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Nick can you cue the tape this is now the worst form of a shot oh my God I mean the fact that he hit the ri
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is a miracle the most unath what is oh my God I have wish we could get slow motion down that oh like ball the ball
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forward no look at his hand look at the right hand look oh look at look at that he what is that about
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one-handed I mean that has nothing to do with basketball was the most unnatural basketball SL athletic
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movement I've seen come on wasn't that bad I mean the lean forward the lean forward the kind of like sassy jump you
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know the sassy little Sach on the side there nice let your winners ride Rainman David and instead we open sourced it to
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the fans and they've just gone crazy [Music] with all right everybody Welcome to the
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Allin podcast with me again the chairman dictator chamal hatia David freeberg the
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Sultan of Science and the Rain Man himself David Sachs our first topic we'll go to our war correspondent the US
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and its allies have shuck houthi Targets in Yemen sax well we talked about this two we ago on the show and we talked
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about it as a escalatory risk in the Middle East back then and I think that that is playing out
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now we fired I don't know maybe a 100 rockets and missiles at Yemen last night the purpose
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of the strike is to restore deterrents and I guess try and prevent the hooes from attacking commercial
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shipping in the Red Sea but that deterrence is not working I mean there's already a you attack by the houes this
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morning of a commercial ship in the Red Sea so I don't think this is going to have any impact other than to escalate
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the conflict in the Middle East and put us on a path to war with Iran which is really where the neocons want to take us
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you've heard obviously the warmongers like Lindsey Graham are calling for that but even speaker Mike Johnson is talking
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about that I think that's where this is all headed is a larger war in the Middle
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East that features the US and Israel go to war with Iran I think we should all be very concerned about that actually
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but yeah I mean you have to be fair it's not just it's not just the US right it's
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now the US the UK Israel Qatar UAE and Saudi against the hotti rebels that's a big Alliance and you got to think that
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Iran will think very carefully about how close they want to get to the hooes in the middle of all of this because that's
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a that's a huge Armada if you will of countries that I don't think you really want to cross as a group well I think
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Saudi Arabia and UAE are are playing this very carefully I think they did not participate in the strikes they did
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allow the US to fly overhead or to use its territory but they released a statement calling for restraint and
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deescalation so I think they're very nervous about this blowing up into a wider Regional War I don't think they
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want that the Allies who participated in the the campaign of air strikes were UK
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Australia Canada Netherlands and Bahrain but I don't think they actually did anything I don't think they contributed
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any assets they just provided their names to this operation and provided some diplomatic cover freeberg any
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thoughts well sex you posted a comment on Twitter which I wanted to respond to where you said
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China has the largest chipping volume through the Red Sea and they're staying out of this conflict letting the US do
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do the dirty work but the houis didn't attack Chinese ships they specifically attacked Western ships isn't that
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correct I mean this is a very targeted disruptive event that the htis have been undertaking for some time now and
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they're using these very interesting tactics with drones that can be very destructive and very hard to block and
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doing it not at Chinese ships but at a very targeted enemy right well what the hoodies have said is that they're only
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attacking ships that are either Israeli or going to Israel but in reality they've attacked a much wider range than
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that it may be true that they haven't attacked ships that are declaring themselves to be Chinese ships or
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Russian ships however there are more Chinese shipping containers on all of the ships that are
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going through the Red Sea and the Suz Canal than any other country so there's no question that if we're talking about
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the disruption of global trade this is going to have a big impact on Chinese trade whe whether it's on Chinese ships
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or not or it could benefit them because they can get through that shipping Lane and the W their ships can get through
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but foreign ships European ships that have Chinese shipping containers on them are not getting through yeah so their
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trade is still getting disrupted never less they don't feel the need to engage in this militaristic response or
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participate so in terms of understanding implications of the escalation in this conflict let's just quickly talk about
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number one I'm assuming chipping prices are going to go up Freight prices are going to go up but hold on a second we
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talked about this with Ryan remember the question that I asked him this is really
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an issue for Europe it's not an issue for the United States because there are alternative routes you can go through
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the Pacific and you can go down through the bottom of of Africa right and all that does is ADD like a five or 10%
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increase so what we're really debating is what is the risk of inflation and a backup of goods and shipping rates into
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Europe yeah and this is why I don't understand why America needs to even get involved I understand why the
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Netherlands and the UK and France and all these folks need to send resources to unclog this that makes a lot of
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sense but I don't see why the US needs to be involved other than providing moral support or logistical support what
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what is the point wellam this is exactly my point is the number one type of trade
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that's going through the Red Sea are shipping containers from China going to European ports right and as a result of
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what the hoodies are doing it's having to go Around the Horn of Africa it's adding two or three weeks to the trip
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and it's raising the cost of a shipping container from China from say $1,500 to $3,000 it's Europe and China who are
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impacted the most but for some reason it's the US that decides it has to take the lead in doing this and the problem
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is that first of all the action is futile I mean the hoochi have been at War on and off with the Saudis for a
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decade and the saud's been backed by Western weapons and we have not been able to defeat the htis so this missile
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Strike last night is not going to deter them it's not going to stop them they're
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very determined very tough Fighters second they are going to be looking for retaliation they're going to be looking
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for blowback and CH to Chas to your point they're not goingon to be looking for retaliation against China or Europe
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they're going to be looking at it against the United States so we're incurring this cost and risk onto
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ourselves so let put this question to you then we have no obvious economic incentive to get
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involved because we can sustain our economy through different shipping ports that at best raise rates five or 10 per.
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right we can absorb that in the economy 100% which could drive inflation is a European problem so there's no economic
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incentive necessarily to get involved so what is the incentive it feels like not
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to play conspiracy theorists but like a Wag the Dog moment at another distraction to add to the
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plate what do you think about that line of thinking I tweeted something just like that this does feel it's a Wag the
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Dog in the sense that the Biden Administration was you want to explain the reference for folks that me movie
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called Wag the Dog that came out in the early 90s where the president is up for reelection and there's a horrible
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Scandal that's about to come out like a Monica Linsky type Scandal this is before Monica Lewinsky by the way but um
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really was sort of one of those movies that kind of predicted the future but in any event the President's trying to
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avoid this Monica Linsky type Scandal and so the political AIDS and advisers decide the way to do that is to start a
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war but they don't start a real war they basically manufacture a fake war on a sound stage and in a movie studio and
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it's pretty hilarious how they keep the whole thing going David Mammoth who's a brilliant brilliant writer wrote that
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script but this movie came out right around the time of the Linsky scandal with Clinton and so therefore it took on
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this larger political and cultural significance yeah it's been used so Wag the Dog is you know you basically start
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a war because of the political benefits as opposed to the real necessity of going to war and I think you can make
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that accusation here chth because I think that the bid Administration was looking impotent I mean they were
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basically telling the hoodis to stop they were pleading with them to stop interfering with international shipping
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the htis weren't listening by the way the reason why the hoodies are doing this is they're doing it in
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solidarity with the Palestinians in Gaza they've demanded that the Israeli invasion of Gaza stop and humanitarian
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Aid be let in and they're not going to stop interfering with global trade until that happens so that's the hooie
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position the bid Administration has been telling them to stop and I think that they were looking increasingly feckless
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and impotent and that's why they did this strike the problem the problem is that the strike's not going to have any
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impact and so so what what's the point well is it that or is it that I think if you take the Wag the Dog analogy to the
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Limit I think maybe a different interpretation I'm not saying that they did this but a different interpretation
