00:00:00
did you just finish a good cry because you had this wetness right here on your eye oh sorry I just got out of my coal
00:00:05
Plunge in my sauna because you know I hit a new record low weight 169 this week oh hold on my way what's your
00:00:12
temperature on oh I don't want to say it's embarrassing I don't want to say no what
00:00:16
is it I've been doing like 56 58 that's great it's okay I mean all these lunatics like I don't know they're at 45
00:00:24
degrees 48 degrees I think it's unnecessary you get the same value I think of 15. my two-year-old does 56.
00:00:30
it's good it's really impressive I consider an 80 degree pool to be a cold Plunge
00:00:36
unless it's like 85. there's no difference between them [Music] if it's not the temperature
00:00:51
[Music] [Music] fits it's crazy and then I went in my infrared sauna so now I've been going in
00:01:13
you do the cold then the warm I think you're supposed to be warm then cold no they say end on uh cold and so yeah yeah
00:01:20
I just do like a site cold warm cold cold warm cold yes what are you doing like two minutes ten minutes two minutes
00:01:28
or what do you do yeah exactly like one or two minutes cold plunge four minutes you warm up you get back to it and then
00:01:34
you jump back in yeah it works pretty good you know I have to say my energy level goes way up have you been tracking
00:01:40
your blood pressure I have not uh but I have this uh Executive Health coach that I'm using
00:01:46
and so that's where I got those ridiculous glasses the blue lights and my sleeps better
00:01:52
I got some I've taken some supplements uh I'm eating estrogen estrogen bro levels are at an all-time high for
00:02:05
hanging out with you guys it just oozes odd to me no it turns out you know even at 52 my testosterone is very high so
00:02:13
that's why because you're a free testosterone I don't have the number here but they said it's the the high end
00:02:17
of normal so I was like should I be shooting up testosterone they're like no you're good you're good just we'll send
00:02:23
it over to Freeburg I said all right great send it over to freyberg it's all good A lot of people take testosterone
00:02:28
in their 50s and 60s and I've had a couple of my friends in their early 60s start H is it HGH
00:02:36
human growth yeah is that right not a good idea seems like a really bad idea that off menu stuff I don't think it's a
00:02:43
good idea I think you got to be careful with the off menu items I think you can get a
00:02:47
prescription for it is that right yeah yeah I know there's something off menu items available to
00:02:52
affluent people with the right doctors and I don't think it's a good idea I mean you guys see Bezos he's jacked I
00:02:59
didn't bring up anybody specifically but he looks great I think that's just all weights
00:03:05
is he going to be president I mean if you had your choice right now between Bezos and Bob Iger who would you
00:03:13
try then Biden I think we know who you'd pick I mean listen I was talking to some
00:03:19
affluent people and they everybody's going to some affluent people I don't want to say who but if Vivek is now
00:03:27
people are starting to talk Vivek I think he's hitting the right chords man Vivek is about to pass to Santas he will
00:03:33
be I think if you look at the polling right now New Hampshire he'll be the clear number two
00:03:40
in about four between four and eight weeks from now crazy that's crazy and so I think if he
00:03:47
becomes a clear number two the the think of this it's like then all of a sudden all these Maga supporters are given
00:03:56
Trump and then Trump with some small feature improvements that are actually pretty meaningful right and then they're
00:04:03
like well do I want the 80 year old Trump or do I want the 38. right with like the super features you know I can
00:04:10
forgive all of his other issues when he tells me that he's going to cut the government the federal government by 75
00:04:16
75 my gosh sold so you're right so you're on team Vivek I want to continue to gather a little data there's no rush
00:04:23
to make a declaration right now give me a little bit of time come up are you with Vivek yes I and and the reason is I
00:04:29
would love for it to be RFK and Biden in a debate and then Trump and Vivek in a debate so
00:04:36
that I could really figure out between RFK and Vivek who I would like to vote for
00:04:41
but I think it's been pretty clear that the Democrats have chosen to Railroad rfk's candidacy it's unfortunate because
00:04:48
I don't think we're given a real Fair Shake in really being able to evaluate him yeah even the the tractors like
00:04:55
Friedberg you have some pretty significant things that you dislike about RFK which I think are fair
00:05:00
they're never going to get a chance to get aired out because you're never going to get a chance to be put on a national
00:05:05
platform where there will be really enough debate and I think that's where America loses so yeah in that context I
00:05:15
would say that Vivek has done more in the last month to convince me that he is fiscally responsible
00:05:21
and that he has some intuitions that I think RFK and Trump and a lot of people in America
00:05:30
share which is just about the usefulness of The Blob and you know that there maybe needs to
00:05:38
be a grand experiment where we deconstruct The Blob and I'm for that experiment to be totally honest with you
00:05:45
to see what happens sex where you at he's unhappy what I would say I think it's too early in the process to say
00:05:51
definitively okay this person has to be the person for me I'm viewing candidates
00:05:55
as either being acceptable or unacceptable and Vivek is acceptable to me I think desantises too
00:06:03
the ones who are unacceptable to me are the ones who would escalate this Ukraine
00:06:06
war because I think that avoiding world war three is to me the central issue of the campaign
00:06:12
so for me it's just a litmus test issue I can only support a candidate who would
00:06:16
work to end this war not one who had escalated where does our fiscal emergency sit for you in terms of
00:06:22
priorities so no World War III Priority One is the fiscal emergency that we're facing
00:06:27
priority two or is it overstated by maybe event or others no I think it's important but the problem is this is
00:06:33
that in order to do something about that problem you really need bipartisan support yeah because it would be suicide
00:06:41
for one party to try and do all the heavy lifting without the support of the other and I just don't see
00:06:46
in the near to midterm that you're going to get that kind of bipartisan support no matter who is president whether it's
00:06:52
a Democrat or Republican the only issue that for sure the American president has
00:06:58
unilateral discretion over is our foreign policy and so for me making sure that the next
00:07:04
president pursues a foreign policy that doesn't result in the destruction of the
00:07:09
United States that to me is the overwhelming issue it doesn't mean these other issues aren't important but look
00:07:14
at how simple numbers are let me show you this Paul for a second just so we level set with the audience
00:07:19
poll ending September 18 2023 for those of you not watching on YouTube Trump 39 is that or 38 then the vague 13 Haley 12
00:07:29
Christie 11 DeSantis 10 percent that is a stunning Turner yeah that's probably because it's New Hampshire Jake
00:07:37
Hill but you know no I know it's just but that's a very critical state right I mean exactly what do you think about
00:07:42
what dalio said on stage about the need to have a Manhattan Project Style effort
00:07:48
here that is bipartisan comes to the center and tries to resolve this as that scale of an emergency is that realistic
00:07:56
to kind of frame this as we are in a fiscal emergency we have to get a Manhattan Project Style effort underway
00:08:02
to try an engineer a solution well let's back up first of all I think you asked the right question to him which is is
00:08:08
our decline a matter of physics you know due to forces we can't control or is it
00:08:12
something we still have control over and I think that that's a really good framing I think if you're in the bucket
00:08:18
that we can do something about it I mean I believe that we can the question is how and I think his view was that
00:08:25
somehow you get all these Elites together and you get them on the same page I don't think that's how our system
00:08:31
works I think what happens is you have elections people compete against each other and then voters decide who's right
00:08:36
and so one side has to defeat the other and I think until we get some clarity from voters on the direction they want
00:08:44
to go I don't think there's going to be a resolution but to your point there's no solution without bipartisan
00:08:49
bipartisanship here so what is the path to bipartisanship when it comes to the fiscal crisis I'm not sure wouldn't the
00:08:55
obvious thing be if one party wins with that as part of their platform then it becomes part of the winning platform and
00:09:02
the winning formula or we're just saying that's not even possible because it's too unpopular to tell people that they
00:09:06
don't get free money I think it's political suicide for one party to engage in deep Cuts deep government Cuts
00:09:14
deep cuts of programs especially popular programs he'd probably cut the unpopular
00:09:17
ones at the margins but political suicide to cut anything important without having the other party
00:09:23
on board there's been a couple of times where we've been able to have this type of consensus
00:09:27
I mean the one that always gets mentioned is when Reagan and Tip O'Neill cut a deal
00:09:32
and they were able to reform entitlements and make some changes to those programs and they kind of did it
00:09:37
arm and arm and that worked and then the other time where it kind of happened not through agreement but almost through
00:09:45
lack of agreement was when we had the sequester remember when Obama was President and what happened is the
00:09:51
Democrats and the Republicans worked out a deal where if they couldn't agree you would get
00:09:57
equal Cuts in both military spending and social spending the idea being that Republicans wanted the military spending
00:10:04
the Democrats wanted the social spending and that's ultimately what happened is that they couldn't agree and so you got
00:10:10
the sequester and we had some spending restraint for a short period of time the problem now is that both Republicans and
00:10:17
Democrats want more military spending I don't hear anybody really argue for cutting military spending except for
00:10:23
maybe rokana at our event but the Democrats are completely on board with war now and then on the social
00:10:30
spending I don't think either party really wants to cut Social spending either or do entitlement reform so there
00:10:35
is no constituency out there for reigning in the biggest sectors of government spending so I don't see how it's going
00:10:42
to happen no matter who the president is well the fourth thing function will be the debt service costs which is just
00:10:48
crossed a trillion dollars a year just to pay the interest and it's mounting right 30 of our debt I think is coming
00:10:53
up for refinancing in the next 12 months and that's going to refinance at a five
00:10:57
percent rate because that's where the markets are at just like consumers can ignore it Friedberg and put their
00:11:01
fingers in their ears and say la la la la I don't have to worry about my payments then the payments show up and
00:11:07
you've got to worry about them same thing's going to happen here in the US right the federal budget will get
00:11:11
naturally constrained at some point here but yeah as The Economist service Stein
00:11:15
once said if something can't go on forever it won't so I think I think you're right
00:11:20
Friedberg it's not Yogi Bears I think yeah if something can't go on forever it won't I
00:11:27
think that that's where we're headed is we're going to have restraint impose on us from the outside it's not going to
00:11:32
come from Washington people stop buying treasuries interest rates just have to go up to what's happening in Japan right
00:11:39
I mean their bond auctions have uh been very um lukewarm and supposedly a lot of the
00:11:46
money in Japan is coming West looking for opportunities to get Alpha so we have an example that we can look to all
00:11:53
right let's get we can get started here we have so much to talk about I think we
00:11:56
got to give some flowers here last year the Sultan of science the prince of panic attacks the queen of quinoa was an
00:12:03
absolute Terror when I did the all in Summit 2022 and then this year he was an absolute All-Star and Delight what an
00:12:12
amazing job you did on the content people are saying the content that all in Summit 2023 is the best conference
00:12:18
ever had Bill Gurley got a four minute ovation that talk is on YouTube Elon Musk
00:12:25
star LinkedIn from uh forty thousand feet he crushed it Toby was fantastic Ray dalio Larry Summers Mr Beef Beast
00:12:34
Gwyneth Paltrow the bow Tes sisters which we did a pretty good show and I have to say a great job to sax and
00:12:42
Friedberg uh who who held the line with the bow Test sisters in our group chess Brian Armstrong
00:12:49
who am I missing here I mean what an incredible lineup Nicole Polk Rock Anderson Jenny just Rob
00:12:57
Henderson I mean extraordinary let me just go around the horn chamac your what what
00:13:04
um discussion or moment pick your choice there for you was the most intellectually
00:13:12
engaging and important at the summit you can mention two or three if you like I thought number one were my outfits
00:13:20
pretty great I mean you did do an alpha change twice a day so congrats on that I
