E47: Facebook's week from hell, Ellen Pao on sexism in Elizabeth Holmes coverage, Newsom wins & more

where were you on thursday were you in l.a i was at home i i got like a family to do well family have you you met them what were they like were they everything you expected me i had to meet the new kid he's 19. what's his [Laughter] major winner [Music] [Music] hey everybody welcome to another episode of the all-in podcast yes we made it to episode 47 in three episodes it'll be episode 50. no plans to do anything other than just trying to record this every week for you the loyal audience with us again coming off an amazing event a live event

on monday uh tuesday and i don't know if it went into wednesday but david freeburg's the production board event we uh recorded our first live all in it seems like it went uh well on an av basis and the audience seemed to enjoy it what was the feedback freeberg so you know half the room were scientists and they'd never heard of this podcast before and they were like what the hell did we just show up to it's like these who are these four guys on stage drinking this wine talking about politics for an hour and a half um but and then dropping f-bombs and dropping off bombs and uh there was a little bit of uh kind of seasoning we had to do afterwards to get everyone

kind of comfortable but no actually it was fantastic people loved it you guys were the highlight um and i thought it was super fun to do that in person i don't know what you guys thought it's cool energy it's super cool it was great and with us again of course uh david sacks the rain man himself and the dictator chamoth paulie hapatia what did you think uh saks of the live event format uh obviously half the audience were fans of the show half warrant which is i better than putting people randomly into it but i i'm glad that the people who are not fans of or have never heard of the show didn't walk out we didn't have walkouts so that was good

yeah i mean look we were slightly more palatable to them than andrew dice clay or something like that but uh [Laughter] it was a good change of pace i mean i think some people commented that the lighting the production values weren't that great they seemed fine to us at the time but uh so we're gonna have to do better on that next time and other people speculated that we took we're easier on each other in terms of debating topics because we were in person i didn't feel that while sitting there but you guys tell me if you think that was true i thought you know we got a better read

on each other in person and we had more dialogue than we normally would over a zoom i don't know if you guys felt the same very good i i think so and then i i kind of like the evening podcast the glass of wine there's something about it like you're just like a little yeah you're coming in for a landing yeah coming in for a nice evening the little cards after it could be a thing it could definitely be good i could definitely make harlem 2012 a uh a regular part of taping this pod the problem is we taped too early on a friday right if we could change the taping to like happy hour or something like that it might work better oh my god

harlan 2012 uh what is it that's a good bottle of wine oh my god j cal knows that look at him pretending that one pretending that's the it's the one with the round label i know it i know i'm looking at it right now oh my lord some of those go up in value those things looks like as high you guys think we could like record after playing poker for two hours so you're two hours into the wine and poker and then you record wouldn't work no way no way maybe two i think the wine yes poker no yeah i think uh for a first time the audio was great so that's you know job one is to get the audience

consumption happens that way to do like a line of light in fredberg's face for all commentators you know it was my goal i actually got up and fixed that like no one else of the crew you know the dozens of people working there did anything about it my wife stood up and fixed the curtain dude without al you would be nowhere be nowhere in life she's she's she's a great person what what what was the empty seat about between me and chamoth i mean there was an effort that was if we wanted to bring up a guest so unfortunately all the people's names that were written on that piece of paper our quote-unquote besties did not show up on time yeah right exactly nobel girl

girls didn't come and die and they all showed up at like nine o'clock yeah there might be a reason for that yeah it actually was the back channel sky date and the back channel was sky dating and somebody else waited outside because they knew they might get pulled up i got that from uh you're gonna have to beep his name out yeah it's your first time saying his name on the sky he's not going to no he's not going his name mentions are you kidding me he's been on my pocket he's been on this weekend he's one of the first 10 guests that was the last press appearance he

did was 11 years ago he literally does not i mean everybody knows who sky dating is earthling everybody of our generation but it's amazing how um you know quickly the tech the tech crowd you know moves on so true there's a there's a famous story actually when um when mark andreessen met um mark zuckerberg for the first time zuckerberg didn't know that you know andreessen had created netscape i'm not even sure he knew what netscape was i think he said something like i created mosaic and he's like what's that oh right right yeah yeah so it's like yeah look in the tech industry we're all concerned about the future no one pays a

lot of attention to history do you guys feel like last generations uh entrepreneurs and investors at this point well some of us are still currently creating things freeburg i can't mention the name of the app as per our anti-promotion rules but i have recently there's not a lot of kind of long careers in silicon valley right a lot of people kind of have because you're creating products well you consistently kind of if you have asymmetric success right you have these kind of like big bursts and then you know it's a it's a different kind of life you don't go kind of push again for

the next hard entrepreneurial project typically not everyone obviously uh and then you end up seeing like a generation kind of die out like you know web 1.0 and web 2.0 and then you know you don't see them again you also see some adventure yeah i think i think there's a lot of truth to that that um and i worry about this with my own kids that i think deprivation creates motivation especially to do something as hard as create a company creates motivation welcome to david sax's infomercial no no i mean look i think you know people are coming to my tent that leads to fornication [Music] you know our friend beep has a has a saying that that sort of

became famous when elon then repeated it which is that uh creating a startup is like staring into the abyss and eating glass and it is really hard to create these companies when they're successful and so not a lot of people want to do it again once they've reached that point and um you know it does take a certain amount of um like i said deprivation you know to do this which is why giving everybody the participation trophy and trying to make people's lives as easy as possible i mean yes you want you don't want to deprive people on the one hand but on the other hand it does often lead to to good things

totally agree we're seeing a bit of a dry run of this if people believe that you know they have ubi or the government's going to take care of them i would be fine with ubi you know everybody getting a little bit of money and if it was a safety net the only thing i worry about is it seems like a little bit of money if you're clever means you could never work and then what happens to those people in society right like well i just i think it's anti-compassionate because what you do is you kick out the bottom rungs of the ladder of economic success when you basically pay able-bodied people not to

work i mean they need those entry-level jobs that may not pay much better than the ubi are an important stepping stone to where they get to next in their career and i think it's it's demotivating and we've already seen in california we've been ubi ubi's not going to pay you to go to college but amazon will as an example so you're absolutely right there's a the the gi bill you know there's all kinds of examples where in history we've used you know entry-level jobs as exactly as they're meant to be an entry-level opportunity and on-ramp to work your ass off and to make something of yourself if you if you all of a sudden let people opt

out of it then it's going to be a very um it's what they're not going to realize is by the time they get old enough where they will want to have some kind of purpose it'll be too late because then activating yourself in your 40s and 50s to essentially start your life is really hard i'll give you an example of this like you know right now i you know i would say i'm like fairly fluent in italian um that's pretty impressive but i uh but i started uh taking italian lessons and you know the last four or five percent of a language is brutalizing right because it's like it's every little

grammatical thing you want to get it completely right and it's very um demotivating for me sometimes because i'm like god why the [ __ ] am i doing this um i don't have to i can get it by just speak it but i've made a commitment to myself uh same thing in biotech you know i got introduced to it by friedberg and and obviously nat and and now i'm trying to learn and it is a it is a grind and i think it's so easy to quit now you take that to the extreme and some random person that doesn't have necessarily the ability to fall back on the success that you know so we've all collectively had and you have to start

from scratch my god it's it's really tough it's really tough at our age it is just hard kids are screaming in the background you're trying to manage all the stuff it's impossible so you think it's easier when you're in your early 20s yeah be careful what you wish for but why is it easier when you're in your early 20s isn't it always a grind to learn something and push yourself to develop yourself i mean well you have nothing so the theory is you have some motivation to get something right because you're going to climb up the mountain because like staying at the shore means you can go wash it out to sea or

something hours hours hours and hours and hours to my 20s and 30s like it was like 10 to 16 hour days i couldn't have every day of the office is that different today yeah i i don't work in the same way i did before because i i'm trying to do a different job um but i've earned the right and i've now put myself under pressure to do it differently because i have a different job to do right but when i was in my 20s and i was a pm you know grinding out a product or you know writing a feature spec or you know building a model and trying to put all these things together

uh it was so much thankless work i learned a ton uh and it was all worth it right i was about to ask you do you regret it or not yeah no look this is the thing about work this is the thing about work-life balance that the people are always complaining about people are working too hard don't realize is that yeah you want to think about work-life balance but but across your entire life i mean one of the things you'll do in your 20s is work much harder to set yourself up to where you want to be in your 50s and so chamath doesn't have to work as hard in his 50s because he worked much harder earlier in his life and now he's got the skill set where he can delegate more um so yeah i

think we're you know we really shortchange people when we tell them as young people that they don't need to work hard or in the extreme case of ubi that we're actually paying people not to work that's not developing the right habits they're going to make them successful later on and in fairness though if you look at minimum wage and you look at entry level jobs many of them paid too little historically these companies like mcdonald's i know it's a free market but we're paying very little we're talking seven eight dollars an hour and no benefits and you know this is kind of

