00:00:00
what are the next steps in your
00:00:01
interview process for your cabinet
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position Secretary of Treasury chth
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Secretary of State sax jel uh press
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secretary obviously press secretary oh
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my God press secretary can you imagine
00:00:15
me in the Press briefing room whoever
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wins the presidency I just want you guys
00:00:19
to know I would I would be a great
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secretary of sweaters I will Source
00:00:23
incredible only cashmir vun I will
00:00:26
redesign the outfits of the entire
00:00:30
military industrial complex in Laur yes
00:00:33
the Navy Seals will be in Laur Pian from
00:00:35
head to toe it's a new outfit they're
00:00:37
going to go whack Osama bin lad next
00:00:39
time with laana $4500 print shoes could
00:00:41
you imagine SEAL Team Six
00:00:44
wearing absolutely it's gonna be great
00:00:47
it get chil in those Apaches in the
00:00:49
Blackhawks you're going to want like a
00:00:51
pasmina rap or
00:00:54
something Have You Been to Afghanistan
00:00:56
at night
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crazy
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[Music]
00:01:01
let your winners
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ride rman
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David and instead we open sourc it to
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the fans and they've just gone crazy
00:01:12
with
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[Music]
00:01:15
it all right everybody Welcome to
00:01:17
episode
00:01:19
151 of the Allin podcast with me again
00:01:22
today the Sultan of science the queen of
00:01:25
quinoa the prince of panic attacks David
00:01:28
freedberg the dictat himself chth
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ppaa and your crazy angry history Uncle
00:01:35
David saaks is here welcome to the
00:01:37
program everybody uh we got a very full
00:01:40
docket I guess we'll start it off with
00:01:42
how the war and the conflict in the
00:01:45
Middle East is going here saaku hosted a
00:01:47
Twitter space with v uh and Elon on
00:01:53
preventing World War II what was the
00:01:56
premise and the reason for setting up
00:01:59
this uh Trio to talk about World War I
00:02:04
well I think V actually had the idea to
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do it uh we had a couple other folks on
00:02:08
the panel as well we had uh Colonel
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Daniel Davis who has a podcast called
00:02:12
Deep dive he's a military expert we had
00:02:14
Alexander murus from the Duran which is
00:02:16
a top geopolitics podcast and so we were
00:02:19
talking about the risk of a series of
00:02:22
chain reactions that could happen in the
00:02:25
next few weeks here over what's
00:02:26
happening in the Middle East Elon wanted
00:02:28
to do it because of what he said which
00:02:31
is that he's talking to a lot of world
00:02:33
leaders he's talking to a lot of
00:02:34
different people and they tell him that
00:02:37
the risk of some major war happening or
00:02:41
some greater catastrophe is higher than
00:02:43
they've ever seen so he was quite
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concerned about
00:02:47
that and you know I think a few things
00:02:49
came out of it uh the first is and I
00:02:52
think Elon took this position most
00:02:54
strongly we really need to end the war
00:02:56
in Ukraine the combination of having a
00:02:59
war in Ukraine that involves the United
00:03:01
States and then a war in the Middle East
00:03:03
that could also involve the United
00:03:05
States and Russia has troops in Syria
00:03:07
there's a lot of ways for this to spiral
00:03:10
out of control there's a lot of um room
00:03:12
for unintended consequences his view was
00:03:15
look we've just had five months of
00:03:17
counter offensive here it didn't go
00:03:19
anywhere on net the ukrainians didn't
00:03:21
take back any territory in fact the
00:03:24
Russians slightly gained territory so
00:03:26
this war is going nowhere it has failed
00:03:29
it is time for the administration to
00:03:31
work towards a ceasefire and a
00:03:33
resolution because for who well the
00:03:36
ukrainians have not taken back they had
00:03:39
a completely failed counter offensive
00:03:41
okay but you said the war has failed so
00:03:42
I just curious which side sorry the
00:03:44
counter offensive has failed okay got it
00:03:47
we're now the counter offenses started
00:03:48
on June 4th or 5th it's now October 26
00:03:52
and if you look at the map that the New
00:03:54
York Times provided Ukraine has not
00:03:56
taken back any meaningful amount of
00:03:57
territory in fact Russia on net has
00:04:00
gained territory even when it was
00:04:03
supposed to be Ukraine on offense so
00:04:04
there is no Prospect of Ukraine
00:04:07
achieving its objective of evicting
00:04:10
Russia from their territory so what is
00:04:12
the point of they have defended
00:04:14
themselves from an invasion from Putin
00:04:16
yeah you would say that they've ended up
00:04:19
success hundreds what's successful about
00:04:22
it several hundred thousand didn't get
00:04:24
taken over as a country when they were
00:04:26
invaded by that was that was Russia's
00:04:28
goal okay so when they sent the troops
00:04:30
in there their goal wasn't to
00:04:34
invade what was their goal then honestly
00:04:36
you don't really understand the history
00:04:37
of the conflict no no I mean we we've
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talked about history conf I'm just
00:04:41
saying the way you're framing it is that
00:04:42
Ukraine failed it seems to me they've
00:04:44
also the argument could be that they
00:04:45
defended themselves successfully if you
00:04:47
look at what's happened this year so
00:04:50
let's just put a pin in what happened
00:04:52
last year because I think there's
00:04:53
different ways of interpreting it but if
00:04:54
you look at what's happened this year
00:04:56
and certainly over the last 5 months
00:04:58
Ukraine has made no progress in evicting
00:05:00
the Russians nor is there any Prospect
00:05:03
of them evicting the Russians so the
00:05:05
continuation of that war doesn't achieve
00:05:06
anything except kill the flower of
00:05:09
Ukrainian Youth and continue Russian
00:05:13
youth the ukrainians are dying in much
00:05:15
higher numbers and Russia is a much
00:05:17
bigger country they've got something
00:05:18
like five times the population so
00:05:20
moreover with this new conflict in the
00:05:22
Middle East you create all these
00:05:24
unintended consequences and all this
00:05:25
risk of escalation being in a proxy war
00:05:27
with Russia so that was the first thing
00:05:29
to come out of the the Twitter space was
00:05:33
a consensus among the people who were
00:05:34
there that it's time to resolve this
00:05:37
conflict with Russia the United States
00:05:38
does not need to be in a proxy war with
00:05:40
Russia we need to normalize relations
00:05:42
it's way too dangerous to be continuing
00:05:44
this with what's going on in the Middle
00:05:47
East the second half of the the Twitter
00:05:49
space I think was about the scenarios
00:05:53
here for what could come in the Middle
00:05:55
East and just briefly I think that
00:05:58
there's three scenario I here for what
00:06:00
could happen assuming Israel goes into
00:06:02
Gaza this is what everyone's waiting for
00:06:04
is will there be a ground invasion of
00:06:06
Gaza Netanyahu says are going to do it
00:06:09
the theory on why they haven't right now
00:06:10
is the US is actually moving a bunch of
00:06:12
assets into military assets into place
00:06:15
they're putting air defense batteries
00:06:17
around military bases in the Middle East
00:06:19
so there's been a lot of reporting that
00:06:20
the US has told Israel to wait until the
00:06:23
US military is ready for any blowback
00:06:25
that could happen but netanyahu's been
00:06:26
very clear that they are going in no
00:06:28
matter what anybody else says three
00:06:30
scenarios could arise from that number
00:06:32
one is what Israel and I think the
00:06:35
administration want which is that they
00:06:37
have a successful military operation and
00:06:40
the US's threats deter hisbah or Iran
00:06:44
from getting in so that would be like
00:06:45
scenario number one scenario number two
00:06:48
would be that the Israelis go in it's
00:06:51
gorilla fighting it's much tougher than
00:06:53
anybody expects they start to take
00:06:54
casualties at the same time you get
00:06:57
massive public uproar you get a lot of
00:06:59
of protests the Arab Street erupts more
00:07:01
and more leaders across the world
00:07:03
denounce Israel and so you kind of
00:07:06
muddle your way eventually towards the
00:07:07
ceasefire in a couple of months so that
00:07:09
would be scenario number two scenario
00:07:11
number three is that this thing spirals
00:07:13
out of control very quickly where you
00:07:15
get Hezbollah in the north invades so
00:07:17
you have a second front the West Bank
00:07:20
could erupt in protest that could
00:07:22
potentially create a third front Iran
00:07:24
could get involved either because they
00:07:26
feel the need to defend hisbah or
00:07:28
because you have people like Lindsey
00:07:30
Graham who are basically already calling
00:07:31
for war with Iran so either side could
00:07:34
basically escalate into that so I think
00:07:37
there's what happened with Lindsey
00:07:38
Graham because he was telling them if
00:07:40
Iran if they got involved that we would
00:07:43
strike back yeah yeah but I think he
00:07:45
wasn't saying invad I think he's saying
00:07:47
pretty clearly I think he's saying
00:07:48
pretty clearly that if Hezbollah gets
00:07:50
involved we're blaming Iran for that got
00:07:52
it okay so he's chomping at the bit to
00:07:54
to basically invade Iran now how could
00:07:57
that happen well you're saying you think
00:07:59
he's chopping at the bit to invade Iran
00:08:01
oh he so he gave them the warning to not
00:08:03
this been on the neocon I'm curious
00:08:05
about that point yeah explain that piece
00:08:08
this has been on the neocon agenda for a
00:08:09
long time they've wanted to have a war
00:08:11
with Iran they basically see the Iranian
00:08:12
regime as an enemy and they want to
00:08:14
knock it off even if you go back to 2003
00:08:17
the beginning of the Iraq War there was
00:08:20
serious conversation about whether Iraq
00:08:22
was the right country to invade a lot of
00:08:24
people thought that we should go after
00:08:26
Iran not Iraq and the bush
00:08:29
administration's view on that was don't
00:08:31
worry we're gonna get them all the
00:08:33
questions is which one to do first we're
00:08:35
going to knock off Saddam first in fact
00:08:37
what's going to happen is we're going to
00:08:38
be greeted as liberators The Invasion is
00:08:40
going to be so successful that the rest
00:08:42
of these tyrannical Middle Eastern
00:08:44
regimes are just going to throw up their
00:08:45
arms and they're going to basically you
00:08:48
know surrender and become democracies
00:08:50
that this was the bush administration's
00:08:52
claim back in 2003 obviously didn't work
00:08:54
out like that but there has been a
00:08:56
desire to go into a lot of these
00:08:57
countries for a long time and and I
00:08:59
think there are a lot of these neocons
00:09:01
who see Iran as unfinished business and
00:09:04
if they get the chance to do that they
00:09:08
will so yeah so that see that's the
00:09:10
piece of your analysis there that I
00:09:13
thought was most interesting you think
00:09:14
Lindsey Graham wants to invade Iran so
00:09:16
when he gave that warning in his speech
00:09:18
which I think came out today or did it
00:09:19
come out yesterday um you think when he
00:09:22
gave him the warning hey don't get
00:09:23
involved or that's going to be the third
00:09:25
front youd actually think it's he wants
00:09:27
to invade the United States that agenda
00:09:30
I think there's a lot of neocons who
00:09:32
have that agenda and you see this in the
00:09:34
Wall Street Journal which is sort of the
00:09:35
lead leading neocon publication got it
00:09:38
okay so let's explain what the W The
00:09:40
Wall Street Journal obviously has been
00:09:42
talking about Hamas militants being
00:09:46
trained in Iran a few weeks before the
00:09:48
107 attacks and it says about 500
00:09:51
militants from Hamas even when 107
00:09:53
happened remember there was that Wall
00:09:54
Street Journal story claiming that Iran
00:09:57
had directed the whole thing yeah and
00:09:59
then that was knocked down by Israeli
00:10:02
officials who said we haven't seen
00:10:04
evidence of that as well
00:10:05
as Washington officials you know kind of
00:10:08
the usual unnamed knock that down so the
00:10:11
Wall Street Journal has been kind of
00:10:13
pushing the the edge here trying to I'd
00:10:16
say rattle the saber and Jin up some
00:10:18
sort of action against Iran the latest
00:10:21
thing was a story claiming that 500
00:10:24
militants had just been trained by Iran
00:10:26
so they keep trying to put this IDE a in
00:10:29
play that we need a war against Iran is
00:10:32
my point okay so just let me reflect
00:10:33
that back to you you're saying Lindsey
00:10:35
Graham wants to invade Iran and he's
00:10:37
part of the neocon agenda and the Wall
00:10:38
Street
00:10:39
Journal is not just straight reporting
00:10:42
this the Wall Street Journal is in
00:10:44
trying to incite an incident here and
00:10:46
start a war with Iran well the Wall
00:10:48
Street Journal reflects the agenda of
00:10:51
the people who own it and then the
00:10:54
people who are their sources and clearly
00:10:57
somebody is leaking these stor to the
00:10:59
journal somebody leaked the idea on day
00:11:02
one of this crisis that Iran was
00:11:05
secretly directing the whole thing even
00:11:06
though it Israel itself said that was
00:11:08
not true so yeah look they have an
00:11:10
agenda they have an agenda so the Wall
00:11:12
Street journal's agenda is to saado and
00:11:15
incite a global war with Iran or are you
00:11:20
saying that they're just useful idiots
00:11:21
and that they're being manipulated by
00:11:23
the military Global complex and the
00:11:25
neocons I'm just saying said the Wall
00:11:28
Street Journal SA rattling so that's if
00:11:30
the Wall Street Journal wants to start a
00:11:32
conflict The Wall Street Journal is
00:11:34
beating the drums of War that's what's
00:11:35
going
00:11:36
on okay so you believe the journalists
00:11:38
at the Wall Street Journal are trying to
00:11:40
start a war with Iran they are beating
00:11:42
the drums of war the drums of War means
00:11:45
to you okay chamath freberg you think
00:11:48
that the Wall Street Journal here is
