00:00:00
I'm so [Â __Â ] tired I've slept six
00:00:02
hours in three and a half days six hours
00:00:05
so wait wait I went to the World Series
00:00:07
of Poker with
00:00:09
helmets so you spent no no first of all
00:00:11
I flew public took Southwest what yeah
00:00:15
cost me 49. yeah cause I got a ticket
00:00:18
for 49 bucks it's like so [Â __Â ]
00:00:19
incredible did you sit in seat A1 also
00:00:21
known as Jake owl's Reserve seat it has
00:00:24
my name on it Moe's in the front row
00:00:25
yeah it's great like Southwest has these
00:00:28
numbers first class on Southwest no no
00:00:32
no no premium plus he was in the front
00:00:34
row no there's like these signs that
00:00:37
that like have a number that attaches to
00:00:39
your ticket and then you stand in that
00:00:40
line and then you go on in this orderly
00:00:42
way and so I was I had like A5 or
00:00:45
something so I was like the fifth person
00:00:46
on and then I sat in the front and I put
00:00:49
my bags up top yeah you carried your
00:00:52
backs yeah an hour later I was in Vegas
00:00:54
it was so easy Southwest is phenomenal
00:00:56
and then I flew back anyways and after
00:00:58
after losing as much money as I did it
00:01:00
felt good to fly for 49 so I gotta be
00:01:02
honest with you well austerity measures
00:01:05
you can sleep better at night with
00:01:07
austerity measures and did you go to the
00:01:08
all-you-can-eat buffets ticket to go as
00:01:11
well no I'd never do that you never know
00:01:13
[Music]
00:01:17
Rain Man David
00:01:21
said we open source it to the fans and
00:01:24
they've just gone crazy
00:01:26
[Music]
00:01:30
why did you fly Southwest why did I Fly
00:01:32
Southwest well the planes in Europe with
00:01:34
Nat that's number one and then two
00:01:36
I just wanted some flexibility to get in
00:01:38
and out depending on when I busted these
00:01:40
tournaments so let me tell you about
00:01:41
these tournaments
00:01:43
the 100K is literally like a murderer's
00:01:46
row of like every great poker Pro so it
00:01:50
was like 96 of us or something I got to
00:01:53
be honest with you it was so much fun
00:01:57
so much fun why how so you know that we
00:02:01
play 40 minute levels and you have to
00:02:03
really get the chips moving which means
00:02:05
that there's only so much like you know
00:02:07
Game Theory optimal poker you can play
00:02:09
and at some point you just gotta gamble
00:02:11
it up and you gotta take your shots and
00:02:12
you have to be willing to Bluff and you
00:02:14
know you have to bet for thin Equity
00:02:16
it's so much fun and then you see some
00:02:18
of these guys that just lose their minds
00:02:20
anyways it was it was really really a
00:02:22
lot of fun I finished in the middle of
00:02:25
the pack like 40 second or something so
00:02:27
that was brutal but then the thing that
00:02:28
I'm the most proud of is and I went from
00:02:30
that and I hopped in the 3K six
00:02:32
six-handed right afterwards and there
00:02:34
was like 1250 people in that and I got
00:02:37
to 81st and whoa the problem was I just
00:02:40
couldn't get anything going I couldn't
00:02:41
get any real car like you need some card
00:02:43
distribution like you have to at some
00:02:45
point yes make some hands you can't just
00:02:47
you know I could Bluff my way to 81st
00:02:49
but I needed hands to really to really
00:02:52
really have a chance to chip up and run
00:02:54
it
00:02:54
then I played in the Raz
00:02:56
which is seven card stock low
00:03:00
there's 126 people now when I finished
00:03:02
in the middle of the pack there and then
00:03:04
this 10K Bounty there's about 600 people
00:03:06
and I finished like 150. those are all
00:03:09
respectable I mean I know play
00:03:10
tournaments I have no idea how to play
00:03:12
tournament to be honest I know how to
00:03:13
play poker I know how to play cash games
00:03:14
but tournaments are very different so I
00:03:16
feel like I was very ill prepared but I
00:03:19
had so much fun and you know the crazy
00:03:21
thing is when you're playing for 12
00:03:22
hours a day you are focused for 12 hours
00:03:26
the thing that I forgot is that you end
00:03:28
up I ended up losing like two and a half
00:03:31
pounds oh wow if your brain is going
00:03:33
going
00:03:36
biggest [Â __Â ] thing and I was I was
00:03:39
mentally devastated at the end of each
00:03:40
night you're just lying in bed eyes
00:03:42
awake yep and then you can't sleep and
00:03:44
so then you know you go and you play
00:03:45
craps and bakra
00:03:47
break the casino for a couple hundred
00:03:48
times a night there and then we'll go
00:03:50
back to bed that's great sounds like a
00:03:52
great week the good news is uh as Phil
00:03:54
was live blogging
00:03:56
for you on your behalf from uh over your
00:03:59
shoulder by the way the other thing was
00:04:00
I brought my phone but I don't have
00:04:02
anything on my phone like I don't have
00:04:04
Twitter I don't have any of that stuff
00:04:05
so I was just totally in the zone it
00:04:08
felt so great to not be connected to
00:04:10
social flow experience it's a flow
00:04:12
experience when you can turn it very
00:04:13
often just be in the moment
00:04:14
congratulations on the on the you know
00:04:17
coming in the 10 of the field and the 3
00:04:19
000 or eight percent of the field that's
00:04:20
incredible dude if I really practice at
00:04:22
these tournaments I think I would Bank a
00:04:24
couple but I just don't have the time
00:04:25
the Paradox there is that you did best
00:04:27
in the largest field if you can do this
00:04:29
for three or four years and you go into
00:04:31
those Razz Fields when it's 100 or those
00:04:33
25k 100ks when it's 100 200 people in
00:04:37
the 100K there's 90 95 96 people like
00:04:40
you really do have about a one percent
00:04:42
shot of winning the thing which is
00:04:43
pretty incredible yeah Raz too Raz is
00:04:46
always a hundred I love tournament poker
00:04:48
that was my that was my game back in the
00:04:51
day that's because it's because you're
00:04:52
afraid to lose money so it's perfect for
00:04:53
you put up a small amount of money and
00:04:55
you can play for many hours you're
00:04:56
probably in your mind you're probably
00:04:58
dividing the number of hours by your
00:04:59
buy-in so that you can think about what
00:05:01
your hourly cost is I actually like
00:05:03
tournament poker because when you lose
00:05:04
you lose like you can't just yeah
00:05:06
rebound basically and then there's a
00:05:09
broader macro strategy you start to play
00:05:11
the chips against the other players
00:05:12
because you know how everyone else is
00:05:14
playing based on how many chips they
00:05:16
have in front of them it's a great point
00:05:17
this theory of ICM which is like
00:05:19
independent ship model is exactly what
00:05:20
you just said the craziest thing
00:05:22
Freeburg happens right at the money
00:05:23
bubble these guys start I've never seen
00:05:26
this before they Ultra tank ultrade
00:05:29
oh yeah they go in the tank for two
00:05:31
minutes and then they fold so obnoxious
00:05:33
when I used to play tournament poker I'd
00:05:35
sit I'd fold Ace King suited you'd fold
00:05:37
pocket Queens you'd fold everything if
00:05:40
you're on the Bubble Level of getting
00:05:41
into the money or you're on the bubble
00:05:43
or getting to the final table it just
00:05:44
doesn't matter because if there's three
00:05:46
guys with you that have smaller chip
00:05:47
Stacks let them get blinded off and now
00:05:50
you're in the money or now you're on the
00:05:51
final table and then you'll play poker
00:05:53
it's like go get up go have some dinner
00:05:54
I'm back in an hour don't even look at
00:05:56
your cards if you can Cruise your way
00:05:58
there it's a totally different kind of
00:06:00
game totally different there's a guy
00:06:02
that was tanking he's a really lovely
00:06:03
guy a British guy I offered him the Min
00:06:06
cash just just not tank I was like
00:06:09
please stop taking for four minutes and
00:06:12
folding around I'll just needed his
00:06:14
action I had a guy do this in a
00:06:15
tournament and I timed it with the rest
00:06:17
of the table I took out my phone I timed
00:06:19
it and I said whatever number of seconds
00:06:21
you do I'm doubling
00:06:24
and I just did that it was so obnoxious
00:06:27
that the entire table like the guy
00:06:29
finally stopped well in the in the 100K
00:06:31
we actually had a better setup which is
00:06:32
that we had these iPads on the table and
00:06:35
everybody gets a 30 second shot clock so
00:06:37
you can't really [Â __Â ] around but then in
00:06:39
these big field events they're not going
00:06:41
to have
00:06:42
iPads on 100 tables obviously yes and so
00:06:46
instead people just tank forever and
00:06:47
then you have to call the floor and you
00:06:49
have to call time on these folks the
00:06:51
funniest thing though was like the last
00:06:52
tournament I bought in for was a 10K
00:06:54
secret Bounty which means that on day
00:06:56
two when you knock somebody out you
00:06:58
actually everybody stops the action you
00:07:00
go up on stage and you pull like out of
00:07:02
it's like treasure hunting some of these
00:07:04
bounties can be like a million bucks and
00:07:07
obviously there's a lot of people there
00:07:09
that kind of recognize me and when they
00:07:11
saw me in the 10K secret bounty there
00:07:13
was like a movement it was so funny they
00:07:15
were like if you win the secret Bounty
00:07:18
and you win the million we're gonna
00:07:19
revolt and burn the Paris Paris
00:07:25
and I and I thought you know it's true
00:07:26
it'd be patently unfair if I was the one
00:07:28
that won that million dollar secret
00:07:29
value how many selfies did you take on
00:07:31
Southwest that's the question everybody
00:07:33
wants to know how many people recognize
00:07:35
you on Southwest and what was the shame
00:07:37
that you felt that's great I'm Gonna Fly
00:07:40
I'm Gonna Fly Southwest to Vegas all the
00:07:41
time now it's [Â __Â ] great it I
00:07:43
literally was honestly to get from my
00:07:45
house to the gate where you stand to get
00:07:47
into the plane it was like clustered
00:07:49
maybe 15 minutes more than just driving
00:07:51
on the tarmac like it was a nothing
00:07:52
Burger
00:07:53
check out it's amazing what a down
00:07:56
Market could do to people
00:07:57
you know what this is what is it Brad
00:08:00
this is the victory of the age of
00:08:02
fitness
00:08:06
Southwest you were in the first the
00:08:09
first 30 minutes you were the front row
00:08:11
Southwest all right listen there's a big
00:08:12
docket today we've got a lot on the
00:08:14
plate David sacks is busy in a Star
00:08:16
Chamber right now selecting the next
00:08:18
president of the United States he's
00:08:20
picking a VP in the cabinet for
00:08:22
whoever's gonna win so he couldn't make
00:08:23
it today so we brought the fifth bestie
00:08:25
Brad gerstner back and great timing
00:08:27
because the FED decided to pause rate
00:08:29
hikes in
00:08:31
just yesterday I guess and this would
00:08:33
have been the 11th consecutive
00:08:36
rate hike is that about right that's
00:08:38
right and they anticipated
00:08:40
two more 25 bases hikes before the end
00:08:43
of the year so here's just the um fed
00:08:46
funds effective rate so you can all can
00:08:49
see it here over time and there was also
00:08:51
some big news this week
00:08:52
a couple of 20 23 IPO candidates
00:08:57
started to be floated obviously we've
00:08:59
been hearing about Reddit and tripe for
00:09:00
a while but arm
00:09:02
confidentially filed for an IPO back in
00:09:04
April and they're seeking to raise
00:09:05
between 8 and 10 billion later this year
00:09:07
and that would be uh a pretty big deal
00:09:10
for SoftBank
00:09:12
which owns The Firm
00:09:14
and that could I guess save
00:09:17
SoftBank which has had a just a brutal
00:09:19
run with the two different
00:09:22
opportunities save softbanks the arm
00:09:25
deal is being done is what's the
00:09:26
valuation that's being done at SoftBank
00:09:28
acquired on for 32 billion in 2016. they
00:09:31
don't know the valuation right now they
00:09:33
haven't put that out there yet I mean
00:09:34
they were originally looking for
00:09:35
anywhere from 30 to 70 but I mean Brad
00:09:37
where do you think that comes out I have
00:09:39
no idea I think that
00:09:41
you know they're shopping to get these
00:09:43
anchor tenants into arm
00:09:46
if the IPO Market was super hot and this
00:09:49
was really easy to get done this would
00:09:51
have been done you know so I think you
00:09:53
know they're tiptoeing now because they
00:09:55
need to get it into the public market
00:09:58
but you know I I think that anybody who
00:10:01
does an IPO today okay is going to
00:10:05
demand
00:10:06
a you know a rate of return into that
00:10:10
offering
00:10:11
that is a significant margin of safety
00:10:14
relative to all deals that were done in
00:10:16
20 and 21. and what that means is
00:10:19
on the road show investment Banks go and
00:10:22
they try to drum up demand they want to
00:10:23
have anchors in the IPO book they call
00:10:26
firms like ours they call Strategic
00:10:28
investors they want to size up what that
00:10:31
is and you know they give you their
00:10:34
expectation of fair value or where they
00:10:36
think the IPO will trade to of course
00:10:38
you meet with management you
00:10:40
ascertain and develop your own
00:10:42
expectations of fair value what I'm
00:10:44
saying is maybe in the peak
00:10:47
you know in 20 and 21 people were
00:10:49
getting thinner and thinner in terms of
00:10:52
the margin of safety they demand I my
00:10:54
expectations whether it's arm whether
00:10:56
it's data bricks or other companies that
00:10:58
are starting to queue up and these are
00:11:00
fantastic companies right make no
00:11:01
mistake about it Nvidia tried to buy arm
00:11:04
and you know databricks is doing over a
00:11:06
billion in Revenue growing
00:11:07
extraordinarily fast led by an
00:11:09
incredible team but in order to get into
00:11:12
the public markets they have to you know
00:11:14
step in with a bigger discount than they
00:11:16
would of
00:11:17
you know previous correction
00:11:20
and uh just to put some numbers on it
00:11:22
arm had agreed to be acquired by Nvidia
00:11:24
for 40 billion before the talks fell
00:11:26
through that was due to regulatory
00:11:27
scrutiny Bloomberg says arm is aiming
00:11:29
for evaluation of 70 billion obviously
00:11:31
there's no confirmation about that
00:11:32
that's just the news hopefully
00:11:34
intelligently speculating about it what
00:11:36
exactly would you be buying for 70
00:11:37
billion dollars I thought they missed it
00:11:40
yeah arm had a window where they had to
00:11:43
make some really important product
00:11:45
decisions to be able to actually have
00:11:47
reference designs that actually made
00:11:48
sense Beyond just simple mobile
00:11:51
processors and CPUs and they don't have
00:11:53
any of that so they have a good Cash Cow
00:11:55
business it's probably worth 25 billion
00:11:57
they paid 30 some odd 32. yeah they
00:12:01
could have gotten it out for 40
00:12:02
something but it's a mid-20s billion
00:12:04
dollar company
00:12:05
no more
00:12:06
and if you're in if if you buy it at the
00:12:08
20s you're buying a cash flow yielding
00:12:10
asset and the good luck to all the
00:12:13
players I guess is what I would say
00:12:14
clearly it's a function of soft Bank
00:12:16
seeking liquidity right I mean they uh
00:12:19
they've had this position for how many
00:12:22
years now
00:12:24
four years no more I think this was six
00:12:27
maybe six years yeah when did they buy
00:12:29
it was it 2016 I think it was longer
00:12:31
yeah 2016. they bought it so this has
00:12:34
been and in the physical Center ending
00:12:36
march the vision fund alone took a 32
00:12:38
billion dollar write down
00:12:40
obviously SoftBank has a big chunk of
00:12:43
the vision fund but this is not in
00:12:45
division and it's not in the vision fund
00:12:47
exactly
00:12:49
yeah but it's clearly uh liquidity
00:12:53
driver for them I don't think that this
00:12:54
is you know first of all Jason I don't
00:12:56
think the point about SoftBank needs
00:12:58
saving is necessarily true it's
00:13:00
not a company that needs saving but
00:13:01
they've certainly taken some hits well
00:13:03
they could use a win this is what my
00:13:04
point yeah yeah they could use a win but
00:13:06
the last two uh quarterly calls you know
00:13:12
was pretty repentant and humble right in
00:13:16
fact he used that exact language we
00:13:18
talked about it here so there's a big
00:13:19
liquidity need at some point for the
00:13:21
business so they can get this thing out
00:13:23
and get liquid on it
00:13:25
it would certainly support the balance
00:13:27
sheet more than anything you know the
00:13:28
the market is on a tear this year Brad
00:13:30
is there now that everybody's buying
00:13:33
back into tech stocks I guess two
00:13:36
questions why is everybody suddenly
00:13:37
buying into tech stocks when people
00:13:41
think there's going to be a recession
00:13:43
and consumers have run out of money and
00:13:48
yeah what what's the thinking here of
00:13:50
why so much money has gone to Tech and
00:13:51
this incredible rally it's been great to
00:13:54
watch but uh people seem to be perplexed
00:13:57
by the rally and then the FED even
00:13:58
though they didn't do a rate hike seem
00:14:01
to put cold water on and say Hey listen
00:14:03
don't get ahead of yourselves we're
00:14:04
gonna probably do rate hikes later in
00:14:05
the year we all have short memories
00:14:08
you know Tech had a devastating year in
00:14:10
2022 so this is a bit of a reversion to
00:14:13
the mean right if you remember the chart
00:14:15
we you know we showed a lot on this pod
00:14:16
last year at the at the end of starting
00:14:19
at the end of 2021 was that we were
00:14:22
trading at you know multiples that were
00:14:25
you know 50 to 70 percent above their
00:14:27
10-year average
00:14:29
um and at the trough we were trading
00:14:31
about 30 to 40 below the 10-year average
00:14:33
right so the market corrected it
00:14:35
overshoots on the upside because rates
00:14:37
went to zero and by the end of 2022 when
00:14:40
you had Larry Summers and others who
00:14:42
were going out and saying we don't know
00:14:44
what the upper bound of inflation and
00:14:47
rates is that's really scary to the
00:14:50
markets and so you had this overshoot to
00:14:51
the downside we're still trading below
00:14:54
the 10-year average for internet and
00:14:56
software companies based upon our
00:14:58
numbers and so when you look at this as
00:15:01
we said at the end of last year the
00:15:02
framework changed early in this year all
00:15:06
of 22 was about two things is inflation
00:15:09
going higher and our rates going higher
00:15:11
and those things are debilitating for
00:15:13
growth assets and growth multiples by
00:15:16
the beginning of this year we started to
00:15:19
have confidence that inflation had
00:15:21
peaked which meant that rates were
00:15:23
largely in kind of you know spitting
00:15:26
distance of their final destination and
00:15:29
the framework shift to economy are we
00:15:31
going to have a hard Landing now
00:15:33
remember at the start of the Year Mike
00:15:35
Wilson from Morgan Stanley who made give
00:15:37
him credit made the call in 2022 he said
00:15:40
22 was going to be awful he was right
00:15:42
but he stayed in that bearish position
00:15:45
at the beginning of 2021 said the
00:15:48
economy is going to hit the skids in q1
00:15:50
and that we're going to revisit 3 000 or
00:15:53
3200 on the S P instead we're sitting at
00:15:56
4 300. so he was tragically wrong at the
00:16:00
