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hey everybody hey everybody welcome to another episode of the all in podcast we have a new bestie yesterday filling in
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for the prince of panic attacks [Music] the queen of quinoa the sultan of science
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can't make it this week i think after his incredible performance last week and him trending on tick tock with his
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incredible insights over uh sadly the the potential famine that could come after this
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ukraine war he decided he would take a week off i think it's just a little too much
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attention for him so we have a bestie guestie today yes the shaman of stocks is with us
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he brings the equanimity to equities you know him he'll bring that namaste to your payday his predictions are the
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anti-galloway brad gerstner welcome back to the program thanks for having me namaste uh and also
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with us of course the rain man himself he's bitter on twitter he's brawling on colin
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he's the bill of rights from pack heights david sacks boy you've really outdone yourself today wow and the prince of
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palo alto the overlord of the overton window paulie hupateo are you the stinker of stonks oh god
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relax you don't leave the comedy to me all right [Music] let your winners ride [Music]
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rain man david [Music] it's been a pretty pretty crazy couple of weeks here we are not a political show here but
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obviously when world affairs become acute as they have we cannot ignore uh the war that is occurring
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in ukraine uh we're going to talk a little bit about markets i think we'll start with those
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with brad gerstner here the sas market and the index uh why don't you walk us through this chart
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here because everybody's wondering what's happening with the markets given the war
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given interest rate hikes and the repricing of stocks i don't know how you would look at what happened in
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november december january brad how do you contextualize well certainly a repricing is certainly repricing but i i
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think of it more as normalization okay right chamath was saying it november i was i was on cnbc talking about the fact
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that when when we got to a post covered world rates were going to normalize go back to
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where they were in january 2020 that was around 2 percent and the growth multiples would have to
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come off of this historic red bull high that we were on during most of 2020 and 2021 so we were 30 to 50 depending upon
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the index above the five-year average growth multiple pre-covet so that just needed to happen
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like we should be celebrating in one sense that that happened because that means that we overcame a global pandemic
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the downside is we couldn't play with artificial money zero percent rates trillions of dollars you know of of
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congressional and fed injection in order to prop up valuations and when it happened in and of itself
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that was going to be extraordinarily painful what i didn't anticipate and what most
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people didn't anticipate is that on top of that we're going to have increasing fears of hyperinflation
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not just getting back to normal rates and that we were going to find ourselves in the middle of
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an incredibly devastating war in ukraine those two things added to the uncertainty the risk premiums
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added to uncertainty around future inflation the dot plot exploded higher and expectations of forward rates went
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higher now why the hell does this matter it matters because when you take you know if you're looking
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at that chart the five year average the ten year was two and a half percent like we all got
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comfortable investing in this period of time the markets hate uncertainty we had a
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predictable way for us to estimate where we thought our wax should be in our discounted cash flow models
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all of a sudden that was thrown into uh thrown into the air oh my god look what we got going on i can't believe it look
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at this oh yeah never compete with babies or animals yeah no chance no chance this is talita talita
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look at this little look at this little butter ball oh my goodness lord look at that so so good sex that's called a
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child it's uh you have three of them those are babies and what you're seeing there is affection from a father and a
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child look at how cute this little baby is going to eat sax is like this is taken from my time
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get that baby out of here ah so cute so brad i guess what everybody wants to know now that we see
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this repricing occur is what do you think's gonna happen in 2022 uh and then into 2023 so
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we're now multiples are now below the five year average for for software we're about at the five year average for
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internet we're well below the five year average i said on twitter that the rate path
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last week became a lot more certain the fed said something last week that i think is still not
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well reported well understood the fed said at the end of the year we're going to have
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two percent negative real rates they said we expect inflation exiting the year to be 4.3 and we expect the
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tenure to be around 2.3 the reason the market exploded higher is because under the fed's prior
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protocol a four percent uh a four percent inflationary rate would mean that rates
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would have to go to four and a half and if you take rates to four and a half then growth multiples need to be about
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30 below the five year average okay so as investors whether we're investing in mid-stage venture late
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stage venture whether we're investing in the public markets like we need to know
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what exit multiples are and it was bad enough that we had to bear the drawdown coming off of you know
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this this red bull high of 2020 and 21. but if you think we're durably going to an inflation rate of three percent or
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four percent and an interest rate environment of three percent or four percent then you simply have to adjust
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what you're willing to pay for growth assets and so as i look ahead right we don't we don't know with certainty
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the question is what's the distribution of probabilities and you know just this morning city
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goldman sachs raised their exit year their their exit tenure for 2022 to 2.7 percent and took it as high as three and
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a half percent for 2023. i think it's going to this period is going to be marked by a lot of
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uncertainty around inflation and rates till we have more clarity and what that means is allocators of capital are going
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to allocate less to risk assets and they're going to pay less for risk assets um but you know listen if i look
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out over the the 5-10 year horizon i don't believe in global stagflation i don't believe that we're in this new
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hyperinflation environment um but we're going to have to get through this next uh six 12 18 months and it's going to be
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filled with a lot of volatility and a lot of uncertainty jamath what rings most true about what brad just said and
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then what can you add to the prediction for this coming year i mean i don't know what the prediction
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for this year is um i i think the markets are mostly moving upwards for the short term
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and then i think volatility is going to come back i'm just trying to find good long-term businesses and just
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kind of close my eyes and not have to look at these stock prices every day and as long as i can
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manage my own psychology i think i'll be fine i think that's probably the thing that most of us need to be doing the
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interesting thing about brad said is that the implication of that is that it means
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that late stage venture is pretty badly mispriced and i think you're going to have to
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knock these things back by 50 60 percent i think you saw the first real big movement there
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yesterday which was the instacart print right we went from a 40 billion valuation
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uh to i think it was 24. if you look at from february of last year which was really the high for all
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of us right that's when we all thought we could do no wrong you know the comps to uh instacart are
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off anywhere between 50 and 70 you know takeaway is off 70 uber's down 60 doordash was down 55
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so these are some big moves and so you know it made sense that instacart had to get
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kind of like reset the problem that it has is that it's now the nth player trying to get public into
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a space with many players who've guzzled up a lot of capital in a low rate environment
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and so if you think about company building this is why entrepreneurs have to pay attention to this stuff
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you want to get money when money is cheap but the problem is you can't control that timing and so if you can't control
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your operating margins and your profitability then you're gonna have to go and basically pay somebody an enormously
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high price to get their money and i think that's what's setting itself up to happen in a bunch of these
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markets i think enterprise sas has always claimed long-term profitability um the thing is when you look at sort of
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like the real long-term companies they've built some enormous moats right like if you look at a service now or a
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sales force at the high end and then there's a crop of a couple of companies like palo alto networks who
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are the next ones coming after who seemed like behemoths in the making but everybody else i think people have
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to really question like where the long-term profitability going to come from and so if that's true then the late
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stage private sas companies are in trouble similarly in places like delivery where again you've had a bunch
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of comps come out they've been curing in the public markets for years you know uber doordash there's a couple
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of these behemoths getting built doordash being the most obvious and then there's a bunch of more kind of
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question mark business models including uber which is not really hanging together in the public markets
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so i think the real question for entrepreneurs is if you have the nth business nth being not the first not the second
