00:00:00
We went to an amazing restaurant Friday
00:00:02
night. She So is the name of this
00:00:04
restaurant. Wonderful food. The owner of
00:00:07
this restaurant. Shimoth is a is a super
00:00:10
fan as well of the all-in podcast. Is
00:00:12
that a French restaurant? Jason, she
00:00:14
said it was um more like an Asian fusion
00:00:16
restaurant. Like great sushi. We had
00:00:18
this incredible hotel. Del just just
00:00:20
aces all the way. The guy comes and uh
00:00:24
we go to pay. He says, "Oh my god,
00:00:27
Phipe, listen to this story.
00:00:28
This is the most money is no good here.
00:00:30
Your money is no good here. Oie, he
00:00:32
refuses to let us pay after we ran up a
00:00:34
hell of a bill. And now you see
00:00:36
Freeberg's running. Freeberg just ran
00:00:39
off the show. Why did he run off the
00:00:40
show, Jim? Okay,
00:00:42
so Jason says to me, Jamal, this is
00:00:46
absolute this is an absolute
00:00:49
You guys, you guys, you guys make this
00:00:51
up to try and make entertainment
00:00:53
out of me. I'll tell you the truth.
00:00:55
Okay, I'll just tell you the truth. I'll
00:00:56
tell
00:00:57
you. Okay, ready? I'm gonna tell the
00:00:59
truth. So Jason says, "Guys,
00:01:02
I'll see you guys later." If
00:01:04
they're
00:01:05
care's gonna talk for more than three
00:01:08
minutes anyway. Go ahead. You said if
00:01:10
they're if they're going to comp all the
00:01:12
food, just make sure you give a great
00:01:13
tip. Huge tip. Huge tip. Huge and Jal
00:01:16
level tip. To T totally makes sense.
00:01:18
Freeberg's like, "Yeah, got it. No
00:01:20
problem." We had like $19,000 of food.
00:01:22
And he goes, "Is is $175 appropriate?"
00:01:27
Literally Freeberg calculates it. And so
00:01:30
Jason says, Jason says, "No." And then
00:01:32
Freeberg says, "Hold on. Oh, fine. Fine.
00:01:34
I'll double it to 350." Now, he was
00:01:36
around. He was joking. I gave the guy
00:01:38
a,000 bucks. It was gave a,000 bucks.
00:01:40
And I said, "Actually, I think we should
00:01:41
give two 3,000." So then we tipped the
00:01:44
woman an extra 2K. So we gave her 3K for
00:01:46
a 10erson dinner, which I think is
00:01:48
appropriate. She was ecstatic. The food
00:01:50
was phenomenal. It was great. Go to
00:01:52
Shiso if you're in Miami. Dave, are you
00:01:54
adjusting the tips for the no tax on
00:01:56
tips? So, you're like making the middle
00:01:59
smaller tips.
00:02:01
[Music]
00:02:02
We'll let your winners ride.
00:02:06
[Music]
00:02:10
We open sourced it to the fans and
00:02:12
they've just gone crazy with it.
00:02:17
Hey everybody. Hey everybody. Welcome
00:02:19
back to the number one podcast in the
00:02:22
world. We're going to have an amazing
00:02:24
episode today. The besties are riding
00:02:27
high. Why are we riding high? Because we
00:02:29
went to Miami. Oh my goodness. We had so
00:02:33
much fun at F1 thanks to I mean it was
00:02:37
fun. I mean, so many great stories. Uh
00:02:40
so much good times. We were laughing the
00:02:42
whole time. We did a little stage show
00:02:44
and uh Tony Robbins came up. We had Nico
00:02:47
Rossberg. He's a Formula F1 champion.
00:02:50
our guy Antonio Gracias who's working on
00:02:53
Doge, Valor Capital, front of the pod,
00:02:55
and Mayor Francis Suarez joined us. And
00:02:58
uh then at the end of the show, surprise
00:03:01
guest, none other than Sergey Brin, who
00:03:04
is punching a clock. He's working like
00:03:06
70 hours a week over at uh Alphabet. And
00:03:09
we'll talk about that today a bit. Did
00:03:10
you have a favorite speaker, Mr. Sultan
00:03:13
of Science, the one and only David
00:03:15
Freeber? Do you have a favorite speaker
00:03:17
or a moment? Sergey Sergey. Sergey did a
00:03:20
great job. He was very casual, very
00:03:22
chill. We had a great conversation. I
00:03:24
think we should probably publish that as
00:03:26
a standalone. I thought it was really
00:03:27
good to drop him like a little midweek
00:03:30
drop or something. But I will say
00:03:31
Antonio, I I gave him a shout out just
00:03:34
because I think the work Antonio is
00:03:35
doing is so important. I am super
00:03:38
impressed and I was really appreciative
00:03:40
of him taking time to come hang out with
00:03:42
us, but obviously he's working with Elon
00:03:44
on Doge, but he's also uncovering a lot
00:03:46
of stuff in the government that it's
00:03:48
really powerful to see someone actually
00:03:49
go in, do the digging, and present it
00:03:51
the way they are with the transparency
00:03:53
he is. And he's not doing it for any
00:03:55
angle. There's no money. There's no
00:03:57
benefit to him individually. He's just
00:03:59
doing it's probably net negative on the
00:04:00
margins for him. Really hard for him.
00:04:02
And yeah, and it's just amazing. Based
00:04:04
on Elon's experience, it's definitely
00:04:05
net negative. People uh maybe don't like
00:04:09
having their grift cancelled. Shimoth
00:04:11
Polyhapatia, our chairman dictator. Do
00:04:14
you have a favorite moment with the
00:04:16
speakers or a favorite speaker, you
00:04:18
know, a highlight from the programming
00:04:19
specifically? I thought all five of them
00:04:22
were amazing. I do I did think that
00:04:23
Sergey did a really good job. I like
00:04:26
Nico Rosberg a lot. I did too, for sure.
00:04:29
I'm really excited to see what Francis
00:04:31
does next after being the mayor of
00:04:32
Miami. Maybe governor. We'll see what uh
00:04:36
love party says. I think they were all
00:04:38
great. Tony Robbins, I have to say, his
00:04:40
energy is very unique and when you're
00:04:42
near it,
00:04:44
I didn't have many interactions with
00:04:46
Tony up until that first time. Really,
00:04:48
I'd met him through Peter Goober a
00:04:50
couple of times when I was part of the
00:04:52
ownership team of the Warriors. Peter's
00:04:53
a co-owner. They're very good friends,
00:04:55
but I'd never really spent much time
00:04:56
with him. He's a special person. And you
00:04:58
can tell there's a there's a big energy
00:05:00
there. They're all great. Yeah. You
00:05:02
know, I'm interested to see how the
00:05:04
audience likes that interview because,
00:05:05
you know, he uh he is a ball of energy.
00:05:08
I tried to get him to open up, talk
00:05:09
about himself a little bit, but you
00:05:10
know, he was kind of on his own tip, but
00:05:12
the audience loved him. And we did a
00:05:14
great like meditation exercise that
00:05:16
everybody loved it. It was a lot of fun.
00:05:18
Joining us this week from CO2
00:05:20
management. Yes, we have Phipe Leafant
00:05:25
who is his older brother and uh Phipe
00:05:29
welcome to the program for the first
00:05:30
time. Thanks guys great to be here. Have
00:05:33
you heard the show before? Have you have
00:05:35
listened to the Allin podcast Philippe?
00:05:36
Let me ask you that question right off
00:05:38
the bat. I've been listening about it
00:05:39
for a week at speed of 1.8. So I think
00:05:42
I've gone through about like 10 or 12
00:05:44
episodes. Okay. Catching up and uh All
00:05:47
right. Are you an F1 fan? You're French,
00:05:49
so I don't know. Is that like popular in
00:05:51
France? The F1. Hey, we had a good F1
00:05:53
pilot, right? Alan Frost. Alan Frost. He
00:05:55
won a few years, you know. So, okay.
00:05:59
It's incredibly popular in Europe.
00:06:01
Jason, what did you think of Formula 1?
00:06:02
That was your first time, right? It was
00:06:04
my first time to F1. You know, there was
00:06:07
a lot of um pomp and circumstance. We're
00:06:11
very lucky that the trophy house, my
00:06:13
friend Ford, whose partners on the
00:06:16
trophy house, included us. He gave us a
00:06:19
level of trophy house. Trophy house.
00:06:21
There it is. Beautiful structure. Three
00:06:24
amazing floors, tons of activations uh
00:06:27
which means free stuff for those of you
00:06:29
who are not in these like uh circles
00:06:31
where celebrities get all kinds of free
00:06:32
stuff. And we had a poker game. Was
00:06:34
wonderful. Best way to watch the F1.
00:06:37
Play poker. By the way, when you're live
00:06:39
at the F1, it's a little bit hard to get
00:06:41
into the experience because like the
00:06:42
cars just zip by you, so you get to see
00:06:44
the car for like a few seconds and then
00:06:46
kind of like dead time. Yeah, it it was
00:06:49
um very exciting. I have to say it was a
00:06:51
very social experience and we made an
00:06:53
executive decision because it was
00:06:54
raining to pull the table and put it
00:06:57
inside the trophy house. And then we had
00:06:59
an incredible view of like the finish
00:07:01
line and uh there's Freedberg standing
00:07:03
up, me next to him. We had an incredible
00:07:06
lineup. Travis joined us. You can see
00:07:08
there Phil Helmuth heranging poor Travis
00:07:11
from Uber sitting next to me. I mean
00:07:13
this is he always has to have his hand
00:07:15
on a billionaire.
00:07:18
He's not within 5t of a billionaire. He
00:07:21
has a panic attack. So and there's
00:07:23
Helmouth. Poor Helmouth. Um my friend
00:07:26
Timothy
00:07:27
Shalamé came by to say hi to me. And of
00:07:31
course like tackling him. Look at those
00:07:33
meat hooks just going
00:07:35
over a giant tanda bear and Shalom's the
00:07:38
bamboo. I felt so bad for Timothy. You
00:07:40
know, he's he's
00:07:44
done such amazing work and you can see
00:07:46
how engaged he is in Phil Helmouth. He's
00:07:48
like, who is that person? Why is he
00:07:50
grabbing me? But you know, then again,
00:07:52
Phil Helmouth is presenting him. And now
00:07:54
here's a proper way. Can I say
00:07:56
something? Is that dealer is that dealer
00:07:58
Larry Summers? He sort of looks it is
00:08:00
Larry Summers after his appearance
00:08:02
actually dealt by Larry. Well, after he
00:08:05
was here, he he lost so much sponsorship
00:08:09
and and so so many uh you know so many
00:08:12
deals that he uh now is working on
00:08:14
moonlighting as a dealer. He wanted to
00:08:16
continue the great debate. Yeah. But but
00:08:18
can I just point out here the proper way
00:08:20
to embrace an A-list celebrity who
00:08:23
you're friends with is to just let them
00:08:25
come up to you.
00:08:27
Look at so Timothy comes. Timothy and I
00:08:29
are just me just as a background. This
00:08:30
is my friend. This is your good friend
00:08:32
Timothy Shalom. Right. I will not say
00:08:33
good friends. We we've met a couple of
00:08:35
times like a handful of times because
00:08:36
we're both Knicks fans and I'm friends
00:08:38
with Ben Stiller. Ben Stiller, myself
00:08:40
Timothy and my brother Josh went to the
00:08:41
Pistons game,
00:08:44
you know, versus the Knicks when we
00:08:45
crushed them and crushed their souls. So
00:08:46
Timothy came over just to say hi to me
00:08:47
and his friend Yeah. Frankie and his
00:08:50
other friend Cody Block. Frankie Bones.
00:08:52
He's got a great crew and you know he
00:08:55
came over to say hi to me and he was
00:08:56
thanking me for the tickets I I was able
00:08:58
to get cuz it was hard to get tickets
00:08:59
for that. Anyway, for Helm Youth, don't
00:09:01
tackle people at all in events. This is
00:09:04
why Chimant banned you. Just complete
00:09:07
inappropriateness. And then Helm Youth
00:09:09
was going around. I don't know if you
00:09:10
knew this. He was telling everybody that
00:09:12
he created Allin and that he was like
00:09:15
the executive producer for life.
00:09:18
Just so much inappropriateness from Phil
00:09:20
Helm Youth. It was brutal. Man, if I
00:09:22
may, let me also thank we had a partner,
00:09:24
OKX, the new money app, and they they're
00:09:28
a big major sponsor of the McLaren F1
00:09:31
team. They're the main sponsor on
00:09:32
McLaren. Oh, they're the main. And they
00:09:34
won the race. So, we were there with
00:09:36
Haidider, the C CMO. Very cool guy and
00:09:38
his team. Super guy and his wife. Nice
00:09:40
guy. We had dinner with them. Shout out
00:09:42
to those guys. And they just launched
00:09:43
their crypto exchange here in the US.
00:09:45
So, if you love AllIn, do me a favor, go
00:09:47
check out OKX. And uh thanks to some of
00:09:50
our other partners, Salana, Google
00:09:52
Cloud,
00:09:54
BVNK, Circle, shout out my guy Jeremy
00:09:57
Lair, and my brother in Nyx Fandom,
00:10:01
Shane from Poly Market, who I got to
00:10:03
hang out with a whole bunch. This is a
00:10:04
really great guy. Wonderful event. We're
00:10:06
going to do it again. We're going to run
00:10:07
it back, I think, for maybe F1 Austin,
00:10:11
Vegas, and we're going to and maybe
00:10:12
Vegas. Who knows? Uh maybe the Super
00:10:14
Bowl, maybe NBA Finals. We're going to
00:10:15
do some more of these 200 to 500 person
00:10:17
events. I got to say it was so fun to
00:10:19
hang out also with the the fans that
00:10:21
came in for the show, the sponsors. It
00:10:24
was just so great to like go to these
00:10:26
events and hang out with people. I need
00:10:28
to ask you guys a question. What was the
00:10:30
most fun? The Friday, the Saturday, or
00:10:32
the day of the race?
00:10:34
Saturday for me. So, you like the
00:10:37
content best? Okay. Saturday was I woke
00:10:39
up, I went straight to Jeff Gross's
00:10:41
house.