beginning of this year because again he
00:16:02
was fighting I think the last battle
00:16:04
that he that was one as opposed to
00:16:07
looking ahead and saying this is no
00:16:09
longer about rates and inflation so the
00:16:12
NASDAQ has moved 30 percent to start
00:16:13
this year you know the FED said
00:16:15
yesterday
00:16:16
um we're hitting pause
00:16:18
um you know the quote uh from chairman
00:16:20
Powell that has everybody a little bit
00:16:22
perplexed because on the one hand he
00:16:24
says we're data dependent on the other
00:16:26
hand he said we're likely to have more
00:16:29
rate hikes right and the rates are going
00:16:33
to stay high for a couple years well if
00:16:35
we're dated you can't have it both ways
00:16:37
if we're data dependent we have a hard
00:16:39
Landing like Stan drucken Miller thinks
00:16:41
we're going to have in Q4 this year then
00:16:43
rates are going to get caught
00:16:46
but the market seems to like this and
00:16:48
let's talk about where we are the 10
00:16:51
years at about 3 7 the s p is basically
00:16:54
flat
00:16:55
in terms of where it was and where it
00:16:57
was before and where it was after the
00:17:00
rate hike announcement the economy
00:17:02
appears to be reasonably good 80 percent
00:17:05
of earnings in q1b the guides were okay
00:17:08
Stan druckenmiller said I shifted you
00:17:12
know he pulled forward when he thought
00:17:14
we were going to have a hard Landing
00:17:15
based upon the bank crisis which now
00:17:18
feels like it's a distant memory for
00:17:19
many and he's now calling for
00:17:22
potentially a hard Landing in Q4 so the
00:17:25
FED just came out and said no we're not
00:17:26
going to have a hard Landing in Q4 we
00:17:28
think we're going to have one percent
00:17:29
growth
00:17:31
they think that inflation to end the
00:17:33
year is going to be at 3.2 percent
00:17:35
versus the 3.7 percent Goldman consensus
00:17:38
what I would say is you know we've moved
00:17:41
but we're still below the 10-year
00:17:43
average but you have to start paying
00:17:45
attention now to individual stocks that
00:17:48
have likely gotten ahead of themselves
00:17:49
or where they've taken that's an example
00:17:51
of that a lot of the return
00:17:54
Facebook no Microsoft you know I think a
00:17:58
lot of the AI related stocks are at or
00:18:01
within 10 of our end-of-year price
00:18:04
Target
00:18:05
and when you when you see that take
00:18:07
something like Nvidia if I'm playing at
00:18:10
home or I'm a you know a professional
00:18:12
investor I may say oh I'm going to go
00:18:13
sell some long dated calls to buy a
00:18:16
little protection to the downside I
00:18:18
don't think there's any problems with
00:18:20
Nvidia I think they're going to continue
00:18:21
to perform I think they're beat their
00:18:23
numbers for the balance of the year
00:18:25
but you know remember at the start of
00:18:27
the Year people thought they were going
00:18:28
to miss their numbers for data center
00:18:30
people thought data center revenues this
00:18:33
year were going to be negative and they
00:18:35
just revised their guide from 7 billion
00:18:38
in Q2 to 11 billion in Q2 so they've
00:18:42
absolutely blistered their numbers and
00:18:44
the Stock's gone from 125 dollars
00:18:47
you know to over 400 so when you have
00:18:51
those parabolic moves just like we did
00:18:53
with rates last year I think it's wise
00:18:55
to say it's a fantastic company we want
00:18:57
to be involved it's going to continue to
00:18:59
be one of our larger positions but if I
00:19:01
can lock in 20 yield by selling calls
00:19:05
six months out I think that's a
00:19:07
reasonable risk reward
00:19:09
so you know I think that's where we are
00:19:11
and now now the question really becomes
00:19:13
and it's unknown and unknowable
00:19:16
right are we going to have a soft
00:19:17
Landing a medium Landing a hard landing
00:19:19
and Q4 and rolling into next year and I
00:19:22
would say as an investor I'm very data
00:19:24
dependent you know we're talking to
00:19:25
companies what data point should we all
00:19:27
be looking at at this point you think
00:19:29
jobs unemployment just these stocks in
00:19:33
their multiples and how are you looking
00:19:35
at it as a capital allocator to month
00:19:37
still on the sidelines what if I said
00:19:39
like a broken record rates are going to
00:19:41
be higher than you want and they're
00:19:42
going to be around for longer than you
00:19:44
like
00:19:45
and now Powell is basically telling you
00:19:47
the same thing
00:19:49
so
00:19:51
we're almost at the end of I think the
00:19:54
bottoming though
00:19:56
I don't agree with drucken Miller I
00:19:59
think he's wrong on which part that
00:20:00
doesn't be a hard Landing in Q4 yeah
00:20:02
yeah and the reason there's not going to
00:20:04
be a hard Landing is you just saw China
00:20:06
today basically say we're going to start
00:20:07
to rip in trillions of dollars they're
00:20:09
going to stimulate the economy you can't
00:20:10
have a hard Landing when China's
00:20:12
printing trillions of dollars not
00:20:14
possible so I think that what Powell was
00:20:16
forecasting is that if China starts to
00:20:19
basically
00:20:21
turn on the money printer and go through
00:20:23
a huge Spate of quantitative easing
00:20:26
it's going to just inflate everything
00:20:28
because they're just such a critical
00:20:30
artery to the world economy and so you
00:20:33
just have to get prepared for rates just
00:20:34
being sticky and inflation being sticky
00:20:38
and I think that that's probably the
00:20:40
most reasonable base case for the rest
00:20:42
of the decade rest of the Decades seven
00:20:44
more years yeah yeah and so in that
00:20:46
environment
00:20:49
the problem is that now you have the
00:20:51
seven or eight most valuable tech stocks
00:20:53
priced to Perfection yet again
00:20:56
if you look at their Enterprise Value
00:20:58
over their net income these things are
00:20:59
trading at astronomical yields
00:21:01
that
00:21:03
are less than half of the two-year note
00:21:06
and now approaching sometimes less than
00:21:08
half of the 10-year note government
00:21:10
bonds that makes no sense
00:21:14
and if you subtract out those seven or
00:21:17
eight
00:21:18
biggest companies in the S P 500 the s p
00:21:20
has not been a great asset
00:21:23
so the I think the equal weighted index
00:21:25
Brad you probably know the exact number
00:21:27
the equal weighted index is just [Â __Â ]
00:21:29
so what does all this mean I think it
00:21:31
means that people are psychologically
00:21:34
exhausted with having lost money
00:21:36
they are psychologically wanting to Will
00:21:38
the Market up they want to
00:21:39
psychologically believe whatever will
00:21:42
allow them to
00:21:46
influence rates getting cut
00:21:48
but I think the most reasonable bear
00:21:50
cases rates aren't getting cut and
00:21:51
whatever I hope you had of rates getting
00:21:52
cut just went out the window today
00:21:54
because there is no world in which you
00:21:55
cut rates when China is going to print a
00:21:57
trillion dollars free bird a lot of
00:21:58
people seem to think
00:22:00
that uh this big run up in the markets
00:22:02
is AI related everybody's got an AI
00:22:05
angle for their company some of them
00:22:07
super valid like Microsoft and Google
00:22:09
other ones feels kind of speculative we
00:22:12
talked about BuzzFeed talked about
00:22:14
having AI journalists in their stock
00:22:16
which is looks like it's going to be
00:22:18
delisted got a quick pop do you think
00:22:20
the AI
00:22:23
AI actually coming to Market driving
00:22:25
efficiency driving revenue for companies
00:22:28
is going to happen in the short to mid
00:22:31
term or is it more like midterm to long
00:22:33
term in other words is the AI rally
00:22:35
overheated and fake I don't know if I
00:22:37
would assume that the
00:22:41
pricing of equities is entirely driven
00:22:44
by AI
00:22:45
I think there's a lot of factors
00:22:48
including a lot of folks maybe being on
00:22:50
the sidelines for too long and needing
00:22:52
to come and buy in at the same time but
00:22:57
I do think that there's a radical
00:22:58
realization underway
00:23:01
that a lot of businesses
00:23:05
that are dependent on services that
00:23:07
might be replaced by AI don't
00:23:09
necessarily have the longevity today
00:23:11
those are businesses that have been
00:23:13
severely hurt
00:23:14
by the point of view of what AI could
00:23:17
bring to Market and bring to Industry
00:23:19
there's a lot of stuff happening on the
00:23:21
short side on the long side I think it's
00:23:25
a distribution curve unlike how quickly
00:23:27
different Industries will be affected in
00:23:29
a positive way by AI
00:23:32
certainly the most obvious is demand for
00:23:34
chips is all this infrastructure is
00:23:36
being built out so that's the first and
00:23:39
so you know with a high discount rate
00:23:41
which is the environment we're in today
00:23:42
you can more quickly bet on those
00:23:45
opportunities and so you see a
00:23:46
disproportionate bubbling evaluation in
00:23:48
multiples on businesses like that there
00:23:51
are other businesses that are further
00:23:54
down like Services businesses how long
00:23:57
until lawyers are able to leverage AI
00:24:00
how long until Banks investment banks
00:24:02
are going to be leveraging AI to create
00:24:04
new products and improve their margins
00:24:06
there's a lot of speculation a lot of
00:24:08
ideas but the discount rate is quite
00:24:09
high right now and that's probably a few
00:24:11
years out to the point that the
00:24:13
fuzziness wipes out the potential value
00:24:15
what you mean by the discount rate in
00:24:17
this context so let's say that I think
00:24:18
that investment banks are going to be
00:24:20
severely changed in seven to ten years
00:24:23
that's the time Horizon I think that
00:24:25
their business is going to improve
00:24:26
because of AI as an example or you know
00:24:29
Factory Machinery automation right
00:24:32
manufacture structuring businesses
00:24:33
probably 10 to 15 years so I can't
00:24:36
really give them that much credit today
00:24:38
and so I apply a higher discount rate
00:24:40
there but there are other industries
00:24:41
that are certainly being affected much
00:24:43
more quickly and you know I'm sure Brad
00:24:45
and his
00:24:47
his team of of uh Finance Wizards
00:24:49
probably have a board you know where
00:24:51
they have this list of all the
00:24:52
industries they're going to be affected
00:24:53
and what time Horizon I mean that's the
00:24:55
way you could kind of think about this
00:24:56
and over different time Horizons you
00:24:58
could kind of accrue some net
00:25:00
Improvement to earnings and say okay you
00:25:02
apply a discount rate to that here's how
00:25:04
much the stock should trade up and and
00:25:06
you know that's one way to kind of think
00:25:07
about this I don't think it's everything
00:25:08
everywhere all at once
00:25:10
great drop uh great reference Brad great
00:25:13
by the way I I got to tell you I just
00:25:15
saw that movie I have to reference it
00:25:17
because I saw it over the weekend have
00:25:18
you seen that movie of course of course
00:25:20
yeah what an unbelievable film I had not
00:25:23
seen that film I had very clearly
00:25:25
postponing it incredible anyway uh what
00:25:28
is it what movie it's uh everything
00:25:29
everywhere all at once it won best
00:25:31
picture
00:25:32
not the Oscars last year
00:25:35
I don't trust the best picture awards at
00:25:37
the Oscars for a few years I've just
00:25:39
been duped by that award like you get
00:25:41
some really crap ass movies that are
00:25:43
like uh watch this movie and then report
00:25:45
back let's I won't even tell you more
00:25:47
politically correct or whatever and then
00:25:48
they get this little virtue signaling
00:25:50
they were doing a little catch up
00:25:51
because of Oscar so white the movement
00:25:54
to try to balance things out in fact
00:25:56
people well that doesn't exactly
00:25:58
reinforce trust that actually destroys
00:26:00
complete trust and reputational
00:26:01
credibility yes they're uh virtuous and
00:26:05
actually that was something people said
00:26:06
that everything everywhere all at once
00:26:08
was possibly uh because it's an Asian
00:26:11
cat I don't even know what is it what is
00:26:12
it it's a Sci-Fi Adventure surrealist
00:26:16
kind of romp Michelle yo is in it uh
00:26:19
she's very famous from Crouching Tiger
00:26:21
Hidden Dragon correct exactly yeah
00:26:25
who played Short Round in Indiana Jones
00:26:28
yep
00:26:32
impersonation but I would get canceled
00:26:34
for doing the impersonation of him in
00:26:36
that that guy must be like [Â __Â ] 70
00:26:38
years old no yeah no he's like he's like
00:26:41
something but it's pretty great because
00:26:43
he also won
00:26:45
best actor best supporting actor and
00:26:48
there were all these pictures of him
00:26:49
with Harrison Ford and Steven Spielberg
00:26:53
the guys that made it are like music
00:26:55
video directors you got to go see this
00:26:57
film it's really good it's it's on a
00:26:59
visual basis
00:27:03
watch it on Apple TV in one of your
00:27:05
theaters tonight
00:27:15
I ever had I go to the bathroom
00:27:18
you know it's a long flight back from
00:27:20
Italy so I'm taking my time and I see
00:27:23
that ASAP as sub soap that I can't
00:27:26
afford it's like a hundred peso yeah
00:27:28
that one okay so I see that and I'm like
00:27:30
wait a second so I look in the cabinet
00:27:32
underneath I'm like if there's two up
00:27:33
here there's got to be six down below so
00:27:35
I check in the galley of course there's
00:27:37
six down there I put two I boost two on
00:27:39
my back which I'm still not through in
00:27:42
my uh bathroom here that's about 300
00:27:45
bucks
00:27:46
and I check out he's got a TV set up so
00:27:49
I'm like oh I wonder what movies are on
00:27:50
here and it's Netflix he's got so much
00:27:52
bandwidth on that freaking plane
00:28:01
all right let's get back to work here
00:28:03
right have you seen it by the way have
00:28:04
you seen that movie yeah it's incredible
00:28:06
movie
00:28:08
it's not the best film of the year that
00:28:10
was tar but I don't want to get into it
00:28:11
with chuma
00:28:13
oh my God I tried to watch tar
00:28:16
that movie sucks balls it was so boring
00:28:19
and [Â __Â ] self-absorbed and controlled
00:28:22
that's what I like about it for anybody
00:28:25
that has sleeping issues and otherwise
00:28:27
needs to use a sleeping aid I would just
00:28:29
put that movie on because you know once
00:28:31
you see Kate Blanche had blathering on
00:28:33
and walking back and forth from her kids
00:28:35
[Â __Â ] school and then some crappy
00:28:37
piano play you'll fall asleep
00:28:40
what puts you to bed faster chamoth
00:28:43
Ambien
00:28:44
tar or science corner or science Corner
00:28:48
which one I actually love science
00:28:49
Corners I don't take I don't take sleep
00:28:52
aids I've taken Ambien three times in my
00:28:54
life yeah but that was recreationally
00:28:56
during the day it was prescribed to me
00:28:59
because I wanted to try it I also tried
00:29:00
Lunesta once they were they're both like
00:29:03
be careful with that stuff man you'll
00:29:05
start tweeting weird [Â __Â ] be careful I
00:29:07
tried those sleeping aids four times in
00:29:09
my life and you wake up I wake up with a
00:29:11
it has a really bad tail effect so like
00:29:13
you wait I woke up I wake up super
00:29:15
groggy I only get five or six hours of
00:29:17
sleep with it so anyways I uh I do take
00:29:20
melatonin and that's really good that
00:29:22
works that's natural and it does the
00:29:23
trick does the trick for me everybody on
00:29:26
melatonin all of a sudden like everybody
00:29:28
I know takes melatonin are you just a
00:29:30
natural way to ease into sleep yeah for
00:29:32
me what I do is like I use it as part of
00:29:34
a routine where like typically around 10
00:29:37
like all the you know devices things get
00:29:40
silenced and do not disturb mode and I'm
00:29:43
in a really restful place by 10 o'clock
00:29:44
and then usually by 10 15 to 10 30 I'm
00:29:47
out like a light
00:29:48
I just like this infrared sauna you guys
00:29:51
have infrared saunas this is like the
00:29:52
new hotness and uh man that is
00:29:54
incredible uh you get a heart rate goes
00:29:57
way up and then you sleep like a baby
00:29:58
okay let's get back to AI Brad
00:30:01
are people getting too much credit in
00:30:03
their stock prices and is the do you do
00:30:05
contrast therapy after the infrared
00:30:07
sauna I don't know what contrast RP is
00:30:09
what is that meaning when you do the hot
00:30:10
then you jump into like an ice bath no
00:30:12
I'm getting an ice bath of course next
00:30:15
for my little outdoor sauna area and I'm
00:30:17
going to start doing that I did that
00:30:18
with my friend Antonio friend of the pot
00:30:20
Antonio gracias he's got one of those
00:30:22
cold plunges we jump in the cold plunge
00:30:24
together he's got this thing at 45
00:30:25
freaking degrees
00:30:27
he says don't try to do too much he'll
00:30:29
have a heart attack so I go in I get 45
00:30:30
seconds in I start breathing like really
00:30:35
heavily and I'm like I could get the
00:30:36
hell out of here he does six minutes
00:30:39
I do four minutes three times a week
00:30:43
what temperature what temperature 42 to
00:30:45
44. the research paper that everybody
00:30:48
references now I think her name is
00:30:49
Suzanne's Soderberg or something like
00:30:51
that she's the Swedish researcher
00:30:54
huberman did it on his podcast that
00:30:56
Rogan did it anyways the the data is
00:30:59
like
00:31:00
an out like a little less than an hour
00:31:02
of heat and 11 minutes of cold per week
00:31:06
per week was shown to be physiologically
00:31:08
optimal so I do it three times a week 20
00:31:10
minutes of heat followed by four minutes
00:31:13
of of cold plunge three times a week do
00:31:15
you have like a cold plunge where you
00:31:16
set the dial on it or is it no no I just
00:31:19
call water in no I do old school I uh I
00:31:21
use the Mr steam in my bathroom because
00:31:24
like after I'm done working out the last
00:31:26
thing I want to do is schlep outside
00:31:27
find my slippers put on a robe I'm not
00:31:29
gonna do any of that so I walk upstairs
00:31:31
I do the mistress team at like 110
00:31:33
degrees and then
00:31:36
while I'm working out somebody just
00:31:38
makes an ice bath for me and ah nothing
00:31:40
put a bunch of ice in the tub fill it
00:31:42
with water and just jump in it so that
00:31:44
what do they do they carve like a bunch
00:31:46
of baby seals in ice and then they just
00:31:48
when you get pushed all the ice cubes
00:31:50
were made to look like my Chase so I
00:31:52
have these shapes just like advice of
00:31:54
yourself so I'm like looking at myself
00:31:56
yeah
00:31:57
no infrared gets up to like 130 140
00:32:00
degrees and your heart rate will go up
00:32:02
to 140 150 degrees in this it's a whole
00:32:04
different experience than the Mysteries
00:32:06
I was recently on a ski trip yeah and
00:32:09
it's a this extraordinary sauna it's
00:32:12
Wood Fired okay you told me about this
00:32:15
so so the lead guide on this trip we go
00:32:19
down there he gets the thing heated up
00:32:21
before we show up right and I show up
00:32:22
with this great athlete down there and
00:32:24
we go in the hot box because you know
00:32:27
this is the thing to do yeah and I look
00:32:29
at the thermostat I think it's broken
00:32:31
it feels like it's hard pegged at like
00:32:35
225 degrees Fahrenheit that's a lot you
00:32:38
walk in you're I mean you slow cook meat
00:32:41
at 225.