00:13:25
like this Fortune a really good job with that I do agree I agree did you guys get
00:13:30
the special shoes from Laura Piana oh my God the king's cashmere loafers yeah those are ridiculous I'm wearing them as
00:13:36
we speak actually I wore them they're out of night and I can you wear them yet socks yeah yeah those are the most
00:13:44
incredible shoes clouds ten pairs or something and yeah and we got four special for us yeah then I get
00:13:51
back to the Beverly Hills Hotel the sweet that freyberg booked me a beautiful sweet thank you Freeburg and there is a
00:13:58
Laura shafted me on my room what what yeah let me put you by the garage no I got a room that was
00:14:07
well it's very appropriate that these rooms exist but it's handicap accessible which totally fine except the problem is
00:14:13
the the closet and everything is set for wheelchair height why didn't you change
00:14:18
your room dude and so all Mike and so I thought oh he just [ __ ] me on purpose he just tried to control your little
00:14:23
passive aggressive name check so all right you guys got some work to do in the group therapy chat I would never do
00:14:29
that to you guys don't worry when I when I organize this Summit I'll make sure these details are perfect I fly onto
00:14:34
moth's plane he has gluten-free Nutella crepes handmade in the morning and I stick him in a handicapped accessible
00:14:39
room where he can't even put his bag I mean and I can't put my clothes except without it touching the ground so then I
00:14:45
had to play them on the bed and then I had to lay them on this is my first world problems yeah the audience right
00:14:50
now is just triggered by the suffering that you went through at the Beverly Hills Hotel my honest reaction was I
00:14:56
thought the content was really inspiring I guess it's kind of like I knew what I was going to get up front
00:15:01
with so many of the folks because I knew them but then where I still came away where they exceeded my expectations
00:15:07
number one probably was Graham Allison oh I could literally talk to him for eight hours a day I feel like and I
00:15:16
don't know him well so I felt like I was scratching the surface of the things that he knew I could do an entire dinner
00:15:22
I think where he could just walk through the Cuban Missile Crisis and I could just sit there listening so I thought he
00:15:27
was unbelievably intellectually stimulating for me every time I sit down with Toby
00:15:35
I'm just like in awe of how smart and different Toby lootkey is and so I always kind of like walk away
00:15:44
thinking this is really one of the very special entrepreneurs of Our Generation just in terms of his mindset underrated
00:15:51
I thought Larry had the line of the summit Larry Summers Rory said self-esteem should come from Achievement and not the
00:16:02
opposite which is that achievement should come from self-esteem and he was talking about
00:16:07
wokism and sort of like the entire philosophy around that stuff right now and I thought that that was really
00:16:13
insightful those are probably the three moments I thought girlie's obviously presentation was superb but again it's
00:16:19
kind of like saying the obvious because it was just so master class but the the from what I expected to what I got those
00:16:25
were the three that I thought were the most inspiring and net new positive for me
00:16:30
fantastic sax did you have any moments aside from Gwyneth Paltrow saying she was your favorite bestie other than that
00:16:38
being the Claire number one for you and crushing soul-crushing for us I've never
00:16:43
even heard that because the uh sound issues we had technical issues during her interview and it got really hard to
00:16:50
hear her at various points and I don't think you guys heard that either right I heard it I tried to ignore it I tried
00:16:56
to block it I couldn't I couldn't hear it so I didn't know that yeah well congratulations can we uh can we chew
00:17:02
that up right here no we're not doing Victory Laps on the Pod we talked about this on the chat no I mean that's
00:17:07
awesome go go for it I want to hear it yeah oh my God no is that his her husband thinks that
00:17:23
she is attention oh oh this is not good David is incredible oh the husband's jealous that's not a good situation for
00:17:40
you sex after that what did you like sex be honest you I I want to also give credit to David sacks who um showed up
00:17:47
for every talk and Friedberg said uh Jake out the issue I said well anything I can help he said
00:17:54
oh well actually uh the issue is I asked David sax to show up at 8 45 for the run
00:17:59
through and he um he won't respond to me can you can you get in touch with him I
00:18:02
said let me tell you what's going to happen with David sacks program's going to start at nine he'll be here at 8 56.
00:18:08
and if you get him on stage for two out of three talks you did better than I did
00:18:13
and friedberg's team which God bless the production board team they did an amazing job these Wolverines are
00:18:19
incredible shout out to Laura Rachel and everybody on the team there they did a fantastic job
00:18:26
and sure enough Zach shows up at 8 56 goes on stage and he crushes it so great job uh getting him on stage but congrats
00:18:33
on showing up first well they wanted me I mean I asked when's the first Speaker going on stage yeah actually it was 10
00:18:39
a.m right 10 a.m sorry 10 10 10. so I'm like okay in my head I'm thinking okay I'll be there at 9 59.
00:18:56
[Laughter] look I thought the conference was amazing it exceeded my expectations
00:19:12
your conference exceeded my expectations too Jake out but I think fever took it to another level and yes he did exceeded
00:19:18
my my already high expectations yeah you know highlights I mean I think starting
00:19:22
with Ray dalio as the first speaker was really interesting I think we only got to go for what 30 40 minutes with him I
00:19:28
felt like we could have gone for two hours yeah I'll have to bring it back on the Pod and
00:19:32
you know drill into that topic more two hours with dalio would be amazing because I think what's really
00:19:38
interesting is the way that he's looking at the Grand sweep of History right he's
00:19:42
thinking about not just a 10-year business cycle or a 75-year debt cycle he's looking at a 250-year Empire Cycle
00:19:50
I think this is really interesting that he thinks in that really big way I agree Graham Allison really
00:19:56
interesting we could have spent two hours with him Larry Summers these are all people I think we should bring back
00:20:00
on the Pod for a long-form conversation I agree that bill gurley's talk was one of those great Ted style talks that I
00:20:09
think should go viral I think it has you know I think 200 million people should watch that yeah I mean the people
00:20:14
retweeting it are incredible and I was at a dinner party last night and everybody was talking about it so it's
00:20:20
it's spread into our industry and it's starting to tip over into other Industries already the chess was really
00:20:25
fun I am a game day player that way you know I I brought it and managed to win the game else
00:20:34
I know there are a lot of Great Moments I'm sure forgetting about things I love that I love that yeah the parties were
00:20:39
incredible right now the parties were absolutely incredible we missed both of you guys at the Grimes
00:20:45
DJ set that was amazing by the way I think chamato's there for that weren't you there no I left right at 10 to fly
00:20:51
back to the Bay Area early night yeah I got it yeah she Grimes thank you to Grimes for doing that for me a personal
00:20:58
favor uh the audience lost their minds Santa Monica she was incredible she's such a performer it's incredible yeah
00:21:04
people were losing their minds uh for you Freiburg uh best moments uh on stage it was just great to be with everyone
00:21:11
and go through it I mean honestly I didn't Source all these speakers you guys did and so I don't want to take
00:21:16
credit for that I think it was what I had hoped you know I went to Ted for 12 years I started going to Ted I think
00:21:21
2007 and I felt pretty disappointed over the last couple of years and I actually
00:21:26
spoke to the CEO of Ted and said I'm not going to go anymore because so much of this the talks became kind of social
00:21:34
justice type talk nonsense I wouldn't I don't want to use that term because I do
00:21:39
think it's all very well intentioned and I think it just became overwhelming that
00:21:43
you would go to Ted and you would basically feel bad about yourself and that it kind of missed the element
00:21:49
of the world is an amazing place we should have a great degree of optimism with technology and where it's taking us
00:21:55
we should observe the greater cycle and the bigger perspective of things that are happening in the world not kind of
00:22:01
go into them who done it and who's to blame and US versus them kind of mentality which I think so much of this
00:22:06
stuff turned into at Ted and I was really hoping we could capture some of that and so I'm really glad we got a lot
00:22:12
of the speakers we did and had a couple hours to be able to share you know those
00:22:18
sorts of perspectives so it was fun I really enjoyed what you did with the conference in terms of the editorial
00:22:24
Direction was great you leveled it up certainly from last year as Tremont pointed out correctly and it had a great
00:22:30
amount of optimism realism and we didn't talk about Superfluous virtue signaling
00:22:37
social justice woke nonsense that really is should not be at the top of the agenda in my mind I'm not saying that
00:22:44
these issues are not important to some people but I think prioritizing what's important in the world is what I got out
00:22:50
of the conference you know when you have people on this level speaking for for you know very long
00:22:56
periods and not long enough but you know that Larry Summers and and you know they really gave you a sense of this is
00:23:08
what's important in the world right now this is the priority and I came away from it so intellectually stimulated
00:23:14
that maybe just say hey you know I want to travel more I want to read more I want to have more conversations and I
00:23:20
have been basking in that like after glow so I just want to say you know once again
00:23:25
what an extraordinary uh amount of teamwork just as the moderator of our quartet I felt everybody did a great job
00:23:33
moving the ball around I think everybody was on their game everybody you know I'm
00:23:37
talking about the three of you guys we're very focused on just knowing exactly when to insert a great question
00:23:43
so I felt like we were playing basketball like the Warriors when they play Prime basketball ball moved really
00:23:49
well great questions people picking up on themes threading themes from one talk to the other and it just made me really
00:23:56
excited for next year so I just want to say a great job to each of you thank you back at you yeah back at you
00:24:03
listen uh we could talk about ourselves all day but people hate that let's talk about what's going on in the markets
00:24:08
yeah we only did it for 40 minutes perfect okay yeah exactly IPO is an m a on fire we've had a ridiculous week
00:24:16
six quarters of down Market has suddenly turned into a bunch of green shoots on the m a front Cisco announced it
00:24:26
acquired Splunk for 20 billion dollars in an all-cash deal if the notes are correct here it's about
00:24:33
10 of Cisco's market value somebody did a trade where they they bought a bunch of options and uh so that looked a
00:24:40
little fugazi congratulations to Nancy Pelosi on that trade possibly and actually don't forget your favorite
00:24:47
word allegedly allegedly allegedly perhaps I don't know she's good at trades so if somebody's going to make
00:24:54
money on that trade or somebody's going to jail so congrats to shkreli instacart clavio
00:24:59
and arm all ipoed in the past week and you know they've Fallen back to Earth just crazy stat 21 months since the last
00:25:11
significant Venture back company went public I'll leave out like the Middle Eastern food company was that Cava that
00:25:17
went public and then the vacuum company that went public but that's just in the past seven days so we talked about this
00:25:24
on the program we discussed hey we'll know when the markets are back if some of these companies are forced to walk
00:25:31
the plank slash get public you know and fix their cap tables and sure enough instacart really kind of represents that
00:25:38
most most of the late stage investors in instacart are underwater the early stage
00:25:43
folks absolutely crushed it chemov listen you're you're uh Market expert here you've taken a lot of companies
00:25:51
public what do you think the last week means for the greater technology industry I
00:25:57
don't think that this was the great reopening that we all were hoping for I think it's important to understand the
00:26:06
Dynamics of bank-led traditional IPOs in America and the best way to understand them is to
00:26:14
contrast and compare to how that same company would go public in Europe or Asia because it'll explain what what
00:26:20
happened and I think unfortunately what has happened is not good for the market so typically what happens is when you
00:26:26
construct an IPO you're selling 15 to 20 percent of the company and when you do that you go and you call
00:26:34
hedge funds and you call these mutual funds but what are called long onlys right meaning they don't short they just
00:26:40
go long these big mutual fund companies and you try to find a handful of people to Anchor the IPO so they take a huge
00:26:47
piece of that 15 to 20 percent and in Europe and Asia the Securities Law says that when you get such a big
