00:00:00
all right everybody welcome back to the
00:00:01
number one podcast in the world the
00:00:03
Allin podcast with me again today jamath
00:00:07
poaa your chairman dictator how you
00:00:10
doing brother how you feeling doing
00:00:12
great Fresh Off The Holiday Spectacular
00:00:15
oh good times and then uh getting ready
00:00:17
for a little ski you and I will be doing
00:00:19
a little skiing together with Friedberg
00:00:21
that'll be quite
00:00:23
nice freeberg I don't think you've skied
00:00:25
with me and Jason Jason is an excellent
00:00:27
skier I mean I've heard his for have I
00:00:30
you Jason I don't think I have his
00:00:32
brother is excellent too they're both
00:00:33
Josh the black bomber is good yeah yeah
00:00:36
shout out to Josh the black bomber it's
00:00:37
gonna beas's got those hips he's got
00:00:39
he's got skiing hips they kind of shift
00:00:41
left right right yeah child it's kind of
00:00:44
like when I the hips are wider than the
00:00:46
shoulders yeah it reminds me of I went
00:00:47
to the Tom Ford uh out I went when I
00:00:51
went to Tom Ford to get my suit I'll do
00:00:52
that in just a second but with us again
00:00:54
of course you're cackling Sultan of
00:00:56
science freeberg how are you doing have
00:00:58
you guys seen that clip of the guy with
00:00:59
the fake bum that runs around the city
00:01:01
yes with security guards it's like some
00:01:03
sort of a crypto put on or something
00:01:05
it's hilarious this guy he's got like a
00:01:08
big Brazilian butt and he just runs
00:01:10
around in tight Tac you find a clip of
00:01:13
this guy oh my God it's so ridiculous so
00:01:16
funny all right with us the cackling
00:01:18
with his afterlove from the Holiday
00:01:20
Spectacular let's call it what it is
00:01:22
it's the Christmas Spectacular we're
00:01:24
going to pick a side freedberg how did
00:01:26
you like our Christmas why are you being
00:01:28
anti-semitic bro how dare you how dare
00:01:31
you you can have the Hanukkah special
00:01:33
with your two specials and now with us
00:01:35
in The Red Throne it's fit Sachs it is
00:01:40
stylish Sachs it is goes to work every
00:01:44
day in Venture Sachs his name is Keith
00:01:46
raboy how are you my brother welcome
00:01:49
great great Jason thanks happy to be
00:01:52
here you know it's great being more fit
00:01:54
and more fashionable with socks is a
00:01:56
pretty low bar yes so I'm really excited
00:01:59
to drill
00:02:01
[Music]
00:02:02
let your winners
00:02:03
[Music]
00:02:08
ride and instead we open sources to the
00:02:11
fans and they've just gone crazy with it
00:02:14
queen
00:02:17
of and as we love about you you've got a
00:02:21
little American exceptionalism Supremacy
00:02:25
dare I say you don't f with dictators
00:02:29
that's true you with them yeah I don't
00:02:31
really love dictators they're not good
00:02:32
for society they're not good for America
00:02:35
but you know it's not always America's
00:02:36
job to fix all of that all right well
00:02:39
listen what about running companies
00:02:40
should company CEOs be dictators Yes
00:02:43
actually um so I believe in the founder
00:02:45
mode the Brian chesky founder mode I
00:02:47
held a conference in New York recently
00:02:48
that Brian was nice enough to speak at
00:02:50
called hiring the art of hiring for
00:02:52
founder mode so specifically for people
00:02:55
who subscribe Founders that subscribe to
00:02:57
that view how do you hire people and how
00:02:59
is that different which you would hire
00:03:00
in a standard you know monstrosity of a
00:03:03
company like Google or something yeah
00:03:05
good founder mode in New York by the way
00:03:06
just history if I remember correctly
00:03:09
lots of good founder mode in New York J
00:03:11
do you want to give Keith's background
00:03:12
the of course went to Stanford with the
00:03:16
boys saaks and Peter teal went on to do
00:03:19
PayPal he had a stinet square he started
00:03:22
a bunch of other companies Founders fund
00:03:24
he work he worked he he went to LinkedIn
00:03:28
that's how it all started LinkedIn was
00:03:30
pretty key like re left PayPal started
00:03:32
LinkedIn I joined him so yes that's true
00:03:35
and then after that I went back with
00:03:37
back stion from PayPal days to slide
00:03:39
which is on the as of History we don't
00:03:41
have to talk about that but then uh I
00:03:43
did jump into square as the 20th
00:03:45
employee and helped build a pretty good
00:03:47
company yeah and then Founders I got
00:03:51
Lac you know became lazy you know
00:03:54
decided to be VC in 2013 spent six years
00:03:56
at Coastal Adventures five at Founders
00:03:58
fund the last year almost last year now
00:04:01
before we jump in I actually have a
00:04:03
question for you starting already how
00:04:05
does that happen Keith how do you you're
00:04:08
at Founders sorry and then you
00:04:11
get what like what pulled you to go and
00:04:15
work with v note and then what pulled
00:04:16
you back like how does that process work
00:04:18
because these things are typically meant
00:04:20
to be sort of forever jobs that's true
00:04:22
so I you know had the benefit of having
00:04:24
the note on the board of square which I
00:04:26
think is typically how Executives uh
00:04:29
wind up turning into VCS is you forge a
00:04:32
relationship with board members so like
00:04:34
for example Roa B who runs tooa had Mike
00:04:37
Mor on his board roaf was our CFO at
00:04:39
PayPal and Mike recruited him so that's
00:04:42
a very common same thing Ravi at Sequoia
00:04:44
today was the COO and CFO of instacart
00:04:48
again same thing Mike recruited him into
00:04:49
scya so I think that's typically uh how
00:04:52
people become VCS I always knew I wanted
00:04:54
to be a VC since 2003 I was a very
00:04:57
active inial investor as you know even
00:04:59
when I was was you know concentrating on
00:05:00
all these other jobs I was writing a lot
00:05:02
of checks and so anybody who's writing a
00:05:04
lot of active Angel checks probably has
00:05:06
in the back of their mind one day I
00:05:07
might want to be a professional investor
00:05:09
we could talk about the merits or
00:05:10
demerits of that but like the goal was
00:05:12
pretty clear in my mind and then at some
00:05:15
point I think you have to make a
00:05:16
decision what do you want to be in life
00:05:20
um you know venture has long time
00:05:22
Horizons it is a job for life like 15 20
00:05:25
years is pretty much what you have to
00:05:26
commit to so you don't really want to
00:05:28
start Venture when you get to old
00:05:30
because 20 years you know you'll be like
00:05:32
Donald Trump age yeah so I can run for
00:05:36
president I can run for president in 25
00:05:38
years or something Keith why did you
00:05:40
leave Founders fund to go to kosa so
00:05:43
kosa was great I spent six years there
00:05:45
the truthful reason why I left it's kind
00:05:47
of funny given covid and how history
00:05:50
changed is I hated commuting a sa Hill
00:05:52
Road every day we were one office period
00:05:56
in office every single day and I felt
00:05:59
like the future of investing was more in
00:06:01
sanan Francisco than in paloalto at the
00:06:04
time and I just despised sitting in a
00:06:06
car 45 minutes each Direction turns out
00:06:09
you know Co changed everything how
00:06:10
people do their work like we're
00:06:11
recording this by Zoom before covid we'd
00:06:14
probably all be in the same studio
00:06:15
recording a podcast like this and so but
00:06:18
the node and the team was very
00:06:20
inflexible about it and Founders phone
00:06:21
was located in the city obviously I knew
00:06:23
Peter since College as Jason alluded to
00:06:26
and I decided that you know it was
00:06:27
better for me I remember talking to Sam
00:06:29
Alton
00:06:30
and I said am I crazy for changing funds
00:06:32
mostly on a commute basis and Sam said
00:06:34
you're human and every single study of
00:06:36
human happiness is it's inversely
00:06:38
correlated to your commute time it's
00:06:40
like there's nothing wrong with being
00:06:41
human in any event there are a lot of
00:06:44
similarities between FF and KB both are
00:06:47
great funds that have put up you know
00:06:49
incredible returns have funded iconic
00:06:51
Founders and companies but they're very
00:06:53
different KV is involved as early as
00:06:56
possible and FF is a momentum investor
00:06:58
and is maybe the best in the Planet as
00:07:00
at being a momentum investor so almost
00:07:02
every successful investment of Founders
00:07:05
fund over eight funds was invested at
00:07:08
$500 million or more in true valuation
00:07:11
and almost every single investment at KV
00:07:13
in eight funds was like the seed or
00:07:16
series a investment with very few
00:07:18
exceptions ever and so andreil and ramp
00:07:21
were the only exceptions at Founders
00:07:22
fund and at KD The Only Exception would
00:07:26
be stripe which I led in you know 2013
00:07:29
or so which is an order of magnitude
00:07:31
higher valuation than any KV investment
00:07:33
initial investment ever so KV is much
00:07:36
more an input driven organization
00:07:37
Founders funds much more output driven
00:07:39
and you know there's great technology
00:07:40
companies that are input driven think
00:07:42
Amazon apple and there's great
00:07:43
technology companies that are output
00:07:45
driven so you can choose but certain
00:07:47
people are going to be better in some
00:07:49
environments and other people are going
00:07:50
to thrive you know in other environments
00:07:52
i f in really really well at KV you
00:07:55
enjoy the early stage you enjoy year
00:07:57
zero year one year two
00:07:59
I'm very good at it you know I think I
00:08:02
prefer to invest as early as possible on
00:08:04
a keynote deck only like if I meet a
00:08:06
founder and there's a keynote deck
00:08:07
there's no product there's no metrics
00:08:09
that's my sweet spot because I also know
00:08:11
nobody else in Venture is good at that
00:08:12
nobody else is still active in Venture
00:08:14
what's the secret what's the secret from
00:08:16
a key note to a check it comes out a
00:08:18
Founder assessment at the end of the day
00:08:19
the only data point is is this founder
00:08:21
capable of building an iconic company
00:08:23
period And I prefer to compete when
00:08:25
there's no metrics because you all the
00:08:27
metrics are going to do is confuse you
00:08:29
that said there's a lot of investors who
00:08:30
are very good once there's product
00:08:32
metrics Financial metrics and so I have
00:08:34
to compete with people who are pretty
00:08:35
good at what they do so I'd prefer to go
00:08:37
as early as possible and then secondly I
00:08:38
like companyb building like I think part
00:08:40
of my role is to help the founder
00:08:43
increase the amplitude or probability of
00:08:45
success and I enjoy that at FF that's
00:08:47
very
00:08:48
controversial yeah ah right yeah the
00:08:50
founder Reigns Supreme and everybody
00:08:53
else is there to get out of the way
00:08:54
right yeah I've had both KV and FF as
00:08:57
investors lead investors in both climate
00:09:00
and at ohal now so I know both firms
00:09:02
really well and it's really I always
00:09:03
people always ask me about the
00:09:04
difference between the two that's always
00:09:05
what I get to it's like Founders fund
00:09:07
they have this kind of Mantra they find
00:09:09
great Founders and just get out of the
00:09:10
way let them run and they don't want to
00:09:12
be helpful that's not their objective
00:09:14
they feel like if they have to be
00:09:15
helpful it's not the kind of founder I
00:09:16
mean Keith obviously speaking outside of
00:09:19
yourself and then at kosla as you know
00:09:22
venod has been extremely and and the
00:09:24
whole team there especially climate and
00:09:26
always have always been extremely
00:09:28
helpful so adding board members
00:09:30
introducing commercial Partners being
00:09:31
like very traditionally proactive
00:09:34
participatory VCS on the board very
00:09:37
different both very valuable when I had
00:09:39
a board issue at Founders fund and there
00:09:42
were some board members that did not
00:09:43
like my strategy had issues with what I
00:09:46
was doing with the company at climate
00:09:47
Corp at the time Founders fund actually
00:09:50
stepped up and protected me and they got
00:09:53
the board the rest of the board together
00:09:54
to protect me uh in a way that was like
00:09:56
actually at a very kind of crucial
00:09:58
moment for the for the business
00:10:00
and as a result we had a massive exit
00:10:01
within a year I saw Brian singerman uh
00:10:04
is leaving so does anybody know which
00:10:07
ambassadorship he's taking I mean the
00:10:10
timing's a little interesting is it not
00:10:12
I don't know he's go compete with our
00:10:14
friend Kenny Howry yeah Ken Howry where
00:10:16
is he off to next hope hopefully some
00:10:19
great destination I'm sure I know we can
00:10:21
all crash yeah something warm this time
00:10:23
okay Sweden's a little bit much swed
00:10:25
I'll send in my wish list for you yeah
00:10:27
let's go like maybe like is there like
00:10:29
Turks and caos or something what about
00:10:31
an embassy tour we should do an embassy
00:10:32
tour this year St Barts do they have an
00:10:34
embassy there St Barts yeah that's a
00:10:36
great idea they don't unfortunately it's
00:10:37
a French protectorate but well you know
00:10:40
what everything's on the table now we
00:10:42
could make them the 51st second third or
00:10:44
fourth state I mean we're in the game
00:10:45
right now Canada is coming on board did
00:10:48
you not want to roll uh in the
00:10:49
administration yourself no you know the
00:10:51
