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all right everybody Welcome to the 54th annual World economic Forum here in Davos you guys didn't know this but as
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Elites ourselves we were invited to kick off the festivities Surplus elit yeah you know the all-in podcast very popular
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and so they wanted us to come and represent the Pod and our audience there and uh it's been amazing if you haven't
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seen some of the great musical performances this year I mean they're so notable let's just start off here I mean
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guys we were here for this live soak it in I mean on the better on the replay soak it there's the air
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flute so wait wait there's a great moment where she really starts vibing wait for
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the head shake the eyebrows are grit but the head shake comes in and about there there it
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is I like I like your moomo I like her mumo have you ever played the air flute or just a skin flute Jam skin
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flute went there it's like it's like a high school but guys guys this isn't it there there were other uh there was a
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witch doctor or something I'm not sure exactly what's going on here I'm going to just apologize in advance for mocking
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this or for sax mocking it I should say this was incredible I don't know exactly what's going on here with the
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blowing of the hair but from that's for sure so they're blowing the co on each person's forehead here to spread the co
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they've all taken the MRNA vaccine but you know uh we each have a speaking gig each of us is speaking and so I thought
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to kick us off here gentlemen instead of us just telling everybody our schedule I
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would sing our schedule and so let me just grab a let me see if I got my guitar here hold on have a guitar here
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let me grab it here oh here it is okay hold on I happened to have the guitar here is that air guitar or a real guitar
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guar actually real guitar here so but I thought you know everybody is really excited about each of our speaking gigs
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so I thought we would just kick it off here let me just see if it's in tune you guys hear
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that oh okay all right was I think we got it kumay my Lord K sax is interviewing Putin my Lord
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AUM in the dictator Lounge at noon a kumay conquering Europe kumbai and now I'm going to there a
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little audience participation in here besties I need you each to sing with me okay it's uh we're going to start here
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it's going to be just listen one time and then you're going to repeat okay here we
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go it's hard to keep it together oh Davos kumay so just o Davos Kumbaya ready 3 2
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oos K okay very good very good okay now we go to the next verse hereo hosting Steve Bannon at 1 p.m.
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AUM free bgs at 2 p.m. bill ion Aire bunker panel Lum teal just bought one goombay Hunter Biden after party at a 1
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a.m. eight balls and escorts for everyone brought to you by barisa that's for you sex and now you
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all sing ohos Kum wow fabulous you really are the world's greatest moderator let your winners
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[Music] ride and instead we open sourc it to the fans and they've just gone crazy with it
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love queen of all right everybody yes the uh World economic forum is wrapping up in Davos
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uh if you don't know what the wef is I'll just give you the brief overview 3,000 people 5 days tons of parties
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happens in Davos Switzerland it's run by a foundation uh they call these non-government organizations NOS uh you
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can think of it kind of like the Ted conference topic this year was rebuilding trust it's politicians
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Business Leaders economists journalists all the elites the mission statement of the WF improving the state of the World
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by engaging business political academic and other leaders of society to shape Global Regional and
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Industry agendas it's money printing machine I'll give you a funny backstory later if you care to know but basically
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they try to shake it down for about 40 Grand a year to go to this thing tons of notable moments that we can get to on
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the docket here free break any highlights for you watching this you know get mocked on social media this
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year it's it's been a slow unraveling from this being something that people used to flex about going to Davos
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now people are literally apologizing on social media X Twitter Etc explaining why they're going because
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they're kind of feeling shame in going to this event so what are your thoughts on the sort of whole flipping of this
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from being a flex to requiring an apology in advance you guys know Andrew Ross sorin the journalist for
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CNBC I think he posted on Twitter you know I know I know forgive me I got to go to Davos it's almost like
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embarrassing now that you are associating yourself with the elite cabal in the Swiss Alps during a time of
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rising Global populism and all the criticism that's been raining down on Davos in the last couple of years and
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then Davos is trying to adapt by trying to be more cool and appeal to the the populist Notions uh that have criticized
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them thus the fluke playing thus the Shamanism you know and and thus I think a lot of what Javier mle has called a
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general economic support for what he defines as collectivism which I'd love to talk about but why don't we just say
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that so I think there's generally been like a response from the community that attends to AOS but there there's a lot
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of conflict here with the fact that folks are flying in on private jets and telling everyone to stop producing
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carbon the F the fact that they're all dining and spending lots of money and telling everyone that we should move to
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more towards socialist conditions and higher taxation it's all a lot of irony wound up in this whole thing it's almost
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like a like a like a Simpsons show it's what it's become well and the theme rebuilding trust is kind
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of insulting at its face at least to me like we we don't trust you you don't need to rebuild trust with us we're not
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going to trust you there's no way for you to do that especially after what happened with covid sax did you have any
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sort of reaction to this year's Davos and just how people are reacting to it you heard freberg sort of thoughts on it
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well doas has become a of itself and that's why you saw these clips go viral of these ridiculous antics of the
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Priestess doing I don't know what she was doing but the only two sets of remarks that actually were taken
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seriously on their own terms was the speech by Malay from Argentina and then also comments by Jamie Diamond and the
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reason why they went viral is because they were actually saying sensible things that
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contradicted the sort of established wisdom or consensus at Davos I mean they were effectively subtweeting the other
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Elites at Davos I mean M gets up there and I think he was introduced by CLA Schwab and he immediately starts
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denouncing collectivist experiments and says that the West is in danger because its Elites have been co-opted by a
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vision of the world which leads inexorably to socialism and thereby to Poverty so melee basically says this
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right in front of CLA Schwab I mean he describing the the people at Davos that's why that took off and went viral
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it was incredible I mean yeah yeah in a similar way and he flew their commercial I didn't know that yeah yeah
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kudos to him Jamie diaman gave this interview I think it was on CNBC where he basically went full chth
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you know he basically admitted that Trump had been right and that you know a lot of the criticism of trump and all
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the derogatory comments for years were were basically just lazy and he said that you know Trump was largely right on
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NATO on immigration on tax reform he grew the economy immigration immigration he was mostly right on China he said
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Diamond said he didn't always like how Trump said things or talked about people but he said his policies were largely
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sound and only look better in time since we've abandoned them and and he's basically saying that you know look at
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where we are right now now and he questioned the kind of everything is hunky dory narrative that the Biden
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campaign is pushing out so he really went off script there and like I said I think Chamas said it first here on this
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pod three months ago and now jimie diamond is accepting that so that was a huge sub tweet you could say of all the
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elites of Davos and the accepted wisdom and you know the narrative that they're all pushing out so you know that was the
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other big interview that went viral and I think that's really saying something that you know that the elites now have
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parody themselves to the point where Davos has become a joke and the only talks or remarks out of Davos that
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people pay attention to are the ones talking sense to the people at Davos because they're not
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listening chath your thoughts look everything has a season and I think that when there was a much more singular
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hierarchy of status Davos played a very important role to signal to other people
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that you had made it but you know these things come and go and I think that this is sort of in the
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the back half of its usefulness and halflife what is it probably more than anything else now a glorified enterprise
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software sales conference where the reason to go to these conferences for a lot of these companies I suspect ECT is
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that it allows you to close very big deals multi-million dollar licenses of this that and the other thing where you
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can get the leaders of that counterparty across a table from you and hammer out a
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deal and I think you pay 40 Grand a ticket for the right to get everybody together to do that so I think they want
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to pretend that it's a lot more than what it is and I think what it is is that and I think whenever you have the
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ability to convene people to close business that's valuable beyond that I think it's sort of in the eye of the
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beholder and it used to be that the beholder thought that this was important and now I think we realize it's much of
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nothing it's shame in and air flutes and all kinds of stupidity which is why people have the courage to go and mock
