Industry veterans, degenerate gamblers & besties Chamath Palihapitiya, Jason Calacanis, David Sacks & David Friedberg cover all things economic, tech, political, social & poker.
Sat, 13 Aug 2022 05:56
0:00 Bestie intros
3:02 Where Masa and SoftBank went wrong, why VC isn't scaleable, Vision Fund impact
27:59 Metrics that signify a bubble or the top of a market
36:46 US macroeconomic picture
50:45 FBI raids Mar-a-Lago, Trump back in news
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How mad is Sachs going to get when he sees my button situation today? I'm going to join you. Mama. How you doing? Oh my God. Look at the collar situation. Look at the button situation. Look at that. Oh, this is fantastic. Got off the lake in the lake that's got the lake. Yeah. I was just on the lake with the Boat Lake Cuomo. Where, where were you? I was doing a little wakeboarding. Tahoe, yeah, still wakeboarding me and suck me. And that took all five kids. And we navigated the entire island of Sardinia for eight days. Amazing. And by when you say we navigated, you mean the crew navigated and you ate seafood. It took, it took a village. Let your winners ride. Man David. We open sources to the fans and they've just gone crazy. Queen. Alright, everybody, welcome to episode 91, episode 91 of the All in podcast. Yeah, we're still here. Lots of news to discuss this week. With me, of course, to chop it up from his deposition room. The war room. The Rain Man himself. David sacks. How you doing, brother? Good. Big week for you. They're all big weeks. They're all big weeks. Yeah. You look tired or recording pretty early today. It's a little exhausting. You actually look really tired. What are you talking about? Just got off the lake. I I feel fresh. I was just wakeboarding this morning on Lake Tahoe. Refreshed. I'm refreshed. And of course, in front of his $9 clip art that he blew up on easyprints.org, the Sultan of Science himself, David Frieberg. How are you, Sir? Always great to be with you. Jakal. Are you working? It boosts myself, esteem and my morale. Be with you every morning that we get to connect over zoom. Well, I'm glad that your performance has been stratospheric the last three weeks. You're going on a hot streak. Let's see if you can continue it on episode 91 and missing many buttons this week. We've got at least a 3 or 4 button. August going. How are you doing? Dictator from your island? Remote Island, did you you you invaded an island. Markets go up. Another 5% and one more button comes undone. I love it. So this is 20% up and we could go to 25. That's bullshirt. We're bullish. He gets on the market the more he Unbuttons daddy's back. So the the low rise jeans on right now. Are you wearing shorts? What are you wearing? Show us those stickling wearing these beautiful linen shorts. Can you stand up and show us 360? Come on, let's see what's going on. But these are the most beautiful. Inner thigh, that's a little too much thigh. Yeah. That's like a chicken wing. Guys like this, it looks tight too. Very tight. Are you? Yeah, those are definitely yours. Are you wearing like a children's size or something? Is that a junior size? I like, you know, I like the tighter sizes you do. You do like the tighter sizes. I think they they they one person body type accentuate all the little bumps and nodules, too much information. All right, let's start with. There's a lot to talk about this week. I think one of the most interesting things last week we're talking about it in the. Group chat that doesn't exist vision funds $21 billion investment loss for the quarter. Masayoshi Son did a really great YouTube video. I sent it around and you guys watched the video. OK, it's it's really interesting to watch. We'll put it in the show notes. It's like a 6 minute interview he put on his earnings page, right? Like right when they put out quarterly earnings, he's like, here's my interview, yeah, you know, he comes to a podium and basically talks about the vision fund. Obviously, if people don't know, the Vision fund one was $100 billion, the largest venture fund ever raised. And Softbank's current market cap is 66 billion. Here's the quote from the FT article sunset on Monday, that SoftBank would now subject itself to dramatic cost cutting exercise after a $59 billion investment gain at the two vision funds almost completely reversed over the past six months. They were up almost $60 billion at the peak and it came crashing down. Massa kicked off the presentation, showing portraits of Tokugawa Tokugawa Yasu. This is the founding Shogun of Japan's Tokugawa. Sugar? Not. And he ruled Japan for six. I mean, I'm killing. This is such a long intro. God, it's so hard. Yeah, I mean it. But it was just so great. Let me just play a clip for you here. Here's a 68 second clip, and we'll talk about it right after. And then we'll get into what all this means. This is a portrait of Tokugawa Yasou. He actually made a big loss against Takeda Shingen and came back in the background of that. Tokugawa years had to face Takeda Shingen, which is much, much larger. Army than theirs in the most of the Allies actually said this is gonna be the losing battle so that they should not go for it. But actually it's better to stay at the castle. However, Tokugawa Yasir didn't want to lose his face so that he get out from the castle, had a battle, made a complete loss and suffer and came back and that actually learned lesson he tried to remember and remind his own learnings and put it into destroying. So since the foundation of SoftBank Group, I made that two consecutive quotas loss, so previous quota and this time quota consecutively we made three trade union lever of the loss. So in total 6 trade union those was made in the past six months. So I believe I need to remind that myself pretty spectacular loss. And then he, he goes on to take some Q&A and this is the I guess the the killer quote. And we were turning out big profits. I became somewhat delirious and looking back at myself, I am quite embarrassed and remorseful. You remember of course and he complained a little bit in the in this whole thing about how there was a giant bubble without ever recognizing that he kind of created the bubble with a $4 billion check to. We work at a $47 billion valuation after a 20 minute meeting with Adam Newman. This chart is pretty incredible. This is the net income quarterly. Essentially. You can think of SoftBank as like a holding company of a bunch of. Different assets including Alibaba, previously Uber and all of this vision fund stuff, 97% decrease in terms of deployment of capital. So if you look at capital deployment as well, nobody ever put this much money to work, especially in privates. The second chart. If you're looking Q1 of 2021 they put 20 billion into work and then Q1 this year they're putting 600 million to work. Just quick reflections on this, what we saw here with Masayoshi Son deploying $100 billion at the top of the market into and maybe basically creating the market top trim off. What are there lessons here or takeaways for you? I mean I think that people don't seem to understand that. If you're going to attempt to be great, there are going to be moments where you look the exact opposite of great. You know the guy that takes the final shot is the same guy that can miss the final shot. And here is a guy. Over his you know, 50 year career has had some huge ups and downs. This is also the same guy that found a way to rip in 25 or $30 million and made 125 billion off of Alibaba. That's the same kind of person who has that kind of risk tolerance. He was, for seven minutes or something, the richest person in the world, and then lost 99% of his wealthinthe.com bubble. I have enormous respect for a person like this because I feel like it takes enormous amounts of courage. I've said this before, most people jibber jabber about investing in all of this stuff and when push comes to shove. They crumble like little ******* and run into Mommy's coattails. It's hard to put lots of money to work, and this is a guy that's done it. So the same person that can make 125 billion, turns out, is the same person that can lose 30 billion. And so one thing is I would just keep in mind that this is a resilient guy who seems to land on his feet. And the second thing that nobody talks about is how smart Saudi Arabia and Abu Dhabi were and how they structured the investment into the Vision Fund, because half, more than half their investment is in preferred equity, which is effectively debt that pays a coupon. And you see it now where SoftBank, by the way, who has been pretty smart in how they've managed their Alibaba position, have been using these derivatives and forward swaps to be able to sell and manage their liquidity. So it turns out that, you know, even if the vision Fund breaks, even Saudi Arabia and Abu Dhabi will have made money because I think they paid a 6% coupon. On, you know, $50 billion is a lot of money. Over 6789 years, it's a lot. SoftBank has