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all right everybody Welcome to the 54th
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annual World economic Forum here in
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Davos you guys didn't know this but as
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Elites ourselves we were invited to kick
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off the festivities Surplus elit yeah
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you know the all-in podcast very popular
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and so they wanted us to come and
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represent the Pod and our audience there
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and uh it's been amazing if you haven't
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seen some of the great musical
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performances this year I mean they're so
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notable let's just start off here I mean
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guys we were here for this
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live soak it in I mean on the better on
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the replay soak it there's the air
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flute
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so wait wait there's a great moment
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where she really starts vibing wait for
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the head
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shake the eyebrows are grit but the head
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shake comes in and about there there it
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is I like I like your moomo I like her
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mumo have you ever played the air flute
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or just a skin flute Jam skin
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flute went there it's like it's like a
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high school but guys guys this isn't it
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there there were other uh there was a
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witch doctor or something I'm not sure
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exactly what's going on here I'm going
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to just apologize in advance for mocking
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this or for sax mocking it I should
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say this was incredible I don't know
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exactly what's going on here with the
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blowing of the hair but from that's for
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sure so they're blowing the co on each
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person's forehead here to spread the co
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they've all taken the MRNA vaccine but
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you know uh we each have a speaking gig
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each of us is speaking and so I thought
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to kick us off here gentlemen instead of
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us just telling everybody our schedule I
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would sing our schedule and so let me
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just grab a let me see if I got my
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guitar here hold on have a guitar here
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let me grab it here oh here it is okay
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hold on I happened to have the guitar
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here is that air guitar or a real guitar
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guar actually real guitar here so but I
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thought you know everybody is really
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excited about each of our speaking gigs
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so I thought we would just kick it off
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here let me just see if it's in tune you
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guys hear
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that oh
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okay all right was I think we got it
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kumay my Lord
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K sax is interviewing Putin my Lord
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AUM in the dictator Lounge at noon a
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kumay conquering Europe
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kumbai and now I'm going to there a
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little audience participation in here
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besties I need you each to sing with me
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okay it's uh we're going to start here
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it's going to be just listen one time
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and then you're going to repeat okay
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here we
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go it's hard to keep it together oh
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Davos
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kumay so just o Davos Kumbaya ready 3 2
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oos
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K okay very good very good okay now we
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go to the next verse
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hereo hosting Steve Bannon at 1 p.m.
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AUM free bgs at 2
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p.m. bill ion Aire bunker panel
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Lum teal just bought
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one
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goombay Hunter Biden after party at a 1
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a.m. eight balls and escorts for
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everyone brought to you by
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barisa that's for you sex and now you
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all
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sing
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ohos
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Kum wow fabulous you really are the
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world's greatest
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moderator let your winners
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[Music]
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ride and instead we open sourc it to the
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fans and they've just gone crazy with it
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love queen
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of all right everybody yes the uh World
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economic forum is wrapping up in Davos
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uh if you don't know what the wef is
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I'll just give you the brief overview
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3,000 people 5 days tons of parties
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happens in Davos Switzerland it's run by
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a foundation uh they call these
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non-government organizations NOS uh you
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can think of it kind of like the Ted
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conference topic this year was
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rebuilding trust it's politicians
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Business Leaders economists journalists
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all the elites the mission statement of
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the WF improving the state of the World
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by engaging business political academic
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and other leaders
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of society to shape Global Regional and
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Industry agendas it's money printing
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machine I'll give you a funny backstory
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later if you care to know but basically
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they try to shake it down for about 40
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Grand a year to go to this thing tons of
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notable moments that we can get to on
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the docket here free break any
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highlights for you watching this you
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know get mocked on social media this
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year it's it's been a slow unraveling
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from this being something that people
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used to flex about going to Davos
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now people are literally
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apologizing on social media X Twitter
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Etc explaining why they're going because
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they're kind of feeling shame in going
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to this event so what are your thoughts
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on the sort of whole flipping of this
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from being a flex to requiring an
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apology in advance you guys know Andrew
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Ross sorin the journalist for
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CNBC I think he posted on Twitter you
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know I know I know forgive me I got to
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go to Davos it's almost like
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embarrassing now that you are
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associating yourself with the elite
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cabal in the Swiss Alps during a time of
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rising Global populism and all the
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criticism that's been raining down on
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Davos in the last couple of years and
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then Davos is trying to adapt by trying
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to be more cool and appeal to the the
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populist Notions uh that have criticized
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them thus the fluke playing thus the
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Shamanism you know and and thus I think
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a lot of what Javier mle has called a
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general economic support for what he
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defines as collectivism which I'd love
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to talk about but why don't we just say
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that so I think there's generally been
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like a response from the community that
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attends to AOS but there there's a lot
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of conflict here with the fact that
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folks are flying in on private jets and
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telling everyone to stop producing
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carbon the F the fact that they're all
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dining and spending lots of money and
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telling everyone that we should move to
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more towards socialist conditions and
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higher taxation it's all a lot of irony
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wound up in this whole thing it's almost
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like a like a like a Simpsons show it's
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what it's become well and the theme
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rebuilding trust is kind
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of insulting at its face at least to me
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like we we don't trust you you don't
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need to rebuild trust with us we're not
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going to trust you there's no way for
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you to do that especially after what
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happened with covid sax did you have any
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sort of reaction to this year's Davos
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and just how people are reacting to it
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you heard freberg sort of thoughts on it
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well doas has become a of itself and
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that's why you saw these clips go viral
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of these ridiculous antics of the
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Priestess doing I don't know what she
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was doing but the only two sets of
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remarks that actually were taken
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seriously on their own terms was the
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speech by Malay from Argentina and then
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also comments by Jamie Diamond and the
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reason why they went viral is because
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they were actually saying sensible
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things that
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contradicted the sort of established
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wisdom or consensus at Davos I mean they
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were effectively subtweeting the other
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Elites at Davos I mean M gets up there
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and I think he was introduced by CLA
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Schwab and he immediately starts
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denouncing collectivist experiments and
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says that the West is in danger because
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its Elites have been co-opted by a
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vision of the world which leads
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inexorably to socialism and thereby to
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Poverty so melee basically says this
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right in front of CLA Schwab I mean he
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describing the the people at Davos