00:32:43
my lips are burning you know and this
00:32:47
this person sitting in there is like now
00:32:48
this is the way you do it right tough
00:32:50
guys you know do it at this temperature
00:32:52
we're like all right so you know we sit
00:32:54
in there for like 10 10 minutes and then
00:32:55
we go and we jump in you know in a
00:32:58
frozen lake and about 10 minutes later
00:33:00
we're taking off we had to leave this
00:33:02
particular place and you know people are
00:33:04
waving goodbye and they're looking you
00:33:07
know they have to look over the sauna as
00:33:09
they're waving goodbye and they notice
00:33:11
that the sauna is on fire ah yeah that's
00:33:15
basically what happens when you go to
00:33:16
220.
00:33:19
people are taking this a bit to the
00:33:22
exynos it's a little crazy all right so
00:33:24
back to back to the docket here AI yeah
00:33:26
are people getting too much credit in
00:33:28
public markets kind of running with this
00:33:30
before it's actually ready for prime
00:33:31
time time just to add to freeburg's
00:33:34
point here there are a lot of people
00:33:36
talking about doing things in startups I
00:33:38
see people actually doing things I would
00:33:39
say four out of five startups that we've
00:33:42
invested in and the majority of them
00:33:44
that we're being pitched on right now
00:33:45
are not only talking about AI which they
00:33:47
were all talking about it three years
00:33:48
ago they're actually implementing it now
00:33:50
because the tool sets are available I
00:33:52
just had a call thank you Freeburg for
00:33:54
putting me in touch with the Google
00:33:54
people I just did a call this past week
00:33:57
with Google and they gave me some
00:33:59
previews of what they're working on I
00:34:00
can't say anything about it but it's
00:34:01
it's mind-blowing I think Google's not
00:34:04
as Far Behind Closed AI That's your read
00:34:06
on Google now we had a little kerfuffle
00:34:08
when I when I talked about sundar's
00:34:10
reaction to
00:34:12
you know Ai and the concerns that others
00:34:15
might have on folks talking about the
00:34:17
company I mean what's your point of view
00:34:18
on Google today I don't know if you've
00:34:19
talked about this yeah yeah no
00:34:23
well I mean I think you know I had this
00:34:25
I had this dinner this incredible dinner
00:34:26
actually Thursday at the pub and you
00:34:29
know it's how I know Silicon Valley is
00:34:31
back because it was just like
00:34:32
serendipitous we threw it together in
00:34:34
the afternoon you had this like poor
00:34:36
extraordinary you know CEOs there and
00:34:39
you know you had Mustafa the one of the
00:34:42
co-founders Deep Mind there and Rich
00:34:44
Barton from expedienzo it's just just an
00:34:46
incredible group and the 20 trillion
00:34:48
dollar question is how does the entire
00:34:51
open architecture of the web get
00:34:53
re-architected in the age of AI
00:34:56
another way of ask asking the question
00:34:58
because we're all kind of playing small
00:34:59
ball right we're all talking about oh
00:35:01
you know our tpus but gpus you know and
00:35:04
who what Cloud's going to get
00:35:05
accelerated that's kind of the small
00:35:07
ball the big ball here the 20 trillion
00:35:10
dollar question that is defined the
00:35:12
entire internet for our entire careers
00:35:15
has been web search
00:35:17
and I will tell you that the
00:35:20
conversation around that table there's
00:35:22
increasing confidence that whatever
00:35:24
comes next right the top of the funnel
00:35:27
is up for grabs and all of those dollars
00:35:30
over a period again a five years seven
00:35:32
years is going to get redistributed and
00:35:35
make no mistake Google is well
00:35:37
positioned to make its claim for that
00:35:40
but its claim is going to come at the
00:35:43
expense of search and so Google May
00:35:46
create the best AI in the world but it's
00:35:49
going to have to fight off the
00:35:50
cannibalization of course search and the
00:35:53
question is in this new thing and so
00:35:55
rich Barton you know an incredible
00:35:58
product founder right think about
00:36:00
Expedia Zillow yes and Zillow so he's
00:36:03
founder of Expedia and founder of Zillow
00:36:05
two vertical search engines that
00:36:07
dominated right their particular
00:36:09
verticals and the topic of the
00:36:11
conversation was that the new UI right
00:36:14
the new way you interact with your
00:36:16
customers right right is not optimizing
00:36:19
a web page it's not optimizing an
00:36:22
application he calls it the race to
00:36:25
intimacy
00:36:27
the race to intimacy that you have to
00:36:29
build a conversational UI I've run that
00:36:31
race a few times
00:36:33
and no and it's a related race okay
00:36:36
Sprint not a marathon
00:36:38
sometimes it's been American and the
00:36:41
penultimate question is
00:36:43
who ends up on top yeah are you always
00:36:45
on top
00:36:47
this is I I run a really good middle
00:36:49
distances and then if I need to just
00:36:51
make it you know run a Boston Marathon I
00:36:53
can if I want but I don't know okay yeah
00:36:55
sure you can yeah but I think you know I
00:36:57
took a poll does he think sorry does he
00:36:59
think Zillow is dead I mean he's no
00:37:01
longer a shareholder I'm guessing I mean
00:37:03
he's the CEO he's the chairman sorry
00:37:05
sorry not zero sorry not Zillow Expedia
00:37:07
pardon me what does he think about
00:37:08
Expedia and travel well you know you and
00:37:10
I had this conversation girly chimed in
00:37:12
the cash chimed in on Twitter well
00:37:13
you're not on Twitter but they chimed in
00:37:16
you know about the conversation from
00:37:19
last week's pod every Vertical Search
00:37:21
Engine and Google itself that
00:37:24
architecture is suspect right the
00:37:27
questions just over what timeline is it
00:37:30
suspect but the world is moving past 10
00:37:33
Blue Links information retrieval that
00:37:35
looked like a card catalog is not where
00:37:38
we're going you no longer need an index
00:37:40
you need someone to do the retrieval
00:37:41
from the index for you that's the the
00:37:43
new service extract the knowledge that's
00:37:46
what I mean it's personalized to you but
00:37:48
I think one of the questions that's
00:37:49
still outstanding from an architectural
00:37:51
point of view in terms of your
00:37:53
interaction with all the data in the
00:37:55
world is are you as a user going to have
00:37:58
a number of independent relationships
00:38:01
with your travel search engine so your
00:38:03
travel agent or are you going to have a
00:38:05
relationship with your doctor medical
00:38:06
office and you're going to have a
00:38:07
separate relationship
00:38:09
with your you know Financial advisory
00:38:12
type service or are you going to end up
00:38:15
seeing similar to The Challenge we have
00:38:16
in search versus Vertical Search today
00:38:18
an aggregator of services because
00:38:21
there's value in Cross populating the
00:38:23
data and the knowledge about you across
00:38:25
those services so yeah sure you know
00:38:27
it's going to be the no it's going to be
00:38:29
the former because like obviously
00:38:31
there's value to the company because
00:38:33
every company wants to profiteer from
00:38:36
you and monetize you in nine different
00:38:38
ways and maximize the equity for their
00:38:41
employees and their Founders and their
00:38:43
board and their shareholders but that's
00:38:44
not what people want right so like for
00:38:46
example when you go to a doctor would
00:38:48
your doctor be better off if you know
00:38:50
she also had all of your data from I
00:38:53
don't know pick your other service
00:38:55
providers of course maybe you could make
00:38:57
a claim that if they had all of your
00:38:59
personal information and they understood
00:39:01
your risk factors they could do a much
00:39:03
better job but the reason you don't do
00:39:06
that is you want some segregated
00:39:07
relationships a it gives you some level
00:39:09
of privacy but mostly it gives you
00:39:10
control in a world of AI where you can
00:39:12
be more conversational the idea that
00:39:15
humans will want to get reduced to
00:39:17
talking to one thing for everything
00:39:19
I think is wrong I think instead it's
00:39:22
actually going to be hyperpragmented
00:39:24
because the best-in-class use cases are
00:39:27
going to be the things that people want
00:39:29
and then B it gives the user control the
00:39:32
one thing I would tell people is do not
00:39:34
give up all of your data to one thing
00:39:37
who's professing to be at all they are
00:39:39
going to lie to you and trick you and
00:39:42
you're going to have a social media
00:39:43
problem writ large all over again
00:39:45
there's another way to think about this
00:39:46
which is the reverse of the client
00:39:48
server model where today you as you are
00:39:51
the client you are the node on the
00:39:53
network and you're communicating with
00:39:55
the center of the network which is the
00:39:56
server which is the service provider and
00:39:59
all the data sits there and you're
00:40:00
getting data in and out of their product
00:40:02
to suit your particular objectives but
00:40:05
the future may be that more data is
00:40:07
aggregating and accruing about you you
00:40:09
end up becoming a server you then have
00:40:12
the option just this speaks to kind of
00:40:13
the architecture on the internet imagine
00:40:14
if every individual had their own IP
00:40:17
address and that individual's IP address
00:40:19
uh had behind it behind your ability to
00:40:22
control lots of information and lots of
00:40:24
output about all your interactions
00:40:26
across the different networking service
00:40:28
providers that you use that's a very
00:40:30
smart framework I think and that object
00:40:31
and ultimately what you would agree you
00:40:34
want to be able to rent that data to
00:40:35
services I don't even think it's about
00:40:37
rent is yeah as much as it is about you
00:40:40
should have the reason the reason rent
00:40:41
well that then you have to rent it you
00:40:43
can't give it to them because that's be
00:40:44
stupid that's right and so your goal
00:40:46
your usage like let's say the doctor
00:40:48
says hey can I can I get access to your
00:40:51
health data or sorry your your Apple
00:40:53
watch activity data for the last year
00:40:54
you then have the option to provide that
00:40:57
data to them through some permission
00:40:58
type service that you then make
00:41:00
available so there will be
00:41:02
interconnectivity amongst the service
00:41:03
providers but entirely gated and
00:41:05
controlled by the user look you're
00:41:06
seeing this up front now with Reddit
00:41:09
when in this world the people that
00:41:12
create the content are actually in
00:41:13
control of the data and if you try to
00:41:16
like monetize an API without paying the
00:41:19
people that created it or giving them
00:41:20
control they'll revolt and you're seeing
00:41:22
it happen now Reddit lost what 90 some
00:41:25
odd X percent of all of their content
00:41:27
because the mods were like [Â __Â ] you to
00:41:29
Reddit well think of that writ large
00:41:31
where everybody is asked hey on this
00:41:34
great service hey I'm this great service
00:41:35
I can solve x y and z problem for you
00:41:37
just give me all your data and then if
00:41:40
you're not asking well what do I get and
00:41:42
they're like well you're going to get a
00:41:43
whizbank service and that's all they
00:41:45
they say you're being tricked it's
00:41:47
already happening I mean there's an open
00:41:48
source lawsuit against uh Microsoft's
00:41:51
GitHub co-pilot and you have the Getty
00:41:53
lawsuit and
00:41:55
you know it there's also a correlator
00:41:57
for this Google tried to kill Expedia
00:41:59
already they tried to kill Yelp and it
00:42:01
didn't work folks use both services and
00:42:03
you know if you if you are trying to
00:42:05
boil the ocean like chat gbt might I
00:42:08
think it's not going to work because
00:42:09
there's going to be so much Innovation
00:42:11
so much Community brand and all that
00:42:13
kind of stuff and these llms seem to be
00:42:15
trending towards good enough or some
00:42:17
kind of parody that I think your rights
00:42:20
people are just not going to give their
00:42:21
data over wholesale I've been using the
00:42:23
Zillow plug-in to get exact
00:42:25
and the zoa plugin sucks on chat it's
00:42:28
getting slightly better
00:42:29
well I guess it's the wrong model
00:42:31
this will exist on Zillow site Zillow
00:42:35
will not let chat CPT take their
00:42:37
business you're going to go to Zillow
00:42:38
site and you're gonna say hey show me
00:42:39
homes that have a sauna and a nice
00:42:42
plunge and that are four bedrooms and
00:42:44
that are you know
00:42:45
fixer-uppers or are not fixer-uppers and
00:42:47
have ensuite bathrooms and whatever and
00:42:49
it's just going to give you that list
00:42:50
why would they give that business to
00:42:52
closed AI can you take a crack just at
00:42:54
summarizing what we all just said
00:42:56
because your your initial question was
00:42:58
Friedberg was like what does this mean
00:43:00
for Google well we all just said
00:43:02
that what we're certain of is there's
00:43:05
not going to be 10 Blue Links and a
00:43:07
model of search that they have monetized
00:43:09
in a way that has been the most prolific
00:43:11
business model in the history of
00:43:13
capitalism right so that's a problem for
00:43:16
them you know from a business model
00:43:18
perspective so they're going to have to
00:43:19
reinvent their business that's going to
00:43:21
be hard to do it's like rebuilding the
00:43:22
plane on the fly but that then if you
00:43:24
just go to the two models that we
00:43:26
outlined here on the one hand shama said
00:43:28
you know you're going to work with all
00:43:30
of these agents that's exactly what Mark
00:43:31
Zuckerberg said on Lex he's like you're
00:43:34
not going to have one super agent you're
00:43:35
going to have you know hundreds of
00:43:36
agents and he he thinks of what's
00:43:38
happened all of his platforms is the new
00:43:40
open web where all of these agents will
00:43:42
live and you'll interact with them
00:43:44
you'll interact with your Zillow agent
00:43:45
there you'll interact with your booking
00:43:47
agent your Expedia agent there Etc on
00:43:50
the other hand chat GPT
00:43:52
Hyatt inflection read Hoffman and and
00:43:55
Mustafa and many others think that the
00:43:58
benefits of general intelligence this
00:44:01
will be the first time that that we
00:44:03
solve vertical problems horizontally
00:44:05
right and their metaphor the compare
00:44:08
there is we all don't have a hundred
00:44:11
personal assistance in our office you
00:44:14
have one that gets to know you really
00:44:16
well they get to know what you like to
00:44:17
wear how you like to travel the things
00:44:19
you like to eat the things you like in
00:44:21
your house how many kids you have so
00:44:23
there's real leverage in that in that
00:44:26
horizontal knowledge that can then be
00:44:28
applied to these different verticals I
00:44:30
think the answer lies in between your
00:44:32
personal assistant will do a lot of the
00:44:34
general stuff okay whether it's Pi chat
00:44:37
GPT whatever Googs comes up with Etc but
00:44:40
I think they will subcontract the work
00:44:42
whether they chain it out via you know
00:44:45
behind the the scene
00:44:47
you know mechanism to other agents so
00:44:50
for example if you're interested in
00:44:52
traveling to this undisclosed location
00:44:54
that I'm at in in Europe right now you
00:44:57
know my my my assistant doesn't know
00:45:00
anything about this place
00:45:01
so she may interact with a specialist
00:45:04
for this particular place to get you
00:45:06
that magical experience so you know I I
00:45:10
don't think you have to pick one or the
00:45:11
other but architecturally 20 trillion
00:45:14
dollars of value on the web is built
00:45:17
around
00:45:18
web pages
00:45:20
advertising and e-commerce right and
00:45:24
sending traffic to those other places
00:45:26
and what we're all saying unequivocally
00:45:29
is it's moving to knowledge extraction
00:45:32
and intelligent agents and I think
00:45:34
that's tectonics but I still think
00:45:35
there'll be clicks I you know I
00:45:38
have been using Bard a whole bunch and
00:45:40
they have made massive rapid progress
00:45:42
just to give you but one example here
00:45:44
I'll share my screen it is pretty
00:45:46
extraordinary how quickly they're
00:45:48
figuring this out and I did this just to
00:45:50
the search while we're talking about the
00:45:51
five best Greek restaurants uh in the
00:45:52
Bay Area obviously came up with kokar
00:45:54
and you know other ones and then I asked
00:45:58
it like hey what are the top items on
00:46:00
each of these menus they started putting
00:46:01
images in and linking to Yelp and then I
00:46:04
said hey tell me the most expensive
00:46:05
wines and
00:46:07
it actually got that from kokari they
00:46:10
have a chateau Margot 2009 for 1500
00:46:12
chamoth I don't think it's good enough
00:46:13
for you but what year is it it looks
00:46:16
like 2009 yeah they have Screaming Eagle
00:46:19
2013. I don't know if that's a no-go
00:46:21
Carl in 2014.
