00:00:00
oh no gosh I'm having some technical
00:00:02
difficulties freeberg there's something
00:00:04
happening oh you got a bit oh something
00:00:06
breaking in what's happening oh no my
00:00:09
camera is not working but I sense
00:00:11
something is happening guys it's like a
00:00:13
transformation I'm going through you're
00:00:15
not going to believe it yes it is I nois
00:00:19
I'm here I'm here nois has
00:00:23
arrived I have predicted the hot swap
00:00:26
Sachs can I get my flowers now from you
00:00:29
saxs you you need to bring yeah I give
00:00:31
you I absolutely give you credit for
00:00:32
that you also predicted a speedrun
00:00:34
primary which is the opposite of what
00:00:35
happened okay so one out of two is not
00:00:38
bad though no Stanis did not account for
00:00:41
the Democratic party being run by the
00:00:45
Deep State H but I'm having a vision
00:00:49
producer Nick there's a vision for you
00:00:53
coming in to
00:00:55
view yes your uncle has been bought out
00:00:59
of the o podcast is going for Maga and
00:01:02
he he got the $25 million buyout deal
00:01:06
and he gave you 20% we're leaving we're
00:01:09
going to start a new podcast and Jared
00:01:11
Kushner is the new moderator here oh no
00:01:14
wait it's JD no it's Alex Jones starting
00:01:17
next week Alex Jones the new host oh
00:01:21
wait I'm going
00:01:27
away let your winners ride
00:01:31
Rainman
00:01:34
David and instead we open source it to
00:01:37
the fans and they've just gone
00:01:39
[Music]
00:01:42
crazy all right let's get started here
00:01:44
we've got a full docket we've got Civil
00:01:47
Wars everything is going down in all in
00:01:51
land it is episode 189 you're not done
00:01:54
with us yet folks the world's number one
00:01:56
podcast is still publishing the world is
00:01:59
still spinning hey did you announce that
00:02:02
you're you've moved to Texas I did I did
00:02:04
I I did a little tweet I uh we moved to
00:02:07
Austin a little earlier this year we
00:02:09
have a horse ranch and um you know we've
00:02:12
always wanted to move to Austin we
00:02:13
looked during the pandemic thanks for
00:02:14
asking jamath and we wanted to have a
00:02:17
ranch and horses and live a more
00:02:19
homesteading lifestyle and obviously a
00:02:21
lot of our friends are in Austin so I'll
00:02:24
still be spending a lot of time in the
00:02:25
valley in New York like I always do in
00:02:27
Miami but the home base and the girls
00:02:30
are going to school and in Austin how is
00:02:34
it going so far it's super hot you know
00:02:36
isn't it in the summer the summers are
00:02:37
hot but most people DeCamp so we'll
00:02:40
DeCamp for Tahoe or Park City or
00:02:42
something during the summer months and
00:02:44
the winter months uh to go skiing in get
00:02:46
a little Lake time or whatever and uh
00:02:48
yeah we're really really excited we
00:02:51
found an incredible horse farm and we're
00:02:53
going to raise animals and horses and
00:02:55
just enjoy these last years with the
00:02:57
girls while um you know some big
00:03:00
announcements coming in terms of my
00:03:02
accelerator and my investing in startups
00:03:05
in Austin so I'll I'll save those
00:03:07
announcements for maybe the fourth
00:03:08
quarter some big announcements will
00:03:10
happen and um yeah I'm just super
00:03:12
excited obviously I'm going to miss you
00:03:14
know the weekly poker game but I will be
00:03:16
back uh on the regular and uh we'll just
00:03:19
do a double session play Friday
00:03:20
Saturdays we'll do you got to get this
00:03:23
for two days in a row we'll just do a
00:03:24
full Friday session everybody take up
00:03:26
Fridays I'm sad to see you go the one
00:03:29
thing I'm saying about is like missing
00:03:31
the Thursday game but I'll be back
00:03:33
regular don't forget science Corner
00:03:34
today we got a great science Corner
00:03:36
lined up absolutely ABS is looking
00:03:38
forward to it SX has been texting me all
00:03:40
week about it he's like I can't wait for
00:03:41
science corner I'm thrilled he was
00:03:43
shaking nervously he's
00:03:46
ready sax does not look amused all right
00:03:50
let's get started whiz has declined
00:03:52
Google's 223 billion offer and it
00:03:54
intends to IPO some big news there last
00:03:58
week we talked about Google offering to
00:04:00
acquire this Cloud security startup for
00:04:02
23 billion CNBC reported whiz decline
00:04:04
Google's offer wow that's big time
00:04:07
because whiz was valued at 12 billion in
00:04:09
its most recent funding round they've
00:04:11
got about 500 million in ARR uh so this
00:04:14
$23 billion is a massive massive 50
00:04:19
times current Revenue 23 or so
00:04:22
times forward looking Revenue they think
00:04:24
they'll hit a a billion in AR this is a
00:04:26
company that was founded in
00:04:28
2020 and just so if you don't know what
00:04:30
they do they help people secure their
00:04:32
data in clouds like AWS Azure Google
00:04:34
Cloud all that good stuff but high
00:04:36
growth SAS businesses are trading at a
00:04:38
10x Ford Revenue multiple there's the
00:04:41
chart this is obviously an absurd
00:04:44
premium and two potential reasons that I
00:04:48
can think of and I'm curious your
00:04:49
positions gentlemen of why they would do
00:04:53
this I guess chth there's two reasons
00:04:56
one they think they can grow this
00:04:57
company at a high percentage maybe fill
00:04:59
in that premium Google was willing to
00:05:00
pay or maybe they're scared that they
00:05:03
can't get this deal
00:05:05
through you know Regulators what's your
00:05:07
take here and then we'll go talk about
00:05:09
the wider cloud and Google cloud and AWS
00:05:12
in a moment but what what's your initial
00:05:14
take here of why they would do this
00:05:16
tomor I actually wonder whether this
00:05:20
deal would have had more probability of
00:05:23
happening had the whole AT&T snowflake
00:05:27
leak not happened because I think that
00:05:30
when you have moments like
00:05:33
this there's a non-trivial possibility
00:05:37
that it supercharges sales even
00:05:40
more I think the reality is that if
00:05:43
you're a hyperscaler so if you're Amazon
00:05:45
or Google or
00:05:47
Microsoft your business is pretty
00:05:50
fragile and brittle if the services you
00:05:54
provide or the services that third
00:05:55
parties like snowflake provide through
00:05:57
you are not reliable and so I've never
00:06:00
heard of a business that has generated
00:06:02
so much ARR so quickly I mean from zero
00:06:04
to half a billion dollars in four or
00:06:07
five years I mean how do you even build
00:06:09
the product surface area quick enough to
00:06:12
capture that much revenue I think it
00:06:14
just goes to show you how bad security
00:06:17
is in the cloud and how needed it is so
00:06:20
it doesn't surprise me that
00:06:22
Google wouldn't buy something like this
00:06:25
I think Amazon and and Microsoft would
00:06:27
probably want something like it as well
00:06:29
I suspect that if you had to guess why
00:06:31
they said no is because they thought
00:06:33
that they could grow Revenue much faster
00:06:36
because of recent events as well as
00:06:39
their own just natural momentum and I
00:06:41
think that if if this thing had not
00:06:43
happened I wonder whether they wouldn't
00:06:45
have just sold all right sax I want to
00:06:47
get your take on this after showing you
00:06:48
a couple charts
00:06:50
here Google's Cloud Revenue growth has
00:06:53
been absolutely stunning here is a chart
00:06:57
they're going to hit gosh in the first
00:07:00
half they did almost 20 billion so
00:07:02
they're on a run rate of $40 billion
00:07:04
this year last year they did 33 back in
00:07:07
2017 he only did four and if you compare
00:07:09
this to Amazon's AWS again these are
00:07:11
cloud services people can buy compute in
00:07:14
the cloud AWS if you look at those first
00:07:17
seven years the all the crack all-in
00:07:19
research team put these side by side uh
00:07:22
Google is tracking almost identical in
00:07:26
Revenue to aws's interestingly meta and
00:07:29
and apple do not have a competitor here
00:07:31
you said on this podcast shth I think
00:07:33
last year that would be a pretty bold
00:07:35
move by Apple to have a cloud computing
00:07:38
platform since they have all the app
00:07:40
developers sax what what do you think of
00:07:43
this just tremendous run by Google Cloud
00:07:46
also known as gcp in the industry well
00:07:49
all the cloud service providers are
00:07:50
doing extremely well I mean cloud is
00:07:52
still the future of software and the
00:07:54
cloud service providers are still
00:07:55
growing really strongly on Whiz I think
00:07:58
the most likely explanation is that they
00:08:01
just want to keep building this a
00:08:02
standalone company I think they're
00:08:03
probably also worried that they can't
00:08:05
get the deal through the multiples that
00:08:06
we have right now are not that insane I
00:08:08
mean I think the long-term median
00:08:11
software multiple is around a seven so
00:08:14
you know you see here the mid growth
00:08:15
median 7.7 we're about tracking at the
00:08:19
Historical preco mean and we had that
00:08:23
really frothy bubbly period in 2020 and
00:08:27
2021 and that's clearly over now in
00:08:31
terms of how our friends at altimer
00:08:33
break this down I think that high growth
00:08:36
means a 30% or greater growth rate and
00:08:40
then I think the mid- tier is more like
00:08:43
what is it like 10 or 15% to 30% and
00:08:46
then the low growth is like you know
00:08:48
yeah under 10 yeah so my point is if
00:08:52
whiz is growing at 100% 100% I mean I
00:08:57
don't know if it's still growing at 100%
00:08:58
but I I mean I guess they're projecting
00:09:00
% yeah would be yeah they're they're
00:09:02
projecting a billion in AR next year up
00:09:05
from what is it roughly
00:09:09
500 like that offer may not be that
00:09:12
crazy again you know you're getting 10
00:09:14
times at a 30% average growth rate so
00:09:17
you know let's say they get to a billion
00:09:19
in AR next year and then they're
00:09:21
forecasting you know whatever it is the
00:09:23
the year after you know the 23 may be
00:09:26
reasonable so I can see why these guys
00:09:28
would just want to go for it if they
00:09:30
think they're building a big stand loone
00:09:31
company uh freeberg let's talk a little
00:09:34
since you were a googler at some point
00:09:37
um this gcp product maybe you could tell
00:09:39
us a little bit about uh and I know you
00:09:41
know some of the people running it um
00:09:44
how meaningful this is becoming to
00:09:45
Google or how much of a priority it is
00:09:48
uh YouTube obviously Android priorities
00:09:50
there at the company then you have like
00:09:51
the next year down Nest weo you know
00:09:55
some of those other projects but but how
00:09:56
important is gcp right now to Google
00:09:59
well gcp in the last quarter did 10.3
00:10:03
billion in Revenue which is up from
00:10:05
eight billion in Revenue the year before
00:10:07
in the same quarter of the year before
00:10:09
and importantly in this past quarter
00:10:10
they're running at a $1.2 billion
00:10:12
operating profit out of
00:10:14
gcp so you know if you kind of think
00:10:17
about what cloud margin should be over
00:10:19
time and kind of call it 20 to 30%
00:10:21
margin This Cloud business could be
00:10:24
generating 20 to30 billion a year of
00:10:26
free cash
00:10:27
flow now in the last year if you kind of
00:10:31
look at or even if you look at the last
00:10:33
quarter annualized Google's generating
00:10:34
currently about $60 billion a year in
00:10:37
free cash flow as an overall
00:10:38
organization alphabet is um and they
00:10:41
have over a hundred billion in cash so
00:10:44
you know what can I do to accelerate
00:10:47
This Cloud outcome given the risks the
00:10:50
challenges The Slowdown with respect to
00:10:52
the core consumer business cloud and AI
00:10:56
based tools really is where it's at and
00:10:59
so Google's asking this important
00:11:01
strategic question I would imagine what
00:11:03
can we do to accelerate outcomes in the
00:11:05
cloud and what can we do that is going
00:11:08
to be big enough to matter and what can
00:11:11
we do that is going to past antitrust
00:11:14
muster so we can actually get it through
00:11:16
antitrust authorities so Cloud security
00:11:18
kind of comes top of mind it's a fast
00:11:20
growing segment as evidenced by the
00:11:22
results with with whiz and it's a an
00:11:26
opportunity for Google to cross sell and
00:11:28
to secure more enterpr customers and
00:11:30
theoretically cross sell more Enterprise
00:11:32
Revenue by getting folks on a
00:11:34
platform um that Google could now offer
00:11:38
I would imagine that what saak is saying
00:11:40
is probably right I have absolutely no
00:11:41
sense of what these individuals and
00:11:43
board members at whiz are thinking but I
00:11:45
think what saak is saying is right this
00:11:46
is an incredibly fast growing business
00:11:49
Peter teal made the comment once which I
00:11:50
think is totally right either the buyer
00:11:53
pays way too much or the seller sells
00:11:57
way too early um when you have a fast
00:11:59
growing business like this it's really
00:12:01
an important question to kind of
00:12:02
acknowledge that if whiz continues to
00:12:04
grow at this rate it's conceivable they
00:12:06
could be in the range of a Palo Alto
00:12:08
networks's hundred billion dollar market
00:12:09
cap in a couple of years um you know
00:12:12
given uh given this momentum and if you
00:12:14
if you progress it forward so if I was
00:12:16
them I would ask that question could we
00:12:18
reach a 100 billion if we feel
00:12:19
reasonable reasonably confident this may
00:12:21
be a risk worth taking and what's the
00:12:23
downside right the downside is they go
00:12:25
public next year anyway and maybe
00:12:26
they're only valued at 15 billion or 20
00:12:28
billion there's not a lot of downside
00:12:30
from this offer and certainly seems to
00:12:32
be quite a bit of upside but I think for
00:12:33
cloud the thing to to watch is what
00:12:35
they're going to do next Google wants to
00:12:37
accelerate Beyond AWS they want to
00:12:39
become the leader and they're going to
00:12:41
look for other sizable transactions that
00:12:43
will pass antitrust muster and so I
00:12:45
think you could see them perhaps looking
00:12:47
at some public m&a in the same space and
00:12:50
I wouldn't be surprised to see them
00:12:51
start to get active in that sense
00:12:53
YouTube and gcp are the are the two
00:12:55
money printing machines inside the
00:12:56
