00:00:00
shout out to uh a company sax and i
what we're doing what are you doing okay shut the [ __ ] up i just wanted to give
a founder applause you are such a scumbag
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despite how tired of them you i've woken
up now now i'm awake you've awakened i'm done i quit i'll give a shout
out to uh which just got acquired by
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shut the uh up we need plugs hey everybody welcome to the all in podcast
i'm jason calacanis with us today the rain man
00:00:55
himself calling in from an undisclosed location
the queen of quinoa and of course the dictator
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himself chamoth paulie apatia all right boys how
are we doing feels low energy today what's going
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on great how are you what's going on let's
go let's do this i love it let's go love it
00:01:15
all right you're hot you're coming in hot yeah
breaking news breaking news uh biden has announced
00:01:23
uh his capital gains tax hike i don't think this
impacts any of us but biden will propose almost
00:01:31
doubling the capital gains tax rate for wealthy
individuals from 20 percent to not 25 not 28 39.6
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to help pay for the social spending uh and in
equality for those earning one million or more
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so nobody on this call federal tax rates could be
as high as 43.4 percent the capital gains increase
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would raise 370 billion over a decade yada yada
for new yorkers the combined state and federal
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capital gains rate could be as high as 52.22
percent and californians 56.7 biden has previously
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warned that those earning over 400 000 can expect
to pay more in taxes this was just breaking news a
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couple of hours before we started the pod and the
stock market is uh down and people are freaking
00:02:25
well dude jacob i want to hear your take on this
actually i want to start with your attention
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you didn't tell me this is gonna hit
me so hard no j j j cal was ranting on this topic 15 minutes ago we were talking and
i'm like dummy what did you think was gonna happen
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you know he's sitting there going off he's sitting
there going off it's like what did you expect just
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before we get into it we should do a quick primer
on what this means right so capital gains taxes
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are the taxes you pay when you make an investment
and you sell that investment at a profit
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that you pay a tax on the profit you make and
there's a difference between capital gains on the
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short term which means less than one year and long
term which means you've had the investment for
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more than a year so economic policy historically
has dictated that having a low capital gains tax
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rate relative to what you know an income tax rate
might make it might be incentivizes people to make
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long-term investments and it you know gets more
money moving in the economy and as a result um
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you know the economy will grow and so the idea of
increasing the long-term capital gains tax from 20
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which it currently is to 40 um is a real striking
you know economic policy shift rationalized as
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you know we're going to save uh you know we're
going to use this money for social spending but
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i think the historical context and what this is is
really important as we get into the conversation
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um and just speaking historically you know the
the maximum tax rate and long-term capital gains
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got up to 40 sacks you probably have the history
on this in 1978 for a year right or like 76 to 78
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and then it's been largely you know
15 to 20 for the last 20 years or so um and so to jump up yeah and prior to that
in the early part of the 20th century like 25
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pretty consistently for a long time so to jump
up to 40 percent it's a really big shift and
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there's a lot of debate around the
economic implications of doing this uh i thought that was important yeah let's
take a step back and actually see the forest
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from the trees and the forest from the trees
is that i don't think biden um thinks that
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it's a credible plan um inasmuch as i probably
think uh he needs you know this is like its
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performative um because it was a lot larger
the number the headline number was a lot larger
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than um what people were whispering was going to
be the number right it was supposed to be like
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in the low 30s or maybe kind of like you know 33
34 and then all of a sudden like to come out of
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39.6 i think it's almost like okay he's he's
giving the pound of flesh to uh the the left
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kind of like woke mob of the democratic party
who probably doesn't understand how capitalism
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works in the first place and doesn't care because
they're not they're not participants in it now
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my reaction is i don't think it's going to pass
i think it's going to be really tough to get done
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and i think it probably you know maybe maybe
there's a watered-down version but this version i
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i'm not super worried about and then it just comes
back to the same thing over and over the the fewer
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the number of people that get to participate in
the growth and see the upside the more there are
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that just wants to just kind of you know tear it
all down and so i don't know it's just yet another
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signal that we have these structural issues to
fix it's not reasonable that a few people get
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super rich and everybody else gets left on the
sidelines saks were you thought it's not going
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to pass but it's not going to pass it's not going
to tax is it going to pass is it an opening salvo
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where he wants to get to 32 so he's starting at
39. i think i think it could pass because i think
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they're they're planning to do this tax increase
as part of the the second infrastructure bill it's
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not really an infrastructure bill they're calling
it human infrastructure we've talked about this
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infrastructure is one of the last categories
of federal spending that's still popular so
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they're rebranding a bunch of social programs as
human infrastructure i think that bill will pass
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i don't know if the the rate will stay at 39.6
but i think there will be a big increase clearly
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in the the cap gains rate i mean i think it's
worth remembering how it got to 20 it got to 20
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because bill clinton lowered it from 28
to 20 as part of an overall package of um
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of of tax reforms that he did in the in the
sort of the mid-90s and you know that led to
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some of the best years of economic performance
gdp growth in the u.s productivity growth
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uh deficit reduction um you know and so you know
i think we're we're we are experimenting with
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breaking something that's been working i think
pretty well since the the reagan clinton years
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uh which is to have you know reasonably low uh
taxes on capital formation and investment um i
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think it's a category error to treat capital
gains or to think about it just as income you
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have to remember that all this money has already
been taxed once right so you make the money the
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first time as income you earn it you pay tax on it
then you decide to save some of it and invest it
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and then you get taxed again on that amount and um
so so capital gains is a form of double taxation
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uh that was the original reason one of the
reasons to to have a different tax rate for it
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and um you know i think that this risk kind of
messing up the economic recovery that's really
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underway already by the way think about um what
just happens to any organization that has to pay
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cap gains right it's not just individuals
like last time i checked organizations
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aren't exempt from cap gains for-profit
organizations um and i don't exactly know
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what they will do as well so you know you you
you're putting a lot of people under a huge
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strain when you double the the the effective rate
of return so you know if you're for example like
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um a pension fund right and you have an enormous
investment in a private equity fund or a hedge
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fund part of these things is that you know
there are these complete pass-through vehicles
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um and so as long as like you've structured
yourself in a way where you don't have to pay
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that tax i think i guess you're indifferent but if
you're any organization or institution or a person
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or collection of people that bears that tax all of
a sudden you know your returns have been basically
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cut in half that's pretty nuts let's talk about
the average joe for a second or jane as it were
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401ks would take a hit here and then when you go
to your retirement and you have to liquidate them
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you know you don't pay tax on the you don't make
taxes on that yeah you don't pay tax on the 401k
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gains during the otherwise your portfolio
because 401k is going to be a small amount
