00:00:00
oh baby no skin on skin you just got to keep the shirt on listen to me only the best for my daughter this is 100%
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laurana vuna she's gonna PE any minute there is not you're using laurana to wipe her when she mom no this is the
00:00:16
sweater that she's she's got her face on but this is the softest material human you know I mean natural material on
00:00:22
Earth really this is not subject to any supply chain constraints a in fact when you buy one
00:00:29
from Laura Piana fly one right to you let your winners ride Rainman David and instead we open source it to
00:00:43
the fans and they've just gone crazy with it love [Music] you guys isn't it amazing how people in
00:00:52
power cannot take any time off and still remain in power and engaged when you have a baby
00:01:00
J K what's the reference okay our friend Joe Lonsdale venture capitalist living in
00:01:06
Austin had a tweet that uh went viral but maybe not for the best reasons he said uh in response to a Dan primr tweet
00:01:15
a Dan works at axios who was talking about Joe Rogan criticizing uh the amount of time budha was taking on
00:01:23
paternity leave and Joe Londale responded wow great for fathers to spend time with their kids and support moms
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but any man in an important position who takes six months of leave for a newborn
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is a loser in the old days men had babies and worked harder to provide for their future that's the correct
00:01:40
masculine response uh well it was an opinion from 1957 that's either his or I'm in the way back machine but Joe's
00:01:49
old school Joe is a unique individual and he just happened to I think in this whole like not get cancelled debate or
00:01:59
don't let yourself get canceled debate the right is now saying like I'm just going to tell you how I actually feel
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and so Joe told us actually how he felt I don't think he said anything offensive
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I think you can have a different opinion than what he said but I don't think he said it shouldn't exist he said if
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you're in a position of power and you check out for six months it puts everything that you're doing under a lot
00:02:22
of pressure that's I think what he said and he called those very specific people
00:02:27
losers the context is Joe Rogan called Pete budajudge because Pete Budaj had two kids via surrogate and I
00:02:36
guess it's taking six months or I don't know I don't even know how much time he's taking he's at three months but
00:02:41
nobody knows if he's like working half time full time but Rogan had an issue with it and then Dan prac basically said
00:02:48
what Rogan doesn't know is at his own company I.E Spotify there's a six-month policy which by the way Joe Rogan does
00:02:56
not work for Spotify they license his show so there is no way for Joe Rogan to know the internal policies he is not an
00:03:02
employee I mean Jason if you want if you want to hang your hat on that little fig
00:03:06
Leaf okay no I'm just saying it's I'm not defending Joe but I'm also saying like how would he know it's not like he
00:03:12
went to HR and was like hey uh what's our fraternity he doesn't work there yeah fine well 6 months is is a long
00:03:19
time especially I mean that is a long time to take off the word loser is a very strong word do you think men who
00:03:27
take fraternity are losers no no it's there choice you think men who take six months of fraternity are no no I
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wouldn't I wouldn't necess call him a loser I do think that is a long time for somebody who you know prioritizes work I
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mean if an entrepreneur took six months of fraternity would you would that influence whether or not you invest in
00:03:48
his business well look if you are the principal of a business and you just disappear for six months that's not
00:03:53
going to work I mean let's be realistic here unless unless it does in which case
00:03:58
then you have other problems well or look if you're at like the stage that Google is at or whatever the founders
00:04:03
can disappear and move to you know islands and private islands and it doesn't matter basically what they did
00:04:08
but but look we all know I mean that when you're a startup you face existential decisions daily weekly or
00:04:15
monthly you can't just disappear for six months it's not going to work you might
00:04:18
only have six months of Runway so if you did take six months of fraternity there
00:04:21
would be no company when you came back in all likelihood let me speak for myself uh I couldn't ever take six
00:04:27
months I'll I'll probably take three weeks to a month and honestly I agree with David I really didn't do much of
00:04:35
anything Nat had to do frankly all of this by herself and so I'm there to just be moral support and help where I can
00:04:43
you know baby needs a diaper change I do that I'll hand feed in a bottle because
00:04:50
she's tired of pumping and you know breastfeeding like but I am so peripherally at the edges trying to help
00:04:55
and be relevant and try to give her a break here or there that's my role and at some point when the kid gets on a
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schedule um there's even less stuff necessarily for me to do other than again just be moral and emotional
00:05:08
support then of course there's bonding and stuff but you know to be honest with you like I have found as a parent the
00:05:15
the connection that I have with my children has gotten meaningfully better as they've gotten older and maybe that's
00:05:21
just the limitation that I have in my need to communicate and how I want to connect with my kids and how I feel I
00:05:27
get feedback back that gives me energy to app parent it is much easier for me to find that equation with my
00:05:37
12-year-old than it is with my you know two-day old so that's just me you know I'm going
00:05:42
to be out for three weeks to a month and well me the other thing we're leaving out here is the question of resources so
00:05:48
Joe Lonsdale uh according to his podcast is a billionaire and his podcast title and so if you're a billionaire and you
00:05:56
have unlimited resources at home and 24-hour night nurses which you know we all know what those cost uh
00:06:02
you're talking about a th000 or $2,000 a day uh to have 24-hour coverage but that's nothing to a billionaire so if
00:06:07
you I don't make it about class but if you were two working parents and you didn't have the money to hire somebody
00:06:15
this is actually practically the only thing you can do somebody has to be with a kid and can one spouse be at
00:06:22
home 24 hours alone with the kid all the time as you guys know I'm from Canada in
00:06:27
Canada we have a one-year maternity and paternity leave policy it can kind of go
00:06:32
both ways the the basically the family gets it and you can allocate it as and how you need
00:06:37
it and who pays for their salary the government basically guarantees your job you go on effectively unemployment
00:06:46
insurance after some period of time where you go from 100% of your salary to about I think it's 50% somebody will
00:06:52
correct me if I get these details wrong um and then you go through the rest of the year now in both cases my my sister
00:06:58
you know when she had both kids you know on the way in she was like I think I want to take the full year and by the
00:07:05
six-month Mark she was losing her mind and you know she's a lawyer at a yeah really good research hospital and you
00:07:11
know she does work that's really valuable to her and that she finds really stimulating and she just needed
00:07:16
more adult connection after six months it was very hard for her to kind of be there yeah I just think six months for
00:07:23
the second parent is that seems like a long time I I don't think I could take six months off but uh I also think if
00:07:31
you have resources there's pockets of time even when I did stay home for I don't know the first couple weeks after
00:07:37
the kids were born you know they're asleep for three hours and then you clean the diapers feed them they play
00:07:43
for an hour or two and then they go back on a nap you know it's like you're it's
00:07:46
constantly the stop and start I mean that's the thing that's hardest about is the lack of sleep I think oh my god it
00:07:51
feels like I mean it's funny but like I I forgot what it's like but you know you
00:07:55
you reminded quickly it feels like you're drunk yes two hours you wake up you get a 10-minute catnap you wake up
00:08:04
and this is where again I go to and I'm such a bit player in this play right now
00:08:08
you know at the edges we like not sleeping I can take care of T but I I don't know how women do it it's it's
00:08:16
incredible and for those of you listening chth has got his newborn on his chest uh and uh swallowed quite
00:08:23
nicely there this is why you should subscribe on YouTube and you can see you can see yes he's using his new daughter
00:08:28
to get YouTube subscriptions up this is they should blow us past 100,000 SI but how do you feel it's so special I feel
00:08:36
so lucky um I feel so so lucky this is going to be the most popular Cameo on the Pod since free Burg's dog yeah I
00:08:46
mean she this chick is so deliciously cute she's so she's so delicious and I forgot how beautiful the sounds that
00:08:54
girls makes versus boys having three boys and two girls now I remember the boys they make kind of interesting
00:09:00
noises but not really but my gosh like little baby girl noises oh and you guys SX has two girls you have three free
00:09:07
Brig girls it's girls are incredible my go we're all basically girl dads like Kobe oh so what a blessing what a
00:09:16
blessing any news on your front well we had a baby the day after chath had a baby so we're oh right I did see the B
00:09:22
congratulations thank you freeberg where's your swaddled infant you're letting you're letting chamath uh win
00:09:28
sweep swe here what's going on yeah his vun is on the way I haven't I haven't are you in the Joe laale you you did one
00:09:35
day off and then went right back to work she's in the the place where you drop the kids off to get raised and then you
00:09:40
pick them up in a year okay you're like Oh you mean like Vulcans you're like Vulcans where you into a learning pod
00:09:46
and come back a year later I mean they they sleep most of the day so she's asleep right now actually Alison just
