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all right everybody Welcome to the number one podcast in the world I am your boy J Cal the world's greatest
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moderator executive producer for life with me again on the all-in podcast is the Rainman David Sachs yeah looking
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healthy looking good looking trim the hair is great how you feeling brother good good haircut good haircut looks
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good now do you go to the barber The Stylist they come to you everybody wants to know they come to me yeah course they
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do of course and then with us of course your sulan of science he loves those vegetables his
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name is David Friedberg uh from Burkle to the Bay our boy how you doing there brother are you living the lake
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lifestyle you have a nice restful August loving loving the outdoors good for you
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you look so healthy speaking of looking healthy celebrated birthday with Jason yesterday happy 39th Jason
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happy 39th Jason we did a long mountain bike ride with our other buddy Z and had a little family Barbecue last
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night everyone had a good time would you do a little portella mushrooms what did
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you do you put a little zucchini on the grill let's just say I show up with my own food to a barbecue absolutely you do
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all right and everybody's favorite the chairman dictator chamath poly haaa you love him you hate him but you can't
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ignore him how you do look at the number of buttons here you got the M collar on
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and I don't think any of those buttons are butt none of them are button none of them are but you became a meme once
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again once again the Allen Podcast creating memes you were swirling you were swirling a little white wine last
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week you were in the arena and uh I'm putting up all the numbers going macro and you're swirling wine the the
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audience loved it uh what's going on today do you have a bottle that was a 2019 K
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Bosco really really great one can you tell us the uh flavor profile the notes what did you what did you get as you
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were swirling there was some Plum there's a little TR there oh the PO and Beres little poisonberry Fant little
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moth it was a a touch of inflation with a hint of unemployment there he goes I don't want
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to be political let your winners [Music] ride [Music] David we open source it to the fans and
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they've just gone crazy with Love Queen of well you know boys I had a big week I
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had a big week this week you know I'm at the lake still but uh I made a little trip to Silicon Valley I was uh hanging
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out with ruoff at seoa and as I'm prone to do I love to go to Bucks you guys been to Bucks before in Woodside yeah I
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went one a couple years and I and I've never been back since okay well it's my favorite place to get breakfast or get
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my little Tuna Melt I've been going there for ages it's a little bit of a legendary place where Steve jinson made
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the Hotmail investment the Tesla investment all kinds of famous stuff happens bucks well it's where PayPal got
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its first funding round where John Malloy from Nokia Ventures beamed the money to Peter and Max at at bucks on a
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Palm Pilot on a PM pilot way back in 1999 yeah for those people who don't know PM pilot was the uh most Innovative
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and poorly designed product nickname in college my god well done good so good but you know I'm
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wearing my buck hat and I got my buck menu here boys it it was like a pinnacle of my
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career I've been waiting for this if you go to bucks and you look at the sides you can get your crispy brussels sprouts
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there freeberg get your sweet potato fries but there it is J Cal's onion rings are now on the menu at bucks I
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have hit the big leagues folks wait is that is that real did you really get that I did I'm the first person
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I I love a good tuna melt it's a weird sandwich but they do it so great there and I keep asking for onion rings for
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like a decade and then we don't do ons we don't do onion rings two yeah and so suddenly you know that the team there
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comes out they say Jal we have two different types of onion rinks please pick which one you like best I went with
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the panko crusted freeberg these are for you delicious panko crusted and uh they
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put them on the menu so I was so touched I just while we're on while we're on sandwiches sure you know what I love
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what do you a Reuben made with turkey breast instead of pamies have you guys ever had a turkey Reuben I haven't it's
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incredible because I think a pastrami Reuben is a little too much it just feels too sclerotic too fat like your
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arteries are yeah it's terrible but like you get a good Thousand Island sauce and
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like some SAU Crow and some cheese it's amazing I took my I took when I was in New York a couple weeks ago I took my
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daughter to cats's Deli I took her on a little tour of the Lowry side and we made a stop at cat's what's your
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favorite Sammy there Max's Deli by the way has a turkey mov Max why did you do a paid promo for bucks at
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Woodside I don't they gave you a hat every time they sell one of those uh onion rings they I get $1 on my account
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there t the gri Never Ends get us only podcast to sell onion rings perfect okay I mean you're selling potatoes and
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shamat is Laur Piana to sell onion rings onion rings and Laura Piana what we go high we go
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low they go high we go low they go low we go high all right listen Tat's big old outcome is on the table the doj is
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looking at breaking up Google this is huge news in our industry last week we talked about the ruling that Google had
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an illegal Monopoly in Search and advertising the case was brought by Trump's doj back in
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2020 shamat said two outcomes are possible little low Big O little low consent degree you know like Microsoft
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did back in 2000 with the Internet Explorer decision the Big O we didn't think that was a major
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possibility but here we are Google getting broken broken up doj is going Big O on Wednesday Bloomberg reported
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the doj is considering a breakup according to the article most likely breakup targets are Android OS Google
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Chrome and AdWords okay last time the Government tried to break up a monopoly was 20 years ago when they tried and
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fail to dismantle Microsoft we know how that's gone that company's doing great so let's talk about it aside from search
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and advertising there's kind of Five Pillars at Google and you're a former googler so we'll go to you first
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freeberg I think cloud 40 billion in Revenue grow 30 % YouTube 34 billion growing 15% little volatile because it's
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advertising that doesn't include like premium YouTube TV and that stuff but oh my Lord uh YouTube is up to 2.7 billion
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monthly active users World population's 8.2 so quite significant Netflix has 38 billion in Revenue they're worth almost
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300 billion so that's an interesting corollary you got weo doing 50,000 PID trips a week now 2.5 million a year and
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that's growing uh quite nicely you got Android right they don't disclose Revenue you got the G Suite so
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let's start with you freeberg and then I'll go to you chth because you made the prediction what do you think would
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be a creative or uh generally increase the market cap and be something that Google would be happy with and the
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government would be happy with if you had to like maybe shed one or two properties what what's a possible
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outcome here and your thoughts broadly on this I'll just start by commenting I'm not really
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sure what the improve movement to Consumer pricing or competition would be in different breakup scenarios i'
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really like to understand the doj's analysis on that how does breaking up one of these things improve the uh the
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consumer experience I could see the case for Android because Android defaults to
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Google search but again Android's an open sourced operating system and so everyone has their own fork or a lot of
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the handset manufacturers will have their own Fork of Android obviously the Google Fork defaults to Google search so
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it benefits Google services quite well I think that would be an analysis that the
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doj would really have to kind of prove out that there's real uh anti-competition associated with
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Google's influence over the open source Android operating system Fork that they manage and license out I think
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understanding that would be good I do think that there's a lot of value unlock in YouTube so if Google were to just
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generally spin out YouTube that is probably a business that on its own would attract an
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investor base that might otherwise not want to get into the conglomerate and you know there's always this notion of
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what's called a conglomerate discount when you put a lot of different businesses together the businesses in
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aggregate get valued less than the individual Parts would would be valued on their own because different investors
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interested in a business investment thesis would like to bet on cloud would like to bet on YouTube would like to bet
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on AI and so and and so each one of these kind of like segments if they can be unlocked can actually be value
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creating in terms of overall market cap the challenge is the way YouTube's infrastructure operates it operates on
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shared infrastructure with the rest of Google services so does cloud so does search so does AdWords so there's one
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common Cloud infrastructure that everything runs on and then there's um one common Advertiser pool there are
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dedicated advertising salespeople within YouTube but there's also dedicated shared infrastructure on Advertising
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between YouTube and search and AdSense and so on and there's ad sales teams that actually can sell across search and
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thirdparty publisher sites and YouTube and so you know breaking up those shared teams becomes a little more technically
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difficult but YouTube certainly seems like an unlock the question is what happens with all the infrastructure
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layer does that go with cloud and if it does then YouTube AdWords and search all
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become customers of cloud so that might be one way that this could work but I think netn net if were to happen there
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could be a lot of um upside in the market cap I'll also say it just feels like the tenor of all of this is anti
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success and not anti-competition and anything that's kind of successful or big is automatically deemed to be a
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monopoly and I think we really have to kind of understand how are consumers and the market for competition being
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affected by having all these things together and that's what should really be focused on and studied not just the