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but you're the seventh or eighth or tenth trying to go public and all the seven or eight before you
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are gas guzzling machines you're going to pay a very heavy price to get public and i think that that's the reckoning
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that we're starting to see so i'm really interested to see how that plays out you
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know the instacart valuation could easily be cheap at 24. but it could just as easily be overpriced by
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another 10 billion dollars depending on how people think about who the last buyer of resort is in the public markets
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saks did uh instacart miss their window to go public and then what does this say
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about the backlog of hundreds of unicorns that the venture community is investing
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heavily in some of them are probably gonna have to ipo at down rounds um i think that's
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sort of the takeaway explain what that is to uh to neophytes well it just means that they're gonna have to go public at
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evaluation lower than what the last private round was so all of these late stage private investors who assumed that
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they would always make money investing in a company in the last private round before it went public they they thought
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that was sort of an automatic gain in arbitrage and it's not and there's going to be
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some disappointment there brad's been sharing these charts with me since i guess what december
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brad um where the charts basically show uh public sas valuations as a multiple of arr and
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then he's got a similar chart for it sort of the internet companies the sort of nonsense internet companies
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as a function of revenue and we've been looking at these charts you know once brad showed these to me
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again four months ago it became so obvious what was going on which is that valuations were reverting back to the
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historical mean if you look at you know during the two-year period during covet the they the multiples had risen to some
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insane level right and because of all the liquidity that had been pumped into the system so as soon as you saw that
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the charts that way you could just see where things were headed which is back to historical
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averages now we're below those averages um partly because no no no not really the multiples are can i
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summarize brad's chart because it is extremely elegant and simple for the layman to understand
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so here's the layman's understanding of of brad's uh uh analysis technical analysis and and and balance sheet and p
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l analysis which is accurate when rates are zero typically people are willing to pay
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eight times revenue for a company okay so if you're generating 100 revenue top line revenue you're generating 100
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million revenue in your reasonably high margin reasonably high growth software business
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that's worth 800 million dollars in the public markets for every 100 basis point increase
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in rates you decrease the valuation between 15 and 20 so if you think rates are 2.75
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the price is somewhere between 30 to 40 percent cheaper than what it was when rates were at zero
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so if you go back and you look at every techcrunch article and every bloomberg article
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and every information article and you look at all those headline valuations when rates were at zero
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we all just said rates are going to be somewhere between you know 2.5 to 3 percent at the end of this year
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at a minimum you have to haircut those things by 30 to 40 percent steady state meaning the company is
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continuing to execute on all on all cylinders if they have a downtick in their performance
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then it it increases that discount if rates go higher it increases the discount but the basic way to think
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about this is for every 100 basis point increase in rates you got to downtake that valuation by 15 to 20 percent
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and i think you know just to be fair i think i don't think there's any daylight between you and saks on this what what's
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actually saying is the 40 percent just giving the numerical rule that that's something i think you're right that is
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the that is the the correlation and so this idea listen we all get paid to find good
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companies and avoid bad companies that's generally what we get paid to do we're decent at it
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all of a sudden in fact most fundamental investors say hey i'm not a macro expert
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i don't know where inflation's going i don't know where interest rates going i just find good companies
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we've had a decade or longer where that was okay to do that was easy to do because guess what inflation was at two
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and we had two and a half percent tenure when all the sudden you have massive volatility in that it's not acceptable
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as an investor just to say well none of this matters because it does matter right price matters because what you can
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exit for is essential to the game and there were a lot of people invested in 2013 14 and 15
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when when the cost of entry was low and exited when the cost of entry was high multiple expansion hides many sins
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right and now just the opposite is happening in a dramatic and historic way and that multiples were higher than
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they've ever been caused by a global pandemic and the exit rate for a lot of those
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companies right is going to be very painful i think that saks's point about down around ipos i don't think this is
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the exception david no reddit i think i think the vast majority of companies that come public in the next 12 months
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are going out below their last round of valuation yeah the reddit rumor was that goldman put a
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10 billion dollar price on the cover and that you know it effectively been cut in half again these are all rumors
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so these could completely not be true i don't i don't have any knowledge one way
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or the other uh to 5 billion and that may actually end up being too expensive it just depends on where the
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market is well just so people are clear when investors sophisticated investors make these late stage valuations at very
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high multiples like they have they do have some downside protections in other words they cannot lose more than the
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money that was put in when this thing ipos or they may get kickers of additional shares so maybe these ipo no
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no in fairness you're talking about something very important but they're very rarely in these high priced rounds
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because most of these high priced rounds are in go-go companies where all of those rights get stripped away this is
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why i do think jason what you're actually bringing up is in in the last innings of
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a bull market you have incredibly irresponsible behavior by a bunch of these investors
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and that's also going to get exposed as well so jason what you're talking about is what's called an ipo ratchet yeah
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which means i'm giving you this money at this price but if you can't ipo at this price then
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you're going to give me an equivalent number of shares that makes me whole right right so it's as if i am i am
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indifferent to what price you ipo at that's extremely dilutive to really one really important class of individual
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which is the employees of the company it's also really dilutive to other investors who've come in before them
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but jason you're probably right to the extent that there were ipo ratchets they'll get triggered but i think in
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many of these go-go companies and you know brad and sachs can confirm but i see it all those rights get stripped
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away it's like come in at this crazy price get out get get our logo on your fundraising deck for the next round
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and so this is the price of the capital it's been a little bit of sloppy behavior just so people understand this
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if the reddit valuation was 10 billion somebody put in you know 100 million in this late stage round if it came out at
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5 billion they would get twice as many shares to make up for that difference that doesn't exist in the case of reddit
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j cal you know it was fidelity who led that last round so they're going to be price takers at whatever price the
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company comes public what does that mean explain that price takes you so you know
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if they come public at five billion dollars and you put in a hundred million dollars your stake is now worth 50
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million right right so why didn't they have the discipline to put in these protective provisions ratchets etc what
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happened in the market to chamas point they haven't really existed in most deals for the last five years right uh i
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go back to 2000 and i think 2007 2008 kayak raised money with a ratchet in their last pre-ipo round it prevented
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them from getting public for three or four years that dilution overhang um was a significant impediment to
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getting public so you know listen we all know that groupon raised at 20 billion dollars went public in a year later is
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worth two billion i mean it's not as though this hasn't happened before uh but yes uh people people got a little
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laxative i just wanted to i just want to say one other thing though because multiples coming down is a problem
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what this really reveals is the importance of stock and company selection right because if you were a shitty
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company with an unproven business model way out on the risk curve okay and you had a super high valuation last
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year and you don't you know there's a good chance you never grow in it grow into it you never get back to that
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valuation example your example your growth will do you sell well give us an example company okay discord ripple
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companies in the 15 minute delivery space in europe you know i i i would say go puff is one
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of the best of them there are a lot of startups that got funded with billions of dollars in europe unproven business
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models burning tremendous amount of cash right like i don't know why they need to
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exist i don't think they're going to get funded right maybe one or two of them do
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but when you have doordash and uber that are free cash flow positive that have strong brands and that can redeploy