organization that have actually paid off
00:12:58
Android it's paid off in terms of
00:13:00
dumping more search you know from the
00:13:03
default search buttons or
00:13:05
boxes but I guess the to steal me on the
00:13:07
other side if you're on the board and
00:13:09
you want your
00:13:10
cash you know you get 100% of it you
00:13:13
take no risk and what if Google decides
00:13:15
they're going to make this product free
00:13:17
and bundle it as we saw Microsoft do in
00:13:20
a number of cases and they just
00:13:21
Microsoft teams this or Internet explore
00:13:23
it I guess that would be the risk is if
00:13:25
Google feels uh some Vendetta here and
00:13:28
puts this product out for free as you
00:13:30
alluded to chth it was a big week for
00:13:34
cyber security crowd strike had a really
00:13:36
rough week last week when they knocked
00:13:37
out eight and a half million Windows
00:13:39
machines just to briefly explain what
00:13:42
happened here obviously whiz is cyber
00:13:45
secur and so is crowd strike crowd
00:13:47
strike instead of working on data sets
00:13:49
in the cloud they work on securing your
00:13:51
laptop your desktop your servers all
00:13:53
that kind of stuff for threats and uh
00:13:56
they did an update and when they did
00:13:57
their update a sensor configuration
00:13:59
update as they called it to Windows
00:14:02
machines they basically bricked them and
00:14:05
this wasn't a Cyber attack they a cyber
00:14:07
security company they weren't attacked
00:14:08
they updated it and it crashed all these
00:14:11
machines and these machines all needed
00:14:13
to have a hard reset by it it wasn't
00:14:15
something that could just be field
00:14:16
swapped apparently people had to go back
00:14:18
to their offices in some cases Delta was
00:14:20
hit hardest they canceled over 6,000
00:14:23
flights and there's a Department of
00:14:25
Transportation investigation going on
00:14:27
now Shares are down 25% since Friday so
00:14:31
that represents $24 billion in market
00:14:33
cap crowd strike CEO it's been uh clown
00:14:37
for his apology and explanation and uh
00:14:40
the good news though is they sent
00:14:41
everybody an Uber Eats gift card so I'm
00:14:43
super happy about that shamat saaks
00:14:46
looking at this and duve telling with
00:14:48
the last story this is going to be an
00:14:51
ongoing story and and one of the big
00:14:54
trends in our industry yeah major
00:14:57
outages like this I I think the reality
00:14:59
is that that code is still really
00:15:01
brittle and there's gaping holes
00:15:04
everywhere and I suspect that the reason
00:15:07
why foreign adversaries don't hack us is
00:15:10
because we could hack them back and so I
00:15:11
think it's almost like a mutually
00:15:13
assured destruction is the only reason
00:15:15
why these things stay up every day so at
00:15:18
some point we're going to write better
00:15:20
code maybe these AI agents will do it
00:15:22
and there won't be like memory leaks and
00:15:24
all this other random stuff but in the
00:15:26
meantime
00:15:29
I think you just have to assume that
00:15:30
everybody will get access to all of your
00:15:33
information and that eventually
00:15:35
everything is hacked and everything is
00:15:36
leaked yeah and act accordingly and act
00:15:39
accordingly yeah assume every the worst
00:15:42
conversation you ever had on social
00:15:43
media or on uh DMS is going to come out
00:15:47
all right I think we've kind of finished
00:15:49
this anybody have any thoughts on the
00:15:50
scratch strike thing seems like it's
00:15:52
over now I don't have a lot to say about
00:15:53
them except actually this is that that
00:15:56
company has some murky connections to
00:15:58
the Deep state
00:16:00
and yeah well apparently yeah their
00:16:03
fingerprints were all over you know
00:16:04
Hillary's bleach
00:16:06
server then there's been other reports
00:16:09
which I don't know exactly what to make
00:16:10
of I can say this that in the wake of
00:16:13
this Elon announced that he was removing
00:16:14
crowd strike from any of his company's
00:16:17
servers similarly I had my it department
00:16:20
check and make sure that we didn't have
00:16:21
it running anywhere we don't I'm just
00:16:23
gonna be frank I don't trust this
00:16:25
company all right there you have it uh
00:16:27
deep state
00:16:29
tinfoil hat deep State deep State AC
00:16:32
accusation tin foil hat today I forgot
00:16:35
you believe what you want that's what I
00:16:37
don't this is the first time hearing
00:16:38
about it I don't have my chin foil hat
00:16:40
here but uh who knows I guess uh use
00:16:43
your products if you want to you have it
00:16:46
folks and sax is as a puts his
00:16:50
endorsement B paler definitely not deep
00:16:52
State
00:16:53
paler paler look there's no question
00:16:55
that paler paler sells into the deep
00:16:58
state but know that that makes a deep
00:17:00
State well I they're on your team as
00:17:02
oppos to the other so no hold on I'm not
00:17:05
on any team and
00:17:07
respect I don't really understand what
00:17:09
you're saying there I'm just goof I have
00:17:10
shares in the company I think it's a
00:17:12
good investment oh okay there have all
00:17:15
right let's go to the stock market it
00:17:17
just had its first days I gotta get a t
00:17:19
hat for a bit here one thing I want to
00:17:21
say none of us are at any risk of
00:17:23
running paler in our servers okay crowd
00:17:26
strike is running in the background of
00:17:28
many many companies who may not even be
00:17:30
fully aware of it and they were
00:17:31
certainly surprised when all those
00:17:33
Airlines computers went down right so my
00:17:37
only point is maybe you should make sure
00:17:39
about whether you're running their
00:17:40
products or not and then make a
00:17:41
conscious decision whether you think
00:17:43
that's a good idea that's all that's all
00:17:45
just a little tip from the more you know
00:17:47
from David J J move on I'm trying I'm
00:17:50
trying my best all right the stock
00:17:52
market just had its worst day since 2020
00:17:55
on Wednesday clearly this is because of
00:17:57
the January 6th insurrection and the
00:17:59
NASDAQ which is the most tech I'm joking
00:18:01
the NASDAQ which is the most tech heavy
00:18:02
F 3.6% S&P down
00:18:05
2.3% bunch of The Magnificent Seven
00:18:07
companies were in the red but you got to
00:18:09
put this in context NASDAQ and S&P still
00:18:12
up around 15% for the first half of the
00:18:15
year record setting territory obviously
00:18:17
if that holds up or
00:18:20
increases there's a lot of theories
00:18:22
about this that people are rotating out
00:18:24
the max 7 tech stocks which were a place
00:18:26
that maybe got a little overheated with
00:18:28
the AI
00:18:30
here's the top gainers that are not in
00:18:34
the max 7 as you can see financials
00:18:38
energy materials over the last six
00:18:40
months S&P financials up 11 S&P energy 9
00:18:44
S&P materials 9% as well broader index
00:18:47
up 11 as we said Tessa dropped 12% after
00:18:49
missing on earnings but they had a
00:18:51
massive runup earlier this year Google
00:18:53
dropped
00:18:54
5% I guess YouTube was what most people
00:18:58
pointed to their revenue came in lower
00:19:00
than expected so maybe some softness in
00:19:02
the advertising Market which would then
00:19:03
correlate with consumers Nvidia down 7%
00:19:07
metad down
00:19:08
6% chth any thoughts here on what we're
00:19:12
saying you talked a lot about the
00:19:13
consumer weakening on an episode about
00:19:15
six weeks ago I believe so is this just
00:19:18
the manifestation of that prediction you
00:19:20
made not this specific thing I think
00:19:22
that when you
00:19:24
see a broad-based set of Revenue misses
00:19:27
that that will kind of mean that the
00:19:29
consumer is really Under Pressure I
00:19:30
think I still think that that's more in
00:19:33
the
00:19:33
fall but we're headed in that direction
00:19:36
I think what happened here is that the
00:19:39
market is just priced to Perfection and
00:19:41
all of a sudden we had all kinds of
00:19:43
volatility you had the former president
00:19:46
almost assassinated you have the current
00:19:48
sitting president resigned you
00:19:51
have a somewhat convoluted process to
00:19:54
pick who replaced him that at a minimum
00:19:56
was opaque and all of these things
00:19:59
create doubt and
00:20:01
anxiety in the people that own Financial
00:20:04
assets and so if you saw the volatility
00:20:06
index the vix that has spiked and so
00:20:10
whenever you see that stuff happen
00:20:11
people go risk off right and when you go
00:20:14
risk off what do you sell you sell the
00:20:16
things that are deepest in the money
00:20:18
where you think that they probably don't
00:20:20
have that much more room to run and that
00:20:22
was the mag 7 and so what you actually
00:20:24
saw was a huge rotation out of those
00:20:27
companies into everything but those S
00:20:29
names and I think that that's a pretty
00:20:32
reasonable thing to do so I think we're
00:20:34
in the part of the cycle where people
00:20:35
are getting a little bit more sober and
00:20:37
risk managing we're also in the middle
00:20:39
of the Summer where a lot more vacation
00:20:42
is taken which how it manifests is that
00:20:45
people tend to be frankly more riskof
00:20:48
and be more liquid because a lot of
00:20:50
people are in and out of the
00:20:52
office and I think it the real setup is
00:20:54
for what happens in September maybe
00:20:56
there's a cut which will help maybe
00:20:58
maybe there isn't which won't help and
00:21:00
then the whole consumer cycle the
00:21:02
consumer credit
00:21:04
cycle that doesn't look good to be
00:21:06
honest and so I think the fall is going
00:21:08
to be complicated yeah absolutely what
00:21:10
an eventful week on a political front
00:21:12
we'll get towards that in a moment but
00:21:15
uh freeberg your thoughts here is it
00:21:17
just people trimming their perfect
00:21:19
positions and maybe a dispersion going
00:21:21
out people wanting to own some other
00:21:23
assets that maybe have
00:21:25
been undervalued in this market cycle
00:21:29
no I think it's definitely
00:21:31
this mini AI bubble deflating a bit and
00:21:36
transactions are let me get out of some
00:21:39
of these high multiple tech stocks that
00:21:41
are expected to grow rapidly get of AI
00:21:44
and shift more into Stable Market
00:21:46
recovery interest rates are going to get
00:21:48
cut type trades that will benefit there
00:21:51
so I think it's just a rebalancing and
00:21:52
as a result of the high concentration of
00:21:54
the mag 7 in the S&P and in the q's the
00:21:57
indes look like they're coming down but
00:22:00
yeah there's obviously a lot of
00:22:01
complexity in what's going on in the
00:22:03
economy right now but I do think that
00:22:04
that's been a big trade for PMS for
00:22:06
portfolio managers over the last couple
00:22:08
of weeks makes sense yes ax if you owned
00:22:11
a bunch of Nvidia and it ran up meta
00:22:13
Google Apple other companies that ran
00:22:16
way up you might want to trim your
00:22:17
position here and and deploy capital and
00:22:20
balance things out yeah sure I just
00:22:22
don't want to overreact or over read
00:22:24
into one day in the market I mean today
00:22:26
is up yesterday was down it's these are
00:22:29
blips in the grand scheme of things even
00:22:30
a 2 to 3% move is just not that unusual
00:22:33
yeah especially given the context but
00:22:35
definitely something worth keeping an
00:22:37
eye on is what the earnings reports will
00:22:41
say for Q3 and Q4 and those will come
00:22:45
out towards the end of the year okay
00:22:47
some interesting news Sam wman did a Ubi
00:22:51
experiment a couple of years ago he put
00:22:53
14 of the $60 million into this
00:22:57
experiment that was done by by a firm
00:22:59
called open research that's a nonprofit
00:23:01
group that was founded in 2015 out of an
00:23:05
accelerator called why combinator first
00:23:07
I'm hearing of that one well here's the
00:23:09
experiment they did this took place
00:23:11
between November of 2020 October of 2023
00:23:14
3,000 low-income adults in Texas and
00:23:16
Illinois making just under $30,000 a
00:23:19
year on average were selected a thousand
00:23:22
participants received $1,000 a month for
00:23:25
3 years so on top of the $30,000 they
00:23:27
got1 $2,000 a year taxfree so that's
00:23:30
nearly a 50% pay increase for doing no
00:23:33
more work 2,000 control participants
00:23:36
receive $50 per month over the same
00:23:38
period and the research collected and
00:23:41
studied a bunch of data they did blood
00:23:43
draws to do uh health impact uh they had
00:23:45
a custom app that tracked time usage
00:23:49
work play Etc and they checked
00:23:51
everybody's credit reports and Bank
00:23:53
balances So brly speaking the research
00:23:56
found almost no lasting impact on
00:23:59
everything they tested from overall
00:24:00
health to work to
00:24:01
education and here are the quotes
00:24:04
directly from the paper and I'll get the
00:24:05
gentleman's take on this Ubi is super
00:24:07
fascinating obviously the cash transfer
00:24:09
resulted in large but short-lived
00:24:11
improvements in stress and food security
00:24:13
we find no effect of the transfer across
00:24:15
several measures of physical health we
00:24:17
also find that the transfer did not
00:24:19
improve mental health after the first
00:24:21
year and by year two we can again reject
00:24:25
very small improvements final quote we
00:24:28
also so find precise null effects on
00:24:30
self-reported access to healthare
00:24:32
physical activity so fascinating and
00:24:37
reinforces a bunch of intuition that I
00:24:39
think we would probably all have you
00:24:41
have you guys seen these studies where
00:24:43
when somebody has an amputation or they
00:24:46
get paralyzed they study their pre
00:24:50
levels of happiness their inim level of
00:24:53
happiness and then they just kind of
00:24:54
mean revert to their natural state of
00:24:56
happiness
00:24:58
independent of what physical Calamity
00:25:00
they may have gone through and I I'm
00:25:03
when you were talking about it Jal I was
00:25:05
reacting in the same way which is in the
00:25:07
absence of I think purpose and
00:25:11
Community I think children in many
00:25:15
cases it just doesn't meaningfully shift
00:25:17
any of these curves that really matter I
00:25:19
think your happiness levels mean revert
00:25:21
I think your health levels mean revert
00:25:24
so it's great to kind of confirm
00:25:29
at least my intuition which is that Ubi
00:25:32
is
00:25:33
a wonderful idea that I think doesn't