00:26:54
allocation you have to hold it for six months which means you're treated exactly the same as
00:27:00
the employees who are typically locked up in an IPO for at least six months and so what happens is these firms do
00:27:09
all kinds of diligence and when they buy something it's because they really believe in it and then they
00:27:15
go along it for you know what is at least half a year so it's a it's a non-trivial amount of time
00:27:20
so that's what happens in Europe and Asia 15 to 20 of the company is sold a handful of people anchor and you're
00:27:26
locked up for six months now you need to look at how American IPOs are done which
00:27:31
is why people have experimented with direct listings we've experimented with spax it's
00:27:36
because the fundamental architecture of IPOs are broken they're set up in a dynamic where it's a
00:27:44
heads I win tails you lose situation for the bankers that run the IPO now what happened in these three IPOs
00:27:52
number one it was less than 10 percent of the float so highly highly highly concentrated small amount of the of the
00:28:00
company was made available for sale number two there really weren't anchors what happened was the allocation of that
00:28:09
less than 10 percent was smeared across 50 or 60 different organizations and then number three there was no lockup
00:28:16
which meant that people could sell right away and so what you saw with all of these
00:28:21
companies was the exact same Dynamic which was it opened because there was such a small amount of
00:28:27
Supply it traded up and the minute that retail which typically tends to be late to the game because they don't have
00:28:33
access to these things right when they started buying what was unique this time around is all
00:28:39
of the mutual funds just dumped everything hmm and the hedge funds were like well we
00:28:45
don't have a real allocation our friends said in the group chat he got a five or
00:28:49
ten million dollar allocation in these IPOs these are 20 and 30 billion dollar hedge
00:28:54
funds five and ten million dollar allocations don't move the needle so the hedge fund sold right away and got on
00:28:59
the sidelines and said I don't care about this the long onlys bought just enough to
00:29:04
make the stock go up because of such a small Supply then when retail stepped in they just dumped it all
00:29:10
and so unfortunately what's happened is all three IPOs within a few days have breached their issue price now they're
00:29:17
at the same issue price may be slightly higher but that is an unsuccessful Dynamic what could have been different
00:29:24
the banks could have forced these companies to sell up to 20 the banks could have found a few anchor
00:29:31
buyers the banks could have created a lockup structure for these anchor buyers they did none of it
00:29:37
and so the result is a lot of downward pressure in a moment where the overhang of rates
00:29:43
has have come back and are forcing all of us to realize and we'll talk about it in a second that these rates are going
00:29:50
to be higher for longer which completely changes how you value these tech companies so
00:29:54
net net very poor IPO construction by the Banks and this the grand reopening was a grand closing I think okay so just
00:30:04
to put some numbers on that instacart's flow it was 6.7 and clavia's Float 7.6 arms load almost hit the 10 9.4 but
00:30:12
certainly less than the 20 that you would expect so then I guess the follow-up question here sax is why did
00:30:19
these companies go out and do will we see the the other big ones go out the stripes uh and some of the other backed
00:30:27
up inventory what's what's the back channel in our industry about the viability of other IPOs is this going to
00:30:33
push a lot more people out to get liquidity even at discounted prices even with the headwinds that jamath points
00:30:39
out or is this going to have a chilling effect and people are going to say you know what let me wait till 2025. so I
00:30:44
think they went out because investors and others need liquidity and there's no point holding on and waiting for
00:30:50
evaluation that's never going to come back I mean so you take instacart for example their last private round was at
00:30:56
39 billion what's the market cap now around 10. nine nine so it's great that they got out I I think I know it's at
00:31:03
eight today two said eight I mean that look it's sort of a green shoot that they got out but we're never going back
00:31:09
to the evaluation level so we had a couple of years ago during a giant zurp created asset bubble so I just think
00:31:16
there's no reason to wait and you look at SoftBank they needed the liquidity from the arm IPO yeah so I think that's
00:31:22
why these companies are going out is it's we're kind of getting back to business as usual just to broaden out
00:31:27
the question a little bit what I think is interesting is that for the past year or so we've been in a
00:31:34
software recession it really started in the first half of 2022 the Market's Creator especially for growth stocks
00:31:40
there's a huge correction evaluations that happened in especially the first half of 2022 but then about a year ago
00:31:48
so starting in mid-22 and continuing through Q2 of this year you saw a reduction in growth forecasts everybody
00:31:56
started forecasting down there wasn't a single board meeting that I was in in private companies that
00:32:02
wasn't missing their numbers and reforesting down and you saw it in the public companies as well I think German
00:32:07
ball sub Stacks showed that the average growth forecast for SAS companies for next 12 months have been cut roughly in
00:32:16
half so for the last year year and a half we've been in a software session you could brought say a B2B recession we saw
00:32:24
companies like meta Google and so on Cut thousands of jobs tens of thousands of jobs you know get
00:32:31
much more efficient yeah each that meant they were buying a lot less software on
00:32:35
a per seat basis so I think we've been through call it a B2B or Enterprise recession but the thing that's held up
00:32:43
stronger than I think people might have expected over the past year has been the
00:32:46
consumer consumer spending has kept the economy afloat so the b2c part of the economy has been strong whereas B2B has
00:32:54
been very weak what I wonder about next is whether that's going to flip I wonder
00:33:00
if the consumer is on their last legs here you see their credit card debt is at an all-time high interest payments on
00:33:08
credit card debt all-time high mortgages the rate now is approaching eight percent so no one can afford to sell
00:33:15
their house which has a three percent more mortgage and then buy a new one at eight percent so real estate
00:33:20
transactions have cratered the commercial real estate industry is you know on its last legs I think they're
00:33:27
starting to throw the keys back to the bank and start forfeiting buildings because they can't refi at a attractive
00:33:31
rate so I just wonder if the consumer now is about to go through the type of pain and restructuring of their personal
00:33:39
balance sheets the way that the Enterprise segment of the accommodate over the past year Friedberg your
00:33:45
thoughts on what we're seeing here in terms of the IPO window companies getting out and and the impact that'll
00:33:53
have maybe on how limited partners look at Venture funds that's been frozen for 18 months limited partners and I'm
00:34:01
raising a fund right now publicly under 506c so I can talk about it and it's going great but man it's a lot of
00:34:07
meetings and I'd say two-thirds of the meetings I'm having people are saying we're not adding managers we're cutting
00:34:14
managers and we're cutting commitments to managers but we'd love to meet you know just to start the relationship you
00:34:19
know so what do you think this means overall for the limited partner GPS and the startup
00:34:26
Market star of a turnaround or maybe just sideways for more I guess we should just
00:34:33
put the volume in context if you look at the slide this is from Ernst young showing the IPO activity by year and
00:34:43
this was through June 30th so if you assume kind of a steady state you probably are going to come in at a
00:34:49
volume that's less than 22 and and perhaps even less than going back all the way to 2019 with less than 1200 IPOs
00:34:57
during the year compared to the peak of 2400 which happened in 2021 if you go to
00:35:03
the next slide and just look at the total dollar volume Rave so that IPO proceeds thus far through June 30th of
00:35:10
this year is just around 60 billion compare that to a total of about 180 billion
00:35:16
all of last year 450 billion in 2021 and the IPOs we're talking about today instacart clavio
00:35:27
arm in total raised about five and a half billion dollars so you know that kind of
00:35:34
doesn't have a huge consequence on this dollar volume for the year and then if you look at what's in the
00:35:40
pipeline right now in terms of what's publicly filed as s1s there's basically nothing right now so I think everyone's
00:35:48
kind of sitting around waiting to see how these transactions go before they decide to put other stuff I think the
00:35:54
big mistake is that we continue to treat IPOs as this big yardstick the real yardstick for a business is the
00:36:03
performance of the business and the valuation you get when you raise Capital at some point in time is largely
00:36:09
driven by market conditions not necessarily by the performance of the business and the value of the business
00:36:14
over time the market will do its job and rightly value that company we've talked
00:36:19
at length about how much value has accrued as a public company for Apple for Microsoft for Google 99.9 of their
00:36:26
total market value with realized post IPO so that the IPO transaction I think it's a little too much weight and gets a
00:36:34
little too much attention in terms of determining success or failure of a business and success or failure of the
00:36:41
investors in that business so I really hate this whole thing about does the IPO price go up on a day it's this really
00:36:47
weirdly engineered thing that they try and do to drive psychology and marketing by Banks
00:36:53
the banks to try and get people to give them more capital or to give them more deals in the future do you think that
00:36:58
the IPO Market would be better served if banks were forced to be locked or the the allocations were forced to be
00:37:05
six-month flock like the employees of course maybe longer what if they what if they
00:37:11
were locked for 70. what do you think well where would the float come from on day one
00:37:16
but why do you need a flip yeah I mean that's that's a good point I I believe the direct listing should be
00:37:22
the way that you do this and then you do a um a follow-on offering once you're sharing the problem with the direct
00:37:27
listing as I've found as a seller because I went through a handful of direct listings I
00:37:34
went through slack and I went through coinbase coinbase right yeah and in the slack direct listing
00:37:40
I only sold a small portion on day one and it turned out to be a a mistake and the reason was because the pricing of a
00:37:49
direct listing forces you to find the absolute highest price at the open [Music]
00:37:55
now I we learned that so then going into the coinbase IPO what all the Venture investors did was
00:38:02
distributed literally the day before and the day of the direct listing right so that you
00:38:08
would get delivered your stock at the highest price so that you could sell I'm not sure that that serves
00:38:15
anybody any better you know what I mean because then you get a lot of price volatility and the price just goes
00:38:22
straight down so I don't exactly know what the answer is I suspect though that getting companies to float at least 15
00:38:30
to 20 percent and doing a better job of allocation so that you're right David removing the
00:38:36
psychology of like it has to go up a hundred percent on day one is success is the thing that actually catches these
00:38:43
companies off guard now we haven't even talked for a minute about whether any of
00:38:47
us thinks the quality of instacart and clavio and arm are good businesses and this is part
00:38:53
of it as well exactly you just spent 15 or 20 minutes debating the stock price that is completely divorced from the
00:38:58
reality of these businesses and that's a bunch of distraction that the banks create as well that are that is totally
00:39:04
unnecessary I mean what do you guys think about these businesses let me just respond to the direct listing point I I
00:39:10
just want to also point out Spotify went public via direct listing the stock actually traded up after the direct
00:39:15
listing it went down a little bit after but it continued to trade up you know into the 2021 era and today it's trading
00:39:22
at or above what it was trading at during the direct listing so can I tell you why though the performance of that
00:39:27
business fundamentally drove interest from investors the thing with the Spotify IPO was that it was still a very
00:39:33
new vehicle and so that direct listing was we were all learning as we went along
00:39:38
and at the end of the day there was one bank that kind of not cornered the market but really became an expert on it
00:39:43
and they used Spotify as the example so by the time Spock and then coinbase came
00:39:48
along the Playbook was so tight that everybody knew how to play the game so I think a lot of the Spotify post IPO
00:39:57
Behavior was a bunch of people figuring out what a direct listing meant by the time that we actually dl'd slack and
00:40:03
specifically when we dealed coinbase the bank was so sophisticated in telling us
00:40:08
