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hey everybody welcome to another episode of the all in podcast it's been a crazy uh couple of weeks
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here we had the all in summit and boy was it amazing our bestie david freeburg couldn't make it today uh he had uh some
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personal things he had to attend to so joining us again is brad gerstner welcome back
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to the fifth bestie uh on his is this your fourth appearance now including the uh all in summit i think you've been on
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four times now very good all right that's about five percent of the episodes a nice nice uh
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i think that's a nice little chip in your uh in your your belt there i mean unworthy replacement to freedberg but i
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do what i nobody can replace freeburg that is the truth [Music] [Music] just uh going around the horn here
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chamoth did you have a a favorite moment on stage a favorite moment off stage what is your general impressions of the
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all-in summit 2022 i thought the people i met were really impressive i really enjoyed meeting people and
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learning what they did i also thought you and your team organized really an incredible event and
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i forgot how good you are at these things but um so i give you a lot of credit i really enjoyed participating
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the only thing that i was nervous about during that whole thing which probably limited a little bit of my fun
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was my mom was coming she's 81 and so it's not i was not super psyched to really be in the throes of all the
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parties to be honest just because i was like i didn't i didn't necessarily want to
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get coveted and i didn't want to introduce it to her and got it yes you know nat ended up getting
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really really sick but more uh like a flu and a cold yeah um but you know i've been fine my mom's fine i know a bunch
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of folks that came unfortunately tested positive so that was the only that's the only
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downside where i would i would have wanted to be a little bit more carefree but um
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that was the only thing that was but that's not in anybody's control so yeah i i recall that when i had a christmas
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party back in december like a week later he called my christmas party a super shredder even though i
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tested everybody at the door every single person was negative at this summit so so my parents went to this conference
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they both got coveted my aunt who lives in miami who was in her 70s she got coveted
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are they okay by the way are they good yeah they're most important it's you know it's omicron it was like
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you know it's like bad for two days and then you get better so they're gonna be fine thank god
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or no yeah one did and one didn't so um my brothers got covered in so your brother's got it which one josh josh and
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jamie both got it and then josh's wife got it so she um took the pax love and everybody's great now but yeah
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if you go to my a lot of people who came to the event it was their first time out
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like this was for a lot of people i think very emotional and exciting because it was their first venture out
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and if you go to miami to a conference like you're gonna get getting a covet especially if the event
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organizer doesn't test anybody it's impractical to test 850 people nobody would come like no if you want to make a
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profit right nah it wouldn't have actually been that expensive you could put that on the
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people they could just you know share their results but i think at this point you know even on
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the planes going out there nobody's wearing masks i don't know if you know well you guys are flying
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private but you know my flight out there it was all you know nobody's wearing masks anymore but anyway j cal i think
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everybody who went to the conference took the risk upon themselves of getting coveted and you know it's not
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the end of the world or anything they're all fine but i'm just pointing out the hypocrisy
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my hypocrisy yes exactly it's like you're like nancy pelosi or something where you're criticizing
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every time a republican gets covet it's their fault but when you throw a super spreader and i think ais now stands for
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all in super spreader yeah it's not your fault it was well beyond your control it
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was the virus absolutely and in fact it was probably just florida it was just yes but in mine i tested
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yeah it's not even proven that mine was a super spreader all right in all seriousness did you have a favorite
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moment on stage or some reflections on the event uh i thought the elon thing was really good by the way and then the
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only thing i'll say is the the palmer lucky thing was pretty incredible um yeah which will be we will
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be releasing the podcast i think that that episode is uh eye-opening yeah we don't want to say too much but i
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think that you were uh really i think you handled yourself really well there oh thank you for that
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jamath what actually happened i wasn't there for that portion i haven't heard anything about we give a
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mini summary here of it i guess i'll give you the outside inversion he gives what i can only describe as an
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incredibly motivating breakdown of american defense and what his company and you know you have to remember to put
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it in context this is a 29 year old young man who has now started two multi-billion
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dollar unicorns so you know this he's going to be around for a long time doing amazing things
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but he talks about anderl which is his defense company really impressive and then the whole you know everybody's kind
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of like rousing and cheering and applauding and then he said you know i have something else that i want to get off my
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chest and i was standing beside jason backstage jason was looking at the monitor i was
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looking at the mirror at myself but uh and check out your sweater uh and uh he said uh you know there's a
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person here that that has been you know really hard on me you know tried to ruin
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my life attacked my family and represents you know these really this strain of very influential people
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in silicon valley who have gotten it totally wrong basically and he called out cancer culture and
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then he called out jacob and to jake all's credit after he was done jacob was the first one that walked out
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on stage shook palmer's hand and then we all sat down we talked to him and then the two ended up hugging it out at the
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end but there were moments that were very heated in the middle of it um the whole thing was
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incredible to watch i got to be honest with you super dramatic yeah incredible i
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the most shocking and surprising aspect of the whole thing was that a person as important as palmer
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lucky felt the need to get revenge on a person as unimportant as jason calcanis that was the part i mentioned when he
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was like my career was when he said important people in silicon valley i initially thought oh my god
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he's talking about me what did i say i that was i was thrown by that tip if i'm being honest he's like my entire
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career was stopped in its tracks and i had to claw my way back because jason calacana said this and i was like
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um no actually no i'm looking forward to when you're it's going to be a great episode
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it's going to be coming out next week thank you yeah and i i want to give a shout out to
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um glenn greenwald matt tybee and antonio garcia martinez for appearing and you know we did two different panels
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we did one on domestic politics with glenn and taibi and then the we did a debate on ukraine which has now been
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published between glenn and antonio and particularly i want to thank antonio because
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it did end up being a little bit of a two one at the end which wasn't my intention but i have my own views on it
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too although i did try to be somewhat restrained and even-handed in the moderation but it's a
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really good debate we should have had longer we only had about 30 minutes but you can see that online right now it
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actually is a great uh example of actually how to listen to somebody else having a completely diametrically
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opposed view and still be respectful i thought those guys were great to listen to i think it's a new format sax and i
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think you know somebody was like hey maybe you and j cow could do it i think you and i moderating like two people
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with different sides it could be like a really interesting format for us for future events brad did you have a
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favorite moment on stage maybe outside of elon of course you can mention i would say you know maybe both on stage
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and off stage you know i think listen i think this podcast has taken some shots and
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probably appropriately so at times for being a bunch of men in a little bro culture
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and the effort made to build authentic community and diversity into that room i've been to a lot of
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conferences whether it's claire thielke you know patty wexler extraordinary you know
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minds women all diverse cultures economic backgrounds when we walked around the floor p you know indiana kentucky
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west virginia everywhere right and who were starting companies having authentic conversations and
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frankly we're grateful for the community and the advice that they were being given these were from big startups to
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very small startups and so for me that was a highlight the effort you made i don't know almost 40 women you know both
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economic i thought as well as you know geographic uh diversity and then you know listen i had a moment
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after bill and i after gurley and i got off stage um i was stopped by a group of founders
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and they said hey we need your help i said what and they said we are that company you and bill were just talking
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about and said was screwed we raised 100 million dollars last november from from tiger at 100 times
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arr what do we do right and like like the fact that that you know that those conversations are
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going on of course they're not screwed and it's a very interesting company but it led to a real conversation that you
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don't often have um at conferences like that and so i thought it was much more than just a
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bunch of talking heads on stage i thought it was a real give and take in the you know uh in the crowd
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afterwards the parties the in-betweens and so i really enjoyed that the other big um thing that we avoided um
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failing on was uh putting back the amas i think these amas are some of the most interesting
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parts of that conference and i think that we should make sure that we probably do an ama jason like
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both days we do a two-day conference the amas are awesome yeah when the audience is asking us and just to
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explain to people how we were able to um you know curate the audience we ask people i think it's a good playbook for
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other people if they want to steal it to uh they could they could pick the price
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they wanted to pay based on their station in life and so people said i want to come i'll pay 500 i'll pay a
