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hey everybody welcome to another episode
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of the all in podcast
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it's been a crazy uh couple of weeks
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here we had the all in summit and boy
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was it amazing our bestie david freeburg
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couldn't make it today uh he had uh some
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personal things he had to attend to so
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joining us again
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is brad gerstner welcome back
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to the fifth bestie uh on his is this
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your fourth appearance now including the
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uh all in summit i think you've been on
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four times now
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very good all right that's about five
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percent of the episodes a nice nice uh
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i think that's a nice little chip in
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your uh in your your belt there i mean
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unworthy replacement to freedberg but i
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do what i nobody can replace freeburg
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that is the truth
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[Music]
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[Music]
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just uh going around the horn here
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chamoth did you have a a favorite moment
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on stage a favorite moment off stage
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what is your general impressions of the
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all-in summit
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2022 i thought the people i met were
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really impressive
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i really enjoyed meeting people and
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learning what they did
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i also thought you and your team
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organized
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really an incredible event and
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i forgot how good you are at these
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things but um so i give you a lot of
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credit i really enjoyed participating
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the only thing that i was nervous about
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during that whole thing which probably
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limited a little bit of my fun
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was
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my mom was coming
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she's 81
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and so it's not i was not super psyched
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to really be in the throes of all the
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parties to be honest just because i was
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like
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i didn't i didn't necessarily want to
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get coveted and i didn't want to
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introduce it to her and
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got it yes you know nat ended up getting
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really really sick but more uh like a
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flu and a cold yeah um but you know i've
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been fine my mom's fine i know a bunch
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of folks that came unfortunately tested
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positive so
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that was the only that's the only
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downside where i would i would have
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wanted to be a little bit more carefree
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but um
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that was the only thing that was but
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that's not in anybody's control so yeah
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i i recall that when i had a christmas
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party
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back in december
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like a week later he called my christmas
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party a super shredder even though i
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tested everybody at the door every
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single person was negative at this
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summit
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so so my parents went to this conference
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they both got coveted my aunt who lives
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in miami who was in her 70s she got
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coveted
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are they okay by the way are they good
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yeah they're most important
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it's you know it's omicron it was like
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you know it's like bad for two days and
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then you get better so they're gonna be
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fine thank god
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or no yeah one did and one didn't so um
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my brothers got covered in so your
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brother's got it which one josh josh and
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jamie both got it and then josh's wife
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got it so she um took the pax love and
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everybody's great now but yeah
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if you go to my a lot of people who came
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to the event it was their first time out
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like this was for a lot of people i
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think very emotional and exciting
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because it was their first venture out
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and if you go to miami to a conference
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like you're gonna get
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getting a covet especially if the event
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organizer doesn't test anybody it's
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impractical to test 850 people nobody
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would come like no if you want to make a
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profit right
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nah it wouldn't have actually been that
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expensive you could put that on the
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people they could just you know share
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their results but
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i think at this point you know even on
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the planes going out there
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nobody's wearing masks i don't know if
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you know well you guys are flying
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private but you know my flight out there
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it was all you know nobody's wearing
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masks anymore but anyway j cal i think
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everybody who went to the conference
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took the risk upon themselves of getting
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coveted and you know it's not
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the end of the world or anything they're
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all fine
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but i'm just pointing out the hypocrisy
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my hypocrisy yes exactly it's like
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you're like nancy pelosi or something
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where you're criticizing
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every time a republican gets covet it's
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their fault but when you throw a super
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spreader and i think ais now stands for
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all in super spreader yeah it's not your
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fault it was well beyond your control it
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was the virus absolutely and in fact it
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was probably just florida it was just
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yes but in mine i tested
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yeah
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it's not even proven that mine was a
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super spreader all right in all
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seriousness did you have a favorite
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moment on stage or some reflections on
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the event uh i thought the elon thing
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was really good by the way and then the
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only thing i'll say is the
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the palmer lucky thing was pretty
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incredible um yeah which will be we will
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be releasing the podcast
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i think that that episode is uh
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eye-opening
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yeah we don't want to say too much but i
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think that you were uh
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really i think you handled yourself
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really well there oh thank you for that
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jamath what actually happened i wasn't
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there for that portion
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i haven't heard anything about we give a
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mini summary here of it i guess i'll
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give you the outside inversion
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he gives
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what i can only describe as an
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incredibly
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motivating
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breakdown of american defense and what
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his company
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and you know you have to remember to put
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it in context this is a 29 year old
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young man
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who has now started two multi-billion
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dollar unicorns so you know this he's
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going to be around for a long time doing
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amazing things
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but he talks about anderl which is his
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defense company really impressive and
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then the whole you know everybody's kind
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of like rousing and cheering and
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applauding
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and then he said you know i have
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something else that i want to get off my
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chest and i was standing beside jason
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backstage
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jason was looking at the monitor i was
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looking at the mirror at myself but uh
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and check out your sweater
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uh and uh he said uh you know there's a
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person here that that has been you know
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really hard on me you know tried to ruin
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my life attacked my family
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and represents you know these really
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this strain of very influential people
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in silicon valley who have gotten it
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totally wrong basically
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and he called out cancer culture and
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then he called out jacob and to jake
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all's credit after he was done
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jacob was the first one that walked out
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on stage shook palmer's hand and then we
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all sat down we talked to him and then
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the two ended up hugging it out at the
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end but there were moments that were
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very heated in the middle of it um the
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whole thing was
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incredible to watch i got to be honest
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with you super dramatic yeah incredible
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i
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the most shocking
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and surprising aspect of the whole thing
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was that a person as important as palmer
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lucky felt the need
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to get revenge on a person as
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unimportant as jason calcanis
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that was the part i mentioned when he
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was like my career was
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when he said important people in silicon
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valley i initially thought oh my god
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he's talking about me what did i say
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i that was i was thrown by that tip if
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i'm being honest he's like my entire
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career was stopped in its tracks and i
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had to claw my way back because jason
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calacana said this and i was like
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um
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no
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actually no i'm looking forward to when
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you're it's going to be a great episode
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it's going to be coming out next week
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thank you
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yeah and i i want to give a shout out to
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um glenn greenwald matt tybee and
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antonio garcia martinez for appearing
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and you know we did two different panels
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we did one on domestic politics with
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glenn and taibi and then the we did a
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debate on ukraine which has now been
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published between glenn and antonio and
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particularly i want to thank antonio
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because
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it did end up being a little bit of a
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two one at the end which wasn't my
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intention but i have my own views on it
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too although i did try to be somewhat
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restrained and
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even-handed in the moderation but it's a
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really good debate we should have had
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longer we only had about 30 minutes
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but you can see that online right now it
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actually is a great uh example of
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actually how to listen to somebody else
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having a completely diametrically
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opposed view and still be respectful i
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thought those guys were great to listen
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to i think it's a new format sax and i
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think you know somebody was like hey
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maybe you and j cow could do it i think
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you and i moderating like two people
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with different sides it could be like a
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really interesting format for us for
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future events brad did you have a
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favorite moment on stage maybe outside
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of elon of course you can mention i
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would say you know maybe both on stage
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and off stage
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you know i think listen i think this
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podcast has taken some shots and
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probably appropriately so at times for
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being a bunch of men in a little bro
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culture
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and the effort made to build authentic
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community and diversity
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into that room i've been to a lot of
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conferences
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whether it's claire thielke you know
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patty wexler extraordinary you know
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minds women all diverse cultures
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economic backgrounds when we walked
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around
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the floor p you know indiana kentucky
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west virginia everywhere
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right and who were starting companies
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having authentic conversations and
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frankly we're grateful for the community
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and the advice that they were being
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given these were from big startups to
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very small startups and so for me that
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was a highlight the effort you made i
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don't know almost 40 women you know both
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economic i thought as well as you know
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geographic uh diversity and then you
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know listen i had a moment
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after bill and i after gurley and i got
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off stage
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um i was stopped by a group of founders
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and they said hey we need your help i
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said what and they said we are that
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company you and bill were just talking
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about and said was screwed
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we raised 100 million dollars last
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november from from tiger at 100 times
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arr what do we do
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right and like like the fact that that
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you know that those conversations are
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going on of course they're not screwed
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and it's a very interesting company but
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it led to a real conversation that you
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don't often have
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um at conferences like that and so i
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thought it was much more than just a
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bunch of talking heads on stage i
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thought it was a real give and take
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in the you know uh in the crowd
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afterwards the parties the in-betweens
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and so i really enjoyed that the other
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big um thing that we avoided um
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failing on was uh putting back the amas
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i think these amas
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are some of the most interesting
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parts of that conference and i think
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that we should make sure that we
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probably do an ama jason like
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both days we do a two-day conference
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the amas are awesome yeah when the
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audience is asking us and just to
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explain to people how we were able to
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um you know curate the audience we ask
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people i think it's a good playbook for
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other people if they want to steal it to
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uh they could they could pick the price