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that's why that took off and went viral
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it was incredible I mean yeah yeah in a
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similar way and he flew their
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commercial I didn't know that yeah yeah
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kudos to
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him Jamie diaman gave this interview I
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think it was on
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CNBC where he basically went full chth
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you know he basically admitted that
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Trump had been right and that you know a
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lot of the criticism of trump and all
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the derogatory comments for years were
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were basically just lazy and he said
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that you know Trump was largely right on
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NATO on immigration on tax reform he
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grew the economy immigration immigration
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he was mostly right on China he said
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Diamond said he didn't always like how
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Trump said things or talked about people
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but he said his policies were largely
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sound and only look better in time since
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we've abandoned them and and he's
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basically saying that you know look at
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where we are right now now and he
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questioned the kind of everything is
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hunky dory narrative that the Biden
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campaign is pushing out so he really
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went off script there and like I said I
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think Chamas said it first here on this
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pod three months ago and now jimie
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diamond is accepting that so that was a
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huge sub tweet you could say of all the
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elites of Davos and the accepted wisdom
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and you know the narrative that they're
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all pushing out so you know that was the
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other big interview that went viral and
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I think that's really saying something
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that you know that the elites now have
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parody themselves to the point where
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Davos has become a joke and the only
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talks or remarks out of Davos that
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people pay attention to are the ones
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talking sense to the people at Davos
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because they're not
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listening chath your thoughts look
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everything has a season and I think that
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when there was a much more singular
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hierarchy of status Davos played a very
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important role to signal to other people
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that you had made
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it but you know these things come and go
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and I think that this is sort of in the
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the back half of its usefulness and
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halflife what is it probably more than
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anything else now a glorified enterprise
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software sales conference where the
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reason to go to these conferences for a
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lot of these companies I suspect ECT is
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that it allows you to close very big
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deals multi-million dollar licenses of
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this that and the other thing where you
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can get the leaders of that counterparty
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across a table from you and hammer out a
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deal and I think you pay 40 Grand a
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ticket for the right to get everybody
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together to do that so I think they want
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to pretend that it's a lot more than
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what it is and I think what it is is
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that and I think whenever you have the
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ability to convene people to close
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business that's valuable beyond that I
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think it's sort of in the eye of the
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beholder and it used to be that the
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beholder thought that this was important
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and now I think we realize it's much of
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nothing it's shame in and air flutes and
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all kinds of stupidity which is why
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people have the courage to go and mock
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it and I think that malle's comments and
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Jamie Diamond's comments exemplify that
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the only other thing I would say is that
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I had heard although I haven't seen it
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so I don't know is that Alex karp
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apparently did a very thoughtful speech
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about
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anti-Semitism and which was also which
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was also very countercultural to the
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established logic that the the Surplus
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Elites at Davos want to believe which is
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the anti-israel pro Palestine line I
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haven't heard it though so I don't know
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yeah how impactful that was but those
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are the three things that I that I've
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Just Seen on Twitter just kind of the M
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speech I think is the one that everybody
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is keying on and correctly so you know
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obviously he's the he's the new
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president of Argentina and this speech
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was amazing people might not people
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might not also know that he was uh an
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economics teacher and so this talk about
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collectivism leading to suffering and
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Regulatory capture and bloat which we'll
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talk a little bit about when we talk
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about Boeing
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today was incredibly powerful it's super
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basic you know listen free markets work
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there are people opting into either side
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of it he went over essentially without
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saying it the rule of 72 and like 200
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years of GDP growth and how GDP growth
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under capitalism Rises everybody up and
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then collectivism AKA
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socialism is a bit of a
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disaster but it's well worth watching it
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there was a really cool thing that a
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company called hen did Hy genen with
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their AI tool they just immediately took
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his speech put it in his own words and
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um published it and translated it as if
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he was speaking English cuz he was he
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was speaking his native tongue so really
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worth checking it out
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and yeah it was super notable it's very
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basic but I think it's everybody wants
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to hear this right now which is if
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you're picking collectivism and
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socialism and redistribution of wealth
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Argentina has like a really good history
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of watching this faou and now they're in
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the process of dismantling and I'll say
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something else before freeberg says
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something here which I think is going to
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be very thoughtful Jason the other
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reason why Argentina is a really good
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example to use is that
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what does Davos
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represent at a different level well what
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it is is Old Europe getting together in
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a way that allows them to continue to
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coales power and what's interesting is
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if you had presented the case of any
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other country trying collectivism and
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failing it wouldn't get nearly the same
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attention as Argentina and the reason is
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that Argentina has so many ethnic
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Europeans and I think that's another
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reason which is like when present people
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that are telling you it didn't work that
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frankly look like you speak the same
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language as you I think it actually goes
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further in making the point than if you
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found somebody in South Asia or Africa
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that said the same thing to these folks
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which they have which they've not
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listened to and so this is why I think
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Malay is so interesting and important
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because he looks the part of a western
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leader and I think that that
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unfortunately is what it's going to take
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for some of these folks to listen yeah
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and everyone's acutely aware I mean I'll
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say three things on this one is just
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talking to your point Jam about the
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history of Argentina and how it relates
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to this position that mle holds in being
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able to speak credibly to this second is
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what he said which I think is really
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important and third is how it relates to
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the United States but this was clearly
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to my for my view one of the most
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important media events of the year I do
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think that anyone that's listening to us
00:15:16
right now should go watch it and go
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listen to the entirety of the speech it
00:15:20
is so important I hope everyone really
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takes in what he said just briefly on
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Argentina in the mid 19th century
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Argentina was a Col
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nation very agricultural but a lot of
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free market Pioneer going on businesses
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were built and an economy flourished in
00:15:39
Argentina um this photo I put up here is
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from
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19113 buos arees which at the time was
00:15:46
called Paris of the West I was about to
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say it looks like Paris right the
00:15:50
architecture and everything it's
00:15:51
beautiful stunning but here's here's
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some statistics a lot of people don't
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know Argentina at this time was
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wealthier than France or Germany twice
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as wealthy as Spain and had one of the
00:16:01
top 10 highest GDP per Capas of Any
00:16:04
Nation on Earth in 1913 and so it was
00:16:07
this flourishing vibrant
