E102: Elon closes Twitter deal, $META uncertainty, Zuck's historic bet, big tech decline & more

my stance really took over the comment board yeah sax how was your week off when uh you you gave up on the Pod for a week and then did four media appearances for 90 minutes each on other pods you did six hours you took off from this pod to give your ratings to Megan Kelly and uh Dave Rubin yeah I did uh 45 minute hit with Dave Rubin on Ukraine so be sure to check that out and then yes I do but no Megan Megan Kelly uh Friedberg and I did that the week was that this week or okay surprisingly she didn't invite you back yeah I don't know what could have happened it was so great it was so great that was awesome I love Megan kelly didn't she

call you a prick yes you did yes she did [Music] [Music] sax we have not had such negative panning comments on YouTube since jaycal got brick of doomed for his uh Pro Ukraine for sacks not showing up I get doing for asking him a question then I could bring a dude from him getting rigadooned I don't know maybe it's just honestly when will you guys realize that there are three to five million people a week that listen to this podcast a hundred nitwits who comment on YouTube they're neither right nor wrong they should just be completely ignored turn the comments off the only thing that matters are the ratings if you care

about that at all and last week was one of the best rated shows we've ever done I think it was highest rated after elon's episode it would have been even better with David so we should bring a dune the brigadooners those nitwits should be ignored I think this is a little bit like a band where like you can't mess with the chemistry of the band and that's the lesson even though there's a lot of infighting in the band like it works and so you don't want to second-guess it too much well and then if somebody from the band gets sick and somebody sits in some incredible guitar players sit in people are like that's not

have the T-shirt of I need my guitar player back all right anyway well I'm just glad Ringo showed up 22 minutes late welcome back Friedberg uh let's get started I don't mean to [ __ ] with the bed I'm not gonna [ __ ] with the fan Ringo was an underrated drummer Freebird you have a role here that's amazing I think you're more alive maybe bass maybe bass player you know I'm John bass guitar George Harrison George Harrison yeah actually George Harrison very underrated but you know I'm I'm pretty clear have you guys ever heard uh the version of Blackbird that Paul McCartney did just with the ukulele

no I'd like to hear that maybe one of the best songs ever recorded one of the best records I've ever heard fantastic incredible all right listen there's so much to start with but I've black birds swimming in the dead of night night take these broken wings and learn to learn sax were you at a building on Market Street Yesterday by any chance no fly zone the homeless shelter well I think you can talk about Abandoned homeless shelter I think it's fair to say that there will be a lot of people that we know that will go and help make Market Street better make Market Street Great again make marketing

absolutely absolutely I'm looking forward to some tofu salads and meditation Namaste literally I think 8 000 square feet is meditation rooms that haven't been used in five years quite honestly though like on the other side of this I would say parag agrawal does deserve a statue for shareholder value creation what 54 20 a share which by the way we said was going to happen and it did happen was ginormous in this market and I just want to see the look on that barista's face when they're warming up the oat milk very very tough knuckled uh company Builders walks through that door yeah the only has left the building let's

just leave it at that wow so I guess we can talk about it now uh Elon has closed the deal we can talk about it now well no I'm just saying sax and I could not talk about this because we had you know we couldn't talk about it for legal reasons they deserve a statue in front of the bronze statue for shareholder value creation Market Street in front of that Twitter building best um Tech CEO of the year girl hold on a second so your theory is that he did such a bad job in terms of suppressing viewpoints and and censorship that he actually induced Elon to want to buy the company so he could fix their censorship problem no my

theory my theory is simpler than this which is they got great representation to do a very bulletproof deal and it turns out that contract law still matters in the United States and Elon did the right thing and just said you know what I'm gonna own this thing and probably double or triple my money so I'm just gonna go and do it and I'll do it for the benefit of everybody else but my point is more that they and the board had the wherewithal to fight because you know that they could have easily gotten intimidated and capitulated and in doing that whether they were right or wrong or good or bad is irrelevant to me they represented shareholder values well

and they got shareholders paid in a moment where the stock market is still down 20 30 40 percent where big Tech is down 50 some of these big tech companies are down eighty percent these guys sold the company at a premium and so that just you know we just have to acknowledge that that happened that's all well and just give you a little bit of background on Twitter historically you know in 2013 the stock was trading at 69 dollars and it got sold for 54. like this company has been sideways for a decade essentially in terms of its market cap and so but there's no doubt that I think Elon can turn this around pretty quickly

and make it massively profitable I think and clean up the bot problem very quickly if you can land two rockets at a time create self-driving cars I think you can figure this out this isn't rocket science and elon's done rocket science so I think he's going to figure it out right yeah for what it's worth I think elon's really excited about it and yeah there is tremendous potential at Twitter I mean the company's been sideways because it hasn't done that much in 10 years but there's so much you can do with that product it's just you know there's a ton of potential I think the best way to think about it is he bought a quarter of a billion miles for 44 billion dollars and in the grand

scheme of things that is I think going to turn out to be pretty reasonably cheap especially if he can layer in a few of his bigger ideas and uh and I think that those mouths the value of those monthly active users could probably double or triple pretty quickly right I think that was the so I just sent you guys this link from this analyst and he said that Twitter was bought at 172 dollars per monthly active user compared to 81 dollars per monthly active user at meta where they said today so but that's but that's for a very different point which we can double

click into because meta is its own bag of you know it's a little bit of an unfortunately you know already attached to it well and I'll explain why because the met the meta problem is it's it's a deep and a very dangerous situation that they've put themselves in which is why their male values are this low but you know if you had done this analysis a few years ago the trade was looking at meta's male values being so high where you would have said why isn't Twitter doing more so I know that this this is a little bit in my opinion cherry picking yeah well I think making everything verified and a path to verification

which Elon has talked about publicly many times and payments uh you know he's talked about publicly many times just those two things alone could make the experience of being on Twitter absolutely delightful if everybody could verify themselves this thing could turn around so quickly I'll say I'll say what you're saying in a slightly more I think the most powerful change that Twitter could make today is there are two classes of users people who are verified real world identity yeah and people who want to stay Anonymous correct there is a hundred percent distribution fire hose for people who are real

and there is a fire hose for fake people or fake names that you need to pay to amplify just that one simple change will cut through all the nonsense because if you want to see where the money is being spent you will be able to see very quickly because otherwise there'll be virtually no distribution for anonymous fake people and it'll Force those people if they really want to be heard that and that there's something valuable to say to spend against it well this really is about the brigad dunes and elon's been very clear about this you know it's pretty easy to get rid of the Bots and if people are opting

in to putting themselves into the top class of verified users well that's a revenue stream right and so all of a sudden you know I don't know how many millions of people would instantly say I'll pay for this for five or ten bucks I think you're verified I think you're right and I think like what we want to do is like you know no offense to all the people out there although I don't really care but no offense but you cannot use Twitter as a coping mechanism okay like I get that life is hard or that you know life hasn't lived out to your expectations or you know there's envy and whatever of other people but to go out there and spew hate doesn't solve anything

are you talking about brigad Dunes well there's also just a lot of people that are just in general they're just they're just mean and I'll give you a perfect example there's a woman that I saw on Tick Tock and she's like uh you know been married for 13 years mother of two kids and she was she had a thing that went viral where she was talking about who's in charge her or her husband and it was a very funny little thing and so I've I followed a couple of her videos just to see what else she had posted and one of the videos was how she has some complicated health issues which she was very public about PCOS and

how it causes you know issues in losing weight and she posted a pre and post picture of her which takes a lot of courage and she was like brigadooned and it's like what is wrong with these broken people yeah that have to give this woman a hard time and it just it so to me these social media channels are not coping mechanisms they were never meant to be and so you know if they have to go to 4chan or a Chan or Reddit or whatever better to sort of create these honey pots of hatred than to have it spew everywhere because it makes for the rest of us these platforms to be unusable well sax you were the CEO of PayPal with Elon and Roloff and TL and everybody and that

crew over 20 years ago and verified you understand pretty well because you yourself have been brigaduned of late and you've experienced this firsthand the psychological torture that made you take a week off from the show in fact because you were so under directs I'm kidding you had a planned week office you're allowed to have occasion which of the two ideas is the bigger idea payments making Twitter into PayPal including that x.com which was the original name of uh that was elon's payment company and he owns a domainx.com which is a bigger idea the payments or the verification which is the bigger idea for increasing shareholder value which would you do

first I mean payments is an entire roadmap right so there's a lot that could be done there explain well I mean it's it's about I mean you could layer on a lot of services on top of that so it's not just like one feature look I think they're both compelling in terms of where they could lead I think what's amazing about Elon as an entrepreneur is he always starts with a mission and then he figures out how to turn it into a great product and a great business so for example with SpaceX the mission was to get to Mars to make life multi-planetary you would think that be a spectacularly unprofitable business

but in the course of pursuing that mission he figured out the launch business and then the satellite business was starlink and I think starlink's going to be a phenomenal business phenomenal and like and likewise with Tesla he started with the mission of moving the world to sustainable energy yeah and in the process of doing that he created the world's best car not just the world's best electric car but I just think it's the best car in the world and Tesla is this amazing business today it's so far ahead of every other car company so look I think what's cool about what Elon is doing is he's starting with this mission of restoring Twitter to being a free speech platform

of being the Town Square it was always meant to be and in the process of doing that he's going to figure out how to make Twitter into an even better product and in into a great business which is not today I think Twitter's losing you know a few hundred million dollars a quarter so there's work to do on all those fronts but um I think you know it's really impressive to see and you know he's still operating at the top of his game I mean 20 years after PayPal some of us are just doing a podcast but he is uh he's still alive some of us are exhausted I know I know we're tired but we're tired and he's like working 68-hour days he's been leveling up for

