00:00:00
sacks the United States is maybe not
00:00:02
going to send weapons to Ukraine
00:00:05
indefinitely and they're asking them to
00:00:07
sit down and negotiate something that
00:00:09
people on the left
00:00:10
started to do and got I got smashed for
00:00:12
something you've been pushing for so I
00:00:14
guess mini Victory lap for you sax what
00:00:17
what's the end game here well yeah I
00:00:18
mean I've been talking common sense
00:00:19
about this for months just saying that
00:00:21
we need to be open to diplomacy because
00:00:23
total defeat for Russia also means a a
00:00:26
maximum risk of nuclear war I mean these
00:00:28
things go hand in hand that's the
00:00:29
Paradox of this war is that if Russia
00:00:32
faces the prospect of a total defeat
00:00:34
that's when they're most likely to
00:00:35
escalate this conflict into something
00:00:37
much much worse so therefore we need to
00:00:39
be open to diplomacy but it was good to
00:00:42
hear Administration officials over the
00:00:44
past week say things that I've been
00:00:46
saying for months and that I've been
00:00:47
accused of being like a Putin
00:00:49
sympathizer for so apparently there's a
00:00:51
bunch of Putin sympathizers in the
00:00:53
administration and just to read you some
00:00:55
of these remarks actually I want to play
00:00:56
like a fun game with you guys instead of
00:00:59
just oh really yeah instead of just
00:01:00
mentioning these quotes
00:01:03
I want to play a game called Millie or
00:01:05
sax
00:01:06
so I want you guys to guess okay whether
00:01:09
it was General Millie who said the quote
00:01:11
or whether I said the quote okay does
00:01:13
that sound like a fair fair game yes
00:01:14
fair game let's put some game show music
00:01:16
here
00:01:18
yeah Leo sax I'm gonna read you like
00:01:21
four or five quotes and you guys are
00:01:22
gonna say whether it was Millie yeah or
00:01:24
sax who said it first quote who said it
00:01:26
General Millie or sax one of the lessons
00:01:29
that should have been learned from World
00:01:31
War one is that European powers refusal
00:01:34
to negotiate compounded the human
00:01:35
suffering and led to Millions more dead
00:01:37
million or sex sex I'm going sax I'm
00:01:40
going sex it's a very historic Millie
00:01:42
said that no next one next one go go go
00:01:45
okay a regional War turned into the
00:01:48
first world war because all parties made
00:01:50
Maximus demands and assumed others were
00:01:52
bluffing it can happen again exactly or
00:01:54
something you said bluffing that
00:01:57
bluffing is a word that you would use
00:01:58
all right that was sex that was sex
00:02:00
maximalist yes okay would never say
00:02:02
maximalist yes he would never say
00:02:03
bluffing yeah go ahead where there's an
00:02:05
opportunity to negotiate when peace can
00:02:07
be achieved seize it Millie Miller it's
00:02:11
very it's pithy it's pithy like Millie
00:02:12
all right that was Millie yes good all
00:02:14
right I'm two and one two in one me and
00:02:16
you two for one two for one it's deeply
00:02:18
Earth responsible not to try for
00:02:19
diplomacy when the stakes are so high
00:02:21
sax that's an emotional statement I go
00:02:24
milk it was socks
00:02:27
damn it two and two three there has to
00:02:30
be a mutual recognition that military
00:02:33
Victory is probably in the true sense of
00:02:35
the word may not be achievable through
00:02:36
military means and therefore you need to
00:02:38
turn to other means oh that's Millie
00:02:39
it's a word
00:02:43
to work it's a milli word salad it's too
00:02:45
too convoluted for sacks Saks I'll go
00:02:48
Millie I go Millie I think it's Millie
00:02:49
that's Millie yeah smart salad Millie Ah
00:02:52
that's it I caught up now I'm three and
00:02:54
two tied with your mouth last one last
00:02:56
one okay it must be our objective now to
00:02:59
help achieve a ceasefire and negotiated
00:03:00
peace rather than protract the conflict
00:03:04
um wow it's so formal nilly so formal
00:03:07
feels like somebody said that on the
00:03:08
steps of like a building outside it's
00:03:10
very formal
00:03:12
it's well spoken it's crisp can we hear
00:03:16
it one more time may we hear it one more
00:03:18
time it must be our objective now to
00:03:21
help achieve a ceasefire and negotiated
00:03:23
peace rather than protract the conflict
00:03:25
Millie it's a little too formal for a
00:03:28
podcast
00:03:29
but in a tweet it wouldn't be so it
00:03:32
could be a sex Tweed but I'm thinking
00:03:34
this little podcast I gotta go melee I
00:03:36
gotta go Melly sex ah God damn it damn
00:03:39
it you can't tell Millie from Saks is
00:03:42
what we've learned what a great game
00:03:44
right now we're gonna play the next game
00:03:46
this is called Bernie Madoff or SBF
00:03:52
Ernie Madoff or SPF
00:03:55
[Applause]
00:03:57
[Music]
00:04:09
[Music]
00:04:13
all right everybody Welcome to the all
00:04:15
in pod with us again the dictator in a
00:04:18
beautiful
00:04:19
purple sweater sweater Karen
00:04:21
man it's The Fall season will be the
00:04:24
inside the inside of this is suede oh
00:04:27
very nice very nice so uh multiple
00:04:30
animals killed you are a pleasure yeah
00:04:34
got it all right what animal do they
00:04:36
kill to make suede is that like a type
00:04:38
of leather or what is that I hope it's
00:04:40
an endangered one
00:04:44
well actually that version of sway that
00:04:46
he's wearing is from a white rhino so
00:04:48
they just take the hide and they throw
00:04:50
everything else away oh my God so hard
00:04:55
can we take this out of this these are
00:04:58
ivory buttons
00:05:02
I think it's baby seal fur around the
00:05:05
house
00:05:06
no how many baby seals were killed to
00:05:09
make your outfit all right also with us
00:05:10
is uh the Sultan of science uh David
00:05:12
Friedberg racing from the airport how is
00:05:15
that JetBlue mint yeah I heard you
00:05:16
upgraded to Mint no comment
00:05:19
well you don't want to talk about the
00:05:20
1200 upgrade you did to your JetBlue
00:05:22
ticket wait you don't want to talk about
00:05:23
JetBlue mint why are you embarrassed to
00:05:26
fly commercial what did you eat
00:05:30
are you embarrassed to fly jaycal yeah
00:05:34
I'm the president I'm like hold on mint
00:05:38
coming through all right then I start
00:05:40
spreading out I think Jayco Class is
00:05:42
like the seat by the bathroom
00:05:44
in the back do you think you save 150
00:05:47
bucks each way what is is JetBlue meant
00:05:49
the name of like JetBlue mint is their
00:05:51
first class uh Coast to Coast it is so
00:05:55
delightful
00:05:56
they just have figured out a way to make
00:05:59
like sleeper seats you know that are
00:06:00
very nice and it's an upgraded service
00:06:03
where they they put like a little wall
00:06:04
between you and everybody else it's kind
00:06:06
of like having a private plane if you
00:06:08
didn't and um sax is here the whole
00:06:10
Cruise here basically uh we'll have a
00:06:12
surprise uh bestie guesty jumping in in
00:06:15
the middle of this I'm not going to tell
00:06:16
you who because nothing's going on this
00:06:18
week nothing is going on this week I
00:06:19
mean there's so much to talk about let's
00:06:20
just start with
00:06:22
the elections and then we have to start
00:06:24
with my mayor culpa
00:06:26
throwing red meat to sacks but I mean at
00:06:28
this point all right so DeSantis won by
00:06:30
double digits in Florida he got a huge
00:06:32
amount to the vote but all the Trump
00:06:33
high profile Trump back candidates seem
00:06:35
to have lost Dr Oz
00:06:37
Dan Cox just it was a shellacking I
00:06:41
guess or the Red Wave became like a
00:06:43
puddle or like an eye dropper or
00:06:46
something
00:06:47
but some of the Trump back candidates
00:06:48
did win some of the um Peter Thiel
00:06:51
collection JD Vance one
00:06:54
so I guess that's a big win I wasn't a
00:06:57
trump candidate though because if you
00:06:58
remember when uh Trump went to stump for
00:07:00
JD Vance he forgot his name I got his
00:07:02
name so anybody from your side you don't
00:07:06
need friends anybody that Trump actually
00:07:08
cared about
00:07:09
turned out to be just a complete dud and
00:07:11
lost and everybody that kind of you know
00:07:14
had to keep him somewhat around just so
00:07:16
that he didn't throw bombs
00:07:18
actually did decently but I mean Trump
00:07:21
is a just a a weight on the neck of the
00:07:24
Republican party and it's time to just
00:07:27
get rid of him sax what happened to your
00:07:31
Red Wave yeah listen I got this wrong
00:07:34
um I think there's a few reasons for it
00:07:36
so I think when you get an election
00:07:37
wrong you have to admit it and figure
00:07:39
out what you've what you what your
00:07:40
mistake was otherwise you're not going
00:07:42
to improve I mean number one I was
00:07:43
looking at you know the RCP polling this
00:07:46
real clear politics were they taking
00:07:47
average of all the different polls they
00:07:49
were adding a factor to it they were
00:07:51
showing by the way plus three or plus
00:07:53
four in the center for Republicans but
00:07:55
they were adding a factor to it based on
00:07:57
the underweighting uh that the pollsters
00:07:59
did in the last election cycle and it
00:08:01
turns out that the pollsters I think did
00:08:03
a pretty decent job correcting their
00:08:04
polls and so the RCP overweight turned
00:08:07
out to be just basically completely
00:08:09
wrong the other thing that I got wrong
00:08:11
was I was looking at the fundamentals I
00:08:13
mean three quarters of Americans think
00:08:14
we're on the wrong track and we're in a
00:08:16
recession So based on that you would
00:08:19
think that this would be a great year
00:08:21
for republicans and in fact the out of
00:08:24
power party usually wins in a midterm
00:08:27
and Biden's popularity is at historic
00:08:29
lows at like 41 42 so everything was
00:08:33
teed up for the Republicans so what went
00:08:36
wrong I think a couple of things number
00:08:37
one two days before the election Trump
00:08:40
basically comes out in pre-analysis that
00:08:41
he's running oh yes you know this
00:08:44
basically plays into the narrative that
00:08:46
Biden has already created that this is a
00:08:48
this is not a referendum on Biden it's a
00:08:51
referendum on democracy and basically
00:08:53
Trump made it into a choice election who
00:08:55
do you like better Biden or Trump and
00:08:57
the fact of the matter is if you look at
00:08:59
the exit polling as unpopular as Biden
00:09:01
is Trump is even more unpopular so that
00:09:04
did absolutely nothing to help the
00:09:06
Republicans in it I think it really hurt
00:09:07
them at the margins the other thing that
00:09:10
turned out I think the other big thing
00:09:11
that helped Democrats was Dobbs and I
00:09:14
never thought that it wouldn't be a
00:09:15
factor but if you looked at the polling
00:09:17
before the election 15 of likely voters
00:09:21
said that it was their number one issue
00:09:23
if you looked at Exit polling after the
00:09:25
election it was 28 so Dobbs turned out
00:09:27
to be twice as significant as what the
00:09:29
early polling was showing and if you
00:09:31
remember Jason go back to the episode we
00:09:32
did on abortion I said the shrewd play
00:09:35
for Republicans here was that Roberts
00:09:37
compromise what did Roberts want to do
00:09:39
he basically was going to allow the
00:09:41
15-week restriction on abortion but not
00:09:44
have the headline of Roe v Wade
00:09:46
overturned and that basically is what
00:09:49
DeSantis implemented in Florida he
00:09:51
basically restricted abortion after 15
00:09:53
weeks it's the purple State compromise
00:09:55
it's where I think the purple States and
00:09:57
where most of the country is going to
00:09:59
end up and the sooner Republicans get
00:10:01
their heads wrapped around that fact the
00:10:03
better they're going to be long term and
00:10:05
ask you one question their sax who
00:10:07
stacked the Supreme Court deliberately
00:10:10
to turn over Roe v win listen I mean
00:10:12
there this was a long-term priority of
00:10:15
Republicans obviously that's not a
00:10:17
question Jacob well no when we you have
00:10:19
to recognize that Trump said he would do
00:10:20
that he did it so this is doubly Trump's
00:10:22
fault every party nominates justices
00:10:24
that align with their values and it
00:10:26
Cycles yeah but Trump said he's going
00:10:28
Trump said he would specifically do it
00:10:30
in order to know what the president
00:10:32
doesn't choose who dies in the Supreme
00:10:34
Court and when yeah right
00:10:36
yeah it's also more complicated than
00:10:39
that because what does Dobb's decision
00:10:40
did is throw the issue back to the
00:10:42
states and the fact of the matter is
00:10:44
that now it's up to each of these states
00:10:46
to determine where they're going to come
00:10:48
out in this issue so if you look at
00:10:50
there were ballot initiatives in red
00:10:52
States like Kansas and like Kentucky
00:10:56
that's right that's what I'm saying is
00:10:57
there a pro-life ballot initiatives in
00:10:59
red states that lost and so you can see
00:11:02
all over the country that the
00:11:04
Republicans tried to go too far or they
00:11:06
do try to go too far when they try to
