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how mad is saks going to get when he sees my button situation today i'm going to join you how you doing oh my god look
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at the collar situation look at the button situation look at that oh this is fantastic oh hey besties
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so just got off the lake where the lake it's got the lake yeah i was just on the
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lake the boat lake cuomo where where were you i was doing a little wakeboarding tahoe yeah still
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wakeboarding me and suck me and that took all five kids and we navigated the entire island of sardinia
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for eight days amazing and by when you say we navigated you mean the crew navigated and you ate
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seafood yeah it took a village [Music] [Music] all right everybody welcome to episode
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91 episode 91 of the all-in podcast yeah we're still here uh lots of news to discuss this week with me of course to
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chop it up from his deposition room uh the war room the rain man himself david sacks how you doing brother big week for
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you they're all big weeks we're all big weeks yeah you look tired well we're recording pretty early today
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it's a little exhausting you actually look really tired what are you talking about just got off
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the lake i feel fresh i was just wakeboarding this morning on lake tahoe i feel refreshed i'm refreshed uh and of
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course in front of his uh nine dollar clip art uh that he blew up on easyprince.org the sultan of science
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himself david freeburg how are you sir always great to be with you jay cal are you working it boosts my self-esteem and
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my morale to be with you every morning that we get to connect over zoom well i'm glad that your performance has been
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stratospheric the last three weeks you're going on a hot streak let's see if you can continue it on episode 91.
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and missing many buttons this week we've got at least a three or four button august going how are you doing uh
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dictator uh from your island the remote island did you you invaded an island markets go up
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another five percent and one more button comes undone oh i love it so this is 20
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percent up and we could go to 25. that's a [ __ ] daddy's back the more bullish he gets on
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the market the more he unbuttons daddy's back so all the low rise jeans on right
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now or are you wearing shorts what are you wearing show us those sticklers i'm wearing these beautiful linen shorts can
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you stand up and show us yeah come on give us a 360. come on let's see but these are the most beautiful
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inner thigh inner thigh that's a little too much thigh yeah that's like a chicken wing you guys like
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this it looks tight too very tight are you yeah those are definitely yours are you wearing like a
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children's size or something is that a junior sign i like you know i like the tighter sizes you do
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i do like the tighter sizes i think they uh they they personal body type accentuate all the little bumps and
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nodules too much information all right let's start with um there's a lot to talk about this week
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i think one of the most interesting things last week we were talking about it in the
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group chat that doesn't exist uh vision funds 21 billion dollar investment loss for the quarter
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masayoshi-san did a really great youtube video i sent it roger any of you guys watch the video yes no
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okay it's it's really interesting to watch we'll put it in the show notes it's like a six minute interview he put
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on his earnings page right like right when they put out quarterly earnings he's like here's my interview yeah
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you know he comes to a podium and basically talks about uh the vision fund obviously if people don't know the
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vision fund one was a hundred billion dollars the largest venture fund ever raised um and softbank's current market
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cap is 66 billion here's the quote from the ft article sun said on monday that softbank would now
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subject itself to dramatic cost-cutting exercise uh after a 59 billion dollar investment
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gain at the two vision funds almost completely reverse over the past six months they were up almost 60 billion
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dollars at the peak and it came crashing down masa kicked off the presentation showing portraits of togugawa tokugawa
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gawa yasu this is the founding shogun of japan's uh tokugawa suganat and uh you rule japan for six i mean i'm
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killing this such a long intro god it's so hard yeah i mean but it was just so great
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let me just play a clip for you here here's a 68 second clip and we'll talk about it right after and then we'll
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get into what all this means this is a portrait of tokugawa he actually made a big loss against takeda
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shingen and came back in the background of that tokugawa yes which is much much larger army than
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theirs and most of the allies actually said this is gonna be the losing battle so that they should not go for it but
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actually it's better to stay at the castle however tokugawa didn't want to lose his face so that he
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get out from the castle had a battle made a complete loss and suffered and came back and
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actually learned lesson he tried to remember and remind his own learnings and put it into this drawing so since
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the foundation of softbank group i made two consecutive quotas loss so previous quota in this time quota
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consecutively we made three trillion yen develop the loss so in total six trillion yen those
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was made in the past six months so i believe i need to remind that myself pretty spectacular loss and then he he
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goes on to take some q a and this is the i guess the killer quote when we were turning out big profits i became
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somewhat delirious and looking back at myself i am quite embarrassed and remorseful you remember
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of course and he complained a little bit in the in this whole thing about how there was a giant bubble without ever
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recognizing that he kind of created the bubble with a four billion dollar check uh to we work at a 47 billion dollar
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evaluation after a 20-minute meeting with adam newman this chart is pretty incredible this is
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the net income quarterly essentially you can think of softbank as like a holding company of a
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bunch of different assets including alibaba previously uber and all of this vision
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fun stuff 97 decrease in terms of deployment of capital so if you look at capital deployment as well nobody ever
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put this much money to work especially in privates this second chart if you look in q1 of 2021 they put 20
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billion into work and then q1 this year they're putting 600 million to work just quick reflections on this what we
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saw here with masayoshi-san deploying 100 billion at the top of the market into and it's basically creating the
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market tops are there lessons here uh or takeaways for you i mean i think that people don't seem to understand
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that if you're gonna attempt to be great there are going to be moments where you look the exact opposite of great
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you know the guy that takes the final shot is the same guy that can miss the final shot
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and here is a guy over his you know 50-year career has had some huge ups and downs this is
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also the same guy that found a way to rip in 25 or 30 million dollars and made 125 billion off of alibaba
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that's the same kind of person who has that kind of risk tolerance he was for seven minutes or something the richest