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it and I think that malle's comments and Jamie Diamond's comments exemplify that
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the only other thing I would say is that I had heard although I haven't seen it so I don't know is that Alex karp
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apparently did a very thoughtful speech about anti-Semitism and which was also which
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was also very countercultural to the established logic that the the Surplus Elites at Davos want to believe which is
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the anti-israel pro Palestine line I haven't heard it though so I don't know yeah how impactful that was but those
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are the three things that I that I've Just Seen on Twitter just kind of the M speech I think is the one that everybody
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is keying on and correctly so you know obviously he's the he's the new president of Argentina and this speech
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was amazing people might not people might not also know that he was uh an economics teacher and so this talk about
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collectivism leading to suffering and Regulatory capture and bloat which we'll talk a little bit about when we talk
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about Boeing today was incredibly powerful it's super basic you know listen free markets work
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there are people opting into either side of it he went over essentially without saying it the rule of 72 and like 200
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years of GDP growth and how GDP growth under capitalism Rises everybody up and then collectivism AKA
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socialism is a bit of a disaster but it's well worth watching it there was a really cool thing that a
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company called hen did Hy genen with their AI tool they just immediately took his speech put it in his own words and
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um published it and translated it as if he was speaking English cuz he was he was speaking his native tongue so really
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worth checking it out and yeah it was super notable it's very basic but I think it's everybody wants
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to hear this right now which is if you're picking collectivism and socialism and redistribution of wealth
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Argentina has like a really good history of watching this faou and now they're in
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the process of dismantling and I'll say something else before freeberg says something here which I think is going to
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be very thoughtful Jason the other reason why Argentina is a really good example to use is that
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what does Davos represent at a different level well what it is is Old Europe getting together in
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a way that allows them to continue to coales power and what's interesting is if you had presented the case of any
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other country trying collectivism and failing it wouldn't get nearly the same attention as Argentina and the reason is
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that Argentina has so many ethnic Europeans and I think that's another reason which is like when present people
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that are telling you it didn't work that frankly look like you speak the same language as you I think it actually goes
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further in making the point than if you found somebody in South Asia or Africa that said the same thing to these folks
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which they have which they've not listened to and so this is why I think Malay is so interesting and important
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because he looks the part of a western leader and I think that that unfortunately is what it's going to take
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for some of these folks to listen yeah and everyone's acutely aware I mean I'll say three things on this one is just
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talking to your point Jam about the history of Argentina and how it relates to this position that mle holds in being
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able to speak credibly to this second is what he said which I think is really important and third is how it relates to
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the United States but this was clearly to my for my view one of the most important media events of the year I do
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think that anyone that's listening to us right now should go watch it and go listen to the entirety of the speech it
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is so important I hope everyone really takes in what he said just briefly on Argentina in the mid 19th century
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Argentina was a Col nation very agricultural but a lot of free market Pioneer going on businesses
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were built and an economy flourished in Argentina um this photo I put up here is
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from 19113 buos arees which at the time was called Paris of the West I was about to
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say it looks like Paris right the architecture and everything it's beautiful stunning but here's here's
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some statistics a lot of people don't know Argentina at this time was wealthier than France or Germany twice
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as wealthy as Spain and had one of the top 10 highest GDP per Capas of Any Nation on Earth in 1913 and so it was
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this flourishing vibrant economy with a lot of innovation a lot of Arts a lot of building a lot of um
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employment a lot of immigration and then the series of military coups began I don't know if you guys are aware but
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there was a military coup in 1930 1943 1955 1962 1966 1976 and in every one of these cases the
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essence of the coup was one of relativism which is some people have benefited more than others as a result
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we need to change the way that the government and the social structure is functioning and it had to be taken by
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force and I think this is the big story of Argentina that says so much more than
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any other nation of the past Century Century and a half which is that these Cycles happen based on not absolutism
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but on relativism and I'll just give you what I mean by that mle made this point which is so
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important from the year 1800 to the year 2020 in the year 1800 we saw 95% of the
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world's population in extreme poverty by 2020 it was less than 5% and this was driven by free market
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capitalism democracies that allowed people individuals to pursue their own self-interest and as a result deliver
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products into a Marketplace that people wanted and were willing to pay for and that incentive that market-based
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system allowed the entire world to move forward the relativism problem is that some people mooved forward faster than
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others and that causes this great cycle of what some people might call Envy or jealousy and Malay said it best the West
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is in Jeopardy which is the key statement he was trying to make in his point that countries are no longer
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defending free markets this is a quote private property and other institutions of Liber libertarianism due to errors in
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their theoretical framework and ambition for power opening doors to socialism and
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condemning us to Poverty misery and stagnation socialism has failed in all countries where it was attempted and
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then he started to harp on about neoclassical economic theory and the issues with that but I want to show you
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one last image which speaks so clearly to the point that he's making which is as these governments that are
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well-intentioned and the people that elect the governments and put them in power are well-intentioned then try to
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redistribute wealth by getting the governments to step in and play a market role
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the market role that they play causes inflation causes degradation and Economic Opportunity economic mobility
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and prosperity for most people and you can see this in this chart which we've looked at many times but everything on
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the top of this chart this is a chart that shows the 20 years of price changes of various goods and services in the
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United States everything that's gone up in price is something that the US government has a role in buying or
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paying for yeah controlling yeah and everything that's gone down in price is where there is a free market that has
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allowed people to access goods and services at a lower price over time as opposed to a higher price over time and
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while the intention is that the government is doing good for people by making Education Health Care and other
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uh goods and services available to them the government stepping in and intervening in the free market causes
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the price to go up and ultimately you end up in a really negative cycle that reses in this collectivism approach that
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he's talking about and that's why just wanted to tie back what he said to what's going on in the US today and the
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and I've harped on this a lot but the growing role that the federal government is playing and the intention is good but
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the impact is bad over time and that's really I think why it was such an important speech he was so clear it was
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so important for me to hear it I'm sorry I harped on but I just really thought that was the highlight the key of his
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speech is hey good intentions can lead to to a bad outcome here yeah you want everybody to have Healthcare you want
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everybody to have education the government is providing it and there's no customer and there's no Market
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there's no competition and the products and services that you are referring to they include medicine they include
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College they include tutoring they they don't just incl and they include air conditioning they include refrigerators
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and televisions smartphones all of that and um picking which system and which set of problems you want to have I guess
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is what societies need to do and and free markets it's a weird reflexive Loop though for governments because these
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people what he also said was these aren't just well-intentioned people they're also a small class of Elites
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that wanted to feel like they were better than everybody else by implementing things at worked and so
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there is a dark part of this as well which is their desire for power and I think it's important to not gloss that
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over so this wasn't just a bunch of bumbling do gooders that screwed things up this was also a bunch of folks that
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that irrespective of the data had an opportunity to gain influence and power and I think that that's that's an
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important thing to acknowledge because it created a very negative reflexive Loop that government used meaning if you
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look at freeberg charts why did that happen well part of what happened was the administrative
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state became more and more powerful they were able to pass laws they were there to decide who the winners and losers
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were that is a drug and that drug is very addictive and so what happened as this happened was the laws went and