20 years and at this point he's like a level 99 Mage or something no he's like a crazy it's amazing to to see Freeburg the biggest issue I perceive in the short term for Twitter is going to be what to do with people like Trump and Kanye West or yay and of course that's all going to seem like Elon is making those decisions as an individual as opposed to for the platform Etc should he let somebody like Kanye West I'm sorry yay is Alex call himself who is in the middle of an obvious manic episode back on the platform should he let Trump back on the platform how do you think he should handle those two polarizing individuals specifically look I mean I think this is

what's going to be really interesting to watch because there have been very successful very inspirational very intelligent very creative entrepreneurs that have started and built generally kind of open platforms at the beginning only to over time be challenged with the content that doesn't feel appropriate and then they come back and they make the necessary kind of moderation guidelines and they make the necessary edits to the way the platform operates this is how Google operated originally you know and then they ended up saying you know what if we're going to be in China we do have to create a censored version of the internet and they did that and that was controversial with

YouTube they've got a lot of censoring and it was supposed to be just a generally open platform for anyone to use and they were even Larry and Sergey were kind of flouting dmca at the beginning and they were like it's not our job to monitor copyright you have to file a takedown notice and they kind of wave their hands in the air over time they realize that that could actually damage and completely ruin the platform and they had to go in and create guidelines and moderation systems and um the same with crew of EV and Jack and Twitter the same with crew of the founders at Reddit and I don't know if you guys you know remember that period

of time when Ellen Powell was CEO of Reddit and she went in and cleaned up a lot of the bullying and harassment and nastiness that was going on on Reddit and she got a lot of controversy for why are you closing it down why are you censoring it Elon is a reasonable person and he's going to be faced with unreasonable people on this platform and when that happens he's going to have very tough decisions to make about what kind of platform he wants to have what's the quality of that platform you need to look like and then all of a sudden he's gonna have to look in the mirror and say did I step on the wrong side and you know he's he's idealistic and it's great

and it's wonderful and I hope that he's successful but to some degree some amount of moderation is going to be necessary to create a high quality product would you if you were in charge or sell Freeburg would you put Trump back on the platform and under what circumstances and would you allow somebody like Kanye West back on the platform at some point obviously easily yeah you personally yeah look my content moderation guidelines you know it gets very nuanced very quick what do you allow people to say what are you not allowed to say and then if they violate them is there the opportunity for a lifetime ban I don't think so I

don't think anyone should have a lifetime ban on these platforms so I'm totally would you do that for Kanye West who has been saying crazy anti-semitic stuff which has real world danger that's already started to spell over where people are putting up banners like Kanye's right about the Jews and they're putting up banners like over the you know 10 Freeway as you may have seen in Los Angeles how would you deal with Kanye specifically in a manic anti-semitic episode that he's been in look I think I think the question is anyone that's saying anything racist or what you know whatever might be deemed kind of uh to fall in that category there is a tagging mechanism and you

have to figure out how to create the tagging mechanism based on that tagging mechanism the default is it's like when you go to Google and you search for stuff they exclude porn so all porn content that's indexed on Google index servers um is index is porn and it's default off there's a safe search thing you got to turn um I think off or something to access stuff that Google deems inappropriate sure how do you how do you do that and by the way I'll tell you when I worked at Google we used to have pizza weekends where you would go into the office on the weekends they give you free pizza and everyone would tag you

know you'd watch porn and you would tag porn and so you basically go through the indexing servers they show you images and Google images and you click porn or not porn and it was just like hey come and volunteer come and help us do it and there was all these Engineers sitting in the freaking cafeteria attacking porn but actually you know that happened to sax and he saw Tucker Carlson and he said yeah that's porn I think it's my personal support yeah so I think Montclair had yes I think the same mechanism is needed on these social networks which is that you have to figure out well you have to figure out a

way to use AI got it to tag content and then think about them is cable just let me finish for one second you think about them it's Cable cable stations on a cable company so they're the cable company and there's different stations and you as a user decide what do you not want to opt into and what do you want to opt into what content do you want to exclude from your version and your experience of Twitter and if you're okay with the stuff Kanye says you're okay with the stuff Trump says you can keep that stuff in if you want to exclude that type of content it's it's excluded for you and I think that's what Twitter ultimately has to become what do you

think chamoth would you put Trump back on the platform and seeing you know Kanye West having this manic episode and saying you know basically participating in hate speech explicitly how would you handle those two specific instances in 2022 going into 2023. I think that there has to be a way where nobody is banned forever okay I think that it when somebody is banned temporarily they can be banned for any reason that violates a term of service that's well understood and uniformly enforced got it and I think that's the right of a private company but there has to be a way to get back on in the case of both of these folks there

should be a way to basically you know have because of the the step uh the the quantity of their reach some sort of almost like tribunal or you know mediator that can understand what's going on because if somebody's going through a manic episode it's absolutely right to turn that off I mean these guys should have turned him off much much sooner because when you're in the middle of a Mania and I said this last week like you know like for example like this this relative of mine when they're in a manic episode it's 60 70 80 emails a day and text messages a hundred texts that I get and they're honestly they're vile yeah okay and they don't even remember them

half the time and and you know they go through paranoia they go through Mania they go through these periods where they think they're completely right they go through these periods where they look completely sane and normal so yeah so it's a tough the most important thing when you have a family member in Mental Health crisis is to get the phone away from them that is a weapon that only continues the loop and to re-regulate this person and then there should be a way to prove that you're back in a re-regulated state to get these tools back but I think that

that needs to we just need to acknowledge like there's just a lot of people with mental health issues there's a lot of social media there's a lot of damage that can be done it's not to forgive these people but it's to explain that in moments you've got to shut these channels down and then give them a way to come back when they've re-regulated sex how do you think about it well with regard to Trump I don't know what the continuing reason is for him not being allowed on the platform remember that when he was banned it was considered to be a temporary measure because he was supposedly inciting a riot right so I think incitement

to violence is legitimate grounds for taking down speech but once that breach of the peace is over I don't know why it would become a permanent ban as opposed to a timeout so I don't even know how the companies continue to justify the ban on Trump except for the fact that they just think that he's a threat to democracy well I don't think that's for social networks to determine is that who gets to participate in our political process so it's not actually the first thing I would do but do I think that Trump should be allowed back yeah I do with regard to Kanye it's a little more complicated because like you're saying it's hard to know whether he's having a manic episode or

he's just you know being Kanye what he's saying right now is probably not in his own interest and probably it would be in his best interest to have a timeout but what I would look for guidance here is there is a Supreme Court decision and my general view on on the content moderation is that these social networking companies should be looking to for inspiration to stream Court decisions because Supreme Court's been wrestling for these with these issues for hundreds of years whereas social networks are just making it up as they go along and there are nine major categories of speech that the Supreme

