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all right everybody Welcome to
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2023. everybody's well rested ready to
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take on 2023 yes Tremont how's your
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break amazing okay sexy poo I know you
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don't go to uh temperatures that are
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under 57 degrees anymore should have a
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nice break did you go somewhere warm yes
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okay that's a confirmation uh wow man of
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so many words and Freeburg I'm over cold
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weather vacations
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yeah that does happen at a certain point
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actually we went to Florida we went to
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the the free state of Florida oh really
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what what what's going on in Florida at
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the turn of the new year I wonder that
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Drew you down to the great state of
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Florida we're just freeing It Up In The
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Free State of Florida
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[Music]
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we
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[Music]
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have our 2023 predictions now uh play
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some music and all that kind of stuff
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producer Nick at this point let's get to
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it last year do you guys notice that
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every time we talk about something
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somewhere between
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sort of two months to a year later the
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Wall Street Journal ends up writing a
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big piece about it think peace about it
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yeah so I tweeted into the group chat
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like last year we all talked about
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Sequoia and distributing public equities
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and yeah how it's very fraught and
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difficult and then today they write this
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big article about how people have just
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burned enormous amounts of billions of
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dollars that they could have returned to
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LPS like these Venture investors by not
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Distributing
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that makes sense three weeks ago when we
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did our end of the year wrap up my big
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winner for 2022 were the pot shops right
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Citadel and today in the Wall Street
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Journal an article lands that these guys
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with 56 billion of AUM
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over the last two years have made almost
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45 billion dollars of revenues
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isn't that incredible
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and this is what happens
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usually uh they are these guys are just
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crushing and then Citadel Securities did
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like almost you know seven and a half
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billion in Revenue I mean it's
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unbelievable these businesses how good
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they are yes so let's get into uh and
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this is typical if you think about
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journalists they're trying to get into
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the conversations that are occurring at
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the bar after the event the late night
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conversation the group chat's well and
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that's what this podcast is it's the
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exposed back channel right and so if you
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listen to this pod you got the back
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channel of Silicon Valley politics Tech
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science Etc so let's do our predictions
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in 2020 we said our biggest political
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winner would be uh sax and I both said
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to Santa XI Japan and Friedberg said
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Putin who do we think is our biggest
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political winner uh going forward
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who do you pick sacks biggest point of
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winner for 2023 who will be your biggest
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political winner for 2023. well I went a
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little bit outside the box here because
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I think we're gonna have gridlock in
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Washington so not expecting a ton to be
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coming out of Washington over the next
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year
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my pick for biggest political winner is
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Asian American college applicants
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there are two Supreme Court decisions
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that the court heard on Halloween last
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year uh there was a lawsuit against
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Harvard and another lawsuit against UNC
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by a group called students for fair
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Admissions and that they maintain that
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Harvard and UNC violate title VI Civil
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Rights Act because Asian American
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applicants are far less likely to be
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admitted than similarly qualified
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applicants from other groups and the the
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federal courts in Boston and North
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Carolina rejected this argument but the
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Supreme Court took up the cases so they
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kind of went out of their way to hear
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this and I think that they are going to
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they're going to refuel affirmative
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action I think the majority will rule to
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strike down these policies
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that uh really discriminate against
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Asian Americans and I think they're the
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last uh group in America where it seems
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to be okay to discriminate against and
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uh really I think the Supreme Court is
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gonna is gonna find that
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unconstitutional
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belts there you have brought this up
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multiple times on the podcast over the
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last two years
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I have said that this was unfortunately
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affirmative action when it started I
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think had very very good intentions and
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I still think that there's a place for
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it the problem is that these very
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liberal institutions decided to play
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judge jury an executioner on which
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minorities counted in affirmative action
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and that's not what the intention was
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the intention was to look at the
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establishment
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and their ability to get their progeny
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into these incredible schools even when
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they didn't deserve to be there
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and so I think this was always an issue
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of classism that was disguised as racism
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and people who were in the upper classes
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of society have always had an edge
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you had the legacy admissions into
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Harvard you had people the Kushner is
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very famously right like the five
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million dollar check from the father
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that got the son into the school all of
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this stuff it's all it's been well
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written about and whether or not those
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things are right isn't the point I think
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the point is that there are folks in
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emerging lower middle classes who have
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the potential to crush
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and those kids should have a chance and
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you can't just decide who those kids are
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based on the color of their skin and in
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this case what happened was some blacks
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were still allowed in some Hispanics
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were allowed in but Asian Americans
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broadly were discriminated and that was
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a really stupid outcome
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you cannot punish kids for willing to
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work their ass off
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and I think that that was the
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unfortunate outcome of what affirmative
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action has become by 2022 so it is going
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to get repealed
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the reason it's going to get repealed is
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that
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you know we have case law that very
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clearly states that that any institution
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that accepts federal funds cannot have
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any form of discrimination and this is
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how
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these folks who have tried to repeal
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affirmative action have taken up this
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lawsuit and
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hopefully the outcome is a more
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meritocratic system that also
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tries to create a plurality of different
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people from different backgrounds
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freeberg any thoughts
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uh if not your biggest political winner
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for 2023. um my biggest political winner
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for 2023 is um MBS Mohammed bin Salman I
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think that Saudi Arabia will have
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the most important year
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in kind of the modern era in terms of
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their role I don't know if you guys saw
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this Reuters report
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from a few weeks ago but there's kind of
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a deepening discussion about
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the oil Yuan trade in that um Saudi
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would sell oil to China and they would
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get paid in Yuan Saudi Arabia sits at
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the intersection of the United States
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Russia and China they have relationships
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with all three nations and in the kind
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of conflict and power struggle that is
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underway I think that ultimately the
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direction of
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where Global Currency kind of reserves
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will be taken and the importance of
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these great Nations and who sits atop
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whom
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can actually be dictated and
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significantly influenced by MBS this
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year by some of the deals and trades he
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might put in place and the and the the
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kind of
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Partnerships he might Forge I think as a
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result you will see him kind of rise in
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terms of influence not in terms of you
