00:00:00
my stance really took over the comment
00:00:02
board yeah sax how was your week off
00:00:04
when uh you you gave up on the Pod for a
00:00:07
week and then did four media appearances
00:00:09
for 90 minutes each on other pods you
00:00:11
did six hours you took off from this pod
00:00:13
to give your ratings to Megan Kelly and
00:00:15
uh Dave Rubin yeah I did uh
00:00:19
45 minute hit with Dave Rubin on Ukraine
00:00:21
so be sure to check that out and then
00:00:24
yes I do but no Megan Megan Kelly uh
00:00:27
Friedberg and I did that the week was
00:00:28
that this week or okay surprisingly she
00:00:30
didn't invite you back yeah I don't know
00:00:32
what could have happened
00:00:33
it was so great it was so great that was
00:00:36
awesome I love Megan kelly didn't she
00:00:37
call you a prick yes you did
00:00:45
yes she did
00:00:47
[Music]
00:00:57
[Music]
00:01:01
sax we have not had such negative
00:01:03
panning comments on YouTube since jaycal
00:01:07
got brick of doomed for his uh Pro
00:01:10
Ukraine for sacks not showing up I get
00:01:13
doing for asking him a question then I
00:01:15
could bring a dude from him getting
00:01:17
rigadooned I don't know maybe it's just
00:01:19
honestly when will you guys realize that
00:01:22
there are three to five million people a
00:01:24
week that listen to this podcast a
00:01:26
hundred nitwits who comment on YouTube
00:01:28
they're neither right nor wrong they
00:01:31
should just be completely ignored turn
00:01:33
the comments off the only thing that
00:01:35
matters are the ratings if you care
00:01:36
about that at all and last week was one
00:01:38
of the best rated shows we've ever done
00:01:40
I think it was highest rated after
00:01:42
elon's episode it would have been even
00:01:44
better with David so we should bring a
00:01:46
dune the brigadooners those nitwits
00:01:49
should be ignored I think this is a
00:01:51
little bit like a band where like you
00:01:53
can't mess with the chemistry of the
00:01:55
band and that's the lesson even though
00:01:57
there's a lot of infighting in the band
00:01:59
like
00:02:00
it works and so you don't want to
00:02:03
second-guess it too much well and then
00:02:04
if somebody from the band gets sick and
00:02:06
somebody sits in
00:02:08
some incredible guitar players sit in
00:02:10
people are like that's not
00:02:12
have the T-shirt of I need my guitar
00:02:14
player back
00:02:15
all right anyway well I'm just glad
00:02:17
Ringo showed up 22 minutes late welcome
00:02:19
back Friedberg uh let's get started
00:02:24
I don't mean to [ __ ] with the bed I'm
00:02:27
not gonna [ __ ] with the fan Ringo was an
00:02:29
underrated drummer Freebird you have a
00:02:33
role here that's amazing I think you're
00:02:36
more alive
00:02:38
maybe bass maybe bass player you know
00:02:41
I'm John bass guitar George Harrison
00:02:42
George Harrison yeah actually George
00:02:44
Harrison very underrated but you know
00:02:46
I'm I'm pretty clear have you guys ever
00:02:47
heard uh the version of Blackbird that
00:02:50
Paul McCartney did just with the ukulele
00:02:52
no I'd like to hear that maybe one of
00:02:55
the best songs ever recorded one of the
00:02:57
best records I've ever heard fantastic
00:02:58
incredible all right listen there's so
00:03:01
much to start with but I've black birds
00:03:03
swimming in the dead of night
00:03:05
night take these broken wings and learn
00:03:07
to
00:03:10
learn
00:03:12
sax were you at a building on Market
00:03:14
Street Yesterday by any chance
00:03:17
no fly zone the homeless shelter
00:03:21
well I think you can talk about
00:03:23
Abandoned homeless shelter I think it's
00:03:26
fair to say that there will be a lot of
00:03:28
people
00:03:29
that we know that will go and help
00:03:33
make Market Street better make Market
00:03:35
Street Great again make marketing
00:03:38
absolutely absolutely I'm looking
00:03:40
forward to some tofu salads and
00:03:42
meditation Namaste
00:03:45
literally I think 8 000 square feet is
00:03:47
meditation rooms that haven't been used
00:03:49
in five years quite honestly though like
00:03:51
on the other side of this I would say
00:03:52
parag agrawal does deserve a statue for
00:03:55
shareholder value creation
00:03:57
what 54 20 a share which by the way we
00:04:00
said was going to happen and it did
00:04:01
happen was ginormous in this market and
00:04:05
I just want to see the look on that
00:04:07
barista's face when they're warming up
00:04:09
the oat milk
00:04:14
very very tough knuckled uh company
00:04:17
Builders walks through that door yeah
00:04:19
the only has left the building let's
00:04:21
just leave it at that wow so I guess we
00:04:24
can talk about it now uh Elon has closed
00:04:27
the deal we can talk about it now well
00:04:30
no I'm just saying sax and I could not
00:04:31
talk about this because we had you know
00:04:34
we couldn't talk about it for legal
00:04:35
reasons they deserve a statue in front
00:04:38
of the bronze statue for shareholder
00:04:41
value creation Market Street in front of
00:04:42
that Twitter building best
00:04:44
um Tech CEO of the year
00:04:46
girl hold on a second so your theory is
00:04:49
that he did such a bad job in terms of
00:04:53
suppressing viewpoints and and
00:04:55
censorship that he actually induced
00:04:58
Elon to want to buy the company so he
00:05:01
could fix their censorship problem no my
00:05:03
theory my theory is simpler than this
00:05:05
which is
00:05:07
they got great representation
00:05:10
to do a very bulletproof deal
00:05:13
and it turns out that contract law still
00:05:15
matters in the United States
00:05:17
and Elon did the right thing and just
00:05:19
said you know what I'm gonna own this
00:05:21
thing and probably double or triple my
00:05:22
money so I'm just gonna go and do it and
00:05:25
I'll do it for the benefit of everybody
00:05:26
else but my point is more that they and
00:05:30
the board had the wherewithal
00:05:33
to fight because you know that they
00:05:35
could have easily gotten intimidated and
00:05:37
capitulated and in doing that whether
00:05:40
they were right or wrong or good or bad
00:05:42
is irrelevant to me
00:05:43
they represented shareholder values well
00:05:45
and they got shareholders paid in a
00:05:47
moment where the stock market is still
00:05:49
down 20 30 40 percent where big Tech is
00:05:52
down 50 some of these big tech companies
00:05:54
are down eighty percent these guys sold
00:05:56
the company at a premium and so that
00:05:58
just you know we just have to
00:05:59
acknowledge that that happened that's
00:06:00
all well and just give you a little bit
00:06:03
of background on Twitter historically
00:06:04
you know in 2013 the stock was trading
00:06:07
at 69 dollars
00:06:09
and it got sold for 54. like this
00:06:12
company has been sideways for a decade
00:06:15
essentially in terms of its market cap
00:06:17
and so but there's no doubt that I think
00:06:21
Elon can turn this around pretty quickly
00:06:25
and make it massively profitable I think
00:06:28
and clean up the bot problem
00:06:30
very quickly if you can land two rockets
00:06:32
at a time create self-driving cars I
00:06:35
think you can figure this out this isn't
00:06:37
rocket science and elon's done rocket
00:06:39
science so I think he's going to figure
00:06:40
it out right yeah for what it's worth I
00:06:43
think elon's really excited about it and
00:06:45
yeah there is tremendous potential at
00:06:47
Twitter I mean the company's been
00:06:49
sideways because it hasn't done that
00:06:51
much in 10 years but there's so much you
00:06:53
can do with that product it's just you
00:06:56
know there's a ton of potential I think
00:06:57
the best way to think about it is he
00:06:59
bought a quarter of a billion miles for
00:07:02
44 billion dollars and in the grand
00:07:05
scheme of things that is I think going
00:07:07
to turn out to be pretty reasonably
00:07:09
cheap
00:07:11
especially if he can layer in a few of
00:07:13
his bigger ideas and uh
00:07:16
and I think that those mouths the value
00:07:18
of those monthly active users could
00:07:20
probably double or triple pretty quickly
00:07:22
right
00:07:23
I think that was the so I just sent you
00:07:25
guys this link from this analyst
00:07:27
and he said that Twitter was bought at
00:07:30
172 dollars per monthly active user
00:07:33
compared to
00:07:34
81 dollars per monthly active user at
00:07:36
meta where they said today
00:07:39
so but that's but that's for a very
00:07:41
different point which we can double
00:07:42
click into because meta is its own bag
00:07:45
of
00:07:46
you know it's a little bit of an
00:07:47
unfortunately
00:07:49
you know already attached to it well and
00:07:52
I'll explain why because the met the
00:07:54
meta problem is it's it's a deep
00:07:57
and a very dangerous situation that
00:07:59
they've put themselves in which is why
00:08:01
their male values are this low
00:08:05
but you know if you had done this
00:08:07
analysis a few years ago
00:08:09
the trade was looking at meta's male
00:08:11
values being so high where you would
00:08:14
have said why isn't Twitter doing more
00:08:15
so I know that this this is a little bit
00:08:17
in my opinion cherry picking
00:08:20
yeah well I think making everything
00:08:23
verified and a path to verification
00:08:25
which Elon has talked about publicly
00:08:27
many times and payments uh you know he's
00:08:29
talked about publicly many times just
00:08:31
those two things alone could make the
00:08:34
experience of being on Twitter
00:08:35
absolutely delightful if everybody could
00:08:38
verify themselves this thing could turn
00:08:39
around so quickly I'll say I'll say what
00:08:41
you're saying in a slightly more I think
00:08:43
the most powerful change that Twitter
00:08:44
could make today
00:08:46
is there are two classes of users
00:08:49
people who are verified real world
00:08:51
identity yeah and people who want to
00:08:54
stay Anonymous correct there is a
00:08:57
hundred percent distribution fire hose
00:08:58
for people who are real
00:09:00
and there is a fire hose for fake people
00:09:03
or fake names that you need to pay to
00:09:06
amplify just that one simple change will
00:09:09
cut through all the nonsense because if
00:09:11
you want to see where the money is being
00:09:13
spent you will be able to see very
00:09:15
quickly because otherwise there'll be
00:09:17
virtually no distribution for anonymous
00:09:19
fake people and it'll Force those people
00:09:22
if they really want to be heard that and
00:09:24
that there's something valuable to say
00:09:26
to spend against it
00:09:28
well this really is about the brigad
00:09:30
dunes and elon's been very clear about
00:09:32
this you know it's pretty easy to get
00:09:33
rid of the Bots and if people are opting
00:09:36
in to putting themselves into the top
00:09:38
class of verified users well that's a
00:09:40
revenue stream right and so all of a
00:09:42
sudden you know I don't know how many
00:09:43
millions of people would instantly say
00:09:45
I'll pay for this for five or ten bucks
00:09:47
I think you're verified I think you're
00:09:48
right and I think like what we want to
00:09:50
do is like you know no offense to all
00:09:52
the people out there although I don't
00:09:54
really care but no offense but
00:09:56
you cannot use Twitter as a coping
00:09:58
mechanism okay like I get that life is
00:10:01
hard or that you know life hasn't lived
00:10:03
out to your expectations or you know
00:10:05
there's envy and whatever of other
00:10:07
people but to go out there and spew hate
00:10:09
doesn't solve anything
00:10:11
are you talking about brigad Dunes well
00:10:14
there's also just a lot of people that
00:10:15
are just in general
00:10:17
they're just they're just mean and I'll
00:10:20
give you a perfect example there's a
00:10:21
woman
00:10:22
that I saw on Tick Tock and she's like
00:10:25
uh you know been married for 13 years
00:10:27
mother of two kids and she was she had a
00:10:31
thing that went viral where she was
00:10:33
talking about who's in charge her or her
00:10:35
husband and it was a very funny little
00:10:36
thing and so I've I followed a couple of
00:10:38
her videos just to see what else she had
00:10:40
posted and one of the videos was how
00:10:43
she has some complicated health issues
00:10:45
which she was very public about PCOS and
00:10:48
how it causes you know issues in losing
00:10:50
weight and she posted a pre and post
00:10:52
picture of her which takes a lot of
00:10:55
courage and she was like brigadooned and
00:10:59
it's like what is wrong with these
00:11:01
broken people yeah that have to give
00:11:03
this woman a hard time and it just it so
00:11:06
to me these social media channels are
00:11:09
not coping mechanisms they were never
00:11:10
meant to be and so you know if they have
00:11:13
to go to 4chan or a Chan or Reddit or
00:11:16
whatever better to sort of create these
00:11:19
honey pots of hatred
00:11:21
than to have it spew everywhere because
00:11:23
it makes for the rest of us these
00:11:24
platforms to be unusable well sax you
00:11:27
were the CEO of PayPal with Elon and
00:11:30
Roloff and TL and everybody and that
00:11:32
crew over 20 years ago and verified you
00:11:35
understand pretty well because you
00:11:37
yourself have been brigaduned of late
00:11:39
and you've experienced this firsthand
00:11:42
the psychological torture that made you
00:11:45
take a week off from the show in fact
00:11:46
because you were so under directs I'm
00:11:48
kidding you had a planned week office
00:11:50
you're allowed to have occasion which of
00:11:52
the two ideas is the bigger idea
00:11:53
payments making Twitter into PayPal
00:11:56
including that x.com which was the
00:11:58
original name of uh that was elon's
00:12:00
payment company and he owns a
00:12:01
domainx.com
00:12:03
which is a bigger idea the payments or
00:12:06
the verification
00:12:08
which is the bigger idea for increasing
00:12:11
shareholder value which would you do
00:12:12
first I mean payments is an entire
00:12:15
roadmap right so there's a lot that
00:12:17
could be done there explain well I mean
00:12:19
it's it's about I mean you could layer
00:12:21
on a lot of services on top of that so
00:12:24
it's not just like one feature
00:12:26
look I think they're both compelling in
00:12:28
terms of where they could lead I think
00:12:29
what's
00:12:30
amazing about Elon as an entrepreneur is
00:12:33
he always starts with a mission and then
00:12:36
he figures out how to turn it into a
00:12:37
great product and a great business so
00:12:39
for example with SpaceX the mission was
00:12:41
to get to Mars to make life
00:12:43
multi-planetary you would think that be
00:12:45
a spectacularly unprofitable business