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person in the world and then lost 99 of his wealth in the dot-com bubble i have enormous respect for a person
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like this because i feel like it takes enormous amounts of courage i've said this before
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most people jibber jabber about investing and all of this stuff and when push comes to shove
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they crumble like little [ __ ] and run into mommy's coattails it's hard to put lots of money to work
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and this is a guy that's done it so the same person that can make 125 billion turns out is the same person that can
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lose 30 billion and so one thing is i would just keep in mind that this is a resilient guy who
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seems to land on his feet and the second thing that nobody talks about is how smart
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saudi arabia and abu dhabi were in how they structured the investment into the vision fund because half more than half
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their investment is in preferred equity which is effectively debt that pays a coupon
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and you see it now where softbank by the way who has been pretty smart in how they've managed their alibaba
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position have been using these derivatives and forward swaps to be able to sell and
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manage their liquidity so it turns out that you know even if the vision fund breaks even
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saudi arabia and abu dhabi will have made money because i think they get paid a six percent coupon
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on you know 50 billion dollars is a lot of money over six seven eight nine years
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it's a lot softbank has found a way to sell down 25 of alibaba which is no trivial feat
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for a half a trillion dollar company and this guy gets to keep swinging and if he you know hits it one more time
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he'll end up with half a trillion this chart is pretty great um saks if you look at this this is the gain and loss
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on investments at the vision fund uh you can see the first vision fund raising up
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uh then coming down i think after that summer of ipos that we had in the airbnb uber days
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and then a huge peak run up in 2021 and then coming crashing down apparently he wasn't selling uh any portion of this
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that to me was a big lesson of like maybe pairing some of these winners if it sold 10 or 20 percent on the way up
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this could look like a completely different outcome uh but i agree with him off he he swung for the fences and
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there was downside protection built in for the lps into some of these sacks what are your thoughts any lessons here
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in terms of the impact on our overall ecosystem or that you can take as a capital allocator yourself
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well uh jason i think mossa did something you could never do which is admit a mistake
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oh here we go wow personal quick well would i have my first mistake i'm certainly willing to admit it i'm
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waiting imagine that you ran 100 billion for sovereigns instead of a hundred thousand for doctors and
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kind dentists you can kind of put yourself you can put yourself in moss's position yeah
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oh i love saks in the morning saks in the morning's like a hot cup of coffee he's up early that's the big lesson here
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you make sex go to a 9 a.m wow you know look i think that softbank obviously made some decisions that were
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you know they were they were sort of peak decisions um they were they were a little bit bubbly they didn't take chips
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off the table and they probably should have it's easy to fall into these bubbles because the psychology of it is
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so powerful and as you know bill gurley's pointed out these bull markets are more like a sawtooth which is they
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gradually go up for 9 10 11 12 years and then when they end they just you know it's like an
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elevator going down so you know if the market had continued for another couple of years mazda probably would have made
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a lot of money but in any event look he took responsibility for the losses this was a
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very you sort of culturally japanese speech i mean he didn't commit supoku at the end but it was kind of the
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direction they might move the camera off oh my god what is he doing with that sword it was the verbal equivalent
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basically and uh look he took responsibility what else can you do now one thing i would quibble about is
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the idea that that softbank caused this bubble um you know it wasn't just softbank we had tons
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of tigers tiger had huge funds they were deploying very quickly but there was a lot of
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so-called tourist money basically money from crossover funds investors who are not primarily vcs came into the
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ecosystem over the last few years and a lot of that was driven by sovereigns and
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by liquidity so you know you can't forget that we had 10 trillion dollars of liquidity pumped into the system over
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the last couple of years and many billions of that found its way into the tech ecosystem and fundamentally
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you know vc is not that scalable there there was an attempt to make it scalable there's an attempt to push more money
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into vc why isn't it scalable why isn't it scalable because people have tried right this is
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it is scalable it's just that if you try to scale it your returns will go to zero
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yeah that's kind of the same thing right like i wanna i wanna just critique the strategy for a second because um you
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know we're talking about as if market conditions cause these massive write downs
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and that is the only reason that these funds have suffered but you know if you read a lot of the
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stories of masa's investments in a number of these companies and the full list is available and how much he
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invested there are many many stories and i've heard many of them personally from
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ceos that have met with masa and raise money from him you go into masa you tell some the
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bigger the story you tell the more excited he gets the more of the world you can capture
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and you go and you're raising 100 million dollars he's like i'll invest 400 million you say you're raising 25
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million he's like i want to give you 150 million and um his his motivation was always
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give you more capital so you can go capture the market and the problem in that model is that by giving you so much
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money capital becomes your primary asset as a business and capital needs to be the fuel that
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enables your assets as a business to accelerate but as soon as capital itself becomes your primary asset the business
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is doomed to fail and that's a really key point if you let's say and let me let me be very specific about what i
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mean let's say you have a direct to consumer business that requires online marketing and your your
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business grows well you spend 100 to acquire a customer suddenly someone says here's a billion dollars to spend on
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acquiring customers as soon as you have to start deploying a billion dollars your cost of acquisition goes up the
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number of customers per dollar spent goes down and the business itself starts to look upside down and fail and that's
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what happened with a number of these businesses that masa put in and he put oversized checks in wework is a really
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well documented example in terms of what happened when they started to accelerate
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their growth beyond the natural course of the business because of the amount of capital that they took it really started
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to hurt the fundamental profitability in unit economics of the core assets of the
