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all right everybody welcome back to the Allin podcast the Channel's been active we're in the Afterglow we're in the
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Allin Summit after it's so glowing that freeberg couldn't make it he has been writing a
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high Nick told me that in the last week just we uh we've only put out a half the
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clips and they've already gotten 20 million views oh my Lord I you know I I I so we'll be we'll be around 50 million
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I think when all the clips are released and you let it bake for a couple of months that is an astoundingly large
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amount of breach yeah and that's just YouTube we're not doing it on the podcast feed right now YouTube and X
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well hopefully we get it on the podcast feed we get another 50 million uh but uh
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free Berg's in his Afterglow couldn't make it but he's very busy right now look how happy he is the summit went
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well is that marijuana I think he's making potatoes I think that's his farm but I mean the smile is incredible it's
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marijuana it's free BG's version of founder mode he's in that's freeberg founder mode he's hitting the bong his
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founder mode [Music] gives let your winners [Music] ride and instead we open sources to the
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fans and they've just gone crazy with it queen of he is uh he's in the Afterglow um and
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he won't be with us this week um but uh he organized such a great conference don't you think J he did great uh I mean
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he really took charge of that and just did an amazing J I would like to give him his flowers absolutely it is like at
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least a trillion times better than the first and at least 50% better than the second I mean that's how it should go
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you know when you create something in the world chth what you want to do is you want to H you want to hand it off to
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Professional Management to then scale it right not everybody can do the creative
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act of actually forming something you need to have these operators to go and then execute your vision and uh I just
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want to give free to break his flowers for executing incredibly well we all play a role jamat saaks launched a
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tequila company I want to say thanks to uh Friedberg he did all of these great speakers big thank you to our CEO John
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who put together all the operations Nick did incredible Nick did incredible incredible job with those opening
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Graphics they went viral uh Zach helped with the graphics you had young Spielberg chipping in you had Laura did
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an amazing job with Stage management and of course you know I focused on the moderation I got a lot of great things
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so everybody plays a role you got Sachs with the tequila Friedberg Laura Zack Spielberg Nick John everybody
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brought something to the table are you congratulations to everybody you scale through people
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that's it scale through people that's it did anybody nobody got the joke we chth everybody contributed you
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understand Sachs new tequila company John operations your freeberg content me with the being the world's greatest
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moderator up there what ch's contribution oh yeah chath showed up chath chth looked great I showed up
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that's just he showed up and looked great I brought my two votes and I brought my vision absolutely I would
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also say fan favorite you what you really did that was amazing was you took a lot of selfies I was very proud of
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both of you with the fans service and fans were very pleased that you guys took so many selfies you know we got a
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lot of feedback too coming in so it was uh pretty pretty great feedback do you think that you did
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better as moderator because you finally let go of just the conference organization what
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yeah I think that you were able to focus on your unique value ad instead of immersing yourself in a bunch of details
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that could be handled by the team I agree um it was absolutely process to get you to let go well you know you have
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it's it's a fair point I I did people did say my moderation was dialed in and I appreciate that positive feedback from
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everybody and um yeah there is something to having people you trust with the content thought your moderation was
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excellent this time it was better than before because I think that you're actually exceptional as a moderator and
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I think you're mostly average as a conference [Laughter] producer I do think as a moderator
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you're excellent I mean like some of the most memorable moments were you basically drawing out contrasting
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opinions and the way that the people engaged with them was so healthy and good that was the I think the curring
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theme so I gave you an enormous amount of credit I think you did an exceptional job but I also think it's because you
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were able to focus on what you great at I I do agree with that I was talking to Jade about and she said and Nick also
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pointed out you were really dialed in J what what's up and I said I'm not worrying about the party and the vendors
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and the front desk and the sponsors and it is actually you're able to to focus did you have some favorite moments
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yourself there saxs any favorite moments for you or panels or things maybe that exceeded expectations for you well I
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thought the Mir shimer Jeffree Sachs panel was great I thought it would be which is why I helped organize it but I
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was just glad that the audience so many people in the audience reacted and said that was the surprise head of the
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conference I would say that was my favorite of the event one of the best panels I've ever been part of it's the
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most viewed it's like slightly above elon's one really oh just behind El elon's slightly ahead but yeah it's
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still like growing it's like finding an audience well I think that I think that if you if you look at the one from last
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year greme Allison where he got a standing ovation the thing is there are these Village Elders where they are at a
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point in their life where they're willing to just be a truth teller but often times they're
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deplatformed and we have the ability to actually bring some of the smartest of them on and give them a voice and it's
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incredible how much they resonate because what they say is so logical and sensible that's a that's a really
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important thing that we have now at our disposal and I think that people really appreciate it you know so we're like a I
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think we're doing a really important job in doing that and now the question is what village Elders do we get next year
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to keep you know being truth tellers well give us your thoughts you know there's an all-in um Twitter handle and
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he's chamath David saxs and I'm at Jason and freeberg at freeberg just tell us who you think would be great but saaks I
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know you're super excited and want to give Biden his flowers the FED just cut rates 50 bips and the stock market is uh
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tearing it up right now on Wednesday fed cut interest rates by a half a percentage Point taking them down off of
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a 23-year high we've been talking about this God for two years here on this podcast First Rate cut since March of
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2020 which is about when we started this podcast jpow basically said the FED thinks inflation is coming down to
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around 2% nicely and they don't want the job market to soften any further than it
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already has he also mentioned mentioned immigration has helped soften the market
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uh the labor market as well obviously with all those new people looking for jobs so in the last two months July and
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August CPI has been at a two- handle we talked about that 2.9% in July 2.5% in August here's the CPI over the last
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decade obviously massive boom uh in interest that you see there from 2021 to 2023 many obviously think we're going to
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have more R Cuts probably every meeting for a little bit and um Dow's already at an all-time
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high surge 300 points on the news here's um here's uh some interesting data about the 50 basis
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point kickoff Cuts so uh this is where it gets interesting chth fed only started publicizing their interest rate
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changes in 1994 since '94 fed has initiated a cutting cycle six times here's the chart take a good look at
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that 95 98 2019 they started with 25 bips 01 and 07 after the great financial crisis they started with a 50 bip cut so
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obviously there was an emergency 50 bip cut in March of 2020 when Co hit 0107 2020 very severe
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situations and the what happened in the markets is what I want to discuss uh with both of you today in 20 2001 Market