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fact that something is big and successful we'll see how that all plays out all right shath you predicted the
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possibility of a big O here we are your thoughts on what this might look like chances of it happening and then just
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maybe if you're interested in the uh anti- suuccess approach here or do you think this is more you know valid
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criticism of Google's massive search Monopoly well when I pain Ed that series of
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outcomes just kind of like looking forward I really didn't think that this big O outcome was a very large
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probability I was like you know I would have handicapped that at single digit percentages and I think the reason why
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the doj leaked this thing and floated this trial balloon essentially is in part I didn't weigh enough what saxs was
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talking about which is that there really is a massive bipartisan amount of support against Google Now it cuts on
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two different dimensions I think that there is one dimension which is more Republican oriented which is just about
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freedom of speech and putting your thumb on the scale but if you take the Democratic point of view it's more the
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anti successful vein that freeberg just mentioned the thing is though that it'll
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make strange bed fellows because it unites both sides against pushing for a big outcome if you go back to the last
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big outcome that we had in antitrust law which was AT&T in the 70s and 80s that lawsuit was a decade long right
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and essentially what happened was when it looked like AT&T was going to lose the case they were the ones that
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proposed splitting itself up and so I think that it's this is going to start this really interesting chess game here
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where obviously Google has to appeal and fight this but if it looks like the political pressure is going to build and
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the courts aren't going to let them off the hook and have a little o outcome probably the best thing to do is
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for Google to initiate it themselves because they can answer a lot of the questions that freedberg just raised and
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they'll do it in a way where going back to the people that matter along with the
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customers and the employees are the sh shareholders you can do it in a way where the sum of the parts will be
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greater than the value today of Google so I think that there's a shareholder win it needs to be offered by Google and
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then negotiated but to be really honest with you Jason when I when I kind of was
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thinking about it last week I really thought this was a single digit probability I still don't think it's a
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single TI of probability and if it grows it's the most meaningful thing that's happened in technology quite
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honestly all right saaks from a business perspective cool saaks your thoughts I agree with chamath that Google has the
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opportunity to do something really interesting here which is get ahead of the curve and break itself up before the
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political system forces that onto it and the advantage of doing that is that it could partition the company in ways that
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are economically smart the big categories would be search advertising and YouTube and I think that would have
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two big economic benefits for shareholders one is you unlock value by deong glomera like freeberg was saying
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second once you break up the company into these pieces there's less places for employees who aren't doing anything
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to hide you know for all this bureaucracy to hide I mean look Google is famous for employees who don't do
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anything right the guys sitting on the roof suning themselves all day if you break up the company into three or four
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smaller companies right there's just way less room for people to hide and I think
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that they could all be leaner more efficient operations and that would ACR to the benefit of of shareholders so I
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think that would make a lot of sense and then furthermore I guess a third point is that you forall the possibility of
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the government doing something that could actually be very harmful and you know the the piece here is that I guess
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the doj is talking about spinning up Android and Chrome and I think it's worth pointing out that
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those aren't really businesses in and of themselves the reason why Google developed Android and chrome was to
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prevent anybody from getting Upstream of them right they saw what Microsoft did in terms of capturing the operating
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system and then capturing the browser and they didn't want to potentially allow Microsoft or anyone else to
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essentially win The High Ground capture The High Ground Upstream of them and be able to divert traffic away from search
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to their own search engine or someone else's search engin so they began the strategy of commoditizing those layers
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of the stack and it worked brilliantly I mean Android and chrome have become very
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popular and it guarantees that nobody else can get Upstream of them and then dis remediate them but the problem is if
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those things get spun out and have to become businesses on their own how would they function as businesses it's not
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clear to me that there's an obvious strategy there I would like to ask freeberg freeberg do you do you see a
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way that Chrome and Android could be spun out in and become viable businesses on their own or do you agree that they
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were essentially created to commoditize layers of the stack rather than become profitable businesses on their own yeah
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so they they were both created to avoid third parties blocking access to Google search that's why they were both started
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and remember Sundar was the product manager on Chrome originally that was his big kind of product that he ran for
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quite some time so Android was all about making sure that the handset manufacturers didn't
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basically default consumers to do search and use the internet in a way that would
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disadvantage Google so Google said you know what just like Zuck is doing currently with llama Google said let's
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make an open- sourced mobile operating system that's better than any other mobile operating
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system and we'll make sure that consumers have choice and they have the ability to go where they want to go and
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it's not just defaulted by the Telos or the handset manufacturers so that was the reason and obviously they ended up
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making their own Fork of Android which is the most popular Fork of Android that has Google as a default search engine so
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yeah and and they get license fees from that but fundamentally it's really just in service of making sure that people go
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to Google Search so where that ends up sitting in a split up company I have no idea and chrome similarly you know
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Google originally supported Firefox and gave a lot of money to Firefox and then Firefox just wasn't moving fast enough
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so Google started hiring Firefox engine and built Chrome and house as a way to keep Netscape and Internet Explorer from
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blocking access to Google search and defaulting uh and they built a default to Google search obviously what do you
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think jao you know I I I have a long relationship with Google um as a content creator and they they do have a massive
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Monopoly in search that's absolutely true and the justice department I think is um well within their rights to to
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take a deep dive on that they don't have it in ads if you look at the competition
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for Google in advertising you got met Tik Tok and Amazon which have very very significant advertising businesses and
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then like a bunch of new players um which are referred to basically as the shopping cart ad networks that's Uber
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instacart door Dash Etc and so when you look at this it's it's kind of paradoxical that it really does rhyme
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with what happened with Microsoft they're two decades late on this the the search Monopoly has been squeezed for
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every dollar and to build every subcomponent of of Google's Monopoly flights shopping all of these
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things put into Google search and put at the top above organic search has basically killed hundreds hundreds of
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startups over the decades and so I actually don't think this is going to do much if they do a breakup the easy
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solution for Google and I agree with I think people who said that here is to just spin out YouTube and weo those who
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are perfect Standalone businesses yeah there's some backend stuff but like you said freeberg they could become
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customers of the ad network of the cloud for some number of years but YouTube and
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weo those would be like a $400 billion company a $50 billion company and those are right in the Zeitgeist of the future
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and what advertisers want so I I think offering those two up would unlock massive shareholder value the most
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damaging one would be Android if they force them to sell Android that is going to be massively damaging because an
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independent Android company could then you know give their search default to bang and Microsoft would happily
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not good not good they they must in order to to capture maximum economic value they auction it right and so I
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mean Los go Fork of Android right correct and so that is the dominant player and then they have handsets so
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that that worth how much is that worth because maybe that does make Android a viable business on its own you know it
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would be it's probably 30 billion of Revenue a year okay great so let's do it I take back what I said it can survive
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as an independent business Chrome can't right Chrome can't but maybe Android and
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Chrome go together that would be incredibly damaging to Google that's the most damaging the easiest is YouTube and
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wayo in this whole mix but I'll give you the wild card in all of this think about
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the math sorry just real quick on think about the math on that so let's say it spins out and it generates 30 billion of
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Revenue a year and Google owns the majority of it and eventually they'll sell it down but that business will be
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valued on the money that Google's paying so Google will make that Equity value back if they own the shares and they
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will lose onethird of their revenue to that new company now of course they'll get it back in the equity but then they
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don't have it because about a third of searches are mobile now and that's increasing the big wild card and all
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this is Apple um when I was doing Mahalo which was a human powered search in over
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10 years ago that's Theo back I emailed it to Steve Jobs he opened it he played with it a bunch I won't talk about