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reinforce those dynamics of those people being able to decide winners and losers
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the thing that it has that has not happened yet though and maybe we're beginning to see it in some of these
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markets that the government is too involved in is that it is bred a level of incompetence and
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incapability that we now have to unwind because the average everyday Citizen's lives are either at risk or these
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services are just so expensive that it's just untenable and I think that's where
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we are now it's a great segue I think into this Boeing issue that we've seen because here's an issue of Regulation
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and safety where you want the government and you want safe planes and you want some level of Regulation but then you
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get regulatory capture so maybe but the government the government has not been the supporter of the safety agenda that
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citizens think yes meaning when you look at what has happened in the US airline industry there are a handful of enduser
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providers but those are all using OEM equipment from one of two vendors Boeing or Airbus so it's a duop but in many
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ways it's a monopoly the way that these folks fight with respect to tariffs and imports and incentives so the United
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States airline industry is a monopoly of one company now if you look at what's happened what they would say is well
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planes have become safer and safer and safer yes but they've become safer in some ways in in the most simple and
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obvious ways but they've become unsafe in that you have these fleets of planes that are now behaving very unpredictably
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and if you look under the hood what happens is Boeing as an example in like the last four years how much money do
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you think they've spent on lobbyists and packs I'll tell you $65 million how much
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have they spent just in the last year almost $1 million they're like the 15th most active spender in in politics in
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Washington now what did they use that money for while that's also documented see the crazy thing is this stuff
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happens in plain in plain sight so they able to water down the safety regulations what does that allow you to
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do it allows you to have a situation like this unfold and then on the other side the pilots unions can Lobby those
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same politicians who are taking money from Boeing and prevent systems that would actually make these
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planes safer you can have more improvements in the guide by wire technology you can have more
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improvements in GPS you can have more improvements in a computer's ability to help improve and augment the capability
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of the pilot unfortunately that would result either in fewer Pilots or less pay and so that doesn't happen nearly as
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fast and obviously as it should it's the same for air traffic control and all of
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these issues build up because we've allowed monopolies to build up so as much as we think we are a capitalist
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Society we have veered into this collectivism in certain markets and where it's measurable and obvious we
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need to point at it and say let's go fix it yeah and this be let me just tea up a
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little bit of what you're referring to in case people don't know but everybody probably saw the news that on January
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5th the door blew off of a one of these Boeing 737 Max Jets if you've heard that
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name before it's because this isn't the first time that the max Jets have had problems this plane safely landed thank
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God and there was nobody sitting in the row with the door blew off and this has to do with some bolts on the doors but
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this is just the start of problems with the 737 Max there's an incredible doc mentary if you haven't seen it we'll
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we'll put it in the show notes Boeing's fatal flaw and the version before this the 737 Max 9 is the one that had the
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the bolts come off jth the max 8 if you remember there were two really harrowing
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uh instances where tragically 346 people died in these two instances because the
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plane literally the software on the plane which is called Max maneuvering characteristics augmentation system
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which was designed because they were trying to get more fuel efficiency and they had
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positioned the engines in a weird way on on the wings so they had to kind of help
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Pilots level the stuff into your point about regulatory capture there was all this behind the
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scenes manipulation of the market to try to get these planes built to try to get
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them out the door because there was so much money at stake well on these two terrible accidents the plane the nose
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literally Dove and the pilots were fighting it in both cases right they they just crashed and everybody on board
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died and for 20 months the the 737 Max models were grounded and that cost the company over $21 billion so there is no
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competition to your point and then in a free market if there were 10 providers would this be much different tooth and
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absolutely yeah so I think that's what you have to realize here is that these duopolies you think there's competition
00:26:17
in a doopy there isn't competition no I mean like for example like if you look at the car market how many instances I
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think the last big incidence that I remember was I think Ford had an issue with the fuel tanks of some cars that
00:26:29
were exploding right yeah but the reality is when that happens there are alternatives one is that there's a legal
00:26:37
requirement for Ford to just fix these things quickly there were lawsuits that happened there was class actions there
00:26:43
was settlements but there's also the ability for folks that can afford it is just to switch vendor and of which there
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are 50 other vendors to choose from that is a healthy Dynamic so today when you look at the auto market what do you see
00:26:55
a plethora of choice and when you see fatalities or safety issues they are overwhelmingly driver error yes and we
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assume that and we get insurance to deal with that when you look at airplanes you have
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these three sections of risk that each are compounding because there is no competition number one is that the
00:27:15
Monopoly vendor has zero pressure to actually test these things adequately because on the other side of building
00:27:23
something well is shareholder pressure to deliver something sooner and faster so that they can reap more profits then
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second is you have a regulatory infrastructure that puts rules on top of rules but then will bend the rules if
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you donate to them right and that's measured and known and then the third are the folks that actually operate the
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planes who have this actual incentive to not see technical improvements because it defends their job for
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longer and in all of these cases there isn't enough competition to shine a light on this to say how does society
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actually want this Market to operate this is collectivism it's not working freeberg you have thoughts on this
00:28:03
Boeing regulatory capture and the issue of only having two vendors there and the complexity of these
00:28:10
machines now in relation to that Nick you can pull this up this is an audit of the business model for a company called
00:28:18
trans group trans group is a aircraft Aerospace parts manufacturer they sell certified
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regulated uh aircraft parts to Aviation companies as well as to Airlines private
00:28:35
pilots and also the government and they do about 7 billion in Revenue three and a half billion in IB so off TI point a
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couple weeks ago about what's the appropriate competitive IAH margin that a company can ultimately achieve they
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eiton margins 53% this company insane better than Facebook insane on 7 billion of Revenue growing Nick if you want to
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pull up their stock chart and you guys can see how the business has performed over the years and their business model
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has been relatively simple they've acquired aerospace companies got that have certified Parts they drop the cost
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and raise the price and they do that over and over again and here's the business over the last 10 years this
00:29:15
thing is um you know a roughly 10 bagger 8 to 10 bagger in the last 10 years the market cap is 60 billion today
00:29:25
no end in sight and so there was a government audit done of the business by using uncertified cost data which is one
00:29:32
of the most reliable sources of information to perform cost analysis we found that trans earned excess profit
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profit of at least $21 million on 105 spare parts on 150 contracts so they're selling spare parts into the government
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the government auditor came in audited them and identified because there's no real audit there's no real
00:29:52
accountability in government as purchasers but there is regulatory Authority UND deciding who are the
00:29:57
winners and who are the losers in the market trans time has been elected a winner because they have regulatory
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approval to make and sell these parts the cost to get approval to make and sell these parts is so high that it
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makes it prohibitive for startups to come in and compete in this Marketplace and now that they're a preferred
00:30:14
supplier and they get these single contracts where there's no competition to be a supplier they can raise the
00:30:21
price every year multiple audit reports over the last 23 years have highlighted the problem of the Department of Defense
00:30:26
paying exess profits on Soul Source contracts where cost analysis was not used to determine fair and reasonable
00:30:32
prices and this problem continues to occur now I'm not necessarily saying that this is a negative on trans time
00:30:38
it's a fantastic business it's well-run it's one of the best-run public companies with a multi10 billion dollar
00:30:43
market cap in the world but the condition is that the US government comes in and picks and chooses through
00:30:48
its regulatory Authority which companies can make products the cost to enter and
00:30:53
compete becomes prohibitively high and then the company has complete pricing power and there's very little
00:30:58
accountability in the overall system and I think that this plays out not just with this company but obviously also
00:31:03
with Boeing and the fact that we've narrowed down the competitive market space to just a few Soul Source
00:31:08
providers that have very little accountability and eventually these sorts of conditions arise either prices
00:31:13
get too high quality degrades all the other things that Natural Market forces would keep a check on yeah and in in
00:31:19
terms of competition chamath the I guess the only thing you could say is consumers could potentially Maybe try to
00:31:27
avoid the 737 Max I know I did when all these accidents happen I just told you know my my person who books the flights
00:31:34
hey do not put me on a 737 Max period full stop and you know what you're going to wind up paying a lot more you're
00:31:41
going to have a hard time getting certain routes you're going to reduce it because you know most Airlines I think
00:31:46
have these 737 Maxes in there so you when you have such a few number of providers to your point about it's not
00:31:52
like cars it's not fragmented like that you can't avoid a certain car type a plane type the way you can avoid a car
00:31:58