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fell 31% in the two years after that rate cut in 2007 Market fell 26% after 2 years so and 2020 despite all the fears
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Market ripped 44% over two years what's the more likely scenario chth is this similar to the Doom great financial
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crisis or similar to 2020 well I think 2020 you have to put it at Big asteris because the question
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is what would have happened had there not been covid and had there not been an entire global shutdown so if you go back
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to that chart you could probably just extrapolate and cut out that part that's flat because the part that's flat from
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2020 to 2022 was largely artificially created because on top of that we injected so much money into the economy
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the reality is we probably would have raised at some rate of change that you could have predicted from 2016 so what
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do you what do you take away from that I think that you have to like realize we are at a point in the economy where you
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cut rates because there's tension and there's tension between employment and unemployment there's
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tension between earnings growth and contraction and so it's a stimulatory move so if you look through that
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stimulatory move why is the Fed doing this and why will they cut probably all the way down to two or 3% by the end of
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26 it's because we now need to stimulate the economy again so the reason why markets tend to fall once the rate cut
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cycle starts is because the next couple of quarters sort of demonstrate what I think the FED is expecting which is that
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there's pressure in the economy we have not seen that flow through in earnings or in how companies describe markets on
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the field by and large except for a few so I think this part of the cycle now will be about all of these companies
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telling us whether there's nothing to see here or whether there is actual real pressure and if there is real pressure
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it'll probably look like the several times before where you're just going to have to contract the value of financial
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assets because they're just not worth as much when they're earning less okay saxs
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any thoughts here just balls and Strikes I think a lot of people are commenting on the fact that the only other two
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times where we've had a 50 basis point rate cut in modern history it has been just before a recession so I think this
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happened in 2001 2007 right before the recession and the FED had to do a dramatic rate cut because they could see
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in the data that things were weakening so a lot of people are asking the question well is that what's going on
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here now Pal's comments though are indicating that the econom is in good shape he said the economy is in very
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good shape that um basically indicating that they had tamed inflation and that they would look to cut another
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50 basis points this year so Pal's rhetoric is uh in a way at odds with the magnitude of this cut the you know so
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why didn't they just cut 25 basis points I think people are trying to figure that
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out reading the tea leaves into 50 because they could just do 25 a month sure mon the econom is hot yeah if the
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economy is hot why would you tiptoe into rate cuts uh and just do 25 now that's the key
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thing if you look at the The Dot Plot and if you look at where the Smart Financial actors are betting where rates
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end so it's hard to sort of like look at any point in time 50 now 25 later what does it all mean it's very hard to know
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but what is much clearer is where do we think terminal rates will be in even in the next 18 months and it is
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dramatically lower for where they are now and I think that support sacks your that argument that you just made which
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is if you're going to basically cut this aggressively over the next year to year
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and a half by the estimates of very smart Financial actors whose job it is to spend every day observing the FED
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then they must see something because otherwise as you said you could take a much more gradual approach and so I
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think that the Smart Financial actors are guessing recession or guessing contraction I think what they're also
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guessing is similar to nonfarm payrolls we're going to go through a couple of difficult GDP revisions probably
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downward and I think that will have an impact to people's sense of how the economy is
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doing even more than what their sense is today which is already teetering on it's
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at best okay and I think all of that has to play itself out so it's going to be a very
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complicated and dynamic fall in that respect yeah and and I think so much of this has to do with Unemployment uh we
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had that period where so many jobs were available remember we talked about it here 11 12 million jobs available at the
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peak we can debate the numbers of course but we all saw it where you just couldn't hire a talent in America there
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was so few people available to to take positions and man has that changed and you get to see it on the ground in early
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stage startups where this whole narrative I don't know if you saw it in your board meetings but hey we can't
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find a person hey we're looking hey that search is still going we're still looking for a director of sales we're
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still looking for sales people we're still looking for developers we're still looking for operations people now it's
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the opposite it's like I I just I'm hiring producers here in Austin because I'm building in my inperson studio we
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had like I don't know a dozen viable candidates for this position and I had a hard time picking between you know the
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top three now that's distinctly different than my experience for the last five to 10 years where you were
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like how do we how do we fill this role so I think that employment has been broken
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and that's the thing that has me concerned because with all these people who came in through the southern border
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and then you have people Outsourcing to other countries I wonder if Americans are going to lose so many of these midp
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paying jobs and this will dovetail into our next story about Amazon making Cuts I'm very worried about the the hollowing
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out of the upper middle class that Elite group of $150,000 jobs that then employ nannies
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and spend money in the economy I wonder I don't know if you're seeing that in your company sacks
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I'm not worried about the hall out of that that class you have disain for them but I
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mean just in terms of the labor market what do you see you know in companies right now you know hiring the talent
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pool Etc well I mean in tech things are are pretty good I mean they they're not as absurdly frothy as they were during
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the bubble of 2020 and 2021 but things are good you have this huge AI Tailwind now and there's just a ton of investment
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going into AI there's a little bit of A Tale of Two Cities going on if you're in
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AI things are really bubbly and if you're outside AI they're they've return to much more normal levels in terms of
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valuation and Company operations all that kind of stuff just to go back to the state of the economy for a second
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the the reason why a lot of people were predicting a recession including me for a while is that the yield curve
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inverting has been an almost perfect gug of whether a recession is coming it's when basically the FED raises short-term
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interest rates above long-term interest rates normally long rates are the ones that should be higher because investors
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demand a higher rate of return to tie up their money for longer so something's really off and kind of broken when short
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rates go above long rates the yield curve inverts and it's always been the Prelude to a recession but the recession
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doesn't come when the yield curve inverts it usually comes when the yield curve de inverts
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and the reason for that is because the FED now sees weakness and dramatically cuts the short rates so in other words
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it jacks up the short rates to control inflation that works it trickles through the economy the economy cools down and
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then the FED says oh [ __ ] maybe we've over corrected they slam on the brakes and then they cut rates to basically
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make up for the effect in the economy so the yield curve has finally de inverted
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and the question is just do we now get that recession or did the FED manage this to a soft Landing I don't think we
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know I'm not I'm not like calling recession but this is the the thing that people are concerned about yeah well