found a way to sell down 25% of Alibaba, which is no trivial feat for half a trillion dollar company. And this guy gets to keep swinging and if he, you know, hits it one more time, he'll end up with half a trillion. This chart is pretty great sacks. If you look at this, this is the gain and loss on investments at the Vision Fund. You can see the first Vision fund raising up, then coming down, I think after that summer of IPO's that we had in the Airbnb Uber days and then a huge peak run up in 2021 and then coming crashing down. Apparently he wasn't selling any portion of this. That to me was a big lesson of like. Maybe pairing some of these winners if it sold 10 or 20% on the way up. This could look like a completely different outcome, but I agree with you. Yeah, he he swung for the fences and there was downside protection built in for the LP's into some of these sacks were your thoughts any lessons here in terms of the impact on our overall ecosystem, or that you can take as a capital allocator yourself? Well, Jason, I think Mossad did something you could never do, which is I made a mistake. Oh, here we go. Wow, personal quick. What would I have? My first mistake. I'm certainly willing to admit it. I'm waiting. Imagine that you ran 100 billion for sovereigns instead of 100,000 for doctors and dentists. And then you kind of, you can kind of put yourself, you can put yourself in Moss's position. Oh, I love sax in the morning, sax in the morning, like a hot cup of coffee cup early. But the big lesson here, you make sex go to a 9:00 AM, he's coming like there have been hibernating and you poke him, she's. Wow. You know, look, I think that SoftBank obviously made some decisions that were, you know, they were, they were sort of peaked decisions. They were they were a little bit bubbly. They didn't take chips off the table and they probably should have. It's easy to to fall into these bubbles because the psychology of it is so powerful. And as you know, Bill Gurley's pointed out, these bull markets are more like a sawtooth, which is a gradually go up. For 910, eleven, 12 years and then when they end they just, you know, it's like an elevator going down. So you know if the market it continued for another couple of years mass probably would have made a lot of money. But in any event, look, he took responsibility for the losses. This was a very. You sort of culturally Japanese speech. I mean, he didn't commit seppuku at the end, but it was kind of the direction they might move the camera off. Oh my God. What is he doing with that sword? It was the verbal equivalent, basically. And look, he took responsibility. What else can you do now? One one thing I would quibble about is the idea that that SoftBank caused this bubble. You know, it wasn't just SoftBank. We had tons of tiger. Tiger had huge funds that were deploying. Very quickly, but there was a lot of so-called tourist money, basically money from crossover funds, investors who are not primarily VC's came into the ecosystem over the last few years and a lot of that was driven by sovereigns and by liquidity. So you know, you can't forget that we had $10 trillion of liquidity pumped into the system over the last couple years and many billions of that found its way into the tech ecosystem. And fundamentally, you know, VC is not that scalable there. There was an attempt to make it scalable. There's an attempt to push more money into VC. Why isn't it scalable? Why isn't it scalable? Cause people have tried, right? This is not the first time it's a craft business. I mean, what does it mean it is scalable, it's just that if you try to scale it, your returns will go to 0. That's kind of the same thing, right? Like, I wanna, I wanna just critique the strategy for a second because you know, we're talking about as if market conditions caused these massive write downs and that is the only reason that these funds have suffered. But, you know, if you read a lot of the stories of Massage's investments in a number of these companies, and the full list is available, and how much he invested, there are many, many stories, and I've heard many of them personally from CEO's that have met with NASA and raised money from him. You go into Masa, you tell some the bigger the story you tell, the more excited he gets, the more of the world you can capture. And you go in and you're raising $100 million. He's like all invest 400 million. You say you're raising 25 million. He's like, I want to give you 150 million. And his his motivation. Was always give you more capital so you can go capture the market. And the problem in that model is that by giving you so much money, capital becomes your primary asset as a business and capital needs to be the fuel that enables your assets as a business to accelerate. But as soon as capital itself becomes your primary asset, the business is doomed to fail. And that's a really key point if you let's say and let me let me be very specific about what I mean. Let's say you have a a direct to consumer business that requires online. Marketing and your business grows well. You spend $100 to acquire a customer. Suddenly someone says, here's a billion dollars to spend on acquiring customers. As soon as you have to start deploying a billion dollars, your cost of acquisition goes up, the number of customers per dollar spent goes down, and the business itself starts to look upside down and fail. And that's what happened with a number of these businesses that Massa put in and he put oversized checks in. We work as a really well documented example in terms of what happened when they started to accelerate their growth beyond the natural course of the business because of the amount of capital that they took. It really started to hurt the fundamental profitability and unit economics of the core assets of the business. And this strategy theoretically can work to a degree, but Massa took it to a level that had not been seen before. I think I I highlighted for you guys like back in 20. 11 I think when Andreessen Horowitz they they pitched me on this idea I was trying to raise $25 million in my company. Mark was like we'll give you $40 million you can accelerate your growth and he's like we want you to go capture the market and Peter Thiel always used these terms go capture the market and these and blitzscaling scale again Reed Hoffman with blitz scaling and and the motivation is look we'll give you more money because the the core asset of the business works the core assets of the business work. So the money should be more fuel for the fire. The problem is if you over indulge if you put too much money in and the. The asset cannot handle that much capital. The whole thing collapses. Yeah, I would say so many documented examples of this in his portfolio and I think that the strategy is worth highlighting that there are some issues with that strategy across all these business categories. It doesn't always work, right. The core issue here I think is and then I'll go to usacs and then the core issue here that you're describing is exactly correct and it really is up to the founder to decide what they going to do with that capital. The we work examples so instructive because they were buying under market buildings in the in the Tenderloin. And then marking them up to, you know, Class A office space and getting those prices. Once they got the Masa money, he started buying Class A and offering kit at Class B prices and flipped the whole business upside. The rate at which you can deploy capital does not flex, right. And so in, in all businesses, understanding the rate at which you can deploy capital to grow is critical to understand how much capital you can raise. And then if you raise too much money and you and you flex beyond what the natural condition of the business is in terms of capital deployment, the economics fall apart and the business. Itself looks terrible and eventually you will have a write down and the distraction on the founder is the key. I mean, look at what Adam Newman, he was easily distracted. He started buying surf machines and companies and starting kindergarten because you can't actually deploy that much capital. So you find unnatural ways to deploy. It may build on that point. I think there was a belief on the part of SoftBank that they did publicly espouse, which is that they could be the Kingmaker totally. And in fact, you know, we had some startups that were in competitive markets and SoftBank would basically announce that we're going to be annoying, we're gonna be picking a winner, Annointing a winner. And writing them a huge check and everyone kind of had to play along because if your competitor got that 100 or $500 million check, then you would be presumably way behind. So there was this belief that they could be a kingmaker and make the difference. And I think that what we saw is that for whatever reason, partly because of the dynamics of Freebirds, talking about that, that strategy just didn't really work that well. And