00:00:00
Nick these guys are low energy today you
00:00:01
notice that you know what we need to do
00:00:03
we need to gamble let's do it Nick let's
00:00:05
play a hand of blackjack let's get these
00:00:07
guys amped gentlemen what an absolute
00:00:09
pleasure to walk amongst some goddamn
00:00:11
greats uh let me see if I can put a bit
00:00:13
of pip in your step with a onetime black
00:00:15
jackan to kickart one of the greatest
00:00:18
podcasts on Earth it is I can confirm
00:00:20
this is not AI my you did this we're
00:00:22
gonna rock and roll proper tonight let's
00:00:25
go all right get some is this guy you on
00:00:28
right now
00:00:30
you are going you I'm actually breaking
00:00:32
my own rules for you guys I filmed
00:00:34
today's hand day foing but I'm going to
00:00:36
film tomorrow's hand for you guys right
00:00:38
now um it'll roll out this will roll
00:00:43
hold on hold on wait a minute Tim you
00:00:45
are and kiwi living in Calgary is that
00:00:48
right yes sir correct yep kiwi living in
00:00:50
Calgary been here since September 2022
00:00:52
the misss and I oh fantastic welcome
00:00:55
welcome to my
00:00:58
country I know how I I stumbled across
00:01:01
you somewhere and I started watching all
00:01:03
your videos on Instagram they were off
00:01:05
the hook man congrats they're awesome
00:01:07
thank you so much fun where where in New
00:01:09
Zealand are you from uh from tanaki so
00:01:12
West Coast North Ireland certainly not
00:01:13
somewhere uh it's not a holiday
00:01:15
destination for certain if you're going
00:01:17
it's like Dairy farming country it's
00:01:19
it's it's beautiful but it's off the
00:01:20
beaten path so yeah and how did you how
00:01:22
did you choose Calgary of all places in
00:01:24
Canada do you know what the Miss we
00:01:26
holiday here uh my fiance and I may 2022
00:01:29
too and we thought it was just going to
00:01:31
be a holiday then back to the farm um
00:01:34
but I guess we had that uh Co Cabin
00:01:36
Fever like the rest of the world and
00:01:38
loved our time a so much that we just
00:01:40
decided before we even finished the uh
00:01:42
the holiday that we cracked on to to
00:01:43
getting our visas and got back sold up
00:01:45
me livestock and leased the farm back to
00:01:47
me parents and and made the move and uh
00:01:50
we haven't looked back I I don't think
00:01:51
they'll be seeing me uh pulling tits on
00:01:53
the dairy farm anytime soon I'll that's
00:01:55
Cal foring by the way um yeah so Lads uh
00:01:59
what do we want to do here we want to
00:02:00
put 10K and then give it to uh one of uh
00:02:03
Tim's mates who's who's stuck or
00:02:05
something how do we do this we Mr Beast
00:02:07
this we give 10K to the next time you
00:02:09
get coffee if we win you give it to the
00:02:11
Barista or something what should we do
00:02:13
yeah let's do it let's do it let's do a
00:02:14
10K free roll for Tim and his fans okay
00:02:17
perfect so now do you want me to add
00:02:19
that to my bet for this one yes
00:02:22
absolutely we want to be in 10k sweat
00:02:24
with you one and done is absolutely the
00:02:26
uh the way to go about this here we go
00:02:29
first part we've got to do here is pick
00:02:31
out are these real dealers or are these
00:02:33
AI these definitely are real dealers
00:02:35
they certainly Eastern European as far
00:02:38
as I know I don't know what their
00:02:38
quality of life is like I imagine
00:02:40
they're warehoused somewhere uh and put
00:02:43
on the tools now I had a I went with a
00:02:45
with a young Lassie today and she roll
00:02:47
Bing ass for me so I'm going back to the
00:02:48
B Because they' been good to me yeah
00:02:50
pick a BL pick a somebody who feels Blue
00:02:53
Collar who wants to work for us we need
00:02:55
somebody who's a worker and you have
00:02:57
over a million followers now watching
00:02:59
this yeah it's G from 15,000 to 1.3
00:03:03
million in this entire Journey so yeah a
00:03:06
little bit nonsensical but okay this
00:03:07
this looks like a good he looks like a
00:03:09
worker what you say he gonna work for us
00:03:11
are you gonna you're gonna cop the
00:03:12
insult live as I do it uh all righty it
00:03:16
is day 15 uh going to Blackjack
00:03:18
committing 13 I've got we have a $14,000
00:03:21
bit going on the laan for me personally
00:03:23
but I actually have some absolute
00:03:25
Legends with me today I'm bidding for
00:03:28
the besties from the Orland podcast as
00:03:29
well they're going to bring the luck
00:03:31
having been rolled bold and AR by a
00:03:33
young Lassie yesterday so
00:03:35
$34,000 goes on the line oh no you guys
00:03:38
want 10,000 on right not 20 geez I
00:03:40
better
00:03:41
not not take put us down for 10 put us
00:03:43
down for 10 24,000 is going on the line
00:03:47
alela looks like the kind of bloke who
00:03:49
stops at red lights playing GTA we won't
00:03:51
hold that again real n if you will I
00:03:54
need to see good cards
00:03:56
Jack 2
00:04:07
do
00:04:11
baby go oh my
00:04:14
God that that worker B I knew he would
00:04:17
do it for us I can't believe we've just
00:04:20
pulled that off oh my god did that did
00:04:24
that happen gentlemen that has really
00:04:26
just happened you've just turned 10 into
00:04:28
25
00:04:29
holy sh holy
00:04:32
cow oh my God look at s is like we can
00:04:37
doing this for the whole taping that's
00:04:39
amazing ready for another round we turn
00:04:41
20 10 to 25 all right so are we going to
00:04:44
have a separate All In Balance we just
00:04:45
keep rolling it every week yeah can you
00:04:48
come back next week and can we rolling
00:04:51
we just keep rolling every week we might
00:04:54
have to that is I cannot believe we've
00:04:57
just Blackjack there is
00:05:00
unbelievable well Tim have a good day
00:05:03
all right Tim you are a legend Everybody
00:05:05
follow Tim on Instagram let's get him to
00:05:07
10 million let's get I mean you have a
00:05:10
future in broadcasting you are going to
00:05:12
make millions you you went from The
00:05:15
Farmhouse oh yeah literally and here we
00:05:18
go now you're gonna be running a casino
00:05:20
I think you should have Tim's Blackjack
00:05:22
you should have your own Brandon build a
00:05:24
whole brand on
00:05:25
this on Insta tell
00:05:30
I would have to run anything if I can
00:05:31
just play oneand of blackjack with you
00:05:33
guys and I land Jack Ace every week that
00:05:35
is unbelievable and like we said that
00:05:37
15K we won yep that's yours for you and
00:05:40
the misses go on vacation no no no no we
00:05:43
said it we said it we want you to do
00:05:45
something go with it we're already
00:05:47
cashed up you take that 15K you take the
00:05:50
misses out you get some first class
00:05:52
tickets you meet your M Italy and then
00:05:55
let's go that's it how about I go first
00:05:57
class to the orand summit now that
00:06:01
we could play some oh we could have a s
00:06:04
we may or may not have a have a fun
00:06:05
casino night there so this will be fun
00:06:07
yeah you got to come all in Summit for
00:06:09
sure yeah get the misses take the 15K
00:06:11
two first class tickets get yourself set
00:06:13
up in a nice hotel and we will see you
00:06:16
there all right everybody let's get to
00:06:18
the docket well done Tim thank you Tim
00:06:20
see you later I appreciate
00:06:23
it I can't believe they have live
00:06:25
dealers standing in a warehouse in front
00:06:27
of a webcam I don't that that is such a
00:06:30
like imagine walking into that facility
00:06:32
you're surprised that facility only has
00:06:34
what dealers it's like a lots there I
00:06:38
think you can choose at the door of what
00:06:40
you want to do D
00:06:42
blackj yeah or whatever else you want to
00:06:44
whatever else you want to be on a
00:06:46
web probably making a porno in the next
00:06:49
room above the table and below the table
00:06:52
there's two different tapings occuring
00:06:55
oh oh my
00:06:57
God smell warehous
00:07:00
oh man well it's rough rough so awesome
00:07:02
so what happened you dm' him that was so
00:07:05
good yeah we he you know what no what
00:07:06
happened was somebody emailed me and
00:07:07
they're like hey that's my mate that you
00:07:09
talked about he's a big fan of the show
00:07:11
it turns out you know this is the thing
00:07:13
about influencers now this is the thing
00:07:15
about this micro celebrity stuff we all
00:07:18
we all know each other by default right
00:07:21
so he was just slid into the there's
00:07:24
definitely camaraderie yeah that was
00:07:26
awesome that's awesome I'm so glad he
00:07:27
won and uh you know he he basically got
00:07:30
smashed in his DMs like a thousand
00:07:32
people dm'd him oh you're on Allin
00:07:34
they're bugging out to you on Allin and
00:07:36
uh so yeah I just said hey would you do
00:07:38
a hand would you do your live hand with
00:07:39
us and then I didn't I didn't I wanted
00:07:41
to clear with you guys before I put our
00:07:43
money on it or whatever but I couldn't
00:07:44
do that because I wanted to surprise you
00:07:47
here we are I did not think that was
00:07:48
real when he popped up I thought it was
00:07:50
like a record thing yeah all I could
00:07:51
think of was do I look like an ass by
00:07:53
saying more so that I just stayed
00:07:57
quiet we more than
00:08:00
I was like you start with 50k let's just
00:08:02
see what happens I know you ever feel
00:08:04
like when you like tiptoe into the bet
00:08:06
with like a small amount but you you
00:08:08
want to do more and then you win and and
00:08:10
you feel like you actually lost money
00:08:12
because if you made a bigger bet you
00:08:13
would have made more I lost
00:08:18
60k I should have put I no I would I
00:08:21
would have put 50 I would have won 75
00:08:23
instead we put 10 we won 15 I lost 60 we
00:08:27
made a jake house size back yeah yeah
00:08:29
there a feel
00:08:32
that let your winners
00:08:35
ride Rainman
00:08:39
David and instead we open source it to
00:08:42
the fans and they've just gone crazy
00:08:44
with
00:08:44
[Music]
00:08:47
it I don't know what's going on anything
00:08:50
going on in your life anybody uh been
00:08:53
busy having some Adventure sacks seems
00:08:56
like you were busy last week any
00:08:58
anything to report from your side of the
00:09:00
world well should we take you take you
00:09:02
guys behind the scenes of of a
00:09:03
presidential fundraiser I admit I've
00:09:05
never done one before so it was uh it
00:09:07
was a new experience for me when you
00:09:09
host a president it's just a whole
00:09:10
different level of preparation the
00:09:12
Secret Service was out like a week
00:09:13
before the president has an amazing
00:09:16
Advanced team they work out every detail
00:09:18
they make a map of your house they
00:09:19
really have to think through everything
00:09:21
the police shut down the
00:09:23
street it's really a very involved
00:09:26
process by the way I went to dinner
00:09:29
in the city that night and you know I
00:09:32
was right by your house so I drove up
00:09:35
the street and they had everything
00:09:36
blocked off on like three blocks on both
00:09:38
streets like on both sides of your house
00:09:40
but there were all these protesters like
00:09:42
all throughout San Francisco like prot
00:09:44
Trump people had driven in from all over
00:09:47
NorCal must have been because these were
00:09:48
not San Francisco natives supporters
00:09:51
yeah and they came in with these like
00:09:52
cars and the streets were blocked it was
00:09:54
a total zoo in the city for hours before
00:09:58
and after your I actually stayed in the
00:09:59
city that night and I heard the people
00:10:02
going nuts for hours afterwards but it
00:10:05
definitely like took over it took over
00:10:06
the city yeah so really interesting is
00:10:08
that all week the San Francisco
00:10:10
Publications had been trying to Jin up
00:10:12
protesters by writing about that you
00:10:14
know the president's coming to town and
00:10:15
the protesters are going to show up and
00:10:17
in fact there was almost no anti-trump
00:10:20
protesters and then a huge number of
00:10:23
prot trump demonstrators came out and
00:10:25
they were waving flags and cheering
00:10:26
along his motorcade as he was coming to
00:10:29
to the house so the whole protest thing
00:10:32
backfired why do you
00:10:34
think anti-trump protesters did not show
00:10:37
up what happened I think there's just a
00:10:40
big enthusiasm Gap I mean I think that
00:10:42
the prot Trump people are very
00:10:43
enthusiastic and the let's call Pro
00:10:46
Biden or anti-trump people are just not
00:10:48