Court has said are not protected because they actually are dangerous speech so for example in this decision called chaplinsky versus New Hampshire which came out in 1942 the Supreme Court held that so-called fighting words were not protected and they Define fighting words as speech that tends to incite an immediate breach of the piece through the use of quote personally abusive language that when addressed the ordinary citizen is as a matter of common knowledge inherently likely to provoke a violent reaction so you know I would use that type of decision by the Supreme Court as inspiration to say that racist misogynistic homophobic and other

sort of racial racial and ethnic slurs yeah shouldn't be out on these networks because it doesn't do anything to enhance the public debate now there is a question like could Kanye frame his arguments in a way that is still incredibly offensive to us but doesn't you can say slurs yeah for example he could say hey here are the top 10 media companies here are the executives here's the percentage that are Jewish and this is you know my concern is that this is a and here's the percentage people who are Jewish in the population you could some [ __ ] like that and then you're like okay did he say something anti-semitic

you know and you're kind of in this bubble area and there's always going to be edge cases and people are always going to be pushing the envelope and so listen just because we find it offensive and you know it's specifically offensive to me uh that doesn't mean that it should automatically be banned and you know I think slurs slurs banned or out but but arguments I don't know that we should be banning entire categories of arguments and and look part of the problem here is that lots of people are hearing the arguments that yay is making whether he's making them on Twitter or not and because he's there's a total ban people

can't really engage with him on Twitter and so he's not getting off-ramped from this Rabbit Hole he's falling into and nobody else who might be a fan of his is hearing the other side of the argument so I don't know that it's ultimately in the long-term interest of the Town Square to be banning you know the argument the you know ACLU and other people have is like hey you put a little sunlight on these bad opinions at least everybody knows who has the bad opinions and you can fight them paradoxically I mean do you really want these folks going to the dark web and you know being untraceable there is some value in kind of knowing who's getting

radicalized and hopefully exposing them to other opinions in the same conversation that can all framp them yeah I mean paradoxically while we're talking uh Elon just tweeted at 11 18 a.m Twitter will be forming a Content moderation council with widely diverse viewpoints no matter no major content decisions or account reinstatements will happen before that Council convenes so he's going to take the same approach that Facebook has they have a council as well that Zuckerberg tried to set up so I think he realizes there should be a thoughtful uh discussion sexy gonna be on that Council I have no idea that sounds like a uh the worst Purgatory you could ever be in is to be the person who

has to make these decisions like talk about a no-win situation I'm curious shamath we talked last week about Kanye and then Lex Friedman dropped his episode Lex came at it with uh he pushed back on Kanye I don't know if you watched some of the highlights I saw some of those he pushed back pretty hard I watched the whole thing okay so he pushed back really hard on the anti-semitic stuff and we had a discussion last week I said hey you can't platform this guy but it looks like Lex had a specific point of view which is he has a friendship with Kanye of some level and he wanted to try to convince him in this

manicness that he's wrong about things did do you think Lex succeeded and he should have done it I obviously we won't question Alex's intent we know I I have had replace Lex with me and Kanye with my relative wasn't on television or whatever but I've had these same kinds of I'll call them interventions and like I said this person goes through periods of lucidity periods of mania periods of paranoia periods of anger and so that's all I saw when I was watching this thing is just what a lot of people in the United States deal in the world deal with when they have relatives who are

suffering from one of these things and you know my relative has said the same thing there's nothing wrong with me you know I don't need medication I'm not on these meds blah blah blah I don't want to judge because I don't know him but I'll tell you in my situation trying to like you know for example like this person thinks that you know myself and one other person like we hacked into a computer system of the place that they worked to manipulate the financial records to point to this person as having committed a fraud and has and then thinks that people are now listening and bugging the phone I mean there's all kinds of stuff over and over again and then sometimes they don't

think that and sometimes they do and it's like it's magic what I'm trying to tell you is like when you're not when you're in a normal State a regulated State and you're talking to somebody who's dysregulated it's not two normal people having a conversation where you're trying to get them to see the logic of your ways so again I just think that it's not it's not a thing that should be litigated in the media I think it is a thing that is where people that care for this person need to surround them and get them with a doctor to help them rebalance in in in the in the case of our family

what it turns out is that this person needs to constantly be re titrated the drugs for them to be regulated that may be different for other people and I don't know Kanye's situation so anyways I I see all that and I and and I and I go to my own family situation which I'm which we actively deal with today and I don't have much of an idea of what to do about Kanye because it brings up too much stuff about what I'm dealing with in the real time with my own family I'm sorry you're going through that and I uh yeah like I said I mean I think Lex had good intent I don't think it's worth

doing no he's from somebody he's incredible you know he's a really beautiful empathetic person Lex is in general yeah so I think he tried to do the best job he could so I saw I saw part of the The Lex interview it was two and a half hours and I wasn't going to sit through two and a half hours of it you know I went to the I went to the chapter titles and I was in the middle it was like Holocaust and like right and I was like okay let's just go right to the train wreck yeah so I skipped to there but anyway I think the argument that that Lex should have made or pointed out to Kanye is like go see the the new Elvis movie which is all about how an artist

basically got taken advantage of by his business manager and you'll see that this idea is a very familiar Trope in the music business but that manager uh Colonel Tom Parker he wasn't Jewish he was a Dutch con man pretending to be a southern pick so this can happen and it's a very common story and it's got nothing to do with the uh religion or race or whatever of the the business people so and in fact the person in that movie who has the best advice for Elvis is BB King who says to Elvis at a very early point in the movie he says if you don't do the business the business will do you hmm and so look I think Kanye again if I

was to sort of Steel Man and respond to it is listen you know what you're describing is a pretty common of artists being taken advantage of is is a common issue it goes back a long time and it's got nothing to do with religion and quite frankly you know there's probably a lot of other Jews in your life who've helped you I mean I wonder the last time you went to a doctor did you notice whether they were Jewish or not you know and so he's developed a little bit of a fixation here of noticing that some people are Jewish but probably he's not noticing when other people are Jewish you've probably helped him yeah so that's probably like the argument I

would have made with him you know if I were conducting that interview and you make the argument to a person who's in a manic episode and that just there's no limit they don't even realize what they're saying they forget what they say when they get through the manic episode these parents these paranoias don't tend to come up when you're in a regulated normal State exactly all right let's talk about uh meta Brad Gerson was on last week we've had an ongoing discussion about big Tech entitlement spending the number of employees at these companies on Monday Brad I I think you know got a little worked up on the last pod maybe and dropped an open

letter some might say activist he would say constructivist to Zuckerberg and the team over there hey maybe pump the brakes on the cap ax maybe do a riff maybe become profitable anyway the uh revenue and the the third quarter was a complete utter disaster for meta and the stock has plummeted and been under a hundred dollars a share I don't know who wants to start on this one but okay look there's a lot to unpack here so I think I think we should take our time because I think one part of it is meta okay but one part of it is actually about what we talked about a few episodes ago which is like this big Tech put right where they Define

the rules of the game on the field for every other startup and I think the third part is just about like the era of big Tech being over and what it means for the stock market if I think if you section it out in those three ways Jason we can have a pretty rich convo I'd love to tease somebody where do you want to start okay so let's let's start with meta so Nick can you please throw up Apple versus meta for a second and let me just give you guys the the talk track and then maybe we can go from there so when you look at Apple versus meta there's this really interesting thing that comes up which is in 2016 you know and we've said this before you could not

give Apple stock away they were generating a ton of cash it was sitting on the balance sheet in many ways Facebook was doing the same thing and there was this famous dinner I don't know if it was a dinner that ever happened but that's how the the lore is told between Tim Cook Carl Icahn and I think Luca meistry the CFO and in it what carlikon said is listen I have a below the line suggestion for apple and what does that mean if you look at a p l you have your revenues that's above the line you have costs that's also above the line and then you have your profits and then it's what you

do with the profits so what he was suggesting is below the line the fact he had no suggestions for how the business should be run he just said give us back the money and we will reward you the stock price will go up and what's interesting to note here is the black line is the performance of Apple stock as as they've given back and they've used a ton of their own balance sheet cash to buy back the stock okay so they've spent 396 billion dollars since 2016 to buy back stock in the same time Facebook has spent almost 100 billion now here is here's where you start to see the Divergence so you would have said well shouldn't Facebook's

stock have reacted in the same way and for a very long time it actually looked like it was right until about September 21 and then obviously this thing fell off a cliff and the reason why it started to fall off a cliff was somebody started to notice that hold on a second even though you're buying back all these shares the bottom of the funnel right you're leaking all of these shares to all of these new employees why are you hiring so many people and this is when people started to uncover what was happening above the line at Facebook and is what caused this massive dispersion so Nick if you go to the first chart so what has

actually been going on above the line here's what's going on if you look at the light purple bar Facebook in the last two years have spent 25 billion dollars on reality dabs and they said that they're going to spend you know meaningfully more in 2023 and then sustain that investment for a while so if you do a little bit of math if they spent you know they spend around 4 billion a quarter right now so 16 billion a year that'll go to 25 billion in 2023 and then they'll sustain that what that means is that over this you know 12 or 13 year life of reality Labs as we've seen it these guys will have spent a quarter of