00:09:52
sent me a picture she's sitting on the rocking chair where they're outside right now pretty amazing I give Lono a
00:09:57
lot of Courage for saying what he thought I really don't think that uh what he said was altogether that like
00:10:09
vilified better language but I think where he was coming from I think a lot of us probably wouldn't do it ourselves
00:10:15
we may never judge anybody else I would never judge anybody who wants to take six months I know that I could not I
00:10:20
would just I think either I'm too selfish or whatever but um I'm not sure there's just that much to do as the
00:10:27
secondary and to David's point if I was asked to be the primary I think I could probably step in and do 10% of what Nat
00:10:34
would do but here here's Joe lonsdale's super blind spot he made this very gender specific with men and women in
00:10:42
certain roles and he basically is saying you know a man who takes six months off
00:10:48
is a loser so he is not just giving his opinion he's attacking people who do take the time off and then he says
00:10:55
listen in the old days men had babies and worked harder to provide for the future that's the correct masculine
00:11:01
response so I think what triggered people about his response and perhaps rightfully so is that this is just a
00:11:06
view but Jason here can I say something this is degrading men who take time to take care of their kids but look we've
00:11:12
talked about this a lot there is an opportunity for folks like us to take a step back and slow down in
00:11:18
how we interpret a tweet that's written at 8: a.m in the morning super quickly I'm not advocating he' be canceled and
00:11:26
not and and not just him but everybody else but like there's an opportunity to teach empathy here where I'm not saying
00:11:32
you have to agree with him but you can also choose to see what he's trying to say through the exact words that he used
00:11:39
decide that you agree or disagree and then just move on yeah of course you know what I mean and and I think that
00:11:46
the reason why folks may want to do that in this case but in most other cases is
00:11:51
eventually it will be you that makes a mistake sure and you want to be let off the hook by other people that are
00:11:58
empathetic enough to say I really disagree with what you're saying but you don't deserve to be punished Beyond
00:12:05
disagreement I love what jamath just said you know the mistake that we make might even be on this pod
00:12:12
today I might have already made it I already I agree that we should all just be a little bit less judgmental and um
00:12:20
there there there the there is an element there is a judgmental element in Joe's tweet that that's probably the
00:12:27
part I don't agree with is look if someone wants to do that fine take the time doesn't make them a loser but it's
00:12:34
not a choice that I would realistically make yeah it's totally unrealistic it's not even startups like you know I'm I'm
00:12:39
getting these I'm getting put to these multi hundred million dollar decisions a day I can't you know I could pause the
00:12:46
business but that'll have so many Downstream implications unfortunately I picked a job or am in a position where I
00:12:51
can't check out even if I wanted to to so I try to do my best that's the point you was trying to make that wasn't that
00:12:57
well articulated I think I don't think any of us are a situation where we can straight up walk away from work for any
00:13:02
meaningful time I mean on a daily basis desty it would destroy my business yeah we get texts we get emails we get phone
00:13:07
calls that we have to answer and so it's not it it you know almost definitionally
00:13:13
isn't an option to just walk away but for those who it is and if that's their choice that's what it is the the great
00:13:19
thing about Freedom isn't that you can say whatever you want it's that you don't have to listen to what anyone else
00:13:25
is saying and you know for people that that disagree with Joe I feel like you always have the option to not listen and
00:13:31
you always have the option to walk away unfollow and yeah and unfollow and the whole idea of cancel culture and you
00:13:39
know punishing people for the things they say regardless of what they say and and the censorship and all the shutdown
00:13:44
of of voices and channels for people to have a voice I think it um it takes the freedom away that's inherent in the idea
00:13:53
of you know your choice to not listen yeah and and it and it's almost always totally hypocritical so just as a
00:13:59
postcript on the whole Chappelle debate it turns out that the leader of the the anti- Chappelle protest who''s been
00:14:05
trying to get him cancelled at Netflix it turns out this this person has like a treasure Trove of the most angry hateful
00:14:15
vile tweets that I or anybody has ever seen when you put it in the group chat I thought that that was a joke the the
00:14:23
things that she wrote were so beyond the pale Beyond they're like they're like the worst play
00:14:32
them on the show no we can't I I don't even want anybody to speak these things I don't want to include it in the show
00:14:37
notes they're literally the worst tweets I've seen Ser most racist like like I've
00:14:44
never seen such explicit racism in the 21st century basically aside from these tweets and um and this is the person
00:14:52
who's trying to cancel Chappelle was out there with the megaphone and who the Press was fawning over by the way and
00:14:57
she said in her thing yeah those were from a long time ago I've already owned up to those so let's move
00:15:03
on wait owned up how owned up how and it's kind of like you know let me play the
00:15:11
empathy card on me but then you know I so meaning I expect you to see through what I'm going through and that those
00:15:19
expressions were in a moment in time so see past them and see my true character that's what she's asking that's what
00:15:24
she's asking the world to do you know about her but then you're not willing to do it to any for anybody else and that's
00:15:31
where I think that double standard just doesn't work anymore and I think this is
00:15:35
what people are getting really fed up with and yeah and I would also say that her tweets weren't funny they weren't
00:15:41
attempting to be funny oh God they are so gross have a customer service problem with this beeping beep they so I want to
00:15:48
bash I want to bash this you know beeping Asian or whatever over the head blah blah blah blah like a lot of racism
00:15:55
towards Asia you know um Asian people no there was homophobic tweets there was Asia Asian hate tweets I mean it Latina
00:16:02
Hispanic I mean it she wasn't even trying to be funny that's the thing it wasn't even it wasn't even a failed
00:16:07
attempted humor so you here you have Chappelle who I think is dishing it out in an equal opportunity way making you
00:16:15
know funny uh observations about really he's criticizing our culture not specific groups and he's being
00:16:22
deliberately misinterpreted by the people who want to cancel him they're really to think that
00:16:29
Chappelle's standup routine is hateful really requires I think deliberate uh obtuseness you have to deliberately
00:16:36
misinterpret what he's saying and so you have these people out there trying to do
00:16:40
that and meanwhile they are guilty of the it's a total Act of projection because they are guilty of everything
00:16:46
they accuse Chappelle of well not all of them this person in particular the leader the leader and of course the
00:16:53
Press doesn't dig any of this up it all happens through the through kind of Internet sleo that would be a narrative
00:17:00
violation David if if somebody is virtue signaling and they are leading a cancellation movement it's it's kind of
00:17:06
a narrative violation to say well they maybe they should be canceled by the same standard or you know quite easily I
00:17:12
think the thing that I don't think she should get canceled let's just there go yeah yeah yeah I don't I don't think she
00:17:16
should be cancelled but I and and this what if she said it when she was drunk what if she had a nervous break I can
00:17:22
only imagine the the difficult path that this lady has gone through and on the off chance that she's listening I'm
00:17:29
totally cool with your journey I understand you made some mistakes we've all I'm going to let you off the hook
00:17:34
can you please try to let the next person off the hook I think that would be a nice place for everybody to aim to
00:17:39
go and then and just to Circle back with with Joe when he started explaining himself self in the thread when it
00:17:46
became a conversation with a wider group of people the journalists went on the pure dunk cancellation route but then
00:17:52
there was actually a productive discussion about between CEOs Etc and I thought what was very interesting about
00:17:57
it was he he started talking to Gary tan who you know was like listen we have a four-month leave practice at our Venture
00:18:03
firm and and Joe said do you really take 100% off cold turkey or did you work parttime and stay in touch like a
00:18:08
responsible leader of your firm and of course Gary did just that right and then Joe says you know what I shouldn't have
00:18:14
written loser and appreciate the PUSH Pack in more intensive operational context losing key leaders cold turkey
00:18:19
for six months seems unnecessary but I respect the different takes here and I think that really is an actual good
00:18:27
discussion about this is hey well maybe if you're an intense leader and you don't have the ability to take a couple
00:18:32
of months off well maybe you should take a couple of Fridays off and and then there was a really interesting
00:18:38
discussion what's better for a leader to do spend a little more time every year or to spend three or four or six months
00:18:45
in the beginning when you're as you just said chamath on the periphery here and trying to be helpful on the margins
00:18:51
maybe for the secondary person if it is in 5050 sacks it is actually better for you to pick up some Fridays or whatever
00:18:59
and and take over the whole well I'm glad I'm glad you read that clarification by Joe because I think
00:19:03
what he basically is saying is that yeah he the initial language he used he he would he basically clarified that and it
00:19:10
sounds like what he's saying is listen if you're on a high performance team and you're the star player and you disappear
00:19:16
for six months that's going to cause your team to lose so I think that's maybe what he was saying that's a
00:19:21