00:16:10
economy with a lot of innovation a lot
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of Arts a lot of building a lot of um
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employment a lot of immigration and then
00:16:19
the series of military coups began I
00:16:21
don't know if you guys are aware but
00:16:23
there was a military coup in 1930 1943
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1955 1962 1966
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1976 and in every one of these cases the
00:16:33
essence of the coup was one of
00:16:34
relativism which is some people have
00:16:36
benefited more than others as a result
00:16:38
we need to change the way that the
00:16:39
government and the social structure is
00:16:41
functioning and it had to be taken by
00:16:43
force and I think this is the big story
00:16:46
of Argentina that says so much more than
00:16:49
any other nation of the past Century
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Century and a half which is that these
00:16:54
Cycles happen based on not absolutism
00:16:57
but on relativism
00:16:59
and I'll just give you what I mean by
00:17:00
that mle made this point which is so
00:17:02
important from the year 1800 to the year
00:17:05
2020 in the year 1800 we saw 95% of the
00:17:09
world's population in extreme poverty by
00:17:11
2020 it was less than
00:17:14
5% and this was driven by free market
00:17:17
capitalism democracies that allowed
00:17:20
people individuals to pursue their own
00:17:22
self-interest and as a result deliver
00:17:25
products into a Marketplace that people
00:17:26
wanted and were willing to pay for
00:17:28
and that incentive that market-based
00:17:30
system allowed the entire world to move
00:17:33
forward the relativism problem is that
00:17:35
some people mooved forward faster than
00:17:37
others and that causes this great cycle
00:17:39
of what some people might call Envy or
00:17:41
jealousy and Malay said it best the West
00:17:43
is in Jeopardy which is the key
00:17:45
statement he was trying to make in his
00:17:47
point that countries are no longer
00:17:49
defending free markets this is a quote
00:17:51
private property and other institutions
00:17:54
of Liber libertarianism due to errors in
00:17:56
their theoretical framework and ambition
00:17:58
for power opening doors to socialism and
00:18:01
condemning us to Poverty misery and
00:18:04
stagnation socialism has failed in all
00:18:06
countries where it was attempted and
00:18:08
then he started to harp on about
00:18:09
neoclassical economic theory and the
00:18:11
issues with that but I want to show you
00:18:13
one last image which speaks so clearly
00:18:15
to the point that he's making which is
00:18:17
as these governments that are
00:18:18
well-intentioned and the people that
00:18:20
elect the governments and put them in
00:18:21
power are well-intentioned then try to
00:18:23
redistribute wealth by getting the
00:18:25
governments to step in and play a market
00:18:27
role
00:18:29
the market role that they play causes
00:18:31
inflation causes degradation and
00:18:33
Economic Opportunity economic mobility
00:18:36
and prosperity for most people and you
00:18:38
can see this in this chart which we've
00:18:40
looked at many times but everything on
00:18:42
the top of this chart this is a chart
00:18:43
that shows the 20 years of price changes
00:18:46
of various goods and services in the
00:18:47
United States everything that's gone up
00:18:49
in price is something that the US
00:18:52
government has a role in buying or
00:18:55
paying for yeah controlling yeah and
00:18:58
everything that's gone down in price is
00:18:59
where there is a free market that has
00:19:01
allowed people to access goods and
00:19:03
services at a lower price over time as
00:19:05
opposed to a higher price over time and
00:19:07
while the intention is that the
00:19:09
government is doing good for people by
00:19:11
making Education Health Care and other
00:19:14
uh goods and services available to them
00:19:17
the government stepping in and
00:19:18
intervening in the free market causes
00:19:20
the price to go up and ultimately you
00:19:22
end up in a really negative cycle that
00:19:24
reses in this collectivism approach that
00:19:26
he's talking about and that's why just
00:19:28
wanted to tie back what he said to
00:19:29
what's going on in the US today and the
00:19:31
and I've harped on this a lot but the
00:19:33
growing role that the federal government
00:19:34
is playing and the intention is good but
00:19:37
the impact is bad over time and that's
00:19:40
really I think why it was such an
00:19:41
important speech he was so clear it was
00:19:43
so important for me to hear it I'm sorry
00:19:45
I harped on but I just really thought
00:19:47
that was the highlight the key of his
00:19:48
speech is hey good intentions can lead
00:19:50
to to a bad outcome here yeah you want
00:19:52
everybody to have Healthcare you want
00:19:53
everybody to have education the
00:19:55
government is providing it and there's
00:19:57
no customer and there's no Market
00:19:58
there's no competition and the products
00:20:00
and services that you are referring to
00:20:03
they include medicine they include
00:20:04
College they include tutoring they they
00:20:06
don't just incl and they include air
00:20:08
conditioning they include refrigerators
00:20:10
and televisions smartphones all of that
00:20:12
and um picking which system and which
00:20:14
set of problems you want to have I guess
00:20:17
is what societies need to do and and
00:20:19
free markets it's a weird reflexive Loop
00:20:21
though for governments because these
00:20:23
people what he also said was these
00:20:24
aren't just well-intentioned people
00:20:26
they're also a small class of Elites
00:20:28
that wanted to feel like they were
00:20:30
better than everybody else by
00:20:31
implementing things at worked and so
00:20:33
there is a dark part of this as well
00:20:35
which is their desire for power and I
00:20:37
think it's important to not gloss that
00:20:38
over so this wasn't just a bunch of
00:20:41
bumbling do gooders that screwed things
00:20:43
up this was also a bunch of folks that
00:20:45
that irrespective of the data had an
00:20:48
opportunity to gain influence and power
00:20:50
and I think that that's that's an
00:20:52
important thing to acknowledge because
00:20:54
it created a very negative reflexive
00:20:56
Loop that government used meaning if you
00:20:59
look at freeberg
00:21:01
charts why did that happen well part of
00:21:04
what happened was the administrative
00:21:07
state became more and more powerful they
00:21:10
were able to pass laws they were there
00:21:12
to decide who the winners and losers
00:21:14
were that is a drug and that drug is
00:21:16
very addictive and so what happened as
00:21:19
this happened was the laws went and
00:21:21
reinforce those dynamics of those people
00:21:24
being able to decide winners and losers
00:21:26
the thing that it has that has not
00:21:28
happened yet though and maybe we're
00:21:30
beginning to see it in some of these
00:21:32
markets that the government is too
00:21:34
involved in is that it is bred a level
00:21:36
of incompetence and
00:21:38
incapability that we now have to unwind
00:21:41
because the average everyday Citizen's
00:21:44
lives are either at risk or these
00:21:47
services are just so expensive that it's
00:21:49
just untenable and I think that's where
00:21:52
we are now it's a great segue I think
00:21:53
into this Boeing issue that we've seen
00:21:56
because here's an issue of Regulation
00:21:58
and safety where you want the government
00:22:00
and you want safe planes and you want
00:22:02
some level of Regulation but then you
00:22:03
get regulatory capture so maybe but the
00:22:05
government the government has not been
00:22:06
the supporter of the safety agenda that
00:22:09
citizens think yes meaning when you look
00:22:12
at what has happened in the US airline
00:22:15
industry there are a handful of enduser
00:22:19
providers but those are all using OEM
00:22:23
equipment from one of two vendors Boeing
00:22:25
or Airbus so it's a duop but in many
00:22:28
ways it's a monopoly the way that these
00:22:31
folks fight with respect to tariffs and
00:22:33
imports and incentives so the United
00:22:36
States airline industry is a monopoly of
00:22:38
one company now if you look at what's
00:22:41
happened what they would say is well
00:22:42
planes have become safer and safer and
00:22:44
safer yes but they've become safer in
00:22:48
some ways in in the most simple and
00:22:51
obvious ways but they've become unsafe
00:22:53
in that you have these fleets of planes
00:22:55
that are now behaving very unpredictably
00:22:57
and if you look under the hood what
00:23:00
happens is Boeing as an example in like
00:23:04
the last four years how much money do
00:23:06
you think they've spent on lobbyists and
00:23:07
packs I'll tell you $65 million how much
00:23:11
have they spent just in the last year
00:23:13
almost $1 million they're like the 15th
00:23:16
most active spender in in politics in
00:23:19
Washington now what did they use that
00:23:21
money for while that's also documented
00:23:23
see the crazy thing is this stuff
00:23:24
happens in plain in plain sight so they
00:23:28
able to water down the safety
00:23:29
regulations what does that allow you to
00:23:31
do it allows you to have a situation
00:23:33
like this unfold and then on the other
00:23:35
side the pilots unions can Lobby those
00:23:38
same politicians who are taking money
00:23:40
from
00:23:41
Boeing and prevent
00:23:44
systems that would actually make these
00:23:46
planes safer you can have more
00:23:49
improvements in the guide by wire
00:23:51
technology you can have more
00:23:52
improvements in GPS you can have more
00:23:54
improvements in a computer's ability to
00:23:58
help improve and augment the capability
00:23:59
of the pilot unfortunately that would
00:24:02
result either in fewer Pilots or less
00:24:04
pay and so that doesn't happen nearly as
00:24:07
fast and obviously as it should it's the
00:24:09
same for air traffic control and all of
00:24:11
these issues build up because we've
00:24:13
allowed monopolies to build up so as
00:24:15
much as we think we are a capitalist
00:24:18
Society we have veered into this
00:24:20
collectivism in certain markets and
00:24:22
where it's measurable and obvious we
00:24:24
need to point at it and say let's go fix
00:24:26
it yeah and this be let me just tea up a
00:24:29
little bit of what you're referring to
00:24:30
in case people don't know but everybody
00:24:32
probably saw the news that on January
00:24:34
5th the door blew off of a one of these
00:24:36
Boeing 737 Max Jets if you've heard that
00:24:39
name before it's because this isn't the
00:24:41
first time that the max Jets have had
00:24:43
problems this plane safely landed thank
00:24:46
God and there was nobody sitting in the
00:24:47
row with the door blew off and this has
00:24:50
to do with some bolts on the doors but
00:24:53
this is just the start of problems with
00:24:55
the 737 Max there's an incredible doc
00:24:57
mentary if you haven't seen it we'll
00:24:59
we'll put it in the show notes Boeing's
00:25:00
fatal flaw and the version before this
00:25:03
the 737 Max 9 is the one that had the
00:25:05
the bolts come off jth the max 8 if you
00:25:08
remember there were two really harrowing
00:25:10
uh instances where tragically 346 people
00:25:13
died in these two instances because the
00:25:16
plane literally the software on the
00:25:18
plane which is called Max maneuvering
00:25:20
characteristics augmentation system
00:25:22
which was designed because they were
00:25:24
trying to get
00:25:25
more fuel efficiency and they had
00:25:28
positioned the engines in a weird way on
00:25:31
on the wings so they had to kind of help
00:25:33
Pilots level the stuff into your point
00:25:35
about regulatory capture there was all
00:25:37
this behind the
00:25:39
scenes manipulation of the market to try
00:25:42
to get these planes built to try to get
00:25:44
them out the door because there was so
00:25:45
much money at stake well on these two
00:25:47
terrible accidents the plane the nose
00:25:50
literally Dove and the pilots were
00:25:52
fighting it in both cases right they
00:25:55
they just crashed and everybody on board
00:25:56
died and for 20 months the the 737 Max
00:26:00
models were grounded and that cost the
00:26:03
company over $21 billion so there is no
00:26:07
competition to your point and then in a
00:26:08
free market if there were 10 providers
00:26:10
would this be much different tooth and
00:26:12
absolutely yeah so I think that's what
00:26:14
you have to realize here is that these
00:26:15
duopolies you think there's competition
00:26:17
in a doopy there isn't competition no I
00:26:19
mean like for example like if you look
00:26:20
at the car market how many instances I
00:26:23
think the last big incidence that I
00:26:24
remember was I think Ford had an issue
00:26:27
with the fuel tanks of some cars that
00:26:29
were exploding right yeah but the
00:26:31
reality is when that happens there are
00:26:34
alternatives one is that there's a legal
00:26:37
requirement for Ford to just fix these
00:26:38
things quickly there were lawsuits that
00:26:41
happened there was class actions there
00:26:43
was settlements but there's also the
00:26:45
ability for folks that can afford it is
00:26:46
just to switch vendor and of which there
00:26:48
are 50 other vendors to choose from that
00:26:51
is a healthy Dynamic so today when you
00:26:53
look at the auto market what do you see
00:26:55
a plethora of choice and when you see
00:26:58
fatalities or safety issues they are
00:27:01
overwhelmingly driver error yes and we
00:27:04
assume that and we get insurance to deal
00:27:05
with
00:27:06
that when you look at airplanes you have
00:27:09
these three sections of risk that each
00:27:11
are compounding because there is no
00:27:13
competition number one is that the
00:27:15
Monopoly vendor has zero pressure to
00:27:19
actually test these things adequately
00:27:21
because on the other side of building
00:27:23
something well is shareholder pressure
00:27:26
to deliver something sooner and faster
00:27:28
so that they can reap more profits then
00:27:31
second is you have a regulatory
00:27:33
infrastructure that puts rules on top of
00:27:35
rules but then will bend the rules if
00:27:36
you donate to them right and that's
00:27:39
measured and known and then the third
00:27:41
are the folks that actually operate the
00:27:42
planes who have this actual incentive to
00:27:45
not see technical improvements because
00:27:47
it defends their job for
00:27:49
longer and in all of these cases there
00:27:52
isn't enough competition to shine a
00:27:54
light on this to say how does society
00:27:56
actually want this Market to operate
00:27:59
this is collectivism it's not working
00:28:01
freeberg you have thoughts on this
00:28:03
Boeing regulatory capture and the issue
00:28:05
of only having two vendors
00:28:07
there and the complexity of these
00:28:10
machines now in relation to that Nick
00:28:13
you can pull this up this is an audit of
00:28:16
the business model for a company called
00:28:18
trans group trans group is a aircraft
00:28:23
Aerospace parts manufacturer they sell
00:28:26
certified
00:28:28
regulated uh aircraft parts to Aviation
00:28:32
companies as well as to Airlines private
00:28:35
pilots and also the government and they
00:28:38
do about 7 billion in Revenue three and
00:28:41
a half billion in IB so off TI point a
00:28:44
couple weeks ago about what's the
00:28:47
appropriate competitive IAH margin that
00:28:49
a company can ultimately achieve they
00:28:51
eiton margins 53% this company insane
00:28:54
better than Facebook insane on 7 billion
00:28:56
of Revenue growing Nick if you want to
00:28:58
pull up their stock chart and you guys
00:29:00
can see how the business has performed
00:29:01
over the years and their business model
00:29:03
has been relatively simple they've
00:29:06
acquired aerospace companies got that
00:29:08
have certified Parts they drop the cost
00:29:10
and raise the price and they do that
00:29:12
over and over again and here's the
00:29:13
business over the last 10 years this
00:29:15
thing is um you know a roughly 10 bagger
00:29:19
8 to 10 bagger in the last 10
00:29:21
years the market cap is 60 billion today
00:29:25
no end in sight and so there was a
00:29:28
government audit done of the business by
00:29:30
using uncertified cost data which is one
00:29:32
of the most reliable sources of
00:29:34
information to perform cost analysis we
00:29:35
found that trans earned excess profit
00:29:38
profit of at least $21 million on 105
00:29:41
spare parts on 150 contracts so they're
00:29:44
selling spare parts into the government
00:29:46
the government auditor came in audited
00:29:48
them and identified because there's no
00:29:51
real audit there's no real
00:29:52