00:10:42
Me, Travis, Helm, Youth, and a couple of
00:10:45
others. We played poker until 4:00. I
00:10:48
ran to the hotel, took a shower, went on
00:10:50
stage at 5.
00:10:52
I spent four hours prepping. 5 hours out
00:10:56
of your pockets. It was great. Yeah. I
00:10:58
was in the nightclub till 5 a.m. That's
00:11:00
a true story. All right, start the show.
00:11:02
Let's get the show. I'm going to start
00:11:03
the show once I remind people that
00:11:06
September 7th, 8th, and 9th, we'll be in
00:11:08
Los Angeles if you want to come hang
00:11:09
with us like we did in F1 for the All-In
00:11:11
Summit, the fourth year. And my lord, I
00:11:14
got a preview from Freedberg of the
00:11:15
content. It is going to be another peak
00:11:18
all-in event, you know, and our goal is
00:11:21
to have the world's most important
00:11:22
conversations, yada yada yada. Our
00:11:24
experience at the summit this year is
00:11:26
what's going to be awesome. It's in
00:11:27
addition to the content being great.
00:11:28
We've got some really awesome Well, you
00:11:31
told me the party location, which I
00:11:32
won't say here, but you also told me
00:11:34
that you're I did 900K was the peak two
00:11:37
years ago. Then you spent 1.2 two
00:11:39
million on the party last year and now
00:11:41
you told me you're spending 2 million on
00:11:42
this year's party. Forget is that true?
00:11:44
The two the two million whispers. It's
00:11:45
going to be more than that. Oh my word.
00:11:48
Anyway, if you want to apply for tickets
00:11:51
allin.com/summit and um yeah, Chimath
00:11:54
and I were on Megan Kelly. Let's get
00:11:56
started. I love it when Jal and Megan
00:11:58
Kelly like have their Oh, it's the best.
00:12:01
It's the best. Well, she likes She
00:12:02
understands it's broadcaster on
00:12:04
broadcaster action. We like to mix it
00:12:06
up. We know how to do ratings. He's a
00:12:08
radio show. Come on. All right. The Fed
00:12:11
held their rates steady again this week.
00:12:13
Uh if you remember last year, the Fed
00:12:15
cut 50 bips in September, then 25 bips
00:12:18
in November and December. Uh but so far
00:12:20
in 2025, the Fed has kept rates in a
00:12:24
steady range, 4.25 to 4.5%. They said
00:12:27
they want to wait and see. They're in
00:12:28
wait and see mode because they don't
00:12:30
know what Trump's doing with these
00:12:31
tariffs and how that's going to impact
00:12:32
the economy. Here's the quote from the
00:12:35
Fed. Economic activity has continued to
00:12:37
expand at a solid pace, but they warned
00:12:40
about potential stagflation. Risks of
00:12:43
higher unemployment and higher inflation
00:12:45
are their concerns. And I I talked about
00:12:47
that last week. I'm I'm hearing a lot of
00:12:49
uh hand ringing about layoffs coming
00:12:52
soon. So, what do you think, Phipe,
00:12:55
about the Fed not taking any action? And
00:12:59
what's your general take on the markets?
00:13:01
you know, the the markets have seemed to
00:13:03
recover largely from the Trump uh
00:13:06
Independence Day um tariff announcement,
00:13:08
but it's uh feels a lot pretty shaky out
00:13:11
there. A lot of M&A on hold, a lot of
00:13:12
hiring on hold. What What are you seeing
00:13:14
on the streets? Yeah. Well, it hasn't
00:13:17
been a boring year, has it?
00:13:20
So, I would say on the Fed, right, a lot
00:13:22
of people are saying, "Oh, you know, the
00:13:24
Fed should cut and this and that." I
00:13:27
actually think that there's also the
00:13:29
scenario that what if the Fed is cutting
00:13:31
because things are not so great. Maybe
00:13:34
that's actually not a good message. And
00:13:36
what if the Fed is not cutting because
00:13:39
actually the economy is really strong.
00:13:42
And so I think that the Fed not cutting
00:13:45
is actually not that bad of a message.
00:13:48
And I'm surprised just in general at how
00:13:51
bad sentiment is, but how good the hard
00:13:54
data is. And we have this ratio at CO2
00:13:57
where we sort of divide hard news as a
00:14:00
numerator and sentiment as a
00:14:03
denominator. And it's the first time
00:14:05
where the news is so good and the
00:14:07
sentiment is so bad. And I don't know if
00:14:10
the sentiment is bad because just the
00:14:13
market went down a lot or for other
00:14:16
reasons. But I actually think the
00:14:17
economy is doing really well. Uh and we
00:14:20
also learned two really important
00:14:22
things. One is when the market did go
00:14:24
down a lot, the government did budge and
00:14:26
said, "Hey, we need to step in here."
00:14:29
And the second part is the Fed did
00:14:31
something that I thought was very
00:14:33
clever. They basically said, "We're not
00:14:35
going to cut just to bail out the equity
00:14:37
market, but if the market's liquidity is
00:14:40
no longer functioning, emphasis on
00:14:42
liquidity, then we'll step in to restore
00:14:46
liquidity." And I think those two things
00:14:48
really brought the market back up.
00:14:50
And I think it's more a little bit the
00:14:53
case of a tariff correction or a tariff
00:14:56
tantrum, but not a tariff crisis.
00:15:01
So you said there was a lot of good
00:15:03
fundamental news. What would you put at
00:15:04
the top of that list? And you said there
00:15:07
were things in terms of sentiment that
00:15:09
were making people quite negative. The
00:15:11
the um economy as viewed by consumers is
00:15:15
really shaking. So what is the sentiment
00:15:17
news that you are most tuned into and
00:15:19
what are the hard data that you're most
00:15:21
tuned into? So on the on the hard data,
00:15:25
the part that's most surprising is that
00:15:28
consumers have very very weak sentiment
00:15:31
but in the meantime consumer spending is
00:15:34
remarkably resilient and you can see
00:15:36
this in a number of ways. You can look
00:15:38
at the Visa and Mastercard earnings, but
00:15:41
I also like just to listen to like
00:15:43
little quotes, little tidbits that you
00:15:45
pick up in the transcripts of tr of of
00:15:48
companies reporting earnings and stuff.
00:15:50
And people will say like even in the
00:15:53
month of April, consumer spending is
00:15:55
very strong and even in the last week
00:15:58
when we adjust for the front loading,
00:16:00
some people are pre- buying ahead of the
00:16:02
tariffs. Even when we strip that out,
00:16:05
consumers really good. So I think the
00:16:07
part that to me is most surprising,
00:16:09
consumer is great. With respect to
00:16:11
sentiment, it's really bad. But one
00:16:13
thing that's funny is whenever the
00:16:15
market goes down, sentiment is bad. And
00:16:18
so I don't think sentiment is
00:16:19
necessarily good leading indicator. I
00:16:22
almost think it's like a lagging
00:16:23
indicator. I bet you that now that the
00:16:25
market's gone up, we look at sentiment
00:16:27
in a month from now and it'll be like,
00:16:29
oh, sentiment's getting better. So I
00:16:32
think that's what's going on. Chimatha
00:16:34
uh our friends at Poly Market are
00:16:36
showing in uh June 84% chance of no
00:16:42
change. July 51% chance of no change.
00:16:46
And then September 48% chance of a cut.
00:16:49
And then pal obviously Trump's been
00:16:51
mixing it up with him saying he's going
00:16:52
to fire him, he's not going to fire him.
00:16:54
What's your take on the Fed and what
00:16:56
they should be doing here at this moment
00:16:58
in time? And then maybe you could
00:17:00
respond to Phipe's sort of insight there
00:17:02
that I think was pretty good that there
00:17:04
is a juxaposition between what people
00:17:05
are saying they're going to do consumers
00:17:08
and how they feel about the economy than
00:17:09
what they're actually doing. I agree
00:17:12
with Philip's diagnosis that the Fed
00:17:14
will really be focused on liquidity. I
00:17:17
agree with that.
00:17:19
In fact, Nick, I just sent you something
00:17:21
on signal if you could just throw it up
00:17:23
here, which is a really interesting view
00:17:25
on
00:17:26
subprime. And what it shows you is the
00:17:30
spread between where credit acceptance
00:17:33
is versus capital ones. And the point in
00:17:35
bringing this up is that when you look
00:17:37
back historically around these subprime
00:17:40
lenders, whenever these guys start to
00:17:43
see price to books just start to
00:17:45
escalate and get to highs, it tends to
00:17:48
portend a liquidity crisis. It tends to
00:17:52
show that things are about to roll over.
00:17:54
And from that
00:17:56
perspective, I think that there are some
00:17:59
blinking yellow lights that the Fed
00:18:01
needs to take seriously. But then where
00:18:04
I deviate from Phip's perspective is I
00:18:08
think that the Fed is getting
00:18:10
increasingly political in how they want
00:18:13
to react to the conditions on the
00:18:15
ground. I'll give you two perspectives.
00:18:18
The first is if you actually read the
00:18:20
press
00:18:22
release, either the word
00:18:24
waiting or some synonym of that word was
00:18:28
littered in there 22 times. It just
00:18:30
seemed like an incredible amount of
00:18:32
verbal gymnastics to try to justify why
00:18:36
they weren't
00:18:37
cutting. And if I had to just take that
00:18:40
at its face
00:18:41
value, I would at least put some
00:18:44
percentage of probability that you have
00:18:46
to assign to this case where
00:18:48
Powell views that if this lever is the
00:18:53
only thing that he has going into the
00:18:56
midterms, it's almost as if he's holding
00:18:59
it back because I think that if you look
00:19:01
at some of these leading indicators,
00:19:04
particularly on the liquidity side, I
00:19:06
agree with Phipe about how important
00:19:08
that specific metric is. I don't believe
00:19:10
in the Fed put. We've talked about this,
00:19:12
but I think the liquidity measures are
00:19:14
starting to blink yellow. And I think
00:19:16
that if the Fed really wanted to get
00:19:18
ahead of it, they could cut, but the
00:19:21
political overlay is cutting helps
00:19:22
Trump. And I think there's this tension
00:19:24
between these two people. And I think
00:19:26
that the Fed is saying we're not going
00:19:28
to cut. So your position is or what
00:19:30
you're hypothesizing here is that the
00:19:32
Fed is saying, "Hey, we have to wait for
00:19:35
Trump to clean up the tariff stuff." the
00:19:37
trade war stuff and that that's a
00:19:40
political act by Powell in retaliation
00:19:43
for Trump saying he wanted to fire him.
00:19:45
Is that what you're insinuating? No, no,
00:19:47
no, it's not what I'm insinuating. What
00:19:49
I'm saying very directly is that the Fed
00:19:51
is acting in in a manner that is as much
00:19:56
politically motivated as financially
00:19:58
metric motivated because the financial
00:20:00
metrics some of the most critical
00:20:02
leading indicators particularly around
00:20:04
liquidity and the credit health of the
00:20:07
American consumer are blinking yellow.
00:20:10
So right now they are choosing to ignore
00:20:13
these historically useful leading
00:20:15
indicators. And the only reason that I
00:20:18
can come up with to ignore it are
00:20:19
political reasons. So Freeberg, do you
00:20:23
think there's a political beef going on
00:20:24
here between the two parties? And what
00:20:26
do you think about subprime uh and maybe
00:20:30
this being a lead indicator that maybe
00:20:33
it's time for a cut? Maybe we're going
00:20:34
to see people miss mortgage payments,
00:20:36
car loans, etc.
00:20:40
I was just looking at the mortgage
00:20:41
delinquency rates. They're pretty uh
00:20:43
flat right now. And that's I think
00:20:45
because so many people did refinance
00:20:47
when rates were low and there's a
00:20:48
tremendous amount of mortgage balance
00:20:51
with a with a low rate
00:20:53
outstanding. But remember, I think the
00:20:55
Fed has a whole bunch of data that
00:20:58
they're still going to need to wait on.
00:21:00
The CPI data for March was
00:21:03
2.4%. Their target is
00:21:06
2%. The next CPI report comes out, I
00:21:09
think next Tuesday. And so that's going
00:21:11
to be an important indicator. But I do
00:21:13
think one other data point that is now
00:21:15
going to be part of the calculus is what
00:21:18
do these trade deals look like? So this
00:21:21
morning it was announced that there's a
00:21:24
trade deal with the
00:21:26
UK and in that trade
00:21:29
deal there are lots of provisions that
00:21:32
relate to parody and what is expected to
00:21:35
provide better market access for
00:21:37
American businesses into the UK. But
00:21:40
there's also a really important piece of
00:21:42
data there, which is that there's a 10%
00:21:44
tariff rate for imports from the UK into
00:21:46
the US. So this is the first time we're
00:21:49
seeing a trade deal that actually gets
00:21:51
announced and finalized through this
00:21:53
whole tariff trade negotiation process
00:21:56
that's been underway now for several
00:21:57
weeks with all the hoopla and all the
00:21:59
drama attached to it. And what we're
00:22:01
seeing is that for one of our
00:22:03
friendliest allies, for one of our best
00:22:05
trade partners, we are keeping in place
00:22:08
a 10% tariff rate. So if that holds with
00:22:11
other trade deals and that becomes kind
00:22:13
of a standard across the board as they
00:22:15
get more of these trade deals done
00:22:17
perhaps with countries that are less
00:22:18
friendly with more ownorous with less
00:22:20
regulatory parody in the trade
00:22:22
relationship between the US and that
00:22:24
country maybe there's higher tariff
00:22:26
rates. What that means ultimately is
00:22:29
that there is now maybe a pretty sizable
00:22:31
long-term revenue stream for the federal
00:22:33
government that didn't exist before,
00:22:35
which means that there's room to cut
00:22:38
taxes, which means that this is all
00:22:40
going to be part of the calculus of the
00:22:42
Fed's decision on whether or not and why
00:22:46
they would need to cut rates because
00:22:47
this is going to drive inflation. It's
00:22:49
going to drive GDP growth. It's going to
00:22:51
drive employment. And so I think that
00:22:53
there is a pretty dynamic situation at
00:22:56
play right now. It's not just that
00:22:57
there's a static tax revenue base and a
00:23:01
static federal spending model and then
00:23:03
CPI and employment data that is going to
00:23:06
follow them. Do you think Powell thinks
00:23:07
that this Trump thing is going to work?