Perfect Analogy saxs because if we were looking at Lebron James or Kevin Durant and they had a baby mid-season or
00:19:26
Draymond had a baby mid-season which I'm sure has happened to you know folks it's
00:19:31
not like they say I'm not playing the next six months of games they miss one game maybe two they go back on the road
00:19:37
and I think everybody understands like yeah you can't give up one of your 10 primary years or three years left that
00:19:43
LeBron and KD have left I'll give you one final anecdote to end this chapter of our discussion today uh 2007 at
00:19:51
Facebook at one point in like one of the UMP reorgs we were doing as we were trying to get out of the primordial ooze
00:19:58
I was in charge of HR and everybody at that company was young except for a handful of people and then there was
00:20:05
finally a person and I think it was our this HR person that that at some through
00:20:10
some weird convolution of events reported to me uh who got pregnant who was pregnant
00:20:18
and we didn't have a policy because nobody had ever gotten pregnant before and you know I remember saying oh we
00:20:24
have to come up with a policy and what I did was I was like well what would I want which is the easiest way for me to
00:20:30
answer most questions and I came up with four months for either the father or the
00:20:35
mother irrespective of the context and that's how we started the original policy four years later though when I
00:20:40
had my first kid um I took like three weeks and it came back because the grind was too hard yeah all right I think I
00:20:45
think where we have to go is it's been a crazy week of uh the reconciliation Bill
00:20:50
the infrastructure Bill and how to pay for this uh incredible spending it's been a meta week meta it's been it's
00:20:56
been a meta week I mean and this Builds on on top of our discussions about inflation uh as well as the supply chain
00:21:03
issues that builds on the conversation we had about covid and the new president so we're trying to get the wealth we're
00:21:10
trying to get the reconciliation Bill done and part of that is hey how is this going to get paid for and in the course
00:21:16
of one week we've seen uh the tax proposals flip I think multiple times to ones that have never been tested and and
00:21:25
may not even be legal in the United States of course I'm referring to a billionaire tax which was proposed uh
00:21:32
which would be a penalty or a tax on assets that are liquid but that have not yet been sold and it would look back
00:21:41
three years essentially going after Bezos or Elon lar Sergey basically going after the top 10 billionaires in the
00:21:47
world and then maybe it was going to be the top 700 then it became a millionaire
00:21:51
tax all of this to try to pay for these bills while so much money has been poured into the system that you know
00:21:59
nfts and stocks are going through the roof where do we want to begin gentlemen should we does anybody have thoughts on
00:22:06
this brief billionaire tax that was floated and what that says about where we are as a country in
00:22:14
terms of how we think about the success of our greatest entrepreneurs do we want
00:22:17
to talk about what's fair or the process well I thought the the process was insane and what was crazy was that you
00:22:24
know Ron weiden had been working on this proposal theoretically for the past two
00:22:29
years and at no point did he bother to float the trial balloon with his colleagues in the Senate to even see
00:22:35
whether these people actually supported it Beyond some um folks on the Progressive left who are ideologically
00:22:42
fixated on you know this confiscatory way of running the country the funniest thing about that
00:22:49
bill to me and I let the powers at B know this is hey guys I've always been on the record I'm happy to pay whatever
00:22:56
tax you want I feel super blessed to be in America whatever we want me to pay 30% 80% I don't care but I had a real
00:23:04
issue with the way that bill was written because I'm like um the Democrats are writing a bill that will
00:23:10
disproportionately tax Democratic uh successful billionaires and it'll leave intact the
00:23:18
coax who is literally the boogeyman to the progressive left who wants to write this bill and I thought how could you
00:23:25
even write this bill this way it is so stupid you're saying because those people own private assets and this goes
00:23:31
after guys like me would have been paying billions of dollars and the CES would not have paid zero because their
00:23:39
entities are private and yours are public just so the audience understands yes how insane is that and yet we're the
00:23:45
ones that is a a great second order observation these people clearly didn't think through that was my only issue
00:23:52
with the thing it's like if you want to try to RAM and jam this thing through go
00:23:55
ahead and try I'm not going to be the one that that you know files a lawsuit the day after it's
00:24:01
passed and takes it to the Supreme Court which will get heard and you know this conservative Supreme Court would not
00:24:06
have allowed this this tax to stand you can't Target 700 people uh but by the way the reason you can't Target 700
00:24:14
because there's a slippery slope from 700 to 7 million to 70 million and what it does is it allows tax and spend
00:24:23
politicians a blank ledger to go absolutely crazy and just fund every single hairbrained pork barrel scheme
00:24:30
that they can come up with and that's really what we stopped was an important slippery slope and then in its place I
00:24:38
think is a tax that is fair a simple Sur tax on adjusted gross income if you're above X you pay five million and if
00:24:45
you're above y you pay another three so eight% 5% three% on every kind of income
00:24:51
and I think like that's a really reasonable way to get folks to pay more that seems like a good start but the
00:24:56
first version of the bill was so stupid and the thing that really anchored me though was it targeted Democratic
00:25:02
successful people and left alone Republican successful people written by the Democrats free bir what are your
00:25:08
thoughts on the confiscatory nature of this I've never heard the word used that way confiscatory where we're going back
00:25:16
and saying listen you won so much we're just going to take 20 to 30% of it we all pay property taxes so we there is a
00:25:24
experience we've all had with paying a percentage of some of assets that we own people of all income brackets every year
00:25:31
to your local government to fund local services that everyone uh participates in so you know I don't think it's
00:25:39
unfounded now if you look at history as a guide you know France introduced a wealth tax to people making over uh I
00:25:48
think it was 1.3 million euro per year um and it was shut down and came back basically 1999 2000 and between the year
00:25:57
2000 in the year 2016 25% of millionaire households immigrated out of France uh during this period and
00:26:07
the amount of tax revenue that was lost during that period of time was greater than the new revenue generated from the
00:26:13
wealth tax that was introduced and so France ultimately scrapped the wealth tax um and there have been a number of
00:26:20
other you know reasonably good examples of European countries putting in place these wealth taxes and then kind of
00:26:26
removing them uh later so um you know on the one hand I I I think that we've all
00:26:31
seen this experience and Switzerland does this I think you get taxed on your total assets in Switzerland and you have
00:26:35
to go negotiate every year uh with respect to how much you pay it's a very weird process so on the one hand there
00:26:41
is this kind of experience and and precedent for paying some percentage of assets sometimes it's a targeted asset
00:26:48
and sometimes it's not but the longer range consequences we've seen is like you know immigration and people realize
00:26:56
there's always a better choice the CH the question we have in the United States if we introduce a wealth tax like
00:27:00
this where will successful Americans immigrate to um you can see how people could leave France and go to Belgium or
00:27:06
go to the UK or go to Switzerland or go somewhere else where they might be better off uh where where are Americans
00:27:12
going to move toada you're a successful Canada I mean are you going to move to Vancouver I mean you're from Canada but
00:27:18
saaks would you move you know where would you move to you know it's almost like there ends up being this kind
00:27:24
of you know I think really interesting experiment that'll be run here now remember this wealth tax was introduced
00:27:30
by Warren and others last year so this wasn't some New Concept that that was Fly by Night this has been one of those
00:27:36
things that's been on the shelf for a while what happened is they pulled it down from the shelf and said let's try
00:27:40
this now they've never they've never had committee hearings on it uh they've never had committee markups on it it's
00:27:46
been tried and repealed in European countries and like you said they pull it down on the 11th Hour why because their
00:27:53
carefully laid plans which they've been concocting for three months were thrown overboard Cinema said she wouldn't
00:27:59
support the rate increases now I don't know why they wouldn't go to her at the beginning of the process instead of
00:28:03
waiting till the end of the process but so because of that they're scrambling around trying to find any source of
00:28:09
Revenue so it's oh well a billionaire tax work no well what about a corporate AMT how about that no what about a
00:28:15
millionaire search charge these guys are like burglars rubbing through the house
00:28:20
they hear they hear the sirens they hear the sirens coming and they're like what
00:28:25
can we take oh the TVs are bolted down can't get that where's the jewelry what can we take and it's just you can't set
00:28:33
you can't set tax policy this way and this whole idea that we can set tax policy based on our intuitions of
00:28:40
fairness without having hearings to ask the question what will this do to the economy how much damage will it cause
00:28:47
this is absurd I'll say it's it's really important to note um the market is telling Congress something here and the
00:28:54
market is members of Congress informed by their uh their constituents the market is saying maybe we shouldn't be
00:29:01
spending this much because there isn't a place to fund it and no one's raising their hand and saying this is something
00:29:06
we can all align on and so I think the the more important fundamental question is are we really equipped and do we