than you I love politics if you you know
00:10:53
follow my Twitter feed I pay a lot of
00:10:55
attention I used to be involved in
00:10:56
politics before I got into TCH however
00:10:59
what I realized about where I am in my
00:11:01
career in Tech is if I stop doing what I
00:11:05
do I'm never going to come back like
00:11:07
technology is rapidly emerging we're
00:11:09
going to talk about all the latest
00:11:10
developments this week like you can't
00:11:12
take your foot off the gas and the
00:11:14
network building parts of venture for
00:11:15
two to five years and come back when
00:11:17
you're like 50 years old and so I felt
00:11:20
like I'm not ready to give up on Venture
00:11:22
I'm in like the prime of my Venture
00:11:23
career I'm only 12 years in actually
00:11:25
chth so figure five 10 more years like
00:11:28
is is The Sweet Spot and so I'd like to
00:11:30
see the companies I was involved in grow
00:11:32
up become public companies Etc and I
00:11:34
didn't feel like I could ever come back
00:11:36
if I quit at some point when I like to
00:11:38
get involved in politics probably yes
00:11:41
but it's a decade out well the
00:11:44
household's involved uh big announcement
00:11:46
your husband Jacob is joining the
00:11:49
administration maybe you could tell us a
00:11:50
little bit about that obviously very
00:11:53
proud of that yeah it's extremely
00:11:55
exciting for him obviously for the
00:11:57
country I think which is he's going to
00:12:00
be the chief economic officer really for
00:12:03
the for the for the country his job is
00:12:05
to build foreign policy from the
00:12:08
business standpoint which if you think
00:12:09
about it what's the foundation of power
00:12:11
in the world it's economic success why
00:12:13
did the United States win World War Two
00:12:15
is we had an economic Engine That Could
00:12:17
outcompete Germany plus Russia plus
00:12:19
Japan we could build more tanks you know
00:12:21
blah blah blah blah Etc and so the
00:12:23
economic engine is critical to this
00:12:25
Administration obviously Trump
00:12:27
understands that we had a great three
00:12:29
years under his first Administration as
00:12:31
he likes to say best economy ever before
00:12:33
covid which may you know may be true and
00:12:36
we need to rebuild American strength and
00:12:37
Jacob's job is to export that you know
00:12:40
philosophy and sometimes you can build
00:12:42
economic strength through working
00:12:44
through Foreign Affairs and so that's
00:12:46
his main job is to be the primary Point
00:12:49
person under
00:12:50
Secretary of economic Affairs and then
00:12:52
they've got a bunch the Democrats and
00:12:54
the W people added a bunch of other
00:12:56
things to the title it used to be just
00:12:57
under Secretary of State for economic
00:13:00
um and they added like a you know
00:13:01
environment and all these politically
00:13:02
correct things so hopefully they'll
00:13:03
subtract all that stuff and just go back
00:13:05
to under Secretary of State for economic
00:13:08
Affairs and interestingly what what's
00:13:11
turning out to be interesting as Trump
00:13:13
assembles this group I love to get the
00:13:14
panel's thoughts on it is not everybody
00:13:16
thinks the same Jacob's position on Tik
00:13:19
Tok which we'll get to in this show very
00:13:21
different than some other people in the
00:13:24
administration and even Trump himself
00:13:25
flip-flopped a little bit on that so
00:13:28
what are your thoughts as we get started
00:13:30
here just
00:13:31
on that assembly of people you know
00:13:35
including saxs obviously who couldn't be
00:13:36
here this week but we'll be on future
00:13:38
episodes there's your announcement folks
00:13:41
what are your thoughts on that the sort
00:13:42
of diversity and opinion in the
00:13:46
administration and how that all sorts
00:13:47
out because some people exem exciting I
00:13:50
think it's very obvious watching from
00:13:51
afar that the way Trump makes decision
00:13:53
is he likes to ask a lot of people a lot
00:13:55
of different questions and then he makes
00:13:57
the decision that's why
00:13:59
to some people the media enem is very
00:14:03
unpredictable is he doesn't just take
00:14:05
one source of input and so you can never
00:14:08
totally predict the output but he arrays
00:14:11
an interesting cast of characters and
00:14:13
listens to them like so for example I
00:14:15
haven't spent that much time with him
00:14:17
but in so far as I have he would go
00:14:19
around the room and ask every single
00:14:20
person a dinner what's your view on act
00:14:23
and literally go around the room of 28
00:14:25
people and listen to every single person
00:14:28
so I think that's how he makes decisions
00:14:30
X being a topic not the website X not X
00:14:33
yeah everybody knows what op I think he
00:14:35
likes X chth any thoughts on this um The
00:14:38
Wider team as we see it get assembled we
00:14:40
obviously don't have saxs here he joined
00:14:41
the team but just your thoughts on the
00:14:44
collection of characters and Executives
00:14:48
here's an interesting tweet that I saw
00:14:50
Nick can you just share it with the with
00:14:52
the guys oh net worth of each one
00:14:54
now the reason why it was interesting to
00:14:57
me was not the net worth per se but I
00:15:00
think this is the first time that I can
00:15:03
remember in modern history at least that
00:15:05
I've been in the United States and
00:15:07
following us politics where such an
00:15:10
enormous number of business people have
00:15:13
been motivated to come and work inside
00:15:16
of the administration and I think that
00:15:18
it creates this very interesting
00:15:22
contrast and compare I think that the
00:15:24
Democrats would never have assembled a
00:15:26
group of people like this even though
00:15:29
the Democratic party has a version of
00:15:31
this chart that they could have made
00:15:33
there's a lot of extremely talented
00:15:35
business people that support the
00:15:37
Democratic party the problem is that
00:15:40
they believe it's deeply
00:15:42
unfashionable to get strong competent
00:15:45
business people to take a pause in their
00:15:47
business career and come work in
00:15:49
government and you almost look down on
00:15:50
people that are successful whereas the
00:15:53
Republican alternative Here If it
00:15:56
creates a movement so to speak so that
00:15:59
subsequent presidents tap folks on the
00:16:02
shoulder I think we'll be much better
00:16:03
off and the reason is pretty simple I
00:16:06
think that the United States economy is
00:16:08
too complicated to be managed by
00:16:11
theoreticians by folks with random phds
00:16:15
in absolutely no working experience in
00:16:18
the real world and when you bring those
00:16:20
people in to oversee those phds I think
00:16:23
you probably get better outcomes so I
00:16:25
hope this becomes a standard which is
00:16:27
ask these very talented clearly
00:16:30
demonstrated successful people with
00:16:32
judgment to hit the pause for a year or
00:16:35
three or five whatever it is step into
00:16:38
government help the country and then go
00:16:40
back and this was what the founding
00:16:43
fathers Dave actually prescribed this is
00:16:47
what they wanted they wanted people who
00:16:49
were in business to do a tour of Duty to
00:16:51
serve their country and then to get out
00:16:52
they were not interested in career
00:16:54
politicians correct I've said this a
00:16:57
number of times but of the founding
00:16:59
fathers had jobs had professions and
00:17:02
they stepped in to serve their country
00:17:05
as a civic duty participated in the
00:17:08
process of executing the the
00:17:12
responsibilities of government and then
00:17:13
stepped out and went back to their
00:17:15
private lives I think it is such a more
00:17:17
powerful model for government than
00:17:20
people who choose to to be politicians
00:17:23
to represent people as a living because
00:17:26
it creates extraordinarily nasty and
00:17:28
incentive structures if that's the model
00:17:30
which is for example to Curry favor With
00:17:34
Private Industry participants and then
00:17:36
go cash that favor in after you leave
00:17:38
and I think that this alternative where
00:17:40
you have people who are everyone looks
00:17:41
at them oh they're all billionaires and
00:17:43
so on they're actually as because
00:17:45
they're independently wealthy and they
00:17:46
have enough money than they'll ever
00:17:47
spend I think Larry pagee once said you
00:17:49
can never spend more than a billion
00:17:50
dollars in your life no matter how hard
00:17:52
you try it's literally impossible people
00:17:54
think like oh you could spend all that
00:17:55
money actually when you buy stuff most
00:17:56
of the stuff you buy are capital assets
00:17:58
that you end up selling later it's very
00:18:00
hard to spend at that level so when you
00:18:02
have people that are truly independently
00:18:04
wealthy their motivation is actually
00:18:06
quite different than someone who's
00:18:08
trying to make it from 100K to 500k of
00:18:11
net worth or 50k to a million of net
00:18:13
worth and I think it actually creates a
00:18:15
higher degree of freedom and it aligns
00:18:18
the people much more in the long-term
00:18:20
outcome of government rather than their
00:18:21
own personal interests and they're just
00:18:24
smarter so I'll give you a a simple
00:18:27
example maybe we'll talk about this
00:18:29
later jcal I'm not sure but when I saw
00:18:31
the doj's theoretical guidance on the
00:18:35
Google antitrust
00:18:37
matter their idea is to divest the
00:18:41
browser and I kind of scratched my head
00:18:44
thinking would any reasonable business
00:18:47
person think that that was the right
00:18:49
remedy meanwhile three weeks later
00:18:52
Google's like here's a super chip in
00:18:54
Quantum Computing here's a Quantum
00:18:56
Computing that breaks the world yeah and
00:18:58
thought how is it that these folks are
00:19:00
so disconnected from reality that they
00:19:02
don't understand what's actually sitting
00:19:04
inside this company and I think it's in
00:19:06
part because they don't know the right
00:19:08
questions to ask and the reason they
00:19:10
don't know what the right questions to
00:19:11
ask is they've never worked in the real
00:19:14
working world we have a professional
00:19:16
class of politicians and and their
00:19:18
understanding is 10 years old but it's
00:19:20
not just politicians this is also
00:19:21
bureaucrats so my point is these folks
00:19:24
need to get off the sideline and work in
00:19:26
a company for a while know the ballot
00:19:29
they'll be much better able to guide
00:19:32
these Regulatory Agencies if they
00:19:34
actually just know what's going on so if
00:19:35
the right answer is some
00:19:38
antitrust issue with a company where you
00:19:41
need to divest wouldn't it be great
00:19:43
where like a 100 smart businessmen
00:19:45
looked at that said that makes sense but
00:19:47
let me give you the counter to that jth
00:19:49
because the counter to that which it
00:19:50
comes up a lot just so you can like
00:19:52
frame the response is why are all these
00:19:55
people coming out of Pharma companies to
00:19:56
regulate Pharma why are all these people
00:19:58
coming out of big a companies to
00:19:59
regulate big a why are all these people
00:20:01
that come from energy companies coming
00:20:02
to regulate energy the common refrain is
00:20:05
business people are basically bringing
00:20:08
business interests into the government
00:20:10
by transporting themselves into these
00:20:12
regulatory bodies versus having career
00:20:15
politicians or what you call bureaucrats
00:20:16
be kind of independent regulatory
00:20:18
authorities so what's the response in
00:20:19
that context to that that refrain
00:20:22
they're absolutely right and that's how
00:20:24
it should work the United States can no
00:20:26
longer afford to be a bleeding piggy
00:20:29
bank for bad ideas so yeah like if a
00:20:33
bureaucrat thinks the right thing to do
00:20:35
is to divest a random browser to fix
00:20:39
Google's monopolistic Tendencies that's
00:20:42
not a remedy or spend tens of billions
00:20:44
of dollars on a super on a high-speed
00:20:46
rail like you were talking about earli
00:20:48
this week this is not logical it's not
00:20:50
meaningful it's misguided so if what we
00:20:54
want is kindergarten soccer where
00:20:56
everybody gets to touch the ball that's
00:20:58
what we are getting right now which is
00:21:00
it's not useful so I would rather have a
00:21:04
business person with a direct point of
00:21:06
view and by the way with the level of
00:21:08
transparency the big issue I guess fre
00:21:10
Brook that that would create is could
00:21:12
these people Advantage themselves
00:21:14
somehow to make more wealth but the
00:21:17
reality is that would be so obvious and
00:21:20
laid bare what happens today is they
00:21:22
burrow at this midlevel of an
00:21:24
organization and they do exactly this
00:21:26
but it's not laid bare yep so I'd rather
00:21:29
be a transparent where some guy tries to
00:21:31
take the government for $500 million and
00:21:33
we castigate that person than what's
00:21:36
happening today which is you slip in the
00:21:39
back door you get paid four 500 Grand
00:21:41
from a company then you come back to the
00:21:43
government then you go back nobody knows
00:21:45
who these people are Nobody Knows the
00:21:47
decisions they're making and they're
00:21:49
altogether misguided because they're not
00:21:51
grounded in an understanding of the real
00:21:53
economy Keith where do you fall yeah
00:21:56
well I share actually you're both right
00:21:58
in some ways if you look at what who's
00:22:00
Trump's picked these successful people