type so just wrapping up here chth what changes should we see in terms of late stage capitalism something in the
00:32:06
example like air travel and and manufacturers is there any way to unwind this reasonably or is it too late because
00:32:14
we're at thisy I I I go back to some of the examples that we've made fun of before you have to rely on the
00:32:23
government to actually be competent in key moments in time I think this is one of them the organization that could do
00:32:31
something about it for example take the FTC or even take the doj we are investigating
00:32:40
Amazon's purchase of the portable vacuum cleaner Roomba right critically important issue and that is apparently
00:32:50
for the American people higher than the sclerosis that the government has enabled enabled in the airline industry
00:32:59
which affects everybody so could the right government agencies choose to actually focus on
00:33:05
something important here and actually figure out H why is this happening because I think the door plugs
00:33:14
issue is endemic of a much bigger problem this is a company that's rotting because there is no accountability and
00:33:20
the reason there's no accountability is there's no real functional competition and I have not seen any good answer
00:33:27
to accountability other than competition yeah I mean the the good news uh is the
00:33:33
FAA really took quick action to ground these 171 Boeing 7379 Max a planes but they don't they do not understand the
00:33:43
scope of the problem if they let them back in the fleet and this is happening the bigger picture problem of lack of
00:33:48
competition yeah they they're no no Noy of these my point is like you had to adjudicate the interaction of very
00:33:57
complicated hardware and software in that first go around here is just a pure systemic Hardware
00:34:05
failure so the point is that whether it's them or their suppliers there's just a some
00:34:13
complacency that sets in when you know you will always have the business to Freed Burke's point it is a very
00:34:19
corrosive thing in running a business trying to have motivated employees when they know on the back end of it
00:34:30
that they could make anything in the world and they'll just be able to sell it to somebody and they'll have to take
00:34:35
it that's that example that freeberg just cited 20 odd million dollars for just random stuff for what is it 15
00:34:42
pieces that's crazy that's just straight up theft and so when you have that how do you expect the employees of that
00:34:50
organization to give a I don't see how I don't see how you could expect that and so my point point
00:34:57
is the FAA has a much bigger problem so for example like the doe has a loan program to try to create a diverse
00:35:03
energy infrastructure in the United States maybe we need to look at some of these sectors and instead of building
00:35:08
the administrative State take some of that money instead and just create programs to get more competition all
00:35:15
right in other news Adam Newman you remember from wew work infamy Fame has a new startup you may have heard of it Flo
00:35:23
they've raised a ton of money he started buying a bunch of apartment builds bus the idea people can rent nice apartments
00:35:29
and cool cities that focus more on social interaction and hanging out comment spaces all that great stuff and
00:35:36
there's also allegedly or reportedly some sort of rent to own where renters can receive equity in the company over
00:35:44
time and I don't think this has ever been released but the idea would be maybe you own shares in flow flow
00:35:50
manages around 3,000 units most of which were purchased by Newman after he left wework and you know he took down a
00:35:56
windfall as an exit package and so according to the real deal this a real estate publication Newman had a 60
00:36:02
million variable rate mortgage on one of these properties in June sax maybe you could explain to us what's going on here
00:36:08
since you have a lot of experience in real estate well it's pretty simple he can't make his interest
00:36:14
payments Okay the reason is is because he had floating rate debt so if he had locked in his debt over say 10 years
00:36:22
back in when he bought this building in 2021 or whenever it was when interest rates were extremely low you know that
00:36:29
was during the the Zer period probably could have locked in long-term debt at maybe even 3% three or 4% and instead he
00:36:38
got floating rate debt and if you look at where commercial debt is now I mean it's 78
00:36:43
9% if you can get it which is pretty hard so he maxed out on debt when he bought these buildings he bought them
00:36:50
top of Market it sounds like in 2021 because real estate like a lot of things moves
00:36:56
inversely to interest rates so when interest rates spiked over the last year or so then real estate valuations went
00:37:04
down so he bought a bunch of buildings top of Market using a lot of debt that was floating rate interest rates spiked
00:37:11
Perfect Storm now he can't make his interest payments the crazy part about this when I was watching it happen jth
00:37:17
and we talked about it I think on the program at the time was in recent harowitz put in like over 300 million at
00:37:23
a billion dollar valuation but they didn't do that in Peak Zer they did that in 2022 when the writing was on the wall
00:37:29
what what are your thoughts on why they would make a bet like that and uh yeah just Tech VC's betting on real estate
00:37:38
for a second time how does that occur well I don't think it occurs because they cared about real estate I
00:37:44
think it allows them to take $300 million of committed capital and put it out there so that
00:37:51
they're $300 million less available which means that they're $300 million closer to raising a new fund which means
00:37:58
that they can raise they can charge 2% on more money that's why they did it got it yeah so just keep the money train
00:38:06
deploying Capital it's a place where you can put a big huge check and you can raise your next fund and yeah yeah why
00:38:12
not yeah okay well there you have let let me let me offer I mean I don't disagree I think that candidly what
00:38:18
you've said is exactly how Mega funds are thinking about we have to deploy Capital to raise our next fund and if we
00:38:23
still have capital in our last fund then we can't deploy if you're going to have to deploy large
00:38:29
amounts of capital wouldn't you feel better deploying that Capital with an entrepreneur who's actually run a big
00:38:37
business before even though the business failed no no no if you if you if you if
00:38:41
you were not optimized for fees you would do what Peter teal did and just have the fund and return the
00:38:45
money right he and for for for does that because he's already won but for everybody else that's trying to win the
00:38:52
only way to win in a world where your your exits are not that great rate is to actually generate money via fees even
00:39:00
though that fees are tax at current income that's the way to win inventure it's not carry it's by fees and so it's
00:39:07
and and I don't blame andreon I think like that's that's smart for them to do and if they have folks that are willing
00:39:13
to enable that by giving them money they should do it but are they going to generate huge rates of return probably
00:39:20
not because that's not what real estate is known for Real Estate is known for long steady tax arbs that's slowly
00:39:27
compound for the for the owner of the company over 20 or or the owner of the business over 25 to 35 years that's not
00:39:33
what a venture fund is supposed to be doing for a 10 year 12E return cycle so obviously they're doing it for fees
00:39:39
that's okay I think that's capitalism what are the LPS then think Sachs if we look at this you know you're
00:39:45
an LP and a technology firm I'll take andreon out of it for a second but let's just say some giant LP gives giant
00:39:50
amounts of money to a venture capital firm and then they're deployed in real estate
00:39:57
what happens you know in their minds and is there any kind of tension that would
00:40:00
occur well handicapping the situation you can never judge a VC based on one investment if we were to do that every
00:40:08
VC would have a lot of egg on their face because we're supposed to take big swings and swing for the fences and
00:40:14
trying to hit home runs and grand slams and a lot of them are going to make you look foolish you have to look at an
00:40:19
Investment Portfolio and track returns over time so I wouldn't judge any particular investor based on one
00:40:26
investment so I don't think that's fair now in the case of this investment if you want me to explain what I think went
00:40:34
wrong I think Adam Newman had a compelling Vision his vision was to create a new experience in in I guess
00:40:41
you call it apartment living and that people would be willing to pay more for that because he would create this
00:40:48
National brand in apartments and right now apartments are super local and there's there is no brand in you know
00:40:54
apartment living so I think as a entrepreneur as an operator he had a a great vision and I think he actually
00:41:02
achieved his vision if you read these articles carefully what they say is that his occupancy was high and people were
00:41:08
willing to pay at least a little bit more for the experience of being in a flow apartment the problem for Adam
00:41:15
Newman is that at the end of the day his plan to raise rents by creating experience even though it worked it just
00:41:23
didn't raise rents that much and what ended being much more important were the moves and interest rates and how he
00:41:31
capitalized these Acquisitions and the price he paid on the Acquisitions so there's an old saying in real estate
00:41:38
that you make money based on the buy not on the sell meaning that you know when you go and sell your apartment building
00:41:45
office building or whatever you're monetizing an acquisition that you did correctly and if you don't buy at the
00:41:51
right price you're never going to be able to make money on the sale and I think this is a really good example of
00:41:55
this where where he bought at top of Market his Capital stack was over reliant on debt and he had floating rate
00:42:04
debt I mean those are just Financial mistakes and timing mistakes that you can't make up for no matter how good an
00:42:11
operator you are in real estate and in a way I mean this is the same thing that happened with we work which is he
00:42:18
delivered an excellent product I mean people love we work offices absolutely yeah they they pick them over other
00:42:25
offices because The Vibes because of the culture because of the community so he he is a ma he has some Mastery of that
00:42:32
but to your point entry price matters and the economics matter if you look at wework it didn't fail because the
00:42:38
product wasn't good it was because he didn't pay enough attention to the financial aspects of the business with
00:42:43
Wei work he leased a bunch of offices at the absolute top of the market and then
00:42:48
overinvestment with Flo he bought a bunch of real estate at the top of the market and sort of did it with the wrong
00:42:55
Capital stack so this is the problem is that when you get into a real estate business it doesn't really matter how
00:43:02
great you are as an entrepreneur operator if you're not good at like sort of the Legacy old school real estate
00:43:11
part of it and the the old school real estate guys were were saying during Wei work this is not going to work you know
00:43:17
this is this is regious but with a bad capital structure and the old school real estate guys were saying something
00:43:24
similar about this and you know it just goes to show that if you are going to try and disrupt a legacy industry you do
00:43:31
have to kind of understand the ins and outs of of that Legacy industry and the great Paradox of this Sachs was when he
00:43:37
did Green desk which was the precursor to Wei work when he did the first Wei Works in San Francisco and other places
00:43:43
his Playbook was find a building that's empty that cannot be leased so he got 25
00:43:48
Taylor Street like six then Market the worst area by the tenderloin and we had an office there for a little bit and I
00:43:54
had my podcasting Studio there for a little bit this was a terrible off this was a terrible area but he made it hip
00:43:59
and cool and it was really cheap and man it sold out and it was packed and The Vibes were great but then as you're
00:44:06
saying then he moved all of a sudden to Soma and he started opening up these glass filled ones and you know the he
00:44:12
was renting them for Less with all their giveaways and six months free and all the stuff than they could ever afford so
00:44:18
right he he kind of had Mission drift right the Playbook they just they changed the Playbook and it economically
00:44:24
was not viable well the timing the timing got really bad and again they didn't pay attention to the financial
00:44:30
aspects as much as they should in this case I think that if he was trying to execute this play today and doing his
00:44:38
Acquisitions today he could actually make it he would he would need a lot more Equity because he wouldn't be able
00:44:43
to get as much debt financing but if he had the equity and could do more of an acquisition based on Equity the prices
00:44:48
he'd pay right now would be much lower and then his interest rates come down he could ride that wave he could refi pull
00:44:55
his Equity out and put debt on it that is cheaper as the price goes down so there was a way to maybe make this work
00:45:04
but you know with real estate the timing is just so important again your cost basis of when you get in the investment
00:45:11
is probably the most important thing in terms of whether you make money or not did you see this by Chance the real
00:45:17
estate piece in 60 minutes the package they did last week sax it was basically what we were talking about here a year
00:45:23
ago super compelling uh if you haven't seen it it's basically the all in podcast from 12 or 18 months ago has
00:45:28
anything changed on the field in terms of commercial real estate or is it just continuing to I mean nothing's changed I
00:45:35