here's what's going to happen here's what you should do what do you want to do and obviously we wanted to do the
00:40:13
thing that maximized returns for our LPS so I'm not sure that the Spotify example
00:40:19
will ever repeat in a direct listing I think that the slack and coinbase particularly will be the
00:40:25
example going forward you'll top tick day one and then the thing will spear down find a bottom and then why does
00:40:31
that matter what is isn't it ultimately about finding the real market value for the company yeah it doesn't matter it
00:40:36
doesn't matter that the price goes down or goes up that ultimately the buyers that want to pay a certain price will
00:40:41
step in and buy and the folks that want to sell because they think the price is higher than their Mark will want to say
00:40:45
I agree with you I do think that it's really about business fundamentals but there's a lot of people that
00:40:52
get caught up in the price as what the quality of the business is now those people are maybe not the most
00:40:58
sophisticated people in the world but they make a lot of noise for not knowing what's going on and so they can be a
00:41:03
real distraction to a CEO trying to run a business I remember in 2008 I think I've told you guys this story it was
00:41:10
like November of 2008 Expedia was trading down to seven bucks and I saw Dara at some event in March
00:41:18
Yeah March and he said hey our Stock's at seven bucks I can't believe it I mean like everyone should be buying our stock
00:41:22
and that was well off of the price that it had been trading at in 030405 and sure enough if you had bought that
00:41:32
stock you know you would have made 15x from there to where we sit today and even more if you sold at the top take in
00:41:39
2021. so you know these yeah that's a that's a good chart so look at where Expedia was in in March of 09 it was
00:41:46
right around seven bucks and I think that that was for me like the first example where I really
00:41:52
understood that the price where the market trades a stock shouldn't matter as much as the fundamental value of the
00:41:59
business if you're willing to be a long-term holder if you're willing to say and you're willing to do the work
00:42:03
and you have to do the work yeah most people are not willing to do the work they want to look at a price and then
00:42:09
they want to imbue all of their own psychological desires into it versus what are the actual ones and zeros of a
00:42:16
spreadsheet tell you yeah but I'm like a pure efficient mark never shared should be
00:42:22
a cell they should be able to sell whatever people want to buy should buy the market and if the stock gets too
00:42:26
cheap there's plenty of capital out there to step in and buy the stock if they think
00:42:30
that it's too cheap and the market can find itself so let's do the underwriting of instacart then were any of you guys
00:42:35
investors in instacart no they're already I am in a fund that's an instacart from the seed round so I will do I think
00:42:45
very well because of that let's bleep that out thank you uh that's that will be a that'll be a yum yum for jaycal but
00:42:54
let's just talk about Revenue when it trickles down all the way to you as an LP what's the real multiple
00:43:01
I guess you know if you take out the carry 25 or 30 percent less than uh what looks like to be um the whole fun first
00:43:10
so yeah that that fund's been paid back many times over already so that do you know what the multiple is on that fun
00:43:16
for you yeah it'll it was eight million invested and uh no that's their investment that's
00:43:23
not your investment yeah what if you look at your investment is that investment is going to be uh 200x 100 or
00:43:31
200x somewhere somewhere in that range I'll I will report back but I think the seed round investors are going to be
00:43:36
hold on so so you're saying eight million will become 1.6 billion I think it's over a billion we can actually have
00:43:43
a chart here let's take a look uh let's assume it's a billion 1.6 seems a little
00:43:46
high let's say a billion but let's say the fund was what five six hundred million
00:43:52
for the lp it's like a 2X I'm just saying that yeah for the fund it was 100x but for the lp it's a 2X I
00:44:00
think that's a big difference right the Fun's already in the black so mitigating
00:44:04
factors okay so it's two extra turns of your investment uh meaning if it was a 4X Jason he's saying that it'll become a
00:44:11
success yeah yeah something like that yeah I mean it's a good font I'm not disparaging it
00:44:16
but I just I'm just trying to set things and put things in proportion I think I think at this point that fund's at 21x
00:44:22
right now something in that range so it's a pretty great fund in in terms of total because
00:44:28
let's go to 23x something to that effect yes it's going to be pretty amazing what
00:44:33
else was in there Instagram and WhatsApp were also in the fund either before it or with it so they were
00:44:44
it's a pretty good fun there were two funds uh I wouldn't say which firm this is um what 12 and 24x I I believe is the
00:44:52
last time I checked them WhatsApp was a monster that was a really well everybody
00:44:56
should learn from WhatsApp um and you know shout out to the Sequoia team douglioni I think and um they did
00:45:03
every round Jim Gastonia they did every round so it was an internal round for I think four rounds in a row so they just
00:45:11
made preemptive offers the reason WhatsApp was a home run is because it was so Capital efficient
00:45:17
yeah I didn't burn that much they didn't raise that much so there's very little dilution yep for everybody
00:45:27
let's pull up this uh chart here this is super telling to pull up you know who made money and I think this shows you
00:45:34
what happens in a certain environment when people do not look at entry price the series C underwater no no seriously
00:45:41
not underwater everybody from F on is kind of underwater uh and everybody from the series C is underwater compared to
00:45:50
the S P 500 to your point free uh free bird even and then everybody who invested in 2020 and 2021 actually lost
00:45:57
money General Academy DST D1 T row Fidelity all the late stage folks even Sequoia was in that late stage that
00:46:04
series I in 2021 but it was worth 39 billion Not only was it bad for all the late
00:46:12
stage investors who invested at too high a price I would argue that it was bad for the companies and even their early
00:46:18
stage investors because these companies got so inefficient the delicious yeah yeah the solution was ridiculous I also
00:46:26
think you have to think about this in the context of what your alternative returns are I think that we always look
00:46:33
at these numbers and we think we try to make judgments but if you put yourself into the mindset of the of an investor
00:46:40
it's actually the alternative of what you could have gotten and it's the spread between the two that's really
00:46:46
important so Nick do you want to just throw up this image that I just sent you this is an example that I saw in axios I
00:46:51
thought that this visualization by the way I want to try to use this visualization in the future because it
00:46:57
tries to really it just paints available this picture shows is essentially and this uses instacart as an example but
00:47:05
you could use it for any company but it just basically shows you at every point in which you could have invested money
00:47:10
in instacart what would the equivalent return have been had you just invested that same
00:47:15
amount of money in the S P 500 and the difference between that is what you would call the alpha right because the S
00:47:22
P 500 is the beta meaning it is what the Market's going to do it'll be up 10 it'll be down four percent whatever and
00:47:30
so by owning the market you get that if you decide to not own the market and make an explicit decision like owning
00:47:37
instacart then you get a different return stream and if you compare the two you know how much better or worse you
00:47:42
would have been so what this chart shows for example is the series F investor in 2018
00:47:48
if you had taken a dollar and put it into instacart would have gotten 13 but if you had put a dollar into the S P 500
00:47:55
you would have gotten 68 percent in the series C in 2015 had you invested a dollar in instacart you would have
00:48:02
made 153 percent but the s p would have returned 121. the difference means that the series C
00:48:10
investor generated about 32 Alpha now then the decision you have to make is that 32 percent of incremental gain
00:48:21
over the last seven years or eight years was it worth it because you're not liquid and because you have to then
00:48:30
solve for illiquidity and other things and this is the math that I think all of the LPS will be engaged in they'll be
00:48:36
doing these calculations it just goes back to what Sax's Point said which is our business frankly did very well in
00:48:44
moments where we had zero interest rates our business now when prevailing rates are at five or six
00:48:51
percent and you can own those things or you can own structured credit for 11 to 13 our
00:48:58
business unfortunately does not look so good and when people do the calculations
00:49:01
on what the true Alpha of venture capital is they're going to come back with answers like this which is it's not
00:49:07
that great and I do think it will impact how limited partners have an appetite to
00:49:14
give all of us or you guys folks that are that are accepting LP checks more money because the alternative universe
00:49:21
is more liquid it's less volatile and it has roughly the same amount of return I can tell you what they're
00:49:28
saying because I'm doing about a dozen LP meetings a week and I've got 50 more on the calendar until the end of the
00:49:35
year so I'm going to hit 100 of these meetings they're really saying two things one we want to go earlier we
00:49:39
don't want to go later as that chart proves they're suddenly fascinated with the seed in series a rounds and they're
00:49:46
looking for distinctly different strategies uh they're looking for some sort of edge so the first two questions
00:49:54
are how early are you getting in and securing a 10 position in this company and then what's your Edge and literally
00:50:00
the start of my pitch deck now when I walk people through it is I have two podcasts one of them gets 50 million
00:50:07
lessons a year the other one gets over 50 million listens a year those 100 million listens result in 20 000
00:50:12
applications I have larger deal flow than anybody with the only exception being Y combinator and that resonates
00:50:19
with books um but if you're somebody who's got a new fund and you're like what's your what's your Edge yeah I go
00:50:25
to you know some demo days that's not an edge you have to have a massive Competitive Edge and a differentiate you
00:50:33
have to be differentiated in some very credible believable way and they're telling me the same thing they're
00:50:39
cutting two funds out of their 20 and then they're cutting their commit commitments to the weaker ones of the
00:50:44
other 18. I have a question for all of you guys you had a wonderful question which we never touched guys what do you
00:50:48
guys think about the arm business model or the clavio business model have you guys had a chance to look at any of
00:50:55
those companies and think about that yeah I'll meet you up the facts and then you guys respond the revenue is up 15
00:51:00
year-over-year 716 million ad revenues 206 million that's on Pace to make up 28 of their revenue this is just the last
00:51:08
quarter I'm talking about it right here end of June 30th net income 114 million they have 600 000 instacart Shoppers
00:51:14
those are like uh the drivers you can think of them like doordashers or Uber drivers 7.7 million monthly active
00:51:20
orders the red flags is that their gross transaction volume which is the value of
00:51:25
all of the groceries in the in the bags uh is flat but ad revenue is growing this means ad revenue is a just a
00:51:32
massively larger percentage of the total revenue they think they can you know they're on track for 800 million in ad
00:51:37
Revenue so this is starting to look not like a e-commerce business but more like
00:51:41
a an advertising business your thoughts Freiburg or socks on the actual car business yeah Amazon by the way has that
00:51:48
Dynamic too now have you seen the charts showing advertising on Amazon compared to the entire internet yes it's huge and
00:51:56
also Uber's blown past a billion I believe here's what we know we know that advertising multiples broadly speaking
00:52:02
have contracted right so I think that the market in general doesn't love that Revenue quality
00:52:09
because it's too levered to interest rates in the economy so when the economy does well more companies advertise when
00:52:15
the economy doesn't do well companies advertise less that's number one and number two the
00:52:22
ones that can systematically drive advertising more broadly the Facebooks and the Googles of the
00:52:26
world tend to get an increasing share so advertising as a revenue stream I think
00:52:30
is is good and complementary unfortunately the markets don't necessarily love it
00:52:36
and then the second thing generally speaking for these businesses that drive huge gtbs gross transaction values is
00:52:43
I think most people when they try to find what they're worth are very sensitive to the take rate
00:52:49
and what they typically do is they assume a falling take rate which means what percentage of the transaction can
00:52:56
you get and the reason why most people do that is that history has shown that these kinds of businesses
00:53:02
cannot defend take rate for a very long period of time whether it's for competitive pressure or