unnecessary greed in my mind and i think that's what my personal job was at i made an hour yeah i made four dollars and 25 cents an hour in 1996 as my first job cleaning cleaning a pool yeah 250 for me when i worked at fordham's uh fordham's computer center i think it was four two no three three dollars it had gone to but when i started in the workforce in 88 it was 250 was the minimum wage what was the minimum wage where you were dude what was it like in that 19th century it sucks yeah tell us when i when i when i was working at when you killed the federals no i remember

when i was in college i worked at a bar um and uh i mean i was there drinking so much i finally was like why don't you just give me a job so i might as well make some money while i'm sitting here and they pay me seven bucks an hour that's why i did my senior year oh pretty good yeah pretty good that's a pretty well-paying job seven bucks a month one of the other problems but one of the other problems of ubi that larry summers has been he's the former u.s secretary of treasury he's been on the record about um is the inflationary effect so you know there are pretty smart economists like himself who kind

of highlight that as you give people everyone you know ten thousand dollars a year first of all it's gonna cost 10 trillion dollars whatever the estimate is to kind of fund that sort of program um and you know suddenly the cost of a burger goes from 49 cents to 99 cents or 99 to 1.99 because there's uh you know much greater demand on that kind of area of the economy for consumption and so you see an inflationary effect which trickles its way through and so what ends up happening ultimately is by pumping more of that money in for free without productivity coming out of it

you effectively see inflation and so it wipes itself out um and so this is kind of one economic theory on ubi is that it can actually just end up being within 10 years completely useless and pointless because then the basic costs of living climb so much that you need to raise the ubi again to give people basic living expenses and so it becomes this kind of nasty runaway effect so it's not really sustainable is one argument that's made against ubi but you know obviously different point than what we were kind of saying a moment ago anyway i think people i think people don't know what they want and if they get it they're going to

um i think of look a form of a form of ubi does make sense and i do think we need to subsidize folks but you know i think maybe it's probably just a fancier word for welfare i grew up on welfare and i can tell you that i don't think our family benefited from it um psychologically we benefited from it socioeconomically because we needed it to not starve um but the the knock-on effects of you know when you're in that loop of again being in your 30s 40s and 50s not finding purpose you know which my parents had to struggle through uh coping you cope with alcohol you cope with depression the knock-on affects your kids i don't think we want to see

that and so when people think about ubi i think they need to understand that you know we've run a long experiment in this thing called welfare you know what welfare does a lot of us have felt it and uh there needs to be a better way because if you just let people opt out i don't think you really understand what happens over long durations of time when you're not doing anything oh it's getting really weird right now right i mean the fact that restaurants are closing that have customers but they can't operate and so we're starting to actually see the effect of it you know in some sense what's the open job stat right now it's

like 9 million open jobs in the us it's been bouncing from 8 to 10 million yeah there's more unfilled jobs than there are unemployed people right yeah or unemployment's unemployment is high but uh unfilled jobs is even higher yeah we've somehow moved away from a political consensus we had in the 1990s that i think made a lot of sense when bill clinton passed welfare reform with you know a lot of republican support is look we need to have a welfare system we need to take care of people who either can't work or can't find a job for for a good reason there needs to be a social safety net but if you're an able-bodied person who can find a job you should be working

and um and that that that welfare reform they passed in the 90s did lead to a lot of people finding meaningful work which i think resulted in happier lives and somehow we've moved off that political consensus um that everyone kind of agrees yes social safety net but but able-bodied people should work to now we have this elite it's really an elite ideology of ubi which is look we're going to pay people not to work um which i just think is sort of like un-american isn't it also like a little insulting being like you know what don't even bother working you're making too little money we'll just give you money it's

it's yeah it's like it feels insulting to people's dignity i'll be honest like i wouldn't want to take it i would rather go out and be i was a waiter or a bus boy i'll go be a waiter or a bus boy and make enough money to pay my rent and yeah one of the things you wanted for free yeah one of the things you hear is well your job's gonna be replaced by a machine anyway it's not productive work so why don't we just pay you to sit back and you know take yourself out of the economy well like you said the unfilled jobs number shows that even with all the automation that's happening in the economy and that's a trend that will continue

there's still a need for you know human labor and i think there always will be and um and it's a little bit too soon to be throwing in the towel on the idea that entire groups of people can't productively work does everybody believe able-bodied people should work and not get free money it's not that it should or shouldn't i think the question is what's uh what's in folks's best interests well that's what i mean yeah but yeah so is it in best people's best interest our phrase is what you're saying is in people's best interests i think the i think the point where we're going to go wrong is when we couple ubi

with um actually having to work or not work and i don't think that's the right idea i think we have to do a decent job of letting people find the things that they want to work on because everybody can find something that they want to work on and that shouldn't exclude you or disqualify you from getting ubi so that all that does is then just raise the general standard of living i think that idea is better the problem is when we talk about ubi what we are talking about it is in the exact way jason that you said which is letting people opt out so i mean think about how privileged that is to there are places in the world

where there's not enough jobs and people are like wait a second an american has to be fulfilled with their job selection in addition to getting a job it that just seems like the height of entitlements like sometimes you just need a job because you need money to pay your bills right but you're saying if you get product if you get job job candidate you know citizen fit you the uptick will be better ubi is a benefit it's like universal health care we don't we don't make a decision about universal health care based on who does or does not have a job and so uh ubi should basically be about evening you know the bottom few rungs of economic

viability so that everybody has a reasonable um ability to have a decent life that's a nice idea i think that makes a ton of sense but coupling it to having to work or not work where some people say oh great i can take this money and not work is the wrong way to figure this out we're talking politics why don't we shift to the the recall yeah all right uh so uh post morten on the uh newsome recall he he uh secretary of state says the recall cost over 300 million obviously um gavin knew someone in landslide hold on the 300 million point let me just take care of this real quick okay because i saw this all day on social media

you know what yeah it did cost 300 million dollars but all the people crying about that clutching their pearls about the 300 million never said a word about the 30 billion the 100 times greater edd fraud that was perpetrated by our state and by our one party rule of the state and the recall process and the ballot initiative process is the only check we have on elected leadership in a one-party state so listen i'll start clutching my pros about the 300 million when they start uh talking about the 30 billion but look let's shift to the result of this what are you wait what are you referring to i'm not sure i know enough about this is this is the

this is the edd fraud where 30 billion basically went to anyone claiming unemployment uh insurance and 30 billion and fake claims were paid out that process was so poorly administered so i mean people were just creating fake addresses they were just sending in claims from anywhere and um and 30 billion went out so so look i mean that's the kind of incompetence and corruption that we have in california so zach your point is that because it's a single party state where the state where the democrats have super majority in the assembly and obviously have the the governorship that the only

mechanism for the minority the republican party is to kind of run recall not even not the republicans citizens i mean look let's remember how the um how the recall and the ballot initiative uh came to be that process it actually came from progressives early in the 20th century who said we need the people to have some direct democracy because special interests might usurp the uh the the electoral process and right and and get control over all these elected representatives and frankly that's exactly what's happened in the state of california but the people who you know have that power are progressives and so they want to amend

or abolish the the recall process but so look i think 300 million once every 20 years to put the fear of god into politicians is not is money well spent in my view even if this particular recall wasn't close there are much greater examples of waste fraud and abuse that the people complaining about this should be wanting to tackle and i'll believe them about the 300 million when they complain about the 30 billion but look this was a total shellacking for supporters of the recall and i i do think that whenever you suffer a defeat i think it's important for you to think about what went wrong

you know and and certainly as a supporter of the recall i think it's worth doing a post-mortem um i think you know any political party when it loses needs to do some some introspection and so what went wrong well i think a couple of things okay so if you if you go back to the polls a month ago or so it was a dead heat we even had that shock pole that newsom was down by 10. and then what happened well the republican party basically consolidated their support around larry elder prior to that you kind of had this amorphous blob of five different candidates who didn't have a lot of name recognition they were pretty moderate they were a

hard target for for newsome to shoot at once the republican party consolidated around elder it provided a very uh convenient and rich target for for uh newsome to shoot at and so you'd have to say that tactically the republican party made it made a mistake there now i understand why they did it i mean elder is smart he's charismatic he appeals to that base uh but he's not the moderate candidate that like a schwarzenegger was or that i you know chamath i wanted you to run and so falconer was sort of that candidate and so you kind of had a choice on the republican side between a moderate

candidate who wasn't very charismatic which was falconer and a very charismatic candidate who wasn't moderate and it really played into newsome's hands and he was then able to nationalize the election in in the wake of that so he branded i think somewhat unfairly he branded elder as a as a trumper and he ran against trumpism and even biden came to california to denounce elders as a trump clone which look there's a lot of things you may not like about larry elder i don't think it's fair to call him a trump clone but that's what they did and so they demonized him and so if you look at the issues that newsom ran on they were all national issues he was you know talking

