00:00:00
look at John Quincy Adams here yeah hey hey Quincy how you doing that hair look look at that hair John
00:00:07
Quincy Adams needed a wig to achieve this look he did he did I did it all natural I mean it's a lot it's a it's a
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look you're like some movie star from the 1970s you're still working do me a favor pull up a picture of Grayden
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Carter for a second and then put that side by side with sax let's see just say I zoom in on that facts this is where
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you're headed by the way you're headed to Crazy Town this is where you're headed you can just
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poof it out on the sides and you get a little woof swoop on the top this is where you're headed eccentric
00:00:37
Stacks pull up a picture of Steve bannon's hair he's a wise Statesman I think this is what happens when you get
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too close to power you get more eccentric with your hair so like too much power equals crazy hair now look
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this is my theory great and Carter too much power Vanity Fair he went hair crazy now you look at Bannon you get me
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a Bannon photo here you start to see they go longer they go wafty they just they get volume and they're just like
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[ __ ] it I'm just I'm not gonna cut it I'm gonna let it go wild and of course the the old I mean he's the penultimate
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but you look at Trump's hair this is where it gets truly crazy this is where you're headed sax
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you keep getting this close to power this is where your hair is headed I'm so glad this podcast never broke up because
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where would we get this amazing Insight from jaycal if not for keeping this all together this makes it all worth it it's
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very true it is true you get like eccentric and you get crazy hair this is men get too close to power
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and the hair gets wild unchecked Power unchecked hair we had a good meeting last night we had an all-in-summit
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meeting let's see Freeburg give me a call let's catch up on this stuff he's like oh I'm in the bath right now with
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my candles and I'm like yeah okay whatever that's cool he's like no no and he presses the video button and then I'm
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exposed I kid you not to the most bubbles I've ever seen in a bubble bath I like
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bubbles and he is peeking his head out from Over the bubbles and he's like look which exactly and then he flips he flips
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the camera around and I got his toes pointing out and I kid you not there's six candles around the bathtub I'm like
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this is like the prince of panic attacks he had to come down for his phone call with me so now when he has a phone call
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with me it's so intense and everything's getting so intense with the summit that
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he has to do self-care yeah that could be emotional emotionally ready he's self-caring your wife wasn't anywhere to
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be found in the bathtub with the candles I take a bath every night who are you Romancing yourself or what yeah I think
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he was romantic the spreadsheet with the prophet life of all in Summit I have about 18 minutes of self-care every day
00:02:42
18 seconds a minute all right let's get the show started in three two let your winners
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[Music] we open source it to the fans and they've just gone crazy [Music] hey everybody Welcome to episode
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130 maybe of the all in podcast we're still here cooking with oil with me of course the dictator himself chamath Pali
00:03:15
hopatia Prince of panic attack Sultan of science the queen of quinoa David Friedberg and the power broker himself
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the emperor the Emperor of his new Republic anybody have any interest anything going
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on interesting this week any interesting moments for people on the national stage
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no okay well let's get right into the docket first around the docket Ron DeSantis Governor Ron DeSantis announced
00:03:46
his bid on the internet yeah on something called Twitter spaces and it looks like almost 10 million viewers
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have seen it so far across all the different spaces and Donald Trump wasn't too pleased he said
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Rob my big red button is bigger better stronger and it's working truth because when Elon fired up the Twitter spaces it
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went to 650 000 viewers in under five minutes and then blew up everybody's phones my phone was melting I could have
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cooked an egg on the back of it the Twitter app crashed so many times but then sax with his meager following of a
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half million people or something then restarted the stream and so 15 minutes of technical snafus
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were relieved and then there was a announcement and I'll let you take it from their sex
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you want me to take you behind the scenes I guess behind the scenes how did it come together sex
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oh yeah even better yeah the way it came together is I think the DeSantis team were interested in potentially you know
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doing something different for their announcement he also did an appearance on Fox News afterwards and I think he
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did a town hall but I think they saw an opportunity to break new ground here in terms of presidential announcements by
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doing it on Twitter spaces and so the DeSantis campaign connected with Twitter and Elon and I agreed to kind of co-host
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the space and with him and he did his announcement now you're right we had about 15 minutes of technical
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difficulties because the interest was so intense at the time the the room crashed
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it had over 700 000 people in it and there were it crashed because so many people were trying to get in it I think
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there was well over a million people trying to get in it so you normally don't have this kind of Interest I think
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this is by far the biggest Twitter space the engineers there told me that the previous order of magnitude was more
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like a hundred thousand not a million and then you combine that with the fact that elon's account has over 100 million
00:05:47
followers and that basically led to a new level of scale and you guys understand that when you get to a new
00:05:52
level of scale as a platform there's always going to be some yeah some challenges so hey event the engineers
00:05:58
were there trying to figure out how do we you know solve this and we realized the simplest thing to do would be to
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restart the room on my account instead of elon's and then Elon joins the co-host and we brought to Santa sin and
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it all worked perfectly at that point the audio was pressed we had over 300 000 people in the room there was also
00:06:16
another room that had been set up by Mario nawal who's like a big Twitter spaces host and he had hundreds of
00:06:24
thousands of people on there and then he had live commentary from people he invited and so this ability to Fork
00:06:30
Twitter spaces into many different rooms and each room gets to decide who they want to be their hosts and their
00:06:36
speakers allows you to do live commentary and in a way that you could never have done before so it was really
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Innovative I think super Innovative and for people who don't know Twitter spaces
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was really a rushed job at Twitter they did that in reaction to clubhouse they it's it's still basically a beta product
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that predates Elon being there and it doesn't have yet the infrastructure or scale of the code base
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I don't think like YouTube and twitch do which you know have been working on this
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problem for I don't know 15 years maybe the live products observations yeah go ahead
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the first is I thought DeSantis did a really good job just rolling with the punches
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okay because I think whether he wins you're not going to look back on this moment as the defining moment of the
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campaign nor whether he loses will you say that this was where it was it all the beginning of the
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end instead what this was was a really seminal moment I think in further divorcing
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ourselves away from the mainstream media and you know that it was that important
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because Biden tried to troll the whole thing Nick you can show this link this link works and I actually think
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this is a really terrible idea by the Biden team because never this basically acknowledges how important the moment
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was and the fact that even the president of the United States was grinding the link
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and couldn't get in because there was so much interest is really important and I think what it
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speaks to is the fact that we are now showing credibly that you don't need to listen to four channels to shape your
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Consciousness and you can just go straight to the source and what Zach said is right if you now have
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a moderated forum that then gets put out to 50 or 60 different Twitter spaces all at the same
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time Framing and reframing it gives people a chance to come to their own conclusion in a totally
00:08:43
unique way so I think it was really really an important moment for citizen journalism and podcasting and
00:08:55
audio formats and all of the things that I think we've been a small part of but I
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think that it's really must have tilted the mainstream media and it tilted The Establishment and you can see that in
00:09:07
Biden's tweet yeah I'm going direct yeah so that was the first thing second thing
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I think DeSantis did a really decent job enrolling with the whole thing and being
00:09:16
super cool and just being committed to the process and I think that says a lot about him as well which was again it's a
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question mark and I've said this before the Big Money guys got close and then took a step back so
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this could be a very good moment for them to reevaluate because I thought he did a very good job so I agree so you
00:09:35
know I was there I was live I was seeing what was happening behind the scenes when DeSantis came on after we you know
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had 15 minutes of technical difficulties there wasn't a hint of anger there wasn't a trace of irritation there
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wasn't any freaking out that we were potentially ruining his presidential announcement the guy was completely calm
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and more than that he was in good spirits I mean if you listen to the recording you know he's happy he's tone was great
00:10:01
his tone was really good I mean and then of course it was very substantive he spoke in a very articulate way about all
00:10:07
the issues uh when Congressman Thomas Massey came on to make a a commenter question he was telling a kind of
00:10:13
amusing anecdote about when they were in Congress together and Massey was one of
00:10:18
the only members of Congress who uh had a Tesla but he comes from Kentucky so I think his license plate said Kentucky
00:10:25