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business and um this strategy theoretically can work to a degree but masa took it to a level that had not
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been seen before i think i i highlighted for you guys like back in 2011 i think when andres and horowitz
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they pitched me on this idea i was trying to raise 25 million dollars in my company mark was like we'll give you 40
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million dollars you can accelerate your growth and he's like we want you to go capture the market and peter thiel
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always use these terms go capture the market and these um and blitz scaling and blitz scale again reid hoffman with
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blitz scaling and the motivation is look we'll give you more money because the the core asset of the business works the
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core assets to the business work so the money should be more fuel for the fire the problem is if you over indulge if
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you put too much money in and the the asset cannot handle that much capital the whole thing collapses yeah i would
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say so many documented examples of this in his portfolio and i think that the strategy is worth
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highlighting that there are some issues with that strategy across all these business categories it doesn't always
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work right the core issue here i think is and then i'll i'll go to you saxon the core issue here that you're
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describing is exactly correct and it really is up to the founder to decide what they're going to do with that
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capital the wework example is so instructive because they were buying under market uh buildings in the in the
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tenderloin and then marking them up to you know class a office space and getting those prices once they got the
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masa money he started buying class a and offering it at class b prices and flipped the whole business upside down
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rate at which you can deploy capital does not flex right and so in all businesses understanding the rate at
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which you can deploy capital to grow is critical to understand how much capital you can raise and then if you raise too
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much money and you and you flex beyond what the natural condition of the business is in terms of capital
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deployment the economics fall apart and the business itself looks terrible and eventually you will have a right down
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and the distraction on the founder is the key i mean look what adam newman he was easily distracted he started buying
00:16:13
surf machines and companies and starting kindergarten because you can't naturally deploy that much capital so
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you find unnatural ways to deploy let me build on that point i think there was a
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belief on the part of softbank that they did publicly espouse which is that they
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could be the king maker totally and in fact you know we had some startups that were in competitive markets and softbank
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would basically announce that we're going to be anointing we're going to be picking a winner anointing a winner and
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writing them a huge check and everyone kind of had to play along because if your competitor got that 100 or 500
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million dollar check then you would be presumably way behind so there was this belief that they could be a king maker
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and make the difference and i think that what we saw is that for whatever reason
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partly because of the dynamics that freebie's talking about that that strategy just didn't really work that
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well and what it really goes down to is that vcs can be helpful but they don't ultimately
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uh cause the the the winning companies to be the winner um so this idea that you could be a king maker i think was a
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little bit flawed i think one way that tiger actually improved on this model was that they never tried to be a king
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maker they just they actually went the other direction which is we're going to own less your company they tried to be
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passive non-dilutive capital and they would do high price rounds but you know with with reasonably sized checks but
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they didn't try to go for 25 30 ownership at a late stage and founders did like that model better now as it
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turned out they both had the market timing wrong but i think this king maker aspect was was a problem and
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one other aspect of that i think is that and i don't want to beat up on softbank
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too much i'll see something nice about them in a second but i think one of the mistakes they made is you'd see them
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writing multi-hundred million dollar checks into companies that were at a very very early stage free product
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market fed pre-product market for companies frankly that we thought were like seed investments brandless was the
00:18:04
perfect example they were it was a it was a company that made like soaps and dishwashers and cereal but they had no
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brand on it was like uniqlo of this and they gave them i think 200 million dollars and i was like this is a seed
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stage company makes no sense right right they were i mean look they wrote like 500 million dollar seat checks into
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robotics companies effectively and it's because that you know the softbank had a thesis and i think
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sometimes if again this goes back to kingmaker if if you're a vc and you think you're the
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one with the thesis and you're the one who's going to make the difference it's actually a seductive fallacy to fall
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into it's the founder who has the thesis and you can't you can only do so much to
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help and you can't really force it and so i think they ended up making some cutting some really big checks into some
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companies that were really risky and you know the way that we do growth investing is that you know it's
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milestone based we're writing that the size of the check is proportional to the amount of proof
00:19:00
that the company has and and look the nice thing i'll say about softbank is recently we've actually done some sas
00:19:05
deals with them that i think are some really good deals and they've written checks that i think are appropriate to
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the size of the of the company and the amount of proof they have and they've been really easy to work with and i look
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forward to doing more deals with them but i think it would behoove them to do more deals like that where again check
00:19:21
size is related to proof i think that softbank in hindsight made one critical critical error and only one
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and everything else was sort of affected complete with that one error which is that in their fund documents
00:19:36
they made this a 10-year fund now let me explain why is that an error that is the status quo
00:19:43
for all these funds and the more nuanced part of that decision to make it a 10-year fund is
00:19:49
that your investment period is only five years so you're only allowed to put the money
00:19:54
in for the first five and then you have to basically manage the portfolio because there's an
00:19:59
expectation that you raise a new fund so if all of a sudden you have a hundred billion dollars in a five-year investing
00:20:05
life the math says oh my gosh okay well i need to put 20 billion out per year and then you try to look for i don't
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know let's say 50 companies a year while the mean check size now all of a sudden
00:20:16
balloons to 400 million that was the error you see afterwards the very very smart private equity folks
00:20:25
who saw that that was the error fixed it so blackstone silver lake when they came
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on the heels of softbank what they did was they raised funds with a 15 and 20 year life
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and what that allows them to do and what what it would have allowed masa to do in
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this situation was just slow it way way down pace yourself and do fewer deals with much more capital
00:20:50
and then be patient and say i'm going to have a 10-year investing life and i think that that would have saved
00:20:55
them and they would have looked incredible right now because they would be the king maker in a moment where
00:21:00
there is no money flowing into venture an early stage tech so in my opinion i think it was just that it was such an
