00:00:00
hey everybody Welcome to the all in podcast I'm your moderator for the week Dave Friedberg
00:00:06
not the world's greatest moderator this show is going to be a bit of a shortened
00:00:09
version at the back end of the Pod today we actually are going to show some q a from Jason's launch Summit which he held
00:00:18
in Napa Valley this week great event thanks for having us up there Jay Cal thanks for coming great speakers great
00:00:24
content and we did a live q a for the all in pod with the audience there which will transition to about
00:00:33
halfway through through the show today Jay Cal thanks for your hospitality oh yeah thank you the fun birthday party
00:00:39
the poker night we had a great time I still didn't know what I was doing there you were meeting some of your LPS who
00:00:45
you've never met before it was like a dog and pony show Jake Howell was using us as some sort of dog and pony show to
00:00:51
raise money Zack did you really have LPS there that you had never met no yes hold
00:00:57
on a second I had one LP there who I have definitely met many times before okay she told us she'd never met you she
00:01:02
wanted an introduction so maybe she's getting into the spirit of all in and joking with you but you had a three-hour
00:01:06
meeting with one of your own pieces I heard Chicago yeah she said she had like two or three hours are you with us today
00:01:12
what's going on you're there buddy was very drunk by the way he brought up his own wine he started Margarita well he
00:01:17
was drunk by the time we got there what he showed up he was day drinking margaritas in the
00:01:23
sun oh and then we showed up and he was like falling asleep by the time we were done with the steaks I said
00:01:32
[Music] David's side we open source it to the fans and they've just gone crazy [Music]
00:01:47
you know by the way politics is one of these incredible things where you see the meanest people
00:01:54
come out of the woodwork when you even feign support for somebody that they don't support now that it's out there
00:02:02
that sax and I are doing this fundraiser for RFK oh yeah if you look at Twitter some of like the the Democratic
00:02:11
surrogates are out just smacking me and sax around and it's incredible these people are like the biggest
00:02:21
imposter loser clowns they've never literally done anything in their whole life and then they show up
00:02:28
and then they just like how dare you work and help build a company how dare you help build another company how dare
00:02:35
you help now fund other companies I am a talking mouthpiece who's never done anything except work and want
00:02:40
Administration as a speechwriter and now I think you guys suck balls it's like give me a break
00:02:47
so you are you a little kind of emotional about that today I actually I love critiques actually because I think
00:02:52
like you can learn a lot from critiques but then when mids just spew I just get annoyed I think mids should
00:03:01
not be allowed to talk yeah well that's just my thought there goes half the internet sex are your Republican cohort
00:03:09
friends upset about you hosting a fundraiser for RFK I've got none of that none of that
00:03:15
that's interesting what's your take on that yeah do Republicans generally think that it's a good thing if RK Jr gets the
00:03:21
Democratic nomination because he will be easily beatable I don't think they're thinking that way I think that there's a
00:03:28
respect for RFK Jr among many Republicans because he's speaking out on issues that they care about like I've
00:03:35
talked about he's denouncing censorship he's in favor of free speech he's in favor of civil liberties and you know
00:03:42
not the this master surveillance State he's speaking out in favor of Peace instead of War he's speaking out on the
00:03:47
border he had this amazing video that was great a couple of days ago where he went to the Border in Yuma Arizona at 2
00:03:55
A.M in the morning and he shows he shows where the border wall ends and where the
00:04:00
border wall ends the line begins and people from all over the world are just entering through this hole in the wall
00:04:07
in a never-ending stream of people and then they get loaded onto buses provided by the government and then they get
00:04:15
handed a ticket to supposedly appear in court to resolve their case in three or four years and they're never heard from
00:04:22
again and they're dispersed all over the country what I don't understand is if the federal government can get its act
00:04:27
together enough enough to provide buses why can't they get their act together enough to plug the hole in the wall it's
00:04:34
absurd this is like an act of sabotage against the United States and so he's there just pointing this out I've never
00:04:40
seen anything like this before it was interesting as a as a Democrat to do this because that's typically kind of a
00:04:47
Republican point right and some of the commentary made about RFK Jr I think it was in the
00:04:53
New York Times this week um or someone that covered his candidacy one of the big media companies
00:05:00
highlighted how much of his agenda seems to be a republican talking point agenda
00:05:06
does that sound accurate even most uh people in the country who identify as Democrats would be against
00:05:13
having an open border that's what we're talking about when there's a hole in the
00:05:16
wall and people can just start forming a line and then once they get through the
00:05:20
line right they're literally hold on they're basically distributed throughout the country on buses I don't think most
00:05:26
people in the country even Democrats would support that but what he's violating here is the Press blackout on
00:05:33
what's really going on at the border he went there yeah but other Republican talking points so the points around the
00:05:42
vaccine the points are Republican well he's expressed obviously concerns about vaccines preceding the covet vaccine I
00:05:49
don't know whether he's right about that or not we're not willing to say whether
00:05:52
he's right or wrong about that because I just don't know enough I think he's definitely right about the inefficacy of
00:05:57
the coveted vaccine we've talked about this before even Bill Gates admits now that the vaccine doesn't work it's too
00:06:03
short acting and it doesn't hold up against variance it's not a vaccine let's just start let's see it doesn't
00:06:08
prevent you from getting the illness it's a death reduction shot it was a revenue grab by big Pharma plastered
00:06:15
with non-scientific thinking from a bunch of people who should have known better wow okay I think you just got our
00:06:23
oh so much this is just the truth hold on what shamas said is just like the factual
00:06:30
reality and and you can't get that from the mainstream media like there's no re-evaluation there's no appraisal they
00:06:37
control what we see in here it's like proveda level in terms of the propaganda and that's why I think RFK Jr is so
00:06:44
interesting is because he is blowing up what the mainstream media wants is control the really interesting thing
00:06:51
about him going to the Border I agree with sax is hey let's just have a discussion about this and look at the
00:06:56
actual facts on the ground that we can agree on and what he actually did was he pierced the vow of like this is an issue
00:07:02
about a certain group of people he was there and there are people from Afghanistan China all over the world
00:07:07
coming in he made the point that this isn't just about one country and that these people are suffering and that I
00:07:13
thought was like another really important highlight these people are being trafficked they're you know being
00:07:17
abused at the border and that it's going to cost us 10 million talking about it and he's done this with
00:07:25
Ukraine as well where he emphasizes the humanitarian aspect of it yes about it and I think Republicans should
00:07:33
adopt some of that he rhetoric and to jamaat's point I think it's it is I think it's a
00:07:39
MoneyGram I do think it lowered death rates but you know I do think piercing the veil on this and none of us are
00:07:45
still getting boosted because we know they don't work guys okay let's keep moving I'm not debating vaccines and
00:07:50
politics we're moving on we're going to talk about crypto so this week the SEC here we go serious action
00:07:56
against binance and coinbase you know pretty significant pretty loud SEC filed 13 charges against Finance
00:08:04
entities and the founders CC charges include operating unregistered Securities exchanges broker dealers and
00:08:10
clearing agencies misrepresenting their trading controls and their oversight on the binance U.S platform and the
00:08:17
unregistered offer and sale of Securities the next day they sought a temporary restraining order to freeze
00:08:23
binance's U.S assets and then on Tuesday the SEC sued coinbase over their exchange and their
00:08:31
staking programs stock dropped 12 percent the SEC said that the company was operating an
00:08:38
unregistered exchange and broker and that 13 of their assets listed on their platform were considered crypto asset
00:08:44
Securities Brian Armstrong obviously has been on the Pod several times said he's
00:08:51
not shutting down his staking service and said regarding the SEC complaint against us today we're proud to
00:08:56
represent the industry in court to finally get some clarity around crypto rules he's generally made the statement
00:09:01
that he has tried multiple times to register with the SEC they have not had a mechanism for him to register
00:09:07
they have tried to do everything by the book and that the SEC approved their IPO filing knowing full
00:09:13
well the details of their business and their operating model and still allowed them to go public on a U.S Securities
00:09:20
Exchange despite full knowledge about their business Jamal does anything change this week based on the sec's
00:09:25
action or is this just a continuation of you know crypto has been rolled back and will continue to roll
00:09:34
back here in the U.S or is this something new and a new action and opens up a new front on the
00:09:41
uh the government versus crypto it's a good question I think there's two ways to look at this one
00:09:47
is the conspiracy theorist way which you see a lot of on Twitter which is this idea that crypto
00:09:56
is making all of these inroads as a replacement mechanism for fiat currency and so governments are really
00:10:07
now invested in trying to shut it down I think that's largely untrue and then there's the more
00:10:14
simple basic reality which is that there was one part of the SEC that frankly didn't do the job that they
00:10:22
were supposed to by either allowing a few of these crypto companies or crypto businesses to go public either as
00:10:28
Standalone businesses or as part of other businesses so coinbase Robin Hood Etc and then there's this part of the
00:10:36
enforcement action after this FTX Fiasco which is a lot of cya covering your ass by the SEC
00:10:44
especially because it looked like they had some cozy relationships with them and so they're coming down hard and
00:10:50
they're going to go and systematically dismantle the largest actors and they're going to
00:10:55
go through the value chain so I think the obvious place that they're looking now are
00:11:01
the exchanges they'll look at the custodial Services they will not approve any ETFs
00:11:08
and then eventually I do think it trickles into all of the staking services and eventually I think it'll touch the
00:11:14
Venture community and all of those firms and funds that had a huge robust business
00:11:21
in staking these crypto projects in order to get coins like founding coins and then being
00:11:29
able to sell them Jacob I mean I've been talking about this since the beginning because I I've bought Bitcoin and wrote
00:11:36
about Bitcoin when it was maybe 25 cents and then again when it was a hundred so
00:11:40
I've been following this for a long time and I think thinking from first principles just
00:11:45
stepping back for a moment you know what we do in technology is fundamentally disruptive if it's at its best if it's
00:11:50
truly going to be important in the world and when you hear that word disruption you kind of file it as a buzzword but
00:11:57
what it really means at its core is like competition and it's not just competition disruption when you say
00:12:03
disruption you're talking about existential competition two people go in the ring one person comes out like
00:12:07
somebody's gonna get really [ __ ] up and if you people keep bringing up oh you're an investor at Uber they broke
00:12:14
the rules they bent the rules Uber was going against caps Airbnb was going against like hotels wework was
00:12:21
going against like long-term real estate leases when you look at all those disruptive Technologies and what they
00:12:27
did at their core they disrupted on behalf of consumers and lower prices increased Choice et cetera when you get
00:12:35
crypto the crypto crowd literally said we are going to replace fiat currency fiat
00:12:41
currency is the government and so my thesis from the beginning was if the government has a way to stop this they
00:12:47
do not want to be disrupted what what is a government at its core it's a military
00:12:52
it's a bunch of rules laws and it's money that's the kind of pillars of any government's power we knew the