very motivated right now so it's
00:10:50
exhausting to be against Trump for eight
00:10:52
years like this has been exhausting
00:10:55
think they've exhausted folks uhhuh so
00:10:58
anyway
00:11:00
who's the founder of intercom he was
00:11:01
there and I I think this was actually a
00:11:04
good summary because he said that he
00:11:07
spoke with a bunch of people and none of
00:11:08
them identify as Republican all voted or
00:11:10
donated Democrat in the past that's true
00:11:13
for me too now they're backing this guy
00:11:15
for his policies on war immigration
00:11:17
crypto and more this elections referend
00:11:19
on those issues so Owen you know came
00:11:21
out appreciate his support but it's true
00:11:23
the campaign told us that they had more
00:11:26
firsttime donors at this event than
00:11:27
they've seen before and that's because a
00:11:30
lot of these people hadn't supported
00:11:33
Republicans or hadn't supported Trump
00:11:35
and they came out so we have a few
00:11:36
photos and videos here to take you
00:11:37
behind the scenes I think might be super
00:11:39
people so the first thing to say is that
00:11:42
President Trump is extremely Charming he
00:11:44
connects with people in like 5 seconds I
00:11:46
mean he meets you and and finds
00:11:49
something interesting and or funny to
00:11:51
say and he's hilarious I mean when he
00:11:55
spoke in the the living room and he
00:11:57
talked extemporaneously for an hour he's
00:12:00
speaking off the cuff every speech he
00:12:03
gives is different this is him coming
00:12:05
into the living room he had made just a
00:12:08
few notes about topics he wanted to talk
00:12:10
about on a piece of paper but that was
00:12:12
it it was all completely extemporaneous
00:12:14
no teleprompter obviously and he's
00:12:17
hilarious I mean people don't realize
00:12:18
how entertaining he is what what were
00:12:21
some of the greatest hits what did he
00:12:23
hit on did he hit on low pressure from
00:12:26
showers did he what did he what because
00:12:28
I know he's got like some things he hits
00:12:30
on that are relatable was it all like
00:12:33
specific crypto topics Tech topics or
00:12:35
did he go off he did you know he did
00:12:37
talk crypto and it was really
00:12:40
interesting at one point in his speech
00:12:43
he called on the winlos brothers who
00:12:44
were there and I'm only mentioning this
00:12:46
because it was already reported that
00:12:48
they were there so I don't want to speak
00:12:49
out of school but he said to them he
00:12:51
says I know you guys created Facebook
00:12:54
you know he was giving them credit for
00:12:56
creating Facebook and said created yeah
00:12:59
but he says but but it's okay I mean you
00:13:01
guys look like models you were dealt a
00:13:03
lot of cards you know a lot of cards
00:13:06
you I mean they're very good-looking
00:13:08
huge IQ and I mean look at him great
00:13:11
hair yeah and so I thought okay wow like
00:13:13
he must know the wink ofos Brothers he
00:13:15
must have met them previously and I
00:13:16
found out this is the first time that he
00:13:19
had ever met them so think about the
00:13:21
awareness that he has to know that
00:13:23
they're in the audience to see them
00:13:25
Point them out and then have this kind
00:13:26
of hilarious routine with them so he's
00:13:28
someone who's very sharp very on the
00:13:30
ball very funny and then his energy
00:13:33
level is incredible so he had started
00:13:36
his day at Mar Lago at 3:30 a.m. Pacific
00:13:39
Time 6:30 a.m. his time then he flew to
00:13:42
Arizona did a trump rally in Arizona
00:13:45
then he flew to San Francisco for our
00:13:47
event he spent four hours at our event
00:13:50
he could have left an hour earlier if he
00:13:52
wanted to then he flew to La for more
00:13:54
events the next day there so think about
00:13:57
his day and his energy level was just
00:14:00
amazing the whole time shath your
00:14:02
thoughts before this goes on for an hour
00:14:05
yeah I'll give
00:14:06
you two
00:14:09
observations the first is that I think
00:14:12
that there is a huge
00:14:14
gap between how the media tries to
00:14:19
portray Donald
00:14:21
Trump and what he's like when you meet
00:14:24
him in person and that Gap is really
00:14:27
wide
00:14:29
and so I would say specifically to
00:14:31
Democrats and
00:14:33
independents you really do need to sit
00:14:35
in the room and feel what it's like he
00:14:40
David David is right he is charismatic
00:14:42
he's intellectually sharp and he's funny
00:14:45
and when you put that together he can
00:14:47
engage an audience for a long time and
00:14:49
be totally extemporaneous the other
00:14:52
thing I would say that is that he is
00:14:53
very polite and he's kind in a way that
00:14:56
was disarming and was not what I
00:15:01
expected and so I felt that I had
00:15:04
misjudged him many years in the past and
00:15:06
so I was very
00:15:08
glad that I had an opportunity to sit
00:15:11
beside him and to
00:15:13
actually interact with him one
00:15:15
onone it was really really
00:15:18
engaging and so that's that's more about
00:15:21
the style and then about the substance
00:15:24
what I would say is it was not just a
00:15:27
pro-america agenda
00:15:29
but it was it's very clear that he was
00:15:31
Pro Innovation so he was really
00:15:34
supportive of AI in the details that he
00:15:36
talked about he was very supportive of
00:15:38
crypto in those details and he's very
00:15:41
much low regulation low Taxation and so
00:15:45
when you put that together it does stand
00:15:48
very much in contrast with what the
00:15:49
alternative is um and so I think that um
00:15:54
both of those things are a reason why
00:15:56
even
00:15:57
if you aren't willing to vote for him I
00:16:02
would encourage everybody to experience
00:16:05
what it's like to hear
00:16:08
him freeberg your thoughts on uh all
00:16:11
this I didn't go to this I didn't go to
00:16:12
the event I don't know no I just big
00:16:14
picture wonder I want to know why why
00:16:17
chamat didn't wear a tie everyone else
00:16:19
is wearing a tie you didn't want the tie
00:16:21
chamat doesn't need a tie he's a
00:16:23
baller all right you want to say what
00:16:25
what Trump said to you when he met
00:16:27
Natalie so it's us talking any he says
00:16:29
you guys are a really beautiful couple
00:16:32
uhoh and and I said well thank you and
00:16:36
then he turns to me and he goes well you
00:16:38
must be really rich
00:16:42
he and I started laughing out loud Nat
00:16:45
thought he was hilarious so oh because
00:16:48
of the disparity and the looks between
00:16:49
you and Nat is what sort of implying you
00:16:52
guys sat next to him at dinner yeah yeah
00:16:54
and was that like an hour just private
00:16:56
conversation between the three of you
00:16:58
this is the thing that he does he
00:17:00
actually sits there and he says you know
00:17:01
folks I'm happy to continue to talk
00:17:03
about whatever you want me to you feel
00:17:05
free to ask me questions or feel free to
00:17:08
just go around the room and just tell me
00:17:09
what you think and what would happen is
00:17:12
people would say different things and
00:17:13
then he would start asking questions of
00:17:14
other people and the thing becomes
00:17:16
almost like this Roundtable discussion
00:17:18
of topics from we talked about Iran we
00:17:20
talked about foreign policy we talked
00:17:22
about deficit crypto regulation
00:17:25
everything what he say
00:17:27
about what did he say about deficit in
00:17:30
debt well he's very much he's very much
00:17:34
on your side of we have to really figure
00:17:37
out how to get spending in order and get
00:17:40
the deficit under control well congrats
00:17:42
on it sounds like a successful event for
00:17:44
you guys sounds like you guys are in the
00:17:46
halls of power now and Trump has flipped
00:17:48
his positions on EVS abortion and taking
00:17:51
away a woman's right to choose he's
00:17:53
flipped his position on Tik Tok and
00:17:56
flipped his position on crypto I give
00:17:57
him a ton of credit four flips in a
00:17:59
month and he just sweeps all those votes
00:18:02
it's pretty smart um and for the
00:18:05
Democrats who are listening he's also
00:18:07
Pro you're losers and you're not
00:18:09
listening to people so you're going to
00:18:11
lose the election and he's Biden's going
00:18:13
to get demolished nobody wants to vote
00:18:16
for somebody who they
00:18:17
think J you think Biden's getting
00:18:19
demolished right that's your thought I
00:18:21
mean did you see the video that came out
00:18:23
this week where he was at some event and
00:18:25
he looks it looked like a a mitch
00:18:27
mcconell moment right where he kind of
00:18:29
Frozen he was likeu so I don't want to
00:18:31
make it like elder abuse and I know like
00:18:34
not elder abuse to to S to say to to be
00:18:38
honest about what you're observing
00:18:39
especially when it comes to I'm most
00:18:42
role in America yeah he's got to he's
00:18:44
got to bow out 538 just put out their
00:18:47
election forecast showing 51% chance of
00:18:51
Biden winning 48% chance of trump
00:18:53
winning as of two minutes ago yeah who
00:18:56
knows I think it's all going to be
00:18:57
determined by the
00:18:59
saxs you were going to say well I just
00:19:01
think what other job in America could
00:19:03
Biden even be qualified for like what
00:19:05
what would you hire him to do is there
00:19:07
any is there any mental job you would
00:19:10
hire him to do is there any physical job
00:19:11
you would hire him to do would you hire
00:19:12
him to be your babysitter I mean I don't
00:19:14
think there's any job in America that
00:19:17
anybody would hire him to do except for
00:19:19
maybe president it's kind of kind of
00:19:20
crazy and this is where like the
00:19:22
Democratic parties in shambles we should
00:19:24
have the highest standards for the
00:19:26
mental acuity sharpness and energy level
00:19:29
of our president it's the most demanding
00:19:31
job in we need a cognitive test but the
00:19:33
Democrats need to just look deeply in
00:19:35
the mirror and say hey you're Fielding a
00:19:36
candidate that nobody's going to vote
00:19:39
for that's the problem here and there's
00:19:41
not enough anti-trump sentiment and
00:19:43
Trump's a genius that flipping his
00:19:45
position to to get huge swats of Voters
00:19:48
and so you're going to get demolished if
00:19:49
you don't hot swap them I guarantee you
00:19:51
hot swap is coming I predicted the Trump
00:19:54
TV flip and I predict it now I think I
00:19:57
think you're right about maybe some of
00:19:59
the issues where folks will get much
00:20:01
more precise on these issues but I I
00:20:03
actually think what's happening is that
00:20:06
this is really going to be about Trump
00:20:08
versus KLA Harris I don't think Biden is
00:20:11
going to step down at all but I do think
00:20:12
there's a chance a non-trivial chance
00:20:15
that Biden wins and if he does I don't
00:20:19
think he's going to make it four years
00:20:20
and so then the real question is do
00:20:22
folks want Kamala and have they had a
00:20:25
chance to really figure out whether they
00:20:27
want to vote for her I think that's
00:20:29
really where it's going to come down to
00:20:30
it's it's really Trump versus KLA Harris
00:20:33
and if you if you frame it as that
00:20:34
chamath then it's even a bigger
00:20:36
trouncing right like if you put Biden if
00:20:39
you put kamla against Trump then what
00:20:42
would the it would be a even bigger
00:20:44
shellacking yeah in your mind I just
00:20:48
think that without saying anything bad
00:20:50
kamla because I don't know much about
00:20:51
her is really what I would says I don't
00:20:53
know much about her and so you can't
00:20:55
have somebody who gets into that role
00:20:59
accidentally I think there we have to
00:21:03
give both president Trump and President
00:21:04
Biden a lot of credit which is they
00:21:07
stood in the eye of the hurricane and
00:21:11
withstood all the pressure and
00:21:14
won and he who wins that way deserves to
00:21:18
be the president of the United
00:21:20
States she hasn't withstood that and so
00:21:24
I think that it's pretty unfair for a
00:21:28
lot of Voters if there is a bait and
00:21:32
switch and so I think that you have to
00:21:35
look at both of these two candidates and
00:21:38
assign a reasonable probability that
00:21:41
both of them make it to the finish line
00:21:43
and from at least what I saw up close I
00:21:46
think it's a much higher probability
00:21:47
that Donald Trump does than President
00:21:49
Biden does and listen Biden hasn't made