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anything else in that regard but they had a search Project in the works when Steve Jobs was in charge over there they
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were looking at search because he had such an ax to grind with Eric Schmidt because they launched
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Android and he kicked Eric Schmidt off the board and there was a lot of hand ringing there I think apple is and i'
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I've heard this from folks around Apple that they're looking at search again and
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there's duck. go and there's a company called Brave that has their own search engine and search API that's gotten very
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popular I believe Apple's going to launch their own search engine and compete heads up with Google and so I
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think that's going to be the very interesting thing that happens in this market the question then becomes
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off does this distract management to a level like it did Microsoft and you have a lost decade and it takes their eyes
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off the prize of well Ai No and the reason I say no is that I think that people's reaction to these
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things become more sophisticated in time because folks go back and actually study
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what happened in the Mell situation AT&T in the rbox what happened in Microsoft and so I
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suspect that they know how to Shield the rank and file employee from whatever is
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going to happen so I I think that that's less likely referring to management you
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know like do you think it distur do you think it distracts management from running the business
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Jamal I don't think so either because I think that these things get put into a very tight group of
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people mostly lawyers who then go and deal with this issue I think that there's an acute moment where if they
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think that they're going to lose an appeal or that appeal is not going to get heard then yeah I do think
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management and the board are brought together and the again if if if history is a guide they should want to propose
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the terms on which they break their own company up because I think if the government tries to decide there's going
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to be so much imprecision that they'll break the and I think that would be a shame because I mean look take a step
00:23:03
back the breaking up of Google is great for competition and for startups but let's not forget Google is an incredible
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company that has created enormous amounts of good they have done way more good than bad way more like three four
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five orders of magnitude more good than bad and to break a company like that I think would be a really bad
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outcome from a competitive Dynamics perspective and Game Theory it's pretty reasonable to hobble them that's why I
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think the small o outcome is much more palatable and seems more fair to me a breakup is a really Draconian action and
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I'm not sure that when you look at Google versus AT&T and the and the baby bells I don't think it's anywhere near
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the same but if there's the political will they'll be able to craft and change some of the laws that allow these folks
00:24:02
to just keep going after them and if that happens I think it's going to be really important for Google to define
00:24:08
the terms of their own breakup I want to just underline what Cham said real quick
00:24:12
being big can be very good in the sense that it can drive an ability to invest in Innovation that is not possible
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without the scale and the significant cash flow that's being generated by being that big and AT&T is a great
00:24:27
example Labs so the way AT&T was set up is there was all the the local telephone
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companies under this this Bell system that AT&T owned and then Western Electric was the company that
00:24:38
manufactured all the telephone equipment that was put into the uh the telephone system and then B Labs was the third
00:24:44
entity it was the research arm and all that they did at Bell Labs was do research and they were fully funded they
00:24:50
had all this cash flow pouring into them so they could discover and work on and invent whatever they wanted with that
00:24:56
capital B Labs is so insane if you go if you guys haven't read any of the books on Bell labs and what was discovered
00:25:02
there and how it operated it truly is like the the most Innovative Center ever in human history but they invented like
00:25:09
antenna arrays they invented microwaves they invented radar they invented the transistor they invented information
00:25:15
Theory which was the basis for everything in the internet there was even some efforts to try and invent a
00:25:22
nuclear bomb before the Manhattan Project started they invented integrated circuits and on and on and on and on on
00:25:28
and that's because they could invest all this money in doing this research that would have been very difficult for a
00:25:33
small startup or a company that's trying to grow and is barely profitable to be able to do at Google they've invested
00:25:38
billions of dollars in weo and I think as we all know weo really was if not the leader but the inspiration for a whole
00:25:44
generation of autonomous driving that ultimately will come to Market and will really transform our lives in a
00:25:50
meaningful way in the same way Amazon and Microsoft and meta have all invested tens of billions of dollars in
00:25:56
Innovation look at what Zuck is doing at meta with the open sourcing of the Llama
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models it's incredible that would have never been possible if you had a small company that was trying to get
00:26:06
profitable so I just want to highlight like these businesses just because they're big and successful doesn't
00:26:11
necessarily mean that they're stifling innovation in fact they may be accelerating Innovation and enabling
00:26:16
progress I'm just pointing out that the cash flows that are being generated and the way they're investing those cash
00:26:21
flows is pretty pretty impressive and we lose that if we end up going after every
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big company just because they're big and saying hey we should take away their ability to do this I'm going to take the
00:26:31
other side of that I think that what they can do with their massive amount of power is destructive to competition in
00:26:38
the marketplace if you look at self-driving we have had tens of billions of dollars invested without weo
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it would have been just fine there have been so much money Tesla Uber you know uh Cruise GM there's plenty of people
00:26:52
out there there's plenty of capital out there from around the world and I think when these companies and Facebook Face's
00:26:58
one I think proves my point what you're saying here is I think it would be better that you didn't have these
00:27:04
companies that could put $20 billion into something and you had 50 startups go after it rather than these giant
00:27:10
companies just steal it and overpower them flooding them with capital it makes the world less Dynamic that Zuck can
00:27:15
just and Google can keep taking the next category from the marketplace go ahead saak you had a point if you break Google
00:27:23
up from a conglomerate of let's call it for monopolies or duopolies or with extraordinary Market power into four
00:27:30
separate companies they're still going to be generating extraordinary profits and those could still be invested in a
00:27:35
weo so I don't know that it stops The Innovation our workshopping this issue has pretty much convinced me that it
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should be four companies search advertising you YouTube and Android because I think Android could be a stain
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low business because of the value of the search cloud is in search or advertising that's got to be figured out
00:27:56
I don't know the answer to that yeah so I mean I guess it's a negotiation now maybe they put up one or two to be spun
00:28:01
out and and then the negotiation happens and who knows you could have regime change in Washington okay let's keep
00:28:07
moving through this incredibly juicy docket Starbucks CEO is out after a year and a half of
00:28:13
underperformance star B's CEO laxman narim stepped down uh after just 16 months on the job uh I'll break down
00:28:21
what went wrong and get your reaction to all this I know you have some strong feelings on it freeberg as well earlier
00:28:26
this week Starbucks shares were down 20% year to date compared to the S&P up 12%
00:28:31
companies are two straight quarters of declining Revenue the definition of recession in fact they've had to raise
00:28:36
prices massively due to inflation that has annoyed customers and customers have been IR about the weight which has been
00:28:44
caused by two things one they have a broken Staffing algorithm that's led to massive understaffing and then the app
00:28:50
has become the starbz app is incredibly complex and you can order ridiculous strengths that's causing a massive why
00:28:58
do you keep saying star bees it's what the kids call it it's what the kids call it stares oh that's part of the
00:29:04
problem to this that's yeah and they've added like all these like fruity drinks with and stuff
00:29:11
that would be like along the Boba lines that have made have become incredibly popular with Millennials and gen
00:29:16
Z so anyway laxman was the uh handpick successor by Howard Schultz and Schultz helped prep and train laxman but he's
00:29:25
been super critical of him recently kind of like the Bob Bob chapek relationship
00:29:29
we saw play out in 2022 over at Disney Brian nickoll the currency of chipot is going to take over at the end of August
00:29:36
investors love this move shares jumped 25% on Tuesday what you sorry what what did you call it it's called Chipotle
00:29:43
normal people call itan the current CEO of chipot Chipotle Chipotle CEO of Chipotle no
00:29:51
Chipotle Chipotle Chipotle chipot Chipotle don't need it this place anyway jump 25% on Tuesday lar sing day
00:30:03
increase y y meanwhile Chipotle dropped 8% Nicole is on a heater when he switches teams the odds go with him and
00:30:10
Starbucks has a bunch of uh activist investors who are winning massively as part of putting pressure on this
00:30:16
freeberg Starbucks and Nike both iconic Global Brands both have faltered what's your
00:30:22
take well the one argument is there's a Founder Le problem here which is when the founder steps out and Professional
00:30:29
Management takes over and you have the same expectations that you had when the founder was leading things go um
00:30:37
sideways but Starbucks faces many more kind of macroeconomic challenges Nick if you pull up Starbucks financial report
00:30:45
so here you can see that their uh net revenue growth was only 1% year-over-year but their operating
00:30:51
margin's been on the decline so they have not really been able to boost their operating margin very much in the past 5
00:30:57
years so while they've raised prices they've had a really hard time making more money and that's because the cost
00:31:04
of food and the cost of Labor and the cost of rent and the capital expenditures needed to upgrade stores
00:31:11
has far exceeded the ability for them to grow revenue and compete and now revenue
00:31:16
is flatlining because consumers are getting tapped out with respect to how much they can spend and there's only so
00:31:22
much Innovation you can really do to charge more get people to come in the store more and drive up Revenue Brian
00:31:29
nickel has an incredible reputation prior to Chipotle he ran Taco Bell and he ran Taco Bell for several
00:31:37
years and made it one of the most profitable qsr Quick Serve restaurants in the world he did this by focusing on
00:31:44
every nickel he is notorious for being a Cost Cutter for being an efficiency driver for being a productivity Hound he
00:31:52
goes into the business and he figures out every step in the supply chain every step of the operating activities of the
00:31:57
employee in the stores and figures out ways to make sure did you say that Brian nickel focuses on every nickel was that
00:32:05
say that want to say it he did say it he say don't interrupt him he doesn't like
00:32:11
to be interrupted yeah no no it's good sorry keep going that was good and um and so he was recruited heavily I don't
00:32:18
know if you guys remember Chipotle's founder was running Chipotle and at the time there was a lot of investor
00:32:22
activism around Chipotle because they were wasting money like no one's business the guy had a private J he was
00:32:28
flying his management team back and forth between Denver and New York they were spending money on crazy projects
00:32:34
and the board fired the CEO founder of Chipotle brought in nickel nickel came in and made Chipotle an incredibly
00:32:40
profitable growing business and the expectation is he'll come and do the same here that maybe over the years
00:32:45
Starbucks's success has bred laziness Starbucks's success has bred fat slowness productivity Decline and that
00:32:55
this guy is the right guy to come in and find all all the nickels and Brian Nicholls is probably the right guy which
00:33:00
is why you're seeing the stock kind of rally as hard as it has saaks or chamat anybody have strong feelings here yeah I
00:33:06
would just add something here which is I I do think that macroeconomic forces played a huge role here we've seen that
00:33:12
we have had tremendous amount of inflation over the last few years and Starbucks has gotten more expensive and
00:33:18
if you're a worker whose wages have not kept up with inflation do you really want to spend 10 15 bucks on a cup of
00:33:25
coffee that I mean it's pretty fancy cup of coffee I'm not saying it's it's not but when you could just go to your