00:13:02
government wasn't going to give this up and you know they they effed around and found out but the truth is the and this
00:13:10
is where I have some sympathy for the crypto people not the people who are just committing crime with the whole way
00:13:14
and just dumping these bags on retail Etc but we do want to have this Innovation here there are some
00:13:20
Innovative aspects to it but Gary Ganser said listen you already have electronic
00:13:23
money it's called money in the United States we already have these Services you don't need this consumers don't need
00:13:27
it and you have to understand the sec's function in the world to understand why they're taking this action their
00:13:33
function is to protect investors investors lost a bunch of money therefore they are going to
00:13:38
retroactively inflict pain and hold people accountable for their mandate which is to protect investors you could
00:13:46
have easily resolved this the SEC and the company's gonna resolve this the companies could have followed these
00:13:53
things as Securities and only allowed accredited investors top five percent of the country people who make over 200k a
00:13:58
year they didn't do that they said anybody can buy these well that's just not how it works in
00:14:04
America and it should change I think everybody should be able to buy any security they want in America just like
00:14:09
anybody can go play Blackjack and the easiest solution for this just passed in Congress this week and we'll go to the
00:14:15
Senate and be a lawsuit I think allowing every American the other 94 to take a test and become accredited if that
00:14:21
happens you take a test just like you take a driver's license test I know what diversification is I know how risky
00:14:26
these are once you take that 50 question test you become accredited and then you
00:14:30
can buy these coins if you want to and that's really the easiest path to resolution here so we don't have Brian
00:14:36
Armstrong move his company to the Middle East or uh you know an island in the Caribbean which is what he's going to do
00:14:40
I predict so okay well look we've seen this bill make its way I think through is it going to the Senate next or is it
00:14:49
going to the Senate yeah going to the Senate so let's see if it gets done I think it's a it's a good point one thing
00:14:55
I'll point out when individual investors were making money because all of these asset values were
00:15:03
inflating all of the coins were growing and were climbing in value everyone felt
00:15:07
good there was an emergent cry that we all want to have access to these new instruments we all have a right to make
00:15:15
these Investments and to own these assets and then as the asset values declined and individual investors began
00:15:23
losing money the emergent cry is where was the government to help save and protect us and so the SEC I would argue
00:15:31
was probably a little bit hindered when the market was inflating and being able to step in and take action because that
00:15:37
would have been counter to the cries of the retail Market but as the retail Market took
00:15:44
their their hits the SEC has to step in and Congress steps in and everyone starts to say it's time to act we should
00:15:50
have acted sooner and this was you know fairly predictable I think what's happening is more nefarious than that
00:15:56
so the SEC is doing two different things they're alleging two different kinds of
00:16:03
crimes one set has to do with protecting investors from having their funds stolen on these exchanges or at least
00:16:13
commingled FTX did that right where they basically took customer deposits and stole them what binance is accused of is
00:16:20
taking customer deposits maybe not stealing them but commingling them with company funds that should be looked at
00:16:25
and and I think crypto customers should be protected against that however the case against coinbase they're alleging a
00:16:32
completely different set of facts which is effectively what guns are in the SEC are saying is that it is not legal to
00:16:38
operate a crypto Exchange in the United States that is what the SEC is staying because coinbase has basically done
00:16:44
everything right and I believe that genzer is far exceeding his authority and stating something like that it is
00:16:50
not up to the chairman of the SEC to say that Americans should not be holding crypto why as a free people should we
00:16:57
not be able to buy crypto if we want to you know why shouldn't we be able to buy
00:17:02
Bitcoin now maybe you apply rules around accredited investor status there should
00:17:08
be protections against unsophisticated investors buying stuff or get defrauded that's fine that's the framework that
00:17:14
Brian Armstrong is asking for but everyone should understand what the SEC is doing right now is
00:17:21
basically usurping Congressional Authority it should be Congress that makes the law if Congress wants to ban
00:17:27
crypto exchanges in the United States and prevent the citizens of the United States from owning crypto let Congress
00:17:33
do it it should not be up to Gensler to do that and the question is why is guns are going this far when previously he
00:17:40
had relationships in the industry apparently he was a consultant to binance and even worse he was talking to
00:17:47
FTX about giving them some special status and I think the reason is the the scuttlebutt is that he has an alliance
00:17:54
with Elizabeth Warren and the rumor is that you know she will make him treasury secretary if he basically destroys
00:17:59
crypto in the U.S sorry where's the evidence for that that's just someone's rumor and speculation this is the
00:18:04
scuttlebutt in the industry okay so it's it's someone this is in fact the back channel so just
00:18:11
to be clear rumor and innuendo is what you're saying no look what I would say is clear is that Gensler and Elizabeth
00:18:16
Warren have an alliance to destroy crypto in the U.S this was speculated about before with operation choke point
00:18:22
but now it's clear they're trying to shut down choke point we've talked about on the show before it was a series of
00:18:27
actions taken what you do when you're in a hotel at night no operation choke point was a series of
00:18:34
actions by the US government to basically destroy all the on-ramps to crypto so you couldn't get money into
00:18:40
the system now they're going further and they're basically saying it is illegal to operate a crypto Exchange in the
00:18:45
United States yes explain why I can explain why you're wrong what they're saying is it's not just the
00:18:54
exchange it's that the exchange contains uh unregistered security so it's a more
00:18:58
nuanced point I think I think I agree what security could you trade well if it passes the Howie test or it
00:19:06
is registered and there are people who have actually their registered their crypto passes the Howie test no they're
00:19:11
going back on that you could pass it if you limited it to accredited investors and the fact is
00:19:17
Brian Armstrong binance and a lot of crypto projects refused to exclude non-accredited investors and I watched
00:19:26
this happen up close and personally you're right about the unregistered Securities thing they're trying to say
00:19:32
that all crypto is on registered Securities no they literally they named them sacks
00:19:38
in the in the lawsuit they named the 16 or 13 what was it Friedberg so they they
00:19:43
know how to it was 13 they know how to craft this they're saying for these specific 13. now the industry does feel
00:19:48
you're correct and the back channel is everybody's against us but if they had just registered these they would not
00:19:54
have a problem I don't think they're gonna I think it's not important is not included he doesn't have a way of
00:20:01
registering them they do they don't want to so they claim they don't have a way of registering
00:20:06
they could register it just like we all know we have privacy there's been a lot of people tweeting about this that the
00:20:11
SEC has put out statements saying our door is open come talk to us there is no Open Door there is no one to talk to
00:20:17
they have no idea how to get registered how do you think this is going to get resolved Armstrong's talked publicly
00:20:23
about going to Congress to try and get some clarifying law passed are you familiar with any of the
00:20:30
any of the drafting that might be going on to support his cause here or do you think it's going to get settled in the
00:20:35
courts first of all I think I think Brian Armstrong is is a really really really good entrepreneur
00:20:42
and I'm a really big fan of his that said I just don't think that there's a lot of
00:20:50
political support to visit this issue right now and so unfortunately I'm pretty skeptical that you're going to see any
00:21:01
form of legislation pass I unfortunately think that the SEC has by and large put the entire
00:21:11
sector into mate and so I think that what Jason said is largely right which is that it's
00:21:20
going to force these companies to preserve Enterprise Value to to leave the United States and to
00:21:27
jurisdictionally operate from a different place and to basically IP block and IP gate U.S residents from
00:21:35
using their products and services I also think that they're going to have to pay large fines and so the only thing
00:21:42
that will be left is to adjudicate all of the staking stuff that that happened and whether that was right or
00:21:48
wrong right so the court it'll get settled it'll get decided I agree with that and I think I think that when you
00:21:53
start talking about minutia like well these 16 cryptos are okay or not okay no look you're kind of missing the point
00:22:00
the government led by Gensler is in a Full Assault on crypto and the goal is basically to either destroy in the US or
00:22:08
drive it offshore tremath is right about that and the question is why and I think
00:22:12
jaycal you made the point that progressives like Elizabeth Warren see crypto as competition to fiat currency
00:22:21
and they do not want there to be a competitor now what is the reason for that I think it's because of their
00:22:25
radical spending schemes remember in the first years of The Binding Administration the progressives wanted a
00:22:30
four and a half trillion dollar build back better Bill remember Larry Summers told them that you're
00:22:37
going to cause inflation and even the 750 billion dollar scope down version that they ultimately passed caused a lot
00:22:44
of inflation and it causes the problems that we have now that we're seeing in the economy but they wanted four and a
00:22:48
half trillion and when people were opposed to it and said we couldn't fund this they were in favor of minting
00:22:52
trillion dollar coins yeah so these are the people who don't want any check on their ability to spend down the full
00:23:00
faith and credit of the United States they would basically spend all the money that we have they would basically eat
00:23:06
the seed corn or don't have that we don't have that I think you guys agree we should not be spending and that is
00:23:12
why they're the faction in our political system who are most against crypto hold on I gotta respond to it two things
00:23:20
can be true one the government doesn't want to give up control of Fiat I agree with that
00:23:25
second thing that's also true is that this group of people did not want to play by the rules they knew the rules
00:23:30
they explicitly broke them for profit that's why they have them dead to rights you can name this operation choke point
00:23:37
you can brand it you can put out any conspiracy theory you want they did have the option
00:23:42
Theory you agree they're trying to run these guys out of business I said two things can be true at the same time
00:23:46
David these this is a tolerance for ambiguity being able to hold two things at the same time
00:23:51
and they don't want to give up control yeah that's what's happening that's the rule you have to file as a security you
00:23:57
have to only allow them you said that coinbase was a good actor I believe they have good intentions yes
00:24:03
I don't believe the other people do I do believe you believe that coinbase is in
00:24:07
violation of the law I believe the Securities they trading are in violation of Law and that's obvious if you but I
00:24:13
believe that law should change let me give you security points our security jaycal let me give you a third point and
00:24:19
sex Elizabeth Warren she may be motivated by the intention to preserve the authority of the Fiat
00:24:28
but is it not also possible that a large number of people lost a lot of money that they worked hard for and they used
00:24:36
to buy crypto assets and then the value of those assets went down and those people lost a lot of value I had there
00:24:43
was a group of guys that are house painters that painted my house two summers ago and they painted the
00:24:50
whole house they were here every day for hours every day so I got to speak to these guys
00:24:54
and these these guys were House Painters you know they they work for an hourly wage they do fairly well but every lunch
00:25:01
break every break they got all that they would talk about with one another was what cryptocurrency they're buying and
00:25:07
trading in and out of with the whole intention of making money they all believed that they had a good point of
00:25:14