00:23:09
So he's holding bullets in the chamber
00:23:11
because he's worried about inflation. I
00:23:13
think they're going to wait for data. I
00:23:14
would agree with that. Yeah. Dave, in
00:23:17
fact, uh, a couple things I was
00:23:19
wondering your opinion on is
00:23:22
one. I was with this
00:23:25
retailer, gigantic retailer in the US,
00:23:28
and there's this sort of false narrative
00:23:30
that when you have tariffs, like 100% of
00:23:32
tariffs are going to get passed through
00:23:33
in pricing, and therefore tariff is like
00:23:36
a tax, right? That retailer told us that
00:23:39
they think only about 50% of the tariff
00:23:42
gets passed in pricing. So, I I sort of
00:23:44
agree with you. there is going to be a
00:23:47
net net positive and that retailers have
00:23:50
way to uh work things around and stuff
00:23:53
like that. I would also say today post
00:23:55
this announcement the market's very
00:23:57
strong and initially I was a little bit
00:24:00
surprised because um we're taxing 10%
00:24:04
not only the most uh friendly country
00:24:07
but one where we actually have a
00:24:09
surplus. So it's like if it's 10% when
00:24:12
we have a surplus, what is it when we
00:24:14
have a deficit? But on the other hand,
00:24:16
the market is speaking as we speak. And
00:24:19
I also think that uh there were a lot of
00:24:22
announcements that seem to make it like,
00:24:24
hey, we're going to make a deal with
00:24:26
China. We want China to do well, but we
00:24:29
need to do well, too. It seems to me
00:24:31
that at some point maybe there'll be a
00:24:33
bit more of a win-win versus such an
00:24:35
acrimonious and maybe that's why the
00:24:38
market's reacting a little bit more
00:24:40
positively. By the way, that trade deal
00:24:41
we also eliminated the
00:24:43
2% tax on big tech companies. And then
00:24:47
Howard just said today that they're
00:24:51
going to announce a10 billion order from
00:24:53
Boeing on top of that as well.
00:24:57
So these are going to drive GDP. They're
00:24:58
going to drive employment. It's really
00:25:00
hard to cut rates into a market where
00:25:03
there is not yet priced in or not yet
00:25:05
well understood, but an expectation of a
00:25:09
driver for GDP, driver for employment
00:25:12
and potentially an impact on inflation.
00:25:13
It's really hard to go into that sort of
00:25:15
an environment and cut. I mean, if we're
00:25:17
in a sustained period of four to 5%
00:25:20
rates, I mean, we should talk about that
00:25:21
at some point, but there's huge
00:25:23
implications to the economy if this
00:25:25
thing stays where it is. Huge. Philipe,
00:25:28
are you in the uh camp of 4D chess with
00:25:31
these uh tariffs and these negotiations
00:25:33
or, you know, throw some stuff against
00:25:36
the wall, react to it in real time, you
00:25:38
know, he's shaking the snow globe, it's
00:25:40
it's chaos, etc. Where where do you sit
00:25:42
between those two opinions we've heard
00:25:44
on this podcast over and over? You know,
00:25:46
when you ask a tech investor for like
00:25:48
his opinion on macro. Yeah. Uh this is
00:25:51
the beginning of the end, right? I think
00:25:54
I've like predict I think I've like
00:25:56
predicted like seven of the last three
00:25:58
recessions, you know? So my my track
00:26:01
record is pretty weak. Well, let me ask
00:26:03
a different then question. How is this
00:26:05
impacting the tech market? Private
00:26:08
companies that are thinking about going
00:26:10
public, M&A, we saw Door Dash buy two
00:26:13
companies this week. We've seen a bunch
00:26:14
of companies file to go public. We've
00:26:16
seen them
00:26:17
pausing. Does this kind of uncertainty
00:26:20
which it seems like is causing the
00:26:22
disconnect, right? You you explain this
00:26:24
disconnect how people feel about the
00:26:26
economy and then their behavior. Is that
00:26:28
disconnect caused by the sort of
00:26:30
communication that Chimath and I and
00:26:32
other folks were saying, hey, needs to
00:26:33
be improved here. And it seems to be
00:26:34
with this UK. If this had been the
00:26:37
process from the start where we're like,
00:26:38
"Hey, we're going to do one of these a
00:26:39
week for 50 weeks and uh you're going to
00:26:42
get this good news each week as as we
00:26:44
sort this out." That seems to me like
00:26:46
something that would build confidence as
00:26:48
opposed to, hey, everybody's going to go
00:26:49
back and forth. You say 50, we're going
00:26:51
to go to 150 tit for tat. So maybe talk
00:26:54
about the impact this has for founders,
00:26:56
startups, executive teams. I think for
00:26:58
tech guys by and large, you know, a lot
00:27:01
of the tech is in services. So that's
00:27:04
out of the picture for now. Uh but
00:27:06
there's obviously going to be a lot of
00:27:09
tears for semis and then for the
00:27:10
assembling of the motherboards into
00:27:13
computers. So those are the two key
00:27:14
areas and one of the difficulty is we
00:27:17
have these sort of base tariffs but we
00:27:19
also have these sector tariffs and we've
00:27:21
had sector tariffs in cars 25%. There's
00:27:25
rumor to be sector tariffs in pharma
00:27:27
that could come out next week and
00:27:29
there's also
00:27:30
been potential uh sector tariffs, you
00:27:33
know, in semis. So, it's been pretty
00:27:37
disruptive and I don't really know how
00:27:40
to think about it and I think nobody
00:27:42
knew which is why the market just took a
00:27:43
25% peak to trough down. And then after
00:27:48
that, we learned well the government is
00:27:50
actually smarter. They're going to one
00:27:52
of the things that I love to see is all
00:27:53
these executives that get to come to
00:27:56
also plead their case in Washington and
00:27:58
maybe that was never the case you know a
00:28:00
few months ago and there seems to at
00:28:02
least be a feed a feedback loop okay we
00:28:05
do something we see what breaks we
00:28:07
listen we readjust and stuff like that
00:28:09
but to be honest I don't really know how
00:28:12
it's going to play out and I sort of was
00:28:15
very conservative for a period of time
00:28:17
just waiting and then to me what
00:28:21
happened last week with uh Microsoft
00:28:23
saying that like AI had really picked
00:28:25
up. That was like a really big deal and
00:28:28
I almost like uh coined it in my own
00:28:30
mind like tokens greater greater than
00:28:33
tariffs and I think like one of the
00:28:35
reason why the market's moving up right
00:28:37
now. Hold on just explain that just a
00:28:39
little bit over tariffs. Tokens I don't
00:28:42
know I put the greater greater sign you
00:28:43
know tokens are much greater than
00:28:45
tariffs. Tokens you mean AI tokens? AI
00:28:47
tokens. Yeah. So I I sort of view
00:28:50
tokens, you know, I I don't really
00:28:51
understand the as as well as Dave for
00:28:55
sure, you know, all the AI models and
00:28:57
stuff like that, but I sort of view
00:28:59
tokens to an AI model is like fuel to a
00:29:01
car or electricity to a computer, right?
00:29:04
And Microsoft said that in their Q1,
00:29:08
they processed 100 trillion tokens, 50
00:29:10
trillion alone in March. And so the
00:29:13
tokens are really going basically
00:29:14
vertical which is probably because of
00:29:17
these reasoning engines which are much
00:29:19
more sophisticated and require more
00:29:21
compute power. And I think the market it
00:29:24
didn't to to it's a bit unfair for Trump
00:29:27
but the market did not just go down
00:29:29
because of tariffs. If you remember it
00:29:31
went down because people freaked out
00:29:32
we're in an AI bubble. AI is not really
00:29:35
working. What's the ROI on AI? That was
00:29:38
maybe I don't know half a third to a
00:29:41
half of the problem. And I think what
00:29:43
Microsoft said is like capex is going up
00:29:47
and everybody has a gigantic shortage of
00:29:49
chips right now. That I know for sure
00:29:51
from all of our private companies,
00:29:53
public companies. There's a shortage of
00:29:55
chip, a shortage of compute power. And
00:29:57
so I think that's also maybe why the
00:29:59
market's going up. And so for me it was
00:30:01
sort of a way emotionally I got so
00:30:04
drained with the tariffs and thinking
00:30:06
about tariffs and having to think about
00:30:08
something I don't really understand and
00:30:10
I feel now there's a chance when you
00:30:12
look at the next year or two at some
00:30:14
point tariffs goes away Trump makes this
00:30:16
big deal with uh deregulation the tax
00:30:19
breaks sort of cancel out the tariffs we
00:30:22
move on and what are we left with we're
00:30:24
left with tokens and I think the world
00:30:26
of tokens for me I've been doing this
00:30:28
for 35 years It's maybe the most
00:30:31
exciting trend and thing that I've seen.
00:30:34
And all these people that say, "Oh, this
00:30:36
is the end of American exceptionalism."
00:30:38
I almost wanted to say, "No, you guys
00:30:39
are wrong. This is the beginning of
00:30:41
American exceptionalism because we've
00:30:43
got Wall Street. We've got Silicon
00:30:44
Valley, and we still got a pretty good
00:30:47
government that at least tries to get
00:30:49
stuff done. So, I'm pretty excited by
00:30:53
that. I've been talking with my
00:30:56
management team a lot about AI first
00:30:59
principles and we're actually doing an
00:31:02
offsite in two weeks on this because
00:31:04
I've been following a lot of what the
00:31:05
other CEOs have been doing and hearing
00:31:08
stories. We had a great conversation
00:31:09
with Sergey. He gave us two anecdotes of
00:31:11
how he personally has used some of these
00:31:14
tools to make management decisions and
00:31:16
his observation was managers are the
00:31:19
first to go. And if you zoom out from
00:31:21
that statement and you zoom out from the
00:31:23
comments you're making, Phipe, there's I
00:31:27
would say like a once in a generational
00:31:30
opportunity to select companies that are
00:31:34
going to accelerate growth because of
00:31:37
the leverage they're going to create by
00:31:39
adoption of these tools. Not tech
00:31:41
companies in the traditional sense, but
00:31:43
across the entire economy. And some of
00:31:46
what we're seeing right now in the
00:31:49
reformation of venture capitalists and
00:31:52
and I know you're going to talk a little
00:31:53
bit about CO2 here in a bit, but so much
00:31:57
of the thesis is around traditional
00:31:59
businesses being reinvented using AI.
00:32:02
And as a result, it's not just the few
00:32:05
tech companies that are providing the
00:32:07
fuel, but there are these fires that are
00:32:09
going to take off in all these different
00:32:10
markets that we could sit and spend
00:32:13
probably hours kind of, you know,
00:32:15
extrapolating and theorizing on that
00:32:18
creates a real opportunity for
00:32:19
incredible market value creation. And
00:32:21
traditionally, it's like the market
00:32:22
grows and the differentiation among the
00:32:24
competitors is minim minimized once the
00:32:26
market has matured. But for the first
00:32:28
time ever, every mature market can be
00:32:30
completely disrupted. And so so if
00:32:32
you're smart about selecting management
00:32:33
teams and selecting companies, there
00:32:35
seems to be an incredible opportunity to
00:32:37
realize investment returns. Okay. Even
00:32:39
in a mature equity market. Well, let's
00:32:41
move on to our next topic, which is
00:32:42
obviously super related. Google was down
00:32:44
8% on Wednesday after some bad search
00:32:47
data came out because the Justice
00:32:49
Department, as everybody probably knows,
00:32:50
is doing this antitrust lawsuit with
00:32:53
Google. And the key part of that lawsuit
00:32:56
is Google paying Apple 20 billion a year
00:32:59
to be the default search engine on
00:33:00
iPhones. Obviously, we all know iPhones
00:33:02
have elite customers. Those are very uh
00:33:05
precious searches from people with a lot
00:33:06
of money cuz iPhones are expensive.
00:33:08
Anyway, Eddie Q, who's been with Apple
00:33:11
for 35 years. He said, quote, "For the
00:33:14
first time ever last month, our search
00:33:16
volume actually went down." Quote, "That
00:33:19
has never happened in 20 years. If you
00:33:21
ask what's happening, it's because
00:33:22
people are using chat GBT. They're using
00:33:24
perplexity. I use it at times. He
00:33:27
believes that AI search is going to
00:33:29
replace classic search like Google.
00:33:31
Quote, "Again, there's enough money now,
00:33:33
enough large players that I don't see
00:33:35
how it doesn't happen." Bloomberg
00:33:37
reported on Q's comments at 11:00 a.m.
00:33:39
An hour later, Google was down a hundred
00:33:41
billion dollars in market cap. It
00:33:43
bounced back a little bit today when
00:33:45
we're taping this uh on Thursday. Here's
00:33:48
the statement from Google. Responding to
00:33:51
Q's comments, we continue to see overall
00:33:53
query growth in search. That includes an
00:33:55
increase in total queries coming from
00:33:57
Apple's devices and platforms.
00:33:59
Freeberg, is it time for Google to
00:34:03
panic, Google shareholders to panic? We
00:34:04
talked last week about making bold
00:34:06
decisions about what is the default and
00:34:09
how might Google get out of this classic
00:34:12
innovators dilemma. What do you think?
00:34:14
We keep coming back to is search dead
00:34:18
conversation. Everyone knows that the
00:34:20
search click repeat paradigm is over and
00:34:24
there's a new model in what I would zoom
00:34:27
out a little bit and say is kind of the
00:34:29
difference in human computer interaction
00:34:31
for knowledge
00:34:33
information and
00:34:35
services. It may not be that I type
00:34:38
something into a search box. It may be
00:34:39
that I'm having a chat. That chat may
00:34:42
happen in a chat window. It may happen
00:34:45
via voice. It may happen on a screen. It
00:34:47
may happen in an
00:34:48
earpod. We don't yet know where the
00:34:51
consumer is going to go with this. But
00:34:53
there's a lot of paradigm shifts
00:34:55
underway. I will say Google has models
00:34:59
that are if not the best competitive. So
00:35:02
the underlying models, the underlying
00:35:03
technology exists. They are certainly
00:35:06
aware of the shift in the paradigm. And
00:35:10
so the transition for Google doesn't
00:35:13
need to happen overnight to a chat
00:35:15
interface that looks like chat GPT. It
00:35:18
may be a standalone app. They have a
00:35:19
standalone app. As Chimath has pointed
00:35:21
out in the past, they don't do a great
00:35:22
job promoting it. They don't do a great
00:35:24
job integrating the chat interface into
00:35:26
search or replacing search of a chat
00:35:28
interface because remember search ad
00:35:30
revenue today is $200 billion.