00:21:06
ambitious feat that when it came time to execute whoever was really in charge of
00:21:10
those details kind of [ __ ] it up and they should have realized the math didn't work
00:21:16
for a five-year fund life and they should have made it a 10-year frontline or 10-year investment life which would
00:21:22
have put a 20-year fund life on the thing and i think they would have been fun yeah i mean if you look at it as 60
00:21:26
months maybe you take out august and like the holidays you got basically 50 months to deploy 100 100 billion it's 2
00:21:31
billion a month 500 million a week i mean how do you even process that many deals it's
00:21:36
impossible the quality of the diligence by by necessity has to go to zero yeah it's it was a crazy strategy
00:21:44
if you can breathe you get money if you can get a meeting you get the money i mean basically i mean and and if they
00:21:50
had just i i'll say if there's there was one sorry this one would be good no and it forces you to have a team that
00:21:58
is so broad and large and diffuse that is not this game this is another thing i would love to you know for us to
00:22:04
talk about correct correct investing has never will never and is not ever a team sport
00:22:14
okay it is like basketball you can be on a team but you are steph curry or you are
00:22:20
not steph curry you are draymond green or you're not draymond green you are lebron james or you're not there are j.r
00:22:26
smith's on a team they're tristan thompson's on a team and you come together and the team can
00:22:31
win a championship but there are these exceptional individuals yes and the firms that have
00:22:38
really done well consistently over decades embrace that philosophy benchmark sequoia you know these guys don't try to
00:22:46
create this team-oriented glad-handing approach but they also don't allow the teams to
00:22:52
get so diffused that there's 500 people running around ripping money in because you basically then return the beta of
00:22:57
the market and if the market doesn't look good in that vintage then all of your returns look pretty crappy the
00:23:03
lesson for me in all of this is i think we talk about writing your winners on the show that came from just so people
00:23:08
understand when we said ride your winners and it's famously in the in the opening song here
00:23:13
what we were talking about was like don't sell your entire position like when sequoia sold their entire apple
00:23:18
position or other people have done but pairing your position would have changed this whole story if he had paired 10 20
00:23:24
percent of some of these names that were breaking out i disagree with that too along the way oh why go ahead because
00:23:29
that's the dumb i think that's the world i think the opposite he would have had it up a year ago sequoia just put out an
00:23:35
entire document and a roadmap for becoming an evergreen fund but and i read that document and what i thought to
00:23:42
myself is all of this looks incredible unless the market goes down and then a market
00:23:47
and then the market went way way down why because their whole thesis is we're going to park and hold money well okay
00:23:53
but they also allowed a revolving liquidity mechanism for their lps every year you know you're a cancer foundation
00:23:59
and you want to fund cancer research and you expect sequoia to give you back money you fill out a form and sequoia
00:24:05
basically fronts you the money well excuse me but you can see how all of a sudden this can very quickly get
00:24:11
out of control because then where does sequoia get that money they'll have to borrow it or liquidate some positions
00:24:16
but the whole point is to not liquidate positions this is what they said yeah so
00:24:20
my point is i really think and david said this before i think that vc's job is to be a vc it's hard enough to do
00:24:26
that job well and if you think that you're going to cascade across all asset classes and do
00:24:31
better than the market it's an extremely high bar that creates tremendous pressure and forces you
00:24:38
to bring things on like debt and all of these leverage lines which when markets go up will work in your favor but can
00:24:45
very quickly turn against you yeah i disagree completely because when if you look at when you're in a private company
00:24:50
and you're you own some private shares you know the revenue you know the velocity you know the management team
00:24:55
you have more insights than everybody you got a massive information edge because it's all based on insider
00:24:59
information before it's public and pairing your positions in privates uh can be amazing because you have some overvalued
00:25:06
company because someone like masa or tiger comes along that overvalues it so for venture funds i think when you start
00:25:11
hitting these 50 100 x's pairing 10 pairing 20 along the way which masa could have done and these private names
00:25:17
especially would have been brilliant you're saying don't distribute and just hold on and
00:25:22
use data and give people give your lps them on liquidity no no no i'm saying if you have the opportunity
00:25:28
to sell in secondary you should pair your position in your winners 10 or 20 two or three times i'm
00:25:34
not saying that i'm saying that this would be a different position but like you're using soft you're using
00:25:40
apple and sequoia as an example you do remember the trajectory of apple basically went to a 4 billion market cap
00:25:47
for years languishing i mean the idea that sequoia would have held those shares because they had some
00:25:52
proprietary views ludicrous why is you can see the youtube videos when steve jobs came back he said uh we may
00:26:03
not make it yes but chamath that in that that is part of the opportunity but putting that aside that's exactly what
00:26:10
sequoia is doing is they're saying we want to hold the legendary companies the legendary brands with the great founders
00:26:15
before it's all easy in hindsight how do you do it today well is unity a legendary company or should
00:26:23
you have distributed 165 dollars a share well i'm such an extremely hard question
00:26:28
and i'm saying you can mitigate that question by pairing your position 10 20 percent so you have the best of both
00:26:33
worlds what do you think well i think it's it's hard to pair down a position while the company's still private
00:26:38
because the companies don't don't want you to by and large but but once they do become public then
00:26:45
the question is when you distribute and we talked about this i think it sounds like sophing was sitting on quite a few
00:26:51
large public positions and could have distributed i'm not fully familiar with their structure but given
00:26:56
that they had all this debt seems like you'd want to pay off all the debt uh as soon as you could
00:27:03
and missing every year i think it's like three or four billion dollars it's well it's
00:27:12
documented but that's the six percent that they that they were owed on their 50 billion dollars
00:27:18
but did they pay it off well you have to get paid every year yeah so they did it i mean look i would
00:27:23
just say these bubble it's it's easy you know hindsight's 20 20. it's really easy
00:27:28
to point out these mistakes after the markets cratered you know my experience with these
00:27:32
bubbles whether you go back to 1999 or 2021 is when you're in them they're very powerful psychologically you know
00:27:39
everyone's talking about how everything's going up and we i think actually had some really good commentary
00:27:44
on the show about back in november about how it could be the peak how it could be
00:27:49
all liquidity fueled uh we didn't know for sure but there were some pretty good predictions on this pod but by and large
00:27:55
it's it's pretty hard to to know whether you're you know whether is there a grounding metric that you use i'll open
00:28:02
up to freeberg and then everybody else when to know that the market is overheated free burgers there's
00:28:08
something you look at and go okay we've disconnected from reality price to earnings price the sales
00:28:14
some valuation metrics are the things you look for so you know that this is overheated and maybe it is time to pair
00:28:20
positions uh what what have you learned over now our third collective uh down market valuation trophy hunting
00:28:29
i would say is a pretty good indicator of things being things being um explain what that is in
00:28:36
a heated market like if the the businesses the ceo the founder the venture firms everyone is all about how
00:28:48
much you can mark up your investment as opposed to talking about the quality of the business and the quality of the
00:28:53
earnings and then you revert back as we just recently did to now people talking about
00:28:59
okay uh how strong are the gross margins of this business how effectively can they
00:29:04
deploy capital what's the return on invested capital key metrics around the fundamentals of the business versus
00:29:11
the value that the market is willing to pay for the business and the more heated the market gets the
00:29:17
more everyone focuses on terms like unicorn decacorn you know and that becomes the key metric
00:29:23
as opposed to saying this business is so good for every dollar they spend they make
00:29:28
three dollars in gross profit in 12 months that's what fundamentally says that's a high quality
00:29:35
grow you know a valuable business over time as opposed to here's what the market is telling me it's worth today
00:29:42
and if the market is telling you it's worth that much today and you're and that's what you focus on
00:29:48
you inevitably end up in these kind of bubbly moments where you miss out on focusing on core value creation
00:29:54
which will actually pay off much much more over time jamaf you pointed out another signal um hey when smart people
00:30:02
who have the largest amount of capital in the markets are clearing positions uh maybe that's a signal of a top
00:30:09
and then i think it's a really good insight by freeberg when the conversation the narrative is about the
00:30:13
valuation and the status and vanity metrics as opposed to the quality of the earnings hey that's a really good
00:30:18
indicator we're in a bubble maybe you should start clearing positions what are indications for you that we're either in
00:30:22
a bubble or the market is undervalued because we're really talking about this timing right timing is very important