view because they read something on the Internet or got some tweet or got some text or saw something on Tick Tock about
00:25:19
this one crypto asset or this crypto asset and they were trading in and out and all of the money that these guys
00:25:25
worked hard for was being invested in crypto assets you're right that set of facts is not great however I don't think
00:25:30
that's a motivation I think the motivation is to basically end crypto as a potential competitor to Fiat money in
00:25:37
the United States that's the motivation and they're going to use those fact patterns to basically support that
00:25:43
because look fair enough because we could handle that okay we could do the accredited investor test there should be
00:25:49
a framework or a set of guidelines under which it is legal for people to buy and
00:25:55
hold or trade crypto in the United States all that Brian has been asking for is give us a framework and genzer is
00:26:01
not giving a framework he's just trying to basically put them out of business okay look I think we've gone around this
00:26:06
topic this has been a great conversation I'm going to move forward to the next topic which I think is
00:26:13
really interesting in the vein of both de-globalization but also you know the scale at which Venture firms have gotten
00:26:22
to Sequoia decided this week and announced publicly that they're splitting off their China and India
00:26:28
slash southeast Asia funds as you guys obviously know Sequoia capital is a venture capital firm and
00:26:36
within that firm they manage multiple funds some of the funds that they've raised and managed have been
00:26:42
specifically targeted in China where they have 56 billion dollars I don't know if this number is accurate but
00:26:48
that's an incredible number 56 billion dollars of assets under management Focus just in Sequoia China and then they have
00:26:55
a sequoia India fund which has about four billion dollars of capital raised in just the last three
00:27:02
years and now they are separating the management company and the oversight of those funds into separate management
00:27:08
companies so Sequoia Capital will no longer oversee those China funds a new firm has been formed called Sequoia
00:27:15
China that is now owned and run by a separate management team based in China and Sequoia India is now called Peak 15
00:27:22
Partners which is owned and operated by a separate team of managers out of India
00:27:27
roll off Botha will manage the U.S and European Sequoia capital Neil Chen will oversee Sequoia China
00:27:36
I'm sorry Neil Shen and shailendra is saying we'll oversee Sequoia India I guess this is a question of did Sequoia
00:27:44
get too big or are they caving to pressure of the political issues arising with having deep relationships and ties
00:27:51
with China or as they have said a lot of competition between these different portfolios and companies Within These
00:27:57
portfolios amongst each other chamoth what's your read on the action is there anything to read into this and anything
00:28:02
to extrapolate from it well it's been a parade of missteps for Sequoia in the last couple of years and
00:28:10
I'll let Sequoia figure out who to blame for this but the reality is they I think felt a lot of fomo posts
00:28:18
off bank they raised this large Mega fund that kind of straddled all of the sub funds and straddled all of the
00:28:25
regions and so they dangled the carrot of trying to get into the early stage U.S fund by
00:28:31
investing in this big Mega fund that also had China and Indie exposure and growth exposure
00:28:36
then they tried this like very convoluted Evergreen structure right before the market fell
00:28:44
apart where you could basically become a permanent Capital vehicle and as far as I can tell from the outside
00:28:51
looking in it just seems like a taxi tax play for the GPS to not have to sell and realize capital gains
00:29:01
but that only works when the stock market keeps going up which it didn't and then it's summarily
00:29:06
Crush tech stocks 80 or 90 so that was a misstep and then when you put all these
00:29:11
things together now that China is Contracting and we've said this before I think China is
00:29:16
largely uninvestable for the next 30 or 40 years it just makes sense to jettison
00:29:23
now I will say though that Neil Shen is Elite if you consider in investing I would say I have a simple rubric anybody
00:29:30
who's made more than a billion dollars for themselves as an investor I consider Elite Neil Shen is Elite
00:29:37
and so he'll do just fine running that Sequoia China business I was surprised about why they would allow
00:29:46
India to leave there's nobody that Elite at Sequoia India by that rubric but India is a country growing at six
00:29:54
percent a year it literally looks like China in 2008 and 9. and so I'm not sure why you would let them leave I think
00:30:03
that you would want to attach them to yourself because it makes the US business look better you probably gets
00:30:09
differentiated and smoothed out returns but I think this is a little bit of particular of competition that there was
00:30:17
competition between the the different portfolio companies and it was leading to conflict
00:30:23
I mean that's dumb that happens in the United States Sequoia has always been known to fund everybody that they think
00:30:30
will make money no matter how much they compete when they back YouTube and Moritz was
00:30:36
sitting on the board at Google and sure look Sequoia Sequoia as an organization is Elite they're there to make money for
00:30:42
their LPS period end of story and so all of the other words that can go in any press release basically I think try to
00:30:49
hide the fact that this is an organization that's hats and missteps they're not on Solid Ground they've lost
00:30:55
a lot of money and they're trying to figure out what to do next I however if I was running that
00:31:01
organization would have probably done nothing and just let the dust settle and I think that all of these actions
00:31:10
are too close together and it's a little bit to me of flailing in the water and so I don't think it was a good idea
00:31:18
to let India leave I think it made a ton of sense to cut China but I think all of this stuff happened
00:31:25
started happening a few years ago starting with that eight or nine billion dollar Mega fund that they raised to try
00:31:31
to compete with suffix Saxony read on this yeah I mean I think it's a example probably an example of decoupling and
00:31:39
globalization going on so I agree we have to treat India and China separately with respect to China I just think it's
00:31:46
become harder and harder for Americans to do business in China both because we don't really have the visibility into
00:31:55
that system and there's too much political uncertainty so kind of touch Ma's point about it being increasingly
00:32:02
uninvestable but I also think that geopolitical concerns it's just very hard to straddle those concerns now
00:32:08
because the geopolitical competition is heating up so much I think it's investable for people like Neil Shen who
00:32:15
are insiders in that system so I think you know Elite Chinese investors can I'm sure make money in China over the next
00:32:22
few decades but I think it's just too hard for Americans to figure that out so I think them parting ways makes a lot of
00:32:30
sense I think it's going to simplify sequoia's life a lot India I I agree with jamas that that's
00:32:36
sort of a different question because India is going to be a huge growth economy over the next few decades and
00:32:41
they are a U.S Ally so it doesn't pose the same geopolitical risk but my guess is that it was just kind of
00:32:49
unwieldy that it's too unwieldy to kind of merge funding sources and firm management across two firms that are
00:32:59
really pretty different right the U.S aquarium firm and then this Indian firm so my guess is they just decoupled
00:33:05
because it was just getting too hard to manage and if you're an LP don't you just want the ability to say okay I'm
00:33:10
going to allocate this much money to India and I'm going to allocate this much money to the US I think LPS
00:33:16
probably like it too Sequoia China is frankly over the last 15 or 20 years as good and probably is
00:33:24
numerically better than Sequoia us so that was an elite organization just by itself Sequoia India I don't think
00:33:32
has much to talk about and so maybe what Roloff decided is this team is just not
00:33:37
very good so we might as well just cut it and we can revisit it later they probably have some number of years of a
00:33:42
non-compete and then they could come back into the market five years with a totally new team and that may be easier
00:33:47
so it may be easier just to just actually wanted to be separate look it's hard to cross returns from two totally
00:33:55
different funds right because one side one side's gonna be unhappy with the trade right yeah I I
00:34:01
can give you the jaycal's got actual information to share well no I mean I have to know I think I have the closest
00:34:07
one invest in your company right Jacob well I'm an LP in their funds they're printing money for me they back my
00:34:13
second startup roll-offs on the board of that company and still with me and I was
00:34:17
their first Scout when they started the scouts program which is the highest percentage performing fund I think they
00:34:23
ever had you're our resident Captain America so as a patriot how do you feel about it
00:34:29
they are put that aside um sequoise 20 of the NASDAQ this is the greatest Venture firm of all time hands down and
00:34:35
the Sequoia fund which refers you mean companies they've invested in companies I guess and so the reason the Sequoia
00:34:43
fund came out this Evergreen fund was because a lot of their LPS wanted Sequoia to manage the public equities
00:34:51
going forward because they didn't want to sell them because they realized [ __ ] that the massive gains the the
00:34:58
gains from Google Apple Etc of these Investments that they did when they were private companies Cisco the gains from
00:35:07
public forward were greater than the gains in private and I've been in on these presentations I've sat through
00:35:12
them uh with the Sequoia team and so when you manage those public ones we've all talked about the denominator problem
00:35:21
here the denominator problem is hey are they Venture returns or are they part of
00:35:24
the public Equity so at a giant endowment they want to put them into the equities bucket get them out of the
00:35:28
Venture bucket and Sequoia store an opportunity there to manage this Evergreen fund I'm sure there are tax
00:35:34
advantages to it of course but with relation to what they did in China and India these these were incredibly
00:35:42
prescient and Innovative things they did in 2000 and 2005 when they started India and then
00:35:49
China was 2005 I believe they found domestic teams you need domestic teams to do this properly especially in places
00:35:56
with different governance and different regulations and it gives them autonomy they were incredible Investments
00:36:03
but what's happening right now is all venture Investments because of AI and chips and the decoupling with China are
00:36:10
now under massive scrutiny so they can say there's brand confusion you can talk about you know the collisions and who's
00:36:18
going to back this Chinese entrepreneur and Indian entrepreneur who also is operating in the US right these
00:36:23
businesses operate in the U.S and so what really is happening is the government is going to stop all
00:36:30
U.S Venture investing in China that's what's going to happen in the coming months and so they're just getting ahead
00:36:35
of that and now they will compete it really has to do with chips and AI you may have seen some of these stories
00:36:42
and nobody's going to invest your if an American invests in AI in China that's going to be bad and the same with chips
00:36:48
yeah you're right there are a bunch of stories about whether U.S investors should be investing in AI in China and
00:36:55
people are saying this was Un-American because it was basically going to give China an advantage against us in this
00:37:01
key industry and I think that point is a good example of what I'm talking about with the geopolitical concerns it's just
00:37:06
getting too complicated yes for Americans to invest in China it raises too many geopolitical concerns and I
00:37:12
think Sequoia is massively simplifying its life by just splitting these things up and being out did you see Keith
00:37:18
Roberts tweets on this yeah that's what we're referring to yeah Keith from boy tweeted basically like it's Un-American
00:37:24
to invest in China at this point yeah we've talked about this before I mean look the Chinese relationship primarily
00:37:30
used to be seen as an economic relationship and people are looking for a win-win basically trade scenarios and
00:37:36
it was not seen as a moral to invest western China now the relationship is primarily seen through a geopolitical
00:37:42
lens which is to say the balance of power which is a zero-sum game it's about you know how much better is the US
00:37:48
doing how much more powerful is it than China and anybody who's perceived as helping China in that rubric now is
00:37:54
looked on skeptically within what do you think the United States about that well like I said I don't think that's
00:38:01
