00:00:00
the fact that sax's greatest moment in life was beating peter thiel in a multi-game chat
00:00:05
so you ever see that picture of yeah of him with his arms raised can't believe he beat i mean tell us
00:00:12
about that moment nick show that picture of saks i mean listen here's what i say when i when i saw that picture
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i had a couple thoughts number one i've seen this picture somewhere else and then number two is oh my god it was
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on nbc's to catch a predator i mean i have never seen sacks happier i
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like the birth of his children oh my god in comparison to this moment i'll tell you that was the day of paypal's ipo and
00:00:38
so we did a party in the it was like a keg party in the parking lot that was the extent of the celebration and peter
00:00:44
did it yeah he did a 10-game simultaneous which means he's playing against 10 people at
00:00:49
the same time and he goes board to board makes his move and i was the only one out of the 10 that beat him and somebody
00:00:55
i guess i mean on the left i put money down i put like 20 bucks down or something on the game which is a foolish thing to do against
00:01:01
peter because he's like a chess master and uh and i somehow i won and you can see i've
00:01:08
got the money in my hands raised up look at the look on peter thiel's face he hates losing look at the
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look on p i mean he's so angry he and he but he sees the joy in your face and he
00:01:19
can't process it and look at max max is to my right and roll off
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yeah but this was a few seconds before peter smashed all the pieces off the board
00:01:33
and uh what yeah if he flipped the board he always does that when he loses and uh
00:01:38
his motto is when you call him a sore loser he says show me a good loser and i'll show you a loser wow that's such a great line but i just
00:01:45
want to also comment on the pleats on sax's pants and how high that waste
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is
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i mean strong hair roloff's always had incredible hair his hair is incredibly bright hair to this incredible thick
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yeah it's still thick like that beautiful hair never noticed [Music]
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[Music] all right everybody welcome to another
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episode of the all in podcast with us again today the dictator chamath
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poly hopitia rain man david sax and
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the sultan of science formerly known as the queen of quinoa he's out of that business
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david friedberg we got a lot on the agenda however one thing that we've had a hard time
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figuring out is the state of the supply chain and it's confounding
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it seems like nobody knows what the hell they're doing but there's one guy who's been on twitter and we happen to know him he's
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he's been on my pod and freeburg knows him and his name is ryan peterson and uh he's a bit of an expert on this and we
00:03:18
thought we'd have a bestie gusty come on we don't do this too often maybe this is a third or fourth bestie guestie
00:03:23
and um welcome to the pod ryan peterson from flexport what's up guys thanks for
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having me on what's up ryan ryan did you tell olivia you were doing the show today no i didn't tell her so she's gonna
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she's a huge fan oh don't tell her where is she right now is she like not there she was in the room next door but i
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totally mean i'm doing a podcast she knows i'm doing a podcast she doesn't know which one that's fantastic she's a super fan she's a very big fan she's
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literally wearing the wet your beaks hoodie right now it's awesome fantastic my coincidence she doesn't know him on the show
00:03:52
fantastic so what you're not gonna tell her right she's just gonna watch my next show and you're gonna be on it we'll listen to it yeah we'll probably
00:03:58
listen to it together tonight whenever it comes out ryan what is the state now should we be worried about the supply
00:04:03
chain is it getting better is it getting worse what's 2022 gonna look like yeah i mean i think the supply chain means a
00:04:08
lot of things and it'll depend what your industry is what's really happening but you know because it goes for everything from
00:04:14
manufacturing products which means sourcing all the sub components like semiconductors
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through logistics and final delivery all the way to a customer store and where flexport focuses on is sort of picking
00:04:25
goods up from factories around the world and delivering them into fulfillment centers all over the world so kind of
00:04:30
that global mile uh is what we sometimes call it there you're seeing real disruption
00:04:36
um and it starts really with the pandemic shift in consumer behavior where people started buying
00:04:41
more goods because they couldn't go to restaurants and travel and things and so a lot of spend shifted onto goods and
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imports are up almost 20 imported container volumes so that's the start of
00:04:52
it all uh and then what we learned is our infrastructure is dilapidated and unable to handle a 20 increase and by
00:04:59
infrastructure i mean the number of ships in the world the capacity uh throughput of the ports
00:05:06
the number of trucks and availability of trucks and chassis which is the trailers that haul containers around which didn't
00:05:13
have enough of these things or the port capacity you know like look at uh american ports operate this i just
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learned the statistic pretty recently and i keep saying it because it appalls me our ports operate with a lower throughput and productivity level than
00:05:25
mombasa kenya and you know we just do not have modern port infrastructure roger dam's been
00:05:31
fully automated for 20 years so if they want to run 24 7 and keep containers
00:05:36
flowing through the port they can do that with self-driving trucks and everything is that a technology issue or do you think that's a regulatory capture
00:05:43
and union issue like a labor issue like a labor the tech is there you know it's existed for a long long time it's really
00:05:49
about labor getting together with management negotiating these things and allowing it to happen
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and the way that our ports are run is it's pretty crazy when you look at it they treat labor as a fungible commodity
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as in the the poor terminal operators will say i need this many workers tomorrow and the union
00:06:07
provisions that many workers but there's different people every day doing operating complex you know heavy
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machinery that you can't like the number one thing in business is like
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what did we learn today and how are we going to do better tomorrow every day with your team but if it's a new team
00:06:24
every day like that's not even possible so i don't know how you can drive a productivity improvement when it's different workers every single day of
00:06:30
the week right so wait they're not full-time employees they're like staff by the hour they're union workers they're paid by
00:06:36
you they have annual contracts you even decide who goes to work every day and who gets shifts yeah and where and so
00:06:42
they'll show up at different terminals and there's like 15 different terminals so they just kind of move around do different things essentially what we saw
00:06:48
on the waterfront yeah where like the union decides you get to work today these other people didn't whatever it's
00:06:53
like literally like that movie yeah it's literally like that even going further back in supply chains to manufacturing
00:06:59
centers how much are you hearing about and seeing kind of labor shortages because
00:07:05
people are out for covid and hey someone's sick they got to take 10 days off and when you know 10 of the
00:07:10
employees get sick and they lose 10 days of work the facility sees a decline in productivity to you know 70 80 of normal
00:07:17
and then you know all of the output of that facility goes way down i mean are you know are you hearing about more of that
00:07:23
stuff happening particularly during this kind of omicron wave where the real effect of that hasn't really
00:07:29
hit the supply chain system yet and we're still kind of seeing a build up of uh
00:07:35
you know of demand and we don't you know we haven't really kind of hit the problems so for the last 18 months china had this
00:07:42
total zero tolerance policy and was very successful in keeping kobet out of out of their country and so manufacturing
00:07:49
just kept running as if not no problem in china which is the majority of this manufacturing
00:07:55
with omicron you're starting to see that it is still taking hold in a zero tolerance policy we haven't yet seen
00:08:00
like major shutdowns and waves of shutdowns but a little bit you're seeing that here and there
00:08:06
the zero tolerance policy has shown up for example uh at least twice where one
00:08:12
launch one port worker in a chinese port got coveted and they shut the whole port down for like three
00:08:17
weeks yeah that's crazy it's really extreme i mean u.s workers have been getting covered non-stop and the ports
00:08:23
keep operating even you know we have lower level of productivity but they'll shut the whole port down that happened both at yantian which is the largest
00:08:29
port in china or second largest and ningbo which is the third largest so it's it it's been very very disruptive it's also
00:08:35
happening at the airports over there so that's something i'll definitely keep an eye on here over the next couple of
00:08:40
months or even next couple of weeks are we still having this like uh we're ordering too many goods and we're backed
00:08:46
up or is it that we're backed up for six months just trying to fulfill all those pandemic orders like what's the state of
00:08:53
the backlog today if you could describe it so volumes are high but they're sort of flat they're over you're over here
00:08:58
they're flat now they're much higher than pre-pandemic but they're pretty much flat year-over-year and that's what has me so worried here is that you have
00:09:05
increasing delays even though the input's the same and when you have a complex system where the
00:09:10
same amount of inputs coming in but the delay is getting longer and longer that's a very worrisome sign like if you're ever building a
00:09:18
technology system you're building this uh system and you're sending the same amount of bits in and the
00:09:23
performing the job is taking longer and longer that should be like that would be a very alarming sign that you're going
00:09:29
to want to send some of your best engineers in here to debug the thing but i think we're seeing that like because a lot of companies people don't realize
00:09:34
like when they buy capital equipment like machines that you know are either sold to end users or
00:09:40
machines that are used in their own production systems capital equipment is typically assembled last minute it's not like you know there
00:09:46
are companies that own huge pieces of equipment and then they ship them and they just get plugged in and turned on there's usually components associated
00:09:51
with them and you know in businesses i've been involved in over the last couple years we've got a lot of lab businesses and
00:09:57
hardware businesses and just getting capital equipment has been like delays like we've never seen it's like you know
00:10:02
a year to a year and a half for something that used to take four to six weeks to arrive because the company that makes that equipment is having delays
00:10:09
with each of their component suppliers and then all of this stuff backs up into the system and it plays out where the end user is now stuck waiting a year
00:10:15
year and a half and the business doesn't make progress and a lot of hardware companies in silicon valley right now are facing these significant shortages
00:10:22
where they can't get the equipment they need to ship product to their customers and they're sitting around burning money
00:10:28
every month and so the when the result will actually show up down the road when all of a sudden they miss revenue three
00:10:34
four quarters down the road and that's why i've been saying for you know a couple shows now that the biggest thing i'm concerned
00:10:41
about is when the revenue shortfalls start to hit the companies that are dependent on these supply chains but you
00:10:46
don't actually see their revenue shortfall for a couple of quarters after the supply chain problems hit them
00:10:51
and just this quarter with the quarterly earnings we're now seeing there's a company yesterday that reported called ingredient their big
00:10:57
food ingredients company and they just reported how supply chain problems have now backed up to affect and the stock
00:11:03
was down like 10 11 yesterday and this is like a very stable very mature
00:11:09
third largest producer of starch in the united states and their business got totally hammered but it took a while
00:11:14
before that hit them um and so you know it feels to me ryan i mean correct me if i'm wrong but like a
00:11:20
lot of the the business level and market level risk isn't going to show up for a while
00:11:25
after these supply chain problems really persist within their organization this is the thing that has to be most concerned is
00:11:31
what what's happened is it's now taking a 115 days on average across our customer
00:11:38