00:46:24
yeah but
00:46:27
anyways okay okay good so we've got to
00:46:29
save anyway
00:46:31
search like four weeks ago it didn't
00:46:33
have images and it couldn't get me the
00:46:35
items on the menus and these could all
00:46:37
be links and these could all be paid
00:46:38
links so in these results there's
00:46:41
nothing to stop Google from saying hey
00:46:43
Yelp if you want we'll put your
00:46:45
information here or not up to you you
00:46:47
choose do robots.txt except we're going
00:46:49
to call it ai.txt you tell us what you
00:46:52
want to be included and if you want to
00:46:53
be included we want you know it's it's a
00:46:56
Marketplace for clicks we'll include
00:46:57
three of your images with clicks and
00:46:58
we'll call it sponsored they are going
00:47:00
to be able to insert ads into here that
00:47:02
are better than the current ads and that
00:47:04
will perform at a higher level and
00:47:05
they're going to know us this could
00:47:07
actually be the reverse of what
00:47:08
everybody's thinking this could lead to
00:47:10
higher cpms and higher costs per click
00:47:12
because of intent by the way I mean the
00:47:15
the 2014 is actually I think
00:47:18
uh underrated and it's very highly rated
00:47:20
but I think it is an excellent one all
00:47:22
right
00:47:23
Jason as to your point I think all of
00:47:26
that I mean that's impressive it's true
00:47:28
you can also do it on chat GPT I'll just
00:47:30
say the number of people I interact with
00:47:33
on a global basis who talk about chat
00:47:36
GPT versus Bard is like ten to one today
00:47:39
now Google's not that's gonna change
00:47:40
real fast Google's got massive
00:47:42
distribution power let me tell you what
00:47:44
I what I also think but to your point
00:47:46
Brad about this bro I just want to I
00:47:47
want to respond to you Bard versus gpd4
00:47:50
that's people are not paying attention
00:47:53
and when Google puts this on the home
00:47:55
page yeah and starts sending five
00:47:57
percent of users to it I mean obviously
00:47:59
it's expensive to do it people are going
00:48:01
to have their eyes jump out of their
00:48:02
head I think Google's going to be Chachi
00:48:05
pt4 I'm saying it right here right now I
00:48:07
think they're going to beat them because
00:48:08
I think that they're better at indexing
00:48:10
all this information and understanding
00:48:11
it than anybody on the planet and they
00:48:13
have the the largest ad network if they
00:48:16
get this done in the next six months I
00:48:18
think it's going to increase the cost
00:48:20
per click because they're going to know
00:48:21
so much about each user continue abroad
00:48:24
I know I'm in the minority here well uh
00:48:25
no no I mean listen I think a lot of
00:48:28
Google's revenue comes from de facto
00:48:30
navigation of the web they term they
00:48:31
turn the URL into a navigation box there
00:48:34
are a bunch of ads there that you know
00:48:36
people click on they don't even know
00:48:37
they're clicking on ads and you know
00:48:40
they generate a lot of Revenue off of
00:48:42
that but let's be clear Google is firing
00:48:46
at this I just don't think it's going to
00:48:48
be as monopolistic as they are in search
00:48:50
I think there are going to be other
00:48:51
competitors who are going to be wealth
00:48:53
financed you're going to have access to
00:48:55
the data
00:48:56
um and today you have well north of 100
00:48:59
million people who are paying to you
00:49:02
know a huge percentage of those to use
00:49:04
chat GPT and I think this you know it's
00:49:08
the first competition but you know
00:49:10
Friedberg knows he and I had the back
00:49:12
and forth they reported earnings stock
00:49:14
was flat I said on CNBC that we had sold
00:49:17
our shares we bought back some of the
00:49:19
shares around Google I O because we do
00:49:22
think they're going to be a player we
00:49:23
think they're going to be a beneficiary
00:49:24
but I I would say as I sit here today
00:49:26
the distribution of potential for them
00:49:30
is less than it was before chat GPT you
00:49:34
know the the distribution of of upside
00:49:38
they have some competitors now
00:49:40
who are going to be vying for this next
00:49:43
new thing and I wonder whether or not
00:49:46
you know as they try to navigate you
00:49:48
know you're saying they're going to take
00:49:49
some of this traffic from search and
00:49:51
feed it into this other thing this other
00:49:53
thing better monetize as well as search
00:49:55
or by definition that means Revenue goes
00:49:57
down it feels like Google is so close to
00:49:59
figuring this out I mean I've been doing
00:50:02
some barge searches how much Google do
00:50:04
you own how much Google is not enough
00:50:05
not enough I've just been playing with
00:50:07
the J on my jtrading.com he's thinking
00:50:10
of adding this stuff
00:50:12
like a buy-in or two
00:50:15
but uh let's pivot over to this Reddit
00:50:18
thing because it's super important that
00:50:19
people understand this
00:50:22
I'm gonna buy 17 more shares I'm gonna
00:50:24
buy like a Harlan 2014 equivalent
00:50:26
insurance no my J training is up right
00:50:29
now jtrading.com shout out uh to my
00:50:31
trades I did it as for fun I'm at like
00:50:33
20 Returns versus six percent well you
00:50:36
were kind of quiet for a while so when
00:50:37
you're down you don't talk
00:50:39
to things I liked and I didn't want to
00:50:42
change them do you track them and exit
00:50:44
or what do you do I'm gonna track the
00:50:46
exits but I haven't exited any if you go
00:50:48
to jtrading.com you can play along
00:50:51
how can you only be up 20
00:50:54
when Facebook has doubled oh sorry 22.43
00:50:58
yeah but Facebook doubled off the bottom
00:51:00
the whole goal of trading jcal is to
00:51:02
maximize your highest conviction
00:51:04
maximize your highest conviction what'd
00:51:06
you do put a nickel to put five percent
00:51:09
into Facebook I don't know I just I just
00:51:11
bought companies
00:51:16
you got to put a lot of chips on the
00:51:18
table I mean that's I think what's the
00:51:21
optical number as a day trader Brad
00:51:23
what's the optimal number of names I
00:51:24
should have you're not a day trader you
00:51:26
don't trade
00:51:28
as a long Trader what's the optimal
00:51:31
number of names I should be uh you have
00:51:33
too many
00:51:34
um I think with your level of insight
00:51:37
um you know on the things that you
00:51:39
really believe in there was such
00:51:41
asymmetry in that position at the time
00:51:43
that you bought it it was your best idea
00:51:45
you should have put at least 30 percent
00:51:47
of of whatever you're going to allocate
00:51:49
to this internet position that's what
00:51:51
I'll do yeah I mean it's done okay I
00:51:53
mean listen I'm up
00:51:54
what did I buy I bought uh 500 shares
00:51:57
and my basis is 47 I'm at 140. so it was
00:52:00
a good trade now imagine if you could
00:52:01
you know 10 or 20 exit yeah that's what
00:52:03
I should have done yeah all right Jason
00:52:05
how wait hold on how much have you put
00:52:07
into all those stocks 1.5 million I I
00:52:09
basically took I had some money in an
00:52:11
index fund laying around and I was like
00:52:12
let me do this 5 million I did Jay
00:52:15
trading as a blatant attempt to get a
00:52:17
sponsor for this weekend startups so I
00:52:19
was like oh maybe Robinhood or E-Trade
00:52:21
will sponsor this and I'll make it like
00:52:22
a segment oh my God let me do like a
00:52:25
segment where I trade and see if I can
00:52:27
secure the bag and it you know the
00:52:29
markets are so crushed that nobody is
00:52:31
spending advertising from Robinhood or
00:52:32
E-Trade or interactive brokers or
00:52:35
Bloomberg but I also did because I
00:52:36
wanted to become better at Public Market
00:52:38
trading to your point to last week's
00:52:40
Prime conversation per month is under
00:52:42
understanding when to sell and when to
00:52:44
go long when you get distributions as a
00:52:46
VC that was really the reason I tried to
00:52:48
do it was just to try to have skin in
00:52:50
the game you know just like learning to
00:52:52
play PLO or you playing the Razz
00:52:53
tournament I just want it's it's very
00:52:55
it's very easy once you get shares
00:52:58
distributed to you immediately sell them
00:53:00
and then yeah and then hold on yeah and
00:53:03
then re-underwrite from scratch from
00:53:05
there
00:53:06
okay once the money is sitting in your
00:53:08
account
00:53:09
even if it takes a day a week a month
00:53:11
it's not like the Stock's going to rip
00:53:13
and triple on you over the next 30 days
00:53:15
re-underwrite it from scratch and then
00:53:18
see if you have that much conviction
00:53:19
when you see the money in your bank
00:53:20
account
00:53:21
um I like it I would just tell you guys
00:53:23
the distributions you know there were a
00:53:27
lot of firms
00:53:28
that rode you know a lot of these big
00:53:31
names right all the way down
00:53:35
um you know they they got public but
00:53:37
they didn't distribute much if any
00:53:39
and it's really don't say the names but
00:53:42
what do they rhyme with I'll I'll start
00:53:44
I'll start
00:53:45
but yeah go ahead you go you go next you
00:53:49
pick one
00:53:51
not doing it
00:53:52
um
00:53:54
Andreessen borrow its flounders Lund
00:53:58
look at Freeburg just dropped off I
00:54:01
don't want to be associated with this
00:54:02
conversation all right listen we all got
00:54:05
our asses kicked except for me Uber's up
00:54:07
67 this year oh come on come on let me
00:54:10
what what I was saying
00:54:13
it's just Rockets what tends to happen
00:54:17
is things hit the bottom they bounce a
00:54:19
little bit and people are so relieved
00:54:22
that they bounced a little bit did they
00:54:24
immediately start Distributing because
00:54:26
LPS are hammering them LPS are like why
00:54:30
did you not send us this you know
00:54:32
snowflake when it was at 400 a share why
00:54:35
did you not send us this doordash why
00:54:37
did you you know go through any name you
00:54:39
know that you can think of but then
00:54:41
people compound the mistake I think
00:54:44
that as soon as they get a little relief
00:54:47
boom it's out the door and then the
00:54:49
thing doubles on them and I just think
00:54:52
you know part of the benefit of me
00:54:54
having to get up every day 5 a.m deal
00:54:57
with public markets and think about long
00:54:59
or short it's what we were talking about
00:55:01
in the fall of 2021 around the table
00:55:03
before the poker games which is the
00:55:06
public market is tilty it doesn't feel
00:55:09
good and that you know we stopped making
00:55:11
Venture investments in October of 21.