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of that analogy would be that they are struggling domestically and I think jcal tweeted this but if you look at the
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polls and you look at Dean Phillips all of a sudden and you look at what's happening on the Republican side there's
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so much activity and momentum Frank for non Biden candidates all all across the board that that would be the most
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Wag the Dog explanation in my opinion which is like to distract folks from the domestic Mala by pointing someplace far
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away and saying we're doing something very righteous here let's all get on the same page and support us how does that
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logically make sense jamath if the US is against Wars and people are tired of Wars like what would be the this the
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only problem I have with the logic of the way dog theory is you America against Wars who's against Wars Jason
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the American people they've been very much against starting forign Wars we' talked about let's talk about the people
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that run the country no I know so but if you're saying they're doing it the logic
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here is Wag the Dog is to Curry favor Sak you said they're rallying this is to Rally the American people around like a
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patriotic cause but this isn't like a you know 9111 situation where Bush got a lot of credibility we saying hey we're
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going to go get these terrorists Americans don't want more Wars right now the polling is very specific on that so
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then I guess Sachs what is the the logic there to Wag the Dog if this is something American people don't want
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well I I think you're right Jason in the sense that the American people are exhausted by Wars especially Middle
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Eastern Wars we've just gotten out of two decades of endless forever wars in the Middle East and I don't think the
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majority of the American people want to get back in so I think you're right on that level
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and it's true that if you were to pull the American people and ask them are you in favor of getting in more Wars they
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would say no the problem is that with every war the mainstream media starts propagandizing for the wars and they'll
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basically demonize whoever it is that we're going to go to war with and explaining why they're a huge threat
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they'll engage in threat inflation and so the American people end up supporting it so we're against war in the abstract
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but in every particular case we end up supporting it that's what happened with Ukraine it's even happening right now if
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you look at polling for this hoodi conflict I think most Americans believe it's a good thing to strike the hoodies
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so yeah they're against it in the abstract but in each particular case the media is able to manufacture consent for
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the US involvement so just to challenge that yeah as well so now our theory is or your theory is the media plus the
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Biden Administration are in cahoots to Wag the Dog create this support of a war in order to distract from domestic
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issues in order to Curry favor with the American public that doesn't really want
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more Wars that's where I'm saying like I think Wag the Dog might have been something 20 years ago like you're
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saying that could work as a technique but I can't imagine anybody would want to do more military action at this point
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in time when the American public is exhausted from it well which what you said for the last months on this pod
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look I I I tweeted exactly that sentiment is that I don't think wagging the dog is going to work I think
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there'll be a short-term rally around the flag effect but I think that overall if this conflict is still going on in
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November is going to weaken Biden by making him look like a president who's lost control of events so I I agree with
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you that ultimately the perpetuation of this conflict is not ultimately in Biden's interest
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now nonetheless it may factor into their political calculation that in the short
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term they think this makes them look good that would seem super incompetent as like a a political strategy to me but
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I'm political I mean despite the fact that this Administration claimed to be the the foreign policy grown-ups they
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haven't shown a lot of competence they couldn't even find Lloyd Austin who's the Secretary of Defense for five days I
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me no one knew where he was just not what happened but no he checked into the hospital for a procedure and no one
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could find them for several days and there was an article I think on CNN talking about how he was managing this
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hoochie strike from his hospital bed yeah that was weird I hope I hope the man's okay I don't want you know
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he's got he's got prostate cancer I know I it's that's sad he had a UTI he had a
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UTI that's why he was in the hospital but fair enough but no one in the white house the White House couldn't find him
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for a couple of days is that true they couldn't find him yes I mean having a UTI is a very benign well he had he had
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a prostectomy and then he got discharged from the hospital and somewhere along the way he got a UTI which was severe
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apparently went back to Walter read and yeah in those three or four days the handoff of power to
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his Deputy happened she was on vacation on a beach somewhere and you're right the and
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the problem was that the other person the chief of staff had the flu so they couldn't escalate to the white so it was
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like a comedy of errors but I I don't think it was anything but anyways I mean imagine if you were like a a sea level
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executive at a company and you're going to be out of the office for a few days and unreachable you would set up a clear
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chain of command you'd have a deputy who the CEO could get a hold of if if necessary in this case you've got the
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Secretary of Defense who if the United States was attacked in some way is part of the chain of command the president
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would need that person in the situation room so the fact that they couldn't find
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him for a couple of days is really I think unforgivable how does that even happen is that really true that they
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couldn't find him like they literally for a couple of days this was widely reported they but they couldn't call him
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on his cell phone or his chief of staff or the nobody knew where he was H wow yeah okay all right very good haven't
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kept up on on on the details of his UTI and his cancer I hope he's okay so uh segueing into markets the likelihood of
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a q one rake cut is not looking good we had a slightly hotter than expected December CPI interest rates hit a
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22-year high in July as everybody knows when the FED raised the range from 5.25 to 5.5 but they've left rates unchanged
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if you haven't been following it uh as inflation has cooled but in December the CPI rose 3.4% from a year earlier that
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was just a slight tick above and of course markets are wondering is this going to going to be a Glide path
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into a soft Landing or could it be choppy going forward freeberg higher for longer interest rates you think that's
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still going to be the case and what are your thoughts going into the new year Well Larry Summers put out a note saying
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that he thinks that the rates are going to stay higher than the market is predicting based on the yield curve
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right now so I think the Market's currently saying no Cuts in March and high probability of cuts
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in June but some folks Like Larry are saying might be longer because inflation is very sticky and if you look at the
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breakdown on the drivers of inflation you start to think about what's the underlying business activity that's
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going on like car insurance went up by 20% Which was one of the key drivers and car insurance has always been this
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lagging indicator but it does ultimately Drive costs up later the reason car insurance rates go up is because the
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cost to repair a car goes up and the cost for medical care goes up when that happens the insurance companies actually
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have to file with State Regulators to get approval to raise their rates and it can take over a year for The Regulators
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to then approve those raising of rates so by the time the rates get raised the other factors have maybe leveled out but
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you're still going to have some elements of uh costs they're going to continue to
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climb for some period of time after you get the core engine tuned down so these are the sorts of things that I think
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we're seeing in the the current CPI data is that there are some of these lagging
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effects of an overheated economy or over stimulated economy that are now starting
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to play through and so there's a number of these it's not just car insurance but
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there's a lot of things that are going to linger for a while and they're going to be very hard to work their way
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through the system very quickly and as a result it may be the case that rates are
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going to need to stay higher for longer I think the thing with inflation that is
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worth noting is that a couple of things are true at the same time which I think is
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interesting I think we were the ones in May of 21 that started getting very ansy
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around inflation and we started to look at the five and 10 year break evens do you guys remember that we would like
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look at that chart a lot and I think it was very predictive we also used to look at the
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future oil curve you know not that we're macroeconomists but I think it's it's useful if average everyday people can
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have a few things to look at if you look at those things today it tells you the same picture
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which is inflation has cooled we're going through the last kind of like throws of some of the random variables
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still being a little sticky but the broad trend is down I think it's indisputable at the same time even with
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the configurations in the Middle East if you look at what people think about the
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future price of oil it's also down oil Futures are I think about 5 to 10% future prices are about 5 to 10%
