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all right everybody welcome back to the number one podcast in the world it's episode 185 and uh you're going to be
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delighted by today's docket if you're into politics we we move the taping back a day gentlemen because we knew there
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would be a presidential debate so with me to discuss all things presidential debate and the News Finance markets
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maybe even a little science from our science boy David freeberg is the Rainman David Sachs yeah probably have a
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t Frozen or he's staring everybody down how are you sir we're about to enter the
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end game Jason oh oh the end game is here okay we're in the end game now and from a we work in the home office in
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Pasadena is uh our friend the sultant of science he's back to work he's in his Cube did you get the TPS reports done
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how you doing there freeberg The Humble headquarters of ohol genetics beautiful lab downstairs I'll take you on a tour
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one day oh nice can't wait to hear my friends gloat and bloat themselves on the show today after the debate last
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night it's going to be insufferable I'm looking forward to it okay so you're building the next 10 billion dollar
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company and we don't get to invest but we do get a tour thank you that's good to
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note not that we're bit uh we appr this every week we if you guys want to put money in I will open up the round
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again for you and you guys you said this three times when do we wet our beak jal's right about this actually that's
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how you know the winner the one he doesn't let us invest it is the winner [Music]
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it's the easiest way in his portfolio know he's like hey can I can I introduce you to a soda pop
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machine let your winners ride RAV and instead we open source it to the fans and they've just gone crazy with
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[Music] iten all right everybody let's get to the show here enough of the craziness
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last night was the first presidential debate and there's no easy way to put this it was an unmitigated disaster for
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the Democrats and President Biden uh gosh he looked confused uh lots of slips lots of gffs if you are under a
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rock living in a cave without starlink and you missed it here's a couple Clips everybody's talking about this one where
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Biden lost his train of thought for I don't know close to 10 seconds play the clip making sure that we're able to make
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every single solitary person eligible for what I've been able to do with the uh with with with the co
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excuse me with um dealing with everything we have to do with uh look if we finally beat Medicare thank
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you president uh Biden president Trump gosh that was brutal and uh the reaction from uh CNN even msnbc's Joy Reed as far
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left as you can go was brutal and candidate and here it is the knives are out from the Democrats
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for President Biden right now as we speak there is a deep a wide and a very aggressive panic in the Democratic party
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it started minutes into the debate and it continues right now it involves party strategists it involves elected
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officials it involves fundraisers and they're having conversations about the president's performance which they think
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was dismal which they think will hurt other people down the party in the ticket and they're having conversations
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about what they should do about it some of those conversations include should we
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go to the White House and ask the president to step aside other of the conversations are about should prominent
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Democrats go public with that call because they feel this debate was so terrible that was painful uh I love Joe
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Biden I work for Joe Biden he did not do well at all and I think there's a lot of
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people who are going to want to see him consider taking a different cour now there is time for this party to figure
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out a different way forward if he will allow us to do that I too was on the phone throughout my of the debate my
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phone really never stopped uh buzzing throughout and the um Universal reaction was somewhere approaching Panic the
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people who were texting with me were very concerned about uh President Biden seeming extremely feeble seeming
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extremely weak this has been quite frankly a car accident in slow motion that we've seen over and and building
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and questioning it and as has been pointed out Joe Biden sought this debate at this Remar remarkably early time
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because he knew he was losing and he needed to change the narrative and he did change the narrative he sunk his
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campaign toight all right gentlemen there is absolutely no way any of us could have
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predicted this oh wait Nick play the clip read the room Democrats you have put up a candidate that nobody wants his
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policies on the border and some other issues are not in sync with the majority of the country at some point the
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Democrats just have to take a deep look in the mirror and say we feel that a bad
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candidate who's too old and people don't believe will stand up to scrutiny of like say being on the all-in pot for two
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hours or in the debates or with a hosti interviewer or any of those possibilities and so I think if that's
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the case we really need to have the Democrats think deeply about maybe fiing a different candidate and I believe
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that's what's going to happen in the next 30 to 60 days so I'm predicting you think this G be a switch foro 100% I
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mean if you just think 100% there'll be a Switcheroo who's thewi I have no idea could be Gavin could be
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anybody anything's possible I think Trump's going to demolish him in the debate I think he'll sink to 30% in the
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in the polls and then the Democrats will find a way to give him a graceful out and then they'll feel somebody else I
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think the Democrats as cynical as it sounds were waiting to see what happens with this Trump trials conviction what
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you call law fair what other people call fair use of the law and then they are going to see how he does in the debates
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that's why they move the debate up in June and I think they know to pull the plug on this if it gets too far gone and
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they have the ability to do that because all he's got to say is you know what I I
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I'm I'm feeling old and I want us to win and I'm going to slot somebody else in all right and to wrap this up prediction
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markets showing Biden has plummeted to let's check the number oh yeah 33% in the the sharps as uh you've
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referred to them on the program uh are basically saying Biden's going to drop out now 44% % chance over a poly Market
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will Biden drop out of the presidential race and then predicted another one of these prediction markets where you can
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actually BET Real dollars it's not a plug for them or commercial just those happen to be two of the bigger ones
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Newsome sits at 14% now Biden 33% Trump at 58% at the start of the evening before
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the debate Biden was at 47% post debate chth we see Biden dropping from 47% to 30 3% nothing like
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this has happened in modern politics your thoughts Jam POA and then saaks will give you the red me let me
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just start by saying that President Biden is a person that's given up his whole life to work on behalf of America
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in the best way that he thought was possible he's overcome a lot of tragedies I think he's worked very hard
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he's diligently tried to do what he thought was right on behalf of the people of Delaware and then the United
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States my honest takeaway is that that person though is no longer really in charge and I think that that was very
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troubling for me and it actually makes the last sort of six months make a lot more sense so I thought the fact that we
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could not get a response from the White House to be I took it a little bit actually personally I was wondering why
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for someone that had been such an Ardent supporter I couldn't even get an email back when I was consistently asking them
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to be on the Pod and now I see that it wasn't just one single act it was part of a holistic
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strategy it was the same strategy that boxed RFK out of the Democratic primary because could you imagine if this event
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had happened when he had to debate RFK in the Democratic primaries it would have been exposed then it's probably
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partly to explain how the law has been used in New York state whether you want to call it law or not
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but it it was a very directed partisan action and so all of these things are now three data points that are really
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important you will not come on an open format show like ours to just speak openly none of us were going to attack