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know hey the world has accolades for
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this for this guy but I think in terms
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of global influence uh he will rocket
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ship to kind of the top because of this
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this kind of uh jockeying he can now do
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between these three great nation states
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and defining you know what's going to
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happen with the US and what's going to
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happen with China and what's going to
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happen great collection of currency
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reserves great selection I mean
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the shitty thing by the way about your
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selection is that Biden
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are explicit stance is unfortunately
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quite confrontational with MBS and yeah
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you saw that play out in Q4
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we asked them to ease up on OPEC Plus
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to introduce
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Supply cuts and they did some nominal
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hundred thousand Barrel per day cut
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didn't do much of anything there was an
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article to your point free bird just
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recently about Saudi really doubling
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down
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on getting the oil out of the ground and
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monetizing their petrochemicals
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so there's just going to be a glut of
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Supply in the market
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and we have the least amount of
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influence with Saudi Arabia than we've
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ever had and it seems like we could
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change that if we decided to but I think
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Biden has taken this very
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confrontational approach which doesn't
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seem to make and remember a lot of sense
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their stated intent is to diversify away
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from oil and into technology and other
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kind of emerging growth economies that's
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why they funded the vision fund that's
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why MBS made that big kind of visit to
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Silicon Valley a few years ago and there
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is technology that they want to import
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into Saudi Arabia and they want to have
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ownership in around the world and if the
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U.S is creating a barrier for them to
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import US tech into Saudi or for Saudi
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to kind of invest in the U.S but China
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and Russia have open arms and all they
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want is for Saudi to start doing trades
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in Yuan it's going to happen and I think
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that's where this guy has kind of a real
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opportunity to shift the global economic
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Dynamic say what you will about Trump he
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uh had open dialogue with North Korea
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China
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Russia if your enemies close sure you
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want to be able to talk to anybody and
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he was able to talk to anybody now you
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also want to be able to say Hey listen
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you can't dismember a journalist like
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khashoggi and you need to be able to
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have both of those ideas in your head
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you can't be rigid in foreign policy you
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have to be fluid and keep people at the
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table talking chamath who is your
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big political who do you predict will be
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the big political winner of 2023 shamots
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prediction everybody go ahead I really
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like spread trades right where you go
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long something and short another so I'd
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like to pair my biggest political winner
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with my biggest political loser for
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2023. okay and I am going to focus on
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the Republican nomination and I am going
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to go long
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Nikki Haley and I'm going to go short
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Ron DeSantis now let me explain
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if you're watching if you're not
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watching sex right now he is ready to
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interject go to mother so I think that
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all of this nonsense for example in the
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house Speaker race
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all of the midterm results what it
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really speaks to are is people are
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getting exhausted with the lunatic
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fringes of both parties
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that's Point number one
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and point so that favors moderates as an
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emergent class
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and point number two is that if you look
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back through many many cycles of
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Republican and Democratic nominations
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it is a very negative thing to be in the
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lead so early going into the Iowa
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caucuses in January
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and so if you put those two things
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together the risk is that DeSantis
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decays
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things emerge people attack him because
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he's the clear FrontRunner and the
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opportunity just like it was for Trump
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in 16 or for Clinton or for George Bush
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not Herbert Walker but you know w
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is to emerge from the back
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and so if I think about a moderate
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person who can emerge from the back who
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can consolidate the ranks they should
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probably be from the south
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they will have a lot of these purple
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compromises that sax mentioned in their
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policy program
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and they will have a history of winning
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and a history of normalcy
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and so I think that of all of the places
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where you could ever elect a woman as
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president of the United States I think
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it will come from the Republicans before
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it comes from the Democrats I mean the
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Democrats are unfortunately increasingly
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judgmental
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and I think it's very difficult for a
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woman to emerge there
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but I do think that Nikki Haley has a
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shot so I'm going to go long Nikki Haley
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and I'm going to short Ron DeSantis okay
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I like a spread trade for his prediction
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well done before sax you interject let
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me just do mine and because then you'll
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have two to interject too uh I was
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looking uh at Biden and Trump and
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thinking Hmm
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which one of these is going to have the
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big win in 2023 so the two biggest I
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think uh players I have a prediction for
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Trump I think he's going to lose 50
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pounds on the ozempic everybody loves a
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weight loss story I think he is going to
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be indicted by Garland is he on wait a
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minute sorry he's on ozenpick no I'm
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predicting an ozempic run and he's gonna
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drop 40 50 pounds then we're gonna have
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a schvelt trump get indicted by Garland
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and the debates and the and the and the
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rigmarole with DeSantis I think he's
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gonna
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go after DeSantis based on weight and
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height
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and then he's going to win the
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nomination in 24 and we're going to have
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Trump versus Biden but this is a crazy
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prediction here I think we're gonna have
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a settlement
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I think he's going to agree to not run
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and get the pardon this is a crazy
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prediction I know but I think he loses
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the weight
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he wins the Nam he gets indicted and
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then he gets the Richard Nixon pardon
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Global pardon for all of the [ __ ] he's
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done
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sax you can reply now to these two crazy
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predictions this French random mine I
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mean this is like proof positive that
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everything you have to say about Trump
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is an act of projection I mean like
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asempic I mean like I mean are you
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talking about yourself or Trump I strike
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boom yeah
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and super good yes both of those things
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are fasting have you sacked on any of
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them yeah I've tried it yeah um I think
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everybody should be looking into this if
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you're uh have weight issues it's a it's
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a it's a great news I want to say it
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even more broadly I've been reading a
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lot about these glp ones and I I got to
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tell you statins are a clear wonder drug
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yes okay I think that the 50-year
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longitudinal data on its value
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is pretty unimpeachable
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metformin even taken prophylactically
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has shown incredible benefits for cell
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regeneration longevity
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and glucose management and the real look
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the reality is let's just take a step
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back the American diet we're all
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pre-diabetic okay so let's just let's
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just not beat around the bush the way
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that Americans eat and our food supply
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and also probably in Western Europe is
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pre-diabetic by definition it's [ __ ]
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it's trash
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so metformin makes a lot of sense and
00:15:02
again its longitude data is incredible
00:15:04
but I got to tell you the early data on
00:15:06
these glp ones are unbelievable
00:15:10
it's extraordinary firsthand experience
00:15:13
I would lose half a pound a week when I
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would diet no but what I'm saying is
00:15:17
it's beyond that um what I'm talking
00:15:19
about is insulin response it's cardiac
00:15:22
health and so if this data tracks like