coal on it KY Cole so anyway you know the guy was in good spirits and so I think it does say a lot about what he
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would be like as a president cool Under Fire doesn't get thrown off his game you
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know again not an angry guy you know which I think will be a real contrast with let's say some of the other people
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in the race you know Trump was sort of angrily truthing during the whole thing you know so I think it was a pretty
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strong improving the act of posting to truth social exactly so the contrast between the personalities could not have
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been stronger now to the other point the charmath about the traditional media you're right about what they're saying
00:11:03
if you look at that the headlines this morning from traditional media Outlets that really started within minutes of
00:11:10
the the technical difficulties the New York Times called the announcement of fiasco NBC News called it a meltdown
00:11:17
Politico called it horrendous and you know why I mean if you you know what I call that winning
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I mean if they are losing their cool that's clearly they feel threatened by the fact that a major presidential
00:11:32
candidate chose to go directly journal the Wall Street Journal headline is DeSantis looks to rebound after botch
00:11:39
Twitter announcement but again what they failed to acknowledge is and I'm not a DeSantis supporter per se I'm
00:11:43
open-minded to him but I haven't decided one way or the other but this is a guy that managed to get millions of people
00:11:49
in a nanosecond to be activated to hear what he had to say that is different than basically giving talking points and
00:11:56
having surrogates blather through fox or CNBC or CNN to hundreds of thousands of
00:12:03
people this is a really important moment I think what happened okay we got all the positive just to finish that point
00:12:08
so if this was a political rally a traditional political rally that had started 20 minutes late
00:12:13
would anybody have said that was a disaster that happens all the time no it was the crashing that made people be
00:12:19
like oh my phone crashed you know I was using the app I got crashed out of the app but I my phone did not crash so no
00:12:25
yeah that's what I'm saying the app crashed a couple of times because yeah your phone did not crash yeah but anyway
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look this was at the end of the day this was a an event that started 20 minutes late once we started it on my Twitter
00:12:36
account in my Twitter space it worked perfectly there was no problem and that's the recording that you can go on
00:12:41
Twitter now and listen to we had about 300 000 people contemporaneously in my Twitter space I think Mario had a couple
00:12:48
hundred thousand but if you look at the numbers today there's already 10 million
00:12:52
views for this thing three to ten million on the replay and that's what you have to look is replay
00:12:59
because the world has moved to asynchronous like this was three o'clock in the afternoon in
00:13:05
Silicon Valley and six o'clock in the afternoon in the afternoon so you have a Hysterical overreaction by the
00:13:13
traditional media simply don't like a that Elon is disremediating them by letting the politicians go direct and
00:13:19
then B he's restored the platform being a free speech platform so they jumped on
00:13:23
this the first second they could to try and portray as a disaster but you know there was an article in political this
00:13:29
this morning and they were asking voters in Iowa what they think about it and they're like huh what you know it's not
00:13:35
it's an elite thing that's not yeah it's not even on the radar Freeburg we heard
00:13:39
all the positive here any the constructive feedback on it or thoughts on it generally
00:13:44
now look I mean I would love to see all the political candidates engage in long-form
00:13:51
discussion like this so that an audience can really get a sense of who they are and what they
00:13:57
think in a direct way and uninterrupted way and in a deeper way sort of like the
00:14:03
conversation we all had with RFK last week and Zach did with DeSantis yesterday and I would love for
00:14:09
the voters who engage in that content to better understand the candidates rather than
00:14:15
key off of short talking points and short ads I think one of the saddest commentaries on Modern democracy is that
00:14:23
you can spend a dollar to buy a vote that all of these campaigns functionally try and raise Capital to go and do
00:14:30
advertising and that the advertising creates these little 30-second sound bites that actually change people's
00:14:36
opinions and it's a really sad it will they otherwise they wouldn't spend the money
00:14:41
and I think it's a really sad State of Affairs that we spend money to change people's
00:14:47
opinions by shortening everything to a sound bite instead of doing what maybe would have happened a long time ago you
00:14:54
know we often talk about the Town Square if you lived in a village with 60 people and someone was
00:14:59
going to run for the mayor of that Village you'd all go to the Town Square you'd hear that person have a debate
00:15:03
have a discussion you talk with them and that dialogue would inform your decision
00:15:07
about who you're going to vote for but you know with 300 million people in this country and you know short attention
00:15:13
spans and jumping around from one thing to another there aren't a lot of great forums for any of us to really engage
00:15:19
with candidates particularly on the national level and make a better informed decision hearing from that
00:15:24
person directly instead everything is about driving narrative and chopping things up and getting the sound bite and
00:15:30
driving the emotional reaction and I think one of the the greatest things that's happening right now that you know
00:15:36
could be a great benefit for this modern democracy is the sort of stuff that we've been doing on our podcast and RFK
00:15:41
coming on board like last week and what sax did with Twitter and I really hope that more
00:15:46
politicians do that and that more people engage and consume that sort of content
00:15:49
to make their decision and ignore the idiotic sound bites and the stupid 30-second ads and the nonsense that you
00:15:56
know third parties use to try and drive narrative so yeah look I mean I think that's
00:16:01
generally the positive trend that that I took away from it Jacob what do you think I have some notes for sacks I'm
00:16:06
always you know careful not to be too critical you know in the moment because I don't people will weaponize them as oh
00:16:13
Jason said this because you know it's Elon and he's team Elon or he's friends with sax
00:16:18
but I think everything said so far just tweak the media a great start the thing that I
00:16:25
think was there were probably one or two misses here that I think you can build on sax since you were very involved in
00:16:30
the campaign with DeSantis I think it wasn't the free-for-all that Elon had said it would have been right
00:16:39
so he pitched it as like hey this is going to be uncensored and everybody's gonna get to ask hard questions and that
00:16:45
didn't happen and you know I think that is in stark contrast to what Trump did because I was doing the media analysis
00:16:52
of this and so I think the follow-up needs to be where he actually takes questions not from fans not from people
00:16:58
who are already voting for him but really you know a little bit more of the cantankerous people
00:17:03
the people who maybe are voting for Trump the people who are maybe in the Biden camp and that's what was the
00:17:10
master stroke of Trump's CNN Town Hall he went into the you know the Lions Den or what most people perceived was going
00:17:17
to be the Lions then and he took on all comers he fought hard and that one was I
00:17:23
think a bigger win I don't think DeSantis that was not a presidential announcement so just to be clear yes
00:17:28
this was a launch event declaring that he's running so in that context yeah so you want to compare it to what these
00:17:35
things usually are which is a guy standing at a Podium yes in front of his supporters compared to that this was
00:17:41
much more interesting Dynamic and engaging I agree with you that at some point he's going to step into the lion's
00:17:46
den do a town hall on a place like CNN and I think he probably will in fact I think he did yeah I think he did a town
00:17:52
hall we're here I think he actually did a town all in Florida later that night so yeah I agree with you it just wasn't
00:17:58
that kind of event now to the point about involving more people you know one of the things I learned hosting this
00:18:04
thing is there were literally thousands of people raising their hands yes you can't store I was scrolling through this
00:18:09
in real time in the app I wanted to call them more people but it was just there was no way to do it this is something at
00:18:16
scale they need to add to the interface which is maybe pre-populating a list sorting it by the number of followers
00:18:22
whatever and this is my second point about this so I agree with you as an announcement this was Lightspeed ahead
00:18:27
as like a full court you know like sharp elbow thing it didn't hit that note but
00:18:31
it can that's what I think the follow-up you know having if DeSantis wants to come here and have like a two-hour
00:18:36
discussion we kind of get into it a little more that would be I think really good for him because I think he's got
00:18:41
the potential to win over moderates and I don't think this one over moderates didn't win over anybody who was in you
00:18:47
know the left or in the you know moderate left and that was one of the things I noticed is my second point
00:18:52
about it is what a great group of listeners if you look at who showed up to listen
00:18:59
Bill Ackman Michael Dell no you Source by your followers so but I think it sorted by the number of uh
00:19:08
followers they have it's certainly by your followers who then have the most followers so you're gonna see it's a bit
00:19:12
of a echo chamber that way okay okay sure but they were still very prominent people in them because prominent people
00:19:21
follow you okay but they weren't coming to follow me they were coming to listen to this my
00:19:25
point is still the same Bill Ackman were coming so but that's why you saw them because they're your followers I we all
00:19:31
understand that they still showed up for this in the middle of the day I think that is really interesting and that yeah
00:19:36
yeah yeah that's yeah that's what my point is it's really interesting that powerful people showed up for it full
00:19:41
stop sucks I have a question for you sorry Jason whenever you're done oh yeah and then I just had a couple of other
00:19:45
ones Elon was a bit underutilized in this format and that's you know a challenge when you
00:19:51
have Elon in the room because people want to ask Elon questions so this is something I think he's going to have to
00:19:56
you know contend with people wanted to hear Elon asked questions than the people who are were asking the questions
00:20:02
wanted to ask you a long question so you do get like a little bit of how to utilize Elon in this format I
00:20:08
heard a lot of back channel from important people like I wanted to Elon ask a question or maybe the two of them
00:20:13
get into it so for a follow-up one getting some people you know who maybe don't traditionally get to ask questions
00:20:20
because let's face it in traditional media the only people get to ask questions are these anchors on news
00:20:25
channels I want to hear Michael Dowell or Bill Ackman ask a question that's the opportunity in Twitter spaces maybe
00:20:30
letting Elon ask a tough question then a follow-up or you know like we did here with RFK I would have been totally open
00:20:35
to that I just couldn't manage it there was just so many people in the room I didn't see Ackman actually I mean I
00:20:40
totally believe he was there but I didn't see it the only criticism people had of use access you're a major donor
00:20:44
and you stack the deck was the most cynical version of it with like five people who were just super effusive but
00:20:50
this is his launch party so I think in that context I would have called on Bill Ackman if
00:20:55
I'd known he wanted to speak but I couldn't see whether he raised his hand or not no I didn't see him in the room
00:21:00
so what am I supposed to do call on Bill Ackman and he's like uh guys I don't want to talk I don't want to put him in
00:21:04
that spot can we get him on this pod so we can Grill them about fortune and fiscal policy
00:21:09
who Bill Ackman I don't know look I don't speak for the campaign but I can put in the requests
00:21:14
you put 150 dimes in get them on hold on can you can you tell us the actual Tick
00:21:19
Tock of how this whole thing came to be the campaign within the last week or two
00:21:23
had the idea of should we explore doing it on Twitter spaces and I think they were open to doing it and
00:21:31
sax didn't know about it when I put it in our group chat Zach was like he is yeah you found out about it
00:21:36
okay all right I thought you didn't good no sometimes Elon will just tweet something without telling anybody or to
00:21:42
just go directly no I mean I I help look the the census people reached out to Elon and Twitter they also reached out
00:21:48
to me about it and we discussed it and they were excited breaking the ground he's something different and I think