about what was happening in texas with abortion uh and he he talked about covid we should come back to that one because i think that is a state issue too we should talk about it but he started talking about issues that were really more national issues he and and so the the recall moved away from the issues that had galvanized supporters in the poll just want polls just one month ago which were homelessness crime schools and school closures and lockdowns and news was able to very effectively change the subject well you got everybody back to school right if people didn't go back to school it could have been a different result i think the recall was very

helpful in that in in that i mean if you remember do you think policy has shifted because of the recall sacks at this point and doesn't that ultimately kind of benefit the issues you were most kind of concerned about look the 300 million was worth it just to get businesses open and just to send a message to the the education unions that they could not keep schools closed for another year i you know if you look at when newsome relaxed the lockdowns it was at every step of the recall process when when the recall finally got enough signatures to get put over the top he all of a sudden started liberalizing the lockdowns he

knew they were very unpopular and he gave up on that issue and he got the education unions to stand down on the issue of school reopenings i think because he was facing this recall so look i think that the recall was worth it just just for that but um do you think things could have been different if there was a fringe candidate like i don't know a sri lankan billionaire uh that was you know not kind of this this hardened republican that they could yeah yeah i i blame i blame chamoth for this i think i think a candidate like chamoth could have won okay a democratic centrist obviously i'm joking i don't i don't blame you chamath i

understand why you wouldn't want to run but but i'm saying a candidate like chamoth which is who i supported or a candidate like schwarzenegger remember schwarzenegger when he ran in the early 2000s he was pro-choice and pro game gay marriage at a time that gay marriage was not very popular he was socially very liberal you have to take those issues off the table because california is not going to vote he was a pro-life candidate i think he was pro-gay marriage before the clintons yes he was very early on on that he was he was socially very liberal and very tolerant and you got to be in california in general do you think

the unions in california you know which is an issue that's been talked about a lot on this pod have been weakened because of the recall and the voice that kind of rose up during this period of time or do you think that nothing's really changed kind of long term i i think it's i i think it's a long-term project for to get the public to see that the education unions are like any special interest which is that they will pursue their interest at the expense of the general interest and they have to be controlled again like any special interest i think because teachers are rightfully very popular

people haven't realized what the union bosses are up to i think that that has been exposed because of covet and the school closures to a much much greater degree and i think that's that's a good thing well i mean if you look at the recalls happening locally too with chesaputin and the san francisco school board it seems like now the citizenship is saying oh we do have a recourse it's called doing a recall and stating our opinion very strongly and then attempting to removing people and yeah i think that does change people's behavior you can be sure chesaputin is thinking about outcomes a little bit more now than the implications of this recall i

think are really important um and i think it plays out in who runs uh in two years when um newsom is up for re-election and absolutely it'll change who runs on the democratic side in four years uh assuming new some wins you have to remember there have been a massive degradation in the quality of life uh the most populous state in america which represents the fifth largest economy in the world under one party control right so there is not a single law that cannot be passed there's not a single program that cannot be implemented there's not a single idea

that can't be pursued yet we have had an absolute decline in quality of life under that rubric and so when people really come to terms with that that's i think when there's a sea change and i hope the sea change is not necessarily a democrat or republican thing it's back to centrism and i think it's checking special interests exactly what sac says and realizing that just because you use a different name like union or something else you're still a special interest and you need to actually be focused on the interests of the general public our kids the environment water quality and if you can't walk into a state where everybody up another

ticket is on your same team and get [ __ ] done it's a really tough uh report card yeah i'm just super uninspired by these guys like where is their audacious plan for california has anybody stated like an audacious like here's what this state is no i mean no and that's what's possible we could be the best economy with the greatest education system and we can build a million units should that be should that be the role of the state government i mean like you know should or should well they're in competition they are they're in competition with with florida and texas they have to compete for business and citizens and if it's not done at the state level we're

going to have to rely on the federal level and we know that that doesn't work because we have 50 states that are increasingly more diverse every day so the whole idea with the constitution and the founding fathers was like we have this incredible startup but over time i think we've decided that you know this startup is an umbrella organization of 50 other startups it's a holding company and and there'll be these small little you know rules and differences amongst these 50 states and that'll allow us collectively to thrive so you put out a tweet oh sorry go ahead no i just want to i think we want to believe in that idea like there is no savior you

know what i mean there's no savior for 350 people and there's barely a savior for the 60 million people in california but it's not going to happen by just throwing your hands up in the air and expecting some president to come around because that's just too hard each state has to act like the citizens and be you know just rugged individualists who are self-sustaining uh and resourceful and this state is not self-sustaining resourceful or ambitious and it's falling behind texas and florida and other competitors so zach you were in a competition you put out a tweet saying often or miami are you are you in the active transition phase or where are you at well i don't know i

mean we'll see i think the trend line in california is not good i think what you've already seen in the days since the recall is that gavin newsom has now laid out the strategy for all progressives uh in like even from san francisco to anywhere in the country of how they're gonna run and what they're going to do is this that no matter how bad things get in terms of crime in terms of homelessness in terms of quality of schools in cities and states that they have complete control over they're always going to campaign against trump and trump-ism and they're going to demonize and authorize whoever the candidate is

on the other side as a trumpist whether they are or not that's going to be the playbook from now on and this is where i think the attacks against larry elder were very unfair is before he even had a chance to define what he was about you had publications like the la times calling him the new face of white supremacy i mean was it was like unbelievable but black klansmen yeah they basically try to make him out for your black which look he is not okay larry elder's a libertarian maybe his politics are not in the mainstream in california but he's not a black landsman but look this is what the progressive playbook is going to be for the next two decades which is to demonize

anybody who stands up to them as basically being a a trumpist and um and and the irony of it will be that they will have total control over over the the problems that people really can care about crime schools homelessness and um and somehow you know that they what news improved is that you can whip people up into you can stir their their partisan political tribalism when you do that right that's why it's effective is he gets people just to see blue and um and he gets a free pass on these issues that just a month ago people were very dissatisfied with now i i do think it's very very important that our republican

party not play into this and there was a very good editorial i think there's something to say how come the republicans are still pursuing a trumpian you know their stream they're stupid they are they look they're so dumb it's a really stupid strategy and there's two things they gotta fix right away okay so number one rich lowry from nashville view had a police a piece in politico where he said that this election uh the stolen election myth has become an albatross for republicans they have to get off that um i think it's it's ridiculous that's gonna bring him down between two and the other thing is this

anti-vac stuff i mean you know voters completely forgot about the way that newsom locked down this state and then broke his own lockdowns why because he's provacs even to the point of vaccine mandates whereas uh the republicans were not and frankly i think chemoth your instincts on this were were right on which is people given a choice between vaccine mandates or an anti-vax position they will take the the the vax mandates speaking of instincts uh you want to go to the uh this week in facebook's dumpster fire sure sure uh so i i mean where to begin uh this all started um on tuesday 2016 at

the last time of course graduate school of business okay well we'll get to your victory lap in a moment but just to queue up this past week on tuesday the wall street journal reported that facebook conducted in-depth research on the impacts of instagram on children's mental health from 2018 to 2020 but they never made the research public nor did they make it available to academics or lawmakers who requested it you will remember that last year or earlier this year facebook started floating the idea of instagram for kids so in addition to having this research which they didn't share and here is the slide from a presentation it seems like the wall street journal has

somebody inside of facebook giving them everything literally but here is the quote from presentation slides from 2019 internal facebook presentation slides we make body image issues worse for one in three teen girls teens blame instagram for increases in the rate of anxiety and depression this reaction was unprompted and consistent across all groups according to the wall street journal uh and uh instagram obviously is a juggernaut over a billion monthly active users and over 40 of them are under the age of 22. this is a really interesting issue because we are this is probably the first example of a broad-based

public policy public health issue that tech has created not necessarily amplified right or exacerbated but actually created it now we're going to have to deal with this before i i want to issue you guys how would you define that issue well i think it is a public health issue if you have mental illness a large percentage of a cohort of our population uh subject to mental health issues and eating disorders that's not a good place to be right i don't think that's what we want as a healthy society in a healthy society our daughters and it's probably by the way it's probably not more than

just our daughters it's probably our sons and daughters that are going through these issues the question is now about you know is it really a public health issue if you know about it what responsibility do you have to do something and before i apply i just want to give you guys a little bit of data and just get your reaction i actually want to go back to what's called the tobacco master settlement agreement and the tobacco master settlement agreement was entered in november of 1998 originally between the four largest u.s tobacco companies philip morris rj reynolds brown and williamson and lauriard okay

and the attorney generals of 46 states and essentially it was an agreement that basically said okay we're going to net all these medicaid lawsuits together we're going to hold these folks responsible for the downstream implications of the product that they've been selling our kids and our you know adults population without the proper disclosures et cetera et cetera et cetera the pres the the what happened before this tobacco msa in big tobacco though was there was about eight or 900 private claims that were filed from the mid 50s all the way to the midnight david knows all this because he he made a movie about this