00:53:09
whether it's because their suppliers actually develop more pricing power take rate tends to decay
00:53:16
so said in you know in grocery land I think it's because Walmart and Amazon will try to do it for much much cheaper
00:53:25
and or charge just be more aggressive in how much they they want to keep which means it's less
00:53:33
that you can maybe necessarily pass through I don't know the instacart business at all but if I were starting
00:53:37
to look at it that's where I would focus is what are the assumptions on take rate
00:53:41
and if the take rate is going up had it would be a little bit of a head scratcher I think that you have to model
00:53:48
the health of the business with a declining growing share yeah I can actually build on that pretty easily
00:53:53
having spent a long time in the advertising Market if this was very profitable advertising to math it would
00:53:59
get a 25 x multiple on earnings let's take that 800 million you put it at 400 million in profits like if the other
00:54:07
business didn't exist so you have 400 million in profits of advertising times that by 20 you get 8 billion
00:54:13
that's exactly there market cap so it perhaps what you're saying is exactly what the market is is actually penciling
00:54:22
out uh Google which obviously has a lot of other Technologies I think a 28x PE and Facebook is crushed it like 35 p e
00:54:30
but these are much different scale and scale matters this is not one or two billion in you
00:54:37
know a little extra revenue on top of your business that's the entirety 90 95 of that I think what's working in favor
00:54:44
of instacart is that if you compare it to probably Uber and doordash or Airbnb at least Airbnb Dash I'm gonna guess
00:54:52
that it looks pretty cheap now I think of all the three businesses Dash probably has the biggest upside quite
00:54:58
just like again arm's length I don't I don't own any of these three stocks I'm just saying business model quality Dash
00:55:03
teams infinitely scalable Airbnb I think probably has long-term issues with take because of
00:55:12
this exact reason because just competitive Dynamics and pressure regulatory capture you're seeing that in
00:55:18
New York Airbnb and then the question is what is the business outside the United
00:55:23
States look like for instacart I don't know but if I had to figure out what to pay for that's how I would kind
00:55:31
of try to break the problem down sax any of your thoughts on the in the actual business here or do you want to jump
00:55:35
over to clavia yeah I think uh clavio's the really interesting one at least from
00:55:40
my standpoint because it's a software business I think Jason lemkin had the take here
00:55:45
he said that clavio's IPO will be the ultimate yardstick for SAS and 23 and 24 top growth top margins top Founders
00:55:52
gonna Cruise past a billion and ARR whatever multiple they end up trading at you home is certainly worth less I think
00:55:59
it's trading at about 12 times for Revenue last quarter they did 165 billion that's
00:56:08
165 million sorry yeah so they're at 650 million in ARR growing 56 percent that's amazing so year over year 51
00:56:17
every year so you know project F4 they're probably going to be at a billion in AR next year 119 nrr which is
00:56:25
very good especially considering that is folks yeah it's not Revenue retention it's the way to think about that is if
00:56:32
you just look at your existing customers going into next year what percent of that subscription base
00:56:39
is gonna be there and if it was 80 it would mean 20 of your customers are churning away if it's
00:56:46
119 it means you have expansion from your customer base in other words your customers are buying more and there
00:56:54
there will be some who churn but the ones who are expanding more than make up for that and then they've been very
00:56:58
Capital efficient apparently they've only burned 15 million today that does not mean they've only raised 15 million
00:57:04
they've raised several hundred million in various growth rounds but they've still got that money in the bank
00:57:09
so I assume they raise it as a cushion in case they missed their forecast or something like that yeah it seems like a
00:57:16
pretty strong business but I think his point is right is that they're kind of the ceiling you know
00:57:22
so I think Founders still have maybe unrealistic expectations from the days when SAS businesses were being valued at
00:57:28
100 times ARR have you had this conversation sax with folks coming in for funding who have great businesses or
00:57:35
let's call them good to Great businesses somewhere in that zone they're seven eight nine businesses but their
00:57:40
valuations are way off and do you do you bring up hey here's what your your company would be worth publicly this is
00:57:46
what your last round is and then trying to negotiate in between those two numbers because it does seem like
00:57:52
Founders are bringing that up proactively in some meetings with me they're actually aware of public comps
00:57:58
now and and they're kind of admitting hey I get it kind of situation yeah I think Thunder expectations have adjusted
00:58:06
on this yeah which it is healthy yeah when you're in a hot Market there's definitely a lot of
00:58:11
sharing among founders of what's happening and where valuations are at and I think the same thing is probably
00:58:17
happening in the down Market as well so yeah I think everyone's getting more realistic yeah just to finish on clavio
00:58:22
I just want to give a shout out to Toby Lukey the best thing that I saw about that was that Shopify actually owns like
00:58:28
11 of this company which I think like if you look at the corporations again just doing an
00:58:35
incredible job of building an ecosystem not only does Toby support these companies but Shopify ends up owning a
00:58:40
huge non-trivial portion I think Shopify owned like 11 or 12 percent of clavio amazing I think with the sale of the
00:58:47
flex Port deliver back to flexport they own 13 or 14 of it I suspect they probably own a
00:58:54
non-trivial share of stripe and it's incredible you're right if you do some of the parts on on Shopify their cash
00:59:02
and cash and then cash equivalents are only valued at like two or three billion so I feel like there's a ton of upside
00:59:07
there just for free again I don't own it I haven't done the work but I'm just saying seems like seems like it seems
00:59:11
great Travis yeah so I think that brings up a really interesting point which is the only vulnerability or negative I
00:59:19
think about clavio's business is the fact that 70 of it is on Shopify so that's a platform dependency and
00:59:27
whenever 70 of your business is on one platform you always have to be afraid of getting the rug pulled out from under
00:59:31
you by the way that was PayPal's problem back in the day 20 years ago 70 of our business was on eBay eBay had a
00:59:38
competitor we were constantly worried that they were going to pull the rug out from under us if we could have made a
00:59:43
business deal with eBay we would never have had to sell the company it would have been ideal I think clavio is really
00:59:48
smart creating alignment with Shopify by letting them invest giving them Equity doing a REV share agreement and they
00:59:56
would be smart to continue that rev share agreement into the future to take this risk off the table because
01:00:02
investors do not like existential risk you could have a perfect business but if there's some hard to quantify risk of
01:00:08
the whole thing basically getting rug pulled then how do you discount that David as an investor you look at that
01:00:13
and you're like okay I then price this company as a function of Shopify that's a good point I mean 70 percent of
01:00:20
the business is Shopify the way I would look at it is I would price it as a SAS business because Shopify is more of a
01:00:26
transaction well they're a transactional slash SAS business clavius is a pure SAS
01:00:31
business I price is a SAS business but I would have to create some sort of discount for the chance that you know
01:00:39
well Shopify adds the features how do you figure that out that's a really complicated thing to figure out yeah I
01:00:45
agree but I think that clavio mitigates the risks extent they do this like rupture agreement it's a really Savvy
01:00:50
move for people who have insights into the market to own pieces of emerging companies and lock in that partnership
01:00:56
this was Emil Michael a shout out at Uber and Travis did this with all of the grabs DDS Etc and then Dara just slowly
01:01:06
sold those positions and they were incredible cash a creative to that stock and to running
01:01:11
that business let's talk about care table for a second um this also trended on Twitter with the
01:01:17
Tweet storm if you don't know what airtable is it's kind of like what is it it's like Excel meets a database and
01:01:23
it's more programmable so if you wanted to have a bunch of it uses it a lot of small businesses use it
01:01:29
medium-sized businesses and they use it to let's say instead of hiring somebody to build a database system uh or it's
01:01:37
like Google Sheets on steroids it's actually a really good product it's a really sick product yeah I've seen it
01:01:42
use like 10 different ways some people use it for tracking uh product feature requests uh and you know task lists some
01:01:50
people use it for contact database some people use it for complex project management it's super extensible super
01:01:56
easy to use and great collaborative Tool uh if you think about it like it's like
01:02:01
a spreadsheet for words instead of numbers yeah yeah but you could also do numbers so yeah with a lot of great
01:02:06
features that you can do really Dynamic things within the spreadsheet do you guys believe in this Swiss army knife
01:02:12
approach of building these kinds of things or do you believe that it's just cheaper and simpler to build
01:02:17
best-in-class versions of each of those use cases Friedberg that you just I think it allows certain businesses to
01:02:22
have a very specific tunable version of what they need from call it a project management tool so if you use a
01:02:29
traditional project management tool it may be too overbuilt or it may be too specific whereas this tool allows you to
01:02:35
build something unique for your platform so that's where I've seen a lot of teams
01:02:38
use it instead of other tools like jira or whatever for traffic well that's a good point I just wonder that you get
01:02:45
these small non-scalable use cases because then if a company is successful don't they then just migrate to jira for
01:02:54
example no I view it a lot like spreadsheets basically the reason people use spreadsheets for so many different
01:02:59
things is because everyone's got their own representation of data and utilization of a spreadsheet and I think
01:03:04
this is just an extension of that it's the cult big about it is a more feature-rich spreadsheet tool I actually
01:03:09
think that Jamal's question is is an excellent one I I tweeted many years ago that the way I saw Excel was the long
01:03:17
tail of use cases that hadn't moved into a dedicated SAS app yet that's interesting yeah and that the way that
01:03:23
if you wanted to be a SAS founder you're trying to come up with ideas find some really complicated Excel spreadsheet
01:03:30
that's used across so many different businesses yeah and just figure out if you can move that into a SAS app so for
01:03:34
example think about harda you know before Carter people just use a spreadsheet for the cop team and every
01:03:40
company totally had a half tablespoon totally but they just move that into specific Sasa so I think there's a lot
01:03:47
of that and so and all a spreadsheet is it's a visual representation of a database with some relational logic that
01:03:53
you build into the the cells of the spreadsheet and this this pattern of breaking apart breaking apart a major
01:03:58
product was the playbook for Craigslist people looked at Craigslist and said oh there's Couchsurfing make that Airbnb oh
01:04:05
there's a ride sharing I'm going to La I have two extra seats that became like uber so people this Playbook has an
01:04:13
original of that too where every category on Craigslist became its own dedicated Marketplace yeah yeah it was
01:04:20
one well you know so everybody uses yeah free break everybody uses something different that's interesting when it
01:04:26
comes to you that's the one that comes first Craigslist was a huge dating product before dating apps came it was
01:04:30
casual encounters or missed uh what was it called misconnections misconnection is
01:04:36
hilarious freedoms like me you the numbers I think the point though the question that I was asking is exactly
01:04:42
this which is you have these beefed up workflow things that happen in Excel but then eventually you go to these systems
01:04:53
of record that are purpose built to solve the use case and if the use case is important
01:04:59
enough it just seems like that's what's happened I don't have a view because I've never used the product but I wonder
01:05:03
whether part of this valuation reset doesn't reflect that Dynamic it is a dynamic the two companies or yeah two or
01:05:12
three companies that represent it best is there's a product called Coda which is part Wiki part air table part
01:05:18
database and it's programmable and notion and now people are making templates in
01:05:24
notion and then they're adding things like project management so I asked my team to do project management
01:05:31
for events and they tried base camp they were looking at Asana and then somebody
01:05:36
was like you know what I just added it to notion is good enough it's not as good as those other two products but