accountability in government as
00:29:54
purchasers but there is regulatory
00:29:56
Authority UND deciding who are the
00:29:57
winners and who are the losers in the
00:29:59
market trans time has been elected a
00:30:01
winner because they have regulatory
00:30:03
approval to make and sell these parts
00:30:05
the cost to get approval to make and
00:30:07
sell these parts is so high that it
00:30:09
makes it prohibitive for startups to
00:30:11
come in and compete in this Marketplace
00:30:13
and now that they're a preferred
00:30:14
supplier and they get these single
00:30:16
contracts where there's no competition
00:30:19
to be a supplier they can raise the
00:30:21
price every year multiple audit reports
00:30:23
over the last 23 years have highlighted
00:30:24
the problem of the Department of Defense
00:30:26
paying exess profits on Soul Source
00:30:28
contracts where cost analysis was not
00:30:30
used to determine fair and reasonable
00:30:32
prices and this problem continues to
00:30:34
occur now I'm not necessarily saying
00:30:36
that this is a negative on trans time
00:30:38
it's a fantastic business it's well-run
00:30:40
it's one of the best-run public
00:30:41
companies with a multi10 billion dollar
00:30:43
market cap in the world but the
00:30:45
condition is that the US government
00:30:47
comes in and picks and chooses through
00:30:48
its regulatory Authority which companies
00:30:50
can make products the cost to enter and
00:30:53
compete becomes prohibitively high and
00:30:55
then the company has complete pricing
00:30:57
power and there's very little
00:30:58
accountability in the overall system and
00:31:00
I think that this plays out not just
00:31:01
with this company but obviously also
00:31:03
with Boeing and the fact that we've
00:31:04
narrowed down the competitive market
00:31:06
space to just a few Soul Source
00:31:08
providers that have very little
00:31:10
accountability and eventually these
00:31:11
sorts of conditions arise either prices
00:31:13
get too high quality degrades all the
00:31:15
other things that Natural Market forces
00:31:17
would keep a check on yeah and in in
00:31:19
terms of competition chamath the I guess
00:31:23
the only thing you could say is
00:31:24
consumers could potentially Maybe try to
00:31:27
avoid the 737 Max I know I did when all
00:31:30
these accidents happen I just told you
00:31:33
know my my person who books the flights
00:31:34
hey do not put me on a 737 Max period
00:31:37
full stop and you know what you're going
00:31:39
to wind up paying a lot more you're
00:31:41
going to have a hard time getting
00:31:42
certain routes you're going to reduce it
00:31:43
because you know most Airlines I think
00:31:46
have these 737 Maxes in there so you
00:31:49
when you have such a few number of
00:31:50
providers to your point about it's not
00:31:52
like cars it's not fragmented like that
00:31:53
you can't avoid a certain car type a
00:31:56
plane type the way you can avoid a car
00:31:58
type so just wrapping up here chth what
00:32:00
changes should we see in terms of late
00:32:04
stage capitalism something in the
00:32:06
example like air travel and and
00:32:08
manufacturers is there any way to unwind
00:32:10
this
00:32:11
reasonably or is it too late because
00:32:14
we're at thisy I I I go back to some of
00:32:18
the examples that we've made fun of
00:32:20
before you have to rely on the
00:32:23
government to actually be competent in
00:32:26
key moments in time I think this is one
00:32:28
of them the organization that could do
00:32:31
something about it for example take the
00:32:33
FTC or even take the
00:32:36
doj we are
00:32:38
investigating
00:32:40
Amazon's purchase of the portable vacuum
00:32:44
cleaner Roomba right critically
00:32:47
important issue and that is apparently
00:32:50
for the American people higher than the
00:32:54
sclerosis that the government has
00:32:56
enabled enabled in the airline industry
00:32:59
which affects
00:33:00
everybody so could the right government
00:33:03
agencies choose to actually focus on
00:33:05
something important here and actually
00:33:07
figure out H why is this
00:33:12
happening because I think the door plugs
00:33:14
issue is endemic of a much bigger
00:33:16
problem this is a company that's rotting
00:33:18
because there is no accountability and
00:33:20
the reason there's no accountability is
00:33:21
there's no real functional competition
00:33:24
and I have not seen any good answer
00:33:27
to accountability other than competition
00:33:30
yeah I mean the the good news uh is the
00:33:33
FAA really took quick action to ground
00:33:37
these 171 Boeing 7379 Max a planes but
00:33:41
they don't they do not understand the
00:33:43
scope of the problem if they let them
00:33:44
back in the fleet and this is happening
00:33:46
the bigger picture problem of lack of
00:33:48
competition yeah they they're no no Noy
00:33:51
of these my point is like you had to
00:33:54
adjudicate the interaction of very
00:33:57
complicated hardware and software in
00:33:59
that first go around here is just a pure
00:34:03
systemic Hardware
00:34:05
failure so the point is that whether
00:34:08
it's them or their
00:34:10
suppliers there's just a some
00:34:13
complacency that sets in when you know
00:34:15
you will always have the business to
00:34:16
Freed Burke's point it is a very
00:34:19
corrosive thing in running a business
00:34:22
trying to
00:34:24
have motivated employees
00:34:27
when they know on the back end of it
00:34:30
that they could make anything in the
00:34:31
world and they'll just be able to sell
00:34:33
it to somebody and they'll have to take
00:34:35
it that's that example that freeberg
00:34:37
just cited 20 odd million dollars for
00:34:40
just random stuff for what is it 15
00:34:42
pieces that's crazy that's just straight
00:34:46
up theft and so when you have that how
00:34:48
do you expect the employees of that
00:34:50
organization to give
00:34:52
a I don't see how I don't see how you
00:34:55
could expect that and so my point point
00:34:57
is the FAA has a much bigger problem so
00:34:59
for example like the doe has a loan
00:35:01
program to try to create a diverse
00:35:03
energy infrastructure in the United
00:35:05
States maybe we need to look at some of
00:35:07
these sectors and instead of building
00:35:08
the administrative State take some of
00:35:11
that money instead and just create
00:35:12
programs to get more competition all
00:35:15
right in other news Adam Newman you
00:35:17
remember from wew work infamy Fame has a
00:35:21
new startup you may have heard of it Flo
00:35:23
they've raised a ton of money he started
00:35:25
buying a bunch of apartment builds bus
00:35:27
the idea people can rent nice apartments
00:35:29
and cool cities that focus more on
00:35:31
social interaction and hanging out
00:35:34
comment spaces all that great stuff and
00:35:36
there's also allegedly or reportedly
00:35:39
some sort of rent to own where renters
00:35:41
can receive equity in the company over
00:35:44
time and I don't think this has ever
00:35:45
been released but the idea would be
00:35:48
maybe you own shares in flow flow
00:35:50
manages around 3,000 units most of which
00:35:52
were purchased by Newman after he left
00:35:54
wework and you know he took down a
00:35:56
windfall as an exit package and so
00:35:59
according to the real deal this a real
00:36:00
estate publication Newman had a 60
00:36:02
million variable rate mortgage on one of
00:36:04
these properties in June sax maybe you
00:36:06
could explain to us what's going on here
00:36:08
since you have a lot of experience in
00:36:10
real estate well it's pretty simple he
00:36:12
can't make his interest
00:36:14
payments Okay the reason is is because
00:36:17
he had floating rate debt so if he had
00:36:19
locked in his debt over say 10 years
00:36:22
back in when he bought this building in
00:36:24
2021 or whenever it was when interest
00:36:27
rates were extremely low you know that
00:36:29
was during the the Zer period probably
00:36:32
could have locked in long-term debt at
00:36:35
maybe even 3% three or 4% and instead he
00:36:38
got floating rate debt and if you look
00:36:40
at where commercial debt is now I mean
00:36:42
it's 78
00:36:43
9% if you can get it which is pretty
00:36:46
hard so he maxed out on debt when he
00:36:48
bought these buildings he bought them
00:36:50
top of
00:36:51
Market it sounds like in 2021 because
00:36:55
real estate like a lot of things moves
00:36:56
inversely to interest rates so when
00:36:58
interest rates spiked over the last year
00:37:01
or so then real estate valuations went
00:37:04
down so he bought a bunch of buildings
00:37:07
top of Market using a lot of debt that
00:37:08
was floating rate interest rates spiked
00:37:11
Perfect Storm now he can't make his
00:37:13
interest payments the crazy part about
00:37:15
this when I was watching it happen jth
00:37:17
and we talked about it I think on the
00:37:18
program at the time was in recent
00:37:20
harowitz put in like over 300 million at
00:37:23
a billion dollar valuation but they
00:37:24
didn't do that in Peak Zer they did that
00:37:26
in 2022 when the writing was on the wall
00:37:29
what what are your thoughts on why they
00:37:31
would make a bet like that and uh yeah
00:37:34
just Tech VC's betting on real estate
00:37:38
for a second time how does that
00:37:40
occur well I don't think it occurs
00:37:42
because they cared about real estate I
00:37:44
think it allows them
00:37:45
to take $300 million of committed
00:37:49
capital and put it out there so that
00:37:51
they're $300 million less available
00:37:54
which means that they're $300 million
00:37:56
closer to raising a new fund which means
00:37:58
that they can raise they can charge 2%
00:38:00
on more money that's why they did it got
00:38:03
it yeah so just keep the money train
00:38:06
deploying Capital it's a place where you
00:38:08
can put a big huge check and you can
00:38:10
raise your next fund and yeah yeah why
00:38:12
not yeah okay well there you have let
00:38:15
let me let me offer I mean I don't
00:38:17
disagree I think that candidly what
00:38:18
you've said is exactly how Mega funds
00:38:20
are thinking about we have to deploy
00:38:22
Capital to raise our next fund and if we
00:38:23
still have capital in our last fund then
00:38:25
we can't deploy
00:38:27
if you're going to have to deploy large
00:38:29
amounts of
00:38:30
capital wouldn't you feel better
00:38:33
deploying that Capital with an
00:38:34
entrepreneur who's actually run a big
00:38:37
business before even though the business
00:38:38
failed no no no if you if you if you if
00:38:41
you were not optimized for fees you
00:38:42
would do what Peter teal did and just
00:38:43
have the fund and return the
00:38:45
money right he and for for for does that
00:38:49
because he's already won but for
00:38:50
everybody else that's trying to win the
00:38:52
only way to win in a world where your
00:38:55
your exits are not that great rate is to
00:38:57
actually generate money via fees even
00:39:00
though that fees are tax at current
00:39:01
income that's the way to win inventure
00:39:03
it's not carry it's by fees and so it's
00:39:07
and and I don't blame andreon I think
00:39:09
like that's that's smart for them to do
00:39:11
and if they have folks that are willing
00:39:13
to enable that by giving them money they
00:39:15
should do it but are they going to
00:39:17
generate huge rates of return probably
00:39:20
not because that's not what real estate
00:39:22
is known for Real Estate is known for
00:39:23
long steady tax arbs that's slowly
00:39:27
compound for the for the owner of the
00:39:28
company over 20 or or the owner of the
00:39:30
business over 25 to 35 years that's not
00:39:33
what a venture fund is supposed to be
00:39:35
doing for a 10 year 12E return cycle so
00:39:38
obviously they're doing it for fees
00:39:39
that's okay I think that's
00:39:41
capitalism what are the LPS then think
00:39:43
Sachs if we look at this you know you're
00:39:45
an LP and a technology firm I'll take
00:39:46
andreon out of it for a second but let's
00:39:48
just say some giant LP gives giant
00:39:50
amounts of money to a venture capital
00:39:53
firm and then they're deployed in real
00:39:55
estate
00:39:57
what happens you know in their minds and
00:39:59
is there any kind of tension that would
00:40:00
occur well handicapping the situation
00:40:04
you can never judge a VC based on one
00:40:06
investment if we were to do that every
00:40:08
VC would have a lot of egg on their face
00:40:10
because we're supposed to take big
00:40:12
swings and swing for the fences and
00:40:14
trying to hit home runs and grand slams
00:40:15
and a lot of them are going to make you
00:40:17
look foolish you have to look at an
00:40:19
Investment Portfolio and track returns
00:40:21
over time so I wouldn't judge any
00:40:24
particular investor based on one
00:40:26
investment so I don't think that's fair
00:40:29
now in the case of this investment if
00:40:31
you want me to explain what I think went
00:40:34
wrong I think Adam Newman had a
00:40:36
compelling Vision his vision was to
00:40:39
create a new experience in in I guess
00:40:41
you call it apartment living and that
00:40:44
people would be willing to pay more for
00:40:46
that because he would create this
00:40:48
National brand in apartments and right
00:40:50
now apartments are super local and
00:40:52
there's there is no brand in you know
00:40:54
apartment living so I think as a
00:40:57
entrepreneur as an operator he had a a
00:40:59
great vision and I think he actually
00:41:02
achieved his vision if you read these
00:41:03
articles carefully what they say is that
00:41:06
his occupancy was high and people were
00:41:08
willing to pay at least a little bit
00:41:10
more for the experience of being in a
00:41:12
flow apartment the problem for Adam
00:41:15
Newman is that at the end of the day his
00:41:18
plan to raise rents by creating
00:41:21
experience even though it worked it just
00:41:23
didn't raise rents that much and what
00:41:25
ended being much more important were the
00:41:28
moves and interest rates and how he
00:41:31
capitalized these Acquisitions and the
00:41:33
price he paid on the Acquisitions so
00:41:36
there's an old saying in real estate
00:41:38
that you make money based on the buy not
00:41:40
on the sell meaning that you know when
00:41:42
you go and sell your apartment building
00:41:45
office building or whatever you're
00:41:47
monetizing an acquisition that you did
00:41:49
correctly and if you don't buy at the
00:41:51
right price you're never going to be
00:41:52
able to make money on the sale and I
00:41:54
think this is a really good example of
00:41:55
this where where he bought at top of
00:41:59
Market his Capital stack was over
00:42:01
reliant on debt and he had floating rate
00:42:04
debt I mean those are just Financial
00:42:06
mistakes and timing mistakes that you
00:42:09
can't make up for no matter how good an
00:42:11
operator you are in real estate and in a
00:42:14
way I mean this is the same thing that
00:42:15
happened with we work which is he
00:42:18
delivered an excellent product I mean
00:42:20
people love we work offices absolutely
00:42:22
yeah they they pick them over other
00:42:25
offices because The Vibes because of the
00:42:27
culture because of the community so he
00:42:29
he is a ma he has some Mastery of that
00:42:32
but to your point entry price matters
00:42:34
and the economics matter if you look at
00:42:36
wework it didn't fail because the
00:42:38
product wasn't good it was because he
00:42:39
didn't pay enough attention to the
00:42:41
financial aspects of the business with
00:42:43
Wei work he leased a bunch of offices at
00:42:45
the absolute top of the market and then
00:42:48
overinvestment with Flo he bought a
00:42:51
bunch of real estate at the top of the
00:42:53
market and sort of did it with the wrong
00:42:55
Capital stack so this is the problem is
00:42:57
that when you get into a real estate
00:42:59
business it doesn't really matter how
00:43:02
great you are as an entrepreneur
00:43:05
operator if you're not good at like sort
00:43:07
of the Legacy old school real estate
00:43:11
part of it and the the old school real
00:43:13
estate guys were were saying during Wei
00:43:15
work this is not going to work you know
00:43:17
this is this is regious but with a bad
00:43:20
capital structure and the old school
00:43:22
real estate guys were saying something
00:43:24
similar about this and you know it just
00:43:26
goes to show that if you are going to
00:43:28
try and disrupt a legacy industry you do
00:43:31
have to kind of understand the ins and
00:43:32
outs of of that Legacy industry and the
00:43:34
great Paradox of this Sachs was when he
00:43:37
did Green desk which was the precursor
00:43:39
to Wei work when he did the first Wei
00:43:41
Works in San Francisco and other places
00:43:43
his Playbook was find a building that's
00:43:45
empty that cannot be leased so he got 25
00:43:48
Taylor Street like six then Market the