00:11:08
impose a total ban what it seems to be
00:11:11
popular is this what I'm saying is the
00:11:13
purple stay compromise it's what yes
00:11:15
DeSantis did in Florida it seems like
00:11:18
most of the country tree we talked about
00:11:19
this on that episode yeah most of the
00:11:21
countries in the messy middle they want
00:11:23
abortion to be safe legal rare and early
00:11:26
they're willing to support it in say the
00:11:29
first 15 weeks but then after that there
00:11:31
needs to be some restrictions that I'm
00:11:33
saying most the country supports that
00:11:34
now it's also the case that Democrats
00:11:37
though are staking at a pretty extreme
00:11:40
position too because most of the
00:11:41
Democrats were taking the position that
00:11:43
abortion should be legal up into the
00:11:45
ninth month which is not even that's
00:11:47
more radical than even Roe Roe said that
00:11:49
you can restrict it after 23 weeks so
00:11:52
you know what we said on that podcast
00:11:53
Jason was the party that gets the middle
00:11:56
first on this issue is the one that's
00:11:58
going to do well not just this issue
00:11:59
yeah and I and I think yes I think it's
00:12:01
true on this and I think it's true on
00:12:03
other things so look I think the
00:12:04
Republicans can correct here pretty
00:12:06
easily if they listen to folks like
00:12:09
DeSantis and yonkin and Kemp uh people
00:12:13
who understand that they have there's a
00:12:14
compromise here and the ones who
00:12:16
basically insist on pushing a total ban
00:12:19
are going to go down in flames there's a
00:12:22
couple of things I think that are worth
00:12:23
looking at now that we have all the exit
00:12:26
polling and the results
00:12:28
the Democrats strategy of helping to
00:12:32
promote
00:12:33
these extremist Maga candidates in the
00:12:35
primaries turned out to be a huge
00:12:37
winning strategy because every single
00:12:39
one that they helped put up against the
00:12:42
Democrat the Democrats won but number
00:12:45
two so what that shows is the extreme
00:12:47
right
00:12:48
cannot field a winning candidate but on
00:12:51
the other side all of these extreme
00:12:54
left-leaning Democrats
00:12:56
also did not do very well either and so
00:12:58
you're back to David what you said which
00:13:00
is we have been saying for a while the
00:13:03
winning strategy is that messy middle
00:13:05
it's the moderate person that kind of
00:13:07
like talks to the center and this is
00:13:10
what you see everywhere around the
00:13:12
country all of the battle ballot
00:13:13
initiatives every time you had an
00:13:15
extremist ballot initiative whether it
00:13:17
was a complete ban on abortion in a red
00:13:20
state or whether it was a tax the rich
00:13:23
policy in a blue State they failed and
00:13:26
so I think the message that you have to
00:13:28
take away is the extreme left doesn't
00:13:30
work the extreme right doesn't work
00:13:32
right if you look at for example like
00:13:34
Kathy hokel almost lost in New in New
00:13:37
York state because of who because of
00:13:39
like AOC and all of that extremist
00:13:41
Progressive Rank and file of that party
00:13:44
so people need to really understand and
00:13:46
look at the data on the ground if you
00:13:48
want to win in 24 you got to be in the
00:13:50
middle and you got to clean up all of
00:13:51
this extremist rhetoric freeberg any
00:13:53
thoughts I think the Georgia Senate
00:13:56
runoff race that we had
00:13:58
in the 2020 election
00:14:00
cost the U.S 10 trillion dollars and I
00:14:04
think it uh because if you'll remember
00:14:06
that was the race that when the
00:14:08
Democrats won tipped the power in Senate
00:14:11
to the Democrats and all this
00:14:13
legislation for the last two years was
00:14:15
passed including
00:14:17
a lot of the fiscal stimulus and
00:14:19
spending that very likely may have faced
00:14:22
significantly more opposition than could
00:14:24
have been faced where the Democrats had
00:14:27
the White House and the Senate and the
00:14:29
house and so that single seat and and
00:14:33
the loss of that seat in the runoff to
00:14:35
the Democrat Party
00:14:36
I think ended up allowing a lot of
00:14:40
loose Behavior over the last two years
00:14:42
that's going to cost this country for a
00:14:44
very long time and in part perhaps we
00:14:47
could argue a lot of the inflationary
00:14:49
pressure and now the debt load the U.S
00:14:51
debt load increasing by 10 trillion
00:14:53
dollars in the last two years since that
00:14:54
election by the way
00:14:56
and so I think one of the most important
00:14:58
things that perhaps people don't
00:15:00
cognizantly recognize but feel in some
00:15:03
way is that having a balance of power is
00:15:05
really important in this country and so
00:15:07
to some degree while there may be issues
00:15:09
that folks can argue about disagree
00:15:11
about there may be candidates that are
00:15:13
vile to us I think ultimately folks are
00:15:16
recognizing the benefit and the value
00:15:17
and having a good legislative debate and
00:15:21
a good check and balance in this country
00:15:22
and so I I think that there's a lot of
00:15:25
what sax is saying that that ties into
00:15:27
that kind of emotional conditioning
00:15:29
that's probably underway okay sax Trump
00:15:30
said he was going to announce
00:15:32
he went after DeSantis called him to
00:15:34
sanctimonious obviously the the Trump
00:15:36
endorsements here didn't help uh Roe v
00:15:39
Wade didn't help the situation
00:15:42
what is going to happen here is the
00:15:44
Republican Party finally going to cut
00:15:46
ties because they want to start winning
00:15:48
or uh is Trump going to just announce
00:15:51
next week and cause massive chaos what's
00:15:54
going to happen in the Republican Party
00:15:55
in the coming weeks because we're 14
00:15:57
months away from Iowa right I mean this
00:15:59
is so now the next issue the question
00:16:01
comes down to do Republicans want to
00:16:03
start winning elections yes or no and
00:16:05
Freeburg brought up the the right point
00:16:07
in the last election cycle he's right
00:16:09
that the reason why we got 10 trillion
00:16:11
dollars of unnecessary spending is
00:16:13
because of that Georgia runoff see we're
00:16:16
about to have another one where Purdue
00:16:17
won that seat on Election night and then
00:16:21
Warnock won in the runoff why did things
00:16:23
go against Purdue because Trump had a
00:16:25
six-week hissy fit after the election
00:16:28
the Georgia runoff happened on January
00:16:30
5th and it all culminated in the ride on
00:16:32
January 6th so the fact of the matter is
00:16:35
Trump has been having this extended
00:16:38
hissy fit and living in denial since the
00:16:40
loss in 2020 and a as a result of that
00:16:43
we lost the Georgia runoff I think we
00:16:45
did worse than we had to in this midterm
00:16:48
I think we're going to lose the Georgia
00:16:49
runoff again if Trump continues with
00:16:51
these Antics and so it really comes down
00:16:53
to Republicans do you want to win and
00:16:56
look I know that there's call it 40
00:16:57
percent of the country passionately
00:16:59
loves Trump but here's the problem he's
00:17:02
capped at 40 percent Independence and
00:17:05
moderate centrists will not give the guy
00:17:07
another look and so you cannot win a
00:17:10
major national election in this country
00:17:11
with 40 percent of the vote no matter
00:17:13
how passionate that 40 percent is you
00:17:16
know what 40 percent is 40 percent is
00:17:18
Charlie Crist the guy who just answers
00:17:20
beat who wiped out
00:17:22
in Florida that was a 60 40 election
00:17:24
that is what a 40 of the electorate
00:17:28
looks like Landslide it's a landslide
00:17:31
exactly so the bottom line is that who
00:17:34
your messenger is in politics is
00:17:37
incredibly important and Trump just
00:17:39
gives his enemies way too much to work
00:17:41
with now if he weren't a republican it
00:17:44
might be different take fetterman for
00:17:45
example okay this guy fetterman okay
00:17:47
he's being portrayed as this man of the
00:17:49
people he's got the goatee and the the
00:17:52
tattoos and the hoodie or whatever who
00:17:54
is he really he's a trust fund kid who
00:17:56
never had a job until his mid-40s but
00:17:58
the Press completely gives them a pass
00:18:00
on that they would never do that for
00:18:02
Republican if federmen were a republican
00:18:03
the Press would expose him in two
00:18:05
seconds now that's a complaint but the
00:18:07
fact of the matter is Republicans
00:18:08
deserve to accept it these are the rules
00:18:10
of the game if you're a republican
00:18:11
candidate for office you have to be
00:18:13
perfect you have to be focused you have
00:18:14
to be disciplined you have to be
00:18:16
DeSantis you cannot give your opponents
00:18:19
something unnecessary to work with every
00:18:21
fight DeSantis pix has been a smart
00:18:24
fight that he's won and same thing with
00:18:26
Len yonkin as well he doesn't give his
00:18:28
opponents things to work with and unless
00:18:31
Republicans realize that these are the
00:18:32
kinds of candidates we need to nominate
00:18:33
in this media environment we're going to
00:18:35
keep losing elections
00:18:37
yeah
00:18:38
any final thoughts here as we wrap up
00:18:40
election I'm going to DC next week doing
00:18:42
the rounds high five and back slapping
00:18:45
yeah just to finish the thought one
00:18:47
other quote from New Hampshire Governor
00:18:49
Krista Nunu who's kind of a he's a
00:18:51
republican who's been in space with
00:18:53
Trump he said listen the message of this
00:18:55
election is first fixed crazy then fixed
00:18:58
policy
00:19:00
if you're coming across like you're
00:19:02
crazy their voters will reject you now
00:19:05
that doesn't mean you can't stand for
00:19:07
principle Ron DeSantis says that Florida
00:19:09
is where woke goes to die he says we
00:19:12
will fight woke in the boardrooms we'll
00:19:13
fight in the classrooms this is
00:19:15
certainly not a liberal position these
00:19:16
are pretty conservative positions he's
00:19:17
taking but he does it in a calculated
00:19:20
disciplined way I'll say this right now
00:19:22
he is a winning candidate and the scale
00:19:27
of Reagan if the Democrats also don't
00:19:30
figure out how to clean up their act
00:19:32
because the other message that's so
00:19:34
interesting that I took away is the
00:19:37
legislative agenda that works is
00:19:39
actually what Biden has always believed
00:19:41
the problem is that Biden seems to get
00:19:44
distracted or confused or hijacked by
00:19:46
the left wing of his party and they
00:19:49
introduced all these unbelievably crazy
00:19:51
iterations of progressive policy that
00:19:53
just are not popular even in blue States
00:19:56
just look at the number of bills that
00:19:59
failed
00:20:00
so he also has to fix what he's doing by
00:20:03
the way because he doesn't think that
00:20:05
could fail uh the a U.S judge in Texas
00:20:07
I'm not sure you can tell me if this is
00:20:09
legit or uh or not no they stayed that
00:20:12
well we should talk about that in the
00:20:14
context of the economy actually well
00:20:15
that was predictable that was
00:20:16
predictable thrown out is completely
00:20:19
unconstitutional for a presence of a
00:20:21
trillion dollars without congress's
00:20:23
approval can I build on Jamal's Point
00:20:24
here DeSantis won Miami-Dade County
00:20:26
which went for Hillary by 30 points okay
00:20:29
he showed that a competent executive a a
00:20:34
an energetic youthful operator who
00:20:37
actually runs the state well okay can
00:20:40
win over moderation Independence and
00:20:42
Democrats no he's the winner these are
00:20:44
the types of candidates Republicans are
00:20:45
yeah he's a winner he's the winner we
00:20:46
got uh we got a call breaking in here uh
00:20:49
we have a special bestie guesty you know
00:20:50
it's been a big news week it's not just
00:20:52
the elections FTX crypto exchange went
00:20:55
belly up and uh we thought well let's
00:20:56
bring somebody in who's super credible
00:20:58
in crypto and that's a friend of the
00:21:00
past God it's credible because he's
00:21:01
wearing a tie yeah hey Brian I'm shrunk
00:21:03
how are you doing brother Ryan Armstrong
00:21:04
you look fantastic yeah what are you
00:21:06
testifying today I'm doing great it's
00:21:08
not it's not Montclair and it's not uh
00:21:10
Laura Piana but um you know normally I
00:21:14
just I just wear the black T-shirt and
00:21:16
the hoodie but you know when times like
00:21:18
this I gotta go talk to Media policy
00:21:20
makers regulators and it's a it's a good
00:21:22
time to you know spruce up the image
00:21:24
this is a week to break out the tie yeah
00:21:26
Hey listen Men's Warehouse it never
00:21:28
looked better you look great thank you I
00:21:30
see a red tie and I think fiscally
00:21:32
responsible
00:21:35
I guess Brian just to kick it off FTX in
00:21:39
spectacular fashion blew up this week
00:21:41
and uh it's pretty gnarly you run an
00:21:44
exchange as well what's your take on
00:21:46
what happened with FTX and then what is
00:21:48
your position in terms of making sure
00:21:50
your customers understand that coinbase
00:21:52
is not going to have a similar Fate To