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you can contribute a year so retirees who happen
to have stock market gains or cryptocurrency
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people trading that yeah you'll basically pay
the same as income tax as opposed to paying
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a lower tax so would a it'll diminish investment
jason it's exactly what david says which is that
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on the on a marginal basis what will happen
is inflation probably goes up because people
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just decide to consume rather than invest because
they think well what's the point you know there's
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already risk that i bear and so you know the the
earliest risk assets right the riskiest ones that
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we all participate in which is early stage venture
and company formation there's you you may not be
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thinking about the capital gains rate but it's
implicit in the returns that you're expecting
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for the risk and the time you're going to take and
you know we've been trained to feel that rate and
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if you double that rate from 20 to 40 i suspect
that there's a lot of people whose risk tolerance
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changes and they're going to feel their after-tax
gains differently and they'll wonder to themselves
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is this worth it and then i think what happens as
a result is entrepreneurship drags i don't know
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if anybody's done an analysis but i suspect part
of the reason why america is such a you know an
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amazing like sink for capital right it absorbs
capital all around the world is that you've
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created incentives that get people very excited
because they think they can get rewarded if you
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take those rewards away i think the implications
are much bigger than just the cap gains rates here
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because as the people change their behavior then
the capital formation pools outside of the united
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states change their behavior and the whole thing
has a knock-on effect and it was more muted in
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clinton it was less muted in 78 it basically
didn't exist in the 40s and 50s but it is
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a huge force today i mean like we are an indebted
nation that owes money to all kinds of countries
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around the world including china we're supposed
to generate growth and sort of pave it back and
00:10:59
where will the growth come from if lps don't want
to back venture funds or venture funds but let's
00:11:04
people say you know let's be honest and direct
i mean are any of you guys going to change your
00:11:10
investment behavior if the cap gains tax goes to
40 no but there'll be less of it you know yeah so
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look anything my behavior has changed i think
my behavior will change yeah how will it change
00:11:24
because it's exactly what david said so i just
put in 100 million dollars into a climate change
00:11:28
company two weeks ago uh under this promise uh
i could only put in 50. so there's 50 million
00:11:35
less progress that's going to happen on
that business i'm not sure that that was
00:11:38
that's the right answer for what that company
is trying to do in the world and the way you're
00:11:43
thinking you're saying that you're saying
the profits you would have had from before
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are diminished in half therefore you would only
have half as much money to invest as an investor
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right so so however way you want to cut it
whether it's like the 10 companies gets cut
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down into five or the five ten companies that i
invest in get half my money the point is at some
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point the money starts to run out not just for me
but for everybody else yeah basically at the end
00:12:06
of the day the money goes into the hands of you
know government legislators and administrators
00:12:10
to decide how that money gets spent and it's not
in the hands of uh capitalist investors to decide
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where to invest that that's the fundamental kind
of shift that that's gonna be right right capital
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capital has been taken out of the economy risk
capital has been taken out of the economy and it's
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now going to be you know spent by by government
look and anything that you tax you punish and
00:12:32
disincentivize and anything you subsidize you
you create an incentive for there to be more of
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and you know so this is just we we always talk
about these things in terms of who they're going
00:12:42
to hurt is it that they are that this only falls
on the backs of rich people um so we shouldn't
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care but the real question is what is this going
to do to the economy and you know i think we've
00:12:52
talked in previous podcasts the last part that we
have with brad gerstner it feels like everything
00:12:57
in the american system is kind of broken except
for one thing which is this sort of opportunity
00:13:02
economy that's that's been created by risk capital
right and and people creating new companies
00:13:08
you know like these big sultifying political
corporations the s p 500 are completely broken
00:13:14
government's completely broken the federal debt
is out of control everything's the media is broken
00:13:19
everything in america is either broken or needs
to be revitalized or reformed except one thing
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is working really well which is risk capital and
its allocation to founders who have nothing but
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a good idea right and when all of a sudden you
double the cap gains rate that is an attack on
00:13:37
that opportunity society now i think there is a
legitimate conversation to be had about how do
00:13:41
we spread this sort of system of opportunity to
more and more people i think like brad framed it
00:13:47
really well in the last episode like how do we
get more people involved in that i would submit
00:13:51
the answer has a lot to do with school choice and
charter schools giving people everyone in this
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country deserves to have a first-rate education
um and so that is a very legitimate conversation
00:14:01
to have but i think to have punitive taxation on
it is i think it risks breaking that last thing
00:14:07
that is working so well in in the american system
i think it's really well said and uh i think this
00:14:12
is going to take re-domiciling to another level
i mean if you're in new york or california right
00:14:17
now and you were thinking about wyoming or utah
or texas or florida i mean this kind of makes
00:14:25
the decision for you if it does go to 40 and
because you could actually meet would you get
00:14:32
to neutral if you left and so well i remember i
remember when i moved to the united states in 2000
00:14:38
the marginal tax bracket that i was in and i was
making maybe you know 100 no i was probably making
00:14:46
80 or 90 000 a year was 55 and i remember
coming to the united states and seeing my after
00:14:54
my take-home pay my first paycheck and i was
shocked because i was like you know i was
00:14:59
paying maybe 36 all blended in federal and local
at the time or state at the time in california
00:15:05
and slowly slowly it's creeping up with with
if you play it out today where we are plus new
00:15:10
york state just passed laws you're going to be
sort of in the 50 to 55 almost upwards of 56 for
00:15:16
certain folks and maybe the answer is that's the
right thing um but i think we have to acknowledge
00:15:22
that there's going to be a bunch of unintended
consequences so maybe the intended consequence
00:15:26
is to actually create more um equality between the
richest few and you know uh not even the poorest
00:15:34
frankly because but it'll just be the richest
few and the the next richest few quite honestly
00:15:39
because like you know the investing class
is still a small number of people um but the
00:15:42
unintended consequences of that decision i think
is what exactly what david said which is that
00:15:47
over the next five or ten year period you
will at a practical level see less investment
00:15:54
and the the only way to make that whole is if the
government then takes all that money and all of
00:15:59
a sudden allocates it from their own coffers
back into the economy and we know that that's
00:16:03
not going to happen well right that's just going
to be riddled with waste and graft and corruption
00:16:08
so unfortunately the setup is that you know you're
going to really impact entrepreneurship and then
00:16:14
and then i wonder to myself by the way guys like
what was the actual goal of this meaning there was
00:16:20
20 or 30 guys that were just making so much money
on their equity but then that's then then we need
00:16:26
to blame like the these lists like the forbes
billionaires list because those are inaccurate
00:16:31
because a lot of these stuff is like unrealized
realized paper gains right and so they're not
00:16:38
they're not paying any capital gains because they
haven't sold anything and most of these guys that
00:16:42
are uber uber rich you know have no desire to sell
because it's for them it's a control issue to sell
00:16:47
i'm not sure the car i'm not sure the consequence
of taxing uber rich people is the true motivation
00:16:54
i think for some people maybe it is but um if we
just take a step back i mean a year ago the u.s
00:17:01
debt level was significantly lower than it is
today we've taken on a tremendous amount of of
00:17:06
federal debt to fund a series of programs that we
believe we're going to kind of keep you know the
00:17:12
american population employed and keep our economy
moving that was a massive burden we accrued and in
00:17:18
the past year so ultimately over time the only way
to kind of support this this new federal budget
00:17:26
and um you know the this new servicing costs
that we've taken on at the government level
00:17:30
you really only have kind of like three options
option one is you're gonna continue to raise more
00:17:35
debt and massively kind of inflate everything
and the dollar declines in value option two
00:17:41
is to reduce spending which means starting to cut
these programs and option three is to raise taxes
00:17:46
and it's pretty clear that option one is one
where we're kind of already at the economic limit
00:17:51
option two is going to be very hard to swallow at
a time like this so you can't just cut spending
00:17:56
right now across the board so many aspects of the
us economy and so many individuals in the united
00:18:01
states are dependent on the federal government for
support and so option three is the only real one
00:18:08
that's left on the table and so then the question
is who are you taxing you're not going to go tax
00:18:12
the people that are struggling you're going
to tax the corporations and the wealthy and
00:18:16
the capital gains tax is the one place where
you can kind of say look the tax rate that
00:18:21
you're paying today is half of what an income tax
rate would be if you were earning that as income
00:18:25
let's get it to be fair and even and i think
just just to argue this other side like there's a