00:11:49
trying to start a war with Iran I'll
00:11:50
give you a little bit of History here
00:11:52
I'm going to presume you know it so
00:11:53
it'll be repetitive but it used to be
00:11:55
that Iran was a Bastion of economic
00:11:58
growth and cultural Vitality right but
00:12:00
if you go even further back there was a
00:12:02
duly elected prime minister that was
00:12:04
overthrown Muhammad
00:12:06
mad because he tried to nationalize the
00:12:08
oil industry in the 50s in Iran and that
00:12:12
Cuda which was run by the Army was
00:12:15
sponsored by the UK and US Government so
00:12:18
we've had a long kind of sorted history
00:12:22
with Iran for a very long time post
00:12:24
World War II A lot of it has been
00:12:28
intertwined with Petro dollars and
00:12:31
oil so you know we had the Sha then
00:12:34
there was this duly elected prime
00:12:35
minister he tried to nationalize the oil
00:12:38
industry he was overthrown in a couet
00:12:41
supported by America and Britain they
00:12:43
brought back the foreign oil companies
00:12:47
including American oil companies then
00:12:50
the Sha ran for 30 years but then he was
00:12:52
overthrown for a whole bunch of cultural
00:12:54
issues and so it's gone back and forth
00:12:56
and back and forth so I think it's
00:12:58
important to to keep in mind that a lot
00:13:01
of that
00:13:02
generation it's not clear to me where
00:13:05
their views come from and what I mean by
00:13:07
that generation is folks of Lindsey
00:13:08
Graham's generation and older have this
00:13:11
multi-layered view of Iran because
00:13:13
they've seen two or three of these
00:13:14
regime changes and they've seen the
00:13:16
changing incentives that America has had
00:13:18
towards dealing with them so instead of
00:13:20
just kind of kind of putting it out
00:13:22
there like we just want to go to war I
00:13:24
think it's important to remember that
00:13:26
these guys have a historical context
00:13:28
that young folks may not okay that's
00:13:30
number
00:13:31
one number two I think it's David is
00:13:35
right that there are certain
00:13:37
Publications that are beating the drums
00:13:38
of war the first time that the Wall
00:13:40
Street Journal did it it was that Iran
00:13:44
was the one that essentially was the
00:13:46
trigger puller on the October 7th
00:13:50
attacks and that was immediately
00:13:53
refuted interestingly not by Iran which
00:13:56
did it later but actually by the United
00:13:58
States and
00:14:00
Israel so I do think that there is some
00:14:03
questionable incentives that drove the
00:14:07
publication of that article at a very
00:14:08
critical point at the beginning of this
00:14:12
Israel Hamas
00:14:14
Gaza an idea of what that incentive
00:14:16
would
00:14:17
be no I don't I don't know except to say
00:14:20
that the facts are that there was an
00:14:23
article that pointed the finger it was
00:14:25
written as an exclusive It Was Written
00:14:27
in a moment where things were very
00:14:29
heightened and little was known and that
00:14:32
these governments had to come out and
00:14:33
explicitly disavow and and deescalate it
00:14:37
and so I think that's just an important
00:14:38
thing to observe now we're in this
00:14:40
second wave where there's a second
00:14:42
attempt to now point the finger directly
00:14:44
back to Iran as having trained these
00:14:46
Hamas terrorists as now engaging in and
00:14:50
it's not to say that they're not but
00:14:51
it's just that this escalation is
00:14:53
definitely happening on a continuous
00:14:55
basis and so it's important to frankly
00:14:58
understand the historical context and
00:14:59
deescalate so that we don't I think Elon
00:15:02
is right this is how you Sleepwalk into
00:15:04
war is you read a headline you believe
00:15:08
it and then you run with
00:15:10
it and the opposite of sleepwalking is
00:15:13
underwriting from first principles I
00:15:15
think it's important to go and read the
00:15:17
historical context of how we've been
00:15:19
engaged in Iran since World War II
00:15:22
particularly the back and forth the
00:15:25
complicated issue of all the Petro
00:15:27
dollarss and then you can view Lindsey
00:15:30
Graham's comments in two veins I think
00:15:34
vein number one is he was there with a
00:15:37
bipartisan delegation of I think it was
00:15:40
10 US senators five of each five
00:15:42
Republicans five Democrats demat so I
00:15:44
think it's fair to say that he is not
00:15:47
just speaking off the top of his head I
00:15:49
think that there's some understanding of
00:15:51
what he intended to say and so I do
00:15:53
think that this is sort of a backchannel
00:15:54
way of getting on the record that they
00:15:57
really need to deescalate if they are
00:15:59
given an opportunity to engage they
00:16:01
should not I think that's the you're
00:16:04
talking about Iran yeah Iran should
00:16:06
deescalate and frankly hopefully they
00:16:08
listen and they do and they do it
00:16:10
Lindsey Grahams quote just to to put it
00:16:12
out there uh when he was visiting Tel
00:16:13
Aviv we're here today to tell Iran we're
00:16:16
watching you if this war grows it's
00:16:18
coming to your backyard the idea that
00:16:19
this happened without Iranian
00:16:21
involvement is laughable freeberg what
00:16:23
are your thoughts do you think the
00:16:24
journalists at the Wall Street Journal
00:16:27
or
00:16:29
complicit in trying to incite something
00:16:31
here do you think they're just reporting
00:16:33
the facts straight what's your take on
00:16:38
this can I answer that because I I
00:16:40
actually have a data point yeah no I
00:16:42
mean and the reason I'm pushing you on
00:16:43
it Sach you're using the language of
00:16:45
conspiracy like complicit to make it
00:16:48
sound like I'm leveling an accusation at
00:16:50
them when what I'm saying is this is
00:16:52
their editorial policy and you can see
00:16:54
that by actually reading their editorial
00:16:56
so therefore look at an oped that came
00:16:59
from their editorial board two days ago
00:17:02
called Biden's Redline moment with Iran
00:17:04
and what it says is here that Secretary
00:17:06
State Anthony blinkin warned Tuesday
00:17:09
that the US would respond swiftly and
00:17:10
decisively to any attack on American
00:17:12
forces from Iran or its proxies and then
00:17:14
it says that's a welcome message aimed
00:17:16
at deterring the mulles and Tran and
00:17:18
their agents but will the president
00:17:20
enforce the red line he appears to be
00:17:21
drawn he hasn't so far so in other words
00:17:25
the journal editorial board is saying
00:17:27
that Biden has not been tough enough on
00:17:29
Iran okay now go to the last paragraph
00:17:32
It also says here Iran is using its
00:17:34
proxies to test us resolve the more they
00:17:37
attack without Iran paying a price the
00:17:39
more likely that Iran will raise the
00:17:41
stakes the Paradox Mr Biden has to
00:17:44
appreciate the most stabilizing move for
00:17:46
the region would be restoring America as
00:17:49
a deterrent power so what does that mean
00:17:51
you take these things together they're
00:17:52
saying that in order to stabilize the
00:17:55
region we need to deter Iran but they
00:17:57
say that just make thinking threats of
00:17:59
deterrence is not enough you actually
00:18:00
have to do something so in other words
00:18:03
like attacking Iran is the stabilizing
00:18:05
move which is war is peace it's right
00:18:07
out of George Orwell so this is what I
00:18:10
mean beating the drums of and by the way
00:18:11
the reason I'm not saying you're
00:18:12
conspiracy there you're there are there
00:18:14
is editorials then there's news and then
00:18:17
there's your imprecise language that I'm
00:18:19
just challenging you on because I want
00:18:21
you to be precise here if you're saying
00:18:23
the journalists are trying to provoke a
00:18:25
war here or you know in the banging the
00:18:28
drum and saber rattling I'm not I think
00:18:31
you're well saber rattling and banging
00:18:32
the drums are a bit imprecise you're
00:18:34
going down a weird Rabbit Hole of what
00:18:37
what the Wall Street Journal believes I
00:18:38
think it's pretty clear that their
00:18:40
editorial policy is they are super
00:18:42
hawkish on Iran they don't think B's
00:18:44
been tough enough on Iran they also have
00:18:46
published two stories that have been
00:18:49
either knocked down or questioned since
00:18:52
October 7th that clearly want to lay all
00:18:54
the blame for this on Iran and so they
00:18:57
are jinning up both in their news and
00:18:59
their editorial Pages they're beating
00:19:00
the drums of War they're trying to
00:19:02
basically
00:19:03
Prime the administration to go to
00:19:06
war got it they're trying to Goat the
00:19:08
administration try to I don't understand
00:19:11
why honestly I feel like we're going
00:19:13
down a rabbit hole look I'm just trying
00:19:15
to understand your position and if
00:19:17
you're talking about the editorial page
00:19:19
or you're talking about the reporting
00:19:20
that's all I'm just trying to get you to
00:19:21
be more precise that's all I think both
00:19:23
in this case remember if you go back to
00:19:26
the reporting on the Ukraine war and I
00:19:27
followed a lot of it by all the major
00:19:29
Publications in my
00:19:31
opinion the Wall Street journal's news
00:19:34
coverage of Ukraine was some of the most
00:19:36
biased and inaccurate of any publication
00:19:40
any major Western publication and I'll
00:19:42
just give you one example here which is
00:19:45
on August
00:19:46
31st The Wall Street Journal claimed
00:19:49
that Ukraine had a major success in its
00:19:51
counter offensive claiming that it had
00:19:53
pierced the main Russian defensive line
00:19:57
okay we are now what is it uh basically
00:20:00
two months since then and it's very
00:20:03
clear that that did not happen Okay that
00:20:05
was all nonsense and again read the
00:20:08
first paragraphs here not only do they
00:20:09
claim to penetrate the main Russian
00:20:11
defensive line it said it raised hopes
00:20:13
of a breakthrough that would
00:20:14
reinvigorate the slow moving counter
00:20:16
offensive was there a subsequent
00:20:18
breakthrough did hopes get raised no
00:20:21
this was total nonsense so your position
00:20:23
here is the the journalists who wrote
00:20:24
this story are in some way Trump try to
00:20:29
benefit the neocons in the uh military
00:20:33
industrial confence I just want to be
00:20:34
clear about it using the war Street
00:20:36
Journal as a you know an active
00:20:39
participant in this as a reporter it's
00:20:40
just kind of an explosive um it's not
00:20:42
kind of it is it's an explosive claim
00:20:44
and so I'm just trying to be not really
00:20:45
I'm just saying that their reporting on
00:20:49
Ukraine was highly inaccurate and it was
00:20:51
all inaccurate in the same way which is
00:20:54
it always
00:20:56
overstated Ukrainian in this war so I
00:20:59
call that bias I think it's easy to
00:21:01
prove I think they have a similar bias
00:21:04
which is stated explicitly by their
00:21:05
editorial board which is they don't
00:21:07
think that Biden and DC has been hawkish
00:21:11
enough on Iran and they would like to
00:21:13
see they think the stabilizing move is
00:21:17
for Biden to basically take action
00:21:20
against Iran whatever that means yeah
00:21:24
okay freeberg any thoughts on this
00:21:26
before we move on to the next topic
00:21:30
nothing on the war on the situation no
00:21:32
I'm good I we can pivot off
00:21:35
of yeah yeah that's why I'm bringing him
00:21:38
in I feel like we're debating the wrong
00:21:40
thing which is you're you're actually
00:21:42
questioning whether there are War drums
00:21:45
beating for Iran when I think it's like
00:21:48
abundantly clear and what we should be
00:21:50
discussing is whether that's a wise move
00:21:53
for the US I think it's clear that these
00:21:55
drums are being beaten I think the
00:21:56
question is why why would
00:21:59
we allow that to be the default plan of
00:22:02
action my
00:22:04
concern it's everyone's going to think
00:22:06
it's crazy but it's that
00:22:09
there's a very very low probability but
00:22:13
now probably much higher than it was
00:22:16
that the world marches towards using a
00:22:19
nuclear weapon for the first time in a
00:22:21
long time and the reason is as Sak has
00:22:23
pointed out so many times there's
00:22:26
significant material and Industrial
00:22:28
production shortages not just in the US
00:22:30
but around the world to support Rising
00:22:33
conventional Wars that seem to be
00:22:36
scaling all over and there's going to be
00:22:37
multiple fronts and to feed those Wars
00:22:41
with conventional Weaponry there's
00:22:43
there's a Breaking Point our cost of
00:22:45
Weaponry is 10x Russia's cost of
00:22:47
Weaponry supposedly I mean I'm just
00:22:49
quoting saxs on this point but um if all
00:22:52
that is true at some
00:22:55
point these conflicts become really
00:22:58
difficult to maintain and if we're in
00:23:00
the midst of a conflict you may not be
00:23:02
able to Simply Retreat or recede at some
00:23:05
point the question is well how do we
00:23:09
gain superiority again and whether
00:23:12
that's us or Russia backed into a corner
00:23:15
or Israel backed into a corner who also
00:23:17
has a nuclear Arsenal there's a a couple
00:23:19
of scenarios there's like a million
00:23:21
scenarios from here there's a million
00:23:23
realities we could live in from here
00:23:24
from today but there's some number of
00:23:26
them that end up with someone saying I
00:23:29
got to press the button and there's
00:23:32
remember not all nuclear weapons are
00:23:34
these things that wipe out a million
00:23:36
people instantly some of them are small
00:23:39
load tactical weapons that is still very
00:23:41
low probability but much higher than it
00:23:43
was a few weeks ago that we find
00:23:45
ourselves walking because of the fact
00:23:48
that we're going to have multiple
00:23:49
conflicts and burn through all this
00:23:50
conventional Weaponry not have
00:23:51
industrial production systems to support
00:23:54
all these conflicts but every there's a
00:23:56
bunch of countries that have a trump
00:23:57
card and once you start talking about it
00:23:59
it'll seem scary at first then it'll get
00:24:01
normalized and then it'll become a
00:24:03
question of when and where and how and
00:24:06
then all of a sudden it's like holy
00:24:07
this is a different world we're living
00:24:08
in that's a scary place I don't want to
00:24:10
be in anything we can do to eliminate
00:24:12
those paths from being walked I'm in
00:24:15
favor of even if that means seeding
00:24:17
strategic advantages today I just don't
00:24:20
think that that's a place we want to go
00:24:22
there's like u nine nuclear Powers who
00:24:25
who do you think is going to be the one
00:24:27
who would
00:24:28
actually use a nuclear bomb freeberg you
00:24:32
have some speculation there you just
00:24:33
think everybody runs out of bullets and
