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hey everybody welcome to another episode
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of the all-in podcast your favorite
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podcast
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and a lot of a lot of topics on the
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docket
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including
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well we'll get to that in a minute uh
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tons of stuff to talk about not just
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politics but a lot of tech news you do
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sound really hungover today jkl you
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sound like an old man that's been
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smoking cigarettes for three weeks
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you sound wrecked how big was your night
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last night admitted i didn't go that big
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a scale of one to charlie cheat it was
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like a six there's like a martin sheen
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in his 30s what does that mean one to
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charlie we had a couple of beverages i'm
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sorry on a scale of one to charlie sheen
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i don't think i've ever been past the
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one in my life so what is a six
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a six is like you know
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paris hilton
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you know in her heyday or like lindsay
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lohan in hollywood in the 90s it's like
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you know like a good time but not crazy
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mm-hmm didn't they have to go to rehab
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let me tell you something charlie sheen
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cannot say it was just like lindsay
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lohan wait lindsay lohan the one who
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went to rehab like five times like what
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are you talking about yeah that's a 6.
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i don't want to know what seven is
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[Music]
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[Music]
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joining us of course the queen of quinoa
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is here the thriller from mamilla valley
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he puts the eye and anxiety he got his
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degree from his google pedigree the
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sultan of science david friedberg with
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us again all right next up of course the
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czar of arr he perfected the flywheel
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with his boy peter thiel lps don't be
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nervous because he's
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only investing in software as a service
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the world's biggest [ __ ]
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the rain man himself
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david sacks
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he's waiting
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that might stick i don't know i feel
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like this might be heading towards kind
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of like a high school talent show kind
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of uh episode but yeah go ahead and
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finally the king of spaxx himself the
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guru of growth he puts the dick in
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dictator he's going to upset her with
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his sweater
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mouth probably hopped here
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all right boys
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i kept letting the audience know i can't
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keep this up every week yes yes it's
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become a
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very anticipated new feature of the show
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it is it's a new feature we you know i
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forgot we had like wet our wet your beak
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and you know all this stuff and
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all these things and flows we come up
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with absolutely come up with new things
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um all right listen uh just a quick
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programming update all in summit sold
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out um basically it's going to be a
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great show we got about a dozen speakers
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lined up uh all kinds of great folks and
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uh three great parties i want to
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highlight
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monday a sunday night will be the poker
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tournament that's going to be our good
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fellas
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godfather kind of theme dressed to
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impress the family
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night number two monday night is going
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to be our havana white party where your
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best linens and whites and then closing
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night party on tuesday night
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is going to be our miami vice big 80s
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party neon and
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t-shirts under
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suits it's going to be a hell of a lot
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two million 999
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700 people don't give a [ __ ] about what
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you're talking about right now
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there's like maybe 300 people that are
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gonna go to this party that you're
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throwing and
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700 tickets i think there's gonna be 700
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tickets issued and there'll be probably
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400 people at the party so they'll be
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pretty good parties uh-huh
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we're in the party business here at the
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all-in pod well i mean
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the world needs some good parties in my
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opinion it's going to be three
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back-to-back grade parties and the theme
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of the conference is the problem i most
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want to solve in the world or the
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problem i most want to see solved in the
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world so we're asking every speaker to
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think about that
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and we're going to kind of talk about
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the world's biggest problems and then
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who actually wants to solve them the
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world needs more parties
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well that's that's what i'm doing that's
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my that's going to be my 10-minute talk
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my ted talk i've been i've been watching
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the wework show have you guys been
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watching it on fabulous tv plus yeah
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like elevating the world jared leto is
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so freaking good in that character by
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the way
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yeah it's incredible he gotta get it
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like elevating the world's consciousness
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as the mission and then just throw
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parties is the way to do it i feel like
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you're you really got that vibe like
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yeah
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it's aspirational you can motivate the
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world's consciousness with your with
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your summits i i told bill pocketing
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millions of dollars
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it's not gonna make a profit whatever
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profit it makes it's gonna go to
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chamot's star chamber 50-person
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conference he's doing with the all-in
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brand so everybody gets to leverage the
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brand
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yeah first you did it saks with your
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call in now i'm doing it with the summit
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chamat's gonna do with his thing tanking
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i'm not gonna do it coming soon from
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freedberg the all in munich special lose
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weight like your besties
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he's gonna the it's it's the all-in
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brand that allows you to lose weight in
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the following way he brings his best
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vegan chef to you oh yeah
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he spins up some [ __ ] tempeh garbage
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tempe and vegan shake your favorite
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chamato it's double [ __ ] yuck right
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yes you vomit after you eat it you're
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you're in a caloric deficit for the
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month that that person refuses to leave
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your house boom you lose everything's
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solved you lose weight they're like hey
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want some quinoa you're like no and then
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you lose weight
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no that's pretty good give me a cotton
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give me give me my olive infused beef
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please the olive infused beef no i'm
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sorry not all have infused
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these beef only ate olives guys right
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and then we murdered them
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okay
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and have a party let's go
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we need to get some morels and some
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chickens and make some yesterday we had
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morels shawn made morels
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wait a second
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for you
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so good so good the morel season has
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started everybody enjoy it
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lots of different news this week
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you guys appeal you guys appeal to the
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common man the morel season has started
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morals aren't that expensive tempeh is
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more expensive than both quinoa and
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morels
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100
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that vegan [ __ ] is way more
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expensive than normal people listen we
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have to elevate the world's consumption
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of steak and meats
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um
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i think a good place to start is we've
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been talking by the way by the way have
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you guys ever looked on the back of
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any carton of oat milk how much