00:12:47
but in the course of pursuing that
00:12:50
mission he figured out the launch
00:12:51
business and then the satellite business
00:12:53
was starlink and I think starlink's
00:12:54
going to be a phenomenal business
00:12:56
phenomenal and like and likewise with
00:12:58
Tesla he started with the mission of
00:13:00
moving the world to sustainable energy
00:13:02
yeah and in the process of doing that he
00:13:04
created the world's best car not just
00:13:06
the world's best electric car but I just
00:13:08
think it's the best car in the world and
00:13:10
Tesla is this amazing business today
00:13:11
it's so far ahead of every other car
00:13:13
company so look I think what's cool
00:13:16
about what Elon is doing is he's
00:13:17
starting with this mission of restoring
00:13:20
Twitter to being a free speech platform
00:13:22
of being the Town Square it was always
00:13:24
meant to be and in the process of doing
00:13:26
that he's going to figure out how to
00:13:28
make Twitter into an even better product
00:13:30
and in into a great business which is
00:13:32
not today I think Twitter's losing you
00:13:34
know a few hundred million dollars a
00:13:36
quarter so there's work to do on all
00:13:38
those fronts but um I think you know
00:13:40
it's really impressive to see and you
00:13:43
know he's still operating at the top of
00:13:44
his game I mean 20 years after PayPal
00:13:46
some of us are just doing a podcast but
00:13:48
he is uh he's still alive some of us are
00:13:51
exhausted I know I know we're tired but
00:13:54
we're tired and he's like working
00:13:55
68-hour days he's been leveling up for
00:13:58
20 years and at this point he's like a
00:14:00
level 99 Mage or something no he's like
00:14:03
a crazy it's amazing to to see Freeburg
00:14:07
the biggest issue I perceive
00:14:10
in the short term for Twitter is going
00:14:12
to be what to do with people like Trump
00:14:14
and Kanye West or yay
00:14:17
and of course that's all going to seem
00:14:19
like
00:14:20
Elon is making those decisions as an
00:14:22
individual as opposed to for the
00:14:24
platform Etc should he let somebody like
00:14:27
Kanye West I'm sorry yay is Alex call
00:14:30
himself who is in the middle of an
00:14:31
obvious manic episode back on the
00:14:33
platform should he let Trump back on the
00:14:35
platform how do you think he should
00:14:37
handle those two polarizing individuals
00:14:39
specifically look I mean I think this is
00:14:42
what's going to be really interesting to
00:14:43
watch because there have been very
00:14:45
successful very inspirational very
00:14:48
intelligent very creative entrepreneurs
00:14:51
that have started and built generally
00:14:53
kind of open platforms at the beginning
00:14:56
only to over time be challenged with the
00:15:01
content that doesn't feel appropriate
00:15:03
and then they come back and they make
00:15:05
the necessary kind of moderation
00:15:06
guidelines and they make the necessary
00:15:07
edits to the way the platform operates
00:15:09
this is how Google operated originally
00:15:11
you know and then they ended up saying
00:15:13
you know what if we're going to be in
00:15:14
China we do have to create a censored
00:15:16
version of the internet and they did
00:15:17
that and that was controversial with
00:15:20
YouTube they've got a lot of censoring
00:15:21
and it was supposed to be just a
00:15:22
generally open platform for anyone to
00:15:24
use and they were even Larry and Sergey
00:15:26
were kind of flouting dmca at the
00:15:28
beginning and they were like it's not
00:15:30
our job to monitor copyright you have to
00:15:31
file a takedown notice and they kind of
00:15:33
wave their hands in the air over time
00:15:35
they realize that that could actually
00:15:37
damage and completely ruin the platform
00:15:39
and they had to go in and create
00:15:40
guidelines and moderation systems and um
00:15:42
the same with crew of EV and Jack and
00:15:45
Twitter the same with crew of the
00:15:47
founders at Reddit and I don't know if
00:15:48
you guys you know remember that period
00:15:50
of time when Ellen Powell was CEO of
00:15:52
Reddit and she went in and cleaned up a
00:15:53
lot of the bullying and harassment and
00:15:56
nastiness that was going on on Reddit
00:15:57
and she got a lot of controversy for why
00:16:00
are you closing it down why are you
00:16:01
censoring it Elon is a reasonable person
00:16:03
and he's going to be faced with
00:16:05
unreasonable people on this platform and
00:16:08
when that happens he's going to have
00:16:09
very tough decisions to make about what
00:16:11
kind of platform he wants to have what's
00:16:12
the quality of that platform you need to
00:16:14
look like and then all of a sudden he's
00:16:16
gonna have to look in the mirror and say
00:16:18
did I step on the wrong side and you
00:16:20
know he's he's idealistic and it's great
00:16:22
and it's wonderful and I hope that he's
00:16:24
successful but to some degree some
00:16:26
amount of moderation is going to be
00:16:27
necessary to create a high quality
00:16:29
product would you
00:16:30
if you were in charge or sell Freeburg
00:16:34
would you put Trump back on the platform
00:16:36
and under what circumstances and would
00:16:37
you allow somebody like Kanye West back
00:16:40
on the platform at some point obviously
00:16:42
easily yeah you personally yeah
00:16:46
look my content moderation guidelines
00:16:48
you know it gets very nuanced very quick
00:16:51
what do you allow people to say what are
00:16:52
you not allowed to say and then if they
00:16:54
violate them is there the opportunity
00:16:56
for a lifetime ban I don't think so I
00:16:58
don't think anyone should have a
00:16:59
lifetime ban on these platforms so I'm
00:17:01
totally would you do that for Kanye West
00:17:02
who has been saying crazy anti-semitic
00:17:05
stuff which has real world danger that's
00:17:07
already started to spell over where
00:17:08
people are putting up banners like
00:17:09
Kanye's right about the Jews and they're
00:17:12
putting up banners like over the you
00:17:14
know 10 Freeway as you may have seen in
00:17:16
Los Angeles how would you deal with
00:17:17
Kanye specifically in a manic
00:17:19
anti-semitic episode that he's been in
00:17:21
look I think I think the question is
00:17:22
anyone that's saying anything racist or
00:17:24
what you know whatever might be deemed
00:17:26
kind of uh to fall in that category
00:17:29
there is a tagging mechanism and you
00:17:31
have to figure out how to create the
00:17:32
tagging mechanism based on that tagging
00:17:34
mechanism the default is it's like when
00:17:37
you go to Google and you search for
00:17:38
stuff they exclude porn so all porn
00:17:40
content that's indexed on Google index
00:17:43
servers
00:17:44
um is index is porn and it's default off
00:17:47
there's a safe search thing you got to
00:17:49
turn
00:17:50
um I think off or something to access
00:17:52
stuff that Google deems inappropriate
00:17:54
sure how do you how do you do that
00:18:00
and by the way I'll tell you when I
00:18:01
worked at Google we used to have pizza
00:18:03
weekends where you would go into the
00:18:05
office on the weekends they give you
00:18:06
free pizza and everyone would tag you
00:18:08
know you'd watch porn and you would tag
00:18:10
porn and so you basically go through the
00:18:12
indexing servers they show you images
00:18:13
and Google images and you click porn or
00:18:15
not porn and it was just like hey come
00:18:17
and volunteer come and help us do it and
00:18:19
there was all these Engineers sitting in
00:18:21
the freaking cafeteria attacking porn
00:18:22
but actually you know that happened to
00:18:24
sax and he saw Tucker Carlson and he
00:18:26
said yeah that's porn I think it's my
00:18:28
personal support yeah so I think
00:18:29
Montclair had yes I think the same
00:18:32
mechanism is needed on these social
00:18:33
networks which is that you have to
00:18:35
figure out well you have to figure out a
00:18:36
way to use AI got it to tag content and
00:18:39
then think about them is cable just let
00:18:41
me finish for one second you think about
00:18:42
them it's Cable cable stations on a
00:18:44
cable company so they're the cable
00:18:45
company and there's different stations
00:18:47
and you as a user decide what do you not
00:18:49
want to opt into and what do you want to
00:18:51
opt into what content do you want to
00:18:52
exclude from your version and your
00:18:54
experience of Twitter and if you're okay
00:18:56
with the stuff Kanye says you're okay
00:18:58
with the stuff Trump says you can keep
00:19:00
that stuff in if you want to exclude
00:19:01
that type of content it's it's excluded
00:19:04
for you and I think that's what Twitter
00:19:05
ultimately has to become what do you
00:19:07
think chamoth would you put Trump back
00:19:08
on the platform and seeing you know
00:19:11
Kanye West having this manic episode and
00:19:13
saying you know basically participating
00:19:15
in hate speech explicitly how would you
00:19:18
handle those two specific instances in
00:19:20
2022 going into 2023. I think that there
00:19:24
has to be a way
00:19:25
where nobody is banned forever okay I
00:19:29
think that it when somebody is banned
00:19:31
temporarily they can be banned for any
00:19:33
reason that violates a term of service
00:19:36
that's well understood and uniformly
00:19:38
enforced got it and I think that's the
00:19:41
right of a private company
00:19:42
but there has to be a way to get back on
00:19:45
in the case of both of these folks there
00:19:49
should be a way
00:19:50
to basically you know have because of
00:19:54
the the step uh the the quantity of
00:19:56
their reach
00:19:58
some sort of almost like tribunal or you
00:20:01
know mediator
00:20:03
that can understand what's going on
00:20:06
because if somebody's going through a
00:20:08
manic episode it's absolutely right to
00:20:10
turn that off I mean these guys should
00:20:12
have turned him off much much sooner
00:20:15
because when you're in the middle of a
00:20:17
Mania and I said this last week like you
00:20:19
know like for example like this this
00:20:21
relative of mine when they're in a manic
00:20:23
episode it's 60 70 80 emails a day and
00:20:28
text messages a hundred texts that I get
00:20:30
and they're honestly they're vile yeah
00:20:34
okay and they don't even remember them
00:20:36
half the time
00:20:37
and and you know they go through
00:20:40
paranoia they go through Mania they go
00:20:42
through these periods where they think
00:20:43
they're completely right they go through
00:20:45
these periods where they look completely
00:20:46
sane and normal so yeah so it's a tough
00:20:49
the most important thing when you have a
00:20:52
family member in Mental Health crisis is
00:20:54
to get the phone away from them that is
00:20:56
a weapon that only continues the loop
00:20:59
and to re-regulate this person
00:21:01
and then there should be a way to prove
00:21:04
that you're back in a re-regulated state
00:21:06
to get these tools back but I think that
00:21:09
that needs to we just need to
00:21:11
acknowledge like there's just a lot of
00:21:13
people with mental health issues there's
00:21:14
a lot of social media there's a lot of
00:21:16
damage that can be done
00:21:17
it's not to forgive these people but
00:21:19
it's to explain that in moments you've
00:21:21
got to shut these channels down and then
00:21:23
give them a way to come back when
00:21:24
they've re-regulated sex how do you
00:21:27
think about it
00:21:28
well with regard to Trump I don't know
00:21:31
what the continuing reason is for him
00:21:33
not being allowed on the platform
00:21:35
remember that when he was banned it was
00:21:38
considered to be a temporary measure
00:21:41
because he was supposedly inciting a
00:21:43
riot right so I think incitement
00:21:46
to violence is legitimate grounds for
00:21:49
taking down speech but once that breach
00:21:52
of the peace is over I don't know why it
00:21:54
would become a permanent ban as opposed
00:21:56
to a timeout so I don't even know how
00:21:59
the companies continue to justify the
00:22:01
ban on Trump except for the fact that
00:22:03
they just think that he's a threat to
00:22:04
democracy well I don't think that's for
00:22:07
social networks to determine is that who
00:22:10
gets to participate in our political
00:22:12
process so it's not actually the first
00:22:15
thing I would do but do I think that
00:22:17
Trump should be allowed back yeah I do
00:22:19
with regard to Kanye
00:22:21
it's a little more complicated because
00:22:24
like you're saying it's hard to know
00:22:26
whether he's having a manic episode or
00:22:28
he's just you know being Kanye what he's
00:22:30
saying right now is probably not in his
00:22:32
own interest and probably it would be in
00:22:33
his best interest to have a timeout but
00:22:35
what I would look for guidance here is
00:22:38
there is a Supreme Court decision and my
00:22:41
general view on on the content
00:22:42
moderation is that
00:22:45
these social networking companies should
00:22:46
be looking to for inspiration to stream
00:22:49
Court decisions because Supreme Court's
00:22:51
been wrestling for these with these
00:22:52
issues for hundreds of years whereas
00:22:54
social networks are just making it up as
00:22:56
they go along and there are nine major
00:22:58
categories of speech that the Supreme
00:23:00
Court has said are not protected because
00:23:02
they actually are dangerous speech so
00:23:04
for example in this decision called
00:23:06
chaplinsky versus New Hampshire which
00:23:08
came out in 1942 the Supreme Court held
00:23:11
that so-called fighting words were not
00:23:13
protected and they Define fighting words
00:23:16
as speech that tends to incite an
00:23:18
immediate breach of the piece through
00:23:20
the use of quote personally abusive
00:23:22
language that when addressed the
00:23:24
ordinary citizen is as a matter of
00:23:26
common knowledge inherently likely to
00:23:28
provoke a violent reaction so you know I
00:23:31
would use that type of decision by the
00:23:35
Supreme Court as inspiration to say that
00:23:37
racist misogynistic homophobic and other
00:23:41
sort of racial racial and ethnic slurs
00:23:44
yeah shouldn't be out on these networks
00:23:46
because it doesn't do anything to
00:23:48
enhance the public debate now there is a
00:23:51
question like could Kanye frame his
00:23:53
arguments in a way that is still
00:23:55
incredibly offensive to us but doesn't
00:23:58
you can say slurs yeah for example he
00:24:00
could say hey here are the top 10 media
00:24:02
companies here are the executives here's
00:24:04
the percentage that are Jewish and this
00:24:06
is you know my concern is that this is a