00:15:24
this man you're just going to want to
00:15:25
put everybody on these gops well I just
00:15:27
want to also put a disclaimer out here
00:15:28
do your own research work with your
00:15:29
doctors whether it's for metformin or
00:15:31
zempic but I had great results on it
00:15:33
I recommend if you're struggling with
00:15:35
weight loss like I did for many years
00:15:36
you talk to your doctor about it that's
00:15:38
it it's not a commercial for a govier or
00:15:40
something but I do think these things
00:15:41
are going to change well and they're
00:15:43
getting better and it seems like diab
00:15:45
people with diabetes are on them for
00:15:46
life so if your question is like if I
00:15:48
could do this for a year to lose weight
00:15:50
you know I think diabetics are on it for
00:15:52
life so when I made my decision again
00:15:53
work with their doctors not random
00:15:55
podcast or Venture capitalists for your
00:15:57
health advice
00:15:59
I was like well if all of these people
00:16:01
who have diabetes are gonna on it for
00:16:02
years unless it's non-toxic go get a
00:16:04
pre-nuvo scan just make sure absolutely
00:16:06
you got that right so there you have it
00:16:08
those are our uh predictions
00:16:10
I wanna I want the sax to react to my
00:16:13
spread Trader yeah okay so so look I
00:16:15
think you know if you're going on a
00:16:16
betting site I think that um you could
00:16:19
place that bet that your mouth made
00:16:21
pretty cheaply and probably it's like
00:16:22
has some good upside to it so I don't
00:16:24
criticize it as a bet do I think it's
00:16:26
actually going to happen no and I I
00:16:28
think the reason is is this that if you
00:16:31
look at what's happening right now with
00:16:32
the speaker's race there's two very
00:16:34
clear Wings in the Republican Party
00:16:36
there's establishment wing and then
00:16:37
there's kind of this populist Maga wing
00:16:39
and the candidate whoever it is in 24
00:16:42
needs to unite those two wings and I
00:16:45
think this is really the best argument
00:16:47
for DeSantis is he's widely accepted by
00:16:49
both I think Nikki Haley's problem is
00:16:51
that she's very well regarded within the
00:16:53
establishment wing of the Republican
00:16:55
party but she has no meaningful support
00:16:57
within the populist wing and so I don't
00:17:00
think she's capable of bringing the
00:17:01
party together at least at this point in
00:17:03
time she would have to prove let's call
00:17:05
it populist
00:17:06
bona fide that she just doesn't have
00:17:08
right now so this is why I think you
00:17:10
know DeSantis even he does have front
00:17:13
runner wrists you're right that people
00:17:14
are going to keep taking shots of them
00:17:16
as long as he's the front runner but all
00:17:18
right let's use capable he's capable of
00:17:20
uniting the party in a way that a
00:17:22
desperately needs right now as we're
00:17:23
seeing with the Kevin McCarthy thing
00:17:25
playing out yeah okay let's go for our
00:17:27
biggest losers uh we'll rip through this
00:17:29
last year I said Biden and Trump in the
00:17:32
extremes
00:17:33
had the progressive laugh again the
00:17:35
extreme sack said Pelosi who just
00:17:37
wrapped up her tenure and Friedberg said
00:17:39
U.S influence globally
00:17:42
was the biggest political loser uh let's
00:17:45
get our
00:17:46
predictions for the biggest political
00:17:47
loser of 2023 Freeburg who do you think
00:17:50
would be the biggest political loser of
00:17:52
2023 the world wants to know Freiburg I
00:17:55
would continue my U.S influence but I I
00:17:57
am going to shift
00:17:59
here's what I think is going to happen
00:18:00
this year my big prediction
00:18:04
is based on I think the world has too
00:18:07
much debt I think that the economic
00:18:09
slowdown coupled with Rising interest
00:18:11
rates globally and a and a dearth of uh
00:18:13
kind of asset uh Capital inflows means
00:18:16
that there's going to be a lot of issues
00:18:17
with a number of debt markets around the
00:18:19
world particularly kind of emerging
00:18:20
sovereign debt
00:18:22
just to give you guys a sense Global
00:18:23
debt is about 235 trillion dollars in
00:18:26
public
00:18:26
and private um you know that's somewhere
00:18:29
between five and fifteen trillion
00:18:30
dollars of interest payments a year
00:18:31
depending on what the net rate is on 96
00:18:34
trillion dollar Global GDP and there's
00:18:36
another trillion and a half of unfunded
00:18:38
liabilities in the U.S and pensions and
00:18:40
Social Security and all that sort of
00:18:41
stuff I think this is the year where a
00:18:43
lot of the debt markets start to unravel
00:18:44
the so freedberg is this ability that
00:18:47
steps in
00:18:48
or a political loser I'm going to tell
00:18:50
it one second this is the political yeah
00:18:51
so the political ramifications so the
00:18:53
political ramifications for me I think
00:18:55
that the um the entity that steps in to
00:18:57
try and support these um unwinding
00:19:00
moments is the IMF and I think that no
00:19:02
matter what the IMF does they're going
00:19:03
to look bad I think that the you know
00:19:05
it's sort of like like Jerome Powell
00:19:07
this this past year right like you you
00:19:09
raised rates too late you raised rates
00:19:11
too quickly no matter what you do it has
00:19:13
some adverse effect and impact it's
00:19:15
either inflationary or it impacts growth
00:19:19
and so I think the IMF is going to get a
00:19:21
lot of heat for either acting not too
00:19:23
soon uh or sorry not fast enough or
00:19:26
or acting too aggressively and causing
00:19:28
inflation as a bunch of these markets
00:19:30
face credit risk this year so My Big bet
00:19:33
is the IMF is going to play a major role
00:19:35
and we're going to be talking a lot
00:19:36
about the IMF later this year I think as
00:19:38
a result the IMF will get a lot of heat
00:19:40
and you'll end up seeing
00:19:42
a lot of pressure and political you know
00:19:43
just like we blame NATO just like we
00:19:45
blame Jerome Powell and the FED will end
00:19:47
up blaming the IMF for a bunch of
00:19:48
problems uh that'll arise but the
00:19:50
natural physics of what's going on is
00:19:53
the world has too much debt and not
00:19:54
enough growth to cover the debt the cost
00:19:56
of debt that's it okay and the IMF will
00:19:58
be the political kind of you know hit
00:20:00
that'll that'll result well you have a
00:20:02
point of view but I think yeah
00:20:05
and who do you have uh as your biggest
00:20:07
political loser prediction for 2023 Mr
00:20:10
Davis hacks
00:20:11
well I mean Kevin McCarthy may not
00:20:13
survive the week so let me go in a
00:20:15
different direction
00:20:16
I think California is my big political
00:20:19
loser and I would say in particular the
00:20:21
city of San Francisco both are going to
00:20:24
have gigantic budget shortfalls you may
00:20:26
remember that this is back in 2021 when
00:20:30
we had that asset bubble California had
00:20:32
a surplus of 76 billion and then insane
00:20:37
and then 2022 happened and now the state
00:20:40
is looking at a 24 billion dollar
00:20:42
deficit well if we had taken say a third
00:20:45
of that Surplus from 21 and put it in a
00:20:48
rainy day fund we wouldn't have to worry
00:20:50
about this deficit but that was never
00:20:52
done Newsome started handing that money
00:20:54
out like candy to the electorate to
00:20:56
Goose's
00:20:57
election his re-elect numbers and to get
00:21:00
him past the that recall remember okay
00:21:03
so the the state never got a Cisco
00:21:05
Outlook in order and now I think it's
00:21:07
going to be even worse in 2023 and San
00:21:11
Francisco the city uh very similar kind
00:21:13
of problem where it's uh tax base is
00:21:16
heavily dependent on Commercial Real
00:21:17
Estate which is really suffering so you
00:21:19
know the city of San Francisco and the
00:21:21
state of California they've moved their
00:21:22
tax base to to highly volatile capital
00:21:26
gains and with a really lousy stock
00:21:28
market I don't know how these guys are
00:21:30
going to meet their budgets so a lot of
00:21:32
pain is going to be a lot of austerity
00:21:33
and pain coming that's for sure and
00:21:35
these people do not know how to manage a
00:21:38
budget they're incompetent so you say
00:21:40
California Freeburg says IMF jamoth who
00:21:43
do you think the biggest political loser
00:21:44
for 2023 will be already gave us your
00:21:46
predictive sentence
00:21:47
I'm in alignment with you I think
00:21:49
descent has peaked a little too early
00:21:51
and the forever trumpers and the in the
00:21:53
chaos is going to be a little too much
00:21:55
for him to handle okay now we get into
00:21:58
what everybody wants business business
00:22:00
biggest business winner for
00:22:02
2023 who do you have chamoth for your
00:22:05
biggest biggest business winner of 2023.
00:22:07
I'm going to pick something out of my
00:22:09
portfolio I think I'm the only
00:22:12
non-trivially large investor in both
00:22:15
SpaceX and relativity space
00:22:19
relativity space has a huge SpaceX is
00:22:22
clearly just crushing on all cylinders
00:22:26
and they're really the only game in town
00:22:28
with respect to launch capability and if
00:22:30
you just Google it you'll see that the
00:22:33
Europeans you know have a hit or miss
00:22:36
capability and launch the Russians are
00:22:39
completely unable to do launch now
00:22:41
because of all of these sanctions
00:22:43
the private companies in New Zealand or
00:22:45
the United States have also had fits and
00:22:47
starts really incapable
00:22:51
relativity which is really which is now
00:22:53
the second most highly valued space
00:22:56
business
00:22:59
is about to do a launch
00:23:01
in the third week of January and the big
00:23:04
difference between it and SpaceX which
00:23:06
is sort of why we did it this is a early
00:23:09
YC company I did the series a and kind
00:23:11
of went along the whole way they have 3D
00:23:13
printed everything and the reason why 3D
00:23:15
printing is interesting is you take a so
00:23:19
if you if you think a rocket costs five
00:23:22
billion dollars if built by NASA
00:23:24
Elon was able to take that to a hundred
00:23:26
to 500 million and if you 3D print
00:23:29
everything you can take that cost to
00:23:31
like five to fifty million and so it
00:23:34
allows you to just have this
00:23:35
repeatability and manufacturability now
00:23:36
SpaceX also has a lot of 3D printed
00:23:38
Parts but relativity is entirely 3D
00:23:40
printed
00:23:42
it has a launch
00:23:44
in three weeks
00:23:47
at Cape Canaveral I think
00:23:49
and we have like a 10 billion dollar
00:23:51
order book that gets unlocked
00:23:53
so I don't know how to see beyond a lot
00:23:56
of these Market forecasts right now so
00:23:58
I'd rather pick a company I'll pick
00:23:59
something in my portfolio if the rocket
00:24:01
does not blow up
00:24:02
there's a 10 billion dollar order book
00:24:05
and this company is now on a trajectory
00:24:08
to be as valued as SpaceX all right
00:24:10
talking his book times two and if it
00:24:13
doesn't it goes to zero Freeburg go
00:24:16
ahead and talk your book times two or
00:24:18
three let's see if you can one-up
00:24:19
chamoth which one of your investments
00:24:21
will be the biggest business winner of
00:24:22
2023 Freeburg
00:24:25
I'm not an investor my big bet is open
00:24:26
AI it's just way too obvious to be
00:24:28
anything else this year as you guys know
00:24:30
there are dozens of startups that are
00:24:32
being started right now based on an open
00:24:34
ai's demonstration of Dolly and uh
00:24:36
Chachi BT I think we're seeing this in
00:24:38
the Enterprise and consumer markets I
00:24:40
think open AI will become to some degree
00:24:42
maybe they could be as many paths they
00:24:45
could take the AWS providing tooling and
00:24:47
infrastructure to all these startups
00:24:48
that are building applications for
00:24:49
consumers and business users
00:24:52
or they will end up doing a massive deal
00:24:54
with Microsoft I think it's inevitable
00:24:55
they're going to get a billion dollar
00:24:56
plus investment this year they could
00:24:58
power you know AI driven Bing search and
00:25:00
Voice driven search
00:25:02
they could build their own products and
00:25:04
their own tools and they're becoming
00:25:05
great investors they invested in dscript
00:25:07
which is a product company we use here
00:25:09
for our podcast which is an incredible
00:25:11
product and I think that Sam Altman is a
00:25:13
very smart and screwed investor as well
00:25:15
so for a lot of reasons I think openai
00:25:17
could end up having an amazing year this
00:25:20
year and a lot of different paths they
00:25:21
could walk and we're going to come out
00:25:22
of this year and say they're one of the
00:25:23
top tech companies in the valley
00:25:25
okay sax open AI has of course increased
00:25:30
your ability to talk to other humans
00:25:32
so you're seeing a lot of big wins there
00:25:34
I know
00:25:35
um
00:25:36
he's how do I talk to a child about
00:25:41
their college hopes and aspirations
00:25:44
no no how do I talk to a child about
00:25:46
their day
00:25:49
hello it literally is hello hello
00:25:51
progeny of mine how are you faring today
00:25:55
in this complicated write me a script of
00:25:58
talking to a 12 year old about their
00:26:00
hopes and dreams say it's interesting
00:26:03
using GPT for talking points on
00:26:05
different topics I should try that for
00:26:07
the Pod you know oh okay we should have
00:26:09
done the GPT predictions
00:26:12
or answer these categories sex as a
00:26:15
person on the Spectrum uh yeah how
00:26:18
delightful is uh this uh chat EBT and
00:26:21
you know your treatment of your
00:26:22
condition that's great let me let me get
00:26:24
to my answer here okay so um my answer
00:26:27
for the big business winner of the year
00:26:29
is America's natural gas industry and I
00:26:33
have to admit this is an aspect of the
00:26:35
Ukraine war that I didn't fully
00:26:37
appreciate until I read this New York
00:26:39
Times article the other day about how
00:26:41
natural gas prices in Europe have now
00:26:45
fallen to the level they're at before
00:26:46
the war and everyone thought that
00:26:48
there'd be this huge shortage and then
00:26:50
we'll be able to heat their homes well
00:26:52
what happened the the answer is that
00:26:55
Europe completely cut off their
00:26:58
dependence on Russian gas and in fact
00:26:59
the Nordstrom pipelines were blown up so
00:27:02
physically they separated but then on
00:27:05
top of it
00:27:07
they basically started importing
00:27:09
liquefied natural gas from the U.S and
00:27:12
here's the key paragraph in this article
00:27:13
from The New York Times is that
00:27:16
Europe rapidly built terminals to
00:27:18
receive liquefied gas sweeping away many
00:27:20
of the usual bureaucratic obstacles and
00:27:23
environmental objections so in other
00:27:25
words what normally would have taken
00:27:27
decades to get approvals now was all put
00:27:30
on a fast track and Europe is now
00:27:33
completely dependent on American natural
00:27:37
gas and I think this is again the thing
00:27:40
maybe I underestimated that cold hard
00:27:42
American interest in this war is to
00:27:45
basically turn Europe into a vassal of
00:27:49
America's natural gas industry
00:27:50
previously they were about to be
00:27:52
dependent on Russia and Nordstrom was
00:27:54
going to make that situation permanent
00:27:56
we've you know somebody blew up
00:27:58
nordstream now they're dependent on
00:28:00
American LNG they're going to pay higher
00:28:02
prices for that but it's uh it's been a
00:28:06
pretty impressive win for the American
00:28:08
natural gas industry and I think Biden
00:28:10
has really pulled a 180 here because you
00:28:12
remember when he first came into office
00:28:14
he canceled Keystone he canceled
00:28:16
drilling he was very tough on the oil
00:28:18
and gas industry I think after he then
00:28:21
delivered the hundreds of billions for
00:28:23
the climate special interest and the
00:28:25
inflation reduction act now he is taking
00:28:27
care of the oil and gas industry I love
00:28:30
it
00:28:31
yeah not and so what you're saying is
00:28:34
Biden dynamically changed course based
00:28:36
on inputs like a great leader would okay
00:28:38
well done sex well I don't I don't
00:28:40
listen I don't know well no listen I
00:28:43
think Biden has done something
00:28:44
politically smart here there's no
00:28:46
question about it I am giving him credit
00:28:48
does it mean that this war was worth it
00:28:50
no I don't I don't think we should be
00:28:51
engaging in oil Wars like we did in the
00:28:55
Middle East we agree so I'm not
00:28:56
justifying this war but I am saying that
00:28:59
there is a cold hard American interest
00:29:01
undergirding the uh our position which
00:29:03
is it's about LNG it's not it's not just
00:29:06
about moral platitudes yeah I mean the
00:29:09
strong start to 2023 vassal and
00:29:11
undergirding
00:29:13
