SPEAKER_18: ["I'm Going All In"]
SPEAKER_18: Antonio, uh, Elon had a moment of reflection and uh, he was talking about 2008, he was talking about the uh, imminent, uh, collapse as he felt it of SpaceX and Tesla at the same time on December 25th and he said, uh, there were just a handful of people who came out there and put their careers on the line for him uh, yourself and Steve Jurvetson specifically mentioned uh, and Ira, and it was a particularly poignant moment for him he was getting a little choked up about it tell us about that bet you made in 2008 and the potentially career ending bet for you to bet in an electric car company at that moment take us back to that decision yeah, um, but before I do that I just want to say
SPEAKER_08: that I left my wallet, uh, backstage because the last time I was with the four of you I lost a lot of money and I realized that I better leave, I better leave all the cash somewhere where you can't get it and then, and you also made me cry so I don't, I think I might, I might cry again now of joy? I mean, no, no, it was more like a humiliation yeah, we're playing poker yeah, we're playing poker wait, wait, wait, you pulled a Palmer Lucky? yeah, yeah, yeah, no, so if I cry again this time it will be from a sense of, um, just gratitude
SPEAKER_08: for those moments that we got to share so, the, for us in particular because, you know, our strategy is so operational I was there working on supply chain in the factory and on sales in that period along with my partner Tim Watkins and three or four of our supply chain people and we had a major problem in the supply chain the cost we had to control and, you know, Elon was doing engineering on the very expensive parts we were doing the, I call it the B parts, the A and the B parts and man, it was brutal um, but it was very clear to us that, remember it was also the middle of the financial crisis, right? so we had a treasury portfolio we had to decide, we didn't have a lot of capital at the time these are tiny funds, $123 million funds where our capital go, where our people go, more importantly where our operating people go and where I would go and we decided to focus on Tesla because first we really did believe in Elon when most people didn't and we saw in him something very special which I think you probably saw here yesterday that not only is he a brilliant, brilliant engineer you know, one in a hundred year kind of engineer he's a man of deep conviction and deep passion and deep compassion what he is doing is really trying to bend the arc of humanity for all of us because he really cares and that came through to us and we wanted to be on that mission with him and so we were privileged enough to be there in a moment in time that it mattered and it was really hard man I mean we had clients, I actually had a client say to me how do I know this isn't DeLorean? and I said look, I can tell you for a fact we are not selling cocaine out of the back of the factory in the cars DeLorean being the famous back to the future car
SPEAKER_17: where the owner was trafficking cocaine to underwrite the car
SPEAKER_08: exactly I may live in Miami but even Tony Gracia's were not selling cocaine for sure that I'm sure yeah but no it was a career betting event for us and it turned out right, it was the right thing to do but yeah for me it was I'm just deeply grateful for these experiences I mean you really doubled down because you didn't just do Tesla
SPEAKER_14: you also were there in some really critical moments at SpaceX as well
SPEAKER_08: we were, although I tell you we doubled down at the time in Tesla, we put more money in Tesla and then we'll finish a crisis and then help lead a convert round there that was really tough for us to do and then put money in SpaceX but I tell you operationally, like in terms of capital stack I think there were other people around and SpaceX is also running out of money and so we put money into SpaceX operation we worked at SpaceX over the years but it was never as existential in terms of the operations as it was at Tesla I mean Tesla was truly, I think truly existential and because we were operating guys and I myself had been a factory manager I worked in auto parts, an auto parts factory I'd run industrial facilities myself we could kind of uniquely add value there in the rocket factory, we were just less valuable but yeah both these companies were going down at the same time and the amount of stress we were all under was extraordinary but looking back on it, it's one of the greatest moments of my career I mean this sense of fellowship I think the great thing about being in our business, the business we're all in is that we get to back amazing people that are trying to change the world and in these dark, dark, dark deep moments we get to go to war for them and in those moments, I call them these moments of fellowship where you just care deeply about someone and passionate about the mission and you get to make a huge difference like these are the highlights of my career and if you ask my partners, they'd tell you the same thing these are the best moments, we've had some together three of us have had some together, actually we've all had some together but here on the stage, we had to fight for something you believed in and it's a privilege, man, to do it it's a privilege to be in that situation, it's a privilege to be with Elon it's been a privilege to be there with all of you at different moments in my career and I'm very grateful for it Do you feel like you come off of a high after having huge successes like that?
SPEAKER_14: How do you stay grounded and motivated to try to find the next one if in the back of your mind there must be a little piece that says it's never going to be as good as this guy or those two things I mean, you know, it's an interesting question, Javath
SPEAKER_08: I think that there's a couple things in play for us one is we keep going because we believe in making the world better we invest in companies that we believe make a difference with people we respect and we're values aligned with and that's the ethos of our firm, right? so whether it's large or small we may never find something that's as important as SpaceX again but we will find more great people, we will help them two of our companies here, I mean, we invest in Andoril with Palmer we have a small investment flex port which should have been one of the biggest mistakes the last 10 years of my career is not putting more money in flex port yeah, no, we had a, we actually, it's kind of a funny story about we had, you know, I'd say kind of a soft handshake on a term sheet at, say, a price of X and SoftBank came in like two days later and made it 2X and I had too much price memory to keep going and co-lead it so it was an error but you have two people on the stage here they're extraordinary entrepreneurs, they're trying to make the world better both these companies are really great and making the world much more particularly now post-COVID and in times of war making it much safer for all of us there are people like that out there, there's more of them they may not be Elon, you know, it was probably one Elon in our generation but there's lots of great people and I'm very optimistic about what's happening now in the economy we're seeing incredible, incredible innovation with tremendous entrepreneurs in our pipeline so maybe there's another one, I don't know Antonio, how do you think about the
SPEAKER_13: in the businesses you guys invest in there can sometimes be a very long capital deployment cycle before you see any real return in terms of business value whether it's pharma, I know you've done pharma some of these hardware companies where there's a big build cycle how much do you need to kind of think about and see a customer and revenue show up before you're willing to say, hey, let's build the big rocket ship to go to the friggin' moon and how do you judge and value that business and back a team?
SPEAKER_08: It's a really interesting question, I think it depends on the sector we're in and it depends on how we look at the world share probabilistically and we're looking for companies that we call pro and true where they get bad and the world gets worse so in the case of pharma or something like SpaceX we'll think about like what is our probability tree here what's our probability of loss, what's our probability of 3x, a 5x, a 10x, a 100x and then we'll think about when the capital goes in what is the actual return on capital I was watching the talk you guys had with Ryan about what happens to the public markets the reality is that a business is a machine you put capital in one side and out the other side comes return the ROIC, return invested capital, really matters and if you're a classically trained investor the way I am we think about that a lot so even though we may be putting a lot of capital in the question is what's the margin in the back end a company like SpaceX, a lot of capital is going in but we know that if it works and we believe it will work we're ultimately going to have a company that has tremendous margins even in the industrial sector because of the industry structure it's in it lives in an oligopoly inside the US and outside the US so it's like building Starlink, same thing, capital going in but we know that the margins and the profitability of that business on the back end will be very very high and so the ROIC will be very good are you backing a lot of deep tech startups?
