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he's a robot don't quit your day job jamath that's all i can say bro you don't remember baby shark i mean how
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many no he doesn't know his kids first names for birthdays how does he know baby
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sharks ride [Music] [Music] hey everybody welcome to episode 55 of the all in podcast with us again this
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week the dictator himself jamal paulie hoppetea the queen of quinoa david friedberg and
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coming back from portugal and the solana conference riding his where heroin and prostitution are legal
00:01:16
david said we were gonna we were gonna double click on that but you jumped the gun here on the docket so david how was
00:01:22
the heroin in portugal great great okay there you have it folks i was i was fully drinking the kool-aid at the
00:01:30
salana conference it wasn't heroin it was kool-aid it was it was literally kool-aid
00:01:37
how many people were at the solana conference in portugal why is it in portugal what happens at a solana
00:01:44
crypto conference i think there were thousands of people there and it was i mean easily and i mean it was kind of
00:01:51
a mad house and people were trying to get in last minute nobody could get in because the conference was like totally
00:01:56
sold out it was a lot of crypto developers a lot of people with projects and why portugal i think because
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there's a lot of conferences happening in portugal right now because they are easier on the covet restrictions and a
00:02:10
lot of other countries so you can actually get in there and host a conference what was which
00:02:15
stores with no masks um um i can't remember if like maps were required or not i did see people wearing
00:02:23
masks indoors so were you required to be vaccinated do they do i did so i think i
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did show a vaccine pass at one point when i checked in i just did my booster i'm going to do my booster kind of it
00:02:34
kind of uh it was a little i would say the same kind of shitty feeling as the second one
00:02:41
where's that i just got fi i mean i had the first two were pfizer so i took pfizer she was the
00:02:47
the nurse actually gave me a choice she's like you can do whatever you want physio madonna or j j i just i didn't
00:02:52
know any better i texted my doctor so i just took um pfizer although the interesting thing is modern is the only
00:02:59
one that's dose regulated for the third dose so there's a they they actually give you less
00:03:04
specifically but pfizer is the same for all i think we talked about this on the pod there's one theory which they told
00:03:09
you get whatever one you can get was the instructions because it's more important
00:03:12
to just get one than which one you get but they said there's a swiss cheese theory which is if you took two slices
00:03:18
of swiss cheese from two different bricks of it the holes would not be the same and therefore you overlap them so
00:03:23
whichever deficiencies each one had maybe the other one doesn't so i should have gotten modern is what you're saying
00:03:28
that would be i if you believe in the swiss cheese there i don't know fredberg you're a science guy i should ask aaron
00:03:33
rodgers what he thinks i mean he's just straight up lied about being vaccinated huh
00:03:38
i think so and i think the nfl's not doing anything about it yeah that's not cool i why would you lie
00:03:45
about it i mean he's not he would have still been allowed to play so there was no reason
00:03:49
to lie about it i i'm not totally up on that story the rumor is that kyrie is going to be
00:03:54
playing basketball soon because eric adams is going to lift the vaccine restrictions
00:04:00
uh you will not need to be show a vaccine card or wear a mask bro i don't work maybe i'll
00:04:06
just get a pcr test every day i i don't think it's going to matter because the warriors are shooting the lights out and
00:04:12
clay hasn't even come back yet and so that gary uh the second you see gary did you see
00:04:18
gary payton yeah junior uh these clips oh the second i mean i mean he's like living above the rim oh my gosh
00:04:26
his wise men back and then uh wiggins is playing great basketball i mean the warriors are gonna win this year i don't
00:04:31
know steph is otherworldly right now yeah i think steph's got something to prove um even though he doesn't but he's
00:04:38
playing like he's got something to prove okay so um do we want to just cover um the elephant
00:04:45
in the room there the last episode i think we should get out of the way because it relates to
00:04:49
solana there was we took something out of the last podcast so people understand we have an
00:04:54
agreement between the four of us if there's something that somebody uh doesn't want on the pod after we record
00:05:00
it we'll take it out because we don't want anybody i mean i think the philosophy haven't
00:05:04
said this out loud is we don't want anybody to say something they regret that could
00:05:10
cause damage to other people or to themselves so if they want to take something out that
00:05:14
they said that's fine with all of us and um basically each of us has veto right on something so last week two people
00:05:20
took their veto right on something and we took something out you want to explain our thinking on that sax and why
00:05:26
we're reversing yeah okay so a few weeks weeks ago on the pod there was an oblique reference between me and chamath
00:05:33
regarding solana and so and so some internet theorists that claimed that we were trying to engineer a pump and dump
00:05:40
in solana which if you actually listen to what we said um it certainly is not a pump let me
00:05:46
explain what it was so craft is the beneficiary because we invest we're the first investors in
00:05:53
multi-coin we were kind of like their seed investor invested in their we put in something like 40 of the money for their
00:05:59
special opportunity fund they were one of the first investors in solana so we are the beneficiary of
00:06:04
about a billion dollars of solana so thank you multicoin at some point well so so they have
00:06:11
started doing distributions by the time i texted chamoth they hadn't really started doing distributions i didn't
00:06:17
know how deep and liquid the market for solana was i just asked jamath like i'd heard that tremont may have said
00:06:24
something that he was long salon and wanted to accumulate so i sent him a text saying hey are you interested you
00:06:30
know i thought maybe we could do an otc transaction at some point we get our solana he basically
00:06:36
you know we had a brief exchange about that and then he mentioned on the pod that was the extent of it what i didn't
00:06:41
know at the time but learned subsequently is that the market for solana is very deep about three and a
00:06:45
half billion notional is traded every day so there's no need even if we wanted to fully get out of barcelona position
00:06:53
which by the way we don't even have you know multi-coin still has most of it we it's not necessary to do an otc
00:07:00
transaction we could just sell it explain what otc transaction is it just means over the counter it just means
00:07:04
that instead of going to like uh an exchange you would deal with like a trading desk or it could just be direct
00:07:10
like for me to chem off so that was basically the exchange it chamath and i talked about it for maybe
00:07:16
two minutes and then it came up on the pod for 20 seconds so then some internet theorists basically clipped it and try
00:07:23
to accuse us of organizing a pump and dump well obviously if you're talking about selling something it's not a pump
00:07:29
it's also not a dump either so anyway the reason why we said cut it out last week is because we didn't want to
00:07:36
give oxygen to this stupid like conspiracy theory that somebody had invented on the internet with like no
00:07:43
basis whatsoever um because you could spend all day trying to like shoot the stuff down but
00:07:48
then at the solana conference enough told me enough people told me that this was
00:07:53
becoming a meme that i thought was worth addressing and what and look what you understand with crypto is that for every
00:07:59
cryptocurrency like solana there are haters because they're invested in tribal or everybody's talking up their
00:08:05
books there's pump and dumps and there are armies of anonymous twitter accounts that will
00:08:13
coordinate attacks and or memes etc right so they're trying to spread the rumor that like vcs are big holders and
00:08:19
solana and are going to dump it the reality is that multi-coin has a large position but they have lps they are
00:08:25
slowly distributing their positions to lps in the forms of the tokens they're not
00:08:31
selling them and giving you cash they're giving you the tokens you just decide what you do yes and by the way that's
00:08:35
what we would like to do as well we're currently working through those mechanics because it's actually
00:08:39
complicated for a pc firm to distribute you know in kind through tokens but well you had to give them to
00:08:45
your lp so that's what i would like to do exactly so people are doing that with coinbase so coinbase is providing that
00:08:51
as a service now from my understanding right so we're so we have to work through with rops that's what we're
00:08:55
going to try to do is distribute it in kind so everyone can make their own decision
00:08:59
i um i have a couple things to say so i've only been a buyer i've never um i haven't sold a single
00:09:08
solana token and so we are you know net buyers and we're buying a bunch of stuff
00:09:16
but i hate acknowledging that and this is why you know my tone was more non-committal when we did the pod is
00:09:24
that i really don't like this culture that's emerged via twitter mostly where you all of a sudden have to be this
00:09:35
maximalist that basically falls on their sword and never sells in order to be legitimate
00:09:40
and i think that that's a really dangerous place to be so you know look if i take a watch that dangerous well if
00:09:46
i take a much much bigger step back let me put solana in the context of crypto and let me put crypto in the
00:09:52
context of the markets and where we are today at the end of the week after you know uh qt earnings
00:09:59
uh in november of 2021 we have the stock market at absolute all-time highs ripping we have crypto at absolute
00:10:09
all-time highs ripping we have the art markets i don't know if you guys saw phillips and
00:10:13
christie's and sotheby's this past week at absolute all-time highs sold another people for 25 million we have inflation
00:10:20
at a 30-year high we have 10-year break-evens at a 25-year high we have you know one point somewhat
00:10:28
trillion dollars that we just approved last week and we're still horse trading on another three you know 1.8 trillion
00:10:34
dollars of stimulus that we're going to put in and so when you and then you have i and i think the the
00:10:41
most important thing which is the two most important founders of our generation the two smartest people who
00:10:47
have really consistently won elon musk and jeff bezos have collectively sold more than 11 billion dollars of their
00:10:53
holdings this year alone and if you can't take all of that and decide for yourself what's right for
00:11:00
you and your family you're doing yourself a disservice i think it's important for me to never
00:11:04
sort of like you know be forced to tell folks whether i'm buying or selling although i'm willing to do it in moments
00:11:10
where i think it's important but i think it's really important to understand the context and so i think
00:11:16
like these folks that like think derisively about individuals who are managing risk i think it's really naive
00:11:23
and i think it's um it creates a lot of missed opportunity for them as well if the smartest people
00:11:29
in the world are now selling their core holdings that they told you they would never sell
00:11:35
and you are not reconsidering your position on things you're either much smarter than them
00:11:44
or you're being really really reckless all right there you have it yeah you know i we just people also know
00:11:54
inside baseball we have a docket of stories that we talk about on our group chat that make up the docket for the
00:11:59
show but i'll bring stuff up and i didn't bring that up in some way to cause trouble or anything i thought
00:12:04
you guys would want to clear the air about it and i understand chimao's position of
00:12:08
hey you don't want to give these things oxygen or whatever but i think so i didn't even know that we needed to clear
