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I'm now recording Jesus you look terrible what's going on did you sleep last night do I look tired you look a
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little tired you look unshaven yeah what happened last night I had a holiday party at my house last night from my
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office and you look destroyed yeah what's going I mean did you drink I did drink yeah what does vodka and oat milk
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taste like you had a White Russian a White Russian people with oatmeal he's like I want a White
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Russian with oatmeal oh my God actually my white russian is made with only and please compliment that with a huge punch
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in the face give me five minutes I'm gonna go I'm gonna go shave and it's called The Hair
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of the Dog yeah yeah either a little Bloody Mary you're banana man should I go get a beer I might get a
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beer just to beat this hangover go do it yeah go get a beer hang on I'll be right
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back [Music] [Music] all right listen uh we have to start with scam Bank Run fraud I mean Sam I've
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been free I get that wrong sometimes uh he was interviewed by uh Andrew or Sorkin the
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suit at deal book who gave him softball after softball then the next day he was on good morning really passive
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aggressive right now a little bit Yeah but Jake house got a point he's got a point a little bit a little bit a little
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bit anyway the New York Times continues to embarrass themselves uh by handling Sam Bachmann fraud with kid gloves wow
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George Stephanopoulos my Greek brother Stephanopoulos the Spartan came in and absolutely fricassade and filleted
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sambachment freed a Good Morning America very important to note that Good Morning
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America uh the segment was between holiday cocktails and the cast of The White Lotus and Andrew Sorkin was at the
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deal book Finance conference but you know that that Stephanopoulos interview was two hours but they reduced it down
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to 10 minutes so there were probably a lot of sort of cordial conversation banter and then softball questions and
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then he does stick the knife in and and does the fricassee but he cuts out all the other stuff so he just gets it down
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to the 10 minutes what Stephanopoulos did to him was extraordinary in that he said over and over again in the FTX
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terms of service you cannot touch the user accounts but you at Alameda were taking them and you were loaning them
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out I don't know who is advising uh Sam bankman Freed at this point but why he is talking so much he was also on a two
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hour Twitter spaces after all this at this point sax what do you think is going on
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here in the mind of Sam bankmanfried and also the media which seems to have a very variable way of dealing with this
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obvious fraud and crime right okay well you know I can speculate about SBF I think if there is a strategy here it is
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this he is basically copying two criminal negligence in order to avoid the more serious charges of Fraud and I
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think again if there's a strategy here it is he saw himself being defined as Bernie Madoff 2.0 in the press and if
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that image which may well be true cemented around him then prosecutors would never stop they would never accept
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a plea that basically gave him anything less than I made off like sentence which
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would be you know decades in prison maybe a life sentence so he is out there doing what lawyers would tell you never
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to do which is basically incriminate yourself create more of a record but he's doing it to change the public
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perception maybe muddy up the public perception get people thinking that okay he you know this that he he's admitting
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he did something wrong but it wasn't deliberate it wasn't fraudulent it was just basically carelessness or
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sloppiness if he succeeds in mudding the waters enough then maybe the prosecutors
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will give him a plea deal that allows him to have his life back at some point I think that would be the crazy like a
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fox explanation of what's Happening now there is you know an alternative explanation as well which is I just
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think that these types of guys you could call it you know a narcissistic fraudster do you
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think they can talk the way out of anything you know because they have they have um you know when they've talked
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their way into getting hundreds of millions of dollars of investment billions billions uh in some cases and
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so they just feel and they've been trained by employees Partners investors the press that they can talk their way out
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of any of this stuff I think yeah the average person is not really used to dealing with one of these personality
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types who um is I mean they clearly are smart and they're articulate articulate and they
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know what to say and they're crafting their words what they've learned through their life is that if they use the
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precise magic words with a person they can pretty much you know convince them of anything get them to do anything and
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in particular I would say investors tend to fall for this not because investors are dumb but because investors are so
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clear about what they're looking for and we're predictable they're predictable yeah like we're you know VCS especially
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we're looking for the 100x outcome or whatever so it's easy for this type of personality to construct a story to
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essentially stroke the erogenous zones of a VC whoa yeah and and and sort of trick them and so there is probably a
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positive reinforcement Loop that gets created in the minds of one of these people who and they start to think that
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they can basically talk their way out out of any situation so I think that would be part of what's going on here
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and you know if you look at sort of the tactics that he's using to do this you know all of a sudden he's trying to
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portray himself you know before this he's portraying himself as a smart guy in the room now all of a sudden it's
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this babe in the woods impression where I didn't know it was my subordinator I wasn't really in control
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right each individual decision he says looked sensible to him it's just it all added up to something he didn't
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anticipate like really you know loaning yourself a billion dollars of of basically the company's money which was
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basically customer money that seemed reasonable to you I don't know how you defend that individual decision and
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there's many like that but but this is sort of the narrative that he's trying to construct and
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um let me stop there but I think there's a lot more that can be said to dismantle
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The Narrative he's trying to create what's your take on this and then can I make a comparison to SBF and Trump
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through the lens of the media so if you go back to 2016 you know Donald Trump violated every single
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establishment bias that these left Progressive journalist Elites had and so they basically just attacked
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attacked attacked attack attacked but then you went into the election and there was a very clear data point
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that said whatever you thought was that was at best limited and you missed the tone of the country
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because 50 plus percent of the country held a very different view about this person and instead of taking a step back
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and and then the left media the mainstream media re-underwriting and learning and then
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saying you know what Mia khalpa I got this wrong they just doubled down and they said no it still doesn't meet our
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priors and so we're just going to ring fence this problem and we're going to just try to destroy this issue because
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you know we want to control the narrative and and and by result we want to control Power
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now you look at SPF it's the exact opposite he went to the perfect elite private high school
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then he went to one of the most prestigious elite private universities MIT his parents teach governance of all
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things at one of the most elite liberal institutions in America Stanford they are in the establishment of the
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progressive left and what happened was he took customer funds and all of this money he made tens
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of millions of dollars of political donations he wrapped himself in this blanket of a progressive left-leaning
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cause called effective altruism and all of the mainstream media fell for it and embraced him as well as some
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politicians because it met everything that they themselves also bought into yes and now you have this cataclysmic event
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a multi-deca billion dollar fraud or bankruptcy millions of customer accounts who are frozen you know tens of millions
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to hundreds of millions to billions of dollars lost and stolen from them and they refused to re-underwrite this
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kid and the reason is because in order to do so it's like eating your own tail and that's why they don't want to do it
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and so this is why you have the media basically allowing him to do an apology tour
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now this is his second time at manipulating them the first time he was able to manipulate them by basically
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being one of them and now he's allowing them and their desire to basically protect themselves
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so that he can create some kind of a defense for himself and I just think the whole thing is gross because it misses
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the entire mood of the nation this is an enormous financial fraud that was perpetrated on tens of millions of
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people and there's no accountability because in order to do so the media would effectively have to admit that they
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missed it and they got it wrong and they refused to do it and I think like that is the really big problem that nobody is
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really speaking out about is like well if these folks are meant to be the last stop
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to make sure that there's truth and honesty and transparency in society and you can't count on them and in fact
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they're just going to reflect their own narrative what is one supposed to do to learn the truth
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in a way what you're saying and then we'll go to your freeberg is this fraud was encased in all the Gilded facade
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that America hates right now reflects the institutional rot of America it reflects every single aspect of
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institutional rot that every non-elite talks about all the time but Elites when they have those labels
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will refuse to give up and just to add to that the the thing that's missing that I'd say one of the big issues with
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the institutional rot in our country is the lack of accountability when somebody
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gets it wrong we saw this with covid right the health establishment is saying that they want amnesty yeah and Atlantic
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magazine was willing to give it to them so the point is that this this class of people think that when they get it wrong
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that they're the experts but when they get wrong there should be no accountability and such a mouth to your
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point the media and these institutions are not willing to re-underwrite SBF when he so clearly as a fraudster uh