what it really goes down to is that VC's can be helpful, but they don't ultimately cause the, the, the. Winning companies to be the winner, so this idea that you could be a Kingmaker, I think was a little bit flawed and I think one way that tiger actually improved on this model. Was that they never tried to be a kingmaker, they just they actually went the other direction, which is we're gonna own less your company. They tried to be passive non dilutive capital and they would do high price rounds but you know with with reasonably sized checks. But they didn't try to go for 2530% ownership at a late stage and founders did like that model better. Now as it turned out, they both had the market timing wrong, but I think this kingmaker aspect was was a problem and what one other. The aspect of that, I think, is that. And I don't wanna beat up on SoftBank too much. I'll see something nice about the millisecond. But I think one of the mistakes they made is you'd see them writing multi $100 million checks into companies that were at a very, very early stage. Free product market fit pre product market companies frankly that we thought were like seed investments brand list was the perfect example. They were it was a, it was a company that made like soaps and dishwashers and cereal, but they had no brand on it was like Uniqlo of this and they gave they gave them I think $200 million and I was like this is a seed stage company, makes no sense, right? We're, I mean, look, they wrote like $500 million seat checks into robotics companies effectively. And it's because that, you know, the SoftBank had a thesis. And I think sometimes if again, this goes back to kingmaker. If if you're a VC and you think you're the one with the thesis and you're the one who's going to make the difference, it's actually a seductive fallacy to fall into. It's the founder who has the thesis and you can't, you can only do so much to help and you can't really force it. And so I think they ended up making some, cutting some really big checks into some companies that were really risky and, you know, the way that we do. Growth investing is that, you know it's milestone based. We're writing that the size of the check is proportional to the amount of proof that the company has. And and look the, the nice thing I'll say about SoftBank is recently we've actually done some SAS deals with them that I think are some really good deals and they've written checks that I think are appropriate to the size of the of the company and the amount of proof they have. And they've been really easy to work with and I look forward to doing more deals with them. But I think it would behoove them to do more deals like that where again check size is related to proof. I think that SoftBank in hindsight. Made one critical critical error and only one. And everything else was sort of a physical complete with that one error, which is that in their fund documents they made this a 10 year fund. Now let me explain why is that an error? That is the status quo for all these funds. And the more nuanced part of that decision to make it a 10 year fund is that your investment period is only five years. So you're only allowed to put the money in for the 1st 5. And then you have to basically manage the portfolio because there's an expectation that you're raising new fund. So if all of a sudden you have $100 billion in a five year investing life, the math says, Oh my gosh, OK, well, I need to put 20 billion out per year. And then you try to look for, I don't know, let's say 50 companies a year while the mean check size now all of a sudden balloons to 400 million. That was the error. You see afterwards the very, very smart private equity folks who saw that that was the error, fixed it. So Blackstone Silver Lake, when they came on the heels of SoftBank, what they did was they raised funds with a 15 and 20 year life. And what that allows them to do and what would it would have allowed Massa to do in this situation was just slow it way, way down, pace yourself and do fewer deals with much more capital and then be patient and say I'm going to have a 10 year investment life. And I think that that would have saved them and they would have looked incredible right now because they would be the kingmaker in a moment where there is no money flowing into venture and early stage tech. So in my opinion, I think it was just that it was such an ambitious feat that when it came time to execute whoever was really in charge of those details kind of ****** it up and they should have realized the math didn't work. For a 5 year fund life and they should have made it a 10 year fund life or 10 year investment life, which would have put a 20 year fund life on the thing. And I think they would have been fun. Yeah. I mean if you look at it as 60 months, maybe you take out August and like the holidays, you got basically 50 months to deploy 100 hundred billion, it's 2 billion a month, 500 million a week. I mean how do you even process that many deals? It's impossible. The quality of the diligence by by necessity has to go to zero. Yeah, it's it's it was a crazy strategy. If you can breathe, you get money. You can get a meeting, you get the money. I mean, basically I mean and and if they had just, I'll say there's there was one you got. No. And it forces you to have a team that is so broad and large and diffuse. That is not this game. This is another thing I would love to you know, for us to talk about. Correct? Correct. Investing has never, will never and is not ever A-Team sport. OK, explain. It is like basketball. You can be on a team, but you are Steph Curry or you are not Steph Curry. You are Draymond Green or you're not Draymond Green. You are LeBron James or you're not. There are Jr Smiths on a team. They're Tristan Thompson's on a team. And you come together and the team can win a championship. But there are these exceptional individuals, yes. And the firms that have really done well consistently over decades embraced that philosophy benchmark, Sequoia. You know, these guys don't try to create this team oriented, glad handing approach, but they also don't allow the teams to get so diffused that there's 500 people running around ripping money in. Because you basically then returned the beta of the market and if the market doesn't look good in that vintage, then all of your returns look pretty crappy. The lesson for me in all of this is I think we we talk about riding your windows on the show. That came from just so people understand. When we said ride your winners, and it's famously in the in the opening song here, what we were talking about was like don't sell your entire position like when Sequoia sold their entire Apple position or or other people have done. But pairing your position would have changed this whole story if he had paired 1020% of some of these names that were breaking in. I disagree with that too along the way. Ohh, why go ahead? Because that's the dumbest thing in the world. I think the opposite. He would have had it up a year ago. Sequoia. Just put out an entire document and a road map for becoming an Evergreen fund. But, and I read that document and what I thought to myself is all of this looks incredible unless the market goes down and then mark down. And then the market went way, way down, wide because their whole thesis is we're going to park and hold money. Well, OK, but they also allowed a revolving liquidity mechanism for their LP's every year. You know, you're a Cancer Foundation and you want to fund Cancer Research, and you expect Sequoia to give you back money. You fill out a form, and Sequoia basically fronts you the money. Well, excuse me, but you can see how all of a sudden, this can very quickly get out of control, because then where does Sequoia get that money? They'll have to borrow it or liquidate some positions, but the whole point is to not liquidate. Positions. This is this is what they said. Yeah. So my, my point is, I really think that David said this before. I think that VC's job is to be a VC. It's hard enough to do that job well. And if you think that you're gonna cascade across all asset classes and do better than the market. It's an extremely high bar that creates tremendous pressure and forces you. To bring things on like debt and all of these leverage lines which when markets go up will work in your favor but can very quickly turn against you. Yeah, I I disagree completely because when if you look at when you're in a private company and you're you own some private shares, you know the revenue, you know the velocity, you know the management team, you have more insights than everybody. You got a massive information edge because it's all based on insider information before it's public. And pairing your positions in privates can be amazing because you have some overvalued company because someone like mass or tiger comes along and overvalues it so for venture. Funds, I think when you start hitting these 5000's pairing, 10% pairing, 20% along