SPEAKER_13: like companies, a founder shows up with a PowerPoint and they're like I need 50 million bucks to make our prototype I mean what happens there? it depends on the business
SPEAKER_08: so as an example we have passed on things that are our view going to have margins that are ultimately going to be competed to a low level and I don't want to give examples here but there are lots of examples of people that are doing things in what I call electric aircraft, VTOLs, etc. we look at this and say this is going to be a highly competitive market these are not in and of one SpaceX is in and of one if you compare that to someone making an electric vehicle say an electric airplane or electric VTOL that will not be in and of one it will be in and of many and in and of many business you're ultimately going to have margin competition that's going to make it that return on capital goes down to basic industrial margins it won't be that much better than Boeing's ROIC or Airbus's ROIC because those will be ultimate competitors you said it a little too, I think superficially
SPEAKER_14: so let me just double click and I think Antonio brings up I think one of the most important principles of investing that is so utterly poorly understood which is ROIC, ROIC, Return on Invested Capital most people don't even know what it means you calculate it, no pat over your weighted average cost of capital these are enormously fundamental principles when you're running a business especially in a moment like this because when the rubber meets the road and you need a lot of money and you run into somebody as sophisticated as him he's already worked from first principles to understand it it's really, really, really important to know these things because these are the core foundations of valuation so obviously DCFs are one framework but ROIC is incredibly, incredibly important especially when you make real things and you need to spend CapEx Look at the world in the last 10 years where money is free
SPEAKER_08: nobody thinks about this very much we always have thought about it which informs our investment model but yeah, Chamath's right, in today's world if you're an entrepreneur and you can show up and say listen, I have a 50, 60, 70% return on capital every dollar you give me will yield a 70, 80% return on the back end even though we're losing money along the way that's a very compelling case well to say hey, we're losing a bunch of money and we're not sure what's going to happen which is what we hear a lot This also builds on the question from yesterday
SPEAKER_14: which is how do you present yourself as a young emerging company and cut through all the noise an understanding of these things and about future value creation in a moment like this becomes really important as well even if people will debate whether it's right people will give you credit for the intellectual honesty of actually going there and understanding these things You see it a lot where companies slip away from first principles
SPEAKER_13: so the first principle is on a high margin enterprise software business you can define ARR and assume some and then people say hey, some multiple of ARR is your valuation comp like your multiple and then another company shows up and the margins are different the growth profile is different, the revenue retention is different it's a services business and they try and use a similar sort of comp and all of a sudden everyone's thinking about valuation as a function of some industry standard comp as opposed to going back to understanding how did that comp get created in the first place and what's the nature of the business from which that comp arose and people are doing things like calling revenue ARR it's not even subscription revenue and so on and I think that happens considerably more and then that investing cycle just becomes hey, well the next round will be this multiple and that's how we'll get our increment in valuation and everyone just misses the core proposition of building a valuable business What's your look through into the economy just from your portfolio companies?
SPEAKER_14: I think we're in a recession
SPEAKER_08: I don't know if someone's already said this but we're in a recession and this will be like my 100th cycle or something I'm pretty old but like the rest of us here we've seen it over and over again I see David's tweets about go raise two and a half years of money this is correct, you need enough capital to get through the problem but the good news about this recession and there is some good news here which is to me if you look at the macro picture here it looks like if you look at the amount of federal debt the state of the consumer and what's happened in this information it actually looks a little like post World War II to me in the World War II period we had the last massive mobilization or demobilization of our economy occurred in World War II that happened again in COVID in this case it's like a mini version of remobilization that we're restarting the economy we flooded the system with money to get a buffer to the problem and restart the economy and now we have inflation but we also have lots of business formation and we have new ways of doing work which is what happened after World War II so I'm very optimistic because most of these recessions to really get inflation down we're going to have to reduce consumer demand and or change oil prices so for sure we should be pumping oil in this country I know it's controversial but that's important to lower oil prices and get inflation down but the reality is underneath the numbers there's a lot of innovation happening and that's what happened kind of post World War II so I would say we're in a bit of a mini retooling it's going to be a rough year or two hang on, it will be a rough year or two but the consumer is in pretty good shape they're not over levered we should come out okay and the US economy is so resilient we are all either one generation from being immigrants or immigrants here I think most of us, right? it's the best place in the world to live we're the most innovative economy in the world I'm super optimistic what's happening here because there's so much innovation so many smart people working so hard to make things better I think it's going to be great I think when we get the next couple of years it's going to be great talk about this pumping more oil situation
SPEAKER_18: obviously Russia is involved in a and we talked about it earlier today had a debate about Ukraine and then you have maybe some folks in the Middle East not pumping as much oil as we might like them to and then Europe decided well we don't want to frack here we want you to do that over there and then we stopped here and none of us want to see environmental damage done to the planet but we also don't want to see dictators take over the planet or the economy come to a halt what's a reasonable proposal for America and American sovereignty in terms of green and renewables and maybe pumping some oil so look, we were the first institutional investors as a motorist
SPEAKER_08: so I think I have enough bona fides to say this I believe in green technology, okay? absolutely 100% but energy and in the same fund we did Tesla we actually had fracking assets because energy independence is a... well that's incredible really
SPEAKER_14: in the same fund
SPEAKER_08: in the same fund because then as it is today energy independence is a national security issue this is not a partisan issue extremely important to understand this extremely important to understand this it's not about Democrats and Republicans it's about wars in the Middle East and the reality is that the Saudis are not pumping OPEC is not pumping this is terrible for America and they know it they're squeezing the American economy the way they did in the 70s and it's absolutely being done on purpose so the answer to that in my mind is twofold one, we should have an... we need an industrial policy agenda in this country but the first we should have is an energy policy energy policy should look like this we take all of the background subsidies literally make them equal and we give let's say 500 billion total 250 billion in low cost loans to the energy patch for drilling in places like Texas, Louisiana and an equal amount to green energy and we sprint to a green future at the same time we ensure that this country is safe and we have energy security in this country for all the people out there being hurt by inflation it's a security problem
SPEAKER_13: You guys invest heavily in manufacturing what do you see in terms of the future of manufacturing the opportunity for onshore manufacturing are there technologies that you guys are excited about that create an advantage for the United States to build manufacturing capacity to service industry here yeah look I think this thing about we outsource the entire
SPEAKER_08: our entire manufacturing base in China because it was cheaper but the reality is that the if we have been our the productivity between the kind of US and China right now is about 8 to 1 so a US worker is 8 times more productive than a Chinese worker we found in cases like Tesla where we actually helped in terms of GDP per worker?
SPEAKER_13: yes, we helped to insource the supply chain of Tesla
SPEAKER_08: why is Tesla floating rate? because I got news for you you actually can make stuff in America it's made very well shocking let me tell you when you put what is the
SPEAKER_18: why do we have this narrative that it can't be done and then we go to Gigafactory and you see it having been done
SPEAKER_08: let me tell you why and boy I mean here's the I'm probably going to get pilloried for saying this but great companies are built by engineers like Elon Musk that's the reality of it and they know they want to control their manufacturing we do it here so we can iterate faster and make the product better if the product is good enough you'll sell it for a great margin they optimize their marketing people and destroyed by the CFO when you put the finance guy in charge and he's like oh hey we can get a lower piece by saying it to China but he doesn't understand the iteration cycle of making that product that guy destroys the company and that's what happened in America bean counters yeah we put the CFOs in charge
SPEAKER_17: for god's sake don't do that fuck these bean counters I mean can I say that fuck that
SPEAKER_15: let me say that let me say that
SPEAKER_08: if you calculate return on invested capital and you think about this carefully what happens is these long supply chains to Asia they have huge capital deployed but if capital is cheap you do that because the piece part price is cheaper but if you calculate what happened at Tesla in particular when you calculate the overall cost and capital wasn't free because you didn't get any it was actually much smarter to bring it back
SPEAKER_13: right so the long term cycle you make more money the short term cycle you make less money the short term cycle you make more money I mean is that another way to think about it you optimize you optimize short term outcome
SPEAKER_08: you improve the you improve the income statement because you might improve profit in the short term but you actually hurt the balance sheet because you sell this capital on the water over to China you're never bringing it back and your iteration cycle goes down because you've got so what you're saying is the product's less innovative
SPEAKER_18: for sure it is
SPEAKER_14: but he's saying something really important which is that it's the financialization of the P&L that in some ways led to the decline of American manufacturing in part meaning if you're a CEO of a business and you construct your employment agreement and it's based on a certain kind of earnings in a certain period a certain earnings per share the incentive to then drive financialization goes up now the perfect example of this is if you compare it for example and you did this the comp package that you gave Elon in 2018 versus the comp package that any other CEO in America got it was completely black and white it was opposite land and you basically completely said you get nothing now let's set these extreme goals and then if you can hit it you'll get compensated so much so that when you had Glass Lewis and ISS they all said vote no right?