00:18:30
motivation there's a there's a point of view where
this is coming from it's not just let's go tax the
00:18:33
rich screw the economy it's that we find ourselves
in a circumstance where we need to do one of those
00:18:38
three things the most rational to do is to or the
most kind of sensible politically uh to do is to
00:18:45
is to increase taxation and this is the the first
place to go the most obvious place to go it's not
00:18:51
because so when you think about like so for
example like you know you would say okay
00:18:55
who are the folks that we're talking about there
can be entrepreneurs that are building companies
00:19:00
again they're never selling so they're never going
to pay these taxes like it's not the case that
00:19:04
elon musk or mark zuckerberg is all of a sudden
going to write a 40 billion dollar check because
00:19:09
that's that's not how much they make that may
be how much they're worth right but they will
00:19:14
never sell a single share unless they have
to to fund some other project in which case
00:19:19
would you do tomorrow so so what i was going to
say is so and then and then you look at somebody
00:19:24
else like maybe you say oh well you know the
people that manage money like let's go after
00:19:28
those guys because like those guys shouldn't be
you know rich but then the problem is those guys
00:19:32
are already paying w2 income they're already
paying nominal income tax rates that's how the
00:19:37
entire hedge fund industry works right now
you know you get paid in current income um
00:19:43
and so okay so you're not getting their money
because they're already paying at the prevailing
00:19:46
rate so again this goes back to if you actually
trace the problem and see who it affects it's
00:19:52
exactly what david said it's these folks that are
in the middle that are actually putting the money
00:19:56
to work that are trying to invest in things
that now have a very different return profile
00:20:00
and you're right the core business that they
do they may still keep doing but then all of
00:20:05
the incremental things in the future that
they want to do they won't do for example
00:20:09
look at all of the talk right now about how
everybody needs to stand up you know more angel
00:20:14
investing more minority investing more women gps
all of this stuff well all of the folks let's just
00:20:21
be honest all the folks that were in a position to
put money into those folks are now 50 on a dollar
00:20:28
rated basis poorer if this thing passes and i bet
you what they're going to do is they're not going
00:20:32
to cut their allocations in sequoia they're going
to cut their allocations to all these other folks
00:20:37
yeah that's exactly what i was thinking is who's
it going to hurt it's again it's going to hurt all
00:20:41
the people that you want to get into the game it's
going to hurt all the people that are here but the
00:20:45
richest richest rich folks that is not unless
you impact but unless you ex-appropriate the
00:20:50
money from them that's not you're not going
to get a single cent and then that was the
00:20:54
that was the concept of the wealth tax wasn't it
that you would take the total value what you have
00:20:58
and just take away one percent a year from bezos's
you know or zuckerberg's hundred billion dollars
00:21:04
so would that not have been a better solution than
this if you had to pick one a one percent well
00:21:09
that's a that's a super silver whatever then we're
no better than the banana republic that could also
00:21:14
then expropriate a mine because we don't like
the way that the mining is happening or you know
00:21:19
another critical asset because the government
decides that it's important i mean what's the
00:21:23
difference between a stock and any other asset
that either a person or or a corporation owns
00:21:28
it's it's it's very uh i think that the
definitions are thin they're all the same
00:21:33
things at the end of the day let's go back let's
go back to the federal budget problem like how
00:21:36
do you address it saks i mean what's the right
course here what i think is amazing is we're
00:21:41
we're about to spend we're raising this hundreds
of billions of taxes in order to fund you know
00:21:47
trillions of new spending i don't really hear
the administration selling these new programs
00:21:53
selling the spending all we're really talking
about is that there's too many rich people you
00:21:58
know we have these millionaires and billionaires
we gotta tax them more and so all we're really
00:22:02
talking about is whether it's appropriate to be
punishing the rich and super rich we're not really
00:22:06
talking about where is this money going are these
programs what do we get out of it exactly and my
00:22:12
point is for forget about like who it's gonna hurt
i think it's eventually gonna hurt the economy
00:22:18
uh and the question is what do we get
out of it and i think what's amazing is this is even paying for the big ticket items on
the progressive wish list we're not getting to
00:22:27
universal um health care with this we're not
getting to universal higher education we're
00:22:32
not getting to any other we're not getting to like
forgiveness of student loans or anything like that
00:22:36
we're not getting to any of the really big ticket
items on the progressive wish list and yet we're
00:22:41
maxing out the taxes relative to anything we've
done historically and so where do you go from
00:22:46
here you know because we're thinking this is just
the tip of the iceberg in terms of the progressive
00:22:52
agenda doesn't that speak to the problem like the
fact that we have such an extraordinarily high
00:22:57
uh debt burden and federal budget that we're kind
of scrambling to figure out a way to kind of make
00:23:03
ends meet effectively right i mean because our
alternative again is to just let massive inflation
00:23:08
run you know issue a ton of uh a ton of new debt
or to cut spending no no but david did either
00:23:14
of those seem to be on the table no no you're
going to exacerbate this issue i'm i'm telling
00:23:19
you i know it doesn't seem likely but i think on a
marginal basis this will be an incentive to spend
00:23:25
and the reason is that it's a very frustrating
idea for somebody to think about putting money
00:23:29
in the ground especially a sophisticated investor
at a rate of return that just changed in half and
00:23:36
so from my perspective i would be more likely to
spend because i would rather just yolo the money
00:23:42
than i would rather put it into the ground because
i would be worried that that could then get taken
00:23:46
away from me it could also change even further and
further and i think that's a very frustrating idea
00:23:51
i'd rather take a vacation again let's go back
to the example i'd rather take a vacation with
00:23:55
that 10 000 then go on to jason syndicate
and put it into the hands of folks because
00:24:00
i'm just like you know what it's going to turn
into even if even if jason hits it and i get back
00:24:04
you know i'd rather just go on vacation enough
of those decisions and i think i think you have
00:24:09
a very different kind of economy you have you know
what you have you have what everybody else has so
00:24:14
do we reduce spending i think you have to reduce
expenses i think that we have an infrastructure
00:24:20
that is not well accounted for meaning if you're
a company you can go to a company like tableau
00:24:25
you can go to a company like you know pick your
pick your metrics company and within you know a
00:24:30
few weeks and months of work you can literally
understand where all the dollars are right you
00:24:35
can understand your business and you can figure
out where money is being wasted and where it's not
00:24:40
in a government that's impossible to do right
because you have these laws and these laws are
00:24:45
artificial constructs that we construct and
those artificial constructs are influenced by
00:24:50
money in and of itself and so these dollar flows
are impossible to map so you don't know where
00:24:55
it goes so for example the 700 billion budget in
the pentagon does anybody have any idea what the
00:25:00
roi is on that or even a way to measure it like
even to actually make it simple what like if you
00:25:06
were if you had 700 billion dollars of investment
capital the the market has a really simple way of
00:25:12
saying okay david what's your roik what's your
return on invested capital and you can say all
00:25:18
kinds of fancy things you can have all kinds of
fancy projects or simple projects but at the end
00:25:23
of the day what is measurable is a dollar in and
what that dollar grew into and that's a return
00:25:27
on invested capital it is impossible to know that
and so you know we could say for example you could
00:25:33
define it and say well i'm going to basically
get every single person to graduate high school
00:25:40
and now i'm going to spend 500 billion dollars a
year to make sure that the graduation rate is 100
00:25:45
that would be an incredible goal you know what
that is absolutely measurable right and and you'd
00:25:50
be able to back into all of these programs and
the one that's ones that didn't work you'd cut
00:25:55
you know and you'd end up with what david said
which is school vouchers uh i mean just exactly i
00:25:59
think i think the absence of that accountability
chamath has led us to a scary dilemma
00:26:04
and the dilemma is over 10 million americans
are directly employed by federal government
00:26:10
and a large swath of the remainder of the
economy is supported by federal government
00:26:15
spending which is basically your point
right so large amounts defense and military
00:26:20
construction health care and pharma i mean the
list goes on but like the direct employees of the
00:26:25
federal government plus the amount of revenue that
depends on federal spending is so significant now
00:26:31
as a percent of the total income generated by
americans that it is very hard to say like let's
00:26:36
create accountability in a system when so much of
the economy is functionally dependent on it am i
00:26:41
missing something saks like i mean isn't that
the circumstance we're in right now yeah i mean
00:26:45
the thing that like is amazing to me is you know
i lived through the 1980s and 1990s like like you
00:26:50
guys did from 1982 to 2000 that 18-year period we
had sort of an unrivaled economic performance it
00:26:59
was roughly around we had two bad years under
george herbert walker bush that's why he lost
00:27:03
reelection but we had close to 40 percent growth
in gdp every year we had great productivity um
00:27:11
and we had massive deficit reduction it's the
last year percent a year yeah and we and we had
00:27:17
we we actually had government uh budget surpluses
the last few years so it seems to me that we had
00:27:24
the winning formula as a country and look this
is not partisan i think it's bipartisan i think
00:27:30
the the right solution is somewhere between what
what reagan and bill clinton did and you know
00:27:36
clinton uh he rose he increased the individual
tax rate to 39.6 so he did do that from 36 percent
00:27:44
but he cut it from he cut the investment the cap
gains rate from 28 to 20. it was in that ballpark
00:27:49
you know we know that works you know we know that
works i and and and you know somehow we've moved
00:27:55
away from what we learned in that time period
because you know i think the the left in this
00:28:01
country has has become kind of you know has
embraced this we're saying the same thing you
00:28:06
set up the incentives for people to invest they do
if you set up the incentives for people to spend
00:28:12
they will do that as well i i see this i think
chamath is exactly right there are a lot of people
00:28:17
in it you use the example of the syndicate.com
when i do my syndicate deals there are people
00:28:21
who are recreationally saying you know what i
love the idea of putting 5 or 10k into a flyer
00:28:26
they're gonna you know half of them will go away
a third of them all these people who are you know
00:28:31
involved in day trading or crypto or real estate
investing they're going to look at it and say is
00:28:36
this worth the time or is it worth this amount