00:20:10
lower than spot right now for whatever that's worth but the third thing which I think is important is we've now started
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to see folks come back from the new year and start to affect some pretty big layoffs and they're across Industries
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right City bank today just announced 20,000 layoffs that's a huge amount of people that are going to lose their jobs
00:20:31
so what does all of this mean it's that I think that people expect that as inflation contracts the money supply
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will expand but demand has yet to reset properly so that's the last thing and I think freeberg mentioned this a bunch
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consumer spending has always been crazy people living on credit all of this stuff that is now finally I think the
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last thing that has to get sorted out so in the absence of demand back to the way
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you started Jason companies will cut expenses in order to maintain profitability because they don't really
00:21:03
want to cut prices unless their product really sucks yeah and just to note that City group as you mentioned 20,000 cuts
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by 2026 Google also laid off hundreds of people Amazon hundreds of people Discord
00:21:16
laid off 17% and there's a viral video going around of a woman laid off by Cloud flare you know who was only on the
00:21:23
team for like six months or something or five months and it does seem like yeah firing people before the holidays laying
00:21:31
them off is considered yeah you don't do it in the fourth quarter so maybe there
00:21:34
was some some uh backed up layoffs that people decided to do into this year but it certainly feels like sacks people are
00:21:43
and you said this I think in the predictions episode or the recap episode hey you know maybe it's still going to
00:21:48
be a little bit of turbulence and the soft Landing isn't guaranteed maybe you could expand on that yeah my prediction
00:21:54
for the year was bumpy Landing I thought soft land in was a little too optimistic
00:21:59
and I also thought that this big stock market rally that we had in November December was too much too soon the
00:22:05
market starting in November started pricing in about 1 and a half% of rate Cuts this year believing that the
00:22:11
inflation problem had been licked and now what we're seeing is first of all you had a slightly hotter than expected
00:22:16
inflation report and now we have this escalating situation in Yemen where this war in the Middle East might
00:22:26
expand and just so you understand I mean the hotis have already said that if the
00:22:31
United States attacks them and uses Saudi or UAE airspace to do it that they will consider themselves at war with
00:22:38
Saudi Arabia and UAE and that they will try to do things like light the Saudi oil fields on fire I don't think they
00:22:44
have the capability to do that necessarily but it's an indication that things are very volatile another thing I
00:22:50
think we're likely to see in the Middle East is continued attacks on US military
00:22:55
bases in Iraq and Syria so that whole region is a powder keg and if it develops into a wider Regional War then
00:23:04
I think you can see an oil shock and if there's an oil shock I think you can kiss rate Cuts goodbye because that's
00:23:09
going to percolate through the whole economy and have a big impact on inflation so I just think that there's a
00:23:17
lot of downside to these very optimistic projections that we're going to get these huge rate cuts it might happen but
00:23:26
but I just see a lot of risk yeah freeberg you think these oil shocks are here for the long term or a possibility
00:23:32
you've been talking a lot about Alternative Energy nuclear obviously uh so is is and the US has
00:23:42
become a net exporter of oil so do you think this risk of oil disruption from the Middle East is with us for the long
00:23:50
term or do you think that's waning now there's definitely structural risk because you have a supply chain that can
00:24:01
get disrupted in a number of ways and limited alternative options if you look at the chart I just shared it's the US
00:24:10
strategic petroleum Reserve so we have about 350 million barrels in the uh strategic petroleum Reserve today that's
00:24:18
down from call it early 21 when we were at 650 million barrels and you know it was
00:24:26
pretty much at that level for decades after the buildup leading up to 1990 we haven't been at a level this low in the
00:24:34
Strategic petroleum Reserve since 1983 and so there's not a lot of levers for the government to intervene
00:24:44
uh to support the supply as there may have been in the last couple of years in the case of some Supply shock because of
00:24:51
a conflict that arises in a major oil producing region it's a really interesting chart isn't it because that
00:24:57
was after the oil crisis of the 70s and you look at how long it took to build it
00:25:01
up and how large we built it it's a really fast I've never seen that chart before but if you look at the you know I
00:25:07
don't know if you guys remember the oil lines did you have them in Canada chath where and I remember in Brooklyn you had
00:25:13
an even number odd number license plate thing if you wanted to get gas you know some days was the even number some days
00:25:19
was the odd number I remember my parents getting online for gas and waiting for two hours or three hours to get gas yeah
00:25:24
by the way I'll say this is not a real cost today that we're experiencing but as Sak is pointing out there's a number
00:25:30
of ways that this can become a real cost I was in Austin this week and the thing
00:25:35
that shocked me the most was how cheap gas was the gas station you can get gas for like two bucks and 25 cents a gallon
00:25:42
it's pretty awesome it's like $6 when you're in leak Lake to yeah just so everyone understands how the spr got
00:25:48
depleted last year when inflation was the top story you know on the front page of every newspaper and gas prices were
00:25:56
hitting what $7 or 8 the administration started releasing crude from the spr to try and bring the
00:26:04
price down and they did that for about a year and they were basically subsidizing
00:26:08
the price of oil now that's why our stock p is low and that was a really great political strategy but if we end
00:26:15
up in a real crisis we're going to have less dry powder to deal with it so you know we could have a perfect storm of
00:26:22
things coming together here where at precisely the time we end up getting involved in a big war in the Middle East
00:26:30
are tools to mitigate the oil shock that would create have been reduced by what the administration's done over the past
00:26:38
year now I don't know that that's going to happen I mean I still think we're several steps away from a regional War
00:26:44
but you look at how many fronts now we have conflict in the Middle East there's about five different fronts where
00:26:51
there's conflict you've obviously got Israel's war in Gaza you've got Hezbollah in the north basically firing
00:26:59
Rockets you've got us bases in Syria and Iraq coming under attack and now we have
00:27:06
the US striking Yemen so there's just so many ways that this could spiral out of
00:27:11
control isn't the spr designed so that when we have an economic crisis like this to use it like I mean it's yeah
00:27:17
you're the the Biden Administration just allowed to dip in by the way you have to
00:27:20
give credit to the Biden Administration in one in one form it's not necessarily skilled per se but when you look at the
00:27:28
spr depletion they were selling at incredible moments in the market and the energy Department I actually I think
00:27:36
they they just announced that they're buying another you know4 or eight billion dollars U to replenish the spr
00:27:43
so they'll be doing that now but they were selling if you look at these price points here they were selling when
00:27:48
prices were 80 and 90 a barrel and now they're buying it back at 70 so at least the United States can take some solace
00:27:56
in the fact that we arbed out a few billion dollars for treasury I wonder how the spr relates to consumption you
00:28:03
know we see this chart but it's in the number of barrels right 350 million barrels or something like that is that
00:28:09
what the chart says and then it peaked at 600 or 700,000 I wonder what it needs to be chth or freeberg on a as a
00:28:16
percentage of our consumption as more EVS hit the market right and as the number of miles per gallon goes up so I
00:28:24
couldn't find a chart for that I tried to find if anybody in the audience knows the spr in relation to consumption that
00:28:29
would be a very important chart no I think they're pretty independent Jason how so like we just Build It Up
00:28:36
independent of what we need no the the Strategic petroleum Reserve is is essentially that it's it's not meant to
00:28:42
be something that's that's meant to bookend usage you know if in a highly functioning Market there's theoretically
00:28:51
an infinite amount of oil that's available and so if there's more consumption you'll be able to find more
00:28:56
oil you'll just have to pay a different price for it this is meant to be used in
00:29:01
very different kinds of situations this interesting yeah right like when there's
00:29:04
a disruption when when there's an acute disruption it's supposed to be break last in case of emergency exactly yeah
00:29:10
but how many days is supposed to last is what I'm sort of getting at like that's
00:29:13
what I wonder because over time are we consuming more oil now as a country or are we consuming less I would think
00:29:19
consuming more but but the thing you have to keep in mind is that even in an acute shock what you can't just look at
00:29:25
the spr because we have now domestic oil capability right and a lot of that developed under two presidents Obama and
00:29:32
Trump and both of them deserve a lot of credit because we have a capability now to be self-sufficient and we are a
00:29:41
net exporter because of the work that happened during that time yeah knas oh my gosh did you guys see all of this
00:29:48
michiga with Carta this week crazy huh absolutely uh actually it's on the docket so those of you who don't know
00:29:55
Carta is Capt software if you don't know what the cap and cap table is uh which many of you might not stands for
00:30:01
capitalization what is it it's a Google or an Excel sheet that says who owns the
00:30:06
number of shares in a company this gets very complex in private companies and they've made quite a business out of it
00:30:11
wait wait wait can I pause you there there there was a lot of comments that said exactly that it gets very
00:30:15
complicated I apologize I've I've owned equity in companies for 20 years what the hell is exactly complicated well I
00:30:24
don't understand that statement I'm not I'm not directing it at you Jason I can tell you yeah because I I feel like that
00:30:30
is like some BS statement yeah it's not the thing is you as acting as a price round individual in a lot of these cases
00:30:38
it was very simple to do a priced round but when you inserted safes into this you know a simple agreement for future
00:30:46
Equity that y combinator created and you put Capital uh um convertible notes into
00:30:52
this Founders started doing like dozens of these shth and at the early stages the cleanup work and understanding how
00:30:59
many shares people owned especially with no but jcal what I'm saying is what like
00:31:04
okay tell let me stop let me ask a different way yeah sure we did this with spreadsheets let me answer your question
00:31:10
okay so in a private company let's say a company issues options to an employee and they don't have a good record of
00:31:16
that the employee executes the options they now believe that they own shares unlike in a public company where there's
00:31:23
a broker of record every share is registered in a public company you know who owns the shares you know what broker
00:31:29
is holding those shares and every share is traded through a public exchange so there's a record of every transaction
00:31:34
that takes place with every share in a public company in a private company there's no independent legal regulator
00:31:42
that tracks all the shares so you could issue options to an employee and forget that you did that put the document in a
00:31:49
in a drawer and the employee shows up five years later and they're like wait or I've experienced this I've had
00:31:54
advisor show up be like look here's my advisory agreement I was given options I'm asking a different question you're
00:32:00
you're saying something great I get that I'll tell you what I think the killer feature was is that complicated to
00:32:06
implement in software I don't understand tell I I I think the killer feature for
00:32:09
Carta it was called eshares back then was getting the shareholder to sign for their stock certificates so to freeberg
00:32:16
point in the old world where it was all done by email and a spreadsheet they would literally have to send you a paper
00:32:22
stock certificate you put in a file cap if you lost it you have to sign a document say with with a lawyer say oh I
00:32:27
lost my my certificate I promise you I lost it all that of stff I think the killer feature was digitizing the stock
00:32:34
certificates and then you would sign for them using like a e signature you know on Carta and they would just keep it for
00:32:42
you I get it I'm not saying that is I'm I'm not debating the value guys you're saying why is the software complicated
00:32:47
yeah why is the software complic this is not complicated nothing you guys have said complicated but but what happened
00:32:52