SPEAKER_08: the ISS said no but they just did most things and we're being sued for it so gotta be careful what I say about it but yeah we had a comp package fully vote on equity appreciation that required creation of new products and look I'm gonna pick on Apple here Apple's the first stock I ever bought I was 12 years old my mom actually went to O'Kend Bank and bought me a few shares of Apple I still have it in my account to remind me what it takes to build our company Steve Jobs dies terrible and look Tim Cook takes over Tim Cook's the supply chain guy I mean they've really optimized profitability it's unbelievable they've done a 2 trillion dollar market for something now but man when's the last time they made a new product? AirPods AirPods yeah I mean pretty great
SPEAKER_13: great product great product but I mean
SPEAKER_14: it's not an end change in the world incredible free cash flow and they aggressively buy back their stock yes and the financialization of that company has attracted them I mean if you look at a comp if you can look at a the largest shareholder is the most sophisticated financial asset owner in the world Berkshire yes Berkshire doesn't buy technology companies they buy incredibly well run financial assets and it is
SPEAKER_13: by the way look at how Zuck's getting land based for the VR investment some might say that strategically it's not a great investment but he's saying fuck it I'm gonna spend 10 billion dollars a year
SPEAKER_14: no no no he said it for a quarter and then he had to take it back and cancel it
SPEAKER_13: oh you said that they took it back yeah yeah but that's what he wanted to do and so to your point like it's very hard to really build things now
SPEAKER_14:
SPEAKER_08: yes but it can be done and look I think one of the I am what is happening in the world today geopolitically is tragic the war we experience in Ukraine is absolutely tragic but from all tragedies come some some good things there's always a silver lining and one of the silver lines here I think should be the acceleration of reshoring of all these products into America to rebuild our industrial base because we actually can do it I can tell you I am starting my career basically as a factory manager in California it can be done there are Americans who want to make stuff between here, Mexico, Canada we can make pharma we can make high-tech products yes the price might be a little higher but I gotta tell you the iteration will be better and your value will be better if the product is better people will pay for it and resiliency
SPEAKER_18: and resilient
SPEAKER_08: listen for 100% 100% all right
SPEAKER_18: we are setting up a couple of microphones here Antonio has been gracious enough to join us for some Q&A the audience is filled with entrepreneurs capital allocators artists and builders so we're gonna put a couple microphones out there hopefully some lights on the microphones if I can see them line up and remember the rule we don't need to know about your company just a tight concise question anybody does any marketing or promotion we're all gonna groan let's practice a groan three, two, groan oh no girth you can say your name you can say your favorite bestie
SPEAKER_15: also wait before we start
SPEAKER_14: yeah if Chris is Chris Malloy okay everybody you guys may want to just know Chris whenever you're in Vegas Chris is the guy at Carbone in Las Vegas which is the most you know best hardest restaurant reservation to get but Chris bought a bottle of wine for us that we can open now and drink while we do AMA oh well bring up a bottle of wine
SPEAKER_15: say hi to him get his number and text him if you're ever in Las Vegas get that guy up I mean only Chamath
SPEAKER_17: would bring the captain of Carbone to our event
SPEAKER_18: oh get the drink
SPEAKER_08: let's drink the wine let's do it fantastic nice to meet you
SPEAKER_18: alright first question tell us your favorite bestie and then yeah we're still doing favorite besties right
SPEAKER_19: favorite bestie
SPEAKER_16: and then a quick tight question go alright favorite bestie
SPEAKER_19: Jake out point guard of the century to this team so hats off to you my question is first of all we've been here all week in the last three days watching these cards fall from the sky and we all know that you guys center around this poker table this beautiful game my question is how has that game influenced both your relationships and decision making in business and your personal lives great question
SPEAKER_18: Chamath start us off and you can go to the back and next person queue up how is poker influenced? friendship our lives how has the poker game itself had an impact on our lives I think I really do believe this but I think it's the most incredible game
SPEAKER_14: and training ground for business because in any given moment you are forced to deal with the spectrum of good information to moderate information to bad information good outcomes moderate outcomes bad outcomes you're taking risk you're learning information you're adjusting your style and the most important thing is you're forced to anchor to your core values or not how you behave at the table is how you behave in life you can take these wins poorly that's like a news for Phil Hellmuth you can take these wins poorly you can take these wins well you can take the losses poorly you can take the losses well I would encourage all of you to learn to play the game with your friends it's a beautiful beautiful game and start a weekly game, Saks?
SPEAKER_18: well the poker game at Chamath's house is how I got to be friends with Chamath right?
SPEAKER_07: I'm just saying this is what you guys tell your wives while you stay up all night playing poker
SPEAKER_08: because I've been there with you guys it's pretty friggin degenerate we're all holding hands talking about feelings
SPEAKER_08: it's training for business no it is training for business I'm kidding you but I've been there it is training for business I've seen the drinking of the food too
SPEAKER_06: it is training for business we're not degenerates but go ahead Saks
SPEAKER_16: well I was just saying Chamath didn't you invest in Yammer after I started playing in your weekly poker game?
SPEAKER_07: yeah and it was actually so degenerate what really happened after that was I was in Las Vegas in 2011
SPEAKER_14: I had just left Facebook I moved to Vegas and I was on the phone with Saks in between playing tournaments and he like let me in invest in Yammer literally like and you know you did me an incredible solid because I put money in and you know what this is like nine months later he sells to Microsoft and I returned a third of my first fund ooh yum yum and it really solidified my reputation so I mean I owe you a big one for that well I got to think about this though so David Saks I've known David for 25 years he did Yammer I want to put money in
SPEAKER_08: he said no because if
SPEAKER_08: this is a true story he said no he said he said no because if this fails you are my backup plan oh for a job?
SPEAKER_17: yes well you know for me a job
SPEAKER_08: I wanted David to come join me I was so afraid of losing everyone's money when I founded a company you know
SPEAKER_07: he literally took a little shot from me I wanted to have like one friend who's money I didn't lose but you know that was the wrong way of thinking about it we should have had a good one Freeberg? I mean how is the game?
SPEAKER_13: well I'll before Chamath are you leaving? no I'm getting glasses come back for a sec ok he'll get glasses ok he's getting one I'll tell you guys one thing Chamath is one of the most generous people you'll ever meet it's unbelievable it's unbelievable unbelievable and for all of his for all of his bluster about his friggin mink coats and shit like Chinchilla Chinchilla he has brought together a group and he largely is the reason that I think the game grows and goes on and you saw some of the amazing people that we've had on stage here some of our friends are here that we play our game with that really that network has been built and solidified because of Chamath and his generosity and friendship that's it's really something I've learned to appreciate in my life and you know thank you yeah I mean it's a tremendous group and yeah
SPEAKER_18: amazing people
SPEAKER_15: amazing people and
SPEAKER_16: yeah the consistency of it has been amazing
SPEAKER_18: and it's a degenerate group Chamath had this like little tiny two million dollar house with like a one and a half car garage when he was at Facebook and we would play in the garage that little tiny place you had remember? yeah yeah you know before you bought the two houses next door and knocked them down and gentrified but true story Saks said hey you know you're doing these conferences you should invest in the companies and this is when I put the fix in for him to win TechCrunch 50 at Yammer with Yammer he said I have to win and then his wife told my wife he has to win so then I basically got the whole jury to vote for him with Yammer he wins and he goes hey schmuck all my success is due to J. Cal you guys understand that right?