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him or try to Corner him or box him in you prevented other people from actually challenging you and directly asking
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questions of you in the Democratic primaries and then you try to put political pressure on your opponents all
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of that is systematically about a group of people that are unelected who are trying to control
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democracy and I think that that's the most troubling takeaway from this I don't think that you should take away
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from last night that Joe Biden had a bad debate I think what we should take away
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is that there is a person who should be allowed to transition into the sunset and be celebrated for what he's done and
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instead there are people that frankly at the at the margins are acting pretty unethically and at the limit is actually
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acting somewhat diabolically to prop this person up so that they can keep power for example you've been in
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situations where you would expect the team that runs a company to be able to stand up and say the CEO is not in a
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position to run this company anymore that's what you would expect if there's good governance and honesty you know
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what was Ron Clan doing as an example when he was doing debate prep did he legitimately believe that Joe Biden was
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prepared for or mentally capable of actually doing this and the fact that they are allowing his legacy to be
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destroyed after 50 years I think is really tragic yeah I well said by the way chamat sacks your thoughts on what
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we witnessed last night in the reaction to it well let me speak as a objective and
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independent political Observer okay just as independent as you jcal yes let's do that let's be
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independent today yeah look anyone can have a bad night absolutely his campaign put out the word
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that he had a cold and uh maybe he just had a bad night I mean after all it was media people like Joe Scarboro just
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saying a week ago that Not only was Biden cognitively fine but in fact he was the best Joe Biden he had ever seen
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just a week ago or two weeks ago Reed Hoffman was saying that he had a two-hour lunch with Joe Biden and Biden
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was regaling him with details of AI and Gaza and he was good and so what we've heard from all
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these highly reputable people is that Biden may not present that well in public but in private he's just fine
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you're saying they're lying and they lie to the American people well I'm I'm actually taking them at their word
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because they seem like very trustworthy sources to me I see no reason to swap out this candidate I think that anyone
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can have a bad night and and there's no reason whatsoever for the media be panicking like
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this sack satire socks is into the J well I mean look I just um I I think that there's no reason for this kind of panic
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still going I believe in democracy and the Democratic primary voters have spoken this is the candidate who they
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voted for okay and there is there is Stand By Your Man to hear a message Stand by Your Stand By Your Man stop
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being a wimp because your candidate had one bad night you don't stab him in the back like this absolutely not and even I
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think van Jones said that Republicans wouldn't do this if Trump had a bad night you know he he's like why why are
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we all stabbing Biden in the back so look this is a candidate who you've been supporting for years this is a candidate
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who you rigged the primaries for you boxed out Bobby Kennedy who you know I thought was a fantastic candidate you
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basically boxed out Dean Phillips this is the candidate who you want and just days ago you were saying was
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completely mentally fit in fact the best he had ever been okay sleep in it you made your bed sleep
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in it stop betraying your candidate like this it's it's uh unseemly it's okay satire sex has some has some loyalty for
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God's sake okay freberg you've heard from compassionate shth you got to hear from satire Sachs now let's go to
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freeberg what do you got now this morning you get to hear from FR Frank freedberg Frank freedberg H to it buddy
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go for it the big loser of last night's debate was the American public the big winner of last night's debate was
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probably Russia China Iran maybe the Saudis licking their chops watching the utter dysfunction in the leadership of
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the party in the leadership of the country as it stands today a notable mention I will say was the debate format
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I absolutely love the fact that there were no interruptions that the mics went mute that there was no audience and the
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moderators didn't kind of challenge back and forth and try and make themselves the show that was very unique in in a
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presidential debate so I actually like the debate format fin they stopped interrupting
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me thanks for the interruption uh I think that as saak points out the biggest issue is that this was front and
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center Biden's decline in capacity and aptitude for quite some time I didn't tell you guys this before but last
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October a senior member of the democratic party reached out to me for a quote meeting I took the meeting in
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October and of course it turns out they were asking me for money little did they
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know I don't give any money to politics ever never have never will so they're their handlers are morons for bringing
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this person in to come and talk to me in the meeting I said you cannot put Joe Biden forward as your candidate what the
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hell are you guys thinking he's like no he is complet stable he is as sharp as he's ever been
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I sent him an email I'm going to read you what I said to him this was in the first second week of October I said Joe
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Biden does not appear equipped to be president of the United States I think the continued heralding of Democratic
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party leadership of the president's performance and ability to continue to serve into the next term is mindboggling
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his inability to conduct even a basic interview or give a clear and concise statement in a candid setting highlights
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a clear and obvious decline in function since he took office it is important for
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Democratic Leadership to find an alternative candidate and message this soon doing so I believe will buoy
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fundraising efforts across yada y y I said I would feel uncomfortable with a democratic majority Senate head in house
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giving a leader with declining aptitude nearly Limitless effect so I sent this as my response to his follow-up request
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for for money this was the second week of October and I wanted to pull up the date on this because it was so apparent
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back then what was going on so what's so striking is how long mainstream media and leadership in the
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Democratic party have tried to tell an alternative story that was so obviously revealed to be not true last night and
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that is the thing that I think makes me say America is losing because there are a few people that are in charge of
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controlling the narrative there are a few people in charge who decide who gets to be the candidate and those few people
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are keeping democracy from working effectively because the raw data the direct data the imagery the video the
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media content that has come out of Biden over quite some period of time made it so obvious that he was not in full
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capacity and so that was my biggest kind of takeaway is that there's something wrong with the way things are running in
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this country you're saying the media and the Democratic party leadership are lying to America yeah and I think I but
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I because if you fact the fact that we all had this information we we've seen the videos we've seen the interviews and
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every time a video or an interview comes out it has been excused away as oh well
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he tripped or oh you know it wasn't well edited and every time there's a story and then when it's fully exposed it
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becomes like well my God the fact that they all flipped so quickly is what's so shocking because this was there and you
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you know if you're on Twitter you can see these clips being talked about by millions of people but then media and
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Democratic Leadership won't acknowledge them the subversion of democracy is really the real threat to democracy to
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your point you have the right to a person up or down none of us are choosing to elect a shadow cabinet of
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handlers to run America that's not what any of us are signing up for and I think
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that's what we have the risk of having for another four years if this lie isn't exposed what I what I find unbelievably