00:22:02
they're not typically being assigned to
00:22:04
Industries they came from so it's not
00:22:06
like he's taking drug you know he's
00:22:08
actually taking the opposite like think
00:22:09
of RFK for
00:22:11
example so actually I think you can take
00:22:13
successful people who have proven
00:22:15
themselves through Merit like I think
00:22:17
what that's one of the other benefits of
00:22:20
the real world is the only way you get
00:22:21
ahead is you're in a darnis experiment
00:22:24
with other people that are comparable
00:22:26
and to be successful you have to out
00:22:28
think outwork Etc and that shows up
00:22:31
ultimately in promotions and net worths
00:22:34
and various other metrics so Trump has
00:22:36
taking a lot of successful people and I
00:22:38
think we want a society where we Aspire
00:22:40
for our kids to be successful we want to
00:22:42
emulate successful people that needs
00:22:44
more that will yield more success like
00:22:46
having Elon involved in the government
00:22:48
will yield more success than you know if
00:22:50
you penalize successful people you'll
00:22:52
get you stigmatize it you get less of so
00:22:55
I think if you transplant successful
00:22:56
people into industries that they're not
00:22:58
from and that they have no interest in
00:23:00
going to after the government you might
00:23:01
get the best of both worlds because I
00:23:04
can see some of the critiques of you
00:23:06
know you're regulating you know your
00:23:08
friends companies and you're going to
00:23:09
make money later that said most of
00:23:11
Trump's people are not going to do that
00:23:13
you can also pass laws like you know you
00:23:15
can't Lobby you can't work for for X
00:23:17
years after there's also this great data
00:23:19
point I think it's in the last 60 years
00:23:21
Trump is the only president whose net
00:23:23
worth went down after office every other
00:23:26
president that you know took a
00:23:28
relatively modest net worth or mediocre
00:23:30
net worth and turned it into the
00:23:32
stratosphere so you think about the
00:23:34
president as the you know signature
00:23:36
example it's great that Trump like is
00:23:38
setting the opposite illustration well I
00:23:41
mean we've discussed this on the other
00:23:43
pod Keith a couple of times which is
00:23:44
domain expertise can be an ankle for a
00:23:48
Founder you know you got a founding team
00:23:50
that works in the hotel business they're
00:23:51
going to look at something like Airbnb
00:23:53
and say this will never work you got
00:23:54
somebody who worked in transportation
00:23:56
they're going to look at Uber and say
00:23:57
that'll never work look at PayPal if
00:23:59
they worked in finance and they did say
00:24:00
to you and the team that's never going
00:24:03
to
00:24:03
work yeah I mean I think it's critical
00:24:06
adventure to not really fall for that
00:24:08
trap I always mention that I don't like
00:24:10
people with um expertise typically as
00:24:14
Founders uh I think and when I call Dil
00:24:17
due diligence and call experts I only
00:24:19
ask one question which is what is
00:24:21
metaphysically impossible about this
00:24:23
working like is there a law of physics
00:24:25
that I don't understand that makes this
00:24:27
actually possible and if they can't
00:24:29
isolate a very specific principle that
00:24:33
makes it or fact that makes it actually
00:24:34
impossible then I just ignore everything
00:24:36
they say and you know write a cheat yeah
00:24:39
because it it's just all Vibes and
00:24:40
opinions Etc so well they're experts in
00:24:42
a prior world right they've learned why
00:24:44
not and this is actually like to combine
00:24:46
a couple topics here the reason why
00:24:48
Trump is so effective so the most
00:24:49
interesting question to me over the last
00:24:51
year was how is this guy who everybody
00:24:54
in the media and everybody in you know
00:24:56
the legal groups of various things is
00:24:58
trying to attack and hatte and all these
00:24:59
people publish these you know books why
00:25:02
is he on the price of being elected
00:25:03
president of the United States twice you
00:25:04
must have a superpower or two most
00:25:07
people do not get elected president of
00:25:08
the United States twice and most of the
00:25:10
people who are attacked by everybody who
00:25:12
has power in the establishment
00:25:13
definitely do not get elect the
00:25:14
president so what it come came down to
00:25:17
and I interviewed a lot of people who
00:25:18
are critics of him but knew him well
00:25:20
like ex-cabinet people that don't like
00:25:21
him comes down to he just asks a lot of
00:25:24
why like why do we do this why do we
00:25:26
have to do it this way why have we done
00:25:28
this way and it turns out in politics
00:25:30
and in DC most of the answers are pretty
00:25:32
mediocre or weak or poor or haven't been
00:25:34
rethought for 20 30 40 50 60 70 years
00:25:37
and so he just constantly Dives in and
00:25:39
says why why why why and that's actually
00:25:41
what predicts success for Founders is in
00:25:44
a domain they don't know anything about
00:25:45
they're just like why why do we take
00:25:47
these Hotel things for granted in the
00:25:48
Airbnb case why should they be so
00:25:50
expensive why should scarcity you know
00:25:52
Prevail in New York for four months of
00:25:53
the year etc
00:25:55
etc all right let's get to our docket we
00:25:57
got a ton of stuff to get to Google's
00:25:59
new Quantum chip is super impressive
00:26:02
freeberg and I were talking about that
00:26:04
on the group chat on Monday Google
00:26:06
announced its latest Quantum chip it's
00:26:08
called Willow here's the chip if you
00:26:10
haven't seen it it's uh beautiful it was
00:26:13
fabricated in Google's new chip plant in
00:26:15
Santa Barbara they started this project
00:26:17
back in 2012 their Quantum Computing
00:26:19
project
00:26:20
and the headline basically is Willow
00:26:22
performed a standard Benchmark
00:26:24
computation under five minutes that
00:26:25
would have taken today's fastest
00:26:27
Supercut 10 septian years or 10 to the
00:26:30
25th power which is billions of times
00:26:32
older than the universe if you don't
00:26:34
know what Quantum Computing is freeberg
00:26:36
will expand on it but basically
00:26:38
computers are binary you've heard this
00:26:40
before one and zeros quantums use cubits
00:26:42
you know those are Z1 or both at the
00:26:44
same
00:26:46
time and uh Google got a a 5% pop
00:26:51
they're up 13% in the last 5 days
00:26:54
probably on the other news that Gemini
00:26:55
2.0 is out as well which is unbelievable
00:26:58
have been playing with it what do you
00:27:00
think freedberg of this big announcement
00:27:03
Google's
00:27:04
announcement is a paper published in
00:27:07
nature that follows a pre-print they
00:27:09
actually put out in August so this news
00:27:11
has been out for a little bit there's
00:27:12
obviously a press cycle this week around
00:27:13
it to kind of make a big thing about it
00:27:16
but it is a very kind of important
00:27:19
milestone in the evolution of quantum
00:27:23
Computing so do you want me to kind of
00:27:25
talk about Quantum Computing again I
00:27:26
think we've talked about this in the
00:27:27
past I mean maybe a brief primer for
00:27:29
people but like what what does this mean
00:27:31
practically I think what people want to
00:27:33
know is when did these things actually
00:27:36
have an impact in the way say nvidia's
00:27:38
gpus have had yeah the big breakthrough
00:27:40
here is that the whole basis of a
00:27:43
quantum computer is called a qbit or
00:27:45
Quantum bit it's radically different
00:27:47
than a bit a binary digit which we use
00:27:49
in traditional digital Computing which
00:27:52
is a one or a zero a Quantum bit you can
00:27:55
kind of think about it as a wave
00:27:56
function it's sort of a Quantum state of
00:28:00
a of a molecule and if we can contain
00:28:04
that Quantum State and get it to
00:28:06
interact with other
00:28:08
molecules based on their Quantum State
00:28:11
you can start to gather information as
00:28:14
an output that can be the result of what
00:28:17
we would call Quantum computation and
00:28:19
that sounds complicated but what it
00:28:21
really means is that instead of doing
00:28:22
kind of binary computation where we're
00:28:25
adding numbers together or doing kind of
00:28:26
other traditional
00:28:28
arithmetic there are really interesting
00:28:30
functions you can do with cubits cubits
00:28:33
can for
00:28:34
example be entangle so two of these
00:28:38
molecules can actually relate to one
00:28:40
another at a distance they can also
00:28:42
interfere with each other so canceling
00:28:44
out the wave function and then when you
00:28:46
read it out you get a a result that is
00:28:49
basically a very very complex problem
00:28:52
that is solved through this Quantum
00:28:56
interpretation it's really hard to of
00:28:58
highlight how different this is from
00:29:00
traditional Computing so Quantum
00:29:02
Computing creates entirely new
00:29:04
opportunities for algorithms that can do
00:29:06
really incredible things that really
00:29:08
don't even make sense on a traditional
00:29:10
computer they're not possible to kind of
00:29:11
resolve on a traditional computer and
00:29:13
sorry let me just State one thing the
00:29:15
quantum bit needs to hold its state for
00:29:18
a period of time in order for a
00:29:19
computation to be done and so the Big
00:29:22
Challenge in Quantum Computing is how do
00:29:24
you build a quantum computer that has
00:29:26
multiple cubits
00:29:28
that hold their state for a long enough
00:29:30
period of time that they don't make
00:29:33
enough errors that you can actually do a
00:29:35
computation with them so what Google was
00:29:37
able to demonstrate here is they created
00:29:39
these call
00:29:41
it logical cubits so they put several
00:29:44
cubits together and by putting several
00:29:46
cubits together they were able to kind
00:29:47
of have an algorithm that sits on top of
00:29:49
it that figures out hey this this group
00:29:51
of physical cubits is now one logical
00:29:54
Cubit they balance the results of each
00:29:56
one of them so each one of them has some
00:29:57
error
00:29:58
and as they put more of these together
00:30:00
what they were able to demonstrate for
00:30:01
the first time ever is that the error
00:30:03
went down so when they did a 3X3 Cubit
00:30:07
structure the error was higher than when
00:30:09
they went to 5x5 and then they went to 7
00:30:10
by seven and the error rate kep going
00:30:12
down and down and down so this is an
00:30:14
important Milestone because now it means
00:30:16
that they have the technical
00:30:18
architecture to build a chip or a
00:30:20
computer using multiple cubits that can
00:30:22
all kind of interact with each other
00:30:24
with a low enough fault tolerance or low
00:30:26
enough error rate that they can start to
00:30:27
do these Quantum calculations this is a
00:30:30
a big area of opportunity one of the
00:30:32
very interesting areas that a lot of
00:30:33
people are talking about is in
00:30:35
cryptography so there's an algorithm by
00:30:38
a
00:30:39
professor who was at MIT for many years
00:30:41
named sh it's called sh's algorithm and
00:30:43
in 1994 1995 I think around that time he
00:30:47
basically came up with this idea that
00:30:48
you could use a quantum computer to
00:30:51
factor numbers almost instantly and all
00:30:55
modern encryption standards so all of
00:30:57
the RSA standard everything that
00:30:59
bitcoin's blockchain is built on all of
00:31:01
our browsers all server technology all
00:31:04
computer security technology is built on
00:31:07
algorithms that are based on number
00:31:10
factorization so if you can factor a
00:31:12
very large number a number that's 256
00:31:14
digits long theoretically you could
00:31:17
break a code and it's really impossible
00:31:20
to do that with traditional computers at
00:31:21
the scale that we operate our encryption
00:31:23
standards at today but a quantum
00:31:25
computer can do it in seconds or minutes
00:31:28
and that's based on Sha's algorithm and
00:31:30
if you want there's some great YouTube
00:31:31
videos that describe sh's algorithm and
00:31:33
how it works but it's like mind-blowing
00:31:35
when you look at it it's like this
00:31:36
really like non-intuitive but simple set
00:31:39
of steps that when you put them together
00:31:41
on a quantum computer it's like this
00:31:42
thing can instantly figure out all the
00:31:43
factors and then you can break a code
00:31:45
one of the things that this highlights
00:31:46
is that in a couple of years
00:31:47
theoretically if Google continues on
00:31:49
this track and now they build a large
00:31:50
scale cubid computer they theoretically
00:31:52
would be in a position to to start to
00:31:55
run some of these Quantum algorithms
00:31:57
like shortes algorithm
00:31:58
and so we're now kind of spitting
00:31:59
distance or a couple of year it's not
00:32:01
really clear is it three years five
00:32:02
years seven years but a couple years
00:32:03
away from having computers that
00:32:05
theoretically could crack all encryption
00:32:07
standards and there are a set of
00:32:09
encryption standards that are called
00:32:10
postquantum encryption and all of
00:32:12
computing and all software is going to
00:32:13
need to move to post Quantum encryption
00:32:15
in the next couple years so there's like
00:32:16
this big kind of push now to like how do
00:32:18
we do that how do we accelerate it I saw
00:32:19
Sundar post it I saw it in my feed I
00:32:23
ended up missing my next meeting because
00:32:26
I had to figure out how long will it