think that the all the commercial real estate guys the the sponsors and the dealmakers and so forth they're all kind
00:45:42
of hanging on by their fingernails waiting for interest rates to come down and all the leases are still coming off
00:45:48
right like people are still who had six seven eight year leases that were signed
00:45:51
preo before depends on the market I mean some of the some of the markets are are
00:45:56
coming back but again what this flow news show this Adam Newman news shows is that you could be fully occupied and you
00:46:06
could still default and the reason is because of your capital structure the interest rates have spiked up you're now
00:46:12
paying you know all of your operating income is being eaten up by your debt service the only way to to make it
00:46:20
through that is you you go to your bank who is one of these Regional Banks and you work out a to extend you know they
00:46:27
call it pretend and extend and they let you hang on there you'll like you know extend the term of your Kick the Can
00:46:34
down the road yeah yeah they'll they'll lower your debt payments and exchange for more term and you just try to get to
00:46:39
the other side of these high interest rates and then once you get to the other side again you're hanging on you're not
00:46:45
defaulting that's what everyone's doing so if rates don't come down as expected this year you know I think the Market's
00:46:52
expecting 150 basis points of of rate Cuts if that doesn't actually happen there's a lot of real estate sponsors
00:46:59
who are in trouble and in turn there's a lot of regional Banks who are in trouble
00:47:03
because they're the ones who made all these loans to these sponsors so everyone's trying to like you said Kick
00:47:08
the Can down the road yeah and I the the 60 Minutes piece also talked about how there's some emergency resoning going on
00:47:16
in New York specifically where they take the floor plate in the middle which I think you talked about sa you you have
00:47:21
to have Windows if you want to convert to residential and they just make an space the void they call it in the
00:47:28
middle of the building that you know they'll deal with in the future but they just have this empty space in the middle
00:47:33
of the building that's not going to get used and then the rest that has Windows gets used to be converted into Lofts Etc
00:47:39
in New York so people are starting to think creatively uh if people don't come back to office okay let me ask you a
00:47:45
question just based on that com the set of comments given Adam Newman's experience as an investor in this space
00:47:52
and this General opportunity wouldn't you rather back a known some someone who knows and has been through the market
00:47:57
and has experience versus some founder who shows up and has never run a business in this space I mean this guy
00:48:02
has more experience it's such a great don't know that well here's the thing freeberg the great point about that is
00:48:09
you don't see a lot of Founders who explicitly come out and say I want to build a hundred billion dollar business
00:48:13
I want to build a giant business they're so rare that VCS who have a lot of chips
00:48:19
they would like to back those you know swing for the fences folks and so I do understand why people would back him
00:48:25
again and they've run at it before they've done it to some degree failed learned from mistakes and this time
00:48:30
around he he learned from exact same mistake so therefore they made the Bad Bet I'm not advocating by the way I'm
00:48:37
just asking no I understand to your point freeberg I can understand people want to bet on somebody who is crazy and
00:48:42
swings for the fences this entrepreneur clearly does not learn from their mistakes I think both of those things
00:48:48
could be true right shouth what I would say is that I think that where I've made
00:48:53
the biggest mistakes in my investing career is when I confused what I was investing in for one thing when it was
00:49:00
the other and so when I look back and I had a small doans in biotech because I thought oh this is going to be more
00:49:09
computational biology and I understand computation so this gives me an edge turned out I was wrong there was another
00:49:16
time where I've invested in certain sectors of the economy because I thought they were technology businesses and at
00:49:21
best they were Tech enabled versions of an existing industry and when I look at those Investments the thing that I got
00:49:28
wrong was not listening to the very experienced investors in those sectors and why they
00:49:37
passed and that has caused me no shortage of headache and grief and so if I had to learn anything from all of this
00:49:46
it would be that if it looks like a duck and it quacks like a duck it's a duck it's not a tech company and so if that
00:49:53
duck means it's a real estate business I would talk to a real estate investor and and wonder to myself why they
00:49:59
wouldn't have done this deal similarly you know when it's a biotech business I have to ask myself why wouldn't they
00:50:06
have done it they know more than I ever will in this space and so similarly I kind of look at this as an example of
00:50:13
that which is could be a very talented person in an industry I think just it's important for us to be very clear and
00:50:20
lucid and intellectually honest about what industry that is I think it's a great point I mean look I whenever
00:50:25
you're dealing with a tech enabled business which I would Define as a more traditional business model with some
00:50:33
sort of software layer you know on top of it you have to kind of assess like how much of a difference does that
00:50:42
software really make at the end of the day in this case this is a real estate business with a very thin kind of
00:50:50
software slash operating technology of yeah the experience layer is a very small part of the overall
00:50:59
let's call it p&l of this business such a great Point sax I mean the Perfect Analogy would be like if you have if
00:51:06
you're taking a flight on United the United app is delightful now it's a really good app I you this is a
00:51:11
commercial airline it's called United Airlines sex you pay for one ticket instead of the whole plan but have you
00:51:15
been to McDonald's recently I actually went to McDonald's yeah you order through an app now and there's a big
00:51:20
screen the point is you walk in there and it's probably not the McDonald's you knew 15 or 20 years ago it's not about
00:51:26
waiting in line and ordering and it that's not how it works anymore there so the point is is that a tech enabled
00:51:32
business or is that still a restaurant well if you spend a lot of your time intellectually contorting yourself to
00:51:38
try to justify why the next version of McDonald's is a tech enabled business you're just going to lose a lot of money
00:51:44
it's a restaurant now all restaurants need technology and what you see by McDonald's is even the oldest and most
00:51:50
established are running forward very quickly to implement technology ology because they know that it creates
00:51:57
efficiency which then flows to the bottom line for them yeah so the reality is that we have lived in this
00:52:03
Wonderland where we've looked at these software businesses that have 80 and 90% gross margins and imposed that
00:52:09
expectation on other markets and then made investment Decisions by trying to justify how that it's a tech enabled
00:52:15
real estate business a tech enabled Healthcare business a tech enabled energy business without being honest
00:52:21
with ourselves that those businesses have over decades because of lots of competition found a consistent
00:52:29
and reliable resting place in terms of gross margins far below 80 and 90% And so
00:52:36
instead of willing Tech enabled businesses to be at 80 and 90 and tricking on I think it's more realistic
00:52:43
to ask yourself why aren't 80 and 90% gross margin businesses decaying to 30 and 40% gross margins like every other
00:52:49
part of the economy when everything will be technology enabled I think that that's a very reasonable question and
00:52:55
and I think the answer is there is no safe SP I don't think that you can justify 80 and 90% gross margins in
00:53:00
software when you can use a model and whip up a competitor I just think that we are all going to a place where
00:53:07
everything is a tech enabled version of something yeah marketplaces would be a notable exception there with network
00:53:12
effects so door Dash versus the tech enabled restaurant asset light marketplaces you and N Soxs have been
00:53:18
involved in a bunch of different marketplaces together sometimes they're asset heavy sometimes they're asset
00:53:23
light when they're asset heavy man it's really hard to make those businesses for
00:53:26
our cax yeah I mean I think we should differentiate between gross margin and then the net operating margin or or or
00:53:36
profit right and so you know gross margin is what is the cost on the margin of providing one incremental unit and
00:53:45
the thing about pure software businesses is that on the margin you can provision
00:53:49
another instance of the product almost for free I mean there's a little bit of Hosting cost at AWS or whatever so so on
00:53:55
the margins it's you know it's like the perfect gross margin business as opposed
00:53:59
to a hamburger as opposed to a yeah a restaurant is going to have very large cost of goods sold or cogs the simple
00:54:08
heris that I use is just does this company have large cogs cost of good sold and are they physical world
00:54:17
cogs if they are it's not a software business it's at best a tech enabled business so just look for
00:54:26
that you know does this business have large physical world cogs now what I would say is if the cogs are virtual
00:54:34
like you know it could be hosting cost or it could be paying twilio for telefony or something like that then
00:54:42
at least it's still not like as good a business because the the margins aren't as good but it's very scalable right
00:54:48
because you're you're not you don't have that like huge friction of needing to scale up physical world infrastructure
00:54:53
physical world Supply chains that kind of stuff so I like virtual cogs a lot better or digital cogs a lot better than
00:55:01
physical cogs I I love it when marketplaces though I mean we could speak to that too you know when I had
00:55:06
Dar on the Pod the other week and when he launches an adjacency hey we're going to sell alcohol hey we're going to sell
00:55:12
groceries hey we're going to add this thing that's right next to the already you know portfolio of of uber offerings
00:55:18
doesn't cost them much right they just have to get the supply side up and running but they already have the demand
00:55:23
side and I think that's where like these super apps are do really well or Airbnb
00:55:26
adding you know some inventory in a new city that they unlock right well true true marketplaces are perfect gross
00:55:33
margin businesses as well because they don't have fiscal inventory that they themselves own what you'll see is with a
00:55:39
lot of marketplaces they'll cheat by buying the inventory themselves at least to jump start the market and then
00:55:47
selling it yeah and so when you see that line item on the p&l the you know that they have real cost of goods sold you
00:55:54
know oh wait a second this isn't a true Marketplace they're providing the service yeah and so again it's just a
00:56:01
way to like catch whether the business is truly one of these great high gross margin businesses or whether it's more
00:56:09
of a tech enabled business that's pretending to be a pure software business yeah direct consumer got people
00:56:14
in a lot of trouble during the last cycle in Venture Capital if you look at a lot of these
00:56:22
companies even the best SAS businesses have seen their gross margins erode by about
00:56:28
15 to 20% it used to be that best-in-class software business can generate 90 90 1% 80 high 80s to low 90s
00:56:38
gross margins now that's not true you see a lot of these best-in-class companies that are in the high 60s low
00:56:42
70s so it already just shows you that that pressure has has come upon the market and so is it that the software
00:56:49
enabled business goes towards 85 or is that the 85% gross margin business goes towards 30 it looks like it's the ladder
00:56:55
that's just what the data says well maybe I'm just categorizing certain costs differently than you are but I
00:57:00
don't know why a software business would go all the way to 30 right because again
00:57:03
sales and marketing don't count in the gross margin GNA doesn't count even R&D doesn't count in the gross margin it has
00:57:10
to be you know a unit cost that you can attribute on the margin to that incremental instance of the product so
00:57:18
things like again paying twio for meter telefony or paying open AI for like metered API access all of that is
00:57:27
definitely in cogs and I think some customer support costs that can be attributed on kind of a per instance
00:57:34
basis that goes in there but if if sales and marketing and R&D and GNA aren't going in there I mean I just I don't
00:57:41
know why it go all the way to 30 I guess I'm just saying that I still think software businesses and marketplaces for
00:57:47
that matter are still the best kinds of businesses on a margin profile basis the
00:57:52
problem is that there's a lot of fake software businesses or fake marketplaces out there that are pretending to be pure
00:58:00
Tech businesses when actually they're they're more like old school businesses that have the veneer of technology and I
00:58:07
think to your point there like the trick of saying I'm an 80% gross margin business but having no profitability is
00:58:14
then who cares so you true when you look at the profitability of these businesses
00:58:20
again you'll be in the the 20 to 30% that's why when you see companies that are in the high 30s to low 50s they're a
00:58:29
very unique and B you should expect that there is something fundamentally monopolistic about them and that is a
00:58:39
simplest way to filter out these companies because in a highly competitive market you cannot extract
00:58:44
those kinds of profit dollars cap capitalism says you can't do that so you can only do it when when you have an N