00:12:13
the air until you know i went to the conference and enough people mentioned it so but what's so funny is half the
00:12:18
people on twitter spend all their time in crypto lens saying things like never going to make it have fun staying poor
00:12:24
they're extremely jason as you said tribal i'm not sure that they're doing first principles analysis of these
00:12:30
things they've gone they've got time exceptionally lucky yeah some of them are exceptionally good
00:12:36
but many people broadly speaking have gotten exceptionally lucky and i think a little bit of it is getting to their
00:12:41
head where they become you know very virulent against people that they think you know whose perspectives may actually
00:12:47
be negatively affecting their position without actually understanding what david said which is these are incredibly
00:12:52
deep liquid markets and one person's opinion is can't do much of anything right i mean that's a really good point
00:12:59
i mean i'd like to give my opinion on solana but the thing or just crypto in general the thing that's like hard about
00:13:04
it is that it's hard to talk about the benefits of say the salon of blockchain without being seen as a pumper of soul
00:13:11
or a dumper of eth or whatever because all these things are so intrinsically connected i mean i learned a lot of
00:13:16
really bullish things about solana you know at this conference uh i mean the biggest thing is i mean
00:13:22
there's basically a a battle for the hearts and minds of developers going on right now between salon and ethereum
00:13:27
that's why solana has raced up to you know over 200 i don't know what like seven thousand percent increase or some
00:13:35
something incredible like that the reason is because solana as a blockchain gives confirmations back in something
00:13:40
like 400 milliseconds whereas ethereum takes you know minutes and you know a transaction that might cost tens of
00:13:47
dollars 10 20 30 50 of gas on ethereum cost pennies on solana and so that's the advantage yeah
00:13:55
yeah exactly it's also you know a lot of developers feel like the tools the developer tools that they've created are
00:14:00
easier than building on solidity the thing that solana gives up the trade-off that it makes is decentralization
00:14:07
there's basically that transactions are processed by 20 validators and they're a
00:14:12
top 20 based on holdings of souls so it's kind of like this proof-of-stake model so
00:14:18
anyway there's some trade-offs there i can tell you that you know it's the view of you know our
00:14:23
friends at multicoin and you know i heard a lot of this views at the conference although obviously you have
00:14:28
to take it with a grain of salt because these are the biggest believers but their view
00:14:32
is that solana over the next year will flip ethereum based on developer activity that there's real
00:14:39
companies we spend a lot of time actually before we do anything is that's the only thing
00:14:44
we've been looking at you know and syndica fractal a lot of the stuff that we've done deso
00:14:52
is purely driven by developer interest when we see developers in the open source ecosystem building
00:14:58
things on top of this stuff making stuff that's composable and usable by other people and building infrastructure
00:15:04
you know we don't really second-guess that because they are spending their the most
00:15:08
important currency which is not monetary capital but human capital yeah and there's the time and their skill and
00:15:14
they can apply for another project yeah and so when enough developers so i i've always thought you just followed the
00:15:20
developers and as more and more projects get started you just have to unemotionally support
00:15:25
that i think the writing is on the wall which is bitcoin is gold ethereum looks like it's trending to be silver and
00:15:32
solana could be the first but there will be others that come after it of real developer ecosystems that can be built
00:15:38
on top of it the other the other thing that i would offer up to people for them to think about is
00:15:44
before you blindly go and rush into crypto one way in which i try to think about
00:15:49
these things is in the following way you see these projects get started all the time
00:15:54
and i would view each of these projects as a mini economy and really try to think
00:16:00
what is the economic value of what's happening under the hood so simple example you know helium is an
00:16:05
interesting project that's trying to build a completely decentralized you know 5g infrastructure right render is a
00:16:11
really interesting project that's trying to build a completely decentralized you
00:16:15
know graphical processing infrastructure right gpus essentially in both of those things you can
00:16:21
quantifiably economically measure what the value is that people get right in the case of render you're basically
00:16:29
displacing an aws instance and so um that has a price and a value and so you know for render to be valuable there's
00:16:37
an economic value that it replaces if you're joining a hotspot that has an economic value where you hadn't
00:16:43
necessarily have to pay you know to get internet connectivity if you all of a sudden are on the helium network that
00:16:49
displaces a measurable economic quantum understanding that is probably and taking the absolute value of that is the
00:16:56
best way of really understanding which projects have potential so if you take those two ideas and marry them together
00:17:01
where is their developer interest and where is their measurable economic activity at the intersection of those i
00:17:07
think are the really compelling projects that can win well the thing that complicates all of this is that the
00:17:11
developers are not just picking based on which language or technology or stack they think has the most potential they
00:17:17
also have acquired economic stakes in it so a developer who might be objective and say hey this new platform is better
00:17:24
than ethereum might be sitting on millions of dollars in ethereum and they're like
00:17:30
i want to keep my bet going here um and i'm going to keep talking my book possibly but i but i do think that
00:17:36
developers in general will choose the platform that's easiest and cheapest and fastest for them to develop on which
00:17:43
would mean the list on coin market cap of market cap ones that has been static for a decade of crypto almost you know
00:17:50
or largely the top 10 doesn't change that much it's xrp at stellar ethereum bitcoin tether that could be up for
00:17:56
grabs that whole thing could change now that people are actually building projects and
00:18:00
the the projects are getting competitive with each other and that's that flipping
00:18:04
we're talking about correct sex yeah i think what's tricky here again is i never want to give anyone investment
00:18:11
advice i mean that's just not my job and if there's anyone out there listening to
00:18:16
the show because they're trying to get like tips or tricks whatever for investment
00:18:20
like i'm not really comfortable telling people what to do um sure so you know everyone just has to understand that i
00:18:26
did i do feel like what i saw at this conference over the past week in terms of developer enthusiasm activity was
00:18:32
very bullish actually it was a lot like i went to the um ethereum conference i think was
00:18:37
back in 2017 several years ago and it felt a little bit like that although i would say that this time it felt less
00:18:43
academic like several years ago it felt more like white papers now it actually feels like
00:18:48
real projects and businesses that people are trying to create still infrastructure and less applications or
00:18:53
more applications mentioned a couple of them um so there's helium which is creating a decentralized
00:18:59
network for wi-fi there's uh render which is creating a decentralized network for gpu there's one called hive
00:19:05
mapper i met the founder it's a decentralized network for people to map the world you can think of you know the
00:19:10
concept of a minor that bitcoin invented think of them more as like a resource provider to a network so with bitcoin
00:19:17
you know we call them miners but they're the validators of transactions and we're
00:19:20
trying to incentivize them through block rewards basically through small bits of
00:19:25
uh bitcoin that get released to uh to provide these valuable computing resources to the network and
00:19:31
so people are figuring out now how to create massively decentralized networks where you have you know thousands or
00:19:36
millions of resource providers provide a little bit of something to the network for everyone's benefit in exchange they
00:19:42
get some coin that's like a really interesting model that couldn't exist before crypto
00:19:47
and so yeah i mean i think it's very interesting but you know in order for that to work you have to have
00:19:53
like very you need fast efficient scalable blockchains and the feeling as i mean i'll give credit
00:20:00
here to to tushar um who's one of the gps of multicoin his view is that this was the iphone
00:20:07
moment for blockchain that that what salon has built because it's massively scalable and also very cheap i mean
00:20:12
again you can run a lot of transactions for pennies now all of that is obviously very bullish
00:20:18
for solana the thing i wrestle with is and jamal kind of allude to this is i think everything's kind of in a bubble
00:20:23
right now because of monetary and fiscal policy and so you know i guess i you could say that i'm long solana versus
00:20:31
eth but i do kind of worry that the whole world right now is very bubbly and so as a gp you're like what do you do
00:20:37
about that i can tell you right now like this second we are sitting on solana that we have not sold so you know
00:20:44
i am long in that sense however sometime over the next whatever number of years we will distribute out our position of
00:20:50
solana to illinois and the lps will make their decisions and then they will make
00:20:54
their decisions might specialize in crypto and want to keep it other ones might not want to hold assets and need
00:20:59
that money to fund their endowment to give scholarships to students or whatever your lp's right particularly
00:21:05
well yeah i mean and so i guess to the issue of hey we're not giving investment advice here we are all
00:21:11
capital allocators and startup creators so we're talking about our day-to-day lives here nobody should
00:21:17
interpret this as investment advice and especially not in a world now i don't know if you guys saw what happened with
00:21:22
rivian this week i don't know how we don't talk about a company with essentially
00:21:29
no public sales they've sold 148 cars to their employees it's worth 120 billion dollars any at freiburg did you
00:21:37
see this ipo any thoughts on it um it seems like you have investment advice for the
00:21:42
audience that you'd like to give tell me what rivian does wait can you play that video that you
00:21:49
found that you shared with everyone you have that video you know okay well i we we do have it i can we could queue it up
00:21:54
did you see this yet who is this guy no i haven't oh that yeah yeah well but just so i don't want to beat this point
00:22:00
to death but i just think it's so important for the audience that what they should be getting out of the show
00:22:03
if they're fans is maybe like advice on how to think yeah what a critical thing critical thinking
00:22:09
how we think about investments tips exactly so look if you want to invest in crypto first of all like go
00:22:16
understand like what all these different projects or blockchains do and figure out what is the purpose of the token in
00:22:22
that system what are the token economics yeah does it even make sense or is it just a scam then if it's a if it's
00:22:29
something like a blockchain go research how many projects are have developers on them and how much
00:22:34
code is being checked in and maybe open a wallet and buy some nfts and buy some eath and transfer it and learn just how
00:22:41
to set up your internet connection right right this was 1995. right exactly and then on top of
00:22:47
all that you got to consider macro forces because i mean and i think you know my friends at multi-coin would fully
00:22:52
concede this that you know it could be the case that if there's a crypto bust over the next year
00:22:59
and this thing you know crypto has gone through boom and bus cycles for many many years
00:23:03
it's the standard so you could have a situation in which for example solana flips eth and yet still goes down in
00:23:09
value because there's an overall bust cycle so you know you have to consider the macroeconomic factors
00:23:14