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thousand i'll pay 2500 instead of the 7 500 ticket price which was like 300 people in the audience and we just said
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hey what do you love about the show you know what would coming to the conference
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mean to you and we kind of just sorted that and we look for people who are passionate about the show and then you
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know the the thing that stuck out to me and i know freeburg uh had a great time as well
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was the passion of the audience and how much they appreciate what we do here every week and so the love that we got
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people asking to take selfies people telling us what the show meant to us you know and people coming from all
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different uh stations in life really it made it not elitist but it felt like the
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people who were there were all builders and that was really an interesting part what i instructed the
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team to do was anybody who was like a real estate broker or a money manager a sales executive a business development
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person i said let's not have them there no offense to those you know critical functions but a lot of people will come
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to these events to sell and get customers but i said anybody who's a builder an artist they're making something in the
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world let's give them the priority for these the scholarship tickets so you know when you met people they were all
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building something interesting in the world and and no press i think also created a certain
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vibe there we didn't have the media there criticizing every panel and you know every speaker and so it i think
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it just yeah made it magical well i think it really couldn't do it without all you guys uh freeberg and the besties
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and brad you were helping behind the scenes so couldn't do without everybody and my team
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turned out surprisingly well i thought i thought the whole thing was a j-cal grift and it actually turned out there's
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been there was there's some grifting going on for sure we still haven't seen an accounting of of exactly where all
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the money went so it's it's close we'll have that accounting any day now saks any day now what could you have done
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better what would you change for the next time um you know i it's a great question you know we we
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always do a document with lessons learned right after the event so i went through my team and i had 26 people from
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my team uh 21 from launch and i think five from insight came and uh you know helped staff the event
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a little more time to to work on the speakers in the agenda um if we had a little more time i would have teased out
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of each bestie you know maybe five or ten speakers or topics they wanted and worked backwards
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so just a little more time to to to to experiment with the format but i i took an experimental approach to it we did
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have people who did solo dolo like ted style talks we then had people come on stage uh with the besties and do
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discussions but having all besties on stage all the time is a little hard for for everybody i
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know david likes to focus on maybe a couple of things other people like chamoth and i like to be on stage for
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everything i think um but the format was experimental and there was a couple of great moments i
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think when we overlapped folks so i think nate silver overlapped with keith roboy
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uh you and bill gurley together tim robert i'm sorry overlapped with keith roboy um those were magical moments i
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think and so i have something in my brain about weaving individual talks and data points with
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the besties and then having the next speaker on the stage the next speaker and i would have liked to have more time
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to refine that format i think okay my only question is was the palmer lucky deal
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was that a plant did you plan that no did you put that in there i'll tell you the back
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story is i you know i i've had invited him on this weekend starts before all in came out many times he said [ __ ] you
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basically in so many words i hate jake out and then when all in came out he's a fan of this show um i think he's
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particularly a fan of david sax's and i think david knows a lot of the investors
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the investor pools i think overlap in a lot of different circles of ours and um i said would you like to come to
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the summit and i and i basically said to him heartfelt like listen i think the work
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you're doing to protect the country most people in silicon valley don't believe in building weapon systems but i
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kind of am with you on this so we probably have some common ground here i think the mission of what you're doing
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is more important than our disagreement from you know the hillary clinton versus
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trump days maybe we could just you know put that aside and have you speak and surprisingly these people were like yes
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i didn't know they were doing yes because he had a plot to dunk on me but who cares you know like i don't mind
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being dunked on if i'm wrong about something or i'm right it's the whole spirit of this show is to
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you know to learn and grow and have great conversations so with that maybe we start the show now
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let's do it all right let's go let me am i am i still allowed to do intros or is
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it too triggering because i do have interest for this week do it say do it okay i got thumbs up only if
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they're nice well you know that's the caveat that i cannot guarantee but anyway here we go
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getting ready to gallivant across the italian countryside he spent 40k at all in summit on food and wine he took 400
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selfies in three hours those sweaters my lord the wreak of power the dictator himself is back shamath polly hoppity
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welcome back to the show thank you jason all right his body looks like he doesn't
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eat cake he's got a major steak in snowflake you might have heard him earlier on the week with bill gurley
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he's the crossover fund manager with that bde our fifth bestie the audience hangs on
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every word he has to say the dark knight of namaste welcome back to the program brad gerstner
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i like it what's bde if you don't know then you don't know you can look that up urban dictionary
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he's about to turn 50 but he looks like he's 65. after 72 hours in miami we're not sure he's still alive the [ __ ]
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keeper is jealous of the facts under his eyes his portfolio has been down for 35
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straight days no surprise the rayman himself is back david sacks too rough on saks no it's okay is it
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okay i felt like i might have gone too rough on sax all right i guess we start with markets and um s p 500 down 15
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year-to-date down down 11 two stocks of note uh that did particularly well during covet uh zoom
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and snowflake reported their earnings this week and they beat expectations of course
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that uh gives them no reprieve uh market cap for uh zoom 31 billion they got almost six
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billion dollars in cash uh which was a prescient move to cash up i guess during the
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the boom times their stock jumped 18 after the earnings so great for them uh q1 revenue
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2023 1 billion 12 year-over-year they got an 80 gross margin for that business pretty impressive
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500 million adjusted free cash flow 7 000 employees they're at almost 500 000 per employee
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uh at this point and stock is still down 43 year to date but a little bump here so i i guess we might be bumping along
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the bottom soon and just to quickly recap snowflake and get your comments after that snowflake reported their
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quarterly earnings yesterday 41 billion market cap they got almost 4 billion in cash
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they were down slightly at the taping of this episode today and they're down 67 from the peak of 409 a share in november
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so they're not in the 85 plus club like coinbase and peloton but still they've lost two-thirds of their
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market cap 422 million in revenue 85 year-over-year beat their expectations uh and um
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gross margin 72 net retention 174 percent uh 70 on growth within within their existing
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customers to david sacks's point about why sas is so great they got 4 000 employees
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uh 6 300 total customers so uh i guess maybe starting with you brad since you're in this in the vic of it
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thoughts on uh i know your major snowflake early supporter thoughts on what's happening in the market and maybe
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any indication uh from these two let's face it strong results uh in the bouncing along the bottom i
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think is how we'd all describe what's happening right now well i think listen what makes investing hard is sometimes
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you have to hold simultaneous truths right and the reality is there's a lot of cognitive dissonance when you see
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something down 30 40 50 but it may be still fair value right we were talking about last october
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like make no mistake about it just take snowflake as an example the move from 400 to 200 was probably
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just what i would describe as normalization in a world where rates were going back to two and a half or
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three percent right the market last october had gone too high we discussed it on this pod we
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discussed it on cnbc and so i expected a return to what we call the five year average as we discussed at the summit
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what's been surprising to me is the negative reflexivity that's kicked in as a result of the war in ukraine
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uncertainty about hyperinflation uncertainty about hyper rates and so now we're seeing software generally all risk
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assets growth assets trading now 30 40 50 below the five-year average right so i don't think it's helpful to say
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well none of that should have happened no the reality is meant that all of this stuff was going
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to be down 20 to 50 percent because it was way overvalued last fall we gaslighted ourselves in many respects
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we didn't hedge it perfectly in many respects but that's you know that's what happens in late market cycles so the
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question is where are we today and for example like why is the nasdaq up 300 basis points today right this it feels
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like whiplash i come in one day and you know you have market caps up 10 percent one day down to 10 the next and so i
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think it's really important to help the people listening understand you know like what happened this week and what's
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going on it has been kind of a uh a a pretty mixed bag this week in fact of of things going down chamoth
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what are you gonna take on this of what we're seeing in the market this week specifically with precipitous drops and
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then you know the bouncing up again look we we still had some amount of rate uncertainty from the fed i think people
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weren't sure how aggressively they were going to hike but by early this week it was pretty
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clear there's going to be two 50-point hikes one in june and one in july and then effectively a pause
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because then the fed funds rate will be at around two percent and everything from there will probably be path and
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data dependent okay that's effectively what they said now i think the the markets had actually