01:05:41
it's good enough and we don't have to and the reason they want to do is not because we're cheap I don't want to
01:05:46
spend money on another SAS product we don't want to have to teach everybody a new SAS product we don't have to want to
01:05:50
do the logins for that so I think it is a natural tension and people are doing both Tremont Phil some people like the
01:05:57
best of breed but you're also seeing it I don't know if you saw this past week slack added I think during dreamforce
01:06:03
the ability to give you an AI summary of everything you missed and then Zoom added AI summaries of calls so that
01:06:11
feature that uh I guess otter and some other people were doing that feature is now built into Zoom you get you get a
01:06:18
transcript from Zoom for free and now you get a summary of the call for free that is work that was done by somebody
01:06:25
on the meeting right somebody was responsible for me being the note taker sometimes somebody was so those are jobs
01:06:30
that are gone and I think it speaks to the bigger economy I had the CEO of kayak on this week in startups this week
01:06:35
it'll come out next week it was really great and I asked him about hiring and the size of the company said I'm not
01:06:40
hiring anybody in the next year or two because all my developers are 30 or 40 better I got Junior developers that are
01:06:46
acting like senior developers I got senior developers who are turning into 10x developers we're not hiring we're
01:06:51
just going to have increased margin so what happened to airtable airtable had a massive valuation uh here's the Tweet
01:06:57
storm that's somebody from CB insights this guy Anand uh who I think I follow him
01:07:03
did something happen or nothing well they're most recently valued at 11.7 billion in December their 2021 series
01:07:09
app his thesis not only is their table worth less than 11.7 billion it's likely worth less than the 1.4 billion in
01:07:17
funding it has raised to freeburg's been bringing this point up over and over about the overfunding and cash in is
01:07:23
less than the valuation most yeah most of these unicorns are worth less than their total prep stack and this is a
01:07:29
good example I've just been through this this week I went I saw there's a company
01:07:32
I was an investor in that I saw this happen contract to do their big problem is I
01:07:38
mean they're doing over 100 million of ARR it's a it's a great product and 150 million of ARR that's no small feat the
01:07:45
problem is the growth rate I think it's only 15 what do you do with the founder of sex because this was my point earlier
01:07:50
is in these circumstances it's still a good business investors are going to want to own these shares at some price
01:07:56
someone will buy new shares at some price but but to do this transaction given that the preference in the company
01:08:01
which is effectively debt is greater than the value of the company the founders and the employees get their
01:08:06
ownership Stakes wiped out so if you want to I think you know I think their only hope is to go public because that
01:08:12
wipes out the prep stack and everyone basically just owns their percentage of the company if they don't go public
01:08:18
private investor do that why would a preferred investor allow that to happen well this is going to be the huge
01:08:24
tension on the board is that if you're a common holder or if you're one of the early investors of the company you want
01:08:29
to go public if you're a late stage investor you don't want to give up your preference but those late stage people
01:08:34
sex did not have blocker rights in many cases because the market was so hot they
01:08:39
just put the money in without yeah I mean unless they had a ratchet into the IPO but yeah yeah but in many cases but
01:08:45
that's not a universal truth right it in almost in the majority of these cases the preferred shareholders do have
01:08:51
significant representation on the board they do have the ability to influence whether or not the company is going to
01:08:56
go public and there's likely some middle ground that every company ends up having
01:08:59
to meet at which is we're going to recap the company in a way that we're going to
01:09:02
give some shares newly issued shares the founders yeah that in doordash I think they all
01:09:11
just got dragged out they didn't have a choice my understanding of some of these
01:09:14
late rounds during Peak zurp 20 20 21 from talking to Bill Gurley which people did not negotiate those rights those
01:09:21
rights the blocker rights weren't available and If the majority of common says we're going public you're going
01:09:26
public and that's the that's the end of the story here's here's the punch line to the air table if you look at the uh
01:09:31
Ford price to sales multiple 78x for an 11.7 billion dollar valuation at 150 million ARR and you compare it to the
01:09:40
trailing price to sales multiples in the project management space Mondays at 12x plus Asana 6.6 acts and
01:09:49
smartsheets at just around 8X so it's a challenge yeah well to freeburg's point one of the downsides of taking all this
01:09:58
excessive Capital at these ridiculous valuations is that it produces a dynamic in your boardroom where your board
01:10:04
members are at war with each other the late stage investors are going to be at war with the early stage investors and
01:10:09
the founders and who knows who comes out on top of that thing that's not something Dynamic I don't know if you
01:10:14
guys have but I've got like so many anecdotes over the last couple of months on this exact scenario playing out an
01:10:21
amalgamation of those you know without talking about specific ones but you know you can make yeah what is the dynamic
01:10:27
and how does it work itself out investor invested a multi-billion dollar valuation
01:10:32
the company is now worth 20 of that valuation and the investors have more money in the
01:10:37
company than it is worth and the company needs more cash they can't go public at
01:10:42
this rate because the markets are shut down no one's going to buy new shares they can't raise cash by going public so
01:10:47
they have to raise cash in the private markets so then the tough question is okay what's the value of the company in
01:10:53
almost all of these cases the CEO has been replaced or they're with some professional CEO so
01:11:00
there's a new Option pool created equal to 10 to 15 of the company new options are issued and a round is done at a
01:11:06
significant discount and there's a huge recap and a pay to play and all this other sort of stuff starts to play out
01:11:11
that the original Founders in the company get wiped out most of the management team leaves because their
01:11:16
options are now worthless and the investors who historically have been totally passive late stage investors
01:11:22
have had to step in and try and take action in rebuilding a management team which guess what they're not necessarily
01:11:27
good at and so it ends up becoming this really nasty unwinding of the business because everyone thinks oh well I
01:11:33
deserve to get a fair deal because I put money in and I have a preference in this
01:11:36
company Founders don't want to see their ownership go down from 20 to 2 percent they're like why would I keep working
01:11:42
for two percent I'm fully vested I'm Gonna Leave the management team's like wait a second I'm getting offers left
01:11:47
and right to go join other companies and so it's a real kind of nasty unwinding and I think that's the scary scenario
01:11:52
that's likely going to play out not all but a good chunk of these companies that
01:11:56
are there are still business Services they have decent value to their business but they just raise too much Capital
01:12:01
relative to the valuation of the business today if you looked at it on a blank piece of paper these businesses
01:12:05
would look incredible at whatever the true valuation is today but if you have the psychological
01:12:12
hindsight bias of what the price was two years ago you just can't see that you get it
01:12:18
totally can't get it and by the way I will say and there's structure there's like Legacy structure in the cap table
01:12:23
from yeah yeah meaning there's like this prep stack I will say that the terms are so
01:12:28
crazy good for the recap that investors are clawing their way into the recap round well that means oh my God nature
01:12:36
markets are healing that's means we're in the end game right that's part of what's happening
01:12:42
it's totally predatory it's totally predatory is like to go public again I think that
01:12:50
when there's a recap and the founder is still running the company there's a chance of it being fair but when they
01:12:56
bring in a new CEO who then does a recap oh yeah they don't care they don't care
01:13:00
they don't care about their audience exactly and all these Recaps turn into a disaster yeah well it's recap or you're
01:13:09
going to go out of business so I mean this is a forcing function and everybody partied too hard I think it's time for
01:13:16
everybody's favorite part of the show which is to give chamoth his flowers here we go
01:13:25
the FED spoke this week and it's time for Fortune moth to take his Victory lap here he goes everybody
01:13:40
is this evangelis yes evangelis doing Chariots of Fire this week the FED said to quote Shema
01:13:52
well this is this is but interesting connections to the Deep state for longer there he is
01:14:00
there's shrimach leading the pack I sent my I sent my talking points from six months ago to my deeps up to our friend
01:14:06
deep State [ __ ] deep style sent the note and deep statement sent it to the fed and then fed just cut and pasted it
01:14:14
into them will stay higher for longer absolutely we don't care who cares I don't think anyone understands what it
01:14:23
is that jamas said that he's taking the Victory lap on once you see the subject that rates will stay higher for longer
01:14:31
and now he takes his Victory lap all right enough of the shenanigans chamat said rates will stay higher for
01:14:38
longer the FED said rates will stay higher for longer at the end congratulations Jamal you got it right
01:14:42
thanks okay we're going to give our chariots a fire [Applause] can you sell the metal in the group chat
01:14:55
this is when Obama who is Obama giving the medal to what's the real picture here it's Obama is he giving it to him
01:15:03
well I think he's getting it I thought it was so so I think what happened this week
01:15:13
is actually pretty important because I think the markets were really trying to force Jerome Powell to start the
01:15:21
cutting cycle and now they had to move the date at which they could expect cuts out by a year
01:15:31
and I think that we're only starting to see the reverberations of that you're gonna have to reprice
01:15:37
a lot of risk assets so if you put it all together oil is creeping back up so commodity prices essentially are
01:15:49
trending up I don't think that's going to have a big impact on inflation because of the way
01:15:54
that owner equivalent rents and core CPI is calculated because it's calculated on
01:16:00
this six-month lag this dumb nonsense of just how arcane our system works but that's going to spike down so basically
01:16:09
the fed's like saying we know all of this is happening we're sitting on our hands but the problem is that if you add
01:16:15
another 100 basis points to your discount rate for an unprofitable SAS company my gosh
01:16:22
guys you're taking like another turn and a half of market cap out of the business like if you thought it was
01:16:29
worth eight times it's not worth six and a half six times so unfortunately that's gonna hurt
01:16:37
everything that's not the top seven tech companies and everything else is just gonna just
01:16:46
kind of meander along for a much longer time so it's really good for the Magnificent Seven
01:16:52
I think it's really bad for everything else and we're going to be in a holding pattern for a while crude oil
01:17:00
uh is at uh let's see 89 a barrel yeah it's it's you know I told remember remember this conversation I told my
01:17:09
CEOs guys let's get enough cash to last through the middle of 25. sure remember I was pretty clear about that to folks I
01:17:16
mean get to get to default alive but if you can't please have enough money to the mid of 25 I
01:17:22
think that that was wrong I think now you got to be q1 of 26 and maybe even mid 26 so now I have to
01:17:31
go back to all these CEOs and redo an entire justification for why they need to cut even more people cut even more
01:17:40
expense cut more burn I don't know where we're gonna find another year of burn in most of these
01:17:46
businesses so I was wrong by at least a year Jason because of this I think I got
01:17:51
the words right but I got the timing wrong yeah just to further translate this okay so the markets right now are
01:17:57
definitely taking a bath the growth stocks are off significantly expect them to be off more yeah and the
01:18:03
reason is because the market starts at price in rate Cuts next year and now the FED is saying that because inflation
01:18:09
ticked up a little bit it's not coming down as much we have higher energy prices we may not get those rate Cuts I
01:18:16
think the FED still maintains that we'll get 50 basis points or rate Cuts next year but the market was pricing in more
01:18:22
and I think people are starting to wonder if we'll even get the 50. so as a result of that interest rates
01:18:28
are going to stay higher longer which means that risk Capital will be less available so valuations are going to go
01:18:35
down or at least they're not going to be racing back up like they used to when I
01:18:39
was saying mid 25 sax that was because the forward curves started showing Cuts in early 23.