00:33:31
Commissary at work and pour yourself a cup of coffee for free do you really want to work roughly an hour every day
00:33:37
to pay for your coffee fix and I think more and more consumers are just saying that this is a luxury good I'm looking
00:33:45
at cut cost when I go to the grocery store and buy groceries they're 30% more expensive than they were a few years ago
00:33:52
I got a cut somewhere and a luxury cup of coffee just seems like a really easy place to cut so I think that's a huge
00:33:58
part of this and I don't know how Brian Nichols going to fix that it's a macroeconomic force
00:34:03
Jam I have a couple the first is that I think Starbucks is actually an incredible brand and it's actually a
00:34:10
really good business and the mistakes here have nothing to do with the product per se
00:34:18
meaning Chipotle if you remember someone got poisoned there there was like botulism the chicken was bad so there
00:34:25
was a core product problem but that's not the case here if you unpack what Starbucks is I
00:34:34
think that they are a premium product and that's reinforced by what Sac said which is they price in such a way
00:34:43
because they believe that they are a premium product the problem is they are not a premium brand and the difference
00:34:50
is Hermes as an example is a premium brand they can charge whatever they want under all weather conditions they have
00:34:58
pricing power so if their inputs go up they can make sure they maintain margin by changing the final price that the
00:35:05
customer paid Starbucks doesn't have that power so they charge like a premium product but they're not a premium brand
00:35:12
that has pricing power and that's why you've seen this compression so very specifically when the new CEO came in he
00:35:21
I think made one important mistake which is he came in on the of a very Rosy set of projections that
00:35:30
Howard Schultz and the board put out to the street and I think that he had an opportunity then and there to just cut
00:35:37
it because they saw inflation they saw what it was doing and if you just looked around the corner you would have seen
00:35:45
that there would have been this compression in the product and I think what he should have done is just cut the
00:35:52
analyst projections in the forecast to give him room and time he didn't do that and by the way when you bring in
00:35:59
somebody who ran Taco Bell that is proving that this is neither a premium product nor a premium
00:36:05
brand anymore it is a mass Market product that will EB and flow cyclically with the vicissitudes of inflation that
00:36:13
doesn't mean it's a bad business I'm just saying it's just an observation I expect that Brian niichel
00:36:20
if he is smart will look at this forecast and shred it to give himself time so that's the
00:36:28
sort of the short-term thing the longterm thing though is in the following image which I just sent to
00:36:34
Nick I think there's a real question mark on this company over the medium to long term and I think it's best
00:36:41
represented in this graphic starbu is a sugar company so for example a caramel macchiato 32 grams of sugar a mocha
00:36:52
Frappuccino 60 gr of sugar this is three times what you're supposed to have as a
00:36:56
human in a day a frappuccino 53 g of sugar a caramel ribbon crunch frappuccino 62 g of sugar and these
00:37:06
products also average 4 to 500 calories per drink so the real issue is that more
00:37:13
consumers as they question the repercussions of consuming a lot of sugar what will they do as more
00:37:23
consumers get on gp1s what will they do as more people think about about the fact that fat was never an enemy in fact
00:37:31
fats are actually really good for you the problem was that the sugar Lobby convinced us that fat was bad and sugar
00:37:37
was okay what will consumers do and I think that's a really big strategic question mark because the company has to
00:37:44
embrace where the world is going the world is going away from sugar and I think become smarter they're
00:37:53
going to have to really figure out what to do could Starbucks introduce uh line of low calorie drinks that use sugar
00:38:00
substitutes to achieve the same they already got that yeah the app they have every single syrup comes in
00:38:09
sugar-free and regular so when I go there now that I'm on glps and I've lost all this weight and I drink less I just
00:38:15
get the Nitro cold brew it's got zero calories or five calories I might throw a little cold foam on it and then my
00:38:21
kids what the kids want that's not what the kids with the kids is is critical what I do with my kids is I do low sweet
00:38:28
or like one3 sweet I ordered one giant one I pour it into three glasses at home with ice and I cut it with water because
00:38:36
it is like drinking an unbelievable amount of sugar it is nuts um and they I'm I'm going to
00:38:44
go get an espresso after this this this is the thing about coffee coffee supposed to have zero calories and you
00:38:48
put a little half and half in it and you get the fat and you're good but I mean here's what here's what happened the
00:38:52
thing about Starbucks I I study Starbucks and I've spent some time with Howard Schultz actually um cou years
00:38:57
right maybe you could talk about your e a little retail you did a little retail side quest but the thing about Starbucks
00:39:03
is they realized early on that when you can customize a consumer experience the consumer comes back more frequently so
00:39:10
when you see your name written on that cup you feel like you're getting your product you're not buying an off
00:39:15
the-shelf product you're getting a custom personalized experience what that led to is people customizing their
00:39:20
drinks and what did they find that they liked when they customized their drinks sugary sweet add-ons and then that
00:39:26
became more and more of the standard menu and then that just kept evolving and that's just the consumer feedback
00:39:31
mechanism working which is to chat's point led to 60 gram sugar drinks that are now the standard product at
00:39:38
Starbucks not an espresso or a cappuccino which is how they started and it's really unfortunate I don't think
00:39:44
that Brian Nichols gonna focus on that to be honest given his background with Taco Bell and chipotle that that was
00:39:49
never anything to your point he'll be able to plug the leaks my my question is just more what does a company that's
00:39:56
selling product that people are learning is worse and worse for them what do they
00:40:02
do they have to embrace a different alternative but I think it can be very hard because it may be so disruptive to
00:40:09
the core product that they sell yeah J what do you think I mean what do you think about Starbucks I mean guy I my
00:40:16
kids love Starbucks we are regular consumers the app is extraordinary uh and I think the key
00:40:22
issue here uh you know is obviously the inputs in inflation that that's a major driver but wage inflation is is a
00:40:28
critical piece of this here's a chart for you you know just in terms of weekly earnings of full-time worker since Q4
00:40:35
2019 Starbucks started having a lot of Labor movements a lot of unionization a lot of complaints from the green aprons
00:40:42
and they have massively raised salaries they they were at you know $15 $16 17 a lot of people were going into gig work
00:40:50
door dashing you know Uber and so this competition for entry rung employees for Starbucks and I know this from the the
00:40:59
Uber experience and then door Dash people wanted to set their own schedules not be like in a shift work and so you
00:41:07
could make 20 bucks working for Uber and door Dash You're making 15 and you have
00:41:11
to drag your ass into Starbucks at 567 a.m and work a shift and not be able to pick up your kids that led them to go to
00:41:17
like 2022 per hour for these Baristas and and they continue to raise those rates they've been very generous
00:41:26
with employees and so I think that's a key piece of it I think the big story here is going to
00:41:31
be automation I think you're going to see a lot more robotics in these if you look at I just
00:41:37
had the CEO of um what's the salad company that people sweet greens I just had the CEO of sweet Greens on this week
00:41:44
startups and he is all in on Automation and they are making salad robots and they've already got two or three stores
00:41:50
with them and his whole concept is it's going to take $3 out of every salad we have an investment in a company called
00:41:55
Cafe X Nick you can play a clip of it these two machines in fso have broke a million dollars a year in Revenue they
00:42:01
are serving a massive number of them and they've sold a dozen of these to other people so I think automation is what's
00:42:07
going to come to this I don't think you can sustain it and the money has to come
00:42:11
out of somewhere and the two big cost it can come out of is the real estate and the employees and I think that's what's
00:42:17
gonna we're going to see in in the very near future is dun I will also I will predict yeah no doing it at right were
00:42:24
you doing um yeah we had automation I I actually worked with Jonathan at GRE and Starbucks and
00:42:30
chipot so I knew them all yeah and then the Chipotle CEO got fired we were going
00:42:34
to roll out automation with Chipotle and he got fired and nickel came in and our deal blew up it killed
00:42:41
the deal so explain how that might work and impact a business like that unpack it for oh my God so it was going to take
00:42:47
out basically these businesses today are running a call it 30% IIT margins at Peak Performance that's like Chipotle's
00:42:54
best class by taking out labor you could probably take out another 20 points of cost which could translate into lower
00:43:00
prices for consumers higher throughput lower weight times all of these kind of experiential differentiators are going
00:43:07
to be significant certainly true for Starbucks certainly true for sweet green I would expect that with nickel coming
00:43:13
in you'll see some experimental stores as you point out jcal that'll be more highly automated but we'll also I think
00:43:19
one of the first things you're going to see from nickel within the first year at
00:43:22
Starbucks is a reduction in the complexity of the menu this is something he he's done historically and he focuses
00:43:28
like he did at Taco Bell he creates a couple of key highlight products and creates these Innovative product ideas
00:43:34
and then those become the banners that bring people into the store but it's a simpler menu with kind of more
00:43:39
attractive interesting products that bring people in and then if you couple automation to reduce some of the cost
00:43:44
you can bring that labor cost down so yeah and this is a key point you know the order complexity is what's killing
00:43:50
the the the Barista there there's about four there's four quintilian ordering options at Starbucks today I and so the
00:43:58
expectation has always been that that is what brings people coming back to the store but what nickel has shown in the
00:44:04
past with Chipotle and with Taco Bells you can actually have a simpler menu with a few points of customization you
00:44:09
don't need to have infinite uh customization around everything and is what Steve Jobs did right with his four
00:44:15
quadrants when he took back over he was like listen what's business what's consumer what's highend what's low
00:44:20
what's portable what's desktop I forgot what the four quadrants were but he did it and and if you look freeberg to your
00:44:25
point of the cost savings right now the majority of orders in Starbucks I believe are coming in through the app
00:44:30
and what I was told you know and some of the buzz I heard from Baristas was that they are they are
00:44:37
prioritizing mobile orders to punish the people online to get them to download the app uh because that gets rid of
00:44:44
cashiers and McDonald's has no cashiers in a lot of restaurants right now you just order at a giant touchscreen so the
00:44:49
cashiers will be gone the cooks will be gone and eventually the Baristas will be
00:44:53
gone and it'll just be the cashier the cashier problem also creates a time problem because it's a Serial ordering
00:44:58
process everyone stands in line they order one at a time and there's only one so the Barista
00:45:03
taking all of these are really good points I just think that the CEO would not have gotten fired had he just moved
00:45:09
the forecast down by 20% when he came in also did you see this incredible clip of
00:45:14
him saying he doesn't want anybody working past 6m Nick play this clip this is likeu CEO the previous Starbucks CEO I
00:45:22
mean this clip is so brutal we should talk about this in the context of Eric SCH smid and intervie as well J this a
00:45:28
show the clip and then let's talk let's show Eric and talk about like work culture in America I think this is a
00:45:34
really important Point yeah fantastic uh side quest let's do it all right so now
00:45:37
there's a big culture thing going on here freeberg of hard work in corporations I don't know if you saw
00:45:43
Eric Schmidt at Stanford they took this talk down and Eric Schmidt is walking the comments back but here we go folks
00:45:49
this is the money clip from Eric Schmid Google decided that work life balance and going home early and working from
00:45:56
home was more important than winning and the startups the reason startups work is because the people work
00:46:06
like hell and I'm sorry to be so blunt but the fact of the matter is if you all leave the university and go found a
00:46:14
company you're not going to let people work from home and only come in one day a
00:46:20
week the Starbucks clip can you show the Starbucks clip well it's self-evidently
00:46:24
true I mean he's basically making a a point similar to what I said about Google's so large that employees can
00:46:29
hide and not do very much and you know they can kind of it's not just it's not just Google oh it's pervasive yeah let's
00:46:37
pull up the um the Starbucks CEO I'm very disciplined about balance if there's anything after 6:00 p.m. and if
00:46:45
I'm in town it's got to be a pretty high bar to keep me away from the family anybody who gets a minute of time after
00:46:52
that better be sure that it's important because if not it'll just wait for another day makes me so uncomfortable
00:46:58
just hearing that I feel holy I mean retire bro just retire what is America value is the real question does America
00:47:05
value success performance or does America value comfort and the problem is American American work culture has
00:47:13
shifted to value and comfort and that is the inevitable outcome of Decades of extraordinary success and now the
00:47:21
performance culture is losing to the Comfort culture and I think you guys a lot of things together the problem is
00:47:30
that I don't think that that's his truth actually I think that this guy's clip sounds very inauthentic I think what