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already started to see that writing on the wall so if you go back to you know one of our
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favorite measures which is the 10-year break even it's effectively rolled over which meant that you know which means
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that from the highs in sort of late april it started to come down which says that you know they were
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thinking that you know the inflation was not going to be as bad in the back half of the year
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and then the second is that corporate credit which is really what matters in some ways to the fed because
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that's where they can intervene what is the spread above treasuries that a company can issue debt
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when it goes crazy and it goes up it means oh no the cost of capital is going up
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that's going to be hard for companies to raise money they may have to lay people
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off they may need to get into cost cutting mode right that's what goes through everybody's mind
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but that's also now about 35 and 40 days rolled over which means that the gap has started to shrink
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you know between the us treasury price and what you know decent corporates can can issue debt at
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so it looks like we are set up for potentially a decent little rally here the problem is is it a rally that is
00:22:47
sustainable or is it a rally that's basically what we call a dead cat bounce or a bear
00:22:53
market rally where you know you just get some one or two weeks of relief before the
00:22:58
thing spears down again and we're not going to know although tomorrow on friday there's going to be a really
00:23:03
important set of inflation data that gets released and i think everybody's going to be sweating these details so
00:23:09
right now we're in a moment of pause and there is the potential if this data comes back as reasonably
00:23:17
good which means prices are you know not escalating as much as we thought um inflation is not going to be as bad
00:23:24
growth is going to be moderate that that gives a lot of ammo for the fed to kind of take their foot off the
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um off the gas here and in that case markets will go boom sax um the interesting note i think is
00:23:39
uh what we talked about here everything was correcting except housing and we were wondering when this uh you know the
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increasing rates would hit mortgage rates mortgage is way above five percent uh in the last two weeks i think it's
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come down a little bit but the mortgage rate basically doubled and then we finally saw it earlier in this week um
00:24:00
uh what day was it it was two days ago so we're taping this on thursday so i think on tuesday new home sales
00:24:07
591 thousand they expected 749 and i think the last month before that was 763 is that
00:24:16
uh indicative of the uh raising the rates and slowing down inflation has finally occurred and
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that maybe we the fed maybe uh steered too much into the turn how do you interpret that
00:24:29
massive it was a pretty massive miss in terms of home sales in the estimate well
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the costs of buying a home are going way up because home loans are now more expensive so
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that's going to factor into all sorts of consumer purchases anything that's financed can be more expensive
00:24:44
you're also seeing companies starting to slow down spending uh really starting to
00:24:49
slam on the brakes we see it in startup land startups are all slashing costs right now but that's eventually going to
00:24:54
percolate up to big companies too you saw dara's memo basically when he got back from wall street remember he
00:25:00
published that a couple weeks ago saying we need to sharpen our pencils cut everything
00:25:04
uh what wall street is looking for now is free cash flow um so it seems to me like we're headed into a
00:25:11
pretty serious downturn or recession here i mean i've been saying we're in recession for months
00:25:16
um the the the you know the tricky thing for the fed is that they don't have a lot of
00:25:21
good options because we have a lot of recession indicators blinking red right now at the same time
00:25:28
inflation is still high so they're kind of caught between a rock and a hard place i think what the fed
00:25:33
should have done is in 2020 hindsight is back last summer we first got that shock cpi
00:25:41
print remember it was like 5.1 percent seemed to come out of the blue because for years and years we've been talking
00:25:46
about deflation nobody thought inflation was a problem all of a sudden we got that 5.1 percent print
00:25:52
they were in total denial about it they just dismissed it saying that inflation was transitory and you know yellen said
00:25:59
the same thing and so basically everyone just ignored the data for six months and what they should have done was stop
00:26:06
qe right then and there they could have taken a little bit of time to think out you know a rate increase
00:26:12
strategy but they were still basically engaging in qe for nine months after that
00:26:19
you know first inflation warning and if they had stopped qe there then we wouldn't have had this
00:26:24
asset bubble in the second half of last year that's when it inflated the most and we could have had more of a soft
00:26:31
landing unfortunately now they let the they kept inflating and really until the end of q1
00:26:40
and they've yanked away the punch bowl so violently that i think the real economy's gonna go into recession so
00:26:45
that's where we are right now i mean i don't know what that what the right answer is now
00:26:51
given that we're in this you know almost stagflationary position let's try and answer that brad what is if if we didn't
00:26:57
act soon enough if you agree with uh sax's point pretty hard to disagree with um and we didn't take the medicine a
00:27:03
little bit at a time um and now maybe we've overreacted or maybe it's going to get worse what is the right thing for us
00:27:11
to be doing now because all these companies doing hiring freezes layoffs at the same time that the housing market
00:27:17
tanks at the same time crypto tanks at the same time the stock market tanks this feels like a major shock to the
00:27:24
system is it time to maybe reconsider some of these um no you know for the fed to reconsider or just slow
00:27:32
and steady wins the race here what what's the best option first we should erect statues to senator manchin for
00:27:38
saving the republic by vetoing stimmy too that would have been devastating that would have been
00:27:45
devastating so we'll revisit that listen the fed said two really important things
00:27:50
this week they said number one our communications have been helpful in shifting market expectations
00:27:59
what that means the fed is the air traffic control they said to the markets at the
00:28:04
beginning of the year you're 90 degrees off runway heading get your ass back on runway heading it was a slap in the face
00:28:13
to markets and it was a radical adjustment now you hear the fed in these little statements this week they said hey
00:28:21
we're well positioned this year to assess the effects of policy firming in the back half so they're saying we're
00:28:27
going to hit it with 50 50 and then we're going to take a look so now think of it as air traffic
00:28:33
control you're two degrees to the left you're two degrees to the right they're steering us on runway heading i don't
00:28:40
think the fed wants to do anything at this moment to lose credibility in the inflation fight we're going to get 50
00:28:46
we're going to get an another 50. but they're doing what they want to do which is keeping markets sufficiently
00:28:53
tight right they wanted to take the crypto market down they wanted to take all the excessive risk in the stock
00:29:00
market down right you're absolutely right the inventory of 350 000 homes spiked from four months to nine
00:29:07
months right used car prices are rolling over the last three months all the things they needed to do they're
00:29:14
doing right they need to stay the course however the hyperventilation this week by bill ackman on twitter
00:29:22
that the fed needs to be doing radically more that somehow we need to be raising
00:29:26
rates to six seven eight percent in order to squash inflation to me seems highly misdirected and totally out of
00:29:35
touch with the fact that on layoffs.fyi they've already announced 750 companies that are announcing layoffs
00:29:43
right the market is getting the drill i i totally agree with this i think we're in a we're we're in a
00:29:50
pretty reasonable place here the real the real question is now what do you need to take the market
00:29:55
lower and this is more of a nuance but you know when you look at companies that are now quote-unquote cheap right let's
00:30:01
take an example like you um you know well we hear a lot about google or facebook right people say my
00:30:08
gosh this is cheap because if you run a screen on it it's like 10 11 12 times price to earnings
00:30:15
well the price you know because you can look on the screen the real question is are the earnings
00:30:20
right and the thing that can take the market lower is if you actually think earnings are
00:30:27
modeled incorrectly right so we saw this week as well snap i mean completely just blew themselves
00:30:35
46 down intraday yesterday i think i just want to say something about one day they have the most incredible propensity
00:30:43
to self-immolate on earnings calls than any other company i've ever seen there's
00:30:47
probably been three times no less than three times over the last four years where i don't know whether it's just
00:30:55
poorly scripted or not well rehearsed or the people that are helping evan get ready for these things
00:31:04
but these are disastrous calls you know facebook's had a couple in this lifetime
00:31:08
but snap consistently probably once every 18 months will do this anyways the thing just completely implodes the
00:31:16
stock implodes by 48 or something and then it you know rolls over to companies like
00:31:22
facebook and google who then are off eight or ten percent my point in telling you the story is
00:31:26
that if you think facebook and google just as an example again are cheap at 10 times well you better hope that the
00:31:32
earnings are right because the earnings are actually wrong that's actually 27 times in 19 times you
00:31:38
know i'm making these numbers up to give you the example because the earnings are
00:31:41
fundamentally wrong so that's the risk now that's left in the market in my opinion that could take it
00:31:46
much much lower is if that you know all of this slowdown really contracts spend and the earnings are actually not
00:31:54
accurate the forecasted earnings will need to be revised over the next two or three
00:31:59
quarters and that's where we will probably see the low if however growth is muted
00:32:06
and the fed can as brad said it's a really good analogy now just course correct by degrees you know a degree
00:32:12
here degree there we've probably consolidated the lows so said another way we look at a company
00:32:18
like snap or google a lot of their expected value has to do with people's ad spend we now see
00:32:27
less homes being sold so maybe people in real estate stop spending less on ads they're a major advertising category
00:32:32
maybe direct to consumer uh people are not buying because the supply chain issues this stuff is too expensive and
00:32:38
we're not going to spend on ads and so all of this ad revenue that's some of the first to come out of people's
00:32:44
budgets so you know even as great as snaps results actually look they were up 38
00:32:51
year-over-year uh they're generating over 100 million free cash flow the guide was terrible because what they
00:32:57
said was our e right our earnings right are not modeled accurately right and so that's the risk that you now have to
00:33:06
take to every company you cannot look at a screen at yahoo finance or bloomberg look at a price to earnings ratio and
00:33:12
say wow seven times that's so cheap it may not be seven you have to do your own work it could actually be much
00:33:19
higher than that because earnings may be at risk the earnings being at risk is this
00:33:24
contagion that we talked about i don't know six maybe it's like we're going on almost a year now saks we talked about a
00:33:30
contagion happening because we've all experienced it in the last two recessions to the dot com bust in the
00:33:35
great recession so what are you seeing in terms of at companies this contagion risk are people
00:33:41
canceling sas contracts on the margins obviously people are doing hiring freezes obviously people are laying
00:33:48
people off are people gonna start renegotiating uh salaries you know what what's the next couple of
00:33:54
shoes to draw pure sax and that would signal to you a true bottom here like have you seen
00:34:00
i thought maybe one would be if somebody offered somebody an investment with a two or three times liquidation
00:34:05
preference have you seen one of those yet have you seen people say we're going to renegotiate salaries because that's
00:34:09
when it was really dark right the last two times yeah it's going to take time to get to that
00:34:15
point i mean where you start seeing structure and deal is in deals is when a founder
00:34:20
is trying to preserve a valuation they got last year and that can't really be justified but they don't want to just
00:34:25
take the down round so you try to preserve the optics the last round by building all these preferential terms we
00:34:31
don't like to do deals that way but you'll start to see them happen later this year when you know companies get
00:34:36
more desperate that's not the first thing that happens though um i think that that to your
00:34:41
point about the talent market it's definitely going to happen has it happened yet no
00:34:46
what has to happen is first all these open wrecks get cancelled companies freeze their hiring plans then
00:34:51
eventually they do layoffs that's coming and then the talent market cools so those students are here both are here so
00:34:57
what's the next in talent wars well yeah i mean look but within the next six months the talent market's not going to
00:35:02
be as hot and you know in the same way that startups aren't getting 10 term sheets
00:35:08
now that maybe they get one or two if they're a good company same thing with talent right they're not going to have
00:35:12
10 job offers they might have one or two and that's going to create that's not going to create the same
00:35:18
upward pressure continuing upward pressure for um for increases in comp um to your point about like will sas
00:35:26
contracts be cut i mean i think software is pretty sticky i mean if it's a good product
00:35:32
um will deal cycles get longer yes will there be more mortality risk in the startup or smb customer bases of
00:35:42
companies yes i think one concept that starts may want to wrap their heads around is what i would call deferred