00:24:08
and here's the percentage people who are
00:24:09
Jewish in the population you could some
00:24:10
[ __ ] like that and then you're like
00:24:12
okay did he say something anti-semitic
00:24:14
you know and you're kind of in this
00:24:16
bubble area
00:24:17
and there's always going to be edge
00:24:19
cases and people are always going to be
00:24:20
pushing the envelope and so listen just
00:24:22
because we find it offensive and you
00:24:25
know it's specifically offensive to me
00:24:27
uh that doesn't mean that it should
00:24:28
automatically be banned and you know I
00:24:30
think slurs slurs banned or out but but
00:24:33
arguments I don't know that we should be
00:24:35
banning entire categories of arguments
00:24:37
and and look part of the problem here is
00:24:38
that lots of people are hearing the
00:24:41
arguments that yay is making whether
00:24:43
he's making them on Twitter or not and
00:24:45
because he's there's a total ban people
00:24:48
can't really engage with him on Twitter
00:24:50
and so he's not getting off-ramped from
00:24:53
this Rabbit Hole he's falling into and
00:24:55
nobody else who might be a fan of his is
00:24:57
hearing the other side of the argument
00:24:59
so I don't know that it's ultimately in
00:25:02
the long-term interest
00:25:03
of the Town Square to be banning you
00:25:07
know the argument the you know ACLU and
00:25:09
other people have is like hey you put a
00:25:10
little sunlight on these bad opinions at
00:25:13
least everybody knows who has the bad
00:25:14
opinions and you can fight them
00:25:16
paradoxically I mean do you really want
00:25:18
these folks going to the dark web and
00:25:20
you know being untraceable there is some
00:25:22
value in kind of knowing who's getting
00:25:24
radicalized and hopefully exposing them
00:25:27
to other opinions in the same
00:25:28
conversation that can all framp them
00:25:29
yeah I mean paradoxically while we're
00:25:32
talking uh Elon just tweeted at 11 18
00:25:34
a.m Twitter will be forming a Content
00:25:36
moderation council with widely diverse
00:25:38
viewpoints no matter no major content
00:25:40
decisions or account reinstatements will
00:25:42
happen before that Council convenes so
00:25:44
he's going to take the same approach
00:25:46
that Facebook has they have a council as
00:25:48
well that Zuckerberg tried to set up so
00:25:50
I think he realizes there should be a
00:25:52
thoughtful uh discussion sexy gonna be
00:25:54
on that Council I have no idea that
00:25:56
sounds like a uh the worst Purgatory you
00:25:59
could ever be in is to be the person who
00:26:01
has to make these decisions like talk
00:26:03
about a no-win situation I'm curious
00:26:05
shamath
00:26:07
we talked last week about Kanye and then
00:26:09
Lex Friedman dropped his episode Lex
00:26:11
came at it with uh he pushed back on
00:26:14
Kanye I don't know if you watched some
00:26:15
of the highlights I saw some of those he
00:26:16
pushed back pretty hard I watched the
00:26:18
whole thing okay so he pushed back
00:26:19
really hard on the anti-semitic stuff
00:26:22
and we had a discussion last week I said
00:26:23
hey you can't platform this guy but it
00:26:25
looks like Lex had a specific
00:26:29
point of view which is he has a
00:26:30
friendship with Kanye of some level and
00:26:33
he wanted to try to convince him in this
00:26:34
manicness that he's wrong about things
00:26:36
did do you think Lex succeeded and he
00:26:39
should have done it I obviously we won't
00:26:40
question Alex's intent we know I I have
00:26:42
had replace Lex with me and Kanye with
00:26:46
my relative
00:26:49
wasn't on television or whatever but
00:26:51
I've had these same kinds of I'll call
00:26:54
them interventions
00:26:55
and like I said this person goes through
00:26:57
periods of lucidity
00:26:59
periods of mania periods of paranoia
00:27:02
periods of anger
00:27:05
and so that's all I saw when I was
00:27:07
watching this thing is just what a lot
00:27:10
of people in the United States deal in
00:27:12
the world deal with
00:27:14
when they have relatives who are
00:27:15
suffering from one of these things and
00:27:18
you know my relative has said the same
00:27:20
thing there's nothing wrong with me you
00:27:22
know I don't need medication I'm not on
00:27:25
these meds blah blah blah I don't want
00:27:26
to judge because I don't know him but
00:27:28
I'll tell you in my situation
00:27:30
trying to
00:27:32
like you know for example like this
00:27:34
person thinks that you know myself and
00:27:37
one other person like we hacked into
00:27:39
a computer system of the place that they
00:27:43
worked to manipulate the financial
00:27:45
records to point to this person as
00:27:48
having committed a fraud and has and
00:27:51
then thinks that people are now
00:27:52
listening and bugging the phone I mean
00:27:54
there's all kinds of stuff over and over
00:27:56
again and then sometimes they don't
00:27:57
think that and sometimes they do and
00:27:59
it's like it's magic what I'm trying to
00:28:01
tell you is like
00:28:03
when you're not when you're in a normal
00:28:05
State a regulated State and you're
00:28:08
talking to somebody who's dysregulated
00:28:10
it's not two normal people having a
00:28:12
conversation where you're trying to get
00:28:13
them to see the logic of your ways
00:28:15
so again I just think that it's not it's
00:28:18
not a thing that should be litigated in
00:28:19
the media I think it is a thing that
00:28:22
is where people that care for this
00:28:24
person need to surround them and get
00:28:26
them with a doctor to help them
00:28:28
rebalance in in in the in the case of
00:28:31
our family
00:28:32
what it turns out is that this person
00:28:34
needs to constantly be re titrated the
00:28:36
drugs
00:28:38
for them to be regulated
00:28:40
that may be different for other people
00:28:41
and I don't know Kanye's situation so
00:28:44
anyways I I see all that and I and and I
00:28:46
and I go to my own family situation
00:28:49
which I'm which we actively deal with
00:28:51
today and I don't have much of an idea
00:28:53
of what to do about Kanye because it
00:28:54
brings up too much stuff about what I'm
00:28:56
dealing with in the real time with my
00:28:58
own family
00:28:59
I'm sorry you're going through that and
00:29:01
I uh yeah like I said I mean I think Lex
00:29:03
had good intent I don't think it's worth
00:29:06
doing no he's from somebody he's
00:29:08
incredible you know he's a really
00:29:09
beautiful empathetic person Lex is in
00:29:11
general yeah so I think he tried to do
00:29:13
the best job he could so I saw I saw
00:29:15
part of the The Lex interview it was two
00:29:17
and a half hours and I wasn't going to
00:29:18
sit through two and a half hours of it
00:29:19
you know I went to the I went to the
00:29:21
chapter titles and I was in the middle
00:29:23
it was like Holocaust and like right and
00:29:25
I was like okay let's just go right to
00:29:26
the train wreck
00:29:28
yeah so I skipped to there but anyway I
00:29:31
think the argument that that Lex should
00:29:32
have made or pointed out to Kanye is
00:29:35
like go see the the new Elvis movie
00:29:37
which is all about how an artist
00:29:40
basically got taken advantage of by his
00:29:43
business manager and you'll see that
00:29:46
this idea is a very familiar Trope in
00:29:50
the music business but that manager uh
00:29:53
Colonel Tom Parker he wasn't Jewish he
00:29:55
was a Dutch con man pretending to be a
00:29:57
southern pick so this can happen and
00:30:00
it's a very common story and it's got
00:30:01
nothing to do with the uh religion or
00:30:05
race or whatever of the the business
00:30:06
people
00:30:08
so and in fact the person in that movie
00:30:10
who has the best advice for Elvis is BB
00:30:13
King who says to Elvis at a very early
00:30:16
point in the movie he says if you don't
00:30:18
do the business the business will do you
00:30:20
hmm and so look I think Kanye again if I
00:30:25
was to sort of Steel Man and respond to
00:30:26
it is listen
00:30:29
you know what you're describing is a
00:30:30
pretty common of artists being taken
00:30:32
advantage of is is a common issue it
00:30:34
goes back a long time and it's got
00:30:36
nothing to do with religion and quite
00:30:38
frankly you know there's probably a lot
00:30:40
of other Jews in your life who've helped
00:30:42
you I mean I wonder the last time you
00:30:44
went to a doctor did you notice whether
00:30:46
they were Jewish or not you know and so
00:30:48
he's developed a little bit of a
00:30:50
fixation here of noticing that some
00:30:53
people are Jewish but probably he's not
00:30:55
noticing when other people are Jewish
00:30:57
you've probably helped him yeah so
00:30:58
that's probably like the argument I
00:31:00
would have made with him you know if I
00:31:03
were conducting that interview and you
00:31:05
make the argument to a person who's in a
00:31:06
manic episode and that just there's no
00:31:08
limit they don't even realize what
00:31:10
they're saying they forget what they say
00:31:12
when they get through the manic episode
00:31:13
these parents these paranoias don't tend
00:31:15
to come up when you're in a regulated
00:31:17
normal State exactly all right let's
00:31:19
talk about uh meta Brad Gerson was on
00:31:22
last week we've had an ongoing
00:31:23
discussion about big Tech entitlement
00:31:25
spending the number of employees at
00:31:27
these companies on Monday Brad I I think
00:31:30
you know got a little worked up on the
00:31:32
last pod maybe and dropped an open
00:31:34
letter some might say activist he would
00:31:37
say constructivist
00:31:38
to Zuckerberg and the team over there
00:31:40
hey maybe
00:31:42
pump the brakes on the cap ax maybe do a
00:31:44
riff maybe become profitable anyway the
00:31:47
uh revenue and the the third quarter was
00:31:51
a complete utter disaster for meta and
00:31:55
the stock has plummeted and been under a
00:31:58
hundred dollars a share
00:32:00
I don't know who wants to start on this
00:32:02
one but okay look there's a lot to
00:32:03
unpack here so I think I think we should
00:32:05
take our time because I think one part
00:32:08
of it is meta okay but one part of it is
00:32:11
actually about what we talked about a
00:32:13
few episodes ago which is like this big
00:32:15
Tech put right where they Define
00:32:18
the rules of the game on the field for
00:32:21
every other startup and I think the
00:32:23
third part is just about like the era of
00:32:26
big Tech being over and what it means
00:32:28
for the stock market if I think if you
00:32:30
section it out in those three ways Jason
00:32:32
we can have a pretty rich convo I'd love
00:32:34
to tease somebody where do you want to
00:32:35
start okay so let's let's start with
00:32:37
meta so Nick can you please throw up
00:32:39
Apple versus meta for a second and let
00:32:42
me just give you guys the the talk track
00:32:45
and then maybe we can go from there so
00:32:47
when you look at Apple versus meta
00:32:49
there's this really interesting thing
00:32:52
that comes up which is in 2016 you know
00:32:56
and we've said this before you could not
00:32:58
give Apple stock away
00:33:00
they were generating a ton of cash it
00:33:03
was sitting on the balance sheet in many
00:33:05
ways Facebook was doing the same thing
00:33:06
and there was this famous dinner I don't
00:33:09
know if it was a dinner that ever
00:33:09
happened but that's how the the lore is
00:33:12
told
00:33:13
between Tim Cook Carl Icahn and I think
00:33:16
Luca meistry the CFO
00:33:18
and in it what carlikon said is listen I
00:33:23
have a below the line suggestion for
00:33:26
apple and what does that mean if you
00:33:27
look at a p l you have your revenues
00:33:30
that's above the line you have costs
00:33:32
that's also above the line and then you
00:33:35
have your profits and then it's what you
00:33:36
do with the profits so what he was
00:33:38
suggesting is below the line
00:33:41
the fact he had no suggestions for how
00:33:43
the business should be run he just said
00:33:45
give us back the money and we will
00:33:47
reward you the stock price will go up
00:33:50
and what's interesting to note here is
00:33:52
the black line is the performance of
00:33:54
Apple stock as as they've given back
00:33:58
and they've used a ton of their own
00:33:59
balance sheet cash to buy back the stock
00:34:02
okay so they've spent
00:34:05
396 billion dollars
00:34:07
since 2016 to buy back stock in the same
00:34:10
time Facebook has spent almost 100
00:34:12
billion now here is here's where you
00:34:16
start to see the Divergence so you would
00:34:18
have said well shouldn't Facebook's
00:34:20
stock have reacted in the same way and
00:34:23
for a very long time it actually looked
00:34:26
like it was right until about September
00:34:28
21 and then obviously this thing fell
00:34:31
off a cliff
00:34:32
and the reason why it started to fall
00:34:34
off a cliff was somebody started to
00:34:36
notice that hold on a second
00:34:39
even though you're buying back all these
00:34:40
shares
00:34:42
the bottom of the funnel right you're
00:34:44
leaking all of these shares to all of
00:34:46
these new employees why are you hiring
00:34:48
so many people and this is when people
00:34:51
started to uncover what was happening
00:34:53
above the line at Facebook and is what
00:34:55
caused this massive dispersion so Nick
00:34:58
if you go to the first chart so what has
00:35:00
actually been going on above the line
00:35:04
here's what's going on
00:35:06
if you look at the light purple bar
00:35:09
Facebook in the last two years have
00:35:11
spent 25 billion dollars on reality dabs
00:35:14
and they said that they're going to
00:35:16
spend you know meaningfully more in 2023
00:35:18
and then sustain that investment for a
00:35:20
while
00:35:21
so if you do a little bit of math if
00:35:23
they spent you know they spend around 4
00:35:25
billion a quarter right now so 16
00:35:26
billion a year that'll go to 25 billion
00:35:29
in 2023 and then they'll sustain that
00:35:32
what that means is that over this you
00:35:35
know 12 or 13 year life of reality Labs
00:35:37
as we've seen it
00:35:39
these guys will have spent a quarter of
00:35:41
a trillion dollars
00:35:42
and what I did here was I just wanted to
00:35:45
understand hilarious I wanted to
00:35:47
understand a quarter of a trillion
00:35:48
dollars in the context of other major
00:35:50
leaps in humanity
00:35:52
so at the left is what Apple spent in
00:35:55
its entirety by the way these are all
00:35:56
inflation-adjusted dollars for today
00:35:59
Apple spent 3.6 billion dollars to
00:36:01
create the first iPhone
00:36:04
and what they did was they said every
00:36:06