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they wanted to pay based on their
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station in life and so people said i
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want to come i'll pay 500 i'll pay a
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thousand i'll pay 2500 instead of the 7
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500 ticket price which was like 300
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people in the audience and we just said
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hey what do you love about the show you
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know what would coming to the conference
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mean to you and we kind of just sorted
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that and we look for people who are
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passionate about the show and then you
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know the the thing that stuck out to me
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and i know freeburg uh had a great time
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as well
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was the passion of the audience and how
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much they appreciate what we do here
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every week and so the love that we got
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people asking to take selfies people
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telling us what the show meant to us you
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know and people coming from all
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different uh stations in life really it
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made it not elitist but it felt like the
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people who were there
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were all builders and that was really an
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interesting part what i instructed the
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team to do was anybody who was like a
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real estate broker or a money manager a
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sales executive a business development
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person i said let's not have them there
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no offense to those you know critical
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functions but a lot of people will come
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to these events to sell and get
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customers
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but i said anybody who's a builder an
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artist they're making something in the
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world let's give them the priority for
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these the scholarship tickets so you
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know when you met people they were all
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building something interesting in the
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world and and no press i think also
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created a certain
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vibe there we didn't have the media
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there
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criticizing every panel and
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you know every speaker and so it i think
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it just yeah made it magical well i
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think it really couldn't do it without
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all you guys uh freeberg and the besties
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and brad you were helping behind the
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scenes so couldn't do without everybody
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and my team
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turned out surprisingly well i thought
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i thought the whole thing was a j-cal
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grift and it actually turned out there's
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been there was there's some grifting
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going on for sure we still haven't seen
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an accounting of of exactly where all
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the money went so it's it's close we'll
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have that accounting any day now saks
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any day now what could you have done
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better what would you change for the
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next time um you know i
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it's a great question you know we we
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always do a document with lessons
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learned right after the event so i went
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through my team and i had 26 people from
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my team uh 21 from launch and i think
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five from insight came and uh you know
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helped staff the event
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a little more time to to work on the
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speakers in the agenda um if we had a
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little more time i would have teased out
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of each bestie
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you know maybe five or ten speakers or
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topics they wanted and worked backwards
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so just a little more time to to to to
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experiment with the format but i i took
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an experimental approach to it we did
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have people who did solo dolo like ted
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style talks we then had people come on
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stage uh with the besties and do
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discussions but
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having all besties on stage all the time
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is a little hard for for everybody i
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know david likes to focus on maybe a
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couple of things other people like
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chamoth and i like to be on stage for
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everything i think
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um but the format was experimental and
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there was a couple of great moments i
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think when we overlapped folks so i
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think nate silver overlapped with keith
00:13:53
roboy
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uh you and bill gurley together tim
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robert i'm sorry overlapped with keith
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roboy um those were magical moments i
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think and so i have
00:14:04
something in my brain about weaving
00:14:06
individual talks and data points with
00:14:09
the besties and then having the next
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speaker on the stage the next speaker
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and i would have liked to have more time
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to
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refine that format i think okay my only
00:14:17
question is was the palmer lucky deal
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was that a plant did you plan that no
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did you
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put that in there i'll tell you the back
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story is i you know i i've had invited
00:14:26
him on this weekend starts before all in
00:14:28
came out many times he said [ __ ] you
00:14:30
basically in so many words i hate jake
00:14:32
out and then when all in came out he's a
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fan of this show um i think he's
00:14:36
particularly a fan of david sax's and i
00:14:39
think david knows a lot of the investors
00:14:41
the investor pools i think overlap in a
00:14:43
lot of different circles of ours
00:14:45
and um i said would you like to come to
00:14:47
the summit
00:14:48
and i and i basically said to him
00:14:50
heartfelt like listen i think the work
00:14:51
you're doing to protect the country
00:14:54
most people in silicon valley don't
00:14:55
believe in building weapon systems but i
00:14:57
kind of am with you on this so we
00:14:59
probably have some common ground here i
00:15:00
think the mission of what you're doing
00:15:02
is more important than our disagreement
00:15:03
from
00:15:04
you know the hillary clinton versus
00:15:05
trump days maybe we could just you know
00:15:07
put that aside and have you speak and
00:15:09
surprisingly these people were like yes
00:15:11
i didn't know they were doing yes
00:15:12
because he had a plot to dunk on me but
00:15:14
who cares you know like i don't mind
00:15:15
being dunked on if i'm wrong about
00:15:17
something or i'm right
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it's the whole spirit of this show is to
00:15:21
you know to learn and grow and have
00:15:23
great conversations so with that maybe
00:15:24
we start the show now
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let's do it all right let's go let me am
00:15:28
i am i still allowed to do intros or is
00:15:30
it too triggering because i do have
00:15:31
interest for this week do it
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say do it okay i got thumbs up only if
00:15:35
they're nice
00:15:36
well you know that's the caveat that i
00:15:38
cannot guarantee but anyway here we go
00:15:40
getting ready to gallivant across the
00:15:42
italian countryside he spent 40k at all
00:15:45
in summit on food and wine he took 400
00:15:48
selfies in three hours those sweaters my
00:15:50
lord the wreak of power the dictator
00:15:51
himself is back shamath polly hoppity
00:15:54
welcome back to the show thank you jason
00:15:56
all right his body looks like he doesn't
00:15:58
eat cake he's got a major steak in
00:16:01
snowflake you might have heard him
00:16:03
earlier on the week with bill gurley
00:16:06
he's the crossover fund manager with
00:16:08
that bde
00:16:09
our fifth bestie the audience hangs on
00:16:11
every word he has to say the dark knight
00:16:13
of namaste welcome back to the program
00:16:15
brad gerstner
00:16:17
i like it what's bde
00:16:20
if you don't know then you don't know
00:16:22
you can look that up urban dictionary
00:16:24
he's about to turn 50 but he looks like
00:16:26
he's 65. after 72 hours in miami we're
00:16:29
not sure he's still alive the [ __ ]
00:16:31
keeper is jealous of the facts under his
00:16:33
eyes his portfolio has been down for 35
00:16:35
straight days no surprise the rayman
00:16:38
himself is back david sacks
00:16:40
too rough on saks no it's okay is it
00:16:43
okay i felt like i might have gone too
00:16:44
rough on sax all right i guess we start
00:16:46
with markets and um s p 500 down 15
00:16:51
year-to-date down down 11
00:16:53
two stocks of note uh that did
00:16:55
particularly well during covet uh zoom
00:16:56
and snowflake reported their earnings
00:16:59
this week and they beat expectations of
00:17:00
course
00:17:02
that uh gives them no reprieve uh market
00:17:04
cap for
00:17:06
uh
00:17:07
zoom 31 billion they got almost six
00:17:10
billion dollars in cash uh which was a
00:17:13
prescient move to cash up i guess during
00:17:15
the
00:17:15
the boom
00:17:16
times their stock jumped 18 after the
00:17:19
earnings so great for them uh q1 revenue
00:17:22
2023 1 billion 12 year-over-year they
00:17:25
got an 80 gross margin for that business
00:17:27
pretty impressive
00:17:29
500 million adjusted free cash flow 7
00:17:32
000 employees
00:17:33
they're at almost 500 000 per employee
00:17:36
uh at this point and stock is still down
00:17:38
43 year to date but a little bump here
00:17:41
so i i guess we might be bumping along
00:17:42
the bottom soon and just to quickly
00:17:44
recap snowflake and get your comments
00:17:46
after that snowflake reported their
00:17:47
quarterly earnings yesterday
00:17:49
41 billion market cap they got almost 4
00:17:52
billion in cash
00:17:54
they were down slightly at the taping of
00:17:56
this episode today and they're down 67
00:17:59
from the peak of 409 a share in november
00:18:01
so they're not in the 85
00:18:03
plus club like coinbase and peloton but
00:18:06
still they've lost two-thirds of their
00:18:09
market cap
00:18:11
422 million in revenue 85 year-over-year
00:18:14
beat their expectations uh and um
00:18:18
gross margin 72
00:18:20
net retention 174 percent uh 70 on
00:18:23
growth within within their existing
00:18:24
customers to david sacks's point about
00:18:27
why sas is so great they got 4 000
00:18:29
employees
00:18:30
uh 6 300 total customers
00:18:32
so
00:18:33
uh i guess maybe starting with you brad
00:18:35
since you're in this in the vic of it
00:18:37
thoughts on uh i know your major
00:18:39
snowflake early supporter thoughts on
00:18:42
what's happening in the market and maybe
00:18:44
any indication uh from these two
00:18:47
let's face it strong results
00:18:49
uh in the bouncing along the bottom i
00:18:52
think is how we'd all describe what's
00:18:53
happening right now well i think listen
00:18:55
what makes investing hard is sometimes
00:18:57
you have to hold simultaneous truths
00:18:59
right and the reality is there's a lot
00:19:01
of cognitive dissonance when you see
00:19:02
something down 30 40 50 but it may be
00:19:05
still fair value
00:19:07
right we were talking about last october
00:19:09
like make no mistake about it just take
00:19:11
snowflake as an example
00:19:13
the move from 400 to 200 was probably
00:19:17
just what i would describe as
00:19:19
normalization in a world where rates
00:19:22
were going back to two and a half or
00:19:23
three percent
00:19:24
right the market last october had gone
00:19:28
too high we discussed it on this pod we
00:19:30
discussed it on cnbc and so i expected a
00:19:34
return to what we call the five year
00:19:36
average as we discussed at the summit
00:19:38
what's been surprising to me is the
00:19:40
negative reflexivity that's kicked in as
00:19:43
a result of the war in ukraine
00:19:45
uncertainty about hyperinflation
00:19:47
uncertainty about hyper rates and so now
00:19:49
we're seeing software generally all risk
00:19:52
assets growth assets trading now 30 40
00:19:55
50
00:19:56
below the five-year average right
00:19:59
so i don't think it's helpful to say
00:20:01
well none of that should have happened
00:20:03
no the reality is
00:20:05
meant that all of this stuff was going
00:20:07
to be down 20 to 50 percent because it
00:20:10
was way overvalued last fall
00:20:12
we gaslighted ourselves in many respects
00:20:15
we didn't hedge it perfectly in many
00:20:17
respects but that's you know that's what
00:20:19
happens in late market cycles so the
00:20:21
question is where are we today and for
00:20:23
example like why is the nasdaq up 300
00:20:26
basis points today right this it feels
00:20:28
like whiplash i come in one day and you
00:20:31
know you have market caps up 10 percent
00:20:33
one day down to 10 the next and so i
00:20:36
think it's really important to help
00:20:38
the people listening understand you know
00:20:40
like what happened this week and what's
00:20:43
going on it has been kind of a
00:20:46
uh a a pretty mixed bag this week in
00:20:49
fact of of things going down chamoth
00:20:51
what are you gonna take on this of what
00:20:53
we're seeing in the market this week
00:20:54
specifically with precipitous drops and
00:20:56
then you know the bouncing up again look
00:20:59
we
00:21:00
we still had some amount of rate
00:21:04
uncertainty from the fed i think people
00:21:07
weren't sure
00:21:08
how aggressively they were going to hike
00:21:10
but by early this week it was pretty
00:21:12
clear there's going to be two 50-point
00:21:15
hikes one in june
00:21:16
and one in july
00:21:18
and then effectively a pause
00:21:20
because then the fed funds rate will be
00:21:22
at around two percent and everything
00:21:25
from there will probably be path and
00:21:27
data dependent
00:21:28
okay that's effectively what they said
00:21:32
now i think the the markets had actually
00:21:35
already started to see that writing on
00:21:36
the wall
00:21:38
so if you go back to you know one of our
00:21:40
favorite measures which is the 10-year
00:21:41
break even it's effectively rolled over
00:21:44
which meant that you know which means
00:21:46
that
00:21:46
from the highs
00:21:48
in sort of late april it started to come
00:21:50
down which says that you know they were
00:21:53
thinking that
00:21:54
you know the inflation was not going to
00:21:56
be as bad in the back half of the year
00:21:58
and then the second is that
00:22:00
corporate credit which is really what
00:22:02
matters in some ways to the fed because
00:22:04
that's where they can intervene what is
00:22:06
the spread above treasuries that a
00:22:08
company can issue debt
00:22:11
when it goes crazy
00:22:12
and it goes up it means oh no the cost
00:22:14
of capital is going up
00:22:16
that's going to be hard for companies to
00:22:17
raise money they may have to lay people
00:22:19
off they may need to get into cost
00:22:20
cutting mode right that's what goes
00:22:22
through everybody's mind
00:22:23
but that's also now about 35 and 40 days
00:22:26
rolled over which means that
00:22:29
the gap has started to shrink
00:22:30
you know between the us treasury price
00:22:33
and what you know decent corporates can
00:22:36
can issue debt at
00:22:38
so it looks like
00:22:40
we are set up
00:22:42
for potentially a decent little rally
00:22:44
here
00:22:45
the problem is is it a rally that is
00:22:47
sustainable
00:22:49
or is it a rally that's basically what
00:22:51
we call a dead cat bounce or a bear
00:22:53
market rally where
00:22:54
you know you just get some
00:22:56
one or two weeks of relief before the
00:22:58
thing spears down again and we're not
00:23:00
going to know although tomorrow on
00:23:02
friday there's going to be a really
00:23:03
important set of inflation data that
00:23:05
gets released and i think everybody's
00:23:08
going to be sweating these details so
00:23:09
right now we're in a moment of pause
00:23:12
and there is the potential
00:23:14
if this data comes back as reasonably
00:23:17
good which means prices are you know not
00:23:19
escalating as much as we thought
00:23:21
um inflation is not going to be as bad
00:23:24
growth is going to be moderate that
00:23:27
that gives a lot of ammo for the fed to
00:23:28
kind of take their foot off the
00:23:30
um off the gas here and in that case
00:23:32
markets will go
00:23:34
boom
00:23:34
sax um the interesting note i think is
00:23:39
uh what we talked about here everything
00:23:41
was correcting except housing and we
00:23:43
were wondering when this uh you know the
00:23:46
increasing rates would hit mortgage
00:23:48
rates mortgage is way above five percent
00:23:50
uh in the last two weeks i think it's
00:23:52
come down a little bit but the mortgage
00:23:54
rate basically doubled and then we
00:23:57
finally saw it earlier in this week um
00:24:00
uh what day was it it was two days ago
00:24:02
so we're taping this on thursday so i
00:24:04
think on tuesday new home sales
00:24:07
591 thousand
00:24:09
they expected 749 and i think the last
00:24:12
month before that was 763
00:24:14
is that
00:24:16
uh indicative of
00:24:18
the uh raising the rates and slowing
00:24:21
down inflation has finally occurred and
00:24:24
that maybe we
00:24:25
the fed maybe uh steered too much into
00:24:28
the turn how do you interpret that
00:24:29
massive it was a pretty massive miss in
00:24:31
terms of home sales in the estimate well
00:24:33
the costs of
00:24:35
buying a home are going way up because
00:24:36
home loans are now more expensive so
00:24:38
that's going to factor into all sorts of
00:24:40
consumer purchases anything that's
00:24:42
financed can be more expensive
00:24:44
you're also seeing companies starting to
00:24:46
slow down spending uh really starting to
00:24:49
slam on the brakes we see it in startup
00:24:51
land startups are all slashing costs
00:24:53
right now but that's eventually going to
00:24:54
percolate up to big companies too you
00:24:56
saw dara's memo basically when he got
00:24:59
back from wall street remember he
00:25:00
published that a couple weeks ago saying
00:25:02
we need to sharpen our pencils cut
00:25:03
everything
00:25:04
uh what
00:25:05
wall street is looking for now is free
00:25:06
cash flow
00:25:08
um so
00:25:09
it seems to me like we're headed into a
00:25:11
pretty serious downturn or recession
00:25:13
here i mean i've been saying we're in
00:25:14
recession for months
00:25:16
um the
00:25:18
the the you know the tricky thing for
00:25:19
the fed is that they don't have a lot of
00:25:21
good options because
00:25:23
we have a lot of recession indicators
00:25:26
blinking red right now at the same time
00:25:28
inflation is still high
00:25:29
so they're kind of caught between a rock
00:25:31
and a hard place i think what the fed
00:25:33
should have done
00:25:34
is in 2020 hindsight is back
00:25:37
last summer we first got that shock cpi
00:25:41
print remember it was like 5.1 percent
00:25:44
seemed to come out of the blue because
00:25:45
for years and years we've been talking
00:25:46
about deflation nobody thought inflation
00:25:49
was a problem all of a sudden we got
00:25:50
that 5.1 percent print
00:25:52
they were in total denial about it they
00:25:54
just dismissed it saying that inflation
00:25:56
was transitory and you know yellen said
00:25:59
the same thing and so basically everyone
00:26:01
just ignored the data for six months
00:26:04
and what they should have done was stop
00:26:06
qe right then and there they could have
00:26:07
taken a little bit of time to
00:26:09
think out you know a rate increase
00:26:12
strategy but they were still
00:26:14
basically engaging in qe for nine months
00:26:17
after that
00:26:19
you know first inflation warning and if
00:26:21
they had stopped qe there then we
00:26:23
wouldn't have had this
00:26:24
asset bubble
00:26:25
in the second half of last year that's
00:26:27
when it inflated the most
00:26:30
and we could have had more of a soft
00:26:31
landing unfortunately now
00:26:34
they let the
00:26:35
they kept inflating
00:26:37
and really until the end of q1
00:26:40
and they've yanked away the punch bowl
00:26:41
so violently that i think the real
00:26:43
economy's gonna go into recession so
00:26:45
that's where we are right now i mean i
00:26:46
don't know
00:26:48
what that what the right answer is now
00:26:51
given that we're in this you know almost
00:26:53
stagflationary position let's try and
00:26:55
answer that brad what is if if we didn't
00:26:57
act soon enough if you agree with uh
00:26:59
sax's point pretty hard to disagree with
00:27:02
um and we didn't take the medicine a
00:27:03
little bit at a time um and now maybe
00:27:06
we've overreacted or maybe it's going to
00:27:09
get worse what is the right thing for us
00:27:11
to be doing now because all these
00:27:13
companies doing hiring freezes layoffs
00:27:16
at the same time that the housing market
00:27:17
tanks at the same time crypto tanks at
00:27:19
the same time the stock market tanks
00:27:21
this feels like a major shock to the
00:27:24
system
00:27:24
is it time to maybe
00:27:27
reconsider some of these um no you know
00:27:30
for the fed to reconsider or just slow
00:27:32
and steady wins the race here what
00:27:34
what's the best option first we should
00:27:36
erect statues to senator manchin for
00:27:38
saving the republic by vetoing stimmy
00:27:41
too
00:27:42
that would have been
00:27:44
devastating that would have been
00:27:45
devastating so we'll revisit that listen
00:27:48
the fed said two really important things
00:27:50
this week
00:27:51
they said number one
00:27:54
our communications have been helpful in
00:27:56
shifting market expectations
00:27:59
what that means the fed is the air
00:28:01
traffic control
00:28:03
they said to the markets at the
00:28:04
beginning of the year you're 90 degrees
00:28:07
off runway heading get your ass back on
00:28:10
runway heading it was a slap in the face
00:28:13
to markets and it was a radical
00:28:15
adjustment
00:28:16
now you hear the fed in these little
00:28:18
statements this week they said hey
00:28:21
we're well positioned this year to
00:28:23
assess the effects of policy firming in
00:28:26
the back half so they're saying we're
00:28:27
going to hit it with 50 50 and then
00:28:29
we're going to take a look
00:28:31
so now think of it as air traffic
00:28:33
control you're two degrees to the left
00:28:35
you're two degrees to the right they're
00:28:37
steering us on runway heading i don't
00:28:40
think the fed wants to do anything at
00:28:41
this moment to lose credibility in the
00:28:43
inflation fight we're going to get 50
00:28:46
we're going to get an another 50.