00:29:14
really have a general economic interest economic interests meaning people measure things and vote with dollars to
00:29:21
support these sorts of social programs and it seems to me the indication is no and this seems to me to be primarily a
00:29:27
response of the pendulum swinging the other way post the Trump era where you know the Trump era was all about blowing
00:29:33
up these ineffective overregulation bloated government infrastructure and and programs and people and and
00:29:41
bureaucracies and now we've kind of found ourselves through our our voted Representatives swinging this other way
00:29:47
but it turns out maybe we've swung too far and the market is now voting and saying this just isn't a playing field
00:29:53
we should be on and so you know where they end up here I think regardless it's going to end up needing to be some sort
00:29:58
of reconciliation on spending to make this all work let's be honest Bernie Sanders and Elizabeth Warren were did
00:30:06
not win the nomination the country specifically wanted a moderate uh Biden was sold as a moderate go back to the
00:30:13
way it was moderate Dems like Clinton like Obama this is the classic Coca-Cola this isn't new Pepsi nonsense and we got
00:30:22
Hoodwinked basically and I think what a lot of Democrats are seeing now especially the moderate ones is hey wait
00:30:28
a second Biden is Warren and Bernie and sheep's clothing perhaps uh and and we didn't want this this we didn't want
00:30:34
Trump he was too hot and we don't want this to left crazy let's just take everybody's money randomly change the
00:30:42
tax code I don't think American citizens want to live in a world where we change
00:30:47
tax code at the 11th Hour that is scary to people all people people who have savings if you care about the economy
00:30:54
but but these progressives I think these progressives so so used to be that taxation was a necessary evil you you
00:31:02
you tax people because you got to pay for government and government programs everybody hates it but but you do it and
00:31:07
you try to figure out the way of achieving the revenue government needs in the least destructive way possible
00:31:12
but I think progressives now they're so focused and monomaniacal about this issue of income inequality the fact that
00:31:18
there's some people who've gotten richer than everybody else that I think they're
00:31:21
willing to tax those people I mean they would like to siphon off money from those people I think they would siphon
00:31:26
it off just to light it on fire just to level people and so they don't really care what the impact is going to be on
00:31:32
the economy well I mean and their position was in fact ban the billionaires that was their roof but uh
00:31:37
you know before we get to that I just want to say these rules I think Americans want the rules to be simple
00:31:43
and I don't think people want you changing the rules at the last minute and then making them retroactive I think
00:31:48
all Americans want taxes to be predictable and simple not just change them willy-nilly because you change the
00:31:55
budget this seems so unthoughtful crazy chamat your point I have two points to make the first is that I don't think
00:32:02
anybody really knows what's in these bills and as a result of nobody really knowing what's in these bills they're
00:32:10
used as negotiating chits so case in point when Biden came out and said you know we have a$
00:32:17
1.85 trillion dollar bill now and we're ready to get this done so that he could you know fly to Europe and you know fly
00:32:25
to cop 26 and kind of you know declare Victory unfortunately the progressive wing of the democratic party in the
00:32:32
house said no I'm not ready to dance yet and you know they have consistently refused to sign an infrastructure Bill
00:32:40
until they got what they needed from this other Bill and so when Pelosi called the vote she had to pull
00:32:46
it because they weren't going to get the votes necessary to get this bill passed
00:32:51
so what this says to me is that even with spending it doesn't matter whether you're spending five because that's a I
00:32:56
think it's a trillion dollar bill bill right that's a$1 trillion bill this is a$ 1.875 trillion bill nobody cares
00:33:03
about the quantity and nobody cares about the details they care about some perceived moral Victory this is the only
00:33:10
reason why we're seeing this you know Mexican standoff that we're seeing today if these things were so substantively
00:33:17
important we would have passed the first bill we would have negotiated a reasonable second version and pass that
00:33:22
too instead we're here going through the end of the year with nothing done and I
00:33:27
just want you know the Democratic Leadership who listens to this because we know a lot of people in Washington
00:33:32
listen to this podcast you guys got to get something done because if you go into the midterms
00:33:38
with nothing done with a Democratic president Democratic Senate and Democratic house this is going to be a
00:33:46
bloodbath well this is why something will will get done but uh you know I think the political realities are that
00:33:53
at the end of the day the Democrats will come together and pass something but it's concerning that we're just talking
00:34:00
about doing something because it will help you in the midterms you know in the immortal words
00:34:05
of Nancy Pelosi you have to vote for the bill in order to find out what's in it I
00:34:09
mean at the end of the day we're not even going to know what's in this thing and um you know we're spending another
00:34:15
it'll probably end up being a$ 1.75 trillion bill it'll be stacked on top of the spending that's already happened one
00:34:20
point remember Biden already pass 1.9 trillion of covid relief another 1.2 trillion of infrastructure no that
00:34:27
hasn't passed yet well it's going to along with this now 1.75 million sorry 1.75 trillion of this new social
00:34:34
spending Bill assuming right so it's about five5 trillion 5 trillion wealth redist progressives have will have set
00:34:42
the stage for this to be perceived as some sort of failure it's by the way David if you go back then if you take
00:34:46
that five trillion and add it to the all the covid before and all of the uh the FED buying we've probably had one entire
00:34:56
turn of GDP so call it 20 to 22 trillion doar of money created in the last three or four
00:35:04
years right now you go back J so so now so now you go back to Jason what you started the thing that I have struggled
00:35:11
with the most in these last few weeks is trying to come to a conclusion on inflation My worry is that it's here and
00:35:17
it will be persistent and inflation comes in two ways way number one is if you massively increase the supply of
00:35:25
money why let's just say the economy at $100 and now all of a sudden you just print another 100 so now there's $200
00:35:32
what will happen is all of the goods and services that make up that 100 will get
00:35:38
repriced to absorb the 200 so prices go up inflation goes up the second way that
00:35:44
inflation can happen is if middle and lower inome people buy and spend because when rich people have extra money they
00:35:52
just buy Financial assets that's why you get financial bubbles but practical goods and service are bought by average
00:35:59
everyday normal working folks and their wages are going up and so I think what we've created is a really distortive
00:36:09
inflationary cycle that's going to really hurt the United States because as saaks talked about we cannot print
00:36:16
enough money to pay for the debt when interest rates go up this is this is the this is the number one thing causing me
00:36:24
concern as well is that you look around it's alltime highs for everything it's alltime best everything NASDAQ and S&P
00:36:32
alltime highs crypto markets all-time highs Shibu enu worth 3040 billion do bubble uh I'm seeing SAS mules real
00:36:42
estate I'm seeing SAS multiples at all-time highs and so you have to wonder is this a new normal is this sustainable
00:36:49
or is it some sort of inflated bubble then you look at the inflation ratees 5.1% to Chamas point it might be
00:36:57
persistent you look at treasury the treasury uh interest rates the yield is 1.6% on the
00:37:04
10-year T Bill okay so effectively your real interest rate for Savers is 1.6% minus the 5.1% inflation rate you're at
00:37:13
- 3.5% if you just save your money in t- bills in sort of uh risk-free you take the risk-free return Nega 3.5% so now
00:37:24
you have everybody going out there trying to chase yield because how do you earn a return on your money you don't
00:37:30
want it to be bu you buy stocks or nfts or houses so people start going into riskier and riskier assets to basically
00:37:36
try and make up for the loss of inflation and so you have to wonder they're trying to hit the one outter
00:37:42
yeah so then okay so so you have to ask yourself okay so back to this point about all-time highs is this because
00:37:49
everything is really this great or how much this is driven by these sort of distortions
00:37:55
50/50 I mean I'm just putting a number on it like obviously the industry and E and economy is doing fantastic but seems
00:38:01
50/50 here's the other thing that I wanted to make in just the last portion which is I think what we've realized as
00:38:08
well at the end of this is I I actually again now to use this empathy card I'm going to give the progressives my
00:38:14
empathy card and say I understand what you're trying to do and I believe in a lot of what you're trying to do is to
00:38:20
even the starting line for everybody right now a lot of what you end up proposing distorts that goal by trying
00:38:27
to you know even out the outcomes and even the finish line but I really do think they want to even the starting
00:38:33
line but here's a thing that we all have to realize now all the things that the progressives want to tax and fund are
00:38:40
actually being done by private corporations and I think we just have to acknowledge that and make a decision
00:38:47
about whether as a society that's okay or not I'll give you two examples number one is the federal minimum wage we have
00:38:54
tried for years and we have debated raising this minimum wage it's still sits today at
00:38:59
$725 just this week McDonald's moved their minimum wage up Starbucks moved their minimum wage up we're talking
00:39:06
about you know entrylevel quick service jobs that now pay1 17 to $25 per hour right some two and a half to three
00:39:16
plus times the proposed federal minimum wage the fre Mar and so and so what government didn't and wasn't able to do
