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I can't wait to talk about lob grow meat I have been trying to get people to please
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let's not get canceled but the four of us are functional again we like each other we enjoy we look
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forward to doing the show again everything styled in is your lab-grown meat does it use hormones my lab-grown
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meat was a little let me ask you this about your lab ground meat do you have sage no no no no no
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you know I was told that my lab grow meat was a little I've injected some flavors of tobacco
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black cherry some notes some notes persimmons [Music] [Music] so let's go to big Tech earnings Google
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stock is up five percent after beating on the top line and bottom line estimates some high level takeaways
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Google announced a 70 billion dollar stock buyback plan and that their Cloud unit was profitable for the first time
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in its history as we mentioned last week Sundar officially announced that deep mind was merging
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with brain this is kind of controversial because it's uh really hard According to
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some sources or Sundar to get all his lieutenants to work together and row in the right direction Google's Q on search
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Revenue up year over year two percent down five percent quarter of a quarter just kind of to be expected because
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of seasonality and because we're in a down market right now obviously with the recession
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YouTube down 2.5 year over year down 16 quarter of a quarter other bets which is
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like nest and some other products down 35 year over year net income 15 billion dollars
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any thoughts freeberg on what is a mixed quarter by Google and I guess the water macro environment what
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was so striking about the earnings call is not necessarily what was presented but what was not presented
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which was a stronger voice and a strategic plan going forward for dealing with two major issues that the company
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one is the operating cost model and the second is the AI strategy and the response to this
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Evolution and AI I've heard from a lot of folks that the AI strategy in particular
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it's almost like Google already has this in the bag but they just haven't kind of
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let it out of the bag it's like they've got a Tasmanian devil and they're they're ready to go with it and there's
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from from my read an incredible amount of confidence that there's something that's going to happen
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and a set of things that are going to happen that are going to be very profound and Powerful I even heard some
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anecdotal stories about hey you know we don't have this feature in this product but chat GPT does and then
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people basically showed up to this meeting and there was all this debate about well we can't let it out because
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we're not sure you know the classic kind of like we're scared of doing doing wrong versus leaning forward and taking
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risks don't be evil you're referencing no it was just more about regulatory concern and getting things wrong and
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making a mistake and so there's this total fear of like again you know Regulatory and fear so someone kind of
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slammed the table and said let's just put it out the next day they put it out so there's definitely a cultural change
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happening internally is what I've heard anecdotally but what was really missing which is what Wall Street needed to hear
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what investors and shareholders needed to hear is what's the strategy there how are you going to compete how are you
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going to resolve what's going to go forward and secondly what are you going to do about the cost structure of the
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company because everyone else you know in contrast to meta being up 11 12 after hours with their cost cutting model and
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demonstrating that they're going to start pulling cash out of this business Google's top you know kind of top story
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was Hey We're stopped serving at peanut M M's in the cafeteria or something ridiculous and you know that doesn't
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really address the real structural question so I think the stock buyback the 70 billion
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stock buyback is an authorization to repurchase it's not a plan to repurchase so it's unclear if when or how that
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Capital does actually get deployed in the market to buy back stock and so there is also this big kind of
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shareholder sentiment of being let down that there isn't an improvement in either cash coming out of the business
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or in cash being used in a smart way with the business and it was the The Silence in the
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earnings call that I think really stunned a lot of people which is why you didn't see a lot of stock movement
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despite the actual business numbers being better than expected and so there's a lot that Google I think
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still has to catch up to with respect to their peers both on a product and strategy point of view but also on
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a cost cutting and a communication of that cost cutting point of view to the market and to the street otherwise
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shareholders are going to start to lose faith if they're not already and are going to start to put their Capital with
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other folks who they feel are better leading and leaning into this new Evolution of Technology like
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Microsoft and Apple and meta which is really where those big Capital allocators end up picking stuff to go
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one final thing I'll say it's extraordinarily important to note that I think Google
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has such an incredible AI advantage over Microsoft and you know Microsoft is almost solely
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dependent on openai this small startup company and all of Bing chat is powered by it and Microsoft hasn't built out the
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the infrastructure the team the rigor the depth the models that Google has and Google made
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a few strategic blunders you know they shouldn't have been as open with the Transformer work that they did and
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shared that publicly it certainly enabled openai and others to compete but Google certainly has an incredible
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set of tools and capabilities that is leap years ahead of Microsoft they're in a position to really compete they just
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have to have the will and the leadership to do it slam the table say here's we're
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going to stop wasting money and we're going to start leading and driving this this industry forward and this this
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could be a quick turnaround story for the stock and for this company and and I I hope it'll happen chamath what are
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your thoughts on Google's leadership specifically is Sundar the right person to run the
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company going forward does he have the founder authority to get the ship and to get the lieutenants
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all kind of rowing in the same direction or does it need to be a leadership change which is the big discussion of
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Topic in Silicon Valley right now I think he's very capable that's an amorphous organization of so
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many different competing interests the thing that doesn't add up about the Google
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earnings release but then also what Freebird just mentioned is there was this article that kind of
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tried to paint sundara as sort of a caretaker CEO right where Larry was the actual Shadow CEO well if that's true
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you know Larry has more incentive than anybody else to kind of Force change and there was all these kind of like
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gripes and complaints that were articulated and I don't put much stock in all of this stuff I think that he is
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the right person for the job and I think what they have to do is just do the simple basic things like it doesn't take
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a CEO change for a board of directors to have the emotional wherewithal to authorize a 15
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or 20 reduction in force for a company that is so profitable that clearly is not yet humming on all
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cylinders and so you don't need to go through all of this drastic change to do these simple obvious things
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my takeaway across all of these four big companies is we are in a really unique moment to observe
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something that may sound controversial or hurt people's feelings that like these companies
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but I think we're now well past Peak big Tech their valuations may still go up because
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they generate such an enormous amount of cash flow but these are exactly those kinds of
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businesses now they are X growth large cash flow businesses Blue Chip you might say while they were always Blue Chip but
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the way that they grow is not through Innovation if you look at Google Facebook Microsoft and Apple and ask
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yourself when was the last hugely disruptive thing that they've created you're hard-pressed to find something
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that was even done in the 2010s yeah actually that's a good thought I mean the iPhone for Apple iPhone was 2007.