00:25:38
really understand how humans are both
00:25:41
motivated and wired freeberg your
00:25:44
thoughts yeah so I definitely agree I
00:25:46
think I've talked about this we talked a
00:25:48
little bit about it with Jonathan height
00:25:49
there's some great studies that have
00:25:50
shown in the past that the change in
00:25:52
income is a better predictor of
00:25:53
happiness than absolute income
00:25:55
eventually everything normalizes so I
00:25:57
think you bi makes no sense for three
00:25:59
reasons the first is this normalization
00:26:02
of spending level so once you've kind of
00:26:04
had this increase you have a moment of
00:26:06
happiness and then you actually start
00:26:08
spending differently or spending more
00:26:10
and effectively every human has one
00:26:12
innate trait desire and desire is what
00:26:16
drives Humanity it's what drives
00:26:18
progress It's what pushes us forward
00:26:20
because no matter what our absolute
00:26:21
Condition it's our relative condition
00:26:23
that matters relative to others or
00:26:25
relative to ourselves in the past or
00:26:27
perspect itively in the future and so we
00:26:30
always want to improve our condition so
00:26:32
a Ubi based system basically gives a
00:26:34
flat income so the only way for it to
00:26:36
really work is if you increase the
00:26:38
income automatically by say 10% a year
00:26:41
so in a Ubi world no amount of money
00:26:43
will actually make someone satisfied or
00:26:45
meet their minimum thresholds because
00:26:47
those minimum thresholds will simply
00:26:49
shift and you know the second issue is
00:26:52
just the the net economic
00:26:54
effect if we gave 350 million Americans
00:26:57
,000 bucks a month that's $350 billion a
00:27:01
month that's $4 trillion a year our
00:27:04
prospective budget for next year is 7.3
00:27:06
trillion at the federal level so you
00:27:09
know that's already more than 50% of the
00:27:11
total projected federal budget next year
00:27:14
finding the mechanism for funding this
00:27:16
at scale is not what this study actually
00:27:19
looked at because if you look at it the
00:27:21
net effect would be inflationary and
00:27:23
that's the third major reason is that
00:27:25
ultimately this would have an
00:27:26
inflationary effect anytime we've
00:27:28
stimulated the economy with outside
00:27:31
money with government-driven money we
00:27:33
see many bubbles emerge and we see an
00:27:35
inflationary effect so look at covid
00:27:37
there were all these little bubbles that
00:27:38
popped up in the financial markets we
00:27:40
had nfts we had crypto we had all these
00:27:42
sort of new places that money found its
00:27:44
way to and then we had an aggregate
00:27:46
inflationary effect food prices are
00:27:47
still up 30 40% since covid and so net
00:27:51
net I think that the study provides an
00:27:53
interesting insight into the micro
00:27:55
effect the psychological effects the
00:27:57
social effect but macro effects are what
00:27:59
is so like simply arithmetically obvious
00:28:02
which is inflation and an inability to
00:28:05
actually fund us at scale and
00:28:06
fundamentally people want to work so
00:28:08
they'll take that money and then they'll
00:28:10
go find ways to work and generate more
00:28:12
money and you have this inflationary
00:28:13
effect so I think N Net Ubi does not
00:28:16
make sense Sachs participants were 5%
00:28:18
more likely to start a business by the
00:28:20
third year maybe that was the most
00:28:21
encouraging part of this people work
00:28:24
slightly less 2% decrease in labor
00:28:26
participation but that seems negligable
00:28:29
people in their 20s had a 2% increase in
00:28:32
enrolling in postsecondary education
00:28:34
again very tiny
00:28:35
impact there were major benefits to
00:28:37
stress and mental health in year one but
00:28:39
by year two as we talked about it
00:28:40
reverted to the Baseline how do you
00:28:42
think about Ubi in a world where let's
00:28:46
say I don't know we lost a large amount
00:28:49
of jobs in a short period of time
00:28:51
because of AI so in that hypothetical
00:28:53
situation and we hit 20 or 25%
00:28:55
unemployment from the historic low we're
00:28:57
at now now how might you think about Ubi
00:29:01
well that's positing a future that I
00:29:02
don't think's going to happen at least
00:29:04
any I tried to yeah that's why I'm
00:29:06
trying to give you a hypothetical yeah
00:29:07
no I just I I don't really buy that and
00:29:09
so I think this whole idea of Ubi is
00:29:12
premature and very expensive and it
00:29:14
doesn't work I mean I think what we saw
00:29:16
from the study just to Echo what
00:29:17
freeberg said is that cash transfers
00:29:20
don't work we saw this in the Great
00:29:21
Society just handing people money
00:29:23
doesn't solve poverty it actually tra
00:29:26
people in conditions of dependence we
00:29:29
also saw during covid that all those
00:29:30
stimy checks it might have had a macro
00:29:33
effect in the economy of kind of
00:29:35
boosting the economy during what could
00:29:37
have been a covid depression however at
00:29:39
an individual
00:29:41
level what did we see we saw people
00:29:43
quitting or quite quitting their jobs
00:29:45
they spent more on Leisure alcohol and
00:29:48
meme stocks in other words it wasn't
00:29:51
tremendously
00:29:52
productive so I think that what we've
00:29:54
seen in the past is just handing people
00:29:56
money doesn't create the types of
00:29:59
outcomes that people want and you know
00:30:03
is all this virtue signaling sax is it
00:30:05
virtue signaling kinda kinda I'm kind of
00:30:08
that from you yeah I think it's I think
00:30:10
it's a combination of virtue signaling
00:30:12
combined with let's assume that you want
00:30:15
to become the first AI trillionaire and
00:30:19
people are concerned about job loss
00:30:22
you're going to virtually signal in the
00:30:23
direction of well let's just give
00:30:24
everyone money and a lot of people in
00:30:28
power will love that because it creates
00:30:30
a lot of dependence yeah so it serves
00:30:34
the interests of tech Moguls and people
00:30:37
in the government but I don't think it
00:30:40
serves society and I think one of the
00:30:41
most interesting data points in the
00:30:42
study please confirm if I get this right
00:30:45
but what it said is that the people who
00:30:47
got the thousand a month Ubi saw their
00:30:50
incomes rise to $445,000 on average
00:30:52
while the control group who only got $50
00:30:55
a month increased their average income
00:30:57
to 50,000 actually just sh
00:30:59
51,000 so the people who didn't get the
00:31:03
larger stimi actually genuinely bettered
00:31:06
themselves over the course of the study
00:31:09
while the ones who got the 12,000 a year
00:31:10
stayed in place and that's kind of what
00:31:13
you'd expect right which is if you just
00:31:15
hand people money without having to work
00:31:17
it doesn't motivate them to work harder
00:31:19
it actually motivates them to do less
00:31:21
yes and let's say that you're in a point
00:31:23
in your career where you need to learn
00:31:25
you need to get mentorship you need to
00:31:26
advance yourself by giving people Ubi
00:31:29
you could be kicking out those bottom
00:31:30
rungs of the ladder where you know the
00:31:33
work isn't necessarily that fun but
00:31:34
you're picking up very important skills
00:31:36
that are going to help you rise up in
00:31:37
the ladder and being a cashier like
00:31:40
sending your kids to be a cashier at a
00:31:41
restaurant or a bus boy or a waiter like
00:31:44
that teaches them a work ethic I was a
00:31:46
dishwasher I did hard work as a child
00:31:48
like I was a bender I mean look these
00:31:50
are all jobs that have dignity I mean I
00:31:52
think work has dignity and you need
00:31:56
people to start somewhere
00:31:58
and if you just give them the stimi or
00:32:00
the
00:32:01
Ubi it demotivates them from starting
00:32:03
their careers and you trap people at
00:32:05
this lower level so I just don't think
00:32:07
you're doing anyone any favors by doing
00:32:10
this and I just want to say you know my
00:32:12
production company's in full swing and
00:32:13
we are actually working on a remake of
00:32:16
Cheers with David Sachs yeah as the
00:32:18
bartender as the lead character it's
00:32:22
it's a really great show looking at um
00:32:25
the back of the envelope matth here I
00:32:27
had the crack research team take a look
00:32:29
at this welfare $1.1 trillion budget in
00:32:31
2023 eight different federal agencies
00:32:34
you know Medicare I'm sorry Medicaid is
00:32:36
in there as well unemployment $33
00:32:38
billion paid across 1.8 million
00:32:41
participants last year food stamp safety
00:32:43
113 billion we put all those numbers
00:32:46
together and uh we got about a 100
00:32:49
million people participating in these
00:32:51
programs in some way for $1.2 trillion
00:32:53
per year this is all back of the
00:32:55
envelope it's imperfect but that turns
00:32:57
out to be about 12K each uh which is
00:32:59
exactly what the study did so not
00:33:02
perfect math but that's totally
00:33:03
reasonable I grew up on welfare and we
00:33:06
needed it to make ends meet and we would
00:33:08
have completely fallen through the
00:33:10
cracks without it and so I'm glad that I
00:33:14
was able to be raised in a country that
00:33:17
has
00:33:19
welfare I guess my question to you choth
00:33:22
is do you think all these agencies put
00:33:24
together you know with all this
00:33:26
Administration and this complexity would
00:33:28
it be better if we take something from
00:33:30
this Ubi of maybe consolidating down no
00:33:33
no no okay no because I I think like you
00:33:36
need to be motivated as sack said and so
00:33:40
even though we
00:33:41
got support from I grew up in Canada so
00:33:44
the Canadian government there was still
00:33:47
an expectation where certain things were
00:33:49
not covered and you still had to work
00:33:51
and so you had to find motivation to
00:33:53
pick yourself up and go out and get a
00:33:55
job and it just so happened that in
00:33:58
situation even welfare and what my mom
00:34:01
made as a housekeeper and then as a
00:34:02
nurse's aid wasn't enough and my dad
00:34:04
didn't have a job so I went and I
00:34:06
started working at Burger King and to sa
00:34:08
this point it's pretty eye openening
00:34:11
when you're 14 years old and you know
00:34:14
you're working the night shift and
00:34:16
people come in after going to the bars
00:34:18
they're drunk they're puking all over
00:34:19
the place sometimes you see people that
00:34:21
go to your own high school and it's a
00:34:24
little bit embarrassing because you're
00:34:25
working while they're going out but at
00:34:27
the end of the day was very motivating
00:34:28
and I think saak is right if you take
00:34:30
that away from people I think that you
00:34:32
end up with a worse Society I don't
00:34:34
think that you have a motivated group of
00:34:36
people that want to go and better
00:34:38
themselves I think they just become
00:34:40
really lazy I think it's well it's well
00:34:41
stated and I think the pressure cooker
00:34:44
that immigrants are under or you know
00:34:47
people who have tough situations like it
00:34:49
it can create the diamonds and man I I I
00:34:52
do think a lot of the folks here on this
00:34:53
podcast went through that pressure
00:34:55
cooker and does create a on your
00:34:58
shoulder and and when people criticize
00:34:59
these entry-level jobs I'm and they're
00:35:02
oh they're not sustainable well they're
00:35:03
we do have a safety net in both
00:35:05
countries I think that that's not I
00:35:07
think the problem is not the entry-level
00:35:08
job I think it's the expectation of
00:35:10
people and freedberg just mentioned this
00:35:12
but what you have is that there is this
00:35:16
desire Doom Loop that we've Fallen
00:35:19
ourselves into where what social media
00:35:23
does is
00:35:24
amplify in many cases a fake ception of
00:35:28
what your neighbor has that you don't
00:35:30
have and so you're in this constant
00:35:32
desire Doom Loop so if you go to a job
00:35:34
and you're expected to work for four
00:35:36
years I'm just going to make up a number
00:35:38
before you get promoted and the
00:35:40
perception is that your neighbor is
00:35:41
getting promoted after eight months
00:35:43
you're going to be mad and you're going
00:35:44
to be angry and you're going to feel
00:35:46
like life isn't working out for you and
00:35:49
we have to figure out a way of resetting
00:35:50
that back to normal so that you know
00:35:52
that that is a lie that is being told to
00:35:56
get clicks and likes
00:35:58
and the real truth is you're going to
00:35:59
have to just put your nose down and
00:36:01
grind at something to get what you want
00:36:02
and life is not perfect and it's
00:36:04
complicated and it's
00:36:05
messy and we need to do a better job of
00:36:08
that let me ask you a question freeberg
00:36:09
if you were going to do a 2.0 of the
00:36:11
study I was thinking about it you know
00:36:14
where do you go from here I just had
00:36:16
this idea like well what if you put like
00:36:19
half of the money into like a a perfect
00:36:21
portfolio wealth front one of those
00:36:22
services and um allow people to take out
00:36:25
maybe 5% of it every year some
00:36:27
sustainable amount so they see you know
00:36:30
and get some education around that or
00:36:31
maybe put the money into a business
00:36:34
formation fund people can apply to get
00:36:36
grants to you know maybe form a business
00:36:39
and you you kind of reframe how this Ubi
00:36:42
is distributed with milestones and maybe
00:36:46
some education baked into it that that
00:36:48
was my thought on where to go next with
00:36:49
it do you have any thoughts of where you
00:36:50
would do a 2.0 test of this or would you
00:36:53
just well that's that's not Ubi right
00:36:55
and what you're describing I think exist
00:36:58
and there are incentives and programs
00:36:59
and opportunities out there people can
00:37:01
sign up with Roth IRAs they can
00:37:03
contribute some percentage of their
00:37:05
paycheck to a 401k if they have a job
00:37:07
that has a 401k setup for them there's a
00:37:09
lot of systems and mechanisms out there
00:37:11
and you get tax breaks for doing that so
00:37:13
there's mechanisms and incentives out
00:37:15
there to do that sort of thing the the
00:37:17
concept with Ubi is can you pay people a
00:37:20
flat amount of money so that they don't
00:37:23
have to work and then they end up being
00:37:25
able to explore and do other things with
00:37:27
their life as the robots and AI does