00:35:34
And the cost to serve an AI query is
00:35:38
order of magnitude higher than the cost
00:35:39
to serve a search query. So flipping the
00:35:42
search interface over to a chat
00:35:44
interface overnight doesn't make sense.
00:35:45
And they don't need to. They have the
00:35:47
users, they have the models, they
00:35:49
already have the product. So it's going
00:35:51
to be a slow kind of process of finding
00:35:53
the optimal course for them to make the
00:35:56
transition would be my guess on what
00:35:58
they're doing. It's a question of at
00:36:00
what point do you change the default on
00:36:02
Google? Do you make it a slow one box,
00:36:05
which is that answer section at the top
00:36:07
of the search page, and you slowly get
00:36:09
people used to that, and you lead them
00:36:11
over to the chat interface, or do you do
00:36:13
it all at once, or do you tell people,
00:36:14
"Hey, go use the app instead of the
00:36:16
search box." So, there's a lot that I
00:36:18
think they're going to discover. And if
00:36:20
anything, this is an organization that
00:36:22
is used to doing testing and then making
00:36:24
incremental changes and then making big
00:36:26
changes once they're, you know, kind of
00:36:27
tested and proven.
00:36:28
I'm pretty positive on their ability to
00:36:31
respond to the shift if there is one
00:36:32
underway. I guess two important data
00:36:34
points Jimoth that I'd like you to
00:36:35
respond to. Search is only like 56% of
00:36:39
Google's revenue right now. People
00:36:40
forget they have cloud. So they have
00:36:42
diversified. It's not a one revenue
00:36:44
stream company anymore. And then also
00:36:46
these Google search results at the top
00:36:48
of the page, they're dropping
00:36:50
precipitously the number of clicks below
00:36:52
it. So different studies 15 to 35% of
00:36:55
the clicks below the box are not get you
00:36:59
know are dropping. So this is
00:37:01
significant but it seems manageable.
00:37:04
Where do you stand on it right now? Time
00:37:06
to panic or as Freeberg was saying
00:37:08
before hey maybe it's a great
00:37:09
opportunity for Google to add yet
00:37:12
another product line yet another revenue
00:37:14
stream. They definitely have the best
00:37:18
models in many domains.
00:37:21
I would say that the codegen models from
00:37:24
anthropic are really good but in many
00:37:26
other domains including general
00:37:28
information and chat I think Gemini is
00:37:30
exceptional. So what is the problem? The
00:37:33
problem is that they were effectively at
00:37:35
99% share and now we were always just
00:37:40
waiting for that shoe to drop which is
00:37:42
where they started to go from 99 to
00:37:44
something less than 99. And the point is
00:37:47
now that it has happened, it is very
00:37:50
easy for anybody to build a model that
00:37:54
precisely calculates the economic value
00:37:57
of every single basis point of share
00:37:59
shift that happens. And what you saw was
00:38:03
an initiation of that process this week.
00:38:06
So what do you do? The problem is that
00:38:09
this is not Google's problem. This is a
00:38:12
consumer choice issue and they have
00:38:14
chosen something different. And whether
00:38:16
we like it or not and whether they like
00:38:18
it or not, the reality is that chat GPT
00:38:21
is running away with it. And if you look
00:38:24
at the growth and the share that OpenAI
00:38:30
is seeing, it's quite an incredible
00:38:33
thing. So what does one do? I think that
00:38:37
instead of waiting for data, I think
00:38:39
that you have to assume that you're
00:38:42
going to go from
00:38:43
99% share to 75% in the next two years
00:38:47
as an example. And you need to start
00:38:49
asking yourself what will go wrong.
00:38:53
And if you can ask yourself that
00:38:55
question honestly and red team that then
00:38:57
I think the conclusion you get to is you
00:39:00
need to start very aggressively
00:39:01
integrating Gemini as the front-facing
00:39:05
window to Google Inc. But again as I
00:39:08
sort of said last week that requires a
00:39:12
combination of taste and courage.
00:39:14
Otherwise, what'll happen is if you're
00:39:16
waiting for the
00:39:17
data, you're just going to get caught
00:39:19
off guard because Apple will do things
00:39:22
and then make a press release months
00:39:24
after the fact. Open AI will announce a
00:39:26
press release, Facebook will do
00:39:28
something. And what that does is it
00:39:30
destroys the morale of the company of
00:39:32
the brilliant product managers, of which
00:39:34
there are many, and the brilliant
00:39:35
engineers of which there are many inside
00:39:36
of Google. If you're sitting around
00:39:38
waiting to react to some sandwich served
00:39:42
up by your competitors, that is a
00:39:44
terrible
00:39:45
approach. Philipe, what are your
00:39:47
thoughts here on Google? You obviously
00:39:49
participate in public markets. Is it a
00:39:51
buy right now? I mean, I don't want to
00:39:52
give investment advice, but do you think
00:39:54
the company has the talent, the
00:39:57
temperament to make these hard decisions
00:40:00
and to turn this around or avoid the
00:40:03
iceberg? uh if the iceberg being chat
00:40:05
GPT and people getting answers instead
00:40:08
of links. Well, I think you guys have
00:40:10
summarized the situation pretty well. I
00:40:12
would just add just a couple small
00:40:14
things. One is the market cap of Google
00:40:17
is like 1.8 trillion and that of chat
00:40:20
GPT is let's say 300. So Google is worth
00:40:23
six chat GPT. And is that the correct
00:40:26
ratio into the future or not? The second
00:40:29
one is I was around sadly in uh the
00:40:33
times of the yellow pages and I remember
00:40:35
when the yellow pages the way you go
00:40:37
somewhere to bounce and go somewhere
00:40:40
else and basically these yellow links
00:40:42
got replaced by the blue link and the
00:40:45
yellow page companies went away. Now
00:40:46
part of the reason they went away is
00:40:48
they were very levered. Google has no
00:40:50
leverage sits on a lot of cash and
00:40:53
imagine what someone like Elon would do
00:40:56
if he had to re-engineer Google. I think
00:40:58
they have um you know uh it's it's a
00:41:01
much larger company let's say than
00:41:02
Twitter. So like the part that I'm
00:41:05
wondering about, I haven't made an
00:41:07
opinion on Google is like, "Hey, is this
00:41:09
the next IBM? You're going to stick
00:41:11
around for a really really long time,
00:41:13
but you're just not going to be like a
00:41:16
company growing as fast as you used to,
00:41:18
and maybe there'll be little growth and
00:41:20
you just sort of struggle ahead. Or can
00:41:22
they completely re-engineer their
00:41:24
business?" And they do have two great
00:41:26
businesses, Whimo and YouTube, and
00:41:29
really cloud and all the cloud apps. So
00:41:32
they have three great businesses and
00:41:33
then they have this one search business
00:41:35
like you said maybe it's 60% of the
00:41:37
revenue. It's probably 85% of the
00:41:40
profits because it's just so profitable.
00:41:43
No, I would say it's 110% of the
00:41:45
profits. 110, right? So you're right
00:41:48
because some of these others lose money.
00:41:50
That's actually a good point. So um if
00:41:53
you put that together, it's just a
00:41:54
classic innovators dilemma and imagine
00:41:56
that they create a Gemini app and we
00:41:59
start downloading the Gemini app. I
00:42:01
would love to be the fly on the wall
00:42:03
between the head of the Gemini app and
00:42:06
then the head of like the search box and
00:42:08
they're both fighting because one guy is
00:42:10
stealing the business from the other and
00:42:12
stuff like that. Personally me I found
00:42:15
that these stocks they're like a little
00:42:17
bit too complicated for me and I think
00:42:19
that sometimes in life you just got to
00:42:21
say hey this is just tricky. There's
00:42:23
like a lot of forces at work. But the
00:42:25
one thing stepping out that I would
00:42:27
think about is there was this concept of
00:42:30
the Mac 7. And for the last two or three
00:42:32
years, everybody is like, "Oh, you just
00:42:34
need to own the Mac 7. Uh, it's really
00:42:37
easy. I can do it on my own." And I
00:42:39
think what AI is showing is that at a
00:42:41
time of great change. And like you guys
00:42:44
said on the show, a couple of you, AI is
00:42:46
sort of precipitating so many fast
00:42:49
changes. To me, it's a little bit like
00:42:52
the end of the Mac 7. And what we should
00:42:54
do is almost think like, hey, what is
00:42:56
the next? Remember when the Mac 7 used
00:42:58
to be Fang and then Fang Pl+ and nobody
00:43:01
talks about Fang anymore. Uh, and now I
00:43:04
don't know like the Max 7, the sexy 6,
00:43:07
the Fabulous 5. There's going to be a
00:43:10
new index that comes up and I think we
00:43:12
should think about like who's going to
00:43:14
be on the new index, which private
00:43:15
companies, which public companies. And I
00:43:19
think Google for sure has some
00:43:21
struggles, but it's got a lot of
00:43:22
advantages and a lot of cash. You know,
00:43:25
to your to your point though, to just to
00:43:27
add one thing, which I I love this
00:43:29
framing. Here's another data point. If
00:43:32
you were going to make the case that we
00:43:35
need to go into harvest mode, right, and
00:43:40
say we don't know the rate of change of
00:43:43
the search business, so let's just have
00:43:45
as much money on hand so that we have as
00:43:47
much optionality. That's a very
00:43:49
reasonable and fair
00:43:51
strategy. You would probably not spend
00:43:54
$75 billion a year of capex on making
00:43:56
these models. The opposite is also true.
00:44:00
If you're going to drain your cash at a
00:44:03
rate of change that's greater than it
00:44:04
needs to be to the tune of an extra $75
00:44:07
billion a
00:44:08
year, there's probably a case to be
00:44:10
made. Well, if we've made the cake,
00:44:12
let's sell the cake. You know, we've
00:44:14
made the dog food, let's have the dogs
00:44:16
eat the dog food. It's the in the middle
00:44:19
strategy of both spending the money but
00:44:21
then stagegating the product that is the
00:44:23
worst outcome in my opinion. I think
00:44:25
they're right to invest. I find these
00:44:27
companies that decide to harvest, you
00:44:30
know, the cash cow and buy all their
00:44:33
shares back, you know, it never really
00:44:35
works. I think that the only chance that
00:44:37
Google has to create an amazing company
00:44:40
is you got to take some risks. At the
00:44:42
end of the day, the man in the arena, he
00:44:44
who takes the risk usually gets the
00:44:46
spoil and they've got to invest in the
00:44:49
future. It'll be interesting to see if
00:44:50
the shareholders, you know, agree with
00:44:52
that or not. What do you do, Jac? What
00:44:55
do you think? Great question. You guys
00:44:57
teed it up perfectly. I think they're
00:44:59
going to cut a large number of
00:45:01
employees, get people to return back to
00:45:03
office and take this a little more
00:45:05
seriously on a corporate level because
00:45:06
you got that sense from Sergey who's in
00:45:08
the office every day. And I use Gemini
00:45:10
and I have a sort of AI first company
00:45:13
where everybody's required to do their
00:45:15
work on AI two or three different
00:45:17
Claude, Gemini, Grock, etc. And what
00:45:20
I've been noticing inside these products
00:45:22
is they're very deeply integrated. I got
00:45:24
surprised just the other day. I was
00:45:26
asking it about a travel question and it
00:45:29
referenced my GCAL. I didn't know they
00:45:32
could do that. Then obviously you can
00:45:35
use chat uh you can use Gemini inside of
00:45:38
Google Docs. Now they have four or five
00:45:41
products right now that are one or two
00:45:43
billion users per month. Obviously
00:45:45
Chrome might get spun out but you have
00:45:46
YouTube, you have Google Docs, you have
00:45:48
Android. They have such a data advantage
00:45:51
and such a deep integration into
00:45:53
people's lives because they use three or
00:45:55
four services. I use YouTube TV. I use
00:45:57
YouTube and I have a subscription to
00:45:59
that YouTube music. They have such
00:46:02
integration. I think Google's going to
00:46:03
figure this out. And if they cut their
00:46:06
team size down, the earnings are going
00:46:08
to go massively uh up and they're
00:46:11
spending
00:46:12
75 billion dollars on infrastructure. I
00:46:15
think it's going to be would you
00:46:16
integrate these models more aggressively
00:46:18
into in front of the consumer or would
00:46:20
you is this the rate that makes the most
00:46:22
sense in your mind? I think you
00:46:24
mentioned like maybe go all in on
00:46:26
certain other services. I think YouTube
00:46:28
search is the place to go allin right
00:46:30
now. When you do a YouTube search, it
00:46:31
just gives you 10 links, right? It just
00:46:32
gives you that rolling bang. You should
00:46:34
be able to ask a question to YouTube and
00:46:36
you should be able to ask questions to
00:46:37
your calendar. You should be able to
00:46:38
say, "Who have I met with over the last
00:46:41
10 years who I'm no longer in touch with
00:46:43
and what are they up to?" And it should
00:46:44
do a Gemini search inside of Google
00:46:47
Calendar. It's very light right now. And
00:46:49
then if you did that on YouTube, hey,
00:46:50
tell me everybody's opinion on COU and
00:46:53
their strategy over the years and how
00:46:55
it's changed. And you asked that on
00:46:56
YouTube with all their transcripts, they
00:46:58
could make a super cut of all of that.
00:47:00
This would train people, you know, at
00:47:02
the point of pain in a very deep way
00:47:05
without sacrificing Google search
00:47:07
queries, you know, too aggressively. So
00:47:10
there's YouTube's such a secret weapon.
