00:00:00
We went to an amazing restaurant Friday night. She So is the name of this restaurant. Wonderful food. The owner of
00:00:07
this restaurant. Shimoth is a is a super fan as well of the all-in podcast. Is that a French restaurant? Jason, she
00:00:14
said it was um more like an Asian fusion restaurant. Like great sushi. We had this incredible hotel. Del just just
00:00:20
aces all the way. The guy comes and uh we go to pay. He says, "Oh my god, Phipe, listen to this story.
00:00:28
This is the most money is no good here. Your money is no good here. Oie, he refuses to let us pay after we ran up a
00:00:34
hell of a bill. And now you see Freeberg's running. Freeberg just ran off the show. Why did he run off the
00:00:40
show, Jim? Okay, so Jason says to me, Jamal, this is absolute this is an absolute
00:00:49
You guys, you guys, you guys make this up to try and make entertainment out of me. I'll tell you the truth.
00:00:55
Okay, I'll just tell you the truth. I'll tell you. Okay, ready? I'm gonna tell the
00:00:59
truth. So Jason says, "Guys, I'll see you guys later." If they're care's gonna talk for more than three
00:01:08
minutes anyway. Go ahead. You said if they're if they're going to comp all the food, just make sure you give a great
00:01:13
tip. Huge tip. Huge tip. Huge and Jal level tip. To T totally makes sense. Freeberg's like, "Yeah, got it. No
00:01:20
problem." We had like $19,000 of food. And he goes, "Is is $175 appropriate?" Literally Freeberg calculates it. And so
00:01:30
Jason says, Jason says, "No." And then Freeberg says, "Hold on. Oh, fine. Fine. I'll double it to 350." Now, he was
00:01:36
around. He was joking. I gave the guy a,000 bucks. It was gave a,000 bucks. And I said, "Actually, I think we should
00:01:41
give two 3,000." So then we tipped the woman an extra 2K. So we gave her 3K for a 10erson dinner, which I think is
00:01:48
appropriate. She was ecstatic. The food was phenomenal. It was great. Go to Shiso if you're in Miami. Dave, are you
00:01:54
adjusting the tips for the no tax on tips? So, you're like making the middle smaller tips.
00:02:01
[Music] We'll let your winners ride. [Music] We open sourced it to the fans and they've just gone crazy with it.
00:02:17
Hey everybody. Hey everybody. Welcome back to the number one podcast in the world. We're going to have an amazing
00:02:24
episode today. The besties are riding high. Why are we riding high? Because we went to Miami. Oh my goodness. We had so
00:02:33
much fun at F1 thanks to I mean it was fun. I mean, so many great stories. Uh so much good times. We were laughing the
00:02:42
whole time. We did a little stage show and uh Tony Robbins came up. We had Nico Rossberg. He's a Formula F1 champion.
00:02:50
our guy Antonio Gracias who's working on Doge, Valor Capital, front of the pod, and Mayor Francis Suarez joined us. And
00:02:58
uh then at the end of the show, surprise guest, none other than Sergey Brin, who
00:03:04
is punching a clock. He's working like 70 hours a week over at uh Alphabet. And we'll talk about that today a bit. Did
00:03:10
you have a favorite speaker, Mr. Sultan of Science, the one and only David Freeber? Do you have a favorite speaker
00:03:17
or a moment? Sergey Sergey. Sergey did a great job. He was very casual, very chill. We had a great conversation. I
00:03:24
think we should probably publish that as a standalone. I thought it was really good to drop him like a little midweek
00:03:30
drop or something. But I will say Antonio, I I gave him a shout out just because I think the work Antonio is
00:03:35
doing is so important. I am super impressed and I was really appreciative of him taking time to come hang out with
00:03:42
us, but obviously he's working with Elon on Doge, but he's also uncovering a lot
00:03:46
of stuff in the government that it's really powerful to see someone actually go in, do the digging, and present it
00:03:51
the way they are with the transparency he is. And he's not doing it for any angle. There's no money. There's no
00:03:57
benefit to him individually. He's just doing it's probably net negative on the margins for him. Really hard for him.
00:04:02
And yeah, and it's just amazing. Based on Elon's experience, it's definitely net negative. People uh maybe don't like
00:04:09
having their grift cancelled. Shimoth Polyhapatia, our chairman dictator. Do you have a favorite moment with the
00:04:16
speakers or a favorite speaker, you know, a highlight from the programming specifically? I thought all five of them
00:04:22
were amazing. I do I did think that Sergey did a really good job. I like Nico Rosberg a lot. I did too, for sure.
00:04:29
I'm really excited to see what Francis does next after being the mayor of Miami. Maybe governor. We'll see what uh
00:04:36
love party says. I think they were all great. Tony Robbins, I have to say, his energy is very unique and when you're
00:04:42
near it, I didn't have many interactions with Tony up until that first time. Really,
00:04:48
I'd met him through Peter Goober a couple of times when I was part of the ownership team of the Warriors. Peter's
00:04:53
a co-owner. They're very good friends, but I'd never really spent much time with him. He's a special person. And you
00:04:58
can tell there's a there's a big energy there. They're all great. Yeah. You know, I'm interested to see how the
00:05:04
audience likes that interview because, you know, he uh he is a ball of energy. I tried to get him to open up, talk
00:05:09
about himself a little bit, but you know, he was kind of on his own tip, but the audience loved him. And we did a
00:05:14
great like meditation exercise that everybody loved it. It was a lot of fun. Joining us this week from CO2
00:05:20
management. Yes, we have Phipe Leafant who is his older brother and uh Phipe welcome to the program for the first
00:05:30
time. Thanks guys great to be here. Have you heard the show before? Have you have
00:05:35
listened to the Allin podcast Philippe? Let me ask you that question right off the bat. I've been listening about it
00:05:39
for a week at speed of 1.8. So I think I've gone through about like 10 or 12 episodes. Okay. Catching up and uh All
00:05:47
right. Are you an F1 fan? You're French, so I don't know. Is that like popular in
00:05:51
France? The F1. Hey, we had a good F1 pilot, right? Alan Frost. Alan Frost. He won a few years, you know. So, okay.
00:05:59
It's incredibly popular in Europe. Jason, what did you think of Formula 1? That was your first time, right? It was
00:06:04
my first time to F1. You know, there was a lot of um pomp and circumstance. We're
00:06:11
very lucky that the trophy house, my friend Ford, whose partners on the trophy house, included us. He gave us a
00:06:19
level of trophy house. Trophy house. There it is. Beautiful structure. Three amazing floors, tons of activations uh
00:06:27
which means free stuff for those of you who are not in these like uh circles where celebrities get all kinds of free
00:06:32
stuff. And we had a poker game. Was wonderful. Best way to watch the F1. Play poker. By the way, when you're live
00:06:39
at the F1, it's a little bit hard to get into the experience because like the cars just zip by you, so you get to see
00:06:44
the car for like a few seconds and then kind of like dead time. Yeah, it it was um very exciting. I have to say it was a
00:06:51
very social experience and we made an executive decision because it was raining to pull the table and put it
00:06:57
inside the trophy house. And then we had an incredible view of like the finish line and uh there's Freedberg standing
00:07:03
up, me next to him. We had an incredible lineup. Travis joined us. You can see there Phil Helmuth heranging poor Travis
00:07:11
from Uber sitting next to me. I mean this is he always has to have his hand on a billionaire.
00:07:18
He's not within 5t of a billionaire. He has a panic attack. So and there's Helmouth. Poor Helmouth. Um my friend
00:07:26
Timothy Shalamé came by to say hi to me. And of course like tackling him. Look at those
00:07:33
meat hooks just going over a giant tanda bear and Shalom's the bamboo. I felt so bad for Timothy. You
00:07:40
know, he's he's done such amazing work and you can see how engaged he is in Phil Helmouth. He's
00:07:48
like, who is that person? Why is he grabbing me? But you know, then again, Phil Helmouth is presenting him. And now
00:07:54
here's a proper way. Can I say something? Is that dealer is that dealer Larry Summers? He sort of looks it is
00:08:00
Larry Summers after his appearance actually dealt by Larry. Well, after he was here, he he lost so much sponsorship
00:08:09
and and so so many uh you know so many deals that he uh now is working on moonlighting as a dealer. He wanted to
00:08:16
continue the great debate. Yeah. But but can I just point out here the proper way
00:08:20
to embrace an A-list celebrity who you're friends with is to just let them come up to you.
00:08:27
Look at so Timothy comes. Timothy and I are just me just as a background. This is my friend. This is your good friend
00:08:32
Timothy Shalom. Right. I will not say good friends. We we've met a couple of times like a handful of times because
00:08:36
we're both Knicks fans and I'm friends with Ben Stiller. Ben Stiller, myself Timothy and my brother Josh went to the
00:08:41
Pistons game, you know, versus the Knicks when we crushed them and crushed their souls. So
00:08:46
Timothy came over just to say hi to me and his friend Yeah. Frankie and his other friend Cody Block. Frankie Bones.
00:08:52
He's got a great crew and you know he came over to say hi to me and he was thanking me for the tickets I I was able
00:08:58
to get cuz it was hard to get tickets for that. Anyway, for Helm Youth, don't tackle people at all in events. This is
00:09:04
why Chimant banned you. Just complete inappropriateness. And then Helm Youth was going around. I don't know if you
00:09:10
knew this. He was telling everybody that he created Allin and that he was like the executive producer for life.
00:09:18
Just so much inappropriateness from Phil Helm Youth. It was brutal. Man, if I may, let me also thank we had a partner,
00:09:24
OKX, the new money app, and they they're a big major sponsor of the McLaren F1 team. They're the main sponsor on
00:09:32
McLaren. Oh, they're the main. And they won the race. So, we were there with Haidider, the C CMO. Very cool guy and
00:09:38
his team. Super guy and his wife. Nice guy. We had dinner with them. Shout out to those guys. And they just launched
00:09:43
their crypto exchange here in the US. So, if you love AllIn, do me a favor, go check out OKX. And uh thanks to some of
00:09:50
our other partners, Salana, Google Cloud, BVNK, Circle, shout out my guy Jeremy Lair, and my brother in Nyx Fandom,
00:10:01
Shane from Poly Market, who I got to hang out with a whole bunch. This is a really great guy. Wonderful event. We're
00:10:06
going to do it again. We're going to run it back, I think, for maybe F1 Austin, Vegas, and we're going to and maybe
00:10:12
Vegas. Who knows? Uh maybe the Super Bowl, maybe NBA Finals. We're going to do some more of these 200 to 500 person
00:10:17
events. I got to say it was so fun to hang out also with the the fans that came in for the show, the sponsors. It
00:10:24
was just so great to like go to these events and hang out with people. I need to ask you guys a question. What was the
00:10:30
most fun? The Friday, the Saturday, or the day of the race? Saturday for me. So, you like the
00:10:37
content best? Okay. Saturday was I woke up, I went straight to Jeff Gross's house.
