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hey everybody Welcome to episode
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125 of the all in podcasts on a historic
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day we're taping 420 really excited that
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SpaceX was able to launch Starship and
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it made it off the launch pad and
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Incredibly successful today day today we
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have of course with us the Rayman David
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sacks the Sultan of science David
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Friedberg and of course the dictator
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tremath polyhapatia but two special
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guests are here special guests Gavin
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Baker
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from a tradies how do you pronounce it a
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tradies house of tradies House of
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tradies if you know Dune and then SpaceX
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board member Antonio gracias one of the
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First Investors in SpaceX Antonio a big
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day for you maybe you could just tell
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the audience what happened today why
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that is so important in the history of
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this company
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well first I want to thank you guys for
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letting me uh come on and have a little
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chat with you about this
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today was extraordinarily important for
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for SpaceX I think for America and for
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Humanity
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and the Starship is the realization of
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the vision hat Elon had 20 years ago 25
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years ago even as a child really to to
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go to Mars
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and the engineers here at SpaceX and on
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the entire team working extremely hard
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or really just to get this this vehicle
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off the pad Asiana said right this is a
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brand new vehicle everything about it is
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new so the engines the material science
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the structure the design all of it new
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and the most important thing here was to
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get off the pad so we acrylic data and
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this technology platform is the platform
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that allow us to go to Mars so from a
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non-engineer standpoint why this is
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important is that what we've proven with
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this flight we got past a point called
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maxq which is the point at which the
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vehicle takes maximum stress that's how
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I think about it I'm sure Engineers
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would tell us a lot more description to
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it or David Friedberg give you a better
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script to it but it's the most funnest
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rest in the vehicle which means this
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vehicle will get to orbit
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and this is the vehicle that's going to
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take us to Mars so today's the day that
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all of the hard-working people at SpaceX
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accomplished a goal of making the human
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race space fairing when we look back in
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history I believe this will be the day
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when you mark the the technological
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development that we broke through and
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built a vehicle that could actually go
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to Mars now when we look at it obviously
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it didn't make it to orbit maybe you can
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give some context into what is the
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typical life cycle of a new rocket ship
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coming out the Falcon the original one
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has done I think 224 missions
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222 of them successful I think 160 or so
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actually landed themselves yes and so
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you had two or three mulligans I think
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in the development of that maybe two
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actually
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so what can we expect here when are they
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going to stack and rack and launch the
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next one Antonio let's see what's the
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timeline here to getting to orbit what
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would we expect versus some of the other
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projects that we've seen like the
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Russian Rockets
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so look this is um a brand new vehicle
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and whenever we develop brand new
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vehicle it takes a long time development
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you know my understanding all this is as
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again a Layman and sort of as a board
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member non-executive year is it it'll
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take at least called two or three months
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two or three months to really get the
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pad rebuilt and get another vehicle back
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on for testing uh maybe longer
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but it's really important to note here
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that we've gotten sort of used to the
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idea that SpaceX launches rockets and
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all these Rockets come back and all
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those vehicles are stable because the
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Falcon 99 heavy are so stable and
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they're so well engineered and they're
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amazing vehicles but the most reliable
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vehicles on Earth in human history
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this is a brand new vehicle this was a
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huge win I mean it was an enormous room
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for the company an enormous room for the
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country just getting it off the pad and
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collecting the data and now we know it
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works we just have to get it stable now
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get up to orbit
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so it's it's really it's it's a hard
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problem but it's a soluble problem from
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here and the the we learned here is that
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this vehicle does work
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amazing can you guys talk about like the
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impact of this vehicle cost to launch
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payload like the big metrics that are
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that kind of help realize
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that outcome govern I think I saw you
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did a bunch of really good tweets on
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this you shared some of the metrics that
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I that I thought were really succinct
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and really helpful yeah sure so when
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this is I think it's a long road to full
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reusability
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um you know the first step will be
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CCA Zilla catching the booster
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doesn't it doesn't have uh legs like the
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Falcon 9 and then the second step will
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be landing the Starship which is really
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hard
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but once you do that
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they should be able to send over a
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hundred metric tons to orbit at a
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variable cost of under two million
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dollars
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per public data this these are public
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statements
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I would never confirm or deny those
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damages this is Gavin's map on the back
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of the envelope two million dollars is
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the cost to get 100 tons into orbit
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that's that's the the metric variable
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cost variable cost so but I think the
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point gav is making if I might just play
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that is that it is a step function
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change it's not like a small change it's
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an enormous change right can you compare
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that to the numbers before for folks to
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understand
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the Falcon 9
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Mass to useful orbit is 17 metric tons
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and the variable cost that
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you know I I have seen Elon tweet about
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is somewhere around 15 million dollars
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so you are lifting more than five times
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the mass to orbit
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and based on other statements at 100
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metric tons is a very conservative
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estimate
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and you're doing it I'd call it
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10 to 15 of the cost
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so this is a you know we can all do the
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math but
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we can envelope it um you know
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roughly a 50x huge change in this you
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know massively changes needed economics
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for starlink for sending anything into
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orbit
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and as Antonio said it's it's great for
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SpaceX it's great for America and it's
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great for uh for everyone we have the
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humanity is great for Humanity can you
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explain how that then translates into
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going to Mars so now we can get 100 tons
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into orbit for two million dollars what
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happens next in terms of like how that
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payload capacity and low cost enables
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you know full transport to Mars and
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you know I know that the timelines are
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tough but it would be super helpful to
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just to translate the orbit concept into
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the let's go to Mars concept it's
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important to know that like the size of
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this thing it gives a sense of scale is
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the Interior Space of it is the size of
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the International Space Station
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so it's a huge amount of time I just
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think about all that's going to take to
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get to Mars right you gotta you have to
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lift a payload into orbit you have to
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you know create a base either on the
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moon or or in
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um it's orb in the earth to actually
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refill ships and send them out into
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space and this same design will scale up
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to become the Mars Colonial transporter
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reverse similar design
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that's why it's important and look the
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timeline that I don't know I'm hoping
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that it will be um well I am still able
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to go that would be great if is it able
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to go but that's really why it's
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important think of this as a small
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version of the same vehicle we will
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actually use to go to Mars and then all
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the stuff you have to transport to orbit
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it becomes more economic because as
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Gavin just said we've had you know 50x
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kind of reduction in cost
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can I ask you another question sorry I
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don't mean to monopolize the questions
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but these are things that I think are
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like super important questions but that
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a lot of people often ask
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or I hear them asking but what happens
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with the space industry in the nearer
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term so there's this great long-term
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goal get tomorrow that's a that's a big
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project but it'll certainly be funding
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I'm sure
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to run that project but what other
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economies now emerge as this this cost
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down of 50x happens and what else do you
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think happens besides you know
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Communications and starlink obviously
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there's that's already a pretty scale
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business what other markets can develop
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here in the near term what other
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economies do you see happening
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as a result of this costume yeah I mean
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look having to jump in here too but the
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reality is once you can take that much
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Master orbit you can move anything
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around the planet very quickly you can
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kind of go out but or spin below even
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come down so Transportation generally
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changes
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you know if you want to fly to Tokyo
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from New York City it goes from being
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you know a day trip to a matter of hours
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it's extraordinary or a container chip
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in a couple hours kind of yeah
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everything that's rapid transport around
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the earth you run a package around there
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everything gets faster Kevin yeah there
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will be no more trans-pacific or
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transatlantic cargo flights I think in
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five six seven eight ten years you're
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gonna need a big Starship Fleet to
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accomplish that
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but I think the um transatlantic and
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trans-pacific Aerospace cargo routes go
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away
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so transmission Logistics I think is a
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fundamental change human transport
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fundamental change
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um and then there's all the knock-on
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effects of buildings kind of Technology
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look the space program the American
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space program that took us to the moon
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created the cell phones we use right I
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mean there's so much the chip designs
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all the technology came off of that the
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same kind of effects We Believe will
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happen here so it's hard to predict but
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it will be a lot of great stuff well
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that's kind of the point when you can
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get payload up there now entrepreneurs
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can think of a million different crazy
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ideas and affordably put something up
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there whether they want to mine an
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asteroid or they have a science project
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now a thousand flowers a million flowers
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can bloom and then entrepreneurs can
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start thinking about it and that's
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already happened to a certain extent
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with Falcon yes that people are able to
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come up with great ideas well I have to
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say and the inspiration it provides it
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does it's amazing to be here and feel
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the inspiration and the just the dream I
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think that's what I was going to ask you
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about if you know as we wrap here with
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YouTube
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if you could if you could take people
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inside mission control which were
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privileged enough to be in
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the sense of history and the feeling in
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that room if you could describe it for
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the audience what those Engineers were
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feeling
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and what you in fact felt at that moment
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Antonio
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so I would start by juxtaposing with
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Monday so we were here Monday we're here
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Monday and Monday
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I think there was a real sense of
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concern you know the the countdown
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stopped around 10 minutes the vehicle we
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had a valve failure and without got
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stuck open basically and uh we had to
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stop and and kind of regroup and by the
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way from my perspective that's like a
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solid success because the vehicle did
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not get destroyed in the pad yeah which
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is like the number one thing to have
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happen here
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the second and so that was kind of
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Monday and I think Monday was
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um yeah caution and intensity it was it
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was a very intense very intensity can
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this will this will this ever happen
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when will it happen yeah today