00:58:50
of one or n of two kind of competitive Dynamic where there's essent a mutual toon with your biggest
00:58:57
competitor yeah it is it is a good point that just because you have good union economics or good gross margins doesn't
00:59:03
mean that the business is profitable at the end of the day good yeah could be mean you could have 80% gross margins
00:59:08
and still be losing a ton of money because you've got too much overhead you've got too much sales and marketing
00:59:13
you've got too much R&D yes so you're selling to customers who don't really need it and then they eventually cancel
00:59:18
right like we see that a lot look at the streamers look at the streamers that's just a big recycling it's just like
00:59:25
people come to the top of the funnel they use the product and then they leave and then you have to reacquire them over
00:59:30
and over again and it and it could be the case that SAS actually looks a little bit like that too at the bottom
00:59:34
line level well when you hit your natural audience it it does get challenging yeah well this is why in in
00:59:39
SAS there's a herisa called the rule of 40 which is for public market SAS companies you want to see that their
00:59:47
operating margin plus their growth rate equals 40 or is greater than 40 ideally so in other words you could have a SAS
00:59:55
business with a 20% operating margin and a 20% growth rate and that would hit rule of 40 and that would be a very
01:00:02
attractive business or you could have I don't know it could be growing 50% year-over-year and its operating margin
01:00:09
could be negative 10% and that'd be okay too because they're losing money but at
01:00:14
least the investment is leading to AB well above average growth you know or you could be growing you could you know
01:00:22
be growing slower you could have a 10% growth rate and have a 30% operating margin and that would also be hitting
01:00:27
the rule of 40 so it's just a simple way of like tracking whether this is a a good business at scale I don't think
01:00:35
stups have to worry about this until they get to kind of the later growth stage yeah when you're in your BC round
01:00:40
you're making 50 100 million yeah you got to be really thoughtful about this in the beginning you're trying to get
01:00:44
product Market fit triangulate on something so shth just mentioned streaming NBC Universal if you didn't
01:00:51
know it paid the NFL $100 million for for the exclusive streaming rights to one that's right one first round playoff
01:00:58
game for the NFL that happened last weekend between the Chiefs and the Dolphins that was on their service
01:01:04
peacock NBC's app basically their version of Netflix or Disney plus it guarded 23 million viewers which makes
01:01:11
it uh the most streamed live event in US history even so that's almost half of what you the Packers and Cowboys had
01:01:21
about 40 million Lions versus Rams same weekend 36 million and so this has brought into question what's going on
01:01:29
with streaming have these businesses gotten ahead of their skis just give you a couple of charts Disney plus took off
01:01:35
like a massive rocket peaked in Q4 of 2022 at 164 million subscribers they're now at 150 million here's a chart I mean
01:01:43
just amazing how uh quickly they got to Netflix is numbers here's Netflix's chart again this is quarterly they're up
01:01:52
to now an all-time high 24 47 million subscribers and the annual growth rate all the way back to 2001 still pretty
01:02:00
spectacular and their revenue also uh very respectable for Netflix however they overspent massively during the peak
01:02:09
streaming era 2019 to 2022 and that's when subscriber growth started to slow obviously they were spending way too
01:02:16
much and other entrance came in like apple plus and Amazon Prime where they really didn't even think that they had
01:02:22
to make a profit they were using streaming maybe to sell more iPhones or to get more Amazon Prime subscribers so
01:02:30
here is the major problem here's the churn chart basically churn means people cancel right and so as these Services
01:02:38
have cut what they're offering the number of Marvel shows or Disney you know having Star Wars shows the churn
01:02:45
goes way up people are also having subscription overload I don't know how many of these I subscrib to but I think
01:02:51
it's all of them or maybe out of these 1 2 3 4 5 6 7 8 n on the chart I think I'm
01:02:58
I have seven of these so there is definitely some unbelievable subscription burnout and the streamers
01:03:06
in order to get these businesses above water have raised their prices we all know that you've probably seen your
01:03:10
streaming bills you know have three four five bucks added to them every month and
01:03:14
at the same time they're cutting how much they're spending so you're paying more for last chth your thoughts on this
01:03:20
Dynamic if you bring the chart back up here's the most important thing that's worth noting let's take stars as an
01:03:26
example it turns 12% of their users every month which means that over a year they've ched 144% of their user base
01:03:34
that means that they have to basically turn their entire membership base one and a half
01:03:41
times in order just to tread water right so if you start with 100 it's a lot of money that you have to
01:03:48
spend to make sure you end the year at 100 forget about growing if you look at peacock they're
01:03:54
going to lose 100% of their subscribers in a year if you look at Discovery they're going to lose 75% if you look at
01:04:03
max they're going to lose 50 odd percent Apple TV same Hulu and Disney plus will
01:04:09
lose 60% Netflix will lose almost 40% so the only winner in all of this is Facebook and Google The Only Winners are
01:04:20
Facebook and Google because that's where the ads will appear to try to reacquire
01:04:25
these folks right so I guess that's a positive indication but the reality is that money
01:04:30
isn't infinite and so what happens in a dynamic where you have a category where there's just a lot of consumer churn I
01:04:37
think what happens is it evolves in phases and in phase one which is sort of where we are now where there's a bunch
01:04:43
of relatively wellestablished folks is that they are going to initially overspend on content because they are
01:04:50
going to try to differentiate the cost of acquisition based on on content right which makes sense I have a tent pole
01:04:57
come and watch it here you can't watch it anywhere else and I think that was the peacock example where they had this
01:05:03
football game and all these people showed up and they thought this is exactly why we're paying so much money
01:05:09
for these rights because people will show up I think the problem is that when everybody is doing it everybody's doing
01:05:16
it and so you don't know how to differentiate Even in our group chat look at the number of times when
01:05:22
somebody randomly says is there something to watch and everybody's got 50 recommendations guess what I do I
01:05:27
tune it all out because I'm like 50 across six different Services I have no way to track it and then I lose interest
01:05:34
and I'm like you know I'll just stick to YouTube so I think what happens is in Phase One folks spend a lot of content
01:05:41
in phase two they realize that actually what you need to do is spend on a long taale of content
01:05:48
in a much more disciplined way so there's a company that that I know about for example they just signed a
01:05:55
pretty big deal with Amazon hundreds of millions of dollars and I was trying to figure out
01:06:04
is that a lot or a little and it turns out that Amazon's trying to get three or four or five versions of these
01:06:11
going which means that before we probably could have gotten five or 600 million and instead you get two or 300
01:06:17
million it's still an incredible thing but it just goes to show you that there's a lot of competition and so
01:06:21
instead of having a single mode right if you were to graph something where there's a few
01:06:27
pieces that just get all the money now you're smearing this content across all kinds of stuff and I think that that
01:06:35
makes it very difficult to keep folks so I suspect that you're just going to see
01:06:39
a lot of turn I don't I don't like this category at all as an investor so clearly there's been an overspend here
01:06:45
but consolidation is coming freeberg any thoughts on the streaming space I just think this is the opposite of what we
01:06:51
were talking about earlier where there's a free market Market competing and it's
01:06:55
benefiting consumers I mean the point that you made is a really good one that there's a lot of great content to watch
01:07:01
folks that raise prices people cancel so you got to drop prices you got to offer
01:07:05
good content and I actually think this is a really good and healthy thing to see happen is competition that benefits
01:07:12
consumers and there'll be some set of winners here and some set of losers but I think ultimately it's just really good
01:07:18
to see this how it all shakes out who's willing to put up the big bucks who's got the smarter algorithm that predicts
01:07:24
how fresh your content has to be and how unique it has to be relative to other platforms to keep the audience attention
01:07:31
I would argue if you look at those numbers and you look at the performance over time Netflix absolutely rules the
01:07:35
roof in this sense they're an incredible operating team they have an incredible capability of predicting what content
01:07:41
will work how how quickly they have to refresh content how much they should be investing in content per quarter per
01:07:46
month and they're clearly retaining users and making money and others maybe that are newer to the game haven't
01:07:52
figured that out yet but it's just very good to to see the competition so I don't know how to predict what's going
01:07:56
to happen here but it's good to see it's clearly going to be massive consolidation also these folks are
01:08:00
launching Advertising based version so you probably saw Netflix has an advertising tier and so a lot of these
01:08:06
folks uh didn't have those Disney plus I think is going to have one as well you know what no one's paying attention to
01:08:11
is YouTube TV I don't know you guys subscribe to YouTube TV I'm a Hulu person yeah I think it's fantastic if
01:08:18
you look at some third party data on YouTube TV the subscriptions are going through the fraking roof and it's really
01:08:24
interesting to see because with YouTube TV you're basically rebundling the unbundling that happened in cable except
01:08:30
you're doing it over the internet you can access it anywhere so they've basically converted the pipe as the
01:08:35
value to the service itself as the value which you can access anywhere you want on any TV and any room without boxes
01:08:41
while you're on the road on your phone on your laptop and it seems to be kind of highlighting that maybe it wasn't
01:08:47
necessarily the bundling that was the problem but the way that the service was being offered so who knows maybe
01:08:54
bundling versus all of this part and parcel you got to pick five different providers and buy content on the Fly
01:09:00
maybe that's not what consumers want young people don't care about the live channels old people do but yeah Hulu and
01:09:06
YouTube TV are really wonderful products because they work really well on Apple TV the apps work great but they also
01:09:12
work great on your iPhone your iPad so yeah you know they're really spectacular in that way sax well just tie this
01:09:20
conversation back to what we were talking about with margins s and Tech enabled versus real software businesses
01:09:27
I personally have never seen a BTO C subscription business that works the churn is just too high I mean what I've
01:09:34
seen is that the monthly churn rates on a software subscription for consumers is
01:09:40
somewhere in the 5 to 10% range so on a full year basis you're retaining maybe 50% of your customer base you're
01:09:46
effectively rebuilding your business from scratch every two years it's a very tough place to be this is why I
01:09:51
basically skewed towards B2B SAS is because a good B2B SAS business will have net expansion instead of 50% churn
01:10:00
you'll do 120% expansion and so you're actually building a subscriber base with long-term value now how did Netflix do
01:10:08
it I mean Netflix avoided that prohibitive level of churn by spending literally billions of dollars on content
01:10:15
and original programming and again it goes back to the point this is not a pure software pure Tech business it
01:10:22
includes an old school Studio which is very Capital intensive and they financed a lot of the content
01:10:32
acquisition with billions and billions of dollars raised during that Zer period from I think both equity and debt and
01:10:40
you have to wonder if that could be done again in this post Zer period where capital is just a lot scarcer I think
01:10:47
this is going to work really well though for Netflix and Disney man these huge archives that they own these libraries
01:10:52
are going to get them to 3 four 500 million Global subs and this become money printing machines that I
01:10:58
don't think they're going to need a ton of new content the question is whether you could recreate an archive of that
01:11:03
level today given how much more expensive capital is my point is that Zer help Netflix catch up to these
01:11:10
Studios and create this huge library but still I think that what the streaming services have shown in their churn is
01:11:18
that if you don't provide original content and original programming then users will turn off that so you have to
01:11:25
kind of have both you kind of have like the library as filler but if you don't have a hot show come along every so
01:11:32
often the subscribers will turn off that yeah you need to have some new content depending on how deep the library is
01:11:38
feels like Netflix and Disney Plus have done a great job with their libraries just to give you an idea revenue for
01:11:43
Netflix for 2023 33.5 billion 247 million Subs that's a arpo yearly revenue for those folks 136 bucks
01:11:54
a year now the reason you're seeing that uh number not Mak sense if you're paying
01:11:58