00:21:53
they deserve credit for that can I ask a follow-up question just on the DeSantis
00:21:57
thing himself because you've seen him up close do you know why Schwartzman Griffin Peter fry
00:22:04
stepped in took a half step back and do you know what it's going to take for them to just lean in and just make this
00:22:09
effect to complete so that he's really well financed to be Trump I don't know what their issues are but I did see I I
00:22:15
don't know this what's his name Peter fry or whatever yeah yeah I don't I don't know him but I did see a press
00:22:20
article and he was referencing book Bannings so that to me just showed that he was buying into some you know
00:22:27
crazy left-wing kind of narrative that was the best part of that I asked this answer about that so by the way for
00:22:33
people by the way that was the one thing that was new news uh for a lot of people
00:22:36
was the book Banning can you explain the issue and the spin and the clarification
00:22:42
on book Banning in Florida it's very simple they haven't banned any books in Florida but the question is what books
00:22:49
are taught in the curriculum and what's in the school library and some of these books were positively pornographic I
00:22:56
mean they had someone DeSantis have an event where somebody was actually reading what was in these books and the
00:23:03
mere reading of what was in the books actually got labeled on social media by the algorithms so there was a lot of
00:23:09
stuff that's just not appropriate for kids no one is restricting your ability to buy or read whatever books you want
00:23:15
in the State of Florida is ridiculous there's a legitimate question about what's in the curriculum by the way I
00:23:22
remember when we had debates on campus about this is back a long time ago like the late 80s early 90s when they were
00:23:28
throwing dead white males out of the curriculum you know Plato Aristotle Shakespeare people like that the people
00:23:34
on the right who were opposing that never made the argument that this was censorship everybody understands that
00:23:40
when you're dealing with a curriculum you have to make choices you can't teach everything so the question is what are
00:23:46
you going to limit it to God I think that when people actually dug into some of these books they realized that
00:23:52
they're not appropriate so any of that his answer was along those lines that you know you should go listen to it for
00:23:58
yourself but I think that he did address that issue I think he's kind of exposed
00:24:03
it as a you know left-wing media narrative and I think he deconstructed it and I think that was helpful because
00:24:10
I think there are a lot of centrists who all they've heard about DeSantis is that
00:24:14
he's Banning books or you know or the Disney issue which we also asked them about and you recovered that I think so
00:24:22
um yeah the yeah we talked about some of these controversies the issue here just
00:24:26
to summarize it is the left is framing the Banning quote unquote but just the not
00:24:34
inclusion of certain books which are graphic that have sex in them from certain age groups in schools as part of
00:24:41
a curriculum so they're saying these books are banned in Florida the more accurate way to say it is these books
00:24:47
are not being used in curriculum you know for these age groups parents if they want to buy them can buy them and
00:24:55
then can read them so this is where this conversation is kind of breaking down and I think is a complete waste of time
00:25:00
all parents want control over at what age or what stuff their kids are exposed to and so there is a thoughtful
00:25:07
discussion to be had there and maybe the discussion is this is something your parents should decide right well yeah of
00:25:12
course but it's not even a conversation it's a hoax it's a it's a fake media narrative they're trying to pin on him
00:25:17
and DeSantis has been the the subject and victim of these types of fake median narratives which are deliberate the
00:25:23
media's not trying to have a conversation they're trying to disqualify the guy and they did this
00:25:27
this goes all the way back to covid when he opposed lockdowns and kept schools open and they called him death santis so
00:25:35
the media has had it in it for this guy since the beginning because he refuses to go along with their narratives on
00:25:41
things this is the same reason that he hate Elon is Elon is defying their narrative control so you put you put
00:25:47
these two guys together okay hold on even before the technical difficult let's be clear the media's heads were
00:25:53
exploding that DeSantis and Elon were going to be in the room together look at the Vanity Fair article the headline was
00:25:59
DeSantis announcing with Elon because David Duke wasn't available okay the Atlantic was saying that this whole uh
00:26:05
Twitter space was a hate group I mean literally so these people were losing their minds before
00:26:12
we even got into the technical difficulties and then they pounced on that that there was a 20-minute delay
00:26:17
they pounced on that as some sort of fiasco which it wasn't will DeSantis cut spending and cut our taxes
00:26:25
well we cut spending we didn't get into that so have you ever had a conversation
00:26:29
with him about balancing the budget and federal debt do you know his position on
00:26:33
cutting like uh long-term capital gains and taxes let me give you the elevator pitch I
00:26:40
mean the nutshell for DeSantis is he calls it the Florida blueprint he's saying look at what we've done in
00:26:44
Florida look at what we've achieved at Florida let's take Florida Nationwide Florida has had a great economy Florida
00:26:50
Tax budget zero time because I don't that's a state that's because if you have zero talks you have my book oh
00:27:00
the dictator has spoken if people want to look up this issue there's a book called genderqueer and there's a story
00:27:06
about it in the New York Times and it's um you know it's a graphic novel about coming of age for a non-binary person
00:27:12
which is fine great but it's it's very graphic it's a graphic graphic novel it has explicit
00:27:18
scenes and these kind of books most parents would say I would like to wait on cutting my taxes to zero okay there you
00:27:26
go it's called uh just to write it come on guys overall great job and yeah get him on the Pod here and we'll have a
00:27:35
great discussion with him yes great job great job please invite him to to our paw to I think you know we each have our
00:27:42
own issues or else we're just gonna go with the other Republican candidates Nikki history and I'm proud of you we're
00:27:48
also voting for yes I don't know I mean all right well thanks guys I think it'd be great to get Nikki Haley
00:27:54
that's a no that's a no just say no no no I'm going to put in the ass to this answers for sure all right well that's
00:28:00
great yeah it would be great people want to hear for more folks so a lot of other news going on I think
00:28:07
a good place for us to go to next maybe do we want to do the debt ceiling defense spending or in videos let's go
00:28:15
together in my opinion okay great we'll go with the Sultan of science U.S debt ceiling
00:28:20
is at 31.4 trillion currently uh Treasury Department recently won the federal government could be unable to
00:28:27
pay its bills as soon as June 1st Fitch put the US credit rating which is the highest rank of Triple A on negative
00:28:34
watch so negative watch means it's trending towards bad and that it's imminent that they might lower it due to
00:28:42
this debt limit deadline it seems like we're not making much progress every couple of days we seem to swing one way
00:28:49
or the other the stock market has kind of shrugged it off and the last time the U.S credit was downgraded was in 2011
00:28:57
but we avoided that chamoth what's going on here what do you think the eventual outcome in is there a
00:29:03
chance that these Knuckleheads who represent us are going to default and cause chaos or do you think this is all
00:29:11
Kabuki theater and we're going to wind up in the same place which is they raise it and make some modest concessions
00:29:16
August 5th 2011. the s p downgraded the United States from AAA to double A plus you know what
00:29:26
happened absolutely [ __ ] nothing okay so I do think that this is another opportunity for
00:29:35
the Little Red Riding hoods to get their panties in a bunch but these downgrades don't mean much
00:29:42
difference talking about I think that these third-party credit rating agencies are not particularly
00:29:55
that accurate and sophisticated they don't know anything that you don't know they're not getting access to Moody's
00:30:03
gave svbn a rating the week before it went into receivership this is my exact point well done
00:30:10
none of these because you know what they're doing these companies are in the business of putting a letter
00:30:14
on a document and then selling access to that document so if you're going to trust these guys to know what they're
00:30:22
saying either right or wrong independent of what side you are Outsourcing your decision making to the wrong body so
00:30:30
whether it's s p Fitch or Moody's I would tell you to ignore it and come to your own conclusion I think
00:30:37
that this budget ceiling thing is happening now every couple of years and it seems like the real thing we
00:30:45
should be talking about is whether Biden's going to use the 14th Amendment and just Ram a budget through
00:30:49
and I think that that's yeah so under under the 14th Amendment the president of the United States has in their
00:30:56
discretion the ability to make sure that the United States can pay their debts and that wasn't necessarily thought of
00:31:02
as a way to work around the debt ceiling impasse but because Congress refuses to pass any
00:31:08
structural laws that allow the budget to ebb and flow with tax receipts we get in caught in this
00:31:15
situation again roughly every handful of years so what Biden could do is he could
00:31:20
say the 14th Amendment gives me the right I'm going to pass a budget via executive order
00:31:26
from a game theory perspective what that does is it forces Republicans to sue Biden take him to the Supreme Court and
00:31:33
say this is unconstitutional the problem with that is that that probably really does tank the economy in
00:31:40
the way that it creates enough uncertainty where Capital markets freeze up and liquidity just absolutely goes
00:31:47
away and again liquidity has been shrinking for the last 18 months anyways so it'd get even worse so I think the
00:31:53
brinksmanship right now between McCarthy and Biden is basically that Veiled Threat if Biden effectively isn't going
00:31:59
to get something done I think he's going to test the 14th Amendment now if the 14th Amendment turns out to be a
00:32:05
reasonable way in order to pass a budget the good news is not just for Biden but for any future
00:32:10
president including Republican presidents will not have to be held hostage by Congress
00:32:16
they will in the 11th Hour be able to pass a budget that works the implications of that though is that now
00:32:21
you will not get consensus and whatever's happening in that moment you'll see more of so if you have
00:32:28
a spending president they'll just continue to spend and if you have an austerity president they'll continue to
00:32:33
cut and that'll have implications on either side you think this is over issues the 14th Amendment or do you
00:32:40
think it's a valid use of it no I it's not going to fly I mean it's true that the
00:32:45
14th amendment has some language about the full faith and credit the U.S shall not be compromised uh however it's never
00:32:52
been tested or tried so no one exactly knows what it means progressives are now saying that the language means that
00:32:59
Biden could just keep spending without the debt limit being raised but find himself through cold water on this he
00:33:05
said that he didn't think he had that Authority and even Lawrence O'Donnell the other night who's a big Progressive
00:33:11
on the media he was saying that the Dems were going to take this tack they needed
00:33:15
to do it months ago before they started negotiating on a debt limit increase so it's too late now in other words if
00:33:21
you're going to take that position why would you have negotiated that you're you the president are effectively
00:33:25
conceding you don't have that Authority when you start negotiating so I think it's too late to invoke the 14th
00:33:31
Amendment they're going to have to raise the debt ceiling that being said I think they're
00:33:34
going to be able to Reuters had a report this morning that they're only 70 72 billion apart now in their positions
00:33:41
which is a relatively small amount so my guess is they're gonna they're gonna work this out
00:33:46
now what should the fate of the debt limit be moving forward I mean the thing that's so stupid about our budget
00:33:52
process is we spend the money and then argue about whether we're going to pay the credit card bill the way that the
00:33:57
debt limit should work is you raise the debt before you spend it Congress should have to vote first on
00:34:05
whether they want a deficit or debt spend then you decide how much you're going to spend so this thing this vote
00:34:11
needs to be moved up before they spend it and I think if you did that it'd be a lot harder for the politicians to spend
00:34:16
money because you know if you had an up or down vote very early on saying should we even be
00:34:21
in deficit I think a lot of people would say no we're not we're not in a war so why why would you deficit spend if we
00:34:28
bring any thoughts in the debt ceiling if not we'll go on to the government accountability vis-a-vis