as well so there's a lot of things to consider here and then you also have to consider your own risk tolerance and you
00:23:19
know what is appropriate for your portfolio and i mean when do you need your money are you a 25 year old
00:23:24
everything is at all time highs and the two smartest men in the world are selling
00:23:30
not just not just them by the way there are other guys that are heavily on the other side waiting for this whole
00:23:35
thing to go like drunken miller has been very vocal about this um and he's uh he's been the best macro
00:23:41
trader in the last 30 years so his position is what exactly that we're printing too much money and
00:23:48
we're in a lot of trouble so you know look i mean generally there is um i think a good point of view being
00:23:54
shared here uh which is you know understanding how to think about what you're investing
00:24:00
in and what your uh your expectations are versus relying on someone's advice or opinion on what to do
00:24:06
if you have to rely on someone else's advice or opinion on what to do you're gonna eventually lose money you should
00:24:12
not be in that investigation you should not be in the market because guess what anyone that's giving you advice or
00:24:16
opinions is gonna make money if you do what they tell you to do if you do what they tell you to do end of story
00:24:22
so at some point they're gonna all make money and you're gonna end up losing money
00:24:27
and it's a it's you know it's it's it's a better game to play to learn how to kind of be thoughtful
00:24:32
about where's your money going what are you investing in and it takes a lot of time and a lot of money i've been
00:24:36
sitting here silently as you guys have been talking deeply about solana and ethereum and bitcoin
00:24:42
and the crypto markets because i realized so much of um you know what's needed to be successful
00:24:49
in entering this market is a depth of understanding a depth of knowledge my time is highly limited i have spent no
00:24:54
time on understanding crypto markets because it's so deep and it's so fluid it's changing every day it's changing
00:25:00
every week so if i can't get smart enough to feel confident about the opinions and decisions that i would be
00:25:05
making as an investor i decide not to invest and i stay out and so i'm not an active crypto investor you're a
00:25:10
specialist and you're on the razor's edge on synthetic biology and and so many other whatever it is there are
00:25:16
there are other areas where it's better for me to spend my time and my energy and i've chosen to do that versus being
00:25:21
drawn into what view what feels like a very exciting kind of you know turbulent time
00:25:27
there are other areas that i kind of spend my time on i just kind of try to recognize that maybe i don't know what
00:25:31
i'm doing if i were to try and get involved here and so i'd rather stay out and i think that's council forever for
00:25:36
anyone you know if you're going to make an investment it's important to feel confident about the knowledge and the
00:25:41
depth needed to kind of be different than the rest i'll build on your point like when i when i started doing
00:25:47
my spax i um started to write these one pagers and those one pages were artifacts for me to
00:25:53
hold myself accountable for how i saw something in a moment in time and then to be able to see whether it was
00:26:02
tracking to that and then also to share it to other people a starting point as david said a journey where they should
00:26:07
then if they're curious go and do their own work it turned out not enough people
00:26:10
were doing the work so then i had to start adding disclaimers to these things saying hey guys uh i'm not telling you
00:26:16
to buy this please be abundantly clear these next backs that i will eventually launch you're to see an entire like in
00:26:25
red block letters like please don't buy this right because to your point it doesn't
00:26:30
matter what you say people want a lazy easy way out and so i just want to reiterate what all of you guys said none
00:26:36
of us are dispensing advice we are not telling you to do anything please do your own work and please come
00:26:43
to your conclusion it is your responsibility and if you're not sure go and look at your children in
00:26:49
the face or your significant other in the face you are responsible to them and so do your own work i'll say one
00:26:57
more um point on where i sit as an investor um i i choose uh to only participate in investing in
00:27:07
what i call productive assets that is you put some money into something and whatever that thing is is
00:27:13
generating money in some way or is trying to generate value through a set of activities
00:27:18
uh like a business um or owning an apartment building where you're making rent you know anything that or you know
00:27:25
a group of people that are trying to have some breakthrough or some discovery those are productive assets there's a
00:27:30
lot of what's going on now that is what i would call speculative assets which is the only way you make
00:27:36
money is if someone else pays more in the future versus what you're paying and there isn't an underlying productive
00:27:43
asset to what you're putting money into are you're describing every ico or every
00:27:48
ico every nft and the art market right these are these are examples of unproductive assets they're speculative
00:27:54
assets in the sense that you're speculating that at some point the price of them are going to go up and someone
00:27:58
somebody wants that nft more than someone down the road will pay more for that asset than what you paid
00:28:04
but that underlying asset that capital that you just put in didn't go in to build something it because nobody wanted
00:28:09
a new generation there was no ip you went into someone else's pocket that sold that asset to you and you're
00:28:14
eventually going to try and sell it to someone else and so you know there there's a there's a real attraction here
00:28:20
because what we just talked about is really hard to do having fundamental analysis and understanding of businesses
00:28:25
and a fundamental understanding of what's working and what's not and when to shift and oh my gosh you know are
00:28:30
things different or are they not to do that is really hard so people end up relying on opinions of
00:28:36
others or they end up running into speculative markets and the speculative markets are easy to understand someone
00:28:41
just paid more for x than the other person did therefore there's a trend line it's going up it's like playing
00:28:46
roulette and you know black keeps coming up and you're like okay it's gonna be black again it has to be black there
00:28:50
were seven correct there were seven blacks and so i i think that that's a really important kind of takeaway for
00:28:55
for for folks that might be new as investors we're all susceptible we're all susceptible to this like i was just
00:29:00
looking you know at my own performance coming into the end of this year and you know um
00:29:08
i did a lot of specs this year but i also did these pipes which are these third-party deals private investment in
00:29:15
public entities exactly other people's deals that they were bringing to the market where they said chmath do you
00:29:20
want to be a part of it and um you know and i did and part of it was i was looking at these things
00:29:28
and you know freebird doing my work but in the end it turned out i didn't do nearly
00:29:33
as much as i probably should have because i ended up sitting on top of other people's work versus the original
00:29:39
or underwriting that i would do if it was my own deal itself right anyways the net net of it all is like you know
00:29:45
that was very inefficient capital deployment and as i look at it now it's like you know i'm down well i'm i'm
00:29:51
technically up 19 but that's really because of one deal if i take that one deal out which is a total outlier i'm
00:29:56
down 17 on about 200 million dollars of investment when you are a fast follower not the originator it wasn't your idea
00:30:02
this is critically important there are many different ways to make money but you have to specialize and you have to
00:30:07
first and your knowledge i trusted other people i did the same thing that i that i'm
00:30:12
saying to other people about to do do not just copy other people you have to do your own principle work and even when
00:30:18
you do your own principle work it may not be enough and you have to be willing to basically see the forest from the
00:30:23
trees and walk away and so all these pipes i'm in the midst of sort of cleaning up and selling down and they've
00:30:29
been just a kind of a disaster for me you know hold on i'm gonna build on this for a
00:30:33
second because i think it's critically important what you said as well friedberg you have to be comfortable
00:30:37
with the investment you're making i look at these companies and i look at the underlying customer the product you know
00:30:43
and what kind of revenue it's going to generate and people thought i was dunking on rivian yesterday and i said
00:30:47
listen you know when tesla went public people forget their valuation was 1.5 billion
00:30:52
1.7 one point okay so 1.7 billion uh when they went public now they already had thousands of roadsters and they had
00:31:00
already had the no they had 93 93 million of revenue in year one so this was dramatically different than what riven
00:31:08
had riven is being valued at you know whatever that is 120 billion i think yesterday rivien has 17 billion in cash
00:31:13
somebody asked me at the poker game last night what i value driving at i said 17 plus three 17 million in cash plus
00:31:21
three billion double roughly what tesla's was the market's hotter right now whatever but i
00:31:27
put them at 20 billion and people were giving a hard time about i said i think that's actually the realistic valuation
00:31:30
for this company and we are in a very dangerous moment in time right now where i think people are whether it's meme
00:31:37
stocks or crypto or nfts suspending disbelief in some cases spax because they're not all created equal and
00:31:43
certainly in private companies we're seeing this where people are giving people an amount of credit which makes no
00:31:50
logical sense and is getting further and further disconnected in from reality so
00:31:54
as an investor you have a choice either you have your fundamentals which i'm not
00:31:58
going to change my fundamentals i'm going to focus on the fundamentals that got me where i am
00:32:02
and i'm not going to be involved in a 100 billion dollar market cap company that hasn't launched
00:32:07
a product yet let alone 120 billion one i'll stay focused on startups but what you're saying is also important because
00:32:14
you're highlighting how you value that company you individually said i think that company's
00:32:21
worth some multiple of how many cars have been sold in the past elon sold you know thousands of cars he was worth 1.7
00:32:28
billion these guys have sold and other people are coming in and looking at this company and saying they've built
00:32:32
facilities they've built assembly lines and they've got pre-orders and bookings for lots and lots of cars down in the
00:32:37
future and clearly they've gone in and you know some people have gone in and seen these plants and seen these cars
00:32:42
actually working so you know it's really important to take note that your point of view is one point of view in a very
00:32:48
diverse market with many points of view and everyone's going to come into this market and that's why unless you
00:32:53
individually as an investor have a strong point of view and can show that you can apply your unique insights to
00:32:59
consistently beat the market making decisions investment decisions like that you're eventually going to lose because
00:33:04
those other points of view will be a bigger view of the truth and you'll lose money
00:33:08
and that's why that and that by the way that's why picking stocks is ultimately a loser's game unless you
00:33:14
have some unique ability and insight for most people historically and in an enough market
00:33:20
right you need to have an edge and the public markets are hard to say that there's
00:33:26
i mean if we double click on what you just said as the things that would be reasons to in bet on rivian
00:33:31
number one they have 48 000 orders of pickup trucks against the f-150 which is now electric
00:33:38
from ford and a million i don't know why i don't know why you're arguing this right like you're just making a point
00:33:42
that we don't have someone on the on the on the panel right now but someone else
00:33:45
could come in and argue okay and i would just say this is the part of the conversation to
00:33:51
be honest jason to give you feedback i don't like because rivian just in defense of rivian for a
00:33:57