00:37:29
everything for them and I've just always
00:37:31
been of the belief that I don't think
00:37:32
that there's this natural border that we
00:37:34
hit Beyond which humans don't work I
00:37:38
think that AI based tools and automation
00:37:40
tools are the same as they've always
00:37:42
been when we developed a tractor people
00:37:44
didn't stop farming they could get much
00:37:46
more leverage using the tractor and farm
00:37:48
more and new jobs and new Industries
00:37:50
emerged and I expect that the same thing
00:37:51
will happen with this next evolution of
00:37:53
technology and human progress humans
00:37:56
will find ways to create new things to
00:37:58
push themselves forward to drive things
00:38:00
forward and for the natural market-based
00:38:02
incentives that fundamentally are rooted
00:38:04
in this internal system of Desire will
00:38:07
create new opportunities that we're not
00:38:08
really thinking about so I don't believe
00:38:10
in this idea of Ubi in some utopian
00:38:13
world where everyone's happy not working
00:38:14
and letting machines do everything for
00:38:16
them I think that the fundamental sense
00:38:18
of a human is to find purpose and to
00:38:20
realize that purpose to drive themselves
00:38:22
forward and progress themselves and I
00:38:24
think that that's always going to be the
00:38:25
case the closest thing to leisure and
00:38:27
leisurely Pursuits that we have today in
00:38:30
modern society is the nepo baby and if
00:38:33
you look at the no but and if you look
00:38:34
at the nepo baby they're the most
00:38:36
miserable group of people I've ever met
00:38:39
they're so unhappy with themselves and
00:38:42
so and part of it is because they've
00:38:44
only ever lived a life of shout out to
00:38:45
Alex
00:38:47
Soros no I'm I'm not name checking
00:38:49
anyone I'm just saying when I when I
00:38:51
when I observe it I think that you can
00:38:54
see it right in front of you which is
00:38:56
that there's just so much inherent
00:38:59
unhappiness because you're not motivated
00:39:01
to do anything and then that's Amplified
00:39:03
typically by guilty parents because
00:39:07
they've been working so hard and I so I
00:39:09
don't think you need to run a second
00:39:10
study a different version of an idea
00:39:13
that friend of the Pod Brad gersner is
00:39:15
working on which I think deserves a
00:39:18
shout out is this idea of giving every
00:39:20
kid when they're born a retirement
00:39:22
account and I think that that's
00:39:25
interesting idea where you give them
00:39:27
some amount of money and it just matures
00:39:30
inside of an index fund that gets
00:39:32
unlocked for you when that kid is 65 or
00:39:34
70 years old that's great because it
00:39:37
helps you have a soft Landing in
00:39:39
retirement I think that that's very
00:39:41
Humane and a right thing to do but it
00:39:44
doesn't rob you of that motivation to
00:39:45
work in your 20s 30s 40s and 50s and
00:39:47
that's a much better idea than Ubi and I
00:39:50
think by the way it's really important
00:39:51
to state
00:39:52
that Ubi can be more of a trap than a
00:39:56
benefit it takes away the opportunity
00:39:59
for individuals to progress because you
00:40:02
no longer have a system that says you
00:40:05
progress you get richly rewarded It
00:40:07
ultimately drives to an outcome where
00:40:09
you spend all the money and distribute
00:40:10
it equally so everyone ends up having
00:40:12
some sort of stasis and I don't think
00:40:14
that that's really human nature I do
00:40:16
think that systems and government
00:40:18
programs that support people's ability
00:40:20
to succeed to work hard to work smart to
00:40:22
progress while providing these necessary
00:40:24
safety nets is a better solution there's
00:40:26
no right or wrong way it's just it's
00:40:29
it's a very complicated system that's
00:40:30
needed and I don't think that this like
00:40:32
this Ubi concept is fairly naive and I
00:40:35
think that you'll see it play out at at
00:40:37
both a micro and a macro scale as being
00:40:39
I think net net negative so yeah you
00:40:42
know just wrapping up here so we can get
00:40:43
on to the rest of the very juicy docket
00:40:45
we have today it it does seem
00:40:47
demotivating to just have money drop in
00:40:49
your head that's why like my experiment
00:40:50
I was referring to freeberg of just
00:40:53
forcing people not like having these
00:40:55
programs that you have to go find out
00:40:56
about and have the social capital and
00:40:58
fabric around you that you know about
00:41:00
small business loans Etc but hey these
00:41:02
three things are happening to you right
00:41:04
now this Money's been put into your
00:41:05
account automatically and you can decide
00:41:07
what to do with it and just raising the
00:41:10
education level and empowering people is
00:41:13
a much better idea I feel like whatever
00:41:15
the education system is schools or
00:41:17
whatever like actually teaching the
00:41:19
vocational skills or the skills on how
00:41:20
to succeed in the workplace like here's
00:41:22
how you go get a job here's how you
00:41:24
build a business here's how you start
00:41:26
something those are the sorts of skills
00:41:28
that are not taught in the educational
00:41:30
system that I think are generally
00:41:32
lacking and then people kind of learn a
00:41:34
bunch of history or some algebra or
00:41:36
whatever they learn in school and they
00:41:37
they pop out the other end and it's like
00:41:39
okay go figure out how to survive go
00:41:41
figure out how to get a job go figure
00:41:42
out how to build a business to just
00:41:43
build on your idea we need more
00:41:44
healthcare workers if you paid somebody
00:41:46
$1,000 do a month and you paid for their
00:41:48
school for one year to become a nurse
00:41:50
doctor nurse practition or whatever that
00:41:52
would actually have a dramatic impact
00:41:54
and solve a problem for our society
00:41:56
while not giving a hand out I think we
00:41:58
all agree on this one let's keep moving
00:42:00
through this amazingly juicy docket all
00:42:02
right there is a battle right now for
00:42:05
rer Murdo media Empire the times
00:42:07
reported on a behind the-scenes fight
00:42:10
for control of Fox News Wall Street
00:42:12
Journal New York Post and just tons of
00:42:15
TV networks in Australia the UK I think
00:42:18
we all know the newscorp holding Set uh
00:42:22
bit like the TV show secession uh which
00:42:24
makes sense because they based it on the
00:42:26
Murdoch family it turns out this article
00:42:30
in the times is based on a sealed court
00:42:31
document that was obtained by them
00:42:33
Murdoch to remind you is 93 years old
00:42:35
now and his trust would have given
00:42:37
control to his four eldest children
00:42:40
however he changed the uh trust to
00:42:43
ensure that Lin Murdoch who is more
00:42:48
conservative and would take over these
00:42:52
assets as opposed to James Elizabeth and
00:42:55
Prudence who are more moderate
00:42:57
in laan and they are engaged in a
00:43:00
massive court case now that's going to
00:43:02
start in September the trust is
00:43:04
irrevocable but it contains a provision
00:43:07
allowing for changes so long as they're
00:43:08
made quote in good faith and with the
00:43:11
purpose of benefiting all member so rert
00:43:14
argued that the change is in the best
00:43:16
interest of James Elizabeth and Prudence
00:43:18
as it keeps them formally separate from
00:43:20
Fox News without having to worry about
00:43:23
its political point of view Fox News
00:43:26
obviously has massive influence and has
00:43:28
been a bit of a disaster over the last
00:43:30
couple of years they did the largest
00:43:32
settlement ever
00:43:34
in a defamation case with Dominion Aid
00:43:39
$787
00:43:41
million you remember Tucker Hannity
00:43:43
Laura Ingram all of them privately uh
00:43:46
trashed the people who lied about the
00:43:48
Dominion case on Fox News and that all
00:43:50
got shown in text messages and it was a
00:43:53
disaster for them saaks any thoughts on
00:43:55
this and and how collection of assets
00:43:58
and the GOP have you know collaborated
00:44:01
over the years I wouldn't necessarily
00:44:02
call it collaboration I call it a market
00:44:04
position I mean Fox News has carved out
00:44:07
a powerful and profitable Market Niche
00:44:09
by being the one Cable News Network that
00:44:11
appeals to
00:44:13
conservatives now if you know let's say
00:44:16
the more liberal members of the family
00:44:17
like James take over and change the
00:44:21
content and the programming to serve
00:44:23
their own political views they're going
00:44:25
to lose viewership they're going to lose
00:44:26
their audience it would be a foolish
00:44:28
idea just from a business standpoint so
00:44:31
I think that Lachlan is the right choice
00:44:33
I've met Lan before by the way nice guy
00:44:36
look I think a pretty mainstream
00:44:38
conservative type of guy he's clearly
00:44:40
the right guy in the family to run this
00:44:42
and the siblings I think could really
00:44:45
screw it up and I'm talking about not
00:44:47
just from a Content standpoint I'm
00:44:48
talking about from a a revenue and
00:44:51
profit standpoint if they take it in a
00:44:54
different direction I would already say
00:44:57
that Fox News has a has a market
00:45:00
position problem which is that rubert is
00:45:04
very much a neocon and neoconservatism
00:45:08
is on the way out in the Republican
00:45:09
party in favor of a more populist
00:45:11
conservatism that you see with Trump or
00:45:14
now his running mate JD Vance rert and
00:45:17
fox waged a really strong campaign to
00:45:20
keep JD Vance off the ticket obviously
00:45:22
lost that
00:45:23
battle rert fired Tucker by far their
00:45:27
EST rated and most profitable host ever
00:45:29
and it was over again this populism
00:45:32
versus neoconservatism Direction so I
00:45:35
think that fox already has a problem
00:45:39
where they are becoming misaligned With
00:45:42
Their audience and regardless of what
00:45:44
you think of the politics this is bad
00:45:46
for business it'll be really interesting
00:45:48
to see if laan Will realign things in a
00:45:52
more populist Direction but definitely
00:45:54
going in a liberal direction that like
00:45:56
James or the siblings want to go in that
00:45:58
would be a disaster freeberg chth any
00:46:01
thoughts on this uh media Empire and
00:46:03
secession
00:46:05
planning man I think probate and wills
00:46:08
and trusts are of the devil's making
00:46:12
nothing good comes out of these things
00:46:14
and I don't know I just think some of
00:46:16
these assets should just be left to
00:46:20
shareholders just sell them and or just
00:46:23
sell them and take the money give it to
00:46:24
the kids hopefully raise good kids they
00:46:27
can all go and pursue their own path
00:46:29
because again I think the point is like
00:46:31
the path and the journey is the fun
00:46:38
and these kinds of battles are really
00:46:41
brutal and I'll tell you to me the thing
00:46:42
that I'm I'm sad when I hear this whole
00:46:44
thing is like you have four siblings
00:46:47
that I'm guessing grew up together yeah
00:46:50
and now are they ever going to talk to
00:46:52
each other again or is it like three
00:46:53
versus one or two versus two or and I
00:46:56
just think that that's ugly over what
00:46:58
power and
00:47:00
money I would have just if I was the
00:47:02
father I would have sold the asset given
00:47:03
the money to the kids or to charity or
00:47:05
whatever and hopefully they would have
00:47:08
found happiness in a different way but
00:47:10
that is what they did with the Disney
00:47:11
deal they took the cash and they
00:47:13
distributed it to the kids so they each
00:47:14
got a pretty big windfall and then you I
00:47:16
think the concept was this remaining
00:47:18
asset would be managed over the long
00:47:20
term maybe I'm speaking out of school a
00:47:22
bit but I thought that's what happened
00:47:24
there Fox the studio and yeah that the
00:47:29
library in the library and that brings
00:47:30
X-Men Fantastic 4 Wolverine back
00:47:33
together with the Avengers which is most
00:47:35
important 20th C clearly they
00:47:38
didn't no it's all coming back together
00:47:41
now now they just got to get Sony to
00:47:42
give up I mean we want to talk about
00:47:44
interesting IP Marvel just sold these
00:47:45
characters to the highest bitter in
00:47:48
perpetuity such a crazy weird deal but
00:47:51
it's like it's like me saying you know I
00:47:54
uh I've collected some really nice belts
00:47:56
and so I'm just going to have like a
00:47:58
death match between my five kids to see
00:48:00
who gets the best belt yeah it's just I
00:48:02
mean and it's not it's not even about
00:48:04
money actually because they have enough
00:48:07
it's clearly this is about power picked
00:48:09
no and it's about being picked imagine
00:48:10
if your father picks your sibling and
00:48:13
not you why why would you why would you
00:48:16
do that yeah like is there is the asset
00:48:18
so important as said there these are
00:48:21
self-managing because business people
00:48:23
will make rational business decisions so
00:48:25
put it in the hands of a r bus keep the
00:48:28
family intact because if you lose the
00:48:29
family what what do you have that's what
00:48:32
I don't get that's what I don't gam we
00:48:35
might as well just go to our next topic
00:48:37
Joe Biden has been hot swapped as no sh
00:48:39
and as predicted the speedrun primary
00:48:42
maybe that's been subverted uh as we all
00:48:44
know Joe Biden formally exited what's
00:48:47
your version maybe it has been subverted
00:48:49
maybe possibly could have been subverted
00:48:52
inadvertently knocked over forgotten it
00:48:55
could be an oversight anything's
00:48:57
possible Joe Biden formerly exited the
00:49:01
presidential race on Sunday after donors
00:49:04
and party leadership politely asked him
00:49:06
to enjoy his retirement NOP they shived
00:49:08
him by most Insider accounts Biden was
00:49:11
not happy about the decision and felt
00:49:14
betrayed nonetheless public has backed
00:49:17
his VP Cala Harris who appears to have
00:49:20
already wrapped up the nomination survey
00:49:23
conducted by AP on Monday suggested that
00:49:25
Harris already had the Endor ment of
00:49:27
enough delegates to secure the
00:49:28
nomination in the first round of
00:49:30
convention voting so this won't be
00:49:33
official until the DNC that starts
00:49:35
August 19th in shy toown so far no one
00:49:38
has stepped forward as a arrival for
00:49:40
Harris and in fact many of her would be