00:21:51
it to the finish line of his first term
00:21:52
it's obvious to everybody who's in
00:21:54
cognitive decline you put up a candidate
00:21:56
who's in cognitive decline you're going
00:21:57
to lose
00:21:59
even against you know Trump who people
00:22:02
really don't like these are the two most
00:22:03
unpopular candidates of our lifetime I'm
00:22:05
not sure about that I don't think it's
00:22:07
true that people don't like Trump I
00:22:08
think that he's got a core but yeah no
00:22:11
people the Republicans including the
00:22:13
Republicans including yourself we
00:22:15
looking for a different candidate just
00:22:16
months ago you said Trump was not your
00:22:18
preferred candidate and you are all in
00:22:20
on to santis so let's not pretend like
00:22:22
he was your preferred candidate he's the
00:22:24
remaining candidate so
00:22:26
you're I think it's wrong to say that
00:22:28
there's not enthusiasm and love for
00:22:30
Trump we saw it on the streets we saw it
00:22:31
in that room there's some yeah do you
00:22:33
see Logan Paul meeting with Trump four
00:22:35
years ago he was for Biden now he's for
00:22:38
Trump have you ever seen Trump walk into
00:22:39
a UFC event they go nuts for him I'm
00:22:41
just saying there a lot of there's a lot
00:22:43
of enthusiasm and a lot of love out
00:22:45
there for Trump a lot of excitement I
00:22:47
don't see any of that for Biden there
00:22:49
are people who don't like Trump and that
00:22:51
drives some support for Biden but if you
00:22:53
look at enthusiasm and excitement it's
00:22:55
all on the Trump side in this we are in
00:22:57
total agree ment yes there is no
00:23:00
enthusiasm to put somebody in cognitive
00:23:03
decline in the White House all right
00:23:05
listen we got to get to the docket we
00:23:06
could talk for hours about Biden Biden
00:23:08
Biden Trump Trump trump and we will it's
00:23:10
going to be a continuing topic but let's
00:23:13
get to a very full docket here breaking
00:23:16
news last night Tesla shareholders have
00:23:19
backed their guy yes there was a two
00:23:23
important votes
00:23:25
measures that Tesla just
00:23:29
had taken with their shareholders the
00:23:31
first was approving elon's pay package
00:23:33
the $56 billion pay package that was
00:23:35
voided by a Delaware judge we talked
00:23:37
about that on episode 164 back in
00:23:40
February and then moving Teslas
00:23:43
incorporation from Delaware to Texas
00:23:46
this is also major remember we talked
00:23:47
last week about the Texas Stock Exchange
00:23:50
here's the two
00:23:51
charts massive overwhelming support
00:23:54
there were some notable people who
00:23:56
dissented I think Norway's sovereign
00:23:58
wealth fund and cpers were two of the
00:24:00
ones who were voting against it Tesla
00:24:02
share price popped 6% on the news you
00:24:05
don't want to lose Elon a Tesla that
00:24:08
would be really bad so your thoughts
00:24:10
chamath
00:24:12
on this
00:24:14
vote and maybe the move and what that
00:24:16
represents it's kind of odd that we're
00:24:20
in this crazy Place same more when that
00:24:25
original package was unveiled
00:24:28
there was a lot of people including me
00:24:31
who thought there's no way he's going to
00:24:33
hit this it's just way too aggressive
00:24:37
and it
00:24:38
requires so many things to go
00:24:41
right and so I think in part that's why
00:24:45
three4 of the Tesla shareholders
00:24:47
approved it then 73% is not squeaking
00:24:51
over the line it's not 50% plus a vote
00:24:54
it's it's a super majority and that
00:24:57
excluded Kimbell and Elon sh ex so and
00:25:01
then I think you had this very dangerous
00:25:04
form of judicial
00:25:05
activism which essentially ignored the
00:25:08
will of the
00:25:10
shareholders and tried to create some
00:25:14
administrative ruling that threw up this
00:25:17
big question mark So then in in typical
00:25:21
Elon style he's like great we're just
00:25:23
going to get them to voted again and
00:25:25
then yet again it passes and it looks
00:25:26
like it's going to pass by around 73%
00:25:29
but the problem now is that it's still
00:25:31
not clear what happens I think that
00:25:32
there's still some question marks where
00:25:35
this may not nullify the judge's
00:25:39
decision it may actually create more
00:25:42
question marks so hopefully this gets
00:25:44
sorted out he should get this stock he
00:25:46
never should have or these options he
00:25:48
never should have had them taken
00:25:49
away and so I just hope this thing yeah
00:25:53
it becomes a nothing Burger saaks you
00:25:55
have thoughts on this outcome is it
00:25:57
surprising to not surprising and then I
00:26:00
I think the jurisdiction thing is bigger
00:26:02
than
00:26:03
maybe people are thinking because
00:26:07
Delaware has been the standard for
00:26:09
incorporating companies but Elon is
00:26:11
putting his companies in Nevada and
00:26:13
Texas we saw the stock exchange uh last
00:26:16
week getting back to move to Texas this
00:26:18
does seem like there's something about
00:26:21
jurisdiction in the water what are your
00:26:23
thoughts Sachs well I think it's ironic
00:26:25
that the winning margin 73% is the same
00:26:28
margin by which shareholders approved
00:26:31
his comp package back in 2018 so again
00:26:34
they got 73% voted for this 2018 now
00:26:38
they voted to reapproved by the same
00:26:40
margin and the reason why they had to do
00:26:42
it is because this activist judge in
00:26:44
Delaware avoided it on the grounds that
00:26:46
somehow the original shareholder vote
00:26:48
wasn't valid and I think this is
00:26:50
interesting that the margin didn't
00:26:52
changed because it shows that
00:26:54
shareholders aren't in grates Elon
00:26:56
delivered what he promised and now
00:26:58
shareholders are upholding their end of
00:27:01
the bargain and certainly they didn't
00:27:02
have to take that position there were
00:27:05
different groups like calers who
00:27:07
basically took the position what have
00:27:09
you done for me lately you know yeah you
00:27:11
delivered but we don't have to pay you
00:27:12
because of the judge so we're not going
00:27:14
to pay you and I think shareholders
00:27:16
wisely approved the package because I
00:27:18
think there was some chance that if they
00:27:20
reneged that Elon could leave the
00:27:22
company and I still think he's
00:27:23
absolutely vital to all the Innovation
00:27:25
that's going to come in the future from
00:27:28
Tesla and you see this the stock is
00:27:30
ripping on the news is up about 3% today
00:27:32
in a down market so clearly the market
00:27:35
thinks that securing elon's future at
00:27:40
the company was the right decision and
00:27:42
shareholders did the right thing yeah in
00:27:44
ter in terms of the the downstream
00:27:46
effect on this like you said it raises
00:27:49
the Spectre of Delaware being an
00:27:52
activist State that's not why anyone
00:27:55
incorporates in Delaware the reason why
00:27:56
you incorporate in Delaware is because
00:27:58
you think it makes you subject to an
00:28:01
extremely predictable body of corporate
00:28:03
law that's been tested and become bullet
00:28:06
proof over many many decades and now all
00:28:09
of a sudden you have to worry that maybe
00:28:12
a judge will set aside a shareholder
00:28:15
vote for reasons that seem incredibly
00:28:17
specious especially in light of the fact
00:28:20
that the shareholders just reapproved it
00:28:22
so obviously the shareholders did didn't
00:28:24
think they needed your protection and
00:28:27
they voted to reverse you and moreover
00:28:30
Tesla could still be subject to paying
00:28:32
the legal fees of these trial lawyers
00:28:35
who've asked for literally billions of
00:28:37
dollars in legal fees that the judge Sol
00:28:39
to rule on so imagine this imagine that
00:28:42
the shareholder vote gets set aside by
00:28:45
the judge it then gets reapproved by
00:28:46
sholders but the trial lawyers who
00:28:49
brought this nuisance suit can now get
00:28:50
billions of dollars if that happens I
00:28:53
mean Delaware can kind of Kiss its
00:28:55
status as the premier corporate law
00:28:57
state way freedberg is this a John G
00:29:01
Moment is this where capitalism
00:29:04
socialism and the state Collide and
00:29:07
people now start thinking H maybe we
00:29:10
need
00:29:11
to create a new jurisdiction a new
00:29:13
framework that's a good question I think
00:29:16
it's a good example for
00:29:18
capitalism and I think it should Shine
00:29:20
the Light on how other CEOs are getting
00:29:22
compensated at public companies where
00:29:25
there's typically a multi-million dollar
00:29:27
or multi- deam million doll pay package
00:29:30
that has no dependency on the
00:29:31
performance of the business you can make
00:29:33
tens of millions of dollars a year and
00:29:35
not drive shareholder value and I think
00:29:39
that the way that this deal was
00:29:41
structured where Elon effectively got
00:29:43
10% of the company for 10 Xing the stock
00:29:48
should be an example that other boards
00:29:50
should actively consider when
00:29:53
considering both candidates and their
00:29:55
appetite for this sort of a package and
00:29:58
their compensation packages themselves
00:30:01
the way executive comp typically works
00:30:02
at the board level at public companies
00:30:05
is you hire these comp consultants and
00:30:07
the comp Consultants come in and they
00:30:08
use comparables which basically means
00:30:11
let's do what everyone else does and so
00:30:13
you have this self-reinforcing system of
00:30:17
compensation and benefits for CEOs that
00:30:19
bumps up a little bit every year that
00:30:21
ultimately has not has some degree of
00:30:23
ownership in the stock but fundamentally
00:30:25
has very little downside and Elon had no
00:30:28
guarantees in his pay package when he
00:30:31
got this comp package originally in 2018
00:30:34
and he got 10% of the company if he 10x
00:30:38
the stock which is what he did I really
00:30:41
think that it is worth having this
00:30:43
become the kind of Beacon for all boards
00:30:46
to consider and it seems like
00:30:47
shareholders in aggregate are applauding
00:30:50
the concept and look Elon is a special
00:30:52
guy and he gets special treatment but I
00:30:55
think that it moves the needle and
00:30:56
should move the needle a little bit for
00:30:59
other CEOs and other boards to stand up
00:31:01
and say we should think about something
00:31:02
that looks a lot more like this than
00:31:04
what we typically do and I think you
00:31:06
would find a very different cast of
00:31:08
people showing up to become CEOs and to
00:31:10
drive performance out of these
00:31:11
businesses and a lot more risky and
00:31:13
aggressive behavior than what I think
00:31:15
you would typically see in big companies
00:31:17
that are in maintenance mode what do you
00:31:19
guys think of the organizations that
00:31:22
initially voted yes and now voted no
00:31:25
they basically are saying look I mean if
00:31:27
you think about it you're big public
00:31:28
company I don't know what iss
00:31:29
recommended this is institutional
00:31:30
shareholder Services they they
00:31:32
recommended no both times right and so
00:31:35
ISS basically is what a lot of big
00:31:37
public fund managers will follow when
00:31:39
they make their votes and so if I'm a
00:31:42
shareholder that's not what I'm no no I
00:31:44
know what I'm saying but like let's say
00:31:45
let's say that I'm black rock or I'm a
00:31:46
share a big I'm not goingon to put Black
00:31:47
Rock as some big shareholder of Tesla
00:31:49
stock why would I vote to give away 10%
00:31:53
of the company when I don't have to yeah
00:31:56
very simple because he would leave
00:31:58
morals and ethics matter and you want to
00:32:02
do the right thing and you want to
00:32:04
incentivize capitalism to operate
00:32:06
properly and want to incentivize the
00:32:08
people who take on the burden of running
00:32:09
these companies and the people who voted
00:32:12
against it I think people should just
00:32:13
make a list of those individuals Cham
00:32:16
and they should not do business with
00:32:17
them because if somebody is going to
00:32:19
double cross you they've shown you who
00:32:21
they are these are people who double
00:32:23
cross them they got the benefit and then
00:32:25
they stabbed them in the back make a
00:32:27
list exactly what they did
00:32:28
that's exactly what they did it's worse
00:32:30
if they voted yes the first time and
00:32:31
then they voted no no I'm saying
00:32:34
and then maybe you're just against the
00:32:36