00:24:34
tanks and missiles and then they go to
00:24:36
nuclear because they have nothing left I
00:24:38
don't know look I I tend to think in
00:24:40
terms of like there are multiple
00:24:41
parallel scenarios that can play out so
00:24:43
I don't have a point of view I'm not
00:24:44
going to say deterministically I think
00:24:46
this thing is going to happen again I
00:24:47
think this is very low probability sure
00:24:49
but I could see a bunch of scenarios
00:24:50
emerging like let's say that Russia's
00:24:52
got their back against the wall and
00:24:53
Putin's feeling lost and desperate and
00:24:56
he needs to use a tactical weapon to you
00:25:00
know get some Regional
00:25:02
Victory again these tactical nuclear
00:25:04
weapons they're they're
00:25:06
not
00:25:07
necessarily the kinds of things that you
00:25:09
would use to level Manhattan those exist
00:25:13
but there are other weapons in the
00:25:15
Arsenal that I I get worried that
00:25:17
someone says we're backed in a corner we
00:25:20
have nowhere else to go we can't win
00:25:22
this thing conventionally and we cannot
00:25:23
lose and that's the moment when someone
00:25:26
says this is the let's start talking
00:25:28
about this and that conversation happens
00:25:30
before it gets used then that
00:25:32
conversation becomes normalized and then
00:25:33
suddenly it's not this thing we all grew
00:25:35
up in a world where this was never a
00:25:37
real threat or risk or conversation
00:25:39
there was the Cold War and the
00:25:40
dismantling and we were kind of headed
00:25:42
in a good direction for the last 40 some
00:25:44
odd years but now it's like I don't see
00:25:46
it going in that good direction anymore
00:25:48
so I'm just really nervous about that
00:25:50
yeah I think you should be nervous about
00:25:51
that let me give you a couple of
00:25:52
examples so so first of all I agree with
00:25:53
free BG's point that humans who are
00:25:55
convinced of the righteousness of their
00:25:56
cause have a tremendous ability to wave
00:26:00
away or
00:26:01
Justify any sort of tactical
00:26:03
implications so for example we did use
00:26:06
two atomic bombs to end World War
00:26:08
II that wasn't the only time it was
00:26:11
advocated if you go back to I think it
00:26:12
was around 1950 MacArthur wanted to win
00:26:16
the Korean War by using 20 to 30 atomic
00:26:20
bombs and his plan was to so thoroughly
00:26:23
irradiate the border between China and
00:26:27
North Korea
00:26:28
that China would never be able to invade
00:26:30
through a invading Army for something
00:26:31
like 50 years Truman had to fire him
00:26:34
because Truman didn't agree with the
00:26:36
strategy and by the way MacArthur was
00:26:38
not some crazy you know he was not some
00:26:41
like wacko he was the most respected man
00:26:43
in America in 1950 and Truman paid a
00:26:47
huge political price for having to fire
00:26:49
him it was one of the reasons why Truman
00:26:50
couldn't run for re-election again so
00:26:53
this idea that like rational people
00:26:54
would never use these things not true
00:26:56
the Generals in 19 1962 during the Cuban
00:26:58
Missile Crisis were all ready to take
00:27:01
the nukes off the chain if the Soviets
00:27:03
were willing to break the the naval
00:27:06
blockade so you know it's not just
00:27:08
foreign powers who have rattled the
00:27:10
saber on nukes uh we've done it at
00:27:13
various points through our history too
00:27:15
let me give you a more mundane example
00:27:17
just earlier this year Biden said that
00:27:20
we were out of 155 mm artillery
00:27:24
ammunition and so we had to give Ukraine
00:27:27
cluster bombs remember this just a year
00:27:30
before that same administration had said
00:27:32
the use of cluster bombs was a war crime
00:27:35
so in other words they were able to
00:27:36
change their morality on the use of
00:27:37
cluster bombs because tactically they
00:27:40
were out of the type of of ammunition
00:27:43
they want to use they had nothing left
00:27:45
so you know I think this kind of
00:27:47
reinforces free Burg's point now look at
00:27:50
our inventory replacement times for Key
00:27:52
Systems this was a report by
00:27:55
csis that is uh military think tank in
00:27:58
Washington what they show is that our
00:28:00
industrial capacity is so hollowed out
00:28:02
that it's going to take us five plus
00:28:04
years to replace our stockpiles of
00:28:08
artillery ammunition of javelins of
00:28:11
stingers of uh gimmers as another type
00:28:15
of Rocket system and so we are like
00:28:17
dangerously low on he types of
00:28:21
ammunition and yet remember when 60
00:28:24
Minutes to that interview with Biden
00:28:25
they said to him well gee if we're in a
00:28:27
war both on behalf of Ukraine and behalf
00:28:31
of Israel doesn't that pose any
00:28:33
tradeoffs and Biden's response was no
00:28:35
we're the most powerful nation in the
00:28:37
world for good measure he said we're the
00:28:39
most powerful nation in the history of
00:28:40
the world so he doesn't see any
00:28:42
trade-offs he doesn't see any limits on
00:28:44
American power quite frankly I think
00:28:47
this is why he's dangerous is because he
00:28:49
still thinks that the US is living in
00:28:51
1991 he's been in Washington for 50
00:28:53
years and he only remembers the unipolar
00:28:56
moment all of his instincts and
00:28:58
experience have been shaped by that
00:29:00
period of time when the US was the only
00:29:03
superpower that we were the global
00:29:05
hedgemon we're no longer in that
00:29:07
position anymore you know first of all
00:29:09
Russia and China are strong they are
00:29:12
great Powers too and Iran is much
00:29:14
stronger than Iraq Iran is four times
00:29:17
the size of California and has roughly
00:29:18
90 million people and they got a lot of
00:29:20
Engineers and even if we did want to
00:29:22
attack them it's not exactly clear how
00:29:24
you would stage that attack just getting
00:29:26
to Iran would require flying over some
00:29:29
very dangerous territory it's not clear
00:29:31
we have the uh we have the bases or the
00:29:34
air clearance rights from allies to be
00:29:36
able to even get to Iran moreover Iran
00:29:39
apparently has a very strong missile
00:29:40
program so they may even have the
00:29:43
ability to fire missiles or Hypersonic
00:29:47
missiles at our aircraft carriers that
00:29:49
are sitting in the Mediterranean Sea so
00:29:52
if we get into a war with Iran it's no
00:29:54
joke this is not going to be shock and
00:29:56
awe this could be a very very dangerous
00:29:58
situation for the United States which is
00:30:00
why when people are just kind of making
00:30:02
these Idol
00:30:04
threats they should be very careful
00:30:06
about that because Iran is hearing that
00:30:08
too and they're getting
00:30:09
ready and and one last point on that
00:30:12
thanks to are destabilizing the Middle
00:30:14
East with the Iraq War and the Syria
00:30:17
regime change operation Iran now has
00:30:20
proxies in both Iraq and Syria they've
00:30:24
got Iraqi hisbah they also have proxy
00:30:28
in Yemen with the htis and all of those
00:30:31
groups could stage attacks on American
00:30:32
military bases there we've uh gone down
00:30:35
the worst case scenario here use of a
00:30:37
nuclear bomb the United States invading
00:30:39
Iran here's just a list of the nine
00:30:41
countries that are nuclear powerered
00:30:42
that have nuclear bombs rather not
00:30:44
nuclear powerered and as you can see um
00:30:46
Russia us China France UK Pakistan India
00:30:50
Israel and North Korea Israel denies
00:30:52
they actually have them and Pakistan has
00:30:54
been the one who has been Prof Pro
00:30:57
proliferating them getting bombs to
00:31:00
North Korea and helping Iran with their
00:31:04
program Iran obviously does not yet have
00:31:07
a nuclear bomb but we don't know how far
00:31:10
they are because intelligence is sparse
00:31:12
on that topic based on my cursory
00:31:15
research what's the
00:31:17
best sorry J I just want to be clear I
00:31:20
just want to be clear that I don't see
00:31:21
nuclear use as likely yes that was free
00:31:23
brgs point yeah um no I sorry I did not
00:31:26
say it was like at all either not at all
00:31:28
no no you said it's a small possibility
00:31:30
and we just SP 10 minutes talking about
00:31:31
that small possibility want everyone
00:31:33
like let's say something goes from 2%
00:31:36
chance to 8% chance it's now 4X in the
00:31:39
next 20 years that's right a significant
00:31:43
shift in risk and I think there have
00:31:44
been others like Ray Doo I think or
00:31:47
Warren Buffett some people have said
00:31:49
that the chance of us using a nuclear
00:31:50
weapon over a long enough period of time
00:31:53
approximates 50 to 100% it starts to get
00:31:55
very high because you know at some some
00:31:57
point these things proliferate the
00:32:00
intelligence the capabilities
00:32:02
proliferate they get into the wrong
00:32:04
hands there's all these different
00:32:05
scenarios that emerge so the probability
00:32:07
might be low on any given period of time
00:32:09
but over a long enough period of time
00:32:10
these things become a real kind of
00:32:13
concern the nukes that were dropped on
00:32:15
Hiroshima Nagasaki are like 20 kiloton
00:32:17
yields I mean we have massive massive
00:32:20
massive Warhead multi- Warhead missiles
00:32:23
that have many many many megatons of
00:32:25
yield but there are sub20 sub 10 kiloton
00:32:28
yield
00:32:29
nukes that can be deployed in a
00:32:32
conventional in what people would call a
00:32:34
tactical setting so you're not trying
00:32:36
the suitcase nuke they're not literally
00:32:38
suitcases they're on trucks but tactical
00:32:40
nukes are uh have been produced by
00:32:43
Russia China and the United States are
00:32:45
the known tactical Nuclear Powers well
00:32:48
they're also they're they're they're in
00:32:49
different forms of delivery but they're
00:32:51
not you know you don't take a bomber up
00:32:53
and put it over a city and blast the
00:32:55
whole city Drive City in a van is the
00:32:57
idea yeah no it's not necessarily about
00:32:59
being on a van it's like they can be on
00:33:01
short range Tactical Systems so the
00:33:04
point is like yeah you're caught in a
00:33:07
corner you have nowhere to go and you
00:33:09
can't lose and if you have one of these
00:33:11
things I mean just take all human
00:33:12
history aside and all convention aside
00:33:16
if you've got this thing you're trapped
00:33:18
in a corner you got nowhere to go and
00:33:21
you can press this button and
00:33:24
win you might press the button and
00:33:26
that's the other side what's the best
00:33:29
case scenario here obviously we haven't
00:33:31
had the ground Invasion we've had uh
00:33:34
Qatar
00:33:35
and Saudi and a number in the United
00:33:38
States obviously doing some pretty
00:33:39
hardcore
00:33:40
diplomacy and we've had some hostages
00:33:43
released so you know and I've been
00:33:46
spending some time here in the Middle
00:33:47
East there is a theory that people have
00:33:48
brought up multiple times here that
00:33:50
there's a deal going on right now to get
00:33:54
the hostages a larger number of them and
00:33:57
that the ground Invasion may not occur
00:33:59
this is just a theory that a number of
00:34:00
people have been talking at here maybe
00:34:02
they're just optimists but is there an
00:34:04
optimistic scenario here chamath is
00:34:06
there a uh golden bridge out of here is
00:34:09
there a possible path to you know the
00:34:12
peace process getting back on track or
00:34:14
does it all just seem hopeless and if
00:34:16
there is and if there is a possible path
00:34:18
what would that look like let let's just
00:34:20
see if we can come up with uh any
00:34:22
optimistic framing or or Theory here why
00:34:25
it's just as bad as the other side okay
00:34:28
so you don't see when are how about we
00:34:30
just look at the facts on the ground the
00:34:31
facts are that we have this long
00:34:34
simmering war between Russia and Ukraine
00:34:36
that doesn't seem to have an
00:34:38
end and there doesn't seem to be a loss
00:34:41
of life at
00:34:43
which they're willing to stop or whether
00:34:47
the International Community is willing
00:34:48
to force a ceasefire and then now you
00:34:51
have this one which is in the thousands
00:34:54
and will escalate into defense of
00:34:56
thousands but but it seems like it's on
00:34:57
a path to be slow and simmering so I
00:35:00
don't know what to say except that it
00:35:02
does not seem to be
00:35:06
escalating and the reason it isn't
00:35:08
escalating is that there is enough
00:35:12
emotional
00:35:14
impact that's causing people to
00:35:17
understand that the stakes are high and
00:35:19
so when the actual actions are
00:35:24
relatively de escalatory I find that the
00:35:28
rhetoric ratchets up right it's almost
00:35:30
inversely proportional you know it's
00:35:32
kind of like what was the the phrase
00:35:35
in World War II about Churchill Iron
00:35:38
Fist wrapped in a velvet glove is that
00:35:40
is that the phrase something like that
00:35:42
but the idea is that when you act
00:35:44
decisively you say little and when you
00:35:46
have no plan of really escalating you
00:35:48
say a lot so I think that right now
00:35:52
we're saying a lot which actually
00:35:54
counterintuitively to me says we're not
00:35:55
planning to do much of anything and I
00:35:57
think that that's good so I'm all for
00:36:01
lindsy Graham braing as long as we don't
00:36:03
take it too seriously and and Sleepwalk
00:36:05
into some escalation saak any chance
00:36:08
that this uh gets de-escalated and what
00:36:10
might that look like sure I think
00:36:13
there's a chance I think like it look
00:36:16
like yeah well what it looks like I
00:36:19
think is that the ground Invasion keeps
00:36:22
getting paused either because the US
00:36:25
needs more time to get its military in
00:36:28
place or because the Israeli military
00:36:32
realizes this is going to be a very
00:36:33
difficult operation and they need more
00:36:34
time to plan and while that's happening
00:36:37
there's a serious diplomatic effort
00:36:39
going on and while that's happening
00:36:41
there's also more pressure being brought
00:36:43
to bear against Israel to not go in so
00:36:46
for example you saw erdan this week make
00:36:49
some statements I actually thought they
00:36:50
were pretty outrageous where he
00:36:51
described Hamas as basically being
00:36:52
Freedom Fighters but warning Israel not
00:36:55
to go in they were much more reasonable
00:36:58
remarks by King abdella of Jordan
00:37:00
basically at least recognizing the
00:37:02
atrocity that had taken place against
00:37:04
Israel but also trying to advocate for
00:37:08
the lives of Palestinian civilians in
00:37:12
Gaza and telling them that it would be a
00:37:14
mistake to go in so you're seeing like a
00:37:16
wide range of opinions across I'd say
00:37:19
major players in the Middle East but all
00:37:22