00:35:50
mortality risk meaning that during the last few years during the boom times the graduation rate from c to series a to
00:35:57
series b was very high perhaps artificially high so there's a lot of companies that got funded and advanced
00:36:02
to the next round where in more normal times they wouldn't have made it so got it now if those
00:36:08
companies haven't really fixed their issues they've just deferred the mortality so i think all of us probably
00:36:14
in saselian need to be modeling out higher logo churn for uh for customer bases that are skewed
00:36:23
towards startups or smbs and we don't know what those numbers are going to be yet
00:36:27
but that is likely to happen i think that that's right i think the other thing is that um there are there's
00:36:32
a lot of companies that are going to have to get religion on free cash flow conversion asap
00:36:37
and i just think that most ceos to be very blunt are poorly educated and enumerate
00:36:45
so their level of numeracy to even understand this is pretty poor and most uh board directors are equally
00:36:53
can you unpack it right now what does it mean to to get the business uh to free cash flow what does it take why is it
00:37:00
important and what what are the how do those businesses look differently to them to spend less
00:37:06
than you make okay hold on i just want to make sure i got it correct you make money but the number of the
00:37:13
money you make is higher than the number of the money you spend got it okay and then there's a delta
00:37:18
there there's some difference between those two numbers and that number is important to some people is what you're
00:37:22
saying i think increasingly getting that number to be greater than zero is going to be really important
00:37:30
it it allows you again everybody starts to throw out this whole thing which is oh my god you can never slow growth and
00:37:37
the company will die and yeah maybe in a vacuum that that's true but when every other company is
00:37:43
fighting tooth and nail to survive the only thing that you need to do is actually survive by surviving you win
00:37:50
and if you can basically make your cash last as long as possible even if you cut to
00:37:55
the bone and stop growing if you come out the other end and you're the only company that's left you will
00:38:02
win and run over the market you may have pushed to the right a few years your plans of world dominance but they're
00:38:08
still available to you it's the company that foolishly thinks that they can continue to spend money at
00:38:13
the same rate or in the same ways that are going to learn this hard lesson because i think that
00:38:19
investors are not going to tolerate being able to you know provide incremental capital to
00:38:26
organizations funds who are then you know misallocating that capital to basically support a poorly
00:38:34
marked portfolio and i think that is going to be the real come to jesus that actually makes all of this thing come
00:38:39
clean like pension funds family offices endowments all these organizations are smart enough to realize that they're
00:38:47
giving good money after bad if what those folks are going to do is not demand portfolio rehabilitation and
00:38:53
instead are just going to basically keep the marks of their old funds because they're just in a in a game of waiting
00:38:59
it out where the whole taking action greater than you know blind hope and just going you know steady doing what
00:39:07
you've been doing you got to make some changes i mean look i love brad's reaction i think that
00:39:12
most growth-oriented funds are looking at their portfolios and they're trying to balance two
00:39:18
strategies strategy one is get into massive rehabilitation mode the problem is most of these people have never built
00:39:24
or run a company so they have no idea how to rehabilitate anything they're you know market momentum folks and in
00:39:30
that they were excellent but in actually helping ceos build and rebuild a business i think that they're not as
00:39:35
well suited doesn't mean they can't do it but they're not as well suited that's path a
00:39:41
but i think that path is very painful and it requires you to take medicine the bitter medicine which is to basically
00:39:47
mark your portfolio down 50 or 60 just like the public market terminal valuations have gone down
00:39:53
the other alternative is to basically raise enough money to do for example unpriced converts into
00:40:00
those same companies so that you don't have to remark so that the auditors will be allowed to carry these fake
00:40:06
valuations you can maybe mark it down 10 or 15 percent but you don't have to mark
00:40:10
it down 50 or 60 and hope the market returns to his previous state but as we've all talked about
00:40:18
that previous state is probably unreliable because it was a moment where we had a global pandemic where we took
00:40:24
rates to zero and we printed nine or ten trillion dollars of excess liquidity that
00:40:29
inflated these things so i got to think that you know prices in 2019 were a little bit ticking up 2020
00:40:38
we're really ticking up 2021 was egregious in 2022 is to come is you know where it all comes home to roost
00:40:45
uh brad explain to us uh we we hear free cash flow we hear income net income ebitda we hear all these terms now free
00:40:54
cash flow is what everybody is focused on i i believe that seems to be the predominant um
00:41:01
rallying cry in a lot of public market companies now can you explain to people what the difference between these things
00:41:06
are because people kind of bundle them together why would somebody like dara at uber
00:41:11
just say hey you know we've been talking about adjusted ebitda ebitda income net
00:41:15
income all this stuff but free cash flow is what we want to focus on now or is that correct yeah you know and our
00:41:20
friend bill gurley uh rails on this adjusted adjusted and you know look to your left look to your right adjust it
00:41:27
one more time ebitda right like in markets like this what people want to know or what's the green stuff i can
00:41:33
take out of the business and put under my mattress free cash flow distributable free cash
00:41:38
flow and not only that how much per share i think the single biggest issue growth
00:41:45
investors are focused on today is the easy way out for all these companies they'll tap down a little bit
00:41:51
on their hiring they'll tap down on their spend but out of the back door they want to give a bunch of free stock
00:41:56
to employees to help offset that pain this is really important to understand because stock is a real expense
00:42:05
right when a company goes public the more shares you have the lower your price so it is a real expense to
00:42:11
everybody the founders the employees the investors right and so what's what i think the
00:42:17
single biggest conversation going on in boardrooms in silicon valley today is hey
00:42:22
can we have a little bit more stock this year whether it's options or whether it's
00:42:26
outright rsus to give to employees because if we don't give it to employees they tell us they're going to leave
00:42:32
this is a real hard truth i had a ceo of an incredible company call me and say listen
00:42:39
we pay our engineers a million bucks ahead but we give them stock that over the last five years has been worth another
00:42:46
million dollars each year so they built their lives as though they had two million dollars a year in
00:42:52
income they bought a house they bought cars they sent their kids to private based upon that two million dollars and
00:42:59
now when we tell them that this upcoming year the mil we're not making whole on that
00:43:05
million it can't be when when we win you win and when we when we lose you win so the tough conversation is we're not
00:43:12
re-upping you because the stock's been cut in half and so now that engineer's saying yeah but this year that means i'm
00:43:19
only getting paid 1.2 million and the answer the tough answer is yes right shared sacrifice you should have
00:43:27
never assumed that that was going to be worth an incremental million dollars a year but that takes leadership that
00:43:33
takes courage that takes a board that knows what they're doing to explain that over the full arc of that employment and
00:43:40
the first thing the mercenary employee says is well i'll just go work somewhere else
00:43:45
and the right answer for a good leader is okay if you've got your approach to this
00:43:50
business then you need to go work somewhere else i mean you just did a great test right that's a great filter
00:43:56
you you uh you're a mercenary and you know you were with us when we're up but you're not with us when we have to take
00:44:02
some austerity measures is this the end of entitlement across the board sacks i mean we had an entitlement class
00:44:08
everybody thought they could raise a vc fund everybody thought they would have 100 irr because they would just buy nfts
00:44:13
and flip crypto projects that had no released product and the same with employees they just
00:44:19
thought i can just keep you know raising my salary x amount and now it looks like apple said everybody comes
00:44:25
back to work three days a week and we don't see a lot of people quitting apple because there may not be another option
00:44:31
and maybe a lot of the firings that are occurring i'm thinking of cameo here had
00:44:36
top three of their top like six or seven leaders leave i interpreted that as maybe they had
00:44:42
really big comp packages and when they did the layoffs they said you know what the number twos in these positions can
00:44:47
get the job done for a third of the price maybe that's better for the business so
00:44:52
is this the end of austerity the end of entitlement i think so or a lot of it there was a great article here uh in
00:45:00
well that was that came out recently about netflix where netflix they're finally getting real about their kind of
00:45:06
entitled and their woken title employee problem and this is in the new york post but
00:45:11
there's many other newspapers that covered it basically it says here netflix tells woke workers to
00:45:16
quit if they're offended if you find it hard to support our content breath netflix may not be the best place for
00:45:22
you said the memo so period full stop yeah they're just sick of it they're just not gonna put up
00:45:27
with it anymore they're sick of being held hostage by their employees who think that they can kind of muscle
00:45:33
the leaders of the company by starting a petition or boycott campaign every time
00:45:37
they want to drive the company in a certain direction and so i think companies are finally figuring out this
00:45:42
is the only way to react to basically being held hostage if you don't like it quit if you don't have seven eight job
00:45:49
offers you know and recruiters calling you constantly because everybody's on a hiring freeze well then maybe people
00:45:54
will appreciate the contract of i work for you you give me money and then everything else is
00:46:00
superfluous on that note did anybody see the ricky's your vase netflix special yet
00:46:06
netflix it's on netflix it's unbelievable i mean dave chappelle you know in terms of bravery ricky
00:46:15
gervais was like i've already made my money i'm burning the whole building down i mean he went full
00:46:22
equal opportunist and i mean i think the trans issue became like 10 or 20 percent of the of his
00:46:29
latest special so it does seem like the comedians are saying you know what we're gonna make
00:46:34
jokes we're gonna make jokes about everybody we're not gonna buy into this you can't cancel us we're just gonna
00:46:39
keep making jokes and we're gonna keep making money and and that whole concept that
00:46:44
you know people are going to be held hostage i think is over independent of what you think of making jokes of you
00:46:49
know various marginalized or smaller groups of people can we chris go back to something brad
00:46:55
said a while back about how mansion saved the democratic party because i think there's actually an interesting
00:47:00
point there yeah yeah such notorious right-wingers as jeff bezos have said something very
00:47:05
similar lately when uh do you see that where buy biden tried to blame billionaires for
00:47:11
the inflation and bezos was having none of it he said no listen it's not because
00:47:15
of us or our companies because you printed too much money and joe biden or he said mansion saved you from yourself
00:47:22
because it would have been another 4 trillion of spending on top of all the other trillions of spending that we had
00:47:27
last year so it's absolutely the case that that if the administration was left just to own
00:47:33
devices remember they were touting back in december they were touting the idea that this 4 trillion of buildback better
00:47:39
spending would somehow be the cure to inflation imagine if they had poured that gasoline onto the fire i mean we
00:47:44
would go to 20 inflation we might have had a currency uh you know like a serious currency
00:47:50
issue no yeah but let me just finish the points i don't want to just make a partisan point here i want to there's
00:47:55
there's a serious economics point here with or learning i hope our policymakers learn from this which is what happened
00:48:01
over the last couple of years we had 10 trillion dollars of money printing right
00:48:06
why they do that they thought that they could stimulate our way out of this covid recession that they had induced
00:48:12
with lockdowns in any event the point is they thought they could stimulate economic activity by printing money and
00:48:18
maybe cynically politically they thought it'd be good for them in the midterms what actually happened that 10 trillion
00:48:23
goes into the economy but there's no corresponding increase in the output of goods and services so two things happen
00:48:30
first price levels rise and we get inflation and second we get an asset bubble in the stock market and then the
00:48:36
way both those things sort of come crashing down to earth is the fed looks at this inflation and
00:48:42
suddenly has to jack up interest rates that pops the asset bubble it vaporizes something like 14 of global wealth and
00:48:49
then simultaneously workers feel a lot poorer because their wages haven't kept up with inflation so this whole idea
00:48:55
that you can just print money as a way to create wealth and prosperity i hope what we take away from this i think
00:49:02
recession that we're going into is that is not a viable strategy the only thing that creates wealth in a society is the
00:49:08
output of goods and services that people want and you just can't try to sort of play games with that by
00:49:16
creating phantom the sort of phantom money that doesn't represent a real increase in good
00:49:21
services or productivity yeah it's hard for people not to take this all as partisan but if you just look at the
00:49:27
objective facts the last two administrations have printed money like drunken sellers and
00:49:32
it's a mess right now so you you can divorce yourself from any conception that this is partisan
00:49:38
trump spent a [ __ ] ton of money and so did uh biden and who's more qualified than
00:49:43
trump and biden elon bezos the people who appear on this podcast we have much more
00:49:48
of a pulse on what's happening in the actual real economy and in entrepreneurship and capital allocating
00:49:53
than these people and i love the fact that now you know bezos is a [ __ ] poster he just
00:49:59
doesn't get he doesn't care uh and i think we're having like an honest discussion now right one of the one of