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saak we were talking about AI in the group chat right yeah I think it's now becoming really clear that call centers
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are going to be the first really big disruption caused by AI yeah I mean all the level one customer support is going
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to get replaced by AI I mean llms plus voice cuz you know open AI just released their audio
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API you saw that at the All In Summit we released A Mir shimer AI yeah where we trained it on all of his work and you
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can go to Mir shimmer. and ask a questions and it will tell you the answers in his voice because we cloned
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his voice using resemble AI anyway so AI can do voice now and it can be trained extremely well on large data sets to
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give you answers to questions which is pretty much what customer support is so I think it's now becoming clear that I I
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think within the next two to three years you're going to see a massive disruption
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in that I agree with that massively and I think there's another underreported story which is people don't like to call
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and talk to a customer service agent like an actual human if they can avoid it they would much rather go on YouTube
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and say how do I fix this or you know ask chat GPT how do I fix this it's like I don't want to waste another person's
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time just give me the answer as quick as possible and AI will give you the answer
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quicker YouTube will give you the answer quicker I've had so many times where I have people who work for me who are like
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I don't know how to do that and I literally would walk up to their computer and load YouTube and type in
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how do I blank and there's a video there watch it on two speed you can do it that's what's you know gonna also kill
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this like I I don't want to talk to a human just change my flight just you know question yeah I mean you talk about
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disruption call centers are a very big part of the economy in certain geographies Denver Sal Lake I mean parts
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of yeah exactly it's a really big deal if like half the cost gets ripped out of those call centers where would you move
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those people if you if you had your choice could they move to sales well I think sales will be the one that's
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disrupted after customer support but um but I don't know I think it's going to be very disruptive one of the reasons I
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think this is you know in the early days of llms people were saying that legal services would be disrupted and you saw
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some very highly valued startups Rock up based on that I think the problem with that is the error rate so when you think
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about AI applications you have to think about what is the tolerable error rate that the industry will allow because we
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know that AI get things wrong they can hallucinate and you're never going to be able to make it perfect I mean you can
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improve the quality but it's still going to have some errors and when you're dealing with like legal services for
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example you just can't have mistakes it's just not tolerated however customer support is different customer support is
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already organized into levels level one level two level three based on difficulty and there's already in a
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sense a mechanism for failover if like the level one customer support person can't answer the question they kick it
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up to level two so there's a place for llms to start in customer support which is replacing all the level one and then
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working their way up the chain to level two as they get better and better and so
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what I'm saying is that the level of accuracy now especially with the new PhD level reasoning models is good enough
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yeah we don't need to wait for like some perfect llm model and I think this is why this is going to be a big big
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disruption let me people potentially are going to have their their jobs disrupted
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or at least transformed well it could be the end of the entire career as well jamath if you were to look at this 4x4
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sort of quadron chart that sax is describing which is the cost of an era you know and
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um the actual complexity of the job perhaps or the cost of the job how do how do you look at this I know you're
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working on software that kind of does this with your startup as well I mean I'll
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preview one use case from 8090 which is pretty stunning you know we work with an a very
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large regulated highly regulated company public company and they have a very complicated
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set of people and processes because of the the field in which they're in and David your point is exactly right
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it took us a fairly long time but we're at a point now where we've been running AI powered
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software versus the old Legacy deterministic solution and we've been running it at 100% accuracy now for
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about 10 days so this is still very new and it's an incredible thing because to your
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point our first version was like a in the mid 80s then we were in the mid90s then we were you know 97 98% but there
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was still errors and it just took a lot of engineering to figure out how to get to 100 but now it's at 100 and it's been
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consistent at 100 and so we're all kind of like scratching our head because now the next step is well what do we do to
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your point what what do we do do we so we're we're figuring that out right now but the art of the possible is that
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I think well-crafted AI software is as good as deterministic software in the sense that the error rates will be
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equivalent in production and at the level of very highly regulated public company and I think that's the gold
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standard because in those sectors those companies have zero tolerance it's not a
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toy it's not even you know level one customer support it's system of record type work yeah but it shows what's
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possible and to your point saaks we're doing that today even though they're the best models imagine how good those under
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the underlying models will get in a year from now yeah right and we'll be able to
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take on more and more work it's it's very stunning actually it's really have you guys worked with the 01 preview yet
00:24:03
I I just literally have been using this new reasoning engine that open AI released and it is extraordinary and
00:24:10
it's kind of thinking about the next three or four prompts you would do and I literally just got this while we're on
00:24:15
the show I've hit the I've hit the limit for my paid account because this thing is so intense on compute I guess well
00:24:23
the thing with o1 is that I think it's starting to add reasoning but the way that you do reasoning
00:24:29
is sort of this idea that you have this Chain of Thought and I think that that's
00:24:33
a very powerful but early concept and as we refine those ways in which these models get the better answers the
00:24:43
wonderful thing is that open AI will preview o1 and then they'll have the actual 01
00:24:50
production build probably in the next couple of months which will be probably pretty spectacular but then you'll see
00:24:55
something from Claude you'll see something from llama and the real art I think and this is where I do think it's
00:25:02
a little bit of alchemy still which I think is good because it it keeps humans involved all of us involved
00:25:08
yes is how do you Stitch all of those things together to get to a 0% error rate what what sack said you know how do
00:25:15
you minimize the blast radius and how do you make sure these things are super high quality right well and people don't
00:25:22
it's still a very hard technical problem go ahead SX and then I I'll show you what so yeah one of the reasons why I'm
00:25:27
bullish on this customer support use case is because there's a very large data set to train on you've got all of
00:25:33
the product documentation that companies very created you've got all the previous
00:25:37
email support you know and calls yeah the calls have been recorded so you can out train the AI on that so there's a
00:25:45
very large body of data to train the AI model on and it's not necessarily the most proprietary it's not like dealing
00:25:53
with people's medical records or or even confidential legal documents something like that so the data is readily
00:25:59
available and then the foundation models are getting really good I think there's
00:26:02
a big question here about value capture which is there's a number of startups now that are becoming very highly valued
00:26:09
that are chasing this disruption this sort of customer support agent disruption and they're getting into very
00:26:17
high valuations even unicorn valuations already and the question is well wait if
00:26:23
if the foundation models are advancing at such a rate exactly like a year from now why couldn't a like a developer just
00:26:29
a startup of a few guys take next year's model train it and then commoditize the you're you're making such a good
00:26:38
point this so when we were trying to figure out like what applications we would build and like which sectors of
00:26:45
the economy we would go after I was like guys we got to go after the hardest most
00:26:50
regulated places because those are the things and places and people that have absolutely zero tolerance for error and
00:26:57
where you're going to need to do some amount of customization and and specialization
00:27:03
to actually solve these problems and S to your point like when you see and I said you cannot we cannot touch customer
00:27:09