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shocking is all of these data points now just make so much sense because the through line is as you said a
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coordinated effort to kind of obfuscate his decline like if you thought about this in a different way if you took a
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29y old and a 32y old would you say that they're the same absolutely right if you
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took a 39 and a 42y old they're the same a 49 and a 52 year old they're the same
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but the reality is a 79 and an 82y old or a 78 and an 82y old are meaningfully different and the reason is that because
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there is significant decline every year every month every day and you're seeing the impact of every week day and month
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and year as a president of the United States wear on an 82y old body and I'm not sure any of us would do much better
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but the reality is that when you're at that age there's a level of transparency that's required and we have the opposite
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so take Warren Buffett as the counterfactual to this Warren Buffett is in his early
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90s but what does he do every year he marches tens of thousands of people into Omaha he sits them down he sits at the
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front of a dis with Coca-Cola and peanut brittle and speaks for 6 to 8 hours and
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is sharp as attack well the point is if you decide after those 6 to8 hours of fully transparent unedited interaction
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with Warren Buffett that you don't think he's capable of leading Burkshire you can sell the stock what they don't do is
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hide him behind the shadow propping them out in package interviews and all of this other stuff that is unamerican and
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undemocratic and you see why because the importance as freed BR said is so high you probably do have a lot of people
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outside the United States really questioning what is going on in the greatest country in the world right now
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that this can even happen and the people that you thought were so anti-trump right that they would do
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anything to make sure that Donald Trump was unelected well they're actually not that
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anti-trump they're just Pro Power because the thing that they care more about than their hatred of Donald Trump
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is your desire to stay in power yeah I think these are all very well said Frank freeberg nicely done I mean how is
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anyone at this point in time surprised like we have been talking about his cognitive ability for a couple of years
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here on this podcast everybody's been talking about it on Twitter they've been talking about on social media
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everybody's been talking about it at every Christmas every Thanksgiving for a couple of years right now and um you
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know this long form discussion podcast test is the ultimate test and I think people need to take that to heart if you
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look at the long form podcast as and I'm just saying this to twe our own horn here it could be Joe Rogan it could be
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Tim Ferris it could be whoever you want Lex fredman when you saw RFK the Trump Chris Christie Dean Phillips come on
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this podcast talked for in some cases two plus hours it was clear they were there and this is completely selfish on
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the part of Biden's family the people around him to you know stay in power and the swaps coming I just I'm telling you
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right now he is not going to be in this race in the next 30 days well theot the hot swap is going to create a
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free-for-all Jason which is better better than running somebody who has a 30% chance of winning and I'm going to
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take this a step further this is 25th amendment territory this person is not fit to serve as president for the
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remaining of his term what we saw last night was incredibly troubling he was not there and I've been saying this till
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I'm blew in the face for months this is absolutely disgusting that they did this
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this is elder abuse I don't say that as a joke I say this sincerely I remember when my dad had to take the keys away
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from my grandfather God Rest his soul my grandfather wanted to drive that car you
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know in the streets of Brooklyn his his his station wagon my dad at some point said this guy keeps clipping other
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people's mirrors we got to take the car away so you know what my dad did he went
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to my grandfather God Rest his soul and he said listen the car was stolen and I'm sitting there as a seven-year-old
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next to my dad and I'm like the car wasn't stolen and my dad said you know what the car was stolen pop we can't
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afford a new car I'll lend you my car once in a while my dad then sold the car for 800 bucks and got out of there
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that's what we need to do you got to take the keys away from Biden he's not fit to finish the rest of his term
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period full stop I and I'm glad everybody else now sees what you know half of Us Saw for the last year hold on
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s has a Ruttle go ahead well look who are you going to believe J Cal's uninformed non-expert opinion or the
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Expert Medical opinion of Dr Joe Biden with her uh doctor in education well I mean the bias is strong when you see
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that clip I mean play the clip of Biden post these guys are so deranged these lunatics are so deranged they thought
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they won last night here's a clip of Joe Biden tell lady MC Beth telling in Biden
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he did good Joe you did such a great job you answered every question you knew all
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the and let me ask the crowd what did Trump do why you're not running Joe Biden's not
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running you are not running this is a farce and now the Val so happy he looks so happy in that moment getting that
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approval I mean give the man some milk and cookie I mean he literally let the man retire to your point shth
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compassionate shth said it great like the guy had a lifetime of service let the guy retire let him spend time with
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his grandkids great grandkids whatever he's blessed with and let's let's do the hot swap now it's incredible that not a
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single staff member has resigned isn't that incredible like where they see this Jason and they have the moral Clarity to
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say hold on a second this is really wrong not a single one yeah a really good point it's a really good point and
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actually I I thought I thought one of Trump's best moments in the debate a line that I hadn't heard him say before
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is that Joe you never fired anyone you know and he was specifically talking about the Afghanistan withdrawal but
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just more generally when have you ever fired anyone for getting anything wrong whereas I Trump fired Comey I fired
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other people and I paid a political price for that but at least I was willing to fire people who do a bad job
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you're not well now we know the reason for that is because there is no Biden Biden is just the staff so why would the
00:24:02
staff ever fire themselves and this is why it's actually important to have a leader at the top to have a
00:24:08
commander-in-chief as opposed to just a shadow government consisting of party apparat chicks and that's what we have
00:24:14
is the problem is when the staff gets something wrong there's no one there to fire them how like how does somebody
00:24:21
who's worked for Biden for 40 or 50 years who sat in Camp David helping to do debate prep at no point have the comp
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to say Sir this is not working because they would be firing themselves chth only Reon it's a rical question I'm just
00:24:36
saying actually there's a more Sinister reason and I think Zach you're pointing it out there which is they consider
00:24:42
Trump such an existential threat and they want to maintain power that they'll they're willing to do anything to keep
00:24:47
power you know and you know listen I I don't want to get into Trump here but he's got his own ways to stay in power
00:24:54
himself this was an embarrassment for America this debate this fact that these are the two candidates is a complete
00:25:00
embarrassment well I think the real embarrassment for the media was the fact that they were exposed the fact of the
00:25:07
matter is for months if not years they've been saying that this candidate is fine he is cognitively fit in fact
00:25:13
he's the best he's ever been I've had two-hour lunches with him he's wonderful that's what they've been telling us and
00:25:18
the reason why their Panic was so visceral last night in all these postgame wrap-up shows is they saw their
00:25:25
credibility going down the drain they saw that they had been exposed it wasn't just the fact
00:25:31
that Biden was exposed they were exposed for putting out this North Korea level propaganda for months and years and
00:25:38
everybody should understand these people were part of the coverup it wasn't just
00:25:42
the Biden team who wants to hold on their jobs it was the media it was this entire Democratic party apparatus
00:25:48
they're all in on this giant con I wouldn't have a problem with this sex if it was like Reagan where they were like
00:25:55
oh God he's got 18 months left we're going to ride this thing out and yeah maybe we let him have a quiet thing but
00:26:02
to actually put him up for another four years is the issue here if they just said listen we could 25th amendment this
00:26:07
guy or let him finish the last six months that's one thing but to say we want four more years of this I mean how
00:26:13
much worse is it going to get he what's going to happen right now I guarantee you is he's out we're GNA have President
00:26:19
Kamala she's going to get her flowers for four months as she gets to be the first female president of the United
