00:00:01
do I care I'm coming in hot my quick
00:00:02
time I told you seven times you Nick you
00:00:04
don't work for me work first you're on
00:00:06
your own good luck working for chal do
00:00:08
not attack my employees
00:00:10
Jason you guys are going to billionaire
00:00:13
me and that's going to be the greatest
00:00:15
revenge of all you want to run the show
00:00:17
in year four go ahead chairman you guys
00:00:20
won the vote guess what jal's goingon to
00:00:21
do I'm gonna ski and you're going to
00:00:22
make my 25% worth 500 million get to
00:00:25
work deal let's go deal Chamas
00:00:28
title has been upgraded from dictator a
00:00:30
chairman chairman dictator that is very
00:00:32
funny chairman dictator chairman
00:00:34
dictator he's got the super voting I
00:00:37
have no say anything I built this entire
00:00:40
Empire and I have nothing I built the
00:00:43
Empire I came up with the name of the
00:00:44
show I came up with the format I invited
00:00:47
you miserable Pricks make me rich
00:00:49
let's go distribution checks Daddy needs
00:00:52
new skis three two all right everybody
00:00:55
welcome back to the all-in podcast if
00:00:57
you can believe it we're almost at 4
00:01:00
years of this muga episode 158
00:01:03
today and we've got a full docket I'm at
00:01:06
half speed I got a little bit of uh the
00:01:08
sniffles but we're going to power
00:01:10
through the docket with me again today
00:01:13
you got the sniffles I got a little bit
00:01:15
can I get you a tissue give me a little
00:01:17
tissue and some uh some juicy a juice
00:01:20
box and I'll some cough drops I'll be
00:01:22
fine I'll be fine you'll tough it out
00:01:24
you'll tough it out well listen I just
00:01:26
want say you can make it through this
00:01:28
pod of course of course I'm professional
00:01:30
with me again today the king of beep
00:01:33
can't say what he's working on it's a I
00:01:36
don't think people understand that like
00:01:38
what the beep there were so many beeps
00:01:40
last time that people couldn't even
00:01:42
understand beep out of the show it was
00:01:43
crazy it's some C he's genetically
00:01:46
engineering right but he's it's top
00:01:48
secret which one is gonna they already
00:01:50
figured it out in the comments by the
00:01:52
way all the Fig I don't know what's so
00:01:55
secret they they already figured it out
00:01:58
so can we say what it is the horse out
00:01:59
of the bar bar freeberg can we fit get
00:02:01
through introductions go ahead keep
00:02:02
going and chairman dictator chamath p
00:02:05
haaa is with us welcome back to the
00:02:08
program thank you by the way I um I was
00:02:11
feeling pretty bad about your sore
00:02:13
throat so I was I went on
00:02:16
Google and I
00:02:18
found something that may be the cause of
00:02:21
it Nick can you just throw up this AR
00:02:22
pre
00:02:25
strike let him land the joke come on
00:02:28
Jesus this isn't a Cru movie you can't
00:02:30
pre- strike go
00:02:32
ahead I found an arle that made the Epic
00:02:35
source of
00:02:36
your
00:02:45
god oh no I'm going to get
00:02:49
cancelled let your winners
00:02:51
ride Rainman
00:02:56
David and instead we open source it to
00:02:58
the fans and they just gone
00:03:01
[Music]
00:03:04
crazy I am your bip chairman and I'm
00:03:07
here to do the best job I caning what do
00:03:09
you mean bip chairman explain to the
00:03:10
audience what these two words mean
00:03:12
person of color bro billionaire person
00:03:14
of color oh is that what it is yeah
00:03:17
soing to we checked the Dei Manifesto
00:03:21
and it said we needed to make a chairman
00:03:23
of the organization so uh saak is
00:03:25
leading the all-in Dei group and uh they
00:03:29
vote Ved chamath to be the first
00:03:31
chairman of Allin as we get our CEO
00:03:33
ready to come on board and so you did A
00:03:35
diversity token candidate saak explain
00:03:37
the process well it's it's more like um
00:03:41
you know tath was getting a little bit
00:03:42
touchy about being called dictator all
00:03:44
the time and you were kind of playing
00:03:46
the Biden role of needlessly offending
00:03:47
him he's kind of playing the Shen King
00:03:49
role so we've elected him chairman so
00:03:52
that you can stop calling him dictator
00:03:54
right because you want to more
00:03:56
diplomatic more sensitive more yeah I
00:03:57
think it's great I'm all about the
00:03:59
Diplomatic listen and he there was there
00:04:00
was a polit buau there was a process it
00:04:02
was
00:04:04
meritocratic chimney and now for year
00:04:07
one there's a PA buau consisting of me
00:04:10
freeberg and
00:04:11
chamath and the PA buau has selected
00:04:13
shth as chairman get to work get to work
00:04:16
let's make my 25% worth a billion
00:04:19
dollarss please uh and of course with us
00:04:22
hot off his hosting of the absolute best
00:04:26
party of the Season well top two here at
00:04:29
too man it was a top meat protein party
00:04:33
shth and I went to sa I hope you got
00:04:36
enough food I did it was good yeah I
00:04:38
mean the dessert table was crazy the
00:04:40
dessert table I had to I was like I
00:04:42
found myself beside it and I was like
00:04:44
why am I near this dessert Table after
00:04:45
the Fiasco at free birds so I had to go
00:04:48
I had to go to the other side well
00:04:50
here's what jamaath and I did we got in
00:04:52
there and we sniffed out the caviar and
00:04:55
this was Top Shelf caviar on potato
00:04:58
chips fresh and also on bis we parked it
00:05:02
there and then that actually is a great
00:05:05
way to you know that those B are too
00:05:08
like Brey I don't think it's a good
00:05:10
combination with caviar but caviar
00:05:13
chip high and low they call it high and
00:05:16
low in the business should always be
00:05:18
served on Pringles the most important
00:05:19
thing Nick I'm sure you have it queued
00:05:21
up is our annual awkward hug this is a
00:05:24
tradition amongst the all-in every year
00:05:26
to celebrate the holiday seasons we
00:05:28
engage in
00:05:30
the awkward Allin hug let me explain how
00:05:33
the hug went down we're at the
00:05:35
caviar and chamath is on his eighth
00:05:39
Pringle I'm I'm about 15 in I've eaten
00:05:41
half the 10 of caviar at this point I'm
00:05:42
getting my money's worth uh for coming
00:05:44
all the way up uh to the city and
00:05:47
risking my life and then here it is we
00:05:48
got to break this down first chamath is
00:05:51
in a loving Embrace with Sachs what you
00:05:54
see there from Sachs is not a cry of Joy
00:05:58
fear it's it's Fe absolute fear abject
00:06:03
fear going a little bit too long that
00:06:06
was M shth refus they went on for a
00:06:08
while that's what you guys don't AR
00:06:10
because if you look at the you look at
00:06:12
the studies and freedberg can attested
00:06:14
this when men hug for two minutes
00:06:17
there's a release of oxytocin and it's
00:06:19
an incredible anti-inflammatory
00:06:21
anti-anxiety so I was I was giving you
00:06:24
therapy that's like a therapeutic H it's
00:06:27
a gift that that was your Christmas gift
00:06:29
SX tell us what you're feeling here we
00:06:31
see this blood curdling scream Endor Cry
00:06:35
Of Joy what what were you what was going
00:06:36
through your mind when you got to minute
00:06:38
two of the hug take us to the moment
00:06:40
I'll show you what I was I was thinking
00:06:42
of here hold on okay because you can see
00:06:44
here also if we break this down freeberg
00:06:47
comes in with an asperg or side hug I
00:06:49
don't know if you can see that there in
00:06:50
the photo but let's see the because you
00:06:52
know he yeah you got to zoom over to the
00:06:55
left freeberg looking at his shoes is
00:06:57
like I'm going to express joy and love
00:06:59
with my three besties through a man hug
00:07:03
and he he gets enough of the shoulder in
00:07:06
there that he doesn't have to have
00:07:08
technically part of the hug but he's not
00:07:10
really cannot make eye contact and he
00:07:13
says I have to it now me I'm like this
00:07:15
is hilarious so I just jump and I grab
00:07:18
all three guys and I just said that's
00:07:20
just me pure joy hilarious friendship is
00:07:22
great good to have good friends in
00:07:24
Friendship is great I love you guys I
00:07:26
love you guys too yeah back at you this
00:07:29
is what I was thinking this is what it
00:07:30
reminded me of this is Sax's personal
00:07:32
Vietnam this is oh yeah it's a great
00:07:35
scene great scene great scene love that
00:07:37
that's a great scene from fight from
00:07:39
Fight Club that's meatloaf right that a
00:07:42
great scene that's a great movie he on
00:07:45
he's on estrogen therapy in the scene
00:07:46
and he grows man boobs and then he
00:07:48
stuffs Edward Norton into his man boobs
00:07:50
it's a great scene we're men men is what
00:07:53
we are let's get to work we got a full
00:07:55
docket here and uh the world continues
00:07:57
to spin
00:07:59
into chaos apparently members of the
00:08:02
houti movement have been attacking
00:08:05
commercial ships in the Red Sea with
00:08:07
drones and with missiles this is largely
00:08:10
underreported in the mainstream press so
00:08:12
we thought we would tackle it here they
00:08:15
are calling this revenge for Israel's uh
00:08:18
military campaign in Gaza the houis say
00:08:21
they will only stop once Israel begins
00:08:24
allowing food and medicine to freely
00:08:26
enter Gaza think something we would all
00:08:28
like to see CRI suggests this is a power
00:08:30
play for more legitimacy in the
00:08:33
reason us allies including the UK Canada
00:08:35
France are reportedly preparing to
00:08:38
deploy Naval vessels to the region to
00:08:40
deter more strikes obviously there's a
00:08:43
lot of geopolitics
00:08:45
here and this is a business story we can
00:08:48
link this back because the attacks have
00:08:50
interrupted one of the world's busiest
00:08:52
trade routes as you know all five of the
00:08:54
world's largest shipping conglomerates
00:08:55
have paused transfers through the Red
00:08:58
Sea and that that means they've got to
00:08:59
go around Cape Horn they got to go
00:09:01
around South Africa to get things to
00:09:04
Europe uh from Asia thousands of extra
00:09:07
miles from what I understand and this
00:09:09
has caused oil and gas prices to rise
00:09:12
and if this becomes acute it could
00:09:15
be really really impactful to the
00:09:17
economy on a global basis so in order to
00:09:21
understand what's happening of course we
00:09:23
go to our foreign war correspondent yes
00:09:27
he's got his military cap on he's now a
00:09:29
total of zero tours of Duty SX can you
00:09:32
please with your infinite wisdom and
00:09:34
experience in the field tell us what is
00:09:38
happening in this well you know um
00:09:41
Matchbox situation yeah what's happening
00:09:43
is um gee yeah what's happening um come
00:09:46
on you're an expert yeah I'm really I'm
00:09:48
really struggling with this one jcal um
00:09:50
can I use a
00:09:51
[Music]
00:09:52
Lifeline I'd like to phone a friend
00:09:55
phone a friend tance for this one for
00:09:57
the first time Sax is unable to give us
00:09:59
a confident answer he's chosen to phone
00:10:01
a friend which we allow here on the
00:10:03
all-in podcast who would you like to
00:10:05
phone have you thought about that who
00:10:07
are you going to phone since this is uh
00:10:09
involving impact on global trade
00:10:11
Zuckerberg no I'm I'd like to phone Ryan
00:10:14
Peterson the founder of flexport all
00:10:16
right here we go we're going to the AT&T
00:10:19
phone call phone a friend zoom we're
00:10:23
going to click through on zoom and can
00:10:24
we get Ryan Peterson from
00:10:28
flexport Brian Peterson you're
00:10:30
[Music]
00:10:32
here it's Jason calanis from the Allin
00:10:34
podcast it's your boy jcal let's go
00:10:37
skiing soon welcome back we're live
00:10:40
we're live you're on the Allin podcast
00:10:42
live we've got an official phone a
00:10:45
friend moment here you uh you understand
00:10:47
what's going on there better than
00:10:48
anybody uh Ryan obviously runs flexport
00:10:51
and he is in the business of shipping
00:10:53
containers so Sach you want to ask him
00:10:54
for some help what is the impact on
00:10:56
global trade here from what's Happening
00:10:59
in the Red
00:11:01
Sea well it's it's massive about 30% of
00:11:04
all ocean container traffic flows
00:11:06
through the flows through the Suz and
00:11:08
through the Red
00:11:10
Sea most of that is going Asia to Europe
00:11:12
so like the biggest impact here is going
00:11:14
to be felt on those two areas it's going
00:11:16
to make Chinese manufacturing that much
00:11:18
more challenging you have to go around
00:11:19
the southern tip of Africa it's adding
00:11:22
about
00:11:23
20% 20 to 25% longer journey and now in
00:11:28
a network business a longer Journey
00:11:30
means less capacity uh so you're talking
00:11:33
about a 20 25% cut in shipping capacity
00:11:36
on the 30% of all containers so that's
00:11:39
containers I also understand that about
00:11:40
12% of global oil goes through and about
00:11:43
8% of liquefied natural gas and just to
00:11:46
explain what we're talking about there
00:11:47
can we zoom in there's a very narrow
00:11:49
straight there called the Babel mandb
00:11:51
straight I hope I didn't Massacre that
00:11:52
pronunciation so you go around the Gulf
00:11:55
of aen through that bob L MB straight
00:11:58
into the red sea and then from there you
00:12:00
can go through the sus Canal into the
00:12:02
Mediterranean yeah and so it's it's a
00:12:03
maritime choke point by the way this is
00:12:05
going back it always has been um you
00:12:07
know there's there's documentation
00:12:08
Caesar Augustus invaded Yemen in like 63
00:12:12
BC I forget 63 ad no I forgot the dates
00:12:15
but it was during the reign of Caesar
00:12:16
Augustus so it would have been right
00:12:18
around
00:12:18
the the birth of Jesus Christ and you're
00:12:22
talking about thousands of years of this
00:12:23
being a really important choke point
00:12:25
even the Egyptians actually built a
00:12:26
canal the ancient Egyptians had a canal
00:12:29
that connected the Nile River so this
00:12:30
has always been the place to connect
00:12:31
East and West uh an incredibly important
00:12:34
Maritime choke point and uh the Reel
00:12:37
forces in Yemen have been firing
00:12:39
missiles at ships um and that what that
00:12:42
does is Spike the insurance cost
00:12:44
obviously it puts uh the crew lives in
00:12:47
danger which they can't tolerate but it
00:12:49
also uh really spikes the insurance cost
00:12:51
if you sail a ship into a region that's
00:12:53
got missiles being fired the insurers
00:12:55
just won't cover it and so you can't you
00:12:57
can't operate a ship without insurance
00:12:58
cuz if it sinks you go out you go
00:13:00
bankrupt um and so they're just taking
00:13:03
the long way around which as I said is a
00:13:06
20% reduction in capacity what we've
00:13:09
seen remember with covid you had all the
00:13:11
ships off the port you guys brought me
00:13:12
on to the show the last time I think was
00:13:15
when that happened that was about a 20%
00:13:17
reduction in capacity but at the same
00:13:20
what happened during covid was there was
00:13:21
also a 20% increase in demand so this
00:13:25
time there's not an increase in demand
00:13:26
so I don't think it's as impactful as
00:13:27
what we saw to shipping prices during
00:13:30
covid where you had like a 10x run up in
00:13:32
price but you're already seeing prices
00:13:34
are coming out now for January Freight
00:13:36
for ocean Freight Asia to Europe you're
00:13:38
seeing about a 3X increase in the price
00:13:39
of ocean Freight uh versus where we were
00:13:42
a month or two ago which was very very
00:13:45
cheap a month or two ago so I wouldn't
00:13:47
read too much into this and frankly the
00:13:49
Suez Canal is too valuable in my opinion
00:13:52
too valuable to civilization to the
00:13:55
modern world to believe that you know
00:13:58
group of rebels no matter how
00:14:00
well-funded they may be is going to be
00:14:02
able to disrupt that for any long period
00:14:04
of time I think there's too many
00:14:05
interests aligned here to say to keep
00:14:08
this thing flowing well okay two points
00:14:10
on that so we call them a rebel group
00:14:14
and I guess they are it's a Shia group
00:14:17
in Yemen that rose up in 2014 and
00:14:19
deposed the Monarch there and they
00:14:21
basically control large swwa of the
00:14:23
country but they're not internationally
00:14:25