00:49:43
competitors have already endorsed her
00:49:45
that includes Shapiro Pennsylvania's
00:49:48
Governor Nome California's governor
00:49:50
pritzer Illinois's governor and Whitmer
00:49:53
Michigan's Governor all of those I guess
00:49:55
potential VP
00:49:57
candidates she is now the 90% favorite
00:50:01
to get Democratic nomination I'll stop
00:50:05
there and ask our panelists what they
00:50:08
think of this turn of events jamath do
00:50:11
you want to start us off I mean I don't
00:50:13
think the process was super open and
00:50:16
transparent and Democratic but I don't
00:50:19
think they had much of a choice and I
00:50:20
think we've talked about that because
00:50:21
too much of the money would have had
00:50:23
to essentially been returned and I don't
00:50:26
think you can fight a federal election
00:50:28
in 2024 with one hand tied behind your
00:50:30
back so she was the de
00:50:34
facto nominee even when the rumor
00:50:38
started and now I think the whole point
00:50:41
is to figure
00:50:42
out where does she stand I think the
00:50:45
thing that she will have to overcome is
00:50:47
that these last three years three and a
00:50:49
half
00:50:49
years she's
00:50:52
been relatively under the radar Mia some
00:50:55
might say and I think that now there's
00:50:57
this like this whole controversy I don't
00:50:59
know if you guys have seen this where
00:51:00
like she was named the borders are but
00:51:02
then she was not the borders are and I
00:51:03
think there's a there's a mainstream
00:51:05
media it's sort of fighting with itself
00:51:07
from six months ago about the whole
00:51:09
thing but the point is that we don't
00:51:10
know what she believes and we don't yet
00:51:13
have a sense of
00:51:16
her agenda really you know and I think
00:51:19
that over these next two months it'll be
00:51:21
up to her to really create a very clear
00:51:24
case of what she believes in and it'll
00:51:27
be really interesting to see who she
00:51:28
picks as her VP candidate and then
00:51:30
people I think will be in a position to
00:51:32
judge and I think that that's what you
00:51:34
know what if I've been kind of like
00:51:35
reading the tea leaves from the folks
00:51:37
that I've talked to is sort of what they
00:51:38
say which is TBD and we need to figure
00:51:41
out where she's at freeberg your
00:51:44
thoughts on uh this unbelievable 10 days
00:51:48
in the history of our country
00:51:51
where president was nearly murdered by
00:51:56
an
00:51:57
assassin
00:51:59
and Joe Biden
00:52:01
resigns and a
00:52:04
39-year-old political neoy venture
00:52:07
capitalist is picked as VP I mean this
00:52:09
is
00:52:10
consequential what are your thoughts on
00:52:12
this 10 days that's a lot of stuff I
00:52:15
think we talked about that last week but
00:52:17
the kamla Harris deao nomination that
00:52:21
took place over 48 Hours um I think was
00:52:24
a little bit shocking to a lot of people
00:52:26
I've spoken with that there wasn't a bit
00:52:28
more of a process to identify a nominee
00:52:33
besides KLA that effectively the party
00:52:35
lined up now what I think is is relevant
00:52:39
here is that for the first time it's
00:52:41
exposing people to the way the electoral
00:52:43
process actually works in the United
00:52:45
States that it's not a direct democracy
00:52:47
where every individual in this country
00:52:49
votes for their federally elected people
00:52:51
remember the United States was set set
00:52:53
up as a Federated Republic that there
00:52:55
was meant to be States the states were
00:52:57
in a federation and then the states
00:53:00
would elect electors that would go and
00:53:03
figure out who should be the president
00:53:05
who should run the the federal office
00:53:07
and the states would elect their
00:53:09
representatives their Congress people to
00:53:11
go represent them in the federal
00:53:13
government and so I think a lot of
00:53:15
people you know whether it's just
00:53:17
without thinking about it or based on
00:53:20
President assumed I get a vote and who
00:53:22
gets to be president what you get to
00:53:24
have is a vote and who gets to be the
00:53:26
delegate to represent your state in
00:53:29
picking the president and so this
00:53:31
process where delegates very quickly
00:53:32
fell behind kamla Harris because of the
00:53:35
the the significant coalescing of power
00:53:38
and influence within the parties the two
00:53:41
major parties in the United States has I
00:53:43
think exposed a lot of people to the
00:53:46
lack of a democratic process for Federal
00:53:48
Executive role in this country and I
00:53:51
think that's a little bit shocking to
00:53:52
people but it is the way that the way
00:53:55
the nation was set up and and the same
00:53:56
thing with the popular V vote versus
00:53:58
electoric college right people keep
00:54:00
getting confused by that that's right
00:54:02
and in this very unusual condition where
00:54:05
a candidate who's earned all of these
00:54:06
delegates drops out of the race yeah is
00:54:09
shocking and surprising to people that
00:54:10
they don't get to go and make a vote
00:54:12
again individually and I think it feels
00:54:15
unfair and I think that a lot of people
00:54:16
are feeling that way I do however think
00:54:19
that pretty quickly there's a lot of
00:54:20
people who are anyone but Trump that are
00:54:23
going to Rally behind her and she seems
00:54:25
to be pulling well in the polls that
00:54:27
have come out in the last couple days
00:54:28
here so all right let me hand it off to
00:54:31
sxs then you had a situation where Trump
00:54:35
was The
00:54:36
Runaway
00:54:38
favorite and this unbelievable Unity at
00:54:41
the RNC and immediately after the RNC
00:54:45
the Democratic party hot swaps Biden for
00:54:49
kamla and they've got a lot of great VP
00:54:51
picks that they can choose from Mark
00:54:54
Kelly looking like the possibility which
00:54:56
would obviously give them a lot of
00:54:58
support in Arizona and with moderates
00:55:01
and Law and Order folks so saaks were
00:55:04
looking at uh essentially a dead heat
00:55:06
some polls have them tied some po
00:55:09
Reuters ipsos has Harris with a 2% lead
00:55:12
CNN has Trump with a 3% lead what's your
00:55:15
take on forget about how we got here you
00:55:19
know how does this affect the race
00:55:22
itself this is a dead heat now what are
00:55:24
your thoughts on the race going forward
00:55:27
who's the VP pick that you're most
00:55:28
worried about going up against the
00:55:31
Republicans well look this clearly
00:55:33
reshuffles the race to some degree I
00:55:35
don't think it's a dead heat the polling
00:55:37
shows that Trump is still ahead in most
00:55:39
of the Swing States but look Harris has
00:55:42
more upside than Biden does because she
00:55:44
can actually campaign I mean Biden
00:55:46
clearly was a shorefire
00:55:49
loser and that was exposed in the
00:55:51
presidential debate and that's why there
00:55:52
was a total panic in the Democrat Party
00:55:55
after that debate they're like we got to
00:55:56
get someone new and they drove him out I
00:55:58
do want to just say a word about that
00:56:00
process you know throughout that process
00:56:02
remember it started with Biden doing
00:56:03
that Stephanopoulos interview he said
00:56:06
that even God Almighty won't get me out
00:56:08
of this race then he said nobody's
00:56:10
pushing me out I'm not going anywhere
00:56:11
I'm campaing next week he expressed that
00:56:14
what was happening in the party was a
00:56:15
revolt against him and then boom all of
00:56:19
a sudden he's out and you know all we
00:56:22
really know from the public reporting is
00:56:23
that Nancy Pelosi said you know Joe we
00:56:26
can do this the easy way or the hard way
00:56:29
and he was out again less than 24 hours
00:56:33
after he said I'm in and I'm campaigning
00:56:35
next week and even his surrogates on the
00:56:37
Sunday morning shows were saying that
00:56:40
he's definitely in the race the White
00:56:42
House staff didn't know his campaign
00:56:43
staff didn't know it kind of came out of
00:56:45
the blue it's a very strange process and
00:56:48
it happened via him just posting a
00:56:51
photograph of a letter that was on
00:56:53
personal stationary not even like an
00:56:55
official White House memorandum and we
00:56:58
didn't get an update we didn't hear
00:57:00
directly from the president about one of
00:57:01
the most consequential decisions of his
00:57:03
life and of his presidency until
00:57:06
Wednesday well he did have covid so that
00:57:08
you know for an 80y old is pretty hard
00:57:10
yeah fair enough that was the the the
00:57:12
story but still I mean for us to be left
00:57:15
in the dark wondering what was really
00:57:16
going on for three days it was very
00:57:18
strange it certainly was not what you
00:57:20
would call a democratic process there
00:57:22
was no speedrun primary as you wanted
00:57:24
Jason there was no open convention what
00:57:26
happened is the delegates fell in line
00:57:28
instantly as I predicted because I said
00:57:30
that they would not be able to handle
00:57:31
the chaos that they wanted to basically
00:57:33
fall in line immediately and end the
00:57:35
chaos and they fell in line behind kamla
00:57:38
Harris who has never gotten even one
00:57:40
primary vote who are you most as a VP
00:57:43
candidate give us that because we
00:57:45
understand that I'll be honest with you
00:57:46
I think that the guy the scariest the
00:57:49
one I would pick is Josh Shapiro he's
00:57:51
the governor of Pennsylvania rising star
00:57:54
look if he can deliver p Mania for the
00:57:57
Democrats that's powerful because one
00:57:59
way for Harris to eek out a victory is
00:58:04
if Shapiro can get her Pennsylvania and
00:58:08
then if she sort of
00:58:10
taxs back to appealing to the Arab and
00:58:13
Muslim vote in
00:58:15
Michigan to eek out Michigan and then
00:58:17
eeks out Wisconsin with one point in
00:58:19
other words if she can hold on to the
00:58:21
blue wall and then she loses the swing
00:58:23
states that Trump is very much ahead in
00:58:25
like Ariz Iona Nevada Georgia North
00:58:27
Carolina she can still win this election
00:58:30
by 270 electoral votes to 268 it' be the
00:58:33
closest margin in presidential history
00:58:36
so that's a scenario and it's probably
00:58:39
her best path to the to Victory is to
00:58:42
win by one one electoral vote that's the
00:58:45
scenario I'd be most worried about as a
00:58:47
republican now the other candidate you
00:58:48
hear a lot about is Mark Kelly the cater
00:58:51
from Arizona who on paper looks
00:58:54
fantastic he's an astronaut his his wife
00:58:57
was a victim of a of a gunshot moderate
00:59:00
right super moderate I personally don't
00:59:02
think he is that moderate but I think he
00:59:03
presents as one and he's he's made
00:59:06
noises he he comes across as tough and
00:59:09
and comes across as as someone who's
00:59:11
wanted to be tougher on the border which
00:59:14
is a huge weakness for Harris yeah if he
00:59:16
can deliver Arizona then he becomes a
00:59:19
strong Contender but I'm not sure that
00:59:22
he can so if it were me I'd probably go
00:59:25
with Shapiro I mean I hope they're not
00:59:27
listening to me I hope they go with
00:59:28
Kelly chamaa obviously even in this
00:59:31
heated thing the good news is that both
00:59:34
sides are going to accept the election
00:59:35
results we have that fairness and and
00:59:38
that honorability and both parties will
00:59:40
accept even a close election there'll be
00:59:42
no drama after it but what's your
00:59:44
thought on the strongest ticket do you
00:59:47
think Shapiro do you think Kelly CNN
00:59:50
said hey and this went viral do we think
00:59:53
a Jewish vice president the country's
00:59:55
ready for it they got kind of dragged
00:59:57
for
00:59:58
that what do you what do you think is
01:00:00
the right VP pick here Cham what do you
01:00:02
think the right VP pick here here is and
01:00:05
which one is the scariest to a trump JD
01:00:08
Vance ticket which is a very strong
01:00:09
ticket in of
01:00:11
itself so if you look at Trump's VP pick
01:00:15
it's
01:00:17
about aligning a
01:00:20
philosophy Donald Trump created the Maga
01:00:24
movement this populist conservative
01:00:26
right-wing movement and I think JD Vance
01:00:30
has an opportunity now to carry that
01:00:32
torch post Donald
01:00:34
[Music]
01:00:35
Trump and that is an ideology that spans
01:00:40
States I think this idea that you pick
01:00:43
somebody because they can deliver a
01:00:44
state is pretty misguided I just don't
01:00:46
think that that in reality is what
01:00:48
happens so I think that kamla has to
01:00:51
decide what she stands for and figure
01:00:55
out whether she needs somebody on her
01:00:56
flank that represents a slightly
01:00:58
different set of ideas that will then
01:01:00
maximize her appeal or she wants to
01:01:02
double
01:01:03
down and then she has to pick somebody
01:01:05
that sort of like aligns with her
01:01:08
philosophically and again I would just
01:01:10
say that it's not super clear yet what
01:01:12
she thinks I think that Joe Biden was
01:01:15
more of a traditional Centrist that had
01:01:17
to appeal to the progressive left in
01:01:20
order to get his work
01:01:22
done so that kind of makes sense you can
01:01:27
understand it you don't have to agree
01:01:28
with it but it's it's pretty obvious I
01:01:31
don't know what
01:01:33
she where she's at politically so I
01:01:35
think that that's the first thing she
01:01:36
needs to explain herself is she a
01:01:38
Centrist is she more of a moderate
01:01:42
Democrat is she more of a progressive
01:01:44
Democrat and then we can then understand
01:01:47
who the best person to align her with
01:01:49
should
01:01:50
be but if I was if I if I was in the
01:01:53
Democratic kind of like Star Chamber
01:01:56
yeah I would kind of try to figure that
01:01:58
out first because I think the Donald
01:01:59
Trump pick makes a lot of sense because
01:02:01
it basically moves the Republican party
01:02:03
in a very firm direction that die is
01:02:05
cast for the Republicans for many years
01:02:07
to come now okay freeberg your thoughts
01:02:09
who is the VP candidate what do you
01:02:12
think of this race and give us a
01:02:15
prediction you know you're you're famous
01:02:17
for your incredible insights and
01:02:19
predictions in politics give us your
01:02:21
prediction R who should she pick who
01:02:23
will she pick and why I think there's a
01:02:26
lot of talk about Roy Cooper in North
01:02:29
Carolina saak didn't mention Cooper but
01:02:32
sounds like could be in the running and
01:02:35