the way, which Massa could have done in these private names especially, would have been brilliant. You're saying don't distribute and just hold on and use debt and give people give your LP's and want liquidity. Saying if you have the opportunity to sell in secondary. You should pair your position in your winners 10 or 20%. Two or three times, I'm not talking about. This would be a different position, but like you're using soft, you're using Apple and Sequoia as an example. You do remember the trajectory of Apple basically went to a $4 billion market cap for years, languishing. I mean, the idea that Sequoia would have held those shares because they had some proprietary views? Ludicrous. What if they just had a philosophy of keeping 20 company was on death's doorstep? You can see the YouTube videos. When Steve Jobs came back, he said we may not make it, yes, but chamath that in that. That is part of the opportunity. But putting that aside, that's exactly what Sequoia is doing is they're saying we want to hold the legendary companies, the legendary brands, with the Great Founders forever easy in hindsight. How do you do it today? Well, is unity, is unity a legendary company or should you have distributed at $165 a share? Well, I'm such an extremely hard question and I'm saying you can mitigate that question by pairing your position 1020% so you have the best of both worlds. Sex? What do you think? Well, I think it's it's hard to pair down a position while the company is still private because the the companies don't don't want you to buy and large. But but once they do become public, then the question is when you distribute and we talked about this, I think it sounds like SoftBank was sitting on quite a few large public positions and could have distributed. I'm not fully familiar with their structure, but given that they had all this debt, seems like you'd want to pay off all the debt as soon as you could. And missing the chance for better preferred coupon, they have to pay PIF and and Adia every year. I think it's like 3 or $4 billion. It's well, it's documented, but that's the 6% that they that they were owed on their $50 billion. Do they pay it off the, the, the paid every year you have to pay. So they did it. I mean, look, I would just say these bubble, it's it's easy, you know, Hindsight's 2020, it's really easy to point out these mistakes after the markets cratered. You know my experience with these bubbles, whether you go back to 1999 or 2021 is when you're in them, they're very powerful psychologically. You know, everyone's talking about how everything's going up and we I think actually had some really good commentary on the show about back in November about how it could be the peak, how it could be all liquidity. Fueled, we didn't know for sure, but there were some pretty good predictions on the spot. But by and large it's it's pretty hard to to know whether you're, you know, whether is there a grounding metric that you use. I'll open up to Freeburg and then everybody else went to know that the market is overheated or something. You look at and go, OK, we've disconnected from reality price to earnings, price to sales. Some valuation metrics are the things you look for. So you know that this is overheated and maybe it is time to pair positions. What have you learned over now our third collective down market valuation? Trophy hunting I would say is a pretty good indicator of things being things being explained, what that is in the heated market like if the. The businesses, the CEO, the founder of the venture firms, everyone is all about how much you can mark up your investment as opposed to talking about the quality of the business and the quality of the earnings. And then you revert back as we just recently did to now people talking about. OK. How strong are the gross margins of this business? How effectively can they deploy capital? What's the return on invested capital, key metrics around the fundamentals of the business versus the value that the market is willing to pay for the business. And the more heated the market gets, the more everyone focuses on terms like Unicorn deck, acorn, you know, and and that becomes the key metric as opposed to saying this business is so good for every dollar they spend they make $3 in gross profit. For 12 months, that's what fundamentally says. That's a high quality growth, you know, valuable business over time as opposed to here's what the market is telling me it's worth today. And if the market is telling you it's worth that much today and you're and that's what you focus on, you inevitably end up in these kind of bubbly moments where you miss out on focusing on core value creation which will actually pay off much much more overtime if you pointed out another signal. When smart people who have the largest amount of capital in the markets are clearing positions, maybe that's a a signal of a top. And then I think it's a really good insight by freeberg when the conversation, the narrative is about the valuation and the status and vanity metrics as opposed to the quality of the earnings, hey, that's a really good indicator. We're in a bubble, maybe should start clearing positions. What are indications for you that we're either in a bubble or the market is undervalued? Because we're really talking about this timing, right? Timing is very important. It's not possible. This is why I think that. You have to define what game you want to play before you start playing the game, OK? This is why I think it's. Kind of nonsensical. For example. I believe that at best I am an equity investor. In technology companies or things that have a technology bias, because I can generally understand them, maybe, you know, a few seconds faster than everybody else, which allows me to make a decision a little bit quicker. But if all of a sudden I started investing in debt, you should expect that I'll lose my money. Because I don't know what I'm doing and that's not the game where I have any advantage. So I think the most important thing to do is to not try to do all of this crazy stuff, because this is what happens. In moments where either things are very, very good or things are very, very bad, people try to create all these stupid rules. And the rule, their only rule is there are no rules. So I don't know, I just think it's like stick to your knitting if you're a product builder, build products. If you're an early stage investor, just do that. It's hard enough to do any one of those things really, really, really well. But this idea that you know you're going to come up with like some mosaic and the system, I think it's just highly suspect. And I think the market returns have showed that everybody that tries has failed except for maybe one or two. Gonna work. What's the point? So I don't know if you're an early stage investor, make good deals and then give the shares and book the win. That's what I do. Yeah, that's my philosophy. Sacks, what are your thoughts? There's a couple of metrics that I'll be looking at from now on that I wasn't paying a huge amount of attention to before. One is the price to AR of the media and public SAS company. And so like Brad Gerstner has these great charts where you saw that? Historically that number was around six. You know the media task company was was trading at about 6 times their next 12 months revenue and it went all the way to 15 during this sort of COVID bubble in 2021. And for the high gross ask companies which are the ones scoring 40% said 20%, it went from you know like 8 to 35. So. So I'll definitely be looking at that and you know what you're looking for is just how off the historical mean are we positively or negatively because these public valuations? Are the exit comps for, you know, the private markets and those valuations do eventually trickle down and so if there is a bubble in the public markets, it will trickle down to the private markets. So that would be like one metric. I mean again, it's not something that like affects me daily, but it's something I'd want to periodically keep tabs on. The other is just interest rate policy. I mean, I've never spent so much time in my entire career like looking at inflation and interest rates that I have this year because who knew how much this, this stuff was affecting? So I thought I was a micro investor. I thought I was just picking companies on a micro level. As it turns out, we were all massively impacted by macroeconomic policy and you know it got so we didn't even notice it. The zero, the 0 interest rate policy, the zero up along with the quantitative easing. These are supposed to be exceptional measures that started back in 2008, but we stopped noticing them. They continued for years and years and years. They continued until last year and we again we just stopped noticing. We got used to it. We kind of got hooked on hooked on drugs, so the market did. So I'm just going to have to pay a little bit more attention to what the Fed is doing now. And, you know, if you go all the way back to the.com bubble, what's interesting is that the Fed funds rate back in 1999 wasn't low. It was like 4%. It wasn't like it was even today. And we still had a bubble. But what popped the bubble was that interest rates went from 4 to 6% and from 1999 to 2000, that's what popped the bubble. So you know, I I don't. I don't know if we'll ever have a situation again like we had over the last years with the with the ZIRP, but I mean that probably looking for that next time is fighting the last battle instead of the next one. But you do probably have to be a little bit more aware of monetary policy what the Fed is doing. Yeah, this chart exhibited 6 from the Vision Fund. Benchmarking against pure funds that chamath just put into the group chat is absolutely spectacular. It puts Sequoia insight and SoftBank, you know, large, large funds. Against each other. Fun size 100 billion for SoftBank, 8 billion for Sequoia, 6.3 billion for insight and to chamotte point earlier. The pace is, yeah, really crazy. 