going to change so I think Sukhoi is doing the right thing to cut like I said simplify its life what's your personal
00:38:05
opinion I'm curious I think that it should be possible to do business with China without it being seen as
00:38:13
either unpatriotic or immoral however there are strategic technologies that are just going to be I think it's too
00:38:21
hard and too risky to um to be supporting China in chips and AI yeah I mean look if somebody is using
00:38:29
Chinese manufacturing to make toys or clothes I don't think that's fun at least strategic in a geopolitical way but
00:38:37
if you're helping them make the next generation of chips that's going to raise a lot of questions
00:38:44
so so a VC firm Freebird can't take out chips and AI from their investment hold on hold on I want to say something
00:38:50
because sure this reminds me of when Benchmark actually had Benchmark Europe and then they cut it do you guys
00:38:56
remember that right yeah I do yeah and kind of retrenched they weren't retrenching from a position of strength
00:39:01
they were retrenching to re-establish themselves after a bunch of missteps so I think typically these retrenchments
00:39:06
happen when there's a little bit of internal chaos and mismanagement and underperformance that's not the case
00:39:12
here I can assure you yeah but I actually think retrenching is good because it simplifies things
00:39:19
yeah I I totally agree with you my point is when I saw that overlay fund I was like this is questionable but then when
00:39:26
I saw that weird Evergreen fund that to me just seemed like a tax ARB and I thought to myself as a person who's
00:39:34
looked at this exact stuff for my own stuff what I did was I just converted it to a
00:39:39
family office and from a tax perspective it was much simpler but that exact same
00:39:44
structure I looked at for myself and the reason that that structure exists and Jason I know you want to think it's
00:39:51
because these endowments want them to manage public equities I still work with a few endowments and pension systems
00:39:56
they don't and the reason they don't is they're not allowed to they're not allowed for concentration purposes they
00:40:01
pay other people to manage it they have these outside consultants and for fiduciary perspective you have to do all
00:40:07
of these things with respect to managing risk and one of the most obvious things
00:40:10
that these foundations do is they get distributions and they sell they don't hold and so the reason why you'd want to
00:40:16
look at the long-term gains of a stock that you distributed is because the GP sold too early not the lp and I just
00:40:25
don't I think that you should not just be a blithe surrogate on this topic and actually really think about it well I
00:40:31
mean I don't think you need to well I'm not I'm not and you know square if you look at something like that you know
00:40:37
rule off still on the border Square I believe so they Sequoia has realized over time you know as it's been
00:40:42
explained to me as NLP that you know these companies grow the outliers continue to grow massively
00:40:49
when they become public and Sequoia is now staying on the board of those companies and so they actually have the
00:40:54
most insight into it because they backed it when it was two people and then they're still on the board money is not
00:40:59
infinite and if you're a foundation and you're legally obligated to distribute some percentage every year you need the
00:41:05
money back and the foundations do get to choose some foundations want to go along
00:41:09
Harvard or whoever I'm just picking you know one of the large ones if somebody's
00:41:13
got 30 40 billion dollars they may not need to liquidate that and they might very much
00:41:17
the only person that is in a position to actually hold for the long term because
00:41:21
it's so tax advantageous is the GP that is why that fund was created and I will bet you
00:41:27
if you ask him under oath why they did it I'll tell you it was for themselves people have the choice I bet you a
00:41:36
million dollars for charity whatever you want to do I bet you if you put them under oath then you subpo them and you
00:41:40
ask him why he did it he'll say he did it for himself and that's fine all I'm saying is that's the kind of complexity
00:41:46
that sax is talking about that does not add to success it is over complexifying something that doesn't need to be
00:41:52
complicated yeah I disagree with you but we can just move on well we agree to disagree
00:41:56
sometimes here on the all-in podcast we're going to move on for our last topic of the day with the uh
00:42:02
announcements can we talk messy no no we're not we're because we're going to do one last topic which I think PGA and
00:42:07
Messi go together yeah so let's just talk about PGA guys I appreciate the messy interest but
00:42:14
we're going to talk about something less messy or even more messy who cares actually think it's pretty interesting
00:42:19
for a couple of reasons so as you guys know the PGA Tour has been around since 1930 I think the PGA Tour makes 1.6
00:42:27
billion dollars a year if reports are correct I make 1.6 billion a year boring that's I mean depends on the year
00:42:34
all of the players on the PGA tour are independent contractors so uh Saudi Arabia's public investment fund and this
00:42:42
is what I think is one of the more interesting aspects of this story and maybe speaks to a broader kind of
00:42:49
set of geopolitical transitions that are underway the Saudi Arabian public invention uh public
00:42:57
investment fund started live golf as an alternative to the PGA Tour live golf live golf They invested uh two billion
00:43:04
dollars of capital and offered guarantees to Golfers to come and get on their tour they ended up offering at one
00:43:13
point Tiger Woods reportedly got a 800 million dollar guarantee to join their tour which he turned down
00:43:20
Phil Mickelson got a reported 200 million guarantee which he took to join the tour hidaki Matsuyama got offered
00:43:26
750k 750 million so seven of the 10 top paid golfers in the world actually signed up and
00:43:36
um it caused obviously significant disruption to what has effectively been a monopoly which is the PGA tour in golf
00:43:42
in professional golf and uh here we are two years later and it was announced this week that live and
00:43:50
PGA are merging and the current PGA Tour conditioner Jay Moynihan will serve as CEO of the new entity
00:43:56
just by way of reference J Moynihan makes a reported 14 to 15 million dollars a year in salary as CEO of the
00:44:03
PGA Tour he will now be CEO of this combined organization one big question mark is how much is he getting paid and
00:44:10
did that help secure and solidify this deal getting done but I think another big question is do
00:44:16
we think this will actually close will this face Regulatory and antitrust scrutiny will this face cypheus because
00:44:21
it is the Saudi Arabian public investment fund that is effectively taking a large stake in the PGA tour
00:44:27
let's go to our resident professional sports team owner or former minority owner tomoth
00:44:35
and he takes on on this announced merger what does it say about the pga's ability
00:44:40
to hold action this is what's so crazy about your topic selection Messi was offered 1.6 billion dollars
00:44:47
personally by the Saudis and you don't want to talk about that because you want to talk about a whole organization
00:44:52
playing an Antiquated sport that itself generates 1.6 billion dollars what's your point I don't care about
00:45:04
golf I don't care the reason this is so controversial is that they're calling it Sports washing
00:45:11
trying to make the reputation of Saturday more palatable in the west by using Sports things people love the
00:45:18
reason this has become controversial is because of the hypocrisy of it the PGA fought against Liv
00:45:25
and this guy Jay Moynihan who is the CEO of this he basically evoked the 911 families and went on a whole thing about
00:45:35
how evil live was only to then secure the bag and then there's some background here about well there was a lawsuit
00:45:44
between the live golfers you know who are now banned from playing the PGA when they signed up and Anti-Trust stuff and
00:45:51
so the hypocrisy of the group is what's being pulled into the question here this
00:45:57
is why it's important the players who took the money were ostracized as supporting an evil regime
00:46:05
yeah and now it's clear that they were smart and tigers should have taken the money
00:46:10
and actually the guy who said as much at the time was was Trump you know he you know yeah he nailed it it's like one of
00:46:18
these uh once again once again no he said he's basically said that take the money from Lyft
00:46:25
because eventually live in PGA are going to merge and then the guys who stuck with BJ are gonna get nothing and
00:46:29
they're gonna feel like idiots he was totally right he's you don't think that that's insane I
00:46:36
mean come on it's pretty amazing tell me when you get to Messi and the fact that
00:46:40
these guys were proclaiming that if you're gonna go join this tour you're joining you know you're lining up I
00:46:45
don't understand whether I don't understand whether you're naive or dumb this is like about money it's always
00:46:50
about money professional sports all the money's been about money what what are we what are we talking about money money
00:46:56
money money money there's your answer money drove the answer money drove the deals now money drove the
00:47:02
merger I don't understand can we talk about Messi please it's so much more interesting okay go talk about message
00:47:08
I mean the messy thing is so incredible because Cristiano Ronaldo went to a team
00:47:14
in Saudi to play in the August of his career the last two or three years and this has been a thing that started with
00:47:21
Pele in the 70s Pele came to the New York Cosmos and played Beckham famously did it as well came to the LA Galaxy
00:47:28
but Beckham did this one interesting thing which is he said okay I'm gonna come to playing the MLS
00:47:34
on one condition really which is I'll take a huge pay cut and all this stuff but I want an option to buy an expansion
00:47:40
team for 25 million bucks fast forward he ended up buying intermiami that team is now worth 585 million
00:47:49
dollars so Messi is 36 years old he's about to enter the August of his career he's won
00:47:55
everything he's done everything possible he is so incredible I mean I love him I love him
00:48:01
he gets offered 400 million dollars a year for four years to go play in Saudi Arabia a 1.6 billion dollar deal and you
00:48:10
know there's no income tax here so that's like 1.6 billion dollars right in his pocket
00:48:15
except the deal that he did which was for a lot less upfront is really interesting
00:48:22
he basically said I'll come to the United States and play in intermiami for for the Miami Football Club
00:48:30
but I am you know basically I'm not sure he said this so I'm using my own words I'm the greatest player in the world
00:48:38
every time I do something magical on the field I'm creating content that will sell tickets and create brand awareness
00:48:44
and move the interest level of soccer in the United States I'm a content creator
00:48:49
so I want a piece of this content and so Apple who signed a two and a half billion
00:48:56
dollar 10-year license for the MLS said you're right you're probably going to sell more subscriptions for me I'll give
00:49:01
you a piece of the ref share and then Adidas said you know what you're right you're probably gonna sell
00:49:07
more shoes for me I'll give you a piece of those shoes so in one Fell Swoop I think what's
00:49:13
amazing is Messi is not an athlete in this deal I think going back to a theme that we've talked about a lot is
00:49:20
he is this ultimate penultimate whatever he's an elite content creator he's the equity
00:49:27
who is now creating incredible who will come to the United States to create this
00:49:32
incredible content that will move viewership move merchandise and he's going to monetize that so it's
00:49:39
effectively like becoming the Jordan brand getting a piece of Netflix all in one he has the equity in those
00:49:45
businesses basically yeah there's a subtle Point shabbat's making in the deal you have the person who's
00:49:51
responsible for distribution so this would be the same as like the NBA on ABC ESPN or TNT and TNT or ESPN saying you
00:49:58
know what you're so important LeBron James to play in this or Steph Curry we're going to give you a piece of the
00:50:04
subscriptions to ESPN so apple is giving him rev share on their Apple TV league pass for MLS that's nuts like and this
00:50:15
is I think it goes back to the live uh deal with PGA which is people are looking at these sports leagues and
00:50:20
saying let's get creative it goes back into a different one the the NBA just signed a new collective bargaining
00:50:26
agreement that they're going to ratify I always thought that the real thing that
00:50:30
the NBA players association should be asking for Equity was Equity yeah and that equity could be Phantom equity in
00:50:38
the teams because it's clear that in the absence of the players there's no viewership and there's no appreciation
00:50:44
in the value of those franchises and so the idea that LeBron you know Steph Dre KD
00:50:52