00:30:28
it's not possible this is why i think that you have to define what game you want to
00:30:35
play before you start playing the game okay this is why i think it's kind of nonsensical
00:30:43
for example i believe that at best i am an equity investor in technology companies or things that
00:30:54
have a technology bias because i can generally understand them maybe you know a few seconds faster than
00:31:01
everybody else which allows me to make a decision a little bit quicker but if all of a sudden i started
00:31:07
investing in debt you should expect that i'll lose my money because i don't know what i'm doing and
00:31:13
that's not the game where i have any advantage so i think the most important thing to
00:31:18
do is to not try to do all of this crazy stuff because this is what happens in moments where either things are very
00:31:25
very good or things are very very bad people try to create all these stupid rules
00:31:30
and the rule their only rule is there are no rules so i don't know i just think it's like
00:31:36
stick to your knitting if you're a product builder build products if you're an early stage investor just do that
00:31:42
it's hard enough to do any one of those things really really really well but this idea that you know you're going
00:31:49
to come up with like some mosaic in a system i think it's just highly suspect and i think the market returns have
00:31:55
showed that everybody that tries has failed except for maybe one or two seconds i mean it's just not gonna work
00:32:00
what's the point so i don't know if you're an early stage investor make good deals and then give the shares and book
00:32:06
the win that's what i do yeah that's my philosophy um saks what are your thoughts there's a
00:32:10
couple of metrics that i'll be looking at from now on that i wasn't paying a huge amount of attention to before
00:32:17
one is the price to arr of the median public sas company and so like brad gerstner has these
00:32:24
great charts where you saw that historically that number was around six you know the
00:32:30
median sas company was was trading at about six times the next 12 months revenue
00:32:35
and it went all the way to 15 during this sort of covet bubble in 2021 and for the high-growth sas companies which
00:32:41
are the ones growing forty percent said twenty percent it went from you know like eight to thirty five
00:32:48
so um so i'll definitely be looking at that and you know what you're looking for is just how off the historical mean
00:32:54
are we positively or negatively because these public valuations are the exit comps for
00:33:00
you know the private markets and those valuations do eventually trickle down and so if there is a bubble in the
00:33:05
public markets it will trickle down to the private market so that would be like one metric i mean again it's not
00:33:10
something that like affects me daily but it's something i'd want to periodically
00:33:14
keep tabs on the other is just interest rate policy i mean i've never spent so much time in my entire career
00:33:21
like looking at inflation and interest rates that i have this year because who knew how much this stuff was affecting
00:33:27
us i thought i was a micro investor i thought i was just picking companies on a micro level as it turns
00:33:34
out we were all massively impacted by macroeconomic policy and you know it got so we didn't even notice
00:33:41
it the zero the zero interest rate policy the zerp along with the quantitative easing these are supposed
00:33:46
to be exceptional measures that started back in 2008 but we stopped noticing them they continued for years and years
00:33:53
and years they continued until last year and we again we just stopped noticing because we got used to it we kind of got
00:33:59
hooked on hooked on drugs so the market did um so i'm just gonna have to pay a little
00:34:05
bit more attention to what the fed is doing now and you know if you go all the way back
00:34:10
to the dot com bubble what's interesting is that the fed funds rate back in 1999 wasn't low it was like four percent
00:34:17
um it wasn't like it was even today and we still had a bubble but what popped the bubble was that interest rates went
00:34:24
from four to six percent in from 1999 to 2000 that's what popped the bubble so you know
00:34:31
i i don't i don't know if we'll ever have a situation again like we had over the last years with the zerp
00:34:37
but um i mean that probably looking for that next time is fighting the last battle instead of the next one but you
00:34:43
do probably have to be a little bit more aware of monetary policy and what the fed is doing
00:34:48
yeah this chart um exhibit six from the vision fund benchmarking against pure funds that chamath just put into the
00:34:54
group chat is absolutely spectacular it puts sequoia insight and softbank you know large large funds
00:35:03
uh against each other fund size 100 billion for softbank eight billion for sequoia 6.3 billion for insight and 2
00:35:09
months point earlier the pace is yeah really crazy 130 deals meals per month but then the average check size is
00:35:17
620 million versus 130 and 70. and the deals per month 3.5 versus 0.6 versus 4.2 so insight going pretty fast
00:35:28
with small checks soft bank going very fast data here huge tax is really you know sequoia
00:35:34
has the benefit of being able to back test against 40 years of returns and so if
00:35:40
essentially what they're saying is there's really no more than five or six companies a year that are worth
00:35:44
investing in that's a really big signal that's worth thinking about and so you know five or six companies maybe
00:35:51
they can absorb even 600 million dollars each you know it still puts you at three
00:35:56
and a half four billion dollars doesn't put you back twenty which is what you need to put a hundred into the ground
00:36:01
and two billion a month i mean my lord it's like brewster's millions or something it's it's like some crazy
00:36:07
i think in fairness to in fairness to softbank again you know these are the same guys that
00:36:12
invested in yahoo they invested in all of these you know com companies and brought them into japan including great
00:36:18
businesses like cisco you know these guys have been big time serial winners i think the tactical mistake was not
00:36:26
having a 10-year investment life i mean and we could be sitting here next year alibaba could double in value a couple
00:36:32
of their other positions could recover 50 percent okay but we could be sitting there and
00:36:37
they could be they could have closed the gap massively anything's possible i think actually a good jump off point
00:36:43
here uh great discussion gentlemen do we want to talk about the markets and we got the inflation
00:36:51
print uh sax i guess depending on what political party you're in it's either 8.5 or zero
00:36:57
zero percent month over month uh if you're a democrat if you're republican it's eight point five percent in our uh
00:37:03
polarized times uh but what does this tell us uh saks just at least about maybe inflation is tipped over and we're
00:37:11
going to be flat for a little bit that obviously caused the market to rip a little bit and we had this incredible
00:37:17
jobs report we're now at 3.5 percent unemployment and we have twice as many jobs as we
00:37:24
predicted i mean it's pretty extraordinary what happened in the last 30 days to the to these uh prints yeah
00:37:29
look i think that overall the economic data is mixed uh but we got a couple of good data points in the last month so
00:37:37
inflation did decrease from 9.1 to 8.5 percent inflation was until now measured on a
00:37:46
year-over-year basis not a month-over-month basis but since we got the first good month-over-month reading
00:37:51
all of a sudden now it's been redefined to be on a month-over-month basis just this is the same thing that happened
00:37:56
with the definition of recession where recession used to mean two quarters of negative gdp growth
00:38:04
of course that happened and so all of a sudden the definition became unknowable we have to defer
00:38:09
to this this economic board that won't render a decision until next year by the way if
00:38:14
that were true how can we ever contemporaneously talk about a recession you know if if you had to wait until
00:38:20
this economic support declares a recession a year from now the press could never have ever reported for one
00:38:25
recession yeah i'm shocked politics politicians of this are obvious which is they keep
00:38:29
redefining terms rather than admit that there's any bad data at all now look i don't i don't think the data
00:38:36
is catastrophic i don't i don't think i don't think it's in anyone's interest to
00:38:41
catastrophize the data but there's a lot of negative data out here i mean look inflation is still very high eight and a
00:38:47
half percent if you had told any of us that in august that inflation would still be a half
00:38:52
eight and a half percent the beginning of this year we would have said that is horrible because remember the investment
00:38:56
banks were all saying it's gonna come down to three percent by the end of the year
00:39:01
so inflation is still high the jobs picture is good um we're technically in a recession i if
00:39:07
i were to predict i think what's gonna happen now i think you know look for a double dip i wouldn't be surprised at
00:39:12
all if in q3 or q4 we're back to positive gdp growth but i don't think we're actually out of the woods because
00:39:20
i think there's a pretty good chance that next year these and these rate hikes really kick
00:39:25
in it takes six to nine months for them to ripple through the economy so if you look at the construction industry the
00:39:31
construction industry's just been devastated new housing starts you talk to the builders they tell you that the
00:39:36
construction industry has just been clobbered by these rate hikes the inventories are piling up and the
00:39:43
affordability of there's a chart today about the affordability of home prices at a 40-year low and so
00:39:49
the construction industry it's really the bellwether when a recession starts they're the ones who are first impacted
00:39:56
but it's probably going to take six to nine months because the loans are so expensive
00:40:00
and cost of capital is expensive right you can't start new projects yeah so look i if i had to i think we're in a
00:40:06
shallow technical recession right now i bet that we probably bounce out of it in q3 or q4