130 deals per month. But then the average check size is 620 million. Versus 130 and 70. And the deals per month 3.5 versus .6 versus 4.2, so insight going pretty fast with small checks. SoftBank going very fast with huge tax is really, you know, Sequoia has the benefit of being able to backtest against 40 years of returns. And so if essentially what they're saying is there's really no more than five or six companies a year that are worth investing in, that's a really big signal that's worth thinking about. And so, you know, five or six companies, maybe they can absorb even $600 million each. You know, it's still puts you at three and a half, $4 billion doesn't put you back 20, which is what you need to put. 100 into the ground and 2 billion a month. I mean, my Lord, it's like Brewster's millions or something. It's like some crazy premise. I think in fairness to, in fairness to SoftBank again, you know, these are the same guys that invested in Yahoo. They invested in all of these youknow.com companies and brought them into Japan, including great businesses like Cisco. You know, these guys have been big time serial winners. I think the tactical mistake was not having a 10 year investment life. I mean, and we could be sitting here next year. Alibaba could double in value, a couple of their other positions could recover 50%, OK, but we could be sitting there and they could be, they could have closed the gap massively. Anything's possible. I think actually a good jump off point here. Great discussion, gentlemen. Do we wanna talk about? The markets we got the inflation print sacks. I guess depending on what political party you're in, it's either 8.5% or 00 percent month over month if you're a Democrat. If you're a Republican, it's 8.5% in our polarized times. But what does this tell us, sacks? Just at least about maybe inflation is tipped over and we're going to be flat for a little bit. That obviously caused the market to rip a little bit, and we had this incredible. Jobs report we're now at 3.5% unemployment. And twice as many jobs as we predicted. I mean, it's pretty extraordinary what happened in the last 30 days to the to these prints. Yeah, look, I think that overall the economic data is mixed, but we got a couple of good data points in the last month. So inflation did decrease from 9.1 to 8.5%. Inflation was until now measured on a year over year basis, not a month over month basis. But since we got the first good month of a month reading, all of a sudden now it's been redefined to be on a month over month basis. Just this is the same thing that happened with the definition of recession, where recession used to mean two quarters of negative GDP growth. Of course that happened. And so all of a sudden the definition became unknowable. We have to defer to this, this economic board that won't render a decision until next year. By the way, if that were true, how could we ever contemporaneously talk about a recession? You know, if if you have to wait until this economics board declares recession a year from now, the press could never have ever reported for one recession. Yeah, I'm shocked politicians are spinning this are obvious, which is they keep redefining terms rather than admit that there's any bad data. At all that's now, look, I don't, I don't think that data is catastrophic. I don't, I don't think, no, I don't think it's anyone's interest to catastrophize the data, but there's a lot of negative data out here. I mean, look, inflation is still very high, 8 1/2%. If you had told any of us that in August that inflation would still be half 8 1/2% at the beginning of this year, we would have said that is horrible because remember, the investment banks were all saying it's going to come down to 3% by the end of the year. So inflation is still high. The Jaws picture is good. We're technically in a recession. If I were to predict, I think what's going to happen now, I think you know, look for a double dip. I wouldn't be surprised at all if in Q3 or Q4 we're back to positive GDP growth. But I don't think we're actually out of the woods because I think it's a pretty good chance that next year these and these rate hikes really kick in. It takes 6 to 9 months for them to ripple through the economy. So if you look at the construction industry, the construction industry. Has been devastated. New housing starts. You talk to the builders, they tell you that the construction industry has just been clobbered by these rate hikes. The inventories are piling up and the affordability of. There's a chart today about the affordability of home prices at a 40 year low. And so the construction industry, it's really the bellwether. When a recession starts, they're the ones who are first impacted, but it's probably going to take six to nine months because the loans are so expensive and cost of capital is expensive. Right. Can't start new projects. Yeah. So look, I if I had to, I think we're in a shallow technical recession right now. I bet that we probably bounce out of it in Q3 or Q4. But I think there's a significant risk that we're back in, we're back in it next year. Just my guess, we've been talking about consumer credit, whole bunch buy now, pay later. Household debt now totals more than 16 trillion. Credit card balances make up 890 billion of that. Obviously, student loans, mortgages, other things are in there. And the number of credit cards is now at a massive high 550 million of them issued here in the United States, we added. A massive amount of debt. It's still lower the the the credit card debt, just to be clear, is still lower than the. Pre pandemic level of 930. Billion, but consumers seem to be taking out credit, I guess to deal with inflation or to enjoy their lives because they're not stopping their spending and we see that in some of the stocks in the earnings reports that are coming out as well. So what's your, what's your take on this? You know conflicting data we have or is or have you made some sense of it? And and what is your prediction of Q4, sorry, are you asking what my take is on the consumer credit? Well, basically the overall macro situation here, we've got consumer credit. You know, people taking on a lot of debt while jobs look great, while inflation is still high. What does that look like? You know, as we go into Q4 and next year, what is this telling you? Is there some signaling you can take from this? Sack said shallow recession thinks we might double dip. I'm kind of getting to your prediction of Q4. Maybe this is a little repetitive. I mean, I've said this, I first said it in May at the Allen Summit and I said it again on the show twice. Great. Which is I think that the definition of a recession of negative GDP growth when you're coming off of inflated GDP is? You know, it's. It's not a binary catchall term. I mean, the fact is we had. Inflated assets and as a result of inflated assets we had inflated earnings and we had inflated valuation and we inflated income and. You know, now the capital's coming out and things are going to go down inevitably, but I don't think that this should be deemed that there's something fundamentally negative about the US economy. The biggest risk I still see is this rising consumer credit balance, particularly in a rising rate environment. People are taking on more debt. If you look at the New York Fed here, I'll just give you the latest. This is the household debt and credit report they put out household debt rises to. $16 trillion amid growth in housing and non housing balances and so there are variable rate loans in there in the auto, home and credit card markets. Those variable rates mean that as interest rates climb, the amount to service existing debt will go up each month and the amount of debt that's being taken on is also going up each month. And so the key economic question is does the income gain that's being experienced or the asset value gain that's being experienced outpace the increase? In monthly debt