was cuz I remember when like the market tipped right is I got one email from a company that was using eshares back then
00:33:00
and I would just do the digital signature and I started getting a few more and a few more pretty soon there
00:33:06
was a network effect like I don't want to have to wonder where my digital stock certificates are I just know that
00:33:13
they're all at Carta that's very convenient for me as an investor I think it's very convenient for the company to
00:33:18
be able to manage all the stuff digitally so look I mean DocuSign is not a complicated technology either and that
00:33:24
is what a multi-billion dollar company because there's a very strong Network effect you don't want to have to have
00:33:29
all of your signatures at a whole bunch of different companies so I think that's how it kind
00:33:33
of got off to the races and then since then they've been able to add more workflows they've been able to add fund
00:33:39
management they've been able to add a number of things to make it stickier and more feature Rich and it's not that
00:33:46
expensive it's like 10 grand a year or something like that it's kind of getting very expensive for startups we're
00:33:52
talking 10 grand a year is is expensive I mean for a seed stage shup it's a lot and then we invested in a company called
00:33:58
cake Equity that's doing it for like $1,000 a year to chat's point you tweeted Why Can't This be $1,000 a year
00:34:04
go to cake Equity you'll see well can we can we just go to my tweet like I was confused by all of this stuff we haven't
00:34:10
even got other story yet oh just sorry Jason go yeah yeah sorry so anyway what you're hearing is this software is very
00:34:16
integrated into startup culture we all have a lot of opinions on it because the cap table is where all the value is
00:34:24
recorded the cap tables have gotten much more complicated but this is not like building the Tik Tok algorithm or chat
00:34:30
GPT to be clear to chamat point this is not really hard software to build so correct on that and saxs correct to your
00:34:38
point it's super convenient if everybody uses the same platform and for a series
00:34:42
a VC company spending 10 $20,000 a year on this is not that big of a deal uh although there are cheaper options VCS
00:34:49
and investors use it too to track their portfolios absolutely and so it grew from one to the other just to be clear
00:34:55
so I mean first companies started using it for their cap tables then they got into the fund management business so if
00:35:00
you were a fund you were receiving all of your stock certificates then you started using to communicate with your
00:35:05
LPS so we've started doing that and it's very convenient for that so it's a real
00:35:09
it's more of a network effect business than a hard software business I think it'sa
00:35:14
point this business has benefited from the network effect so they had such strong Network effects here's the
00:35:21
brewhaha the Donnie Brook that came up uh this past week Donnie Brook so you can look it
00:35:28
up I like that word yeah so the company I bet you knew a lot of Donnie's in Brooklyn we we I
00:35:37
was involved in a couple of Don Brooks if I'm being honest and they they they escalated from bruhaha typically not
00:35:44
unlike an average episode of this podcast and so there are probably some Donnie Brooks involving guys named
00:35:49
Donnie that yeah Donnie was typically the guy start this episode is going to be named the Donnie Brook episode please
00:35:55
so uh the company had a massive violation of trust as they were expanding to figure out other
00:36:02
businesses to come into they got into What's called the secondary market for those of you who don't know what the
00:36:07
secondary Market is people like to trade stocks of private companies you may have
00:36:11
heard people buying and selling stripe or SpaceX and so employees early investors might sell their shares to
00:36:18
other people now this is not happening as a primary offering from the company where they raise money and and issue new
00:36:23
shares this is people who have shares carda was in a great position to do this because they had the cap table now on
00:36:29
your cap table might be a 100 investors 30 of them might be your friends family very quiet you know it could be Jeff
00:36:36
Bezos who was a seed investor in Google some folks at Carta who were in the secondary business violated the
00:36:45
trust and the privacy of companies who had Angel Investors or early stage investors on their cap table and started
00:36:51
contacting them directly saying hey do you want to sell your shares in company a to this person we're trying to create
00:36:57
a market for it they got called out publicly the CEO Henry Ward who is a unique individual as uh as many CEOs are
00:37:09
tried to do some coms it was a disaster of comms for a couple of days while they
00:37:13
tried to explain basically breaking their own terms of service and it all ended up with them selling the secondary
00:37:21
business which I understand was a tiny business for them overall your thoughts gentlemen I don't know if anybody why
00:37:27
you say he was an interesting individual you mean um he communicates directly uhhuh in a very
00:37:35
effervescent candid way okay like some Founders do effervescent wow that's a nice nice effervescent I me I'm just TR
00:37:44
saying's he's sparkling I think he is bad at PR but entertaining to listen to right like I
00:37:52
think maybe they should have had a little bit of a slightly more thoughtful approach to this but it all happened in
00:37:57
real time so it's very difficult to deal with the crisis in real time I think I have two comments go the the first is I
00:38:04
actually disagree with David Sachs I I think that there's literally no concept of network effects in this business and
00:38:10
it makes no sense here and the reason is that when you look at the public markets which are
00:38:15
infinitely larger we have a vibrant public stock market that has no concept of this and
00:38:20
it works where you have companies like computer shares you have companies like ssnc
00:38:27
there's just a a plethora of providers that do fund Administration and frankly I'm glad that there's a plethora of
00:38:33
providers I use some of them and I trade one against the other to get a constantly cheaper price we
00:38:40
use the distribution agents and depending on which bank I'm working with on whatever deal I have shares at
00:38:47
multiple different agents and they also cost virtually nothing and I don't see a
00:38:53
world where that deflationary cost reduction doesn't come to this Market either because I don't see this as a as
00:39:00
a defensible area of software I think it's a necessary piece of software so I kind of like randomly tweeted out just
00:39:08
kind of like oh because I was just watching from the sidelines now in full disclosure I was a CA investor I sold
00:39:14
all my equity in a secondary transaction actually speaking of secondary transactions was that a good trade yeah
00:39:19
I sold yeah I sold it all two and a half years ago so I I have no opinion one way
00:39:24
or the other on this company I understand process automation but I don't think process automation is
00:39:30
defensible so if you build software around process automation you will be competing in a race to the bottom on
00:39:37
price that is and I have not seen a single example of a company that's proven this otherwise there are
00:39:42
different companies that create real locking because of what they build that isn't one so I tweeted this out some
00:39:49
person sent me this and Jason to your point the two most prevalent competitors that they showed me were mantle and
00:39:57
I think one is a YC company and and one is not but mantel and pulley I think were the two that that came up the most
00:40:03
often and Jason to your point what they both told me was carda is like 10K a year 12K a year and these guys are 90%
00:40:11
discounted de a tenth of the price which again proves there is not a lot of super
00:40:17
compelling software lock in here it's useful stuff but that useful stuff is eventually going to get as close to free
00:40:24
as possible these guys are proving and then last night while we were at poker I got this thing somebody in two days oh
00:40:32
built an open source competitor and just put the code out there and said here you
00:40:36
go take it isn't that incredible exactly guys that happened that happened in two
00:40:42
days from that tweet right and by the way I don't know if I got how crazy is that if I got a stock certificate from
00:40:50
what's the name of this thing open source clone byby carta.com I'd like grow gr I'd be like oh here we
00:40:58
go I've got to like bu first of all that's totally myir in like five different sites and this thing's
00:41:03
probably going to go out of business in six months come on that's not true and you know it you know it you don't know
00:41:07
where the CTS are I can actually there be seriously annoying T to deal I can actually tell you what's happening in
00:41:13
the market with startups startups are looking at the Alternatives they want to save money the bigger companies are
00:41:19
probably not as price sensitive chamat so you know spending $20,000 as a Serius B company nobody cares but for the start
00:41:26
s they tend to find the most efficient software and you're exactly right shth on that yeah my comment is less about
00:41:35
Carta itself and its price point my observation is twofold one is software that doesn't have a fundamental lock in
00:41:44
yeah does not have pricing Power number one and number two we are almost at the Tipping Point of a set of tools that
00:41:53
will allow competitors in a matter of days to compete with an 80% feature complete solution at a fraction of the
00:41:59
price that's my that's my generalized observation as manifested in this CA example in less than a week well what do
00:42:06
you do with some observation like this if you have this 80% observation is there anything so then I was like well
00:42:10
you know what I'm just G to go for it so iing it up for you here so I I'm starting this thing and I've been
00:42:17
working on this idea for a little bit but and I've been experimenting with it with some of my companies but then I was
00:42:22
like you know what we should just do this so the concept here is we're going to build this incubator it's called 8090
00:42:28
I have a team I have a bunch of developers offshore and we are going to basically create a hit list of
00:42:37
software that we think is relatively straightforward and mispriced and could be built much more efficiently in 2024
00:42:45
using all of these co-pilots and tools and our our boundary conditions will be can we deliver 80% of the functionality
00:42:53
at 10% of the price so at a 90% discount H so 8090 is like is what is what the name of the incubator is and what was
00:43:02
interesting is when I tweeted this out we had 1,200 people essentially give us a product road map they told us the
00:43:09
software that they would want they told us the features that they need they told
00:43:12
us the things that they don't need and so the idea here Jason I think is I'm just going to build this in the in the
00:43:17
wild I'll create the list of companies we'll publish that out let people vote on it okay then we'll publish the prds
00:43:24
of what the 80% version is and we're going to work backwards with my team in South Asia to try to build these
00:43:33
things at a temp price point so SX your thoughts you're a SAS investor it's h your vertical your thoughts on chat's
00:43:40
plan to be the most hated person in Silicon Valley by underpricing every piece of SAS offer by 90% in real time
00:43:50
well can he do it in your estimation well I think there probably are categories where you could do that but
00:43:56
but in general what I would say is that it always looks easier from the outside than from the inside meaning that you
00:44:05
look at any particular SAS category leader and you're like this is easy like I could do this and then when you
00:44:11
actually get into it you realize that okay the product I'm seeing is kind of an iceberg I'm just seeing the tip of
00:44:17
the iceberg below the waterline is all the business logic that's been written into the system there's like a much
00:44:22
deeper and longer list of features not in every category you might be right that in some categories you don't need
00:44:28
the product depth but in many other categories there's just a lot of subtle features usability issues that have been
00:44:34
figured out Integrations you know with other ongoing support ongoing support train and then you have the whole sales
00:44:41
and marketing component to it so what ends up happening is you attack a category saying oh this is going to be
00:44:47
easy you know a year or two into it you're like wow like the category leader we're not even close to where it is in
00:44:55
terms of table Stakes here and it ends up being more of a slog than you thought and then you find out the market doesn't
00:45:00
necessarily have as much of an incentive to switch I'm not saying it can't be done there are categories where I think
00:45:07
the category leaders has become stagnant and has stopped innovating and I think those are ripe for disruption I mean
00:45:14
look I'm kind of trying it in a way we're going to be launching my S killer soon I feel a lot better about that
00:45:20
because slack out acquir doesn't hasn't really innovated in a few years and Salesforce by the way just announced
00:45:26
zero hiring in 2024 and the slack teams were like what how are we supposed to hit our road map without more people
00:45:32
like what's going on here so there is there is so look I definitely think it can be done but I don't know I think you
00:45:38
got to choose carefully the categories where the iceberg isn't bigger than you think basically I want do you think that
00:45:46
there's a shift in the business model for SAS companies that emerges from what jamat is talking about where I think
00:45:52
right now sales and marketing cost as a percent of Revenue on average average for a scaling enterprise software