00:47:12
I hear you. I would just remind the
00:47:15
Google management team that very very
00:47:18
very smart people like Phipe and others
00:47:21
who control trillions of dollars I wish
00:47:25
well collectively are not making the
00:47:28
decisions about today but are taking the
00:47:31
trail of breadcrumbs of what they see
00:47:32
today and guesstimating what 18 to 24
00:47:35
months in the future looks like and all
00:47:38
I'm encouraging them to do is I think
00:47:40
that that data point from Eddie
00:47:44
is the beginning of a stream of such
00:47:47
data points and I just encourage them to
00:47:50
inoculate them from the morale hit that
00:47:52
will come if they don't have an explicit
00:47:55
aggressive strategy and instead if they
00:47:59
become reactive to external data. It's
00:48:02
really demoralizing. But what if what if
00:48:05
they're actually tracking the
00:48:07
data and they're seeing their own sense
00:48:12
of search
00:48:14
queries driving clicks and then driving
00:48:17
positive response to the AIdriven onebox
00:48:20
results that they show at the top. Oh, I
00:48:21
think that's exactly what they're
00:48:22
seeing. But that's and they're just
00:48:23
making the they're making the requisite
00:48:25
kind of balancing decisions, right? No,
00:48:27
no. What I'm saying is that's absolutely
00:48:29
what they're seeing that the
00:48:31
demonstrated strategy is emblematic of
00:48:33
exactly that. It's the rationalization.
00:48:35
My point is there's something that you
00:48:37
can't rationalize because you don't know
00:48:39
until it's presented to you, which is
00:48:41
what is the other company doing. They
00:48:43
don't have spies inside of OpenAI. They
00:48:45
don't know what the OpenAI product
00:48:46
strategy looks like. They only hear
00:48:49
secondhand what the OpenAI growth looks
00:48:51
like. And all I'm saying is it's a bit
00:48:53
of a sword of damicles. At some point,
00:48:55
the sword drops. you're not in control
00:48:57
of it. And once you start to see a
00:49:01
trend, that's the rationalization that I
00:49:04
think puts companies in a very difficult
00:49:06
and tricky strategic situation. It takes
00:49:09
a lot of courage to say, "Oh my god,
00:49:11
like it's like but Buffett said this,
00:49:13
like Buffett has this very famous thing
00:49:15
of just putting his CEOs on the spot and
00:49:17
saying, "Stop telling me all these
00:49:19
things that can go right. Let's go paint
00:49:20
the death case. what can absolutely go
00:49:22
wrong and bread team me the solution and
00:49:25
then justify for me why you haven't done
00:49:26
it and all I'm saying is if you start to
00:49:29
think about like for example you saw
00:49:30
open AI today Fiji Simo she's leaving
00:49:33
Instacart right she's going to go and be
00:49:34
the CEO of apps inside of open AI you're
00:49:37
seeing a level of talent concentrate
00:49:40
that I have not seen since I was at
00:49:42
Facebook there was nobody we couldn't
00:49:44
get when we thought we were building a
00:49:46
model that was totally orthogonal to
00:49:48
Google now it did not mean that Google
00:49:51
diminished in any way, but it creates a
00:49:53
different use case. In that example,
00:49:55
though, the social use case was very
00:49:58
much
00:50:00
non-cannibalistic to the blue links. And
00:50:03
to your point, David, if it turns out
00:50:05
that question asking is not
00:50:08
cannibalistic to search, Google will be
00:50:10
fine. All I'm encouraging them to do is
00:50:12
play the scenario where it is
00:50:14
cannibalistic and figure out what to do.
00:50:16
I think there's a chance that we're
00:50:18
underestimating the power of Google's ad
00:50:20
network right now. It's quite possible
00:50:23
that knowing your queries in Gemini,
00:50:25
knowing what you're doing in calendar,
00:50:26
knowing what you're watching on YouTube
00:50:28
could lead to a stream of more target
00:50:30
ads that do better and are more
00:50:32
valuable. And so we've been seeing a
00:50:34
number of companies, startups, you know,
00:50:35
in the early stages and year one
00:50:37
startups that are figuring out how to
00:50:39
use your queries and what you're doing
00:50:42
in AI to present to you search results.
00:50:45
So imagine you're doing a Gemini search
00:50:47
Jamoth and or Philippe and on the side
00:50:48
of it it's giving you a rolling list of
00:50:51
ads or offers that you might be more
00:50:53
interested in. That could be a better
00:50:55
advertising product than even search
00:50:58
itself. Freeberg, your thoughts? Well,
00:51:00
let me ask all three of you a question
00:51:03
which is since chat GPT's come out and
00:51:06
Gemini and other tools like it, do you
00:51:08
find that you're doing generally more
00:51:11
stuff or less stuff?
00:51:14
I find that I am
00:51:16
using search a lot less. I But but the
00:51:20
aggregate is your aggregate like usage
00:51:22
of the internet to do things for
00:51:24
yourself for work kind of are you
00:51:27
getting more? Yeahve yeah I've learned
00:51:31
how to ask things that I've always
00:51:32
wanted to know but didn't even know were
00:51:34
possible. Right. But all of that to me
00:51:36
goes to open AI and to X. I use that
00:51:39
that's fine. But I'm just saying like
00:51:40
like if you were to cuz I'm I'm what I'm
00:51:42
trying to do is paint the picture of
00:51:44
where the denominator of quote search
00:51:46
queries is going because if search
00:51:48
queries is no longer that's the wrong
00:51:49
way to think about this. No, I like your
00:51:51
I like your I'm doing five times as many
00:51:54
queries and I would say they're spread
00:51:56
across a number of different platforms
00:51:58
because instead of asking humans to do
00:52:00
work, I'm now doing it myself. You used
00:52:03
to ask a human, hey, can you do this
00:52:04
research for me? They would come back to
00:52:05
you. You would hire somebody or use a
00:52:07
consultant. Now I'm doing it myself. So
00:52:09
you're on to something that the total
00:52:10
volume the total pi could be
00:52:13
510 per person. Yeah. If if the old
00:52:15
paradigm is like measuring search
00:52:17
queries and quote market share as a
00:52:19
function of search queries I don't know
00:52:20
if I care about having 99% of that or if
00:52:24
I'm actually better off having 80% of
00:52:27
something that's now three times bigger.
00:52:29
Yes. Where there's so much more. Imagine
00:52:31
you get you lose 99% of one bucket, but
00:52:35
you're only getting 10 or 20% of the new
00:52:37
bucket. That's the bad scenario. That's
00:52:39
exactly right. That is the bad scenario.
00:52:41
That's the issue, guys. That bucket is
00:52:43
getting built right now, and they're in
00:52:44
nowhere'sville in that bucket. How are
00:52:46
you going to show up in 18 months and
00:52:48
say, "Oh, that new bucket that's so
00:52:50
shiny. Pick me. Pick me." This is why
00:52:52
it's a strategic error. Well, think
00:52:54
about the let's say you're running
00:52:56
growth at Facebook Chimop and you guys
00:52:58
have a new product you want to launch.
00:53:00
You've got a billion users. How do you
00:53:03
get them to use that new product?
00:53:04
Because Google has a a chat GPT
00:53:06
competitor. How do you get them to use
00:53:07
that product? Yeah, I walked through
00:53:10
this last week, but I'll do it again,
00:53:12
which is I think that today the part
00:53:15
that I agree with you is this whole view
00:53:17
on search is antiquated and it makes no
00:53:19
sense. I think instead what you need to
00:53:21
think about is where are the inbound
00:53:24
actions into the house that is Google,
00:53:27
right? Google Inc. And you have to have
00:53:30
a very simple way of deducing what is
00:53:32
the value of that inbound action. And if
00:53:35
you rank them, the inbound actions to
00:53:38
the Google search bar are obviously way
00:53:40
more valuable than the inbound actions
00:53:42
in all these other apps. I would start
00:53:44
in those places that are more bottom of
00:53:45
the list on the money side but high on
00:53:48
the list in terms of intention and
00:53:50
behavior and I would reddo the
00:53:52
experience around Gemini but that
00:53:55
requires taste and cannibalization that
00:53:58
you're that you have to be willing to
00:53:59
take the hit on which service you think
00:54:01
is number one YouTube I think your idea
00:54:03
Jason around YouTube is a very smart one
00:54:05
because it's a juggernaut business I
00:54:07
also think workspace we use workspace
00:54:09
here every day Gmail
00:54:12
calendar. I think workspace could be
00:54:14
really interesting as well. Gmail is a
00:54:16
great one. Yeah, inside of Gmail and it
00:54:18
is going to get better. Like there are
00:54:20
smart people thinking about this. All
00:54:22
I'm saying is that the market will now
00:54:24
start to price this decay in. I'm long.
00:54:27
Well, Philipe, I want to know your
00:54:28
bucket of what are the most important
00:54:30
companies that matter the most. Okay, I
00:54:33
I'll try, but I have to ask you guys a
00:54:35
question before. Do you guys think that
00:54:37
the two founders come back in a very
00:54:40
forceful way into the company? I don't
00:54:43
know exactly why, but one thing that I
00:54:45
was wondering, Chamath, is you you bring
00:54:48
up a very important word,
00:54:50
taste. Do you have to be a founder to be
00:54:53
able to impose this sort of new taste?
00:54:57
And do you need sort of founder
00:55:00
credibility at the junction at which
00:55:03
Google is at? It seems like this is a
00:55:05
big junction, right? This is the first
00:55:07
time in their 20 25 year history where I
00:55:10
feel like, wow, there's a real threat.
00:55:13
How do you do that without the founders?
00:55:15
Yes. And on top of that, they're alive.
00:55:17
You know, it's just they ask Larry. No,
00:55:19
Sergey is going to do it. I think he's
00:55:21
building up the reason we're seeing at
00:55:22
the all-in events, the reason he's going
00:55:24
to work every day is that he's building
00:55:26
up his knowledge base here. And I don't
00:55:28
want to speak for him, but I've seen him
00:55:30
really engaged on this stuff. And the
00:55:32
Gemini app is kick ass. And I've had
00:55:34
long conversations with him about like
00:55:36
little details in the Gemini app. He is
00:55:38
super engaged. Like I've had
00:55:39
conversations with him about granular
00:55:42
details of Google local and YouTube
00:55:44
searches and how they should be
00:55:46
presented in the results in the Gemini
00:55:48
app. He's into it. He's into it. You're
00:55:52
bringing up something which I think is
00:55:53
very important. when you're at a
00:55:55
junction this important who has the
00:55:58
gravitas to come in and actually make a
00:56:00
difficult change like this I think in
00:56:02
general it's the founders and you know
00:56:04
in fairness to Larry and Sergey these
00:56:06
are two brilliant brilliant guys they've
00:56:09
done it once and in fairness they
00:56:11
probably did it kind of a second time
00:56:13
when they created Alphabet because now
00:56:14
you have these other businesses that are
00:56:16
pretty impressive now they're just going
00:56:18
to have to do it a third time but
00:56:19
they're going to have to impose their
00:56:21
will and they're going to have to
00:56:22
develop some very specific specific
00:56:24
taste. This is nothing against Sundar
00:56:25
and the team, by the way. This is just
00:56:27
to say that the only people that can
00:56:29
come in and say, "Guys, we're going to
00:56:30
make a change that could have this
00:56:32
negative impact to a $ 1.8 trillion
00:56:34
company are people that are going to
00:56:35
feel it the most, they will feel it more
00:56:38
than anybody else." And so, if they say
00:56:40
that it should happen, they'll have the
00:56:42
moral credibility to make it so. I love
00:56:45
this question that you were just asked,
00:56:46
Philipe. Go through your top 10
00:56:49
companies. Why you What's the number?
00:56:51
What's it? Not top 10. What's the
00:56:52
number? What are the companies that
00:56:54
matter the most? Yeah. So, I have a I've
00:56:59
thought about that a lot. I'm not sure,
00:57:01
you know, great answers. But the first
00:57:03
one is I keep defaulting to the number
00:57:06
25. I can't explain you why, but they're
00:57:10
not a 100 companies. But if you think
00:57:12
there's only five and all these money
00:57:14
managers, you know, they have like five
00:57:16
stocks that represent 80%. I feel the
00:57:19
level of risk that you're taking is too
00:57:21
high. And that one has to be, you know,
00:57:23
I start with a h with the public
00:57:25
markets. I would say most French people
00:57:28
are not known to be particularly humble,
00:57:31
but at least if you've been in the stock
00:57:33
market as a French guy, you've been
00:57:36
beaten up so bad. I started January 1st,
00:57:39
2000. So imagine what my first three
00:57:41
years looked at. I got reduced to, you
00:57:44
know, ashes, just beaten up by the
00:57:46
market. you know, we we did reasonably
00:57:48
well uh uh because uh thank god being a
00:57:52
hedge fund, you know, you have different
00:57:53
tools that you can do. And so I think
00:57:56
you need to have a certain number of
00:57:58
stocks. You need to know that some stuff
00:58:01
you get lucky, some stuff you get
00:58:03
unlucky, some stuff you get right, and
00:58:05
some stuff you get
00:58:07
wrong. And then I think that there's a
00:58:10
second phenomenon. Once you agreed to
00:58:12
the 25, you say, "Wait a minute. Why are
00:58:15
there no IPOs? Why are these private
00:58:18
companies, amazing private companies,
00:58:20
some of the best in the world, SpaceX,
00:58:23
Stripe?" Answer that question. Why? Open
00:58:25
AI, why in your mind? I
00:58:29
think that the cost of being public is
00:58:34
too difficult. One, what? think like the
00:58:39
the reputation, the regulatory like you
00:58:43
get busted like left and right by uh
00:58:47
agencies and like when's the last time
00:58:49
that a public company I think that you
00:58:52
know during the last
00:58:54
administration something like someone
00:58:57
told me I don't know if it's true or not
00:58:58
but I love the I love the quote so much
00:59:00
that I'm using it without checking if
00:59:03
it's 100% true or not something like 35%
00:59:06
% of the S&P had an issue with a
00:59:08
government agency in the last few years,
00:59:11
right? When's the last time that you
00:59:13
guys remember a private company that has
00:59:15
an issue with a government agency? Like
00:59:17
I'm sure it happens, but like off the
00:59:19
top of my mind it seems like a fraction
00:59:21
of that, right? And then I also think
00:59:24
that the private markets have become so
00:59:27
sophisticated that in essence like our
00:59:29
private markets, public markets that
00:59:31
just trade three times a year like uh
00:59:34
you know these companies they do these
00:59:35
uh uh rounds you know once or twice
00:59:38
they're becoming pretty sophisticated.