00:28:48
but they're doing what they want to do
00:28:51
which is keeping markets sufficiently
00:28:53
tight right they wanted to take the
00:28:55
crypto market down they wanted to take
00:28:58
all the excessive risk in the stock
00:29:00
market down right you're absolutely
00:29:02
right the inventory of 350 000
00:29:05
homes spiked from four months to nine
00:29:07
months right used car prices are rolling
00:29:10
over the last three months
00:29:12
all the things they needed to do they're
00:29:14
doing
00:29:15
right they need to stay the course
00:29:17
however the hyperventilation this week
00:29:20
by bill ackman on twitter
00:29:22
that the fed needs to be doing radically
00:29:24
more that somehow we need to be raising
00:29:26
rates to six seven eight percent in
00:29:29
order to squash inflation to me seems
00:29:32
highly misdirected and totally out of
00:29:35
touch with the fact that on layoffs.fyi
00:29:37
they've already announced 750 companies
00:29:41
that are announcing layoffs
00:29:43
right the market is getting the drill i
00:29:46
i totally agree with this
00:29:48
i think we're in a we're we're in a
00:29:50
pretty reasonable place here the real
00:29:51
the real question is now
00:29:53
what do you need to take the market
00:29:55
lower and this is more of a nuance but
00:29:57
you know when you look at companies that
00:29:59
are now quote-unquote cheap right let's
00:30:01
take an example like you um you know
00:30:04
well we hear a lot about
00:30:06
google or facebook right people say my
00:30:08
gosh this is cheap because if you run a
00:30:10
screen on it it's like 10 11 12 times
00:30:13
price to earnings
00:30:15
well the price you know because you can
00:30:17
look on the screen
00:30:18
the real question is are the earnings
00:30:20
right
00:30:21
and
00:30:22
the thing that can take the market lower
00:30:25
is if you actually think earnings are
00:30:27
modeled incorrectly
00:30:29
right so we saw this week as well
00:30:32
snap
00:30:33
i mean completely just blew themselves
00:30:35
46 down intraday yesterday i think i
00:30:38
just want to say something about one day
00:30:41
they have the most incredible propensity
00:30:43
to self-immolate on earnings calls than
00:30:45
any other company i've ever seen there's
00:30:47
probably been
00:30:49
three times no less than three times
00:30:50
over the last four years
00:30:53
where i don't know whether it's just
00:30:55
poorly scripted or
00:30:57
not well rehearsed or
00:31:00
the people that are
00:31:01
helping evan get ready for these things
00:31:04
but these are disastrous calls you know
00:31:06
facebook's had a couple in this lifetime
00:31:08
but snap consistently probably once
00:31:11
every 18 months will do this
00:31:13
anyways
00:31:14
the thing just completely implodes the
00:31:16
stock implodes by 48 or something and
00:31:19
then it
00:31:20
you know rolls over to companies like
00:31:22
facebook and google who then are off
00:31:23
eight or ten percent
00:31:25
my point in telling you the story is
00:31:26
that if you think facebook and google
00:31:28
just as an example again are cheap at 10
00:31:31
times well you better hope that the
00:31:32
earnings are right because the earnings
00:31:34
are actually wrong
00:31:36
that's actually 27 times in 19 times you
00:31:38
know i'm making these numbers up to give
00:31:40
you the example because the earnings are
00:31:41
fundamentally wrong so
00:31:43
that's the risk now that's left in the
00:31:44
market in my opinion that could take it
00:31:46
much much lower is if that you know all
00:31:49
of this slowdown really contracts spend
00:31:52
and the earnings are actually not
00:31:54
accurate
00:31:55
the forecasted earnings will need to be
00:31:57
revised over the next two or three
00:31:59
quarters
00:32:00
and that's where we will probably see
00:32:02
the low if however growth is muted
00:32:06
and the fed can as brad said it's a
00:32:07
really good analogy now just course
00:32:09
correct by degrees you know a degree
00:32:12
here degree there
00:32:14
we've probably consolidated the lows
00:32:17
so said another way we look at a company
00:32:18
like snap
00:32:20
or google
00:32:21
a lot of their
00:32:23
expected value has to do with people's
00:32:25
ad spend we now see
00:32:27
less homes being sold so maybe people in
00:32:29
real estate stop spending less on ads
00:32:30
they're a major advertising category
00:32:32
maybe direct to consumer uh people are
00:32:34
not buying because the supply chain
00:32:36
issues this stuff is too expensive and
00:32:38
we're not going to spend on ads and so
00:32:40
all of this ad revenue that's some of
00:32:43
the first to come out of people's
00:32:44
budgets
00:32:45
so
00:32:46
you know even as great as snaps results
00:32:49
actually look they were up 38
00:32:51
year-over-year uh they're generating
00:32:53
over 100 million free cash flow the
00:32:55
guide was terrible because what they
00:32:57
said was our e right our earnings right
00:33:01
are not modeled accurately right and so
00:33:04
that's the risk that you now have to
00:33:06
take to every company you cannot look at
00:33:07
a screen at yahoo finance or bloomberg
00:33:10
look at a price to earnings ratio and
00:33:12
say wow seven times that's so cheap
00:33:15
it may not be seven you have to do your
00:33:17
own work it could actually be much
00:33:19
higher than that because earnings may be
00:33:20
at risk
00:33:22
the earnings being at risk is this
00:33:24
contagion that we talked about i don't
00:33:26
know six maybe it's like we're going on
00:33:28
almost a year now saks we talked about a
00:33:30
contagion happening because we've all
00:33:31
experienced it in the last two
00:33:33
recessions to the dot com bust in the
00:33:35
great recession so
00:33:37
what are you seeing in terms of at
00:33:39
companies this contagion risk are people
00:33:41
canceling sas contracts on the margins
00:33:45
obviously people are doing hiring
00:33:46
freezes obviously people are laying
00:33:48
people off are people gonna start
00:33:50
renegotiating uh salaries
00:33:53
you know what what's the next couple of
00:33:54
shoes to draw pure sax and that would
00:33:56
signal to you a true bottom here like
00:33:59
have you seen
00:34:00
i thought maybe one would be if somebody
00:34:02
offered somebody an investment with a
00:34:04
two or three times liquidation
00:34:05
preference have you seen one of those
00:34:06
yet have you seen people say we're going
00:34:08
to renegotiate salaries because that's
00:34:09
when it was really dark right the last
00:34:11
two times yeah
00:34:12
it's going to take time to get to that
00:34:15
point i mean where you start seeing
00:34:16
structure and deal is
00:34:18
in deals is when a founder
00:34:20
is trying to preserve a valuation they
00:34:22
got last year and that can't really be
00:34:24
justified but they don't want to just
00:34:25
take the down round so you try to
00:34:27
preserve the optics the last round by
00:34:28
building all these preferential terms we
00:34:31
don't like to do deals that way but
00:34:32
you'll start to see them happen later
00:34:34
this year when you know companies get
00:34:36
more desperate
00:34:37
that's not the first thing that happens
00:34:39
though um i think that that to your
00:34:41
point about the talent market it's
00:34:43
definitely going to happen has it
00:34:44
happened yet no
00:34:46
what has to happen is first all these
00:34:47
open wrecks get cancelled companies
00:34:49
freeze their hiring plans then
00:34:51
eventually they do layoffs that's coming
00:34:53
and then the talent market cools so
00:34:55
those students are here both are here so
00:34:57
what's the next in talent wars well yeah
00:34:59
i mean look but within the next six
00:35:01
months the talent market's not going to
00:35:02
be as hot and you know in the same way
00:35:05
that startups aren't getting 10 term
00:35:07
sheets
00:35:08
now that maybe they get one or two if
00:35:09
they're a good company same thing with
00:35:11
talent right they're not going to have
00:35:12
10 job offers they might have one or two
00:35:14
and that's going to create
00:35:17
that's not going to create the same
00:35:18
upward pressure continuing upward
00:35:19
pressure for um
00:35:21
for increases in comp
00:35:24
um to your point about like will sas
00:35:26
contracts be cut i mean
00:35:28
i think software is pretty sticky i mean
00:35:30
if it's a good product
00:35:32
um
00:35:33
will deal cycles get longer yes will
00:35:35
there be more mortality risk
00:35:38
in the startup or smb customer bases of
00:35:42
companies yes
00:35:44
i think
00:35:45
one concept that
00:35:47
starts may want to wrap their heads
00:35:48
around is what i would call deferred
00:35:50
mortality risk meaning that during the
00:35:52
last few years during the boom times the
00:35:54
graduation rate from c to series a to
00:35:57
series b was very high perhaps
00:35:59
artificially high so there's a lot of
00:36:00
companies that got funded and advanced
00:36:02
to the next round
00:36:03
where in more normal times they wouldn't
00:36:05
have made it so got it now if those
00:36:08
companies haven't really fixed their
00:36:09
issues they've just deferred the
00:36:11
mortality so i think all of us probably
00:36:14
in saselian need to be modeling out
00:36:16
higher logo churn
00:36:19
for
00:36:20
uh
00:36:22
for customer bases that are skewed
00:36:23
towards startups or smbs and we don't
00:36:25
know what those numbers are going to be
00:36:26
yet
00:36:27
but that is likely to happen
00:36:29
i think that that's right i think the
00:36:30
other thing is that um there are there's
00:36:32
a lot of companies that are going to
00:36:33
have to get religion on free cash flow
00:36:35
conversion asap
00:36:37
and i just think that most ceos to be
00:36:40
very blunt
00:36:42
are poorly educated and enumerate
00:36:45
so their level of numeracy to even
00:36:47
understand this is pretty poor
00:36:49
and most uh board directors are equally
00:36:53
can you unpack it right now what does it
00:36:55
mean to to get the business uh to free
00:36:58
cash flow what does it take why is it
00:37:00
important and what what are the how do
00:37:02
those businesses look differently to
00:37:03
them to spend less
00:37:06
than you make okay hold on i just want
00:37:08
to make sure i got it correct
00:37:10
you make money but the number of the
00:37:13
money you make is higher than the number
00:37:14
of the money you spend
00:37:16
got it okay and then there's a delta
00:37:18
there there's some difference between
00:37:19
those two numbers and that number is
00:37:21
important to some people is what you're
00:37:22
saying
00:37:23
i think increasingly getting that number
00:37:25
to be greater than zero
00:37:27
is going to be really important
00:37:30
it it allows you again everybody starts
00:37:33
to throw out this whole thing which is
00:37:35
oh my god you can never slow growth and
00:37:37
the company will die
00:37:39
and yeah maybe in a vacuum that that's
00:37:41
true but when every other company is
00:37:43
fighting tooth and nail to survive
00:37:46
the only thing that you need to do is
00:37:47
actually survive by surviving you win
00:37:50
and
00:37:51
if you can basically make your cash last
00:37:53
as long as possible even if you cut to
00:37:55
the bone and stop growing
00:37:57
if you come out the other end and you're
00:38:00
the only company that's left you will
00:38:02
win and run over the market you may have
00:38:04
pushed to the right a few years your
00:38:06
plans of world dominance but they're
00:38:08
still available to you
00:38:10
it's the company that foolishly thinks
00:38:11
that they can continue to spend money at
00:38:13
the same rate or in the same ways
00:38:15
that are going to learn this hard lesson
00:38:17
because i think that
00:38:19
investors are not going to tolerate
00:38:22
being able to
00:38:24
you know provide incremental capital to
00:38:26
organizations funds
00:38:28
who are then you know misallocating that
00:38:30
capital to basically support a poorly
00:38:34
marked portfolio and i think that is
00:38:36
going to be the real come to jesus that
00:38:38
actually makes all of this thing come
00:38:39
clean like pension funds family offices
00:38:42
endowments all these organizations
00:38:45
are smart enough to realize that they're
00:38:47
giving good money after bad if what
00:38:49
those folks are going to do is not
00:38:51
demand portfolio rehabilitation and
00:38:53
instead are just going to basically keep
00:38:55
the marks of their old funds because
00:38:57
they're just in a in a game of waiting
00:38:59
it out
00:39:00
where the whole taking action
00:39:03
greater than you know blind hope and
00:39:05
just going you know steady doing what
00:39:07
you've been doing you got to make some
00:39:08
changes i mean look i love brad's
00:39:10
reaction i think that
00:39:12
most
00:39:13
growth-oriented funds are looking at
00:39:15
their portfolios
00:39:16
and they're trying to balance two
00:39:18
strategies strategy one is get into
00:39:20
massive rehabilitation mode the problem
00:39:22
is most of these people have never built
00:39:24
or run a company so they have no idea
00:39:26
how to rehabilitate anything they're
00:39:28
you know market momentum folks and in
00:39:30
that they were excellent but in actually
00:39:32
helping ceos build and rebuild a
00:39:33
business i think that they're not as
00:39:35
well suited doesn't mean they can't do
00:39:37
it but they're not as well suited that's
00:39:39
path a
00:39:41
but i think that path is very painful
00:39:43
and it requires you to take medicine the
00:39:45
bitter medicine which is to basically
00:39:47
mark your portfolio down 50 or 60
00:39:49
just like the public market
00:39:51
terminal valuations have gone down
00:39:53
the other alternative is to basically
00:39:55
raise enough money
00:39:57
to do for example unpriced converts into
00:40:00
those same companies so that you don't
00:40:02
have to remark so that the auditors will
00:40:04
be allowed to carry these fake
00:40:06
valuations you can maybe mark it down 10
00:40:08
or 15 percent but you don't have to mark
00:40:10
it down 50 or 60
00:40:11
and hope
00:40:13
the market returns to his previous state
00:40:16
but as we've all talked about
00:40:18
that previous state is probably
00:40:20
unreliable because it was a moment where
00:40:22
we had a global pandemic where we took
00:40:24
rates to zero
00:40:25
and we printed nine or ten trillion
00:40:28
dollars of excess liquidity that
00:40:29
inflated these things
00:40:31
so i got to think that you know
00:40:33
prices in 2019 were
00:40:35
a little bit ticking up 2020
00:40:38
we're really ticking up 2021 was
00:40:40
egregious in 2022 is to come is you know
00:40:43
where it all comes home to roost
00:40:45
uh
00:40:46
brad explain to us uh we we hear free
00:40:48
cash flow we hear income net income
00:40:51
ebitda we hear all these terms now free
00:40:54
cash flow is what everybody is focused
00:40:56
on i i believe that seems to be the
00:40:59
predominant um
00:41:01
rallying cry in a lot of public market
00:41:02
companies now can you explain to people
00:41:04
what the difference between these things
00:41:06
are because people kind of bundle them
00:41:07
together
00:41:08
why would somebody like dara at uber
00:41:11
just say hey you know we've been talking
00:41:12
about adjusted ebitda ebitda income net
00:41:15
income all this stuff but free cash flow
00:41:16
is what we want to focus on now or is
00:41:18
that correct yeah you know and our
00:41:20
friend bill gurley uh rails on this
00:41:23
adjusted adjusted and you know look to
00:41:25
your left look to your right adjust it
00:41:27
one more time ebitda right like in
00:41:30
markets like this what people want to
00:41:31
know or what's the green stuff i can
00:41:33
take out of the business and put under
00:41:35
my mattress
00:41:36
free cash flow distributable free cash
00:41:38
flow and not only that how much per
00:41:41
share
00:41:42
i think the single biggest issue growth
00:41:45
investors are focused on today
00:41:47
is the easy way out for all these
00:41:49
companies they'll tap down a little bit
00:41:51
on their hiring they'll tap down on
00:41:52
their spend but out of the back door
00:41:55
they want to give a bunch of free stock
00:41:56