00:50:04
the areas where i i don't think elon gets enough credit is when he explains macroeconomics i
00:50:10
think he actually really understands the the what an economy is i mean an economy
00:50:16
is basically a trading system for the production of goods and services if you were to go this point he's made if you
00:50:22
were to go to a desert island and somebody just gives you a billion dollars when you're sitting there on
00:50:27
that island you can't buy anything it doesn't make you wealthier what makes you wealthier is the
00:50:32
production of goods and services that people want and that's ultimately what an economy is
00:50:37
money is just the accounting system the dollar's just the accounting system if you start printing lots of money all
00:50:42
you're doing is debasing the accounting system it doesn't make anyone richer and
00:50:45
yet you know the way that conversations around economics really take place the only thing you ever hear
00:50:52
about is stimulating demand you never really hear anything about production and i mean this is an old debate that
00:50:58
goes back to the 1980s about you know supply side economics but regardless of what you call it wealth ultimately comes
00:51:05
from our capacity to produce goods and services that people want it's a great point chamath all this adds up to
00:51:12
companies and the government's balance sheet becoming tighter and more efficient so the talent
00:51:20
diffusion across the industry perhaps everybody being entitled and getting overpaid uh people not wanting to go to
00:51:26
work people who have jobs not wanting to go to the office all of this seems to have
00:51:30
actually reversed in three months so this medicine we're taking we stopped eating the bad food we started working
00:51:38
out we're getting better sleep this is going to turn around for the the companies that take the medicine the
00:51:43
management teams the capital allocators who do the hard work and sharpen their pencils as we've talked about
00:51:48
this will all result in a more efficient uh and vibrant economy yes i think for the most part i think
00:51:55
there's still going to continue to be examples of folks who basically run themselves into a brick wall because
00:52:00
they don't want to make the hard decisions that is going to be more exaggerated in
00:52:05
silicon valley because we have a culture of tolerance and we have an economic business model
00:52:11
that supports kind of irresponsible decision making and supports poor governance you know
00:52:19
look i i've said this many times but a fund's job ultimately is to make a very important decision
00:52:26
about whether they truly care about generating massive returns or whether the fee income becomes so
00:52:33
meaningful so as to drown out every other incentive that they have and i think by and large in silicon
00:52:40
valley if you track all of the increased frequency and fundraising you can also probably follow those
00:52:49
dollars and they generally will be the most poorly run uh they'll be held the least accountable
00:52:57
and i think those will have the largest negative outcomes and then instead if you follow the
00:53:03
dollars of the the real practitioners who have discipline they look kind of sheepish and silly for years in
00:53:11
the middle of a rally but they're the ones that are able to really reset and help some of these few
00:53:17
companies really win and i think that you're going to go through that cycle over the next
00:53:21
four or five years and so you know i think it's super well said smoth because i have felt at or
00:53:29
i've been made to feel silly by some folks who said why are you asking to do diligence why do you want to have a
00:53:34
board seat why do you want to talk to customers why are you asking for month-by-month revenue you made a
00:53:40
sub-economic decision like the idea that over the last four or five years you optimized for anything except the market
00:53:46
beta was kind of dumb you know and it's and and the worst thing that you could have done in that
00:53:51
period was confuse alpha and beta meaning alpha is what you are able to do because of your discrete skill
00:54:00
versus anybody else beta is when just the market goes up said differently you could take any nba
00:54:07
player and put them on uh a high school basketball team and they would be the you know college
00:54:14
player of the year any single one okay that's beta yeah if you then can be the mvp of the
00:54:20
mba that's alpha yeah okay and i think that a lot of folks um were made to feel very silly or
00:54:30
you know a downer or a wet blanket um in these last few years who will probably have the last laugh
00:54:37
it's been unbelievable brad to watch the changing of attitudes and the entitlement in fundraising and private
00:54:44
markets in the last 60 days and it's been even more pronounced in the last 30. i literally have people we talked to
00:54:51
last month who had really crazy expectations they've come down by 50 they wanted 50 now they're at 25. they
00:54:59
didn't want board seats now they're okay with board seats information rights they
00:55:02
were fighting against information rights i don't know why that's a hill to die on
00:55:06
now they're like information rights yeah sure here's our cfo's email we need to get money in the doors
00:55:11
so um i guess what's the silver lining here it does seem to me as a great setup right now wait jason let me ask you a
00:55:17
question hold on yeah michael ordered brad like and then you're forgetting one other key thing in in the in the race to
00:55:23
raise all of this money what did these folks do they hired these mid-level kids as partners into their venture firms and
00:55:32
gave them money to put into companies what do these people know no mentoring i'm not saying it
00:55:37
disparagingly i'm just like what do they know how do they know how to actually invest investing is just not you see it
00:55:43
you just say okay well i think it sounds cool there are some of those uh younger folks who are going to turn out
00:55:50
to be all-stars and they're just like in the nba and they're going to be some that you know prove to be writing the
00:55:55
beta but let me answer jason's question because you know maybe end on a on a note of
00:56:00
optimism you know in some countries you know notably china right now they're doing a lot to prop up a bunch of
00:56:07
companies that should be allowed to fail right one of the beautiful things about
00:56:11
free market capitalism the creative destruction the cycle time on creative destruction
00:56:17
in this country has never been faster right make no mistake about it if you took money at a valuation over a billion
00:56:25
dollars okay last year you're not that's not a venture capital bet i call it quasi public
00:56:34
right you stepped into the bigs and you said i will deliver this plan and if you don't deliver the plan
00:56:41
there's not going to be a lot of tolerance there's not going to be tolerance for just giving away a bunch
00:56:46
of more stock there's not going to be tolerance for no course correction right maybe in seed or series a
00:56:54
right there's a lot of tolerance because you sign up to a lot of unpredictability
00:56:59
but the level of tolerance that you'll see out of late stage growth investors is going to be akin to what they do with
00:57:06
a public company that runs them off a cliff you know how that is you've been on those earning calls so i think this
00:57:13
is going to shine a light on the bifurcation that we really have we call all of this venture capital
00:57:20
but the truth of the matter is series c and before is venture once you're stepping into the bigs and
00:57:26
taking money at a billion to billions the expectations are different your access to capital will be different um
00:57:33
the expected course correction will be different right but i take it as a um i take it as a sign of strength
00:57:41
that we're going to work through this we're going to have you know the the private markets are absolutely going to
00:57:46
go through a reset but we'll get through it and the winners will win and those who fail to course correct and want to
00:57:51
fly into the wall will do that and we'll get on with the next generation of incredible entrepreneurs solving big
00:57:57
problems the secular curve of technology solving big problems has never been steeper
00:58:03
right and the cycles that overlay that secular curve are not suspended we have not suspended wars we
00:58:11
have not suspended economic cycles and so we're going to have to get through this one it's happening in record pace
00:58:17
exactly actually that's an interesting point i want to let me ask brad a question about that which is what's the
00:58:22
potential here for more of like a v-shaped recession where to your point the market's correct
00:58:28
more rapidly and violently than ever snap misses of you know issues a new forecast down 40 percent
00:58:35
um is there a possibility that this thing gets resolved in say six months that's
00:58:40
not to say that uh valuation levels are ever back to where they were you know in the second
00:58:45
half of 2021 but in six months could we have sort of done this big reset washed out a lot of the problems
00:58:53
and um you know again valuations are not back but the market becomes the the capital markets become become unfrozen
00:59:00
and we're back to a more normal operating environment as opposed to say yeah as opposed to say like more of a u
00:59:07
where we're kind of bouncing around the bottoms here in this volatile state for about 18 months
00:59:13
um you know and then it's more like the dot-com crash we come out of it in two years i see smart people on both sides
00:59:19
of this i hear jason lemkin's been saying i think this is kind of short deep sweet six month reset
00:59:25
fred wilson just wrote 18 months at least i think sequoia is saying two years i mean i think our instinct is 18
00:59:32
months to two years but what do you think the possibility is that we could be in a more normal environment in six
00:59:37
months right so let's let's separate public markets and venture markets because venture markets as you know have
00:59:43
a six to 12 month lag just in terms of the reset but i would say you know the future's a
00:59:48
distribution of probable outcomes there's a downside case an upside case in a base case i think the base cases by
00:59:55
this fall will have very good evidence right of where inflation's rolling over i think it is rolling over what the fed
01:00:02
is likely to do the upward bound on on interest rates and i think we'll be at a point where we can start underwriting to
01:00:08
the five-year average again make no mistake about it the s p and the nasdaq today are still
01:00:16
30 above where they were in january of 2020 30 above where they were in january 2020. how much better is the world today
01:00:27
than where it was in january 2020. well i think what the market is saying is that we've grown the economy on a
01:00:34
nominal basis about 15 during that time and earnings have about doubled right the earnings margins of those companies
01:00:42
are about have about doubled so you would expect normal course and trajectory maybe that
01:00:47
those companies would be 30 percent more valuable the problem is as we look ahead
01:00:52
to chamas point the earnings are likely to come down profit margins are being squeezed so i
01:00:58
think there's a decent argument there's more pain to come in the public markets that we
01:01:03
haven't seen the bottom however i do think that the fed is taking a good course here i don't think that we have
01:01:09
runaway inflation i think that um you know we're going to have an investable environment come this fall however i
01:01:16
think for venture there's a six to a 12 month lag to that so i think you got to add it to those six months to really get
01:01:24
to the market clearing prices for all these companies but i think it's incumbent upon all of us to give really
01:01:30
good feedback today and i see a lot of it right to entrepreneurs about making that
01:01:35
course correction if they're only turning the plane 10 degrees when they see lightning dead ahead they're making
01:01:42
a huge mistake the default action by every founder today should be a 90 degree course
01:01:48
correction unless they have very good idiosyncratic reason in that business in terms of their outperformance to stay
01:01:56
the course plan for the worst hope for the best yeah and yeah you could even bifurcate
01:02:04
the companies in private markets to ones that have strong product market fit and
01:02:09
the ones that don't there's a lot of companies to david's point that we're getting series b's without product
01:02:14
market fit you know it's it's one thing to get your series a when you have this like weak product market fit and a great
01:02:19
story but when you start seeing series b's happening on momentum it's like that to me is is is going to be
01:02:26
impossible to resolve that company has to go to zero or has to reset or give even give money back to founders those
01:02:31
are the really the three things i would see as a true bottom like the really dark moment where people have two or
01:02:37
three liquidation preferences people reset reset comp and tell people listen we're going to cut comp 30 across the
01:02:43
board for management if you don't like it leave and then finally people saying you know
01:02:48
what we're going to give the 60 cents on the dollar back to investors those are the three things i saw during
01:02:54
the two downturns you're saying something that i think is also important that's not really talked about which is
01:02:58
that there's going to be a lot of really good companies with really horrible capital structures
01:03:03
really terrible cap tables really bad valuations really big overhangs of preference stock
01:03:10
that are going to have to get worked out and in getting that worked out going back to
01:03:15
what brad said the person that course corrects 90 degrees will win and the reason they'll win may
01:03:21
not even because they're being that courageous they're just being less stupid than everybody else quite
01:03:26
honestly because you have to remember in most of these markets over the last four
01:03:29
or five years we funded four or five versions of every imaginable company right and there's going to be two
01:03:36
winners 70 and 30 yeah and and there's really only going to be one winner and then there's going to be a marginal
01:03:42
second kind of also rant that captures some value and everybody else is not that valuable and you know that's
01:03:49
roughly been true but the reason we were able to support that was that every company looked kind of interesting
01:03:54
anyone with traction could be you know competed against because the only differentiator at the
01:04:00
time was very cheap money that was effectively free and it was flowing in you know faster than you could count
01:04:06
so all of that has to get sorted out so i just think that that those dynamics shouldn't be ignored and so you know
01:04:12
again hard work too i mean to the thing we've been saying here the it's hard work for a board and founders to do this
01:04:17
but what choice do you have well the problem is the pro if you take much more sophisticated markets like the debt
01:04:23
markets which i would say are much more sophisticated okay cutthroat liquid covenants when you see the people that
01:04:31
make the money two things are true number one is their incredibly sharp elbow to number two is
01:04:36
they make money in moments like this right if you look at apollo's great returns or blackstone's great returns or
01:04:42