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what I felt in that room was a sense of
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um there was a high sense of intensity a
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high sense of focus
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and also a sense of
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people were excited there was an
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excitement about it it felt different
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today it felt more electric today
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they were super focused but you could
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feel the exam in the room they believed
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it was going to happen they thought it
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was highly probable and that it was
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going to work and when it did work
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I would say it was a sense of elation
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and joy and just you know this is this
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is 20 plus years of work and you know
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Elon was in the room with the engineers
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and it just sing him light up seeing the
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joy that he felt seeing the joy the
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engineers felt together
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for me
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and I haven't been a board member here
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in investor for a long time and sort of
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been a bit along this company and scene
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develop it it brought a real sense of of
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Hope yeah for what's going to happen to
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this country and what's happening to
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humanity and and it's such a joy to my
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heart yeah
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Gavin do you have any emotional feelings
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there when you watch it you want to add
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yeah well I think it's also just what I
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had what always strikes me when I'm here
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is this is a Sandy spit of land there
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was no power no electricity no potable
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water you know no sewage no utilities
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nothing
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and out of this you know Sandy spit of
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desert you know on the Gulf of Mexico
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a
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extremely talented group of Engineers
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the last five years have lived in you
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know these these airstreams
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you know a long way from a major city
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and it is it is just an amazing place to
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visit and you know the sense of
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commitment and when you talk to anyone
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at SpaceX anyone here at Starbase you
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know what are you trying to accomplish
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make Humanity multi-planetary species
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yeah get to Mars
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so just the experience of visiting star
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base is amazing second I'll just say
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launches are very visceral it's shocking
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if you have not experienced one
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the ground shaking yeah feeling your
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chest you feel it in your feel the yeah
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yeah you feel your body shaking like an
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earthquake yeah but it doesn't stop and
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it's incredibly dramatic you know the
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rocket it's going so slow at first and
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then it accelerates
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and then you hear this enormous
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crackling noise that's you know louder
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than any concert louder than any you
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know Sports Stadium you then a blast of
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hot air hits you you feel it
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and I would I would say a lot of people
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at launches cry it's a very emotional
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experience often for people who are who
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are not yeah it's hard not to get
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emotional yeah I think just the human
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beings can accomplish something like
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this is amazing and then what I would
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just say is
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you know there was the rocket flew for
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four minutes it went through Max Q it
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went to 39 kilometers the Soviet N1
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which was comparable rocket only reached
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12 kilometers
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like the team was ecstatic yeah um The
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Joy on their faces to be cheering I've
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never seen anything like it yeah it was
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awesome it was very inspirational and I
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felt very uh very grateful to be there
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yeah um incredible yeah okay with one
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thought of what I'm thinking right now
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yeah the after effect the after effect
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after glow it's just it destroys into
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gratitude
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I mean there has been so much sacrifice
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here and we have witnessed it over 20
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years from from Elon of course and the
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amount of just you know unbelievable
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worth going from him and the entire team
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at SpaceX is Engineers everyone works
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here yeah it's been extraordinary and it
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just really I'm just deeply grateful
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incredible and grateful to you all for
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having us on thank you uh incredible
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it's great to hear that perspective
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because you would not have gotten it
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from off the Twitter feed
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you know from the mainstream media David
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if you'd come here with us you could
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have gotten yeah David you were invited
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you were invited you almost we almost
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shame everything from Miami so it's a
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new term called as opposed to Shanghai
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we're going to Shanghai and Starship you
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we're gonna Starship you next time yeah
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I'm bummed I couldn't be there but
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I'm excited to see how excited you guys
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are and just the point I was making is
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that when I was reading the mainstream
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media coverage of this it was almost
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like ghoulish it was like a type of Glee
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it was almost like I said that the
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rocket blew up but they didn't they
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didn't really mention any of the things
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you're mentioning I mean from the point
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of view of the people who are there it
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was a Triumph and it was exciting
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because of the data that was collected
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and the fact that this rocket even got
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off the Earth
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for four minutes but the media never
00:15:31
really conveyed that so thank you for
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giving us perspective that you just
00:15:34
would not have gotten today from The New
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York Times or other mainstream media and
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just to add that just a little bit of
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context you know this is an inner design
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process with rapid Improvement this
00:15:45
Starship had 31 engines that were made
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over the course of one year had
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different tolerances behaved
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unpredictable unpredictably
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you know this was far from the best
00:15:56
Starship the one that's going to launch
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in three months or two months or four
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months or five months or whatever it is
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they've already made over a thousand
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discrete improvements to it and that was
00:16:07
before they got all the data for today
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and then there's a Starship after that
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and after that
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so I think it's it really is a the with
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the mainstream media just failed to
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understand is the process under which a
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new rocket platform is deployed and how
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revolutionary this is they they are
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iterating at a speed here I don't think
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people can comprehend I mean honestly
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that's important
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they don't care and it was a way to
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paint somebody who they dislike and they
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are threatened by it a negative light
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the front page of the Wall Street
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Journal says spacex's Starship explodes
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shortly after launching uncrewed test
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flight if you take Antonio gracias's
00:16:50
explanation which was articulate
00:16:52
and transparent and fair and this
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headline you could not be more further
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apart on the spectrum of the truth
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Antonio just said that this is a date
00:17:02
this is for the audience of which there
00:17:04
are millions of people now
00:17:05
Antonio said this is the day that you
00:17:07
look back on when we are multi-planetary
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as this Cambrian moment if you will this
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incredible
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point of innovation and human Ingenuity
00:17:17
and teamwork and sacrifice
00:17:20
you know Gavin said it as well just
00:17:21
giving up five years of your life to
00:17:23
move in the middle of nowhere live in an
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Airstream trailer
00:17:26
and then the Wall Street Journal was
00:17:28
basically perspectives
00:17:31
I mean it was just fireworks it was just
00:17:35
a fireworks display right I said no to
00:17:37
my own team sure he just said I said
00:17:39
ignore please ignore the news media yeah
00:17:42
it's total BS this is a huge success
00:17:44
it's a huge success and you know we
00:17:47
should just step back for a second and
00:17:49
enjoy a success because part of the
00:17:51
problem with the news media is this is a
00:17:53
moment that should Galvanize our country
00:17:59
I think they can't see that it
00:18:01
galvanizes potentially galvanizes
00:18:04
support for a human being that they feel
00:18:06
deeply threatened by and that's what it
00:18:08
all comes down to ultimately and that's
00:18:10
what you see in the headlines that's why
00:18:12
what's so interesting about this is that
00:18:14
the behavior of the mainstream media did
00:18:16
not paint this as something unsuccessful
00:18:18
or a joke or rocket goes boom or
00:18:20
fireworks when you look back on
00:18:22
something as meaningful as this it'll
00:18:24
just make them even less credible that's
00:18:26
what that's unfortunately what they're
00:18:27
doing to themselves is shooting
00:18:28
themselves in the foot it's pretty sad
00:18:30
yeah Wall Street Journal this is CNN New
00:18:34
York Times everybody just painted it as
00:18:36
a failure and it's like oh here's a
00:18:38
collection headlines well done producer
00:18:40
Nick I mean literally you would think if
00:18:43
you read the mainstream media that
00:18:44
SpaceX failed and it really the when I
00:18:49
was talking to Elon months ago about
00:18:51
this you know he said listen 50 50 we
00:18:53
get off the launch pad yeah if we can
00:18:55
get off the launch pad and we don't blow
00:18:57
up the launch pad that's a huge success
00:18:59
the fact that this thing got as far as
00:19:01
it is in four minutes and they got all
00:19:04
that data and they've got when you see
00:19:06
the scale of this factor and I hope you
00:19:08
all get to come down here and and all
00:19:09
Americans get to see this because
00:19:12
for me you know and being friends with
00:19:14
Elon for as long as I have and to watch
00:19:17
him go from the idea of this and he
00:19:20
showed me I went with Elon to see the
00:19:22
the horthon factory when he was
00:19:23
considering renting it and from that
00:19:25
moment to now to see the suffering that
00:19:28
he went through personally to do this
00:19:30
and the team the amount of suffering to
00:19:33
get to this point has been so tremendous
00:19:36
but
00:19:36
when you go to the gigafactory in Texas
00:19:39
when you see what's happening here at
00:19:41
Starbase it should let you know that
00:19:43
this is still the greatest country in
00:19:45
the world with the greatest
00:19:46
entrepreneurs and and he is truly the
00:19:49
greatest entrepreneur of our lifetime
00:19:50
and I'm not just saying that because
00:19:51
he's my bestie I'm saying it because
00:19:54
it's objectively true and when you see
00:19:56
headlines in the Press look at what has
00:19:59
been accomplished look at the Teslas on
00:20:01
the road look at what happened with this
00:20:03
rocket ship and and judge The Man by
00:20:06
what has been produced to date and
00:20:09
understanding he's going to keep going
00:20:11
and the team he has inspired is
00:20:13
Relentless I spoke I sat there on the
00:20:16
deck an hour or two after all this went
00:20:18
down and I just ate some chips and salsa
00:20:21
with a half dozen of the people who are
00:20:24
in Mission Control they love the podcast
00:20:27
they listen to every episode of all in I
00:20:29
I kid you not and they said
00:20:31
will you talk about this on all and I
00:20:33
said well we talk about someone thank
00:20:35
you for what you've done for Humanity
00:20:36
this is the most inspiring thing I've
00:20:38
experienced in my life we love you guys
00:20:40
we love you guys SpaceX
00:20:43
charge ahead be relentless as you've
00:20:45
been and know that despite these
00:20:48
absolutely insignificant headlines what
00:20:51
you're doing is so meaningful to every
00:20:54
American and every human on this planet
00:20:56
don't stop go faster go harder be more
00:21:00
Relentless we're all cheering and we're
00:21:02
in awe of you this is one topic we can
00:21:04
all agree on
00:21:05
this is something that can Galvanize
00:21:07
America
00:21:08
we are leading the world again yes we're
00:21:12
leading the world in the space race
00:21:14
again we're going to be on the moon
00:21:16
we're going to be on Mars what about
00:21:18
Uranus
00:21:32
[Music]
00:21:34
that was great I'm surprised I beat your
00:21:36
mouth to the punch there yeah oh no we
00:21:39
were all cute was having a moment he was
00:21:41
like daydreaming about the future and
00:21:44
not thinking about the line I was taking
00:21:46
the number of shares of SpaceX I know
00:21:47
and multiplying it by a billion trillion
00:21:51
a million trillion dollars per share wow
00:21:54
yeah the rest of us are thinking about
00:21:56
Humanity America inspiring people and
00:21:59
shabbat's got his like little calculator
00:22:00
out I'm gonna have like a Babushka of
00:22:03
planes a plane
00:22:07
the moment make it about you oh my God
00:22:10
[Music]
00:22:20
we open source it to the fans and
00:22:22
they've just gone crazy
00:22:23
[Music]
00:22:27
I did have a business question about how
00:22:30
the Starship impacts
00:22:32
starlink very simple there's a graphic
00:22:34
online you can find on the SpaceX
00:22:36
YouTube channel and they show the
00:22:38
starship
00:22:39
and it literally looks like a goddamn
00:22:41
Pez dispenser shooting out the next
00:22:44
version of starlink and these are you
00:22:47
know without I don't want to speak about
00:22:50
any specifics but you can you can watch
00:22:52
it spit them out
00:22:53
you can put out more and they're
00:22:55
obviously going to be more powerful and
00:22:57
if you have seen the size of the
00:23:00
satellite I have starlink at both houses
00:23:02
the ski house and my main house is a
00:23:04
backup it's getting scary how good it is
00:23:06
and
00:23:08
if you look at the size of them and
00:23:10
again I don't want to speak about any
00:23:12
future products it's not my place but if
00:23:15
you see the size getting smaller
00:23:17
there's one or two things that we all
00:23:19
know about technology
00:23:20
cheaper faster better smaller and just
00:23:24
so I would just say if you're if you're
00:23:26
a fan of starlink just keep those words
00:23:28
in mind yeah it's going to be pretty
00:23:30
amazing what starlink's going to be able
00:23:32
to do yeah I thought that maybe I read
00:23:34
this somewhere that Starship can carry
00:23:36
600 plus satellites whereas the previous
00:23:41
top of the line rocket the Falcon 9
00:23:43
could only carry was it like 50 or
00:23:46
something or yeah maybe a little less
00:23:48
yeah there's like 30 40. so so you're
00:23:49
talking about 20 times the number of
00:23:51
satellites can go up and at a lower
00:23:53
expense yeah and I guess SpaceX has
00:23:56
gotten permission from the FCC to
00:23:59
put up about twelve thousand Starling
00:24:02
satellites so you could do that you know
00:24:05
with I guess just 20.
00:24:08
you know 20 missions the big disruption
00:24:11
is going to happen by the end of 2026
00:24:13
because
00:24:14
this next Generation set of
00:24:17
licenses uh spectral licenses that the
00:24:20
FCC sold
00:24:22
came with a condition that you had to
00:24:24
launch satellite capacity by the end of
00:24:25
2026 I think otherwise you lose it or
00:24:28
you have to do your first launch I think
00:24:30
by the end of 20. any the point is that
00:24:31
the only company that actually has the
00:24:34
capability to build and to launch is
00:24:36
SpaceX so they have a complete Monopoly
00:24:38
and because they're advantaging their
00:24:40
own solution
00:24:42
it puts everybody else behind the eight
00:24:44
ball so not only will they probably
00:24:47
offer the best global internet
00:24:49
connectivity at every single natural
00:24:51
point in the world that you could be
00:24:53
which is going to be a really big leap
00:24:55
they're going to do it Jason as you said
00:24:56
at a throughput that's going to surprise
00:24:58
people
00:24:59
and it's also going to render every
00:25:02
other existing provider in a really
00:25:05
difficult situation who's like you know
00:25:07
what is their alternative you can't
00:25:08
launch with Ula because they're
00:25:09
inconsistent you can't launch with blue
00:25:12
origin because they're inconsistent
00:25:15
you can't log to the Europeans in
00:25:17
general because they're inconsistent
00:25:18
SpaceX is the only solution but then
00:25:20
SpaceX is just going to Advantage
00:25:21
themselves
00:25:22
and there's nothing illegal about that
00:25:24
so you're going to be left with a bunch
00:25:25
of these existing telecommunications
00:25:27
companies in a really difficult spot in
00:25:29
the next couple years so it's going to
00:25:30
be really Dynamic space I think very
00:25:32
much worth paying attention two-line
00:25:34
sentences regards to the all-in
00:25:35
community
00:25:37
stay in a nap man has not slept in the
00:25:39
last couple days uh he's taking a
00:25:41
well-deserved nap right now so hopefully
00:25:44
we'll have a mind in a future episode
00:25:46
very quickly where are you taping from
00:25:49
jcal just curious where are you taping
00:25:51
from there I'm at Starbase and uh there
00:25:54
are little tiny homes and anyone um lent
00:25:57
us one to to stay in here and yeah it's
00:26:00
because it's just inspiring to be here
00:26:01
it's been it's been a great experience
00:26:04
and I've been this is I've been here a
00:26:07
couple times and it the the the scale of
00:26:09
the factory the ships and just over the
00:26:12
last like they said the list I've been
00:26:14
here a couple times maybe three or four
00:26:16
years ago um it really is growing
00:26:19
exponentially and the other really
00:26:21
positive thing is people are driving
00:26:23
again back to the enthusiasm in the
00:26:26
public
00:26:27
and what you don't see mirrored in the
00:26:29
Press which I think was really astute
00:26:30
Point sax
00:26:32
I met a guy who gave me a ride in his
00:26:35
golf cart I was I was late to a meeting
00:26:37
guy says hey are you going somewhere and
00:26:39
I said yeah because I was literally
00:26:40
running down the street trying to get
00:26:41
catch a flight and uh the guy drives me
00:26:44
in his golf court and I say hey he says
00:26:46
hey are you here for the launch I said
00:26:47
yeah I'm here for the lunch he says so
00:26:49
am I say can I ask you um do you work
00:26:51
for SpaceX he says no I'm just a fan of
00:26:53
elon's I'm a fan of SpaceX and I said
00:26:55
can I ask who you drove for me so I
00:26:56
drove 19 hours through somewhere in
00:26:58
Texas Houston or something he drove 19
00:26:59
hours to come here to spend the week to
00:27:02
see the launch
00:27:03
and the crowds here have gotten bigger
00:27:05
and bigger and there's hundreds of
00:27:07
people uh it's I think I call San Padre
00:27:09
Island over here uh there's a little
00:27:11
Beach Community kind of like a like a
00:27:14
Las Vegas on the beach or a Reno or New
00:27:16
Orleans and um and they're just lined up
00:27:19
there with cameras these are Americans
00:27:22
just Americans in RVs in cars
00:27:26
setting up cameras to see history happen
00:27:29
and it's it really is truly inspiring
00:27:32
these are just softly Earth normal folk
00:27:35
this isn't the media this isn't like
00:27:37
affluent people or necessarily they're
00:27:40
just Americans who who are inspired and
00:27:43
that's I think what all entrepreneurs
00:27:46
who hear these stories about what's
00:27:48
going on down here you'll overestimate
00:27:49
what you can do in a year you're going
00:27:50
to underestimate what you can do in 10.