00:55:14
principally because of how we felt about
00:55:16
public markets at that point in time and
00:55:18
so I think a discipline in fact I was
00:55:20
meeting with a managing uh partner of a
00:55:23
very big Venture firm in Silicon Valley
00:55:24
this week they just started about a year
00:55:27
ago or six months ago doing Public
00:55:29
Market investing and they said it was
00:55:31
incredibly valuable to how they think
00:55:34
about distributions and what they're
00:55:36
doing in the Venture business that's
00:55:37
what it's been for me I have now started
00:55:39
to learn how these things are priced and
00:55:40
I just think it's great as a learning
00:55:42
thing for me I have to make two
00:55:43
decisions when to distribute to my LPS
00:55:45
which I just give them the shares the
00:55:47
second I have them and let them make the
00:55:49
decision but then it's also personally
00:55:50
for me me do I want to hold it or do I
00:55:52
not I like your suggestions a nice punch
00:55:54
up shamath of looking at the cash and
00:55:55
then deciding if you want to react did
00:55:57
you guys see this crazy thing from
00:55:58
Calpers where they were like yeah you
00:56:00
know they were they were down like four
00:56:02
I mean horrible Returns on the Venture
00:56:04
side and so their decision was to Double
00:56:06
Down
00:56:07
well they didn't have they took like a
00:56:09
decade off from Venture the returns of
00:56:11
what they did invest in adventure were
00:56:13
atrocious to be fair I don't know how
00:56:15
the board has changed to Calpers but
00:56:17
Calpers brought in a new CIO an entire
00:56:20
new team and so they can't be held
00:56:22
liable for you know that track record I
00:56:25
did kind of see something on Twitter
00:56:26
about I was shocked it would be very
00:56:28
difficult to manufacture that bad a
00:56:31
track record if what I saw was accurate
00:56:33
however I would say the team that is
00:56:36
there now the portfolio that they're
00:56:38
putting together and doubling down where
00:56:40
I think Venture is kind of at the bottom
00:56:43
or bottom third and oh this is the
00:56:45
bottom you know I think bottom third I
00:56:47
don't know bottom half you know listen
00:56:49
inventory you got to find three things
00:56:51
you gotta find you know you don't want
00:56:54
to invest all your money at the top so
00:56:55
you got to get the bot you know bottom
00:56:57
third none of us can call the bottom but
00:56:59
you know last year at the end of 22 we
00:57:01
were certainly in the bottom third
00:57:02
evaluations then you want to be early in
00:57:05
a major platform disrupt I think we all
00:57:08
agree we're early in a major platform
00:57:10
disruptions probably the third of our
00:57:12
careers
00:57:13
and then you want to back one of the
00:57:15
best firms Best Brands in Silicon Valley
00:57:16
like if you do like and people know who
00:57:18
those are if you do those three things
00:57:20
you know simultaneously like he got a
00:57:23
good shot at producing really incredible
00:57:24
vintage just to put some numbers on the
00:57:26
Calpers thing so you can respond to its
00:57:27
mouth America's public largest public
00:57:29
pension Calpers that's the California's
00:57:31
manages some 444 billion in capital on
00:57:35
behalf of California's 1.5 million state
00:57:37
school and public agency employees
00:57:40
is leaning it to venture after years of
00:57:42
bringing down its VC exposure to one
00:57:45
percent to a one percent Target the
00:57:47
institution investor is now looking to
00:57:48
increase this allocation more than
00:57:50
six-fold obviously six percent
00:57:52
from 800 million to 5 billion
00:57:54
the financial times reported so thoughts
00:57:57
on that Shabbat well I mean this is the
00:57:58
moment there's a lot of venture firms
00:58:00
that are hard up for money and so
00:58:03
they may have a shot they can get
00:58:05
allocations now in order to get into
00:58:06
these funds the problem that they have
00:58:08
to realize is
00:58:09
they may be buying a bunch of toxic
00:58:11
assets or a bunch of toxic Partners in
00:58:14
the sense that a lot of these people
00:58:15
have been getting run over for the last
00:58:17
three or four years we don't know again
00:58:20
we've said before most Venture investors
00:58:22
are probably
00:58:24
unprepared for this shock because
00:58:27
they've never lived through one there's
00:58:28
been a lot a lot of Junior monkey mucks
00:58:30
that were hired because they were XYZ
00:58:32
middle level exec at Rando company means
00:58:36
nothing
00:58:37
so I don't know I think it's smart that
00:58:40
they have I mean they have to be
00:58:41
thoughtful first of all how is it
00:58:45
that the Calif like literally it's like
00:58:47
I know trillions of dollars being made
00:58:50
in your backyard and some genius was
00:58:52
like well the thing that's creating all
00:58:54
the wealth in the world which is in our
00:58:55
backyard where we probably have the best
00:58:57
pitch in order to get into these
00:59:00
alien just called Doug Leone and say hey
00:59:02
oh my God give me the listed
00:59:04
put money on those tenant call it a day
00:59:06
oh my God that's unbelievable that's
00:59:08
unbelievably derelict that's
00:59:10
unbelievably
00:59:12
sloppy and I will tell you I'm sorry
00:59:15
that's it sorry let me just finish
00:59:16
that's actually that's the best word to
00:59:18
use
00:59:19
when you look back on a decision like
00:59:20
that there's no numerical justification
00:59:22
that one could have made in the 2000
00:59:24
teens to have made that decision except
00:59:26
that that was an emotional decision
00:59:29
and when you're running a half a
00:59:31
trillion dollar fund there is no room
00:59:32
for emotion you should not be allowed
00:59:34
there should be some so I think that
00:59:36
that shows a very hollowed out
00:59:40
and at a minimum imbecilic risk
00:59:43
management infrastructure at Calpers
00:59:45
that needs to get fixed so whether the
00:59:47
allocation goes up or down if I was a
00:59:49
teacher and my money was being managed
00:59:51
by them I'd say man these people I would
00:59:54
want to understand how they're making
00:59:55
decisions because I don't I would want
00:59:58
to see the investment memo that got them
01:00:01
to decide as an investment committee
01:00:03
that one percent in the most important
01:00:05
asset class that's in your backyard
01:00:07
that's making all the money in the world
01:00:08
made any sense I just want to read that
01:00:10
memo and see could I agree with that
01:00:14
um
01:00:15
hold on then I would want to read the
01:00:18
investment memo that says we're going to
01:00:20
change course and get back to five or
01:00:21
six percent because if that process
01:00:23
isn't fixed these decisions are just
01:00:25
going to be equally bad you're just
01:00:27
going to compound bad on top of bad
01:00:28
because again they clearly did a
01:00:31
terrible job
01:00:33
and then on top of that they had
01:00:35
horrible partner selection because the
01:00:37
people that they did invest in because
01:00:39
the data is public have performed
01:00:40
horribly
01:00:42
so what changes now all of a sudden
01:00:45
right because if the best firms still
01:00:47
don't want you in increasing it from 800
01:00:49
million to 5 billion just means you're
01:00:50
going to lose 4.2 billion more than you
01:00:52
would have otherwise at 800 million it
01:00:54
says here they made uh two bets they had
01:00:57
bet on uh looks like light speed in the
01:01:00
last couple years Lightspeed and tpg
01:01:03
so we'll see how those
01:01:05
goals but I do have some data on this
01:01:09
because we've spent a lot of time
01:01:10
talking with them and as you know Jason
01:01:12
we were just talking you know like
01:01:13
talking to folks like mabala who I I yep
01:01:16
California is one of the largest
01:01:18
Sovereign wealth funds in the world
01:01:19
right this is not just a state this is
01:01:22
bigger than most countries right this is
01:01:24
one of the biggest economies in the
01:01:25
world I would say that what my
01:01:28
interactions with the new team have been
01:01:31
very impressive and I will tell you
01:01:33
they're not just looking at funds and
01:01:35
building a new portfolio I think they
01:01:37
are thinking about doubling down at the
01:01:39
right time and they're thinking about
01:01:41
thematic bets against super Cycles like
01:01:44
AI to say let's allocate this much money
01:01:47
who are the three or four deep strategic
01:01:50
Partnerships that we can have to drive
01:01:52
you know return on that so I I think it
01:01:54
I I think they're on their way but I I
01:01:56
agree with you they're The Sovereign
01:01:58
wealth fund of the most prolific state
01:02:00
in the world and they should have
01:02:02
outsized return it's not trailing with
01:02:04
this I just want to point out uh one
01:02:06
thing here is the power of writing
01:02:07
shamop you decided to write your annual
01:02:08
letter a couple years ago Brad you also
01:02:11
uh will write a letter famously in the
01:02:14
Facebook getting fit one or the meta
01:02:15
getting fit one the power of writings
01:02:17
and I just did this for the launch run
01:02:19
4. and when you write a deal memo
01:02:22
compared to doing a deck
01:02:24
the the questions you get are so
01:02:27
qualitatively different and the people
01:02:29
you attract are so different it is
01:02:31
extraordinary
01:02:32
I am advising startups
01:02:34
across the board to write really tight
01:02:36
deal memos because I write these we
01:02:38
write these deal memos internally when
01:02:39
we make an investment but man is it
01:02:41
great for clarity of thought and for the
01:02:43
person on the other side to just stop
01:02:44
and read a thousand words or two
01:02:46
thousand words as opposed to go through
01:02:48
some
01:02:49
stupid performative deck it's just so
01:02:51
such a better process maybe you could
01:02:53
you both could speak to that or
01:02:54
Friedberg I don't know if you're you've
01:02:55
been writing deal memos but maybe for
01:02:57
people who are listening or capital
01:02:58
allocators and Founders I've been
01:03:00
writing for years why and what is the
01:03:02
what is it what does it do for you yeah
01:03:04
well
01:03:05
it allows you to actually find people
01:03:08
who will critique things in a thoughtful
01:03:10
intelligent way it's hard to critique
01:03:12
Dax because you use broken English you
01:03:14
use fancy Graphics all of a sudden
01:03:16
somebody that's very good at like
01:03:18
graphical layout can dupe somebody else
01:03:20
and so you don't get to good outcomes
01:03:22
because
01:03:23
this weird group think effect sets in
01:03:26
when you look at decks so I'm not a fan
01:03:28
of decks I I use them but they need to
01:03:31
be a companion to some sort of long-form
01:03:33
narrative document and I just think it's
01:03:36
more useful you get people who can
01:03:38
really think about what they agree about
01:03:40
what they don't agree about it shows the
01:03:42
intellect of the person writing it quite
01:03:44
honestly
01:03:46
I just think it's a it's like a basic
01:03:48
skill that people should have it's a
01:03:50
useful skill to teach people as well
01:03:51
decks are very dangerous I think if
01:03:54
you're going to make decisions I would
01:03:56
encourage you the bigger the decision
01:03:58
a deck is insufficient it can be a
01:04:00
companion piece but it needs to be
01:04:01
attached to long-form documents but the
01:04:04
law firm documents don't need to be long
01:04:05
either
01:04:06
two three four five pages but without it
01:04:09
I think you're going to allow some
01:04:10
really bad decisions to creep into some
01:04:11
good ones Freeburg any writing from you
01:04:15
for deals
01:04:17
okay
01:04:19
do you have
01:04:20
uh he ran he doesn't want to talk about
01:04:22
writing all right as everybody knows uh
01:04:23
Reddit is on strike right now I should
01:04:25
say the mods who run Reddit are on
01:04:27
strike 95 of reddits went dark they
01:04:31
basically turned off new posts or they
01:04:33
just went private basically nobody could
01:04:34
join nobody could see the content I
01:04:36
believe is what that me means between
01:04:38
Monday and Wednesday
01:04:40
and the reason they're doing this is
01:04:42
because Reddit decided it would start
01:04:44
charging for its API so who gets
01:04:46
impacted by using the API it turns out
01:04:49
apps we saw this at Twitter as well when
01:04:51
Twitter started changing its pricing for
01:04:53
its API and this means that some of the
01:04:57
really high-end Reddit apps would have
01:05:00
to pay 20 million dollars a year for
01:05:02
access
01:05:03
to read its data now they originally had
01:05:06
said they were changing this pricing
01:05:07
because they were going to train AI
01:05:09
models uh and they wanted anybody using
01:05:12
that data I.E Google bard or chatgpt4
01:05:15
and closed AI they wanted them to pay
01:05:17
for it and Steve Huffman was uh
01:05:19
explained all this in a New York Times
01:05:20
profile in April you can go search for
01:05:23
that Reddit wants to get paid for
01:05:24
helping to teach big AI systems the
01:05:27
largest app is called Apollo uh just so
01:05:29
you know if you're not into those Reddit
01:05:30
really came out with their app
01:05:32
really late this was a function of the
01:05:35
2005 to 2015 time frame back then
01:05:39
Web 2.0 startups didn't have a lot of
01:05:41
capital so they let other people build
01:05:43
on their apis and build apps some of
01:05:44
those apps caught Steam and are actually
01:05:46
better than the apps developed at least
01:05:49
for a while it was better than the
01:05:50
Twitter app and the Reddit app so
01:05:53
thoughts on this freeberg there's a
01:05:55
history here
01:05:58
um is mimicked at both Facebook and
01:06:00
Twitter both of whom had open apis that
01:06:03
provided
01:06:05
access to third-party app developers to
01:06:07
build tools on top of the platform by
01:06:09
accessing either user data or content
01:06:11
off of the network and then making that
01:06:14
available via some different product
01:06:17
function some different UI than the
01:06:20
native tools allowed if you'll remember
01:06:22
Facebook started to kill off its API and
01:06:24
in the process killed a number of these
01:06:26
third-party app developers the most
01:06:27
prominent of which was Zynga I think
01:06:30
this was around the 2012 time frame you
01:06:32
guys know if I'm right on that I think
01:06:33
it's right sounds right and you know we
01:06:35
saw the same thing happen in Twitter
01:06:38
where if you guys remember in the early
01:06:40
days a lot of users accessed tweets from
01:06:43
people that they followed through
01:06:45
third-party apps and third-party apps
01:06:46
all competed for the user and ultimately
01:06:50
Twitter's management team realized that
01:06:52
having direct access to the user being
01:06:54
able to control the UI the ux and not
01:06:57
just become a Data Network but to
01:07:00
actually become a a service for users
01:07:02
made a similar sort of change so you
01:07:05
know reddit's motivation around AI
01:07:07
training is an interesting one but it
01:07:09
does speak to this idea that these
01:07:11
social network companies social in the
01:07:13
sense that the users themselves are
01:07:15
creating the value they're creating the
01:07:16
content
01:07:17
at both Facebook at Twitter and at
01:07:20
Reddit ultimately the company loses the
01:07:24
value if that
01:07:26
data that content gets extracted and
01:07:29
they can't monetize it or capture the
01:07:30
value somehow and it's a lot different
01:07:33
you know every company ultimately wants
01:07:34
to become a platform company meaning
01:07:36
that they can offer multiple products or
01:07:39
services to users that sit on top of
01:07:42
some you know Network they've created
01:07:44
and in the process create a network
01:07:46
effect because more products more apps
01:07:48
creates more users more users you know
01:07:50
it gets more more uh more apps and so on
01:07:52
that works well in some contexts like an
01:07:56
Apple App Store context but in the
01:07:58
context where there is a network unto
01:08:01
itself like Facebook Twitter and Reddit
01:08:03
meaning that there is already a user
01:08:06
Network that is generating value in the
01:08:08
form of the content that's being
01:08:09
produced and consumed you don't
01:08:11
necessarily gain anything by then
01:08:12
building an app Network on top of it and
01:08:15
I think that's been one of the kind of
01:08:16
key learnings that's repeated itself
01:08:18
over and over with Twitter and Facebook
01:08:20
the thing about Reddit it's always been
01:08:22
a community service if you guys remember
01:08:24
like in 2014 2015 in Ellen Powell
01:08:27
stepped down after there was a Reddit
01:08:28
Revolt she was the CEO at the time and
01:08:31
she fired an employee at Reddit that ran
01:08:34
the Q a site for reddit's mods and their
01:08:37
users and the network the community was
01:08:39
super pissed off when this happened and
01:08:40
they all revolted and they were going to
01:08:42
shut down the service
01:08:43
and ultimately Ellen you know got
01:08:45
removed from her role as CEO when this
01:08:48
happened so you know because so much of
01:08:50
the value of Reddit isn't in the
01:08:52
management team it's not in the work
01:08:54
that the software Engineers do that run
01:08:56
the company it's not the the VCS or the
01:08:58
shareholders the value of Reddit is
01:09:00
inherent in the community it's inherent
01:09:02
in the individuals that build the
01:09:03
content on that platform and that
01:09:05
Community has convened many times in the
01:09:07
past at Reddit to change the rules to
01:09:09
say this is what we want this community
01:09:11
to become and this is how we want this
01:09:13
management team to operate and so it's a
01:09:16
really uniquely positioned business
01:09:18
says a lot about how social networks in
01:09:20
this kind of modern era are operating it
01:09:22
really speaks to how much of the value
01:09:23
ultimately accrues to the shareholders
01:09:25
in a business like this when the users
01:09:27
themselves can step in and unionize and
01:09:29
say hey you know what we're not going to
01:09:30
allow this much value to be pulled out
01:09:32
of the network in this way we want this
01:09:34
to change so I think it'll it'll have a
01:09:36
lasting effect in terms of investing in
01:09:39
Social Network or social media type
01:09:40
businesses where the users are
01:09:42
generating so much of the value and have
01:09:43
the ability to kind of communicate with
01:09:45
one another and control where value
01:09:47
ultimately Falls tremoth you were at
01:09:49
Facebook I think when Zuckerberg
01:09:51
realized
01:09:53
enabling a bunch of folks to use the API
01:09:55
wasn't as good as controlling the user
01:09:57
experience having a uniform user
01:09:59
experience
01:10:00
and uh it got deprecated and I remember
01:10:03
Zynga and a bunch of other people had
01:10:05
games and were sucking users off the
01:10:07
platform there was a LinkedIn competitor
01:10:09
at one point that was growing at a
01:10:11
credibly violent pace and I guess you