recognized so that's why they're called
00:14:26
Rebels but make no mistake they
00:14:28
basically control the vast majority of
00:14:30
of Yemen it's a Shia group they're you
00:14:33
could say sponsored by Iran but I'm not
00:14:35
sure they're controlled by Iran people
00:14:37
call them proxies and that's true to
00:14:39
some degree but they also have agency
00:14:41
like you said uh jcal they are doing
00:14:44
this they say in solidarity with the
00:14:47
Palestinians when the invasion of Gaza
00:14:50
first began they were firing rockets at
00:14:53
Israel but they had to go all the way
00:14:54
over Saudi Arabia they didn't make it so
00:14:56
now they've started firing on ships that
00:14:58
are going through the straight they
00:15:00
started mining the straight and so like
00:15:03
Ryan's saying this is basically put a
00:15:04
damper on on Commerce unless you're a
00:15:08
country that the hoodies like apparently
00:15:10
Russia's been able to move its ships
00:15:12
through still they claim they're only
00:15:15
targeting ships that are transacting
00:15:17
with Israel but that's not true I mean a
00:15:19
lot of ships have been targeted that
00:15:21
don't have a relationship with Israel so
00:15:24
let's just say broadly speaking for
00:15:25
Western ships they can't get through now
00:15:28
what the US is done in response to
00:15:29
Ryan's point if is that we've announced
00:15:31
this operation Prosperity Guardian which
00:15:35
is to restore the flow of trade through
00:15:37
you know the Red Sea but the question is
00:15:39
what that's going to involve and I think
00:15:41
we are bracing now for the us to start
00:15:44
taking military action against the houes
00:15:48
the problem is I think Ryan when you're
00:15:50
saying this is going to be resolved
00:15:52
maybe quickly is that the US was already
00:15:56
backing the Saudis in a war against the
00:15:58
houes that started in 2015 it only got
00:16:02
sort of resolved with a ceasefire that's
00:16:05
still pretty fragile last year and so
00:16:07
the hooes have already survived almost a
00:16:09
decade of Western sponsored attacks on
00:16:11
them it's not clear what we have to do
00:16:14
to basically stop them from taking these
00:16:16
actions and I think if the US starts a
00:16:19
war basically against the houes in Yemen
00:16:23
we're talking about an expansion of this
00:16:25
conflict in the Middle East from you
00:16:27
know beyond what's happening in Gaza to
00:16:28
now another front uh that directly
00:16:31
involves the US moreover uh this is I
00:16:34
think very underreported but there have
00:16:36
been almost 80 attacks on us bases in
00:16:39
Syria and Iraq by Shia militias again
00:16:42
sponsored by Iran over the last couple
00:16:45
of months so this whole region is a
00:16:47
powder keg and it's not clear to me that
00:16:49
if the
00:16:50
US attacks the hooes that this is going
00:16:53
to lead to a quick resolution so I guess
00:16:56
my question back to Ryan is let's say
00:16:57
there is a war here let's say the hooes
00:16:59
don't stop I don't think they will um
00:17:01
and let's say the US gets in a war there
00:17:04
but isn't really able to bring it to
00:17:06
decisive
00:17:07
conclusion um and let's say that this
00:17:11
blockade of the Red Sea continues for
00:17:15
all of
00:17:15
2024 what does that do to Global prices
00:17:19
because I think right now the market is
00:17:21
pricing in rate Cuts next year on the
00:17:24
theory that inflation is coming down and
00:17:26
is a solved problem it's the right
00:17:28
question it'll be a big impact um and if
00:17:30
you listen to like retailer earning call
00:17:32
earnings calls they're all talking about
00:17:34
hey we've had six 12 months of
00:17:36
deflationary environment prices are
00:17:37
coming down a lot of what they site is
00:17:38
the lower ocean Freight prices and if
00:17:41
and if that goes back and it if it goes
00:17:44
back anywhere near I mean we're already
00:17:46
seeing a 3X but even that 3x is sort of
00:17:48
well is this going to last do I need to
00:17:50
price it all in do I need to uh and it
00:17:53
hasn't really uh taken hold of like
00:17:55
that's not a true market Dynamic of what
00:17:57
is the supply and what is the demand and
00:17:58
Freight is very inelastic like you're
00:18:00
going to ship the product regardless of
00:18:02
the price of freight you know unless
00:18:04
your business model has the tiniest of
00:18:06
margins the price of freight goes up it
00:18:08
doesn't impact how many products you
00:18:10
ship you're going to go sell as many
00:18:11
products as you can does it impact
00:18:13
America as much as it impacts Europe
00:18:16
absolutely not um now this is the the
00:18:19
fastest route for many parts of Asia to
00:18:22
the east coast of the United States and
00:18:24
especially with the Panama canals also
00:18:25
congested at the same moment right now
00:18:28
because of they say it's because of a
00:18:30
drought but actually they built a bigger
00:18:32
canal and it's just draining the lake
00:18:34
faster and that's my hypothesis but I'd
00:18:36
like to look into it a little further
00:18:38
but uh the the Panama Canal is only
00:18:40
going at about two-thirds capacity so if
00:18:42
you're going Asia to the east coast
00:18:44
those are your options but it to go
00:18:46
around the southern tip of Africa around
00:18:48
the Cape of Good Hope to get to the East
00:18:50
Coast it's like an 8% increase in
00:18:52
transit time versus 20 to Europe and
00:18:55
there's Alternatives so definitely
00:18:57
impacts Europe much more it impacts
00:18:59
China like the reason I
00:19:01
think that this there there's so many
00:19:04
people lined up here like this is not
00:19:06
good for China China wants to be able to
00:19:08
ship stuff quickly to Europe and get it
00:19:10
to Market um so to the extent that they
00:19:12
have any impact I think they're going to
00:19:13
be clearly on the same side as the
00:19:14
United States here Europe obviously has
00:19:16
a thing and the other thing I haven't
00:19:17
heard anyone talk about is like you look
00:19:18
at that map they're blockading not just
00:19:20
the Suez but they're blockading Saudi
00:19:23
Arabia the saudi's biggest Port is in
00:19:25
Jedi right up there well I think they're
00:19:28
going to tolerate being cut off from the
00:19:30
world taking on Saudi seems like an
00:19:33
unwise idea well they've been at war in
00:19:34
the past as as David pointed out so um
00:19:37
and I'm not I'm certainly no expert by
00:19:38
the way I find this ship to be amazing
00:19:40
it's since it's since transited but this
00:19:42
is one of the ships that was there
00:19:43
yesterday just going for it uh and if
00:19:45
you look at the destination it says
00:19:47
armed guard on board as they set that in
00:19:50
the AIS G GPS transponder so that if
00:19:53
anyone comes after him you know what
00:19:54
you're going to get I have two comments
00:19:57
when I look looked at this in the last
00:19:59
couple of days that was sort of my
00:20:01
takeaway which is that the the really
00:20:03
significant impacts are Downstream to
00:20:06
Europe consumer prices so I think like
00:20:09
European inflation has more chance of up
00:20:13
ticking again than America
00:20:15
does because I think the Practical
00:20:17
reality is what you said Ryan you'll
00:20:19
just this the need to ship is in elastic
00:20:22
and so they'll just pay 8% more and
00:20:23
they'll just go to the east coast in a
00:20:25
more in a longer way through the Cape of
00:20:28
hope or whatever the second comment I
00:20:30
think to me
00:20:31
is a little bit more macro in nature
00:20:35
which is if you look at what's happening
00:20:38
now there's a hot war in Israel and Gaza
00:20:43
and theoretically now there's a hot war
00:20:45
in Yemen I think the positive take on
00:20:49
this is that it actually puts the Middle
00:20:51
East in a position to resolve all of
00:20:54
these things and what I mean is the
00:20:56
following if you're Saudi Arabia or if
00:20:58
you're the UAE or if you're
00:21:00
Qatar what you really want to do is
00:21:02
build for the next 30 to 40 years
00:21:04
they've said it as much they want to
00:21:06
pull trillions of dollars of oil and
00:21:08
that gas out of the ground they want to
00:21:10
monetize it and then they want to invest
00:21:12
in their people the last thing they need
00:21:14
is to be bookended by two hot Wars
00:21:17
largely propagated by a third party
00:21:19
actor in Iran and so I think if there
00:21:21
was not resolve for them to get aligned
00:21:24
I think that the resolve now really amps
00:21:26
up Saudi Arabia doesn't want to be in
00:21:28
the middle of this
00:21:30
nonsense Qatar doesn't want to be in the
00:21:32
middle of this nonsense UAE does not and
00:21:34
then the fact that Canada America
00:21:37
Britain France are now all of a sudden
00:21:39
pulled in and China as you said Ryan I
00:21:41
didn't even think about the implications
00:21:43
to China as a supplier of record for
00:21:44
most of these
00:21:45
Goods all roads I think lead in my
00:21:49
opinion to a coming together of folks to
00:21:52
say okay let's use this as a definitive
00:21:54
moment to just clean the Dex here and I
00:21:58
I think that that'll put a lot of
00:21:59
pressure on Iran a lot of pressure on
00:22:01
the money flows I suspect that both of
00:22:03
these two hot Wars get resolved quickly
00:22:06
because the larger multi-decade
00:22:07
implications for the Middle East are too
00:22:09
big to Let It Be subsumed by the houti
00:22:11
rebels or Hamas it's interesting here um
00:22:15
how you see like Israel is a relatively
00:22:16
small economy in the world and the and
00:22:18
and you know you start to see in the
00:22:21
same way that Ukraine is not a big
00:22:23
economy Russia is not that big but it
00:22:24
has a massive the war there has just a
00:22:26
massive impact via the Commodities
00:22:28
markets because Russia is such an
00:22:29
important supplier of Commodities and
00:22:32
now you see what you know Israel and
00:22:34
Gaza are relatively small potentially a
00:22:36
small regional conflict big Global
00:22:39
implications because of everything that
00:22:40
goes behind it but now you see this
00:22:42
spread to something that really could
00:22:44
impact if this is an extension of that
00:22:46
conflict now you're seeing wow this
00:22:47
actually has the ability to extend to
00:22:48
Global markets in a way that's similar
00:22:51
to what happened in Russia and Ukraine
00:22:52
where all of a sudden commodity markets
00:22:53
are impacted and you're seeing that
00:22:56
inflation but I I I don't know chamant
00:22:58
if your your view is hey we're going to
00:23:01
have progress because progress is good
00:23:03
or something I don't know that that's
00:23:04
necessarily the direction that the world
00:23:05
follows like you could have sitting in
00:23:08
Dubai or Saudi or Qatar you're thinking
00:23:10
this is the last thing we need for sure
00:23:12
well I think that's definitely true
00:23:14
multi-decade multi-trillion dollar
00:23:16
investment plans and we're going to let
00:23:17
the hotti rebels derail that and
00:23:20
literally on ports like saudi's trying
00:23:21
to build a big Port as part of the neon
00:23:23
project there in the in the northwest of
00:23:24
the country on the Red Sea which would
00:23:27
be cut off I mean it's not going to fly
00:23:30
yeah look Saudi Arabia is in a really
00:23:31
tough spot here because what happened is
00:23:33
after the houes deposed the Monarch
00:23:36
there in 2014 Saudi Arabia started
00:23:39
fighting a war to restore the the leader
00:23:41
in 2015 and that war went on for almost
00:23:43
a decade created a huge humanitarian
00:23:45
crisis really
00:23:47
underreported compared to other crises
00:23:50
there were hundreds of thousands of
00:23:51
civilians who were killed millions of
00:23:52
people displaced went hungry finally
00:23:55
that war again got paused by a fragile
00:24:00
ceasefire that was negotiated I guess in
00:24:02
the last year or so and then
00:24:04
simultaneous to that there was a
00:24:07
reproach M between Saudi Arabia and Iran
00:24:09
that was brokered by China and so the
00:24:12
last thing Saudi Arabia wants to do is
00:24:14
get involved in restarting this war or
00:24:18
restarting hostile relations with Iran I
00:24:21
mean they would like to move beyond that
00:24:22
which is why they're not participating
00:24:24
in this operation Prosperity Guardian
00:24:27
the problem they have is that the htis
00:24:30
aren't going to stop doing what they're
00:24:32
doing until Israel's war in Gaza stops
00:24:35
and Netanyahu just in the last 24 hours
00:24:38
made it clear that Israel won't stop
00:24:40
fighting they will not agree to another
00:24:42
ceasefire until Hamas is eliminated so
00:24:45
chath I think you're right that if there
00:24:46
were a ceasefire that this situation
00:24:49
would go away very very quickly and
00:24:51
shipping normal shipping would be
00:24:52
restored however I'm not sure you're
00:24:55
going to get the parties to agree to a
00:24:56
SE fire anytime soon I mean the Israelis
00:24:58
seem pretty determined not to agree to a
00:25:01
ceasefire I think the Biden
00:25:02
Administration clearly would like that I
00:25:04
think they would like this problem to be
00:25:06
over but with the continuation of
00:25:08
hostilities in Gaza you continue to have
00:25:11
the potential for the second order
00:25:13
effects these kind of knock on effects
00:25:15
and like I mentioned one is the is the
00:25:17
houes and other are all these American
00:25:19
bases that are under attack right now by
00:25:21
these GM militias so I think this has
00:25:24
the potential to be a Black Swan in 2024
00:25:26
meaning that some how the Israel Hamas
00:25:29
War spirals into a larger Regional war
00:25:32
that pulls the US in I'm not saying
00:25:34
that's going to happen but I think the
00:25:36
potential is there the longer this goes
00:25:38
on and I think that if that does happen
00:25:41
there could be the potential for an oil
00:25:42
Shock by the way the hotis have said
00:25:44
that if the US attacks Yemen they will
00:25:48
light the Saudi oil fields on fire now
00:25:50
I'm not sure they have the potential to
00:25:51
do that I mean presumably if they had
00:25:52
the potential to do it they would have
00:25:54
done it during their long War so that
00:25:56
probably is just you know hyperbolic
00:25:58
rhetoric but there's so many ways for
00:26:01
this to somehow turn into a larger
00:26:03
Middle Eastern War to your point shth I
00:26:05
think you know I've been meeting with
00:26:08
folks in DOA and Riad and Abu Dhabi and
00:26:11
Dubai for the last six months and I was
00:26:13
talking to people this past weekend
00:26:15
you're absolutely right there are a
00:26:16
group of people with an agenda uh which
00:26:19
is to modernize the economies there to
00:26:21
move off Pro and to move into technology
00:26:24
and to move into Hospitality with the
00:26:26
neon project uh as you're pointed out
00:26:28
Ryan and that's not going to get
00:26:30
derailed and those are the most powerful
00:26:32
you know deep pocketed uh influential
00:26:34
forces there and so yeah they're working
00:26:37
with the United States and any of these
00:26:40
Rebels Etc I think they're going to be
00:26:42
dealt with because people want
00:26:44
prosperity and they want to keep
00:26:46
evolving these societies and moving them
00:26:49
and normalization normalization yeah I
00:26:51
mean have you ever have you guys who's
00:26:54
been to Riad here I have yeah I think
00:26:56
freeberg or sax have have you been to
00:26:58
Riyad ever freeberg ever I mean no it's
00:27:03
beautiful and it's changing rapidly
00:27:07
massively and and obviously Dubai's
00:27:09
already been changing then do and I'm
00:27:12
not arguing that
00:27:13
yeah Saudi Arabia isn't a great place
00:27:16
and and they want to do the right thing
00:27:17
here but you're acting like the hotis
00:27:19
can just be dealt with what what does
00:27:20
that mean to you well I I think that the
00:27:23
larger forces are united in wanting to
00:27:26
have prosperity for their people
00:27:27
education for their people uh and to
00:27:30
build deep ties with the west and the
00:27:33
East to do Commerce and so I think those
00:27:35
forces are greater than maybe some of
00:27:37
the traditional forces that are at work
00:27:40
and and these longer term conflicts
00:27:42
maybe are not as important to the
00:27:44
leaders and the citizens of these
00:27:46
countries as Prosperity is and so when I
00:27:49