a trillion dollars and what I did here was I just wanted to understand hilarious I wanted to understand a quarter of a trillion dollars in the context of other major leaps in humanity so at the left is what Apple spent in its entirety by the way these are all inflation-adjusted dollars for today Apple spent 3.6 billion dollars to create the first iPhone and what they did was they said every subsequent version of the iPhone would only be funded from the cash flow and profits of the generation before it right so they used consumer demand as their guiding principle so it was a very incremental approach iPhone 1 iPhone 2

and now we're on iPhone you know 14 or whatever 13 but the point is it took 3.6 billion to get that Juggernaut off the ground um the Manhattan Project will cost 23 billion in today's dollars to create the atomic bomb Tesla in its entire life spent 25 billion to get to free cash flow profitability and they took this incremental approach as well will create the you know the the coupe uh the Roadster then the model S then the model X they iterated their way they used customer demand and all of that Revenue to fund future growth the cumes spend on Tesla was 25 billion Boeing spent 32 Google and other bets has spent 40. the only thing that I

could find in history that is comparable to what meta has basically said they're going to spend is the entire Apollo program which cost in today's dollars a quarter of a trillion as well so the problem is that below the line meta was doing the right things above the line they've created I think an enormous set of pressures for themselves which is you know if you think about the Apollo program this was 13 years of building Rockets getting to low earth orbit then getting to be able to you know orbit the earth then eventually building an entire infrastructure and capability to land on

the moon and get back so there was a lot of incremental progress there I think what people don't understand is where is this quarter of a trillion dollars going and is it going to be a leap in humanity at the scale of the Apollo program because it now is becoming the single largest Capital allocation program in capitalism history nothing comes close so I think that that is a really interesting maybe jumping off point to talk about what's going on inside of this business it's I think they're doing all the right things below the line but there's this one major big red flag above the line that has to be probably better explained by them if they want to

have long-term shareholders and basically what happened was when people heard this they said this is a dumpster fire we're out here sax what do you can ask the question what happened with the whole uh Brad gerstner's uh proposal was that actually discussed on the call on the earnings call they you know they ignored well I I don't want to say it was totally ignored because I I do think that they should be given credit for a couple of things I think that the Core Business continues to March forward and they basically said look we're gonna slow head count growth some teams will shrink I think the problem is really in this reality Labs the amount of investment

that they're making is so outsized and so abnormal and doesn't compare to anything anybody's ever seen I think everything else in the business seems to be actually quite functional so the problem is that this above the line thing though has become so big it could sink the business you know it's very very hard to see an investment case for a quarter of a trillion dollars of money in the door before you really start to see something magical now they may have something super magical that nobody knows about that they're going to unveil and say ha See told you and maybe there should be a set of outcomes where

we plan for that but the reality is it's you know 25 billion dollars a year for the next umpteen years and it's it's and I think it's 10 billion where did the 25 billion come from no this number it's 4 billion a quarter right now so 16 billion a year and they said that they're going to significantly increase it to 2023 so I just assumed it was a 50 increase maybe significant means a hundred but 16 goes to 25 and they said they're gonna keep going at that pace and so if you run that out till 2030 that's how you get to 250 billion dollars you think there's a business here in vrar Saks you think this will be the next platform I guess that's a a key question to ask here yeah I mean I I

like I actually like these Oculus products I think it's a very cool product the question is really just about the magnitude of the investment level but I think there is a future in VR and AR and it is a you've tried the Oculus headset before it is like a very magical you know experience with software one of the most magical that I've had the question is just we're talking about magnitude and time frame this I think also comes to mind for me sacks like uh I everybody seems to you know try and then say Oh My and then say goodbye to these headsets like people buy them they try them and they're like this is incredible but

there's no use case for them on a regular basis we just invested in a company that is creating professional flight simulators using VR as a component education yeah I think training is actually a huge use case huge and by the way these are not like video game flight simulator programs these are actual they create physical cockpits with knobs and dials and stuff it's just that the pilot is using a professional grade VR headset and so they're able to load you know a lot more training programs and scenarios and they're able to train on more planes they can like change up the cockpit by the way the the cockpit's on Gyros so it actually moves around let

me put a date in a different way I think that we should assume that VR and AR is going to be a really important part of our existence and I do think that as David said many of these experiences are magical I think what investors reacted to was spending 25 billion dollars a year needs to be measurable somehow and I think what they said is the things that we're seeing don't necessarily tell us that this bed is going to make any sense at that level of spend so if you were spending 2 billion a year or 3 billion a year I don't think people would have said anything it's just a magnitude relative to the

progress that's being demonstrated publicly and and that's the thing that I think the Tesla program got right the Apple phone program got right the Boeing program even the Apollo 13 program for that Quantum of spend so it's not to say that you can't spend a quarter trillion dollars over the next decade but you gotta eat what you kill you have to be able to show progress in a way that says Ah this this investment is tracking Freeburg I think the biggest issue he's having is he's trying to build a moon shot that you'll only get to see when I'm done it's like hey I'm behind the curtain over here I'm Willy Wonka I'm gonna come out with the most amazing chocolate bar

in 10 years and after I spend 100 billion dollars but don't worry it's going to be awesome trust me shareholders it's going to be amazing and with consumer products in particular not guys you keep saying 100 it's 250. yeah whatever it ends up being I in general I think consumer products you want to see them in the market and you want to iterate to success tell me one consumer product that launched and didn't iterate after launch and didn't kind of evolve over time in a way that responded to what the market was telling the Builder into that product but free Brick In fairness to them they're doing that too it's just I think what people can't

square is we see the next gen oculuses and then we see the spend and we think that they're upside down relative to what we're seeing in terms of progress I think that's what people are reacting if you were spending 5 billion a year this wouldn't be an issue to a month right a nothing Burger nothing people would say good idea throw a long ball I think that there's two kind of ways to think about the distinct things that they're building one is this Hardware platform with oculus and a better kind of experience for immersive experiences whether that's VR or ar the second is what's all the software layer look like and what goes on in that

platform that's where this thing seems to be pretty short and where people seem to have a lack of confidence and conviction the hardware seems super interesting but I gotta tell you epic games just raised money earlier this year at a 31 billion dollar valuation if Zuck was a smart guy he would go to 10 cent and cut him a check and buy the whole thing for 50 billion and you know buy those guys because that's a platform that has a couple hundred million active users is making money has a really deep immersive but two-dimensional experience it's not 3D it's not on VR right and on

top of fortnite and on top of their um their engine that they've built um there are just countless experiences and worlds and interactions and models that exist today that are already active that are being iterated that have been evolving for years and if you look at where fortnite and some of the tools and experiences that have been built into fortnite over the past couple of years sit relative to when fortnite was first launched I don't think that Tim Sweeney and that team would have ever said hey this is where we're going to be in a couple of years that's what we're going to be doing it was part of an evolutionary experience of building a great platform and having an Engaged

user base and unfortunately there doesn't seem to be a great engaged user base in the software layer of what he's built here today making it very difficult to track a path to get consumer feedback and to identify where that goes over time the hardware experience totally understand that that takes time to build something incredible also should be in the market and getting iterative feedback but really that that software piece is what what feels short to your point I think that that's another great example of a below the line decision that they could have made with all of this money you know if you compare what Brad asked

Facebook to do on Monday versus what icon asked Apple to do in 2016 you know icon basically said just make this below the line change and everybody will be happy it's a Do no harm solution none of us are getting in the way we're not telling you how to run the business the thing that I think that you know what Facebook had to react to was Brad suggestions were fundamentally above the line it's like you know firing 20 of the people or 30 or changing the capital allocation would require some changes to strategy and I think this is a a good moment to recognize it as as much clarity as Brad's letter had and as much sense as it probably makes to Outsiders

looking in the minute you have to tell companies how to change above the line it's just a good reminder to me that no it's not going to happen because these folks will not want to make those changes they don't you're saying Zuck won't make the changes I think it's natural human psychology I think you want to make those changes yourself you don't want to be told what to do got it sax what do you think this is going to do to governance in Silicon Valley writ large probably nothing really excited it's not going to change anything well it is it is interesting if you look at elon's Twitter deal

there is no dual class everybody has this is one class of security this is one type of stock so it's simple majority voting Elon actually had the choice of doing dual class and he decided not to so that's pretty interesting so if people want to follow elon's example then they would you know not not necessarily go for adults Tesla doesn't have super shares either and you said it many times if you want to vote me out you can vote me out right SpaceX either yeah he's putting his neck on the line I don't know I has a SpaceX should I have no idea class structure yeah I can't remember SpaceX isn't public yet so maybe it doesn't matter like they