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chemical nonsense is in that stuff yeah
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that would really be can that really be
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good for you no you know what i want oh
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my god give me where's the oat milk
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that's just oats and water
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doesn't exist it doesn't exist it's like
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soy laxative xantham gum like is that
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stuff can't be good for you
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you know saks drinks and a 12-ounce
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glass of milk with every dinner they
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just
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drink something with the almond the
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almond milk at like the whole foods
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riddled with sugar and all this other
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nonsensical chemicals as well man i mean
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i mean people trash milk i get it but
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like uh and as if you're lactose
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intolerant i understand you're in a
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pinch but
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why go to an alternative milk that is
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just riddled with just all of this
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terrible terrible stuff
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you know saks used to love to eat brie
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cheese so much that whenever we'd have a
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party somebody would do whatever the
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breed walks with the [ __ ] with the wheel
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of brie
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he would literally eat an entire
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freewheel
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sugar no they would put the brown sugar
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on top they would melt it and sacks free
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brook saks has eaten an entire brick of
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bree in front of us
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what was the origin of your brie
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obsession sacks stanford i've been at
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stanford
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at some point
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the last guy i would think that would
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eat bread what's the matter you just
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don't have i mean what about cheddar
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what a great american cheese no you just
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prefer the french huh yeah yeah you
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still got that fetish for free
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i gotta go
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yeah we got [ __ ] to do
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is that fermented kombucha
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stop stop this is just plain
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iced tea
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sometimes it's just good to be
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normal unsweetened oh oh you're back on
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trying to catch up
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trying to catch up okay here we go
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listen we've been talking a little bit
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about the contraction in tech the
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growth stocks uh having their
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multiples um lowered and we knew this
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was coming but um it's been a horrible
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week uh for
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large companies uh starting the layoffs
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we knew this was coming we predicted it
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probably six months ago fast.com is a
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one-click checkout startup fast.co they
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announced they're shutting down on
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tuesday this after the company grew to
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450 employees
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and generated reported 600 000 in
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revenue i think that their employees
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could have made more money if they did
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one doordash a day delivery
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at its peak fast was burning 10
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million dollars a month according to
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reports i think the information got most
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of this information while only
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generating about 50k a month in revenue
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their 102 million dollar series b was
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led by stripe in january of 2021.
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company raised 124 million dollars in
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total also better.com which we talked
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about you remember
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they had their
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uh horrific cringeworthy founder lay off
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a bunch of employees over zoom
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um and
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they laid off 900 people december 1st 3
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000 people on march 8th according to
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techcrunch
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for the 5 000 remaining employees on
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april 5th better.com offered corporate
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and product design and engineering
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employees the opportunity to voluntarily
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resign in exchange for 60 days paid
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severance and health insurance coverage
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better ceos vishal garg
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uh hopefully i'm practicing that correct
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noted the uncertain mortgage market
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conditions of the last couple of weeks
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have created an exceedingly challenging
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operating environment for many companies
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in our industry
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and then going to go puff
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which you know i had the founder on uh
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this week at startups and he's a pretty
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good um
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you know like pretty realistic about the
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margins in that business they're making
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a modest cut of three percent
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of their 15 000 staff seems like a
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reasonable thing to do
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given how the market is changed but
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again their valuation was absurd 1.5
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billion at 40 at a 40 billion dollar
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valuation in december
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chamafi predicted a lot of this uh and
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that people would have to sharpen their
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pencils we had a discussion about this
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you know the the good times r.i.p
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what's your take is this the the
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beginning of the end this the middle
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where are we at in the cycle and what's
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the reasonable thing for founders to do
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here i think uh so you we probably
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should take the
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the macro and then boil it down to the
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startup so at the at the macro level
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i think that we're playing a very
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dangerous game of chicken with the fed
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and you can kind of summarize it in the
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following way which is that
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you know three or four months ago we
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only thought that there was going to be
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a handful of interest rate increases
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and increasingly what has happened the
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market has remained so resilient
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that the fed has sort of put out more
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and more data as the data has justified
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them being a lot more aggressive
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and it kind of crescendoed this past
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week where they basically said listen
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you know we're going to move by 50 basis
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point increments for the foreseeable two
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or three rate hikes and we're going to
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start quantitative tightening what does
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that mean that means that instead of
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basically printing money and coming in
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and buying securities from the market
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right so what happens when they enter
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the market with money that they
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literally do print
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and buy your bonds they're giving you
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cash in return
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and typically what that has led to is
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the inflation of all assets right equity
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assets have gone up bond assets have
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gone up because there's just nothing
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else to buy
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when quantitative tightening happens
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they reverse that and what they're going
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to do is about 95 billion dollars a
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month of the opposite action which means
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they're taking money out of the system
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right or in this case what they're going
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to do is uh they're going to let a bunch
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of maturities roll off and not
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rot not renew them okay so why is this
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important
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well it's important because you know
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we're still four percent from the highs
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so we have seven percent inflation we
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have all this crazy stuff happening we
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have a war you know going on we have uh
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massive price issues we have supply
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demand issues and the market keeps
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shaking it off
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so i think what the fed's going to do is
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get even more aggressive
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you're going to probably see you know a
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lot of 50s maybe even a 75 point hike
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you probably are
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going to see them you know even ratchet
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up quantitative tightening
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until
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there is a bit of a bloodletting in the
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equity market
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they need to see
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that the markets crack and so they