01:10:13
all made a decision we don't want you
01:10:15
sucking our user base off the platform
01:10:17
maybe you could expand on what the
01:10:19
decisions were at Facebook at the time
01:10:20
that was one of the things I ran I think
01:10:22
one of my teams was responsible for
01:10:24
Facebook platform
01:10:26
yeah it was just a very clinical
01:10:28
decision around Enterprise Value look
01:10:30
the the thing with Reddit
01:10:32
is that it's a hot mess
01:10:34
and in order to
01:10:36
try to create Enterprise Value
01:10:39
they decided to really Leverage
01:10:42
the mods
01:10:44
so that there was some level of control
01:10:48
and that control was necessary so that
01:10:51
they could basically sell ads that's how
01:10:53
this thing moved in lockstep because the
01:10:54
minute that there was corporate Venture
01:10:56
investors and other investors and a need
01:11:00
to generate Enterprise value and is it
01:11:02
worth 2 billion or 5 billion or 10
01:11:04
billion whatever the number was that
01:11:05
they thought they were worth they had to
01:11:07
make money right and Huffman was very
01:11:09
straightforward about that and wanting
01:11:11
to go public in the whole nine yards but
01:11:13
because it was such a hot mess the mods
01:11:16
became this integral
01:11:18
part of the ecosystem so that they could
01:11:20
actually drive reasonable Revenue
01:11:23
but then what happened was it also
01:11:25
allowed them to basically
01:11:27
take over
01:11:29
and I think that it was a pretty
01:11:32
significant miscalculation because I
01:11:35
think that what they needed to do was
01:11:37
really redefine the economics of how
01:11:39
Revenue generation splits would work
01:11:42
before they could do all of this stuff
01:11:43
to try to monetize the API so I think
01:11:45
like they got the order of operations
01:11:47
wrong but I also think it's very fixable
01:11:49
and I think that they have some very
01:11:51
smart people around that table so as
01:11:54
long as they're again willing to be
01:11:55
clinical and unemotional like we were
01:11:57
they'll get to the right answer which is
01:11:59
give them a healthy rev share that's the
01:12:02
future Freeburg you know what version of
01:12:04
what Freiburg said is true the content
01:12:06
creators need to get paid you know why
01:12:08
you know you see content creators now on
01:12:10
YouTube making millions tens of millions
01:12:13
hundreds of millions in a few unique
01:12:15
cases billions
01:12:16
and then we are all content creators yet
01:12:19
most of us on these old Legacy platforms
01:12:21
make nothing
01:12:22
so that exch that exchange has to change
01:12:25
Brad any thoughts with this derail the
01:12:27
IPL not on that but I mean I think you
01:12:29
know you bring up this thing about meta
01:12:31
you know did anybody pay attention to
01:12:34
you know such launching project 92 right
01:12:38
and project 92 is going to take on
01:12:40
Twitter
01:12:42
it's a text-based social network that's
01:12:44
going to pay creators and they're
01:12:46
recording apparently Oprah Winfrey the
01:12:48
Dalai Lama and all of their creators
01:12:51
that are already on their current sites
01:12:53
are saying we will use this thing to
01:12:56
interact and we will compensate you and
01:12:58
then on Lex Friedman's podcast he
01:13:00
mentioned something about
01:13:02
um you know having
01:13:04
been inspired a little bit by what was
01:13:07
going on with blue sky so I'm super
01:13:10
intrigued you know you talked about it
01:13:11
at this all hands meeting I think Chris
01:13:13
Cox talked about it so it looks like
01:13:15
meta may be revisiting some of these
01:13:17
things that they shelved a while back
01:13:19
you know doesn't have any direct uh
01:13:22
implications on the Reddit front but I
01:13:25
think there's a suggestion here
01:13:28
that it may be more about putting the
01:13:30
control back in the hands of the user
01:13:33
from a data perspective and a
01:13:35
monetization perspective that would be a
01:13:37
pretty gangster move
01:13:39
you know and an interesting way to
01:13:42
leverage the platform and I don't really
01:13:43
hear anybody talking about it there's a
01:13:46
really easy solution here for rabbit
01:13:48
those mods
01:13:50
most of them do it for fame glory and
01:13:52
affiliation uh Community but if some
01:13:55
number of them wanted to monetize their
01:13:58
activity there why not allow people to
01:14:00
subscribe to subreddits and pay a
01:14:02
membership fee and split it with the
01:14:04
mods that that seems like it would be a
01:14:06
high scale move getting patreon you know
01:14:09
subscription services to let them make a
01:14:12
little bit of money and then with these
01:14:13
it's only three apps that are being
01:14:14
affected they should just either buy
01:14:16
those apps and bring those teams
01:14:18
internal or I think it's not or they
01:14:20
could split Revenue with those apps they
01:14:21
could tell those apps that that's the
01:14:23
key issue it's like it's like if you're
01:14:24
going to try to monetize apis on user
01:14:26
generated content I think what's
01:14:28
Happening Here is the internet is saying
01:14:30
okay that's enough because we're going
01:14:32
to leak our activity someplace else
01:14:34
where we can directly monetize it so
01:14:36
that's the whole point I think in this
01:14:37
current version of the internet the
01:14:40
value is going to go and again further
01:14:42
further further erode away
01:14:44
from decentralized apps and more towards
01:14:48
the individual people or in this case
01:14:50
these hubbed spokes these mods and not
01:14:53
to the centralized organization that
01:14:54
that has the housing the Reddit the
01:14:57
Facebook of the world so that's just the
01:14:58
trend that's happening the Instagrams of
01:15:00
the world and there's nothing wrong with
01:15:01
that
01:15:02
YouTube as well
01:15:04
it's just where the pendulum is swinging
01:15:06
so I think that Reddit just has to
01:15:09
cut him a deal pretty easy to do
01:15:10
speaking of AI
01:15:14
funding there was a breaking news story
01:15:16
just in the last 48 hours a startup
01:15:19
named mishro AI has raised a 105 million
01:15:23
seed round they're calling it
01:15:26
should be at about a 240 million
01:15:28
valuation according to reports
01:15:31
one of the co-founders is a deep mind
01:15:33
researcher I guess people are saying
01:15:35
this is insane because they haven't
01:15:36
written any code yet and they've been
01:15:38
working on the company for a couple of
01:15:40
years why these rounds are so big is I
01:15:42
guess that you have to buy all these
01:15:44
h100s and they're expensive and these
01:15:45
rigs are very expensive I mean you guys
01:15:47
saw this that Nat Friedman basically
01:15:50
published that he
01:15:53
spent 75 million dollars on a bunch of
01:15:55
hardware and if you were one of his
01:15:57
portfolio companies you could use it so
01:16:00
getting these h100s and a100s to train
01:16:02
on seems to be a non-trivial task and so
01:16:04
and they're very expensive even if you
01:16:06
can't get a hold of them
01:16:08
so I think what we're talking about is
01:16:10
basically that these rounds have to go
01:16:11
up
01:16:12
my and because if you notice like the
01:16:15
the post
01:16:16
you had to raise the post so that it
01:16:18
wasn't so utterly deluded as to
01:16:20
completely disincentivize the employees
01:16:22
but let's be honest here nobody's
01:16:25
writing 105 million dollar heat check
01:16:26
that 105 million is chopped up probably
01:16:29
10 Ways to Sunday so there's a bunch of
01:16:30
people putting in fives and tens and 15s
01:16:33
in the round and they said it was
01:16:35
massively oversubscribed yeah so I so
01:16:38
it's everybody taking a little teaser
01:16:40
bet the problem with these teaser bets
01:16:42
is they never hit in the way that you
01:16:44
think maybe you'll get your money back
01:16:45
with all the dilution that's going to
01:16:47
happen etc etc
01:16:49
this is not the way to make money guys
01:16:51
I'm just going to be honest with you so
01:16:52
whoever's putting money in thinking they
01:16:53
know what the [Â __Â ] they're doing you
01:16:55
might as well just light it on fire go
01:16:56
to Vegas and have some fun with it
01:16:58
because you will make more you'll get
01:16:59
more enjoyment from that than you will
01:17:00
for making these kinds of Investments
01:17:02
what do you think that's dumb
01:17:03
stupid stupid bat brilliant Pat by the
01:17:07
way this has nothing to do with the
01:17:08
company
01:17:10
when you're embedding four million in
01:17:13
105 million dollar rounded 240 plus you
01:17:15
do not know what the [Â __Â ] you're doing
01:17:17
that is not the job
01:17:19
so again
01:17:21
Mr they're going to be a couple monster
01:17:23
rounds I think announced next week like
01:17:25
that are gonna make this one look like
01:17:27
kids play
01:17:29
um so a lot more of this is coming
01:17:30
you're exactly right this is about
01:17:33
buying h100s and compute everything
01:17:35
we're talking about right an essential
01:17:38
ingredient is compute and it's a scarce
01:17:40
resource my God these people that put
01:17:42
the money in the seed round should have
01:17:43
just bought Nvidia buy some call options
01:17:45
like you'd make more money well and
01:17:47
there's downside protection because
01:17:48
Nvidia has a floor and by the way
01:17:51
because in just in case Mistral doesn't
01:17:53
work Nvidia will sell those h100s to
01:17:55
somebody else yeah they probably have
01:17:57
the option
01:17:58
I think you're right on these teaser
01:18:00
bets this is a power law business
01:18:03
there's a massive pressure on Young
01:18:06
Junior Partners principals Within These
01:18:10
firms to do something fire them it's not
01:18:13
just teaser bets what happens in these
01:18:15
players they want to get the logos
01:18:18
because they need to explain sorry no
01:18:22
actually no that's even worse the GP
01:18:24
that can't manage their [Â __Â ]
01:18:25
principle should be fired right so I
01:18:28
think I should those the young people
01:18:30
should shut the [Â __Â ] up
01:18:31
okay be lucky you have a job learn the
01:18:35
craft it'll take you a decade and if you
01:18:37
are proposing stupid bets like this
01:18:39
again sizing matters again I'm not
01:18:42
talking about the company here I'm just
01:18:44
saying when you make a five million
01:18:46
dollar three million dollar deal memo
01:18:48
for 105 Million Dollar Round that is
01:18:50
stupid okay and so if you're the
01:18:54
partnership that allows those kinds of
01:18:55
things to leak through you don't know
01:18:58
what you're doing
01:18:59
so at some point somebody should be held
01:19:01
accountable for this and I guess what's
01:19:03
going to happen is the returns of
01:19:04
Calpers are going to Cascade through
01:19:06
everybody else thinking well at least I
01:19:07
own some you know h100s for a minute so
01:19:10
let me see people I think this could you
01:19:12
wanna take the other side of that no
01:19:14
that's just an incredible team that's
01:19:15
going to do you know that this may turn
01:19:17
out to be a fantastic bet or I don't
01:19:20
know Lightspeed or whoever LED this
01:19:21
round let me let me say something
01:19:23
different
01:19:24
in in 1997-98 we had a similar
01:19:27
phenomenon everybody thought internet
01:19:29
search was going to be huge there was
01:19:31
massive fomo and chasing and everybody
01:19:34
scrambled to get a search logo
01:19:36
Alta Vista info C lycos go plan it all
01:19:42
you know geocities just go through the
01:19:45
lists you know that people were
01:19:46
scrambling after and the truth of the
01:19:48
matter is almost all those companies
01:19:50
went to zero even though you got a
01:19:52
couple bets right you got the internet
01:19:54
right you got search right but you
01:19:57
didn't have to invest a dollar in search
01:19:59
until 2003 and you would have captured
01:20:01
98.99 do it again do it again now for
01:20:04
social networking same thing do it again
01:20:06
for social networking Brad say all the
01:20:08
names say all the names it's the same
01:20:10
thing same thing and
01:20:12
so you know when you when I look at it
01:20:15
today we have a huge anti-portfolio for
01:20:19
AI
01:20:20
it's painful we've said no to over 60
01:20:22
companies right we you know but when we
01:20:26
look around
01:20:28
I see a lot of our competitors doing a
01:20:30
lot of these deals
01:20:32
maybe they're teaser bets I don't really
01:20:35
know the size they're putting into those
01:20:36
companies but I suspect that if we
01:20:39
believe this is as big as as it's going
01:20:41
to be and going to play out over decades
01:20:43
then putting a bunch of really small
01:20:46
bets in order to buy a network or buy
01:20:48
relationships or buy logos Etc I don't
01:20:50
think it's going to work any better this
01:20:52
time than it worked then around social
01:20:54
networking but to be clear there could
01:20:56
be some people who lead these deals who
01:20:59
help these companies build incredible
01:21:01
businesses and those will you know
01:21:03
they're going to be some winners here I
01:21:05
think there's time to participate in the
01:21:07
winners a lot of this is unknown and
01:21:10
unknowable it will become more clear in
01:21:13
the one two three years ahead the
01:21:15
problem is for the LPS like if you are
01:21:16
the lp I am an LP in a bunch of venture
01:21:19
funds this stuff really turns my stomach
01:21:21
because I'm like wow I am losing money
01:21:23
every day when I see these things that's
01:21:25
why I get so emotional about this
01:21:27
I think to myself if the GPS that I've
01:21:30
given money to are doing these kinds of
01:21:32
deals I'm screwed at best maybe I'll get
01:21:35
back 50 or 60 cents on the dollar and I
01:21:38
immediately start thinking to myself I
01:21:39
really need to write this down and I'm
01:21:41
re-underwriting that person and that
01:21:43
organization because I'm wondering how
01:21:45
can you let these things happen because
01:21:46
if you just look back in history
01:21:49
you have to be really really negligent
01:21:52
to not learn that these things never
01:21:54
work out the way that you think they are
01:21:56
and especially these kinds of rounds and
01:21:58
this nominal ownership the inability to
01:22:00
defend ownership it's just not a path to
01:22:02
success I mean also if you think about
01:22:04
this tremath you know what company in
01:22:07
recent history that got over funded
01:22:09
actually use that money logically the
01:22:11
magic of Silicon Valley is the
01:22:12
milestone-based funding system and we
01:22:15
never use short-circuit that this money
01:22:17
becomes a huge distraction to Founders
01:22:18
if they were to receive 10 million 25
01:22:22
million work for a year or two then
01:22:24
raise another 25 or 50 million they
01:22:26
don't need to raise all this money at
01:22:27
once this is like taking your ABC round
01:22:29
putting it all in 100 is distract
01:22:32
Founders and then everybody coming for a
01:22:34
salary says well you got 105 million in
01:22:36
the bank I want three million dollars I
01:22:37
want five million dollars what's the
01:22:39
best example guys of a huge financial
01:22:41
winner that raised these ginormous
01:22:43
amounts of money
01:22:45
pre-launch of our product there's no
01:22:47
product here what's the best example
01:22:49
magic leap
01:22:50
what is it oh oh of disasters that
01:22:54
actually oh no no what is the best
01:22:55
example of a great company I'm putting
01:22:58
great quotes that raise these kinds of
01:23:01
amounts so early in this like quibby
01:23:29
we needed a lot of money later but no
01:23:32
it's five million sorry 500 000 safe at
01:23:34
five five posts there's a five million
01:23:37
valuation for Uber and 1.25 I think
01:23:39
wouldn't it here's another thing
01:23:40
everybody walks in they say well I have
01:23:41
to raise this much money
01:23:44
it's good this is a circular logic I
01:23:48
have to raise this money because I have
01:23:50
to have all this compute
01:23:52
and I say okay you got to train it you
01:23:54
know we want to have a vertically
01:23:55
integrated model we want to train a
01:23:56
model and say okay so there's a huge
01:23:58
upfront cost and they're like but I
01:24:00
don't want to take a lot of dilution so
01:24:03
I have to raise it at a really high
01:24:04
price and so you say okay well um that's
01:24:08
a that's a challenge for you not
01:24:10
necessarily a good thing for us and then
01:24:12
they say oh and I if you ask the
01:24:14
question is this an ongoing expense
01:24:16
they're like oh yeah we're gonna have to
01:24:17
retrain like we're gonna have to
01:24:18
continue to spend this money and I'm
01:24:20
like well so if if you're a software
01:24:23
company for example and you say well
01:24:25
what's my cogs if all of a sudden you
01:24:27
have an embedded cogs that's massive and
01:24:31
recurring right for your compute costs
01:24:34
that we haven't had in the past then the
01:24:37
revenue on the other side of that's got
01:24:38
to be a multiple of what a traditional
01:24:40
software company might have in order to
01:24:43
get back to that set of Economics so I
01:24:46
think there's this
01:24:47
there's a scramble and understandably so
01:24:49
if you think the big win AGI or you know
01:24:53
this autonomous agent that's going to
01:24:55
you know
01:24:56
be the top of the next funnel that thing
01:24:59
is going to be worth a lot but to me
01:25:02
those are lottery tickets at this at
01:25:04
this stage can I tell you a little
01:25:06
secret
01:25:07
here's a little secret
01:25:09
when you put in a hundred million
01:25:12
dollars into a startup to buy compute
01:25:15
you are not buying whiz-bang Next
01:25:18
Generation IP you are subsidizing capex
01:25:23
and that is a job that many many other
01:25:26
people do
01:25:28
at a very low hurdle rate
01:25:31
and so it is a law of capitalism
01:25:35
that it could be the most incredibly
01:25:37
Innovative company in the world but if
01:25:40
you are offering money to them
01:25:43
to fulfill a low-yield thing
01:25:47
you are just not going to make a lot of
01:25:48
money
01:25:50
when you put money into a startup that
01:25:54
is their writing code to build
01:25:56
groundbreaking IP
01:25:57
you own something that's really real
01:26:01
but that's because 80 cents on the
01:26:03
dollar is going to core critical r d in
01:26:05
that point in time and then they raise a
01:26:08
lot of money at a lot less dilution when
01:26:10
80 cents on the dollar goes to sales and
01:26:12
marketing then they raise a lot of even
01:26:14
more money at an even smaller smaller
01:26:16
amount of delusion you start to get to
01:26:17
scale internationally so you start to
01:26:19
see right more dollars less return right
01:26:23
you're owning less of the critical
01:26:25
differentiation
01:26:26
so if if everybody is like oh it's so
01:26:29
expensive for compute I need to raise
01:26:31
100 million well buddy you know that's
01:26:33
like a leasing function
01:26:35
you know you're you're like all of a
01:26:38
sudden like the best VCS in the world
01:26:39
have become like Comerica Bank yeah I