00:32:27
take for us to crack the encryption
00:32:29
standards that we use for Bitcoin Nick
00:32:33
here's the answer because I was so
00:32:34
tilted by this idea
00:32:37
so if you think of Willow as essentially
00:32:41
like one stable logical Cubit
00:32:45
equivalent in a chip we need about 4,000
00:32:50
to break RSA 2048 and we need about
00:32:52
8,000 to to break sha 256 which is the
00:32:55
underlying encryption framework for
00:32:57
Bitcoin
00:32:59
so I think you're right I think we're in
00:33:01
the sort of like the end game two to
00:33:04
five year shock clock no I mean I think
00:33:06
what'll have to happen is some of these
00:33:08
chains will need
00:33:09
to obviously reimplement something at a
00:33:12
pretty foundational
00:33:15
level the weird thing as free Brook says
00:33:17
is like the willow chips error
00:33:19
correction gets better the more of these
00:33:22
things you start to use together now
00:33:26
there are some really big problems in
00:33:27
see inside these chips like logical
00:33:29
interconnects are very complicated if
00:33:31
you put two chips on a board like the
00:33:33
ctoc communication is comp this all this
00:33:35
stuff that we haven't figured out how to
00:33:36
do but this is a big deal and I was I
00:33:40
was really like my God what's going on
00:33:42
here other projects at Google are
00:33:45
finally Landing you have whc and you
00:33:48
have this now I mean project Lon might
00:33:50
be gone but you know I think those
00:33:53
projects we're going to see a couple of
00:33:54
them change the world yeah just to give
00:33:56
you a sense on the numbers like Google's
00:33:58
Target for fault Tolerance on a Quantum
00:34:00
chip to make it logically useful is 1 *
00:34:03
10 -6 right now this Willow chip is kind
00:34:07
of running at
00:34:09
99.7% so it's still a few orders of
00:34:12
magnitude away they have a long way to
00:34:14
go in getting the fall tolerance low
00:34:16
enough to actually build uh logical
00:34:19
Gates using cubits that can resolve kind
00:34:21
of computational output and so there's
00:34:24
still there's still a build cycle ahead
00:34:25
and that pathway is a little bit unclear
00:34:27
but what they've shown is this almost
00:34:28
feels like the shockly transistor moment
00:34:30
it's
00:34:31
like you know here's this this
00:34:33
transistor now everyone's like you have
00:34:35
a lossy transistor and then you'll
00:34:36
figure out P injunctions you'll figure
00:34:38
out all of these ways of just like
00:34:40
getting the error correction down but by
00:34:42
the way this reinforces what you said
00:34:44
before which is it's hard for an
00:34:45
outsider like us to comprehend what's
00:34:49
really happening inside of Google
00:34:51
because the business they built was able
00:34:52
to fund this I mean and and I I went
00:34:55
down a rabbit hole because I'd never
00:34:56
heard of who this guy was that that runs
00:34:58
his helmet Nevan he's in Santa bar they
00:35:00
have a whole team in Santa Barbara
00:35:01
they've been running for like 10 years
00:35:03
he has his own law nevan's law and then
00:35:05
I went down the rabbit hole of that but
00:35:07
what's amazing is so valuable for
00:35:09
Humanity Google had the money to fund
00:35:11
him for the last 12 years exactly and
00:35:14
the greatest money printing machine of
00:35:16
all time is paying dividends yeah but
00:35:18
isn't it great to know that Google takes
00:35:21
these resources from search and sure
00:35:25
maybe there's waste and or maybe they
00:35:26
could have done better with the black
00:35:29
George Washington or maybe they could
00:35:30
have done better with YouTube but the
00:35:33
other side is they've been able to like
00:35:36
incubate and germinate these brilliant
00:35:38
people that can toil
00:35:40
away and create these important step
00:35:44
function advances for Humanity it's
00:35:47
really awesome Deep Mind is on that list
00:35:49
as well Keith what are your thoughts de
00:35:50
mind yeah yeah so I I think first of all
00:35:53
I think there's a long time before this
00:35:55
becomes a commercial product or
00:35:57
application of any sort so you know it's
00:36:00
great that they're taking money but
00:36:01
think about it like almost like Stanford
00:36:03
takes money or the US government funds
00:36:05
basic research in some ways this is at
00:36:08
least a decade out kind of thing um
00:36:10
there's another I mean this area Way
00:36:12
Beyond my expertise but I've been
00:36:13
talking to a lot of smart people because
00:36:14
I do do Financial Services Innovation
00:36:16
and obviously encryption is pretty
00:36:17
critical whether it's Bitcoin or other
00:36:19
places and there's a couple concerns one
00:36:22
is it's not even clear that you can
00:36:25
verify that this is true um by the way
00:36:27
like Computing to explain sort of the
00:36:29
magnitude of difference standard
00:36:31
Computing would take 10 to the 25th
00:36:34
years uh to verify that what uh Google
00:36:37
analys is accurate so there's a chance
00:36:39
that it's not even true for the thing
00:36:41
for the for the sampling test they ran
00:36:44
yeah to 20 50 number of years that's the
00:36:48
big I think hole in the whole RCS
00:36:50
Benchmark that they use that it only is
00:36:52
it's a it's a framework that only a
00:36:53
quantum computer could theoretically
00:36:55
even so how how you know the answer is
00:36:57
correct is I guess the question it takes
00:37:00
that long to solve and then to be
00:37:01
practical like so assuming you solve all
00:37:03
this and it's accurate and blah blah
00:37:04
blah you make it fast all second then
00:37:07
there is the postquantum Computing
00:37:08
encryption which you know a lot of
00:37:11
people a lot of things a lot of
00:37:11
important things have switched over to
00:37:13
so you have historical
00:37:15
Communications that were encrypted under
00:37:17
an old Paradigm that would be vulnerable
00:37:19
and you know every year that goes by
00:37:21
like the embarrassment level or the
00:37:23
threatening level of old historical
00:37:25
Communications will probably has some
00:37:26
Decay function or some halflife so if it
00:37:29
takes another 10 years Communications
00:37:31
that were drafted 20 years ago yeah
00:37:33
there'll be some embarrassing things and
00:37:34
blah blah blah blah but the more time it
00:37:36
takes the more safe you know sort of
00:37:38
private Communications and exchanges
00:37:40
will be so I think that's positive
00:37:44
third is there's a question of order
00:37:47
magnitude here you mentioned you need
00:37:49
like three orders of magnitude sort of
00:37:50
improvement is each step function you
00:37:52
know incrementally easier and faster or
00:37:54
is each step function you know 10 years
00:37:57
and I don't know that anybody knows the
00:37:58
answer to that that's right that's right
00:38:01
yeah a lot more work here to to to be
00:38:04
done you're not buying any Quantum
00:38:05
Computing stock yet uh not yet we have
00:38:08
looked at KB you know talk about like
00:38:10
technology forward you know VCS over the
00:38:12
years I've sat three partner
00:38:14
presentations and we've never really
00:38:16
pulled the trigger um there's other
00:38:18
reasons like including like even if you
00:38:20
have Quantum Computing you have to
00:38:21
rewrite software on top of it uh from a
00:38:23
different it's a completely different
00:38:25
you know world and who know nothing Maps
00:38:27
nothing m at all so you're starting from
00:38:29
scratch so you have an application layer
00:38:31
which might be actually an interesting
00:38:32
business
00:38:33
opportunity yeah how are these things
00:38:35
actually going to be coded and how our
00:38:37
developer is going to interact with them
00:38:38
if at all Maybe by that time it'll just
00:38:40
be AI running how do you build a
00:38:41
compiler who the hell knows how do you
00:38:43
build language properly these are all
00:38:45
complicated yeah Who's Gonna Write the
00:38:47
basic who's gonna write like the
00:38:48
Microsoft basic the interesting thing is
00:38:50
there's a lot of work that's been done
00:38:51
in the space like thinking about Quantum
00:38:53
Computing and Quantum algorithms is like
00:38:56
an entire Branch people do spend a lot
00:38:58
of time thinking about this and working
00:38:59
on this and there are ways you can kind
00:39:00
of simulate and test and start to build
00:39:03
out models for how you could utilize
00:39:06
quantum computers but obviously we just
00:39:08
don't have you know industrial scale
00:39:10
systems at this point there was one
00:39:14
Interstellar Marvel Easter egg in their
00:39:17
announcement that I wanted to get your
00:39:18
thoughts on freeberg Google said that
00:39:21
this massive jump in performance quote
00:39:23
lends Credence to the notion that
00:39:25
Quantum computation occurs in many
00:39:27
parallel universes in line with the idea
00:39:30
that we live in a Multiverse so is that
00:39:34
somebody in PR is high AF or reads too
00:39:40
much science fiction you know you know
00:39:41
the crazy down for us so the crazy thing
00:39:44
about quantum physics is such a mind
00:39:47
have you guys taken quantum mechanics
00:39:49
like have not I have yeah I remember the
00:39:51
summer I took it like the quantum the
00:39:54
first quantum mechanics class and I was
00:39:55
like glad it was a summer course you
00:39:57
really have to like think like pretty
00:40:00
deeply about what you learn in quantum
00:40:02
mechanics there's just nothing about it
00:40:04
that's intuitive like the way we kind of
00:40:06
think about the world is not the way the
00:40:09
quantum World operates in the case of a
00:40:12
cubit as soon as you measure the Cubit
00:40:14
it collapses to a value if you try and
00:40:17
measure it if you try and look at it it
00:40:18
goes to zero or one the probability by
00:40:21
which it goes to zero or one is defined
00:40:23
by you know the the quantum state right
00:40:25
at the moment You observe it it's just
00:40:27
such a mind so effectively this thing is
00:40:30
existing in a super position in multiple
00:40:33
States at the same time until you try to
00:40:35
observe it and that's the case of
00:40:37
quantum mechanics so what's kind of
00:40:39
happening I think in that
00:40:41
language jcal is nothing novel was kind
00:40:44
of discovered or represented that's just
00:40:46
quantum mechanics it's a mind and you
00:40:48
could go watch hours of YouTube videos
00:40:50
if you want to like get taken down the
00:40:52
Mind Rabbit Hole of quantum mechanics
00:40:53
and realize like one thing I've always
00:40:56
found fascinating about this discipline
00:40:57
is that looking at a cubit changes it
00:41:02
like it understands it's being particle
00:41:05
there's a slit experiment and if you try
00:41:07
and observe a light as a particle versus
00:41:11
a wave it actually changes what happens
00:41:14
what the the outcome is of it being a
00:41:15
particle or a wave same with electrons
00:41:17
the thing about quantum mechanics is the
00:41:19
observation of a particle changes what
00:41:21
happens serious
00:41:24
question serious question here it comes
00:41:26
here Buckle in when you look at the the
00:41:29
quantum bit can you get a better idea of
00:41:33
the scale of Uranus let's move on no
00:41:36
let's move i s jamat was doing a joke he
00:41:39
was queuing up a joke at the same time
00:41:42
no I was I was thinking about
00:41:43
Schrodinger's cat that's like a another
00:41:46
ridic ridiculous thought experiment that
00:41:48
when you you go the same concept it's
00:41:50
the same qu the quantum state of the
00:41:53
cat is it's both in the box and not in
00:41:55
the Box you don't know whether it's in
00:41:56
the box
00:41:58
until you open the box and then you open
00:41:59
the box and there's a x probability that
00:42:01
it's in the Box X probability it's not
00:42:03
in the box but when when you don't see
00:42:04
it it's both it's
00:42:07
both and if you're a cat lady you have
00:42:09
three of those boxes and I'm a dog
00:42:13
person well we got more engagement from
00:42:15
Keith on that science Corner than we
00:42:16
have
00:42:17
from so he's more he's more open science
00:42:23
inness I need to I need to Def they both
00:42:26
said
00:42:27
this is stupid and I'll never touch it
00:42:30
except Keith was Kinder and more
00:42:32
articulate in getting
00:42:34
there would have just been snoring yeah
00:42:38
he would have done this he would he
00:42:39
would have done his move where he goes
00:42:40
stupid and then like he
00:42:43
would next topic there's an advantage of
00:42:46
Monday partner meetings is I get to
00:42:48
watch the science fiction stuff you know
00:42:49
every week if I don't really understand
00:42:51
it but like a decade of watching science
00:42:54
fiction you pick up some tricks
00:42:57
you play chess with Peter teal while
00:42:59
that discussion is going oness actually
00:43:01
so I don't play Chess at all ever Okay
00:43:04
the reason why is if I do something I
00:43:06
want to be really proficient at it and I
00:43:07
don't have the time got it got it also
00:43:09
you have a life you have a life yeah I
00:43:11
like to do other things things in the
00:43:13
real worlda big big shout out to gesd my
00:43:17
my my Indian friend 18 years old new
00:43:19
world champion I saw
00:43:22
Champion yeah know world champion did
00:43:25
was he playing Magnus is that
00:43:28
every Brown guy that's done any random
00:43:31
useful thing in the world we all know
00:43:32
each other we're in a huge group chat oh
00:43:34
is it really yeah how it is the name of
00:43:37
the group chat isn't like the top 10
00:43:39
tech companies the group chat's name is
00:43:41
what can Brown do for you what can Brown