00:43:51
worst area by the tenderloin and we had
00:43:53
an office there for a little bit and I
00:43:54
had my podcasting Studio there for a
00:43:55
little bit this was a terrible off this
00:43:57
was a terrible area but he made it hip
00:43:59
and cool and it was really cheap and man
00:44:02
it sold out and it was packed and The
00:44:04
Vibes were great but then as you're
00:44:06
saying then he moved all of a sudden to
00:44:08
Soma and he started opening up these
00:44:10
glass filled ones and you know the he
00:44:12
was renting them for Less with all their
00:44:15
giveaways and six months free and all
00:44:17
the stuff than they could ever afford so
00:44:18
right he he kind of had Mission drift
00:44:20
right the Playbook they just they
00:44:22
changed the Playbook and it economically
00:44:24
was not viable well the timing the
00:44:26
timing got really bad and again they
00:44:28
didn't pay attention to the financial
00:44:30
aspects as much as they should in this
00:44:33
case I think that if he was trying to
00:44:35
execute this play today and doing his
00:44:38
Acquisitions today he could actually
00:44:40
make it he would he would need a lot
00:44:41
more Equity because he wouldn't be able
00:44:43
to get as much debt financing but if he
00:44:45
had the equity and could do more of an
00:44:47
acquisition based on Equity the prices
00:44:48
he'd pay right now would be much lower
00:44:51
and then his interest rates come down he
00:44:53
could ride that wave he could refi pull
00:44:55
his Equity out and put debt on it that
00:44:59
is cheaper as the price goes down so
00:45:02
there was a way to maybe make this work
00:45:04
but you know with real estate the timing
00:45:06
is just so important again your cost
00:45:08
basis of when you get in the investment
00:45:11
is probably the most important thing in
00:45:14
terms of whether you make money or not
00:45:15
did you see this by Chance the real
00:45:17
estate piece in 60 minutes the package
00:45:19
they did last week sax it was basically
00:45:21
what we were talking about here a year
00:45:23
ago super compelling uh if you haven't
00:45:24
seen it it's basically the all in
00:45:26
podcast from 12 or 18 months ago has
00:45:28
anything changed on the field in terms
00:45:30
of commercial real estate or is it just
00:45:32
continuing to I mean nothing's changed I
00:45:35
think that the all the commercial real
00:45:37
estate guys the the sponsors and the
00:45:40
dealmakers and so forth they're all kind
00:45:42
of hanging on by their fingernails
00:45:44
waiting for interest rates to come down
00:45:46
and all the leases are still coming off
00:45:48
right like people are still who had six
00:45:50
seven eight year leases that were signed
00:45:51
preo before depends on the market I mean
00:45:54
some of the some of the markets are are
00:45:56
coming back but again what this flow
00:46:00
news show this Adam Newman news shows is
00:46:03
that you could be fully occupied and you
00:46:06
could still default and the reason is
00:46:09
because of your capital structure the
00:46:10
interest rates have spiked up you're now
00:46:12
paying you know all of your operating
00:46:15
income is being eaten up by your debt
00:46:18
service the only way to to make it
00:46:20
through that is you you go to your bank
00:46:22
who is one of these Regional Banks and
00:46:25
you work out a to extend you know they
00:46:27
call it pretend and extend and they let
00:46:30
you hang on there you'll like you know
00:46:32
extend the term of your Kick the Can
00:46:34
down the road yeah yeah they'll they'll
00:46:36
lower your debt payments and exchange
00:46:37
for more term and you just try to get to
00:46:39
the other side of these high interest
00:46:41
rates and then once you get to the other
00:46:43
side again you're hanging on you're not
00:46:45
defaulting that's what everyone's doing
00:46:47
so if rates don't come down as expected
00:46:50
this year you know I think the Market's
00:46:52
expecting 150 basis points of of rate
00:46:54
Cuts if that doesn't actually happen
00:46:57
there's a lot of real estate sponsors
00:46:59
who are in trouble and in turn there's a
00:47:01
lot of regional Banks who are in trouble
00:47:03
because they're the ones who made all
00:47:05
these loans to these sponsors so
00:47:07
everyone's trying to like you said Kick
00:47:08
the Can down the road yeah and I the the
00:47:11
60 Minutes piece also talked about how
00:47:14
there's some emergency resoning going on
00:47:16
in New York specifically where they take
00:47:18
the floor plate in the middle which I
00:47:20
think you talked about sa you you have
00:47:21
to have Windows if you want to convert
00:47:23
to residential and they just make an
00:47:26
space the void they call it in the
00:47:28
middle of the building that you know
00:47:30
they'll deal with in the future but they
00:47:31
just have this empty space in the middle
00:47:33
of the building that's not going to get
00:47:35
used and then the rest that has Windows
00:47:37
gets used to be converted into Lofts Etc
00:47:39
in New York so people are starting to
00:47:41
think creatively uh if people don't come
00:47:43
back to office okay let me ask you a
00:47:45
question just based on that com the set
00:47:47
of comments given Adam Newman's
00:47:49
experience as an investor in this space
00:47:52
and this General opportunity wouldn't
00:47:53
you rather back a known some someone who
00:47:56
knows and has been through the market
00:47:57
and has experience versus some founder
00:47:59
who shows up and has never run a
00:48:01
business in this space I mean this guy
00:48:02
has more experience it's such a great
00:48:05
don't know that well here's the thing
00:48:06
freeberg the great point about that is
00:48:09
you don't see a lot of Founders who
00:48:10
explicitly come out and say I want to
00:48:12
build a hundred billion dollar business
00:48:13
I want to build a giant business they're
00:48:15
so rare that VCS who have a lot of chips
00:48:19
they would like to back those you know
00:48:20
swing for the fences folks and so I do
00:48:24
understand why people would back him
00:48:25
again and they've run at it before
00:48:26
they've done it to some degree failed
00:48:29
learned from mistakes and this time
00:48:30
around he he learned from exact same
00:48:33
mistake so therefore they made the Bad
00:48:35
Bet I'm not advocating by the way I'm
00:48:37
just asking no I understand to your
00:48:39
point freeberg I can understand people
00:48:40
want to bet on somebody who is crazy and
00:48:42
swings for the fences this entrepreneur
00:48:45
clearly does not learn from their
00:48:47
mistakes I think both of those things
00:48:48
could be true right shouth what I would
00:48:50
say is that I think that where I've made
00:48:53
the biggest mistakes in my investing
00:48:54
career is when I confused what I was
00:48:57
investing in for one thing when it was
00:49:00
the other and so when I look back and I
00:49:04
had a small doans in biotech because I
00:49:07
thought oh this is going to be more
00:49:09
computational biology and I understand
00:49:11
computation so this gives me an edge
00:49:13
turned out I was wrong there was another
00:49:16
time where I've invested in certain
00:49:18
sectors of the economy because I thought
00:49:19
they were technology businesses and at
00:49:21
best they were Tech enabled versions of
00:49:23
an existing industry and when I look at
00:49:26
those Investments the thing that I got
00:49:28
wrong was not listening
00:49:31
to the very experienced investors in
00:49:35
those sectors and why they
00:49:37
passed and that has caused me no
00:49:40
shortage of headache and grief and so if
00:49:43
I had to learn anything from all of this
00:49:46
it would be that if it looks like a duck
00:49:48
and it quacks like a duck it's a duck
00:49:50
it's not a tech company and so if that
00:49:53
duck means it's a real estate business
00:49:56
I would talk to a real estate investor
00:49:57
and and wonder to myself why they
00:49:59
wouldn't have done this deal similarly
00:50:02
you know when it's a biotech business I
00:50:04
have to ask myself why wouldn't they
00:50:06
have done it they know more than I ever
00:50:08
will in this space and so similarly I
00:50:10
kind of look at this as an example of
00:50:13
that which is could be a very talented
00:50:15
person in an industry I think just it's
00:50:17
important for us to be very clear and
00:50:20
lucid and intellectually honest about
00:50:22
what industry that is I think it's a
00:50:24
great point I mean look I whenever
00:50:25
you're dealing with a tech enabled
00:50:27
business which I would Define as a more
00:50:30
traditional business model with some
00:50:33
sort of software layer you know on top
00:50:36
of it you have to kind of assess like
00:50:40
how much of a difference does that
00:50:42
software really make at the end of the
00:50:44
day in this case this is a real estate
00:50:47
business with a very thin kind of
00:50:50
software slash operating technology of
00:50:54
yeah the experience layer
00:50:56
is a very small part of the overall
00:50:59
let's call it p&l of this business such
00:51:02
a great Point sax I mean the Perfect
00:51:04
Analogy would be like if you have if
00:51:06
you're taking a flight on United the
00:51:08
United app is delightful now it's a
00:51:10
really good app I you this is a
00:51:11
commercial airline it's called United
00:51:12
Airlines sex you pay for one ticket
00:51:14
instead of the whole plan but have you
00:51:15
been to McDonald's recently I actually
00:51:17
went to McDonald's yeah you order
00:51:18
through an app now and there's a big
00:51:20
screen the point is you walk in there
00:51:21
and it's probably not the McDonald's you
00:51:23
knew 15 or 20 years ago it's not about
00:51:26
waiting in line and ordering and it
00:51:29
that's not how it works anymore there so
00:51:31
the point is is that a tech enabled
00:51:32
business or is that still a restaurant
00:51:34
well if you spend a lot of your time
00:51:36
intellectually contorting yourself to
00:51:38
try to justify why the next version of
00:51:40
McDonald's is a tech enabled business
00:51:42
you're just going to lose a lot of money
00:51:44
it's a restaurant now all restaurants
00:51:46
need technology and what you see by
00:51:48
McDonald's is even the oldest and most
00:51:50
established are running forward very
00:51:53
quickly to implement technology ology
00:51:55
because they know that it creates
00:51:57
efficiency which then flows to the
00:51:58
bottom line for them yeah so the reality
00:52:01
is that we have lived in this
00:52:03
Wonderland where we've looked at these
00:52:05
software businesses that have 80 and 90%
00:52:07
gross margins and imposed that
00:52:09
expectation on other markets and then
00:52:11
made investment Decisions by trying to
00:52:12
justify how that it's a tech enabled
00:52:15
real estate business a tech enabled
00:52:17
Healthcare business a tech enabled
00:52:19
energy business without being honest
00:52:21
with ourselves that those
00:52:23
businesses have over decades because of
00:52:25
lots of competition found a consistent
00:52:29
and
00:52:30
reliable resting place in terms of gross
00:52:32
margins far below 80 and 90% And so
00:52:36
instead of willing Tech enabled
00:52:39
businesses to be at 80 and 90 and
00:52:40
tricking on I think it's more realistic
00:52:43
to ask yourself why aren't 80 and 90%
00:52:45
gross margin businesses decaying to 30
00:52:48
and 40% gross margins like every other
00:52:49
part of the economy when everything will
00:52:51
be technology enabled I think that
00:52:53
that's a very reasonable question and
00:52:55
and I think the answer is there is no
00:52:57
safe SP I don't think that you can
00:52:58
justify 80 and 90% gross margins in
00:53:00
software when you can use a model and
00:53:03
whip up a competitor I just think that
00:53:05
we are all going to a place where
00:53:07
everything is a tech enabled version of
00:53:09
something yeah marketplaces would be a
00:53:11
notable exception there with network
00:53:12
effects so door Dash versus the tech
00:53:15
enabled restaurant asset light
00:53:17
marketplaces you and N Soxs have been
00:53:18
involved in a bunch of different
00:53:19
marketplaces together sometimes they're
00:53:22
asset heavy sometimes they're asset
00:53:23
light when they're asset heavy man it's
00:53:25
really hard to make those businesses for
00:53:26
our
00:53:27
cax yeah I mean I think we should
00:53:30
differentiate between gross margin and
00:53:32
then the net operating margin or or or
00:53:36
profit right and so you know gross
00:53:38
margin is what is the cost on the margin
00:53:42
of providing one incremental unit and
00:53:45
the thing about pure software businesses
00:53:47
is that on the margin you can provision
00:53:49
another instance of the product almost
00:53:51
for free I mean there's a little bit of
00:53:52
Hosting cost at AWS or whatever so so on
00:53:55
the margins it's you know it's like the
00:53:57
perfect gross margin business as opposed
00:53:59
to a hamburger as opposed to a yeah a
00:54:02
restaurant is going to have very large
00:54:05
cost of goods sold or cogs the simple
00:54:08
heris that I use is just does this
00:54:12
company have large cogs cost of good
00:54:15
sold and are they physical world
00:54:17
cogs if they are it's not a software
00:54:21
business it's at best a tech enabled
00:54:23
business so just look for
00:54:26
that you know does this business have
00:54:29
large physical world cogs now what I
00:54:31
would say is if the cogs are virtual
00:54:34
like you know it could be hosting cost
00:54:36
or it could be paying twilio
00:54:39
for telefony or something like that then
00:54:42
at least it's still not like as good a
00:54:44
business because the the margins aren't
00:54:45
as good but it's very scalable right
00:54:48
because you're you're not you don't have
00:54:50
that like huge friction of needing to
00:54:51
scale up physical world infrastructure
00:54:53
physical world Supply chains that kind
00:54:56
of stuff so I like virtual cogs a lot
00:54:59
better or digital cogs a lot better than
00:55:01
physical cogs I I love it when
00:55:03
marketplaces though I mean we could
00:55:04
speak to that too you know when I had
00:55:06
Dar on the Pod the other week and when
00:55:08
he launches an adjacency hey we're going
00:55:10
to sell alcohol hey we're going to sell
00:55:12
groceries hey we're going to add this
00:55:14
thing that's right next to the already
00:55:16
you know portfolio of of uber offerings
00:55:18
doesn't cost them much right they just
00:55:20
have to get the supply side up and
00:55:21
running but they already have the demand
00:55:23
side and I think that's where like these
00:55:24
super apps are do really well or Airbnb
00:55:26
adding you know some inventory in a new
00:55:28
city that they unlock right well true
00:55:31
true marketplaces are perfect gross
00:55:33
margin businesses as well because they
00:55:35
don't have fiscal inventory that they
00:55:36
themselves own what you'll see is with a
00:55:39
lot of marketplaces they'll cheat by
00:55:42
buying the inventory themselves at least
00:55:45
to jump start the market and then
00:55:47
selling it yeah and so when you see that
00:55:49
line item on the p&l the you know that
00:55:52
they have real cost of goods sold you
00:55:54
know oh wait a second this isn't a true
00:55:56
Marketplace they're providing the
00:55:58
service yeah and so again it's just a
00:56:01
way to like catch whether the business
00:56:03
is truly one of these great high gross
00:56:07
margin businesses or whether it's more
00:56:09
of a tech enabled business that's
00:56:10
pretending to be a pure software
00:56:12
business yeah direct consumer got people
00:56:14
in a lot of trouble during the last
00:56:16
cycle in Venture Capital if you look at
00:56:20
a lot of these
00:56:22
companies even the best SAS businesses
00:56:25
have
00:56:26
seen their gross margins erode by about
00:56:28
15 to 20% it used to be that
00:56:32
best-in-class software business can
00:56:33
generate 90 90 1% 80 high 80s to low 90s
00:56:38
gross margins now that's not true you
00:56:39
see a lot of these best-in-class
00:56:40
companies that are in the high 60s low
00:56:42
70s so it already just shows you that
00:56:44
that pressure has has come upon the
00:56:46
market and so is it that the software
00:56:49
enabled business goes towards 85 or is
00:56:51
that the 85% gross margin business goes
00:56:53
towards 30 it looks like it's the ladder
00:56:55
that's just what the data says well
00:56:57
maybe I'm just categorizing certain
00:56:58
costs differently than you are but I
00:57:00
don't know why a software business would
00:57:01
go all the way to 30 right because again
00:57:03
sales and marketing don't count in the
00:57:05
gross margin GNA doesn't count even R&D
00:57:08
doesn't count in the gross margin it has
00:57:10
to be you know a unit cost that you can
00:57:13