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those profits back into compete in those markets i think it's very tough neobanks
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are another example neobanks you know the number of neobanks that have been funded at
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exorbitant valuations where um you know the problem is all of these financial services companies are
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essentially an arbitrage on rates right when rates are zero they take that money at zero percent and
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then they can go and execute a business model you know and sell that money at one percent and take the difference but
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when their cost of capital is two or two and a half or three percent the whole business implodes on them so you're
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going to see a bunch of these financial services companies get under pressure another example jason is like all the
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low end you know bottoms up sas companies and the reason is because they spend their time inside of google and
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facebook doing customer acquisition and managing this very intricate dance of ltv to cac
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and when all of those input costs go up their business implodes because you can't raise rates faster or you can't
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raise prices i would say then faster than the input costs are and then all of a sudden your unit economics blow up and
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in all of this what is the salvation in a moment like this it's being healthy gross margins
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healthy contribution margins and in a realistic path to profitability which means being ebitda positive this year or
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within the next two years said another way if you're profitable you're not going to go away
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if you can't if you can't show that you're you know to use the famous paul graham adage default alive
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in a moment like this then you are a price taker which means that you will have to pay probably a
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very high cost of capital to raise incremental capital to support a fundamentally fragile and non-resilient
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business model is the issue here saks that when you see the getter gorilla zap all these instant delivery companies get
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funded at exorbitant prices and they're the seventh eighth ninth as chamath is pointing out no no instacart was the
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seventh those are like the tenth eleventh okay so now here we are this to me seems like
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the fault of poor judgment by capital allocator sacks are there too many venture funds
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chasing too few deals and not thinking through what investing in the 10th 11th or 12th player in a market is going to
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be able to do is it too i think part of what's going on with the companies you mentioned is that they're
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physical world companies they are very capital intensive they burn a lot of money they're operationally intensive
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i have sort of i soured on those businesses years ago and that's why i just focus on sas because they're
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basically perfect gross margin businesses they're very they can be very capital efficient if the founders
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want to run them that way so what we're doing now is telling founders lengthen your runway be more
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capital efficient you need to understand that you know multiples if you raised last year at 100 times arr you need to
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understand that the next time you raise it may be at 20 times ar so now you can grow into that right if
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you're tripling and then triple again the next year you'll be able to grow into that valuation but you know make
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your money last two three four years instead of you know burning it in 12 to 18 months
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unless you want a down round i think this is this is the point that now allocators venture capitals are going to
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spend the next six months thinking about what's in bucket one low quality companies burning a lot of
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cash that may very well not make it across the chasm no path to profitability what are the high quality
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companies that yeah the multiple's down because public market multiples are down
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risk premiums have changed inflation change but they have plenty of cash on the balance sheet and think about it
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this way snowflake became a poster child in the public markets of a high priced uh sas
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business snowflake this year will grow its free cash flow at over 100 a year next year
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probably you know 80 or 90 free cash flow not just revenue free cash flow in q4 i think they booked 1.4 billion of
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revenue q4 on a business that entirely in last year did 1.2 billion in revenue right you think about that the
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incremental was more than what they had generated in the prior many years that business so let's say we reduce the
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multiple by 50 percent but the company's growing top line and free cash flow by 100 doesn't take you very long to grow
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through the multiple compressions so snowflakes multiple is plummeting for two reasons one because the stock price
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came down number two because right their growth rate and free cash flow growth is so high and so now
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if you look at the multiple it's similar to what we would expect of a regression
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of the five-year analysis unless these companies unless these private companies are want to go dark for the next three
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to five years meaning you know no sophisticated late stage investor doing around or going public
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they'll be okay but otherwise they're going to have to reckon with a version of what brad just
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said which is the high the flight to quality problem you know when in moments of uncertainty
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and high volatility it's just more straightforward to go to the things that are reliable and
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so you know when you think in the public tech markets what is a reliable must-own
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company well i would put snowflake in the list of these must-own high-growth software businesses right
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you know the fangs tend to be in the must-own category but then there are all these other businesses that then get
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orphaned because they're kind of nice to own would love to own would be great in
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any other circumstance and that gets even more exacerbated in the in the private markets you have to
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remember right now like the private markets cannot really exist without an incremental buyer of
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equity right holder somebody has somebody needs to be the better you somebody needs to be the bag holder
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after you and the problem right now is that those folks have a lot more credible safe durable assets that they
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can own and not have to deal with all the crazy anxiety that comes with owning something
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that's that's high volatility like or chamath correct me if i'm wrong or brad if they don't want to even be involved
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in this meshuggana they could just be in cash and the interest rates are going up
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so maybe they can say you know what i'll just sit this out for a year is that also happening with those folks well is
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that too hard to do because of impressions she knows a bunch of these folks but like take for example d1 you
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know it's uh dan sondheim's great investor i mean my understanding is that they are sort of off privates completely
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because why invest in a private company at x times ar when you can invest in a public sas company for six times so
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they've substituted i think tiger is still in market with a gigantic fund for privates but the valuations have come
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down so they're essentially re-pricing everything i think those are probably the two broad reactions you could have
00:26:51
right brad certainly i i would say this broadly speaking the late stage private financing market inventure is closed
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um because there hasn't been right we're in this this buyer seller standoff sellers aren't to the point where
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they're willing to accept that a new rate a new regime of multiples exists right it's painful we saw you know the
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instacart news here recently but i think you know like listen we're not even 10 or 20 of the way into the psychic reset
00:27:23
that needs to occur in order for us to see real price discovery that's not going to occur until these
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companies need money or want to go public that's right this fall is when we'll start to see real price discovery
00:27:35
you couldn't pry a late-stage dollar out of my hand right now because i don't think we have real price discovery going
00:27:42
on early stage venture if we're investing in an incredible you know software business at 300 million 400
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million 500 billion we think could be worth tens of billions you can withstand a little inflation but the later you get
00:27:54
in the life cycle of a business it's about irrs and irrs in late stage at last year's valuations relative to
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today's public market valuations that is a negative arbitrage explain irr why that matters yeah just for the latest
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you know we expect uh our herder rate in the public markets is a 20 risk adjusted
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rate of return so if i'm you know like you know you look at these late stage private valuations from last year i mean
00:28:20
uh you know saks just talked about companies repricing down 40 or 50 or 60 percent so if they haven't done that now
00:28:28
just didn't just up level this what brad is saying is the following jason any person can wake up tomorrow
00:28:35
and buy the s p index right what buffett would tell you to do just by the s p 500
00:28:40
index that historically has compounded at around eight percent a year if you reinvest the dividends so
00:28:47
you can do nothing right get a basket of the 500 best companies in the world that are
00:28:52
automatically selected for you based on revenue and profitability you don't have
00:28:56
to do anything and that'll compound at eight percent that is effectively the risk-free rate
00:29:00
if you want to own an equity so if you're going to step into the late stage private markets and you know buy
00:29:06
some shares in you know dingdong.com you got to be rewarded for that which typically means
00:29:12
that there is a premium above the eight percent and what brad is saying like you
00:29:16
know it's it's actually more than double in his case what he's saying is it's two
00:29:19
and a half times you know you've got to clear 20 percent to you otherwise you're
00:29:23
better off on a risk-adjusted basis it is what's likely to happen i'm looking here at a list go puff at 40 billion
00:29:29
canva at 40 billion florina at 45 billion discord at 15 billion ripple at 15 billion these
00:29:35
grammarly at 13 billion these don't make sense given that if they were public they would be trading at well
00:29:42
you can 60 of that here's what you can say if if everything is held equal just with the rise of rates you have to
00:29:50
reset those valuations between probably 15 and 40 percent okay at a minimum minimum but what brad said is also true
00:29:58
which is if they then keep growing at a superior rate they can get back to even so meaning 18
00:30:04
months they could also show up again at 40 and be net net awash they could get unstuck but a lot of hard work will need
00:30:12
