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.

E89: GDP growth negative in Q2, $SHOP layoffs, Alzheimer's fraud, Ginkgo acquires Zymergen & more

E89: GDP growth negative in Q2, $SHOP layoffs, Alzheimer's fraud, Ginkgo acquires Zymergen & more

Fri, 29 Jul 2022 02:35

0:00 Bestie intros!

2:19 GDP growth is negative for a second consecutive quarter, but is the US actually in a recession? How has the White House controlled the narrative?

22:45 Looking at COVID trends with a post-COVID view: e-commerce, remote work, and how they correlate

36:33 "Inflation Reduction Act", how government subsidies can stifle innovation

59:50 Alzheimer's fraud, Ginkgo acquires Zymergen for $300M

1:17:36 Democrats backing MAGA candidates in primaries vs. more moderate republicans: savvy and cynical or too risky?

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Alright, his monthly burn rate would make even Bezos wince. He's living the life of a Sri Lankan Prince. He drinks nothing but the absolute highest top shelf. He's lifting Italy's GDP by himself. The dictator's back mouth Polyphagia. I'm back to the program. Thank you. Jake, when you mentioned that burn rate, I thought you could be talking about me talking about it. Sometimes these intros, you're not sure which which way you're gonna go direct. It's a misdirect comedy. A mystery is inconceivable. That might burn is higher. And David, I have I own one house. How is it possible? And maybe one or two next week? You're such an ***. He's analyzing macroeconomic charts and grids while at the same time ignoring his kids. He's the Sultan of Sass. It's no surprise. The only thing heavier than his pockets, the bags under his eyes. The Rain Man is back. David sacks. It's not bad. Ohh, here we go. Here we go. Admiral of Anxiety. He's rife with strife. He plays on his PS Five, and he also plays what in real life? Meow. The commander of the Catboys, David Friedberg. I mean, I'm totally cool with that opening because you're gonna look like an *******. It's all good. I mean, more of an *******. I mean, if you didn't ignore it, every time free Brooke spoke, you would have heard that the guy from Annapurna Pictures reached out to him, gave him a link to download a free game about cats, which he downloaded, and he's been playing. It's now the most popular video game in the world. Which reduced the cat game. It's on you, by the way. What shirt are you wearing? It looks like a carpet. Yeah, you really do look like one of the characters from Goodfellas. Like one of the older guys in the Kansas City, Ohio. Yeah, I had my cigars right off screen here, and I got my own coffee I got from Dunkin' Donuts. You remind me of one of the guys in Kansas City from Casino. Absolutely sit around the table in that restaurant. It's like, should we whack him? Why take a chance? Boom. You get him? You got my style icons. Joe Pesci is my style icon. You look really bad. Thank you. Thank you. Let your winners ride. Rain Man, David. We open sources to the fans and they've just gone crazy. We. GDP fell by .9% in Q2, marking 2 straight quarters of negative growth. In Q1, we all know GDP fell 1.6%. Here's the real GDP chart. Current dollar GDP increased 7.8% in annual rate, or 465 billion in Q2 to a level of 24.85 trillion. Home construction down 14%. Ostensibly because of the interest rates increasing. Inventories, which helped boost GDP in 2121, dragged down growth in Q2. So supply chains easing, taking away two percentage points. Chamath, what's your take? Do these year over year comparisons work? We were talking in the chat a little bit about the spike in 2021 versus the dip in 2020. What's your take on this? I mean, I think you just summarized that people are really fixated on these numbers without understanding basic statistics. So just taking a step back, if you go to the Bureau of Economic Analysis, which is an official website of the Government of the United States that posts GDP, the title makes it pretty self obvious what we're dealing with here, which it says Nick, you can put it up there, real GDP, the percent change from the preceding quarter. So things can still go up positively but still be negative if it doesn't go up by the same or more than the quarter before it. The thing that we really have going on is that over the last eight quarters, we've had all kinds of very turbulent data that's made the trend line unpredictable. And the most obvious way to see this is actually in one specific subsector, which we'll get to in a second, which is around US ecommerce adoption. You see this one huge spike coming out of nowhere. And then eventually everything has settled back to trend. The same way, I think what we're waiting to figure out is how many quarters does it take for us to get back to on trend growth in the economy. We had a massive shortfall in Q2 of 2020. We had a massive surplus in Q3 of 2020. We've had a country that's been getting back to finding equilibrium over the last five quarters, so we don't really know. What the steady state growth should be. This is why I specifically had such an issue with the tone the White House took, which was trying to explain away this that this isn't a recession by trying to create doubt in the definition. Instead, I think it would have been much better off just repeating what I just said and explaining basic statistics and actually showing that the country is headed in the right direction, largely speaking from a really crazy one time externality that nobody could have predicted. That it's going to take some number of quarters and so really what you should look at and Jason, you've pointed to this. Is employment and wages and try to be a little bit more circumspect and overreacting to any 1/4 of data. By the way, the Fed exactly just said the same thing yesterday when they raised 75 basis points. They said we are not going to give guidance anymore because things are too turbulent. We're going to remain vigilant on inflation, but mostly we're going to be very near term data dependent. So I would boil all of this in saying let's not overreact to a quarters print here or there and specifically the label. I think the White House made a mistake in trying to basically think, you know, we all didn't understand what our technical recession was. I think instead we should just focus on what we have to do to get back to solid-state equilibrium. And just to put a pin in the definitions, we all know the common definition 2 successive quarters of negative GDP, however. People have said it's a temporary economic decline during which Trade and Industry activity are reduced. So there's a sort of debate and splitting hairs going on sacks, which was kind of stupid. The big news this morning is that we no longer know what a recession is. This is such a vast and complicated question. You might as well be asking what is the meaning of life? Now, I remember in the days of Republican presidents, we had a very simple definition of recession, which was two quarters of negative GDP growth. But now that we have a Democrat in the White House, we just can't know these things. Why even ask such difficult questions, right? I mean, that's basically the media coverage. Today, and it's absurd. I mean, and you saw for the last week, the administration and its spokespeople have been trying to muddy the waters on the definition of recession, and it was laughable as they're doing it. But now you see the media coverage today and you realize, like, they've bought into this nonsense and they're carrying so much water for the administration. Look, the headline should be the Biden recession has begun. That's it. If you had three minutes and 45 seconds for your Biden over under with sacks, you took the under. You won. We were in a recession. He's the president. If we had a Republican in the White House, it would be Republican president. Recession has begun. Yeah. So the media here is carrying so much water to try and avoid the obvious headline. I just explained it. Instead of reporting the obvious headline, there are now saying that we're approaching a recession or we might be in recession. We have all these difficult technical issues. Listen, listen, we're in a recession. It's started. It might be a shallow recession. We don't know yet. Yeah, it's it's it's a recession in which the unemployment rate. As of today, is low, although the labor participation rate is also low. So listen, we're at the beginning of a recession. It might turn out we might have a bounce in Q3. This might be more of a double dip. I suspect that's what it will be. But we know the cause of this, the cause of this recession is inflation. If you look at the economy's growth on in nominal terms, that grew at 7 point something percent. But because inflation was at 9%, you have to subtract them in real terms. The economy is shrinking and who is to blame for? We're set for inflation. Well, Jay Powell, the Fed because he reacted way too slowly, but also the Biden administration for all the spending they did, how much sooner do you think they could have reacted? Two quarters? No, like nine months earlier. So three we got the, we got that first surprise inflation print last summer. It was may I believe that 5.1% we started to talk about 10 year break evens tips in May of last year. So they could have gone quarter to 8:45 months and they continued not only did they not raise rates. Or or signal any desire to raise rates for six months. They continue to quantitative easing for nine months, which just makes no sense. What, they should have taken their off the accelerator, right? Nine months. They only start. They only stopped in June of this past year. So we've only been quantitatively tightening for two months. They stopped the bond buying program in March. Maybe that's right. Yeah, yeah. But they they saw quantitative easing in March. But you're right, the tightening is just something they're getting started with. But the point is they should have stopped easing, right? Like why would you need to keep intervening? In in the in the markets to buy more and to basically push out more money. Is the reason for this that Powell and Yellen just haven't lived through highly inflationary times? I just read they're older than I am. I'm just saying they they haven't been in office and doing fed policy. Like, I just read Volcker's book. If you haven't read it, it's pretty great. His biography, I mean what he had to do in 8182 was super severe, but we just haven't lived through this in our life. So I guess people are just not used to having to tap the brakes. No, no, no. Look, what happened is that the administration? Reacted in a political way to the inflation print. They invented this work. Well, the word transitory existed, but they applied it. You heard this word used relentlessly for about six months. So the administration went into denial mode and then by the end of the year, it became clear that it was persistent. And I think the issue with Powell is that he is basically responding to headline risk, right? So he didn't respond to, you know, the inflation problem last summer. He waits until the the headlines tell him he has to react. And so now the the thing that he's worried about is is recession. Obviously he knew no he's worried about inflation mostly right he he wants he's worried about inflation. But if you look at yesterday's right, but if you look at his comments yesterday. He it was more dovish comments. They did 75 point rate hike, but the comments were more dovish. And I think it's because he knows that today we have this second consecutive quarter of negative GDP growth. So now he's trying to balance recession risk against inflation risk. But the point is that the Fed's been