00:43:43
do for you okay there it is also UPS is
00:43:47
filing a treadmark infringement case hey
00:43:50
um speaking of Chip news apple is making
00:43:52
its own AI server chips for internal use
00:43:55
a report just came out that broadcom and
00:43:58
tsmc are helping them develop AI
00:44:01
inference chips you know inference chips
00:44:03
like rock uh H moth and there are
00:44:06
obviously gpus like Nvidia gpus those
00:44:09
are like the giant dump trucks that help
00:44:11
you build large language models these
00:44:13
infrin chips are kind of like speeder
00:44:15
bikes you know motorcycles quickly
00:44:16
getting you the results from those same
00:44:18
ones it's called balra btra I don't know
00:44:21
what that's in reference to mass
00:44:23
production in 2026 they don't plan on
00:44:25
selling the chips they don't plan on
00:44:27
cloud computing the reason they're doing
00:44:30
this obviously is because they really
00:44:32
want the iPhone to be the interface and
00:44:35
they have planted their flag that they
00:44:37
want to have privacy and have ai working
00:44:41
off of your local device and not having
00:44:43
access to your data but having a
00:44:45
compelling AI experience gosh my my
00:44:48
iPhone does not work I'm sorry I'm just
00:44:50
going to say it okay I don't know what
00:44:52
happened in you upgraded your software
00:44:54
is what happened you're on iOS 18 it
00:44:55
doesn't work I after 3 years I upgraded
00:44:58
to the newest phone I upgraded to the
00:45:00
newest OS the phone doesn't work meaning
00:45:02
like to call people I can't call my wife
00:45:04
anymore I can't call my kids anymore the
00:45:07
phone bricks constantly my photos app
00:45:09
doesn't work it is just really bad and I
00:45:12
think for a company of this scale I
00:45:13
don't understand how it does not go
00:45:15
through a more complicated test harness
00:45:17
that catches all of this I'm I'm not
00:45:20
trying to complain but because I know
00:45:21
it's hard for them and I know it's
00:45:22
complicated and but it's really bad
00:45:25
you're not the only person people are
00:45:27
freaking out about the infras changes on
00:45:29
photos crashing is a major thing and
00:45:32
apple intelligence just doesn't work so
00:45:34
it does seem Keith that Apple has gotten
00:45:37
off their game of making Polish stuff to
00:45:40
race to try and I guess catch up to
00:45:42
their perception of you know AI being a
00:45:46
disruptive Force at the interface level
00:45:48
I.E your phone or desktop what what are
00:45:50
your thoughts on uh this new story about
00:45:52
them doing more chips they've obviously
00:45:54
had great success with the processors
00:45:56
and phones now the M4 incredible if you
00:45:59
haven't tried the Mac Mini best computer
00:46:00
for the dollar in the world right now
00:46:02
but what are your thoughts on Apple so
00:46:04
the most important thing about Apple is
00:46:06
to remember it's vertically integrated
00:46:08
and vertically integrated companies when
00:46:10
you construct them properly have a
00:46:11
competitive advantage that really cannot
00:46:14
be assaulted for a decade 20 30 40 50
00:46:17
years and so chips classic illustration
00:46:20
go all the way down to the metal in
00:46:22
build a chip that's perfect for your
00:46:24
desired interface your desired use cases
00:46:26
your desired UI and nobody's going to be
00:46:28
able to compete with you and if you have
00:46:30
the resources that you know because you
00:46:31
need balance sheet resources to go the
00:46:34
chip Direction um it just gives you
00:46:36
another five to 10 year sort of
00:46:38
competitive advantage and so I love
00:46:40
vertically integrated companies uh you
00:46:42
know I posted a pin tweet I think it's
00:46:43
still my pin tweet about vertically
00:46:45
integrate is the solution to the best
00:46:48
possible companies uh but it's very
00:46:49
difficult you need different teams with
00:46:51
different skill sets and you need
00:46:52
probably more money truthly more Capital
00:46:54
but Apple's just going to keep going
00:46:56
down the vertical integration software
00:46:57
Hardware you know all day long and
00:46:59
there's nobody else who does hardware
00:47:01
and software together in the planet
00:47:03
which is kind of shocking in some ways
00:47:04
is there a world class company a company
00:47:07
that's world class it's both software
00:47:08
and Hardware other
00:47:09
than yeah maybe
00:47:12
Nvidia well may not really could they do
00:47:16
a world class UI you know maybe maybe
00:47:18
there's a foundation you have have a
00:47:20
different Vision maybe a different team
00:47:22
not clear Tesla's close I guess I'd say
00:47:25
the software's
00:47:27
good if you Define software as it
00:47:29
touches a
00:47:30
consumer Tesla Apple in some ways
00:47:35
Google maybe meta with the meta
00:47:38
glasses trying trying attempting you
00:47:41
can't say Nvidia because I think Nvidia
00:47:43
touches the consumer through an app that
00:47:45
then sits on top of Cuda which I think
00:47:47
is that's a brilliant strategy for them
00:47:50
but it's it be apple then Tesla and then
00:47:53
a long tail of people right anyway the
00:47:56
point a lot of competitive advantages
00:47:59
that they you know been actually
00:48:00
leveraging for about 15 years now and
00:48:02
even back then Steve there's some old
00:48:04
great Steve videos I I'll see if I can
00:48:06
find you a clip where he talks about
00:48:08
this very intentionally from the 1990s
00:48:11
you know when he came back to Apple he
00:48:12
said we're doing vertical integration
00:48:15
basically using those words of software
00:48:17
and hardware and there's going to be
00:48:18
nobody else that can compete with us I
00:48:20
think it's in an interview he did in
00:48:22
it's published in uh in the company of
00:48:23
giants I believe and he's perfect on
00:48:26
point he just follow that strategy for
00:48:27
you know the next 25 years now you're
00:48:30
seeing some of the manifestations though
00:48:32
of a competitive strategy that gives you
00:48:34
incredible advantages is you get very
00:48:36
sloppy in other places especially over
00:48:38
time because you have such great
00:48:40
competitive modes that you don't have to
00:48:41
compete at The Cutting Edge of this like
00:48:43
the photos app is completely unusable
00:48:45
I'm the biggest apple Fanboy in the
00:48:46
world like I I I remember interviewing
00:48:48
once with a job for Tim Cook and I
00:48:50
walked in and I said he's like why you
00:48:52
know why are you interested and I said
00:48:54
well you know I own every skew of every
00:48:56
product you've ever produced except I
00:48:58
don't have every color of each you know
00:49:01
iPod and he was like blown away and but
00:49:03
now like my photoos app is completely
00:49:05
unusable so I totally understand you
00:49:07
know about the frustration and they
00:49:09
they're showing like the Decay function
00:49:12
you know culturally and otherwise that
00:49:14
eventually somebody will figure out an
00:49:16
angle to rip them out yeah I'll tell you
00:49:18
we talked about dictators at the
00:49:19
beginning of this shath and obviously
00:49:22
this is your real house as a dictator
00:49:23
yourself is you know there has to be a
00:49:26
constant fear that some a-hole is going
00:49:31
to come to your office and be like what
00:49:33
did you do to the photos at and that
00:49:35
fear does not exist inside of Apple it's
00:49:38
not like the mobile me you ever hear the
00:49:40
mobile me story
00:49:41
where he brought the mobile me team in
00:49:44
he said how is mobile me supposed to
00:49:45
work they said well it's supposed to
00:49:47
back up everything when you buy your new
00:49:48
phone you get everything you never have
00:49:49
to worry about losing a f slammed his
00:49:51
hand down and said well why the F
00:49:52
doesn't work that way fired the person
00:49:55
brought the next person in and said now
00:49:56
make the way he said it's supposed to be
00:49:58
game over I don't think Tim Cook's doing
00:50:00
that Johnny IV's not there and obviously
00:50:02
Steve Jobs not there to terrorize people
00:50:05
well I don't think you look you don't
00:50:06
need to necessarily terrorize people but
00:50:08
I do think you have to go through uat so
00:50:11
I think it's pretty reasonable when you
00:50:13
have a large footprint of consumers
00:50:14
using an app to go through user
00:50:16
acceptance testing is like first base
00:50:19
and typically what happens is you can do
00:50:21
a process of a few months where several
00:50:23
hundred thousand people get it all over
00:50:25
the world and as long as you do an okay
00:50:27
job of getting a decent distribution of
00:50:29
people this would have come out but I
00:50:32
want to just talk about what Keith said
00:50:34
as well it's literally not just photos
00:50:36
it's like the phone doesn't
00:50:38
work so there are just core structural
00:50:41
issues with this operating system now
00:50:43
that makes the Iphone
00:50:46
maybe 10 to 30% less usable and that
00:50:50
everything is everything really
00:50:52
frustrating the command center you know
00:50:53
when you pull up your little Command
00:50:55
Center to change the brightness and the
00:50:57
your airpods it's just like what are
00:50:59
they doing here I mean by the way so do
00:51:01
you need a chip do you need a machine
00:51:03
learning chip to do inference to figure
00:51:05
out that when you constantly run your
00:51:07
phone at a certain level of brightness
00:51:09
you should just allow the phone to be at
00:51:11
a certain level of brightness stop
00:51:13
changing the damn brightness why does it
00:51:15
re like I me this is not this is not
00:51:18
complicated software engineering guys no
00:51:20
but this is my point there's no Arbiter
00:51:23
of taste anymore who is the back
00:51:28
yeah let me let me pause double click on
00:51:30
that for a second so I think taste is
00:51:33
great if you have it but there's only so
00:51:34
many people on the planet that are going
00:51:35
to have you know Cutting Edge taste and
00:51:37
be right if you don't have taste what
00:51:40
most tech companies do is they use data
00:51:42
data is something that's approachable
00:51:44
and leverageable because Apple has like
00:51:46
this the antibodies to using data to
00:51:49
measure success with the user experience
00:51:50
to measure whatever
00:51:52
success if you subtract taste even by a
00:51:55
bit you don't have the scaffolding that
00:51:57
every other company would use and so you
00:52:00
see the worst of Both Worlds that's a
00:52:01
great take that's a great good take the
00:52:04
rails right you go off the rails so
00:52:06
Keith do you think that you think that
00:52:07
what happened is like when Steve Jobs
00:52:09
isn't there and Johnny IV isn't there
00:52:12
there's still a bunch of folks that
00:52:13
probably think they have taste but the
00:52:15
real taste folks left and there's really
00:52:17
no scaffolding left to more scaffolding
00:52:21
you had at Facebook meta obviously or
00:52:23
that Google uses would catch some of the
00:52:25
stuff without a doubt about it you know
00:52:27
that users are less thrilled and they'
00:52:29
use things less and you'd fix it and
00:52:31
maybe even you take that too to extreme
00:52:33
you never develop taste like I could
00:52:34
argue that about Google or meta they
00:52:36
don't really have taste but like yeah
00:52:38
you could AR You could argue the
00:52:39
paradigms but fundamentally if you don't
00:52:41
have that back stop if the taste of
00:52:43
tracks even 10% not all the way down
00:52:46
you're just not going to catch this
00:52:47
stuff and I think there's only like how
00:52:49
many people in the world really have
00:52:51
Cutting Edge technology user experience
00:52:52
taste I don't know too many I would fund
00:52:54
them right away
00:52:56
he might have it it's an incredible
00:52:58
point because
00:53:00
I if I'm being really
00:53:03
insecure I would want to say oh yeah no
00:53:05
we had a lot of taste at Facebook back
00:53:07
in the day but actually we had so much
00:53:10
scaffolding around data probably because
00:53:12
intuitively we knew that that was way
00:53:14
more reliable for us it's more
00:53:16
predictable scal it's certainly more
00:53:17
scalable right like you take Steve out
00:53:19
you don't need a dictator but you do
00:53:20
need a a taste and taste is Artistic the
00:53:24
same thing Venture like you know like
00:53:25
scaling venture is really really
00:53:27
challenging because early stage
00:53:29
investing is more like taste than data
00:53:32
driven and later stage you can use data
00:53:34
and scale it and Scaffolding so I think
00:53:37
there's just Fields it's a little bit
00:53:39
also you see like the sports teams they
00:53:41
just happened at Stanford when Jim
00:53:42
Harbaugh
00:53:43
left it took years for the Decay
00:53:46
function for like the next coaching
00:53:49
regime to show they were completely
00:53:50
incompetent like the next year they're
00:53:52
pretty good next year they lost one more
00:53:53
game than they should have next year
00:53:54
they lost two more games than they
00:53:55
should have blah blah blah then
00:53:56
eventually they became like horrible and
00:53:59
you know there's a Decay function with
00:54:00
an organization when you take out the
00:54:01
person who is the original thinker or
00:54:03
the leader or the dictator or whatever
00:54:06
and so I think some of this is showing
00:54:08
up now and then you know playing on a
00:54:10
field that's not favorable to them which
00:54:12
is there are advantages Apple has in AI
00:54:15
but there's some significant
00:54:16
organizational structural disadvantages