subsequent version of the iPhone
00:36:08
would only be funded from the cash flow
00:36:11
and profits of the generation before it
00:36:14
right so they used consumer demand as
00:36:17
their guiding principle so it was a very
00:36:19
incremental approach iPhone 1 iPhone 2
00:36:21
and now we're on iPhone you know 14 or
00:36:23
whatever 13 but the point is it took 3.6
00:36:26
billion to get that Juggernaut off the
00:36:28
ground
00:36:30
um the Manhattan Project will cost 23
00:36:33
billion in today's dollars to create the
00:36:35
atomic bomb
00:36:36
Tesla in its entire life spent 25
00:36:39
billion to get to free cash flow
00:36:41
profitability and they took this
00:36:43
incremental approach as well will create
00:36:45
the you know the the coupe uh the
00:36:48
Roadster then the model S then the model
00:36:50
X they iterated their way they used
00:36:54
customer demand and all of that Revenue
00:36:56
to fund future growth the cumes spend on
00:36:59
Tesla was 25 billion
00:37:00
Boeing spent 32 Google and other bets
00:37:03
has spent 40. the only thing that I
00:37:06
could find in history
00:37:08
that is comparable to what meta has
00:37:10
basically said they're going to spend is
00:37:12
the entire Apollo program which cost in
00:37:14
today's dollars a quarter of a trillion
00:37:16
as well so the problem is that below the
00:37:20
line meta was doing the right things
00:37:22
above the line
00:37:24
they've created I think an enormous set
00:37:27
of pressures for themselves which is you
00:37:28
know if you think about the Apollo
00:37:30
program this was 13 years of building
00:37:32
Rockets getting to low earth orbit then
00:37:35
getting to be able to you know orbit the
00:37:37
earth then eventually building an entire
00:37:39
infrastructure and capability to land on
00:37:41
the moon and get back
00:37:42
so there was a lot of incremental
00:37:44
progress there I think what people don't
00:37:46
understand is where is this quarter of a
00:37:47
trillion dollars going and is it going
00:37:49
to be a leap in humanity
00:37:52
at the scale of the Apollo program
00:37:54
because it now is becoming the single
00:37:58
largest Capital allocation program in
00:38:01
capitalism history
00:38:04
nothing comes close
00:38:05
so I think that that is a really
00:38:07
interesting maybe jumping off point to
00:38:10
talk about what's going on inside of
00:38:12
this business it's I think they're doing
00:38:13
all the right things below the line but
00:38:16
there's this one major big red flag
00:38:18
above the line that has to be probably
00:38:20
better explained by them if they want to
00:38:22
have long-term shareholders and
00:38:24
basically what happened was when people
00:38:25
heard this they said this is a dumpster
00:38:27
fire we're out here sax what do you can
00:38:29
ask the question what happened with the
00:38:30
whole uh Brad gerstner's uh proposal was
00:38:33
that actually discussed on the call on
00:38:35
the earnings call they you know they
00:38:38
ignored well I I don't want to say it
00:38:40
was totally ignored because I I do think
00:38:43
that they should be given credit for a
00:38:45
couple of things I think that the Core
00:38:47
Business continues to March forward and
00:38:50
they basically said look we're gonna
00:38:52
slow head count growth some teams will
00:38:54
shrink
00:38:55
I think the problem is really in this
00:38:58
reality Labs the amount of investment
00:39:00
that they're making is so outsized and
00:39:03
so abnormal and doesn't compare to
00:39:06
anything anybody's ever seen I think
00:39:09
everything else in the business seems to
00:39:10
be actually quite
00:39:12
functional so the problem is that this
00:39:15
above the line thing though has become
00:39:16
so big
00:39:18
it could sink the business you know it's
00:39:21
very very hard to see an investment case
00:39:24
for a quarter of a trillion dollars of
00:39:26
money in the door before you really
00:39:27
start to see something magical now they
00:39:30
may have something super magical that
00:39:31
nobody knows about that they're going to
00:39:33
unveil and say ha See told you and maybe
00:39:37
there should be a set of outcomes where
00:39:38
we plan for that
00:39:40
but the reality is it's you know 25
00:39:42
billion dollars a year
00:39:44
for the next umpteen years and it's it's
00:39:47
and I think it's 10 billion where did
00:39:49
the 25 billion come from no this number
00:39:50
it's 4 billion a quarter right now so 16
00:39:53
billion a year and they said that
00:39:55
they're going to significantly increase
00:39:56
it to 2023 so I just assumed it was a 50
00:39:59
increase maybe significant means a
00:40:01
hundred but 16 goes to 25 and they said
00:40:04
they're gonna keep going at that pace
00:40:06
and so if you run that out till 2030
00:40:08
that's how you get to 250 billion
00:40:09
dollars
00:40:10
you think there's a business here in
00:40:13
vrar Saks you think this will be the
00:40:15
next platform I guess that's a a key
00:40:17
question to ask here yeah I mean I I
00:40:19
like I actually like these Oculus
00:40:21
products I think it's a very cool
00:40:23
product
00:40:25
the question is really just about the
00:40:26
magnitude of the investment level but I
00:40:29
think there is a future in VR and AR and
00:40:33
it is a you've tried the Oculus headset
00:40:36
before it is like a very
00:40:39
magical
00:40:40
you know experience with software one of
00:40:43
the most magical that I've had the
00:40:45
question is just we're talking about
00:40:47
magnitude and time frame
00:40:49
this I think also comes to mind for me
00:40:51
sacks like uh I everybody seems to
00:40:54
you know try and then say Oh My and then
00:40:57
say goodbye to these headsets like
00:40:58
people buy them they try them and
00:41:00
they're like this is incredible but
00:41:01
there's no use case for them
00:41:04
on a regular basis we just invested in a
00:41:08
company that is creating professional
00:41:10
flight simulators using VR as a
00:41:13
component education yeah I think
00:41:15
training is actually a huge use case
00:41:17
huge and by the way these are not like
00:41:21
video game flight simulator programs
00:41:24
these are actual they create physical
00:41:26
cockpits with knobs and dials and stuff
00:41:29
it's just that the pilot is using a
00:41:32
professional grade
00:41:33
VR headset and so they're able to load
00:41:36
you know a lot more training programs
00:41:39
and scenarios and they're able to train
00:41:40
on more planes they can like change up
00:41:43
the cockpit by the way the the cockpit's
00:41:45
on Gyros so it actually moves around let
00:41:47
me put a date in a different way I think
00:41:49
that we should assume that VR and AR is
00:41:51
going to be a really important part of
00:41:53
our existence and I do think that as
00:41:55
David said many of these experiences are
00:41:57
magical I think what investors reacted
00:42:00
to was
00:42:01
spending 25 billion dollars a year needs
00:42:04
to be measurable somehow and I think
00:42:07
what they said is the things that we're
00:42:08
seeing don't necessarily tell us that
00:42:11
this bed is going to make any sense at
00:42:12
that level of spend so if you were
00:42:14
spending 2 billion a year or 3 billion a
00:42:17
year I don't think people would have
00:42:18
said anything
00:42:19
it's just a magnitude relative to the
00:42:22
progress that's being demonstrated
00:42:23
publicly and and that's the thing that I
00:42:26
think the Tesla program got right the
00:42:28
Apple phone program got right the Boeing
00:42:31
program even the Apollo 13 program for
00:42:33
that Quantum of spend so it's not to say
00:42:35
that you can't spend a quarter trillion
00:42:37
dollars over the next decade but you
00:42:39
gotta eat what you kill you have to be
00:42:40
able to show progress in a way that says
00:42:43
Ah this this investment is tracking
00:42:45
Freeburg I think the biggest issue he's
00:42:47
having
00:42:48
is he's trying to build a moon shot that
00:42:52
you'll only get to see when I'm done
00:42:53
it's like hey I'm behind the curtain
00:42:55
over here I'm Willy Wonka I'm gonna come
00:42:57
out with the most amazing chocolate bar
00:42:58
in 10 years and after I spend 100
00:43:01
billion dollars but don't worry it's
00:43:02
going to be awesome trust me
00:43:04
shareholders it's going to be amazing
00:43:05
and with consumer products in particular
00:43:07
not guys you keep saying 100 it's 250.
00:43:10
yeah whatever it ends up being I in
00:43:12
general
00:43:13
I think consumer products you want to
00:43:15
see them in the market and you want to
00:43:18
iterate to success tell me one consumer
00:43:20
product that launched and didn't iterate
00:43:22
after launch and didn't kind of evolve
00:43:24
over time in a way that responded to
00:43:26
what the market was telling the Builder
00:43:28
into that product but free Brick In
00:43:29
fairness to them they're doing that too
00:43:31
it's just I think what people can't
00:43:33
square is we see the next gen oculuses
00:43:37
and then we see the spend and we think
00:43:40
that they're upside down relative to
00:43:41
what we're seeing in terms of progress I
00:43:43
think that's what people are reacting if
00:43:44
you were spending 5 billion a year this
00:43:46
wouldn't be an issue to a month right a
00:43:47
nothing Burger nothing people would say
00:43:50
good idea throw a long ball
00:43:52
I think that there's two kind of ways to
00:43:54
think about the distinct things that
00:43:56
they're building one is this Hardware
00:43:57
platform with oculus and a better kind
00:43:59
of experience for immersive
00:44:02
experiences whether that's VR or ar the
00:44:05
second is what's all the software layer
00:44:07
look like and what goes on in that
00:44:08
platform that's where this thing seems
00:44:10
to be pretty short and where people seem
00:44:12
to have a lack of confidence and
00:44:14
conviction the hardware seems super
00:44:16
interesting but I gotta tell you epic
00:44:19
games just raised money earlier this
00:44:20
year at a 31 billion dollar valuation if
00:44:23
Zuck was a smart guy he would go to 10
00:44:24
cent and cut him a check and buy the
00:44:26
whole thing for 50 billion and you know
00:44:27
buy those guys because that's a platform
00:44:30
that has a couple hundred million active
00:44:32
users is making money has a really deep
00:44:35
immersive but two-dimensional experience
00:44:38
it's not 3D it's not on VR right and on
00:44:41
top of fortnite and on top of their um
00:44:44
their engine that they've built
00:44:46
um there are just countless experiences
00:44:48
and worlds and interactions and models
00:44:52
that exist today that are already active
00:44:55
that are being iterated that have been
00:44:56
evolving for years and if you look at
00:44:57
where fortnite and some of the tools and
00:45:00
experiences that have been built into
00:45:01
fortnite over the past couple of years
00:45:03
sit relative to when fortnite was first
00:45:05
launched I don't think that Tim Sweeney
00:45:08
and that team would have ever said hey
00:45:09
this is where we're going to be in a
00:45:10
couple of years that's what we're going
00:45:11
to be doing it was part of an
00:45:12
evolutionary experience of building a
00:45:14
great platform and having an Engaged
00:45:16
user base and unfortunately there
00:45:18
doesn't seem to be a great engaged user
00:45:20
base in the software layer of what he's
00:45:21
built here today making it very
00:45:23
difficult to track a path to get
00:45:25
consumer feedback and to identify where
00:45:27
that goes over time the hardware
00:45:29
experience totally understand that that
00:45:31
takes time to build something incredible
00:45:33
also should be in the market and getting
00:45:34
iterative feedback but really that that
00:45:36
software piece is what what feels short
00:45:38
to your point I think that that's
00:45:40
another great example of a below the
00:45:42
line decision that they could have made
00:45:43
with all of this money
00:45:46
you know if you compare what Brad asked
00:45:48
Facebook to do on Monday versus what
00:45:49
icon asked Apple to do in 2016
00:45:52
you know icon basically said just make
00:45:55
this below the line change and everybody
00:45:56
will be happy it's a Do no harm solution
00:45:59
none of us are getting in the way we're
00:46:01
not telling you how to run the business
00:46:03
the thing that I think that you know
00:46:05
what Facebook had to react to was Brad
00:46:06
suggestions were fundamentally above the
00:46:08
line it's like you know firing 20 of the
00:46:10
people or 30 or changing the capital
00:46:12
allocation would require some changes to
00:46:14
strategy and I think this is a a good
00:46:17
moment to recognize it as as much
00:46:20
clarity as Brad's letter had and as much
00:46:22
sense as it probably makes to Outsiders
00:46:23
looking in
00:46:25
the minute you have to tell companies
00:46:26
how to change above the line it's just a
00:46:28
good reminder to me that no it's not
00:46:30
going to happen because these folks will
00:46:32
not want to make those changes they
00:46:34
don't you're saying Zuck won't make the
00:46:36
changes I think it's natural human
00:46:37
psychology I think you want to make
00:46:39
those changes yourself you don't want to
00:46:41
be told what to do got it sax what do
00:46:44
you think this is going to do to
00:46:45
governance in Silicon Valley writ large
00:46:47
probably nothing really excited it's not
00:46:50
going to change anything well it is it
00:46:52
is interesting if you look at elon's
00:46:54
Twitter deal
00:46:55
there is no dual class everybody has
00:46:59
this is one class of security this is
00:47:02
one type of stock
00:47:03
so it's simple majority voting Elon
00:47:06
actually had the choice of doing dual
00:47:08
class and he decided not to
00:47:11
so that's pretty interesting so if
00:47:13
people want to follow elon's example
00:47:15
then
00:47:16
they would you know not not necessarily
00:47:19
go for adults Tesla doesn't have super
00:47:20
shares either and you said it many times
00:47:21
if you want to vote me out you can vote
00:47:23
me out right
00:47:26
SpaceX either
00:47:28
yeah he's putting his neck on the line I
00:47:31
don't know I has a SpaceX should I have
00:47:33
no idea class structure yeah I can't
00:47:35
remember SpaceX isn't public yet so
00:47:38
maybe it doesn't matter like they
00:47:39
haven't reached that decision Point yeah
00:47:40
yeah yeah yeah I will tell you I just I
00:47:43
think starlink has such a huge
00:47:45
opportunity I just got starlink for two
00:47:48
locations as a backup because you know
00:47:51
you lose your internet a couple times a
00:47:52
year and you can get these routers now