uh my biggest predictions I'm working
00:29:15
backwards from two here I think the door
00:29:17
dashes airbnbs Ubers etsy's of the world
00:29:20
who need entrepreneurs they need workers
00:29:23
they need Supply they've always been
00:29:24
Supply constrained
00:29:26
as unemployment becomes let's call it
00:29:29
what it is sticky you're going to see a
00:29:31
lot more people participating in Gig
00:29:32
platforms or entrepreneurial platforms
00:29:34
that enable them to make money so I
00:29:36
think they will be huge beneficiaries
00:29:37
especially if they continue to lay off
00:29:39
employees like doordash and Airbnb did
00:29:40
to right size their businesses but my
00:29:43
first one
00:29:44
my number one is laid off Tech workers
00:29:48
I think laid off Tech workers who
00:29:51
get together in groups of two three or
00:29:53
four uh developers product managers
00:29:55
people who actually build stuff and
00:29:57
start companies together are going to
00:29:59
become extremely successful and they're
00:30:02
going to make incredible lemonade
00:30:04
from these lemons of these big Tech
00:30:06
layoffs so I think the startup space is
00:30:08
again and these laid off Tech workers
00:30:10
who choose to take control of the
00:30:11
destiny and starts companies are going
00:30:13
to be the true Big Winners if you do it
00:30:14
do it with two or three friends because
00:30:17
you're going to need developers you're
00:30:18
going to need those those talented
00:30:20
people in the startups that have three
00:30:22
founders get funded faster than the ones
00:30:24
with one uh so those are my two winners
00:30:26
all right oh yeah and last year our
00:30:28
biggest business winners were chamat
00:30:30
said smbs Sac said rise of the rest uh
00:30:32
Freeburg set stripe and I said Disney
00:30:33
Millennials and gen Z let's go on to
00:30:35
biggest business loser for 2023
00:30:38
Friedberg who do you think will be the
00:30:40
biggest business loser in 23 this year
00:30:43
in fact okay so my Biggest Loser is the
00:30:46
general category of capital intensive
00:30:48
series B through D growth businesses in
00:30:51
the startup landscape private companies
00:30:54
um as you guys know there's been a big
00:30:55
shift in capital allocation
00:30:58
a lot of the folks who were writing big
00:31:00
checks into growth rounds are retreating
00:31:03
back to writing smaller checks and seed
00:31:05
and a rounds they don't want to write
00:31:06
the 20 million dollar series B they want
00:31:08
to write the five million dollar seed in
00:31:10
a round uh no one wants to kind of
00:31:12
follow the valuation no one wants to set
00:31:13
the valuation for these growth
00:31:15
businesses particularly if after this
00:31:17
round you know you need another big
00:31:19
round of capital and no one's sure if
00:31:21
someone's going to be waiting on the
00:31:22
other end as a result we're seeing tons
00:31:24
of these businesses run into capital and
00:31:26
fusion walls they can't pivot I think
00:31:29
we'll see what we saw in the.com bubble
00:31:31
we're 99 and a half percent of these
00:31:33
companies actually die the half percent
00:31:35
that we are going to emerge as the next
00:31:36
hundred billion dollar Enterprise is the
00:31:38
Googles and the Amazons of the world so
00:31:40
there will be light at the end of the
00:31:41
tunnel for the winners but generally
00:31:42
there are hundreds of companies in
00:31:44
Hardware in sinbio in biotech and high
00:31:47
growth Enterprise software that require
00:31:49
significant sales investment expense a
00:31:52
lot of these businesses where the
00:31:53
capital intensive nature of the business
00:31:56
just doesn't have the market for it
00:31:58
right now and there and and investors
00:32:00
are are all retreating and they're going
00:32:01
to be selective so that that's where I
00:32:03
think there's going to be more people
00:32:04
intensity by the way see in a investing
00:32:07
hot as a button uh that's what that yeah
00:32:10
that's it okay sax biggest business
00:32:13
loser for 2023. well I just by the way
00:32:16
100 agree with what Friedberg said but
00:32:18
my my Biggest Loser for business in 23
00:32:21
is the consumer I just don't understand
00:32:24
how the consumer isn't going to finally
00:32:26
tap out in this economy I mean they they
00:32:29
have a mountain of personal debt credit
00:32:31
card debts at all-time highs I think the
00:32:33
average credit card rate hit 19.6 last
00:32:36
week and is expected to rise even
00:32:38
further uh the mortgage rates are above
00:32:41
seven percent now so forget about trying
00:32:43
to buy a new home or uh sell your home
00:32:46
and your stock portfolio is down too and
00:32:48
now layoffs are starting to pile up so I
00:32:50
just don't understand how we're going to
00:32:52
avoid a recession and you saw you know
00:32:54
Kashkari saying that right the fed's
00:32:56
gonna keep raising 5.4 his prediction
00:32:59
you know I don't understand how if if
00:33:01
rates are at five and a half percent
00:33:03
that doesn't finally break the back of
00:33:04
this economy and uh we go into a
00:33:07
recession you think sax that the economy
00:33:09
is actually broken right now we just
00:33:11
don't have the day data because the data
00:33:12
lag 60 days in most people's minds
00:33:15
because it does feel like the consumer
00:33:16
is just and real estate has just broken
00:33:18
at this very moment it seems like I mean
00:33:20
the pain is very unequal right but in
00:33:22
the tech industry we've been in a
00:33:23
recession for a year I mean like the
00:33:25
growth stocks are down 80 percent but
00:33:27
Freeburg said is true no one's going to
00:33:29
fund these you know High burning
00:33:30
companies there's an enormous amount of
00:33:32
retooling that has to happen look I
00:33:34
think the recession is here it's just
00:33:36
very unequally distributed distributed
00:33:39
exactly yeah well I mean if you look at
00:33:40
it uh buy now pay later that's a
00:33:43
category starting to break credit card
00:33:45
debt as you're saying hitting you know
00:33:46
uh big um
00:33:50
a bad records in terms of how much we
00:33:52
love spending also people's um
00:33:54
savings are going down so the consumer's
00:33:57
back has been broken I think we're just
00:33:58
going to feel it in the in the first and
00:34:00
second quarter chamath who's your
00:34:02
biggest business loser prediction for
00:34:03
2023 the world wants to know let me just
00:34:05
build on what Freiburg and Sac said for
00:34:08
a second before I give you my pick sure
00:34:10
I this is the conversation you and I had
00:34:12
when we just got on guys what I was
00:34:13
telling jaycal is at the end of Q4
00:34:16
I did five deals
00:34:19
and four were proratas one was a new
00:34:21
deal and they were all clean markups so
00:34:26
the four deals that other people put
00:34:27
money into
00:34:30
and I was looking at them and I was
00:34:31
trying to figure out okay what
00:34:33
differentiates these things in Freebird
00:34:34
to your point these were super clean
00:34:36
startups with very clean cap tables that
00:34:38
had clear progress
00:34:40
and then conversely I had seven converts
00:34:43
showed to me
00:34:44
for companies whose valuations were
00:34:47
anywhere between three and I would say
00:34:49
12 billion
00:34:50
and I did none of them and not only did
00:34:53
I do none of them nobody else did any of
00:34:55
them
00:34:56
and the problem was the real market
00:34:58
clearing price was 80 to 90 percent down
00:35:02
and so I was like what is going on here
00:35:04
so fever to your point I don't even
00:35:06
think it's just cash intensive startups
00:35:08
I think it's like all growth companies
00:35:10
are in a really bad place I thought that
00:35:12
this growth stuff would get sorted out
00:35:14
in two to three months and now I'm
00:35:15
worried it's two to three years I think
00:35:17
it's it's toxic
00:35:19
toxic here's the definition of what I
00:35:22
think has happened and where I think the
00:35:24
cutoff is is when the value the implied
00:35:26
Market valuation of the company based on
00:35:28
where public comps are trading is less
00:35:30
than the total Capital preference in the
00:35:32
company the total preferred stock now so
00:35:34
many companies now that raised 400
00:35:36
million in a two billion valuation but
00:35:38
the company is actually worth 300
00:35:40
million now based on public market comps
00:35:42
so they're worth less than their
00:35:43
preference stack so worth it
00:35:46
no that this is why I think all these
00:35:49
converts are getting done
00:35:51
that's where the rubber meets the road
00:35:52
on all these deals yeah that's right who
00:35:54
does the convert benefit the convert
00:35:56
benefits the VCS who want to maintain
00:36:00
the illusory valuation that they had
00:36:03
before
00:36:04
they do their work they do that to
00:36:07
assuage The Limited partner who gave the
00:36:09
money that the marks aren't as bad as
00:36:11
they thought
00:36:13
but the people that really get screwed
00:36:15
as Jason said are the common
00:36:16
shareholders because eventually those
00:36:18
convert deals that do get done
00:36:21
those people will end up owning the
00:36:22
company the cap table gets completely
00:36:24
flushed and reset and the employees get
00:36:27
wiped up yeah and then you gotta
00:36:29
basically take all the employees who
00:36:31
were there previously who now hate the
00:36:32
founder and give everybody all yeah
00:36:35
they're wiped the people to do all the
00:36:37
work get [ __ ] and the people don't do
00:36:39
none of the work and who just want to
00:36:40
maintain this shell game gets to
00:36:42
basically Live Another Day basically
00:36:44
people are investing as you gave in the
00:36:46
example earlier like if it's a three
00:36:48
billion dollar company but it's actually
00:36:49
worth 750 people instead of taking the
00:36:52
valuation from 3 billion to 750 will say
00:36:53
okay buy one share at the three billion
00:36:55
dollar price and we'll give you three or
00:36:57
four shares for free or for a penny
00:36:59
warrants they're called typically or you
00:37:01
know just different ways to structure
00:37:02
this
00:37:03
and then all of a sudden Nobody Knows
00:37:05
the actual denominator they may own them
00:37:07
10 000 shares but they don't know how
00:37:09
many shares are actually issued because
00:37:10
the warrants are not on the cap table
00:37:11
they're in some side document in a
00:37:13
folder in a lawyer or cfo's office so
00:37:15
let me let me tell you my biggest
00:37:16
business loser yes please
00:37:19
I think that
00:37:21
the biggest potential business loser
00:37:24
this year is Google search who has
00:37:26
measured by pure profitability and
00:37:30
engagement
00:37:32
I think it's easier for me to see where
00:37:35
the the usage comes from as opposed to
00:37:40
picking open AI or chat GPT in terms of
00:37:43
where the usage goes to and the reason
00:37:44
is because I think a lot of people don't
00:37:46
still fully understand how machine
00:37:49
learning and AI work but just 30 second
00:37:52
primer there's two big buckets of work
00:37:54
there's what's called learning which is
00:37:57
how you learn how to make predictions
00:37:59
and then there's what's called inference
00:38:01
which is when you actually type
00:38:02
something into the search box you get
00:38:03
the answer
00:38:05
the thing with learning and what chat
00:38:07
GPT is showing is that they have learned
00:38:10
by crawling the entirety of the web
00:38:13
there are five or six other
00:38:14
organizations that are capable of
00:38:16
crawling the entire web
00:38:18
in terms of cost in terms of compute in
00:38:20
terms of the quality of the Transformers
00:38:22
and the quality of the AI
00:38:24
and so I find it easier to predict
00:38:29
the decay in the quality of Google
00:38:32
search as that much better than
00:38:33
everybody else then I find it is to
00:38:35
predict who will win because I think
00:38:37
that with enough time and money Oracle
00:38:40
Microsoft Google
00:38:42
the Chinese internet companies
00:38:45
can all compete
00:38:47
Facebook and so I think that you'll
00:38:50
Converge on the same training which will
00:38:52
lead to the same inference and so I
00:38:54
think consumers end up getting confused
00:38:55
and will end up being able to get high
00:38:57
quality search results from many places
00:38:59
versus today
00:39:01
you know you wouldn't only think that
00:39:02
Google is the only game in town quite
00:39:04
honestly for most people well so I think
00:39:06
the statistics you know that Google
00:39:08
could lose 10 or 15 percent of usage to
00:39:10
all these other sites
00:39:12
and that may not make any of those sites
00:39:14
that relevant but it'll have a material
00:39:16
measurable impact to Google and Google
00:39:18
fantastic prediction and I think you
00:39:20
know Chachi potatoes other ones are
00:39:22
going to have a very interesting
00:39:23
marketing
00:39:25
attack that they can do on Google is why
00:39:27
search when you can get an answer right
00:39:29
hey we'll just give you the answer you
00:39:30
don't have to search I had so many
00:39:32
losers that I went through here I'm just
00:39:35
going to run backwards to them number
00:39:36
five I thought Founders who refused to
00:39:37
downsize in 2022 could be big losers in
00:39:39
2023. obviously have five and the rest
00:39:41
of us are just I'm just going to tell
00:39:43
you my thought process this was the one
00:39:44
I had a long time number four I thought
00:39:47
VC funds founded in 2020 then I thought
00:39:50
crypto because Gary getzer says it's all
00:39:51
a stock then I went with youth number
00:39:53
four Google my God they got so many
00:39:55
headwinds against them with the shot GPT
00:39:57
but I wound up on
00:39:59
why collar workers with no hard skills
00:40:02
Twitter going down to I think you know
00:40:05
Elon said a couple of hundred people is
00:40:06
all you need to run Twitter and I think
00:40:08
he said he has two thousand employees or
00:40:09
something like that he has shown
00:40:10
everybody you know Hey listen these more
00:40:13
can be done with less uh or these things
00:40:15
are overstaffed in a massive way I think
00:40:17
white collar workers now the idea that
00:40:20
you're going to have four offers and
00:40:21
you're gonna be able to play them off
00:40:22
each other is over
00:40:24
you're saying Surplus Elites sure white
00:40:27
collar workers AKA Surplus Elites people
00:40:29
who actually you know are mid managers
00:40:31
who don't
00:40:32
who don't actually code or don't
00:40:34
actually build a product or sell a
00:40:35
product don't actually do real work as I
00:40:38
think uh many people would frame it in
00:40:40
the managerial class or the CEO class
00:40:43
man they're going to have a hard time
00:40:44
and this week Andy Amazon Andy cut 18
00:40:49
000 white collar workers not the Blue
00:40:50
Collar the white collar workers at
00:40:51
Amazon that was a big turning point and
00:40:54
Benny off
00:40:55
you know he's Ohana he is Mahalo he is
00:40:58
uh Aloha he does not like to lay people
00:41:00
off he considers Salesforce or family he
00:41:02
laid off 8 000. I predicted that yeah
00:41:05
and I mean that is to tweet about that
00:41:08
well I mean the reason is pretty simple
00:41:09
right they're gross slowed down by
00:41:11
two-thirds in the most recent quarter
00:41:12
but they're still spending the same
00:41:13
amount on sales and marketing so when
00:41:15
that happens your CAC payback explodes
00:41:18
right you go from three years pay back
00:41:20
to like 10 years so they have to cut
00:41:22
costs in order to rationalize your unit
00:41:24
economics so and now it it Cascades
00:41:27
right because all of salesforce's
00:41:29
vendors are going to be getting less
00:41:32
money from Salesforce because they're
00:41:34
tightening their belts so then those
00:41:35
companies are gonna have to cut and the
00:41:37
cycle just keeps going and going right
00:41:39
and everybody tightens their belts at
00:41:42
the same time freezes the economy AKA
00:41:44
recession uh and and possibly were so
00:41:47
that mine was a surplus Elite so that's
00:41:48
a nice uh little quartet
00:41:50
in 2022 just so you know uh I picked
00:41:53
crypto freeberg also picked crypto which
00:41:54
must have Visa Mastercard and Sac said
00:41:56
assets classes that benefit from
00:41:58
government
00:41:59
uh dumps and publicity yeah all right
00:42:03
let's go to biggest business deal of
00:42:05
2023 it's a prediction what do we think
00:42:06
could be the biggest business easy easy
00:42:08
this one okay let's go okay quickly
00:42:11
starlink will go public oh SpaceX will
00:42:14
cut and paste the cap table
00:42:16
and we will take yum it'll be yummy and
00:42:20
delicious and my prediction is that the
00:42:22
starlink valuation will be at least half
00:42:25
of spacex's current private Mark 75
00:42:28
Billy just 75 billion it will be
00:42:31
phenomenal and I think the reason why is
00:42:33
that I think
00:42:35
in order for Elon to have complete
00:42:37
Financial flexibility and do what he