00:45:58
company around 55% of Revenue or something in that range does that number get compressed by bringing price down so
00:46:05
you bring price down but you need fewer people to go in and do the selling fewer
00:46:11
F Mar that has not been the pattern I mean look everyone was saying things like this when enterprise software
00:46:16
shifted from on-prem to the cloud you know we went from Oracle and seol to salesforce.com people would say oh this
00:46:23
going to Fally change the business sales won't become that important products going to be all important it was true to
00:46:29
some degree I mean I do think you tried to do it that was your what you pioneered at yeah you you try to do
00:46:35
bottom up yeah so there was product Le growth became a thing you know and a very important thing and I still think
00:46:41
that's the best way to build a SAS company is you let the users just try it on a premium basis as opposed to having
00:46:46
sales knock on the cio's door let the employees pull the product into the company then go close the deal so it did
00:46:54
make important changes but it did not get rid of sales I mean you know what I believed doing this stuff way back in
00:47:00
2008 is to be able to get rid of sales and just make Enterprise Products completely self-distributing that never
00:47:06
happened people have been predicting the the death of sales for a long time and it's never happened I think your vision
00:47:12
is absolutely right and I think this in a world of autog gpts it's going to happen and I think the way that it's
00:47:18
roughly going to happen is as follows I think what happens is that and Zoho is is another good example of how you can
00:47:24
do this which is what you need are a small set of tools that provide useful capability for a company that work
00:47:31
elegantly together now when you work elegantly together there's a bunch of things that you need you need security
00:47:36
you need hand offs and handshakes you need different ways of handling exceptions you need a a common kind of
00:47:43
data model all of those things can actually be configured on the Fly dynamically by and between two sets of
00:47:50
software if you let the AI actually run and auto configure itself and so I think
00:47:55
the experimentation is as follows you have product a and product B you want to adopt them both they have elements of an
00:48:02
agent that can go and autoconfigure themselves to each other separately I think what the CFO or the CEO does is
00:48:10
allocate a budget and that budget is an agent and what that agent does is works with these other agents to say okay
00:48:17
great I can spend money on these features that is the thing we've not explored we've always taken software
00:48:23
that we build and all of a sudden pause Automation and hand it over to people to
00:48:29
run it through a relatively archaic go to market process and I think what's worth trying to figure out in 2024 and
00:48:36
Beyond is how to use these tools to automate all of the low-level negotiation that happens before you can
00:48:42
adopt software I just think it's totally unnecessary and I think that this is where software can do a very powerful
00:48:50
job on behalf of the salesperson does it mean the salesperson is totally out of the loop no but I do think that if these
00:48:57
tools are lightweight enough especially the young Nimble companies will actually
00:49:02
Sayre my procurement person is actually an AI agent with a budget and it's the products that then figure out how to
00:49:09
negotiate for the share of that budget and then configure how to work amongst itself that is the key Innovation that I
00:49:16
think someone will figure out that is the Zoho 2.0 right that is the Salesforce 2.0 it's sort of this app App
00:49:24
Store common data bus kind of an idea that that I think somebody will build I would like to try to help well people
00:49:31
have started building a chth because you're starting to see the features overlap in many programs you're seeing
00:49:36
HubSpot Salesforce zenes they all kind of getting into each other's businesses those those are that's a great
00:49:42
observation but those are all closed products what I mean is like there is like a totally open protocol and set of
00:49:50
standards for how product a integrates and interacts with product B on many levels
00:49:56
right from security to data model and everything in and I think that that is what needs to get figured out and be
00:50:02
very much an open source idea the great part about this is this is going to be massive competition it will lower prices
00:50:08
it'll add features and uh the the the team over at 37 signals is doing something similar if you look at
00:50:14
once.com they are also going to go after slack Sachs and they're going to just charge one time for the software I think
00:50:21
I may have mentioned it on a previous one but their concept yeah just yeah can we can we take a moment
00:50:27
actually Nick can you throw up my tweet can you take a moment to just say thank you to steuart Butterfield and what he
00:50:34
pulled off thank you as a series a investor I thank you sir yeah 27 times ARR is looking like a pretty
00:50:43
great exit multiple oh there's my reply oh yeah look at my reply yeah I mean my gosh what a deal and at the time it was
00:50:53
they were public and people were wondering like hm was this a good deal or not should they have stayed
00:50:58
independent but the product velocity never seemed to get going how are you thinking about what the critical go
00:51:07
to market MVP capability is for slack so this here's what I'm curious about there's chat right but the problem with
00:51:18
chat in my opinion is that slack has become totally overrun where you could be a five person company and all of a
00:51:23
sudden you have 500 channels so there's no scarcity and that scarcity is in my opinion what makes what makes all
00:51:30
corporate chats in this modern version teams included totally unusable so much noise and distraction so how are you
00:51:38
thinking about that product problem yeah I totally agree with that what you hear
00:51:42
from every single company that has more than I don't know 50 employees is that slack doesn't scale because what happens
00:51:50
is you have a channel get created and there's a whole bunch of conversations in there that are kind of munged
00:51:56
together and if anybody in the company wants to participate in any one of those conversations they have to join that
00:52:01
entire Channel and as a result every single employee ends up in every single Channel and it's just a giant mess and
00:52:07
there's way too much noise so I think that the channel model was beautiful in terms of letting people get started
00:52:14
really easily you just jump into a channel and start posting that's why it took off but it's not particular enough
00:52:20
in terms of of addressing conversations to the right people so that's basically one of the problems that we're fixing
00:52:28
the other thing I've heard from people is that we love chat but we also really like the feed that Yammer had as a way
00:52:35
to quickly scroll through new stuff top level corporate feed people forget that there was like this hey if you want to
00:52:41
get pulse of the entire organization go to this one corporate Fe we were the first ones to figure out that like a
00:52:46
feed should be used inside of an Enterprise not just in a consumer social network so in any event I i' say those
00:52:53
are like two of the main Concepts is combining feed and chat in a way that actually makes sense and solving the
00:52:59
noise the signal noise problem do you have a name for it yet yeah it's gonna be called glue oh I love that can I
00:53:06
remind you can I can I remind you that as a as a humble investor sir I I I think I was part of Yammer and slack so
00:53:15
iocation I can add value you're in you're in there's just one requirement for the early investors is you guys
00:53:22
actually have to use it you got to do a rip and replace on your slack and what sure sure if you're willing to do that
00:53:27
you're in perfect I'm in I'll take 250 500k yeah lock me in first place I'll take yeah I mean so I think
00:53:34
what we're going to do is before launch we'll do like a seed round nice right now it's all been incubated by Craft so
00:53:40
we'll do a seed round milon six million post six post I'll put 50 in at six pre 56 post that cheap but it won't be
00:53:52
it won't be a super expensive round because what we want to do is incentivize you know influencers to like
00:53:58
sport the product switch to the product so it really is going to be do you have glue.com uh we have glue. a oh wow nice
00:54:08
I was gonna get 8090 a but then I didn't like it you know what I got instead tell
00:54:12
me if you like this 8090 in so it's just 8090 Inc yeah it's fine it doesn't matter everybody searches I mean
00:54:20
eventually you fake it till you make it if the 8090 domain happens you get it you put get orgo 89.com so do that
00:54:28
before the show gets published what is it get or go like if people have an app get 890 get 890 or go 890 so you know if
00:54:36
it's a service you say go 8090 and if it's whatever you say get if it's an app or something right like you're just
00:54:41
gonna go get it here at this domain name it's justas remember I also got VC sasco
00:54:46
boom.com oh excellent well I have wet your people don't remember it's for a call back I have wyou be.com I think it
00:54:53
just goes to wyou be. just goes to our website so that I mean that was the basic
00:54:59
Scandal Sachs they let the sales team doing secondary apparently or somebody broke a rule they weren't exactly clear
00:55:07
with it it sounded to me like you know they didn't want to throw anybody under the bus
00:55:13
exactly but how big of a violation is it to let people go sell into the cap table
00:55:20
secondary shares without the CEO or your customer even knowing that you access that data where would you put that on a
00:55:26
violation of trust scale I think it was a huge issue for them because the only reason STS give their data to Carta is
00:55:33
because they trust them to keep it private yes and I think a big part of the problem with the Carta vision of
00:55:39
creating the secondary Marketplace is that Founders don't want it fundamentally that's the problem I mean
00:55:44
Carta is in the perfect position to rationalize and make liquid the secondary Market the vision was correct
00:55:52
in that sense and the reason for that is is because carda not only has the cap table and they know who all the
00:55:58
investors are they also have all the documents they got all of your corporate documents the buy laws all that kind of
00:56:03
stuff they can very easily execute these transactions so CA was in a great position to replace all these secondary
00:56:10
brokers who are running around creating books on their own the problem they have
00:56:15
is that at the end of the day Founders don't really want secondary markets to take place in their company shares and I
00:56:23
think there's a few reasons for that one is is price Discovery I think a lot of these startups now if their shares were
00:56:29
to be freely traded would be trading below bad timing below the last rounds Mark so they don't want it second the
00:56:38
founders don't necessarily want their investors getting out and then getting new investors on the cap table that they
00:56:43
don't know so Founders are somewhat particular about who their shareholders are it's different than public companies
00:56:49
in that way I mean Apple doesn't really care who it shareholders are private companies do care do you think that
00:56:54
that's sustainable in a world where companies take 14 or 15 years and they're trying to retain
00:56:59
Talent well I think it would be better for everybody if there was more organized liquidity I mean one of the
00:57:05
things I love that SpaceX has done perfect is that for the last number of years now they've had a tender offer
00:57:12
every year and not even every year like almost every quarter right it's every six months I think was what my
00:57:16
understanding of it is but yeah I mean it would be think about that example so with SpaceX it's been up and to the
00:57:22
right on a pretty consistent basis so every tender round has been a bump sometimes it's been a small bump
00:57:28
sometimes it's been a larger bump the company I don't think has gotten greedy so they haven't tried to shoot the moon
00:57:35
and raise the valuation too much so they've been able to keep a very organized process and they they've had
00:57:39
this attitude from the beginning of letting their employees and investors get liquidity when they need to so it's
00:57:45
been great but that's very different by the way that that sort of organized tender process is very different than
00:57:51
the secondary Market that cardo is organizing right because Carta was trying to do what all these secondary
00:57:57
Brokers are doing which is they hit up people one at a time and just say are you looking to buy or sell and they're
00:58:02
trying to organize secondary transactions that are not part of an official process and I think that's a
00:58:09
huge part of the problem here freeberg did you have thoughts on it yeah well I mean there's an element
00:58:14
of secondary transactions in private companies that are unstructured generally being a problem the issue with
00:58:21
cardo was was there a violation of trust with respect to the transparency to the
00:58:25
cap table that they have access to because they have all the data in their systems and when I was at Google in 04
00:58:32
or so Sergey was kind of throwing around the idea why don't we start a hedge fund
00:58:40
because we have all this data about what people are searching for and we can see
00:58:43
all of this consumer behavior and we could trade on that and have a huge data advantage in the market place and
00:58:51
ultimately whether or not there was an impro iety of the use of data and even if we excluded personal data and search
00:58:58