00:21:54
All the Other exchanges that seem to be
00:21:56
blowing up every couple of months yeah
00:21:58
well first of all I mean I think we were
00:22:00
all shocked that somebody like Sam who
00:22:02
seemingly is so smart and and capable
00:22:06
ended up in this really the situation
00:22:08
where he appears to have done something
00:22:09
quite unethical and illegal so you know
00:22:13
my job right now this week has been to
00:22:14
go out there and just help people
00:22:15
understand that coinbase is not like
00:22:17
that we've been pursuing a different
00:22:19
strategy for the last 10 years
00:22:21
we're a public company we're we're
00:22:23
regulated our financial statements are
00:22:24
audited they can show that you know
00:22:26
customer funds are segregated they're
00:22:28
backed one to one we're not investing
00:22:30
customer assets without their explicit
00:22:32
Direction and so that's been the first
00:22:34
step is just to make sure people
00:22:35
understand that but then after that we
00:22:38
need to kind of think about how we go
00:22:40
forward as an industry here and both
00:22:42
take a long-term perspective make sure
00:22:44
the good companies in the space aren't
00:22:46
allowing one or two Bad actors to kind
00:22:48
of mess it up for everybody else and it
00:22:50
feeds into the whole regulatory story
00:22:52
too because companies like coinbase are
00:22:54
already regulated but we're regulated
00:22:56
like a traditional financial service
00:22:57
business but we don't have clarity about
00:23:00
the crypto specific regulations like
00:23:02
what's a commodity what's a security and
00:23:04
that lack of regulatory Clarity I
00:23:06
believe has pushed a lot of this
00:23:07
business offshore to these less
00:23:09
regulated exchanges that's part of what
00:23:11
caused the blow up today they were based
00:23:13
in the Bahamas you know and they just
00:23:15
there's not sophisticated Financial
00:23:17
Regulators overseeing what they were
00:23:18
doing Brian there's a lot to unpack but
00:23:22
maybe we can just take a step back and
00:23:24
for the uninitiated or for the person
00:23:27
who's only been just following this very
00:23:29
superficially can you just in a nutshell
00:23:32
explain what happened yeah so my
00:23:35
understanding is and again this is from
00:23:37
people I've talked to and I spoke with
00:23:39
Sam and CZ briefly during this but I
00:23:41
didn't get details from them I got it
00:23:42
from other people you spoke to them this
00:23:44
week yeah I mean this was all going down
00:23:46
I mean I spoke to Sam about you know he
00:23:48
was trying to raise emergency financing
00:23:50
and things like that and I spoke to Cece
00:23:52
about why he was considering buying the
00:23:54
asset I thought it was a bad idea
00:23:57
but my understanding of what happened at
00:23:59
this point again I don't have all the
00:24:00
facts this is just my my understanding
00:24:02
is that
00:24:03
you know FTX was in a position where
00:24:06
they had this Market maker Alameda that
00:24:09
was investing in Risky things and that's
00:24:10
fine like market makers hedge funds
00:24:12
they're designed to take more risk it
00:24:14
appears at this point that back during
00:24:16
the last uh shake up in the crypto
00:24:19
industry where you know it's Terra Luna
00:24:21
and Voyager and Celsius and three arrows
00:24:23
went under it appears that Alameda took
00:24:26
a big loss at that time as well they may
00:24:28
have even been underwater and instead of
00:24:31
just saying hey you know this hedge
00:24:32
fund's going to blow up too which would
00:24:34
have been unfortunate people would you
00:24:35
know Sam would have lost money it's
00:24:36
embarrassing but it's not illegal for a
00:24:38
hedge fund to blow up that happens with
00:24:41
some regularity instead of just letting
00:24:43
it blow up it seems like at this point
00:24:45
he took customer funds but you have to
00:24:48
explain he all he owns both that's for
00:24:50
the people that may not understand that
00:24:52
right so it's a related part he owns his
00:24:55
own exchange called FDX and he owns his
00:24:56
own hedge fund called Alameda which
00:24:58
operates inside of FTX as well as in
00:25:00
other places right but again Alameda
00:25:03
seems to have
00:25:04
blown up sorry Brian back to you yeah so
00:25:07
it seems they had this solvency issue
00:25:10
and instead of just letting it blow up
00:25:12
Sam basically said um hey we have a
00:25:14
bunch of customer assets over here at
00:25:16
FTX or he somehow basically made a loan
00:25:18
from FTX into Alameda to try to prop it
00:25:21
up I don't know why he did that I mean
00:25:23
that that's the moment in my mind where
00:25:26
he crossed the line into probably
00:25:27
committing fraud and I I think he
00:25:29
probably lied to users lied to investors
00:25:32
and he went around and tried to bail out
00:25:34
these different companies like like
00:25:36
Voyager and blockfy and to sort of prop
00:25:38
up this thing and and maybe he thought
00:25:40
he could trade his way out of it or
00:25:42
something I I'm not sure but that seems
00:25:44
to be where the mistake was made Brian
00:25:46
can ask one question which I which I
00:25:48
think will help frame the contagion risk
00:25:51
set of questions that everyone's having
00:25:53
when people have an asset we all talk
00:25:56
about customer deposits and customer
00:25:57
assets held at these exchanges but those
00:26:00
assets and those deposits are very often
00:26:03
some form of coin I have someone amount
00:26:05
of Bitcoin some amount of ether some
00:26:06
amount of something else is it the case
00:26:09
that there's an assumption of total
00:26:11
asset value that's held in a in a
00:26:15
portfolio of coins that doesn't
00:26:17
necessarily match the individual users
00:26:20
accounts and then when one coin goes
00:26:23
down in value nominally to dollars that
00:26:25
the whole value of the portfolio goes
00:26:27
down and now you can't actually make the
00:26:29
customers whole so in the statements
00:26:31
that have been made by these guys and
00:26:33
other exchanges that we have enough
00:26:36
liquidity to cover customers accounts
00:26:38
that the Assumption might be we have
00:26:40
enough liquidity if you assume the
00:26:42
current market price for a whole bunch
00:26:44
of different coins but then if one coin
00:26:46
tanks the total liquidity tanks and they
00:26:48
don't actually have it matched up
00:26:50
correctly because now the customer
00:26:51
account value didn't go down as much as
00:26:53
the exchange of the total uh asset value
00:26:56
does that make sense it does and is that
00:26:58
part of the contagion risk that's going
00:26:59
on here is that they're not matched
00:27:01
truly between customer accounts and the
00:27:04
exchanges you know holding of coins so
00:27:06
not exactly okay so if you're a
00:27:09
regulated financial service business
00:27:10
um that's but you're not a bank
00:27:12
you know we're regulated as a Trust
00:27:14
Company a money transmitter Etc you're
00:27:16
required to hold customer assets one for
00:27:18
one and denominated in the the asset so
00:27:21
in other words if you say you the
00:27:23
customer has one Bitcoin you have to
00:27:24
hold one Bitcoin if they say they have a
00:27:26
hundred dollars you have to hold a
00:27:27
hundred dollars and so that's the case
00:27:29
with coinbase you don't have to take our
00:27:31
board for it by the way you can look at
00:27:32
our audited public financial statements
00:27:33
as a public company with a independent
00:27:36
you know big four accounting firm who
00:27:37
went to go verify all of that and that's
00:27:39
what various custodians and exchanges
00:27:42
that's what they all should be doing if
00:27:44
by the way if you're regulated as a bank
00:27:45
you can actually uh go invest some of
00:27:47
those but there's very strict regulation
00:27:49
around that and capital requirements and
00:27:50
whatnot and we're not a bank so we we
00:27:53
hold one to one now if you're an
00:27:55
investment fund or a hedge fund or or
00:27:57
something like that then you can try to
00:28:00
take positions in different coins and
00:28:02
different assets and they could go up
00:28:03
and they could go down you know you may
00:28:05
you may lose your investors money but
00:28:07
there's no such thing as the customer
00:28:10
assets being involved in that there
00:28:12
needs to be clear segregation of those
00:28:14
customer funds and from from what an
00:28:17
investment fund would be or corporate
00:28:18
funds and that's where they got in
00:28:20
trouble they basically co-mingled
00:28:22
customer funds with their hedge fund a
00:28:24
massive fund yeah can you explain the
00:28:25
contagion by the way just so we can
00:28:27
because everyone's been talking about
00:28:28
the contagion and understanding what's
00:28:30
next so that's why I just want to yeah
00:28:32
because I think people are going to be
00:28:32
asking that a lot this weekend
00:28:34
yeah so I do think there's there is some
00:28:36
contagion risk here I think there's
00:28:38
other firms that had first of all
00:28:40
there's firms that had money just
00:28:42
sitting in FTX and that's now going
00:28:43
through bankruptcy court so that's been
00:28:45
bad I mean multi-coin came out publicly
00:28:47
and said that they had 10 percent of
00:28:48
their portfolio sorted on FDX
00:28:51
um there's other firms that Alameda may
00:28:53
have had loans with
00:28:56
and those firms are probably struggling
00:28:58
I you know I don't want to say who but
00:29:00
we have received a couple of inbound
00:29:02
calls from other people trying to get
00:29:04
emergency financing there's people who
00:29:06
may have just totally different from fgx
00:29:09
and Alameda they may have just had their
00:29:10
own portfolio that they took margin or
00:29:12
leverage on to buy crypto and now as the
00:29:14
prices have come down a little bit
00:29:15
they're getting stopped out so um that's
00:29:19
all been very challenging and I again
00:29:20
just for the sake of clarity I should
00:29:22
say that coinbase did not have any
00:29:24
material exposure to Alameda FTX or ftt
00:29:27
token can we just talk about this issue
00:29:28
of customer deposits because this is
00:29:30
really a Crux of the issue from a legal
00:29:32
standpoint right I mean I remember when
00:29:34
I was doing PayPal like 22 years ago and
00:29:37
the company was like six months away
00:29:38
from running out of money I remember the
00:29:39
lawyers told us really clearly
00:29:41
you cannot use customer deposits to fund
00:29:44
the operating expenses of your business
00:29:45
in other words if this business ends up
00:29:47
going bankrupt you'll still have all the
00:29:49
customer money there and they'll be able
00:29:50
to get it back and you know it was
00:29:52
really clear like hey if you use
00:29:54
customer funds to pay for the burn of
00:29:57
the business to operate the business
00:29:58
that is a do not pass go go directly to
00:30:01
jail type offense and so like that's
00:30:05
really the heart of this now I read in
00:30:07
some articles covering this that the way
00:30:09
it worked is that Alameda had a bunch of
00:30:13
these ftt or F these ftxt called ftt
00:30:18
and they basically use that as like a
00:30:20
marker as collateral so that they
00:30:22
basically borrowed what is it like six
00:30:25
billion of customer funds
00:30:27
from FTX and then they use their own
00:30:29
token
00:30:30
to then as collateral so back stop it
00:30:33
yeah exactly and then what happened is
00:30:34
apparently like CZ got wind of this and
00:30:38
he owned a whole bunch of these tokens
00:30:40
and he signaled that he was going to
00:30:42
dump it and the price basically went
00:30:43
down and so now all of a sudden the
00:30:45
collateral for the customer loans was
00:30:48
insufficient and then there was a run on
00:30:49
the bank and by the way this has
00:30:51
happened this happens in the public
00:30:52
markets a lot as well so like when you
00:30:54
see heavily shorted names or when you
00:30:57
know that certain hedge funds are on the
00:30:58
brink other hedge funds will go in and
00:31:01
essentially Force
00:31:03
a margin call and a stop out because
00:31:05
then it's what causes all these runs and
00:31:07
if you look actually inside a GameStop
00:31:09
the reason why you got all this
00:31:10
gamification in the game stock equity
00:31:12
and a bunch of these other names was in
00:31:14
part because of this Dynamic folks that
00:31:16
are highly levered folks that don't have
00:31:19
the right matching of risk
00:31:21
and what happens is they're solvent but
00:31:25
a liquid
00:31:26
and then if you run the instrument into
00:31:30
the ground they both become insolvent
00:31:32
and illiquid all at the same time
00:31:36
so Brian the question is now that we
00:31:39
know what happened which is all of these
00:31:40
crazy inner party related transactions
00:31:43
and you know all of this stuff seems
00:31:46
very illegal
00:31:47
there was a bankruptcy filing today and
00:31:50
up until today it seemed like this issue
00:31:54
was really about FTX International and
00:31:57
Alameda and it didn't touch FTX us which
00:32:01
for a lot a long time tried to position
00:32:04
itself as you know well run and
00:32:06