the reason why i think this is interesting is that whether it happens in the united states or someplace else when i read that article my immediate thought went to the tobacco msa because i was like well okay there's a public health issue that may or may not have been covered a cover-up you know it's definitely may or may not have been covered up there could be criminal liability there's probably civil liability if you're you know a mother or father who's lost their kid to an eating disorder or to depressed suicide anxiety bullying suicide and i think like i think the article in the wall street journal yesterday was

about like human trafficking i mean these are some gnarly horribly complicated gnarly issues to me that's how i can edit the dots so i just love to hear well i mean who's the jeffrey weigand in this case i mean this is literally the movie the insider like somebody's leaking these documents out there's a deep threat inside facebook yeah well yeah and that's what the brown and williamson was really about is that somebody had the studies from the 70s of when correct me if i'm wrong david when the tobacco industry knew and did nothing and covered it up and then they had the whistleblower so do you feel this is exactly analogous sax or how close to analogous are we

taking too big of a jump here well this this idea that social media is as bad for you as cigarettes has been around for several years now and i've always wondered whether that was a hyperbolic claim i mean it can it really be the case that using facebook is as bad for you as lighting something on fire and sucking its carbonized ash into your lungs i mean i just you know i yes i think there's like a kernel of truth here in terms of yes it does exacerbate body image issues but i don't believe that facebook or social media created those issues um i mean these issues existed before and what facebook does is connect people in a more intense way than they were

connected and so it might intensify some of the social dynamics that already existed but i don't know that it created them and if you're gonna blame facebook for this there's a lot of other places you could blame too i mean why don't we be why don't we blame the met gala you know like um you know look at all those well we have had actually blame on the fashion industry for making unrealistic body types and the magazines and they stuff my kids can't wear the full body stalking to school that kim kardashian wore to the met gala or whatever i mean and they're upset about that so should we ban the met gala or i mean let's look

at all advertising i mean all advertising just about focuses on unrealistically beautiful people and what about tv and movies i mean hollywood tends to cast people are better looking or even the people reading the news off teleprompters i mean so this like body image and self-esteem issue is everywhere in our society and i think what social media does as it does in so many of these cases is really just hold up a mirror to our society and it's it's not and yes there's a lot of bad stuff happening on social media but that's because there's a lot of bad stuff happening

in our society well let me i you know here's one thing david the i there there have been other industries that have influenced this but i don't think that they were as pernicious and as frequent in their use of as social media you know when reading a fashion magazine or watching tv like slightly different than an interactive version of that that you might use for five hours a day like tick tock or instagram and i just dropped in an image into uh the the zoom chat there about suicide rates in the united states and this chart you'll see goes up to 2018. and right around 2006 when we were at 11 percent uh eleven suicides i think per

ten thousand per hundred thousand uh you'll see from 2006 to 2008 we go from you know 10 or 11 basically suicides per 100 000 americans all the way up to 14. a 40 increase but what's your that correlates directly with social media becoming part of what we're doing here but what's your connection to what's happening i mean is that among teens i mean what what is that this is overall suicide rate so i just think social media and the anxiety it produced could be actually having it i'm open-minded to that can i clear up one thing saks i think that um your argument would be reasonable if the first part of your argument uh made

more sense and to me it doesn't and when you don't think that smoking and looking at your screen for an hour a day are the same let me just in from my perspective explain to you why they are the same whether or not you're ingesting something into your lungs or whether or not it's your eyes at the end of the day you're still activating physiological pathways okay there are specific chemicals that are being created through smoking specific chemicals that are created through how your brain and your mind is reacting and all of these things when you're bathed in these chemicals for long

periods of time have known deleterious consequences some manifest in tumors which then result in cancer you die lung cancer cigarettes but what we're learning is some of these things result in long-term imbalances of these critical hormones and chemicals you need in your brain to stay healthy and that results in anxiety or the propensity to overeat or the propensity to then throw stuff up and so i would be careful about not assuming they're not physiologically the same i actually think they're more similar than different at a core physiological level it's just that we're not used to the fact that something that that is

equivalent to looking at a screen could actually do that to you i guess the question is what's the what's the what's the threshold for regulatory intervention if um if someone did this at the scale let's say there was a social network that was had a hundred thousand users and people were actively using the social network every day and having body issues or whatever the you know the the concept that's gonna find that claim might be we're about to find out you know are we gonna end up creating kind of a regulatory frame across all of these things and i think that this goes also to the point of scale because

um at the end of the day if you end up starting a business and you're not successful you don't really kind of find yourself in the sort of framing of well what are you doing wrong all of the the companies that scale the assumption is they did something wrong in order to get to that scale you know roloff both of um sax's former colleague and and obviously famed investor now at sequoia capital um said that uh he always he only invests in businesses that pursue one of the seven deadly sins because those are ultimately the things that consumers kind of increment their consumption of there has to be a seven deadly sin

driver uh you know underscoring the success of any business that sells two consumers and if that is actually true people aren't making kind of altruistic purchasing and consumption decisions they're making decisions based on envy and based on greed and based on gluttony and all of those drivers we kind of you know are effectively kind of related back to these physiological drivers right and so like yeah no two things can be right what you said can be right but i think what also can be right is are we really willing to

bet that now there are not 50 individually ambitious politically ambitious state ag's licking their chops reading this stuff wondering how many kids in their state may have suffered from an eating disorder or anxiety and blame it on one of these apps of course are we convinced that not a single lawsuit will get filed are we convinced that there's not going to be any class action and by the way that's just the united states what is somebody that's sitting around a you know around a table of politicians desks in you know germany belgium uh france thailand

they're going to find their issue in this treasure trove of content that's being you know continuously drip fed out to the public i guess my point is that this is today's issue and business success ultimately over time in consumer markets will always ultimately be driven by products that have at scale deleterious effects on the consumer market and those deleterious effects will be a result of some sort of kind of addictive or negative kind of consequence that arises when folks use these things frequently and the market figures out how to optimize the utilization of products to increase revenue to increase profit and that's what a free market does and i'm not

saying it's right or wrong i'm just pointing out that there isn't in my opinion something unique here i mean you know coca-cola is the largest beverage company in the world they sell 40 grams of sugar in 12 ounces of water and everyone buys that and they feel great from that and the sugar creates this addictive problem now we've got an obesity epidemic i'm not blaming coca-cola but that's the general trend in cpg over the last 50 years increasing sugar increasing salt and then the difference the difference is that this is not sugar which is a generic compound this is for example no different than when purdue pharma started to make

fentanyl it's a really great drug it has incredibly superior advantages it's used for a lot of very important things when that spilled over knowingly to a level of abuse and i don't think it was a lot of abuse but there was enough that essentially was overlooked in in the building of a business it started with state ags who stepped in and then it basically ultimately drove a federal agreement states agreements a master settlement agreement around fentanyl and then purdue essentially disgorging all the profits that they made so you're right free markets should act in however way they're going to act

but when those free market operators themselves are producing data that shows that oh [ __ ] hold on something could be going wrong here um then i do think that politicians will step in regulators could step in i mean what's crazy here is you know the fda could actually act like if the fda is willing to act on joule what is the difference if the fda says they feel like let's just assume that somebody in the fda says we feel like we should have a responsibility to think about mental health and eating disorders but that's the slippery slope right what's the threshold right at what point do they say no we're not touching this and at what point do they say yes we are

touching this because at the end of the day any successful consumer product will have some degree of deleterious effect exactly and well and this is why we have to have some perspective about it so in preparation for the segment i asked my 11 year old uh girl daughter um i know jake how you don't think i talked to my kids but actually i made no joke no joke i was thinking if you were the father she was like who are you why are you in my room so the first thing she said is who are you and the second and after i said i'm your dad and the second thing she said the second thing she said is i don't use instagram i'm like okay well what do you

use she said tick tock i'm like the worst so i'm like what do you what do you use tick tock for and she said well i watched uh dance videos and i'm like well the i've been reading press articles that say that the only thing on tick tock is sex and drugs and that it's you know it's it's bringing you into a vortex of that and she said i don't i don't watch i watch dance videos and then smart as a whip she said the only people who end up watching that are the ones who keep indicating she didn't use word preference but she basically said that they keep getting that stuff because they like it and they keep getting fed

more of what they're watching so look i think we have to have a sense of perspective about this at the end of the day products like facebook and instagram are ways for people to share content and consume content from people they follow i mean that's basically it now is there a lot of bad [ __ ] on there yeah because there's a lot of bad [ __ ] in the world and should facebook be trying to control this stuff absolutely um but i don't at the end of the day think it's it's uh it's cigarettes if they banned kids from using tick tock and instagram until they were 16 years old would you be opposed to that because i don't let my kids use