say dealt with I think they're going to
00:27:51
just focus on developing their economies
00:27:53
over you know these skirmishes but are
00:27:56
you saying there's going to be a
00:27:56
diplomatic solution here because I don't
00:27:58
see it I mean here's the problem
00:27:59
Israel's not stopping its war in Gaza
00:28:02
the htis aren't going to stop until
00:28:03
Israel stops so how do you make him stop
00:28:06
that's a great question I containing
00:28:09
these conflicts is probably the likely
00:28:10
scenario when I I've asked that same
00:28:12
question to the people who are in those
00:28:14
regions and when I spoke to them they
00:28:17
they're all about containment they don't
00:28:19
think there's a
00:28:20
resolution like we might think about it
00:28:22
here in the west that you know there's
00:28:23
not going to be a conflict between
00:28:25
Palestinians and and Israelis they just
00:28:27
think containing it and having it not be
00:28:29
an allout war is Success what do you
00:28:32
think is gonna happen I mean at some
00:28:34
point us we have two sides who are
00:28:36
implacably resolved the Israelis to
00:28:39
continuing their fight against Hamas and
00:28:41
the htis to continuing to lash out at
00:28:45
Israel or the West in general until that
00:28:49
stops the likely scenario is that
00:28:50
Netanyahu is losing support that's what
00:28:52
every Israeli and every person in the
00:28:54
region says is that Netanyahu is not
00:28:56
going to last long term
00:28:58
so and what have you heard sex what do
00:29:00
you think the resolution well I think
00:29:02
it's interesting if you look at Israeli
00:29:04
domestic politics it's true that
00:29:06
Netanyahu is unpopular but something
00:29:08
like 90% of the Israeli public favors
00:29:12
the continuation of this war until Hamas
00:29:14
is eliminated I mean the Israeli people
00:29:16
are really I think hardened on this
00:29:18
question those tapes of Hamas atrocities
00:29:24
on October 7th were compiled into a film
00:29:27
they were recorded by the Hamas Fighters
00:29:29
own GoPros and the Israeli people have
00:29:31
watched all of those things and they are
00:29:34
resolved to destroy Hamas now you can
00:29:36
argue with their tactics and I'm just
00:29:38
stating the fact okay I'm not judging it
00:29:42
and the point is just whether Netanyahu
00:29:44
survives or not I think the Israeli
00:29:45
public wants to eliminate Hamas so I
00:29:48
think they are resolved I think the
00:29:49
hoodis are resolved and the hooes
00:29:52
control this choke point so they can
00:29:54
stop or interfere with global trade and
00:29:57
I think look there could be a ceasefire
00:29:59
I mean I think Biden clearly would like
00:30:00
there to be a ceasefire certainly before
00:30:02
the
00:30:03
election and that would bring all this
00:30:05
to a rapid end but if there's not a
00:30:07
ceasefire I don't understand how you
00:30:08
just stop the hoodies I mean the only
00:30:11
way to stop them is if you want to go to
00:30:13
war with them that's what we're talking
00:30:15
about so we're talking about the US
00:30:17
using its Naval assets to go get the the
00:30:21
regions chth mentioned could use
00:30:23
diplomacy Andor Financial measures and
00:30:26
so those are other options that's not
00:30:27
going to work with the hoodies well uh
00:30:29
no easy solutions here Ryan thanks for
00:30:31
jumping on the Pod with us once again
00:30:34
one question how how much more resilient
00:30:37
postco if at all are Supply chains
00:30:40
because you talked about wanting to make
00:30:41
them more resilient and that was a major
00:30:43
Focus for flexport H is it better now
00:30:46
postco have we done any I think at the
00:30:48
physical infrastructure layer nothing's
00:30:49
really changed uh I don't think you know
00:30:52
the the bottlenecks have gone away just
00:30:53
because demand went back down us had
00:30:55
like a 20% increase in container volume
00:30:57
it created all these bottlenecks we
00:30:59
couldn't process that many containers in
00:31:00
our ports uh and then the containers now
00:31:03
are back at 2019 levels and everything's
00:31:04
flowing normally but I wouldn't say that
00:31:06
makes us more resilient it's the same as
00:31:08
before um and situations like this you
00:31:11
learn just how amazing and resilient the
00:31:14
global trading network is the global
00:31:16
logistics infrastructure but also it's
00:31:18
pretty fragile if a small group of
00:31:20
rebels can fire missiles and you go well
00:31:23
even the US Navy what are we going to do
00:31:24
I mean it's kind of an asymmetric
00:31:26
Warfare type thing
00:31:28
they they shoot they shoot a $20,000
00:31:29
drone and we we need a $2 million
00:31:31
missile to shoot it down like it's not a
00:31:33
it's not a great setup uh and it's not
00:31:35
clear that firing missiles back is going
00:31:37
to open it back up um and so yeah I
00:31:40
think I think it's much more fragile
00:31:41
than we realize as civilization always
00:31:43
has been you know it takes takes a
00:31:45
hundred years to develop a civilization
00:31:47
and and an afternoon to go back to
00:31:49
barbarisms and uh Air Freight you had
00:31:52
talked about previously that's still
00:31:53
four or five times more expensive than
00:31:56
SE Freight is that about right that
00:31:57
multiple uh in general that's a yeah
00:31:59
reasonable assumption is about four five
00:32:01
times more the airf freight networks are
00:32:03
very small in proportion to give you a
00:32:04
sense like one of these container ships
00:32:06
that flows through that ever given is
00:32:08
the world's most famous containership
00:32:09
that got stuck in the soos canal a few
00:32:11
years ago that one holds about 10,000 40
00:32:13
foot containers uh 747 which is
00:32:16
basically the biggest cargo plane out
00:32:18
there can hold 7 40 foot containers uh
00:32:21
and so if you have a diversion of global
00:32:23
ocean Freight will rapidly flow over to
00:32:26
it doesn't take a lot of freight going
00:32:27
hey I'm going to ship this by Air
00:32:28
instead to suddenly have the air freight
00:32:30
markets get impacted so um it hasn't yet
00:32:34
the air the airlines are a little bit
00:32:36
less connected to this market and
00:32:38
haven't instantly said hey we're raising
00:32:40
prices in January but I suspect if this
00:32:41
lasts another week or two you're going
00:32:43
to see big run-ups in Air Freight prices
00:32:45
and these are Global markets the price
00:32:47
of freight from Asia to the US gets
00:32:49
impacted because they're pulling ships
00:32:50
off the supply gets redirected the
00:32:52
planes get rerouted um it is a global
00:32:55
market so an impact here will affect
00:32:56
price prices of shipping Asia to us as
00:32:58
well thanks so much for coming back on
00:33:00
the program Ryan Peterson great to have
00:33:03
you here and oh congratulations on being
00:33:05
CEO of the company you found at flexport
00:33:07
again we didn't get a chance to talk
00:33:08
about all the craziness with the CEO and
00:33:11
turnover but you're back you're back in
00:33:12
the home and running back it's amazing
00:33:14
it's amazing having the time of my life
00:33:16
back here and uh work at the flexport
00:33:17
office every day all right we'll see you
00:33:20
soon and thanks for coming on uh as
00:33:22
Sax's Lifeline well done all right guys
00:33:24
take care Ryan did bring up really
00:33:27
interesting point there that you don't
00:33:28
hear enough which was the asymmetry of
00:33:30
the Warfare that the hoodies can launch
00:33:33
a drone or a cheap missile that costs
00:33:35
thousands of dollars and it costs us
00:33:37
millions of dollars to shoot it down yep
00:33:39
that is just not sustainable for the us
00:33:42
we see this happening in Ukraine as well
00:33:45
all these you know multi-million dollar
00:33:46
expensive tanks get taken out by a land
00:33:49
mine or by a cheap you know RPG or
00:33:52
something like that that cost a few
00:33:54
thousand dollars it's also the fact that
00:33:57
if you send a drone and it blows up on a
00:33:59
ship and it cost you a couple thousand
00:34:01
bucks to do that the lack of risk
00:34:04
tolerance the fact that the insurance
00:34:06
companies won't insure the ship anymore
00:34:08
means that now that ship can't travel
00:34:10
and that's tens of millions of dollars
00:34:12
of you know Commerce that get shut down
00:34:14
off of a few thousand investment so
00:34:16
there's there's a deep asymmetry in the
00:34:18
sensitivity we also have to loss we you
00:34:21
know we won't take hey well maybe one in
00:34:23
10 ships can blow up let's keep going
00:34:25
it's the fact that there's no margin for
00:34:28
loss there's no allowance for loss as a
00:34:30
result any sort of threat of loss means
00:34:32
that the whole system shuts down I'm not
00:34:34
advocating that we should but it's just
00:34:35
the condition we're in I also think the
00:34:37
other point I didn't make I would
00:34:38
imagine that this Behavior with the
00:34:40
houthis is driven in part by the
00:34:43
embolden that arises following October
00:34:46
7th and the the praise um that Hamas has
00:34:49
received globally and if you believe
00:34:52
that to be true there are many other
00:34:55
groups uh like this that may get
00:34:57
emboldened and you start to see more
00:34:59
activity in other regions as well that
00:35:02
you can have these kind of outsized
00:35:04
impacts and uh folks suddenly you know
00:35:07
start to take action but I think that's
00:35:09
why we're between a rock and a hard
00:35:10
place here is that on the one hand if we
00:35:12
don't do anything then you're
00:35:15
emboldening that behavior and if you do
00:35:17
do something you're escalating the war
00:35:19
yeah and to your point you know saying
00:35:21
like hey the us is going to enter the
00:35:23
war I I think that there may be this
00:35:24
moment where it's not even an option
00:35:26
that the US is being provoked in a way
00:35:28
that you can't say no you have to you
00:35:30
know maybe they end up having to act the
00:35:32
Guerilla Warfare aspect of this is super
00:35:35
fascinating because you can really do
00:35:37
incredible damage to very expensive
00:35:39
airplanes with hypersonic missiles that
00:35:41
go incredibly fast or like mach five or
00:35:43
something insane and they're cheap so
00:35:45
a100 million or $20
00:35:47
million fighterjet can just be
00:35:50
annihilated by a couple of hundred
00:35:51
thousand in you know Hypersonic missiles
00:35:55
all right there's been a ton of m&a
00:35:58
activity and m&a deals that have been
00:36:00
cancelled Adobe figma has been called
00:36:03
off and alumina and growl has been
00:36:07
Unwound as well the big headline is that
00:36:10
after a 15-month review process adobi
00:36:12
and figma called off their merger we
00:36:14
talked about it here multiple times it
00:36:16
was a$ 20 billion cash and stock merger
00:36:19
that was agreed to back in September of
00:36:22
2022 um and there's tons to unpack here
00:36:25
shareholders employes
00:36:27
the startup uh ecosystem and of course
00:36:30
uh limited partners who were expecting
00:36:33
huge paydays from figma being sold uh to
00:36:37
Adobe are now back to a waiting game of
00:36:40
figuring out if this company can go
00:36:42
public Etc chamath you had tons of
00:36:44
thoughts on this and maybe you could
00:36:46
educate everybody on the alumina growl
00:36:48
deal since I don't think people
00:36:50
understand that I think there are three
00:36:53
Deals or almost deals that got
00:36:57
essentially called off or cancelled or
00:37:00
never consummated in the last few weeks
00:37:03
which show a pretty interesting Trend so
00:37:05
the first as you said Jason was Adobe
00:37:08
figma the second was siga and
00:37:11
human they were proposing a multi-
00:37:13
decillion dollar merger and it was very
00:37:16
clear that the FDC was going to have a
00:37:20
huge fit around it so they said that
00:37:23
we're not even going to do it and then
00:37:24
Signa just said they'll do a$1 billion
00:37:26
buyback instead and then in the craziest
00:37:29
example alumina and Grail so alumina
00:37:31
makes these Gene sequencing machines and
00:37:34
Grail makes one of the leading tests for
00:37:38
free DNA cancer
00:37:41
detection and at the time alumina owned
00:37:44
almost half the company they bought the
00:37:46
other half they merged it in even though
00:37:48
the Regulators said hey hold on we have
00:37:49
an issue with this and now they're being
00:37:52
forced to unwind the merger so to to
00:37:55
pull this company back out out and
00:37:58
divested I think the point of this is
00:38:01
two things one is that there is no
00:38:04
viable m&a path for early stage Venture
00:38:08
Capital businesses so if you can't have
00:38:11
a$ 20 billion merger or a $40 billion
00:38:13
merger or a 15 or 20 billion m&a with a
00:38:17
high degree of confidence then the path
00:38:19
to liquidity through m&a is less than
00:38:21
20% of the outcomes which means that the
00:38:24
overwhelming path to get liquid is what
00:38:26
you said Jason which is IPO but the
00:38:28
problem is the second part which is that
00:38:30
the capital markets in the United States
00:38:32
are not ready or not in a position to
00:38:34
support all this IPO liquidity why the
00:38:37
banks won't
00:38:39
underwrite there aren't enough
00:38:41
researchers research analysts that'll
00:38:43
cover these
00:38:45
stocks the ways in which the banks make
00:38:48
money have become so constrained and so
00:38:50
I'm kind of left pondering to myself how
00:38:52
do you go back to a world of like the 9s
00:38:55
where startups four and 5 years old
00:38:57
would go public to raise Capital um I
00:39:01
don't think that that's going to happen
00:39:02
so I don't know exactly what happens to
00:39:04
us except that we'll have companies just
00:39:06
shading for 15 and 20 years and I think
00:39:09
that just has a chilling effect because
00:39:11
it's like what investor wants to put
00:39:12
money away locked up in highly liquid
00:39:15
stuff for 20 years what rate of return
00:39:16
do you need to give them that makes them
00:39:18
want to do that so something has to
00:39:20
change because if the m&a market can't
00:39:22
exist then we need to change the rules
00:39:24
of the Capital Market so that there's
00:39:25
incentives for these Banks to underwrite
00:39:27
these companies to go public well I
00:39:29
guess there's two things saxs that could
00:39:31
change this dramatically one is if we
00:39:33
put in more um Conservative Republican
00:39:37
libertarian Etc uh less regulatory
00:39:40
regime in Washington that could open up
00:39:43
m&a you know as soon as 2025 perhaps uh
00:39:46
and then the second is direct listings
00:39:49
um D I say spaxs and alternative ways to
00:39:52
get companies public it may not be um
00:39:56
the gold standard as a traditional IPO
00:39:59
but at least it we get those liquidity
00:40:01
started and I guess third sax and I'll
00:40:04
get your your thoughts on this for
00:40:06
private investors and their
00:40:08
LPS everybody seems to be focused on
00:40:10
building strong stable cash flowing
00:40:13
businesses and we've seen all the
00:40:15
companies that went public whether it's
00:40:16
Airbnb or Uber are now focused on
00:40:19
ringing the cash register and being
00:40:20
profitable so ultimately maybe this Log
00:40:23
Jam and m&a blockage makes everybody
00:40:25
focused on sustainable profitable
00:40:27
companies and that's a good thing long
00:40:28
term what do you think sex look like I
00:40:30
said last week in relation to the figma
00:40:32
Adobe deal the fact that Regulators took
00:40:34
15 months to analyze the deal only to
00:40:37
come to the conclusion that they
00:40:39
basically weren't going to allow it and
00:40:40
then Adobe finally killed it is going to
00:40:42
have a chilling effect on m&a and
00:40:43
Silicon Valley I mean if acquirers and
00:40:46
targets can't have confidence that the
00:40:49
deal will be approved and in fact
00:40:50
they're going to be left in limbo for
00:40:51
over a year waiting for speculative
00:40:54
approval they're going to be less likely
00:40:56
to do deals in the first place and I'm
00:40:57
sure adobe's not happy about the fact
00:40:59
they got to pay a billion dollar breakup
00:41:00
fee which by the way was a really smart
00:41:02
thing for figment to negotiate I mean if
00:41:04
you're if you're a company the startup
00:41:06
that's going to get acquired you need a
00:41:07
pretty big breakup fee now as insurance
00:41:10
on the deal because there's a very good