00:39:25
the free markets have done second example we tried to get free Community College inside of one of these bills it
00:39:31
was dropped now depending on where you go the the nation's largest employer Amazon actually will just pay you to go
00:39:41
to college right so they are replacing that intention and a version of the GI bill
00:39:48
but as a private organization so I think what we also have to realize is that maybe some of these policy decisions is
00:39:56
actually a little bit of you know getting tilted by the fact that private organizations are acting more nimbly to
00:40:02
actually implement this Progressive agenda because it actually exists in America if you're willing to take the
00:40:07
time to look let me ask a question about inflation if who is inflation going to um hurt the most and who's going to gain
00:40:15
the most from it because it does seem like consumables gas station you know Supermarket trips Etc are going through
00:40:22
the roof in that case you know that's going to have no impact on the top third of people because gallon of milk at 36
00:40:29
$9 doesn't matter but then you look at inflation on stocks it's going to make it go up so a rich person isn't impacted
00:40:38
by their gas or their groceries but somebody in the middle class or uh who's poor that's going to dramatically impact
00:40:44
them so if we spend more does that actually create a larger wealth Gap Sachs look inflation is devastating for
00:40:52
the middle class um if you have savings it if you can afford to put all your savings and financial assets the way
00:40:59
that the super wealthy can then your financial assets will go up but if you have a good sort of middle class income
00:41:08
and you don't have your and your savings are in something more conservative you're going to get absolutely uh eroded
00:41:14
by inflation over time it's going to kill you and you know housing prices will go up the the um the the middle
00:41:20
class young couple that wants to buy a house for the first time that's going to be much harder to achieve because
00:41:26
housing prices will inflate away so I think you know there is there are some effects that are a wash so for example
00:41:34
prices go up and then uh wages go up at the same time but savings can really get
00:41:38
hammered if you're not in financial assets it hurts the middle class first but it also hurts it hurts everybody
00:41:45
because again unless you're perfectly hedged going into a rising rate environment you will own assets that are
00:41:50
just specul freedberg a scientific question here are we starting to go into a self-fulfilling prophecy around around
00:41:57
inflation Allah what happened in the 70s which is we've been talking about it so
00:42:02
much that anybody who is thinking about raising prices says well everybody else is Raising prices so even if my grilled
00:42:08
cheese sandwich hasn't been impacted by all of this and I didn't have to give raises to my employees they're happy at
00:42:13
their current salaries I'm just going to put $2 on my grilled cheese and we just
00:42:17
get this cycle of everybody saying how much can I add to the cost of something I trying to remember there's an earnings
00:42:23
uh interview I saw yesterday uh God which was the company anyway they're um their company in the industrial supply
00:42:31
chain and he said that they're raising rates to get ahead of the supply cost going up for them um so that their
00:42:38
margins won't get squeezed and I think that's uh it's almost like that what you're referencing is a little bit of a
00:42:44
run on the bank mentality where um those with pricing power raise ra raise prices
00:42:51
and as a result you end up kind of seeing the the the trickling effects because competition can't catch up so if
00:42:56
everyone's kind of raising rates and there's not enough competitive Advantage the one thing that's making this even
00:43:00
harder right now is the gluts in the supply chain which are reducing the competitive um uh market dynamics that
00:43:07
we might normally see where One customer raises one company raises rates and another company says wait our rates are
00:43:13
going to stay the same but because so many people are challenged by getting product there's enough demand for their
00:43:18
product everyone can raise rates together we're seeing this in the energy markets now so um yeah I mean this is
00:43:24
kind of part of the scary uh scenario that that everyone's trying to manage against um I don't know what the science
00:43:30
is and I'm not an economist but it certainly seems to me like the psychology of managers and business
00:43:36
owners and and Boards is such that they're saying let's get ahead of the curve let's raise rates and as a result
00:43:41
you're seeing the trickling effect of inflation throughout the whole economy so um little scary Sox what do you think
00:43:49
psychologically is going on with raising prices yeah so so expectations are definitely part of the inflation game
00:43:55
people raise prices if they expect inflation in the near future and then that feeds on itself and that's how if
00:44:01
you look at countries that have had hyperinflation that's how you get a spiral now I don't think we're going to
00:44:05
have hyperinflation here but we're at 5.1% now and if people think it's going to be worse next year and the fed's not
00:44:11
going to raise rates it could even be higher next year and I think people are going to start getting upset about this
00:44:17
you know when they buy their Thanksgiving turkey and their Christmas ham and those prices are way higher than
00:44:23
they think and they're already paying gas prices that are a lot higher than they're used to um I think you could see
00:44:30
a lot of unhappiness out there one other thing I'm thinking about is is the logical thing for a person to do in this
00:44:37
hyperinflationary you know Market is to say you know what the these I went to look at a car that I wanted to get to
00:44:43
drive in the snow and I was like you know what I'm just going to hold off buying this because I'm not paying 15K
00:44:47
over sticker so and I can pay 15 stickers I was like ah do I want to do that H the other car is okay I'll just
00:44:53
put snow tires on it so are a lot of people chimen as part of this psychological you know spiraling out of
00:44:59
control situation then some group of people might say you know what I'm going to opt out of consumerism and I'm just
00:45:05
going to lower my burn rate and stop consuming which is also bad for the how you going to stop consuming
00:45:09
food food prices are instead of getting you know Fame andan you might get chicken okay well
00:45:17
there's gon to be a lot of unhappy people who are eating chicken for Christmas instead of fet I me serious
00:45:22
I'm coming to your house so I'm getting fet so I'm good I'm going to go your house for lunch and I'm going chamat for
00:45:28
the surf and turf after guys rich people don't create inflation the middle class
00:45:33
and lower middle class create inflation there's just not enough rich people to matter they're irrelevant so when you
00:45:39
look at the last two or three spikes and waves of risk that we've seen globally they've come from large multi hundred
00:45:45
million person cohorts of people right those could be in Asia those could be specifically in China those could be in
00:45:54
the United States plus all around the world of certain loose monetary conditions that's what we have now we
00:46:00
have a multi hundred million probably approaching more than a billion person strong liquid buying pool of people that
00:46:07
are again as I said if the if the lowest on the packing order is now making 17 bucks an hour we all know this guys it's
00:46:16
not as if the inflation stops at 50,000 bucks a year everybody's wag is Rise so consistent and persistent wage
00:46:25
inflation will allow allow you to spend more because that's just what people do we also have high savings rates so
00:46:31
people will feel more flush with money the point is that everybody will spend they will spend more you know you can't
00:46:37
get cars you can't get this you can't get that all this pent up demand will get fed and the downstream implication is I
00:46:45
think that prices will rise but it will disproportionately hurt the middle class
00:46:49
and the lower middle class and then these asset bubbles will probably deflate or they'll have to get rated
00:46:57
and If the Fed stops tapering and you know hikes rates two or three times over the next 12 or to 18 months man this is
00:47:05
an ugly ugly uh stock market one of the things people have been asking me to ask
00:47:10
all of us on the Pod is what are our strategies right now given the turmoil we're in so maybe we can go around the
00:47:17
horn and what we're thinking about in terms of our strategies to deal with inflation while maybe not getting ahead
00:47:25
of our skis and being the bag holders anybody have I'm Not Gon I'm not going to answer
00:47:31
this question and you you know why because I can't got it okay because of the public Mark I don't I don't want to
00:47:35
even answer this question yet okay well let can I I'll let me further describe the the the problem um so this happened
00:47:44
in the late 1970s we had stagflation we had sort of um every year we had um increasing inflation because of the
00:47:51
expectation game and the thing that broke it was you had Paul vulker come in at the fed and he jacked up interest
00:47:57
rates and uh he actually caused a pretty severe recession in like 80 I think it was like 82 uh 81 82 I think by 83 we
00:48:07
were coming out of it and then the economy absolutely boomed interest rates came way down because he broke the back
00:48:12
uh back of inflation and actually interest rates came down for you know as a result of vulker and the FED
00:48:19
controlling inflation they came down for 40 40 years basically and that those that decrease in interest rates fueled
00:48:27
everything it made debt a lot cheaper it uh in it made the stock market boom because the Net Present Value the
00:48:34
discount rate went down so the net present value of all those future earnings went up um so you had it it set
00:48:39
the stage for the Boom in the Reagan Era and Beyond and and the Clinton ero as well now what's the difference between
00:48:46
then and now um well for one thing the government debt as a percentage of GDP when Reagan took office was around 31%
00:48:56
okay so when vulker jacked up interest rates it didn't really create that much more
00:49:03
of a Debt Service cost for the United States for the federal government now today the uh the government debt uh is