could be a leading Contender for the
01:02:37
slot I think the Harris Trump
01:02:43
poll is not out or there's a recent one
01:02:46
that shows Harris yeah 4448 Trump in the
01:02:50
lead in North
01:02:52
Carolina so there's uh some some room
01:02:56
there if you can get the governor in
01:02:58
that spot that's a lot of electoral
01:03:01
votes in terms of who I think should be
01:03:03
I'm not sure but I do think that might
01:03:05
be a top Contender from folks I've
01:03:08
talked to any thoughts on Shapiro and
01:03:11
CNN's positioning that the country is
01:03:14
not ready for a Jewish vice president so
01:03:16
you know I was shocked recently to hear
01:03:18
about a board a pretty you know
01:03:21
important board because it represents a
01:03:24
large organization and there was a an
01:03:26
individual on the board who was supposed
01:03:27
to be elected chairman they went in for
01:03:29
the for the vote and in that board
01:03:30
meeting this individual who happens to
01:03:32
be Jewish there was a conversation that
01:03:34
ensued about you can't be the the
01:03:36
chairman at this time because having a
01:03:37
Jewish chair would be really difficult
01:03:40
in this current climate and I was
01:03:42
shocked to hear this it you know it was
01:03:45
it was not expected by by folks going
01:03:48
into the meeting things were supposed to
01:03:49
be quite different in the vote and
01:03:51
ultimately the decision was made that a
01:03:53
Jewish person should not be the chair of
01:03:55
the bo at this time jcal to your
01:03:57
question I think that behind closed
01:03:59
doors these are the sort of
01:04:00
conversations that are going on that
01:04:02
there's a perception given the Gaza
01:04:04
conflict that there is a risk of having
01:04:07
Jewish leadership being put into
01:04:09
powerful positions right now Jewish
01:04:11
leaders being put into powerful
01:04:12
positions wow that is shocking that's
01:04:15
insane it's R it's just this is this is
01:04:19
what is going what this is just yeah
01:04:22
it's shocking and deranged and and the
01:04:24
anti-Semitism right now social media and
01:04:28
what we're seeing online is just
01:04:30
absolutely heartbreaking and infuriating
01:04:32
in equal parts saak anything you want to
01:04:35
add to this as we uh wrap up our what
01:04:39
the well I mean just talk about Shapiro
01:04:41
saxs is the country ready for this you
01:04:44
saw the CNN clip and you know sort
01:04:47
of ask question can I just ask I'm sorry
01:04:50
go ahead what what what does it
01:04:52
solve what does it accomplish
01:04:55
less heat coming into that board less
01:04:58
protests less less protests the
01:05:00
protesters now have I guess what I would
01:05:03
read into this correct me I'm War here
01:05:05
freeberg is the protesters have now won
01:05:08
in that they've intimidated people to an
01:05:11
extent that they don't want to go near
01:05:13
Jewish leadership am I interpreting
01:05:16
correctly a possibility
01:05:19
here sorry say that again the protest
01:05:21
was what so these protests the Gaza
01:05:26
conflict have reached a point where
01:05:28
people do not want to have Jewish
01:05:32
leadership because it would be
01:05:33
polarizing and create more protests
01:05:35
that's right that's that and that's the
01:05:37
conversation that I hear going on behind
01:05:39
closed doors or I'm hearing about and so
01:05:43
you know it's almost like a cancel
01:05:45
culture against Jews because of the risk
01:05:47
of a Jewish person being in a leadership
01:05:49
position that could yeah which is
01:05:52
exactly what CNN was bringing up with
01:05:53
the VP choice of Shapiro and that's
01:05:56
right I think it's totally crazy however
01:05:57
I definitely have seen people online I
01:06:00
mean articles online like saying like is
01:06:03
this an issue with putting Shapiro on
01:06:05
the ticket now I can't believe this is a
01:06:08
problem for the voters of the country
01:06:10
however I think if you're one of the
01:06:12
democratic masterminds and you're trying
01:06:14
to engineer enough electoral votes for
01:06:16
Harris to win like I said you're trying
01:06:19
to win that blue wall you're trying to
01:06:20
get not just Pennsylvania but Michigan
01:06:22
and the problem that Biden and had and
01:06:26
now Harris has in Michigan is that the
01:06:29
large Arab and Muslim population in
01:06:32
Michigan is really against the
01:06:34
administration's support of Israel now
01:06:37
this is why Harris just snubbed
01:06:39
Netanyahu when he came to Washington so
01:06:42
they are imately trying to reposition
01:06:44
that issue and remember the margin of
01:06:47
error in Michigan is like 2% so if they
01:06:50
can win back that vote by seeming to be
01:06:53
more Progressive on the whole is Gaza
01:06:56
War then there's a big electoral
01:06:59
Advantage for them so I have to wonder
01:07:01
if this is where this talk about you
01:07:04
know is it an issue for Shapiro to be
01:07:06
Jewish on the ticket or whatever again
01:07:08
it's nuts to me that we could be even
01:07:10
having that conversation in this country
01:07:13
but it's possible that that that is
01:07:15
what's going on is it's it's like can
01:07:17
you win Pennsylvania but not lose
01:07:19
Michigan well the inevitable outcome of
01:07:21
identity politics by giving everyone a
01:07:23
definition on their race or their gender
01:07:26
or their background or their religion is
01:07:29
that you ultimately end up picking
01:07:30
winners and losers and you don't just
01:07:33
get to pick winners when you when you
01:07:34
make selections or prioritize things
01:07:37
based on identity like this you also
01:07:41
deao pick losers and that's where this
01:07:44
unfortunate snowball when johnf Kennedy
01:07:47
ran for president it was a big issue
01:07:49
that he was Catholic I mean you guys
01:07:50
don't remember this
01:07:51
but 1960 right a major thing in our
01:07:54
family was major point of Pride that we
01:07:56
had an Irish Catholic in the White House
01:07:58
yes yeah and specifically what people
01:08:00
asked is would he be loyal to the United
01:08:02
States or would he be loyal to the
01:08:03
Vatican and the pope you know who is his
01:08:05
ultimate Authority and he made a really
01:08:07
clear look I'm going to do what's right
01:08:08
for the United States and he neutralized
01:08:10
that
01:08:10
issue I think that what matters about
01:08:13
Shapiro or any VP is their views and
01:08:16
their accomplishments their policies and
01:08:19
whether he's Jewish or not really is
01:08:21
secondary even if even if you're a
01:08:24
principal concern is Gaza there are
01:08:26
still plenty of Jews who have a wide
01:08:29
spectrum of views on that issue so it is
01:08:33
nuts to me that this conversation is
01:08:35
seriously happening all right there has
01:08:38
been a Kur fuffle a Donnie Brooke online
01:08:42
between Paul Graham and our bestie uh
01:08:44
David Sachs here here Paul Graham
01:08:47
threatening you Sachs on X do you really
01:08:51
want the full story of what you did to
01:08:53
Parker being told publicly because it's
01:08:55
the worst case of an investor
01:08:57
maltreating a Founder that I've ever
01:08:59
heard and I've heard practically all of
01:09:01
them this Paul Graham the founder of Y
01:09:02
combinator I was talking recently to
01:09:05
another investor about whether you are
01:09:06
the most evil person in silon Valley
01:09:08
Frank to you David sax he thought about
01:09:10
it for a few seconds and agreed that he
01:09:13
couldn't think of anyone worse the
01:09:15
second tweet about you being the most
01:09:17
evil person David Sachs in Silicon
01:09:20
Valley has been deleted well that's nice
01:09:23
your response it's nice to know yes
01:09:24
that's nice to know there was also
01:09:25
another unhinged tyde that he had
01:09:27
against me a few months ago okay where
01:09:31
he was commenting in the Ukraine debate
01:09:33
and uh was responding to a Ukrainian
01:09:36
partisan who this guy is like a
01:09:39
propagandist for Ukraine who was
01:09:40
embedded in the asof Battalion people
01:09:43
may know what that is any event Paul
01:09:45
went out of his way the the thing is
01:09:48
I've never met Paul Graham I I don't
01:09:50
know him I've never I've never done
01:09:52
business with him so it's just weird to
01:09:54
me that he had this animus and this
01:09:56
vitriol towards me it's hard to know
01:09:58
exactly what this is based on I think
01:10:01
that part of it is that he thinks he
01:10:05
knows what happened at zenitz even
01:10:08
though he wasn't involved at all and
01:10:10
he's just listening to one guy who's
01:10:11
been nursing this Vendetta for many
01:10:13
years and then other people are
01:10:15
speculating that there could be other
01:10:16
things involved I don't quite know you
01:10:19
want to set the record straight on
01:10:20
zenitz and just say what happened what
01:10:22
is it that you guys want to know Parker
01:10:24
apparently has done several public
01:10:26
interviews where he kind of made claims
01:10:29
I think I don't know if I've listened to
01:10:30
him I've just read the summaries but J
01:10:32
you probably know that par say you ran a
01:10:34
coup on him obviously for folks who
01:10:36
don't know there was an SEC
01:10:38
investigation and Parker was ousted from
01:10:42
zenitz as the founder CEO he's very
01:10:45
bitter about that did a Revenge start up
01:10:47
Rippling which is doing quite well from
01:10:49
what I understand and uh he blamed Sachs
01:10:52
for all of this even though he was
01:10:54
sanctioned for doing essentially
01:10:55
Assurance fraud by helping
01:10:59
people lie on a test for their
01:11:03
insurance certifications and he he got
01:11:06
sanctioned by the SEC for it and as you
01:11:08
pointed out sax he was the only person
01:11:10
who was sanctioned for
01:11:11
that so he broke some rules and he got
01:11:15
pretty pretty serious penalty yeah do I
01:11:19
have that basically I mean that that
01:11:21
that whole experience was like the was
01:11:23
easily the worst year of my entire
01:11:25
professional career having to deal with
01:11:28
that mess that he created and look
01:11:30
anybody can now say anything almost 10
01:11:33
years later in a podcast but the
01:11:35
situation there was thoroughly
01:11:37
investigated by Regulators who had
01:11:40
subpoena Powers who did extensive
01:11:43
Discovery they looked at everyone's
01:11:44
emails throughout the whole company they
01:11:46
also interviewed something like a dozen
01:11:49
people under oath and took witness
01:11:52
testimony from them and then they
01:11:54
sanctioned him they find him and they
01:11:56
published an account of what happened I
01:11:58
personally think it's a huge waste of
01:11:59
time to be like rehashing events are
01:12:02
almost a decade old but I guess I'm
01:12:03
being forced to by this smear campaign
01:12:07
that he and Paul Graham have engineered
01:12:10
against me if you want to know what
01:12:13
happened just read what the SEC said
01:12:15
read what the other Regulators said
01:12:18
there was only one person who was named
01:12:21
as being aware of the misconduct and
01:12:25
there was only one person who was fined
01:12:27
and held accountable by Regulators in
01:12:29
fact he was fined more than the company
01:12:32
now if he just said yeah look I learned
01:12:34
from that mistake and I you know I made
01:12:36
some mistakes moved on and apparently he
01:12:38
does have a successful company so I
01:12:41
don't really understand why he's so
01:12:42
bitter he seems to have like a you know
01:12:45
he's like disturbed about it then it
01:12:48
would be fine I mean there would be no
01:12:49
reason to be talking about this but the
01:12:52
guy refuses to admit that he did
01:12:55
anything wrong and instead he's created
01:12:56
this elaborate story that his departure
01:12:59
from Zenit wasn't related to massive
01:13:01
compliance issues and that somehow it
01:13:04
was related to him missing a sales
01:13:05
Target or being the victim of a coup
01:13:07
that's not what happened this was a
01:13:09
regulatory crisis that unfolded over
01:13:11
many months and kept getting worse and
01:13:14
worse and we kept discovering new
01:13:17
compliance violations and this created a
01:13:19
50 State Insurance investigation that
01:13:21
could have shut the company down yeah
01:13:23
and he controlled the bll he didn't have
01:13:26
to leave if he didn't want to he
01:13:28
ultimately perceived that it was in his
01:13:30
interest to leave and let us clean it up
01:13:32
and then he went on to go do this other
01:13:33
startup which I think he was planning to
01:13:35
do all along so his plan worked out for
01:13:38
him which is he left a big mess for us
01:13:39
to clean
01:13:41
up and he very successful now with the
01:13:43
new company so right right sax I
01:13:45
remember I will just say I remember how
01:13:47
hard you worked at that after you were
01:13:50
uh in the COO seat and then you were
01:13:51
promoted to CEO and I was really
01:13:53
impressed watching it and seeing what
01:13:55
you did because you chose to step up and
01:13:57
take care of this company at a time
01:14:00
where you expressed to all of us
01:14:01
privately how hard it was and what a
01:14:03
challenge this company had found itself
01:14:04
in and you had investors that were
01:14:07
friends of yours that were involved in
01:14:09
the company that were on the board and I
01:14:11
think you did what felt like at the time
01:14:13
and from my experience interacting with
01:14:15
you during the time the right thing
01:14:17
which was to step up and address this
01:14:18
rather than just throw your hands in the
01:14:20
air and say this guy screwed things up
01:14:21
or this company screwed up and walk away
01:14:22
from it you had personally put money in
01:14:24
your friends have put money in and you
01:14:26
worked hard to try and help the business
01:14:27
recover after this miserable period of
01:14:30
time and it was really impressive to
01:14:32
watch you do that work so I just want to
01:14:34
highlight my kind of experience watching
01:14:36
you it was it was miserable and
01:14:38
obviously pretty thankless and I did it
01:14:40
for no compensation I did it because
01:14:43
like you said I had a lot of friends who
01:14:44
invest in the company I just thought it
01:14:45
was the right thing to do to do this
01:14:47
cleanup the lawyer said it would take
01:14:49
two years we managed to get it done in
01:14:51
one year we got a clean bill of health
01:14:52
from Regulators we had to remediate all
01:14:55
the compliance failures and when I then
01:14:57
handed the torch to the new CEO we had
01:14:59
$200 million in the bank and 60 million