00:27:52
and I think that's you know we all know
00:27:54
Elon pretty well here and have watched
00:27:55
this journey they're cooking with oil
00:27:58
they're moving fast and the iteration
00:28:00
process is extraordinary
00:28:02
and they're making everything here and
00:28:04
it's Americans making everything that
00:28:06
the tiles I remember being here three
00:28:08
years ago and Elon and I have two in the
00:28:11
morning we're walking through the
00:28:12
factory while where they were working 24
00:28:13
hours a day trying to figure out the
00:28:15
tiles
00:28:16
on Starship to get it back in and they
00:28:19
were making the tiles themselves and and
00:28:21
just trying to figure out that formula
00:28:22
that's the level of detail that's
00:28:24
occurring here and as Gavin said there's
00:28:26
a thousand different things changing on
00:28:29
each iteration of this so more great
00:28:31
stuff to come I I believe yeah
00:28:34
has been another episode of Phil helm
00:28:37
youth mentions his relationship with
00:28:38
Elon thanks everybody for tuning in yeah
00:28:40
exactly
00:28:41
no I mean what am I supposed to do you
00:28:44
know like I'm sorry that my friend you
00:28:46
know started a rocket ship company and I
00:28:48
don't apologize for it
00:28:50
you guys doing great stuff in the world
00:28:52
as well so do we want to talk about AI
00:28:54
do I want to go to this uh tiger marking
00:28:56
down their book where would you like to
00:28:57
go gentlemen we can talk about the fox
00:28:59
settlement with
00:29:01
Dominion that was something you and I
00:29:03
talked about last week sax I'd love to
00:29:04
get your opinion on that they paid 787
00:29:07
million dollars in this settlement uh
00:29:10
for defamation it didn't go to trial uh
00:29:12
you were hoping it would go to trial how
00:29:14
do you feel I mean and this is an
00:29:16
extraordinarily large settlement so
00:29:19
yeah but what are you what are your
00:29:21
thoughts on this you wanted to see this
00:29:22
go to the mat and go to the Supreme
00:29:23
Court and maybe see the laws in the
00:29:24
United States change eventually um catch
00:29:26
us up on your reaction to this ginormous
00:29:29
find yeah yeah there's a big speeding
00:29:31
ticket yeah
00:29:32
yeah well it's funny you you call it a
00:29:34
speeding ticket because when I saw this
00:29:36
it reminded me of a scene at the
00:29:38
beginning of Apocalypse Now where Martin
00:29:40
Sheen says that charging a man with
00:29:42
murder in this place is like handing out
00:29:44
speeding tickets at the Indianapolis
00:29:45
500. I mean the analogy here is that the
00:29:49
media is so dishonest whether at CNN or
00:29:52
MSNBC or the New York Times I mean
00:29:54
they're constantly inaccurate or
00:29:56
whatever and yeah so still defending Fox
00:30:00
so for this one network to get a fine of
00:30:02
like 800 million it's like pretty
00:30:04
pretty incredible
00:30:06
um I mean they should be handing out a
00:30:07
lot more of these in my in my view not
00:30:09
just to Fox but yeah look I would like
00:30:11
to see to that end I would like to see
00:30:13
the standard in New York Times versus
00:30:15
Sullivan revised by the Supreme Court
00:30:17
the standard is actual malice so you
00:30:20
have to prove not just that the Press
00:30:23
told a lie but that there was malice
00:30:25
behind it and that's what this trial
00:30:27
would have been about and um which
00:30:30
should have changed too
00:30:31
yeah I think we want to change too what
00:30:34
would be a better standard in your mind
00:30:37
I think that if the media makes a
00:30:40
mistake they should have to correct it
00:30:42
and I would say the correction needs to
00:30:43
be at the same level that they publicize
00:30:45
the original story
00:30:47
so if they make a mistake if it's
00:30:50
untruthful and it damages someone's
00:30:51
reputation and they refuse to post a
00:30:55
correction then I think they should be
00:30:56
liable
00:30:57
that seems fair to me if you were to put
00:31:00
something on page A1 if you were to give
00:31:02
it five minutes at the start of a show
00:31:04
on whether it's Rachel Maddow or Tucker
00:31:06
or whoever makes the mistake it could be
00:31:08
anybody
00:31:09
if they made the mistake in the first
00:31:11
five minutes top of the show they don't
00:31:12
get to buried on the website they don't
00:31:13
get to buried on page seven they gotta
00:31:16
say it up front Hey listen we made a
00:31:17
mistake correct here's the mistake
00:31:19
correct yeah I think it's reasonable
00:31:20
correction she got the same level but
00:31:22
let's see as the original story
00:31:24
and by the way if they correct it that
00:31:25
would be like a safe harbor but if they
00:31:27
refuse and they publish a lie and it
00:31:30
damages somebody then they should be
00:31:31
liable for that I think there should
00:31:33
also be something that's what I think
00:31:34
but yeah I'm in agreement with that
00:31:36
because they there is the trick in
00:31:37
journalism to bury the correction
00:31:40
and and there's another trick that I
00:31:42
think needs to be looked at and it's a
00:31:44
little more nuanced which is
00:31:46
somebody makes a mistake or an
00:31:49
accusation in a in a publication and
00:31:52
then the next publication says oh the
00:31:54
New York Times Fox News CNN said this
00:31:57
but they don't check it themselves so
00:32:00
they're using another publication as
00:32:02
like a proxy to kind of give them some
00:32:04
level of protection I think they should
00:32:06
have to on a firsthand basis right no
00:32:08
that's the game they play you're right
00:32:10
so they start with a super Shady Source
00:32:12
yeah that you know it just attributes it
00:32:16
to some sort of anonymous source then
00:32:17
the second most Shady publication quotes
00:32:21
that one and the third most shitty
00:32:23
quotes that and then it just goes
00:32:25
through the whole food chain yeah so
00:32:26
you're right reposting something in the
00:32:28
Echo chamber because other Publications
00:32:29
are doing it you're right that should
00:32:31
not be protected they have to do their
00:32:33
own sourcing basically yeah or just some
00:32:35
base level of fact checking if you and
00:32:37
now if if you called it Fox opinion
00:32:40
that's slightly different than calling
00:32:41
it Fox News so maybe the part of this is
00:32:43
branding a chamoth or Freeburg Germany
00:32:45
thoughts on this
00:32:46
just in general Fox I think has only
00:32:49
four billion of cash so they just spent
00:32:51
20 some odd percent of it paying this
00:32:53
off and if I were a shareholder the
00:32:55
question I would ask is did we actually
00:32:57
make enough money to justify having to
00:32:58
pay almost 800 million dollars of our
00:33:00
cash balance the answer is probably no
00:33:03
and this is the first of a bunch of
00:33:05
lawsuits that they have
00:33:07
the next one which is I think is like
00:33:10
smartomatic which is another voting
00:33:12
machine company that's an even bigger
00:33:14
lawsuit actually that's a two and a half
00:33:16
billion dollar lawsuit and so it's
00:33:20
could it be the same outcome and another
00:33:21
settlement
00:33:23
and so now all of a sudden you would
00:33:24
deplete half their cash
00:33:26
all for a lie to do what at some point
00:33:29
some smart business governance needs to
00:33:31
kick in over at Fox and they need to
00:33:32
realize that
00:33:34
this stuff just doesn't make economic
00:33:37
sense maybe they thought it made
00:33:38
political and ratings sense but you
00:33:41
can't justify that when it costs two
00:33:42
billion dollars there's a concept here I
00:33:44
think sax that is particularly
00:33:47
interesting in Finland
00:33:49
when you get a speeding ticket speaking
00:33:50
of speeding tickets your speeding ticket
00:33:52
is proportional to your net worth and so
00:33:55
these NHL players who like to speed and
00:33:58
a Nokia executive it was given the
00:34:00
equivalent and this is a bit excessive
00:34:01
of a hundred and three thousand dollar
00:34:03
fine for going 45 into 30 Zone on this
00:34:06
motorcycle and an NHL player got a 39
00:34:09
000 fine two years earlier I I think
00:34:11
that this is part of the problem and
00:34:13
sometimes fines don't match the crime
00:34:15
and or the they're not proportional
00:34:18
enough for the person to feel them and
00:34:20
so then we kind of can Joe that they're
00:34:22
speeding tickets one very rich person
00:34:24
said to me
00:34:25
you know when they would they I'd watch
00:34:27
them parking you know incredibly
00:34:28
illegally in a small town
00:34:31
and I said uh you know you're gonna get
00:34:32
a pretty serious ticket that's in it's a
00:34:35
pretty gnarly spot to be parking and
00:34:37
they said Oh you mean the VIP parking
00:34:39
charge and I was like yeah that kind of
00:34:41
sucks but okay
00:34:43
so there might be some concept here of
00:34:45
um a proportional fine
00:34:48
and I think the EU is starting to work
00:34:50
on that as well because you know big
00:34:54
tack was ignoring this is going to
00:34:55
embossing a lot of people to take
00:34:58
matters into their own hands and Sue
00:35:00
some of these media companies if the LIE
00:35:01
is egregious enough
00:35:03
and it negatively impacts them enough I
00:35:05
think it would embolden a lot of folks
00:35:06
so Saks is right that up until now most
00:35:09
folks haven't done anything about this
00:35:10
but
00:35:12
if you feel like the media has really
00:35:14
wronged you in a meaningful way
00:35:17
there's probably also now a lot of
00:35:21
private Equity organizations that would
00:35:23
do the lawsuit Finance or hedge funds
00:35:25
that would do the lawsuit Finance um and
00:35:27
so now Peter did yeah like you're free
00:35:29
rolling it right so you you get one of
00:35:31
these folks to pay it they get 50 of the
00:35:33
gains you get 25 the lawyers get 25 and
00:35:36
you go and you litigate
00:35:38
I'm sure that you'll see more not less
00:35:40
because this fine is it's really big and
00:35:43
again we don't know the end of all of
00:35:44
these 2020 election hoax Shenanigans
00:35:47
because this is the first not the last
00:35:49
of these I do think it's a really big
00:35:51
number I mean I did I did want the the
00:35:55
case to go to all these courts so they
00:35:57
could revise New York Times versus
00:35:58
Sullivan but I I do wonder about the
00:36:00
size of this settlement here it's just
00:36:02
it seems extraordinary they paid it it
00:36:04
was a interesting it's a settlement yeah
00:36:06
they they voluntarily agreed to do it
00:36:08
yeah absolutely so
00:36:10
so in any event look I I hope your math
00:36:12
is right that this actually incentivizes
00:36:14
more actions against media companies
00:36:16
because I think their feet need to be
00:36:17
held to the fire and they need to do a
00:36:20
better job publishing the truth there
00:36:22
was an interesting thread
00:36:24
by a Twitter poster called kanakoa do
00:36:28
you I don't know if you guys saw this
00:36:30
where he posted an hour of footage by
00:36:34
democrats and
00:36:37
uh Democratic groups and more
00:36:39
democrat-leaning political science
00:36:41
experts questioning whether voting
00:36:44
machines could be hacked basically this
00:36:46
this idea that voting machines could be
00:36:49
hacked is not
00:36:51
it's not an allegation that is unique to
00:36:53
Fox so apparently there's evidence that
00:36:57
Fox News was bogus so they definitely
00:36:59
should not have run with it but I do
00:37:01
Wonder Hey why why shouldn't other
00:37:04
people be liable for this too well I
00:37:06
mean the the question is I think those
00:37:08
internal text messages between the host
00:37:10
who knowingly
00:37:12
knew it was false and then we're doing
00:37:13
it I think that's why they took that
00:37:15
settlement because 800 million or
00:37:17
whatever or so is a lot less than 1.4 or
00:37:19
1.5 and so there's speculation that
00:37:21
maybe clearly they got some bad
00:37:22
Discovery they got some Discovery
00:37:24
problems yeah
00:37:26
these allegations about electronic
00:37:28
voting machines being hackable or rigged
00:37:31
this seems like an allegation that's
00:37:33
been made well it's actually interesting
00:37:35
not just in 2020 but it's been made
00:37:37
multiple times by whichever side loses
00:37:39
yeah and so I would wonder why more
00:37:42
parties aren't liable for this by the
00:37:44
way I never I never bought into I never
00:37:47
bought into those allegations I said so
00:37:48
at the time I thought they were bogus I
00:37:51
thought the whole Sydney Powell thing
00:37:52
you know the release the Kraken or
00:37:54
whatever was ridiculous so I don't feel
00:37:57
too bad for Fox or anything like that
00:37:59
but it seems to me like I'm saying
00:38:01
they're they're not the only ones
00:38:02
speeding here there's a lot of people
00:38:03
who need to get speeding tickets yeah
00:38:05
there is a road map for the press to
00:38:07
learn from this and to get better right
00:38:10
like to maybe take to heart that that
00:38:12
maybe the public now is looking at them
00:38:15
and assuming that the Trust in Media has
00:38:17
is at an all-time low Alex John
00:38:19
find a billion dollars right it's a
00:38:22
judgment judgment judgment the fox
00:38:24
thing's a settlement right he got a
00:38:26
judgment of over a billion from multiple
00:38:28
courts yeah so he said a bunch of stuff
00:38:30
that you know was in court provable to
00:38:34
be false and then he kind of restated it
00:38:36
and he got you know this massive fine I
00:38:39
think there's an interesting question
00:38:40
here on how far this goes with respected
00:38:45
you know maybe it invites the lawsuits
00:38:47
like you guys say where there's things
00:38:49
that are more on the on the line
00:38:51
and then we really start to have kind of
00:38:53
a tough set of conversations that it
00:38:55
maybe there are things that are
00:38:57
factually debatable arguable opinionated
00:38:59
or they were true at a certain point and
00:39:02
then you didn't really have evidence to
00:39:03
disprove it what are you allowed to say
00:39:05
are you only allowed to say things that
00:39:06
you've proven or things that haven't
00:39:08
been disproven and that becomes a pretty
00:39:10
tough set of conversations and what I
00:39:11
think might be interesting from here if
00:39:13
so much of media over time gets replaced
00:39:16
by chat and AI aggregating lots of
00:39:19
different information synthesizing that
00:39:21
and making representations back to us
00:39:23
and that becomes our primary source of
00:39:25
call it news or quote media in the
00:39:27
future
00:39:28