very slow to react and the administration basically just tries to relabel and rebrand problems instead of confronting them head on. When we look at this chart, you pulled up four and we see this massive spike. Q3Q4Q1Q2 a little bit in Q3 and then Q4, I mean this massive 123456, just extraordinary quarters or five out of 6 in terms of GDP. That's all stimulus in your mind, right? This is the money drop downs in Q2 2020, Jason. They locked the economy down. Yeah, but so people were spending online and we'll get to the chamat story about Spotify, but it's not all of it, but the the point is it's some combination of lockdown and access money, right, access. Because because of loose financial conditions. Distort what true supply and demand should be. Got it right? And excess money can come from the government. But in this case, excess government money went from the government into the hands of individuals who then participated in the public markets, and they distorted what it what it all looked like. And so there was a lot of purchasing activity that was propped up by what seemed like an endless supply of free money, right? So now that that good and and so now that that money is getting taken out. We don't yet. Know what the real equilibrium economic growth rate should be? Because you have to remember, we have not seen an era without federally introduced spending, without federally introduced forms of quantitative easing since the great financial crisis. So we have been propping up our economy. For 14 years straight now. So we have distorted the prices of bonds and fixed income, we've distorted the prices of equities. We've we've created an asset bubble in crypto out of nowhere. And now we have to do the hard work of figuring out what the real supply demand is in the economy. And we took six quarters here. There's six quarters of just massive GDP spike there from the preceding quarters and we have two down quarters. Is it going to take six quarters to wash this out or longer? I guess longer because what David said is now making the problem even worse. So because Powell was catering to whatever pressure he's been getting and he must be getting some severe pressure from the White House. Those were really dovish comments. But what is the problem when he is dovish? Well, the practical reality is a couple of things. Number one is typically the yields of long dated bonds. Go down, OK. That essentially tells everybody else to reprice assets. What does that practically do? It makes the cost of borrowing roughly cheaper. OK. It makes the price of equities, particularly ones that are far out on the risk spectrum. So specifically let's focus on NASDAQ and Crypto, right? Tech stocks, biotech stocks and and crypto stocks go up much more aggressively. So what does Powell effectively done? He is synthetically created a form of easing again, right, like his job at the Federal Reserve if you think about the money supply as a pipe? It's to shrink the pipe to close off demand to get things in equilibrium. So even though he's doing this by the language that he's doing, he's effectively allowing market participants to basically guess. That the worst is over and now we're going to start to expand the pipe again and so they go to the end state. So what he effectively did in one speech. Is basically put a pin at the end of this year. And is telling the markets I'm mostly going to be done and if anything I'm probably going to be cutting in the back half of 23 go on your merry way and there is no see the problem with Jason is it's now pushing the problem out another eight quarters like we need to stop this nonsense. He needs to be definitive and he needs to fundamentally break the back of inflation so that. You find out what the true demand is in the economy. Yeah. And it we did .75 yesterday, the markets rallied on his sort of the assumption that he would do a couple of more of these rate hikes and then he'd be done at the second-half of the year. And then, hey, maybe we can get back to growth or some normalcy in in related related to all of this. And by the way, there's an interesting story this would be interested in. How did you read Paul Volcker's biography at sax? No, I've not read it. It's, I'm not familiar with this record, but you know. Like at one point Baker and Ray took Reagan and Volcker into a room off of the White House, so it wasn't recorded. And just, said Volker to Volcker, the president does not want you to raise rates going into the 84 election. And volker's like, well, I wasn't planning on raising them. So there's a lot of politics in this, even though people claim already done enough. I mean, Volcker raised rates all the way up to like 20%. He broke the back of inflation. It created a very severe recession and I think 198182, but by 1983, the economy. Those rocketing back, yeah with lower interest rates and and they basically solve the inflation problem. Hopefully we're not in that situation where Powell has to Jack up rates so much to break the back of inflation because it means that we'd be in an even more serious recession. So I hope we're not in a Volcker type situation. Just think about that spread sacks 20% versus like 3 or 4% we're trying to get to. We've never in the history of America. Ever had CPI print above 4 1/2 or 5%? Without inflation being brought down by having fed funds not also be greater than 4 1/2 or 5%. So at some point inflation will turn over and will print six and seven percents, but that's still not below 4 1/2 or five. And right now, our target Fed funds rate is between 2.25 and 2.5%. So we could still be only 50% of the way there if inflation remains at 4 to 4 to 5%. And this is what I think market participants don't want to hear. They don't want to hear that there has to be a meaningful form of tightening, and politicians don't want to hear that. The White House for sure doesn't want to hear. The problem is that if Powell caters to too much of that feedback, he's not going to do what he's supposed to do and why he's put in that job. His job is to get it to 2% and keep price stability and full employment. There is a balance here. I mean the the reality is we do not want Powell tightening more than he should or more than is necessary to solve inflation because it will cause a serious recession. So I think we're we're caught between 2 pretty bad options here and it's because I think that what happened last year contributed to this. I mean, look, if you go back to that. Chart that you just showed what happened in Q2 of 2020. We had a very healthy economy going into 2020 in 2019, right? And then in Q2 of 2020, we had COVID, but we made the situation even worse with lockdowns and we should basically shut down the whole economy, brought it back at least in most States and Q3 and then the Fed started printing and Congress started printing $10 trillion. Well. Still by last year the economy was back. We had something like 5.7%. Annualized growth this year, it's negative. Why? Why is that? I mean, this may be the lingering effect of all that stimulus, but I think that it is. But I do think that the administration made it worse by sending checks into an overheated economy. They also created energy scarcity and they just kept, you know, spending more money. So I'm not saying the White House isn't without fault, David, but I do think that if all of these geniuses could have actually just taken a simple econ and stats one-on-one class and explained how. You're over your measurements work to the American people. I think they're smart enough to understand it. We didn't have to go down this convoluted route. We could have just explained we put a lot of excess money in the economy. We don't yet know what the full effect of that is. We need to let that wash through. In the meantime, you're going to see some crazy numbers from time to time and we just have to be patient. And the other crazy things you're going to have looking at 2nd and 3rd order effects is all these downstream effects. People are making business decisions going into these economies. Shopify just laid off 10% of its workforce about 1000 people on Tuesday. Their stock is down 10%. Last five days overall, 70% year to date and if you look at this chart and and Toby took. Blame for this. He basically said, listen, we thought that this was going to be a, you know, Fast forward into the future, that people would adopt ecommerce in a major way and that would stick. Here's US ecommerce adoption growth rate, massive spike when people were forced to buy all their goods online and now it is regressing to the mean. Mean, mean reversion is a *****. If you look at Shopify Stock, if you look at Peloton stock, if you look at a firm stock, if you look at Ark, you know, a lot of these things were trending in a great direction. They had this short term crazy behavior in the middle of all of this free money, and now they've mean reverted. And you know, we're in the midst of finding out what the real price is. I got to give Toby a huge. You know, round of applause because he is such a great CEO, and I'll tell you why. Last year, in the middle of all of this woke ISM, he wrote this incredible memo, which was, you know, we're not a family, we're a team. Which I thought was exceptionally well written and really got the point across this time around. He just owned it. He's like, you know, I made a huge bet. That all of this behavior change was going to be discontinuous and permanent. And it turned out I was wrong. I'm sorry for that. And here's how we're going to have to course correct in both cases. He kind of just put it all out there and he owned it. And I think that that's all you can do when you make a bet and it's wrong. And here's what he said. It's now clear that bet didn't pay off. Ultimately placed in the spat was my call to make, and I got this wrong. Now we have to adjust. As a consequence, we have to say goodbye to some of you today. And I'm really sorry for that. I mean, everybody made that mistake, right? So. You know, it is, it's just, you're right truth, just to own it. Everyone was thinking the same thing we're all we're talking about how COVID was this acceleration of this virus and it was going to accelerate all these trends and well, that's the acceleration awakening is going to be for all these people who made all these bets, assuming that it's permanent and specifically, I mean, you know, especially around real estate and work from home and all of the stuff benefits and it's all going to change now. And the reason I say that is the combination of reversion to the mean will. Impact a company's bottom line. And those boards of directors and CEO's will say, OK, we're just going to have to reset expectations and that's going to touch the employees. I don't know if you saw. This leaked transcript, but, you know, Zac was asked a question from this employee in Chicago that was unbelievable. He was asking about his emotional support days or something. I think in the in the middle of like, Zack having like a really serious, you know, heart to heart with the company about how we're going to have to buckle down and, you know, get this company back on the right track performance, one dude, one dude. You know, schmincke from the back raises and he goes, what about the COVID extra vacation days for those get canceled, Zuckerberg almost like. He literally, his head almost exploded. Like, did you not just listen to what I said? I just said if people are not performing at a high level, maybe they shouldn't be here and you're asking me about more days off, hire that person to say like, you obviously you don't get it. You didn't listen anything I said. You're not right for this team at this time. Goodbye, said a