to employees to help offset that pain
00:42:00
this is really important to understand
00:42:02
because stock is a real expense
00:42:05
right when a company goes public the
00:42:07
more shares you have the lower your
00:42:08
price so it is a real expense to
00:42:11
everybody the founders the employees the
00:42:14
investors
00:42:15
right and so what's what i think the
00:42:17
single biggest conversation going on in
00:42:19
boardrooms in silicon valley today
00:42:21
is hey
00:42:22
can we have a little bit more stock this
00:42:24
year
00:42:25
whether it's options or whether it's
00:42:26
outright rsus to give to employees
00:42:29
because if we don't give it to employees
00:42:31
they tell us they're going to leave
00:42:32
this is a real hard truth i had a ceo of
00:42:36
an incredible company call me and say
00:42:38
listen
00:42:39
we pay our engineers a million bucks
00:42:41
ahead
00:42:42
but we give them stock that over the
00:42:44
last five years has been worth another
00:42:46
million dollars each year
00:42:48
so they built their lives as though
00:42:51
they had two million dollars a year in
00:42:52
income they bought a house they bought
00:42:54
cars they sent their kids to private
00:42:57
based upon that two million dollars and
00:42:59
now when we tell them that this upcoming
00:43:02
year
00:43:03
the mil we're not making whole on that
00:43:05
million it can't be when when we win you
00:43:07
win and when we when we lose you win
00:43:10
so the tough conversation is we're not
00:43:12
re-upping you because the stock's been
00:43:15
cut in half and so now that engineer's
00:43:17
saying yeah but this year that means i'm
00:43:19
only getting paid 1.2 million
00:43:22
and the answer the tough answer is yes
00:43:25
right shared sacrifice you should have
00:43:27
never assumed that that was going to be
00:43:29
worth an incremental million dollars a
00:43:31
year but that takes leadership that
00:43:33
takes courage that takes a board that
00:43:35
knows what they're doing to explain that
00:43:37
over the full arc of that employment and
00:43:40
the first thing the mercenary employee
00:43:42
says is well i'll just go work somewhere
00:43:44
else
00:43:45
and the right answer for a good leader
00:43:47
is okay
00:43:49
if you've got your approach to this
00:43:50
business then you need to go work
00:43:52
somewhere else i mean you just did a
00:43:54
great test right that's a great filter
00:43:56
you you uh you're a mercenary and you
00:43:59
know you were with us when we're up but
00:44:00
you're not with us when we have to take
00:44:02
some austerity measures is this the end
00:44:04
of entitlement across the board sacks i
00:44:06
mean we had an entitlement class
00:44:08
everybody thought they could raise a vc
00:44:09
fund everybody thought they would have
00:44:11
100 irr because they would just buy nfts
00:44:13
and flip crypto projects that had no
00:44:15
released product
00:44:17
and the same with employees they just
00:44:19
thought i can just keep you know raising
00:44:21
my salary x amount and now
00:44:23
it looks like apple said everybody comes
00:44:25
back to work three days a week and we
00:44:27
don't see a lot of people quitting apple
00:44:29
because there may not be another option
00:44:31
and
00:44:32
maybe a lot of the firings that are
00:44:34
occurring i'm thinking of cameo here had
00:44:36
top three of their top like six or seven
00:44:38
leaders leave
00:44:40
i interpreted that as maybe they had
00:44:42
really big comp packages and when they
00:44:43
did the layoffs they said you know what
00:44:44
the number twos in these positions can
00:44:47
get the job done
00:44:48
for a third of the price
00:44:50
maybe that's better for the business so
00:44:52
is this the end of austerity the end of
00:44:54
entitlement i think so or a lot of it
00:44:57
there was a great article here uh in
00:45:00
well that was that came out recently
00:45:01
about netflix where netflix they're
00:45:03
finally getting real about their kind of
00:45:06
entitled and their woken title employee
00:45:08
problem
00:45:09
and this is in the new york post but
00:45:11
there's many other
00:45:13
newspapers that covered it basically it
00:45:15
says here netflix tells woke workers to
00:45:16
quit if they're offended if you find it
00:45:18
hard to support our content breath
00:45:20
netflix may not be the best place for
00:45:22
you said the memo
00:45:23
so period full stop yeah they're just
00:45:26
sick of it they're just not gonna put up
00:45:27
with it anymore they're sick of being
00:45:28
held hostage by their employees
00:45:31
who think that they can kind of muscle
00:45:33
the leaders of the company by starting a
00:45:35
petition or boycott campaign every time
00:45:37
they want to drive the company in a
00:45:38
certain direction and so i think
00:45:40
companies are finally figuring out this
00:45:42
is the only way to react to basically
00:45:44
being held hostage if you don't like it
00:45:47
quit if you don't have seven eight job
00:45:49
offers you know and recruiters calling
00:45:51
you constantly because everybody's on a
00:45:52
hiring freeze well then maybe people
00:45:54
will appreciate
00:45:56
the contract of i work for you you give
00:45:58
me money and then everything else is
00:46:00
superfluous on that note did anybody see
00:46:02
the ricky's your vase netflix special
00:46:04
yet
00:46:06
netflix it's on netflix it's
00:46:09
unbelievable
00:46:10
i mean
00:46:11
dave chappelle
00:46:13
you know in terms of bravery ricky
00:46:15
gervais was like i've already made my
00:46:17
money i'm burning the whole building
00:46:19
down i mean he went full
00:46:22
equal opportunist
00:46:23
and
00:46:24
i mean i think the trans issue became
00:46:26
like 10 or 20 percent of the of his
00:46:29
latest special so
00:46:31
it does seem like the comedians are
00:46:32
saying you know what we're gonna make
00:46:34
jokes we're gonna make jokes about
00:46:35
everybody we're not gonna buy into this
00:46:37
you can't cancel us we're just gonna
00:46:39
keep making jokes and we're gonna keep
00:46:40
making money and and that whole concept
00:46:43
that
00:46:44
you know people are going to be held
00:46:45
hostage i think is over independent of
00:46:47
what you think of making jokes of you
00:46:49
know
00:46:50
various marginalized or smaller groups
00:46:52
of people
00:46:53
can we chris go back to something brad
00:46:55
said a while back about how mansion
00:46:57
saved the democratic party because i
00:46:59
think there's actually an interesting
00:47:00
point there yeah
00:47:02
yeah such notorious right-wingers as
00:47:04
jeff bezos have said something very
00:47:05
similar lately when uh do you see that
00:47:08
where buy
00:47:09
biden tried to blame billionaires for
00:47:11
the inflation and bezos was having none
00:47:13
of it he said no listen it's not because
00:47:15
of us or our companies because you
00:47:17
printed too much money and joe biden or
00:47:20
he said mansion saved you from yourself
00:47:22
because it would have been another 4
00:47:23
trillion of spending on top of all the
00:47:26
other trillions of spending that we had
00:47:27
last year so
00:47:29
it's absolutely the case that that if
00:47:31
the administration was left just to own
00:47:33
devices remember they were touting back
00:47:34
in december they were touting the idea
00:47:37
that this 4 trillion of buildback better
00:47:39
spending would somehow be the cure to
00:47:40
inflation imagine if they had poured
00:47:42
that gasoline onto the fire i mean we
00:47:44
would go to 20 inflation we might have
00:47:46
had a currency
00:47:48
uh you know like a serious currency
00:47:50
issue no yeah but let me just finish the
00:47:52
points i don't want to just make a
00:47:53
partisan point here i want to there's
00:47:55
there's a serious economics point here
00:47:56
with or learning i hope our policymakers
00:47:59
learn from this which is what happened
00:48:01
over the last couple of years we had 10
00:48:03
trillion dollars of money printing right
00:48:06
why they do that they thought
00:48:08
that they could stimulate our way out of
00:48:10
this
00:48:11
covid recession that they had induced
00:48:12
with lockdowns in any event the point is
00:48:14
they thought they could stimulate
00:48:16
economic activity by printing money and
00:48:18
maybe cynically politically they thought
00:48:20
it'd be good for them in the midterms
00:48:21
what actually happened that 10 trillion
00:48:23
goes into the economy but there's no
00:48:25
corresponding increase in the output of
00:48:28
goods and services so two things happen
00:48:30
first price levels rise and we get
00:48:32
inflation and second we get an asset
00:48:34
bubble in the stock market and then the
00:48:36
way both those things
00:48:38
sort of come crashing down to earth is
00:48:40
the fed looks at this inflation and
00:48:42
suddenly has to jack up interest rates
00:48:44
that pops the asset bubble it vaporizes
00:48:46
something like 14 of global wealth and
00:48:49
then simultaneously workers feel a lot
00:48:51
poorer because their wages haven't kept
00:48:53
up with inflation so this whole idea
00:48:55
that you can just print money as a way
00:48:57
to create wealth and prosperity i hope
00:48:59
what we take away from this i think
00:49:02
recession that we're going into is that
00:49:04
is not a viable strategy the only thing
00:49:05
that creates wealth in a society is the
00:49:08
output of goods and services that people
00:49:10
want and you just can't try
00:49:13
to sort of play games with that by
00:49:16
creating phantom
00:49:17
the sort of phantom money that doesn't
00:49:19
represent a real increase in good
00:49:21
services or productivity yeah it's hard
00:49:23
for people not to take this all as
00:49:25
partisan but if you just look at the
00:49:27
objective facts
00:49:28
the last two administrations have
00:49:30
printed money like drunken sellers and
00:49:32
it's a mess right now so you you can
00:49:34
divorce yourself from any conception
00:49:36
that this is partisan
00:49:38
trump spent a [ __ ] ton of money and so
00:49:40
did
00:49:41
uh biden and who's more qualified than
00:49:43
trump and biden elon bezos the people
00:49:45
who appear on this podcast we have much
00:49:47
more
00:49:48
of a pulse on what's happening in the
00:49:50
actual real economy and in
00:49:52
entrepreneurship and capital allocating
00:49:53
than these people and i love the fact
00:49:55
that now
00:49:56
you know bezos is a [ __ ] poster he just
00:49:59
doesn't get he doesn't care uh and i
00:50:01
think we're having like an honest
00:50:03
discussion now right one of the one of
00:50:04
the areas where
00:50:06
i i don't think elon gets enough credit
00:50:08
is when he explains macroeconomics i
00:50:10
think he actually really understands the
00:50:13
the what an economy is i mean an economy
00:50:16
is basically a trading system for the
00:50:18
production of goods and services if you
00:50:20
were to go this point he's made if you
00:50:22
were to go to a desert island
00:50:24
and somebody just gives you a billion
00:50:26
dollars when you're sitting there on
00:50:27
that island you can't buy anything it
00:50:29
doesn't make you wealthier
00:50:31
what makes you wealthier is the
00:50:32
production of goods and services that
00:50:34
people want and that's ultimately what
00:50:36
an economy is
00:50:37
money is just the accounting system the
00:50:39
dollar's just the accounting system if
00:50:40
you start printing lots of money all
00:50:42
you're doing is debasing the accounting
00:50:43
system it doesn't make anyone richer and
00:50:45
yet you know the way that
00:50:48
conversations around economics really
00:50:50
take place the only thing you ever hear
00:50:52
about is stimulating demand you never
00:50:54
really hear anything about production
00:50:56
and i mean this is an old debate that
00:50:58
goes back to the 1980s about you know
00:51:00
supply side economics but regardless of
00:51:02
what you call it wealth ultimately comes
00:51:05
from
00:51:05
our capacity to produce goods and
00:51:07
services that people want it's a great
00:51:09
point chamath all this adds up to
00:51:12
companies
00:51:13
and the government's balance sheet
00:51:15
becoming tighter
00:51:17
and more efficient so the talent
00:51:20
diffusion across the industry perhaps
00:51:22
everybody being entitled and getting
00:51:23
overpaid uh people not wanting to go to
00:51:26
work people who have jobs not wanting to
00:51:27
go to the office all of this seems to
00:51:29
have
00:51:30
actually reversed in three months
00:51:33
so this medicine we're taking we stopped
00:51:36
eating the bad food we started working
00:51:38
out we're getting better sleep this is
00:51:40
going to turn around for the the
00:51:42
companies that take the medicine the
00:51:43
management teams the capital allocators
00:51:45
who do the hard work and sharpen their
00:51:47
pencils as we've talked about
00:51:48
this will all result in a more efficient
00:51:51
uh and vibrant economy yes
00:51:54
i think for the most part i think
00:51:55
there's still going to continue to be
00:51:57
examples of folks who basically run
00:51:58
themselves into a brick wall because
00:52:00
they
00:52:01
don't want to make the hard decisions
00:52:02
that is going to be more exaggerated in
00:52:05
silicon valley because we have a culture
00:52:07
of tolerance and we have an economic
00:52:10
business model
00:52:11
that supports
00:52:14
kind of irresponsible decision making
00:52:16
and supports poor governance you know
00:52:19
look i i've said this many times
00:52:21
but a fund's job ultimately
00:52:24
is to make a very important decision
00:52:26
about whether they truly care about
00:52:28
generating massive returns
00:52:30
or whether the fee income becomes so
00:52:33
meaningful so as to drown out every
00:52:36
other incentive that they have
00:52:38
and i think by and large in silicon
00:52:40
valley if you track
00:52:42
all of the
00:52:44
increased frequency and fundraising
00:52:47
you can also probably follow those
00:52:49
dollars and they generally will be the
00:52:51
most poorly run
00:52:53
uh they'll be held the least accountable
00:52:57
and i think those will have the largest
00:53:00
negative outcomes
00:53:02
and then instead if you follow the
00:53:03
dollars of the the real practitioners
00:53:07
who have discipline they look
00:53:09
kind of sheepish and silly for years in
00:53:11
the middle of a rally
00:53:13
but they're the ones that are able to
00:53:14
really reset and help some of these few
00:53:17
companies
00:53:18
really win and i think that you're going
00:53:20
to go through that cycle over the next
00:53:21
four or five years
00:53:24
and so you know i think it's super well
00:53:26
said smoth because i have felt at or
00:53:29
i've been made to feel silly by some
00:53:31
folks who said why are you asking to do
00:53:33
diligence why do you want to have a
00:53:34
board seat why do you want to talk to
00:53:36
customers why are you asking for
00:53:38
month-by-month revenue you made a
00:53:40
sub-economic decision like the idea that
00:53:42
over the last four or five years you
00:53:43
optimized for anything except the market
00:53:46
beta
00:53:47
was kind of dumb
00:53:48
you know and it's and and the worst
00:53:50
thing that you could have done in that
00:53:51
period was confuse alpha and beta
00:53:53
meaning alpha is what you are able to do
00:53:57
because of your discrete skill
00:54:00
versus anybody else
00:54:02
beta is when just the market goes up
00:54:04
said differently you could take any nba
00:54:07
player
00:54:08
and put them on uh a high school
00:54:10
basketball team
00:54:12
and they would be the you know college
00:54:14
player of the year any single one
00:54:16
okay
00:54:17
that's beta
00:54:18
yeah if you then can be the mvp of the
00:54:20
mba that's alpha yeah okay and i think
00:54:24
that a lot of folks um
00:54:26
were made to feel very silly or
00:54:30
you know a downer or a wet blanket um in
00:54:33
these last few years who will probably
00:54:36
have the last laugh
00:54:37
it's been unbelievable brad to watch the
00:54:40
changing of attitudes and the
00:54:42
entitlement in fundraising and private
00:54:44
markets
00:54:45
in the last
00:54:47
60 days and it's been even more
00:54:48
pronounced in the last 30.