what happens when those models or the
00:39:31
synthesis of data or the source of the
00:39:33
data leads to a statement that has a
00:39:36
similar sort of descent around whether
00:39:37
or not it's true or not
00:39:39
and that you really end up kind of
00:39:40
ending up in a pretty cloudy environment
00:39:44
you know by started starting this
00:39:45
process I think it's a very insightful
00:39:47
moment we'll get to in a minute I just
00:39:49
coming as a coming from a journalism
00:39:51
background myself
00:39:52
and then becoming a commentator there
00:39:54
really needs to be three or four very
00:39:57
simple things that the media needs to do
00:39:59
number one more fact checking and number
00:40:01
two less Anonymous sources it's they
00:40:03
were like too much on Anonymous sources
00:40:05
and then there needs to be very clear
00:40:07
delineation between what is a fact and
00:40:09
what is an opinion and the public is
00:40:12
trying to sort this out is it Fox News
00:40:14
is an opinion and what you're saying is
00:40:16
this an opinion or is this a fact did
00:40:17
you do journalism or did you just have
00:40:19
an opinion is Rachel Maddow an opinion
00:40:21
or did she actually have a journalist
00:40:23
check these facts and I think this is
00:40:25
where self-policing and maybe rebuilding
00:40:28
their rebuilding trust is on the media
00:40:31
it is now the news and the media's job
00:40:32
to rebuild Trust
00:40:34
and if not they're going to get more
00:40:36
fines but let's get into I think some of
00:40:38
the stuff we're seeing with AI we had
00:40:40
talked on this show before
00:40:42
many times about the Corpus of data
00:40:44
under which these models are being built
00:40:47
well Reddit announced plans to start
00:40:49
charging companies that use its data to
00:40:51
train AI models the co-founder Steve
00:40:54
Huffman who came back after contacting
00:40:55
us Nast had bought Reddit and then sold
00:40:59
it back to the founders and
00:41:00
paradoxically I believe Sam Altman has a
00:41:03
major investment in Reddit he said more
00:41:04
than any other place on the internet
00:41:06
Reddit is a home for authentic
00:41:07
conversations there's a lot of stuff on
00:41:09
the site that you'd only ever say in
00:41:10
therapy AAA or never at all a lot of
00:41:13
people use pseudonyms obviously and the
00:41:15
Reddit Corpus of data is incredibly
00:41:16
valuable but we don't
00:41:18
need to give all that value to some of
00:41:22
the largest companies in the world for
00:41:24
free crawling Reddit generating revenue
00:41:26
and not returning any of the value to
00:41:28
our users or something we have a problem
00:41:29
with it's a good time for us to tighten
00:41:31
things up your thoughts shamoth on what
00:41:35
we talked about two different episodes
00:41:36
maybe we'll play drop a clip in here
00:41:38
Nick if you want to in post it's going
00:41:40
to be the large data sets quora Yelp the
00:41:43
App Store reviews Amazon's reviews so
00:41:45
there are large corpuses of data that
00:41:47
you would need like Craigslist has
00:41:49
famously never allowed anybody to scrape
00:41:51
Craigslist the amount of data inside
00:41:53
Craigslist as but one example of a data
00:41:55
set would be extraordinary to build
00:41:57
chatgpt on chatgpt is not allowed to
00:42:00
because as you brought up robots.txt
00:42:02
last week There's going to need to be an
00:42:04
ai.txt are you allowed to use my data
00:42:06
set in Ai and under and how will I be
00:42:09
compensated for it will the rights to
00:42:12
the data will will Google just data
00:42:15
quora hey we'll give you a billion
00:42:17
dollars a year for this data set you
00:42:20
those were our previous discussions that
00:42:22
we just played what do you think it's so
00:42:25
incredible we are witnessing such an
00:42:28
important moment for
00:42:31
Silicon Valley but frankly how the world
00:42:33
works and
00:42:35
it's just everything is changing that's
00:42:37
what I'm just in awe about that you know
00:42:39
we talked about this and we were
00:42:41
basically spitballing something two or
00:42:43
three months ago
00:42:45
and not but 60 or 90 days later these
00:42:48
things come to pass
00:42:50
right we talk about something in one
00:42:52
week and then you know 14 days later
00:42:54
it's completely upended like how
00:42:57
impressed Saks was about plugins and
00:43:00
then plug-ins were rendered useless and
00:43:03
somewhat impotent Two Weeks Later by
00:43:04
Auto gpts
00:43:07
it's just so profound I think what's
00:43:09
going on so Google today announced that
00:43:12
they're going to merge two organizations
00:43:13
that I thought were so
00:43:16
orthogonal to each other disparate brain
00:43:19
and Deep Mind
00:43:21
the cultures just seem so totally
00:43:23
different but now they're merging those
00:43:25
two things together something that I
00:43:27
thought would never happen they did it
00:43:28
so all these competitive pressures are
00:43:30
so real
00:43:32
I was in LA for the Breakthrough prize I
00:43:35
was flying home with somebody on
00:43:36
Saturday I won't say who it is but they
00:43:39
are right at the bleeding edge of a lot
00:43:41
of this AI stuff and they let go a third
00:43:45
of their company replaced it with an
00:43:46
agent
00:43:48
Within six weeks of training it
00:43:52
so
00:43:54
how is this not going to affect
00:43:55
everybody else I guess is maybe the
00:43:58
bigger question and then I go back to
00:44:00
what I said last week which is that
00:44:02
we've talked about a lot of the positive
00:44:04
things and I think it's important to
00:44:05
make sure that people understand that
00:44:08
there are a bunch of non-trivial
00:44:09
negative things and I think I shared one
00:44:11
on Twitter which was around this company
00:44:12
that used an AI model to build a library
00:44:14
of 40 000 toxic compounds that could
00:44:17
kill all kinds of numbers of humans so
00:44:20
there's all kinds of really really tough
00:44:22
things going on right now that I think
00:44:23
to me means it's the moment where
00:44:26
I have the least sense of how to do my
00:44:28
job
00:44:30
and so I've tried to kind of like put a
00:44:32
pin in everything and just go back to
00:44:34
learning mode it's a bit humbling is
00:44:35
what you're saying like it's incredibly
00:44:37
humbling the entire rule book even for
00:44:39
us as capital allocators company
00:44:40
formation it has you it has YouTube even
00:44:44
as I do this as a CEO I'm like should I
00:44:48
be using models to do parts of the
00:44:50
workflow inside of my business
00:44:53
inside the portfolio companies that were
00:44:55
invested in am I supposed to go into the
00:44:58
board meeting now on Monday and say hey
00:45:00
XYZ person just did one two and three
00:45:03
and cut Opex by a third
00:45:06
do I demand the CEO do that do I force
00:45:10
change if they don't do it do I say
00:45:13
so I don't I don't I don't exactly know
00:45:14
what to do
00:45:16
the carousel is spinning increasingly
00:45:18
faster and we're alone I'll just say a
00:45:21
general point
00:45:23
which I kind of made at this event today
00:45:27
it feels like the pace of change is so
00:45:29
high that you're kind of in a dust storm
00:45:31
you don't really know where you're going
00:45:32
to end up so it's very hard to sit as an
00:45:34
investor right now and say I'm going to
00:45:36
pick these things because you know two
00:45:38
weeks later you just don't know
00:45:39
whether that path even exists anymore
00:45:42
because the dust storm washes it away or
00:45:44
you know blows it away
00:45:46
and I think that
00:45:49
there will as a result there will be a
00:45:51
lot of money lost
00:45:53
by investors by companies building in
00:45:55
this space
00:45:57
net net
00:45:58
the index for investing in like.com
00:46:02
companies
00:46:04
the majority a large amount of money was
00:46:06
lost during that era
00:46:09
but from that era also emerged a handful
00:46:12
of winners and those winners ended up
00:46:15
creating extraordinary value I think
00:46:16
we're at a point in time right now where
00:46:18
we could see 10 times the value
00:46:19
generated in this phase of Technology
00:46:22
advancement than we saw during the
00:46:24
internet
00:46:25
and the advancement of the internet
00:46:27
and if if that is true I think you'll
00:46:29
end up seeing certainly the same thing
00:46:31
happen which is the index will lose
00:46:32
money
00:46:33
but the few winners will accrue such
00:46:35
extraordinary gains the problem is you
00:46:38
can't deterministically pick those
00:46:40
winners today totally because of the
00:46:42
dust storm problem you just don't know
00:46:43
the path totally so if you were to meet
00:46:45
Jeff Bezos versus some
00:46:48
CEO of some.com selling pet stuff back
00:46:52
in 1995 to 97. 94 to 97 would you have
00:46:55
recognized Jeff Bezos was going to stand
00:46:57
out would you have recognized Larry and
00:46:59
Sergey were going to stand out would you
00:47:00
have recognized Bill Gates was going to
00:47:01
stand out or Zuck at the end of the day
00:47:04
this is harder than it has ever been in
00:47:06
terms of predicting a technology cycle
00:47:09
but what we still know to be true is
00:47:12
that the capital will be allocated
00:47:13
within a company the operations will be
00:47:15
run managed and driven and led by an
00:47:18
individual or a set of individuals and
00:47:20
that's effectively what I think a lot of
00:47:22
investing in the cycle is going to come
00:47:23
down to we're all going to sit here and
00:47:25
pontificate and intellectually
00:47:26
masturbate ourselves to some you know
00:47:29
genius you know path that we think is
00:47:30
going to evolve and at the end of the
00:47:32
day most of it won't turn out to be true
00:47:33
and that path won't be real because this
00:47:35
is such a dynamical system right now
00:47:37
there are so many feedback loops one
00:47:39
thing makes one step change and it
00:47:40
changes every other step but but what we
00:47:43
still know is that great leaders can
00:47:45
lead
00:47:46
you know and especially coming out of
00:47:48
this this Elon discussion and seeing the
00:47:50
extraordinary achievements he he's
00:47:52
delivered particularly today
00:47:54
I think that's maybe what a lot of early
00:47:56
stage Venture is going to shift to an AI
00:47:58
it's really you know finding great
00:48:00
people and and I'll tell you one thing
00:48:03
for sure and I was kind of commenting on
00:48:04
this earlier today was I really think a
00:48:07
lot of series C in later companies and I
00:48:09
know we're going to talk about this
00:48:10
implosion discussion later so many of
00:48:13
those companies have a valuation that's
00:48:15
less than their preference stack and as
00:48:17
a result those Founders that work there
00:48:20
and those employees that are there are
00:48:22
getting their Equity wiped out they'll
00:48:24
have to get restructure can you just
00:48:26
explain what that means technically to
00:48:27
the audience when you when you raise
00:48:30
money into a startup the investors that
00:48:33
give you that money that invest that
00:48:34
money it's effectively a loan you owe
00:48:37
them that money back first before your
00:48:40
shares get paid out in the in the future
00:48:42
so if the company ends up being worth
00:48:44
less than the money that they've
00:48:45
invested they get the money first
00:48:48
and ultimately if the company goes
00:48:50
public or gets sold they can convert
00:48:52
their what are called preferred shares
00:48:54
into common shares and participate so
00:48:56
even though you only quote sold 20 of
00:48:59
your company for let's say 200 million
00:49:01
dollars that 200 million dollars
00:49:03
actually has to get paid first so now
00:49:06
you've raised this 200 million dollars
00:49:07
the investors the company is now
00:49:10
repriced because the market has come
00:49:11
down by 80 and investors are saying hey
00:49:14
your company's now worth 175 million
00:49:16
your company is now worth less than what
00:49:18
you owe the pre the pro the preferred
00:49:21
investors and if it's worth less than
00:49:23
what you owe which I think is the case
00:49:25
for over 70 or 80 percent of series C
00:49:27
and later companies
00:49:28
you know we can kind of yeah and and
00:49:31
this but this number comes from what I
00:49:33
shared a few months ago which is that 70
00:49:36
of publicly traded companies that went
00:49:38
public in the last three years are
00:49:39
trading below the cash that they've
00:49:41
raised so if you translate that on a
00:49:43
one-to-one basis to the private Market
00:49:45
you know and these by the way were the
00:49:46
best companies actually got public so in
00:49:49
the private Market you've got to assume
00:49:50
that something in that late stage Market
00:49:51
is on the order of 70 80 is worth less
00:49:54
than their preference stack so a lot of
00:49:56
those employees are going to run those
00:49:58
Founders don't want to go work for the
00:50:00
VCS when they get recapped and get
00:50:01
offered a four percent because it looks
00:50:04
like they're going to start AI companies
00:50:05
and I think that's fantastic and I think
00:50:07
that's what's really shifting it right
00:50:09
now that's kind of a big Dynamic is a
00:50:12
lot of these I'm calling them zombie
00:50:13
corns are going to see this kind of mass
00:50:15
Exodus of talent and a lot of the
00:50:18
investors that don't know how to price
00:50:19
stuff and don't want to deal with Recaps
00:50:21
in the late stage or diverting their
00:50:23
attention to seed and a and early stuff
00:50:24
and so there's both A Rush of talent and
00:50:27
a rush of capital to this kind of very
00:50:29
early stage and so we'll create this
00:50:31
massively bubalific you know index of AI
00:50:35
stuff but some number of these things
00:50:37
with some great leaders will emerge in
00:50:39
World crew extraordinary value across
00:50:41
many Industries I really agree with a
00:50:44
lot of what you're saying the thing to
00:50:46
keep in mind is that the problem with
00:50:48
the use of Auto gpts as an example is
00:50:51
that the order of magnitude of capital
00:50:52
that you need has now just gone down
00:50:54
yeah yeah instead of a 10 million dollar
00:50:57
series a so we used to be you know
00:50:59
people in the height
00:51:00
we're doing 30 and 40 million dollar
00:51:02
series A's into
00:51:04
crazy very bubblish ideas in nfts and
00:51:07
all this other stuff
00:51:09
that's idiotic today
00:51:12
because a two or three person company
00:51:14
can now do the work of 20 to 30 people
00:51:17
and the amount of capital that they need
00:51:19
is really
00:51:21
their salaries plus the cost of renting