00:59:40
They match buyers and sellers and I
00:59:43
think that's okay. And then the last
00:59:45
piece which I think that's a very bad
00:59:47
piece for the four of us and all of us
00:59:49
on this call and many of your uh
00:59:52
listeners is that there's such a view
00:59:56
that like large companies are bad and we
00:59:59
got to bust them and we're not going to
01:00:00
let them do any M&A and as a result of
01:00:04
that small companies no longer get
01:00:05
bought by big ones. And for me, it's a
01:00:08
disaster because if I fund small
01:00:10
companies, but now you take away one of
01:00:12
the best ways that I have to monetize my
01:00:14
investment, why should I invest in risky
01:00:16
private companies? I can just buy the
01:00:19
public one. And so I'm really hoping
01:00:20
that as part of this deregulatory move
01:00:23
and you guys and Sachs will have way
01:00:25
more influence than we, but to convince
01:00:28
people that in my mind the best way to
01:00:30
create competition is to allow these
01:00:33
large companies to fight against each
01:00:35
other. And the battle between OpenAI and
01:00:38
Google is the best way to do that. But
01:00:40
not by telling Google not to buy
01:00:42
something or telling Open Double Click
01:00:45
on that, Philipe. I think it's a super
01:00:47
important point. The singles, the
01:00:48
doubles in the industry. I've been
01:00:50
harping about this on this program as
01:00:51
well. So, we're sympotico. What about a
01:00:54
proposal where maybe the non-MAG7 let's
01:00:57
let's pick a number under a trillion
01:00:59
market cap under 750 billion. We let
01:01:02
those companies buy and sell each other
01:01:04
at a very vibrant pace. We saw Chat GPT
01:01:07
buy a $3 billion company. I think this
01:01:09
past week in the um kind of uh coding
01:01:12
space like I mentioned earlier in the
01:01:14
program, Door Dash bought two companies.
01:01:16
What if we said hey okay we understand
01:01:18
Google getting bigger, Apple getting
01:01:19
bigger, Microsoft getting bigger
01:01:23
competitive would be but how does size
01:01:25
make a difference to whether or not
01:01:26
someone should buy a company? Very
01:01:28
simple because they have such a market
01:01:30
dominant position.
01:01:31
Hold on, let me finish my sentence. They
01:01:33
have such a market dominant position
01:01:35
when a company like uh Apple has, you
01:01:39
know, half of the mobile phones or
01:01:41
Google has Chrome, Android, plus all
01:01:44
these things that they could shove that
01:01:46
product for free down the throats of
01:01:48
users, price dump it, which is illegal,
01:01:51
and create less competition in the
01:01:53
future. But if you said Door Dash and
01:01:56
Lyft or, you know, Coinbase plus a
01:01:59
stable coin company, this would build
01:02:01
the Max 7 to the max 70 and then you
01:02:04
would have many more larger companies.
01:02:06
What What do you think of this, Philipe?
01:02:09
I I'll respond to that because I don't
01:02:11
think that that makes any sense and I
01:02:13
think that the the comments you're
01:02:15
making about
01:02:17
size shouldn't drive these decisions.
01:02:19
The fact that Apple, for example, has a
01:02:21
minority market share in operating
01:02:24
systems on mobile phones. Remember,
01:02:26
Android is the majority. That's no
01:02:28
longer true in the US, by the way.
01:02:29
Right? Not globally, right? And Apple
01:02:32
comes along and says, "Hey, I want to
01:02:34
buy a car company or I want to buy
01:02:36
something else." Why should that affect
01:02:38
consumers in any way whatsoever? it the
01:02:41
the ultimate objective of antitrust
01:02:43
authority is to prevent monopolistic
01:02:46
practices that hurt consumers and hurt
01:02:48
the market and take away options and
01:02:51
choice and freedom in the market. But if
01:02:53
companies want to make um orthogonal
01:02:56
acquisitions, if companies want to
01:02:58
continue to grow and become a you know a
01:03:00
large holding company, why should we
01:03:02
step in and say, "Oh, you're too big
01:03:04
now." Ultimately, Jason, you're you
01:03:06
could see that threshold very quickly
01:03:08
becoming a slippery slope that leads to
01:03:10
a general like anti- capitalist concept
01:03:13
where people say, "Well, let's stop all
01:03:14
companies from getting bigger than a
01:03:15
billion or let's stop them all getting
01:03:17
bigger than 100 million now." And that
01:03:19
that is a very slippery slope. Scale
01:03:21
shouldn't matter. At the end of the day,
01:03:22
protecting consumers from um
01:03:25
monopolistic or antitrust practices
01:03:27
should be the objective of these
01:03:29
antitrust authorities. Yeah, I think my
01:03:31
response to that would be except in the
01:03:33
case where the bundling, as we've talked
01:03:36
about in previous episodes, makes it so
01:03:38
any of the large companies can hold Hold
01:03:40
on. Let me finish my sentence again. In
01:03:43
the case that a large company could kill
01:03:45
all the competitors instantly by price
01:03:47
dumping. So, you take something that
01:03:49
people are paying for, you know, like
01:03:51
say uh Robin Hood or Coinbase. You, you
01:03:53
know, Google buys Robin Hood or Apple
01:03:55
buys Coinbase and they just say
01:03:57
everything's free. we're going to make
01:03:58
our money from our main business. Yes,
01:04:00
it's better for consumers, but it's not
01:04:02
as good for a competition and in the
01:04:04
long term then you would kill all the
01:04:06
competitors and then they can do
01:04:08
unnatural acts. That would be the
01:04:09
argument. I'm not saying it's a great
01:04:11
argument. That's a great argument for
01:04:13
what you're talking about. It is not a
01:04:14
great argument for stopping companies
01:04:16
above a threshold of of market cap from
01:04:18
doing stuff and companies below because
01:04:20
a company below a threshold in market
01:04:21
cap could have the same effect as what
01:04:24
you're describing in a smaller market
01:04:26
and they could have you have to be
01:04:27
thoughtful about you're 100% correct if
01:04:29
they're in the same arena. So Coinbase,
01:04:32
Robin Hood, and Erade merging could
01:04:35
cause the same effect. You're right,
01:04:36
Philip. What are your thoughts on just
01:04:38
how to get the country out of this
01:04:39
debate? Because big companies bad. No,
01:04:43
we shouldn't let them do m any M&A. The
01:04:45
wrath of Lena Khan. Is there a is there
01:04:47
an offramp here? Can can Trump just
01:04:49
unilaterally kind of make this happen?
01:04:52
What are your thoughts? Or should he?
01:04:55
Oh, I think that to me one of the best
01:04:58
part being an investor of venture
01:05:00
capital is when you have a really big
01:05:03
idea and it works out, it takes care of
01:05:05
a lot of sins. You know, there's a
01:05:07
little aspect like would you like to
01:05:08
play the lottery? if the lottery was
01:05:12
capped like hey if you win the lottery
01:05:14
you can't win more than $30 million 30
01:05:18
million is insane amount of money but I
01:05:20
I read that there's some lottery guys
01:05:22
who make 1 billion and two billion and
01:05:24
the reason why people are willing to bet
01:05:26
so much and most people are willing to
01:05:28
lose is they all think that they're
01:05:30
going to have this one ticket that's
01:05:31
worth a billion and I think when you
01:05:33
reduce the incentive the financial
01:05:36
incentive of and I agree with Dave like
01:05:39
success should be rewarded as much as
01:05:42
possible. But if you've done something
01:05:43
wrong, then use these, you know, the
01:05:45
existing uh laws to define what success
01:05:49
is. I don't think you can cap because
01:05:51
once you start capping and then what
01:05:53
happens if the stock market goes down,
01:05:55
do you then have to just recap? So, but
01:05:58
I I agree with you. You bring up an
01:06:00
interesting point which is in these
01:06:02
bundles like Amazon Prime bundle, Apple
01:06:05
bundle, there's a Costco bundle, right?
01:06:08
We seem to be living in this world of
01:06:09
bundles where the stock market is
01:06:12
willing to pay 40 50 times earnings just
01:06:15
for the you know the membership fee as
01:06:18
long as whatever you do on the side you
01:06:20
basically make no money like Costco I
01:06:22
think makes 100% of its money more or
01:06:24
less on the membership fee and trades
01:06:27
for 50 60 times earnings there is a
01:06:29
limit to like how big the bundle is
01:06:32
before you start uh dumping so I don't
01:06:35
think I'm saying anything super
01:06:36
interesting I just hope that you don't
01:06:38
cap the upside because that's what
01:06:41
enables all of us to fund these new
01:06:44
companies. The reason why all of you
01:06:46
guys and me were willing to fund these
01:06:48
companies knowing that many of them are
01:06:50
going to fail is the hope that you get
01:06:54
open AI. Yeah, it's well said the power
01:06:55
law. Chimath, I think maybe a good time
01:06:57
to maybe talk about private markets and
01:06:59
liquidity in VC. Yeah, I
01:07:03
mean it's just so
01:07:05
hard. It's hard to make
01:07:08
money. And if you view making money as
01:07:13
some derogatory thing and you put a
01:07:17
bunch of impediments in the way, the
01:07:20
downstream impact is interesting ways to
01:07:23
make money will be out of fashion and
01:07:25
simple ways of making money will be the
01:07:27
only things that people do. The problem
01:07:29
is that society doesn't move forward if
01:07:32
all you do are simple things. You need
01:07:34
people who are willing to put risk
01:07:36
capital to buy these lottery tickets.
01:07:38
And if you marginalize the upside,
01:07:41
you're just going to have exactly that,
01:07:42
a stagnant society of marginal things
01:07:46
that doesn't move along. And unless
01:07:48
people fundamentally embrace that idea,
01:07:51
we're going to lose. We being America.
01:07:53
Yeah. Yeah. If you look for example in
01:07:54
the last 5-year period in China or
01:07:58
Canada where both of them two totally
01:08:01
different political regimes but they
01:08:03
both had the same thing happened which
01:08:05
is the the the amount of investment
01:08:07
capital that went into both of those
01:08:09
countries fell off of a cliff for two
01:08:12
totally separate reasons.
01:08:15
What is interesting is going to be what
01:08:17
is the downstream impact of that in 10
01:08:21
and 15 and 20 years and you can look
01:08:24
historically back and we know what this
01:08:27
looks like which is countries stagnate
01:08:30
in the absence of investment and risk
01:08:32
capital. So you will become a
01:08:34
marginalized also ran country and you
01:08:36
know not to slag Europe but part of what
01:08:39
Europe got wrong was that compact didn't
01:08:42
exist too many administrators too many
01:08:44
hall monitors not enough ability to put
01:08:46
risk capital to work and actually get
01:08:48
gigantic outcomes. So the most important
01:08:51
thing we can do on that dimension is to
01:08:54
figure out how to have less regulation,
01:08:57
have these companies fight it out and
01:09:00
create the incentives for for these
01:09:02
smaller businesses to be bought andor to
01:09:05
go public. So let's uh back this up with
01:09:07
some data here. Nick, pull up the chart
01:09:09
on exits. This is an important one for
01:09:10
people to see. we've had since the wrath
01:09:13
of Lena Kong last four years under
01:09:14
Biden. You know, you had this 2021 spike
01:09:17
of IPOs, peak zer, a lot of inventory, a
01:09:20
lot of risk capital have been put to
01:09:22
work for 10 years. And after that 2021
01:09:25
spike, things have been flatlined and
01:09:28
companies are preferring to stay
01:09:30
private. And now we have venture capital
01:09:31
constricting in terms of new funds being
01:09:34
done and people are making larger funds
01:09:36
to do later and later stage investments.
01:09:38
And Jason, it's constricting at the
01:09:41
absolute worst time because what Philipe
01:09:43
said before is we're in the midst in the
01:09:45
early phases of an entirely new economy
01:09:48
that's going absolutely
01:09:51
parabolic. But the people that are
01:09:53
supposed to accelerate that innovation
01:09:54
and make these companies come to life
01:09:57
are going to run out of gas because if
01:09:59
they don't return money to their limited
01:10:01
partners, where are they going to get
01:10:02
the incremental capital from? Yeah, it's
01:10:05
retail investors and sovereign wealth
01:10:07
funds outside the US seem to be the
01:10:08
answer to that question. This lead to a
01:10:10
normalized market, Phipe and Chimath. So
01:10:13
ultimately, shouldn't the exit volume
01:10:17
define the amount of capital that LPs
01:10:20
should invest in this asset class to get
01:10:22
an out a return that compensates them
01:10:24
for the ili liquidity relative to public
01:10:26
markets with the same kind of risk
01:10:27
levels. At the end of the day, it is
01:10:30
what it is and you're going to see a
01:10:32
reduction in venture dollars and that's
01:10:34
just the market normalizing. The econ
01:10:35
the economy only grows and only
01:10:37
innovates at a certain pace maybe is
01:10:39
what the data shows. I think the way
01:10:41
that I think about this as an LP and
01:10:43
maybe Philipe can talk about this as a
01:10:45
GP but as an LP when I think about
01:10:48
putting capital into different
01:10:51
funds I have a base return in my mind
01:10:53
which is I want after taxes net of
01:10:56
everything to generate about 10% a year
01:10:59
that's where my risk of ruin is
01:11:01
basically zero it compounds to infinity
01:11:03
I like the profile of my return of my
01:11:05
assets how do I get to 10%. Well,
01:11:09
sometimes when I'm holding short-term
01:11:10
stuff, I'm only generating four or 5% in
01:11:12
paper. So, then I have to go out on the
01:11:14
risk curve. So, I talk to a hedge fund.