00:41:12
chance that Regulators aren't going to
00:41:13
allow it so yeah absolutely the fact
00:41:16
that Regulators got in the way of the
00:41:18
Adobe deal and moreover the way that
00:41:20
they did it with this protracted delay
00:41:22
is absolutely going to have a chilling
00:41:23
effect on m&a in Silicon Valley and look
00:41:26
there are only two good outcomes for a
00:41:30
startup you can either IPO or you can
00:41:32
get acquired that's it the third is
00:41:34
basically you go out of business that's
00:41:36
the third outcome so when you take half
00:41:38
the potential exits off the table you're
00:41:41
absolutely making it tougher for VCS and
00:41:44
Founders to get a good return it's that
00:41:46
simple and that is going to have a
00:41:48
depressing effect on you know the
00:41:50
investing of risk capital in Silicon
00:41:52
Valley I don't think it's a good thing
00:41:53
for anyone and by the way even if the US
00:41:56
sort of fixes this even if we get a
00:41:58
regime that's more friendly towards m&a
00:42:00
you still have the EU to worry about and
00:42:03
you also have the UK to worry about
00:42:05
because they're not part of the EU
00:42:06
thinks to brexit the UK like I said last
00:42:09
week they're like the Chihuahua who's
00:42:10
leading the pack they're the smallest
00:42:12
Market but they're the most aggressive
00:42:14
on antitrust enforcement tax they may
00:42:16
just be the beard for the US and the
00:42:17
Europeans it's possible but in any event
00:42:20
now you got three Regulators to worry
00:42:21
about not just one and you know like I
00:42:24
said last week I think if you're a St up
00:42:26
and you're trying to consider where to
00:42:27
put your Europe office I would not
00:42:30
choose the UK anymore I used to think
00:42:32
that the UK was number one because it
00:42:34
was so easy but you don't want to create
00:42:36
that Nexus if you can help it it might
00:42:38
subject you to a competition Authority
00:42:40
you don't want to deal with later when
00:42:41
you get acquired yeah I would have just
00:42:43
opted out of the UK I would have called
00:42:44
their Bluff as I said last week freeberg
00:42:47
any solutions here you think to solving
00:42:49
this problem in VC land or do we just
00:42:51
have to build stronger more profitable
00:42:53
companies and be more patient about
00:42:55
taking them public since m&a is not on
00:42:57
the table I don't know if I'd take the
00:42:59
anti-rust regime as being the core
00:43:01
driver of m&a not being on the table I
00:43:04
mean there there's a couple of these
00:43:05
examples but I don't think there's a
00:43:07
predominance of
00:43:08
this going on I think that there's a lot
00:43:12
of smaller deals that still end up being
00:43:14
good outcomes I mean we've we've also
00:43:16
talked a lot about the lower cost of
00:43:18
capital in starting software businesses
00:43:20
and the era of AI type
00:43:23
tools and that leads to you know being
00:43:26
able to hit 100x if you put you know
00:43:30
small enough amount of capital in and
00:43:33
have a decent outcome where you're not
00:43:34
building the market Monopoly in some
00:43:37
particular Market it doesn't feel to me
00:43:39
like that's the biggest driver of
00:43:42
concern here the biggest driver of
00:43:43
concern is just all the return on
00:43:46
Capital metrics that the big buyers are
00:43:48
having to face you know return on
00:43:49
invested capital is becoming more
00:43:51
important than it's ever been because
00:43:53
we're talking about trillion dollar
00:43:54
market cap buyers and so that's how
00:43:56
they're measured and so they have to be
00:43:58
really thoughtful about how they're
00:43:59
deploying capital in a high interest
00:44:01
rate environment that's there's a
00:44:02
greater
00:44:03
sensitivity to a faster path to cash
00:44:06
returns than there has been historically
00:44:09
so it feels to me like that's and I
00:44:10
would imagine if I'm Adobe and I'm
00:44:12
looking at this figma deal do I keep
00:44:13
fighting it or at this point paying a
00:44:16
billion dollars is probably net
00:44:17
accretive to them I think the stock
00:44:18
price went up when they called the deal
00:44:20
off which highlights that it was
00:44:22
probably a better investment for them to
00:44:23
say I'm going to pay a billion dollars
00:44:24
to actually get out of this deal at this
00:44:26
point and I think we see more of that
00:44:28
happening which is this rationalization
00:44:30
of you know timelines to roic and a high
00:44:33
interest rate environment Cham deals do
00:44:35
get done there's a lot more tolerance
00:44:36
for smaller deals obviously yeah I mean
00:44:38
Salesforce was able to acquire slack
00:44:40
that was 2020 Amazon was able to acquire
00:44:42
Whole Foods Walt Disney 21st Century Fox
00:44:46
with the X-Men so those are a different
00:44:48
era I I I really think are all 2016 to
00:44:50
2020 you're right those are all those
00:44:52
are very different era I don't think
00:44:54
that that's what you can expect anymore
00:44:56
I don't think you can underwrite to get
00:44:57
a billion deal done in any industry yeah
00:45:01
remember met Facebook buying what's up
00:45:04
for what was it 17 billion I mean that
00:45:06
was one of the biggest Venture returns
00:45:07
ever yeah today that could never happen
00:45:10
today that could never happen that figma
00:45:12
adobe deal it was a 20 billion deal but
00:45:16
with the rise in Adobe stock it's really
00:45:19
a 30 billion dollar deal if it would
00:45:21
have been consummated because half the
00:45:22
consideration was an adobe stock and
00:45:24
that has basically doubled so all of
00:45:26
those investors and employees were
00:45:28
looking at a $30 billion exit and look
00:45:31
figma's going to do great I think the
00:45:33
numbers that came out about figma where
00:45:36
they're going to do about 700 million of
00:45:37
ARR growing
00:45:39
40% so I don't know they'll be able to
00:45:42
IPO anytime based on that but what's the
00:45:45
multiple they're going to get probably
00:45:47
12 to 15 times so 8 to 10 maybe it's
00:45:50
like A10 billion do company in the
00:45:52
public markets I mean growing nicely but
00:45:55
it's just not as good an exit I mean
00:45:57
it's a big big haircut the positive to
00:45:59
this is consumers or retail investors
00:46:02
haven't been able to buy IPOs and get in
00:46:04
on companies earlier so if people build
00:46:06
stronger companies that aren't that are
00:46:08
more Capital efficient then companies
00:46:10
can go public earlier as you alluded to
00:46:12
chth where Microsoft Apple a lot of
00:46:14
these companies back in the PC era they
00:46:16
used to go public in under a decade and
00:46:18
now it's always over a decade so maybe
00:46:20
this will make stronger companies that
00:46:21
go public and then if there's a regime
00:46:23
change and maybe people feel more
00:46:26
they still have to get through Europe
00:46:27
but you know biotech is the only Market
00:46:29
that's always viewed going public as a
00:46:32
transitory Capital raising moment right
00:46:34
every biotech company that goes public
00:46:37
in America at least are startups they're
00:46:39
pure startups it's pure risk
00:46:41
Capital but the the technology side has
00:46:47
viewed it very differently it used to be
00:46:48
the same right but and then it went to
00:46:52
like Oh we must be mature and then it
00:46:55
has to be growing really fast and it has
00:46:56
to be profitable there were so many ANS
00:46:58
ands ANS that the that at the end of all
00:47:01
of that there were just very few
00:47:02
companies that qualified and then by the
00:47:04
time they did go public they're 12 13 14
00:47:06
15 years in they're so long in the tooth
00:47:08
that their best growth periods are
00:47:10
Beyond them now a couple of companies
00:47:11
have bucked that Trend but by and large
00:47:14
that's that's the case and I don't think
00:47:16
that's to to support what David what
00:47:18
sack said it's that's just
00:47:20
unsustainable you cannot you will not
00:47:23
have risk Capital flow into the United
00:47:25
States if if this is going to
00:47:28
continue yeah this is going to be super
00:47:30
challenging for Founders you got to
00:47:32
build companies that are sustainable and
00:47:34
can go public because that's really the
00:47:36
only path right now and it's exacerbated
00:47:38
by what freedberg said which is then
00:47:39
that that family office or that
00:47:41
endowment who can rip in a check as an
00:47:43
LP to a fund can still get five six s%
00:47:48
can get corporate bond at corporate
00:47:50
yields at like 8 9
00:47:52
10% why take on 15year illiquidity
00:47:56
for often times funds that return less
00:47:59
than the
00:48:01
S&P which is the Dirty Little Secret of
00:48:03
Silicon Valley it makes no sense it is
00:48:07
going to be a challenged environment for
00:48:09
some time to come I think as we work
00:48:11
this out I mean the thing that I find
00:48:13
super interesting with the spaxs was
00:48:15
like you got to invest in some companies
00:48:17
that were very early and speculative
00:48:19
like Joby now how could a consumer ever
00:48:22
make that kind of bet your mouth to bet
00:48:24
on and that wasn't one of yours I know
00:48:26
but it it was one of these like
00:48:27
incredible moments where you could bet
00:48:28
on flying cars literally as a consumer
00:48:31
and I think they're actually going to
00:48:32
figure it out I was tempted to buy it
00:48:34
and I've been tracking the stock and I'm
00:48:36
like wow if they actually make air taxes
00:48:39
work and it's kind of cool that the
00:48:41
public can participate in that and
00:48:42
that's what they were saying when there
00:48:43
weren't enough IPOs and we had half the
00:48:45
number of public companies so I don't
00:48:48
know if you have thoughts on
00:48:49
it the number of public companies I
00:48:52
think has haved in the last 20 years
00:48:56
so are more public companies better than
00:48:59
less I don't know I think that's kind of
00:49:00
like a random statement I think what is
00:49:03
true is that the public markets used to
00:49:05
be
00:49:06
used for raising risk Capital but the
00:49:10
public markets at the time also had a
00:49:12
ton of research analysts there would be
00:49:15
a lot more coverage of these companies
00:49:17
there would be a lot more visibility a
00:49:19
lot more checks and balances because
00:49:21
people would be meeting with Management
00:49:22
on a regular basis writing thoughtful
00:49:24
research reports
00:49:26
all of that is constrained as the as the
00:49:28
business of being on Wall Street has
00:49:29
changed so it's not enough to just all
00:49:32
of a sudden have a bunch of companies go
00:49:34
public if all of that supporting
00:49:35
infrastructure isn't there so this is
00:49:38
what I mean by it's a catch22 on the one
00:49:40
hand there's not there's there's no m&a
00:49:43
so you need to have more IPOs but the
00:49:45
banks will need to hire more
00:49:47
people that comes at a cost which means
00:49:50
that they're going to have to generate
00:49:51
more Revenue somehow that comes at a
00:49:53
cost to somebody else and until that's
00:49:56
figured out you're not going to solve
00:49:58
this problem and instead what's going to
00:50:00
happen is folks will be less motivated
00:50:02
to invest in The Innovation economy
00:50:06
because there'll be no path to liquidity
00:50:08
and when you do invest you'll invest
00:50:10
much smaller amounts of money and you'll
00:50:12
make it as part of your risk allocation
00:50:14
a smaller piece of the overall pie what
00:50:17
it also means is that if you're an
00:50:20
entrepreneur and you haven't started a
00:50:22
company yet you may want to seriously
00:50:26
consider raising a friends and family
00:50:28
round using these AI tools and trying to
00:50:31
build a very different kind of business
00:50:33
slow and steady profitable from day one
00:50:37
and that's never been rewarded by
00:50:39
Silicon Valley VCS but if the reward for
00:50:42
VCS don't exist then the VCS themselves
00:50:44
won't exist and so you may want to start
00:50:47
thinking about different ways to
00:50:48
capitalize your
00:50:50
business and it's interesting point you
00:50:52
make that is very subtle so I just want
00:50:54
to restate it here
00:50:56
the analysts who are covering companies
00:50:59
like say Joby I'm just picking this air
00:51:01
taxi company because I'm obsessed with
00:51:02
it if there's not an infrastructure
00:51:05
those analysts act in a way as a back
00:51:08
stop or a bit of pressure on management
00:51:11
I think is what you're saying to hey
00:51:13
perform and we're checking on you and
00:51:14
we're meeting with you so without that
00:51:17
there's just a company sitting out there
00:51:18
and nobody is asking them hard questions
00:51:21
and then making decisions to put a buy
00:51:23
or a sell rating on it is that correct
00:51:24
maybe you could B on that missing piece
00:51:27
there was an evolution in the public
00:51:28
market so look the public markets back
00:51:29
in the90s was a bit of a rigged game
00:51:33
where you could call a CEO if you had
00:51:36
his or her number and they could tell
00:51:38
you things that they didn't tell
00:51:40
everybody else and when you look at the
00:51:42
folks in their 60s and 70s and 80s who
00:51:45
really tund it I'm sorry folks but they
00:51:48
profited massively from that information
00:51:51
Arbitrage and that changed when there
00:51:54
was a regulation called reg FD that got
00:51:56
passed In America which said regulation
00:51:58
full disclosure what you tell one you
00:52:00
have to tell everybody right and that
00:52:02
was an attempt by the SEC to level the
00:52:04
playing field it was a very smart piece
00:52:06
of legislation but what that did was it
00:52:09
constrained the touch
00:52:11
points that a company would have with
00:52:13
the public markets to a few organized
00:52:15
events right analyst
00:52:17
conferences research days actually banks
00:52:20
are allowed to organize formal company
00:52:23
dinners and you'll get all these people
00:52:25
together analysts across the entire
00:52:28
Spectrum from Fidelity to Goldman Sachs
00:52:30
to Morgan Stanley and the company has to
00:52:32
perform to them and those folks will
00:52:34
write both internal and external reports
00:52:36
that say buy neutral or sell right that
00:52:39
became the only check in Balance to make
00:52:42
sure that management was held
00:52:44
accountable to the large swwa of public
00:52:46
shareholders because otherwise it's not
00:52:48
Jason you as a shareholder of Joby quite
00:52:50
honestly have any say right you you
00:52:54
exert your pressure through through the
00:52:55
analyst who then
00:52:57
represents the ability to influence your
00:52:59
buying and selling decision but if those
00:53:01
analysts don't even exist there is no
00:53:04
feedback loop between management and the
00:53:06
people that own the stock and that's the
00:53:08
problem we have today there's not enough
00:53:10
research coverage there's not enough
00:53:11
analysts there's no organized way to
00:53:14
keep companies held accountable and so
00:53:16
if you have a bunch more companies that
00:53:18
go public without that infrastructure
00:53:20
it's very difficult seems like there's
00:53:22
an opportunity somewhere in there you
00:53:24
know the big opportunity that that I
00:53:26
that I think should happen is that a
00:53:28
bunch of these Banks should actually use
00:53:30
these AI tools Jason to be crawling all
00:53:32
these 8ks and 10ks and all these
00:53:35
filings and generate statistical
00:53:38
measurements of all of these public
00:53:40
companies that they make free and
00:53:42
available to everybody these things
00:53:44
should be a bunch of dashboards and
00:53:45
charts that are just out there for
00:53:47
anybody to subscribe to so that you can
00:53:50
just do the initial work of having to
00:53:54
parse through all of these filings have
00:53:56
it done by an AI by an
00:53:58
agent from a bank who can train it
00:54:01
properly I think that would be an
00:54:03
immense value to all shareholders and I
00:54:05
don't think it costs that much money and
00:54:07
I think it would be Goodwill Robin Hood
00:54:09
could do this it would be great Goodwill
00:54:11
to build a lot of trust and and
00:54:13
credibility with investors so now that
00:54:16
you're CEO of a company how do you look
00:54:18
longterm at potential exits going public
00:54:21
what what is the the thoughts you have
00:54:23
on this as you architect the company