00:51:24
some gpus on your favorite pick your
00:51:28
cloud and so all of a sudden you can get
00:51:30
huge amounts of progress in weeks and
00:51:33
months with hundreds of thousands or low
00:51:35
millions of dollars so if you've raised
00:51:38
all of a sudden
00:51:40
a five billion dollar fund because you
00:51:42
were trying to do late stage deals
00:51:44
and now all of a sudden said well wait
00:51:46
we'll just pivot to early stage
00:51:48
but what are you going to do find the
00:51:49
next 30 person company that's not going
00:51:51
to work because you have to know how to
00:51:53
write 500 000 to million dollar checks
00:51:55
with two or three people and a lot of
00:51:58
really and really help them and really
00:52:00
understand their technical ability to
00:52:02
execute right yeah but then it also
00:52:05
quickly becomes a thing where maybe
00:52:07
you're better off just doing 500 of
00:52:10
these two and three person teams
00:52:12
we tried this experiment seven years ago
00:52:15
this thing called Capital as a service
00:52:17
where we were doing this automated
00:52:19
investing I don't know if you guys
00:52:20
remember this but it was like some
00:52:21
machine learning that we did on all of
00:52:23
our portfolio companies and
00:52:25
all somebody had to do was fill out a
00:52:27
form and send us some metrics and we
00:52:29
would have a machined decision right so
00:52:31
humans would not be allowed to make the
00:52:33
investment decision
00:52:34
the problem that we ran into was there
00:52:36
was a lot of great companies all around
00:52:37
the world but the administrative burden
00:52:40
of supporting 500 companies was
00:52:43
unbelievably large and complicated oh
00:52:46
you have a company in Indonesia well
00:52:48
there's another company in South Korea
00:52:50
and here's a company and you know
00:52:52
they're raising a new round they have to
00:52:54
get board approval they got to do this
00:52:55
and signatures I mean it's hard to scale
00:52:57
yeah so so that the VC which is a
00:53:00
software light people heavy artisanal
00:53:03
business all of a sudden becomes
00:53:04
misfactured right so you actually need
00:53:07
to be highly automated and use software
00:53:09
yourself in order to put 500
00:53:11
three-person teams on the field
00:53:14
so this is what I mean by
00:53:16
it's really I think Freebirds
00:53:19
use of the term dust storm is a really
00:53:21
good one it's extremely extremely
00:53:23
confusing what to do and if you have
00:53:26
large amounts of money that may actually
00:53:28
now what used to be a real
00:53:30
differentiator
00:53:32
and a key to success
00:53:34
may actually become an impediment
00:53:36
because you yeah you you are forced to
00:53:39
do business in a classical way
00:53:42
that has changed frankly in the last 90
00:53:44
days what do you think sax
00:53:46
what's the question because we're
00:53:47
touching a lot of different things here
00:53:48
do you feel like this is a dust storm
00:53:51
and it's murky and it's just hard to
00:53:54
place bets as a capital allocator
00:53:56
because something comes out the next day
00:53:59
or 48 hours later or the next week that
00:54:02
takes the previous idea and wipes it out
00:54:04
and then and how do you scale
00:54:06
and be Capital efficient well we're at
00:54:08
the early stages of a huge new wave and
00:54:11
I think that creates a lot of
00:54:12
opportunity so yeah you've gotta
00:54:14
basically separate what's really
00:54:16
interesting from the Fool's Gold there's
00:54:18
definitely going to be a lot of that
00:54:21
but at least there's a reason now to
00:54:24
believe that say dozens of unicorns
00:54:27
could be created in the next couple of
00:54:28
years
00:54:29
so before we were getting kind of long
00:54:30
in the tooth on some of these Tech
00:54:32
Cycles I mean Cloud Social Mobile I mean
00:54:35
there was a reason to believe that those
00:54:37
earlier waves that sort of played out
00:54:39
that the big Winners already been
00:54:40
determined and maybe there wouldn't be
00:54:42
too many more big winners in those
00:54:44
spaces but now we have a whole new
00:54:46
Catalyst for
00:54:48
Founders to do all sorts of new things
00:54:50
and so I tend to think that's super
00:54:52
exciting you know we're in the early
00:54:54
stages and I do think there will be
00:54:57
dozens of new unicorns minted in various
00:55:00
aspects of AI it could be in AI
00:55:04
infrastructure you know whether you're
00:55:06
seeing now there's a lot of funding
00:55:07
that's gone into Vector databases or
00:55:10
platforms for creating agents
00:55:13
or it could be in AI co-pilots basically
00:55:16
that tackle various professional
00:55:18
categories and create a copilot for
00:55:21
coders or co-pilot for doctors or
00:55:23
lawyers or Architects I think there's
00:55:25
going to be potentially multiple
00:55:27
unicorns created in in those categories
00:55:30
I think there's going to be SAS software
00:55:34
products that were just good before but
00:55:36
now will actually be great because the
00:55:38
incorporation of apis from
00:55:41
you know AI Foundation models we're
00:55:43
we'll just Turbo Charge the capabilities
00:55:46
and so there's a whole bunch of SAS
00:55:48
products that I think become newly
00:55:51
interesting and and better they go from
00:55:53
being vitamins to painkillers so you
00:55:56
know we're looking in all those
00:55:57
categories and I think we'll end up
00:55:59
making some batch but there's also going
00:56:01
to be a lot of companies there are
00:56:03
flashes in the pan or get undermined you
00:56:06
know there'll be SAS companies that
00:56:08
actually become less attractive because
00:56:10
of disruption from AI but look I think
00:56:13
all of this this Maelstrom is great for
00:56:15
an investor I mean if you're going to
00:56:17
spray and pray it's not good you've got
00:56:19
to be selective about where you take
00:56:21
your shots but I think this is the most
00:56:24
exciting
00:56:25
environment we've been in in a number of
00:56:27
years I mean it makes me want to go to
00:56:30
work every day and see it's so funny you
00:56:31
say that sex because I literally am
00:56:34
looking for an office space in San Mateo
00:56:37
to start like doing the incubator in
00:56:40
person again and on Monday I'm having 60
00:56:42
companies come to San Francisco we'll be
00:56:44
at my attorney's office and we're having
00:56:46
like a Foundry University with just all
00:56:48
these new startups that we invested in
00:56:50
to just hang out for a day
00:56:52
the enthusiasm right now is amazing and
00:56:54
what's really unique is the developers
00:56:57
who had
00:56:59
three out of seven companies they
00:57:01
interviewed with offer them 150 or 250k
00:57:04
packages rsus whatever
00:57:06
now there's no offer from Facebook
00:57:08
there's no apple there's no Twitter
00:57:09
there's no Google or Microsoft offer
00:57:13
coming in to be the backstop against
00:57:15
starting a company so what are they
00:57:17
doing
00:57:18
they're saying you know what I got two
00:57:19
friends who got laid off I got one
00:57:21
friend who's halfway at the door let's
00:57:22
just start something let's just start
00:57:24
something who can give me 100k who can
00:57:25
give me 500k and it's uh it's it's so
00:57:29
invigorating to see the talented people
00:57:33
not people who've learned how to
00:57:35
you know hack a pitch deck together and
00:57:37
tell a story but people were actually
00:57:39
coding and making MVPs it's it's truly
00:57:43
exhilarating right now the amount of two
00:57:45
and three person startups I'm seeing
00:57:47
yeah and so while you'll have this and
00:57:49
it's and it's an incredible I've never
00:57:51
seen this amount of Destruction and
00:57:53
creation occurring simultaneously I love
00:57:55
this zombie concept
00:57:58
you have one half of your portfolio
00:57:59
coming apart at the seams layoffs
00:58:02
reducing their targets while people are
00:58:05
coming in the door with products that
00:58:07
are absolutely awe-inspiring I just give
00:58:09
one example I I had a company come out
00:58:12
of our founder University I gave them
00:58:13
twenty five thousand dollars to
00:58:14
incorporate a developer and his brother
00:58:16
who's a screenplay writer they're taking
00:58:17
screenplay writing software Sac so
00:58:19
you'll appreciate this having produced
00:58:20
two amazing movies thank you for smoking
00:58:22
and the dolly film is called
00:58:24
Dolly land dollyland yeah two months
00:58:28
coming on two months congratulations to
00:58:30
uh Emmy award-winning oscar-winning
00:58:32
producer he's gonna win an Oscar this
00:58:34
time he's
00:58:36
you know the screenplay writing tools
00:58:38
that have existed they're like what word
00:58:40
processors with formatting what they're
00:58:42
doing is they're saying hey write some
00:58:45
dialogue and then you can have dialogue
00:58:47
and say hey make it a little snappier
00:58:49
make it a little tarantino-ish make it a
00:58:51
little more you know sorkinish and then
00:58:53
make a storyboard with you know uh
00:58:56
stable diffusion
00:58:58
and I was like well this is the genius
00:59:00
idea I mean it's unbelievable of course
00:59:01
I'll give you 25 000 for your
00:59:03
incorporation and then they're coming to
00:59:05
the Excel I'm gonna give another 100K
00:59:06
and and every single piece of software
00:59:09
will that company and success Ever
00:59:11
Raised 25 or 30 million dollars do you
00:59:13
think no I think there'll be 12 people I
00:59:15
think it'll be 12 people I'll I'll give
00:59:17
them
00:59:18
2500k and then a million our industry
00:59:21
raises 100 billion dollars a year on the
00:59:23
premise that each company before they
00:59:25
become a unicorn will absorb between 500
00:59:28
and a billion dollars
00:59:29
yeah no I'm gonna own 20 10 to 20 of the
00:59:33
company for low millions and and we'll
00:59:35
see mid-journey is 12 people and no it's
00:59:38
totally bootstrap like I guess what I'm
00:59:40
saying is because in the world of AI
00:59:43
so much work is done for you for free
00:59:46
this is why I'm asking maybe we will
00:59:48
have to change how we do business on the
00:59:50
Hollywood example there's about to be a
00:59:52
writer's Guild strike and they may want
00:59:54
to think twice about that because this
00:59:56
is not the time where you want to be
00:59:59
encouraging the industry to find
01:00:00
alternatives to writers okay you want to
01:00:03
get back in the office and you want to
01:00:04
say hey can I could is there any other
01:00:05
work I can do this weekend boss did you
01:00:08
see the news about BuzzFeed today they
01:00:10
had won a Pulitzer they just shut down
01:00:12
BuzzFeed news the entire news division
01:00:14
gone another 15 gone the layoffs and
01:00:18
then there was a report this week that
01:00:19
Zuckerberg's doing his third round of
01:00:21
layoffs another 4 000 people that puts
01:00:23
him at 24
01:00:25
000. yeah with a hiring freeze so the
01:00:28
way I described the current funding
01:00:29
environment is It's A Tale of Two Cities
01:00:32
it's the best of times it's the worst of
01:00:33
times if you're a hot AI startup that's
01:00:38
able to tap into the Zeitgeist that's
01:00:40
doing something that's perceived as
01:00:42
Cutting Edge or relevant there's a
01:00:44
strong why now and you're early you know
01:00:46
your early stage you're able to raise
01:00:48
money for that the spigot is turned back
01:00:50
on there's a lot of funding for those
01:00:52
types of early State startups but if
01:00:54
you're a series sea Sage start you're a
01:00:57
late stage startup with a it's called a
01:00:59
pre-ai model the spigot is just turned
01:01:02
off completely I mean let's look at that
01:01:04
chart from
01:01:05
French base where the amount of serious
01:01:09
C funding has gone from something like
01:01:11
10 billion a quarter last year or to
01:01:14
like zero I mean this is hardly I
01:01:18
thought this was an error in the chart
01:01:20
look at this chart everybody it's
01:01:22
seriously funding to U.S companies by
01:01:24
quarter there is just no growth stage
01:01:25
funding it's just completely dried up
01:01:27
I mean look at that
01:01:29
I mean it got cut in a half and then it
01:01:33
got cut in half again and then it just
01:01:35
flatlined and so when you see this is
01:01:38
your thesis let me ask you this actually
01:01:39
sure thesis here that people aren't
01:01:41
trying to raise money and they're just
01:01:42
busy cutting their companies down to a
01:01:45
smaller team size and they'll come back
01:01:46
out in the second half of the year or
01:01:48
that anybody with that amount of dry
01:01:50
powder is out of the game now yeah I
01:01:53
think that we're in this awkward stage
01:01:55
where the the companies who raise money
01:01:58
and call it 2020 and 2021 all those
01:02:01
valuations are obsolete and you've had a
01:02:05
lot of late stage players leave the game
01:02:07
or they're in the Penalty Box they're in
01:02:09
timeout I mean look at Tiger for example
01:02:10
the single most active funder at late
01:02:13
stage is trying to figure out how much
01:02:15
to mark down his portfolio so I just
01:02:18
think that a lot of the funding has
01:02:19
dried up there this idea that there's
01:02:20
tons of dry powdersing out there I think
01:02:22
is a myth or maybe it's there but
01:02:24
there's no willingness to deploy it the
01:02:26
valuations are all out of whack and VCS
01:02:30
generally would rather lead around in a
01:02:33
new startup with a fresh cap table than
01:02:36
in a cap table they got to restructure
01:02:38
because no one would want to talk about
01:02:39
a year ago that's what we talked about a
01:02:41
year ago I asked you point blank would
01:02:43
you if they cut the valuation and you
01:02:47
know they redid everything and said Hey
01:02:48
listen we understand this is reality
01:02:50
would you get involved and cut a check
01:02:51
and you're like I don't want to deal
01:02:53
with that kind of amount you know that
01:02:54
kind of hard bucket too hard too hard
01:02:56
bucket for you yeah and so now once
01:02:59
again a year six months or a year after
01:03:01
we talk about this it has now manifested
01:03:03
this is metastasized into no it hasn't
01:03:06
even started I think we are going to get
01:03:08
started okay I think I think we're still
01:03:10
being really prescient like the tiger
01:03:12
thing was very important because they
01:03:14
are in many ways at the front of the
01:03:16
line in terms of the number of companies
01:03:18
they've touched the amount of capital
01:03:20
they've written and because they're in
01:03:22
the middle of a very large fundraise
01:03:24