haven't reached that decision Point yeah yeah yeah yeah I will tell you I just I think starlink has such a huge opportunity I just got starlink for two locations as a backup because you know you lose your internet a couple times a year and you can get these routers now that'll fail over so since I'm doing business like I can't really lose the internet so for a thousand bucks a year I can have starlink as a backup and I started using it and uh the speed is getting pretty compelling already uh like Zoom calls you can't tell the difference right now most of the time and certainly for web browsing or watching a movie

you know it just works so I I could see many companies putting in starlink even if they have a fiber line or whatever just as a backup that business alone could be ginormous just to provide both sides of the story here I mean the reason why dual class emerged and was seen as viable is that if you look at the historic performance of internet companies the ones that have done the best perform the best are the ones where the founder stays involved for a long time and the ones where the founder checked out like after a few years and hired a professional CEO those are the ones that went off the rails it happened again and again so there there is an argument for dual class in the sense

that you keep the founder involved and you sorry you avoid a power struggle that's not what happened well but that was why it was considered acceptable well I think it was considered acceptable because in the Google bake off all these Banks were clamoring so hard and you know there were two vectors of iteration one vector was on the way that you know Google wanted to do this uh IPO process they pick Credit Suisse they did this Dutch auction the other one was the bankers basically pitched them on a dual class voting control structure and was Morgan Stanley Morgan Stanley and once Google got it everybody else was able to copy because all the bankers realized that if

you want to win a bake off you're not trying to win over the CFO you're actually trying to win over the CEO and giving that person control turned out to be an incredible commitment uh and a way to win the deal and so I actually think it was never a governance issue or a reflection of how value was created it was just basically a feature that you that one Banker used in an IPO Bake Off to try to differentiate versus another this is why you know like I said like Elon has never cared about that stuff because it's like if I'm not doing well vote me out which is so clarifying because he realizes that that's actually the best check on him making bad

decisions you know and I think part of it is why he's done so well you know one class has thought he was able to negotiate an incredible compensation package and it's he's he has Clarity a lot of the few things of the business that matter but I think he's also more compelling than some of these other guys and there may be some degree of feeling like this is a mechanism that other people need that Elon has a degree of confidence and a degree of of Charisma and salesmanship that gets him what he wants I just want to read you guys the excerpt from Larry and sergey's Founders letter from the IPO in 2004. as a private company we've concentrated on the long term and this

has served us well as a public company we will do the same in our opinion outside pressures too often tempt companies to sacrifice long-term opportunities to meet quarterly Market expectations sometimes this has caused opportunities to manipulate Financial results in order to make their quarter and they go on and on and on and they say look you might ask us how long is long term usually we expect them in a couple of years and they go on many companies are under pressure to keep their earnings in line with analysts forecast therefore they often accept smaller predictable earnings rather than larger and less predictable returns Sergey and I feel this is harmful and we

intend to steer in the opposite direction I think that the statement that they made really resonated in Silicon Valley at the time particularly during this era of what people were calling web 2 and the internet was being rebuilt and all these businesses were starting to thrive and it was like we have this massive road ahead of us this long road ahead of us and we can really change the world but in order to do it well in order to do it effectively we have to as entrepreneurs as Engineers be able to have the freedom to operate for the long term I don't think it had anything to get stuck in the short term had nothing to do with anything that

there was no pressure on them it's not like they shied away it's not like that super voting control allowed them to make one seminal decision there were quarters where Google was getting a lot of heat for the amount of money they were spending on capex because they were building their own data centers they were building their own server first they were building their own eventually dram they started to build their own switches every element of how Google built a competitive advantage over time was difficult for analysts to understand but you're not saying but you're not saying the obvious thing the reason why they were allowed to do it in the end

was because more and more users used their product because it was better and better and they consistently meet and beat every expectation this is not I didn't need to use this option this was not I didn't need to call this option this is not a company that went back and forth between meeting and missing expectations okay they were up and to the right they were they were up and to the right is correct that is the general principle but the time to return the roic the time frame to hit their roic targets was long and it was hard for people to get that when they bought YouTube true that is not YouTube David watch YouTube and they spent tens of

billions of dollars investing in YouTube before generated cash again I think that that would yeah but you're not math you're not what you're saying is not true it is not mathematically true what you you're saying there was no 13-year royk play that they executed on not true and you can just both agree they put their own they put their own fiber optic lines across the oceans the capex I understand scrutinized and not well understood I get it you can read but tomorrow you can read the analyst reports and see how difficult this was all I'm asking for you to do is look at a head voting shares is what gave them the ability to do this [ __ ] I think

that if you look at their performance their ebitda margins and their roik was exceptional when they were making those investments in fact I would say the opposite I would say that they were surprised by hi how by how high quality their business model was they were generating so much cash but they were probably thinking back in the day was oh my gosh we need to make sure that we are actually making long-term Investments and now we have the ability to do it because we have all this cash we didn't expect and we should probably bleed off cash so that we don't show 50 gross margins to raise all of the attention of regulators and everybody else and so what do you think Zuck is doing what's

different today I think that they have an incredible core business because he's got good business good ebitda margins good Revenue growth what's different they have an incredible Core Business and they have decided for whatever reason to make an enormous bet and that bet could be a very good bet but the way that you make a bet and you've said this well is you have to look at incremental progress and you have to demonstrate that all of these bets make sense because the problem is when you get compared to the Tesla program look Tesla is Reinventing an entire category trillions of dollars of energy generation and

transportation but they did it on in one year of meta reality lab spend Apple reinvented an entire compute platform on one quarter of meta's reality lab spent that's not a judgment that's just a numerical observation so if you want to get people on your side you just have to be able to double click into that in an elegant articulate way and say here are all of these things that justify 25 billion dollars a year hey guys let me show you a chart here's a chart of alphabets Capital expenditures by quarter and here is their revenue the blue line at seven billion dollars right now this is my point yeah they struggled to find ways display they they create a Project Loon

they were gonna do balloons guys they wanted to do fiber they wanted to build they wanted to build they wanted to build at one point a ladder to the Moon a ladder they thought they could go from Ted to them but yeah whatever an elevator is in that seven point to climb there right the elevator was in the purple line yeah and somewhere in there they spent a billion or whatever on maps and it ended up being a phenomenal asset when the whole world moved to mobile I think we're not seeing the obvious thing we spent a lot less on them we're not we're not we're not saying the obvious thing which is great leaps of progress

in humanity are not correlated to Dollars all the time in fact most examples are the exact opposite which is it's more about small and extremely Nimble and talented management teams that generate human progress and again if you go back to that first chart of Apple versus meta you know the fact that you've hired so many people to work on a category with so much money it just violates a lot of pattern recognition that people have historically seen so all I'm saying is maybe this is a great bet they just need to do a better job of explaining this would have been so much easier if you had just put yourself just I'm saying this could be this could

have been such a better transition he should have put Cheryl Sandberg a CEO of the Facebook Corporation he should have become CEO of meta and then he should have ran that other business to print even more profits and then if you look at some of their forays into building a super app they edit Facebook Marketplace to Facebook and it was a huge hit they started to pull the a Commerce string over at Instagram it started to work there's just no focus on those products if you look at the Facebook collection of billions of users what apps could you add to that you know whether it's payments they did the whole crypto thing they gave up on that it seems like

there's no leadership on the Facebook side that actually wants to take take swings over there they just are obsessed with this one thing it makes no sense to me I I think that there's probably part of it which is that you know when you're working on a thing for a long time there's a certain personality type that loves the Mastery that comes from working on the thing for a long long time yep and then there's a different personality type that likes more shiny new things yeah and you kind of have to have a balance of all of those different people um and so maybe what we're seeing as well is that you know you're right maybe

the boring business was just labeled too boring internally and there wasn't enough heat around wanting to work on it forever nobody wanted to keep grinding and so you wanted to throw these big Hail Marys all I'm saying is you just need to explain the Hail Mary all right let's by the way let me just ping you on this so the um meta spend in the quarter relative to their revenue it's about 15 are the the virtual reality stuff it's about 15 billion 15 does that sound right I don't know but they said it was 4 billion this quarter yeah so 4 billion out of 27 of Revenue so it's about 15 and alphabets last quarter Revenue was 70 billion and

they spent about a billion billion let me show you I actually I actually have this chart handy because I was talking about it on which is 1.4 so on a relative basis alphabet is spending one tenth of what meta is per dollar earned or top line revenue earned um on their other bets category so tomorrow do you think it's a relative spend problem that because they're spending 10 times as much as a percent of Revenue that it's causing so much heartache even if it is directionally correct if you want to see the capex versus Revenue here's that uh on the screen right now yeah no we know we know what we haven't shown this is Google and