00:26:24
States then she steps out of the way she decides she's not going to run because she's got things to do with her family
00:26:29
and there will be two new people who will be moderates and then the real election starts in about 15 days I don't
00:26:35
think you need to go into all of those mechanics to get the outcome of a new candidate all Joe Biden has to do is go
00:26:42
into the Democratic Convention and release the delegates yes of course yes technically but the pro but the problem
00:26:48
with releasing the delegates is I do think it creates a free-for-all unless the party then exposes this next facet
00:26:55
of their plan which is that they are so in control that they only allow one candidate to go up there oh they've
00:27:02
already got that yeah that's done and then I think what happens is depending on who that person is they'll either I I
00:27:09
think the Democratic party is probably at risk of a pretty meaningful reset and yep I I think that
00:27:17
these tactics I think are very much seen and understood by the American people I
00:27:22
think that people do not like this idea that you vote for person a but instead you get persons B through z I don't
00:27:28
think that's what anybody thinks the election for the president of the United States should be it should be two people
00:27:33
independently and then when you see one person that's not really in a position to run Faithfully I actually think that
00:27:40
you know Donald Trump last night showed tremendous restraint and compassion I think that is the right way to deal with
00:27:45
this situation I think it's just acknowledging that President Biden is not altogether there so without making
00:27:52
claims of a cold or anything else this is the security and the well-being and the economic prosperity of the most
00:27:58
important country in the world why are we messing around let's just put it plainly the Democratic party is a
00:28:04
collection of interests who want to remain in power the Democratic party is the party of government its goal is to
00:28:11
allocate money and power from the government to the collection of interests who back the Democratic party
00:28:17
in other words it's basically a collection of of interests who want a Lu the Republic well obviously no one's
00:28:23
going to vote for that so they have to make it about something else they choose a figurehead they talk about how this is
00:28:27
about saving democracy they basically invent hoax after hoax lie after lie to basically maintain their power and I
00:28:34
think what's happened is the mask has come off the whole thing the whole shell game has been revealed it's obvious that
00:28:40
Biden was always a puppet for these interests who are hiding behind him and now it's all being exposed this also
00:28:48
goes all the way back to 2016 because if you remember and you look at the the real runup into the 2016 primary you
00:28:57
have to remember president Obama sat Joe Biden down and said you cannot run and the reason was to direct the Democratic
00:29:06
party and establishment and energy towards Hillary Clinton who ultimately lost that election there's a very
00:29:11
important question here which is if Joe Biden had actually run in 2016 you may have actually had him beat Donald Trump
00:29:17
in 2016 and you he probably would have continued into 2020 this would be a totally different situation for the
00:29:24
Democrats so back to your point David all of these back room Shenanigans and negotiating and gerrymandering and
00:29:30
politicking and power broking is not how democracy should work as messy as the Republicans are I have to give you know
00:29:39
I tip my hat to them they run very straightforward Fair visible transparent faceoffs between people and
00:29:48
you may not like the candidates but the process is what it's supposed to be messy turbulent but you see all sides
00:29:54
whereas this tends to be managed from the inside out and I think that that is as your point being exposed and I think
00:30:00
that's what really has to stop within the Democrats they need to open the floodgates AB Bobby Kennedy should have
00:30:05
had the chance to run Dean Phillips should have actually had the chance to run but they were not and they were
00:30:11
prevented and by the way props to Dean Phillips who in a very respectful and compassionate way was telling the truth
00:30:18
from day one and he was essentially censored he was not allowed to basically tell you yeah he he told everybody what
00:30:26
he observed in front of his face right and if people had listened a year ago to Dean Phillips then the voters in
00:30:34
the Democratic primary could have made a different choice they could have maybe replaced Joe Biden but the party elders
00:30:40
and the powers that be did not let that happen and now they're in a panic a year
00:30:45
later trying to do a hot swap because it's manifest to everyone to the American public that Joe Biden is not
00:30:52
fit to serve yeah but the real time to hold on the let me to speak to the hot swap for a second the time to do the hot
00:30:58
swap was a year ago when Democratic primary voters could have voted for someone new the problem you have now
00:31:05
jcal I actually think that on balance the hot swap is not going to happen let me just tell you why I think you make a
00:31:10
really good argument for it nonetheless the reason it's not going to happen is that Joe Biden and Jill Biden have come
00:31:18
out this morning and said there's no way that he's stepping down it was just one
00:31:22
bad night he's fit to serve there is no mechanism to replace a nominee who's ready won all the necessary primary
00:31:30
votes without their consent so if if the bidens are saying we're not stepping down there's no mechanism to force them
00:31:36
to step down and that's the situation we're in right now there's a very simple mechanism he's going to he's going to
00:31:42
capitulate and you're Obama's gonna give him a call I guarantee you Obama's going
00:31:47
to talk to him in the next 72 hours guarantee the hot swap happens I'm absolutely right now on it let me finish
00:31:54
my point yeah they can pressure him and that's what you're talking is they're going to try and leverage him out but
00:32:00
the truth of the matter is that if they can't find the right leverage points he does not have to step down the right
00:32:05
leverage point is very simple he's not going to get any more donations last night the Democrats who are donating all
00:32:11
said no more money for Joe Biden so he's going to have no oxygen you need money to run these things but all right look
00:32:16
just one other final problem with the hot swap theory is not only is there no mechanism to force Biden to do it but I
00:32:22
don't think there's a consensus right now on who the replacement would be the fact of the matter is that KLA Harris is
00:32:28
in line and she pulls even worse numbers than Biden does so there's every reason
00:32:33
to believe that she would do worse than Biden in the election and I think it's not going to be easy to basically shiv
00:32:39
her and push her aside and so you can talk about Nome you can talk about Michelle Obama you can talk about
00:32:45
Hillary Clinton the fact the the matter is that I think you're going to have a big comma problem and because of that
00:32:51
you know there's no mechanism and there's no clear replacement I think that although a lot of people are going
00:32:57
to say what you said J Cal about the hot swap being desirable I think at the end
00:33:01
of the day on balance probably not going to happen although certainly I admit it
00:33:05
could I'll bet you $10,000 right now to whatever charity you want that Biden will not be in the
00:33:10
nominee you could be right but are we on they got to work out those two problems
00:33:15
they got to work out those two problems I'm just I'm just offering you a $10,000
00:33:18
bet and I and I'm not giving you any odd straight money I would not bet a lot of
00:33:21
money on this because I'm not sure I'm just raising some problems with the hot swap Theory okay freeberg yeah you have
00:33:28
uh you've been a little bit silent here you want to wrap us out so we can get to
00:33:30
the next topic I'll wrap us out I think I'll read the final paragraph of the email I sent to the Democratic party
00:33:35
leader a few months ago as a coda to this conversation here goes the United States is facing a fiscal crisis the
00:33:42
likes of which the world only sees every few hundred years as World leading nation states overextend themselves take
00:33:47
on unaddressed debt loads increase social programming and eventually collapse under these conditions the cost
00:33:53
to service the interest alone on our federal debt is now greater than a trillion dollars per year this already
00:33:58
exceeds the discretionary defense budget The Debt Service expense will only swell
00:34:02
as interest rates are unlikely to decline back to 0% and I do not subscribe to the easyto refute economic
00:34:08
arguments of mon modern monetary Theory simple arithmetic is all that's needed to discredit it furthermore I can
00:34:14
identify dozens of federal programs sponsored by democrats that are not achieving their objectives yet we
00:34:20
continue to fund them as if they were performing exactly as anticipated when originally conceived every Federal
00:34:26
program should be held to account for performance every year if not they should be defunded instead I see the
00:34:33
party pushing new programs that create new expense burdens without first addressing programs that simply aren't
00:34:39
working accountability is a critical first step in reducing our federal deficit below 7% of GDP I believe our
00:34:46
nation is facing financial and thus social Peril I urge the party to become the quote party of reason and results
00:34:52
put forward leaders that can lead hold government programs that aren't working to account make sure that every dollar
00:34:57
spent on social programming has a measurable impact and if they fail to deliver results cut them the opportunity
00:35:02
to be the party of reason and results is wide open myself and many of my friends
00:35:05
would Scramble for the opportunity to support that party that's the end of my statement and I think did you get a
00:35:12
response then a month later the Handler said so and so has this on their docket they're going to call you never got a
00:35:18
call of course yeah because you're not a donor they only care if you donate and you're not a I donated I donated and I
00:35:27
didn't get anything I asked for was a chance to sit down know why bid didn't come on the podcast I mean he couldn't
00:35:32
the debate format to your point freeberg was like the easiest debate format ever
00:35:38
and the greatest thing I think Dave Porton I pointed this out on Twitter like Trump's best strategy was to just
00:35:44
let Biden talk like just get out of the way and let him talk and there was one moment where he's like I I I'm sorry I
00:35:50
mean Trump was pretty graceful here which is a big statement he like at one point was like I'm sorry I don't
00:35:56
understand what he just said like I don't know how to respond to something I don't understand if he what his point
00:36:00
was hot swaps coming and I am an undecided voter I have a big announcement Sachs I have a big announcement about my
00:36:07
undecided vote you want to hear it yeah let's hear it this is breaking news I am
00:36:12
not voting for Biden I've eliminated Biden as a possibility I was waiting to see what happened last
00:36:17
night no I I never was clear about that I you also eliminated Trump you've also eliminated Bobby Kennedy so you I have
00:36:23
not eliminated Trump or Biden Kenedy I said Stein maybe Cornell West let's move forward let's move on here we go who's
00:36:32
left bring anybody out it can't be weekend up Bernie's part two I mean the Weekend at Bernie's joke is real I mean
00:36:39
it's cruel and it's real and my Lord get it together all right there's a really interesting
00:36:45