to happen underneath the covers of these businesses in the next two years okay for that to happen and that's what's
00:30:17
going to happen with a lot of these early stage private companies right is let's say the error multiple
00:30:23
has gone from 100 times to 20 or 30 times they have to grow their arr 5x to get the same valuation
00:30:31
so the question is can they grow their ar-5x before having to return to market that's just to get a flat round now if
00:30:37
they are tripling this year and then doubling next year then that's 6x growth in arr so even if
00:30:44
you know the multiples gone down 5x they could still get a slight upround so that's the game i think all these
00:30:49
companies are going to be playing is lengthen your runway so that you can grow into your valuation and not take it
00:30:56
down round because the problem is if you're ever in a situation where you take a down round
00:31:01
it's way worse than just the dilution because now the psychology of everyone in the
00:31:05
company changes everyone has to worry that you're gone sideways it's hard to experience but here's the here's the
00:31:11
difficulty of what saks is saying though in order to grow revenue you have to invest right you have to invest in sales
00:31:17
people and account management functions in engineers and product managers right and all of those people uh need to exist
00:31:24
which actually increases opex right it increases burn it doesn't maintain burn and so this is the death spiral jason
00:31:31
you're talking about which is in order to actually grow by those multiples you actually don't have more fuel you
00:31:36
gotta increase your speed you burn more fuel you don't actually have the money to to withstand two or three or the
00:31:41
altitude you're now so it's going to be a very precarious balancing act of trying to figure out how these companies
00:31:46
actually get to the other side because again i think the the buyers in this case will
00:31:51
be will drive a hard bargain you know i mean like look organizations like you know durable d1
00:31:58
tiger altimeter these guys are the smartest of the smart they're not dumb yeah and so you know the price of
00:32:03
capital is going up in that case and so you know they're going to strike really good opportunities for their investors
00:32:10
right for their lps if we were going to do an analogy here 20 the analogy here is these founders were
00:32:15
on autopilot they were asleep at the wheel and now all of a sudden they're in the soup and
00:32:20
they got to be really perfect no that's not fair i don't think they were asleep at the wheel at all i just think that
00:32:25
they you know when the music is on you got to dance they did it they raised money at the
00:32:31
highest valuation possible god bless them now you're going to see who uh is really
00:32:37
good at what they do um and who is benefiting from a lot of just natural uh you know you know
00:32:45
but people were only there for the first time that's what i'm talking about you're
00:32:52
gonna have to make real changes look in an um well in an up market or a boom market
00:32:58
the three things that matter are growth growth and growth in a down market the three things that matter are growth burn
00:33:04
and margins it's not that growth stops mattering it's just that burn and margins also matter and now there's
00:33:10
going to be real trade-offs before it was just how much money can we spend how quickly to get growth now let's wait a
00:33:16
second is this growth efficient you know and will we have enough runway to get to
00:33:21
the next round without having to take a down round brad when we saw at the peak of the pandemic some leadership i'd say
00:33:28
you know seasoned or well-informed leadership airbnb and uber come to mind cut their staffs massively they use that
00:33:35
crisis to reset their cost structure and get to profitability quicker those were
00:33:39
money losing businesses for a long time maybe you know taking advantage of these
00:33:44
hot markets is that what needs to happen here are we going to see a cascade of companies lowering their evaluation
00:33:49
lowering their costs sharpening their pencils cutting staff and then becoming more efficient and more ruthless at you
00:33:55
know the sixth seventh eighth product they're launching saying hey let's go to the core product and make it sing make
00:34:00
it profitable you know frank slootman has said that silicon valley is full of companies
00:34:06
that are walking dead and they don't even know it right zombie starting you know frank is
00:34:12
you know he says in tape sucks he says listen i'm a wartime ceo not a peacetime ceo
00:34:18
right he came into he came into snowflake when it was growing over 300 percent and he
00:34:24
you know he he reconstituted what what that culture was about to prepare for wartime
00:34:31
right because he says when wartime comes right and it gets challenging i want to
00:34:35
run the field right i don't want to be laying off employees i want to be that's the time
00:34:39
to hire that's the time to press the advantage that's the time to invest in product
00:34:44
that's the time to win the new customers over the course of the last 12 to 18 months a lot of people without that
00:34:50
experience right took a negative signal and the signal was money will always be available and it will be available at
00:34:59
ever increasing valuations and of course anybody who's been at this for 20 years
00:35:03
like the four of us we know that isn't true but it's amazing i mean the behavioral psychology our ability to
00:35:11
gaslight ourselves totally in these moments and move out on the risk curve and ignore these lessons right and so
00:35:19
i really actually hurt and i've spent a lot of time on zooms lately with founders and with their teams
00:35:27
talking them through this because like we talk about it in the abstract and in through the lens of a spreadsheet but
00:35:33
there are a lot of people's lives at stake if you're an employee and you went to this company and you took everything
00:35:39
in stock at 15 billion that's now worth 5 billion you're totally underwater at the same time the cost of buying a home
00:35:47
and mortgage rates and everything else is going up against you i mean this is a massive morale problem right uh you know
00:35:54
for for companies that frankly we want to invest in these are the innovators but this is what happens when you have
00:36:01
government intrusion right that we can all debate whether or not is worthwhile but it was hugely
00:36:07
distortive what we know to be true is that we had more distortion in markets the last two years than probably
00:36:14
any time since post world war ii and the consequence of that is dramatic and you know we all kind of saw it but
00:36:21
we all kind of gaslighted ourselves as well because you were like well maybe there is a new normal maybe we have
00:36:27
accelerated digitization the truth of the matter is the law of economic gravity is interest rates and inflation
00:36:33
and it remains yeah and and this time turns out is not really that much different
00:36:40
i think jason if you take your list of these high-priced startups yup i think it would be a good useful exercise for
00:36:46
somebody to do somebody in the press should probably do it but if you take that list and just rank companies based
00:36:51
on valuation the last announce date yup and then if they are not announcing layoffs of any kind
00:37:01
you can probably forecast when they're going to burn through the money especially if they're hiring and the
00:37:07
reason that you can probably forecast that accurately is you can pretty much predict what opaques will be
00:37:12
especially knowing the fact that their input costs are actually going up so for example most of these businesses that
00:37:17
rely on facebook and google and instagram for customer acquisition those input costs are going up and the reason
00:37:22
you know that is that's two trillion dollars of market cap that doesn't give a flying [ __ ] what's happening in
00:37:28
startup land they're gonna make their numbers right okay those are the most important companies
00:37:33
in the world they will ratchet up the prices and so your input costs are going up it's not
00:37:39
just the physical supply of materials that i think is going up it's just the cost of customer acquisition is going to
00:37:45
probably go up by 20 30 40 right and you know this because facebook and google guide
00:37:51
to where they need to perform and so if you pass that through the venture ecosystem that all of a sudden now
00:37:57
upticks your burn yeah if you're adding more people it upticks your burn yep and
00:38:01
now back to david's math you then also have to grow five or six x that none of this hangs together so we are at the
00:38:06
beginning of probably a very complicated process of unwinding yeah the distortion that we've lived through
00:38:12
in the last couple years at this point i mean you have to blame the capital allocators in this instance they bought
00:38:18
these logos they suspended disbelief we've had this ridiculous culture of no governance
00:38:24
uncapped notes just pushing i see it on the boards i'm on you guys probably too some people
00:38:29
just pushing top line growth never discussing uni economics never discussing the bottom line and they
00:38:35
created these crazy fugazi markups they raised bigger funds based on it and they
00:38:39
just were never the adults in the room the stories of capital it's infuriating i'll tell you an incredible conversation
00:38:44
i had yesterday with one of my partners so he's been you know with me for 10 years
00:38:49
he was really the one that pushed us very early on to go into deep deep deep tech when nobody else is doing it 3d
00:38:54
printing of rockets satellites all that stuff and it's been so i really trust and respect his
00:39:00
perspective and he was telling me a story he uh called um a recruiter um you know because we've been toying
00:39:08
with you know helping get some folks to help us manage some of our early stage deal flow and he
00:39:14
asked her essentially something to the point of like uh who are the types of gps that are getting hired today in
00:39:19
early stage and he said you know this is how we approach our business right we have a
00:39:24
permanent capital balance sheet you know we do you know at most one deal a year per partner and she said well you're
00:39:30
never going to get anybody because a mid-level executive at one of these high-flying startups that then
00:39:34
goes and joins a venture firm she said the consistent single thing that they make their decision on are you
00:39:42
ready for this is how many deals will i be allowed to do per year what and so you know these people are make
00:39:51
work construction workers right that's dig a ditch fill a ditch that is not what investing is
00:39:57
that's not about having a discerning philosophy on what a business should be or a market so if you have a bunch of
00:40:03
capital allocators jason to your point who are unsophisticated about investing probably
00:40:08
very sophisticated operationally but fundamentally don't know what they're doing and they're coming and
00:40:13
transforming in an organization that should be a disciplined discerning allocator of capital and turning them
00:40:20
into a velocity deal machine this is what you're going to get i mean sometimes the best money sacks is
00:40:27
money you put into a bet you've already made continuing to build the pot with a startup that's already proven themselves
00:40:32
correct so i think what we're going to see we have a follow-on fund yeah i mean i got to say the the things you guys are
00:40:37
saying are making me feel great about our portfolio explain um not not because we won't get hit with the same valuation
00:40:45
corrections that everybody else is going to suffer but because you know a few years ago we decided we
00:40:50
were going to invest in a certain kind of company i mean high margin sas and marketplace businesses that were not
00:40:56
capital intensive we defined a new metric that didn't exist called burn multiple which is the amount of money
00:41:02
you burn for every dollar of incremental ar that you generate incremental uh subscription
00:41:08
revenue and you know we turned down investments that were growing fast but they had a
00:41:13
horrible burn multiple and um so and and i do think most of our companies raised last year when you know
00:41:21
they made hay while the sunshine so there's going to be they need to manage their cash flow so
00:41:27
they don't have to raise too quickly but um as long as they do that and they keep
00:41:31
growing they're going to weather the storm what's the right number spend three dollars to make one spend two
00:41:36
dollars to add one what's what's your ratio so what i've said is that if you can spend a dollar or less to generate
00:41:43
an incremental dollar of ar you're doing amazing and uh between one and two is good so in other words if you're burning
00:41:50
20 million in a year to add an incremental 10 million of ar you're doing quite well in startup land and
00:41:56
then when you start getting it to two and a half three that's a problem and then above three is just bad
00:42:03
spending 30 million to add 10 million an ar it means it takes three years or probably four or five because you'll
00:42:09
have turn to get that money back yeah and that's just a lack of discipline and how many vcs are we on the boards uh or
00:42:15
you know other investors are we on the board and having that nuance of a discussion it's always just top line top
00:42:20
line top line who's going to be the next holder i think it's very difficult because i think the number of qualified
00:42:25
investors have gone way down as the surface area of investing has gone way up so again just going back to this
00:42:31
conversation this woman is staffing most of these venture firms with their junior
00:42:35
and mid-level partners and again the qualification to become a venture capitalist at this point is not
00:42:40
that you have an ability to pick or you know in david's case have operated and actually
00:42:46
run a business and then actually have developed a methodical framework or brad's business
00:42:51
which is brad had to start from literally zero in the public markets and work his way backwards to end up with 15