cerebrus you know these folks were the you know they they really were the barbarians at the gates and they made
01:04:48
all the money in moments of true dislocation if you apply that construct here you
01:04:54
know we've never had to go through a period where there are some real terms and conditions attached to the
01:05:00
incremental dollar and i think that if that does come to pass in silicon valley you're just going
01:05:05
to have a reckoning and i think that that what it will really do is just sort out
01:05:10
the winners and the losers and it will sort out the folks that were able to get to default or close to default to live
01:05:15
or at least default life support exactly default festival i like that one too i mean zach's made a great tweet he
01:05:23
basically said it's not default alive or dead investible or not and that's an even finer filter
01:05:29
default default alive is fantastic if you can get there basically just means cash flow positive i mean all default
01:05:35
alive means is that your cash flow positive or you're going to be cash flow positive based on the money you have you
01:05:40
don't need money exactly you don't need money well of course that's the best place to be is you don't need money but
01:05:44
i think you know for early stage companies that's almost an impossible standard you know it takes time to get
01:05:50
to the point of encounter positive so therefore i was trying to propose a standard that i thought was more
01:05:55
actionable for founders because it was because it wasn't impossible and i call it default investible which is here are
01:06:02
the metrics that you need at least i can tell you what they are in the sas world
01:06:06
you know here's what great metrics look like here's what good metrics look like here's some danger zone metrics and you
01:06:12
need you know out of the five key metrics you really need three or four great ones and one or two good ones to
01:06:17
raise in this environment and no dangerous metrics and if you don't have those you need to give yourself the time
01:06:23
to fix the problems in your business to get to those metrics um on that note you
01:06:28
know sequoia had a really good chart called survival the quickest that illustrates this concept of giving
01:06:33
yourself time and i threw it in the chat um but basically what it shows is there's a
01:06:39
green line and an orange line that the green line is the company that realizes in may of 2022 that we've gone into a
01:06:46
very different environment and they slash their burn in half and they basically double their runway
01:06:53
and then there's the other company that just keeps going along the same path they were at
01:06:57
until they realize oh wait a second you know and then that you know some point in the future they realize there's
01:07:02
been a change they make a small cut they make another small cut and they're always behind the eight ball and i've
01:07:07
seen this so many times before that the company doesn't make cuts until they're forced to
01:07:13
and so they never really lengthen their runway and then when they finally do make the cuts they go into a death
01:07:17
spiral and die and now they're over the atlantic and there's not enough fuel to get to a landing strip and you just
01:07:23
plunge into the cold ocean and die founders really have to think about the the asymmetry of the risk that they face
01:07:30
right which is let's say that you cut too much and the environment is better than you think it's going to be well you
01:07:37
can always hire back i probably have a lower price in all likelihood i promise you'll be able to hire back okay but on
01:07:42
the other hand if you don't cut enough and the situation is worse than you think then you just die
01:07:48
so you this is why andy gross said only the paranoid survive you've got to think about the downside risk and be
01:07:55
more skewed towards the bad scenario than sort of the the sort of wishful thinking scenario okay survive
01:08:03
just just one final point here you know because we have all these decks flying around now by venture capitalists
01:08:09
telling founders to go make these really tough decisions being a little self-reflective
01:08:17
where were we all six months ago where were we in october when we were putting more money in and they were
01:08:23
hiring like crazy where were we in november right i remember some of the conversations that
01:08:29
we were having but i look i posted in in chat layoffs.fyi right the number one company on that
01:08:37
list gets here sequoia company okay are they making a course correction you bet your ass they are they're laying
01:08:44
of 4 500 people 15 of the workforce the second company on that list lace work an altimeter software company
01:08:52
that's doing terrific growing hundreds of percent laying off 300 people 20 right a 90 degrees turn of the plane
01:09:02
right that company will never need cash again but it's not just flying toward the lightning they're making the tough
01:09:08
decisions because that's what leaders do in businesses that are even good businesses there are a lot of companies
01:09:14
that are ship businesses that should be on this list but they're bumbling along and not making the tough decisions we
01:09:20
need venture capitalists that instead of you know this being a popularity contest
01:09:26
venture capitalists need to look inside as well and say what about our firm didn't didn't work right why weren't we
01:09:34
issuing these course corrections and telling people to tap the brakes a little bit when we knew markets were
01:09:40
overheated last year right and so i think there's there's a lot of responsibility that sits on both
01:09:45
sides of the table um but i'm you know there's 714 startups on this list by the time we're done there are going to be at
01:09:53
least 3 000 startups out of zero that's another reason i say the fed is getting what it wants right
01:10:00
this labor market is you know was cooling down very quickly at least in silicon valley well i mean
01:10:06
and the fact that people felt like they didn't need to take a job and they could
01:10:09
live off credit and there would always be jobs for them i think people are going to have to rethink like
01:10:14
can i be unployed forever and you know do i need to take my career seriously do i need to pay down my debt do i need to
01:10:20
have a a balanced uh balance sheet do i need to my personal balance sheet needs to be in
01:10:26
order as well i think that's what individual workers need to think about yeah i mean
01:10:31
brad's right that there's certainly enough blame to go around in the ecosystem and you know vcs bought into
01:10:37
these frothy evaluation levels last year to some degree we're all gaslit by by the fed and these low interest rate
01:10:43
policies i wrote my post about burn multiple and how to measure capital efficiency two years ago
01:10:49
um it's getting a lot more retweets now than it did back then but uh but look i do vcs have some
01:10:55
self-reflecting to do definitely but you know i'm seeing a lot of tweets going around basically saying
01:11:00
like people objecting to this advice on the grounds you'll hear something like if you
01:11:06
vcs wanted us to operate more efficiently then you should have invested more efficiently or if you
01:11:13
wanted us to be disciplined you should have been more disciplined in your investing and to me that's kind of
01:11:18
missing the point it's kind of cutting off your nose despite your face the reason we're giving this advice is
01:11:23
because we just want our companies to survive and we don't want a zero we don't want a zero we've been through
01:11:28
multiple down cycles and the truth of matter is unless you've been in the business world for over 14 years you've
01:11:34
never been through a down cycle i mean that means that you know no founder under the age of
01:11:40
what like 36 has even seen a down cycle before they don't know what it can be like when you go into a
01:11:47
two-year nuclear they probably they probably weren't the pilots at that time anyway so it's more like people who are
01:11:51
40 45 have the scar tissue because they were in the pilot seat totally totally so the reason you're hearing all these
01:11:57
vcs all of a sudden say get more discipline this is mainly because we've seen this movie before and we don't want
01:12:04
to run out of money and die i think you can safely short if you could the stock of all of these
01:12:12
rando peanut gallery ceos tweeting their disdain on twitter if you're a writer it would be a great
01:12:18
index fixing stuff just write that company to zero yeah just turn your [ __ ] twitter
01:12:24
back and just sharpen your pencils um i i we we would be remiss if we didn't talk about uh at least for this last
01:12:31
segment about the tragedy in uvalde uvalde texas uh 80 miles west of san antonio tuesday
01:12:39
19 elementary kids two adults were murdered um how are we gonna talk about this without losing our
01:12:46
[ __ ] it's really hard i think maybe the roadmap tremendously i did give this a
01:12:50
lot of thought i was like why why is this first segment on the market trundling along on [ __ ] life support
01:12:56
for an hour and ten minutes and i think part of it is because none of us can really talk about this without losing
01:13:00
our cool it's really hard and but i do think we did good work chamath i was thinking about the good work we did
01:13:07
in the episode of roe v wade and we actually came to a point where we said you know here are the extreme positions
01:13:13
and then you're like hey wait a second i found this data point i found this data
01:13:15
point we actually figured out hey 80 percent of people want this definition of abortion in the united states so i
01:13:24
i'll throw it to you tomorrow you know we're all outraged we're all frustrated but maybe we could start there is there
01:13:30
a consensus of what could be accomplished here that you've come to i've started to
01:13:35
think about it a whole bunch but you know we're all outraged we could all yell and
01:13:39
scream here but a path forward is where my mind goes i'll just tell you what i what i
01:13:45
um have been thinking about okay this is just a random stream of consciousness let's do it
01:13:53
i think that the democrats will not make any progress because they try to make this unfortunately
01:14:04
a moral virtue signaling issue the republicans will not make any progress because they
01:14:13
become sort of very binary adamant absolutists about constitutional rights and the interpretation of that right in
01:14:20
a very specific way the truth is in the middle you know if you go back before we talk
01:14:27
about yuvaldi um peyton johndron who was the kid that shot up at tops supermarket in buffalo and
01:14:34
killed umpteen you know black shoppers lived in a state where there was a red flag law for those that don't understand
01:14:44
what red flag laws are david you know tweeted some stuff about it as well but essentially it allows a community member
01:14:50
or a family member or a school uh teacher or a police officer to essentially put
01:14:56
a restraining order around an individual that they think could cause harm and use that as a way to
01:15:02
confiscate their weapons people have talked about red flag laws as being possible while he lived in a state the
01:15:08
kid was you know put under a cycle you know a year ago and it it all just falls through the
01:15:14
cracks now you know ted cruz or somebody else said let's spend 10 billion dollars and
01:15:19
only have one door into a school and put an armed guard there well then you find
01:15:23
out that yuvaldi you know doubled their security spend over the last two or three years they actually had a person
01:15:32
that may or may not have just kind of like stepped to the side or something to let
01:15:35
them in the police according to the uh ap showed up and stood around for 40 minutes before they were able to
01:15:43
actually breach the school you know so much so that the quote in the ap article was that there was a parent that
01:15:49
tried to get other parents to for 40 minutes they were standing there you know in california you have you know
01:15:57
very restrictive measures um but we've had you know in san bernardino and other places we've had
01:16:03
mass shootings here as well because the guns can just get transported across state lines and there's there's no real
01:16:07
way to stop this the nra i find out just so if you guys are interested uh mitt romney took 13.6 million dollars
01:16:16
from the nra this is the moral finger wagger of the republican side who you know last time i checked is a
01:16:24
multi-sentient millionaire but somehow still needs to take 13 million from these folks
01:16:29
rich burr took 7 million roy blunt 4.5 million tom tillis 4.4 million cory gardner 4 million marco rubio 3.3
01:16:37
million there's no effective counter lobby that says how about we have a more moderate and
01:16:44
restrained pro-gun set of rights and field candidates on the left and the right that could jason find this middle ground
01:16:53
and so you know we're in this two or three day period it seems like where folks will
01:16:59
get extreme and then nothing will happen here's one thing that i think we can all
01:17:04
agree as well if you look at the underlying family situation of all of these mass shooters
01:17:11
there is a really disturbing theme that i think is worth putting out there these are all universally young men
01:17:18
18 19 odd years old they come from broken families this individual salvatore ramos
01:17:27
father was absent again according to the times in the wall street journal article i read mother
01:17:33
intermittent drug use issues lived with the grandmother bullied they're unemployed barely graduated if
01:17:39
graduated at all in high school they harbored these deep resentments towards women or minority groups
01:17:46
um they then project a lot of their frustration they were bullied potentially in high
01:17:51
school growing up and all of the they were posting all kinds of very challenging content you know apparently
01:17:59
this kid had a one tick talk of where he sat in a car with a dead cat in a paper
01:18:04
bag you know he would post on instagram of assault rifles and nothing happens so
01:18:11
i just think that we have to acknowledge that there's a complete failure of our politicians
01:18:18
and at this point i think they should all be replaced writ large every single one
01:18:23
nobody has added value to this solution is nobody has really tried to figure this out
01:18:28
but then also like parents have to do something incrementally more from the perspective of the community
01:18:36
because these kids are going to school with our kids and the red flags are there the red flags are there so just
01:18:41
one last thing and i said i said brad i said to my kids when you interact with your friends i
01:18:46
just want you to understand when you're on social media and you encounter this content
01:18:50
i hope you're never like either scared or embarrassed or unsure enough to just show somebody when this stuff is
01:18:56
happening so that you can let somebody with a little bit more maturity and judgment try to figure out what to do if
01:19:01
anything at all but these communities are completely failing uh these kids as well brad you
01:19:07
have some dead i would say that um every [ __ ] country on the planet has kids with mental health disorders
01:19:15
but not every country on the planet has kids getting shot up in schools and supermarkets and churches
01:19:23
that is a unique feature of the system that we accept this the system we created
01:19:30