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Freeburg what do you think the of this Theory you had a large amount of donations to politicians uh obviously
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you have coming from Stanford MIT Etc and then uh you have these Investments gifts slash advertising slash donations
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to propublica Vox this new publication semaphore The Intercept that have all been uncovered now
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did he do this paying off of all the elites you know splashy cashy giving money to everybody because he knew he
00:12:00
was doing a fraud and that this is evidence of this is a premeditated fraud or do
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you think this is a deranged individual who just was seeking status I don't know
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there's a video you can watch of this guy for some reason FTX has left up all of
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their videos on YouTube from three years ago called quantitative trading seven and a half thousand cell
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wall of Bitcoin on binance it's a 17 and a half minute YouTube video of SBF Trading
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Arbitrage across markets I think it provides probably the best like natural non-scripted insight into this guy's
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Behavior that you could see you know because it's not like him being interviewed it's just him living in his
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world and he's just you know a mouth trying to get a piece of cheese like he's you know he's like out there he's
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you know scrambling around in the markets he's finding edges he's finding advantages and he's and he's clearly
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just taking advantage of them all day every day that's who he is now you put a person like that
00:13:06
in an unregulated environment and there was this clustering demand for an unregulated environment because of a lot
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of what you guys are saying which is people have this disdain for the elitism and the and the institutional Roth and
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all these things so Bitcoin emerged as a solution out of 2008 to the you know the
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the what felt like institutional wrought that that governments have a key role in
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but when you have no regulation and you have no trusted Central Authority involved mice that are trying to find
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cheese will rule the day and I think that's what happened here if it wasn't this guy it was someone else it was
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going to be someone else and then all of a sudden everyone's clamoring and saying
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hey we needed the government to protect us no one protected us someone's got to save us we're The Regulators we're
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people that are supposed to keep an eye on the stuff when the whole premise of so much of what was being sold was
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non-regulatory regimes was openness was peer-to-peer trust protocols and it turns out that in that sort of an
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environment the mouse that is hungry is for the cheese will get the cheese and that's exactly what happened I don't I
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don't know how much of it was I don't agree with this him saying I'm creating intentional fraud which certainly seems
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to be the case versus him saying I'm going to pay these guys I don't know how much it was even that intelligent but
00:14:21
the guy was clearly like trying to get a piece of cheese okay so this cheese eater this rat is a League of Legends uh
00:14:30
you know expert playing on eight different monitors at a time the cryptocurrency game while hopped up on
00:14:36
speed yeah I'm not saying that to be cruel I'm saying that because they admitted it they talked about it in
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their staff meetings instructing their Traders and team members of how to take speed he admitted to it in an interview
00:14:50
this week he said that it was all legal prescription drugs but they were taking them yes yes and literally in the same
00:14:56
videos you're referencing people see speed patches or I don't even understand this but there are patches you can put
00:15:02
on your body to deliver speed to you at some you know dose or whatever sex you buy this Theory no care that this isn't
00:15:09
about the elite side of it it's about the non-elite the Anarchy side of it no and this cheese eating rat which just
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wanted to eat more cheese I don't buy this narrative because I see too much design intentionality between what
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happened so in other words it wasn't just a series of individual decisions that didn't add up many of those
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individual Decisions by themselves were totally unjustifiable and moreover there
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were too many there's too much evidence of sophisticated Behavior here again he overnight went from portraying
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himself as a smart guy in the room to the to the babe in the woods and so for example when you look at the
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construction of all these entities and the corporate org chart you know of all the related entities it's a very
00:15:56
sophisticated attempt to obscure and construct certain you know protections when you look at the way that Alameda
00:16:06
was Exempted from the normal margin requirements on FTX there was the so-called back doors there was
00:16:11
intentionality there there was intentionality in terms of who was hired to staff these organizations again they
00:16:17
wasn't hired no board no CFO yeah the guy the guy who was in charge of compliance what like Trump talked about
00:16:25
in a previous episode was the guy who was involved in the ultimate bet poker achieving Scandal you know not super
00:16:33
mode yeah exactly right or look at this goofy goofball Caroline Ellison who was put in charge of Alameda right his
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girlfriend it's being done for a reason right he's setting it up in a certain way and you know the one time I
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interacted with him at this Tech conference he was sitting there holding court and he had all of his minions
00:16:51
around him who were following his orders this was a guy who was controlling his business he was making the decisions at
00:16:59
I think a task level and um he knew exactly what was going on here so look I just don't buy I do not
00:17:06
buy this idea that um that he was like a blind Mouse who's just a stimulus response you know in the Moment by the
00:17:16
way that wasn't that wasn't my point sax my point was whether it was him or it was going to be someone else it was
00:17:22
bound to happen the idea that we want to have completely free unregulated Bahamian base
00:17:30
trading you know environments that we can supposedly trust because someone puts on a good face when there is no
00:17:37
real regulatory body and Regulatory Authority overseeing it at some point it was going to happen well no hold on it
00:17:43
is look coinbase is a fully regulated industry they're not set up in the Bahamas and they're not unregulated he
00:17:49
set up and he had no oversight he had no board there was no regulatory regime there was nothing how was he able but
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okay so first of all look I don't think this had to happen I think that again I think that excuses too much because it
00:18:00
implies that if it wasn't SPF it'd be somebody else I actually think that this was a highly concerted effort listen he
00:18:06
courted Regulators he donated to politicians he courted the media and donated he was really good at it he was
00:18:15
unusually good at it no and I totally agree on that yeah super smart super connected really thoughtful design on
00:18:21
how he committed this I only think an Insider could have pulled off something at the scale I think I agree I think
00:18:26
this is where chamoth you're exactly right I think you needed to be of cynicism here is he new to the Playbook
00:18:31
and he admitted it you pointed this out with the chats that were released where he said he he he he yeah look I mean
00:18:38
just like the he he chat look how like convoluted and intertwined all these people are like gensler's intertwined
00:18:44
with the parents yeah parents apparently bundled a bunch of money to Elizabeth Warren you know he was dating the CEO of
00:18:52
the business that he owned 90 in they're all these other random shell companies that he owned 100 of where they were
00:18:58
lending back and forth hundreds of millions to billions of dollars yeah to David's point that is a sophisticated
00:19:04
con that you have to architect and the way that he was able to get away with it is that not a single reporter or
00:19:12
regulator thought to dig in and the reason I think is because he said all of the right things that wanted them to
00:19:21
embrace him and the reason is this is a dumb game that we woke westerners have to say the right to the less and then
00:19:28
everyone thinks we're a good person exactly imagine pull that card up on what he said because it's actually a
00:19:32
good thing that's what I just said exactly what he said yes he said it's it's the game that we woke westerners
00:19:38
have to play we didn't say the right Shiba less so Everyone likes us he actually said the most uncomfortable
00:19:42
thing out loud which is look by having gone to Crystal Springs High School by having professors my parents that went
00:19:48
to Stanford by having gone to MIT I can pull this off that's that's what he said because he
00:19:54
can go with those things because I'm a I'm a champion of effective altruism that I can justify any of these
00:20:00
decisions how amoral or immoral that they be because I'm trying to help you know my brother stand up a multi-million
00:20:07
dollar pandemic response business I'm trying to do this I'm trying to do that and all of these regulators and all of
00:20:14
these reporters said okay you get the hall pass now imagine if you replaced him with some random kid in some
00:20:22
developing country or even from the United States who did went to Public High School who went
00:20:30
to some random State School do you think that they could have pulled any of this
00:20:33
stuff off no you need the patina of the privileged class the New York Times that's what he had the majority of the
00:20:40
privilege class even after this fraud the New York Times wrote more of a puff piece on him than the hit piece they
00:20:46
wrote on Brian Armstrong last year when Brian Armstrong wouldn't toe the line on
00:20:50
allowing politics at work remember that yeah unbelievable yeah so the big end I think what chamoth is kind of saying
00:20:56
here is that the big enabler here is not crypto per se it's all these institutional biases and Elite biases
00:21:02
that he was able to play into partly because he was a big Insider I mean in a way he monetized his parents life work
00:21:09
the problem that I think this allows us to put a fine point on is the following you know in society we've confused a lot
00:21:18
of people to think that the opposite of liberal is conservative or Republican and I think that's the cycle that drives
00:21:27
the Mind virus inside the mainstream media the problem is the opposite of liberal is illiberal okay and what a
00:21:35
liberal means is to be narrow-minded and unenlightened it means to be puritanical
00:21:40
it means to be Fundamentalist and this is really what it allows us to see now we have now had six years of
00:21:48
data case after case after case where if you are woke if you are a social justice
00:21:56
Warrior if you have the right credentials that justify your upbringing if you have institutional uh Bona fides
00:22:04
that come from your parents you get to create the narrative and you get a hall pass
00:22:11
and everybody else basically is at the subject and the mercy of the mainstream media and so if
00:22:18
you don't kiss the ring and bow down to them they will try to destroy you or run
00:22:22
you out of town but if you are one of them they will give you a hall pass and when it's time for them to change their
00:22:29
mind in order to tell the truth they won't do it and so these types of grips will continue as Friedberg said because
00:22:36
there is no check and balance without a healthy Independent Media there is no way for all of us to actually know
00:22:43
what's really going on guys some person in the media could have asked the question and dug in deeper around the
00:22:51
connections between Alameda and FTX for the last 24 months at no point could any person have asked
00:23:00
these questions and found ex-employees and said you know are there any unseemly connections here between FDX and Alameda
00:23:07
there was no disgruntled employee I mean every company has disgruntled employee whistleblowers
00:23:13
but here where there was billions of dollars being made by tens of people not a single person who felt on the outs
00:23:18
said anything well he was also giving millions of dollars hold on because the questions weren't asked and then this
00:23:26
kid paid hush money to the mainstream media let me ask you a question of you guys do you think that it's the media's
00:23:31
responsibility in this context or do you think that there should have been a regulatory Authority that had oversight
00:23:36
of this business like there is for every bank and every trading operation in the
00:23:40
United States and every one of those businesses has a compliance officer and has Regulators up the Wazoo making sure
00:23:46
that customers are kept safe and protected or do we think that that should should offshore Vehicles be
00:23:52
allowed like this that allow people to operate it's a reasonable question but there was a chicken and egg question we
00:23:57
were all standing around holding our hands while the cftc and the SEC were fighting that's not something that
00:24:04
consumers can be expected to adjudicate so yes we should have legislation that clearly defines all of this but there
00:24:10
were enough parameters that created regulatory Frameworks where a bunch of good actors did operate in them and are
00:24:17
continuing to do so like coinbase so I don't think this is a regulatory issue I think that if you believe there are
00:24:24
people who are supposed to forensically examine things and get to the bottom of things and ask hard questions
00:24:30
those people did none of that here and and what's what's even more worrisome is what they're showing is now with a
00:24:38
massive amount of data that shows that you could ask hard questions they don't care to because it makes them look bad I