00:42:56
or 20 billion of assets it's it's none of that it's are you a vp at an xyz unicorn that may also be poorly run
00:43:03
and all of a sudden that you know gives you the qualification to go into a job where
00:43:08
and it's not their fault where what they are told is uh what you want is what we're going to
00:43:14
give you which is the ability to write you know x number of checks per year that is insanity that's not what makes a
00:43:20
good investor and then your ability to then give advice i don't know it's probably zero
00:43:26
or less than zero your ability to give advice is uh i think we have to qualify bad advice is being given so
00:43:32
the ability to give quality advice is what's missing in this formula i just think these people are really naive like
00:43:38
you know and it's not their fault but you know they're given way too much rope to hang themselves with and they're and
00:43:43
and the the the unfortunate byproduct is going to be the uh the companies who gets bad advice or
00:43:49
the bad businesses that get funded um and that's not what you know an efficient capital market should do
00:43:55
so one of the things i'm seeing our portfolio companies do is use burn multiple as a governor for how fast
00:44:02
they're going to grow so for example they will say that the burn multiple should not exceed two
00:44:09
in the next quarter so you know we want to so that the old way of doing it would
00:44:15
be that the company would just have a forecast and say we're going to grow 3x this year we're going to grow
00:44:19
er from 10 million to 30 million and whatever that cost it costs right that was basically how companies did it now
00:44:26
what i'm seeing from some of our portfolio companies is they are saying yeah our goal is to grow from 10 to 30
00:44:32
but we will not spend so much money that our burn multiple exceeds two so you know if if it turns out that
00:44:40
there's a trade-off here between growth and burn burn is going to win we're not going to exceed
00:44:46
that level of that ratio of spending and that's actually a good i mean i've seen a few companies implement that
00:44:52
already and it's probably something they should all be doing i mean if these are pilots
00:44:56
they basically created a rule to not stall the plane right you got to keep a certain altitude
00:45:01
a certain speed so what is the opportunity here then if we're going to have too many companies
00:45:07
two high evaluations if we're going to hang around the rim and try to get some rebounds here and try to find
00:45:11
opportunities what are the opportunities what are the layups here for capital allocators and for founders if we have
00:45:17
there are no great advice for them there's nothing there's there have never been layups and the
00:45:22
problem is um you know in in up markets whenever we think that there are um it ends up being what causes our
00:45:31
downfall later because we we just take the wrong signal away i i i don't think that there are
00:45:36
i don't want to be investing incremental capital into a late stage startup that's
00:45:40
poorly run that doesn't have their margins in line and then having to work it out why do
00:45:44
that again i can just go in the s p 500 and get eight percent and yeah it's not thirty percent but it's eight percent
00:45:50
and i don't have to deal with all this nonsense like wow a bunch of people think because you're a crossover
00:45:55
investor right i mean you have the ability to choose between public privates or wherever you want to play i
00:46:00
actually think what i am is an investor right you you don't have lps for a vc fund like saks and i do but but this but
00:46:07
this is my point like i think investing irrespective of whatever stage you do it
00:46:12
still fundamentally comes down to the following which is do you have the judgment to understand whether these
00:46:18
decisions are marginally good marginally average or marginally destructive for the short medium and
00:46:23
long term of a business and i just don't think that enough people steep themselves
00:46:29
in the practice that it takes to get good at that kind of a game and i think what these moments expose
00:46:37
is that the status games that come around investing because it just seems like it's easy it
00:46:42
just seems like you don't do much work that's what ruins these periods and the implications i
00:46:48
think is brad said is really right it affects the employees it affects the entrepreneurs it affects the startup
00:46:52
culture it affects the incremental desire for people to take a shot at things you can overcome all of it we
00:46:58
have and we will again but i really think like to the entrepreneur the message is if you're
00:47:04
you know taking a term sheet i think you have to have better judgment to really look at that on that investor and say is
00:47:10
this person really qualified to help me because in these moments in the absence of help you're probably
00:47:16
going to basically have a valuation reset at the minimum case and the worst case is you go out of business what's
00:47:22
insightful about you said chamoth then i'll hand it to you brad is that a lot of the founders picked
00:47:28
based on the highest valuation who their next investor should be and now we see what a trap that is brad you know the
00:47:33
takeaway for me is we return to a place we've always been which is about selection
00:47:40
right look at the mean returns for ventures for 20 years they're lousy lousy right
00:47:47
ninety percent of the of the spoils they've apparently barely mapped to the public
00:47:52
five to ten percent of the investments and that's the way it's always been look at look at buffett right by superior
00:47:59
companies at good prices what are the two technology companies buffett bought in the public markets
00:48:04
right apple and snowflake snowflake apple and snowflake he doesn't own a broad basket of
00:48:11
long tail internet or long tail software and so i think what you're going to see
00:48:16
and and to sax's point i think even running a recipe on software as though all arr is created equal i mean i can
00:48:24
show you five companies each with a hundred million of are each growing at 30 percent and there's massive
00:48:29
dispersion in future outcomes yeah right and so like i i just think that this at
00:48:35
the end of the day is a craft business it's an essentialist business it's about finding and identifying those very very
00:48:42
very few companies that ever durably are worth more than 10 billion dollars you know on my screen today chamath was just
00:48:50
talking there are four internet companies that are green today amazon google apple and facebook
00:48:56
everything else on my screen is bleeding mustang mustang versus versus everything else is red and my growth
00:49:04
internet stocks are down 400 basis points right the market is voting with its wallet where it wants to sit on the risk
00:49:12
curve right and i think we're just gonna go there's no new normal here this is just back to the future right is what
00:49:18
we've always done and you know the reset is always painful uh the only surprising
00:49:22
thing is how often we have to go through it if if opportunities do arise where will
00:49:27
they where would they be brad i mean i was watching peloton i always loved that company i see the change in management i
00:49:32
see the management you know thinking about profitability thinking about creating it into a
00:49:36
marketplace maybe having uh more hardware available disconnected from the software etc do you think
00:49:43
there's opportunities there or there will be opportunities over the next year to buy some of the names that aren't the
00:49:49
fangs um what we do in the first instance jason and listen we we outperformed last year
00:49:57
because we owned quality and we're short lower quality stuff unfortunately this year the market said
00:50:04
guess what it's all overvalued quality low quality doesn't matter we're taking it all lower
00:50:11
and so for us in moments like this and i've lived probably through five of them in the public markets
00:50:16
we always do the same thing d gross take risks down first thing is like have less chits on the board
00:50:25
number two reduce the number of outliers pull in the risk curve right for me i want to
00:50:32
own five or six things because remember i'm the biggest lp in the fund this is my money i want to sleep well at
00:50:38
night and i want to protect the foundations the the endowments the good causes we
00:50:43
represent i can't do that with a company that has an unproven business model i may think that it's going to be great in
00:50:49
the future but i don't know so the problem with for the pelotons of the world right they may be incredible
00:50:56
returners but what every portfolio manager on the planet is doing today is compressing the
00:51:03
number of names of their portfolio saying what are the companies i know with absolute certainty
00:51:08
whether rates are two and a half three and a half four and a half five and a half is going to be worth more over the
00:51:13
course of the next two to three years that's what i want to own right right but what i was just going to start
00:51:19
not even interrupt but jason what you're talking about is what a lot of people do
00:51:23
you see a lot on twitter and i call it clapping as a strategy what about this and what about that and
00:51:30
what about if they do this and what about clapping is not a strategy clapping is something people do at the
00:51:35
blackjack table it turns out it doesn't actually influence the cards sure um and so i think you have to stop with
00:51:42
the clapping as a strategy because to be clear that's not my strategy i was asking that as the moderator is there
00:51:48
just i think you're representing a psychological reaction that a lot of people have
00:51:55
and i think what brad is trying to tell you is clapping is not a strategy i know
00:51:58
i'm asking that on behalf of the audience it is not my belief just to be clear my commentary to the audience is
00:52:03
clapping is not a strategy yes correct yes if enough people though do what you're
00:52:08
saying brad and they just retreat to quality at some point that qual those quality companies
00:52:14
would then become fully valued maybe even overvalued and thus the cycle begins again or not so long does that
00:52:20
take no you nailed it what happened last year 2021 dispersion collapsed go check out jamin ball who does
00:52:28
incredible software analysis on our team dispersion collapsed between the best cohort and the worst cohort of software
00:52:35
companies last year the first thing that happened is dispersion returns we pay a
00:52:40
higher price for the best [ __ ] and we pay a lower price for the low quality stuff right then when we start to
00:52:47
recover when there's more predictability in the world when we resolve the war when we understand the path of inflation
00:52:54
right the stuff close in on the risk curve that'll start being fully valued so then we will be brave enough to walk
00:53:01
a little further out on the ice on the lake testing it is it safe to walk here and then you walk out a little further
00:53:08
and sadly right eventually we're in the exact same pattern we've been before which is we'll know we're at a market
00:53:15
top five or six or seven years from now when we repeat the same asinine behavior
00:53:20
that we just went through when everybody becomes complacent again and over bidding this stuff way out on the risk
00:53:26
curve i'm just suggesting to you the number one question i get from gps venture capitalists and others right now
00:53:32
is when are we going to bounce back let me be absolutely clear there is no bouncing back to where we
00:53:37
were the last 18 months that was the outlier that was the make-believe what i hope and expect is that we can ba
00:53:45
bounce back to the five-year average but even to durably trade at the five-year average we have to have a lot more
00:53:52
clarity on the war in ukraine on inflation and rates so that's a perfect place to pivot sacks
00:53:58
uh we are now here and i think this is the fourth or fifth episode where we've been discussing the war and we flipped
00:54:04
it today just to do markets first uh for a little change of pace and since we had
00:54:08
brad here where are we at with the war and what are your what is your expectation of it wrapping up or it
00:54:14
escalating well actually there's a tweet storm this morning um that schmoth you sent to the group
00:54:20
that from a russian official and it seemed to indicate well it indicated what we've
00:54:26
kind of known for a few weeks now which is what the broad contours of what a peace deal would look like which is
00:54:33
there's three main pieces uh neutrality for ukraine the russians insist that it not be part of nato
00:54:40
they get to keep crimea which they annex in 2014 that's been a fade accompli and then some version of independence
00:54:47
for these sort of breakaway territories in eastern ukraine the in the donbass region everyone kind of knows that's the
00:54:56
the broad strokes of the deal then there's you know a lot of details are going to matter a lot to the people who
00:55:01
live there like is there this land bridge from crimea to don bass but frankly don't matter as much to all of
00:55:07
us the united states of america so the question is you know what what is the administration going to do about it
00:55:12
biden just went to europe and you know my concern is that no one in washington and i talked about this last
00:55:20
week seems to be pushing for a ceasefire it seems like their preferred position is for russia to bleed out as as long as
00:55:29
possible in ukraine for the us to fund an insurgency a la afghanistan where you know these fighters in eastern ukraine
00:55:38
are sort of like the mushrooms urgency is that the right word well sure because you know if they're
00:55:43
defending their own land and so we're the mujahideen i mean i know but why would you call it an
00:55:48
insurgency or defending their land if if the government of ukraine falls then it
00:55:53
becomes an insurgency so the point is that the administration the question is what's the
00:55:58
administration's end game here do they want to lead the world to a ceasefire or do they want to protract the conflict to