01:15:01
of ARR with a clean bell of health so
01:15:05
you know but I didn't know I'd have this
01:15:07
like crazy founder like lobbing bombs at
01:15:09
me the whole time and frankly if I known
01:15:12
he was going to do this I would have
01:15:14
just said listen man you clean up your
01:15:15
mess and he would have continued playing
01:15:18
games and stolen Walling The Regulators
01:15:19
and it would have been a much worse
01:15:21
situation for sure Cham you want
01:15:23
anything here before we wrap up on this
01:15:25
because I'll I have two points to make
01:15:26
but I'll let you go first look I think
01:15:29
that part of what happens in Silicon
01:15:32
Valley is that there's these clicks and
01:15:35
there's definitely a a YC click and they
01:15:39
protect their own in absolute terms and
01:15:42
so I think there's a level of morality
01:15:44
that everybody else has to live by
01:15:45
that's not necessarily the the rules
01:15:47
that apply if you're a YC
01:15:50
CEO now that was accepted in Silicon
01:15:53
Valley because in the early
01:15:56
days they were frankly one of a very
01:16:01
very small handful of games in town with
01:16:03
respect to high quality deal flow when
01:16:05
you started to do series a b and c and
01:16:09
as a result of that I think venture
01:16:10
capitalist essentially looked the other
01:16:12
way because the returns were so good the
01:16:15
companies that were coming out of the
01:16:16
incubator were so good but as with all
01:16:18
things when you're successful and you
01:16:20
try to scale returns Decay and this is
01:16:24
not a a flight on YC's returns but it's
01:16:27
what happens to everybody so if you look
01:16:29
at blackstone's returns they were
01:16:31
incredible when they started then
01:16:33
they're okay today when you look at
01:16:35
sequoia's returns they were incredible
01:16:37
when they started they're okay today
01:16:40
YC's returns were incredible when they
01:16:42
started they're okay today and this is
01:16:44
nothing against any of these folks it's
01:16:46
that in the business of building an
01:16:47
organization and scaling that's what
01:16:50
happens and when that happens and a lot
01:16:52
more competition emerges on this
01:16:56
seen the old tactics that you used to
01:16:59
use to run a protection racket if you
01:17:02
will just doesn't work anymore and I
01:17:04
think part of what's spilling out in
01:17:06
public here is that that kind of
01:17:09
immature form of bullying and
01:17:11
intimidation is just kind of dumb
01:17:13
because it's it just doesn't hang
01:17:15
together anymore so I don't know I
01:17:17
thought the whole melee if you will
01:17:21
Ruckus Jason fraus fraus Donnie Brooke
01:17:26
bruh a clash yeah was more about a guy
01:17:32
that was engaged in this trying to do
01:17:34
what he perceived to be the right thing
01:17:37
for a YC founder in his community but
01:17:41
probably just he just needs to get back
01:17:43
to work and do something productive and
01:17:45
probably this wouldn't happen the next
01:17:46
time I'll just make two points here why
01:17:49
combinator has always like much of our
01:17:52
industry they're not unique in this been
01:17:54
in favor of rule Benders Breakers and
01:17:58
naughty is actually something in their
01:18:00
interview process that they optimize for
01:18:03
Sam Alman has talked about this very
01:18:05
publicly I had a ycl Alum who was trying
01:18:08
to get funding for me hack my voicemail
01:18:10
and change my outgoing voicemail and
01:18:12
that was like a big brewhaha and Hacker
01:18:14
News Etc and you know we kind of
01:18:16
celebrate a little bit of bending and
01:18:18
breaking of rules and what everybody
01:18:21
needs to understand is sometimes if you
01:18:22
bend or break a rule like insurance
01:18:24
certification like Parker did here you
01:18:26
know that that can be fatal for a
01:18:28
company which it was and it can be you
01:18:31
know really really dangerous and so then
01:18:34
you superimpose on top of this to your
01:18:37
point chamama Y combinator very big
01:18:40
powerful organization some folks say a
01:18:42
mafia and they described it as a bully
01:18:45
stack you know y combinator does circle
01:18:47
the wagons they do bully people and they
01:18:50
do put out a presentation that we are
01:18:53
the only people in Valley who are
01:18:55
founder friendly you know even though
01:18:57
they're getting 7% for 125k like we do
01:18:59
in our accelerator techar does while
01:19:02
also saying everybody else is the enemy
01:19:04
everybody else is taking advantage of
01:19:06
Founders the truth is we're all working
01:19:08
really hard every founder you know is
01:19:11
going to H hack their way to success
01:19:14
sometimes you take it too far like
01:19:16
Parker did here he learned a lot of
01:19:17
lessons like some people say Uber did
01:19:19
like some people say Airbnb did there's
01:19:21
always been rule breaking and bending in
01:19:23
the entrepreneurial middle class and
01:19:25
then you superimpose on it Paul Graham's
01:19:28
feelings you know uh in the Middle East
01:19:30
Sachs your strong feelings about Ukraine
01:19:32
and politics and now the footprint of
01:19:35
Silicon Valley is just so powerful so
01:19:37
influential on the global stage when it
01:19:39
comes to politics it just reaches a
01:19:41
level of toxicity here that it doesn't
01:19:43
need to we're all on the same team let's
01:19:45
all build great companies let's put this
01:19:47
ugliness behind us and get back to work
01:19:49
that's my final statement No shanis is
01:19:51
spoken I like that statement and if we
01:19:54
were just talking about somebody who had
01:19:56
learned their lesson this wouldn't even
01:19:58
be an issue this is like events that
01:20:00
happened a decade ago such a waste of
01:20:01
our time and energy even be talking
01:20:03
about the problem is that you have
01:20:06
people really we're talking about Parker
01:20:08
and Paul Graham who are trying to smear
01:20:10
somebody as a way to you ex yeah they're
01:20:14
trying to damage your business let's be
01:20:15
honest they're trying to get Founders to
01:20:17
not work with you for sure they're doing
01:20:19
that and that's by the way look
01:20:21
Parker has this very complicated story
01:20:24
and the whole purpose of it is to
01:20:25
exonerate himself to basically say that
01:20:27
he didn't engage in any wrongdoing and
01:20:29
somehow he was set up okay it's
01:20:32
ridiculous I mean I don't have that kind
01:20:33
of power over the SEC the SEC they sent
01:20:36
us a list of people they wanted to talk
01:20:38
to I was not on the list and I was like
01:20:40
well wait don't they want to talk to me
01:20:41
I'm the new CEO of the company and the
01:20:43
lawyer said no your Discovery was clean
01:20:45
as a whistle they don't have any
01:20:46
questions for you they only want to talk
01:20:47
to people who you know they saw in the
01:20:50
discovery there was an issue so The
01:20:52
Regulators prosecuted they basically
01:20:55
conducted this investigation I had no
01:20:57
impact over that it was a very serious
01:21:00
issue this was not made up so I I I just
01:21:02
think it kind of defies belief to now
01:21:04
say that this you know all the
01:21:06
Regulatory Compliance issues which
01:21:07
played out over months were not an
01:21:09
existential issue for the company it
01:21:11
certainly was but look we have better
01:21:12
things to talk about do you see Ali
01:21:14
resnik's tweet this is pretty dark Ali
01:21:17
Resnik tweeting here Paul Graham reached
01:21:20
out to the key SV firm so Valley firms
01:21:25
to attempt to get Jewish
01:21:28
VCS fired post October 7th no idea if
01:21:32
that's true or not but there has been
01:21:35
this Paul Graham is
01:21:38
anti-Semitic you know sort of meme going
01:21:41
around I don't think he's anti-semitic
01:21:42
but this is a pretty bold charge here
01:21:45
and I don't know if it's true or not
01:21:47
well I can speak to some of it okay go
01:21:48
ahead yeah I've talked to a few people
01:21:50
who are involved in this look I think
01:21:52
what happened is that in the wake of
01:21:54
October 7 there was obviously a very
01:21:55
heated debate online PG is on one side
01:21:59
of that he got into it was supporters of
01:22:02
Israel on the other side they accused
01:22:04
him of saying anti-semitic things he
01:22:08
took offense to that and basically went
01:22:11
over their heads to their bosses of a
01:22:14
couple of different VC firms at least
01:22:16
two that I know of where he basically
01:22:19
went to the heads of these firms to
01:22:20
express his displeasure I guess with
01:22:22
these exchanges and I I think the
01:22:24
feeling on the part of the junior VCS
01:22:27
because the people he was going over the
01:22:28
heads of were were not senior Partners
01:22:30
or whatever these were lower level to
01:22:32
mid-level VCS at firms you can
01:22:35
understand how they would receive that
01:22:37
the head of YC is going PA is a giant
01:22:40
yeah yeah so he he's basically going to
01:22:42
the heads of their firm to seek a
01:22:45
correction in their behavior even though
01:22:48
this wasn't like a workplace activity
01:22:51
and so they certainly felt intimidated
01:22:52
and silenced by that or in the worst
01:22:56
case that he was trying to get them
01:22:57
fired in his case I guess he's trying to
01:23:00
you know say hey this isn't cool to call
01:23:02
me an anti-semite on Twitter publicly
01:23:05
and the truth may be somewhere in
01:23:06
between I mean the great irony of this
01:23:08
of course is he's out he's concerned
01:23:10
about his reputation being damaged and I
01:23:13
know YC took it very seriously the
01:23:15
claims that they're anti-semitic and
01:23:17
Paul Graham's anti-semitic they took
01:23:18
that very seriously as they should but
01:23:21
here he is out there trying to damage
01:23:23
your reputation so it's a little bit of
01:23:26
hypocrisy here I think if he's outwardly
01:23:30
trying to destroy your reputation with
01:23:31
Founders and then he's concerned about
01:23:33
his reputation well clearly there's a
01:23:35
double standard here because PG doesn't
01:23:37
like being called names on Twitter yeah
01:23:41
he doesn't like his views being labeled
01:23:43
and he's willing to take those debates
01:23:44
offline go over the heads not talk to
01:23:47
the people who said those things but
01:23:49
then go to their bosses the heads of
01:23:51
their firm yeah maybe not threaten them
01:23:53
maybe not say
01:23:55
I don't think he said fire this person
01:23:56
whatever but like you said there's
01:23:58
always an implication of retaliation
01:24:00
because people understand the way that
01:24:02
YC operates and certainly those junior
01:24:05
level
01:24:06
VCS experienced it as a form of
01:24:09
intimidation I mean this is the classic
01:24:12
cancellation Playbook right and this is
01:24:13
what people will do to the left or the
01:24:15
right or they'll do it to advertisers
01:24:17
they'll try to get advertisers to cancel
01:24:19
it feels similar to that cancel culture
01:24:22
even if that's not how PG intended well
01:24:24
it's also like rather hypocritical when
01:24:27
he's super sensitive about this type of
01:24:29
thing but then he's instigating this
01:24:32
pylon when on this whole Zenit thing
01:24:34
he's basically single Source from a
01:24:37
disgruntled founder who has this
01:24:38
Vendetta who's been nursing this thing
01:24:40
for years he's never talked to me like I
01:24:42
said he's never even met me but he's
01:24:44
willing to call me the most evil person
01:24:46
in all of Silicon Valley and then again
01:24:49
instigate this pylon with like all these
01:24:51
other people from YC yeah I mean how
01:24:53
dare him you the most evil person that's
01:24:57
my job here on the podcast yeah exactly
01:24:59
and then I saw like other people from YC
01:25:01
like Michael seel who I think is
01:25:03
actually a really cool guy oh he's
01:25:04
awesome yeah supportive Founders and
01:25:07
then he's tweeting that like I somehow I
01:25:09
put up my Founders who were there were a
01:25:10
lot of Founders who basically spoke up
01:25:12
and actually said including many
01:25:14
Founders who came out of YC say you know
01:25:17
actually David has been a great VC to us
01:25:19
and he's saying oh saxs must have put
01:25:20
them up to it no I never asked anybody
01:25:22
to do that and a good reason why why is
01:25:24
I don't want to trouble my founders with
01:25:28
into this drag them into it so I'm not
01:25:29
going to make them do that so I had
01:25:31
nothing to do with that but but frankly
01:25:33
you know old saying that every
01:25:35
accusation is a confession maybe the
01:25:37
reason why people at YC think that I
01:25:39
might have done that is because that's
01:25:40
kind of their playbook is they create
01:25:41
these online mobs but like what gives
01:25:44
him the right to to do that I can tell
01:25:47
you go for it he doesn't have enough to
01:25:50
do he's sitting around he's got a lot of
01:25:53
money I mean he's been very successful
01:25:55
and as far as I can tell he's just
01:25:57
getting into dust UPS on Twitter and
01:25:59
then like like I there's a lot of
01:26:02
amazing people we all know them that are
01:26:04
so good when they're under pressure
01:26:06
focused and grinding and then when you
01:26:09
take a little bit of the pressure off
01:26:11
they just go crazy and they don't have
01:26:14
enough to do and it's Amplified by money
01:26:15
and it's Amplified their own perceptions
01:26:17
of themselves so I don't know may maybe
01:26:19
you should just go back to work so
01:26:21
everybody back to
01:26:22
work when these things get heated here's
01:26:25
an interesting idea for everybody go get
01:26:27
a cup of coffee with the person you
01:26:28
disagree with sit down like we do here
01:26:30
at the all-in podcast and have a vibrant
01:26:32
debate it makes life richer it makes you
01:26:34
smarter it gives you more perspective
01:26:36
and so PG Sachs anybody else involved
01:26:39
you just all sit down and have a cup of
01:26:41
coffee try to Hash this out okay good
01:26:43
coffee in San Francisco that's my Rx
01:26:46
freeberg I've been talking to saaks
01:26:47
privately he has been complaining to me
01:26:49
for weeks that we've had too much
01:26:51
Politics on the program and not enough
01:26:53
science corner so I acques to Sax's
01:26:57
appeals to me and all of his supporters
01:27:00
to to get a science Corner in today
01:27:02
let's talk about nuclear power
01:27:04
everybody's got nuclear power on their
01:27:06
mind obviously China is doing a really
01:27:08
good job of executing on it and uh