deal but if you're yes no then that's a
00:32:39
a reneg then you're a true scumbag
00:32:41
you're a scumbag is that public anywhere
00:32:44
who did that yeah there are a bunch of
00:32:45
folks that said that they you know I
00:32:46
think it was cpers that voted yes and
00:32:48
then when they were on trying to explain
00:32:50
they were like tap dancing in like
00:32:52
corpor jargon but really what they are
00:32:54
scumbags Jason you're right they are
00:32:57
morally and eth void and they're
00:32:59
reneging and this is the one rule in
00:33:01
business you're not allowed to do and
00:33:02
the people that do that are these penny
00:33:05
pinching scumbags I'm not saying a black
00:33:07
list but I would say making a list of
00:33:09
people who maybe you want to consider
00:33:11
not doing business with is how I would
00:33:12
frame it these are but they're public
00:33:14
they're Public Market investors they're
00:33:15
not private investors they buy the stock
00:33:17
on the open market so they don't have to
00:33:19
worry I mean I think the question is
00:33:20
what are the chances that Elon leaves
00:33:21
the company if he didn't get the pay
00:33:23
package the chances prob risk and I
00:33:26
think Poss think about it yeah non zero
00:33:29
possibility you made an agreement with
00:33:31
somebody and you shook their
00:33:33
hand yeah why does care whether he would
00:33:35
have le left or not left this is like
00:33:37
you have to do the right thing yeah you
00:33:39
have to do the right thing you promised
00:33:40
the guy x amount of money for doing y
00:33:42
amount of things he did the why things
00:33:45
and then you had a judge come over the
00:33:47
top because of somebody who owned 10
00:33:49
shares and all I'm saying is if you if
00:33:51
you don't have the intellectual
00:33:53
intelligence to look past that and say
00:33:56
wait a minute we just paid the guy to do
00:33:57
this work and now we're going to reeg
00:33:59
they're gaming the system I just think
00:34:00
that like how can anyone who is capable
00:34:03
of doing a job sign up for a pay package
00:34:07
how could anyone and the people that
00:34:08
will sign up are these like middling
00:34:11
corpo people who will accomplish nothing
00:34:15
and will run these companies in ways
00:34:17
that then speaks to organizations that
00:34:20
have just proven themselves to be
00:34:22
totally unreliable the irony of the
00:34:24
thing is that these folks thought that
00:34:27
they were getting a 10% free roll when
00:34:29
they voted no and the reality is that by
00:34:33
him getting the pay package the
00:34:34
certainty of him sticking round at the
00:34:36
company caused the stock to go up by 10%
00:34:39
so they actually had the calculus wrong
00:34:41
that if they had gotten their way the
00:34:43
stock would have declined by more than
00:34:45
the 10% free roll they thought they were
00:34:46
getting this is I think the the main
00:34:48
point and 10% being the ownership of the
00:34:50
company that he gets yeah the pay
00:34:52
package was laughed at on CNBC by all
00:34:55
the experts there's no way for him to
00:34:57
hit this stuff
00:34:58
if he does hit it he's getting a
00:34:59
fraction of the value of it and this is
00:35:01
why stock is such a valuable device if
00:35:04
employees get stock and the CEO gets
00:35:07
stock and everybody in between and
00:35:08
Retail investors get it and endowments
00:35:10
get it and your retirement account gets
00:35:12
it everybody rows in the right direction
00:35:14
is it perfect no people can buy back
00:35:16
their stock they can do a little gaming
00:35:17
on the margins but it is the most pure
00:35:20
system we have everybody has a share of
00:35:22
the company so if you're a socialist you
00:35:25
know like you should actually kind of
00:35:27
appreciate
00:35:28
how stock works that everybody has a
00:35:30
chance to buy everybody has a chance to
00:35:32
participate this is the model we should
00:35:35
be using for all CEOs they should all
00:35:37
get a massive package if the stock goes
00:35:39
up and to the right it's so obvious and
00:35:42
this was so unfair let's see this
00:35:44
flipper I want to see their
00:35:46
explanation the compensation is
00:35:48
commensurate with the performance of the
00:35:49
company did you vote for it in
00:35:52
2018 I believe we did vote for it in
00:35:54
2018 but this is about long-term value
00:35:57
but do you believe you were duped in
00:35:59
2018 no I believe we used the
00:36:02
information we had available and made
00:36:03
the best choice okay so here's what I
00:36:05
find so interesting about this
00:36:07
particular
00:36:09
choice 73% I believe of the shareholders
00:36:11
voted in favor of in 2018 a judge has
00:36:14
said that shareholders were not informed
00:36:17
properly if you talk to most
00:36:18
shareholders by the way especially big
00:36:19
shareholders they say we were not dup we
00:36:21
we understood completely what we were
00:36:22
doing and we were on board with this now
00:36:25
that this opportun almost opportunity
00:36:27
has arrived on your doorstep uh to say
00:36:30
to actually rethink this if you
00:36:33
will there's a view that oh maybe maybe
00:36:36
we're not getting the value uh we we
00:36:37
thought we should MH you thought you
00:36:40
should get it but he's worked by the way
00:36:42
under the assumption that he was hitting
00:36:45
the numbers right and and dealing with
00:36:47
the contract mhm if I told you that you
00:36:51
were being paid a certain amount of
00:36:52
money in 2018 and then I called you and
00:36:55
said actually you know what we're not
00:36:56
going to give you that money anymore
00:36:57
what would you do it's a great question
00:37:01
I would um I would go to my board you
00:37:03
know I would talk with my
00:37:05
board this woman is so smug what is her
00:37:08
name Karen Frost I don't think she's
00:37:10
smug sorry marshy Frost oh sorry I
00:37:12
thought it was Karen Frost I think that
00:37:14
this is emblematic of the kind of person
00:37:17
who is incapable of actually doing the
00:37:19
right thing and there's a lot of these
00:37:22
people that run a lot of these
00:37:23
organizations that I mean what what kind
00:37:26
of an answer is that I mean it was a non
00:37:28
answer that's why I said it was smug let
00:37:30
me just ask each of you you've all
00:37:33
started companies some of you are still
00:37:34
running companies would you take money
00:37:36
from her and cpers after that statement
00:37:39
hard no for me yeah but remember she's
00:37:41
not investing in private companies she's
00:37:43
buying stock on the open market so
00:37:46
announc yeah cper announced that they're
00:37:48
an LP and they're starting to do directs
00:37:50
oh okay I didn't know that yeah they're
00:37:52
trying to catch up they've been behind
00:37:54
on Venture let's call this whole thing
00:37:56
what it is it was a heist you had these
00:38:00
trial lawyers they find a name plan if
00:38:02
who's got nine shares and on a
00:38:05
contingency fee basis they go after
00:38:07
elon's pay package what are they looking
00:38:09
for
00:38:10
$5.6 billion how does a lawyer make $5
00:38:14
billion how that's what motivated this
00:38:16
whole thing they don't care about Tesla
00:38:18
they don't care about the company they
00:38:20
don't care about shareholders they're
00:38:21
looking for a giant multi-billion dollar
00:38:24
contingency fee payment and they took
00:38:27
their shot and they found a Delaware
00:38:29
judge to basically agree with them even
00:38:32
though shareholders approved it and then
00:38:34
shareholders reapproved it so my
00:38:36
question is how much are these trial
00:38:37
lawyers going to get is a judge going to
00:38:39
award them billions of dollars for what
00:38:41
was clearly now a mistake to avoid a pay
00:38:45
package that shareholders wanted to
00:38:46
stick with if they award these lawyers
00:38:50
billions of dollars which is what
00:38:51
they're seeking no one's going to want
00:38:53
to do business in Delaware anymore
00:38:54
because it subjects you to these stickup
00:38:57
up Heist by trial
00:38:59
lawyers so I think that's going to be
00:39:02
the next big shooter drop is what do
00:39:04
these trial lawyers get awarded well
00:39:06
what are they going to get paid because
00:39:07
they also wanted to get paid in Tesla
00:39:09
shares no I'm serious here's an idea buy
00:39:12
the shares yourself yeah they said we
00:39:14
don't like your management of the
00:39:15
company but uh we want your shares yeah
00:39:19
yeah by the way they got their shares
00:39:20
and then they voted to give Elon the
00:39:22
next pay package so it's just a full-on
00:39:24
grift they they secure the bag but
00:39:27
supposed to protect corporations against
00:39:29
this grift that's why people incorporate
00:39:31
there when people ask why does Delaware
00:39:33
have the special place that everybody
00:39:35
decided Delaware would incorporate it
00:39:38
was because it was predictable lawyers
00:39:40
felt this was the most predictable
00:39:41
jurisdiction that would be the most
00:39:44
shareholder friendly most shareholder
00:39:47
thoughtful whatever word you want to use
00:39:49
they would defend the the the
00:39:51
shareholders and here we are the last
00:39:53
company I started 8090 we incorporated
00:39:56
in Nevada and I just redomicile a couple
00:39:59
of other companies that I own into
00:40:01
Nevada as well it's becoming a trend
00:40:04
we're having very big discussions about
00:40:05
this in the startup community of where
00:40:07
to domicile your company
00:40:09
and more to come on this one okay let's
00:40:11
keep moving Apple had a huge
00:40:13
announcement this week Apple has entered
00:40:16
the chat they announced Apple
00:40:17
intelligence get it Ai and they have
00:40:20
included a chat GPT integration from
00:40:23
open
00:40:24
AI this was really I think imp
00:40:27
impressive in many ways because people
00:40:29
thought Apple was far behind it was a
00:40:31
banger of a demo a lot of unapp like
00:40:34
futur looking demos so none of these
00:40:36
demos that we're going to show are
00:40:37
coming to your phone this week they were
00:40:40
really I think playing catchup with
00:40:43
Microsoft and it worked stock is up 10%
00:40:46
uh they added about 300 billion in
00:40:48
market cap now the top three market cap
00:40:50
companies are all driven specifically by
00:40:54
the perception that AI is going to be
00:40:56
the next technological wave Microsoft
00:40:59
Apple and Nvidia all cruising around
00:41:01
about
00:41:02
$3.2
00:41:04
trillion and the this top three keeps uh
00:41:07
flipping back and forth Apple had past
00:41:10
Microsoft and market cap here's the
00:41:12
features I'll just give you a quick
00:41:14
overview of what we're seeing it's added
00:41:17
uh grammarly like features great product
00:41:19
grammarly I'm not an investor but they
00:41:20
added the ability to proof get grammar
00:41:23
help AI will transcribe and summarize
00:41:25
phone calls with permission obvious
00:41:27
double opt in it will prioritize
00:41:29
notifications and iMessage and email
00:41:31
that are super important you can do
00:41:32
smart replies uh and Company where an
00:41:35
investor in superhuman or he does this
00:41:36
kind of stuff and they're bringing AI to
00:41:39
Siri and this is going to be the big win
00:41:43
in my mind you're going to be able to
00:41:45
say things like you want to order
00:41:47
something in door Dash or Uber Eats or
00:41:50
instacart and it's the AI Siri will be
00:41:52
able to dip down into Apps they're
00:41:54
building a whole app AI interface much
00:41:57
like the rabbit device CEO talked about
00:41:59
doing and uh I think this means that
00:42:02
apple is going to win the AI consumer
00:42:04
there is a deal with chat GPT that I'll
00:42:06
get your feedback on gentlemen in a
00:42:08
moment according to sources apple is not
00:42:10
paying open AI it's a non-exclusive deal
00:42:13
chat GPT can be swapped out apple is
00:42:15
also talking to Google about a similar
00:42:18
deal obviously it doesn't take a genius
00:42:20
to predict that apple is going to
00:42:21
auction off the llm integration I think
00:42:23
to the highest bidder they did that with
00:42:25
the search deal Google pays Apple 20
00:42:27
billion to be the default search engine
00:42:29
that's about 5% of Apple's annual
00:42:31
revenue if you didn't know and it's all
00:42:34
profit right so this is a huge uh profit
00:42:36
moment I'm going to pause there for a
00:42:38
second before I get into more of this uh
00:42:40
and just get your general reaction
00:42:43