15 bucks a month is because internationally Netflix is a lot a lot cheaper but I I love those two
01:12:04
businesses I think they're going to be extraordinary over time Netflix has to acquire a 100 million people a year just
01:12:11
to stay even what's their turn rate 4% a month I think it's fine right so they're
01:12:16
turning half their customer base every year that's my point 100 million people they're rebuilding their customer base
01:12:24
from scratch every two years how does that make sense it's totally fine because what happens is you have people
01:12:29
coming off their parents plan getting their own people go through a bad beat they don't like it you know whatever
01:12:34
they unsubscribe but they all come back back and forth back and forth and then it just keeps growing over time I think
01:12:41
you're describing something that's true I think David is describing why it's a business I mean if they if they
01:12:48
make more money than they spend and I don't think they need to do a ton of advertising eventually you turn through
01:12:53
so much of the market that actually you can't maintain that growth rate I mean if you reactivate maybe you can do it
01:13:00
but I I think that's what's happening from a business perspective the only logical thing that I would do if I was
01:13:06
running one of these businesses is attach it to another business where you can think about it in terms of LTV so
01:13:13
the only obvious example of that I think is Amazon video because you can stick it
01:13:18
beside Prime and a bunch of other things and now you have a very different way of
01:13:22
justifying LTV and minimizing churn and that seems like a I buy that argument Jason I don't
01:13:29
buy like a standalone business like this trying to do it yucky I I no sorry real
01:13:34
quick have you guys dug into Netflix's business I mean they're still growing Top Line the eiton margin continues to
01:13:41
expand I mean all those facts might be true but that churn engine and that recapture engine seems to be working in
01:13:47
a way that they're printing cash and growing it's pretty impressive I don't know if there's a limit there but I mean
01:13:52
I I haven't looked at I think that is the key question yeah to the bundling Point apple plus which is
01:13:59
the TV component not the hardware product is bundled as part of this apple one program which is kind of like Amazon
01:14:06
Prime and so I think you're seeing a little bundling there Netflix also added video games to make it even more sticky
01:14:12
so I think there's like a subscription super app coming which the New York Times has kind of done right with Wordle
01:14:17
crosswords the athletic wire cutter and the New York Times so I think you're going to start to see
01:14:23
honestly you just had a jumble of names that went in one year and out the other I don't remember a single one you said
01:14:28
this is my point for most people Jason not a media fish AO New York Times is doing fantastic doing this bundling some
01:14:34
people come for the crosswords and Wordle and that's why they subscribe and they like the news other people come for
01:14:38
the news they discover crosswords and wire cutter and the athletic and they stay for that so I I do think there's
01:14:43
going to be an incredible business here I'll take the other side of it yeah they
01:14:47
spent a lot on content though during that period where Disney plus came in and I think everybody's now has a little
01:14:53
more discipline and the budgets came way down if you didn't know the Hulk cost 250 million or something the She-Hulk
01:14:59
rather that cost 225 million for Nine episodes what the first Avengers 225 million wait sorry 225 250 million for
01:15:06
for Nine episodes of the shek and people criticize it for having bad CGI so it's
01:15:12
I think there's like new discipline coming to was this a Netflix show a Disney Plus show a Disney Plus show yeah
01:15:17
I I don't know about you guys I've been rewatching The Sopranos I find some of the content on HBO Max to be the best
01:15:22
content out there oh my god I've there's so much rewatchability on it Disney doesn't have that much rewatchability I
01:15:28
don't know the only reason I keep my Max subcription is cuz I'm waiting for House
01:15:31
of the Dragon season two yeah I mean if they didn't have that one show I'd be like yeah cut it you know yeah I do
01:15:37
think this could help Netflix because a lot of these streaming services came along we had way too many right we got
01:15:43
saturated with streaming services and most of them you subscribe to you may not even remember subscribing you may
01:15:50
just subscribe to a free trial to get an NFL game and then you get build because
01:15:54
you forgot to cancel it by the way yeah have you guys ever gone into Apple iCloud settings and looked at your
01:16:02
subscriptions oh boy yeah get in there and guys just RI go go if you have like an extra five minutes you will save so
01:16:11
much money by going into subscriptions in your settings and just turning them all off I was shocked I was shocked I
01:16:18
mean this is part of your austerity measure absolutely you know how many subscriptions to Disney plus I had how
01:16:23
many well this is what's so gross is why they even let me do this I had three what
01:16:31
three how's it even possible one for the plane one for kids I had three I had three I had two hpos I had two Netflix
01:16:42
Oh no Netflix keeps sending me message saying hey you need to update your payment information but then I'm
01:16:47
watching Netflix on my Apple TV so I'm like I'm clearly playing for paying for it somehow so confusing and I have the
01:16:56
perfect solution for you there are credit cards now where you can set a spending limit and so what I do is every
01:17:02
year I just turn off the limit on that credit card I just take it from unlimited or uncapped down to zero and I
01:17:08
do this for business as well and then all the subcriptions time out you know what I call that what Jeff Jeff does
01:17:15
that for me Jeff does it yeah but I mean having somebody go in there I have a Jeff I have a Jeff know but it's very
01:17:21
simple you only use one card for subscriptions and then you turn it off every year to see which ones you want to
01:17:25
keep going it works really well and then you move the other ones to a new I don't
01:17:28
even want to say how many thousands of dollars I was wasting on like dual lingo I was like I'm paying for dual lingo and
01:17:35
then I was paying for your Italian it's still terrible yeah terrible and then I I had I had have a Cas against them no
01:17:40
then I had dual lingo and I had Babble and I had Rosetta Stone so I'm like my Italian is not improving because of any
01:17:47
of these three apps but I was paying them collectively like $400 I had a whoop subscription I don't even have a
01:17:52
whoop when Rick Thompson started manscaped I was I signed up for manscaped I get all
01:17:59
this ball deodorant I've never used it once we know we know we sit next to in poker we know it's not working bro just
01:18:06
a message to manscaped I have tried to cancel I have called I have emailed I took it upon myself to try it's
01:18:14
impossible to cancel they won't even let you reset your account so you can get a
01:18:17
link to cancel it's so hard and still your balls are terrible yeah my balls are phenomenal no I've sat next to you
01:18:26
in poker man not real okay let's get into Plastics and get off chamat balls I mean how did we get here uh
01:18:35
subscription Services subscription Services yes streaming is at a cross wordss AC Crossroads apparently so
01:18:42
they're really trying to make that ball deodorant happen aren't they they're trying to make it happen well they're
01:18:46
trying to make fetch happen ball deodorant is not happening I'm sorry I mean what are you supposed to do Squat
01:18:51
and swipe how does this work is it a spray are you lifting and spraying is it you got to give him
01:18:57
points for creativity trying to create like a new thing but yeah I was trying to support my friend in signing up for a
01:19:03
subscription service and now I can't cancel that's my problem that's my predicament could you also take a shower
01:19:09
and your soap I don't know just putting it out there I I'm I it's what's there does it have to do with the product I
01:19:16
signed up because Rick was the Venture investor that seated it and started I supported my friend yes
01:19:23
and now I want out and I cannot get out you can't get out every every time I try
01:19:27
to get out they pull me back in I'm just going to say when it comes to manscape no no testimonials please no
01:19:32
testimonials the worst part is like you you know it comes to the house and oh somebody opens your ball deodorant and
01:19:39
puts it on your desk they do no they put it staff knows you have saky balls well
01:19:44
that's what's so funny they put it right on the kitchen counter so as I walk through the
01:19:49
everybody I grab it and I'm like who's seen this bottle ah there it is what is it there bottle going shaving
01:19:58
[Music] Bal oh my God so how do you apply it is it just a little dabble do you no I mean
01:20:08
you know it's not a spray it's apparently an ointment sax it's an ointment this is far too much
01:20:14
information yeah I'll try it don't I'll try it it'sing you know what I'm going to
01:20:21
give you my my subscription it's got a why not oh man use the promo code shth for 10% off your use the promo code
01:20:35
dictator you get 10% you can never cancel but it's d i k Tater dick Tater yeah use S promo
01:20:47
dictator get 10% off your ball deodorant at manscape all right freeberg it's your
01:20:52
turn to to shine no not ball deodorant we wanted to talk about micro Plastics a study came out it's terrifying we've
01:20:59
known Plastics have been terrible for years obvious turned into some sort of political discourse with straws and
01:21:04
everything but Plastics are horrible we shouldn't be using them but this study confirms a bunch about drinking
01:21:10
microplastics educate us on this study that everybody's talking about right now Dr freedberg I I wouldn't start with the
01:21:18
statement that Plastics are awful Plastics are polymers which are long chains of what
01:21:25
are called monomers this is hydrogen carbon and oxygen that comes together to form these specific molecules and then
01:21:32
we can kind of bake them into crystall likee structures and the reason the Plastic industry took off is because it
01:21:38
ended up being very cheap to create materials that we could turn into chairs that we could turn into bottles to move
01:21:43
stuff around a lot of applications everything from solar photovoltaics to our computers to our laptops to our
01:21:50
phones everything has some form of these polymers in it the polymers that are commonly used for making uh bottles that
01:21:59
we consume beverages out of are a pet uh Plastics these pet Plastics are made from a combination of natural gas and
01:22:07
crude oil so we kind of have a production process where we get the carbon hydrogen and oxygen that's
01:22:13
naturally found in natural gas and crude oil convert it into these molecules that
01:22:18
we turn into long chains and we turn them into bottles and fill those bottles and they end up being
01:22:23
a lower carbon footprint than using glass about 5x the carbon footprint to use glass instead of plastic in in um in
01:22:33
making a bottle to store stuff and move liquids around 40% cheaper and a lot of other kind of reasons why the industry
01:22:41
and the world adopted Plastics not just for bottle beverages but for other applications so in Bottle beverages
01:22:47
because these are polymers there're these long chains of little molecules that are stuck together some of those
01:22:53
chains break and then some of those little chunks of those molecules end up floating around in the liquid that we're
01:22:59
consuming and what this study did that kind of highlighted a a set of data that hadn't really been studied well before
01:23:06
is they used a form of spectroscopy so kind of a multispectral light system Shining Light at different wavelengths
01:23:13
on the liquid in a bottle in a plastic bottle to figure out how many of these little plastic particles there were in
01:23:19
the liquid and in doing that they found that there was on the order of 10,000 little plastic particles per
01:23:27
liter of water or per liter of soda or drink or Gatorade or whatever the beverage is that you're drinking the
01:23:33
real question then is well how risky is that so if you look at a lot of the the health agency studies the kind of well
01:23:41
adopted and and well researched efforts on is there toxicity associated with pet
01:23:46
Plastics on its own they find that there's very little genotoxicity or no genotoxicity meaning it do doesn't
01:23:51
change your DNA there's no carcinogenicity so it doesn't cause cancer but there are other studies
01:23:57
recently that have shown different mechanisms by which these little tiny microplastics might end up in your cells
01:24:04
because they absorb into your body and they're small enough that they can cross into barriers they can get into your
01:24:09
brain they can get into your cells when they're in your cells there are other mechanistic studies that are done in a
01:24:14
Petri dish as opposed to being studied in the body where they've demonstrated that they could actually disrupt the
01:24:19
function of organel like mitochondria endo plasmic reticulum so all these little things that operate in your cell
01:24:25
they can cause irritation they can trigger chemicals to be produced that might cause allergies that might cause
01:24:30
inflammation and so on and so forth so while the general molecule of pet itself isn't known or shown in any way to cause
01:24:38
cancer or to cause changes in your DNA there are other mechanisms by which these little tiny Plastics might be
01:24:44
disrupting cellular function might be causing other health issues and that's now going to open up a big area of
01:24:50
research that that's going to be predicated I think on the fact that this study now shows that there are thousands
01:24:56
hundreds of thousands of little pieces of tiny plastic in these plastic bottles that we're drinking water and soda and
01:25:02
juice from that are getting into our body and into ourselves 240,000 little pieces in in the average