00:10:42
Me, Travis, Helm, Youth, and a couple of others. We played poker until 4:00. I ran to the hotel, took a shower, went on
00:10:50
stage at 5. I spent four hours prepping. 5 hours out of your pockets. It was great. Yeah. I
00:10:58
was in the nightclub till 5 a.m. That's a true story. All right, start the show.
00:11:02
Let's get the show. I'm going to start the show once I remind people that September 7th, 8th, and 9th, we'll be in
00:11:08
Los Angeles if you want to come hang with us like we did in F1 for the All-In Summit, the fourth year. And my lord, I
00:11:14
got a preview from Freedberg of the content. It is going to be another peak all-in event, you know, and our goal is
00:11:21
to have the world's most important conversations, yada yada yada. Our experience at the summit this year is
00:11:26
what's going to be awesome. It's in addition to the content being great. We've got some really awesome Well, you
00:11:31
told me the party location, which I won't say here, but you also told me that you're I did 900K was the peak two
00:11:37
years ago. Then you spent 1.2 two million on the party last year and now you told me you're spending 2 million on
00:11:42
this year's party. Forget is that true? The two the two million whispers. It's going to be more than that. Oh my word.
00:11:48
Anyway, if you want to apply for tickets allin.com/summit and um yeah, Chimath and I were on Megan Kelly. Let's get
00:11:56
started. I love it when Jal and Megan Kelly like have their Oh, it's the best. It's the best. Well, she likes She
00:12:02
understands it's broadcaster on broadcaster action. We like to mix it up. We know how to do ratings. He's a
00:12:08
radio show. Come on. All right. The Fed held their rates steady again this week.
00:12:13
Uh if you remember last year, the Fed cut 50 bips in September, then 25 bips in November and December. Uh but so far
00:12:20
in 2025, the Fed has kept rates in a steady range, 4.25 to 4.5%. They said they want to wait and see. They're in
00:12:28
wait and see mode because they don't know what Trump's doing with these tariffs and how that's going to impact
00:12:32
the economy. Here's the quote from the Fed. Economic activity has continued to expand at a solid pace, but they warned
00:12:40
about potential stagflation. Risks of higher unemployment and higher inflation are their concerns. And I I talked about
00:12:47
that last week. I'm I'm hearing a lot of uh hand ringing about layoffs coming soon. So, what do you think, Phipe,
00:12:55
about the Fed not taking any action? And what's your general take on the markets?
00:13:01
you know, the the markets have seemed to recover largely from the Trump uh Independence Day um tariff announcement,
00:13:08
but it's uh feels a lot pretty shaky out there. A lot of M&A on hold, a lot of hiring on hold. What What are you seeing
00:13:14
on the streets? Yeah. Well, it hasn't been a boring year, has it? So, I would say on the Fed, right, a lot
00:13:22
of people are saying, "Oh, you know, the Fed should cut and this and that." I actually think that there's also the
00:13:29
scenario that what if the Fed is cutting because things are not so great. Maybe that's actually not a good message. And
00:13:36
what if the Fed is not cutting because actually the economy is really strong. And so I think that the Fed not cutting
00:13:45
is actually not that bad of a message. And I'm surprised just in general at how bad sentiment is, but how good the hard
00:13:54
data is. And we have this ratio at CO2 where we sort of divide hard news as a numerator and sentiment as a
00:14:03
denominator. And it's the first time where the news is so good and the sentiment is so bad. And I don't know if
00:14:10
the sentiment is bad because just the market went down a lot or for other reasons. But I actually think the
00:14:17
economy is doing really well. Uh and we also learned two really important things. One is when the market did go
00:14:24
down a lot, the government did budge and said, "Hey, we need to step in here." And the second part is the Fed did
00:14:31
something that I thought was very clever. They basically said, "We're not going to cut just to bail out the equity
00:14:37
market, but if the market's liquidity is no longer functioning, emphasis on liquidity, then we'll step in to restore
00:14:46
liquidity." And I think those two things really brought the market back up. And I think it's more a little bit the
00:14:53
case of a tariff correction or a tariff tantrum, but not a tariff crisis. So you said there was a lot of good
00:15:03
fundamental news. What would you put at the top of that list? And you said there
00:15:07
were things in terms of sentiment that were making people quite negative. The the um economy as viewed by consumers is
00:15:15
really shaking. So what is the sentiment news that you are most tuned into and what are the hard data that you're most
00:15:21
tuned into? So on the on the hard data, the part that's most surprising is that consumers have very very weak sentiment
00:15:31
but in the meantime consumer spending is remarkably resilient and you can see this in a number of ways. You can look
00:15:38
at the Visa and Mastercard earnings, but I also like just to listen to like little quotes, little tidbits that you
00:15:45
pick up in the transcripts of tr of of companies reporting earnings and stuff. And people will say like even in the
00:15:53
month of April, consumer spending is very strong and even in the last week when we adjust for the front loading,
00:16:00
some people are pre- buying ahead of the tariffs. Even when we strip that out, consumers really good. So I think the
00:16:07
part that to me is most surprising, consumer is great. With respect to sentiment, it's really bad. But one
00:16:13
thing that's funny is whenever the market goes down, sentiment is bad. And so I don't think sentiment is
00:16:19
necessarily good leading indicator. I almost think it's like a lagging indicator. I bet you that now that the
00:16:25
market's gone up, we look at sentiment in a month from now and it'll be like, oh, sentiment's getting better. So I
00:16:32
think that's what's going on. Chimatha uh our friends at Poly Market are showing in uh June 84% chance of no
00:16:42
change. July 51% chance of no change. And then September 48% chance of a cut. And then pal obviously Trump's been
00:16:51
mixing it up with him saying he's going to fire him, he's not going to fire him.
00:16:54
What's your take on the Fed and what they should be doing here at this moment in time? And then maybe you could
00:17:00
respond to Phipe's sort of insight there that I think was pretty good that there
00:17:04
is a juxaposition between what people are saying they're going to do consumers and how they feel about the economy than
00:17:09
what they're actually doing. I agree with Philip's diagnosis that the Fed will really be focused on liquidity. I
00:17:17
agree with that. In fact, Nick, I just sent you something on signal if you could just throw it up
00:17:23
here, which is a really interesting view on subprime. And what it shows you is the
00:17:30
spread between where credit acceptance is versus capital ones. And the point in bringing this up is that when you look
00:17:37
back historically around these subprime lenders, whenever these guys start to see price to books just start to
00:17:45
escalate and get to highs, it tends to portend a liquidity crisis. It tends to show that things are about to roll over.
00:17:54
And from that perspective, I think that there are some blinking yellow lights that the Fed
00:18:01
needs to take seriously. But then where I deviate from Phip's perspective is I think that the Fed is getting
00:18:10
increasingly political in how they want to react to the conditions on the ground. I'll give you two perspectives.
00:18:18
The first is if you actually read the press release, either the word waiting or some synonym of that word was
00:18:28
littered in there 22 times. It just seemed like an incredible amount of verbal gymnastics to try to justify why
00:18:36
they weren't cutting. And if I had to just take that at its face value, I would at least put some
00:18:44
percentage of probability that you have to assign to this case where Powell views that if this lever is the
00:18:53
only thing that he has going into the midterms, it's almost as if he's holding it back because I think that if you look
00:19:01
at some of these leading indicators, particularly on the liquidity side, I agree with Phipe about how important
00:19:08
that specific metric is. I don't believe in the Fed put. We've talked about this,
00:19:12
but I think the liquidity measures are starting to blink yellow. And I think that if the Fed really wanted to get
00:19:18
ahead of it, they could cut, but the political overlay is cutting helps Trump. And I think there's this tension
00:19:24
between these two people. And I think that the Fed is saying we're not going to cut. So your position is or what
00:19:30
you're hypothesizing here is that the Fed is saying, "Hey, we have to wait for Trump to clean up the tariff stuff." the
00:19:37
trade war stuff and that that's a political act by Powell in retaliation for Trump saying he wanted to fire him.
00:19:45
Is that what you're insinuating? No, no, no, it's not what I'm insinuating. What
00:19:49
I'm saying very directly is that the Fed is acting in in a manner that is as much
00:19:56
politically motivated as financially metric motivated because the financial metrics some of the most critical
00:20:02
leading indicators particularly around liquidity and the credit health of the American consumer are blinking yellow.
00:20:10
So right now they are choosing to ignore these historically useful leading indicators. And the only reason that I
00:20:18
can come up with to ignore it are political reasons. So Freeberg, do you think there's a political beef going on
00:20:24
here between the two parties? And what do you think about subprime uh and maybe this being a lead indicator that maybe
00:20:33
it's time for a cut? Maybe we're going to see people miss mortgage payments, car loans, etc.