00:34:33
the defense spending I mean look we're running a two trillion dollar a year deficit and it's forecast to continue to
00:34:40
be at that level for several years and it's going to take pretty radical changes in how we tax and spend
00:34:50
to make up that Gap so you know this is a problem that is going to continue and repeat
00:34:58
and it does beg the question you know would you want to buy bonds from an entity that's
00:35:05
generating 4 trillion in revenue and spending Six Trillion and has a plan to do that for the foreseeable future and
00:35:11
it's only you know seeing its economy or its underlying Revenue base grow by two
00:35:16
percent a year it seems like you know that would be a very hard startup to fund and it would be a very difficult growth
00:35:24
investment to make particularly in an environment like this so I'm just pointing out that this is a becoming a
00:35:30
more kind of systemically risky situation for the U.S that you know we spend the way we do and
00:35:38
we have to keep coming back to having these debates about it's appropriate or not and now they've narrowed down
00:35:43
the way that the Republicans seem to be kind of going about getting this done this deal done is they're only focusing
00:35:48
on the you know roughly 15 percent of the overall federal budget and they're saying we'll kind of make some tweaks in
00:35:54
in that in that little range there and save some save some pennies save some nickels but uh we've got a much more
00:36:01
fundamental problem to deal with which is how do we stop running these deficits and running the data but I mean yeah I'm
00:36:08
gonna sound like a friggin no I think you're right at some point yeah the inflation is here and the crowding out
00:36:15
of private investment and private borrowing is now occurring because the government borrowing is so big I mean
00:36:21
our our treasury our government debt of what 32 trillion that has to be financed
00:36:25
somehow and all that money is going to finance government instead of being put to other uses so I think that the
00:36:31
downside's already here you can't run two trillion dollar deficits every year that's unsustainable now I think that
00:36:38
you guys referenced what happened in 2011. that's worth this discussing for a second because I actually think that
00:36:43
what was agreed to in 2011 was excellent Obama and the republicans in Congress agreed to a thing called the sequester
00:36:50
where they agreed that they would freeze both defense and non-defense discretionary spending until they could
00:36:58
get their act together and agree on what the budget should look like and so the theory was the Republicans agreed to the
00:37:04
pain of freezing defense Democrats agree to the pain of freezing non-entitlement
00:37:10
social spending and that's how the deal was cut I actually think that made a lot
00:37:14
of sense and I think we should have kept operating under the sequester until we got to a balanced budget but the reason
00:37:20
that broke quite frankly is because of the lobbying power of the military industrial complex is so great in both
00:37:26
the Republican and Democratic parties that they basically wanted the sequester overseas keep raising the defense budget
00:37:33
I think it's just that there's never been a degree of accountability for the spending that's being done because of
00:37:37
this assumption that we'll always be able to pay our debt and we'll always be able to take on more debt and I think
00:37:43
that you see the other conversation the other topic that we were going to talk about was
00:37:49
this lack of accountability and defense spending that you know we should play the Jon Stewart clip
00:37:55
you know where I think who does he interview the under Secretary of Defense or something what is her title deputy
00:38:01
secretary of defense Kathleen Hicks was discussing in the defense budget when I see a state department get a certain
00:38:09
amount of money and a military budget be 10 times that and I see a struggle within government to get people like
00:38:15
more basic Services I mean we got out of 20 years of war and the Pentagon got a 50 billion dollar raise like that's
00:38:22
shocking to me now I may not understand exactly the ins and outs and and the incredible magic of an audit but I'm a
00:38:30
human being who lives on the earth and can't figure out how 850 billion dollars to a department means that the rank and
00:38:39
file still have to be on food stamps like to me that's [ __ ] corruption I'm sorry
00:38:45
and then there was a story that came out this week according to Bloomberg the government accountability office
00:38:51
disclosed that the Pentagon is currently unable to account for hundreds of thousands of spare parts for for the
00:38:56
F-35 Jets the pentagon's never passed pentagon's never passed an audit and it's accepted and it's acceptable in the
00:39:03
same way that it's acceptable to never balance the budget to always spend and give everyone what they want and to find
00:39:12
ourselves in you know this kind of late stage problem where we've gotten away with it for so long that both of those
00:39:19
factors whether it's the the downgrade on the rating whether it's the fact that we end up in these battles
00:39:25
over whether to raise the debt ceiling every couple of years or whether we can't pass an audit all of
00:39:31
these factors are symptoms of the same underlying problem which is that there is no accountability for you know how we
00:39:38
operate the you know the kind of fiscal condition of the the federal government you know the
00:39:43
other thing it leads to is all these optional Wars so let me give you an example so all of these wars are always
00:39:49
they're all free yeah they're all off book so take Ukraine we've appropriated what 130 billion that's not part of the
00:39:55
defense budget we have it or a billion in the defense budget but then we just stacked the 100 billion or so for
00:40:00
Ukraine on top of that and it's off book now if we said the reason we're funding
00:40:05
Ukraine is because it improves the National Defense of the United States why wouldn't that just come out of the
00:40:09
defense budget if you force people to make actual choices actual decisions and they could say okay we could spend 100
00:40:16
billion on Ukraine or we could spend 100 billion on stockpiling tanks or f-35s or
00:40:22
whatever for the United States now you actually Force some prioritization decisions but because the wars are
00:40:28
always off book they're just additive you just tack them on and we did that within Afghanistan we
00:40:33
did that in Iraq but we spent something like eight trillion dollars and that was
00:40:37
just added to the national debt yeah we can't afford these anymore it's becoming clear to everybody that there
00:40:42
has to be some accountability and chamoth I guess is it seems like there's a couple of unpopular stances to take
00:40:49
when you're running for office one of them is social security retirement age as we saw it in other countries like
00:40:54
France where people are arguing over 62 64 years old whatever it is yeah and so these entitlements
00:41:01
job requirements if you want to get unemployment and then of course defense spending you seem Un-American if you
00:41:07
don't want to take care of old people you seem un-American and you know week if you don't want to support the
00:41:14
government is there a path towards celebrating an administrator as CEO an executive who
00:41:22
tells honest truth to the American people which is hey we we've been on a binge we've been going on vacation
00:41:28
nobody's looking at their the bills and we need to have a staycation we need to cut costs we need some austerity here is
00:41:34
there a path for somebody Ron DeSantis Chris Christie RFK whoever it is to win over the American public to win over
00:41:43
moderates with an austerity and they balance the budget message or is it just too unpopular to even bring
00:41:49
that up I just think that you guys don't psychologically understand how to get what you want
00:41:56
I think the best way to get what you want which I would want too which is a healthy economy where there's
00:42:03
accountability for spending is to not look at expenses and all of this talk is always about
00:42:11
expenses but to look at revenue and limit Revenue more drastically and I think the best way to limit Revenue
00:42:19
dramatically at the federal and state level is to just minimize taxation as much as possible
00:42:25
and I think that is something that Democrats and Republicans have a hard time fighting nobody wants to raise
00:42:31
their hand and say I want new taxes nobody says that right and I think that if you attach
00:42:37
that to some sort of spending guidelines like what David says with a sensible foreign policy you just end up spending
00:42:44
a lot less you want to fight a foreign war okay great well you know what it's part of the existing budget let's go
00:42:49
figure out why we want to do it we want to have more accountability in defense spending okay well look the defense
00:42:55
budget is a half of what it used to be because we just have half the revenue I think that if you start to go and talk
00:43:01
about austerity and cutting Social Security and health care benefits it's literally a non-starter people close
00:43:07
their eyes they plug their ears and you get nowhere now separately I think the step even
00:43:13
before you look at taxation so minimizing government revenue is to figure out how to refinance so if you're
00:43:20
a homeowner and you got a mortgage in the 80s you were paying 12 14 15 16 if when rates kept going down you or the
00:43:30
people around you didn't have the common sense to refinance that that was negligence
00:43:36
similarly we're in a position today to refinance our debt wall and push out these maturities past 100 plus years we
00:43:44
are the only country that has a viable stable economy that looks like it can still continue to thrive at scale take
00:43:52
advantage of that you lose Nothing by giving us the optionality generating some Hundred Year debt refinancing a
00:43:59
bunch of this short-term stuff and then second inflation helps us and it helps us because it allows us to
00:44:06
inflate the value of these dollars that allows us to pay off our short-term maturity so
00:44:11
these are two practical simple things that are uncontroversial that should happen today
00:44:17
and then separately I think you need to look at minimizing Revenue and then you can cut expenses but if you
00:44:24
flip them around I'm just telling you it's not like I want any of this to happen but I'm telling you nothing will
00:44:30
change and you guys will still be crying wolf in five years it'll still be the same it'll just be a different debt to
00:44:35
GDP number that gives you anxiety speaking of anxiety free break your response I don't agree I think we need
00:44:40
to balance the budget and I think that if we don't we what can you agree with financing pushing out hundred years no
00:44:47
no reducing Revenue solves the problem I think that and by the way one of the problems with
00:44:53
a democracy Chapman is that you speak about it as if everyone benefits from a tax cut
00:45:01
generally there's some disproportionate benefit to a tax cut and that's why it's
00:45:06
less likely to happen because the majority will benefit by keeping taxes high for a minority whether that's some
00:45:13
corporate minority or whether it's um wealthy individual minority and that's why I think the opposite is more likely
00:45:21
to happen which is we're more likely to see taxes go up in order to bridge the gap to continue to fund programs that
00:45:26
everyone wants to everyone wants an and they don't want an or and as a result they'll kind of continue
00:45:31
to seek Revenue because there are other places to get Revenue that don't affect me meaning it doesn't affect the
00:45:36
majority and I don't mean me personally I'm just speaking about a voter and a voter would say if there's a way to tax
00:45:41
other people for me to get the things I want they will vote Yes for that and that's ultimately what the system ends
00:45:47
up finding and I think that's what's more likely to end up happening that's awesome
00:45:53
yeah look I mean I agree with part of both of what you're saying which is I agree with Schubert that we need to
00:45:59
balance the budget there's no excuse for running peacetime deficits this large we're really going to regret this one
00:46:04
day on the other hand I agree with Jamal that if you just try to solve the problem by raising taxes the politicians
00:46:10
will just keep spending I mean you have to starve the Beast I think in order to control it at least that's been a view I
00:46:17
think for a long time you agree with your mouth on that point here's the thing you cannot solve this problem by
00:46:23
raising up to 70 tax rates like we had in the 1970s and I can prove it pull up this chart France is a good example of
00:46:30
this too so what you see in this chart here is this is federal assistance percentage of GDP
00:46:35
what I see when I eyeball this is if you were to put a regression line on that it'd be around 17 and with a plus or
00:46:41
minus of two percent and the times when you get up to 19 percent are a little bit close to 20 or when we
00:46:48
have great economic conditions or money printing so the Clinton era from was it 92 to 2000 was an economic boom and we
00:46:56
got up to almost 20 percent but we've never ever been able to get more than 20 percent of GDP and federal tax receipts
00:47:04
even during the 1970s when the top marginal rate was 70 percent doing economic activity no it curtails
00:47:14
investment in economic activity this is yeah that was recommended for hundreds of years taxation doesn't solve this
00:47:21