don't own a huge piece of the underlying Equity gains that they're creating in the period in which their players is
00:50:59
pretty crazy now the ownership their perspective is while we translate that in terms of rapture but it's really not
00:51:06
true because if you look at the kager the irr of the franchise values versus the catering of the salaries
00:51:12
they're not equivalent yeah so I just think it has huge implications to all the professional sports leagues
00:51:20
because these big stars should be asking their agents and their managers how do I
00:51:24
do a deal like message I am the ultimate content creator in my league the Dynamics are changing it will it will no
00:51:31
longer be an employee Capital labor situation but capital is merging with labor and labor labor is basically
00:51:39
becoming the equity in the equation and they are 100 of the business and by the way the reason we see it
00:51:46
happening so much is because of the social media age and it's really incredible I know you have more
00:51:53
I have more to say I just want to hire a highlight I need to go I have to go to a
00:51:56
kindergarten graduation congratulations congratulations I love you guys I'll see
00:52:01
you later adios congrats to your kid thank God but what's really interesting to your point about the CBA is they're
00:52:09
going to make these huge salaries they're not going to give them the equity as part of
00:52:14
their five-year deal they make the money they then have the ability to invest in
00:52:19
a team so you could be LeBron and you could be investing in the Knicks maybe if somebody wanted to sell a percentage
00:52:25
of it you can invest in any NBA team any sports betting team any sports betting I
00:52:31
actually think there's a simpler way to do this which is it's it I think it's fair to say that when you join a team
00:52:35
it's like joining a company yeah and you can create Shadow equity and that shadow
00:52:40
Equity says you came in at this point right you left at this point here was the Delta of the value and I think a
00:52:47
good Agent should be negotiating on behalf of a player most players will not get that much a few basis points of that
00:52:53
value yeah but the idea that a LeBron James can go to on Miami and double the franchise value double yeah right from
00:53:01
you know one okay great stuff comes in at 480 million and is now 5.3 billion so that's a
00:53:09
10xing plus a value you know is Step responsible for 10 or 15 should a billion dollars of that go to Steph Dre
00:53:17
and Clay I think you can make a great claim that it could yeah absolutely put them on the map so yeah
00:53:22
it would be and it would be pretty easy to do and what this might do is keep people on the same team longer which is
00:53:28
what fans want exactly why people moving around that's a great point and private
00:53:32
companies like Cargill or Coke Industries they have these shadow Equity programs that they've had for years for
00:53:39
decades that they've run on behalf of their employees so we know how to run Phantom Equity programs in private
00:53:47
businesses and I just think the leadership of the NBA Players Association the NFL players
00:53:53
Association is right now still lacking the sophistication to understand this well enough to then
00:54:00
propose when the next time it is to to negotiate this kind of deal but when you see things like this messy deal
00:54:08
I think it's a game changer it is a game changer and I think for sports I don't know if you saw Adam Silver gave
00:54:16
you know a little press conference with the finals and everything he was talking
00:54:19
about the Jay Moran situation with the guns and just a lot of like topics coming up but one of the topics that was
00:54:24
probably underappreciated was he was talking about the bundle the cable bundles going away and that people can't
00:54:31
watch like the TNT uh NBA on TNT whatever that is with you know Charles Barkley et cetera and he wants that to
00:54:39
be available for free so he's going to challenge people in the new TV deal if you want to have the NBA you have to
00:54:44
have it available to everybody because the number of people who can see NBA games has been going down I have a
00:54:49
question for you more people do you think more people would pay for a subscription to watch the Knicks games
00:54:56
wherever they happen to be all over the world or a subscription to watch Steph Curry no matter what team he plays on
00:55:01
the old Generations are loyal to the teams the new generations loyalty players so it's a generation numerical
00:55:06
numerical question which one's great it's probably a jump ball right now but it will eventually be they'll follow the
00:55:12
players because this new generation follows players like our kids like I don't know
00:55:16
LeBron I think you could probably sell a few hundred thousand subscriptions to the Knicks and I think you'd sell mid
00:55:23
Millions for Stuff what's going to happen now is I think they're going to they just want this to
00:55:29
be ad based and to directly subscribe so I directly subscribe to the NBA I get every game for 200 a year with no ads
00:55:35
you know what we should do I actually have I have a great idea what we should do is we should what Liv did to the PGA
00:55:41
we should do to the NBA let's get together 20 billion dollars let's start a competitive NBA league where we give
00:55:48
the players oh I'm serious a structured Phantom Equity plan pay these guys 100 million bucks a year
00:55:55
get all the big guys to come everybody else will come and just blow the whole thing wide open
00:55:59
by the way that's the blueprint now if you want to really compete with the with the NFL or the NBA or the NHL this is
00:56:05
what you should do put together 20 or 30 billion which is not that much money and go for it you only need to get a
00:56:11
couple of stars to to blow it up and if you give Stars the equity in the league they'll convince all the other players
00:56:15
to come all right give let's give sack some red meat here you sax will give you a little red meat you want Tucker on
00:56:20
Twitter here's your redmi choices as we wrap you want Tucker on Twitter you want
00:56:26
a Russian controlled dam being destroyed for a major flood or do you want Chris Christie joining the
00:56:34
race which red meat would you like which red meat we put in front of crazy hair well I mean what's happening Ukraine is
00:56:41
really the big news this week intensive has well the Ukrainian counter offensive has started in earnest
00:56:48
and yes in conjunction with that you had the destruction of that major Dam which
00:56:52
it's not clear who did it I mean both sides are pointing the finger at each other so and there are
00:56:58
reasonable Arguments for why either side may have done it in terms of who benefits it seems to benefit the
00:57:05
ukrainians more because the destruction of the dam washed out a bunch of Russian
00:57:10
defensive fortifications and Villages of Russian speakers on the other hand the Russians were in control of the dam
00:57:20
so it would have been easier for them to carry it out if they had wanted to we just don't know but I think you know
00:57:26
events have now moved beyond that and we are now probably in the third or fourth
00:57:30
day of of the Ukrainian counter offensive of course has not been officially declared but there is major
00:57:35
major fighting happening now where Ukrainian armored divisions are seeking to you know penetrate Russian defensive
00:57:44
lines around zaparizia and so the long-awaited Ukrainian counter offensive has certainly begun how does the
00:57:52
the dam relate to the Nordstrom pipeline because these are both situations where
00:57:57
people are like who actually did it what's their motivation and let's face it these are chaotic actors at times and
00:58:05
figuring out who has the motivation to do these things seems like a leveling up kind of game
00:58:11
because you can't put it past either party in some cases but in the case of nortream
00:58:17
people saying hey it was the Ukraine but then there's this argument that the Ukraine is not capable of doing it or
00:58:22
maybe it was sanctioned by the us or the west and then executed by Ukraine where
00:58:26
do you wind up with all these so on on nordstream we're now on our third cover Story the CIA sourcing their
00:58:32
stenographers at the Washington Post have now claimed that it was six Ukrainian dudes in a yacht who blew up
00:58:39
nordstream no seriously and if you look at this boat I'll put a photo of the boat on the
00:58:44
screen it's it's pretty silly yeah the opinions do not have a navy and they certainly don't have Navy Seals I don't
00:58:51
believe they have the capability to by the way this destruction in Nordstrom Nordstrom was this huge underwater steel
00:58:59
and concrete structure it's not that deep though because it's only 150 or 200 feet deep at the lower points it's deep
00:59:07
enough and it took a lot of explosives so they had to know what they were doing so I I dove 120 feet once so it's but
00:59:13
the point is that when when Nordstrom was first destroyed the media rushed out to say well the
00:59:19
Russians did it even though the Russians had no motive to do it it was their pipeline is there a pipeline they could
00:59:24
just turn it off if they wanted to but this is what we hear is that every time something destructive happens it's
00:59:29
the Russians did it why would they attack themselves because they're so crazy we heard this with the Nord stream
00:59:34
when belgarad which is a Russian District just across the border from Ukraine was attacked
00:59:40
it was claimed that the Russians did it these were Russian insurgents no that's pretty silly it was ukrainians dressed
00:59:46
in Russian uniforms and just recently when there were drone attacks on Moscow we were also told that oh it wasn't the
00:59:52
ukrainians who did it was Russian dissidents or something which again makes no sense so this is not to say
00:59:57
that the Russians didn't blow up that Dam it's just to say that whenever the story
01:00:03
is rushed out that the Russians did something highly destructive you have to we need to see some evidence here and we
01:00:09
just don't know it's just hard to know the fog of war is thick all right what do you think of Tucker's
01:00:15
first show incredible getting sued but he got The Tweak got at least like 90 million
01:00:22
views which means the video probably got 10 of that or something yesterday was at 17 million views or
01:00:28
something like that so I'm sure it's more today so no he's getting a huge distribution through Twitter arguably
01:00:34
it's more distribution it's almost certainly more distribution than he got through Fox Fox was 3 million right yes
01:00:39
that's how many viewers he gets on Fox yeah well Fox is half of that now because they've
01:00:44
David traded so much viewership after Tucker left but look the only thing that I think Tucker got through Fox was
01:00:51
access to frankly a viewership base that's not very online there are a lot of old people who watch Fox who just
01:00:57
aren't on social media that's it though everybody else can see it on Twitter and
01:01:02
he's getting more Distribution on Twitter super distribution is the way to go he's gonna get
01:01:08
25 million people and of course monetizing it is the hard part because Fox is subscription revenue and
01:01:15
everything else is there but apparently he's creating a list um you know he advertised the website
01:01:19
Tucker carlson.com at the end of his video and you can go there and sign up for you can subscribe direct and get it
01:01:27
on his website well I don't think he's monetizing it yet but you can sign up for alerts and so forth so he's clearly
01:01:32
creating a list of some kind oh that's probably because he yeah with his contract he's still getting paid and so
01:01:38
he's like yeah daily wire is the model I mean they they've got well over 100 million in Revenue I understand and they
01:01:45
have a massive subscription business so there's a clear path all right Hey listen for the uh world's greatest
01:01:50
moderator living in the Bay Area David Friedberg and uh the dictator himself apatia and
01:01:58
the architect hosting any number of fundraisers for any number of politicians David sacks the rain man I
01:02:05
am the world's greatest moderator taking a week off we'll see you next week oh and uh enjoy some q a here from the live
01:02:12
angels Summit 100 people in Napa thanks for coming besties I appreciate you uh love you supporting the event love you
01:02:18
besties see you next time bye-bye all right welcome to a baptism John the Baptist are you ready to accept
01:02:28
Christ freeberg into your soul I honestly have no idea what I'm doing here I've I have no idea who these
01:02:37
people are or what this is or why you're all wearing white I mean seriously I'm sure you're very
01:02:45
nice people but I have no idea what this is have you seen the Wicker man Jacob was like we're taping an episode in Napa
01:02:52
and I'm like what on a you know off day what what is this Monday today's Monday it's Monday are you okay buddy yeah
01:02:59
you low blood sugar yeah actually I do bring us like a cheese plate or something
01:03:04
and guacamole and chips police but honestly like I didn't sign up for this I thought we
01:03:14
we disagreed to a podcast and somehow we've been roped into doing some dog and pony show for jayco's LPS