version of that. He's like, there's a lot of people here that may not be the right thing. Freeberg when we look at these trends, OK, commerce seems like people are going back to shopping. But I want to ask you about two specific. Months health care. It does seem like telemedicine was one of those things that got accelerated during. COVID do you think that's going to revert to the mean? Or do you think that you know, doing doctor's visits over, you know, FaceTime and text and all these consultations is going to stick with us? And then what about work from home? Because that does not seem to be shifting all that much. Free the work. The work from home is not shifting. Well, I mean it. People are still staying home. And, you know, Amazon just put a hold on six buildings where they said you can finish the outsides. But let's not do the insides, because we don't even know what we're going to do with these buildings and what hybrid's going to look like. And Zuckerberg hasn't been able to get people to come back to the office. And Apple seems to be getting people two or three days a week, so it seems like it's still been a struggle. And downtown San Francisco is empty, so we're getting mixed. We're getting mixed results back now. I would say is the best way to to describe it. So work from home and telemedicine, what do you think freeberg, I mean, certainly the knowledge economy seems to prefer work from home. I mean, you're working on a computer and you don't need to interact with people. And you got kids or family, you're inclined to stay home. So that seems to be a sticking point, you know, younger people. Probably have their own motivations, but there was a good stat on telehealth. I'm just trying to find it and I think telehealth surged during COVID. And 36% of patients used a telehealth service in twenty 21420% increase over 2019. And so despite some reversion post COVID post lockdowns, there's a significant sticking point. That and I think 60% of telehealth patients are women. So there's particularly female services that are being rendered through telehealth at an increasing rate than pre COVID. And so there's a lot of stuff. I mean, look, we've all had to go sit in the doctor's office for two hours to get some prescription or get a doctor to give us some advice on something you don't need to physically check us out for. So, you know, certainly seems to be a acceleration in that department. Offices. What's the Amazon like? Was working on 15 warehouses. They shut down as well, right? I mean, if you guys remember at the start of COVID, when you place something on Amazon, it was like a two week delay because they didn't have enough capacity to fulfill the order volume. You know, you looked at Toby's chart, it's nearly a doubling in ecommerce volume in a week. When that happens, Amazon's, you know, ± 5% supply chain has to revert to servicing twice as many customers. It's just not going to happen. So they overbuilt, tried to get ahead of the curve. Remember they hired like a, you know, 100,000 workers. And, you know, they they they had to make a pipeline for quarters ahead to build warehouses. Now they're realizing that demand is not going to be there and they're cutting back on 15 warehouses around the country and not gonna build them. They were buying up so many warehouses that a couple of companies that were looking for warehouses in Los Angeles, Northern California and Amazon just bought an option on every single warehouse they could find. And now they're putting them back on the market. So they they definitely went too heavy. And then everybody started betting on Peloton and Teledoc and if you look at teledoc. I mean it's off 90% from the peak. I would show the I would show the Peloton chart as well, but that would just be. Gratuitous. Some of the stuff to note is like, at the end of the day, whatever product is better for the consumer, they're going to pick. You know, what's the better way to buy shirts? You know, what's the better way to get well defined? Defined better? Yeah. I mean, for the consumer, it's like you want to try them on or do you know what your size? Right. You're buying a brand that you know on a size, you know, you can buy it online at this point. I mean, the one thing COVID did is it basically created a trial by fire. My parents never used door dash before COVID. So then they were forced to use door dash during COVID. Now they know what it's like. And so, you know, there are now people that never trialed a lot of these services, that have trialed them and are now making decisions. Based on that experience, but that's a beautiful example. So just use your parents. Why do you think, let's assume they did? Why do you think they mean reverted to now using DoorDash only in the same percentage as they would have otherwise? X of a little bit of, I think, the quality of the food, the the time to wait, the experience of going out to dinner. There's a lot of motivating factors that are different by different demos, and so whatever the consumer wants, they're gonna pick. If I want to go have a dining experience in person with my friends, I'm going to go do that instead of sitting at home ordering DoorDash and having everyone come sit on the couch. And eat dinner together. So I think that there's this, you know, this, call it mean reversion, but we have seen, call it a broader exposure, and we're really going to see the true market dynamics play out. I don't think everyone wants to buy shoes online. I don't think everyone wants to buy every piece of clothing online. I think people want to go to the store and try stuff on. I think it's that. And I think that there's a lot of ancillary social benefits that come with a lot of these activities that you lose if you just optimize for efficiency. So to your point, like, yeah, you can get a burrito. But even going to Chipotle with your friend is more fun. Totally get out of the house. Get out of the house shooting the **** you know. It's just it's and the serendipity, yeah you may run into somebody that nothing beats that. I will tell you by the way, I I I do believe that there is a counter narrative to the idea of work from home and e-commerce moving together. I think as people work from home they wanna go be in person for other activities more. Yeah. So the the more you're working from home, the more you want to go to dinner with people or lunch to people, the more you wanna go shopping person because you're stuck in the house all day and you wanna go do other stuff. And so if you're working in the office you're going to do more ecommerce and if you're working at home. You're probably gonna do less ecommerce. So there's probably some net net balance. We saw both of them rise together during COVID, but now there's more of an equilibrium being reached. Well, I mean, if you don't, by the way, I think we're changing. Your behavior may stay home for three days straight and all of us remember, whoa. And just remember, 60% of the US population lives in urban areas where this is kind of an effective kind of conversation we're having. I think outside of that, it's a very different world. And so for 40% of Americans, this is not like the conversation that, you know, in in in deeply suburban and rural areas. Do you guys know what Shadow Ghost quitting is? You know what ghost quitting is? Go song, huh? I saw it on time. You stopped, you stopped working. I saw it on tick Tock, but you're still getting paid. It's when you decide to quit mentally but don't actually quit. And so you basically get out, get off the corporate rat race by doing the bare minimum to not get fired at a company like sacks during the science segment. And so I, you know, I I think that there's all of these, like invented things that people do that they think they can get away with, which they generally can in a moment of prosperity. Where in a moment of actually, like, buckling down when earnings matter and profits matter and investor pressure matters, all of this stuff I think is going to mean revert. So this is sort of my my opinion on all of this, which is I think that most of these behaviors will eventually take over. But it's still many years away and right now we have to go through the process of just getting back to where we were meant to be in the 1st place, I think 1 area with significant disequilibrium right now. I mean, to your point is, is productivity. I think it's very hard to assess and and qualify productivity for knowledge workers in this environment. And this is for employee base, right? Remember we talked about last time like a large percentage of the US workforce has moved to more of an independent contractor, sole service provider, kind of model for how they're interacting and working in the world, but I'm talking about knowledge workers in an employed environment. And it is becoming difficult for managers and for companies to assess, you know, the the the quality and the level of work being produced relative to its potential. It's not the same as it used to be when you'd be able to hack in person monitoring and interaction. And so, you know, I saw a stat the other day where it was like most companies are asking workers to come home. Most of the workers are to come to the office. Most of the workers are saying no. And then most of the bosses don't know what to say in response. And they're still sitting on the sidelines like, OK, OK, don't come to work. OK, yeah. And so there is this and and by the way, this, this may yield a competitive advantage for businesses in the marketplace that figure out how to assess productivity and how to assess performance in their organization. Right now in this rapidly shifted, totally different workforce than what we had a few years ago, because it's so easy to take 4 hours off in the afternoon, go to lunch, hangout, have beers, come back, get back online, get back on Slack, do stuff. And so there's this real challenge, I think for organizations and and a real disequilibrium of productivity and output. Right now I've had to deal with you guys looked at the tick tocks of these people that are like day in the life of like a Google engineer or day in the life they work for 30 minutes and then they're like 4 hours at the gym. They don't work. They're literally smoking weed and playing video games and everyone knows playing cats. Managers know talking about managers know it, senior VP's know it, the CEOs know it. It's this is my point. People just don't know how to manage it. It's a real. I figured it's it's a real disequilibrium in the workforce. Because the way you manage it before is everyone would show up to work or they wouldn't. Someone's not in the office, they're not working. They get fired. Now what do you do. You know, and and no one wants to be monitored. No one wants to manage keystrokes through a frigging remote computer and figure out how much you're typing. Actually, it's interesting you mentioned. You take out to your employee, no, no, no, no, no, no. There there are people doing that. Call centers actually do that. So call centers and sales teams, they have monitoring software, customer service and call centers, totally sales people. You can totally track productivity. I'm talking about creators. Producers, right. Like, yeah, I actually have come up with some strategies for this. So we have a lot of writers doing newsletters and stuff like that. And so we did was we created a block in the afternoon, we've been testing where three riders will get together in a pod and they work on a newsletter together. So instead of three writers writing three different newsletters. You have three riders collaborate on three different newsletters. They do one for two hours, one for two hours, one