00:47:37
probably happened is the pr and policy group of Starbucks says Hey listen here's the average age of your employee
00:47:44
and here's what they value and he probably spouted some politically correct nonsense to try to inspire the
00:47:50
troops I think a lot of CEOs do this like I think we're seeing in modern media today that a lot of CEOs have
00:47:58
actually become the least version of their authentic self they are being packaged by people
00:48:06
to dress and act and say things in a certain way and I think what happens as a result of that is that you have a
00:48:13
wayward culture where nobody knows what people stand for that's when the corrosiveness of
00:48:20
folks not working at all or having jobs at two different companies comes in like that's a total moral and
00:48:28
ethical breach that happens because people think it's acceptable and I think people think it's acceptable because
00:48:36
it's not in the talking points of how the CEOs are trying to package themselves to tens of thousands of
00:48:43
employee so you think this was a PR design genuflect I like that Insight saaks your thoughts
00:48:50
overall well it could it could be a genu reflect I don't know um look I would say
00:48:55
that there are a lot of Americans who do feel that way about work but I think it's not appropriate in in two cases
00:49:03
number one is if you're ambitious and you really want to rise in your organization then you got to have more
00:49:10
of the jcal attitude which is I'm going to be the first to work and the last one
00:49:13
to leave and I'm G to show my boss I'm gonna get promoted so if you want to be ambitious in your career that's not a
00:49:19
good attitude to have and then on the Other Extreme if you're the CEO of the company your attitude has got to be I'm
00:49:25
247 with this you know it's like I'm always online I'm always reachable the buck stops with me now obviously
00:49:32
you're going to cut out time to be protected that you can spend with your family but your attitude's always got to
00:49:38
be that I'm available you know I don't turn off my phone I don't do any of that stuff I just think that if you're
00:49:44
running an organization you can't take this attitude that oh at 6m I'm Switched Off you know it just doesn't work that
00:49:51
way yeah especially if you're one I don't think that's yeah yeah I mean an appropriate thing for someone like that
00:49:58
to say when he's the CEO of a multinational corporation yeah I think that is the key Insight Saxon with you
00:50:05
on this which is leadership starts at the Top If the leader says Hey listen don't bother me after 6 I'll talk to you
00:50:10
at 9:00 am then that's just gonna go through the entire organization and it's already hard enough to run these
00:50:17
organizations now if you run a lifestyle business as your local cafe and you want
00:50:21
to do that and you're running it at a break even that's fine this is a publicly traded company with
00:50:25
shareholders with massive compet I who could get taken out by all these other brands that are that are trying to
00:50:30
compete with it you have to have this is a war we are at War we have to figure out how to lower prices we need to grind
00:50:37
every nickel from you know the supply chain rent we have to renegotiate contracts and then you know just to
00:50:43
speak on the work ethic issue this country is in a um a very significant War about going back to work and work
00:50:52
ethic you mentioned overemployed and the ethics around that chth and then there's
00:50:57
a group of Americans and I've been studying this a bit that are opting out of capitalism or hacking capitalism
00:51:03
there's a very interesting movement it's called fire financial Independence retire early and if you look at the two
00:51:09
subreddits overemployed and the fire subreddit young people are saying H capitalism is there to be hacked and my
00:51:16
way of hacking it is I'm going to have two jobs and I had a startup come to me and say we've got this great engineer
00:51:21
literally from Google who wants to work from us and he's making 400k we can get him for Buck 50 and I said oh wow that's
00:51:28
great why would he do that is he independently wealthy they said no he's keeping his job at Google he says it
00:51:32
takes 10 20 hours a week and he's going to work 60 hours a week for us and I said is that ethical or legal and
00:51:38
they're like I don't know that's why we're asking you these are 20y old Founders we had backed and I was like
00:51:43
this is incredibly unethical and you're going to get us in a lawsuit don't do it
00:51:46
but that is what's you know the the give and take and if you look at what happened with Dell this past six months
00:51:52
have you been following that freeberg the Dell story no it's pretty incredible they told everybody coming back to
00:51:57
office people were like yeah I don't want to come back to office okay reasonable you think you do a better job
00:52:01
at home I get it what they said was if you want to be work from home you can't get a promotion and you can't get a
00:52:06
salary increase and you know what employees said okay I don't want an increase I don't I if my choice is stay
00:52:13
at home and and have no salary KS and I don't care about a raise I don't care about a promotion then they said you
00:52:19
know what we're cutting 12,000 people you have to come back to office Jay Pensky and his company told
00:52:25
everybody have to come back to office so now that you know you have this era of Being Fit and you don't need as many
00:52:30
people from AI I think everybody's coming back to the office unless you are part of the 20% of truly Elite workers
00:52:39
thanks for coming to my TED Talk even then though I I struggle to understand why anybody who has any ambition would
00:52:47
think that they're going to achieve the same amount of stuff working by themselves than they will by working
00:52:54
with the group of colleagues that you was back in a physical space together well influence our culture no no but I'm
00:53:01
saying like when you when you look at the the great things that the world needs that we are building and should be
00:53:08
building I don't see many good examples where those things are done in a remote way I see the necessity of people to be
00:53:18
together whether it's to design something together to talk about something together to debate something
00:53:23
together to learn from each other to as a person and you're robbing yourself of all of
00:53:31
that and so I just think that it is a shortterm optimization that a lot of people will regret not necessarily in
00:53:38
the moment but when their career doesn't go where they want to or the company they work at doesn't go where it should
00:53:45
go to or is capable of going to they'll start to look for a scapegoat but the real reason is that
00:53:53
they've abandoned the idea that they need to be together and I just think that that's that's a
00:53:58
tragedy and as it turns out the best of our companies like when I rank my portfolio the ones that are doing the
00:54:07
best are in total different Industries but the single consistent theme is we are all back together in
00:54:14
person isn't that interesting makes total sense it's much more productive because I I think Innovation happens as
00:54:23
a team you need collaboration and it's way EAS iier to do that when everyone is together in the same place there's more
00:54:30
room for spontaneity more spontaneous interactions the reason why Steve Jobs designed the the spaceship uh campus in
00:54:37
that famous circle was because it maximized the opportunity for Serendipity right like there's nobs did
00:54:44
the same thing Bel Labs had a quad that you had to walk through to go from meeting to meeting so everyone
00:54:49
interacted inter the technical term for that is um collisions and there's been a
00:54:53
lot of research on random collisions and I agree wholeheartedly with it yeah and
00:54:58
look I just want to underscore this point I think there's nothing wrong if somebody says look my family is the most
00:55:05
important thing in my life I only want to work 40 hours a week I'm going to do a nine to6 job with an hour lunch break
00:55:10
that's 40 hours don't call me after 6 PM you can design your career that way but
00:55:15
that is not a career that's going to enable you to either run a company as a CEO or be a founder of a startup or be
00:55:25
on a track to one day being a founder or a CEO it's just not compatible I mean or
00:55:31
even just a senior executive right exactly so you have to decide what track you're going to be on and I think
00:55:36
there's a lot of millennial gen Z types who are confused about this and they have the entitlement of saying well I
00:55:42
want to just do the 40 hour a week thing but then I also expect to rise rapidly and be an executive and be a Founder be
00:55:48
a you know a CE both ways that's not gonna work yeah it's not gonna work and and you know In fairness I think a lot
00:55:56
of young people have not been mentored because they came up in the co generation and we're now four years
00:56:01
later and they just haven't had the chance to be mentored or be in a in an office and a lot of senior Executives
00:56:07
and CEOs are not coming to the office you know a part of my move to Austin is I'm building uh a theater to record the
00:56:14
podcast in and I'm building an incubator space and we're moving back to iners I grire the existing employees and I'm
00:56:20
only hiring people in person now because I feel something very big has been lost
00:56:24
in terms of meeting Founders in person and young people seeing me interact and my other senior team members with those
00:56:32
Founders in person during a pitch meeting during a product jam session during a fundraising review go sh can I
00:56:39
just say something about mentoring I also think mentoring can be described as capital M mentoring and small M
00:56:46
mentoring capital M is where some person is assigned to you and they're going to
00:56:53
imuse some magical phrase or saying or thing and all of a sudden everything is going
00:56:58
to work out for you that form of capital M mentoring doesn't exists and has never worked for
00:57:07
those that have tried it the thing that's really productive is small M mentoring and that happens when you
00:57:13
model behaviors of really smart people and really capable people really ethical people and again that happens because
00:57:20
you're seeing them on a day-to-day basis not just in a meeting but in the gap between meetings and they'll include you
00:57:29
in certain things or you'll have lunch with them and this is what I mean by all of these people that are looking for an
00:57:36
accelerant in their career they've robbed themselves of the most powerful accelerant possible which
00:57:44
is capable people to surround themselves with yeah I think it's so well said they're going to look back on these
00:57:51
decisions and they're going to agret them I agree 100% And my one of my first jobs working at land systems my mentor
00:57:58
Mike Savino was always working late he was trying to move up in the organization and I wouldn't leave before
00:58:03
he left and then he would walk by and he'd say it was in New York City hey what are you working on I'm say oh I'm
00:58:08
reading these novel networking books I'm trying to get my certification I'm trying to learn more I want to get out
00:58:13
of hardware and get into software and he'd say oh um I'm gonna get some dinner you want to come now he was four levels
00:58:19
above me in the organization I was the lowest he was second to the highest and then I got to go to dinner with him and
00:58:24
then I got to hear about all the big clients I got to hear how you know they were doing the pitches and then he
00:58:30
started including me in pitches and all of a sudden I went from four degrees from him to reporting into him and
00:58:35
that's how I learned you know look at the person on the left look at the person on the
00:58:40
right I was uh I don't think I yeah I was actually I was a certified network engineer I was I was a certified novel
00:58:47
engineer as well I I did it when I was like 16 shout out to Eric Schmid yeah yeah I mean if you had that in the 90s
00:58:55
you could make you know 50 75 100K well the person that helped me little and mentored me he's
00:59:02
like listen man I'm not going to tell you how to do pitches or whatever but I'm going to teach you how to install
00:59:07
this I'm going to teach you how to manage it and that was mentoring and that was really valuable and I sat
00:59:13
beside this guy difference in my care absolutely and if you want to be a freelancer be a
00:59:19
freelancer okay let's go to our little election update and some news about kamla
00:59:26
and a little bit of socialism coming so here's how I I set it up today we'll see
00:59:31
how this goes 2024 election update is here I'm going to do two things gentlemen I'm going to just te up the
00:59:36
latest polls um and then I ask our crack Allin research team to just give me the
00:59:41
top you know a couple of issues in the principal's own words uh the principles being you know the Press on either side
00:59:48
and the four people who are running for office so let's just go through the numbers here Nate silver a friend of the
00:59:54
Pod now has come Harris at 57% favorite to win the electoral college there's your first chart you can compare this to
01:00:02
what happened with Biden before the hot swap Trump had a 73% probability to win the electoral college so that is the the
01:00:10
swing of all swings and obviously a lot has happened since then as well as the assassination attempt on Trump massive
01:00:17
swing for Harris as you can see in Nate Silver's chart he's doing something called Silver bulletin he's not a 538
01:00:23
anymore but this is the most telling chart you can see Biden Trump there and it's it's almost a clean sweep in red
01:00:29
and then you go to Harris Trump and the shift has been 100% blue pretty dramatic Harris is flipped according to
01:00:38
Silver Pennsylvania Wisconsin Arizona Michigan Nevada and Virginia here's a couple of quotes and then we'll get into
01:00:44
it the big critique from Republicans this past week is that Harris won't do interviews God it's just ridiculous that
01:00:51
they have not sat for interviews and meanwhile Trump is doing every podcast and and Twitter spaces on the planet uh
01:00:58
but the big news is that this might have changed by the time you listen to this podcast everybody knows we tape on
01:01:03
Thursdays for the world's number one podcast and it comes out on Fridays Washington Post Jeff Stein reported that
01:01:09
Camala Harris will propose the first ever Federal ban on corporate price gouging for food and groceries on Friday
01:01:17
we'll get I'm gonna hand that off to you freeberg toil oh I'm gonna throw up take
01:01:22
it easy just we're gonna get there you're gonna get your um you're GNA get your rare vegetables in a