base from when the factory says hey these goods are ready come pick them up to when they finally get delivered to
00:11:44
the warehouse in the united states crazy 15 days before the pandemic that was 50 and 50 even felt high like the ship is
00:11:51
only taking 15 days like what the heck is going on a lot of inefficiency a lot of customs processing
00:11:56
hard to find a truck etc even in normal times when you go to 115 all of a sudden these
00:12:02
companies are so much less agile like because you've placed the orders and you're expected forecasting demand
00:12:08
is so hard and now you're forecasting demand for twice as long of a time period you've already placed all that
00:12:14
inventory if your demand goes down guess what you've already ordered the goods so i'm really worried that we're going to find out
00:12:19
in six months or in some time period in the future here that people have ordered way too many goods that these companies
00:12:25
expected demand to stay high and keep booming at some point consumers start going to restaurants and start traveling a lot
00:12:31
more you get pre-covered consumption patterns and all these companies get stuck with way too much inventory
00:12:38
that they paid way too much to ship and get delivered and they can't sell it and so i'd be very worried for like middle
00:12:44
market kind of retail direct to consumer ecom these types of businesses that aren't very sophisticated and demand
00:12:50
planning and end up with way too much inventory i think that there's been this weird dispersion actually and i think that
00:12:56
like these supply chain issues are not broadly distributed so if you bear with me for a second if you
00:13:02
watch the earnings reports i don't know how close you you watched them rhyme this past couple weeks but like
00:13:07
apple and tesla basically said it's kind of reasonably well managed particularly on the chip side and we see
00:13:13
the whole thing easy in q4 q1 of next year amazon last night basically said yeah there's some you know toughness in the
00:13:20
system but we think it's sort of like you know reasonably achievable and they're past it and so it seems like
00:13:27
the bigger companies who have influence were able to manage through it these smaller companies to your point who
00:13:33
really do rely on many actors in the supply chain have been really thrown left and right they
00:13:39
probably don't know where demand really is so is that sort of the more nuanced actual the way that it's running out
00:13:45
yeah and and it's sort of it's very interesting to see this flip so pre-pandemic the biggest companies paid
00:13:51
the least for freight because they buy the most freight so they negotiate good rates now they're paying the most and
00:13:57
they're the biggest companies for a reason they have the best businesses they either have the best margins the best you know they just built something
00:14:02
that people wanted scale to be huge well when times are tough and you need to spend
00:14:08
extra to prioritize your freight to get loaded to sign a contract and make sure that these
00:14:14
ship owners and airlines honor their commitments and serve step up it's the big companies
00:14:19
that can afford it and so they're not paying extra for freight but they're getting around these problems and freight is a really interesting
00:14:26
market because it's pretty inelastic like you're either going to ship the thing or you're not the whatever the price is you're
00:14:33
probably still shipping it and so like you i haven't ever looked at an apple uh at this level but i'm sure that if you
00:14:38
did you'd see that it's a the percent they spend on freight is just negligible so if they doubled it it wouldn't matter
00:14:44
but to chamat's point it seems like and i think we're seeing this a lot the bigger companies can actually afford to
00:14:49
integrate their supply chains whereas before it didn't make sense to vertically integrate like i think walmart announced that they've spent
00:14:55
like 11 or 12 billion dollars kind of rebuilding their supply chain themselves apple obviously has captive facilities
00:15:01
all the way down to the fab where they're driving the whole supply chain from fab to components all these foxconn
00:15:07
facilities that are operated for them are captive facilities but the tesla obviously you know has a very deeply
00:15:13
integrated supply chain team whereas gm probably relied on subs who relied on subs or light on subs and that's why gm
00:15:19
delivered like no electric cars but tesla was able to keep volume up the guys that are winning are the ones that
00:15:24
are integrating supply chains and do you think that that kind of becomes a persistent solution here where
00:15:30
you know bigger companies their competitive advantage becomes hey we're going to own our whole supply chain all the way through we're going to own more
00:15:36
of the infrastructure all the way through like amazon's done with delivery vans and ultimately be able to kind of
00:15:41
you know have a true competitive advantage because of this disruption that's going on right now yeah potentially i mean i think oh my
00:15:48
vision for flexport is that we become that layer and we allow small businesses medium-sized businesses to get access to world-class logistics
00:15:54
services and get them you know sort of almost be a union that can represent them at the table as uh against these
00:15:59
bigger guys um i think it's very interesting to see a companies like the biggest companies
00:16:04
have gone out and chartered their own ships totally wild experiment to watch for my sitting here with popcorn you're
00:16:10
bringing up a really important effect of all of this which is what happens now in six or nine months to your point
00:16:17
when the consumption of hard physical assets turns towards the consumption of services which it typically does
00:16:23
right if you revert back to the mean here you know people aren't going to be buying as many pelotons and all of that
00:16:28
stuff because they bought them all right they bought all the physical goods they need and to your point these companies have
00:16:35
over ordered all this inventory actually peloton is a perfect example because they basically shut down their entire
00:16:40
supply chain last at the end of this past quarter and essentially said our inventory turns will be more than enough
00:16:45
to meet you know existing demand for the foreseeable future that's an enormous capital problem that
00:16:51
these companies now all of a sudden will face right so like the next step beyond all of the supply chain issues could be
00:16:57
um and i think saks has been talking about this a lot like a a pretty bad recession if these companies have all this inventory and
00:17:03
they don't know how to get working capital yeah it can be real ugly and and the other the other factor is the price has
00:17:08
gone crazy so the price of shipping a container long run like i've been in this business
00:17:13
and been a customer of this business for 20 years and you're you can just rule of thumb it cost you two thousand bucks to ship a container from china to the west
00:17:20
coast during um 2016 that price collapsed so you have these booming bus cycles of an asset
00:17:26
market 2016 it was 550 bucks last year was twenty thousand dollars so
00:17:33
it's up 10x over normal it's up 40x over or or more right over just a few years
00:17:38
ago and what what that's done is create a real barrier to entry like for a ddxc ecom
00:17:46
business you used to be able to go to china find some product put your slap your label on it and go sell it on amazon and you were in business and
00:17:52
there's like a huge number of people doing this right now you have to come up if you want to ship 10 containers it used to be
00:17:58
you needed 20 grand now you need 200 grand that's like that's a real barrier to entry so
00:18:04
actually i've talked to some companies in this space we're really happy like if you have an established business you're
00:18:09
like great now it's much harder for joe schmo to show up in china and start competing with me
00:18:14
so it i was really surprised to hear that i thought that was a pretty sophisticated take at what dollar point
00:18:20
does airfreight compete with containers because when we start hearing about chips i was always wondering and again
00:18:26
i'm no expert but putting a bunch of chips on a plane versus putting them in a container given
00:18:32
how much those chips are valued by a tesla whoever's putting them into you know a car um
00:18:38
it's in what was the break certainly but air freight price has just gone in line and it's gone up five hours as well and one
00:18:44
thing to remember is that 50 of all the world's air freight flies in the belly of passenger planes which should kind of horrify you if
00:18:51
you're ever flying on a passenger plane from from east asia but to the united states there's a whole bunch of stuff down in that belly
00:18:56
and those are grounded so the the supply why are they grounded nobody's flying to china right now oh i
00:19:03
see so because there's no now we're seeing kind of the backlog play into commodity cycles right ryan so
00:19:08
we're seeing like a lot of these commodities because of these uh discontinuities in these supply chains
00:19:14
uh suddenly commodity prices are spiking all over the place and i mean do we think that that settles down or do you
00:19:19
think it kind of continues for you know the foreseeable future until this all works its way out yeah i mean
00:19:25
i'm not the right person asked about commodity prices maybe tomorrow has a view on that but i i you know on the logistics market i don't see it sorting
00:19:32
itself out for the next year um the next couple of years in fact you've warned that it might get worse right you've i
00:19:38
mean i saw on bloomberg you said that there could be a union strike in maybe october what are the prospects for that
00:19:43
and what happens if if that takes place um so it's on july 1st of july okay the the west coast union it's called the
00:19:50
ilwu there that union extends from the southern border so from mexico all the
00:19:55
way to alaska and it includes canada so the whole west coast of the united states is run by this one union that
00:20:01
deports in they uh their contract expires on july 1st and uh in years past the last time this
00:20:08
happened was in 2015 this is a contract that was signed then and extended at some point but um
00:20:13
in 2015 it had a three-month period where nobody could import anything on the west coast uh and some major companies missed
00:20:20
christmas that year so it uh that's july 1st uh typically these there's kind of slow downs in the lit months leading up
00:20:26
to that and we've already had slow downs for a couple of years with hundreds of ships are now waiting offshore
00:20:33
so yeah i can't make a prediction this is slow down basically a negotiating tactic by the unions in the past it has
00:20:39
been i'm not convinced that that's what we've seen over the last year versus you know they are there are legitimate problems staffing people getting coveted
00:20:46
et cetera so is there a role for presidential leadership in sorting out these union issues or just
00:20:52
sorting out the issues with the port more generally or avoiding a strike in july
00:20:57
i mean it seems to me that if biden wants to get reelected this inflation supply chain issues are
00:21:04
pretty top of mind and in the news and are going to be on people's you know you want to be seen doing things and i do
00:21:09
think there are things that can be done so yeah there's a role and as far as union negotiations
00:21:16
biden's probably pretty as equipped as any president's ever been to negotiate with a union and get them to play nice
00:21:22
and not screw up his re-election with a with a strike he's known as a union friendly president
00:21:27
can go sit down and do a deal with them where trump would probably never be able to do a deal with the union because they know that they're sort of natural
00:21:34
adversaries so there's something there there's a lot more to be done and i you
00:21:39
know i got some arguments with people that are like you know that's not in the president's power to do such and such i'm like yeah but
00:21:45
he's the president of the united states to pick up the phone like you can do things that aren't legally in your power just by asking for favors
00:21:50
and other people do them and negotiating with unions is a good idea a good example
00:21:55
convincing to change the zoning laws in la so you can stack containers higher would be
00:22:00
another yeah that's not the president of the united states jurisdiction but if he calls the mayor of l.a or the city council can you explain that so what
00:22:07
does that mean so in southern california you can't stack a container more than too high in a truck yard
00:22:14
by law well we have no place to put these containers but is that a is that a danger issue or is that like a site
00:22:20
issue sight lines like what what i assume a little bit about so i think there's some safety issues although they're stacked sticks high all over the
00:22:26
world so that's not that legitimate to my in my view um and in california it's what four or
00:22:31
something two too high it's too hot oh wow at the truck yards at the port you see them stack six high but in the truck
00:22:38
yards two is the limit okay and so it's it's a uh it's also an eyesore
00:22:43
especially in california um containers are a sign of free enterprise and it's just the people in california can't stand to
00:22:49
see them right they really just object to the idea of capitalism in their neighborhood like that
00:22:56
but there could be like some kind of temporary waiver that we do just to get through all of this backlog which is to say okay let's just ease all of these
00:23:04
small little things that slow the process down just to get all these ships you know unloaded right yeah off
00:23:11
into the world where they need to be and then we could revert back to what we are after things you know kind of normalize
00:23:17
yeah so we did that so like i wrote about this this zoning law and what's what's happening then is if you can't
00:23:23
stack the container three high there's nowhere to put that third container so you leave it on the trailer and now you
00:23:30
have one less trailer in rotation servicing the port to unload and that's that's true across southern california