00:24:45
disagree with this Tremont I think Regulators failed here because they have been reactive to crypto they have not
00:24:49
been proactive and they have not been clear with the crypto community that what they were doing was illegal and
00:24:55
they should have put the regulations in quicker and they're playing catch-up but
00:24:58
all three groups fail the media failed The Regulators failed and VCS failed Capital allocators failed I apparently
00:25:05
to due diligence here and install proper governance you cannot put a company like
00:25:10
this you know in business billions of dollars and have no board of directors no no I agree with you or he lied to
00:25:17
them my point is that while Regulators are are basically fighting a territorial Turf War okay
00:25:25
the media could have still done their job they chose not to guys it was worse than that because not only it's not just
00:25:30
a case where the SEC failed to exercise any oversight of him or dig into any of these questions he was in the room with
00:25:37
them crafting the next set of regulations he was working on the regulations that you're talking about
00:25:43
that are supposedly needed while breaking them they let the fox in the hen house yeah he was gonna crash a a
00:25:50
new type of regulatory license for these types of exchanges with the result that
00:25:55
he was going to get one and some of his competitors weren't this is one of the things that triggered CZ to basically
00:26:02
you know do what he did which is basically that SPF was trying to get binance and competitors like that band
00:26:10
while SPF would be one of the sole people to get the license with The Regulators yeah Jason you just
00:26:18
said something derogatory towards easy he rug pulled them did he do that or did he actually expose the fraud that's what
00:26:25
I mean by rug pulling yeah that's not what rug pull means Jason okay well he was partners with him and then he
00:26:31
realized he was weak and that he was doing some stuff that was shady and he decided he would eliminate a partner who
00:26:36
was creating regulation a sack said whatever you want to say he knifeled all he did was indicate a desire to
00:26:42
liquidate his position in a token that was supposedly perfectly liquid and that's basically that caused the
00:26:49
everything to unravel yeah but these were Partners right I mean they were these were deep business partners they
00:26:55
were collaborating on these tokens together so they were they were not Jason like part of the big loan that
00:27:01
that initiated all of this stuff like a year and a half ago was to buy FTX off the cap table
00:27:08
so you know this all I'm saying is like you used words and you're framing of a guy you know who's built the business is
00:27:17
like he is this nefarious bad actor David Jackson that's his first investor hold on a second
00:27:22
but but David's right all the guy did as far as we can tell right now his tweet I'm selling this token because I don't
00:27:28
believe in the capital structure of this entity and he got those tokens by being
00:27:33
bought out of the cap table I know he was partners with them so if if you if you don't like rug pulled how about
00:27:39
backstage business partners they're not Partners you still don't understand of course I understand they had he was the
00:27:45
first investor so to do this yeah hold on part of the consideration were these tokens these I understand tokens
00:27:56
yes Jason when you when Uber went public yes and you got distributed stock yeah did you distribute and sell Uber at any
00:28:03
point foreign a partner of uber you're just a stockholder yeah this is slightly different I think but okay fine you guys
00:28:25
if you guys listen Jason investor in the company they were a business historical
00:28:31
situation but their status at the time that CZ tweeted was that they were competitors okay fine I mean they became
00:28:38
competitors I agree and by the way to Jamal's point about this rug pulling language I think we're getting kind of
00:28:43
done a rabbit hole here but yeah but CZ CZ did perform a service in this sense okay SBF claims that 4 billion more was
00:28:52
about to come in I personally don't believe that sounds like [ __ ] to me but if it is true that would have been a
00:28:57
bad thing the more money that came in to that operation svf proved that he was a
00:29:02
very poor custodian of customer funds for sure but the longer this one I'm just highlighting the language that you use
00:29:10
is sort of like Again part of that establishment Elite narrative and I'm just questioning you should maybe steal
00:29:17
man take a second to just steal man yeah a more dispassionate view which is here's a counterparty okay yeah who when
00:29:25
he left the cap table was given half cash half tokens okay and he decided to sell his tokens
00:29:33
yeah and tweet it publicly and cause a run on the bank so there was something to run on the bank there was no Bank
00:29:39
where's the bank on the bank language okay is something this was in the semaphore coverage okay you did it
00:29:46
publicly that's my point so I'll steal management no no no these tokens are worthless I need to liquidate them as
00:29:52
fast as possible but why would you do that publicly why why would you do it privately you're about to move the
00:29:57
market he wanted to move the market he's letting people know why but he wanted to kill his competitor as
00:30:03
charmath who's just saying CeCe wanted to kill him say he was trying to do that we got to
00:30:09
back up here because I think we've done a lot of like 30 000 foot like lessons and like takeaways from this whole thing
00:30:15
but we haven't really established what it is that SBF did wrong so I think we need to sort of take a second to unmutty
00:30:21
the waters okay and part of that I think we should start with this idea of a run
00:30:25
on the bank because the favor the Press you've been writing puff pieces about SBF I'd say mainly some of four which he
00:30:32
was a big donor to yeah you've been trying to frame it as a run on the bank and then that implies that it's not
00:30:37
really his fault it could happen to anybody lots of banks have had this problem okay first of all they're not a
00:30:42
bank Banks actually have the legal right under certain conditions to take customer deposits and loan them out okay
00:30:48
yes they did not their terms of use did not allow that as Stephanopoulos pointed
00:30:53
out svf's answer to that was well we had this like margin account program there were other Provisions in other terms of
00:30:58
use but most of the customers who lost money the vast majority did not opt into that program they never agreed to that
00:31:04
so that's that's Point number one point number two is I think we need to to look
00:31:09
at this language of margin account okay SVS explanation of how customer money was siphoned off for his own personal
00:31:18
use I.E to Alameda is that Alameda had a margin account so I think we could perform a service here by explaining why
00:31:25
it wasn't a margin account and you know and you guys understand this really well
00:31:30
the way that a margin account works is the following okay because I think some of us have them set up with investment
00:31:38
Banks you go to an investment Bank say Morgan Stanley and you over you post collateral you actually over
00:31:45
collateralize so for example you might take 100 million dollars of stock posted at the investment bank and then they
00:31:52
will let you loan a certain percentage nowhere near 100 maybe 50 percent if you have a very very liquid security
00:32:01
you may get 50 coverage which means if you posted a hundred million dollars you could get a 50 million dollar loan okay
00:32:08
100 million in Amazon stock you're some Amazon VP you can get 50 million loans and if it's a private asset it's
00:32:15
anywhere as high as 30 35 but typically it's about 25 my expectation is in a liquid token like this would have
00:32:25
basically gotten five or ten percent coverage ratio at the best of it and then what happens is you have these
00:32:30
maintenance values so if all of a sudden the value of these entities multiplied by that percentage that you're allowed
00:32:37
to loan Falls below you have to post money that's how a margin account works it's just there is no free lunch in that
00:32:42
yes exactly there's let me just say quite simply very simply what I it appears this guy did he took customer
00:32:49
deposits in US dollars he then converted those dollars into some other asset and he had a mark on
00:32:59
that asset let's call it a dollar a token and then those dollars were moved to somewhere else
00:33:05
no this is because someone transferred in some other token listen we need to finish the explainer around
00:33:13
the margin account okay because what SPF did is this he took customer deposits gave them to himself
00:33:21
no he gave he took customer deposits in U.S dollars they were wired in correct he took those dollars out and he
00:33:29
put a fake token in and he called that that's right he said he said therefore he said the balance sheet is good but
00:33:37
the value of that token it turns out isn't a dollar it's 10 cents that's right it was his it was his sort of it
00:33:43
was sort of his made-up token that yesterday that he tightly controlled the training of and and artificially propped
00:33:49
at the price yeah yeah but but here's the thing it wasn't just the fact that his collateral
00:33:55
was no good it was also the fact that and this is from the bankruptcy uh filing by the the new the Enron trustee
00:34:03
guy he specifically said that Alameda unlike every other margin account on the platform had the Auto Liquidation
00:34:11
Provisions turned off so wait we have to finish the thought around how margin works so like Thomas said you over post
00:34:18
collateral and if the value of that collateral goes down or the the the the the position your trading account the
00:34:25
value of that goes down you either have to post more collateral or they will actually liquidate your collateral to
00:34:32
pay off the loan so Morgan Stanley will never lose money on a margin account never like the whole point is because
00:34:39
they don't make money on it they loan you the money at like you know a few percent it's like very cheap yeah loan
00:34:45
Libor plus so yeah exactly that is not a risk account to them and so in the example let's use an example in the case
00:34:53
of the VP at Amazon we've got 100 million in Amazon they have a 50 million dollar loan if Amazon loses half its
00:34:59
value then that triggers the automatic selling of Amazon shares to get it back down to 50
00:35:06
25 million of Amazon shares if the full 50 million was pulled down to get back down to 25 to 50 leverage yes and they
00:35:14
don't wait until like Amazon stock is at the exact level where now the collateral
00:35:19
equals 100 of the loan they will keep that 50 loan to value yes and they will liquidate you you know and by the way
00:35:26
you can lose your entire amount right so yes you know this is why trading a margin is so risky is that you can get
00:35:32
wiped out because you can get wiped out very very quickly with a small move down
00:35:35
because they are the custodians of that Amazon stock they are holding it for you
00:35:40
now and they have the right to sell it to cover your margin you're saying that Governor that basic tenant that basic
00:35:46
safety control was turned off by Alameda and it's even more Sinister Alameda controlled like 90 or 95 of these ftt
00:35:54
tokens and was owned by Sam bankman fraud so he owned that company then he claims he had no
00:36:01
operating position what should have happened is with that collateral is that as the value of their position was going
00:36:10
down and or as the value of the collateral was going down it should have been liquidated to pay off the margin
00:36:15
loan and that did not happen and the reason it didn't happen is that Alameda got a special exception on the platform
00:36:20
to turn off Auto Liquidation therefore it was never a margin account if even if it was a margin account okay and and FTX
00:36:29
somehow misadministered the margin account it should never have taken other customers deposits and use them to pay
00:36:36
back that money what should have happened is if FTX was going to lose money on a margin account that would hit
00:36:42
the FTX corporate Treasury okay and when the FDX corporate treasury ran out the company files for bankruptcy
00:36:49
then and then all the other customers hold on their account is still there their money is there in segregated
00:36:55
accounts and in bankruptcy they get their money back the idea that a margin account could ever cause another
00:37:02
customer to lose money that like whatever that is that's not a market there's a great article there's a great
00:37:08
article uh this one was a journalist that did his job properly his name is David Z Morris
00:37:13
he wrote an article in coindesk that summed up for anybody that's interested all of the actual fraud and all of the
00:37:21
crimes that were committed in excruciating detail and what's so sad about all these interviews in this press
00:37:26
tour is if anybody would just read this article you can construct the right questions to ask this guy just based on
00:37:32
this one article but the the point I wanted to make is that one of the most interesting insights was
00:37:39
these guys had lost an enormous amount of money already in calendar year 21. and so this is what's so crazy Jason
00:37:48
about you know you using language like rug pulling and like you know nobody actually trying to like be clear like
00:37:56
you guys are giving this guy a hall pass any industrious reporter could have found an employee who said wait a minute
00:38:04
we just blew a three billion dollar hole in our balance sheet and calendar year 21 20 and now we're sitting here at the
00:38:10
end there's 22. hold on I need to respond I am not giving him a pass and for you to blame
00:38:18
journalists who are reflecting the crime and not putting any light on VCS and the
00:38:25
capital allocators who made this investment and who did know diligence ended up with governance in it is the
00:38:29
height of arrogance Shema this is not the process they're not doing that either this is the VCS this is the
00:38:35
capital allocator's fault you're blaming the people who are telling the story after the story
00:38:41
they're covering the story up handle the truth Jason they're covering the story enough time can I get in here can I get
00:38:47
in here all right listen Jason I will defend you against Jamal saying that somehow you're uh you know that you're
00:38:53
letting us be off off the hook I know you don't want to let especially however you are letting the press off the hook
00:38:59
and the reason why hold on a second the reason why you're using this inaccurate language like rug pulling and run on the
00:39:05
bank when there was no run and there was no bank is because you've been infected
00:39:09
by this language that the media has inserted into the discourse the immediately listen and hold on a second
00:39:15
investors may have got it wrong last year investors may have got it wrong when they did that last round but I
00:39:21
think investors Now understand what's happening but the media is still covering for SPF by Mis explaining what
00:39:27