00:47:53
that'll fail over so since I'm doing
00:47:55
business like I can't really lose the
00:47:57
internet so for a thousand bucks a year
00:47:58
I can have starlink as a backup and I
00:48:00
started using it and uh the speed is
00:48:03
getting pretty compelling already uh
00:48:05
like Zoom calls you can't tell the
00:48:07
difference right now most of the time
00:48:08
and certainly for web browsing or
00:48:11
watching a movie
00:48:13
you know it just works so I I could see
00:48:15
many companies putting in starlink even
00:48:17
if they have a fiber line or whatever
00:48:18
just as a backup that business alone
00:48:21
could be ginormous just to provide both
00:48:23
sides of the story here I mean the
00:48:25
reason why dual class emerged and was
00:48:27
seen as viable is that if you look at
00:48:30
the historic performance of internet
00:48:32
companies the ones that have done the
00:48:35
best perform the best are the ones where
00:48:36
the founder stays involved for a long
00:48:38
time and the ones where the founder
00:48:40
checked out like after a few years and
00:48:42
hired a professional CEO those are the
00:48:44
ones that went off the rails it happened
00:48:46
again and again so there there is an
00:48:49
argument for dual class in the sense
00:48:50
that you keep the founder involved and
00:48:52
you sorry you avoid a power struggle
00:48:56
that's not what happened
00:48:57
well but that was why it was considered
00:48:59
acceptable well I think it was
00:49:01
considered acceptable because in the
00:49:02
Google bake off all these Banks were
00:49:04
clamoring so hard and you know there
00:49:06
were two vectors of iteration one vector
00:49:09
was on the way that you know Google
00:49:10
wanted to do this uh IPO process they
00:49:13
pick Credit Suisse they did this Dutch
00:49:14
auction the other one was the bankers
00:49:16
basically pitched them on a dual class
00:49:18
voting control structure and was Morgan
00:49:20
Stanley Morgan Stanley and once Google
00:49:21
got it everybody else was able to copy
00:49:24
because all the bankers realized that if
00:49:26
you want to win a bake off you're not
00:49:28
trying to win over the CFO you're
00:49:30
actually trying to win over the CEO and
00:49:32
giving that person control turned out to
00:49:34
be an incredible commitment uh and a way
00:49:36
to win the deal and so I actually think
00:49:38
it was never a governance issue or a
00:49:41
reflection of how value was created it
00:49:44
was just basically a feature that you
00:49:46
that one Banker used in an IPO Bake Off
00:49:49
to try to differentiate versus another
00:49:50
this is why you know like I said like
00:49:52
Elon has never cared about that stuff
00:49:54
because it's like if I'm not doing well
00:49:55
vote me out which is so clarifying
00:49:57
because he realizes that that's actually
00:49:59
the best check on him making bad
00:50:01
decisions
00:50:02
you know and I think part of it is why
00:50:04
he's done so well you know one class has
00:50:06
thought he was able to negotiate an
00:50:08
incredible compensation package and it's
00:50:10
he's he has Clarity a lot of the few
00:50:13
things of the business that matter but I
00:50:15
think he's also more compelling than
00:50:17
some of these other guys and there may
00:50:18
be some degree of feeling like this is a
00:50:21
mechanism that other people need that
00:50:23
Elon has a degree of confidence and a
00:50:25
degree of of Charisma and salesmanship
00:50:27
that gets him what he wants I just want
00:50:29
to read you guys the excerpt from Larry
00:50:32
and sergey's Founders letter from the
00:50:33
IPO in 2004. as a private company we've
00:50:36
concentrated on the long term and this
00:50:37
has served us well as a public company
00:50:39
we will do the same in our opinion
00:50:41
outside pressures too often tempt
00:50:44
companies to sacrifice long-term
00:50:46
opportunities to meet quarterly Market
00:50:47
expectations sometimes this has caused
00:50:50
opportunities to manipulate Financial
00:50:52
results in order to make their quarter
00:50:54
and they go on and on and on and they
00:50:56
say look you might ask us how long is
00:50:58
long term usually we expect them in a
00:51:00
couple of years and they go on many
00:51:02
companies are under pressure to keep
00:51:03
their earnings in line with analysts
00:51:05
forecast therefore they often accept
00:51:07
smaller predictable earnings rather than
00:51:09
larger and less predictable returns
00:51:11
Sergey and I feel this is harmful and we
00:51:14
intend to steer in the opposite
00:51:15
direction I think that the statement
00:51:17
that they made really resonated in
00:51:19
Silicon Valley at the time particularly
00:51:21
during this era of what people were
00:51:22
calling web 2 and the internet was being
00:51:24
rebuilt and all these businesses were
00:51:26
starting to thrive and it was like we
00:51:28
have this massive road ahead of us this
00:51:30
long road ahead of us and we can really
00:51:31
change the world but in order to do it
00:51:33
well in order to do it effectively we
00:51:35
have to as entrepreneurs as Engineers be
00:51:39
able to have the freedom to operate for
00:51:41
the long term I don't think it had
00:51:43
anything to get stuck in the short term
00:51:45
had nothing to do with anything that
00:51:47
there was no pressure on them it's not
00:51:49
like they shied away it's not like that
00:51:52
super voting control allowed them to
00:51:53
make one seminal decision there were
00:51:55
quarters where Google was getting a lot
00:51:57
of heat for the amount of money they
00:51:58
were spending on capex because they were
00:52:00
building their own data centers they
00:52:01
were building their own server first
00:52:02
they were building their own eventually
00:52:04
dram they started to build their own
00:52:06
switches every element of how Google
00:52:08
built a competitive advantage over time
00:52:10
was difficult for analysts to understand
00:52:12
but you're not saying but you're not
00:52:14
saying the obvious thing the reason why
00:52:16
they were allowed to do it in the end
00:52:17
was because more and more users used
00:52:20
their product because it was better and
00:52:22
better and they consistently meet and
00:52:24
beat every expectation this is not I
00:52:27
didn't need to use this option this was
00:52:29
not I didn't need to call this option
00:52:30
this is not a company that went back and
00:52:33
forth between meeting and missing
00:52:34
expectations okay they were up and to
00:52:37
the right they were they were up and to
00:52:39
the right is correct that is the general
00:52:40
principle but the time to return the
00:52:43
roic the time frame to hit their roic
00:52:45
targets was long and it was hard for
00:52:47
people to get that when they bought
00:52:49
YouTube true that is not YouTube David
00:52:51
watch YouTube and they spent tens of
00:52:53
billions of dollars investing in YouTube
00:52:55
before generated cash again I think that
00:52:57
that would yeah but you're not math
00:52:59
you're not what you're saying is not
00:53:00
true it is not mathematically true what
00:53:02
you you're saying there was no 13-year
00:53:04
royk play that they executed on not true
00:53:08
and you can just both agree
00:53:10
they put their own they put their own
00:53:12
fiber optic lines across the oceans the
00:53:14
capex I understand scrutinized and not
00:53:17
well understood I get it you can read
00:53:19
but tomorrow you can read the analyst
00:53:21
reports and see how difficult this was
00:53:22
all I'm asking for you to do is look at
00:53:24
a head voting shares is what gave them
00:53:26
the ability to do this [ __ ] I think
00:53:28
that if you look at their performance
00:53:29
their ebitda margins and their roik was
00:53:32
exceptional when they were making those
00:53:33
investments in fact I would say the
00:53:35
opposite I would say that they were
00:53:36
surprised by hi how by how high quality
00:53:40
their business model was they were
00:53:42
generating so much cash but they were
00:53:44
probably thinking back in the day was oh
00:53:46
my gosh we need to make sure that we are
00:53:48
actually making long-term Investments
00:53:50
and now we have the ability to do it
00:53:51
because we have all this cash we didn't
00:53:53
expect and we should probably bleed off
00:53:56
cash so that we don't show 50 gross
00:53:58
margins to raise all of the attention of
00:54:01
regulators and everybody else and so
00:54:03
what do you think Zuck is doing what's
00:54:04
different today
00:54:06
I think that they have an incredible
00:54:08
core business because he's got good
00:54:10
business good ebitda margins good
00:54:11
Revenue growth what's different they
00:54:13
have an incredible Core Business
00:54:15
and they have decided for whatever
00:54:18
reason to make an enormous bet and that
00:54:22
bet could be a very good bet
00:54:25
but the way that you make a bet and
00:54:26
you've said this well is you have to
00:54:28
look at incremental progress and you
00:54:31
have to demonstrate that all of these
00:54:33
bets make sense because the problem is
00:54:35
when you get compared
00:54:37
to the Tesla program look Tesla is
00:54:40
Reinventing an entire category trillions
00:54:43
of dollars of energy generation and
00:54:45
transportation but they did it on in one
00:54:49
year of meta reality lab spend
00:54:53
Apple reinvented an entire compute
00:54:55
platform on one quarter of meta's
00:54:59
reality lab spent that's not a judgment
00:55:01
that's just a numerical observation so
00:55:03
if you want to get people on your side
00:55:05
you just have to be able to double click
00:55:08
into that in an elegant articulate way
00:55:11
and say here are all of these things
00:55:14
that justify 25 billion dollars a year
00:55:17
hey guys let me show you a chart here's
00:55:19
a chart of alphabets Capital
00:55:21
expenditures by quarter and here is
00:55:23
their revenue
00:55:26
the blue line at seven billion dollars
00:55:28
right now this is my point yeah
00:55:32
they struggled to find ways
00:55:36
display they they create a Project Loon
00:55:39
they were gonna do balloons guys they
00:55:40
wanted to do fiber they wanted to build
00:55:42
they wanted to build they wanted to
00:55:44
build at one point a ladder to the Moon
00:55:46
a ladder they thought they could go from
00:55:49
Ted to them but yeah whatever an
00:55:51
elevator is in that seven point to climb
00:55:54
there right the elevator was in the
00:55:55
purple line yeah and somewhere in there
00:55:58
they spent a billion or whatever on maps
00:56:00
and it ended up being a phenomenal asset
00:56:02
when the whole world moved to mobile I
00:56:03
think we're not seeing the obvious thing
00:56:05
we spent a lot less on them we're not
00:56:07
we're not we're not saying the obvious
00:56:08
thing which is great leaps of progress
00:56:11
in humanity are not correlated to
00:56:13
Dollars all the time in fact most
00:56:15
examples are the exact opposite which is
00:56:17
it's more about small and extremely
00:56:20
Nimble and talented management teams
00:56:22
that generate human progress and again
00:56:25
if you go back to that first chart of
00:56:27
Apple versus meta
00:56:28
you know the fact that you've hired so
00:56:30
many people to work on a category with
00:56:33
so much money it just violates a lot of
00:56:35
pattern recognition that people have
00:56:38
historically seen so all I'm saying is
00:56:40
maybe this is a great bet they just need
00:56:43
to do a better job of explaining this
00:56:45
would have been so much easier if you
00:56:46
had just put yourself
00:56:48
just I'm saying this could be this could
00:56:50
have been such a better transition he
00:56:52
should have put Cheryl Sandberg a CEO of
00:56:54
the Facebook Corporation he should have
00:56:55
become CEO of meta and then he should
00:56:58
have ran that other business to print
00:57:00
even more profits and then if you look
00:57:02
at some of their forays into building a
00:57:04
super app they edit Facebook Marketplace
00:57:07
to Facebook and it was a huge hit they
00:57:09
started to pull the a Commerce string
00:57:11
over at Instagram it started to work
00:57:12
there's just no focus on those products
00:57:15
if you look at the Facebook collection
00:57:17
of billions of users what apps could you
00:57:19
add to that you know whether it's
00:57:21
payments they did the whole crypto thing
00:57:22
they gave up on that it seems like
00:57:24
there's no leadership on the Facebook
00:57:26
side that actually wants to take take
00:57:29
swings over there they just are obsessed
00:57:31
with this one thing it makes no sense to
00:57:32
me I I think that there's probably part
00:57:34
of it which is that you know when you're
00:57:37
working on a thing for a long time
00:57:39
there's a certain personality type that
00:57:41
loves the Mastery that comes from
00:57:43
working on the thing for a long long
00:57:44
time yep and then there's a different
00:57:46
personality type that likes more shiny
00:57:48
new things yeah and you kind of have to
00:57:51
have a balance of all of those different
00:57:53
people
00:57:54
um and so maybe what we're seeing as
00:57:56
well is that you know you're right maybe
00:57:58
the boring business was just labeled too
00:58:00
boring internally and there wasn't
00:58:01
enough heat around wanting to work on it
00:58:03
forever nobody wanted to keep grinding
00:58:05
and so you wanted to throw these big
00:58:06
Hail Marys all I'm saying is you just
00:58:08
need to explain the Hail Mary all right
00:58:10
let's by the way let me just ping you on
00:58:12
this so the
00:58:14
um meta spend in the quarter relative to
00:58:17
their revenue it's about 15 are the the
00:58:18
virtual reality stuff it's about 15
00:58:20
billion 15 does that sound right I don't
00:58:22
know but they said it was 4 billion this
00:58:24
quarter yeah so 4 billion out of 27 of
00:58:26
Revenue so it's about 15 and alphabets
00:58:30
last quarter Revenue was 70 billion and
00:58:33
they spent about a billion billion let
00:58:36
me show you I actually I actually have
00:58:37
this chart handy because I was talking
00:58:38
about it on which is 1.4 so on a
00:58:42
relative basis alphabet is spending one
00:58:45
tenth of what meta is per dollar earned
00:58:48
or top line revenue earned
00:58:51
um on their other bets category so
00:58:52
tomorrow do you think it's a relative
00:58:54
spend problem that because they're
00:58:56
spending 10 times as much as a percent
00:58:58
of Revenue that it's causing so much
00:59:00
heartache even if it is directionally
00:59:02
correct if you want to see the capex
00:59:03
versus Revenue here's that uh on the
00:59:06