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literally need to see what percentage
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draw down or just to go sideways what do
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they need to see in order to look or is
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it inflation coming down a couple of
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points well the problem that we suffer
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from is that they're going to look at
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the highest level indexes right they're
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not looking at single stocks and so when
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they like when you and i think this
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market is down four percent we don't
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feel that because some of our companies
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are down 50 and 60
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right but that's because we're all
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focused on high-tech growth but they
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look at the broad indices and the broad
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indices have held up really well and
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mostly
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it's because you know if you look inside
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the s p 500 40 of every dollar is you
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know apple amazon you know microsoft etc
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tesla so
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we're in a situation where i think until
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the feds see that there's a massive
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trading of liquidity which means like
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you see these indices crack big time
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35 3600 in the s p they're just going to
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keep ratcheting things up
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as it comes all the way down to our
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companies in silicon valley and tech
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what that means is like you have to
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start planning for the
00:13:36
worst and i think the worst means that
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there's an 18-month period where you
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cannot raise money
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on your terms
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you have to raise money on the market
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terms
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um and so if you're not a position to
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show good growth over these next two
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years i would encourage you to just get
00:13:51
your balance sheet in order to wait it
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out saks nuclear winner is a possibility
00:13:55
here markets for startups
00:13:59
raising money again what saying could be
00:14:01
on the terms of the capital allocators
00:14:04
what what's your advice to founders what
00:14:06
are you seeing in the boardrooms that
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you're on the board of and if you were
00:14:10
running one of these high-growth
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companies for the past year what are the
00:14:13
first two or three things you do i mean
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the first thing you got to do is look at
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your burn multiple i mean how much are
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you burning relative to how much
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incremental air are you generating you
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look at fast they raise 120 million what
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like a year ago
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they're out of money now so they burnt
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10 million a month like you said here's
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the crazy thing if they just slammed on
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the brakes three or four months ago when
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we were talking on the spot about the
00:14:33
coming downturn they could still have 30
00:14:35
million dollars in the bank that's a lot
00:14:36
of money the only reason it doesn't seem
00:14:39
like a lot of money is because they've
00:14:40
been burning 100 million over the past
00:14:42
year but objectively 30 million dollars
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is a growth series b which is actually a
00:14:47
lot of money for a company that only has
00:14:48
a hundred thousand in revenue so they
00:14:50
could have saved that company if they
00:14:52
had slammed on the brakes three months
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ago and rationalized the cost structure
00:14:55
and they didn't so they hit the wall at
00:14:57
100 miles an hour who's responsible when
00:14:59
something like that happens david
00:15:01
because you we've all seen it
00:15:03
what is this suspension of disbelief
00:15:04
that creates this kind of stupidity that
00:15:07
i mean that's what it is i mean you've
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got
00:15:10
you you've got people who are kind of
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drinking the kool-aid and there's nobody
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advising them to stop or if there is or
00:15:15
not listening i mean look paypal had
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this situation
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back in uh 2000 the year 2000 right
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after the com crash we were burning 10
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million a month like fast we had no
00:15:26
revenue and no business model okay we
00:15:29
had said the service would be always
00:15:30
free
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we had four months basically of life and
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we pulled up on the throttle and what we
00:15:36
did is we basically introduced paid
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accounts we started charging transaction
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fees and we caught the we cut the cost
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structure of the company and we made
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that last 40 million dollars last a lot
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longer than four months
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it lasted until we could then do another
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fundraise the following year and we were
00:15:52
able to then raise with good numbers
00:15:55
real revenue a business model et cetera
00:15:58
so
00:15:59
you know and that was because we were
00:16:00
just paying attention to the changing
00:16:02
environment the world had changed from
00:16:05
sort of the pre-dot-com crash you know
00:16:07
1999 your business model didn't matter
00:16:10
your margins didn't matter revenue
00:16:12
didn't matter none of that stuff
00:16:12
mattered all that mattered was growth
00:16:14
but by you know mid-2000 everything had
00:16:17
changed so you have to be attuned to
00:16:19
what the fundraising environment is
00:16:21
looking like and if you're a high burn
00:16:24
company right now that's not generating
00:16:26
a lot of revenue to go along with it you
00:16:28
better slam on the brakes and
00:16:30
rationalize your cost structure before
00:16:32
it's too late david tell me like what do
00:16:34
you think is going on in this board
00:16:35
meeting i mean like this is a group of
00:16:38
incompetent
00:16:39
incompetents
00:16:42
i don't even know who's on the board
00:16:43
because stripe led two rounds i think
00:16:46
and so
00:16:47
you've heard of it david that you you
00:16:49
and listen we all love stripe it's a
00:16:50
great company it's it's a legendary
00:16:52
company but
00:16:54
one of the reasons we don't like to have
00:16:56
strategics is maybe they're not thinking
00:16:58
the same as a proper capital allocator
00:17:00
and for them this is peanuts right
00:17:02
exactly no look the the reason why it's
00:17:04
strategic investor
00:17:06
sorry guys i think the reason why a
00:17:07
strategic investor invests is because
00:17:08
it's strategic for them i mean it was in
00:17:10
stripes interest to try and back a
00:17:12
winner in the whole e-commerce checkout
00:17:15
line sort of payment space
00:17:17
and so they did that and i don't even
00:17:19
know if they had a board seat um and so
00:17:21
no one was really but i don't i don't
00:17:23
understand that strategic decision
00:17:25
because i i suspect the rationale
00:17:27
somewhere internally
00:17:28
in stripe which is pretty flawed is hey
00:17:31
we can't do it ourselves because if we
00:17:33
did we would be competing with our
00:17:34
customers
00:17:35
but
00:17:36
picking a winner and putting 120 million
00:17:38
dollars is tantamount to the same thing
00:17:40
so i don't understand
00:17:43
i mean
00:17:43
it doesn't make any sense right and
00:17:45
stripe raised money at a what 9 500
00:17:47
billion dollar evaluation so look it all
00:17:49
flows down from you know the the
00:17:51
frothiness at the peak no i'm saying i
00:17:53
think i would have it would have been
00:17:54
much more credible for stripe to say
00:17:56
this is a critical piece of the
00:17:57
infrastructure and value chain and
00:17:59
payments that we want to own so we're
00:18:01
just going to go and put some of our
00:18:02
better engineers as like a you know side
00:18:05
project and see if we can tack away at
00:18:07
something that works i mean i i think a
00:18:08
lot of
00:18:09
people would have adopted it
00:18:11
but i guess
00:18:12
to
00:18:16
okay that's interesting i mean those are
00:18:17
some good investors um there's there's
00:18:19
on the board index and who else
00:18:21
according to crunchbase stripe was on
00:18:24
the board a business development person
00:18:26
from there index was on the board
00:18:28
and dom the founder
00:18:30
uh and uh looks like brian sugar uh who
00:18:33
i know uh who's an angel investor and a
00:18:35
founder now but who knows if that's
00:18:37
outdated information encryption you guys
00:18:38
remember when philip kaplan used to run
00:18:40
a website called [ __ ] company
00:18:42
absolutely a friend of mine yeah do you
00:18:44
want to tell the [ __ ] company story take
00:18:46
out for all the people that have no idea
00:18:47
well i mean basically what happened was
00:18:48
dot com the dot com world was imploding
00:18:50
all the employees didn't have a voice
00:18:52
there was no social media at the time
00:18:54
there was no blogs at the time the only
00:18:56
thing you could really publish on the in
00:18:57
the world was like a geocities page you
00:19:00
could put up a home page if you knew how
00:19:01
to do html there's even pre myspace um
00:19:04
and so a friend of mine phil kaplan who
00:19:06
does a very successful company called
00:19:07
digital kid now started [ __ ] company and
00:19:10
it was a message board and what he
00:19:11
basically let people do was
00:19:13
he would write three headlines one
00:19:15
sentence each kind of like before reddit
00:19:16
existed where you just put a one-line
00:19:18
hit and then there was
00:19:19
comments underneath it might say this
00:19:21
company we just got an email this
00:19:22
company's laying off people and he would
00:19:24
beat all the news stories to the layoffs
00:19:26
because he would just run with any email
00:19:28
that came in and then people would
00:19:30
detail and savage the management of
00:19:32
those companies underneath it for
00:19:34
malfeasance and explain exactly how
00:19:36
ridiculous the spending was in that era
00:19:38
where people were burning money like
00:19:39
drunken sellers i think this time around
00:19:41
it's probably
00:19:43
important for employees to understand a
00:19:45
couple things one is like who doesn't
00:19:47
know what they're doing right so like
00:19:49
companies that are making layoffs those
00:19:51
are those are happening they shouldn't
00:19:52
get punished for that
00:19:53
but you got to think like the
00:19:54
fiduciaries that are ripping this money
00:19:56
and i mean do you really want to be the
00:19:58
person that goes to work at a company
00:19:59
that's backed by these folks in round
00:20:01
two
00:20:03
i mean that's not a signal like like the
00:20:04
opposite has always been a signal right
00:20:06
meaning when mike moritz makes an
00:20:08
investment we all pay attention
00:20:10
because we all think wow there's a
00:20:12
picker you know
00:20:14
and he did that with stripe and with so
00:20:16
many other you know great companies and
00:20:17
so the likelihood of an employee wanting
00:20:19
to work for a mike mort's backed company
00:20:20
or mike morick's governed company is
00:20:23
very high
00:20:24
right same thing with gurley you know
00:20:26
same thing with a lot of a lot of really
00:20:29
really good investors john doerr
00:20:32
but the opposite should also be true
00:20:33
then because if it if you really want to
00:20:35
work for a peter thiel back company you
00:20:36
should probably not work for one of
00:20:38
these companies where these folks who
00:20:40
are just completely absent are also
00:20:42
governing the board because that just
00:20:43
means like nobody knows what's going on
00:20:45
we haven't had proper governance for a
00:20:47
long time in silicon valley so i mean i
00:20:48
think that's what we crashed we crashed
00:20:51
and the dropout were in some ways about
00:20:53
incompetent boards both of those tv
00:20:55
shows no i mean i definitely see this um
00:20:58
you know i think you guys know the the
00:21:00
incentive for a traditional venture
00:21:03
capitalist that that that maybe isn't
00:21:06
um
00:21:08
you know motivated by
00:21:09
improving their craft
00:21:12
but they're motivated you know
00:21:14
incentivized primarily by making money
00:21:15
is to to raise more capital and get more
00:21:18
deals
00:21:19
and as you guys know like every venture
00:21:20
firm has maybe one or two superstars
00:21:23
and then they fill out the ranks and
00:21:25
hire a bunch of folks who are maybe not
00:21:26
superstars
00:21:28
or they don't pay as much attention you
00:21:29
know it used to be maybe a vc would sit
00:21:31
on a handful of boards and now it's like
00:21:33
you're the board representative for 12
00:21:35
companies
00:21:37
and that's a you know you're not going
00:21:38
to be able to provide quality time and
00:21:39
service to and support to the ceo and
00:21:42
the company and more importantly as you
00:21:43
guys point out like not provide good
00:21:45
governance and governance isn't just
00:21:46
about are you signing the docusigns as
00:21:49