00:40:12
but i think there's a significant risk that we're back in we're back in it next year just my guess
00:40:17
free break we've been talking about consumer credit a whole bunch buy now pay later um household debt now totals
00:40:23
more than 16 trillion credit card balances uh make up 890 billion of that obviously student loans mortgages other
00:40:29
things are in there and the number of credit cards uh is now at a massive high 550 million of them issued here in the
00:40:38
united states uh we added a massive amount of debt uh it's still lower the the credit card debt just to
00:40:44
be clear is still lower than the free pandemic level of 930 billion but consumers seem to be taking
00:40:52
out credit i guess to deal with inflation or to enjoy their lives because they're not stopping their
00:40:56
spending uh and we see that in some of the stocks and the earnings reports that are coming
00:41:01
out as well so what's your what's your take on this you know conflicting data we have or is or have you made some
00:41:07
sense of it and and what is your prediction of q4 sorry are you asking what my take is on the consumer credit
00:41:13
well basically the overall macro situation here we've got consumer credit you know people taking on a lot of debt
00:41:19
while jobs look great while inflation is still high what does that look like you know as we go into q4
00:41:25
and next year what what is this telling you is there some signaling you can take
00:41:29
from this sac said shallow recession thinks we might double dip i'm kind of getting to
00:41:35
your prediction of q4 i mean this is a little bit repetitive i mean i've said this i first said it in may at the all
00:41:41
in summit and i said it again on the show twice great which is i think that the definition of a recession of negative
00:41:48
gdp growth when you're coming off of inflated gdp is you know it's not a binary catch-all term i mean
00:41:56
the fact is we had uh inflated assets and as a result of inflated assets we had inflated earnings and we had inflated
00:42:03
valuation and we inflated income and you know now the capital's coming out and things are going to go down
00:42:10
inevitably but i don't think that this should be deemed that there's something fundamentally
00:42:15
negative about the u.s economy the biggest risk i still see is this rising consumer credit balance
00:42:21
particularly in a rising rate environment people are taking on more debt if you look at the new york
00:42:26
fed here i'll just give you the latest this is the household debt and credit report they put out household debt rises
00:42:32
to 16 trillion dollars amid growth in housing and on housing balances and so there are variable rate loans in there
00:42:39
in the auto home and credit card markets those variable rates mean that as interest
00:42:45
rates climb the amount to service existing debt will go up each month and the amount of debt that's being
00:42:52
taken on is also going up each month and so the key economic question is does the
00:42:57
income gain that's being experienced or the asset value gain that's being experienced outpace the increase
00:43:04
in um monthly debt service needed for a large number of consumers student loans are also in here by the way and so when
00:43:11
you put that all together um it's a it's a very technical question which is technically where do you start
00:43:16
to see defaults rise and when you have defaults rise then the money that's owed and the services that are the service
00:43:22
payments that are owed on that debt trickles through the economy because bonds start to default
00:43:28
um equities start to decline and so on so um you know i this is why i can speak at a high level from a macro point of
00:43:35
view that the rate at which debt is going up and consumer credit is going up and the rate at which rates are climbing
00:43:42
that affect the revolving and variable rate um debt that consumers hold could outpace
00:43:50
the income and the asset value gain particularly when equities are down 401ks are down
00:43:54
housing prices are down and so there's a tipping point and when that starts to happen then you
00:44:00
start to really hit um an economic crunch and i've mentioned this multiple times now that it's the thing you know i
00:44:06
would kind of watch most closely while there are core elements of the current economy that
00:44:12
look strong um there are uh real uh concerns around whether consumers can keep up with their
00:44:18
debt payments uh in the monthly quarters ahead yeah chamath are you following this consumer credit uh surge and do you
00:44:24
think that this could be a black swan type event this could be you know um because it's right here in front of us
00:44:31
so you know okay yeah yeah i would say like a massive contagion where there's massive number
00:44:36
of defaults creating a black swan contagion-like event but yes so it's it's not it's maybe hidden in plain
00:44:41
sight what do you think jamaat is this important data uh or impacting your view on things yeah i think it's important
00:44:47
it's part of a mosaic and i i don't i don't really know look what are we trying to get from this
00:44:54
discussion i don't understand like like are we trying to predict what's going to happen i mean
00:45:02
i think david basically said it best like if you actually just take a step back and stop
00:45:07
overlaying what we want to happen look the reality is all four of us want things to go up
00:45:14
and we like it when there's money in the system and everything's flush but if we had said last year that we
00:45:20
would open an envelope and you know we would show these inflation prints we would be shocked and we would have been
00:45:26
scared and quite honestly you know in the process in november when i started selling i would have sold
00:45:32
even more violently than i sold and all i can say is i saved my ass in november of last year looking at what's happened
00:45:39
in the last six eight months so i don't know i just think that if you look at the cpi print
00:45:48
and you look at the components we were saved because energy basically fell off a
00:45:53
cliff and for whatever reason a bunch of people decided not to travel and you know we didn't import as much oil
00:46:01
and we were able to keep cost contained and that kept cpi from being really out of control
00:46:07
but again we're in the summer where we don't have the pressure on energy that we're going to have in october november
00:46:13
this year so i i really don't know i mean i just think that there is like freeberg has
00:46:19
his pet issue i have my pet issue saks has his pet issue you ask a hundred economists they'll have their own pet
00:46:25
issue housing affordability whatever it is the point is we have a hundred whack-a-mole problems
00:46:33
and the question is which mouse trap sets off the rest of the mousetraps i have no idea um
00:46:40
and so you know i just think that right now things are a little bit too calm and that makes me feel very unsettled
00:46:48
another shoe might drop i mean the point of the conversation is to try to understand and make better decisions in
00:46:53
capital allocation company formation and placing bets in the next year so that i
00:46:57
think that's the point of the discussion we now have the spectacle of the president saying he's going to pass
00:47:05
an inflation reduction act to solve a zero percent inflation problem to get us out of a recession
00:47:12
that he says doesn't exist you guys know this but the the politics and the political commentary on this are absurd
00:47:18
i think what we're describing here is to simply more honest which is to say that
00:47:23
the data is mixed so we don't exactly know what's going to happen yeah i mean the thing that i think is encouraging is
00:47:29
when you look at this jobs data and you look at the debt that consumers are putting on my
00:47:35
theory is and i could be wrong that people want to keep spending uh they want to keep living their lives they're
00:47:41
taking on a little bit of debt to deal with inflation and to keep spending but they're also going back to work and i'm
00:47:46
seeing that anecdotally a lot more people going back to work and the numbers show that that feels to me and i
00:47:50
said this on previous episodes that that feels like a possible you know very helpful path out here and
00:47:55
i think you brought it up saks as well which is hey if we have increased participation
00:47:59
that's great increases monetary velocity increases participation in the economy that's a possible path out do you do you
00:48:05
feel like that's still holding strong secular decline on that trend for 25 years
00:48:11
so maybe maybe on the margins a few folks um run out of stimulus and decide to go
00:48:17
and get a job but i don't think again it's it's kind of like you know when you're at you're when
00:48:22
you're at the blackjack table in vegas and clapping there's a strategy happening
00:48:29
i feel like all the like what we're talking about right now is clapping as a strategy
00:48:33
maybe this can happen maybe that cap you know what maybe it'll start raining gold
00:48:37
[ __ ] coins that we can use and just worry about i mean yeah i mean i feel like the last 15 minutes have
00:48:44
been like not a good conversation because look the structure of the problem i think is very well defined
00:48:55
which is we have an inflation problem great it went down from nine point one eight point five percent it's still
00:49:00
really high two to three percent would be would be normal okay so that's half the problem is how fast is inflation
00:49:07
going to go back down to normal based on interest rate cuts the other side of the
00:49:10
problem is increases is sorry interest rate increases not cuts the other side of the problem is how much will the
00:49:16
economy be hurt by these rising rates and those are the two variables and we see that there is a slowdown there's
00:49:23
still a lot of jobs being filled which is good but there is unquestionably an economic slowdown and those are the two
00:49:29
sides of this equation and we just need to see some economic data it's going to play out over the
00:49:34
next seven years we've been asking the same question for three [ __ ] weeks if you guys don't want to talk about the
00:49:39
new data that's fine we don't have an opinion other than we don't know how many ways can we say i
00:49:47
don't want to talk about inflation or recession or jobs or any of that [ __ ] anymore unless there's something really