00:56:04
impose on the russian state a afghan-style uh you know debilitating defeat to destabilize the russian regime neil
00:56:14
ferguson had a column this week in um it says bloomberg he's from the brooking institute at stanford no he's from he's
00:56:21
from hoover uh i'll move around the start yeah so i'll read i'll read this part where is that
00:56:26
can you just explain to people what the hoover institute is and how that leans whoever institution for war and peace i
00:56:30
would say it sort of leans um i idealistic in foreign policy i would describe neil as sort of the most
00:56:38
realistic idealist got it um but he's quite well sourced i think uh with you know in with
00:56:46
you know various people in washington and europe and what he wrote is the us intends to keep this war going the
00:56:53
administration will continue to supply the ukrainians with anti-aircraft stingers anti-tank javelins explosive
00:57:00
switchblade drones it will uh keep trying to persuade other nato governments supply heavier defensive
00:57:05
weaponry and so on uh he says washington will revert to the afghanistan after 1979 playbook of supplying an insurgency
00:57:14
only if the ukrainian government loses the conventional war so the concern here is that the u.s government
00:57:21
has an incentive actually that right they don't want a quick end to this war is basically the theory is they want the
00:57:28
russian state to bleed out and be destabilized in a way it's the one chance we have for
00:57:34
like regime change there without us actually starting a war is that they have this self-inflicted wound that is
00:57:38
the theory yeah and i think a lot of people are saying that that is what a lot of people want in washington i don't
00:57:44
you know this is not like conspiracy theory people are saying this is our chance to topple the russian state to
00:57:49
destabilize it there was a rand corporation how do you survey a few years ago hold on there's a rand
00:57:55
corporation study done a few years ago that was commissioned by somebody probably in our state department or
00:58:00
someone like that where they talked about this that if we want to destabilize the russian regime ukraine
00:58:05
is the way to do it right they would fall for it right they would actually fight that fight that is an unwinnable
00:58:10
fight we would basically be putting an f we'd be supporting an afghanistan-like path for them to go down like we did and
00:58:17
they did previously to that right and the problem the problem that i see is just this which is we've discussed on on
00:58:23
this program the downsides of this war first it's a humanitarian disaster second we've talked about the risk of
00:58:29
recession later in the year third freberg talked about famine the risk of famine later this year if the spring
00:58:36
planning doesn't happen and then fourth we have this always have this risk that the war spins
00:58:41
out of control and goes nuclear right and leads into war three those are some vital american interests to avoid all of
00:58:48
those scenarios i don't see an equivalent vital american interest in determining the exact nuances of who
00:58:54
rules the donbass in other words the broad strokes of this agreement are there you know what the u.s should be doing is
00:59:01
leading they should be pushing for lead not bleed lead the way to a ceasefire not to
00:59:06
inflict maximum damage on the russian regime which we don't know exactly what their intent is because
00:59:12
they're doing this behind closed doors brad what's your take on this i think that dave and i talked about this at
00:59:17
dinner the other night i think there's something bigger playing out here i mean clearly he's the expert on real politic
00:59:21
and you know but it seems to me that we have had decades of military diplomacy right and and most recently the pal
00:59:33
doctrine of overwhelming force we don't want to make the same mistake we made in
00:59:36
vietnam so like we're going to go in with full force and you know basically the public doesn't support you
00:59:43
know military adventure ism anymore right and so now we have maybe we'll call it the blinkin doctrine which is
00:59:50
the pal doctrine equivalent but for economic force it's the nuclear economic weapon that is
00:59:58
on full display by the west right now that i think has really significant implications
01:00:03
right it's reunited the west um and i don't think this is just about putin and i think the reason that the us
01:00:11
and western europe is slow playing this a bit as they're sending a message to the chinese as well
01:00:16
which is that we we are unified and we will use an economic weapon of mass destruction
01:00:24
if right you don't play by global norms and so the box i think we're in from a negotiating perspective
01:00:31
right uh in ukraine right now is not a box around neutrality i mean neutrality is already clear
01:00:37
i mean we had zielinski didn't even ask for a no-fly zone he's not even asking for nato membership they've already
01:00:43
seated neutrality i think the real question is sanctions i don't think the west wants to roll
01:00:49
back sanctions and i think putin's saying i can't hightail it out of here unless you roll back all the sanctions
01:00:55
and give me a little bit of the donbass and so watch the next week or two like in any good negotiation
01:01:01
unfortunately i think both sides are going to amp up their current strategies we may see missiles coming out of russia
01:01:08
and we may see european uh complete european embargo of russian oil three million barrels a day
01:01:15
those will be the final straws right before we enter negotiations because then they can see the last things that
01:01:21
they took as part of the negotiation but this i think is going to be all about economic sanctions um and uh and
01:01:30
and i think the west is playing a a really strong game what i worry about and saks has talked about this at length
01:01:37
is that we overreach we over play our hand here in an effort to send a signal to other parties around the world
01:01:44
right and that has fat tail risk associated with it that you're representing in taiwan let me ask a question how many
01:01:52
of us woke up or this at the beginning of this year or making our new year's resolutions and said
01:01:58
that we need to risk recession famine and war in order to destabilize and topple the
01:02:06
russian regime when did this become a vital american interest no one at the beginning of the year thought this was
01:02:12
an important goal of america what's more important is is basically getting our economy back on track getting back on
01:02:19
track after this long day this long this this plague we've had i mean nobody needed this problem and what the
01:02:27
administration should have done was use diplomacy and all their resources to try
01:02:31
and prevent the conflict and now the conflict has occurred we should be pushing for a negotiated peace and
01:02:37
ceasefire we do not have a vital national interest in the details of who roles rules the dawn pass yeah the
01:02:44
problem with your setting up of that question is that we did not start the war putin did shamafi you've been
01:02:50
silenced so far what are your thoughts on this war that jason saying we started the war well you're saying did we wake
01:02:56
up and say that we should do this we did not listen to you a lot of other people in the
01:03:01
media woke up on february 24th and you think putin went mad and there's no prehistory to this conflict now here's
01:03:06
the deal hold on a second this is a war of russian aggression it's true that putin started it he's the invader
01:03:13
however there were things we could have done to prevent or to avoid this war and
01:03:19
american diplomacy completely failed and we even discussed it the month before this war started we talked about how the
01:03:26
u.s could have given a written guarantee to russia that ukraine would not be part
01:03:31
of nato just this week zielinski in an interview with fried zakaria admitted he was told by blinken you will not be part
01:03:38
of nato but we don't admit that publicly what games were they playing what is the
01:03:42
point of playing that kind of game with the grave issue of war and peace why didn't lincoln say publicly what he said
01:03:48
to zielinski this administration did not do everything he could do to prevent war
01:03:54
and now we are faced with all of these existential risks why for what reason the reason is that it gave
01:04:01
the united states an opportunity to topple russia i mean exactly who who of us thought we
01:04:06
needed that at the beginning of this year well i think that you know the thing to
01:04:11
keep in mind and i'm again i don't i'm not saying that this is right but i'm just game theorizing
01:04:17
uh that these are like you know um grudges that these guys have held for a very long time and i think it started
01:04:25
when they were in the obama white house and it carried over to now and i think they saw an opportunity to
01:04:32
basically execute a strategy that essentially now i think we're moving into the second phase of this war which
01:04:38
is effectively trying to bait russia into doing something really egregiously bad
01:04:43
and that is terrible david to your point i think we're willing to you know sacrifice a lot i think we've
01:04:48
decided that uh implicitly by based on the actions of of the american government
01:04:55
and and it's weird it's like we're trying to get russia to react and so the rhetoric in fact
01:05:01
the rhetoric since that do you guys remember i think it was only 10 days ago that both russia and ukraine said the
01:05:07
surface area of a deal is pretty much in sight um oh friedberg from the top rope coming
01:05:14
in look at you freedberg i mean like you you look like an everyman i mean i'm so
01:05:19
proud of you are you actually driving your own car gas guzzling car suv in the mountains you you should be you should
01:05:26
put your skates in that tank is in that tank is that putin's gas i only use it i only use ethanol i make in
01:05:32
vats in my backyard when i don't solar panels that are handcrafted in my bag out of my way to find a luke oil gas
01:05:40
station filled up um what i was saying guys was that uh you know from the 10 days from
01:05:45
when you know both sides russia and ukraine were like hey you know we think we're basically there we have a deal
01:05:51
the rhetoric has gotten really insane uh you know yesterday i think it was like the united states said you know we
01:05:57
we think that russia should be kicked out of the g20 then russia responded and said i'm only going to sell in that gas
01:06:02
and settle it in rubles you know all of a sudden uh other actors china and saudi arabia are in the game
01:06:10
now you know china and saudi arabia are negotiating settling a huge oil trade in
01:06:14
yuan why in the last 10 days have all these things happened when we were so close to getting something done
01:06:20
i think the best explanation is that um we are willing to i guess we've decided i mean
01:06:27
none of us have decided but american government decided that some amount of sacrifice is okay uh if
01:06:33
it could trigger a russian escalation which could then further destabilize that country and i think they believe
01:06:38
that that's more important than anything else and i think we you know from where i
01:06:42
said i think we can take putin at his word that he actually cares about reunification and that's not to say he's
01:06:47
crazy david um and i don't think we can control his behavior i think you're wouldn't you use word reunification
01:06:53
uh i've never said that jason and also just today the russian military the tweet that i sent you guys was from the
01:06:59
russian military and that was an official statement and i don't think he they would be allowed without putin's
01:07:04
explicit sign off they no longer talked about denatificating ukraine or demilitarizing ukraine they
01:07:12
simply focused it on the donbass and to use your sun tzu argument it's almost like they're trying to construct
01:07:19
their own golden bridge to exit in a way where they can claim victory to the russian people to explain the tens of
01:07:25
thousands of you know russian military people that have been killed in this whole conflict right because they have
01:07:30
an explanation that they have to give but in in all of this i think that we're we're uh probably exposing a very high
01:07:37
risk game of poker that we're playing which is it seems that the us government is focused more on the destabilization
01:07:43
of of russia than they are in getting this conflict behind us i mean he did he did
01:07:47
say in his speech since time immemorial the people living in the southwest of what has historically been russian land
01:07:53
have called themselves russians and orthodox christians that's don bass yeah i know but he is there's been a jason
01:07:58
there's been a civil war going on since 2014 in this donbass region between ukrainians and these sort of these
01:08:04
russian speakers and now that civil war is this a balkan style civil war that has now escalated
01:08:10
with you know ukraine and russia getting in and now the whole west potentially could get in this is a very dangerous
01:08:17
situation that we should not let spin out of control i'm agreeing with that you guys asked me did he ever talk about
01:08:21
reunification he did he did in his speech that was not one of his stated war objectives now you could keep
01:08:26
accusing him of being a liar but look what his objective is i'm just talking about his word that he believes these
01:08:31
areas are russian and they should be considered where they are predominantly russian
01:08:36
speakers i'm not taking a side and who should rule the donbass okay yeah i think it's
01:08:43
a complicated ethnic strife sort of issue like we saw in the balkans all the time between the russians who live there
01:08:50
and the ukrainians who live there what i do know is it's not worth risking war three over an agreement 100 agreement
01:08:57
100 agreement sacks let me can i ask you a question um so how is putin gonna withdraw without a
01:09:06
hundred percent lifting of the sanctions and how is the west possibly going to trust him to withdraw