they come in to approve stuff but it's
00:21:51
about actually critiquing the business
00:21:54
strategy with the ceo at the board
00:21:56
discussion critiquing the spending
00:21:58
reviewing the financial plan making sure
00:22:00
that everyone's aligned that this makes
00:22:02
sense in this funding environment to
00:22:03
continue to do this work and i don't see
00:22:06
that a lot i don't know about you guys
00:22:07
but i see a lot of vcs either pandering
00:22:09
to the ceo because we have founder
00:22:11
culture
00:22:12
hysteria in silicon valley where it's
00:22:14
true the best founders make the thousand
00:22:17
x returns and that's it but that doesn't
00:22:19
necessarily mean that the rest of the
00:22:21
businesses
00:22:22
um should be left to their own vices
00:22:24
just because there are a few um ultra
00:22:26
successful founders that there are a lot
00:22:28
of businesses that actually need
00:22:29
governance
00:22:30
in order to achieve outcomes and i see
00:22:32
that lacking heavily in silicon valley
00:22:34
because the vcs are more incentivized to
00:22:36
raise more money to make more
00:22:38
investments and then pay less attention
00:22:39
and just go raise the next fund well i
00:22:41
think i think you said the key thing
00:22:42
there are really very few star pickers
00:22:44
in our business um it takes decades to
00:22:46
really prove that out and and those
00:22:49
popular but those people that are real
00:22:51
pickers i don't think put up with
00:22:52
[ __ ] they're not just pickers like
00:22:54
so john doerr was deeply involved in
00:22:56
google in the early days like you're
00:22:58
right i'm i'm simplifying our job but
00:23:00
what i'm saying is our job okay at the
00:23:02
end of the day is we're picking okay and
00:23:05
then once you pick you got to do the
00:23:06
work if you pick poorly and you do the
00:23:08
same amount of work it doesn't matter
00:23:10
nobody's going to remember you yeah and
00:23:11
what ends what ends up happening is the
00:23:13
vc flushes the deal because it's not
00:23:14
going to be the 100 bagger they don't
00:23:16
pay as much attention they let the thing
00:23:17
right into the sunset
00:23:19
and they're moving on to the next thing
00:23:21
but there is still a duty and a
00:23:23
responsibility i think to the
00:23:24
shareholders and the employees of that
00:23:25
company to you know do what sacks
00:23:28
mentioned which is can you reduce burn
00:23:29
under these circumstances and can you
00:23:31
actively engage as a board member to
00:23:33
encourage leadership to do that and that
00:23:35
doesn't happen but you said the key
00:23:36
thing there are few practitioners that
00:23:37
really have the gravitas to actually
00:23:39
enforce those decisions so you know
00:23:41
there's a reason why in during the great
00:23:42
financial crisis there was only one
00:23:44
organization that even had the courage
00:23:46
forget whether it was right or wrong at
00:23:48
the time to even write the r.i.p good
00:23:49
times deck right it was sequoia nobody
00:23:52
else dared to even put that on page let
00:23:54
alone give it to all of their companies
00:23:56
knowing that it would leak lest they'd
00:23:58
be wrong
00:23:59
and the reason sequoia could do it is
00:24:00
they're looking at a 40-year franchise
00:24:02
and saying the integrity of our
00:24:03
franchise is at stake we need to keep
00:24:05
doing what we've done before
00:24:06
and what it did i think in that case was
00:24:08
pulled along
00:24:10
a bunch of folks that were not as good
00:24:11
as the top few folks
00:24:14
and it helped reorganize because if you
00:24:15
see the three or four years after that
00:24:17
gfc deck sequoia flushed that whole
00:24:19
business right there's an entire
00:24:20
turnover of that team and so i think
00:24:23
what it speaks to is and we talked about
00:24:24
this in a few episodes ago
00:24:26
if you're seeking out aum
00:24:28
you're going to hire a very different
00:24:30
kind of person than if you're helping
00:24:31
trying to help build companies and the
00:24:33
difference is that when you're trying to
00:24:35
raise aum
00:24:36
your customer is not the company the
00:24:38
customer is the lp and what the lp wants
00:24:41
to do is be able to write their
00:24:43
investment memo and not get fired and
00:24:46
the way that you do that is by pointing
00:24:48
to the team and saying well this person
00:24:49
worked at this company this person was a
00:24:51
vp of that company
00:24:53
and it seems credible
00:24:54
but between but being able to invest
00:24:58
and being able to actually be a good
00:25:00
operator is so different look i'll also
00:25:03
say one thing that's important you know
00:25:05
i don't like this celebration or sorry
00:25:08
the the mockery and the entertainment
00:25:09
that comes from failure i i thought [ __ ]
00:25:11
company
00:25:12
like i was young when it when it was out
00:25:14
and you know i would read it and kind of
00:25:16
giggle at the stupid companies they got
00:25:17
funding
00:25:19
you know but to me it's not like the
00:25:21
kind of thing that could should kind of
00:25:23
be funny or or laughed at
00:25:25
or even to mock failed companies i mean
00:25:28
it's cynical i think the capital that's
00:25:31
available
00:25:32
in the markets today
00:25:35
that wasn't that that's not what [ __ ]
00:25:36
company was i don't i don't think it was
00:25:37
people taking pot shots as much as there
00:25:39
was a lot of that oh yeah there was a
00:25:40
lot of that that and because yeah there
00:25:42
was that time did you admit but would
00:25:44
you admit in fairness that there was a
00:25:45
lot of people telling the truth oh yeah
00:25:47
yeah totally no no but but but a lot of
00:25:48
it was like this mockery like can you
00:25:50
believe this [ __ ] even existed yadda
00:25:52
yadda and the cynicism i think you know
00:25:54
kind of um you know it's it stales out
00:25:57
the opportunity for for capital to
00:25:58
support you know new new ventures new
00:26:00
initiatives like this
00:26:02
you know i also think that
00:26:04
these businesses that
00:26:07
today
00:26:08
are looking to raise capital that are um
00:26:11
you know let's call them
00:26:13
good businesses they have a good
00:26:15
opportunity
00:26:16
they're going to be challenged in a
00:26:17
marketplace where everyone is cynical um
00:26:20
and i'll say like
00:26:22
scarcity breeds success when there
00:26:24
wasn't a lot of venture money and um
00:26:26
there were only a you know kind of a few
00:26:29
investments that could be made each year
00:26:31
there was a decision-making process that
00:26:33
says you know look how valuable could
00:26:35
this be
00:26:36
versus this other opportunity that i
00:26:38
could invest my capital into that says
00:26:40
okay the best opportunity wins and gets
00:26:43
picked and gets capital in a world where
00:26:45
everyone was raising a billion dollar
00:26:47
second fund or a three billion dollar
00:26:50
fourth fund and you suddenly had an
00:26:52
influx of 100 billion dollars of venture
00:26:53
money in a year it's a lot like what we
00:26:56
saw in crypto markets which is an
00:26:58
extraordinary explosion in highly
00:27:00
speculative bubble assets and a lot of
00:27:02
these businesses maybe shouldn't have
00:27:04
existed in the first place too much
00:27:06
demand for the stock of private
00:27:07
companies uh and all the hedge funds
00:27:10
that came into it all the mutual funds
00:27:11
enough supply of great founders and
00:27:13
serious teams that are working hard on
00:27:16
this i think with the case of fast i
00:27:17
agree with your general sentiment about
00:27:19
dunking in the case of fast what you had
00:27:21
was a founder who was on twitter every
00:27:23
day
00:27:24
tweeting about how great the company
00:27:26
wasn't giving startup advice while he
00:27:28
was taking none of it and should not
00:27:30
have been giving any of it because they
00:27:31
didn't even have product uh market fit
00:27:34
lesson learned you know you know you
00:27:35
know who should be criticized the next
00:27:37
person that backs that guy
00:27:39
that's it yeah you know that guy
00:27:41
he's got a very interesting history
00:27:42
actually as well i think if they've done
00:27:44
any colleges they didn't do any
00:27:45
diligence on him apparently he had two
00:27:47
companies that were
00:27:48
kind of major red flags and i think the
00:27:51
diligence issue sacks is one maybe you
00:27:54
are having a similar experience to me on
00:27:56
the early stage we were seeing deals
00:27:58
last year close in a week um we normally
00:28:00
have 30 days to vet a deal and maybe a
00:28:02
week or two to get our diligence wrapped
00:28:04
up sometimes these things overlap but
00:28:06
it's what was it you know historically a
00:28:08
four to six week process and then it
00:28:10
went down to a four to six day process
00:28:12
and then people were meeting with you
00:28:13
one day and saying they're closed the
00:28:14
next
00:28:16
were you did you feel like over the last
00:28:17
couple years people were doing proper
00:28:19
diligence or not and what impact did
00:28:21
diligence have on any of this you know
00:28:24
certainly i can't speak to what our
00:28:26
competitors were doing i don't think our
00:28:28
diligence process changed much we would
00:28:30
just have a mentality of when there was
00:28:32
a deal that was urgent we would drop
00:28:34
everything and focus on that deal and
00:28:36
get our work done and it can be done
00:28:37
quickly
00:28:38
although it's easier for sas companies
00:28:40
because the metrics that you're looking
00:28:41
at are so standardized it's just a it's
00:28:44
an easier process what's the most
00:28:46
important thing in diligence in your
00:28:48
mind what is the like bullet that like
00:28:50
people can't the silver bullet thing
00:28:52
people can't fake probably off sheet
00:28:54
customer references so the first thing
00:28:56
we do is focus on the on the metrics
00:28:59
right and the the financials the sas
00:29:01
metrics all that kind of stuff but then
00:29:03
you want to talk to customers and you
00:29:05
want to understand the value they're
00:29:07
getting out of the product and ideally
00:29:08
they're off sheet customers explain what
00:29:10
offers just means that you know you
00:29:11
frequently ask a founder
00:29:13
to give you customer references
00:29:15
those are on sheet references the off
00:29:17
sheet references are the ones that you
00:29:19
find yourself that they never gave you
00:29:21
so like the easiest off-shoe references
00:29:24
to do are when your own portfolio
00:29:25
companies are using some other like
00:29:28
piece of software and they tell you
00:29:30
about it so
00:29:32
no you know that it's a totally
00:29:34
non-conflicted situation so that's what
00:29:37
you're looking for so one of your
00:29:38
companies is using stripe they tell you
00:29:41
how great stripe is they tell you what's
00:29:42
good about it what's bad about it but
00:29:44
right references you're giving so it's
00:29:45
sort of like back door references if
00:29:46
somebody tells you here's the references
00:29:48
you can do the same thing on founders
00:29:49
too you can have on sheet and off sheet
00:29:50
references for founders and you can do
00:29:52
it for vcs yeah but but look i think um
00:29:56
i think it's probably a little bit
00:29:57
unfair to blame the board of this
00:30:00
company too much because the reality is
00:30:02
that
00:30:03
vcs don't have the leverage or the power
00:30:06
in this business i mean it's found this
00:30:08
this whole construction of the industry
00:30:10
is set up around founders and at the end
00:30:12
of the day
00:30:13
it's up to the founder to run the
00:30:14
company and they get to do what they
00:30:16
want unless they do something criminal
00:30:18
otherwise they're gonna be able to do
00:30:19
whatever they want and
00:30:21
hold on boards generally are very
00:30:22
differential to founders and if the
00:30:24
founder is not willing to listen to
00:30:26
advice
00:30:27
what are you going to do about that well
00:30:28
that though this is but this is the
00:30:29
point you're making i think is not right
00:30:32
you think that if peter thiel gave some
00:30:34
advice to slow the company down that
00:30:36
this guy uh would have not taken it of
00:30:38
course he would have taken i don't know
00:30:39
i don't know about that and we would
00:30:41
have to consider it if mike morris
00:30:42
actually said it he would have had to
00:30:44
consider it i think what you're actually
00:30:45
speaking to is in hold on in the rush to
00:30:47
put so much money to work we've elevated
00:30:50
people who don't understand what the job
00:30:52
is to do the job and if they're not
00:30:53
credible of course they're going to be
00:30:55
ignored we all have ignored stupid board
00:30:57
members you've done it too david but
00:30:59
even you know let's let's actually look
00:31:01
at yammer as an example there were one
00:31:02
or two of us that you would talk to
00:31:04
pretty consistently you didn't talk to
00:31:05
all of them i would always seek out
00:31:07
advice look a good a great founder a
00:31:08
good founder always seeks out advice no
00:31:10
question about it
00:31:12
but look this idea that it's governance
00:31:14
versus advice i mean the problem with it
00:31:16
being governance is all the
00:31:17
institutional incentives for vcs are to
00:31:19
be pro-founder so no one wants to jam a
00:31:21
founder by making them do something
00:31:23
they don't want to do well i'm just
00:31:25
saying that's that's the way it is no to
00:31:26
be clear that became a competitive
00:31:28
tactic that emerged as more venture
00:31:30
capital funds were raised and more
00:31:32
venture capital was raised from lps
00:31:34
prior to that there was a scarcity of
00:31:36
venture capital and vcs could be
00:31:39
could have good governance and not have
00:31:41
to have this whole pro founder model
00:31:43
that became the thing that founders fund
00:31:45
and andreessen and others kind of
00:31:46
proclaimed as being core to their
00:31:48
advantage and the reason to pick them
00:31:50
over some other vc who's going to meddle
00:31:51
in your affairs and by the way both are
00:31:53
true there are most vcs as vinod has
00:31:56
said publicly add negative value and i
00:31:58
totally agree with him on this because
00:31:59
they many vcs particularly the ones who
00:32:02
aren't
00:32:02
you know valuable and don't really have
00:32:04
much to add try to add stuff try to say
00:32:07
stuff and they just you know create
00:32:09
negative value in the process but on the
00:32:11
other hand the whole pro founder model
00:32:14
led to the the wework and ubers of the
00:32:16
world that you know i think that's right
00:32:18
there's a trader there's a trade off i
00:32:19
mean look i remember in the 1990s the
00:32:21
default was that the founder just got
00:32:23
replaced right like as soon as the
00:32:25
company's successful you hire a
00:32:27
professional ceo that was just like
00:32:29
rules rick schmidt i mean even the
00:32:30
mighty google did that
00:32:32
yeah no i mean that wasn't that by the
00:32:34
way it was pretty much less than the
00:32:35
point i was trying to make which was
00:32:36
like so much of john doerr's influence
00:32:39
was in getting larry and sergey to take
00:32:41
ericon as ceo and i really do think that
00:32:43
that was like
00:32:45
you know a critical move that created
00:32:46
probably the that created the most
00:32:48
valuable company
00:32:49
uh in history uh right and you know it's
00:32:52
it was an important imagine if you had
00:32:55
one of these founders fund and by the
00:32:56
way you know as you guys know i'm very