00:49:52
for us all to say like something news come out well like some [ __ ] economic report
00:49:57
was really important i mean that was a that was a massive print but it's not that it's it's oh yeah
00:50:01
it is twice as many to keep track of what we've all read data point it's one day
00:50:07
there were some bad jobs reports before that print yeah i think we should stop doing the recession inflation chat every
00:50:12
week it honestly is like repeating a better job moderating can you not dial it in you got no you guys asked to talk
00:50:19
about it you guys put some of these things on i don't want to talk about it anymore i think we should congratulate
00:50:22
you let's move on what are you okay what do you want i think softbank was a great
00:50:26
chat i think you know that was a good talk we should do that kind of [ __ ] we should talk about i don't know what you
00:50:30
guys think about the sequoia evergreen fun tell me what you guys think about that come on geniuses the sequoia like
00:50:35
when they restructured are you joking i love i love when these two go silent no no i i always didn't want to
00:50:43
interrupt anybody i don't understand what you're saying i don't understand why you guys are trying so hard to avoid
00:50:47
the the obvious news of this week is there something else in the news this week zach's um
00:50:53
if trump actually had some material in mar-a-lago that was related to the nuclear program
00:51:01
and um you know there was an attempt to try and get recover those documents through
00:51:06
normal means and they were not recoverable what would your course have been if you were the director of the fbi
00:51:11
or the president of the u.s in that condition because i think that seems to be the party line of what's going on
00:51:16
here well the democratic kind of spin on what's going on here but like you know honestly in that circumstance
00:51:24
what do you think would have been appropriate so there's some sort of confidential material related to our
00:51:27
nuclear program or nuclear weapons something something there in those materials that were attempted to be
00:51:33
recovered or were taken without approval and then they tried to recover it for you know assume there's no nefarious
00:51:39
intent what would be the right kind of course here well i i so i i don't know exactly
00:51:45
what's going on i just think that um you can't necessarily give the f sadly i don't think you can necessarily give the
00:51:52
fbi the benefit of the doubt here in light of their history um but let's back up i mean first you had this this raid
00:51:57
on mar-a-lago where you got 30 fbi agents they're not wearing suits with holstered sidearms they're carrying
00:52:03
ar-15s you know weapons of war fingers just outside the trigger guard they're wearing body armor it looks like a para
00:52:09
military raid on mar-a-lago it's utterly unprecedented and you look at tweets by
00:52:15
andrew cuomo for example or uh andrew yang i mean these guys actually turn out to be pretty i think intellectually
00:52:22
honest democrats on this point saying this is unprecedented and it's really going to here i want to read this
00:52:28
by why aren't you andrew why don't you answer a free bird's question i'm getting there i know you're
00:52:33
going to cut me off so i'd like to just read these tweets so maybe you because you know maybe you'll give more credence
00:52:38
to andrew yang he said i'm no trump fan i want him as far away from the white house as possible but a fundamental part
00:52:44
of his appeal has been that it's him against a corrupt government establishment this race strengthens that
00:52:49
case for millions of americans who will see this as unjust persecution you have andrew cuomo saying doj must immediately
00:52:55
explain the reason for its rate it must be more than a search for inconsequential archives or be viewed as
00:53:00
a political tactic and undermine any future credible investigation and legitimacy of january 6 investigations
00:53:05
and let me read one other tweet by elon that's not directly about this but he tweeted this on july 11 so a
00:53:12
month ago and he said i don't hate the man but it's time for trump to hang up his hat and steal at the sunset that was
00:53:18
the part that was widely reported but he also said dems should also call off the
00:53:23
attack don't make it so that trump's only way to survive is to regain the presidency i think there was a lot of
00:53:29
wisdom in that and you know i'm old enough to remember when the case for biden getting elected is we have to move
00:53:36
past this partisan warfare this extreme rancor and derangement and we were told that
00:53:43
the media you know all these people who had tds that that their psychosis was due to trump and if we could just move
00:53:50
past trump this all this sort of partisan warfare would end and now and and i was certainly hoping
00:53:57
that would be true and now sadly it seems like we're right back in this thing um where we're right back with the media
00:54:04
being obsessed with tds portraying this narrative that somehow he's a traitor and what does this whole thing hang on
00:54:10
just these two words nuclear documents well listen until they actually produce those documents i'm going to suspend
00:54:17
judgment because the fbi the last time they did this remember they manufactured a falsified warrant to the fisa court
00:54:25
for this type of investigation they have that history so i'm just gonna suspend judgment on
00:54:32
what's going on here until they actually produce the documents they're talking about can i ask him right now he stinks
00:54:39
do you honestly question the integrity of leadership and agents uh at the fbi are you serious like you don't think
00:54:47
yeah all right let me read you this tweet from michael burris i don't hear the tweet i want to hear your point well
00:54:51
no well i i i agree with what michael berry is saying so i think sometimes there's a lot of thoughtful commentary
00:54:57
about this and what barry says is jager hoover led the fbi for five decades denied the mafia existed fought the
00:55:04
civil rights movement shielded the kkk multiple presidents acknowledged fear of him so what he's saying is
00:55:09
that the fbi since its inception has political origins uh and and basically meddled politically in the affairs of
00:55:17
the country then he says the fbi lied to the fisa court this is back in 2016. totally true altered emails leaked lies
00:55:25
to the press to get trump nothing shocking so freeberg listen i don't know whether the fbi is telling the truth but
00:55:31
are you honestly going to say that the fbi's leadership has never been political that has never harbored or
00:55:37
pursued their own agenda and that has never had a desire to go after i'm trump i'm not making it all happen
00:55:43
we saw we saw the text messages from comey strzok mccabe i mean these guys basically took
00:55:50
it upon themselves when trump was elected to be the quote-unquote insurance policy yeah and an fbi lawyer
00:55:57
pled guilty to falsifying documents to seek a warrant from the fisa court so i just think anything's possible here
00:56:06
now i'm not saying the fbi is lying about this i don't know but the idea that the fbi is automatically entitled
00:56:13
to the benefit of the doubt in light of their proven history of basically pursuing trump like ahab pursued the
00:56:19
white whale i mean yeah these guys have been after him i'm just going to zoom out for a second the reason i'm
00:56:25
interrogating sax on this is like it's just so telling to me that a guy like like you sacks in your position
00:56:33
are actually questioning the integrity of like the highest justice authority and institution in the united states
00:56:41
um really says a lot about kind of the state of of the us citizenry the state of our
00:56:47
society today i i think it speaks a lot at least a third of americans i know it's incredible and what ray dalio said
00:56:53
in his book about how during these periods when the empires begin their decline and you know when you're challenged with
00:57:01
kind of the economic conditions that the u.s is challenged by printing lots of money lots of debt very hard to service
00:57:06
all that debt and we have a ton of obligations over the next decade or two that are going to be very hard to meet
00:57:11
given our economic growth and inflation conditions right now that you start to see these sorts of behaviors
00:57:17
historically it's happened six times in the last 500 years where large empires like the united states are large
00:57:24
you know economic powerhouses like the united states start to decline that the civil war begins that the institutions
00:57:31
get challenged by a minority and then a majority of the citizenry and it really starts to crumble and and challenge the
00:57:38
uh the integrity of the institution and its ability to hold itself together well
00:57:42
i'm not hold on a second i'm not challenging hold on a second i'm not well you're questioning the integrity
00:57:47
you're you're questioning the integrity of the department of justice right listen by the way i'm not i'm not
00:57:50
arguing i'm just pointing out like it's it's an incredible condition for us to find ourselves in yeah but i but but but
00:57:56
my questioning did not create that condition there this lack of trust is earned it's earned by the fbi in light
00:58:03
of behaviors they took just a few years ago now listen i'm not defending trump per se i don't know what he did or
00:58:11
didn't do okay but i think that it you can't just accept at face value without further proof
00:58:20
these leaked what are basically leaked comments by the fbi yeah i mean look i'm not listen i'm not a naive child i mean
00:58:28
the fact of the matter is that power can be corrupt and power corrupts okay and we have seen
00:58:35
that the fbi from his earliest days did engage in corruption and more recently against trump himself had a vendetta
00:58:42
against trump so i'm simply so hold on so all i'm doing is i'm not going to automatically accept at face value what
00:58:49
they're saying until i see some proof now i'm not saying that they're wrong or they're lying about this i'm simply
00:58:55
saying i'm not going to accept it at face value yeah and remember trump trump was
00:58:59
elected on on on the platform that there is this deep state that there is institutional
00:59:05
corruption that there is um malaise and lethargy in these institutions of the government that are funded on the order