00:20:40
I was just looking at the mortgage delinquency rates. They're pretty uh flat right now. And that's I think
00:20:45
because so many people did refinance when rates were low and there's a tremendous amount of mortgage balance
00:20:51
with a with a low rate outstanding. But remember, I think the Fed has a whole bunch of data that
00:20:58
they're still going to need to wait on. The CPI data for March was 2.4%. Their target is
00:21:06
2%. The next CPI report comes out, I think next Tuesday. And so that's going to be an important indicator. But I do
00:21:13
think one other data point that is now going to be part of the calculus is what do these trade deals look like? So this
00:21:21
morning it was announced that there's a trade deal with the UK and in that trade
00:21:29
deal there are lots of provisions that relate to parody and what is expected to provide better market access for
00:21:37
American businesses into the UK. But there's also a really important piece of data there, which is that there's a 10%
00:21:44
tariff rate for imports from the UK into the US. So this is the first time we're
00:21:49
seeing a trade deal that actually gets announced and finalized through this whole tariff trade negotiation process
00:21:56
that's been underway now for several weeks with all the hoopla and all the drama attached to it. And what we're
00:22:01
seeing is that for one of our friendliest allies, for one of our best trade partners, we are keeping in place
00:22:08
a 10% tariff rate. So if that holds with other trade deals and that becomes kind
00:22:13
of a standard across the board as they get more of these trade deals done perhaps with countries that are less
00:22:18
friendly with more ownorous with less regulatory parody in the trade relationship between the US and that
00:22:24
country maybe there's higher tariff rates. What that means ultimately is that there is now maybe a pretty sizable
00:22:31
long-term revenue stream for the federal government that didn't exist before, which means that there's room to cut
00:22:38
taxes, which means that this is all going to be part of the calculus of the Fed's decision on whether or not and why
00:22:46
they would need to cut rates because this is going to drive inflation. It's going to drive GDP growth. It's going to
00:22:51
drive employment. And so I think that there is a pretty dynamic situation at play right now. It's not just that
00:22:57
there's a static tax revenue base and a static federal spending model and then CPI and employment data that is going to
00:23:06
follow them. Do you think Powell thinks that this Trump thing is going to work? So he's holding bullets in the chamber
00:23:11
because he's worried about inflation. I think they're going to wait for data. I would agree with that. Yeah. Dave, in
00:23:17
fact, uh, a couple things I was wondering your opinion on is one. I was with this
00:23:25
retailer, gigantic retailer in the US, and there's this sort of false narrative that when you have tariffs, like 100% of
00:23:32
tariffs are going to get passed through in pricing, and therefore tariff is like
00:23:36
a tax, right? That retailer told us that they think only about 50% of the tariff
00:23:42
gets passed in pricing. So, I I sort of agree with you. there is going to be a net net positive and that retailers have
00:23:50
way to uh work things around and stuff like that. I would also say today post this announcement the market's very
00:23:57
strong and initially I was a little bit surprised because um we're taxing 10% not only the most uh friendly country
00:24:07
but one where we actually have a surplus. So it's like if it's 10% when we have a surplus, what is it when we
00:24:14
have a deficit? But on the other hand, the market is speaking as we speak. And I also think that uh there were a lot of
00:24:22
announcements that seem to make it like, hey, we're going to make a deal with China. We want China to do well, but we
00:24:29
need to do well, too. It seems to me that at some point maybe there'll be a bit more of a win-win versus such an
00:24:35
acrimonious and maybe that's why the market's reacting a little bit more positively. By the way, that trade deal
00:24:41
we also eliminated the 2% tax on big tech companies. And then Howard just said today that they're
00:24:51
going to announce a10 billion order from Boeing on top of that as well. So these are going to drive GDP. They're
00:24:58
going to drive employment. It's really hard to cut rates into a market where there is not yet priced in or not yet
00:25:05
well understood, but an expectation of a driver for GDP, driver for employment and potentially an impact on inflation.
00:25:13
It's really hard to go into that sort of an environment and cut. I mean, if we're
00:25:17
in a sustained period of four to 5% rates, I mean, we should talk about that at some point, but there's huge
00:25:23
implications to the economy if this thing stays where it is. Huge. Philipe, are you in the uh camp of 4D chess with
00:25:31
these uh tariffs and these negotiations or, you know, throw some stuff against the wall, react to it in real time, you
00:25:38
know, he's shaking the snow globe, it's it's chaos, etc. Where where do you sit between those two opinions we've heard
00:25:44
on this podcast over and over? You know, when you ask a tech investor for like his opinion on macro. Yeah. Uh this is
00:25:51
the beginning of the end, right? I think I've like predict I think I've like predicted like seven of the last three
00:25:58
recessions, you know? So my my track record is pretty weak. Well, let me ask a different then question. How is this
00:26:05
impacting the tech market? Private companies that are thinking about going public, M&A, we saw Door Dash buy two
00:26:13
companies this week. We've seen a bunch of companies file to go public. We've seen them
00:26:17
pausing. Does this kind of uncertainty which it seems like is causing the disconnect, right? You you explain this
00:26:24
disconnect how people feel about the economy and then their behavior. Is that disconnect caused by the sort of
00:26:30
communication that Chimath and I and other folks were saying, hey, needs to be improved here. And it seems to be
00:26:34
with this UK. If this had been the process from the start where we're like, "Hey, we're going to do one of these a
00:26:39
week for 50 weeks and uh you're going to get this good news each week as as we sort this out." That seems to me like
00:26:46
something that would build confidence as opposed to, hey, everybody's going to go
00:26:49
back and forth. You say 50, we're going to go to 150 tit for tat. So maybe talk about the impact this has for founders,
00:26:56
startups, executive teams. I think for tech guys by and large, you know, a lot of the tech is in services. So that's
00:27:04
out of the picture for now. Uh but there's obviously going to be a lot of tears for semis and then for the
00:27:10
assembling of the motherboards into computers. So those are the two key areas and one of the difficulty is we
00:27:17
have these sort of base tariffs but we also have these sector tariffs and we've had sector tariffs in cars 25%. There's
00:27:25
rumor to be sector tariffs in pharma that could come out next week and there's also
00:27:30
been potential uh sector tariffs, you know, in semis. So, it's been pretty disruptive and I don't really know how
00:27:40
to think about it and I think nobody knew which is why the market just took a 25% peak to trough down. And then after
00:27:48
that, we learned well the government is actually smarter. They're going to one of the things that I love to see is all
00:27:53
these executives that get to come to also plead their case in Washington and maybe that was never the case you know a
00:28:00
few months ago and there seems to at least be a feed a feedback loop okay we do something we see what breaks we
00:28:07
listen we readjust and stuff like that but to be honest I don't really know how it's going to play out and I sort of was
00:28:15
very conservative for a period of time just waiting and then to me what happened last week with uh Microsoft
00:28:23
saying that like AI had really picked up. That was like a really big deal and I almost like uh coined it in my own
00:28:30
mind like tokens greater greater than tariffs and I think like one of the reason why the market's moving up right
00:28:37
now. Hold on just explain that just a little bit over tariffs. Tokens I don't know I put the greater greater sign you
00:28:43
know tokens are much greater than tariffs. Tokens you mean AI tokens? AI tokens. Yeah. So I I sort of view
00:28:50
tokens, you know, I I don't really understand the as as well as Dave for sure, you know, all the AI models and
00:28:57
stuff like that, but I sort of view tokens to an AI model is like fuel to a car or electricity to a computer, right?
00:29:04
And Microsoft said that in their Q1, they processed 100 trillion tokens, 50 trillion alone in March. And so the
00:29:13
tokens are really going basically vertical which is probably because of these reasoning engines which are much
00:29:19
more sophisticated and require more compute power. And I think the market it didn't to to it's a bit unfair for Trump
00:29:27
but the market did not just go down because of tariffs. If you remember it went down because people freaked out
00:29:32
we're in an AI bubble. AI is not really working. What's the ROI on AI? That was maybe I don't know half a third to a
00:29:41
half of the problem. And I think what Microsoft said is like capex is going up and everybody has a gigantic shortage of
00:29:49
chips right now. That I know for sure from all of our private companies, public companies. There's a shortage of
00:29:55
chip, a shortage of compute power. And so I think that's also maybe why the market's going up. And so for me it was
00:30:01
sort of a way emotionally I got so drained with the tariffs and thinking about tariffs and having to think about
00:30:08
something I don't really understand and I feel now there's a chance when you look at the next year or two at some
00:30:14
point tariffs goes away Trump makes this big deal with uh deregulation the tax breaks sort of cancel out the tariffs we
00:30:22
move on and what are we left with we're left with tokens and I think the world of tokens for me I've been doing this
00:30:28
for 35 years It's maybe the most exciting trend and thing that I've seen. And all these people that say, "Oh, this
00:30:36
is the end of American exceptionalism." I almost wanted to say, "No, you guys are wrong. This is the beginning of
00:30:41
American exceptionalism because we've got Wall Street. We've got Silicon Valley, and we still got a pretty good
00:30:47
government that at least tries to get stuff done. So, I'm pretty excited by that. I've been talking with my
00:30:56
management team a lot about AI first principles and we're actually doing an offsite in two weeks on this because
00:31:04
I've been following a lot of what the other CEOs have been doing and hearing stories. We had a great conversation
00:31:09
with Sergey. He gave us two anecdotes of how he personally has used some of these
00:31:14
tools to make management decisions and his observation was managers are the first to go. And if you zoom out from
00:31:21
that statement and you zoom out from the comments you're making, Phipe, there's I
00:31:27
would say like a once in a generational opportunity to select companies that are
00:31:34
going to accelerate growth because of the leverage they're going to create by adoption of these tools. Not tech
00:31:41
companies in the traditional sense, but across the entire economy. And some of what we're seeing right now in the
00:31:49
reformation of venture capitalists and and I know you're going to talk a little bit about CO2 here in a bit, but so much
00:31:57
of the thesis is around traditional businesses being reinvented using AI. And as a result, it's not just the few
00:32:05
tech companies that are providing the fuel, but there are these fires that are going to take off in all these different
00:32:10
markets that we could sit and spend probably hours kind of, you know, extrapolating and theorizing on that
00:32:18
creates a real opportunity for incredible market value creation. And traditionally, it's like the market
00:32:22
grows and the differentiation among the competitors is minim minimized once the market has matured. But for the first
00:32:28
time ever, every mature market can be completely disrupted. And so so if you're smart about selecting management
00:32:33
teams and selecting companies, there seems to be an incredible opportunity to realize investment returns. Okay. Even
00:32:39
in a mature equity market. Well, let's move on to our next topic, which is obviously super related. Google was down
00:32:44
8% on Wednesday after some bad search data came out because the Justice Department, as everybody probably knows,
00:32:50
is doing this antitrust lawsuit with Google. And the key part of that lawsuit is Google paying Apple 20 billion a year
00:32:59
to be the default search engine on iPhones. Obviously, we all know iPhones have elite customers. Those are very uh
00:33:05
precious searches from people with a lot of money cuz iPhones are expensive. Anyway, Eddie Q, who's been with Apple
00:33:11
for 35 years. He said, quote, "For the first time ever last month, our search volume actually went down." Quote, "That
00:33:19
has never happened in 20 years. If you ask what's happening, it's because people are using chat GBT. They're using
00:33:24
perplexity. I use it at times. He believes that AI search is going to replace classic search like Google.