01:01:27
[Laughter] second so uh the other going to get your get your V shimmy soon all right
01:01:38
from the JD Vance uh corner he is questioning Tim waltz's service here's the quote well I wonder
01:01:45
Tim Waltz when were you ever in War when was this Harris campaign responding in his 24 years of service the governor
01:01:52
carried fired and trained others to use weapons in War inum innumerable times yada yada yada a lot of back and forth
01:02:01
there about that issue but let's get to um and there was an incredible uh twoh hour spaces audio was a little rough but
01:02:11
the content was great Elon had a conversation with uh Trump and they talked about nuclear power Elon offered
01:02:18
his Services two or three times to Trump saxs to uh do efficiency uh in the uh government and maybe cut some
01:02:27
but that's what happened notably in the last week freeberg what's your take on this reported by The Washington Post and
01:02:36
I think confirmed by Politico uh move by Kamala Harris thank you for asking thank
01:02:41
you for you have any feelings on it yes yeah I unequivocally hate socialism socialism destroys Innovation
01:02:51
destroys productivity and destroys individual liberties Agriculture and Food Markets have
01:02:58
insanely competitive Dynamics because there are commodity markets there are tons of competitors there is no Monopoly
01:03:04
in making food there is no Monopoly in making cpg products there is no Monopoly in retail there is no Monopoly in
01:03:10
grocery stores it is a small margin highly competitive highly fragmented free market and the free market Works in
01:03:18
that everyone is always competing with each other creating new productivity improvements and as a result over time
01:03:24
prices come down except when the government intervenes and gets involved so I would argue that
01:03:32
the real cause of price inflation in food is not the supposed price gouging by corporate players in the A and food
01:03:39
industry all of whom are deeply competitive with one another but rather is the result of the inflation
01:03:46
associated with government spending and stimulus coming out of covid Nick exhibit
01:03:51
one the FED balance sheet from Co to today the Fed balance sheet Grew From 4.2 trillion to $7.2 trillion a growth
01:04:00
of 70% the Federal Reserve went out and they bought assets and they issued debt to Banks and introduced liquidity into
01:04:08
the system if you go to the next slide as a result the M2 money supply increased from 15 trillion to 20 21
01:04:15
trillion since covid a 40% increase okay so now there is more money in the system
01:04:21
so the cost of everything should go up which is exactly what we've seen we can walk through a couple of the other
01:04:26
commodity price charts from the St Louis fed here is the price of electricity as
01:04:31
an example the price of electricity has gone up a little bit less than the M2 money supply but the truth is when you
01:04:36
start to actually look at a commodity prices over time what's happened is there were certainly a boost coming from
01:04:42
covid but the competition and the challenges in over production in the a markets has started to hit and started
01:04:48
to bring prices back down so here's the price of strawberry strawberries today are selling for less than they were
01:04:54
preco potatoes are now back to where they were pre-o now let me give you some statistics on some of the supposed price
01:05:02
gouging companies in the industry craft Hine stock preo was 29 bucks a share today craft Hine stock is 34 bucks a
01:05:11
share 2019 revenue of 25 billion 2023 revenue of 26 billion EB on 2019 of 6.1 billion Eaton 2023 of 6.3 billion
01:05:22
there's not a lot of profit gouging in fact craft hindes has not been a B to keep up with the inflation Starbucks
01:05:28
which we just talked about their stock was at $90 preo and today 93 bucks 2019 revenue of 26 billion operating income
01:05:37
of 4.1 billion 2023 revenue of 36 billion but operating income only 5.9 margins have come down in Starbucks Nick
01:05:45
if you pull up the McKenzie chart this is a study of the grocery industry the state of grocery in North America 2023
01:05:52
by McKenzie accelerating pressures on profitability to cope with the pandemic's upheaval grossers have had to
01:05:59
dramatically increase capex increase supplies as a result they've seen a significant impact on margins here's the
01:06:06
margin profile pre pandemic and today gross margin has declined by two points from 47.6 to 45.6 ebit margin has
01:06:15
declined by 1 and a half points and now let's just go to the final chart which is cpg companies the companies that make
01:06:21
food and sell it to Consumers as you can see during the co era the three-year rolling TSR has declined
01:06:30
since Co across the board so food companies are seeing food prices come down so farmers are really suffering
01:06:36
labor costs have tripled since the pandemic but they're still having to sell products at the same price cpg
01:06:42
companies have lower margins and supermarkets have lower margins so there is nowhere in the aggr food supply chain
01:06:48
that we are seeing fundamentally price gouging or profit taking happening what has happened is the cost of Labor the
01:06:55
cost of moving stuff around the cost of fuel the cost of electricity the cost of
01:06:59
goods has all risen with inflation because of the increase in the money supply and federal spending and the
01:07:05
stimulus associated with the Federal Reserve buying assets onto their balance sheet so arguably I would say that
01:07:11
trying to step in and cap prices will reduce competition and as a result will reduce investment in improving
01:07:17
productivity and we have seen this countless times with every socialist experiment in human history has started
01:07:23
with caps on food and it has resulted in spread lines like you see in the image behind me today as we can see in Soviet
01:07:29
Russia this is a mistake it is a problem it is anti-American it is anti-free Market it is anti- innovation it is
01:07:36
anti- productivity and ultimately it's anti- liberty and I cannot stand it that's my rant okay thanks for coming to
01:07:43
freeberg Ted Talk sham so you're nodding strongly in agreement this is just Dum and pandering am I
01:07:49
correct there is no sustainable solution to inflation if you cap what a company can charge because
01:07:58
what they'll do is they'll just stop producing they'll manage to margin that they'll just stop and the reason they
01:08:07
can stop is that they would rather contract and maintain their profitability than lose money and then
01:08:14
what happens is there's less products in the market and so the prices go up so I
01:08:19
think it stands to reason that the Harris campaign has access to some reasonably smart people they also have
01:08:26
access to really smart people like Larry Summers and so I think if they just make
01:08:31
a few phone calls they'll figure out that this is a really terrible idea saaks any
01:08:37
thoughts overall election and the specific issue you take it either way you like yeah so this story was reported
01:08:44
by The Washington Post and by Bloomberg and others so it appears to be more than
01:08:50
just a rumor conjecture I mean these are Publications that are apparently well sorted within the Harris campaign so I
01:08:57
think it is fair game for us to comment on this policy proposal that she apparently will be coming out with look
01:09:05
I think freeberg is right about the policy the idea of price controls is widely discredited across the political
01:09:13
Spectrum I mean I think virtually all economists agree on this this was Pride extensively in the
01:09:20
1970s not just under Jimmy Carter but Nixon tried wage and price controls and Gerald Ford had this whole program
01:09:28
called whip inflation now where they printed out these buttons called these wind buttons and then Carter extended it
01:09:35
that's why we had huge lines to the gas pumps is because we had price controls on gas and those lines of the pump went
01:09:41
away almost overnight when Ron Reagan came in and removed the price caps on on gas so we've tried price controls before
01:09:50
it didn't work and it is remarkable that she would be proposing here potentially
01:09:57
as her first major policy proposal on the economy to go back to this 1970s era failed policy and I think it's really
01:10:07
tipping her hand in terms of where her economic proposals are going to come from and what she really thinks keep in
01:10:14
mind that throughout the the Biden presidency he rhetorically would blame corporate Greed for the rise in
01:10:22
inflation we saw as like a scapegoat because he didn't want to blame him self for all the spending but she's going
01:10:27
further now and actually instituting this as policy yeah and so just to be clear with everybody we don't have the
01:10:34
actual policy here but it's been reported seems like it's true maybe it's not maybe they step it back we don't
01:10:40
know the details of this at all what we do know is it's been tried before what we do know is there are times when you
01:10:47
could like in an economic emergency like during um what was the giant hurricane or Wars you know you can your eye on
01:10:55
this um but the truth is as we just talked about with Starbucks you know sax is like I got a free cup of coffee or
01:11:02
close to free I make my own C Brew uh C shout out Cafe dumon because I don't want to pay $8 for an the market
01:11:10
responds and when you put your thumb on capitalism or you put 12 thumbs on capitalism and on the scale all kinds of
01:11:16
weird behaviors occur it does not work and consumers can just simply opt out they can make breakfast at home they can
01:11:23
Brown Bag their lunch and you know what then companies are going to be like holy
01:11:28
sh people are not buying $8 coffees let's make a cheaper Happy Meal to support your point and what chamath was
01:11:35
messaging on our on our chat look at Walmart stocks up 7% today because they offer lower priced solutions to
01:11:42
Consumers and Dollar General and Dollar Tree are rallying as well when the market competes consumers benefit and
01:11:49
there are companies that will win and the companies that try to price gouge and the companies that try to charge too
01:11:54
much will lose Starbucks has been trying to charge too much for sugar water they
01:12:00
have a real problem they are now tackling Walmart is trying to bring value to Consumers they are winning that
01:12:06
is how free markets work when the government steps in and says here's how much margin you can make or here's how
01:12:11
much prices should be it ruins everything and the entire incentive structure goes away and you end up with
01:12:17
breadlines Saxy poo what do you got well there was a really interesting story in
01:12:22
the Wall Street Journal this week called K Harris's economic team and agenda start to take shape and it was
01:12:29
interesting because it said here in the first paragraph that the challenge of her economics team is quote
01:12:36
differentiating the candidate which is Harris from her unpopular boss which is Biden without abandoning his policies
01:12:44
and the problem that they have is that for the last three and a half years there has been no daylight between
01:12:50
Harris and Biden and in fact Ken Jean Pierre said exactly that in the article there's been no daylight they've been
01:12:55
highly aligned now in response to that what the campaign has been trying to do is a not say anything about policy to
01:13:03
try to redefine the candidate based on biography she's done no interviews with the media she's done no sort of
01:13:10
unscripted speaking appearances and the media has cooperated with this so far the most egregious example was that Time
01:13:17
Magazine cover story which was this really Gauzy profile that was heg geography even though she refused to
01:13:24
even do an interview with Time magazine in that story so strategy number one has
01:13:29
been just to kind of hide from the media in terms of what she would really do strategy number two was adopting some of
01:13:36
Donald Trump's most popular policies so she just announced no tax on tips she was I think widely kind of criticized
01:13:43
for being a copycat on that and now we finally have strategy number three which is to tiptoe into the campaign with her
01:13:50
own original proposal on price controls which I think is being criticized but it
01:13:56
shows where her policy instincts are coming from I mean this is somebody who has always been on the Progressive left
01:14:01
when she was a member of the Senate GV track rated her as the most liberal member of the Senate even to the left of
01:14:09
Bernie Sanders and Elizabeth Warren and you're now seeing this come out in her policy proposals so look I think she's
01:14:16
definitely gotten a bounce in the polls over the last few weeks because of this favorable media coverage but it's a
01:14:21
sugar high based on something that's not substantive I mean she didn't put forward any proposals and I think that
01:14:28
now that she finally is putting out policy proposals that can be questioned and analyzed and criticized I think this
01:14:34
is going to be the beginning of I would say a big correction in in her campaign J Kel do you agree do you think her
01:14:41
strategy is off at this point and is it starting to hurt her to put out these proposals I I am I remain undecided
01:14:48
moderate leftly moderate have voted Republican 35% of the time Democrat 65% of the time time and I've been studying
01:14:55
the strategy here her strategy is crushing Trump so obviously it's working now we I'm I don't like it I think
01:15:03
everybody should be doing debates I was really upset that there wasn't a debate or a speedrun primary I I don't like the
01:15:09
fact that Trump and Biden skipped out on the primary debates I think they should
01:15:12
be forced to do debates forced to do interviews and so I you know on that front I hate what this is doing to
01:15:21
democracy now pragmatically running at the clock as a strategy and not defining your positions
01:15:29
too much and just you know selling The Vibes is a brilliant strategy and it's working and you know as Trump said the
01:15:38
VPS don't matter what she did as VP doesn't really matter what JD Vance thinks as VP doesn't matter VPS don't
01:15:43
matter you're voting for the president the VPS get in line Trump Trump's positions JD Vance flipped a bunch of
01:15:50
his positions to align with Trump and I think Cala did the same when she worked with Biden that's your job is to align
01:15:56
with the president now that she's her own and Waltz is going to flip to her so I think they're putting out moderate
01:16:02
Vibes I think they're kind of socialists I think they're not as socialists as Bernie and Elizabeth Warren but they're
01:16:08
not moderates but they're pretending to be moderates and that is working as a strategy they are demolishing Trump and