00:23:35
right now there are thousands of trailers with containers on them because they're not allowed to stack them they'll get fined if they do so i
00:23:40
tweeted about this and the the city of long beach actually responded i tweeted about it at six a.m
00:23:46
by three p.m the city of long beach had changed the zoning law to allow stacking up to five high i believe
00:23:52
i'm totally the fastest response by any government to citizen action like ever that's incredible you must feel great
00:23:58
about that it was great but unfortunately only long beach did that la never followed drew other and there's not that many truck
00:24:03
yards in long beach a lot of them are in los angeles compton rancho dominguez et cetera so i saw this kind of thing like
00:24:09
yeah joe biden could call these mayors and say hey let's work on this right yeah but let's face it he's super union
00:24:15
joe right like i mean he won't even say the word tesla over there but jason isn't that more pro union because won't
00:24:20
these folks be working more and getting paid more and i don't think there's a reluctance to pay
00:24:25
right because clearly like you're going to have to put some money into the system and where the money comes from we can figure that out later but the point
00:24:31
is that there's a there should be a desire to actually get the people on the ground to be working there wasn't even a
00:24:36
third ship shift ryan right like that was another thing you were working on on top of the stacking of these containers to get you
00:24:43
know more of these uh you know to alleviate the problem you were also talking about they don't even have a third shift some nights but they seem to
00:24:49
have added a third shift did that become permanent or not no uh they do have a third shift but nobody's showing up is
00:24:55
the problem so truck drivers don't work in the middle of the night warehouses aren't open in the middle of the night but is that a compensation issue ryan
00:25:01
like if we paid more folks show up like is that just a supply demand issue that needs to get sorted out never underestimate incentives um
00:25:07
i there's there's just a lot of factors and a lot of a lot of it is it's so easy to point fingers to somebody else and
00:25:13
blame someone in the chain right supply chain you've got all these different people and it's everybody has their own opinion
00:25:18
you know we at one point i wanted to hear what the union's opinion was what what are they saying because everyone else is calling them lazy and not
00:25:25
working hard what's really happening so we i sent a taco truck down to the port
00:25:31
a couple of months ago just because we i figured we'd give them free tacos they'll talk to us and that was that's a game changer right there yeah
00:25:37
that really works well we got um they loved it they were the only business ever to send tacos to
00:25:42
the port and then they told us all about what their viewpoint was they viewed that the
00:25:48
truckers are screwing up that 50 of all the appointments where a truck is supposed to come and pick up a container
00:25:54
they're missing their appointments right um and because and then and then so that's what sent me investigating wait
00:25:59
why are they missing the appointments that's when i learned oh they don't have any trailers these chassis because they're stuck under containers
00:26:06
and can't be unlocked so a lot of it is going here it's the supply chain it's kind of like this that metaphorical elephant in the dark
00:26:13
room right and everybody sees their own aspect of it but you got to synthesize all those perspectives and kind of take
00:26:18
a systems view and see if you can get some real understanding i'm not convinced i have it yet by the way i think it is more complex and i'm really
00:26:26
beware of simple narratives if someone even including me says oh this is exactly what's happening like there's
00:26:31
really a lot of complexity in all of this right how much how much of this is sort of the the
00:26:36
the extreme end of the other spectrum which is basically the u.s exceptionalism view that says okay we
00:26:42
just need to really in-house more of the stuff that we need so that we don't actually have to rely
00:26:48
on some of these arcane methods of just transporting goods from you know from point a to point b it might be that
00:26:53
would be a shame if we i mean we have the best companies in the world who need to be able to source raw materials
00:26:59
components finished goods anywhere on planet earth and we should have a modern infrastructure that makes
00:27:05
that possible instead of being like oh we can't trade with the rest of the world so we're going to become like self-sufficient you know we might as
00:27:11
well go back to everybody being a farmer on subsistence farmer on our own land like i think we should have global
00:27:17
infrastructure that's really great and seamless and makes it really easy but you're right that might be an end result
00:27:22
as people can't rely on these supply chains and start saying hey let's manufacture at home or let's manufacture in latin america let's manufacture
00:27:29
closer to home uh that to my perspective that would be a shame well i think the i think the pro the pendulum
00:27:35
always starts from one extreme to the other and i think the the middle ground is probably that you need to have some heterogeneity right
00:27:41
you have to have some amount of it that is not just singularly reliant on china maybe it's maybe it's to central or
00:27:47
latin america right some that's domestic but that domestic production probably has to be subsidized by something
00:27:53
because we're never going to be able to run as efficiently and as cost-effectively as you know cheaper
00:27:59
international labor you know unless we invent something really you know incredible so the balance is probably in
00:28:06
the middle but it's going to take us a long time to kind of get there i think i saw governor abbott was pitching people on hey just
00:28:13
send your containers to texas we're cheaper and more central in the country is that true is that a solution takes
00:28:20
much longer costs much more when if the union goes on strike on the west coast it'll be one of your only
00:28:25
options bringing stuff through the canal what you'll very quickly see is that the canal is going to back up
00:28:31
can't move that many more ships through the canal that are currently going to the west coast so a lot and you've seen that a lot where
00:28:37
the bottleneck just moves for a while last summer the
00:28:43
for example the trains that were going into chicago they were really having a hard time staffing the railroads out
00:28:48
there and it was taking them a long time to unload containers at the port at the terminals inland in chicago and drivers
00:28:56
a lot of the truck drivers are owner operators so these are entrepreneurs who own their own truck work for themselves
00:29:02
and they were able pre-pandemic to do three loads per day at the chicago rail
00:29:08
heads go drop it off come back get another one three times with the delays and the traffic jams that resulted they were
00:29:14
only able to do one a day and so you opt out because you can go drive for ups or fedex or take your
00:29:20
truck and do something else so we had this huge reduction in drivers and that's the kind of a feedback loop that
00:29:26
we should all be really mindful of here where a problem begets more problems and you get these positive feedback loops in
00:29:33
the system that really vicious cycles and so you know bottlenecks move and you'll
00:29:38
see as soon as they if everybody started to ship to houston guess what houston port won't be able to handle the volumes either it's not like it's magically
00:29:45
better just because it's a republican state or something do we need more ports or do we just need to run them more
00:29:50
efficiently and then who determines who runs the port because
00:29:56
i know that they i've seen some tweets of yours where they license the government i guess own supports but they license it to people
00:30:02
to have the franchise there more ports better run ports and then what's the business model of ports i'd
00:30:08
say better run ports is the answer i don't think we need more ports uh you can't really create ports out of thin air like there's only a handful of
00:30:14
geographic locations that actually make sense for report um and we have we have great geography like the san francisco
00:30:20
bay like this is probably the best natural harbor in the world or one of them and the oakland port is perfectly fine
00:30:27
it's who owns it is the city of oakland or the city of long beach the city of l.a so the local cities own the ports in the
00:30:34
united states that is a difference between united states and europe for example where there's sort of national
00:30:39
strategic assets they're still government-owned but it can be operated as a sort of public good for everybody
00:30:45
instead of what are the odds given what's going on in oakland that that's the big priority of the mayor of oakland to like
00:30:52
run a better port like she's got a lot of other things on her on her list and so that's one problem with our
00:30:57
system and then second they do rent it so the government owns it and then rents it to a private company that operates it
00:31:03
and then but those as a condition of renting the port you must agree to hire the ilwu
00:31:10
so you can't run a non-union port in the united states should the government buy the federal government buy the port from
00:31:15
oakland buy the port from long beach offer them some you know trillion dollars or billions of dollars and buy
00:31:20
it out from them it's not a terrible idea i mean as long as you're forcing everyone to use union labor it's not really like a private sector endeavors
00:31:27
it's like you can't especially with the way that the unions run so you can't do that much but like here's an example
00:31:33
where technology could flexport already made this technology we could 10x the throughput of one of these ports overnight which is today a truck driver
00:31:40
shows up looking for a specific container he's like i got this container number so they have to make an appointment at that hour and as i said
00:31:46
they're missing 50 of their appointments well on the back end inside the port they gotta go find that container in
00:31:52
this in the needle in the haystack and make sure it's at the front during that one hour when the guy shows up for it
00:31:58
and you could we already have this tech to make it what we call a free flow stack where
00:32:04
you just have this the truck pulls up and you give them the first the first container off the line and then the
00:32:09
mobile app tells them where to take it and he doesn't have to come for a specific container and if you did that you'd just be every 30 seconds coming
00:32:16
out of here instead of every 10 15 minutes you'd easily 10x throughput and this is we already have
00:32:21
this tag so uh it's a matter of implementation deployment and how do you get around a
00:32:26
lot of people that don't really want to see better running ports and uh it's it's pretty sad to sit where i
00:32:33
sit they don't benefit from better running ports although that's the good point although at the back end they they
00:32:38
suffer from higher prices and inefficiency and not getting the things they want on time well if you listen to
00:32:43
elon talk about unions and why tesla is not a union shop it's got nothing to do with wages you know he said we'll pay
00:32:50
you the union rate or better and it's not about mistreatment because
00:32:55
he said listen if someone mistreats you we're gonna have a no [ __ ] rule and we'll get rid of them the issue is inflexibility right he wants to drive
00:33:02
continuous process improvement at tesla and he can't do that with a union shop because every change has to be
00:33:08
negotiated and then if there is a worker who's not living up to the performance bar you can't get rid of them and they
00:33:14
can't repurpose workers and have them work a different line so that's why elon has always resisted
00:33:19
being a union shop not the wages not mistreatment purely inflexibility and it seems like
00:33:25
that's what you're seeing in in the ports as well is we can't drive changes and improvements because everything's so
00:33:31
highly contractually negotiated that's my editorial comment ryan what do you think about it i mean it's kind of
00:33:38
it's worth studying a little history here is that like you know we went through the container revolution in the 60s and 70s and the union agreed to it
00:33:45
and they that dramatically transformed the waterfront these guys like you see photographs from that era they would put
00:33:52
it on their back like burlap sacks full of stuff like hauling it on and off these these ships and kind of load them
00:33:58
by hand it was a real art and it was a massive employment driver and by the way we've still barely recovered from this
00:34:04
like the west side highway in new york is finally like a nice park but it sat there for 50 years like dilapidated
00:34:10
piers and ugly ass buildings and some of those are still there san francisco waterfront still mostly like that south
00:34:16
of the bay bridge it's still like these old dilapidated buildings so it's kind of funny to see how long it takes like
00:34:22
that infrastructure to change but there there was uh and i don't know i'm not like the world's expert on this history but
00:34:28
somehow they convinced the union to adopt containerization which is about it's far more radical than anything we
00:34:33
would be proposing now in how you would change their workflow or change their work like that was
00:34:39
complete change where it's really these giant automated or these giant cranes that replace the
00:34:45
worker couldn't biden deploy his commerce secretary or i mean isn't there some cabinet official he could deputize
00:34:50
to say go solve this problem go bring the parties together yeah and i think i suspect that'll happen over the coming
00:34:56
months because july 1st is pretty bad timing for a midterm election if they were to go on strike
00:35:01
and i think he's got a lot of incentive to make sure that he does have the incentive it just seems like i mean
00:35:06