00:33:31
Quote, "Again, there's enough money now, enough large players that I don't see how it doesn't happen." Bloomberg
00:33:37
reported on Q's comments at 11:00 a.m. An hour later, Google was down a hundred billion dollars in market cap. It
00:33:43
bounced back a little bit today when we're taping this uh on Thursday. Here's the statement from Google. Responding to
00:33:51
Q's comments, we continue to see overall query growth in search. That includes an
00:33:55
increase in total queries coming from Apple's devices and platforms. Freeberg, is it time for Google to
00:34:03
panic, Google shareholders to panic? We talked last week about making bold decisions about what is the default and
00:34:09
how might Google get out of this classic innovators dilemma. What do you think? We keep coming back to is search dead
00:34:18
conversation. Everyone knows that the search click repeat paradigm is over and there's a new model in what I would zoom
00:34:27
out a little bit and say is kind of the difference in human computer interaction
00:34:31
for knowledge information and services. It may not be that I type something into a search box. It may be
00:34:39
that I'm having a chat. That chat may happen in a chat window. It may happen via voice. It may happen on a screen. It
00:34:47
may happen in an earpod. We don't yet know where the consumer is going to go with this. But
00:34:53
there's a lot of paradigm shifts underway. I will say Google has models that are if not the best competitive. So
00:35:02
the underlying models, the underlying technology exists. They are certainly aware of the shift in the paradigm. And
00:35:10
so the transition for Google doesn't need to happen overnight to a chat interface that looks like chat GPT. It
00:35:18
may be a standalone app. They have a standalone app. As Chimath has pointed out in the past, they don't do a great
00:35:22
job promoting it. They don't do a great job integrating the chat interface into search or replacing search of a chat
00:35:28
interface because remember search ad revenue today is $200 billion. And the cost to serve an AI query is
00:35:38
order of magnitude higher than the cost to serve a search query. So flipping the
00:35:42
search interface over to a chat interface overnight doesn't make sense. And they don't need to. They have the
00:35:47
users, they have the models, they already have the product. So it's going to be a slow kind of process of finding
00:35:53
the optimal course for them to make the transition would be my guess on what they're doing. It's a question of at
00:36:00
what point do you change the default on Google? Do you make it a slow one box, which is that answer section at the top
00:36:07
of the search page, and you slowly get people used to that, and you lead them over to the chat interface, or do you do
00:36:13
it all at once, or do you tell people, "Hey, go use the app instead of the search box." So, there's a lot that I
00:36:18
think they're going to discover. And if anything, this is an organization that is used to doing testing and then making
00:36:24
incremental changes and then making big changes once they're, you know, kind of tested and proven.
00:36:28
I'm pretty positive on their ability to respond to the shift if there is one underway. I guess two important data
00:36:34
points Jimoth that I'd like you to respond to. Search is only like 56% of Google's revenue right now. People
00:36:40
forget they have cloud. So they have diversified. It's not a one revenue stream company anymore. And then also
00:36:46
these Google search results at the top of the page, they're dropping precipitously the number of clicks below
00:36:52
it. So different studies 15 to 35% of the clicks below the box are not get you know are dropping. So this is
00:37:01
significant but it seems manageable. Where do you stand on it right now? Time to panic or as Freeberg was saying
00:37:08
before hey maybe it's a great opportunity for Google to add yet another product line yet another revenue
00:37:14
stream. They definitely have the best models in many domains. I would say that the codegen models from
00:37:24
anthropic are really good but in many other domains including general information and chat I think Gemini is
00:37:30
exceptional. So what is the problem? The problem is that they were effectively at
00:37:35
99% share and now we were always just waiting for that shoe to drop which is where they started to go from 99 to
00:37:44
something less than 99. And the point is now that it has happened, it is very easy for anybody to build a model that
00:37:54
precisely calculates the economic value of every single basis point of share shift that happens. And what you saw was
00:38:03
an initiation of that process this week. So what do you do? The problem is that this is not Google's problem. This is a
00:38:12
consumer choice issue and they have chosen something different. And whether we like it or not and whether they like
00:38:18
it or not, the reality is that chat GPT is running away with it. And if you look
00:38:24
at the growth and the share that OpenAI is seeing, it's quite an incredible thing. So what does one do? I think that
00:38:37
instead of waiting for data, I think that you have to assume that you're going to go from
00:38:43
99% share to 75% in the next two years as an example. And you need to start asking yourself what will go wrong.
00:38:53
And if you can ask yourself that question honestly and red team that then I think the conclusion you get to is you
00:39:00
need to start very aggressively integrating Gemini as the front-facing window to Google Inc. But again as I
00:39:08
sort of said last week that requires a combination of taste and courage. Otherwise, what'll happen is if you're
00:39:16
waiting for the data, you're just going to get caught off guard because Apple will do things
00:39:22
and then make a press release months after the fact. Open AI will announce a press release, Facebook will do
00:39:28
something. And what that does is it destroys the morale of the company of the brilliant product managers, of which
00:39:34
there are many, and the brilliant engineers of which there are many inside of Google. If you're sitting around
00:39:38
waiting to react to some sandwich served up by your competitors, that is a terrible
00:39:45
approach. Philipe, what are your thoughts here on Google? You obviously participate in public markets. Is it a
00:39:51
buy right now? I mean, I don't want to give investment advice, but do you think the company has the talent, the
00:39:57
temperament to make these hard decisions and to turn this around or avoid the iceberg? uh if the iceberg being chat
00:40:05
GPT and people getting answers instead of links. Well, I think you guys have summarized the situation pretty well. I
00:40:12
would just add just a couple small things. One is the market cap of Google is like 1.8 trillion and that of chat
00:40:20
GPT is let's say 300. So Google is worth six chat GPT. And is that the correct ratio into the future or not? The second
00:40:29
one is I was around sadly in uh the times of the yellow pages and I remember when the yellow pages the way you go
00:40:37
somewhere to bounce and go somewhere else and basically these yellow links got replaced by the blue link and the
00:40:45
yellow page companies went away. Now part of the reason they went away is they were very levered. Google has no
00:40:50
leverage sits on a lot of cash and imagine what someone like Elon would do if he had to re-engineer Google. I think
00:40:58
they have um you know uh it's it's a much larger company let's say than Twitter. So like the part that I'm
00:41:05
wondering about, I haven't made an opinion on Google is like, "Hey, is this the next IBM? You're going to stick
00:41:11
around for a really really long time, but you're just not going to be like a company growing as fast as you used to,
00:41:18
and maybe there'll be little growth and you just sort of struggle ahead. Or can they completely re-engineer their
00:41:24
business?" And they do have two great businesses, Whimo and YouTube, and really cloud and all the cloud apps. So
00:41:32
they have three great businesses and then they have this one search business like you said maybe it's 60% of the
00:41:37
revenue. It's probably 85% of the profits because it's just so profitable. No, I would say it's 110% of the
00:41:45
profits. 110, right? So you're right because some of these others lose money. That's actually a good point. So um if
00:41:53
you put that together, it's just a classic innovators dilemma and imagine that they create a Gemini app and we
00:41:59
start downloading the Gemini app. I would love to be the fly on the wall between the head of the Gemini app and
00:42:06
then the head of like the search box and they're both fighting because one guy is
00:42:10
stealing the business from the other and stuff like that. Personally me I found that these stocks they're like a little
00:42:17
bit too complicated for me and I think that sometimes in life you just got to say hey this is just tricky. There's
00:42:23
like a lot of forces at work. But the one thing stepping out that I would think about is there was this concept of
00:42:30
the Mac 7. And for the last two or three years, everybody is like, "Oh, you just
00:42:34
need to own the Mac 7. Uh, it's really easy. I can do it on my own." And I think what AI is showing is that at a
00:42:41
time of great change. And like you guys said on the show, a couple of you, AI is
00:42:46
sort of precipitating so many fast changes. To me, it's a little bit like the end of the Mac 7. And what we should
00:42:54
do is almost think like, hey, what is the next? Remember when the Mac 7 used to be Fang and then Fang Pl+ and nobody
00:43:01
talks about Fang anymore. Uh, and now I don't know like the Max 7, the sexy 6, the Fabulous 5. There's going to be a
00:43:10
new index that comes up and I think we should think about like who's going to be on the new index, which private
00:43:15
companies, which public companies. And I think Google for sure has some struggles, but it's got a lot of
00:43:22
advantages and a lot of cash. You know, to your to your point though, to just to
00:43:27
add one thing, which I I love this framing. Here's another data point. If you were going to make the case that we
00:43:35
need to go into harvest mode, right, and say we don't know the rate of change of
00:43:43
the search business, so let's just have as much money on hand so that we have as
00:43:47
much optionality. That's a very reasonable and fair strategy. You would probably not spend
00:43:54
$75 billion a year of capex on making these models. The opposite is also true. If you're going to drain your cash at a
00:44:03
rate of change that's greater than it needs to be to the tune of an extra $75 billion a
00:44:08
year, there's probably a case to be made. Well, if we've made the cake, let's sell the cake. You know, we've
00:44:14
made the dog food, let's have the dogs eat the dog food. It's the in the middle strategy of both spending the money but
00:44:21
then stagegating the product that is the worst outcome in my opinion. I think they're right to invest. I find these
00:44:27
companies that decide to harvest, you know, the cash cow and buy all their shares back, you know, it never really
00:44:35
works. I think that the only chance that Google has to create an amazing company
00:44:40
is you got to take some risks. At the end of the day, the man in the arena, he who takes the risk usually gets the
00:44:46
spoil and they've got to invest in the future. It'll be interesting to see if the shareholders, you know, agree with
00:44:52
that or not. What do you do, Jac? What do you think? Great question. You guys teed it up perfectly. I think they're
00:44:59
going to cut a large number of employees, get people to return back to office and take this a little more
00:45:05
seriously on a corporate level because you got that sense from Sergey who's in the office every day. And I use Gemini
00:45:10
and I have a sort of AI first company where everybody's required to do their work on AI two or three different
00:45:17
Claude, Gemini, Grock, etc. And what I've been noticing inside these products is they're very deeply integrated. I got
00:45:24
surprised just the other day. I was asking it about a travel question and it referenced my GCAL. I didn't know they
00:45:32
could do that. Then obviously you can use chat uh you can use Gemini inside of Google Docs. Now they have four or five
00:45:41
products right now that are one or two billion users per month. Obviously Chrome might get spun out but you have
00:45:46
YouTube, you have Google Docs, you have Android. They have such a data advantage
00:45:51
and such a deep integration into people's lives because they use three or four services. I use YouTube TV. I use
00:45:57
YouTube and I have a subscription to that YouTube music. They have such integration. I think Google's going to
00:46:03
figure this out. And if they cut their team size down, the earnings are going to go massively uh up and they're
00:46:11
spending 75 billion dollars on infrastructure. I think it's going to be would you
00:46:16
integrate these models more aggressively into in front of the consumer or would you is this the rate that makes the most
00:46:22
sense in your mind? I think you mentioned like maybe go all in on certain other services. I think YouTube
00:46:28
search is the place to go allin right now. When you do a YouTube search, it just gives you 10 links, right? It just
00:46:32
gives you that rolling bang. You should be able to ask a question to YouTube and
00:46:36
you should be able to ask questions to your calendar. You should be able to say, "Who have I met with over the last
00:46:41
10 years who I'm no longer in touch with and what are they up to?" And it should
00:46:44
do a Gemini search inside of Google Calendar. It's very light right now. And then if you did that on YouTube, hey,
00:46:50
tell me everybody's opinion on COU and their strategy over the years and how it's changed. And you asked that on
00:46:56
YouTube with all their transcripts, they could make a super cut of all of that. This would train people, you know, at
00:47:02
the point of pain in a very deep way without sacrificing Google search queries, you know, too aggressively. So
00:47:10
there's YouTube's such a secret weapon. I hear you. I would just remind the Google management team that very very
00:47:18
very smart people like Phipe and others who control trillions of dollars I wish well collectively are not making the
00:47:28
decisions about today but are taking the trail of breadcrumbs of what they see today and guesstimating what 18 to 24
00:47:35
months in the future looks like and all I'm encouraging them to do is I think that that data point from Eddie
00:47:44
is the beginning of a stream of such data points and I just encourage them to inoculate them from the morale hit that
00:47:52
will come if they don't have an explicit aggressive strategy and instead if they
00:47:59
become reactive to external data. It's really demoralizing. But what if what if they're actually tracking the
00:48:07
data and they're seeing their own sense of search queries driving clicks and then driving
00:48:17
positive response to the AIdriven onebox results that they show at the top. Oh, I
00:48:21
think that's exactly what they're seeing. But that's and they're just making the they're making the requisite
00:48:25
kind of balancing decisions, right? No, no. What I'm saying is that's absolutely
00:48:29
what they're seeing that the demonstrated strategy is emblematic of exactly that. It's the rationalization.