01:16:15
then Trump is you know getting bad advice around him I think you know if I to handicap this and I'll wrap up it
01:16:21
with just one more minute I think Trump was so good on all in he was so good at the RNC for the first half of his speech
01:16:27
when he is presidential when he has a big open tent I love him I think he's great and I think he's like World
01:16:35
positive when he goes into grievance culture when he goes after the race stuff like he did with the black
01:16:40
journalists when he goes after gender or JD does the gender stuff and the cat stuff I hate that stuff moderates hates
01:16:46
that stuff women hate that stuff and the moderates and the women in the swing States will decide the election and
01:16:52
Trump's campaign is lounder right now they have to get they have to flip it back to that Trump 2.0 I described many
01:16:58
times where he's serious presidential not bullying people not doing the insult comic thing this going after Walts going
01:17:05
after cat ladies it's just gross and not necessary so I think you know maybe Trump after the RNC after the DNC will
01:17:12
go back to Trump 2.0 that would be much better and I think Trump has a chance of
01:17:16
winning if he does that if Kamala goes moderate I think she's going to win so that that's my that's my strategic take
01:17:22
I am UND I remain undecided as a voter but you just said she's a socialist not a moderate I think in her heart she's
01:17:30
between like if you had Clinton and a great question if you had Clinton and you had a you know Bernie Sanders I
01:17:35
think she kind of Falls between the two but I think she's pretending to be a moderate to get votes right you know
01:17:40
just like Trump will pretend to be super right-wing to get the you know po acted
01:17:44
up but he's kind of a moderate too socially I think Trump is a moderate in this race and she's much more moderate
01:17:50
than than she is I think that actually is true look I think that she's pretending to be a lot of things she's
01:17:56
pretending to be a moderate when really she was the most liberal member of the Senate she's pretending to be a change
01:18:01
agent when really she's the incumbent keep in mind that she has been in office now for three and a half years as part
01:18:07
of the Biden Harris Administration and she was perceived within that Administration as their Emissary to the
01:18:12
left wi of the party I mean remember that when she was put on the ticket Biden was perceived as the moderate and
01:18:18
she was perceived as the person on the left and she was going to basically help consolidate those votes so she's
01:18:23
pretending to be a lot of things that she isn't and the reason why it's working is because the Press has fully
01:18:30
cooperated in letting her run a campaign without doing press interviews without doing unscripted appearances and the
01:18:37
Press frankly is embarrassing Itself by revealing themselves to be effectively DNC operatives and that Time Magazine
01:18:45
cover story was just the latest example of that I do think that this strategy can only work for so long I think that
01:18:52
the media is starting to feel a little bit embarrassed they're starting to get a little bit shamed about the fact
01:18:57
they're letting her just give them the Heisman and I don't think she can run out the clock for three months without
01:19:03
doing interviews I just think that I think she can do this for another week or so I think that they're going to run
01:19:08
this Playbook through the convention but eventually she's going to have to start
01:19:12
doing interviews and she's gonna have to start putting out more substantive policy proposals and I think the fact
01:19:18
that this price control proposal is their very first one that they've put out I think this shows
01:19:25
that this is not going to be easy for her it certainly jolted me awake Zach I'll tell you that so yeah I mean this
01:19:31
this idea that she can pretend to be a moderate and just run on Vibes with no interviews and no substance proposals I
01:19:37
don't think it's going to work for three months I think she's going to reveal herself I think an educated voter base
01:19:41
is going to wake up to that and particularly in that independent segment there's going to be a lot of
01:19:46
acknowledgement that maybe these are not going to be the right policies I think they're preparing their policies and
01:19:51
they're going to drop them after the DNC Cham what's your take on strategy and then we'll move move on to science
01:19:56
Corner we're in the middle of the relief rally that Biden isn't in the race I think that we had a different version of
01:20:04
a relief rally when everybody realized that President Trump hadn't been assassinated
01:20:11
so these are the pendulum swings I think of an electorate that still hasn't been
01:20:19
given a clear definition of a or b in this case I think what's happening is there's a lot of testing of language and
01:20:28
ideas and Concepts that both sides are doing and I think we will not know where this election is going to go until after
01:20:35
September the 10th in that first presidential debate because I think that these big issues will be put to the test
01:20:42
the journalists asking the questions will Corner both candidates both of them will have points of view and then I
01:20:48
think they'll have to go into these five states that matter on these five issues
01:20:52
that matter and I do think that this will will be one of those issues because this is a very aggressive
01:20:59
proposal that has a lot of implications and that has a lot of historical context of never having work
01:21:06
literally never so it's dumb we we haven't seen it but it it seems dumb on its face and just to be clear there is
01:21:14
no proposal we're just commenting on reports of a proposal proposal will probably come out on Friday this weekend
01:21:20
so you can read it for yourselves and and we'll talk about the actual proposal if there is one who knows could be bad
01:21:25
reporting could all be Capp freeberg you wanted to talk about Boeing well I wanted to just highlight
01:21:32
the the the Starliner project and unbeliev the issues unbelievable give us an overview and then let's let's let's
01:21:39
let's chop it up as we wrap two NASA astronauts flew on the Boeing Starliner capsule uh June 5th and they docked with
01:21:47
the ISS and they're now stuck on the ISS and they might be stuck there until February because the Starliner has a
01:21:54
number of technical issues the astronauts cannot get back in the Starliner and just fly back to Earth
01:21:59
NASA is kind of evaluating the options here on what to do and whether to put them on a SpaceX crew Dragon capsule in
01:22:06
February to get them back so I just want to talk a little bit about the history of this project and provide a little
01:22:14
context before we highlight the the particularly acute story of two astronauts being stuck in space right
01:22:20
now which is an incredible story so this is a nextg Space Capsule that was designed to take people to and from low
01:22:26
earth orbit basically to the ISS and NASA if you guys remember in the 2000s decided to stop making their own vessels
01:22:34
and they're going to start using thirdparty contractors so they went out and had a competitive bidding process
01:22:39
and ultimately in 2010 they gave both SpaceX and Boeing the winning contracts to develop these commercial crew
01:22:48
Transportation capabilities SpaceX obviously developed the crew Dragon capsule so it was unveiled in 10 is the
01:22:55
CST 100 Boeing's first commercially developed Space Capsule the company would take on all the financial risk for
01:23:01
developing it with a fixed price contract from NASA of $4.2 billion to date by the way Boeing has taken a $1.6
01:23:09
billion Financial hit on the development of this program SpaceX by the way won a
01:23:14
$2.6 billion contract to develop the crew Dragon capsule and just to give you guys a sense the crew Dragon capsule has
01:23:22
flown 13 missions thus far to the ISS and this was the first crude Mission flown by Boeing both of which got
01:23:30
contracts at the same time so originally it was going to be a 2017 launch timeline and I just want to hit on some
01:23:36
of the history of the Starliner problems 2016 it was delay you said just to confirm you said it was $4.2 billion
01:23:42
that contract that contract with Boeing to develop this Starliner capsule so the
01:23:47
first issues arose in 2016 when there were design problems the first crude flight was then pushed back to be
01:23:53
scheduled for 2019 in 2018 they found issues with propellant leaks which led to more delays 2019 a test flight
01:24:01
parachute failed December of 2019 they had their first uncrewed test flight and there were software errors that would
01:24:07
have caused destruction of the spacecraft this led to NASA and Boeing submitting 80 different changes that
01:24:13
needed to happen before they did their next uncrewed test flight so they then pushed that all the way out to 2021
01:24:21
Boeing ended up saying it cost us half a billion dollars to do that then in August of 2021 13 propulsion system
01:24:28
valve issues were discovered on the Launchpad the flight was aborted and the capsule was returned they eventually got
01:24:35
it up again in space in May of 2022 and it docked with the ISS and it returned back to Earth even though one of the
01:24:42
parachutes failed when it returned to Earth it still made it down this again led to the
01:24:48
2023 first crude launch which means people are in the capsule this was originally supposed to be in
01:24:55
2017 and they kept pushing it back because of more issues with the parachute system and then they finally
01:25:00
got it launched in June 5th of 2024 with two astronauts on board to go to ISS and
01:25:07
come back on the way they discovered that five out of the 28 maneuvering thrusters which is how they can move
01:25:14
this capsule through space to get it to dock with the ISS and ultimately make its way back to Earth were
01:25:19
malfunctioning they have now discovered five helium leaks helium is stored in a pressure ized system to actually control
01:25:26
those thrusters and make it move through space and now they may not even be able
01:25:29
to get this capsule to fly off of the ISS so on June 28th NASA announced that while the Starliner is theoretically
01:25:37
capable of returning the astronauts to Earth in an emergency on the ISS the capsule is not approved to fly until
01:25:44
these Thruster issues and the leaking helium are figured out or better understood and they have now pushed the
01:25:50
decision to the end of August it would be massively embarrassing for Boeing if these two
01:25:57
astronauts had to be rescued by SpaceX it's a crew Dragon capsule had to find its way up to the ISS they hopped on and
01:26:03
they came back to Earth clearly a massive problem but it's a certainly a personal and a human story now with
01:26:09
these two astronauts stuck on the ISS I you've had a lot of comments on Boeing in the past but I mean does this feel
01:26:15
like like a continued underscoring of the issues at Boeing and and just to be clear chat the statistics are three four
01:26:23
Starliner two unman one Mann and then for uh SpaceX with the dragon they did 11 eight with NASA 3 with commercial
01:26:32
commercially with like other passengers yeah yeah so the NASA cargo Dragon which
01:26:37
only has a cargo on it not people has completed nine successful missions to and from the ISS there are six more
01:26:42
planned and they've obviously done 13 missions um with the crew dragon and by the way I don't know if you guys know
01:26:49
this this is a surprise but exciting to share that we are going to have a crew Dragon C from SpaceX at The all-in
01:26:55
Summit in La parked on the lawn so you can actually go inside and check it out and take a little tour it's going be
01:26:59
amazing so thank you to the SpaceX team for bringing the crew Dragon capsule chamach my gosh I mean where do I begin
01:27:07
look Boeing is these three very complicated businesses that try to live as one so you have a commercial airline
01:27:14
business you have a defense business and you have the space business I'll be the
01:27:20
first one to say that I think it's extremely difficult to be good at one of those three things and the probability
01:27:27
of getting all of those three things right is basically next to Impossible that's just a general comment
01:27:33
and I think that specialization is better the second thing that I'll say is that I observed this company about five
01:27:41
years ago and I wrote about it in my annual letter and part of the reason why I wrote about it was there was a quote
01:27:48
I'll never be able to judge what motivated Dennis mullenberg whether it was a stock price that was going to
01:27:53
continue to go up and up or whether it was just beating the other guy to the next rate increase he said he added
01:28:00
later if anybody ran over the rainbow for a pot of gold on stock it would have been him who do you think said this it
01:28:07
was the incoming CEO of Boeing and I was so flabbergasted because I'd never seen
01:28:13
something like this so in a company where safety has to be the number one priority to have an individual that's
01:28:20
characterized by the incoming CEO as solely focused on their Compensation Plan sort of explains why there's all
01:28:28
these fissures in this company because again back to that famous Charlie Monger quote show me the incentive and I'll
01:28:35
show you the outcome if the incentive is safety and worldclass Engineering that's
01:28:41
what you'll get but if the incentive is earnings per share growth then that's what you will also get and Boeing was a
01:28:49
darling of the stock market for a very long time and now what happen is underneath the other things that
01:28:56
actually should matter IE safety are slightly deprioritized and then you have these
01:29:03
issues I really hope these two people get back safe it seems like they're doing a lot of experiments and they love
01:29:09
being up there but it's a little bit unacceptable that they have to be there until
01:29:14
February but I do trust that if Elon has to go and get them basx will do a great
01:29:20
job and they'll be home safe sack's one of the great things about this thank God
01:29:24
NASA gave two contracts out if they had given one you know oh my God could you imagine if that was Lobby you would be
01:29:31
asking the Russians to go get them and then like you know we're in a little I don't know if you've been watching this
01:29:36
this is what I thought we could discuss it's like you know is there benefit in having being dependent on Putin at this
01:29:41
moment in time when Ukraine is making massive gains into Russian territory I know this hasn't come up all that much
01:29:47
but that would be really dangerous but by the way just back to what freeberg said before sorry to interrupt you