their need to Mark the market quite
01:03:27
accurately so that their existing LPS
01:03:28
know what they're signing up for in this
01:03:30
next fund so they're the ones that have
01:03:33
the most incentive
01:03:34
to move the marks but it still leaves an
01:03:38
entire industry of folks that don't
01:03:39
necessarily need to do that because they
01:03:42
have whether it's dry powder that dry
01:03:44
powder is real or not the point is that
01:03:46
there's a lot of money that hasn't been
01:03:48
deployed and so again I've asked this
01:03:49
question before what is their incentive
01:03:52
to really mark their book down 50
01:03:53
percent they don't have an incentive why
01:03:56
would they do that they would rather let
01:03:58
it decay down naturally I'll give you an
01:04:00
example of this or do you converts that
01:04:02
keep it alive that basically allow them
01:04:04
to delay
01:04:05
yeah but even the convert Market
01:04:07
Freebird that was hot for about six
01:04:08
months and then it just yeah no nobody's
01:04:10
doing that stuff either but I'll give
01:04:12
you one example there's a very good
01:04:13
company
01:04:15
that we are investors in along with
01:04:17
every kind of Big Blue Chip tier one
01:04:20
marketing muck organization we did the A
01:04:22
and they stacked on afterwards and when
01:04:25
we
01:04:26
thought about what our valuation should
01:04:28
be we did something we got to a number
01:04:31
which was a third of what the Mark was
01:04:35
and we're like well if we think the
01:04:37
price is two-thirds off we should
01:04:38
probably just sell it now and we
01:04:41
actually went and got some term sheets
01:04:43
from some private Equity firms to
01:04:45
validate it and what they it was
01:04:47
incredible they both independently got
01:04:48
to that same number
01:04:50
and so while the deal was closing we
01:04:52
went through the end of quarter we moved
01:04:55
the markdown and we pointed to that
01:04:56
valuation and we said look this is what
01:04:59
these two other very well known firms
01:05:01
have said this is what we've said so
01:05:02
this is what our new valuation is and
01:05:04
you know we're trying to sell it and we
01:05:05
ended up selling it but every other
01:05:07
organization didn't touch their their
01:05:09
valuation that valuation folks maybe you
01:05:12
could explain to the audience why the
01:05:14
private Equity folks are such a good
01:05:16
backstop in terms of valuation versus
01:05:18
say Venture capitalists well I think
01:05:20
that Venture capitalists we tend to be
01:05:23
glass half full and we are conditioned
01:05:27
especially if you do your job well to be
01:05:31
smart buyers of deep out of the money
01:05:33
options what does that mean it's like
01:05:35
when you meet an entrepreneur and you
01:05:36
give them three or four million bucks or
01:05:38
five hundred thousand dollars or
01:05:39
whatever at some nominal valuation
01:05:42
you're not trying to get your money back
01:05:44
you're trying to figure out whether he
01:05:45
is a zoc or an Elon or Larry Page and
01:05:48
all of a sudden you get a thousand X on
01:05:50
your money back right so we are buying
01:05:52
these deep out of the money options most
01:05:54
of them don't hit
01:05:55
but when they do they can just have
01:05:57
these crazy statistical outlier outcomes
01:06:00
yum yum so we're trying to buy the
01:06:03
future and we tend to be Believers of
01:06:05
what can go right
01:06:07
private Equity has refined a very
01:06:10
powerful toolkit of putting
01:06:14
two or three orders of magnitude of the
01:06:16
money we put into companies to work
01:06:18
on the premise that the glasses actually
01:06:19
half empty and what can go wrong and how
01:06:22
do we mitigate that risk and so they
01:06:25
tend to be much more sober I think in my
01:06:27
experience dealing with them in what is
01:06:30
the true valuation of a business what
01:06:32
are the upsides of a business what are
01:06:34
the warts on a business they they really
01:06:36
kind of see the truth the ground truth
01:06:38
much better than VCS do in general
01:06:39
because they're closer to public markets
01:06:42
and they're they flip these things two
01:06:43
or three years their margins are much
01:06:45
thinner they're they're trying to make
01:06:47
1.5 1.6 X their money 2x is a huge
01:06:51
outcome for them yes so they they have a
01:06:53
much more sober version of reality
01:06:57
a bunch of this tiger stuff yeah got
01:06:59
released and I mean their funds
01:07:02
underwater just like masi yoshi-san's
01:07:04
fund is underwater and uh it's gonna be
01:07:06
years of pain and suffering to get out
01:07:09
from under this and so again I think sax
01:07:11
nailed it with tal of Two Cities anybody
01:07:14
else want to chime on this before we
01:07:15
talk a little bit about well for us our
01:07:17
friend of the Pod Brian Armstrong I've
01:07:19
been I've been investing off balance
01:07:21
sheet since 2018 and six months ago we
01:07:24
started to explore whether we should
01:07:25
raise a fund and I think it was like two
01:07:28
weeks ago we brought the senior Partners
01:07:30
In Me and the five other guys that run
01:07:33
our business and
01:07:34
we said we're not going to raise a fund
01:07:37
and the biggest reason is this Dynamic
01:07:39
which is that you know we have
01:07:42
dollars of private assets
01:07:44
I don't actually know what they're
01:07:46
really worth
01:07:47
but I have a responsibility to try to
01:07:49
get as much of that Capital out and so I
01:07:51
thought the best thing to do is just to
01:07:53
take our time
01:07:55
and try to figure it out because I I
01:07:57
have way more questions and answers
01:07:59
right now and that's really the first
01:08:00
time since I've moved to Silicon Valley
01:08:02
where I've had that sensation is a
01:08:04
sensation humility
01:08:06
I think it's like
01:08:08
I mean I'm joking but it is it is for
01:08:11
somebody like you who has done extremely
01:08:13
well placing bets deeply I mean I I say
01:08:16
this a joke but I mean it as like a
01:08:18
point of self-awareness for you because
01:08:20
listen you've placed some amazing bets
01:08:22
whether it's the Warriors or Facebook
01:08:24
or Bitcoin or whatever or slack or
01:08:26
whatever I don't know whether I should
01:08:27
be writing 200 million dollar checks or
01:08:30
200 000 checks and I don't know whether
01:08:32
I should be doing that sort of as an
01:08:34
incubator actually as an accelerator
01:08:37
that's what I'm doing
01:08:38
or actually just as a series a detached
01:08:41
investor so I don't know I'm trying to
01:08:43
take the time to figure it out and my
01:08:45
thought was if I raise a fund right now
01:08:47
I could barely stand the idea of me
01:08:49
putting money to work right now of my
01:08:51
own Capital without any answers but then
01:08:53
the idea of like having a bunch of
01:08:55
sovereign wealth funds and folks that
01:08:57
were ready to work with us
01:08:59
I don't know I just I just about the
01:09:01
right time just to tell you my
01:09:02
fundraising story I um I'm publicly
01:09:05
raising launch fund 4. I get over 50
01:09:08
million dollars in just you know High
01:09:10
net worth individuals uh you know and
01:09:12
family offices who are interested
01:09:13
immediately close uh I don't know 26 27
01:09:16
28 of it and then I'm gonna go out on
01:09:18
the road to meet with LPS and Silicon
01:09:20
Valley Bank blows up nobody's can take a
01:09:22
meeting that month right and so now
01:09:24
thank the Lord I said I'm going to have
01:09:26
a one-year window to raise the fund and
01:09:29
I talked to some old school VCS Fred
01:09:31
Wilson Bill Gurley these people would
01:09:34
take a year to raise a fund it used to
01:09:36
be or I'm sorry in the height of this uh
01:09:39
bubble you tell me a sacks the the
01:09:41
quickest you closed one of the the
01:09:42
crafts funds but I was hearing people
01:09:44
saying they're closing funds within two
01:09:45
or three months I think we're back to
01:09:47
it's a year on the road to close a fund
01:09:49
what's your experience accent listen
01:09:50
you're an All-Star so
01:09:53
yeah I think it's just depends on your
01:09:57
situation to be honest but but I I think
01:10:00
the important thing for Founders to know
01:10:03
is just that the way that late stage
01:10:05
financing is dried up is very real I'll
01:10:07
give you like two data points just this
01:10:09
week so I got my first notification from
01:10:12
a portfolio company this is a company I
01:10:14
invested in before craft it's not a
01:10:16
craft investment but my personal
01:10:18
Investments and they're doing a pay to
01:10:20
play round you know what that is explain
01:10:22
what that is that means pain yeah
01:10:24
Yeah so basically the way it works is
01:10:27
they say they're going to raise 20
01:10:28
million dollars well by the way they
01:10:29
said they went out to raise growth
01:10:31
funding
01:10:32
weren't able to get a term sheet from
01:10:34
anybody
01:10:35
and no takers and this is a good product
01:10:38
I mean a lot of startups use this
01:10:40
product
01:10:41
I think they're ARS in the 20 something
01:10:44
million maybe 30 something million it's
01:10:47
not like doubling over years growing
01:10:49
like let's call it 50 year over year
01:10:50
this is a company that should have been
01:10:52
able to raise money I don't understand
01:10:53
why they weren't maybe because they're
01:10:55
burning too much money so instead of
01:10:57
cutting costs the way they should
01:10:58
they're doing like a 20 million pay to
01:11:00
play around and what that means is that
01:11:03
everybody is an investor in the company
01:11:05
you either have to do your prorated
01:11:07
share of the 20 million or you get
01:11:09
diluted ten to one if you had 10 percent
01:11:11
of the company you have to put in two
01:11:12
million dollars for your 10 of the
01:11:15
company is now one percent no it'd be
01:11:17
it'd be more because
01:11:18
you would look at let's say 50 of the
01:11:21
companies owned by the investors and the
01:11:23
other 50 is common just to take round
01:11:26
numbers okay if you own 10 of the
01:11:28
company that would actually be twenty
01:11:29
percent of the preferred yes yeah the
01:11:31
employees are not buying shares in this
01:11:32
20 of the of the of the 24 million so
01:11:36
it's four minutes yeah exactly so
01:11:38
basically you have to own one percent
01:11:41
right right so basically it's almost
01:11:43
like a capital call
01:11:44
where you just have to Pony up more
01:11:47
money in order to preserve your
01:11:48
ownership in the company
01:11:50
if it makes you feel alternative but
01:11:52
yeah I had one of those just happen to
01:11:55
me as well and I was just like we'll put
01:11:57
in the bare minimum because like the
01:11:58
thing that it puts you in it paints you
01:12:00
in a corner where you're like well I've
01:12:01
been with this thing for eight or nine
01:12:03
years
01:12:04
is this the moment
01:12:06
to basically lose all of that
01:12:09
compounding or value or work that you've
01:12:12
put in or seen their team do and it's
01:12:14
just a really tough position right yeah
01:12:17
so look I'm not on the board so I don't
01:12:19
know what reasoning went into this but
01:12:21
what they should be sending out to all
01:12:23
the shareholders is look here are all of
01:12:25
our metrics here's our burn you know
01:12:27
here's the steps we took to reduce our
01:12:29
burn I don't really like the idea of
01:12:31
having to do essentially a capital call
01:12:33
from your existing investors when you
01:12:35
haven't reduced your own burn I mean why
01:12:37
can't the company operate at break even
01:12:39
if you're at 30 something million of ARR
01:12:41
you should be able to operate you may
01:12:44
not want to operate at break even but
01:12:45
you but they should be able to but sax
01:12:47
this is what I mean I'll tell you after
01:12:48
we stop taping who it was that
01:12:50
that told me this about their company
01:12:52
but they were basically able to let go a
01:12:55
third of their Workforce by moving a
01:12:57
bunch of work to models and let me guess
01:12:59
the founders get to keep their shares or
01:13:02
they get re-upped in this whole
01:13:03
mashugana no no but wait hold on can we
01:13:05
can I just finish this yeah
01:13:07
so so the point is like if you can cut
01:13:09
off X by a third by using all of these
01:13:12
new AI you know models and gpts and auto
01:13:15
gpts what are you as a board member or
01:13:17
shareholder
01:13:19
supposed to do and also as a Founder
01:13:22
don't you have to go there first before
01:13:24
you start to ask people for more money
01:13:27
and why aren't people doing that first
01:13:29
much more aggressively and so this is
01:13:31
what doesn't make any sense to me that's
01:13:33
exactly my point is what steps were
01:13:34
taken to cut costs before you just went
01:13:37
to the investors to Pony up more money
01:13:39
that's what I want to know if they
01:13:40
actually did that work and this is like
01:13:42
the last money they need okay then you
01:13:45
know I'll Pony up my share and by the
01:13:46
way we need investors no we don't and we
01:13:49
need investors to be much more
01:13:51
aggressive in holding
01:13:52
folks accountable because these examples
01:13:55
need to be better discussed well if XYZ
01:13:58
company was able to do it why aren't you
01:14:00
able to do it and
01:14:02
if it's because we're not technically
01:14:04
capable mad that's maybe a plausible
01:14:06
answer but even that reason will go away
01:14:08
in a few months I suspect but if it's
01:14:10
that we just have such institutional rot
01:14:12
we're incapable of doing it well then
01:14:14
you might as well just not write the
01:14:16
check because that company is going to
01:14:17
get undercut by some new white sheet
01:14:20
version of that business that doesn't
01:14:21
have any of these impediments that yeah
01:14:24
in a way to mop and sacks management has
01:14:26
told you they're incapable of running
01:14:28
this business this concern in a in a
01:14:31
thoughtful way I had this happen to us
01:14:33
as well and the the question I have used
01:14:35
access in these situations where this
01:14:37
pay to play happens
01:14:38
you basically everybody gets wiped out
01:14:40
except those who who play but the
01:14:43
founders and the management team always
01:14:45
seem to get re-up and they're whole
01:14:46
because the new investor doesn't want
01:14:48
the management team not incentivized so
01:14:51
in these kind of situations it's kind of
01:14:53
like the management team gets to reboot
01:14:55
the cap table and they don't get penis
01:14:57
no I I actually I don't I don't have
01:14:59