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yep Microsoft was in the 1990s Google was in 1998 with course search maybe there was maps and Gmail in two in the
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2000s Chrome Android they bought some of that Facebook it was the core service that we built in the 2000s and then they
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acquired brilliantly right so I'm not saying that they didn't acquire well yeah my point is that core organic
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Innovation hasn't been there for a long time so this is a moment to just be reflective of the fact that these are
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some incredible companies with ginormous cash flows but now you've had this foundational
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platform shift which exposes the fact that they really aren't good at innovating and at times when they've
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tried to organically innovate they've massively misallocated capital either TLS would be the example either
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through a bloated balance sheet so someone claim that Google overspends or through just pure misallocation by
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starting projects that just are not large but consume large amounts of cash that would be the Facebook VR example
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but in all of this I think when you cut staff and expenses as a way to meet and beat and Top Line
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growth is in the low single digits it's an important moment to recognize that these companies have now
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transitioned to being cash cows and if you look at sort of how financial markets value cash cows they're very
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valuable but it's not where you look for growth and so in a world where rates eventually get cut and we start to
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come out of a recession it tends to be that other people get rewarded so that's an idea that's
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getting to your point here they're not allowed to acquire things Microsoft's acquisition thing dead dead so they're
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not going to be allowed to buy stuff so then you're right what is the growth here
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they're not able to innovate I think these companies are X growth which is why they use their cash flows to do what
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borrow money cheaply to buy back stock to manipulate their Equity right you can manipulate
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and overcome dilution you can manipulate earnings per share you can manipulate the number of shares outstanding
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and so just by the nature of that whole game a bunch of passive investors will end up buying more which helps the
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active investors who own that stock so it's a game so if we're not in the world financial engineering would be the I
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mean the most charitable way to say it we're in the financial engineering phase which is fine and by the way you can
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make a lot of money Facebook's up 90 percent so there's a lot of there's a lot of
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meaning just this just this year oh yes so there's a lot of room for financial engineering but it's not where you need
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to look to figure out where these big improvements and uses of this next Generation platform technology are
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going to come from most likely saxon's is a fair assessment in your mind looking at you know the the major tech
00:11:30
companies the fangs yeah I mean their growth is down to single digits so I think Microsoft had seven percent
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year-over-year Revenue growth Google was at three percent I think Facebook was for sales Rose three yeah three
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percent from a year earlier but at least that was an improvement because it's actually gone down for three straight
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quarters so yeah but you're down to you know single digit year-over-year growth rates nevertheless most these companies
00:11:57
beat expectations so Microsoft shares wrote nine percent meta jump 12 might be up more now
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and I guess Google got a little bit of a bounce and they all gave a pretty upbeat
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forecast the only one that wasn't upbeat was Google where the CFO Ruth poorat said that the
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Outlook remains uncertain but all the other ones seem to indicate that things are going to get better
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so I think what's interesting about that is just the mismatch that we have between how well these companies did in
00:12:30
this quarter versus how uncertain the rest of the economy is looking right now and maybe the fed's behavior yeah so
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maybe this is the flip side which moth is saying is they're not growing very fast but they are profitable machines
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generating a lot of earnings and they seem to be pretty immune from what's happening in the economy right now or at
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least that's what they're saying now you're right in a parallel track there was an interesting interview that
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Powell did so uh Jerome Powell gave an interview it was actually kind of like one of these
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hoax calls where a couple of people pretending to be zelinski engagement and interview
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oh my God that was crazy you want to explain that reference oh my God they've done this a number of times
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where they've gotten you know major leaders I think they did this to macron some other people or they pretend to be
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zelinski and they do an interview it's like Ali G yeah but they played it straight I don't care that he was fooled
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into giving the interview it's like who cares but some of the things he said were really interesting I mean number
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one Powell said that the economic outlook for the year was looking pretty uncertain and he said the most
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likely scenarios were either sub one percent growth so staying out of recession but just barely or he said
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going into recession so he thought that was roughly about equally likely he admitted that we had the worst inflation
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of 40 years and that's why interest rates weren't necessary and he said that it was necessary to slow the economy in
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order to combat inflation and he then even went further and said that it was necessary to cool off the labor market
00:14:02
and even to cool off wages specifically because that's how you combat inflation that's the only thing we know how to do
00:14:08
in a situation like this so I think this is certainly a political mistake for Powell to say that his objective here is
00:14:16
to hurt the wages the American people and to basically cause a recession but that is his view apparently and I think
00:14:23
that we are headed for it seems like a recession I'm a little surprised that the earnings reports of these tech
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companies are so good because or at least their forecasts are so good well they can cut spending and we talked
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about this last year when we were trying to reject what would happen I remember saying well I think jamath and I were
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talking about this and I said well they're saying hey earnings are going to go down and there's a PE and I said what
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if they just stop spending or they make a lot of cuts well here we are people are just saying you know what we're
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going to cut our way to and do stock BuyBacks and that's another way of financial engineering
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to Route Around the FED right and to and to make the stock go up worked incredible for Facebook I mean my
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Lord they were at 91 to share and now they're over 200. right but just to bring it back to the
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economy so look I think we agree that these tech companies seem to be pretty immune they've got a
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large cushion in terms of their ability to continue generating earnings because of all the bloat that actually gives
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them like a margin of error where they can just keep cutting to prop up earnings I'm a little surprised that
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they think their revenue forecasts are going to be so positive because again they were guiding upwards generally so
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they seem to think they're not going to be impacted by the recession and maybe they won't be again I think what was
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interesting from pal is the way that he seemed to think that the only thing we know how to
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do this is basically what he said the only thing we know how to do in this situation with inflation is to kill the
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economy is to slow the economy and specifically to kill jobs and wages and that was pretty remarkable to me
00:15:53
because there are other things we could do such as okay well one thing is that you don't have to
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print so much money cut spending austerity so yes our fiscal policy remains completely out of whack we're
00:16:04
running two trillion dollar annual deficits right now pass covid so he could have said listen we could
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get off this Reckless fiscal policy and be more restrained but he didn't want to