right i'm not against guns you guys know i took my kids to a shooting range last weekend
01:19:36
but the idea that we let you know assault weapons be sold in this country with no background checks
01:19:46
that we let assault wipe rifles be sold in this country with no limits on magazine sizes that
01:19:53
you can just replace magazines it's total insanity right so i think this is a country that
01:20:01
does a lot to self-help but we are not self-helping here after the assassination attempt of ronald reagan
01:20:10
amazingly republicans found their voice and they said let's have an assault ban on assault weapons or let's have a
01:20:19
ban on assault weapons that expired and we as a i asked my analysts i said plot the number
01:20:27
of shootings since the expiration of that ban and it's terrifying yeah it's obvious
01:20:35
and it should be something that we just like don't accept like the middle ground
01:20:39
jason i saw what you tweeted there is an obvious middle ground right there's about whether it's
01:20:46
background checks that steve kerr i mean he's gone viral yeah feeling the same way we all feel but they're also
01:20:53
technical solutions why the hell do we let assault weapons why why not put a scrambling device on
01:21:00
these weapons so that you can't fire them in schools and churches if somebody says that's a breach of
01:21:07
their second amendment rights i'm sorry i'm also not going to allow you to drive
01:21:12
into the school yard with nuclear material there are some rational limits we can agree to
01:21:19
so i don't think this is a partisan thing at this point in time nobody's saying you know ban all guns
01:21:25
right in fact i i think there's a plurality among gun owners they too want reasonable limitations on these
01:21:34
things which are killing machines not hunting machines sex any thoughts on this yeah i mean i i so i think we're looking
01:21:41
for solutions i think these red flag laws and building on them is is the way to go um you know the the problem with
01:21:48
with background checks and and i'm not against them i mean you know i've i've gone through background checks to get
01:21:54
you know my guns and i'm in favor of them but they wouldn't have done anything to stop the buffalo shooter
01:22:00
they didn't i mean you know the buffalo shooter was in new york they've got the toughest gun control
01:22:04
laws in the nation the background check didn't stop him from getting the gun because he bought it lawfully didn't
01:22:09
have a criminal record so you know it doesn't that by itself isn't going to do it so i think where these
01:22:16
red flag laws are useful is that we've seen with these all these school shooters they have a similar kind of
01:22:22
profile right they are disturbed young men like in their who are still school age 18 19 early 20s
01:22:32
exactly now this shooter in uh uvalde i mean there are reports coming out now that he had been cutting
01:22:38
his face that he had aimed a bb gun at people so he was clearly idioting towards this
01:22:44
idea of shooting people he had posted um violent fantasies basically of mass shootings on social media and he told
01:22:54
his classmates he wanted to kill him i mean there's almost always a call for help here
01:22:58
same with the buffalo shooting i mean the people who these like psychos go to school with are the least surprised they
01:23:04
all know because these people have been warning they've been saying that they're gonna
01:23:08
do it so i think we have this problem of we've got these young psychotic people and i
01:23:14
think the reason why it happens young is when somehow they get into adulthood whatever this mental
01:23:21
illness they've got basically takes hold and they snap they become psychotic and
01:23:26
it doesn't take long for them to act on those fairness those violent fantasies so the simple solution here i think is
01:23:34
to prevent those people from getting guns you know if you threaten mass violence
01:23:39
uh you shouldn't be able to get a gun and i you know i personally don't think that's an
01:23:43
abridgement of second amendment rights because look felons can't get guns either if you commit a felony you can't
01:23:49
get a gun these people haven't committed a felony yet but i don't want to wait until they
01:23:54
do if they're if they have these kinds of red flags against them then there should be a way to file
01:24:00
to basically get a protective order perfectly if we don't we don't let 12 year olds drive cars we don't let them
01:24:05
drink beer because we don't want 12 year olds drunk driving right and then at some point there's a licensing that
01:24:10
occurs i think a lot of this is framing i think it's just once again very analogous to this abortion issue where
01:24:17
most people are pro-choice and want restrictions on abortion where they don't occur after a
01:24:23
certain number of weeks just like europe got to and i was just you know ideating on this and i think
01:24:29
replacing the nra to your point your moth they have funded people they've become a key funding
01:24:36
source for a lot of folks and they've they've been over funded themselves um what if we had americans for reasonable
01:24:41
gun safety and we have this organization raised a ton of money and they just outbid the nra for republicans uh and
01:24:48
for people who are against background checks and we just a good question but look mike bloomberg started every town
01:24:53
for gun control after newtown and it did it hasn't really had i think the impact
01:24:58
that that we wanted i mean well i think part of it is cheap what you said so let
01:25:03
me just give you my my little four bullet points here and have you react it you you are right that people
01:25:08
are absolutists no abortion you know no restrictions and no guns or no restrictions on guns background
01:25:16
checks we all agree on make them more intense and make them proportional to the caliber of the weapon if you want
01:25:22
one of these weapons why don't we have you go through a training course so for a pistol you've got a two-hour training
01:25:27
quest for an ar-15 or something that's more powerful how about an eight-hour course a four-hour course then you could
01:25:32
actually see the red flags emerge and with somebody who has this red flag issue go through that
01:25:37
the red flag laws should be national and they should be very strong and then finally what if we introduced insurance
01:25:43
for certain classes of weapons not all if you want to get a rifle you know to go hunting or a pistol for self-defense
01:25:49
maybe you don't need to have insurance or maybe if you have one you don't need to have insurance but once you get to
01:25:53
high caliber once you get to having clips that are a certain size what if we just had some
01:25:59
basic insurance because that would force then somebody to underwrite the danger of that weapon jk i mean look the trick
01:26:05
here is to figure out a system that has the least possible impact on law-abiding americans there's maybe a
01:26:12
few thousand of these um mentally highly mentally disturbed uh young men but like i said their schools know who
01:26:22
they are yeah right and what we need is a process where you know that doesn't turn into the no-fly list
01:26:29
where all of a sudden everybody's on it or uh training or insurance or content moderation or something like that this
01:26:35
is the problem look this is what the nra is afraid of is that you create a red flag process and all of a sudden
01:26:40
thousands or millions of people could be on it right so you need a right but that's not true because you had you had
01:26:46
this kid who could have been put on it in in new york he wasn't right no no no look i think we need to i think we need
01:26:51
to figure out how do you create due process around this and i i think i think if a school they know i mean you
01:26:58
get multiple affidavits from a teacher they should be put on the list yeah school is a no-brainer
01:27:04
the problem isn't that these these kids aren't identifiable because as you say david they're hiding in plain sight in
01:27:09
these schools the problem is that there's no mechanism or incentive for any of these kids
01:27:15
parents educators teachers community members to do something about it because they don't know what that something is
01:27:22
and this is where these kids are left to fester fester fester and then and it boils over and it's all of us that have
01:27:28
to pay a collective price david can you it's even it's even worse than that chamoth because in the buffalo case the
01:27:34
the buffalo shooter was referred to for psychiatric evaluation because they thought he did have mental illness and
01:27:40
then they released him releasing after a weekend and then he got the gun he got the gun so he should have been put on a
01:27:46
red flag list and that should have been the end of it and it should be a database like a federal database which
01:27:50
they're the nra fights too yeah i also want to say something about these technology companies
01:27:55
there is an explicit decision that technology companies can make to be able to review
01:28:02
content from certain kinds of accounts and start to build a cluster and a distribution of
01:28:08
risk it is possible i helped build one for one of these companies so don't tell me
01:28:13
it's not and i i will not tolerate some non-technical person telling me it's not
01:28:17
possible it is absolutely possible and these technology companies should have a mechanism to be able to say you
01:28:24
know what here are these thousand accounts david in the united states of these thousand individuals
01:28:31
that you know are sort of getting to a red line here yeah incline whatever but it's it's also it's it's not it's not
01:28:37
just gonna be what they post on social media it's although in both cases buffalo and
01:28:42
uvalde they both posted that they were going to do what they did but in addition to that
01:28:48
breadcrumbs early warning system is a great idea with uvaldi the the cops were called out multiple times for
01:28:57
violent disturbances you know and you combine that with what he's telling people in the schools and what he's
01:29:03
posting on social media you it's there's an identifiable profile here it's not one red flag it's multiple red flags
01:29:10
where this is where these corporate social media companies need to take off all of this for-profit
01:29:18
focus that's extreme at this point be willing to degrade margins to hire the tens of thousands of people to
01:29:26
manually review content okay there should be a mechanism that allows these folks to plug into some
01:29:31
system that law enforcement can use there is an early warning system that can be built yeah earlier
01:29:38
great idea human review before this stuff gets out of control david to control people's individual civil
01:29:44
liberties okay but that is a big step forward from where we are today which is nothing there is zero
01:29:50
leadership in america can i just ask david one question david you you correctly pointed out i think it's
01:29:55
astute that um we can't penalize people who are legally getting guns or create too much
01:30:01
friction for them i understand that would you consider training or insurance and just take each
01:30:06
one individually for high capacity these deadly assault rifles would you consider
01:30:12
what would you consider each of those in terms of realistic you know having some basic training a
01:30:17
four hour training class i mean like like you do for uh like you do for driving a car should we have that for
01:30:21
assault rifles and then should insurance be required what training does is prevent accidental shootings okay that's
01:30:28
right i'm not against training i love training i do training but but look should be mandatory what
01:30:34
training prevents is is accidental shootings buffalo and uvaldi and all these school shootings they're not
01:30:39
accidental shootings they're going out there and killing as many people as possible and they know how to use these
01:30:42
weapons i mean the problem is is what their objectives are so i don't think training solves it well let me ask
01:30:48
you this if you were in training for four hours and you're an instructor and you were trained to look for red flags
01:30:53
and it brought in some friction from this person going and buying it and doing the next day wouldn't that help
01:30:58
and then going to have to buy insurance the buffalo shooter cased this this grocery store for like four months i
01:31:03
mean they are patient they are methodical in how they go about so they would have gone
01:31:08
i think so that but we don't even necessarily need that filter jake out because i'm just
01:31:12
telling you that the profiles of these psychos it's so dramatic when you go back and look i mean again multiple red
01:31:20
flags they're killing animals i just wanting bb guns they've been the cops have been called
01:31:25
out on them they're posting on social media their classmates are all terrified of them their own families are terrified
01:31:30
of them we just need to basically we need an incentive to jamaa's point for schools i
01:31:37
think to create these profiles and file the right forms the affidavits in the database now do insurance for high
01:31:43
capacity assault rifles would you be in favor of and do you think it's a viable what does that do i don't understand
01:31:48
what that does well it means you would have to apply and say hey i'm jason calacanis i'm 18 years old i'm in the
01:31:54
school i would like to apply to own an ar-15 and then some insurance companies say okay you're 18 years old you're a
01:31:59
male you live in texas your bill is going to be 600 a year for this gun oh okay you're a 45 year old
01:32:06
male in wyoming your bill is going to be 100 for this because we've done some actuary tables on the actual risk would
01:32:12
you be in favor of insurance i think the key to solving this problem is to create
01:32:16
the minimum disruption on law-abiding americans okay tens of millions of them who like
01:32:21
insurance look i don't know what that would do exactly i want to stop the basically
01:32:26
that i think what are a relatively small number of psychos young psychos maybe there's only
01:32:33
a few hundred or a few thousand sort of candidates in the entire country i i don't want i don't want to wait for them
01:32:39
to become felons to to basically prevent them from getting jobs and by the way there's a there's there's a bunch of
01:32:46
study about this there's been a lot of social science studies about the individuals that own guns
01:32:52
legally and those individuals that sort of break and commit these crimes and whether we want to admit it or not there
01:32:59
is a definable archetype it starts with gender then there's socioeconomic conditions then there's
01:33:06
you know home family conditions these are knowable things these can be built into a combination of
01:33:14
software and human review and we need to create incentives so that these kids can get some kind of help or
01:33:21
intervention and the worst case is we kind of you know do something with them in a way that
01:33:27
helps us protect everybody else because sorry to interrupt we do this every day we turn this country on its head after
01:33:35
september 11th we started profiling everybody and to sax's like minimum standard of
01:33:43
disrupting other people's lives the department of homeland security disrupted everybody's lives take off
01:33:50
your shoes go through the security before you get on a plane we changed everything in months
01:33:57
because we said we're under attack but there we're under attack by a foreign presence a foreign terrorist
01:34:04