happened okay give me a percentage acts of who's to blame here VCS who invested and didn't set up any governance
00:39:34
Regulators who did not set uh rules around crypto and then through the media what percentage out of a hundred percent
00:39:41
is the investors The Regulators and the Press go three numbers I would say that before the fraud got exposed one-third
00:39:50
one-third one-third one-third each before the Frog got exposed but they were all jointly and severally liable
00:39:56
but after the Fraud's been exposed no investor is still defending SBF but I I think that the investors who were
00:40:03
swindled by him they feel bad about it so Thirty Thirty Thirty is absurd the Press had no way to know the fraud was
00:40:11
going on just like the VCS are you stupid like wasn't that yours wasn't the journalist that exposed to
00:40:19
product theranos he's the guy that went and did all the work John should be celebrated hold on a second John Kerry
00:40:26
you went and found this thing when no when everybody else was like this is perfect it meets all of our priors let
00:40:32
me finish please it meets all of our priors this is great hold on and so John Kerry was like this doesn't surpass the
00:40:38
smell test to me let me go do some work and he pulled one little string and over
00:40:43
the course of 18 months he exposed the whole bloody things so hold on a second so what is incredible to me is that it
00:40:48
was possible to expose this thing before nobody did I agree with David it's about
00:40:53
equal responsibility before but afterwards the bulk of the responsibilities now sits with
00:40:58
Regulators to clean it up and journalists to tell the truth okay and now may I respond to that since you call
00:41:04
me stupid you are delusional number one every one of those investors in theranos could
00:41:11
have taken a [ __ ] blood test at two different places like Jean-Louis gassier did and write a blog post and prove that
00:41:18
theranos didn't work and they withheld disbelief investors putting in a hundred million dollars including Rupert Murdoch
00:41:26
didn't even take a [ __ ] blood test or tell one of their diligence teams to do it the same thing happened here with the
00:41:32
investors in FTX they did zero diligence they set up zero governance this was a failure of the investors and the
00:41:41
governance for 99 of the problem and then Regulators should have caught it and The
00:41:46
Regulators in fact did catch therano so you're completely wrong chamoth again the journalists come in after the fraud
00:41:53
is happening the investors and governance is responsible for stopping these things FTX was a failure of
00:41:59
governance and investors and so is theranos the end you're completely wrong the question is post post exposure why
00:42:07
are you guys obsessed with post how about avoiding these things you guys are bless the story is ongoing because these
00:42:13
stories for something that is capital allocators responsibility it is our responsibility to due diligence it is
00:42:20
our responsibility to create a board of directors that checks on Elizabeth Holmes I don't disagree with you just
00:42:28
call me stupid you just call me stupid for pointing out something that you refuse to accept what are you talking
00:42:34
about allocators are giving a pass to the investors again I'm not doing Fredo I'm not doing
00:42:48
Fredo you guys are being absurd this is why people say Don't call them dumb the reasons
00:42:59
like the guy you can't call dumb totally he loses it goes berserk yeah don't call me dumb hey
00:43:13
investors I think that they did a horrible job here too it's a great episode um but the reality is just went up but
00:43:21
the reality is I think that if you think that you can if you it's your decision to defend the mainstream media I think
00:43:27
that that's fine I'm not defending them no you are you said they have no responsible I'm blaming the VCS it's
00:43:31
different the culpability is with the investor class that has not had proper governance Jason how many articles have
00:43:39
been written excoriating them uh yeah somewhere like fools yeah I mean show me show me the Washington close
00:43:49
Capital no show me the Washington Post New York Times that's like digging in to that malfeasance or that lack of
00:43:55
oversight and holding them accountable in a way that you feel exposes this problem to create change well if we look
00:44:01
at theranos uh those people uh who invested including um Draper and um to show me the examples Rupert
00:44:10
Murdoch they they really went after them for sure yeah what about here uh Wall Street Journal one day ago
00:44:17
Sequoia Capital apologizes to its fund investors for FTX loss Venture Capital firm tells fund investors that's hard
00:44:22
hitting it will improve due diligence on future Investments they really got it let me let me read you it's a cover
00:44:28
story Wall Street Journal I'm gonna I'm gonna read you I'm going to read you a sentence from The New York Times
00:44:32
coverage of SBF and Sam Banger freed is neither a Visionary nor a criminal mastermind he is a human who
00:44:41
made the same poor choice that generations of money managers have made before him are you effing kidney times
00:44:48
coverage yes you are they also said I am just reaching them and then semaphore who was on the take
00:44:55
who received Millions hold on a second where is their apology Sequoia has apologized where is their
00:45:06
apology oh it has to come I'm not defending the Press yes I'm just saying yes I am not I am literally telling you
00:45:13
that the New York Times has the Twitter spaces yesterday did a better job of trying to ask questions
00:45:26
and getting to the truth then a single journalist has done or the collective body of olive journals absolutely
00:45:31
literally randos on Twitter spaces did a better job than Sorkin let me tell you why the why no one trusts the Press
00:45:37
Jason first of all they have an agenda that's an agreement when they make a mistake they never admit it when's the
00:45:42
last time they did an apology or attraction when's the last time they did what Sequoia did
00:45:48
I don't know and they need to apologize I am in agreement with you on that but I
00:45:52
think we have to first say and this is where you guys should be ashamed of themselves is what is the responsibility
00:45:58
of capital allocators and governance and Regulators I think it's one two three our industry is responsible for setting
00:46:06
up proper governance The Regulators are responsible for making sure that your scientific
00:46:11
and then press is a distant third you know who I think is responsible yeah one two and three and then we can talk about
00:46:19
four five and six okay four five and six Capital allocators Regulators the press
00:46:24
a distance sixth I agree let's go on to China God it's so spicy today it's so hot
00:46:31
I mean I do think I do think when we attack the mainstream media Jason feels a little twin tinge of like uh
00:46:37
insecurity and illegitimacy because he were a journalist my personal perception is I think that's [ __ ] no I haven't
00:46:43
I think that you have a an incredibly romantic view of the craft as you practiced it back then which I think is
00:46:51
full of Integrity yes I think that's true I think that you you don't adequately realize how massively the
00:46:59
industry has changed in the last 20 years since I realize it more than you do I fully realize that the media has
00:47:05
absolutely become biased or they can have lost uh in some cases yes I mean if you're taking money are they providing
00:47:11
are they giving him they are corrupt if they are taking money from SPF and then giving him Kick Love coverage absolutely
00:47:18
that is the definition of corruption in my mind what is what is it called when you don't take money necessarily like
00:47:23
the New York Times and still treat them with kid clubs what is that it is Extreme bias and the New York Times
00:47:27
became incredible why do you think the bias why do you think that bias exists they were always left-leaning but I can
00:47:33
tell you why they when Trump came in a generation of new journalists became activist journalists they didn't
00:47:42
want to tell stories and take it straight down the middle and let the facts tell the story and let the
00:47:46
audience make their own decision they felt that existential risk when Trump came into office they got trumped
00:47:51
Arrangement syndrome they picked a side like MSNBC and fox did and the business model became for the New York Times pick
00:47:58
a side and get the subscribers it was a deliberate cynical choice on the New York Times
00:48:03
part to go full MSNBC for full Fox the two Extremes in mainstream media in order to get the subs and they literally
00:48:11
rallied the troops there to do anti-tac anti-trump uh coverage and they became activists and when journalists become
00:48:19
activists they are no longer journalists they're activists or commentators and that's the problem it's being presented
00:48:25
as journalism when in fact it's activism so shout out to Matt taibi who just did a
00:48:32
monk debate uh yeah on this very topic and he has a great great sub stack basically saying what you're saying
00:48:39
Jason and the the best quote is the story is no longer the boss instead we sell narrative he's a lifelong
00:48:45
journalist whose father was a lifelong journalist and he understands the way the business has changed and it's like
00:48:50
what you're saying and and this is why Independent Media whether it's sub Stacks whether it's call in shows
00:48:56
whether it's all in podcasts or other podcasts Joe Rogue and Sam Harris whoever it is independent voices are now
00:49:03
what consumers are seeking out because they can sense the bias they know Rachel Maddow and Tucker have an ax to grind
00:49:10
and they're left and right they didn't what about these New York Times Washington Post and Wall Street Journal
00:49:15
to you know they knew they were leaning they didn't expect them to pick a side do you think we should cancel if folks
00:49:22
do you think folks are better off keeping their New York Times subscription or replacing that New York
00:49:28
Times subscription with a basket of sub stacks and yeah you answered your own question it's the latter I think you're
00:49:34
on your own as a consumer now you're going to have to and I think this podcast and the Nuance we have shout out
00:49:40
to Freeburg for nuance what we've done on this podcast is what's that funny sound to explain to people freeware is
00:49:46
not the only one with Nuance nobody would describe David sacks with the word he's a nuanced department on
00:49:52
this podcast what am I 100 he is but you would know that because you leave when science is in the church Department okay
00:49:57
sometimes all right I'm the truth Department consumers need consumers need to become extremely
00:50:05
literate and they have to do their own search for truth in today's age they don't they shouldn't trust New York
00:50:10
Times they shouldn't trust us they should trust themselves they shouldn't trust necessarily the CDC or you know
00:50:16
the World Health Organization they should trust themselves and come up with their own process for figuring out the
00:50:21
truth in the middle of this mess by the way this is a good reflection on what's happened with the rest of media
00:50:28
with respect to the Creator class where right it used to be the movie studios and you know a handful of kind
00:50:36
of aggregated creators that made all of the content the record labels and now you know Independent Artists Independent
00:50:42
Producers independent creators and now independent journalists are going to become the bulk of volume that's going
00:50:48
to be consumed it's just a different consumption model but we've already seen acts of Journalism we saw it happen with
00:50:53
movies and we've seen this disruption happen across all these other media classes journalism and what we call the
00:50:59
Press is very likely going to be kind of that next layer of disruption I would trust having a conversation with
00:51:06
you about science topics over reading a science article 100 you know in the New York Times or Wall Street Journal if I'm
00:51:12
being 100 I would much prefer to talk to you about it and if it was markets I'd rather talk to chamoth and if it was SAS
00:51:17
I would talk to sax or operating a company speaking of operating a company or politics
00:51:27
we'll see we'll see uh but I do have to talk about I think it's about having unique inside Insight right like
00:51:33
that wasn't the case and what's interesting is that the people who are the professionals that have the
00:51:38
knowledge and the touch points are also becoming journalists in the sense that they're also becoming speakers of their
00:51:44
truth right and I think Twitter is a good enabling platform for this we see it on YouTube where like scientists are
00:51:50
putting out their own videos or Market actors like people that are traders in the market go out and they put out their
00:51:56
own videos and they put out their own podcast and I think we're probably a good reflection of that yeah uh in the
00:52:01
sense that like we are the actors in the market and we're not just the independent Observer that has kind of a
00:52:08
surface level view we have the depth to be able to talk about the things that we
00:52:12
choose to talk about and I think that's where consumers find Value and we'll continue to find Value in terms of who
00:52:18
the journalist or speaker is that they're going to start to trust for their information
00:52:21
I saw that interview you did with um newcomer oh yeah yeah I saw that coverage I mean yeah he
00:52:31
speaks a lot about the uh this phenomenon of going direct and of course he's against it now he interprets going
00:52:37
to direct as an attempt by um newsmakers to avoid answering tough questions or take tough questions I
00:52:44
think that's ridiculous because for example I go on CNBC all the time I go on Emily Chang and um Bloomberg all the
00:52:53
time I submit to like really tough questions I actually like those sort of sparring sessions yeah I did hard talk
00:52:59
this week have you ever done that exactly that's not what's going on here I think what's going on is we have
00:53:06
expertise we want to communicate them and we do feel like the media has become a very unreliable narrator there is too
00:53:12
much bias and sloppiness not all of it is agenda some of it's just pure sloppiness and there's no reason why we
00:53:19
shouldn't go direct and people want to hear from us the audience wants to hear from us same for look look at Draymond
00:53:25
look at Draymond and the success he's had with his paws but no basketball player has ever gone direct and created
00:53:30
content like draymond's created and it's totally changed the game and he was so clear he's like We Are I Am the media
00:53:36
now JJ Reddit you know old man and the three amazing amazing podcast I was going to
00:53:42
tell you guys a story so I was in the Middle East last week or this week sorry and um I had this crazy experience where
00:53:49
I was trying to understand what was going on in China and so I started on CNN and the whole
00:53:55
thing was the propaganda machine around a democratic Revolt you know pushing for
00:54:01
democracy and trying to depose G then I moved to Al Arabia so one channel up I went from Channel 10 to channel 11.