01:29:51
before you go suck but why is this even possible it's exactly as you said jcal we have competition but why is
01:29:58
competition possible it's because of what fber talked about before we didn't have a set price the government didn't
01:30:05
come and say you will build it for x and I'm only doing it one time the free market was able to solve this problem
01:30:12
and it turned out the more capable solution was 40% cheaper than the one that they thought was going to work and
01:30:20
the one that was 40% cheaper was also on time one was and reliable and this other one
01:30:27
seven eight n 10 years delayed it's 100% that's a perfect examp examples every day of the fact that these other ideas
01:30:36
just don't work yeah I I think we've pretty much beaten that capitalism is the greatest Force for Innovation and
01:30:43
lowering prices sxs your thoughts on this Humanity yeah yeah God forbid people will get air conditioning at a
01:30:50
lower price you know and smartphones Etc saaks your thoughts here yeah I mean look if we're talking about capitalism I
01:31:00
think about what the Austrian Economist Joseph Schumer said which is capitalism is a process of creative destruction and
01:31:07
the creativity happens in the early days when you've got a Founder who's creating
01:31:11
a startup and the business gets big but then it gets older and the founder goes away and the company can drift and
01:31:18
become bureaucratic and sometimes it can renew itself and maybe you get a Brian nickel and maybe to save it and
01:31:25
sometimes it doesn't and the companies that get old and don't renew themselves eventually fade away and they get
01:31:33
destroyed and replaced by other startups it's a system that has worked incredibly
01:31:38
well in America and it's the basis for all of our prosperity and Innovation when you compare that to the political
01:31:45
process it's very different I mean the political process kind of has this knee-jerk resistance to change and
01:31:51
Innovation and it has an pulse to control things it wants to control prices it thinks it can solve problems
01:31:59
with just top- down mandates and it doesn't reform itself it creates new bureaucracies and never gets rid of them
01:32:06
I mean we create new departments they never go away they just keep getting bigger and bigger there's never any
01:32:11
crate of Destruction it's just like a blob it's a one-way ratchet of bureaucratic growth so it's really clear
01:32:18
what creates prosperity and I do think we have now reached a point where the government has gotten so big
01:32:24
and so out of control and so expensive that it actually is threatening this engine of creative destruction and at
01:32:32
some point I think voters are going to have to make a choice about whether they're going to try and reign in the
01:32:38
government and create more room for capitalism Innovation or they're going to allow it to get overtaken I I love
01:32:44
your capitalism quote and reminds me of the Winston Churchill one which I'm sure
01:32:48
you've heard the inherent Vice of capitalism is the unequal sharing of blessings the inherent virtue of
01:32:52
socialism is the the equal sharing of miseries it's uh that's a great qu Winston Churchill is strong man strong
01:33:01
he I'd like to hang with that dude that's a guy I would like to hang out with fun guy to hang out with Teddy
01:33:06
Roosevelt oh my gosh I love to go drinking with Teddy guns wow I like to took a bath every day freberg please
01:33:16
don't bring up this whole thing about baths cuz then you're going to make me pull out of my phone the three or four
01:33:21
times you called me from the bath and I took a screenshot I literally free BG's in the bath he lights candles he takes a
01:33:28
picture of his pale stems and he sends it to me and calls me from the bath trth you can't see anything always I have
01:33:36
PTSD he's called me from the bath I know he's in the bath because you hear this kind of like echoey kind
01:33:43
of you know so it does and it's like oh my God you're in the bathtub yeah calling he in the bathroom call from the
01:33:50
bath I'll call you later right it's so dist by way I mean that invasion of of Russia that you're
01:33:56
talking about is not what you think it is here we go so yes we haven't had a general fact update in a while I'm I
01:34:02
actually want to hear your take on this sax like what is talk about the of Putin
01:34:06
yeah tell us yeah what is the real story with the Ukraine counter Invasion into Russia I think you're falling for a lot
01:34:12
of lot of hype I mean what's happening is that the stage of the war is that the the fighting is in the donbass and along
01:34:20
a 12200 kilometer front in Ukraine where the Russians have just been pounding the ukrainians the Russians
01:34:27
have more soldiers they have more artillery they have more air power and they have air superiority and they've
01:34:34
just been annihilating the ukrainians I mean Ukrainian casualties According to some sources are somewhere between
01:34:40
30,000 and 60,000 a month it's massive and unsustainable so what zalinsky did is he basically threw this Hail Mary
01:34:48
where he took some of their best forces their best reserves and had them attack this undefended part of Russia K and
01:34:55
yeah they took a few hundred miles of undefended territory but there's nothing strategically important there and now
01:35:02
Russian air power is basically creating significant casualties among those forces and the Ukrainian forces are now
01:35:09
trying to figure out what to do I mean they're basically running around this part of Russia like headless chickens
01:35:13
trying to figure out where they can dig in and find some defensive fortifications I don't know what zinski
01:35:19
is trying to accomplish I guess it's kind of a PR offensive a lot of people have been fooled into thinking that this
01:35:25
is somehow a GameChanger in the war it's not all zalinsky has really done is take
01:35:29
some of his best troops away from where the strategically important fighting is have them attack this part of Russia and
01:35:36
over time Russia's just going to mop them up did the Russians get caught with their pants down yeah I guess they did
01:35:42
is that an embarrassment to Putin I guess it can be spun that way does it change the outcome of this war in any
01:35:47
way no it's not and what we're on track for is at some point probably next year Ukraine is going to collapse I mean
01:35:56
their position in this war is unsustainable and taking some of their top troops feeding them into curse where
01:36:03
they can be easily picked off by the Russians is only going to accelerate that process and then saaks what about
01:36:09
nordstream what we just found out about nordstream well the the nordstream story
01:36:14
is is very strange because we're on our third or fourth explanation here of what
01:36:17
what happened I mean it was pretty clear that somehow the US was behind it and they've been blaming you know first they
01:36:27
said that the Russians did it right which makes no sense that'd be like the Russians shooting their own legs off
01:36:35
that was the first cover story then they kind of went with I guess delusion he did it from a yacht I guess that's the
01:36:41
story they're on now yeah the Wall Street Journal report just to give people the background of why we're
01:36:45
talking about this the Wall Street Journal reported that Germans investigation into this uh you know the
01:36:50
people who were impacted by it here's the quote the holding was born of a night of heavy boosting and the iron
01:36:55
determination of a handful of people who had the guts to risk their lives for the
01:36:58
country the Ukraine operation cost around 300,000 according to people who participated in it inv a small rented
01:37:04
yacht with a six-member crew including trained civilian divers one was a woman whose presence helped create the
01:37:11
illusion they were a group of friends on a pleasure Cruise so you're saying you don't believe that German report well no
01:37:19
so this report about that yacht being used and and how zusy was is like The Mastermind of this yeah that support is
01:37:27
not anything new this has been out for I don't know at least six months I've always been skeptical about this the
01:37:32
thing to understand about the northstream pipeline is that it was a massive structure surrounded by huge
01:37:39
amounts of concrete on the ocean floor and blowing this thing up required some significant expertise in
01:37:48
underwater demolition I'm just very skeptical that it could be accomplished by guys on a yacht under Zusi I mean the
01:37:56
ukrainians have never had a Navy this just doesn't seem like something that's in their wheelhouse of capabilities it
01:38:03
all it always made more sense to me that the US was involved somehow but how do how do you think an article this detail
01:38:10
that points to the Dutch intelligence Community the German intelligence Community American int how
01:38:18
does an article like this with this much detail then get written and put into the
01:38:24
Wall Street Journal how does that happen I think intelligence sources want it to
01:38:28
happen I mean they have to get their sources from somewhere right and I'm I'm just saying that this story about
01:38:32
disillusioning The Yacht has this is not new this has been out there for many months look I mean it could be true I
01:38:38
mean I I guess I don't know for sure but I I guess I'm also just saying that I'm
01:38:42
a little bit skeptical about this I mean Seymour hsh had other reporting from different sources who claimed that the
01:38:49
US was behind it and President Biden himself at at a press conference said that if Russia invades Ukraine we will
01:38:57
bring an end to the northstream 2 Pipeline and when a reporter asked him how will you do that he said we have
01:39:02
ways we'll get it done and similarly Victoria newand warned at a press conference that northstream 2 will not
01:39:08
move forward if Russia invades and then lo and behold the pipeline gets blown up
01:39:13
and if you're comparing which of these two forces has the capability to do something like this I know for sure that
01:39:19
the US does Ukraine I'm just a little more skeptical of just give you some facts to introduce some facts here it it
01:39:27
was only 260 feet or so down where they blew it up I've Dove to 130 140 feet many times you can easily dive three
01:39:37
four 500 feet this is not difficult I could dive to 260 fet with you know one day of training and I've I've done half
01:39:44
of that and I have only dived 25 times in my life so this is easily accomplished saxs and so this sounds
01:39:51
like it's dead on I mean I know you don't what about the explosives yeah it's very
01:39:56
simple I mean you're literally attaching it to a pipe and you hit boom it I mean
01:40:00
these people are the the Ukraine people are massive amount of explosives to do something
01:40:06
like this no it does not in the face of Ukraine defending itself against Russia one of the greatest militaries on the
01:40:14
planet this idea that that same group of people who have held Russian at Bay for
01:40:18
two years plus can't go down 260 blow it up is ridiculous they could easily do this this is not a difficult task super
01:40:27
easy for the Ukraine Army think you're in position to know I don't think you're because I have facts 260 feet down I've
01:40:34
Dove to 130 it's very easy to go 260 end that's your facts I mean it's it's just
01:40:39
called reality chth I'm sorry sax is the most biased person in the world when it
01:40:43
comes to this it's hysterical to hear him it Jason Jason Jas said you what you just said was it here are the facts it's
01:40:52
260 ft down I've gone to half that so it's possible so they did it no no he's saying it's
01:40:59
too sax is premise is this is too this is beyond the capability of the Ukraine Army that's ridiculous saxs easily well
01:41:11
a lot of people are dumb then it is the stupidest concept you're also an explosive expert as well as I'm an
01:41:16
expert at he some firecrackers he knows what he's talking about as well dude I bought
01:41:24
pineapples that's a quarter stick of dynamite when I was think six guys on a yacht did this easily easily six
01:41:32
ukrainians these are hardcore mofos you you think these ukrainians are not hardcore they were they probably did
01:41:38
drunk they did it drunk I bet you they were half in the bag when they blew that up that's why Russia can't beat
01:41:46
them I've also read the Seymour HS story and it just makes a lot more sense to me
01:41:49
that's all I'm going to say is it just makes a lot more sense to me and by the way I've never taken away anything from
01:41:54
the ukrainians as a fighting force I mean clearly they are fighting bravely and they are hardcore I've never taken
01:42:01
that away from them and I'm certainly not saying that they're incompetent or anything like that and they've
01:42:06
definitely been massively plused up by American weapons and you'd like to see them win versus Russia and get Russia
01:42:11
out of their country right I would like to see America stay out of other people's Wars and I would have liked to
01:42:18
have seen them agree to a peace deal that would have avoided this war okay okay who would you rather win the war
01:42:23
Russia or Ukraine if you had to pick who would you rather not my War I don't think America should take sides in other
01:42:27
people's Wars I think we should stay out of them and I think we should agree to peace deal when we can and not sabotage
01:42:32
those peace deals yeah I'm for peace deals too I'm also I'm also for democracies beating autocracies okay
01:42:38
everybody this has been another amazing episode let's canceled elections this has been another amazing episode of the
01:42:45
Allin podcast for the Rainman yeah David Sachs the one and only Sultan of science
01:42:52
David freeberg getting ready for the all-in summit sold out great speakers lots of surprises for y'all and our
01:43:01
chairman dictator so rested so tan working 15 hours a day in Italy and we'll talk about wi I have I have
01:43:11
something that I have something I have something for around 8090 that I'll be able to talk about hopefully Sooners oh
01:43:18
yum yum oh I SL a little bety in there all right everybody I am world's greatest moderator and the executive
01:43:25
producer for life love you boys see you next time everybody byebye let your winners
01:43:32
ride Rainman David and instead we open source it to the fans and they've just gone crazy
01:43:40
with it love queen [Music] of Besties my dog taking [Music] driveway oh man myit will meet me we
01:44:00
should all just get a room and just have one big huge orgy cuz they're all this useless it's like this like sexual
01:44:05
tension that they just need to release Som we need to get mer [Music] I'm going all and now the plugs the all- in Summit
01:44:29
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