regulated as coinbase to be you know
00:32:08
they tried to say that
00:32:09
but now if you look inside the Wall
00:32:11
Street Journal all the Articles say that
00:32:13
this is actually FTX group so the whole
00:32:15
thing seems to be imperiled can you just
00:32:17
help us explain that because there now
00:32:19
that's a lot of us people that were
00:32:21
following the rules thinking that this
00:32:23
thing was matched one to one that maybe
00:32:25
also affected yeah
00:32:27
so look I I don't know who inside ftx's
00:32:31
and its orbit of companies actually knew
00:32:33
that the the fraud had been taking place
00:32:35
I
00:32:36
it would not surprise me I have no idea
00:32:38
to be honest but it would not surprise
00:32:40
me if FTX U.S people and employees had
00:32:43
no idea that this was happening I'm
00:32:45
imagining if Sam was doing when he when
00:32:47
he started doing this he probably wanted
00:32:48
to keep it to a very small group
00:32:49
otherwise this is the kind of thing that
00:32:51
leaks and the whole thing blows up
00:32:53
now that being said I don't necessarily
00:32:55
think FTX us is worth anything as a
00:32:58
business right now because of the brand
00:33:00
being so tainted and there probably was
00:33:03
not great separation of these entities
00:33:05
in the sense of you know like did they
00:33:08
have truly separate boards and
00:33:09
beneficial owners and governance and it
00:33:12
Sam seems to have you know it appears
00:33:15
that they didn't FTX didn't really have
00:33:17
a CFO or maybe even like a real board or
00:33:20
anything like that and so it's hard to
00:33:22
imagine we found on there was an article
00:33:25
that appeared that said that the head of
00:33:27
compliance at FTX
00:33:29
was also the head of compliance at a
00:33:32
poker site called ultimate bet which in
00:33:34
the 2010s did this exact thing
00:33:37
apparently some version of this where
00:33:39
they went in and they looked at whole
00:33:41
cards of poker players and then a few
00:33:43
employees inside the business would
00:33:45
basically play against these folks
00:33:47
knowing what the whole cards were ran
00:33:49
this cheat stole millions of dollars
00:33:52
somehow that person found a way to be
00:33:54
out of compliance at FTX yeah 10 years
00:33:57
later
00:33:57
which is incredible but back to this
00:33:59
question so so now what happens now is
00:34:01
you have the international business and
00:34:04
the US business and Alameda research all
00:34:06
rolled up into this one Frozen entity
00:34:09
right
00:34:11
with now Regulators having to so do you
00:34:13
know what happens in a process like this
00:34:15
like is it that the the doj and the SEC
00:34:17
get priority or is there some
00:34:19
international
00:34:20
monetary like who who's who unwinds all
00:34:24
of this how how do people get their
00:34:26
money back if at all
00:34:28
yeah so I'm not an expert at this but my
00:34:30
high level understanding is that the
00:34:32
bankruptcy courts will essentially and I
00:34:34
believe they filed bankruptcy in the U.S
00:34:36
which is an interesting thing I didn't
00:34:37
know why they did that versus Bahamas
00:34:39
but anyway the bankruptcy court will
00:34:41
basically go through and try to find any
00:34:42
assets of value so I mean they must they
00:34:45
still have some tokens and value they
00:34:47
have a venture portfolio they you know I
00:34:49
think Sam owns nine percent of Robin
00:34:51
Hood there's various things that they
00:34:53
may own and then they'll kind of auction
00:34:55
those off to various bidders on
00:34:57
distressed assets and then try to
00:34:59
distribute those funds to the customers
00:35:00
I I don't know the exact process beyond
00:35:02
that though I mean if you remember the
00:35:03
Madoff wind down took many years and for
00:35:06
years he was uh trying to find assets
00:35:08
and then he found a market sold them
00:35:10
there's this the trustee and he's still
00:35:12
active and then you know tried to
00:35:14
redistribute the funds obviously so many
00:35:16
more customers here than I was with
00:35:17
Madoff but it can be a very long and
00:35:19
winding process to identify all the
00:35:21
assets then run the market sale process
00:35:23
on them then figure out who gets what
00:35:25
first and then distribute there was an
00:35:27
interesting thing that Larry Summers did
00:35:29
I think for Bloomberg where he was asked
00:35:32
whether this was Lehman or Enron
00:35:35
and he said it seems more like an Enron
00:35:37
than it is a Lehman and Brian I'm just
00:35:40
curious how you think about it like is
00:35:42
this sort of a fraud perpetuated by a
00:35:44
group of Executives to essentially take
00:35:46
advantage of a situation
00:35:49
or do you think that this is more like a
00:35:50
Lehman situation which is a well-run
00:35:52
business I guess that just you know got
00:35:55
caught in a liquidity trap
00:35:58
I think it's my guess is it's a little
00:36:00
more like Enron in the sense that I mean
00:36:01
yes they were over levered and that kind
00:36:03
of thing but the minute that they moved
00:36:06
customer funds in some way shape or form
00:36:08
to backstop the hedge fund that that was
00:36:11
in my mind fraud and you know that's
00:36:14
more like Enron do you think now that we
00:36:16
have to open the gates on regulation
00:36:18
like the whole point of crypto in some
00:36:20
ways was you know trust nobody
00:36:23
and you know decentralization is the key
00:36:25
but here what we see is a lot of people
00:36:28
were tricked into trusting FDX and
00:36:31
having their deposits there
00:36:33
and it was a centralized exchange which
00:36:35
caused all these problems so it's like
00:36:36
it almost violates the principles of
00:36:38
what the whole product Market fit was
00:36:40
supposed to be
00:36:41
so what what should sort of the Observer
00:36:45
expect and what do you expect as a
00:36:47
business in terms of how governments now
00:36:49
react to all of this
00:36:51
yeah well I think it's really important
00:36:53
to distinguish between the centralized
00:36:55
players in crypto which are custodians
00:36:57
exchanges Etc coinbase has a big
00:36:59
business there and the decentralized
00:37:01
players which are you know
00:37:03
self-custodial wallets D5 protocols web
00:37:06
3 that whole world so the centralized
00:37:09
players should be regulated and today
00:37:12
they're regulated already like like kind
00:37:14
of traditional Financial Service
00:37:15
businesses but they don't have the
00:37:18
regulation clear when it comes to the
00:37:19
crypto aspects so for instance in the US
00:37:22
we we actually don't still have clarity
00:37:23
about what is a commodity what's a
00:37:25
security should which one should cftc
00:37:27
regulate or versus SEC that kind of
00:37:29
thing and that lack of regulatory
00:37:31
Clarity and frankly the the climate of
00:37:33
Regulation by enforcement the negative
00:37:35
rhetoric from you know chair ganzar in
00:37:38
particular has created this sort of
00:37:39
chilling effect in the U.S that has
00:37:40
pushed a lot of that centralized actors
00:37:43
activity offshore in fact
00:37:45
95 of the trading volume in crypto is
00:37:48
now outside the United States and it's
00:37:50
come down a lot since the beginning of
00:37:51
this year even
00:37:52
now the decentralized players
00:37:54
self-custodial wallets D5 web 3
00:37:57
this is where crypto really has an
00:37:59
opportunity to make a more fair and free
00:38:01
and transparent system because you can
00:38:04
go look at any smart contract to see
00:38:06
exactly what it's doing anybody can
00:38:07
audit the code if you have a
00:38:09
self-custodial wallet you you can just
00:38:11
trust yourself you don't have to trust
00:38:12
any other intermediary out there and um
00:38:16
that's where you get true
00:38:17
decentralization and I think that's
00:38:18
actually uh you know those areas still
00:38:21
have a couple of their own challenges
00:38:22
you know sometimes people will lose
00:38:24
their password or their phone and
00:38:25
they'll lose their own money so if
00:38:27
you're if you're trusting yourself you
00:38:28
still have the you have to trust you
00:38:30
know that you're going to do that piece
00:38:31
correctly but there's a lot of good
00:38:32
things we can do there around making
00:38:34
social recovery mechanisms and MPC
00:38:36
wallets and things like that we uh
00:38:38
remember just a couple of months ago
00:38:40
Gary gentler started saying hey these
00:38:41
things are all securities
00:38:43
and you went and visited the SEC a
00:38:45
couple years ago or you tried to they
00:38:47
wouldn't meet with you you were very
00:38:48
public you did a tweet store and we
00:38:49
talked about this on my other pod that
00:38:51
hey like we want to meet we want to talk
00:38:52
about that now we're still in a position
00:38:55
where the sec's position is these are
00:38:57
all Securities which means the anything
00:39:00
that's trading it would have to be
00:39:01
limited to accredited investors Etc what
00:39:04
should the United States do here and how
00:39:06
close are we to getting Clarity because
00:39:08
I know you're trying to talk to the SEC
00:39:10
directly about can we just get some
00:39:11
clarity here can people buy these tokens
00:39:14
or not what is the status of are they
00:39:16
tokens are are they Securities or are
00:39:18
they not here in the United States yeah
00:39:21
so luckily since then we have had a lot
00:39:23
of productive dialogue with both the SEC
00:39:25
and the cftc and Treasury and all kinds
00:39:28
of people in Congress and I do think the
00:39:30
US is making some steps in the right
00:39:32
direction there was actually there was a
00:39:33
bill going through Congress recently
00:39:35
called the DC CPA or the staff now
00:39:37
Bozeman Bill although it's having some
00:39:39
challenges now frankly due to this FTX
00:39:41
blow up because SPF was one of the
00:39:43
people sort of pushing that bill forward
00:39:45
but regardless of that the the sort of
00:39:48
system that we should have is
00:39:50
there should be a clear designation
00:39:51
between what is a crypto commodity and
00:39:54
that can be regulated by the cftc and
00:39:57
what is a crypto security now this is
00:39:58
one of those legal by the way what is
00:40:00
also a stable coin and artwork and other
00:40:02
things that are not any of those things
00:40:05
the challenge lies in that there's kind
00:40:08
of a fuzzy line between what is a
00:40:10
commodity and what is a security and a
00:40:12
lot of this law is based around the
00:40:14
Howie test which says a security is an
00:40:17
investment in a common Enterprise with
00:40:19
an expectation of of profit
00:40:21
and so it's basically a point-based
00:40:24
system and in the absence of really
00:40:25
getting a clear list between the cftc
00:40:27
and the SEC are in this Turf battle I
00:40:29
would love it if you know they could
00:40:31
basically put out a list get their heads
00:40:32
together and put out a list hey cftc is
00:40:34
going to do these SEC is going to do
00:40:36
these a bunch maybe are in the middle
00:40:37
let's let the courts figure that out or
00:40:39
whatever but that just hasn't happened
00:40:41
and it's a it's a missed opportunity in
00:40:43
the U.S so if the Howie test is not
00:40:45
perfect given the dynamic nature of
00:40:48
cryptocurrencies and all the Innovation
00:40:49
if Brian Armstrong was going to say hey
00:40:52
this is in the best interest of
00:40:53
Americans balancing you know some amount
00:40:56
of security and safety for people making
00:40:59
bets on this currency and allowing
00:41:02
Innovation what would you say is the
00:41:03
best definition the best way for us to
00:41:06
regulate crypto coins putting nfts aside
00:41:11
putting downside just specifically yeah
00:41:12
Jason hold up hold on let me just tweak
00:41:14
your question sure because because we
00:41:16
should switch to SPF as well and just
00:41:18
talk about the person but to me it seems
00:41:20
the whole issue if you you come back
00:41:22
like what is the first string that you
00:41:23
pulled that unraveled the sweater was
00:41:25
the fact that these tokens were created
00:41:28
out of thin air they had no meaningful
00:41:30
value somebody prescribed the value and
00:41:32
all of a sudden everybody else in the
00:41:34
economy all of a sudden said yeah I'll
00:41:36
take that as collateral look you cannot
00:41:38
do that in the regular world I can't
00:41:40
call JP Morgan and say I've invented
00:41:42
this thing it's called a share in XYZ
00:41:45
and I'd like you to margin loan you know
00:41:47
give me a loan against it so Brian
00:41:49
explain like there's a ton of these
00:41:51
tokens that have been engineered right
00:41:53
and there's been a ton of these tokens
00:41:55
that have been sold so what should
00:41:57
people do that own these things thinking
00:42:01
that there was going to be some safety
00:42:03
or value or you know like how do you
00:42:05
think about all of these tokens that are
00:42:07
that that could be as basically as as
00:42:09
fragile and shitty and worthless as ftt
00:42:13
yeah well there there is this concept of
00:42:15
like an exchange token and there's a
00:42:17
couple other firms out there that have
00:42:18
them and that's something we haven't