you've been tweeting about this for months that nobody's paying attention in the administration i mean we've all been
00:35:12
reading your tweet storm saying like someone in washington really should be paying attention to these ideas over two
00:35:17
administrations now right ryan it's both administrations have been out to lunch on this they've focused on it the union
00:35:23
is a really big issue that's going to come up this summer there's it might be an even bigger issue that's got even less attention which is on january 1st
00:35:30
of next year january 1st 2023 which is tomorrow in shipping terms that all the ships in the world will
00:35:37
have to reduce their carbon emissions by 13 and these are internal combustion engine
00:35:44
is it's not right right ryan ryan hold on a second wait just explain what that means by who's mandating that and how is
00:35:50
that enforceable and why is that happen it's a it's uh the international maritime organization it's part of the
00:35:56
united nations and it's the group that is overseeing global ocean freight it's the regulatory body for ocean freight in
00:36:01
the world and it's the united nations group so any member state of the united nations must follow the rules of the imo
00:36:07
and they've all said they will uh and so the imo has said all existing ships in the world must reduce their carbon
00:36:13
emissions by 13 and again it's an internal combustion engine we don't know how to make it 13 more carbon efficient or we would have
00:36:19
done that already can you actually buy indirect offsets like can you go and buy some amazonian rainforest credits and no
00:36:26
you can't offset it uh and it's not about the fleet either so some of these fleets have uh lng liquid natural gas
00:36:33
so the fleet might be more efficient but no it's down to the individual ship and it has to so there is one way to reduce
00:36:38
the emissions of a ship and that's to go slower uh and if you go 30 percent slower then
00:36:44
you can achieve a 13 reduction in reduction in carbon emissions well if you look at it on a per container
00:36:49
basis by the way it's the same amount of carbon emitted because the ship is still carrying the same number of containers just go slower
00:36:56
but it will reduce the supply of shipping capacity and slow everything down another 30 percent that that takes
00:37:01
place january 1st 2023 it's getting very little attention but to my view it's going to be massively disruptive if we
00:37:07
slow everything down reduce the capacity of the network that much further prices are going to go to the moon
00:37:13
and it's it's like really asinine law because it doesn't actually achieve any carbon reduction the fuel type
00:37:19
correct me if i'm wrong is this like mgo mdo like it's dirty or fuel is that correct
00:37:24
used in containers this same group imo actually passed a new launch uh january 1st of 2020 and it got totally
00:37:31
it was supposed to be a huge deal in our industry and then overhead and we all kind of ignored it but um that
00:37:36
eliminated the worst kinds of fuel uh sulfur used to be you could have this bunker fuel that was up to three percent
00:37:42
sulfur which led to crazy amounts of sulfuric acid which is like apparently like 15 times worse than carbon as a
00:37:48
greenhouse gas and so that was eliminated and now uh it's still kind of ugly bunker fuel but
00:37:54
it's not like it used to be the reputation is probably still carried over from from pre-2020 got it if you could wave your magic wand as we wrap up
00:38:01
here and change two or three things uh that to you seem like layups and i think
00:38:06
you kind of hinted at them in order what would be the changes just based on your intuition and your knowledge of the
00:38:11
supply chain what two or three things are the layups we got to do right now i think first off it's got to start with
00:38:17
some uh with metrics like what well if you care about something measure it the metric that the government's been using
00:38:24
for ocean freight delays has been how many ships are waiting offshore at the port of long beach and this is
00:38:30
like one of the most mischievous i don't know if it was just like outright fraud or incompetence but one of the worst
00:38:36
things i've seen from a government in terms of pr is they they pass this rule that the ships have to wait 150 miles
00:38:43
offshore so that the car so that the uh pollution wouldn't hit la like reasonable good but then they kept using
00:38:50
the same metric for how many ships are waiting right outside the port and and it went way down and they started celebrating that success so like
00:38:56
let's actually use the right metric which is how long is it taking cargo to transport you can't just hide the ships and
00:39:02
celebrate that there's no ships there um if we get the government you're saying that the government pushed the ships
00:39:08
beyond the measurement window and then said they don't exist yes basically and the transportation secretary and the
00:39:14
port of l.a director got up there this government that's like when i went to an xl sweater to hide my gut and i was like
00:39:20
i'm thin yeah look better to look at the scale so if we at least get them focused on
00:39:26
the right metric which i think we have the best metric right now we call it the flexport ocean timeliness indicator it's
00:39:32
how long is it taking the cargo to from when the factory says it's ready to when it can be delivered now any solution
00:39:38
that we create we have a metric we know okay there's a kpi here door door yeah door to door you mentioned the
00:39:44
transportation secretary was part of that press conference where they're taking credit for changing the metric so i assume that's buddha judge who's in
00:39:49
charge of disbursing the 1.2 trillion dollar infrastructure bill is there any money in the infrastructure bill to
00:39:55
solve this problem there's um there's 17 billion dollars allocated to ports
00:40:01
i went and read it and i couldn't find any money that was going to be spent on building ports it was like
00:40:08
stuff so here's a crazy thing we just had this trillion dollar infrastructure bill that's supposed to modernize and update the infrastructure of the country
00:40:14
and it's doing nothing to solve the most pressing supply chain issue in the country which is the bottleneck at the ports which is
00:40:20
driving inflation which is causing interest rate increases and wrecking the economy there's a term in in washington
00:40:26
which is called a christmas tree bill and the infrastructure bill is an example of that which is this is not a
00:40:31
directed shot on goal what this is is a random you know tree that you go and
00:40:36
hang little things on top of and eventually the whole thing is covered so it kind of looks beautiful from afar
00:40:42
but when you get really close to it it's a little bit chaotic and you don't understand what's going on and so to
00:40:47
your point the fact that ryan can say there's 17 billion dollars allocated to something like ports but it's unclear to
00:40:53
him who's an expert in the space where that money goes and how it's spent gives us zero chance of figuring this out yeah
00:41:01
i mean it was like it's like things like oh each state must create our supply chain readiness report about it's like
00:41:07
what are you talking about like singapore put 20 billion dollars to build a
00:41:13
badass automated port like that's like a reasonable thing to do like let's spend 20 billion dollars make
00:41:19
the most automated amazing port in the world that'd be a good use of government money but like to then create studies
00:41:25
and consultants i don't know that any of it's going to hit the ground and shovel right so you're saying you're saying that 17 billion that goes to you know
00:41:32
studies and consultants could actually get redirected and we could pick a port where there's an amenable city and
00:41:37
actually completely modernize it to set the example of what modern shipping should look like in the united states
00:41:43
that at a minimum matches what's happening in the rest of the world yeah i think it'll be pretty awesome and doesn't seem to me like science fiction
00:41:49
like the government wants to build a port who's going to stop the government that seems too too logical and too obvious ryan try something else of
00:41:55
course compete for who gets to get that 20 billion it'd be the modernized port like as well
00:42:02
in competition and see which mayor wants us in their backyard does greg abbott want it does long beach want it does
00:42:08
oakland water who wants to fight to be the most modern port that should be santa's once it i'll tell you that
00:42:13
descent miami yeah exactly i'm sure the sanchez and greg abbott wanted i don't know that california's two incredible
00:42:19
ports wanted and those are the two that are closest to china by the way spoiler alert you guys remember when
00:42:24
google fiber ran that competition and they got like mayor of pittsburgh to swim in like a frozen lake and it was
00:42:29
awesome right like yeah government yeah please bring us stuff so yeah i think i i
00:42:35
i don't have a lot of faith even if that came around it would take five six years right even if it was done right you don't get a port overnight um there are
00:42:41
some very simple solutions like this changing the zoning law adopting technology to go with a free metric out
00:42:47
of the poor put some metrics in here like have someone focus on this
00:42:52
a key part of problem solving is make sure the problem doesn't get worse so let's assign someone to go work with the
00:42:57
union and the and the company terminal operators make sure that they don't go on strike and make sure and then someone needs to go
00:43:03
look at this imo u.n thing and figure out if the united states is really going to go through with that because it's pretty crazy
00:43:09
well listen ryan you've been incredibly generous with your knowledge and incredible your leadership watching you
00:43:15
as uh you know uh a ceo and a leader go out there on a boat and go visit and buy
00:43:20
the freaking tacos and actually boots on the ground figure this out like the country owes you a debt the world owes
00:43:27
you a debt to to really keep this uh you know problem down to first principles and figure it out and our government
00:43:33
should be taking notes and really the other leaders who are importing whether it's apple or tesla you know it'd be great for all of them to be supporting
00:43:39
you i don't know if they've reached out but maybe the you know a half dozen of you can then sit with this
00:43:44
administration and the next one and just tell them where to point the money cannon well because it doesn't seem like they know where you're appointed we have
00:43:51
a lot of people in washington that listen to this pod please yes just reach out to ryan just reach out to ryan and
00:43:56
have a lunch please just sit there and please just go for these
00:44:02
let ryan buy you a taco guys ryan bring your taco truck to washington one of the big common denominators of both business
00:44:09
and politics is that leaders have to focus on the right problems and when they're not focusing the right problems like bad things happen and you know we
00:44:16
know that inflation is a huge problem the fed now is raising rates or projecting raising rates very quickly
00:44:21
which is creating it was created a huge market downturn it's a very blunt instrument it could
00:44:27
cause a downturn or a recession so that's the big problem and yet there are specific solutions and fixes to the
00:44:33
inflation problem by updating or modernizing the ports that ryan suggested but who's focusing on it and
00:44:39
now they'd be more strategic right sax there'd be a more strategic sniper shot as opposed to this blunt instrument
00:44:44
right exactly so you know and and so what have they been focusing in washington on definitely not
00:44:50
this you know absolutely and then i see ryan posted suggestions on twitter and then all these people come in and
00:44:56
they're all like fatalistic oh well the president can't do anything you know first the president can
00:45:01
emergency uh war time if there was ever a time for presidential leadership this would be it what i worry about is that if you're the union leader and you know
00:45:08
that you've got biden in the white house who's always going to take their side why won't you make your demands more unreasonable yeah they should be asking
00:45:14
for triple time to keep it open overnight why wouldn't they do you really if you're the leader of that union do you know
00:45:20
gonna break your strike no way no way ask for quadruple time yeah just make it
00:45:26
painful you should make the most of the crisis egregious ask possible i mean that this is your max leverage right now
00:45:32
max leverage never waste a crisis yeah this is your time all right man listen ryan thanks a lot um great thank you for
00:45:39
the appearance it's my pleasure i'm a big fan of the show so being at besties it means a lot to me so thanks guys and
00:45:45
we'll uh continue the discussion perhaps at the all-in summit in may exactly see miami facebook stock has dropped over 25
00:45:52
after reporting negative user growth for the first time and not only
00:45:58
10 billion or maybe even 12 million lost a year on their uh ar vr headsets and
00:46:04
project but also a 10 billion decrease in projected 2022 revenue thanks to
00:46:11
apple's privacy features i guess we've got to go to youtube first well paypal dropped 25 too
00:46:17
yeah we have to pay we'll we'll and then snapchat had a whip saw back and forth but chamoth when you see this uh you
00:46:23
called this with your spread trade maybe you could walk us through what you saw you know whatever it was three four
00:46:28
five months ago and then what you're seeing now and at this level with 250 billion dollars wiped off the market cap
00:46:35
what do you what do you think about the future of this as a trade and as a company well i think the trade did what
00:46:40
it was supposed to do which is in a period of a lot of volatility i saw an opportunity to
00:46:47
you know just reduce my risk exposure look i'm generally long very risky assets right i mean
00:46:54
all of us are in the business of building companies that have huge volatility because
00:47:00
all of our companies generate earnings very far in the future and so you know in november of last year