00:54:10
and instead what they were actually doing was interviewing people on the ground and what they were talking about
00:54:16
was literally how these PCR tests have become far too burdensome and they just wanted it to end and more reasonable
00:54:23
restrictions to get in and out of quarantine then I went from there to uh BBC and in BBC they had a China scholar
00:54:30
who was talking about how for decades actually the Communist Party supports local level protests and demonstrations
00:54:37
because they've realized that it is a part of their political system to make sure that people feel like they have a
00:54:44
say and I was like taking a step back and I'm like if you listen to the U.S narrative and even Jason like in our
00:54:50
group chat people formenting for like Revolution and this is Tiananmen 2.0 and I'm like well I'm reading two other
00:54:58
channels that tell us a completely different set of things and I just thought man people just really fit the
00:55:04
data such a good point to fit their bias yeah we are projecting we want to see a
00:55:09
revolution in China the people in China want you to have their lives back well I
00:55:12
would love to see more democracy in the world yes guilty as charged I would like to see people be more free
00:55:18
in the world dictator I think most people just want to improve their condition and I don't
00:55:24
think people are as tied up on the philosophy of the government as they are about improving their condition and as
00:55:29
long as their condition is improving they're willing to put up with any form of government and history shows that by
00:55:34
the way the conditions in China have improved better than everybody's in the lives
00:55:39
of people out of abject poverty uh and that's the great success of Engagement isolationism would not have created that
00:55:50
amazing outcome 500 million people you're referring to us you're saying building factories is what
00:55:58
I'm referring to oh okay so you guys if they if they want to build something over there I guess that's better than us
00:56:02
throwing up open our markets and giving China mfn status to destroy American manufacturing and build up their economy
00:56:10
so they can become a peer competitor to the United States yeah I mean this is the balance of Engagement if you engage
00:56:16
too much you give everything up in sex which of the current Republican agenda do you
00:56:24
disagree with most strongly just as an aside well most Republicans are in favor of our Ukraine policy this sort of
00:56:31
unlimited appropriation of weapons and Aid to them don't you disagree with immigration policy of Republicans and
00:56:37
Democrats well I have a more nuanced position on immigration which is I think we need to have a border
00:56:43
and it can't be just like an open border which is the day Factor policy we have now but at the same time I do think that
00:56:49
we should have H-1B visas and we want to like jamasa we want to be an All-Star team for the world we want to have the
00:56:54
best people want to come here so there's a balance it's a balance and then you know look I think that I was happy to
00:57:00
see the marriage equality Bill finally passed the Senate yes they did again about a dozen 12 Republicans voted for
00:57:06
it and supported so that's right yeah but that's not the majority unfortunately you know look on on what I would
00:57:12
categorize as the old social issues uh you know like gay marriage like cannabis legalization I was on the
00:57:21
liberal side yeah I don't think you know Banning abortion entirely a total abolition is going to
00:57:27
work for this country I think Republicans will lose elections if they insist on that and I think they're
00:57:32
getting that message so um so yeah I mean look I I think that um I've always considered myself to be
00:57:39
pretty Centrist and so you're not a globalist you don't believe in open Global markets but the U.S in general I
00:57:46
understand the benefits of free trade and I don't think we should be isolationist with respect to trade I
00:57:52
don't think that we can be a successful country if we are we isolate our economy
00:57:57
so I do want to trade however with China in particular I think we made a mistake
00:58:03
in throwing open our markets to their products giving them mfn status while the most favored nation is enriching
00:58:10
them to the point where they became a pure competitor of the United States now look I understand why we made that
00:58:16
mistake 20 years ago because everybody thought the theory was that if we help China become rich that China would
00:58:22
inevitably become more democratic and they'd be filled with gratitude towards the United States and it actually become
00:58:28
more uh more hospitable towards us more westernized and I think that theory has just proven to be wrong I mean they have
00:58:35
not or it's going very slowly one or the other let's own our Clips here uh here is shamat's prediction from episode 61
00:58:43
and we'll see you on the other side of this quick clip my worldwide uh biggest political winner for 20 2022 is Xi
00:58:52
Jinping I think this guy is uh he's firing on all cylinders and he is basically ascendant so 2022 marks the
00:59:03
first year where he's essentially really ruler for life and so I don't think we really know what he's capable of and
00:59:09
what he's going to do and so that's just going to play out you think he's the biggest political winner really oh my
00:59:13
God I think it's going to be a he's going to run roughshod not just domestically but also internationally
00:59:19
because you have to remember he controls so much of the critical supply chain that the Western world
00:59:25
needs to be I think he's completely wrong I think you're completely wrong I think he's losing his power he's scared
00:59:31
that's why he took out all these CEOs he's consolidating power because he fears that they're gonna
00:59:36
when too big and then displace him and he has massive real estate problems over there that could blow up at any moment
00:59:43
in time he could face a civil war there I think he's totally isolated himself Civil War and they don't even have every
00:59:48
major country is removing their factories and removing this dependency there what are you talking about what
00:59:53
are they going to Riot with uh did you not see Tiananmen Square did you not see the riots in Hong Kong are
01:00:00
you not paying attention there's been many riots in China so those were crushed he still will have massive amounts of uh
01:00:11
I believe protests and yeah I think I think the the bigger risk is is that China gets better for Xi Jinping but
01:00:18
worse for everybody else in China it's already worse for all the billionaires uh over there it's worse for the tech
01:00:23
industry you've now got ever Grand that whole uh you know gigantic debt implosion I think there could be
01:00:30
contagion from China next year I don't think she's gonna lose his grip in any way but I'm not sure China's gonna have
01:00:37
a good year next year wow nailed it I think all three of us kind of got this right what are you
01:00:43
talking about you got none of it right well I I said they were going to be there were going to be riots and then
01:00:47
they're gonna have uh a recession I mean squashed that's exactly what happened both things happened I actually think I
01:00:55
have a pretty decent ability to steal man pretty concretely the details I think that at best when it comes to
01:01:00
things like democracy and your belief in U.S exceptionalism in a specific political worldview at best you strawman
01:01:08
and I think that you get very biased without seeing the forest from the trees the reason I said that is not because
01:01:13
I'm like you know some huge G supporter I'm just trying to steal man what happens when one individual person gets
01:01:21
anointed leader for life of 1.3 billion people that then controls 20 of the world's GDP there is no other single
01:01:30
human being as powerful as him as of this month can I just say that this show this show
01:01:39
is going to become insufferable if every time you sort of said something in the past that was sort of correct we're
01:01:45
gonna have to replay it keep playing that one for you sacks who nailed it I was giving that was a
01:01:52
softball to you actually every week Jay Cal all right this Show's gonna slow down if we play every clip that I got
01:01:58
right you guys are asking to pull Clips all the time I just pulled one clip about China where you nailed it no no
01:02:03
look I I think like and also it's the king of pull a clip the the evergrant thing look what he did this week they
01:02:09
said okay you know what the real estate industry can now issue secondary stock sales raise equity and equitize
01:02:15
themselves so they're going to find a soft Landing for the equity part up for the real estate industry in China and
01:02:21
now they're reopening so I don't know I mean like I'm not sure what we're supposed to comment what I'll what I
01:02:27
will stand by is what I said which is I don't think we have a very clear view about what's
01:02:32
going on what the substance of these protests are and what people actually want if you're only consuming U.S media
01:02:39
and so if you find a way to get a diet from a bunch of different sources all around the world you maybe get a better
01:02:45
sense I had an accidental window into that by being in a completely different part of the world this past week
01:02:51
Freeburg any final thoughts on China and what's going on there before we move on
01:02:55
to chat GPT your favorite story I think one of the things we often miss is that China the
01:03:02
CCP does have their hand on the throttle like big throttle up and down we always think that it's a linear line
01:03:13
and that it's super dogmatic and fixed but there's certainly responsiveness and the release of the lockdowns in
01:03:19
Guangzhou and Beijing this week seems to have been a pretty good indication that
01:03:24
when things do get when when things when the tides do do change leadership there seems to respond not
01:03:30
always but enough to kind of keep things going so should they reopen I think it's
01:03:36
60 of the population or so is vaccinated with obviously vaccines that maybe aren't as don't have the same efficacy
01:03:43
as the ones uh here in the United States do you think they should open up and just let it rip uh or do you think they
01:03:49
should stay still try to maintain this zero covet policy because that is the debate right now what's what's the
01:03:56
objective because obviously asking you yeah well from the objective of economic growth they need to open up and they
01:04:01
need to keep their economy working and they need to keep their labor force engaged
01:04:05
or else they're going to continue to suffer so if economic growth is the objective they need to open up
01:04:12
right if the long-term Health cost of the nation balanced again against that is the calculus that they're kind of
01:04:20
weighing there's probably some more Nuance to that and certainly um my understanding is there may be
01:04:28
a precedent setting which is hey we've said that it's a zero covet policy therefore we have to hold strict to it
01:04:35
hold toe the line um else it looks like we're weak and so there's also this you know maintaining
01:04:41
the authority of the CCP objective so there's a lot of maybe competing objectives right now I certainly don't
01:04:48
have a sense of how they're they're weighing them all but but I think that one once all those videos came out this
01:04:53
week yeah you guys saw them but people were screaming there was an apartment on fire where the doors were locked with
01:04:59
steel beams on the on the base of the building at least that's what the the video said I don't know how much truth
01:05:04
there is to that but that's what was said and clearly people are extremely distraught and unhappy with the
01:05:09
conditions of the lockdown at some point enough people with enough loud voices you know something's going to change I
01:05:18
mean let's just remember like the bargain that struck in that country and with all countries is that you know the
01:05:25
citizenry to some extent are willing to tolerate their government so long as their
01:05:33
conditions continue to improve and there's a bargain there's some bargain that struck and as soon as that bargain
01:05:38
starts to go south for for the citizenry then that that that governing entity is