01:27:11
there's some new science here so fill us
01:27:15
in sax looks so engaged let's go well SX
01:27:18
might like it because it's it's a bit of
01:27:20
an economic story and a bit of a China
01:27:22
competitive story which I think is the
01:27:25
main point here the story is rooted in a
01:27:28
paper that was published out of China on
01:27:30
their new high temperature gas cooled
01:27:33
Pebble bed reactor which is a new type
01:27:35
of nuclear reactor technology that shows
01:27:37
that this thing cannot melt down which
01:27:39
is an amazing new technology but I want
01:27:41
to just take a step back and talk about
01:27:43
General electricity production in the US
01:27:45
versus China and where it's headed so
01:27:47
today the US has roughly one terawatt of
01:27:51
total electricity production capacity
01:27:53
China today has about 3 ter of total
01:27:57
electricity production capacity and
01:27:59
about you know 2 to 3% of that is
01:28:01
nuclear today for China so by 2050 the
01:28:05
US has projected to build out an
01:28:07
additional terawatt to getting us to two
01:28:08
terawatts of capacity so we're going to
01:28:10
double our total electricity output by
01:28:12
2050 China meanwhile has a plan stated
01:28:16
to increase electricity production to
01:28:18
8.7 tratt so basically tripling between
01:28:21
now and 2050 88% % of their power by
01:28:25
2050 will be
01:28:26
Renewables and by 2060 they've stated
01:28:30
this goal that they want about 18% of
01:28:31
their overall power to come from nuclear
01:28:33
reactors they currently have 26 nuclear
01:28:36
reactors in the construction phase
01:28:38
they've got planning going on around
01:28:39
building 300 of these and they've
01:28:42
already got stated plans around 500 gws
01:28:45
of capacity just to give you a sense of
01:28:46
that 500 gws which is what China's got
01:28:49
plans for is half of the total us
01:28:52
electricity production today
01:28:54
that's in their nuclear buildout today
01:28:57
just to give you a sense on the relative
01:28:58
cost of electricity China's about 7 to 9
01:29:01
cents a kilowatt hour the US is 17 to 25
01:29:04
cents a kilowatt hour and China is
01:29:08
projected to drop their price to less
01:29:10
than 6 cents due to the expansion of
01:29:12
Renewables and nuclear power in the
01:29:15
country so the US cost is about triple
01:29:17
what it is in China to build out new
01:29:19
electricity capacity that's a really
01:29:21
important point so currently we have
01:29:23
about a third of what China has China's
01:29:25
going to Triple we're going to double by
01:29:27
2050 their cost is already lower than
01:29:29
ours and it's going to get lower and
01:29:31
their cost to build out new electricity
01:29:34
is a fraction of what it is in the US so
01:29:38
this is a a massive difference the
01:29:39
International Energy agency estimates
01:29:41
that the electricity from nuclear power
01:29:43
cost 65 bucks per megawatt hour in China
01:29:46
compared to 105 in the US and 140 in the
01:29:50
EU um and recent data has us costs
01:29:52
looking like they might be anywhere from
01:29:54
five to up to 10 times what it costs to
01:29:56
build out in China so this is a real
01:29:59
important long-term competitive point
01:30:03
china has more electricity production
01:30:05
it's cheaper to make electricity and
01:30:06
it's cheaper to build new capacity and
01:30:08
they're building at an accelerated rate
01:30:10
and this really highlights the
01:30:11
industrial challenge the United States
01:30:13
is going to have in the decades ahead we
01:30:15
talk a lot about wanting to onshore
01:30:17
Manufacturing in the US build out new
01:30:19
Manufacturing Technologies But
01:30:21
ultimately all of these industries
01:30:22
particularly AI are going to be driven
01:30:24
by the cost of power so Nick if you pull
01:30:27
up this chart so what's going on in
01:30:29
nuclear well there's uh effectively
01:30:32
considered to be four generations of
01:30:33
nuclear reactors the first generation
01:30:36
was all the early prototypes and I've
01:30:37
got an image up here to to show uh to
01:30:40
show this comes from the Department of
01:30:41
energy the second generation which was
01:30:43
the first kind of commercial power
01:30:44
reactor started to get built out in the
01:30:46
1960s 7s 80s and then these gen 3
01:30:49
reactors were these lighter weight
01:30:50
reactors that were kind of more advanced
01:30:54
Gen 4 is the next generation of nuclear
01:30:57
power reactors and their next Generation
01:30:59
because they're meant to be much more
01:31:00
safe where they cannot theoretically
01:31:02
have a meltdown you can't have a nuclear
01:31:04
meltdown like you had with
01:31:06
Fukushima or with Three Mile Island and
01:31:09
to be clear Fukushima was generation two
01:31:11
those are the boiling water reactors
01:31:13
yeah yeah and so these these These Old
01:31:15
reactors have this risk where if the the
01:31:18
where you pump water in to cool down the
01:31:21
reactor and to drive the turbine and if
01:31:23
the the water pumping system fails and
01:31:26
you can't get the rods out of the
01:31:29
reactor then the the reactor keeps
01:31:31
reacting the uranium keeps having this
01:31:33
kind of chain reaction gets hotter and
01:31:35
hotter and eventually gets so hot it
01:31:37
melts all the walls and all the
01:31:39
surrounding materials of the reactor and
01:31:41
all of the nuclear rods start to
01:31:44
evaporate and all this nuclear material
01:31:45
is released into the environment that's
01:31:47
the risk of a meltdown ultimately this
01:31:49
is not a nuclear bomb just to be clear
01:31:51
this just about really high temperatures
01:31:52
melting the facility and then
01:31:54
radioactive material escapes the
01:31:56
facility the Gen 4 reactors are designed
01:31:59
where that isn't possible and so one of
01:32:02
the first uh if you go to this next
01:32:03
slide you'll see just kind of an image
01:32:04
here this is the new reactor called the
01:32:06
the pebble bed reactor China started
01:32:08
this facility I don't want to butcher
01:32:10
the the the the name but I think I will
01:32:12
it's at the Shia Dawan site in Shandong
01:32:15
Province it's a 210 megawatt electricity
01:32:18
production um reactor they started
01:32:21
Construction in 2012 they finished um
01:32:23
and started Ed uh doing operational
01:32:25
tests in December of 22 they ran all the
01:32:28
safety tests in the summer of 23 where
01:32:30
they turned off the cooling and
01:32:32
basically simulated that the system
01:32:34
failed to see if it would melt down and
01:32:37
that's the results that they just
01:32:38
published which was the test they ran
01:32:40
last summer and even when they turned
01:32:42
everything off the system did not fail
01:32:43
it did not have a meltdown it it
01:32:45
maintained its ability to control its
01:32:47
temperature and not have a meltdown and
01:32:50
the way it works as you can see here is
01:32:52
that these little Pebbles kind of like
01:32:54
billiard ball sized Pebbles have uranium
01:32:56
in their core these Pebbles kind of drop
01:32:58
into this um the center reactor chamber
01:33:01
and when the uranium is close to other
01:33:02
uranium a chain reaction starts to
01:33:04
generate heat that heat is actually in
01:33:07
this reactor concept captured by your
01:33:10
helium gas that's circulated inside
01:33:12
around the reactor that hot helium gas
01:33:14
heats up water turns a turbine generates
01:33:16
electricity and then these billiard
01:33:18
balls fall out the bottom so what they
01:33:21
did is they simulated that the system
01:33:22
stopped circulating that the power went
01:33:24
out and measured what happened
01:33:25
ultimately it was able to recover it
01:33:28
didn't melt down and this is quite
01:33:29
different Nick if you show an old model
01:33:31
of an old nuclear Rod system so here's
01:33:33
nuclear rods they're made of uranium
01:33:36
they they go inside these chambers that
01:33:37
have other uranium and when they touch
01:33:39
each other or get close to each other
01:33:40
they heat up and you have water that has
01:33:43
to be pumped continuously to keep it
01:33:44
cool to maintain a low temperature what
01:33:47
happened in Fukushima and other
01:33:48
facilities where we've had meltdowns is
01:33:50
that the water stopped pumping
01:33:52
everything kind of evaporated away and
01:33:55
the rods didn't get pulled if the rods
01:33:56
can't get pulled out and the water can't
01:33:58
keep pumping you have a meltdown where
01:34:00
things get so hot it melts everything
01:34:02
around it and collapses so this Chinese
01:34:04
site just demonstrated this Pebble bed
01:34:07
reactor which is a Gen 4 reactor and it
01:34:10
has extraordinary safety profile there's
01:34:14
you know basically no no condition where
01:34:17
the system would have a meltdown so
01:34:18
these Gen 4 reactors are smaller they're
01:34:20
more modular they're they're much much
01:34:22
safer they're more efficient they have
01:34:24
much less waste you still have to store
01:34:26
those used Billiards somewhere so you
01:34:28
still have to kind of take them and put
01:34:29
them somewhere and keep them underground
01:34:31
for 10,000 years but compared with
01:34:34
previous reactors you know this
01:34:36
plant is designed to be much more
01:34:39
efficient much safer and they completed
01:34:41
the safety test they published the
01:34:42
results on the safety test and I think
01:34:44
it really shows the the performance is
01:34:46
there and this was always meant to be
01:34:48
future technology these Gen 4 reactors
01:34:50
China opened up commercial operations
01:34:52
with this reactor in December of 2023 so
01:34:54
it's running it's producing power it's
01:34:56
on the grid and you know this design
01:34:59
funny enough was first proposed in the
01:35:01
1940s and it took us nearly a 100 years
01:35:03
to get it to Market which makes me also
01:35:06
point out why I'm so optimistic 100
01:35:08
years from now on Fusion technology
01:35:10
which seemed crazy at the today and this
01:35:12
this sort of Technology seemed crazy at
01:35:14
the time but you know 80 years later
01:35:15
we've gotten there so you know this was
01:35:17
an exciting outcome but I really do want
01:35:19
to highlight the competitiveness with
01:35:21
China lower cost to produce lower cost
01:35:24
to run and and they're expanding like
01:35:26
crazy and the downstream is they can
01:35:28
power more h100s the US this is why this
01:35:32
is why and this is why I asked Donald
01:35:33
Trump when he came on the show and I
01:35:34
want to make my passionate plea this is
01:35:36
why investing in and deregulating
01:35:38
nuclear reactor technology in the United
01:35:40
States to enable a competitive playing
01:35:42
field with the United States and China
01:35:44
in the decades ahead is so critical
01:35:45
because if we don't China will beat the
01:35:47
United States industrially and we will
01:35:49
eventually find ourselves in a greater
01:35:51
point of conflict with respect to this
01:35:53
Rising power that is going to be driven
01:35:55
by lowcost highly abundant power and the
01:35:58
United States does not have that power
01:36:00
equals AI you don't think that
01:36:02
distributed energy can basically deliver
01:36:07
effectively energy at a marginal cost of
01:36:09
zero yeah so the the the solar build
01:36:12
atum off is in the the US forecast where
01:36:15
we can get in an optimistic scenario a
01:36:17
doubling of power output from one
01:36:19
terawatt to two that's in the system
01:36:21
today in the forecast but how do we get
01:36:24
to nine that's where China's going to be
01:36:26
at by 2050 and we have to have this
01:36:29
ability to more rapidly kind of
01:36:31
accelerate you know high power output
01:36:33
systems like nuclear because while solar
01:36:35
is great it's a low power output you
01:36:37
need you know much more volume So This
01:36:39
is highly concentrated system and the
01:36:41
cost per megawatt hour you know can be
01:36:44
significantly competitive if you use
01:36:45
these small modular reactors and
01:36:47
accelerate about carbon what about
01:36:49
carbon based Solutions as a fall
01:36:51
back difficult to scale I mean we're not
01:36:54
going to open up 500 more coal power
01:36:56
plants in the next couple years what
01:36:57
about oil and N gas yeah so today n gas
01:37:00
is
01:37:01
44% of of us power production capacity
01:37:05
and we are going to build out and we are
01:37:07
building out new n gas facilities but
01:37:09
that's in the forecast so all of our
01:37:10
forecasts today for the US are mostly n
01:37:13
gas going out and and a lot of solar and
01:37:15
wind going out to 2050 to double our
01:37:18
capacity and it's already a stretch for
01:37:20
us to be able to double our capacity so
01:37:22
the only solution is to to rewrite the
01:37:24
regulation we have to get nuclear going
01:37:27
in the United States and these systems
01:37:30
are safe they are scalable and if the
01:37:32
United States embraced this and we took
01:37:34
a public policy perspective that this is
01:37:36
about competitiveness with China it's
01:37:38
about National Security I'm hopeful that
01:37:40
whoever comes in to lead the executive
01:37:42
branch in this next Administration will
01:37:44
be really thoughtful and make this a top
01:37:46
priority so that's my plea and my reason
01:37:47
for going through this today yeah I
01:37:50
agree with you yeah this has been
01:37:52
another amazing episode of the Allin
01:37:55
podcast for what have we what have we
01:37:57
learned Jason it's important to have a
01:37:59
job otherwise everything just goes to
01:38:01
pot yeah do not retire keep your mind
01:38:04
sharp and shout out to our friend Phil
01:38:06
helmuth doing really great at the World
01:38:08
Series of Poker happy birthday Xander
01:38:11
happy birthday to our guy Xander yada
01:38:13
yada and for the chairman dictator the
01:38:16
uh sulan of Science and your Rainman
01:38:19
architect yeah David Sachs I am the
01:38:22
world's most moderate
01:38:24
we'll see you all next time
01:38:26
byebye let your winners
01:38:33
ride and instead we open source it to
01:38:36
the fans and they've just gone crazy
01:38:38
with it love
01:38:42
[Music]
01:38:46
youen besties
01:38:49
are that's my dog taking a your driveway
01:38:52
wa
01:38:54
yeah oh man myit meet me we should all
01:38:58
just get a room and just have one big
01:39:00
huge orgy cuz they're all just usess
01:39:01
it's like this like sexual tension that
01:39:03
they just need to release
01:39:04
[Music]
01:39:10
somehow we need to get merch
01:39:15
[Music]
01:39:19
our I'm going all in