attribute on the margin to that
00:57:15
incremental instance of the product so
00:57:18
things like again paying twio for meter
00:57:22
telefony or paying open AI for like
00:57:24
metered API access all of that is
00:57:27
definitely in cogs and I think some
00:57:29
customer support costs that can be
00:57:31
attributed on kind of a per instance
00:57:34
basis that goes in there but if if sales
00:57:37
and marketing and R&D and GNA aren't
00:57:39
going in there I mean I just I don't
00:57:41
know why it go all the way to 30 I guess
00:57:43
I'm just saying that I still think
00:57:45
software businesses and marketplaces for
00:57:47
that matter are still the best kinds of
00:57:49
businesses on a margin profile basis the
00:57:52
problem is that there's a lot of fake
00:57:56
software businesses or fake marketplaces
00:57:57
out there that are pretending to be pure
00:58:00
Tech businesses when actually they're
00:58:03
they're more like old school businesses
00:58:04
that have the veneer of technology and I
00:58:07
think to your point there like the trick
00:58:10
of saying I'm an 80% gross margin
00:58:12
business but having no profitability is
00:58:14
then who cares so you true when you look
00:58:19
at the profitability of these businesses
00:58:20
again you'll be in the the 20 to 30%
00:58:23
that's why when you see companies that
00:58:24
are in the high 30s to low 50s they're a
00:58:29
very unique and B you should expect that
00:58:34
there is something fundamentally
00:58:36
monopolistic about them and that is a
00:58:39
simplest way to filter out these
00:58:41
companies because in a highly
00:58:42
competitive market you cannot extract
00:58:44
those kinds of profit dollars cap
00:58:46
capitalism says you can't do that so you
00:58:48
can only do it when when you have an N
00:58:50
of one or n of two kind of competitive
00:58:53
Dynamic where there's essent a mutual
00:58:55
toon with your biggest
00:58:57
competitor yeah it is it is a good point
00:58:59
that just because you have good union
00:59:01
economics or good gross margins doesn't
00:59:03
mean that the business is profitable at
00:59:05
the end of the day good yeah could be
00:59:07
mean you could have 80% gross margins
00:59:08
and still be losing a ton of money
00:59:10
because you've got too much overhead
00:59:11
you've got too much sales and marketing
00:59:13
you've got too much R&D yes so you're
00:59:15
selling to customers who don't really
00:59:17
need it and then they eventually cancel
00:59:18
right like we see that a lot look at the
00:59:20
streamers look at the streamers that's
00:59:23
just a big recycling it's just like
00:59:25
people come to the top of the funnel
00:59:26
they use the product and then they leave
00:59:28
and then you have to reacquire them over
00:59:30
and over again and it and it could be
00:59:31
the case that SAS actually looks a
00:59:33
little bit like that too at the bottom
00:59:34
line level well when you hit your
00:59:35
natural audience it it does get
00:59:37
challenging yeah well this is why in in
00:59:39
SAS there's a herisa called the rule of
00:59:42
40 which is for public market SAS
00:59:44
companies you want to see that their
00:59:47
operating margin plus their growth rate
00:59:50
equals 40 or is greater than 40 ideally
00:59:53
so in other words you could have a SAS
00:59:55
business with a 20% operating margin and
00:59:59
a 20% growth rate and that would hit
01:00:01
rule of 40 and that would be a very
01:00:02
attractive business or you could have I
01:00:05
don't know it could be growing 50%
01:00:07
year-over-year and its operating margin
01:00:09
could be negative 10% and that'd be okay
01:00:12
too because they're losing money but at
01:00:14
least the investment is leading to AB
01:00:17
well above average growth you know or
01:00:20
you could be growing you could you know
01:00:22
be growing slower you could have a 10%
01:00:24
growth rate and have a 30% operating
01:00:26
margin and that would also be hitting
01:00:27
the rule of 40 so it's just a simple way
01:00:31
of like tracking whether this is a a
01:00:33
good business at scale I don't think
01:00:35
stups have to worry about this until
01:00:37
they get to kind of the later growth
01:00:38
stage yeah when you're in your BC round
01:00:40
you're making 50 100 million yeah you
01:00:42
got to be really thoughtful about this
01:00:43
in the beginning you're trying to get
01:00:44
product Market fit triangulate on
01:00:46
something so shth just mentioned
01:00:48
streaming NBC Universal if you didn't
01:00:51
know it paid the NFL $100 million for
01:00:54
for the exclusive streaming rights to
01:00:56
one that's right one first round playoff
01:00:58
game for the NFL that happened last
01:01:00
weekend between the Chiefs and the
01:01:02
Dolphins that was on their service
01:01:04
peacock NBC's app basically their
01:01:07
version of Netflix or Disney plus it
01:01:09
guarded 23 million viewers which makes
01:01:11
it uh the most streamed live event in US
01:01:14
history even so that's almost half of
01:01:18
what you the Packers and Cowboys had
01:01:21
about 40 million Lions versus Rams same
01:01:24
weekend 36 million and so this has
01:01:27
brought into question what's going on
01:01:29
with streaming have these businesses
01:01:31
gotten ahead of their skis just give you
01:01:32
a couple of charts Disney plus took off
01:01:35
like a massive rocket peaked in Q4 of
01:01:37
2022 at 164 million subscribers they're
01:01:41
now at 150 million here's a chart I mean
01:01:43
just amazing how uh quickly they got to
01:01:46
Netflix is numbers here's Netflix's
01:01:49
chart again this is quarterly they're up
01:01:52
to now an all-time high 24 47 million
01:01:56
subscribers and the annual growth rate
01:01:58
all the way back to 2001 still pretty
01:02:00
spectacular and their revenue also uh
01:02:02
very respectable for Netflix however
01:02:06
they overspent massively during the peak
01:02:09
streaming era 2019 to 2022 and that's
01:02:12
when subscriber growth started to slow
01:02:15
obviously they were spending way too
01:02:16
much and other entrance came in like
01:02:18
apple plus and Amazon Prime where they
01:02:21
really didn't even think that they had
01:02:22
to make a profit they were using
01:02:25
streaming maybe to sell more iPhones or
01:02:27
to get more Amazon Prime subscribers so
01:02:30
here is the major problem here's the
01:02:33
churn chart basically churn means people
01:02:35
cancel right and so as these Services
01:02:38
have cut what they're offering the
01:02:40
number of Marvel shows or Disney you
01:02:43
know having Star Wars shows the churn
01:02:45
goes way up people are also having
01:02:48
subscription overload I don't know how
01:02:50
many of these I subscrib to but I think
01:02:51
it's all of them or maybe out of these 1
01:02:54
2 3 4 5 6 7 8 n on the chart I think I'm
01:02:58
I have seven of these so there is
01:03:00
definitely some unbelievable
01:03:02
subscription burnout and the streamers
01:03:06
in order to get these businesses above
01:03:08
water have raised their prices we all
01:03:09
know that you've probably seen your
01:03:10
streaming bills you know have three four
01:03:12
five bucks added to them every month and
01:03:14
at the same time they're cutting how
01:03:15
much they're spending so you're paying
01:03:17
more for last chth your thoughts on this
01:03:20
Dynamic if you bring the chart back up
01:03:21
here's the most important thing that's
01:03:24
worth noting let's take stars as an
01:03:26
example it turns 12% of their users
01:03:29
every month which means that over a year
01:03:30
they've ched 144% of their user base
01:03:34
that means that they have to basically
01:03:36
turn their
01:03:38
entire membership base one and a half
01:03:41
times in order just to tread water right
01:03:43
so if you start with
01:03:45
100 it's a lot of money that you have to
01:03:48
spend to make sure you end the year at
01:03:49
100 forget about
01:03:51
growing if you look at peacock they're
01:03:54
going to lose 100% of their subscribers
01:03:56
in a year if you look at Discovery
01:03:59
they're going to lose 75% if you look at
01:04:03
max they're going to lose 50 odd percent
01:04:06
Apple TV same Hulu and Disney plus will
01:04:09
lose 60% Netflix will lose almost
01:04:14
40% so the only winner in all of this is
01:04:17
Facebook and Google The Only Winners are
01:04:20
Facebook and Google because that's where
01:04:22
the ads will appear to try to reacquire
01:04:25
these folks right so I guess that's a
01:04:27
positive
01:04:28
indication but the reality is that money
01:04:30
isn't infinite and so what happens in a
01:04:32
dynamic where you have a category where
01:04:35
there's just a lot of consumer churn I
01:04:37
think what happens is it evolves in
01:04:39
phases and in phase one which is sort of
01:04:41
where we are now where there's a bunch
01:04:43
of relatively wellestablished folks is
01:04:46
that they are going to initially
01:04:48
overspend on content because they are
01:04:50
going to try to differentiate the cost
01:04:52
of acquisition based on on content right
01:04:55
which makes sense I have a tent pole
01:04:57
come and watch it here you can't watch
01:04:58
it anywhere else and I think that was
01:05:00
the peacock example where they had this
01:05:03
football game and all these people
01:05:04
showed up and they thought this is
01:05:06
exactly why we're paying so much money
01:05:09
for these rights because people will
01:05:10
show up I think the problem is that when
01:05:13
everybody is doing it everybody's doing
01:05:16
it and so you don't know how to
01:05:18
differentiate Even in our group chat
01:05:21
look at the number of times when
01:05:22
somebody randomly says is there
01:05:23
something to watch and everybody's got
01:05:25
50 recommendations guess what I do I
01:05:27
tune it all out because I'm like 50
01:05:29
across six different Services I have no
01:05:32
way to track it and then I lose interest
01:05:34
and I'm like you know I'll just stick to
01:05:36
YouTube so I think what happens is in
01:05:39
Phase One folks spend a lot of content
01:05:41
in phase two they
01:05:44
realize that actually what you need to
01:05:46
do is spend on a long taale of content
01:05:48
in a much more disciplined way so
01:05:50
there's a company that that I know about
01:05:52
for example they just signed a
01:05:55
pretty big deal with
01:05:58
Amazon hundreds of millions of
01:06:01
dollars and I was trying to figure out
01:06:04
is that a lot or a little and it turns
01:06:06
out that Amazon's trying to get three or
01:06:09
four or five versions of these
01:06:11
going which means that before we
01:06:13
probably could have gotten five or 600
01:06:15
million and instead you get two or 300
01:06:17
million it's still an incredible thing
01:06:18
but it just goes to show you that
01:06:19
there's a lot of competition and so
01:06:21
instead of
01:06:23
having a single mode right if you were
01:06:25
to graph something where there's a few
01:06:27
pieces that just get all the money now
01:06:29
you're smearing this content across all
01:06:32
kinds of stuff and I think that that
01:06:35
makes it very difficult to keep folks so
01:06:38
I suspect that you're just going to see
01:06:39
a lot of turn I don't I don't like this
01:06:41
category at all as an investor so
01:06:44
clearly there's been an overspend here
01:06:45
but consolidation is coming freeberg any
01:06:47
thoughts on the streaming space I just
01:06:49
think this is the opposite of what we
01:06:51
were talking about earlier where there's
01:06:53
a free market Market competing and it's
01:06:55
benefiting consumers I mean the point
01:06:57
that you made is a really good one that
01:06:58
there's a lot of great content to watch
01:07:01
folks that raise prices people cancel so
01:07:03
you got to drop prices you got to offer
01:07:05
good content and I actually think this
01:07:07
is a really good and healthy thing to
01:07:09
see happen is competition that benefits
01:07:12
consumers and there'll be some set of
01:07:14
winners here and some set of losers but
01:07:16
I think ultimately it's just really good
01:07:18
to see this how it all shakes out who's
01:07:20
willing to put up the big bucks who's
01:07:21
got the smarter algorithm that predicts
01:07:24
how fresh your content has to be and how
01:07:26
unique it has to be relative to other
01:07:28
platforms to keep the audience attention
01:07:31
I would argue if you look at those
01:07:32
numbers and you look at the performance
01:07:33
over time Netflix absolutely rules the
01:07:35
roof in this sense they're an incredible
01:07:37
operating team they have an incredible
01:07:39
capability of predicting what content
01:07:41
will work how how quickly they have to
01:07:43
refresh content how much they should be
01:07:45
investing in content per quarter per
01:07:46
month and they're clearly retaining
01:07:48
users and making money and others maybe
01:07:50
that are newer to the game haven't
01:07:52
figured that out yet but it's just very
01:07:53
good to to see the competition so I
01:07:55
don't know how to predict what's going
01:07:56
to happen here but it's good to see it's
01:07:57
clearly going to be massive
01:07:58
consolidation also these folks are
01:08:00
launching Advertising based version so
01:08:02
you probably saw Netflix has an
01:08:03
advertising tier and so a lot of these
01:08:06
folks uh didn't have those Disney plus I
01:08:08
think is going to have one as well you
01:08:10
know what no one's paying attention to
01:08:11
is YouTube TV I don't know you guys
01:08:14
subscribe to YouTube TV I'm a Hulu
01:08:16
person yeah I think it's fantastic if
01:08:18
you look at some third party data on
01:08:20
YouTube TV the subscriptions are going
01:08:22
through the fraking roof and it's really
01:08:24
interesting to see because with YouTube
01:08:25
TV you're basically rebundling the
01:08:28
unbundling that happened in cable except
01:08:30
you're doing it over the internet you
01:08:31
can access it anywhere so they've
01:08:33
basically converted the pipe as the
01:08:35
value to the service itself as the value
01:08:37
which you can access anywhere you want
01:08:38
on any TV and any room without boxes
01:08:41
while you're on the road on your phone
01:08:42
on your laptop and it seems to be kind
01:08:45
of highlighting that maybe it wasn't
01:08:47
necessarily the bundling that was the
01:08:49
problem but the way that the service was
01:08:51
being offered so who knows maybe
01:08:54
bundling versus all of this part and
01:08:55
parcel you got to pick five different
01:08:57
providers and buy content on the Fly
01:09:00
maybe that's not what consumers want
01:09:01
young people don't care about the live
01:09:03
channels old people do but yeah Hulu and
01:09:06
YouTube TV are really wonderful products
01:09:09
because they work really well on Apple
01:09:11
TV the apps work great but they also
01:09:12
work great on your iPhone your iPad so
01:09:14
yeah you know they're really spectacular
01:09:17
in that way sax well just tie this
01:09:20
conversation back to what we were
01:09:22
talking about with margins s and Tech
01:09:24
enabled versus real software businesses
01:09:27
I personally have never seen a BTO C
01:09:30
subscription business that works the
01:09:32
churn is just too high I mean what I've
01:09:34
seen is that the monthly churn rates on
01:09:37
a software subscription for consumers is
01:09:40
somewhere in the 5 to 10% range so on a
01:09:43
full year basis you're retaining maybe
01:09:44
50% of your customer base you're
01:09:46
effectively rebuilding your business
01:09:48
from scratch every two years it's a very
01:09:50
tough place to be this is why I
01:09:51
basically skewed towards B2B SAS is
01:09:54
because a good B2B SAS business will
01:09:58
have net expansion instead of 50% churn
01:10:00
you'll do 120% expansion and so you're
01:10:03
actually building a subscriber base with
01:10:05
long-term value now how did Netflix do
01:10:08
it I mean Netflix avoided that
01:10:10
prohibitive level of churn by spending
01:10:12
literally billions of dollars on content
01:10:15
and original programming and again it
01:10:17
goes back to the point this is not a
01:10:19
pure software pure Tech business it
01:10:22
includes an old school
01:10:25
Studio which is very Capital intensive
01:10:29
and they financed a lot of the content
01:10:32
acquisition with billions and billions
01:10:34
of dollars raised during that Zer period
01:10:37
from I think both equity and debt and
01:10:40
you have to wonder if that could be done
01:10:42
again in this post Zer period where
01:10:45
capital is just a lot scarcer I think
01:10:47
this is going to work really well though
01:10:48
for Netflix and Disney man these huge
01:10:50
archives that they own these libraries
01:10:52
are going to get them to
01:10:54
3 four 500 million Global subs and this
01:10:57
become money printing machines that I
01:10:58
don't think they're going to need a ton
01:11:00