01:18:46
you know what I mean so I was like okay let's assume they're wrong by 18 months it turns out that that initial data
01:18:51
point in early 22 my God we were wrong by three years not a year and a half it's brutal and I
01:19:00
think the X Factor here is that we're running almost two trillion dollar deficits in peacetime well I mean we're
01:19:08
not in a direct War we're in a proxy war but in relative peace time and in a relatively decent economy so what
01:19:17
happens if either of those things change and what happens to long-term rates as all of these debt issuances you have to
01:19:26
get raised as the FED has to keep selling more treasuries to fund our deficit in debt at these higher rates do
01:19:33
long-term rates keep going up based on the debt financing needs of the federal government and then this is again where
01:19:38
you know we made a huge mistake by politicizing this idea of raising money Beyond 30 years we made
01:19:46
that mistake under the Trump presidency because people reacted to Trump saying it but it was the smartest thing we
01:19:52
could have done to give our kids and our grandkids a reasonable economy and Friedberg has been right all along
01:19:59
about just like our spending is just going up and up and up and now short-term rates are
01:20:05
really high maybe we'll have enough political will to just get out of the fed's way and the FED can actually look
01:20:13
at raising in durations past 30 years because if you believe that we're going to start an aggressive cutting cycle at
01:20:20
some point and you believe we'll get back to like a two percent terminal rate you could
01:20:25
theoretically justify 50 60-year bonds at much lower than the third year but I don't see it happening here's um a
01:20:34
really good way to look at this there are prediction markets this one call she is when I use
01:20:40
k-a-l-s-h-i chances of a rate cut by May of 2024 29 chance and these are people actually
01:20:49
making bets on these things and so it has gotten pushed out and I guess 74 Chance by the fourth quarter third
01:20:58
fourth quarter of next year people think they'll be already cut so we're a year away from a rate cut everybody needs to
01:21:03
just take that off the table which means the translation for Founders for GPS is
01:21:09
performance has to go up you got a Beat five six seven percent or whatever people are going to get on those other
01:21:16
instruments corporate debt you know 10 11 12 you got a really hard bogey to beat here the alternative to that
01:21:22
statement is that total Capital has to go down in order for the capital remaining to
01:21:29
have its return multiple increase given that there's a generally set number of companies that are going
01:21:36
to generally create a certain amount of value over the next couple of years and the way to create that value is so if
01:21:42
that's true well I'm saying if there's a bunch of startups that are going to make
01:21:45
100 billion dollars of market value over the next five to seven years you need to have less Capital going into
01:21:50
those companies in order for that Capital to generate a higher return which is on your day-to-day basis means
01:21:55
what Freebird explain on a day-to-day basis on a daily basis it means there's gonna be less companies that are going
01:22:00
to get funded but more importantly it's going to be less LP money going into Venture and there's going to be less
01:22:04
Capital available to fund startups in aggregate by significant amount on a daily basis you need to do more with
01:22:11
less as a Founder you need to Delight customers with less resources spend less money on marketing spend less money on
01:22:17
teams yeah and get to profitability you've got to be a stronger founder I'm seeing it across the board in the seed
01:22:23
stage two three four Founders raising 250 to a million instead of raising three to five I gotta be honest Jacob I
01:22:30
thought it was much easier to kind of say the sky was falling this time last year
01:22:38
right now and I think that people are a little bit again exhausted about hearing
01:22:43
this message constantly of like cup more it's like I think that they're exhausted
01:22:48
and I see a lot of Founders that are exhausted and giving up there's a lot of giving up they're like they're like I
01:22:54
can't cut anymore and now I do think we have to go back to them and say if we're
01:22:59
doing our jobs right okay even okay now are strategic viewers right but the time scale of our analysis was
01:23:10
wrong and I think now you got a plan to mid-26 I don't even know where to start to be
01:23:16
honest with that conversation actually that what I'm seeing is people are merging companies and M A's picking up
01:23:21
because hey you got two companies doing five million each but they're burning 2 million each a year cut half the team
01:23:28
put one team with the other and I think you're going to just see some of that portfolio consolidation happen go ahead
01:23:33
sex I think one way to put it is that we've had a regime change those are the words that we've been using for a while
01:23:40
and specifically we've gone from a regime of capital abundance to a regime of capital scarcity
01:23:46
and I think a lot of people were holding out hope that there's gonna be a quick bounce back
01:23:50
because we'd cut these interest rates and capital would start flowing again in a big way and I think that the FED here
01:23:57
has dumped a bucket of cold water on the markets basically saying we're not bouncing back to Capital abundance
01:24:04
anytime soon we're going to be in this environment of more Capital scarcity and that's what I think just Founders and
01:24:10
VCS now have to take into account is this shift could be permanent or it could it could last a while it could
01:24:16
last five ten years sure we're seeing a lot of the question I have is just what do you guys think is going to happen to
01:24:21
the consumer because I I actually think that even though Founders in many cases could cut more and they could have acted
01:24:27
faster I actually think that the B2B economy has kind of taken its licks I mean for the last year we've been in
01:24:33
this software recession companies have been sharpening their pencils they've been cutting costs and getting more
01:24:39
efficient yes you could say maybe they haven't done enough but the consumer has still been strong but what is the
01:24:45
consumer going to do now that credit card rates and interest payments are at all-time highs they're going to they
01:24:50
can't sell their house no here's what they're going to do they're going to skip an iPhone cycle instead of going
01:24:55
from you know 13 to 14 or 14 to 15 they're going to go 13 to 16 for 14 to 17. they'll just skip which which I did
01:25:02
for the first time I don't need to skip it but I was just like this 13 is good enough they're going to skip upgrading
01:25:08
their car you're going to keep your car for an extra two or three years and uh if you were thinking about moving your
01:25:13
house you're gonna say you know what I'm going to make this house work uh we're gonna put two of the kids in order 100
01:25:18
right I think that is that is I think that's very I think that's very well said and and the the other side of it is
01:25:25
that some of these industries where you have these large ticket purchases that drive consumer consumption
01:25:31
their backs are against the wall look at the automakers that the deals that's that the unions have proposed to the
01:25:37
automakers will cause them from I thought I saw an out an analysis of Ford where Ford would go if you just did a
01:25:45
pro forma and went back the last couple years they would have gone from like you
01:25:49
know 30 billion of profits to minus 17 billion of losses so that's a 47 billion dollar swing in the Ford p l the only
01:25:56
way they overcome that is with more expensive cars which Jason to your point means that those cars are not going to
01:26:02
get sold I do think that you're going to just have a little bit of belt tightening in the in the consumer I
01:26:07
think this is interesting I think you know traumath you're right that at the same time that the auto companies are
01:26:13
facing what you'd expect to be reduced demand because no one can afford a car payment at these higher interest rates
01:26:18
the unions are going on strike demanding oh I think this is existing higher wages
01:26:24
yeah for a four day work week how does this one day work week I think that the the labor deal is an existence risk to
01:26:32
the unionized Auto industry in America and I'm not opining on whether this deal should or should not happen I'm just
01:26:39
making an observation if the deal as announced happens and you sensitize stalantis GM and Ford's p l to these new
01:26:49
terms and then you compare that against non-unionized highly automated organizations like Tesla and rivian
01:26:58
it's going to be very difficult for the established Auto industry to survive right and then if you'd layer on top of
01:27:04
it seven eight nine percent consumer lending rates for new cars forget about it and yet the FED forecast at the same
01:27:13
meeting they were being hawkish about race they also said that they were expecting unemployment next year to be
01:27:19
4.1 percent down from their previous expectation of 4.5 percent and they forecast the economic growth would be
01:27:25
higher so I just don't understand how these countervailing forces aren't going to create so much stress in the economy
01:27:32
that something breaks and these uh idiot unions honestly their timing is so dumb
01:27:38
whether it's the ones uh you know in Hollywood or this car strike while they're shutting that's great it's great for
01:27:44
Tesla I mean it's giving Tesla the entire U.S auto market yeah Tesla is lowering the price when I bought my
01:27:50
model y long range I think I paid 72 for it the old price on this chart says 66.