SPEAKER_05: it was a good fix I put the fix in for him but he said listen I want to thank you for this and you should start a fund instead of doing all this work at the conference why don't you just invest in the companies I'll put 250k into your fund I'll be the anchor
SPEAKER_18: I said that's incredible really and he said yeah and then I went to the poker table I told the story and then Dave Goldberg rest in peace one of our great friends and certainly the best amongst us thank you he said I'll put money in too alright thank you and he put money in and then Billy said I'll put money in and everybody said they put money in and free break said I'll take a pass
SPEAKER_17: but you know we'll put that aside anyway I was all locked up in other stuff
SPEAKER_13: yeah he's like I got a quinoa farm I've got to take care of
SPEAKER_18: cheers cheers cheers cheers
SPEAKER_18: fellowship and this is a true story Bill Lee's there he couldn't make it here but he's one of our great friends and one of Elon's best friends in the world and he said of course I'm in would you mind if I tell our billionaire friend the co-founder of eBay Jeff Skoll and he tells him Jake Hal's doing a fund you should do it I meet Jeff Skoll's money manager and Jan and I say hey here's what I'm doing I'm a first time fund manager I don't know what the fuck I'm doing I'm a former journalist and he said how much is the fund I said 10 million he said I'll take half and I said I'm sorry and he said I'll take 5 million and that was the biggest check I ever got and it was because of Billy and literally that first fund was raised around the poker table in one night and that changed the trajectory of my career and that really is the fellowship and it started with David and you hosting and I remember as like yesterday and I think maybe also a good moment to just maybe cheers to Goldie Dave Goldberg no longer with and Tony Shay who played in the game as well two incredible men Next question
SPEAKER_06: Hey my name is Bobbin favorite bestie is Chamath great to meet you last night By the way Antonio is also our people too
SPEAKER_14: Alright listen we know Chamath is the bestie quick with the question let's go
SPEAKER_06: My main question is like when you guys actually decided to manage capital for people like what really was the scariest step in taking that leap and taking that risk I know a lot of you are GPs solo GPs so
SPEAKER_13: I mean Zach you made a big leap
SPEAKER_07: What was the scariest step well I mean even as a founder like I mentioned before I was like so worried about losing people's money I mean that was like I mean I don't know if like founders today even care that much that this seems but It just seems like upcoming didn't work move on to the next one I mean maybe that will change now that the environment's not gonna be as free flowing but I was always like really worried I was gonna lose people's money and you know with something I remember when I started social capital I think I was playing I was either playing golf or I had dinner with Chase Coleman in New York and Chase says to me I'll tell you the one piece of advice Julian gave me when I started Tiger
SPEAKER_14: But I said what was that this is a 2011 he said this is a death sentence and I was like well what does that mean and he said you are the only person that's gonna live with this because you're responsible especially based on who your LPs are for folks that if you really think about who they are it's just gonna create this thing there and it's like you know and I was I was trying to get a job at Tiger And I was like well what does that mean and he said you are the only person that's gonna live with this because you're responsible especially based on who your LPs are for folks that if you really think about who they are it's just gonna create this thing there and it's like you know and I was I was lucky in that moment because we were we were able to get like the Knight Foundation and Mayo Clinic and these folks that are doing these good works but then you're representing their capital It's heavy. It's heavy because you make this decision and if it's wrong you just feel literally like you're derelict and you're taking money away from sick children or you know free speech I mean it's it was a that's a brutally stressful thing to lose money on behalf of people By the way I'll recommend if any as a founder if you raise money raise money from your friends too and it'll really change how you operate. Yeah I mean I raised the first fund from my friends and I tell you I took every single deal very seriously and I did my diligence and I was very thoughtful about it. How about you Antonia?
SPEAKER_18: Oh man our first fund there are two fears I had the first one was raised from I live in Chicago from my friends in Chicago and I literally said to one of my partners at the time if this doesn't work I have to move. I'll have to go to Chicago because in Chicago you might get killed if you'd like to look in the bathroom.
SPEAKER_15: I thought you were meeting the weather. No no no. I mean these guys lose your money. He was talking witness protection. Exactly. These guys lose your money. People are kind of like oh I'm sad about it. Chicago would like break your legs they burn your house down man it's a whole different. All right let's take another question.
SPEAKER_08: Oh sorry. No keep going. No the second thing I mean it's the worst thing for me the most scary thing for me was just the people. I had three or four guys that I worked with building companies before that and I knew if I just felt if I disappointed them if we failed I would have felt terrible. Yeah.
SPEAKER_18: It certainly makes you focus on the game. It's like being staked in poker you play better. Sir. I have a question for the 17th most important person from PayPal. Oh okay. I'm just kidding. I'm just kidding. David. Obviously Friedberg is my favorite bestie.
SPEAKER_23: All right. Let's go out. We've been. Let's go. Unbelievable the free bird love. All right. Free bird soak it in. You've been talking about how all this increased money supply has been sending the asset prices up and now it's unwinding. I don't think we've heard you talked about crypto specifically. Bitcoin has obviously come down but it's still over three times where it was pre pandemic. Curious what you think will happen in that world as this unwinds.
SPEAKER_23: You want me to address that. Sure. Or it was for you. 17 months important. So the thing the thing about the crypto market to understand is that it's like a liquidity sponge. The more liquidity there is out there the more people feel empowered to make speculative investments and crypto is like the most speculative. Now that's not to say you know it's not real. I actually do believe in Bitcoin. I think there'll be a number of other sort of all currencies that work.
SPEAKER_07: But probably the vast majority will not and there's been a tremendous amount of speculation and inflation there and so that space is in the process of correcting. You know I've never been able to say like what the right price levels for any of this stuff are. Let's say you believe in Bitcoin long term. Let's say you believe it's going to be the first non fiat currency. What price should that be today? You know it's there's no like discounted cash flow analysis you can apply to it. So I think it's going to be a lot of money. But it's always been very hard to know what the prices of these things should be. And so in practice the price is a function of how much liquidity is in the system. When you go through a period of liquidity getting destroyed it's no surprise that crypto goes wrong with it. Antonio have you touched them and you were so into physical assets and building real things like spaceships and rocket ships. When you watch this crypto bubble you know grow and burst and grow and burst and now it's burst again. What's your take?
SPEAKER_08: Well first I want to I bought my first crypto I mean I think in 2017 because David Sachs and Bill Lee were pushing the Ponzi scheme on me. They were like they were I was at a birthday party and you probably were there too. Yeah. They were like they were they were hawking Bitcoin. So I bought some. Nobody had heard of it at that point. I think it was like 800 bucks. So here's my general view. I actually think I think that Bitcoin in particular is a bet on rising political risk and on political freedom. Economic freedom is is closer to political freedom. And last time I looked Ukrainians are the third largest holders of Bitcoin. And if I were staying in Taiwan today I would have 10 50 percent assets Bitcoin. So this this removes the ability to control currency capital controls from governments. I think this is very important and it should survive. Price levels I don't know.
SPEAKER_08: I do have a reason why a Bitcoin is a hedge to political risk globally. And that's how we think about it. We have invested in infrastructure assets in and around a block chain with Dave we have a couple of assets because we believe that block chain itself is a platform shift in the technology of tracking assets. This was a real thing and it's going to happen. It's going to change the way we do finance. So we invest in infrastructure. Got it. Let's take another question. Oh I'm sorry we're going to take one from here. We'll alternate. So tight is right. Yeah. Hi. Car Muncher CEO of Credo. I have to say I'm a science nerd. Freeburg. But J. Cal it's been awesome today. And I want to say you guys like your courage and bravery to do what you've done with the pod and watching this today. Like thank you.