those details yet yeah
01:15:01
remember I didn't lead around I was just
01:15:03
uh angel investor in the company so I
01:15:04
checked with one of the VC firms that
01:15:07
led around and I'm like are you gonna do
01:15:09
this and they said probably not you know
01:15:11
and so like the round might fail I mean
01:15:14
they can make it as punitive as they
01:15:16
want but if the shareholders don't
01:15:19
believe that the company has fixed its
01:15:21
problems they're not gonna Pony up the
01:15:24
money let's get free bargain yeah I
01:15:25
think one of the problems that a lot of
01:15:27
folks are facing
01:15:29
is
01:15:31
it becomes less about the fundamental
01:15:33
value of a business in a lot of these
01:15:36
conversations as you guys know and it's
01:15:38
becoming a lot more about who will fund
01:15:40
the next round if the company is still
01:15:42
burning money and so you're making a
01:15:44
social Market bet not a bet on the team
01:15:47
or the business or the value it's that
01:15:51
there's someone else that's going to
01:15:53
lead the next round and this is
01:15:54
fundamentally why he's called the
01:15:56
greater fool that's called the greater
01:15:58
pool Theory look I mean it's
01:15:59
historically we wouldn't call him a fool
01:16:00
if it's just about progress towards
01:16:02
profitability but right now there's so
01:16:05
much trepidation it's almost like a
01:16:06
self-fulfilling prophecy that there's so
01:16:08
much trepidation in doing late stage
01:16:10
rounds that no one wants to be the last
01:16:12
guy in because you're not sure if the
01:16:14
next guy is going to be there to fund
01:16:15
the last round to get to profitability
01:16:16
and that's why half of biotechs that are
01:16:19
public are trading below cash because
01:16:22
historically the way biotech companies
01:16:23
which is a really good pointed example
01:16:25
of this
01:16:26
they make progress to hit milestones and
01:16:29
then the next round of capital comes in
01:16:30
they make progress hit Milestones next
01:16:31
round of capital comes in and then
01:16:33
eventually you get you know phase three
01:16:34
approvals and you go sell the company or
01:16:37
or whatever you get profitable and they
01:16:38
almost always get Acquired and in the
01:16:40
case of other technology companies if
01:16:43
the business has to do three or four
01:16:45
things it's got three or four Milestones
01:16:47
it has to hit in your case tax it might
01:16:49
be that they got to get to 50 million
01:16:50
ARR and they got to get you know the
01:16:52
certain cost function down in the
01:16:54
business and if they can do those two
01:16:55
things then the business profitable but
01:16:57
it's going to take us around a 20 and
01:16:58
we'll get the first chunk down and then
01:17:00
another round of 30 to get the last
01:17:01
chunk done and no one knows if the next
01:17:03
30 is going to be there and that's
01:17:05
really where a lot of these market
01:17:06
dynamics are falling apart that there's
01:17:08
historically been a model in the market
01:17:10
of hit Milestones next round shows up
01:17:13
hit Milestones next round shows up and
01:17:15
now no one knows if the next round will
01:17:17
show up so no one wants to fund this
01:17:19
round
01:17:20
particularly where there's High burn it
01:17:21
requires a lot of capital to make that
01:17:23
bed so the social you know the
01:17:25
self-fulfilling problem the social
01:17:26
Market bed right now is you know it it's
01:17:29
self-fulfills and and we're um
01:17:31
you know we're sitting here kind of
01:17:33
spinning our thumbs wondering if the
01:17:35
next guy's gonna find it do you think
01:17:37
that
01:17:38
only
01:17:39
10 or 15 percent of companies have now
01:17:42
properly reset value like you said 70 of
01:17:45
these unicorns are actually zombie corns
01:17:47
yeah that's why I think the number from
01:17:48
I I don't I don't know Tiger's book at
01:17:50
all but when I hear numbers like 20 for
01:17:54
a for a fully invested mature book that
01:17:56
invested during the peak of the cycle it
01:17:58
doesn't sound right that it's 20 percent
01:18:01
it sounds like it should be a lot lower
01:18:04
like I think that 20 by the way you know
01:18:06
comes after like two other smaller write
01:18:09
Downs so they might be cumulative I
01:18:11
don't want to talk about tiger I think
01:18:13
like sure the statistic of 70 of these
01:18:15
public companies trading below their
01:18:16
cash the cash that they've burnt that
01:18:19
they've raised
01:18:20
in their lifetime
01:18:22
and again just to for anyone that's
01:18:24
Analyst at home trying to figure out how
01:18:25
we get to that number you look at the um
01:18:28
retained earnings on the balance sheet
01:18:30
and so the cumulative retained earnings
01:18:32
tells you if it's negative tells you how
01:18:33
much money they've burnt over their
01:18:34
lifetime and that tells you effectively
01:18:36
how much money has been invested so when
01:18:38
you look at the Enterprise Value which
01:18:39
is the market cap minus the cash they
01:18:41
have today you get their Enterprise
01:18:42
Value if their Enterprise Value is less
01:18:44
than their cumulative retained earnings
01:18:46
it means that they're currently worth
01:18:48
less than the money they've spent
01:18:50
and that's a statistic that is a fact
01:18:52
right now in public markets in
01:18:54
technology gone public in the last three
01:18:55
years and then you compare that to
01:18:57
private markets and I don't think we've
01:18:59
seen a 70 write down yet
01:19:00
or you know 70 of these things being
01:19:02
worth less than the cash so it's um you
01:19:05
know it's still yeah I think you're
01:19:07
right Jamaica is probably a
01:19:09
another Hammer to drop multiple hammers
01:19:12
multiple times before we move on to a
01:19:14
different topic so I think one of the
01:19:16
interesting differences in opinion in
01:19:18
Silicon Valley is the way that Founders
01:19:21
in VCC see the nature of the
01:19:23
relationship and I've been on both sides
01:19:25
of this I've been on the side of being a
01:19:27
founder and I've been on the side being
01:19:29
a VC and what you'll see is that VCS
01:19:32
always talk about it as a partnership
01:19:33
but a lot of Founders will talk about it
01:19:36
as if the money is just a commodity and
01:19:38
frankly when everything is up and to the
01:19:40
right and everything's going great and
01:19:41
you're in a bull market and you can just
01:19:42
keep raising money and definitely
01:19:44
because there's always someone willing
01:19:45
to lead the next round then the money is
01:19:48
a commodity but when you're in a in a
01:19:51
down market and all of a sudden there is
01:19:53
no market like you can't raise your next
01:19:55
round all of a sudden it is a
01:19:56
partnership because you've got to go to
01:19:58
your investors and ask them to do
01:20:00
something that they may not otherwise
01:20:02
want to do is this was purely a
01:20:05
transactional decision as opposed to a
01:20:07
relationship they might not want to to
01:20:10
fund your next round and you're asking
01:20:11
them to say no actually believe in our
01:20:13
long-term relationship and I think that
01:20:16
you know this is the type of environment
01:20:18
which you find out it is more of a
01:20:19
partnership
01:20:20
and it should have always been it should
01:20:22
have always been it should have been but
01:20:23
it but it wasn't and look I don't know
01:20:25
what happened with that other company
01:20:27
and all of a sudden I get a notification
01:20:29
out of the blue well I want to
01:20:30
understand the thinking that went into
01:20:31
that before you know I'm just gonna
01:20:36
this is where trust comes in right and
01:20:38
like I think in a zero interest rate
01:20:39
environment
01:20:41
you know there's no need for trust you
01:20:43
just this cash splashing around just
01:20:44
grab whoever the latest person in town
01:20:46
is who wants to drop a couple of bags
01:20:48
you just take one of their bags the most
01:20:50
important thing to me like what make it
01:20:51
a partnership is for me to know that the
01:20:53
founders have done everything in their
01:20:54
power to reduce costs and put the
01:20:57
company on the right trajectory before
01:20:59
going out and basically issuing Capital
01:21:01
calls to the investors I want to know
01:21:02
they've done that work all right listen
01:21:04
Freeburg I know you got to go take care
01:21:06
of something of science I'll just wrap
01:21:07
up with the other boys here with uh one
01:21:10
piece of breaking news stack Overflow
01:21:11
says they will join the parade of data
01:21:15
providers like Reddit and Twitter that
01:21:17
will require permission and payment to
01:21:19
use their data sets and stack Overflow
01:21:21
has a lot of answers to a lot of
01:21:22
developers questions in there I was just
01:21:24
curious to get your thoughts SEC
01:21:27
obviously sent to Wells notice we talked
01:21:29
about this before to Brian Armstrong of
01:21:30
coinbase
01:21:31
he said he's thinking about uh or
01:21:34
considering relocating out of the U.S if
01:21:36
the regulatory Clarity does not improve
01:21:39
crypto's dead in America
01:21:41
it is done in America crypto's dead in
01:21:43
America I mean now you have you had
01:21:46
ganster even blaming the banking crisis
01:21:48
on crypto so they've the the United
01:21:52
States authorities have firmly pointed
01:21:54
their guns at crypto is it a scapegoat
01:21:58
or was it a around find out moment
01:22:00
for crypto in your mind or a little bit
01:22:03
of both I I don't know I just think that
01:22:06
they were probably the ones that were
01:22:08
the most threatening to The
01:22:10
Establishment okay and they were the
01:22:13
ones that In fairness to The Regulators
01:22:15
did push the boundaries more than any
01:22:16
other sector of the startup economy
01:22:20
and yeah so now they're paying the price
01:22:22
for the the bill has come due for them
01:22:24
Saks is it a around find out moment
01:22:26
is it uh protecting the American dollar
01:22:29
somewhere in between
01:22:31
or incompetence on Regulators part the
01:22:34
more I think about it the more I think
01:22:35
it's probably not a coincidence that
01:22:37
you're seeing all these concerns about
01:22:38
dedolarization at the same time they're
01:22:40
cracking down on crypto
01:22:42
so look there were a bunch of crypto
01:22:43
companies that might have done shitty
01:22:45
things but I think we all agree that
01:22:47
coinbase was not one of them coinbase
01:22:49
was the gold standard in terms of doing
01:22:51
everything right and they've just agreed
01:22:52
asked over and over again for a
01:22:54
regulatory framework they're just like
01:22:56
tell us how to operate and we'll do it
01:22:58
so I think jamatha is right that they're
01:23:00
effectively Banning crypto in the United
01:23:02
States they're going to drive all these
01:23:03
companies overseas which is terrible for
01:23:06
American innovation I don't know exactly
01:23:08
where blockchain and crypto are going to
01:23:10
go from here but I think that we should
01:23:13
find that out in America you know we
01:23:15
don't want that Innovation going
01:23:16
offshore you bring up a really good
01:23:18
point too it's just like
01:23:21
coinbase played by the rules stood in
01:23:23
line tried to do the right things it
01:23:26
seems that every step along the way
01:23:28
right everything from board composition
01:23:30
to Executive composition to
01:23:33
how they try to interact with the
01:23:35
Regulators yet they were probably the
01:23:37
furthest away from getting a license the
01:23:38
one that came the closest was the one
01:23:40
that was the most fraudulent which is
01:23:41
FDX
01:23:43
fascinating how is that even possible
01:23:46
I mean because he had skills in gaming
01:23:49
the system yeah he's splashy cashy
01:23:51
splashy cashy well he he ponied up large
01:23:54
amounts of money because it wasn't his
01:23:56
money so it was easy for him to make
01:23:58
huge donations but he knew how to play
01:24:00
the game
01:24:01
to quote SPF he said this is the dumb
01:24:03
game we woke westerners play we say the
01:24:06
right Chevrolet so Everyone likes us
01:24:07
that's the game he was playing which is
01:24:09
my my whole concern about if we jump the
01:24:12
gun on regulating AI too quickly it'll
01:24:14
turn into another you know woke game
01:24:17
that everyone's gonna play so here's uh
01:24:20
here's how the world Works regulate
01:24:22
yourself behave yourself act in the
01:24:24
interest of consumers
01:24:26
or get regulated or smashed and I think
01:24:29
we've we've gone over this we talked
01:24:31
about it in fact last week whether the
01:24:32
movie industry crypto AI regulate
01:24:35
yourself behave properly don't push the
01:24:38
boundaries too far you can bend the
01:24:39
rules but you don't want to break them I
01:24:42
think they regulate yourself that you
01:24:43
use the MPAA I don't think that's the
01:24:45
right example I think if you're going to
01:24:46
regulate yourself
01:24:48
look at the tobacco industry they tried
01:24:51
to regulate themselves but what they did
01:24:53
was just lie to maximize profit in an
01:24:56
area that was much less benign than
01:24:58
movies and content maybe you could have
01:25:01
some lascivious content in a movie or a
01:25:03
video game or an album but that was a
01:25:06
lot less harmful than smoking which not
01:25:09
just impacted the smoker but it turned
01:25:10
out the secondhand smoker as well or the
01:25:13
secondhand smoke so it touched everybody
01:25:15
right you could be in a restaurant not
01:25:17
smoke and yet have years of your life
01:25:19
taken so I think that the
01:25:21
self-regulation for areas that impact
01:25:24
everybody independent of whether you
01:25:26
participate in the system or not is
01:25:28
where you have to look for good examples
01:25:30
Jason and I'm not sure there are many
01:25:31
good examples of separate allegations
01:25:33
those kinds of systems I mean I like
01:25:34
your workshopping it here I mean some
01:25:37
restaurants would have a smoking section
01:25:38
in a non-smoking section before there
01:25:40
was regulation right and I think if
01:25:42
crypto had just thought had been more
01:25:44
thoughtful about hey which tokens nft
01:25:46
projects were going to support which
01:25:48
ones we're not going to
01:25:50
that maybe they would have avoided a
01:25:51
little bit of this I'm not sure you know
01:25:53
it's it's hindsight's 2020 here but a
01:25:56
little more regulation I don't think
01:25:57
those smoking non-smoking sections work
01:25:59
too well the smoke went all over the
01:26:01