00:42:39
needs to do and you know he talked about
00:42:41
this on our pod about the difficulties
00:42:42
and the dangers of margin loans and all
00:42:44
of that stuff yes he's gonna create
00:42:46
breathing room for himself ah this is
00:42:49
the simplest and most obvious way for
00:42:51
him to do it it'll give him a ton of
00:42:53
more dry powder sure so I think that
00:42:56
this is
00:42:58
an obvious outcome in 2020. they already
00:43:00
have a million subscribers in there
00:43:01
better than nothing beta as they call it
00:43:03
I have two of them I think uh this is a
00:43:06
great great uh I was the first one to
00:43:09
get it for uh for the global 7 500. so
00:43:12
okay well I I got it for yeah Tahoe so
00:43:15
yeah similar uh so uh they're my Clayton
00:43:19
in your house in the same size yes
00:43:20
exactly so there you go uh there is a
00:43:23
point here people are underestimating
00:43:24
The Tam I think of this product
00:43:26
The Tam is not existing Broadband
00:43:28
connections it's second connections it's
00:43:30
connections where connections didn't
00:43:31
exist just so you know buses the Best in
00:43:35
Class the Best in Class broadband
00:43:37
connection for a plane is called Ka band
00:43:39
and it costs 500 Grand a year
00:43:43
that's ridiculous and you can replace it
00:43:45
for you know a tenth of the cost and
00:43:48
start a link on a plane is dramatically
00:43:51
better bi-directionally
00:43:54
so I think starlink is going to go
00:43:55
public and I think it's going to be it's
00:43:57
going to be the best chance that we have
00:43:58
of opening up the capital markets in
00:44:00
2023. there's another way of saying
00:44:02
people who own private jets if they are
00:44:04
flying 250 hours a year which would
00:44:07
probably be a reasonable number to 300
00:44:09
hours a year they're paying two thousand
00:44:11
dollars an hour for their internet
00:44:12
service that is Bonkers okay sax
00:44:15
who is your uh big deal biggest business
00:44:17
deal prediction for 2012 steals 23
00:44:20
prediction is
00:44:22
there will be a deal between uh Putin
00:44:25
and G
00:44:26
and they met by satellite late last week
00:44:29
to discuss ways to further help each
00:44:31
other in 2023 Putin characterized it as
00:44:35
a no limits partnership you may remember
00:44:37
that the two of them Inked a 175 billion
00:44:41
dollar gas deal in early February last
00:44:44
year that was three weeks before Putin
00:44:46
invaded Ukraine I think now Russia is
00:44:49
even more dependent on China
00:44:51
we've really driven Russia into China's
00:44:53
arms and I think there will be a big
00:44:56
deal not just on energy but on
00:44:59
agricultural products mineral products
00:45:01
and rare earth minerals that you know
00:45:04
chamoth likes to talk about I think
00:45:07
there could be a trillion dollar deal
00:45:09
between Russia and China this year if I
00:45:11
was going to go out and live and make
00:45:12
prediction okay so there is your 2023
00:45:15
prediction of the biggest deal the
00:45:16
Legion of dictators is Foreman I do
00:45:19
think it's uh it is like uh you know
00:45:21
that the axis of Evil this is more
00:45:23
Legion of dictators like hey let's do
00:45:24
business together
00:45:26
treeberg he got a prediction for the
00:45:28
biggest business deal of 2023 this is
00:45:30
really going on a limb here I'll do two
00:45:31
real quick the first was the similar to
00:45:34
what Zach said but it's
00:45:38
kind of echoing what I said earlier
00:45:40
which is the Petro you on trade I think
00:45:42
that's the Saudi China trade if this
00:45:44
happens and oil is sold in Yuan
00:45:48
it marks the beginning of I think
00:45:52
um the end of the assumption that the US
00:45:56
dollar is the global reserve and the
00:45:59
risk-free currency
00:46:01
in reserve for the world so I think the
00:46:03
Petro you want to trade if you guys um
00:46:05
here's the Reuters article covering ji's
00:46:09
visit uh to Saudi Arabia last month for
00:46:11
the second week of December
00:46:13
once this gets Inked and signed it's a
00:46:16
real shift uh globally I think the other
00:46:18
one that I'm that I'm going to point out
00:46:19
that I think is
00:46:21
a bit of a out of left field one maybe
00:46:24
and maybe I'm just gonna look like a
00:46:25
total idiot at the end of the year about
00:46:27
do a wild card I like it this is my wild
00:46:28
card so my wild card is I think Apple
00:46:30
ends up buying something completely out
00:46:32
of the ordinary and here's why I think
00:46:35
Apple's Core Business they're facing
00:46:36
significant pressure with respect to
00:46:38
their relationship and ties to China as
00:46:41
you guys may have seen last week Foxconn
00:46:43
announced that they're actually going uh
00:46:45
further Downstream in terms of their
00:46:46
production model and they're trying to
00:46:48
diversify away from being kind of the
00:46:49
sole service provider to Apple
00:46:51
apple as you know is under such pressure
00:46:53
to get out of China
00:46:55
politically that they've started to try
00:46:57
and invigorate activity in Vietnam and
00:46:59
elsewhere so a lot of pressure on their
00:47:02
relationship with their low-cost
00:47:04
producer and low cost production partner
00:47:08
they're also under a lot of political
00:47:09
pressure because of the App Store
00:47:11
revenues you guys know this 30 App Store
00:47:13
that they take a lot of people are
00:47:15
calling it monopolistic and antitrust is
00:47:17
getting involved so they're feeling that
00:47:18
pressure there's also the pressure with
00:47:20
respect to the
00:47:22
you know waning uh consumer demand for
00:47:24
high-end Electronics Samsung last
00:47:25
yesterday or last week and or yesterday
00:47:27
I think announced significant declines
00:47:30
in consumer demand for electronics or
00:47:32
their forecast as such that has to
00:47:34
impact apple as well so when you put all
00:47:36
of this together right they're they're
00:47:38
they're being pressured to get out of
00:47:39
their low-cost manufacturing center
00:47:41
they're being pressured to stop making
00:47:42
money on the app store they're being
00:47:44
pressured because the demand may be
00:47:46
waning they have to do something big to
00:47:48
kind of diversify the business so I
00:47:50
think they might end up doing something
00:47:51
like buying a real content company maybe
00:47:53
they do something like buy a Disney
00:47:54
maybe they do something like buy an
00:47:57
automotive company like Fiat Chrysler I
00:48:00
think there are a number of these kind
00:48:01
of like what may seem today outrageous
00:48:03
deals that Apple might end up kind of
00:48:05
being pressured into doing so that they
00:48:07
can get ahead of their forecast of the
00:48:09
impact that all these pressures are
00:48:10
going to have on their Core Business and
00:48:12
so I think this is something interesting
00:48:13
to kind of think may happen this year I
00:48:15
certainly have no Insight or Intel on
00:48:18
anything or I could be completely wrong
00:48:19
on this one but it feels like they've
00:48:21
got to do something this year I'm
00:48:22
necessarily to keep that business I
00:48:24
think this is I think I love your wild
00:48:26
card because the MBS China trade
00:48:28
and that relationship sure Legion of
00:48:31
dictators but this one is really good
00:48:33
it's hard to buy Disney monopolistic
00:48:35
issues but buying a car company pretty
00:48:37
easy because that's a fragmented Market
00:48:40
I love this prediction
00:48:42
I mean now with Tesla with this
00:48:44
depressed stock price Apple can make a
00:48:45
run at Tesla they have they could almost
00:48:46
buy it with cash
00:48:48
let alone BMW Volvo one of those Brands
00:48:50
they could buy easily what a great
00:48:53
prediction for me the prediction is
00:48:55
Amazon's three-legged stool grows into a
00:48:58
sturdy chair chair with a fourth pillar
00:49:00
for those folks who are not familiar
00:49:02
with how Amazon has built their
00:49:04
businesses there are three
00:49:07
pillars in their stool e-commerce
00:49:09
obviously when you buy stuff Prime
00:49:11
memberships which is kind of considered
00:49:12
a separate Revenue stream
00:49:14
and of course AWS cloud computing I
00:49:16
think the fourth is going to be this
00:49:18
continuation of following the health
00:49:20
stream not advertising because that's
00:49:22
not a consumer-based product that's just
00:49:23
the way they make money health is going
00:49:25
to be a big one for them uh they
00:49:27
obviously acquired one medical which was
00:49:28
a small purchase I think they're going
00:49:30
to buy Roman hymns they're going to buy
00:49:32
Peloton they could buy a whoop and
00:49:35
they're going to go all in on health and
00:49:37
you know that three-legged stool becomes
00:49:39
a very sturdy chair
00:49:41
and my runner-up is Tick Tock is going
00:49:43
to divest under duress I think that it's
00:49:46
going to have to go public and the
00:49:48
Chinese are going to divest their
00:49:50
interest in it uh and just take their
00:49:51
chips because they're going to be faced
00:49:53
with the existential threat during the
00:49:55
political debates over the next two
00:49:56
years there will be
00:49:58
unanimous support from Democrats and
00:50:00
Republicans to get Tick Tock out of the
00:50:02
U.S therefore they divest can I just
00:50:04
test that which with you guys because
00:50:06
we've talked about this a lot that hey
00:50:07
we're going to ban Tick Tock how many of
00:50:10
your
00:50:12
friends kids or your kids do you guys
00:50:14
know spend hours a week on Tick Tock
00:50:17
it's a lot 90 how do you get over the
00:50:20
political mountain of trying to ban Tick
00:50:23
Tock if you try and ban Tick Tock
00:50:25
whoever raises their hand and says we
00:50:27
should ban Tick Tock and actually gets
00:50:28
it done they're out of office there is
00:50:30
going to be so much pressure and
00:50:31
backlash because people are hooked and
00:50:33
love that app and use it all the time to
00:50:35
take that away from people will feel
00:50:37
like this kind of young kids that don't
00:50:39
have phones actually get everything that
00:50:42
Tick Tock has on YouTube shorts so I
00:50:44
don't think Tick Tock is that important
00:50:46
because it is not actually there is no
00:50:48
sticky Network effect inside that app so
00:50:51
there isn't usage that's dependent on
00:50:53
people you know or a graph that you
00:50:54
build it's a lot of passively consumed
00:50:57
content and so you know you're you're
00:50:58
getting pushed a lot of algebra
00:51:01
algorithmically defined content you can
00:51:02
do that on YouTube and so I actually
00:51:04
don't think it's that meaningfully
00:51:05
important if tick tock goes away I think
00:51:08
the content creator stayed
00:51:10
it's harder for them to build a business
00:51:12
on YouTube shorts but if you look at the
00:51:15
and measure the density of content
00:51:18
inside Tick Tock it exists almost one to
00:51:20
one on YouTube
00:51:22
that's interesting it's an interesting
00:51:24
even it'll you think it'll be okay if we
00:51:26
if we cancel Tick Tock in the US and we
00:51:28
say that too you can't have taken
00:51:29
everybody moves to YouTube and it's
00:51:30
going to be disruptive but people will
00:51:31
just go to YouTube and Instagram it's
00:51:33
not that big of a deal in fact a lot of
00:51:36
the my favorites if there was a network
00:51:38
effect inside there then I think people
00:51:40
would have a reason to complain to
00:51:42
somebody whether it's your
00:51:43
representative or
00:51:44
whether it's somebody else to say hey
00:51:46
don't do this this would have a
00:51:48
deleterious impact on my quality of life
00:51:50
or my quality of experience and you
00:51:52
could make that clear claim on Instagram
00:51:54
Facebook you know Google YouTube
00:51:58
but Tick Tock is is much more brittle
00:52:01
that way and that's why they need to get
00:52:03
public sooner and monetize this bloody
00:52:05
thing because I think that it's very
00:52:08
easy actually to deconstruct tick tock's
00:52:12
value into these other places I can tell
00:52:14
you my favorite Tick Tock is Chef's
00:52:16
reactions and I consume him now on
00:52:18
Instagram because he posts he just
00:52:20
copies one to the other and so Chef's
00:52:22
reactions is a great example where he
00:52:24
actually got banned by Tick Tock and
00:52:25
then Diversified on his own and now what
00:52:28
he does is he publishes across multiple
00:52:30
streams and if you look at all the big
00:52:31
creators
00:52:32
they all do that because it makes no
00:52:34
sense to actually give the power to any
00:52:36
one of these things why have a
00:52:37
dependency well I have a dependency all
00:52:40
right let's keep the trains moving most
00:52:42
contrarian belief this is the Peter
00:52:44
Thiel award your chess partner sex who's
00:52:48
winning in 2022 in chess how many chess
00:52:50
games do you have going with Peter Thiel
00:52:51
right now and who's higher rated you
00:52:53
demolished me with your Queen's Gambit I
00:52:55
played one game I got killed in seven
00:52:57
moves I'm I'm ranked at 800 900 right
00:53:00
now sax is at 1800 he just walloped me
00:53:02
who's higher rating right now you
00:53:04
accepted the Queen's Gambit well you
00:53:06
know I just I don't even know what it
00:53:07
was I was like what opening is this
00:53:09
you're like uh Queens Gambit you're dead
00:53:13
I don't want to accept the Queen's
00:53:15
Gambit okay very pleasant game for white
00:53:18
I'm gonna go on a linear you know and
00:53:20
risk being wrong uh my my prediction or
00:53:24
most contrarian belief is that the
00:53:26
Bromance between Biden and zielinski
00:53:28
comes to an end at some point in 2023
00:53:31
and uh let me State the part that I
00:53:34
think is conventional wisdom and
00:53:37
everyone agrees with which is there's
00:53:38
going to be a massive Ukrainian
00:53:40
counteroffensive in the spring and I
00:53:42
think that could go one of two ways
00:53:43
either it could make limited gains
00:53:46
basically the Russians fight them to a
00:53:47
stalemate or it could be successful and
00:53:51
they could basically push the Russians
00:53:53
back to the February 23rd lines and then
00:53:54
make a play for Crimea I predict that in
00:53:57
either one of those circumstances
00:53:59
zelinski's interests and Biden's
00:54:01
interest will start to diverge so in the
00:54:03
case of a stalemate
00:54:05
which I think is probably 50 50 here
00:54:08
Biden's gotta start going into election
00:54:11
mode for 2024 and I think we're saying
00:54:13
that we're going to be in a recession so
00:54:14
I think that if there's a stalemate I
00:54:17
think Biden's going to tell zelinski
00:54:18
wrap this thing up it's time to
00:54:20
negotiate we need to get this over with
00:54:22
by the same token if the counter offense
00:54:24
is successful I think that the
00:54:26
administration hopefully cooler heads
00:54:28
will prevail and not let them take
00:54:30
Crimea that's basically what they're
00:54:31
gunning for is they not only want to get
00:54:33
back to the February 23rd lines they
00:54:35
want to go all the way back to the 2014
00:54:38
lines of retaking Crimea I think that's
00:54:40
extremely dangerous I think that could
00:54:42
precipitate a nuclear war and I think
00:54:45
that the cooler heads the administration
00:54:47
will tell zelinski to stand down and
00:54:49
that's the right time to make a deal so
00:54:51
I think in either one of these scenarios
00:54:52
I think you will start to see a
00:54:54
Divergence between the Ukrainian and the
00:54:56
American interests and that could create
00:54:57
a rift and I think no one's really
00:55:01
predicting that I I think this is great
00:55:03
this is kind of what I thought the plan
00:55:04
all along was which was to deplete Putin
00:55:07
of resources distract him them and then
00:55:09
get the West off of his oil and and try
00:55:12
to do regime change but do it by
00:55:14
bleeding him this would be uh proof
00:55:17
positive of that strategy which is bleed
00:55:18
him to the end and then sell zelinski
00:55:21
out I think that's actually I know
00:55:23
that's I know it's cynical but I think
00:55:25
that's what we're doing I think Ukraine
00:55:26
is a tool to deplete Putin and then
00:55:28
maybe get to regime change uh I'm
00:55:30
cynical as it gets with this chamoth
00:55:32
what's your most contrarian belief of
00:55:34
2023
00:55:35
I will go and pick that
00:55:39
inflation which people expect to fall
00:55:42
off a cliff
00:55:44
doesn't fall off a cliff as fast or as
00:55:47
meaningfully as people want and so I
00:55:50
will explain inflation as
00:55:53
three different chapters and we've seen
00:55:55
the first two chapters play out so 2021
00:55:58
chapter one was all about energy
00:56:00
inflation and you know we all talked
00:56:02
about having almost ten dollar gas at
00:56:05
the pump and what does it mean for
00:56:06
everybody and
00:56:08
it caused that initial Spike
00:56:12
in inflation
00:56:13
and then we had it come off and sax
00:56:16