of time maybe i'll cut back from doing 40 hours
00:28:42
a week of this to 20. and if you look at what
happened with crypto people they went to puerto
00:28:46
rico you look what happened to venture capitalists
and ceos they went to florida miami austin
00:28:50
this is gonna if it does pass you could be
pushing people to singapore well we have
00:28:55
another very complicated problem and this is what
freeberg brought up which is and i don't know the
00:28:59
answer david so i'm trying to i'm actually talking
around your question because i i think it's a it's
00:29:04
it's the right absolute question but think about
this what happens in a world where now let's just
00:29:09
say that the revenue of the government goes up
right but outcomes stay the same or get worse
00:29:16
and at the same time and you could claim that
that's effectively what's been happening over the
00:29:20
last 20 or 30 years right government revenues have
gone up impact has stayed the same or probably
00:29:24
been net negative but then at the same time you
have this you know program of quantitative easing
00:29:30
where then you can essentially print money
on demand and when you think about that it's
00:29:35
like wait a minute i am giving you money but then
you are also going to the photocopy machine with
00:29:40
my money to make more money and all of that total
money does less than what it did when it was half
00:29:47
that or a quarter or a third of it that's a very
scary realization i think that people you know
00:29:52
will eventually come to um and i don't know what
the answer to that is i you know i i think david
00:29:58
saxxypoo said it which is like you know the states
are this incredible a b test right because you
00:30:02
get to test like theories right and you have you
have now every complexion of theory you have like
00:30:07
you know the low tax states the no tax states the
mid tax dates you have high real estate taxes low
00:30:11
real estate taxes high estate tax whatever you
get every grab bag of incentives and you're gonna
00:30:17
see but the problem is that was assuming that
the federal government kind of mostly stayed
00:30:20
out of the way you have this massive overlay
yeah i just posted a chart in the the chat
00:30:26
that nick can put up which is federal spending
federal outlay is a percentage of gdp and it's
00:30:31
really interesting because federal outlays and
percent of gdp have generally been around the 20
00:30:38
line plus or minus a couple of percent since you
know the 1980s and last year in 2019 it was 20.7
00:30:47
percent it jumped to 31 under covid and it now
feels like we're trying to make this new level
00:30:55
of you know going from 20 to 30 permanent it's
like math math squaring well the the pro the
00:31:01
problem is the only time we did that in history
was in world war ii now we were trying to fight
00:31:05
the nazis which was worth spending the money on
yeah i would say that was a good use of capital
00:31:09
but it's very hard to step back right i mean what
starts out as temporary becomes permanent is that
00:31:14
kind of the concern well that's what that's what
milton friedman said is there's nothing quite
00:31:17
so permanent as a temporary government program
right but but what they're threatening to make
00:31:22
permanent is this new permanently higher
level of federal spending in the economy
00:31:26
and i think it's a very dangerous experiment
because it either takes tremendous money
00:31:32
printing to support it or a tremendous tax
burden and neither one of them is good for
00:31:36
the economy by the way you know again when bill
clinton left office i remember you know you can
00:31:40
go to the the time machine for whitehouse.gov
when he left in 2000 and he bragged about how
00:31:47
under his terms under his eight years as president
they reduced federal spending from 22 percent
00:31:54
to 18 of the economy can you imagine a democrat
today boasting of that or even a republican i mean
00:32:01
what who was the guy who was your guy who was like
uh the tea party people who there was somebody who
00:32:07
was like in charge of the settlement i don't
know who it was but it was just like we got to
00:32:11
cut spending there oh yeah ryan the speaker
the the speaker of the house paul ryan yeah
00:32:18
no you're right you're right based on this yes
spending restraints kind of gone out the window
00:32:23
in in both parties and the republican it did it
did happen under trump the republicans don't seem
00:32:28
to find their principles on spending unless and
until there's a democrat in the white house so
00:32:33
they definitely deserve their share of the blame
on this but but we do seem to be entering a new
00:32:37
territory here of you know this again levels of
spending we've never seen before it's incredible
00:32:44
it's absolutely the price the problem is it would
be so much better if we just said we're going to
00:32:47
do this one very specific thing with a huge number
attached to it like i would rather say we're going
00:32:53
to mars here's a trillion dollars we're cutting
student debt here's a trillion dollars we're going
00:33:01
to double down on cyber and we're going to get you
know completely pivot the military or something
00:33:05
and here's 500 new deal whatever something
aspirational that is not just anti-rich people
00:33:11
let's tackle right now we have we have labels we
have a label and then we have a spaghetti mess of
00:33:17
spending that just isn't really attached to what
the label means and none of it is accountable and
00:33:22
so you don't really get anything for it i know
this is a silly question but why wouldn't we
00:33:27
test this and say hey 20 40. there are numbers
between these two maybe we'll increase it two
00:33:35
percent a year for eight years i'm sorry what
happens this is the this is the other problem
00:33:40
with like this idea of american exceptionalism
we believe that we can't learn anything from
00:33:45
anybody else and that's also not true we actually
know what it looks like when you have government
00:33:50
as a massive portion of the economy and we also
know examples where government basically enables
00:33:55
human capital outcomes but remains relatively
you know small and fixed singapore right
00:34:02
there's this there's incredible yeah you know
there's this incredible example where i think uh
00:34:07
right when lee kuan yew became um the head of
singapore the gdp of singapore was the same as
00:34:13
the gdp of jamaica right and what you saw was
this complete just just complete divergence
00:34:19
in in these two countries and think about
this country which is basically this like
00:34:24
you know this little spot of land surrounded
you know and you know apolitical a religious
00:34:31
surrounded by these muslim countries and
they still thrived and they kicked ass
00:34:35
you know they were never invaded et cetera et
cetera and underneath that was this belief that
00:34:40
it's what you said freeberg where you focus on an
outcome you spend against the outcome and you try
00:34:45
to measure in a reasonable way and you double
down on the things that work and then on the
00:34:49
other hand if you look at europe europe is a good
example when you know spending sometimes for the
00:34:53
greater good in the best interest can run them up
and really what happens is you start to stagnate
00:34:59
yeah and singapore is only what six million people
i mean it's like ireland or norway or denmark i
00:35:05
mean it's this is not a huge place sounds like
we didn't solve any problems in that last piece
00:35:09
yeah we didn't solve it i mean i mean what
do we think is going to happen in four years
00:35:11
does donald does this give donald trump a clear
path into office if he said hey where are you
00:35:18
you know the worst case scenario is you see
what happened in france when they had that 75
00:35:22
super tax and then they introduced the wealth
tax and they had massive immigration of of uh
00:35:27
invested dollars out of the country and people
out of the country they did get rid of george that
00:35:32
was a bonus you know it's a process yeah at what
point how many red pills do you guys have to take
00:35:39
before you're willing to reassess your political
party because it seems obvious to me now look we
00:35:44
can talk about political parties hold on hold on
we can talk about we can talk about how bad the
00:35:49
republican party is but there's no question in my
mind that the democratic party all the energy the
00:35:54
base the activists and the politicians who have
the microphone they are woke socialists okay that
00:36:00
is the dominant ideology in the democratic party
and what biden is doing right now is catering to
00:36:05
that he's compromising he wasn't catering to
that until this point he he didn't put bernie
00:36:10
or elizabeth warren into any cabinet positions he
kind of marginalized them and now he's like okay
00:36:16
let's do something i mean would warren and
this is this no but jason i think you're right
00:36:21
this is why i think this is like a sacrificial
lamb and i don't think anything's gonna happen
00:36:24
i don't i think biden is a fundamental centrist
that's why i like him i think he's a boring
00:36:29
he's a stable he's a stable predictable figure
and that's i think what you want in the in the
00:36:34
presidency i i think that this is sort of like
okay you guys want a pound of flesh here you go
00:36:40
but i think he's so politically smart that
he probably does have a bunch of millennial
00:36:45
woke socialist whispering and chattering like hey
do this do that to the other but he's probably the
00:36:50
only one there who's smart enough to realize none
of this won't get passed you know it's not going
00:36:54
to muster enough support i don't know i think
mayden is not governing like a centrist right now
00:36:58
he's he's proposing you know what four trillion
of new spending you know new tax increases and
00:37:03
he's just getting started but look and i would
challenge this idea to slightly of him being
00:37:07
a centrist what i would say is he's always
tacked to the center of the democratic party
00:37:12
so i i do i i do think he's he's a triangular
triangulator and a calibrator he's not like
00:37:19
a conviction politician the way that uh bernie
sanders is or an elizabeth warren but what he's
00:37:24
talked to is the center of the democratic party
and the center of the democratic party has moved
00:37:28
very far left because all the activists have moved
to the left and so he's been dragged left remember
00:37:33
biden was clinton's floor manager in the senate
when he passed all this legislation and so now
00:37:39
biden is very far to the left of where biden was
in the 1990s and the reason for that is because
00:37:45
the democratic party has moved so once again i
guess you know my question to all of you guys is
00:37:50
what does it take how far does the democratic
party have to go to the left donald trump okay
00:37:55
donald trump i would i wouldn't i wouldn't call
this the problem i wouldn't call this as much of a
00:37:59
radical policy shift as i think it's being framed
i honestly think this is a natural and inevitable
00:38:05
consequence of the circumstances we find ourselves
in right now with respect to the spending level
00:38:09
the dependence we have on federal spending across
the board with respect to individual employment
00:38:14
and the economy the need for a variety of social
services to get us through this covet economic
00:38:19
collapse i just don't see another way out and i
feel like it's the natural course to do exactly
00:38:25
what's going on right now i think it's going to
pass i think something like it's going to pass
00:38:29
and i think something like it's going to pass
but i don't think it's going to pass yeah
00:38:33
you think it's going to be equidistant i'm not
saying it's good or bad i think obviously we
00:38:37
just find ourselves in the circumstance in this
country in this moment in time that this is the
00:38:42
only path i'm just not sure you can go in and go
slash a ton of spending right now and and you know
00:38:47
and anyone would win re-election or any you know
or most americans would be anything but unhappy
00:38:53
uh it's just it's just a consequence of where we