service we cannot touch it because it's going to get commoditized and run over by these
00:27:15
foundational models within a year right you you'll be able to deploy these it's just too easy you'll be able to do it on
00:27:22
a local computer I mean you'll just download the entire database of every call on a MacBook with by the way just
00:27:29
to build on that that the other thing that's now possible and you saw this with Clara because Clara put out this
00:27:34
like cryptic tweet press release where I think maybe it was in their earnings Nick maybe you can find this where
00:27:40
they're like we've deprecated Salesforce and worked it that like range how how can a company that big deprecate those
00:27:48
two systems of record how is that even it's how is it means they're writing their own right well I'll tell I'll tell
00:27:54
you how it's possible and so this is like this next crazy thing that's been happening we've been doing a version of
00:28:00
this to go after some other sources of software we haven't had the balls to be honest to go after s force or or work
00:28:08
day but here's how they do it they write these agents and these agents can spawn
00:28:13
other agents right so it's very classic kind of machine that builds a machine and you start to observe the inputs and
00:28:19
outputs of a system right I'm I'm hyper simplifying but I'm just it'll make the point and over time what the agents
00:28:26
start to do is by observing the inputs and the outputs they start to guess on what the intervening code is and the
00:28:32
code pths must be in the middle to generate the outputs based on these inputs and so over time what happens is
00:28:38
you develop a digital twin and then you run that against that counterfactual against workday or Salesforce and then
00:28:47
at some point you're like it's the same and you you just turn it off and you're saving yourself tens or hundreds of
00:28:54
millions of dollars so that's it's a version of what CL did it takes an enormous amount of technical strength to
00:29:02
do it it also takes tremendous I think Executive courage and Leadership because I think that's a very difficult decision
00:29:09
to embark on but if you're an engineer that must be an unbelievably exciting technical challenge to be a part of but
00:29:17
but that's the basic premise of what they were able to do hopefully they share more and maybe
00:29:23
they even open source what they did because I think it would just be an amazing thing for all of us to look at yeah I
00:29:30
mean to to restate it watch people use a piece of software and then based on what
00:29:36
they do you could write the code which you could take a video of a video game today like Angry Birds and somebody did
00:29:43
this you give the Angry Birds iPad you know game from 15 years ago to AI it's going to back into the code just by
00:29:52
watching it so why not just watch people use Salesforce or workday and those are
00:29:56
very expensive products thousand of dollars per user right I want to I want to get Sax's point of view like the
00:30:01
thing in Enterprise software that we were always told is you cannot touch these systems of record don't ever start
00:30:06
a systems of record company don't try to touch these systems of record companies
00:30:10
don't you know try to disrupt them it's an impossible task but then the question
00:30:15
is if you have these things why do you necessarily need a system of record in the way that you
00:30:22
needed to before when you're writing all this clunky deterministic I don't well I
00:30:27
saw the clar story where they said they were going to rip out Salesforce and and
00:30:31
work day because they were able to write their own bespoke code using AI I mean I
00:30:36
have to say I'm a little bit skeptical of that story for a couple of reasons one is if that's their goal why wouldn't
00:30:42
they have open- sourced this these products they created you might as well get the whole ecosystem working on it
00:30:47
because they're not trying to sell this product that they've internally created they're just trying to rip out the cost
00:30:53
so why not let the whole ecosystem see it the other thing is if it's so easy to do why hasn't the market already been
00:31:01
flooded with new startups that are effectively able to reverse engineer I don't think you're right I don't think
00:31:07
it's easy to do because I don't think there's a generalization here that's producti do you know what I mean like I
00:31:13
do think that these are very custom specific things so maybe there's like some scaffolding but I don't think that
00:31:19
that scaffolding has a ton of economic value I think it's really good open source stuff yeah I think it's what you
00:31:25
build on top of it and so that hasn't been figured out yet for sure yeah look I I think that if you're only using a
00:31:32
few use cases of these big complicated software packages then yeah it's probably easier than ever to deprecate
00:31:40
them you know eliminate them from your stack and just have your own internal engineers build specifically what you
00:31:45
need in a more tightly integrated way I think that is possible Nick show this tweet to these
00:31:52
guys here's the tweet this is this was a crazy one yeah so so look at but look at
00:31:59
the code look at the actual product itself for a second yeah but the product's garbage I mean look how
00:32:05
ridiculous this is but that was 600 sorry it was a billion dollars that so here's
00:32:12
theor paid Oracle 600 million to build our course management portal it's built on top of oracle's people soft Suite
00:32:19
which they refuse to customize without an extra 400 million to hit 1 billion New Yorkers got the image below and pay
00:32:25
5 million plus a year for hosting look this this is egregious government waste I mean that site looks like it's
00:32:33
pathetic I mean honestly this looks like it a it could have been done with a SharePoint site and you pay some
00:32:39
consultant to stand it up and for 1% of the cost and to there are better plat more modern platforms than that so this
00:32:47
is just incredibly wasteful and inefficient government spending they're going for retro they were going for
00:32:54
retro they wanted to hearken back to the 90s the reason I wanted to I wanted to show
00:33:00
this to you is I think that these kinds of things will not be possible in the future I just don't see how one could
00:33:08
spend a billion dollars if one tried to to enable that feature it be impossible right but that that that 600 million
00:33:16
that was wasted on that um crappy portal that shouldn't have happened even without AI right because there's like
00:33:23
much better ways there you could you could buy a much better product for 1% of the cost so or .1% of the cost there
00:33:29
must be some regulatory capture going on here where somebody's got a reput Rel that's what I'm saying like a
00:33:36
10year relationship with somebody in Albany that you know at previous Fraud and Abuse it's the same thing that's
00:33:44
happening with um rural internet you paradoxically is our next story so let's go for it in related news of our
00:33:54
government burning our money we're all Brad BR band rural broadband and EV charging 42 billion and 7.5 billion
00:34:03
almost $50 billion combined let's just go over these two programs real quickly here both were part of the $1.2 trillion
00:34:11
infrastructure bill in 20121 42 billion carved out to provide high-speed internet to people living on farms in
00:34:20
rural locations 7.5 billion carved out to build 500,000 EV Chargers over 10 years it's been a thousand days days
00:34:27
since the bill was passed so let's check on the progress zero people have been connected according to FCC commissioner
00:34:34
Brendan Carr and eight 1 2 3 4 5 6 seven eight e Chargers have been built as of May according to Auto Week Magazine
00:34:44
what's even crazier Private Industry already solved these problems United Airlines just announced they're putting
00:34:50
starlink on a thousand of their planes and they're going to offer it for free and starlink now has 2500 planes under
00:34:59
contract with a bunch of other Airlines and uh in the second half of 2023 alone the private sector built over a thousand
00:35:08
charging stations in the US these are two problems that's have already been solved sacks why are we burning $50
00:35:17
billion in the future with on things that have already been solved we've solved for this you I own
00:35:26
electric cars I you know the answer you know the answer say the answer Jason corruption no come on Jason
00:35:34
incompetence really graft keep going I mean you tell me corruption graft buying votes from your
00:35:45
constituents they haven't they haven't delivered any of it incompetence yes well there's there's a couple things
00:35:52
going on here so one is typical government waste Fraud and Abuse where theyve allocated 42 billion for Rural
00:36:00
internet haven't hooked anyone up and we could spend a fraction of that giving people Starling and allowing the private
00:36:08
sector to do its job and why even pay for it tax why are we paying for it if it's available for 100 bucks that that's
00:36:14
the Baseline but it's worse than that because on top of the waste Fraud and Abuse and the fact that the government
00:36:20
is grossly incompetent inefficient you also have naked political retaliation going on here Ah that's the answer yeah
00:36:28
exactly and Brendan Carr who's an FCC commissioner pointed this out he said that in
00:36:33
2023 the FCC cancelled or revoked an $885 million contract with the company by claiming starlink is not capable of
00:36:42
providing high-speed internet then a year later yeah of course that was a lie and then a year later the FCC is now
00:36:50
claiming that Starling provides so much high-speed internet that the word monopoly should be uh tossed out yeah so
00:36:57
look this is just it's pure naked retaliation the the Biden Harris Administration doesn't want to admit
00:37:04
that Elon has the best solution for Rural internet just like they couldn't admit he made the best electric cars
00:37:11
remember when they did that EV Summit and they didn't invite him that was just nakedly political um because
00:37:17
he's so look I mean the the Biden Harris Administration it look it's blue no matter who and Elon has drifted from
00:37:26
being sort of in independent and not he was blue what it is Ian voted for Hillary and Obama he said he's no longer
00:37:35
team blue and so they're punishing him for this yeah and it's costing taxpayers a huge amount of money I I think this is
00:37:41
one of the worst Decisions by the current Administration and if Trump gets in there he should reverse it on day one
00:37:47
well I wean need to investigate I mean I think how we got to the point of wasting
00:37:51
50 billion dollar that requires an investigation I think chath your thoughts one comment is
00:37:58
and this is so sad but I'm so desensitized by the amount of waste that I don't know whether 50 billion is a lot
00:38:05
or a little anymore when it comes to the United States government isn't that sad
00:38:09
like because now everything I hear is hundreds hundreds of billions and trillions but 50 billion is an enormous
00:38:17
amount of money right well that that's such a good point and I remember you know back in the day 60 Minutes used to
00:38:24
do these segments on waste Fraud and Abuse at the Pentagon different parts of the government $42 billion just spent on
00:38:31
something that really taxpayers could have for free or without the government getting involved and you know 42 billion
00:38:37
that was lining someone's pocket when the service doesn't even work that would have been a scandal and the media would
00:38:42
have covered it but the media doesn't even cover it these days and again it's because the media has become so tribal
00:38:48
that it's better dead than red and blue no matter who and so because the media would have to admit that elon's already