01:05:45
at risk and I think that that's what we sort of started to see this week was the
01:05:49
conditions are getting far far worse and far less livable for so many people in that country that the government had to
01:05:56
shift do you think chamoth this uh covet strategy and then we'll move on was basically Xi Jinping wanting to get to
01:06:05
that Congress his coronation and now that that's over maybe he can change gears and then like
01:06:11
I said I my belief is that I have a very poor access to enough data to have a to
01:06:17
steal man um what is actually going on there but one explanation could actually be that
01:06:23
in the absence of enough Hospital infrastructure and ventilators and a bunch of these other things they had to
01:06:30
take a pretty severe approach to this disease I don't know what they know or didn't
01:06:38
know maybe they understood you know the virulence of it maybe that they have a slightly different aging
01:06:45
characteristics of their population maybe they genetically responded to the SARS kovi II virus I don't know any of
01:06:51
these things enough to tell you Jason yeah but the reality is what freebrook says is Right which is that you cannot
01:06:57
grow an economy if people are inside locked in their apartments and it looks like they have decided that that's
01:07:04
coming to an end and they're going to you know deconstruct all of these things so you
01:07:11
know the the Chinese growth engine is coming back and I think that that's going to be an important factor
01:07:17
economically that we're going to have to figure out because it's going to have a huge
01:07:22
implication to American growth and American inflation sax if uh in fact the if the lab League
01:07:30
theory is correct China might have some insights into this disease that maybe the West didn't maybe
01:07:37
that plays into their policy a bit any follow-ups here Jacob I'm just surprised to hear that you have a problem with
01:07:43
their lockdown uh policy over there because aren't they just implementing Democratic party Orthodoxy
01:07:50
I mean isn't this the policy that Tony fauci and Barbara Ferrer I was not in favor of lockdowns what are
01:07:58
you talking about you're the one who had all your masks and had ventilators day one isn't this uh
01:08:03
why am I getting us because I'm just asking a question as the moderator isn't this basically why am I
01:08:11
getting a stray isn't this I'll answer the question yes I was in favor if people wanted to stay
01:08:21
home stay home and then if people wanted to go out and take the risk take the risk I was always in but it wasn't this
01:08:26
what Gretchen Whitmer in Michigan and Gavin Newsom in California subscribe to the idea that the way to fight covid was
01:08:33
through lockdowns now yes Newsom had 10 pages of exceptions for his political donors and he didn't use the police to
01:08:40
lock people in apartment buildings he may have wanted to but they didn't actually do that but can you really tell
01:08:45
me that this lockdown policy has been disavowed by people like fauci or by the the health authorities like the Barbara
01:08:53
farrers of this world they still subscribe to this view do they really is anybody doing show me well they're not
01:09:00
able to do it because no one agrees anymore yeah but tell me tell me where anybody tell me where any of the health
01:09:07
experts who said that lockdowns were the correct response have repented and disavowed that view
01:09:12
yeah I don't know I haven't been I haven't been tracking their uh mayakopa's you yourself were in favor of
01:09:18
lockdowns period of time yes you were no you absolutely were out there was a mass
01:09:23
mandate no it's not true I was in favor of a mass mandate and I said the mass mandate was the alternative to lockdowns
01:09:30
okay I was saying that by May of 2020. all right listen let's move on to the next thing I don't represent I'm an
01:09:35
independent I don't represent the Democratic party I don't represent fauci no you wrote the media I do not
01:09:42
represent mainstream media you just said I was an old school journalist who's mortified with where it is today I'm
01:09:47
giving you a hard time I thought your explanation was fabulous oh thank you thank you obviously Jacob I'm giving you
01:09:53
a hard time too I know that you were not a big lockdown proponent but you understand the point I was making would
01:09:59
you understand your points making me the Democratic spokesperson no I'm feeling a
01:10:05
lot better after my beer let's talk about come on so listen let's do a little talk
01:10:11
about open AI all right open AI is a a company that builds artificial intelligence software and
01:10:20
platforms they have one platform called GPT it is on its third version as part of gpt3 they created chat GPT which is a
01:10:30
chat interface where you can ask questions to AI the results are nothing short of stunning when they hit some of
01:10:38
them are a little bit mixed but Freeburg has spent the last 48 hours uh drinking white Russians with Oatley
01:10:46
milk and playing with chat GPT including his question to the chat GPT which was write a script of chemath sax and J Cal
01:10:55
uh talking about the future of AI in the style of a Quentin Tarantino movie and I
01:11:01
have to say it was pretty great the result go ahead uh freeberg tell us what you
01:11:07
described I think you guys should read this real quick we can cut it out if it's stupid but okay actually read the
01:11:12
script yeah the Quentin Tarantino part right I mean I think it was like impressive but it there's no f-bombs
01:11:17
there's no like Tarantino s dialogue and by the way they are they took they took out all
01:11:23
cursing and violent cussing and violence from open AI that explains it because this is a Tarantino script there would
01:11:28
be some Choice languages but it's interesting it's like the PG Tarantino script because okay no violence
01:11:36
yeah you do the narrative go ahead [Music] Jackson California sitting at a dimly
01:11:48
lit table in a smoky bar a bottle of whiskey sits in the center of the table half empty Jamal's leaning forward his
01:11:54
eyes intense so what do you guys think about this chat GPT thing David sacks takes a sip of his drink
01:12:01
it's impressive no doubt about it a large language model trained by open iei that can generate human-like texts in a
01:12:07
variety of styles and formats as a game changer Jason nods definitely it's one of the
01:12:12
most advanced AI systems we've seen to date it's going to have a huge impact on the way we use and interact with AI to
01:12:19
moth frowns that's what I'm worried about with a technology like this the possibilities
01:12:24
are endless but so are the potential dangers sacks leans back in his chair oh come on chamoth you're not still
01:12:31
stuck on that whole AI is going to kill us all thing are you timoth leans forward again his voice low
01:12:37
and serious look I'm not saying that Chad GPT is going to turn into Skynet overnight
01:12:44
but we need to be careful about the way we develop and deploy AI we need to make
01:12:49
sure that we're using it for good and not just for our own game J Cal nods I agree we need to make sure
01:12:57
that we're responsible in a way we use Ai and that includes making sure it's accessible and affordable to everyone
01:13:03
not just a select few to moth with a dirty smirk and let's not forget about the impulse records calling cut oh God
01:13:20
that's it scene yeah we're not gonna finish it it's not that far off I mean it's 60 on the way there
01:13:27
I actually they're they're uh Biden for sacks if you blame Biden it would have been perfect let me tell you guys
01:13:34
something stunning about this um this platform so this is GPT 3.5 which is an interim model to the what
01:13:41
people are saying is the long-awaited GPT 4.0 model um which I think they announced in 2020
01:13:47
and has been in development for some time so the model this GPT 3.5 model was trained in three steps they do a great
01:13:55
job explaining it on the openai blog site where they collect some some data and then there's a supervised model meaning
01:14:03
that there are humans that are involved in tagging and then the model kind of you know learns from from that system
01:14:09
then you ask the model questions you get output and then humans rank the output and so the model learns through that
01:14:15
ranking system and then there's kind of this third optimization thing and then it's fine-tuned so the the model itself
01:14:22
um has several steps of kind of human involvement and you know kind of it sources its own data and and builds it
01:14:28
you know what's incredible about this model the total size of the software package that runs the model is about 100
01:14:34
gigabytes isn't that amazing like you could fit this model on probably what 20 of the storage space on your iPhone and
01:14:42
you could run this thing and you could probably just talk to it for the rest of your life
01:14:46
um and it's really kind of an incredible Milestone but I think what was so stunning to me about this I I know you
01:14:52
guys are probably expecting something to be said like this but you could see so many human knowledge worker roles and
01:15:03
and and functions being replaced by this extraordinary interface so kids can do homework that's easy uh software
01:15:10
Engineers can get their code optimized and can get their code written for them there's great examples of how software
01:15:15
code has been written uh by this interface you could see real estate insurance sales people
01:15:22
being replaced by some sort of software like interface writers copywriters you know make me a hundred versions of a
01:15:30
commercial or an ad customers customer support completely replaced right if you guys remember there were these automated
01:15:36
customer support companies that started uh you know two decades ago and there was this great flurry all BPO businesses
01:15:43
were all about lower cost human labor now the cost of human labor goes to zero my prediction which is so everyone's got
01:15:50
the obvious prediction which is there's going to be a hundred thousand startups that are going to emerge I mean this is
01:15:54
kind of like this moment where the internet came along and everyone's like this changes everything I do think
01:15:58
everyone thinks and feels that so the obvious next step is a bubble wool form so can I ask a technical question though
01:16:05
Freeburg um and then uh you're probably thinking the same thing I just finished my market prediction but I think because
01:16:11
everyone's so hyped about this and and we all know this it'll be over fun PC attention all the investor attention is
01:16:17
Shifting to this capability and how do you apply this sort of capability across all of these different Industries and
01:16:23
all these different applications and as a result my guess is the next hype cycle
01:16:26
the next bubble cycle in Silicon Valley will absolutely be this generative AI business okay but this is a little
01:16:33
technical but how would it know the difference between like y-o-u-r and you are when it is processing natural language
01:16:42
if you were to do like your anus or Uranus how would that Freeburg how would it know the
01:16:48
difference between Uranus and your space anus it'll it'll learn that you know it was a joke
01:16:58
yeah yeah I probably would have made a better joke than that I would have made a better joke for sure in our group chat
01:17:04
and said can I do an insurance like jaycal and they were terrible so at least AI to pretend you're the all-in Pod
01:17:11
besties telling Uranus jokes sorry let me just say one more thing about this open AI thing I I do think
01:17:18
that the biggest and most interesting um thing to think about is how this will um disrupt the search box the the search
01:17:26
you know the way search works at Google you know an internet search is there are
01:17:31
these kind of servers these web crawlers that go out and gather data someone starts your data feeds and some of them
01:17:37
are just crawlers and then that data is indexed or in in the structured way it's
01:17:42
kind of made available for for serving directly on the search page and so much of that is is indexing so I
01:17:50
search for a bunch of keywords those keywords and perhaps there's some natural language contexts are matched to
01:17:55