00:32:58
close to the guys at founders fund and
00:33:00
um but but imagine if you had a
00:33:02
founder's fund type approach where you
00:33:03
said look larry and sergey are the
00:33:04
founders they know what they're doing
00:33:05
let them do it as opposed to the john
00:33:07
doe nuance of let's make sure that we
00:33:09
think about the development of this
00:33:10
company successfully over time and then
00:33:12
convince larry and sergey through a
00:33:14
bunch of meetings and riding bikes and
00:33:15
whatever else they did with eric you
00:33:17
know to like and then and then what
00:33:19
about jim breyer didn't he bring cheryl
00:33:21
over to facebook i mean like there's a
00:33:22
lot of these stories of the really um
00:33:25
you know the vcs that really change the
00:33:26
trajectory of the business through their
00:33:28
work right and but look all i'm saying
00:33:30
is the the the good vcs can still have
00:33:32
that influence but it's in the form of
00:33:34
advice rather than governance right
00:33:36
look we just don't call the show no
00:33:37
you're right you're right it's it is it
00:33:39
is advice but but for example governance
00:33:41
as an example in in in every board that
00:33:43
i take the first thing that i say is
00:33:45
here's a template i want i'm not going
00:33:47
to ask you a bunch of stuff but i just
00:33:49
want some transparent reporting and the
00:33:51
first page is always how much money at
00:33:53
the beginning of the month how much
00:33:55
money did you burn you know how much
00:33:56
equity did we give out how much is left
00:33:58
in the pool simple basic checks and
00:34:01
balances
00:34:02
right where you're not asking all kinds
00:34:04
of crazy questions you're just like all
00:34:05
right how much money are we burning how
00:34:06
much dilution did we take now tell me
00:34:08
what we've done and those are simple
00:34:10
elements of governance
00:34:12
way before you get into advanced level
00:34:14
setting what's the speed of the plan
00:34:16
what's the elevation where are we at
00:34:18
what's the altitude and when you ask
00:34:20
people for this today
00:34:21
yeah i don't know anyone that doesn't do
00:34:23
that i'll be honest like yeah anybody
00:34:24
that doesn't do it honestly is being
00:34:27
that's not what we're talking about
00:34:28
i don't know anyone that doesn't do that
00:34:30
i mean i'm talking about i would love to
00:34:32
see i would
00:34:36
deck and to see if that first page is
00:34:38
that page the first page and by the way
00:34:40
you know where i learned that from from
00:34:42
sequoia and kleiner perkins because back
00:34:44
in the day what i saw from founders was
00:34:47
oh this is the first thing i have to
00:34:48
report on i was taught by founders when
00:34:50
i was a when i was a principal at
00:34:51
mayfield they're like this is how you do
00:34:53
the job and i was like great thanks i
00:34:55
mean i was you know sitting beside these
00:34:57
guys that were
00:34:58
old hands at doing it and that's how i
00:35:00
learned this business through that
00:35:01
apprenticeship but there was governance
00:35:04
and advice and the governance is just
00:35:06
about being transparent about how much
00:35:07
money are you burning and so you can't
00:35:09
you know to david's point if you had
00:35:11
just seen that data even if you take
00:35:13
those board decks by the way because you
00:35:14
have these information rights i don't
00:35:16
know about you guys but we did it we did
00:35:18
it as well you take the board deck you
00:35:20
circulate it to your other partners
00:35:22
there's lots of times where i see board
00:35:24
decks and companies where one of my
00:35:25
partners are on the board and i send
00:35:27
them an email of like hey here's some
00:35:28
bullet points of things to think about
00:35:30
that i've seen before et cetera et
00:35:31
cetera you don't think nobody at stripe
00:35:34
or index could have said uh you're
00:35:35
burning 10 million dollars a month and
00:35:37
there's no revenue
00:35:38
so the point is that data isn't there 30
00:35:40
or 40 million in the bank give me a
00:35:43
break guys so this was a whole a
00:35:45
cataclysmic failure at the advice level
00:35:48
and at the governance level and all i'm
00:35:50
saying is it's a good lesson for folks
00:35:52
to learn
00:35:53
absolutely yeah so let me point people's
00:35:55
attention to two articles i wrote that i
00:35:57
think are relevant so first we actually
00:35:58
published an article on the sas board
00:36:01
meeting deck that we would like people
00:36:03
to use and obviously they're free to use
00:36:05
it or not to jamaa's point right up at
00:36:07
the top as a contact center we need to
00:36:09
know what's your monthly burn and how
00:36:11
much money is in the bank and that and
00:36:13
then we just divide those things to
00:36:14
create runway we don't like looking at
00:36:15
projections for runway totally
00:36:18
we just look at how much you burned last
00:36:19
month and how much money you got in the
00:36:20
bank
00:36:23
they were down to 30 or 40 million
00:36:25
dollars burning 10 million a month
00:36:26
somebody should have like thrown up a
00:36:28
red flag and said better slam on the
00:36:30
brakes right now because you're gonna be
00:36:31
out of business in three or four months
00:36:32
so so that that's that's sort of piece
00:36:35
number one the other piece was an arc i
00:36:37
wrote a couple years ago called blitz
00:36:39
fail which is how not to go off the
00:36:41
rails because a lot there's a lot of
00:36:43
literature out there about blitz scaling
00:36:45
and a lot of startups think they need to
00:36:47
scale as rapidly as humanly possible and
00:36:50
i wrote this piece about how
00:36:51
fast-growing companies that raise lots
00:36:53
of money at high valuations basically go
00:36:56
off the rails and they end up imploding
00:36:58
and
00:36:59
there's like 11 reasons why this happens
00:37:01
i sort of categorize them
00:37:02
one of the biggest ones is founder
00:37:04
psychology you have a founder who
00:37:06
believes that things are always going to
00:37:07
be up and to the right
00:37:08
it's they they it's funny they're always
00:37:11
described the same way described as
00:37:13
visionary charismatic and the word crazy
00:37:16
is often used but it's crazy good and
00:37:18
then when everything goes to [ __ ] all of
00:37:20
a sudden the word crazy means something
00:37:22
pejorative and bad and
00:37:23
you know the problem is that you know
00:37:26
these characteristics of being highly
00:37:29
visionary and charismatic they also can
00:37:32
be combined with an unwillingness to
00:37:33
listen to advice and so
00:37:35
you know founders who have those
00:37:37
qualities they can be a good thing but
00:37:39
they have to seek out advice from people
00:37:42
who've had experience otherwise they're
00:37:43
going to make a mistake and hit the wall
00:37:45
being delusional is you know what you
00:37:47
need to start these companies like i'm
00:37:49
going to beat these incumbents i'm going
00:37:50
to change the world
00:37:52
a little bit of delusion is good but not
00:37:54
when you're looking at how the runway
00:37:56
right like that's when you need to be
00:37:58
pragmatic i think um
00:38:00
you know there's a term of coachability
00:38:02
you know how how coachable is this
00:38:04
person as a ceo as a leader
00:38:07
and i do think that coachability goes
00:38:09
hand in hand with intellectual curiosity
00:38:11
i mean if you look at the collisions
00:38:13
patrick collison and how much
00:38:15
breadth he has and some of the topics
00:38:17
he's interested in and the things he
00:38:18
writes about it indicates to me a high
00:38:20
degree of intellectual curiosity and
00:38:22
people who are intellectually curious
00:38:24
generally are
00:38:25
very humble because they're constantly
00:38:27
seeking things they don't know and they
00:38:29
recognize that they don't know a lot of
00:38:30
things and in that same kind of
00:38:31
mentality they are willing to recognize
00:38:34
that other individuals can have good
00:38:35
points of view that can inform their
00:38:37
perspective and they're willing to
00:38:39
change their perspective and i think
00:38:40
that's a really key
00:38:42
key thing that if you look across
00:38:43
the the range of successful founder ceos
00:38:47
that scale to 100 billion plus
00:38:48
valuations for their businesses that to
00:38:51
me is one of the more common threads uh
00:38:53
is this kind of intellectual curiosity
00:38:54
which translates into a coach ability
00:38:56
which translates into an adaptability as
00:38:59
and and being willing to take advice and
00:39:00
so your board is a tool not kind of a
00:39:02
governance structure sitting over you we
00:39:04
think the less you are like that the
00:39:05
more you are likely to feel like you're
00:39:07
bored of the governance structure and
00:39:08
umbrella sitting over you telling you
00:39:10
what you can't do i don't think that's
00:39:11
what governments means by the way well
00:39:12
government's meant to it's meant to look
00:39:14
out for the shareholders that's the job
00:39:16
right sure but but to act as a fiduciary
00:39:18
doesn't mean to like tell the ceo what
00:39:20
to do this is my point like yeah i'm
00:39:21
just saying it's it's not
00:39:23
i think i think he's right about i think
00:39:25
freeberg's right about how boards are
00:39:27
often perceived by founders i think
00:39:28
there is an increasing
00:39:30
uh let's call it a hollywood director a
00:39:33
hollywood auteur
00:39:35
mentality towards vc jaycal on the
00:39:37
all-in podcast right
00:39:39
well
00:39:40
it's basically it's basically look there
00:39:42
there are certain incubators out there
00:39:44
and accelerators and whatever who teach
00:39:47
these young founders that it's all about
00:39:49
their vision and anyone who stands in
00:39:51
the way of it is basically interfering
00:39:52
with them totally and they they are the
00:39:54
author like a hollywood director and you
00:39:56
got to stay away from those suits the
00:39:58
studio guys right ever that's the
00:40:00
mentality they're trying to they're
00:40:01
teaching them an adversarial mentality
00:40:04
an adversarial mentality and look there
00:40:06
are to chamas point there are plenty of
00:40:07
vcs who don't know what they're doing
00:40:09
they have no useful advice to offer but
00:40:11
the better mentality to teach a founder
00:40:13
would be like look it the world is so
00:40:16
complicated and building a company is so
00:40:18
complicated it's going to be 10 times
00:40:19
more difficult if you don't seek out
00:40:21
advice so go find board members who will
00:40:23
let you ultimately do what you want but
00:40:25
will still give you the advice if
00:40:27
something's going wrong and what was
00:40:29
true at one point in time when paul
00:40:30
graham gave this advice and he set up y
00:40:32
combinator you didn't want to say their
00:40:33
name but it is paul graham had a
00:40:35
terrible experience in his company with
00:40:37
venture capitalists so he set up that
00:40:39
wartime stance between founders and the
00:40:41
investment community
00:40:43
and you know founders fund became the
00:40:45
antithesis of the traditional venture
00:40:47
funds and they were going to be founder
00:40:48
focused so but that advice then might
00:40:50
have been true and now it's not now
00:40:52
we've sung the pendulum too far the
00:40:53
other way we did two things because we
00:40:55
saw this ten years ago when i started
00:40:57
seed investing and then when i started
00:40:58
building positions of over five percent
00:41:00
i just said to founders if we own over
00:41:02
five or ten percent we should have an
00:41:03
option of a board seat and we'll do
00:41:05
board seat we'll do board training with
00:41:07
you we'll just teach you we'll take like
00:41:09
here's some decks that we've seen from
00:41:10
other you know here's some decks that
00:41:12
are available and we'll show you what a
00:41:13
board is like and then i would have
00:41:14
three founders come two would sit on
00:41:16
one's board meeting and i would do three
00:41:18
back-to-back board meetings bring your
00:41:20
counsel bring your founders and sit in
00:41:22
on the other two board meetings and
00:41:23
we'll have a little socratic discussion
00:41:25
about what was good about each board
00:41:26
meeting we did board meeting training as
00:41:28
a proxy
00:41:30
for venture worthiness later on and when
00:41:32
those companies did go out to the
00:41:33
adventure and they had an esop and they
00:41:35
had board minute meetings they just
00:41:36
looked more impressive to the venture
00:41:38
community so i know people say don't do
00:41:39
a board it's not cool it actually turns
00:41:42
out doing a one-hour board meeting four
00:41:43
times a year six times a year even as a
00:41:45
seed stage company it does differentiate
00:41:48
you to the venture community i find
00:41:51
all right moving on and speaking of
00:41:52
boards
00:41:53
elon bought a uh
00:41:55
chunk of twitter last week a nine
00:41:57
percent stake and he's joining the board
00:42:00
uh that makes him the largest individual
00:42:01
or the larger shareholder um individual
00:42:03
or institutional uh he brought the
00:42:05
shares in uh
00:42:06
march twitter ceo parag agarwal uh
00:42:10
tweeted i'm excited to share we're
00:42:12
appointing elon musk to our board uh and
00:42:14
then jack tweeted in support i'm really
00:42:17
happy elon is joining the twitter board
00:42:18
exclamation point just to give some
00:42:20
level setting here uh in q4 of 2021
00:42:23
twitter had 1.5 billion in revenue up 22
00:42:26
year-over-year they've really been
00:42:27
starting to ring the register over there
00:42:29
uh daily active users are solid but
00:42:32
modest 217
00:42:34
million uh daily active users 38 million
00:42:37
of which in the us 179 million are
00:42:39
international
00:42:41
and their stated goals uh for q4 of next
00:42:44
year 2023 so in a year and a half they
00:42:46
want to have 315 million and they want
00:42:48
revenue in 2023 to hit 7.5
00:42:51
billion again they're on a 6 billion run
00:42:53
rate so i guess that would be an
00:42:54
increase of 25 percent
00:42:57
uh just general thoughts on uh and elon
00:43:00
obviously has been making uh some
00:43:02
twitter suggestions uh for the product
00:43:05
saks you worked with elon at paypal
00:43:08
thoughts on
00:43:09
what this does for
00:43:11
that wasn't why you're laughing it's
00:43:13
like such a funny transition sexy work
00:43:16
with elon and paypal
00:43:18
worked for it i'm sure
00:43:19
i'm sure he's gonna have some great
00:43:20
product ideas but what this is really
00:43:22
about is free speech you know right
00:43:24
before elon announces he is doing
00:43:26
polling
00:43:27
asking the twitter user base whether
00:43:29
twitter was succeeding or failing in his
00:43:31
mission to be an open town square and
00:43:33
open marketplace of ideas something like
00:43:35
70 said they were failing at it elon on
00:43:38
many occasions has spoken up for free
00:43:40
speech he believes that twitter's
00:43:41
historic mission is as an open town
00:43:44
square and i think he's going to bring
00:43:46
that emphasis to the board and it's a
00:43:48
great thing
00:43:49
now i think the person who had the best
00:43:50
take on the reaction to this was mike
00:43:53
solana and he had a few funny tweets
00:43:55
about who does he work for is he a
00:43:57
founder's fun guy i think yeah i think
00:43:59
he he works for peter or founder's fund
00:44:01
but he's got a he also writes a great
00:44:03
news sub stack newsletter kind of like a
00:44:05