00:54:25
freedberg as the CEO do not care about
00:54:28
exits don't care about expand on that
00:54:30
yeah explain I just want to build a
00:54:32
great business that makes great products
00:54:34
for our customers that's it so if you do
00:54:36
that all these discussions around you
00:54:39
know giving shareholders liquidity I'm
00:54:42
the I'm the main shareholder so I don't
00:54:44
need
00:54:45
liquidity I just want to build the
00:54:47
business so you think about
00:54:49
profitability then because if you have
00:54:51
to fund it or funding might be harder to
00:54:53
come by how do you think about funding
00:54:56
over the next decade this Vision you
00:54:58
have it freaks me out you got to keep
00:55:02
businesses capitalized
00:55:05
so there's definitely across businesses
00:55:09
I'm on the board of or involved in
00:55:11
universally a bias towards
00:55:14
profitability I've seen a couple of
00:55:17
decisions we've made at some
00:55:19
companies to shift from making
00:55:23
longer time Investments that may not pay
00:55:27
off for many years where you had the
00:55:29
luxury of doing that in a Zer
00:55:30
environment and you could always get
00:55:32
Capital to fund anything that's multiple
00:55:34
years away from realizing any sort of
00:55:36
return to shifting towards a bias
00:55:39
towards making things that can generate
00:55:41
real revenue and real profitability in
00:55:43
the near term keeping costs low and
00:55:46
building from there so it it's
00:55:47
definitely I'd say been a flip-flop in
00:55:49
the environment it's why the biotech
00:55:50
landscape has largely kind of dried up
00:55:53
the funding landscape has dried up sign
00:55:54
significantly because most of the
00:55:57
investment opportunities are those
00:55:58
multi-year out before you know if you
00:56:00
have a return on your investment kind of
00:56:01
investment
00:56:02
cycles and so the ones that do get
00:56:04
funded are those that have a nearer path
00:56:06
to profitability and where you can build
00:56:09
some sort of cash generative service in
00:56:11
the near term on the path to building a
00:56:13
bigger product down the road so as
00:56:15
you're strategizing you're thinking how
00:56:17
can we get to cash flow positive Break
00:56:18
Even whatever quicker you're not
00:56:21
strategizing how do I get a huge
00:56:23
multiple and get some dumb tiger money
00:56:26
whatever no no dick to Tiger but they
00:56:28
paid the highest prices at the end of
00:56:29
the cycle I've got enough wisdom at this
00:56:30
point to tell you that if you don't have
00:56:32
to raise Venture Capital you're better
00:56:33
off so yeah shath you also became a CEO
00:56:36
you have the I think it's hustle is your
00:56:38
company and that's profitable and you're
00:56:41
running it I I'm assuming for growth but
00:56:44
maybe profit first then growth how how
00:56:46
do you think about those two dials how
00:56:48
much growth how much profits we have the
00:56:51
same belief that freeberg has which is
00:56:53
our job is just to make really great
00:56:54
products for for our
00:56:55
customers when I took over the business
00:56:59
we had to go through a difficult layoff
00:57:01
and a rebasing of the business but it's
00:57:03
it's a business that's growing kind of
00:57:05
45% a year and it's profitable and and
00:57:10
what I talked to the team is that you
00:57:11
know we will reinvest our profits and so
00:57:14
we have an ambitious plan and as long as
00:57:16
we meet that we'll take some percentage
00:57:18
of that profit and reinvest it but I
00:57:21
like freeberg also have no plans for
00:57:23
liquidity I just want to build this
00:57:25
thing to be as big as possible and I
00:57:27
don't want one single shred of pressure
00:57:32
that isn't defined by our customers and
00:57:34
so by being profitable we have complete
00:57:35
control of the cap table we can do
00:57:37
whatever we want and the people that
00:57:40
benefit frankly are the employees
00:57:41
because they can get paid and our
00:57:43
ability to hire people without being
00:57:45
subject to like pressure to raise a new
00:57:46
round and set a new random valuation so
00:57:49
no unnatural acts just customer profits
00:57:52
and so by the way if I can grow for 10
00:57:54
years years if we can grow for 10 years
00:57:55
at 40% a year this will be a ginormous
00:57:57
business so trying to 3x and do it on
00:58:00
naturally yeah Jason just just to chim
00:58:03
back on the the question you asked a
00:58:05
couple minutes ago I number one if you
00:58:07
can avoid raising Capital you're better
00:58:08
off because then you don't have any
00:58:11
shareholder pressure to get liquid and
00:58:15
that can create contortions in what you
00:58:17
do and how you operate the business and
00:58:19
second is if you're going to raise
00:58:22
Capital if you set too high value if
00:58:25
that becomes the bogey you set yourself
00:58:26
up for challenges because now you've got
00:58:28
to have a multiple on that valuation to
00:58:31
satisfy investor return hurdles and the
00:58:34
higher the the valuation the and you
00:58:37
apply a multiple to that the higher the
00:58:38
exit has to be and suddenly all the
00:58:40
options start to fade away you can no
00:58:42
longer have a modest exit that can do
00:58:45
really well for employees and the
00:58:46
founders and early investors and it
00:58:49
becomes a necessity that you have a
00:58:51
massive outcome and by the way we see
00:58:53
this now in this post Zer environment
00:58:56
that a lot of businesses that raised a
00:58:57
lot of capital at a very high valuation
00:59:00
and then you have this multiple
00:59:01
compression that's just happened in the
00:59:03
last two years their valuation
00:59:05
effectively if they were to go public
00:59:06
today or get sold is less than the
00:59:08
capital they've raised and that's the
00:59:10
most extreme scenario where you know
00:59:11
suddenly all the common shareholders get
00:59:13
wiped out in terms of their return it's
00:59:15
such a great Point like the thing that
00:59:16
people used to say was oh it's a tech
00:59:18
company so we need to give it a premium
00:59:21
the problem is now everything's a tech
00:59:23
company to say you're a tech company is
00:59:25
a meaningless statement that means
00:59:26
nothing you're a company so that you're
00:59:28
a company so then there's no premium for
00:59:30
being a company no there a premium for
00:59:33
profits well there's a premium based on
00:59:36
quality of Revenue which has to do with
00:59:37
gross margins I mean obviously ecomics
00:59:40
and un economics obviously a company
00:59:41
that has 80% gross margins is different
00:59:44
than a company has 20% gross margins not
00:59:46
if it's unprofitable no no I I totally
00:59:48
get that I'm just saying that you can
00:59:50
normalize based on gross margin as
00:59:53
opposed to the type type of company it
00:59:55
is sometimes we'll see a company that
00:59:57
markets itself as a tech company and
00:59:58
only has 20% gross margins that's an
01:00:00
indication that something is wrong
01:00:02
usually or it's not truly a software
01:00:04
company it's just a company that's just
01:00:05
a company yeah I think that's the way to
01:00:07
look at it high gross margin versus
01:00:09
lower gross margin margin just to go
01:00:10
back and answer your question jcal about
01:00:13
how do you decide how much money to put
01:00:15
into growth versus being profitable I
01:00:18
think the right answer to that is not to
01:00:20
say there's some absolute amount of
01:00:21
money you should burn given your round
01:00:23
it's to look at growth on an Roi basis
01:00:26
or Union economics basis what is the
01:00:28
return on the growth dollars you're
01:00:30
spending and probably the best way to do
01:00:32
that is to look at the payback on
01:00:35
customer acquisition how long does it
01:00:37
take you to payback your customer
01:00:39
acquisition costs and I think a lot of
01:00:41
people don't do that analysis correctly
01:00:43
because they just look at the revenue
01:00:45
they make from that customer but you
01:00:47
actually have to look at the marginal
01:00:48
profit so this is how the gross margin
01:00:50
ties in Easy example is something like
01:00:52
Spotify Spotify it cost $100 a year and
01:00:55
they were to acquire somebody for $100 a
01:00:56
year hey they get to year two it looks
01:00:58
like you made $100 except Spotify has to
01:01:00
pay a massive amount to the record label
01:01:02
so their margin isn't as high as maybe a
01:01:04
SAS company and that's where the devil's
01:01:06
in the details yes and overhead and
01:01:08
overhead you got to look at churn as
01:01:10
well so if that customer only lasts two
01:01:13
years and half the margin goes to the
01:01:17
record companies well you can't count
01:01:20
100% of Revenue now you're looking at I
01:01:21
don't know what's that's like you're
01:01:23
dividing by two twice so it's
01:01:24
effectively you know a quarter 50 bucks
01:01:27
of the 200 let's say what are you seeing
01:01:29
in your in the companies you're funding
01:01:31
you're seeing profitable companies or
01:01:33
Revenue generating companies what like
01:01:35
are you telling folks you got to grow
01:01:36
and raise a big series a or are you
01:01:37
telling folks hey take your time and
01:01:40
yeah great question we invested in 100
01:01:42
companies this year it's more than I've
01:01:44
ever done that's the same amount I did
01:01:45
in first seven years of my career and
01:01:47
100% of the time they are not expecting
01:01:49
to raise like some giant seed or series
01:01:52
a they're raising just the amount of
01:01:54
money they need need and they're keeping
01:01:56
their expenses absurdly low the biggest
01:01:59
Trend I'm seeing is outsourcing of
01:02:01
talent and so Americans and I'm not
01:02:05
going to make this like a huge
01:02:05
anti-American thing but the level of
01:02:07
entitlement and the effort Americans are
01:02:10
putting into jobs expecting 150k let's
01:02:12
say and then offshoring a developer
01:02:15
Latin America Portugal keeps coming up
01:02:18
Canada they're all looking for what's
01:02:20
the most efficient way for me to build a
01:02:21
10 person team and then I'll see a burn
01:02:23
rate of 30 ,000 with 10 people I'm like
01:02:25
how's that possible like oh our
01:02:26
developers cost 22,000 our you know sdrs
01:02:29
are 10 I'm like how is that possible oh
01:02:31
we have two people in Manila Etc long
01:02:32
way of saying efficiency efficiency
01:02:34
efficiency we have to get to break even
01:02:36
with the money we just got we're not
01:02:37
expecting a second round of funding and
01:02:39
a lot of them are raising but 500k to
01:02:43
1.5 million and if this was 2020 it
01:02:46
would be 3 to 10 we talk about like AI
01:02:49
is like a big disruptor to like the big
01:02:50
companies and this and that but AI may
01:02:52
be the biggest disruptor to VC in the
01:02:54
end explain what you mean I know what
01:02:56
you mean but I want the audience to
01:02:57
understand let's just say you raise a $2
01:02:58
million seed round in in the past what
01:03:01
you would do to your point Jason is you
01:03:03
would
01:03:03
hire seven people at $200,000 each right
01:03:08
so now you have a $1.4 million burn so
01:03:11
you basically have and let's just say
01:03:13
you co-work someplace you have a year
01:03:15
and a half and so you're pedal to the
01:03:17
metal right you're basically trying to
01:03:20
throw as much spaghetti against the wall
01:03:23
as possible see what
01:03:24
buy as many ads do whatever it takes the
01:03:27
money basically goes to AWS and Facebook
01:03:30
and a couple of other companies to
01:03:32
Google and then you hope that there's
01:03:34
enough traction where somebody then
01:03:35
writes you a 10 or 15 million series a
01:03:38
check now if you take that same $2
01:03:41
million you could have a threers team
01:03:45
four-person team half of them
01:03:47
offshore where they also use things like
01:03:50
co-pilot which is like a 2 to 3x lever
01:03:53
now all of a sudden they have the same
01:03:55
10 person team and it costs
01:03:58
$40,000 exactly and so now all of a
01:04:00
sudden they have four
01:04:02
years so why wouldn't they do that where
01:04:05
they would still own 80% of that company
01:04:08
and all of a sudden there is a potential
01:04:10
to exited for 50 million or 100 million
01:04:12
and they've made more money than in a
01:04:15
traditional outcome if you sold it for
01:04:16
two billion precisely the case this is
01:04:18
literally what Founders are modeling
01:04:20
right now they previously wanted to beat
01:04:23
the record of the
01:04:24
person in their cohort Who had who
01:04:26
raised the most money at the highest
01:04:27
valuation now they're just like how do I
01:04:29
get to profitability and and how do I
01:04:31
own as much of my companies possible so
01:04:33
Sachs you've got under over a billion
01:04:35
dollars under management you've been one
01:04:36
of the most successful new Venture firms
01:04:39
in Silicon Valley in the last decade you
01:04:41
got a lot of cash you could deploy and
01:04:43
how do you deploy it intelligently
01:04:45
intelligently given the circumstance of
01:04:48
people maybe raising less or being more
01:04:50
efficient and what do you think of the
01:04:52
ai's impact on
01:04:54
Venture well the most important thing is
01:04:57
to have opportunities to invest in and
01:04:59
the fact is that before this AI wave the
01:05:02
whole Cloud Social Mobile wave had kind
01:05:05
of petered out I mean the pond of
01:05:08
opportunities had kind of been fished
01:05:09
out and AI is great because it restocks
01:05:13
the pond I mean there is a lot of new
01:05:16
ways for Founders to use these
01:05:18
advancements to solve problems that they
01:05:21
weren't addressing before so I think you
01:05:23
guys are being a little too gloomy I
01:05:25
mean I think that the impact on Capital
01:05:28
efficiency will take some time to play
01:05:30
out but I think that for the first time
01:05:33
in a number of years it feels
01:05:35
everything's feeling fresh again and
01:05:38
there's just I think a lot more
01:05:39
opportunities for Founders to go after
01:05:40
now it's the begin it's like this at the
01:05:42
beginning of any big new tech wave right
01:05:45
is this is a new platform opportunity
01:05:47
same thing was true with the App Store
01:05:49
when the iPhone launched same thing was
01:05:51
true when the internet launched now I
01:05:53
understand a lot these opportunities are
01:05:54
going to be taken by big companies that
01:05:56
already exist but there's always going
01:05:58
to be an opportunity for Founders when
01:06:00
you have a big disruption David I agree
01:06:02
with you my comment is less about the
01:06:05
the pond I agree with you that the pond
01:06:06
is getting restocked my comment is that
01:06:09
the economic impact of AI is so
01:06:12
massively deflationary it may be an
01:06:15
order or two orders of magnitude more
01:06:18
deflationary than AWS was and that was
01:06:22
massively accretive to the startup
01:06:24
economy so if this is a a 10 Xing or 100
01:06:27
Xing of that economic impact my only
01:06:29
point is that the break even threshold
01:06:32
for a Founder will have gone way down
01:06:35
and then as a result it's only a matter
01:06:37
of time until they can put two and two
01:06:39
together in a Excel spreadsheet to
01:06:41
figure out that owning 50% of aund
01:06:44
million company is greater than owning
01:06:46
18% of you know some other company when
01:06:50
you're massively diluted or 8% or
01:06:52
whatever it's just like that's all I'm
01:06:53
saying is is like the the effective
01:06:55
Break
01:06:56
Even goes way down in a world where Ai
01:06:59
proliferates and I think that's positive
01:07:01
what do you think yeah sex it's just
01:07:03
positive for Founders if you look at
01:07:05
what Founders do with the money when we
01:07:08
invest in a series A or B the number one
01:07:11
thing is go to market right so they want
01:07:12
to basically triple their sales let's
01:07:14
say they want to grow from 5 million of
01:07:15
AR to 15 million of AR they have to
01:07:18
staff up the quota capacity to hit that
01:07:21
number and you know for every AE you're
01:07:24
going to need some number of FDR some
01:07:26
sort of management you're going to need
01:07:29
some sort of operations overhead so
01:07:31
you've got to hire all of that and then
01:07:33
there they want there to be a cushion in
01:07:35
case they miss their numbers right
01:07:36