00:42:20
done and I do I think I think you're
00:42:21
right like the the actual utility of
00:42:24
those things is a little questionable
00:42:25
and so if someone's gonna sort of Mark
00:42:28
those up on a low Supply and then a low
00:42:31
float and then somehow leverage that
00:42:32
that that's going to get yourself into
00:42:34
trouble but look I don't want to throw
00:42:36
out the entire concept of people
00:42:37
creating tokens I think there's actually
00:42:39
a lot of good stuff there and it comes
00:42:41
down to this idea of if if you're trying
00:42:43
to raise money for your company and
00:42:45
through a token that's fine that should
00:42:48
be a security and there should be a
00:42:50
regulated way to do that in the US like
00:42:52
go register it with the SEC you know let
00:42:54
it trade on broker dealers that's that's
00:42:57
what we've been wanting to do for a long
00:42:58
time and the SEC is taking their time
00:43:00
getting there they don't you know cancer
00:43:02
to be honest he doesn't seem that
00:43:04
um excited about the idea of this whole
00:43:06
industry existing and so anyway but it
00:43:09
should it should exist and it should be
00:43:10
happening in regulated ways so if people
00:43:11
want to issue a token that's right
00:43:13
raising money for a company let's
00:43:14
regulate it as a security if they want
00:43:16
to issue a token that's truly on a
00:43:18
decentralized protocol or has some other
00:43:20
purpose like voting in a dow or Rewards
00:43:24
or something like that then that's
00:43:25
probably not a security and let's be
00:43:27
honest about that and allow those things
00:43:29
to trade in a different environment a
00:43:30
different regulator under the cftc we're
00:43:32
probably running out of time with you
00:43:33
because you said you had a hard stop so
00:43:35
let's ask the million dollar question
00:43:36
tell us about SPF like what's who is
00:43:40
this character when did you first
00:43:42
suspect yeah what's your read on the
00:43:43
psychology that this wasn't legit do you
00:43:45
think that it was his altruistic intent
00:43:47
that allowed himself to convince himself
00:43:50
to do this or do you think this was like
00:43:52
malicious the whole way or what's your
00:43:54
sense of the guy hmm
00:43:56
so again I'm speculating here I mean
00:43:57
I've spent time with I've met him a
00:43:59
bunch of times and
00:44:01
I have to say I did not see this coming
00:44:02
like he he appeared to me to be a very
00:44:06
bright credible competent person perhaps
00:44:09
a bit young perhaps you know a bit
00:44:12
Reckless at times but not unethical and
00:44:14
not
00:44:15
not committing fraud I definitely did
00:44:17
not see that you know if I look back to
00:44:19
see were there any warning signs that I
00:44:21
should have thought twice about it you
00:44:23
know one of the things I noticed was
00:44:25
that in 2021 you know coinbase had a
00:44:28
good year we we did seven billion in
00:44:29
revenue for a billion of positive ebitda
00:44:31
we went we became public as a company at
00:44:33
that time FTX did about 1 billion in
00:44:35
revenue and I knew how much money we had
00:44:38
for our Venture budget and just like
00:44:40
different Investments we wanted to make
00:44:42
and I knew their revenue and I had to
00:44:45
scratch my head a bunch of times and I
00:44:46
was like where is this guy getting all
00:44:48
this liquidity because he was like
00:44:50
buying nine percent of Robin Hood he was
00:44:52
putting like a billion dollars into this
00:44:53
he was donating to all these politicians
00:44:55
and I was like I it did not make sense
00:44:58
to me where he was getting all this cash
00:44:59
people just kept telling me Oh his
00:45:01
Market maker Alameda is just printing
00:45:03
cash like it's like okay I guess you
00:45:05
know it seems like a conflict of
00:45:06
interest to own an exchange to Market
00:45:07
maker that's why we haven't done it but
00:45:09
more power to him I guess and so I was
00:45:12
surprised I didn't speak up I cannot I
00:45:15
can't explain in the psychology of it at
00:45:16
this point whether he's a pathological
00:45:18
liar or if he's started off good and
00:45:21
somehow under the pressure of this whole
00:45:23
thing went bad but
00:45:25
the minute you can you can go watch the
00:45:27
interviews he's he's lying to people
00:45:29
about why he's he's bare you know
00:45:32
bailing out Voyager and blockfy and
00:45:34
these and he he knew at that time that
00:45:36
most likely he knew at that at that time
00:45:38
that they were not solvent Alameda was
00:45:40
not solvent and so that's where he
00:45:42
crossed a major line in my book man we
00:45:45
see it time and time again Elizabeth
00:45:46
Holmes Bernie Madoff I mean once the LIE
00:45:48
gets too big you can't get out of it
00:45:50
anymore
00:45:51
uh if that's the case really incredible
00:45:53
and the most important thing at this
00:45:55
point Brian is that the United States
00:45:58
makes a decision on do we want to be in
00:46:01
crypto do we want to have a say in this
00:46:03
and create a regulatory framework that
00:46:05
entrepreneurs like yourself can deal
00:46:07
with that is the most important thing to
00:46:08
happen in the next year but you're
00:46:10
saying the SEC is not motivated I guess
00:46:13
why are they not motivated they're just
00:46:14
cya oh they're motivated now this is a
00:46:17
political issue now so they but let's
00:46:19
see yeah answer here what do you find
00:46:21
out who who did SPF give all this money
00:46:23
to because he was touted as one of the
00:46:25
future biggest donors of the democratic
00:46:27
party Democratic if you want signals so
00:46:29
if you want signals I would say there
00:46:31
are some pretty big signals here number
00:46:32
one he said he's going to donate a
00:46:34
billion dollars Democratic party and he
00:46:36
kept touting this like effective
00:46:38
altruism whatever the saving the world
00:46:40
stuff now why do you need to do that
00:46:43
unless your reputation laundering and
00:46:45
trying to buying political protection
00:46:47
come on okay you don't think that was a
00:46:49
little bit of a signal
00:46:51
right here I'll tell you I'll tell you
00:46:53
an even more explicit signal we he
00:46:56
pitched Us in that 17 billion dollar
00:46:58
round and I did a zoom with him
00:47:01
and after the zoom I'm like this doesn't
00:47:03
make much sense but I'll have my team do
00:47:05
some work we did some work and we sent
00:47:07
him a two-page deck and we said here are
00:47:09
our recommendations for taking the next
00:47:12
step one was the formation of a board
00:47:14
the second was the creation of dual
00:47:16
class doc the third was some reps and
00:47:19
warranties around Affiliated
00:47:20
transactions and related party
00:47:21
transactions and the person that worked
00:47:24
there called us back and literally I'm
00:47:26
not I'm not kidding you said go [ __ ]
00:47:29
yourself was quote unquote the response
00:47:32
to us we're like okay so that was the
00:47:34
easy decision but message receives
00:47:36
message received but I still thought
00:47:39
okay I'll just put that in the bucket of
00:47:40
these guys are unbelievably arrogant and
00:47:42
smug but Brian I thought what you
00:47:45
thought which is maybe it's because
00:47:47
they've print they've created some money
00:47:48
making machine in the Bahamas and so
00:47:51
they they have that level of it of
00:47:53
confidence
00:47:55
you know I it but then to see this thing
00:47:58
to the extent of which is now we're only
00:48:01
scratching the surface guys you know
00:48:02
that we're going to find out stuff every
00:48:04
day it's gonna be crazy but Brian to the
00:48:07
question I asked before about the SEC
00:48:08
and what should happen you said I want
00:48:11
to pick up on what you said which is the
00:48:12
SEC doesn't seem motivated why is the
00:48:15
SEC in your mind not motivated
00:48:17
well I think you're right that I hope
00:48:19
that they use this as a moment to come
00:48:21
together and help you know local
00:48:23
companies in the U.S being built here to
00:48:26
end up in a better place and I do
00:48:29
believe you know David I think said it's
00:48:30
it's right it is a political issue at
00:48:32
this point there's going to be a major
00:48:34
impetus to get the clarity here in the
00:48:37
U.S and hopefully to help build the
00:48:38
companies here in the US that are going
00:48:39
to serve the rest of the world and in
00:48:41
every major Financial Hub so we're
00:48:44
committed to building that together with
00:48:45
all the Regulators around the world and
00:48:48
crypto is here to stay this is a
00:48:49
temporary setback
00:48:51
um but I'm I'm here to keep building and
00:48:52
make this thing happen
00:48:54
all right we really appreciate you
00:48:55
taking the time Brian
00:48:57
yeah listen I mean story after Story
00:49:01
here about you know SPF was going to
00:49:04
create this billion dollar philanthropy
00:49:06
to you know save the world improve
00:49:08
Humanities long-term prospects number
00:49:10
two donor to the entire Democratic party
00:49:12
and on and on and on and like quite
00:49:16
frankly what this shows is you want to
00:49:18
know what effective altruism means it
00:49:20
means that you steal other people's
00:49:22
money while bragging about saving the
00:49:24
world while taking a big chunk for
00:49:26
yourself
00:49:27
that's what it means there's a research
00:49:29
paper in 2011 and this research team
00:49:32
looked at drug addicts and Drug abusers
00:49:34
4 000 people and they found that the
00:49:37
biggest addicts had the highest
00:49:39
intelligence that you were twice as
00:49:42
likely to become an abuser or an addict
00:49:44
uh if you were any kind of intelligent
00:49:46
uh quintile quantile that they were
00:49:48
measuring
00:49:50
and I someone explained this to me at
00:49:52
the time
00:49:53
that the smarter you are the more you
00:49:56
can convince yourself that when you're
00:49:58
doing bad things you're actually doing
00:49:59
good things even if you're doing bad
00:50:01
things to yourself or bad things to
00:50:02
other people that you really may
00:50:04
actually care about you can convince
00:50:06
yourself that there's some reason to
00:50:08
keep doing it he seems like a brilliant
00:50:10
guy I think that to some extent he may
00:50:13
actually I don't know the guy but he may
00:50:15
actually believe that the
00:50:18
um you know the the ends did justify the
00:50:20
means and he thought that he was doing
00:50:22
good for the world and this was
00:50:24
something that had to be done in some
00:50:26
way and oh it just got a little bit away
00:50:27
from me but it's it's still I think I
00:50:30
think the problem is bigger than FTX uh
00:50:32
and I'll say the uncomfortable part out
00:50:34
loud and nobody needs to necessarily
00:50:37
comment if you don't want to but there
00:50:39
were an enormous number of venture firms
00:50:41
that
00:50:43
talk their their way into just
00:50:46
completely doing zero work here I mean
00:50:49
and the the tip of the spear is this
00:50:52
thing uh well who's the guy that works
00:50:54
at Founders on bulgar bulgar is
00:50:57
zebul Jared
00:51:00
thank you yeah yeah that tweet that he
00:51:03
had where he basically took the snapshot
00:51:05
of the Sequoia transcript was one of the
00:51:07
funniest things that I've ever seen I
00:51:09
mean this was a 215 million dollar
00:51:12
decision and Sequoia documented it and
00:51:15
put it on their own website
00:51:17
and I think that's an example of
00:51:19
something that was happening which is
00:51:21
people just looked the other way and
00:51:22
didn't even want to do the layer of work
00:51:24
come on let me just sing together a
00:51:26
couple of things we've talked about over
00:51:27
the past few episodes and I think you'll
00:51:29
agree with this point but generally
00:51:32
speaking there seems to be a very heavy
00:51:33
lack of governance in investing given
00:51:36
the amount of capital and the velocity
00:51:38
of capital in Silicon Valley
00:51:39
particularly in private markets of late
00:51:41
and a lot of the stuff that's been
00:51:43
talked about where last week we talked
00:51:45
about super voting shares and the
00:51:46
founder does whatever they want and
00:51:48
there's no governance and there's no
00:51:49
board and there's no oversight and
00:51:51
particularly with this FTX situation
00:51:53
where clearly there wasn't a board uh
00:51:55
that that was you know getting the
00:51:56
necessary information that had the
00:51:58
necessary influence that had the
00:51:59
necessary controls the meta conversation
00:52:02
but all of these threads tie together
00:52:04
the concept that maybe there's not a lot
00:52:07
of governance and not a lot of diligence
00:52:08
going on and the amount of money that's
00:52:10
flowed into Silicon Valley has allowed a
00:52:12
lot of this Lucy
00:52:14
sequence of it let's thank Brian
00:52:16
Armstrong for joining us I know it was a
00:52:18
very busy day and uh what a great uh
00:52:19
candid insightful thanks Brian uh yeah
00:52:22
thank you Brian thank you and insightful
00:52:24
finish your Dutch month I just want to
00:52:26
say the second uncomfortable thing out
00:52:28
loud which is there was a lot of venture
00:52:30