00:49:12
125% of GDP so if and this goes back to the to the Dr and Miller point from previous pod if the the FED were to jack
00:49:21
up interest rates to say the historical Norm of 4.9% Debt Service would go from from 2% of the federal budget to 30% you
00:49:29
would have a massive crowding out of government programs so how we fund all that Debt Service very unclear so we're
00:49:36
caught between a rock and a hard place the rock is we have inflation that could be persistent the hard place is The Debt
00:49:43
Service so you know the tools for controlling this aren't exactly clear so this I think is fundamentally the the
00:49:51
problem is it's it's not clear whether we're going to have you know interest rates going up or consistent High
00:49:57
inflation uh those are the threats to the the sort of economic boom we're seeing now the full side of it is that
00:50:03
the reason why the stock market is one of the reasons is at an all-time high is because earnings right now are fantastic
00:50:09
so the economy is doing very companies are doing very well but we just had for Q3 the GDP growth was at 2% annualized
00:50:20
which was sort of an anemic number it's the lowest it's been since this Co recovery started so it's um you know
00:50:27
it's it's interesting we're at all-time Highs but there's also these like major storm clouds on the horizon and I'm not
00:50:32
going to like pretend like I know what's going to happen I just you know when when things are this good I start
00:50:38
getting nervous when it's this easy to make money across everything the stock market the crypto Market the SAS
00:50:45
investing we're doing can I can I say that's the that's the part that really scares me so for
00:50:50
example when everybody gets tilted because there's some Sheba wallet where 8,000 turns into 5.7 billion right so
00:50:58
for those that don't know there was a you know Sheba enu coin which is a shitcoin which was basically there to
00:51:04
ape uh the other shitcoin Dogecoin the Dogecoin right a mcoin um all of a sudden some guy uh 13 months ago put 8K
00:51:14
into it because the whole market cap was 80k and then all of a sudden over the course of these 400 Days that wallet
00:51:22
holds $5.7 billion doar of value or 10% the entire market cap of sheiba um people get tilted by that then then
00:51:29
there was an article today in Bloomberg where there's a gentleman a 66y old man in Singapore who's a billionaire right
00:51:36
so he was successful in his own right however he had made in his entire career about one or two billion and he has made
00:51:42
seven billion in the last two years speculating on Tesla call options wow I'm not kidding so buying
00:51:52
short dated calls right riding the riding the way making money allocating the gains buying the underlying Tesla
00:51:59
security over and over and over again and so you know I was talking to Nat about this and I was telling her these
00:52:06
these examples and she's like that's what sounds like a bubble because it really is very difficult to be in
00:52:11
business and to make these decisions and to be reasonable also if you're a capital allocator or you're building
00:52:17
companies like how do you know if you're doing a good job if everybody just is I'm gonna be right back guys I have to I
00:52:24
have to deliver the goods yeah yeah okay got a quick baby change I think what's hard about this is okay so so one of the
00:52:30
areas where it's sort of like best times ever are is the SAS Market which is where I invest in and I'm obviously
00:52:36
investing in very very early stage companies but we're seeing valuations now go to multiples of ARR that we've
00:52:44
never seen before 50 75 I would say 100 time I'd say 100 times AR is sort of the
00:52:49
rule of thumb right now um and you're seeing what scale a $5 million company is worth 500 million uh anywhere from 1
00:52:56
million to 10 million I mean absolutely is worth between hundred and a billion dollars which makes no sense well no it
00:53:03
does if well let me give you the argument for why it could make sense okay let's say the company is expected
00:53:07
to go 3.3x this year and 3X next year that's basically a 10x over the next two two
00:53:15
years so that 100x in two years will only be a 10 times AR multiple and by the way if you look at the comps for the
00:53:23
companies that have gone public the SAS companies have gone public like look at toast being worth what 30
00:53:29
40 billion so they're trading at 30 40 50 60 times ARR in the public markets on big big numbers so how hard is it to go
00:53:39
3X 3X that is I mean going 3x is hard going 3X 3X back to back that's like winning two you know NBA championships
00:53:47
being in the finals it's hard I don't think it's that hard I mean not for you but you're the king of
00:53:53
SAS no I'm being dead serious for the for a sax founder with a million to go from 1 to three and then 3 to n how many
00:54:00
out of a 100 actually go from 1 to nine yeah I'll tell you yammer's trajectory and this is back this is over a decade
00:54:05
old we went from 1 million in our first full year selling the product to uh well
00:54:12
back in those days we looked at total contract value of 7 million of tcv that was about 5 million of ARR and then it
00:54:18
it tripled the year after that so you know and then we tripled the year after that well a category defining SAS
00:54:25
company so you're taking Microsoft but but but I'm just saying that it's entirely possible there's a lot more
00:54:30
Yammer today or companies with that growth trajectory so I mean but look this is what's led to you know our fund
00:54:37
to which we started investing in 2019 which has a SAS Focus already has five unicorns in it from companies that we
00:54:45
invested in the Cedar series crazy so but look I mean when you're seeing like results that good where my head goes is
00:54:52
okay this is too good you know what am I missing here or like what's the downside
00:54:56
and how long will this sustain just to build your just to build on your point there are these businesses that
00:55:03
have I I I would say interesting products that are growing well but they may not actually be very important
00:55:11
companies yet they trade at enormous valuations and then you have these companies that are just so superb and
00:55:20
I'm talking about Microsoft Google Apple and Facebook that now trade in many cases at some pretty deep discounts um
00:55:27
to their intrinsic value but this is the sign of this histrionic behavior that I
00:55:34
think um embellishes the end of a bubble right it's this thing where you look at
00:55:40
a growth rate and you don't even ask the structural questions about business quality viability sustainability
00:55:48
competitive modes you're like oh well it's going from 300% you know it's only decaying to 200%
00:55:54
I buy well it's like but yeah but what are you buying and is there any longevity and staying power this is why
00:56:01
you know I've I think there are some great businesses in SAS but I also think there's a lot of head fakes and in the
00:56:07
public markets particularly people just want to buy that growth as David said because they're chasing yield they're
00:56:14
not you know do they really understand am I buying this company because I really believe in this database
00:56:19
technology versus that streaming technology versus this container technology they don't know any of those
00:56:24
things well I to to so so this is the conundrum is I actually do believe like so I believe in my own portfolio and I'm
00:56:31
doubling down on all these companies and I do believe in SAS and I think the reason why these SAS companies get such
00:56:36
great multiples is because they're pure software businesses very high gross margins 80% plus gross margins you know
00:56:42
once the flywheel gets going they're very hard to displace I mean they have uh it's not just a recurring Revenue
00:56:49
subscription type business but you get expansion out of your current customer base so you know on January 1 of a new
00:56:55
year you're starting with 120% 150% of last year's Revenue just from your existing customers and then you're
00:57:02
stacking the new Revenue courts on top of that so I am a believer in SAS but when I see everything going so well it's
00:57:10
SAS and NASDAQ and S&P and crypto and and then I see you know 125% debt to GDP and the the sort of radical uh spending
00:57:21
that's coming out of Washington I just start getting nervous and I don't know if I have like a prescription for people
00:57:27
out there I would just be a little bit cautious right now and temper Your Enthusiasm but but look the fli side of
00:57:33
it is we could keep having a boom for five more years you know and so theet while inflation going sit out you
00:57:41
can't sit out out but but but but you know but on on um I was listening to Vinnie lingham's um show on uh beep on
00:57:50
Callin it's called it's called crypto music no he and sunny MRA do a great show that you just got 25 bips we just
00:57:58
you guys should all listen to a show it's called crypto musings they they were talking about all the the dog coins
00:58:03
the other night it was Sheba enu and Dogecoin and there's a couple others Vinnie made a great point he said listen
00:58:10
if you're out there listening and you're sitting on lifechanging money in Sheba youu sell take it off the table if you
00:58:18
can key words being if you can so look I you know this boom could last for another five years it could last for
00:58:23
another 10 years and the Valu valuations keep going up the earnings could keep going you don't want to miss out on that
00:58:29
bull run but if you've got lifechanging money in a in a highly risky position that's not I'm amending my advice of let
00:58:38
your winners ride to take some take some chips off the table prudently doesn't mean you sell everything but just take
00:58:44
some chips off the table to diversify specifically diversify yes yeah I mean I think it's absolutely I mean I got to
00:58:50
say when when you saw these quarterly earnings there is no better business in the world than Google
00:58:57
singlehandedly par excellance the most incredible moneymaking machine that's ever been created and a close second as
00:59:04
it turns out is Microsoft unbelievable I mean just to which is now the most valuable company in the world greater
00:59:10
than Apple well and and freedberg has been saying this on the podcast forever but just to give people an idea qy
00:59:15
Revenue at Google was up 41% year-over-year to $65 billion dollar in a quarter by
00:59:26
the way that is high margin high margin the incremental revenue on the core Google
00:59:33