shath I think you nailed it right at the
00:42:46
beginning the thing that I was struck by
00:42:48
the most in this
00:42:50
is we went from a phase where in the
00:42:54
Steve Jobs
00:42:55
era these events were because you were
00:42:58
about to unveil a product that was done
00:43:03
and shipping as of that day and then at
00:43:07
some point we transition to they are
00:43:10
talking about products that they intend
00:43:13
to release within a year now we've
00:43:16
shifted to the part where they're
00:43:17
talking about software Integrations from
00:43:19
a third party that will happen in a year
00:43:21
so if you just look at it
00:43:23
sequentially it's a little disappointing
00:43:25
in that sense because for a company this
00:43:29
big it's really not much of anything you
00:43:31
can't really touch it and feel it and
00:43:34
it's going to take a
00:43:37
year before we really know what the
00:43:39
totality of all of this is
00:43:42
meanwhile the economics of the chat GPT
00:43:45
deal were leaked and there's no money on
00:43:47
either
00:43:49
side so I don't know it's a little bit
00:43:51
of like it's really not much of anything
00:43:54
to be honest because there's nothing we
00:43:56
can actually play with
00:43:58
experience freeberg your thoughts on the
00:44:00
vision here at least and to chat's point
00:44:04
Apple used to release dope stuff fully
00:44:08
baked ready to go and now we are
00:44:10
increasingly see them talking about
00:44:12
what's coming next year or at some point
00:44:15
do you think Apple's going to win the
00:44:16
consumer do you think Apple's falling
00:44:17
behind should they have built their own
00:44:19
llm by this point I'm not sure I think
00:44:22
what they have shown is more of a
00:44:25
glimpse into the future of hard Ware
00:44:28
where for the last two decades or so
00:44:31
Hardware has mostly been a portal to
00:44:33
access the internet and use the internet
00:44:36
through apps or through the browser and
00:44:37
Hardware has done a good job of enabling
00:44:39
that but I think we're now going to see
00:44:41
a much more tighter coupling where the
00:44:43
hardware becomes more valuable and it's
00:44:45
less of this kind of
00:44:47
funnel for apps to flow through and data
00:44:49
to flow through but the hardware
00:44:51
actually becomes the value Creator and
00:44:52
you see a much more tighter integration
00:44:54
in the hardware OS and the AI or the
00:44:57
software that enables you to do lots of
00:44:59
things you're no longer just going to
00:45:00
use the hardware to access an app to do
00:45:02
something so a lot of the companies that
00:45:04
are app developers are likely going to
00:45:05
end up becoming Services developers that
00:45:08
enable that Hardware AI to do something
00:45:10
for you and this coupling between
00:45:12
hardware and software because of the way
00:45:14
AI works is I think becoming more
00:45:16
apparent not just in consumer devices
00:45:18
but we see it in the data center and in
00:45:20
the Enterprise stack as well you know
00:45:22
we've seen that obviously there's this
00:45:25
tight integration between the chip and
00:45:26
the software stack that grock built
00:45:28
there's a tight integration between
00:45:30
Google's TPU stack and then the ml
00:45:32
instances and the and the tools that you
00:45:34
can use in Google Cloud that are
00:45:36
optimized for use on that TPU Hardware
00:45:39
nvidia's got a big effort obviously in
00:45:41
continuing to build out their software
00:45:42
stack that sits on top of their hardware
00:45:44
and works in a more coupled way and then
00:45:46
Google has this ability to kind of
00:45:48
realize I think a similar outcome with
00:45:49
pixel phones which is a pretty sizable
00:45:53
opportunity for them and then all of the
00:45:54
hardware manufacturers can probably grab
00:45:56
more Val now as they build their own AI
00:45:59
into their OS and you start to see more
00:46:01
of this value realized by the hardware
00:46:03
companies so I think that there's this
00:46:04
really interesting shift where we've all
00:46:07
thought about Hardware as being this
00:46:08
like commodity where there's some degree
00:46:10
of like Improvement or innovation made
00:46:13
over time but now it seems like a lot of
00:46:15
value might actually get captured by
00:46:17
Hardware companies in all points in the
00:46:19
value stack so it's an interesting
00:46:21
moment and I think that this just shines
00:46:23
a light on that Trend that I think is
00:46:25
going to play out over the next couple
00:46:26
of years
00:46:27
it's clear Sachs that right now to
00:46:31
enable these features you're going to
00:46:32
have to have a pretty solid
00:46:35
device they announced here at the
00:46:37
keynote at WWDC that you need to have an
00:46:39
M1 chip or better iPhone 15 or better so
00:46:43
and having all this local data is a huge
00:46:47
Advantage for Apple they've got your
00:46:48
messages your phone your calendar your
00:46:51
photos your app Behavior the data inside
00:46:54
of your wallet all of this gives them a
00:46:57
huge huge Advantage so I guess the
00:46:59
question is do you think this renews the
00:47:02
Apple franchise and people start
00:47:04
upgrading their phones again to get all
00:47:07
these new features David sax well the
00:47:09
market definitely thinks so because
00:47:10
Apple was up big on this news and even
00:47:12
if it was largely vaporware at this
00:47:15
point the market definitely liked where
00:47:16
they were going and frankly Apple did
00:47:18
exactly what I said they should do last
00:47:20
week which was to reinvent Siri as an
00:47:22
llm with the ability with the capability
00:47:25
to reach into apps as an agent and take
00:47:28
actions on the user's behalf that's what
00:47:29
they effectively announced however Apple
00:47:32
took a shortcut to get here they
00:47:35
partnered with open Ai and this is
00:47:37
something that I don't think they've
00:47:39
ever really done before at the operating
00:47:41
system level apple is famous for being
00:47:44
vertically integrated for being a Walled
00:47:45
Garden for being end to end they control
00:47:47
everything from the chips to the
00:47:50
hardware to the operating system and
00:47:52
they don't let anybody else in until
00:47:54
you're at the App Store layer this is
00:47:57
allowing somebody in beneath the level
00:47:59
of the App Store this is allowing
00:48:00
someone open AI to get access to your
00:48:03
data and to control your apps at the
00:48:05
operating system level and I think you
00:48:07
know Elon pointed out wait a second what
00:48:09
are the Privacy implications here and I
00:48:11
think there are major privacy
00:48:12
implications there's simply no way that
00:48:14
you're going to allow an AI on your
00:48:16
phone to take all these actions on your
00:48:18
behalf without giving that model
00:48:21
substantial amounts of user data and
00:48:24
that is a huge change for Apple remember
00:48:27
Apple in the past has been the advocate
00:48:30
for Consumer privacy there's a whole
00:48:33
issue of the San Bernardino terrorist
00:48:36
where the FBI went to Apple and said we
00:48:37
want you to give us backd door access to
00:48:40
their phone and apple refused to do it
00:48:41
and went to court to defend user privacy
00:48:44
and furthermore one of Apple's defenses
00:48:47
to the arguments the antitrust Arguments
00:48:49
for allowing sideloading and allowing
00:48:52
you know other apps to get access to
00:48:54
parts of the operating system is they've
00:48:55
always said we can't do this because it
00:48:57
would jeopardize user privacy and user
00:49:00
security well here they are opening
00:49:02
themselves up to open AI in a very deep
00:49:05
and fundamental way in order to
00:49:08
accelerate the development of these
00:49:09
features in other words they took the
00:49:11
shortcut they could have developed the
00:49:12
llm themselves they could have developed
00:49:14
the AI themselves but they chose not to
00:49:16
do that and I think this is going to
00:49:17
open Pandora's Box for Apple because
00:49:20
again they've proven that they can open
00:49:22
up the operating system to a third party
00:49:24
now and who knows what the privacy
00:49:26
implications of this are going to be it
00:49:28
turns out Apple has addressed this
00:49:30
head-on they hear the concerns and much
00:49:33
like when you share a photo or you share
00:49:35
your location it's going to ask you over
00:49:38
and over again do you want to let this
00:49:39
app do this so they're aware that this
00:49:41
is an issue they brought up privacy
00:49:43
every single time but people don't trust
00:49:45
open Ai and they do trust Apple so this
00:49:48
is strange bad fellows to be sure chath
00:49:51
your thoughts I think that Apple really
00:49:54
cares about privacy when they're to hurt
00:49:57
a company they don't like I.E
00:49:59
meta and they're they're willing to
00:50:02
figure out a way to work around it when
00:50:05
a company that they clearly support open
00:50:08
AI yeah well when you're behind you know
00:50:10
you behave differently than when you're
00:50:11
ahead and you have your Monopoly
00:50:13
freeberg you wanted to add anything here
00:50:14
before we move on to the next story okay
00:50:17
in related news open AI has hit a run
00:50:21
rate and this is kind of stunning of
00:50:23
$3.4 billion
00:50:27
that means they've roughly doubled their
00:50:29
monthly Revenue in the past six months
00:50:31
or so these are not official numbers
00:50:33
open eyes denying them but here's a
00:50:35
chart that somebody put together based
00:50:37
on all the different leaks and
00:50:39
approximations of what open is making
00:50:43
the reason this makes no sense this
00:50:45
chart and it shows a year and then it
00:50:47
shows a month a month a month a month is
00:50:49
because there's been different leaks at
00:50:50
different points in time but just to
00:50:52
normalize this in 2022 for all of 2022
00:50:55
before they really had a lot of
00:50:57
customers 28 million and now on a $3.4
00:51:00
billion run rate again it's pretty
00:51:03
stunning number if you can you can do
00:51:05
apples to apples here because like 2023
00:51:08
Jan is 200 million that means that June
00:51:11
is 300 million if they're on a$ 3.6
00:51:13
billion run rate so yeah and so if we
00:51:16
were to even look at you know the number
00:51:19
of people who work there 770 if you put
00:51:21
that at 500,000 a person some Engineers
00:51:23
getting a couple of million some people
00:51:24
maybe getting less they're probably only
00:51:26
a half billion dollars in salaries a
00:51:28
year who knows what they're spending on
00:51:31
the infrastructure for this if you were
00:51:34
to do evaluation on this everybody knows
00:51:36
they sold a bunch of shares in secondary
00:51:39
at around 80 billion which means they're
00:51:41
trading at if these numbers are true 25
00:51:44
times for Revenue which is close to what
00:51:47
Nvidia is trading at right now obviously
00:51:49
they're two very different businesses so
00:51:52
your thoughts on this as a SAS company
00:51:55
obviously the majority of this revenue
00:51:57
is consumption based some portion of it
00:51:59
is SAS based reoccurring like
00:52:01
subscriptions we pay for at launch my
00:52:04
Venture fund we pay for 6,000 a year to
00:52:06
have all 20 25 people on chat GPT as a
00:52:10
corporate account maybe it's 250 300 a
00:52:11
year per person so what do you think of
00:52:13
this business sacks and how fast it's
00:52:16
growing obviously some of it's API
00:52:17
consumption based not reoccurring some
00:52:19
of it is reoccurring first of all let me
00:52:21
say that you know we've talked about AI
00:52:23
General Hospital and all the soap oper
00:52:25
issues around open AI yeah and you know
00:52:27
judge sax had opinions on that yes but
00:52:30
putting that aside I mean everyone
00:52:31
acknowledges that their products are
00:52:33
awesome I mean open AI makes really
00:52:36
great products uh with chat gbt 40 being
00:52:39
at the top of the list and I talked
00:52:40
about how when we move from chat gbt 4
00:52:44
Turbo to 40 at glue the speed and
00:52:48
quality went up you know at least 2X and
00:52:51
it felt like 10x so they have the best
00:52:54
language model as of this point in time
00:52:57
and they also have other products that
00:52:58
are really great like the whisper API
00:52:59
which does transcription I mean there's
00:53:01
a whole bunch of tools they have that
00:53:03
are great for developers so nobody's
00:53:06
taking anything away from them on the
00:53:07
product side and I think you're seeing
00:53:10