second what i have heard is that it's a it's a well-engineered car or truck rather
00:34:04
they've done a very smart path to market which is essentially to you know build these delivery trucks for amazon that
00:34:11
allowed them to even frankly you know be default alive sure versus you know to use the paul
00:34:16
graham term instead of default dead i think the point that's more important here is that
00:34:22
it doesn't affect you so let rivean do well you know and this is part of the so i shouldn't have an opinion publicly no
00:34:29
no no i'm just saying this is the part of the cycle that i don't understand where people legitimately
00:34:37
have these zero sum points of view about companies um and this is where i think uh free
00:34:44
burke is more right than anybody else which is there are the market is the sum of all these collective points of view
00:34:51
sure and i think it's fine i think it's fine to have one i think it's a little superficial your
00:34:57
point of view because it's not really you know sitting on top of a model or anything else and i think it's the same
00:35:01
kind of superficiality that the tesla cute guys had about tesla for many years as well
00:35:07
it takes a long time has somebody that does this every day and i just want to point this out it takes an enormous
00:35:12
amount of time an enormous amount of work to be 55 350 companies i meet with you in the
00:35:19
public markets jason it's different my companies are going public now so i take exception to what you're saying i know a
00:35:24
fraud when i see it i've seen them before that's a really big statement no but the distance between the
00:35:31
valuation and reality is in the 50 capabilities that's not in control of that's not in
00:35:38
their control okay that's in a bunch of external market participants control so you can't pin that on them my point is
00:35:46
the market right now seems dysfunctional and jason properly measured that you then you should throw shade at
00:35:53
t row fidelity all these people that are bidding up your companies by the way because they are the ones that are
00:35:58
taking review into 120 billion it's not rivien's fault and jason what's really going on in the market was public
00:36:04
speculators no what's really going on it's not you can't sell 16 billion dollars of uh in an ipo to
00:36:10
speculators these are much lower prices these are institutionally placed uh trade orders but regardless the market
00:36:17
is clearly right now in in productive assets businesses the market is looking at a time horizon that it has never
00:36:24
looked at before which is making bets that are 10 15 20 years in the future and that's because of the condition that
00:36:30
we're in right now from a monetary policy point of view interest rates are so low there's nowhere to get yield in
00:36:35
other assets so you have to look further and further out to find value so the market the market is betting is making
00:36:41
10-year bets which is like a vc times more than a 10-year map yeah and jason sorry can i just can i just finish my
00:36:47
last point because before you interrupt me my issue jason is i think you are an exceptional angel investor but just the
00:36:53
same way you derided a bunch of late stage guys remember last night at poker when we were talking about late stage
00:36:58
folks entering into the angel market and the er series a you were extremely dismissive because you know
00:37:06
what the job is to be done to do that job well and they have a different skill set similarly what i would just offer
00:37:12
for you to think about is the people that really underwrite public market stocks well
00:37:17
do things and have a skill set that is extremely specific and it is well trained as well
00:37:22
and i think that okay all right no i accept i'm gonna i'll just let me i'll let me jump into
00:37:27
that since you want to defend me and that's the people are in shock right now way to get yourself back in the game
00:37:41
okay so here's where i think jake also i don't know anything about the derivation
00:37:44
company but where i think jkl's right is we've seen over and over again that when
00:37:48
a company gets when a startup gets a billion dollar plus valuation without a product
00:37:55
invariably it ends up somewhere between a disappointment and outright fraud whether you know it was
00:38:02
theranose or magic leap or quibby or whatever i'm not saying they're all frauds i mean i think just theranose
00:38:10
frauds trading arts whatever so i think it's reasonable for any let's say seed or early venture investor to
00:38:17
develop the heuristic then i'm not going to invest in anything with a billion dollar with basically a unicorn
00:38:23
valuation without seeing the product first because we've learned we've got our hands burned so many times from
00:38:29
these overhyped companies and here's why i agree if i can't see and use the product i'm not investing i'll invest in
00:38:35
a seed stage but i will not invest in a unicorn stage no way i i agree with that but what i'm saying
00:38:40
is when a company is going public like that there is demonstrable proof of concept there okay
00:38:46
the only market in which that's not true is in biotechnology well i would say for
00:38:50
fisker and nicola two related companies those ones seem very very shaky you can debate about the scalability of these
00:38:56
things and you can debate that people didn't do the diligence but they had to at least put a proof of concept out
00:39:01
there for you to judge if people don't do the work i agree with you like if you're rolling a truck down a hill sure
00:39:07
outright fraud no but my point is if you were there and you did your work you would have seen what you needed to see
00:39:12
what i have heard from people who were investors in both lucid and rivien is that they have sat in the cars they've
00:39:18
driven the cars they've spent time with them they've seen the factories and it's very much real now what they're
00:39:25
debating is ramp and velocity and scale i don't know i don't have a position in either neither do i have the bigger
00:39:31
macro point of view which is important to me which is it's it just because these things are in
00:39:36
the public markets i think people think it's easy to judge and i think actually modeling them and making good decisions
00:39:42
is just as hard as it is for private we need to roll this clip because there is somebody who is giving exceptional
00:39:47
advice on cnbc let's roll the clip yeah so well up starts up about 25 just in four days
00:39:55
since we since we bought it we bought it on uh about four days ago uh so that's actually made a nice little move in the
00:40:01
uh short term probably a little extended right now but longer term uh that that's
00:40:05
a that's a good looking uh name a very powerful very strong earnings these stocks are actually they do not know
00:40:12
what do they do uh excuse me what does upstart do uh well i'm i'm sorry what kind of company is it
00:40:29
[ __ ] god brutal who is this guy who is he i have no idea jake how's that is that is that like
00:40:35
your uncle or something who's that guy i listened yeah i i i mean what do you want cnbc
00:40:42
well you know the guy's been on many times but doesn't this prove what we were saying which is
00:40:46
that exactly you've got to do your own principle work here that that is why we wanted to play here's a talking head
00:40:51
who's probably getting paid for selling some books and giving advice who knows nothing about what he's telling you you
00:40:56
can join his membership club for one thousand a month yeah i'm sure he's publishing lots of papers that show that
00:41:02
he's a highly successful profitable investor and look how smart he is he doesn't even know the company he just
00:41:06
promoted on cnbc it's incredible on a um mechanical basis here chamoth you and i have been on cnbc many times
00:41:14
in that moment uh what is going on what do you think is going on in the host's mind
00:41:22
and the the producer who has to dump this call because they're watching this let's move on i just the breakdown where
00:41:28
he says i'm sorry i i have no idea uh what do they do i think the point's been made i think the point's been made oh my
00:41:34
lord everybody should do their own work yeah do you work just actually look like you want to say
00:41:41
something i mean i just chose the agenda yeah look i mean there is a massive agenda in
00:41:47
corporate journalism there's an agenda by the people on these shows to promote positions there's an agenda by the
00:41:54
reporters themselves uh and on and on and on it goes so to jamaa's point if you just take them at face value
00:42:01
you're and you don't do your own work then you're buying into someone else's agenda trust yourself okay uh one thing
00:42:07
that we are trying to all understand uh is inflation the cpi uh has gone up 6.2 in october
00:42:16
highest jump in 31 years since 1990 according to the wall street journal fifth largest straight month
00:42:22
fifth straight month of inflation above five percent you know somebody tweeted out we'll pull
00:42:28
it up here uh denver bitcoin put out a year-over-year commodity chart uh we can throw up on the screen
00:42:35
and then uh i think friedberg you shared in the chat the average weekly retail prices
00:42:43
around fertilizer what are our thoughts uh on the nature of inflation and how that
00:42:51
affects our investment i i think it's persistent and the reason i think it's persistent is
00:42:57
that there's a the all of these things are intertwined and so you know if you want
00:43:02
to just bear with me for a second like when when this let's just go to the the entry-level economic job right so
00:43:09
you're a barista at starbucks or you work at mcdonald's and you're making 17 to 20 dollars an hour
00:43:14
what that does is it shifts labor and eventually there are other people that are entering the workforce or you
00:43:21
know may shift jobs and essentially it just causes this leaky bucket effect where everybody else
00:43:26
has to then accommodate itself so you know you have a guy like uh you know you have a company like amazon
00:43:32
which is now going to pay 25 or 30 dollars to keep folks right because otherwise they may say oh you know if i
00:43:37
make 15 or 16 an hour i'd rather work at mcdonald's it's simple it's not back breaking work blah blah so
00:43:43
then they start to um increase the amount that they pay they increase their benefits and the like
00:43:49
didn't i saw this thing this week there's a crazy thing that's happening though which is it's now pulling
00:43:55
people from non-traditional job classes into those jobs there are teachers that are leaving teaching to go work at
00:44:02
an amazon warehouse there are firefighters that are quitting being a firefighter to go work at an amazon
00:44:08
warehouse because you make the same or more plus you have all of these other benefits and the job is structurally a
00:44:15
lot easier and so people are making different optimizations and to that point i think we talked about this in nick you
00:44:22
can put it in the group chat in reddit as an example there is more engagement in the subreddit around having a simple
00:44:33
work life than there is now in wall street bets right so there's been a structural
00:44:38
cultural change where people need to get paid more to do the same amount of work
00:44:42
and then at the same time you have all of the all of the supply side getting more expensive fertilizer makes corn
00:44:49
more expensive lumber makes house prices more expensive chip prices makes the iphone and cars more expensive or
00:44:55
completely backlogged you know yesterday at poker sonny was showing us he bought
00:44:59
a tesla and the delivery period october of 2022. yeah it's great it's freaking crazy
00:45:08
so i i think that it's a it's this is the beginning of a persistence i think those are all like really valid points
00:45:13
the thing i'm seeing now is i think we've moved into um what i'll call a contagion
00:45:19
phase of inflation which is people are hearing about inflation they're seeing it in some places my gas went up a
00:45:25
little bit my milk went up a little bit whatever and they're saying well i guess
00:45:28
if everybody's raising prices i need to raise the prices as well of whatever i provide in the world so
00:45:35
i can just keep up with everybody else and they're not looking at their inputs necessary and saying i need to charge
00:45:40
more or that's the best business decision they're just saying everything's going up around me and so
00:45:44
they raise prices i've literally had this happen three or four times and i went to buy a car
00:45:49
and they wanted 15k oversticker and i didn't buy it based on principal but i'm sitting here going like maybe i'm an
00:45:53
idiot maybe i should just pay the 15k overstick what do you thought stacks on inflation and the contact