product uh generated an increment operated at an incremental 50% ebit margin and they just adjusted their
00:59:40
their capex depreciation amortization schedule because they realized that their computers that they use in their
00:59:48
data centers last four years instead of three and the networking equipment lasts
00:59:52
5 years instead of three so they're like and and I've been saying this since the
00:59:56
beginning because I worked at Google and ERS is still there and he runs all the data centers and the networking
01:00:01
infrastructure when I worked at Google there was this Amazing Project where we built a 10,000 I we didn't build it they
01:00:06
built it a 10,000 ports switch called fire hose which helped increase the throughput of the data centers and have
01:00:12
these massively parallelized indexing and um uh and uh and production servers um and there was so much
01:00:20
investment made from the beginning in building the infrastructure stack the flywheel continues to move spin faster
01:00:27
and faster and faster and here they are building their own servers building their own racks their own data centers
01:00:31
literally the most they have their own fiber across the oceans um literally the most vertically integrated business in
01:00:38
history with a moat that no one will ever be able to catch up on and I read all these nonsense comments on the
01:00:43
internet about people being like why doesn't someone else go after search it's so crazy to me people fail to
01:00:48
recognize that what we see is the tip of the iceberg at Google and this flywheel
01:00:52
is built by layers and layers of Monopoly istic in a good way monopolistic technical advantages that
01:01:00
they've built into this business over the period of the past two decades and it is extraordinary beyond anything
01:01:06
we've ever seen in human history how well this commercial enterpris has run and the reinvestment of capital has been
01:01:11
extraordinary they' if you look at YouTube in the quarter uh YouTube generated this is insanity YouTube is
01:01:19
now operating in a nearly $30 billion Revenue run rate and that's just like pure margin incremental revenue for
01:01:25
Google layered on um you know built off of the same ad ad network uh that they were originally running on Google
01:01:31
obviously they have a different ad team now at YouTube but YouTube now has more Revenue than Netflix and is growing at
01:01:38
likely 40 to 60% year-over-year Revenue growth rate whereas Netflix is you know considered one of the Fang stocks you
01:01:45
know one of the top stocks and Netflix is only growing at 22% remove Netflix and just put Google twice it should be
01:01:52
and then you look at Google YouTube in there on its own Google cloud is now operating at a 20 billion run rate and
01:01:59
you know they can just throw these services on top of um all these flywheels that they've built and they
01:02:04
become massive Enterprises unto themselves I mean it is a behemoth that is effectively not attacks in a bad way
01:02:11
but attacks on the internet because they are core infrastructure to service almost everything that we all consume
01:02:16
and use they give it to everybody free and they build the internet for every they been they have been extremely smart
01:02:23
about competitive pricing as we saw recently they dropped the in the store to 15% if I'm making an app and I'm
01:02:30
giving Apple 30% now I give Google 15% I'm more inclined to promote my Android app and that's going to affect users and
01:02:36
you know they're putting out this pixel 6 phone that looks like an incredible piece of equipment that's cheaper than
01:02:41
the iPhone they're an incredible company they are so incredibly well-run at the top Sundar is an incredible CEO
01:02:50
um and they are they're running a money printing pest uh at Amphitheater Parkway
01:02:55
in Mountain View I was going to say Jason to your point I was talking to somebody and one really interesting
01:03:05
thing that this organization did was um a couple of years ago they basically went long Google and Microsoft and they
01:03:15
shorted Apple Amazon and Facebook against it and I asked them why and they said it's the best inflation hedge we
01:03:25
could come up with with at massive scale that could work in a way where you know we're long growth but we're hedged
01:03:33
where you know the types of Supply constraints that could come in and you know kick us in the ass would never
01:03:38
affect Microsoft and Google the same way that it would affect apple and Amazon which by the way in their earnings
01:03:44
results they said right Amazon has huge issues on the supply chain side Apple has huge issues on the supply chain side
01:03:50
Amazon was up 15% they missed their numbers although Amazon web services is a 40% year-over-year also on a big
01:03:59
number $16 billion in AWS revenue for Q3 so that as a standalone company is now on a what do
01:04:08
what did you guys think about meta 60 billion oh my God I mean that was did you watch the video I watched the whole
01:04:15
thing I watched two minutes of it and then I stopped watching pts I mean it's basically you you have Facebook in the
01:04:24
face of all of the things all the times they got their hand caught in the cookie
01:04:29
jar saying this is going to be the new world but instead of us doing everything wrong and screwing the users and their
01:04:36
privacy and democracy and creating Strife in the world this time we're going to make it open source this time
01:04:42
we're going to build a coalition and partnership and this time it's going to be awesome and it's it's like a
01:04:47
dystopian SNL skit where Zuckerberg is describing the future and he literally describes how proud he is that you're
01:04:54
going to be able to play Grand Theft Auto and Nick C is like yeah this is going to be amazing this time we're
01:05:00
going to bring all the regulators and the scientists in to tell us how to build it and we'll have consensus of how
01:05:05
to build the future and you're like did you just say that everybody in 3D is going to be in a virtual space beating
01:05:12
each other up with bats and guns and killing police officers in Grand Theft Auto luckily they didn't show a clip of
01:05:18
it uh but it was basically Zuckerberg taking credit for every single uh virtual reality or augmented real thing
01:05:26
you've seen over the last 20 years he literally took everything from education to hollow lens to you know poker games
01:05:35
and he took basically credit that this is going to be the future and that instead of this time it being a closed
01:05:41
ecosystem it would be an open one that supports nfts and don't worry this time I think any developer who puts any
01:05:47
amount of their effort into supporting in any way Zuckerberg's view of the metaverse is crazy when they could do it
01:05:55
on a distributed decentralized Crypt based open-source platform you do not want to give Zuckerberg any more power
01:06:03
and if there is even a 10 or 20% chance that this is the next big computer platform Zuckerberg needs to be stopped
01:06:09
from doing it by the market jcal I you're I think you're crazy I think you've lost your mind I haven't yeah I I
01:06:16
think lost your mind oh my God I have a counterargument too okay David you start
01:06:20
well I I don't even know if if I could categorize what I'm about to say as a counterargument I don't even know how
01:06:25
counter that all I would say Insanity all I would say is look I think it's really great that Facebook is spending
01:06:32
all this R&D money on metav verse virtual reality Oculus is a really cool product I think Jason you've made the
01:06:39
observation that people use it once say it's the coolest thing ever and never use it again there is that element to it
01:06:45
they have to solve that um using Oculus for the first time was one of the most unique experien I've ever had with
01:06:51
Computing but I admit I don't use it anymore it's just not better or worse than PornHub the first
01:06:58
[Laughter] time but any event look I think I think the that's his way of saying words I think that the fact that
01:07:07
Facebook wants to do all this R&D and virtual reality great um changing the name of the company however at this
01:07:13
point in time it felt to me like a little bit like Philip Morris changing his name to Altria Group and by the way
01:07:19
I don't buy the idea that Facebook is like cigarettes I don't believe that at all I don't think it's it's bad for
01:07:25
people in the way that it's been hyped up to be you're saying this is a PR marketing straty but it feels like
01:07:30
they're running from their name and uh and and basically it's almost like saying you know this whole business of
01:07:37
social networking has been so sullied that we need to appear to be a diversified portfolio of companies of
01:07:43
Which social networking is just one small piece a deprecating piece yeah exactly and I don't I don't really buy
01:07:50
into that and I I I think if that was any part of their motivation it's a mistake because I think the only thing
01:07:56
Facebook should do about all these accusations is get up on their hind legs and fight because I think like all this
01:08:03
these leaks from the so-called whistleblower I think this is a completely orchestrated political hit
01:08:09
and they should just fight back and push back on it I think the dangers of social
01:08:12
networking have been vastly exaggerated so it seems to me like they're buying into that nonsense by running from their
01:08:19
name I so I at least would not have done this right now I would have won that battle and then if it was still
01:08:24
important to change their name then I would have changed the name uh well they're losing young people at an
01:08:30
extraordinary rate on Facebook us teenagers were projected to decrease by 45% over the next two years young adults
01:08:36
between the ages of 20 Ina were expected to decline by 4% or Tik Tok I think is probably more accurate yeah Tik Tok is
01:08:42
Big yeah yeah during that same time frame via leaked memo obtained by by way I mean how in the world is Facebook or
01:08:48
Instagram more dangerous than Tik Tok I I don't get it no Tik Tok is dren which but by the way are Stan making our Henry
01:08:57
bcer of uh Tik Tok is reporting that we have like millions of views over there so there's some Rogue did I say that how
01:09:05
much I love Tik Tok I love Tik Tok he's building our audience we're connecting with J
01:09:10
finally Tik Tok Tik Tok you're right you're right the Tik Tok account there's an all-in Tik Tok account done by a fan
01:09:18
and we got like 2 million views in the last week it is absolutely boners we just passed Rachel mat and a bunch of uh