that in this Revenue number now if I was
00:53:13
to try and take apart this business as
00:53:16
an investor I would separate the b2c
00:53:18
business from the B2B business the BC is
00:53:21
a consumer subscription plan people
00:53:23
paying $20 a month I I'm one of them I
00:53:26
pay the 20 bucks a month it's probably
00:53:28
the only llm that I would pay 20 bucks a
00:53:31
month for how often do you use it daily
00:53:34
weekly monthly it's a a handful of times
00:53:37
it's it's not to be honest it's not like
00:53:39
a daily use for me but I I probably use
00:53:42
it every week I would say at least once
00:53:44
yeah so I still use it I have to say
00:53:46
though that the other llms are catching
00:53:48
up and if J and I ever gets good enough
00:53:51
or you know when grock gets to the next
00:53:53
level am I going to stick with that $20
00:53:55
month plan I'm not sure it depends
00:53:58
whether open AI can really maintain the
00:54:01
the leadership it has or the perception
00:54:03
of leadership okay so that's half the
00:54:05
business and then the other part of the
00:54:07
business is the B2B which is the the API
00:54:10
products that effectively they're
00:54:11
selling to developers and that's where I
00:54:14
would place the future value of this
00:54:15
company I mean as somebody who invests
00:54:17
in SAS when we see a business that has
00:54:20
uh beta C subscriptions and beta B we
00:54:23
place all the value on beta B and the
00:54:24
reason is because historically the churn
00:54:27
rates in BC are too high yep 5 to 10%
00:54:30
churn rates are common 50% a year per
00:54:33
month per month 50% turn a year very
00:54:36
common open AI may not be experiencing
00:54:39
that yet but it's very hard to avoid the
00:54:43
downdraft of consumer churn and and you
00:54:46
know on the other hand on the B2B side a
00:54:49
good B2B business has expansion 120%
00:54:51
150% expansion year-over-year from same
00:54:54
customers in other words they're order
00:54:56
more so you would compare this business
00:54:58
to Amazon web services Google Cloud
00:55:01
Azure that's really the business you're
00:55:03
yeah the first thing I'd want to know is
00:55:05
how much of the 3.4 billion is consumer
00:55:07
and how much of it is is developers
00:55:09
we'll find out eventually chamath your
00:55:11
thoughts on open AI surging Revenue I'm
00:55:14
kind of in David's Camp which is I think
00:55:15
to the extent that
00:55:17
the business has a large terminal value
00:55:21
it's going to be because of the
00:55:23
Enterprise cash flows the thing to keep
00:55:25
in mind is
00:55:27
that I still haven't
00:55:29
seen Enterprises
00:55:32
building production level products using
00:55:35
AI it's all experimentation right it's
00:55:38
all experiments now yeah that's nothing
00:55:39
against open AI it's just a commentary
00:55:42
on the fact that we are at a very very
00:55:45
early part of the cycle where when you
00:55:48
use this term blast radius right what
00:55:51
are you referring to you're referring to
00:55:53
this idea that you're stringing together
00:55:56
elements of a model or multiple models
00:55:58
that each have some non-trivial error
00:56:01
rate and by multiplying all these error
00:56:03
rates together you get your final
00:56:05
product but the unfortunate reality in
00:56:08
most AI workloads is that you end up
00:56:11
with something that's not very good and
00:56:14
that's not the fault of open AI nor is
00:56:16
it the fault of llama it's just the
00:56:17
nature of how these bottles work and the
00:56:19
fact that you know you've gone from
00:56:21
something very you know deterministic to
00:56:23
something that's very probabilistic and
00:56:26
we have not found a way to create
00:56:28
extremely high quality experiences we as
00:56:31
an
00:56:32
industry that make this cost justifiable
00:56:35
so right now as you said Jason most of
00:56:37
that is toy apps and a lot of
00:56:40
experimentation will we get there I
00:56:42
absolutely think so but we're not there
00:56:44
yet so I suspect that most of the
00:56:47
revenue
00:56:49
then is on the consumer side right now
00:56:51
actually and so I just looked at Google
00:56:53
Trends and I first looked at the United
00:56:54
States and I just wanted to understand
00:56:56
and how is the traction and what's
00:56:58
interesting is is
00:56:59
that the traffic in the United States is
00:57:02
down about 25
00:57:05
26% since the end of the school year
00:57:08
which I think reinforces this belief
00:57:10
that chat GPT has definitely over
00:57:13
indexed in that young people's cohort
00:57:15
where they rely on it to write essays or
00:57:18
what have you but then I looked outside
00:57:20
the United States and worldwide and
00:57:22
what's interesting about that is that's
00:57:23
actually still growing up into to the
00:57:25
right so I think you have then an arpo
00:57:28
problem which is the same thing that we
00:57:30
had to deal with at Facebook which is we
00:57:32
have these extremely valuable users in
00:57:34
America they ASM toote at some point and
00:57:36
then we have to grow in other markets
00:57:38
but those markets aren't nearly as
00:57:40
lucrative right the they just average
00:57:43
revenue per user rpu per year is single
00:57:46
digits maybe it hits double digits as
00:57:48
opposed United States where it could be
00:57:50
triple digits right so then I I don't
00:57:51
know I would just wrap up by saying that
00:57:53
I think that it's just if this number is
00:57:55
right it's just an incredible Testament
00:57:57
to what they've been able to uncover and
00:58:01
create in a short amount of time that is
00:58:04
legendary stuff yep but what I can tell
00:58:07
you in working with Enterprises around
00:58:10
these AI experiences through 8090 we
00:58:13
have not yet
00:58:15
seen production quality models being
00:58:19
deployed in the
00:58:21
wild that are dealing with very very
00:58:24
important
00:58:26
business processes which means that most
00:58:28
of the revenue right now is probably
00:58:30
consumer oriented okay freeberg you I
00:58:32
don't know if you got to see Sunny's
00:58:33
talk at liquidity last week but he
00:58:35
talked about how many of the cios CEOs
00:58:38
are looking for open- Source Solutions
00:58:40
here 80% of them want to go open source
00:58:43
they don't want a proprietary model uh
00:58:45
to invest in but the best model right
00:58:47
now is a proprietary model so what do
00:58:50
you think about open ai's Revenue surge
00:58:53
is it sustainable or are there 20
00:58:56
better open source projects that are
00:58:58
going to be death by 20 open source
00:59:00
project
00:59:01
cuts and chat's general feeling here
00:59:04
that hey it's not ready for prime time
00:59:06
yet it will be but we're in the AI
00:59:08
dialup era to use an analogy here hey
00:59:11
you can see the promise but it kind of
00:59:12
sucks in terms of reliability maybe open
00:59:15
AI is AOL right like I think that
00:59:18
there's going to be a Google that'll
00:59:19
show up that'll maybe it's Google
00:59:22
that'll grab a large part of the the
00:59:23
value here or
00:59:26
you know ultimately the cost comes down
00:59:29
so much with the open source tools I do
00:59:32
believe that these open source tools are
00:59:33
incredible I mean the the open source
00:59:35
llama
00:59:36
instances are like they get you 85 to
00:59:39
90% of what you're looking for so if
00:59:40
you're an Enterprise user why would you
00:59:43
pay thousands of dollars for the open AI
00:59:45
platform when you can use llama and you
00:59:47
can tune it and you can build your own
00:59:49
front end to it your own integration
00:59:50
with your own data etc etc it's just
00:59:53
early days for Enterprises figuring out
00:59:55
how to do that but I do really believe
00:59:58
that the future is Enterprises companies
01:00:02
building their own llm driven tools for
01:00:06
both internal and external products that
01:00:09
leverage smaller open- Source models and
01:00:13
that we're kind kind of in this you know
01:00:15
dir of people's understanding and
01:00:17
ability on how to actually execute
01:00:18
against that which makes the default to
01:00:20
be go to the chat GPT interface I will
01:00:23
also provide a counter I just did a
01:00:26
project at work this week we had a like
01:00:27
a big offsite we had 20 people involved
01:00:30
and everyone used chat GPT to get ready
01:00:31
for it so there was a ton of analysis a
01:00:34
ton of data Gathering a ton of reporting
01:00:36
needed for the offsite and rather than
01:00:39
hire a third party or have people go out
01:00:41
and Source data themselves a lot of us
01:00:44
including myself I I prepared like maybe
01:00:45
a quarter of the material just used chat
01:00:48
GPT and pulled the sources to make sure
01:00:50
it was all kind did you did you oh you
01:00:51
did pull sources and check facts right
01:00:53
you do have to do so we pulled the and
01:00:54
there was a lot of wrong stuff just
01:00:56
clear but for our to ballark percentage
01:00:59
I would say 25% of it was like wrong and
01:01:01
then you had to clarify but the truth is
01:01:03
for this particular application it
01:01:05
didn't matter we were making some
01:01:07
approximations on markets and sizes and
01:01:09
and various facts that we were kind of
01:01:11
using to do some strategy stuff but and
01:01:14
some product development stuff so I
01:01:15
would say like found it useful you found
01:01:17
it 100% And I would say it saved us
01:01:19
hundreds of hours hundreds of hours you
01:01:22
paying them an Enterprise license or a
01:01:24
consumer license 20 bucks bucks a month
01:01:26
what is that it's the same thing for the
01:01:28
Enterprise jamaath you can just sign up
01:01:31
and for 20 bucks a month you can have
01:01:33
your whole like did freeberg yeah no
01:01:35
freeberg like you're just paying it
01:01:37
yourself or you pay for everybody at
01:01:38
ohal I think everyone has the right to
01:01:40
pay for I think other people at the
01:01:41
company pay for it too I pay like I I
01:01:43
have my I don't have like a corporate
01:01:45
thing set up so everyone B we took the
01:01:48
time to set up the corporate it's really
01:01:49
easy and then anybody with your domain
01:01:50
can sign up and let you track it but it
01:01:52
doesn't consolidate that's what I'm
01:01:54
looking for trat is the ability to
01:01:56
consolidate all the searches in one
01:01:58
place and everybody can share their
01:01:59
searches but like I said the application
01:02:01
is doing right in some way Sachs yeah
01:02:03
collaborative AI it's an application
01:02:05
today meaning like we go to the app we
01:02:07
ask questions we get answers and we use
01:02:09
that and I actually had it Pull tables
01:02:11
down and I Dro those tables in like all
01:02:13
sorts of great stuff it could do you
01:02:15
know do some analysis pull out the Stu
01:02:17
what the analysis showed understanding
01:02:19
unit economics on various businesses all
01:02:21
this sort of stuff that it
01:02:23
Consolidated definitely makes everybody
01:02:25
bionic I but what it's what it doesn't
01:02:27
do yet is take all of our internal data
01:02:29
and all of our internal tooling and kind
01:02:32
of reconfigure how we use that so we're
01:02:34
still paying for a whole bunch of
01:02:36
enterprise software and SAS licenses for
01:02:39
things that we know we don't want to be
01:02:41
paying for in the future and we're now
01:02:42
starting to figure out how can we build
01:02:44
our own AI based software to replace a
01:02:47
lot of the dependency we have on third
01:02:49
party software that uses our internal
01:02:50
data for our internal consumption so
01:02:53
there's a lot of that still ahead of us
01:02:55
and that's why I and we're pretty
01:02:56
Progressive so that's why I know it's
01:02:58
early Innings because I see the way
01:03:00
we're going to use it and I know that
01:03:01
we're probably well ahead of a big
01:03:03
Enterprise companies that are more
01:03:04
traditional and so I can see like a
01:03:06
couple years from now all these big
01:03:08
Enterprises are going to figure the same
01:03:09
thing out and then you're not
01:03:11
necessarily going to need to pay for
01:03:13
this chat GPT stuff if there's an
01:03:16
internal tool and an internal LM that
01:03:18
you can run young people are really
01:03:20
getting dependent on this and they use
01:03:22
it constantly we were on our investment
01:03:24
team meeting we were valuating a company
01:03:26
for real estate brokers we're evaluating
01:03:28
a company for therapists and like tools
01:03:31
and SAS products for those type of
01:03:32