01:03:20
by the way is that true or what these are a bunch of your LPS as well you just have never met them
01:03:28
literally okay I'll drink it yes yes sir literally somebody's like Jake out I'm with this incredible endowment we're
01:03:36
incredibly successful I'm like oh that's great Yes you heard I'm raising a fun they're like no no no no
01:03:40
um we heard uh sax is going to be here I'm like yeah you want to meet him invest in his phone oh no we've invested
01:03:44
in all these funds we just never met him I said wow that's one way to do it that's how successful sex is it's pretty
01:03:52
funny two things they've never seen tax and a distribution great [ __ ] decision whoever you are
01:04:02
you're a real [ __ ] genius back there except for the fun we already paid back oh my God I lost control of it in the
01:04:13
first 90 seconds why should tonight be any different except for the five-year-old fun that's
01:04:18
already fully returned okay whoa easy so uh welcome to the angel Summit uh these are my besties we do a
01:04:26
podcast called all in we thought we'd do it live this is the fourth time we've ever appeared on stage together the
01:04:34
first two times we're at freeburg's LP conference in the Presidio yeah I resented that one too
01:04:44
[Music] yes I came out in his mask he took his gloves off it was very uncomfortable for
01:04:50
him but he eased into a seat and then of course we did the all in Summit uh last
01:04:55
year in Miami and this is the fourth time so it's great to be out here we have a couple of news items on the
01:05:01
docket we could start with or we can go right to q a with these many audience members who have a lot of questions what
01:05:07
would your gentlemen like to do so math has a few words he'd like to say go ahead whatever you guys want to do
01:05:13
chamoth is drunk by the way he texted us you got grin on his face that's the chamoth
01:05:20
grin he gives when he decided like x capital scheming that he would not have LPS and he would just invest his own
01:05:27
money he does not care so it's the gloves are off let's do q a j Levy's sax what's the path for
01:05:35
DeSantis to win the nomination um and get the base of trump oh red meat oh goodness
01:05:41
here we go I think the path basically is he has to win Iowa and or New Hampshire
01:05:46
it's just that simple but keep in mind that Trump did not win Iowa last or in 2016 Ted Cruz did Iowa
01:05:55
tends to be more religious um I think DeSantis is trying to outflank Trump on the right actually on
01:06:03
certain issues and um so he's on the ground there campaigning from what I understand he's
01:06:09
generating a lot of interest and enthusiasm and he's going to keep plugging away at
01:06:13
it I think he's going to out hustle Trump I'm not saying he's going to win but I think he's going to work harder
01:06:18
and the path would be that over the next what is it like nine months that Trump's
01:06:24
style and message which is admittedly much more entertaining than DeSantis but kind of fatiguing whether that kind of
01:06:31
gets old and DeSantis more like discipline messaging people just kind of wake up and say you know what like I
01:06:39
don't really want to go back to the chaos of of the whole Trump show this seems like
01:06:44
better to me so um that's basically what I think has to happen is Trump fatigue has to set in
01:06:50
and people realize that there's a different was that CNN Town Hall a sign that some group of people find him incredibly
01:06:58
entertaining and the media themselves want him back because it's great for Ratings Allah Menken on session or
01:07:06
is it a sign that like my God that's so [ __ ] exhausting like you're saying sex what do you think I think that the
01:07:13
the base like the town hall because it was Trump walking into the lion's den and standing up to the mainstream media
01:07:20
which is what they like but I don't think it did anything to help them in the general because I think that viewers
01:07:26
who don't like Trump or aren't entertained by Trump I mean there's nothing there to really grab onto I
01:07:32
don't think so um but but look I think your point about who does the media want to get the
01:07:37
Republican nomination definitely Trump because he's good for Ratings I mean it really is that simple and they think
01:07:43
they can beat him so right now the Biden people the Trump people and the media all want Trump over DeSantis and that is
01:07:52
why like DeSantis is getting dispatched by everybody right now is because you know everyone's kind of aligned on
01:08:00
this but the minute that Trump gets the nomination it's all going to turn the media all of a sudden is going to turn
01:08:05
on Trump and then we're going to see what the real campaign is going to be DeSantis is in show business as they
01:08:10
said on secession was that the quote he show business he's box office he's not Bach yeah DeSantis isn't box office he's
01:08:16
a he's somebody who actually can execute right right but also that's that's why he would be a good move for Republicans
01:08:22
I think is because he doesn't give the Democrats as much to work with yeah all right that Trump's entertaining but he
01:08:27
gives his enemies so much to work with all right another question from the back go ahead stand up tell us your name yeah
01:08:33
uh Sal daher from Boston and uh the question is much less exciting uh regarding sort of
01:08:43
in the problem of of bank bank runs and Bank insurance by the fed and bailing out uh you know average people bailing
01:08:52
out wealthy people I've heard a lot of solutions about this I've been so careers in banking for a
01:09:00
while um the idea of having Senior Management and the board have direct liability if
01:09:07
the feds have to step in to rescue the bank do you think that that could be a step in the right direction in
01:09:14
preventing Banks from taking risks they really shouldn't have taken I mean the 2008 disaster the subprime crisis could
01:09:20
have been addressed with this I think this crisis with SVP could have been addressed with management just having a
01:09:26
lot more to lose okay so let me just First Take issue with the terminology of bailout I know that's what everyone
01:09:32
calls it a bailout in my mind is when the shareholders the bondholders of the bank get bailed out by taxpayers that
01:09:39
happened in 2008 it did not happen here here the question was whether depositors
01:09:44
get made whole or not I personally don't consider that a bailout I understand there are people
01:09:49
who do but it is a slightly different issue as to the bank management you know uh you're talking about like a strict
01:09:56
liability standard here that I mean basically you're talking about piercing the corporate veil and making
01:10:03
the bank Executives and their directors liable for mismanagement of the bank and
01:10:10
that is that's a pretty high bar that's a really high bar and the problem with it is that I I would never serve on the
01:10:16
board of a bank I mean I probably wouldn't anyway but if you told me that I could be liable piercing the Bell yes
01:10:23
right we have a thing called the business judgment rule you know in Delaware where if directors and officers
01:10:31
of the company perform their job in a good faith way making the best decisions they can and it goes wrong they're not
01:10:40
typically liable for that maybe the corporation's liable if they're not personally liable I'd like it's if you
01:10:45
did that the managers wouldn't invest the cash in anything because they wouldn't want to take any
01:10:51
risk of loss and in order to operate the business which has a bunch of people working there and a bunch of banks that
01:10:56
they got to operate they're going to charge you a fee to hold your money for you and so what happens is interest
01:11:00
rates turn negative and you basically have to pay someone to hold your money for you and that's what's a little bit
01:11:05
messed up about the way the banking system works today is you're effectively giving a money manager the right to
01:11:10
invest your money for you they take your money they pay you a low interest rate and they go invested in high interest
01:11:14
rate stuff by taking on risk with your capital and ultimately they can take losses on that and if you wanted to make
01:11:20
them liable for those losses they're not going to take that risk and the bank is
01:11:24
going to have to change its business model from being an Arbitrage business to being a service fee business and
01:11:29
they're gonna have to figure out other ways to charge you service fees including charging you to hold your
01:11:33
money in order to make money and that's what a lot of the banks are now doing first for public and others have now
01:11:38
proclaimed that they're going to start charging a lot more service fees to hold your money and they're going to start
01:11:42
taking a lot less risk so we're already headed in that direction but that's fundamentally what I think would let's
01:11:47
take another question from the audience good evening I'm Lisa song Sutton Las Vegas Nevada I'm GP in the veteran fund
01:11:54
as investors you all invest in entrepreneurs theoretically you support American entrepreneurship what role if
01:12:01
any do you think VCS should have in shaping advocating supporting conservative economic policy in the
01:12:09
country Shama zero I think that we have to know the role that you're doing if you're a venture
01:12:19
investor which is you're buying a deep out of the money option and I think that you want to motivate
01:12:26
the people that you are partnering with to take really thoughtful but outsized risked
01:12:32
and so I don't think there's a lot of room for conservativism I do think that there's room for misallocation of
01:12:40
capital and I think that there's people that can help guide that but the reality is that
01:12:45
when you start a company it's 95 percent likely to fail and the Venture investor is signing up for a 70
01:12:54
or 80 percent probability that they lose capital maybe a 10 or 15 or 20 percent chance
01:13:00
that they get their money back and then these small five percent chance that it becomes reasonable
01:13:06
so in that lens I don't think that's where conservative economic policies really
01:13:14
should play a role I think you just kind of got to go for it and if it's gonna win it's going to
01:13:20
win big and if it doesn't you lose one extra money I think like where you want conservative economic and rational
01:13:27
thinking is when you go to the extreme other end which is just like the large-scale decisions that affect the
01:13:35
economic vibrancy of the country in which you live and there on the margins you probably want to be more rational
01:13:40
than unrational irrational but as a venture investor I think you want to be irrational
01:13:45
but I also think you have to be very judgmental and the reality is that most companies
01:13:49
aren't going to work and most people this may seem controversial most people actually when push comes to shove are a
01:14:00
little afraid of the decisions they need to make to be truly successful they're not willing to fire the people
01:14:06
that they need to fire they're not willing to be extreme in the product they want to build they're not willing
01:14:10
to price it they're not willing to go to market in an extreme way and it tends to
01:14:15
be that these companies fail because of that a lack of Courage a lack of conviction it's a lack of courage or
01:14:20
conviction because that that's a very heightened word I just think that when push comes to shove most people implode
01:14:25
with the pressure of making a very very hard decision interesting all right in my experience
01:14:31
it could be yours could be no I mean I I agree with you largely when a startup does fail
01:14:37
if the experienced people around it are watching and can't get through to the founder or the founding team it's
01:14:43
typically they are blocking their own success they're unwilling to fire their co-founder their CTO as the example
01:14:49
you're alluding to perhaps or raise the price of the software and lose some customers or to drive people to work
01:14:54
harder because you've got a competitor in the space and that's why you see extreme people win in our Pursuit and I
01:15:02
think there's been just a great fallacy that's gone on that you can have live work balance or life work balance and
01:15:07
you could have this Nirvana where you have it all the fact is the great companies are made by people who make
01:15:13
great sacrifices period full stop and if you're not willing to make the great sacrifice you're not going to have great
01:15:17
outcomes hi uh David Samuel earlier today Jason you had kind of a doomsday or Ai panelist and my question is you
01:15:25
guys have been thrust into the public spotlight and we look at Deep fakes in the next
01:15:30
year or two as you talk about you know tweeting on Friday versus Wednesday how do you think about somebody having
01:15:37
each of you saying things that you did not say and like how might we know whether chamoth said that or it was a
01:15:45
deep fake saying it I already have that problem Insider last week where somebody was
01:15:52
saying I had a phone call I never had so how do we solve this especially for you
01:15:56
as public as public two things two things one I don't think people can say more outlandish and damaging things in
01:16:03