of it the gist of it is basically
00:37:23
telling the Israelis not to go in so
00:37:25
you've got all these
00:37:27
delays and pressures going on and so
00:37:29
maybe there's some chance it could
00:37:30
deescalate I personally think that
00:37:32
that's still
00:37:35
unlikely and the main reason for that is
00:37:37
I think Israel is determined to go in I
00:37:40
think Netanyahu has made that clear I
00:37:42
think from the Israeli point of view
00:37:44
they don't feel like they have a choice
00:37:46
they've suffered the biggest Massacre of
00:37:50
of Jews since the Holocaust and they
00:37:53
can't be perceived as simply standing by
00:37:55
and doing nothing that would make them
00:37:57
look extremely weak in a region of the
00:38:00
world where you don't want to look weak
00:38:02
they have to annihilate Hamas I guess is
00:38:05
the the thinking well they say that
00:38:07
their objective is to destroy Hamas but
00:38:09
I think that probably from their
00:38:10
standpoint they considered a success if
00:38:12
they could significantly degrade Hamas
00:38:15
set them back 10 years destroy get the
00:38:17
hostages back destroy their capability
00:38:20
to wage war against Israel to undermine
00:38:22
their tunnel networks and so forth so I
00:38:24
think Israel still feels like this is
00:38:26
something have to do and so I kind of
00:38:28
think that the most realistic good case
00:38:31
scenario is that if they do go in that
00:38:35
the military operation for various
00:38:37
reasons is not a long one and eventually
00:38:40
a ceasefire can be agreed to before this
00:38:42
can escalate out of control and so
00:38:45
there's a bunch of like very delicate
00:38:47
red lines there for a lot of different
00:38:50
players and so in order for that
00:38:52
scenario to work out I think it's going
00:38:54
to take some very dep behind the scenes
00:38:56
diplomacy from the Biden Administration
00:38:59
really and I'm not sure they're capable
00:39:00
I'm not sure they're up to that task so
00:39:03
this is why I think it's such a
00:39:04
dangerous situation but can I ask you a
00:39:06
question by the way is Lindy Graham
00:39:07
speaking on behalf of the United States
00:39:09
officially with the president's
00:39:12
approval he can't possibly be
00:39:14
freelancing that I I didn't have
00:39:17
any I I tried to research it online I
00:39:20
couldn't find any um well why don't you
00:39:23
in the blank was sanctioned or not yeah
00:39:26
well Jason think about this David texted
00:39:28
this into the group chat and then
00:39:29
tweeted it as well do you think Muhammad
00:39:31
bin Salman is meeting with the group of
00:39:33
10 Senators that's just off on an
00:39:38
adventure no okay well there's your
00:39:41
answer yeah yeah no no I I'm just look
00:39:43
at this photo I think this the picture
00:39:44
says a thousand
00:39:46
words so you have a a delegation of
00:39:49
senators count about 10 Senators there
00:39:52
Middle East yeah yeah they're meeting
00:39:54
with Muhammad B Solon five Republicans
00:39:56
and five Democrats and who has the seat
00:39:58
of Honor right next to MBS in the front
00:40:00
of the room so I personally would like
00:40:02
to believe that lindsy Graham is just an
00:40:04
outlier and he doesn't speak for anybody
00:40:06
but
00:40:07
unfortunately this delegation saw fit to
00:40:10
put him in the front of the room I
00:40:11
consider that very scary well I think
00:40:14
it's also fair to say that the office of
00:40:17
MBS would have coordinated that decision
00:40:19
with the white house before receiving
00:40:20
them that's that's typical political
00:40:22
protocol yeah it just was never
00:40:25
explicitly said say on behalf of the
00:40:27
president or the president has sent us
00:40:29
here it just seemed like a disjoint I
00:40:31
had never seen that
00:40:33
before all right uh I guess we'll move
00:40:37
on to some business issues here the
00:40:39
macro picture is uh quite confounding
00:40:42
GDP as we were talking about in our
00:40:43
group chat grew 4.9% year-over-year in
00:40:46
Q3 higher than the 4.3% expectations and
00:40:49
much higher than the 2.1% growth in Q2
00:40:53
highest year-over a year GDP since uh Q4
00:40:56
2021 uh and we thought we were going
00:40:58
into a recession we'd have a couple of
00:41:00
quarters of um contraction that hasn't
00:41:03
happened CPI in September was 3.7
00:41:05
slightly above the 3.6 estimates and
00:41:08
shth what do you take from all of this
00:41:10
this crazy high growth GDP is this
00:41:13
because of stimulus government spending
00:41:16
what what is this a
00:41:18
confounding you know uh inflation coming
00:41:20
down and getting somewhat under control
00:41:22
and then crazy GDP growth I don't know I
00:41:26
don't think anybody
00:41:29
knows but it's really confounding for
00:41:31
the markets I think it's really bad for
00:41:35
markets in general it's probably the
00:41:37
worst for private companies because you
00:41:41
have this effect now where everybody's
00:41:43
been wanting to price in a recession
00:41:46
right everybody wants to see that shoe
00:41:48
drop where they say oh okay here it is
00:41:51
something's softening demand is
00:41:53
softening and then when you see a print
00:41:55
like this where
00:41:56
the economy is expanding you're kind of
00:41:58
confused and you're like well where
00:42:01
where is this softening going to come
00:42:02
from and so what happens is people
00:42:05
become very overreactive to small
00:42:07
amounts of data and that actually
00:42:10
started to come
00:42:11
out I think basically since August and
00:42:14
what's been happening since August is
00:42:16
that every time a company reports the
00:42:19
sector that's gotten the most attention
00:42:21
has been fex and the reason is that fex
00:42:23
tend to be on the bleeding edge of
00:42:25
capturing consum consumer demand and if
00:42:27
consumer demand shrinks that's probably
00:42:31
the first sign that there's going to be
00:42:32
a recession right because consumption is
00:42:34
about almost 70% of the US economy and
00:42:38
so since August what you've seen are the
00:42:40
large Leading
00:42:41
Edge public fintech companies just get
00:42:45
absolutely murdered and yesterday was an
00:42:47
even worse day because what happened
00:42:49
yesterday was a company was basically
00:42:51
worldline started to report softness in
00:42:54
spending now that spending was not even
00:42:56
in America that spending actually
00:42:58
happened to be within a segment of their
00:43:01
customer base in Germany and that was
00:43:04
enough to just literally sink the stock
00:43:06
I think 60% in a day so we have on the
00:43:11
surface a healthy growing
00:43:13
economy but underneath the surface what
00:43:16
we what we are betting
00:43:18
on increasingly is that consumer demand
00:43:22
has basically stopped so you can see
00:43:26
here aen is down 50% since the beginning
00:43:28
of the year but again most of this was
00:43:30
since August block is down another 35%
00:43:33
PayPal is down 30% so so that's one
00:43:36
thing which is this is a big bet that
00:43:38
consumption is slowing and shrinking the
00:43:41
economy will be in a recession over
00:43:43
these next two or three quarters which
00:43:45
will give the fed the motivation and the
00:43:48
justification to lower rates starting in
00:43:51
the middle of next year that's the big
00:43:53
bet in the market but separately if you
00:43:56
take a different lens and look at this
00:43:58
data we all have a bigger problem in
00:44:00
Silicon Valley land which is how do the
00:44:03
capital markets take companies public
00:44:06
when this is happening and the reason
00:44:08
why this data is so important is we've
00:44:11
said this a thousand times there are
00:44:13
only two
00:44:14
companies that can structurally open the
00:44:16
capital markets for all startups one is
00:44:20
SpaceX starlink but that's on its own
00:44:23
path and not going public soon
00:44:26
and the other is stripe and you could
00:44:28
probably Tik Tok to that as well yeah no
00:44:30
because that's a Chinese company with
00:44:32
all kinds of overhangs so no I would
00:44:34
disagree with 30 or 40% us ownership I
00:44:36
would disagree with that but no okay so
00:44:39
I think it's starlink and stripe and the
00:44:42
the problem now for stripe is that the
00:44:47
public comps dollar for dooll are off
00:44:49
50% which from the beginning of the year
00:44:51
which then says that if you apply that
00:44:54
ratably to its valuation they did around
00:44:56
at 55 billion then the market clearing
00:44:59
trade may be 25 to 30 billion now now at
00:45:02
25 to 30 billion for stripe you're
00:45:05
incinerating $70 billion of equity value
00:45:08
right and about5 to 10 billion doar of
00:45:10
actually paid in capital so what does
00:45:12
that do for Silicon Valley and for VCS I
00:45:15
think it's going to put a lot of
00:45:16
pressure on companies and
00:45:19
valuations
00:45:21
so yeah we're in for a real slog so on
00:45:24
the surface for the real economy
00:45:26
I think it's generally decent
00:45:28
news for startup land I think it's not
00:45:32
good and then specifically within
00:45:34
startup land sectors like fintech are in
00:45:37
pretty bad trouble I think and the late
00:45:39
stage obviously still very much in
00:45:41
trouble freeberg any thoughts on the
00:45:42
startup economy you had some thoughts on
00:45:44
this I think too I'd like to hear your
00:45:45
guys's experiences but there's
00:45:47
definitely been a big hold
00:45:49
up in series B CD later rounds because
00:45:53
so much
00:45:54
of the market questioning is you know
00:45:57
when when is the next round going to get
00:45:59
done which is based on when can the
00:46:01
companies potentially go public and
00:46:04
ultimately if you don't see a path to a
00:46:06
window opening up you don't fund the
00:46:09
pre-ipo round you don't fund the late
00:46:11
stage round the growth stage round
00:46:12
everything gets held up and a lot of
00:46:14
rounds that are getting done lately have
00:46:16
been these kind of convert or Bridge
00:46:18
rounds where existing investors are
00:46:20
funding the company to give it another
00:46:21
year or two of Runway that was
00:46:23
definitely the case for most of this
00:46:24
year coming out of too I think post the
00:46:28
summer it seems like a lot of folks I'm
00:46:30
talking to are starting to wake up
00:46:32
there's even more series B at lower
00:46:35
prices and everyone's kind of
00:46:36
capitulating and accepting that there
00:46:38
are still great businesses out there
00:46:39
it's just that they got overpriced in
00:46:40
their a or their B and let's price them
00:46:43
at a lower valuation and rounds are sort
00:46:45
of starting to get done in the fall here
00:46:47
I'll have you react to this data Sachs
00:46:49
um Carta manages cap tables for folks
00:46:53
but they have produced this chart and
00:46:55
this is Carta companies only so this is
00:46:58
a subsection who knows Carta May power
00:47:00
the cap tables of 10% 20% of Silicon
00:47:04
Valley the rest are done on other pieces
00:47:05
of software or even in Google Sheets or
00:47:09
uh literally in an Excel sheet by an
00:47:11
attorney who is uh working with the
00:47:14
company if you look at this chart in
00:47:17
2020 and 2021 you had about 70 startups
00:47:21
shutting down per quarter in 2022 you
00:47:24
see that number D
00:47:27
and we start seeing 129 141 a quarter
00:47:30
and then in
00:47:32
2023 this last quarter Q3 uh rocketing
00:47:35
up to 2020 so roughly three times what
00:47:37
we see in the boom markets saaks any
00:47:40
thoughts on this data I have a couple of
00:47:41
observations but I wanted to go to you
00:47:43
first well this is not surprising to me
00:47:45
at all this is the bubble of 2021
00:47:49
working its way through the system we
00:47:51
know that there were these gigantic
00:47:53
rounds that were funded in 2021
00:47:55
especially in the second half where you
00:47:57
had this asset Super Bubble it wasn't
00:47:59
just in Tech it was like all grow stocks
00:48:02
crypto everything and so there were a
00:48:04
lot of startups that raised huge funding
00:48:06
rounds at the peak of the market and
00:48:08
they haven't had to raise for a couple
00:48:11
of years well now they're starting to
00:48:12
run out of cash and they do have to
00:48:15
raise they're finally being forced to go
00:48:16
back into market and a lot of them are
00:48:18
either burning too much money or they
00:48:20
don't have the numbers to justify
00:48:21
another round or if they do it's a
00:48:23
structured round a Down Round or again
00:48:26
they just are unable to raise they have
00:48:28
a broken process and they eventually
00:48:30
start winding down so I think you're
00:48:33
going to see this Dynamic for the next
00:48:34
18 months or so but this is not a new
00:48:36
Dynamic this is the lagging indicator of
00:48:38
what we've been talking about since the
00:48:40
regime change of the first half of 2022
00:48:44
is that the Markets started looking for
00:48:47
different things instead of growth at
00:48:48
all cost it's been about growth with
00:48:51
unit economics and efficiency and the
00:48:54
valuations went way down and there's a
00:48:55
lot of companies that no longer qualify
00:48:57
and they're getting weeded out so this
00:48:59
is just a delayed reaction to things we
00:49:02
already knew that's the key part the
00:49:04
delayed reaction as well I'll just note
00:49:05
when a company does shut down that
00:49:08
process typically takes two or three
00:49:09
quarters and for a Founder to accept the
00:49:12
shutdown that might take one two three
00:49:13
quarters as well so anything you're
00:49:15
seeing in 2023 that might be a shutdown
00:49:18
where the employees were all laid off in
00:49:19
late 2022 but I mean I have that I have
00:49:22
a question for you guys what what turns
00:49:24
this around I'll tell you what I'm see
00:49:25
in the early stage we are seeing many
00:49:28
companies come to founder University and
00:49:30
two or three people who want to build a
00:49:33
company who can't get jobs at Google or
00:49:35
stripe they're not hiring so we'll see
00:49:37
two or three developer teams working on
00:49:39
a project and then raising 250 500k at
00:49:43
A5 to1 million valuation and then very
00:49:46
quickly getting to 10 to 50K in monthly
00:49:49
about all this money that we need to
00:49:51
return so that we can recycle and keep
00:49:53
doing this job what what needs to happen
00:49:56
saak Friedberg what do you guys think
00:49:58
needs to happen to get to crack because
00:50:00
like the three IPOs we've had have not
00:50:03
fared particularly well and the market
00:50:06
just seems to get harder and harder for
00:50:10
tech companies even profitable ones
00:50:12
right yeah I mean I think I think
00:50:14
profitability is key I think that's the
00:50:16
great evolutionary forcing function here
00:50:18
it's like a tale of two world of two
00:50:20
startups the one startup needs cash for
00:50:24
a long period of time and the the ones