01:09:24
folks more popular than all of MSNBC yeah well I mean come on way to set the Benchmark fredberg do you guys do you
01:09:33
guys remember a year ago Larry Ellison negotiated this deal with Trump to buy Tik Tok for he's going to throw in laai
01:09:40
fredberg is uh and Masa son was supposed to be on Tik tok's board yeah that's by
01:09:45
the way uh xiin ping is on laai right now and Larry Ellison got tick to fair trade nobody talks about the Billy that
01:09:53
uh Ellison kicked into Tesla right before to that he AOS he made like1 billion 15 billion he's such a bus he he put a
01:10:05
billion dollar investment joined the board told everyone talk all talk all the the the smack you want about this
01:10:11
guy but he's Landing spaceships on a drone ship in the middle of the ocean what are you do he'll figure it out
01:10:17
he'll figure it out and 15 eggs that's insane but wait I have one question for freeberg is Zuckerberg pulling a Larry
01:10:24
Page I somebody else becomes CEO of the Facebook collection of companies and then he becomes the chief product
01:10:31
officer and then doesn't have to go to Senate hearings no I think he's way more active and driven in terms of product
01:10:36
Direction than Larry ever was so I don't think they're the same person and I wouldn't liking these two what about the
01:10:42
meta strategy of changing the company name um by the way my prediction was that they were I should have done this
01:10:47
on the Pod a month ago I said they were going to change their name The Meta I I think that uh at some point as you
01:10:53
diversify these businesses um away from your core and you have this core engine driving the business um you
01:11:01
know you have to make it look like these businesses can and will operate independently while they might get some
01:11:07
leverage off of one another and one might feed into the other um they need to be able to operate independently from
01:11:12
a kind of public perception operating and management perspective that's what alphabet did it's a natural progression
01:11:17
of States as you start to do things that are too far distinguished from one another um and so it feels reasonable I
01:11:23
think you know is this a whole like PR rebranding maybe to some extent that's helpful but I do think that this idea
01:11:30
that we need to do more than we're doing today and we need to make a big hard cold bed on it um is what this
01:11:35
represents now the the the the the the important psychological question is he doing it out of a matter of Defense
01:11:43
meaning like does this signal fear about the Core Business um or is it about ambition and aggression and and rebets
01:11:51
on New Opportunities and emerging opportunities that he thinks and that's the big debate that I think is kind of
01:11:55
going on right now is how much often when you see people make big moves like this it's either out of greed or out of
01:12:00
fear and I think um some people are asking the question how much should we be afraid of the core business being
01:12:06
eroded based on his making this sort of a big bet oh you think this could perpetuate that or it's a bit of a tell
01:12:12
that this is happening a tell got right and and I'm not saying that's the case I'm saying that's the question right and
01:12:18
that's the question a lot of people are asking is this a tell that the core business is at serious risk well he's
01:12:25
putting 10 billion into it this year for example this apple you know ad Revenue business I think is climbing by billions
01:12:32
of dollars while Facebook's Core Business is being affected by the the uh TR cookie tracking policy change on
01:12:37
Apple iOS uh so at the same time that you know Apple's reaping these benefits from the changes that they've made uh in
01:12:44
iOS you know people don't really have great visibility into how much it's really affecting Facebook's ad Revenue
01:12:49
at this point and this could be as you point out the tell um that maybe things aren't that good and he needs to
01:12:54
diversify he needs to make a big aggressive bet elsewhere so um you know we'll see I mean important question
01:13:00
chamath are we going to celebrate the birth of both your and friberg's daughters with a poker
01:13:08
game with my gambling do you want me do you want me to give you my thoughts on meta or no
01:13:13
you don't care no it's a joke can you take a paternity to go toen I got a board meeting I gotta go
01:13:19
bite all right uh for the queen of quinoa wait wait wait don't you want to know what I think I think on The Meta
01:13:26
thing I think the the risk is if Google and apple take the hardware costs to zero because I think there's an
01:13:34
incentive in a highly fragmented ecosystem you have to remember when Apple introduced the iPhone there was
01:13:39
nothing that came before it so it was completely groundbreaking and I think what Facebook has to figure out is how
01:13:44
to make their VR experience so revolutionary that it attracts developers and in the meantime if Apple
01:13:51
and Google figure out how to kind of give it away for free and just kind of make it a lowcost Hardware game where
01:13:58
everything else Jason as you say is this kind of Open Source thing where it's like a browser yeah right where
01:14:03
everything just exists in a dii kind of world like the web and the internet then
01:14:07
then it's a little bit more problematic for all the money spent that's what they
01:14:10
have to figure out you think it's GNA be VR or ar what wins the day with consumers well that's a good question I
01:14:20
mean they're very different experiences um both can win but talking 20 years from now which one will be used
01:14:29
more or 10 years from now 10 to 20 years from now which one will make more money
01:14:32
be more relevant be more utilized well I mean AR the dream there is that you wear
01:14:38
these glasses that have like the Terminator view where it's like scanning the world and giving information you'll
01:14:42
never forget anyone's name again stuff like that um that would be kind of useful maybe um VR I think is more about
01:14:50
immersion uh it's really like a gaming experience I think at least now I think it's all about AR basically what he was
01:14:57
saying there he was talking about VR I think VR let you make the worlds and then AR let you experience them
01:15:03
concurrently with the real world and it's the same Tools in libraries and kits as a developer making it for VR AR
01:15:10
is going to be pretty I think seamless and so I think Apple has skipped VR on purpose and
01:15:16
they're going to AR I think Google is basically going to go directly to AR and then where does that leave then
01:15:25
Microsoft already has hollow lens that they've been investing in heavily and they think they got the biggest lead uh
01:15:30
that at least we publicly know about so I think it's going to be a race for who can get AR to work and VR is just like
01:15:35
kind of a waypoint on the way there there's a lot of stuff going on and I'm I'm sure that people will want
01:15:43
to check out of the real world for some amount of their life but they'll probably also want to be in the real
01:15:49
world for some part of their life and at some point maybe if those two things merge that won't matter as much and I
01:15:56
think if the experience is compelling enough it could happen well I mean if you think about us playing poker on the
01:16:03
poker one of those poker apps if we could put our glasses on sit in our room and see each other at a poker table you
01:16:10
know like if bogot wanted to play from Australia and he was you know projected into the seat on the game and we all saw
01:16:15
them there with glasses AR glasses that would be amazing wouldn't it be able to you know have two of the people at the
01:16:21
game be projected in as it were could be especially if it was Diego I mean that would be pretty great I mean
01:16:29
for I'm saying for the good of the game I I did a tweet where I said listen VR people leave it on the shelf and you
01:16:34
know Palmer lucky and a bunch of people got in my face about it and then we had like a actually really good discussion
01:16:41
um and I said well what about serious Gamers because I'm talking about serious Gamers they all buy it and then they
01:16:46
never use it and they said yeah it's not for serious Gamers I said okay well what
01:16:48
about iPad Gamers and casual gamers and bejweled and Candy Crush they're like oh
01:16:52
yeah they're not interested in it and I'm like well who are The Gamers then is it the intense ones or the Casual ones
01:16:57
they said no there's a new category the number one game like wck room beat saber
01:17:02
and golf are like crushing it uh with a million users a month in some cases you know what they all have in common their
01:17:10
physical activities where you get some amount of exercise and it would be very difficult to coordinate in the real
01:17:14
world I know but Jason when you look at things like like axi Infinity where you know there are play to earn movements
01:17:20
that are happening in in sort of this you know layer three kind of defi world where you're getting paid to basically
01:17:27
you know play games that could be a job and then you will spend 8 to 10 hours in
01:17:31
a metaverse of some sort so these things are very possible I find it so dystopian
01:17:37
uh yeah that's true but I'm sure that our parents find some parts of our lifestyle dystopian and you know we find
01:17:44
certain parts of our kids lives dystopian it's just what happens yeah I don't know all right everybody we will
01:17:50
play poker we will play poker yeah we got to play poker at some point I mean we will play poker either either Tuesday
01:17:55
or Thursday okay yeah well that's good perfect babies will be like almost a week which which days are you going to
01:18:01
flake Tuesday and Thursday which day will you play Tuesday and Thursday Tuesday and Thursday sey I mean do I
01:18:06
have to come pick you up I can play on Tuesday all right everybody four the queen of quinoa the Rainman and the
01:18:13
dictator I'm Jason kenis we'll see you all next time on all in love you besties let your winners
01:18:22
ride Rainman David and instead we open source it to the fans and they've just gone crazy with it
01:18:31
love you [Music] Queen besties are that's my dog taking your driveway oh man my habiter will meet me
01:18:50
at we should all just get a room and just have one big huge orgy cuz they're all useless it's like this like sexual
01:18:55
tension that they just need to release Som your your we need to get merch [Music]
01:19:12
our I'm going [Music]