01:09:15
right while taking all the sanctions off that seems to me like when when i try to
01:09:20
construct the golden bridge in my mind it comes down to you know like how do we how do we whack
01:09:27
up the sanctions do we take some of them off say prove to us be out for x period
01:09:32
of time and then we'll roll the other ones off because these sanctions are not going to be rolled back in the next
01:09:36
three months based on some ceasefire i i agree with that i i don't know that putin can expect the sanctions to be
01:09:44
lifted or that he can effectively negotiate for that i think again where i think the
01:09:50
the peace deal is is that we've known all along what it's going to be ukraine will agree to neutrality in exchange for
01:09:57
some security guarantees from the west uh russia will get to keep crimea because
01:10:03
that's been a fetacon police since the annexation 2014 and there will be some sort of
01:10:10
regional autonomy for these sort of russian-speaking areas in the dawn bass which by the way we
01:10:17
could have had that too there was a a deal called mints2 since 2015 that simply hasn't been implemented
01:10:23
so you know i think that those are the broad strokes of the deal and then there's questions about well is there a
01:10:28
land bridge from crimea to the donbass and you know what weapons exactly does ukraine get to get from the united
01:10:36
states or get to keep i mean so look those details matter a lot to the people who live there but the broad strokes of
01:10:41
this i think are pretty well understood i'm not betting this way with with our book
01:10:46
but if i had to guess we are going to have a period of significant escalation on both sides
01:10:53
before they both get to the table macron said this week that we still have the europeans have not made a decision
01:11:00
about the embargo of russian oil that will collapse the russian economy and oil will go to 180 or 200 a barrel i
01:11:08
think that's a real likelihood and the second one is i think the russians will amp up military aggression
01:11:15
um uh in some phase saving measure and to have more to negotiate with um so maybe to answer my own question is
01:11:22
if there is an oil embargo then you take the oil embargo off right as part of the
01:11:27
economic sanction whacking up of the sanctions um because that's really the nuclear option uh against the russians
01:11:34
economically but it's a you know unfortunately i think we have to be prepared for this to
01:11:42
get worse before it gets better because it makes sense from just a game theory for both sides to grab as much as they
01:11:48
can right before they sit down at the table so they have more [ __ ] to give to each other right but the problem is if
01:11:55
both sides keep asking i agree with that fundamental analysis is that neither putin nor zelinski can be trusted on
01:12:00
their own uh to basically make peace because they want to push their advantage if either
01:12:05
one believes that they're winning on the battlefield they're going to push their
01:12:08
advantage to grab as much they can to then negotiate from a position of greater strength the problem is that
01:12:13
they're in an escalatory spiral where if you know one or both of them miscalculate we never get that deal and
01:12:19
i think the longer the war drags on the harder it is to make a deal not easier one one of the i'd i have to say one of
01:12:26
the disturbing things that came out over the past week was in that interview that i mentioned uh where
01:12:31
fried zakaria interviewed zielinski zielinski said he said that it's we're either gonna get
01:12:37
a peace deal or war three and i'm listening to this thinking wait a second um you know that
01:12:46
that is a pretty scary posture for him to be taking and furthermore who appointed him leader of the free world
01:12:53
you know the decision to have war three is not his decision he is not the president united states we did not vote
01:13:00
for him we may think he's heroic we may think he deserves our support but he does not get to turn this into war three
01:13:08
for us the american people did not choose that and this is where i go back to buying in
01:13:14
the administration and their leadership what are they pushing for are they pushing for a protracted
01:13:19
never-ending afghan-style war in ukraine or are they going to lead the situation to some sort of negotiation or
01:13:26
cease-fire and i just think if we're considering the interests the united states we would not let this decision
01:13:33
purely be zielinski's this guy is willing to entertain war three that can't be acceptable to us but what what
01:13:39
what what is his worst alternative i mean like he's losing his country so of course he wants to say
01:13:44
the thing that would scare us into action potentially right so he has nothing to
01:13:49
lose so he's right for us he's not he's using he's he's using rhetoric to get us to talk about it
01:13:57
which he just won like he you can see that what he's saying is working yeah uh because you're talking about it so uh i
01:14:04
think the i think the bigger question in all of this is when uh is the united states willing to draw
01:14:11
a really hard line so there was a another thing that happened which is that you know biden essentially said
01:14:15
like you know if they use chemical weapons we will react sort of in kind right there was some some version of
01:14:22
that it's a red line basically he said yes and and then he also said you know depending on uh you know how they use
01:14:29
nuclear weapons we could theoretically respond so just the the rhetoric is ratcheting way way up and that is
01:14:37
surprising to me because i would have thought we had a deal in sight just get it done
01:14:42
be pregnant you're assuming that we have the influence you assume david that we have
01:14:49
the influence to actually cut a deal you were saying yourself for the last couple
01:14:53
of months that the u.s power has waned and that we don't have influence so which is it i think you're just blaming
01:14:59
it i believe we have the influence to get facilitated we lost our influence listen let me give
01:15:06
you an example we are giving zielinski and the ukrainians all these incredible weapons
01:15:11
what are the conditions on that if zielinski is unwilling to make a reasonable peace deal
01:15:17
do we do we have any conditions and are giving him these weapons why wouldn't we
01:15:21
insist zelinski listen we support you we basically are against this russian aggression you should have the right to
01:15:28
defend your homeland and drive them out but we also want you to take a reasonable peace deal if one is
01:15:33
available and we need you to specify what that is you're we exercising that kind of discretion i
01:15:38
don't think so i think you're assuming that biden is blocking this when in fact it might be that putin is and i believe
01:15:45
you're taking putin's sort of position here over our own presidents i think you need to know for a second that
01:15:51
we don't want to have this continue or escalate you actually think there's a world in which biden wants to see this
01:15:56
escalate i don't think that that's the case david we do not have the influence today
01:16:03
that we did it is no longer first united states you know gets to dictate to the world what's going on
01:16:08
here we no longer have to thought about this who wants to talk to israel putin wants to talk to macron in france not us
01:16:14
because we're not seen as an honest broker but but look we don't have the influence we once had
01:16:19
okay let me explain i'm not saying we can dictate the outcome okay but we can push for a
01:16:25
negotiated settlement instead of a protracted we can lead not bleed okay chamoth laid it out neil ferguson laid
01:16:32
it out the rand corporation laid it out these there is a significant chance that
01:16:37
there are definitely actors in the state department who want to see an afghan-style situation insurgency play
01:16:44
out in eastern europe that's their goal okay now i don't know what biden is thinking
01:16:49
but he has made no statement to the contrary what have we done to help lead the situation to a negotiated settlement
01:16:56
name one thing well i don't think we're in the room david but biden is in europe in the room i i
01:17:03
read all their public statements i don't see anything i don't think they want to
01:17:06
negotiate through the press with putin i don't think they want to go up right now i think that says enough
01:17:12
about him what his intent is he's in poland right he's going to pause he's in poland we're scaling up our military
01:17:17
presence listen yeah i mean i don't all i'm saying is look i don't know exactly what biden is saying or doing
01:17:23
behind closed doors what i'm saying is that the u.s should be playing a constructive role to get to a negotiated
01:17:29
cease-fire not indulging this sort of fantastical thinking that we can basically perpetrate a regime
01:17:36
change operation i agree with you on that i agree with you on that i i'm worried that there may be a small
01:17:42
strain of that probability in the range of outcomes here and i didn't think that
01:17:47
before i really thought that okay maybe we were a little bit on the outside looking in but it looks like you know
01:17:53
we're pretty close to a deal these guys will get in a room they'll you know chop it up and uh it'll be done
01:17:59
and uh instead honestly if you just look at the headlines and the rhetoric and the words from all these three leaders
01:18:05
in the last uh ten days it's been it's been in the other direction and so you have to wonder what is the point of
01:18:11
all of this right now otherwise it could be crescendoing like brad said you know i i i i listened to blinken
01:18:18
over the weekend and he talked about what i think he defined what is this new doctrine of
01:18:23
economic statecraft he said our objective is we have the power to impose overwhelming costs on our target okay
01:18:31
economic costs and he said our cause putin's actions are remembered as a strategic failure
01:18:38
not regime change that's what's within our control that is very different bush wanted regime change in iraq and we
01:18:49
executed it through the pal doctrine of overwhelming military force i think that
01:18:53
this is a doctrine of overwhelming economic force that is meant to not only signal to the russians but every other
01:19:00
rogue dictator in the world if you go rolling into your neighbor uninvited you can count on the fact that
01:19:06
there's going to be massive economic sanctions because our our military deterrence is no longer
01:19:11
a deterrent everybody knows we're not going to go defend taiwan everybody knows we're not
01:19:17
going to send our military into ukraine so we have to demonstrate that we actually have economic resolve
01:19:23
not these poo-poo sanctions we've been having around the world for the last 20 years and if that is the lasting impact
01:19:29
on this i think you're right you know that that we turned this into an economic nuclear weapon yeah
01:19:37
better than sending our kids around the world to get killed i think you're absolutely right and i think tony
01:19:43
is very smart to say what he said the um the one thing that i would want though on top of that tell me if you agree is
01:19:51
just to ratchet down our rhetoric which we can control and maybe to to i mean why not say that listen we're willing to
01:19:59
put these sanctions on the table we're willing to basically reinstitute economic ties with russia if we can get
01:20:05
to a satisfactory outcome well you don't want a reward i would say is we're making a big
01:20:10
assumption to say that there's not back channel diplomacy going on from the israelis the turks the the french you
01:20:17
know having those conversations on our behalf right like i i don't i honestly i i don't know that there that's a high
01:20:24
probability that we're not sending those signals but to your point i i just don't
01:20:28
know i don't know i don't know i but here's what i would say is look i can only judge from the public
01:20:35
statements and i think there is signal in these public statements and this the statements are all
01:20:40
one way there is no olive branch it's all it's all basically about escalation just like in january before the war what
01:20:49
were the state department's statements about the situation they said that nato's door is open and will remain open
01:20:55
even though they told zielinski in private that he would not be joining nato okay that was an astounding
01:21:01
revelation that came out this week on the fried zakaria show number two lincoln was saying
01:21:07
that there there was no change in the american position and there would be no change they said these are all public
01:21:12
statements that the u.s would never recognize the russian annexation of crimea never
01:21:18
you know he said that we went into these peace talks to represent our core values
01:21:22
there's no change on that so in other words it's been the position of the united states to be hard line with
01:21:28
russia to basically engage in no compromise whatsoever and uh it's basically double down it's a double
01:21:34
you assume you assume david you don't know those are the public statements i know but you're assuming that there's no
01:21:39
back channels going on and just to just i wanted to make one quick point which was
01:21:44
you know what if we offer to take the sanctions off and then we are training putin that these kind of misadventures
01:21:51
get him something don bass etc and that the sanctions roll off so the isn't there a possibility chamath that if we
01:21:58
don't keep the sanctions up we're actually rewarding his behavior i'm a huge guy look i've been the first person
01:22:04
in the front of the line on sanctions i thought this was the most brilliant approach to this whole thing and i still
01:22:11
believe that sanctions work and i think that this will [ __ ] that country what i'm saying though is that there are
01:22:17
these moments where instead of then sticking to the rhetoric that tony talked about what he said i don't know
01:22:23
brad where tony said this uh this weekend but like sticking to that there are these added flourishes that i