00:54:19
and that's the field that people are
00:54:20
going to be competing on for the next
00:54:22
five years from a consumer perspective
00:54:25
and they're playing on a field where
00:54:26
they don't have all the advantages in
00:54:28
their favor yeah yeah true let's go to
00:54:31
the app level here Tik Tok is scrambling
00:54:33
right now after an appeals court upheld
00:54:35
the January 19th deadline for divestment
00:54:38
here we
00:54:40
go here we go I refer you to my Twitter
00:54:43
feed
00:54:45
my I mean you and Jacob must sit I mean
00:54:48
what do you do you just sit at dinner
00:54:50
and feed the kids and then uh talk about
00:54:52
Tik Tok in China it's it's well I think
00:54:54
Tik Tok is pretty obvious like you don't
00:54:56
even have to have a conversation in my
00:54:58
view like Tik Tok is a
00:55:00
threat to the National Security of the
00:55:02
United States and that's why whyl to
00:55:05
people who are like it's just an app
00:55:06
it's just an app why why so I think
00:55:09
there's different dimensions one of the
00:55:10
problems is there's so many things wrong
00:55:11
with Tik Tok that actually sometimes
00:55:14
people get confused because there's not
00:55:15
just one it' be easier sometimes if
00:55:16
there's just one thing so they are
00:55:18
definitely using the app to track data
00:55:20
about Americans and there's evidence
00:55:24
that regardless of what alleged
00:55:25
protections
00:55:27
exist there are people in China
00:55:29
monitoring what certain people in the
00:55:30
United States are doing and the CEO lied
00:55:34
under oath to congressional committees
00:55:36
about this and the evidence is now in
00:55:38
the public domain hopefully this justice
00:55:40
department will prosecute him for lying
00:55:42
under oath I think setting a really good
00:55:43
example that you cannot just purg
00:55:45
yourself before Congress sorry Keith can
00:55:47
you double click into that so what how
00:55:49
did it come into the into the open
00:55:51
source that what he said was a lie like
00:55:53
what so there are people in China who on
00:55:56
the record have said they had access and
00:55:59
have had access to American user data
00:56:02
which he swore to under oath to the
00:56:04
Congress that they were storing the data
00:56:06
in Texas somewhere and that there's no
00:56:08
possibility that you know Chinese
00:56:10
Nationals in China could access the data
00:56:13
there is now several um instantiations
00:56:15
of this in the public record let alone
00:56:17
what's privately available yeah I mean
00:56:19
the case specifically too back in 2022
00:56:21
by Dan the parent company of Tik Tock
00:56:24
had used an app to track Loc
00:56:26
had used their app to track the location
00:56:28
of journalists because they were trying
00:56:30
to track leaks
00:56:32
outside then secondly let me let me keep
00:56:34
going here because it's worse so there's
00:56:36
a law the fundamental problem is in
00:56:38
China there's a law that says if you're
00:56:41
a Chinese company upon request of the
00:56:43
CCP you must provide all user data so
00:56:47
any Chinese company is subject to that
00:56:49
law period there's no court intervention
00:56:51
you don't need a subpoena blah blah blah
00:56:53
and so it any Chinese any executive of
00:56:57
that company is subject to significant
00:57:00
penalties on the record for not
00:57:02
providing any user data at the request
00:57:04
of the CCP so as long as that law exists
00:57:09
there's a real structural threat to the
00:57:10
United States now then there's the is
00:57:13
the app being used manipulated on a
00:57:15
Content basis to influence you know
00:57:18
policy in the United States to
00:57:20
disadvantage this or that or create
00:57:22
hostilities I don't really know the
00:57:24
answer I think there's been studies that
00:57:26
suggests that and you know pretty
00:57:28
rigorous methodologies but that's a
00:57:30
second level and then third is there's
00:57:33
the why the hell are we allowing Chinese
00:57:37
companies to compete with us when no
00:57:39
American content based organization is
00:57:41
allowed into the Chinese
00:57:43
market whether it's meta
00:57:46
Google a you know there's a strong
00:57:49
argument there that Reddit if you don't
00:57:52
allow our content or non you know non
00:57:55
chines content into your Market why
00:57:58
should we be enabling Chinese companies
00:58:00
to be successful in quotes in the US
00:58:03
market and that's more of a a fair trade
00:58:05
free trade Keith do you think that the
00:58:07
Pegasus spyware that can infiltrate
00:58:10
WhatsApp so that you can turn on the mic
00:58:12
and listen remotely and it has no
00:58:14
fingerprints it's very difficult to
00:58:16
detect do you think an
00:58:18
equivalent let's call it a back door
00:58:20
exists inside of Tik Tok yes so my
00:58:23
evidence for this that I believe is in
00:58:26
interpolation of what's in the public
00:58:27
domain is if you looked at that vote to
00:58:30
ban Tik Tok it was extremely bipartisan
00:58:33
despite you know controversy and what
00:58:36
happened was that vote was taken a week
00:58:38
after there was an intelligence briefing
00:58:41
to both the House and Senate
00:58:42
intelligence committees that was that's
00:58:45
confidential and the votes you know all
00:58:47
of a sudden flowed through I think
00:58:48
there's things that are not in the
00:58:50
public domain about Tik Tock that
00:58:52
spooked a lot of elected officials and
00:58:54
led to this bipartisan consens is how
00:58:56
many bar parters votes do we see on an
00:58:59
allegedly controversial issue that you
00:59:01
know basically didn't the vote was like
00:59:03
you know like not even close in either
00:59:05
house 360 to 58 yeah when do you see a
00:59:09
vote like that on something meaningful
00:59:11
never right they got they definitely got
00:59:14
spooked and I mean if you just think
00:59:16
about Navy SEAL Special Forces they're
00:59:18
not allowed to use a lot of these apps
00:59:20
government officials aren't to use these
00:59:21
apps because they know that all you have
00:59:23
to do is if you track somebody's child
00:59:26
and their Tik Tock usage now you know
00:59:28
where the parent is you start thinking
00:59:29
about the security and safety of
00:59:31
individuals in our government it's crazy
00:59:33
so 352 votes for an incredibly popular
00:59:37
product yes think about how bad
00:59:39
something has to be to get a consensus
00:59:41
of 352
00:59:43
votes on a on an out that's used by you
00:59:46
know huge fraction of the American
00:59:48
public pass the Senate 79 to8 and you
00:59:51
are right if you say you're going to ban
00:59:53
Tik Tok the was against TI to but then
00:59:56
he opened one because that's where
00:59:58
voters are you you're going to lose that
01:00:00
generation of Voters arguably arguably
01:00:04
Theory there's some risk I I can see
01:00:06
that Biden can if he's awake extend this
01:00:12
window by 90 days I don't know if
01:00:14
grandpa is up for it but he could extend
01:00:16
it a bit and obviously this with the
01:00:18
Trump campaign you know he says a lot of
01:00:21
different things Trump has flip-flopped
01:00:22
a couple of times during his first time
01:00:24
he tried to band it wait till he gets
01:00:26
the readout that the rest of these guys
01:00:29
got yeah and well and then he had a mega
01:00:32
Dona and Tik Tok investor Jeff y gave
01:00:34
Pax $50 million and he owns 15% of it
01:00:38
when I had dinner with him that's is
01:00:40
this is the one of the things that I
01:00:42
pointed out to him was this specific
01:00:44
thing I said you have to look at the
01:00:48
Pegasus like equivalent INF infiltration
01:00:51
of WhatsApp having been done on Tik Tok
01:00:54
because the reality is if Tik Tok has
01:00:56
200 million users it is true that you
01:01:00
know
01:01:02
199,999
01:01:04
th000 just don't matter so you could
01:01:06
turn on the microphone you're not going
01:01:08
to hear anything but there is probably a
01:01:11
thousand to 10,000 to 15,000 people and
01:01:14
I do suspect
01:01:15
that state actors are smart enough to
01:01:18
figure out how to triangulate
01:01:20
who you would want to be able to turn it
01:01:23
on when that phone is in your pocket or
01:01:25
when that phone is on a desk and I'm
01:01:27
sure you will hear all kinds of random
01:01:29
things and many of those things could be
01:01:32
quite sensitive in nature so I think
01:01:34
that this is something that the the
01:01:36
government's going to have to look at
01:01:38
really intensely there's such a simple
01:01:39
test here what are they doing with their
01:01:41
own people in China they are in a police
01:01:44
state there they make the stazzy jealous
01:01:46
how much they're tracking individuals in
01:01:49
China so if they'll do it to their own
01:01:50
people they would have no problem doing
01:01:52
it to an adversary and ask yourself if
01:01:55
the shareholders care about money they
01:01:57
would be willing to divest right no
01:02:00
problem they want to take the company
01:02:02
public so if you won't divest and get
01:02:04
off the board as a CCP it's because you
01:02:07
see this as a valuable tool right I mean
01:02:09
just work through the basic logic folks
01:02:11
right it's some price point right like
01:02:13
what I would do if I were president I'd
01:02:14
say you tell me the fair market price
01:02:16
for Tik Tok and I'll go f you know I'll
01:02:18
make sure that there's buyers right
01:02:21
because CCB won't name any price there
01:02:24
is no great tool the point right that
01:02:28
would be like giving up your nukes I
01:02:30
don't think they should have to sell at
01:02:31
a less and fair market Price I think
01:02:33
that's you know legit like I believe in
01:02:35
capitalism but there any free market
01:02:38
should allow for you know some price
01:02:41
Discovery and if they can't name any
01:02:42
price period that suggests that you're
01:02:45
doing something that's nefarious there
01:02:47
there's Reason by the way Cham you
01:02:49
probably know this you know if you meet
01:02:51
like at least you know some of the times
01:02:52
I've met with the president they take
01:02:54
your phone away why they why do they
01:02:56
take your phone away 100% why exactly
01:02:59
pretty obvious yeah exactly also there
01:03:01
are phones that can be designed to be
01:03:03
weapons as we've seen a number of people
01:03:05
got some nutshots with their pagers
01:03:07
recently all right let's talk about
01:03:09
Venture as we wrap up here man Keith for
01:03:11
boy cooking with oil new sacks new red
01:03:14
meat sacks are you a steak guy too ke
01:03:17
you you eat a steak once in a while oh
01:03:19
of course what's your cut what's your
01:03:20
cut are you kolette are you a ribeye guy
01:03:23
I like Tom eight to 10 12 ounces Max
01:03:28
medium you know solid I don't really
01:03:31
care pretty much wagu I'll be a little
01:03:34
non-american go wagu you know like
01:03:36
Australia or Japanese yeah sure all
01:03:38
right all right I think uh just shout
01:03:39
out to my friend Kimo I'm a you know red
01:03:42
meat Republicans of course of course I'm
01:03:44
a big fan of this kolette
01:03:47
slash on it yes I just bought recently a
01:03:51
Denver Cut which i' never tried
01:03:53
incredible Denver Cut okay cut all right
01:03:56
let's wrap up with Aventure update here
01:03:58
at The Darkest Hour Keith sometimes
01:04:00
before the dawn VC deal
01:04:03
activity has uh getting close to uh
01:04:06
preco numbers in 2019 obviously major
01:04:10
funding drop off happened in 2022 yeah
01:04:12
it's been a couple of years of this but
01:04:14
deals uh the number of deals is coming
01:04:16
back the amount being put to work coming
01:04:18
back to I would say the steady state
01:04:20
perhaps even normal level uh and um but
01:04:25
VCA exits sadly are not keeping up but
01:04:28
we did have service now go public today
01:04:30
up 50% and the wrath of lenina con is
01:04:34
officially over she's out Andrew
01:04:37
Ferguson is in this looks like a great
01:04:39
appointment another one by Trump in the
01:04:42
column of somebody who wants to allow
01:04:46
business to occur and wants a free
01:04:49
market he wants to do basically
01:04:51
everything Lena KH con uh didn't do
01:04:53
which is allow some m&a boy what's your
01:04:56
pulse like here uh and what's your take
01:04:59
on the Venture industry and then we'll
01:05:00
go into m&a and exits we'll start with
01:05:03
just investing is it is it ramping up
01:05:05
you seeing high quality companies well
01:05:07
I'd say that you should cut that data by
01:05:09
Ai and non- Ai and you might see a t to
01:05:11
different cities my anecdotal experience
01:05:15
is there's AI companies where the
01:05:17
Market's pretty hot maybe cooling a
01:05:19
little bit but hot and AI companies with
01:05:21
the right team are getting funded you
01:05:23
know frequently quickly Etc and then
01:05:26
there's non AI companies and I think
01:05:28
you'll see a very different you know
01:05:29
sort of chart there I do think net net
01:05:32
you're probably at a city state that
01:05:33
looks reasonable across 40 years you
01:05:35
know like Etc but um it would be
01:05:37
interesting and you know you have to
01:05:39
make some methodological decisions about
01:05:41
what's an AI company what's not but if
01:05:42
you could do that it'd be interesting to
01:05:44
see if the lines you know look similar
01:05:46
or
01:05:46
not but it's pretty hot like people
01:05:49
starting companies found Founders are
01:05:51
optimistic crypto companies also you
01:05:53
know are back in Vogue obviously due to
01:05:54
the change in Administration I think a
01:05:57
lot of people had been hesitant to start