problem I don't disagree they shouldn't disagree I just you can only get so much
00:47:24
blood from a stone and the reality is is that when you try to tax rich people in
00:47:29
a confiscatory way they spend a lot more on lawyers and accountants to figure out
00:47:36
where they tap out you know like if you're paying 50 60 taxes like what's the incentive to go to work and if
00:47:43
you're sitting on a big nut you can just be like no you know what I'll just I'll
00:47:46
just enjoy my life a little bit more because each incremental dollar 50 60 is going to taxes and then I have to pay my
00:47:52
team and you just sort of yeah I asked a question on Twitter you know because we
00:47:57
all talked in our group chat about the the concept of passing a balanced budget amendment which would be an amendment to
00:48:02
the U.S Constitution that says you know Congress has an obligation and the the executive branch has an obligation
00:48:09
to generate a budget surplus you know every uh every year and you could have a balanced budget
00:48:16
amendment that provides certain exemptions to this like in in a year of of War for example where Congress declares an
00:48:25
emergency or declares a war and in those cases theoretically like if there's some
00:48:29
sort of emergency that we have to address and and over fund you can kind of resolve to this but man I so might
00:48:36
you know we've been we've been at War for something like two out of every three years since the Cold War ended how
00:48:42
many of those Wars sacks were voted on by Congress is the other issue you know well what happened is we did the the
00:48:49
authorization for the use of force I think goes all the way back to was it like 2001 whereas basically we declare a
00:48:55
war on terrorism in response to 9 11 and they use that authorization to go into Afghanistan which I think was
00:49:02
understandable then they use that same one to go into Iraq then they use it to go into Syria and only recently only a
00:49:09
few months ago did they actually repeal that use of force as a way to keep authorizing new Wars so they really
00:49:15
should go back to Congress for every new war but the problem is you know Freeburg
00:49:20
I agree with you that we need to have a balanced budget amendment but it's going
00:49:23
to contain a caveat or exception for war and we're just in at War all the time now sure but I think that there's ways
00:49:29
to create some mechanism that forces that issue to actually come front and center as opposed to being what you're
00:49:34
arguing which is hey it's always on the back road therefore it's always bubbling
00:49:38
over and maybe you draft it in that way but what was surprising to me was just the incredible negative sentiment I got
00:49:43
from so many people who were so deeply have this deeply held belief that the only way to support growth in our
00:49:49
economies through federal spending and that that has become the driver that has become the handicap of our country it
00:49:55
has become the handicap of our economy it has become the handicap of our people and as a result is it a handicap because
00:50:01
it means that we now have this instead of having an incentive to drive productivity through private commercial
00:50:07
and economic activity through Innovation through productivity gains through business building it's now dependent on
00:50:13
what we have now identified as a highly unaccountable system of spending and that unaccountable system of spending
00:50:19
ends up putting a lot of dollars into the pockets of cronies and the the pockets of folks that aren't actually
00:50:24
driving job growth or aren't driving productivity there are certainly programs that work but overall there's
00:50:30
no level or degree of accountability that asks the question did that program work did we spend a dollar and get more
00:50:36
more than a dollar back for what we spent there's no assessment of that whether it's a war or whether it's
00:50:41
defense spending there's always some kind of intellectual argument that's true I don't think that's true I think
00:50:46
the OMB releases report after reports saying that all of this stuff sucks and doesn't do anything
00:50:51
just nobody actions no one cares right yeah you're right you're right I don't care I think what you're saying is
00:50:56
inaccurate this is my point I think it's important to get the facts right what you are saying is not true they do do an
00:51:01
accounting that accounting sucks it shows that there's tons of ways nothing changes so now what do you want to do
00:51:06
David it's the real question what do you want to do knowing that we shouldn't spend on things that don't have a
00:51:11
positive return this is my point that's why we're now in this very difficult situation that's not happening now what
00:51:16
would you like to do well the reason it doesn't happen is because the way that politics decides things has nothing to
00:51:23
do with the merits of it it has to do with special interests debating that I agree I'm just saying
00:51:32
betrayed the country because we just keep teaching people that somehow the government's going to solve all these
00:51:36
problems when really it's just a product of special interest lobbying for things
00:51:41
and that's why we perpetuate these programs that don't work I think the best way to think about government
00:51:44
spending is that in every dollar there's probably 15 or 20 cents that actually does some
00:51:50
good there's probably 15 to 20 cents that's like on the margins break even and then the rest of it which is half of
00:51:57
it is wasted that's probably roughly accurate right you get things like tarp which turned out to be a pretty decent
00:52:04
program there were things like the doe loans that you know got things like Tesla into the marketplace right there's
00:52:10
things like the IRA today that'll delever ourselves and create a peace dividend because we won't need to fight
00:52:17
over resources and oil from other countries but the problem is that that represents
00:52:21
a minority of the dollars okay now that we know that that's true and we've known
00:52:26
that that's true for decades I guess again I'm just asking a practical question what do you guys want to do now
00:52:30
play the ball where it lies what do we do today there's a couple things you can do first of all one of the points I'd
00:52:35
make is I think you you're probably right in your assessment that 50 cents that's what you're calling wasted that
00:52:41
money does end up somewhere it ends up in someone's Pockets probably the pockets of the shareholders of some
00:52:46
contractor or the daughters of individuals or employees well there's also there's also individuals that that
00:52:53
benefit but functionally what's going on is it's a system of wealth transfer and
00:52:57
that's not necessarily bad the question is is the transfer of wealth happening to the right groups that we intend to
00:53:04
support with these social programs or is it not and I think Sax's point which I think we could all probably align on is
00:53:10
it's not and I think that's probably a set of standards for accountability that we should probably try and create but
00:53:16
where where does that where does that money end up it ends up buying homes feeding people they're going to
00:53:21
restaurants you're buying cars not like there's like a fleet of Mega yachts in America well I I guess what I'm asking
00:53:27
is where where even that leakage of 50 doesn't that just end up in the normal economy yeah it ends up supporting
00:53:32
individuals and maybe yeah so why is that so bad here is what I'll say well that's what I'm saying it is a wealth
00:53:38
transfer it is a system of wealth where it ends up in people's pockets and that that system ultimately benefits a lot of
00:53:44
people in need and a lot of people that we as a society intend to support here in the U.S I don't think it just goes to
00:53:50
poor people yes there's so much corporate welfare I mean come on it's not all just going to needy
00:53:59
people it's giving to your special interests on some level we can accept the inefficiency of government
00:54:06
I like your idea of constraining how much of a canvas they have to paint with and how many how how much revenue they
00:54:12
bring in and I think what we have to accept is that the reason this country gets bailed out is because we have
00:54:18
tremendous entrepreneurs an amazing Capital allocation system a very fluid market for building corporate
00:54:26
corporations and capitalism is so vibrant here that no matter what happens we always seem to make the next Google
00:54:33
Uber Nvidia whatever it is Airbnb and I can tell you you know I'm spending a lot
00:54:39
of time traveling meeting with people in Japan in UAE Etc they're all looking at
00:54:45
the massive entrepreneurial drive that we have in the United States to build global companies and how we do it over
00:54:51
and over and over again and the only countries that seem to be able to do this at scale you know maybe Sweden and
00:54:58
some of the nordics obviously China but other countries have not figured out how
00:55:02
to build Global corporations and and that is what bails us out every time is entrepreneurs check how the deficit's
00:55:09
getting so big that we can't bail out that way think about it we have 2 trillion in deficit every year that is
00:55:15
two Googles yeah it's an apple everywhere there's money in apple every year we have to we have to address it
00:55:21
but the point is that's bailed ourselves out historically is massive capital education and
00:55:27
Entrepreneurship I want to remind you guys what happened at the end of the 70s we had all these inflationary problems
00:55:33
we had all of these taxation problems where people thought all of a sudden 70 tax rates were going to solve the
00:55:38
problem what you guys talked about and instead the exact opposite thing happened which was the guy that got
00:55:43
elected Ronald Reagan I just want to remind you what the Electoral College was between
00:55:48
him and Jimmy Carter 489-49 like a bigger just shellacking I don't think we've seen in modern U.S
00:55:56
politics to the guy that basically said enough with this we're going to tone it all down and we're going to cut revenues
00:56:03
so I do think that people have an appetite for them and I think that people you know the debt to GDP in 1980
00:56:09
was only 30 percent so we just have a lot less driving lots of work to do we got a lot of work to do but let me say
00:56:14
this look I actually agree with what you're saying in this sense okay if you look at my simple chart of federal tax
00:56:21
receipts as percent of GDP okay the highest it's ever been in the history of the United States is 19.75 in 2000 we
00:56:30
had the.com bubble okay that's the highest ever been and we had periods of high tax rates and low tax rates it
00:56:36
never went above 20 so the simple math here is you do a forecast of what do you think GDP is going to be over the next
00:56:43
year you get independent economists to do it and you say the federal government can't spend more than 20 percent of GDP
00:56:48
because we've never extracted that we've never figured out a way to accept it's perfect
00:56:53
your logic is perfect out of the economy the logic is perfect there your aggression is so it's it's very
00:56:58
important because what your aggression says is we're actually spending a lot of energy fighting over two to three
00:57:03
hundred basis points at any given time right yeah and what we should be focusing on is more important why are we
00:57:09
doing that why are we spending so much time getting our pennies in a bunch over two to three hundred basis points and we
00:57:14
need to stop Wars increase our education system stop the wars by the way and inspire people to start companies and
00:57:20
make it easy to start companies the bil the IRA and the chips act all three the biggest components in all three bills
00:57:27
this is Biden's signature legislation is creating energy Independence for America
00:57:32
which will have an enormous peace dividend you will not fight these stupid endless Wars every single one of them
00:57:39
goes back to oil right like with the exception of it's always about resources yeah what has it never been about
00:57:45
resources in modern history well and now it's going to be chips is the modern resource Nvidia shares jumped as much as
00:57:50
30 percent after reporting huge Revenue guidance due to AI demand q1 Revenue 7.2 Bill up 19 quarter over quarter not
00:58:00
year over year quarter of a quarter Revenue beat annual assessments by more than 600 million for people who don't
00:58:07
know Nvidia is working on gpus as opposed to CPUs the graphic processing units that are being leveraged in Ai and
00:58:17
there is a massive cycle going on there's a line out the door to buy these when you see Twitter going into AI
00:58:23
Facebook Google and obviously Microsoft all the cloud infrastructure is moving from CPU to GPU yes uh Freeburg
00:58:32
well I mean I was talking with the CEO and CFO of a major data center wreath and they shared with me
00:58:40
that they're seeing more demand in the last couple of months than they've seen in the prior 10 years almost all of that
00:58:48
data center build out demand so they'll build data centers for software companies for internet companies
00:58:54
it's coming from you know GPU racks and these GPU racks are much more energy intensive much more
00:59:01
costly but it's a pretty uh kind of significant shift underway that businesses that historically didn't even
00:59:06
operate their own data centers are now building out their own data centers have their own Training
00:59:11
Systems to have their own infrastructure to be able to run AI applications and tools so it's uh it's a pretty
00:59:20