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go there the other thing he could have done was address the supply side one of the ways that you can reduce
00:16:20
inflation it's not just to kill demand you could actually affect Supply chains so like cost of energy for example
00:16:26
energy is a huge input into the economy and one of the things that happened at the beginning of this Administration is
00:16:31
they made it much harder to drill for oil and gas and I think Biden sort of reversed course on that at the State of
00:16:37
the Union remember he had that line where he said we can't get off oil and gas for 10 years and the
00:16:43
audience started laughing but at any event the point is just that it's too little too late they could have done
00:16:47
more on energy to keep costs low and then there's a whole bunch of other critical inputs into the economy besides
00:16:53
labor and what you could do is I think you could go category by category and say how do we get the price of these key
00:17:01
inputs into our economy down how do we resolve supply chain bottlenecks how do we make it you know easier to get access
00:17:07
to whatever the key commodity is and I think there's things they could do if they're just willing to work at it maybe
00:17:13
this isn't the fed's job this is more the administration but what you could do is say listen we're going to make it
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easier for people to produce and create Supply and if you have a higher supply of goods and services then
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you will start to bring inflation down because inflation is just the amount of money in the system divided by the
00:17:33
amount of goods and services and when the amount of goods and services hasn't gone up but the money supply has gone up
00:17:38
tremendously you're gonna have inflation and that's why I think it's a little bit
00:17:41
misplaced to be killing demand the way they're killing it is because fundamentally the problem here is they
00:17:46
flooded the economy with money both through government stimulus and through quantitative easing and then also they
00:17:53
made it harder on the supply side to produce certainly with energy so it seems to me that the approach they're
00:17:59
taking for us to get out of this it's like taking a meat cleaver to the economy or a sledgehammer really and it's the
00:18:06
most violent possible way that they could solve the problem they previously created
00:18:11
of too much inflation any other thing obviously is jobs we're still sitting here with close to 10 million job
00:18:17
openings and the thing I'm hearing from the streets is that unemployment hacking
00:18:24
is become a high art and so labor force participation remains low it's nowhere near the historic highs we have been
00:18:33
very permissive during covet for good reasons to give people very extended benefits people have now learned
00:18:39
is my understanding and this is a something that's happening on a regional level state by state level
00:18:45
people are learning how to hack unemployment and not going to work and people are just not taking the jobs that
00:18:50
are open which are service industry jobs Americans don't want to work them we don't want to let people into the
00:18:55
country we've got record low people coming into the country it seems to me that would be a much more
00:18:59
productive way to do this right yes I think it's an excellent point because exactly what you're doing there is
00:19:05
addressing the supply side which is you're unlocking the supply of a keep input into the economy which is all this
00:19:10
unused labor it's all these people aren't working you're right the labor force participation rate is still much
00:19:15
lower than it could be so if you get more people into the economy then that helps alleviate the cost of Labor it
00:19:22
helps fill these jobs but it doesn't kill the economy so it would be a much more positive way
00:19:28
to address this so I just think it showed a lack of creativity for him to say that the only thing we can do in
00:19:33
this situation is not just to raise rates you did say that but but to go further
00:19:39
and cool off the job market increase unemployment and cool off wages I mean that's gonna be a very unpopular
00:19:48
thing to say I think because what you're basically saying is you're going to hurt
00:19:51
the wages of the American people who wants that here's the chart for job openings we thought this would collapse
00:19:56
it went down certainly as we you know I don't want to obsess over macro stuff but it's still way up there and so the
00:20:04
fact that we can't get people to take these jobs I don't know chamoth what do you think about the employment
00:20:09
and participation situation and how that might unlock things I also wanted to know from YouTube off this concept of
00:20:16
the FED is reacting to data just so slowly and then you have these companies that maybe are more Nimble and they have
00:20:24
better data than the FED I think that that's a truism and I don't think anything about that is going to change I
00:20:30
mean I think we talked about how these folks calculate non-farm payrolls or how they calculate CPI
00:20:37
it's incredibly outdated right it's people with clipboards walking around talking to people and checking boxes and
00:20:43
filling out forms can that change probably it could will it change it probably won't
00:20:51
and so they're going to focus on the most simple but most powerful measure that they have which is controlling the
00:20:57
money supply kind of what sax talked about so they're going to manipulate the money supply to either put more
00:21:04
liquidity in the system in which case markets go up and asset prices go up but then inflation goes up or constrained
00:21:10
liquidity which then causes markets to go down asset prices to go down and inflation eventually to go down
00:21:17
the thing that we're facing today when you look at this labor market chart is a couple of things that I think we've
00:21:22
talked about before and I just want to reiterate them which is you have to remember that we are in this
00:21:28
new world order which is the ex-china World Order and in that there is no more unitary
00:21:35
economy that can do things cheaper faster and better globally around the world right so we're going to near shore or
00:21:42
onshore all kinds of things that used to be done by the Chinese they'll sit in Mexico or they'll sit in Central America
00:21:49
maybe in some cases they'll sit in Canada and all of that will feed into the United States
00:21:54
the problem with all of that is that that will keep costs higher because it'll be naturally more inefficient
00:22:01
it will naturally take more money and that will naturally cause the prices of those things to be higher which means
00:22:09
that terminal inflation I think is just roughly higher as a result I think that more
00:22:17
power if you will goes to labor so in this constant tension that we have in an economy
00:22:23
between labor and capital the people that own the factories or the businesses and the people that run them and work
00:22:29
inside of them we've been in this position where the pendulum has swung so far towards capitals the owners the
00:22:35
shareholders that all this financial engineering has tremendous upside right that's why companies engage in it
00:22:42
but when you show that chart Jason what it means is it's just really hard to find people and so the only way you're
00:22:47
going to get people off their butt to go into work to sit in a chair to do a job
00:22:51
that you need them to do is to pay them more and in finding that wages will have
00:22:56
to go up the counterbalance of that is what AI will do which I think I have to say that
00:23:03
is the key yeah which is massively deflationary so that is going to be the tension that we're in now for a really
00:23:09
long time as we explore this I don't know if you guys saw today but Sequoia led a 20 million dollar round in this
00:23:14
thing called harvey.ai the legal uh yeah which is like a legal super wizard for law firms yeah we knew that was coming
00:23:21
and my partners and I were debating it and what we thought of was well how much do
00:23:27
you pay out of the 800 or thousand dollars an hour that you charge to harvey.i maybe you're willing to pay
00:23:33
five percent or ten percent but then the reality is that one of the most powerful things it does is it's
00:23:39
able to go into Westlaw find all these cases and say yeah this is germane to the thing that you're working on right
00:23:47
now that's a very useful thing but the N plus First Law Firm will also use that tool and instead of charging
00:23:52
800 an hour they'll say well we'll charge 600 bucks an hour and we're still willing to give you five or ten percent
00:23:58
so I just don't see a world where on the one hand physical labor will continue to
00:24:03
be more expensive they'll demand more and more money to do the job that they're asked to do
00:24:10
and then knowledge work will become increasingly more deflationary because so much of it will be automated by AI
00:24:15
that those folks will charge less and less and there's going to be attention there and I don't exactly know what's
00:24:20
going to happen I did a couple of experiments uh this week I've been rolling up my sleeves and playing with
00:24:26
these tools it's pretty amazing and I've been trying to use them for actual tasks in our companies what
00:24:33
have you learned what did you do and what have you learned so I got on the openai plugins Greg thank you I sent him
00:24:40
my email and he got me on to that and you can connect it to zapier so I have two projects I'm working on currently
00:24:48
one of them I was since I'm raised so raising launch Run 4 and I'm actually going out to people not just taking
00:24:52
inbound I was like hey can I get the names of all the major LPS and start doing some research there put in a table
00:24:58
stuff that sax did when he does blog posts but then I started connecting it with finding people's Twitter handles
00:25:06
finding their LinkedIn profiles and then the next piece I'm working on is automatically following them dming them
00:25:13
on Twitter let's say or following them on and doing an in message saying hey we haven't met here's the deal memo for my
00:25:20
next fund would love to you know get together this is sent from Jason's AI script I was gonna like actually tell
00:25:26
them but here's my real email if after you read the summary of the next fund you want to meet and then I was I'm
00:25:32
going to pair that and then this is a piece I'm going to probably need a developer to do with our internal LP
00:25:36
database to not email people who are already duplicates and then up inside with newsletters I
00:25:42
have it building a database of every newsletter we've ever sent the writing style and
00:25:48
that I'm having it go find in real time news stories that we should be including
00:25:53
in the newsletters which I think will make the writers right now a third more productive
00:25:58
but these are things that would cost 40 50 bucks an hour 30 bucks an hour for you know college-educated Americans and
00:26:05
Canadians and I have already figured out and I'm not a developer anymore I had to script