of new content the question is whether
01:11:02
you could recreate an archive of that
01:11:03
level today given how much more
01:11:06
expensive capital is my point is that
01:11:08
Zer help Netflix catch up to these
01:11:10
Studios and create this huge library but
01:11:13
still I think that what the streaming
01:11:15
services have shown in their churn is
01:11:18
that if you don't provide original
01:11:19
content and original programming then
01:11:22
users will turn off that so you have to
01:11:25
kind of have both you kind of have like
01:11:27
the library as filler but if you don't
01:11:29
have a hot show come along every so
01:11:32
often the subscribers will turn off that
01:11:34
yeah you need to have some new content
01:11:36
depending on how deep the library is
01:11:38
feels like Netflix and Disney Plus have
01:11:39
done a great job with their libraries
01:11:40
just to give you an idea revenue for
01:11:43
Netflix for 2023 33.5 billion 247
01:11:48
million Subs that's a arpo yearly
01:11:50
revenue for those folks 136 bucks
01:11:54
a year now the reason you're seeing that
01:11:56
uh number not Mak sense if you're paying
01:11:58
15 bucks a month is because
01:11:59
internationally Netflix is a lot a lot
01:12:02
cheaper but I I love those two
01:12:04
businesses I think they're going to be
01:12:05
extraordinary over time Netflix has to
01:12:07
acquire a 100 million people a year just
01:12:11
to stay even what's their turn rate 4% a
01:12:14
month I think it's fine right so they're
01:12:16
turning half their customer base every
01:12:18
year that's my point 100 million people
01:12:22
they're rebuilding their customer base
01:12:24
from scratch every two years how does
01:12:25
that make sense it's totally fine
01:12:27
because what happens is you have people
01:12:29
coming off their parents plan getting
01:12:31
their own people go through a bad beat
01:12:33
they don't like it you know whatever
01:12:34
they unsubscribe but they all come back
01:12:36
back and forth back and forth and then
01:12:38
it just keeps growing over time I think
01:12:41
you're describing something that's true
01:12:43
I think David is describing why it's a
01:12:45
business I mean if they if they
01:12:48
make more money than they spend and I
01:12:49
don't think they need to do a ton of
01:12:51
advertising eventually you turn through
01:12:53
so much of the market that actually you
01:12:55
can't maintain that growth rate I mean
01:12:57
if you reactivate maybe you can do it
01:13:00
but I I think that's what's happening
01:13:02
from a business perspective the only
01:13:03
logical thing that I would do if I was
01:13:06
running one of these businesses is
01:13:08
attach it to another business where you
01:13:11
can think about it in terms of LTV so
01:13:13
the only obvious example of that I think
01:13:16
is Amazon video because you can stick it
01:13:18
beside Prime and a bunch of other things
01:13:21
and now you have a very different way of
01:13:22
justifying
01:13:24
LTV and minimizing churn and that seems
01:13:27
like a I buy that argument Jason I don't
01:13:29
buy like a standalone business like this
01:13:31
trying to do it yucky I I no sorry real
01:13:34
quick have you guys dug into Netflix's
01:13:36
business I mean they're still growing
01:13:38
Top Line the eiton margin continues to
01:13:41
expand I mean all those facts might be
01:13:43
true but that churn engine and that
01:13:45
recapture engine seems to be working in
01:13:47
a way that they're printing cash and
01:13:48
growing it's pretty impressive I don't
01:13:51
know if there's a limit there but I mean
01:13:52
I I haven't looked at
01:13:53
I think that is the key question yeah to
01:13:56
the bundling Point apple plus which is
01:13:59
the TV component not the hardware
01:14:01
product is bundled as part of this apple
01:14:04
one program which is kind of like Amazon
01:14:06
Prime and so I think you're seeing a
01:14:07
little bundling there Netflix also added
01:14:10
video games to make it even more sticky
01:14:12
so I think there's like a subscription
01:14:14
super app coming which the New York
01:14:16
Times has kind of done right with Wordle
01:14:17
crosswords the athletic wire cutter and
01:14:20
the New York Times so I think you're
01:14:21
going to start to see
01:14:23
honestly you just had a jumble of names
01:14:25
that went in one year and out the other
01:14:26
I don't remember a single one you said
01:14:28
this is my point for most people Jason
01:14:29
not a media fish AO New York Times is
01:14:32
doing fantastic doing this bundling some
01:14:34
people come for the crosswords and
01:14:35
Wordle and that's why they subscribe and
01:14:37
they like the news other people come for
01:14:38
the news they discover crosswords and
01:14:40
wire cutter and the athletic and they
01:14:41
stay for that so I I do think there's
01:14:43
going to be an incredible business here
01:14:45
I'll take the other side of it yeah they
01:14:47
spent a lot on content though during
01:14:49
that period where Disney plus came in
01:14:51
and I think everybody's now has a little
01:14:53
more discipline and the budgets came way
01:14:55
down if you didn't know the Hulk cost
01:14:57
250 million or something the She-Hulk
01:14:59
rather that cost 225 million for Nine
01:15:02
episodes what the first Avengers 225
01:15:04
million wait sorry 225 250 million for
01:15:06
for Nine episodes of the shek and people
01:15:10
criticize it for having bad CGI so it's
01:15:12
I think there's like new discipline
01:15:13
coming to was this a Netflix show a
01:15:15
Disney Plus show a Disney Plus show yeah
01:15:17
I I don't know about you guys I've been
01:15:19
rewatching The Sopranos I find some of
01:15:20
the content on HBO Max to be the best
01:15:22
content out there oh my god I've there's
01:15:24
so much rewatchability on it Disney
01:15:26
doesn't have that much rewatchability I
01:15:28
don't know the only reason I keep my Max
01:15:30
subcription is cuz I'm waiting for House
01:15:31
of the Dragon season two yeah I mean if
01:15:34
they didn't have that one show I'd be
01:15:35
like yeah cut it you know yeah I do
01:15:37
think this could help Netflix because a
01:15:39
lot of these streaming services came
01:15:41
along we had way too many right we got
01:15:43
saturated with streaming services and
01:15:46
most of them you subscribe to you may
01:15:47
not even remember subscribing you may
01:15:50
just subscribe to a free trial to get an
01:15:51
NFL game and then you get build because
01:15:54
you forgot to cancel it by the way yeah
01:15:56
have you guys ever gone into
01:15:59
Apple iCloud settings and looked at your
01:16:02
subscriptions oh boy yeah get in there
01:16:05
and guys just RI go go if you have like
01:16:08
an extra five minutes you will save so
01:16:11
much money by going into subscriptions
01:16:13
in your settings and just turning them
01:16:15
all off I was shocked I was shocked I
01:16:18
mean this is part of your austerity
01:16:19
measure absolutely you know how many
01:16:21
subscriptions to Disney plus I had how
01:16:23
many well this is what's so gross is why
01:16:25
they even let me do this I had
01:16:27
three
01:16:29
what
01:16:31
three how's it even possible one for the
01:16:34
plane one for kids I had three I had
01:16:37
three I had two hpos I had two Netflix
01:16:42
Oh no Netflix keeps sending me message
01:16:43
saying hey you need to update your
01:16:45
payment information but then I'm
01:16:47
watching Netflix on my Apple TV so I'm
01:16:49
like I'm clearly playing for paying for
01:16:51
it somehow so confusing and I have the
01:16:56
perfect solution for you there are
01:16:57
credit cards now where you can set a
01:16:59
spending limit and so what I do is every
01:17:02
year I just turn off the limit on that
01:17:05
credit card I just take it from
01:17:06
unlimited or uncapped down to zero and I
01:17:08
do this for business as well and then
01:17:10
all the subcriptions time out you know
01:17:12
what I call that what Jeff Jeff does
01:17:15
that for me Jeff does it yeah but I mean
01:17:17
having somebody go in there I have a
01:17:19
Jeff I have a Jeff know but it's very
01:17:21
simple you only use one card for
01:17:23
subscriptions and then you turn it off
01:17:24
every year to see which ones you want to
01:17:25
keep going it works really well and then
01:17:27
you move the other ones to a new I don't
01:17:28
even want to say how many thousands of
01:17:30
dollars I was wasting on like dual lingo
01:17:32
I was like I'm paying for dual lingo and
01:17:35
then I was paying for your Italian it's
01:17:36
still terrible yeah terrible and then I
01:17:38
I had I had have a Cas against them no
01:17:40
then I had dual lingo and I had Babble
01:17:43
and I had Rosetta Stone so I'm like my
01:17:45
Italian is not improving because of any
01:17:47
of these three apps but I was paying
01:17:48
them collectively like $400 I had a
01:17:50
whoop subscription I don't even have a
01:17:52
whoop
01:17:54
when Rick Thompson started manscaped I
01:17:56
was I signed up for manscaped I get all
01:17:59
this ball deodorant I've never used it
01:18:01
once we know we know we sit next to in
01:18:03
poker we know it's not working bro just
01:18:06
a message to manscaped I have tried to
01:18:09
cancel I have called I have emailed I
01:18:11
took it upon myself to try it's
01:18:14
impossible to cancel they won't even let
01:18:15
you reset your account so you can get a
01:18:17
link to cancel it's so hard and still
01:18:21
your balls are terrible yeah my balls
01:18:24
are phenomenal no I've sat next to you
01:18:26
in poker man not real okay let's get
01:18:28
into Plastics and get off chamat
01:18:31
balls I mean how did we get here uh
01:18:35
subscription Services subscription
01:18:36
Services yes streaming is at a cross
01:18:39
wordss AC Crossroads apparently so
01:18:42
they're really trying to make that ball
01:18:43
deodorant happen aren't they they're
01:18:45
trying to make it happen well they're
01:18:46
trying to make fetch happen ball
01:18:47
deodorant is not happening I'm sorry I
01:18:49
mean what are you supposed to do Squat
01:18:51
and swipe how does this work
01:18:53
is it a spray are you lifting and
01:18:55
spraying is it you got to give him
01:18:57
points for creativity trying to create
01:18:59
like a new thing but yeah I was trying
01:19:01
to support my friend in signing up for a
01:19:03
subscription service and now I can't
01:19:05
cancel that's my problem that's my
01:19:07
predicament could you also take a shower
01:19:09
and your soap I don't know just putting
01:19:11
it out there I I'm I it's what's there
01:19:15
does it have to do with the product I
01:19:16
signed up because Rick was the Venture
01:19:18
investor that seated it and started I
01:19:21
supported my friend yes
01:19:23
and now I want out and I cannot get out
01:19:25
you can't get out every every time I try
01:19:27
to get out they pull me back in I'm just
01:19:29
going to say when it comes to manscape
01:19:31
no no testimonials please no
01:19:32
testimonials the worst part is like you
01:19:35
you know it comes to the house and oh
01:19:37
somebody opens your ball deodorant and
01:19:39
puts it on your desk they do no they put
01:19:41
it staff knows you have saky balls well
01:19:44
that's what's so funny they put it right
01:19:45
on the kitchen counter so as I walk
01:19:47
through the
01:19:49
everybody I grab it and I'm like who's
01:19:51
seen this bottle ah there it is what is
01:19:53
it there bottle going shaving
01:19:58
[Music]
01:20:02
Bal oh my God so how do you apply it is
01:20:06
it just a little dabble do you no I mean
01:20:08
you know it's not a spray it's
01:20:10
apparently an ointment sax it's an
01:20:12
ointment this is far too much
01:20:14
information yeah I'll try it don't I'll
01:20:18
try
01:20:18
it it'sing you know what I'm going to
01:20:21
give you my my
01:20:24
subscription it's got
01:20:29
a why not oh man use the promo code shth
01:20:33
for 10% off your use the promo code
01:20:35
dictator you get
01:20:38
10% you can never cancel but it's d i k
01:20:43
Tater dick Tater yeah use S promo
01:20:47
dictator get 10% off your ball deodorant
01:20:49
at manscape all right freeberg it's your
01:20:52
turn to to shine no not ball deodorant
01:20:54
we wanted to talk about micro Plastics a
01:20:57
study came out it's terrifying we've
01:20:59
known Plastics have been terrible for
01:21:00
years obvious turned into some sort of
01:21:03
political discourse with straws and
01:21:04
everything but Plastics are horrible we
01:21:06
shouldn't be using them but this study
01:21:08
confirms a bunch about drinking
01:21:10
microplastics educate us on this study
01:21:13
that everybody's talking about right now
01:21:16
Dr freedberg I I wouldn't start with the
01:21:18
statement that Plastics are
01:21:20
awful Plastics are
01:21:23
polymers which are long chains of what
01:21:25
are called monomers this is hydrogen
01:21:27
carbon and oxygen that comes together to
01:21:29
form these specific molecules and then
01:21:32
we can kind of bake them into crystall
01:21:34
likee structures and the reason the
01:21:36
Plastic industry took off is because it
01:21:38
ended up being very cheap to create
01:21:40
materials that we could turn into chairs
01:21:42
that we could turn into bottles to move
01:21:43
stuff around a lot of applications
01:21:45
everything from solar photovoltaics to
01:21:48
our computers to our laptops to our
01:21:50
phones everything has some form of these
01:21:53
polymers in it the polymers that are
01:21:56
commonly used for making uh bottles that
01:21:59
we consume beverages out of are a pet uh
01:22:02
Plastics these pet Plastics are made
01:22:04
from a combination of natural gas and
01:22:07
crude oil so we kind of have a
01:22:09
production process where we get the
01:22:11
carbon hydrogen and oxygen that's
01:22:13
naturally found in natural gas and crude
01:22:15
oil convert it into these molecules that
01:22:18
we turn into long chains and we turn
01:22:19
them into bottles and fill those bottles
01:22:21
and they end up being
01:22:23
a lower carbon footprint than using
01:22:26
glass about 5x the carbon footprint to
01:22:30
use glass instead of plastic in in um in
01:22:33
making a bottle to store stuff and move
01:22:35
liquids around 40% cheaper and a lot of
01:22:39
other kind of reasons why the industry
01:22:41
and the world adopted Plastics not just
01:22:43
for bottle beverages but for other
01:22:45
applications so in Bottle beverages
01:22:47
because these are polymers there're
01:22:49
these long chains of little molecules
01:22:50
that are stuck together some of those
01:22:53
chains break and then some of those
01:22:55
little chunks of those molecules end up
01:22:56
floating around in the liquid that we're
01:22:59
consuming and what this study did that
01:23:02
kind of highlighted a a set of data that
01:23:04
hadn't really been studied well before
01:23:06
is they used a form of spectroscopy so
01:23:09
kind of a multispectral light system
01:23:11
Shining Light at different wavelengths
01:23:13
on the liquid in a bottle in a plastic
01:23:15
bottle to figure out how many of these
01:23:17
little plastic particles there were in
01:23:19
the liquid and in doing that they found
01:23:21
that there was on the
01:23:23
order of
01:23:24
10,000 little plastic particles per
01:23:27
liter of water or per liter of soda or
01:23:29
drink or Gatorade or whatever the
01:23:31
beverage is that you're drinking the
01:23:33
real question then is well how risky is
01:23:34
that so if you look at a lot of the the
01:23:37
health agency studies the kind of well
01:23:41
adopted and and well researched efforts
01:23:43
on is there toxicity associated with pet
01:23:46
Plastics on its own they find that
01:23:48
there's very little genotoxicity or no
01:23:50
genotoxicity meaning it do doesn't
01:23:51
change your DNA there's no
01:23:53
carcinogenicity so it doesn't cause
01:23:55
cancer but there are other studies
01:23:57
recently that have shown different
01:23:59
mechanisms by which these little tiny
01:24:01
microplastics might end up in your cells
01:24:04
because they absorb into your body and
01:24:06
they're small enough that they can cross
01:24:07
into barriers they can get into your
01:24:09
brain they can get into your cells when
01:24:11
they're in your cells there are other
01:24:12
mechanistic studies that are done in a
01:24:14
Petri dish as opposed to being studied
01:24:16
in the body where they've demonstrated
01:24:18
that they could actually disrupt the
01:24:19
function of organel like mitochondria
01:24:21
endo plasmic reticulum so all these
01:24:23
little things that operate in your cell
01:24:25
they can cause irritation they can
01:24:26
trigger chemicals to be produced that
01:24:28
might cause allergies that might cause
01:24:30
inflammation and so on and so forth so
01:24:33
while the general molecule of pet itself
01:24:36
isn't known or shown in any way to cause
01:24:38
cancer or to cause changes in your DNA
01:24:41