significant shift underway all of the growth that Nvidia is projecting and highlighted in this earnings report
00:59:27
yesterday is coming from their their data center line of products and it's a pretty significant I mean I don't know
00:59:33
people have said they've never seen a beat like this or never seen enough a guidance update like this of the scale
00:59:39
where I think the the street was looking for maybe a seven billion dollar guide and on revenue for this and they
00:59:45
basically came out and said they're going to guide to 11 billion next quarter which is just an insane bump
00:59:50
for a 90-day Outlook I was told from one of their major customers that they had to beg uh like get on their knees and
00:59:57
bag for thousands of gpus and like the lobbying effort he said there's a line around the corner to buy these and you
01:00:04
you need only use chat GPT or any uh stable diffusion Etc and you see how long it takes to do uh generative AI to
01:00:13
use these products it's like we're back to dial-up modems act we're literally we're waiting for a computer to give us
01:00:20
an answer when's the last time that happened that we had to sit there and wait for it to do its job and I think
01:00:26
this is the great renewal for America another amazing American company it's only three decades old it's it's best
01:00:32
years it's best decades are in front of it obviously this is going to be a massive Boon for yeah not only Nvidia
01:00:38
but for America or as I say America yeah Nvidia has basically joined the trillion
01:00:43
dollar club now in terms of market cap companies it's really amazing I mean I'm kind of kicking myself because this was
01:00:48
the easiest buy ever launched on November 30th we all saw that that immediately ushered in a whole
01:00:54
new era in Silicon Valley there's a ton of VC funding that's poured into AI startups they all need to train models
01:01:01
and those models need to use gpus so we all saw this coming and yeah I'm kind of annoyed with myself let
01:01:09
me ask you let me ask you a question so you say that you kick yourself obviously
01:01:12
the general statement that you know AI is coming and Nvidia is going to be a beneficiary or nvidia's product you're
01:01:18
going to see a boon make sense but when you look at the valuation of the business they are currently trading at
01:01:24
70 times the next 12 months ebitda so how do you think about valuation even at a trillion dollar market cap at a
01:01:33
trillion dollar market cap they're trading at 70 times next 12 months even uh you know this seems like they're
01:01:38
doubling Revenue every six months though dude they're doubling Revenue here how high does it go because at a
01:01:45
trillion dollars what's the right ebitda level for a business to be worth a trillion dollars is it a hundreds right
01:01:51
is it 100 but I mean what's the number and then the question is if it's 100 billion how many years does it take them
01:01:55
to grow into that and you know are you really paying the right price are you paying a premium to get you know it's a
01:02:01
momentum establishment and we'll be determined if they have competition so is is there a competition for this
01:02:06
company chamac you'd think there's a competitor that will emerge that you know I mean it's important to understand
01:02:12
what a GPU is maybe so sure Intel had the run of the place for the first 40 Years of compute
01:02:18
because it turned out that most of the things that we used it for Excel Microsoft Word a browser
01:02:25
operated well on a CPU which essentially think about it as like a factory that takes in the first order and then puts
01:02:32
it up first and first up and the great thing about gpus is that it can take multiple streams of work at the same
01:02:38
time and work on them at the same time right so it's very parallel and has this level of parallelism
01:02:44
that makes it very well suited for AI applications I think the thing to keep in mind is
01:02:51
that it is a byproduct of a GPU that tries to also do other things and so as a result of that you're now seeing
01:03:00
a lot of companies building their own silicon and most importantly all the big tech companies now have some pretty
01:03:07
well-evolved efforts underway so a lot of these companies have figured out how to do custom Asics that can do this
01:03:13
massively parallel processing and what you're now seeing is chips that are designed against specific models that
01:03:19
are optimized for them the other thing that you're also seeing is that some people are saying well you know what
01:03:25
for these massive models actually you should just run it all in memory and so you're having folks that are doing it in
01:03:30
in massive arrays of fpgas that was Microsoft's first attempt at all of this so what is the point of me telling you
01:03:37
this I think that again we talked about this last week the biggest cheerleaders of this first
01:03:44
point of value creation has really been Wall Street and family offices that wanted to front run
01:03:50
where the value creation was going to initially go and they've been right which is around chips but there was a
01:03:56
tweet and Nick I posted maybe you can throw it up here that shows that if you compare this to the mobile internet
01:04:01
there's always this phased approach in terms of value creation where let's just say initially in a New Market Mobile a
01:04:09
decade ago in AI today the first dollar of profits tends to go to the chip companies that makes a lot
01:04:15
of sense right because they're the ones that are in the bowels of making the elemental capabilities possible
01:04:23
and then you transition that value and what freebrook says is people realize hey hold on the profit dollars are not
01:04:28
going to accrue there because again this beautiful principle of capitalism is that you can only over earn for a
01:04:36
certain amount of time because then competitors emerge and say hold on I want to steal those profit dollars from
01:04:42
you and take them for myself so margins compress right so in the end nvidia's gains today will be
01:04:48
then spread across Nvidia Facebook will have their own chip Amazon will have their own chip Google already does
01:04:55
papa will have their own chip all the memory companies will be in this space right so then the profits get smeared
01:05:01
there multiples compress then where does the value grow to the device companies in the mobile internet here I think we
01:05:08
still have to debate what is a device company in the world of AI but the most important thing I think to
01:05:13
remember is that where the real value gets accrued is five six seven years later when the
01:05:20
software and services companies show up and create a huge moat and those in the Googles and the Facebooks and the apples
01:05:26
of the world and so it's a really Dynamic moment I think it's wonderful for NVIDIA it's an amazing story for
01:05:32
Jensen who's been really at this game for a very long time by the way there's a Jensen has a law of his own that is a
01:05:41
sort of companion to Moore's Law called Wang's law named after himself which you
01:05:44
can read about which just talks about the variability of the compute capabilities of gpus
01:05:50
versus CPUs so if you want to know that he should get some credit for that but I think it's great I think we're in
01:05:55
the another one apple is also making their own gpus that's what when you hear the M2 that has gpus in it so yeah
01:06:02
you're absolutely correct anyone so we're gonna purchase a few years we're gonna have a few quarters for sure of
01:06:07
this hype and then the smart money will probably figure out where the next the lily pad is
01:06:13
and then they'll go to the next beautifully said beautifully said any other thoughts uh free burgers we
01:06:19
wrap up on that I wanted to show this AI demo from Adobe Photoshop you know every
01:06:23
week or so we see something that's this is incredible and this one was we shared
01:06:28
in the group chat but for those guys put this out shout out to belski yeah so what we see here if you're listening is
01:06:35
uh you know taking a Photoshop creating an area and then instead of like cutting in Paces pasting
01:06:42
it or refining it you're putting in a text prompt and saying oh put um expand the and make this wide screen or
01:06:50
let me grab this deer out of a forest and then put it on a wet alley at night and uh then you know let me highlight
01:06:58
this wall over here and put a sign and put a red arrow sign and it just generates it and it's doing this they
01:07:04
made specific note when they launched this that all of this is done with stock Photography they have the complete
01:07:09
license too so they can monetize this without getting sued like Microsoft is currently being sued and
01:07:18
Microsoft actually in addition to the GitHub lawsuit it turns out Twitter sent a letter
01:07:25
over 2 Microsoft as well so incredible demo The Producers here at all in as our production team grows producer Brian
01:07:35
made a little video here here's chamothin before the Laura Piana days that's that's Tom Ford yeah that's it's
01:07:43
Tom Ford this is Wendy's terrible the hair is terrible you look tired uh the watch is great
01:07:51
that night my God I played poker literally I walked into that to that CNBC right you went straight from the
01:07:58
poker table to the squad wait no tie but he's wearing a title that's a Tom Ford yeah he said to you he
01:08:08
said try this without the without a tie I said okay when you were talking to Tom
01:08:12
Ford great what a flex yeah you know Tom Ford has said me twice in my life I can
01:08:15
tell you both stories okay hold on a second so we're degenerative AI add uh make a yellow sweater is the prompt here
01:08:21
let's see if he goes to Bert from Ernie to Bert there he is Sri Lankan Bert as we call him in the um
01:08:29
it doesn't quite get the borders right but it's terrible it looks like a Warriors jersey oh there you go right
01:08:34
yeah pretty bad yeah yeah I think the demo was [ __ ] can we change his hair can we can we have the
01:08:43
hair be less in sync less Hassan Minaj and more I understand why they call you Aziz Ansari I think the you had the
01:08:52
you're going there the hair yeah it's a lot of lift and what was that day it's honey what is that is it putty this is
01:09:00
like eight years ago is that what are you using clay or putty yeah it's like it's like a stiff it's
01:09:06
like a stiff hair wax I think it's kind of a hair wax oh got it yeah I've come such a long way since now you have much
01:09:12
more much more stylish I mean look at Sax's crazy hair as we as we probably did in the cold open my thought on the
01:09:18
Adobe thing for what it's worth is like I mean do they want a mulligan on this 20 billion dollar figma thing or
01:09:25
um do they get to see the ongoing revenues that figma's generating uh all kinds of stuff it's a different
01:09:34
product though I mean the AI stuff certainly has had an impact but I mean so much of the benefit of figma as it's
01:09:40
web-based it's collaborative it's like people kind of use it online to make stuff together it's a little different
01:09:45
than the other tools that they offer today so you don't think it from September to now
01:09:50
like nothing changes they should just close this thing at 20 billion or or they're half they're half page do you
01:09:58
think that they should pay a billion break it up and then redo the deal at 10 and then
01:10:02
remember not all breakup fees mean that you can break up for any reason so there's only there's limited outs on
01:10:09
what you can pay a breakup fee to get out of it one of which could be anti-drugs to regulatory but otherwise
01:10:15
you may be forced to close in court if you don't have a valid reason for terminating the deal their only hope is
01:10:22
to get lean a content muck it up yeah some weeks is your argument more that they bought figma top
01:10:30
of market pricing which no longer makes sense or is your argument that they're innovating so well that they don't need
01:10:35
it I think it's a little bit of both but it's it's more that I think this generative AI stuff allows
01:10:42
you to refresh I tweeted this out so Nick maybe you can put it up there but I think the first thing is that your
01:10:48
feature set can catch up pretty quickly so even if you set out a team and said just copy exactly what figma has with a
01:10:54
co-pilot enabling 50 Engineers that's like 500 Engineers cranking on something I would
01:11:01
be surprised if they couldn't just replicate the product n10 that's the first thing then the second thing is I
01:11:06
think that you've seen VC funding basically crawl to a halt and so the question there is how many of
01:11:14
those companies are just going to stop spending because they're just not going to exist
01:11:18
and then the third thing is if we're sort of hashtag austerity people are going to look at everything
01:11:25
they're spending money on and try to be really disciplined about it if you roll all those things together sax my thought
01:11:31
is maybe the deal still makes sense but does it make sense at 20 billion and does it then just create a whole Suite
01:11:37
of shareholder lawsuits after the fact that are just going to say these three things and regurgitate them Ad nauseam
01:11:42
that's the Curiosity I had well so we're here let's talk a little bit about the state of Silicon Valley sacks we were
01:11:49
talking offline after the show last week you've slowed down investment at your firm craft you're being thoughtful
01:11:57
you're working on the existing portfolios how would you describe your activity so far in the first half of
01:12:02
2023 as a firm if you're so willing to share them my take on what's Happening is Silicon Valley right now or Tech more
01:12:09