00:26:10
them and I'm actually thinking about learning to code again just so I can do this myself
00:26:16
and so on Saturday I'm going to do a little coding with a friend of mine and get back up to speed on that
00:26:21
I think about 30 percent of what knowledge workers do right now is possible so I put every single person at
00:26:28
both companies on chatgpt4 and the San uh the playground about 30 percent of what knowledge
00:26:35
workers at both firms can do currently is doable if you can figure out and this stuff is not perfectly scripted yet so
00:26:44
I've been doing some stuff in travel as well playing with the kayak interface Expedia interface Etc
00:26:52
to look at travel planning and it's pretty good as well so it's it it's this is the real deal folks I I
00:27:00
think by the end of this year 30 of knowledge work could be done by this and then additionally on Monday I went back
00:27:07
to work in person and I went to I hosted our accelerator in person and then I hosted founder University in
00:27:15
person in the city the city was absolutely dead but we had a hundred people fly in from
00:27:21
around the world for our founding University and a lot of them were working on AI projects
00:27:25
and what's very interesting is like there's this big debate going on Friedberg between
00:27:31
is this going to be built into chat gpt4 or Bard or you know Poe or whatever it is or should I even bother so should I
00:27:38
bother building you know a verticalized app and it turns out like I think you should do the
00:27:43
verticalized app and you're going to be able to put together multiple of these AIS that have
00:27:51
different Specialties um so I'm super stoked about it but I do think if you're not using this if you
00:27:57
hear my voice right now and you're a white collar worker a knowledge worker and you're not using this
00:28:02
this year and getting up to speed on it I think you'll be out of a job within the next two
00:28:06
jeez wow I just don't think you'll compete it would be like trying to compete without knowing how to use
00:28:12
Microsoft Office 20 years ago right like could you work and not know email remember when we came into the workforce
00:28:19
30 years ago and some people knew office and email and web research and then other people
00:28:25
didn't those other people retired they were phased out if you didn't know how to use a computer and type and use an
00:28:30
Excel spreadsheet or do a PowerPoint you were done I think there's two possible ways you can interpret what you're
00:28:35
saying so in terms of the economic impact so one is that you could say well AI is going to do 30 of the knowledge
00:28:42
work therefore 30 of the knowledge workers are going to be put out of work I think that a different way to put it
00:28:48
would be every knowledge worker can get 30 more work done correct so if that's the case then
00:28:55
they're more productive and we're just talking about the problem of how do you increase real wages in the economy
00:29:00
without having inflation well the way to do that is for every worker to be more productive so if every worker is 30 more
00:29:06
productive in theory their wages should be able to go up by up to 30 percent that's how you get wage growth now maybe
00:29:13
there will be some companies that don't need all those employees because now they're able to get you know whatever a
00:29:19
third more done but there will be other companies who can hire them they can go off and do other jobs for other
00:29:24
companies especially when you've got this backlog of like you said eight or ten million new you know jobs that are
00:29:29
unfilled those jobs are all service though you know they're not you're actually you're gonna have this big
00:29:34
group of knowledge workers there's just nothing for them to do oh no I just don't I agree with you but I think
00:29:39
there's going to be a group of knowledge workers who do not Embrace this and do not make the transition because it is
00:29:44
it's going to require an upskilling like I think you're actually going to need to
00:29:48
know how to do some basic programming and coding to really take advantage of the at least like scripting levels up I
00:29:55
don't know it's pretty easy to use I agree with you there have been writing blog posts but the date the example I
00:30:00
gave of like taking the lp database sorting it you know it's not quite sure it will be this is like a chatbot
00:30:07
but it is like I think it takes like level two programming skills no it doesn't no you don't have to know how to
00:30:13
program you just have to know how to prompt it in natural language it's the opposite of need to learn how to code
00:30:18
the thing about the thing that makes coding hard is that you have to learn the specific commands it's like its own
00:30:23
language you have to learn a new language with this you don't in fact one of the cool things about some of these
00:30:29
uh open AI apis is that you just tell it what you want it to do there's not even
00:30:34
like a scripting language a lot of it's in natural language and that makes it incredibly easy to use even for
00:30:40
Developers so I don't think this is a hard technology to use I agree with you there
00:30:45
may be people are resistant to it because there's always people who are resistant to change and new technology
00:30:50
and you're right if they don't adapt they're going to be dinosaurs but I don't think this is a hard technology to
00:30:55
to rock how to use and get benefit from you might be right I mean I right now it's so new that the glue between
00:31:02
systems is just not there yet and maybe you'll be able to talk to chat gpt4 and it'll connect your database on notion it
00:31:10
will take a type form and a survey monkey and put it all together and figure that all out for you in the game
00:31:16
right now is still connecting all these things and that and that's what I'm talking about and like it that's kind of
00:31:21
not there yet but in the auto GPT stuff you need a developer right now but anyway I'm deep in it and I am more
00:31:28
excited right now this feels to me like 2005 to 2012 period when you just saw Ajax and
00:31:36
the web and speed just all coming together so quickly and the rapid iteration and is just unbelievable I I
00:31:45
every day I find a new use for it I have made my default web page opening like when I open a new page on my PC it just
00:31:53
opens chatgpt4 now just so I'm forcing myself to use it for every possible task and the people who work for me some of
00:31:59
them are doing it's most of them are not and I'm just trying to drag everybody along
00:32:05
and then you have at the same time that this um a remote work thing happening where
00:32:12
salaries I'm finding are starting to normalize not across cities but across countries
00:32:18
so you know hiring somebody in Canada Estonia Sao Paulo and then you add this AI to it
00:32:26
the cost to do things is this is like I don't know I think everything's going to
00:32:31
cost about 10 all this knowledge work is going to be 10 as expensive to do I don't think it's 10 less chamoth or
00:32:39
the you know I think it's like 90 percent 10 cents on the dollar I agree I agree and I it's not this is
00:32:46
not a five-year 10-year prediction this is like five quarter ten by the way we said that the first organizations to use
00:32:53
this like the canary in the coal mine would be the Consulting organizations and today when Harvey got announced one
00:32:59
of the things that that right on the heels of that pricewaterhousecoopers announced like a billion dollar
00:33:03
investment into AI which makes sense because as a Consulting organization full of lawyers and accountants and I.T
00:33:10
folks those are the services jobs that you get tremendous Leverage if you were to use these tools free to
00:33:17
bring any thoughts I don't know I mean I think we kind of beat this horse to death right we've talked about it for a
00:33:22
couple of months and I think we just keep repeating ourselves are you doing anything when you're first hand are you
00:33:27
playing with it yourself yeah look tell us about that by the way one thing I will say we all talk about cost
00:33:33
reduction and then oh you know knowledge work is dead and we're gonna save money
00:33:37
and all this stuff what what that is always the first reaction to any new point of Leverage
00:33:43
realized from some novel technology the second is suddenly people start doing things that
00:33:50
use that leverage to do things that they couldn't have done before so it's not just about dropping costs it's about
00:33:56
enabling new things that does a hundred times more or unimaginable things prior and I think the next phase of this AI
00:34:05
shock wave that that kind of hit us and hit the world and you know kind of hit Enterprises is
00:34:11
going to be the evolution of integrating those tools in a very unique way with other tools to drive very novel things
00:34:19
forward to create new things new projects new progress that was unfathomable before so it's not just
00:34:25
about cost savings it's going to be about new stuff I shared a link on Twitter yesterday there's some guy I
00:34:31
want to quote him correctly his name is McKay Wrigley so shout out to McKay on his Twitter page
00:34:40
it says that he didn't know how to code in 2019 he learned how to code for the first time he taught himself
00:34:48
and he put together an object recognition tool with chat GPT I saw this video it's crazy with his
00:34:58
webcam and basically he holds up like a Diet Coke and he's like you know tell me
00:35:03
how many calories what is this and how many calories are in it and it's like oh there's no calories in it it's a Diet
00:35:08
Coke and he does this three different times with three different objects and he hacked this thing together in a
00:35:13
couple of hours that is a product that was like theoretically unfeasible or you know kind of very very difficult to kind
00:35:21
of see how you would put that piece together quickly and easily with one person in a room in a few hours
00:35:27
a year ago and here you see a demo of of this person who didn't know how to code
00:35:32
not too long ago putting it together and creating this product that would have been such a profound startup imagine if
00:35:38
you went to VCS 18 months ago and were like look I've got this thing and I hold stuff up in front of it it tells me all
00:35:42
about it and it talks to me and I literally use my voice to talk to it and he basically strung together
00:35:48
a text-to-speech chat GPT an object recognition tool all of this stuff completely open source and a a plug-in
00:35:55
that does web browsing and the whole thing is basically like your own interactive
00:36:00
visual robot it's it's an incredible product demo and I thought it was so amazing and profound I'm sure it's a
00:36:06
prototype and it's kind of janky but it was done in a few hours on almost a no code basis it's incredible so what's
00:36:13
going to come from that is a whole set of new products and ideas and things that we are certainly not thinking about
00:36:19
today but in six months is going to become almost Mainstay and many new categories of products many new