00:47:06
i was trying to figure out what i could do to shield myself
00:47:11
and the reason i wanted to shield myself was because i saw elon and jeff in part selling but also i saw that clearly we
00:47:18
were going to go through a period where that high growth tech was going to trade down so i sold some of that high growth
00:47:25
tech but then i also wanted to figure out a way where i could be
00:47:30
less exposed to some of that volatility by continuing to hold what i had and the best way that i figured out how to do
00:47:36
that was to do the spread trade and so you know what i saw at the time was that
00:47:41
there is one business above all others that i think is immune amongst big tech
00:47:47
from any sort of real long-term issues and that's microsoft and i think david expressed the reason well is that it's
00:47:53
an enterprise business now you know politicians generally don't tend to care about enterprise businesses
00:47:59
they have enormous longitudinal growth in front of them and they're able to do things on the
00:48:04
margins specifically around m a to keep building their business with very little oversight and we saw
00:48:10
this because they had the courage to do this activision deal you know just a few weeks ago
00:48:15
if you could imagine again no other company in big tech could even dare try to do a 70 billion dollar acquisition
00:48:22
because of the scrutiny it was a bold move yes yeah i think it's not a bold move i actually think it says
00:48:28
the obvious which is microsoft is beyond the level of regulatory scrutiny that the rest of big tech actually has
00:48:34
because they are consumer businesses the second safest company is google and the reason is that google has the best
00:48:41
of both worlds they're both a platform because of android but then where they are at risk of being
00:48:46
an app they have an incredible deal with apple that blunts that effect
00:48:52
and so when apple talks about all their push to privacy you still have this very specific
00:48:57
relationship and facebook called it out in their earnings release they said we believe that google has preferential
00:49:04
treatment relative to the rest of the internet in that apple deal because they pay
00:49:09
apple 15 or 20 billion dollars a year and for people who don't know that's for search the default search on your iphone
00:49:15
goes to google google pays 15 billion dollars to apple and the uh accusation explain the
00:49:22
accusation there of why that would give them preferential in case people don't if you're paying somebody 15 or 20 billion a year they're less likely to do
00:49:29
bad things to you they may do bad things to other people but they're not going to do as many bad things to you did you believe that yeah that allegation from
00:49:36
zakia well no i don't believe the allegation but i think that general uh character that general thing is true
00:49:42
like you're not going to screw over your partners you're going to screw over other people before you screw over your partners got it whether this applies
00:49:48
here it'll have to be borne out in some kind of lawsuit or state ags or blah blah blah
00:49:54
but anyways the i think the point is that every other company has a lot more headwinds than microsoft
00:50:00
and google in big tech and then the third thing is was a market observation from gavin baker which i thought was
00:50:06
incredibly brilliant and what he said was when you see a drawdown meaning when the
00:50:12
markets go down it'll affect high growth tech first
00:50:18
it ended up touching a bunch of other areas second like biotech but he said this key thing
00:50:23
which is big tech will be the last to crack but when they do they are going to get shot and so i
00:50:30
spent a bunch of time just trying to figure out when big tech gets cracked who's going to get cracked the hardest
00:50:35
and i just kind of wanted to create a spread between those who were the most inoculated
00:50:40
to those that were the most at risk as it turned out netflix puked it up facebook puked it up
00:50:46
amazon actually got really crushed even though this past day they had a pretty decent rally because of their earnings but they
00:50:52
really got crushed so in any event the trade is what the trade is the bigger thing is what is going on at facebook
00:50:58
and i think what you see are three really important headwinds that facebook called out explicitly
00:51:04
one is that when they talked about usage kind of flattening and starting to decay
00:51:11
what they're really talking about is tick-tock and i think what we learned is that tick-tock is an enormous threat and
00:51:19
a huge competitive force now in the consumer social app ecosystem
00:51:24
the second is that facebook is fundamentally an app that sits inside of an ecosystem that is
00:51:30
subject to the rules of the platform owner and that's apple and google and so this idfa change so the change in how
00:51:37
you can track advertisers facebook site is going to have a 10 billion dollar impact in 2022
00:51:43
and then the third thing which was more implicit is in order for them to grow if you
00:51:49
can't grow organically the only other way to grow is inorganically and unfortunately as we're seeing the regulatory focus on this company is
00:51:56
really enormous and so it was a you know it was a pretty watershed moment in i think that
00:52:03
company's um discussion of their future and and mark actually kind of said that as much in the in the pres sacks you
00:52:09
look at this uh business you made a interesting uh observation facebook rebranding itself as meta before meta
00:52:15
exists it may be looked at as another sort of sign that maybe they got a little tilted maybe
00:52:22
what was your take on the sort of changing the name of the company before
00:52:28
that business really is at scale or exists yeah i mean it's a bubble move
00:52:33
um because look when you're in an up market and the market is super frothy we had in hindsight last year was a giant
00:52:40
asset bubble funded by all this liquidity coming out of the fed and the federal government so yeah in a bubble
00:52:47
like that all investors care about is the growth story and so facebook went all in on this story around metaverse
00:52:55
but in the cold light of day you know once the once the position came up yeah once the
00:53:00
punchbowl has been taken away and you're in the hangover and you're in sort of a very volatile potential
00:53:05
yeah bear market investors go wait a second you know this vr division is losing 10 billion a year it might even
00:53:13
be 12 by the way because they said it was a little higher so they lost 6 billion last year they lost 10 billion
00:53:18
this year so the losses are escalating and so in that kind of market investors are like wait a second do i do i want to
00:53:26
invest in a company that um whose future is that unclear i mean if you look at
00:53:31
this at this market we've seen that the growth stocks are down 60 today's an update yesterday was a horrible day so
00:53:38
they're bouncing around 60 70 down off the highs in early november okay but
00:53:44
the fangs are only down like 14 or something like that right but facebook basically took themselves out of
00:53:51
the the sort of the the market leader bucket and put themselves in the growth bucket by basically they treat us like
00:53:57
peloton we're speculating why would why would they want to do that you know terrible strategic decision you're saying well it was a it was a decision
00:54:04
it was the kind of decision where you look back with 2020 hindsight and you say look that kind of decision could only be made in a bubbly frothy market
00:54:11
you would never make that decision in the kind of down market you have today and other decisions look
00:54:17
stupid as well so paypal was just down 25 okay why was it down yeah well they just
00:54:23
uh well no growth in users it was mostly on the forecast and yeah they revised their forecast down considerably and of
00:54:29
course they tried to blame it on the economy but other companies you know amazon just had a huge
00:54:35
beat uh relative expectations yeah they're up 15 today so not everybody is
00:54:40
um blaming the macroeconomic picture the way that paypal did any event my point is you go back six months ago
00:54:47
and you know what was paypal doing i wrote a story for um barry weiss for her
00:54:52
sub stack about how paypal was taking the lead in financial d platforming they were working with the adl and the splc to
00:54:59
kick to just to identify groups to kick off their platform so that's what management was spending their cycles on
00:55:05
figuring out how not to grow how to kick people off their platform and trying to figure out how to get more people on it
00:55:11
sounds familiar who else is trying to say it's a platform it's the kind of thing you do when you're in a frothy market and your
00:55:17
stock is up and you're triumphant you can waste your management cycles on stuff like that now their stock is down
00:55:23
25 you have to wonder gee do do we wish we had spent our time on other things okay
00:55:28
so friedberg i have a question for you about the future uh obviously facebook has bet the farm on meta they're betting
00:55:35
on vr and i i guess eventually ar or what collectively is called xr and then
00:55:40
we have uh news that apple has a seemingly brilliant goggles product
00:55:46
coming out uh developers are getting into it and they are the masters of hardware so now
00:55:52
zuckerberg has decided he will be on a collision course with the company that just took 10 billion dollars in revenue
00:55:58
from them by doing the non-tracking and that is the masters of hardware
00:56:03
so we have this collision course coming and then just two weeks ago google said hey by the way remember that google
00:56:09
glass thing we're not giving up on vr ar either and of course microsoft we all know has
00:56:15
their uh hololens so when we look at that four horse race if you were to bet and rank who's gonna win
00:56:22
apple goggles google glass whatever they're gonna call the new thing hololens and
00:56:27
uh metas oculus who's going to win and what do you how do you look at that competition between the big four i don't
00:56:33
know if that's a race you want to be in so i like that answer race to nowhere have you guys used the
00:56:40
oculus quest device absolutely i have two of them try oh my have you played
00:56:45
the games where you like move continuously through space and like when you do that
00:56:50
it's like you're gonna throw up you're gonna throw up i mean i'm not sure that this notion that that becomes the new computing
00:56:56
modality is like a fair and true notion and so you know there may it may end up
00:57:02
becoming kind of a niche entertainment device almost like a nintendo switch where there's a
00:57:07
you know a mode when you're using it but i'm not sure it replaces traditional static two-dimensional
00:57:12
computing in front of you the jury's still out i don't see like a computer sentiment that says these
00:57:17
things will ultimately kind of prevail over the current um mode so you know who's gonna does work
00:57:25
who would win in your mind who's got the best chance for me let's assume we're all gonna use it every day for two hours as our
00:57:31
desktop we're gonna put it on we're gonna find workout apps to use whatever it's gonna become let's let's assume you
00:57:38
know that i think you just answered your own question in in um in all of these things when you build
00:57:43
hardware i think you can take a lot of parallels from what happened in the pc space um if you have uh commoditized pc
00:57:50
manufacturers compact dell ibm right there innumerable number thousands of companies that made pcs
00:57:57
the value created to the application layer to the operating system and the people that can actually build
00:58:02
ecosystems are typically the ones that win and the people that already have an ecosystem and all all they have to do is
00:58:09
port somebody from you know platform a to platform b has a meaningful advantage over somebody
00:58:15
that has to convince you to come to a new platform altogether and so you know if you're a microsoft
00:58:20
and you have thousands or hundreds of thousands of developers or if you're google and you have hundreds of thousands of developers or
00:58:27
if you're apple and you have millions of developers it's just a smaller bridge to cross in
00:58:32
order to convince them to then yeah for one extra endpoint ios versus android
00:58:38
you know versus microsoft yeah and by the way it seems like the obvious transition whereas like facebook is like
00:58:44
you gotta go build all this stuff and apple made um an incredibly important set of decisions a few years ago which i
00:58:52
didn't think a lot of people talked about but they had an os tree that was branching far too
00:58:57
widely right they had a different operating system for the phones they had a different operating system
00:59:03
for ipads uh desktop for watches and they've started to try to converge and you horn
00:59:09
these things into into a set of basic primitives so that it's more controllable and i
00:59:14
suspect the reason is because that gives them more optionality to go into a car
00:59:19
to go into a headset without having to do an entire developer even better than that chamath is a great point you bring
00:59:25
up because they also started investing in their own chipset and i think all of that chipset innovation gives
00:59:31
them a dramatic uh advantage in having smaller batteries and more processing
00:59:36
power in a headset if it does work which what chips does what chip asset does facebook have none so i don't i don't
00:59:43
think we should say that facebook is down and out but let's just qualify what we think can win so that's one thing the
00:59:49
other thing to remember is when you look at the pc industry how did intel become so dominant part of
00:59:55
what intel was able to do to out compete amd and everybody else was that program called intel inside
01:00:01
which is effectively these co-marketing pass-through dollars that they would use to actually give an incentive for dell
01:00:07
and for compact and for all these other folks to basically build the spec and that was the wintel monopoly right
01:00:13
microsoft and intel if you play that out in vr what you really need is just a bag full
01:00:19