there are other mechanisms by which
01:24:42
these little tiny Plastics might be
01:24:44
disrupting cellular function might be
01:24:46
causing other health issues and that's
01:24:48
now going to open up a big area of
01:24:50
research that that's going to be
01:24:52
predicated I think on the fact that this
01:24:54
study now shows that there are thousands
01:24:56
hundreds of thousands of little pieces
01:24:58
of tiny plastic in these plastic bottles
01:25:00
that we're drinking water and soda and
01:25:02
juice from that are getting into our
01:25:03
body and into ourselves
01:25:05
240,000 little pieces in in the average
01:25:08
one liter plastic bottle it's a pretty
01:25:11
scary statistic when you hear that small
01:25:13
enough to cross the blood brain barrier
01:25:16
right and in rats and mice they've shown
01:25:20
that these little microplastics can
01:25:21
actually accumulate in the brain if they
01:25:23
consume enough of them now the reason
01:25:25
this hasn't been well understood or
01:25:26
studied in the past is we kind of look
01:25:28
at the aggregate amount of plastic
01:25:30
that's in a liquid and it's like oh the
01:25:31
amount is so small it doesn't matter but
01:25:33
when you start to look at how small
01:25:35
these little pieces of plastic are and
01:25:38
add them up the cumulative effect over
01:25:40
time that they can actually cross into
01:25:42
cells cross the blood B brain barrier
01:25:44
maybe are not getting removed from the
01:25:45
body that's opening up a whole lot of
01:25:47
research because there's no easy way to
01:25:49
just scan a body and say is there
01:25:50
plastic in it how much plastic is there
01:25:52
because there isn't a good chemical
01:25:53
signature for it and what these guys did
01:25:55
is they used light to look in the liquid
01:25:58
to find the Plastics which we can't
01:26:00
easily do in the body today so freberg
01:26:01
are you going to drink plastic bottle
01:26:02
water anymore I'm not okay Jamal I've
01:26:06
already stopped this started for me
01:26:08
about four months ago my wife basically
01:26:10
said we're getting rid of all plastic
01:26:12
and at first I really pushed back and
01:26:14
I'm like this is crazy and she just kept
01:26:17
talking to me about it and showing me
01:26:18
all this data and yeah about a month ago
01:26:21
I would say I switch so now I use glass
01:26:24
and a cff like this yeah much better we
01:26:27
got rid of all of the plastic in our in
01:26:29
our house in the gym no more bottles
01:26:32
it's wasteful anyway like why not if you
01:26:33
have beautiful filtered water at home
01:26:35
put it in a craft sure but the the scary
01:26:37
thing I mean it's a little bit more
01:26:40
inconvenient I'll be honest with you but
01:26:41
it is very scary and I think that it
01:26:44
does alter the
01:26:45
phenotype of the human body over time
01:26:48
and I think you would have to be insane
01:26:51
to bet against against that and I
01:26:53
suspect when you look at the rates of
01:26:55
depression and autism and Alzheimer's
01:26:57
and Dementia and autoimmune diseases
01:26:59
Crohn's rheumatoid arthritis to think
01:27:02
that all of these environmental factors
01:27:05
have no impact I think is is taking a
01:27:07
very scary bet here's what I do I buy
01:27:10
these glass bottles on Amazon you know
01:27:13
two or three cases of them I have the
01:27:14
best water filter system at home we fill
01:27:17
them we put them in the refrigerator and
01:27:19
we haven't bought plastic in years uh
01:27:22
sacks wow in years in years only because
01:27:25
I care about the environment because I'm
01:27:27
a good person good for you good for you
01:27:30
Jason I'll also say like that that
01:27:31
application is a pretty small like I
01:27:34
think on the order if I'm right 80% of
01:27:36
bottled beverages are drunk outside the
01:27:38
home so people are buying stuff at
01:27:41
convenience stores at gas stations at
01:27:43
markets taking them with them to work
01:27:45
and that's how a lot of plastic bottles
01:27:47
are consumed by way remember the US is
01:27:50
such a small percentage of the global
01:27:52
population you go to Africa you go to
01:27:53
Brazil you go to China there isn't a
01:27:56
great like people don't have these
01:27:57
amenities that we have in our upper and
01:27:59
middle class America that plastic
01:28:01
bottles have provided access to products
01:28:04
that consumers around the world
01:28:05
otherwise wouldn't be able to afford so
01:28:07
there's a reason they exist but by the
01:28:09
way I I also want to just be really
01:28:10
clear there isn't conclusive evidence or
01:28:12
science that shows these plastic micro
01:28:15
particles or nanoparticles are causing
01:28:17
these health effects there's certainly a
01:28:19
lot of questions that it brings on well
01:28:21
what is the cumulative effect of these
01:28:22
little things getting into sales do they
01:28:24
get into sales what they do when they're
01:28:26
why would anybody bet that it's zero
01:28:28
right so that's theide right well the
01:28:30
upside is that people get to access
01:28:32
cheap beverages on the street that
01:28:33
otherwise people that are living on
01:28:34
$113,000 a year that can buy a you know
01:28:37
a plastic soda for 25 cents you can also
01:28:41
buy can though yeah so that's that's
01:28:44
definitely an alternative they're a
01:28:45
little more expensive generally plastic
01:28:46
just became the cheapest container Sachs
01:28:48
your
01:28:50
thoughts sorry all right guys I stepped
01:28:52
out to get a a drink here did I miss
01:28:55
anything it would be better if you had
01:28:57
put a straw in your water bottle that we
01:29:01
drinking now I understand your level of
01:29:05
depression was causing it sax just
01:29:08
killing those Arrow water bottles yeah
01:29:10
did I miss something that was a science
01:29:12
cor I stepped
01:29:13
out also I I use uh these beautiful
01:29:16
contigos I think some people use yetis
01:29:18
or other kind of things and uh I
01:29:20
actually carry them with me only because
01:29:22
I try to like think about the
01:29:24
environment just the amount of plastic
01:29:26
being created I don't know if you've
01:29:28
seen this but like you go to Whole Foods
01:29:29
now or you go to any supermarket and you
01:29:32
see this wall of salads freberg like
01:29:35
this is unconscionable like the we're
01:29:38
literally giving people salad in a giant
01:29:41
plastic box first yeah let me just say a
01:29:45
couple things about this because there's
01:29:46
this conception that this is just awful
01:29:48
awful awful but Plastics there there is
01:29:51
a degradation of these pets when they're
01:29:53
exposed to
01:29:54
sunlight there's a recycling system that
01:29:57
many of much of this material ends up in
01:29:59
much of it yeah I I think that's
01:30:02
actually correct not a lot but what
01:30:03
would the alternative be right so the
01:30:04
alternative is you put in a glass thing
01:30:06
and you charge people $15 for a couple
01:30:08
pieces of lettuce the reason the reason
01:30:10
plast the Plastic industry emerged is
01:30:12
because it provided a lowcost way to
01:30:14
transport materials and that we're we're
01:30:16
all very wealthy so we have to just step
01:30:18
outside of our bubble for a second and
01:30:20
recognize that most people you know the
01:30:22
the dollar difference is a huge
01:30:24
difference for most consumers they're
01:30:25
not going to make that dollar leap so
01:30:27
you know the fact that Plastics emerged
01:30:29
is to support a consumer Market that's
01:30:31
grown up all over the world yeah but how
01:30:33
how does this make sense look at these
01:30:34
bananas just as an example to give
01:30:36
people an idea bananas already come with
01:30:38
a case called czy and they're literally
01:30:42
wrapping bananas in plastic now and you
01:30:45
know this is where regulation makes
01:30:47
sense there must be a there must be a
01:30:49
gas in here or something cuz they're
01:30:50
trying to keep the bananas from going
01:30:52
bad that's why put in I want to shout
01:30:53
out like this is where I think
01:30:55
regulations actually do work France
01:30:58
Spain a lot of countries now are just
01:31:00
saying you know what for fruits and
01:31:01
vegetables like yeah don't put them in
01:31:03
plastic please we're not going to allow
01:31:04
you to do that and and I think I'm not
01:31:07
pro plastic by the way I'm not drinking
01:31:08
plastic from plastic bottles but we have
01:31:10
to be cognizant of where this industry
01:31:12
emerged from what the science says about
01:31:14
it like I I don't want to just be
01:31:16
flipping plastic what doing in the
01:31:19
oceans freeberg is unconscionable like
01:31:22
this is not like a do good or thing it's
01:31:23
just there's no reason that we need to
01:31:26
have Plastics as a should be I'll give
01:31:29
you some good optimism around this
01:31:32
there's a lot of efforts right now to
01:31:34
develop microbes that can actually
01:31:35
biodegrade these pet Plastics so there's
01:31:39
so we're engineering these microbes that
01:31:41
will produce enzymes these are little
01:31:43
bacteria that'll produce enzymes those
01:31:45
enzymes can then be made in the plastic
01:31:48
itself so then the plastic will
01:31:50
biodegrade within a year or after you
01:31:52
use it so there's a lot of this kind of
01:31:54
effort on how do you make naturally
01:31:55
biodegrading Plastics using biosources
01:31:57
and biological molecules as part of the
01:31:59
production process and a lot of big
01:32:01
plastic um packaging companies and
01:32:04
Industrial biotech companies are
01:32:05
investing in this area this is where
01:32:07
collectivism can do good you know like
01:32:09
if we actually as a society say we want
01:32:12
to do sustainable packaging like because
01:32:14
of the tragedy of the commons like
01:32:15
you're saying freeberg because it's
01:32:17
cheaper capitalism like there's no floor
01:32:19
here you know to stop people from doing
01:32:22
this uh and stop from using Plastics
01:32:24
unnecessarily like wrapping bananas Etc
01:32:27
all right listen this been an amazing
01:32:28
episode of the Allin
01:32:30
podcast for the dictator wish me luck
01:32:33
today boys wish me luck use the promo
01:32:35
code dick we'll be following the live
01:32:37
stream on the chat following the live
01:32:39
stream use promo code dick to get 20%
01:32:41
off your ball deodorant hey what do you
01:32:43
guys think about actually like running
01:32:45
some poker tournaments through the year
01:32:47
called Allin 100% that would be super
01:32:50
fun no 100% I think we could replace the
01:32:53
WSOP pretty quick I mean it' be pretty
01:32:57
rep the WSOP I'm not kidding we we have
01:32:59
Phil helmuth on our Squad I think
01:33:01
Jason's right and but not just helth I
01:33:03
think you could get all the pros because
01:33:04
I think the problem is like those
01:33:06
championships have been so watered down
01:33:08
right there's 52 of them just in Vegas
01:33:12
in June and July and then now you have
01:33:14
like these circuit rings so that there's
01:33:16
bracelets and rings and then there's the
01:33:18
European one then there's this one
01:33:20
there's the Bahamas
01:33:22
you you can't have I think in order to
01:33:25
be a world champion can you really have
01:33:27
like 150 winners a year sax are you
01:33:30
bored with hold him well I'll I'll play
01:33:32
with you guys but yeah I'm kind of bored
01:33:34
with it yeah I played a tournament
01:33:36
yesterday Big O 37 players I came in
01:33:39
first I don't know if you play B where
01:33:41
did you play I had a speaking gig
01:33:43
yesterday in La after the speaking gig I
01:33:45
was going to the airport I had a little
01:33:46
time and I just stopped by Hollywood
01:33:48
Park where stop you did
01:33:52
I wanted to see the new one you're the
01:33:54
best I don't know there's nothing more
01:33:57
boring playing a tournament with people
01:33:59
you don't know oh it was great it was
01:34:01
great there was like a fight tourament
01:34:03
last forever I mean I did the WSOP a
01:34:05
couple of times and you know I think I
01:34:06
lasted like three days it's a long time
01:34:09
to be playing poker table people I got
01:34:11
to the final table and they wanted to
01:34:14
chop and I was the short stack I was
01:34:15
like well you know my flights in for in
01:34:17
a couple hours I'd rather not Chop and
01:34:19
this woman like I got in a fight at the
01:34:21
casino almost this woman was wearing a
01:34:23
mask and she goes this mother effer
01:34:27
won't chop and I said ma'am I it's my
01:34:33
option to not shop Madam Madam I said
01:34:36
ma'am Madam whatever they them and she
01:34:39
went crazy and the floor came over said
01:34:41
ma'am you have to sit down she called me
01:34:43
a mother fer twice to my
01:34:45
face you went on to win and I was the
01:34:47
short stack and I went on to win the
01:34:49
tournament I kid you not how much did
01:34:51
you win 1 1400 bucks
01:34:54
so the hourly rate on that you make like
01:34:56
$14 an hour it was $100 buying so yeah
01:34:59
it was uh 200 bucks an hour but here's
01:35:01
what happened so I had this guy
01:35:02
massively you play for seven hours six
01:35:04
hours maybe it was awesome it was great
01:35:06
I was I had the time of my life it was
01:35:08
the first time I played in a tournament
01:35:10
for like since we played the one drop
01:35:12
that time I haven't played in a
01:35:13
tournament since then it was so much fun
01:35:17
Jason goes from playing the 100K buy to
01:35:19
the $100 buer I had a time of my life
01:35:22
because I've never played Big O before
01:35:24
it's where you have five cards and it
01:35:26
was high low it was so Dynamic and fun
01:35:28
oh yeah yeah big oh yeah yeah big is so
01:35:30
fun pole cards and it's high low so I I
01:35:33
was like I'll learn Big O I've never
01:35:35
I've literally not played one orbit of
01:35:36
Big O I won the tournament it was
01:35:38
awesome and so then it's me and this one
01:35:41
guy and you know I've got like I've got
01:35:43
him like three to one or whatever and uh
01:35:46
he's like listen I got to go please I
01:35:48
got my kids I was like no problem I'll
01:35:49
chop it with you if we take 400 off the
01:35:52
top for the dealers the dealer cries she
01:35:54
was like what and I was like yeah just
01:35:56
I'll chop it with you evenly and so I
01:35:58
won and I I just chopped it up and gave
01:36:00
a big tip what what did you did you get
01:36:02
like a a certificate or like I think
01:36:04
they put you on the website or something
01:36:05
like that like for let's it up yeah it's
01:36:07
on the poker Classic website that I I uh
01:36:09
or I don't know if it's called the poker
01:36:10
Classic whatever it is but my point is
01:36:12
we would have a great tournament we do
01:36:14
each of the games each of us gets a free
01:36:16
roll into the game and then everybody
01:36:18
else Buys in I like it saak do you like
01:36:19
PLO or you just like chestn
01:36:22
no I like hold them but I'm just saying
01:36:24
I wouldn't play with a bunch of
01:36:26
strangers you know I like playing with
01:36:27
friends you know but to goof off and
01:36:30
have fun yeah yeah yeah yeah yeah yeah
01:36:32
like sitting the problem with
01:36:33
tournaments you RSVP to my game to show
01:36:36
up at six show at 8:30 yeah and then
01:36:39
listen to yourself on the Pod and then
01:36:41
leave yeah he's editing the Pod at the
01:36:43
table there's a lot of things you can do
01:36:44
while at a poker game U you can watch
01:36:47
your podcast you can edit your podcast
01:36:49
for the Sultan of science the king of
01:36:52
beep David freeberg and yeah definitely
01:36:55
the Rainman himself we're live from
01:36:57
Davos we'll see you next year byebye
01:36:59
wait did you give me the shout out am I
01:37:01
I did for the dictator himself use the
01:37:03
promoe chairman dict no chairman dict
01:37:05
dictator chairman dictator use the promo
01:37:08
code chair man or dick to get 10 20 or
01:37:12
30% off can somebody from manscape
01:37:15
please let me cancel please
01:37:18
please it's like 10 bucks a month it's
01:37:20
just bucks a month I'll give you the
01:37:22
money I just don't want to get I want to
01:37:25
be able to C I'll pay you 10 bucks a
01:37:26
month to not send
01:37:30
deodorant let your winners
01:37:32
ride Rainman
01:37:37
David and instead we open source it to
01:37:39
the fans and they've just gone crazy
01:37:41
with it love you queen
01:37:44
[Music]
01:37:49
of best these
01:37:52
are that's my dog taking
01:37:57
driveways oh man my will meet me at we
01:38:01
should all just get a room and just have
01:38:03
one big huge orgy cuz they're all this
01:38:04
useless it's like this like sexual
01:38:06
tension that they just need to
01:38:08
release
01:38:13
your we need to get merch
01:38:20
our
01:38:21
[Music]
01:38:24
I'm going all
01:38:26
[Music]
01:38:27
in