00:38:55
solved this problem they just can't go there they won't even cover this and so we have no accountability there's no
00:39:01
accountability on the government if I had to just take a step back and just generalize going forward do we want to
00:39:08
live in the kind of administrative state where they will pick people that they dislike based on
00:39:20
totally random criteria a tweet a meme a post and then all of a sudden punish a bunch of the rest of us because of that
00:39:31
they're punishing all of America because they collect our taxes to waste on it and then they punish the people that
00:39:38
they actually say they're going to uplift by not delivering what they promised and if you take Elon out of it
00:39:44
for a second the the problem was when we crossed the chasm and did it with the first guy him but the reality is there's
00:39:52
only one of him and then there's a lot of the rest of us and what will happen is people just get added to this list of
00:40:00
folks that certain nameless faceless people in the administrative State dislike and what happens is the country
00:40:08
slows down and the country wastes money and the country pilers it away and that has to stop and so what really bothers
00:40:15
me about these things is a I don't know how to UND desensitize myself to the fact that all of a sudden now because of
00:40:22
just all of this sloppy waste I didn't react as much as I should have to just $50 billion being flushed down the
00:40:30
toilet on these two projects and then two Jason your point it is a solved problem that you can give incredibly
00:40:39
cheaply and the fact that it's not left to private Enterprise to solve this and instead it's just Brazen partisanship
00:40:47
combined with retaliation combined with incompetence votes by giving this money to other vendors who are giving them
00:40:55
donations and just to give the Democrat what happens if then Trump does the same
00:41:00
thing for a solution that you support and you need and you think should be everywhere the point is we don't want
00:41:06
any of this stuff under any Administration andar it's and the minute that one Administration breaks the seal
00:41:14
and makes it acceptable it becomes part of the water table and that's the real problem we broke the seal on this crazy
00:41:22
multi- multi- trillion dollar spending and it is just never stopped since then and you know the incentives really
00:41:28
matter uh if you look at a private company if you were at clar and to our previous story and you go to the boss
00:41:35
and say I know how to get rid of these this wasteful spending we're doing here we can get rid of all tier one calls
00:41:41
with AI and save that money you get a promotion if you're in the government you can't if you're a
00:41:48
politician and you cut this program your constituents get upset you don't have that stuff being built in your District
00:41:55
there's a perverse incentive that you can't buy buy the votes which is why these folks are constantly trying to buy
00:42:00
votes and the good news is the good news is I I really applaud the people that have the courage to show the stuff on X
00:42:09
to tweet this stuff out so that the rest of us know about it and the person that
00:42:13
talked about the NYC thing but then the next step has to happen which is that we
00:42:18
all need to decide that this stuff needs to stop other it's going to bankrupt our
00:42:22
country and we have to celebrate it that's the key if we can celebrate people save money again like mle is
00:42:29
getting a lot of credit and that's up to us leadership in podcasting or the media
00:42:34
or influential people who have followings if you point out hey this is a waste go save this money and somebody
00:42:39
does save the money well why don't we start celebrating people saving the money and doing the right thing here
00:42:44
because this is our children's future is it true that kamla was the Broadband Zar
00:42:50
that was responsible for this thing I mean it's who knows it's just no because I saw it I I saw that a bunch of
00:42:56
senators wrote letter to her and they claimed that she was the Broadband Zar but I don't know if that's true or not
00:43:02
true and whether she was remember she was the AIS are I mean the administration did put her nomy in
00:43:10
charge of various technology initiatives here's an idea save money get the get the best solution at the lowest price
00:43:17
and then re-evaluate that as you go and I just want to point out with the it's a
00:43:21
this is a a subtle point but Elon also open sourced his patents for the superchargers and let anybody do them
00:43:29
and he opened up the superchargers to other vehicles which he didn't have to do and when they gave him a loan back in
00:43:37
the cindra days and the Fisker days remember they gave these incentives in the form of loans he's the only guy who
00:43:42
paid it back everybody else failed so now you're punishing the guy who actually built the infrastructure for
00:43:48
both of these projects so the reward for actually doing the right thing which starlink did SpaceX did and Tesla did is
00:43:56
to be punished and then you're giving a leg up to somebody else who's building these Char who's more qualified to build
00:44:01
these charges at scale or a satellite Network at scale the person who's already done it he's already done it I
00:44:07
do worry that there's a growing version of the Elon derangement syndrome that's also kind of like festering yeah for
00:44:16
sure which just it just stops people from thinking rationally of course I mean we're talking about laying fiber
00:44:23
lines cable modems to people who are hundreds of miles into the countryside that makes no sense when you can just
00:44:31
beep put a satellite dish up today what are we even talking about I mean government has never been
00:44:37
particularly efficient but there was a period of time where people would at least care about wanting to make it more
00:44:44
efficient and it would be a scandal if there was political corruption to try and bias the result in a way that
00:44:51
actually deprived the intended recipients of the program from getting the services they were supposed to get
00:44:56
and cost cost the government way more money than it needed to we're so far beyond being that country anymore where
00:45:04
we actually debate the best policy we're now it's just like we're Waring political tribes and the objective of
00:45:12
the party is to punish its political opponents to engage in retaliation and to basically loot the public coffers as
00:45:21
much as possible on behalf of their constituents and that's what's basically happening you know it's completely
00:45:26
dysfunctional well let's use this podcast if you see government ways tell us no really cares because the media
00:45:31
doesn't really shine a light on it because they're they're completely tribalize as well I agree with
00:45:36
everything you're saying except the last part I don't think it's on behalf of their constituents I don't think any of
00:45:40
us see any benefit from any of this spending no no I meant they're donors the they donor constituents they not not
00:45:47
the citizens of the country but who but who's winning in this it's not like this
00:45:52
42 is is 42 billion lining the pockets of I don't know name me how do you think all those fiber companies that are going
00:45:59
to lay that fiber are going to get that money and then and then they're going to
00:46:03
cont it's been it's been three or four years they they haven't done a single thing I mean I still think they're cash
00:46:09
the checks yeah it seems like we're at the stage of just pure incompetence and retaliation we're not even at the stage
00:46:14
of actually even giving it to anybody else I mean that would be so they're giving the money away and they're so
00:46:21
incompetent they're not getting the political benefit from it no they're so incompetent they can't get out of their
00:46:25
own way but somebody's getting that call it 50 billion that we don't need to spend and the way that money is awarded
00:46:33
is going to be political we're going to think that they're going to turn around and give big political contributions of
00:46:38
course they well I think I think that I think the good news is that the more of these things we shine a light on the
00:46:43
harder it'll be to hide when these grants are actually given or what the execution is and
00:46:50
running list let's start a running list no to your point Sak maybe like you know
00:46:54
we need a Revival of the 60 minutes you know waste Fraud and Abuse on this program we'll do it at the end of the
00:47:00
show every time we have a running list at allin.com of just every of one of these scandals and we'll feature it so
00:47:06
leak it to us first send it to us my DMs are open all right listen early stage investing has always been hard there was
00:47:13
a tweet storm this week that y combinator might be having a hard time replicating their early success we'll
00:47:19
discuss it now a thread this week from ex user molsen Hart caught a couple people's eyes he made the case that it's
00:47:25
been a rough decade for y based on the accelerator top companies page YC list as top companies by 2023 Revenue there
00:47:34
and uh you'll notice there's not a lot of companies from the recent cohorts out of the 50 companies featured only three
00:47:38
are from the classes after 2020 most of them being from the early 20110 10 obviously that's because they've been
00:47:45
around longer but it sparked a big discussion that there were so many winners from the 2009 to 2016 era and
00:47:53
that uh maybe the class size at YC has expanded a whole bunch and maybe that's part of the problem but there's a bigger
00:48:00
problem in VC that we've talked about here here's a chart from Carta that just shows the percentage of VC funds that
00:48:07
have made a distribution since 2017 over 40% of 2018 vintage funds have not made a single distribution yet uh
00:48:16
and it's getting to the point year five six or seven where you probably should have had some distributions occur
00:48:22
obviously a lot of this has to do with maybe m&a and those early winds being taken off the table we've talked about
00:48:28
that a whole bunch but here's the chart that kind of gets really interesting an explosion in fund managers occurred as
00:48:37
we all know and this chart shows from pitchbook the first time first time VC managers that raised a second VC fund as
00:48:44
a share of all firsttime VC managers and it's now down from above 50% to below gosh 15% so what are your thoughts
00:48:55
here Chima my gosh Venture is a really really tough business every year for the last seven six years seven years I have
00:49:07
published my returns which most VCS don't want to [Music] do I do it because I go back and I look
00:49:15
at it and I think having public accountability actually drives some good decisions they they may
00:49:22
seem suboptimal in the moment but they in in the long run turn out to be good decisions and the biggest one has been
00:49:31
generating liquidity so Nick you can throw up this thing but I'm sure there are funds in each of these vintages that
00:49:38
have done way better than me so I'm not I'm not saying you know it is what it is
00:49:42
but what I want to point out is if I go and look inside of these funds and tell you how hard it has been to generate
00:49:49
this DPI it's like it's like dragging an entire just sack of potatoes over the Finish Line
00:50:01
like like a truck of dead bodies over a Finish Line it is super super hard and the things that we have fought are
00:50:10
two one is that the gation of companies has totally blown out we used to be in a
00:50:17
world where by year five six or seven you could return money you just can't do that anymore unless you get
00:50:22
extraordinarily lucky which by the way I got when saaks was running Yammer it was an enormous win for all of us but
00:50:31