and meta on the same chart the blue line on the red on the bottom nine billion in capex for Facebook 70. for Google is this your new like charting tool that you guys have built yeah no no this weekend startups all the time what do you use what is it yeah actually beep it out because I don't want to give them a free response I'm not giving a free promo they didn't let you invest whatever I mean truth comes out they didn't let him invest no no they've been around forever they've been around forever it's a good product I've used them just a beef that's a good product listen if we're

gonna promo something it's gonna be call in or can you throw up the histogram super gut this is super gut charts so look this is the new charting feature on Colin I think the problem is look here's the problem let's just say that you're an analyst that works at a large hedge fund or a mutual fund and you woke up on Wednesday and you you know had a decent day and then you went into the earnings call believing that you know there's a this is there's a value play here and there's a lot of upside which I think there is actually you know this company can throw off an enormous amount of cash

but then what you hear is okay we're spending four billion a quarter that's going to go up materially and then we're going to keep 23 spending levels roughly the same in the to the Future so then you have to go back and build a model you're going to be hard-pressed to not get to this number maybe you don't get to 250 maybe you get to 200. my point is all of a sudden you have to go back into your you know portfolio manager and say uh you know they're going to spend all of this you know after tax cash flow on this stuff or sorry not after tax capsule but you know below the you know above the line spending on this stuff which won't come

back to us as shareholders and we're going to dilute the stock two or three percent a year so that's another 20 dilution and it just becomes what I again I've said this before it you move the stock into What's called the two hard bucket you know from the it's obvious to wow that's really tough and I'll just take a wait and see approach you know I think yesterday there was a quarter of a I think a quarter billion shares that traded hands uh of Facebook just a ginormous number and so you look I think you think that's tax loss harvesting too at the end of the year maybe some people want to take the loss so there's tax loss harvesting

for individuals by the way there was a couple comments which we should talk about and explain what tax loss harvesting is but a bunch of these mutual funds year-ends are actually October 31st so to your point Jason you know the stock basically gets decimated 20 you know 25 percent in a day the T Rose and the fidelities are like all right book the tax loss and be done we'll we'll re-look at it next year quote unquote next year so you know if you put on the spread trade so we talked about the spread trade there was a big hedge fund manager that you know on November 6th right when we were basically calling the top of the market told people to sell

one of the trades that he put on Nick if you want to just throw it up was this long Google short meta spread trade he called to tell me that you know he closed it out yesterday this is how that trade did so yeah there was just a lot of folks that just kind of like went to the exits and said you know what we're kind of done for the short term I just think that it's it's a it's a moment in time where those folks have to realize that they just have to explain a little bit better how they want to spend the money and show a little bit more incremental progress that justifies that level of spend otherwise people will be a little

skeptical they'll build their own histogram and it'll violate too many rules and so it goes into the two hard bucket okay we got macro we got Ukraine and well I think I think the you should talk about big Tech because Amazon puked as well Jason the can you just throw up the big Tech chart because I think like you guys should see this because I think this is very important for Silicon Valley Amazon reported their Q3 earnings yesterday Thursday total revenue 127 billion up 15 year over year five percent quarter of a quarter net income was 2.9 billion and they're predicting uh they're they're giving slower guidance going forward I mean

what's incredible on this chart is that you know when when everybody talks about being along the S P 500 it was always really a proxy for being long Amazon Facebook Google Microsoft and Apple and at the peak you know in May of this year it was still you know 25 cents of every single dollar of the S P 500 were these five companies and you know we always said the market bottom will be when the generals quote unquote get shot you know to borrow a Fraser and Gavin Baker and it looks like the generals have been shot yeah and what's incredible is this week every single one of those companies other than Apple

really reported pretty crappy earnings they got totally taken to the woodshed the percentage of the of these companies as a percentage of the s p is now you know off by 500 basis points it's down to 20 yet the markets are ripping higher today so I think it's kind of what we talked about three weeks ago like the bottom is kind of in for the short term you know so it's really exciting actually to see I think this is the point where you have to now start to get pretty constructive about where things are going because if this stuff could not bring the market down it's hard to see something other than an exogenous event probably some Russia

Ukraine event really having a negative impact so to me I'm kind of like I don't know it seems like pretty bullish for me also GDP was 2.6 so I mean the this this very weird conflicting data we had two negative quarters of growth we're in a recession then we have a the third quarter is up 2.6 so okay but remember Jason I I said that we were gonna have a double dip that was sure that was most likely thing so we had this sort of mild technical recession based on nominal GDP growth not being bad but simply not quite keeping up with the inflation rate yeah now things are a little bit better but I still think the huge recession is to come next year

because all the interest rate increases we've seen so the FED is you know pedal to the metal on interest rate increases just like they were pedal to the metal on printing money and so first they you know they were too loose and now they're probably being too tight too fast so I think we're headed for a huge recession next year and I think you're seeing that in in the softness of all these forecasts yeah look at that look at look at the the mortgage uh rates right now something like 7.1 percent um they broke the backs of the housing market the inventory and prices inventory shot up prices have shot up new mortgages have uh gone down and you know we we talked about job

openings here's the the Fred chart for job openings real quick you can see the the peak we were talking about we were wondering if that would come plummeting down well here it is folks yeah plummeting down from 11 million uh losing a million in a month yeah job openings coming smashing down there's the FED fund rate you know that's a pretty high ramp so you think double dip recession what do you think Freeburg chamoth in terms of what 2023 looks like you're sort of saying a bottom is forming I kind of agree with that I think the stock market is going up then it'll go back down because I think what David said is right but for the

short term this thing is going up short term up we've generally been positioned for it to go up and uh and at some point we will reverse and position for it to go back down but it's going up sax it seems like you took a week off from the all-in podcast and people stopped talking about Ukraine uh you want to give us an update I mean obviously the war is not over but it does seem like it it somehow has fallen out of the Public's Consciousness a bit I don't know if I go that far there was um the big event in the Ukraine war debate this week was that the house Progressive caucus put on a letter signed by 30 Progressive members to

merely suggest that while we continue to fund Ukraine on a virtually unlimited basis we also in parallel open up a diplomatic track with Russia to mitigate against the threat of us being drawn into the war and specifically a nuclear war and just that very I'd say Anodyne letter that very tepid sentiment really they weren't questioning in any way the providing again of virtually unlimited support to Ukraine that met was such a fierce reaction on social media and in the traditional media that I think all but one of the signatories recanted or walk back the letter and kudos to representative rokana for not being one of the people who recanted he so tall and gave an interview on CNN and

MSNBC saying why has diplomacy become a dirty word I voted for every single appropriation to give Aid and weapons to Ukraine I'll continue to do that but I don't see a problem with us maintaining diplomatic relations we might need those to avoid an unwanted escalation well and here we are kudos to him for standing tall but it's amazing to me that the progressive caucus which used to be one of the groups in Congress that questioned American involvement in Foreign Wars like the Iraq War they basically they they have moved off that and they they threw in the towel so quickly on this it was really kind of pathetic to see I mean it really like this is back to Shakespeare like

politics makes for strange bedfellows you find yourself aligned with the most left part of the democratic party in trying to just say hey maybe we should negotiate peace a little more further wants to pursue the right foreign policy and I don't really care which party has said you would you would actually donate to anybody who is pushing for that so did you actually make any I mean I I just happened but I I plan to donate to members of both party who push for a correct foreign policy which I believe needs to be a little bit more restrained a little bit more questioning of what is in it for the United States and we need to be careful

about overextending ourselves and we need to ask what is in America's vital interests you can support ecoc be coming to the uh with it with AOC she's proud she recanted so she's one of the ones that were candidate what do you think happens in a situation like that well how do they get them to recant yeah like why what is the point of recanting something that was so benign it's not totally no but what do you think like what what's happening behind the scenes like why are people so afraid to say that you know you can be in support of Ukraine but also still try to find a resume why was that turned into such a Scarlet Letter it's a great point and I think it just

shows the heat right now on the issue here here's what I think does it do that or does it just show how the progressives as just kind of clown tones I mean it's it's kind of sad I mean jayapal who is sort of the leader who put out the letter threw her own staff under the bus and I guess there was this snafu where the members all signed this letter in July and then held it for a few months and then they put it out two weeks for the election I can see why that timing didn't make sense I don't know why like they release it now not two months ago not three weeks from now after the election I can understand all those political considerations but once you put the letter out to stand by it

don't throw your own staff under the bus because like you're saying the letter was really a pretty Anodyne statement of Hey listen do you think we can just have diplomacy on a parallel track at the same time that we're arming Ukraine I just don't see the downside but look here's why I think they took so much heat is there's a lot of people on this issue Who start with the end result of what they want and the end result that they want is uh Putin and Russia leave Ukraine with their tail tucked between their legs and they basically don't get one square inch of Ukraine they believe that is the only acceptable moral outcome here and they may be right about that but then what they're doing is