screen right now yeah no we know we know
00:59:08
what we haven't shown this is Google and
00:59:09
and meta on the same chart the blue line
00:59:12
on the red on the bottom nine billion in
00:59:14
capex for Facebook 70. for Google is
00:59:17
this your new like charting tool that
00:59:19
you guys have built yeah no no this
00:59:22
weekend startups all the time what do
00:59:24
you use what is it
00:59:27
yeah actually beep it out because I
00:59:28
don't want to give them a free response
00:59:30
I'm not giving a free promo they didn't
00:59:33
let you invest
00:59:34
whatever I mean
00:59:36
truth comes out they didn't let him
00:59:38
invest no no they've been around forever
00:59:40
they've been around forever it's a good
00:59:42
product I've used them just a beef
00:59:44
that's a good product listen if we're
00:59:45
gonna promo something it's gonna be call
00:59:46
in or can you throw up the histogram
00:59:48
super gut this is super gut charts so
00:59:52
look this is the new charting feature on
00:59:53
Colin I think the problem is look here's
00:59:55
the problem let's just say that you're
00:59:57
an analyst that works at a large hedge
00:59:59
fund or a mutual fund
01:00:00
and you woke up on Wednesday and you you
01:00:03
know had a decent day and then you went
01:00:04
into the earnings call believing that
01:00:07
you know there's a this is there's a
01:00:08
value play here and there's a lot of
01:00:09
upside which I think there is actually
01:00:11
you know this company can throw off an
01:00:13
enormous amount of cash
01:00:16
but then what you hear is okay we're
01:00:19
spending four billion a quarter that's
01:00:21
going to go up materially and then we're
01:00:23
going to keep 23 spending levels roughly
01:00:26
the same in the to the Future so then
01:00:28
you have to go back and build a model
01:00:29
you're going to be hard-pressed to not
01:00:31
get to this number maybe you don't get
01:00:33
to 250 maybe you get to 200. my point is
01:00:35
all of a sudden you have to go back into
01:00:37
your you know portfolio manager and say
01:00:40
uh
01:00:41
you know they're going to spend all of
01:00:43
this you know after tax cash flow on
01:00:45
this stuff
01:00:46
or sorry not after tax capsule but you
01:00:48
know below the you know above the line
01:00:50
spending on this stuff which won't come
01:00:52
back to us as shareholders and we're
01:00:54
going to dilute the stock two or three
01:00:55
percent a year so that's another 20
01:00:56
dilution and it just becomes what I
01:00:59
again I've said this before it you move
01:01:01
the stock into What's called the two
01:01:03
hard bucket you know from the it's
01:01:05
obvious to wow that's really tough and
01:01:07
I'll just take a wait and see approach
01:01:09
you know I think yesterday there was a
01:01:11
quarter of a
01:01:14
I think a quarter billion shares that
01:01:17
traded hands uh of Facebook just a
01:01:19
ginormous number
01:01:21
and so you look I think you think that's
01:01:23
tax loss harvesting too at the end of
01:01:25
the year maybe some people want to take
01:01:26
the loss so there's tax loss harvesting
01:01:27
for individuals by the way there was a
01:01:29
couple comments which we should talk
01:01:31
about and explain what tax loss
01:01:32
harvesting is but a bunch of these
01:01:34
mutual funds year-ends are actually
01:01:36
October 31st so to your point Jason you
01:01:39
know the stock basically gets decimated
01:01:41
20 you know 25 percent in a day the T
01:01:45
Rose and the fidelities are like all
01:01:46
right book the tax loss and be done
01:01:48
we'll we'll re-look at it next year
01:01:49
quote unquote next year so you know if
01:01:52
you put on the spread trade so we talked
01:01:53
about the spread trade there was a big
01:01:55
hedge fund manager that you know on
01:01:57
November 6th right when we were
01:01:58
basically calling the top of the market
01:02:00
told people to sell
01:02:02
one of the trades that he put on Nick if
01:02:04
you want to just throw it up was this
01:02:05
long Google
01:02:07
short meta spread trade he called to
01:02:10
tell me that you know he closed it out
01:02:11
yesterday this is how that trade did
01:02:14
so yeah there was just a lot of folks
01:02:16
that just kind of like went to the exits
01:02:18
and said you know what
01:02:20
we're kind of done for the short term I
01:02:22
just think that it's it's a it's a
01:02:24
moment in time where those folks have to
01:02:26
realize that
01:02:29
they just have to explain a little bit
01:02:31
better how they want to spend the money
01:02:32
and show a little bit more incremental
01:02:34
progress that justifies that level of
01:02:36
spend otherwise people will be a little
01:02:38
skeptical they'll build their own
01:02:40
histogram
01:02:41
and it'll violate too many rules and so
01:02:44
it goes into the two hard bucket
01:02:46
okay we got macro we got Ukraine and
01:02:49
well I think I think the you should talk
01:02:50
about big Tech because
01:02:52
Amazon puked as well Jason the can you
01:02:55
just throw up the big Tech chart because
01:02:56
I think like you guys should see this
01:02:58
because I think this is very important
01:02:59
for Silicon Valley Amazon reported their
01:03:01
Q3 earnings yesterday Thursday total
01:03:04
revenue 127 billion up 15 year over year
01:03:06
five percent quarter of a quarter net
01:03:08
income was 2.9 billion and they're
01:03:10
predicting uh they're they're giving
01:03:12
slower guidance going forward I mean
01:03:14
what's incredible on this chart is that
01:03:16
you know when when everybody talks about
01:03:17
being along the S P 500 it was always
01:03:19
really a proxy for being long
01:03:22
Amazon Facebook Google Microsoft and
01:03:24
Apple and at the peak you know in May of
01:03:27
this year it was still you know 25 cents
01:03:29
of every single dollar of the S P 500
01:03:31
were these five companies and you know
01:03:35
we always said the market bottom will be
01:03:37
when the generals quote unquote get shot
01:03:38
you know to borrow a Fraser and Gavin
01:03:40
Baker and it looks like the generals
01:03:42
have been shot yeah and what's
01:03:44
incredible is this week every single one
01:03:46
of those companies other than Apple
01:03:48
really reported pretty crappy earnings
01:03:50
they got totally taken to the woodshed
01:03:53
the percentage of the of these companies
01:03:55
as a percentage of the s p is now you
01:03:57
know off by 500 basis points it's down
01:03:59
to 20 yet the markets are ripping higher
01:04:03
today
01:04:04
so I think it's kind of what we talked
01:04:06
about three weeks ago like the bottom is
01:04:08
kind of in for the short term you know
01:04:09
so it's really exciting actually to see
01:04:12
I think this is the point where you have
01:04:13
to now start to get pretty constructive
01:04:15
about where things are going because if
01:04:17
this stuff
01:04:18
could not bring the market down it's
01:04:20
hard to see something other than an
01:04:22
exogenous event probably some Russia
01:04:24
Ukraine event
01:04:26
really having a negative impact so to me
01:04:29
I'm kind of like I don't know it seems
01:04:31
like pretty bullish for me also GDP was
01:04:32
2.6 so I mean the this this very weird
01:04:36
conflicting data we had two negative
01:04:38
quarters of growth we're in a recession
01:04:39
then we have a the third quarter is up
01:04:41
2.6 so okay but remember Jason I I said
01:04:44
that we were gonna have a double dip
01:04:45
that was sure that was most likely thing
01:04:47
so we had this sort of
01:04:50
mild technical recession based on
01:04:52
nominal GDP growth not being bad but
01:04:56
simply not quite keeping up with the
01:04:58
inflation rate yeah now things are a
01:05:00
little bit better but I still think the
01:05:02
huge recession is to come next year
01:05:04
because all the interest rate increases
01:05:05
we've seen so the FED is you know pedal
01:05:09
to the metal on interest rate increases
01:05:10
just like they were pedal to the metal
01:05:12
on printing money and so first they you
01:05:15
know they were too loose and now they're
01:05:17
probably being too tight too fast so I
01:05:19
think we're headed for a huge recession
01:05:20
next year and I think you're seeing that
01:05:22
in in the softness of all these
01:05:23
forecasts
01:05:24
yeah look at that look at look at the
01:05:26
the mortgage uh rates right now
01:05:28
something like 7.1 percent
01:05:31
um
01:05:32
they broke the backs of the housing
01:05:34
market the inventory and prices
01:05:36
inventory shot up prices have shot up
01:05:39
new mortgages have uh gone down
01:05:42
and you know we we talked about job
01:05:44
openings here's the the Fred chart for
01:05:46
job openings real quick you can see the
01:05:48
the peak we were talking about we were
01:05:50
wondering if that would come plummeting
01:05:51
down well here it is folks yeah
01:05:53
plummeting down from 11 million uh
01:05:56
losing a million in a month yeah job
01:05:57
openings coming smashing down there's
01:05:59
the FED fund rate
01:06:00
you know that's a pretty high ramp so
01:06:03
you think double dip recession what do
01:06:05
you think Freeburg chamoth in terms of
01:06:07
what 2023 looks like you're sort of
01:06:09
saying a bottom is forming I kind of
01:06:11
agree with that
01:06:12
I think the stock market is going up
01:06:17
then it'll go back down because I think
01:06:18
what David said is right but for the
01:06:20
short term this thing is going up
01:06:23
short term up we've generally been
01:06:25
positioned for it to go up and uh and at
01:06:27
some point we will reverse and position
01:06:30
for it to go back down but it's going up
01:06:32
sax it seems like you took a week off
01:06:34
from the all-in podcast and people
01:06:36
stopped talking about Ukraine uh you
01:06:38
want to give us an update I mean
01:06:40
obviously the war is not over but it
01:06:41
does seem like it it somehow has fallen
01:06:45
out of the Public's Consciousness a bit
01:06:47
I don't know if I go that far there was
01:06:49
um the big event in the Ukraine war
01:06:52
debate this week was that the house
01:06:54
Progressive caucus put on a letter
01:06:57
signed by 30 Progressive members to
01:07:01
merely suggest that while we continue to
01:07:04
fund Ukraine on a virtually unlimited
01:07:06
basis we also in parallel open up a
01:07:09
diplomatic track with Russia to mitigate
01:07:11
against the threat of us being drawn
01:07:14
into the war and specifically a nuclear
01:07:17
war and just that very I'd say Anodyne
01:07:21
letter that very tepid sentiment really
01:07:25
they weren't questioning in any way the
01:07:27
providing again of virtually unlimited
01:07:29
support to Ukraine that met was such a
01:07:33
fierce reaction on social media and in
01:07:36
the traditional media that I think all
01:07:38
but one of the signatories recanted or
01:07:42
walk back the letter and kudos to
01:07:44
representative rokana for not
01:07:46
being one of the people who recanted he
01:07:49
so tall and gave an interview on CNN and
01:07:52
MSNBC saying why has diplomacy become a
01:07:56
dirty word I voted for every single
01:07:57
appropriation to give Aid and weapons to
01:08:00
Ukraine I'll continue to do that but I
01:08:02
don't see a problem with us maintaining
01:08:04
diplomatic relations we might need those
01:08:07
to avoid an unwanted escalation well and
01:08:10
here we are kudos to him for standing
01:08:12
tall but it's amazing to me that the
01:08:13
progressive caucus which used to be one
01:08:16
of the groups in Congress that
01:08:19
questioned American involvement in
01:08:22
Foreign Wars like the Iraq War they
01:08:25
basically they they have moved off that
01:08:27
and they they threw in the towel so
01:08:29
quickly on this it was really kind of
01:08:31
pathetic to see I mean it really like
01:08:34
this is back to Shakespeare like
01:08:36
politics makes for strange bedfellows
01:08:37
you find yourself aligned with the most
01:08:40
left part of the democratic party in
01:08:42
trying to just say hey maybe we should
01:08:44
negotiate peace a little more further
01:08:46
wants to pursue the right foreign policy
01:08:48
and I don't really care which party has
01:08:51
said you would you would actually donate
01:08:53
to anybody who is pushing for that so
01:08:55
did you actually make any I mean I I
01:08:57
just happened but I I plan to donate to
01:09:00
members of both party who push for a
01:09:04
correct foreign policy which I believe
01:09:05
needs to be a little bit more restrained
01:09:07
a little bit more
01:09:09
questioning of what is in it for the
01:09:12
United States and we need to be careful
01:09:14
about overextending ourselves and we
01:09:17
need to ask what is in America's vital
01:09:19
interests you can support ecoc be coming
01:09:22
to the uh with it with AOC
01:09:24
she's proud she recanted so she's one of
01:09:27
the ones that were candidate what do you
01:09:28
think happens in a situation like that
01:09:30
well how do they get them to recant yeah
01:09:31
like why what is the point of recanting
01:09:33
something that was so benign it's not
01:09:36
totally no but what do you think like
01:09:38
what what's happening behind the scenes
01:09:40
like why are people so afraid to say
01:09:42
that you know you can be in support of
01:09:45
Ukraine but also still try to find a
01:09:46
resume why was that turned into such a
01:09:48
Scarlet Letter
01:09:49
it's a great point and I think it just
01:09:51
shows the heat right now on the issue
01:09:54
here here's what I think does it do that
01:09:56
or does it just show how the
01:09:57
progressives as just kind of clown tones
01:09:59
I mean it's it's kind of sad I mean
01:10:01
jayapal who is sort of the leader who
01:10:04
put out the letter threw her own staff
01:10:06
under the bus and I guess there was this
01:10:09
snafu where the members all signed this
01:10:11
letter in July and then held it for a
01:10:13
few months and then they put it out two
01:10:14
weeks for the election I can see why
01:10:16
that timing didn't make sense I don't
01:10:18
know why like they release it now not
01:10:21
two months ago not three weeks from now
01:10:23
after the election I can understand all
01:10:26
those political considerations but once
01:10:28
you put the letter out to stand by it
01:10:30
don't throw your own staff under the bus
01:10:32
because like you're saying the letter
01:10:33
was really a pretty Anodyne statement of
01:10:37
Hey listen do you think we can just have
01:10:38
diplomacy on a parallel track at the
01:10:40
same time that we're arming Ukraine I
01:10:43
just don't see the downside but look
01:10:45
here's why I think they took so much
01:10:46