for 90 minutes, one for 90 minutes total for three people. Read the news letters. Well, it's doing 4 or $5 million of advertising as hundreds of thousands of people a day, but OK. But anyway the point is I didn't mention the name of the company is no plug in here, but you're going to a zoom, yeah, no, no. You put people in a zoom or a huddle on slack, which is like an audio only and then they have to deliver work to each other. It's kind of how developers work or sales teams work with leads. And then in things like programming, like it's like peer programming. Exactly. And then with and it also makes people less lonely and it builds social fabric. So there are techniques that are emerging. The other one I've looked at is I tell anybody, if you're doing any type of knowledge work, you need to create a notion or a coda page depending on what you use and update us on that and then send it to the group chat to the general channel. Hey, I was working on the strategy for this. So when people say they're working on strategy, I have them documented and I say share US, share with us the Google Doc, and I use the Amazon Six page. You know, philosophy of a right first culture and now people have to write it down. So I've been teaching people how to write, use Grammarly. Hemingway app to be better writers and then what you can do is as a manager you can just look at your notion or your coda and see the change log. And when I see people in the change log and I see they made no commits, I'm like, what is this person doing? They said they did all the strategy stuff. Where is it? Where is the strategy stuff? Write it down. So if you switch to a write first culture and then train people how to write and become more confident writers, all that knowledge gets captured on your knowledge base and you can actually see people getting done. It's not perfect, but I think it's actually intellectually better than being in office if you know how to do it. Because in an office, people are also performative. They're doing, like, ******** meetings. They're pretending they're working. They they're they're actually reading the news or, you know, or whatever. So sex, what are you doing to monitor your employees covertly and keep them productive? We don't need to monitor our employees that way because we're a small team of. Yeah and they're highly motivated, you know. But look it it it it is an issue. I don't I I think we're work from home is beneficial is on the hiring side, right. It's so much easier to hire for a job when your potential pool is anyone in the world you're not just geographically limited to the city in which your office is. So that was the temptation for all these companies to go remote as it made hiring so much easier. But there's no question that it makes management. Much harder and scaling the company much harder and building culture much harder. And so there's some real trade-offs there. I don't think companies are totally wrap their heads around it. But look, in addition to productivity, there's one other aspect of this economy that I think is really broken. So the the Chamber of Commerce says that 3.25 million fewer Americans are working today than they were in February of 2020. So basically if you go back to the month before COVID, we had over 3,000,000 more Americans in jobs than we do today. And yet the unemployment rate is still in the 3% range. And the reason is because that if somebody drops out of the labor force and isn't looking for work, they don't get counted in the unemployment rate. So we do have a if you define unemployment as a large number of people who aren't working, we have a huge unemployment problem. But the problem is they're not, they're not counted because they're supposedly not not looking for work. So I don't think this economy is that healthy and. And I think that there's a lot of distortions that have been created by government in the last couple of years. Suspect is what you're saying, right? Like labor participation is all this data that the data is suspect, the labels are suspect. I mean, like we talked about, all of a sudden we can't know what our session is. And let's just bring up one other thing that just happened today. So Manchin cut a deal with Schumer. To bring back to bring back a slim down version of BBB, thankfully it's not 4 trillion like Biden wanted. 750 trillion. OK, but what do they call it? Billion billion, right. OK, so you know, thankfully it's it's a slim down bill, but what are they calling this? They're all of a sudden calling it the Inflation Reduction Act of 2022. Like are you kidding? This isn't. Why did they? Are they trolling us with the names of these bills? The Bills are never what's in the bill. Why don't they just call it the green energy bill and the screw? Private equity bill. I mean, that's basically what it is. Yeah well, inflation reduction self to everyone, right? But Jason let me the media the media is not holding the administration accountable. If we had if we had an honest media they the the headline today would be in recession begins left the station sacks we you can only get it on this pod or other podcasts. Yeah. What did President mansion get for this deal? He agreed to it. What did President mansion get he secured some bag, right. Did you see what I sent you in the group chat? There are going to be huge, he agreed. He's like, I got a pipeline. There's gonna be huge handouts and pork for the state of West Virginia. There's no question about it. I mean, if you look at this bill, OK, the, I mean we just we should just look at what's in it. And more and more is going to come out over the next few weeks, right. It's only one day. So we're going to learn a lot more about what's in this. But the largest thing Republicans feel like, can you explain the dynamic as well after you get through this of why the Republicans felt like now that he double crossed them? Because the Democrats felt double crossed by managed President mansion. And now the Republicans are feeling double crossed by President Manchin. Well, I I don't know that you can use the word double cross because he's not a Republican and he had no obligation. But look, the, the, the. But there's no question that Manchin went back on what he said just a few weeks ago. He was saying that build back better was unacceptable because it would contribute to the inflation problem. In fact, he's been saying that since last summer. He's been saying that we have a growing inflation problem. We can't contribute to it with a lot more government spending. Now he's agreed to a 750 dollars, 750 billion of of which something like 450 is. New spending. So yeah, it's it's it's a smaller package than we had before. But if you're concerned was inflation a few weeks ago, you can't justify this and you certainly can't call it an inflation reduction act. I mean, that's just patently dishonest. How do they come up with it being inflation reduction? Is it because they're the healthcare stuff is theoretically going to help consumers have more money to spend because they spend less than 10? It's a tenuous argument, but if you want to, if you want to make the argument. There's some cap on what seniors pay for prescription drugs and then there are subsidies for people are in the market for an electric vehicle. However, those are small adjustments that those are small rebates to a small segment of the population. I don't think you can argue in good faith that this bill will reduce CPI. It just, you know, that's just not a plausible argument. And the vast majority of the bill, like you said, are subsidies for clean energy, which are basically handouts to special interests in the donor class in the Democratic Party. Just a little bit of this itemize some of these things so the largest single outlay, 60 billion, is for quote environmental justice initiatives to address the unequal effects of pollution on low income communities and communities of color. This includes 3 billion to invest in community LED projects in disadvantaged communities, another 3 billion to support neighborhood equity, safety and affordable transportation access. Another 30 billion shovels estates in the form of grant and loan programs for states electric utilities to advance the green energy transition 30 billion. Or additional production tax credits to accelerate domestic manufacturing of solar panels, wind turbines, batteries and critical minerals processing. So that's basically going to companies, right? 20 billion in loans to build new clean vehicle manufacturing facilities across the US and 2 billion to revamp existing audit plans to make clean vehicles. 20 billion for the agricultural sector to quote curb emissions. 3 billion to reduce air pollution at ports. 10 billion investment tax credit to manufacturing facilities for things like electric vehicles, wind turbines. And solar panels? That seems redundant to the $30 billion outlay I just mentioned, but it's another giveaway to Democratic donors. And would that be good for chamath? Wouldn't that spending be good for energy independence in addition to climate? Because we've been talking about being energy independent. If we have more EV's, more batteries, more solar, that's a good thing, right? We want to be energy independent. So this seems like we get two wins, or possibly 31. We we get economic activity. Two, we reduce our dependence on foreign oil, and three, we. Stop burning a hole in the ozone and increasing the temperature of the planet. Seems like 3 good things we have to. I think we have to see the forest and the trees here. And there's a there's one good part of this bill. And then there's the kind of more ugly reality that it avoids. The ugly reality is, unfortunately, or fortunately for maybe without taking the motion of it, we are dependent on fossil fuels for a very long time. It is a necessary bridge fuel. And so we need to, if we're talking about energy independence, it can't happen without us frankly drilling more and subsidizing the capital incentives of private companies to go and do this exploration work, which they have stopped, Jason. And the reason they've stopped is that they don't trust that these oil prices will stay this high. And so they don't want to make these outlays and investments for the next 5 to 10 years because they're worried that it's going to be a rug pull, which did happen to them in the back half of last decade, in the early parts of this decade. So they're like once bitten, twice shy. They're not, they're not going to touch this. Oil companies that would do some exploration, it would cost them whatever amount $2.00 to get the gasoline out of it, to get the gasoline out of the earth and then process it. But they're afraid it's going to be negative. They're not gonna be able to sell that gasoline. I think they're afraid that, you know, the United States government may impinge on their ability to actually process it, that it may. There may be tariffs and costs and taxes that they don't forecast. They'll be upside down. So they just don't want to be. And right now then you saw this. I don't know if you guys saw it, but like Shell and Exxon and these guys are printing enormous record profits. So their incentives to change the status quo right now is zero. They want less supply because then they can raise prices. They have the perfect situation right now, which is it's an incredibly. Energy intensive world we live in and we don't have nearly enough energy to do the work that needs to get done. And and by the way and you saw this this week already where you know, Putin cut Nord Stream by another 50%. It was already running at 40% capacity. He he cut it down to 20%. It's only getting worse. So I don't know, I mean I think this bill could be good. I haven't looked at the specifics to give you a very well. The specifics aren't even out. I did see the EV credits friedburg, and I thought that these were particularly well constructed. 