um Trend going on that I wanted to get everybody's thoughts on AI and corporate efficiency killing tech jobs let's pull
00:36:52
up this chart uh this somebody shared in our group chat from Fred these are software developer job postings on
00:37:00
indeed from early 2020 that's pre-co obviously to this year look at this the number of job postings for developers
00:37:10
has absolutely come Crashing Down by 80% this is below pre-co numbers in addition
00:37:17
to this we talked about getting back to work Pensky and Dell saying you have to be back in the office starting this fall
00:37:24
four days a week or resignation accepted what are you seeing in your portfolios any thoughts on this trend of the major
00:37:33
jobs the high-paying Elite jobs chth maybe going away this is a trend we haven't seen in our lifetimes there's
00:37:42
always room for Elites at Elite companies and now it seems the demand's gone what's going on here I just think
00:37:50
that company formation has changed after the end of Zer and so I think that that
00:37:54
chart speaks more to a couple things one is that where typically people were hiring for
00:38:00
software engineering roles which was a lot of SAS businesses contracted a lot and the net new amount of SAS startups
00:38:08
also I don't think materially increased and so that was one big switch second is
00:38:12
you went through a whole bunch of layoffs at the big cap tech companies as they reestablish profitability I think
00:38:20
when you layered those two things that explains that chart more than the emergence of AI tools just PR ially what
00:38:27
I see is all of these AI tools can add a 10 or 15% lift to an individual person if you are in a traditional organization
00:38:35
I don't think these things are the Panacea that they're marketed as being these are not creating 10x engineers at
00:38:42
some point these tools will be good enough and at some point companies will get started from scratch that use those
00:38:48
tools and create a level of productivity at on Tenth of the workforce but that hasn't happened yet so I think that that
00:38:56
chart is more about layoffs and contraction in Tech more than anything else yeah and just to explain this chart
00:39:01
a little bit more in depth the 100% number back in uh 2020 uh then boosts up to two and a half
00:39:09
times that amount and then comes back down to 60% of that amount so it's an index uh we don't actually have the raw
00:39:14
numbers here of the number of Developer jobs open or close Sachs your thoughts what are you seeing in company formation
00:39:19
to chat's point and overall what do you think this means for the American Elite Workforce people with you know really
00:39:28
high-end degrees and really high-end salary expectations well I agree with jamaath
00:39:34
it's just too soon for AI to be responsible for this I mean the um AI productivity gains are just starting and
00:39:40
we're not really seeing job elimination yet or job replacement I think this is just a symptom of economic weakness and
00:39:47
the main reason for the economic weakness is the rate hike cycle remember we went from practically 0% interest
00:39:55
rates to 5 a half% in one year and a lot of people were expecting that to cause a recession
00:40:02
that's normally what happens when you get a very very rapid rate hike cycle is it sucks liquidity out of the economy
00:40:10
and it contracts economic activity and you get a recession I was one of the people who thought that and that didn't
00:40:14
happen I think one of the reasons it didn't happen is there was a huge backlog of jobs of of sort of um open
00:40:20
job postings I think originally it started at 12 million open jobs well what's happened is the rise interest
00:40:27
rates has created some economic weakness it's caused a reduction in liquidity and
00:40:33
investment it's created more pressure on companies to be profitable and so all those things have cascaded through and
00:40:39
it what it's doing is it's burning off this JW backlog so we haven't necessarily seen unemployment yet but
00:40:45
we're seeing a reduction in the the job postings and I I think that's what's going on and I would just say that the
00:40:51
economy may not be in recession yet but I just think it's weak and um and this is just one metric showing that ber
00:40:57
you're you know running a company now you're doing hiring qualitatively what are you seeing in terms of hiring from
00:41:03
when you were running production board you had many companies people were fighting it out in the peak Zer era you
00:41:09
know and giving people incredible incredible you know compensation packets and packages and then you also had like
00:41:16
sort of people trying to take talent and maybe Talent hoarding was going on it seems to have dramatically switched
00:41:22
we've been putting job postings out and seeing hundreds of people apply for jobs
00:41:27
that we would get dozens previously what are you seeing what's the game on the field in terms of hiring I'm not really
00:41:32
I don't really have a great perspective on this we're we hire very specialized people at ohal and in the special
00:41:39
specialty field we're in we're the best in the world so everyone wants to work here got it uh I'll answer your question
00:41:45
J Cal I mean what I see from our portfolio companies is hirings got easier it is way higher much easier to
00:41:50
hire devs right now software developers than two years ago no question about it yeah and I think Global is a also having
00:41:58
a big impact here I I honestly my theory on this is the because there's not three
00:42:03
competing offer sacks from Big Tech when you're a startup you know trying to land
00:42:08
somebody and you're like we have to beat Uber or Airbnb or coinbase you know like
00:42:12
a mid-market company or the Google offer the Apple offer the Amazon offer typically like a developer would have
00:42:19
those three sets of offers here's a startup that's willing to give you 1% of the equity here's a mid-market company
00:42:24
at Uber and Airbnb a coinbase that's offering 300K and then here's the like incredible $500,000 offer from Amazon or
00:42:32
Google those offers just aren't there so then it makes for uh the ability for startups to hire great talent this is
00:42:40
the best time possible to be a startup the talent on the field is incredible opening ey is considering a for profit
00:42:45
profit conversion and that means possibly an IPO soon according to report Sam Alman recently discussed this with
00:42:53
major shareholders like maybe Microsoft and it's possible open AI will become a for-profit benefit Corporation similar
00:43:00
to anthropic or xai if you don't know what a for-profit benefit Corporation is a benefit Corporation or bcorp in the
00:43:06
industry means you have a stated mission that the board is responsible for going
00:43:11
after you know save the whales uh provide AI software for all of humanity whatever it is in addition to the
00:43:19
standard uh acting in the interest of all shareholders and so this of course means open eii which was valued at 86
00:43:26
billion could IPO at some point what are your thoughts on this uh we saw the revenue numbers are crushing it any
00:43:33
thoughts jam on open aai iping is that a possibility in your mind I mean it makes
00:43:38
so much sense for them so I think they should do it as quickly as possible we are in the first inning of what should
00:43:47
probably be an enormous tectonic shift in technology and I think if anything whoever wins in the first inning usually
00:43:55
isn't the one that's winning by the ninth inning and so I would encourage anybody that's
00:43:59
winning right now to monetize get secondaries take money off the table as fast as possible because the future is
00:44:06
unknown and the more disruptive the technology is the more entropy there is which means that there's going to be
00:44:11
more changes not less and again I would just look at search as an example I would look at social networking as an
00:44:17
example when you look 20 years later the people who captured all the value were not the ones at the beginning who
00:44:23
everybody thought was going to win and so I think if it plays out similarly it's important for the people that are
00:44:27
in the lead today to recognize it's too early and they should monetize their perceived success as quickly as they can
00:44:35
to the largest magnitude possible in other words you might be opening you might be you might be my yeah grab if
00:44:42
you can grab the bag what is it called secure the bag sorry secure the bag secure the bag yes what what are your
00:44:48
thoughts here sacks on a potential IPO by fam and the team at open Ai and the impact that might have on the wider
00:44:55
space well for a long time time on this show I've been saying that they need to clean up that you know convoluted
00:45:00
Byzantine corporate structure with all the line charts everywhere uh that's that structure is what created all the
00:45:07
problems with this nonprofit board that they had you've got a for-profit entity reporting to a nonprofit board it
00:45:14
created a culture clash and as we've said before on the show it's not a good idea for stups to innovate on structure
00:45:21
using a tried andrue C Corp is the way to go you're ready for IPO if you ever get that far you don't need to like
00:45:28
restructure the company it was always funky and weird that open AI had this nonprofit structure and really they
00:45:35
should have fixed it years ago and and like I said given Elon his Equity given Sam his CEO package and they didn't do
00:45:44
either one of those things and so now they're left with this crazy orc chart that's a mess and I'm not even sure I
00:45:51
mean I think it's I think you would want to clean it up as soon as you can because I think my sense is that the
00:45:56
longer you wait on these things the harder it actually gets but yeah more calcified these things get yeah I'm not
00:46:02
sure how easy it is to actually fix this thing but yes they should fix it they should make it a standard C Corp they
00:46:08
should make things right with Elon because he provided the first 40 million of SE Capital they should make it right
00:46:14
with Sam he should get his Co comp and then they should IPO so that the public actually has the ability to invest in
00:46:22
this AI wave and ride this wave as you know the same way they did with the whole do boom in the late 90s I mean a
00:46:31
lot of those Doom companies didn't work out but some of them did Amazon Google and so on and the public had the
00:46:36
opportunity to participate in that huge in wave of innovation and I think it' be
00:46:40
good if something like that happen we still need more public companies right yeah freberg you got a thought here
00:46:45
before we go into Super intelligence and Ila's new company I don't care if open is for-profit or nonprofit affects a few
00:46:52
people that put money in and the employees doesn't affect anyone else so well no it the public if they can buy
00:46:58
shares and they get to participate you say that about any business right like yeah open AI is one of the leading
00:47:05
companies of the AI wave it is the leading company it's the the leading company they apparently rais money at an
00:47:10
80 billion doll valuation so one could also argue that a company doing three billion in Revenue getting an IPO done
00:47:16
at 120 billion market cap maybe the public already missed the big wave well no I don't think so I mean we saw a lot
00:47:24
of these companies that you could have said that about Nvidia and it yeah it could go up it could go down but
00:47:31
anyway there's a buch there's a bunch of people who put money in who are going to
00:47:34
make a lot of money if this thing gets to P4 profit the trend line is it's doubling Revenue right year over year so
00:47:40
yeah my argument is that it'd be good for open AI to clean up its Byzantine C uh cap table and structure and it would
00:47:45
be good for the public to be able to have the opportunity to invest so it's a win-win I'm not saying they have to do
00:47:50
it this minute I mean I I think that it does take time to get your reporting to the level of maturity necessary to be a