service needed for a large number of consumer student loans are also in here, by the way. And so when you put that all together, it's a, it's a very technical question, which is technically where do you start to see defaults arise? And when you have defaults arise, then the money that's owed and the services that are the service payments that are owed on that debt trickles through the economy because bonds start to default, equity start to decline and so on. So, you know, This is why I can speak at a high level from a macro point of view. That the rate at which debt is going up and consumer credit is going up and the rate at which rates are climbing that affect the revolving and variable rate debt that consumers hold. Could outpace the income and the asset value gained, particularly when equities are down, 401K's are down, house housing prices are down. And so there's a tipping point. And when that starts to happen, then you start to really hit an economic crunch. And I've mentioned this multiple Times Now that it's the thing, you know, I would kind of watch most closely. While there are core elements of the current economy that looks strong, there are real concerns around whether consumers can keep up with their debt payments. In the months quarters ahead, yeah. Shamatha you following this consumer credit surge and do you think that this could be a Black Swan type event this could be you know. Because it's right here in front of us. So you know, OK yeah yeah. I I would say like a massive contagion where there's massive number of defaults creating a Black Swan contagion like event. But yes, so it's it's not it's maybe hidden in plain sight. What do you think math is important data or impacting your view on things? I think it's important. It's part of the mosaic and I I don't. I don't really know. Look, what are we trying to get from this discussion? I don't understand. Like, like are we trying to predict what's going to happen, I mean. I think David basically said it best, like. If you actually just take a step back and stop. Overlaying what we want to happen. Look, the the reality is, all four of us want things to go up. And we like it when there's money in the system and everything's flush. But if we had said last year that we would open an envelope and, you know, we would show these inflation prints, we would be shocked and we would have been scared. And quite honestly, you know, in the process, in November when I started selling, I would have sold even more violently than I sold. And all I can say is I saved my *** in November of last year looking at what's happened in the last 6-8 months. So I don't know. I just think that. If you look at the CPI print. And you look at the components. We were saved because energy basically fell off a Cliff. And for whatever reason, a bunch of people decided not to travel and you know, we didn't import as much oil and we were able to keep costs contained and that kept CPI from being really out of control. But again, we're in the summer where we don't have the pressure on energy that we're going to have in October, November this year. So I I really don't know. I mean, I just think that there is like, Freeberg has his pet issue, I have my pet issue, sacks has his pet issue. You ask 100 economists, they'll have their own pet issue, housing affordability, whatever it is. The point is we have. 100 whack amole problems. And the question is, which mouse trap sets off the rest of the mouse traps? I have no idea. And so, you know, I just think that right now things are a little bit too calm. And that makes me feel very unsettled. Another shoe might drop. I mean, the point of the conversation is to try to understand and make better decisions in capital allocation, company formation and placing bets in the next year. So that I think that's the point of the discussion. We now have the spectacle of the President saying he's going to pass an inflation reduction act to solve a 0% inflation problem to get us out of a recession that he says doesn't exist. You guys know this, but the, the politics and the and the political commentary on this are absurd. I think what we're describing here is to simply more honest, which is to say that the data is mixed, so we don't exactly know what's going to happen. Yeah, I mean the thing that I think is encouraging is when you look at this jobs data. And you look at the debt that consumers are putting on. My theory is, and I could be wrong, that people want to keep spending, they want to keep living their lives. They're taking on a little bit of debt to deal with inflation and to keep spending, but they're also going back to work. And I'm seeing that anecdotally a lot more people going back to work. And the numbers show that. That feels to me and I said this on previous episodes, that that feels like a possible, you know, very helpful path out here. And I think you brought up sacks as well, which is, hey, if we have increased participation, that's great, increases monetary velocity. Increases participation in the economy, that's a possible path out. Do you, do you feel like that's still holding strong sense secular decline on that trend for 25 years? So maybe maybe on the margins a few folks run out of stimulus and decide to go and get a job, but I don't think again it's it's kind of like you know when you're when you're at the blackjack table in Vegas. And some of the strategy happening, strategy, strategy, I feel like all the like what we're talking about right now is clapping as a strategy. Maybe this can happen, maybe that happen. You know what? Maybe it'll start raining gold ******* coins that we can use and just not worry about. I feel like the last 15 minutes have been like, not a good conversation, like I think it's totally, it's a great conversation. It is. I think it's totally repetitive. It's totally repetitive jakal because look, the structure of the problem I think is very well defined, which is we have an inflation problem. Great. It went down from 9.18 point, 5%. It's still really high. 2 to 3% would be would be normal. OK, so that's half the problem is how fast is inflation going to go back down to normal based on interest rate cuts? The other side of the problem is, is. Sorry, integrate increases, not cuts. The other side of the problem is how much will the economy be hurt by these rising rates? And those are the two variables. And we see that there is a slowdown. There's still a lot of jobs being filled, which is good, but there is unquestionably an economic slowdown. And those are the two sides of this equation. And we just need to see some economic data. It's going to play out over the next several ask you the same question for three ******* weeks. If you guys don't want to talk about the new day, that's fine. I thought you guys were. None of us like we don't have an opinion other than we don't know how many ways can we say, you know talking about inflation or recession or jobs or any of that **** anymore. Unless there's something really for us all to say like something news come out like some ******* economic report was really important. I mean that was a that was a massive print. It's not it's it's it is twice as many track of what we've all run data point. It's one data point. It's a bad jobs reports before that print. Yeah. I think we should stop doing the recession inflation chat every week. It honestly is like repetitive better job moderating. Can you not dial it in? You got no. You guys asked to talk about it. You guys put some of these things on the. I don't wanna talk about it anymore. I think we should probably check. Let's move on. What? Are you OK? What do you want to move on? I think SoftBank was a great chat. I think, you know, that was a good talk. We should do that kind of **** we talked about. Don't know what you guys think about this. Sequoia, Evergreen fund. Tell me what you guys think about that. Come on, geniuses. The Sequoia, like when they restructured. Are you joking? I love I love when these two go silent. No, no I was didn't want interrupt anybody understand what you're saying. I don't understand why you guys are trying so hard to avoid the the obvious news of this week. Is there something else in the news this week socks, if Trump actually had some material in Mar-a-lago that was related to the nuclear program and you know there was an attempt to try and get recover those documents through normal means and they were not recoverable. What would your course have been if you were the director of the FBI or the President of the US in that condition? Because I think that seems to be the party line of what's going on here. Well, or, you know, the democratic kind of spin on what's going on here. But like, you know, honestly, in that circumstance, what do you think would be appropriate? So there's some sort of confidential material related to our nuclear program or nuclear weapons, something, something there in those materials that were attempted to be recovered or were taken