called this he said you know we're going
00:56:17
to have this sort of double hump
00:56:19
and 2022 was really the story of goods
00:56:22
inflation right all these prices and all
00:56:24
of these things went up because the
00:56:27
input costs went up and we all had to
00:56:29
Bear the implications of that but then
00:56:31
that started to ebb
00:56:34
and now if you looked at the tail end of
00:56:36
2022 what I found super interesting was
00:56:39
the number of articles I saw about wage
00:56:42
inflation whether that was Biden using
00:56:47
an 1800s era law to prevent a Railroad
00:56:50
Strike
00:56:51
the number of states that increased
00:56:53
minimum wage the trend around
00:56:56
unionization so in general my thought is
00:56:58
that the pendulum is swinging
00:57:01
very markedly away from capital and
00:57:05
towards labor and as the labor
00:57:07
participation rate stays low and
00:57:09
continues to go down
00:57:11
and also it's compounded by an
00:57:13
unemployment rate that may go up right
00:57:15
people are it's going to be harder and
00:57:17
harder to get people to do the work you
00:57:19
need at the company you have
00:57:21
unless you pay them more and if that
00:57:25
gets exaggerated then inflation will
00:57:28
stay where it is it won't be as muted
00:57:30
and it won't fall off a cliff as people
00:57:31
want it'll be persistent
00:57:34
that's my big contrarian God wager for
00:57:37
this year is that we that is equation we
00:57:40
see wage inflation that keeps inflation
00:57:42
not going down as much as people want
00:57:44
this is contrarian because everybody's
00:57:46
saying hey it's over the consumer's back
00:57:48
has been broken the credit card debt is
00:57:50
high and everybody's being laid off yada
00:57:53
yada therefore goods and services
00:57:55
there'll be more Supply than demand and
00:57:58
the prices will lower very contrarian
00:58:00
free break you have a contrarian belief
00:58:02
for 2023. I think my it follows my
00:58:05
earlier points
00:58:06
about the
00:58:09
Saudi
00:58:10
China Russian Russia trade this year
00:58:13
exiting 2023
00:58:16
it may be the case that you know there's
00:58:20
historically been this belief and this
00:58:21
continuing belief that the US dollar
00:58:23
will always be the de facto Global
00:58:24
Reserve currency
00:58:26
and the current Mantra is that it's
00:58:28
better than the rest everyone else is
00:58:29
worse off than the US Western Europe is
00:58:31
in trouble Japan is in trouble China is
00:58:33
in trouble everyone's in trouble but if
00:58:35
there is a coalition
00:58:37
an economic Coalition a scaled economic
00:58:40
coalition
00:58:42
that starts to shift the balance of
00:58:44
power a little bit and the US meanwhile
00:58:46
is taking on extraordinary debt load
00:58:49
sending 1.7 trillion dollars in an
00:58:51
Omnibus Bill
00:58:53
you know has this massive unfunded
00:58:55
social security problem coming down the
00:58:56
pipe and are trying to manage multiple
00:58:59
funded conflicts around the world
00:59:01
it could be that the US dollar coming
00:59:04
out of 2023 starts to trade more like a
00:59:06
risk asset and less like a risk-free
00:59:08
asset and so I think that that's my big
00:59:10
contrarian bet is that maybe this year
00:59:12
marks the beginning of the end of the US
00:59:14
dollar as the kind of global de facto
00:59:17
Reserve currency
00:59:20
based on some of these big trades that I
00:59:22
talked about happening unbelievable so
00:59:24
that would be my um my big kind of
00:59:26
contrarian perfectly said uh that's your
00:59:28
contrarian bet the accent the Legion of
00:59:31
dictators the mbs's ETC they become they
00:59:34
form a new Global Currency yeah my term
00:59:37
not yours I'm not calling it yeah I
00:59:39
wouldn't say a legion of dictators and I
00:59:40
wouldn't say form a new Global Currency
00:59:41
but I do think that
00:59:43
the fact that that large economic
00:59:48
trading models start to be done in
00:59:50
non-dollar denominated form got it you
00:59:52
know weekends the uh the kind of Reserve
00:59:54
status of the dollar to some degree not
00:59:56
fully right it doesn't happen in a
00:59:57
binary way and then the dollar starts to
00:59:59
trade more like a risk asset like other
01:00:01
currencies do to some degree not fully
01:00:03
so maybe once again here we start to see
01:00:05
that shift once again I take the exact
01:00:08
opposite of your contrarian belief I
01:00:10
believe American exceptionalism
01:00:11
continues to soar as Russia China Saudi
01:00:15
Arabia to a lesser extent continue to
01:00:17
self-sabotage themselves with insane
01:00:19
Wars like Putin has done or cutting off
01:00:22
uh the heads of entrepreneurs in China
01:00:25
figuratively uh I'm saying here I think
01:00:28
you cannot have exceptionalism without
01:00:30
entrepreneurs without people having
01:00:32
freedom and I think that means American
01:00:35
exceptionalism based on freedom
01:00:37
is going to continue and the Legion of
01:00:40
dictators I believe are going to stab
01:00:42
each other in the back before they
01:00:44
change the world or move the currency
01:00:46
you can't trust them they'll snip at
01:00:48
each other and all their self-sabotages
01:00:52
yeah I think that America is really
01:00:55
feeling its Wheaties right now I think
01:00:57
that American power is immense I think
01:00:59
that the superiority of our weapons in
01:01:02
Ukraine has been one of the big
01:01:03
surprises of the war let's go Palma
01:01:05
lucky I don't see the world in the
01:01:07
simplistic uh good guys versus bad guys
01:01:10
frame that Jacob does however America is
01:01:13
on turbo right now and um yes it is true
01:01:15
that the bricks would love to get off of
01:01:18
the dollar because we are now using the
01:01:21
dollar and the financial system as Swift
01:01:23
as a as a geopolitical tool and a weapon
01:01:26
and they would very much like to be off
01:01:28
of our dependence on our currency but I
01:01:31
don't think they're anywhere close to
01:01:32
being able to do that yet and
01:01:34
like I said America is on turbo right
01:01:36
now now one thing one thing I want to
01:01:39
mention this just came out White House
01:01:41
correspondent named Jennifer Jacobs just
01:01:43
reported that the U.S has agreed to send
01:01:46
Bradley armored vehicles basically our
01:01:48
best tanks to Ukraine
01:01:51
previously U.S officials had balked at
01:01:53
sending armored vehicles saying heavier
01:01:54
weapons be too difficult for Ukraine to
01:01:56
operate and maintain but allies are
01:01:58
moving to provide such weapons so we
01:02:01
keep providing ukrainians with more and
01:02:03
more sophisticated weapons
01:02:05
more and more support like I said this
01:02:07
is leading up to a huge Ukrainian
01:02:09
counteroffensive in the spring and I
01:02:11
really don't know what's going to happen
01:02:12
at that point I do think that the
01:02:14
Russians will escalate I don't think
01:02:16
they can afford to lose this war they
01:02:18
view it as existential and I like I said
01:02:21
I hope cooler heads will prevail and if
01:02:23
the ukrainians are successful at
01:02:24
breaking through I hope that the Bible
01:02:27
Administration will shut this down
01:02:28
before they try to retake Crimea because
01:02:30
you know we've discussed this before I
01:02:32
think the Russians confronted with a
01:02:35
choice between a total defeat
01:02:38
that includes losing Crimea and their
01:02:40
Naval base sevastopol and sees the
01:02:42
Ukrainian flag flying over their base at
01:02:45
sevastopol if that's a choice between
01:02:47
that or potentially using a tactical
01:02:49
nuke
01:02:50
maybe at the mouth of the Crimean
01:02:52
Peninsula as a firewall I think they
01:02:55
could choose the nuke option so it's a
01:02:57
very dangerous situation and
01:03:01
um you know very very Dynamic there's a
01:03:02
lot of possibilities all right let's go
01:03:04
on to best performing asset of 2023 I'm
01:03:06
going with sea stage investing again
01:03:09
I don't think people want to get into
01:03:11
these toxic cap tables at the late stage
01:03:12
as chamoth pointed out so I go with seed
01:03:14
stage and you know and up to series a
01:03:16
the people brave enough to place bets
01:03:17
the founders brave enough to start
01:03:18
companies I believe it's the best
01:03:20
performing asset class of 2023 tomorrow
01:03:21
yeah
01:03:23
I think that there's still a lot of
01:03:24
uncertainty in the world and in the
01:03:26
markets
01:03:27
and so I'm generally concerned that
01:03:30
there's a lot of chop
01:03:32
and so I picked something that's pretty
01:03:35
conservative
01:03:37
but I would have a combination of cash
01:03:40
and the front end of the yield curve so
01:03:43
t-bills all the way up to two year bonds
01:03:45
so you can generate four and a half
01:03:47
probably by the end of this year five
01:03:49
percent pretty safely
01:03:52
owning this stuff while you wait
01:03:54
for things to become more certain
01:03:57
and the way that I think about it is
01:03:59
that I would rather Miss
01:04:01
the first 10 or 15 percent of a rally
01:04:05
once we're really done this stuff then
01:04:08
try to over correct and try to pick a
01:04:10
bottom just because I think that you
01:04:13
could lose a lot of money so
01:04:16
I think the goal for this year is to
01:04:19
stay resilient and in the game and so
01:04:22
owning having a bunch of cash on the
01:04:23
sidelines ready to pound it in meanwhile
01:04:26
a portion of it collecting five percent
01:04:27
is not such a bad thing while you wait
01:04:29
for the bottom fantastic my answer was
01:04:31
actually very very similar which is if
01:04:33
kaskar is right that rates are going to
01:04:35
5.4 percent in q1 why wouldn't you just
01:04:38
put all your money in short-term t-bills
01:04:40
you earn five five and a half percent
01:04:42
risk free yeah like set it and forget it
01:04:45
yeah and that's why Capital flows are
01:04:47
moving hugely right now from equities
01:04:49
into bonds
01:04:52
especially if we're going to a recession
01:04:53
which is inherently deflationary
01:04:56
what do you got Freeburg
01:04:58
performing asset class of 2023. one of
01:05:01
the things so I think
01:05:03
it's inevitable that we continue to have
01:05:05
significant infrastructure spending from
01:05:08
both the stimulus and security point of
01:05:10
view so you know we kind of want to
01:05:12
continue to stimulate the economy and
01:05:13
and support growth we want to continue
01:05:15
to create jobs and support this
01:05:17
transition and the risk if this if the
01:05:19
recession predictions play out true and
01:05:21
the job market does lucid it's very
01:05:23
tight right now
01:05:24
um there's going to be even more of an
01:05:25
impetus to continue to do infrastructure
01:05:27
investment but I think there's also
01:05:28
these big economic transitions happening
01:05:30
underway right now with Pharmaceuticals
01:05:34
with semiconductors with energy there's
01:05:38
a lot that we've talked about where
01:05:39
there's a security problem and a
01:05:42
redundancy problem
01:05:43
and so you know there are a couple of
01:05:45
ways to kind of play this infrastructure
01:05:47
is spending thesis in each of those
01:05:49
areas
01:05:50
I've kind of highlighted four of them
01:05:51
one is in semiconductor Capital
01:05:53
equipments okay like 10 core Applied
01:05:55
Materials that that range of businesses
01:05:57
that provide and sell the equipment into
01:05:59
the uh the Fabs and the and the
01:06:01
organizations
01:06:03
that build
01:06:05
semiconductor Manufacturing
01:06:08
facilities the second is kind of an oil
01:06:10
and gas services so similar to what Saks
01:06:12
said earlier Schlumberger Baker Hughes
01:06:13
that class of businesses I think benefit
01:06:15
in this in this environment and this is
01:06:18
independent of kind of economic
01:06:19
conditions certainly because these are
01:06:21
Big multi-year spending projects
01:06:24
the third is in the equipment to support
01:06:25
them so deer and caterpillar and then
01:06:27
the fourth I think is an important one
01:06:29
I'll talk about this in a minute with
01:06:30
respect to my biggest kind of
01:06:32
anticipated thing for next year which is
01:06:34
in a pharmaceutical infrastructure so
01:06:36
Thermo Fisher and there's some company
01:06:38
and others like them because there's a
01:06:40
lot of build out happening to support
01:06:41
these big transitions happening and the
01:06:43
modalities that are being used in
01:06:45
pharmaceutical drugs and Diagnostics
01:06:47
and then I think that there's also a
01:06:50
couple of these businesses that are
01:06:51
Diversified like danaher Honeywell
01:06:53
Thermo Fisher is a good example that
01:06:55
play across multiple of these um these
01:06:57
opportunities so those are those are all
01:06:59
great businesses to own and you don't
01:07:00
need to worry about you know they're
01:07:01
they're growing cash flow positive
01:07:03
dividend paying companies and you don't
01:07:05
need to worry about you know am I
01:07:07
getting five percent or five and a half
01:07:08
percent based on the equity price this
01:07:10
year these are long-range businesses
01:07:12
that are building real value growing
01:07:13
their Top Line
01:07:15
and compounding value from within and
01:07:17
then they're acquiring a lot of smaller
01:07:19
businesses very cheap I'll say well
01:07:20
that's an important Trend I've seen
01:07:21
across these companies Dan and her
01:07:23
Honeywell Thermo Fisher they buy small
01:07:25
companies they pay very little and they
01:07:27
immediately get massive return on
01:07:29
invested Capital like they're in the
01:07:31
High Teens so why get five percent on
01:07:33
t-bills when you can get high teens roic
01:07:35
uh on the management teams running these
01:07:38
incredible platforms so that's where I'm
01:07:40
most excited for this year
01:07:42
okay now let's move on that was like a
01:07:45
mad that was like my mad my Mad Money
01:07:47
segment I've never done the Mad Money
01:07:48
segment before but there you go worst
01:07:50
performing asset I I went with energy
01:07:52
because not that I think it's not
01:07:54
important but it just feels like
01:07:55
everybody rushed into it in 2022 so it
01:07:57
feels like it's overheated and if we are
01:07:59
in a recession people might lower
01:08:01
consumption uh in terms of energy and uh
01:08:03
be looking for cheaper alternatives so
01:08:05
it could be overheated so I went with
01:08:07
energy
01:08:08
worst performing asset you got one
01:08:11
I think that if we've learned anything
01:08:13
from the last three years
01:08:15
you have to separate the valuation of a
01:08:18
company
01:08:19
and how it performs in the stock market
01:08:20
with its value in society so for example
01:08:23
if you look at Zoom
01:08:25
zoom's valuation has cratered but its
01:08:27
value in society has probably continued
01:08:29
to go up it's still a massively relied
01:08:30
upon tool
01:08:31
the point is that markets do not give
01:08:34
you credit for the value in society they
01:08:36
will give you credit when you are about
01:08:38
to over earn
01:08:40
but then they'll pull it all back when
01:08:42
they think that you're going to under
01:08:44
earn so in that lens I think that Tech
01:08:47
will have a tough year
01:08:49
I think energy will have a really [ __ ]
01:08:51
year
01:08:53
and probably the biggest asset class
01:08:56
that is going to get pressured is going
01:08:58
to be junk debt
01:08:59
and the reason is a bunch of these
01:09:01
variable rate loans when rates are at
01:09:04
five and six percent that all of a
01:09:06
sudden are like 11 12 13 14
01:09:09
coupons a bunch of companies will have
01:09:13
trouble meeting their debt obligations
01:09:15
and will have to restructure the debt or
01:09:17
we'll have to file so tax energy first
01:09:20
performing asset for 2023.
01:09:22
uh some category of what monster said I
01:09:24
think office Towers in San Francisco are
01:09:27
that is some serious toxic debt 27
01:09:29
vacancy rates and growing as Lisa's role
01:09:33
uh I think that a lot of these buildings
01:09:36
maybe virtually all of the San Francisco
01:09:38
downtown is going to be owned by the
01:09:40
bank soon because the real estate in San
01:09:43
Francisco the office tower specifically
01:09:45
the office Towers because no one wants
01:09:46
to be in those the skyscraper buildings
01:09:48
south of Market you know mired in
01:09:51
homelessness so
01:09:53
um yeah I mean I think that a lot of
01:09:54
those buildings can be owned by the
01:09:55
Banks there's gonna be some major fire
01:09:56
sales remember this was the hottest
01:09:59
commercial real estate market in the
01:10:01
country a few years ago and now it's the
01:10:03
worst well look what I think about it
01:10:05
look what happened to be reap what do
01:10:07
you think about that crazy thing that
01:10:08
happened with the Blackstone read I mean
01:10:10
that's nuts you know explain what
01:10:12
happened yeah Blackstone has a product
01:10:13
called b-read it's like a 70 billion
01:10:15