that is just exceptionally rare and that was m in year what five or six sacks there's so few there's so few
00:50:37
entrepreneurs capable of that he's one of maybe five or 10 so other than that I've never really had a company that has
00:50:46
generated liquidity in year five six or seven they've always generated if they've generated it at all in years 11
00:50:53
12 and 13 and so the problem with that is that at some point you have these paper marks that say you're winning and
00:51:02
things are working but there's no path to liquidity so then I what I did was I stepped in to the secondary markets and
00:51:10
I would sell and it would really upset certain Founders but I was very clear that when
00:51:19
I was running outside capital and I was running outside capital on behalf of really organizations that I believed in
00:51:26
the broad Foundation the Mayo clinics Memorial slone ketering my job was to get them money back you know these were
00:51:33
their Pension funds these were the things that they use to build facilities cancer research cancer research I didn't
00:51:39
have the you know ability to just sit on my hands and say oh you know what you're
00:51:44
15 don't worry so it it's just meant to say that the the tactics of generating liquidity and Venture are very
00:51:53
misunderstood and very underappreciated and even then you sell something that are just absolute winners that had you
00:52:01
waited another five or six years would have turned another you know one or two turns but that's not the job the job is
00:52:09
not to maximize absolute every single win the job is to return capital in a reasonable time period so that your
00:52:17
investors don't run out of money to give you yeah it's a it's a tough game man it
00:52:22
is really really really tough yeah and the the insight and and Sorry by the way and I feel this now because you know the
00:52:28
last five or six years has been entirely my own capital and my gosh it's hard yeah managing liquidity is it's
00:52:35
impossible especially when you can't rely on anybody else so well and thank God for the secondary markets even
00:52:41
emerging because at the same time that the secondary markets emerged and people were willing to buy Venture assets you
00:52:48
know going into their second decade I would have been in real trouble without the without reasonably liquid myself
00:52:54
included I mean my numbers my numbers would be a quarter of what they are yeah and I I took advantage of almost every
00:53:00
time I had one of those opportunities to sell some shares pair some positions and
00:53:04
that's how we got our DPI as well because let's face it Lina con and the anti-tech sentiment has led to these
00:53:12
large companies not buying startups and instead they compete with them they just
00:53:16
say We'll build it inhouse because you're not letting us buy it and it's broken the entire ecosystem now that's
00:53:23
broken the the IPO process is broken I tried to flip that on its head with backs you know some worked some didn't
00:53:34
many didn't in the end many of mine didn't work out at the end there was a period where it looked like it was
00:53:39
working but these are all attempts at changing the liquidity cycle yeah of these companies because the way that
00:53:47
things stand today we are not in a sustainable industry it is if you raise funds and think about fee generation but
00:53:55
it is not if you think about returning money to Founders LPS getting employees compensated for many years of you know
00:54:02
toil that they put in it's very tough game right now well Sachs right now we're seeing people do things like
00:54:09
selling you know their early SpaceX or their early stripe whatever it is to other VCS to later stage funds a lot of
00:54:17
ways to try to secure DPI what's your thoughts on the state of venture today given all this data that we're looking
00:54:24
at today well two two points so first I agree with chamath that the amount of time it takes to generate an outcome for
00:54:32
I'd say most startups is longer than the 10-year period of these funds and these
00:54:37
funds can be extended up to 12 years usually but then what do you do after that I this takes a lot longer than that
00:54:43
in a lot of cases to generate a meaningful outcome I just had two companies that I invested in in my
00:54:49
second fund so in 2019 and 2020 so four years ago and five years ago just got marked up and it was a big markup the
00:54:57
company's doing well I call them late bloomers it took four to five years for them to accomplish what they wanted to
00:55:04
in terms of like building out the tech I mean I invested at like the earliest stage so that's how long it took and now
00:55:09
they just did growth rounds and they're kind of Off to the Races but you know I could easily be 10 years from here to
00:55:15
get to yeah a liquidity event so you're talking about more like 15year funds so I agree with that point the second thing
00:55:21
though is that the big thing that's happened in our industry is we had a bubble in 2020 and especially
00:55:29
2021 and we just had a ton of capital come into the industry because the fed and the the um federal government aird
00:55:37
dropped 10 trillion do liquidity onto the economy in reaction to covid and not all that money went into VC it went into
00:55:44
a lot of places but the VC industry was flooded with cash and you see this in the deployments I mean in those bubble
00:55:51
years there was something like 200 billion a year of capital deployment when normally it's 60 to 100 billion so
00:55:58
if twice the amount of money is going into the industry and is being deployed and rounds are now twice as big and
00:56:04
valuations are twice as big that has a huge outcome a huge effect on returns so for example the average Venture fund is
00:56:12
like a 2X return but if the entry prices were artificially double then there goes
00:56:18
your return right there you get 2X 1X so I think we're just in The Hangover of this massive liquidity bubble that
00:56:26
didn't originate in the Venture Capital industry it came from frankly the federal government but we're just
00:56:32
Downstream of that now what I would say is I I do think we're at the tail end of
00:56:36
working that out and the good news is that we now have maybe the most exciting Tech wave ever which is AI definitely
00:56:44
the most exciting Tech wave since the internet came along in the mid to late 90s so the hope is we're finally going
00:56:51
to have like really exciting things to invest in again but but yeah look I think think we're at the tail end of the
00:56:57
last cycle and the beginning of a of a new cycle and vintage Distortion is so real you know it's very hard to
00:57:04
understand how each of these vintages with your late bloomers or overpriced things company's getting hundred million
00:57:11
rounds totally at a billion dollar valuation before they have product Market fit and those
00:57:16
distortions were just so pronounced the last five to 10 years that we're now sorting them out like a like a house of
00:57:23
mirrors where you don't know who's tall who's fat who's skinny what the reality is here and the other big thing is this
00:57:28
peanut butter effect that you know I tweeted about today you know during Peak Zer you had all these exceptional team
00:57:35
members you know the number two three four five person at a company that was doing great they would leave to start
00:57:42
their own company so the talent got spread then you had so many of these Founders rushing into the same vertical
00:57:48
so you'd have 20 startups because there was too much Capital pursuing the same opportunity you pursu the same
00:57:53
opportunity what happens to earnings they get spread then what happens to customers they get spread across 20
00:58:00
different products competing for the same customer and then what happens with you know ownership Stakes for us as GPS
00:58:07
and LPS chamath the ownership Stakes because the valuations went up so much they got spread like peanut butter and
00:58:14
instead of a series a getting you 20% of a company it got you 10 instead of a c check getting you 5% it got you one
00:58:20
there's no DPI possible you nailed it and saaks nailed it but but and the thing to remember is both of those two
00:58:26
things now work together to erode the return stream for the general partner but really most importantly for The
00:58:33
Limited partner so I I do think that we are in a situation where the average returns are going to Decay by 50 to 100%
00:58:41
because of what sack said and because of what you said on top of that I don't think we know what the actual cap
00:58:48
structure needs to be for a successful AI company is it 20 people that does the work of 2,000 now because they all of
00:58:56
these agents and systems that work on their behalf if that's true giving that company hundreds of millions of dollars
00:59:03
is actually the opposite of what you want to do you want to give that company 10 or 15 and then let them cook and so
00:59:10
we have a we have a right sizing of capital problem that needs to happen the data would tell you though that the
00:59:15
industry understands that so the fact that we've gone from 50% of people being able to raise a fund to 12% means that a
00:59:23
lot of people will get washed out of the industry less Capital being raised which
00:59:28
probably is foreshadowing the fact that these companies will need a lot less Capital but you know that has a lot of
00:59:34
implications as it ripples through our economy it has I think it's very good for the early stage I think you know you
00:59:39
guys are very good there you've talked about how it's good for you it's very complicated I think for the expansion
00:59:44
and growth stage capital and then I think it's going to be there's going to be another turn on what happens on the
00:59:51
IPO markets because you can't have so many companies waiting with very very few ways of accessing
01:00:00
Public Market capital and exposure I just think this is that is that is fundamentally broken and we're going to
01:00:06
have to reinvent we tried once with spaxs we're going to have to go back to the drawing board and try again listings
01:00:12
secondary markets that are more fluid I don't know what it is but we need to do something because the status quo doesn't
01:00:17
work I think there's a lot so many good points that we're hitting here I I'll just say the the other thing to build on
01:00:24
your point about hey these take less Capital you have to look at what does your ownership after you've been diluted
01:00:30
half by 50% as a seed or series a investor you're going to be down to half so if you own 10% you own five if you
01:00:37
own seven like YC or we do in a company you're going to own three you're going to really have to model out is the
01:00:44
valuation you're looking at what does it pencil out to for an outcome and when I
01:00:48
did this with our investments I saw a leak in my game which was hey I'm putting a 100K into a $25 million round
01:00:54
or a $50 million round as a followon investment you know to support the founder okay what does that do for my
01:01:00
LPS well that 100K would need to hit some extraordinary outcome 5 10 2040 billion doar in order for us to return
01:01:09
the fund so now my team understands hey take that 125k that 250k that 500k do more four do four more accelerator
01:01:17
companies with it because those could return the fund and that's that fund math people stop doing I think all these
01:01:24
fund managers who are getting wiped out they never penciled out what does this company I'm giving a million dollars
01:01:31
need to hit in order for me to return my fund and now they're finding out that look just tweeted look at that let me
01:01:39
see you know everybody's course correcting I mean it's basically the capital deployments gone back to where
01:01:45
it was in 2019 let's call it so again we had this bubble the foam started building in 2020 but you had Co people
01:01:52