of cash because if you give developers a subsidized incentive to build for your platform they'll do it so then again if
01:00:25
you rank the companies you just need to look at how much cash do they have because those with the most cash so
01:00:31
again i think the best way to think about this is how many developers do you have today how much cash do you have today how much
01:00:38
cash will you have in the future and you can probably rank and just do a reasonable expected value to think about
01:00:43
who has the best chance of winning assuming the platform is roughly equal now if the
01:00:49
if the if if the company on that list with the fewest developers and the lease money
01:00:54
has a superior device if that device is superior enough they can overcome those things right and
01:01:00
facebook has the least money and facebook has the least if you have rough parody i think the person with the most uh
01:01:07
money and the most developers saks uh facebook has the least developers they have no
01:01:13
relationship with developers in fact they kind of screwed them over with facebook connect a couple times they have the least money but they do have
01:01:19
the largest user base of profiles so does that give them some advantage
01:01:24
here and how would you rank who's going to win who's going to lose well i think it gives them an advantage in to chamas
01:01:30
framework of porting over their app onto whatever the you know dominant platform is going to be but probably it's the
01:01:36
operating system players who are probably going to be able to extend their operating system into this new you
01:01:41
know vr ar world probably what i wonder about is would facebook have been better off if they're going to
01:01:48
run a 10 billion dollar a year money losing division that's highly speculative would they be better off
01:01:54
gambling that on building their own phone or maybe their own like forked version of an android phone with that
01:02:00
and and the reason why i say that is the project that i started
01:02:09
they're losing 10 billion a year now because of this one permissions change that apple has made right because they're completely dependent on apple's
01:02:16
operating system for a big portion of their revenue so what is their defense against that i mean they're really
01:02:21
pretty helpless if you look just to make a comparison if you look at the strategic brilliance of
01:02:26
google what was it first of all after they came up with this cash cow the idea of search and then they combined it with
01:02:32
the sort of keyword auction they got from overture they said that listen the next strategic move is we can't let
01:02:39
anybody disintermediate us so what did they do they started moving upstream the first the first sort of upstream player
01:02:45
was the portal right so they started competing against yahoo they gave away gmail then it was the browser so it was
01:02:51
microsoft explorer so they gave away chrome then it was the operating system they gave away androids they said we're
01:02:56
not going to let anybody else be upstream of us and so they just started replacing all those layers of the stack
01:03:02
giving away free products with free effects right yeah sorry and a good free product yeah great i mean they all have
01:03:08
billions of users also say a big part of the monetization lock-in was google then extended into the publishers very
01:03:14
quickly with the acquisition of adsense and the publishers then allowed google to offer the greatest cpm that those
01:03:21
publishers could have over any other advertising network and as a result google built their network and then
01:03:26
built their advertiser base and they effectively you know got this huge lock-in the only disruptive threat to
01:03:32
google was what facebook did which is to create demographic profiles where instead of targeting ads based on
01:03:38
keyword or search intent you could now target ads based on demographic and then facebook took it a step further
01:03:44
and did uh retargeting so basically following you across multiple sites but facebook always knew and as we just
01:03:50
discovered that was always going to be a weak point for them because they were dependent upon hardware devices that we're going to let them do that tracking
01:03:57
across apps and across sites and that's why google always had this kind of key you know lock-in advantage that you know
01:04:03
will persist and the network is just so big on both sides you can't compete to sacs's thought bomb if they had
01:04:10
invested in a phone uh let's say they made a thousand dollar let's say they made a phone with a bomb of eight hundred dollars did this by the way just
01:04:16
remember the fire tv the fire truck and he gave a bunch of great speeches you can watch these and what happened with
01:04:22
that and just you know despite his extraordinarily large user base his committed loyal users all these reasons
01:04:29
his magical talented technical team he hired the best people he also tried to do the same with search by the way with
01:04:35
a9 and remember apple also tried to do the same with search all these guys tried to kind of compete it's not easy
01:04:40
to execute yeah it's not easy to execute and you get a lock in with the network value but you also get a lock in with the talent and you know this was a
01:04:47
really hard thing to pull off and you have to get it all right so let me ask jamat the question based on what sac said could should they have
01:04:53
deployed 10 billion into phones if we go back two years and they did deploy 10 billion into phones they take
01:04:58
an 800 bomb which is probably what the best iphone cost i think it costs 700 for apple to make and they sell it for
01:05:04
1500 they could basically give the phone away for half price maybe give it away for four or five hundred dollars that's what
01:05:10
fire phone was and if they gave away for 400 and you had to be a facebook user you buy it they get the credit card of the person
01:05:16
that would be they could put 25 million phones into the market every year
01:05:23
so you don't think it would work it didn't create a better user experience for users users got a better experience with the iphone okay and then they got a
01:05:29
better experience with android the window of time was in 2009 10 and 11 when there wasn't lock-in
01:05:37
and you know i think that's look that's been well discussed about what we were doing and
01:05:42
what we tried to do so there's no point rehashing but why did facebook give that up because there was an initiative right it was it wasn't that it was it came
01:05:49
down to you know uh an ask that i made that we didn't get and it didn't happen so it
01:05:55
didn't happen we'll leave it at that yeah i'm not saying that would have been successful
01:06:01
neither died we didn't get to the starting line so we'll never know in fact i think it's unlikely that it would have worked because i'm not sure exactly
01:06:06
what facebook's value prop would have been my point is just if you're going to lose 10 billion dollars a year on a division wouldn't it be better for
01:06:12
it to be something strategically vital as opposed to something that feels a little bit optional even if the majority
01:06:18
chances you don't win the question is if you had a 20 30 35 chance of being a player in
01:06:24
smartphones would you take that chance and i think you have no choice but to take that chance that it would be worth it the
01:06:29
expected value yeah one thing i'll say in defense of facebook is i think that all of this like antitrust scrutiny is a
01:06:35
little bit ridiculous today um and it looks pretty ridiculous and let me just explain why like
01:06:41
uh it seems that capitalism is pretty much working as intended because if you looked at google's results
01:06:47
if you looked at snaps results at pinterest's results at amazon's results there is a vibrant and growing
01:06:54
advertising ecosystem by no means could you claim that facebook has any real monopoly on that number one and and when
01:07:01
you fold in tick tock it's absolutely true and then if you think about the usage curve of tick tock
01:07:06
there's a check and balance there on usage and so anybody that thinks that facebook is a monopoly today i think is
01:07:13
a little misguided so really i think what politicians need to do to today
01:07:19
you know february 4th is be a little bit more honest about what they really care about which is really around section 230
01:07:25
and the misinformation disinformation fears that they have related to facebook's distribution power because
01:07:31
now if you're going to try to legislate this company it's really unfair like especially going back 10 years to litigate an acquisition you'd never do
01:07:38
that to any other company that you know is sort of maybe on the back half of their growth cycle it just doesn't make
01:07:44
any sense it would be like going after google now for the youtube activities supported 31 billion of advertising
01:07:50
revenue crazy there is a vibrant diverse advertising ecosystem facebook is not in
01:07:56
control of that ecosystem and so trying to legislate them as a monopoly in that ecosystem is insane today what do you
01:08:02
think saks do you think this regulation is uh based on the fact that facebook kicked off trump and is scaring
01:08:08
politicians over actual competitive reality i think that politicians are using the threat of regulation to try
01:08:16
and drive the uh the speech policies they want on these social networks that's what's really going on i mean the
01:08:22
merits yeah so you agree with me it has nothing to do with the business yeah look who should get regulated on ancient
01:08:27
trust grounds apple you know apple is that and maybe google i mean well they're the big monopolists i mean they
01:08:33
control the operating system i mean those guys percent of search and i would say amazon with respect to uh
01:08:39
the verticals where they're competing with their own uh with the basic exactly so in other words
01:08:44
when you control an operating system and then there's um developers or other you know uh downstream players on that
01:08:52
you have to treat them fairly you can't privilege your own policy to then dominate vertical after vertical so yeah
01:08:57
there are real anti-trust concerns with those three companies the facebook way less so and yet they get the brunt of
01:09:04
the attacks why because the people in washington are trying to coerce facebook into controlling what they call
01:09:09
misinformation which is really just speech they don't like and that is highly inappropriate perfect segway uh
01:09:16
last week we we didn't jump into the rogue and spotify debate maybe we should have but we'll talk about it now with a lot
01:09:22
more context obviously neil young and some other folks that were pulling our music off joni mitch or whatever some
01:09:29
actual high profile blogger said they don't want to be on there and then joe rogan
01:09:35
and daniel ek both decided to talk about this joe rogan said listen i'm a comedian i
01:09:40
don't prepare for these interviews uh and i just see where they go but
01:09:46
this show has gotten very influential it's the number one podcast in the world it's got a ridiculous listenership so
01:09:51
maybe i should right now have it right now maybe i should have it labeled uh me
01:09:56
and his and maybe i should have people on afterwards and maybe i should do some extra fact checking i thought it was the
01:10:02
best non-apology you know explainology of an apology
01:10:07
because he did say i'm sorry if you don't like it um but he did kind of say that he would do better and then
01:10:13
daniel x said and then i'll let you guys comment uh daniel x said listen we produce shows and we approve guests for
01:10:21
the ringer and for gimlet which we own those studios we license joe rogan we
01:10:27
don't uh do any editing on his show and we will remove ones after the fact but it's a licensing they'll therefore we're
01:10:34
not a publisher i'm curious what you thought friedberg on the non-apology
01:10:40
and culpability for someone like joe rogan having guests on who are anti-vaxx or you know maybe are debatable in terms
01:10:48
of science because yeah he is a comedian but as he says like the show is kind of big now so maybe i should do a little
01:10:54
fact checking what do you think he should do when he has scientists and uh people and people on i'll make two points one is i don't think that uh
01:11:01
journalism is regulated uh in the sense that you know we have freedom of speech so anyone can stand up and they can say
01:11:08
i have this belief or i have discovered this fact and um you may not actually hold that
01:11:13
belief and that fact may not be true but you're still allowed to stand up and say it and you're so allowed to have someone come on and say it um and so i don't
01:11:20
think that there's any disclosure obligation he's putting on a show it's the same as any news show or entertainment show i don't think that
01:11:25
there's a clear line or boundary i mean what the heck do we do here we've all got opinions we try and talk about the news we talk about
01:11:31
our perspectives on the future you know what the heck is is it that we're doing here you know there's no kind of clear
01:11:37
line there so i don't think that he has any obligations do anything he doesn't want to do except if and when his audience tells him or the listeners that
01:11:43
he cares about tell him his customers tell him this is what we expect and want from you and then he responds to his customers that's the way the market
01:11:50
works and that's the way the enterprise system should work i think the separate bigger question here that's really important and worth noting
01:11:57
you know and i just want to speak about this for one second all of the great internet companies started with this notion that they were
01:12:03
creating democratization that they were creating access to information that didn't exist whether it's access to
01:12:09
media or access to search results or access to content or whatever that may
01:12:15
not have been available to you and that was a driving force for the entrepreneurs and the founders that started all these businesses and all of
01:12:20
them had these very idealistic points of view that we're not going to censor we're not going to take a point of view
01:12:25
we're not going to put our foot down and say what is and isn't going to be displayed or shown or made available to our users we're going to let users