SPEAKER_27: Thank you. Thank you. Yeah. You've talked a lot about later stage. I'm wondering if you could like tune in a little bit more on on pre seed and seed and kind of what you're seeing in terms of valuations and metrics that you've got to hit in the earlier stages. It's very simple. You know I invested in Uber thumbtack and calm for 15 million dollars combined. That was a combined valuation. Post money. Post money and those all three companies had products in the market.
SPEAKER_18: And then what we saw over the last five years is people wanting credit for a white paper, a prototype and MVP to the tune of 15 to 50 million dollars. And we did sit out some of those and said listen when the product is ready let's take a look at the product and talk to the first two or three customers. And to David's point about zero to one customers is a really hard hurdle. And now it's back down to six to 15 million for a company that has a product in market and maybe 50 to 100 times yearly revenue for a valuation. So to the extent you can get to 200k in yearly revenue you can get you know a 10 to 20 million dollar valuation. So I'd say halfway back to normal and perhaps a permanent you know livable reset because the outcomes have been pretty fantastic. So the early stage should go up. The only thing you really need to raise money is to build a world class product and just get a couple of customers who are absolutely blown away by what you've built. That's all you need. But everybody gets concerned with the theatrics and the performative stuff and their network and nonsense. And who you are where you came from. None of it matters. Build a world class product that two or three people are obsessed with and you'll get the sea check focus.
SPEAKER_07: I think right. If my Gerstner had sorry to interrupt your applause Jake. I know that's important to you.
SPEAKER_17: I'll take one little.
SPEAKER_07: So I think Brad Gerstner made a really important point on this which is the new normal is going to look like the old normal meaning the pre COVID normal. We had the the abnormal period was this two year COVID period where 10 trillion liquidity is pumped into the system. Things are going back to what they look like before all that happened and maybe before the Fed started with this zero interest rate policy. So we're actually getting back to normal. Understand that the environment we're entering now is is the normality the abnormal period was the inflation we saw in assets over the past couple of years. That's the like reset that everyone's got to like wrap their heads around. Saxx you're my boy.
SPEAKER_05: Finally. Finally.
SPEAKER_15: I think there may be some preference false and false location around this because people don't want to admit they're conservative. All the polling.
SPEAKER_07: All the polling shows this. Anyway, thank you, sir.
SPEAKER_18: And your second favorite bestie is Tucker. Go.
SPEAKER_05: For early stage SAS investors, which most of you are in an increasingly digital world where there are large SAS solutions for nearly everything. How do you think about selecting companies and founders in the early stage that are coming to market with a small amount of utility? And how do you think about they compete with companies with already established customer distribution?
SPEAKER_07: Yeah, so I think one of the things I really like about SAS, which is your software as a service, basically B2B software, it's business software that sold as a subscription is that the world's never going to run out of new ideas for business software. Business keeps changing. So therefore the software that businesses need will keep changing and there will always be an opportunity there for new companies, new verticals, new niches. There will always be new ideas. And so I'm never worried about running out. In terms of how we evaluate the actual idea, we've actually been super transparent around the metrics that we need to see. It really does start with a company hitting the metrics hurdle that we need to see for, for example, series A. You know, it's a call it your roughly more or less a million dollars of ARR. You want to be growing 15% month over month, certain net dollar attention, certain capital efficiency. We've all published it on our website, on our blog. So it starts with that. And then once we know that our thresholds have been hit, then we get into more qualitative or subjective factors like what do we think about this founder in this market? But one thing I like about it is just it's very well defined, like what we're looking for. And so just go to our blog, you'll see. We'll tell you exactly. There's no mystery to it.
SPEAKER_14: Outside of productivity tools, though, there's not a single company that can stay in one category and become really big. What does that mean? There's not a single public company that doesn't have now an entire strategy that says we sell at SMB mid market and enterprise. And so the thing for SaaS businesses, unless you're like a really powerful productivity tool like a Slack or an Atlassian, your valuation capped in the mid to high single digit billions as it currently stands today. That's just the law of the math in the public markets on how you're rewarded. How you grow out of it, you have to embrace a strategy that actually does more where you become a system of record. So a good example is like a Zendesk. They hit an upper bound. There are many of these examples. And so if you're building a SaaS business or you're investing in a SaaS business, the other thing to think about is in the absence of being a productivity tool, of which again there are a few, everything else has to find a way of being applicable to larger bodies over time in order to maintain valuation.
SPEAKER_13: We're going to try and move faster so we can get more people. Another question here? Hi there, guys. Favorite besties, probably four-way tie, but maybe Chamath edges out just a bit.
SPEAKER_20: Oh, yeah. Okay. It's not a tie.
SPEAKER_18: Tie goes to Chamath. Quick question. Tied is right. So you guys did incredibly well. So what would you do if you're dropped in the middle of, say, Kansas, take away the resource, take away the network, and take you back to age 25? What would you do and why?
SPEAKER_20: Antonio, take it.
SPEAKER_08: I'm actually from Michigan. I got dropped in the middle there with no resources and not a lot to do. And I wasn't 25. I was in my early 20s. I would find a way to make it work, man. You should get – you should actually, whatever skill you want to start at, whatever job you have, I would try and start a little company. There's always people – and listen, I play playgrounds with Michigan men. You could cut grass. I had a little computer company when I was 12 years old doing, like, networking for people in the old days. I mean, there's always something you can do if you had a valuable skill. Build a skill, start a company, and just get started. Start moving and make good decisions along the way. One good decision compounds on top of the other. And all four of these guys, what they have done in their careers is made very good decisions, and they've kept moving when they've had problems. You start early.
SPEAKER_14: Yeah, you got to start early. Start early. I just want to tell you this. They may look like super successful guys now, and they are, but it wasn't easy, and it wasn't linear.
SPEAKER_08: They've all had ups and downs. They've all had problems. I still do. And they also do what they do, and I have great respect for all four of them. I know them all well. They keep making good decisions. They're highly resilient, and they just keep going. And I would tell you to do the same thing. The only thing I'd add to that is to keep learning.
SPEAKER_13: I'm getting some applause here, man. Oh, yeah, you're good. I haven't had any, man. I haven't had any. I just got here.
SPEAKER_13: But I would just say keep learning as well. Like, one of the biggest advantages I've had in my career is that I try to always learn as new stuff as often as I can. And whenever I find an area of interest, I pursue it in terms of deepening my understanding of it. And that's always created opportunities for me that I wouldn't have just stumbled across or walked my way into.
SPEAKER_18: It's such a great opportunity to have you here, Antonio, when I asked you to do this. You had never been on a podcast before. Have you never done this kind of thing?
SPEAKER_13: I've never done this kind of thing. No.
SPEAKER_08: It's awesome. Thanks. I'm only doing it because it's a four view, and I am usually very private, but I'm enjoying it. You have an incredible voice.
SPEAKER_08: You know, it's like very like...
SPEAKER_15: Very NPR. Very public radio. It's like, hey everybody, you're listening to the politics of culture. I'm Antonio Gracias.
SPEAKER_08: People tell me I have a voice for radio and pornography. Yeah. It works pretty well. Go.
SPEAKER_12: Hey guys, I'm Samantha. Favorite bestie is Friedberg. I run the factory automation team for a large semiconductor manufacturer in the United States. Really unimpressed with the innovation in industrial automation. And so really interested to hear your thoughts on where you see the next disruptions in automation. And also maybe a question for Antonio. Where do you see the disruptor specifically in how we get not only the technology, but the economies of scale for these really capital intensive businesses in the US? This is your guy to answer this. For sure.