because there's no guarantee you're
01:07:37
going to hit that so you know Founders
01:07:40
still need to raise the money to staff
01:07:42
up to go after that opportunity now does
01:07:44
sales become more efficient over time
01:07:47
because of AI or does lead genen yeah I
01:07:49
think that's possible but in order for
01:07:52
that to happen you're going to need to
01:07:53
see a rise in Quota capacity right I
01:07:56
mean that's what we're talking about is
01:07:57
that that same AE can now hit you know a
01:08:01
greater level of sales because they have
01:08:03
better tooling we're just not there yet
01:08:05
maybe that happens over time but I think
01:08:08
you know your typal inevitable maybe
01:08:10
it's inevitable but I just think your
01:08:11
typical SAS start right now is spending
01:08:14
the money on more prosaic things I mean
01:08:16
yeah yeah no I think you're right I all
01:08:18
all I'm saying is I think what it means
01:08:19
is that the $200 million fund today
01:08:23
becomes 50 the $500 million fund needs
01:08:26
to be 100 and the billion doll fund
01:08:28
needs to be 200 it's basically Back to
01:08:30
the Future it's like back to the 1990
01:08:32
style 2012 by the way I'll I'll show you
01:08:35
a table here Nick I need you to blur out
01:08:37
the names okay I just think it's super
01:08:40
interesting I watched freedberg through
01:08:41
this but this was like a list of all
01:08:43
these funds that I've invested in these
01:08:45
are Venture funds you've invested in
01:08:46
these are all the Venture funds I've
01:08:47
invested it if you look at this what do
01:08:50
you notice about like the mega funds
01:08:52
that just clock out DPI look this is
01:08:54
a100 million fund right look at look at
01:08:59
clocked it this was a $220 million
01:09:03
fund my point in all of this is like if
01:09:06
I look at my returns as an
01:09:08
LP I've never had success when I've
01:09:10
invested in big funds I've only had
01:09:12
success in small funds it's true that
01:09:14
smaller funds do perform better and
01:09:16
larger funds become more of an index and
01:09:18
achieve more average returns when you
01:09:19
got a multi-billion dollar fund it's way
01:09:22
harder to achieve a you know outsize
01:09:24
return so yeah I agree with you I think
01:09:27
this Dynamic would be healthy I mean our
01:09:29
funds actually are not that big in the
01:09:30
grand scheme of things it's definitely
01:09:32
the game is changing dynamically and
01:09:34
this podcast is going to be great in
01:09:35
2024 because we went from four Capital
01:09:37
allocators to two Capital allocators
01:09:38
myself and Sachs to two in the arena
01:09:41
CEOs so we're going to be having this
01:09:43
discussion I think in a very granular
01:09:45
way now that we got two players on the
01:09:47
field sacks that we can watch what
01:09:49
they're doing well I've got a new
01:09:50
incubation that's going to be launching
01:09:52
soon ooh
01:09:54
but I'm not going to be CEO of it but
01:09:56
you know I'm kind of executive chairman
01:09:58
oh
01:10:00
oh yeah SAS company what kind of company
01:10:03
is SAS it's it's basically Yammer you
01:10:06
have
01:10:08
attention 2.0 yeah I thought that was
01:10:11
slack so
01:10:13
this 3.0 yeah yeah Yammer 3.0 okay let's
01:10:17
go let's get a we'll get a little uh
01:10:19
yeah we I think we had a push on call-in
01:10:21
so now we need to get our 50x on uh yeah
01:10:24
3.0 give us a little tasty poo for your
01:10:26
best you're right we sold Colin so now
01:10:28
you know we've cleared the decks and um
01:10:31
I can't work on multiple incubations I
01:10:32
can only work on one at a time can you
01:10:34
have your person that runs that sasd
01:10:37
thing email me because I want to onboard
01:10:39
my company into sasd so I it's so good
01:10:42
well by the way that was the last one so
01:10:43
I've done I guess three of these now
01:10:45
there's Colin sasd so sasd is now spun
01:10:48
out completely of craft and the the
01:10:52
founder of sasd was our VP of analytics
01:10:55
at craft and now he's going full-time to
01:10:58
SAS grid so I think be very successful
01:11:00
great but can I get on board it and can
01:11:02
I get a family discount let's explain
01:11:05
this concept to the audience since it's
01:11:07
Unique in the world and we should maybe
01:11:10
double click on the economics not on a
01:11:12
specific company saxs but just generally
01:11:13
of why VCS are doing this you're
01:11:16
incubating a company you're a former
01:11:18
founder you have that itch you have
01:11:19
ideas so instead of investing in a
01:11:21
company you say hey let's all get to the
01:11:23
office I have an idea let's make this
01:11:25
ourselves as craft and then we'll put
01:11:28
some of Craft's LP's money into it and
01:11:31
then there's some slug of capital saved
01:11:34
for the new team that comes so how does
01:11:36
the economics on something like this
01:11:38
work and why do LPS love it or do they
01:11:40
love it and then why is it good for your
01:11:43
internal team or for you to incubate a
01:11:45
company as opposed to just find
01:11:46
them set up craft we actually wrote into
01:11:50
our LPA that we had the ability to
01:11:52
incubate companies and we had a
01:11:53
pre-arranged economic deal with our LPS
01:11:56
on those incubations cuz I didn't want
01:11:57
it to come up later and then there's
01:12:00
some conflict of interest between the
01:12:02
management company and the lp so it's a
01:12:04
predetermined deal and we don't do a lot
01:12:06
of these like I said I guess there's
01:12:07
been three there's been SAS grid Callin
01:12:10
and out this Yammer 3.0 we're talking
01:12:12
about but really I got to give the
01:12:15
credit for SAS grid to our vpm analytics
01:12:17
who really I think pushed this idea and
01:12:19
it started with a simple way for us to
01:12:21
analyze deals and dashboard deals it
01:12:23
started as a spreadsheet that we would
01:12:25
give Founders that would crank out their
01:12:27
charts and then we turned it into a
01:12:29
website that was free and then you
01:12:31
needed as an investor right you needed
01:12:33
as an inv an investor and then what
01:12:36
happened is that we saw
01:12:39
Founders started using SAS grid as their
01:12:42
dashboard to manage their companies
01:12:44
between funding rounds and we're like oh
01:12:46
okay that's a big aha moment so
01:12:48
basically there was no dedicated
01:12:50
verticalized business intelligence tool
01:12:52
or dashboarding tool just for SAS
01:12:54
companies and the advantages of
01:13:01
verticalization boo out of the box and
01:13:03
the all the formul is going to be
01:13:05
calculated exactly the right way is
01:13:07
going to be less room for error they
01:13:08
don't have to reinvent the wheel use or
01:13:12
looker or whatever you're Reinventing
01:13:13
the wheel you're writing all the
01:13:14
formulas yourself it doesn't make sense
01:13:16
back to the deal yeah you prid the deal
01:13:19
so LPS wouldn't be surprised that's
01:13:20
awesome so the management there's a
01:13:23
determined valuation I guess at that
01:13:24
seed stage a certain amount of money
01:13:26
goes in and your holding company gets
01:13:28
some equity which is like a nice little
01:13:30
extra icing on the cake for incubating
01:13:33
it and then the LPS get a sweetheart
01:13:34
deal or a better deal is that why they
01:13:36
would be in favor of it yeah the LPS get
01:13:38
like basically a vig in the startup got
01:13:41
it we kind of modeled it after YC's
01:13:43
original deal right where YC got was it
01:13:46
7% for $100,000 yeah and then on top of
01:13:49
that the fund can invest in the seed
01:13:52
round at the market
01:13:53
valuation whatever the market ah okay so
01:13:55
they get basically 7% for free or
01:13:57
something in% for 100,000 then plus
01:14:00
whatever the seed round's going to be
01:14:02
brilliant yeah yeah I think it's a good
01:14:03
deal for them and and also it's good for
01:14:05
you because you have to want to come to
01:14:07
work every day and this keeps you
01:14:08
mentally engaged like shamat said he
01:14:10
felt like he was becoming a talking head
01:14:12
and just not I don't know how you phrase
01:14:14
it exactly in your newsletter but well
01:14:16
like you said scratches an itch it's
01:14:18
nice to be able to if you have an idea
01:14:20
for a product you can work creatively on
01:14:22
it yeah
01:14:23
I don't want to run companies anymore I
01:14:25
don't have any desire to be CEO but it
01:14:27
is fun to work on products if you have
01:14:29
an idea Jamal how's it been for the
01:14:31
first couple of uh months now are you
01:14:35
really feeling more intellectually
01:14:36
curious and challenged is it annoying to
01:14:39
deal with employees and you know
01:14:42
customers and and all that kind of stuff
01:14:44
what's it what's it been like I think
01:14:45
you've been at six months I think it's
01:14:46
been really
01:14:48
challenging the first part of it was
01:14:50
quite honestly we had to
01:14:54
rebase the the cost basis of the company
01:14:57
and get costs under control that's hard
01:15:00
and you had to we had to lay some good
01:15:02
people off and then we had to kind of
01:15:05
like reset the strategy write goals get
01:15:07
our values kind of in a good
01:15:10
place reorient the organizational design
01:15:13
like who will do what right all of these
01:15:16
things require just enormous amounts of
01:15:18
time that where you don't see
01:15:21
necessarily the obvious impact in a
01:15:23
metric or a dashboard right away and so
01:15:26
you just have to commit to this process
01:15:27
and really follow through in it you have
01:15:29
to find the people that have this real
01:15:31
potential Elevate them make decisions
01:15:33
quickly find out you made some wrong
01:15:36
undo them find out you made some Right
01:15:38
double down on them so it's been a real
01:15:40
learning process the the thing and then
01:15:42
on top of all that I've tried to start
01:15:45
coding
01:15:46
again Sunny helped me a lot I built you
01:15:50
were PA programming yeah and then but
01:15:52
then I did that to go back into our All
01:15:54
Hands which we do every week and I
01:15:56
wanted to demo some stuff mostly just to
01:15:59
set the values that we're all grinding
01:16:01
here you know and I'm here grinding and
01:16:03
learning this stuff like anybody else
01:16:06
and it's embarrassing because like it's
01:16:07
janky code it doesn't work and blah blah
01:16:10
blah it was but it's been really I think
01:16:13
in the long run it's I think the company
01:16:15
is a lovely business and I and I want
01:16:18
them to be successful because I think
01:16:19
they deserve to be successful and for me
01:16:22
it's been a great Outlet to just get
01:16:24
back to the basics of like what really
01:16:27
matters in running a company in 2023 I
01:16:29
don't think I really knew the
01:16:31
details that's good and I'm finding a
01:16:33
little humbling perhaps a little
01:16:34
humbling to get in there and be in the
01:16:36
cockpit really really humbling yeah it's
01:16:38
good yesterday we were sitting there in
01:16:40
E team which is our executive team and
01:16:41
we're in the middle of a big deal and
01:16:43
the seven of us were redlining a
01:16:45
contract
01:16:46
back and I know that may sound like
01:16:48
really tactical stuff but it was for me
01:16:50
it was amazing I'm like this is great
01:16:52
work and I felt like I accomplished
01:16:54
something when it was done and maybe the
01:16:55
deal gets closed today the team is on
01:16:58
the call and I just think it's wonderful
01:17:00
I I get it real awesome yeah all right
01:17:01
listen there's another story that is
01:17:04
under reported we try to find these
01:17:06
underreported stories things people are
01:17:07
talking about in their group chats but
01:17:10
maybe not reading about or hearing about
01:17:13
in the mainstream Media or even on
01:17:14
social media there are a couple of
01:17:17
unbelievable bombshell class action
01:17:20
lawsuits that are dropping in the United
01:17:22
States regarding our real estate
01:17:24
industry in October a federal jury in
01:17:26
Missouri found the N that's the National
01:17:29
Association of Realtors and several of
01:17:31
the
01:17:32
brokerages that have those Brokers
01:17:34
working for them guilty of conspiring to
01:17:36
artificially inflate commissions for
01:17:38
home sales they now have to pay at least
01:17:41
$1.8 billion in Damages to sellers of
01:17:44
more than 260,000 homes between 2015 and
01:17:47
2022 this could bankrupt the n and if
01:17:51
you don't know what a racket this is
01:17:53
people selling homes in the United
01:17:54
States pay 6% commissions on average 3%
01:17:58
for the seller that's if you own the
01:18:00
home and you're selling it you give them
01:18:01
3% of the sale and then the buyer you
01:18:04
also give them
01:18:05
3% and there have been a number of
01:18:07
companies like redin who have tried to
01:18:10
change this I actually used RFID on a
01:18:12
transaction and tried to use them on a
01:18:13
sale and I was faced with brokers who I
01:18:17
kid you not literally said I'm not going
01:18:19
to show your home because it's a
01:18:21
lower Mission rate and they have been
01:18:24
working in unison to try to stop this
01:18:27
kind of innovation but the 6% is a
01:18:29
tradition it's not a rule you can
01:18:31
actually negotiate it and now uh since
01:18:33
this case got one another couple of
01:18:35
cases have been dropped and these new
01:18:39
class action lawsuits all put together
01:18:41
could be $13 billion in
01:18:44
Damages I don't know who's been
01:18:46
following this in the group but I have a
01:18:48
lot to say about it but yeah freeberg I
01:18:51
spent a bunch of time looking at this
01:18:54
because I've done several no broker real
01:18:57
estate
01:18:57
transactions oh so
01:19:00
lawyers yeah just lawyers and then in
01:19:04
the in California I don't know if you
01:19:05
guys know this thing called MLS the
01:19:07
multiple listing service yes which feeds
01:19:10
the data into redin and Zillow and in
01:19:13
order to list a property on MLS you have
01:19:15
to have one of these real estate
01:19:16
licenses and be a member of of National
01:19:18
Association of Realtors part of the
01:19:21
monopolistic racket that goes on
01:19:23
is that you have to be a licensed broker
01:19:25
in order to list your home on the
01:19:27
service that is the Monopoly in the
01:19:28
listing of homes which everyone looks at
01:19:31
so there's a bunch of folks who have set
01:19:32
up a a listing service where you can
01:19:34
list your home directly on MLS and
01:19:37
basically it's a guy who has a brokerage
01:19:39
license and you pay him a 100 bucks and
01:19:41
he just has a website set up and then
01:19:43
you list it and so uh you can kind of
01:19:44
just list your own home post the photos
01:19:46
and all the docks and then when the
01:19:48
agent asks for disclosures every
01:19:51
disclosure they want to see on a
01:19:53
National Association of Realtors form
01:19:55
and the N forms are only available if
01:19:57
you're a member so there's a whole bunch
01:20:00
of ways that they've tied up the market
01:20:02
and made it impossible for the system to
01:20:05
operate without the N members being a
01:20:08
key principle in the transaction process
01:20:11
when at the end of the day having gone
01:20:12
through this a number of times myself
01:20:14
there's just all these templates and
01:20:15
data that flows into this there's no
01:20:17
reason why you necessarily need
01:20:20
to have an individual that that
01:20:23
to be involved here but if you did it's
01:20:26
actually a data entry service the
01:20:28
process of entering this data could
01:20:30
probably reduce down to a fixed fee of
01:20:32
call it a couple thousand bucks per home
01:20:34
rather than a percentage of the home
01:20:35
value and by the way think about the
01:20:37
craziness around this if you buy a home
01:20:40
and you sell it in most parts of the
01:20:41
United States you actually have a tax
01:20:43
that you have to pay that's a percentage
01:20:44
of the gross and most people have most
01:20:46
of their net worth tied up in the real
01:20:47
estate so it's one of the few places
01:20:48
where you will actually see a large
01:20:50
chunk of your net worth actually taxed
01:20:52
on a gross basis and taken away from you
01:20:55
if you end up selling it rather than on
01:20:56
a net basis meaning net of the profit
01:20:58
you make and then the Brokers want to
01:21:00
get paid a percentage of the gross as