blog post called uh pirate wires it's
00:44:08
worth checking out is he's a pretty
00:44:10
in addition to being a pretty sharp
00:44:11
analyst he's actually says a lot of
00:44:13
funny things too he's iconoclastic and
00:44:15
yeah yeah he he he'll he'll swing the
00:44:17
sword yeah so the way he put it is that
00:44:20
you know elon joining the board has all
00:44:22
the worst people on twitter furious they
00:44:24
think that this guy might actually say
00:44:26
free speech and for authoritarians that
00:44:28
is an existential threat
00:44:30
and then he added um i don't get what
00:44:32
the problem is guys if you want
00:44:33
censorship you can just go build a new
00:44:35
social media company and do censorship
00:44:37
there it's a free market thereby turning
00:44:39
on its head everything they've been
00:44:41
saying which is you know when the people
00:44:43
who the authoritarian
00:44:45
the authoritarian people who love
00:44:46
censorship whenever anyone complained
00:44:48
about censorship they would always say
00:44:50
well just go create your own social
00:44:51
network you know we're free to do
00:44:52
whatever you want
00:44:54
whatever exactly well this is this is
00:44:56
the free market acting in a way they
00:44:57
don't like which is finally somebody who
00:44:59
believes in free speech is one to stand
00:45:01
up by the largest stake in twitter join
00:45:04
the board i mean this is fabulous i
00:45:06
think it's really fabulous i think it's
00:45:08
pretty amazing yeah and the stock went
00:45:09
up 30 percent what do you think yeah
00:45:12
i texted you guys in the group chat i
00:45:14
think that if he is able to make free
00:45:16
speech cool again he'll he'll actually
00:45:19
do more
00:45:20
doing that
00:45:21
than potentially through spacex and
00:45:23
tesla and that's already saying a lot
00:45:26
because free speech really is this
00:45:27
fundamental principle of democracy and
00:45:29
it's been decaying we don't know
00:45:32
the implications of a large technology
00:45:34
company
00:45:35
keeping free speech as a principled
00:45:38
pillar of their
00:45:40
reason to exist
00:45:41
right because we have seen free speech
00:45:44
kind of decay and we've seen sort of
00:45:46
you know random decision making that
00:45:48
seems arbitrary by a lot of these
00:45:49
technology companies and you know the
00:45:51
payments companies freebrook was
00:45:53
mentioning visa and mastercard earlier
00:45:54
in the group chat
00:45:56
but all of these things can change on a
00:45:57
dime if elon makes free speech cool
00:45:59
again and figures out a way to make that
00:46:00
a principle that everybody can embrace
00:46:02
because then if you really believe in
00:46:04
that then you go to the next logical
00:46:05
conclusion which is what david has said
00:46:07
for
00:46:08
forever which is the only solution to
00:46:10
you know speech you don't like is more
00:46:11
speech
00:46:12
and then that creates a surface area
00:46:14
that i think you can technically
00:46:17
maneuver around so meaning what are the
00:46:18
real problems in all of this speech
00:46:20
creates it creates a you know content
00:46:22
moderation issue right it creates a a
00:46:25
spam issue and it creates a sort of
00:46:27
wisdom of the crowd's ranking rating
00:46:28
issues so misinformation comes to mind
00:46:31
yeah but that's that's the wisdom of the
00:46:32
crowd's ranking rating issue in my bro
00:46:34
so i guess the point is that you know if
00:46:36
he can get the twitter employee base
00:46:39
fundamentally on side of this idea of
00:46:42
free speech as a principle
00:46:44
that i think is enormous because you
00:46:46
know that none of the other big tech
00:46:47
companies will ever even do that and the
00:46:50
capital structures of those companies
00:46:51
will never allow
00:46:53
a single strong voice like his to
00:46:55
enforce that idea so this is the only
00:46:58
company where that could happen and i
00:47:00
think you know we want to see what this
00:47:02
how this plays out i think it's a really
00:47:04
really big deal all right freeberg yeah
00:47:05
i'll tell you what i think
00:47:07
changes
00:47:09
facebook
00:47:10
twitter even google all acquiesced
00:47:13
to significant external pressure over
00:47:16
the years i've said this in the past i
00:47:17
believe the founders of those companies
00:47:19
are all philosophically
00:47:21
fundamentally philosophically aligned
00:47:24
with the notion of free speech
00:47:26
and absolute freedom of information
00:47:29
you know enabling truth-finding over
00:47:31
time
00:47:32
and the um the edge cases
00:47:35
of those platforms
00:47:37
ultimately um identify and uncover ways
00:47:40
that they can be used
00:47:42
against what you know many would
00:47:43
consider kind of the the betterment of
00:47:46
society and as a result they acquiesce
00:47:48
to external pressure that drives some of
00:47:50
these censorship decisions and drive
00:47:51
some of these
00:47:53
these behavioral
00:47:54
changes by management
00:47:56
but i think that if you concentrate
00:47:59
the ownership of those businesses and
00:48:01
rather than have kind of a distributed
00:48:03
shareholder base meaning the public
00:48:05
markets were the largest single
00:48:06
shareholder in twitter to date uh has
00:48:09
been jack dorsey at 2.3 percent he
00:48:12
actually serves the shareholders and the
00:48:14
shareholders ultimately want to see the
00:48:15
stock price go up and they ultimately
00:48:17
want to see the business make more money
00:48:19
and as a result they don't have the same
00:48:20
sort of
00:48:22
you know the the stakeholders there have
00:48:24
kind of a different set of alignments
00:48:25
over time you know they're not
00:48:26
necessarily the same long term uh or
00:48:29
focus meaning does the philosophy come
00:48:31
before the money and i think as you kind
00:48:34
of concentrate ownership you have the
00:48:35
opportunity and the option now
00:48:37
uh to you know make make those sorts of
00:48:39
decisions that you can't make when
00:48:41
you're broadly unstuck but facebook and
00:48:44
google are concentrated they have a
00:48:45
different class structure
00:48:46
yeah so what are you talking about the
00:48:48
issue chamoth is in those companies
00:48:50
they're scared to death that they'll
00:48:51
lose their employees and have chaos at
00:48:53
work government no the issue is
00:48:54
government
00:48:58
employees
00:48:58
it's pressure from above and below it's
00:49:00
yeah it's shareholders it's shareholders
00:49:02
and government regulators right and so
00:49:04
in both cases
00:49:05
to the pressure and employees it's a
00:49:07
good point yeah i understand but i'm not
00:49:09
sure how twitter
00:49:11
changes any of that there it does i'll
00:49:12
tell you why because if we look what's
00:49:14
happened is
00:49:15
le sometime last year i think it
00:49:17
happened around chappelle and i think it
00:49:19
happened because of coinbase we saw a
00:49:21
group of folks say you know what
00:49:22
enough's enough
00:49:23
yeah we told you to bring your whole
00:49:24
self to work we told you we would do
00:49:26
your laundry and then at some point
00:49:27
netflix was like listen
00:49:29
you don't
00:49:30
have to agree with every comedian on our
00:49:32
platform there's a range of comedians
00:49:35
and if you disagree with this one you
00:49:36
can do a walk out you can protest you
00:49:37
can make your feelings hurt or you can
00:49:38
choose to not work here and then daniel
00:49:41
kind of did the same thing he said
00:49:42
listen at spotify we're gonna put labels
00:49:45
on it if you don't like joe rogan don't
00:49:46
work here and then of course we know
00:49:48
coinbase did it and
00:49:50
toby from shopify did it and now you
00:49:52
have twitter doing it and when you
00:49:54
apologize
00:49:55
and you start listening to this very
00:49:58
vocal minority when they're upset and
00:50:00
they want to cancel people or they want
00:50:02
to de-platform people
00:50:04
what do they do
00:50:05
they double down you've shown that
00:50:07
you're going to listen to them they're
00:50:09
not doing it at coinbase anymore they're
00:50:10
not going to do it at spotify anymore
00:50:12
they're not doing it at netflix and
00:50:14
apple
00:50:14
acquiesced right they're like we don't
00:50:16
like you know
00:50:17
antonio's book chaos monkeys and he said
00:50:19
these three things in an award-winning
00:50:21
book that we find or we're gonna fire
00:50:23
him i think at some point apple's to
00:50:25
have to say you know what
00:50:26
leave your feelings at work
00:50:28
and
00:50:29
this is a company
00:50:30
leave them at home thank you this is why
00:50:32
elon is so dangerous to to these people
00:50:34
is because he won't be pushed around the
00:50:36
fact of the matter is that this whole
00:50:38
woke mob thing it's a paper tiger they
00:50:40
don't have the support of most the
00:50:41
population it's a handful of very noisy
00:50:45
voices on twitter and social media who
00:50:48
insist on having a monopoly on the right
00:50:51
to shape all of our narratives
00:50:53
yeah they want a monopoly on moral
00:50:55
outrage they want to monopoly moral
00:50:56
outrage they want a monopoly but they
00:50:58
also want a monopoly on the ability to
00:51:01
basically to to define
00:51:03
uh what is acceptable and and what what
00:51:05
the narrative on any topic is going to
00:51:07
be and all it takes is one strong person
00:51:10
to stand up to the mob as we saw brian
00:51:13
armstrong do at coinbase and the mob
00:51:16
dissipated he took you know brian had to
00:51:18
find another target they find another
00:51:20
exactly so yeah elon doing this is a
00:51:23
really big deal because again he cannot
00:51:25
be pushed around and he is showing
00:51:27
leadership here and all it will take to
00:51:30
end this woke censorship is for other
00:51:33
founders to stand tall the way that elon
00:51:34
has and let's see let's go into the news
00:51:38
um employees
00:51:40
kind of gripe about i don't think he'll
00:51:41
care what regulators gripe about
00:51:44
and i don't think he'll care what other
00:51:46
shareholders gripe about he'll talk
00:51:48
about the long-term opportunity the
00:51:50
philosophical alignment with mission
00:51:52
and and plow forward and i think that
00:51:55
that level of leadership is what
00:51:56
separates some you know great businesses
00:51:58
from others but this is a very listen
00:52:00
there were moments of de-platforming
00:52:02
that were earned by people like alex
00:52:05
jones who was saying that the
00:52:07
you know families of sandy hook were
00:52:09
false flags and their children weren't
00:52:11
murdered there are you know milo
00:52:13
yiannopoulos and some of these alt-right
00:52:15
nazi sympathizing people throwing up
00:52:16
swat stickers you know people promoting
00:52:19
violence or brigading on these services
00:52:21
to attack people into docs people those
00:52:23
people those were just cancellations d
00:52:26
platformings from youtube in your
00:52:28
opinion well i mean anybody inciting
00:52:30
violence i think we would all agree
00:52:31
should be just platformed jason look at
00:52:33
how it's evolved we start with isolated
00:52:35
cases like alex jones like a milo that
00:52:38
nobody likes and nobody supports the
00:52:39
next thing you know the president united
00:52:41
states is being de-platform but again
00:52:43
that's supposedly based on him inciting
00:52:45
a crowd then what's happening today now
00:52:48
we have entire categories of of opinion
00:52:51
being banned it starts with code i agree
00:52:53
anyone's exactly my point anyone who is
00:52:55
descending and now there's invalid
00:52:57
anybody who has a single percentage
00:52:59
opinion on covet gets banned now anybody
00:53:02
who has a dissenting opinion on climate
00:53:04
change can be banned there's a story
00:53:05
this week on cnn where pinterest have
00:53:08
all come look pinterest is a photo
00:53:09
sharing site i don't know no one's
00:53:11
talking about climate change on
00:53:12
pinterest and yet i was but then i got
00:53:15
you hardcore
00:53:17
i mean it just shows this censorship now
00:53:20
is on autopilot i mean even sites
00:53:23
where the conversation is not taking
00:53:25
place are banning entire categories of
00:53:28
thought and opinion
00:53:29
because it disagrees with you know what
00:53:32
the experts agree and j cal you could
00:53:34
point out your alex jones case to make
00:53:36
the case that deplatforming should be
00:53:38
allowed the problem is as soon as you
00:53:40
make that case it's only a slight other
00:53:42
people point to a slight degree away
00:53:44
from the next case and then a slight
00:53:46
degree away from the next case and then
00:53:48
fast forward three years and you're
00:53:50
banning entire topics of conversation
00:53:51
that ultimately may end up being proven
00:53:54
to be a topic of conversation we should
00:53:56
have had and if you look back by the way
00:53:58
what great movie woody harrelson the
00:53:59
people vs larry flint larry flint was a
00:54:02
pornographer it was easy for everyone to
00:54:04
chastise him and for everyone to say you
00:54:06
know what let's go ahead and de-platform
00:54:08
this guy back then and ban him and
00:54:10
charge him by the government and at the
00:54:12
end of the day he fought for his rights
00:54:13
for free speech now all that being said
00:54:16
larry flint was publishing using his own
00:54:19
printers and selling on the street in a
00:54:21
very legally compliant way there is a
00:54:23
difference in having someone else's
00:54:25
platform be the mechanism that you use
00:54:27
to promote your voice if they choose
00:54:29
like pinterest and twitter and youtube
00:54:31
and facebook and google to change how
00:54:33
their platform operates stacks i
00:54:35
actually think that's a commercial
00:54:36
decision made by a private company they
00:54:38
should have the right to do that but
00:54:39
they're going to lose users over time
00:54:41
they're going to end up looking like
00:54:42
idiots when they're wrong by banning
00:54:44
certain topics that we should be having
00:54:45
conversations about over time and i do
00:54:48
think that there are other mechanisms
00:54:49
for us to use the free and open internet
00:54:51
this is why i think the free and open
00:54:52
internet is more important than anything
00:54:53
to have conversations using other
00:54:55
platforms
00:54:56
i mean and i'm i'm i mean hold on i just
00:54:58
want to respond to david since he did
00:55:00
you know counter my point i agree with
00:55:03
you i think it went overboard and i
00:55:04
think there are more reasonable
00:55:05
solutions i think a time-based a bam
00:55:08
would have been better for somebody like
00:55:09
trump
00:55:10
um and maybe waiting to see what happens
00:55:12
with the january 6 commission putting
00:55:13
that aside i know it's very
00:55:14
controversial um you know when you just
00:55:16
look at what spotify did to our podcast
00:55:19
i don't know if you've looked at us in
00:55:20
spotify every other episode says coven19
00:55:23
information here i think this is one of
00:55:25
the best things if people want to talk
00:55:26
about ivermectin and it's an open
00:55:27
science and freebird you know more about
00:55:28
it than any of us and people want to
00:55:30
debate it why not link them to the
00:55:33
questions credible sources i think
00:55:34
that's a great solution i have a
00:55:36
question yeah is there an oat milk tag
00:55:38
on spotify yes because the service oat
00:55:41
milk oat milk oat milk wait when you
00:55:43
listen to all in pod on spotify there's
00:55:45
a tag that says there's coven at 19.