place can you
01:26:04
woke up
01:26:07
then you'd have to you'd have to take a
01:26:09
shower when you went to a bar or a
01:26:10
restaurant or a club you would have to
01:26:12
come home take a shower because your
01:26:14
hair and your clothes the smell of smoke
01:26:17
you couldn't sleep in a bed then your
01:26:19
bed had to get to change your sheets
01:26:20
disgusting remember when you went on a
01:26:22
space on a commercial flight they had a
01:26:24
smoking section
01:26:26
yeah it's a tube the Smoke Gets
01:26:32
fine when they have the welded shut ash
01:26:36
trays they used to have an ashtray in
01:26:38
every seat in between in the armrest was
01:26:41
a friend a friend of mine this is like
01:26:43
such a throwback but a friend of mine
01:26:45
well-known guy that you know I'll say
01:26:47
the name you can bleep it out
01:26:51
very important we don't want to he's a
01:26:54
notorious smoker and so I've flown with
01:26:55
him oh that's the worst and we get in
01:26:59
there on his plane and then we he shuts
01:27:01
the door and I'm like smells a little
01:27:03
odd in here smells a little clovy stuff
01:27:08
seven hours I'm gonna have to be in this
01:27:10
job
01:27:12
do the pilots get Hazard pay I mean how
01:27:15
do you compensate I mean this is not a
01:27:17
turbo prop he's on he can't crack the
01:27:19
window no uh it's Global the huge Global
01:27:23
it was it was at least it has three
01:27:25
cabins you could go to the back cabin
01:27:27
felt so sick I mean it's the worst it's
01:27:30
just smoking's the worst worst smoking
01:27:33
is the worst all right well we didn't uh
01:27:35
so long to the uh Sultan of Silence as a
01:27:38
science rather there
01:27:39
polling update here sucks I don't mean
01:27:41
to poke the bear I know it was a rough
01:27:43
week with the Fox News News bring it up
01:27:46
bring it up no go for it quick polling
01:27:50
update between putting her on I'm sorry
01:27:53
DeSantis and Trump not gonna happen the
01:27:55
santis is not happening in late March
01:27:57
news of Trump's indictment
01:27:59
boosted him over to Santa's by 26
01:28:03
percentage points among Republicans and
01:28:05
Republican Independence but earlier this
01:28:07
week the same poll showed that Trump's
01:28:08
lead
01:28:09
shrunk by 10 points in the last two
01:28:11
weeks to just a 16 point Advantage which
01:28:14
is still significant
01:28:16
but there's more University of New
01:28:18
Hampshire Survey Center poll I don't
01:28:20
know if any of these polls are
01:28:21
reasonable or not it seems like call
01:28:22
people on the phone I don't know who's
01:28:24
got a landline
01:28:25
released Wednesday showed a 20-point
01:28:27
DeSantis this deficit
01:28:30
what's going on here sex did your boy uh
01:28:33
Peak too early
01:28:34
no I don't think so if you if you look
01:28:37
at the Republican primary field DeSantis
01:28:40
is the only person who's got a shot
01:28:41
other than Trump
01:28:43
you look at Nikki Haley she's polling in
01:28:45
the three four five percent range all
01:28:47
the others are one or two percent
01:28:48
there's not a candidate other than
01:28:51
DeSantis that has over five percent so
01:28:54
in my view this is a trump DeSantis race
01:28:56
now what you saw is that when Alvin
01:28:59
Bragg pressed charges and indicted trump
01:29:01
it created a lot of sympathy for Trump
01:29:04
among Republicans effectively what
01:29:06
happened is Republicans registered their
01:29:09
displeasure with Alvin Bragg by
01:29:12
indicating support for Trump let's go
01:29:13
and that's that's what you'd expect to
01:29:15
happen and a lot of people speculated
01:29:17
that might be the purpose of Brax
01:29:19
prosecution is to make Trump the
01:29:21
candidate so we knew that was happening
01:29:24
but I think this this new poll that you
01:29:26
just mentioned is really interesting
01:29:27
because it shows that that Sugar High of
01:29:30
Trump's poll ratings was a temporary
01:29:34
bounce and it's coming down somewhat and
01:29:36
so you know what you saw actually is
01:29:39
that this huge uh pole bounce that Trump
01:29:41
got is somewhat normalizing now there's
01:29:44
no question that DeSantis is running
01:29:47
behind Trump and he's got his work cut
01:29:49
out for him if he's going to upset Trump
01:29:51
as the nominee but this thing is just
01:29:53
getting started I mean DeSantis isn't
01:29:55
even formally announced yet and remember
01:29:57
we're still very very early in this race
01:29:59
the primary battle that this most
01:30:01
reminds me of would be Obama versus
01:30:04
Hillary in 2007 and at this time in 2007
01:30:10
Hillary had a huge advantage over Obama
01:30:13
she was considered the favorite she was
01:30:15
considered the the one who couldn't lose
01:30:17
and it was Obama that pulled off a huge
01:30:19
upset and he did it by out fundraising
01:30:22
her out hustling her especially in
01:30:24
building organization and some of those
01:30:26
early primary States and then he
01:30:29
eventually created a narrative that it
01:30:31
was time to turn the page but he didn't
01:30:34
do that until much later in the year
01:30:35
much closer to the the primary
01:30:37
the first Republican primary is not till
01:30:39
February so there's plenty of time here
01:30:41
and I you know we'll see what happens
01:30:45
I think Nikki Haley is going to win the
01:30:47
Republican nomination
01:30:48
the more people here here's the things
01:30:52
the number of people that have told me
01:30:55
the most impressive moment with DeSantis
01:30:58
was before they met him the second most
01:31:01
impressive moment was their first
01:31:02
meeting and then it just falls off a
01:31:05
cliff where he becomes more and more
01:31:07
unimpressive the more and more time to
01:31:09
spend with this guy hey Nikki Haley come
01:31:11
on the pond Nick Haley is the opposite
01:31:13
Nikki Haley announced that in all of q1
01:31:16
in all of q1 she raised five million
01:31:18
dollars extremely unimpressive you're
01:31:19
probably 20 of that shamoth
01:31:21
and Nikki Haley come on the Pod we'll
01:31:23
double it
01:31:24
how much should Nike at least five
01:31:25
million was was you
01:31:27
listen
01:31:30
zero I can say definitively you said q1
01:31:32
zero yeah okay here we go zero but let
01:31:36
me ask a question here because I I'm not
01:31:38
informed on it but you you are a master
01:31:41
strategist here uh 1600 rated chess
01:31:45
player sax
01:31:46
that's not that good well I mean it's
01:31:49
double 800 but where I'm at you you're
01:31:51
killing me in 27 moves on average
01:31:53
DeSantis is fighting with Disney over
01:31:56
and over again he's getting a little
01:31:58
involved in the lgbtq everything and he
01:32:01
just seems to be getting involved in the
01:32:03
culture wars is that like a primary
01:32:06
strategy and then he moves to the center
01:32:08
when he comes to the general or and do
01:32:11
you agree with this General fighting
01:32:13
with Disney and the culture War stuff
01:32:17
I was talking strategically not your
01:32:19
personal opinion on these issues I know
01:32:20
that you're a very tolerant person yeah
01:32:22
so I think this is an issue that works
01:32:24
for him certainly in the Republican
01:32:26
primary but I also think it's going to
01:32:27
work for him in the general and you have
01:32:29
to remember that this bill that they're
01:32:31
fighting over was a parental rights bill
01:32:33
that basically it gave parents the right
01:32:36
to know what their kids were being
01:32:38
taught in schools and it basically
01:32:40
prohibited the teaching of this sort of
01:32:43
gender ideology in in schools and I
01:32:45
think most parents are on board with
01:32:48
that now yeah he didn't go yeah he
01:32:51
didn't go looking to pick a fight with
01:32:52
Disney Disney then got involved and took
01:32:55
the side they're calling this a don't
01:32:56
say gay bill which I think just
01:32:58
factually is not true the bill doesn't
01:33:00
mention
01:33:02
you know gay or homosexuality or
01:33:04
anything like that it was really about
01:33:05
this trans issue and Disney got involved
01:33:09
and this is Bob chapac and Bob chapek
01:33:12
lost his job and Iger came in and Iger
01:33:14
has said that he he had basically
01:33:16
lectured the Disney employees saying
01:33:18
that we need to stay out of politics and
01:33:20
we need to respect our audience's views
01:33:22
so I think that it was Disney who kind
01:33:24
of interfered I think this is overall
01:33:26
played to desensis benefit and and look
01:33:28
the problem for Disney they may win the
01:33:30
battle over this or that tax benefit
01:33:32
that they're fighting over but they've
01:33:35
lost the war
01:33:37
over this issue because parents used to
01:33:39
be able to trust that they could just
01:33:41
pop their kid down in front of a Disney
01:33:43
movie or a Disney show like Disney was
01:33:45
like the babysitter and they just 100
01:33:47
absolutely trusted all Disney content
01:33:50
and if you look at polling now Disney's
01:33:53
brand it used to have like a NPS of like
01:33:55
in the 50s is now in the single digits
01:33:58
because let's call it half the country's
01:34:00
parents the more Republican ones don't
01:34:02
fully trust Disney's content and
01:34:05
programming anymore implicitly
01:34:09
well could they ever do that subjection
01:34:11
line I've never seen anything
01:34:12
objectionable a lot of parents are
01:34:14
questioning what content Disney might be
01:34:17
putting in their their recent
01:34:19
programming obviously we're not talking
01:34:20
about the stuff that we grew up on so
01:34:22
look whether you believe that is a
01:34:25
problem or not what I'm saying is this
01:34:27
has been a Brand disaster for Disney
01:34:29
getting involved with DeSantis this way
01:34:31
they should really I think just try to
01:34:33
patch this thing up I don't understand
01:34:34
the benefits it's a bad look for both
01:34:37
it's a bad look for both people yeah
01:34:39
well I I think I understand the benefit
01:34:41
for DeSantis I don't understand the
01:34:42
benefit for Disney if I were them I'd be
01:34:44
trying to patch this up
01:34:46
I think there's a really valid
01:34:48
discussion to be had about
01:34:50
representation in movies and all that
01:34:52
stuff and I'm very Pro that
01:34:54
the the thing I think all parents agree
01:34:57
is we should just at least know what's
01:34:58
being taught to our kids and we can have
01:35:00
a thoughtful discussion about it there
01:35:01
seems to be some small group of people
01:35:04
that thinks we should hide from parents
01:35:07
what they're actually getting
01:35:09
what's being taught and I find that's
01:35:11
very strange um I think just a little
01:35:13
bit of like transparency and what's
01:35:15
being taught in schools is
01:35:17
and obviously that nobody should be
01:35:19
disagreeing on it to Sax's point I think
01:35:21
it was Pew that put out a study recently
01:35:24
it is the most polarizing issue amongst
01:35:27
Americans where Democrats and
01:35:29
Republicans are literally on opposite
01:35:31
sides of the spectrum well this is going
01:35:32
to be a big issue on the whole trans
01:35:34
issue now despite the polarization in
01:35:37
terms of the quantity of the number of
01:35:39
people it's actually an important issue
01:35:41
for a small percentage of both sides so
01:35:44
it's a highly complicated political
01:35:46
dynamic in America
01:35:48
very so this is where DeSantis clearly
01:35:51
has taken the approach that not only is
01:35:53
this important to the base to win the
01:35:55
nomination but it's going to scale into
01:35:56
the general and it could very well be
01:35:58
but it's a very divisive issue yeah I
01:36:00
wish people were given a little bit more
01:36:02
uh
01:36:04
consideration and maybe they could
01:36:07
have
01:36:09
I feel like maybe we're covering this
01:36:11
issue too much I you know I've heard
01:36:12
some other folks in the community said
01:36:14
like maybe people could be given a
01:36:16
little bit of their privacy and to
01:36:17
handle these things I think you're right
01:36:18
Jake how in this sense I think this
01:36:20
issue has become a lightning rod and um
01:36:22
and whenever you have a lightning rod
01:36:24
issue the amount of attention paid to it
01:36:26
it seems disproportionate to the
01:36:28
attention on that issue however I would
01:36:31
say that this is a lightning rod for a
01:36:34
larger issue which is the quality of
01:36:36
Education in this country which I think
01:36:38
is shockingly bad and it's bad because
01:36:42
of the decline of Standards uh they're
01:36:45
getting rid of advanced math they're
01:36:46
getting rid of greens chest taking
01:36:48
competition and and the schools are run
01:36:51
by these unions who are managing it for
01:36:53
their own benefit not for the benefit of
01:36:55
the students and look there is a
01:36:56
significant ideological component that's
01:36:58
crept into these schools as well so look
01:37:00
I think that overall I think that when
01:37:03
you get into the general
01:37:05
you have to uplevel the issue and talk
01:37:07
about it in broader terms that every kid
01:37:09
in our country deserves a high quality
01:37:12
non-ideological education I think if you
01:37:14
can do that you will get 70 80 percent
01:37:16
of the public on your site on this issue
01:37:19
yeah I feel like yeah it's I think
01:37:22
that's right yeah I think we can all
01:37:23
agree on that Democrats Republicans
01:37:24
everybody in between if you're a parent
01:37:25
you're not looking for an ideological
01:37:28
battle at school you're looking for math
01:37:30
science technology history creativity
01:37:33
you know there's a whole bunch of other
01:37:34
things that we should be really focused
01:37:36
on all right listen it's been another
01:37:38
amazing episode of the online podcast to
01:37:39
people going to the episode 125 meetups
01:37:42
you can type in all in meetups
01:37:44
our team over there we have super fans
01:37:47
are doing it in over 50 cities uh the
01:37:50
day this comes out so you may miss it
01:37:51
but you can sign up for the next one
01:37:52
I'll be uh phoning in and zooming into
01:37:55
them so for the fans you crazy lunatics
01:37:58
getting together have a great time have
01:38:00
a great time and tweet it and mention us
01:38:02
on Twitter
01:38:04
for the Sultan of science the Rain Man
01:38:07
the dictator I am the world's greatest
01:38:09
moderator and we'll see you next time
01:38:10
bye-bye
01:38:13
we'll let your winners ride
01:38:15
Rain Man David's house
01:38:20
we open source it to the fans and
01:38:22
they've just gone crazy
01:38:23
[Music]
01:38:56
we need to get Mercies
01:39:01
[Music]