00:36:26
Industries many new businesses are going to emerge that we're not even thinking about so the Luddite argument of oh this
00:36:31
is going to destroy jobs and destroy the economy and drop costs by 90 lawyers are
00:36:35
going to get cheaper et cetera et cetera I think that doesn't even matter it's the tip of the iceberg what's more
00:36:40
exciting is all the new evolutionary stuff that's going to hit the market that's really going to transform the
00:36:45
things that we can do and that we didn't realize we could do there's gonna be incredible analogy for this because what
00:36:51
you're really talking about is more people being able to use tools and be creators and what happened in the 80 is
00:36:59
the 90s when the NBA started playing exhibition games around the world was more people around the world started
00:37:05
playing basketball and then you started seeing people like Luca or before him Yao Ming
00:37:10
Mutombo you start to have people from around the world who had never been exposed to basketball just incredible
00:37:16
porzingis incredible talents emerged because you just had more people playing with the basketball I think
00:37:22
you're going to have more people playing with code and Building Products so you're going to
00:37:26
have incredible amounts of creativity from people who maybe you didn't expect because they didn't go to school for
00:37:34
coding or have that opportunity hey um I mentioned I was in fidai and I was at fenwick's office and then
00:37:43
Wilson cincini's offices to law firms being the law firms in the financial district in the Embarcadero it was an
00:37:50
absolute ghost town and when I say ghost town I mean like serious ghost town like
00:37:55
weird like this is uh still like being in some dystopian science fiction they were the last man on Earth and then we
00:38:03
saw in the group chat today 350 California Street was worth 300 million dollars four years
00:38:09
old it's a 20 two-story glass and Stone Tower it's a picture of it it's going up for sale and they believe
00:38:17
according to the Wall Street Journal that bids will come in at 60 million dollars and 80 percent Decline and we
00:38:23
talked about this commercial real estate uh would have this moment a lot of the banks uh the smaller Regional Banks own
00:38:30
this debt Saks what do you think is going to happen here who is the person who would buy an office tower
00:38:39
in downtown even at an 80 discount knowing that you have to pay all those carrying costs
00:38:45
and there's so much fake in office space and it's only increasing right what's your who
00:38:53
buys this it's called land banking okay explain so in other words okay what I mean is you're right there's 30 vacancy
00:39:00
in San Francisco right now maybe going up even more in the next few years as Lisa's role and people take less space
00:39:08
you may have a countervailing effect in terms of new companies moving back because of AI or expanding so it's
00:39:15
possible you start to see some growth in the office market in San Francisco but the bottom line is 30 plus vacancy is
00:39:22
going to take years and years of growth in order to absorb so you're right this building they can slash it to rent but
00:39:30
they still probably can't fill it I mean there's just no there's just no demand so you're going to be sitting on that
00:39:35
property for five years ten years before the market comes back the way that you need it to but there's no value right oh
00:39:42
it's going to trade way below its replacement cost right if you were to build that building today it would cost
00:39:47
you many times what they're going to pay for it the problem is you can't finance
00:39:51
that purchase with debt because if Billy's not going to generate enough Revenue so that's what I mean by land
00:39:56
banking it's going to have to be an equity investor who's willing to think long term and say I'm going to buy this
00:40:02
at a super distressed price and I'm just going to sit there and hold it and wait
00:40:07
carry it like you said bury the carrying costs until the market comes back but Jay Cal I want to say something I think
00:40:13
it's a great analogy because public growth stocks have declined 70 plus percent right since the uh the market
00:40:19
started to decline and we've talked a lot about the statistic that I've shared a bunch
00:40:25
publicly on how 70 percent of publicly traded companies that have gone public since 2020 are trading below their total
00:40:33
cash invested since since founding which should translate to an estimate that call it somewhere on the order of 70 of
00:40:39
private companies are probably worth less than their preference stack and so they're not worthless companies
00:40:45
they just have a capital structure that is upside down those companies are making products for customers those
00:40:50
products those customers are paying money for those products there's value there there's real value there the
00:40:55
value's just been reset and so it's interesting it's not just the asset class of growth stocks and the asset
00:41:00
class of private companies or private Tech it's also you know in commercial real estate we we try and treat each of
00:41:07
these as if they were in isolation but the problem is many of these assets were funded with some degree of Leverage
00:41:15
preferred stock is leveraged and you know it is a form of death because it has a preference over the
00:41:22
shareholders there the common shareholders the equity holders and the same is true with this commercial real
00:41:27
estate market that there was a certain amount of debt so the availability of low-cost Capital
00:41:32
um securitized against some asset in the form of debt or in the form of preferred
00:41:35
stock in a private company has the same effect which it allowed the valuations to balloon on the equity and now that
00:41:42
the market has re-rationalized the prices down 70 plus percent across all three of these connected but you know
00:41:48
somewhat disparate asset classes you're kind of having this big reset moment and
00:41:51
funny enough the other statistic is the cell phone traffic down 70 in downtown SF right so it's funny all four of these
00:41:58
numbers are pretty much on track yeah there's this chart that's crazy it's literally like you have some cities
00:42:04
that have more cell phone traffic than they did last year or a couple years ago and this is downtown by the way yeah and
00:42:13
Sam I mean The Wider Bay Area is is I don't say booming but it's vibrant yeah I said on last week's show I was looking
00:42:19
for a place to host the accelerator in San Mateo area I got dozens of people contacting me hundreds of locations and
00:42:28
offers at 25 of what their carrying cost is or like not the carrying costs the the rent was and people offering the
00:42:37
major companies offering me free space just because they would like to have Founders hanging around and there was
00:42:43
one project that I really liked the person was like I'll give it to you for whatever just because I want to get more
00:42:48
people to downtown San Mateo uh so that that does sort of prove the point that there is a
00:42:54
what I and I saw this in New York City during the the 90s when things were so cheap people just got creative with
00:43:00
space it inspired people to say I'm going to create an art gallery I'm going to create a performance space and I
00:43:06
don't know when that happens in San Francisco with these spaces but feels like it's going to be a while
00:43:12
I don't know what you when do you think there would be demand for this SpaceX if you had to pick a year over and give
00:43:19
us an over under I mean five years plus I mean just to give you some numbers I think a healthy vacancy
00:43:27
rate and a office Market is five to ten percent a high vacancy rate in a city was considered like 15 like you wouldn't
00:43:35
want to be an office investor in a market that have 15 vacancy five to ten percent was sort of the normal range if
00:43:42
you were under five percent it was a super hot market and then 10 to 15 was sort of a
00:43:46
not great Market from an investor standpoint so they're at 30 plus and like I said it could get worse
00:43:54
before it gets better because it's Lisa's role people are going to shed more space that that they might not
00:43:58
already be subleasing so the real number might be like 40 percent I think it's like yeah it doesn't seem
00:44:07
like a decade it's a decade assuming that San Francisco gets his house in order and companies come back speaking
00:44:15
of that new companies are created and they don't completely wreck it it's not clear to me that like things will go in
00:44:19
the right direction I mean speaking of that do we want to bring up this horrific uh bear spray
00:44:25
attack now you want to cue that up sax I mean we're like in full-on Gotham City now now we have vigilantes
00:44:33
there was a story of a fire commissioner named uh don carmignani who was beaten with a metal pipe by a gang of homeless
00:44:42
addicts who were encamped in front of his mother's house and apparently they were harassing her and they were doing
00:44:49
drugs smoking drugs or whatever right in front of not not pot it was like professional whatever fentanyl or meth
00:44:56
or crack something like a hard drug and um so what we know is he went down there
00:45:01
had words with them Boop you know and they bashed them upside the head with a pipe and uh now
00:45:11
it turns out that he was accused by the defendant's lawyer the one who assaulted
00:45:16
him so we don't really know what's true here of using bear spray on them first so the da dropped charges the lawyer for
00:45:23
the defendant in that case is saying that he apparently was the perpetrator of these bear spray attacks on
00:45:30
on homeless people going back a number of years I guess there's a like you said pretty gnarly video of of yeah
00:45:41
but obviously the D.A thought something was kind of hinky because they dropped charges against the the guy who
00:45:46
assaulted him we shouldn't the person who sprays the bear spray and the person who beat somebody with a pipe shouldn't
00:45:52
both people yeah yeah yeah of course listen there's video of somebody bear spraying homeless people
00:45:59
and that's clearly wrong however that was from a couple years ago the one that was released is from 2021 we have video
00:46:05
from the night that carbignani was assaulted that they were chasing him down they're
00:46:12
chasing him down yes with the metal pipe and even even if they were acting in self-defense you can't go chasing the
00:46:18
guy dude that's not self-defense more damage on exactly that's Vengeance that's not self-defense yes so they took
00:46:24
it out of that zone of self-defense and they were chasing after him and if you saw what he looked like after the attack
00:46:30
but they were using deadly force he could have been killed and you know if Donna gotten killed by the metal pipe I
00:46:37
don't think it'd be a defense that he bear sprayed them first it would have been an excessive use of
00:46:43
force so yeah but in any event I mean where the D.A ended up on this it was just a drop charges from that night but
00:46:50