00:54:50
i literally have people we talked to
00:54:51
last month
00:54:52
who had really crazy expectations
00:54:54
they've come down by 50
00:54:56
they wanted 50 now they're at 25. they
00:54:59
didn't want board seats now they're okay
00:55:01
with board seats information rights they
00:55:02
were fighting against information rights
00:55:04
i don't know why that's a hill to die on
00:55:06
now they're like information rights yeah
00:55:08
sure here's our cfo's email we need to
00:55:10
get money in the doors
00:55:11
so
00:55:12
um i guess what's the silver lining here
00:55:14
it does seem to me as a great setup
00:55:16
right now wait jason let me ask you a
00:55:17
question hold on yeah michael ordered
00:55:18
brad like and then you're forgetting one
00:55:21
other key thing in in the in the race to
00:55:23
raise all of this money
00:55:25
what did these folks do they hired these
00:55:28
mid-level kids
00:55:30
as partners into their venture firms and
00:55:32
gave them money to put into companies
00:55:34
what do these people know
00:55:36
no mentoring i'm not saying it
00:55:37
disparagingly i'm just like what do they
00:55:39
know how do they know how to actually
00:55:41
invest investing is just not you see it
00:55:43
you just say okay
00:55:45
well i think it sounds cool
00:55:47
there are some of those uh
00:55:49
younger folks who are going to turn out
00:55:50
to be all-stars and they're just like in
00:55:52
the nba and they're going to be some
00:55:53
that you know prove to be writing the
00:55:55
beta but let me answer jason's question
00:55:57
because you know maybe end on a on a
00:55:59
note of
00:56:00
optimism
00:56:01
you know
00:56:02
in some countries
00:56:04
you know notably china right now they're
00:56:06
doing a lot to prop up a bunch of
00:56:07
companies that should be allowed to fail
00:56:10
right one of the beautiful things about
00:56:11
free market capitalism the creative
00:56:13
destruction
00:56:14
the cycle time on creative destruction
00:56:17
in this country has never been faster
00:56:20
right make no mistake about it if you
00:56:22
took money at a valuation over a billion
00:56:25
dollars
00:56:26
okay last year you're not that's not a
00:56:29
venture capital bet
00:56:31
i call it quasi public
00:56:34
right you stepped into the bigs and you
00:56:37
said i will deliver this plan
00:56:40
and if you don't deliver the plan
00:56:41
there's not going to be a lot of
00:56:43
tolerance there's not going to be
00:56:45
tolerance for just giving away a bunch
00:56:46
of more stock there's not going to be
00:56:48
tolerance for no course correction
00:56:51
right maybe in seed or series a
00:56:54
right there's a lot of tolerance because
00:56:55
you sign up to a lot of unpredictability
00:56:59
but the level of tolerance that you'll
00:57:00
see out of late stage growth investors
00:57:03
is going to be akin to what they do with
00:57:06
a public company that runs them off a
00:57:08
cliff you know how that is you've been
00:57:10
on those earning calls so i think this
00:57:13
is going to shine a light on the
00:57:15
bifurcation that we really have we call
00:57:18
all of this venture capital
00:57:20
but the truth of the matter is series c
00:57:22
and before is venture
00:57:25
once you're stepping into the bigs and
00:57:26
taking money at a billion to billions
00:57:29
the expectations are different your
00:57:31
access to capital will be different um
00:57:33
the expected course correction will be
00:57:35
different right but i take it as a um i
00:57:39
take it as a sign of strength
00:57:41
that we're going to work through this
00:57:42
we're going to have you know the the
00:57:44
private markets are absolutely going to
00:57:46
go through a reset but we'll get through
00:57:48
it and the winners will win and those
00:57:50
who fail to course correct and want to
00:57:51
fly into the wall will do that and we'll
00:57:53
get on with the next generation of
00:57:55
incredible entrepreneurs solving big
00:57:57
problems the secular curve of technology
00:58:00
solving big problems has never been
00:58:02
steeper
00:58:03
right and the cycles
00:58:06
that overlay that secular curve are not
00:58:08
suspended we have not suspended wars we
00:58:11
have not suspended economic cycles and
00:58:13
so we're going to have to get through
00:58:14
this one it's happening in record pace
00:58:17
exactly actually that's an interesting
00:58:18
point i want to let me ask brad a
00:58:20
question about that which is what's the
00:58:22
potential here for more of like a
00:58:24
v-shaped
00:58:25
recession where to your point the
00:58:27
market's correct
00:58:28
more rapidly and violently than ever
00:58:30
snap misses of you know issues a new
00:58:33
forecast down 40 percent
00:58:35
um
00:58:36
is there a possibility that this thing
00:58:38
gets resolved in say six months that's
00:58:40
not to say that
00:58:42
uh valuation levels are ever back to
00:58:44
where they were you know in the second
00:58:45
half of 2021 but in six months could we
00:58:48
have sort of done this big reset
00:58:51
washed out a lot of the problems
00:58:53
and um you know again valuations are not
00:58:56
back but the market becomes the the
00:58:57
capital markets become become unfrozen
00:59:00
and we're back to a more normal
00:59:01
operating environment
00:59:03
as opposed to say
00:59:04
yeah as opposed to say like more of a u
00:59:07
where we're kind of bouncing around the
00:59:09
bottoms here in this volatile state for
00:59:11
about 18 months
00:59:13
um
00:59:14
you know and then it's more like the
00:59:15
dot-com crash we come out of it in two
00:59:17
years i see smart people on both sides
00:59:19
of this i hear jason lemkin's been
00:59:20
saying i think this is kind of short
00:59:22
deep sweet six month reset
00:59:25
fred wilson just wrote 18 months at
00:59:27
least i think sequoia is saying two
00:59:29
years i mean i think our instinct is 18
00:59:32
months to two years but what do you
00:59:34
think the possibility is that we could
00:59:35
be in a more normal environment in six
00:59:37
months right so let's let's separate
00:59:40
public markets and venture markets
00:59:41
because venture markets as you know have
00:59:43
a six to 12 month lag just in terms of
00:59:45
the reset
00:59:47
but i would say you know the future's a
00:59:48
distribution of probable outcomes
00:59:50
there's a downside case an upside case
00:59:52
in a base case i think the base cases by
00:59:55
this fall will have very good evidence
00:59:57
right of where inflation's rolling over
01:00:00
i think it is rolling over what the fed
01:00:02
is likely to do the upward bound on on
01:00:04
interest rates and i think we'll be at a
01:00:06
point where we can start underwriting to
01:00:08
the five-year average again
01:00:10
make no mistake about it the s p
01:00:13
and the nasdaq today are still
01:00:16
30
01:00:17
above where they were in january of 2020
01:00:22
30 above where they were in january
01:00:24
2020. how much better is the world today
01:00:27
than where it was in january 2020. well
01:00:30
i think what the market is saying is
01:00:32
that we've grown the economy on a
01:00:34
nominal basis about 15
01:00:36
during that time
01:00:38
and earnings have about doubled right
01:00:40
the earnings margins of those companies
01:00:42
are about have about doubled so you
01:00:43
would expect
01:00:45
normal course and trajectory maybe that
01:00:47
those companies would be 30 percent more
01:00:49
valuable the problem is as we look ahead
01:00:52
to chamas point the earnings are likely
01:00:55
to come down
01:00:56
profit margins are being squeezed so i
01:00:58
think there's a
01:00:59
decent argument there's more pain to
01:01:02
come in the public markets that we
01:01:03
haven't seen the bottom however i do
01:01:06
think that the fed is taking a good
01:01:07
course here i don't think that we have
01:01:09
runaway inflation i think that um you
01:01:12
know we're going to have an investable
01:01:14
environment come this fall however i
01:01:16
think for venture there's a six to a 12
01:01:19
month lag to that so i think you got to
01:01:21
add it to those six months to really get
01:01:24
to the market clearing prices for all
01:01:26
these companies but i think it's
01:01:28
incumbent upon all of us to give really
01:01:30
good feedback today and i see a lot of
01:01:32
it
01:01:33
right to entrepreneurs about making that
01:01:35
course correction if they're only
01:01:37
turning the plane 10 degrees when they
01:01:40
see lightning dead ahead they're making
01:01:42
a huge mistake
01:01:44
the default action by every founder
01:01:46
today should be a 90 degree course
01:01:48
correction unless
01:01:50
they have very good idiosyncratic reason
01:01:53
in that business
01:01:54
in terms of their outperformance to stay
01:01:56
the course
01:01:58
plan for the worst hope for the best
01:02:00
yeah and yeah you could even bifurcate
01:02:04
the companies in private markets to ones
01:02:07
that have strong product market fit and
01:02:09
the ones that don't there's a lot of
01:02:10
companies to david's point that we're
01:02:12
getting series b's without product
01:02:14
market fit you know it's it's one thing
01:02:16
to get your series a when you have this
01:02:17
like weak product market fit and a great
01:02:19
story but when you start seeing
01:02:21
series b's happening on momentum it's
01:02:23
like that to me is is is going to be
01:02:26
impossible to resolve that company has
01:02:28
to go to zero or has to reset or give
01:02:29
even give money back to founders those
01:02:31
are the really the three things i would
01:02:34
see as a true bottom like the really
01:02:36
dark moment where people have two or
01:02:37
three liquidation preferences people
01:02:39
reset reset comp and tell people listen
01:02:41
we're going to cut comp 30 across the
01:02:43
board for management
01:02:44
if you don't like it leave
01:02:47
and then finally people saying you know
01:02:48
what we're going to give the 60 cents on
01:02:50
the dollar back to investors those are
01:02:52
the three things i saw during
01:02:54
the two downturns you're saying
01:02:55
something that i think is also important
01:02:57
that's not really talked about which is
01:02:58
that there's going to be a lot of really
01:03:00
good companies
01:03:01
with really horrible capital structures
01:03:03
really terrible cap tables really bad
01:03:06
valuations really big overhangs of
01:03:08
preference stock
01:03:10
that are going to have to get worked out
01:03:12
and
01:03:13
in getting that worked out going back to
01:03:15
what brad said the person that course
01:03:17
corrects 90 degrees
01:03:19
will win and the reason they'll win may
01:03:21
not even because they're being that
01:03:23
courageous they're just being less
01:03:24
stupid than everybody else quite
01:03:26
honestly because you have to remember in
01:03:28
most of these markets over the last four
01:03:29
or five years we funded four or five
01:03:32
versions of every imaginable company
01:03:35
right and there's going to be two
01:03:36
winners 70 and 30 yeah and and there's
01:03:39
really only going to be one winner and
01:03:41
then there's going to be a marginal
01:03:42
second kind of also rant that captures
01:03:44
some value and everybody else is not
01:03:46
that valuable and you know that's
01:03:49
roughly been true but the reason we were
01:03:51
able to support that was that every
01:03:53
company looked kind of interesting
01:03:54
anyone with traction
01:03:56
could be you know competed against
01:03:58
because the only differentiator at the
01:04:00
time was very cheap money that was
01:04:01
effectively free and it was flowing in
01:04:03
you know faster than you could count
01:04:06
so all of that has to get sorted out
01:04:08
so i just think that that those dynamics
01:04:10
shouldn't be ignored and so you know
01:04:12
again hard work too i mean to the thing
01:04:15
we've been saying here the it's hard
01:04:16
work for a board and founders to do this
01:04:17
but what choice do you have well the
01:04:20
problem is the pro if you take much more
01:04:21
sophisticated markets like the debt
01:04:23
markets which i would say are much more
01:04:25
sophisticated okay cutthroat liquid
01:04:29
covenants when you see the people that
01:04:31
make the money
01:04:32
two things are true number one is their
01:04:34
incredibly sharp elbow to number two is
01:04:36
they make money in moments like this
01:04:38
right if you look at apollo's great
01:04:40
returns or blackstone's great returns or
01:04:42
cerebrus you know these folks were the
01:04:44
you know they they really were the
01:04:45
barbarians at the gates and they made
01:04:48
all the money in moments of true
01:04:49
dislocation
01:04:51
if you apply that construct here you
01:04:54
know we've never had to go through a
01:04:55
period where there are some real terms
01:04:59
and conditions attached to the
01:05:00
incremental dollar
01:05:02
and i think that if that does come to
01:05:04
pass in silicon valley you're just going
01:05:05
to have a reckoning and i think that
01:05:07
that what it will really do is just sort
01:05:10
out
01:05:10
the winners and the losers and it will
01:05:12
sort out the folks that were able to get
01:05:14
to default or close to default to live
01:05:15
or at least default life support exactly
01:05:19
default festival i like that one too
01:05:22
i mean zach's made a great tweet he
01:05:23
basically said it's not default alive or
01:05:25
dead investible or not and that's an
01:05:27
even finer filter
01:05:29
default default alive is fantastic if
01:05:32
you can get there basically just means
01:05:33
cash flow positive i mean all default
01:05:35
alive means is that your cash flow
01:05:37
positive or you're going to be cash flow
01:05:38
positive based on the money you have you
01:05:40
don't need money exactly you don't need
01:05:41
money well of course that's the best
01:05:42
place to be is you don't need money but
01:05:44
i think you know for early stage
01:05:46
companies that's almost an impossible
01:05:48
standard you know it takes time to get
01:05:50
to the point of encounter positive so
01:05:52
therefore i was trying to propose a
01:05:53
standard that i thought was more
01:05:55
actionable for founders because it was
01:05:58
because it wasn't impossible and i call
01:06:00
it default investible which is here are
01:06:02
the metrics that you need at least i can
01:06:04
tell you what they are in the sas world
01:06:06
you know here's what great metrics look
01:06:08
like here's what good metrics look like
01:06:09
here's some danger zone metrics and you
01:06:12
need you know out of the five key
01:06:13
metrics you really need three or four
01:06:15
great ones and one or two good ones to
01:06:17
raise in this environment and no
01:06:18
dangerous metrics and if you don't have
01:06:21
those you need to give yourself the time
01:06:23
to fix the problems in your business to
01:06:25
get to those metrics um on that note you
01:06:28
know sequoia had a really good chart
01:06:30
called survival the quickest that
01:06:32
illustrates this concept of giving
01:06:33
yourself time
01:06:35
and i threw it in the chat um but
01:06:37
basically what it shows is there's a
01:06:39
green line and an orange line that the
01:06:41
green line is the company that realizes
01:06:43
in may of 2022 that we've gone into a
01:06:46
very different environment and they
01:06:48
slash their burn in half
01:06:50
and they basically double their runway
01:06:53
and then there's the other company that
01:06:54
just keeps going along the same path
01:06:56
they were at
01:06:57
until they realize oh wait a second
01:06:59
you know and then that you know some
01:07:01
point in the future they realize there's
01:07:02
been a change they make a small cut they
01:07:04
make another small cut and they're
01:07:05
always behind the eight ball and i've
01:07:07
seen this so many times before that the
01:07:09
company doesn't make cuts until they're
01:07:12
forced to
01:07:13
and so they never really lengthen their
01:07:15
runway and then when they finally do
01:07:16
make the cuts they go into a death
01:07:17
spiral and die and now they're over the
01:07:19
atlantic and there's not enough fuel to
01:07:21
get to a landing strip and you just
01:07:23
plunge into the cold ocean and die
01:07:26
founders really have to think about the
01:07:28
the asymmetry of the risk that they face
01:07:30
right which is let's say that you cut
01:07:33
too much and the environment is better
01:07:35
than you think it's going to be well you
01:07:37
can always hire back i probably have a
01:07:39
lower price in all likelihood i promise
01:07:40
you'll be able to hire back okay but on
01:07:42
the other hand if you don't cut enough
01:07:44
and the situation is worse than you