00:45:58
my thoughts are i told you guys like six months ago about this yeah can we just replay what i said on episode 32. it's
00:46:05
got his researchers in the background giving him you've written down what you said on her episode no this guy's in the
00:46:11
[ __ ] debate club stanford debate club over some of us when we make predictions
00:46:15
take them seriously so you know is that a dig that professor ice cold takes i'll give you guys a link to a
00:46:21
prediction that was made here's oh i mean i just want to replay the 20 seconds here we go the two david's dueling again
00:46:28
just like in the group chat here's freedberg january 1st 2021 if you don't think inflation is already here
00:46:34
you missed what happened to the stock market companies aren't performing better we're just inflating everything
00:46:39
financial assets first everything else will follow that was a good one just make your point just make your point
00:46:44
just add the clip i'm beginning to wonder if biden's going to be a jimmy carter here because
00:46:49
frankly all he had to do was leave things well enough alone covid was winding down we had a vaccine all they
00:46:56
had to do was distribute it to as many people as possible and covet let the recovery take shape and instead they
00:47:03
pushed this insane 10 trillion dollar agenda he's gonna backfire massively look if the economy turns we were set
00:47:11
for a post coveted boom and right now that is all at risk because mouth like you're saying they're keeping the
00:47:17
economy closed or parts of it way too long they then over compensate for that by printing a ton of money and then they
00:47:23
overcome say for that by raising taxes too much just just to build on that so that second step of their
00:47:29
overcompensating their inability to open with money is so true because then what happens is your labor
00:47:37
force stays impaired because people make enough money by not working it was true when i said in may it's even
00:47:43
more true now he said it was there was inflation okay so there's inflation okay so now great
00:47:48
good job somebody makes a prediction yeah i made one in january that said the same thing now look you can do three
00:47:55
things to you can do three things to curb inflation raise rates right when you raise
00:48:00
interest rates you slow spending prices come down inflation slows but the issue when you raise rates is obviously you
00:48:08
see things like job loss and economic growth declines and it can very quickly spiral the other way this is the big
00:48:13
challenge of fed tapering the other option as we've seen a significant attempt at lately is to
00:48:19
raise revenue right so increased tax rates uh tax a broader swath of people at a higher rate or broader spot of
00:48:25
business at a higher rate so it's very likely that you know tax revenue could kind of present itself again
00:48:32
as a driver if inflation continues to spiral up and the third which is the least likely is cut spending right the
00:48:38
the federal government spending the way it does right now makes a very inefficient way of kind of putting
00:48:44
capital into the system and inflating we've seen historically that anything the federal government spends money on
00:48:48
like health care and education the costs very quickly spiral out of control super
00:48:53
inefficient why not just give that money to the free market to make decisions on
00:48:56
how to spend it it would be more efficient etcetera and the market would effectively find balance where buyers
00:49:00
and sellers are equivalent as opposed to having the federal government driving the price of everything up
00:49:06
the fourth option that people don't talk about which i think may end up becoming an
00:49:11
important option not kind of oblique option but more kind of backdrop is to start a war
00:49:18
and you know when you start a war dog the dog yeah when you start a war you stimulate the economy without needing to
00:49:25
pump additional capital in so you can increase growth and avoid the risk of stagflation
00:49:30
and you can source resources that otherwise wouldn't be kind of flowing in the trade
00:49:35
or basically in a land grab type situation but it doesn't necessarily mean that policymakers would say hey let's go
00:49:41
start a war to decrease inflation taiwan but the premise that conflict can improve the economy is a important
00:49:52
backdrop that starts to play into policy decisions that might get made over the next couple of months and quarters and
00:49:58
that's really important whether or not the posturing is one of partnership and and reducing the tension with foreign
00:50:05
nations or one of increasing the tension it's more likely that we would want to increase the tension when we're in an
00:50:11
inflationary environment so that's quite a conspiracy there so what do you think
00:50:14
sex okay let me we gotta go back first principles on this thing we're not gonna start a war to tame inflation okay but
00:50:20
let me just explain what inflation is because i'm not sure people like fully understand like how this works
00:50:26
inflation's very simple it's too much money chasing too few goods okay and we have both sides of the equation going on
00:50:33
right now on the supply side on the good side we've got shortages we've got the ports backed up we've got
00:50:40
paying people not to work we still have the 2 trillion of coveted relief passed earlier this year which was responding
00:50:46
to a problem that was largely winding down so we have these labor short we have people dropping out of the the
00:50:52
workforce in record numbers in the number that just came out showed in more people quitting their jobs than ever
00:50:57
before so we have a shortage in terms of the production of goods and services that people want
00:51:04
the same time we have this monetary and fiscal expansion coming out of washington you've got
00:51:11
you know again they did the 1.9 trillion of coveted relief they did 1.2 trillion
00:51:15
of infrastructure buying still talking about another 2 trillion of social welfare you have the fed still printing
00:51:21
money with qe so you've got this massive expansion in the amount of money so look
00:51:26
too much money chasing too too few goods creates this problem and it was very predictable and so what
00:51:32
i said back in may that's what i was warning about and it goes back to the druckenmiller clip that we that we were
00:51:37
talking about all the way back in may he said the same thing that we had a reckless fiscal and monetary
00:51:43
expansionary policy coming out of washington at a time we didn't need it because if you looked at like retail
00:51:48
spending back in may it was back to above trend so you know in other words like there
00:51:53
was no demand problem the economy was back and they've just been pumping and pumping out of washington
00:51:59
we made a we had a we had good intent we wanted to make people not suffer we wanted to get the economy on
00:52:04
tap we may have just made a bigger bet than we needed to we overdid it we overdid it clearly but
00:52:09
look who wants to be the politician quite frankly yeah he's not going to get you who is the who ends the eviction
00:52:15
moratorium right the gravy nobody wants to be the politician who says okay now you suddenly have to pay
00:52:21
your rent but obviously people have to pay their rent and we're taking away your bonus unemployment i mean people
00:52:26
have to go back to work at some point when there's 10 million jobs open just as a
00:52:32
uh i've been watching the taiwan situation like a hawk and i don't know if you saw this this week to go off on
00:52:38
another tangent but the us is testing israelis iron dome and guam as a defense against chinese cruise missiles
00:52:46
obviously um for possible deployment in taiwan and i don't know if you're watching and
00:52:53
it's cancer in the nba uh but he has been going on cnn and stuff like that now talking about
00:52:59
china pretty amazing i i predict escalating global conflict that'll be my prediction to mark the q4
00:53:07
well i i think that's i think actually that's a pretty valid prediction but i just think it's a
00:53:12
little bit separate than inflation like i said it's not an explicit decision but
00:53:16
i do think that in the backdrop of an inflationary environment where you have something that can temper the condition
00:53:21
at home that at the same time you know might sell politically but we don't need but it's not going to
00:53:27
solve anything politically okay i mean world war ii you know famously got us out of the great depression because that
00:53:32
did stimulate demand but in a situation we're in today we have too much demand we have retail is trending way above
00:53:39
curve what we have is a supply shortage and devoting resources taking them away from the productive economy to go to war
00:53:45
would only exacerbate the problem and make it even worse what we need right now actually is for washington to back
00:53:51
off to stop pumping demand with this with you know now they're still talking about this two trillion dollar machine
00:53:57
so the money printing that's what we've got to get out of the way and to um to stop these disincentives for
00:54:04
production and work so you have ma i mean mansion was exactly right about this okay do you
00:54:09
remember when manchin when he was resisting this two trillion dollar social welfare bill i mean the things he
00:54:15
said are already coming true i mean he said this months ago he said that we should take a strategic pause because he
00:54:22
said this is a quote by all accounts the threat posed by record inflation to the
00:54:26
american people is not transitory and is instead getting worse from the grocery store to the gas pump americans know
00:54:33
that the inflation tax is real and dc can no longer ignore the economic pain americans feel every day that's what he
00:54:39
was saying this past summer several months ago and they rolled right over him the psychology of this could be
00:54:45
could be self-fulfilling as well because what's going to happen is you're going to have everybody raise prices because
00:54:50
it's now become an escalation you know your hairdresser your you know whatever you know services
00:54:56
you're using whatever product you're buying whatever restaurant you're going to is going to put two dollars on every
00:55:01
appetizer and five bucks on every entree everything is just going to keep going up and then what happens is people who
00:55:06
in the middle class or you know who are consumers of products in a large way will say you
00:55:10
know what i'm going to put off buying a car then we're going to be driving all this
00:55:14
supply up and then people are going to say you know what [ __ ] it i'll just drive this one for two more years that's
00:55:19
going to cause stagnation and this is called it's what we have in the 1970s and you're right it's called an inflationary
00:55:25
spiral which is the future expectations of increasing prices means that people start increasing them now and that feeds
00:55:32
on itself yes and that's what we had in the late 1970s and the thing that broke that was paul volcker jacking up
00:55:38
interest rates it was very painful it caused a very severe recession in the early 1980s but then the economy came
00:55:44
roaring out of that by 83 it got reagan elected in 84 and you had 30 straight years of declining interest rates and
00:55:51
that led to a stock market boom so the problem we have now okay here's the problem we have is there's going to be
00:55:57
no paul volcker why we can't afford to jack up rates because the federal government's debt is so much bigger than
00:56:04
it is we are not on a fixed rate we're on a variable rate all of the debt we take the average maturity of government
00:56:09
debt right now is five years okay so that i mean that means the whole debt rolls over within five years so if they
00:56:15
jack up interest rates we have almost 30 trillion of us federal debt right now so
00:56:20
every one percent that they increase interest rates that means another 300 billion a year of debt service payments
00:56:28
yeah exactly so there's going to be enormous pressure on the fed not to raise rates you
00:56:34
already are hearing biden rattling the sabers saying that powell may not be his choice for a second term
00:56:40
by the way powell is very dovish he's basically saying we can't raise rates right now because of this and that so
00:56:47
and abide in the administration nobody in washington ever wants rates to go up right they want to keep these low rates
00:56:52
forever this is the problem is look at the end of the day i don't know what the inflation picture is going to look like
00:56:58
next year but what concerns me is we don't have effective tools to fight it anymore because we've given up our