AI than we say ourselves on this podcast at times but uh number two you know as we've discussed many
01:16:10
times on this podcast we have rebooted our trust uh in institutions what we read what we see and I think people are
01:16:19
now assuming they're being manipulated assuming something might be fake news or doctored and I think it's like people
01:16:27
are building up a much higher resiliency to [ __ ] lies manipulation and if I were to ask a hundred people
01:16:34
what is the bias of CNN New York Times Fox MSNBC NPR 90 out of 100 Americans could describe
01:16:43
it almost exactly people are not dumb this is another fallacy I think we have in this country is that people are dumb
01:16:49
and they're going to get suckered people are kind of figuring it out and and we've seen deep fakes for what five
01:16:55
years ten years now and they're like yeah you know Luke Skywalker didn't look really good in the Mandalorian but
01:17:00
there's a kid who redid it and now dolly two is doing it I think we're kind of inoculating ourselves to what do you
01:17:05
think Freebird deep fakes and Truth when the Gutenberg Press was invented a bunch of fake [ __ ]
01:17:13
was printed and people believed it I don't think the current iteration with deep fakes is very different from any
01:17:23
form of mass media being used Crusades yeah no I mean but look I mean you're 100 right I don't want to speak
01:17:35
about religion negatively in that way it is one of many institutions of power that leveraged mass media historically
01:17:43
uh to get people to believe things to do things and to ultimately be able to tax
01:17:48
people and get them to provide capital and Labor uh in the interest of those who are in power and the the system of
01:17:55
deep faking is one of a long string of using the current toolkit um to take mass media and and follow
01:18:04
that same track so it will be dealt with in the same way that things have been dealt with that have been fake news in
01:18:11
the past which is that there will be an opposing voice and there will be counter
01:18:15
arguments and there will be debate and it will be rancorous and it will be noisy and it will be hard to discern and
01:18:21
Alternatives will emerge and tools that identify deep fakes will emerge and it will be the same ongoing battle and
01:18:26
seeking of the truth that Humanity has tried to do um since the dawn of mass media you know
01:18:33
yesterday's conspiracy theories are like tomorrow's Pulitzer prizes I always say
01:18:38
like if you look at Sinead O'Connor ripping up the Pope's picture on Saturday Night Live right in protest and
01:18:43
saying like the this is the true enemy they're molesting children and then the Boston Globe and the movie Spotlight is
01:18:50
about them decades later uh winning a Pulitzer for uncovering what anybody who's in the room who's Catholic in the
01:18:57
70s and 80s knew or had heard was going on and so you know maybe the time frame is shortening between when we're being
01:19:05
lied to and when we figure it out I actually think it's interesting and good because it forces us to find ways to
01:19:10
find the truth more effectively and um you know it kind of without the antagonism I think it's you know it's
01:19:18
it's absent what is the truth you don't you don't force that debate you don't force that question and this will
01:19:24
start to reveal ways that we can kind of find things that are actual evidentiary
01:19:28
things versus things that someone told me with either historically anecdote or innuendo or I'm a person in power or I'm
01:19:35
an authority or I'm an expert and nowadays it's like I'm a piece of media you should believe me or here I'm an
01:19:41
image of a person and that's not going to be the case anymore I am Jeff a full-time corporate VC and part-time
01:19:46
Angel um my questions about Ai and higher education and it's actually some covert
01:19:52
parenting advice so you can decide who's that's relevant for um my son just finished his freshman
01:19:57
year of college and I'm questioning what the future is for him in higher education given all the change that AI
01:20:04
is going to have on on every career and every profession and I'm wondering what advice
01:20:10
you'd give to to your child or or someone who's in college right now for what what's an area of study that won't
01:20:18
maybe won't be disrupted by by AI or or an area that's um AI you'll get leverage from your
01:20:25
education um through AI I think the reality is that most of the existing jobs that we
01:20:31
have in the United States are going to go to lower cost locations that have that tool chain to accelerate
01:20:41
their capability so we're gonna have to reinvent the workforce and the things that we do
01:20:52
over the next 30 or 40 years to stay relevant that's probably like I think that should
01:20:57
just be the operating principle if you think about it we used to run great call centers okay those call
01:21:04
centers were outsourced to the Philippines in India but in the next you know five or ten years you'll have this
01:21:10
flawless unaccented English or even more yearly perfectly accented English for the zip code of the person that's
01:21:18
calling in so that it sounds like they're talking to somebody that's literally their neighbor
01:21:22
that's like just makes so much sense right so it's like all this stuff is gonna happen where like all these
01:21:27
classes of jobs are going to go away I saw this article where a lawyer two lawyers use chat GPT to submit a legal
01:21:35
brief the problem was that it cited cases that didn't exist and now they're going to be
01:21:40
disbarred so this is like serious business right like you can't do that like that's like
01:21:45
real legal malfeasance so what are your kids practice in college you know if I had to choose something
01:21:55
for my kids I would probably I would probably tell them to do something mathematical or biological
01:22:03
the reason I would Point them to math is that I think that it's irrefutable there's this Great Clip between Ricky
01:22:10
Gervais and Stephen Colbert you guys should go and Google this but it's a clip where he's on The Colbert Show and
01:22:16
Colbert is a deeply devout Catholic and he's offended by the fact that Ricky Gervais doesn't believe in God
01:22:23
and he asked him why don't you believe in God and Ricky gervaises look if we wiped out all the books in the world
01:22:29
in a thousand years everything that's scientific and mathematical would be re-established
01:22:34
but everything that is religious or theoretically not you know mythical if you want to say
01:22:40
would look very very different and that's why I don't believe in God I'm not trying to question that but it's
01:22:47
a way of answering this question which is I would try to point my children to the body of knowledge
01:22:53
that's largely irrefutable which is biological and mathematical versus belief oriented because I think these
01:22:59
tools will change one's beliefs I've been thinking about this a lot too I think teaching them to be
01:23:04
entrepreneurial resilient worldly ability to communicate ability to lead other people
01:23:10
in teams that stuff's not going to go away communication skill et cetera and I'm encouraging everybody who I work
01:23:18
with to just use chat gbt4 and Bard every day for every single thing that they do my base thesis right now is that
01:23:28
the job freezes the hiring freezes that all these companies is indefinite I'm assuming it's indefinite because the
01:23:36
amount of work it takes to write a job requisition is more work in some cases than actually automating with AI or
01:23:44
ready the job function and so I think 20 person companies might you know double in size in the next two or three years
01:23:51
but still have 20 people this is going to be a big challenge for the for society uh and if it if that
01:23:58
does come to pass there's just going to be large swaths of people who are not going to be able to get job interviews
01:24:03
for anything other than service jobs and you know we need a lot more plumbers electricians waiters
01:24:10
et cetera those probably jobs won't go away if especially if we don't let people immigrate so
01:24:15
enthusiastic about that efficient but I think it also means you have to be entrepreneurial because if you can't get
01:24:21
a job and you can't get mentored you better create your own opportunity you better create your own company and
01:24:26
that's what I'm seeing that's the game on the field right now two or three people who don't have job offers from
01:24:30
Uber and Airbnb and Google and Facebook just saying [ __ ] it let's start a company because there's nothing else for
01:24:35
us to do and those are highly skilled people right now doing that I'll say two quick things about this topic so one is
01:24:42
I think there's a lot of AI fear porn out there right now and I just think that like all these Doomer scenarios are
01:24:50
they're not going to play out overnight I mean this is going to take a while second
01:24:56
if you think about like job elimination it's going to be some super specialized job so for example
01:25:03
I wouldn't want to be a radiologist right now but doctors will be fine so I think if you're thinking about like
01:25:11
going into a job category that's super specialized and clearly in the way of AI then that probably is not a good idea
01:25:20
but most General skills like you're talking about and most job categories are going to be fine there's just going
01:25:28
to be some Specialties within them that make it dislocated like I wouldn't want to be a truck driver either you know
01:25:35
because of self-driving but transportation companies are still going to exist so I think you just want to be
01:25:42
careful about super specialization I think but building General skills is always really good that really should be
01:25:47
the point of college where would you put lawyers and accountants on that I'm curious they're sufficiently General
01:25:53
that I don't think they're going to be eliminated but will they be able to do five times the amount of work therefore
01:25:58
we won't need as many they may be able to get more done yeah I would expect them to be able to get more
01:26:02
done yeah but I don't think necessarily think that means we'll need less of them
01:26:07
I mean the old story about lawyers is that there was one lawyer in a town had no business second lawyer came to town
01:26:13
and they were both more busy than they knew what to do with lawyers get 30 more productive they file
01:26:22
30 more lawsuits and you know we're good yeah all right let's take another question these are great questions so
01:26:27
far hey guys Rick Spencer um I hope chamoth gets to choose the wine this evening for dinner I did not get to
01:26:32
choose your wine so I apologize in advance of 2018 uh Brazil I love the bestie okay question so
01:26:43
you've talked recently in in episodes about the speed of AI the adoption and how the winners are still unknown that
01:26:50
was reinforced in the sessions today a room full of investors how are you thinking differently about your
01:26:54
investment you know your Strategic investment decisions and your strategy are there opportunities to look at
01:27:00
Venture investing differently like Venture Studios you know in the future of AI I had this conversation earlier
01:27:06
today I think I started a company in 2006. where we took large data sets and we built predictive models from
01:27:15
those data sets and we use those predictive models to make analytical tools available to a specific vertical
01:27:20
in our case agriculture farmers and the models were both deterministic meaning there was kind of
01:27:26
definitions algorithmic definitions of physical parameters and there was like all the statistical inference that you
01:27:32
get from large data sets and it made recommendations for farmers what a lot of people are calling AI
01:27:40
today is fundamentally a predictive model on text on language I am making a language predictor that
01:27:49
gives you a sentence and it seems so profound because it is how we all interact with computers and interact
01:27:55
with one another and as a result it is kind of viewed as the sea change across all of these
01:28:01
industries instantaneously it's this whole new era but the fact is that generally speaking the digitization of
01:28:08
things and the amount of data that's being generated on Earth is going up by some order of magnitude every number of
01:28:14
months and our ability to make predictions and build predictive models that are useful to specific vertical
01:28:19
segments is improving every sequential cycle that this is happening across every
01:28:25
vertical and it is continued and it hasn't changed and it's not any different so
01:28:30
there's in this area of genomics and bioinformatics there is an absolute sea change happening in human health in
01:28:36
synthetic biology and our ability to understand and predict the biological world and make changes and create new
01:28:42
drugs create new systems for producing molecules for producing things that humans consume and it is all buoyed by
01:28:49
Machine learning applied to large data sets and genomics and other metadata associated with human health and biology
01:28:55
and we're seeing the same thing in other areas whether it's chemistry Material Science
01:29:01
industrial application consumer markets and so on the era of what people are now
01:29:07