dollar exchange traded fund effectively
01:10:18
and what it is is the ability for
01:10:20
individual investors don't act access to
01:10:23
blackstone's you know commercial real
01:10:24
estate portfolio
01:10:26
and they had such a massive amount of
01:10:28
redemptions that they had to close
01:10:30
redemptions at the end of Q4
01:10:32
and they were worried that the
01:10:33
redemptions were going to continue to go
01:10:35
up these are individual investors who
01:10:37
basically seized the writing on the wall
01:10:38
as David said and wants their money out
01:10:41
and so they went to the University of
01:10:43
California pension system and they
01:10:45
essentially got a huge infusion of
01:10:48
capital I think it was about four
01:10:50
billion dollars were they guaranteed 11
01:10:53
and a half percent interest to these
01:10:54
guys for the four billion dollars
01:10:56
and they also posted a billion dollars
01:10:59
of their own equity in in the actual
01:11:01
Reit to backstop it so
01:11:04
what does it show you I think what sax
01:11:06
is saying is really right it's it may
01:11:07
not just be in San Francisco but you
01:11:10
know with all of these people either
01:11:11
getting laid off with all of these
01:11:12
people now working remotely
01:11:15
we may finally start to see the
01:11:17
beginning of the Reckoning in commercial
01:11:18
real estate which has been an
01:11:20
unbelievably performant asset class up
01:11:22
until right about now
01:11:23
and and on top of that you have to
01:11:25
factor in these much higher rates and so
01:11:27
these building owners if they financed
01:11:29
it which they invariably have always
01:11:30
financed they have huge variable rate
01:11:33
payments that are due on these buildings
01:11:35
the rent rolls are lower even people
01:11:37
like Twitter is just refusing to pay the
01:11:39
rent so you have to take them to court
01:11:41
so it elongates when they have to pay
01:11:44
and so you could miss a bunch of
01:11:46
rent payments and all of a sudden the
01:11:48
banks could just go crazy and take
01:11:49
ownership of these things
01:11:51
okay
01:11:53
do you have a worse performing asset
01:11:55
class for 2023 prediction
01:11:57
Sultan of science queen of quinoa David
01:11:59
Friedberg
01:12:00
it's really simple I've mentioned it
01:12:02
before it's Consumer Credit we assume
01:12:05
that raising Rising rates and inflation
01:12:07
would
01:12:09
taper down consumer demand meaning
01:12:12
consumers buying goods and stuff and
01:12:14
that certainly hasn't happened I'm in
01:12:16
Vegas right now
01:12:17
I was in the car yesterday and the
01:12:19
driver grew up in Vegas uh he's like in
01:12:22
all the I've lived my whole life in
01:12:23
Vegas he's like I've never seen a
01:12:25
December like we just had it was packed
01:12:27
the entire month he's like normally in
01:12:28
Vegas it's dead up until Christmas and
01:12:31
then New Year's people come into town
01:12:32
but it's normally dead he's like I've
01:12:33
never seen such a busy month and I think
01:12:35
we see this in the numbers consumers are
01:12:37
still spending like it's 2021 they're
01:12:39
still spending like interest rates are
01:12:41
zero as we talked about
01:12:43
um consumer credit is skyrocketing while
01:12:45
rates are skyrocketing
01:12:47
um and so I think we're going to run
01:12:48
into a real wall with respect to
01:12:50
Consumer Credit in
01:12:52
um sometime this year and you're going
01:12:54
to see as you guys know this is such a
01:12:56
complicated interwoven Market of assets
01:12:59
that the way that this this can be
01:13:01
traded there's a lot of different ways
01:13:03
to trade it but I think it's going to be
01:13:04
in general consumers are not going to be
01:13:06
able to meet their debt obligations
01:13:09
could be mortgages could be credit card
01:13:12
debt defaults are coming yeah the
01:13:15
markets the market has priced in a bunch
01:13:16
of this stuff obviously companies like a
01:13:18
firm and
01:13:19
the um what are they called buy now pay
01:13:21
later companies but credit card
01:13:23
companies mortgages there's a lot of
01:13:25
assets that you can start to kind of
01:13:27
pick apart where do you think this
01:13:28
unravels first how does it what gets hit
01:13:30
hardest what's underpriced and
01:13:31
overpriced probably a lot of good pair
01:13:33
trading to do is Jamal kind of loves to
01:13:35
talk about uh with respect to which of
01:13:37
these are more likely or less likely to
01:13:38
be sensitive to this Dynamic but there's
01:13:40
I think it's going to be a pretty ugly
01:13:42
scene consumers just have way too much
01:13:44
debt relative to their earnings right
01:13:45
now and it's pretty nasty
01:13:47
and they have some confidence that
01:13:49
they'll always have a job or some way to
01:13:51
pay their four easy payments it's hard
01:13:54
it's
01:13:55
muscle memory is serious you know you
01:13:57
come out of 2021 when you had um it's
01:13:59
not just stimulus checks it was the low
01:14:01
interest rate and easy credit
01:14:02
availability everywhere and it's just
01:14:04
easy to jump into getting new stuff and
01:14:06
cool stuff and then when you get used to
01:14:07
getting these stuff every week or every
01:14:09
month you kind of stick with it and
01:14:10
you're like I don't want to give it up
01:14:12
just yet I just not just yet not just
01:14:13
yet you know and so it's hard to kind of
01:14:16
step back from spending when you have a
01:14:18
new type of lifestyle and I think that's
01:14:19
what's going on I think this is an
01:14:21
incredible observation yeah there's a
01:14:23
great Tick Tock of this guy that runs
01:14:24
car dealerships and he sent them out
01:14:25
unlike how much incredible money like
01:14:29
what a significant percentage of
01:14:30
people's income they are spending on
01:14:32
their monthly car payments and people
01:14:33
buy these cars that are well beyond what
01:14:36
should be kind of a reasonable budget if
01:14:38
you were to go to Susie Orman do not buy
01:14:40
that freaking car they stretch and the
01:14:43
stretching is gonna it's gonna snap this
01:14:44
year yeah absolutely which brings us to
01:14:46
the most anticipated try I love it great
01:14:49
one most anticipated trend of 2023
01:14:51
related to yours I went with austerity
01:14:55
I have a friend who sometimes flies
01:14:57
private often and I was talking to him
01:15:00
about his Christmas vacation this friend
01:15:02
of mine Shama
01:15:03
instead of flying private to his
01:15:04
vacation he had to pick up his kids he
01:15:06
had to go back and forth he was driving
01:15:08
his car
01:15:11
that was three hours that was you oh
01:15:13
okay I didn't want to die
01:15:17
it was so great who would normally fight
01:15:19
private to Lake Tahoe and he's like no I
01:15:21
can't go out with you skiing on Friday I
01:15:23
gotta pick up my kids and then I'm
01:15:25
driving back I say wait a second how are
01:15:26
you doing that he's like I'm driving a
01:15:27
car I said what who's driving the car he
01:15:30
said I'm driving the car and that's why
01:15:32
I say austerity is my anticipated train
01:15:34
of 23-3 I agree with you I actually
01:15:36
think this is a really good opportunity
01:15:37
to pull back on so much waste I haven't
01:15:41
really looked at my household budget in
01:15:43
probably two or three years didn't even
01:15:45
bother why and then and then when I
01:15:47
looked at it I was like wow this is
01:15:48
really inflated to a level that I didn't
01:15:50
expect yes but it makes a lot of sense
01:15:53
to live in a more heads down austere way
01:15:59
I don't know yeah I well I mean look at
01:16:01
tonight's menu you went with duck I
01:16:03
guess the olive fed wagu everything's
01:16:05
off the menu now no black truffles we're
01:16:07
having duck we're down to poultry next
01:16:09
week we're gonna have pasta it's okay oh
01:16:12
austerity measures for everybody they
01:16:14
call it foul for a reason right oh God
01:16:17
sax uh do you buy into austerity where
01:16:19
shamath and I are austerity belt hiding
01:16:21
as our trans where are you what's your
01:16:23
Trend first I think that's a pretty good
01:16:24
Trend the trend that I am going to
01:16:28
suggest uh will be to your great
01:16:30
disappointment J Cal which is
01:16:32
Trump's influence in the GOP continues
01:16:35
to wane you're seeing it in real time
01:16:37
right now
01:16:39
the headline is Trump's endorsement
01:16:41
proves worthless to Kevin McCarthy and
01:16:43
the speaker bid even the Maga faithful
01:16:46
like Matt Gates like Lauren bobert they
01:16:49
are ignoring Trump's pleas to get behind
01:16:52
my Kevin and in fact they're kind of not
01:16:56
just defying him but making fun of him
01:16:58
Matt Gates had a repost Trump saying sad
01:17:01
exclamation point and bobert was saying
01:17:04
that Trump needed to get behind her
01:17:06
movement
01:17:06
so we have now a level of of open
01:17:09
Defiance to Trump and the GOP his
01:17:12
endorsements just not are not what they
01:17:14
once were and even if somehow
01:17:17
Kevin McCarthy pulls us off I think all
01:17:20
that means is that Trump gets blamed for
01:17:22
every swampy Rhino compromise that
01:17:25
McCarthy has to make to keep the
01:17:26
government running over the next two
01:17:27
years so it's a lose-lose does that mean
01:17:29
that populism is on
01:17:31
because the it's the electorate that got
01:17:32
him elected in the first place he was
01:17:34
not very popular with politicians the he
01:17:36
was kind of an outcast when he got
01:17:38
elected the first time and that may be
01:17:40
the case now but he still got elected
01:17:41
because the population loved him people
01:17:43
loved him is that going to happen do you
01:17:45
think that means that the populism is
01:17:46
kind of waning or the interest of the
01:17:48
the voters is waiting on him or is it
01:17:50
just the political party's alignment
01:17:52
Wilbur only won by a few thousand votes
01:17:55
she didn't exactly crush it in Colorado
01:17:56
I think a lot of this has to do with
01:17:59
Trump's personal standing after the
01:18:01
midterms the candidates that he
01:18:03
personally picked that were all in tough
01:18:04
Races they all basically lost it was
01:18:06
about the distraction he caused by
01:18:08
making the 2020 election such a big deal
01:18:11
constantly looking backwards so I think
01:18:13
the Republican party doesn't like the
01:18:15
Antics it's not about the policies I
01:18:18
don't think I think it's 100 about the
01:18:21
about Trump's electability and about his
01:18:23
ability to get things done and it's not
01:18:26
really about the positions per se so I
01:18:29
think Freiburg to answer your question I
01:18:30
think that
01:18:31
the future that GOP will incorporate
01:18:33
this populism but it's going to find a
01:18:35
better integration with the establishing
01:18:38
wing of the Republican party and future
01:18:40
candidates will have to basically
01:18:42
satisfy both of those wings of the party
01:18:44
sex was it was a straw that were maybe
01:18:47
the two shrouds that broke the camel's
01:18:48
back for republicans and Trump in that
01:18:50
relationship was it January 6 and the
01:18:52
election denial like for Republicans is
01:18:55
it just like come on those are the two
01:18:57
things this constant focusing on the
01:18:59
2020 election first it costs them the
01:19:02
cost Republicans that Georgia runoff's
01:19:04
seat with Purdue against Warnock Purdue
01:19:07
won on Election night didn't clear 50
01:19:09
had to go to the runoff this was
01:19:11
happened the day before January 6th this
01:19:13
happened on January 5th of 2021. that
01:19:16
was the first race where Trump's Antics
01:19:18
cost them then you had this midterm
01:19:20
election where you know all the
01:19:22
candidates who had to appease Trump by
01:19:25
talking about again the last election
01:19:27
instead of looking to the Future they
01:19:29
got punished by the the voters I think
01:19:31
Republicans want to win I mean they're
01:19:33
tired of losing that's simple it's that
01:19:35
simple yeah the job of a politician is
01:19:37
to win freeberg you got an anticipated
01:19:39
trend of 2023.
01:19:41
I am excited about and want to share the
01:19:45
point of view that I think I'm selling
01:19:47
Gene therapies are becoming more
01:19:48
mainstream so these are
01:19:51
pharmaceutical modalities where we use a
01:19:53
gene editing systems where you can
01:19:55
actually go in and change or add a
01:19:58
genetic material to cells in your body
01:20:00
to resolve things like genetic diseases
01:20:02
or change protein deficiencies or
01:20:04
introduce new proteins and then cell
01:20:06
therapies where we engineer cells put
01:20:08
them in the body and those cells go and
01:20:10
do things like
01:20:11
attack and Destroy cancer cells for
01:20:13
example there are currently 27 FDA
01:20:16
approved cell and Gene therapies on the
01:20:18
market there are over a thousand in
01:20:20
clinical trials many of which are
01:20:22
already showing extraordinary efficacy
01:20:23
and benefit today these therapies cost
01:20:26
upwards of a million dollars so I think
01:20:28
there's a massive and talking about the
01:20:30
infrastructure investment conversation
01:20:31
earlier because of the number of
01:20:32
diseases and the number of conditions a
01:20:34
number of people that these therapies
01:20:36
can treat I think there's massive
01:20:38
infrastructure investment opportunity
01:20:39
coming forward this year but also seeing
01:20:41
these come to Market come out of the
01:20:43
clinical trials get FDA approved we have
01:20:45
to ramp up and build up the
01:20:47
infrastructure needed because it's not
01:20:48
traditional we make a drug in a factory
01:20:50
and send it to people and they get it
01:20:51
injected these are
01:20:53
much more complex they require much more
01:20:55
complicated delivery mechanism you have
01:20:57
to have systems to engineer cells and
01:20:59
edit them and put them back in your body
01:21:00
those systems today take days or weeks
01:21:02
and cost you know as a result a Million
01:21:04
Dollar Plus per treatment so I think
01:21:06
that um the cell and gene therapy
01:21:08
opportunity you know the JPMorgan
01:21:10
Healthcare conference starts this week
01:21:11
uh it's the biggest biotech and
01:21:13
Healthcare conference in the world
01:21:14
starts in San Francisco on Monday
01:21:17
this is uh one of the biggest areas of
01:21:19
interest and one that everyone's
01:21:20
investing against but as these come to
01:21:22
Market there's you know we talked about
01:21:23
this last week genetic diseases types of
01:21:26
cancer that are going to be addressed
01:21:27
and I'm really excited about seeing more
01:21:29
of these products come to Market and
01:21:30
seeing the whole kind of infrastructure
01:21:32
and delivery system change all right
01:21:33
sorry to interrupt trying to keep the
01:21:35
trains moving Gene editing very good
01:21:36
choice all right we end with this it's a
01:21:39
little bit fun most anticipated media
01:21:41
for 2023 these are things we like to
01:21:43
talk about the media here sometimes we
01:21:45
talked about
01:21:46
White Lotus season two uh amazing uh
01:21:50
season and maybe what you're looking
01:21:52
forward to next year
01:21:54
I am really looking forward to in film
01:21:56
Oppenheimer Christopher Nolan's movie
01:21:58
about the Manhattan Project that should
01:21:59
be extraordinary I loved uh it was
01:22:02
Dunkirk his as well I love Dunkirk I
01:22:04
like everything he does and when he is
01:22:06
this is him becoming like a history
01:22:08
Uncle I'm here for it I'm here for Nolan
01:22:10
becoming our history Uncle instead of
01:22:12
Batman what was the one after Inception
01:22:14
though that was really confusing the one
01:22:16
with Denzel Washington's son with John
01:22:18
Washington uh yes um it was um I
01:22:22
couldn't finish it I tried twice I gotta
01:22:24
go the third shot on that one it was oh
01:22:26
yeah it was it was his worst film uh
01:22:29
what's the name of it I can't remember
01:22:30
it was called uh tenet tenant tenant yes
01:22:33
about like time and reverse and this it
01:22:35
was impossible to follow did you guys
01:22:37
see his original film which was
01:22:38
incredible Memento of course it was
01:22:41
fantastic yeah
01:22:43
it was enough mine mine yeah it was
01:22:46
mind-bending enough that you're like oh
01:22:47
my God incredible and then I think they
01:22:49
took it too far tenant I tried to watch
01:22:51
it three times I'm generally pretty good
01:22:53
with these sorts of films and love them
01:22:55
but oh my God it was impossible to
01:22:56
follow he he took it too far okay so
01:22:59
hopefully he goes back to his roots
01:23:01
in terms of TV series I'm looking
01:23:04
forward to secession coming back Ashoka
01:23:06
who is uh Anakin Skywalker AKA Darth
01:23:09
Vaders uh Padawan Ted lasso season three
01:23:11
coming up those are for me incredible
01:23:13
and then on the book front man the
01:23:15
Michael Lewis book about SBF is going to
01:23:17
be next level I cannot wait for that sax
01:23:19