people and when I asked them well how
01:03:34
many What's the total addressable Market
01:03:36
boom three or four researchers and
01:03:38
analysts on my team are doing that
01:03:39
search finding sources and saying there
01:03:41
are this many therapists this many
01:03:43
social workers this many real estate
01:03:44
brokers this many B and then I'm saying
01:03:46
well did you source that they like yeah
01:03:48
of course I asked and like one of them
01:03:50
was like well I asked Claude I asked
01:03:51
Gemini I asked chat gbt I asked them all
01:03:54
for sources I cross reference so they
01:03:56
like have three of these things open and
01:03:58
so just everybody's knowledge level goes
01:04:00
up but you do have to check it because
01:04:02
one out of four facts is probably wrong
01:04:04
or cited wrong and so it's going to be I
01:04:07
think one out of four is about the right
01:04:08
number yeah it's about one out that's
01:04:10
interesting so you use multiple LMS to
01:04:13
find the hallucinations yeah basically
01:04:15
you cross reference them that's actually
01:04:16
pretty interesting I jump on Gemini too
01:04:18
so I use Gemini Google and I use chat
01:04:21
GPT and I just make sure that stuff
01:04:23
lines up just sanity check things
01:04:25
because I'm
01:04:26
of these right how many would you be
01:04:27
willing to pay
01:04:28
for pay for five you'd pay pay for five
01:04:32
different llms well think about it if
01:04:33
somebody's salary is a $100,000 and
01:04:35
these cost $1,000 to have five of them
01:04:37
of course i' pay for five 1% of their
01:04:40
Sal okay so as a work tool you know I
01:04:42
guess there's three categories to their
01:04:43
business now that you're raising this
01:04:45
there's sort of the consumer
01:04:47
subscriptions y then there's the
01:04:49
business subscriptions which are
01:04:50
basically the consumer product but a
01:04:51
company's paying for it corre and then
01:04:53
there's the developers paying for meter
01:04:57
yeah yeah this that that Enterprise is
01:04:59
really powerful yeah it's kind of like
01:05:01
Microsoft Office or Google Docs where
01:05:04
consumers use them for for free or want
01:05:06
to use them for free and then companies
01:05:08
will pay for it and that's where the
01:05:09
real money is anyway this is going to
01:05:12
make people bionic I think all
01:05:14
organizations will have the same number
01:05:15
of people for the next couple of years
01:05:17
and then just individuals will get
01:05:19
better and better at their jobs and so
01:05:21
efficiency is going to go way up
01:05:22
speaking of efficiency the market is
01:05:25
ripping we're going to get a little
01:05:27
macro here in 3A inflation has uh been
01:05:31
broken I I think it's safe to say we're
01:05:33
are down at 3.x 3.3 lower than expected
01:05:38
and hiring and wages are surging and
01:05:41
stocks are surging so let's go through
01:05:43
it here and get the besti take on the
01:05:46
vibe session I actually disagree with
01:05:48
that framing Jason yeah I agree I
01:05:50
disagree as well disagree with it let me
01:05:51
go through the numbers and then you can
01:05:52
all disagree that's how that's how this
01:05:54
works folks inflation print came in at
01:05:56
3.3% lower than expected here's your
01:05:59
10-year chart super easy to explain
01:06:00
what's Happening Here rates were low for
01:06:02
a long time inflation cruising at about
01:06:04
2% and then lunatic spending during
01:06:07
covid and we added a trillion to the
01:06:10
national debt and then Biden added a
01:06:12
bunch everybody getting those stemy
01:06:13
checks and PPP loans and so if you look
01:06:15
at inflation here we were just cruising
01:06:17
along at 2% massive Spike up to 9%
01:06:20
year-over-year inflation and now coming
01:06:22
back down to
01:06:24
3.x and the question is can we get to a
01:06:27
two handle and the rates went up faster
01:06:30
than in ever in history here's the Fred
01:06:32
chart you can see there in and this goes
01:06:35
from the 80s so you see that massive um
01:06:38
Spike when they tried to break the back
01:06:40
of inflation previously so this is the
01:06:42
fastest ever gone up and here we go the
01:06:46
common sentiment here is that savings
01:06:47
has been burned off and people are
01:06:49
starting to have debt and so now we are
01:06:51
in uh act two the lowest unemployment uh
01:06:55
rate of our lifetime continues if you
01:06:57
believe those numbers some people do
01:06:59
some people don't Labor Department
01:07:01
reported
01:07:02
272,000 new jobs in May smashing
01:07:06
crushing the
01:07:07
190,000 estimate uh and then act three
01:07:12
average hourly wages up a massive 4%
01:07:16
from last year at $35 an hour that also
01:07:18
topped estimates so if inflation is at
01:07:21
3.x and hourly earnings are at 4.x maybe
01:07:24
consumers will start feeling better
01:07:25
about the economy eventually they
01:07:27
obviously uh have been pretty shocked by
01:07:29
that 9% inflation and only 4% growth
01:07:32
here's your chart from Fred of the
01:07:34
hourly earnings of all employees and you
01:07:38
can feel pretty good about that where
01:07:39
everybody's wages keep going up the
01:07:41
question is do they go up faster than
01:07:43
inflation okay so there's my framing of
01:07:45
the situation freeberg tell me what I
01:07:47
got right tell me what I got wrong I
01:07:49
think there are three numbers that
01:07:50
matter the inflation rate the growth in
01:07:53
GDP and the cost to
01:07:56
the growth in GDP in the first quarter
01:07:59
of
01:07:59
2024 was a lousy
01:08:03
1.3% on an annualized basis and even if
01:08:07
the rate of inflation came down we are
01:08:09
still inflating the cost of everything
01:08:12
by north of 3% so the economy is only
01:08:15
growing by
01:08:16
1.3% and it costs more than 3% more each
01:08:20
year to buy stuff so that means
01:08:22
everyone's spending power is reducing
01:08:24
and our ability and our government's
01:08:26
ability to tax is declining because the
01:08:29
economy is only growing by 1.3% and the
01:08:31
most important fact is that the interest
01:08:33
rates are still between four and 5% four
01:08:37
4.7% that means that to borrow money
01:08:40
cost
01:08:41
4.7% but the businesses the economy on
01:08:44
average is only growing
01:08:45
1.3% so just think about that for a
01:08:47
second we have a tremendous amount of
01:08:49
Leverage on businesses on the economy on
01:08:53
on the the federal government that that
01:08:55
leverage the cost to pay for that debt
01:08:58
is more than four to five four to 5% but
01:09:01
you're only growing your Revenue by
01:09:03
1.3% so at some point you cannot make
01:09:06
your payments and the rate and the
01:09:08
goal that is true for consumers that is
01:09:11
true for Enterprises and it is true for
01:09:14
the federal government just to point out
01:09:15
here what you're saying the goal was to
01:09:17
in fact increase the interest rate to to
01:09:21
cool the economy right which they got
01:09:22
too late but that was the goal that was
01:09:24
the explicit goal to cool the economy
01:09:26
yeah the whole purpose of raising rates
01:09:27
is to slow the flow of money through the
01:09:30
economy and by slowing the flow of money
01:09:32
through the economy there is less
01:09:33
spending which means that there is
01:09:35
you're reducing the demand relative to
01:09:37
the supply so the cost of things should
01:09:39
come down you should reduce the rate of
01:09:41
the increase in the cost of things now
01:09:43
if you click on this link Nick that I
01:09:45
just sent you in response to the
01:09:48
condition in the economy today Elizabeth
01:09:50
Warren sent this note to Jerome pal
01:09:53
three days ago saying dear Mr pal or
01:09:56
dear chair pal we write today to urge
01:09:58
the Federal Reserve to cut the federal
01:10:00
funds rate from its current two decade
01:10:02
high of
01:10:04
5.5% the sustained period of high
01:10:06
interest rates is already slowing the
01:10:07
economy and is failing to address the
01:10:10
remaining key drivers of inflation she
01:10:13
goes on to point out the fact that
01:10:15
consumers are suffering businesses are
01:10:17
suffering and the strain of these three
01:10:19
numbers is really starting to show on
01:10:22
individuals on businesses and obviously
01:10:24
on the power of the dollar both the
01:10:25
dollar is a different story because of
01:10:27
the condition of the the economy and the
01:10:28
rest of the world and we're in a very
01:10:30
unique position but I think that things
01:10:32
are not as rosy now there's a certainly
01:10:35
a shift in the market because what this
01:10:36
tells us is that the timeline at which
01:10:38
the FED will cut rates is coming in a
01:10:39
little bit relatively speaking and so
01:10:42
the market is saying okay let's adjust
01:10:43
to lower rates the 10year treasury yield
01:10:45
has come down a bit but we are still in
01:10:47
a difficult situation for people and for
01:10:50
the uh for businesses and you have
01:10:52
Elizabeth Warren who I think is the
01:10:53
voice of small business and consumers
01:10:56
she's she she's trying to be the voice
01:10:58
of
01:11:00
those very hard on people chamath what's
01:11:04
your take on this we have a slowing uh
01:11:05
GDP growth we have inflation going from
01:11:09
nine down to three we
01:11:12
have wages going up 4 per. how do you
01:11:15
make sense of all this do you feel like
01:11:17
sorry freeberg are you saying we're
01:11:18
gonna have stagflation or we have
01:11:21
stagflation right now definitely but I
01:11:24
uh what I'm saying is that it's not a
01:11:26
Rosy picture just because labor rates
01:11:29
are going up if the labor rates aren't
01:11:31
going up you can see this ultimately the
01:11:34
best number for this is the sum of GDP
01:11:35
growth so in aggregate if the revenue of
01:11:37
everything combined which is GDP isn't
01:11:40
going up faster than the increase in the
01:11:42
cost of everything people businesses and
01:11:44
the government can't afford their stuff
01:11:46
and that's fundamentally what's going on
01:11:48
right now what we need to see is a
01:11:49
normalization where GDP growth is
01:11:52
greater than inflation rate and as soon
01:11:54
as that happens then we have a more
01:11:57
normalized and stable economy so right
01:11:59
now things are not stable there's a lot
01:12:01
of difficulty and strain in the system I
01:12:04
will put myself on the other side of
01:12:07
that trade if if there was one if I had
01:12:09
to simplify the United States economy
01:12:12
remember GDP is 70% spending by
01:12:17
individual
01:12:19
people and so people can spend two
01:12:22
things savings that they have or credit
01:12:25
that they
01:12:26
have and what's interesting is that we
01:12:29
have finally burned through and this is
01:12:32
what this picture shows all of the money
01:12:35
that folks had in their bank
01:12:38
accounts and so what does that force
01:12:40
people to do it actually forces people
01:12:43
to re-enter the workforce so that they
01:12:45
can start to make money but the problem
01:12:48
is that companies have been shrinking
01:12:52
and have been on a defensive posture and
01:12:55
so as a result which you started to see
01:12:57
this past unemployment report
01:12:59
unemployment is now ticking up because
01:13:01
when these people re-enter the workforce
01:13:03
there are no jobs for them to have
01:13:04
people are filing incremental
01:13:06
unemployment insurance claims States
01:13:09
like California in fact the state of
01:13:11
California was the worst off this past
01:13:13
month so I think what we're starting to
01:13:15
see is that for the large portion of the
01:13:19
economy we've run out of cash to spend
01:13:23
and as a result I do think that we we
01:13:25
are going to see an economic
01:13:27
slowing and I think that that will
01:13:30
create not just enormous empirical
01:13:34
justification for Jerome Powell it'll be
01:13:36
exacerbated by what freedb just showed
01:13:39
which is the political pressure that
01:13:41
he's going to be under to cut will it
01:13:44
cause him to cut more aggressively than
01:13:46
he would have
01:13:47
otherwise on the margins I actually
01:13:49
think
01:13:50
yes but my perspective is that I think
01:13:53
that we've run out of money individual
01:13:55
people so I think unemployment is going
01:13:57
back up I think GDP is going to shrink
01:14:00
yeah and so I kind of tend to be in this
01:14:02
camp that we're going to see more than
01:14:04
one rate cut so here is total job
01:14:06
openings to your point shth they're
01:14:08