01:26:43
mean they could have done it with the
01:26:44
same structure right Comerica could have
01:26:45
given them 50 million to buy these
01:26:47
machines and maybe they should and
01:26:48
Comerica and JPMorgan and somebody else
01:26:50
should basically say hey you know what
01:26:52
here's a lease line for your h100s
01:26:54
because I know they're worth so much and
01:26:55
I'll just yes write it at 10 percent
01:26:57
and and my point is that the fact that
01:27:00
people don't understand this is why the
01:27:02
money will get torched I would love a
01:27:04
critique that says actually tomoth
01:27:05
you're an idiot I'm right I know that
01:27:07
that's happening but here's why I still
01:27:09
see it happening I don't hear any of
01:27:10
that here's the problem with that
01:27:12
critique okay so you asked like what are
01:27:14
the biggest projects in history you know
01:27:16
uh around startups think about AWS I
01:27:19
don't know they spent 400 million
01:27:20
probably uh in order to get AWS off the
01:27:22
ground but it wasn't done by a startup
01:27:24
right you think about what zoc's
01:27:27
spending on the metaverse it's not being
01:27:28
done right by a startup the truth of the
01:27:31
matter is can you go back to apa AWS AWS
01:27:34
was dog food on Amazon retail of course
01:27:37
of course and Oculus was done on
01:27:39
Kickstarter like the cash flow of Amazon
01:27:41
retail fed the development of AWS
01:27:44
correct my point is that when you think
01:27:47
about what these hyperscalers are going
01:27:49
to do they're not going to spend a
01:27:50
billion they're not going to spend 10
01:27:52
billion they'll spend a hundred billion
01:27:54
dollars right in order to be in this
01:27:56
race and so if you're
01:27:58
backing a startup that says I'm going to
01:28:01
build a better chat gbt right just like
01:28:04
open AI discovered themselves they sold
01:28:06
51 or 50 percent of the company to
01:28:09
Microsoft for a reason
01:28:10
they had to they had to have the data
01:28:12
and they had to have the compute this is
01:28:14
a nuclear arms race around compute and
01:28:17
so but I think it's this is insane it's
01:28:20
financially illiterate for someone to
01:28:22
think that they are actually doing
01:28:24
anything other than subsidizing capex
01:28:26
when you're giving a hundred million
01:28:29
dollars to a startup to literally buy
01:28:31
chips and services you want to give up
01:28:33
40 of their Equity that's the other
01:28:35
thing this Equity is so valuable why
01:28:36
would you want to give 40 of it when you
01:28:38
could get an equipment lease and keep it
01:28:40
twenty percent
01:28:41
you probably can't get this you can't
01:28:44
get them I mean if the VC's put in 50
01:28:45
million instead of 105 you don't think
01:28:47
America would come on the back end with
01:28:49
25 million of course they would Brad is
01:28:51
right this happened in 98 99 2000 where
01:28:54
all of this money was getting flushed
01:28:56
down the drain going into buying Data
01:28:58
Center capacity where remember even at
01:29:00
Facebook like we were racking and
01:29:01
stacking our own servers and then we
01:29:04
then we ultimately got big enough where
01:29:05
we actually built out our East Coast and
01:29:07
West Coast Data Centers and data centers
01:29:08
all around the world but it was very
01:29:10
expensive and in that moment again all
01:29:13
of those companies just lit all that
01:29:15
money on fire it they torched it there
01:29:17
was no Remnant Equity value for that
01:29:20
capital
01:29:21
I guess I'm just I'm just questioning
01:29:24
like what does a GP think they're
01:29:26
actually buying
01:29:29
well 80 if 80 of it's going to Hardware
01:29:31
I mean they're buying the other 20
01:29:33
buying chips I mean it doesn't make much
01:29:36
sense that's going to get options I want
01:29:38
to make one point here and Freeburg I
01:29:40
want to get your input on this as well
01:29:41
it constraint is important for Founders
01:29:44
and the thing that I find really
01:29:46
troubling about this is yeah and putting
01:29:48
this startup aside because crypto people
01:29:50
also went through this for the last
01:29:51
three or four years where they were over
01:29:52
funded it was
01:29:55
tens of billions of dollars burnt of LP
01:29:58
monies people's retirements and college
01:30:00
endowments and it's going to be quite a
01:30:01
postmortem but look at you you invoked
01:30:04
meta it's important for people who don't
01:30:06
know this to know that that was a
01:30:09
Kickstarter
01:30:10
shout out to Palmer lucky
01:30:12
he raised a couple of million dollars in
01:30:14
2011 I think it was
01:30:17
on a Kickstarter pre-selling the devices
01:30:19
right constraint makes for great art
01:30:21
constraint makes for great startups you
01:30:24
need to have pressure on a startup for
01:30:26
them to deliver you cannot give startups
01:30:29
five years of Runway and expect it's
01:30:31
going to work
01:30:32
it just doesn't work and I've seen this
01:30:34
movie so many times but now we've gone
01:30:36
through 18 months of nobody doing
01:30:38
anything I guess in VC land so folks on
01:30:40
Saturday are itchy they want to justify
01:30:43
why they should still be drawing two
01:30:45
percent on the full fund they want to
01:30:48
try to show activities so that they can
01:30:49
raise the next fund and continue to
01:30:51
stack fees and all of these sort of
01:30:53
leads to these suspension of financial
01:30:56
logic but it gets replaced with
01:30:58
financial illiteracy which is really
01:31:00
there's an optimal fund size right and
01:31:01
this is why the people that pay the
01:31:03
price are ultimately the LPS and it may
01:31:05
be the case that Calpers maybe actually
01:31:07
avoids a lot of these pitfalls because
01:31:08
by missing yeah they missed all the
01:31:10
returns but then they missed writing the
01:31:13
mega follow-on checks for all of these
01:31:15
folks that they and then they would have
01:31:16
torched I'm gonna take the other side of
01:31:18
that go ahead Brad I think it's merely
01:31:21
impossible to conceive that all of these
01:31:23
bets that are currently being made are
01:31:25
bad bets I think it's a major platform
01:31:27
disruption
01:31:29
but I I you know instead I think the
01:31:31
right way to think about it is it's
01:31:33
about pacing and if you're trying to if
01:31:36
everybody thinks they're going to build
01:31:38
the next Google they're going to build
01:31:39
the next autonomous agent that's going
01:31:41
to sit on top of the funnel that's going
01:31:43
to be worth a trillion and therefore
01:31:44
they can burn a billion dollars training
01:31:47
models that's not like we're not going
01:31:49
to have 10 of those winners okay
01:31:51
but at the same time there's a lot of
01:31:54
stuff getting funded that is in the
01:31:56
application layer that is in the tool
01:31:58
layer and these are not the big
01:32:00
headlines that you're reading about but
01:32:03
these are really interesting businesses
01:32:05
that are solving real problems in the
01:32:07
software and tooling layer here
01:32:09
you know in the smaller model layer
01:32:12
vertically oriented things around Life
01:32:14
Sciences or uh you know targeting you
01:32:18
know Financial Services or things in the
01:32:20
application layer you know like
01:32:22
character.ai Etc so I do think there are
01:32:26
a lot of good things getting funded
01:32:28
that will deliver real value but I agree
01:32:31
with you the prop that there's a there's
01:32:33
a second problem to this chamoth if you
01:32:35
drop a billion or two billion or three
01:32:37
billion into something
01:32:39
you have not only a a product challenge
01:32:42
you have a distribution challenge
01:32:45
right we know all the hyperscalers are
01:32:48
going to play Google is going to play
01:32:49
meta is going to play and so you've got
01:32:52
to compete and then beat them and it
01:32:55
used to be that you would say well if I
01:32:56
get a lot of traction they'll buy me if
01:32:58
I'm Instagram or Whatsapp like they'll
01:33:00
buy me well we have such a regulatory
01:33:03
nightmare in Washington DC today
01:33:06
no hyperscaler can spend over a billion
01:33:09
dollars to buy any AI company not even
01:33:12
that 400 million gift what is it giffy I
01:33:15
bet it wasn't even actually in the
01:33:16
United
01:33:18
Place mergers and acquisition
01:33:20
right with copy and compete
01:33:23
because we've said to hyperscalers
01:33:25
you're not allowed to acquire any of
01:33:28
these companies
01:33:30
so the unintended consequence of the
01:33:32
regulation in Washington is that
01:33:34
entrepreneurs and Founders and Venture
01:33:37
capitalists who might otherwise have had
01:33:39
a good idea built something with some
01:33:41
traction they can't find a home for it
01:33:43
in the way you know that WhatsApp found
01:33:46
a home or is that a good thing Instagram
01:33:48
isn't that a good thing
01:33:50
go public and be independent is it
01:33:53
better presupposes that everything can
01:33:55
become a big and profitable business
01:33:57
there are a lot of net net can what is
01:34:00
it better for them or become a big and
01:34:01
profitable business no
01:34:03
on its own no chance
01:34:05
well it's still not a bigger problem so
01:34:08
that's what I'm saying so maybe it
01:34:09
should have died I mean maybe it's being
01:34:11
kept alive but I mean it's better don't
01:34:13
you think it's better for the market I
01:34:15
think it's created it was it was
01:34:17
Innovative technology it was yeah it you
01:34:19
know you you were able to to back it
01:34:21
with some good funding and I think
01:34:23
what's coming is going to be really
01:34:24
exciting but it took a really long
01:34:26
Runway a lot of capital A lot of
01:34:28
intelligence in order to build
01:34:29
unfortunately we've killed that so you
01:34:32
have a two-sided problem we're spending
01:34:34
more than ever to fund and start these
01:34:36
companies and we you know have
01:34:38
undermined a lot of the downside
01:34:40
protection Freeburg your thoughts so if
01:34:43
you look at how the capital is being
01:34:44
deployed if it's mostly being deployed
01:34:46
to train models then the question has to
01:34:49
be
01:34:50
is there really a sustainable advantage
01:34:52
that arises by being the first to train
01:34:55
the models and then being able to
01:34:57
persist an advantage by training new
01:34:59
models from that foundational model
01:35:01
going forward and the reason that that
01:35:03
matters so much is because you have to
01:35:06
really have a deep understanding if
01:35:08
you're going to invest a lot of capital
01:35:09
here you have to have a deep
01:35:11
understanding for how quickly model
01:35:13
development and training is accelerating
01:35:15
and how quickly the costs are reducing
01:35:17
so something that costs like we said
01:35:20
open AI spent 400 million dollars
01:35:21
training models for for gpt4 if they
01:35:24
spend 400 million dollars in the last
01:35:26
couple of years
01:35:27
you could probably assume that doing the
01:35:29
same trading exercise could be done for
01:35:31
five to ten million dollars 18 months
01:35:34
from now to generate the same model
01:35:36
that's a you know 100x cost production
01:35:39
and I'm just ballparking it here but if
01:35:41
that's really where things are headed
01:35:43
then does the 100 million dollars to
01:35:46
train models today really make sense if
01:35:48
trading those same models can be done
01:35:50
for five million dollars in 18 to 24
01:35:52
months great point and that's where it
01:35:53
becomes a really difficult investment
01:35:55
exercise and one that you have to really
01:35:57
critically understand how cost curves
01:35:59
are moving in AI the same thing with
01:36:01
true and DNA sequencing in the early
01:36:02
days and it's following by the way a
01:36:04
similar cost curve is DNA sequencing
01:36:06
which is actually greater than Moore's
01:36:08
Law greater than a 2X cost reduction
01:36:10
every 18 months we're seeing something
01:36:12
much greater than that in machine
01:36:14
learning right now in terms of cost
01:36:16
reduction and model training so
01:36:17
ultimately the business model has to
01:36:20
have some advantage that by being the
01:36:22
first to Market you can then generate
01:36:24
new data that gives you a persisting
01:36:26
advantage and no one can catch up with
01:36:27
you and my guess is if you get under the
01:36:29
hood of the business models you it's
01:36:31
unlikely going to be the case and it's
01:36:33
very likely going to be the case that
01:36:34
you don't know
01:36:36
when the market Advantage will lie when
01:36:39
you will be able to kind of create a
01:36:40
persisting mode a moat that expands as
01:36:42
you get more data and can train more and
01:36:44
this is why it's so hard to invest
01:36:45
generally in technology is because you
01:36:48
don't know the point at which the market
01:36:50
tips relative to the point at which the
01:36:52
technology tips so there's a moment
01:36:54
where the technology gets so cheap and
01:36:57
then the market maybe adopts after the
01:36:59
technology gets cheap and at that point
01:37:01
it's a totally different game remember
01:37:02
in the mid 2000s where we had memory
01:37:04
shortages and we used to have to buy Ram
01:37:06
yeah I mean it's just like it's all this
01:37:09
stuff and it's like if VCS are funding
01:37:10
this stuff just you just like like the
01:37:12
equity on fire guys not going to be
01:37:15
worth anything Brad's point is Right
01:37:16
which is the question is what's possible
01:37:19
now where can you build a sustaining
01:37:21
Advantage now rather than go after big
01:37:23
model development Cycles where the cost
01:37:25
curve is going to come down by 100 fold
01:37:27
in some period of time in the near
01:37:28
future
01:37:29
is there a business model Advantage you
01:37:32
can build by being in the market first
01:37:33
building a customer base accelerating
01:37:36
your features getting user feedback and
01:37:38
that certainly exists in the application
01:37:40
and the tools layer as Brad is talking
01:37:41
about that seems like such a no-brainer
01:37:44
for disruption across many different
01:37:46
segments many different verticals many
01:37:48
different markets right now
01:37:49
versus trying to compete further down
01:37:52
the stack where it takes hundreds of
01:37:54
millions of dollars of capital and in a
01:37:56
couple of months that hundred millions
01:37:57
of dollars of capital can be replaced
01:37:59
with five million bucks of training
01:38:00
exercise and compute can I take the
01:38:02
other side of that yeah all that
01:38:03
coordination makes no money today so to
01:38:05
your point when you cut the actual input
01:38:07
cost by a hundredfold the coordination
01:38:10
cost goes from being zero to being worth
01:38:12
less than zero right I don't see any
01:38:14
money being made there either and all
01:38:16
the people that say I'm sure there's
01:38:17
going to be some genius in the comments
01:38:19
but what about open source it's like
01:38:20
what about it open AI also just
01:38:24
gave an update on their cost structure
01:38:26
for their API and they just dropped it
01:38:28
25 to 75 again this is after the tenfold
01:38:31
drop they did last year play this out a
01:38:33
hundred million dollars of capital spent
01:38:35
training today is a million dollars
01:38:37
spent doing trading in 18 years yeah
01:38:40
three years 18 18 to 36 months somewhere
01:38:42
in that time frame likely the time frame
01:38:44
so why would you spend all this money
01:38:46
today when an 18 to 24 month things are
01:38:48
going to get so much cheaper yeah I
01:38:49
think the further up the value stack you
01:38:51
go the more of an opportunity to truly
01:38:53
kind of innovate disrupt and make well
01:38:55
what on Capital as possible what happens
01:38:57
in 24 months though when you've made a
01:38:59
bunch of 100 million dollar Investments
01:39:00
and they're all zeros
01:39:02
uh you uh get fired
01:39:07
maybe unfortunately as an investor chip
01:39:09
up is that what you're asking
01:39:11
at some point you don't get invited to
01:39:13
join the next fund think about the
01:39:16
alternative investment strategy with
01:39:17
lots of capital where the cost curve is
01:39:20
not coming down as quickly in terms of
01:39:21
where that capital is being deployed for
01:39:23
example building Rockets to go to space
01:39:25
or building uh infrastructure to
01:39:28
transport power or building roads
01:39:31
you could raise a billion dollars to
01:39:33
build a toll booth system or a port
01:39:35
let's use a port a shipping Port is a
01:39:37
good example you could spend a billion
01:39:39
dollars to build a shipping port
01:39:41
it's not that the cost of building a
01:39:43
shipping Port is going to come down by
01:39:44
10x in 18 months so it makes sense to
01:39:47
raise a billion dollars and build a
01:39:49
freaking shipping port and charge people
01:39:51
right coming out VCS thought they were
01:39:54
underwriting IP instead they're just
01:39:55
actually subsidizing catbacks it's the
01:39:58
craziest thing Brad is this a problem of
01:40:01
the optimal Venture fund size that Fred
01:40:03
Wilson talks about that bill Gurley
01:40:05
talks about a lot of the ogs say hey 250
01:40:08
400 600 million there's an optimal size
01:40:11
here for four or five Partners in a
01:40:13
venture fund to put money to work is
01:40:15
this part of the problem right now which
01:40:16
also happened in crypto is you had
01:40:18
billion dollar two billion dollar funds
01:40:20
sitting around and and different Venture
01:40:22
brand names having four or five of these
01:40:25
multi-billion dollar funds burning a
01:40:27
hole in their pocket and getting frisky
01:40:28
uh over this you know 18 month pause and
01:40:32
is this about optimal Fun Size uh making
01:40:36
you know we have over a billion dollar
01:40:38
funds so if I if I if I take the other
01:40:40
side of that the people are going to say
01:40:42
you're talking your book but I don't
01:40:43
think this is about large funds I think
01:40:46
this is about good and bad decisions at
01:40:49
the end of the day some of these
01:40:50
decisions will pay off like for example
01:40:52
what's the largest bet size from a
01:40:54
billion dollar fund that you've made or
01:40:56
will make
01:40:57
I think out of that fund would be a
01:41:00
hundred million dollars most likely but
01:41:02
we may cross it over other funds and
01:41:05
have you know bigger bets
01:41:07
um certainly would that happen two or
01:41:09
three times though would you do it all
01:41:10
at once like this or might it happen
01:41:12
over you know series ABC kind of
01:41:14
situation where you build a position
01:41:15
well I would say you know we're not
01:41:17
writing I you know we haven't written a
01:41:19
hundred million dollar check into a
01:41:21
series a and I don't think most of
01:41:22
people to Chamas point that you're
01:41:24
talking about are writing a 100 million
01:41:25
dollar checks into those series is the
01:41:27
Mr all around it you reference I imagine
01:41:29
the lead check into that was maybe 50
01:41:31
Maybe 50.