they're kind of reverse engineering all the beliefs that they have based on that outcome that moral outcome they want to get to so for example for the longest time you heard things like Putin is definitely bluffing about using nuclear weapons well how do they know that they don't know that they can't say that for sure but it's what they want to believe because if you believe that nuclear war is a possibility you might not go all the way for that Maximus position of the only acceptable outcome here is Russia leaving with this tail tuck between its legs and I think I think the same thing is happening here with diplomacy is people who want a certain result in the

war are afraid that diplomacy might result in something less than that that's not a reason not to engage in diplomacy and it's not a reason to deny the potential of this war to spin out of control potentially into a nuclear war sax is like a walking thesaurus so Jacob for you I looked up Anodyne and it means not likely to provoke dissent or offense inoffensive often deliberately so yeah like uh whatever I mean listen I got a thesaurus over here also I didn't know what it meant so thank you but seriously what is the I want to know of the Fallout from two things and then

we're going to do science corner so number one what is the I've been getting a lot of oat milk stands emailing me different brands of oat milk have been emailing me this week just give us an update generally speaking on the ultimate milk crowd and your inbox tomorrow oh they're trying to they're definitely trying to Brigadoon me but what these people like you know what's so funny about these folks they have no judgment clearly because they can't even say you know what it actually tastes much crappier than these Alternatives but I choose to for XYZ reasons that I could respect it's the oh my God it's incredible and it tastes so

much better you know look at this little mustache disgusting it doesn't foam properly it tastes like dishwater it's ridiculous and then Saks discussed this this horrific uh illustration of you in the New Republic I saw um look like Dolly broke and they use Dolly to make that illustration no offense to the illustrator we're gonna paid a thousand bucks well it was like it was free ozempic sacks I thought it was yeah that's the problem if you're chubby sacks or chubby J Cal it sucks when people base an illustration on a previous one but it's like a dream I mean you look like well look they got Elon and Peter up there too it's such a stupid hit piece

Elon looks like Hugh Grant uh Peter Thiel looks like he's rolling on uh Molly he's got molly jaw and also he's uh he he you show a lot of stubble which you also don't have but look how fat they make you look look at your feet look like yeah Jesus my Lord but what I mean what's going on in terms of the general reaction to the amount of attention you're getting for political commentary now sex David sacks will be our next secretary of state well no I'm here for it I can't wait I'll go along that David sacks will be our secretary of state within two or three presidents he's got to make a little more cash My Views My Views are so out of step with

the foreign policy establishment I wouldn't buy you a win that's why you that's why I wouldn't feel the need to be so out there on this issue if the foreign policy establishment was doing its job if you actually had you know people from the policy Elite going out there saying sensible things about Ukraine it wouldn't fall on me or people like China like Elon basically posted that straw poll on Twitter which was totally reasonable got condemned for it and then Bill Ackman actually who's been in Twitter spats with me before we've been on opposite sides of issues actually came out and retweeted something I wrote as basically being supportive because

the weird things want this war to escalate out of control I think the weird thing is people are there's a group in the in the media class other podcasters other journalists who are saying you have no right to talk about this topic and I what I said is you know Hey listen sax and I could disagree about things on the margin here or there but I'm glad we're having the discussion shouldn't all Americans be having a discussion about our foreign policy and what our goals are that's our civic duty is to have this discussion so whenever you hear the political class the podcasting class the coastal Elites which we are part of when they tell you you can participate or this person can't

participate in the discussion because they're successful in this other aspect of life that's complete [ __ ] everybody should talk about this and disagree or agree and try to work towards some common understand ending you're right so first of all whenever they say listen to The Experts and you're not an expert first of all they're expressing an opinion themselves and they are expressing equally passionate opinions on the other side about this whole Ukraine war so first of all why are they allowed to have an opinion so whenever somebody uses this you're not allowed to have an opinion argument it's always very selective and it's only applied to people they

disagree with not to people who are equally inexpert on their side of the debate so that's Point number one hold on point number two is I've listened to plenty of experts okay I've listened to the IR scholar John mearsheimer I've listened to the International Development Economist Jeffrey Sachs I've gone back and listened to our former ambassador to the Soviet Union Jack Matlock I've read George kennen's interviews I've read Bill Burns our current CIA director on this matter there are plenty of experts who warned that our policy of trying to bring NATO right up to Russia's border would eventually blow up on our faces it would poison our relations with them and lead

to conflict and this war so there are plenty of authoritative sources going back many years on this topic and the problem is that the people on the other side of this debate simply want to memory hole all of these warnings and deny that they that this war was ever predicted because if this war was predicted it means it could have been avoided and they don't want to admit that this war could have been avoided or how about this how about war is messy resolving things internationally with dictators can be very hard and nobody wins in some of these cases no there's no perfect outcome here and you could hold in your head two things number one Putin's a dictator we need to hold the

line and make sure he doesn't invade other countries and number two yeah you probably want to keep normal relations with these people and negotiate with them to resolve conflict I'm getting a little concerned about the saber rattling on both sides in China you know we're escalating all this chip stuff we're escalating and Xi Jinping is taking complete control I'm wondering who's going to meet with him who's going to talk to Xi Jinping about how we could collaborate together who's left to talk to him Tim Cook there's a there's a bunch of unforced Errors happening in China how do we de-escalate well there's a bunch of unforced errors that you have

to let play out because they have huge economic implications so I don't think this I don't think this is a time for again I think David's generally right we do not have time for adventurism right now because even before we engage in some of these other places there are a lot of you know uh headwinds that are working against for so for example in China you have these massive demographic headwinds that are just building um we have to see what the chips act does in terms of follow-through to China's ability to expand militarily or technologically there are all of these things that that you owe as a citizen of the United States to see some more data on the

ground in terms of its empirical impact before you re-underwrite a different strategy right now the strategy is working you know we we are observing this you know one China policy I think that's the right thing to do and now let all of this other stuff play out can I say one thing about this yeah so what the administration did in Banning uh China from buying from us or any of our Allied countries these Advanced semiconductor chips that's what they did they'd only banned the sale of trips to China they banned the sale of equipment that could make the chips and they even prohibited American citizens and companies from working in China to basically help them

set up their own foundries and and Chip Fabrications so they are essentially cutting off China from Advanced chips that's the goal here and you know we've talked about on this pod before how chips are the new oil right these Advanced semiconductors are the new oil so this is almost like an oil embargo of China if you go back it is yeah if you go back and look what is the reason why the reason why is they don't want these in weapons correct that is the stated reasons that's the tip of the spear but I think the more impactful mechanism is to prevent an entire layer of infrastructure to be

built in China that allows them to advance all of these next Generation cyber capabilities including a whole bunch of things in AI that we want to make sure that as often and as often as possible is is for the United States and our allies as we choose so all this next Generation silicon will do a lot more to push that forward and so if you put that in the hands of Chinese technology companies or Chinese governments or the Chinese government in the parts that are actually technological you actually increase the surface area in which you compete by

preventing that technology to go to them you decrease the surface area in which you're competitive and they are one or two steps behind and have and are forced to build it themselves so Friedberg if that happens do you think that China escalates and says well why are we building iPhones here no I think China makes decisions a little differently than perhaps U.S policy makers and foreign policy makers make decisions they think forward and calculate the series of events that will follow from that decision whereas we are typically reacting to some event that's happened in the past not necessarily always thinking through

the second and third or third order effects and consequences of our decisions so the China calculus would likely look something more like if we were to say stop making iPhones here we would estimate that the US would do the following to retaliate back against us and as they do through that calculation you end up realizing pretty quickly that there isn't as much to gain as there is more to lose by doing that that would be my guess I'm no China expert I'm no foreign policy expert but from my understanding of how Chinese policy makers do think and do make decisions it's much more about what's the rational calculated set of outcomes that will

emerge and evolve from this decision and in my experience talking with people in the United States that are in various communities of influence it's much more about let's do what we consider to be the right or moral thing right now and in response and in retaliation and let's do an eye for an eye so that's why I don't think that they're likely to be the first step in an escalation escalatory ladder there'll probably be a few more series of provocations before that may happen at which point it may need to be kind of an inevitable step that they'd have to take but again I don't know I mean so so in terms of the motivation for this I

think it's pretty clear this is an attempt to hobble the Chinese economy not just that all their weapons programs but their economy itself and hold them back and slow down their rise and their rapid growth now is that a good idea I mean I think what this shows is we've moved from sort of economic logic which is about finding Trade Surplus and win-win scenarios to geopolitical logic which is about balance of power and this sort of ban on sales of semiconductors to them it's very much geopolitical because it's hurting our companies but it hurts China more and so it's about it's about it's about increasing our balance of power against them and now