01:12:31
choose what they want to get access to and what they want to hear and listen to and in all these cases from google to
01:12:37
youtube to twitter and now to spotify the idea of being just an access a platform for access is
01:12:44
proving to be wrong all of them are de facto publishers they ultimately have to make decisions about what they do and
01:12:51
don't let on the platform and de facto if you let something on the platform you're giving it permission you're
01:12:56
giving it a voice you're giving an amplification and you're giving it access and so all of them are now getting
01:13:01
caught up in this problem that i don't think anyone from larry or sergey or um
01:13:07
jack dorsey or daniel eck ever wanted to be in they all wanted to be these democratization platforms and now
01:13:12
they're finding that there is no way to avoid being treated like a publisher and a publisher has someone that's called an
01:13:18
editor and an editor decides what is and isn't put on that publishing platform as has always been the case in old media
01:13:24
and now in new media they're all kind of stumbling into this problem and they're not set up for it and it's creating
01:13:29
issues where people on the right are saying you're censoring us and people on the left are saying you're not giving us access to information we want and it's
01:13:36
you know it's just kind of the the i think the transition that none of them expected but we're all seeing happen
01:13:41
chamath if daniel lack is giving a hundred million dollars to joe rogan
01:13:47
can he claim listen it's just we're a platform when you know listen we're on
01:13:52
spotify as well but they don't pay us doesn't it change the relationship when they give him the hundred million or can
01:13:58
daniel say you know intellectually honestly like hey listen we're not responsible for this i mean they're backing up the
01:14:04
brinks truck uh and they're promoting it like heck are they a publisher or not in your mind
01:14:09
i read um yesterday that uh barack and michelle obama's deal with spotify just
01:14:14
expired and they're going to shop it i suspect that somebody will pay them tens of millions of dollars to produce
01:14:22
content that's not illegal and it's a sign of a free market that's
01:14:28
working spotify has a business to run and that business is to
01:14:34
get content in front of the users that are paying them a lot of money on a monthly basis to get access to that
01:14:40
stuff and so who are we to say how spotify should run their business i think you have a choice
01:14:46
neil young expressed his choice there was a person in the new york times she took her podcast off of spotify yep
01:14:53
there are subscribers that probably left but then there are also subscribers that probably joined
01:14:58
yep and paid yeah and paid and so the reality is that's the free market
01:15:04
being allowed to choose and being allowed to vote with their feet and i think that all sides of that are in the
01:15:10
right so i think spotify should be allowed to run their business i think joe rogan should be allowed to
01:15:17
say what he wants if spotify chooses to put a disclaimer in front of that podcast that's their right and that's
01:15:22
good too and if joe rogan decides that he wants to have you know point counterpoint
01:15:28
across podcasts or within a podcast that's laudable as well and that should be his decision but i don't think people
01:15:34
should be forced to make these decisions by law because i think we get into a very slippery slope because you don't totally understand the
01:15:41
incentives of the lawmaker there and we have a free market as you're pointing out shamat the free market is worth
01:15:47
working perfectly and more a lot people don't like this free market more important in the free market we have a founding document of principles that we
01:15:53
all agree to yes yeah and unfortunately there's a lot of people who don't agree with that says we have a right you're talking about so
01:15:58
here we go let's go to our constitutional attorney counselor take us there if you're talking about
01:16:04
the principle of free speech there's a lot of people who don't believe in it that's the problem first of all you have this geriatric hippie whoa whoa whoa
01:16:12
this jerry can i finish let me finish my rant jacob then you can get it okay we got this geriatric hit i love neil
01:16:18
young no you know what happened here wait sorry saks just there that was j cal saying oh [ __ ] he's going to get a
01:16:23
bell cluster clip and he got tilted oh my god he had to interrupt you there that's
01:16:29
really brutal jake that's about that i thought you were talking i thought you were talking about uh joe biden can i
01:16:35
explain actually explain what happened because i think frankly you guys are completely missing it the wheel of censorship broke
01:16:42
on joe rogan this week they try to alex jones him and it failed okay first you
01:16:47
have this geriatric hippie neil young who somehow has turned into a narc and he plants a flag and he tries to get all
01:16:54
these people behind him and the very online crowd says yes we gotta cancel rogan and then you got jen pasake from
01:17:00
the white house weighing in bringing the coercive power of the administration on the side of censorship okay and what
01:17:07
happens rogan comes out with this non-apology like you said and he seems so reasonable he's a guy who's
01:17:13
inquisitive he's on the side of just asking questions he's on the side of balance he says yeah look i want to
01:17:18
present both sides of the issue and everybody was like there is no reason to be censoring this guy rogan is an
01:17:25
everyman and if they would censor him they would censor every man and that is why there was an enormous backlash to it
01:17:32
and everybody has opposed this and so i think this is the week that this ridiculous idea of censorship has broke
01:17:38
now it would be nice if everybody to jamaa's point did agree with this principle but they don't
01:17:44
the fact of the matter is j cal that censorship is now the official position of the democrat party and you see it in
01:17:52
the poll numbers there was a great tweet that glenn greenwald glenn greenwald posted where he showed the polling
01:17:58
numbers on this so okay you go back to the days of the obama administration
01:18:03
both democrats and republicans agreed that the u.s government and tech
01:18:08
companies should not get involved in this type of censorship but today there's been a bifurcation democrats or
01:18:14
lean democrats versus republicans or lean republicans it's 65 28
01:18:20
in favor of government taking steps to restrict info online and at 76.37 democrats first republicans on
01:18:27
tech companies so blockers the first amendment is no longer longer a consensus and that is fundamentally the
01:18:32
issue scary but i gotta tell you i think there is a backlash against this and i think that
01:18:38
most of the country now and i i think this is where they went too far is that rogan is not alex jones
01:18:44
he's not trump he's not milo yiannopoulos he seems like a reasonable guy he is the biggest figure in
01:18:50
independent journalism he gets 11 million viewers every week and i think there's a lot of people especially young
01:18:56
people who are going this has gone too far and by the way i do not think obama ever would have made this political
01:19:01
blunder of effectively denouncing rogan because obama tried to appeal to young
01:19:07
voters and i think jen pasake by putting the administration on the side of the censorship they've made a huge mistake
01:19:13
and the same week we saw that tucker carlson now gets more young democrats
01:19:19
listening to his show then cnn and msnbc and i'm telling you this is the reason why okay henry you
01:19:25
can put in the roaring crowd of applause at this point the best the best
01:19:32
i'm telling you jacob you got big problems there are now more tucker democrats okay
01:19:40
among the key young demographic in your writer's room tucker's writer room which one i'm a tucker democrat jacob you're a
01:19:47
tucker you are you love you love obama you love clinton i think what's happening is that i mean and chamath
01:19:53
you've said this over and over again chamom i'm sorry
01:19:58
you had on one side you know the the right when lost their mind in the alt-right now they've come a little bit
01:20:04
more center and then you now have the the democrats have lost their minds the fact that anybody can't look at joe
01:20:10
rogan and say he's a comedian he worked on a show where they fed people shakes of blended insects feel
01:20:18
fracture and he's taking mushrooms and he's like why are you taking me so seriously well wait i think you understand hold on i think you're being
01:20:24
super dismissive of joe rogan i think he's actually as sack said a pretty reasonable curious person and
01:20:30
then yeah he does the stuff that he doesn't prepare for the show he literally said i don't prepare for the
01:20:36
show i don't do anything maybe he does or maybe he doesn't know he said explicitly he doesn't and he fact checks
01:20:41
in real time so you got to keep your expectation at a certain level with joe rogan i think i i
01:20:46
i think that that's implausible to believe i know that that's what he said but you know 11 million people a week 100 million dollar deal i do suspect
01:20:53
that he does some sort of preparation i don't think he's a he's completely winging it okay he literally said he
01:20:58
wings it but okay i understand that but i think that's not the point okay okay
01:21:04
the point is whether he prepares or not the excuses and sorry the dog ate my homework it's hey listen i have a right to have
01:21:10
this guy on my show just like i have the right to have this other guy on my show
01:21:15
you can listen to both and then you can decide for yourself you could change the channel okay that's the important point so jason i would not like try to make
01:21:22
this whole arguing about whether he was prepared or unprepared as the excuse it's whether you believe there's a
01:21:27
fundamental right to free speech or whether you believe that people who disagree can disavow people and get them canceled
01:21:34
and get them kicked off yeah i obviously don't agree i don't agree anybody should be canceled i think he should keep going whatever rogan's level of preparation
01:21:40
which i think is actually pretty high the people who are accusing him of putting out misinformation are far more
01:21:46
guilty of it themselves and i think one of the best points in rogan's uh non-polity as you called it is he said
01:21:52
listen a lot of the things that we used to consider misinformation are now the truth for we've talked about it on
01:21:59
the show yeah well we've been ahead of the curve and calling all this stuff out you know we could have been accused of misinformation so examples the lab leak
01:22:05
theory you speak consumers information cloth masks not doing anything listen dan bongino was kicked off youtube two
01:22:12
weeks before the cds first saying that clock dan bongino he's a pretty big conservative commentator okay he's got
01:22:19
an audience of millions you can be dismissive but a lot of people like him yeah j-cal but look my point is he was
01:22:24
kicked off youtube for saying classmates don't work then the cdc comes out two weeks later and says the same thing
01:22:30
right i think that's a valid point yeah well it's the key point i personally like you know for example we've talked
01:22:35
about this thing where like if you look at like the top distributed links on facebook who do you see ben shapiro
01:22:40
dan bongino you know breitbart rogan right yeah my takeaway with all of these things is
01:22:46
there are people of those things if i listen to i'd probably find abhorrent but there are people there that are probably i would be you know i would i
01:22:53
would i would they would appeal to me in all cases they should all exist though because the whole point is let me
01:22:59
spider my way through this stuff and figure out for myself yeah what works and what doesn't work yeah more speech
01:23:05
is the best counter the summary of this that makes the most sense is um elon tweeted this out nick you can put this
01:23:10
because i gave you the image but it's it's a meme of neil young where it says if you won't censor the guy i don't like
01:23:17
i won't let you listen to keep on rocking in a free world yeah and and it's and it's just so true
01:23:24
which is like on the one hand you know you are a standard bearer now maybe what we
01:23:29
should really do is talk about what has happened to this boomer generation over the last 50 years where
01:23:35
they were you know uh sex drugs rock and roll no war in vietnam let's fight for
01:23:40
our rights let's fight for equality then punk rock yeah you know no i'm talking about just those those
01:23:46
folks back then who are now 50 years later you know sitting on 70 trillion
01:23:51
dollars of wealth and who are basically like you can't say this you can't say that don't do this don't do that wear
01:23:57
masks don't leave your house you know yeah vouching is right they're scared
01:24:04
yeah you know this is i mean that generation i think we all have some soul searching to do about what happened to
01:24:09
that generation i think they're scared because they're old and they and they feel like they're going to die from coke is it that generation or is it the fact
01:24:15
that every generation rebels against the prior and ultimately becomes conservative and you know that's the
01:24:21
that's just how life goes i don't i don't think they become conservative i think they've become authoritarian what happened is they're now in power
01:24:28
the boomers are in power they've been making the decisions for last 20 years i think there is enormous popular
01:24:34
discontent with the way the country's been run over the last two decades the futile pointless wars in the middle east
01:24:40
the debt the economy the unfairness that it goes on and on and what and especially with covet i
01:24:46
mean this coveted policy over the last two years has been a fiasco and the point of this censorship of
01:24:51
misinformation is to suppress the debate i mean what ultimately is the point on
01:24:57
take for example covet of saying that people cannot take a point of view it is to stifle the debate that's to prevent