00:50:25
found a path to profitability the one
00:50:27
that's found a path to profitability
00:50:28
they have an infinite number of options
00:50:30
available to them it might take longer
00:50:31
to get public or whatever but they can
00:50:34
wait it out because they don't need
00:50:35
money the one that needs cash
00:50:37
continuously and will for a long period
00:50:39
of time is really screwed what about the
00:50:41
multiple of these profitable companies
00:50:43
that seems to have changed materially as
00:50:45
well I'll tell you something that's
00:50:46
starting to happen as well chamath is
00:50:48
that the public markets are looking at
00:50:49
their stocks if they're undervalued and
00:50:51
then Dar Uber is reportedly planning
00:50:55
like buying back upwards of 20% of the
00:50:57
Uber shares in the next 5 years and then
00:50:59
you look at a company like Snap which is
00:51:01
majority controll with super voting
00:51:02
shares they're still losing three or 400
00:51:05
million a quarter so I think freeberg is
00:51:07
exactly right ta it to cities some
00:51:09
people refuse and then if the stock is
00:51:11
so cheap people start buying it back uh
00:51:14
and and the the freezing of employees
00:51:16
and the expenses going down while
00:51:18
Revenue goes up and earnings increase I
00:51:21
think that's the setup if you're looking
00:51:22
for the setup I think it's the public
00:51:23
market company showing the path profit
00:51:25
buying back stock and then these small
00:51:28
companies how does that how does that
00:51:30
help private companies go public if the
00:51:33
private companies follow suit and
00:51:34
they're profitable and they control
00:51:36
costs and they people get greedy looking
00:51:38
at how profitable they are as opposed to
00:51:40
their 50% growth rate they start looking
00:51:43
at their increasing earnings and how
00:51:44
much cash they're throwing off and I
00:51:46
think that's starting to trickle down
00:51:47
through the startup ecosystem people are
00:51:49
trying to get to profit profitability
00:51:51
quickly I don't know the question was
00:51:54
can people turn it around
00:51:56
if they do that's what it's going to be
00:51:57
is profitability yeah I mean I think you
00:51:59
guys are kind of talking about two
00:52:00
different things sure any particular
00:52:02
company can still get its house in order
00:52:04
and create a great business and they'll
00:52:06
eventually get you know liquidity
00:52:08
they'll go public the question is I
00:52:10
think what chath is getting at is that
00:52:12
the exit comps have changed if you were
00:52:15
a tech investor or let's say a real
00:52:16
estate investor before the regime change
00:52:19
you were underwriting to a completely
00:52:21
different exit comp and now those exit
00:52:24
comps have totally changed and so it's
00:52:25
going to be very hard for those
00:52:27
investors to make a good return oh
00:52:29
they're going to lose their money like
00:52:30
instacart yeah I'll give you a
00:52:32
mathematical example just to illustrate
00:52:34
what David just said if you have a
00:52:36
company with 300 million of
00:52:39
ARR you are in a rare group of say 30 or
00:52:43
40 companies period okay so very very
00:52:47
very few companies get to that level of
00:52:48
scale but if you are at a 100% net
00:52:51
dollar retention okay which means that
00:52:54
you're kind kind of Treading Water
00:52:57
essentially your customers May grow but
00:52:59
the value of each customer isn't
00:53:01
particularly growing so you know you
00:53:03
have you have pretty nominal
00:53:05
growth that company now comps to roughly
00:53:09
three to five times
00:53:12
AR now the problem is if you go and look
00:53:14
back through crunch base or any of these
00:53:16
other Ser a
00:53:18
pitchbook the number of companies that
00:53:21
traded above $ 1.5 billion valuation as
00:53:25
a SAS business there's like 70 of them
00:53:28
but there's only seven of them that have
00:53:29
300 million of AR so what do you what
00:53:33
happens guys like The Jig Is up okay uh
00:53:37
what's going on
00:53:39
here consolidation I guess and and some
00:53:42
of them will flame out I mean look at
00:53:43
instacart the LA the people who were the
00:53:46
last four rounds they they either lost
00:53:48
money or broke even so and that means
00:53:50
time adjusted versus what they could
00:53:52
have made in the markets they lost money
00:53:54
so what happens if stripe is only worth
00:53:56
30 I mean how much has been invested
00:53:59
into that company What's the total paid
00:54:01
in capital the question I I think we all
00:54:03
want stripe to be worth a
00:54:05
100 we want it to be worth 200 billion
00:54:08
because it would help frankly it is the
00:54:11
rising tide that lifts all boats but if
00:54:13
if unit level profitability is
00:54:15
scrutinized and then comped
00:54:16
appropriately to the public markets as
00:54:18
sack
00:54:20
said we're going to have to take that
00:54:22
signal and apply it to our entire
00:54:24
portfolio
00:54:26
and so it goes all the way back to
00:54:29
eventually the seed in the series a as
00:54:30
well which is really good Jason as
00:54:32
you've Sav many times just getting the
00:54:34
inflation under control and in check but
00:54:36
it will mean not just changing
00:54:37
valuations but it will mean changing
00:54:40
salaries right it will mean totally
00:54:43
different Equity packages a lot of hard
00:54:45
work yeah I almost think that maybe none
00:54:49
of the hard work has actually yet
00:54:50
started so I don't know I'm just putting
00:54:52
that out there guys do you think that
00:54:54
we've all just kind of been hoping maybe
00:54:57
that all of this would pass and now
00:55:00
we're getting more and more signals that
00:55:03
we actually have to do a pretty hard
00:55:04
valuation reset yeah I mean if you look
00:55:06
at the alterator charts that Jamon ball
00:55:09
has put out I mean valuation levels are
00:55:12
returning to let's call it the pre-co
00:55:14
mean in fact they're slightly below the
00:55:16
pre-co mean because the
00:55:18
tenure treasury has a higher rate so
00:55:21
yeah we're going back to something that
00:55:24
was more like I don't know 2015 levels
00:55:26
of valuation and maybe even slightly
00:55:29
worse again because long-term rates are
00:55:32
higher so cost of capital and hurdle
00:55:34
rate are higher that's what I'm seeing
00:55:35
I'm seeing 2012 valuations valuation of
00:55:38
uber when I invested was 5 million you
00:55:41
yeah let me just tell you it's a lot
00:55:42
harder for people to make money when the
00:55:43
money supply is shrinking than when the
00:55:46
money supply is growing yeah if we
00:55:48
obviously when the money supply is
00:55:51
shrinking it's like you're playing a
00:55:52
game of musical
00:55:53
chairs and you're just hoping that you
00:55:55
still have a seat whereas when the pie
00:55:58
is increasing it's a lot easier to get
00:55:59
like a piece of it but when the pie is
00:56:01
shrinking it's a lot harder to get a
00:56:02
piece musical chairs as you're described
00:56:05
is what you're is literally the
00:56:07
description of the Venture Capital
00:56:08
industry and GPS right now A lot of
00:56:11
people are losing their seats yeah a lot
00:56:14
of shutdowns of venture firms I think a
00:56:15
lot of venture firms are going to shut
00:56:17
down F this going be zombie funds I
00:56:19
think we got to believe
00:56:22
the extraordinary outcome make up the
00:56:26
bulk of returns and Venture from you
00:56:29
know the singular companies and there's
00:56:31
a few of them right there's 15 billion
00:56:34
dollar exits created every year I don't
00:56:37
know if it's unicorns as valued in
00:56:39
private markets are actual exits but as
00:56:42
we know every couple of years there's a
00:56:43
company that comes along that's worth 10
00:56:45
billion and every once a decade there's
00:56:47
a company that comes along that ends up
00:56:48
being worth 100 billion and the bulk of
00:56:51
the returns in the entire Venture
00:56:52
landscape comes from those handful of
00:56:55
companies I think we end up focusing a
00:56:58
lot on Market metrics as the performance
00:57:02
driver for Venture returns but the truth
00:57:04
is it's the performance driver for the
00:57:06
mid-tier of venture returns and that
00:57:09
mid-tier of venture returns is skating
00:57:11
along at
00:57:13
2x uh multiple after 10 years or 3x
00:57:16
after 10 two to two to 2 and a half X
00:57:17
after 10 years that's the top core to
00:57:19
right and so whatever it is 1.8x and now
00:57:21
those guys are all underwater so instead
00:57:23
of being 1.8x they're all going to
00:57:24
return 7x or. 5x and they're going to
00:57:27
lose money no I think the I think the
00:57:29
50th percentile returns money okay but
00:57:32
the truth is so now they're going to
00:57:33
lose money but the truth is whichever
00:57:36
funds get the
00:57:37
tiger by the tail whoever gets the Uber
00:57:41
at 5 million whoever gets the slack at
00:57:43
whatever you got in at whoever gots the
00:57:45
SpaceX at whatever saaks got in at
00:57:48
you're going to be fine because like the
00:57:50
multiples in markets don't matter as
00:57:51
much if you're generating 4,000 true I
00:57:54
don't think that's true because if it
00:57:55
happens in a fund and that all of those
00:57:59
deals except SpaceX happened in a
00:58:02
different valuation framework where
00:58:04
rates were zero so I think the question
00:58:07
the more intellectually honest question
00:58:09
is what would slack and Uber have gone
00:58:10
public at today with a 5% tenure and I
00:58:14
think the answer if you're going to be
00:58:16
intellectually honest is a very
00:58:18
different valuation than when it went
00:58:20
out when the 10e was Zero it's going to
00:58:21
be hard to make outsize returns unless
00:58:25
until the entry price is completely
00:58:27
correct and I think they've partially
00:58:28
corrected but they may not have fully
00:58:30
corrected because people I think always
00:58:33
want to believe that there's going to be
00:58:34
a bounceback yeah and it takes time to
00:58:37
kill that hope I think I think that
00:58:39
might be capitulation capitulation is
00:58:42
yeah I think I think I think that
00:58:44
capitulation is starting to happen to be
00:58:46
honest I mean that that was my
00:58:48
observation I I feel like everything was
00:58:50
so shut down last year the start of this
00:58:54
year through the the summer and then in
00:58:56
the fall like just the last couple of
00:58:59
months it feels like there's this
00:59:00
capitulation where it's like okay we're
00:59:02
worth 80% less but we need money let's
00:59:04
do the deal okay we'll put money in I
00:59:07
don't think the reset can happen until
00:59:09
stripe goes public I'll be very specific
00:59:11
I think that is the company that sets
00:59:13
the cascading valuation framework for
00:59:16
every other company so I think all of
00:59:18
this is a bunch of people us blathering
00:59:22
on and making stuff up I think the true
00:59:25
numerical forcing function the clearing
00:59:27
event happens when they go public
00:59:29
because it will it will be you won't be
00:59:31
able to hide like I think we all would
00:59:32
say it's the best run company that's
00:59:34
private
00:59:36
it's the most technical it's gotten the
00:59:38
most people it's gotten the most
00:59:40
pristine cap table it's raised the most
00:59:42
money at the like it's done everything
00:59:44
right it's the gold standard yes and
00:59:46
what their valuation is is then what you
00:59:49
can expect if you are of that caliber or
00:59:53
you can expect a lower valuation if you
00:59:55
are not of their caliber and I think
00:59:58
that until we know what that is we're
01:00:00
all going to be hoping and but we know
01:00:03
that hope isn't a
01:00:05
strategy so my my takeaway from all of
01:00:07
this is just more
01:00:09
that people have to really rightsize the
01:00:11
portfolio sell what you can find
01:00:14
liquidity where there are people that
01:00:16
want to buy at different entry prices
01:00:18
they may not be the price that you
01:00:19
thought originally but you know make
01:00:22
sense for them and their risk profile In
01:00:24
This Moment time all of this stuff has
01:00:25
to happen to actively manage to exits I
01:00:27
think well and there's a new phenomenon
01:00:29
that's going on that I've been seeing a
01:00:30
lot of I've been approached by a number
01:00:32
of people who are doing buying strips of
01:00:35
uh GP interest and strips of LP
01:00:37
interests in Venture funds from the last
01:00:39
10 years I got offered for a 5x on paper
01:00:42
fund like 3 point whatever
01:00:45
X you know and you could clear out like
01:00:48
you're saying some of your shares I got
01:00:49
offer you know half price
01:00:51
basically by some people who I think I
01:00:53
don't want to say the bottom feeders but
01:00:55
I think they're maybe optimistic about
01:00:57
certain names and yeah I've noticed that
01:01:00
the amount of activity from secondary
01:01:02
Brokers seems to have increased and yeah
01:01:05
and and specifically the the emails that
01:01:08
I get that are interesting are the ones
01:01:09
where they're asking me to sell shares
01:01:12
so when someone's offering you that
01:01:14
doesn't mean anything because there may
01:01:15
not be any transactions clearing but
01:01:17
when they have definite buyer interest
01:01:19
at a certain price that tells you that
01:01:22
the market now has found or is in the
01:01:25
process of finding the market clearing
01:01:26
price yeah so I think I think we do
01:01:29
actually know from the seconding market
01:01:33
kind of where a lot of these unicorns
01:01:34
are
01:01:35
at my guess is and what would you say on
01:01:37
average half yeah half price there's
01:01:40
yeah a lot of Half Price that's what I
01:01:42
see I see a lot of Half Price action
01:01:43
that I'm not I'm not trying to be a wet
01:01:45
blanket guys but the average SAS company
01:01:47
that's public is down 75% if you look at
01:01:50
the fintech space these companies are
01:01:52
down 80 to 90% so how can half be
01:01:55
reasonable well just for certain names
01:01:56
yeah because I think the the really bad
01:01:58
names don't get any liquidity like
01:02:00
there's just no buyers so you're talking
01:02:02
about names where there's already a
01:02:04
buyer so that's going to bias it towards
01:02:06
the better companies no no I'm saying
01:02:08
when square and aen these are great
01:02:10
companies right that are down 80
01:02:12
90% how can a private liquid company be
01:02:16
only down 50% maybe it's not priced
01:02:18
correctly but maybe also there's been
01:02:20
two or three years of growth since that
01:02:22
last private valuation
01:02:25
so maybe there's some selection bias
01:02:27
maybe it's there's 20 30% growth yeah
01:02:30
but but Adin and stripe of all I mean
01:02:32
Square have also grown by 50% I mean you
01:02:34
also have let me we we have a comp on
01:02:36