firms in Silicon Valley in this period
00:52:33
of both not doing any work or diligence
00:52:35
who also took the extra step
00:52:37
and actually created classes and would
00:52:40
teach teams how to create these tokens
00:52:44
okay and those artifacts those video
00:52:46
links and artifacts are sometimes on
00:52:48
their website they're still on YouTube
00:52:50
they're inside of Twitter and what these
00:52:52
folks would do when we talked about this
00:52:54
the game that they played was they would
00:52:56
get a team they would create a token
00:52:59
they would also buy Equity at some crazy
00:53:01
valuation
00:53:03
the equity was locked up but the tokens
00:53:06
were not
00:53:07
and then they would put them on an
00:53:08
exchange and sell them to unsuspecting
00:53:11
people and they would be able to dump
00:53:12
these tokens
00:53:13
and if you look inside of that Trend
00:53:18
what you're going to see and Brian just
00:53:19
mentioned this those were the sale of
00:53:22
Securities except it was done in a
00:53:24
completely unregulated way so if the SEC
00:53:27
is really and the doj is really going to
00:53:29
take this ftt token issue seriously and
00:53:32
what happened to FTX
00:53:34
they're going to start to look at a
00:53:36
bunch of other tokens and token sales
00:53:38
and you're going to end up looking at
00:53:40
some very well known Venture firms
00:53:41
inside of Silicon Valley
00:53:43
this is going to be super gnarly and we
00:53:45
talked about it before on this pod there
00:53:47
are people who knew better so you get a
00:53:49
bunch of kids who are living in the
00:53:50
Bahamas in a house and and they're you
00:53:53
know winging this thing that's one level
00:53:55
of responsibility and they'll go to jail
00:53:57
but when we talk about Venture capitals
00:53:59
Capital allocators who've been at it for
00:54:00
decades
00:54:01
point and they're teaching people how to
00:54:03
do this and they're hiring attorneys and
00:54:06
creating offshore Panama you know BVI
00:54:10
whatever uh places to put these coins
00:54:13
and then teaching people how to do it
00:54:14
and then flipping them potentially this
00:54:16
is we're just peeling back the onion on
00:54:19
this I have a feeling that this is going
00:54:20
to be the turning point and all that
00:54:21
token guys let's be honest is not the
00:54:24
only token that has been engineered by
00:54:26
Silicon Valley venture firms and it is
00:54:29
also not the only token that's gone to
00:54:30
zero that was engineered by Silicon
00:54:32
Valley venture firms
00:54:34
well I mean who knows engineered by but
00:54:36
yeah adjacent to at the very least Jason
00:54:39
Jason there's videos today on some of
00:54:43
the most well-known Venture firm sites
00:54:44
on how to do this
00:54:46
oh wow I'm gonna have to see those um
00:54:50
yeah so they're basically your point
00:54:52
chamoth is they're instructing people on
00:54:54
how to do this
00:54:55
and that is what it's what it's what
00:54:58
they it's what they did
00:55:00
can I ask your guys a point of view on
00:55:02
just one big macro philosophical
00:55:04
question I'm obviously not big in the
00:55:06
crypto world and haven't been but so
00:55:08
much of the positioning has been that
00:55:10
these networks get decentralized through
00:55:12
the cryptographic verification systems
00:55:15
that obviously enable you know them to
00:55:18
operate effectively and truthfully and
00:55:20
correctly and without centralized
00:55:22
control or manipulation But ultimately
00:55:24
while these networks themselves may be
00:55:26
decentralized the user's point of access
00:55:29
often ends up being centralized as a
00:55:32
point on the network and it is that
00:55:34
point on the network that accrues the
00:55:36
same level of influence power control
00:55:39
and value as what we saw in the prior
00:55:42
centralized Network model you know we
00:55:44
had biology on last year and you know I
00:55:47
tried to get to this point with him we
00:55:49
had to cut the thing up the conversation
00:55:51
short but I've still not heard from
00:55:53
anyone and I've spoken with Brian
00:55:54
separately about this point and and the
00:55:56
the the concept I use is like look media
00:55:59
if you put all the YouTube videos on on
00:56:00
a decentralized network and anyone can
00:56:02
access them and they're distributed
00:56:03
everywhere you still need to have a
00:56:05
really good application and whoever
00:56:07
makes the best application is going to
00:56:08
get all the usage and then all the users
00:56:11
will use that application and that
00:56:12
becomes effectively the point of control
00:56:14
and influence and value once again and
00:56:17
so it seems to me like in this case the
00:56:19
exchange was being used as a centralized
00:56:22
wallet certainly you can do met you know
00:56:24
exchange through the exchange but but
00:56:26
mechanistically these guys were storing
00:56:28
their coins their cryptocurrency inside
00:56:32
of ftx's wallets
00:56:35
had control over their assets and so the
00:56:38
network centralized and so does the
00:56:40
decentralized model it's a question I'd
00:56:43
love to just ask you guys your point of
00:56:44
view on does this decentralized model
00:56:46
actually ever manifest where everyone
00:56:48
has their own wallet I know there's all
00:56:49
these new protocols and these
00:56:51
distributed wallets and B5 things but I
00:56:53
don't know enough
00:56:58
you basically recreated an exchange
00:57:00
without a regulator and of course
00:57:02
someone ripped you off and it blew up
00:57:03
like I mean how's it any different than
00:57:04
what we had in version 1.0 and is there
00:57:07
really a model where decentralized works
00:57:09
or ultimately because of the network
00:57:11
effect and the and the economies okay
00:57:14
yeah all right we got the question yeah
00:57:17
no I mean I I have I have I don't know
00:57:19
the answer to Freebird question because
00:57:21
I don't I don't know this space well
00:57:22
enough I mean you know I my my biggest
00:57:26
purchase ever was
00:57:29
Bitcoin in 2011.
00:57:32
you know I've bought a bunch of these
00:57:34
tokens that have massively depreciated
00:57:36
in value I think lots of investors have
00:57:40
you know I kind of fell into it as well
00:57:42
like I thought wow this is incredible I
00:57:44
get to buy these tokens they do all of
00:57:45
this cool stuff they represent all this
00:57:47
value and my experience has been the
00:57:50
opposite of that I've lost a lot of
00:57:51
money in these things
00:57:53
um
00:57:53
and so you know I really hope that
00:57:55
Regulators not just obviously I hope
00:57:57
that Regulators do their do the best
00:58:00
they can to get investors money back in
00:58:02
FTX
00:58:03
but I really also hope they figure out
00:58:06
all these other tokens as well because
00:58:08
you can just rank them in terms of
00:58:10
market cap start at the top and work
00:58:12
your way down and you will see that
00:58:15
these were unregulated Securities Jason
00:58:16
that were manufactured and sold by our
00:58:20
brethren
00:58:22
people who understand the law around
00:58:24
accredited investors and the stuff very
00:58:27
well yeah
00:58:30
do you guys think crypto investing
00:58:33
uh is dead or what do you think how do
00:58:36
you think people think about that risk
00:58:38
profile now inside of I think investing
00:58:40
in the tokens is going to end investing
00:58:42
in the corporation is going to begin and
00:58:44
any of the tokens are going to be super
00:58:45
regulated building on what you said
00:58:47
chamoth about the ultimate bet is it
00:58:49
possible that Alameda the trading hedge
00:58:52
fund was looking at the FTX data which
00:58:54
they had insights into and essentially
00:58:56
that's the same as seeing the whole
00:58:57
cards in the ultimate bet and so they're
00:59:00
making their trades based on what they
00:59:01
see the consumers are making their
00:59:03
trades front running their trades or
00:59:04
otherwise that's not illegal you know
00:59:06
Citadel does this in the regulated
00:59:08
market that's what payment for order
00:59:09
flow is it's right it's the ability to
00:59:12
front run retail volume and so you know
00:59:15
in dark pools that is legal by the law
00:59:19
in the United States and that's what
00:59:21
allows Citadel and you know I think Jane
00:59:24
Street and Susquehanna you know all
00:59:26
these folks basically run these dark
00:59:29
pool exchanges for regulated Securities
00:59:31
like options and bonds and and stocks
00:59:34
and they get this order flow and they
00:59:36
front run it by a millisecond and they
00:59:37
they just take small Vig but they can't
00:59:39
print the ftt tokens and otherwise
00:59:42
manipulate the market to the level that
00:59:44
I think sbl could I just think that
00:59:46
there's there's there's these really uh
00:59:48
strict walls and segregation as you
00:59:51
heard Brian talk about when you have
00:59:53
those businesses in these regulated
00:59:55
markets the problem here is that this is
00:59:56
totally
00:59:57
wild west unregulated wild wild west so
01:00:01
who knows what's going on really
01:00:03
and we're pushing the business acts off
01:00:05
of the shores of the United States as
01:00:07
you said 95 of this is happening
01:00:08
offshore what do you think should happen
01:00:10
regulatory wise sacs in terms of America
01:00:13
and competitiveness or do we not to be
01:00:15
need to be competitive in this no I
01:00:17
think we should be I mean what if what
01:00:19
if crypto and Defy is the future of
01:00:21
Finance I mean it's an important
01:00:22
technology that I think we should enable
01:00:26
through some sort of constructive
01:00:27
regulatory framework I think I think the
01:00:31
regular should listen to Brian and help
01:00:32
come with a appropriate framework but to
01:00:35
be clear look what Sam did is way worse
01:00:37
than people going on an exchange and
01:00:40
speculating I mean look I I think that
01:00:42
people who speculated in the buying and
01:00:44
selling these tokens
01:00:45
they're they were using it like a casino
01:00:48
okay like that's different than a
01:00:50
customer putting their money on FTX and
01:00:53
having their money gets stolen that's a
01:00:55
big difference so I think there's levels
01:00:57
here now jamas to your point about who's
01:00:59
minting these tokens you're right maybe
01:01:01
that's like another category but I do
01:01:03
think that the reason why this is on a
01:01:06
different level
01:01:08
is because it wasn't Sam's money to give
01:01:10
away
01:01:12
there is such an easy solution I'm just
01:01:14
I'm just great I'm I agree with you on
01:01:16
that point but I think don't underplay
01:01:18
when there's an organized process to
01:01:21
create an illegal security with special
01:01:24
rules for them
01:01:26
that allows the liquidity for one class
01:01:29
of asset and not liquidity yeah you're
01:01:32
right so that's a separate bucket I
01:01:33
don't think it's the same as what Sam
01:01:35
did and I don't think no I agree I agree
01:01:37
no I'm saying
01:01:39
that's something that needs to be looked
01:01:41
at and we need a constructive regulatory
01:01:42
framework for that there is such a
01:01:45
simple Silver Bullet for all of this
01:01:46
which is these things need to be
01:01:50
there needs to be proper governance
01:01:52
people have to have skin in the game
01:01:53
insurance people signing off on the
01:01:55
taxes boards onshore here in the United
01:01:58
States and then we need to have and I'll
01:02:00
keep saying this a way for Americans to
01:02:03
become sophisticated investors only six
01:02:05
percent of this country fall into the
01:02:07
qualified purchaser and accredited if
01:02:09
you want to trade in these things or you
01:02:11
want to trade in nfts or private
01:02:13
companies we should have a driver's
01:02:15
license-like test a Firearms
01:02:18
a sophisticated test and about the
01:02:20
product into it with an education the
01:02:23
problem is when you have guys like this
01:02:24
it sets that desire back by a decade if
01:02:27
not more okay because it sucks I agree
01:02:30
because every single so frustrating
01:02:32
every single person inside of Washington
01:02:34
right now
01:02:36
who's anywhere near this from a
01:02:38
regulatory perspective or a policy
01:02:40
perspective is meeting on Monday morning
01:02:42
and the meeting topic is how do we
01:02:45
defend the mom-and-pop folks that lost
01:02:47
money here yes that's the only thing so
01:02:49
we took this out of you know because I I
01:02:51
remember I remember I texted into the
01:02:53
group chat hey guys what what what do we
01:02:55
think the the legal ramifications are
01:02:57
that drive prosecution and one of our
01:03:00
friends said legal ramifications these
01:03:02
are political ramifications yeah which
01:03:04
means that this is going to go to the
01:03:05
utmost level and it's going to have the
01:03:07
most scrutiny and they're going to act
01:03:09
really quickly it is they're gonna drop
01:03:11
a hammer instead of having a path to
01:03:14
accreditation I agree with you they're
01:03:15
going to drop the hammer because their
01:03:17
constituents some grandma and grandpa or
01:03:18
some people put their college education
01:03:20
to this and lost everything we just need