generally is It's A Tale of Two Cities it's the best of times for AI startups and the worst of time show everybody
01:12:14
else the AI startups there's a lot of interesting things happening there and money is being pushed at them by VCS
01:12:21
it's very frothy arguably bubbly but then at the same time if you're a pre AI company maybe the one that raised
01:12:29
a lot of money at a big valuation in 2020 or 2021 it's a pretty tough time I don't know of any startup especially
01:12:37
like later stage startups who are hitting their numbers everyone is reforcasting down everyone's missing I
01:12:43
think that speaks to the larger economy is not doing that well I think the economist a year from now may say that
01:12:49
their recession had already begun certainly fails like that yeah that's what druck said at the Zone conference
01:12:54
and I think that starts are absolutely seeing that in their sales right now sales are slipping it's taking longer
01:13:01
buyers are sharpening their pencils it's a really tough environment I think for software startups that are actually
01:13:07
trying to make sales AI starts are a little bit exempt for that because people are still investing based on the
01:13:12
dream not based on the metrics and I would say that we're very interested in Ai and we're starting to make some
01:13:19
Investments but we also like to invest based on metrics not just on a dream and so we're being somewhat cautious about
01:13:26
how we approach it so you make a small seed bat in somebody who has a dream if I can translate here but if you're going
01:13:31
to make a bigger battery series a series B you're going to want to see some numbers on the board you're going to
01:13:35
want to see some product in mind I think that's a really good way of putting it because I think the standards change at
01:13:39
each round and then at the seat stage you can absolutely just make a bet based on the dream or just based
01:13:45
on a Founder sure great founder going after the AI space idea still a little bit to be fleshed out you can make that
01:13:52
bet but 500k 750 yeah or even even like 3 million will do as a big seed round but um but then when you get to series a
01:14:00
and you want us to write a 10 12 50 million dollar check we kind of want to see some Revenue yeah and certainly by
01:14:06
the time you get to series b or series C we want to see like all the standard metrics we want to see net dollar
01:14:12
retention expansion all that kind of stuff yeah it's it's really hard for the later stage startups because they raised
01:14:17
and this is the lesson if you're raising at three four five hundred million sax correct me if I'm wrong here
01:14:23
you're not you have to build into that valuation and let's face it that valuation a was never realistic it was
01:14:30
overpriced and then B you got the headwinds and your customers are saying oh you want 40 000 a year for this SAS
01:14:35
product we'll give you 12. and what position are you in to turn down the 12. you got to take the 12. and because you
01:14:40
got three competitors who are going to roll up and take the 12. so it's hard actually can I give you an update please
01:14:47
remember I mentioned there was a startup in my portfolio um actually my my angel
01:14:51
portfolio yes that that way to play around the cram down and I think it's absolutely tragic because of what I
01:14:58
learned which is the founders got crammed down too because a year ago they brought in a professional CEO
01:15:03
and I think as a result of this they're probably going to get nothing for 10 years of work whereas if they had just
01:15:09
cut costs damn it and you know the the company has 32 million of ARR so imagine if they cut their Opex to a million a
01:15:17
month they could have run 20 million dollars of ebitda pivot to basically private Equity model sell that company
01:15:23
for 150 million half would have gone to pay off the investors in the other half would have gone a lot of would have gone
01:15:28
to the common they probably would have made 10 million dollars each and now they're going to get zero because they
01:15:32
burnt too much money didn't want to cut costs they bought into the dream of bringing in the professional CEO is
01:15:37
going to re-accelerate growth it's never done out never does and so it's like so
01:15:41
frustrating to me because I like feel so bad for these Founders I wish they had called me a year ago and I would have
01:15:47
been one of the guys pounding on the table just cut costs and then control your desk because listen yes and here's
01:15:52
the thing is if you're only growing 10 15 20 or even 50 a year you're not a VC backable startup you're a private Equity
01:16:01
place you got to Pivot to that model of making your business work as a cash flow
01:16:05
positive business yeah that's how you're going to get an exit and you know if you're growing 100 plus a year you can
01:16:10
continue to be VC back so it's so important for Founders to understand whether they're even eligible for
01:16:15
Venture Capital anymore and if they're not you have to make a different kind of model work if you want to see a return
01:16:21
yeah and when this happens a cram down round those Founders if they want a refresh
01:16:28
they have to prove their worth they're not just going to get a refresh to keep the relationship going this is 30
01:16:34
million dollars in Revenue they don't need the founders anymore look these guys been working for 10 years so even
01:16:38
if they got a refresh they had to put in four more years of work and the other thing is the scram down round I think
01:16:44
was way too big they raised 25 million with a 3X lick pressure 75 million off the top off the top then
01:16:52
you've got to repay vague is triple yep oh my God who this is where board governance is so important tremath huh
01:17:00
like I mean who is on the board of these companies of these companies these are about
01:17:08
people had to build a company and they may be educated or they may have been an exec at a company and then
01:17:17
some VC who was feverishly raising funds just hired some dope put them on the board of this
01:17:23
company and then just the stupidity compounds and trickles down it's so frustrating compounding stupidity this
01:17:29
is the beginning of the beginning all of these people who have zero judgment are
01:17:33
gonna [ __ ] so many companies up it is the beginning of the beginning well it's your mouth it's not just the
01:17:39
the bad board members it's the view for so many years that who you put on your board didn't matter remember there was
01:17:45
all these VCS who had a model where it's like well we don't take a board seat and
01:17:49
they were selling that to Founders as a positive as a feature as a feature not a
01:17:54
bug and the reality is for a lot of VCS actually not being on the board probably
01:17:58
is the best they can offer but you know that that model works that model works when everything is up and to the right
01:18:06
where like this model of board seats don't matter governance doesn't matter that is a model in a boom where
01:18:12
everything just keeps going upward to the right but when you hit a tough time that is when you need a board member
01:18:17
who's seen this movie before who knows what a cram down round is who knows what's going to happen to you a year
01:18:24
hence when you get screwed into taking a threes where you want the gray-haired pilot you know in the right time to say
01:18:30
Hey listen here you want that hair you want that sex here all right Freebird you are always candid about your own
01:18:37
Journey you've had huge wins climate.com from Billy raising funds but you know sometimes things don't work out what are
01:18:44
you what's your take on some of these hard lessons of great ideas you know spun up during this really hard Market
01:18:51
I mean I think just to Echo the point you guys are making in the last 15 years we've been in a college
01:19:00
structurally inflated environment because of the zero interest rate policy since the 08 financial crisis and
01:19:07
everything's been up into the writer so much it's been so easy to kind of inflate Things fill up hot air balloons
01:19:11
and go up into the right and unfortunately most folks who are working in the investor community that are
01:19:17
sitting on boards weren't around for the.com crash the last time this happened and I think you know just to kind of
01:19:23
echo your point why it's so challenging I think right now to figure out a way out there are there's a lot of failure
01:19:29
going on in in Silicon Valley right now you know sax you talk a little bit about having pads
01:19:36
for exit and options for SAS companies but there are many sectors in startup land that don't have those sorts of
01:19:41
options in biotech in sinbio in fintech and direct to consumer e-commerce there's a lot of markets that
01:19:49
a lot of types of businesses that feel like there isn't a great way out and it's having a deep psychological
01:19:56
toll on entrepreneurs on Founders on CEOs and everyone is experiencing some degree of failure in this environment
01:20:03
there are very few folks who aren't feeling this acute pressure in this acute pain
01:20:08
you know I heard some pretty uh horrific stories this week from a friend of mine
01:20:11
and someone who ended up in the hospital because of the pressure he was under hmm
01:20:16
and it's really trying and you know even within our friend group I mean not not our direct friend group within our
01:20:21
broader community of investor friends there are very few people who aren't feeling this extraordinary pressure that
01:20:28
they've got a book that is declining in value and they don't know how to get out
01:20:31
of the hole and you know that pressure is like is generates deep questions about one's ability and generates deep
01:20:41
existential thought for entrepreneurs and investors about what the hell am I good at and no one's really
01:20:48
talking about this out loud but it is a happening across the valley we all have these thoughts we all have these
01:20:53
dialogues as the failure begins to set in in the slow motion train wreck of a market that we've all been talking about
01:21:00
for weeks and months how do you deal with it look I mean I just think that number one it's worth acknowledging and
01:21:06
it's worth having the conversation that no one is alone going through this pain it is not a one-off that these companies
01:21:13
are failing it is that we are all dealing with failure right now and we are all trying to figure out what is the
01:21:19
best path forward and it is the kind of thing that you just have to work your way through and you have to persist
01:21:23
through this pain but this existential question of am I good enough do I have the skill set I thought I had am I just
01:21:30
an idiot did I blow it up Emperor has no clothes all the kind of interfere and turmoil that everyone's dealing with
01:21:36
you're not alone going through it a lot of entrepreneurs a lot of investors are in the exact same place
01:21:42
now with respect to going forward I think having Integrity with respect to how you handle these situations and
01:21:48
having thoughtfulness about you know your reputation because this is not a one and done environment here in
01:21:54
Silicon Valley failure is part of the process and how you deal your deal deal with people deal with investors deal
01:22:02
with entrepreneurs deal with each other deal with your employees during these difficult times says a lot about your
01:22:07
character and your ability that when you do this the next time it will set you up
01:22:12
for success and you know as any great athlete will tell you you build muscle during the times that
01:22:18
you're failing and then you're ready to go and execute the next time around so you know let's save it for the next
01:22:22
quarter but let's play well as best we can right now through this quarter clearly you want to jump in here what
01:22:30
are your thoughts on separating your identity from your startup from your work and having a more balanced
01:22:36
view of yourself so that when things go wrong maybe you're not as devastated you don't
01:22:41
wind up in a hospital bed when things go wrong they go wrong in bunches just like when things go right they tend
01:22:51
to go right in bunches I called free bird last week and I was telling him a story
01:22:58
about two or three of my businesses just all just pounding eating dirt and what I said to him was and then we
01:23:08
have a mutual investment that's doing pretty well and I needed to use the one that was
01:23:17
doing well to make myself feel better about the three that were eating dirt and I said to him something he's
01:23:23
effective it's just like nothing is working I feel like literally nothing is working it's a tough place to be the
01:23:29
only thing that you can do in those moments is just realize it would be so much worse to just be on
01:23:36
the sidelines oh I like it and I think that's all you can do then you go and hang out with your friends
01:23:42
go hang out with your family kiss your wife have as good of a time as possible outside the context of work and then you
01:23:51
just start the grind again but yeah we are in a moment where in most companies there is something pretty wrong it's
01:23:58
either your burn and by the way that's always the problem but it tends to be balanced by a few things
01:24:12
in your portfolio that are always going well so that as an investor you can maintain some Equanimity through the
01:24:19
whole process but Freeburg is right when there aren't enough of these positives and there's
01:24:24
just a parade of Terribles you're just like wow this whole portfolio is it all about to fail and then I get a
01:24:31
massive wave of imposter syndrome of like what am I doing here and then I have to recognize holy [ __ ] this is my
01:24:36