01:11:16
They're going to give me 12 or 13% net
01:11:19
maybe in some cases. I try to understand
01:11:21
their risk, but I can only get so much
01:11:23
working. So, then I have to go further
01:11:24
out on the risk curve. Then I talk to
01:11:26
some private credit and private equity
01:11:27
guys who tell me, "Yes, I can give you
01:11:29
mid- teens returns." Then I do the
01:11:31
analysis on that and I think, "Okay,
01:11:32
I'll give you some money, but they are
01:11:34
going to lock me up for five or six
01:11:36
years." it's still not enough to get to
01:11:38
a blended rate of return of 10%. So then
01:11:40
I go yet further out on the risk curve.
01:11:42
I call my friends at SEOA and all these
01:11:43
other
01:11:44
places. And when you talk to the venture
01:11:47
investors, the problem is you are so
01:11:50
illquid for so long that the rates of
01:11:54
return need to be in the mid to high 20s
01:11:56
net to me.
01:11:59
But when you look at the data of what's
01:12:03
possible, they actually look like a
01:12:05
three and fouryear hedge fund. And part
01:12:08
of the reason is because of this
01:12:10
strangulation of illiquidity that's
01:12:13
caused artificially by administrations,
01:12:16
by regulations, and by agencies like the
01:12:20
FTC.
01:12:21
The question is if they didn't exist or
01:12:24
if the regulations were a lot smaller,
01:12:27
what would the upside return be? It's
01:12:30
probably 500 to a,000 basis points
01:12:32
higher. Much higher. 100%. Yeah. But I
01:12:35
think at current course and speed with
01:12:38
the lack of IPOs and with the lack of
01:12:41
M&A, you can't justify that asset class
01:12:45
on its own in my opinion unless you
01:12:48
think about it as like something that
01:12:49
you're doing almost philanthropically
01:12:51
unless capital comes out and then prices
01:12:53
come down and then m return multiples go
01:12:56
up. Let me put some numbers on this.
01:12:57
Here's the second chart. annual IPOs and
01:13:00
just give you some, you know, broad
01:13:02
strokes here of how amazing 2021 was for
01:13:04
a lot of firms. Rivian went out at 66
01:13:07
billion, a firm at 24 billions, Qualrix
01:13:09
25 billion, Robin Hood, which I was
01:13:11
involved in, one of the first investors,
01:13:13
30 billion, Dualingo 5 billion, Toast,
01:13:15
etc. Roblox 42 billion, Squarespace, and
01:13:18
then you had all this M&A Square app
01:13:22
bought Afterpay for 29 billion, Zoom
01:13:24
acquired 59 for 15 billion. Mailchimp,
01:13:26
remember that one? 12 billion. Microsoft
01:13:28
and Nuance the um spoken uh the
01:13:31
um models 20 million. Do you know what
01:13:34
the distribution? Do you know what the
01:13:36
distribution of these IPOs were by
01:13:38
method? Spack versus direct listing
01:13:40
versus traditional IPO. I don't have
01:13:43
that here. We'd have to do it not just
01:13:44
on the names but also on the amount uh
01:13:46
distributed. Yeah, that's a good
01:13:47
question. You know, when I look at that
01:13:49
data, what what what I look at if if you
01:13:52
just bring it back for one second is
01:13:55
ever since, you know, the 20 and 21
01:13:58
which were very high. Yeah. If you look
01:14:02
at 22, 23, 24, and now the 25, I'm like,
01:14:06
how is this that it's worse than 04, 05,
01:14:10
06 that were normal years? How is this
01:14:13
worse than 13 and 14 and 15? Yeah. She
01:14:17
scared the hell out of people. She
01:14:18
scared people. Correct. M&A. I've talked
01:14:21
to M&A people, Philipe, and they have
01:14:23
said it's not even worth bringing it to
01:14:25
the board. Worth the discussion. She
01:14:28
can't connect the dots. You know, she's
01:14:30
like, I want people to not, you know,
01:14:34
play the lottery anymore. I don't care
01:14:36
for them. She doesn't understand that
01:14:37
our system is based on this risk
01:14:41
takingaking. And so, listen, I think
01:14:43
it's almost I think it's this might
01:14:45
change. It's also worse than that. I
01:14:47
think that they probably look at like
01:14:49
Adobe Figma and they look at the cap
01:14:52
table and they probably just make a
01:14:54
judgment that, hey, I don't want these
01:14:56
people to be billionaires. Yuck. I hate
01:14:57
these people, but they don't understand,
01:15:00
to your point, the waterfall effect of
01:15:02
not returning capital to all kinds of
01:15:04
other investors who are in the business
01:15:06
of taking risk. It's this like
01:15:07
collateral damage. You know, one of the
01:15:09
things I feel none of these people
01:15:11
understand so well is like all the
01:15:13
collateral damage. You think you're
01:15:15
moving in one direction and all these
01:15:17
dominoes sort of fall around you.
01:15:20
Exactly. Well, the second and third
01:15:22
order impacts this cascade. You know,
01:15:25
it's Ford Foundation, it's Harvard, it's
01:15:28
California retirement. Those are the
01:15:29
people who are the going to be the
01:15:31
beneficiaries. And the third thing,
01:15:32
because I've been talking to a lot of
01:15:35
geographies in the Middle East, Japan,
01:15:37
Australia, Singapore, etc., Asia, they
01:15:40
all want to recreate what we have here.
01:15:42
Well, what we've created here in Silicon
01:15:44
Valley and in America is these diasporas
01:15:47
that start when a company like Google
01:15:49
goes public and then those people go
01:15:50
create Facebook or go work at Facebook
01:15:52
like Cheryl Sanberg did and they
01:15:54
accelerate the growth there and then
01:15:55
those people become angel investors.
01:15:57
They become LPs. This incredible
01:16:00
flywheel was cooking. I mean, it was so
01:16:03
smooth. And now we've literally stuck a
01:16:06
stick in it and the car flipped over and
01:16:08
you you don't have the downstream effect
01:16:10
of Canva in Australia that you I don't
01:16:13
know if you know that company has done
01:16:15
incredibly well. Phenomenal. They were
01:16:17
Oh, you are involved. Yeah, we're we're
01:16:19
we're involved. But sorry, just one
01:16:21
thing I would add because it makes what
01:16:22
you said so much more powerful. On top
01:16:24
of that, when these people die, most of
01:16:27
them gave all their money away to
01:16:28
foundation, which is something very
01:16:30
different between the US and Europe. In
01:16:33
Europe, a lot of the wealth and in many
01:16:35
other countries outside of the Europe,
01:16:37
the wealth basically continues for
01:16:39
generations. In America, these people
01:16:42
built companies, create new companies,
01:16:44
invest in new companies, coach new
01:16:46
companies, mentor new companies, and
01:16:48
when they die, all that money goes to
01:16:50
foundations that continue to promote and
01:16:53
do some of the work that governments
01:16:54
would do. Finally, how great is it that
01:16:57
some foundations are competing with the
01:16:59
government to decide what needs to be
01:17:00
done as opposed to a larger government,
01:17:03
right? And and so that ultimately serves
01:17:05
the Doge mission. Atlassian and those
01:17:08
incredible founders who did Jira, etc.,
01:17:10
bought other companies, they wound up
01:17:12
being the seed investors in Blackbird,
01:17:15
the the venture firm in Australia that
01:17:17
did Canva, and they were the investors
01:17:18
in Canva. Both of those companies are
01:17:20
creating this incredible flood of
01:17:23
entrepreneurship in Australia and we're
01:17:26
breaking that in America. Australia
01:17:28
copied that playbook. I want to know
01:17:29
about the new fund you're doing, Phipe,
01:17:31
and why. Maybe you could explain to
01:17:32
people. I guess this is one of
01:17:35
these what do they call it? Closed or
01:17:37
open-end funds and and they operate
01:17:39
differently than venture ones. And also
01:17:41
the seating you you seated it in a very
01:17:43
unique way with a couple of very unique
01:17:45
family offices. Yeah, you guys are nice
01:17:47
to ask and couple of you have tweeted
01:17:51
some nice things about it. So, I I
01:17:52
really appreciate it. I loved it. I
01:17:54
loved it. Let me tell you the the a bit
01:17:58
the story behind it. Right. So, I was
01:18:00
like on one hand you've got private
01:18:03
funds. They're only available for the
01:18:06
super super rich. Like you got to be uh
01:18:08
like, you know, a super duper accredited
01:18:11
investor. You put your money in there
01:18:13
and you might not see anything for 10
01:18:14
years. And then for me as a GP, every
01:18:17
three years I need to raise a new one of
01:18:19
these funds. So god forbid we have one
01:18:21
fund that doesn't work. Can we raise the
01:18:23
next one or not? Right? So that was on
01:18:25
one side of it. And then on the public
01:18:28
side, what basically is going on in the
01:18:30
public is very strange. But in essence,
01:18:34
the black rocks of the world and the
01:18:35
vanguards of the world and make it that
01:18:37
almost everybody wants to invest in an
01:18:40
index. And as a result of that, the
01:18:42
people who are still active managers,
01:18:44
they're all basically closet indexers
01:18:47
because the risk of being wrong, you're
01:18:50
you do better for 10 years and then you
01:18:52
do worse for one year, you're out. So
01:18:54
basically the public market, everybody
01:18:56
wants to index, which is I think why the
01:18:58
max 7, you know, is so big and stuff
01:19:01
like that. And uh the other part that's
01:19:04
weird with the public markets is since
01:19:06
everybody needs to be indexed, everybody
01:19:08
needs to be fully invested at all times.
01:19:10
I'm like, why? Why is it that you need
01:19:12
to be fully invested in 1999 if the P
01:19:15
multiple of the market is 60? Why is it
01:19:18
that you want to be fully invested when
01:19:20
you're already down 10%, things are not
01:19:22
working? Why not raise cash a lot? Sort
01:19:25
of, you know, freshen up your ideas a
01:19:28
little bit. go take a long walk on the
01:19:30
beach and try to uh understand maybe
01:19:32
you've made some mistakes and stuff like
01:19:34
that. So I've always wanted to do two
01:19:36
things which is one on the public side
01:19:39
have the ability to be different in the
01:19:41
stocks that I own but also that if I'm
01:19:44
nervous then what's wrong with holding
01:19:46
cash and I hate to put this in the same
01:19:48
word but you look at Bergkshire Haway
01:19:50
today and everybody wants to compare
01:19:52
themselves to Bergkshire a little bit
01:19:54
but Bergkshire today is a trillion
01:19:55
dollar company a third in cash a third
01:19:58
in public equities a third in private
01:20:00
equities right and so I was like okay
01:20:03
well what if we have a system where we
01:20:05
can be in public stocks, we can be in
01:20:08
private companies, but we also can be in
01:20:11
lots of cash and where investors know on
01:20:14
day one, please do not compare me to an
01:20:17
index. If you come in, you got to give
01:20:19
me sort of five or seven years to do my
01:20:22
work and I'm also going to let you take
01:20:24
a little bit of money every year. So in
01:20:27
essence, I'm willing to work at much
01:20:30
lower fees because you give me capital
01:20:33
for longer, but you don't give me the
01:20:35
capital forever and you're not stuck
01:20:38
forever. And so these interval funds are
01:20:41
really interesting uh because uh I think
01:20:44
the minimum investment is like $50,000
01:20:48
or something like that. And the
01:20:49
conditions to qualify for such a fund
01:20:52
are much smaller. So there's many more
01:20:54
investors that can come. And I look at
01:20:56
it a little bit of like this is the
01:20:58
democratizations of tech investing and I
01:21:01
really believe in it. I've been doing my
01:21:02
thing for 30 years for institutional
01:21:04
investors. Why can't I do it for like
01:21:08
people who don't have access to Let me
01:21:10
ask you a question. You have what 53
01:21:13
billion under management something like
01:21:15
that. Something in that zone. So I mean
01:21:17
obviously you've been phenomenally
01:21:19
successful. talk about the fees and the
01:21:22
carry and how you decided how to set
01:21:26
that and then tell us how your
01:21:28
competitors reacted when you announced
01:21:30
this fund. I'm very curious about that
01:21:33
both of those two things. Yeah. So, we
01:21:37
got a little bit lucky in that we
01:21:38
studied the fees of other funds. These
01:21:41
are things called interval funds and it
01:21:45
seems like the fees were more like
01:21:47
u 1.25 25 and 12. And so we're like,
01:21:51
well, can we live at 1.25 and 12? And I
01:21:54
was like, yeah, you know, it's a really
01:21:56
good deal for other people, but I get
01:21:59
something for it, which is I get near
01:22:01
permanent capital. And in exchange for
01:22:03
that near permanent capital, I'm willing
01:22:05
to live at lower fees because I think
01:22:08
I'm going to be able to compound it for
01:22:10
longer. So in essence, it's not like I'm
01:22:12
being altruistic. I'm not claiming, oh,
01:22:14
I just want to do a good deal for
01:22:16
people. Is I'm being selfish. If I can
01:22:18
compound capital at 12 and a half
01:22:20
percent incentive fee for a very long
01:22:21
time, it's better than 20% for a short
01:22:24
period of time. And for the investor, I
01:22:27
love the fact that I'm sort of investing
01:22:29
like if you told me, Philip, start from
01:22:31
scratch, write on a little blank piece
01:22:34
of paper. What would you do? I think all
01:22:36
of us on the show would say, well, it
01:22:38
would have to be something that looks
01:22:39
like Berkshire Haway, right? Bergkshire
01:22:41
is the model. and you want to do cash,
01:22:44
you want to do publics, you want to do
01:22:45
private, you want it to be a good deal
01:22:47
for people, you want it to be permanent
01:22:49
capital for you, and you want to try to
01:22:51
be able to do that for a long time. And
01:22:53
I think that's sort of what those uh
01:22:56
things do. And then I was like, okay,
01:22:58
but then the problem is like you have a
01:23:00
snowball at the top of the mountain. How
01:23:02
do you get it to roll and to be big? And
01:23:04
I was like, you know, we're not very
01:23:06
well known. I have to admit this is sort
01:23:08
of one of my first podcasts, you know,
01:23:10
uh ever. So I really appreciate you're
01:23:12
doing great being here with you guys.
01:23:15
So, I was like, I got to get the ball
01:23:17
rolling at the top. And so, I thought,
01:23:20
okay, maybe I can get some tech
01:23:22
entrepreneurs to help me out who believe
01:23:24
in this concept of democratizing tech
01:23:27
investing and stuff like that. So, I
01:23:28
went to see the family officers. I
01:23:30
didn't quite see the founders directly,
01:23:32
but the family officers for both the
01:23:34
Bezos family and then the Dale family.