00:47:57
public company and you don't want your your earnings or your Revenue you don't want your numbers to be volatile if you
00:48:02
were an employee freeberg and it went out at 120 billion would you clear your position if you could would you sell
00:48:08
half your position I don't know enough I don't know enough I'm assuming most of those Jamal anybody anybody want to play
00:48:13
along here and well I've heard that they've had quite a bit of turnover because there's been pretty good
00:48:17
secondary Market activity which means a lot of the employees have cashed out and
00:48:21
they've made so much money just like what's happening in Nvidia now there's very little upside relative to how much
00:48:26
money you've already made so at that point a lot of the early people start to leave got H more yeah so they're trying
00:48:32
to hire more people it sounds like I heard 70% of employees at Nvidia are millionaires now that's a crazy number
00:48:38
go ahead sex well I was gonna say you know that question that you asked is is really a highly personal question
00:48:44
because you could think that open AI is a great company that's going to be worth
00:48:47
a trillion dollars in the future sure but it still makes sense for you to take chips off the table because 100% of your
00:48:53
net worth is in that one company so well let let me ask it that way you got 90% of your net worth in inid I'm sorry 90%
00:49:01
of your net worth you're a person at uh open ey sitting on $10 million in shares
00:49:06
do you sell half all what would you do personally sax I would take some chips off the table I don't if you were first
00:49:14
if you're like this is 90% of your net worth 99% of your net worth well I mean you're an Insider so maybe you have a
00:49:19
lot of information if you were really bullish on the future of the company maybe you
00:49:24
take 10 or 20% of your chips off the table if if you're less bullish maybe it is 50% yeah so I don't know I'd be
00:49:30
influenced by my perspective on that but I think that you could think it's the greatest company in the world and still
00:49:36
it would make sense for you to take some chips off the table because you don't want all your eggs in one basket that's
00:49:40
a personal diversification decision and if it was a $120 billion valuation with 3 million in revenue chth
00:49:47
and you're trading a 40x or whatever it is times next year's Revenue let's assume they do 5 billion next year
00:49:52
you're still looking at 30X Revenue you would clear I think these mult are not really what's going to drive
00:49:58
their behavior I think open AI is running a very strategic game plan to become part of the tech establishment as
00:50:06
quickly as they can so that they are in the inside looking out as opposed to the
00:50:12
outside looking in they were able to add the former head of the NSA to their board of directors yeah what would you
00:50:19
take on that by the way Jam that was interesting people got pretty uh it's how it's how you become part of the
00:50:25
establishment do you do you think the former head of the NSA no longer has a security clearance or knows people in
00:50:31
the NSA no of course not and I think that there is a group of people that want to make sure that these
00:50:39
kinds of Technologies and capabilities are firmly within the hands of the United States apparatus and not anybody
00:50:45
else and so I think that that pulls them closer to the kinds of folks that could
00:50:49
otherwise give them a hard time right or regulate them or etc etc so now what happens is when you have Sen hearings
00:50:57
about this stuff it's more likely that it's confidential behind closed doors it's under the purview of National
00:51:01
Security all these things are beneficial to open Ai and then secondly they were able to get Elon to drop his lawsuit
00:51:07
conveniently I think it was like on the same day that the head of the NSA was added to the board or the former head of
00:51:12
the NSA so the next logical step is now to create Capital markets distribution which is really about syndicating
00:51:19
ownership of the company to all the big deep pools of money so that they are also rowing in the same direction in
00:51:26
support of open Ai and so that's what a lot of people don't get it's not about valuations or this and that this is
00:51:31
about creating a highlevel game theory of how to create an international apparatus that
00:51:37
supports your corporate objectives there are a few companies that have done this
00:51:42
well and they are now one of them the only thing left is to get shares into the hands of the black rocks the t- the
00:51:51
all the big mutual fund apparatuses of the world that then Syndicate to all the individual investors of the world and
00:51:56
you have everything you have government connections you have no real legal overhang then the likelihood that an IRS
00:52:02
agent all of a sudden decides to audit open AI is basically zero okay so to summarize bit cynical
00:52:09
but you're building an ally base that then makes it harder to investigate the company criticize the company or
00:52:15
anything like that right that's that's essing I don't think it's I don't think it's cynical it's like a smart business
00:52:20
strategy strategy what are you what's your take on that sex well yeah they're borrowing their way into the deep state
00:52:27
okay I mean they're the quid pro quo is we will be your vessel we will be an arm
00:52:33
of the intelligence community of the deep state will give you access to whatever it is you're looking for and in
00:52:41
exchange you're going to basically protect us and allow us to get rich and frankly that's the deal that all the big
00:52:47
tech companies have made they are all in bed with the intelligence community and
00:52:52
we saw this in the Twitter files where you know every week for the year before the 2020 election there were meetings
00:53:00
between the trust and safety people the censorship division of of Twitter and the intelligence community so these
00:53:06
people are working arm in-arm and basically the big tech companies have given themselves over in a way to this
00:53:14
powerful apparatus this you know the the Deep state in exchange for you know they're willing to basically give up
00:53:20
power in exchange to be left unfettered to make their money I think it's a horrible development for the civil
00:53:27
liberties of the ordinary American but I think that is a reality of what has transpired yeah and the number of CIA
00:53:34
former CIA former FBI justice department people working at the Googles Facebooks
00:53:40
metas apples of the world is like a very large number I have family as many of you know in law enforcement and in the
00:53:47
Deep State I guess I should call it sex and they are constantly asking me about job offers they have from these compan
00:53:56
companies and should which one should they go to this is after they've done tours in Afghanistan and you know
00:54:01
speaking many different foreign languages and then all of a sudden they secure this incredible you know 3x
00:54:07
salary Bump by working in big Tech so there is something to all of this Ilia announced his new startup finally it's
00:54:14
called safe superintelligence Inc or SSI he uh was obviously an open AI co-founder formerly their Chief
00:54:22
scientist and co-head of super alignment last month he announced was resigning from open AI after a decade with the
00:54:28
company and you remember he was on the board that helped orchestrate Sam maltman's firing um and then he reversed
00:54:36
chorus a few days after and expressed regret in it everybody was asking where's Ilia during all of this on
00:54:42
Twitter the co-founders in SSI include Daniel gross a YC partner and Pioneer Labs co-founder and open ey engineer
00:54:50
Daniel Levy company's goal right now is in the title develop a safe super intelligence here's what Ilia told
00:54:57
Bloomberg the company is special in that its first product will be the safe super
00:55:02
intelligence and it will not do anything else until then freedberg is this super
00:55:08
intelligence making safe super intelligence a great business model or is this something else it's a little bit
00:55:16
confusing to come into the market and compete with a throttle or a governor I guess on your startup at least that's
00:55:24
what some people are discussing so what are your thought no idea I don't know what these guys are doing have you guys
00:55:28
looked at this company I haven't seen anything well I mean we're just basing it on question yeah okay another assist
00:55:36
okay quick bounce pass to sack sack yeah give us your opinion let me uh caveat what I'm about to say by by saying that
00:55:44
I have not heard the pitch directly for this company I've only read what you've read in in the press that what they're
00:55:51
trying to do is the safe super intelligence and I'm not bullish about that pitch because I think it it makes
00:55:58
the company a little bit schizophrenic it's working across purposes with itself on the one hand you're a new company
00:56:04
which means you're behind you've got to catch up with open AI or Google these other companies that now have been
00:56:10
creating you know models for years so you've got to move very fast on the other hand you're saying you're going to
00:56:17
basically make this very safe well to be frank safety concerns are a breake pedal
00:56:21
they don't help you move faster they make you move slower yes it's a governor yeah and in fact I think that this is
00:56:28
the main reason why Sam Alman either kicked these people out of the company or or starve their resources until they
00:56:35
left remember when a bunch of these people left open AI they said that hey we were originally promised 30% of the
00:56:41
Computing Resources by Sam and then he reneged on that promise didn't give us what we needed so they all left well I
00:56:48
think that was that wasn't by accident I mean I think that Sam wants to win he wants to develop AI as quickly as
00:56:56
possible possible specifically AGI and he had this group inside the company that frankly was a Lobby for moving
00:57:02
slower so now they have their own start up that group that he kicked out right and so I don't but I don't think that's
00:57:08
the recipe for winning because you're the guys who want to move slower it would be like taking the Dei group from
00:57:14
Twitter and having them start a new Twitter well I think that's a little bit harsh because I do think that by all
00:57:19
accounts karpathy is like a top topnotch technologist and he's one of the leaders in the space yeah but I do
00:57:28
think that he's going to be hamstrung by his own concerns about safety and I think this is maybe the the tragic
00:57:35
situation is we're going to have this competition by all these different companies to advance Ai and the
00:57:42
companies that care about safety more than others are going to lose and so you have this darwinian effect going on
00:57:49
where there's going to be a race to AGI and I think that is genuinely a little bit scary for where this all leads us
00:57:57
but I tend to think that it's not going to be solved by trying to impose the the
00:58:02
safety Governor as you said I think maybe the best you can do is impose a truth Governor so you know Elon says
00:58:09
that we're going to make sure that our model at XI the grock model is scrupulously honest it's not going to
00:58:15
lie to you and I think maybe that's the best you can do is is Advance AI to be truthful but when you start injecting
00:58:24
these other safety concerns I I just think it slows you down and hamstrings you I think the best way to hit truth is
00:58:30
to site your sources I have been putting into and I don't know if you have you played with 40 yet or claude's new Sonet
00:58:37
shth have you yeah I mean it is unbelievably good if you put site your sources it's really starting to
00:58:44
understand what you're asking for I don't know if you've seen this but I was asking it like I'm hiring some positions
00:58:49