01:25:08
one liter plastic bottle it's a pretty scary statistic when you hear that small enough to cross the blood brain barrier
01:25:16
right and in rats and mice they've shown that these little microplastics can actually accumulate in the brain if they
01:25:23
consume enough of them now the reason this hasn't been well understood or studied in the past is we kind of look
01:25:28
at the aggregate amount of plastic that's in a liquid and it's like oh the amount is so small it doesn't matter but
01:25:33
when you start to look at how small these little pieces of plastic are and add them up the cumulative effect over
01:25:40
time that they can actually cross into cells cross the blood B brain barrier maybe are not getting removed from the
01:25:45
body that's opening up a whole lot of research because there's no easy way to just scan a body and say is there
01:25:50
plastic in it how much plastic is there because there isn't a good chemical signature for it and what these guys did
01:25:55
is they used light to look in the liquid to find the Plastics which we can't easily do in the body today so freberg
01:26:01
are you going to drink plastic bottle water anymore I'm not okay Jamal I've already stopped this started for me
01:26:08
about four months ago my wife basically said we're getting rid of all plastic and at first I really pushed back and
01:26:14
I'm like this is crazy and she just kept talking to me about it and showing me all this data and yeah about a month ago
01:26:21
I would say I switch so now I use glass and a cff like this yeah much better we got rid of all of the plastic in our in
01:26:29
our house in the gym no more bottles it's wasteful anyway like why not if you have beautiful filtered water at home
01:26:35
put it in a craft sure but the the scary thing I mean it's a little bit more inconvenient I'll be honest with you but
01:26:41
it is very scary and I think that it does alter the phenotype of the human body over time
01:26:48
and I think you would have to be insane to bet against against that and I suspect when you look at the rates of
01:26:55
depression and autism and Alzheimer's and Dementia and autoimmune diseases Crohn's rheumatoid arthritis to think
01:27:02
that all of these environmental factors have no impact I think is is taking a very scary bet here's what I do I buy
01:27:10
these glass bottles on Amazon you know two or three cases of them I have the best water filter system at home we fill
01:27:17
them we put them in the refrigerator and we haven't bought plastic in years uh sacks wow in years in years only because
01:27:25
I care about the environment because I'm a good person good for you good for you
01:27:30
Jason I'll also say like that that application is a pretty small like I think on the order if I'm right 80% of
01:27:36
bottled beverages are drunk outside the home so people are buying stuff at convenience stores at gas stations at
01:27:43
markets taking them with them to work and that's how a lot of plastic bottles are consumed by way remember the US is
01:27:50
such a small percentage of the global population you go to Africa you go to Brazil you go to China there isn't a
01:27:56
great like people don't have these amenities that we have in our upper and middle class America that plastic
01:28:01
bottles have provided access to products that consumers around the world otherwise wouldn't be able to afford so
01:28:07
there's a reason they exist but by the way I I also want to just be really clear there isn't conclusive evidence or
01:28:12
science that shows these plastic micro particles or nanoparticles are causing these health effects there's certainly a
01:28:19
lot of questions that it brings on well what is the cumulative effect of these little things getting into sales do they
01:28:24
get into sales what they do when they're why would anybody bet that it's zero right so that's theide right well the
01:28:30
upside is that people get to access cheap beverages on the street that otherwise people that are living on
01:28:34
$113,000 a year that can buy a you know a plastic soda for 25 cents you can also
01:28:41
buy can though yeah so that's that's definitely an alternative they're a little more expensive generally plastic
01:28:46
just became the cheapest container Sachs your thoughts sorry all right guys I stepped
01:28:52
out to get a a drink here did I miss anything it would be better if you had put a straw in your water bottle that we
01:29:01
drinking now I understand your level of depression was causing it sax just killing those Arrow water bottles yeah
01:29:10
did I miss something that was a science cor I stepped out also I I use uh these beautiful
01:29:16
contigos I think some people use yetis or other kind of things and uh I actually carry them with me only because
01:29:22
I try to like think about the environment just the amount of plastic being created I don't know if you've
01:29:28
seen this but like you go to Whole Foods now or you go to any supermarket and you
01:29:32
see this wall of salads freberg like this is unconscionable like the we're literally giving people salad in a giant
01:29:41
plastic box first yeah let me just say a couple things about this because there's
01:29:46
this conception that this is just awful awful awful but Plastics there there is a degradation of these pets when they're
01:29:53
exposed to sunlight there's a recycling system that many of much of this material ends up in
01:29:59
much of it yeah I I think that's actually correct not a lot but what would the alternative be right so the
01:30:04
alternative is you put in a glass thing and you charge people $15 for a couple pieces of lettuce the reason the reason
01:30:10
plast the Plastic industry emerged is because it provided a lowcost way to transport materials and that we're we're
01:30:16
all very wealthy so we have to just step outside of our bubble for a second and recognize that most people you know the
01:30:22
the dollar difference is a huge difference for most consumers they're not going to make that dollar leap so
01:30:27
you know the fact that Plastics emerged is to support a consumer Market that's grown up all over the world yeah but how
01:30:33
how does this make sense look at these bananas just as an example to give people an idea bananas already come with
01:30:38
a case called czy and they're literally wrapping bananas in plastic now and you know this is where regulation makes
01:30:47
sense there must be a there must be a gas in here or something cuz they're trying to keep the bananas from going
01:30:52
bad that's why put in I want to shout out like this is where I think regulations actually do work France
01:30:58
Spain a lot of countries now are just saying you know what for fruits and vegetables like yeah don't put them in
01:31:03
plastic please we're not going to allow you to do that and and I think I'm not pro plastic by the way I'm not drinking
01:31:08
plastic from plastic bottles but we have to be cognizant of where this industry emerged from what the science says about
01:31:14
it like I I don't want to just be flipping plastic what doing in the oceans freeberg is unconscionable like
01:31:22
this is not like a do good or thing it's just there's no reason that we need to have Plastics as a should be I'll give
01:31:29
you some good optimism around this there's a lot of efforts right now to develop microbes that can actually
01:31:35
biodegrade these pet Plastics so there's so we're engineering these microbes that
01:31:41
will produce enzymes these are little bacteria that'll produce enzymes those enzymes can then be made in the plastic
01:31:48
itself so then the plastic will biodegrade within a year or after you use it so there's a lot of this kind of
01:31:54
effort on how do you make naturally biodegrading Plastics using biosources and biological molecules as part of the
01:31:59
production process and a lot of big plastic um packaging companies and Industrial biotech companies are
01:32:05
investing in this area this is where collectivism can do good you know like if we actually as a society say we want
01:32:12
to do sustainable packaging like because of the tragedy of the commons like you're saying freeberg because it's
01:32:17
cheaper capitalism like there's no floor here you know to stop people from doing
01:32:22
this uh and stop from using Plastics unnecessarily like wrapping bananas Etc all right listen this been an amazing
01:32:28
episode of the Allin podcast for the dictator wish me luck today boys wish me luck use the promo
01:32:35
code dick we'll be following the live stream on the chat following the live stream use promo code dick to get 20%
01:32:41
off your ball deodorant hey what do you guys think about actually like running some poker tournaments through the year
01:32:47
called Allin 100% that would be super fun no 100% I think we could replace the WSOP pretty quick I mean it' be pretty
01:32:57
rep the WSOP I'm not kidding we we have Phil helmuth on our Squad I think Jason's right and but not just helth I
01:33:03
think you could get all the pros because I think the problem is like those championships have been so watered down
01:33:08
right there's 52 of them just in Vegas in June and July and then now you have like these circuit rings so that there's
01:33:16
bracelets and rings and then there's the European one then there's this one there's the Bahamas
01:33:22
you you can't have I think in order to be a world champion can you really have like 150 winners a year sax are you
01:33:30
bored with hold him well I'll I'll play with you guys but yeah I'm kind of bored
01:33:34
with it yeah I played a tournament yesterday Big O 37 players I came in first I don't know if you play B where
01:33:41
did you play I had a speaking gig yesterday in La after the speaking gig I was going to the airport I had a little
01:33:46
time and I just stopped by Hollywood Park where stop you did I wanted to see the new one you're the
01:33:54
best I don't know there's nothing more boring playing a tournament with people you don't know oh it was great it was
01:34:01
great there was like a fight tourament last forever I mean I did the WSOP a couple of times and you know I think I
01:34:06
lasted like three days it's a long time to be playing poker table people I got to the final table and they wanted to
01:34:14
chop and I was the short stack I was like well you know my flights in for in a couple hours I'd rather not Chop and
01:34:19
this woman like I got in a fight at the casino almost this woman was wearing a mask and she goes this mother effer
01:34:27
won't chop and I said ma'am I it's my option to not shop Madam Madam I said ma'am Madam whatever they them and she
01:34:39
went crazy and the floor came over said ma'am you have to sit down she called me
01:34:43
a mother fer twice to my face you went on to win and I was the short stack and I went on to win the
01:34:49
tournament I kid you not how much did you win 1 1400 bucks so the hourly rate on that you make like
01:34:56
$14 an hour it was $100 buying so yeah it was uh 200 bucks an hour but here's what happened so I had this guy
01:35:02
massively you play for seven hours six hours maybe it was awesome it was great I was I had the time of my life it was
01:35:08
the first time I played in a tournament for like since we played the one drop that time I haven't played in a
01:35:13
tournament since then it was so much fun Jason goes from playing the 100K buy to
01:35:19
the $100 buer I had a time of my life because I've never played Big O before it's where you have five cards and it
01:35:26
was high low it was so Dynamic and fun oh yeah yeah big oh yeah yeah big is so fun pole cards and it's high low so I I
01:35:33
was like I'll learn Big O I've never I've literally not played one orbit of Big O I won the tournament it was
01:35:38
awesome and so then it's me and this one guy and you know I've got like I've got
01:35:43
him like three to one or whatever and uh he's like listen I got to go please I got my kids I was like no problem I'll
01:35:49
chop it with you if we take 400 off the top for the dealers the dealer cries she
01:35:54
was like what and I was like yeah just I'll chop it with you evenly and so I won and I I just chopped it up and gave
01:36:00
a big tip what what did you did you get like a a certificate or like I think they put you on the website or something
01:36:05
like that like for let's it up yeah it's on the poker Classic website that I I uh
01:36:09
or I don't know if it's called the poker Classic whatever it is but my point is we would have a great tournament we do
01:36:14
each of the games each of us gets a free roll into the game and then everybody else Buys in I like it saak do you like
01:36:19
PLO or you just like chestn no I like hold them but I'm just saying I wouldn't play with a bunch of
01:36:26
strangers you know I like playing with friends you know but to goof off and have fun yeah yeah yeah yeah yeah yeah
01:36:32
like sitting the problem with tournaments you RSVP to my game to show up at six show at 8:30 yeah and then
01:36:39
listen to yourself on the Pod and then leave yeah he's editing the Pod at the table there's a lot of things you can do
01:36:44
while at a poker game U you can watch your podcast you can edit your podcast for the Sultan of science the king of
01:36:52
beep David freeberg and yeah definitely the Rainman himself we're live from Davos we'll see you next year byebye
01:36:59
wait did you give me the shout out am I I did for the dictator himself use the promoe chairman dict no chairman dict
01:37:05
dictator chairman dictator use the promo code chair man or dick to get 10 20 or 30% off can somebody from manscape
01:37:15
please let me cancel please please it's like 10 bucks a month it's just bucks a month I'll give you the
01:37:22
money I just don't want to get I want to be able to C I'll pay you 10 bucks a month to not send
01:37:30
deodorant let your winners ride Rainman David and instead we open source it to the fans and they've just gone crazy
01:37:41
with it love you queen [Music] of best these are that's my dog taking driveways oh man my will meet me at we
01:38:01
should all just get a room and just have one big huge orgy cuz they're all this useless it's like this like sexual
01:38:06
tension that they just need to release your we need to get merch our [Music] I'm going all
01:38:26
[Music] in