01:41:33
so listen larger fund sizes enable you
01:41:38
to participate in companies that require
01:41:41
more capital and and these companies do
01:41:43
require more Capital so you may take the
01:41:46
position that all these companies are
01:41:48
going to zero that's not my position
01:41:50
my position simply is that I do believe
01:41:53
there is a bit of over exuberance that
01:41:57
too many things are getting funded
01:41:59
right and it's um you know like the
01:42:03
margin of safety the margin of return
01:42:05
being required is probably lower than it
01:42:09
should be but there's no doubt out of
01:42:11
this vintage in my mind that you're
01:42:13
going to have some epic companies now I
01:42:15
don't know if what Mustafa and Reed
01:42:17
Hoffman are doing an inflection
01:42:19
is you know building pie to take on chat
01:42:22
GPT and to take on bar to be the
01:42:24
intelligent assistant the ambition is
01:42:27
extraordinary the cost of compute is
01:42:30
high but the first mover Advantage is
01:42:33
also high right because whoever secures
01:42:35
this position
01:42:37
you know Bill Gates said he's been
01:42:38
playing around with it it's one of his
01:42:40
favorite agents or whatever that's an
01:42:42
interesting comment I think it's pretty
01:42:44
good but I think chat GPT is out in
01:42:46
front in this regard I think a lot of
01:42:48
people are going to try to compete for
01:42:49
that space But you know I can't imagine
01:42:52
that all these researchers leaving Deep
01:42:54
Mind
01:42:55
right are going to be able to compete
01:42:57
for the most sophisticated model to
01:43:00
answer general purpose questions so I
01:43:02
don't think it's the large font size I
01:43:04
think it's just a lot of exuberance to
01:43:06
participate in what everybody perceives
01:43:08
to be a massive platform disruption I
01:43:11
think that can be true just like the
01:43:13
internet was in 1997 and a lot of these
01:43:17
bets can you know can and will likely go
01:43:19
to zero how great is America you just
01:43:21
rent other people's money they pay you
01:43:23
two percent and then you're allowed to
01:43:25
get exuberant yet keep your job when you
01:43:26
lose it
01:43:28
God Bless America well I mean the the
01:43:31
issue trim off is it takes 10 years to
01:43:34
prove you're bad at this job
01:43:38
it takes 10 years to prove you're good
01:43:40
and it takes 20 to prove to prove that
01:43:42
you can be consistently good and didn't
01:43:44
get lucky but it in a few years you can
01:43:48
tell that somebody sucks can LPS tell
01:43:51
well I'm not sure that they get the
01:43:52
visibility because when LPS interact
01:43:55
with GPS they're grin [Â __Â ] for the
01:43:57
most part so I don't know probably not
01:43:59
but when I interact with them just as a
01:44:02
peer-to-peer level and I see the deals
01:44:05
that get done it's pretty easy to
01:44:06
understand that some people just suck
01:44:08
they don't know how to make money I
01:44:10
guess is the point which in the job
01:44:11
that's the job is to make money to
01:44:14
consistently make money okay Brad take
01:44:16
care and uh let's go to science corner
01:44:19
Bill Gates wants to genetically modify
01:44:21
mosquitoes is this fingers incorrect
01:44:24
fake news it's fake news okay
01:44:28
explain the reference is from RFK
01:44:31
Junior's tweet that he sent out where he
01:44:33
retweeted someone talking about this
01:44:36
mosquito Factory in Colombia
01:44:38
and this guy
01:44:41
basically put out a tweet saying oh look
01:44:43
Bill Gates has a mosquito Factory in
01:44:45
Colombia it's the largest in the world
01:44:46
30 million genetically modified
01:44:48
mosquitoes are released every week into
01:44:50
11 countries because Bill knows better
01:44:52
than nature what could possibly go wrong
01:44:54
RFK Jr then took it upon himself to
01:44:57
retweet and say should Bill Gates be
01:44:59
releasing 30 million genetically
01:45:00
modified mosquitoes into the wild part
01:45:02
of the mentality of Earth as engineering
01:45:04
object what could possibly go wrong so I
01:45:07
really wanted to take issue with this
01:45:09
because I do think that this is the sort
01:45:11
of misinformation that both create
01:45:14
scientific illiteracy
01:45:16
and damages and impacts negatively some
01:45:20
of the significant progress that can be
01:45:22
made in medicine and in science so I
01:45:24
want to speak very clearly as to what is
01:45:26
going on what the science is behind it
01:45:28
why this is super important
01:45:31
and then we can speak philosophically if
01:45:33
you guys are interested on kind of
01:45:34
should we be doing this sort of stuff
01:45:35
and why so what's real here like what
01:45:38
what are actual facts versus fake news
01:45:39
maybe that's a good place to start the
01:45:41
most common disease-carrying mosquitoes
01:45:43
are called uh Edis uh egypti uh egyptia
01:45:48
um it's a species of mosquito that carry
01:45:50
yellow fever a Dengue uh zika a number
01:45:54
of viruses that obviously are pretty
01:45:57
adverse to human health each year about
01:46:00
400 million people are infected with
01:46:02
Dengue virus via this mosquito Vector
01:46:05
100 million become ill and 21 000 deaths
01:46:08
are attributed to Dengue globally 200
01:46:11
000 cases of yellow fever each year
01:46:12
causing thirty thousand deaths these are
01:46:15
pretty significant health concerns and
01:46:17
it turns out that in mosquito
01:46:18
populations not in this particular
01:46:20
species that carry these viruses but in
01:46:23
other species of mosquito there's a
01:46:25
bacteria a natural bacteria called
01:46:27
walbachia and this bacteria exists in
01:46:29
nature and sometimes these mosquitoes
01:46:31
get infected with this bacteria so they
01:46:33
carry this this bacterial bug
01:46:36
and this bacteria is really interesting
01:46:38
because it causes what's called
01:46:39
cytoplasmic instability in the mosquito
01:46:41
cells which actually makes the mosquito
01:46:44
largely resistant to a lot of viruses
01:46:46
and there's a bunch of theories for this
01:46:48
mechanism and why this is the case but
01:46:50
it causes the mosquito
01:46:52
to not be able to carry and spread these
01:46:55
viruses that are super adverse to human
01:46:56
health so number one there's a natural
01:46:58
bacteria that's found in nature and up
01:47:01
to 40 percent of mosquitoes are already
01:47:03
infected with it number two is it's not
01:47:05
common in the the mosquito species that
01:47:08
is common in these areas that are
01:47:09
spreading these awful viruses to humans
01:47:11
and so there's been a project that's
01:47:13
been going on now for 12 plus years
01:47:17
where they're taking large amounts of
01:47:18
mosquitoes and breeding them
01:47:20
specifically to have this bacteria
01:47:23
in the mosquitoes and then they release
01:47:25
those mosquitoes into the wild and over
01:47:27
time the bacterial infected mosquitoes
01:47:29
start to become a larger percentage of
01:47:31
the population and as a result the
01:47:33
vector of carrying these awful viruses
01:47:35
into humans goes way down
01:47:37
there was a study done in Indonesia
01:47:39
where they took these walbachia infected
01:47:41
mosquitoes and they released them into
01:47:43
the wild and they looked at a population
01:47:45
that was in a region where they released
01:47:47
them in a population that they didn't in
01:47:49
the release and region where they didn't
01:47:50
release some 9.4 percent of people ended
01:47:53
up getting infected with dengue fever
01:47:56
and where they did release them only 2.3
01:47:59
were infected so it was an amazing 75
01:48:01
reduction in the infection of people by
01:48:05
these mosquitoes and so the whole point
01:48:07
is just to kind of you know move the
01:48:09
mosquito populations in a way without
01:48:11
doing any sort of genetic modification
01:48:13
but by exposing them to this bacteria so
01:48:15
that they don't carry these viruses into
01:48:17
people but you know because Nuance point
01:48:21
there Friedberg the it's not genetic
01:48:23
modification or it is it's not I just
01:48:25
explained it's a bacteria
01:48:28
mosquitoes they're exposing the so that
01:48:30
they end up getting infected with this
01:48:31
bacteria and then as they breed the
01:48:33
mosquitoes breed in this facility you
01:48:35
have you have to have two an infected
01:48:37
male and an infected female for The
01:48:39
Offspring to have the bacteria if you
01:48:41
have an infected male they're actually
01:48:43
infertile they can only fertilize an
01:48:45
infected female so unless you do this
01:48:48
breeding work you don't end up seeing
01:48:50
this happen naturally in the environment
01:48:51
where the wolbachia starts to spread
01:48:53
where's the genetic modification
01:48:55
misinformation coming from them
01:48:57
from from the the presidential candidate
01:49:00
RFK Jr who just propagated it and so
01:49:03
this is why I want to make this point
01:49:04
because this whole idea that oh should
01:49:06
we be engineering the Earth let me just
01:49:07
say something about engineering the
01:49:09
Earth
01:49:09
humans used to wander around the earth
01:49:12
or proto-humans did without access to
01:49:15
food and until we realized that we could
01:49:17
plant a seed in the ground and grow
01:49:18
crops and started to engineer the Earth
01:49:21
in the form of farming we did not have
01:49:23
access to a reliable source of calories
01:49:24
human Ingenuity human engineering gave
01:49:27
us the ability to do this gave us the
01:49:29
ability to feed ourselves similarly
01:49:31
humans got infected by viruses by
01:49:33
bacteria by Fungus and died at a young
01:49:36
age over and over again and when humans
01:49:38
began to engineer medicine and engineer
01:49:41
unnatural substances because he makes
01:49:44
this point oh should we be interfering
01:49:45
in the natural world what is natural is
01:49:48
for people to get infected with viruses
01:49:49
or bacteria and die and if not for the
01:49:52
Advent of our engineering and our
01:49:54
Ingenuity and our ability as a species
01:49:55
to create Solutions through science
01:49:58
which allows us to do Discovery and then
01:50:00
through engineering which allows us to
01:50:01
make solutions that solve problems that
01:50:04
humans face we would all be dead at a
01:50:06
young age and we would not have realized
01:50:07
the progress that we've had as a species
01:50:09
so I really get ticked off when I see
01:50:12
guys like RFK Jr and others not just
01:50:15
propagate this this BS misinformation
01:50:18
spiel about oh genetically modified this
01:50:20
and that science is bad but to then say
01:50:23
should we be messing with the natural
01:50:24
world because I would say to him what
01:50:25
about when your kid got infected and you
01:50:27
gave your kid antibiotics maybe you
01:50:29
shouldn't have done that and this is a
01:50:31
group of people who are saying that you
01:50:33
shouldn't do that right there is a
01:50:34
movement to stop taking antibiotics
01:50:36
because it's making
01:50:37
yeah because it's it's having it I'll
01:50:40
tell you a couple things there are bad
01:50:42
pesticides that impact human health and
01:50:45
cause damage to our DNA there is bad
01:50:47
sunscreen that is endocrine disruptors
01:50:49
and can damage human health there are
01:50:51
plenty of chemical products that are
01:50:52
made that we use in everyday products
01:50:55
that cause cancer
01:50:56
there is an endless string of things
01:50:58
that are wrong with the system of engine
01:51:00
the systems of engineering that we do
01:51:02
use that doesn't mean that they're all
01:51:05
bad that doesn't mean that we then say
01:51:07
hey you know what let's not do anything
01:51:09
let's not do any engineering let's not
01:51:11
use any antibiotics let's not use
01:51:12
anything in food and that's the
01:51:15
challenge is you know getting into the
01:51:17
details on like I'll tell you I don't
01:51:18
use any sunscreen products with myself
01:51:21
or my kids I only use zinc and I have a
01:51:23
similar sort of nuanced approach to
01:51:24
understanding what things we should or
01:51:26
shouldn't use in our lives because of
01:51:28
the data on the side can you please
01:51:31
explain that because I didn't know this
01:51:32
but am I doing am I gonna what explain
01:51:35
yeah so there's a number of substances
01:51:38
which are known endocrine disruptors
01:51:40
that are found in sunscreen I think it's
01:51:43
like one of the craziest things that we
01:51:44
haven't made these products illegal at
01:51:46
this point
01:51:47
but the only sunscreen that you should
01:51:50
use is natural mineral sunscreen uh this
01:51:52
sorry I shouldn't say that you should I
01:51:54
should say this is what I chose choose
01:51:55
to do based on the data that I've seen
01:51:57
what's a good brand what brand any brand
01:52:00
that sinks just zinc sunscreen just look
01:52:01
at the back if there's anything but zinc
01:52:03
in it don't use it zinc oxide is that
01:52:05
yeah
01:52:08
zinc oxide sunscreen
01:52:10
yeah well that's the ingredient in it
01:52:15
so I don't know what you guys
01:52:17
um huh wow but uh here let me just send
01:52:20
you this but are you saying that you're
01:52:21
not allowed to have any other ingredient
01:52:23
like there's no stabilizers there's
01:52:24
nothing else no no that like it's it's
01:52:26
it's the principle ingredient has to be
01:52:29
zinc oxide versus some other chemical
01:52:31
you're saying
01:52:32
yeah so oxybenzone I don't use any
01:52:35
product with oxybenzone that's like the
01:52:36
most common sunscreen ingredient uh
01:52:38
octanoxate is the other one homothalate
01:52:41
and the parabens all of those product
01:52:43
categories which are the most common
01:52:45
products used in sunscreen they're
01:52:47
absorbed by your skin they go into your
01:52:49
bloodstream and their endocrine
01:52:50
disruptors now the problem with the zinc
01:52:52
sunscreen and the mineral sunscreen is
01:52:53
it actually stays on your skin so you
01:52:55
look like you're wearing it's really
01:52:56
hard to rub it in you got to really
01:52:58
really rub it in so they're actually not
01:53:00
popular from a cosmetic point of view
01:53:01
people don't like wearing them because
01:53:03
they look like idiots and it's really
01:53:04
hard to yeah that's the stuff I use in
01:53:07
the summer the isdin it drives me crazy
01:53:09
because I look like this weird ghost
01:53:11
shiny ghost thing I know but I do use
01:53:14
that that's like really hardcore about
01:53:16
that so that that's an example of
01:53:18
understanding Nuance right it doesn't
01:53:19
mean all sunscreens are bad
01:53:22
and it doesn't mean that we shouldn't
01:53:23
use sunscreen but understanding what the
01:53:26
risk factors are that are associated
01:53:27
with different
01:53:29
ingredients or different engineering
01:53:30
that's been done to make sunscreens
01:53:31
available is important but that's so
01:53:34
many levels deep it's a really difficult
01:53:35
thing so then people end up being
01:53:36
scientifically illiterate and being
01:53:38
wrong because someone like RFK Jr comes
01:53:40
along and says hey should we really be
01:53:42
engineering the Earth with genetically
01:53:43
modified mosquitoes and then people have
01:53:45
this call to action shut those things
01:53:47
down shut those things down and they're
01:53:49
incredibly beneficial and effective
01:53:50
they're not taking any sort of genetic
01:53:52
editing to Market they're not doing
01:53:53
anything that people might consider
01:53:55
risky and we could have a separate
01:53:56
conversation about the risks and
01:53:57
benefits of of genome editing that's
01:54:00
another topic but how much of this
01:54:02
Freiburg as we get ready to wrap here is
01:54:05
a reaction to what happened with
01:54:07
covid-19 and people's fear now of and
01:54:11
getting sort of educated on gain of
01:54:12
function research and you know this sort
01:54:15
of recency effect of my Lord doing some
01:54:19
of the science feels like it's too
01:54:20
dangerous certainly too dangerous to do
01:54:22
inside a city and what's the point of
01:54:23
taking bats out of caves and and doing
01:54:26
gain of function research how much of it
01:54:28
has to do with that right now and it's a
01:54:30
sort of the downside to questioning that
01:54:32
technology can
01:54:34
can be asymmetric you can have like
01:54:36
nuclear weapons can wipe out the world
01:54:39
they can wipe out the whole population
01:54:40
yeah you know Talib makes this point on
01:54:44
his argument against GMOs which I would
01:54:47
argue against him on this point but we
01:54:48
could do that another time if he's
01:54:49
willing to come on I'd be super happy to
01:54:52
debate him on this point but the idea
01:54:54
being that there's super asymmetric
01:54:56
downside and so you know what happens is
01:54:59
people see
01:55:01
incremental improvements from technology
01:55:03
and they don't really praise those
01:55:05
incremental improvements they assume
01:55:07
that to be the case it's a linear step
01:55:09
function but when something goes wrong
01:55:11
it's a big step down and then people are
01:55:13
like oh wow and then people get scared
01:55:16
of technology and then people want to
01:55:18
step away from it and this is true in
01:55:19
anything that relates to your health to
01:55:21
Food Systems
01:55:22
to the environment now
01:55:24
um now it doesn't mean that all
01:55:25
technology is bad or all engineering is
01:55:27
bad but you know as mistakes are made in
01:55:29
the system as new things are discovered
01:55:31
we have to retrench and change what
01:55:33
we're doing but it doesn't mean that we
01:55:34
should stop progress and it doesn't mean
01:55:36
that the whole system of humans figuring
01:55:38
out how to engineer ourselves of the
01:55:39
world around us
01:55:41
to benefit the health to benefit the
01:55:42
planet to benefit other species on the
01:55:44
planet isn't a critical Mission and
01:55:46
effort that we should be undertaking
01:55:48
while the sunscreen thing is really
01:55:49
tilting I mean I just I need to make
01:55:51
sure I'm pretty sure we have a good one
01:55:53
but I don't yeah I'm on this right now
01:55:55
this has got me a little nervous with my
01:55:57
kids I I like these um
01:56:00
like I I have all my kids have long
01:56:02
sleeve Sun shirts and I try to that's
01:56:05
what I am that I think is like the key
01:56:08
thing and because I my family has
01:56:10
skincare do I have to do that since I'm
01:56:12
dark skinned Freeburg
01:56:15
[Music]
01:56:19
yeah you know it's a summertime you're
01:56:21
in the bed you know you want to show up
01:56:23
yeah you want to show off your typical
01:56:24
stuff Revenge body I get it I get it
01:56:27
all right everybody on behalf of
01:56:31
sacks let me just say Ukraine Ukraine
01:56:34
Ukraine
01:56:35
body Biden and uh Francis mayor Francis
01:56:39
is now in the race so I guess we'll have
01:56:41
him on the Pod we already talked to him
01:56:44
oh okay so uh yeah at the summit last
01:56:47
year and also we're doing a survey for
01:56:49
the podcast all in podcast dot Co slash
01:56:52
survey all in podcast dot Co slash
01:56:56
s-u-r-v-e-y if you got to this point in
01:56:58
the podcast please fill out our survey
01:56:59
our listener survey
01:57:01
and we will see you all next time on the
01:57:04
all-in podcast
01:57:08
we'll let your winners ride
01:57:12
[Music]
01:57:17
and they've just gone crazy
01:57:19
[Music]
01:57:24
besties
01:57:27
[Music]
01:57:42
it's like this like sexual tension that
01:57:44
they just need to release
01:57:46
[Music]
01:57:57
[Music]
01:58:01
I'm going all in