00:48:35
My point is there's something that you can't rationalize because you don't know until it's presented to you, which is
00:48:41
what is the other company doing. They don't have spies inside of OpenAI. They don't know what the OpenAI product
00:48:46
strategy looks like. They only hear secondhand what the OpenAI growth looks like. And all I'm saying is it's a bit
00:48:53
of a sword of damicles. At some point, the sword drops. you're not in control of it. And once you start to see a
00:49:01
trend, that's the rationalization that I think puts companies in a very difficult
00:49:06
and tricky strategic situation. It takes a lot of courage to say, "Oh my god, like it's like but Buffett said this,
00:49:13
like Buffett has this very famous thing of just putting his CEOs on the spot and
00:49:17
saying, "Stop telling me all these things that can go right. Let's go paint the death case. what can absolutely go
00:49:22
wrong and bread team me the solution and then justify for me why you haven't done
00:49:26
it and all I'm saying is if you start to think about like for example you saw open AI today Fiji Simo she's leaving
00:49:33
Instacart right she's going to go and be the CEO of apps inside of open AI you're
00:49:37
seeing a level of talent concentrate that I have not seen since I was at Facebook there was nobody we couldn't
00:49:44
get when we thought we were building a model that was totally orthogonal to Google now it did not mean that Google
00:49:51
diminished in any way, but it creates a different use case. In that example, though, the social use case was very
00:49:58
much non-cannibalistic to the blue links. And to your point, David, if it turns out
00:50:05
that question asking is not cannibalistic to search, Google will be fine. All I'm encouraging them to do is
00:50:12
play the scenario where it is cannibalistic and figure out what to do. I think there's a chance that we're
00:50:18
underestimating the power of Google's ad network right now. It's quite possible that knowing your queries in Gemini,
00:50:25
knowing what you're doing in calendar, knowing what you're watching on YouTube could lead to a stream of more target
00:50:30
ads that do better and are more valuable. And so we've been seeing a number of companies, startups, you know,
00:50:35
in the early stages and year one startups that are figuring out how to use your queries and what you're doing
00:50:42
in AI to present to you search results. So imagine you're doing a Gemini search Jamoth and or Philippe and on the side
00:50:48
of it it's giving you a rolling list of ads or offers that you might be more interested in. That could be a better
00:50:55
advertising product than even search itself. Freeberg, your thoughts? Well, let me ask all three of you a question
00:51:03
which is since chat GPT's come out and Gemini and other tools like it, do you find that you're doing generally more
00:51:11
stuff or less stuff? I find that I am using search a lot less. I But but the aggregate is your aggregate like usage
00:51:22
of the internet to do things for yourself for work kind of are you getting more? Yeahve yeah I've learned
00:51:31
how to ask things that I've always wanted to know but didn't even know were possible. Right. But all of that to me
00:51:36
goes to open AI and to X. I use that that's fine. But I'm just saying like like if you were to cuz I'm I'm what I'm
00:51:42
trying to do is paint the picture of where the denominator of quote search queries is going because if search
00:51:48
queries is no longer that's the wrong way to think about this. No, I like your I like your I'm doing five times as many
00:51:54
queries and I would say they're spread across a number of different platforms because instead of asking humans to do
00:52:00
work, I'm now doing it myself. You used to ask a human, hey, can you do this research for me? They would come back to
00:52:05
you. You would hire somebody or use a consultant. Now I'm doing it myself. So you're on to something that the total
00:52:10
volume the total pi could be 510 per person. Yeah. If if the old paradigm is like measuring search
00:52:17
queries and quote market share as a function of search queries I don't know if I care about having 99% of that or if
00:52:24
I'm actually better off having 80% of something that's now three times bigger. Yes. Where there's so much more. Imagine
00:52:31
you get you lose 99% of one bucket, but you're only getting 10 or 20% of the new
00:52:37
bucket. That's the bad scenario. That's exactly right. That is the bad scenario.
00:52:41
That's the issue, guys. That bucket is getting built right now, and they're in nowhere'sville in that bucket. How are
00:52:46
you going to show up in 18 months and say, "Oh, that new bucket that's so shiny. Pick me. Pick me." This is why
00:52:52
it's a strategic error. Well, think about the let's say you're running growth at Facebook Chimop and you guys
00:52:58
have a new product you want to launch. You've got a billion users. How do you get them to use that new product?
00:53:04
Because Google has a a chat GPT competitor. How do you get them to use that product? Yeah, I walked through
00:53:10
this last week, but I'll do it again, which is I think that today the part that I agree with you is this whole view
00:53:17
on search is antiquated and it makes no sense. I think instead what you need to think about is where are the inbound
00:53:24
actions into the house that is Google, right? Google Inc. And you have to have a very simple way of deducing what is
00:53:32
the value of that inbound action. And if you rank them, the inbound actions to the Google search bar are obviously way
00:53:40
more valuable than the inbound actions in all these other apps. I would start in those places that are more bottom of
00:53:45
the list on the money side but high on the list in terms of intention and behavior and I would reddo the
00:53:52
experience around Gemini but that requires taste and cannibalization that you're that you have to be willing to
00:53:59
take the hit on which service you think is number one YouTube I think your idea Jason around YouTube is a very smart one
00:54:05
because it's a juggernaut business I also think workspace we use workspace here every day Gmail
00:54:12
calendar. I think workspace could be really interesting as well. Gmail is a great one. Yeah, inside of Gmail and it
00:54:18
is going to get better. Like there are smart people thinking about this. All I'm saying is that the market will now
00:54:24
start to price this decay in. I'm long. Well, Philipe, I want to know your bucket of what are the most important
00:54:30
companies that matter the most. Okay, I I'll try, but I have to ask you guys a question before. Do you guys think that
00:54:37
the two founders come back in a very forceful way into the company? I don't know exactly why, but one thing that I
00:54:45
was wondering, Chamath, is you you bring up a very important word, taste. Do you have to be a founder to be
00:54:53
able to impose this sort of new taste? And do you need sort of founder credibility at the junction at which
00:55:03
Google is at? It seems like this is a big junction, right? This is the first time in their 20 25 year history where I
00:55:10
feel like, wow, there's a real threat. How do you do that without the founders? Yes. And on top of that, they're alive.
00:55:17
You know, it's just they ask Larry. No, Sergey is going to do it. I think he's building up the reason we're seeing at
00:55:22
the all-in events, the reason he's going to work every day is that he's building
00:55:26
up his knowledge base here. And I don't want to speak for him, but I've seen him
00:55:30
really engaged on this stuff. And the Gemini app is kick ass. And I've had long conversations with him about like
00:55:36
little details in the Gemini app. He is super engaged. Like I've had conversations with him about granular
00:55:42
details of Google local and YouTube searches and how they should be presented in the results in the Gemini
00:55:48
app. He's into it. He's into it. You're bringing up something which I think is very important. when you're at a
00:55:55
junction this important who has the gravitas to come in and actually make a difficult change like this I think in
00:56:02
general it's the founders and you know in fairness to Larry and Sergey these are two brilliant brilliant guys they've
00:56:09
done it once and in fairness they probably did it kind of a second time when they created Alphabet because now
00:56:14
you have these other businesses that are pretty impressive now they're just going
00:56:18
to have to do it a third time but they're going to have to impose their will and they're going to have to
00:56:22
develop some very specific specific taste. This is nothing against Sundar and the team, by the way. This is just
00:56:27
to say that the only people that can come in and say, "Guys, we're going to make a change that could have this
00:56:32
negative impact to a $ 1.8 trillion company are people that are going to feel it the most, they will feel it more
00:56:38
than anybody else." And so, if they say that it should happen, they'll have the moral credibility to make it so. I love
00:56:45
this question that you were just asked, Philipe. Go through your top 10 companies. Why you What's the number?
00:56:51
What's it? Not top 10. What's the number? What are the companies that matter the most? Yeah. So, I have a I've
00:56:59
thought about that a lot. I'm not sure, you know, great answers. But the first one is I keep defaulting to the number
00:57:06
25. I can't explain you why, but they're not a 100 companies. But if you think there's only five and all these money
00:57:14
managers, you know, they have like five stocks that represent 80%. I feel the level of risk that you're taking is too
00:57:21
high. And that one has to be, you know, I start with a h with the public markets. I would say most French people
00:57:28
are not known to be particularly humble, but at least if you've been in the stock
00:57:33
market as a French guy, you've been beaten up so bad. I started January 1st, 2000. So imagine what my first three
00:57:41
years looked at. I got reduced to, you know, ashes, just beaten up by the market. you know, we we did reasonably
00:57:48
well uh uh because uh thank god being a hedge fund, you know, you have different
00:57:53
tools that you can do. And so I think you need to have a certain number of stocks. You need to know that some stuff
00:58:01
you get lucky, some stuff you get unlucky, some stuff you get right, and some stuff you get
00:58:07
wrong. And then I think that there's a second phenomenon. Once you agreed to the 25, you say, "Wait a minute. Why are
00:58:15
there no IPOs? Why are these private companies, amazing private companies, some of the best in the world, SpaceX,
00:58:23
Stripe?" Answer that question. Why? Open AI, why in your mind? I think that the cost of being public is
00:58:34
too difficult. One, what? think like the the reputation, the regulatory like you
00:58:43
get busted like left and right by uh agencies and like when's the last time that a public company I think that you
00:58:52
know during the last administration something like someone told me I don't know if it's true or not
00:58:58
but I love the I love the quote so much that I'm using it without checking if it's 100% true or not something like 35%
00:59:06
% of the S&P had an issue with a government agency in the last few years, right? When's the last time that you
00:59:13
guys remember a private company that has an issue with a government agency? Like
00:59:17
I'm sure it happens, but like off the top of my mind it seems like a fraction of that, right? And then I also think
00:59:24
that the private markets have become so sophisticated that in essence like our private markets, public markets that
00:59:31
just trade three times a year like uh you know these companies they do these uh uh rounds you know once or twice
00:59:38
they're becoming pretty sophisticated. They match buyers and sellers and I think that's okay. And then the last
00:59:45
piece which I think that's a very bad piece for the four of us and all of us on this call and many of your uh
00:59:52
listeners is that there's such a view that like large companies are bad and we got to bust them and we're not going to
01:00:00
let them do any M&A and as a result of that small companies no longer get bought by big ones. And for me, it's a
01:00:08
disaster because if I fund small companies, but now you take away one of the best ways that I have to monetize my
01:00:14
investment, why should I invest in risky private companies? I can just buy the public one. And so I'm really hoping
01:00:20
that as part of this deregulatory move and you guys and Sachs will have way more influence than we, but to convince
01:00:28
people that in my mind the best way to create competition is to allow these large companies to fight against each
01:00:35
other. And the battle between OpenAI and Google is the best way to do that. But not by telling Google not to buy
01:00:42
something or telling Open Double Click on that, Philipe. I think it's a super important point. The singles, the
01:00:48
doubles in the industry. I've been harping about this on this program as well. So, we're sympotico. What about a
01:00:54
proposal where maybe the non-MAG7 let's let's pick a number under a trillion market cap under 750 billion. We let
01:01:02
those companies buy and sell each other at a very vibrant pace. We saw Chat GPT buy a $3 billion company. I think this
01:01:09
past week in the um kind of uh coding space like I mentioned earlier in the program, Door Dash bought two companies.