didn't know what to think so there was some restraint I guess and then 2021 it just went
01:01:58
wild that was nuts man midle vintages are just going to be garbanzo beans 21 22 well you know that's such an
01:02:06
interesting point if you could return Capital you're gonna look like a Euro also chth I remember I don't know
01:02:13
if it was Michael Moritz or or Doug Leone but I was talking to seoa about the time dispersion of your fund like
01:02:20
over what period of time are you deploying a fund and man people started deploying funds in 18 months because
01:02:27
they could raise the next fund so quick so like screw it I'm going to deploy this Fund in 18 months 24 months and LPS
01:02:33
were saying to me like how what period are you going to deploy this and I said well you know I was taught by Fred
01:02:37
Wilson and this person 36 months 48 months would be a good window to deploy Capital because you know it SMS it out I
01:02:46
think you're saying the the Dirty Little Secret of the Venture business which is
01:02:50
at some point people get to a fork in the road if they hyper optimize for returns I'll put benchmark I'll put Fred
01:02:57
Wilson in USV I'll put sequoia's early stage fund they have to introduce time diversity they keep the funds small and
01:03:06
they look to hit Grand Slams but there are many other people and I would say the most of the set
01:03:13
outside of that take the road more traveled which is then you optimize for size which then becomes a fee game and
01:03:21
so you optimize for velocity get the funds out as quick as possible raise a new f they have no intention of
01:03:27
generating returns because they have no ability to when you have absolutely no time diversity in this business in a
01:03:33
pool of capital you're giving away one of your best edges David just talked about it as a smart practitioner he was
01:03:39
able to nurture these companies and all of a sudden they start to win if you've all of a sudden flushed all your money
01:03:44
in fund one then you go to fund two fund three by the time something in fund one
01:03:48
hits what are you going to do you're going to cross the funds or you're going to justify taking money from the left
01:03:54
hand to pay the right hand or just going to let your ownership Wayne because you
01:03:58
frittered all the money away these are all the problems that most of these folks have encumbered themselves with
01:04:04
it's very difficult to get out of it's going to take now look In fairness to them they probably you know got good
01:04:10
while the getting's good so they'll make a ton of money and fees but they will not be able to raise funds and those
01:04:15
fees are not clawed back folks for those of you playing along at home just just by the way I feel better about those
01:04:20
late bloomers in my portfolio because I know the marks are real because if they're getting marked up now now then
01:04:26
it's very very solid compared to frankly some of those marks that we got in the bubble year like 20201 I call them tiger
01:04:34
marks whether it was tiger or not it's just less real quite frankly and a lot of those companies are retrenching and
01:04:41
have issues so a mark now it just means something different than a mark then but
01:04:46
look I want to you know just so we're not like totally beating up on VC there was you remember that in this bubble
01:04:53
period of September 2021 everybody thought that this party would just continue forever and this is a good
01:05:01
example from The Wall Street Journal where I was talking about how University endowments were minting billions in
01:05:06
Golden Era Venture Capital so the bubble wasn't just in VC it was in the public markets too because we had Zer right
01:05:13
like interest rates were zero liquidity was just flowing and so it was very easy
01:05:18
for companies to get liquid they ipoed and then the valuations were stratospheric so the distributions LPS
01:05:26
were massive in 2021 and then that led to again more funds be able to raise bigger funds everyone was just kind of
01:05:33
paying it forward and thought the party would just keep going so this is what happens in a bubble is everybody thinks
01:05:40
that it's just going to keep going like that this is why it's so important as a fund manager or an entrepreneur for you
01:05:47
to get great advice from people who've been at this for a long time and focus on the process you cannot control all
01:05:54
these outcomes you cannot control all these meta events what you can control is your relationship with your customers
01:06:01
building a team making great bets supporting late bloomers that's the critical part of all this is the process
01:06:08
and you can make your process better and so with my team internally I'm constantly talking to them about our
01:06:15
selection of companies how we help companies get pulled through and get Downstream funding how we literally our
01:06:21
big effort this year is how do we introduce our companies to the top VC fir terms and we've been working on that
01:06:28
as a internal project right of just getting our great breakout companies to the best investors to increase our pull
01:06:37
through it is a process and you have to trust and focus on your process yeah well look ironically just I mean just to
01:06:46
end on sort of a positive note if these interest rate cuts are real like if we we just got 50 if we get another 50 this
01:06:52
year if inflation's really Tamed and are never going to go to zero but if they go
01:06:58
down substantially and we have this new AI disruption this new AI Tailwind we could
01:07:05
be back in another Golden Era it's not going to be a bubble but it's could be another Golden Era so we'll see start
01:07:12
companies from your lips to God's ears love you guys I gotta go love you all right shth had to go do work
01:07:20
apparently he's starting this New Concept Sachs which jth is actually going to work and uh uh at a company uh
01:07:27
we never got to talk about the uh debate because we were busy doing the summit and we took the week off from a new
01:07:32
episode uh people wanted to hear your take what did you think of kamla and Trump the one and only debate we're
01:07:39
going to hear apparently any any thoughts I think that KLA Harris performed better than
01:07:47
expected she did that I think mostly through having canned answers to topics and she was able to kind of memorize
01:07:56
those answers and and say them and she was never knocked out of her preparation she was well prepared yeah I think she
01:08:05
was well prepared however we now know that these were canned answers because in subsequent press interviews she gives
01:08:10
us the exact same thing it's like a jukebox where you just push the button get the same answer exactly so she's
01:08:16
she's memorized a certain number of talking points and that's all she's going to give you no matter what the
01:08:22
question is and if you saw that it's become a meme now where if you saw that question when she was
01:08:27
asked about inflation there's a pause when she's figuring out which greatest hit she's going to play and then you
01:08:33
know she I guess pushes b26 in her head and then it begins so I was born in the middle class and it's working apparently
01:08:42
right it seems like it's it's helping her yeah I think what you saw is that she got a bounce out of the debate but
01:08:48
now it's sort of like a lot of these um bounces there's been kind of a effervescence to it and then it kind of
01:08:55
Settles down back to their occurring pattern and so I think the election is extremely close but I don't think oh
01:09:01
yeah I mean every day it's like a poll going one way or the other I mean this is the closest of our lifetime maybe or
01:09:08
that I can remember I mean it's nuts how this thing has flipped over and over again what did you think of Trump's
01:09:13
performance were you disappointed there were some rumors uh people were a little
01:09:17
upset that he doesn't prep as much as he should what what's your what's your advice there you know well I mean I
01:09:24
think that uh he was in a very difficult situation you basically had a three-on-one situation where he was up
01:09:30
against not just KLA Harris but the two debate moderators it turns out that lindsy Davis is a comma sorority sister
01:09:38
David Mur was factchecking him constantly and some of those fact checks weren't even correct um for example we
01:09:46
now know that the Springfield City manager has acknowledged complaints about pets being eaten far I was
01:09:54
wondering if we were going to get through it's as far as far back as March there
01:09:58
are videos of him talking about the complaints at city council meeting now you can you can say that you don't
01:10:06
believe those stories or whatever but those reports were real but David Mir fact checked in real time saying that
01:10:14
Trump was wrong and there was like this effort to kind of Gaslight and make him sound crazy during the debate when there
01:10:21
are in fact sources for what he was saying and it might have thrown him off a little bit I noticed like it was like
01:10:26
he I I agree they going into it I think they need to negotiate in the future you
01:10:31
know how they're negotiating the microphones on or off audience on or off I think they should
01:10:38
negotiate are we factchecking in real time or are we not factchecking and who's doing that fact and they only fact
01:10:44
check one candidate for example when KLA Harris repeated numerous hoaxes like the
01:10:48
very fine people hoax the bloodbath hoax the suckers and losers hoax I mean these
01:10:54
are things that were already addressed in the last debate and you know even leftwing sites like Snopes have said the
01:11:00
whole veryify people thing is for people who know that they there's been selective edits and I mean there's been
01:11:06
selective edits forever but that one is particularly egregious it's really egregious the blood bath one is really
01:11:10
egregious too because because he was talking about the blood bath yeah just make it into a January
01:11:17
6th extension which it's not right so she was able to say these things and never got fact checked once which meant
01:11:23
she never got knocked out of her and let's also be honest like Trump is hyperbolic so if you are going to say
01:11:31
you know oh we're going to fact check Trump like there's a lot of material there and he's just he's a hyperbolic
01:11:37
guy that's kind of his shtick right I mean but but here's the thing is that in the wake of that debate look I I think a
01:11:43
lot of people scoring the debate on like technical Debaters points would award her the the the win for for that night I
01:11:50
don't clearly she won yeah I don't deny that however what I think has been surprising is that in the wake of the
01:11:57
debate you're seeing her support sort of return more to its previous level and so
01:12:04
what I'm saying is the effect of that's wearing off and I think one of the reasons why that's wearing off is
01:12:09
because Trump still has the killer issues in this election he's got the border and he's got inflation and the
01:12:15
economy and Harris may have done well again on debers points but what substantive answer did she give in that
01:12:23
debate except to say I'm not Joe Biden which is I guess true however what you're basically saying is you won't
01:12:30
defend your own administration's record you are the incumbent you're not the change candidate and you're saying that
01:12:36
people should vote for you because you're not Joe Biden well what is it about Joe Biden's record that what is it
01:12:42
about Joe Biden's policies that you don't agree with I mean after all you cast the tiebreaking vote for the uh
01:12:48
inflation reduction act you cast it for the 2 trillion American Rescue plan that
01:12:52
set off the inflation so the debate Moder never asked Harris well what is it about you that is different than Joe
01:12:59