01:27:57
that car is now 53. that's down 20 a 13 000 saves the model y long range I think is the greatest
01:28:05
vehicle ever made I page 57 I think for my model y long range oh no no I think I
01:28:12
sorry I paid 57 I paid this price for the model y performance the best car and yeah that'll be a forty thousand dollar
01:28:19
car in the next three years well you know and I looked at it and I it's speaking of austerity measures I I was
01:28:24
like I have a model X do I get another model X I think I'll just go with the model y because the model X is I don't
01:28:30
know 50 more and I I just prefer the model I think I think this labor deal is going to put tremendous pressure on
01:28:36
these established Auto ovms China is now the world's largest exporter from what I
01:28:41
understand that just happened they work I looked it up 58 to 64 hours a week Factory workers the U.S Factory workers
01:28:48
want to work 32 hours a week they want a four day work week I mean I don't understand the timing of
01:28:55
these unions I mean they're just gonna move these factories to Mexico or I think it's reasonable for the unions to
01:29:01
ask for as much as possible on behalf of their members that's like obvious and good because meaning if
01:29:07
you're collecting fees from those folks and you're doing a good job on their behalf your job is to ask for as much as
01:29:13
possible I get that where I see the breakdown is that it just doesn't seem like there's enough
01:29:19
numeracy between them and the companies that they're negotiating against to really sit down and look at what the
01:29:26
impact of this is because you may get a short-term labor deal that you can celebrate but it may actually destroy
01:29:34
that Union member's pension yes it may destroy the company and this is my concern is that then that has to get
01:29:40
bailed up by by the U.S taxpayer and once it happens in one industry it's going to be very difficult to actually
01:29:46
not do it in in other Industries and the thing that needs to be understood is the risk that it puts on those kinds of
01:29:54
tail outcomes and I think that that's not well discussed nobody in the media is really talking about it they make it
01:30:00
a a moral issue of like what is the CEO pay versus what is the ratio of multiple
01:30:07
yeah and yeah sure look that's an important issue at some level but if you if for example like you have U.S
01:30:13
senators blathering on about how they'll wear a suit and not look like a homeless
01:30:16
bum if this deal happens in that and it's like well that's not what you should be saying what you should be
01:30:21
saying is my team has done a financial analysis and here's what it shows right they're not saying that this is
01:30:29
crazy what you're saying is that the negotiation and also the political dimension of this have become completely
01:30:36
untethered from economic realities yes they are negotiating in the review Mira they basically talked about whatever
01:30:43
billions of dollars in profits the companies previously had during the serp environment during the Heyday and yeah
01:30:49
it's just timings off just add it to the list of latent problems in this economy
01:30:53
it just feels to me like something's about to break but who knows I mean if the zero points asks
01:30:59
you you keep bringing up like what happens with the consumer yeah I think they just slow their role you know
01:31:04
staycation instead of your conversation what Larry Summers said at the summit he said that
01:31:10
soft Landings are like second marriages the Triumph of Hope over experience yes meaning everyone's talking about a soft
01:31:18
Landing everyone's banking on a soft Landing but soft Landings are actually exceedingly rare
01:31:23
when you have very fast rate tightening Cycles it generally has a very predictable effect on the economy
01:31:29
there's a lag but the effect is very predictable which is it causes recessions and then I would know you've already
01:31:35
been in a B2B recession we're starting to come out of that but I think the consumer hasn't been hit yet and maybe
01:31:40
that has to do with all the stimulus they push through yeah and that created some amount of
01:31:47
cushion for the consumer but I just wonder if that cushions run out now we're about to enter a new phase and
01:31:54
what what all of these strikes you if you overplay your hand chamoth is automation so this happened
01:32:00
in New York just over 10 years ago the fast food workers wanted you know I think it was 15 20 bucks an hour okay
01:32:07
seems reasonable and they replaced every cashier you go to McDonald's now you're
01:32:11
ordering on the app or you're ordering on a kiosk in the space and we have an investment in a company called hello
01:32:19
meter what this company does is pretty simple they just study what's going on inside fast restaurants
01:32:25
and then they just increase the speed at which people are getting served and they're crushing it why people can't
01:32:33
hire people there's not enough immigrants in the country anymore we have an anti-immigration thing going on
01:32:38
here so unemployment's too low and the the salaries are too high it's not working a lot of restaurants are
01:32:45
breaking because a 30 or 40 dishwasher is the difference between a com you know a restaurant being profitable or not all
01:32:51
right listen there's apparently some potential major breakthrough in autoimmune disease treatment with this
01:32:58
new inverse vaccine let's go to our science correspondence the Sultan of science himself for
01:33:04
science corner the taxes turns his camera off wow he'll be back oh he's back I'm here or
01:33:17
I'm here jeez you wouldn't even let me get away with that nope uh we were Zoom shaming you do not leave
01:33:25
you could learn something sucks my super gut I just have my super gut chocolate oh so good I just got my super
01:33:36
protein and uh the weight loss continues Health boosting my gut is so good there
01:33:43
was a paper published in the journal Nature this week which I thought was worth highlighting sex you're going to
01:33:48
be quizzed afterwards on exactly what I say during this this and the implications for it we've all heard of
01:33:54
and know folks that have autoimmune conditions and some of us may suffer from them an autoimmune condition is
01:34:00
when our immune system mounts an attack against A protein that exists in our body that is natively part of our body
01:34:07
our immune system kind of mistakes that protein for being a foreign antigen so the term antigen refers to proteins that
01:34:13
the immune system views as invading and it needs to go in and attack so when the
01:34:17
immune system messes up and it sees a protein in our body as being a foreign antigen and starts attacking it you get
01:34:23
these autoimmune conditions and autoimmune conditions as you know are very debilitating
01:34:28
cost on the health system on people's lives the top 10 autoimmune diseases rheumatoid arthritis
01:34:35
even type 1 diabetes multiple sclerosis irritable bowel Sjogren's Hashimoto's thyroiditis these are all pretty
01:34:42
in different ways damaging diseases so this team at University of Chicago in 2019 published a paper
01:34:50
where they actually took an antigen and glycosylated it so basically attached some sugar molecules and
01:34:57
carbohydrate molecules to it and presented it in the liver so they put it into the blood and it showed up
01:35:03
in the liver and they were able to cause type 1 diabetes to not develop in an animal model That was supposed to get
01:35:09
type 1 diabetes so they did an extension of that work and the team has gotten broader and they just published this
01:35:14
week a much more substantive paper that highlights a pretty incredible technique
01:35:19
that may potentially address a long list of autoimmune conditions so they take the antigen the protein that
01:35:30
is are you saying sorry in the type 1 example are you saying like the beta cells didn't get destroyed like it just
01:35:35
stopped it just stopped everything on the dime yeah so the immune system has a bunch of ways for self-regulating there
01:35:42
are T cells in our body called t-reg cells or regulatory T cells their job is to go find the T cells and the
01:35:48
antibodies that are attacking our own protein that's their job and when they don't do their job the antibodies and
01:35:55
the T cells go and attack our own body so T-Rex cells kind of when they're turned off they're not doing their job
01:36:01
so it turns out that when a protein is presented in the liver in this this particular part of the liver
01:36:09
the immune system recognizes that protein as being a safe protein and there's a regulatory process that gets
01:36:16
kicked off that causes the immune system to start to see that protein as being safe it should not be attacked and t-reg
01:36:23
cells start to develop and other systems start to develop that tell the whole immune system stop attacking this
01:36:28
protein this is a safe protein this is our body this is like friendly fire right like do
01:36:34
not it's like Friendly Fire do not attack this protein so what they did is they took several
01:36:39
antigens proteins and it glycosylated them meaning they put some you know molecules on them put them in the in the
01:36:46
blood just with an IV hookup they go into the liver and once they're in the liver the immune system sees them and
01:36:51
it's like whoa these are totally safe now and they sound by analyzing all the different T cells the regulatory pathway
01:36:58
that emerged that caused the body to stop attacking that protein and they were able to end MS
01:37:05
using this induced system in animals so basically that we have a known model for
01:37:09
making multiple sclerosis show up in animals and they were able to stop Ms in the Animals by taking this particular
01:37:16
protein that they use for Ms and they put it in the in the liver through uh IV they did the same with an egg allergy
01:37:22
and they did the same with several other antigens this represents a very novel and seemingly super impactful and
01:37:30
Powerful way to think about eliminating autoimmune disease going forward is that
01:37:35
we can take the antigen and we now know the antigen or the protein that causes almost all of these autoimmune
01:37:41
conditions from thyroiditis to lupus to ra to Ms and we can take that protein glycosylated put it in an IV ends up in
01:37:49
our liver gets presented and our immune system realizes I shouldn't be attacking
01:37:52
this anymore and resolves it so it opens up a whole new category of Therapeutic Pathways for addressing all autoimmune
01:38:01
conditions it's a totally new modality it's a very interesting approach it'll be he studied more deeply folks will
01:38:07
take this paper and try and start to develop very specific Therapeutics for very specific autoimmune conditions
01:38:13
using this approach and hopefully over the next couple of years we see some of these things have success gain traction
01:38:18
and go to market these autoimmune diseases are typically some combination of genetic and environmental so this is
01:38:25
not attacking them on that basis it's attacking them in a different modality you know there's two ways that we
01:38:30
address autoimmune conditions today the first one is by presenting the antigen to the immune system before you develop
01:38:36
autoimmunity this is like you know when they give little bits of peanuts to kids
01:38:39
and yeah that's how you present prevent peanut allergies in most autoimmune conditions we're past that point the
01:38:45
immune system has already developed T cells and antibodies to go and attack so that doesn't work the second way is
01:38:51
immune suppression and that's terrible globally suppressing meaning on the whole body turning off the immune system
01:38:56
is not healthy in a lot of ways and that's the current you know kind of Best in Class
01:39:01
so this is a new approach which is we can actually re-regulate the immune system to not attack itself to not
01:39:08
attack our own proteins by introducing that protein with with what's called glycosylation getting it into the liver
01:39:14
and boom this magic starts to happen and we'll see what the side effects are as they start to try this on humans we
01:39:21
see we'll see what conditions are more effective than others uh sorry for the stupid basic question but how is the uh
01:39:28
how is it different when we put these into say like uh you said these were monkeys or chimpanzees so how are their
01:39:33
anuses different than Uranus what sorry anyway let's keep going here great science corner I'm laughing at how
01:39:43
contorted that you go you punch it up to these workshops let me work on punching it up we'll try
01:39:52
to get a better Uranus anyway it's super cool autoimmune conditions the world's getting better the tournament
01:40:00
refers to an approach to a therapeutic and this modality is a new modality so it's a super exciting new kind of
01:40:07
universe to be explored now on how we might be able to treat autoimmune conditions ranging from time okay let me
01:40:12
try hold on yeah that's on the science one free bird what part of the body do you think is going
01:40:19
to be most impacted by these discoveries now the immune system no no no that's not
01:40:24
good okay here we go you guys are just so just tell them about science okay all right here we go okay here we
01:40:33
go Freeburg I thought the only solution to Ms was uh fecal transplantation through Uranus yeah
01:40:46
uh a misdirection there with the fecal transplant and then we came back to get that done we're gonna wrap here thanks
01:40:55
to everybody who came uh Brian Armstrong also did a great job Elon did a great job
01:41:00
thanks to everybody who showed up for us and if you want to watch all the talks all the talks are being released
01:41:05
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01:41:21
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01:41:27
that for the Sultan of Science and the world's greatest conference producer the dictator in the arena making it happen
01:41:35
and four [Music] favorite bestie David sax moderate we'll see you next time bye bye
01:41:44
we'll let your winners ride Rain Man David attack [Music] besties [Music] oh [Music]