7500 bucks off of a new car, but you have to be in the 150K salary or less on your taxes. So rich people can't get these and it can only be for an $80,000 new car a $50,000 or $25,000 used. And so they they did seem to be style pretty well and I do know that those incentives did work in the early days of Tesla because when you went to the website you would look at the price and you know this would be 10% off of a of a new car and they they did drive sales and it it was. Pretty significant. What are your thoughts on the EV tax credits? That's something. That's a wise thing. And then what do you think overall about spending a couple of $100 billion on reducing emissions and becoming more energy independent at the same time? Seems like a laudable strategy to you. Nope. Seems like a total waste of money. OK, unpacking on, please. So the EV tax credit is just giving away money to EV car manufacturers. There's already enough demand, the prices are low enough. There's enough consumer interest. There's enough consumer intent. I don't think you need to put this money out there. Distorts a market that's already functioning well. And this goes back to my point about the role of. You know, government and how we create, you know, create incentives or spend money. This is not a place we need to be spending money because there isn't an absolute need. There's no data that indicates that this will accelerate a transition to a carbon free economy or that it's even needed. It really is a a point of view that people hold and they believe that EV's are good, they're good for climate change. We should accelerate it. Therefore, we should spend money on it without any accountability or proof that these tax credits will actually motivate. The market to move faster or quicker than it is already moving. And so it is just spending taxpayer dollars that could theoretically not be spent or be spent in a more effective way to improve the lives of people broadly in this country. So yeah, I don't, I don't fully agree that I haven't seen any data that tells me this makes sense anecdotally. And $7500 off of $75,000 EV is attractive either. Summer, $1000, GM and others have great low priced TV's and there's a ton of market demand and they can't keep up with production. And, you know, giving people $7500 off a car that manufacturers are still struggling to keep up with making because there's so much demand already, you don't need to do it. It is so much cheaper to drive an electric vehicle now by plugging this thing in and spending money on gas that people already want to buy these things. They pay for themselves super fast. Every consumer wants to save money on transportation, and you will save money by buying an electric vehicle. So you will already buy an electric vehicle. You don't need government money to get you to buy an electric vehicle. Drivers point. There was a lot of. Analysis That's been done on consumer adoption patterns and typically for a new good or service, the tipping point is around 5% mass market adoption from when it goes from early adopters to the mass market and EV's just crossed 5%, so to his point. The historical data would tell you that we're now past the critical point where it's no longer questionable and now it's just going to happen. So it's not early adopters. We're getting to the the mass market. I mean I'll tell you like the best, the best thing about Evie adoption for me for having an EV is never having to go to the gas station to amazing, amazing. I just just that one thing is just give you guys currently it's about 34.6 kilowatt hours. Per 100 miles. OK, I'll just get. Let's just do some math together. Let's say kWh in the US costs about $0.10. OK, so that's about $3.50. To drive 100 miles in an electric car, that's a lot cheaper than paying $15 for gas to drive the same distance in a gas car. You don't need the tax credit to get people to buy these things. These cars are financeable. There's a very liquid, very active lending market. You you get paid back on these cars within a few months if you're. Better would you direct if you were going to direct some stimulus to, I would not think really anything right now. We don't. We just talked about how we don't need to stimulate the economy. I would not do any of where the economy about the economy, I'm talking about to you. You believe global warming is happening freeberg? Yes. Look, you want my point of view on climate change and industry I I think. I think humans, I think humans are on a driven, naturally market driven path to resolving carbon output in our industrial systems. And I don't think that government intervention with tax credits and specific consumer products is actually going to accelerate or resolve, you know, these changes that are needed. We need to not change consumer behavior. Consumers always want to have cheaper, faster, better what we need and you know at the end of the day what we need to do is change the way that we're producing and making things. Because that's ultimately what's going to drive this transition. And guess what? Consumers are demanding things that are, you know, more efficient, that are more effective. And efficiency ultimately resolves to less carbon, ultimately resolves to less land, less energy, and industry has always resolved to greater efficiency. Natural market forces improve the efficiency of every industrial system, so stimulus not necessary mankind has ever created and a free market doesn't. It is a matter of time and a matter of natural evolution. We will resolve all of the factors that are driving climate change, from animal agriculture to transportation systems to energy systems. These are all going to get completely rebuilt. We do it in time, technical tools, we absolutely will. And at the end of the day, we can pull carbon out of the atmosphere and resolve it into products. We have tools to do that as well. So I am an eternal optimist, but in this particular case, I think that this century, much of what we're throwing our hands about. And you remember at the beginning of the 20th century, we thought we were going to run out of food, then suddenly we invented the Haber Bosch process. And created fertilizer out of air. It was an incredible, incredible invention that saved mankind. We have had time and time again in the history of humanity, these thoughts that weren't an existential crisis. We thought we would have peak oil. And we have had these and we have had these points of view that we're in an existential crisis and humanity is about to end. And every single time we figured out a way out of it, and we didn't figure out a way out of it because the government came along and said here's a tax credit and we've gotten sick and we've gotten drunk on government spending and we think that it is the. The solution to every problem we have as a species, you know the biggest solution to our problems is our ingenuity. And then they let the markets figured out. Consumers are smart, businesses are smart. They will figure out ways to resolve these solutions. They don't need to have these handouts. And I think that that's that's a really important point that we've kind of missed. And I'll say we were talking earlier about the economy, this stimulus we've been giving ourselves caffeine since 2008 when the Fed started to build up this balance sheet and we got used to the idea. Remember before this it was like, Oh my God, multi $1,000,000 bills and then it became multi billion dollar bills. Then we had an $800 billion payout in 2008, and suddenly it was the multiple of 100 billion and the multiple of a trillion. And this expectation now, we've kind of reset the clock and everything now is in what, multiple of 100 billion or what multiple of trillion we're going to spend on stuff. And no one's even batting an eye at the sides of these, the, the, the Bills anymore Freeberg. What is that bigger existential threat to the United States? Is it climate or is it overspending by our government? I think it's over. I think the biggest threat is. Productivity, I think that as a as a society, we've gotten to the point that we are so well off, that we have so many things that we don't realize we didn't have 50 years ago and, you know, read Pickner's book on enlightenment now and just go through those 200 charts he puts in there, it will blow your mind. And then if you actually sit down and think about it never broader perspective on where we sit in this country today versus where we were 100 years, 50 years, even 30 years ago, you will say, Oh my God, we live in an absolute luxury estate. In this country's golden and golden era, and it is a condition that unfortunately reaps. You know, a decline in productivity because at that point we're entitled to some degree. Some people are entitled. There are many people in this country that are still very hungry. There are many people in this country that still want to progress. And frankly, I think a lot of the the, the LAX behavior from government entities actually holds us back from accelerating our productivity outcomes because it gives people many incentives and many reasons and industry many incentives and many reasons to not solve problems. And I think that we solve problems and we're left to our own Shabbat. There was an article I posted, Nick, you can put it in. About the Congo and that they've decided to auction a bunch of land to oil companies and. I think before they tried to heed sort of, you know, the West's directives and they said, OK, well let's build a land bank and we'll put a bunch of money in. And so then the, you know, people in the in the Congo will have money for things and you won't have to sell off the oil rights and only 10s of millions of dollars showed up and then the Congolese were like they threw up their hand. I'll just read the quote because I think it's interesting Congo sole goal for the auction, said the government officials to earn enough revenue to help the struggling nation. Finance programs to reduce poverty and generate badly needed economic growth. That is our priority, he said. Our priority is not to save the planet, and that's quite a stark statement when you read it, but but the reality is, in one generation what will happen is they will feed the world's desire for fossil fuels. That will generate a lot of revenue. Hopefully it doesn't get pilfered and so it gets invested in healthcare and education. And within a generation, this country could be in a completely different situation. Allowing the productivity of that entire population of that country to do what they think is right. So I'm generally of the belief that that that freeberg's right on this. Do you think that we should subsidized EV's to increase the percentage? And then also for solar, just give me those two chamath solar and EV's. Do you think they should be subsidized or not? In the United States, it depends on how and at what point of the market cycle. The government's job is to create economic incentives that tip the balance of power towards investment. So if you are sitting here 15 years ago. The price of solar panels was sky high. It was incomprehensible that we could make solar equivalent to any other form of energy. The only way that we were able to close the gap was through government subsidies. But what that did was allow a bunch of companies to build businesses to make revenues and then also to make profits that then the public markets valued those public markets then put pressure on those companies to take those profits