00:57:04
ability to raise rates because it would it would increase the cost of the debt so much and i mean so with just one
00:57:10
article just to share with you guys is this again my one of my favorite sources of economic information is the
00:57:16
the fred blog which is from blogs right from the st louis fed okay talking about two tales of federal debt
00:57:23
okay and the article is about here's why there's so much disagreement on whether
00:57:27
the federal government debt is too high so the first chart shows debt to gdp this is always the way of looking at
00:57:32
government debt was simply looking at the ratio of debt to gdp it's now something like 125 percent in peace time
00:57:39
i don't think we've had a higher peacetime ratio that would tell you things are out of control but for the
00:57:43
last decade while it's been going on you had this whole school of thought the mmt
00:57:48
modern monetary theory all these economists and experts and politicians in the media were eager to buy in
00:57:53
because they want to spend the money okay and what they said is no it's not debt to gdp you should look at debt
00:57:58
service to gdp this is the second chart on that blog and so debt service to gdp was was staying constant or even going
00:58:07
down as the debt to gdp was going up why because interest rates were so low the problem
00:58:12
is what was so foolish about this point of view is it is assumed that interest rates were going to last forever well if
00:58:18
that was your point of view why didn't you do what trump actually suggested several years ago when he suggested
00:58:23
having 100 year t bills they should have locked in much much longer duration maturities on
00:58:29
the federal debt and instead and yellen rejected this okay and so you've got a five year average duration which means
00:58:36
that if interest rates go back up the debt service cost is going to explode yeah
00:58:42
so in 1980 we changed the goal posts for cpi so even as a measurement to know what we look at and i think jack dorsey
00:58:49
tweeted this out so nick you may be able to find this tweet but you know we changed the measurement of
00:58:54
how cpi measures and so if you go back to the original measurement uh it looks like inflation in cpi is uh
00:59:01
much more pernicious than we would otherwise think it if we just look at the the new cpi that we
00:59:07
that we started to look at as of 1980 so um that's another sort of like point we
00:59:12
did this we did the same thing with i just go back to what i said early on had given up looking for two smartest people
00:59:18
that we both know are net sellers well they're selling some yeah i mean they're not selling i'm just saying the
00:59:25
two smartest people we know i mean we don't get financial advice here but should everybody be moving to
00:59:31
cash no where do you put your money i don't know i'm totally confused this is i think the
00:59:36
admission just buy productive assets great businesses that have durability and let them ride for 20 years
00:59:44
i i like your answer the fact is we're all confounded as to what to do at this moment in time we're
00:59:49
all trying to figure this out and we do this for a living but then you're trading the market like everyone else
00:59:53
all the time like you know why trade the market where you can just buy great businesses own stakes in them and let it
00:59:58
rest no i'm just talking about this i mean my practical issue is that i don't have infinite money and so in
01:00:04
order to put my money into productive assets i have to sell other productive assets
01:00:09
well if you've got other productive assets leave them in why sell well then it's like then i'm basically
01:00:14
you know doubling down on a world view that may be old and dated right so if i'm along a bunch of software companies
01:00:20
and i really want to do something in climate science or biotech what am i supposed to do don't try don't try and
01:00:25
time the market shift your assets right why do you care what the no no i'm not trying to tax this i'm not trying trying
01:00:29
to time the market i'm just saying if if my world view shifts to really want to double down on climate science or
01:00:34
alternative finance or biotech i have to raise capital to do that you have to raise capital is what you're
01:00:40
saying right but but for me i'm not raising it from other people i'm raising it for
01:00:44
myself so to me the best place to be right now is in the company formation space
01:00:52
because when you create a company um like friedberg does every three months there is so much value being created at
01:01:00
that moment in time and so much further capital getting poured into it that if you are the originator of the
01:01:05
company and you get some big slice of the cap table for doing that which is completely valid you originated the
01:01:11
company whether it's unique or call in or whatever it is man that is a great moment of creation
01:01:16
of wealth creation and when you're the person putting the money in at the billion dollar
01:01:20
evaluation before the company whatever call in i'm sorry clubhouse went from 100 million to 4 billion
01:01:27
with no revenue i don't know what's happening in the world but pretty crazy do you want to go on to um
01:01:34
xi jinping and his he's going to be speaking with biden on monday it's done he had he got it done before his his
01:01:40
video his zoom with biden oh yeah so they're doing this now the supreme leading hasn't left china the
01:01:46
supreme court explain what this means uh from the story um i mean i think the basic the
01:01:52
basic takeaway is that they've been working inside the body politic inside of china
01:01:56
to basically reflect g on the same level as mao and um and effectively what this means is
01:02:02
that it it allows him [Music] to remain um the leader of china indefinitely and so um there is no transition of
01:02:12
power typically what had happened was these there were these ten-year windows and you know you you you go
01:02:18
uh zhang you know 10 year cycles and then they pass the baton but it now looks like we'll be living
01:02:25
with xi jinping until um until you know he he joins the after world so uh he's a ruler for life of
01:02:32
china basically crazy i don't think that's exactly right what an incredible feat of political
01:02:39
maneuvering without judging it just to say how what a complicated byzantine political infrastructure he must have
01:02:46
had to navigate i don't know how he played this three-dimensional chess with all these people the slow systematic
01:02:51
dismantling of the old guard placing all of his people in then slowly moving towards this
01:02:57
this kind of recognition he's admiring yeah no the dictator got his name for a reason somewhere
01:03:05
donald trump and steve bannon are like what did we do wrong we were so close january 6 we almost if pence would have
01:03:12
just played ball sacks you'd still be in power huh your guys dropped the ball and
01:03:17
we wouldn't have inflationary just think trump was leader for life you know jason given how accurate my
01:03:24
predictions have been you should have a little bit more respect for my uh political
01:03:28
positions what do you guys think happens now that g basically is ruler for life you know he i think the chinese term for
01:03:36
it is historic figure which is yeah saying you know you're you're basically um you're a maid man basically you can't
01:03:43
get whacked nobody can touch you you're good for life the end nobody can question you i mean
01:03:49
can you imagine mao zedong then you know deng xiaoping and now xi jinping incredible like he is at that
01:03:55
level well it means if you start a war and a serious military conflict that nobody
01:04:01
can question you right you're the supreme leader so it's sort of like putin and mbs like mbs
01:04:07
can go kill a journalist and he's got nobody to answer to it means he has nobody
01:04:13
dong initiated the revolution and you know deng xiaoping was really the architect of free markets that has
01:04:20
made china the economic powerhouse that it is today their internal reflection is xi jinping
01:04:26
is on the same scale of that now i mean i can't claim for the future yeah what is the accomplishment that's
01:04:33
going to really put him in that league and and you'd have to say it's the annexation of taiwan i mean that's the
01:04:38
thing that he must be looking to do before you know his time to reunify china that's the thing that could put
01:04:45
him in that league and so that that is the trip wire that to friberg's point that could lead
01:04:52
to you know a conflict i i think they you know i hate to say that freeberg is wrong uh because like i don't think
01:05:00
in this case i can i do think that there is some left tail risk for like a crazy wag the dog moment in
01:05:07
taiwan it would be really scary really scary right now if i was looking at the sizes
01:05:13
of the navy's people don't know this japan actually has a very large defensive navy
01:05:18
the uk and the united states obviously have very large ones china's is large but not on a tonnage basis they have a
01:05:24
lot of ships but together i don't know if you saw the military exercises going on but
01:05:29
new zealand australia the united states uk and japan uh were basically i think south korea
01:05:36
would were basically driving their ships around the south china sea this is going
01:05:40
to be i think yeah so you know i did i did a really interesting interview with um the
01:05:44
historian and commentator neil ferguson yeah who is also a pretty avid china watcher and i did an interview with him
01:05:52
actually on on my app uh you don't want me to say the name shall not be yeah but anyway so he he had a
01:05:59
really great line which is he said that the that type the issue of taiwan it's basically like
01:06:06
the issue of cuba and berlin and the persian gulf all rolled into one so it's like cuba and
01:06:14
the cuban missile crisis because it's right there off the shore of china it's like berlin
01:06:20
you know because that was basically the dividing line between freedom and you know totalitarianism you know where
01:06:28
where the berlin wall got built and it's like the persian gulf because the new oil are the semiconductors the chips
01:06:34
that are fabbed in taiwan at tsmc and so all the resources that we're dependent on for the new economy are all right
01:06:42
there so super smart framing yeah it's i thought it was a clever line the thing we have to remember about g is that his
01:06:49
father was um was a commander uh for mao and was in a vice premier and so you know his
01:06:56
historical he is the original princeling right remember you know there's this context of these chinese princelings
01:07:02
but he is he is one of these originalists and so his motivation will be it seems at least
01:07:09
to bring china back into that spectrum of power which is really about a consolidated country
01:07:17
um and a single nation state and that has to include taiwan it can't it can't not so to your point david it's almost
01:07:22
more motivation for him to go off on some crazy adventure and try to reclaim it it's really interesting to look at the
01:07:31
tonnage of ships and the number of ships the united states has over 6 000 tons of
01:07:34
ships 949 according to globalsecurity.org china has to only 2 000 tons and a thousand ships they have
01:07:41
a lot of smaller ships uh and then russia uk india japan france indonesia turkey germany illinois warships jason
01:07:47
or yeah this is their their navy warships um and so they're fighting uh but japan has a very large one i wasn't
01:07:53
aware of this because i thought they were not doing military buildup but they have what's called a defensive navy uh
01:07:58
which can't do offensive stuff so this is um i think this is really problematic how
01:08:04
many of these ships are smaller than sax's yacht that he rented this year yeah saxis tonnage would kind of put the
01:08:10
united states over the top i think in this gross cottage of sax's yachts is going to be donating his new yeah
01:08:16
no for sure it's bigger than indonesia i see indonesia on this list turkey i mean
01:08:20
how big in my defense it was a starter yacht it wasn't my indefensible next stop next one next
01:08:28
one will be bigger yeah solana is going to make sure of that right yeah you can buy yachts with solana all right i think
01:08:33
we covered enough uh ge and toshiba can't run their businesses so they're each separating
01:08:38
into three separate let's talk about that that's interesting actually and johnson and johnson yeah
01:08:43
today all right so on tuesday g announced they were splitting into three separate companies aviation healthcare
01:08:48
and energy toshiba reported a similar plan johnson johnson today johnson johnson was today
01:08:55