you know that they're going to drop those charges I think that that's going to be untenable you know they already
00:46:55
dropped the charges they have to I mean justice has to be blind correct I mean you're you're
00:47:01
you're a trained lawyer here we have to apply the law equally to the sadistic insane person who wait a second they
00:47:09
arrested the guy who hosed the person down didn't they arrest them as well I remember seeing a perp walk we talked
00:47:14
about that on the future anyway it's Gotham City folks this has gone to Pure yeah this proves anything I mean again
00:47:20
what they're trying to say now is that because of of the actions that Don took that San Francisco is safe and there's
00:47:26
nothing to worry about and these addicts people who are encamped on the sidewalks
00:47:30
doing drugs doing hard drugs there's nothing to worry about because somehow they were provoked by karmagnani and I
00:47:37
just think I agree with you that this is part of an overall pattern of chaos and
00:47:41
lawlessness in the city it is like Gotham City so you know it doesn't make me feel a lot
00:47:47
better about what's happening on the streets it's nuts Shabbat you wanted to add something I
00:47:52
want Freebird too oh Riff on lab meat uh yes well there was actually a story about this I guess there's two types of
00:48:00
lab there's two types of mock Meats I've Had The Impossible Burger yeah I've never craved an impossible
00:48:07
Burger there's so many great Burgers you can get out there Shake Shack Five Guys
00:48:09
in and out why would I go to get this impossible Burger unless I was doing it like vegan stuff but then there was also
00:48:14
supposed to be 3D printed meets and this stuff seems to be taking forever where is this at because there was a story in
00:48:19
the Wall Street Journal about how poorly this is apparently going so there's three
00:48:27
categories of these alternative proteins to traditional animal protein the first is
00:48:34
these call it alternative proteins where you use things like soy protein or pea protein Beyond Burger is a good
00:48:44
example they have a pea protein based burger and so that category was kind of hot for a minute where
00:48:51
everyone was like oh it's an eco-conscious decision people will make the shift and you know beyond Mead had this
00:48:57
massive IPO and the stock went crazy and I someone said it was the biggest return
00:49:00
ever for Kleiner Perkins but it really was just taking plant protein processing it and trying to make it sort of mimic
00:49:06
the texture and flavor and taste of animal protein and it's more expensive so I've
00:49:12
generally been fairly negative on whether that really moves the needle right the the needle for me is can you
00:49:17
replace animal proteins traditionally and stop using all this land and putting all this carbon into the atmosphere and
00:49:23
all this water and all these resources that we use to make all these animal proteins which I think is both kind of
00:49:28
ethically incorrect but also extraordinarily environmentally costly sorry can I ask a question qualifying
00:49:33
question do you think it's also important for it to not just replace natural products despite
00:49:39
all of those externalities you talked about with artificial products with chemicals and sugar
00:49:44
so first of all everything is a chemical so that the you know I think the the categorization of you know all
00:49:51
chemicals are bad and silly because everything is made of chemicals I think it's a question of are there bad things
00:49:56
that are being put in there that's not good for your health to make it flavorful or whatever and
00:50:01
that that may or may not be the case it's really product dependent I don't think it's a good generalization
00:50:05
but do you so you think when I eat a salad I'm just eating chemicals it is chemicals yeah got it but coffee
00:50:12
ones right healthy chemicals there's good in there or bad yeah for sure and then bad chemicals are in like sugary
00:50:18
cereal yeah like refined sugar is bad for sure right that's a bad chemical and no I'm just I just want to understand
00:50:23
how you just viewed as a spectrum of chemicals some good some bad yeah there's things that are good for you
00:50:28
there's good fats there's bad fats there's there's you know and even in the category of sugar some people say all
00:50:33
sugars are bad some people say some sugars are better than were others as measured by the glycemic index all you
00:50:39
know there's a lot of ways to kind of look at this stuff is beyond meat and these P ones uh they're all processed
00:50:44
highly processed they got a lot of salt they got a lot of fat right they're they're not good for you so the way that
00:50:50
Beyond and impossible and others have tried to make it taste good for people is they've added a lot of you know
00:50:56
saturated fats which is a way to drive the mouth feel and make it taste good but then a lot of doctors at the
00:51:02
American Heart Association came out and said that those fats are really bad for your heart and you should meet them
00:51:07
and also there's been a general kind of consumer sentiment shift so a couple years ago these were the hottest
00:51:13
products it was like all the food ingredient companies were shifting to plant-based proteins and they were
00:51:18
building plant-based protein business categories and it was this big hot thing and then they came out and they're like
00:51:23
wait a second this isn't going as we thought what happens is people try them out and they're like yeah that's a cool
00:51:29
thing I want to do good for the planet but would I rather pay five bucks for a do good for the Planet Burger that kind
00:51:34
of doesn't taste that good or would I rather pay three bucks for a burger that tastes really good and what happens is B
00:51:41
B I choose option b yeah and so do most people right and so almost all people and that's the point of view I've always
00:51:47
shared I said it's just it's not going to win the hearts and minds of the world unless it's cheaper and it tastes better
00:51:52
and healthier and it's identical yeah and doesn't damage your health doesn't make you worse exactly so the more
00:51:57
challenging technical solution is the other two categories the second category is can you synthesize animal proteins
00:52:04
using recombinant DNA so this is where you take the DNA that codes for the protein whether it's the milk protein or
00:52:11
the egg protein or the cheese protein and you put it in a bacterial cell or a yeast cell that are used to ferment that
00:52:17
we use to make wine that we use to make beer and they eat sugar and then they spit out a product and in the case of
00:52:23
wine and beer they eat sugar from grapes or for from malt or whatever and they spit out alcohol ethanol and Genentech
00:52:30
was the first company to really Pioneer recombinant DNA at a mass scale they basically use recombinant DNA to make
00:52:36
insulin so they took the DNA from humans that that codes for insulin the gene for
00:52:41
insulin they put in E coli bacteria and then they put the E coli bacteria in a big tank and the E coli start to
00:52:47
duplicate and they make all this insulin and that's how we make all the world's insulin today it's using that
00:52:51
biomanufacturing process and it's how we make all of biologic drugs all antibody
00:52:56
drugs are made this way it's a 300 billion year Market just in biologic drugs so when crispr kind of came about
00:53:02
in 2012 suddenly the toolkit to go in and do a much better job and a much cheaper job of editing the genomes of
00:53:10
those little microbes to make them more efficient at making these proteins became standard and everyone said let's
00:53:15
go use this new category of what's being called synthetic biology or synbio to make all these animal proteins that we
00:53:22
use animals to get today so can I just ask a question is the idea that if you use recombinant DNA in this process it
00:53:28
would taste better and be healthier in all this chemically identical so it's the exact same protein as you can get
00:53:34
and just I understand it'd be the exact same under a microscope or whatever but would it taste the same tastes exact
00:53:40
same totally exact same so that's the whole point do we know that or was that that was the guess no we know that it's
00:53:46
the same protein shamat so whether you get the protein from the cow or you get the protein from the yeast cell so
00:53:51
what's the issue it's too expensive to do this process because so the key metric in that second category is
00:53:57
productivity grams per liter per day how well can you get that little microorganism to make that protein the
00:54:04
more protein it makes per day the cheaper the price per protein and we're still a far ways off from getting this
00:54:09
to be price competitive so that's a a challenged category right now there's a lot of I'm invested in a couple of
00:54:15
companies in this space where we're trying to make it faster and cheaper to do that strain engineering to edit the
00:54:20
genome up front and make them make those little cells more productive to bring the price per gram down and hopefully
00:54:25
make it compete ultimately with the traditional market for eggs cheese milk Etc but what is the constraint is it an
00:54:31
energy constraint or is it an actual biological incapability no so the great thing is our first principles basis the
00:54:38
biophysics indicates that this should make proteins cheaper and that is good for the planet it's good for human
00:54:43
health it's good for everything we should be able to make eggs cheese milk all this stuff exactly the same as what
00:54:49
you get from an animal without the animal because the biophysics of a single cell making it is better than the
00:54:54
biophysics of a whole animal think about a chicken it grows feathers it bucks it
00:54:58
walks around it has energy it makes heat so the chicken as a system is not that energy efficient but a little cell that
00:55:04
just eats sugar and it's programmed to do one thing and one thing only eat sugar make protein each sugar make
00:55:09
protein and spit as much of it out you Theory officially can make it way more efficient exactly now we're making great
00:55:15
progress but we're not there yet we're not a commodity price point why I'm trying to ask why where's the failure
00:55:20
Point there's two failure points sorry I should I should say there's three the first is strain engineering which is you
00:55:25
want to shuffle all the other genes in the organism to stop doing things like growing a bigger cell wall or you know
00:55:32
taking your time to duplicate you want to change the Genome of the cell to get it to do stuff faster the second stage
00:55:37
is process engineering when you put that cell in a tank you're changing the sugar
00:55:42
the methanol the CO2 the oxygen the pH everything about that tank and the condition of the tank has to be adjusted
00:55:48
so there's about 60 variables and those 60 variables all need to be tuned and tweaked before you optimize the
00:55:54
performance of production the third category is the hardest which is scale Manufacturing there's about a
00:56:00
hundred million liters of biomanufacturing capacity on Earth today 95 million liters it's owned and