01:07:46
think then you just die
01:07:48
so you this is why andy gross said only
01:07:51
the paranoid survive you've got to
01:07:53
think about the downside risk and be
01:07:55
more skewed towards the bad scenario
01:07:59
than sort of the the sort of wishful
01:08:01
thinking scenario okay survive
01:08:03
just just one final point here
01:08:06
you know because we have all these decks
01:08:07
flying around now by venture capitalists
01:08:09
telling founders to go make these really
01:08:11
tough decisions
01:08:14
being a little self-reflective
01:08:17
where were we all six months ago
01:08:20
where were we in october when we were
01:08:22
putting more money in and they were
01:08:23
hiring like crazy
01:08:25
where were we in november right i
01:08:27
remember some of the conversations that
01:08:29
we were having but i look i posted in in
01:08:32
chat layoffs.fyi
01:08:36
right the number one company on that
01:08:37
list gets here sequoia company
01:08:41
okay are they making a course correction
01:08:42
you bet your ass they are they're laying
01:08:44
of 4 500 people 15 of the workforce
01:08:49
the second company on that list lace
01:08:50
work an altimeter software company
01:08:52
that's doing terrific growing hundreds
01:08:55
of percent
01:08:56
laying off 300 people 20
01:08:59
right a 90 degrees turn of the plane
01:09:02
right that company will never need cash
01:09:04
again but it's not just flying toward
01:09:06
the lightning they're making the tough
01:09:08
decisions because that's what leaders do
01:09:10
in businesses that are even good
01:09:12
businesses there are a lot of companies
01:09:14
that are ship businesses that should be
01:09:16
on this list but they're bumbling along
01:09:18
and not making the tough decisions we
01:09:20
need venture capitalists that instead of
01:09:23
you know this being a popularity contest
01:09:26
venture capitalists need to look inside
01:09:28
as well and say what about our firm
01:09:32
didn't didn't work right why weren't we
01:09:34
issuing these course corrections and
01:09:37
telling people to tap the brakes a
01:09:38
little bit when we knew markets were
01:09:40
overheated last year
01:09:42
right and so i think there's there's a
01:09:44
lot of responsibility that sits on both
01:09:45
sides of the table um but i'm you know
01:09:48
there's 714 startups on this list by the
01:09:51
time we're done there are going to be at
01:09:53
least 3 000 startups
01:09:56
out of zero that's another reason i say
01:09:58
the fed is getting what it wants right
01:10:00
this labor market is
01:10:02
you know was cooling down very quickly
01:10:04
at least in silicon valley well i mean
01:10:06
and the fact that people felt like they
01:10:07
didn't need to take a job and they could
01:10:09
live off credit and there would always
01:10:10
be jobs for them i think people are
01:10:12
going to have to rethink like
01:10:14
can i be unployed forever and you know
01:10:17
do i need to take my career seriously do
01:10:19
i need to pay down my debt do i need to
01:10:20
have a
01:10:21
a balanced
01:10:22
uh balance sheet do i need to
01:10:24
my personal balance sheet needs to be in
01:10:26
order as well i think that's what
01:10:27
individual workers need to think about
01:10:29
yeah i mean
01:10:31
brad's right that there's certainly
01:10:32
enough blame to go around in the
01:10:34
ecosystem and you know vcs bought into
01:10:37
these frothy evaluation levels last year
01:10:39
to some degree we're all gaslit by by
01:10:42
the fed and these low interest rate
01:10:43
policies i wrote my post about burn
01:10:45
multiple and how to measure capital
01:10:47
efficiency two years ago
01:10:49
um it's getting a lot more retweets now
01:10:50
than it did back then
01:10:52
but uh but look i do vcs have some
01:10:55
self-reflecting to do definitely but you
01:10:57
know i'm seeing a lot of tweets going
01:10:58
around basically saying
01:11:00
like people
01:11:01
objecting to this advice on the grounds
01:11:03
you'll hear something like if you
01:11:06
vcs wanted us to operate more
01:11:09
efficiently then you should have
01:11:11
invested more efficiently or if you
01:11:13
wanted us to be disciplined you should
01:11:15
have been more disciplined in your
01:11:16
investing and to me that's kind of
01:11:18
missing the point it's kind of cutting
01:11:19
off your nose despite your face the
01:11:21
reason we're giving this advice is
01:11:23
because we just want our companies to
01:11:25
survive and we don't want a zero we
01:11:27
don't want a zero we've been through
01:11:28
multiple down cycles and the truth of
01:11:30
matter is unless you've been in the
01:11:32
business world for over 14 years you've
01:11:34
never been through a down cycle i mean
01:11:36
that means that
01:11:38
you know no founder under the age of
01:11:40
what like 36 has even seen
01:11:43
a down cycle before they don't know what
01:11:45
it can be like when you go into a
01:11:47
two-year nuclear they probably they
01:11:48
probably weren't the pilots at that time
01:11:50
anyway so it's more like people who are
01:11:51
40 45 have the scar tissue because they
01:11:54
were in the pilot seat totally totally
01:11:56
so the reason you're hearing all these
01:11:57
vcs all of a sudden say get more
01:11:59
discipline this is mainly because we've
01:12:02
seen this movie before and we don't want
01:12:04
to run out of money and die i think you
01:12:06
can safely short
01:12:08
if you could
01:12:09
the stock
01:12:11
of all of these
01:12:12
rando peanut gallery ceos tweeting their
01:12:15
disdain on twitter
01:12:17
if you're a writer it would be a great
01:12:18
index
01:12:20
fixing stuff just write that company to
01:12:22
zero yeah just turn your [ __ ] twitter
01:12:24
back and just sharpen your pencils um i
01:12:26
i we we would be remiss if we didn't
01:12:28
talk about uh at least for this last
01:12:31
segment
01:12:32
about the tragedy in uvalde uvalde texas
01:12:37
uh 80 miles west of san antonio tuesday
01:12:39
19 elementary kids
01:12:41
two adults were murdered um how are we
01:12:44
gonna talk about this without losing our
01:12:46
[ __ ]
01:12:47
it's really hard i think maybe the
01:12:49
roadmap tremendously i did give this a
01:12:50
lot of thought i was like why why is
01:12:52
this first segment on the market
01:12:54
trundling along on [ __ ] life support
01:12:56
for an hour and ten minutes and i think
01:12:57
part of it is because none of us can
01:12:59
really talk about this without losing
01:13:00
our cool it's really hard and but i do
01:13:03
think we did good work chamath i was
01:13:05
thinking about the good work we did
01:13:07
in the episode of roe v wade and we
01:13:09
actually came to a point where we said
01:13:11
you know here are the extreme positions
01:13:13
and then you're like hey wait a second i
01:13:14
found this data point i found this data
01:13:15
point we actually figured out hey 80
01:13:17
percent of people
01:13:19
want this definition
01:13:21
of abortion in the united states so i
01:13:24
i'll throw it to you tomorrow you know
01:13:26
we're all outraged we're all frustrated
01:13:28
but maybe we could start there is there
01:13:30
a consensus of what could be
01:13:32
accomplished here
01:13:33
that you've come to i've started to
01:13:35
think about it a whole bunch but you
01:13:37
know
01:13:38
we're all outraged we could all yell and
01:13:39
scream here but a path forward is where
01:13:42
my mind goes i'll just tell you what i
01:13:44
what i
01:13:45
um have been thinking about
01:13:47
okay
01:13:48
this is just a random stream of
01:13:50
consciousness let's do it
01:13:53
i think that
01:13:54
the democrats
01:13:56
will not make any progress
01:13:59
because
01:14:00
they try to make this unfortunately
01:14:04
a moral virtue signaling issue
01:14:07
the republicans will not make any
01:14:09
progress
01:14:11
because they
01:14:13
become sort of very binary adamant
01:14:16
absolutists about constitutional rights
01:14:19
and the interpretation of that right in
01:14:20
a very specific way
01:14:23
the truth is in the middle
01:14:25
you know if you go back before we talk
01:14:27
about yuvaldi um peyton johndron who was
01:14:30
the kid that shot up at tops
01:14:32
supermarket in buffalo and
01:14:34
killed umpteen you know black shoppers
01:14:40
lived in a state where there was a red
01:14:42
flag law for those that don't understand
01:14:44
what red flag laws are david you know
01:14:46
tweeted some stuff about it as well but
01:14:48
essentially it allows a community member
01:14:50
or a family member or a school
01:14:52
uh teacher or a police officer to
01:14:55
essentially put
01:14:56
a restraining order around an individual
01:14:58
that they think could
01:15:00
cause harm and use that as a way to
01:15:02
confiscate their weapons people have
01:15:04
talked about red flag laws as being
01:15:05
possible while he lived in a state the
01:15:08
kid was you know put under a cycle
01:15:10
you know a year ago
01:15:12
and it it all just falls through the
01:15:14
cracks
01:15:15
now you know ted cruz or somebody else
01:15:17
said let's spend 10 billion dollars and
01:15:19
only have one door into a school and put
01:15:21
an armed guard there well then you find
01:15:23
out that yuvaldi you know doubled their
01:15:27
security spend over the last two or
01:15:29
three years they actually had a person
01:15:32
that
01:15:32
may or may not have just kind of like
01:15:34
stepped to the side or something to let
01:15:35
them in the police according to the uh
01:15:38
ap
01:15:40
showed up and stood around for 40
01:15:42
minutes before they were able to
01:15:43
actually breach the school you know so
01:15:45
much so that the quote in the ap article
01:15:47
was that there was a parent that
01:15:49
tried to get other parents to
01:15:51
for 40 minutes they were standing there
01:15:55
you know in california you have you know
01:15:57
very restrictive measures
01:15:59
um but we've had you know in san
01:16:01
bernardino and other places we've had
01:16:03
mass shootings here as well because the
01:16:04
guns can just get transported across
01:16:05
state lines and there's there's no real
01:16:07
way to stop this
01:16:09
the nra i find out just so if you guys
01:16:11
are interested
01:16:13
uh mitt romney took 13.6 million dollars
01:16:16
from the nra this is the moral finger
01:16:18
wagger of the republican side
01:16:22
who you know last time i checked is a
01:16:24
multi-sentient millionaire but somehow
01:16:25
still needs to take 13 million from
01:16:28
these folks
01:16:29
rich burr took 7 million roy blunt 4.5
01:16:32
million tom tillis 4.4 million cory
01:16:34
gardner 4 million marco rubio 3.3
01:16:37
million
01:16:38
there's no effective counter lobby
01:16:40
that says
01:16:42
how about we have a more moderate and
01:16:44
restrained
01:16:45
pro-gun set of rights and field
01:16:47
candidates on the left and the right
01:16:49
that could jason find this middle ground
01:16:53
and so you know we're in this two or
01:16:54
three
01:16:56
day period it seems like where folks
01:16:58
will
01:16:59
get extreme
01:17:00
and then nothing will happen here's one
01:17:02
thing that i think we can all
01:17:04
agree as well if you look at the
01:17:06
underlying family situation of all of
01:17:08
these
01:17:10
mass shooters
01:17:11
there is a really disturbing theme that
01:17:13
i think is worth putting out there
01:17:15
these are all universally young men
01:17:18
18 19 odd years old
01:17:21
they come from broken families
01:17:24
this individual salvatore ramos
01:17:27
father was absent
01:17:30
again according to the times in the wall
01:17:31
street journal article i read mother
01:17:33
intermittent drug use issues lived with
01:17:35
the grandmother bullied
01:17:37
they're unemployed barely graduated if
01:17:39
graduated at all in high school
01:17:42
they harbored these deep resentments
01:17:44
towards women or minority groups
01:17:46
um they then project a lot of their
01:17:48
frustration
01:17:50
they were bullied potentially in high
01:17:51
school growing up
01:17:53
and all of the they were posting all
01:17:55
kinds of very
01:17:57
challenging content you know apparently
01:17:59
this kid had a one tick talk of where he
01:18:02
sat in a car with a dead cat in a paper
01:18:04
bag
01:18:05
you know he would post on instagram of
01:18:06
assault rifles
01:18:09
and nothing happens so
01:18:11
i just think that we have to acknowledge
01:18:12
that there's a complete
01:18:14
failure
01:18:16
of our politicians
01:18:18
and at this point i think they should
01:18:20
all be replaced writ large every single
01:18:22
one
01:18:23
nobody has added value to this solution
01:18:25
is nobody has really tried to figure
01:18:27
this out
01:18:28
but then also like
01:18:30
parents have to do something
01:18:32
incrementally more
01:18:33
from the perspective of the community
01:18:36
because these kids are going to school
01:18:37
with our kids and the red flags are
01:18:40
there the red flags are there so just
01:18:41
one last thing and i said i said brad i
01:18:42
said to my kids
01:18:44
when you interact with your friends i
01:18:46
just want you to understand when you're
01:18:47
on social media and you encounter this
01:18:48
content
01:18:50
i hope you're never like either scared
01:18:52
or embarrassed or unsure enough to just
01:18:55
show somebody when this stuff is
01:18:56
happening so that you can let somebody
01:18:58
with a little bit more maturity and
01:19:00
judgment try to figure out what to do if
01:19:01
anything at all
01:19:03
but these communities are completely
01:19:05
failing uh these kids as well brad you
01:19:07
have some dead
01:19:08
i would say that um
01:19:10
every [ __ ] country on the planet has
01:19:12
kids with mental health disorders
01:19:15
but not every country on the planet has
01:19:17
kids getting shot up
01:19:19
in schools and supermarkets and churches
01:19:23
that is a unique feature of the system
01:19:26
that we
01:19:27
accept this the system we created
01:19:30
right i'm not against guns you guys know
01:19:32
i took my kids to a shooting range
01:19:34
last weekend
01:19:36
but the idea
01:19:38
that we let you know assault weapons be
01:19:42
sold in this country
01:19:44
with no background checks
01:19:46
that we let assault wipe rifles be sold
01:19:49
in this country
01:19:50
with no limits on magazine sizes that
01:19:53
you can just replace magazines it's
01:19:55
total insanity
01:19:57
right so
01:19:58
i think this is a country that
01:20:01
does a lot to self-help but we are not
01:20:03
self-helping here after the
01:20:05
assassination attempt of ronald reagan
01:20:10
amazingly republicans found their voice
01:20:14
and they said let's have an assault
01:20:17
ban on assault weapons or let's have a
01:20:19
ban on assault weapons that expired
01:20:22
and we as a i asked my analysts i said
01:20:25
plot the number
01:20:27
of shootings
01:20:29
since the expiration of that ban
01:20:33
and it's terrifying yeah it's obvious
01:20:35
and it should be something that we just
01:20:37
like don't accept like the middle ground
01:20:39
jason i saw what you tweeted there is an
01:20:42
obvious middle ground
01:20:44
right there's about whether it's
01:20:46
background checks that steve kerr i mean
01:20:48
he's gone viral yeah feeling the same
01:20:51
way we all feel but they're also
01:20:53
technical solutions
01:20:55
why the hell do we let assault weapons
01:20:58
why why not put a scrambling device on
01:21:00
these weapons so that you can't fire
01:21:03
them in schools and churches
01:21:05
if somebody says that's a breach of
01:21:07
their second amendment rights i'm sorry
01:21:10
i'm also not going to allow you to drive
01:21:12
into the school yard with nuclear
01:21:14
material there are some rational limits
01:21:17
we can agree to
01:21:19
so
01:21:20
i don't think this is a partisan thing
01:21:21
at this point in time nobody's saying
01:21:23
you know ban all guns
01:21:25
right in fact i i think there's a
01:21:28
plurality among gun owners
01:21:30
they too
01:21:32
want reasonable limitations on these
01:21:34
things which are killing machines not
01:21:36
hunting machines sex any thoughts on
01:21:39
this
01:21:39
yeah i mean i i so i think we're looking
01:21:41
for solutions i think these red flag
01:21:43
laws and building on them is is the way
01:21:45
to go um you know the the problem with
01:21:48
with background checks and and i'm not
01:21:50
against them i mean you know i've i've
01:21:53
gone through background checks to get
01:21:54
you know my guns and i'm in favor of
01:21:56
them but they wouldn't have done
01:21:58
anything to stop the buffalo shooter
01:22:00
they didn't i mean you know the buffalo
01:22:02
shooter was in new york they've got the
01:22:03
toughest gun control
01:22:04
laws in the nation the background check