SPEAKER_13: And by the way, you should talk about automation at... I don't know if you want to, but Tesla, yeah? Yeah, I mean, we know a lot about automation. One of my partners is like a genius engineer in this area.
SPEAKER_08: And you're particularly in the chip business, you said, right? Yeah. So, you know, TSMC basically took the... this idea of outsourcing manufacturing assets that Intel did with TSMC in the beginning, they created that business and moved most of our high technology and chips off and offshore into Taiwan. It's like a terrible idea. And we, I think, as I said earlier, in the industrial policy in this country, I think we need industrial policy to bring cheap manufacturing back. It's very important. And the problem you have in automation, chip manufacturing in particular is, you know, when you think about where all the great engineers go today, they're good at automation. They're not going there because they're competing with TSMC. So you have a couple of Infofabs still in the US, but we have to have some... I think actually it's going to require industrial policy to force people like Intel, AMD, to want to bring stuff back into the US and to really get great talent to want to do it. Do you think there's opportunities outside of Greenfield models to kind of reinvigorate
SPEAKER_12: and unlock the capacity that we have in some of our older manufacturing here in the US? Yes, I do. Look, we at Tesla took over the... The Springline factory was a former GM Toyota factory.
SPEAKER_08: And, you know, we retooled it. It was... Look, it would have been... We had to do it because we didn't have any money. And it was free, basically. But if you took that approach and you got the... You got really great entrepreneurs to focus on this problem through industrial policy, they need money to do it. I think you'd get great innovation. Look, Nvidia is actually here in the US. This is a rally. This is a great chip company. And the fabs they use are spread all over the world. But if you gave Nvidia a fab or two, who knows what happens. It was the right price. Yeah, Jensen's a great CEO. Do you go that side?
SPEAKER_10: Favorite bestie, Jason, you keep the ship together. You're the glue that keeps it together. My name is Chris. My friend and I started All In Talk nine months ago. Oh, wow. Thank you. Cheers to you. It's really... Obviously... I was at the outdoor mall near my house and my dog attacked another dog.
SPEAKER_13: And the guy was like, it's okay, I saw you on TikTok. That was because of you. But that wasn't for your channel. That was for his Kinwah channel.
SPEAKER_18: It was in your channel. So my question is, in the 2022 predictions episode, Chamath, you talk about an all-in media idea.
SPEAKER_10: And starting an all-in media channel, maybe. And I wonder if you guys have talked about that anymore, your goals for the future on that. Because I'm pretty sure everyone would agree here that if you did start one, it would do a whole lot better than CNN+. So...
SPEAKER_14: Well, that may not be a very high bar. Yeah, it's a very low bar. We actually did get together, the four of us. We sat in Freeberg's office. What a shit show.
SPEAKER_14: People started yelling. Two people walked out. Sax just started to do this at the table. Yeah, I'm definitely a good driver. My dad lets me drive in the driveway. It wasn't a productive conversation. It was completely unproductive.
SPEAKER_15: That was our first and only meeting. But we did take one key step, which is that Freeberg said, I'm going to get my team to draft the LLC agreement for the four of us.
SPEAKER_14: Which we refused to sign. And now no one signed it.
SPEAKER_15: But it's in our inbox.
SPEAKER_14: So we're one step closer to starting it. But joking aside, I still think that it'll become inevitable. And I think the reason is the two people... The robot's non-humans. That were uncomfortable with human interaction. David's... David's... I'm really fine with lifters. Once we do the recap of this, I think it'll be... I think these two are probably the most shocked.
SPEAKER_13: No, I'll tell you, by the way, my observation, I used to go to TED. I went to TED from 2008 till 2019. I stopped going to TED because I thought the content went to shit. And it basically got overtaken with social justice talks. And I used to start with tech and interesting ideas about where the world's headed. And I listened to our speakers this week, the last few days, and I'm like, man, really fantastic content. I'm like, this could be the new TED. So I got really invigorated by that. I felt like that was really necessary. And by the way, I think it's conversations people don't really seem to want to have. And those are what make them really important. And let's just say, you were not the earliest believer in this was going to get pulled off.
SPEAKER_18: I cannot tell you how many times I've considered quitting the pod and not even showing up for this event.
SPEAKER_13: And I give Jason props publicly for doing a great job pulling this thing off.
SPEAKER_24: Hey, guys, my name is Sarah and I really love all of you. You got me through a very tough, challenging time when I started listening to you. I came here over a 16 hour flight from Abu Dhabi. So thank you.
SPEAKER_16: We love you. We love you.
SPEAKER_24: I have a comment and a question. The comment and maybe David. I have a lot of relatives in Sweden. And when the Ukraine war started, this is very amiable, innovative, beautiful people. Haven't had a war over 150 years. And they were putting gas in their car and supplying cans of goods and got really, really nervous about what's happening. And we're watching closely to see what would be the next step. I think if the U.S. did not step in. There's a lot of reality out there for the U.S. to stay. I don't know, like the savior of the world in a certain way or another. Finnish people felt the same way. Moldovans. So this is a real big reality out in the Western European world, not just Eastern Europe. So that's on my comment. So thank you for the question. And this comes from my husband. If you're sitting on excess liquidity right now and want to invest for a long time.
SPEAKER_08: Sax is raising a fund. Was that a transition from World War III to?
SPEAKER_16: Investment advice? Stock tips? Stock tips? We want to say.
SPEAKER_15: That is dynamic range right there. Well done. Well done. You've gone from two poles. You had us crying. I know the ups and downs of my life.
SPEAKER_24: So yes, it is like that.
SPEAKER_07: Why don't we just take the first part? Because I think it would be good. So on Ukraine, I thought it was important to have this debate today where we got both sides of the issue. And we got two people who are very passionate on both sides. And I tend to agree more with Glenn on it. But that doesn't mean I don't want to help Ukraine at all. I just think we have to keep a close eye on preventing this thing from escalating into World War III. Because the Russians have 6,000 nuclear weapons. And their military doctrine says they can use them if they feel that they're existentially threatened. And so if our objective here is to help the Ukrainians expel the Russians from an invasion, that's one thing. But if our objective, if we have mission creep into destabilizing the Russian regime, into basically trying to take back Crimea, which they see as theirs, if we're trying to weaken them to the point where they're no longer a great power, we're really playing with fire there. So we have to be really careful about our objectives there. And make sure that we don't let this thing spiral out of control. Antonio, do you have thoughts on Ukraine and are we being too dovish or hawkish or doing it just right?
SPEAKER_08: So I think we are, there's a lot more going on here than maybe meets the eye. And this question was about Sweden and Finland. And here's what I would say because I want to focus on that. That if our friends in particularly northwestern Europe should actually be arming themselves. And if they arm themselves, we won't have this problem. That's the reality of it. The reason Ukraine, yes, that's the reality. Obviously they're learning their lesson now. The time for sitting on the sidelines in central Europe is over. If you care about your country, care about your children, care about your families, then you should arm yourselves. Period, full stop. And Americans, we are happy to sell you weapons. No problem, with or without NATO, I think that's true. The reason Ukrainians are able to defend themselves is because they have actually been buying weapons and they built their own weapons with the Turks. The drones that are being used to destroy the Russian supply lines are not coming from America. They're coming from a joint venture with the Turks. This is the reality. So should we be drawn into a war and some to Europe? No, I think it could start with World War III. Should we help these folks defend themselves? Yes, I should. And in your particular part of the world? Yeah, for sure. Start buying some weapons. One question over here.
SPEAKER_22: Yeah. Tough to follow, but my name is Ioana. Favorite bestie? I think Friedberg. I think you do a good job of being heard and hearing others equally. So I think that's an important skill. I'm trying to work on it myself. More Friedberg. Friedberg, wow.