listen I think you can make the argument that we were overdue to be thinking in terms of great power competition and geopolitical rivalry and this is an attempt now to correct the bad decisions that were made 20 years ago in terms of how we fed the Chinese economy until it became a pure competitor of the United States so I think you can make those arguments the the thing that concerns me most about it is do our leaders really have the bandwidth to manage a second front in the sort of great power competition right now while we've got Russia and Ukraine going on on the one hand are they really ready to manage an escalation of the competition with China

and to freberg's point have they really thought through all the second third fourth order consequences of this have they thought through the incentives this may create on China for example to take Taiwan I mean if Taiwan is the place that makes all these chips through tsmc for example and we have now cut them off we have now embarked them from these chips does it strengthen China's incentive to go after Taiwan does it strengthen China's incentives right now to help Russia in its war in Ukraine in retaliation because they don't want to see they don't want to see Russia decisively defeated and then they will solely be in

the gun sites of of U.S Hawks so I think there's a lot of things that could go wrong here when the U.S is now escalating geopolitical tensions and competition not just on one front but on two fronts and and especially given how weak the U.S economy is and that we're headed into a major recession next year it just feels to me like they are you know they are um kind of putting their foot on the accelerator in terms of geopolitical risk at a time when we're not really in a great spot to be taking those risks also on a foreign policy basis is there no Common Ground are there no things we could collaborate on and work on together right and that's the thing that

seems to be missing in the foreign policy for the last couple of administrations is are there things that we could be building together are there things that we could be working on the environment energy sustainability education I I don't know what it is but it felt like you know with China for a couple decades we felt like we were working in a very collaborative way and now it feels like every single instance is adversarial right because the problem is that those policies of constructive engagement that you're talking about fed the Chinese tiger until it became a dragon yeah another size of uh Vega or something that that's also 100 levels and the U.S policy establishment in the

pentagon look at the rise of China and they're like what have we done we have created a pure competitor to the United States we need to stop their economic rise and I think that again I think there is a geopolitical logic and strategy to what the administration has done but I question the timing of doing it at the same time that we have this unresolved war in Eastern Europe well it is nice that we're seem to be getting some of this onshoring of chips and that money is actually starting to flow it does seem like we're thinking a little bit like in decades and strategy say the other part I think Biden and blinken have done a good job they've done a good job on this right now they've

played it well well I don't know about that I just come on first of all questions did a horrible job hold on a second Biden Mike and did a horrible job hope the tiger hold on hold on you poked the tiger no hold on they I'll tell you where they did a bad job is last year they had a whole year to negotiate to avoid this Ukraine war from happening but I didn't even had a summit with Putin on June 16th last year they never engaged in diplomacy and now they have stacked this geopolitical risk with China on top of the risk they've already created in Ukraine I this policy may or may not ultimately turn out to be correct I like I said I can see the

strategy behind it but I do not believe that Biden and blinken have thought through the second third and fourth order consequences just like Friedberg said so I think it's a little early to be giving them credit on this all right uh free but you got anything in the science Corner we gave we gave saxes red meat and he ripped it to shreds now it's time to give you your soy tofu Burger I'll give you guys a quick uh a quick science Corner please please so we've talked in the past about the human gut biome 10 trillion bacterial cells living in our gut biome and it turns out and there has been this theory for many years that a lot of human disease actually originates

in the gut and there's increasingly evidence of how and why this happens so it turns out that your immune cells can sometimes see a protein on the outside of a bacteria that sits in your gut and it attacks that bacteria and it tries to get rid of it that protein can look a little bit like a human protein at some cell in your body and so that then triggers an autoimmune reaction meaning you are now making these antibodies to proteins that look a lot like your proteins in other parts of your body and then your cells start to destroy yourself and you end up having inflammation and disease and they found evidence of this across a lot of disease

States so just the other day published in the journal science translational medicine was a really interesting paper paper by a team that identified a very specific bacteria that we find in the gut that can actually trigger rheumatoid arthritis and so you know I think two million Americans have rheumatoid arthritis it's a really debilitating inflammatory disease and we never understood where the inflammation comes from why is the human immune cell creating antibodies to attack its own protein in the joints of the body and now it looks like that the protein that we find in the joints of the body has some overlap or three-dimensional structure that looks similar to the

protein we'll find on this very specific gut bacteria that they found which creates obviously a path now for if we can stop that gut bacteria from proliferating or you know existing in the gut over time that can have a reduction rate of rheumatoid arthritis did they guess what the mechanism of action was so so this technology so the mechanism of action is typically what's called generally speaking protein mimicry and so protein mimicry means that there's some so think about a protein as being like you know a a clumpy Rock and there's some part of the clumpy rock that looks a little bit like the part of another clumpy Rock and that's the

protein think about that as being the protein on the bacterial cell and the protein in your joint cells and so your body makes an antibody to that little part of the rock on the bacterial cell to get rid of it and then it that there's some overlap that looks a little bit like your own cell and so that's called protein mimicry and because of the ability now to do DNA sequencing and now with um uh you know some of the alpha full technology we can actually take the genome from that bacteria predict the 3D structure of the proteins created that by that bacteria and then potentially identify that there's a mimicry or overlap between our own protein and our cells and the protein of

the bacteria which is why we're having autoimmunity which now our immune cells are not just protecting the bacteria we could solve arthritis we solve for arthritis and so there's a lot of disease states that are starting to look like this so the combination of DNA sequencing and our ability to identify organisms in the gut biome and by the way so much of this goes back to the gut biome we're finding all these disease States from lupus to Sjogren's to rheumatoid arthritis that have some linkage back to some bacteria that shows up in your gut and so now we can be very targeted potentially about eradicating that bacteria from the gut or you know kind of changing our gut biome in a way

that ultimately resolves to eliminating that disease risk and so it's really fascinating yeah any thoughts on this cup bio I mean I always knew the solution was either in friedberg's gut you know or anything in his gutter on Uranus every bird again do it again the joke didn't land all right here we go one more time okay you can't allow till after you land the joke come on do it again start coming it was coming around the corner and by the way you guys three two all right chamoth it seems like very interesting science uh they're coming in the science corner 50 pounds I didn't even get it out I mean oh you tried to get it out of his anus

like a little turtle coming out of his name but you couldn't get it out it's like the entire science quarter is just here for us to beat up the nerd and throw him in a locker oh my God you ever see Smokey in the Bandit when they have the the reals at the end sax I just keep losing it that's what this is done oh my God it's like I'm going to say sides quarter and people are going to just start laughing and thinking about free brexitas all right listen welcome home sacks we miss you for your week off uh uh we missed you David thanks guys thanks and uh we'll see you over on Market Street no announcements right now no

testimonials no announcements I'll see you at yoga doing our second homeless shelter we're volunteering today right yeah volunteering let's see over at the homeless shelter yeah if you could get me a tofu salad with extra tempeh before uh free Burger don't don't go don't get me started on tempting I'm gonna go I'm gonna pour all the oatmeal out I'm going right to the cafeteria I'm going right to the cafe I'm getting all the oatmeal right down the tree there should be there should be one milk non-lactose alternative and then one black coffee and that black coffee that's it if you're lactose intolerant yeah lactose intolerant milk

they'll have one if you have one thing without lactose so whatever that is can we wrap the show now no we're having too much fun can you imagine can you imagine the distribution of gluten-free snacks I mean they should have a few but you know all kinds of different snacks and by the way the keto snacks have horrendous amounts of chemicals in it the xylift hall what is Xylitol well screw up your stomach man do not have that horrible favorite you want to tell everybody about Xylitol and the impact it has on your anus no it seriously does I think xylitol is the thing that gives you a lot of gas

and you just keep ripping I think it's really bad for you here's an idea way to go Jay cow yeah now he's going to turn into a school well that's your fault you were mean to him you came up with the anus jokes that was all I've been doing that joke for five years with him you're a bully I'm not no no freeberg off the shelf you brigaded him we break a dude our bestie sorry bestie all right four the dictator himself chimath polyhapatia going into sweater season I might know it's going to be a big big Q4 for us big Q4 and the beep of the beep Corporation David sacks oh if you mean the general partner of craft Ventures yes the general partner Adventures that's it and the queen of

quinoa the prince of panic attacks the ambassador of your Uranus David Friedberg we will see you next time I'm Jake [Music] we open source it to the fans and they've just gone crazy [Music] besties [Music] is [Music] [Music]