00:55:48
yeah get covered 19 information here
00:55:50
yeah
00:55:50
to freeburg's argument about these
00:55:52
companies should be free to do whatever
00:55:53
they want so i know that free bur i want
00:55:56
to make two points about this first of
00:55:57
all i know freeberg is sincere and
00:55:58
genuine in that belief however most of
00:56:00
the people making that argument are
00:56:02
completely disingenuous about it because
00:56:04
on the one hand they say that these
00:56:06
companies should be free to limit speech
00:56:08
when they like the outcome of that
00:56:10
censorship but meanwhile in congress
00:56:12
they're pushing six bills forward to
00:56:13
regulate these companies as monopolies
00:56:15
so they don't believe that they should
00:56:17
be free to do whatever they want they
00:56:18
believe that they're monopolies and
00:56:19
indeed many of them are monopolies and
00:56:22
even the ones that aren't monopolies act
00:56:24
the same as all the other ones they act
00:56:26
as a cartel to limit speech so that's
00:56:29
point number one is that nobody believes
00:56:31
this argument that these companies
00:56:33
should be free to do whatever they want
00:56:34
the second point
00:56:36
is
00:56:37
that listen
00:56:38
the founding document of our country the
00:56:40
is the declaration of independence it
00:56:42
says that all of us have rights they're
00:56:44
inalienable that means they cannot be
00:56:46
taken away okay
00:56:48
and in the first couple hundred years of
00:56:50
this country it meant that those rights
00:56:53
meant that the government couldn't take
00:56:55
away your right to free speech but now
00:56:57
today where does speech occur it it
00:57:00
occurs on these giant social networks
00:57:02
that are privately owned they're owned
00:57:03
by these large corporations and the fact
00:57:05
of the matter is if they take away your
00:57:07
right to free speech on these platforms
00:57:09
if they censor you if it's a great
00:57:11
you do not have a right to free speech
00:57:13
in this country that right needs to be
00:57:15
protected the founding fathers did not
00:57:17
anticipate that four people would be
00:57:19
mitigating the majority of conversations
00:57:21
online it's you know like if you're if
00:57:23
you're taking off if you look what
00:57:24
happened to bilo and alex jones like
00:57:26
they don't exist in the public sphere
00:57:27
anymore right like they've been
00:57:28
literally
00:57:29
when these big tech companies all get
00:57:31
together as a cartel to deprive you of
00:57:33
your free speech rights you have been
00:57:35
de-person you've been digitally
00:57:37
de-personed and they're not just doing
00:57:38
it on speech they're also taking away
00:57:40
your right to engage in payments in
00:57:41
transactions to earn a living and unless
00:57:44
we stop this now it'll keep going we
00:57:46
have to address the giant elephant in
00:57:48
the room huge uh which is trump uh i
00:57:51
think a lot of this uh you know he hit
00:57:53
its pinnacle when people were saying the
00:57:56
the sitting president of the united
00:57:57
states could not be on twitter that was
00:57:59
i think we all agree ridiculous and
00:58:00
absurd that the president who was duly
00:58:03
elected couldn't have a twitter account
00:58:05
but then with the january 6 and the
00:58:06
inciting of the violence and you know
00:58:08
all the stuff that's coming out and
00:58:10
obviously we'll we'll see where that all
00:58:11
winds up i'm curious what everybody
00:58:13
thinks here about
00:58:15
should trump or is trump being put back
00:58:18
and reinstated on facebook or twitter
00:58:19
and it's supposed to be a lifetime ban
00:58:20
on twitter but if corporate governance
00:58:22
changes and people
00:58:23
lobby for that do we think that there is
00:58:26
any kind of
00:58:28
situation where trump has his twitter
00:58:30
handle or facebook accounts
00:58:33
reinstated and should he have them
00:58:36
reinstated i think jason what you
00:58:37
suggested is probably the most
00:58:39
reasonable thing which was there was a
00:58:40
time based penalty
00:58:42
you know we're we're getting through
00:58:44
we're probably what a third or two
00:58:46
thirds of the way through the january 6
00:58:48
stuff so that's going to come and go and
00:58:51
i think all roads will probably lead to
00:58:53
a conclusion that after three years it's
00:58:55
probably okay to let this guy back and
00:58:58
be able to tweet i mean it's not this is
00:59:00
not
00:59:01
you know controversial stuff at this
00:59:03
point you know that the current thing is
00:59:05
moving on from ukraine when uh the topic
00:59:07
all of a sudden is january 6 all over
00:59:09
again and trump which it is on msnbc
00:59:11
it's all january 6 all the time again so
00:59:14
listen i mean
00:59:15
this is not a justification for the
00:59:16
widespread censorship that we've seen
00:59:18
like i mentioned we've gone so far
00:59:20
beyond isolated cases now it's entire
00:59:22
categories of thought
00:59:24
and this has to be stopped
00:59:26
well what you're feeling on trump should
00:59:28
he be reinstated if you were running
00:59:29
twitter would you have done a time based
00:59:31
if you don't like trump just don't
00:59:32
follow him i mean but but frankly it's
00:59:35
it's um
00:59:37
listen i don't miss the tweets at all
00:59:40
i don't miss the tweets at all i really
00:59:41
don't um they were damaging your party
00:59:44
that's how you felt my thoughts have
00:59:46
evolved before when he first got banned
00:59:48
i was really supportive of it
00:59:50
and there was part of me which was just
00:59:51
afraid that he would get reelected etc
00:59:53
etc
00:59:55
now come two years later and to see all
00:59:58
of the stuff and the escalation of d
01:00:00
platforming
01:00:02
i think the problem is exactly what you
01:00:03
guys have just talked about which is the
01:00:05
person that does it today points to the
01:00:07
person that does it yesterday who points
01:00:09
to the person that did it the day before
01:00:10
as the justification and so even though
01:00:13
we don't want to draw a straight line
01:00:15
between an alex jones and a trump and
01:00:17
climate change unfortunately there is
01:00:20
this line
01:00:21
and so in general now a much more free
01:00:23
speech because i think it's much more
01:00:24
fragile than i thought it was before
01:00:26
gosh your opinion has evolved and
01:00:28
intelligent people should respond to new
01:00:29
data i appreciate that and i was a
01:00:31
person that you know as david said was a
01:00:34
little disingenuous in the sense that i
01:00:36
kind of was for free speech as long as
01:00:38
it was stuff that i agreed with
01:00:40
but two years later a much more on
01:00:42
david's original camp now which is we
01:00:44
just need to establish this as a pillar
01:00:46
of society and not deviate and find
01:00:50
credible voices on both sides and then
01:00:53
algorithmically and through people power
01:00:56
meaning through crowd you know
01:00:58
wisdom of the crowds type stuff
01:01:00
help people figure out
01:01:02
what is truthful and how much truth
01:01:04
there is because that's a tractable
01:01:06
problem
01:01:06
but the minute you start canceling stuff
01:01:08
today as i sit in 2022 what i would tell
01:01:11
you is i think it's very very bad
01:01:12
because it's going in a really bad place
01:01:14
free bro what are your thoughts on trump
01:01:16
specifically because it does seem like
01:01:17
that's a part of the undercurrent here
01:01:19
of you know he's going to be coming back
01:01:22
possibly going to be running again and
01:01:24
january 6 is concerned he's got the
01:01:25
truth social network download the app
01:01:27
listen to what he's got to say it's
01:01:29
rocking and rolling over there on the
01:01:31
the truth app i heard they took it down
01:01:33
like it wasn't even working right
01:01:34
the uh the new thing he built but what
01:01:36
is that what is that smack trading at
01:01:38
was it at 20 billion or something still
01:01:40
doing well um but look they had
01:01:44
you know obviously a reaction a market
01:01:47
driven reaction to the fact that he was
01:01:49
taken off twitter and he said i'm gonna
01:01:50
go make an alternative and that's you
01:01:52
know certainly proving to be technically
01:01:53
difficult but as we all know it's not
01:01:55
technically impossible you just got
01:01:56
probably the wrong people working on it
01:01:58
um but if they wanted to have an
01:02:00
alternative platform for hearing that
01:02:01
voice
01:02:02
you know have at it
01:02:04
uh i don't know what else to say i mean
01:02:06
it's twitter's decision they're they're
01:02:08
curating their audience all these guys
01:02:09
want to be free speech advocates but at
01:02:11
the end of the day they're all
01:02:12
editorializing
01:02:14
and that's just the world we found
01:02:15
ourselves in i hope elon takes a slight
01:02:17
jammer to that yeah i mean it's exactly
01:02:19
what chamas said is they're all they all
01:02:21
believe in free speech and free markets
01:02:22
when it produces the outcome they like
01:02:25
but when the outcome is not what they
01:02:26
like all of a sudden they're like whoa
01:02:28
these companies are monopolies well and
01:02:29
here's another opportunity
01:02:31
if you're not libertarian and believe in
01:02:32
like you know free speech and you know
01:02:36
constitution like you could buy shares
01:02:39
you could lead a group start a dow start
01:02:41
a hedge fund whatever build a block to
01:02:44
buy a bunch of shares and then you could
01:02:45
get a board seat on twitter and you
01:02:46
could have this debate on the board of
01:02:47
twitter and if you're absolutely right
01:02:50
you are absolutely right and you can see
01:02:51
by the way you know small hedge funds
01:02:54
with small amounts of capital like
01:02:55
engine number one you know they were
01:02:57
able to go up against it exxon and beat
01:02:58
them so to your point jason for the
01:03:00
people that actually want to censor more
01:03:03
if they can organize the capital they
01:03:05
absolutely have the right to do that and
01:03:06
i and i think that they if they if
01:03:08
they're able to do it they should win
01:03:10
that's that's that's what mike solano
01:03:12
was kind of getting at it's like look if
01:03:13
you don't like if you don't like the the
01:03:16
free speech that's happening on twitter
01:03:17
go create your own social network
01:03:18
because that's what they were saying
01:03:20
buy the shares and have influence that's
01:03:21
how corporations work the shares are the
01:03:23
votes yeah freedberg update us on
01:03:27
you know the ukraine is in month two now
01:03:30
i'm sorry ukraine is in month two sorry
01:03:32
for putting the thumb before it's a
01:03:34
tough habit to break
01:03:35
freeberg tell us um you know the second
01:03:38
order third order effects of fertilizer
01:03:40
and food at this point we've had this
01:03:42
back and forth and now i think the world
01:03:44
is starting to realize hey freeberg was
01:03:46
right these downstream effects are going
01:03:48
to be
01:03:50
significant
01:03:51
i ask you a question about these which
01:03:54
is
01:03:54
can the world not mobilize if these are
01:03:57
about one percent of the calories twenty
01:03:59
or thirty percent of the calories are in
01:04:00
country could the world not mobilize to
01:04:01
find other caloric sources
01:04:04
rice fish soybeans whatever or is our
01:04:07
system so fragile that we can't rally
01:04:10
around sending food to anywhere on the
01:04:11
planet despite the fact that we can fly
01:04:13
anywhere and go on vacation for two
01:04:14
weeks anywhere on the planet no the food
01:04:16
system is complex and efficient
01:04:20
but it does not have strong
01:04:22
redundancy or malleability uh so
01:04:26
take for example you know how do you get
01:04:28
flour
01:04:30
you get flour
01:04:31
in um uh in your food
01:04:34
from a food company that bought the
01:04:37
flour from a miller there are mills
01:04:39
around the world that process flat wheat
01:04:41
into flour
01:04:43
you can't take that same mill and
01:04:45
process corn into flour there's
01:04:47
different technology different equipment
01:04:48
that's used same with soybeans and so on
01:04:50
so when you look at how the food supply
01:04:52
chain is constructed you know there's a
01:04:54
local point of consumption which is a
01:04:56
store then there's a food processor and
01:04:59
you work your way kind of up the supply
01:05:01
chain and there's a certain input that's
01:05:03
required to make the output that people
01:05:05
consume and so calories while they might
01:05:07
be fungible practically speaking or
01:05:10
philosophical or fundamentally speaking
01:05:12
they're not necessarily fungible
01:05:14
practically speaking on the ground when
01:05:16
you actually try and plug in let's say
01:05:18
soybeans into the milling supply chain
01:05:20
to make the pasta or the bread that
01:05:22
everyone consumes in tunisia it's not
01:05:25
going to work and the same is true with
01:05:27
rice and then the
01:05:28
the more important
01:05:30
dynamic force that's underway is that
01:05:32
these markets for food and commodities
01:05:34
globally are not controlled by
01:05:36
government they're controlled by private
01:05:38
businesses and there's a market for
01:05:40
these products and so what happens is as
01:05:43
the food supply chain threat hit
01:05:45
countries like china and others started
01:05:48
to stockpile they started to buy lots
01:05:50
and lots of supply drive up their stocks
01:05:52
and their reserves you know for fear of
01:05:55
the famine that's about to hit us in
01:05:56
about nine months and when they did that
01:05:58
there was now less food available
01:06:00
to tunisia to eritrea to egypt and so on
01:06:03
and so we're starting to see the effects
01:06:05
of that dislocation driving dynamic
01:06:08
market forces where certain buyers stock
01:06:10
up and then the folks that can't afford
01:06:12
to step in not being able to acquire
01:06:15
product and being left so not only do we
01:06:16
have a local production differential
01:06:18
that makes it hard to have all calories
01:06:20
be fungible we're also seeing this
01:06:21
dynamic where there's a bifurcation
01:06:23
where the habs have more and the
01:06:25
have-nots have less and that's going to
01:06:27
really make this famine kind of hit home
01:06:29
you know in a really really sad way in
01:06:32
the months to come we're already seeing
01:06:34
as as i mentioned two weeks ago yeah i i
01:06:37
as i mentioned a few weeks ago
01:06:39
the fertilizer problem driving acreage
01:06:41
down so the usda farm report comes out
01:06:43
they survey farmers and figure out how
01:06:45
much they're going to plant every year
01:06:46
and they just downgraded the number of
01:06:48
corn acres they're going to get planted
01:06:49
this year which is happening starting
01:06:51
this month from 93 million acres to 89
01:06:53
million that doesn't sound like a lot
01:06:55
but four million percent yeah four
01:06:57
million acres coming out of production
01:06:58
of corn in the u.s is an incredible
01:07:01
amount of calories that are not going to
01:07:03
be planted to corn and so that has all
01:07:05
these downstream effects and again this
01:07:06
this crop doesn't come to harvest till
01:07:09
you know september october then it's
01:07:11
going to get processed and it turns into
01:07:12
food so by the time the the effects of
01:07:14
this decision making hit the marketplace
01:07:17
the availability of calories and the
01:07:18
stockpiling that's going on it's like
01:07:20
boom some countries are going to be you
01:07:22
know they're going to have a limited
01:07:23
budget they're only going to be able to
01:07:24
access so much food and they can't
01:07:26
access any and other countries are going
01:07:29
to be fine the united states is going to
01:07:30
be fine western europe will be fine
01:07:32
china will be fine sri lanka is going to
01:07:34
be a mess
01:07:36
northern and eastern africa is going to
01:07:37
be a mess i mean there's like places
01:07:39
around the world that we are going to
01:07:40
have to scramble i i don't have a real
01:07:42
easy answer there's no simple
01:07:44
plug-and-play here it's going to be a
01:07:45
really complex set of problems that are
01:07:47
going to need to be solved well sri
01:07:49
lanka does grow a lot of its own food so
01:07:51
they may be okay because they're in that
01:07:53
importer right i mean they're a pretty
01:07:54
big net importer so they make a lot of
01:07:56
food but they they rely on imports a lot
01:07:58
for for calories there so
01:08:00
yeah i mean that's the case with a lot
01:08:02
of places around the world a lot of
01:08:03
people think oh we have farmers but most
01:08:06
countries
01:08:07
you know particularly in the developing
01:08:09
world are net importers they they they
01:08:10
rely on third-party
01:08:12
supplies of food so sure but but a lot
01:08:14
of what you're talking about though are
01:08:15
not um
01:08:16
they're they're processed foods that
01:08:18
come into the country sacks anything to
01:08:19
add here well i mean i think that the
01:08:22
ukraine war is kind of entering a
01:08:24
chronic phase i mean the sort of
01:08:25
entering a new phase the first phase
01:08:27
you'd have to say that ukrainians won
01:08:30
the you know the russia wanted to topple
01:08:33
zilinski's regime maybe take kiev they
01:08:36
obviously failed in that now we're in
01:08:39
this uh phase where the fighting is over
01:08:42
in the donbass it's basically the civil
01:08:44
war that's been going on there since
01:08:45
2014.