Biden on a policy level other than the fact I thought that was like a great moment for her objectively I think you
01:13:08
and I've said this forever here on this show uh putting our feelings aside about
01:13:11
the candidates I think whoever comes across as the most normal or the most moderate is going to win and I think
01:13:18
she's done a great job of like P convincing those moderates that she's not crazy and he is what what are your
01:13:26
thoughts on that because people looked at this very podcast and they've said to me my God that's the Trump I want to
01:13:31
vote for that Trump 2.0 the Allin Trump and then people are like ah he's going back to the insult comic Trump but I
01:13:38
don't want the chaos what are your thoughts on moderates specifically in the swing States and and this sort of
01:13:44
strategy let's talk about let's talk about the teamsters so Biden when he was still in the race was plus eight among
01:13:51
the teamsters Rank and file and now that uh Harris is the the candidate Trump has
01:13:57
up something like plus 26 with the teamsters yeah why is that cuz she's isn't she pro-union as well he was Union
01:14:04
Joe so I mean it was like in the name I understand why they loved him there's something about her policies and I think
01:14:12
her the the look I think within the Democratic party think it's her personality I think I think it's partly
01:14:18
personality but I also think it's its policies and cultural issues so within the Democratic party there have always
01:14:23
been two tracks there's the beer track and there's the wine track and so you know Bill Clinton was classic beer track
01:14:30
guy right your summit with Obama right and I think Joe Biden was was beer track then there's kind of the wine track
01:14:37
which is the more it's the part of the party that cares about these Boutique cultural issues starting with Dei and
01:14:44
equity and uh trans and things like that limousine liberals is what they used to
01:14:49
be called but I like yours wine liberals or yeah the woke wine basically the entire California Democratic party is
01:14:56
very wi track I mean Gavin is very wine track Comm Harris is very wi track you can understand why a blue collar worker
01:15:03
it doesn't appeal to that they want more of that lunch paale traditional Democrat
01:15:08
but that Democratic party doesn't really exists anymore I mean the Democratic party has evolved to be the party of the
01:15:14
professional class whereas the Republicans are more the party of the working class and you're now starting to
01:15:20
see it I think Biden was the democrat's last vestage of this working-class party
01:15:26
he really worked at being appealing to those voters you know that whole Scranton Joe image yeah and un Joe yeah
01:15:31
exactly whereas kamla when you get her talking in an unguarded moment and is not a canned answer she's going to talk
01:15:38
about diversity equity and inclusion and that's not what your typical Teamster wants to hear let me ask you challenging
01:15:44
question because one it's likes when I ask you a challenge a bit if Trump loses what do you think will be the
01:15:51
cause of the loss if if he loses like strategically when we look back on the last six months
01:15:58
what do you think you would change what would cause it well look I mean the the the the great asset that KLA Harris has
01:16:06
is not her likability it's not her track record it's not her policies it's the fact that she's got the media behind her
01:16:15
and if you look at like for example ABC News 100% of the coverage by ABC News is
01:16:21
positive whereas something like 93% of the of their coverage on Trump is negative and you saw this that before
01:16:30
Harris replaced Biden's the nominee she had very low favorability ratings and then the media basically reinvented her
01:16:36
as this transformative candidate so look when you've got the media willing to operate as day facto members of your
01:16:43
campaign that's tremendously powerful if we had a fair media this election wouldn't be close so that is the
01:16:50
advantage the Democrats had now look should Trump have done the debate with ABC News no I think he should have
01:16:57
chosen more fair moderators I mean to their credit I think CNN played the Biden Trump debate pretty fair and down
01:17:04
the middle but ABC I mean it was predictable that like I said I mean one of the hosts was her sari sister they
01:17:11
friends so you know I I think that if Trump loses you could say that his willingness to walk into the liance den
01:17:19
take on all comers do every interview you could say maybe that wasn't as strategic as what she did but at the end
01:17:25
of the day I think that voters will appreciate that both Trump and JD are willing to do basically every podcast
01:17:32
every interview they're not afraid to answer questions and when they do answer questions you can see them thinking and
01:17:39
they don't give you the same canned answer they've given 10 times before including at the debate so yeah I mean
01:17:45
that's my take what what's yours JK on which aspect be more specific give me a give me a specific what do you think
01:17:51
what do you if if if she ends up winning what do you think the reason will be yeah that's a good that's a good
01:17:58
question if she ends up winning I think it will be that people believe that they I think it will be
01:18:07
that moderates in those swing States and women believe that it's too much chaos and that Trump will be too much they
01:18:16
want a calmer same thing reason Biden W right like that there's this like concept that the adults are in the room
01:18:22
and it will be calm and it won't be chaotic and I think people just still see Trump as a bit chaotic and I I think
01:18:28
that's the big fear and I think they've played the abortion card and the right to choose really well even though Trump
01:18:35
said it here I'm not going to sign the abortion ban I'm Pro IVF I think they have that really great win of saying hey
01:18:41
you bragged about overturning roie Wade probably wasn't smart to brag about that
01:18:46
and they have that clip that they can keep reinforcing so if he does lose and I don't know that he's going to lose I
01:18:51
think there's a lot of people who are going to go in there and vote for him but not say it to pulsers and
01:19:00
not say it to their family and friends because they're embarrassed because of the pressure against orange Hitler or
01:19:07
you know this whole rhetoric that he's going to you know overturn democracy so I think it's a pretty good chance that
01:19:16
he's going to win actually I don't think that this yeah I mean look I I think in
01:19:20
a close race right they say the statistics in a close race favor him yeah look I mean maybe we're asking the
01:19:26
wrong question here which is why would he lose I mean I think maybe the real question is why is he favored to win
01:19:30
because I think the polls including Nate still ver still show him favor to win and I think that when you look at what
01:19:36
the big issues are in this campaign and what has people agitated and upset why they think the country is on the wrong
01:19:43
track something like 65% it has to do with the economy it has to do with inflation it has to do with the Border I
01:19:48
think the on the cultural issues the trans stuff drives parents crazy they don't want the government telling them
01:19:53
what to do with their kids so it's hard to think of a killer issue other than maybe abortion that Harris has on her
01:20:01
side it feels like all the issues cut Trump's way but the again the thing that Trump doesn't have and there's no way to
01:20:07
for him to fix this is the media is just so in the tank for for Harris now you raise a good point look could Trump be
01:20:15
more disciplined yeah absolutely however you know I think that what amplifies that is the fact that the media is quick
01:20:23
to jump on every little thing he says and distorts it and he sets himself up for it you know like part of what makes
01:20:29
him activate the base is that erratic Behavior his stick you know the comedy and then I do believe that it gets
01:20:37
weaponized by the Press because it's like such so easy for them I agree with you that Trump could be more disciplined
01:20:43
however I don't think it's as bad as what you're saying because if it were there'd be no need to make up these
01:20:48
obvious hoaxes there'd be no need to you know lie about the very fine people or or what he said about blood bath so if
01:20:56
he was really saying that many outrageous things why would you need to keep inventing things that he didn't say
01:21:02
and if they're just stacking them yeah the answer to that question is just throw everything you got at him yeah
01:21:06
they're throwing everything at him but look at look at kamla's interviews I mean she hasn't given very many but I
01:21:12
mean her answers are just I mean just watch them I'm not going to characterize them but just just watch her actual said
01:21:18
it I mean Megan KY thinks she's stupid and not bright I mean she's not the most dynamic speaker that's for sure um and
01:21:26
she doesn't seem to be able to uh have a dynamic debate with intelligent people who are experts in
01:21:34
their field let's say you know she can't hold her own in the way you can see JD can right and and Trump Canen uh so here
01:21:42
we go and just on the um on the second assassination attempt I don't know if you even want to go there but I mean
01:21:48
gosh I'm so glad that he didn't get shot at again this is scary stuff folks uh this rhetoric's got to come down I keep
01:21:56
saying it nobody wants to listen to me but man be well let's look at the rhetoric that Ryan Ruth was literally
01:22:05
quoting on his Twitter was saying that Trump is basically existential threat to democracy he was quoting what Joe Biden
01:22:13
and KLA Harris and the mainstream media have been saying chapter and verse uh so
01:22:17
I think that you know if you want to ascribe motivation there where did Ruth get get these ideas they've been
01:22:26
endlessly Amplified by the mainstream media and it's not like a one-off comment it's been the central narrative
01:22:31
for the last several years is that somehow Trump represents this existential threat to democracy and one
01:22:36
way or another that threat must be eliminated and I think Ryan Ruth simply took literally what the mainstream media
01:22:43
has been saying 1% of your followers is what I tell everybody high-profile people you and I both know is 1% of
01:22:51
people in your following and we all have large followings here and and there certainly people who have extremely
01:22:57
large followings 1% are mentally ill like when I say mentally ill I mean severely mentally ill and if it's but 1%
01:23:04
of your following if it's 0.1% this could be thousands of people and this is what happened to John lennin and and and
01:23:10
other famous people who've been killed tragically is those mentally ill people interpret things in a very different way
01:23:17
and when you say you know a phrase that has triggers in it threat to democracy fight like how whatever it is they
01:23:25
interpret it differently and so just please folks when you call the guy Hitler for years and again you
01:23:32
create millions or billions of Impressions around that and it's not like a one-off statement but it's
01:23:37
something that's drummed into the public over and over again it seems to me you're asking for trouble stay safe
01:23:44
please turnone down the rhetoric everybody and we will see you next time on the all in podcast
01:23:50
byebye let your winners ride Rain Man David and instead we open source it to the fans and they've just gone crazy
01:24:02
with [Music] it besties are that's my dog taking [Music] driveway oh Manet we should all just get a room and
01:24:23
just have one big huge cuz they're all this useless it's like this like sexual tension that they just need to release
01:24:34
someh we need to get mer [Music] our going [Music]