01:01:16
What if we said hey okay we understand Google getting bigger, Apple getting bigger, Microsoft getting bigger
01:01:23
competitive would be but how does size make a difference to whether or not someone should buy a company? Very
01:01:28
simple because they have such a market dominant position. Hold on, let me finish my sentence. They
01:01:33
have such a market dominant position when a company like uh Apple has, you know, half of the mobile phones or
01:01:41
Google has Chrome, Android, plus all these things that they could shove that product for free down the throats of
01:01:48
users, price dump it, which is illegal, and create less competition in the future. But if you said Door Dash and
01:01:56
Lyft or, you know, Coinbase plus a stable coin company, this would build the Max 7 to the max 70 and then you
01:02:04
would have many more larger companies. What What do you think of this, Philipe? I I'll respond to that because I don't
01:02:11
think that that makes any sense and I think that the the comments you're making about
01:02:17
size shouldn't drive these decisions. The fact that Apple, for example, has a minority market share in operating
01:02:24
systems on mobile phones. Remember, Android is the majority. That's no longer true in the US, by the way.
01:02:29
Right? Not globally, right? And Apple comes along and says, "Hey, I want to buy a car company or I want to buy
01:02:36
something else." Why should that affect consumers in any way whatsoever? it the the ultimate objective of antitrust
01:02:43
authority is to prevent monopolistic practices that hurt consumers and hurt the market and take away options and
01:02:51
choice and freedom in the market. But if companies want to make um orthogonal acquisitions, if companies want to
01:02:58
continue to grow and become a you know a large holding company, why should we step in and say, "Oh, you're too big
01:03:04
now." Ultimately, Jason, you're you could see that threshold very quickly becoming a slippery slope that leads to
01:03:10
a general like anti- capitalist concept where people say, "Well, let's stop all companies from getting bigger than a
01:03:15
billion or let's stop them all getting bigger than 100 million now." And that that is a very slippery slope. Scale
01:03:21
shouldn't matter. At the end of the day, protecting consumers from um monopolistic or antitrust practices
01:03:27
should be the objective of these antitrust authorities. Yeah, I think my response to that would be except in the
01:03:33
case where the bundling, as we've talked about in previous episodes, makes it so
01:03:38
any of the large companies can hold Hold on. Let me finish my sentence again. In
01:03:43
the case that a large company could kill all the competitors instantly by price dumping. So, you take something that
01:03:49
people are paying for, you know, like say uh Robin Hood or Coinbase. You, you know, Google buys Robin Hood or Apple
01:03:55
buys Coinbase and they just say everything's free. we're going to make our money from our main business. Yes,
01:04:00
it's better for consumers, but it's not as good for a competition and in the long term then you would kill all the
01:04:06
competitors and then they can do unnatural acts. That would be the argument. I'm not saying it's a great
01:04:11
argument. That's a great argument for what you're talking about. It is not a great argument for stopping companies
01:04:16
above a threshold of of market cap from doing stuff and companies below because a company below a threshold in market
01:04:21
cap could have the same effect as what you're describing in a smaller market and they could have you have to be
01:04:27
thoughtful about you're 100% correct if they're in the same arena. So Coinbase, Robin Hood, and Erade merging could
01:04:35
cause the same effect. You're right, Philip. What are your thoughts on just how to get the country out of this
01:04:39
debate? Because big companies bad. No, we shouldn't let them do m any M&A. The wrath of Lena Khan. Is there a is there
01:04:47
an offramp here? Can can Trump just unilaterally kind of make this happen? What are your thoughts? Or should he?
01:04:55
Oh, I think that to me one of the best part being an investor of venture capital is when you have a really big
01:05:03
idea and it works out, it takes care of a lot of sins. You know, there's a little aspect like would you like to
01:05:08
play the lottery? if the lottery was capped like hey if you win the lottery you can't win more than $30 million 30
01:05:18
million is insane amount of money but I I read that there's some lottery guys who make 1 billion and two billion and
01:05:24
the reason why people are willing to bet so much and most people are willing to lose is they all think that they're
01:05:30
going to have this one ticket that's worth a billion and I think when you reduce the incentive the financial
01:05:36
incentive of and I agree with Dave like success should be rewarded as much as possible. But if you've done something
01:05:43
wrong, then use these, you know, the existing uh laws to define what success is. I don't think you can cap because
01:05:51
once you start capping and then what happens if the stock market goes down, do you then have to just recap? So, but
01:05:58
I I agree with you. You bring up an interesting point which is in these bundles like Amazon Prime bundle, Apple
01:06:05
bundle, there's a Costco bundle, right? We seem to be living in this world of bundles where the stock market is
01:06:12
willing to pay 40 50 times earnings just for the you know the membership fee as long as whatever you do on the side you
01:06:20
basically make no money like Costco I think makes 100% of its money more or less on the membership fee and trades
01:06:27
for 50 60 times earnings there is a limit to like how big the bundle is before you start uh dumping so I don't
01:06:35
think I'm saying anything super interesting I just hope that you don't cap the upside because that's what
01:06:41
enables all of us to fund these new companies. The reason why all of you guys and me were willing to fund these
01:06:48
companies knowing that many of them are going to fail is the hope that you get open AI. Yeah, it's well said the power
01:06:55
law. Chimath, I think maybe a good time to maybe talk about private markets and liquidity in VC. Yeah, I
01:07:03
mean it's just so hard. It's hard to make money. And if you view making money as
01:07:13
some derogatory thing and you put a bunch of impediments in the way, the downstream impact is interesting ways to
01:07:23
make money will be out of fashion and simple ways of making money will be the only things that people do. The problem
01:07:29
is that society doesn't move forward if all you do are simple things. You need people who are willing to put risk
01:07:36
capital to buy these lottery tickets. And if you marginalize the upside, you're just going to have exactly that,
01:07:42
a stagnant society of marginal things that doesn't move along. And unless people fundamentally embrace that idea,
01:07:51
we're going to lose. We being America. Yeah. Yeah. If you look for example in the last 5-year period in China or
01:07:58
Canada where both of them two totally different political regimes but they both had the same thing happened which
01:08:05
is the the the amount of investment capital that went into both of those countries fell off of a cliff for two
01:08:12
totally separate reasons. What is interesting is going to be what is the downstream impact of that in 10
01:08:21
and 15 and 20 years and you can look historically back and we know what this looks like which is countries stagnate
01:08:30
in the absence of investment and risk capital. So you will become a marginalized also ran country and you
01:08:36
know not to slag Europe but part of what Europe got wrong was that compact didn't
01:08:42
exist too many administrators too many hall monitors not enough ability to put risk capital to work and actually get
01:08:48
gigantic outcomes. So the most important thing we can do on that dimension is to
01:08:54
figure out how to have less regulation, have these companies fight it out and create the incentives for for these
01:09:02
smaller businesses to be bought andor to go public. So let's uh back this up with
01:09:07
some data here. Nick, pull up the chart on exits. This is an important one for people to see. we've had since the wrath
01:09:13
of Lena Kong last four years under Biden. You know, you had this 2021 spike of IPOs, peak zer, a lot of inventory, a
01:09:20
lot of risk capital have been put to work for 10 years. And after that 2021 spike, things have been flatlined and
01:09:28
companies are preferring to stay private. And now we have venture capital constricting in terms of new funds being
01:09:34
done and people are making larger funds to do later and later stage investments.