00:59:12
of trillions of dollars a year and that that's what he was intended to you know to go and and blow up and repair and
00:59:18
there there's there's a very strong and potentially close to majority percentage
00:59:23
of voting americans that that feel that there is this core deep state corruption
00:59:27
uh institutional lethargy that is challenging our ability to give everyone the freedom and liberties that they
00:59:33
deserve freebird these agencies are supposed to be nonpartisan they're not supposed to have a horse in the race and
00:59:38
what we saw is that when trump was in office and these texts came out clearly the the top levels of the fbi these top
00:59:46
agents i'm not talking about the rank and file i'm not talking about the field agents i understand that a lot of them
00:59:51
are law and order types to vote republican i get it but i'm talking about the leadership the highly
00:59:55
political leadership in washington and it was pretty clear that they had a horse in the race they did not like
01:00:00
trump and they were out to get trump and you know again trump is not my preferred candidate for
01:00:07
2024 but what the fbi has done with this raid quite frankly i think has polarized
01:00:12
the outcomes they are basically gonna send trump to the big house or the white house i mean because now the republicans
01:00:18
have rallied around trump i think he's gonna be very very hard to beat for as the nominee in 2024 unless the
01:00:26
fbi comes up with iron-clad evidence to show that he did something significantly
01:00:30
wrong i care less about who did what and what was done wrong i care more about the fact that this conflict is
01:00:36
escalating and it's creating a real condition of continuing uh polarization and it really is the the conditioning
01:00:43
that you know biden had some historians in the white house there was a report on
01:00:46
this last week and these historians spoke about how the conditions in the united states are just as they were
01:00:51
right before the civil war and um and that there's real concerns that yeah well i mean you know they
01:00:58
you can go read the the anecdotal reporting that was done on this thing but that was the general theme of the
01:01:03
conversation and um you know it really it really kind of um concerns me more that this level of
01:01:10
discourse is escalating to a point of uh you know there's corruption uh this person is a criminal and that
01:01:18
sort of discussion happens um you know in more dire circumstances and more and economic
01:01:24
circumstances than has ever been seen you know the u.s is the largest economy in history
01:01:30
and we're now having these sorts of conversations that typically lead to some degree of conflict and it's really
01:01:34
concerning well i just think listen i i think that trump was out of office we were told
01:01:40
that this partisan ranker would stop once he was out and it's you know they're pulling him back in
01:01:46
and all i can say is that when the i think we know maybe one percent of the story okay i think
01:01:52
this leak around nuclear documents is it feels like a selective leak it's not certainly all sides are inflammatory
01:01:58
both sides are cantankerous and i'm suspending judgment what i'm saying is though that when all the
01:02:03
information comes out there better be a very significant there there no no no we've made that impossible too because
01:02:10
he trump came out and he basically said uh hey listen if you if these guys find something it was planted
01:02:16
and now you're going to have at least a you know 10 or 15 of the population that
01:02:20
believes okay this was planted it wasn't actually there and you know so whatever
01:02:24
the outcome is um will not be good nobody will be satisfied and both both of the extremes in the
01:02:32
united states will be even more angry further inflamed yeah further well that's what i'm saying that's
01:02:38
inflammatory index has now has now skyrocketed yeah by the way this is why i think at some level maybe the lack of
01:02:44
faith in these institutions is well deserved because where is the the you know the
01:02:52
prudence of all of this like where is the the circumspect thoughtful methodical thinking
01:02:59
about all of the different outcomes that could be possible so that you exhaust every option and this is the only option
01:03:07
left and then even then if merrick garland was open to basically saying unseal the warrant
01:03:14
why didn't you do it before and say we're going to have to serve this guy unless he actually gives us these things
01:03:21
there's all kinds of things you could have done oh clearly they did keep the hold on a second to keep the temperature
01:03:26
of this thing way way down and that's what to your point jamal they could have let trump's lawyers watch
01:03:32
them do the search so that nobody could claim anything about anything being planted
01:03:37
yeah so the inflammatory index is spiking i think that's my key takeaway on all of
01:03:43
this i i care less about what trump did and what the doj did and what the fbi did like i'm more concerned about where
01:03:49
this takes us because the next step regardless of where it takes us you know where it takes us when you're on tilt at
01:03:55
the poker table what do you do you cannot think properly that's right that's where everyone's at right now
01:04:00
when people are so inflamed with emotion they start to make very poor decisions i
01:04:05
don't know whether the doj and main justice made a poor decision or not i think this is where we have to hold our
01:04:11
breath and hope they didn't i don't know whether the white house knew anything or not
01:04:16
but the whole point of all of this is that we pulled this guy right back in to the to the to the main stage
01:04:24
absolutely i mean you're like i said you've polarized the outcomes you're either going to basically send this guy
01:04:29
to jail or you're going to summon the white house no i think there's very likely no i think there's very likely a
01:04:34
middle path where nothing happens right but it will further erode what freeberg says which is it's just a little bit
01:04:41
less trust in the institutional integrity is eroding and when institutional integrity erodes the the
01:04:48
fabric of what keeps everything working starts to fall apart and i'm not saying this is some cataclysmic civil war
01:04:54
happening just to be clear i'm not saying there's some cataclysmic civil war happening next year but it's an
01:04:58
unfortunate decline in everyone's faith and and the stability of the institutions that we all rely on to
01:05:05
support and service us because the inflammatory index is going to go up and everyone's going to be criticizing
01:05:09
everything and that's enough this is why i think we really have to ask was this really necessary i mean why did the doj
01:05:15
and the fbi think this was necessary yeah these boxes were just sitting there i think that's a reasonable question is
01:05:20
like if these things were actually sitting in the box with a lot that they changed
01:05:26
there must have been something more that was so grievous where you had to do something like this
01:05:30
now by the way david i just wanna i read so i don't know if it's true or not i think maybe it was in barry weiss's
01:05:36
upset or matt tybee's upset these folks weren't armed to the teeth they came in jeans and shorts and t-shirts in fact
01:05:43
maine justice told them like do it as well i've seen the photos they i've seen the photos they had
01:05:48
outside i'm saying the people inside were there for six or seven hours and only a few people knew about it they
01:05:53
were there for nine hours they basically told trump's people they couldn't be there
01:05:57
they had to leave they told him to turn the cameras off and they had like highly
01:06:02
militarized guys they were something like 40 people and something like 30 of them were heavily armed the optics were
01:06:07
terrible if there was some nuclear confidential nuclear material in mar-a-lago and through normal means of
01:06:14
communication they had asked several times to have it returned and identified this for him and he had refused which i
01:06:19
think is a very reasonable kind of you know conditioning for what may have happened here and then they said okay we
01:06:24
gotta go get it there's no choice this is like super confidential nuclear material we gotta get this stuff the
01:06:30
only way to get it is to serve a warrant and go in there and get it you know under those circumstances you
01:06:36
know do you think that this would have been kind of inappropriate like assume all other kind of communication means
01:06:41
were exhausted like you know what would you have done if you were president listen i think there is information that
01:06:46
could still come out to convince me that this raid was warranted um i just haven't seen that information yet and i
01:06:53
think the optics of it were terrible i'd like right the point i was making i don't know why it wouldn't have been
01:06:57
good enough to send in the fbi agents with holstered sidearms you know not ar-15 weapons of war you know where the
01:07:05
fingers were just outside the trigger guard it looked like a paramilitary raid so whoever was thinking about the
01:07:10
political ramifications this clearly didn't do a very good job i also don't know
01:07:15
yeah yeah i also don't know why you wouldn't give the courtesy to a former president united states to give
01:07:21
them either more of a heads up or to let his lawyers attend so that just for their own protection so they
01:07:28
can't be accused of planning anything that would have been smart and i don't know why they would have said to trump's
01:07:34
people that they couldn't record it and i don't know why there's been reports that the fbi went through melania's
01:07:39
closet i mean seriously they're like going through melania's clothes it's just weird it's weird so there's a lot
01:07:45
about this that we don't know i'm not conclusively rendering judgment about it because there are things that absolutely
01:07:52
could come out to convince me that it was warranted but i haven't heard them yet okay everybody we'll see on the next
01:07:57
episode of the all-in podcast love you [Music] and it besties we open source it to the
01:08:11
fans and they've just gone crazy [Music] we need to get these [Music] i'm going on
01:08:57
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