heat is there's a lot of people on this
01:10:49
issue Who start with the end result of
01:10:51
what they want and the end result that
01:10:54
they want is uh Putin and Russia leave
01:10:57
Ukraine with their tail tucked between
01:10:59
their legs and they basically don't get
01:11:02
one square inch of Ukraine they believe
01:11:04
that is the only acceptable moral
01:11:07
outcome here and they may be right about
01:11:09
that but then what they're doing is
01:11:11
they're kind of reverse engineering all
01:11:13
the beliefs that they have based on that
01:11:15
outcome that moral outcome they want to
01:11:17
get to so for example for the longest
01:11:19
time you heard things like Putin is
01:11:21
definitely bluffing about using nuclear
01:11:24
weapons well how do they know that they
01:11:25
don't know that they can't say that for
01:11:27
sure but it's what they want to believe
01:11:28
because if you believe that nuclear war
01:11:32
is a possibility you might not go all
01:11:35
the way for that Maximus position of the
01:11:38
only acceptable outcome here is Russia
01:11:40
leaving with this tail tuck between its
01:11:41
legs and I think I think the same thing
01:11:44
is happening here with diplomacy is
01:11:46
people who want a certain result in the
01:11:48
war are afraid that diplomacy might
01:11:51
result in something less than that
01:11:53
that's not a reason not to engage in
01:11:56
diplomacy and it's not a reason to deny
01:11:59
the potential of this war to spin out of
01:12:02
control potentially into a nuclear war
01:12:04
sax is like a walking thesaurus so Jacob
01:12:07
for you I looked up Anodyne and it means
01:12:09
not likely to provoke dissent or offense
01:12:12
inoffensive often deliberately so yeah
01:12:14
like uh
01:12:21
whatever I mean listen I got a thesaurus
01:12:23
over here also I didn't know what it
01:12:25
meant so thank you
01:12:27
but seriously what is the I want to know
01:12:29
of the Fallout from two things and then
01:12:31
we're going to do science corner
01:12:34
so number one what is the I've been
01:12:36
getting a lot of oat milk stands
01:12:38
emailing me different brands of oat milk
01:12:40
have been emailing me this week just
01:12:42
give us an update generally speaking on
01:12:44
the ultimate milk crowd and your inbox
01:12:47
tomorrow oh they're trying to they're
01:12:48
definitely trying to Brigadoon me but
01:12:50
what these people like you know what's
01:12:52
so funny about these folks
01:12:54
they have no judgment clearly because
01:12:58
they can't even say you know what it
01:13:01
actually tastes much crappier than these
01:13:03
Alternatives but I choose to for XYZ
01:13:05
reasons that I could respect it's the oh
01:13:07
my God it's incredible and it tastes so
01:13:09
much better you know look at this little
01:13:11
mustache disgusting it doesn't foam
01:13:14
properly it tastes like dishwater it's
01:13:16
ridiculous and then Saks discussed this
01:13:18
this horrific uh illustration of you in
01:13:21
the New Republic I saw
01:13:23
um look like Dolly broke and they use
01:13:25
Dolly to make that illustration no
01:13:26
offense to the illustrator we're gonna
01:13:28
paid a thousand bucks well it was like
01:13:29
it was free ozempic sacks I thought it
01:13:32
was yeah that's the problem if you're
01:13:34
chubby sacks or chubby J Cal it sucks
01:13:37
when people base an illustration on a
01:13:39
previous one but it's like a dream
01:13:42
I mean you look like
01:13:44
well look they got Elon and Peter up
01:13:47
there too it's such a stupid hit piece
01:13:48
Elon looks like Hugh Grant uh Peter
01:13:51
Thiel looks like he's rolling on uh
01:13:55
Molly he's got molly jaw and also he's
01:13:58
uh he he you show a lot of stubble which
01:14:00
you also don't have
01:14:02
but look how fat they make you look look
01:14:04
at your feet look like yeah Jesus my
01:14:08
Lord but what I mean what's going on in
01:14:10
terms of the general reaction to the
01:14:12
amount of attention you're getting for
01:14:14
political commentary now sex David sacks
01:14:17
will be our next secretary of state well
01:14:19
no I'm here for it I can't wait I'll go
01:14:21
along that David sacks will be our
01:14:22
secretary of state within two or three
01:14:24
presidents
01:14:26
he's got to make a little more cash My
01:14:28
Views My Views are so out of step with
01:14:30
the foreign policy establishment I
01:14:32
wouldn't buy you a win that's why you
01:14:34
that's why I wouldn't feel the need to
01:14:36
be so out there on this issue if the
01:14:38
foreign policy establishment was doing
01:14:39
its job if you actually had
01:14:42
you know people from the policy Elite
01:14:45
going out there saying sensible things
01:14:47
about Ukraine it wouldn't fall on me or
01:14:50
people like China like Elon basically
01:14:53
posted that
01:14:55
straw poll on Twitter which was totally
01:14:57
reasonable got condemned for it and then
01:14:59
Bill Ackman actually who's been in
01:15:01
Twitter spats with me before we've been
01:15:03
on opposite sides of issues actually
01:15:04
came out and retweeted something I wrote
01:15:07
as basically being supportive because
01:15:10
the weird things want this war to
01:15:12
escalate out of control I think the
01:15:14
weird thing is people are there's a
01:15:16
group in the in the media class other
01:15:18
podcasters other journalists who are
01:15:21
saying you have no right to talk about
01:15:23
this topic and I what I said is you know
01:15:25
Hey listen sax and I could disagree
01:15:27
about things on the margin here or there
01:15:28
but I'm glad we're having the discussion
01:15:30
shouldn't all Americans be having a
01:15:32
discussion about our foreign policy and
01:15:33
what our goals are that's our civic duty
01:15:35
is to have this discussion so whenever
01:15:37
you hear the political class the
01:15:38
podcasting class the coastal Elites
01:15:41
which we are part of when they tell you
01:15:43
you can participate or this person can't
01:15:45
participate in the discussion because
01:15:46
they're successful in this other aspect
01:15:48
of life that's complete [ __ ]
01:15:49
everybody should talk about this and
01:15:51
disagree or agree and try to work
01:15:54
towards some common understand ending
01:15:55
you're right so first of all whenever
01:15:57
they say listen to The Experts and
01:15:59
you're not an expert first of all
01:16:00
they're expressing an opinion themselves
01:16:03
and they are expressing equally
01:16:04
passionate opinions on the other side
01:16:06
about this whole Ukraine war so first of
01:16:08
all why are they allowed to have an
01:16:09
opinion so whenever somebody uses this
01:16:12
you're not allowed to have an opinion
01:16:13
argument it's always very selective and
01:16:15
it's only applied to people they
01:16:17
disagree with not to people who are
01:16:19
equally inexpert on their side of the
01:16:21
debate so that's Point number one hold
01:16:23
on point number two is I've listened to
01:16:25
plenty of experts okay I've listened to
01:16:27
the IR scholar John mearsheimer I've
01:16:29
listened to the International
01:16:30
Development Economist Jeffrey Sachs I've
01:16:32
gone back and listened to our former
01:16:34
ambassador to the Soviet Union Jack
01:16:36
Matlock I've read George kennen's
01:16:38
interviews I've read Bill Burns our
01:16:40
current CIA director on this matter
01:16:41
there are plenty of experts who warned
01:16:44
that our policy of trying to bring NATO
01:16:47
right up to Russia's border would
01:16:50
eventually blow up on our faces it would
01:16:52
poison our relations with them and lead
01:16:54
to conflict and this war so there are
01:16:58
plenty of authoritative sources going
01:17:00
back many years on this topic and the
01:17:03
problem is that the people on the other
01:17:04
side of this debate simply want to
01:17:06
memory hole all of these warnings and
01:17:09
deny that they that this war was ever
01:17:11
predicted because if this war was
01:17:13
predicted it means it could have been
01:17:14
avoided and they don't want to admit
01:17:16
that this war could have been avoided or
01:17:18
how about this how about war is messy
01:17:20
resolving things internationally with
01:17:23
dictators can be very hard and nobody
01:17:25
wins in some of these cases no there's
01:17:27
no perfect outcome here and you could
01:17:29
hold in your head two things number one
01:17:31
Putin's a dictator we need to hold the
01:17:33
line and make sure he doesn't invade
01:17:34
other countries and number two yeah you
01:17:37
probably want to keep normal relations
01:17:38
with these people and negotiate with
01:17:41
them to resolve conflict I'm getting a
01:17:43
little concerned about the saber
01:17:44
rattling on both sides in China you know
01:17:47
we're escalating all this chip stuff
01:17:48
we're escalating and Xi Jinping is
01:17:50
taking complete control I'm wondering
01:17:52
who's going to meet with him who's going
01:17:54
to talk to Xi Jinping about how we could
01:17:56
collaborate together who's left to talk
01:17:58
to him Tim Cook there's a there's a
01:17:59
bunch of unforced Errors happening in
01:18:01
China how do we de-escalate well there's
01:18:03
a bunch of unforced errors that you have
01:18:04
to let play out because they have huge
01:18:07
economic implications so I don't think
01:18:10
this I don't think this is a time for
01:18:12
again I think David's generally right we
01:18:14
do not have time for adventurism right
01:18:16
now because even before we engage in
01:18:19
some of these other places there are a
01:18:21
lot of you know uh headwinds that are
01:18:23
working against for so for example in
01:18:25
China you have these massive demographic
01:18:27
headwinds that are just building
01:18:30
um we have to see what the chips act
01:18:32
does in terms of follow-through to
01:18:34
China's ability to expand militarily or
01:18:36
technologically
01:18:38
there are all of these things that that
01:18:40
you owe as a citizen of the United
01:18:43
States to see some more data on the
01:18:45
ground in terms of its empirical impact
01:18:46
before you re-underwrite a different
01:18:48
strategy right now the strategy is
01:18:49
working
01:18:50
you know we we are observing this you
01:18:53
know one China policy I think that's the
01:18:55
right thing to do and now let all of
01:18:57
this other stuff play out can I say one
01:18:59
thing about this yeah so what the
01:19:01
administration did in Banning uh China
01:19:04
from buying from us or any of our Allied
01:19:06
countries these Advanced semiconductor
01:19:08
chips that's what they did they'd only
01:19:10
banned the sale of trips to China they
01:19:12
banned the sale of equipment that could
01:19:14
make the chips and they even prohibited
01:19:16
American citizens and companies from
01:19:18
working in China to basically help them
01:19:20
set up their own foundries and and Chip
01:19:22
Fabrications so they are essentially
01:19:25
cutting off China from Advanced chips
01:19:28
that's the goal here and you know we've
01:19:30
talked about on this pod before how
01:19:32
chips are the new oil right these
01:19:34
Advanced semiconductors are the new oil
01:19:37
so this is almost like an oil embargo of
01:19:40
China if you go back it is yeah if you
01:19:43
go back and look what is the reason why
01:19:45
the reason why is they don't want these
01:19:47
in weapons correct that is the stated
01:19:48
reasons
01:19:52
that's the tip of the spear but I think
01:19:54
the more impactful mechanism is to
01:19:58
prevent
01:19:59
an entire layer of infrastructure to be
01:20:02
built in China that allows them to
01:20:03
advance all of these next Generation
01:20:05
cyber capabilities including a whole
01:20:08
bunch of things in AI that we want to
01:20:10
make sure that as often and
01:20:14
as often as possible is
01:20:16
is for the United States and our allies
01:20:19
as we choose so all this next Generation
01:20:21
silicon will do a lot more
01:20:23
to push that forward and so if you put
01:20:25
that in the hands of Chinese technology
01:20:27
companies or Chinese governments or the
01:20:30
Chinese government in the parts that are
01:20:31
actually technological
01:20:33
you actually increase
01:20:36
the surface area in which you compete by
01:20:38
preventing that technology to go to them
01:20:40
you decrease the surface area in which
01:20:41
you're competitive and they are one or
01:20:43
two steps behind and have and are forced
01:20:45
to build it themselves so Friedberg if
01:20:48
that happens
01:20:49
do you think that China escalates and
01:20:51
says well why are we building iPhones
01:20:53
here no I think China makes decisions
01:20:57
a little differently than perhaps U.S
01:21:00
policy makers and foreign policy makers
01:21:03
make decisions they think forward and
01:21:07
calculate the series of events that will
01:21:09
follow from that decision whereas we are
01:21:12
typically reacting to some event that's
01:21:13
happened in the past
01:21:15
not necessarily always thinking through
01:21:17
the second and third or third order
01:21:19
effects and consequences of our
01:21:21
decisions so the China calculus would
01:21:23
likely look something more like if we
01:21:25
were to say stop making iPhones here we
01:21:28
would estimate that the US would do the
01:21:29
following to retaliate back against us
01:21:31
and as they do through that calculation
01:21:33
you end up realizing pretty quickly that
01:21:36
there isn't as much to gain as there is
01:21:38
more to lose by doing that that would be
01:21:40
my guess I'm no China expert I'm no
01:21:42
foreign policy expert but from my
01:21:45
understanding of how Chinese policy
01:21:47
makers do think and do make decisions
01:21:48
it's much more about what's the rational
01:21:50
calculated set of outcomes that will
01:21:53
emerge and evolve from this decision and
01:21:56
in my experience talking with people in
01:21:57
the United States that are in various
01:22:00
communities of influence it's much more
01:22:02
about let's do what we consider to be
01:22:04
the right or moral thing right now and
01:22:06
in response and in retaliation and let's
01:22:08
do an eye for an eye so that's why I
01:22:10
don't think that they're likely to be
01:22:12
the first step in an escalation
01:22:13
escalatory ladder
01:22:16
there'll probably be a few more series
01:22:17
of provocations before that may happen
01:22:20
at which point it may need to be kind of
01:22:22
an inevitable step that they'd have to
01:22:23
take but again I don't know I mean so so
01:22:27
in terms of the motivation for this I
01:22:28
think it's pretty clear this is an
01:22:31
attempt to hobble the Chinese economy
01:22:34