to become more efficient, to make the panels cheaper. And 15 years later, we're now at parity. So that was a really great example of the government stepping in. To smooth out an imbalance in the investment incentive of the private markets, that is where they are exceptional, so in any market. They should be able to do this, but I think what Freebook is saying is when then they do do it successfully. And a market starts to germinate on its own, where supply and demand happens naturally between the private markets. The worst thing a government can do is step in because it completely perturbs what true supply or true demand is. And that is what causes all of this crazy stuff that we deal with. Jackal, Fast forward. Assume that there's a $7500 tax credit for EV's that artificially makes EV's cheaper and then a better technology than EV's comes along. Let's assume it's some nuclear fusion. Cold fusion. Mr Fusion car like from back to the future. And that car inevitably has to fight against the cheaper car because the cheaper car is subsidized by the government. We see this in a lot of markets that already exist in food, in energy and infrastructure, where government subsidies that are embedded in the operating model of that industry and that industry becomes kind of reliant and dependent on it, totally distorts the ability for the market to naturally transition to a more productive, more efficient state and that more productive, more efficient. That ultimately is cheaper, better for consumers and better for the planet. And we're we hold ourselves back when we insert government dollars into well functioning markets. I do think the government has an important role as I mentioned last time in pure science, in ceding new markets and ceding these opportunities in identifying paths that are quantum leap efficiency improvements in production systems, in industrial systems, in ways of living. Once those have been identified, they've those breakthroughs have been kind of catalyzed. Boom, let the market take off. If it's going to take off, but we shouldn't be in this business, you believe EV's and solar are there already? Absolutely. They're cheaper. And so let me point, let me just give you one, one point of reference. Let's let's use Chemoffice Congolese example. Let's assume that there's someone that lives in the Congo. And I said to this person who's probably subsisting on less than $3000 a year of income, and they're probably living, you know, day-to-day on finding food. And you said to this person in the United States, they have these cars, they're called electric cars and they're cheaper than gas cars, and they're you. You make more money or you save money by buying one of these cars and they're cheaper now and we're giving people $7500 to buy one. This person who's making three grand a year would say what? It is a state of luxury that allows us to do this. And frankly, I think it's. It's a state of excess abundance, and that's what I'm most worried about. Sacks, what are your thoughts on the government giving these type of subsidies to accelerate solar and evies? The whole bill seems anachronistic. You know, first of all, it's raising taxes by 739 billion at a time when we're entering a recession. I don't know any economist who thinks that tax increases help the economy. We just talked about how the economy is in a really tenuous position. So this is not the right medicine right now. Then you've got the fact that the vast majority of the spending this bill goes to these. You know, energy subsidies, which are just, they're not going to help the average person. There's very little money in this bill that helps the average working class person. These are basically handouts. There's basically pork barrel spending for Democratic Party donors and special interests and like freeberg, I think just articulated very well, they're not necessary right now. The what's driving demand for electric vehicles, solar panels and so on is, first of all, the products is keep getting better and better and second, they keep moving down the cost curve as technology. An innovation gets better, these prices get cheaper. That's what's fundamentally driving the demand. We don't need the government now again, and we need to accelerate it in an anachronistic way to shovel out all this money at a time we can't afford it. And I look, I'm glad that 300 billion of the bill is supposedly going to deficit reduction. I hope those numbers actually materialize. But we're still 30 trillion in debt. And now that interest rates have gone from basically zero to around 3%, the imputed debt service on our debt basically gone has increased. By almost a trillion dollars, that is a lot of money. Just like somebody who had a variable mortgage, the United States is on a variable mortgage with our debt. And so when interest rates go up, we're gonna have to pay more interest if interest rates stay at this call at 3% level, which is roughly where the 10 year T bill's been. You know, bouncing around at that is a lot of debt service, a trillion dollars a year of debt service. So I think we're probably entering an era, an overall era of austerity that lasts more than just this year or even this Presidency. And I think we'll look back at all this wasteful spending, this last 1020 trillion of spending as money we need to spend that we're paying for, for a long time. So to be shoveling out another 300 billion plus of these programs and again, once again going to corporations and special interests, not to the average, you know, person who needs it, it's just so irresponsible. Question for free. One of the one of your exceptions there was. Investments in science. You wanna talk about? Your opinion on the quality of the grant process at the NIH and? Whether we are doing the real work necessary to get the right things funded. Yeah, I mean, I think it's a good. Transition to what happened this week, which was that there was a a major potential fraud uncovered in Alzheimer's Research which has led to over a billion and a half dollars of of funding and grants being given out to follow on Alzheimer's Research programs in the years that followed this initial paper. So, you know, in. 2006 there was a paper published in the journal Nature about amyloid beta proteins that impaired memory and brains, which then became kind of the leading theory for the cause and the driver of Alzheimer's disease, and much of the research and funding that followed from there. Which is now up to 9. Several billion dollars in in total funding in private and public institutions. Last year alone, the NIH funded $287,000,000 in research into amyloid beta. And it turns out that the initial paper. Was shown to be fraudulent. And so, you know, just recently the journal Science published in detail and analysis of the photos of the Western blot measurements, the protein recognition images that the scientist used in this initial paper were forged and that many papers of his word and forged years later. And this paper is one of the most cited papers in Alzheimer's Research, and much of the work that's been done on Alzheimer's came out of this. And if you guys remember last year we talked about that Biogen drug, that Biogen drug is meant to stop amyloid beta plaque and you know the projection is that Alzheimer's drug. And and remember there was a panel of scientists that looked at the data for that drug that Biogen got approval for from the FDA. And they all said this does not show conclusively in any way that it improves Alzheimer's. And the FDA still approved the drug because so much of the NIH funding went into the research for amyloid data and so the assumption. Has always been this is the cause of Alzheimer's. This is the way to resolve it. And everyone gets so strongly held in that core belief, and there's so much money behind it, that we can't turn away and say, maybe we're wrong. And this is the problem when science meets money, once you go from funding something and then sign, suddenly a whole bunch more money pours into it. Everyone's going to look bad and everything's going to fall apart, and everyone fears that the system fails if you realize that something you did and said was so totally wrong. We can even argue this is what happened recently with COVID, the masks, the vaccines, all of the statements that were made that you have to keep doubling down. Every system has bad actors. You know, people plagiarize, fraud, whatever. Is this like a systematic thing? And doesn't science protect against this? Because people then do double-blind studies and try to replicate studies, do things because like, Jason Blair eventually got caught right at the New York Times. It was only a matter of time before somebody said, like, his description of my back porch was not accurate and I never talked to this journal. Whether you're a smart up and coming scientist, your job is to is to publish research that gets attention and that you can then go raise grants from the NIH and others from on. So you want to get some good papers out, you want to get attention, and then you want to forward the research that's already being done. It is to no one's incentive to go out and try and retest something that someone's already published on, even though that's what you're supposed to do in science. There's no motivation, there's no dollars to do this. It's it's a disincentive to your career. It's a disincentive to your ability as a scientist. The source funding and to source grants to go back and retest assumptions that are already strongly held beliefs in the industry. I'll give you another strong example that just came out two weeks ago. You know you guys heard of SSRI antidepressant drugs, right? 37 million Americans are on these drugs. The market is is projected to be at about 25 billion in the next few years. That's how much Americans are spending on these, on these antidepressant drugs. Half a sats. But yes, go on, right. So there was a paper published in Nature a few weeks ago and the Nature Journal pulled all the research and all the data from 17 other studies. That was across several 100,000 patients. And their conclusion was that there is. Effectively no proof that these SSRI drugs have an effect on depression have a positive effect on depression that you know serotonin and the idea that. You know, serotonin uptake should kind of have a a driving effect on depression and this has been the assumption that's been held now. For you know for many years, I mean you know I think the original paper on this was published probably north of 20 years ago, but the industry is so big, right. The drug companies are making twenty $25 billion a year on this drug, on these drugs and scientists are incentivized to further that research that supports that research. And so they can go out and get NIH grants because it's already an asset accepted proven belief that this is there a solution to this like for every dollar that's spent on primary, you know a dollar needs to be sent on. Double-blind testing it and making sure that it's accurate should there? Because we have this issue in journalism, right? Everybody is a content creator, reblogged an opinion journalist, but there's very few now. Investigative journalists left the actual pessimistic peer review systems entirely, in my opinion. Like the the problem with this study is that this was done by an up and coming researcher in 2006 at the University of Minnesota under a researcher who is well known. And so there was zero incentive, as Freeberg said, to really push back. When well credentialed scientists tried to find this amyloid beta star 56, they couldn't find it. And, you know, lo and behold, those articles don't get published because they don't