it and i have an 11 year old anywhere near we have a complete moratorium no social media is our rule i can't believe you let your kids use social media i mean i'm not passing judgment but i mean like all they use it for is to watch dance videos so um but i think sax's point is an interesting one which is you know based on what your daughter said that that is effectively what's going on it creates an acceleration of the natural evolution of these markets that historically may have taken call it 50 years for everyone to want to watch you know mtv didn't emerge for 60 years until you know there was kind of radio um and television broadcast signals and then

everyone said you know what i want to watch rockers dancing on stage and go nuts and whatever the kind of consumer demand was that eventually evolved there what's happening in social media is within seconds you make evolutionary votes on kind of what you want in a media cycle and then all of a sudden a few hours later you're getting exactly what you want over and over again and you can't say no and that that's effectively what digital media generally social media in particular has some nuances to it but digital media generally has enabled is an acceleration of the natural consumption trend that we see with humans which is they eventually

want to go to one of the seven deadly sins and that's what they kind of get stuck with we've definitely talked about the danger of getting trapped in in an information bubble and and a feedback loop and i do think that is a danger of these products but so is cable news i mean you know you look at twitter it's an outraged machine and people get trapped in a cycle and they only want to they either follow people to get outraged by them or just because they want to kind of self-indoctrinate themselves but that is basically why people watch cable news as well i mean it is an outrage machine your friend tucker or rachel maddow on msnbc they're both

feeding different uh variations of of outrage and um so so my point is look i don't think these problems are unique to social media i think they pervade hollywood and the entertainment industry and even the news industry um maybe look maybe we should put warning labels on them at the end of the day we don't prohibit cigarettes we have an assumption of risk argument we put warning labels on them maybe we need warning labels on these instances influencers right you put it you put it behind a counter and there's a strict prohibition on people under the age of 18 being able to use them and when it looks

like you know companies like jewel were trying to circumvent those things or make it appear more valuable basically to hook kids at a younger and younger age when they weren't capable of making those decisions um they were held liable so okay so there's a really interesting topic there which is should people under the age of say 16 or 18 be prohibited my original question products yes 100 percent 100 percent look if you if you think about 16 or 18 16 or 18. let's uh 16 100 18 16 100 and then up there needs to be a way of opting up because i think 16 year olds are quite sophisticated but here's the

thing we are living longer and longer than ever it is very likely that we're all going to generally live to our hundreds it's not the end of the world for these kids to have to wait an extra two or three years until their literal physiology is a little bit better form so that they have better antibodies to this [ __ ] and i think that if we as a adult population aren't necessarily going to take responsibility for these kids i think we're doing them a huge disservice you don't let your kids run around wherever they want you don't let them hold guns whenever they want you don't let them do a whole bunch of things

that they may think is okay but you know could have really bad consequences and so if you know that this stuff is happening i think it's very different to look at a 22 year old and tell them what to do or not to do that's not what we're debating but what that data was about was about long-term systemic health issues to a large percentage of girls that's really [ __ ] up and a lot of the research that's come out i dropped a couple of links in the chat you know i haven't read the studies but um they're starting to show a correlation between suicide rates and depression in young kids with social media and it does skew towards females the theory is

uh females are uh more adept or more frequently in uh dynamic or complex social uh situations in other words cyberbullying type situations where people use the social media to just kind of blow each other i mean look i think you guys have a real point with respect to ages 13 to 16 because i don't think you're allowed to use social media or at least the terms you prohibited under age 13. we all know that's a joke you and i have had to build products that have to you know abide by copper laws and we always just kind of laugh at it because they're [ __ ] right okay fair enough but what i'm saying is i think you guys have a real

issue that needs to be explored around what's the usage uh for ages 13 to 16. but look what i worry about with these things is you're always playing whack-a-mole right i mean you basically ban social media and all of a sudden these kids because they're very tech savvy they're going to find themselves on text groups and text chats and they'll be in signal and you won't even be able to see what they're doing i mean at least on social media that the whole point of that though that makes sense to me because i remember when i was growing up and we all wanted to smoke it was a pain in the ass to get

cigarettes so most of us just said it's not worth it but yeah you're right a handful of people found a way to get the cigarettes to sneak behind the school to smoke them that's fine but that's very different than jewel walking into the middle of the lunchroom and passing out berry flavored vape pens yeah coconut peanut wow that's baby basically insane well that's crazy obviously that's going to be created packaging if you look at the paper why do you have a creative outrage around jewel and berry flavored vape look why do you care about jewel um or why should we generally care about jewel and not care about soda companies making

40 grams per 12 ounces of sugar which is truly dangerous and damaging to the health because we've been drinking soda for a long time and we've already accepted it so it's too late to accept it we essentially essentially long time and then we had this kind of you know tobacco moratorium that's now kind of well you know shut out smoking but free break if you say if you said right now covid uh is a disease of the old and the obese you would be cancelled like somebody tried to say that that's recently the guy no but the point is you're talking about like people are very sensitive about this obesity thing and the second you

say like we need to monitor you forty percent of americans with type two diabetes or whatever there's also personal freedom and do you wanna drink a coke zero exactly water and so if you have personal freedom why should some regulator tell you what social media tool you should or should not use right if we're talking about what are you going to do with a 13 to 16 year old what are you going to do with the and 11 year old that's the best part of your argument that's the best part of your argument is when we're dealing with minors i could i could see the argument for more restrictions and and potentially support them depending on what they are i think that's something

what about ideas what about minors not being able to drink soda you have to be 16 year old to drink soda i mean that's actually that's where most diabetes and obesity is rooted in this country i'm open-minded to that position actually i know it sounds crazy but no i think that that that makes sense drinking coconut cola makes no sense if we have a crazy obesity if we can actually show that so let's ask the question though so let me let me ask you let me ask a second-order question about this which is freeberg is right that drinking sodas for 13 year olds has got to be as harmful or more than using facebook okay

so why do we never hear about that i would argue that there's something else going on here with this massive amount of attacks on social networking companies there's a lot of people who hate social networking in the traditional legacy media because they've been disrupted by facebook by these social media companies and so they're working money they took their money and they're looking to publicize any article about the negative effects of these companies which they're not threatened by coca-cola they're not going to publish those kinds of studies so i just think that there's an argument that perhaps i'm not saying you're wrong i think there's absolutely truth in what you're

saying it's all a matter of degree though and perspective and i do think that the traditional media has an incentive to blow this out of proportion a little bit because they have an agenda is what you're saying yeah absolutely and i think i think people in power look i think there's a positive thing about social networking i mean because we haven't said one positive thing about it okay social networking overall enables us to stay in touch with people we care about friends family and allows us to receive information from people we want to follow okay we never talk about those positives i find it an incredibly convenient way to

consume things okay so we never talk about that but but here but here's why is because social media is fundamentally a democratizing force right it enables people to coordinate in a much more democratized way than they ever had been able to before i do think that is threatening to people in power and given the chance they would like to suppress it um zuckerberg gave a speech a few years ago about social networks being the i think called the fourth estate with the third estate being the press and in the same way that that there are people who want us in power who want to censor the press i do believe that there

are people in power want to censor social networks because they don't like the disruptive democratizing force that it represents and there is a lot of positive to that in the world you're i think you're mixing up a lot of things there so yeah you're right and i don't think any of us are saying cancel these companies and remove them from the internet i think what we're saying is there are very specific ways in which certain features are built that they are expressed in features that are now apparently according to their own work and exploration are linked to mental health issues so i think the point is people should

now decide whether to your point we should ignore it because the good vastly outweighs you know what's a third of girls who the [ __ ] airs right i mean they're chicks so whatever uh or you say uh actually this is a really big problem and so let's step up and fix it because somebody needs to protect these people and when you're 16 or 17 or 18 do whatever you want like we let people do today you want to drink a coca-cola every day get diabetes you can do that nobody tries to stop you right you want to smoke a pack of smokes a day you can do that nobody stops you but we

do a lot of other things to try to help kids i think i think if we're only talking about ages if we're talking about the minors the the kids i think you and i can find agreement on this issue i think but but i do think that the demonization of social media goes well beyond that but look i think you've got a great point with respect to the kids do you guys believe and this is a theory that's been growing that tick tock run by the chinese government is trying to reprogram ethics morals and doing psychops basically if there's on our children no jay there's something bigger than that i mean i think all of you guys probably upgraded to 14.8 ios

this week i hope if you haven't and everybody listening if you haven't please go upgrade it but you know the israeli spy firm nso had apparently created a zero click exploit for the iphone where you could turn on the camera and the microphone and basically spy on folks completely unaware and you know jason and i were talking about this and and and i think jason you were the one that said you're like yeah we've been living with that with tick tock for years it's not as if you know nso just licensed it randomly to the saudi government i mean this tool has been available for a while so to your

point but do we think that the chinese government tick tock are trying to program our children to be more deviant and to create social unrest and no you don't think that they're trying to steer them with the algorithm towards bad results because they're not letting their kids play video games wall street did you see the wall street journal article that i just sent to you guys wall street journal article basically created a bunch of kids accounts and then did searches or what started to go down a rabbit hole and just with one keyword search you know these kids went into deep you know kink bdsm this is a this is a pretty straightforward weighted tree algorithm