not just that all their weapons programs
01:22:36
but their economy itself and hold them
01:22:37
back and slow down their rise and their
01:22:40
rapid growth now is that a good idea I
01:22:43
mean I think what this shows is we've
01:22:44
moved from sort of economic logic which
01:22:47
is about finding Trade Surplus and
01:22:49
win-win scenarios to geopolitical logic
01:22:52
which is about balance of power and this
01:22:55
sort of ban on sales of semiconductors
01:22:57
to them it's very much geopolitical
01:22:59
because it's hurting our companies but
01:23:01
it hurts China more and so it's about
01:23:03
it's about it's about increasing our
01:23:06
balance of power against them and now
01:23:08
listen I think you can make the argument
01:23:10
that we were overdue
01:23:13
to be thinking in terms of great power
01:23:15
competition and geopolitical rivalry and
01:23:18
this is an attempt now to correct the
01:23:22
bad decisions that were made 20 years
01:23:23
ago in terms of how we fed the Chinese
01:23:26
economy until it became a pure
01:23:28
competitor of the United States so I
01:23:29
think you can make those arguments the
01:23:31
the thing that concerns me most about it
01:23:34
is do our leaders really have the
01:23:37
bandwidth to manage a second front in
01:23:42
the sort of great power competition
01:23:43
right now while we've got Russia and
01:23:45
Ukraine going on on the one hand are
01:23:48
they really ready to manage an
01:23:50
escalation of the competition with China
01:23:52
and to freberg's point have they really
01:23:54
thought through all the second third
01:23:56
fourth order consequences of this have
01:23:58
they thought through the incentives this
01:24:00
may create on China for example to take
01:24:03
Taiwan I mean if Taiwan is the place
01:24:06
that makes all these chips through tsmc
01:24:09
for example and we have now cut them off
01:24:12
we have now embarked them from these
01:24:13
chips does it strengthen China's
01:24:15
incentive to go after Taiwan does it
01:24:18
strengthen China's incentives right now
01:24:19
to help Russia in its war in Ukraine in
01:24:23
retaliation because they don't want to
01:24:25
see
01:24:26
they don't want to see Russia decisively
01:24:29
defeated and then they will solely be in
01:24:31
the gun sites of of U.S Hawks so I think
01:24:34
there's a lot of things that could go
01:24:36
wrong here when the U.S is now
01:24:39
escalating geopolitical tensions and
01:24:42
competition not just on one front but on
01:24:45
two fronts and
01:24:47
and especially given how weak the U.S
01:24:50
economy is and that we're headed into a
01:24:52
major recession next year it just feels
01:24:55
to me like they are you know they are um
01:24:58
kind of putting their foot on the
01:24:59
accelerator in terms of geopolitical
01:25:01
risk at a time when we're not really in
01:25:03
a great spot to be taking those risks
01:25:05
also on a foreign policy basis is there
01:25:08
no Common Ground are there no things we
01:25:10
could collaborate on and work on
01:25:12
together right and that's the thing that
01:25:14
seems to be missing in the foreign
01:25:15
policy for the last couple of
01:25:16
administrations is are there things that
01:25:19
we could be building together are there
01:25:20
things that we could be working on the
01:25:22
environment energy sustainability
01:25:24
education I I don't know what it is but
01:25:27
it felt like you know with China for a
01:25:29
couple decades we felt like we were
01:25:30
working in a very collaborative way and
01:25:32
now it feels like every single instance
01:25:34
is adversarial right because the problem
01:25:37
is that those policies of constructive
01:25:39
engagement that you're talking about fed
01:25:42
the Chinese tiger until it became a
01:25:44
dragon yeah another size of uh Vega or
01:25:47
something that that's also 100 levels
01:25:52
and the U.S policy establishment in the
01:25:55
pentagon look at the rise of China and
01:25:58
they're like what have we done we have
01:26:00
created a pure competitor to the United
01:26:01
States we need to stop their economic
01:26:04
rise and I think that again I think
01:26:07
there is a geopolitical logic and
01:26:10
strategy to what the administration has
01:26:11
done but I question the timing of doing
01:26:13
it at the same time that we have this
01:26:15
unresolved war in Eastern Europe well it
01:26:17
is nice that we're seem to be getting
01:26:19
some of this onshoring of chips and that
01:26:21
money is actually starting to flow it
01:26:22
does seem like we're thinking a little
01:26:24
bit like in decades and strategy say the
01:26:26
other part I think Biden and blinken
01:26:27
have done a good job they've done a good
01:26:29
job on this right now they've
01:26:31
played it well well I don't know about
01:26:33
that I just come on first of all
01:26:35
questions did a horrible job hold on a
01:26:39
second Biden Mike and did a horrible job
01:26:40
hope the tiger hold on hold on you poked
01:26:43
the tiger no hold on they I'll tell you
01:26:45
where they did a bad job is last year
01:26:47
they had a whole year to negotiate to
01:26:49
avoid this Ukraine war from happening
01:26:52
but I didn't even had a summit with
01:26:54
Putin on June 16th last year they never
01:26:56
engaged in diplomacy and now they have
01:26:59
stacked this geopolitical risk with
01:27:00
China on top of the risk they've already
01:27:02
created in Ukraine I this policy may or
01:27:06
may not ultimately turn out to be
01:27:07
correct I like I said I can see the
01:27:09
strategy behind it but I do not believe
01:27:11
that Biden and blinken have thought
01:27:13
through the second third and fourth
01:27:14
order consequences just like Friedberg
01:27:17
said so I think it's a little early to
01:27:19
be giving them credit on this all right
01:27:20
uh free but you got anything in the
01:27:22
science Corner we gave we gave saxes red
01:27:24
meat
01:27:25
and he ripped it to shreds now it's time
01:27:27
to give you your soy tofu Burger I'll
01:27:30
give you guys a quick uh a quick science
01:27:31
Corner please please so we've talked in
01:27:33
the past about the human gut biome 10
01:27:35
trillion bacterial cells living in our
01:27:37
gut biome and it turns out and there has
01:27:39
been this theory for many years that a
01:27:41
lot of human disease actually originates
01:27:43
in the gut and there's increasingly
01:27:45
evidence of how and why this happens so
01:27:47
it turns out that your immune cells can
01:27:49
sometimes see a protein on the outside
01:27:52
of a bacteria that sits in your gut and
01:27:54
it attacks that bacteria and it tries to
01:27:56
get rid of it that protein can look a
01:27:58
little bit like a human protein at some
01:28:00
cell in your body and so that then
01:28:02
triggers an autoimmune reaction meaning
01:28:04
you are now making these antibodies to
01:28:07
proteins that look a lot like your
01:28:10
proteins in other parts of your body and
01:28:12
then your cells start to destroy
01:28:14
yourself and you end up having
01:28:15
inflammation and disease and they found
01:28:17
evidence of this across a lot of disease
01:28:19
States so just the other day published
01:28:21
in the journal science translational
01:28:23
medicine was a really interesting paper
01:28:25
paper by a team that identified a very
01:28:28
specific bacteria that we find in the
01:28:30
gut that can actually trigger rheumatoid
01:28:33
arthritis and so you know I think two
01:28:35
million Americans have rheumatoid
01:28:37
arthritis it's a really debilitating
01:28:38
inflammatory disease and we never
01:28:40
understood where the inflammation comes
01:28:42
from why is the human immune cell
01:28:45
creating antibodies to attack its own
01:28:47
protein in the joints of the body and
01:28:50
now it looks like that the protein that
01:28:51
we find in the joints of the body has
01:28:53
some overlap or three-dimensional
01:28:55
structure that looks similar to the
01:28:57
protein we'll find on this very specific
01:28:59
gut bacteria that they found which
01:29:01
creates obviously a path now for if we
01:29:03
can stop that gut bacteria from
01:29:05
proliferating or you know existing in
01:29:07
the gut over time
01:29:09
that can have a reduction
01:29:12
rate of rheumatoid arthritis did they
01:29:14
guess what the mechanism of action was
01:29:16
so so this technology so the mechanism
01:29:18
of action is typically what's called
01:29:20
generally speaking protein mimicry and
01:29:22
so protein mimicry means that there's
01:29:24
some so think about a protein as being
01:29:26
like you know a a clumpy Rock and
01:29:29
there's some part of the clumpy rock
01:29:31
that looks a little bit like the part of
01:29:33
another clumpy Rock and that's the
01:29:34
protein think about that as being the
01:29:36
protein on the bacterial cell and the
01:29:38
protein in your joint cells and so your
01:29:41
body makes an antibody to that little
01:29:42
part of the rock on the bacterial cell
01:29:44
to get rid of it and then it that
01:29:46
there's some overlap that looks a little
01:29:48
bit like your own cell and so that's
01:29:49
called protein mimicry and because of
01:29:52
the ability now to do DNA sequencing and
01:29:55
now with um uh you know some of the
01:29:57
alpha full technology we can actually
01:29:59
take the genome from that bacteria
01:30:01
predict the 3D structure of the proteins
01:30:05
created that by that bacteria and then
01:30:07
potentially identify that there's a
01:30:09
mimicry or overlap between our own
01:30:11
protein and our cells and the protein of
01:30:13
the bacteria which is why we're having
01:30:15
autoimmunity which now our immune cells
01:30:17
are not just protecting the bacteria we
01:30:19
could solve arthritis we solve for
01:30:20
arthritis and so there's a lot of
01:30:21
disease states that are starting to look
01:30:23
like this so the combination of DNA
01:30:24
sequencing and our ability to identify
01:30:26
organisms in the gut biome and by the
01:30:28
way so much of this goes back to the gut
01:30:29
biome we're finding all these disease
01:30:31
States from lupus to Sjogren's to
01:30:33
rheumatoid arthritis that have some
01:30:34
linkage back to some bacteria that shows
01:30:37
up in your gut and so now we can be very
01:30:39
targeted potentially about eradicating
01:30:41
that bacteria from the gut or you know
01:30:43
kind of changing our gut biome in a way
01:30:45
that ultimately resolves to eliminating
01:30:47
that disease risk and so it's really
01:30:49
fascinating yeah any thoughts on this
01:30:52
cup bio I mean I always knew the
01:30:54
solution was either in friedberg's gut
01:30:56
you know or anything
01:31:01
in his gutter on Uranus
01:31:05
every bird
01:31:08
again do it again the joke didn't land
01:31:10
all right here we go one more time
01:31:22
okay you can't allow till after you land
01:31:25
the joke come on do it again start
01:31:26
coming it was coming around the corner
01:31:28
and by the way you guys
01:31:34
three two all right chamoth it seems
01:31:37
like very interesting science uh they're
01:31:38
coming in the science corner
01:31:40
50 pounds
01:31:47
I didn't even get it out I mean oh you
01:31:50
tried to get it out of his anus
01:31:52
like a little turtle coming out of his
01:31:54
name but you couldn't get it out
01:32:01
it's like the entire science quarter is
01:32:03
just here for us to beat up the nerd and
01:32:05
throw him in a locker oh my God
01:32:12
you ever see Smokey in the Bandit when
01:32:15
they have the the reals at the end sax
01:32:19
I just keep losing it that's what this
01:32:22
is done oh my God it's like I'm going to
01:32:24
say sides quarter and people are going
01:32:26
to just start laughing and thinking
01:32:27
about
01:32:28
free brexitas
01:32:33
all right listen
01:32:34
welcome home sacks we miss you for your
01:32:37
week off
01:32:38
uh uh
01:32:40
we missed you David thanks guys thanks
01:32:43
and uh we'll see you over on Market
01:32:44
Street no announcements right now no
01:32:46
testimonials no announcements I'll see
01:32:49
you at yoga
01:32:50
doing our second homeless shelter we're
01:32:52
volunteering today right yeah
01:32:53
volunteering let's see over at the
01:32:55
homeless shelter
01:32:57
yeah if you could get me a tofu salad
01:32:59
with extra tempeh before uh free Burger
01:33:02
don't don't go don't get me started on
01:33:04
tempting I'm gonna go I'm gonna pour all
01:33:06
the oatmeal out I'm going right to the
01:33:07
cafeteria I'm going right to the cafe
01:33:09
I'm getting all the oatmeal right down
01:33:11
the tree there should be there should be
01:33:13
one milk non-lactose alternative and
01:33:17
then one black coffee and that black
01:33:20
coffee that's it if you're lactose
01:33:21
intolerant yeah lactose intolerant milk
01:33:23
they'll have one if you have one thing
01:33:24
without lactose so whatever that is can
01:33:27
we wrap the show now no we're having too
01:33:29
much fun
01:33:31
can you imagine can you imagine the
01:33:33
distribution of gluten-free snacks I
01:33:35
mean they should have a few but you know
01:33:37
all kinds of different snacks and by the
01:33:39
way the keto snacks have horrendous
01:33:41
amounts of chemicals in it the xylift
01:33:43
hall what is Xylitol
01:33:45
well screw up your stomach man do not
01:33:48
have that horrible favorite you want to
01:33:50
tell everybody about Xylitol and the
01:33:51
impact it has on your anus
01:33:56
no it seriously does I think xylitol is
01:34:00
the thing that gives you a lot of gas
01:34:01
and you just keep ripping
01:34:03
I think it's really bad for you here's
01:34:06
an idea
01:34:10
way to go Jay cow yeah now he's going to
01:34:13
turn into a school well that's your
01:34:15
fault you were mean to him you came up
01:34:17
with the anus jokes that was all I've
01:34:19
been doing that joke for five years with
01:34:22
him you're a bully I'm not no no
01:34:24
freeberg off the shelf you brigaded him
01:34:29
we break a dude our bestie sorry bestie
01:34:32
all right four the dictator himself
01:34:34
chimath polyhapatia going into sweater
01:34:36
season I might know it's going to be a
01:34:38
big big Q4 for us big Q4 and the beep of
01:34:42
the beep Corporation David sacks oh if
01:34:45
you mean the general partner of craft
01:34:47
Ventures yes the general partner
01:34:49
Adventures that's it and the queen of
01:34:51
quinoa the prince of panic attacks the
01:34:54
ambassador of your Uranus David
01:34:57
Friedberg we will see you next time I'm
01:34:58
Jake
01:35:03
[Music]
01:35:10
we open source it to the fans and
01:35:12
they've just gone crazy
01:35:13
[Music]
01:35:21
besties
01:35:25
[Music]
01:35:41
is
01:35:44
[Music]
01:35:51
[Music]