without approval and then they tried to recover it for, you know, assume there's no nefarious intent. What would be the right kind of course here? Well, so I I don't know exactly what's going on. I just think that you can't necessarily give the F. Sadly, I don't think you necessarily give the FBI the benefit of the doubt here in light of their history. But let's back up. I mean, first you had this this raid on Mara Lago where you got 30 FBI agents. They're not wearing suits with holstered sidearms. They're carrying AR fifteens, you know, weapons of war fingers just outside the trigger guard. They're wearing body armor. It looks like a paramilitary raid on Mar-a-lago. It's utterly unprecedented. And you look at tweets by Andrew Cuomo, for example, or Andrew Yang, I mean, these guys actually turn out to be pretty, I think, intellectually honest Democrats on this point saying this is unprecedented and it's really going to. I want to read this by Andrew, Andrew, Michael, This is why don't you answer Freeburg question? I'm getting there. I know you're gonna cut me off, so I'd like to just read these tweets. So maybe you because, you know, maybe you'll give more credence to Andrew Yang, he said. I'm no Trump fan. I want him as far away from the White House as possible. But a fundamental part of his appeal has been that it's him against a corrupt government establishment. This raise strengthens that case for millions of Americans will see this as unjust persecution. You have Andrew Cuomo saying DOJ must immediately explain the reason for its rate and must be more than a search for inconsequential archives. There will be viewed as a political tactic and undermine any future credible investigation. And legitimacy of January 6 investigations. And let me read one other tweet by Elon that's not directly about this, but he tweeted this on July 11th, so a month ago. And he said, I don't hate the man, but it's time for Trump to hang up his hat and seal at the sunset. That was the part that was widely reported. But he also said Dems should also call off the attack. Don't make it so that Trump's only way to survive is to regain the presidency. I think there was a lot of wisdom in that. And you know, I'm old enough to remember when the case for Biden. Being elected is we have to move past this partisan warfare, this extreme rancor and derangement. And we were told that the media, you know all these people who had TDs that that their psychosis was due to Trump and if we could just move past Trump this all this sort of partisan warfare would end. And now and and I was certainly hoping that would be true and now sadly it seems like we're right back in this thing where we're right back with the media. Being obsessed with TDs, portraying this narrative that somehow he's a traitor and what is this whole thing? Hang on. Just these two words. Nuclear documents? Well, listen, until they actually produce those documents, I'm going to suspend judgment because the FBI, the last time they did this, remember they manufactured a falsified warrant to the FISA court for this type of investigation. They have that history. So I'm just going to suspend judgment on what's going on here until they actually produce. The documents are talking about. Can I ask you now? This stinks. Do you honestly question the integrity of leadership and agents of the FBI? Are you serious? Like you don't think? Yeah. Alright, let me read you this tweet from Michael Berry. I don't hear the tweet. I want to hear your point. No. Well, I I I agree with what Michael Burry saying. So I think sometimes there's a lot of thoughtful commentary about this. And what Barry says is J Edgar Hoover led the FBI for five decades, denied the Mafia existed, fought the civil rights movement, shielded the KKK. Multiple presence acknowledged fear of him. So what he's saying is that the FBI since its inception has political origins and and and basically meddled politically in the affairs of the country. Then he says the FBI lied to the FISA court. This is back in 2016. Totally true. Altered emails, leaked lies to the press to get Trump. Nothing shocking so freeberg listen, I don't know whether the FBI telling the truth, but are you honestly going to say that the FBI's leadership has never been political that has never harbored? They pursued their own agenda, and that has never had a desire to go after Trump. I'm, I'm making a second. We saw, we saw the text messages from comedy struck page McCabe. I mean, these guys basically took it upon themselves when Trump was elected to be the quote UN quote insurance policy, and an FBI lawyer pled guilty to falsifying documents to seek a warrant from the FISA court. So I just think anything's possible here and now. I'm not saying the FBI is lying about this, I don't know. But the idea that the FBI is automatically entitled to the benefit of the doubt in light of their proven history of basically pursuing Trump like Ahab pursued the white whale. I mean, these guys have been after him. I'm just going to zoom out for a second. And the reason I'm interrogating sacks on this is like, it's just so telling to me that a guy like like you sacks in your position. Are are actually questioning the integrity of like, the highest justice, authority and institution in the United States really says a lot about kind of the state of of the US citizenry, the state of our society today. I think it speaks a lot of Americans. I know. It's incredible. And what Ray Dalio said in his book about how during these periods when the empires begin their decline and, you know, when you're challenged with kind of the economic conditions that the US is challenged by printing. It's a money, lots of debt, very hard to service all that debt. And we have a ton of obligations over the next decade or two that are going to be very hard to meet given our economic growth and inflation conditions. Right now that you start to see these sorts of behaviors historically, it's happened six times in the last 500 years where large empires like the United States or large, you know, economic powerhouses like the United States start to decline, that the civil war begins, that the institutions get challenged by a minority and then a majority. Of the citizenry. And it really starts to crumble and and and challenge the the integrity of the institution and its ability to hold itself together. Well, I'm not. Hold on a second. I'm, by the way, not challenging. Hold on a second. I'm not. You're questioning the integrity. You're you're questioning the integrity of the Department of Justice. Right. Listen, by the way, I'm not. I'm not arguing. I'm just pointing out like it's it's an incredible condition for us to find ourselves in. Yeah, but I but but but my questioning did not create that condition there. This lack of trust is earned. It's earned by the FBI in light of behaviors they took just a few years ago. Now, listen, I'm not defending Trump per say. I don't know what he did or didn't do. OK? But I think that it you can't just accept at face value without further proof these leaked what, what are basically leaked comments by the FBI. I mean, look, I'm not, listen, I'm not a naive child. I mean, the fact of the matter is that power can be corrupt and power corrupts, OK? And we have seen that the FBI from its earliest days. Did engage in corruption and more recently against Trump himself. Had a vendetta against Trump. So I'm simply so hold on. So all I'm doing is I'm not going to automatically accept at face value what they're saying until I see some proof. Now, I'm not saying that they're wrong or they're lying about this. I'm simply saying I'm not going to accept it at face value. Yeah, I'm glad. And remember Trump, Trump was elected on on on the platform that there is this deep state, that there is institutional corruption that there is. Malaise and lethargy in these institutions of the government that are funded on the order of trillions of dollars a year. And that that's what he was intended to, you know, to go and and blow up and repair it. And there there is there's a very strong and and potentially close to majority percentage of voting Americans that that feel that there is this core deep state corruption, institutional lethargy that is challenging our ability to give everyone the freedom and liberties that they deserve. Freebord. These agencies are supposed to be nonpartisan. They're not supposed to have a horse in the race. And what we saw is that when Trump was in office and these texts came out clearly the the top levels of the FBI, these top agents. I'm not talking about the rank and file. I'm not talking about the field agents. I understand that a lot of them are law and order types who vote Republican. I get it. But I'm talking about the leadership, the highly political leadership in Washington. And it was pretty clear that they had a horse in the race. They did not like Trump and they were out to get Trump. And you know, again, Trump is not my preferred