are let's play the glass half full here's a crazy
00:38:57
idea okay you know for example somebody like me
what i would think about which i think is is a
00:39:03
little it's crazy but i would do it is okay i'm
just going to move literally every single thing
00:39:10
every dollar that isn't nailed down into a
charitable vehicle and i will invest through
00:39:16
my charity because i still have to donate five
percent a year but then i can compound tax free
00:39:22
now i care more about the businesses that i'm a
part of and the progress that i can create so that
00:39:26
may be okay and i'll just pay myself a salary
to like fund my lifestyle but that could be a
00:39:30
way around this to me the biggest issue isn't how
much money i have personally the biggest issue is
00:39:36
how much money i will have to put back into the
world and the idea that then it goes to a place
00:39:41
where it's profligately spent in a way that isn't
accountable really bothers me that idea bothers
00:39:46
me a lot um david that would cause me to tack you
know more even more to the right if i could find
00:39:52
somebody who understood that principle because
what i don't want to have is you know in the
00:39:56
absence of social programs like the the problem
that the republicans leave is this no man's land
00:40:00
where then you're forced to believe that this
one man for yourself it's all about you you can
00:40:06
figure it out you know the rugged individualism
that's just not realistic like i i am a complete
00:40:14
byproduct of a social safety net and that should
exist and the problem is that republicans don't
00:40:19
give you that option to have then accountability
on spending and just somebody please just say that
00:40:24
i don't care what you call yourself yeah well
look i think you know that i think republicans
00:40:29
have gotten a lot more comfortable with the idea
of entitlements and the the social safety net i
00:40:34
don't really hear anyone opposing that anymore um
i mean it's the same things happened with like the
00:40:39
tories in in england you know no one's really
trying to roll back the social safety net we
00:40:45
need a republican messenger to come forward and
say listen we don't care you know who you love
00:40:51
what you smoke where you're from what you look
like you know we believe in an opportunity society
00:40:58
we want to spread that opportunity to everybody
but ultimately opportunity comes from the private
00:41:01
sector we're going to have a strong social safety
net and we're going to basically give everybody
00:41:07
the the most opportunity to participate by giving
them a great education that's basically what the
00:41:11
agenda should be yeah i'm in i'm in i mean
i i to you even the starting line hallelujah
00:41:16
i like it i mean i i would i probably because
your boy tried to dismantle obamacare you know
00:41:22
trump like trump i'm a never trumper
obviously but i'm kind of purple i would you know i'm considering austin or miami as a
place to locate myself and a decision like this
00:41:32
makes it easier i would never do that i'm actually
very i love texas i love austin austin's the kind
00:41:39
of purple i like like i like personal freedom
and i like what you're saying like love who
00:41:44
you love smoke what you want what year did
you move to the bay area five six years ago
00:41:50
i was in la for 10 new york for 30. i feel like
it's a last-in first-out thing that's going on
00:41:54
right now with respect to immigration out of
california i've been here since 2000 i'm not
00:41:58
leaving yeah i've been here my since i was six
years old in california and i'm not leaving and i
00:42:03
and i've been in the bay area since college so
i'm not you know i feel like it's a lot harder
00:42:07
to leave when you've been here longer it's a lot
easier to leave when you've been here less time
00:42:11
that certainly seems to be the pattern i've seen
amongst friends and colleagues with respect to
00:42:15
leaving the state uh all right uh the chauvin
trial uh came back guilty all three charges
00:42:23
what is there to even talk about here what is
there to talk about i don't i don't even know
00:42:26
i mean let me show you like can i get can i
give it can i give a shout out to um a really
00:42:32
good friend of mine his name is neil katjal he
was the former solicitor general under obama
00:42:36
um he uh he was uh one of the uh prosecutors that
that worked on that case um he's a he's a partner
00:42:44
at hogan's um runs a supreme court practice here
but basically went and did this pro bono trial
00:42:50
uh on behalf of the state of minnesota by
working with the the the district attorney
00:42:55
and i just i just want to say neil proud of you
it's an incredible thing um thank you for keeping
00:43:01
america safe okay i mean uh you know what's crazy
so like but then you know the same day there was
00:43:09
there was a shooting of this on this unfortunate
shooting of this i think i think she was 16 year
00:43:13
old 16 years old this black girl in ohio and then
you know lebron tweeted something out and then
00:43:18
lebron had to basically delete the tweet because
it was causing people to go absolutely crazy
00:43:22
well i mean each of these situations is unique
and in that situation somebody was going to stab
00:43:28
another person the cop didn't know what was going
to happen and you know in another time period like
00:43:33
maybe that would have been saving somebody's
life who had potentially been stabbed and
00:43:39
you know the george floyd i think you got to
reserve judgment on each of these until you
00:43:43
get all the information but the information here
was just super conclusive like the the gymnastics
00:43:49
ben shapiro and some of these far right people
had to go through to say what you saw in george
00:43:55
floyd being murdered was not what happened well
that's that's performative theater trying to get
00:44:00
people to watch something and it was i mean it was
just gross to watch might as well call it what it
00:44:04
is like that's acting i feel like probably if
anybody if any one of us found ben shapiro in
00:44:09
a bar and just hung out and had a beer you'd find
out that he was like he was like the meryl streep
00:44:14
of our generation you know like this incredible
act what does that mean like an incredible actor
00:44:22
all these guys are just trying to figure out how
to say that this was a travesty of justice and
00:44:27
i'm like i don't know what you saw but yeah
let me explain where they went wrong okay so
00:44:33
so look i i agree with you guys fundamentally this
was an easy look this this was uh you know finding
00:44:39
a fact by the jury guilty on all charges obvious
right the tape shows it his uh the chauvin's
00:44:47
record as a cop numerous complaints
you know this was a bad apple this was a bad cop he deserved to be convicted end of
story that's where the analysis should end but
00:44:57
of course the people on cable news would have
nothing to say if that was the end of it and
00:45:02
so look i think both the right and the left kind
of went off the rails on this where you know the
00:45:07
right kind of went off the rails is you had
well what happened is you had maxine waters
00:45:12
you know come out and while the the jury
was still deliberating she was basically
00:45:17
calling for activists to get more confrontation
on the streets if the verdict went the wrong way
00:45:22
and so then the defense not helpful right
and so that so then the the defense made a
00:45:27
motion saying that uh this this was affecting the
deliberations there's no proof of that the jewel
00:45:34
the judge ruled against that motion but he did the
judge reiterated his desire for the politicians to
00:45:40
stop talking about the case right and so then what
happened is the the right-wing commentators were
00:45:46
criticizing maxine waters and implying that that
there was an effort to try and coerce the jury
00:45:52
and there's no proof of that right and and and and
i think there's the mistake is in somehow framing
00:45:59
derek chauvin as like a sacrificial lamb to the
mob he was not he was guilty he deserved it that
00:46:06
being said i do think that the judge had a point
that it would be helpful if these politicians
00:46:11
would just stay out of it stop commenting on it
while the jury is deliberating i think there was
00:46:16
a legit point there um but you know the the the
left made some some weird comments as well you had
00:46:23
nancy pelosi made this really bizarre very
strange i think that was like a slip up of like
00:46:29
just trying to say something not i mean being
charitable she was trying to say something nice
00:46:34
that george floyd is gonna create a wave
of justice and that would be that's a great
00:46:39
idea she said yeah she said thank you george
floyd for sacrificing your life for for justice
00:46:44
yeah yeah that didn't come out exactly as she
ended up no no i mean because look george floyd
00:46:48
did not go out that day intending to be a martyr
um no you know and um and so it it sort of gay
00:46:57
it expressed kind of what she's thinking which
is how am i going to use this politically
00:47:02
uh you know train yeah it's about pretty great
i think you're right it came out gross for sure
00:47:08
i think that's how they're trained it's kind of
like you know if you if you take a finely tuned
00:47:12
athlete in a sport and give them you know they're
they're just they're reactive because they're so
00:47:17
instinctual i think it's kind of like this she's
an incredibly finely trained athlete and her
00:47:21
domain is politics and so you know every what is
that phrase uh uh every crisis is an opportunity
00:47:28
kind of thing so yeah i mean they all flew
there to be there for the for the trial etc and
00:47:34
that couldn't have helped the judge with you
know the impartial jury and maybe that causes
00:47:38
a mistrial i mean i don't know david you're an
attorney is there any chance on appeal that a
00:47:43
maxi water quote like that could result in well
the judge actually said that the the defense
00:47:52
could reserve that issue and use it on appeal so
yeah they could use it but but i don't think it's
00:47:56
good i don't think it's going to work unless they
can prove that somehow the jury was contaminated
00:48:02
by what they were hearing on tv the dutch's
instructions were pretty clear like i watched
00:48:06
a couple of the ending days and he's very clear
like he's like guys i don't want you to watch
00:48:10
the news you know stuff like that he was very
directive in making sure that they tried to be as
00:48:14
uncontaminated as possible so i think the
surface area for an appeal is pretty thin here
00:48:19
the fact that the police chief and everybody who
worked with him said like this is not standard
00:48:24
this and they just threw him right under the bus
they didn't want to be associated with this in
00:48:28
any way by the way well you know they're
they're not going to be able to hide much longer
00:48:31
though because the doj said they're opening an
investigation at the minnesota police force so i
00:48:35
think they're just trying to crack open the police
reform in that state and just get those guys on
00:48:39
the right side it's going to be it you know but
again here's this other issue where it's like okay
00:48:44
this is where like there it's very difficult
for the federal government to do anything but
00:48:49
you know so whatever they try to do won't really
result in what what you want to have because every
00:48:54
state again adjacent to your point has completely
different political ideologies nobody wants to
00:48:58
behave the same everybody wants to be independent
everybody wants to get reelected as not cow towing
00:49:03
to somebody else and so you just don't get these
consistent outcomes and then people are forced to
00:49:08
vote with their feet and move across the country
you know to get a bunch of simple things that
00:49:13
i think should be pretty consistent across the
entire country the thing that i found particularly
00:49:17
deranged was these people who are like listen
he's a fentanyl addict he's an opioid addict
00:49:21
which by the way there are tons of affluent people
everybody in this country is addicted to opioids
00:49:27