give me the high low average of this position give me five sources of information put it in a table and then
00:58:55
average the high low and median and it came back to me saxs with an incredible thread Jam off of this position and then
00:59:03
sourced glass store you know indeed salary.com whatever it was and uh I was like holy cow this is an hour or two of
00:59:12
researcher work done instantly there's an important Insight here that I think people are missing which is that
00:59:20
foundational models are quickly becoming a consumer surplus every model is roughly the same they keep getting
00:59:26
better and better but they're also approaching these ASM totic returns and what do you do when something approaches
00:59:32
an ASM totic return you need to change a key underlying variable that you use to
00:59:37
build these models and it looks like one of those variables that people are looking at is how you basically take the
00:59:43
internet not as raw data but then you actually kind of refine it and refine it some more and then use that as the basis
00:59:49
of learning and what that does is it drives up model costs to a degree that are probably untenable for most
00:59:57
companies except but for a few so I think it was Dario amade the CEO of anthropic who said the cost of a a good
01:00:04
functional model today is in the billions but you know by 2027 it could easily approach a hundred billion
01:00:11
dollar the problem that that represents for ilas company and I wish him the best
01:00:16
of luck but the reality is there isn't hundred billion dollars for him to have Google will find it Microsoft will find
01:00:21
it Facebook will find it Amazon is coming out open AI will probably find it Amazon will find it but I suspect that
01:00:28
these other startups there just isn't that much money going into AI because the returns don't justify it so I think
01:00:34
the bigger problem that you have is that it's becoming an arms race it's not dissimilar actually to ride sharing when
01:00:39
people saw Uber's success they thought well this is simple and it was but you had to subsidize losses for decades
01:00:46
before that company was profitable but meanwhile you had to starve all of these other companies that were funded to
01:00:51
compete with Uber until they ran out of money and died I think that you could make claim that the AI foundational
01:00:57
Model Market will look similar to that one startup can probably win but there will be a bunch of Open Source
01:01:04
Alternatives they're all ASM totically similar and so it's an arms race on cost and compute and I just don't see VCS
01:01:10
having the temperament and the wherewithal to fund hundreds of billions of dollars into multiple companies to do
01:01:16
that freberg any thoughts on the latest models have you played with them I'm curious um I have been having tremendous
01:01:22
results there it seems like there is I don't know I don't want to say stepun function but man it's a lot better right
01:01:28
now have you used any of these models and are you applying any of them inside of your company we're using a lot more
01:01:34
models and we're seeing them be very practically applied at the edge so you don't need to have large models running
01:01:41
on a large compute Cloud to get practical value and this is definitely a big a big point in the industry is that
01:01:50
you're you're getting highly functional application specific models that can be run in a local environment on the edge
01:01:57
so they're not running the cloud on big compute clusters and there's incredible applications in things like Machine
01:02:04
Vision and control systems you could ultimately see this being I don't know if you guys saw that Chinese dog we
01:02:11
never talked about this China basically ripped off Boston Dynamics or at least that's what it
01:02:16
looks like and they created this military dog Nick can you pull up the clip and then they put machine guns on
01:02:21
the back of the dog's back the models are running locally in these devices I think we're going to have a few
01:02:27
demonstrations of this at the um at the all Summit so the robotic applications are pretty powerful Machine Vision
01:02:34
applications are very powerful and when you see this insane video from China by the way this is a totally different
01:02:39
topic you guys seen this I I have seen this it's so this thing goes autonomously into a building and it can
01:02:45
then find its Target and eliminate its Target with the machine gun on the back incredible and you can see this becoming
01:02:52
like let's say they they build assembly line and they put out 10 million 50 million of these things and these things
01:02:57
can now go run autonomously in the field this is the Dark Side of small highly performative application specific models
01:03:07
running in an embedded way imagine those are amphi and they could travel against
01:03:11
they could travel across water and wind up in another destination I don't know where would a beach Invasion occur
01:03:18
anyway that was a very funky tangential aside all right uh we've talked about Microsoft and the bundling issues a
01:03:23
number of times here Saku had a spicy uh take on this well the EU just charged Microsoft with antitrust violations over
01:03:30
how it bundles teams their quote unquote slack killer into office here's a quick
01:03:36
chart Microsoft teams obviously was bundled everybody has it automatically with office you don't get a choice and
01:03:44
they rocket it to 75 million members in 2022 slacks 12 million you've obviously got a lot of thoughts here I'm sure too
01:03:52
as well jamat and you were the early invest in this looks like Salesforce just got a
01:03:59
big win Benny off gave some commentary on x Microsoft excels with bundling it's not it's their not so secret weapon for
01:04:06
dominating new markets we know the Playbook office plus teams Windows plus Explorer Azure plus Visual Studio 365
01:04:13
plus one drive and Xbox Plus game Xbox plus Game Pass here's a clip of saaks discussing this on episode 113 of your
01:04:22
Allin podcast if Microsoft can basically clone the sort of the the Breakthrough Innovative product you know just say
01:04:31
they do one every year and then they put a crappy version of that in their bundle
01:04:36
yeah 10% 20 or 50% worse but they give it away effectively for free as part of the bundle and then they basically pull
01:04:42
the legs out from under that other company so it can't be a a vibrant competitor and then the next year
01:04:47
they'll just raise the price of the bundle right and they've done that with slack they've done that with OCTA
01:04:52
they've done that with zoom can we have a vibrant Tech ecosystem at least in B2B
01:04:57
software if Microsoft can just keep doing that indefinitely all right sax you heard your quote there and guessing
01:05:04
you're not shocked by this action well I think the EU made the right decision here they basically sided
01:05:10
with Salesforce who made the complaint and said that Microsoft was engaged in illegal bundling by combining Microsoft
01:05:19
Office and teams and the reality is Microsoft Office is a product that every company has to have have every certainly
01:05:27
every Enterprise has to have and by bundling it means that that Enterprise receives the teams product
01:05:35
for free until of course the price of the bundle goes up the next year which it has just about every single year so
01:05:42
what that does is when that Enterprise is evaluating the choice of do we use teams or do we use slack or for example
01:05:49
glue or some other tool teams on the margin appears to be free whereas slack is something you have to
01:05:57
pay for seats and I think that is that is a legal bundling you know when you have a monopoly in one product and you
01:06:03
systematically use it to keep adding new products that again on the margins appear to be free because you've bundled
01:06:11
them and I think the EU has done the right thing here which is push to end the bundling every single product needs
01:06:17
to have its own allart pricing and when you add together the alart prices it should equal the price of the bundle so
01:06:24
in other words you don't get anything on the margin for free the customer needs to have the discretion to choose what it
01:06:30
wants if we don't do that I do think that Microsoft will use the power of the bundle to systematically dominate
01:06:38
enterprise software and they won't take on everybody at once but like I said they'll every year they'll add a new
01:06:44
product to the bundle shth what's the uh what's the middle ground here between the interest of consumers which is hey
01:06:51
I'm getting free a free version of slack it's not free it appear appears to be free on the margins because it's now
01:06:57
part of the bundle but then they raise the price of the bundle the next year correct they they boil the Frog so so
01:07:03
killed once they've pulled the legs out pulled the rug out from under their competition and that competitor is no
01:07:09
longer viable now they can raise the price of the bundle okay and so it's kind of like dumping in a way I mean
01:07:14
this is a very old antitrust argument when you would dump product in the market to kill a competitor or you would
01:07:19
price under your cost to kill a competitor right yeah you dump to basically drive a competitor out of
01:07:25
business because there's large cost of Entry there's large capex required to create a new
01:07:31
competitor and um and this is this is basically what they're doing is they appear to give you they appear to give
01:07:37
you the the slack clone or whatever for free but then once they've uh pulled the
01:07:44
the rug out they'll increase the price of the bundle shth what's the balance here between say I don't know Apple
01:07:51
giving away a free note P note taking app or a free journaling app to Consumers saying hey consumers get this
01:07:56
benefit of free product uh versus the bundling concept here with hey we'll give a for free but eventually
01:08:04
we're going to boil the Frog what's your thought of how to adjudicate this or to
01:08:09
execute on it uh the best interest of consumers Microsoft has been bundling to bundling products to kill competitors
01:08:16
for 40 years the the 10 years that they didn't do it was the 10 years when Steve
01:08:22
Balmer was in charge during which there was a legal document between Microsoft and the justice department a consent
01:08:29
decree that prevented them from doing it that consent decree came to be because of this exact strategy and the most
01:08:37
famous example that was the tail end of that process was when they used Internet
01:08:41
Explorer and they bundled it with uh Microsoft Windows and they killed Netscape right so there there's eene
01:08:47
examples of this so I think that they've gone back to their old Playbook it's a Playbook
01:08:54
that you have to remember the Executives that run Microsoft have been there for 30 and 40 years they know this play and
01:08:59
they know that it works and they've been rewarded incredibly handsomely by the public markets so they're going to keep
01:09:05
doing it would slack have sold the Salesforce now look I'm not complaining it was a $27 billion acquisition but the
01:09:12
question is if it were allowed to compete feature for feature could it have beat teams
01:09:19
possibly would the board have made and I was on the board of slack a decision to
01:09:24
have tried possibly but none of those options were on the table because when you see a
01:09:29
product it doesn't matter how inferior it is get bundled in it's kind of DOA and then you know you're on a melting
01:09:36
Iceberg and so you have to make a very quick decision to preserve Enterprise Value so I think what this comes down to
01:09:40
is the the FDC and the doj need to dust off that old consent decree read it and figure out whether this makes sense
01:09:49
again it seems like folks in the EU have more recently read that consent degree than American Regulators up look what
01:09:57
we've said all along is that the right approach to antitrust is to stop anti-competitive tactics bundling is at