01:03:22
a test let people prove they're
01:03:24
sophisticated and let them participate
01:03:25
well first and only if they get a
01:03:27
license haven't you been a proponent for
01:03:30
letting people invest in startups that
01:03:32
are just Mom and Pops and democratizing
01:03:34
access I'm only allowed to do that with
01:03:36
accredited investors I would like there
01:03:38
to be a test and I actually teach your
01:03:40
course Angel University six times a year
01:03:41
for charity I do it for charity it's a
01:03:44
four hour course where you learn about
01:03:46
diversification you learn about the
01:03:48
asset class you learn about 70 80 go to
01:03:50
zero we teach you about the power law I
01:03:52
try to teach people about this stuff so
01:03:54
that they can participate intelligently
01:03:55
it would it would be the equivalent for
01:03:57
your brick and thank you for asking the
01:03:58
question it would be equivalent if we
01:04:00
had a poker test and to play in the
01:04:02
World Series of Poker you had to go to a
01:04:04
five hour seminar and you had to take a
01:04:06
practical test and you had to say you
01:04:07
know a flush beats a straight and you
01:04:10
have to just prove that you had some
01:04:11
level of knowledge of how to play the
01:04:12
game it's such an obvious path to
01:04:15
removing these problems while staying
01:04:17
competitive as a country and instead
01:04:19
we're letting people do this offshore
01:04:20
like CZ with no rules or whatever rules
01:04:23
he chooses
01:04:24
it's just infuriating it's so stupid our
01:04:27
politicians in Washington are so dumb
01:04:29
can I just say something I think the
01:04:31
challenge is there's always a spectrum
01:04:33
of understanding and you'll always end
01:04:35
up seeing the people on the wrong end of
01:04:37
the spectrum getting taken advantage of
01:04:39
there's this notion of adverse selection
01:04:41
distributions are not equal people will
01:04:43
end up
01:04:45
um you know kind of opting in to spend
01:04:47
money on things
01:04:48
or making Investments that they think
01:04:50
are good Investments but they're
01:04:51
actually getting taken advantage of
01:04:52
because they're not Savvy enough where
01:04:54
they miss an important angle or
01:04:56
important perspective about the person
01:04:58
or the thing that they're giving their
01:04:59
money to and there will always be some
01:05:01
number of those and the way that
01:05:02
regulation has worked historically is
01:05:04
not by first saying hey let's figure out
01:05:06
the right way to create a framework for
01:05:07
operating it's that some sort of people
01:05:09
got advantage that story then becomes
01:05:11
the regulatory framework and that story
01:05:13
has repeated itself for 500 years across
01:05:16
Capital markets we're talking about a
01:05:17
multi-layered thing here we want to see
01:05:18
crypto have a framework we want it to
01:05:21
Blossom here in the United States and
01:05:23
then there's multiple level of people
01:05:25
who are
01:05:26
um causing chaos in this ecosystem in
01:05:29
this very promising technology with
01:05:30
their goddamn griffs whether it's VCS
01:05:33
grifting or SPF or incompetence we just
01:05:36
need to clean this framework up if
01:05:37
people sometimes people I understand in
01:05:39
DC listen to this podcast if they're
01:05:41
listening it's essential that America be
01:05:43
competitive here it's essential that
01:05:45
everybody participate in Risk capital
01:05:47
and get educated let's clean it it up
01:05:49
and make a framework that allows all
01:05:51
Americans to participate and educates
01:05:53
them and then stops these grifters from
01:05:55
doing stupid things if people were
01:05:57
educated that's the first step and it's
01:06:00
the best talk about the economy
01:06:02
sure you want to talk about Facebook
01:06:03
with eleven thousand you want to talk
01:06:05
about the uh Market popping so the
01:06:07
beginning of October yeah I think what
01:06:09
we basically said kind of generally
01:06:11
speaking is markets up right markets I
01:06:14
went from nibbling to being
01:06:15
constructively positive and basically
01:06:17
being positioned long here's this really
01:06:20
interesting setup
01:06:21
we have a bunch of very positive news
01:06:25
that I think we all have to process
01:06:27
first positive news was that inflation
01:06:29
takedown
01:06:30
now here's what I'll tell you there's a
01:06:32
caveat here I talked to a bunch of
01:06:33
pretty smart Sharps on Wall Street and
01:06:36
oh two things number one is they all
01:06:38
gave credit to David sacks and they said
01:06:40
Saks was totally right double dip
01:06:42
recession is coming but then they said
01:06:44
tell sacks that we think that these are
01:06:47
the sharps we think that there's a
01:06:49
double hump in inflation coming
01:06:51
which means it's coming down to come
01:06:53
back up and there's a bunch of reporting
01:06:56
vagaries that may cause that so keep
01:06:57
that in the back of your mind but
01:06:59
positive news number one is inflation
01:07:02
ticking down
01:07:04
um number two
01:07:05
and Jason we talked about this a federal
01:07:08
judge basically stayed Biden's attempt
01:07:12
at giving student loan relief now that
01:07:15
would have been a 500 billion dollar
01:07:18
transfer payment from the government
01:07:19
into the hands of individuals
01:07:22
it is deflationary to not put give that
01:07:25
money to people it's effectively taking
01:07:26
stimulus away from folks number three
01:07:29
it looks like we're headed towards a
01:07:31
split government
01:07:32
which means that we are not probably
01:07:35
going to see any more stimulus over the
01:07:37
next two years
01:07:38
number four uh Ukraine wins and Curzon I
01:07:43
hope I'm pronouncing that right number
01:07:44
five the United States uh announced
01:07:47
yesterday through the Wall Street
01:07:49
Journal that they had essentially said
01:07:51
no to Ukraine's request for advanced
01:07:53
drones and they said to Ukraine
01:07:55
essentially you need to go and negotiate
01:07:58
an end game here
01:07:59
and number six
01:08:01
China has started to relax as covet
01:08:03
policies and G is pivoting to economy
01:08:06
first so if you took all the way take
01:08:08
seven don't forget seven Facebook which
01:08:10
would not take the medicine they refused
01:08:12
Brad gerson's letter cut eleven thousand
01:08:15
people 48 hours ago Facebook matters
01:08:18
that much to be honest well but it
01:08:20
matters that big Tech is and they're
01:08:22
taking but it doesn't matter to the
01:08:24
economy to be complete I I think it does
01:08:26
if people are going to start cutting
01:08:27
jobs but okay keep going my point is
01:08:30
these seven things are macro level
01:08:31
things that affect everybody yep and I
01:08:33
think if you take them together what it
01:08:35
says is that wow there's there's the
01:08:37
potential for a lot of great positive
01:08:39
developments over the next six or nine
01:08:41
months and I don't think that that was
01:08:43
adequately priced in the market but
01:08:44
here's the problem and this is what's
01:08:46
why we've been rallying
01:08:48
the problem is that most of this
01:08:49
rallying has been because of a bunch of
01:08:53
short covering by folks that who were
01:08:56
pretty pessimistic and negative after
01:08:58
the last few inflation prints so this is
01:09:01
not really net new buying that we saw
01:09:03
over the last couple days
01:09:05
so you take it all together
01:09:11
we talked about this Jason when the vix
01:09:13
gets into the low 20s or the High Teens
01:09:16
that's probably the short term top and
01:09:18
then it turns around and unfortunately
01:09:19
we're here yeah the low 20s High Teens
01:09:23
so that's kind of my thought on things
01:09:25
right now okay Freebird you have any
01:09:27
thoughts on the inflation print yeah so
01:09:29
I think there's two things one of which
01:09:31
I'll give credit to a guy named Carl
01:09:33
uh two I hope I pronounced Carl's name
01:09:36
right he's from William Blair he puts
01:09:38
out these excellent research reports and
01:09:40
we used one of his Graphics a few weeks
01:09:41
ago so I put it up here and basically he
01:09:43
showed that with the the NASDAQ move
01:09:45
that we saw this week so you can see
01:09:47
this here he basically tracked the move
01:09:49
in the 10-year Treasury
01:09:51
against the the one day move in the
01:09:53
NASDAQ and uh he said that it really
01:09:56
indicates a unique sentiment shift
01:09:59
whereas in other times you've seen big
01:10:01
moves in the NASDAQ that weren't really
01:10:03
seeing significant moves in in the
01:10:05
treasury rate at the same on the same
01:10:07
trading day and that this is such an
01:10:09
outlier what happened
01:10:10
uh this week the only other time that
01:10:13
we've seen anything like it was when the
01:10:14
bank of England issue happened back at
01:10:16
the end of September uh in the last you
01:10:19
know 20 times that we've seen this big
01:10:20
of a move in the NASDAQ in a single day
01:10:22
and so we saw 31 basis point move in
01:10:25
tenure treasuries in a single day at the
01:10:27
same time that we saw what a seven point
01:10:29
move in the NASDAQ so he said because
01:10:31
you don't normally see the bond Mark in
01:10:33
the equity market trading this way
01:10:34
together it really speaks to a big shift
01:10:36
in sentiment now what is that what is
01:10:40
that shift in sentiment that there is
01:10:42
going to be
01:10:42
less of a driver for the FED to raise
01:10:44
interest rates at this point because it
01:10:46
seems like the inflation print indicates
01:10:48
that inflation is coming under control
01:10:50
faster than what folks had otherwise
01:10:52
anticipated and so there may not be as
01:10:55
many rate hikes as quickly as folks who
01:10:57
are anticipating which will you know
01:10:59
benefit uh benefit benefit equities and
01:11:00
the bond market traded that that with
01:11:02
that perspective as well
01:11:03
now the counter narrative which uh I
01:11:06
just put a tweet by a guy who I've never
01:11:08
heard of before uh but someone shared
01:11:10
this with me his name's Gordon Johnson
01:11:11
and he said um the CPI surprise may
01:11:14
actually be due to a technical print
01:11:16
that within the CPI one of the biggest
01:11:19
indicators is health insurance cost and
01:11:22
um you know it the the health insurance
01:11:24
cost plunged by four percent
01:11:28
October to September but at least
01:11:31
healthcare costs didn't actually
01:11:32
magically collapse there was just an
01:11:34
accounting difference in how they're
01:11:35
shifting how they're accounting for
01:11:36
health care costs uh that that took
01:11:38
place during the month and if you did
01:11:40
not uh um if you assumed that that was
01:11:42
flat uh month over month uh you would
01:11:45
end up actually with a 6.7 percent
01:11:47
year-over-year print which was higher
01:11:49
than expected so there is a counter
01:11:50
narrative going on in the market I don't
01:11:52
know how significant this guy is or how
01:11:54
much of a voice he has but I don't know
01:11:56
if we're out of the woods yet but some
01:11:58
folks are saying that the market is
01:11:59
saying we're feeling a lot better but
01:12:02
there are still analysts that are
01:12:03
indicating that maybe there is still
01:12:05
risk uh to be had ahead of us I think
01:12:07
the sharps tend to be on that second
01:12:09
second perspective and by the way I'll
01:12:12
say this week I heard five and a half
01:12:13
points even after that print so is where
01:12:16
we're gonna get to I think consensus we
01:12:18
have here is is that we're in the end
01:12:20
game now maybe what two quarters three
01:12:22
quarters four quarters of choppiness
01:12:23
chamoth what would your gut tell you if
01:12:26
you I I've been telling all of our
01:12:28
startups that you need to plan to have
01:12:30
money
01:12:31
through the first quarter of 2025.
01:12:34
you must yeah you absolutely must and
01:12:38
the way that there's a catch okay the
01:12:40
way that I framed that out to them is
01:12:42
nine yeah eight or nine quarters of cash
01:12:45
ideally nine
01:12:47
and the reason is that we have all of
01:12:50
this positive news in the offing but but
01:12:53
the but the problem is again
01:12:55
there is still a lot of risk to the
01:12:57
downside we haven't seen David's second
01:13:00
you know dip in the recession right so
01:13:02
that double dip is going to be expensive
01:13:04
and again the sharps think that
01:13:06
inflation will come back at some point
01:13:08
in the next six months
01:13:10
that will keep the fed's foot on the gas
01:13:13
maybe it's two or three more 50 basis
01:13:15
point hikes the point is Jason you could
01:13:17
be at five and a half again we said this
01:13:19
last week we're going to get to a point
01:13:21
that's probably higher than what people
01:13:23
expect that's probably around five and a
01:13:25
half
01:13:26
and will stay there longer than people
01:13:28
want that's probably through the middle
01:13:30
part of 24.
01:13:32
and if you don't prepare for that worst
01:13:34
case scenario you're doing yourself a
01:13:36
disservice I think the market can start
01:13:38
to Rebound in the second half of 24.