24th year take a deep breath and it's great that it's that that exhilarating where I
01:24:43
think it's back to 2000 and I just emigrated here the conversation were talking about like a string of
01:24:50
difficult things we were all dealing with you know a couple weeks ago we announced that we returned all the money
01:24:54
to all our all our customers at Canada which was this molecular beverage printer company I've been working on for
01:25:00
a few years I plowed north of 30 million dollars of our Capital into building this business we had two term sheets
01:25:06
last year both of which vaporized as the markets that degraded it was really a brutal experience for me and
01:25:12
these were very high valuations and we were we needed funding to get the production line stood up to manufacture
01:25:18
that device so we were that close I ma'am and as the market went South pre-revenue Hardware companies became
01:25:24
less fundable and despite our reputation and a great working product and a pro and a manufacturing ready prototype we
01:25:30
couldn't get it done it was a really kind of brutal experience to go through the nodes even after you've had a lot of
01:25:36
success in your life believe it or not you still get a lot of freaking notes and you get a lot of I don't believe
01:25:41
Youth and then to just have to get to a point with this one was really difficult
01:25:44
and there's you know been other kind of frustrating experiences of late and then
01:25:48
you know you kind of have a call one day with another investment and you're like
01:25:52
oh my God this thing could be a home run and that just comes out of nowhere and you know as long as we kind of stay in
01:25:58
it as an investor and you keep you know as a builder and you kind of keep building
01:26:03
you don't know when that good knock on the door is going to come yep you got to stay in the game you got to start
01:26:09
building a business and one day you just nail a sale that you just weren't expecting or a partnership or an m a
01:26:15
inbound or something that happens that you weren't expecting it pays for all the pain and all the loss and all the
01:26:22
turmoil and all the downside I always used to tell people for every you know four days I'd be failing I'd have one
01:26:27
day of success but that one day of success will get me slightly ahead of where I was at the start of the week but
01:26:32
80 of it was failing I mean right now it's like 19 days of failure and one day of success but that one day of success
01:26:38
the goal is you used to have a couple of those punctuated moments that are big enough that make up for all this stuff
01:26:43
if you just keep grinding and if you just keep grinding as an entrepreneur you keep grinding as an investor and
01:26:48
stay in the game you're describing living with the power law there's a very relatable poker
01:26:54
analogy in this there's a there's a guy that makes Poker content his name is Jonathan little he's great who
01:27:00
he's wonderful I've been thinking about hopping into one tournament at the WSOP this year it's one of the big buying
01:27:06
tournaments so I'm like let me just take a little tournament Refresher and I was just looking for any content
01:27:12
and I found his and he had this beautiful slide which he said if you are a mid-level poker player
01:27:21
you should expect to final table every one in a hundred tournaments roughly and I thought about that for a second
01:27:32
and I was like that's a one percent success rate now if that is your 99th tournament you
01:27:38
have to be pretty resilient to go through 98 losses where you don't cash you don't make the money and you're just
01:27:44
putting money out you're deep in a J curve and you're like is this ever going to work out for me and so it's a really
01:27:49
really good reminder that it is the grind yep and I thought that was really interesting so you had a you had a
01:27:57
single or double I guess with call-in maybe you could talk a little bit about that experience and what decision you
01:28:03
made there we were obviously investors so we're a bit conflicted but I'd love to hear your candid thoughts on why you
01:28:08
decided to sell yeah we put together a great team and they built an amazing product I think it's by far the best
01:28:14
sort of social audio product and then actually they added a video to it as well and podcasting features so it's
01:28:19
kind of the synthesis of video and audio podcasting with social audio we got acquired by Rumble it's sort of like a
01:28:26
base hit type acquisition it's it's a small deal relatively speaking but the team wanted to do it and then the main
01:28:32
reason is because we got to hundreds of thousands of users but in the consumer space you really need to get to millions
01:28:39
and frankly tens of millions is what it takes to have a successful consumer product Rumble does have tens of
01:28:45
millions of users so the team wanted to find a home and there's a lot of synergy
01:28:51
with Rumble both companies have a Mission that's aligned around Free Speech rumble's sort of the call it free
01:28:58
speech alternative to YouTube it's a video platform and what Colin will do is give Rumble Studio capability so it'll
01:29:05
be very synergistic for all their creators to be able to create content in-calling and then post it in Rumble so
01:29:12
it's not you know a huge outcome for anyone but sort of a push for the investors depending on what Rumble stock
01:29:17
ends up but look it's just you can build a really great product and a great team
01:29:21
but unless you hit that Lighting in a bottle with distribution you know you won't get to the next level so I'm happy
01:29:27
about the deal I think the team's happy about the deal and it's a good outcome for for everybody involved but it's not
01:29:33
you know it's not a home run it's just it's more of a base hit and that's what most these things are yeah getting used
01:29:39
to a high failure rate and living inside the power law where one investment out of 30 or 40 or 50 results in ninety
01:29:48
percent of your funds returns for you know that specific fund or so or maybe two wins represent 95 that's a hard
01:29:54
thing for the human brain to handle as is the J curve estimov you know points out correctly man you invest for two
01:30:01
three years and then you watch the all those things go down in value for two or three years or the value I'm sure of the
01:30:06
portfolio go down for two three years before it actually rebounds and goes back up I remember man I had a run where
01:30:12
everything I touched turned to gold and then Mahalo hit 10 million in revenue and then boom Panda update and it just
01:30:18
goes up and smoke and you're like what what just happened I I sold web logs 18 months after starting it I you know had
01:30:24
the Silicon report I just Uber investment everything I touched went to the Moon it was working yeah yeah and
01:30:29
then it's just a very frustrating experience where you can't make something work and you know like I
01:30:34
should be able to make this work why isn't it working there's a very heavy blanket of humility setting over Silicon
01:30:39
Valley right now and I think all of us who have had strings of successes and repeat successes and you know things
01:30:46
that we touch have worked and we do all the same things and we do the right things and we do them the same way in
01:30:51
the right way and it doesn't work and then it doesn't work again and then it doesn't work again it creates a very
01:30:57
different psyche whether you're an entrepreneur building a business or an investor investing in businesses that
01:31:03
what used to be the case isn't the case anymore as the tides have shifted it's uh it's it's it's a daunting
01:31:09
challenge to work your way psychologically through this moment but you know progress doesn't change
01:31:16
Innovation isn't going to stop technology isn't going to keep shifting forward and uh the opportunities to
01:31:21
continue to build and innovate are not going away so I for want am deeply optimistic and excited about what the
01:31:28
future holds but man you got to put your freaking game face on right now to get through this yeah for sure well yeah and
01:31:33
I would say there's one other exogenous variable here which is I don't think any
01:31:37
of us realized how much our sentiment was affected by one guy's decision at the FED like what interest rates
01:31:47
yeah because you know what when there's a lot of money in the system everyone feels great totally and all the
01:31:53
portfolios look great and when the money is being sucked out of this the buyers are buying and you know oh my God like
01:31:58
when the money is being sucked out of the system everyone's results look terrible yep it's you know what it's
01:32:03
like before a tsunami the big wave gets pulled out and then this tsunami comes in yeah
01:32:08
the money is being sucked out of the system like the tie before tsunami and tsunamis give me all the failures and
01:32:15
bankruptcies but what I would say is just in the same way that things weren't as good as they appear to be during the
01:32:22
asset bubble they're probably not as bad as they appear to be now however you have to give yourself time to get
01:32:28
through this certain recessionary cycle and it's so frustrating to me when founders don't want to cut their person
01:32:36
the burn is the one thing they totally control and they have all these excuses for why they can't cut to an earlier
01:32:42
level of spending that they were the company was working fine at and we can't get them to go back to cut back to some
01:32:48
earlier state of being if Zuckerberg can do it they can do it and you know after seeing what Elon did
01:32:54
at Twitter where he reduced the staff by 80 I'm like I realize there's no good excuse anymore for not giving yourself
01:33:01
the maximum chance of survival and if you overcut like he admits he probably did he literally in the the Dave Farber
01:33:08
great interview he did with him he said you know like we probably overcut we cut people who were great and we
01:33:15
hopefully can welcome them back to Twitter as we get this thing unstable footing but we're gonna make mistakes
01:33:20
because we had an existential crisis Elon Musk cut too many people admits it and says he's going to bring them back
01:33:25
it's no fault of theirs and he said he's going back into growth mode so you know
01:33:28
like sometimes you cut you might cut too deep is the point and you know that sets you up for growth in
01:33:34
the future you had something you wanted to add I have two shout outs okay here we go the first is to one of our besties
01:33:40
got a text from Jason [ __ ] he banked the main event at the Triton for two and a
01:33:44
half million yeah be incredible who I mean he's so strong he's a guy's a beast so it's so great to have a professional
01:33:52
poker player in our Circle finally like somebody consistently over time but he's so open and he teaches
01:34:02
stable rational humble humble professional poker player like happens to basically be the best poker player in
01:34:08
the world but you could you would never know it you'd never know he'd never bring it up like he is literally the
01:34:13
greatest and he won the Triton 2.5 Milli yeah the second the second shout out is
01:34:18
okay here we go to the model y team at Tesla I have been a die-hard model X User from the beginning right I
01:34:28
think I have here we go number 13. so I've been I've been I've had three or four of these things and I was like wait
01:34:34
a minute maybe this why is really all is cracked up to be and I'm a bit of a curmudgeon and I have high expectations
01:34:40
but I just want to say that car kicks absolute ass it is perfect incred no it is incredible that model Y is going to
01:34:49
be the best selling car yeah it's going to be the best-selling car in America if
01:34:53
you get the base level it's actually cheaper than the average car in America now with incentives yeah it's so so good
01:35:01
so huge shout out 300 miles range which is a huge huge shout out to the model y team at Tessa you guys nailed it yeah
01:35:09
incredible product and we I love it I don't want to diminish the ax is the best yeah it's a great car it's a
01:35:23
great great car I can't wait for the Cyber truck that thing looks like a beast I can't wait to pick that up on
01:35:28
top of the Roadster I want the Roadster you know I've been taking my uh 12 year old uh Roadster app and my kids love
01:35:35
going for ice cream in the the original Roadster 1.0 so I've been taking it out every weekend or two number one number
01:35:43
16 of the Roadster which somebody offered me a quarter million dollars for I paid 160 for it I have number one of
01:35:49
the model S Signature Series so I have signature 16 of Roadster they did 100 signatures and they did a thousand
01:35:54
signatures of the model S and I have number one of that and somebody offered me a million dollars for that I have a
01:35:59
number of the founders Edition number 13 of the X yeah that's pretty special yeah
01:36:03
I'd hold on to that yeah there it's a special vehicle all right listen everybody
01:36:09
all in Summit is uh basically so how are we doing how's the all in Summit doing guys we're starting to do our Outreach
01:36:16
and to figure out yes yeah so it's exciting all right everybody for the Sultan of science the dictator and Steve
01:36:25
Bannon 2.0 David sax the architect the architect the architect I like that I remain
01:36:32
even after Sax's triumphant spaces I remain the world's greatest moderator so excited for this weekend boys see you
01:36:39
tomorrow at the tarmac on the tournament bye-bye love you bye Rain Man [Music] besties
01:37:03
[Music] it's like this like sexual tension that we just need to release somehow [Music]
01:37:33
[Music] I'm going all in