01:05:59
new crypto companies and you know
01:06:01
there's belief and confidence in the new
01:06:02
Administration thec Etc so we'll see if
01:06:05
Innovation accelerates you know with all
01:06:07
the new capital and all the new Founders
01:06:09
uh back in crypto in Enterprise
01:06:13
software it had been pretty cool non AI
01:06:16
based enterprise software but you know
01:06:18
like as you mentioned with the IPO this
01:06:20
week
01:06:21
trading very aggressively I think you
01:06:24
know maybe there's some inspire
01:06:25
inspiration there for you know more
01:06:27
traditional boring companies stripe
01:06:30
stripe stripe should go public but uh
01:06:33
you know they don't listen to me
01:06:34
so yeah you didn't know why aren't they
01:06:36
going public Keith what's what's the
01:06:38
story with the boys over there why
01:06:40
they're waiting to get disrupted by
01:06:41
crypto stable
01:06:43
coins I mean seriously talk about
01:06:45
missing your window get out there boys
01:06:47
they bought that crypto stable Coin
01:06:48
Company for like a billion dollar
01:06:50
defensive yeah defensive I I personally
01:06:52
believe and subscribe to the view that
01:06:53
Comey should go public as early as
01:06:54
possible I'm on the group bill girley
01:06:56
you know sort of school of thought what
01:06:57
amount of Revenue what amount of Revenue
01:06:59
put 50 million minimum but
01:07:00
predictability matters you know
01:07:02
definitely so not just 50 like but 50
01:07:05
with line of sight to 100 and knowing
01:07:07
100 to 200 I wrote a whole chapter in
01:07:09
Eli Gill's you know high growth handbook
01:07:11
on why call me should go public as early
01:07:12
as possible so I've been on this Chris a
01:07:15
forever I like accountability
01:07:16
transparency discipline I think they're
01:07:18
good things and you know there's a
01:07:21
critique that like oh you're not going
01:07:22
to be Innovative anymore if you look at
01:07:24
some of the companies we've been talking
01:07:25
about what are some of the most
01:07:26
Innovative companies in the world
01:07:28
they're public companies it just takes
01:07:29
the Right leader to say I'm going to be
01:07:32
Innovative and I don't care with the
01:07:33
bureaucrats and lawyers you know I'm
01:07:35
just not going to get distracted with
01:07:37
that and so I I like public companies
01:07:40
and so I think you'll see a lot of the
01:07:41
companies I am involved in go public at
01:07:43
a fairly rapid clip by his historical
01:07:46
standards different Founders though have
01:07:48
different yeah sort of abuse on this
01:07:50
it's very reasonable stripe SpaceX you
01:07:53
know for example found in 2003 who knows
01:07:56
you know when it's going to be a public
01:07:57
company so you can have a very
01:07:59
successful company like SpaceX or stripe
01:08:01
but my preference is to go public early
01:08:07
and then you have the capital resources
01:08:08
Equity or Capital to be strategic and
01:08:11
per your point about potentially missing
01:08:12
window now they were able to transact
01:08:14
you know in that particular case and get
01:08:16
ahead of the curve or at least not miss
01:08:18
the curve but sometimes when you're a
01:08:20
private company there are strategic
01:08:22
assets that you can't get your hands on
01:08:24
and you know think Facebook buying
01:08:26
Instagram we talked about the taste
01:08:28
issue Instagram had taste at the time
01:08:31
like Kevin had taste and think about
01:08:34
where meta would be had they not been
01:08:37
able to acquire Instagram yeah totally
01:08:40
totally different timeline or the public
01:08:42
currency to have bought what'sapp yeah
01:08:44
or
01:08:45
what'sapp so optionality increases as
01:08:48
you have that public currency if you're
01:08:49
a private buying a private the acquired
01:08:52
company needs to believe that you're
01:08:54
going to get it over the finish line
01:08:55
they're going to have some liquidity at
01:08:56
some point whereas with the public
01:08:57
government they just sell within
01:08:58
whatever their window is jamat your
01:09:00
thoughts well I was just going to ask
01:09:01
Keith a question which is what is the
01:09:02
game theory behind stripe not going out
01:09:05
like what's
01:09:06
the what's the Strategic rationale you
01:09:10
know honestly yeah without sharing like
01:09:12
you know one-on-one conversation sort of
01:09:13
stuff I think the question the burden
01:09:16
they they inverted the burden which is
01:09:18
why should we go public a lot of a lot
01:09:20
of people ask the question the opposite
01:09:22
way which is you know why wouldn't I go
01:09:25
public I think their first principal
01:09:28
thinkers like put per my point about
01:09:29
Trump and I think true of Elon they ask
01:09:32
like why and they're like well what
01:09:33
advantages would we get and I actually
01:09:36
think the m&a one is very real it is but
01:09:39
I think I think they've been able to
01:09:41
construct alternatives to most of the
01:09:44
advantages but not every company's going
01:09:46
to be able to do that it took a lot of
01:09:47
effort energy and then the question is
01:09:49
would you substitute that energy into
01:09:50
something else that might be higher
01:09:52
value creation if you weren't to like
01:09:55
Pro you know creating the alternatives
01:09:56
to a public
01:09:57
structure it's a great answer freeberg
01:10:00
your thoughts here on public markets m&a
01:10:02
the end of the wrath of Lena Khan and
01:10:05
what we might see in the New Year Post
01:10:07
January you I I disagree with the
01:10:10
conflation of Lena KH into all this
01:10:12
stuff too much it's she's a big company
01:10:14
break aart kind of mandate it has
01:10:16
nothing to do with tech m&a small like
01:10:18
the typical kind of deal flow stuff that
01:10:19
I think you're focused on I've said this
01:10:21
a number of times I'll just say it again
01:10:23
but I think on the um on the ener
01:10:25
liquidity thing I don't think that the
01:10:26
thing holding up Acquisitions and IPOs
01:10:28
is markets I actually think it's
01:10:30
investor and board expectations on
01:10:32
valuation relative to where they put
01:10:34
money in the last couple of years so if
01:10:36
you look at the valuations from 21 to 23
01:10:40
you know early 23 so much money went in
01:10:42
at such high prices those investors can
01:10:45
take those companies public today there
01:10:47
are public there's a public market
01:10:48
appetite at all times for anything just
01:10:51
depends on the valuation and the real
01:10:54
issue right now is that a lot of the VCS
01:10:57
the late stage private equities the ones
01:10:58
that did the big markups and the late
01:11:00
stage D rounds e- rounds Etc they don't
01:11:03
want to take these things out and take a
01:11:04
60 70% haircut on the IPO they'd rather
01:11:07
kind of let this thing sit private and
01:11:09
see if they can earn their way back into
01:11:11
the valuation that they did the Mark at
01:11:12
when they put the round together so I
01:11:14
100% agree 100% agree with this yeah I
01:11:17
mean there there is these overhangs are
01:11:20
very real I don't think the exit
01:11:21
liquidity dir fundamentally is driven by
01:11:23
markets I think it's just driven
01:11:26
the the sell side and the investor
01:11:28
expectations there's also a culture
01:11:29
thing I have to say like in talking to a
01:11:31
number of like the leaders of these
01:11:33
public companies that were very
01:11:34
inquisitive and m&a they are taking the
01:11:38
position it's easier for us to build a
01:11:40
competing function a competing adjacency
01:11:42
than do any tuck-ins they just told the
01:11:45
the Corp Dev people pencils down and
01:11:47
they are not wanting to spend a year or
01:11:49
two on a deal when they have a breakup
01:11:52
fee when they see what happened with ad
01:11:53
doobe or they just think well why don't
01:11:55
those are big deal our those are big
01:11:58
deals the small deals are different the
01:11:59
small deals are more the small deals are
01:12:01
the fact that over a couple years like
01:12:03
Google bought at cyber security like
01:12:04
there are these Acquisitions that
01:12:05
happened at 800 million that maybe
01:12:07
should have been done at 200 250 and
01:12:09
again it's the same problem that the
01:12:11
sellers of the high quality companies
01:12:13
demand too high a premium that the
01:12:14
buyers of these rational scaled
01:12:16
companies are like that's not worth it
01:12:17
just like IPO candidates so I don't know
01:12:20
keth if you've got a experience well I
01:12:22
also agree so I used to be an anti trust
01:12:24
litigator which I know knows and I think
01:12:28
I hate like you know the current
01:12:30
leadership the an trust Division I
01:12:31
called her a fraud and I think she is
01:12:33
intellectually a fraud why why she well
01:12:35
she published a paper that was false
01:12:37
like like there her whole claim to fame
01:12:40
is this paper about Amazon and the data
01:12:43
in the Amazon the data she used in the
01:12:45
in the paper at Yale was false and int
01:12:48
she's too smart to have done it
01:12:49
accidentally Benedict Evans wrote a good
01:12:51
critique of it if you want to read all
01:12:52
about the data second thing is you look
01:12:54
at Amazon which is this alleged like
01:12:56
quintessential example have you heard of
01:12:58
Shopify Shopify is one of the biggest
01:13:01
success stories of the last decade right
01:13:03
down the middle competitive with Amazon
01:13:05
and there was nothing Amazon could do
01:13:06
they lost the core Market to a
01:13:08
competitor that was started and you know
01:13:10
went public at a very low valuation and
01:13:12
Shopify is dominating DTC Commerce
01:13:14
nobody builds a DTC Commerce brand
01:13:16
except on Shopify so everything about
01:13:18
her is like a
01:13:20
fra that said I don't believe that what
01:13:23
she's done has affected did you know
01:13:25
exits very much at all because like the
01:13:27
truth is in highend Venture like
01:13:28
institutional Venture Capital other than
01:13:30
the WhatsApp and like maybe like a plot
01:13:33
acquisition or something you know one
01:13:36
every two years you don't drive returns
01:13:38
in venture to an Institutional Venture
01:13:39
Capital fund through an m&a like like
01:13:42
whatap may be the only one that really
01:13:44
drove a fund returning exit to a serious
01:13:47
fund it just doesn't happen that way I
01:13:49
need IPOs like to return our funds our
01:13:51
funds are like billions of dollars you
01:13:53
don't get Returns on lot Acquisitions at
01:13:55
$50 million to $100 million yeah but
01:13:58
$300 million fund 10 yeah but there but
01:14:01
most funds have ballooned for lots of
01:14:03
reasons L big ones and that's actually
01:14:06
led to some of the perversity that you
01:14:07
know David talking about if the funds
01:14:09
get large their tendency to do these
01:14:11
things also increases so yes a seed fund
01:14:15
can drive Returns on m&a Acquisitions
01:14:18
that might be deterred in a bad you know
01:14:21
hostile
01:14:22
Administration Venture fund of 500
01:14:25
million to2 billion do Drive returns
01:14:27
through m&a
01:14:28
no no I mean they could fill in the
01:14:31
first one X maybe yeah I've been
01:14:32
lobbying officials for a long time on
01:14:34
this Crusade they come in and they
01:14:35
expect that oh you know m&a blah blah
01:14:38
blah blah and I'm like no no no I could
01:14:40
care less only my most mediocre
01:14:41
companies are acquired and the IPO
01:14:44
window has started to crack open just to
01:14:46
give you a couple more data points
01:14:47
Gentlemen We Ride the chinese-based
01:14:49
uh self-driving car company went public
01:14:52
on the NASDAQ last month 4. .5 billion
01:14:55
market cap Pony AI another chinese-based
01:14:58
uh self-driving car company went public
01:15:01
in November Clara plans to go public in
01:15:04
the US I think they quietly filed
01:15:06
service Titan today the taping of this
01:15:08
on Thursday and
01:15:10
Sheen the fast fashion company well
01:15:12
she's gonna have some real problems in
01:15:14
the new
01:15:15
Administration yeah right tariffs as we
01:15:18
wrap here that's a good place to wrap on
01:15:20
what what do you think of I guess two
01:15:22
issues Keith we'll end with politics
01:15:24
since we started there two things seem
01:15:27
perplexing to people in finance one is
01:15:32
tariffs and how that's going to work and
01:15:35
the other is inflation and what the
01:15:38
impact would be on 15 million people
01:15:41
being shipped out of the country and the
01:15:42
impact that would have on inflation Visa
01:15:47
the unemployment rate getting even lower
01:15:49
than the historic low it's been in our
01:15:51
lifetimes what do you think of those two
01:15:52
issues take either one well I think
01:15:54
first of the treasury secretary
01:15:56
understands this like I think Scott
01:15:58
actually from everybody I've talked I
01:15:59
don't know him but I I've interviewed
01:16:01
about 10 or 12 people that are very
01:16:03
successful Wall Street and every single
01:16:04
one of them universally has a claim for
01:16:06
him and they've all made points to me
01:16:08
that these kind of
01:16:10
subtleties he really does grock and so
01:16:13
when he when he says you can raise
01:16:15
tariffs without inflation he understands
01:16:18
how all the substitution works and is
01:16:20
running an equation in his brain he's a
01:16:22
very successful Trader and that that's a
01:16:24
really good skill
01:16:25
Also chat's earlier points about Daris
01:16:28
evolution of brilliant people being
01:16:30
successful understanding how the economy
01:16:32