01:25:04
an honest debate on these issues and that people have an interest in doing that are the people who are in charge
01:25:10
and are failing and if you gave people the information they'd be voted out of office if you look when i asked what are the
01:25:17
specific claims that either joe rogan or his guest made that people are objecting to a lot of the people who were objecting and wanted him censored really
01:25:24
didn't know and one of them was he said early on i don't know for a young person who's in
01:25:29
shape if i would advise them to take the vaccine i know a lot of people who have that position which is like if you're
01:25:35
young and i think actually freeberg you might have said mrna early on in this podcast it's a very new
01:25:40
technology and i could see people wanting to wait and see did you not say that i don't want to get
01:25:46
you cancelled here but i i think we did have that discussion not have that conversation that's a valid conversation mrna is a
01:25:52
new technology right freeberg you should think about it and we should be cautious don't draw me into your cancel
01:25:59
that's why i said we i just changed it to we were talking about that don't you remember that discussion we had like when i asked you i think mrna what do
01:26:05
you think of this versus the regular one the j and j i think generally we've seen um
01:26:12
science being used as a way as a term uh to discredit
01:26:18
what i think would arguably and typically be scientific principles which is inquiry challenging hypotheses
01:26:25
and having you know vigorous debate uh to resolve to some sort of objective truth otherwise you're having some sort
01:26:31
of subjective belief and more often than not we've seen politicians and others grab on to the
01:26:36
term science and saying this is science it says this when in fact the process of science is
01:26:43
inquiry and it is to challenge you know again a hypothesis and and what might be kind of a thesis so um so yeah
01:26:51
i think generally this has been a pretty scary time to watch because it's almost like gaslight lighting you
01:26:57
know it's like hey you know you're using the term science to discredit the notion of science uh
01:27:03
it's been pretty brutal i sent you guys this this uh cartoon link by the way it's so funny oh i just got it old left
01:27:08
versus the modern left it's a volkswagen uh bus with a bunch of hippie dippy flowers and it says free speech free
01:27:15
love 1971. no cia screw the establishment resist authority and then it shows like a
01:27:22
modern suv with 2021 it says masks up i heart the cdc obey the establishment no free
01:27:29
speech do what you're told obey basically you have another poll you want to share sex
01:27:34
well yeah this is a really interesting one it says a majority of voters 55 saykovic should be treated as an endemic
01:27:40
disease while a majority of democrats say it should be continue to be treated as an emergency and then there was a similar poll the
01:27:46
monmouth poll just came out where 89 percent of republicans 71 percent of of
01:27:51
independents say that it's time we accept we accept covetous is here to say we need to uh get on with our lives only 40 sharks are
01:27:58
democrats so the reality is that the rest of the country i think has moved on it's ready
01:28:04
to move on the split is not between democrats republicans anymore it's within the democratic party the
01:28:09
democratic party is now divided on this question of whether we should move on as a country pass covet
01:28:16
half of the democratic party still believes that kovitch should be treated as this emergency do you think that it's cut by age do you think there's a bias
01:28:23
but for sure for sure i think yes absolutely people are more scared yeah but i think i think the media and the
01:28:28
party they've programmed their soldiers to be you know to treat covetous emergency and they can't deprogram them
01:28:34
and this is why i think we're seeing tucker's tucker is now the biggest demographic
01:28:39
among young democrats that's insane to me it's insane the idea that idea is insane this does not bode well for the
01:28:46
on top of everything else is happening in the country this is not bode well for the democrats in november and then you
01:28:51
had this crazy thing at the um you know the magic johnson party at that uh that
01:28:57
was the best held my breath i took a picture of magic johnson i held my breath so i wouldn't get the virus with garcetti and and newsome news and claims
01:29:04
it's been you i didn't inhale yeah exactly and then says that he was only photographed at the exact moment
01:29:10
where he took off his mask for two seconds you know you know what i if you go to the ski slopes there is nobody
01:29:15
with a mask on and nobody's enforcing it and no restaurants and this is in democratic country everybody has moved
01:29:21
on at this point everybody's willing to but why haven't they why haven't why haven't they do something politician
01:29:27
because they're very signaling and they want to keep power i don't know you tell me that's that's that's the point well i
01:29:32
think they're dumb they should take the position but wouldn't take in the reopening
01:29:38
position get you more voters at this point people are tired of this they want to move on it doesn't make any sense
01:29:43
they're making a bad political decision to their base that's the point is i think i think the whole country has
01:29:48
moved on even most democrats have moved on but the democratic base has not moved on and that is why
01:29:54
you know newsome and and garcity have to pay lip service to this well i mean and these guys have been telling everybody gotta wear a mask gotta wear a mask and
01:30:00
they're not wearing masks and let's face it they weren't wearing masks at uh the french laundry they have never worn
01:30:06
masks they've been throwing their own parties with no masks a bunch of hypocrites a whole lot of them all right in other
01:30:12
news xi jinping and putin got together and they're apparently besties here's the
01:30:17
quote some actors representing but the minority on the international scale i think that's us continue to
01:30:23
advocate unilateral approaches to addressing international issues and resort to force
01:30:29
they interfere in the internal affairs of other states infringing their legitimate rights and interest and
01:30:35
incite contradictions differences and confrontation uh the statement said i am willing to
01:30:42
work with president vladimir putin to plan a blueprint and guide the direction of
01:30:47
sino-russian relations under new historical conditions mr xi said he added
01:30:55
that china and russia should act like big countries as they intensify coordination on fighting the coronavirus
01:31:02
pandemic yadda yadda any uh feedback from our squad i mean you could have rewritten that press
01:31:09
release as you know we will uh we want to try to destroy u.s hegemony and replace it with ourselves
01:31:17
this is the beginning of the end of u.s cultural and economic influence globally or dominance rather influence
01:31:24
it uh globally and i think that it's uh you know something that we've talked about quite a lot you know i mentioned
01:31:31
in in the prediction episode that i thought that putin was going to play a major role this year and um
01:31:38
and you know he's clearly not just you know out for his own interests but he's going to play a really important
01:31:44
role in china's rise to economic and cultural dominance you agree chamath is this uh the sign that
01:31:50
they're going to be running the show or does this look like something else to you no no i don't think that there's a
01:31:55
show to run i think the point is that there was um a first among equals for the last
01:32:01
many decades in the world order where you know america was it was that first
01:32:06
among equals and i think what they're saying is that it's time for that to change and
01:32:12
and and they're gonna tie that to their ability to influence uh foreign
01:32:19
policy in countries the way that we have historically so you know this is sort of basically putting a marker on the table
01:32:25
that says this is going to be about um you know
01:32:30
a different cohort of people that are also going to have an equal say and if you think about where this all plays out it's always in economics right and this
01:32:37
is where again you have to think about what china has done which is they have while we were fighting wars
01:32:43
you know putting trillions of dollars into the middle east they took their trillion dollars and bought resources
01:32:48
all through africa yep right they built infrastructure they bought infrastructure all through south america
01:32:55
they put infrastructure all through southeast asia you know that say call it 15 trillion dollars that we spent in one
01:33:00
direction they spent another that's a 30 trillion dollar gap that's going to create a resource
01:33:06
imbalance that they will use to create even more influence in the future and we have to figure out a way to counteract that
01:33:13
sax what do you think is this uh a changing moment in the world order should we be worried that these two uh
01:33:19
dictators are going to act in unison and then maybe one gets the ukraine one gets taiwan is this like really
01:33:27
earth-shattering uh news or do you think it's saber-rattling and not that big of a deal well i think it's
01:33:33
a dramatic statement and photo that was was put out it was a continuation of what we've seen where they have you know
01:33:40
xi and putin have been getting and russia and china they've been getting friendlier and friendlier what saddens me and sort of sickens me
01:33:47
as really an american patriot who would like to see the american world order continue is the way that we have
01:33:54
blundered uh and created this this type of situation so to jamaa's point first of
01:34:00
all we wasted 20 years trying to do nation building in the middle east six we wasted six trillion dollars on
01:34:07
that how did china you know lose by not being part of that
01:34:12
they benefited they were building belton road while we were you know engaged in this foolish interventions in
01:34:18
the middle east and now more recently with putin we've really driven putin into xi's arms because we keep
01:34:25
threatening to add ukraine to nato which is not something that's in america's interest if we would just give up on
01:34:33
that position or just reaffirm that ukraine should not be a to nato it would enormously help diffuse tensions with
01:34:39
russia and by the way your point that these are dictators or natural allies that's not that's not historically been
01:34:45
true so during the days of the soviet union you know you had nixon and kissinger make the great opening to mao
01:34:52
and china and we were able to cultivate a relationship there because china and
01:34:58
russia were natural antagonists and it was a major move in the cold war that we
01:35:03
were able to cultivate mao and we did so even though he was a dictator with blood on his hands so
01:35:10
russia and china are not natural allies we should be doing a better job of not
01:35:16
so thoroughly alienating putin that he is rushing into xi's arms that's the blunder i see here by the way after this
01:35:23
um summit they're going to meet with iran there's a tripartite i think access
01:35:29
of dictators this is like the legion of doom we need to be playing our cards a lot in a much smarter way yeah they need to play our
01:35:36
cards what is the strategy i mean the strategy is look we want the american-led world order to continue but
01:35:42
we got to be much more selective about picking and choosing our battles yeah iraq afghanistan syria libya they were
01:35:49
huge mistakes and now on top of it what about looking forward to ukraine what's that yeah looking forward like you keep
01:35:55
bringing up the past what's the look forward strategy in your mind the look forward strategy i think is to defuse and de-escalate the situation in ukraine
01:36:01
exactly the way obama did it which is to recognize that america does not have a vital national interest the way that
01:36:07
russia does to reaffirm that the nations of the caucasus that have border disputes with
01:36:14
russia ukraine moldova georgia they are not eligible candidates for nato at the
01:36:20
present time kick that can down the road by 10 years okay we talked about that last episode taiwan is a much more
01:36:25
complicated situation i do think you have a vital national interest there got it okay so two very different situations
01:36:32
yeah yeah i think taiwan we have to hold the line yeah we have a responsibility in the united states and i think we're
01:36:37
starting to do it so i think there is good news where you know part of the strategic vital interest for taiwan is because they have
01:36:44
critical resources that we need and we depend on and specifically those are semi-conductors
01:36:49
you know we have now i think allocated you know 50 100 billion dollars of capital of capex across
01:36:55
a bunch of companies that have committed to building domestic capability and so we have to make sure we follow through
01:37:01
on that that's successful and the reason is that it gives us optionality it allows us to breathe it allows us to
01:37:06
actually make rational decisions and be patient in our decision making and i think that's going to be really important over the next 10 or 20 years
01:37:13
and so we have to invest in the united states so the the solution to all of these things is we cannot be overly
01:37:19
dependent on any one country any one shipping lane any one product
01:37:24
any one natural resource you just can't do that anymore we have to be strong at home and we have to build strong
01:37:30
relationships with other countries and yeah i i think i think we've got a an operating philosophy here all right listen let's wrap there uh we'll see
01:37:37
everybody on the next episode for the dictator chamath pauli hapatia the sultan of science
01:37:44
david friedberg and the rain man himself triumphant versus peter thiel in that paypal match great
01:37:51
moment david sachs love you boys love you besties
01:38:02
rain man david said we open source it to the fans and
01:38:09
they've just gone crazy with it [Music]
01:38:19
besties [Music]
01:38:43
we need to get back [Music]