data just using internet based traffic and internet data the perception of the problem would have damaged Google's
00:59:04
brand so much first of all is there an actual conflict where you're taking people's what they consider to be
00:59:09
private data and using that to make money from their data without their permission or acknowledgement or
00:59:15
explicit consent and secondly even if you are doing this in a way that doesn't use their data because you just
00:59:21
generally have knowledge about who buyers and sellers are in the market outside of your software The View that
00:59:27
you may be using the the data in Conflict uh can damage your brand and damage your customer relationship so
00:59:33
much so it seems in hindsight a little silly but I think to Jam's Point earlier it may indicate the necessity for them
00:59:40
to think about building another business on top of this core software business that is a more true Marketplace driven
00:59:45
business so they can make you know over time more money and that's probably where this all came from they saw a need
00:59:51
to build something that was more than just monthly subscription fees they weren't making money from it and they
00:59:56
shut it down it's true that Carta is trying to become a multi-product business they started with you know
01:00:03
startup cap tables then they added fund management then they added this broker business but if you read Henry's last
01:00:09
Blog the secondary Market is what he originally wanted to disrupt is he always wanted to create the secondary
01:00:16
market and he created the cap table business the SAS software as a way to get to that yeah I think what he's
01:00:23
realized is that the real value is in the SAS software and this Marketplace is not that valuable I mean the the SAS
01:00:29
business is doing something like 250 million a year of Revenue and the broker business was only doing a few million
01:00:35
yeah three million so I think the value has turned out to be in the SAS and moreover this broker business was
01:00:41
compromising the trust and safety or the perception of trust that the company has
01:00:47
from customers the problem with that SAS revenue is if you look at mantle and pulley that 250 million could could be
01:00:54
25 million and Cake my investment yeah and Cake sorry yeah and cake but but the point is the fact that there are there
01:01:03
are many competitors I think is a sign of the of a low barrier to entry and a lack of a true fundamental lock in let's
01:01:11
say you are an investor and you're looking at pulley or mantle why would you even think that's an attractive
01:01:17
company to invest in if success looks like you're compressing a $250 million Market down to 25 million like what's
01:01:24
the point well I I think a lot of these competitors got funded during the whole Zer era where everything got funded I
01:01:30
mean if you were if you were to look at that market today why would you even fund a disruptor well so look I think
01:01:36
man there are other strategies too yeah there's other strategies you could add on to this in adjacencies my
01:01:41
understanding is mantle and pulley raised in the low single digit millions that gives them a lot of room to run a
01:01:47
25 and $50 million business profitably and never raise any more money the problem is on the opposite side if you
01:01:54
raise money at eight or N9 or 10 billion dollar when companies trade at 20 times
01:01:59
and now companies trade it six times now all of a sudden you have to have $1.3 billion of Revenue a year to break even
01:02:07
and I think that's the real problem so it's not that Henry hasn't built a great company I think he deserves a lot of
01:02:12
credit the question is entry point and the question is upside and the upside is governed by the difficulty of the things
01:02:19
that you're doing and how much pricing power you have for those difficult things and so I think what we're
01:02:25
realizing is that there are few difficult things in software few I just like it's just true and as a result
01:02:32
every product this is not a carda thing every product will see a ton of competitors so the only thing that you
01:02:39
can do is have an extremely leveraged Opex and an extremely low cost to serve that is the only predictive protective
01:02:49
mechanism one has it seems to me on the outside looking in nwork effects are also important unless you have an
01:02:56
Instagram you're right that product is infinitely better with everybody or a Tik Tok great now you can just you can
01:03:02
spend as much money as you want but that's I think procedural software is yeah I don't I mean look we're we're
01:03:11
going to just have to agree to disagree I think there is some pricing risk to carda from these competitors but my
01:03:18
guesses it ends up being stickier than that but in any event I mean I do think that Henry at the end of they pulled off
01:03:24
a nice save by just getting rid of the business agree altogether I think that was a smart way to respond clearly the
01:03:30
First Response didn't work no the First Response yeah yeah it was a very confusing denial where he said this
01:03:38
isn't our policy but he also blamed he also got into it and blamed the person who called him out on it was like what
01:03:45
why are you calling us out on this and then like every founder was like because you violated our trust and he was like
01:03:50
oh yeah sorry yeah well showing people are showing like email campaigns that have been going on for months and it
01:03:57
seemed much more organized and it it was very hard to believe that this was just
01:04:00
an accident instead of a deliberate strategy and you could see the whole starb Community was was you know
01:04:06
evaluating its options in real time on X yeah and that's when he came out and hit
01:04:11
the whole thing with a sledgehammer and just said we're going to get out of this
01:04:13
business smart and I think it was really smart to do that it's kind of quell the
01:04:17
crisis like I said I don't think this is a business that startup Founders want their cap table software to be engaged
01:04:25
in no definitely not and just by the way just a third point on that you know one
01:04:29
reason was price Discovery another reason was having undesirable shareholders the the third reason is
01:04:33
just Founders don't want to create a competing fundraising process to primary financing yeah I think this is actually
01:04:40
a really important point the reason why Founders don't want there to be a secondary Market is because their
01:04:46
company may need to raise money yeah you want to go through the front door to the
01:04:50
CEO and the board not the side door to get a get some uh yeah you know exposure to the company well I think I think in
01:04:56
the Zer era where there was all this excess funding flying around then it kind of made sense to let secondaries
01:05:03
happen but in a world in which funding is scarce you want that money to go into the company not into the pockets of the
01:05:09
early shareholders and so I think like the timing of this whole thing is like really off it all feels like kind of a
01:05:14
function of Zer in its own way agree all right sex you were in the group chat talking about this viral clip about Star
01:05:22
Wars you wanted to chime in on it maybe you could uh queue it up Nick I mean as you may recall my pick for business
01:05:27
loser of 2023 was Disney and it seems like they haven't learned anything from the horrible year they've just had what
01:05:34
is the balance of activating a force for change but also trying to permeate that patriarchy that power
01:05:47
structure and is that a part of the calculation of your art as well and and what's been the reaction to that oh
01:05:55
absolutely um I like to make men uncomfortable I enjoy making men uncomfortable this is the new director
01:06:05
of Star Wars all right your thoughts there well I saw the comment on that tweet was this is going to be the
01:06:11
biggest Disney flop yet isn't that what it said I mean look I I don't know what Bob Iger is doing he seems to want to
01:06:18
burn Star Wars to the ground like the rest of the Disney Brands by playing politics this director doesn't seem to
01:06:26
have had a lifelong fandom for the franchise and she didn't really talk about how she had grown up marinating in
01:06:33
this universe loving its characters her background is in documentary film making and there's
01:06:38
nothing wrong with that but there's no indication from her that she truly loves Star Wars and in fact the comments that
01:06:45
she's making right now are indicating that she's going to politicize it the patriarchy is not why anybody is a fan
01:06:51
of Star Wars that goes to see its movies so nobody wants to see that movie it's the opposite it's the opposite they want
01:06:57
to avoid it they don't go to Star Wars movies for the politics and she's also trying to solve a problem
01:07:04
that doesn't really exist I mean science fiction May skew mail in its fanbase but
01:07:10
it's not because sci-fi franchises don't like strong female characters I mean just stepping out to the larger world
01:07:18
for a second you've got Ripley and Aliens you've got Sarah Connor and the Terminator movies you've got Princess
01:07:23
Leia Trinity in The Matrix you got Princess Leia Padme Ahsoka in Star Wars you seem to
01:07:31
know a lot of these female Chara you're deep in Stars Wars I'm AAR you got some good PS here so not this idea that there
01:07:38
aren't Fe strong female characters in Star Wars is that's just kind of a myth right and yeah so it's not it's not like
01:07:45
the universe needs to be reset in this way and you could just see the whole fan Community kind of groaned at this
01:07:52
comment because they're just like oh here we go again St Star Wars is going to ruin another franchise by playing
01:07:59
politics and the amazing thing is that is that you know iards doesn't seem to learn from this at all but there's
01:08:05
nothing wrong with having a female director either right SX I mean you're not saying that you're saying that a
01:08:10
particular person who has a political agenda in how they want to shape the story of Star Wars is the issue right of
01:08:17
course I'll also say I think one of the core driving narratives emotional narratives of Star Wars is the oppressor
01:08:25
oppressed it's a highly political it's a highly political story I've always said
01:08:29
I think Star Wars has been like the most anti- technology affector in society since the 70s because Star Wars is all
01:08:38
about the I've said this before but the Ewoks destroying the Death Star and like
01:08:42
the no Tech overcoming the oppressor big Tech and so we have to destroy big Tech
01:08:48
and anyone who has the better technology is very likely the oppressor and uh they
01:08:53
have all the wealth and they have all the power and they have all the control and so those who do not have the power
01:08:58
do not have the wealth do not have the control do not have the technology have to go and destroy that whether it's the
01:09:04
Empire or that you know kind of evil force and that's the core Narrative of Star Wars so I do think that at its
01:09:09
heart Star Wars in and of itself is an oppressor oppressed uh storyline that relates very deeply to technology and
01:09:16
wealth and has helped shape the Western psyche for a couple of decades in a very
01:09:21
meaningful way or has really reflected Maybe perhaps the Western psyche you think Andor I think you're super
01:09:28
imposing current day terminology on a movie that was created in the first one in the 1970s when intersectionality did
01:09:38
not exist yes there are political overtones to Star Wars you've got the rebel alliance against the empire that
01:09:45
is not diversity politics sorry it's about I'm not saying diversity politics I I it's really about the corruption of
01:09:52
power I mean you know the famous phrase by Lord Acton which is power corrupts and absolute power corrupts absolutely
01:09:59
to me those are the political overtones of Star Wars it's not yeah so you always
01:10:03
diving the world into intersectional categories it was about War I mean let's be honest it was Lucas was a child of
01:10:09
the Vietnam War era and he was highly influenced as was Francis for Copa and uh yeah the Americans with all this
01:10:16
wealth and power came into the jungle to try and destroy a peasant nation and cause death upon a peasant nation and
01:10:22
the peasant Nation survived W and there was a narrative to that that I think is reflected in this and is reflected very
01:10:28
deeply in a lot of the stories that have come since and I'm not saying Dei is as
01:10:32
a solution was the storyline out of the original Star Wars but the original Star
01:10:36
Wars was very much driven by The Leverage that technology provides to those in power that gives them you know
01:10:43
extraordinary influence over those who don't have power well if there were political overtones to the original two
01:10:48
trilogies and actually I I think there were some really interesting themes especially in that second one where pal
01:10:53
not even not even not evenl by the way not even political let me let me just be clear social right so social systems
01:11:00
which I understand but my point is that Lucas didn't hit anybody over the head with those themes and his goal certainly
01:11:09
wasn't to make anyone feel uncomfortable his goal was to entertain and whatever political or social overtones there were
01:11:17
were very much in the background because that's what good art does one of the reasons why Hollywood produces so few
01:11:24
really interesting movies these days is because the political overtones are really in the Forefront and they really
01:11:30
hit you over the head with them and so therefore they're just not very entertaining it's just not very good art
01:11:36
and I think that's why the fan Community was like oh here we go again let me just
01:11:40
set make sure people understand this is a 9-year-old clip and for context this is probably during like the you know
01:11:46