actually works he's perfect so I think
01:16:34
you're going to see real tariffs like
01:16:37
especially against China and the Trump
01:16:40
Administration is completely committed
01:16:41
to reducing inflation the cost of eggs
01:16:43
you know and groceries and I think those
01:16:46
things can be reconciled I know amateur
01:16:48
Economist you know with random degrees
01:16:50
from Wharton don't think so but as Trump
01:16:52
pointed out in the debate and you know
01:16:54
JD pointed out with some research his
01:16:57
first Administration imposed all these
01:16:59
tariffs and there was no
01:17:02
inflation and then JD Vance pointed out
01:17:04
that the FED Reserve has a study that
01:17:06
says you know housing prices which are
01:17:08
primary driver of affordability for a
01:17:11
normal American are inflated because of
01:17:13
illegal immigration so I I think this
01:17:16
Administration and not making more units
01:17:18
I mean well I think this Administration
01:17:20
there there is substitution right if the
01:17:22
price of one good goes up consumers
01:17:24
typically have you know unlike people on
01:17:26
this podcast typically have a limited
01:17:27
budget and at the end of the day if one
01:17:30
price goes up you have to substitute
01:17:32
somewhere else so the net inflation
01:17:33
might be negative even so in any event
01:17:36
this Administration is not naive and the
01:17:38
people that Trump has put in place to
01:17:40
drive this in treasury the National
01:17:42
Economic Council absolutely understand
01:17:44
this and they're committed to driving
01:17:46
down actual prices the hardest area is
01:17:49
going to be Healthcare that is really
01:17:51
really difficult and it is a major
01:17:53
driver of cost to a normal person and
01:17:56
ObamaCare has been a disaster the
01:17:57
question is what do you do about that
01:17:58
and I don't have an answer for you right
01:18:00
away I have some
01:18:02
ideas uh chth your thoughts on tariffs
01:18:05
Andor immigration and inflation and that
01:18:08
seems to be a place where even across
01:18:10
the a you got people debating it I think
01:18:12
Keith said it pretty well which is that
01:18:14
we do have a lot of experience with how
01:18:16
tariffs can be implemented and that the
01:18:19
the Practical experience is not what the
01:18:23
fear-mongering is that being said I
01:18:26
think the devil will be in the details
01:18:27
which markets for which Goods what is
01:18:29
the Tariff and why what I hope happens
01:18:33
is that if we can really study the
01:18:35
second and third order degree impacts of
01:18:39
some of these markets what the Tariff
01:18:42
does is it acts almost as a reverse
01:18:44
subsidy for American companies to
01:18:46
compete I'll give you one very narrow
01:18:49
example if you believe in electrifying
01:18:53
the Amer economy one of the underlying
01:18:57
things that you need are electric motors
01:18:58
right electric motors and electric
01:19:00
batteries and just to double click on
01:19:02
electric motors for a second electric
01:19:04
motors needs a permanent magnet if you
01:19:07
look inside of a permanent magnet there
01:19:08
are these rare Earths that are just
01:19:10
required to make these magnets but as it
01:19:13
turns out it is impossible for any
01:19:17
company that is not a Chinese company to
01:19:19
be able to manufacture these magnets in
01:19:23
an economically viable way and the
01:19:26
reason is because not only can China
01:19:28
make it and they can make it in the
01:19:30
absence of a lot of environmental
01:19:32
controls they'll also subsidize so if
01:19:34
anybody tries to compete they'll just
01:19:36
inject a subsidy into that economic
01:19:38
supply chain where they're always
01:19:40
cheaper so what do you do Jason if you
01:19:43
can observe that and realize that we
01:19:45
want supply chain diversity what the
01:19:49
Tariff does is it starts to push back on
01:19:51
those kinds of activities because it
01:19:53
doesn't allow it to continue to work
01:19:56
then if you take that with what the
01:19:57
United States government already does
01:20:00
through the doe which is through
01:20:01
subsidies and
01:20:03
underwriting this is what I mean by it
01:20:05
could be a really amazing new moment for
01:20:08
the American economy and that would
01:20:10
please a lot of people including a lot
01:20:11
of people on the left if they just took
01:20:13
the time to understand what's being
01:20:15
proposed I mean look at rare Earths you
01:20:17
you mentioned them we have some of the
01:20:19
great deposits in the world in our
01:20:22
country why can't largest deposits in
01:20:25
the world it's because of environmental
01:20:27
regulations and it's the same thing with
01:20:29
Starship going up we got a lot of
01:20:31
regulations this country I understand
01:20:32
people want to do the right thing but we
01:20:33
also have a lot of debt and if we could
01:20:35
start mining rare earth metals here and
01:20:38
maybe loosen the regulations the lithium
01:20:40
supply chain is another really good one
01:20:43
that's emblematic of all of this but
01:20:45
there are so many other markets like I'm
01:20:47
sure that if you looked in something
01:20:48
that's a little bit more down the middle
01:20:50
like
01:20:51
appliances what you would also see is
01:20:53
the same thing where wh poool will try
01:20:55
to make an appliance or Bissell will try
01:20:58
to make a vacuum cleaner and the Chinese
01:21:01
equivalent makes it almost like fighting
01:21:05
uphill and there has to be a way to
01:21:07
course correct that well I mean look at
01:21:09
byd some of these cars they're just
01:21:10
copying wholesale everything Tesla's
01:21:12
done in their
01:21:14
design and uh feature set and they're
01:21:17
half the price and so they were selling
01:21:19
really well in countries that allowed
01:21:20
them and they would decimate us
01:21:22
automakers and German automakers by the
01:21:25
way a different a different version of
01:21:26
this I wrote this in my Weekly
01:21:28
Newsletter but I was curious why these
01:21:31
Chinese models are so good and I was
01:21:33
like the training of these models seems
01:21:35
to be quite fast the quality of these
01:21:37
models are really good the Alibaba model
01:21:40
Etc and part of what you realize is when
01:21:43
they do their training runs the Chinese
01:21:45
models have no guard drills in the sense
01:21:48
that there's no copyright checks no
01:21:52
there's just none of these things that
01:21:53
otherwise slow down in ameran company to
01:21:55
make a useful model they don't have any
01:21:57
of those things so that's another
01:21:59
example where maybe there's not an
01:22:01
economic tariff but there has to be a
01:22:03
simple reciprocity and in the absence of
01:22:07
reciprocity I think it's reasonable to
01:22:09
say that there needs to be checks
01:22:10
imbalances freir you anything to add
01:22:12
there on tariffs or okay four jamath P
01:22:16
haaa your chairman dictator the Sultan
01:22:18
of Science and new Sachs better BMI
01:22:22
hates dictators what's your take on
01:22:24
Ukraine maybe we could fire up a Ukraine
01:22:26
discuss
01:22:29
I how do you feel
01:22:31
[Music]
01:22:33
Ukraine ke by the time you have me back
01:22:36
hopefully that's solved hopefully that's
01:22:38
solved day one we're gonna solve it on
01:22:40
day one okay Keith you excellent you're
01:22:43
EXC tremendous Keith boy excellent
01:22:45
husband very very effective great great
01:22:49
American great host great coost aesome
01:22:52
you may have heard of two words Allin
01:22:54
okay you may have heard of it David
01:22:56
Sachs brilliant crypto I mean we didn't
01:22:58
even dive into crypto I
01:23:01
mean people are going a little nutty on
01:23:03
this crypto what do you think about all
01:23:05
this crazy crypto going on here Keith
01:23:07
everything's spiking back up xrp Bitcoin
01:23:11
what do you think of uh salor I know the
01:23:14
salor fans are like obsessing about him
01:23:16
coming on the Pod what do you think of
01:23:18
seller taking these loans to buy Bitcoin
01:23:21
and that other people are following suit
01:23:22
to put it in their treasury well sure
01:23:24
version on crypto generally is I still
01:23:26
think the primary use case is
01:23:27
speculation and not that there's
01:23:29
anything wrong with that people
01:23:29
speculate on stocks retail trading
01:23:32
people speculate on football games
01:23:33
gambling like the natural tendency for
01:23:36
humans to want to speculate is very real
01:23:38
the the art to me is because everybody's
01:23:42
now a node connected into these crypto
01:23:44
let's call Bitcoin you know can you
01:23:46
build an application on top that would
01:23:49
have too much inertia too much friction
01:23:51
to start from scratch but it has real
01:23:53
value and I think think it's possible
01:23:55
because so many people are now connected
01:23:57
based upon speculation initially so
01:23:59
that's what's exciting to me but you
01:24:02
know we've watched speculation before in
01:24:05
crypto markets and you know it's very
01:24:08
volatile so hopefully someone builds
01:24:09
real layers of productivity or utility
01:24:13
on top but takes advantage of the
01:24:15
network it's a little bit like back in
01:24:16
your days at Facebook toath you know you
01:24:18
had the social graph and you'd say you
01:24:19
know you can build applications on top
01:24:21
of the social graph but if you had to
01:24:22
create a social graph from scratch that
01:24:24
was heroic effort and nobody else is
01:24:25
going to do it that was like literally
01:24:27
the Facebook Monopoly story and so I
01:24:29
think that's true of crypto there's lots
01:24:31
of nodes someone's got a soci social
01:24:33
graphic and there's no Zuckerberg to rug
01:24:35
pull and say you can't build someone's
01:24:36
got to build the application on top and
01:24:38
then it'd be extremely exciting what do
01:24:40
you think freeberg you you you were
01:24:42
monitoring this sailor situation the the
01:24:44
mister micro strategy people seems well
01:24:48
I think the way the
01:24:50
Sailor Financial structure is set up is
01:24:53
it looks a lot like a synthetic call
01:24:56
option on bitcoin you get a convertible
01:24:59
note so you earn a coupon on the note
01:25:02
and then you have a conversion price
01:25:03
which is a premium to the stock price
01:25:05
which you can translate if you look at
01:25:06
the book value or the net asset value of
01:25:08
the stock that's how much Bitcoin there
01:25:11
is and the premium was two to one I
01:25:14
think or two and a half to one yeah the
01:25:16
premium that the conversion price is at
01:25:18
tells you what Bitcoin needs to be for
01:25:20
you to have Equity upside so it's
01:25:23
effectively convertible note you earn a
01:25:24
coupon and then you have a conversion
01:25:26
premium that you can kind of convert to
01:25:28
equity which basically gives you a call
01:25:31
option you're saying the premium you're
01:25:33
paying is the price for the call option
01:25:35
effectively and you're earning this kind
01:25:37
of coupon in the meantime so it's a way
01:25:39
for some people to kind of trade the
01:25:40
price of Bitcoin seems like this guy
01:25:43
said a lot of hedge funds and I don't
01:25:44
know if you guys saw the CNBC article
01:25:46
that it's kind of like Bloomberg it's
01:25:47
like the hottest trade in hedge fund
01:25:49
land right now is to buy up these
01:25:51
convertible notes that he's issuing so
01:25:53
if you actually were to sit down and do
01:25:55
the black shells modeling of the uh the
01:25:58
value of the synthetic call option that
01:26:01
he's selling you with the convertiable
01:26:02
note there's a reason people are paying
01:26:04
for it they think that there's value
01:26:05
there so there's certainly something to
01:26:07
the structure that makes sense all right
01:26:10
so for your Sultan of science the
01:26:12
dictator and fit saacks fit saacks here
01:26:16
low BMI low heart rate what's the heart
01:26:18
rate at right now ke uh 40 to
01:26:20
42 uh like by measured by eight sleep
01:26:23
typical
01:26:25
oh eight S wonderful what do you think
01:26:26
of our Knicks by the
01:26:28
way we'll see I don't know if I would
01:26:30
have made that trade honestly but car
01:26:32
Anthony towns really fascinating he's
01:26:34
playing so good I know but like I think
01:26:37
you had the chemistry all dialed in
01:26:39
and hopefully they can build back better
01:26:41
you know like bu back better absolutely
01:26:43
all right listen uh we'll see you all
01:26:46
next time don't worry saaks isn't going
01:26:47
anywhere it's just a little bit busy
01:26:49
right now there's a transition going on
01:26:51
saaks is transitioning and we'll see the
01:26:54
the Pod will transition as well we see
01:26:55
what it looks like in the New
01:26:57
Year we have a good lineup of co-hosts
01:27:00
we're going to do eight weeks uh it's
01:27:01
going to be all in idle all in idle is
01:27:05
occurring we're rotating people in and
01:27:07
you get to vote audience ke that was
01:27:09
great thank you you did great thank you
01:27:11
for joining
01:27:13
us
01:27:15
EXC love you boys
01:27:20
love let your winners
01:27:22
ride rain
01:27:27
David and instead we open source it to
01:27:29
the fans and they've just gone crazy
01:27:31
with
01:27:31
[Music]
01:27:40
it besties
01:27:42
are that's my dog taking your
01:27:47
driveway oh man myit will meet me we
01:27:51
should all just get a room and just have
01:27:53
one big huge orgy they all this useless
01:27:55
it's like this like sexual tension that
01:27:56
they just need to release
01:27:58
[Music]
01:28:03
somehow we need to get merch
01:28:09
[Music]
01:28:13
our I'm going
01:28:16
[Music]