this is um in direct uh conflict with the consolidation and the creation of conglomerates and
01:09:01
it's not good i think this is an important point jkl um you know in the 80s and 90s it was
01:09:06
cool to create conglomerates meaning you would kind of stick businesses together
01:09:10
that were rjr somewhat disparate um because you could financially engineer a way to do it that would juice
01:09:16
shareholder returns right you could borrow money add lots of scale the cost of debt goes down you could increase
01:09:22
your debt load et cetera um and you know the challenge is like when you're scaling a business you
01:09:28
either need to grow your revenue organically or you need to acquire and when you're acquiring you're either
01:09:33
acquiring horizontally or you're acquiring vertically meaning you're kind of integrating your supply chain
01:09:38
or you're integrating um or you're adding ancillary businesses that you can cross-sell so you're either reducing
01:09:43
your costs or increasing your cross-selling ability so there's some inherent synergy in the acquisition
01:09:48
the problem with conglomerates is there is very little synergy meaning like when
01:09:52
you acquire a new business like an aviation business it doesn't create synergy for your healthcare business
01:09:57
and um you know there was always a rationalization that these managers of these big conglomerates had which was
01:10:02
like oh well we could do this and we could do that at the end of the day it was financial engineering where they
01:10:06
simply kind of used debt to reduce um you know the cost of capital and increase the shareholder returns and now
01:10:13
everyone's kind of waking up to the fact that you're actually decreasing value because an investor that wants to own an
01:10:19
aviation company doesn't also want to own a healthcare company so the investor doesn't buy those shares and the
01:10:23
investor that wants to own the healthcare company doesn't own the aviation company so they don't buy those
01:10:27
shares so the way to increase shareholder value is to actually split those businesses up and then the
01:10:31
investors that want to own the aviation business will pay more and the investors
01:10:34
that want to own the healthcare business will pay more and the overall value of those two businesses goes up by having
01:10:39
them be separate and that's what the market's kind of waking up to and this is kind of a trend that's been going on
01:10:44
for years now you know going back to kind of 2013-14 where the market started to kind of
01:10:50
rationalize some of these silly conglomerate business ideas and break them apart into more kind of you know
01:10:56
targeted businesses that can actually spin out or or yeah or break off breakups yeah that can basically
01:11:02
attract shareholders to bid on each one of those businesses individually and drive value up you know we saw one
01:11:08
business i was close to that i saw this with was dow dupont where they you know down merged with dupont and then they
01:11:13
split into several businesses that each were focused on a particular vertical and it made a lot of sense to drive
01:11:19
value for uh for for the for the overall shareholders so at the end of the day you know these conglomerates are about
01:11:24
kind of driving economic outcomes and the only folks that you see doing this well are folks like warren buffett where
01:11:30
the job is really about capital allocation where you know you can allocate capital to the best business
01:11:36
and that business on its own will grow organically versus taking a bunch of crappy low growth no growth businesses
01:11:42
levering them up to kind of juice the returns on each other and we're seeing this slow unwinding happening so i think
01:11:47
it'll it'll continue to and you can probably go and pick a bunch of these conglomerates and you'll see the
01:11:51
activist shareholders doing this they'll they'll buy a bunch of shares they'll instigate and say hey you guys should
01:11:56
break up the share price will go up by 20 30 percent so if you want a stock tip of the day
01:12:01
you know go find the next set of conglomerates that are going to get attacked and broken up it's interesting
01:12:06
and you know with public markets dell is spinning out uh vmware and that's going to
01:12:12
create a massive amount of cash and shareholder value they're doing a huge dividend so i guess my question to you
01:12:18
chamath is when do we start to see this hit not from a point of weakness but from
01:12:24
companies that are strong and see this as hey this is a way to just unlock shareholder value will we see an amazon
01:12:31
spin at aws a youtube or an instagram come out of their parent companies i think it's very rare that these things
01:12:39
happen on the offensive foot i think it's typically a defensive maneuver that's driven by
01:12:44
really poor returns over long periods of time or activist investors totally i was about to bring that up i
01:12:55
mean do you remember how hard that ebay i remember like john donahoe was the ceo
01:12:59
he like fought that so hard i remember getting a phone call from him asking if i would support them he had rounded up
01:13:06
read off and other people support ebay and i'm like no i can't wait wait wait no do you remember this we were in vegas
01:13:11
and donahoe called and we were working on a plan and then you went and walked on through the plan
01:13:17
do you remember this thing we were no what happened we were in vegas we were going to try to we were in vegas
01:13:24
i can't i can't no no donahoe either called you or called me and i said you should talk to sax
01:13:29
and you sketched out a plan for what paypal should do remember oh yeah yeah i do remember that but yeah
01:13:35
like on saturday afternoon we sketched out this plan yeah yeah so i told john no i'm sorry i can't support you because
01:13:41
i believe it should be spun out and so in the only two the only two people from the original paypal team who said that
01:13:47
publicly were me and elon and we said that if you could get paypal out from under
01:13:53
you know this you know this sort of ebay bureaucracy it could be a 100 billion dollar plus company the bar for
01:13:59
acquisitions is extremely high like i think the the last really two acquisitions that were really done well
01:14:04
was zuck's acquisition of what's happened instagram but since then the bar is extremely high for these
01:14:10
conglomerates so as an example paypal was rumored to be buying pinterest and you know it there was such an incredible
01:14:18
shareholder revolt that they had to put out a press release saying we have absolutely no interest
01:14:23
in acquiring pinterest but what that all that did was just you know accelerate the bleeding because then
01:14:28
people were saying wait a minute how strategically lost must you be totally that you would want to buy
01:14:34
pinterest as and so then it and as a result the the paypal stock price has gotten absolutely yeah it was over 30
01:14:40
billion dollar company now it lost the entire value of pinterest basically here's the big issue that i think we
01:14:46
have in american economics and company building you know we've gone through 20 or 30
01:14:52
years of really under investing in r d at the sake of share buybacks um at the sake of you know market
01:15:02
consolidation dividend private equity you know driven take privates and so all of this capital misallocation
01:15:11
has really put us on the wrong foot and the pandemic basically showed that we were really ill position
01:15:16
so a lot of these um conglomerates it doesn't make sense today because we've proven that the compensation schemes for
01:15:23
ceos the incentives for executive management are way too perverted and they just create
01:15:32
horrible outcomes a different example i saw in the last i think 15 or 20 years ibm's
01:15:39
market cap has gone down to 113 billion in the meantime they've bought back 132 billion dollars of stock what could you
01:15:47
imagine the kind of r d that ibm could have affected with that 132 billion and where they could be
01:15:55
so we have they're not they're not good capital allocators well we have horrible
01:15:59
capital misallocation so well look at apple i mean i don't think they know how to spend the money in the
01:16:03
r d yeah they're not they're not good at it they're not good at it they're better
01:16:07
off they're better off taking those massive they're better off taking those massive r d budgets and putting it into
01:16:12
m a budgets not for like a 50 billion dollar pinterest acquisition that doesn't make any sense has no synergies
01:16:18
but on smaller acquisitions of teams that have built really interesting technologies ibm ibm could have bought a
01:16:23
lot of different things to innovate or operate those guys don't seem to know how to do anything so like
01:16:30
my point is now we're in the cycle where these conglomerates will get ripped apart so that
01:16:35
a brighter fresher and probably younger group of executive management can take a different the spin on these
01:16:44
companies and actually do some so for example like the j and j spin out is really exciting because you take med
01:16:50
devices in pharma and you separate it from a really struggling complicated consumer goods you know package business
01:16:56
you know the shampoo the q-tips the listerine get all that off-balance sheet now you can actually you know make drugs
01:17:01
and med devices and that's a really interesting business that the right ceo can really do a lot of interesting
01:17:06
things with i heard an interview with us then ceo of ge i think culp who was putting forward this plan
01:17:12
the line that i remember that kind of resonated with me he said the benefits of focus are immediate the benefits of
01:17:17
synergy is are hypothetical and i think that's really the key point here and that's what's going to fuel all
01:17:24
this sort of deconglomeration is that the benefits of focus to a company are so huge
01:17:30
that you know that but but the reason why it doesn't happen is because of this instinct
01:17:36
that all these managers have for empire building right so when times are good they can keep building their empires and
01:17:42
then something bad has to happen to force them to focus yes the motivation they're not they're not
01:17:49
owners they're typically not founders and so what you end up seeing is their comp goes up linearly with market cap so
01:17:56
the biggest right and this is just just to close the thought out on that whole ebay
01:18:00
paypal thing i mean it was so obvious that ebay should spin out paypal but for the manager history the management
01:18:08
resisted it and it took an activist shareholder i think icon came in this icon yeah it was icon who came here when
01:18:13
the carolinas it's in the lobby you're [ __ ] well but but icon shouldn't have to come in there the reason why there's
01:18:19
opportunities the managers won't do the right thing he unlocked a quarter trillion dollars of
01:18:23
value he was incredible no i mean they spelled that out for 40 or 50 billion now it's worth five times that amount
01:18:28
it's a quarter of a trillion dollars yeah it's crazy and just to to put this all in perspective the stock buybacks
01:18:34
that are going on right now apple did almost 20 billion dollars less square they've done 77 billion in last year and
01:18:39
you want to talk about the impact of tax policy on innovation well you've got on one hand here
01:18:45
apple is is looking at well i'm gonna have to pay all these taxes i might as well just increase the amount i'm buying
01:18:51
back and be neutral why would i want to show any kind of a profit here i'll just
01:18:54
buy back as many shares as possible the company will eventually be private i mean this is you got to be really
01:19:00
careful with how you do this because there's no incentive for people now to put money into r d or other stuff that
01:19:06
just buy back the stock might be the most efficient thing to do correct in terms of like the shareholders you don't
01:19:10
know how to spend the money it's the dumbest thing to do it basically shows you're an idiot well it shows you got
01:19:14
nothing better to spend the money on so maybe maybe that's maybe buying back the
01:19:18
stocks better than furring it away but yeah it means you're out of ideas it means you're not here
01:19:23
or you or or a combination of my god this core business is throwing off so much money that we can't come up with
01:19:30
enough ideas at that time i think that's no it just means you're not ambitious enough i mean
01:19:35
what would you spend 20 billion on i mean zuck is having a hard time spending 10 billion on creating the metaverse a
01:19:41
year i mean you're talking about 80 billion a year what would you put that towards what should apple
01:19:46