get accepted. Why? Because it unravels the entire game that folks will play. So, you know, if you're a well educated PhD with postdoc in the right places supporting other people, it's just a loop that goes on forever. The article goes on to talk about how that person. Who wrote that initial article? Eventually got this very prestigious multi year grant from the NIH by a person who was his reviewer who worked on the 2006 paper with him. I mean these are some pretty blatant conflicts of interest, but the reason they don't get uncovered is like who is who's going to step in and all of a sudden become the. Let me strike an analogy here. You know, there's a seedling of fraud here. Obviously some guy took some frigging photos and photoshopped them and doctored them or whatever. But we then tell ourselves stories, and those stories get us access to money, which allows us to pursue more science, which is meant to forward the market. And then eventually the market gets forwarded so much and you spend a billion and a half dollars and it turns out the whole thing doesn't work. Just like stock markets, it starts out as a voting machine in the beginning and it's a weighing machine over time. The same is true in science. You will have a voting machine in the beginning where everyone has some belief, some theory, some hypothesis, and they all want to believe it and they forward it and they fund it and they fund it, but ultimately. If it's not true and it doesn't actually resolve in real world change, the market will collapse, the stock will collapse. And that's what just happened with amyloid beta and Alzheimer's to a large degree. There's a billion and a half dollar market cap. You can think about it, a billion and a half dollars of funding that's gone into this. No, that's right. Yeah, that's pretty well. No, there was a billion and 1/2 of NIH funding over time. This is just the NIH money. You know what I'm saying is the NIH budget per year for Alzheimer's and dementia is 1.9 billion. Yeah. Yeah. And it's and half of it, if you look at the tags. If you just search the tags, half the money has gone into Alzheimer's disease, amyloid beta. So the point is you could Orient. The terms you used and the way in which you wrote your grants to disproportionately affect the the likelihood of getting money. Separately, there's a whole body of researchers that have felt for a very long time that specific forms of infection, viruses, Lyme disease could actually be a precursor to Alzheimer's. And it has been poorly researched because the funding dollars weren't there. So the there's a lot of other theory. Mitochondrial dysfunction. Yeah, yeah. So freeberg when we look at this, a bad actor. Committing fraud can send the entire deployment of capital in science on a multi billion trajectory of the human race. Come on. Like it's not just about like we didn't get the dollars in, it's if you don't take the path, the drug doesn't get discovered. That's a really big deal. And now and now the drug is in the market, Biogen gets approval and people start taking it and we're seeing the data doesn't work and no one wants to use it. So the market has collapsed and you kind of go back to the origin, it's like the market collapses ultimately the weighing machine. Happens because the science doesn't work, it's not there. And there was no incentive. No one got paid along the way. Imagine if there was a bounty program to go and disprove papers. So, you know, imagine if there was a system. That's what I was talking about. What is the safeguard? And we do have that in public markets. It's called shorting. No, there is short stocks. It's called pub here. The problem is if you go to pub peer and all of a sudden put your name out there as someone calling it out, your professional career inside a research institution is finished, right? If if your job, there are no heroes. No, if your job is to disapprove. Other people stuff you don't, you don't forward your career, right? I mean, there's a it's a real that those people should be heroes there. Those are like bug bounty programs. They have to look at it like bug bounty programs in tech or shorting stocks. And the problem is that this community is extremely small, highly specialized, and their impacts are enormous on all of society. But you can't replace them with somebody else very easily because it takes an enormous amount of expertise. Like, if you read that science article, the amount of work science took six months of due diligence before they even. Had the courage to put this thing out there. They had all kinds of different teams trying to prove what this guy had found before they were willing to put into this thing. Yeah, when things are starting to feel like they're moving to market or getting to market, the more money starts to flow in. Another good example of this is zymergen and Genko. OK, so in the past week, Zymergen was acquired for $300 million. There was announced. They're going to be acquired by Gingko Bioworks, both of whom are public companies. Ginko went public and I think a $20 billion market cap. As a snack, a few months ago, Zymergen went public at, you know, 4 billion or whatever. They went public at Zymergen being acquired for $300 million comes off of them having raised a total of 1 1/2 billion dollars of capital from many investors, including SoftBank, and in their IPO's since they were founded in 2013. Both of these businesses do exactly the same thing or similar things, which is pursue the industrialization of synthetic biology. Synthetic biology has been talked about, you know, or pursued for 20 years in an industrial setting, the kind of Gen one of. Synthetic bio companies was amorous. Gevo, kiore, solazyme. These companies were all engineering cells. You changed the genome, or the DNA of the cells. You get those cells to make a product you want them to make. You put them in what's called a bioreactor, and they make the product. You can make bioplastics, you can make animal proteins, you can make fuel, and so these. And you put sugar water in the tank. So you're programming the Organism to make stuff for you. And there's a lot of technical challenges, right? How do you change the genome? How do you get it to be more productive? What are the environmental conditions of the bioreactor? How do you scale this thing up and so on. And so many of them had early stage proof points and then extrapolated out that this is going to work at scale. So all the Gen one companies largely fail, Gevo key or Solazyme. They were all trying to compete with the price of oil and they lost. And so they could never actually the science worked in the lab. But getting it to a big scale. There was a million things that went that suddenly were kind of proven or disproven along the way and they all kind of pivoted and became cosmetics companies and kind of did high end food and other stuff. And then Ginko and Zymergen were kind of Gen 2. They were like, we're going to reduce the cost. Improved the time scale of these synthetic biology programs, and they started using industrial robots and arms zymergen made a bunch of kind of strategic errors where they were like, we're going to make the product and design the organisms. So it took a lot more money, a lot more time. And as they kind of stepped up and tried to scale up, turns out a lot of the things that they believe to be true weren't quite true. But the CEO did a great job selling the story. Josh Hoffman, he went out for years and he told everyone, you know, we're going to kind of create this, this factory and we're going to make everything in the world. In biology, it's gonna transform the world. And we've talked about this. Is it a true story? Yeah. And so, look, there's so much of the fundamentals are true, but the industrialization, the amount of capital these guys raised and what they promised they would deliver on when turned out not to quite beat the economics, not to quite get there. And the market decisions they made about what products to go after, how quickly to scale up, building their own facilities, there was just a lot of strategic errors. And I think the storytelling got ahead of where the business was. You know, we saw this a lot in other businesses in the past year, as we've talked about. Crypto and other markets, but these were really key examples because the science is so compelling and the narrative is so compelling. And if it's right and if it works, it changes the world. And I think the same was true of amyloid beta and Alzheimer's. Everyone wanted it to be true. SSRI's. Everyone wants there to be a cure for depression, that you take a pill and you solve depression. Everyone wants to, you know, have a drug that you take and and it ends Alzheimer's. Everyone wants to print all the world's products in a factory using cells. But there's a lot more to it and as you kind of get through the nuanced 10 to 20 years. Cycle of science moves to technology moves to industry. Those stages are wrought with errors and issues and ultimately may not actually yield what we expected it to yield. And those stories start to fall apart and that's what happened to Simon. They're getting well, we look back on this Friedberg in 20 years and say, hey, yeah, these things were total train wrecks. They flipped the car, but it was a step in the right direction. And yeah, that was 100% right capital. But you know, something will be built on top of it just like mainframes or mini computers to smartphones, the first system of call it. Synthetic biology recombinant DNA where we took DNA from 1 Organism and we put it in it in a in a microbe to make stuff for us was Genentech in 1978, prior to 1978. The way we got insulin is we actually processed pig parts. So it would take like you know hundreds of kilograms of pig parts to make just a few grams of insulin. And Genentech took the DNA for human insulin and they put it in a bacterial cell and they made human insulin in a bioreactor and that really kind of ushered in this, this era of. You know, industrial synthetic biology that all of these companies kind of followed suit to do in different markets. But remember biologics, the entire pharma industry and biologic drugs, it's all made this way. We take the the DNA to code for certain antibodies or proteins, we put it in microbes and those microbes make those products for us. That biologics drug industry is a $350 billion annual revenue industry today. And so it works. It's just a matter of when and what the right products are. Industrial enzymes, $25 billion. Annual revenue today. So there are markets that are working. It is working, but this whole like we're going to change the world overnight isn't really, you know, true. And so these stories catch up to us. And I think we've seen this where I call it science meets money. You know, money usually wins and the science isn't quite there yet. And so we've seen this kind of Genentech, the Genentech story is amazing. I mean Tom Perkins from Kleiner Perkins fame like will that company into being and they, yeah, it's pretty amazing how. In the old days of venture, I don't know, they basically built these companies like you're doing today freeberg in like a production board model. He he basically incubated Genentech and then surprised the world with like, hey, we have synthetic insulin here. It was like true. Look, I mean the potential for Silicon Valley, yeah, there isn't a single material or food. Or a fuel or product that we ultimately won't be able to make using synthetic biology. It's just a matter of how do we get from here to there? And the storytelling kind of gets you a bunch of money and then you get ahead of your skis and then boom, you fall down. Same happened in