00:56:06
operated by companies that use and when I say buy a manufacturing capacity I'm talking about big stainless steel tanks
00:56:11
you pour water you pour sugar you pour your cells in they make hobbies and they make your stuff of that 100 million
00:56:18
liters 95 million is owned and operated by companies 5 million is available for rent of that 5 million liters 4 million
00:56:25
is rented for its entire lifespan by some company usually a biologic Drug Company because very little of this is
00:56:30
being done in food today so there's only a million liters left to rent and there's 200 syn bio startups trying to
00:56:35
make animal proteins and they've all competed for this this capacity so the capacity cost has gone up by about
00:56:40
fourfold but it sounds like the the latter two you can overcome with capital but the first one is really bounded by
00:56:47
science it's more engineering because we're back is kind of What's called the tighter curve which is grams per liter
00:56:53
and the more experiment you do the higher that number goes and so if you can increase your experimental rate and
00:56:59
the few the few grams that it does produce today when when a normal person tastes it they're like Yep this tastes
00:57:04
the same as a a wagyu rib eye no so remember I'm talking about proteins right now I'm not talking about cellular
00:57:12
meat I want to talk about cellular meat last which is the hardest category which
00:57:16
is what you're talking about I'm talking about taking that protein and then using
00:57:19
it to make a product like a like a cheese or you know using it as an egg replacer that kind of stuff it's the
00:57:24
same protein as what you would get from eggs or milk or what have you this all just sounds so hard well it's a big
00:57:30
problem and it's a lot of money so is that a problem eggs alone or 200 billion dollars a year I mean the methane
00:57:36
released from cows is one of the largest contributors to global warming it's a it's a real
00:57:40
problem also we're going to need to solve this Jamaica there's a lot of resources we're going to colonize Uranus
00:57:46
we're going to need to get food there I just asked the question like if you if you go after the high emission
00:57:51
categories first do you give yourself room to leave these things because you're doing so much already
00:57:57
just a question animal agriculture emissions are one of the largest and unfortunately one of the biggest drivers
00:58:04
because it's people's GDP per capita increments the first thing they spend money on is probably no I get it I'm
00:58:09
saying something different which is if we just invented better heat pumps you'd have industrial Heating and Cooling
00:58:14
which represents like almost a third of all greenhouse gas emissions you get that off and you give yourself a lot of
00:58:20
time and space and room and maybe you let the cows Roam and Belch and burp because the tape the meat just tastes
00:58:26
better and you don't have to spend a bunch of time and effort I don't think it's an ore I think it's an antimoff I
00:58:30
think we should be doing all these things and I think that I I'm a big believer as you guys know in markets so
00:58:36
I'm not a believer in transition for the sake of you know Carbon saving because people aren't going to pay a premium as
00:58:42
we've seen with the kind of alternative Meat Market fifteen dollars people want some cheaper hamburgers that's one
00:58:48
cheaper cheaper cheaper so if you can make proteins cheaper it's also a great Roi you can make money doing this
00:58:54
and the market will buy it because it's cheaper protein sorry I just want to I just want to hit on this because we keep
00:59:00
sidetracked a little bit the third category is the one that the article was about which is cellular meat so cellular
00:59:05
meat is where you're trying to make your wagyu or your shrimp or your fish you're
00:59:09
trying to make cells not just proteins but entire cells and those cells stick together and they look and cook and feel
00:59:15
and taste like cellular meat like like muscle like what you eat when you eat fish or beef or whatever
00:59:22
and the problem there is you're trying to take a cell and cells normally grow on you know bones and on tissue and so
00:59:29
there's scaffolding and all these systems that hold all the cells together and so to get cells to grow in a tank
00:59:35
and stick together and replicate without other cells signaling them turns out to
00:59:40
be really expensive there was an executive at Merck I spoke to a few months ago and he said we're going to
00:59:44
sell fetal bovine serum which is basically like this liquid that they get from the fetuses of cows and this is how
00:59:51
cellular meat started they took a cell from a cow and they put it in a tank with fetal bovine serum and the cell
00:59:57
started to replicate and duplicate and then they could take those cells and try and turn them into a beef into a burger
01:00:02
and sell it or try it that was the million dollar burger if you remember that a couple years ago and Fetal bovine
01:00:07
serum Market has gone through the roof because so many companies are trying to make cellular meat and the Merc exact
01:00:12
was like we're going to sell a billion dollars of fetal bovine serum and then we're going to sell zero because No
01:00:16
One's Gonna Be able to make money doing this it's just impossible you're not gonna sell 500 Burgers so the technical
01:00:21
challenge there is do you have to edit the cells to get them to duplicate you have to get them to grow in suspension
01:00:27
meaning in a tank instead of growing on Bones and growing next to each other and
01:00:30
Scaffolding and then you have to change the feedstock so that you're creating all these other proteins and signaling
01:00:35
factors and hormones that you pour into the tank that trigger those cells to grow is there any chance that after all
01:00:41
this it's it actually just tastes slightly different or better it may yeah it may but likely not I mean let's be
01:00:48
honest these are you're taking a cow cell or a salmon cell now the reason I say this is that I don't know if you I
01:00:54
mean you don't eat meat so maybe you don't know this but depending on where the water that they drink the actual
01:01:01
grass that they eat the meat does taste different and that's part of the whether the cow
01:01:07
is massage I mean look at the acorn fed cows the beef that we used to have at poker
01:01:13
before austerity measures life was so good in 2021 well that's that no we can't get it anymore yeah I know we're
01:01:20
on a budget I get it no not us we can't get it anymore because they sell it through one channel
01:01:25
um but yeah like it's so good yeah the variation you're talking about is obviously at an Echelon and a class of
01:01:32
eating chamoth it's probably not Mainstay like you know the thirty thousand dollar a year McDonald's burger
01:01:37
and chicken nugget eater is probably happy to take no I disagree with you chicken nugget that tastes I disagree
01:01:42
with you because if you go into Whole Foods and you actually buy like a USDA top sirloin there's a certain taste that
01:01:48
it has that things that are not USDA don't have so even even at like the most basic layer of the food pyramid
01:01:56
you can differentiate on taste based on the same this is why I'm saying I think it's just a very complicated long
01:02:03
drawn-out process and I just wonder if the people that are in these businesses if they actually love food or not I
01:02:09
understand why they love the science I get it and why they would love to save the planet I get that too
01:02:14
but unless some of these people are are also food lovers they're gonna miss I think the thing where it all dies
01:02:20
anyways I just want to restate again for the final time these are these are identical cells and identical proteins
01:02:27
to what you're getting from the animal so they are not like what we talked about in that first category where
01:02:32
you're trying to get other stuff to sort of taste like meat you're literally trying to create the meat and create the
01:02:37
protein using these systems I'm just trying to tell you that salmon two pieces of salmon can taste totally
01:02:45
different depending on where it swam right I and I guess what I could say is the same protein yeah you could probably
01:02:50
adjust the conditions in the tank if needed to change the the characteristic this is my point like you don't even
01:02:55
know where to start how is it the [ __ ] kelp in the Atlantic Ocean like what are you changing look I don't know
01:03:01
what kelp effects on the salmon I don't know if salmon but this is my point Nobody Does the Atlantic Ocean this is
01:03:07
why we pay so much for the acorn fed beef I get it but most beef is not uh kelp from the Atlantic Ocean fed salmon
01:03:14
it's animals grown in very large feedlots fed corn and water that's it let me just say that again 90 95 of
01:03:21
animal protein consumed is cows pigs and chickens grown in feedlots fed corn and
01:03:27
soybeans and water and that's it right but if you if you go to different countries and taste the meat that's fed
01:03:32
in that exact same way it tastes different so for example if you go to Argentina I appreciate what you're
01:03:38
saying but the point I'm trying to imagine you can recreate whatever the system is that you're talking about so I
01:03:43
want to just get back to the unit economics the cost per kilogram or the cost per gram of the protein we are
01:03:49
still many orders of magnitude away on cellular meat so the problems you're laying out are really down the road
01:03:54
problems of optimization right now we've got more fundamental problems on how do
01:03:58
you actually get this stuff to be cost competitive now fortunately the tools of crispr and since crispr cast 9 came out
01:04:03
10 years ago there are now hundreds of variants that are open source IP free royalty free and used very broadly and
01:04:10
generally and DNA sequencing costs continue to decline those are the two basic tools that are being used by
01:04:15
biochemists and Engineers to do rapid evolutionary iteration needed to produce the recombinant production of proteins
01:04:23
to produce the new cells to produce the feedstock for those tanks and there's a cost curve that we're trying to get over
01:04:28
it's not happening overnight hundreds of millions of dollars and in several cases
01:04:32
billions of dollars have gone into these systems and it's very likely that these
01:04:36
companies may need several more years and several billion dollars we are going to get there the technology is
01:04:41
progressing the rate of progress is a little slower and it's a little more challenged I think than the first round
01:04:48
of investors had hoped but I do think that scientifically in first principles it is absolutely feasible it's a
01:04:54
function of engineering our way there to giving to moth and everyone else that eats burgers and chicken nuggets
01:04:59
everything that they want hopefully at a lower price if you put it on the curve of uh self-driving cars you know we have
01:05:04
Crews doing some automated taxis in like a very constrained area in San Francisco