this which is instacart 39 billion Peak
01:02:38
profit Market valuation it's trading at
01:02:40
like 6 and a half billion which I think
01:02:43
is exactly what you said jamath when we
01:02:45
were pricing it we we looked at that 800
01:02:47
million remember I think we not not but
01:02:50
I I had said 800 million and I just put
01:02:51
it at like there was 800 million in
01:02:53
advertising ing revenue and I said okay
01:02:55
you know S 8 nine times that that top
01:02:58
line or if I said if it was if it was
01:03:00
50% margin you could give it 20x so I
01:03:03
think that's how I came up with my
01:03:04
number and I think we came up with eight
01:03:07
based on that and you sure enough that's
01:03:09
basically where it's trading 6.8 billion
01:03:12
right now yeah that's amazing it's down
01:03:13
26% since it
01:03:15
ipoed now I will say that instacart is
01:03:18
an example of a company that has
01:03:21
historically had very high burn and it's
01:03:23
a very cap intensive business relatively
01:03:26
whereas a good software business like
01:03:28
take a clavio for example uh is much
01:03:31
more Capital efficient and should be
01:03:34
doing better clavio is down 16% since
01:03:36
this IPO yeah market cap out 7 billion
01:03:39
so yeah it's an ugly Story I mean even
01:03:40
for the names that just ipoed it's not
01:03:43
looking too good yeah I mean revenue
01:03:45
profits that that clears it out I do
01:03:48
think there's going to be a lot of GPS
01:03:49
who are arm down
01:03:51
21% since that's a lot of money yeah
01:03:55
look I think the market has just turned
01:03:57
very negative very recently it comes
01:03:59
back to this GDP report you know when I
01:04:03
saw the 4.9% number I mean the thing
01:04:05
that occurred to me the the larger theme
01:04:07
is that there's such a Divergence right
01:04:09
now between Main Street and Wall Street
01:04:11
explain why the GDP is so strong right
01:04:14
now and that would indicate that the
01:04:17
economy is strong therefore stock should
01:04:19
go up right why why is that not
01:04:21
happening I think this is the that's
01:04:23
maybe confusing for people
01:04:24
well I mean I'm not sure I can fully
01:04:27
explain it because I think there's a lot
01:04:28
of contradictory data but if you look at
01:04:30
Main Street you're seeing whatever 4.9%
01:04:33
GDP growth you're seeing pretty robust
01:04:35
employment numbers the consumer seems to
01:04:38
be holding up but if you look at Wall
01:04:40
Street and the investment side of things
01:04:42
it's pretty miserable the whole stock
01:04:44
market this year is being held up by
01:04:46
seven stocks the soall Magnificent 7
01:04:49
it's the top seven Tech names in the S&P
01:04:52
500 if you look at the overall all S&P
01:04:55
500 excluding those names it's flat for
01:04:58
the year and it's basically giv back all
01:05:00
the gains and now those seven names are
01:05:02
starting to crack so just in the last
01:05:05
goog and Tesla went down a bit yeah yeah
01:05:07
we're seeing them go down and Facebook
01:05:09
yeah and Facebook so we're see and then
01:05:12
you know Microsoft had a great quarter
01:05:14
but it's now down it's giving back that
01:05:16
that pop so you're seeing that on the
01:05:21
investment side of things uh it's still
01:05:23
prettyy grim out there because people
01:05:25
are now pricing in higher rates for
01:05:28
longer that's basically what's happening
01:05:31
and the thing I wonder about I mean
01:05:33
here's the disconnect is
01:05:35
that ultimately what happens on Wall
01:05:38
Street affects the consumer their 401ks
01:05:42
go down in value the value of their
01:05:45
houses go down because now you can't if
01:05:48
you if you sell your house you lose your
01:05:49
3% mortgage now you have to get a new
01:05:51
one at 8% so everyone stopped trying to
01:05:53
sell their house the number of real
01:05:55
estate transactions has gone down a lot
01:05:57
that's gradually working its way through
01:05:58
the system so at some point the consumer
01:06:01
realizes that they're just not as
01:06:02
wealthy as they thought they were that's
01:06:04
the wealth effect and they just stopped
01:06:06
spending as freely and we already know
01:06:08
that credit card debt and especially
01:06:10
credit card servicing costs are at
01:06:12
all-time highs because of these high
01:06:14
interest rates so at some point you just
01:06:16
wonder if the consumer is like Wy
01:06:19
coyote and has gone off a cliff but just
01:06:22
hasn't looked down yet yeah just like
01:06:24
the country just like our government
01:06:26
it's like we're just everybody's just
01:06:28
spending and and nobody's actually
01:06:30
paying attention to the balance sheet
01:06:31
whether it's the government or
01:06:32
individuals apparently because credit
01:06:34
card debts now at its highest and people
01:06:36
are still YOLO I I don't May is because
01:06:40
the only possible explanation with the
01:06:41
consumer is that consumer's wages and
01:06:45
the unemployment the low unemployment
01:06:48
persistent low unemployment the number
01:06:49
of jobs available is just making
01:06:51
everybody super confident but that's got
01:06:53
to end at some point right doesn't it
01:06:55
companies keep cutting their belts I
01:06:56
don't think Wall Street and Main Street
01:06:58
can be disconnected forever I think it's
01:07:00
got to reconcile one way or another yeah
01:07:02
I agree so I would describe our economic
01:07:04
situation as as fragile I mean I think
01:07:07
most commentators like Bill Amman still
01:07:11
thinks that things are going to turn
01:07:13
South that this this GDP number is sort
01:07:15
of a peak number I don't know this
01:07:17
things still seem kind of shaky to me
01:07:20
and not exactly not exactly the recipe
01:07:22
that you want when you have this massive
01:07:25
geopolitical
01:07:26
instability yeah exactly that that that
01:07:28
double and then plus the election coming
01:07:31
up and and the chaos that that could
01:07:32
cause in the country it's kind of like
01:07:35
that quote about going bankrupt how did
01:07:37
it happen slowly and then all at once I
01:07:40
think that's kind of what we're heading
01:07:41
towards this this has been happening
01:07:42
slowly and then everybody's going to
01:07:45
wake up with a heck of a credit card
01:07:46
bill at 15 or 20% and they're not going
01:07:48
to be able to pay it well the government
01:07:51
will have to intervene they they're they
01:07:54
can't be in a situation where I agree
01:07:56
with Jamal a large percentage of the US
01:07:58
consumers just
01:08:00
can't this is my point of on yeah on
01:08:02
consumer and all this commercial real
01:08:04
estate and the bank loans eventually the
01:08:06
FED monetizes all this stuff it's the
01:08:08
only path which by the way will inflate
01:08:12
a lot of financial assets and if that
01:08:15
happens and actually you bring up
01:08:16
another data point we haven't discussed
01:08:17
which is there's a major storm cloud out
01:08:19
there which is major US banks are facing
01:08:22
large unrealized losses so Bank of
01:08:24
America had unrealized losses of 131
01:08:27
billion on Securities in Q3 JP Morgan
01:08:31
Chase had unrealized loss of 40 billion
01:08:33
in its um held to maturity portfolio in
01:08:36
Q3 and City group did not disclose its
01:08:40
losses for Q3 but it had 24 billion of
01:08:43
losses at the end of Q2 so remember this
01:08:45
Dynamic that we had with svb and all
01:08:48
these Banks back in was it like March
01:08:50
where all these Regional Banks were
01:08:52
basically had these large unrealized
01:08:53
losses and then it created a run on a
01:08:55
few of them well now the biggest banks
01:08:57
are starting to face that unrealized
01:08:59
losses problem now I don't think like
01:09:01
Bank of America JP Morgan or City Group
01:09:03
are going to have a run on the bank but
01:09:06
they're clearly not doing that great and
01:09:09
at some point there's going to have to
01:09:10
be a Reconciliation of that unless they
01:09:13
hold it to maturity I guess we should do
01:09:14
just a quick hit here on this Cruise
01:09:16
follow-up story we had talked earlier
01:09:19
about the cruise accident and
01:09:21
self-driving well a lot of news has come
01:09:24
out about this gentleman that is um
01:09:27
potentially
01:09:28
explosive as we all know just to catch
01:09:31
everybody up on October 2nd there was a
01:09:32
hit-and run accident
01:09:34
and this tangental uh included that
01:09:37
cruise vehicle uh the cruise vehicle a
01:09:41
woman tragically got hit by a car driven
01:09:43
by a human that that car ran off the
01:09:46
woman got knocked into uh in front of a
01:09:49
cruise self-driving car which then ran
01:09:52
her over uh uh okay California's DMV has
01:09:56
suspended Crews uh and their
01:09:58
permit because allegedly the company
01:10:02
withheld footage of the incident if you
01:10:04
remember we had a little discussion here
01:10:05
about the taxi had rolled over the
01:10:07
person and then we talked about hey you
01:10:09
know you're not supposed to move off of
01:10:10
the person when we we did our whole joke
01:10:12
about uh EMT jcal uh well it turns out
01:10:17
after the AV Collision the cruise
01:10:20
vehicle apparently pulled the woman
01:10:22
forward 20 feet
01:10:24
and this has been confirmed Now by Cruz
01:10:25
but when Cruz gave that
01:10:28
information to the regulatory agency the
01:10:32
California DMV they didn't show that
01:10:35
footage in other words they showed just
01:10:37
the first half of the
01:10:38
footage and that has gotten their
01:10:40
license suspended so we have we're left
01:10:43
to interpret why did Cruz not tell the
01:10:46
full truth to the DMV and now freedberg
01:10:49
to your point about Society taking risk
01:10:53
now we have allegedly
01:10:57
crw I don't know what the most generous
01:10:59
way to say this is but they either
01:11:02
omitted or they straight up lied to the
01:11:05
California D DMV uh DMV I mean Jal if
01:11:08
it's true that they lied and were
01:11:10
deceptive about the video then yeah
01:11:12
that's like do not Pasco go directly to
01:11:15
jail time I mean that's really bad yeah
01:11:18
one point I made last time was that I
01:11:20
didn't think Cruz was sophisticated
01:11:22
enough Tech or really GM who's their
01:11:25
backer was sophisticated enough
01:11:26
technologically to get this right and I
01:11:29
still maintain that and so if on top of
01:11:32
that they were deceptive about what
01:11:35
happened then that's like the kill shot
01:11:37
one question I have Jak K is there was
01:11:38
an NBC reporter who was on the scene
01:11:42
just happened to be on the scene and I
01:11:44
remember her reporting that Cruz was not
01:11:47
responsible so I'm just wondering like
01:11:49
where the disconnect here is between all
01:11:52
these various reports I Theory yeah I
01:11:54
have a theory which is not responsible
01:11:56
for the accident but then responsible
01:11:59
potentially for the subsequent the
01:12:01
dragging of the the body so I think
01:12:04
that's the the issue here is that they
01:12:06
may be able to claim hey we had nothing
01:12:08
to do with the accident but then in what
01:12:10
happened after the accident yes the the
01:12:12
technology failed apparently or maybe
01:12:15
the technology never took into account
01:12:17
what happens if you run somebody over
01:12:18
that was rocketed under your car and
01:12:21
maybe that's just a freak accident that
01:12:22
we have to get used to that possibility
01:12:24
happening and that could happen with
01:12:26
obviously a human driver so it's just a
01:12:28
possibility that that could happen you
01:12:30
don't think that that Ed Case is
01:12:34
hardcoded I mean the edge case of how
01:12:37
would the car know there's a person
01:12:39
underneath it I I don't but I'm saying
01:12:41
you're you're bringing up something so
01:12:42
obvious as to be comical which is like
01:12:45
of course there has to
01:12:47
be some emergency cut off when there's
01:12:50
like some obstruction anyway let's let
01:12:53
all the facts come out I think we'll
01:12:55
wait for the rest of the facts to come
01:12:56
out we've got I think 80% of them here
01:12:58
90% of them but freeberg you had told us
01:13:01
in the group chat that hurricane Otis
01:13:03
would uh potentially be disastrous for
01:13:06
Mexico and uh turns out you are correct
01:13:10
uh 27 people are dead in
01:13:13
Mexico and maybe you could explain to us
01:13:16
why this storm is unique uh and why if
01:13:20
you think this that we're seeing more of
01:13:22
these uh or are we seeing more of these
01:13:24
or is the coverage in the media yeah you
01:13:26
know in the reaction to it getting
01:13:28
distorted I don't know about the media
01:13:30
coverage the big story with hurricane
01:13:32
Otis is that it went from being kind of
01:13:35
a tropical storm to being a category 5
01:13:38
hurricane in about six hours and then it
01:13:41
made landfall in aapco at a category 5
01:13:44
hurricane and no hurricane forecasting
01:13:47
models had predicted this and hurricane
01:13:49
forecasting models are what are you know
01:13:52
typically run off of Ensemble models
01:13:54
meaning that there are multiple things
01:13:56
that may happen and that those
01:13:58
simulations are run on very compute
01:14:00
intensive systems and there are many
01:14:03
many simulations being run all the time
01:14:06
every six hours these simulation runs
01:14:08
are done and then you look at these and
01:14:09
you create a probability of things that
01:14:11
may happen and none of the forecasts had
01:14:14
any probability associated with this
01:14:16
event happening it was so out of the
01:14:18
bounds of anything we have seen
01:14:20
historically that none of the models had
01:14:23
any chance ascribed to this tropical
01:14:25
storm suddenly evolving into a category
01:14:28
5 hurricane in 6 hours and then making
01:14:30
landfall on a city with a million people
01:14:33
we can look at pictures if you guys want
01:14:34
on what happened in aapco it's obviously
01:14:36
pretty devastating there's apparently no
01:14:38
power line standing in the entire region
01:14:40
here's some photos I me look at this
01:14:42
like wow 165 mph sustained winds the
01:14:46
eyewall went through the the town a
01:14:47
million people by the way many of whom
01:14:49
live in not concrete reinforced
01:14:52
buildings up against the Mountain there
01:14:54
and so the devastation is really
01:14:55
extraordinary but the the shocking thing
01:14:57
is that there was no prep there was no
01:14:59
warnings there was no alerts there were
01:15:01
ton of tourists sitting in these hotels
01:15:03
look at the I don't know if you have any
01:15:04
of the hotel photos Nick but it's insane
01:15:06
there are zero Windows left in any of
01:15:08
the hotels any of the condos any of the
01:15:09
resorts they are gone so imagine you're
01:15:12
you're like in Acapulco you're drinking
01:15:14
beer and tequila and then you go to
01:15:17
sleep and this thing hits at 1:00 a.m.