01:09:38
And Jason, it's constricting at the absolute worst time because what Philipe said before is we're in the midst in the
01:09:45
early phases of an entirely new economy that's going absolutely parabolic. But the people that are
01:09:53
supposed to accelerate that innovation and make these companies come to life are going to run out of gas because if
01:09:59
they don't return money to their limited partners, where are they going to get the incremental capital from? Yeah, it's
01:10:05
retail investors and sovereign wealth funds outside the US seem to be the answer to that question. This lead to a
01:10:10
normalized market, Phipe and Chimath. So ultimately, shouldn't the exit volume define the amount of capital that LPs
01:10:20
should invest in this asset class to get an out a return that compensates them for the ili liquidity relative to public
01:10:26
markets with the same kind of risk levels. At the end of the day, it is what it is and you're going to see a
01:10:32
reduction in venture dollars and that's just the market normalizing. The econ the economy only grows and only
01:10:37
innovates at a certain pace maybe is what the data shows. I think the way that I think about this as an LP and
01:10:43
maybe Philipe can talk about this as a GP but as an LP when I think about putting capital into different
01:10:51
funds I have a base return in my mind which is I want after taxes net of everything to generate about 10% a year
01:10:59
that's where my risk of ruin is basically zero it compounds to infinity I like the profile of my return of my
01:11:05
assets how do I get to 10%. Well, sometimes when I'm holding short-term stuff, I'm only generating four or 5% in
01:11:12
paper. So, then I have to go out on the risk curve. So, I talk to a hedge fund. They're going to give me 12 or 13% net
01:11:19
maybe in some cases. I try to understand their risk, but I can only get so much working. So, then I have to go further
01:11:24
out on the risk curve. Then I talk to some private credit and private equity guys who tell me, "Yes, I can give you
01:11:29
mid- teens returns." Then I do the analysis on that and I think, "Okay, I'll give you some money, but they are
01:11:34
going to lock me up for five or six years." it's still not enough to get to a blended rate of return of 10%. So then
01:11:40
I go yet further out on the risk curve. I call my friends at SEOA and all these other
01:11:44
places. And when you talk to the venture investors, the problem is you are so illquid for so long that the rates of
01:11:54
return need to be in the mid to high 20s net to me. But when you look at the data of what's
01:12:03
possible, they actually look like a three and fouryear hedge fund. And part of the reason is because of this
01:12:10
strangulation of illiquidity that's caused artificially by administrations, by regulations, and by agencies like the
01:12:20
FTC. The question is if they didn't exist or if the regulations were a lot smaller,
01:12:27
what would the upside return be? It's probably 500 to a,000 basis points higher. Much higher. 100%. Yeah. But I
01:12:35
think at current course and speed with the lack of IPOs and with the lack of M&A, you can't justify that asset class
01:12:45
on its own in my opinion unless you think about it as like something that you're doing almost philanthropically
01:12:51
unless capital comes out and then prices come down and then m return multiples go
01:12:56
up. Let me put some numbers on this. Here's the second chart. annual IPOs and just give you some, you know, broad
01:13:02
strokes here of how amazing 2021 was for a lot of firms. Rivian went out at 66 billion, a firm at 24 billions, Qualrix
01:13:09
25 billion, Robin Hood, which I was involved in, one of the first investors, 30 billion, Dualingo 5 billion, Toast,
01:13:15
etc. Roblox 42 billion, Squarespace, and then you had all this M&A Square app bought Afterpay for 29 billion, Zoom
01:13:24
acquired 59 for 15 billion. Mailchimp, remember that one? 12 billion. Microsoft and Nuance the um spoken uh the
01:13:31
um models 20 million. Do you know what the distribution? Do you know what the distribution of these IPOs were by
01:13:38
method? Spack versus direct listing versus traditional IPO. I don't have that here. We'd have to do it not just
01:13:44
on the names but also on the amount uh distributed. Yeah, that's a good question. You know, when I look at that
01:13:49
data, what what what I look at if if you just bring it back for one second is ever since, you know, the 20 and 21
01:13:58
which were very high. Yeah. If you look at 22, 23, 24, and now the 25, I'm like,
01:14:06
how is this that it's worse than 04, 05, 06 that were normal years? How is this worse than 13 and 14 and 15? Yeah. She
01:14:17
scared the hell out of people. She scared people. Correct. M&A. I've talked to M&A people, Philipe, and they have
01:14:23
said it's not even worth bringing it to the board. Worth the discussion. She can't connect the dots. You know, she's
01:14:30
like, I want people to not, you know, play the lottery anymore. I don't care for them. She doesn't understand that
01:14:37
our system is based on this risk takingaking. And so, listen, I think it's almost I think it's this might
01:14:45
change. It's also worse than that. I think that they probably look at like Adobe Figma and they look at the cap
01:14:52
table and they probably just make a judgment that, hey, I don't want these people to be billionaires. Yuck. I hate
01:14:57
these people, but they don't understand, to your point, the waterfall effect of not returning capital to all kinds of
01:15:04
other investors who are in the business of taking risk. It's this like collateral damage. You know, one of the
01:15:09
things I feel none of these people understand so well is like all the collateral damage. You think you're
01:15:15
moving in one direction and all these dominoes sort of fall around you. Exactly. Well, the second and third
01:15:22
order impacts this cascade. You know, it's Ford Foundation, it's Harvard, it's California retirement. Those are the
01:15:29
people who are the going to be the beneficiaries. And the third thing, because I've been talking to a lot of
01:15:35
geographies in the Middle East, Japan, Australia, Singapore, etc., Asia, they all want to recreate what we have here.
01:15:42
Well, what we've created here in Silicon Valley and in America is these diasporas
01:15:47
that start when a company like Google goes public and then those people go create Facebook or go work at Facebook
01:15:52
like Cheryl Sanberg did and they accelerate the growth there and then those people become angel investors.
01:15:57
They become LPs. This incredible flywheel was cooking. I mean, it was so smooth. And now we've literally stuck a
01:16:06
stick in it and the car flipped over and you you don't have the downstream effect
01:16:10
of Canva in Australia that you I don't know if you know that company has done incredibly well. Phenomenal. They were
01:16:17
Oh, you are involved. Yeah, we're we're we're involved. But sorry, just one thing I would add because it makes what
01:16:22
you said so much more powerful. On top of that, when these people die, most of them gave all their money away to
01:16:28
foundation, which is something very different between the US and Europe. In Europe, a lot of the wealth and in many
01:16:35
other countries outside of the Europe, the wealth basically continues for generations. In America, these people
01:16:42
built companies, create new companies, invest in new companies, coach new companies, mentor new companies, and
01:16:48
when they die, all that money goes to foundations that continue to promote and do some of the work that governments
01:16:54
would do. Finally, how great is it that some foundations are competing with the government to decide what needs to be
01:17:00
done as opposed to a larger government, right? And and so that ultimately serves
01:17:05
the Doge mission. Atlassian and those incredible founders who did Jira, etc., bought other companies, they wound up
01:17:12
being the seed investors in Blackbird, the the venture firm in Australia that did Canva, and they were the investors
01:17:18
in Canva. Both of those companies are creating this incredible flood of entrepreneurship in Australia and we're
01:17:26
breaking that in America. Australia copied that playbook. I want to know about the new fund you're doing, Phipe,
01:17:31
and why. Maybe you could explain to people. I guess this is one of these what do they call it? Closed or
01:17:37
open-end funds and and they operate differently than venture ones. And also the seating you you seated it in a very
01:17:43
unique way with a couple of very unique family offices. Yeah, you guys are nice to ask and couple of you have tweeted
01:17:51
some nice things about it. So, I I really appreciate it. I loved it. I loved it. Let me tell you the the a bit
01:17:58
the story behind it. Right. So, I was like on one hand you've got private funds. They're only available for the
01:18:06
super super rich. Like you got to be uh like, you know, a super duper accredited
01:18:11
investor. You put your money in there and you might not see anything for 10 years. And then for me as a GP, every
01:18:17
three years I need to raise a new one of these funds. So god forbid we have one fund that doesn't work. Can we raise the
01:18:23
next one or not? Right? So that was on one side of it. And then on the public side, what basically is going on in the
01:18:30
public is very strange. But in essence, the black rocks of the world and the vanguards of the world and make it that
01:18:37
almost everybody wants to invest in an index. And as a result of that, the people who are still active managers,
01:18:44
they're all basically closet indexers because the risk of being wrong, you're you do better for 10 years and then you
01:18:52
do worse for one year, you're out. So basically the public market, everybody wants to index, which is I think why the
01:18:58
max 7, you know, is so big and stuff like that. And uh the other part that's weird with the public markets is since
01:19:06
everybody needs to be indexed, everybody needs to be fully invested at all times.
01:19:10
I'm like, why? Why is it that you need to be fully invested in 1999 if the P multiple of the market is 60? Why is it
01:19:18
that you want to be fully invested when you're already down 10%, things are not working? Why not raise cash a lot? Sort
01:19:25
of, you know, freshen up your ideas a little bit. go take a long walk on the beach and try to uh understand maybe
01:19:32
you've made some mistakes and stuff like that. So I've always wanted to do two things which is one on the public side
01:19:39
have the ability to be different in the stocks that I own but also that if I'm nervous then what's wrong with holding
01:19:46
cash and I hate to put this in the same word but you look at Bergkshire Haway today and everybody wants to compare
01:19:52
themselves to Bergkshire a little bit but Bergkshire today is a trillion dollar company a third in cash a third
01:19:58
in public equities a third in private equities right and so I was like okay well what if we have a system where we
01:20:05
can be in public stocks, we can be in private companies, but we also can be in lots of cash and where investors know on
01:20:14
day one, please do not compare me to an index. If you come in, you got to give me sort of five or seven years to do my
01:20:22
work and I'm also going to let you take a little bit of money every year. So in essence, I'm willing to work at much
01:20:30
lower fees because you give me capital for longer, but you don't give me the capital forever and you're not stuck
01:20:38
forever. And so these interval funds are really interesting uh because uh I think
01:20:44
the minimum investment is like $50,000 or something like that. And the conditions to qualify for such a fund
01:20:52
are much smaller. So there's many more investors that can come. And I look at it a little bit of like this is the
01:20:58
democratizations of tech investing and I really believe in it. I've been doing my
01:21:02
thing for 30 years for institutional investors. Why can't I do it for like people who don't have access to Let me
01:21:10
ask you a question. You have what 53 billion under management something like that. Something in that zone. So I mean
01:21:17
obviously you've been phenomenally successful. talk about the fees and the carry and how you decided how to set
01:21:26
that and then tell us how your competitors reacted when you announced this fund. I'm very curious about that
01:21:33
both of those two things. Yeah. So, we got a little bit lucky in that we studied the fees of other funds. These
01:21:41
are things called interval funds and it seems like the fees were more like u 1.25 25 and 12. And so we're like,
01:21:51
well, can we live at 1.25 and 12? And I was like, yeah, you know, it's a really good deal for other people, but I get
01:21:59
something for it, which is I get near permanent capital. And in exchange for that near permanent capital, I'm willing
01:22:05
to live at lower fees because I think I'm going to be able to compound it for longer. So in essence, it's not like I'm
01:22:12
being altruistic. I'm not claiming, oh, I just want to do a good deal for people. Is I'm being selfish. If I can
01:22:18
compound capital at 12 and a half percent incentive fee for a very long time, it's better than 20% for a short
01:22:24
period of time. And for the investor, I love the fact that I'm sort of investing
01:22:29
like if you told me, Philip, start from scratch, write on a little blank piece of paper. What would you do? I think all
01:22:36
of us on the show would say, well, it would have to be something that looks like Berkshire Haway, right? Bergkshire
01:22:41
is the model. and you want to do cash, you want to do publics, you want to do private, you want it to be a good deal
01:22:47
for people, you want it to be permanent capital for you, and you want to try to be able to do that for a long time. And
01:22:53
I think that's sort of what those uh things do. And then I was like, okay, but then the problem is like you have a
01:23:00
snowball at the top of the mountain. How do you get it to roll and to be big? And
01:23:04
I was like, you know, we're not very well known. I have to admit this is sort of one of my first podcasts, you know,
01:23:10
uh ever. So I really appreciate you're doing great being here with you guys. So, I was like, I got to get the ball
01:23:17
rolling at the top. And so, I thought, okay, maybe I can get some tech entrepreneurs to help me out who believe
01:23:24
in this concept of democratizing tech investing and stuff like that. So, I went to see the family officers. I
01:23:30
didn't quite see the founders directly, but the family officers for both the Bezos family and then the Dale family.