01:21:01
well these are the commissions they get
01:21:03
paid from a first principal's
01:21:04
perspective it doesn't make sense that
01:21:05
we're paying a percentage of the gross
01:21:07
to agencies to to transact this volume
01:21:10
the total volume in the US is an
01:21:11
incredible number it's a hundred billion
01:21:13
dollar a year in residential real estate
01:21:14
commissions and there's 1.6 million
01:21:16
folks who are real estate agents that
01:21:18
are licensed making their living doing
01:21:20
this so it's not an inconsequential
01:21:22
industry and it's not an inconsequential
01:21:24
verdict Nick if you could pull up that
01:21:26
chart of the different countries here's
01:21:28
a good comparison so in the US we pay
01:21:31
about five and a half% brokerage
01:21:33
commission split between the buyer and
01:21:35
the seller's broker and again legally
01:21:38
you don't need a buyer's broker you
01:21:39
don't need a seller's broker you're
01:21:41
allowed to sell your home without a
01:21:42
broker there's nothing in the law that
01:21:44
prevents you from doing that so this is
01:21:45
just an industry that's popped up to
01:21:47
service this need and their pricing
01:21:50
model is to take a percentage of the
01:21:52
gross and that's just the way the
01:21:53
Market's developed but in a competitive
01:21:55
market that should be competed away and
01:21:58
it hasn't been because of this this
01:22:00
Behavior that's gone on with
01:22:01
institutions like the n and you can see
01:22:03
across different countries different
01:22:06
pricing systems as a percentage of grow
01:22:08
in the UK you only pay about
01:22:10
1.3% total brokerage Commission on buy
01:22:13
side and sell side in China 2 and a
01:22:15
half% in Russia three and a half% some
01:22:17
countries like Japan and Argentina are
01:22:19
comparable to the US at 6% France is at
01:22:22
5 % Germany's at 4 and a half can I ask
01:22:24
a question freeberg yeah I only own one
01:22:27
house so I don't I've never gone through
01:22:29
this experience really that I can
01:22:30
remember because that was more than a
01:22:31
decade ago but today if I wanted to sell
01:22:34
a
01:22:36
home okay I could sell it to you right
01:22:38
but if you have a broker do I have to
01:22:41
pay you 3% as well no you could sell
01:22:44
your home to me and then if I have sign
01:22:47
who pays your broker's 3% I seller pays
01:22:50
the buyer's broker but they don't have
01:22:52
to yeah no here it's really important to
01:22:54
understand this if you're going to go
01:22:56
buy a home yeah you're typically not
01:22:59
signing a contract with an agent when
01:23:02
you go home hunting the seller has an
01:23:05
agent and in the agent listing they say
01:23:08
hey if you're a buyer's agent you show
01:23:10
up we'll give you 3% commission and so
01:23:12
the buyer agents who don't actually have
01:23:15
a contract with the buyer are like well
01:23:17
let me show you R homes let me show you
01:23:18
R homes and then they get to a home and
01:23:20
they're like okay this home's let's buy
01:23:23
it and they're going to make a 3%
01:23:24
commission which by the way I just want
01:23:26
to point out the disincentive there
01:23:28
they're not looking out for my best
01:23:29
interest as a buyer they're looking out
01:23:31
for their commission and the higher the
01:23:33
price they get you to pay the more they
01:23:34
make the more money they make what I
01:23:36
want to understand though is if I'm
01:23:36
going to sell my house to you guys and
01:23:38
you guys have a buyer agent and I just
01:23:40
ref can I just refuse to pay the 3% no
01:23:42
one gets paid because there's no the
01:23:44
buyer agent has no contract with anyone
01:23:46
yeah you can just refuse and you don't
01:23:47
have a contract with anyone the place
01:23:48
where you end up paying a commission as
01:23:50
a seller is if you sign a seller agent
01:23:53
listing and where you sign a contract
01:23:55
that s to the seller's agent I'll pay
01:23:57
you 3% and I'm also going to pay a buyer
01:23:59
3% if they show up with an AG how do I
01:24:01
list my house on MLS without a seller's
01:24:03
agent you cannot in California I
01:24:04
mentioned I just I recently went through
01:24:06
this I paid $99 I did it all myself and
01:24:09
I listed on MLS without an agent I've
01:24:11
done a bunch of person-to person sales
01:24:13
of real estate where I haven't had any
01:24:15
agents involved but I knew the people on
01:24:16
both sides and we just did a transaction
01:24:18
so what was your legal cost per
01:24:20
transaction oh like like 15 Grand you
01:24:23
know to do that that was my exact number
01:24:24
it was 15,000 so just to give you a
01:24:27
comparison here chth if you were to have
01:24:29
a million dooll house that would be 6%
01:24:32
it' be
01:24:33
$60,000 so that's 15,000 in legal cost
01:24:36
for you to sell it right if I wanted to
01:24:38
sell it to you directly and that's what
01:24:39
happened my friend owned a really nice
01:24:41
house we did it off market and now all
01:24:43
the brokers in my neighborhood hate me
01:24:46
like they are really upset about it
01:24:48
imagine it was a $5 million house or a
01:24:50
10 million or $20 million house is it
01:24:52
true for commercial real estate as well
01:24:54
this is this how it works I don't know
01:24:55
commercial commercial real estate is the
01:24:57
same situation so there's an agent that
01:24:59
represents the building the landlord
01:25:01
it's actually going to talk about this
01:25:02
then the buy side agent so Buffet
01:25:06
Buffett owns Berkshire realy what is
01:25:08
that that's just basically it's a
01:25:09
residential broker just like Coldwell
01:25:11
Banker 24 just like all these other so
01:25:13
it's sweeping up this 6% Vig yep they
01:25:16
were part of the the lawsuit they were
01:25:18
named yeah they were named and if you
01:25:20
look at listen to Buffett's earnings
01:25:21
reports often talks about how many sides
01:25:24
of a transaction they were on and that's
01:25:26
kind of the key measure of Revenue in
01:25:29
the in that piece of the business and he
01:25:31
was super ecstatic I think in 2020 or 21
01:25:34
when Real Estate boomed and he's like we
01:25:36
got this many sides of the business it's
01:25:37
a great business you know it's cash
01:25:39
generative such a great business but
01:25:41
that's the business you want to be on
01:25:42
both you want to get as many sides as
01:25:43
you can you want to get on a sell side
01:25:44
and buy side uh in the market and you
01:25:47
just get 3% depending on which side
01:25:48
you're on but now the courts basically
01:25:50
said hey this is illegal here's how
01:25:52
you'll know that the Monopoly has ended
01:25:55
is when the buy side commission goes
01:25:56
away yeah yeah I mean the sell side 3%
01:26:00
may be excessive but I do think that the
01:26:02
sell side Brokers do work in terms of
01:26:04
having to market the property whereas on
01:26:07
the buy side the vast majority of the
01:26:08
value is created by MLS like you're
01:26:10
saying freeberg I think it's flipped but
01:26:12
in terms of where the value is but
01:26:14
anyway go ahead no you have to Stage the
01:26:16
house take pictures yeah as a buyer I
01:26:18
just want someone to look out for me and
01:26:19
make sure I'm not like all the diligence
01:26:21
that goes into res searching a home and
01:26:23
reading all the disclosures and going
01:26:24
through them I don't know if you guys
01:26:25
have gone through this hundreds of gone
01:26:27
through it but I he's a lawyer for that
01:26:29
stuff who I pay by the hour right that's
01:26:31
what I do I'm not saying that the buy
01:26:33
side broker does nothing but I'm saying
01:26:36
that most of what they do is just
01:26:38
schedule appointments for tours for you
01:26:41
after you've gone through MLS yourself
01:26:43
and picked out what you want to see you
01:26:44
give them the list and then they give
01:26:46
the list put on your calendar you know
01:26:47
what I would analogize it to is travel
01:26:49
agents I don't know if you remember like
01:26:51
I mean most people watch the tri
01:26:52
probably don't remember but in order to
01:26:54
book an airline ticket a long time ago
01:26:56
before the internet you call up a travel
01:26:58
agent because they have bring it to your
01:27:01
house they have proprietary access to
01:27:02
saber which is the online ticketing
01:27:04
system totally totally what happened is
01:27:06
with the internet you had sites like
01:27:08
Expedia just give you direct access to
01:27:10
saber and so you can book the ticket
01:27:11
yourself there's no reason to have a
01:27:12
travel agent same thing has happened
01:27:14
with MLS it used to be proprietary
01:27:17
access by the Brokers to MLS you
01:27:20
couldn't even see it then had sites like
01:27:23
Zillow basically give you direct access
01:27:25
to MLS so you can just go on there and
01:27:27
find what you're looking for and again
01:27:30
the main thing that the the buy side
01:27:31
Brokers do is to schedule the
01:27:33
appointments because you can't get a
01:27:34
tour typically unless you're represented
01:27:37
and if you're not represented and you
01:27:39
reach out then the sellers agent will
01:27:40
try to basically enlist you have you
01:27:42
done a direct transaction sex I'm
01:27:44
curious you can I don't think you can
01:27:46
residentially I mean it's very hard I've
01:27:48
done it yeah I mean if you know if you
01:27:50
happen to already have pre-identified
01:27:53
the buyer then yeah I guess you could do
01:27:55
it but basically happened in our case in
01:27:57
free I'm curious how yours went down I
01:27:59
had told the person or my wife had told
01:28:01
the person we love your home if you ever
01:28:02
sell it let us know and then they let us
01:28:04
know and then we bought it with them off
01:28:05
market and they said we don't want to
01:28:07
use Brokers we don't want to pay this
01:28:08
huge commission which would have been
01:28:10
hundreds of thousands of dollars and uh
01:28:12
would you agree to this price and we're
01:28:14
like
01:28:15
yes and then done how did yours come
01:28:17
about freeberg how did you find a buyer
01:28:20
if you were on the sell side this is all
01:28:21
like relationship driven people that I
01:28:24
know and that kind of stuff so it's like
01:28:26
hey I think this is the future if two of
01:28:27
the four people here have done it I
01:28:28
think this is the future I don't know if
01:28:30
that's I don't know if that's the common
01:28:32
model I don't I don't think that's true
01:28:33
I do think Market you need a
01:28:35
Marketplace and the Brokers control the
01:28:37
marketplace it's a one-off it's a fluke
01:28:39
when you actually buyer the the MLS is
01:28:42
the deao market because I mean ask
01:28:44
anyone in the country who's bought a
01:28:45
home in the last year five years almost
01:28:48
everyone I'm sure went on Zillow or red
01:28:52
or truly unlooked at homes and the the
01:28:54
place that those you know marketplaces
01:28:57
get their data is from MLS they sweep
01:28:59
the MLS so the real kind of you know
01:29:03
monopolistic breaking is can you break
01:29:05
that Marketplace can you break MLS and
01:29:07
can you get some other alternative
01:29:09
listing services going that you know
01:29:13
enable this to this this brokerage
01:29:16
commission to get competed away because
01:29:17
it's currently locked up in the Monopoly
01:29:19
they have on the MLS what's so perverse
01:29:21
here's where the Monopoly comes from is
01:29:23
that if the buyer had to pay the 3%
01:29:26
directly to the buyer's agent and that
01:29:28
was a choice you could make nobody would
01:29:30
pay that much of course I'm not saying
01:29:33
that the buyer's agent doesn't provide
01:29:34
some value but there's no way you pay 3%
01:29:37
but the reason they get it is because
01:29:39
the Brokers tell you well you're not
01:29:40
paying that the seller's paying that but
01:29:42
of course you're indirectly paying that
01:29:44
because the transaction fees are so much
01:29:46
higher and when the seller goes to list
01:29:48
their house if you tell your seller's
01:29:50
agent hey I don't want to pay the
01:29:52
buyer's agent 3% make it half a percent
01:29:54
they won't do it you know they they will
01:29:56
always make it equal so this is the game
01:29:58
this is where the Locking comes from is
01:30:00
the buyer doesn't have a choice and the
01:30:02
seller doesn't really have a choice
01:30:03
either as we wrap here just real quick
01:30:05
pull up that uh link Nick and go to
01:30:07
number five so that is the key issue I
01:30:09
don't have a horse in this race I don't
01:30:10
own redin stock or anything but here's
01:30:12
red fin explaining exactly what you
01:30:13
talked about it's fsbo for sale by owner
01:30:16
and there's now these third party sites
01:30:17
and they kind of allude to it there but
01:30:19
you know what those are those FS sites
01:30:22
are actual real estate agents that are
01:30:25
registered in the state and are members
01:30:26
of N and so they have a right to list on
01:30:29
MLS so what they're doing is they've
01:30:31
basically set up a super simple website
01:30:34
and then they're posting your listing on
01:30:35
MLS for you for a FL without you for a
01:30:38
flat fee rather than getting a
01:30:40
commission on the sale awesome yeah and
01:30:42
and that's that you know that's kind of
01:30:43
interesting but for most PE most people
01:30:45
they're like well I don't know now I
01:30:47
don't want to disparage the value of
01:30:48
folks that are in this industry there's
01:30:50
obviously a lot of value for agents and
01:30:52
brokers in this industry but the real
01:30:53
point is that if the Monopoly breaks on
01:30:56
the marketplace then the business model
01:30:58
will get competed away and there will
01:30:59
start to be a change here and I think
01:31:01
that this lawsuit and the settlement
01:31:03
ultimately leads to a change a shift in
01:31:06
the industry that would certainly
01:31:08
benefit consumers but could have a
01:31:09
negative economic impact because of the
01:31:12
number of people that depend on
01:31:13
brokerage fees as their as their job the
01:31:15
likely to be that when you hire a broker
01:31:19
they will give you a form and you'll
01:31:20
pick what percentage you want to pay
01:31:22
I'll pay you 2% and I'll pay the the
01:31:25
buyer's agent 1.5 I'll pay you 1.5 I'll
01:31:28
pay the buyer's agent two or there
01:31:30
should be caps on it right or you should
01:31:32
have because of the incentives it
01:31:34
doesn't matter if I sell my home if it's
01:31:35
a $5 million home it may matter to me 5
01:31:39
million 5.5 or six it doesn't matter to
01:31:41
the broker their commission they just
01:31:42
want to sell it as quick as possible if
01:31:43
it sells for 4.5 5.5 It's relatively the
01:31:46
same commission so it really should be
01:31:48
based upon a flat rate up to a number
01:31:51
and then a percentage above that number
01:31:53
to Align interests anyway keep an eye on
01:31:55
this one folks because it's going to
01:31:56
have a massive impact all right Colorado
01:31:59
Supreme Court has removed Trump from the
01:32:02
state's presidential primary ballot this
01:32:04
was decided in a split 4 to3 decision by
01:32:07
the court it's worth noting that all of
01:32:09
the justices were appointed by
01:32:11
Democratic governance it's a democratic
01:32:12
State the court based its decision on
01:32:14
section three of the 14th Amendment this
01:32:17
bars anyone from joining Congress the
01:32:19
military or any federal state off off is
01:32:22
if they have previously taken an oath to
01:32:24
support the
01:32:25
Constitution then engaged in
01:32:28
Insurrection against the US this is the
01:32:31
first time in US history that the 14th
01:32:33
amendment has been used to legally
01:32:35
disqualify a presidential candidate the
01:32:37
14th amendment was originally passed
01:32:39
after the Civil War and was aimed at
01:32:41
former Confederates I'll say a couple
01:32:43
things the first is that I thought that
01:32:45
the Democrats were going out of their
01:32:47
way to give Trump the election with the
01:32:49
documents case but now I think that
01:32:53
they've
01:32:55
basically made his winning the
01:32:59
Republican nomination of foregone
01:33:01
conclusion and he is the overwhelming
01:33:04
favorite to win the presidency after
01:33:05
this and the reason is pretty simple
01:33:08
which is if you take Donald Trump out of
01:33:10
this the idea that you haven't been
01:33:15