a result page and I click on that and it's linked out years ago Google started a product called the one box where they
01:18:01
could take structured data like what is the weather in San Francisco today and that the top of the search result page
01:18:07
just presented that data because it knows with high certainty the question you're asking and it knows with high
01:18:11
certainty the answer it can give you yeah Clifton from somebody's website right so if that starts to become
01:18:17
everything then that one box interface and it's not just Google's ability to access all this data and index it and
01:18:25
serve it and store it there could be a lot of competitors to the one box and a lot of competitors ultimately to search
01:18:32
um and ultimately you know Google's core product their their search engine could
01:18:37
be radically disrupted by an alternative set system or set of systems that have more of a natural language chat
01:18:44
interface which um and I literally which is literally why Google bought deepmind
01:18:50
and there were a collection of human-powered search engines Mahalo included Cha-Cha answers.com who are
01:18:55
trying to do the human based version of this it just didn't scale we don't want to get ahead of ourselves because one of
01:19:00
the things we don't know is how much is going on in deepmind they're they're not
01:19:04
very open like open AI is they talk about some of the advanced Frontier stuff like um Alpha fold and so on and
01:19:09
they've been public about that but a lot of that is really to generate interest in hype and what's next but my
01:19:15
understanding is deepmind's been applied to everything from ads ad ad optimization but also the ranking on
01:19:22
YouTube videos to get people more engagement on YouTube Etc et cetera so there's all these ways that deepmind's
01:19:26
been applied within Google services that we don't certain and certainly within search yeah but the question is is there
01:19:32
an entirely new interface for search yes that risks Google's course search business
01:19:38
and I think that there certainly will be a lot of money thrown at this and if anyone has any interesting ideas send me
01:19:44
an email sax and then chamoth yeah that's a really interesting point I saw a thread on this where somebody was
01:19:52
asking GPT you know a bunch of questions like they were like generally like coding
01:19:58
questions and they were actually comparing the result in Google versus GPT and Google would just give you a
01:20:04
reference to like a link to some page whereas gpt3 would actually construct the answer like a multi paragraph answer
01:20:11
that was far more detailed and in a way user friendly yeah whereas like the Google page would kick you over to a
01:20:19
reference where it was like this one two three sort of maybe someone who created
01:20:22
a checklist but it just wasn't that detailed it really is pretty interesting I thought um Andreessen tweeted a really
01:20:30
interesting example as well where he asked GPT to create a seen from a play starring a New York Times journalist in
01:20:40
a Silicon Valley Tech entrepreneur they were arguing about free speech in each passing asserts the view associated with
01:20:46
his profession and Social Circle we don't need to read the whole thing but I thought this was like spot on where I
01:20:51
was actually like both sides are making their best arguments and it's like to each other in a conversation that seems
01:20:58
intelligible like they're making their points at the right time in the conversation it's like
01:21:04
they're playing off each other in other words it actually reads like a conversation I actually thought this one
01:21:09
was more impressive than the one with the bestie impersonation because I agree I actually thought that the one about
01:21:15
all in didn't really capture our personalities per se but this one actually does a pretty good job
01:21:21
capturing the arguments in this debate so pretty impressive any thoughts here yeah lots I mean I've been spending a
01:21:28
lot of time learning about this area six years ago a team that I partnered with who was at Google that
01:21:36
built TPU we've been building silicon for this space so we've been kind of going from the ground up for the last
01:21:40
six years a couple things that I'll say the first is that I think we're going to replace SAS
01:21:48
with what I call Mass which is models as a service and so you know a lot of what
01:21:54
software will be particularly in the Enterprise will get replaced with a single use model that allows you to
01:21:59
solve a function so these chat examples are one and you can name a bunch of SAS companies that were purveyors of SAS
01:22:07
that'll get replaced by essentially gpt3 or some other language model and then there'll be a whole bunch of
01:22:14
other things like that if it's a you know expense management company they'll have a model that'll allow them to
01:22:20
actually do expense management or blah blah blah forecasting better so I think SAS will get replaced over time with
01:22:28
these models incrementally that's phase one but the problem with all of these models
01:22:33
in my opinion is that they're still largely brittle they are good at one thing they are a single
01:22:40
mode way of interfacing with data the next big leap and I think it will come from one of the big tech companies
01:22:48
or from openai is and we talked about this I talked about this a few episodes ago a multimodal model which then allows
01:22:55
you to actually bring together and join video voice data in a unique way to answer real substantive problems so if I
01:23:05
had to steal man the opposite side reaction so I think there's a lot of people gushing over the novelty of gpt3
01:23:11
if I had to or chat GPT if I had to if I had to steal man the opposite what I would say is it's gonna get
01:23:18
somewhere between 95 to 99 percent of all of these very simple questions right because they're kind of cute and simple
01:23:25
there is no consequence of saying write a play because there is no wrong answer right you either kind of it it it
01:23:32
tickles your fancy or it doesn't it kind of entertains you or it doesn't when this stuff becomes very valuable is
01:23:39
that when you really need a precise answer and you can guarantee that to be overwhelmingly right that's the last one
01:23:46
to two percent that is exceptionally hard and I don't think that we're at a place
01:23:51
yet where these models can do that but when we get there all of these models as a service will be
01:23:58
very much commoditized and I think the real value is finding non-obvious sources of data that feed it
01:24:07
so it's all about training so meaning you can break down machine learning and AI into two simple things there's
01:24:13
training which is what you do asynchronously and then there's inference which is what you're doing in
01:24:18
real time so when you're typing something into chat API or a chat GPT that's an inference that's running and
01:24:25
then you're generating an output but the real key is where do you find proprietary sources of data that you can
01:24:32
learn on top of that's the real arms race so one example would be let's say you build a model to detect tumors
01:24:41
right there's a lot of people doing that well the company that will win may be the company that actually then
01:24:47
vertically integrates buys a hospital system and get access to Patient data that is completely proprietary to them
01:24:55
and covers the most number of women of all age groups and of all ethnic you know ethnic categories
01:25:01
those are the kinds of moves in business that we will see in the next five to ten
01:25:05
years that I find much more exciting and trying to figure out how to play in that
01:25:10
space But I do think that chat gbt is a wonderful example to point us in that direction but I'm
01:25:17
sort of more of that case which is it's a cute toy but we haven't yet cracked the one to
01:25:22
two percent of use cases that makes it super useful but I think the first step but just sorry but the first step will
01:25:28
be the transformation of SAS to Mass and then from there we think we can try to figure this out it reminds me of in a
01:25:34
way when you when you give that description of like hey this is really interesting but it's not complete is
01:25:39
remember when GPS came out and like people were like doing turn-by-turn navigation they drive off the road
01:25:44
because they were trusting it too much and then you know over 20 years of GPS we're kind of like yeah it's pretty
01:25:49
bulletproof but keep your eyes on the road same thing that's happening uh and and these changes these last these last
01:25:56
hundreds or 200 basis points literally takes decades exactly so the last 15 of self-driving is like the decade-long you
01:26:02
know sloth let me take a century 15 may take a century but the last two percent will take a few it's like the change
01:26:07
happens very slowly and then all at once for people who don't know what a TPU is
01:26:11
that's a tensor processing unit this is Google's um application specific circuits right and custom silicon that
01:26:18
they invented for tensorflow at the time yeah so if you want to try it although now the modality of AI we've changed
01:26:23
that as well so now we're totally in the world of Transformers so we're not even
01:26:26
using you know you're not letting the tensors float the way they used to all right
01:26:31
there's been a Slowdown in SAS sax uh what is happening in the software as a service World there was a good update by
01:26:38
uh jam and ball who works for Altima our friend Brad gerstner he does these really great updates on what's happening
01:26:43
in the SAS world the big thing this week is that Salesforce had its quarter and I
01:26:48
would consider Salesforce to be the Bellwether for the whole SAS category I think they're the largest pure SAS
01:26:54
company they were the first multi-tenant SAS like company at scale and what they've shown is a huge slowdown
01:27:02
basically their net new ARR that they just added in the previous quarter dropped two-thirds compared to the
01:27:10
previous quarter but because their sales and marketing spend was the same as the
01:27:14
previous quarter it exploded their CAC payback which means the amount of time it takes to pay back your customer
01:27:21
acquisition costs for a given customer so you see there are 155 months it would take now to pay back the customer
01:27:29
acquisition costs that's over 10 years that doesn't work I mean I think before this quarter it was more like
01:27:36
two and a half years that's something that you can afford a company can't you know if you're spending 10 years of you
01:27:43
know gross profit on a customer to acquire them the business doesn't make sense so now I'm not saying any of this
01:27:49
to pick on Salesforce it's an exceptionally run company you know one of the absolute best uh Mark benioff
01:27:56
fantastic CEO founder great human being but I think the point here is that what you're seeing is the whole SAS industry
01:28:05
is really slowing down here in the first half of the year you saw SAS valuations
01:28:10
correct now we're actually seeing SAS Top Line correct and you know there's an interesting question here if your CAC
01:28:18
payback goes from two and a half years to ten years you have to bring your CAC down how do you do that you can either
01:28:23
reduce marketing or you can reduce sales so in other words you can reduce me cut
01:28:28
the sales team you can either cut people and head count from your own team or you
01:28:33
can cut spending you do on advertising or events or money that you spend on other companies either way there's going
01:28:41
to be a big contraction in jobs basically around this industry and I think that what that could do is cause a
01:28:49
vicious cycle where that's we start seeing I wouldn't say death spiral I think this vicious cycle for the next
01:28:55
year or so where seat contraction becomes the norm instead of seat expansion so if you go back over the
01:29:02
last 10 years a major Tailwind at the backs of SAS startups has been that every year year you start with 120 130
01:29:11
150 percent of last year's Revenue just from your existing customers why because
01:29:15
they were hiring more and more people and they needed to buy more and more seats but now head count growth is
01:29:21
frozen and in fact companies are doing major layoffs so the Baseline for next year year could be seek contraction so