01:23:36
And I sort of pitched them the idea. They like the idea. Then we pitched it uh to the founders and then we got to
01:23:43
some agreement and they gave us a combined billion dollars to get going and then we're also going to put a lot
01:23:49
of personal money in it and I was like great and I had read I don't know if it's true that the largest fund that was
01:23:55
ever launched was the one of the first Blackstone was 1.3. So then I said okay I need to launch the fund that's
01:24:02
1.301 like that I can claim that it's the largest launch ever. So, I don't know if I'll get there or not, but that
01:24:09
was the idea. And I think it's nice to have the backing of these guys. So, typically what happens is people come to
01:24:15
see me in my office. I'll ask some folks to do diligence and then I sign up to an LPA. Is that how
01:24:22
this works? Like if I'm interested, what is that what I do now? I or is this totally different? You mean you as an LP
01:24:29
now? Yeah. Yeah. Yeah. Yeah. Me is just a normal person. So, uh this fund in particular starts to be marketed by uh
01:24:35
one of the Wall Street firms. It's in in this one. Uh we picked UBS. They were the first ones who believed in us but
01:24:41
many other firms will work with others and we have great relationships with JP Morgan and
01:24:47
others. So in time it'll be available on all these different platforms and then most of the people that we target
01:24:56
usually have a relationship with a wealth management firm and our hope in time is to work with a bit the leading
01:25:04
uh wealth management firms and uh you can invest and frankly I'm like hey just start giving me a little bit of money
01:25:11
see if you like what I do on that how many people can be involved because when you do venture obviously there are caps.
01:25:18
You can only sell to accredited and qualified purchases. That's about 6% of the country. And you can only have 99
01:25:26
accredited investors in a in a venture fund and then it's I think uncapped and then you can have 200 you can have up to
01:25:34
10 million and I think it can be 250. I did this when I did our fourth fund and I had 120 million in interest. I can
01:25:41
only take 10 million of the accredited. So it it really is capped in the venture
01:25:45
space. But you're doing a different type of vehicle. Is there a cap on the number
01:25:48
of LPS you can point? And of course, I knew I should be more prepared doing this. I don't remember exactly what the
01:25:54
caps are, but the point is is that the number of people that can join the fund is much greater and the number and the
01:26:02
amount of money they can put in is also much smaller. And as a result of that, you're reaching a wider audience. And
01:26:10
that particular audience, they're happy because if you think about that fund, right? One thing that's a pain in the
01:26:16
ass. How do you manage all the capital calls? They drive me crazy. How do you manage all the distributions? Oh, I just
01:26:22
got some stock in a public IPO. Should I keep it? Should I not keep it? Is it a good company like Google that's going to
01:26:28
20x post IPO? Or is it another company that I should just sell immediately? Right? You basically have one structure.
01:26:35
It manages everything and then you get a 1099 instead of like a bunch of K1 which
01:26:41
are so do you think like Seoia and Dre and Kla founders fund how do they respond that's question one and then two
01:26:52
does it change the behavior of the fundraising cycle or process for you and your partners when you're evaluating
01:26:58
companies or for the entrepreneurs like does any of that change so how do how does how does competition react and then
01:27:04
how Do companies and CEOs react? Listen, um, when you start worrying about your competitors, in my mind, it's
01:27:15
a bit of a version of the grass is greener elsewhere and you have to focus on ourselves. It's such a hard business.
01:27:22
There's so many smart people and this and that. We tried to design something that plays to our strength. And our
01:27:29
strength was we got the public markets, we got the private markets, and then we've got risk management with the cash
01:27:36
and knowing when to be in and out. I would suspect that other people will do the same. Hopefully, it'll be different
01:27:44
because they have different strength and stuff like that. And I thought that what
01:27:49
was nice for us is to sort of uh do this a bit of a hybrid uh public private and
01:27:55
frankly in private you guys think there's venture, there's the growth capital, there's private equity, this
01:28:01
vehicle could own 100% of a company, you could do debt, you could go up and down
01:28:06
the cap. What is your plan then to do with private companies specifically? Do you see yourself, you know, leading a
01:28:11
series A or participating in one of those or buying secondary in SpaceX on the open market from former employees,
01:28:18
maybe buying out strips of other venture firms that are looking to wind down or get early liquidity and you come into
01:28:25
some, you know, midsized uh $300 million fund and buy out 20% of it? What What's
01:28:30
the strategy here with private specifically? This is a good point. It's a bit like, hey, so what's your
01:28:35
northstar? Don't tell me you can do everything. like what are you going to really do right and to me the northstar
01:28:41
is uh Jason I got to build for you in 10 years the new mag seven that's my job so
01:28:50
we know we know who are the 10 largest companies in the S&P or the NASDAQ today what are they going to be in 10 years
01:28:58
some are already public they're just going to get bigger and some are private so to that
01:29:04
extent I don't believe that necessarily venture is the right model for this particular
01:29:10
because it's like uh it's a th00and to one to go from zero to 1 million in revenue then it's 100 to one to go to 10
01:29:18
million that's the insight that and you mentioned this on our call earlier today
01:29:24
that I actually think is really really really powerful the mag seven was this set of
01:29:30
correlated seven companies that sucked up all the attention all the money they moved in unison dollar for
01:29:37
Now that that correlation has broken down, it allows you to ask this question which is what is the real MAG X
01:29:47
companies? And to your point, if it's a 25 company basket, you're absolutely right. Like SpaceX would be in the
01:29:55
basket. It's private. Correct. So, so Stripe would be in the basket. Like so to belong some rando public company
01:30:02
because it's public and ignore SpaceX and Stripe would just be stupid. So to your point that is really that's really
01:30:10
powerful. The the the optimal basket of the companies you'd want to own for the future because of these rules and
01:30:17
regulatory burdens are partially public, partially private, and so you need a vehicle that can straddle both if you
01:30:24
want to own it. Yes. I I think that that makes a ton of sense to me. That's the idea. And also like the people who
01:30:30
choose who the Mac 7 are, it's like some employee at MSCI World or something like
01:30:37
that. Will you actually go out on a limb and try to publish what you think the version of that index is as you
01:30:43
construct it inside of that fund or we have some public requirements which will force us to do that. The private markets
01:30:51
are overheated. There's a lot of secondary offerings. So if you try to get into Stripe, SpaceX, Androl or like
01:30:57
there was recently one of these, you know, robotic companies that has zero revenue and wanted a $40 billion, you
01:31:04
know, valuation and there's all these civilians, retail investors who are investing in your fund, but also have
01:31:09
direct access to these secondary markets. I mean, you also have to buy at the right price and these I know
01:31:15
firsthand for the for those top companies are massively inflated. You have 30 $40 billion valuations on
01:31:21
companies that are pre-revenue sometimes. How do you think about that? I have no idea of the company you just
01:31:26
referred to. I have no idea which one it is. I don't want to say, but yes, maybe
01:31:31
they did a maybe they did a trial with BMW that was in the factory or not in the factory. I don't know. Listen,
01:31:38
humanoids is a pretty exciting area. I don't know what companies are, but there is going like let me in in my top 25.
01:31:46
I don't think I think it's a bit early. I would have a humanoid company. Hm, I'd
01:31:51
have a robot taxi company. You know, I try to find some whoever is the leader. And I think the point that you make
01:31:58
that's really good, Jason, is we also have to wait. To me, there's two key things. Can I establish with 75% chance
01:32:05
that this is the leader? I don't want to do it if it's like a 1% chance that it's
01:32:09
the leader. I got to pay more later. That's one. But two, there's one advantage that the public markets have
01:32:16
over the privates that we know how to value things because we have comps and we know about revenues and profits and
01:32:23
earnings and P multiples and stuff like that. Sometimes private investors, they just value a private company like, hey,
01:32:30
if the last round was 100, well, this round's 200. And I'm like, but why, you know, why is where the CEO is really
01:32:37
good on camera and funny Twitter like doubles, right? And so I think that in the growth business like being a public
01:32:44
investor is important because it lets you at least say if this company were already public what it be worth and then
01:32:52
when you own public company the one thing that the private company gives you if you want the public comp the public
01:32:59
business it gives you discipline but what the private business gives you which is really cool it gives you the
01:33:07
telescope into the future and I think that to be a good investor, you need to have one side of your brain which is
01:33:16
imagination, creation, believing in the future. And you need to have another side that says, "Hey, slow down chemo.
01:33:23
This is like 80 times earnings and it's twice as expensive and be patient." And for me, the best investors are the ones
01:33:32
where you sort of have the telescope in the future, but you also have the day-to-day discipline of the public
01:33:38
markets. And as I said before today, man, you get beat up in the public markets so bad all the time cuz you buy
01:33:45
something, it goes down by half. You in the private markets, it goes up, goes up, goes up, and then one day it just
01:33:52
goes to zero. Yeah. Yeah. It's like we're out of business. You take the loss. Hey guys, some breaking news.
01:33:59
Breaking news. The Pope has been selected. And I thought, you know, since you guys haven't been here, let's go
01:34:05
through it. Here it is. The smoke has come out and Phil Helmuth is Pope Helmut. A little work to be done on
01:34:13
these language models. Oh, look. Here's another one coming out. Chumat, congratulations. The first No, that was
01:34:22
a black smoke. That's black smoke. That's black. Black smoke. Oh no. Maybe Chimat didn't win it. Oh no. Who do we
01:34:28
got next? She was trading. She did better than you, Phipe. You didn't beat the Pelosi index. So you don't become
01:34:36
divine intervention. Divine intervention on her portfolio. Maybe a little insider
01:34:40
information. Okay. Wonderful episode. Phipe, you're amazing. Yeah, that was great. Thomas, you got competition. Your
01:34:46
big brother. He did pretty well. So now you know we don't have two. We have one or the other. So we'll let the audience
01:34:52
decide. For Chimamoth Poly Hapia, your German dictator for Arzar, who couldn't make it today, and your Sultan of
01:35:00
science. I am the world's undisputed greatest moderator, Jake. We'll see you next time. Bye-bye. Bye-bye.
01:35:10
We'll let your winners ride. Rainman David. And it says, "We open sourced it to the
01:35:19
fans and they've just gone crazy with it." Love you queen of kin. [Music] Besties are gone.
01:35:32
That is my dog taking notice your driveways. Oh man, my appetiter will meet. You
01:35:40
should all just get a room and just have one big huge orgy cuz they're all just useless. It's like this like sexual
01:35:45
tension that we just need to release something else. Your feet. We need to get Mercury's I'm going
01:35:56
all [Music] in. I'm going all in.