okay so like when you start on a branch of a tree and you keep clicking on those things that's what you'll get this is no different than how facebook's algorithm works how google search algorithm works for you once you start behaving with clicks or swipes or likes they use that as a feedback loop and they basically weigh the next set of results so david's daughter is right if you click on sex drugs and rock and roll that's it's not all you're going to get but it's going to be a large percentage of what you get because the algorithm in a blunt way assumes that that's what you like yeah so i'm not sure that this is repeating

anything that's so im you know it's pretty obvious that that's how it should work if they want to have maximum utilization well you know the thing that's slightly different about tick tock is you know in facebook or instagram you build your feed and twitter and then it serves it up algorithmically on tick tock it uses the entire corpus so if you do one search for a keyword now it's not just a subset of what your friends posted in some ranked order it's the entire corpus of like long tail and so what they show in this tick tock is like how quickly a child who just types in one key word can

be have their feed be 90 drug use and you know sadomasochistic whatever you're into uh sex i don't know if the content is obscene then it should be taken down to begin with okay and um look my takeaway from this conversation is that uh we need to do something different for kids i don't know if it's a it's a flat out prohibition or what but but but yeah but look so so the tick tock algorithm thing if you want to keep seeing more and more content related to something fine the algorithm is going to give you more and more of what you want as a consumer but maybe for kids there needs to be some guard rails around that

and we don't direct we don't direct kids towards certain kinds of content around you know sex or drugs or violence i have to constantly remind parents like youtube kids should not use youtube because it goes really to crazy dark places and there's kids youtube and kids youtube they add each and every video now you still get some of that consumption and unboxing of things and your kids will ask you to buy a bunch of stuff but you're not going to get straight up sex violence and you know everything i'll tell you what does happen my uh i i put kids youtube on my kids my four-year-old's ipad

and then the other day she said she saw some like scary horror thing on there and she couldn't sleep and she woke up in the middle of the night because you know if we're not doing our job as parents curating the content and curating what our kids are doing and we're leaving it to this app uh we're totally left and uh and that that's what i realized i did my laziness in like just thinking like oh there was something she wanted to watch i put the app on there and didn't pay attention for a few weeks and all of a sudden she had gone down the rabbit hole found something scary i use a i don't know if you guys use this but i use an app called custodio

it's with a q q u s t u d i o and you can kind of like lock down all these devices and then at the end of every week it gives you an email of all the app usage and all the links that these that my kids clicked on or just my oldest one he's the only one that has a phone but that's nice and you had a discussion with him about that like hey yeah it's a privilege to have this and yeah it's going to tell me what you do i agree it's still super super hard but this is why i think you need to have some blunt force instruments right now and my blunt force instruments are you're not allowed to have

um well the ones that we've they're not allowed to have tick tock snapchat facebook instagram twitter yes hard no and the only reason we allow youtube is because a lot of the school links are the videos inside of youtube and so you can't lock it down but that's why i use this custodio app to see what they're watching on youtube even then though it's not perfect by the way this thing that just came from the pentagon there's a total friday news drop i mean talk about a friday news drop i don't know what we don't know what you're talking about u.s military acknowledges kabul drone strike killed 10 civilians including seven children

we knew this they're just confirming something that had been exposed new york times did excellent reporting on this excellent reporting by the new york times that was incredible journalism i mean did you guys see that they were like watching frame for frame of like a video then they were like going to google maps they were comparing colors of cars they were looking at sides of buildings uh incredible reporting by the new york times it was really the i mean it's obviously a tragedy was the final debacle of our afghanistan involvement this was a foreign aid worker who actually he was there as an aid

worker and um they had him on video loading up his car with uh plastic jugs of water and somehow they thought these were explosives or something like that and he was doing his errands and then he comes home and they hit the the car with you know a massive uh missile from one of these reaper drones and it kills him as well as um you know it's basically 10 members of his standard family including seven children now the i i mean i i think i understand why this well we don't exactly know why this happened and i think it needs to be investigated obviously the military in

kabul was on high alert because we had just had that bombing at the airport and it was the bloodiest day for america in afghanistan i think we had three 13 soldiers killed a few days before this but but it just shows the kind of mistakes that we can make even fighting drone warfare you know the idea was the term casualties of war exists for a reason like this is how war works you cannot do it perfectly it's messy everybody innocent people dies that's why war is the worst thing but how did we should be the last resort right and how do we ever think we're going to win hearts and minds in this country by you know like we we made two we talked about this it's

like they're they're not interested in democracy like in the way we want them to be and the west wants them to be we by the way that's forcing it down their throats is not gonna work we we could have maintained a base there there were better ways to exit but let's fix the schools in california first yeah i think that's i think that'll ultimately i think people are going to forget those images of people on planes and just think thank god that's over i think now that there hasn't been 20 you know and hopefully there's not another 911. all right uh let's wrap with um ellen powell wrote a piece for the new york times uh op-ed section section on uh

sexism in tech using the elizabeth holmes trial as the main example um she was also on tech checks the nbc show and discussed her op-ed uh quote holmes should be held accountable for her actions as chief executive of theranos and it can be sexist to hold her accountable for alleged ver serious wrongdoing and not hold an array of men accountable for reports of wrongdoing and bad judgment she uses travis kalanick and adam newman as examples of men who have engaged in questionable unethical even dangerous behavior in tech without much legal penalty and that they both went on to start new companies her main example however if

bias is tech executive kevin burns who is the former ceo of jewel j-u-u-l uh who helped the e-cigarette vaping company raise uh 12 billion dollars but he left jewel amidst a lot of legal blowback and just this past week with a bunch with a bunch of cash with about yeah i mean of course you get the secure the bag on the way out adam newman too um and uh don't drop that don't drop the bag you have one job to do don't drop the bag yes run um but don't do not drop the bag so i mean she meant she mentioned other stories like uh juicero if you guys remember this company um a couple years ago they raised 100

million dollars pre-launched right it was a juicer that you know was supposed to enjoy my juice from my juicer oh yeah the claim that they made was that inside of the packets was like fresh vegetables and this thing squeezed the fresh vegetables and fresh juice juice came out and it turns out that the bag was just filled with juice and so no no i think the bag was filled with shaved vegetables or whatever but you could squeeze the bag you could squeeze it would squeeze the bag so that it was already pre-juiced is what um you know uh olivia zolowski who's now it uh uh she basically put they she she kind of made a whole video and put on

bloomberg they had juice in these packets and they were telling people what they thought fresh juice yeah so they could have opened the drawer sorry sorry they could have put it into a machine and paid seven dollars the juice then took that juice put it in a bag yeah that was supposed to be fresh vegetables sold that as fresh vegetables to then get juiced i charged eight dollars a bag for this stuff um were invested in that who invested in that who wrote a hundred million dollars google ventures anyway a lot of people would like to kind of say it was a huge it was a huge like you know better for

the planet story but it turns out that the hardware didn't work and then they ended up kind of faking it until you make it it's very similar to their notes in the sense that there was a piece of hardware that made a claim that wasn't necessarily true and granted no lives were at risk in this particular case but some might argue lives were at risk in the case of jewel but i think you know you see this a lot more in these kind of hardware and particularly in life sciences companies um you know there's a business like like zymergen's a good example right it's very hard tech very deep tech uh josh hoffman did an incredible job fundraising raise a 400 million dollar

round from softbank took the company public then they go public and a few weeks later they're like oh wait sorry we don't actually have any product or any revenue and we talked about this a few months ago a few weeks ago and the stock completely collapsed there's another company called berkeley lights which went public and uh yesterday scorpion capital one of these short sellers put out a 160 page report on these guys showing that berkeley likes his product actually it's a hardware life sciences hardware that cost 2 million they've sold it into all the pharma companies and scorpions saying look this thing doesn't work it's a total fraud

like there's no the machine doesn't do what they claim it does okay but so to allen powell's point is there a double standard or not right and so these were all run by male ceos and nothing happened to them and um are they all white as well um yeah yeah they're all white all right first of all let's take it easy on the white guys two months it's three on the white guys on the bottom no i'm asking a qualifying question it is um so here's what i'll ask is i mean is this a surprise that white dudes will get a hall pass i don't think that's a shocker yeah it's considered it's considered entrepreneurial failure

but when it comes to the woman that everyone i think was excited about seeing succeed because she was a woman it becomes fraud and i think well you know there's two different things yeah is it free book is there two different things between you know where she obviously misled people in a premeditated way and lied to them like taking their blood sample and then putting it in a fake machine then doing it in the back on an abbott machine and then bringing the results back and making it on her theranos edison machine i mean this is literal wire for a securities fraud in these other cases is it people who are ambitious if you look at the juicer oh