early days of the Dei movement just so we're clear on that but you had another point to make daavid go but Zach I think
01:11:52
that Hollywood has imposed upon itself a certain degrees of restriction on the Artistry of the artists in the community
01:12:00
because the standards now to be nominated for Best Picture Define a number of Dei representation and
01:12:07
inclusion standards and they're listed here so in order to and I if you guys will remember at our Summit uh in La I
01:12:14
asked GTH paltro about this and she wasn't familiar with these changes that had been put in place but in order to
01:12:20
qualify for a best picture nomination you have to meet some of these standards and these standards include onscreen
01:12:27
representation beams and narratives that relate to having at least one of the leag characters or significant
01:12:34
supporting actors come from Min minority background including ethnic background or by gender could get
01:12:42
nominated for an Oscar look I'm South Asian look I'm in the paren here or at least 30 or 30% of the actors in a
01:12:53
second secondary C in the secondary group have to be women racial or ethnic group lgbtq Plus or people with
01:13:00
cognitive or physical disabilities or who are deaf or heart of hearing the main storyline theme or Narrative of the
01:13:06
film is centered on an unrepresented group either women racial or ethnic group or lgbtq positive they can meet
01:13:12
the criteria if the creative leadership team has at least two of the following creative leadership positions met by one
01:13:18
of the underrepresented groups and so on and so forth if you're an artist a filmmaker and you wanted to make a film
01:13:24
a World War II biopic which uh was on the front lines in World War II and was entirely white males would you have been
01:13:31
able to be nominated for best picture or would you have had to go and you know take some actions that have would have
01:13:38
affected your Artistry and your freedom of expression in making that film and as
01:13:42
a big fan of film and you guys I think all of us are probably in the same boat at least a couple of us are are three of
01:13:47
us are three of us are this would have limited a lot of the best pictures of all time I would say if you had to
01:13:53
impose standards on what the artists were allowed to do or how they were allowed to make their film and that's
01:13:59
really what's taken over Hollywood so I sack I would say it's not just a bob Iger Disney thing but this has become a
01:14:04
standard in Hollywood that the the Dei movement has so deeply affected the intentionality of what has historically
01:14:11
been a truly creative talk Hollywood writers if you talk to Hollywood writers they'll tell
01:14:17
you that things have become extremely politicized and it's a mess Iger has been a little bit contradictory about
01:14:22
this in April last year there's this article saying that Iger was doubling down on inclusivity and diversity and he
01:14:29
described that a shareholders meeting by November he was saying that Disney movies had become too focused on
01:14:35
messaging so it seemed like he was finally getting it that after the horrible year they had but then we had
01:14:42
this Star Wars news and it seems to suggest that they were hiring a director who really wasn't right for the material
01:14:49
so we'll just have to see my sense is that they have not made the course correction they need if you want to see
01:14:56
the peak of this there was a bunch of blowback on Dunkirk an absolutely T to force of a film if you haven't seen it
01:15:04
especially go see it in IMAX just extraordinary Christopher Nolan film that it lacked uh diversity and gender
01:15:10
diversity it's a war film uh historically kind of hard to make it about anything else if it was just on
01:15:17
narrowly focused on a couple of battles and so yeah this is this has gotten to the point of yeah a little bit of
01:15:23
absurdity I I relate this very much to the point that we made a couple months ago about standup Comics being
01:15:29
restricted and canceled based on the things that they say that are offensive to the the narratives of social
01:15:35
inclusion and Dei these are artists who should have freedom of expression creative freedom unlimited creative
01:15:42
freedom if we want to have a different set of standards for how we value the art that comes out of it fine but I
01:15:47
don't think that it ends up being true to what the peer group would otherwise recognize and say
01:15:53
you know is the greatest art of the year is the the most impressive achievement of the year in some particular artistic
01:16:00
discipline it's really sad there's also been this change in live performances in
01:16:07
Symphonies used to be that to avoid discrimination in auditions for symphony orchestras auditions were conducted
01:16:14
behind a curtain so the director and those who were making the election on who would get to join the orchestra
01:16:20
would listen and they wouldn't see the person and Performing because they were behind a curtain recently that trend has
01:16:27
changed and now those artists are required to perform not behind a curtain but in front of the curtain so that we
01:16:33
can judge them not on their musicianship and their Artistry but on their race on
01:16:37
their gender and on some other standards so I think this is obviously part of a very broad narrative but it's it's very
01:16:43
deeply affecting can I ask a question the community of Arts I'm about to bring you in on this Jal yeah is listenership
01:16:50
of the symphony gone up or down it's been going down for a long time but Sy around the world are seeing decline in
01:16:57
audience but it's it happened before the changes yeah it's been happening yeah has it accelerated or has it slowed the
01:17:04
negative Decay to zero I'm not sure I'm not sure it's difference yeah yeah to be
01:17:09
honest well if it hasn't if it hasn't made a difference then you're then it hasn't made a difference I mean I think
01:17:14
this is part of a wider discussion of Dei the goal of some of uh some forms of art like these live Performing Arts may
01:17:21
not necessarily be audience growth the goal may be you know finding the best artist I suspect but I suspect it it
01:17:28
should be to sustain itself indefinitely I mean that was by the way that's a big
01:17:32
Point I've had which I quality of Roads as the quality of Roads fewer people will care because there are other
01:17:38
options that you can go to that are high quality and then these things will die off and you know maybe that's what it's
01:17:44
supposed to happen I mean this is part of a wider discussion about I think Dei facing the reality of whether it's like
01:17:52
I guess this whole pilot thing with Boeing and who's getting hired to be pilots and training and what should the
01:17:58
focus of a company board be what should the co focus of hiring be the problem I think with the argument you guys are
01:18:04
having in my opinion is that it's a little too premature and the reason is that there are other people who will
01:18:11
make semi credible claims while you guys make semi credible claims and no progress is made on this
01:18:19
whole Dei discussion as it touches Cinema and Hollywood or music what's much easier if you want to
01:18:25
dismantle Dei which will eventually come and cleanse Hollywood and the symphony is if you go to the jobs where it's
01:18:33
irrefutable where even the most Ardent defender of Dei says you know what I can't take that risk with my own family
01:18:41
or with my own life and the lives of my family and I think that we're we would be better off if we just focus in a
01:18:48
really disciplin way on those and get the criteria to be entirely based on skill and then eventually it'll come
01:18:55
back in Hollywood and the symphony will also get cleansed so doctors Pilots I mean I I I
01:19:02
would say certain doctors I would just say Pilots for sure I would say surgeons I would say that you could probably go
01:19:10
through I haven't thought enough about it to know but you could go through and say systematically what are the
01:19:16
categories in the professional world that we interact with every day where skill can be the only criteria must be
01:19:29
because otherwise innocent lives will be lost that's an important question I I agree with you that the fundamental
01:19:35
choice that we have as Society is whether skills is going to be the determinant of success skills and Merit
01:19:42
or whether it's going to be about something else you know and as soon as you tell somebody that they can't get
01:19:47
the job even though they're the most qualified because of their race or gender then I think that is
01:19:53
racism or sexism so it's doubly bad but Jam I think the I think the reason why this happens is because people don't
01:20:01
really have the right skin in the game so the reason why the the recent discussions about pilots and
01:20:09
whether cockpits should have this sort of Dei program is that everyone can relate everyone has skin in the game if
01:20:15
your kids are going to fly on a plane the only determinant you want for who the pilot is is skill
01:20:23
obviously because you have real skin in the game the problem is people will will
01:20:27
falsify their preferences when they're discussing other people flying on the plane so people will start saying well
01:20:34
you know we need to have Dei programs you know in other words when it doesn't affect me you're willing to basically
01:20:40
virtue signal and genu flect towards these programs and I think that that's the fundamental problem is that people
01:20:47
will pretend to support something other than skill in all these contexts where they're not directly affected but as a
01:20:55
society we are with respect to Aviation specifically my thought is that this is a very easy skill to
01:21:04
determine who is high quality versus not because you have such sophisticated training apparatus and
01:21:12
schemes simulators simulators and all of this stuff it's easy to know how to rank
01:21:16
people from one through n and I think that as a society if you want an efficient transportation infrastructure
01:21:23
and Aviation infrastructure where the consequences are really bad if things go wrong you just want the best period end
01:21:28
of story however I think it's also fair to say that then the government owes the
01:21:33
people a responsibility to advance the technology if they actually want to have a multifaceted hiring criteria so what
01:21:42
do I mean we can have a lot more Automation in the cockpit the reason we don't is
01:21:50
because of how certain lobbies are able to affect rules inside the Federal Transportation infrastructure and we
01:22:00
know this because our friend has been trying to our friend Sky Dayton wonderful pilot has been trying to improve Airline
01:22:08
safety and he's talked about this a lot and these things get blocked by the pilots Union and otherwise because they
01:22:13
don't want to get disintermediate okay fair enough that's the game well if that's the game at some point we need to
01:22:18
have a conversation as a as a society that says okay look if we're going to higher in on a multifaceted basis for
01:22:25
Pilots let's also tell Boeing and Airbus you need to build even better more automated planes that's a fair tradeoff
01:22:33
the great irony of all this saxs is it's illegal to hire based upon gender race Etc and then at the same time people are
01:22:40
trying to hold this contract of hey we want more diversity we want more inclusion at the same time in their
01:22:46
heads and we're seeing lawsuits happen so they're you know want tech companies to report on their diversity they want
01:22:53
Venture firms to report on you know you know diversity and investment but it's illegal and you can be sued if you were
01:23:02
to give investment dollars based on race gender Etc and fierce Founders I believe
01:23:08
it's the name of the firm that's being sued for only investing in a certain demographic of women yeah or to ask
01:23:14
people their sexual preference you're not allowed to ask that in an employment I don't know I've always had a problem
01:23:19
with how do you keep these two things in your mind in our own Venture fir and I just said to folks just this is
01:23:24
considered a diversity Target and now to hire people whether it's on a Hollywood
01:23:28
film set or in your company you've got to go ask them what their sexual preferences that's I mean it's crazy
01:23:35
that we're being asked to do that and what I did in our company was I said hey if if we don't feel we're getting enough
01:23:40
applicants for the programs founder University the accelerator we could have you know uh efforts to increase the
01:23:47
number of applicants but we can't make investment decisions based on anything other than the Merit of the company or
01:23:54
we will get sued and so this is I think the problem in Corporate America with these issues is how do I try to help
01:24:00
this problem if we think there is a diversity problem in our particular industry which is noble and thoughtful
01:24:05
and I wouldn't criticize anybody for that but then the rubber meets a road at legal and then performance right and and
01:24:10
it's very hard for I think leaders to to manage those two dichotomies I could see
01:24:16
a case for why Barbers and Priests should be multifaceted good bedside manner crack a few jokes be able
01:24:24
to listen Rel relatability if a pilot but the first time like the thing is now this thing is
01:24:32
so on the front burner of people's minds that heaven forbid if there is an incident or a near
01:24:41
incident you're going to see lawsuits that are going to focus on this issue show me the training records of the
01:24:47
pilots and show me show me how they fared relative to alternative folks that you either did hire or didn't hire and
01:24:56
you know why was this selection it's going to be a mess we might even see that with Harvard in their selection of
01:25:01
their president like why was this person selected as President right and did we check the new one or the past one like