fentanyls are everywhere fentanyl is everywhere
and then you're trying to say like because he had
00:49:32
that addiction that in some way that negates
the person kneeling on his back while he's in
00:49:36
handcuffs like you're you have a duty as a police
officer to take care of somebody when he's in
00:49:42
handcuffs how is he any threat in any way and then
to listen to scott adams and ben shapiro on these
00:49:48
absolute pieces of garbage try to say oh you know
there was the fentanyl that killed him it's like
00:49:55
uh yeah no the person on his back kneeling on
him for nothing because it's about it's about
00:50:00
ratings now uh switching topics and to talk about
ratings something a little lighter um the most
00:50:06
interesting popcorn thing that i watched uh
was the hulu documentary you did watch the
00:50:12
hula documentary on we work i'll be working out
oh i got to watch it i got to watch i haven't
00:50:16
seen it yet yeah oh it is it is in a word i think
i think the good i think the right word is like
00:50:22
outrageous i think the guy who stole it jason
was the lawyer who they interviewed yep he he
00:50:27
had some incredible kind of like one minors
yeah uh well i think it's yeah the the i had a
00:50:33
g i i'll be honest and this may sound crazy but i
actually had um a fair amount of sympathy for adam
00:50:40
newman and watching it i think that he at least
in the documentary it came out that he you know
00:50:46
not not that he didn't create this issue but that
i think it was a little overly scapegoated because
00:50:51
it's very hard for you to incinerate 45 billion
dollars without the complicity at a minimum of
00:50:56
your board of directors right and and a bunch of
like extremely well-heeled thoughtful investors
00:51:02
um and so there was just there was just
this so much complicity in this thing so
00:51:06
if anything my takeaway was that he he
shares he shares the blame with a lot of
00:51:11
other people and it's not it wasn't you know
him and him only but my gosh that documentary
00:51:16
some of the things guys are just uh they're
fabulous this is this is always true in these
00:51:20
businesses that end up with um you know bad actors
that are enabled right i mean it's been the case
00:51:27
in public and public success stories
and failures right i mean there's uh a cult of personality the personality provides
the the high beta personality provides the alpha
00:51:38
and it can also pro it also could
provide like a thera notes outcome and you know the thing that when you'll see when
you watch this is i don't know if you guys
00:51:46
watch the vow about that nexium cult which is just
equally loathsome horrible people behaving badly
00:51:54
but he really targeted young people to work there
and indoctrinated him into this we're changing the
00:51:59
world and then there were no adults there and
you see him behind the scenes when he's talking
00:52:05
at the ipo roadshow and he's having basically
a panic attack and he's psychotic i mean he
00:52:11
was really deranged and they have this video of
him trying to get through the ipo roadshow what
00:52:27
deranged is a big word i don't i'm not sure that
it's deranged but i think it's like it's juicy
00:52:32
it's uh it's got his wife and like that
whole thing like we school they're like we
00:52:37
have to democratize education for 60 000
a year have you guys have you guys ever
00:52:43
have you guys ever regretted enabling um you
know quirky personality entrepreneurs that
00:52:48
you've backed and then you've regretted it later
yeah so um the problem is it's hard it's hard
00:52:53
to know in the midst of it you know i guess it's
like kind of like that line like the line between
00:52:58
genius and insanity is very thin um but yeah i
mean the the one thing i will say is i've only
00:53:03
ever had one issue of outright fraud um and so you
know well no i mean in hundreds of in hundreds of
00:53:12
companies that i've that i've invested in luckily
i i've only uh i've only seen one issue where you
00:53:19
know the ceo was extremely i don't know aggressive
in how they accounted for and booked revenue
00:53:27
and you know this is where one thing that we
don't have at the early stage companies we
00:53:31
don't have the check and balance of a reporting
infrastructure and a third party watchdog and all
00:53:36
these other people and so you know you guys all
know this when we go in and we sit in a meeting
00:53:42
in a board meeting and you know the entrepreneur
puts slides up there is an inherent 100
00:53:48
categorical belief that they're that they aren't
lying right like you don't you don't even have
00:53:52
to check that assumption it's just assumed that
nobody's lying you know good or bad we're just
00:53:56
presenting the data and i had one case where the
guy lied and it wasn't one was it was and our cfo
00:54:04
and you know our team figured it out and um you
know there were other investors and it was uh we
00:54:09
all were just really shocked and we had to kind of
clean it up as best we could and i have literally
00:54:15
a dozen uh and they we didn't wind up investing
in i think 10 of the 12. and the reason is we
00:54:22
took diligence to your point jamal like do you
how do you even know in a board meeting i just
00:54:26
said screw it i'm going to build a diligence team
and we ask people for all their bank statements
00:54:31
and for their itunes account and for their google
analytics and if a company doesn't give those to
00:54:36
us we just know that something's up and we
figure it out before we invest because the
00:54:41
two times we did get dinged on this we had one
where somebody was giving themselves a loan we
00:54:47
did we just basically have a diligence list that
says give us the incorporation docs and all these
00:54:52
bank statements now somebody could fraudulently
change a bank statement that is possible so there
00:54:58
it depends on nobody's people want to go with
the fraud but did you guys ever like enable a
00:55:02
personality that was just like so over the top and
then you're like oh [ __ ] this is actually gonna
00:55:07
this is actually an explosion like it's
a total disaster my top three investments
00:55:13
that's a good point there's a good point right
yeah so because okay so i wrote about this in my
00:55:18
blog post blitz fail about the the sort of how
yeah how founder psychology can actually cause a
00:55:23
company to go off the rails whose benefits the the
thing the thing is that founder founders do need
00:55:30
to be much more aggressive than the average person
you know we like to think that a quality that a
00:55:35
personality trait like aggressiveness there's
like some sort of normal distribution of it
00:55:39
and you kind of want to be you know somewhere in
the middle of the curve and it's actually not true
00:55:44
you want founders to be much more aggressive than
the average person because if they're not they're
00:55:49
just not going to persevere and push hard enough
right and j i mean we saw this with with uber
00:55:54
right i mean tk was a super aggressive personality
the company would not have been as successful how
00:55:59
do you not push that hard and so the curve in
the real world it's not a normal distribution it
00:56:05
looks more like a curve where there are returns
to aggressiveness and they're keeping increasing
00:56:09
returns to it until suddenly the person goes too
far and then they jump the shark and the whole
00:56:14
thing craters can can i say something like you
know having been in the engine room with zuck in
00:56:20
a critical moment zuck was an aggressive guy but
he wasn't over the top and he wasn't just this
00:56:25
like crazy weirdo personality he wasn't enabling
sexual harassment he was doing any of that stuff
00:56:31
would you say yeah he was he was he was he was
an intellectually incisive he was an aggressive
00:56:37
thinker so this is why my reaction to david's
question is i haven't backed [ __ ] because i
00:56:42
just think that that archetype doesn't work zuck
is a very cool analytical personality there are
00:56:47
these founders that you know we um i've heard the
term wild stallion to uh to describe them where
00:56:54
they are you know they're like these these wild
stallions they have tremendous upside but they're
00:56:59
also a little bit you know um wild and unless they
sort of learn yeah i mean they're they're they're
00:57:07
they're they've got a lot of talent right uh the
the talent is the the amount of talent you have is
00:57:13
like the horse you're riding on and some people
are riding on a bronco they got a lot of talent
00:57:17
but it might just i just think the real the real
edge in investing is figuring out what is bluster
00:57:23
and window dressing and show and what is actually
aggressive thinking like john and patrick collison
00:57:29
there's zero bluster with those guys yeah those
guys shop guys that company zero that's gonna be
00:57:35
the most valuable valuable company that's private
right now besides these guys are these guys are
00:57:40
incredible intellectually thoughtful killers
right that's what they are that's true yeah they
00:57:44
out-think everybody but there's also a maturation
process that a lot of founders go through right i
00:57:48
mean the colsons and zuck i think got very mature
very young i think there's other founders that it
00:57:54
takes them a while to get more polished get more
disciplined reign in the you know those emotions
00:58:03
i'm not saying they're fraudulent we don't want
to bet on fraudulent founders but some founders
00:58:07
need to learn how to harness the talent they have
yeah i agree i agree with that and and those are
00:58:14
the ones where it's very hard to know earlier in
their career whether to bet on them or not right
00:58:19
because they they may get it under control or
they may not it's you can't tell at the beginning
00:58:23
here's the analogy we use internally it's like
being professor x and the x-men you could have
00:58:28
a jean grey or a wolverine and like everybody's
got a different superpower but you need to teach
00:58:32
them how to use that superpower so they don't
self-destruct or bifurcate the other way right
00:58:38
they could be magneto right you could you
could go the other way i'm not sure i get all
00:58:42
the references but i hear you well i mean i'm
kind of shocked given how much of a huge nerd
00:58:48
you are that you don't understand the x-men jason
look at that movie i love that movie with the guy
00:58:52
who's made of all the rocks and the little tree
guy who's his buddy that's right guardians of
00:58:57
the galaxy yes i think i think jason's favorite
character is the blob is that the one if that's
00:59:07
what are you talking about how many how
many cubano sandwiches are you having look at your face how many
cro no croquette does sacks
00:59:25
what is your health plan are you uh now that
we're coming out of covert are you running
00:59:30
right what's the point you do look a
little bloated you look like uh you look like a puffed fish oh geez
i i need to lose like 20 pounds
00:59:41
i'm down 12 for my peak of the covered peak i'm
feeling good just get a personal trainer speaking
00:59:46
of covert what the hell is going on in india oh
my god it's scary i thought the whole thing was
00:59:51
we would they were taking hydroxychloroquine
for totally different reasons and this is why
00:59:55
it had some immunity or that it was hot i mean
there was a million reasons of why they were not
00:59:59
going to get hit and then now they're surging
and we have 60 million shots on the shelf
01:00:05
and the number of people getting shots is going
down this is america's chance to use instead of
01:00:11
battleships and nuclear weapons we can use this
covet to shape global policy we should be getting
01:00:18
vaccines to other countries and be once again the
shining light of the entire planet and humanity
01:00:26
why are we not bringing shots to india now we
have so many extras i'm not sure i'm just trying
01:00:31
to pull up the india vax data per day i'm not sure
that there's a um that's as much the issue right
01:00:40
i mean it is scary to watch their their i
mean you're you're our our go-to science guy
01:00:44
freeburg tell us what we're looking at here
on this chart i mean the daily covey cases