01:10:02
the top of the list instead what they've stopped is all m&a which is actually bad
01:10:07
for the ecosystem because you you deny risk Capital reward and you need that reward in order to induce the next stage
01:10:14
of risk-taking so again I think this was a good decision by the EU regulators and
01:10:20
the um competition authorities in the US should actually be looking to this again
01:10:23
it's a better approach than stifling m&a you are so right on this we are so aligned if you look at I've been talking
01:10:29
to a lot of LPS and in talking to them they're looking at corporate credit and p& Deals
01:10:38
because they can get a return on those and then they're looking at Venture and they're saying hey why is there no m&a
01:10:43
occurring where's our DPI can you guys sell some of these companies it's like yeah we can't sell them because lon's
01:10:49
going to Scuttle this m&a and what that means is in a very real way we have have dollars being taken out of
01:10:59
innovation in early stage and being put into you know privatizing SAS companies whatever real estate deals and this is
01:11:07
really dangerous for America we really need more of this okay I I'll make one last wrap on this topic I'll take the
01:11:15
other side of bundling oh here we go I think ultimately if bundling benefits the consumer or the customer from
01:11:23
improved prices I don't bu the Anti-Trust arguments on a lot of these cases I don't think that you're keeping
01:11:30
competitive Solutions in the market if the benef if the benefit of the lower cost product is actually there for the
01:11:36
consumer or the customer supermarkets for example do this right so there's a lot of products in the supermarket like
01:11:41
peanut butter milk eggs that have historically been big loss leaders because they get people in the store
01:11:46
once they get in the store monopolies they're effectively peanut butter is not a monopoly Bund Monopoly super it's F to
01:11:53
bundle Commodities but when when a product is a monopoly and every enterpr have finite shelf lives right so you're
01:11:59
talking about one week and teams is not a monopoly right when you install it Microsoft offices
01:12:06
and you can't rip it up you can't rip there other options you have options there's plenty of options and the whole
01:12:13
benefit of SAS is that you can Market power of course they do I can switch to money but but in the Enterprise I don't
01:12:21
have to buy it I don't have to buy Enterprise seat licenses for office I can buy Google
01:12:26
think that way enterpr Enterprises don't think that way yeah they have every option to Google
01:12:33
competing effectively in the office space against Microsoft Office you to look is the do Zoom is competing
01:12:38
effectively against teams like none of these businesses have out from under Zoom I would I would argue is getting SL
01:12:45
growing what look once they put teams in the bundle slack sto growing what's the
01:12:48
monopolistic lock in the amazing thing about s is that there's no switching cost there's no switching cost what I
01:12:55
don't think we're debating that I think what we're debating is a sales practice where Microsoft says well you need
01:13:00
office you need Windows and you need 365 or sorry active directory well if you'd
01:13:06
like all of these things we're going to give you this product for free as well and they're going to be tightly
01:13:11
integrated then when you go to slack you have to pay more and then you think to yourself well how do I go back to my CFO
01:13:18
and say I need an extra $1.2 million a year for this Enterprise license to slack and then people say well that's my
01:13:24
point you're saving money if you stick with Microsoft they're they're giving you a discount not because once they
01:13:28
kill slack they'll just raise the price of the bundle that's the point that's a theory and if that's true that should be
01:13:34
prosecuted I don't think that the idea was under the Microsoft Internet Explorer action yeah but that's the
01:13:41
violating action that's my point that's why can't you just make Microsoft the idea of having a bundle should not be a
01:13:47
violating action no all Microsoft has to do is they've got a price of the bundle
01:13:52
allocate that price across all the components of the bundle so people can buy each product all cart that's all
01:13:58
they can still they can still um sell a bundled offering if at the end of the day that sum is cheaper than you buying
01:14:05
the alternative all cart from third party vendors that is a great deal for you as a customer it it can be cheaper
01:14:11
yeah what we're talking about here is proactively keeping competition and that and I think that creates a good
01:14:17
competitive Dynamic but you know maybe I'm thinking two first principles on this I think you're missing something
01:14:21
here at freeberg which is like what happens then when let's just say slack there was n a Suitor for slug okay let's
01:14:27
take the internet browser example because I think it's better if you didn't have a multi billion doll company
01:14:33
prop up a product because they just felt like it I.E Chrome and Google you would
01:14:37
have had Microsoft run away with the core interface for the internet we don't know how that would have turned out so
01:14:43
by luck we've had some modic come of consumer choice but it's not as if Firefox did well Firefox went to
01:14:49
basically irrelevancy Netscape went to zero so there are examples where when Microsoft has done done this they can
01:14:55
starve the Market of Choice over long periods of time and I think hold on a second so if your if your if your whole
01:15:01
point is well let's just bet on the largest of other large companies that's a bad bet but I will show you multiple
01:15:08
counter examples Google meet does not dominate market share you're talking about the largest you're talking about
01:15:13
the largest of companies you're talking not about competitive practices find me Venture funded people risk-taking people
01:15:20
who need a return on investment Google is the worst example they have the most discriminate forms of spending I'm not
01:15:26
saying that they shouldn't be allowed to Sor giv a counter example to the point about bundling right counter example
01:15:32
because Google wave or any of these other nonsense products that didn't work that you I'm not calling Google meet a
01:15:38
the the point of a healthy product environment and Market is not that one incumbent and another incumbent can
01:15:45
create their own crappy versions it's that you could theoretically have an open market where somebody can be funded
01:15:52
with nominal amounts of capital and compete effectively that isn't possible in many markets in software because of
01:15:57
these kinds of strategies so what you're reduced to are these huge companies with
01:16:03
this product sprawl I don't think those are good products and I think we're lying to ourselves to say that they are
01:16:09
Google meet is a terrible product okay so whatever they're competing with is a terrible alternative that's my point and
01:16:16
and they've lost market share they have not won market share by bundling and if you try to find a real competitor to
01:16:22
build an alternative to it they're not able to get funded because the Venture investor says no I can't and that's the
01:16:29
market power that stifles competition that's what this is about and if you as an entrepreneur come up with a much
01:16:37
better product than Google meet a VC will say wow we can go and blow up the side of the Hall of that ship
01:16:43
totally i s person Microsoft bought Skype how many years ago for8 halfon anded if left unchecked Microsoft will
01:16:53
stand alone un product and they totally dominated the market while everyone else
01:16:58
has been doing bundling the bottom line is if left unchecked you will see people
01:17:03
abuse this it is not a big ass to have allock cart pricing and that will make the playing field much more is a Terri
01:17:11
the zoom example is a terrible one and and the reason is that p&l would have a hole blown on the side of it if they did
01:17:18
not have 90% of their R&D and Opex in China so but for the grace of God and Eric strategic thinking they were able
01:17:25
to survive but that is a perfect example of a company that would absolutely not have existed had they not had a labor
01:17:31
Arbitrage that is not the basis of a competitive and fair market and you cannot expect people going off to all
01:17:38
Far Corners of the world and trying to do all these gymnastics to viably compete against a Microsoft and a Google
01:17:46
I would argue figma Adobe Adobe has a bundling solution they if you guys have ever tried to sign up for Adobe or end
01:17:52
your subscription it's nearly impossible just had action taken against them for that they've got these insane practices
01:17:58
they make you buy everything to get access to one thing comes along and sigma figma kills the market they come
01:18:04
in and they're like we're a better product better markets do win even with bundling that's my argument I think the
01:18:10
interesting thing with Adobe is that they have a product Suite that's used in a narrow field I think what saaks is
01:18:15
saying is Adobe is about a sort of vertical system of record I think what the thing about Microsoft and you could
01:18:22
probably say about Google is but less so but definitely from Microsoft is they are these very horizontal broad
01:18:28
amorphous systems of record that you cannot easily replace there aren't people running around building nine of
01:18:34
the 19 things that Microsoft gives you in the bundle that's the problem okay the debate I mean on this very show we
01:18:42
were arguing that the figma acquisition should go through because it created a new market for web designers where as
01:18:48
Photoshop was basically for graphic designers it doesn't with Photoshop it competes with some of their other design
01:18:56
programs but that's anyway all right we're not going to settle it here I think there's a difference between a
01:19:01
bundle and a s SES are okay bundling when you already have a monopoly in the relevant part of Bund bunding is when
01:19:08
you take a wrench and a can of peanut butter and put them together like here you're gonna take them both you're like
01:19:12
well I only need the wrench well well you're going to take the peanut butter and they're like well I already have
01:19:15
peanut butter so I don't need to buy new peanut butter I mean we saw this in the
01:19:18
cable providers and Direct TV as well you know just you can't P for ESPN even if you don't like sports all right
01:19:25
listen another amazing episode for compassionate chamath satire Sachs and the Frank satire saak wants to say one
01:19:35
more thing I just have a perfect wrap up okay satire sax go ahead what's your here we go sat no let's put this uh
01:19:43
tweet by Joe Biden President Biden oh God here the elder abuse no I want to I want to compliment
01:19:51
Joe Biden on continuing to fight you keep fighting Joe do not let the media get you down one bad night is not a
01:20:00
reason to get out of the race all these people stabbing you in the back they're basically ingrates and
01:20:06
backstabbers you're doing just fine all right and from candid and from candid calanis to the Democratic party disad
01:20:15
your disgrace what you did to the American people with this rope of dope is ridiculous disad 25th amendment get this
01:20:24
guy out office president Camala hot swapp it Dean Phillips let's go we'll see you all next time on the all in
01:20:34
podcast love you boys let your winners ride Rainman David and instead we open source it to
01:20:46
the fans and they've just gone crazy with it love queen of [Music] besties are that's my dog taking
01:21:03
driveway man oh man myit will meet me we should all just get a room and just have
01:21:09
one big huge orgy cuz they're all this useless it's like this like sexual tension that they just need to release
01:21:14
[Music] somehow we need to get merch our all [Music] I'm going all in