presence here we're under attack by sick kids who need help okay but we need to disrupt our lives we
01:34:12
need to change things right in order to save these innocent kids who are being shot up in schools
01:34:18
where they're supposed to be safe and so i agree let's profile them let's get these companies doing their jobs helping
01:34:27
us identify these kids get these kids help but we need to raise the volume and raise the urgency in dc the way we did
01:34:35
after september 11 2001 that this is a national crisis as opposed to going back to the normal
01:34:43
right distribution here by the way after 2011 um i was on a no-fly list and i think i've told you guys a story before
01:34:50
but i would have the triple s on my boarding pass for years until about 2007 or 2008. um
01:34:57
constantly profiled you know put in the back room the whole nine yards but in the end you know did did it make
01:35:06
me feel kind of like less than a lot of other people yes but did i do it because
01:35:11
uh i think it was the on the broad strokes the right thing to do yeah so you would take a little friction and so
01:35:17
you know if i needed to basically turn over all my kids you know social media or there was a mechanism where you know
01:35:25
as much as we try to teach our kids you know all of these other things that that allow us to make a socially
01:35:30
progressive society if the guidance counselor also sat around and asked these kids anonymously hey is there
01:35:35
anybody in your class you think needs your help why don't you do that too um there's there is friction because
01:35:42
that that i think we're all willing to take because the counter factual is too horrible to bear
01:35:49
and this is an example of one of those things would you be in favor of insurance and training chamath
01:35:56
assault rifles i don't i think these are good ideas okay i don't think they will
01:36:01
curb the issue i do think what david said is right there's a level of evil or mental illness in these people
01:36:11
that caused them to be incredibly methodical and i think that we shouldn't underestimate
01:36:18
so they would get to the insurance screen and get through the training screening well i think i think you know
01:36:21
look there's a lot of people that drive cars without insurance right it's you can drive enough and you can be insured
01:36:27
and you know so i think that those are good ideas jason where it will falter is we have a
01:36:35
political system where the primaries for both sides are dictated by the looniest 10 percent
01:36:42
of the left and the right yeah we got a vote in our primary it makes practical gun control just like abortion an
01:36:48
impossible task unless we completely turn our political class upside down on both sides of the aisle
01:36:56
okay so i think these are good ideas but in the meantime i think parents have to
01:37:01
do something because nobody's coming to our aid and i think this the most important thing we can do is just say
01:37:07
the truth out loud there is an identifiable archetype of these we should profile these kids we should
01:37:13
profile them there's no doubt there the politicians who are making this about lawful gun ownership they're not helping
01:37:19
they're they're actually hurting because you're activating millions of americans
01:37:24
who lawfully own guns and believe in the second amendment to oppose reasonable measures
01:37:31
like like i'm saying hyper-targeted measures like these red flag laws right and so
01:37:37
if we make the whole issue about gun ownership in general you're not going to get any
01:37:42
reasonable changes the opposite the sales go up the sales go up every time we have this happen my
01:37:47
kids and i'm sure your kids as well have now uh gone through multiple active shooter drills in our school yep but at
01:37:55
no point have my kids been sat down and taught some of the warning signs of their fellow classmates and a mechanism
01:38:02
to raise their hand and say you know what this is actually really worrisome here
01:38:06
they don't have that training they do have training on how to lock the door how to flip a desk how to go into a
01:38:12
closet which is a horrible thing to have to teach a child but if we're already there i just say take the extra step and
01:38:19
teach the kids because they're living on instagram and tick tock every day they see their friends and their you know
01:38:25
classmates every day and we need to start figuring out an early warning system because what is
01:38:31
happening continues to happen these politicians are ineffective they do nothing to help parents right it's
01:38:38
true i i like i like the early warning system because you're right like they're so so first of all the the red flag laws
01:38:44
are something that's done on a state-by-state basis something like 19 states have red flag laws including new
01:38:49
york but it didn't work in new york the buffalo shooter because got one federal no one used the system no i don't think
01:38:54
it has to be federal i just think that people are actually interested i think people just have to use this system so
01:38:59
you had in the buffalo shooter the kid was referred for psychiatric treatment and they still didn't read flag him
01:39:04
that's just bonkers so people have to the school systems have to learn how to use these laws
01:39:10
and so to jamaa's point we need an early warning system we need that translating
01:39:14
into red flags that go on someone's record and then they can't buy guns after that it's it's really simple at
01:39:19
least till maybe they turn 30 or something um i mean it's it's um the the the problem is that
01:39:27
about half the states don't have this mechanism and then the half that do aren't using it effectively enough i
01:39:32
just shared with you guys a chart it the the the most pernicious part of this debate and i think this is a pretty
01:39:38
solid debate we had here so thank you to the gentleman for all participating in it um
01:39:43
is every time we have one of these gun sales spike if you look at the chart in the new york times i just shared a nick
01:39:47
you can you can share it on the youtube channel uh two million guns in the january after
01:39:51
obama's re-election the sandy hook shooting we hit peak guns obviously during coronavirus people got scared and
01:39:56
bought a bunch of guns after september 11th they bought a lot of guns but these moments are sadly going to drive
01:40:02
the ar 15 sec that is because all the conversation is about banning guns yeah and what we
01:40:08
should be doing is preventing psychos from getting guns known psychos reasonable gun control
01:40:14
increased by 50 in the last 10 years the last 10 years have been the safest 10 years in our lifetime
01:40:21
yet for some reason people feel the need to arm themselves more and more and more
01:40:26
now i as an immigrant into this country accept the rules of the country that i come to there's a constitution there's a
01:40:32
second amendment i respect people's rights to own gun i've held a gun twice once in my life i had a panic
01:40:39
attack and i had to put it down i had to so it's not for me okay but i respect your right to have them um
01:40:46
i think that we need to teach people how to think about the precursors before they get the hold of these things really
01:40:53
sadly uh what's killing our kids um it turns out i just put a i just put the tweet in the
01:41:00
chat for you guys to take a look at new england journal of medicine massive uptick now guns deaths
01:41:07
combined it's all gun deaths includes gangs includes suicide and includes mass shootings
01:41:14
but firearm related deaths and injuries now exceeds motor vehicle crashes and so
01:41:19
does opioids so we have a crisis after at new england journal of medicine just to be very honest
01:41:25
it's no it's not necessarily only about kids because they included 18 and 19 year olds in that chart sure so those
01:41:31
are adults okay young adults and kids um and so drug overdoses and firearm related are spiking massively
01:41:40
this is my point about having this debate this is being armed by the by the left and then the right says well
01:41:46
hold on it doesn't include 18 and then everybody gets caught in that hole absolutely the shooting these shootings
01:41:53
are being done by people 1819 but putting all this aside i just want to make a bigger point about our children
01:41:58
like in the last two years with this covet the spike occurred during covid of drug overdoses and firearms so there's a
01:42:05
lot of suicide in here as well so we should think holistically about you know how kids are dying oh yeah one
01:42:10
other thing to that which is we have plenty of gun laws on the books that aren't enforced right now in san
01:42:14
francisco you can't get chase abu deen to enforce a gun charge he uh a young kid named kelvin chu got killed
01:42:23
because his his killer a guy named zion young he was arrested weeks before on gun charges and jason boudin just let
01:42:30
him go and in uh la with gascon he's dropped all gun enhancements to charges the whole the whole thing so
01:42:38
you've got progressive prosecutors who aren't even prosecuting the gun laws we got on the books that's got to change
01:42:44
and ted cruz thinks this is about the back door being unlocked i mean the the stupidity across the board left to right
01:42:50
everybody in between the incompetence is stunning and it has to stop yeah but jake out look i mean if you make this
01:42:56
about people's lawful gun ownership they're going to oppose what you want to do we got to make it well there has to
01:43:00
be some incremental controls don't you agree there has to be control the controls are basically preventing known
01:43:07
psychos from getting weapons okay so you want to focus on that but to be clear no
01:43:12
additional gun control for you background checks or anything or not background checks right now i just want
01:43:17
to be clear red flag laws and background checks are good i know we have to wrap i think the consensus was around red
01:43:24
flag there's a known profile chamath articulated it well david i don't think we helped the cause
01:43:31
to build the consensus by calling a sick 16 year old kid struggling with self-identity a psycho
01:43:39
and because their their kids who live all around us this isn't about lecture this is about building consensus i think
01:43:45
we can profile those folks they clearly have psychotic uh uh challenges right but there is
01:43:53
intervention to help these kids i know a lot of kids who frankly had challenges during high school who turned out to be
01:43:59
great great human beings so these are kids at a very vulnerable age we should profile them within the community social
01:44:07
networks should help us identify these folks and we should get them help and i think you can build a reasonable
01:44:12
consensus around that yeah i agree just to explain myself i'm by when i use the word psycho i'm
01:44:18
referring to the the ones who actually became shooters you know i'm referring to those ones um you're right that if
01:44:24
we're talking about people who haven't done anything yet who are mentally ill yes we should get
01:44:29
them help so mental illness you know this is and this goes to healthcare as well we should have
01:44:36
national mental health services available freely to every american we are in a mental
01:44:41
health crisis between covid and just modern life and suicide is becoming the number one cause of death
01:44:47
sadly for many um demographics now including our kids and so while we do a great job making cars
01:44:54
safer and creating life-saving drugs and and emergency rooms and and medical attention has gotten unbelievable and
01:45:01
we're making all these uh you know great advances mental health we're not making the
01:45:06
advances we need i'm so so so sorry to all those families yeah this is just heartbreaking
01:45:12
i guess you're emotional yeah but i'm just so sorry for all those people dealing with it it's
01:45:17
heartbreaking yeah yeah heartbreaking let's take some action here enough with the thoughts and prayers let's actually
01:45:23
come up with a [ __ ] plan and just i've been profiled for years i put up with it sorry for the
01:45:29
indignity it's okay i said uh my honest perspective is there's a clustering and a technology
01:45:37
component to this that can meaningfully help and we need to start knowing that there are these patterns we
01:45:44
need to say the words out loud they are patterns for these school shooters for these mass
01:45:50
shooters those patterns can be written down they have been written down and we need to do something about it
01:45:56
they need to be codified in some form of algorithms and if we've already taught our kids how to duck and hide i think we
01:46:02
can also teach our kids how to raise their hand well before they need to learn to duck and i identify who's being
01:46:06
bullied into your point your mouth about being profiled if we profile somebody and they're not a mass shooter candidate
01:46:12
but they're just depressed or they're being bullied well that's ver that they deserve help as well so there's no
01:46:19
downside to profiling somebody who's struggling you're profiling them with the intent of getting them help
01:46:24
so let's just profile the kids who are struggling profile them for good and you you'll catch some you know who's
01:46:31
struggling a priority my point is that you actually well they're being bullied they're going to probably be struggling
01:46:35
i mean you know the kids getting bored psychographic and demographic profiles of the
01:46:40
99 of the cases that we've seen over the last two decades and all i'm encouraging
01:46:47
politicians and technology companies to do is come together create some standard
01:46:52
you know what's the downside what's the downside none zero we have mechanisms like this by the way where um you know
01:46:58
these technology companies already do these kinds of profiles on other kinds of situations you know typically you
01:47:04
need a physical request and other kinds of like legal interventions in order to unlock this data
01:47:08
but it's not as if this is uh you know antithetical to what they do in other situations they certainly do it for
01:47:14
fraud in advertising it's not as if the technological prowess of these companies
01:47:17
cannot be applied to a k-means clustering of this issue okay just to use a simple machine learning context
01:47:23
like this is they put a lot of effort into finding click fraud right this is going to be a very similar problem
01:47:30
we don't allow angry young men who've been emailing with the middle east who are citizens of this country who've
01:47:38
been posting online that they want to run a plane into a building to go get their pilot's license
01:47:44
right we profiled them after september 11th and we said no moss and all chamath is saying is use your
01:47:51
[ __ ] common sense identify these folks that we know are struggling to need help and put them on
01:47:57
a list and say they can't buy an assault weapon period yeah all right everybody it's
01:48:02
time to go uh thank you uh to uh brad kirschner for sitting in uh thanks again to the dictator tremofita and
01:48:10
uh thanks saks and thanks to everybody who uh spoke at the all in summit we've been um releasing all of the videos
01:48:16
freyberg will be back next week as well the hammer lucky explosive episode so look for a great week of all in content
01:48:24
next week we'll see you all next time rain man david sacks and it said we open source it to the
01:48:38
fans and they've just gone crazy with it [Music] besties [Music] we need to get back
01:49:18
[Music]