SPEAKER_22: In terms of my question, it's a little more qualitative, but some of us were having an interesting discussion about first impressions last night. And I'm curious to think, one, in terms of your own first impressions, how has the way that you introduce yourself to others changed as you've grown, and what have you learned about that? And on the other end, what are some of the most notable first impressions others have made on you, and why have those stood out to you?
SPEAKER_18: That's an interesting question.
SPEAKER_14: Well, seeing as only two of us have emotions, maybe we can... Yeah, we can chop it out.
SPEAKER_13: Sure. I'm going to go to the bathroom.
SPEAKER_18: You won't find any emotions there.
SPEAKER_15: Turn the mic off, please. The quinoa. Oh, my God. Oh, my Lord. Well, if that baba ganoush goes right through you.
SPEAKER_15: Continue. Baba ganoush. I think that when I was younger, I was more insecure, so I had to wear what few labels
SPEAKER_14: I had on my sleeve and use them as a weapon before others could use their labels on me. I honestly felt that way. And in Silicon Valley at the time, it really... There is a very monocultural aspect of folks from a few schools, folks having worked at a few companies, and I had neither. I went to Waterloo, which is in Canada, and I worked at AOL. So I didn't go to Stanford and I didn't work at Google or Yahoo. And there's a great lineage of where the really credentialed, credible folks came from. And so you do what any insecure person does. You kind of throw what few things you have out there very quickly, trying to one up the person in front of you. And that's calmed down a lot. So that's probably the biggest thing that's changed.
SPEAKER_18: I think I have a similar observation. When I was taking that R train into Manhattan, I used to say to myself, Jason Calacanis, editor in chief. Jason Calacanis, millionaire. I literally had a 16-page photocopy magazine called Silicon Valley Reporter, and I was trying to convince myself that someday I would be somebody. And I think that narrative was important for me. And people, when I would give them the 16-page photocopy, I'd say, here's my magazine. They'd say, this is a photocopy. I'd say, no, it's a magazine. It's got a picture on the cover. Because for me, that was why it was a magazine. And it eventually became a very large magazine, in fact, of 300 pages. And today, thank you. So I think there is something about manifesting stuff and just believing that you're going to get there. But today, I define myself by the things I love to do. So when people do ask me now, hey, what do you do? I say, I'm a writer, and I have a podcast. And I angel invest. And I don't say it's the number one podcast, or I'm one of the top angel investors all the time. I just think about what.
SPEAKER_16: I don't say that. And I don't say, you know, like it's, you know, the book is in 11 languages or whatever.
SPEAKER_18: I got a million dollar advance. I just, there's no ego about it.
SPEAKER_16: I just say writer, podcaster, angel.
SPEAKER_18: Okay. How did it go in there?
SPEAKER_16: Okay, David, you're okay.
SPEAKER_07: What sort of advance are you getting?
SPEAKER_15: A million dollars, he said. A million dollar advance. I mean, the book's in 12 languages now.
SPEAKER_18: Thank you. I'll sign it.
SPEAKER_16: If you have one, I'll sign it. Next question.
SPEAKER_07: Next question. Sometimes I think Jason's just pimping out all of us to fuel his media career.
SPEAKER_15: You think? Sometimes? Hey, David.
SPEAKER_18: All honesty, how has the deal flow gone since you got this podcast? Let's be honest.
SPEAKER_07: I think it's down 50%. Perfect.
SPEAKER_09: That was the intent. That was the intent. More deal flow coming this way.
SPEAKER_15: Down 50%. That's since you went on Tucker.
SPEAKER_18: Go.
SPEAKER_26: Hi. Today the crypto world is focused on decentralization, speculation, and stores of value. Who here is excited about micropayments? And whoever's most excited, which industries do you think will be most impacted by the newfound ability to send payments in as little as one hundredth of a penny?
SPEAKER_18: Go ahead. Favorite bestie. They want to take it?
SPEAKER_18: Yeah.
SPEAKER_07: Go ahead, Sax. So this question of micropayments has come up all the way since back to when I was working on PayPal. And one of the problems with micropayments is, as the name suggests, the amounts are very, very small. So you have to do a lot of them to create enough volume for them to be meaningful. And so there is always sort of this market size problem. Now, for crypto, there may be more of an opportunity there because the way that the old credit card rails network works is there's like a 25 cent charge per transaction. And so like a PayPal, it just didn't make sense to facilitate micropayments because the cost of that transaction always exceeded the fee that we could get. So you're right that or I think what you're suggesting with your question is that there is sort of a crypto opportunity to do this in a different way because you can basically do a costless instantaneous transfer using a blockchain based currency. So I'm sure someone's going to do something interesting with that. And then the question is just how like what does that aggregate into? Is it is it going to be big enough to be there's an interim step, which is also pretty obvious,
SPEAKER_14: at least to me, which is this idea that, you know, for example, like if Stripe actually took the time to embrace one of these stable coins, there's no reason why Stripe needs to actually run on interchange as well, because like you can just basically swap that dollar in a ledger into USDC. Let's just pick that as an example. Not Tether, not to tilt you. Run it on those rails for free and then basically transfer it back. And it's not it's not obvious why people do this. You need the gas cost to come down.
SPEAKER_07: So you know, like you're running a transaction on Ethereum or certainly Bitcoin. Ethereum is impossible, but other chains.
SPEAKER_07: Yeah, yeah. You need like a chain like a salon or something. Something that's like super cheap.
SPEAKER_18: And the cognitive load of the transaction, just the person deciding, do they want to pay a tenth of a penny a penny is sometimes greater than the actual value of the money, which then creates almost like friction to them wanting to read the article. Let's take another question.
SPEAKER_03: Hi, my name is Kate and my favorite bestie right now is Friedberg, who often plays devil's advocate and so forces a stepwise conversation. Running away with it, Friedberg.
SPEAKER_16: Friedberg. My lord. How many people did you pay off? Go ahead.
SPEAKER_03: So we all admire your successes, but we've also been hearing from Mar, for instance, that we need to be comfortable with failure and we need to become resilient. So when you look back on your careers thus far, what have been the toughest moments, the moments when you've made a mistake that have taught you a lot?
SPEAKER_14: I mean, I had two huge ones. And Antonio must have some too.
SPEAKER_18: You want to- Mistakes.
SPEAKER_08: My mistakes?
SPEAKER_08: That you learn the most from. Man, my biggest mistakes in life have been about people. And I have over the years made errors in judging people and how honest they were and how good they were. And as I look back on that, it's because I have a weakness for ideas that are great. And sometimes those come with great people and sometimes they don't. The reality is there are some bad people out there who are acting really great and doing interesting things. And we've suffered from that. I know David and I already deal together that suffer from that. And it happens. So I've learned a lot about that. I've gone deep into neuroscience. We have a woman who's got a PhD in the neuroscience of emotion from Caltech now on staff that helps us learn, as you said, always learning about how to assess people and how to assess their emotional states. That's the most important thing I think we've updated in our process and in my own thinking.
SPEAKER_18: So you love the idea so much that you- Ignore other data. Yes. You ignored the other data that this person was not honorable, truthful. No.
SPEAKER_08: I mean, so there are times when there are two kinds of errors here. One type of error is we just didn't see it because the person was so good at being bad. They are- one of the things the neuroscientists taught us is that about 5% of the human population has a brain anomaly that make them actual psychopaths defined as the amygdala doesn't fire properly when they do something bad, guilt, fear, et cetera. And in our particular industry, it's probably more like 10%. So we raised our base rate forecast to 10% and it's gotten better. But there's something that we're so good at, you just can't see it. I mean, Theranos, Elizabeth Holmes, lots of smart people were pointing at that company. We didn't, but it wasn't obvious to them, obviously. Then there are moments earlier on when we had yellow flags to go over road because we were so emotionally committed to the idea that we wanted- we had a business we did was in the dental space. It was Medicaid Dental Clinic for Kids that were black and Hispanic. And I'm from that demographic and I wanted to make that great. And the reality is we overrode yellow lights because we wanted to make it great and we failed.