01:15:19
as a category 5 hurricane and destroys
01:15:22
everything there's no power there's
01:15:24
nothing so if you pull up the first
01:15:26
chart most of the energy that that is
01:15:30
absorbed from the Sun ends up in our
01:15:32
oceans so you know we talk about
01:15:33
atmospheric carbon increasing energy
01:15:36
retention and people can debate that all
01:15:39
they want where the carbon comes from
01:15:40
etc etc at the end of the day there is
01:15:43
energy coming into the Earth from the
01:15:46
Sun and that energy is being retained
01:15:49
the vast majority of that energy is
01:15:51
retained by the oceans so the first
01:15:54
couple hundred meters of the oceans uh
01:15:56
retain north of 90% of the energy
01:15:59
absorbed by Earth if you go to the next
01:16:01
slide so that results in water
01:16:03
temperatures going up so if you look at
01:16:05
um this is compared to the the uh 1955
01:16:08
to 2006 average and you can measure
01:16:10
ocean heat content but ocean heat
01:16:12
content has risen fairly
01:16:15
linearly since the '90s and you can kind
01:16:17
of see uh you know how much excess is
01:16:20
correlated to temperature perfectly or
01:16:22
no so this is o temperatures over time
01:16:25
uh so here you can see 2023 and so this
01:16:28
shows you the average sea surface
01:16:30
temperature so
01:16:31
2023 has been such an outlier and this
01:16:34
is also because of these um elino
01:16:36
phenomena but there's obviously over
01:16:39
time if you were to look at the average
01:16:40
sea surface temperature Trend it's
01:16:43
rising linearly with heat content over
01:16:44
time and in particular in 2023 there's
01:16:46
an extraordinary rise in temperature so
01:16:49
off the coast of Acapulco the sea
01:16:51
surface temperature was 88 degrees
01:16:52
Fahrenheit I mean it was so hot the
01:16:54
water like imagine an 80 that's like a
01:16:56
David sack swimming pool it's so warm um
01:16:59
you know going down many meters in the
01:17:01
ocean so when a storm goes over that
01:17:03
level of heat it takes heat out of the
01:17:06
ocean and that heat coming out of the
01:17:07
ocean increases the wind speed and then
01:17:09
the wind speed pulls more heat out of
01:17:11
the ocean and that's how these things
01:17:12
become escalatory until they hit
01:17:14
something cold like a mountain or the
01:17:16
the the land the land is much cooler and
01:17:19
then these things start to dissipate and
01:17:20
break apart and that's why these things
01:17:21
form over the ocean so so the point is
01:17:24
no models predicted this and that's
01:17:27
because we've never seen this level of
01:17:29
energy stored in the oceans before and
01:17:30
the model training has never really
01:17:33
accounted for this sort of extreme
01:17:35
condition this extreme condition
01:17:36
obviously is is what some folks are
01:17:38
arguing is becoming more frequent so it
01:17:40
brings into question you know this this
01:17:43
this um ability for us to actually
01:17:44
forecast the the rise in the temperature
01:17:47
over time is driving this um and then
01:17:51
from an economic perspective this is the
01:17:53
one of the key points I wanted to make
01:17:55
when an event like this happens there's
01:17:57
a market called the reinsurance market
01:18:00
and the reinsurance market sets the
01:18:01
price for covering insurance companies
01:18:04
against a big loss where you can lose a
01:18:06
ton of stuff at once insurance companies
01:18:08
like to write insurance policies like
01:18:10
car insurance is a great business
01:18:12
because there's never one big event that
01:18:14
causes everyone to get in an accident on
01:18:15
the same day but with property insurance
01:18:18
a hurricane can cause everyone to lose
01:18:20
on the same day so insurance companies
01:18:22
need to buy re insurance and then
01:18:24
there's these big reinsurance companies
01:18:25
and they have pools of capital and
01:18:26
there's Capital markets involved and
01:18:28
bonds that are sold to protect
01:18:29
reinsurance so there's you know hundreds
01:18:32
of billions of of dollars trillion
01:18:34
dollar Plus in reinsurance when an event
01:18:37
like this happens those reinsurance
01:18:38
markets take a loss and the loss causes
01:18:41
them to raise rates significantly and
01:18:43
it's and when that happens the
01:18:44
reinsurance markets Harden is what they
01:18:46
say and then rates go up next year for
01:18:49
reinsurance and then the insurance
01:18:50
companies pass those rates on to
01:18:52
Consumers and to property developers and
01:18:54
to the people that have mortgages and
01:18:57
the more of these events happen even
01:18:59
though it just happened in Acapulco it
01:19:01
impacts insurance rates everywhere so as
01:19:03
we see the events like what happened in
01:19:04
Maui what happened in aapco what
01:19:07
happened in Miami you can start to see
01:19:09
more of these things start to happen at
01:19:10
the same time the cost for insuring
01:19:13
property goes up and that starts to make
01:19:15
this whole system very difficult to
01:19:17
maintain because if the cost for
01:19:18
insurance doubles or triples and people
01:19:21
can't really afford it but the mortgage
01:19:23
required that they have it in all of
01:19:24
these high-risk coastal cities and
01:19:26
coastal areas that's where an economic
01:19:27
hit either has to be absorbed by the
01:19:29
federal government
01:19:32
or IND or or we insurance right or we
01:19:36
take a massive economic loss and so I
01:19:38
just want to say like this seems like an
01:19:40
outlier event and oh my gosh we should
01:19:41
be sorry and sad but the truth is the
01:19:43
frequency of these events and the risk
01:19:45
factors which is this ocean heat
01:19:46
temperature rising continuously for a
01:19:48
long period of time are going to drive
01:19:50
that frequency of events and there's
01:19:52
going to be a real economic cost to bear
01:19:54
on the order of several trillion dollars
01:19:56
over time because someone has to
01:19:58
underwrite that real estate and someone
01:19:59
has to underwrite the insurance to
01:20:01
support that real estate so it may seem
01:20:02
like a oneoff and oh you know this won't
01:20:04
be a big deal but it actually translates
01:20:06
economically through the reinsurance and
01:20:07
insurance markets into the real estate
01:20:09
markets fairly quickly um and so I just
01:20:11
wanted to kind of point out one of the
01:20:13
the second order consequences an article
01:20:16
in the Wall Street Journal a few weeks
01:20:17
ago Nick you can probably find it about
01:20:20
this exact issue where they profiled a
01:20:22
handful of home owners I think it was in
01:20:23
Palm Beach or West Palm Beach and they
01:20:26
essentially had to
01:20:27
sell and leave because they couldn't
01:20:29
afford the home insurance or for those
01:20:32
that own their home outright they just
01:20:34
stopped insuring it because they
01:20:35
realized the land value would be fine
01:20:37
and so they said if a storm there it is
01:20:40
if a storm hits go yeah if a storm hits
01:20:43
you know West Palm and and destroys my
01:20:46
home you know hopefully I'll be fine and
01:20:48
then I'll just leave and I'll just sell
01:20:50
it for the dirt but to your point it's
01:20:53
become economically untenable in a lot
01:20:55
of places for these folks to be able to
01:20:57
Ure insure their home look at this on
01:20:59
this example 100 and
01:21:01
$21,000 a year for home insurance what
01:21:05
what by way by the way so add up the
01:21:08
value well that's because there's a one
01:21:10
in 10 chance that A hurricane's going to
01:21:11
hit them on any given year right and
01:21:12
then they lose their whole value so do
01:21:14
the math on what the total Real Estate
01:21:16
Value in that region is and think about
01:21:18
what it gets written gets written down
01:21:20
to as everyone starts to sell and then
01:21:22
you do that Ross all these regions where
01:21:23
there's now high risk and lack of
01:21:25
insurance available and you have a real
01:21:27
economic question on who's going to step
01:21:29
in to support and buoy those asset
01:21:31
values now but aren't there State actors
01:21:34
now that step in and act as a reinsurer
01:21:37
great question in Florida they have a
01:21:39
reinsurance pool that is largely assumed
01:21:41
to be completely underfunded and so
01:21:43
everyone says like Florida's got this
01:21:44
reinsurance pool they'll write your
01:21:45
stuff but the Florida if people if you
01:21:48
ask people in the reinsurance industry
01:21:49
they're like this thing's basically
01:21:50
bankrupt it's completely insolvent this
01:21:52
isn't real so the federal government's
01:21:54
going to be asked to step in and cover
01:21:56
that thing at some point and then
01:21:57
someone's got to write a trillion dollar
01:21:59
check I mean you know you want to
01:22:00
complain about sending 100 billion to
01:22:01
Ukraine and Israel wait until most of
01:22:03
the country has to underwrite Coastal
01:22:04
communities real estate values so
01:22:06
Silicon Valley actually needs to be
01:22:09
proclimate change so that you can reinl
01:22:12
the money
01:22:14
supply wow I mean and then the other the
01:22:16
other seriously I'm I'm I'm being
01:22:19
factious but I'm kind of not it's really
01:22:21
crazy that so many Industries it it I
01:22:24
think Sac said it really really quite
01:22:26
perfectly when the money supply is
01:22:28
shrinking there's just a lot less money
01:22:29
to go around when the money supply is
01:22:31
growing it's much easier for all of us
01:22:33
to grab a share of it and now that it's
01:22:35
shrinking you have this weird effect
01:22:37
where you actually want government
01:22:38
Intervention which unfortunately only
01:22:40
happens in acute tragedies and
01:22:44
calamities and so what are we hoping for
01:22:46
now as a society that's a very scary
01:22:48
idea the second R is who who's going to
01:22:50
buy these homes if they can't be insured
01:22:52
right is that going to crash home prices
01:22:53
freberg that's my point is that these
01:22:56
assets aren't worth what they're
01:22:58
currently marked at and if you add up
01:23:00
all of the real estate Assets in all of
01:23:03
these different regions that you know
01:23:05
everyone assumes are worth X but the
01:23:07
only reason they're worth X is because
01:23:08
they're insured and if they're not
01:23:10
insured people are going to have to
01:23:11
start to sell them and if they can't
01:23:12
afford the insurance they're going to
01:23:13
have to start sell them then the real
01:23:14
value starts to come out these sorts of
01:23:16
events like aapco are catalyzing events
01:23:19
for forcing the market to rewrite this
01:23:21
stuff that's this is the beginning of
01:23:22
cascading effect I saw a really
01:23:24
interesting study about the the the risk
01:23:27
of the rising oceans and just the the
01:23:29
salinity of the oceans to all the real
01:23:32
estate in Malibu and the reason is that
01:23:34
you know if you look at the Malibu
01:23:35
Coastline there's a small number of
01:23:37
homes but they trade at an extreme
01:23:39
amount of economic value but what
01:23:42
underpins all of that stuff are that
01:23:43
these homes are viable and that you can
01:23:46
live in them and that you don't have to
01:23:48
replace them and that if you can
01:23:49
sufficiently drill far into the Bedrock
01:23:51
you can keep these homes safe
01:23:53
and this study was just talking about
01:23:54
how the corrosive effects of the ocean
01:23:56
are such now that you can't actually do
01:23:58
that to the same rate when you when you
01:24:02
actually initially buy these homes so
01:24:03
now you have these 50 hundred million do
01:24:05
homes that are really at risk of just
01:24:07
corroding and falling into the sea
01:24:09
interesting yeah that's always been an
01:24:11
issue there and you're right on the PCH
01:24:14
Highway and there's a small amount of
01:24:15
land between you in the water so if it
01:24:17
starts rising or it's corrosive you know
01:24:20
I've rented those homes before friends
01:24:21
of ours have as well and the water just
01:24:24
goes right underneath the homes and
01:24:25
every year it goes a little bit further
01:24:27
under the home right yeah and you can't
01:24:30
and some of the homes now when they when
01:24:32
they rent them to you for the summer
01:24:33
they say Hey listen during High Tides
01:24:35
you can't get to the beach safely you
01:24:37
can like jump off your back porch and
01:24:39
jump into a wave but at you know low
01:24:41
tide you can get down and and use the
01:24:43
beach if not you have to walk down the
01:24:44
street and go down like you know another
01:24:45
person's alley to get to the water ja
01:24:47
where are you now so I have been in the
01:24:49
Middle East I got to go to Riad for the
01:24:51
first time I'm in the UAE for the second
01:24:53
time I don't have any business interests
01:24:55
here but I have uh been taking a bunch
01:24:57
of meetings and the reason I went is I'm
01:25:00
actually and I'll pre-announce it here
01:25:02
I'm going to be bringing this week in
01:25:04
startups I'm going to do a series from
01:25:06
the Middle East and feature the capital
01:25:08
allocators and the startups that are
01:25:10
growing here the startup scene here is
01:25:12
extraordinary and I'm going to bring my
01:25:14
founder University to the region as well
01:25:16
and I'm going to start teaching
01:25:19
entrepreneurs here in the region Egypt
01:25:21
Saudi us
01:25:23
Qatar anybody Jordan who wants to learn
01:25:25
how to build a company I'm going to be
01:25:26
teaching startups in the region and so
01:25:28
it's pretty exciting and I think
01:25:30
startups you know at their core is Hope
01:25:33
and uh personal freedom to change the
01:25:35
world and I think if we build deep
01:25:37
relationships between these important
01:25:40
countries that are playing a bigger and
01:25:41
bigger role in the global stage and we
01:25:43
we build companies together that's going
01:25:45
to be great for America American
01:25:47
interests so that's what I'm doing here
01:25:49
since people have been asking yeah what
01:25:50
if anything has changed between what you
01:25:53
thought of the Middle East versus what
01:25:54
you think of it now has anything changed
01:25:56
did you have a different view of Saudi
01:25:58
let's take Saudi for example what did
01:25:59
you think of Saudi and NBS before you
01:26:01
went and what do you think now after
01:26:03
you've been there well there there was
01:26:05
very little change in that Society over
01:26:08
the last 30 or 40 years and based on
01:26:10
what they've told me you know spending a
01:26:13
lot of time with a lot of people there I
01:26:15
maybe had I don't know 30 individual uh
01:26:18
meetings or coffees dinners literally 30
01:26:21
different people people and um they've
01:26:24
told me Everything's changed so personal
01:26:26
freedoms have changed radically economic
01:26:28
freedoms have changed radically the
01:26:31
political system hasn't changed nor do I
01:26:33
think that's going to change radically
01:26:34
but yes my opinion of it the reality of
01:26:37
it is it's changed massively and then on
01:26:40
top of
01:26:42
that yeah I I have learned a lot I've
01:26:44
I've never been there the
01:26:46
entrepreneurial excitement in the region
01:26:49
s do you think you were do you think you
01:26:50
were too judgmental before
01:26:53
um I have some core principles that I
01:26:56
believe in and what I will say is from
01:26:58
doing this podcast with the three of you
01:27:00
and then being thrust into like
01:27:03
geopolitics which you know I really
01:27:05
haven't been in my life I felt I needed
01:27:08
to get more educated I feel I am more
01:27:10
educated now after doing all these
01:27:12
meetings and I think the big education
01:27:14
is the people here are are not much
01:27:16
different than the folks uh in our
01:27:18
country and they all want peace
01:27:21
prosperity
01:27:22
personal freedoms they want to have a
01:27:24
great life with their family so to that
01:27:27
extent I think and and each of the
01:27:30
countries is very different you know and
01:27:31
so you can't paint with a wide brush now
01:27:33
of course I know that but there's no
01:27:35
substitute for being here and spending
01:27:37
time with people so so do you think that
01:27:39
you just had a misconception or do you
01:27:41
think you just fell for what the media
01:27:43
tried to portray these countries when
01:27:46
there were
01:27:47
incidents like how do you how do you
01:27:49
reconcile that as you change your mind
01:27:51
about them
01:27:53
well I I think things have actually
01:27:54
changed here more than I've changed my
01:27:56
mind I I still feel the same way I feel
01:27:58
about human rights and you know personal
01:28:00
freedoms and everything like that but
01:28:02
what I've learned is that this area is
01:28:03
changing so quickly and that change is
01:28:06
hard and and David said something really
01:28:08
important you know is like you need
01:28:09
strong people to make these changes here
01:28:12
and they're going to make the changes on
01:28:13
their time so the other thing I think if
01:28:16
there's anything that has influenced me
01:28:18
it's probably what what David said you
01:28:20
know is like this going to be hard to
01:28:22
make the changes here and another thing
01:28:24
you said you know there was one point
01:28:25
you said on this pod like hey do you
01:28:27
think they care what you think right
01:28:30
actually do care they listen to the Pod
01:28:32
but the truth is the changes are going