01:13:40
but if you're a company you need to
01:13:42
balance and and plan for the first
01:13:44
quarter of 25 because you know again
01:13:47
most Venture investors are going to want
01:13:50
to see six months of data on the ground
01:13:51
that things are better before their
01:13:53
sentiment changes yeah and we're just
01:13:56
starting to see the drawdowns we're just
01:13:59
starting to see the impacts in people's
01:14:01
portfolios that will drive Behavior
01:14:04
change I mean this SPF thing is the tip
01:14:07
of the iceberg in terms of the money at
01:14:09
risk you know I went and by the way I
01:14:11
did it in analysis I shared it in the
01:14:13
group chat hopefully we can show this up
01:14:15
Brad has a little chart Nick maybe you
01:14:17
can throw up the the historic drawdowns
01:14:21
so for people that care about early
01:14:22
stage technology
01:14:24
since 2018
01:14:26
through 2021
01:14:30
and including an estimate for 2022 we
01:14:34
have injected one trillion dollars
01:14:37
into venture capital
01:14:39
and if you look at historically how
01:14:42
money has been lost in periods like this
01:14:45
and you layer that into 2018 to now what
01:14:48
it basically tells you is about 500
01:14:51
billion dollars
01:14:52
of that trillion from 18 19 20 21 and 22
01:14:57
is going to be destroyed we haven't even
01:15:00
started to see that yet right and then
01:15:03
if you factor in another 100 billion or
01:15:05
so from older vintages we're talking
01:15:06
about a 600 or 700
01:15:09
billion dollar destruction of paid in
01:15:12
capital
01:15:14
so there's still for all the good news
01:15:16
there's still a bunch of these
01:15:18
unfortunate pieces of bad news that have
01:15:19
to work its way through the system if
01:15:21
and for people who are looking at the
01:15:24
chart right now and you can see the
01:15:25
charts on Spotify or if you search for
01:15:27
all in on YouTube we have a video
01:15:28
version there you just take a look at
01:15:30
1997 the peak tvpi was you know seven
01:15:33
and a half X seven and a half times you
01:15:35
know cash on cash money and uh what
01:15:37
actually got realized was 5x right so
01:15:39
what paper said and what got distributed
01:15:41
were two different things anecdotally uh
01:15:44
what I'm seeing in the startup or
01:15:46
ultramoth is people are taking the
01:15:48
medicine and a lot of people are
01:15:49
shutting their companies down they're
01:15:51
giving up on raising money and then
01:15:53
asking me which portfolio company can I
01:15:55
get a job at because I on my personal
01:15:57
balance sheet
01:15:59
have been you know taking a 5k draw a
01:16:01
month and I had I have two kids I need a
01:16:03
job can you get me a job at Amazon or
01:16:06
another portfolio company
01:16:08
and a lot of Aqua hires have started to
01:16:10
happen and so what's happening is the
01:16:12
consolidation of talent people who would
01:16:15
be a great number three or four person
01:16:16
but maybe they weren't suited to be the
01:16:18
number one person are now consolidating
01:16:21
into startups with these layoffs at meta
01:16:24
and other corporations we're starting to
01:16:26
see very talented people who had Peak
01:16:28
comp of 300 700k a year are going to go
01:16:31
to startups or go to smaller companies
01:16:33
and that is also positive more
01:16:36
consolidation of talent stronger
01:16:37
companies did you guys hear the story
01:16:39
yesterday that uh Nick if you could just
01:16:41
bleep out the name
01:16:43
told about his friend his friend
01:16:45
basically makes a hundred and forty
01:16:46
thousand dollars working for a tech
01:16:47
startup and then also makes two hundred
01:16:50
and eighty thousand dollars working for
01:16:51
meta and so and he's been working at
01:16:54
both of those companies virtually for
01:16:56
the last two years the guy makes 400 450
01:16:58
000 a year and nobody knows and he says
01:17:00
he works about 20 22 hours a week
01:17:03
on both combined so the 80 hours and and
01:17:06
remember when we started in startups in
01:17:08
the night late 90s and into the turn of
01:17:10
the century
01:17:12
the number of hours that was expected at
01:17:14
a startup was what sax when you were at
01:17:16
six hours a week I would say 60 60 days
01:17:18
I was expecting the Baseline yeah
01:17:20
Baseline yeah Baseline 10 hours a day
01:17:22
plus come in on the weekend for a couple
01:17:23
hours yes yeah for sure easily
01:17:27
probably more early days of Facebook are
01:17:30
are our executive management meetings
01:17:31
wouldn't start till 9 pm
01:17:35
I think elon's gonna be a Trailblazer in
01:17:38
a lot of ways on this Twitter thing you
01:17:40
know first he did the big head count
01:17:42
reduction but then he also just this
01:17:44
past weeks everyone needs to come to the
01:17:45
office
01:17:46
and if you don't come to the office you
01:17:47
you don't have to come to the office you
01:17:48
have a good excuse if you're an
01:17:49
exceptional performer and you've got a
01:17:51
good reason they never have to but the
01:17:53
Baseline is everyone comes to the office
01:17:56
by the way just to put this point into
01:17:57
Focus Nick can you just throw up this
01:17:59
chart for these guys to see because I
01:18:00
think it's just ridiculous
01:18:02
so this is basically what we're dealing
01:18:04
with which is like if you look at and
01:18:06
these are just a couple of examples but
01:18:07
this is meta Amazon snowflake datadog
01:18:10
versus Gilead Raytheon and Exxon
01:18:14
what is the point of this the point of
01:18:16
this is just to show you that we have
01:18:18
had a massive rotation away from our
01:18:20
industry is the point right where
01:18:24
normally the things that we would work
01:18:26
on were just so well received by so many
01:18:28
different kinds of investors that
01:18:30
unfortunately just isn't the case
01:18:31
anymore
01:18:32
and I think it just goes to show you
01:18:34
that the reason why this is happening is
01:18:37
because people are hedging their bets
01:18:39
about how long the economic pain lasts
01:18:42
that's why you know they'd rather be
01:18:44
long Health Care stocks you know
01:18:46
industrial defense companies and oil
01:18:48
companies because at the end of the day
01:18:50
they're banking on oil and War and
01:18:53
sickness of you know versus social media
01:18:57
and e-commerce and SAS software and if
01:18:59
we look at this chart just no matter how
01:19:01
good by the way so this is not an
01:19:02
indictment on these companies go watch
01:19:04
the the prediction episode from last
01:19:05
year I think that was a prediction
01:19:07
episode yeah we you and I nailed it on
01:19:09
crypto we both said crypto is going to
01:19:10
Crater these four horsemen here datadog
01:19:13
meta Amazon snowflake down 23 to 27 and
01:19:16
then the Gilead Raytheon Exxon cohort
01:19:19
eight to 28 up I think chamoth what this
01:19:22
says also is we don't think your
01:19:25
management style and how you're running
01:19:27
these businesses is appropriate for this
01:19:30
moment in time please consider uh some
01:19:33
austerity measures and some
01:19:35
thoughtfulness in how you treat
01:19:36
shareholders
01:19:39
well I mean it's just watching the
01:19:41
number uh you know how people are
01:19:43
running companies I think we took it too
01:19:46
far in Silicon Valley we took it too far
01:19:48
whether you know Jacob I I know that I
01:19:50
know it's sort of a pet issue of ours
01:19:52
because we have to deal with
01:19:54
some incredible hubris and arrogance
01:19:56
sometimes on the boards of these
01:19:58
companies because folks don't want to
01:19:59
listen to to reasonable advice and we
01:20:01
come off as wet blankets but that chart
01:20:04
to be honest is is because of what we
01:20:07
explained last week which is the when
01:20:10
rates go up
01:20:11
the value of a dollar that you earn
01:20:13
today is just meaningly meaningfully
01:20:15
more worthwhile than a dollar that you
01:20:17
may earn even two or three years in the
01:20:19
future that's why that chart looks the
01:20:21
way that it does and if you believe that
01:20:24
David's forecast of a double dip
01:20:26
procession is accurate which again most
01:20:28
of the sharps do and then you also layer
01:20:31
in this idea that inflation could come
01:20:33
back
01:20:34
you have to be really defensively
01:20:36
positioned you know you can't take a lot
01:20:38
of risk which is why startups have to
01:20:40
expect that if that's the dynamic and
01:20:44
600 billion dollars is going to get
01:20:46
destroyed in Venture Capital portfolios
01:20:48
how open are VCS going to be for
01:20:51
business they're probably not going to
01:20:53
be that open and so you have to plan I
01:20:56
think for the middle for the early part
01:20:58
of 25.
01:21:00
if Amazon and how do you get incremental
01:21:03
dollars in these tech companies Amazon
01:21:05
does a riff some austerity measures they
01:21:08
raise prices a little bit if they can
01:21:09
you know maybe you see more incremental
01:21:11
dollars coming today and maybe that
01:21:13
incentivizes people look at what
01:21:14
happened I uh we were at 89 for Facebook
01:21:17
shares last week tomorrow when he made
01:21:19
the Riff 107 he went up like 15 20 what
01:21:22
does that tell you
01:21:24
I mean I think it tells you that a lot
01:21:26
of people were short going into that and
01:21:28
they were probably caught offside a
01:21:30
little bit by the magnitude of it I
01:21:31
think that that's good
01:21:33
the the issue that a lot of these
01:21:36
companies have even in the face of riffs
01:21:37
is that you have to reset expectations
01:21:40
now on earnings and if you do that the
01:21:43
problem is that when you flow that
01:21:45
through to what people think the s p
01:21:47
will look like in a year
01:21:49
there's some real issues
01:21:51
so this is not free you know
01:21:54
it's really hard treading and I just I
01:21:56
would I would just encourage people it
01:21:58
feels wonderful to have a few days of
01:22:00
like it's like a respite in the middle
01:22:01
of a huge storm right it feels like
01:22:02
we've been getting whipsawed back and
01:22:04
forth and the sun came out and the wind
01:22:07
came out
01:22:08
but I would just really encourage people
01:22:09
in this moment to to reset your energy
01:22:12
which I think is good but you got to go
01:22:14
back into that office and you gotta find
01:22:16
the money and the wherewithal I think to
01:22:18
last through 24 if possible it's Grind
01:22:22
Time Facebook by the way
01:22:24
you need at least two years two years
01:22:26
yeah yeah 24 months is the new yeah
01:22:29
eight quarters is the new six quarters
01:22:31
and by the way Tino the thing that
01:22:33
employees need to do now in this moment
01:22:35
is to hold the management teams of your
01:22:37
companies accountable because in those q
01:22:39
and A's hopefully you're not just glad
01:22:41
hunting talking about [ __ ] you
01:22:43
actually go and ask the question how
01:22:45
much money do we have what decisions are
01:22:47
you going to make to get this company to
01:22:49
be you know in a position to survive
01:22:51
that is really what's at stake here for
01:22:54
the Venture Capital industry is just
01:22:56
survival of as many of these companies
01:22:58
as possible through these next two years
01:23:01
the conversation has to shift from like
01:23:03
culture and features to like the bottom
01:23:06
line and grinding it out and just
01:23:09
proving it to Wall Street into the
01:23:11
investment community that your business
01:23:12
is worthy of investment as you're saying
01:23:14
the dollars today matter all right it's
01:23:16
been a crazy week thank you to David
01:23:18
Friedberg for showing up unfortunately
01:23:20
no time for science Corner apologies to
01:23:22
the Friedberg stands who are many and
01:23:24
we'll see you in the YouTube comments
01:23:26
for the dictator himself to my
01:23:28
palihapatia with just a wonderful
01:23:30
sweater going into the strong November
01:23:33
strong showing for November with that
01:23:34
purple sweater I don't know if it's
01:23:35
mauve or purple whatever you got going
01:23:37
there looks wonderful thank you for team
01:23:39
Montclair
01:23:41
Sasol himself
01:23:43
David sacks people don't understand what
01:23:45
you're saying when you say that Jason oh
01:23:47
they know you're an [ __ ] uh they
01:23:49
they're no that's what they think you're
01:23:50
saying they don't know understand they
01:23:52
don't know we're adding the Sass to it
01:23:53
yes so uh David also is a great
01:23:56
executive in software as a service in
01:23:58
addition to being an [ __ ] so you put
01:23:59
the two together and you get [ __ ] no
01:24:01
I'm just joking David's a wonderful
01:24:03
person people are really excited that
01:24:04
you and I are uh friends again it's a
01:24:06
amazing moment
01:24:09
that was your chance to make a joke so I
01:24:11
actually missed it throw it up there for
01:24:12
you I threw up the softball for you to
01:24:14
say you're not we're not friends all
01:24:16
right we'll see you all next time bye
01:24:17
bye
01:24:18
we'll let your winners ride
01:24:21
rain man
01:24:22
[Music]
01:24:26
we open source it to the fans and
01:24:28
they've just gone crazy
01:24:30
[Music]
01:24:34
foreign
01:24:35
[Music]
01:25:05
foreign
01:25:07
[Music]