01:23:36
And I sort of pitched them the idea.
01:23:38
They like the idea. Then we pitched it
01:23:41
uh to the founders and then we got to
01:23:43
some agreement and they gave us a
01:23:45
combined billion dollars to get going
01:23:47
and then we're also going to put a lot
01:23:49
of personal money in it and I was like
01:23:51
great and I had read I don't know if
01:23:53
it's true that the largest fund that was
01:23:55
ever launched was the one of the first
01:23:57
Blackstone was 1.3. So then I said okay
01:24:00
I need to launch the fund that's
01:24:02
1.301 like that I can claim that it's
01:24:05
the largest launch ever. So, I don't
01:24:07
know if I'll get there or not, but that
01:24:09
was the idea. And I think it's nice to
01:24:11
have the backing of these guys. So,
01:24:13
typically what happens is people come to
01:24:15
see me in my office.
01:24:17
I'll ask some folks to do diligence and
01:24:19
then I sign up to an LPA. Is that how
01:24:22
this works? Like if I'm interested, what
01:24:24
is that what I do now? I or is this
01:24:27
totally different? You mean you as an LP
01:24:29
now? Yeah. Yeah. Yeah. Yeah. Me is just
01:24:30
a normal person. So, uh this fund in
01:24:32
particular starts to be marketed by uh
01:24:35
one of the Wall Street firms. It's in in
01:24:37
this one. Uh we picked UBS. They were
01:24:40
the first ones who believed in us but
01:24:41
many other
01:24:43
firms will work with others and we have
01:24:45
great relationships with JP Morgan and
01:24:47
others. So in time it'll be available on
01:24:50
all these different platforms and then
01:24:53
most of the people that we target
01:24:56
usually have a relationship with a
01:24:59
wealth management firm and our hope in
01:25:01
time is to work with a bit the leading
01:25:04
uh wealth management firms and uh you
01:25:07
can invest and frankly I'm like hey just
01:25:09
start giving me a little bit of money
01:25:11
see if you like what I do on that how
01:25:13
many people can be involved because when
01:25:15
you do venture obviously there are caps.
01:25:18
You can only sell to accredited and
01:25:20
qualified purchases. That's about 6% of
01:25:22
the country. And you can only have 99
01:25:26
accredited investors in a in a venture
01:25:29
fund and then it's I think uncapped and
01:25:32
then you can have 200 you can have up to
01:25:34
10 million and I think it can be 250. I
01:25:36
did this when I did our fourth fund and
01:25:39
I had 120 million in interest. I can
01:25:41
only take 10 million of the accredited.
01:25:43
So it it really is capped in the venture
01:25:45
space. But you're doing a different type
01:25:47
of vehicle. Is there a cap on the number
01:25:48
of LPS you can point? And of course, I
01:25:51
knew I should be more prepared doing
01:25:52
this. I don't remember exactly what the
01:25:54
caps are, but the point is is that the
01:25:57
number of people that can join the fund
01:25:59
is much greater and the number and the
01:26:02
amount of money they can put in is also
01:26:05
much smaller. And as a result of that,
01:26:07
you're reaching a wider audience. And
01:26:10
that particular audience, they're happy
01:26:12
because if you think about that fund,
01:26:14
right? One thing that's a pain in the
01:26:16
ass. How do you manage all the capital
01:26:18
calls? They drive me crazy. How do you
01:26:20
manage all the distributions? Oh, I just
01:26:22
got some stock in a public IPO. Should I
01:26:25
keep it? Should I not keep it? Is it a
01:26:27
good company like Google that's going to
01:26:28
20x post IPO? Or is it another company
01:26:31
that I should just sell immediately?
01:26:33
Right? You basically have one structure.
01:26:35
It manages everything and then you get a
01:26:38
1099 instead of like a bunch of K1 which
01:26:41
are so do you think like Seoia and Dre
01:26:44
and Kla founders fund how do they
01:26:49
respond that's question one and then two
01:26:52
does it change the behavior of the
01:26:54
fundraising cycle or process for you and
01:26:56
your partners when you're evaluating
01:26:58
companies or for the entrepreneurs like
01:27:00
does any of that change so how do how
01:27:02
does how does competition react and then
01:27:04
how Do companies and CEOs react?
01:27:09
Listen, um, when you start worrying
01:27:12
about your competitors, in my mind, it's
01:27:15
a bit of a version of the grass is
01:27:17
greener elsewhere and you have to focus
01:27:19
on ourselves. It's such a hard business.
01:27:22
There's so many smart people and this
01:27:24
and that. We tried to design something
01:27:27
that plays to our strength. And our
01:27:29
strength was we got the public markets,
01:27:32
we got the private markets, and then
01:27:34
we've got risk management with the cash
01:27:36
and knowing when to be in and out. I
01:27:39
would suspect that other people will do
01:27:41
the same. Hopefully, it'll be different
01:27:44
because they have different strength and
01:27:46
stuff like that. And I thought that what
01:27:49
was nice for us is to sort of uh do this
01:27:52
a bit of a hybrid uh public private and
01:27:55
frankly in private you guys think
01:27:57
there's venture, there's the growth
01:27:59
capital, there's private equity, this
01:28:01
vehicle could own 100% of a company, you
01:28:04
could do debt, you could go up and down
01:28:06
the cap. What is your plan then to do
01:28:07
with private companies specifically? Do
01:28:09
you see yourself, you know, leading a
01:28:11
series A or participating in one of
01:28:13
those or buying secondary in SpaceX on
01:28:15
the open market from former employees,
01:28:18
maybe buying out strips of other venture
01:28:20
firms that are looking to wind down or
01:28:23
get early liquidity and you come into
01:28:25
some, you know, midsized uh $300 million
01:28:28
fund and buy out 20% of it? What What's
01:28:30
the strategy here with private
01:28:32
specifically? This is a good point. It's
01:28:34
a bit like, hey, so what's your
01:28:35
northstar? Don't tell me you can do
01:28:37
everything. like what are you going to
01:28:38
really do right and to me the northstar
01:28:41
is uh Jason I got to build for you in 10
01:28:45
years the new mag seven that's my job so
01:28:50
we know we know who are the 10 largest
01:28:51
companies in the S&P or the NASDAQ today
01:28:55
what are they going to be in 10 years
01:28:58
some are already public they're just
01:29:00
going to get
01:29:01
bigger and some are private so to that
01:29:04
extent I don't believe that necessarily
01:29:06
venture
01:29:07
is the right model for this particular
01:29:10
because it's like uh it's a th00and to
01:29:13
one to go from zero to 1 million in
01:29:15
revenue then it's 100 to one to go to 10
01:29:18
million that's the insight that and you
01:29:21
mentioned this on our call earlier today
01:29:24
that I actually think is really really
01:29:25
really
01:29:27
powerful the mag seven was this set of
01:29:30
correlated seven companies that sucked
01:29:32
up all the attention all the money they
01:29:35
moved in unison dollar for
01:29:37
Now that that correlation has broken
01:29:41
down, it allows you to ask this question
01:29:44
which is what is the real MAG X
01:29:47
companies? And to your point, if it's a
01:29:50
25 company basket, you're absolutely
01:29:53
right. Like SpaceX would be in the
01:29:55
basket. It's private. Correct. So, so
01:29:57
Stripe would be in the basket. Like so
01:29:59
to belong some rando public company
01:30:02
because it's public and ignore SpaceX
01:30:05
and Stripe would just be stupid. So to
01:30:07
your point that is really that's really
01:30:10
powerful. The the the optimal basket of
01:30:13
the companies you'd want to own for the
01:30:15
future because of these rules and
01:30:17
regulatory burdens are partially public,
01:30:20
partially private, and so you need a
01:30:22
vehicle that can straddle both if you
01:30:24
want to own it. Yes. I I think that that
01:30:26
makes a ton of sense to me. That's the
01:30:28
idea. And also like the people who
01:30:30
choose who the Mac 7 are, it's like some
01:30:33
employee at MSCI World or something like
01:30:37
that. Will you actually go out on a limb
01:30:39
and try to publish what you think the
01:30:41
version of that index is as you
01:30:43
construct it inside of that fund or we
01:30:46
have some public requirements which will
01:30:48
force us to do that. The private markets
01:30:51
are overheated. There's a lot of
01:30:53
secondary offerings. So if you try to
01:30:54
get into Stripe, SpaceX, Androl or like
01:30:57
there was recently one of these, you
01:30:58
know, robotic companies that has zero
01:31:00
revenue and wanted a $40 billion, you
01:31:04
know, valuation and there's all these
01:31:05
civilians, retail investors who are
01:31:07
investing in your fund, but also have
01:31:09
direct access to these secondary
01:31:10
markets. I mean, you also have to buy at
01:31:13
the right price and these I know
01:31:15
firsthand for the for those top
01:31:16
companies are massively inflated. You
01:31:18
have 30 $40 billion valuations on
01:31:21
companies that are pre-revenue
01:31:22
sometimes. How do you think about that?
01:31:24
I have no idea of the company you just
01:31:26
referred to. I have no idea which one it
01:31:28
is. I don't want to say, but yes, maybe
01:31:31
they did a maybe they did a trial with
01:31:32
BMW that was in the factory or not in
01:31:35
the factory. I don't know. Listen,
01:31:38
humanoids is a pretty exciting area. I
01:31:40
don't know what companies are, but there
01:31:42
is going like let me in in my top 25.
01:31:46
I don't think I think it's a bit early.
01:31:48
I would have a humanoid company. Hm, I'd
01:31:51
have a robot taxi company. You know, I
01:31:53
try to find some whoever is the leader.
01:31:56
And I think the point that you make
01:31:58
that's really good, Jason, is we also
01:32:00
have to wait. To me, there's two key
01:32:02
things. Can I establish with 75% chance
01:32:05
that this is the leader? I don't want to
01:32:07
do it if it's like a 1% chance that it's
01:32:09
the leader. I got to pay more later.
01:32:11
That's one. But two, there's one
01:32:14
advantage that the public markets have
01:32:16
over the privates that we know how to
01:32:19
value things because we have comps and
01:32:21
we know about revenues and profits and
01:32:23
earnings and P multiples and stuff like
01:32:26
that. Sometimes private investors, they
01:32:28
just value a private company like, hey,
01:32:30
if the last round was 100, well, this
01:32:32
round's 200. And I'm like, but why, you
01:32:35
know, why is where the CEO is really
01:32:37
good on camera and funny Twitter like
01:32:40
doubles, right? And so I think that in
01:32:42
the growth business like being a public
01:32:44
investor is important because it lets
01:32:46
you at least say if this company were
01:32:48
already public what it be worth and then
01:32:52
when you own public company the one
01:32:55
thing that the private company gives you
01:32:57
if you want the public comp the public
01:32:59
business it gives you discipline but
01:33:02
what the private business gives you
01:33:04
which is really cool it gives you the
01:33:07
telescope into the future and I think
01:33:10
that to be a good investor, you need to
01:33:13
have one side of your brain which is
01:33:16
imagination, creation, believing in the
01:33:19
future. And you need to have another
01:33:21
side that says, "Hey, slow down chemo.
01:33:23
This is like 80 times earnings and it's
01:33:27
twice as expensive and be patient." And
01:33:30
for me, the best investors are the ones
01:33:32
where you sort of have the telescope in
01:33:34
the future, but you also have the
01:33:36
day-to-day discipline of the public
01:33:38
markets. And as I said before today,
01:33:41
man, you get beat up in the public
01:33:42
markets so bad all the time cuz you buy
01:33:45
something, it goes down by half. You in
01:33:48
the private markets, it goes up, goes
01:33:50
up, goes up, and then one day it just
01:33:52
goes to zero. Yeah. Yeah. It's like
01:33:55
we're out of business. You take the
01:33:56
loss. Hey guys, some breaking news.
01:33:59
Breaking news. The Pope has been
01:34:02
selected. And I thought, you know, since
01:34:04
you guys haven't been here, let's go
01:34:05
through it. Here it is. The smoke has
01:34:08
come out and Phil Helmuth is Pope
01:34:11
Helmut. A little work to be done on
01:34:13
these language models. Oh, look. Here's
01:34:16
another one coming out. Chumat,
01:34:19
congratulations. The first No, that was
01:34:22
a black smoke. That's black smoke.
01:34:24
That's black. Black smoke. Oh no. Maybe
01:34:26
Chimat didn't win it. Oh no. Who do we
01:34:28
got next? She was trading. She did
01:34:31
better than you, Phipe. You didn't beat
01:34:33
the Pelosi index. So you don't become
01:34:36
divine intervention. Divine intervention
01:34:38
on her portfolio. Maybe a little insider
01:34:40
information. Okay. Wonderful episode.
01:34:42
Phipe, you're amazing. Yeah, that was
01:34:44
great. Thomas, you got competition. Your
01:34:46
big brother. He did pretty well. So now
01:34:49
you know we don't have two. We have one
01:34:50
or the other. So we'll let the audience
01:34:52
decide. For Chimamoth Poly Hapia, your
01:34:54
German dictator for Arzar, who couldn't
01:34:58
make it today, and your Sultan of
01:35:00
science. I am the world's undisputed
01:35:04
greatest moderator, Jake. We'll see you
01:35:06
next time. Bye-bye. Bye-bye.
01:35:10
We'll let your winners ride.
01:35:13
Rainman David.
01:35:17
And it says, "We open sourced it to the
01:35:19
fans and they've just gone crazy with
01:35:20
it." Love you queen of kin.
01:35:25
[Music]
01:35:30
Besties are gone.
01:35:32
That is my dog taking notice your
01:35:34
driveways.
01:35:38
Oh man, my appetiter will meet. You
01:35:40
should all just get a room and just have
01:35:42
one big huge orgy cuz they're all just
01:35:44
useless. It's like this like sexual
01:35:45
tension that we just need to release
01:35:47
something else.
01:35:51
Your
01:35:52
feet. We need to get Mercury's I'm going
01:35:56
all
01:35:58
[Music]
01:36:02
in. I'm going all in.