you're a media junkie what do you got on
01:23:21
your list of things you're looking
01:23:22
forward to or should say what is
01:23:23
Tucker's writers what do they put down
01:23:25
for you
01:23:27
I thought the for movie you're gonna
01:23:30
pick cocaine bear
01:23:36
right
01:23:39
extraordinary a bear is in the woods and
01:23:43
a I guess people who are trafficking in
01:23:45
cocaine drop their or crashes and the
01:23:48
bear eats the cocaine and then goes on a
01:23:50
rampage it's kind of like a a genre film
01:23:52
like in the crocodile way by the way I'm
01:23:54
listening to Quentin Tarantino's book by
01:23:55
the way of criticism
01:23:57
get the audiobook you'll like it sax he
01:23:59
talks about all the films in the 70s
01:24:01
very good shout out to Quentin what do
01:24:03
you got what do you got on your short
01:24:04
list
01:24:05
uh history uncle
01:24:07
me yeah I just gave you one but the code
01:24:11
and bear top of your list we'll watch it
01:24:13
again was on my list and I think uh
01:24:16
Marvel is doing a good job developing a
01:24:19
new villain to rival Thanos with this
01:24:21
with king I don't know what phase
01:24:22
they're on now but Loki season two and
01:24:26
then the new Ant-Man movie and
01:24:28
um you know I thought after Thanos who
01:24:30
wouldn't really be able to top that but
01:24:31
yeah they've come up with a really good
01:24:33
concept I think for the next you know 20
01:24:35
Marvel movies well and then it will
01:24:37
eventually become Galactus yeah you guys
01:24:39
have completely [ __ ] up you have
01:24:41
missed the most obvious slam here we go
01:24:44
Sade's new album go
01:24:46
on part two oh I haven't watched number
01:24:50
one yet wait what
01:24:52
you know what's happening wasn't it my
01:24:55
wife wants to watch it it is so
01:24:57
stylistically beautiful it is a little
01:24:59
boring there's not a lot going on slow
01:25:01
but it's so well shot
01:25:05
it's a fun it's visually just stunning I
01:25:08
mean if you need to watch it on a big
01:25:09
screen with big speakers and uh but part
01:25:11
two comes out in November this year
01:25:12
absolutely that's okay great Freeburg
01:25:14
tell us what documentary on veganism do
01:25:17
you recommend and you're anticipating
01:25:18
for 2023 what vegan documentary or
01:25:21
animal abuse documentary I am excited
01:25:24
about the generative AI based media that
01:25:28
I think is going to start to kind of
01:25:29
Rocket this year we could see for
01:25:32
example the first you know AI written
01:25:35
Symphony
01:25:36
the first kind of AI written published
01:25:38
novel how interesting would that be like
01:25:40
a full novel published by AI
01:25:42
and and more maybe short films based on
01:25:45
an AI driven script
01:25:46
and maybe even what I'm really excited
01:25:49
about is these AI based interactive
01:25:51
video games or
01:25:52
um kind of experiences where you the
01:25:54
user kind of get to create and live your
01:25:56
own world uh through some sort of video
01:25:58
game type modality so I think AI driven
01:26:01
media all right there you have it folks
01:26:03
there are speaking of Pop Culture chaos
01:26:05
I guess
01:26:06
Prince Harry has a book coming out
01:26:09
that's called spare
01:26:14
when you're playing uh bowling no but
01:26:17
you know like in in the English Monarchy
01:26:19
they there's the air and the spare
01:26:22
uh so he's calling himself but to me
01:26:24
that's like a weird self-description
01:26:26
yeah like that's that's how you see
01:26:28
yourself is just being self-deprecating
01:26:30
he didn't pick that they paid him so
01:26:32
much money I heard they have to sell 1.7
01:26:34
million books to break even but you know
01:26:36
what it reminds me of is uh when Leonard
01:26:38
Nimoy wrote a book I think he wrote a
01:26:41
book called I am Spock and then he wrote
01:26:43
a book called I am not Spock
01:26:45
nice you can never get comfortable with
01:26:47
the fact that he was just Spock yeah and
01:26:50
there's something weird about calling
01:26:52
yourself spare like you know you're
01:26:54
clearly not comfortable with it's like
01:26:57
everything yeah everything they taught
01:26:59
you everything I learned at Harvard
01:27:01
Business School and everything they
01:27:03
don't teach at Harvard Business School
01:27:04
you can you can do both books all right
01:27:06
listen this has been great uh breaking
01:27:07
news as we're talking here chat GPT uh
01:27:10
open AI doing a tender offer
01:27:13
9 billion
01:27:16
obviously you're losing three billion a
01:27:18
day oh my God who is buying a 29. it's
01:27:21
Founders fund or reportedly according to
01:27:23
the journal it's Founders fund Thrive
01:27:25
Capital so Founders fund does not
01:27:27
generally do super overpriced deals yeah
01:27:37
from here
01:27:40
I wouldn't I would not totally could be
01:27:42
by the way you guys remember that the um
01:27:45
open AI I don't know what the current
01:27:47
situation is but it was a non-profit
01:27:49
where they said investors put money in
01:27:51
but the investors maximum return was 100
01:27:53
X on the dollar invested so it's a
01:27:56
non-profit up to 100 no no that happened
01:27:58
afterwards it's when they converted the
01:28:00
original model yeah no the original
01:28:02
model was appearance
01:28:04
the original model was a pure non-profit
01:28:07
where there was no cap because there was
01:28:08
no concept of equity yeah when they
01:28:11
flipped they capped everybody to 100x on
01:28:13
the return so the original money thanks
01:28:15
but not even more or still but no the
01:28:18
original money which was like elon's
01:28:19
money
01:28:26
so I don't know how it converted but
01:28:28
that's when they or did it convert did
01:28:30
those people who funded it originally
01:28:31
get any shares before profit we could we
01:28:34
could find out probably they did I mean
01:28:35
it would make sense
01:28:37
I mean wait if this is a tender office
01:28:39
27 billion you wouldn't buy shares at
01:28:42
27. so again like the the thing that I
01:28:45
want to impress upon you is like
01:28:46
there is an enormous amount of work that
01:28:48
they do that what their biggest Gap to
01:28:52
monetizing this
01:28:53
will be finding unique content that they
01:28:57
learn on that nobody else has access to
01:28:59
and this is why I really think it's
01:29:01
important to understand if you have
01:29:03
enough compute
01:29:04
these all of these unsupervised learning
01:29:07
models if you run them on the same
01:29:08
training set
01:29:09
will converge to the same answer
01:29:12
so you're just getting there first so in
01:29:15
order to be really defensible you have
01:29:16
to get there in a unique way and so
01:29:19
either you're going to hand tune
01:29:21
or you're going to have inputs that are
01:29:23
different
01:29:24
so I don't know I don't know the answer
01:29:26
that's why like they they have to answer
01:29:28
that question in their fundraising and
01:29:29
I'm sure that they did because these are
01:29:31
smart investors but that's the big idea
01:29:33
that you have to overcome and again you
01:29:35
have to think like you think Google is
01:29:36
sitting on their hands no
01:29:40
129 billion like what fundamentals is
01:29:42
that based on like why not 5 billion why
01:29:44
not 3 billion I mean like why not 10
01:29:46
billion like what makes sense
01:29:48
valuation that's what it is it's all
01:29:50
this is all momentum
01:29:52
said nothing to do with reality right I
01:29:54
mean
01:29:54
it this would imply at a 30 the the
01:29:57
public comps of the Google trades at
01:29:59
what 25 or 30 ebit times ebitda so this
01:30:02
would imply a billion dollars in ebitda
01:30:05
a billion dollars in ebitda 3 million
01:30:08
dollars a day they're losing three
01:30:09
million dollars a day on computer report
01:30:11
at least three million dollars a day and
01:30:12
profit on what product
01:30:14
I don't know if they have a that's
01:30:16
probably the issue I think look I mean
01:30:18
my point was if these guys open up a set
01:30:19
of tools
01:30:21
that support all these applications and
01:30:23
services to emerge on top of what
01:30:25
they've built
01:30:26
and they're getting red share getting
01:30:28
payments out of that it's going to very
01:30:29
quickly turn into a real here's the
01:30:31
problem this is why that can't happen
01:30:32
they don't have the rights to the data
01:30:35
they built the training set on and the
01:30:37
second they commercialize it the second
01:30:38
anybody pays them whoever they based
01:30:41
this on conversation into Oblivion I
01:30:45
predict suit into Oblivion let's talk
01:30:47
about let's let's actually let's talk
01:30:48
about that in the next show because I
01:30:49
think that's like the the way that AI
01:30:51
works and we should probably bring
01:30:52
someone like Sam on to talk about it but
01:30:54
the way that AI works on trading data
01:30:56
and now people are making claims that
01:30:58
the training data is copyright therefore
01:31:00
model output is protects that copyright
01:31:03
is I think worthy of a good conversation
01:31:05
what's interesting is you know the
01:31:07
earlier the early version of the of the
01:31:10
internet was very simple it's like you
01:31:11
had this file called robux.txt and you
01:31:14
would basically be open to a crawl or
01:31:15
not and that's what would allow Google
01:31:17
to basically Go and Spider your pages
01:31:18
right and so we have to replace this
01:31:21
concept of that with this ai.txt
01:31:25
well you could make a claim that this is
01:31:27
no different than you know a spider
01:31:30
crawling a web page except that in in
01:31:32
the search case it was much cleaner
01:31:34
which is we're just going to index your
01:31:35
page and redirect people to you
01:31:38
uh here it's we're actually going to
01:31:40
create a derivative work because of you
01:31:42
in part and I do think that that's going
01:31:44
to be a very interesting legal threshold
01:31:46
that has to get figured out well here it
01:31:48
is chamoth you're you're nailing it
01:31:49
exactly it's a derivative work and they
01:31:52
did not have permission to use it and it
01:31:54
impedes upon the original authors
01:31:56
whether it's a photo it's a song it's a
01:31:59
piece of code it impedes upon their
01:32:01
ability to do Commerce in the world you
01:32:03
are interfering with their ability to
01:32:04
monetize their content and the
01:32:06
percentage you're using is a hundred
01:32:07
percent so when you get to fair use
01:32:09
non-commercial use is very protected
01:32:12
parodies protected education's protected
01:32:14
but when you dip into using the entirety
01:32:17
of the work which they're doing
01:32:20
and you impede upon the person's ability
01:32:22
to Commerce and you confuse the public
01:32:24
well this is the test that they will
01:32:26
fail fail fail this is why I think that
01:32:28
most people don't understand what AI is
01:32:30
they don't even understand the
01:32:31
difference between training and
01:32:32
inference so hopefully there is some
01:32:35
more understanding of this but if you
01:32:37
use the same data set you will
01:32:39
eventually converge to the same outputs
01:32:41
absent of hand tuning weights which has
01:32:45
its own issues and absent any
01:32:48
asymmetrically different
01:32:50
data that you have that nobody else has
01:32:52
absolutely yes so if you are Apple and
01:32:55
you have the watch data or your Google
01:32:57
and you have the search data or you're a
01:32:59
weather company you have the weather
01:33:00
data and your proprietary of course
01:33:01
there's a very easy solution to this to
01:33:03
mouth number one citations when the
01:33:06
algorithm gives you an answer it should
01:33:08
say what were the top percentage sources
01:33:11
of this information how did the AI
01:33:14
look if you look inside of a transformer
01:33:16
the problem is okay that you're going to
01:33:18
have trillions of ranks trillions of
01:33:20
Weights trillions and so how are you
01:33:23
going to decide how to basically draw a
01:33:25
line under a threshold this was actually
01:33:27
a useful input and this was not
01:33:30
so again I I just think that it's hard a
01:33:32
very few small class of people actually
01:33:34
understand this like the great person to
01:33:36
actually bring in to talk about this
01:33:37
would be Andre carpeth not and I think
01:33:40
because Andre was there sure and a Tesla
01:33:42
and he but he can say it in a very
01:33:44
dispassionate way to explain this to
01:33:46
people I think we should we should ask
01:33:48
him to come on yeah for sure I mean I
01:33:50
can ask him okay I mean this is brand is
01:33:52
this
01:33:53
law Sachs you're an attorney you
01:33:54
understand fair use copyright all this
01:33:56
stuff the law correct me if I'm wrong
01:33:58
here sax does not anticipate this
01:34:01
look this is a highly specialized area I
01:34:03
don't want to pretend like I understand
01:34:04
the law in this area you know I'd want
01:34:06
to talk to a specialist yeah okay so
01:34:09
anybody let's have this conversation
01:34:10
because I think yeah the SE are great
01:34:13
um work for us to talk about because all
01:34:15
right this is probably why by the way
01:34:17
they started as open source because it
01:34:18
was like a slam dunk thing to make this
01:34:21
a non-profit and open source everything
01:34:23
be maybe in part because of these issues
01:34:25
but if you just let the code Run free
01:34:30
you probably don't have to even deal
01:34:32
with these issues right well they they
01:34:34
closed it remember their claim the claim
01:34:37
was this is too dangerous their original
01:34:39
claim was it's too dangerous for people
01:34:40
to not see the code then Sam flipped on
01:34:43
that and he said it's too dangerous for
01:34:44
people to see the code and it started
01:34:46
out as a non-profit where the idea was
01:34:48
the way to keep this safe is for
01:34:51
everybody to see the code but they
01:34:53
didn't make any money whatever they went
01:34:55
private and they flipped the decision so
01:34:56
keep that in mind as well he's a he's a
01:34:58
very very very clever business person
01:35:00
he's savvy
01:35:02
and you know Paul Graham when Paul
01:35:05
Graham picked Sam to run YC Paul Graham
01:35:07
said that this is the most impressive
01:35:09
person I've met since Steve Jobs yeah
01:35:11
remember come on the pot I do remember
01:35:13
that um well you said something similar
01:35:15
about Gary tan is now running YC
01:35:16
starting this week yeah Sam Altman
01:35:18
friend of the pot come on all in any
01:35:19
time and has played in our poker game
01:35:21
several times makes sense yes we
01:35:24
we had a tough situation there where you
01:35:26
interfered in the hand if you remember
01:35:27
uh all right listen this is what
01:35:29
happened there was a Sam and I were in a
01:35:33
hand of Poker
01:35:34
he raised I had two pair and I'm trying
01:35:37
to figure out does he have a set or is
01:35:38
he bluffing me I think he's got top pair
01:35:39
and you were like oh look at this and
01:35:41
you started commenting on the hand oh my
01:35:43
God I haven't made the call or not yet
01:35:45
oh my God and I'm like
01:35:47
for my La Bouche let's let's stop
01:35:49
talking here because I'm trying to I'm
01:35:52
playing I'm like okay Sam would get and
01:35:53
I basically came to the conclusion Sam
01:35:55
would get to like great Delight bluffing
01:35:56
me off a hand he's a risk taker he knows
01:35:58
I'm conservative he knows he's a risk
01:36:00
taker I'm gonna call here with my I had
01:36:02
bottom two
01:36:03
how much does he have a set and there
01:36:04
was also a stray on the board I'm like
01:36:05
[ __ ] it I I I at best I'm
01:36:10
you know even money here uh but there
01:36:11
was a lot in the pot so I was just doing
01:36:13
the pot odds while I'm doing the pot
01:36:14
odds you were like
01:36:17
hey which is usually I'm usually want to
01:36:19
be reprimanded for talking right Dad but
01:36:21
it was notable all right listen love you
01:36:23
besties why don't you tell people that
01:36:25
there's no comments and uh just as a
01:36:27
programming note we turned off comments
01:36:28
for a couple of weeks on the YouTube
01:36:30
just to see how it psychologically
01:36:31
affects me and it's for jamaat to just f
01:36:34
with all you brigadooners we love you uh
01:36:37
uh besties this has been a great episode
01:36:40
two great uh and his uh Twitter is at
01:36:43
chamoth and he does it read it just so
01:36:45
everyone listening no sax and I voted
01:36:47
against turning off comments just just I
01:36:50
voted in favor of whatever got uh
01:36:52
chamat's vote for the all assignment 23.
01:36:54
so that's how I vote this is for horse
01:36:56
trading now but the podcast has never
01:36:58
been better besties spending time
01:37:00
together on the slopes is the cure to
01:37:02
all evils we'll see you next time love
01:37:04
you back bye bye love you guys bye bye
01:37:08
let your winners ride
01:37:10
Rain Man
01:37:16
[Music]
01:37:51
we need to get Mercies
01:37:56
[Music]