getting burned off we peaked at 12
01:14:09
million again if you believe the numbers
01:14:11
or not they're they they obviously have
01:14:13
some value and we've burned off a ton of
01:14:16
those so saaks what's your non-political
01:14:19
nonpartisan take first principles of
01:14:22
what's going on with the economy well
01:14:23
look we just had this inflation report
01:14:25
CPI was 3.3% the market was expecting
01:14:28
3.4% so that's a teeny bit better than
01:14:30
expected but it's still persistently
01:14:33
sticky inflation is and furthermore
01:14:36
Pal's comments were very hawkish he
01:14:41
basically said he could not commit to
01:14:43
when rate Cuts might begin and we're
01:14:47
already remember at the beginning of the
01:14:48
year we entered the year with
01:14:49
expectations for seven rate Cuts this
01:14:51
year now we're down to an expectation of
01:14:54
one rate cut and we can't say for sure
01:14:57
when that's going to happen so honestly
01:14:59
I think your introduction
01:15:01
overstated how positive this news was
01:15:04
and that's why I think if you look at
01:15:05
the markets right now it's very mixed
01:15:08
most tech stocks that I'm seeing are
01:15:10
actually in the red and a few of them
01:15:12
like Tesla and apple and Nvidia are up
01:15:15
but the vast majority are in the red so
01:15:16
I think the market is taking this in
01:15:19
stride I think the big picture here is
01:15:21
just we don't know when Ray cuts are
01:15:22
going to begin and I think that Vinnie
01:15:25
lingam had a a really interesting take
01:15:26
on this actually where he he said look
01:15:30
could pal cut by a quarter point would
01:15:31
that matter that much no it wouldn't
01:15:33
matter that much but the point is Pal
01:15:35
doesn't want to say that the rate height
01:15:39
cycle is over right if he were to cut by
01:15:41
a quarter point that by itself wouldn't
01:15:43
do much but it would be a huge statement
01:15:45
that we're out of the woods on inflation
01:15:47
there's not going to be any more hikes
01:15:49
coming and we're beginning a new rate
01:15:51
cut cycle and pal is clearly unwilling
01:15:53
to say that we're still in this like
01:15:55
limbo where he is saying that we don't
01:15:57
know when rate cuts are going to begin
01:15:59
betting markets had two a 70% chance of
01:16:01
two rate Cuts before pal spoke
01:16:03
afterwards now it's one rate cut Dow
01:16:06
record high
01:16:08
again this past week and NASDAQ record
01:16:11
highs each of the last like month for
01:16:14
the last four months so the market
01:16:16
putting aside individual stocks has
01:16:18
broken records almost every month for
01:16:20
the last three free on on the back of
01:16:23
like two stocks I mean Nvidia
01:16:25
is holding up the whole Market there's a
01:16:26
lot of funny memes about this Nvidia
01:16:30
Microsoft thei stocks have have are
01:16:33
holding up the whole Market correct yes
01:16:35
record stock market what does Jerome pal
01:16:38
have to gain or lose by bowing to
01:16:41
political pressure so a lot of folks
01:16:43
mention and reference his kind of
01:16:45
there's political pressure for him to do
01:16:47
something but why would he bow what does
01:16:50
he care what what do you think the
01:16:52
motivation is for pal
01:16:55
individually and what is the political
01:16:57
process that will ensue he doesn't bow
01:17:00
to political pressure I think it's the
01:17:02
Legacy and the perception that he leaves
01:17:04
behind I think had he not over promised
01:17:07
and underd delivered at the end of last
01:17:09
year remember he was promising as sack
01:17:11
said six or seven rate cuts and he's
01:17:13
delivered bubus and the markets were
01:17:16
none too pleased and so now I think he's
01:17:19
just swung the pendulum to the other
01:17:20
side which is he's going to massively
01:17:22
under promise and then overd deliver if
01:17:24
he can and so as a result I think he's
01:17:27
being much more measured and guarded I
01:17:29
don't think he wants to be wrong here so
01:17:31
I think he's thinking about what most
01:17:33
folks think about when they're at the
01:17:34
tail end of their of a job like this
01:17:36
he's not going to get reappointed he's
01:17:38
going to go off into the sunset it's
01:17:40
roughly about how history will write how
01:17:42
he handled the transition from that to
01:17:44
the next phase whatever that is so I
01:17:45
think he's probably very interested in
01:17:47
making sure he doesn't break the economy
01:17:49
and also that he doesn't seem like he's
01:17:51
constantly waffling and unpredictable
01:17:53
but isn't he just an autonomous agent
01:17:55
that is meant to respond to the data I
01:17:56
gu I'm not quite understanding the
01:17:58
degree of judgment and discretion that
01:18:02
everys they have a mandate but if you're
01:18:04
asking what his incentives are I agree I
01:18:07
think his main incentive at this point
01:18:09
is concerned for his historical Legacy
01:18:11
and specifically he wants to be thought
01:18:13
of like vulker not like Arthur Burns in
01:18:16
the 70s vulker basically crushed
01:18:19
inflation even at the cost of a
01:18:21
recession and he is worshiped today as
01:18:23
the best Fed chair ever whereas Burns
01:18:26
let inflation slip the leash in the
01:18:28
1970s and he's not thought of very
01:18:30
highly so I think that Pal's main
01:18:33
concern here is with his historical
01:18:34
Legacy at this point I don't think he's
01:18:35
expecting to be reappointed he's
01:18:37
wrapping up uh his second term already
01:18:40
now I think if you go back to 2021 the
01:18:43
incentives were a little bit different
01:18:44
pal wanted to be reappointed by Biden
01:18:47
and remember that in the summer of 2021
01:18:49
that's when the inflation began we had
01:18:51
that surprise 5.1% inflation print pal
01:18:55
was up for renomination and Confirmation
01:18:57
in November of 2021 and I think what
01:19:00
happened back in in that year is the
01:19:03
administration downplayed the inflation
01:19:04
report they called it transitory Yellen
01:19:07
did Biden did and so pal had to get on
01:19:10
board with that message if he wanted to
01:19:12
get confirmed by the Democrats and he
01:19:13
did get on board that message he
01:19:15
repeated the whole transitory point and
01:19:17
for that reason they didn't begin the
01:19:18
raik cycle until March of the following
01:19:20
year and from that may inflation print
01:19:23
to November they kept doing QE even
01:19:26
though we had inflation back in the
01:19:28
system so I think I think that pal was
01:19:30
actually intensely political in 2021 he
01:19:34
knew who was going to reappoint him and
01:19:37
who was going to have to confirm him and
01:19:38
he got on board that message and that's
01:19:40
why they were so slow to react to the
01:19:42
inflation and I think it was disastrous
01:19:44
and that's one of the reasons why the
01:19:45
rate tightening cycle was so steep is
01:19:47
because he had to catch up with all this
01:19:50
inflation that he had allowed for N9
01:19:52
months longer than he should have but if
01:19:54
you ask me what's his incentive now I
01:19:55
think it's purely about Legacy and he
01:19:58
does not want to let inflation come back
01:20:02
after cutting rates a little too soon so
01:20:05
his incentive I think at this point is
01:20:07
to to make sure that he's not wrong
01:20:09
again about inflation and to remind
01:20:12
everybody maximum employment stable
01:20:14
prices moderate long-term interest rates
01:20:16
is the Mandate for the Federal Reserve
01:20:19
they're supposed to be
01:20:20
independent famously rean push vulker to
01:20:25
get R cuts and there is a lot of
01:20:27
politics involved in this and so Legacy
01:20:30
does seem
01:20:32
like the organizing principle here I
01:20:34
would agree with chamath and Sachs that
01:20:37
it's Legacy but there's always political
01:20:39
pressure here as you can see Elizabeth
01:20:41
Warren is trying to push him to make
01:20:43
cuts for obvious reasons yeah well no
01:20:45
there there's politics when they're up
01:20:47
for appointment or for reappointment for
01:20:51
confirmation basically because they want
01:20:54
to get get that vote Yes but but there's
01:20:57
also subtle pressure and then there's
01:20:58
letter writing like Elizabeth Warren's
01:21:00
doing here right so the pressure can be
01:21:01
there the question is do they bow to it
01:21:04
right sex yeah they don't have to I mean
01:21:05
the fed's independent what do they stand
01:21:07
to gain or lose by the pressure is my
01:21:09
question and I'm not sure I really like
01:21:11
this Con exactly and I think that's
01:21:13
really where there's a important point
01:21:15
to note here that you can identify the
01:21:18
guy's motivation and how he's going to
01:21:19
operate this year because there are
01:21:21
there is no political pressure there was
01:21:23
in 2021 and I think that's why he was
01:21:25
slow to react yeah right listen if pal
01:21:28
can stick The Landing here then his
01:21:31
legacy comes out intact but if he screws
01:21:34
this up and then he was slow to react to
01:21:36
the inflation back in 2021 and 2022 his
01:21:40
legacy's going to be mud so I think he's
01:21:43
going to be more concerned about airing
01:21:46
on the side of tamping down inflation
01:21:48
than airing on the side of the economy
01:21:51
not doing as well I think those are the
01:21:55
my position is I think he he might have
01:21:56
already stuck The Landing I think like
01:21:59
the fact that we've burned off all that
01:22:00
savings to your point shth that people
01:22:02
are going back to work and that these
01:22:05
businesses are doing fantastic and
01:22:07
efficient because of AI and other gains
01:22:09
it feels like people are I think he's
01:22:14
stocks that are no no yeah they're
01:22:16
they're trying to go back to work jobs
01:22:18
don't
01:22:19
exist I think they're going to take jobs
01:22:21
they just might get the job they want
01:22:23
and that's what I think people have to
01:22:24
recognize this they have to take a job
01:22:28
and they may not be the one that they
01:22:29
want working from home we could have a a
01:22:32
negative recessionary print going into
01:22:34
the election cycle I think that's very
01:22:35
possible yeah exactly I don't know Jason
01:22:39
look I I'm I'm hearing a lot of happy
01:22:40
talk right now and I agree with you had
01:22:44
you had 1.3% GDP growth rate with a 6%
01:22:47
of GDP deficit by the government if the
01:22:50
government wasn't printing so much money
01:22:52
wasn't overspending that's right were to
01:22:54
have a balanced budget it would be a
01:22:56
recession yeah think about that to
01:22:59
subtract Nega it would be negative GDP
01:23:01
growth if not for the government's
01:23:03
program stimulating the economy and a
01:23:05
lot of the jobs you're talking about are
01:23:08
government jobs the government is
01:23:09
creating jobs like crazy not in the
01:23:11
private sector but in the public sector
01:23:13
because it is an election year so
01:23:15
there's a lot of political forces proing
01:23:18
things up and I wonder what happens
01:23:20
after the election we'll find out all
01:23:23
right everybody this has been another
01:23:26
amazing episode of the Allin podcast
01:23:29
Just One Last Thing guys this is really
01:23:31
important so friend of the P Peter
01:23:33
Fenton who's a famous VC in Silicon
01:23:35
Valley tweeted that his sister has been
01:23:38
diagnosed with the rare
01:23:40
saroma and they are searching for
01:23:42
lookalike cases to do a study at Dana
01:23:46
Farber and if this works it will change
01:23:49
the future of cancer but they are
01:23:52
seeking this um researcher William
01:23:53
Gibson who's retweeting is seeking
01:23:55
patients with my oxoid Lio myosarcoma
01:23:59
featuring a plag1
01:24:02
fusion so if you are somebody out there
01:24:06
who has a case like this then please
01:24:09
reach out and let us know or let Peter
01:24:11
Fenton know this could save a life or
01:24:15
many lives his sister is also the the
01:24:18
wife of a good friend of ours Pete
01:24:20
brigger so our thoughts are definitely
01:24:22
with you and if there's any out there
01:24:25
who has this type of ver saroma please
01:24:28
let us know and we can refer you to Dana
01:24:31
Farber and this is a very important
01:24:33
study that may save some lives Pete and
01:24:37
Peter are great guys and our thoughts
01:24:38
with Devin and hope you guys find a cure
01:24:40
okay best wishes to Peter and his sister
01:24:43
help out if you can and you're in our
01:24:45
thoughts and our prayers