it's kind of like this is a stupid idea that got over funded he put he put juice in a packet and told you no no he put he put chef shaved vegetables in the packet and then used hydraulics which is actually real that's actually not correct watch the video that olivia put on bloomberg a few years ago which i just showed you pictures of it i mean maybe there's a different one what they showed is that it was already squeezed yes there was shavings in there but it was already squeezed like all right well that guy should go to chat like take it all back i mean it was like it was like a crazy story when this came out and everyone's like oh my god like it was a

standard like hardware is really difficult you know novel hardware technology is really difficult so you fake it till you make it in some cases you launch a product it doesn't even work um you know and and there's just and this isn't just in hardware it's also in life sciences you see this a lot where you ship a product i would probably say that if if regulators believe that those ceos tried to commit fraud they would have done challenges right maybe they still will they should follow up with those folks so why do you think they went after elizabeth holmes because it was actually illegal i think there's i think there's one really

important there are two things at play in theranos which is different number one is the kinds of investors that were involved here are extremely powerful folks not necessarily you know technology capable but very very well-known highly connected people in the establishment and the second was that they were operating in a regulated market which has very strict laws look i've tried to build competing products to theranose for years i've been pretty public about this i've tried five or six times they failed every single time i couldn't even get out of the starting line you know these tests would never

work without with a single drop of blood it just didn't make any sense the only version of this problem that has been solved well is the ability to detect cell-free cancer dna in blood right using a very small quantum of blood companies like garden and grail have actually done and built a great business out of it but it requires extremely sophisticated machinery sold to them by illumina and others so if you're operating in a regulated market the bar is higher there is a lot more scrutiny and then on top of that i think she compounded it by including folks and raising capital from folks that may not

have actually known and been able to diligence and so that's the cycle of fraud that may or may not have occurred there and she has to or they have there's a burden to prove that it's very different i think over here in an unregulated market where you can just kind of build whatever you want and if smart investors look nick just put in the group chat so um the investors in juicero were google ventures kleiner perkins thrive capital i mean these are all very sophisticated folks that um you know made a decision and um you know it's probably not the case that they were lied to i understand why they made the juicer oh mistake because

at the time fresh pressed juice using hydraulics was a thing and this guy said that's what i'm going to do i'm going to use hydraulics i'm going to squeeze the vegetables so you get the best stuff i understand why they fell for it because my my wife jay was buying that pressed juicery juice in l.a you remember this trend it's pure sugar that stuff is pure sugar well it's vegetable juice too but it would cost like 11 because they would use so much vegetables and i saw these presses they used it's incredibly inefficient but the juice tastes really great but the thing i have a problem with that with ellen pow's story is she

brings up you know uh the uh harassment stuff and uh you know this is an issue of gender et cetera but on this week in startups i've been covering fraud after fraud i don't know if you saw app annie got an fcc finder yesterday what happened jason because i saw that annie they told people who were using their analytics products building apps there's like 8 million people that they would never sell their data except in aggregate and then they went to wall street people and said here's actually we'll sell you the data um and you can trade on it and so yeah yeah so i don't think that's like insider trading exactly but it might be

but anyway it's like that's the whole point of that that's the whole point of reg fd the whole point is if somebody knows something if you're a financial actor jason and you know something so like if if all of us were sitting around a table um you know when somebody said something about a random public company if that's not public information if that's not known two things have to happen number one is i when i receive it must not do anything with it and that second that person who disclosed it needs to then file an 8k and say oops i accidentally said this right so there's nowhere where this is an end around

around things like regular fd i think that's a really big deal well and then i guess the question is like what happens with people who use planet labs or whatever to you know to satellite images of the target parking lot or put people as spotters outside of starbucks and count the people coming in and out is that public information that's public but if you have terms of service that says one thing yes and you're violating that but then you may also be violating reg fd so they haven't gone after people for on the other side of the trade for securities fraud but they charge him with securities fraud he pays 10 million bucks i think he's in the penalty box

can't be um you know run up be a public officer for three years then we had headspin i don't know if you saw that sas company but headspin was involved in just basically straight up lying about their sas software then you have tether the stablecoin they've been banned from new york by the doj they've been banned by the canadian regulators for the first two crypto exchanges there and supposedly the doj is investigating them and then there's about five icos in new york that have been prosecuted already so i know ellen's saying like they're not processed but i'm seeing them all the time yeah they're just not right the press is not

obsessed with them because let's face it elizabeth elizabeth she was weird i mean the voice there's a lot of peculiar things about her that you don't see in other folks who are boring right by the way what you just said is was part of the sexist claim that ellen made which is that we talked about her dress and how she dressed and how she talked we don't talk about that kind of stuff when it comes to other entrepreneurs and are they of course they did adam newman they were talking about him being a hippie walking around with bare feet being six seven every profile she's she's wrong in that case every profile of andy newman talked

about his personal life and his wife is married to what's her names no buenos paltrow's cousin yeah so ellen's 100 wrong on that one yeah and did it didn't elizabeth holmes make it relevant by dressing deliberately styling herself in the fashion of steve jobs with the black turtleneck and the glasses i mean you know she she portrayed herself as the next steve jobs i mean it was part of the grift so yeah exactly now did gender play into it yeah but i think not necessarily in the way that ellen powell thinks in this sense that the media wanted to believe so badly

that the next steve jobs was going to be a woman that they kind of looked past what should have been staring them in the face i mean look if a man had gone out there wearing the black turtleneck and the john lennon glasses or whatever they would have said who is this clown i mean yeah exactly but they suspended they suspected you have to dress up as steve jobs in the next episode of free birthday you can make it work can we all do it can we see let's do a halloween episode where we all show up i'll do elizabeth holmes for halloween episode but no but that's like a nested steve jobs so like you're going to be elizabeth we should all do our own versions of it

elizabeth and steve jobs i i think saks you're entirely right i think i think you're right i think this is the way that gender has played into it is that there's a lot of people who really wanted the elizabeth holmes story to be true and frankly she used that yeah in order to perpetuate her fraud she may not have used it but she was definitely influenced or she benefited no no she used it she definitely used it i want to ask you guys kind of a controversial question um you know because this story made me think a lot about some of what's gone on in businesses that i know of and where i know that there is to some degree fraud and misrepresentation

happening by the ceo and founder and this is a little known secret in silicon valley or a little spoken of secret um which is that you know more often than not if you know about fraud at a company in silicon valley you're encouraged to keep your mouth shut because the idea is at the end of the day if they're gaining lots of capital and you know more capital floats all boats and more money will rush into that market and so if there's businesses that you're competing with that are committing fraud rather than raise your hand which then people say hey look if you're going to raise your hand and claim fraud and talk negatively about another company

people are going to start doing that about you and they're going to start doing that about your portfolio um and so you guys know this right like you're discouraged from calling out these sorts of moments when you see them in silicon valley because there is the perceived kind of look we're all in a club together we're all in it together we got to be careful not to talk smack because then capital will stop coming in people will come after you and we're much more of kind of a supportive open community but there is have you guys experienced that i have with at least two companies in

the last year and you know i've kept my mouth shut because and by the way i don't think there's necessarily harm going on but i know of misrepresentation but the investors are like look we'd love to see these guys succeed because that would be good for you in this way because then you would be more money flowing in and yadda yadda and there's always a narrative around why you don't want to do this you know why you don't want to call these things out i called it out and i've still got a crazy founder denouncing me years later i mean look i i hate who has an sec enforcement against him yeah exactly a sanction um so yeah i mean look i

you you're right freeberg that there's very little upshot to doing it um but but look i i hate but we have to distinguish between fraud and sort of uh puffing okay here's the thing that i think you know ellen powell's kind of missing is when she criticizes all these founders who are visionary and evangelical and and promoting something that ends up not working that is not fraud i mean every startup we ask the founder how are you going to change the world what is your big idea what is the big dream and then they lay out this really pretty unrealistic set of things unrealistic in the sense that it comes true maybe one out of a thousand times

right every startup their founding mission is a bit of an over promise and just because it doesn't come true doesn't make it fraud i think that a lot of people out in the non-silicon valley investing world would interpret that as fraud because the founder told them something that ends up not happening not ends and this is why you really it's very dangerous to take money outside of silicon valley because people don't really understand this distinction okay just because it doesn't work out and what you said ended up not being true does not make it fraud what is fraud is when you lie about i've said it before when you lie about the past and what

elizabeth holmes is accused of doing by these prosecutors is again lying about the present-day capabilities of her product and actually falsifying documents she actually falsified documents that is the fraud that is the line you cannot cross they change blood test results listen said another way sacks elizabeth holmes vision of taking less blood and letting and doing more tests with it and being more efficient is a completely valid thing to pursue chamath just said he pursued it five times and failed completely completely failed tens of millions of dollars burned in a pile but what we all buy into here is what if it does