01:05:09
but we don't have it everywhere where do you put this on the curve it's a great question so so what's happened by the
01:05:15
way as we've gotten down the cost curve we are unlocking new markets so new products are being produced existing
01:05:22
proteins that are come from animals there's a good example of a product called pepsin it's uh it's extracted
01:05:28
from pigs today it's very expensive similar to how we used to make insulin and we're replacing the sourcing of that
01:05:33
product we replaced insulin which we used to get from pigsplains we now make it recombinantly we're now replacing
01:05:39
pepsin we're replacing the the rennet that's used to make cheese so as we move down the cost curve these Hive what are
01:05:46
called high value proteins are the first to fall those markets collapse because we now make them recombinantly they were
01:05:52
sorry they collapse in price because they're now cheaper using recombinant systems instead of taking
01:05:56
them from animals and eventually we'll get to that cost curve where they're ubiquitous for all proteins or for all
01:06:01
types of cells in the meantime they're pretty sizable markets to go after these are multi-billion dollar markets that
01:06:06
are getting knocked down we don't talk about it every day it doesn't show up in the news but it's really profound and
01:06:11
interesting to see that this technology is working it's overturning multi-billion dollar markets it's making
01:06:17
progress and you know hopefully it'll it'll get to the point that you know everything from the chicken nugget to
01:06:23
the kelp fed salmon can have you guys tried a Beyond Burger or an impossible Burger I've had it I've tried them a
01:06:30
long time ago but I've not tried them recently they're like it's like eating something mushy that's 60 percent of
01:06:38
average hamburger it's not worth paying double for certainly for somebody who's a hamburger eater
01:06:45
so while we were talking by the way Amazon's results came out they crushed it earnings per share of 31 cents versus
01:06:54
11. and uh stock is about 10 10 off hours and it was up four percent today for The Insider Traders exactly how do
01:07:04
you feel about your recession prediction I'm sticking by it I think we're still going to have a recession but it is an
01:07:10
interesting Paradox here so I think there's only a couple possibilities either Tech is sort of immune or they forecast
01:07:19
down so much they were so conservative in their forecast thinking we're going to be in a recession that it was easy to
01:07:25
beat or look I could be wrong about the recession but Powell is saying it and pal is saying if it's not a
01:07:32
recession it's gonna be less than one percent growth it's gonna be a thousand year to recession so it's not credible
01:07:37
so I'm not revising my forecast well I I think pal is credible when he's giving us bad news because their
01:07:43
incentive is always to fluff it up and make it sound better than it is so when he's telling you things look bad maybe
01:07:49
they're looking really bad I don't know man but look it's A Tale of Two Cities right now I mean the big tech
01:07:56
companies seem to be doing really well so it's it's definitely a paradox yeah all right everybody well the whole
01:08:03
RFK thing okay that's a good topic yeah great topic go ahead I think we should tell
01:08:07
people like what he's about where are all ears I think he gave a terrific announcement speech okay and just give
01:08:14
you some background for the younger viewers who may not know so Robert F Kennedy his father ran for
01:08:21
the Democratic nomination in 1968 after his brother John F Kennedy had been president as assassinated as we know in
01:08:27
the early 1960s what happened is at this time before the 1968 election Lyndon B Johnson was the incumbent Democratic
01:08:35
president and everyone thought that he'd be the party's nominee and he was going
01:08:39
to get reelected and he was brought down by an extremely unpopular War the Vietnam War and it was RFK Jr's father
01:08:46
who was a great critic of the Vietnam War and he ran for the Democratic nomination and I think that he very
01:08:52
likely would have gotten it on the night that he won the California primary he was assassinated by Sirhan Sir Henry
01:08:58
yeah if you go back and look at the things that he was saying in that campaign he really was saying a lot of
01:09:04
beautiful things that are in his son's add that I think would be worth playing here but I I think you have maybe the
01:09:12
setup for a similar situation here you've got an incumbent Democratic president who is sort of not that
01:09:18
popular he's sort of old and out of it and incoherent he's presiding over a war that is rapidly becoming a debacle you
01:09:25
don't hear so much about the spring counter offensive anymore these new Pentagon papers that were leaks show
01:09:30
that the Ukrainian casualties are at least five times greater than have been publicly admitting it looks like Russia
01:09:37
is certainly not losing the war the way they used to be they've captured 90 of Bak mud which has been the most violent
01:09:42
bloody Battle of the war and Biden at this point has no strategy to bring that to an end in fact he's rejected multiple
01:09:49
attempts at a peace deal and so now it looks like it's the Chinese who are in the driver's seat potentially putting
01:09:56
together some sort of diplomatic settlement so I think listen if the economy ends up going into recession and
01:10:02
this war ends up becoming the Fiasco that's increasingly looking like you could have a setup like 1968 where
01:10:08
people are wondering why the hell is this guy our nominee and let me tell you RFK Juniors already pulling at 19 which
01:10:14
I think is pretty good considering he just came out of the gate and people don't even know the substance of his
01:10:19
campaign yet Marion Williamson's at nine percent so if she dropped out you'd be at 28 for the alternative and I think he
01:10:27
could go up from here and I think if you if you watch the speech he gave I thought there was a lot of really
01:10:33
beautiful sentiments in there it's very good he said that Biden has made Ukraine
01:10:38
a pawn and a geopolitical battle that has put the flower of Ukraine's youth into an avatar of death in order to
01:10:44
exhaust Russia he channeled America's anti-war Traditions he quoted John Quincy Adams that America should not go
01:10:51
abroad in search of monsters to destroy he quoted Martin Luther King Jr there's a direct link between poverty and
01:10:57
violence and oppression at home and War abroad he talked about the role of the CIA during
01:11:05
his uncle's Administration where he said that John F Kennedy eventually realized
01:11:11
that the purpose the CIA had become to create a steady pipeline of Wars to feed the military-industrial complex and he
01:11:18
talks about how JFK came to distrust the CIA and realized that it was lying to him and the biggest Applause of his
01:11:26
speech was when he quoted JFK approvingly saying that he wanted to take the CIA and shatter it into a
01:11:32
thousand pieces and Scattered to the winds and this very same week that he gave the speech we found out that five
01:11:37
former CIA directors have participated in a giant hoax on the American people by
01:11:43
claiming that this Hunter Biden's story was Russian disinformation they knew it was not they knew it was not the
01:11:50
information on the hard drive was real it showed that Hunter Biden received multi-million dollar payments from
01:11:56
foreign governments including China and Ukraine okay and regardless of what you think of that story it should not have
01:12:03
been suppressed by social media and it certainly should not have been suppressed in a psyop by 51 former
01:12:10
intelligence officials including five former directors of the CIA and if that's the way they're going to behave
01:12:16
if they're going to meddle in American politics that way I think we do need to start over we do need to ask what's
01:12:21
going on with the security state they're not supposed to be meddling in American
01:12:23
politics that way so I think if this is the way they're going to act I say shatter away scatter
01:12:29
that thing into a thousand pieces hey it's Catholic I'll vote for him and he's called out the insanity of
01:12:37
covid lockdowns and man that's the thing that he's I guess that's the big controversy is he's anti he's an
01:12:44
anti-vaxxer I guess that's the one thing they're trying to position him as and he
01:12:48
does conspiracy theories so so listen if you go back and look at his record he was an environmental activist for most
01:12:55
of his people here he did the worship Project New York where they basically bought the land along the Hudson I
01:13:00
remember I was at some events for it they wanted to clean the Hudson up and they just bought the land and didn't
01:13:05
people donated the land and they bought it they raised money and uh the Hudson today has like
01:13:11
you know it's it's flourishing amazingly and he's directly responsible for that he was a big critic of the way that
01:13:17
corporate greed could lead certain big companies to engage in environmental pollution and at certain point he
01:13:23
realized that big Pharma had a similar incentive now I don't know if he was right about those vaccines but I do know
01:13:28
that he's right in the case of covid they had an incentive to push this dubious RNA shot on us so they would get boosted
01:13:36
a zillion times and he's right about that he was right about the fact that this should never have been mandated we
01:13:41
should not have the lockdowns and you know what in his nomination speech or his declaration the word vaccine was
01:13:47
only mentioned once so this is not what his campaign is about I look forward to having him on
01:13:52
yeah and to be honest I mean look at all the other things that were deemed to be
01:13:56
conspiracy theories that ended up being true oh yeah Monster not that you go either way or it could
01:14:05
be embarrassing let me ask you this ax if it was him versus Trump who do you vote for
01:14:09
well I'm gonna I'm gonna Reserve okay versus Trump sex I'm not going to take a position on the General yet but but in
01:14:16
in the Democratic primary I'm definitely endorsing RFK Jr in the narcotic primary
01:14:27
all right everybody uh to all the amazing people who got together for the episode
01:14:32
unbelievable over 40 or 50 of them Ray great job shout out to Ray shout out to Ray I dialed into a bunch of them in I
01:14:40
think oh that's great Europe and I don't know all over the place no one got robbed or
01:14:46
mugged or bearish but hopefully I don't know if they did any in San Francisco there's no bear spray incense so that's
01:14:50
good all right four of the Sultan of science the dictator himself and the mouth feel
01:15:03
and Rain Man I am the world's greatest moderator we'll see you next time everybody love you boys
01:15:12
let your winners ride Rain Man Davidson we open source it to the fans and they've just gone crazy
01:15:23
[Music] it's like this like sexual tension that they just need to release [Music]
01:15:56
where did you get Mercies [Music]