01:22:29
think are unnecessary so what i mean by that is the talk about you know us reacting
01:22:34
uh or retaliating for the use of chemical weapons biden made a campaign vow i don't know if you guys remember
01:22:40
this about nuclear weapons where you know he was very clear that you know it is a mechanism to demonstrate that this
01:22:47
deterrence exists and instead he actually caved and instead he put out this carefully worded statement which kind of
01:22:54
walked back the campaign valve earlier this week and i'll just read it to you i'll just read what the wall street
01:22:59
journal said it said by president biden stepping back from a campaign vow has embraced the long-standing u.s approach
01:23:05
of using the threat of a potential nuclear response to deter conventional and other nuclear dangers in addition to
01:23:11
nuclear ones during the 2020 campaign biden promised to work towards a policy in which the sole purpose of u.s nuclear
01:23:19
the nuclear arsenal would be to deter or respond to an enemy nuclear attack instead
01:23:24
now it holds that the fundamental role of the nuclear arsenal will be to deter but that it leaves the opening to
01:23:31
respond and use it in extreme circumstances so these are big changes and if if our whole goal is to just
01:23:38
focus the surface area to an economic set of sanctions these are somewhat unnecessary would we
01:23:43
all agree we don't need to talk about changing our nuclear policy yeah biden was right on the campaign trail the
01:23:48
united states of america should never use nukes except if nukes are used on us come on we know that yeah and we're
01:23:55
talking about changing that now that's insane look it shows that there there's an
01:24:01
influence in our government our state department of certain hardline elements who want
01:24:06
this very tough policy that includes destabilizing the russian regime and maybe toppling putin i'm just saying
01:24:13
that objective is not worth all the existential risks that we're now facing all right do we want to touch on the ccp
01:24:21
tax cuts we want to wrap we're at 80 minutes i mean the the ccp tax cuts harkens me
01:24:25
back brad you can react to this because you lived it with me 2018 2018-19 i'll say it again we were
01:24:31
in this unique moment where you know we were not sure whether there was runaway rampant inflation and in q4
01:24:37
of 2018 the fed basically said okay you got us you know the boogeyman exists we're
01:24:43
going to go tame inflation and they ran forward and raised rates and lo and behold the chinese economy
01:24:50
turned over in q1 of 2019 we had like a you know kind of a blippy little recession
01:24:56
um and we had to overcome it because china became stimulative now here we are again
01:25:02
we're worried about this inflationary boogeyman and the chinese government basically
01:25:06
extended these tax cuts increased the tax cuts and essentially said we're going to be very stimulative
01:25:12
in the economy especially through the back half of the year now china again is a massively export
01:25:19
driven economy right so the reality is that as goes china so goes the rest of our economies and so i
01:25:26
think that it's a setup where how can the united states be under so much inflationary pressure where china is
01:25:32
effectively telling you that we are in a um in a contraction and a recessionary period and so if that's where china is
01:25:41
there's a risk that we may already be there or entering that and so i think it's a little um you know
01:25:47
uh contributing to you hit two really important points jamal number one which we didn't get to
01:25:53
earlier i tweeted a few weeks ago the fed's probably behind the curve on recession not inflation
01:25:59
right we have massive demand destruction going on right now on the u.s economy massive the producer define what that
01:26:05
means brad define what that means so i mean if you just think about what does six dollar gas mean what does no stemi
01:26:10
checks mean what is the fact that you actually have to go and get a job again mean you know we're we're rolling back
01:26:16
trillions of dollars off the fed balance sheet i'll tell you what it means is that people can't spend as much money
01:26:22
just the increase in the 30-year mortgage means you're buying power in december four months ago
01:26:28
to buy a house and you if you could afford 1200 bucks a month that buying power bought you a 350 000
01:26:34
house today it buys you a 295 000 house people's ability right to have money to spend money is
01:26:42
getting crushed so i think we are going to face an economic slowdown if you look
01:26:46
at the pmi so this was the inflation read in january little people didn't really notice it
01:26:54
pmi in january came in at 0.2 versus the consensus estimate of 0.6 that means the producer
01:27:03
level of inflation was meaningfully less than we expected if you look at consumer confidence it's
01:27:10
plummeted one of the four biggest drawdowns over the last 20 years retail sales in uk this morning crashing
01:27:17
consumer confidence in the uk crashing the chinese government sees this we're we're not surprising look at the what's
01:27:24
going on in the world with energy prices we've never had oil over 120 bucks and not gone into a recession we're facing a
01:27:31
global slowdown that will have big implications for inflation big implications for rates but
01:27:38
china sees this coming and says we're going to get ahead of this we've got a people's congress in november we've
01:27:44
promised him five and a half percent gdp growth three trillion of that is export
01:27:48
driven that means if europe and the united states catches a cold they catch the flu okay so they have to do
01:27:55
everything in their power this is why they're not going to supply the russians with weapons right because it's
01:28:00
economically assassin assassinating themselves right so we have this interconnected
01:28:06
world this idea that we're de-globalizing what we do doesn't impact anybody else
01:28:11
like that ship has sailed a long time ago and the chinese see this that's why i think there's also a
01:28:17
probability by the middle east this summer the fed in the united states is saying we now see a balanced risk
01:28:24
between growth and inflation saks let's get you in on this just as we wrap here the chinese communist party
01:28:31
premier talked about tax costs and this is a quote fertilizer applied directly to the roots of the economy tax rebates
01:28:38
look like reductions but actually are in addition today you get back tomorrow you
01:28:41
get more in returns does this mean the united states uh people will go back and get jobs because
01:28:46
they need to have more money and that maybe we should be looking at you know tax cuts at some point
01:28:52
listen jkl i think we got big problems here at home in the united states brad and chamoth they've laid out these
01:28:58
gigantic economic risks that are facing the country you know i tweeted at the beginning of
01:29:03
the year january 24th the president's main job is to ensure peace and prosperity and bind's popularity was
01:29:09
already plummeting i think this is when his poll numbers were at 38 but if he gets us into war and recession
01:29:15
he ain't seen nothing yet this war the longer it drags on the longer it basically can spin out of
01:29:22
control and become something worse that sucks us in the longer it creates the risk
01:29:28
of basically causing a recession in the united states we need the american we need the the
01:29:34
blind administration to help try and lead to a better outcome here instead of ratcheting up the rhetoric all right
01:29:39
folks there you have it that's your all in podcast for this week thanks so much to brad kirstner for
01:29:46
joining us and filling in for the sultan of science bg thanks bro and a lot of great announcements here brad will also
01:29:53
be joining us for the all in summit we're about to wrap up tickets uh we've announced a bunch of great speakers uh
01:30:00
for the event may 15 16 and 17 in miami uh you can just do a search for the all in summit we have uh given out uh we've
01:30:08
sent 200 emails to people who asked for scholarships and 100 of them have taken the tickets 500 of the 650 tickets or so
01:30:14
are accounted for we'll be wrapping up registration in the next week or two and we look forward to seeing you all at the
01:30:20
new world symphony in south beach do you have any announcements of people who else is appearing oh my lord we have
01:30:26
great announcements keiser boy is coming joe lonsdale is coming nate silver is coming nate silver i love nate silver
01:30:32
well we decided chamoth we would have people do 15 uh to 20-minute ted-style talks like position papers and
01:30:40
so who else do we have doing that uh tim urban of weight but why who's a brilliant tech speaker and writer nate
01:30:49
silver's gonna do that and then uh antonio is coming he was just on uh uh and uh he was just on a rogan show and
01:30:57
so we're gonna have these like 20-minute uh kind of hits then the besties will sit with them we'll do those back to
01:31:03
back kimball musk is going to come and talk about his uh dao that he's doing for
01:31:07
non-profits brad we're going to talk about what topic so we're collecting all this talent and then we'll figure out
01:31:12
what positions they're going to play in the show and what the themes will be but
01:31:15
the themes will match what we've been talking about here and we don't want to pre
01:31:19
uh set the themes six or seven weeks seven weeks out from the event because we don't know what the world will look
01:31:23
like then uh and then free burke said he wanted to do a position paper and actually give a 20-minute talk so
01:31:27
bessie's will have that ability and besties will start the event and end the event tons of different speakers
01:31:33
rotating in and out talking about the most important topics of our time but i would like to have peter there can you
01:31:38
get peter thiel to come he's maybe the most iconoclastic please please i'm just not i have to get over my
01:31:45
uncertainty that this whole conference thing is really a grift it's not a great we're putting all the
01:31:50
money is going back into the event and we gave 200 scholarships there would be no profit from the other there needs to
01:31:56
be a really nice swag bag and i i think it was already at 600 dollars a person i
01:32:00
just spent three or four hundred letters what is the material of the hoodie all right
01:32:05
if it's gotta be a cashmere hoodie if that'll be on the ground hundred dollars for people need to be able to buy up to
01:32:12
the to the special hoodie brad i just spent six hundred thousand dollars per gift bag for 600 gift bags okay it's
01:32:18
like 400 grand in gift bags and chamath wants to put a six thousand dollar so that i just wanted to know what the
01:32:24
material was of the hoodie in the bag that's all i'm just asking a question this is my life brad i am busting my ass
01:32:29
to put this event on and complaining about the gift bag saks is complaining on me making a dollar from
01:32:35
it and free berks having a panic attack that we don't have enough great speakers
01:32:39
and i'm doing all the work that's my whole [ __ ] life i appreciate you j kell i know you did say some nice stuff
01:32:44
to me you did say some nice stuff right appreciate that i'm bored with you getting a fee for
01:32:49
your hard work yeah i don't need to give you like an hourly wage you know 15 an hour no i'm not your weight slave david
01:32:55
sucks i'm working hard here but i'm working hard but i i just wanted to be appreciated i don't think you
01:33:02
should have like a cotton blend is my i think by the way brad do you have any thoughts
01:33:10
on the sushi is there should we be using brown rice and not the two line cloth tuna no just make sure there's golden
01:33:16
brown gold leaf on the sushi no literally we're spending i think for 300 or 400 000 per party it's over a
01:33:25
million dollars in parties and i'm talking to talent bookers about serious talent coming to perform drake can you
01:33:31
get drink how about dueling that's three million dollars do a lipo two million dollars in two million dollars that's
01:33:37
what the dungeon i got what does that mean how much is dojika she's great i think
01:33:41
those are all seven figures i would like to anyway what i'm trying to do worthwhile
01:33:47
i mean that would make it an incredible party oh god i mean i really would like to get started how much is drake again
01:33:52
two million dollars i heard two to three million and get drake yeah good idea yeah yeah yeah cancel the
01:33:58
bags give it all the drink so you guys are saying and all the work i do i should take two
01:34:06
million dollars and hand it to [ __ ] drake yes yes drake is more valuable than you 25 years
01:34:14
of working on events and media brad and these these are my friends who are like take the 2 million drinks you can put in
01:34:21
your pocket and finally make a profit on your work and just hand 2 million in a bag
01:34:26
to drink we don't need the bags forget about this one guys can i get a plane i'm
01:34:32
do we get to work with drake on which songs he's he would sing i think he does like a medley of like three what
01:34:37
i would like to do is have three songs for two more come on i think it's basically like a hundred thousand a
01:34:43
minute i think that's what you're in for a hundred thousand per minute just 20 minutes
01:34:47
that seems egregious no i mean these guys get paid when when i hired snoop he did like 20 songs for me i mean it was
01:34:54
unbelievable two or three hours three hundred that's because he forgot he was there
01:35:01
yeah he had a great time oh my god man he was blowing this joint that was so powerful that i was 10 feet away and i
01:35:08
got stoned i mean it was like he walked in it was like i remember it was like 20 super bowl shows
01:35:16
good stuff all right everybody love you besties love you brother we'll let your winners ride
01:35:24
rain man david sacks [Music] we should all just get a room and just have one big huge orgy because they're
01:35:54
all just useless it's like this like sexual tension but they just need to release
01:35:58
[Music] your feet [Music] oh [Music]