convicted of a
01:33:17
crime but now a government agency or
01:33:22
government Court in this case can
01:33:23
deprive you of what really is like a
01:33:27
pretty momentous sign of Liberty and
01:33:29
freedom which is to run for president of
01:33:31
the United States to deprive an American
01:33:34
citizen unconvicted of that
01:33:36
crime of that right I think is really a
01:33:40
bad step in the wrong
01:33:41
direction and so there there just needed
01:33:44
to be a lot more prudence and thought
01:33:48
about this and I think that it will do
01:33:50
nothing except embolden the base it'll
01:33:54
get Republicans out to vote I think it
01:33:58
creates a deep wave of
01:34:01
momentum in the direction of of Donald
01:34:04
Trump and so this to me was just an
01:34:07
absolute complete head scratcher that
01:34:09
makes no sense and I think will is
01:34:12
surely to get overturned in the Supreme
01:34:13
Court freeberg your
01:34:17
thoughts okay for those of you not
01:34:19
watching freeberg put both hands up in
01:34:21
the gave a shrug like a shrug Emoji so
01:34:24
if you want to understand freer's
01:34:26
position on trump it is shrug
01:34:27
Emoji coming around the horn Sachs red
01:34:30
meat what are your thoughts on the
01:34:33
Colorado Supreme
01:34:35
Court Banning Trump from the ballot I
01:34:38
agree with what jamas said democracy now
01:34:40
means the right of the people to vote
01:34:42
for candidates approved by liberal
01:34:43
judges uh and yes jcal all these judges
01:34:46
were Democratic appointments I think
01:34:48
this case makes clear that the point of
01:34:50
all of this lawfare
01:34:52
against Trump is to keep him off the
01:34:53
ballot until now they've been pretending
01:34:55
it's about something else and I think
01:34:57
this decision rips the mask off all the
01:34:59
legalistic that we've heard
01:35:02
throughout
01:35:03
2023 I mean Democrats don't really give
01:35:06
a damn whether he paid off a porn star
01:35:08
or kept classified documents or
01:35:11
supposedly led a a racketeering
01:35:13
conspiracy they just don't want him
01:35:14
standing for a vote that he might win
01:35:17
and I feel like all the time we spent on
01:35:19
this pod earnestly debating the details
01:35:21
and legalities of the documents case it
01:35:23
was a total suckers game that's the
01:35:26
narrative they want us engaging in it
01:35:28
never had anything to do with documents
01:35:30
they just want to keep them off the
01:35:32
ballot and I think that by being so
01:35:35
naked about this by ripping the mask off
01:35:38
what they're trying to do the Colorado
01:35:40
Supreme Court has really done us all a
01:35:42
favor I mean the Supreme Court of the
01:35:44
United States is surely going to reject
01:35:46
this decision but the lasting impact is
01:35:49
going to be in revealing liberalism's
01:35:50
true fath
01:35:52
they are the real authoritarians and
01:35:54
while restricting the right of the
01:35:55
people to vote for the candidate who is
01:35:58
leading the polls right now they
01:35:59
Proclaim that they're saving democracy I
01:36:02
mean they they self-
01:36:04
glorify and engage in this
01:36:06
self-righteous rhetoric that they're
01:36:07
saving democracy I mean the rest of the
01:36:09
country any normal person is looking at
01:36:12
this and saying these people have
01:36:13
completely lost touch with with reality
01:36:16
completely lost touch the other
01:36:18
unfortunate outcome of this is that
01:36:20
there will be a wave where people will
01:36:22
talk about the big steel as this and
01:36:26
what people will say is that there was
01:36:27
an attempt by the Democrats to really
01:36:30
roadblock Trump's ability to be voted up
01:36:32
and down by the American people and
01:36:34
that's
01:36:36
disenfranchising the the ability for
01:36:38
people to vote and and I think that
01:36:40
that's really unfortunate and I and I
01:36:42
wish that the Democrats would have
01:36:43
thought about that in their calculus
01:36:44
before engaging in what is really a a
01:36:47
deeply partisan thing to do that that
01:36:50
this will will this will get
01:36:53
overturned but their
01:36:56
damage will be longlasting unfortunately
01:36:58
that's a shame totally and I mat mat Tai
01:37:01
had a good line he said that only people
01:37:03
who live in a bubble within a bubble
01:37:06
within a bubble could ever think a
01:37:07
decision like this is a good
01:37:09
idea here are the three bubbles number
01:37:12
one all of these judges were Democratic
01:37:14
appointments because so living within
01:37:16
the Democratic part is the first bubble
01:37:18
the second bubble was the fact that they
01:37:20
all went to Ivy Le schools this was
01:37:22
actually a 4-3 decision the four
01:37:24
justices who went to the IB leagues all
01:37:25
voted for it they thought this was a
01:37:26
good idea the three that went to Denver
01:37:29
law school The non- Ivy Le School were
01:37:31
all against it and wrote scathing
01:37:33
descents against it so that tells you
01:37:36
the second bubble is the IV League the
01:37:38
third bubble is people who've been
01:37:39
totally marinating in the mainstream
01:37:41
media and their coverage of this because
01:37:43
they think that they can just conclude
01:37:46
that Trump is guilty of an Insurrection
01:37:48
because it's just a fact according to
01:37:50
the media they listen to Trump has never
01:37:52
been convicted of that crime he's never
01:37:54
even been charged with it right so I
01:37:56
think that's a an important distinction
01:37:57
that you know the the the 14th Amendment
01:38:00
which my understanding came about to
01:38:02
keep members of the Confederate Army out
01:38:06
of Congress because they had rebelled
01:38:09
against the government and so the whole
01:38:11
point was this amendment was passed to
01:38:13
keep um anyone who' no that's right who
01:38:16
engaged in Insurrection or
01:38:18
Rebellion or given Aid or Comfort to the
01:38:20
enemies there of it may not be elected a
01:38:22
member of Senate Congress or president
01:38:24
or vice president so sax if that's the
01:38:26
case that that is still the 14th
01:38:28
Amendment that's the claim being made
01:38:30
here it doesn't define whether or not
01:38:33
there needs to have been a conviction of
01:38:35
a charge of insurrection is that what
01:38:38
will
01:38:39
ultimately be the Supreme Court decision
01:38:41
do you think is that he was or wasn't
01:38:44
actually found in a court of law to have
01:38:46
been guilty of insurrection no it's that
01:38:49
the actual article three of the 14th
01:38:52
Amendment doesn't doesn't even Define
01:38:54
the presidency as applying in terms of
01:38:58
where this applies so even before you
01:39:00
get to that legal threshold of the fact
01:39:02
that he's never been tried for this
01:39:03
thing there is a simpler threshold which
01:39:05
is most legal Scholars say it doesn't
01:39:08
even point to the fact that you can
01:39:09
actually hold the president to that
01:39:11
standard so there's like all all these
01:39:13
layers what do you mean it says no
01:39:15
person shall be well it's unclear it's
01:39:18
unclear if officers of the United States
01:39:20
includes the presidency I think that's
01:39:21
one way you could overturn this another
01:39:23
way is to point out that there was no
01:39:25
due process the desense really harped on
01:39:28
this issue of due process you had a
01:39:30
District Court decide after a 5-day
01:39:33
Hearing in which Trump was not allowed
01:39:36
to subpoena no subpoena power no calling
01:39:39
of witnesses no cross-examination they
01:39:41
basically just looked at tape of the
01:39:42
January 6 hearing which was itself bias
01:39:45
because the Republicans didn't even get
01:39:46
a chance to cross-examine so basically
01:39:48
they just looked at MSNBC coverage and
01:39:51
this District Court concluded on that
01:39:52
basis that Trump was guilty of an
01:39:53
Insurrection again that is a crime for
01:39:55
which he's never been convicted and he's
01:39:57
never even been charged with and he's
01:39:59
never even had the chance to answer
01:40:00
those charges in court and there was a
01:40:02
special counsel at the federal level
01:40:04
that declined to prosecute that's right
01:40:06
that's exactly right so sack if a
01:40:08
prosecutor had taken up the case and he
01:40:10
had been convicted would you support him
01:40:12
being disqualified from the state
01:40:15
ballots for being the nominee of for
01:40:17
party for president well there was a
01:40:18
very simple way to disqualify Trump from
01:40:21
running again which was to impeach him
01:40:23
was to convict him in the impeachment
01:40:24
trial remember the second impeachment
01:40:26
was all about January 6 and he was
01:40:29
courts I'm talking about the he was
01:40:30
exonerated that was the time to do it
01:40:33
now I don't know if you know if a
01:40:36
conviction for inment to Insurrection
01:40:39
would hold up in that way freeberg I
01:40:40
don't know but the point is they didn't
01:40:41
even try and the reason is because when
01:40:44
merri Garland first came in they
01:40:46
actually did an analysis of January 6
01:40:48
and there was a memo written and it said
01:40:51
that if we the doj try to prosecute
01:40:53
Trump for either incitement or for
01:40:55
Insurrection we will lose that case and
01:40:57
so mer Garland didn't bring those
01:40:59
charges then there was a story in the
01:41:00
New York Times saying that Biden reacted
01:41:02
really negatively to that and he told
01:41:04
his inner circle that Garland needed to
01:41:07
stop acting like a ponderous judge this
01:41:09
is the New York Times words and that he
01:41:12
needed to take decisive action and Biden
01:41:15
made clear to his inner circle I'm going
01:41:17
to provide the receipt on this that he
01:41:19
thought Trump should be prosecuted so
01:41:21
all of this lawfare ultimately flows
01:41:23
from that it flows from the top Biden is
01:41:25
the most vindictive president we've ever
01:41:27
had I cannot think of another time in
01:41:29
American history where a president
01:41:32
incited his own AIDS and advisers to
01:41:35
basically go prosecute the leading
01:41:38
alternative for the presidency that he's
01:41:40
likely to face in four years that is
01:41:43
what happened by the way we've seen this
01:41:44
behavior before remember this is also
01:41:46
the president who said we need to go
01:41:48
look at this guy meaning Elon I mean I
01:41:51
can't believe that this behavior is just
01:41:53
accepted by so many Americans This is
01:41:56
petty vindictive unamerican behavior and
01:41:58
it's anti-democratic and the people who
01:42:00
are engaging in it the most again are
01:42:03
are glorifying themselves as somehow
01:42:05
standing up for democracy this is a joke
01:42:08
and I think the average American is
01:42:09
going to rebel against this and I said I
01:42:11
think it was like last year that all
01:42:13
this lawfare all these tactics and
01:42:14
shenanigans that the Democrats were
01:42:16
trying it's either going to put Trump in
01:42:18
the big house or the White House and I
01:42:20
think said it for the White House on
01:42:21
this basis right now I agree you would
01:42:24
say that it's reasonable that if he got
01:42:26
convicted in a court of law for charge
01:42:29
of insurrection that he should not be
01:42:30
allowed on the ballot if the Supreme
01:42:31
Court then decided that that's what the
01:42:34
14th Amendment meant sure but that's not
01:42:36
what happened here there's zero due
01:42:38
process I get it I'm just trying to
01:42:40
understand where your threshold is so
01:42:41
you think he'll certainly this will
01:42:43
certainly go to the Supreme Court and
01:42:44
they'll adjudicate what the the 14th
01:42:46
Amendment really means because it's
01:42:47
never been tried the 14th Amendment at
01:42:49
the cour was written think about why
01:42:51
that statute came about chath is right
01:42:53
it was written for the Confederacy right
01:42:55
the only other time it was used was in
01:42:57
1919 against one person that was about
01:42:59
to enter Congress who was who had given
01:43:02
Comfort to the Germans in World War I
01:43:04
that's the only time we've actually
01:43:06
invoked article three section three of
01:43:07
the 14th Amendment were they allowed to
01:43:09
run no person they were not allow they
01:43:11
were not allowed to take the seat now
01:43:13
that's at the federal level and at and
01:43:15
and at the state level it's been used a
01:43:16
couple of times the the the point of
01:43:18
this is for me again take Trump out of
01:43:22
it you do not I think I'm pretty sure we
01:43:26
do not want to find ourselves in a
01:43:28
country no of course where you can all
01:43:32
of a sudden be deprived your Liberty and
01:43:34
your
01:43:36
rights for Random Acts where somebody
01:43:40
believes that you are a threat to them
01:43:42
and that person in a is in a position of
01:43:45
power to affect your Liberty that can't
01:43:49
happen vote the men up or down yeah and
01:43:52
I agree with that and I would say that I
01:43:54
mean what you're speaking to is due
01:43:55
process these judges basically believe
01:43:58
that because the mainstream media says
01:44:00
something is the case that we don't need
01:44:03
to go through a legitimate Court
01:44:04
procedure to determine that as a legal
01:44:07
finding they just declare that okay he's
01:44:09
guilty of insurrection that was never
01:44:11
proven people don't realize you can this
01:44:14
thing can go the opposite direction so
01:44:16
quickly imagine that there's a
01:44:17
Democratic candidate that is running
01:44:19
against a Republican incumbent is this
01:44:22
the standard we want to create where
01:44:24
there's this political Warfare that
01:44:26
happens where each party is trying to
01:44:30
essentially prevent the leading
01:44:32
candidate of the other party from
01:44:33
running in every election from here on
01:44:35
out because that's the precedent that is
01:44:37
being created that's why that's why I
01:44:40
have such an allergic reaction to this
01:44:43
that's totally true why wouldn't every
01:44:45
president from here try to do this I
01:44:48
mean it's already the case that every
01:44:49
president that loses Congress is
01:44:51
probably going to face an impeachment
01:44:53
hearing I mean that's happening too and
01:44:56
now we're going to have a situation
01:44:58
where every presidential candidate can
01:45:00
be potentially excluded from the ballot
01:45:02
based on you know a local Court's
01:45:05
findings from the Democrats point of
01:45:07
view this was deeply shortsighted and I
01:45:09
think it has a very high chance of
01:45:10
blowing up in their face we haven't
01:45:12
heard from jcal I get my information
01:45:14
from two really good sources the first
01:45:16
one I recommend for our listeners is
01:45:17
cafe.com it's a podcast by pre verar
01:45:21
fantastic he does really deep Dives on
01:45:24
these yeah cafe.com is his podcast.com
01:45:27
it's it's a paid podcast but it's really
01:45:29
detailed and then there's actually
01:45:30
speaking of law fair there's a lawfare
01:45:32
podcast and so I listen to those and
01:45:34
it's they're they're covering this but
01:45:35
and also the two other cases that are of
01:45:38
note the federal election interference
01:45:40
case and the Georgia case highly
01:45:41
recommend that our listeners go to those
01:45:44
experts and get a really well balanced
01:45:46
view of the cases against the 45th
01:45:48
president all right for chairman
01:45:51
Jam poap the new chairman of the all I
01:45:54
like chairman dictator I don't want to
01:45:55
lose chairman dictator authoritarian no
01:45:59
no J bipac chairman bipac chairman of
01:46:02
the poit bureau dictator of the all-in
01:46:05
Pod you have my proxy vote too all hell
01:46:08
the chairman dictator and for the king
01:46:11
of
01:46:12
be and Rainman himself I am the world's
01:46:17
greatest moderator love you boys we'll
01:46:19
see you next
01:46:21
time let your winners
01:46:24
ride Rainman
01:46:28
David and instead we open source it to
01:46:31
the fans and they've just gone crazy
01:46:33
with it love you queen
01:46:35
[Music]
01:46:41
of
01:46:44
Besties that's my dog taking a your
01:46:46
driveway
01:46:49
ta oh man my meet me we should all just
01:46:53
get a room and just have one big huge
01:46:55
orgy cuz they're all this useless it's
01:46:56
like this like sexual tension that we
01:46:58
just need to release
01:46:59
[Music]
01:47:05
Som we need to get
01:47:10
[Music]
01:47:19
merch