01:00:48
are now hitting 250 000. 300 000 a day jason right
now it broke 300 oh my lord and the united states
01:00:56
has gotten down to like 50 60 india 800. india's
now past the peak of the us you know india is
01:01:02
now seeing more cases per day than any country
has seen worldwide during the whole pandemic
01:01:08
at over um you know 300 000 a day right now and
it's um you know it doesn't seem to be letting
01:01:14
up and we're now questioning whether it's testing
that's the limiting factor in terms of reporting
01:01:17
on these cases so it's uh it's pretty nasty
now there's a famous indian politician who
01:01:25
who had been double vaxxed who claims
that he is coveted positive as is his mother and sister and so it's also creating a
little bit of a concern in the market about um
01:01:37
you know getting coveted now he doesn't seem to
be having a severe case um which is you know one
01:01:43
of the the kind of important things to take note
of in vaccination is it's not necessarily binary
01:01:50
but it's certainly making a a lot of creating
a lot of fear uh as a result of his um kind
01:01:55
of public statement about this this isn't just
about cases either um 30 days ago they were at
01:02:02
200 deaths a day and uh i mean tragically they're
at 2100. so it's 10xed in 30 days if it 10x is
01:02:10
again that's 20 000 people a day dying this is
a different level than any other country has
01:02:16
experienced tragic and they don't at the end at
the end of the day the hospital's hospitals to
01:02:21
handle this do they this could become a crisis of
epic proportions at the end of the day a country's
01:02:26
success in battling cove it's going to be about
how fast they can get their population vaccinated
01:02:30
it's very simple right i mean israel was first
they got everyone vaccinated now their cases are
01:02:36
down to almost nothing the us is doing
pretty well although there's some room for concern we were doing you know close to
four million vaccinations a day now we're at like
01:02:45
three three and a half they're starting to slip
a little bit um and that doesn't do with johnson
01:02:51
and johnson right that has to do with people not
showing up for appointments yeah and i think you
01:02:55
got to blame the media a little bit because they
keep writing all these vaccine scare stories about
01:03:00
you know how this person or that person the
vaccine punched through and they got sick
01:03:04
despite getting the vaccine they keep saying they
keep selling all this like you know covet um scary
01:03:10
and porn you know the the the do you know what i
noticed the other day on cnn this is how insincere
01:03:16
and ratings desperate they are when they put up
their covet stats they put up cumulative cases
01:03:22
and cumulative deaths that's what they obsess
on and it's like hey dummies we know what you're
01:03:28
doing here you're trying to scare people you
should show the graph of the debts going down and
01:03:33
then why can't you take your mask off if you're
vaccinated and you're outside let's give it a
01:03:38
reward you were talking about this last week yeah
nate silver had a really good tweet about this he
01:03:42
said that wearing a mask after you're vaccinated
is now it's like the the blue equivalent of the
01:03:47
red magga hat where it's completely performative
to say hey i'm on team blue you know even though
01:03:53
like scientifically it's meaningless i it's like
the press they keep talking about this possibility
01:03:59
that even after you're vaccinated and you could
somehow you know tr keep transmitting the virus
01:04:05
to other people look viruses i mean free
breaking is better than me but viruses do not
01:04:10
have in themselves the machinery for replication
right they have to take over your cells hijack
01:04:15
your cells machinery to replicate themselves
so first they have to infect somebody then
01:04:20
that person gets you know gets the virus starts
producing a lot of it then they start shedding it
01:04:25
if you don't get really sick you're not gonna be
shedding a lot of the virus you're not gonna be
01:04:29
transmitting it to a lot of other people and
you know they talk about this this possibility
01:04:34
as if it's like a real possibility that people
could still be transmitting the virus after
01:04:39
they're vaccinated i mean it's not a statistically
relevant possibility right it comes down to this
01:04:44
interpretation of everything being binary
and the reality is that all of this is on um
01:04:50
you know a a statistical curve or a kind of a
grayscale and you know sax's point is 100 correct
01:04:57
that the probability of someone who's been double
vaccinated getting infected getting infected and
01:05:03
then being infectious in a meaningful way is
so remote um that it is not even worth kind of
01:05:09
considering uh in a way and and being double
vaccinated gives you such a significant
01:05:15
typically right not for everyone right all
immune systems are different and some of
01:05:19
what we we might be seeing is the difference
in kind of how people develop immunity but it
01:05:24
is such a rare case that one could have a severe
infection after getting a you know a vaccination
01:05:31
is such that it it shouldn't even be considered
and kind of you know mentioned as being a reason
01:05:36
for continuing to wear masks and not
gather and not do things and so you know we started out as sacs pointed out and i
think this is such a true and important point
01:05:43
we started out with this like immediate politic
politicization of what's the right thing to do
01:05:48
to reduce the spread of the virus and then that
became the mainstay for that political affiliation
01:05:54
and now the transition of the new world that
we live in where most people are vaccinated
01:05:59
we have a better understanding of the science and
the statistics and the mechanisms of transmission
01:06:03
we hold on and we grasp on to that initiating kind
of belief system that was correct at the time but
01:06:11
isn't correct anymore and it seems so difficult
to get people to shift their mind this kind of
01:06:17
this behavior is an ignorant behavior
and you see it in so many manifestations um uh right now uh in particular with respect to
masks and behavior after vaccination and so on
01:06:27
uh and it's uh it's really brutal to watch um
but we obviously digress a bit from the indian uh
01:06:32
circuit the india circumstance which is a really
nasty one so it looks like why why now and not
01:06:38
a year ago you know it's it's not clear right so
there's um someone uh uh provided a a indication
01:06:44
today that there may be as many as uh somewhere
between 100 and 200 unique variants that we're
01:06:49
seeing emerge in india so there may be a a lot of
interesting very interesting technically but not
01:06:55
obviously for for human life but a lot of dramatic
um variants or significant variants uh that might
01:07:02
be increasing the the infectiousness right now
um and uh and in particular uh you know behavior
01:07:08
has shifted in a way that's enabling you know
some of these transmissions to occur you know
01:07:12
a lot of people let their guard down and so on
in a way that maybe they weren't six months ago
01:07:16
um and uh you know there may be some forced
evolution associated with partial vaccination
01:07:22
totally a theory right now where you know 110
million doses have been given in india so far
01:07:28
so you know in order for a virus to succeed the
viral variants that are going to infect more
01:07:33
likely um you know through a partially transmitted
a partially vaccinated population are the ones
01:07:38
that are winning out so there's a lot of you know
confounding factors here we're not really sure
01:07:43
um but it is uh it is pretty brutal um what is uh
what is going on um i will say like this notion
01:07:50
that vaccination does not prevent uh protection
against variants is not a binary statement either
01:07:57
this is really really important i've been
wanting to say this for a couple of of our shows
01:08:01
when you get this vaccine um what you're doing
is you're training your cells you're giving
01:08:06
yourself the rna to print the spike protein
and that protein is now in your body everyone's
01:08:11
immune system then reacts differently to create
antibodies to that protein the antibodies that
01:08:16
chamoth makes and jason makes and sex makes and
i make are all going to be different but if you
01:08:21
had to pick whose would be better yeah i can tell
you saks is probably going to be worse off but the
01:08:27
most sluggish for sure they're the slowest yeah
but there are there are likely tens of thousands
01:08:32
of novel variants that our b cells will make that
will that will bind to that spike protein and get
01:08:38
rid of it and we will each have many hundreds or
potentially thousands of novel antibodies that our
01:08:42
immune system will make so keep that in mind you
now have a portfolio of antibodies that your body
01:08:47
is producing to that spike protein so now when a
when a covid when a stars cov2 virus shows up in
01:08:53
your body some of those proteins some of those
antibodies are going to be really effective at
01:08:57
getting rid of it some of them are not now the
protein in the sars cov2 virus changes slightly
01:09:03
some of the other antibodies you have are going
to be effective and some of the other ones are not
01:09:07
and it is that portfolio that is um that is going
to change sorry that portfolio that is going to
01:09:12
define your success at fighting off a specific
variant of sars cov2 where the spike protein is
01:09:19
changing slightly with each variant right so these
variants change the composition of the protein
01:09:23
the antibodies that you have are going to be
you know more or less successful depending on
01:09:27
how that variant changes and that's um where there
may be cases where the number of antibodies that
01:09:33
you are producing or the success of the antibodies
that you particularly have are a little bit lower
01:09:37
for a particularly new variant it doesn't
mean that you're going to have an infection
01:09:41
that's going to be a runaway infection in
your body it means that it might take you
01:09:44
longer or it might be a little bit harder for
you to clear that particular variant given the
01:09:49
repertoire of antibodies that you've produced
and that's why this isn't that's why this isn't
01:09:53
binary right it could be that it's like hey
this variant shows up boom instantly i got rid
01:09:57
of it i don't have any infection but someone else
might have like you know maybe a a slight bit of
01:10:02
um uh you know there might be a couple days where
they'll feel a cold as your body's clearing it out
01:10:06
and the measure of this is this um this
neutralizing titer which is the where they
01:10:11
take people's blood with all of their antibodies
in it and they put these different variants in
01:10:15
and they can measure how effective your antibodies
are getting rid of that new variant um and the
01:10:20
the less effective your antibodies are the higher
this this this tighter needs to be and as a result
01:10:26
it could be a little bit longer a little bit
harder for you to get rid of that virus and so
01:10:30
so again like when viral variants start to emerge
in the population and as they kind of take off
01:10:35
um and become more dominant it doesn't mean that
we don't have immunity it means that immunity
01:10:40
might be slightly affected um but not not it's not
one or zero right because you've got hundreds or
01:10:45
thousands of antibodies to fight against covid uh
in your body and i think that's really important
01:10:50
so we should you know while there may be some
variants that might be what we call variance
01:10:53
of concern meaning they can kind of slip away a
little bit from most of the antibodies you have
01:10:58
it doesn't mean you're not going to be able
to fight them off with the antibodies and so
01:11:01
i don't know if that was too technical or
too difficult to understand but i think it's
01:11:04
really important it makes total sense yeah yeah
and and and one thing just to add to that is
01:11:09
is that most of the variants that the press
keeps reporting with alarm that are somehow