calling AI is an interface layer of language that's really creating transformational opportunities on how
01:29:12
these tools how these systems how these models can be utilized and provided to all these different verticals and allows
01:29:18
us to rethink business models to rethink interaction models and to really change the economics of
01:29:24
different businesses and and the utility and the productivity of humans because it is about speech it is about
01:29:29
communication it's about what we fundamentally do as a species so I would argue that the general
01:29:36
trajectory of machine learning the general trajectory of data generation our ability to make predictions generate
01:29:42
value across all these different markets is continuing in the way that it has been continuing for the last 20 years
01:29:48
and it is profound in its own right and I wouldn't say that there's a massive sea change in that Evolution because of
01:29:55
large language models large language models create another set of opportunities so I would kind of create
01:30:01
a distinction and make sure that the categorization of the investment opportunities in large language models
01:30:06
be assessed on its own and everyone's all over the place as you guys probably heard today foundational models are
01:30:10
getting disrupted every other week they're being decreased in size parameters are being reduced they're
01:30:15
being commoditized you can run these things on M2 chips everything is up in the air right now and it's friggin nuts
01:30:21
you're going to invest in a company at a 500 million valuation and six weeks later it's going to be worth zero
01:30:25
because someone open source the exact same thing that you can now do for 100k so that's very difficult and very
01:30:31
different than but there are still like these incredible points of inflection happening across all these other other
01:30:36
Industries with respect to machine learning and that's where I spend my time chamathie want to add what you're
01:30:42
looking at I think this is going to be the big question yeah six or seven years ago
01:30:47
there was this Google earnings release where they talked about building their own silicon I've told this story before
01:30:52
but I pinged those guys and I was basically like I just want to meet the team that built the TPU
01:30:58
long story short a year later I put them in business and you know we've been building silicon for this moment for
01:31:05
years it's been really really hard and the reason it's been really really hard is that Nvidia is just really
01:31:13
really good Cuda is very very complete and it's just very difficult to justify why one would build
01:31:24
once you have something that you think is profound through you know Implement multiple sdks to like multiple points of
01:31:31
silicon just doesn't make any sense that being said I still think you need to be at the absolute bottom of the
01:31:37
stack and the absolute top of the stack I think I'm a little too biased for saying the former
01:31:43
which is I'm hoping that there's vendor diversity in Silicon diversity because I think it's going to be really
01:31:50
important I don't think we want to have a world where Nvidia runs away with it so I think there's investment
01:31:54
opportunity there just because I think everybody should want that to happen and then at the absolute top
01:32:01
friedberg's right that all these foundational models I think are changing so rapidly that the thing
01:32:08
that you want to figure out is like what are you seating it with to drive learning that's unique and that's a data
01:32:13
problem so there's an example that I've given this was a an example given to me by nikesh Aurora so it's not I'm not
01:32:21
going to take credit for it he's a CEO Palo Alto networks but he was telling me you know when you look at travel
01:32:29
the travel space all the public travel companies are like 300 billion dollars of public market cap Expedia Travelocity
01:32:35
all these companies but they're pure middlemen and they sit on top of a data feed that
01:32:43
comes from a handful of companies one of them is saber and so I went and I looked at saber
01:32:49
saber is like a 1.3 billion dollar company a small little company but they are the ones that go into all
01:32:56
the airlines extract all this gobbledygook data normalize it and allow Expedia Travelocity booking.com to exist
01:33:05
in a world of machine learning where an AI where theoretically you can have conversational languages in inside of
01:33:11
WhatsApp or messenger or Instagram you see this beautiful picture you're like book me a ticket to that place
01:33:18
well saber is actually the key value Creator there and all these Expedia examples that are plugins of gbt
01:33:27
make no sense they make no economic sense those companies should go to zero so I've used that as a way of forcing
01:33:35
function for me to try to prove that there's really these two barbells it's a barbell bookends one is a silicon and
01:33:42
one of these sort of like data providers that's probably an investable thing that's defensible everything in the
01:33:48
middle I think what what feedbrook said is true which is today it looks like it's worth a couple billion dollars
01:33:53
tomorrow's words nothing and so I think you have to be very careful if you listen to there's an
01:33:58
interview that Stephen Wolfram did with Lex Friedman if you guys listen to it a few weeks ago I had them on my pod the
01:34:04
couple weeks people haven't heard they're free from yeah he's incredible yeah he's incredible if you listen to
01:34:08
that interview I think Wolfram does a great job of describing the difference between inferential models or
01:34:12
statistical models and computational models statistical models are where you take
01:34:18
large data sets and you build statistical models that infer and predict things in the future or predict
01:34:26
things that you ask it to predict from the data set that it's trained on and then it creates a statistical
01:34:31
representation it has a probability of being right or wrong and every prediction it makes and it creates a
01:34:35
distribution of outputs from the model and you can train a model from nothing today
01:34:41
using a bunch of tools that are open source and generally available and a bunch of great silicon and all this
01:34:46
amazing stuff that's that's that's now out in the world but there's a bunch of things that you
01:34:50
can't generate data and you can't necessarily train models on and that requires computational models models
01:34:57
where you actually have to build some system that creates a deterministic outcome and deterministic means that it
01:35:04
doesn't have a distribution of things that could happen it has one thing and it calculates it like two plus four is
01:35:10
six there isn't a probability distribution on it being six two plus four is computable it is calculable it
01:35:16
is six the great unlock that I think is ahead of us still generally speaking with
01:35:24
respect to large language models is the connection back to computational models is the connection back to structured
01:35:30
data where you can make requests and integrate structured data into the output combined with inferential output
01:35:36
and computational models where you can take the inference you can take the request and figure out what
01:35:43
computational models can I now run in addition to making a prediction about an output and that's where so much of the
01:35:50
value is going to lie and it's going to require incredible software engineering Talent applied math statistics all the
01:35:57
stuff that's made data science generally speaking so successful over the last two
01:36:01
decades is going to continue and it's going to be this integration between computation
01:36:06
an inference and it's going to be applied in lots of different markets and it's going to be really powerful and
01:36:11
we're all going to have our minds blown just in terms of like the seed stage or super early pre-seed stage two or three
01:36:17
people who are obsessed with this technology who are playing with it every day who are keeping up to speed on it
01:36:23
and who understands some customer base whether it's delighting themselves or delighting some other customer base I'm
01:36:29
willing to take that small bet on that 100K to 250k bet because in the previous Paradigm shifts
01:36:36
or platform shifts cloud computing apps and before that desktop Computing and the web
01:36:43
you saw people start tinkering with stuff and whatever their first two ideas were are long forgotten because they
01:36:49
figured something else out and I kind of feel like that's the stage we're in there were a lot of people who were
01:36:54
playing with iPhones in the App Store and you know they made a calculator or a flashlight that got built into the
01:37:00
operating system as um I think Freeburg is specifically pointing out like you could just be part
01:37:05
of the model in your whole business is wiped out we have one company that's trying to make itineraries for travel
01:37:10
and I looked at what they're building and then uh you know they're figuring out prompts they're figuring out the
01:37:16
interface they're figuring out what people want and I did the same searches on chat GP before and I was like it's
01:37:21
not that much better what you're doing but it's better and your ideas are better and so I think that they'll win
01:37:27
the race and they only have to please you know whatever number of users and this company could wind up being
01:37:33
like I said before a 20-person company that does 50 million in revenue and I think that's going to be a very
01:37:38
interesting future and it reminds me of the app economy there were a small number of Acts things like distro kid or
01:37:45
Instagram where small teams built things that printed money and had incredibly High margins so I think that's part of
01:37:52
the opportunity here I do agree with jamaat's Point data is the new oil whatever data set you have that you have
01:37:58
That's Unique is incredibly powerful in terms of defensibility and could help you to outpace one of the generic models
01:38:07
this dude's been waiting okay dude who's been waiting all right lightning round thanks David for the mic my name is
01:38:13
rahid masri with transform VC in San Francisco my question is for you shamath um the last finally Jesus Christ
01:38:21
what the [ __ ] these guys so and the last one or two episodes I can't recall you um
01:38:29
you brought up this whole idea as how do we get non-us born American Patriots run
01:38:34
for president so uh as the growth hacking Drunken Master uh what do you recommend how do
01:38:43
we Propel this idea how do we how did the cup Steam and not have to wait 25 years or whatever you know it can't
01:38:49
happen in the next few years I think I do think there's a small probability could happen in 25 to 30 years but
01:38:57
like the problem is that the people that only jaycal can be president on the stage by the way yeah
01:39:05
the three of us that's how [ __ ] up this is but I'll put you guys in my cabinet positions I think the how is
01:39:11
that you have enough Bottoms Up citizen journalism and opinion formation that people can independently decide
01:39:22
that on the margin this is a good idea like look I I'm not interested in running for government but if David were
01:39:29
in charge of something very important treasury or state I would have immense confidence if Friedberg were in charge
01:39:36
of something I would have immense confidence so the idea that guys like this foreign
01:39:44
the idea that guys like this and oh because I'm born here so you don't have to say that yeah yeah don't worry you'll
01:39:49
get the Department of Sanitation no so for sure General I do think it's a little it's a little
01:39:59
crazy that guys like these two get disqualified just because they emigrated when they were like four and six
01:40:07
that's insane so I I think that if we're in the business of actually deciding that you
01:40:13
want the best people for this country on the court so that we keep winning championships
01:40:20
you don't tell Jonas oh you know you were born in Greece so ciao you don't get to play that's crazy
01:40:27
put them on the court and let them win so I do think it takes 25 or 30 years though of us saying this because it has
01:40:35
to be a Groundswell of people that say I just want to win because I'm seeing all
01:40:38
these other countries starting to win more and I don't think I want that for my children I think I did I do think it
01:40:43
takes a generation I don't think it happens today all right guys in a couple of hours it will be
01:40:50
the Sultan of science's birthday and Alan keedings and Alan Keating and yeah that's right
01:40:56
so I thought it would only be fitting if a hundred all in super fans took a moment I'm gonna sing in Italian and son
01:41:07
happy birthday to Dave freeberg three two one happy birthday to you happy birthday
01:41:31
to you and many more all right Sultan of science I know your wish was to be a top 10
01:41:40
podcaster it's come true finally I'm quick I gotta go into podcasting yes [Music]
01:41:49
amazing thank you thank you Ashley we'll let your winners ride Rain Man [Music] we open source it to the fans and
01:42:02
they've just gone crazy the queen of Kim [Music] besties [Music] it's like this like sexual tension that
01:42:28
they just need to release [Music] [Music]