candidate for 2024. But what the FBI has done with this raid, quite frankly, I think it's polarized. The outcomes, they are basically going to send Trump to the big house or the White House. I mean, because now the Republicans have rallied around Trump, I think he's going to be very, very hard to beat for as the nominee in 2024 unless the FBI comes up with ironclad evidence to show that he did something significantly wrong. I care less about who did what and what. Was done wrong. I care more about the fact that this conflict is escalating and it's creating a real condition of continuing polarization and it really is the the conditioning that. You know Biden had some historians in in the White House there was a report on this last week and these historians spoke about how the conditions in the United States are just as they were right before the civil war and and that there's real concern that, yeah well, I mean you know they you can go read the the the anecdotal reporting that was done on this thing, but that was the general. Theme of the conversation and, you know, it really, it really kind of concerns me more that this level of discourse is escalating to a point of, you know, there's corruption, this person is a criminal. And that sort of discussion happens, you know, in in more dire circumstances and more in and and economic circumstances than has ever been seen. You know, the US is the largest economy in history and we're now having these sorts of conversations that typically lead to some degree of conflict and it's really concerning. I I just think, listen, I I think that Trump was out of office. We were told that this partisan rancor would stop once he was out. And it's, you know, they're pulling him back in. And all I can say is that when I think we know maybe 1% of the story, OK, I think this leak around nuclear documents is it feels like a selective leak. It's not. Certainly all sides are inflammatory, all sides are cantankerous, and I'm suspending judgment. What I'm saying is, though, that when all the information comes out there better. A very significant there there. No, no, no. We've made that impossible too, because he Trump came out and he basically said, hey, listen, if you if these guys find something, it was planted and now you're going to have at least a, you know, 10 or 15% of the population that believes, OK, this was planted, it wasn't actually there and you know, so whatever the outcome is will not be good, nobody will be satisfied. And both, both of the extremes in the United States will be even more angry. Claimed, yeah. Further involvement. And that's why I'm saying that's I think Tory index has now has now skyrocketed. Yeah. By the way, This is why I think at some level maybe the lack of faith in these institutions as well deserved because where is the the, you know the, the, the prudence of all of this? Like, where is the the circumspect thoughtful methodical thinking? About all of the different outcomes that could be possible so that you exhaust every option and this is the only option left. And then even then. If Merrick Garland was open to basically saying unseal the warrant, why didn't you do it before and say we're going to have to serve this guy unless he actually gives us these things? There's all kinds of things you could have done. Oh, clearly they did keep the hold on a second to keep the temperature of this thing way, way down, and that's what's your point. They could have let Trump's lawyers watch them do the search so that nobody could claim anything about anything being planted so they wouldn't let that happen. Inflammatory. Texas spiking. I think that's my key take away on all of this. I I care less about what Trump did and what the DOJ did and what the FBI did. But like, I'm more concerned about where this takes us because the next step, regardless of the outcome, takes us. You know where it takes us. When you're on tilt at the poker table, what do you do? You cannot think properly. Points out right now, yeah. When people are so inflamed with emotion, they start to make very poor decisions. I don't know whether the DOJ and main justice made a poor decision or not. I think this is where we have to hold our breath and hope they didn't. I don't know whether the White House knew anything or not, but the whole point of all of this is that we pulled this guy right back in. To the to the to the main stage, absolutely. I mean, you're like I said, you've polarized the outcomes. You're either gonna basically send this guy to jail or you going to some of the White House. No, I think they're very likely. No, I think there's very likely a middle path where nothing happens, but it will further erode what Freeberg says, which is it's just a little bit less trust in the DOJ integrity is ****** and when the institutional integrity. Outbreak of what keeps everything working starts to fall apart. And I'm not saying this is some cataclysmic civil war happening. Just to be clear, I'm not saying this some cataclysmic civil war happening next year, but it's an unfortunate decline in everyone's faith and and and the stability of the institutions that we all rely on to support and service us. Because the inflammatory index is going to go up and everyone's going to be criticizing everything, and that's a nasty place. I think we really have to ask, was this really necessary? I mean, why did the DOJ and the FBI think this was necessary in these boxes? Put us in there. I think that's a reasonable question, is like if these things were actually sitting in a box with a lock that they changed, there must have been something more that was so grievous where you had to do something like this. Now by the way, David, I just want to I read. So I don't know if it's true or not. I think maybe it was in Barry Weiss's up sack or Matt Taibbi Subsec. These folks weren't armed to the teeth. They came in jeans and shorts and T-shirts. In fact, Main justice told them like do it as not seen the photos that I've seen the photos. They are outside. I'm saying the people inside were there for six or seven hours and only a few people knew about it. They were there for 9 hours. They basically told Trump's people they couldn't be there. They had to leave. They told him to turn the cameras off and they had like highly militarized. Got there was something like 40 people and something like 30 of them were heavily armed. The optics were terrible. If there was some nuclear, confidential nuclear material in Mar-a-lago and through normal means of communication, they had asked several times to have it returned and identified this for him, and he had refused. Which I think is a very reasonable kind of. You know, conditioning for what may have happened here. And then they said, OK, we gotta go get it. There's no choice. This is like super confidential nuclear material. We gotta get this stuff. The only way to get it is to serve a warrant and go in there and get it. You know, under those circumstances, you know, do you think that this would have been kind of inappropriate? Like it seemed all other kind of communication means were exhausted? Like, you know, what would you have done if you were president? Listen, I think there is information that could still come out to convince me that this raid was warranted. I just haven't seen that. Information yet. And I think the optics of it were terrible. I'd like right. The point I was making, I don't know why it wouldn't have been good enough to send in the FBI agents with holstered sidearms, you know, not AR15, weapons of war. You know, where the fingers were just outside the trigger guard. It looked like a paramilitary raid. So whoever was thinking about the political ramifications of this clearly didn't do a very good job. I also don't know. Yeah. I also don't know why you wouldn't give the courtesy to a former president of United States to give them. Either more of a heads up or to let his lawyers attend so that just for their own protection, so they can't be accused of planning anything. That would have been smart. And I don't know why they would have said to Trump's people that they couldn't record it, and I don't know why. They've been reports that the FBI went through Melania's closet. I mean, seriously, they're like going through Melania's clothes. It's just weird. It's weird. So there's a lot about this that we don't know. I'm not conclusively rendering judgment about it because there are things. Like, absolutely could come out to convince me that it was warranted, but I haven't heard them yet. OK, everybody will see on the next episode of the All in podcast. Love you, besties. Let your winners ride. Rain Man David satta. We open sources to the fans and they've just gone crazy with it. Why? Besties? My dog's driveway. Ohh man. We should all just get a room and just have one big huge order because they're always useless. It's like this, like sexual tension that they just need to release them out there. Beat, beat. See what we need to get merchants?