01:22:07
didn't stop him from getting the gun
01:22:08
because he bought it lawfully didn't
01:22:09
have a criminal record so
01:22:12
you know it doesn't that by itself isn't
01:22:14
going to do it so i think where these
01:22:16
red flag laws are useful is that we've
01:22:19
seen with these all these school
01:22:20
shooters they have a similar kind of
01:22:22
profile right they are disturbed young
01:22:26
men like in their
01:22:28
who are still school age 18 19 early 20s
01:22:32
exactly now this shooter
01:22:34
in uh uvalde i mean there are reports
01:22:36
coming out now that he had been cutting
01:22:38
his face
01:22:39
that he had aimed a bb gun at people so
01:22:42
he was clearly idioting towards this
01:22:44
idea of shooting people
01:22:46
he had posted um
01:22:48
violent fantasies basically of mass
01:22:51
shootings on social media and he told
01:22:54
his classmates he wanted to kill him i
01:22:55
mean there's almost always a call for
01:22:57
help here
01:22:58
same with the buffalo shooting i mean
01:23:00
the people who these like psychos go to
01:23:02
school with are the least surprised they
01:23:04
all know
01:23:05
because these people have been warning
01:23:07
they've been saying that they're gonna
01:23:08
do it
01:23:09
so i think we have this problem of we've
01:23:12
got these young psychotic people and i
01:23:14
think the reason why
01:23:16
it happens young is when somehow they
01:23:18
get into adulthood whatever this mental
01:23:21
illness they've got basically takes hold
01:23:23
and they snap they become psychotic and
01:23:26
it doesn't take long for them to act on
01:23:27
those fairness those violent fantasies
01:23:30
so the simple solution here i think is
01:23:34
to prevent those people from getting
01:23:35
guns you know if you threaten mass
01:23:37
violence
01:23:39
uh you shouldn't be able to get a gun
01:23:41
and i you know i personally don't think
01:23:42
that's an
01:23:43
abridgement of second amendment rights
01:23:44
because look felons can't get guns
01:23:46
either if you commit a felony you can't
01:23:49
get a gun
01:23:50
these people haven't committed a felony
01:23:52
yet but i don't want to wait until they
01:23:54
do if they're if they have these kinds
01:23:56
of red flags against them then there
01:23:58
should be a way to file
01:24:00
to basically get a protective order
01:24:02
perfectly if we don't we don't let 12
01:24:03
year olds drive cars we don't let them
01:24:05
drink beer because we don't want 12 year
01:24:07
olds drunk driving right and then at
01:24:08
some point there's a licensing that
01:24:10
occurs i think a lot of this is framing
01:24:12
i think it's just once again very
01:24:14
analogous to this abortion issue where
01:24:17
most people
01:24:18
are pro-choice and want restrictions on
01:24:21
abortion where they don't occur after a
01:24:23
certain number of weeks just like europe
01:24:24
got to and i was just
01:24:27
you know ideating on this and i think
01:24:29
replacing the nra to your point your
01:24:32
moth they have funded people they've
01:24:33
become a key funding
01:24:36
source for a lot of folks and they've
01:24:37
they've been over funded themselves um
01:24:40
what if we had americans for reasonable
01:24:41
gun safety and we have this organization
01:24:43
raised a ton of money and they just
01:24:45
outbid the nra for republicans uh and
01:24:48
for people who are against background
01:24:50
checks and we just a good question but
01:24:51
look mike bloomberg started every town
01:24:53
for gun control after newtown and it did
01:24:56
it hasn't really had i think the impact
01:24:58
that that we wanted i mean well i think
01:25:00
part of it is cheap what you said so let
01:25:03
me just give you my my little
01:25:05
four bullet points here and have you
01:25:06
react it you you are right that people
01:25:08
are absolutists no abortion you know no
01:25:11
restrictions and no guns
01:25:13
or no restrictions on guns background
01:25:16
checks we all agree on make them more
01:25:18
intense and make them proportional to
01:25:20
the caliber of the weapon if you want
01:25:22
one of these weapons why don't we have
01:25:24
you go through a training course so for
01:25:26
a pistol you've got a two-hour training
01:25:27
quest for an ar-15 or something that's
01:25:29
more powerful how about an eight-hour
01:25:31
course a four-hour course then you could
01:25:32
actually see the red flags emerge and
01:25:34
with somebody who has this red flag
01:25:36
issue go through that
01:25:37
the red flag laws should be national and
01:25:39
they should be very strong and then
01:25:41
finally what if we introduced insurance
01:25:43
for certain classes of weapons not all
01:25:45
if you want to get a rifle you know to
01:25:47
go hunting or a pistol for self-defense
01:25:49
maybe you don't need to have insurance
01:25:51
or maybe if you have one you don't need
01:25:52
to have insurance but once you get to
01:25:53
high caliber
01:25:55
once you get to having clips that are a
01:25:57
certain size what if we just had some
01:25:59
basic insurance because that would force
01:26:01
then somebody to underwrite the danger
01:26:03
of that weapon jk i mean look the trick
01:26:05
here is to figure out a system that
01:26:08
has the least possible impact on
01:26:10
law-abiding americans there's maybe a
01:26:12
few thousand of these um mentally highly
01:26:16
mentally disturbed
01:26:18
uh young men
01:26:20
but like i said their schools know who
01:26:22
they are yeah right and
01:26:24
what we need is a process where you know
01:26:27
that doesn't turn into the no-fly list
01:26:29
where all of a sudden everybody's on it
01:26:31
or uh training or insurance or content
01:26:34
moderation or something like that this
01:26:35
is the problem look this is what the nra
01:26:37
is afraid of is that you create a red
01:26:38
flag process and all of a sudden
01:26:40
thousands or millions of people could be
01:26:42
on it right so you need a right but
01:26:44
that's not true because you had you had
01:26:46
this kid who could have been put on it
01:26:47
in in new york he wasn't right no no no
01:26:50
look i think we need to i think we need
01:26:51
to figure out how do you create due
01:26:53
process around this and i i think
01:26:56
i think if a school they know i mean you
01:26:58
get multiple affidavits from a teacher
01:26:59
they should be put on the list yeah
01:27:01
school is a no-brainer
01:27:04
the problem isn't that these these kids
01:27:06
aren't identifiable because as you say
01:27:08
david they're hiding in plain sight in
01:27:09
these schools
01:27:10
the problem is that there's no mechanism
01:27:12
or incentive for any of these kids
01:27:15
parents educators teachers community
01:27:17
members to do something about it because
01:27:19
they don't know what that something is
01:27:22
and this is where these kids are left to
01:27:24
fester fester fester and then and it
01:27:26
boils over and it's all of us that have
01:27:28
to pay a collective price david can you
01:27:31
it's even it's even worse than that
01:27:32
chamoth because in the buffalo case the
01:27:34
the buffalo shooter was referred to for
01:27:37
psychiatric evaluation because they
01:27:39
thought he did have mental illness and
01:27:40
then they released him releasing after a
01:27:42
weekend and then he got the gun he got
01:27:44
the gun so he should have been put on a
01:27:46
red flag list and that should have been
01:27:47
the end of it and it should be a
01:27:48
database like a federal database which
01:27:50
they're the nra fights too yeah i also
01:27:52
want to say something about these
01:27:53
technology companies
01:27:55
there is an explicit decision
01:27:57
that technology companies can make
01:28:00
to be able to review
01:28:02
content
01:28:04
from certain kinds of accounts and start
01:28:06
to build a cluster and a distribution of
01:28:08
risk
01:28:09
it is possible i helped build one for
01:28:11
one of these companies so don't tell me
01:28:13
it's not and i i will not tolerate some
01:28:15
non-technical person telling me it's not
01:28:17
possible it is absolutely possible
01:28:20
and these technology companies should
01:28:22
have a mechanism to be able to say you
01:28:24
know what here are these thousand
01:28:26
accounts david in the united states of
01:28:29
these thousand individuals
01:28:31
that you know are sort of getting to a
01:28:32
red line here yeah incline whatever but
01:28:36
it's it's also it's it's not it's not
01:28:37
just gonna be
01:28:38
what they post on social media it's
01:28:40
although in both cases buffalo and
01:28:42
uvalde they both posted that they were
01:28:44
going to do what they did but in
01:28:46
addition to that
01:28:48
breadcrumbs
01:28:50
early warning system
01:28:52
is a great idea with uvaldi the the cops
01:28:55
were called out multiple times for
01:28:57
violent disturbances you know and
01:29:00
you combine that with what he's telling
01:29:02
people in the schools and what he's
01:29:03
posting on social media you it's there's
01:29:06
an identifiable profile here it's not
01:29:08
one red flag it's multiple red flags
01:29:10
where this is where
01:29:12
these corporate social media companies
01:29:15
need to take off all of this for-profit
01:29:18
focus
01:29:19
that's extreme at this point
01:29:22
be willing to degrade margins to hire
01:29:24
the tens of thousands of people to
01:29:26
manually review content
01:29:27
okay there should be a mechanism that
01:29:29
allows these folks to plug into some
01:29:31
system that law enforcement can use
01:29:34
there is an early warning system that
01:29:36
can be built yeah earlier
01:29:38
great idea human review before this
01:29:41
stuff gets out of control david to
01:29:42
control people's individual civil
01:29:44
liberties okay
01:29:45
but
01:29:46
that is a big step forward from where we
01:29:48
are today which is nothing there is zero
01:29:50
leadership in america can i just ask
01:29:52
david one question david you you
01:29:54
correctly pointed out i think it's
01:29:55
astute that
01:29:57
um we can't penalize people who are
01:29:59
legally getting guns or create too much
01:30:01
friction for them i understand that
01:30:02
would you consider
01:30:04
training or insurance and just take each
01:30:06
one individually for high capacity these
01:30:09
deadly assault rifles would you consider
01:30:12
what would you consider each of those in
01:30:13
terms of realistic
01:30:15
you know having some basic training a
01:30:17
four hour training class i mean like
01:30:18
like you do for uh like you do for
01:30:20
driving a car should we have that for
01:30:21
assault rifles and then should insurance
01:30:23
be required what training does is
01:30:26
prevent accidental shootings okay that's
01:30:28
right i'm not against training i love
01:30:30
training i do training but
01:30:31
but look should be mandatory what
01:30:34
training prevents is is accidental
01:30:36
shootings buffalo and uvaldi and all
01:30:38
these school shootings they're not
01:30:39
accidental shootings they're going out
01:30:40
there and killing as many people as
01:30:41
possible and they know how to use these
01:30:42
weapons i mean the problem is
01:30:44
is what their objectives are so i don't
01:30:47
think training solves it well let me ask
01:30:48
you this if you were in training for
01:30:50
four hours and you're an instructor and
01:30:51
you were trained to look for red flags
01:30:53
and it brought in some friction from
01:30:54
this person going and buying it and
01:30:56
doing the next day wouldn't that help
01:30:58
and then going to have to buy insurance
01:30:59
the buffalo shooter cased this this
01:31:01
grocery store for like four months i
01:31:03
mean they are patient they are
01:31:05
methodical in how they go about so they
01:31:06
would have gone
01:31:08
i think so that but we don't even
01:31:10
necessarily need
01:31:11
that filter jake out because i'm just
01:31:12
telling you that the profiles of these
01:31:15
psychos it's so dramatic when you go
01:31:18
back and look i mean again multiple red
01:31:20
flags they're killing animals i just
01:31:22
wanting bb guns
01:31:24
they've been the cops have been called
01:31:25
out on them they're posting on social
01:31:27
media their classmates are all terrified
01:31:28
of them their own families are terrified
01:31:30
of them
01:31:32
we just need to basically we need an
01:31:34
incentive to jamaa's point for schools i
01:31:37
think to create these profiles and file
01:31:39
the right forms the affidavits in the
01:31:41
database now do insurance for high
01:31:43
capacity assault rifles would you be in
01:31:45
favor of and do you think it's a viable
01:31:47
what does that do i don't understand
01:31:48
what that does well it means you would
01:31:50
have to apply and say hey i'm jason
01:31:51
calacanis i'm 18 years old i'm in the
01:31:54
school i would like to apply to own an
01:31:55
ar-15 and then some insurance companies
01:31:58
say okay you're 18 years old you're a
01:31:59
male you live in texas
01:32:01
your bill is going to be 600 a year for
01:32:03
this gun oh okay you're a 45 year old
01:32:06
male in wyoming your bill is going to be
01:32:08
100 for this because we've done some
01:32:10
actuary tables on the actual risk would
01:32:12
you be in favor of insurance i think the
01:32:13
key to solving this problem is to create
01:32:16
the minimum disruption on law-abiding
01:32:18
americans okay tens of millions of them
01:32:20
who like
01:32:21
insurance
01:32:22
look i don't know what that would do
01:32:24
exactly i want to stop the basically
01:32:26
that i think what are a relatively small
01:32:29
number of psychos young psychos maybe
01:32:32
there's only
01:32:33
a few hundred or a few thousand sort of
01:32:35
candidates in the entire country i i
01:32:37
don't want i don't want to wait for them
01:32:39
to become felons to to basically prevent
01:32:41
them from getting jobs and by the way
01:32:42
there's a there's there's a bunch of
01:32:46
study about this there's been a lot of
01:32:48
social science studies
01:32:50
about the individuals that own guns
01:32:52
legally and those individuals that sort
01:32:54
of break and commit these crimes and
01:32:57
whether we want to admit it or not there
01:32:59
is a definable
01:33:00
archetype
01:33:02
it starts with gender then there's
01:33:04
socioeconomic conditions then there's
01:33:06
you know home family conditions
01:33:08
these are knowable
01:33:10
things
01:33:12
these can be built into a combination of
01:33:14
software and human review
01:33:16
and we need to create incentives so that
01:33:18
these kids can get some kind of help or
01:33:21
intervention and the worst case is we
01:33:23
kind of you know
01:33:25
do something with them in a way that
01:33:27
helps us protect everybody else because
01:33:30
sorry to interrupt we do this every day
01:33:33
we turn this country on its head after
01:33:35
september 11th
01:33:37
we started profiling everybody and to
01:33:40
sax's like minimum standard of
01:33:43
disrupting other people's lives the
01:33:45
department of homeland security
01:33:47
disrupted everybody's lives take off
01:33:50
your shoes go through the security
01:33:52
before you get on a plane we changed
01:33:55
everything in months
01:33:57
because we said we're under attack
01:34:00
but there we're under attack by a
01:34:02
foreign presence a foreign terrorist
01:34:04
presence here we're under attack by sick
01:34:07
kids who need help
01:34:08
okay but we need to disrupt our lives we
01:34:12
need to change things
01:34:13
right in order to save these innocent
01:34:16
kids who are being shot up in schools
01:34:18
where they're supposed to be safe and so
01:34:20
i agree let's profile them let's get
01:34:24
these companies doing their jobs helping
01:34:27
us identify these kids get these kids
01:34:29
help but we need to raise the volume and
01:34:32
raise the urgency in dc the way we did
01:34:35
after september 11 2001 that this is a
01:34:38
national crisis as opposed to going back
01:34:41
to the normal
01:34:43
right distribution here by the way after
01:34:45
2011 um i was on a no-fly list and i
01:34:49
think i've told you guys a story before
01:34:50
but i would have
01:34:51
the triple s on my boarding pass for
01:34:54
years until about 2007 or 2008. um
01:34:57
constantly profiled you know
01:35:00
put in the back room the whole nine
01:35:02
yards
01:35:03
but in the end you know did did it make
01:35:06
me feel kind of like less than a lot of
01:35:08
other people yes but did i do it because
01:35:11
uh i think it was the on the broad
01:35:13
strokes the right thing to do yeah so
01:35:15
you would take a little friction and so
01:35:17
you know if i needed to basically turn
01:35:19
over all my kids you know social media
01:35:21