01:29:28
instead of starting with 120 of last year's Revenue you might start with 80 or 90 percent because there's going to
01:29:33
be so much churn so I think that you know SAS companies need to take this into account this idea that like growth
01:29:40
is on autopilot that could start to go in reverse I don't think permanently but I think for the next year or so this is
01:29:45
why I also I tweeted you know two x's is the new 3x if you can grow 2x year over
01:29:49
year and this Incarnation that comes as good as or better than growing 3x last year clearly it's clearly better like a
01:29:57
lot of companies that weren't that great could grow 3x last year because it was so times were so frothy everyone was
01:30:02
buying everything but now it is going to be really hard to even double year over
01:30:06
year companies need to take that into account into their financial planning uh you need to restrain your burn because a
01:30:13
lot of the revenue that you predict is going to be there may not be there all right uh thanks so much to the
01:30:19
Secretary of SAS I think you got a board meeting I did I gotta run one of the interesting things I saw in terms of use
01:30:24
cases is somebody used the chat GPT to describe rooms then they took the descriptions of those rooms and then
01:30:31
they put them into like dolly or stable diffusion one of those and it created the visual I'm curious if you'd think
01:30:37
you know the self-driving apis uh and machine learning that's going on then you got images then you got chat maybe
01:30:45
you have proteins going on with the alpha fold stuff when these things start talking to each
01:30:50
other is that going to be the emergent behavior that we see of General Ai and that's how we'll interpret it in our
01:30:58
world is these hundred different vertical AIS uh hitting some level of reasonableness to chamat's point on data
01:31:06
sets and then all of a sudden the self-driving AI is talking to the one that's looking at cancer and tumor
01:31:12
diagnosis in the chat and the image ones it may be stable diffusion the protein Ai and the one that's looking at cancer
01:31:19
cells start talking to each other yeah I'm not sure that's as likely as the there's a lot of solutions that will
01:31:28
emerge within verticals and I think you can distinguish them so I kind of gave this
01:31:34
example a few months ago if you remember Kai's power tools was a plug-in for Adobe Photoshop came out in
01:31:42
1993 I believe of course and Kai's power tools completely transformed the potential of Adobe Photoshop because
01:31:48
Photoshop had all the basic brushing and editing capabilities within it Kai's power tools with statistical models that
01:31:55
basically took the Matrix of the pixels and you know created some evolution of them into some visual output like a blur
01:32:04
and so you could blur motion blur or something and you could change the parameters and now your photo looked
01:32:09
like it was going through a motion blur ultimately Photoshop bought and implemented those tools but those were
01:32:14
similar they were statistical models that made some representation of the input which was the image and then
01:32:20
created an output which was an adjusted image I would argue that that is very similar although the models behind it
01:32:27
are very different in terms of the contextual application of statistical models in software and you could see
01:32:35
stuff like for example a chat bot that replaces helped me figure out whether my credit card charges are correct or not
01:32:43
instead of having a customer service agent an offshore customer service agent helping you resolve that or help me
01:32:49
return my item or there are very specific kind of verticalized applications that can plug in
01:32:57
that ultimately replaced what was manual and human driven before because humans used to manually make the motion blur in
01:33:03
Photoshop and then it was automated with the software packages and I think you can kind of think about it in that same
01:33:08
way that these These are known nodes they don't require necessarily a human physical labor or some you know human
01:33:16
responsiveness that if 95 of the work can be handled it will get handled by some verticalized solution so I think
01:33:23
the physical labor versus the non-physical labor is one way to think about the distinction meaning is there
01:33:27
some change in the physical world driving is absolutely a change in a physical world you have to move
01:33:32
physically through space so that one is a very distinct class all the stuff that's like communication imagery static
01:33:40
imagery audio and then visual video there's some stacking that happens there and some of those will be kind of siled
01:33:48
and then some of them will merge and you'll have these kind of unique kind of combo models
01:33:52
and so look as they start to work together I think we'll see them you know completely rewrite some of
01:33:58
these verticals like movie production or music production right or advertising or
01:34:04
we're seeing it now with with video and and creative arts uh with um you know some of the the visual stuff on
01:34:11
opening to be honest a lot of Journalism a lot of creative arts have become the wisdom of the crowds over the last two
01:34:16
decades where you know artists were looking at the collective works of the internet interpreting it and then coming
01:34:24
up with content which is kind of what these AIS are doing and then who legally owns the collective content is going to
01:34:31
be a big question chamoth you talked about data sets you know Microsoft is being sued right now and GitHub because
01:34:37
they used open source to create Tools in AI to help augment programmers like rather programming and writing code it
01:34:45
gives them suggestions and now the open source Community is suing them for using
01:34:49
their data set so what do you think about the legality of data sets tremoth and should they get
01:34:54
some kind of protection if you make a gpt3 based on quora or based on Wikipedia should you have to get
01:35:00
approval to use that data what look at the exact opposite yeah it's it's the exact opposite they say that this is
01:35:07
actually your work um and I think that that's the right legal framework but the the answer to
01:35:12
your other question is this is why I think the hunt for proprietary data actually becomes the hunt that matters
01:35:19
all of this other stuff I think is a lot less important because I think you have
01:35:23
to assume that all of these models will eventually just get commoditized so they'll be there'll be a you know like
01:35:28
you see like Jasper Ai and you see a bunch of these generative AI companies it's really interesting
01:35:33
but the problem is when you sit it on top of the same substrate you'll have a convergence
01:35:38
right everybody's chat model will eventually look and sound and feel like the same thing unless you're giving it a
01:35:45
few special ingredients that other people are not and so it's the hunt for those ingredients that will make this
01:35:51
next generation of of models really valuable so to give it an example you would have Wikipedia which is Creative
01:35:58
Commons anybody can use but Cora as a data set not everybody can use that's owned by a company would have an
01:36:04
advantage take an extreme example if quora didn't allow themselves to be crawled right okay
01:36:13
but then and then they develop their own language model which used the best of the internet so call it you know GPT and
01:36:22
quora maybe they are slightly better in certain domains than others the The Other Extreme example is the one that I
01:36:29
used in healthcare which is you know if you have access to Patient data that you
01:36:33
will not license to anybody else you know it stands to reason that that model actually then has much better chances of
01:36:42
Highly Effective clinical outcomes versus any other model Apple watch comes to mind right Apple has all that watch
01:36:49
data if they could pair that with epics it's another data set example what could
01:36:54
they do together so this is going to be like this is the new oil is going to be data and by the way like to to to to
01:36:59
talk about Apple for a second the smart thing is they've gotten so methodically they've never touted the AI you know
01:37:06
they introduce one or two distinguishing features every year right so like the the the ECG which was introduced many
01:37:14
many years ago is has only gotten slightly more usable like five or six years later but in the
01:37:19
meantime there's you know tens of millions of watches collecting this kind of data so to your point
01:37:25
it's it's using these devices as Trojan horses to collect training data that is the oil Uber and Tesla have all this
01:37:34
data of the data being collected by you know the well hold on so phones or the cameras in the cars the other difference
01:37:42
though is that you have to be in a realm where you don't need Regulators to go The Last Mile so the problem with Adas I
01:37:50
think or level five autonomy is that eventually you get to a point where even if the model becomes quote unquote
01:37:56
perfect you still need regulatory approval and what I'm saying is I think you have to
01:38:02
focus on areas of the economy that are not subject to that or where the regulatory pathway is already
01:38:08
defined so for example if you use that Health Care example let's say that you had the largest Corpus of breast cancer
01:38:12
image data and you could actually build an AI that was a much better classifier for tumors versus other things
01:38:19
the FDA actually has a pathway to get that approved very quickly the problem with you know level 5 autonomy is that
01:38:26
there is no clear pathway it's not again we go back to almost a crypto example we
01:38:31
don't really know who will govern that decision and we don't know how that will be governed so I think the the thing
01:38:37
that investors have to do and entrepreneurs entrepreneurs have to pick their End Market very carefully and
01:38:42
investors have to realize that this Dynamic exists as well if you're going to do this right imagine the Robin Hood
01:38:47
trading you know uh Trader data set watching people sell and shares and then predicting markets with it with AI I
01:38:54
mean it could be crazy you have that or payment for order flow that's used by Citadel and the other big but not AI
01:38:59
right so who knows maybe they are losing it they are I I can tell you as somebody
01:39:03
who sells we sell a lot of machine learning Hardware into this Market the biggest buyers are the US government
01:39:11
and these ultra high frequency trading organizations I'll give you the final word uh how could this affect astronomy
01:39:20
how could this affect you know our search of the galaxies you know going out past Pluto Saturn
01:39:26
breaching your anus any any of those things how could it impact any I'm trying to get a Uranus joke to land
01:39:35
help me out there Tremont I think you need to have more uh space related um yeah which Workshop this one with me
01:39:44
or got or gut biome related you know yeah so how would this affect use the promo code twist you have to trick
01:39:52
Friedberg into thinking we're asking a serious question get him down the science path and run pull him no that's
01:39:57
that's right use the proper rug pull exactly okay let's do it here we go let's work so uh tell us you know when
01:40:02
you're doing like super gut use promo code twist to get 25 off when you're doing super gut you're
01:40:07
analyzing people's guts how would you then have machine learning in this you know API uh this chat API
01:40:15
and gpt3 how could that help processing all of that especially when it passes through Uranus
01:40:23
forever okay over there Freeburg you are hungover I'm hungover but I also had like a 7 A.M board meeting so I'm
01:40:32
also just a little beat up were you grumpy on the board meeting did you get a little cantankerous
01:40:38
kept the rage I had my caffeine Fuel and then I kind of cranked down afterwards all right everybody we will see you next
01:40:47
time for the Secretary of SAS The Dictator and the Sultan of hungover we will see you next time bye bye love you
01:40:57
guys bye-bye we'll let your winners Rain Man [Music] it's like this like sexual tension that
01:41:36
they just need to release somehow [Music] [Music]