Alzheimer's, same happened with SSRI's and I think we'll see this happen a lot. But like when science gets exciting, a lot of money gets behind it and sometimes it can kind of, you know, get ahead of its skis and fall down. But and in fact it will reside in our sax. How excited are you for this revolution instead of biology? Exactly. Investing with us in one of our companies in synthetic biology. He may not remember, but he's got some money and I won't name the company, but he's got some money. Yeah. How's that doing? Doing well. Did you fall asleep on the board meeting? No, we're not, we're not on the board. We're we're passive. We didn't. Is that the one we brought you Freeburg? Yeah. Well, I have three people brought, but I've known him since they were small. But yeah, I I know there was a deal that came in that looked interesting, but it was a little bit out of our area. So we went to Freeburg with. It is an interesting business because these guys provide a tooling service to other synbio companies. And so it's a recurring Revenue Service. Yeah. It's a picks and shovels, exactly. Yeah. Yeah. It was very sass like in that regard. But Babushka doll of nerds. So we've broken saxes awake, OK. So we're talking about an area where, you know, I'm not going to be able to contribute a lot to the discussion of SSRI. I'm not going to pretend to know I'm just a consumer. I'm not the one. Right. Saks had these SSRI helps you in anyway with your depression about Biden now. OK. The story that I think kind of fits with everything we're talking about this week, even with Freeburg, is, is there was more, there were more stories this week about this cynical ploy by the Democratic Party to fund MAGA candidates. No, hold on. We talked, we talked a little bit about this last week, but they spent. You should be really opposed to this jakal. Yeah, listen, that's an independent. I think it's gross. I am an independent. You're an independent. Only votes for Democrats. So not true. Not true. I'm gonna vote for Liz Cheney for president. I think. Liz Cheney or Bezos. Those are my have you ever voted for a Republican candidate for any office? Ever? I yeah, I have. You have? Really? Yeah. Yeah. People. I I'm a moderate, and I don't feel like I voted for. Before you say Reagan were about to say Ronald Reagan, you were too young to Patrick. He was a Democrat. It's been a long life, but I did. I did vote, I remember for Republican and and when I lived in New York. David Socks has a look on his face that says finish your stupid banter so I can go on my money. OK, go, go Sox. Hold on. Henry Belcaster in 32GO. No, I don't. I don't really have a monologue on it, but I just think that this is this is a pretty amazing story that you've got Democrats spending almost $50 million as primary season boosting MAGA candidates. Yes, at the expense of moderate GOP candidates. Perfect. So let's get the crazies in there. Yeah, I mean, it's easier to beat, right? And that's the theory. If you get crazy. But in a in a year, in a year in which you get a red wave, it's really dangerous and it totally undermines what the Democrats are saying in their January 6th. It's completely cynical. I agree. You can't. You can't on the one hand is backing Trump. You can't on the one hand say that we're facing an unprecedented existential crisis for our democracy and on the other hand, be giving money. To the very same people you're saying are the threat to democracy. It makes no sense. It just shows that both sides are completely cynical, backing anything that is toxic. You're no, you're what you're saying you're trying to both, you're trying to both sides it you're trying to engaging both sides. No, but the difference here is that there is, this is, I'd say, partisan political gamesmanship. But the point is you can't on the one hand be engaging in ordinary partisan gamesmanship while you're saying that democracy. Faces unprecedented threat. That's the disconnect. No, no. I guess you're trying to get too cute. What do you think about Liz Cheney? I'm curious. Well, I think for her, if she was a a nominee, she's a warmonger, just like her father. She's like, she's basically Darth Vader, 2.0. So that's my biggest problem with her is, no, I would not, I would not vote for her. There's not, there's not, there's not a war she doesn't want to get us involved in and there's not a country she wouldn't try and impose democracy at the end of a barrel. OK, so that's why I don't like her. But to your point, Democrats say they want to work with more Republicans like Liz Cheney, but if you look at who they're donating money to. They're donating money to support the MAGA election denier against every single Republican who voted for impeachment. OK, so you look at like the specific races. Completely cynical, and it's just about winning just like the rest. To give you one example, Democrats they gave they launched 4 and $50,000 of ads that take out a Grand Rapids Congressman, Peter Major, who also voted for Trump's impeachment. They did this with a with a Republican in California, David Valldal, and it just on and on. So you've got on the one hand you've got Democrats saying that this is an unprecedented threats to democracy. They want to work with more reason Republicans who aren't denying the election while at the same time trying to basically fund the campaigns of the MAGA candidate. Yeah, the reason they're doing it obviously is if you fund one of these maniacs then they're easy to beat. So they're trying to serve up somebody who's an easy. And I get this strategy, but in a year effective strategy, I think it's a very dangerous strategy because it was my question. No, I don't, I don't think so because. This year, I think this November is likely to be a wave election. And when you get a wave election, the specific candidate matters less and party matters more, so you could get some of these crazy swept into office. So I think it's a cynical and counterproductive strategy, and you say that Republicans do it too. I can't remember any example itself is like supporting Trump is that I can't remember. I can't remember a single time ever where Republicans have had basically funded, hold on, have funded. Thesaurus security flaws that you. I just think this is very stupid and dangerous, but let me ask you another piece. Listen, it's of a piece, OK? It's of a piece with the administration claiming we're not in recession, trying to redefine recession now that we're in one. It's of a piece with Joe Manchin all of a sudden calling the slim down BBB the Deficit Reduction Act after saying that it would increase the deficit. And the media is not holding these guys accountable. That's why they're politicians. Hold on a second. Politicians are going to be as dishonest as the media allows them to be, and the media is not holding their account. Well, Conan O'Brien kept the White House on this, he tweets out. The White House now says it's only a recession if you see a salamander wearing a top hat. The comments are the best one guys like. What about? What about a rabbit wearing a pancake? But let me ask you a serious question. Seriously, going beyond just the the specifics of the political issue, I think we really have a problem with the media class. I mean the media is carrying water for these Democrats because they agree with ideological agenda. We do not have an honest media who's willing to hold the party in power accountable given what you've said about being disgusted by like the, you know, denying of you know, this voter fraud conspiracy stuff by Trump or whatever if Trump wins the nomination, which I think he will. How are you going to be able to, when we're on this show a year from now and Trump has the nomination or, you know, 18 months from now, whenever it is that he locks it up and he will lock it up if he runs? I don't think so. So if he does, though, I don't think so. You think perceivably be able to back Trump for a second term? Would you be able to come on this program and say, I back Trump as a Republican because you don't want to vote for a Democrat? What would you do? Just not vote because you don't like Trump? You said you would not support him. Listen, politics is always a choice of the lesser of two evils. There are a lot of so you would vote for Trump. So I hope I'm not in that situation. Listen, I I what would you do? Listen, the the election that America does not want in 24 is Biden versus Trump. I think the race that they want, I think the choice they want to make is actually DeSantis versus Newsom. That's the choice I'd like to make. So look, I'm on the DeSantis train. That's who I'm supporting for 24. You know, if it ends up being something different, we can talk. It was Bezos disantis. What would you do? Would you vote for this? You got this? Really? Yeah. What about you, chamath? Would you go Bezos or DeSantis? Who would you vote for, Bezos or DeSantis? I I bases are Disentis. Hmm. Well, that's a tough one. Probably disentis. OK, Freeburg Bezos. And I'm good. I'm gonna sit this question out. Let's keep going. OK? Alright, everybody. There, you have it. Everybody. It's a it's a dumb question, jakal. Because Bezos is not running. I mean, and and honestly, the the the fact that people were even discussing that. No, but his thought. But the thought expert, the reason why I would go to Santis, is at least he knows how to play the game of politics. Bezos would just, in a matter of a week be like, why did I do this? I had the best life in the world. Exactly. There's just no way. Best life. Listen, Jacob Bezos had two tweets criticizing the administration on inflation, and you're like he's running for president. He's running. No, there's there's other reasons. Come on. He bought the Washington Post, he bought the biggest house in DC, and he gave that $10 billion climate page. I think those are all little cards that you could check boxes. And if he writes a biography, that's us, probably has houses all over the world. Doesn't mean he's running for president of those countries. Come on. I'm just saying, you're just scared. You're scared of the baseless presidency. You know that he would roll over DeSantis, he would roll De Santis. Even if Bezos were dumb enough to run for president. I think he's too smart to do that. The Democrat Party would never nominate him. That's not. He would have like some purity tests because of unions. What happened to Bloomberg? I mean, listen, don't get me wrong. I'd love to see a candidate like Bloomberg or Bezos nominated by the Democratic Party because they clearly understand economics, right? Would it be a masterstroke by the Democratic Party to embrace a modern? I would like, I would love to see a candidate like that. But look at look at what happened in Bloomberg. Bloomberg spent $100 million and he lasted to the first question of the first debate. They knocked him out the first question of the first debate. And then, you know, Elizabeth Warren knocked him out by just basically calling him. A billionaire and he's they're stunned he had no answer. Terrible. Yeah, he did. Terrible. Terrible. But I mean, it would be a masterstroke if they went with a moderate. You know it. Alright everybody. For David Sacks, Chamath and Friedberg, I'm Jay cow. We'll see you next time on episode of the Boys. Love you. I'll catch you. Bye. Bye. Love you, sexy. Let your winners ride Rain Man. David Sasha. We open sources to the fans and they've just gone crazy with it. Besties? That is my dog taking out your driveway. Man. We should all just get a room and just have one big huge order because they're all this useless. It's like this, like sexual tension that they just need to release stuff out there. B. Where did you get murky?