put it towards no apple apple could even more aggressively double down to enter the
01:19:51
car market they could have done it much sooner than they have they could spend 20 a year on that sure you're right you
01:19:56
know easily um they could actually enter i don't know power they could uh yeah i
01:20:02
mean but they're but they're you know apple their their culture is to have very few
01:20:06
products as a company they're always very proud of that it's the steve jobs focus thing i mean i think it's worked
01:20:10
pretty well for them i know you're second guessing it the thing that i hear i just don't like buybacks because i
01:20:15
think it comes at the sake of r d for most companies i think it's going to be easy choice no the big tech companies
01:20:21
are different but everybody else what you see is r d is like one or two percent of of of their you know
01:20:27
but it's it's a shame look apple could definitely be more aggressive but i wouldn't judge the tim cook era until we
01:20:32
see what happens with glasses because this is the product that i hear is coming is going to be their you know
01:20:37
their ar glass glasses and that's going to be a new computing platform that they
01:20:41
open up to developers and i guess cook's been there for what a decade but i think
01:20:45
he doesn't want to retire until this comes out and he can see this is going to be his signature product i think but
01:20:51
i'll tell you just the other thoughts that just went through my head as i saw this news about ge it really was kind of
01:20:56
the end of an era you got to remember that back in the 80s 90s i think even as late as 2000 ge was the number one
01:21:01
company in america by market cap it was the top of the s p 500 it later subsequently got kicked out of the the
01:21:07
dow jones but the thing that went through my head is you know when i was a kid growing up the only two business
01:21:13
names that i even knew were jack welsh and then lee iacocca you know that was it
01:21:19
had their posters on your watch ge and chrysler in between the two of them it was big
01:21:24
jacket well shania and now you don't even know the name of the the ge guy i mean like i know it because i watched
01:21:30
some interview and i saw him up there but i mean you can't think of a business leader
01:21:34
today who's not in tech and and really a tech founder or somebody who's handed the ball by the tech founder so we know
01:21:42
tim cook because steve jobs handed him the ball but otherwise it's all tech all tech founders you don't hear about any
01:21:48
of these old like dow jones type type companies anymore is this the the business
01:21:54
the business environment the the economy has changed so much since the 80s and 90s it's all totally
01:22:00
dominated by tech now but i would argue that the disruptive business and the disruptive business leader are always
01:22:06
the icons back in the day the chemical companies were the icons and everyone knew the chemical companies and the guys
01:22:12
running them then it was the industrial companies you know then it was kind of the financial you know then it were
01:22:16
these guys in the 80s and 90s weren't founders you know but they were in different
01:22:22
ways on r d spending top two companies without looking on r d in the world yeah global in the world number one
01:22:30
number two give me number one number two uh i would say microsoft no it depends on classification but i
01:22:35
would say saudi aramco freeburg what do you got yeah i would probably put exxon up there
01:22:42
you guys need to think about who was been some of the most innovative leaders uh amazon 42 billion in 2020. but jason
01:22:49
that's an accounting thing if you're saying in the world saudi arabia their exploration their enp budget is probably
01:22:55
200 billion dollars a year okay i i i guess maybe because that's not that's a is that is that a corporate entity
01:23:02
technically it wouldn't be on the list it's a public company yeah so google no this is all companies samsung
01:23:17
facebook some of this is just accounting categorization anyone who because the engineering
01:23:23
budget is is basically what goes into rnd so the more engineers you have on staff the bigger you are
01:23:29
doesn't mean you're producing anything by the way bigger industrial companies traditional companies that list things
01:23:34
as r d you know most of those dollars flow out to third-party companies like enterprise software companies services
01:23:40
businesses so it doesn't end up it gets accounted for it's quote unquote r d because they get to capitalize it but
01:23:46
that spend is typically um uh not paying in-house salaries to engineers and that's the distinction
01:23:53
between true tech companies and other companies that are quote-unquote going through a digital transformation or you
01:23:59
know have a quote-unquote r d budget they're outsourcing r d and typically paying three times as much and typically
01:24:06
getting one temp in the return um and i think that's the maybe a good heuristic for how you might kind of want to look
01:24:11
at what differentiates detect a true test depending depending on accounting saudi aramco spends 37 and a half
01:24:17
billion to 50 billion depending on height all right so that puts them at you know probably tied with amazon for
01:24:21
all intents and that just means i was right jason that's what i care about well i mean i'm wondering well you know
01:24:26
what the reason i think that you this might be obvious putting it aside i think the issue might
01:24:37
be that they're recently public right so maybe they're uh you know they've only been filing public for two years or
01:24:42
something all right i think that's everything uh how's everybody doing otherwise how's
01:24:47
everybody's personal life are people losing their mind what's people's plans um for the end of kovid i'm gonna go have
01:24:54
beer and pizza on the beach nicely done so i'm ready to get out of here nice yeah i mean i'm exhausted are
01:25:00
you guys exhausted and this has been a [ __ ] crazy run i don't know what day it is anymore i'm
01:25:05
like i'm ready to wind the year down i am so exhausted i mean this has been the craziest pace i've ever experienced in
01:25:11
my life the number of deals going on the amount of inbound oh my god i tell you at that conference um every single
01:25:19
so i have all these founders come up to me and pitch me what they're doing a couple of them like that sounds really
01:25:23
interesting can we participate in that he's like no no the rounds are subscribed i'm like why'd you come up to
01:25:27
me and pitch me this though how dare you like yeah so rule number one i tweeted i
01:25:31
tweeted a new terms of service if this is only if i'm at a conference okay if you set up an appointment in my office
01:25:36
it's fine that's like an opt-in but like if you come to me to pitch me your idea
01:25:40
at a conference then and i say okay i want to invest like give me an allocation like don't
01:25:46
come to me and pitch me if you're not going to give me an analogy no that's not cool that's like being like oh my
01:25:49
god i know the best restaurant in the world it's open tonight they've got the greatest steak and they're like chasing
01:25:55
no reservations guys tell saks about the white truffles from yesterday yeah we we had dinner at jamaat's house
01:26:00
last night it was incredible he got these white truffles from us i've had in a year i mean it was really
01:26:05
incredible i really appreciated it it was amazing and 2000 like it was 1996 white burgundy uh
01:26:11
leroy i'm not a wine drinker i'm not saying that your guy your chef beat saxis from
01:26:20
two weeks ago sax is wasn't sax's chef um your old chef uh i think one of his sessions
01:26:32
david lives in the stratosphere he lives in a stratosphere burn that's just at a different he's next level
01:26:38
are you eating my sloppy seconds over there no no i think we gotta beat that one i
01:26:43
don't know that term means what you think it means anymore sex but by the way there was a there was they were
01:26:48
gonna get there was a dinner conversation last night tax to your point jamal it's up to you to decide if you
01:26:55
want to disclose the dinner conversation guess but um this guy said that there was a
01:26:59
a guy that applied to y combinator that had 750 million dollars in crypto and so he's like applying to y
01:27:06
combinator with his 750k for 150k to give up some percent of his company there's like all these stories of these
01:27:13
guys they're like i will pre-fund my own series a with 15 million dollars to create this business inside of the yc
01:27:20
machine that was incredible there was such an incredible like unexplicable inexplicable
01:27:25
undescribed i think in the in the mainstream media story of crypto wealth creation that's been going on and these
01:27:32
crypto um these crypto 100 millionaires billionaires are emerging and doing their own kind of innovation completely
01:27:39
under the radar right the smartest people that we know are selling right now yeah and i think they changed their
01:27:48
conversions um for the yc safe they're now getting preferred shares they used to do common
01:27:55
and um they now i think it happens post conversion so they want their seven percent
01:28:01
fixed you know after your next round of funding is my understanding i don't know
01:28:04
if that's but yeah so they got it more aggressive but that's brutal it's you know what's happening is like
01:28:10
the accelerators have to move earlier back to incubators so the idea of somebody
01:28:16
you know grin or some of the other companies we funded coming to the accelerator with 20 000 and or 50 000 in
01:28:22
revenue in some cases they may be able to raise money without and certainly the crypto
01:28:26
companies are raising 25 million dollars they're outpacing regular companies regular startups non-crypto startups and
01:28:32
they raise it in 10 seconds from a bunch of eth for buying tokens they've created
01:28:36
a whole shadow economy yeah that doesn't have to play by any of the do you really
01:28:41
need adventure anymore like well if you want to obey the law i guess you do but in a lot of these cases like
01:28:48
i did this um this whole new economy could emerge completely offline right completely off
01:28:53
the current do want to get this thing tightened up they don't want people doing this
01:29:00
20 i think it was 2015 i presented amazon at iris own and one of the things that i did was we
01:29:07
calculated what bezos's investment track record was right because he basically took all his free cash flow and
01:29:12
reinvested it in the business and you could measure what his return on uh invested capital
01:29:17
was and it was like 42 percent and on a really big number on 10 percent on the money amazon deployed in r d
01:29:24
projects like the kindle or 42 percent over like a multi-decade period and double what a venture firm
01:29:31
would do or top down i mean he's in a class by itself but um my takeaway in that moment was wow this
01:29:38
is the you know smartest investor of our generation that's what i said at bazel's
01:29:43
at the time and you know baze has had a track record of selling roughly a billion dollars of
01:29:48
amazon stock every year and this year he you know snap sold 6.6 billion which you know when we talk about the
01:29:55
percentage you're selling we're talking about selling five percent 10 so you know they're not diluting their
01:30:00
whole positions but these are big numbers you're right i think it's a signal jkl you got to close this out all
01:30:05
right everybody it's been another amazing episode episode 55 of the all-in podcast
01:30:10
from uh yeah whatever where you know where people are coming from uh the all-in summit we'll be in the spring at some
01:30:17
point i'm gonna go to miami and look at the locations march 11th through 15th i can't because i'm playing poker yes okay
01:30:23
you got your poker train in an undisclosed location big time if i can go listen is there anywhere
01:30:28
poker big boys you need to have a funny guy there i mean i'm not a great dealer but can i be a waiter or something i
01:30:33
mean i think the game starts at two thousand four thousand but it could get a little spicier free spicy
01:30:39
you got a good year maybe you should go yeah maybe you should have solana play because let's get the solana chips oh he
01:30:44
can play davidson [Applause] you put it in an llc and then you buy into the game and then that may not be
01:30:55
enough that may not be enough all right 20 whatever 20 is enough for the queen of quinoa the dictator and rain man
01:31:03
david sachs i'm jcal we'll see you next time on the olympics subscribe to the channel
01:31:09
[Music] we should all just get a room and just have one big huge orgy because they're
01:31:42
all just useless like [Music] [Music] i'm going home [Music]