from the extraordinary luck of being in tech. Yeah, I know it's super lucky. I think the big thing that's going to happen right now, I'm seeing it all over the place is M&AI think is going to start ticking up. Just today, Amazon acquired one medical for 3.9 billion. One medical operates a network of clinics. If you don't know $3.9 billion enterprise value for 182 franchises, which is 21 million of franchise, look at what happened to their. Look, what happened to their stock price. No, I know it went from 60 in the peak in February of 2021 to 7 in May, and they bought it. They basically bought on the same price date with trading out in January. No, my point is, you could buy a McDonald's franchise for 2,000,000 or you could buy the company that fixes the people that needed McDonald's for 21 million. That's why they've got a good deal. By the way, at McDonald's you can't make money selling pharmaceuticals and upselling, you know, other stuff that Amazon's going to. Certainly it's super interesting that I think it's super interesting. Amazon is getting into this business. Wow. I mean that is really, I mean they they clearly have a an economic model that shows some significant footprint and retail footprint well there. Yeah. And there may also be kind of a supplement pharmaceutical kind of upgrade opportunity. There's synergy in this business and think about the synergy between magic and think about what they're getting is also not just the physical locations, but a network of doctors that can do telehealth. I don't know if you guys have ever used one medical, but they do really. You know, easy zoom telehealth services and so you could hop on, get a prescription, have it fulfilled by Amazon, it shows up at your doorstep in under an hour, genius it. It'll be an incredible synergy for that business and probably a real value driver, not just at the core units, but with respect to other things they're going to sell through. Your one medical doctor will provision a blood test. He or she will analyze those blood tests over a telehealth. They will prescribe a better diet that will be sent to Whole Foods. Who will then? I'm sorry, I'm serious. And then you're right perfect like this and is eating out hopefully Amazon. It makes so much sense for Amazon to expand into built out retail footprints because that business model now gets more and more complete by the day where you become so ingrained and enmeshed in this. Yeah this is this is really about at the end of the day is this business Amazon Prime is the driver of Amazon business that's going to be yet another Amazon Prime lock in. So you're, I know it sounds silly, but. Delivering an entry about your subscription, but I would bet you got, I will bet you guys a dollar that within a year after closing the deal they're going to massively expand the telehealth footprint of where medical is doing because one medical had to go out and do customer acquisition to go and acquire customers to make money doing telehealth services and they're spending $1000 probably CPA to acquire these customers. Amazon wanted to do this. Why didn't Google do this? Amazon's already got the customers they end up with 70 million. By the way, I think another thing, another thing doesn't know how to do messy things in the physical world. They don't how to do service. I mean, Amazon's been working warehouses. They do apple. Apple knows how to do stores. Why? They don't know. Apple knows how to do 4 products in a beautifully designed $30 billion services business. Amazon knows how to get in the nitty gritty and the nuts and bolts operations. Other things. Yeah, real world stuff. The other that's really interesting about the Amazon deal is that it was done with Bezos not at the helm. And I think it really, you know, begs the question and and begs an answer. Around are these guys gonna continue to innovate like this and I think right now the jury saying yes, they are gonna continue to push the the synergies that can drive from this business by expanding it to ancillary services and and and industry. And it's really impressive to see them doing this without, without Bezos running the day-to-day as a shareholder. I feel that. So really great to see. Yeah, I mean this is where like they could buy DoorDash, Uber, Lyft, those kind of real World Service. Maybe with Whole Foods they're buying an asset that they're gonna be a tremendous leverage in synergy out of very cheap. They're buying this company at the same price it was trading at a few months ago. Yeah, no, it's great. They have a great CEO at one medical who's a friend of mine. Amir Rubin. Congrats. Shout out. Congrats. Yeah. Alright everybody. You see what your beaks? No, I never, I never wet my beak in the steel dry beak syndrome. No, I would, I would disclose it. By the way, I've been taking a picture lap right now. If I was in that company, I missed it. I'm shocked we haven't seen the Jackal victory lap. He goes on some podcast, tells Bloomberg that VC's are going to get pinched for insider trading. All these tokens and lo and behold on the Wall Street Journal, three guys, I guess a guy at Coinbase got pinched for basically insider trading these token sales front, running it by buying them in his wallet and stuff. And so, but where is your victory lap? No, keep that up. Peep, peep, peep that up. Beat that up. That would be a recurring joke. What's your take your victory lap. Do you wanna take your victory lap? Well, no. I mean I told everybody. Like if it's a if it smells like a security and people are buying it for that reason, for it to appreciate. Don't be surprised if the SEC, you know, starts having tips dropped on them that different VC firms in cahoots with law firms in cahoots with everybody were liquidating their positions. We talked about liquidating positions as being the goal of venture capital. They created a shadow economy next to securities law and said we're going to start liquidating these things. But under what they made the rules up under which they could liquidate them. I'm not picking on any firm or anybody. We'll we'll see over time who gets pinched. But you know, if you decide you're going to talk yourself into this is not a security, even though it kind of feels like one that's on you, that's on you as the person buying the tokens, issuing the tokens, giving the legal briefs on the tokens. I think people suspended disbelief and talked themselves into thinking. That they weren't trading securities. And I think the SEC, now that everybody's lost their money, is going to just tick off one firm after another and it's going to be massive settlements. It's going to be three or four years of litigation. So is that a victory lap? It's just, it was such an obvious observation. We all saw it. I mean, how do you liquidate your shares in a company that has no product in the world? Like, come on. Come on. People knew what they were doing and if they get the book thrown out and they deserve it. All right, everybody, there's been another amazing episode, even though Sax is gonna say it's the worst one. You like my back? Spike it. I like it. I do. That's a lake. Is that real? That's lake front. Is that a zoom background? Can I get that in the zoom pack photo so we can all use it? Love you, boys. Love you. Alright, we're back in the groove. Back at you. Let your winners ride Rain Man David Sack. We open sources to the fans and they've just gone crazy with it. Besties? Play a dog taking out your driveway. Ohh man. We should all just get a room and just have one big huge **** because they're always useless. It's like this, like sexual tension that they just need to release them out there. B. See what? Where did you get merch? Plan.