01:28:33
to occur here chth whether we're
01:28:35
involved or not and so I think as
01:28:37
Americans what we have to decide and as
01:28:39
Business Leaders how involved do we want
01:28:41
to be in that change and how deep of
01:28:43
those relationships do we want to build
01:28:45
because if we don't build those
01:28:46
relationships there are other people who
01:28:48
would like to forge relationships right
01:28:50
Russia China Etc so I think just in
01:28:53
terms of um the chessboard that we see
01:28:56
playing out right now the more America
01:28:59
can engage with this region build
01:29:02
companies with them I think it's going
01:29:04
to be better for Humanity and society
01:29:06
and I think if you look at China we
01:29:07
disengaged and how's that going for
01:29:10
us yeah it's going terrible so I want to
01:29:13
build companies here and that's the
01:29:14
thing is people are having big talks
01:29:16
about all of these issues human rights
01:29:19
changes um and so I
01:29:22
the thing I want to make sure people
01:29:24
understand is I want to see positive
01:29:26
change in the world in including our
01:29:28
country here everywhere and so you know
01:29:31
it's it's never coming from a place of
01:29:32
trying to be preachy uh to people I just
01:29:34
want to see positive change in the world
01:29:36
and you know now with this podcast being
01:29:38
so popular people have expectations of
01:29:40
us and one of the expectations is we we
01:29:42
know what we're talking about and I did
01:29:45
not know what I was talking about in
01:29:46
this region because I never spent time
01:29:47
here just like sax has never been to
01:29:49
Ukraine what does he know about Ukraine
01:29:50
and Russia he's never been to either
01:29:51
those places so you know just like sax
01:29:53
is going to go to Russia and Ukraine and
01:29:55
get educated you know I came here to get
01:29:56
educated so that I can represent the Pod
01:29:58
better I've been to the United States
01:30:00
and so I know that the US shouldn't be
01:30:02
involved there I'm joking with you my
01:30:04
friend I'm joking but we you know I
01:30:06
think we should go uh you know do more
01:30:08
travel and it's really inspiring to see
01:30:09
what's going on here on a very pragmatic
01:30:12
basis I will say this is going to be the
01:30:14
number two re region in venture capital
01:30:17
and it's going to be that in 10 years
01:30:19
because I met with a lot of the family
01:30:20
offices and the family Offices here are
01:30:23
extraordinary like they built these
01:30:24
businesses like really hard fought
01:30:26
businesses 50 years ago welcome to being
01:30:28
a capitalist Jason I love it the water's
01:30:30
warm in this bathtub join us well no the
01:30:33
the thing with these uh these
01:30:35
individuals is they're they're coming to
01:30:36
the United States to investing companies
01:30:38
here they're they're not just like the
01:30:39
dumb money at the table course they are
01:30:41
of course because they're smart business
01:30:43
people we're all smart business people
01:30:44
we've always wanted to be in business
01:30:46
nobody it's what you said nobody was
01:30:48
sitting here wanting to be some prachy
01:30:49
know it all yeah so anyway I'm learning
01:30:52
a lot I'm having a great time here I
01:30:53
don't have currently have any bu
01:30:54
business interests here but I would say
01:30:56
you know a year from now there'll be you
01:30:58
know a 12 episode run of this week in
01:31:00
startups featuring folks here and then
01:31:02
founder University will be here building
01:31:03
companies with people in the region so
01:31:05
I'll be investing in some companies here
01:31:07
and helping Founders St companies all
01:31:09
right uh saak I I yeah tell us about the
01:31:13
speaker sxs what this lunatic and well
01:31:16
let's not call him because he's third in
01:31:18
Char he's third in line for the
01:31:19
presidency so Sak who is he okay his
01:31:21
name is Mike Johnson he's from
01:31:23
Louisiana's fourth district he's been in
01:31:25
Congress for since 2016 it's his fourth
01:31:27
term he is in relative terms a
01:31:30
backbencher apparently he's never met
01:31:32
with Mitch McConnell that may be a good
01:31:34
thing but several members had to Google
01:31:36
him to find out who he was really yeah
01:31:40
here we are the good news in my view is
01:31:42
that he did vote against more funding
01:31:44
for
01:31:45
Ukraine however as much as I like him on
01:31:48
that issue there are other issues where
01:31:49
I think his previously stated views
01:31:51
could be problematic for the Republican
01:31:54
caucus so he's very socially
01:31:56
conservative he voted to ban abortion at
01:31:59
the federal level he's called gay
01:32:02
marriage a dark harbinger of chaos and
01:32:05
sexual Anarchy that could Doom even the
01:32:07
strongest
01:32:09
Republic on the issue of entitlements He
01:32:12
has expressed support for cutting
01:32:13
Medicare and Social Security I think
01:32:15
Trump has rightly figured out that that
01:32:16
would be death to the Republican party
01:32:19
where he is aligned with Trump is that
01:32:22
he bought into the election denial
01:32:24
theories and particularly he bought into
01:32:27
the Dominion scam that was pushed by
01:32:28
Sydney pal shout out Cindy pal who uh is
01:32:31
pleading guilty this week yeah the
01:32:33
Kraken yeah the Kraken so was lunatic
01:32:37
too muted of a word to describe this guy
01:32:40
sax would you say or would you I don't
01:32:42
think he I wouldn't say sorry David
01:32:44
David how did he get elected because I
01:32:45
thought there was like more moderates
01:32:47
that were like emers and even scal is
01:32:51
more to the left of this guy so how how
01:32:53
did how did is it that all of that ended
01:32:56
up with the the far far far right person
01:32:58
getting elected this is the crazy thing
01:33:01
is that they had better choices and so
01:33:03
for example Jim Jordan is the guy who I
01:33:05
think should have gotten it Jim Jordan
01:33:08
is always supremely prepared for any
01:33:10
hearing he's one of the only Republicans
01:33:11
who knows how to ask tough questions I
01:33:14
think he would have run the house with
01:33:15
tremendous discipline this is a case
01:33:17
where you're plucking a guy out of
01:33:18
obscurity he may not even have the
01:33:20
experience to run the house with the
01:33:22
necessary discipline moreover he's
01:33:25
somebody who the Democrats are going be
01:33:27
able to write campaign ads against very
01:33:29
easily now you asked the question how
01:33:30
did this happen I think that the GOP
01:33:33
just kind of ran out of gas I mean they
01:33:34
went through so many candidates that
01:33:37
they
01:33:37
exhausted all the options and there were
01:33:40
three weeks of chaos and the New York
01:33:42
Times summed up the feelings of the GOP
01:33:44
caucus by saying they view Johnson as
01:33:46
someone who's sufficiently conservative
01:33:48
who they do not personally despise so
01:33:50
that's really the the reason at the end
01:33:52
of the day is they just perceive him as
01:33:53
a nice guy but as you know nice guys
01:33:57
don't always get the job done I think
01:33:59
they what is happening they kind of ran
01:34:01
out of candidates and and they they
01:34:03
chose this guy because he's a nice guy
01:34:05
now Jim Jordan this guy's a nice guy
01:34:08
he's a nice guy he's very believes gay
01:34:11
people are
01:34:12
evil uh I don't I certainly don't
01:34:14
approve of that message but it comes
01:34:16
from his religious views well done
01:34:19
Republican party but look Jim Jordan was
01:34:21
the right guy here but Jim Jordan
01:34:23
sometimes has sharp elbows and so he's
01:34:25
rubbed people the wrong way Mike Johnson
01:34:28
on a personal level has not rubbed
01:34:30
people the wrong way but I agree that
01:34:34
the campaign ads are going to write
01:34:36
themselves
01:34:36
here he he apparently hasn't rubbed
01:34:42
anybody and then the crazy thing is that
01:34:44
the one social issue it gets crazier it
01:34:47
get well from my point of view the one
01:34:49
social issue or cultural issue where
01:34:51
he's not that conservative apparently is
01:34:53
on CRT he said a bunch of things that
01:34:57
indicate that he views the us as being
01:34:59
systemically racist and doesn't think
01:35:02
Republicans should should be attacking
01:35:05
CRT which I think is the one cultural
01:35:07
issue where Republicans should be on
01:35:09
offense they should be opposing the woke
01:35:12
M virus I would like to see them go
01:35:14
after that issue and not be trying to
01:35:16
relitigate gay marriage or abortion at
01:35:19
the federal level so in my view this
01:35:21
guy's the the wrong mix of of cultural
01:35:24
issues and then of course his USS on
01:35:26
entitlements are a Surefire loser for
01:35:28
the Republicans so the Republicans are
01:35:30
all like slapping each other's backs and
01:35:33
sucking each other's over getting this
01:35:34
done they're all so happy about
01:35:37
it but I think it's a disaster they're
01:35:39
making whoa yeah it's a disaster how
01:35:42
long does this last how many days give
01:35:44
me how many muchis how many sacis does
01:35:47
this guy last yeah you give him seven
01:35:52
well again the Republicans now are so
01:35:54
burned by the chaos that has went
01:35:56
through that I don't think they want to
01:35:57
go back into it too easily wow so it
01:36:00
could last it I look you're right I
01:36:03
don't think I don't think he's gonna
01:36:05
last long term but um but it may be more
01:36:08
than a few
01:36:09
Scaris yeah sh scari only lasted 11 days
01:36:13
so yeah that's what I'm saying 100 days
01:36:15
the scaramucci is a is a unit that
01:36:17
equals 11 days yes so you think like 10
01:36:20
scar jeez yeah could no but you have to
01:36:23
you could get to if you have to get to
01:36:25
like January 20th of 2025 which is the
01:36:27
inauguration what are you talking about
01:36:29
365
01:36:30
days right plus another we're talking
01:36:34
like 7 here no we're talking about 41
01:36:37
scaramucci to get to J 20th I mean 40
01:36:41
scaramucci in a
01:36:42
wake2 40 in a wake up oh my Lord so what
01:36:47
you're GNA see is now that the media
01:36:49
this is already started there's going to
01:36:50
be a drip drip drip of all the things
01:36:53
that he's ever said when he was kind of
01:36:55
a backbencher and no one was paying
01:36:57
attention all these sermons that he's
01:36:59
given and so forth they're going to be
01:37:02
you know writing stories about that and
01:37:03
they're going to make the guy seem like
01:37:05
a wacko or expose that he is a wacko I
01:37:07
mean well I I think that um I would say
01:37:11
that he's just somebody who's got very
01:37:13
socially conservative views based on
01:37:15
being Evangelical and might be wildly
01:37:18
out of touch with Americans yeah I don't
01:37:20
want to like
01:37:21
offend people in that group by saying
01:37:24
he's a wacko but I think you are right
01:37:26
that it is not in tune with most voters
01:37:30
let's say that hey before we go saaks I
01:37:32
got to ask you uh about the uh about the
01:37:35
Trump cases I mean as a lawyer what what
01:37:39
do you think is going to happen here we
01:37:41
have all of the people explain to the
01:37:43
audience what happened well I mean I I
01:37:45
think everybody's following it Jenna
01:37:47
Alice uh Kenneth Che chesbro it's
01:37:50
spelled cheesebro but as chesbro and
01:37:52
Sydney pal have all now pleaded guilty
01:37:55
some of them for felonies in fact but
01:37:58
the others misdemeanors and they're all
01:38:00
really apologetic about uh basically
01:38:03
this a fake elector um scam they were
01:38:06
running to try to overturn the election
01:38:08
and they say there's six more of these
01:38:10
19 people in the RICO case who are going
01:38:12
to flip next week at the same time Trump
01:38:15
was doing his um case in New York and
01:38:18
was find 10K for violating this the gag
01:38:20
order second time third time they think
01:38:23
he's going to actually potentially put
01:38:25
be put in jail which seems to be
01:38:27
something he's trying to
01:38:30
do so what's your take here saak is it
01:38:33
all a deep deep state conspiracy still
01:38:35
the January 6 stuff or were these
01:38:37
lunatics actually trying to overthrow
01:38:38
the government to be honest when you
01:38:40
mentioned the name Jenna Ellis all I can
01:38:42
really think of is that election Hearing
01:38:44
in Michigan where she made a face
01:38:47
because Rudy Giuliani audibly
01:38:50
farted
01:38:52
and then it turned out that uh that she
01:38:54
got coid a few days later and that we
01:38:56
think that Giuliani had it at the
01:38:57
hearing so he may have farted the co
01:38:59
into her that's what we've learned after
01:39:01
all of this with coid is that it's not
01:39:03
it's actually is Airborne it's
01:39:07
just you could you could fart Co onto
01:39:11
somebody we got to go to a second
01:39:13
science corner here free we need an
01:39:15
emergency science cor can you fart Co
01:39:17
into somebody's face please free the
01:39:22
serious question can it come out your
01:39:24
bum as well as your mouth come on should
01:39:26
we have put masks or diapers when we
01:39:29
were on airplanes to block the co from
01:39:31
we should have masked in we were masking
01:39:33
in the wrong place yes
01:39:36
freedberg I got him to smile he almost
01:39:39
left hold on put put this on the screen
01:39:42
yeah and you catch from a but
01:39:47
on know but she say she says the tltr is
01:39:51
unlikely but that's not a no it's not a
01:39:54
no that's not the same as impossible
01:39:57
yeah I mean I would can we get fouchy to
01:40:00
come back where shout out Anthony fouchy
01:40:03
he's got the answer for us in all
01:40:05
seriousness this is uh they're going to
01:40:07
flip all these folks I mean this is like
01:40:09
the end of Good Fellas here everybody's
01:40:12
getting pinched you think juliani is
01:40:14
gonna get get go to jail here what do
01:40:16
you think how does this send sax I think
01:40:19
what's likely happening is that they're
01:40:22
flipping these lower level figures in
01:40:24
order to flip the next higher level
01:40:26
which would be Giuliani and John Eastman
01:40:30
because I I don't think these people
01:40:31
have anything on Trump so they're going
01:40:33
to try
01:40:34
and you know use Jenna Lis to flip Rudy
01:40:38
and then they're going to try and see if
01:40:39
Rudy will flip on Trump but this all
01:40:41
begs the question of like was there ever
01:40:44
a crime here oh well yeah I mean they
01:40:47
they admitted yeah who who's admitted to
01:40:50
it
01:40:51
the the three people who pleaded guilty
01:40:54
and like because they don't want to have
01:40:55
their lives ruined by spending their
01:40:57
lives in criminal prosecutions that
01:40:59
could send them to jail so obviously
01:41:01
they're going to cut a deal but that
01:41:02
doesn't necessarily mean that like
01:41:04
they're going to get the big eye here on
01:41:06
some on some crime and in fact I
01:41:08
remember when the TDS crowd was orgasmic
01:41:12
over Trump's CFO flipping remember when
01:41:15
wesle Heim he's going to jail for six
01:41:18
months yeah yeah but remember when he
01:41:20
supposedly flipped on Trump and it
01:41:21
turned out to be a big nothing Burger
01:41:23
they couldn't get Trump you you keep
01:41:24
trying to get never get Trump trump
01:41:26
knows how to say stuff he's just like
01:41:27
hey maybe you guys could do something
01:41:29
over here with the election sex I read
01:41:31
that he walked out of the courthouse
01:41:32
yesterday and he got like a $10,000 fine
01:41:35
for violating a gag order by threatening
01:41:38
a courtroom reporter it's so incredible
01:41:40
this whole thing how does a president of
01:41:41
the United States who's running again
01:41:42
for president not have the right to say
01:41:44
what he wants that's crazy to
01:41:46
me security of these individuals he's
01:41:48
going after like the like court report B
01:41:51
like he's going like the second what
01:41:53
happens what happens if he gets uh
01:41:55
convicted does he miss the election is
01:41:58
there some rule that says he can't run
01:42:00
what is the the law they don't know that
01:42:02
literally is unknown territory we're in
01:42:04
Uncharted Territory Uncharted Territory
01:42:06
just like the fart okay everybody just
01:42:08
like the hot water in the ocean I think
01:42:10
I think Jen Ella is gonna get payback on
01:42:12
Rudy for that fart that Co F absolutely
01:42:15
she flipped she flipped it and the fart
01:42:17
yeah that's that's it all right
01:42:19
everybody uh God I mean at least there's
01:42:22
something to laugh about in this
01:42:24
horrible
01:42:25
terrible end of 2023 it's so depressing
01:42:29
right now I mean it's just so depressing
01:42:31
everywhere isn't it let's pray for peace
01:42:33
and um listen this has been another
01:42:36
amazing episode of the all in podcast
01:42:39
episode
01:42:41
151 let your winners
01:42:44
ride Rainman
01:42:48
David and in said we open source it to
01:42:51
the fans and they've just gone crazy
01:42:52
with
01:42:53
[Music]
01:43:01
iten
01:43:04
besties my dog
01:43:07
[Music]
01:43:09
driveway oh man myit meet we should all
01:43:13
just get a room and just have one big
01:43:14
hug orgy cuz they're all this useless
01:43:16
it's like this like sexual tension that
01:43:18
they just need to release somehow
01:43:22
W
01:43:25
your we need to get merch
01:43:30
[Music]
01:43:34
our I'm
01:43:37
[Music]
01:43:39
doing