01:08:46
and um and and really that's what it's
01:08:49
now about uh zielinski has acknowledged
01:08:52
that ukraine will not be part of nato so
01:08:54
that issue is kind of off the table and
01:08:56
so what they're really fighting over now
01:08:58
is the status of these disputed
01:09:00
territories
01:09:02
in
01:09:02
eastern ukraine
01:09:04
and i think it's going to go on for a
01:09:05
long time that's what you know general
01:09:07
miley test fighting could go on for
01:09:08
years i think it's going to become a
01:09:10
sort of permanent
01:09:11
feature in the background of biden's
01:09:13
presidency
01:09:14
and um i mean i think the good news is
01:09:17
that hopefully the war three uh aspect
01:09:20
is off the table it seems like
01:09:22
the calls for us to impose a no-fly zone
01:09:24
or to put boots on the ground which you
01:09:26
were hearing a lot of a few weeks ago
01:09:28
seems like that's off the table so now
01:09:30
is this going to be a protracted i think
01:09:33
civil war going on in the donbass
01:09:35
uh with between ukraine and and uh
01:09:38
russia and their proxies which would
01:09:40
mean uh sacks correct me if i'm wrong
01:09:43
that putin will be hobbled forever
01:09:44
they're not gonna be a world power
01:09:46
and his power is going to deprecate
01:09:49
because he's going to be busy fighting
01:09:50
this non-winnable war for some period of
01:09:53
time which is in a way saying biden did
01:09:56
it perfectly and checkmated him
01:09:58
i'm saying that's going to be your
01:10:00
assessment if this actually does go down
01:10:02
this way that there's like a civil war
01:10:03
going on and and putin is crippled that
01:10:06
would be checkmate or no i think i i
01:10:08
think that clearly the the state
01:10:10
department's strategy here is to make
01:10:12
putin bleed in eastern ukraine and to
01:10:14
protect this thing and make it go on as
01:10:16
long as possible i think that's a risky
01:10:18
strategy
01:10:20
because this thing could always spin out
01:10:21
of control
01:10:23
could it be effective
01:10:24
is there a chance it could be effective
01:10:27
well i mean if the goal is to
01:10:29
bleed putin yes it could be effective
01:10:31
bleeding putin however i don't know that
01:10:33
that needed to be the key geostrategic
01:10:36
objective of the united states right now
01:10:38
i don't know i don't know because look
01:10:40
china is our main threat china is a pure
01:10:42
competitor to the united states russia
01:10:45
is not our economy is 15 times bigger
01:10:47
than russia's china's economy is about
01:10:49
the same size as ours that is a real
01:10:51
threat
01:10:51
so you know there are cost to us as well
01:10:54
there are clearly cost of putin of this
01:10:55
but there are a huge cost to us as well
01:10:58
uh freebird described the risk the
01:11:00
supply chain we've had to now spend a
01:11:02
lot more money
01:11:03
um building up the defense in europe
01:11:06
we're going to be pinned down
01:11:07
in europe uh
01:11:09
we should really be moving some of those
01:11:10
resources from europe to east asia i
01:11:13
mean that's really where the pivot to
01:11:15
asia is what we thought we were supposed
01:11:17
to be doing until quite recently now
01:11:19
we're gonna be bogged down there
01:11:21
and there's still risks of inflation and
01:11:23
recession in the us and i think if we
01:11:25
are in a recession later this year i
01:11:27
think a lot of people in the u.s will be
01:11:28
asking what was this all for
01:11:30
and if you go read my article that just
01:11:32
came out yesterday with those based on
01:11:34
my speech
01:11:36
is published in the american
01:11:36
conservative look this war was easily
01:11:39
avoidable i mean the state department
01:11:40
could have avoided this war very easily
01:11:42
i thought i listened to your speech i
01:11:43
thought your points that you were very
01:11:46
clear on hey putin started this he is
01:11:48
the aggressor it's his responsibility
01:11:50
but you know we do need to think about
01:11:52
our foreign policy as a country and
01:11:54
regime change is probably not a winning
01:11:56
strategy for us although in this case
01:11:58
it might it seems like it's a
01:12:00
possibility now so
01:12:01
who knows uh i don't know i don't think
01:12:03
we're gonna regime change but if we do
01:12:05
there's no reason to believe that we're
01:12:07
gonna get something much better in every
01:12:08
case where we push for regime change
01:12:09
we've actually gotten the same or worse
01:12:11
um so
01:12:13
yeah i don't think that should be our
01:12:14
objective um
01:12:16
you know i look i think we have a bunch
01:12:18
of bad options now that the war's
01:12:20
already started the best option would
01:12:21
have been
01:12:22
to avoid this war in the first place and
01:12:25
if this thing drags on for years and the
01:12:26
u.s economy tips into recession people
01:12:29
will look back and say why didn't joe
01:12:31
biden's state department in the year
01:12:33
2021 do a much more effective job
01:12:35
preventing this war let me ask you let
01:12:37
me ask this follow-up question as we
01:12:38
wrap here um chamoth
01:12:40
uh i've been thinking about what it what
01:12:42
should a strategic objective be for
01:12:44
america and the number one strategic
01:12:46
objective i could think of was
01:12:49
uh or one of the top ones would be to
01:12:51
build a strong relationship with india
01:12:54
which obviously
01:12:55
uh you know it has an adversarial
01:12:57
relationship with china already on the
01:12:59
border of pakistan and then obviously
01:13:02
you know has relations with russia
01:13:05
what would be on the top of each of your
01:13:07
lists saks and chamoth chemical first on
01:13:10
priority here if we're thinking fresh
01:13:13
looking at the world with china in
01:13:15
retreat uh sort of disengaging from the
01:13:17
west with russia on their heels what
01:13:19
could the united states and the west do
01:13:22
as a preemptive measure to really
01:13:24
solidify democracy and you know the the
01:13:27
world order a peaceful world order i'll
01:13:29
answer it slightly differently which is
01:13:31
we need to put ourselves in a position
01:13:33
to not be
01:13:34
dependent on any country
01:13:36
because then we can actually dictate
01:13:38
what we think the right approach and
01:13:39
solution is from first principles and
01:13:41
have the courage to stick it through to
01:13:43
get to the other side of it
01:13:45
so there are really two things we need
01:13:46
to do the first
01:13:48
which
01:13:49
we've kind of perverted unnecessarily is
01:13:51
energy independence and we've allowed
01:13:53
too many people
01:13:54
to conflate and muddy the water on what
01:13:56
energy independence means you know
01:13:58
nobody's nobody was ever advocating for
01:14:00
coal but you know the amount of coal
01:14:02
that we could have burned as a bridge
01:14:03
fuel to lng which could have been a
01:14:05
bridge fuel to things like nuclear and
01:14:07
wind and solar
01:14:08
that path was pretty clear but we got in
01:14:11
our own way we have to get out of our
01:14:14
own way okay so energy independence i
01:14:17
think beyond anything else
01:14:19
strategic probably an order of magnet it
01:14:22
is the most important thing
01:14:24
and then secondarily
01:14:27
there are certain areas for the future
01:14:30
of those future economies where we need
01:14:32
to have complete capability and know-how
01:14:34
and the most important ones there are
01:14:37
the specialty chemicals that we need
01:14:39
especially chemicals
01:14:41
that we need to basically support
01:14:42
climate change writ large to support
01:14:44
battery production writ large
01:14:46
and then semiconductors get those two
01:14:48
things completely under us control
01:14:51
on top of energy independence and
01:14:53
honestly we would be
01:14:55
a dominant world power for the next 200
01:14:58
years on our terms so the road to
01:14:59
resiliency saks you're now the
01:15:02
secretary of state what are your key
01:15:05
priorities the u.s grand strategy has
01:15:07
always been to prevent the rise of a
01:15:09
pure competitor who can dominate their
01:15:11
region and challenge us for global
01:15:12
hegemony there's only one country in the
01:15:14
world that can do that right now to us
01:15:16
which is china
01:15:18
so the pivot to asia as obama said was
01:15:21
fundamentally correct but we have not
01:15:22
followed through and executed it and now
01:15:24
our attention is distracted and bogged
01:15:26
down by what's happening in europe i
01:15:28
would seek a negotiated settlement to
01:15:30
this war
01:15:31
now that the zielinski government has
01:15:33
survived putin has been unable to take
01:15:36
western ukraine and furthermore that
01:15:38
zilinski has given up being part of nato
01:15:40
the only thing left okay is this is this
01:15:43
fight in the dawn bass there's a there's
01:15:44
an agreement already on the table called
01:15:46
the minsk accords that could allow us to
01:15:48
settle that meanwhile pivoting to asia
01:15:51
yeah wrap it up meanwhile pivot to asia
01:15:53
create a strong alliance
01:15:55
of countries in east asia who are
01:15:58
threatened by china we already are
01:16:00
friends with many of them you've got
01:16:02
japan south korea
01:16:05
taiwan you've got
01:16:06
vietnam create a balancing alliance of
01:16:09
those countries to prevent
01:16:12
china from rising to the point where it
01:16:13
can threaten us for global hegemony that
01:16:15
should be our main priority
01:16:16
geopolitically great uh all right there
01:16:19
you have it folks for the rain man david
01:16:21
sacks the dictator
01:16:23
polly hoppetea
01:16:25
and the sultan of science david freeman
01:16:28
i'm your boy jacao and we will see you
01:16:30
all in miami may 15th 16th and 17th
01:16:34
love you boys bye bye
01:16:36
love you besties
01:16:41
[Music]
01:17:00
besties
01:17:03
[Music]
01:17:15
it's like this like sexual tension that
01:17:16
they just need to release somehow
01:17:18
[Music]
01:17:24
we need to get mercy's
01:17:29
[Music]
01:17:34
i'm going on
01:17:36
[Music]