or there was a mechanism where you know
01:35:25
as much as we try to teach our kids
01:35:27
you know all of these other things that
01:35:29
that allow us to make a socially
01:35:30
progressive society if the guidance
01:35:32
counselor also sat around and asked
01:35:34
these kids anonymously hey is there
01:35:35
anybody in your class you think needs
01:35:36
your help why don't you do that too
01:35:39
um there's there is friction because
01:35:42
that that i think we're all willing to
01:35:44
take because the counter factual is too
01:35:47
horrible to bear
01:35:49
and this is an example of one of those
01:35:51
things would you be in favor of
01:35:53
insurance and training chamath
01:35:56
assault rifles i don't i think these are
01:35:59
good ideas okay i don't think they will
01:36:01
curb the issue i do think what david
01:36:03
said is right there's a level of
01:36:05
evil
01:36:07
or mental illness in these people
01:36:11
that caused them to be incredibly
01:36:13
methodical and i think that we shouldn't
01:36:15
underestimate
01:36:18
so they would get to the insurance
01:36:19
screen and get through the training
01:36:20
screening well i think i think you know
01:36:21
look there's a lot of people that drive
01:36:23
cars without insurance right it's you
01:36:24
can drive enough and you can be insured
01:36:27
and you know so i think that those are
01:36:28
good ideas jason
01:36:31
where it will falter
01:36:33
is
01:36:33
we have a
01:36:35
political system
01:36:36
where the primaries for both sides
01:36:39
are dictated by the looniest 10 percent
01:36:42
of the left and the right yeah we got a
01:36:44
vote in our primary it makes practical
01:36:46
gun control just like abortion an
01:36:48
impossible task unless we completely
01:36:53
turn our political class upside down on
01:36:55
both sides of the aisle
01:36:56
okay so i think these are good ideas but
01:36:59
in the meantime i think parents have to
01:37:01
do something because nobody's coming to
01:37:03
our aid and i think this the most
01:37:05
important thing we can do is just say
01:37:07
the truth out loud there is an
01:37:09
identifiable archetype of these we
01:37:12
should profile these kids we should
01:37:13
profile them there's no doubt there the
01:37:15
politicians who are making this about
01:37:17
lawful gun ownership they're not helping
01:37:19
they're they're actually hurting because
01:37:21
you're activating millions of americans
01:37:24
who lawfully own guns and believe in the
01:37:26
second amendment to oppose
01:37:29
reasonable measures
01:37:31
like like i'm saying hyper-targeted
01:37:33
measures like these red flag laws right
01:37:35
and so
01:37:37
if we make the whole issue about gun
01:37:38
ownership in general you're not going to
01:37:40
get any
01:37:42
reasonable changes
01:37:43
the opposite the sales go up the sales
01:37:45
go up every time we have this happen my
01:37:47
kids and i'm sure your kids as well
01:37:49
have now uh gone through multiple active
01:37:52
shooter drills in our school yep but at
01:37:55
no point have my kids been sat down and
01:37:58
taught some of the warning signs of
01:37:59
their fellow classmates and a mechanism
01:38:02
to raise their hand and say you know
01:38:03
what
01:38:04
this is actually really worrisome here
01:38:06
they don't have that training they do
01:38:08
have training on how to lock the door
01:38:10
how to flip a desk how to go into a
01:38:12
closet which is a horrible thing to have
01:38:14
to teach a child but if we're already
01:38:17
there i just say take the extra step and
01:38:19
teach the kids because they're living on
01:38:21
instagram and tick tock every day they
01:38:23
see their friends and their you know
01:38:25
classmates every day
01:38:27
and we need to start figuring out an
01:38:29
early warning system because what is
01:38:31
happening continues to happen
01:38:33
these politicians are ineffective they
01:38:36
do nothing to help parents right it's
01:38:38
true i i like i like the early warning
01:38:41
system because you're right like they're
01:38:42
so so first of all the the red flag laws
01:38:44
are something that's done on a
01:38:45
state-by-state basis something like 19
01:38:47
states have red flag laws including new
01:38:49
york but it didn't work in new york the
01:38:51
buffalo shooter because got one federal
01:38:53
no one used the system no i don't think
01:38:54
it has to be federal i just think that
01:38:56
people are actually interested i think
01:38:57
people just have to use this system so
01:38:59
you had in the buffalo shooter the kid
01:39:01
was referred for psychiatric treatment
01:39:03
and they still didn't read flag him
01:39:04
that's just bonkers so people have to
01:39:07
the school systems have to learn how to
01:39:09
use these laws
01:39:10
and so to jamaa's point we need an early
01:39:12
warning system we need that translating
01:39:14
into red flags that go on someone's
01:39:16
record and then they can't buy guns
01:39:18
after that it's it's really simple at
01:39:19
least till maybe they turn 30 or
01:39:21
something
01:39:22
um i mean it's it's um the the the
01:39:25
problem is that
01:39:27
about half the states don't have this
01:39:28
mechanism and then the half that do
01:39:30
aren't using it effectively enough i
01:39:32
just shared with you guys a chart it the
01:39:34
the the most pernicious part of this
01:39:36
debate and i think this is a pretty
01:39:38
solid debate we had here so thank you to
01:39:39
the gentleman for all participating in
01:39:42
it um
01:39:43
is every time we have one of these gun
01:39:45
sales spike if you look at the chart in
01:39:46
the new york times i just shared a nick
01:39:47
you can you can share it on the youtube
01:39:49
channel
01:39:50
uh two million guns in the january after
01:39:51
obama's re-election the sandy hook
01:39:53
shooting we hit peak guns obviously
01:39:55
during coronavirus people got scared and
01:39:56
bought a bunch of guns after september
01:39:58
11th they bought a lot of guns but
01:40:00
these moments are sadly going to drive
01:40:02
the ar 15 sec
01:40:04
that is because all the conversation is
01:40:06
about banning guns yeah and what we
01:40:08
should be doing is preventing
01:40:09
psychos from getting guns known psychos
01:40:13
reasonable gun control
01:40:14
increased by 50 in the last 10 years the
01:40:16
last 10 years have been the safest 10
01:40:18
years in our lifetime
01:40:21
yet for some reason people feel the need
01:40:23
to arm themselves more and more and more
01:40:26
now i as an immigrant into this country
01:40:28
accept the rules of the country that i
01:40:30
come to there's a constitution there's a
01:40:32
second amendment i respect people's
01:40:34
rights to own gun i've held a gun
01:40:37
twice once in my life i had a panic
01:40:39
attack and i had to put it down i had to
01:40:41
so it's not for me okay
01:40:43
but i respect your right to have them um
01:40:46
i think that we need to teach people
01:40:49
how to think about the precursors before
01:40:52
they get the hold of these things really
01:40:53
sadly uh
01:40:55
what's killing our kids um it turns out
01:40:58
i just put a i just put the tweet in the
01:41:00
chat for you guys to take a look at new
01:41:02
england journal of medicine
01:41:03
massive uptick now guns deaths
01:41:07
combined it's all gun deaths includes
01:41:09
gangs includes suicide
01:41:11
and includes mass shootings
01:41:14
but firearm related deaths and injuries
01:41:17
now exceeds motor vehicle crashes and so
01:41:19
does opioids so we have a crisis after
01:41:21
at new england journal of medicine just
01:41:23
to be very honest
01:41:25
it's no it's not necessarily only about
01:41:27
kids because they included 18 and 19
01:41:29
year olds in that chart sure so those
01:41:31
are adults okay young adults and kids um
01:41:34
and so drug overdoses and firearm
01:41:37
related are spiking massively
01:41:40
this is my point about having this
01:41:41
debate this is being armed by the
01:41:44
by the left and then the right says well
01:41:46
hold on it doesn't include 18 and then
01:41:48
everybody gets caught
01:41:50
in that hole
01:41:51
absolutely the shooting these shootings
01:41:53
are being done by people 1819 but
01:41:55
putting all this aside i just want to
01:41:57
make a bigger point about our children
01:41:58
like in the last two years with this
01:42:00
covet the spike occurred during covid of
01:42:02
drug overdoses and firearms so there's a
01:42:05
lot of suicide in here as well so we
01:42:06
should think holistically about
01:42:08
you know how kids are dying oh yeah one
01:42:10
other thing to that which is we have
01:42:11
plenty of gun laws on the books that
01:42:13
aren't enforced right now in san
01:42:14
francisco you can't get chase abu deen
01:42:17
to enforce a gun charge he uh a young
01:42:20
kid named kelvin chu got killed
01:42:23
because his his killer a guy named zion
01:42:26
young he was arrested weeks before on
01:42:29
gun charges and jason boudin just let
01:42:30
him go and in uh la with gascon he's
01:42:34
dropped all gun enhancements
01:42:36
to charges the whole the whole thing so
01:42:38
you've got progressive prosecutors who
01:42:40
aren't even prosecuting the gun laws we
01:42:42
got on the books that's got to change
01:42:44
and ted cruz thinks this is about the
01:42:46
back door being unlocked i mean the the
01:42:48
stupidity across the board left to right
01:42:50
everybody in between the incompetence is
01:42:52
stunning and it has to stop yeah but
01:42:54
jake out look i mean if you make this
01:42:56
about people's lawful gun ownership
01:42:58
they're going to oppose what you want to
01:42:59
do we got to make it well there has to
01:43:00
be some incremental controls don't you
01:43:03
agree there has to be control the
01:43:04
controls are basically preventing known
01:43:07
psychos from getting weapons okay so you
01:43:10
want to focus on that but to be clear no
01:43:12
additional gun control for you
01:43:14
background checks or anything or not
01:43:16
background checks right now i just want
01:43:17
to be clear red flag laws and background
01:43:19
checks are good i know we have to wrap
01:43:22
i think the consensus was around red
01:43:24
flag there's a known profile chamath
01:43:26
articulated it well
01:43:28
david i don't think we helped the cause
01:43:31
to build the consensus by calling a sick
01:43:34
16 year old kid struggling with
01:43:36
self-identity a psycho
01:43:39
and because their their kids who live
01:43:41
all around us this isn't about lecture
01:43:43
this is about building consensus i think
01:43:45
we can profile those folks they clearly
01:43:48
have psychotic
01:43:49
uh uh challenges right but there is
01:43:53
intervention to help these kids i know a
01:43:55
lot of kids who frankly had challenges
01:43:57
during high school who turned out to be
01:43:59
great great human beings so these are
01:44:02
kids at a very vulnerable age we should
01:44:05
profile them within the community social
01:44:07
networks should help us identify these
01:44:09
folks and we should get them help and i
01:44:11
think you can build a reasonable
01:44:12
consensus around that
01:44:14
yeah i agree just to explain myself i'm
01:44:17
by when i use the word psycho i'm
01:44:18
referring to the the ones who actually
01:44:20
became shooters you know i'm referring
01:44:22
to those ones um you're right that if
01:44:24
we're talking about people who haven't
01:44:25
done anything yet
01:44:27
who are mentally ill yes we should get
01:44:29
them help so
01:44:30
mental illness
01:44:32
you know this is and this goes to
01:44:33
healthcare as well we should have
01:44:36
national
01:44:37
mental health services available freely
01:44:39
to every american we are in a mental
01:44:41
health crisis between covid and just
01:44:43
modern life and suicide is becoming the
01:44:45
number one cause of death
01:44:47
sadly for many um
01:44:50
demographics now including our kids and
01:44:52
so while we do a great job making cars
01:44:54
safer
01:44:55
and creating life-saving drugs and and
01:44:58
emergency rooms and and medical
01:44:59
attention has gotten unbelievable and
01:45:01
we're making all these uh you know great
01:45:03
advances
01:45:05
mental health we're not making the
01:45:06
advances we need
01:45:07
i'm so so so sorry to all those families
01:45:10
yeah this is just heartbreaking
01:45:12
i guess you're emotional yeah
01:45:15
but i'm just so sorry for all those
01:45:16
people dealing with it it's
01:45:17
heartbreaking yeah yeah heartbreaking
01:45:20
let's take some action here enough with
01:45:21
the thoughts and prayers let's actually
01:45:23
come up with a [ __ ] plan and just
01:45:25
i've been profiled
01:45:26
for years i put up with it sorry for the
01:45:29
indignity it's okay i said uh my
01:45:33
honest perspective is
01:45:35
there's a clustering and a technology
01:45:37
component to this that can meaningfully
01:45:38
help and we
01:45:40
need to start
01:45:42
knowing that there are these patterns we
01:45:44
need to say the words out loud they are
01:45:46
patterns
01:45:47
for these school shooters for these mass
01:45:50
shooters
01:45:50
those patterns can be written down they
01:45:52
have been written down
01:45:55
and we need to do something about it
01:45:56
they need to be codified in some form of
01:45:58
algorithms and if we've already taught
01:46:00
our kids how to duck and hide i think we
01:46:02
can also teach our kids how to raise
01:46:04
their hand well before they need to
01:46:05
learn to duck and i identify who's being
01:46:06
bullied into your point your mouth about
01:46:08
being profiled if we profile somebody
01:46:10
and they're not a mass shooter candidate
01:46:12
but they're just depressed or they're
01:46:14
being bullied well that's ver that they
01:46:17
deserve help as well so there's no
01:46:19
downside to profiling somebody who's
01:46:20
struggling you're profiling them with
01:46:22
the intent of getting them help
01:46:24
so let's just profile the kids who are
01:46:26
struggling profile them for good
01:46:29
and you you'll catch some you know who's
01:46:31
struggling a priority my point is that
01:46:32
you actually well they're being bullied
01:46:34
they're going to probably be struggling
01:46:35
i mean you know the kids getting bored
01:46:37
psychographic and demographic profiles
01:46:39
of the
01:46:40
99 of the cases that we've seen over the
01:46:43
last two decades and all i'm encouraging
01:46:47
politicians and technology companies to
01:46:48
do is come together create some standard
01:46:52
you know what's the downside what's the
01:46:53
downside none zero we have mechanisms
01:46:56
like this by the way where um you know
01:46:58
these technology companies already do
01:47:00
these kinds of profiles on other kinds
01:47:02
of situations you know typically you
01:47:04
need a physical request and other kinds
01:47:05
of like legal interventions in order to
01:47:07
unlock this data
01:47:08
but it's not as if this is uh you know
01:47:10
antithetical to what they do in other
01:47:12
situations they certainly do it for
01:47:14
fraud in advertising it's not as if the
01:47:16
technological prowess of these companies
01:47:17
cannot be applied to a k-means
01:47:19
clustering of this issue okay just to
01:47:21
use a simple machine learning context
01:47:23
like this is they put a lot of effort
01:47:25
into finding click fraud right this is
01:47:27
going to be a very similar problem
01:47:30
we don't allow angry young men
01:47:33
who've been emailing with the middle
01:47:35
east
01:47:36
who are citizens of this country who've
01:47:38
been posting online that they want to
01:47:40
run a plane into a building to go get
01:47:42
their pilot's license
01:47:44
right we profiled them after september
01:47:46
11th and we said no moss
01:47:49
and all chamath is saying is use your
01:47:51
[ __ ] common sense
01:47:53
identify these folks that we know are
01:47:55
struggling to need help and put them on
01:47:57
a list and say they can't buy an assault
01:47:59
weapon
01:48:00
period yeah all right everybody it's
01:48:02
time to go uh thank you uh to uh brad
01:48:05
kirschner for sitting in uh thanks again
01:48:07
to the dictator tremofita and
01:48:10
uh thanks saks and thanks to everybody
01:48:12
who uh spoke at the all in summit we've
01:48:14
been um releasing all of the videos
01:48:16
freyberg will be back next week as well
01:48:19
the hammer lucky explosive episode so
01:48:21
look for a great week of all in content
01:48:24
next week we'll see you all next time
01:48:32
rain man david sacks
01:48:36
and it said we open source it to the
01:48:38
fans and they've just gone crazy with it
01:48:45
[Music]
01:48:49
besties
01:48:52
[Music]
01:49:13
we need to get
01:49:14
back
01:49:18
[Music]