01:11:15
that that basically are going to be vaccine
proof they turn out not to be you know that
01:11:20
we they're very shortly uh there comes out a new
article basically saying that the vaccines work
01:11:27
and so the press keeps reporting these isolated
cases as proof of something that's not actually
01:11:32
true yeah i mean this is i just want to give the
press um a kind of i just want an accounting for
01:11:38
the press in the last 30 days one obsessing about
every single shooting and then inspiring more
01:11:46
shootings when you obsess about these mass
shootings you inspire more of them it is a
01:11:50
proven fact it is inducing people to do this more
it's not exactly correlated but there is proof
01:11:58
about this same thing with suicides that's why we
don't cover any young people killing themselves
01:12:02
in the bay area in a certain town that we all know
had a rash of them or we don't cover suicides on
01:12:08
the golden gate bridge anymore because when they
used to cover them and put it on the cover of the
01:12:12
chronicle two more people would jump off the next
week number two they were obsessing about riots i
01:12:19
mean i don't know if you turned on the tv during
the deliberations they were absolutely gleeful
01:12:25
about the potential of trouble happening and
that of course incense more people to go out
01:12:32
and see what's going on because you're going
to get on tv and because other people are
01:12:36
doing it and humans model other humans and then
finally with the goddamn johnson and johnson
01:12:42
eight people have blood cuts nobody died am
i correct in that and the one person died one
01:12:47
person died okay so we don't even know and
then they obsess about that for days like
01:12:53
you can't cover these things wall to wall and
not think that they you don't have culpability
01:12:58
the cnns the foxes et cetera you're obsessing
over these things and it's scaring people to not
01:13:03
take vaccines it's in sending people who are crazy
you're dog whistling crazy people to go get a gun
01:13:08
and to use that as a way to get famous and you're
doing the same thing you know with it with these
01:13:14
um you know riots in the streets we're all in the
opinion business um that's the but but the problem
01:13:22
is when they just when they don't just hype things
but they actually give you factually incorrect
01:13:26
information because you know it's they're trying
to scare people into getting higher ratings you
01:13:31
know fear important it's often framing david which
is a different thing than lying about statistics
01:13:36
they would say we're not lying about the
statistics that's how many people died of covid
01:13:40
but what they're doing is they're framing the
cumulative number to make you scared today 400
01:13:44
000 people have died from cove but it's like no
over 14 months 400 people thousand have covered
01:13:49
700 people died today and that's the lowest number
since november but that wouldn't get more people
01:13:54
to tune in i want to tell you guys something
it's frustrating yeah uh i'm vaccinated um
01:14:02
i want to see you i want to hug you keep your
shirt on it's uh it's 5 30 p.m and i've been
01:14:09
uh working since 5 00 a.m this morning oh is
that what that look is exactly exhausted i came
01:14:16
back from easter vacation guys and i've been
up between either at 5 00 a.m or 6 a.m every
01:14:22
[ __ ] you're working hard you're working hard i
am grinding but i am tired all right let's wrap
01:14:28
here when we as we wrap what what's going on just
because people have been asking um what's going
01:14:32
on with the scc and spax and and just some more
reporting or something because i was watching
01:14:37
cnbc and they said hey you're doing everything
right but there's a lot of other people doing
01:14:41
things wrong explain to us what's going on uh it's
i mean it's a it's a very specific um accounting
01:14:47
issue which is that some space many specs and in
fact many companies let's just put it that way not
01:14:52
just backs but many companies use warrants and the
prevailing guidance on certain warrants was that
01:14:58
they were equity and basically that gets put into
a balance sheet statement where you have equities
01:15:04
assets and liabilities and you know it sits on
one side and basically what they said was they
01:15:10
issued some refined guidance that said actually
in these specific cases these should be really
01:15:14
listed as liabilities so then it needs to move
from this column to that column but when that
01:15:19
when you do that you go through you know a bunch
of cascading implications and effects and you know
01:15:24
revisions and restatements and so that's what
the that's what the entire securities industry
01:15:29
is dealing with right now which was um you know
this guidance by the sec and the implications so
01:15:34
that was on the 12th i mean just so you know today
we just filed the updated um all of our updated
01:15:39
docs plus the updated s4 for sofi so we were able
to work around the clock and just kind of get it
01:15:44
done and hopefully what we've also done is create
a a bit of a way forward and a path that other
01:15:49
folks can use to kind of like accelerate their
their progress but um it's definitely created um
01:15:55
a ton of work um but uh but we're i think
we're i think we found the right answer so
01:16:00
ultimately good for you because you want to see
it's buttoned up yeah and also i think like the
01:16:06
simpler path forward so i mean if you just think
about capital market stability for a moment like
01:16:10
warrant coverage should probably go away number
one right so take all the warrants to zero
01:16:14
second thing that should happen is that uh you
know i think this is an opportunity to take a
01:16:18
step back and figure out how to really make sure
that the spak sponsors are of the highest quality
01:16:22
somebody told me this incredible thing today i am
one of five groups that put up any money when we
01:16:28
do a pipe in our deals meaning he said to me 95
of sponsors put up literally a zero in the game
01:16:35
z row and so of course you're going to have you
know extremely loose underwriting requirements
01:16:40
if that's the case and so you know the idea that
i'm thinking about uh which someone proposed to
01:16:45
me which i think is very clever is this idea
that you know you earn more of the promote uh
01:16:50
more money you put up right so for example like
you know um you know in so far i think we put in
01:16:56
275 million dollars um so i mean we really you
know um that's a meaningful commitment and it
01:17:04
closes the gap between you know what your equity
is issued at and what investors are buying at
01:17:10
and that's very healthy right and so i think
there's all these mechanisms that will clean
01:17:14
up the stock market we need to have a much more
refined criteria to allow people to be sponsors
01:17:23
and we need to make sponsors in a position where
they must put in money so that they actually do
01:17:29
the work if you get something for free let's be
honest you won't do the work if you're forced
01:17:34
to write a check so you're gonna really think
about it show me an incentive i'll show you
01:17:37
the outcome and this happened on angel list where
in the beginning days of angel list you had some
01:17:43
angels quote unquote who didn't have any money so
they put a thousand or two thousand into a deal
01:17:48
then they would have five hundred thousand come
behind them and so you had this 500 to one ratio
01:17:53
of dollars to skin in the game
and it was like well why wouldn't a syndicate lead put every company out there and
not even put it you know they have no skill which
01:18:02
is why when you have a venture fund i don't
know what they expect us to put in typically
01:18:06
well the problem two funds are one to two percent
i was twenty five percent well one to two percent
01:18:11
is it can be pretty significant if you're doing a
fund every three years i'm doing this and it's it
01:18:15
winds up being millions of dollars for me but i'm
happy to do it because i believe in my own ability
01:18:19
all right as we wrap anybody have a plug or
anything they want to let people know about oh i
01:18:23
i want to talk about this one little thing i just
uh not to talk about it but i would like to tell
01:18:27
you guys to read it because it is so interesting
basically like european soccer tried to incite
01:18:33
a revolt where like the top teams across all the
different leagues came together to try to create a
01:18:39
super league but it ended up like they were like
a band of evil villains and like fans erupted
01:18:44
everybody erupted and then you know it
existed for 24 hours but in that 24 hours
01:18:50
it looked like a complete rewriting of sports
and sports like uh laws and you know um
01:18:57
it was an incredible thing there's an article
in the new york times i'll post it in here and
01:19:00
uh folks want to read it it's really really [ __ ]
funny and that will be on season two of ted lasso
01:19:06
i don't know if you guys watched tim cook's um
keynote this week with the new imacs which are
01:19:12
really beautiful um he was so excited about
ted lasso and ted last was a great show but
01:19:18
i mean it literally is the the apple uh
show did anybody you guys see ted lasso yet
01:19:23
what is it the television show you guys haven't
seen ted lasso the tv show yet is it on nbc or
01:19:28
cbs or what channel what channel is it on tv plus
whatever that is channel 6 is it on channel 6 tv
01:19:34
plus you got to go on your apple tv and then find
an apple tv plus on your tv and you'll find it
01:19:40
eventually it's one of their paid you know they
have their own netflix competitor called apple
01:19:45
tv plus so on your phone if you type apple
tv you'll have apple tv tvs i have apple tvs
01:19:51
behind my tv no no but there's apple tv plus
which is their netflix so this is a better is
01:19:56
it a better apple tv no no no it's content
it's a content subscription you could have
01:20:02
they just they screwed that part up um hey shout
out um i just wanted to get uh sorry so who's
01:20:08
who's ted lasso ted lasso is a jason sedakis
comedy that is incredibly heartwarming about
01:20:15
a really heartwarming joyful kind person who goes
from america to the uk to become a soccer coach
01:20:23
yeah it's really great it sounds boring that's
something he's really kind you would hate it david
01:20:32
should watch you should watch you should
watch gamora on hbo i started it yeah yeah
01:20:39
i watched the first episode i was like whoa here
we go it is so super and also you should watch
01:20:44
it in the original language because it's not
really italian it's like neapolitan and so like
01:20:49
you know i can catch and understand maybe
20 of the words and i said tonight i said
01:20:53
what language is she's like i had no
idea i watched it in italian subtitles so it was it was beaut it's beautiful beautiful
it's so intense it's like the wire but like i mean
01:21:04
you know set in italy it's incredible uh
afterlife is also good ricky gervais if you
01:21:08
want something cynical and heartwarming that's
for you sex love you guys love you saks i'll see
01:21:13
you so what can you just come back to the bay
area so we can play poker baby yeah come back
01:21:18
why don't you just what are we doing
to um miami are we going to miami i'm going to i'm going on a trip i'll just
leave it at that i'll talk to you guys
01:21:37
that term is more associated
with bail and in jail than it is jason you are released on your own
recognizance that's what i'm talking about
01:21:48
you want to do reconnaissance
reconnaissance that's what i said reconnaissance yeah i think you'll be wearing
an ankle bracelet on your recognizance
01:21:59
actually no they don't they
don't fit on his ankles to make it a good episode for jason it'll be a
cankle bracelet what are you talking about my
01:22:12
god what do you is it called a bracelet if your
calf and your ankle are the same circumference
01:22:19
put this way if sax sacks is wearing
two of them right now you'd never know love your besties bye-bye
we'll see you all next time
01:22:46
and they've just gone crazy with it oh your feet we need to get mercies