01:25:07
was there did we know about the plagiarism stuff you know did we not know about it and this is I think the
01:25:13
race to Nowhere when you get into identity politics and and I think this is why everybody and I think Coleman
01:25:19
Hughes said it really brilliantly when he was on this pod talking about his Ted talk like we we at least want the
01:25:25
aspiration of having a colorblind Society I think what Coleman said that was really I think profound was well
01:25:31
well where can we actually affect change that will be important and I think that's Early Education it could be
01:25:37
providing prek it could be providing you know support for people with child care
01:25:42
so that you know they could they could get into you know more job training Etc so like where do we where do we put our
01:25:49
efforts if we do want to see a more inclusive diverse just world is I think the question backing up a second I think
01:25:56
there's a fundamental dishonesty about the Dei movement that's really coming to the four right now on the one hand di
01:26:03
activists will explicitly say that their goal is to engineer job categories to explicit population
01:26:13
numbers but like you said that's actually illegal to do so when they get in a lawsuit like the Harvard
01:26:18
affirmative action case that went to the Supreme Court they'll deny that they discriminating against asian-americans
01:26:23
so when they're preaching for what they want to do when they talk about say kendi style anti-racism they will say
01:26:30
that the explicit goal here is proportional representation but then when that results in discrimination
01:26:36
against groups that are basically selected against they'll deny that that's what they're doing and I think
01:26:41
it's gotten to the point now where they just can't maintain both things being true and we I think we saw this in the
01:26:47
dust up that just happened between Elon and Mark cubin where Elon was saying saying look we should be a colorblind
01:26:55
meritorious Society we just shouldn't discriminate for or against anybody on the basis of race and then Cuban jumps
01:27:02
in says oh no no that's not what de is doing de is just trying to expand the pool of applicants and it's just not
01:27:08
true I mean I don't know if he's being disingenuous I don't know if he's virt signaling I think they were talking
01:27:14
through each other I mean you do want to expand the pool if you're not getting a
01:27:18
pool of diverse applicants there's nothing wrong with that expanding the pool but what you are
01:27:22
there was a Dei Griff that occurred I think that's kind of what you're alluding to and I can tell you the
01:27:27
Inside Story you look at the de movement it goes Way Way Beyond dis exping the pool of applicants it it explicitly puts
01:27:35
its thumb on the scale in terms of what it's looking for in terms of hiring and promotion it turned into a
01:27:42
grift and I can tell you the Inside Story on this and it's going to come out eventually but there was a I don't know
01:27:48
if you experienced this in any of your companies or if anybody's willing to talk about it but company
01:27:54
has lack of diversity in their company then diversity activists and this is I think where it really started to build
01:28:03
up resentment diversity activist comes in says hey you have problems they call them out on social media there's a there
01:28:09
was a you know a Twitter Brigade comes in oh my god look how horrible this company is people go oh I'm sorry we
01:28:15
didn't want to be horrible and then they say oh well hire us and we'll teach you
01:28:19
how to do Dei and let's build a de group and we want be Consultants pay us to come in pay us to speak at your
01:28:24
organization to tell you what you're doing wrong and then rally a reverse support of it after you've gotten paid
01:28:32
for solving the problem for them and I saw this Shakedown occur and I had people ask me for advice on like hey
01:28:38
what do we do here and you can just imagine you know you're a person of good faith who wants to do the right thing
01:28:44
and then these Dei folks come in and then try to uh Brigade you basically publicly shame you in order to get like
01:28:52
like Rich Dei contracts and and we saw this with like the size of Dei groups at companies and you're wondering well what
01:28:57
are these people actually doing are they just what what does a DI Department actually do inside of a company that is
01:29:04
a creative or valuable it creates more bureaucracy to do more Dei right on itself and that's why it keeps getting
01:29:11
bigger and bigger did you guys see the size of the Michigan Dei group did you see that tweet I thought that was a I
01:29:16
thought this was a Babylon B story when I first saw it because there are 250 people
01:29:22
working 500 people at Michigan what theator 500 out of how many people I don't know but they're spending $3
01:29:30
million on payrolling benefits He Man I mean look big companies can kind of afford this stuff but startups cannot I
01:29:38
mean this is really the kiss of death for startups um you just can't afford to have these large
01:29:43
bureaucracies and then also you know when you're a startup founder if you have six months of Runway
01:29:49
12 months of Runway you might not have the luxury to be looking at your statistics and saying you know what
01:29:55
we've got 10 people who are of this demographic statistically we should have this so the next hire we need to make
01:30:04
our sales numbers has to be of this composure and I I've have seen people do this actually you've probably seen it
01:30:09
too on boards or whatever hey we need to hire more of this type of person this profile and uh you know then hiring gets
01:30:17
slowed and you know yeah it's it's challenging and it's also illegal so I don't know how you win in this
01:30:25
thing other than have a colorblind society as a goal at least you know and to are you familiar with um a Mot and
01:30:33
Bailey tactic no tell have you heard of this this is a a rhetorical technique or fallacy no I
01:30:42
haven heard this one yeah I love a good so this comes from medieval times the mod and Bailey was a type of Castle
01:30:48
where the Bailey was this wider area that was just defended by a wooden wall so it's not that secure the was
01:30:55
basically the you know Stone fortress on the hill so a modern Bailey tactic is when you go out and stake out a very
01:31:03
aggressive position you take the Bailey basically but then when you get challenged you Retreat into the mot and
01:31:09
pretend like you never took the Bailey position ah the the Bailey position is basically the kendi style anti-racism
01:31:16
where you say look we have to achieve proportional representation in every job category and that is what the DI
01:31:24
movement in the main advocates for but then when they get challenged by somebody like Elon or by somebody like
01:31:31
Supreme Court they were treat into the mod and to say no no we weren't trying to do that we're just trying to expand
01:31:35
the pool of of qualified applicants because who could be against that and they'll claim that they were never doing
01:31:42
the whole proportional representation thing and then on top of it they'll say well listen obviously increasing the the
01:31:47
pool of qualified applicants is so unobjectionable that if you're against that then you
01:31:53
must be racist and then you get all the accusations and so this is basically the
01:31:58
rhetorical technique that the movement uses to defend itself yeah but eventually when this stuff gets
01:32:04
litigated as it just did at the Supreme Court you start to pick this apart and you see that there's a lot of evidence
01:32:10
that they are actually engaged in overt discrimination against certain groups like
01:32:17
asian-americans no easy answers here but I for one think that that's bad yeah there was something really nice about a
01:32:24
merit based society if there was fairness at the starting line but you know that's that's the thing I've
01:32:30
learned is not everybody starts at the same place and so if you just look at it seems to me and listen I'm no
01:32:36
expert but the starting line seems to matter most so if we could focus on making it as equal and fair and just
01:32:43
when it comes to education that seems to me to be like the quickest solution to feeling better
01:32:49
about all this I I I just think we should have 7day 365 day a year school available Public School available
01:32:56
competitive schools available to to to to make the world more just and give people more opportunity right skills
01:33:02
training Etc why do you think that having school 365 days a year will make the world more just well because I do
01:33:10
think that if you had more competition in schools and you had Parents uh who care or students who care and they could
01:33:17
get more education and there was more available then you could say well how many days a week did you go to school
01:33:24
how much effort did you put in and there was just more highquality school available and If you look at Public
01:33:29
Schools right now there's just it's very unjust how poor the schools are and how
01:33:34
poorly run they are what the teachers unions have done to these schools and disadvantaged communities and and if I
01:33:40
look back on my life and I look at people who did well they had engaged parents and they had uh opportunities in
01:33:47
education that other people didn't uh and that seems how does keeping the school open all year round change that
01:33:54
you think about parents who maybe don't have coverage for their kids after 2:30 or 3:00 and then those kids you know we
01:34:01
called them we were called latchy kids I think uh in the 80s and 90s you know having the ability for them to do more
01:34:07
enriching things to be in chess club to be in Taekwondo Club to to do a little extra math whatever it is that could be
01:34:13
something Society could do for a very low cost or skills training even right hey this is a a culinary school after
01:34:19
school this is a culinary school on the weekends this is a coding school on the weekends it doesn't have to be just them
01:34:23
it could be welding it could be like I said you know could be design whatever it is more opportunities for people to
01:34:30
learn more skills without you know having the Benchmark be my parents can afford Kuman my parents can afford a
01:34:37
chess tutor right we we live in a time of incredible privilege and all of us have unlimited resources and many of the
01:34:43
people who listen to this podcast have a lot of resources to hire tutors for their kids and give them more
01:34:47
opportunity I didn't have that opportunity you know and if I had that opportunity I would have learned chess
01:34:52
faster right I would I would have had more opportunity for it just wasn't available to me and then there's a lot
01:34:58
of people who started behind me who who certainly didn't have it available single parent you know uh in in a worse
01:35:04
School environment than Brooklyn where I grew up grew up so I don't know do you disagree jom would you have a better
01:35:10
idea of how to make the world more fair and just than education and skills training I think I I think education is
01:35:16
the probably the most important I do think that we need to find it fashionable again to have nuclear
01:35:25
families I think that if you look at the marriage rates of 20 and 30 year olds it's meaningfully depressed relative to
01:35:33
older cohorts including ours we're the last generation yeah where it's a structural part of our identity is being
01:35:40
married and I think that that has long-term implications because and when you look at the success rates of how to
01:35:47
grow kids poverty matters a lot less than having a structural nuclear family meaning a two parent
01:35:54
household and so I think that there's a lot of there's a lot of work we need to do to figure out how to reinen
01:36:00
divize folks to want to commit to a single person not this rampant promiscuity but just kind of lock down
01:36:08
and find somebody and build a long-term partnership with them I think that that's really crucial for a functioning
01:36:13
Society do you think tax incentives is a way to do that or just cultural norms I
01:36:19
I haven't studied the problem to have a real I've heard this before I just don't
01:36:22
know how that gets implemented in society right I and I can think of ways that tutoring and having more education
01:36:29
available vouchers Etc I mean if you gave every parent under a certain dollar amount of income a year a voucher to
01:36:37
hire tutors man that could that could change the world right um it could change a lot of people's faith we need
01:36:42
more two parent households that would certainly help more all right well we got we we really
01:36:48
got into it here in the end man what a what a great episode all right four the Rainman David Sachs with a
01:36:55
tight haircut now the dream is over I mean it's just it's a new year I don't know who got to you it's a new year it's
01:37:03
an election year it's a it's a big year for you clean it clean it up for I think
01:37:08
it's just a huge critical mistake I think you were you were going to a certain iconic look and I think you've
01:37:14
blown it I I I'm going to take the other side of that bet and for David freeberg
01:37:18
the CEO of ohal and ch poly hoaa the founder of the new 8090 incubator and the chairman dictator
01:37:28
of the Allin LLC I am the world's greatest moderator yes you are and angel investor and we'll see you all next time
01:37:36
byebye love you boys byee byee let your winners ride and instead we open source it to
01:37:49
the fans and they've just gone crazy with Love You Queen [Music] of Besties are that's my dog taking your
01:38:07
driveway oh man myit meet me we should all just get a room and just have one big huge orgy cuz they're all just
01:38:14
useless it's like this like sexual tension that they just need to release somehow
01:38:20
what we need to get merch [Music] our I'm going [Music] in