work more than a thousand times what we would elizabeth did was she lied about the results and she said how did she lie about the results she lied about real people's blood test results like actual civilians well i have some empathy for elizabeth jobs in the following way when i was told when i uh i think i told the story i was asking an investor hey what's the hottest company around this is in you know 2013 or 14. he said theranose and there was no way to get connected to the company so then i was like you know i had heard just the bullet point one drop of blood full characterization of your you know be able to do a blood test etc i thought

this is an incredible idea but because i had no way of getting connected now thank god that turned out to be a good thing i was like well [ __ ] it i'll just start my own version i'll figure out how to do this and and and jason as you said it turned out to be much much harder than i thought and five different iterations five different teams and you know phds from mit stanford everything we couldn't cal tech we couldn't figure it out so it's not wrong to want to believe that something is possible and it's not illegal to do that but as david said the minute that you try to you tell lies about the past in

order to basically then change the future in a way that shouldn't happen that's real that's really unfair yeah it's uh what do you think of the defense that balwani uh this fengali defense i saw kara swisher and some new york times reporters and other reporters were basically not buying it um and we talked about this last time didn't we yeah yeah i'm just curious if you have been following the trial i i think it's hard for somebody who in the moment took credit for every decision for every piece of press for claim to be the jobsee and micromanager to all of a

sudden now turn around and say no that wasn't me making the decisions i was under the spell of somebody else i think that's a tough argument to make yeah also i think uh you know this is going to come out but she actually fired balwani so if she fired him how was she you know it's harder to do the schwangoli defense i think um well but maybe they were both guilty maybe it could be an answer all right listen we'll close on this mailchimp has sold to intuit for 12 billion dollars in the largest bootstrapped acquisition ever uh we all know mailchimp uh and we all know quickbooks it's a huge deal

i have one issue with this and i don't know if it's true or not but apparently none of the employees have any equity yes and that was what i was about to get to employees didn't have equity however um and i've known mailchimp for a while uh for over a decade been using the product i know the founder had them on the podcast before have they been a sponsor of your pod they sponsored in the first year i think or two um and were you an angel investor i was not i tried to be and he said we're never gonna ever raise money and um he said he was never ever gonna sell and he was also never going to sell i i they gave 12 billion reasons to change

his mind exactly they gave him uh the 20 uh my understanding was employees got a 20 cash bonus and they were amongst the highest paid uh you know in the industry so their plan was instead of giving people some big reward at the end they were just distributing cash basically they were just distributing cash so if you had 100 if you were 150k developer you got 30k on top that's not an unreasonable way to run a business that has no outside investors that you know and employees know that going in they didn't go in with the expectation of equity they went in with the expectation of a high salary

and a big bonus and they got it i do that a few companies few companies that i own i do that but what i also do is i let them buy into the company every year i just think that it's a good principle to have like an ownership in the business i think you should be paying a lot of money and we should pay cash bonuses for for achieving results we do that but then what we also say is if you want to buy equity come and buy it but you're probably right from a performance perspective tomorrow i don't think it's necessarily a moral obligation to do that right how this guy wants to run his business up to him you know

people made the choice yeah i mean people that work at your house you don't give them equity in your house right i mean you own the house you give them cash or people who play for a basketball team are not allowed to get equity in the team but in other countries right i think in soccer you can yes but i think one of the best things about silicon valley is the fact that there's a there's a practice of giving broad-based options to everybody in the company and there's all those great stories about the chef at google who got rich and the secretaries at microsoft who got rich and that is a beautiful thing about the techies

it's wonderful you never and you never hear about that when all the press is doing is writing stories about greedy vcs and all that kind of stuff they they talk about vc but they don't bring up the point that in these non-vc companies the employees never end up with anything someone who came from nothing can afford a beautiful home and have their life taken care of forever because they work really hard at a great company that worked at and that's that's the most common story and it's never reported but yeah and by the way look there's there's nothing wrong with bootstrapping your company so congrats to this mailchimp founder for doing it i mean certainly you know like as a

investor i have no desire to describe what yeah just explain what bootstrapping is sex really strapping is just when you don't raise outside money and he did it himself and he basically found the prophets yeah he founded the company with the prophets which is just amazing but but but here here's the thing about that is uh he did this he started the company back in 2001 at the nadir after the dot-com crash and there was very little money going into new starts back then and he managed to create this so kudos to him but the environment now is very different if you look at the amount of funding that goes into startups i mean it's now in the hundreds of billions every year and so

if you have this mentality of i'm going to bootstrap it you're probably going to lose to a competitor who's simply willing to raise money and pursue that same idea with more funding now look i'm not in the business of pushing money on people who don't want it i'm just saying realistically the times are different now if you can bootstrap a business great go for it but i do think that if you're in competition with someone who can raise vc money you're going to be at a disadvantage hard to compete your son yeah what about aoc what she wore to the met gala tax the rich she wrote it she attacks

the rich dress to the met gala dave portnoy dave pornoy had the best tweet about this which is she's about to go have the best night of her life partying her ass off with all these rich people and she's wearing this taxi rich it's total hypocrisy uh this is classic socialism where they do this uh virtue signaling while being friends and hanging out with the people the owners of capital they're purporting to deride and frankly it's just like the mass things i mean you've got the servant class working at the met gala wearing masks uh while every while all the uh guests of the the gala are don't have to wear a mask i mean it's like

them all over again well she she uh she also dropped some merch you can buy attacks the rich there's an official aoc team can't believe that that's true that's what makes it the most awesome she goes to the thing and now she's selling 58 sweaters t-shirts sweatshirts a 58 sweatshirt a 28 dad hat a 10 sticker pack 27 tote bag it's like a hat for dad's like for us you know oh yeah attacks the rich dad that's the rich yeah wow i didn't know dad hat was a category i know dad jokes and dad bods i've never saw a dad hat dad fantastic fantastic yeah i thought it was kind of gross

is it wrong to buy some of this i i think that it's kind of cool actually i mean the tax the rich hat is pretty funny it's pretty cool oh my god if you were attacking a sweatshirt i think if the best thing is if i bought this sweatshirt and wore it around wearing on cnbc do your next scene if you were attacking the rich hat on cnbc that would be peak chamoth i think that would be peak that'd be great get it signed by uh all right anybody got any plugs anybody have plugs the the craziest thing about that dave portnoy tweet was that it got fact checked can you believe that it got fact checked i mean it was just mind-blowing that this is what when you say fact check they put

a factory check they put a warning label on it oh god so the morning warning uh liberals and socialists at twitter don't agree with this tweet right no exactly warning somebody in the outcrowd dave portnoy is criticizing somebody in the in crowd that by definitely additionally definitely gets a seat at all in summit right he definitely is the is the uh hyper mechan fake story uh from rachel maddow is that fact checked or no no she posted some update or other but begrudgingly presenting other information but i mean the story should have been completely retracted and it wasn't no i'm just curious whether there's a

fact check double standard no there's oh absolutely there is no fact check on that for some reason the rachel maddow tweets when unfact checked as far as i know they're still on fact checked you know what you should wear the get the rich hat and then get your buy the hamptons uh shirt and wear those on your next what a great combo tag can i show you guys a great piece of merch hold on sorry i'll be back in a second yeah oh he's going but can i just say i don't know here we go it's merch for the beep app i don't i don't look good in hats no you don't no no i've wanted to wear a hat for a long

time but i just it just doesn't here we got good on me let's see this is my favorite piece of merch which is somebody made oh buzzies like friends that's fabulous absolutely great wait can we just say by the way there's a person that did make a besties merch site none of us knows who he is but there's an incredible thing that he tweeted at us right j-cal which is he's paying his way through college yeah he puts a note into it he he told me he made like five grand over the summer right and so you know he's probably making like 30 grand a year off of merch if you're anybody's interested in some besties merch we don't make a single

dime from it but there's a young hard-working dude paying him paying his way through school i don't know it's uh bestie apparel he's bestie apparel right that's the apparel bestiapparel.com we don't really want to encourage too many people to go crazy doing this but this is our guy i guess and uh i mean he's paying his way through school for him yeah and i think they did um you know the the the shirts that people wore on their all in bar crawl came from that uh but i really want to do the i want to do this on the rich i'm buying this tax the rich sweatshirt boys and the t-shirt and the sticker pack i'm going for all of it

you got me aoc you got me on the hook do they have a men's bikini uh with taxidera rich on the back side for you for when we're in italy i would buy that we could how about we get matching speedos should we do our walk i always threatened to buy a speedo she always says oh we have to buy speedos next time we're in italy and we have to do our bestie walk from peer-to-peer on the beaches of italy in a speedo can you imagine if that image got leaked of us in speedos i did i did the best to walk with sex all right boys i gotta go i gotta eat lunch all right love you besties love you guys take care we'll let your winners ride

rain man and it said we open source it to the fans and they've just gone crazy with it [Music] besties [Music] we should all just get a room and just have one big huge orgy because they're all just useless it's like this like sexual tension but they just need to release [Music] we need to get back [Music]