SPEAKER_18: Jamath, you were going to add some of your failures.
SPEAKER_14: I had two huge failures, but they were more personal moments of learning for me. One was, you know, we were in the midst of building a phone and it didn't come to pass. And if I really think about what I thought the problem was, this was when I was at Facebook, what the problem then versus now, then, you know, I would have said, oh, Zuck and I had a huge kind of, you know, thing and blah, blah, blah. Now what I would have said is, you know, I didn't really understand my own limitations and what I was really asking of him and the board in that moment. And then the second is there were all these moments that were people decisions at Social Capital that ultimately manifested in sub quality financial and investment decisions. And had I had it to do over again, I would not have ignored some of the red flags because I was so desirous to be in the game, to, you know, be in it that I probably, you know, looked the other way a little bit on folks that, you know, I'll just give you the practical example. I remember in a $300 million fund, I put 25 or $30 million into Bitcoin at 50 bucks a coin. And when the thing went to like 150 or something, just the pressure to distribute was so high. And I had conviction, I had all of these things, I had all the voting control, I had everything to just say no. And I didn't have the courage to understand my role as a leader versus something, you know, my job as a investment partner. And so you learn, you know, you learn what you're good at, you learn where your strengths are, and you try to just get better, try to fix those weaknesses. I mean, at the end of the day, what we're both saying is the same thing, which is ultimately, it has nothing to do with anybody else. It still comes back to you and what your skill set is in your toolbox and whether you're upgrading your toolbox, everything.
SPEAKER_18: Sreedberg, Sax, any mistakes that you're able to access through your CPUs in your long-term storage?
SPEAKER_07: Well, I think as you get older, you learn how to pick your battles better. And you just have to decide like, what are the occasions that are really worth fighting for and which aren't, you know? And sometimes you just let it go, and others you have to fight. And just knowing when you should choose which path I think is really important. When you were younger? The only way you really went behind you in a battle is this guy, so phenomenal investor back when I was on the founder side of the table. Good brawler. Yeah, for sure. That's why I got him a samurai sword for his birthday. He did, yes. What did you get for his birthday?
SPEAKER_02: A samurai sword.
SPEAKER_08: The collection of samurai swords you saw in my apartment started with David Saxe's Samurai Sword. Ah, very nice. Thank you, David.
SPEAKER_07: It's very sharp, too. I'm not sure if kids are going to play with it or something. It was not a toy. Yes, it's not a toy.
SPEAKER_18: Anything in that long-term storage tape drives of a...
SPEAKER_13: I've made a lot of mistakes. It's really hard. I'm very hard on myself. When I was young, I always said, there's no limit. And I always believed that. And when I hit walls in my life, it was very difficult because it totally countered what I felt was possible. I always thought everything was going to be a success. There's no way I'm going to let anything fucking fail. There's no way I'm going to let anything not work. My voice is cracking now because I'm crying because I'm losing my voice. We know it's not...
SPEAKER_14: That's all we need. If you cry now, everybody's going to be broke. Oh, Freeberg's my favorite fast food. It's all for the vote.
SPEAKER_15: It's all for the vote.
SPEAKER_16: He actually does have emotions, see?
SPEAKER_13: But I would say... He's smart and kind. Yeah.
SPEAKER_16: And a vegan.
SPEAKER_15: Yeah. He's my best friend. The biggest mistake I've made.
SPEAKER_16: I love him. He's my dream boyfriend.
SPEAKER_13: Maybe coming on the stage was the biggest mistake I've made. Joining the pot. Oh, man. But I think Antonio's point is right. You just have to be willing to learn and evolve. I now know that my life isn't about everything I do has to work 100% of the time. And being so hard on myself caused a lot of emotional challenges for me over time. But getting to this point where I can now be much more calculated and just move forward quickly and learn from it has been a big evolution for me. It's just a general statement. Yeah.
SPEAKER_18: And I would... Oh, sorry, Jason. Well, no, it's okay. I was thinking about it while these guys were being so candid and I was immediately going to punt and go to the next question, but I thought that would be unfair. I think two things. One, I think a lot of my decision making early on was out of fear, fear of losing whatever I had gained up until that point. So although I was a risk taker and I was being bold in one way, I was also throttling myself because I was just so scared that I would lose whatever gains I had. And it made me an imperfect manager of people, an imperfect person, maybe on edge a little too much and maybe not picking my battles. To David's point, I saw everything as a battle because those wins were so important to me because they were so hard fought. And then I think later in my life I realized I never actually thought about what I enjoyed. I just thought about winning to an extent that was not healthy. And then after Dave Goldberg died and Tony Hsieh died, I really took a self-assessment of what I enjoyed doing. And I mentioned this yesterday, hanging out with these gentlemen and to Antonio's way of phrasing it, which is just beautiful, the fellowship, I thought that's the joy. My family, my kids, my wife, and this fellowship with my friends that I wanted to invest in. And I made a deliberate effort to be a better friend, a better parent, a better husband because of all the gains I got from that and the joy that I got from it. And I just thought a little bit, God, I do like those conversations. I do like writing the book, do like throwing the events. I'm just going to do things I enjoy, which took me 30 years of my career to actually assess what is it that I like? And maybe I should enjoy the journey a little bit more. So I think it's a great question. I appreciate it.
SPEAKER_18: Thank you. Enjoy the journey. Hi besties, my name's Aria.
SPEAKER_00: I was the third or fourth employee at DoorDash. And my question is regarding, oh, sorry, my favorite bestie. Yeah, that was a joke, by the way. My favorite bestie is Chamath and Sax, although it's honestly Sophie's choice. My question is regarding the positive impact that Silicon Valley could have on the political discourse and politics, which I know there's typically an aversion to in tech. You all have done a fantastic job outlining what those problems are as well as your guests. What I'm wondering is what a viable path forward looks like. Chamath, you mentioned that people in DC pay close attention to the podcast. Sax has recently endorsed Michael Shellenberger, which I really hope can save our home state. And I'm wondering is the solution something akin to a third party, like what Andrew Yang is trying to do, or some new, I don't know, Silicon Valley techno party? What does that look like? I'm curious.
SPEAKER_14: Well, I don't think it's set up to actually have a third party structurally in America. So what you have to do, practically speaking, is field more centrist, normal people on both sides, whether they're Republicans or Democrats. That's a practical thing that we can all do, and then we can all show up and vote for those people so that the majority voice is much clearer than it is today. Because right now the fringes a little bit get to hijack the process. And so we take things that should be common sense and we pervert them in a way that just makes no progress possible. I really do think that we have that impact. I'm not sure how much of that can be quantified. But when I spend time in DC, I think it's true what I was told and what I've heard from people. It's basically required listening or viewing. It helps shape people's opinions. Doesn't mean they follow it, but I think it helps people think about things in a more normal way. I think what happened today is a perfect example. The way that Glenn Greenwald and Antonio Garcia Martinez debate, that's probably for some of you was really unsettling, maybe. Raise your hand if you felt awkward. Just be honest with you. Okay, well, you shouldn't because that's normal. My point is it helps you make it seem more normal because those guys were not saying to each other that you're worthless. They were just debating.
SPEAKER_07: By the way, we went out for a beer after that. Yeah, this is my point. So the three of us, I was like, okay, we need to go out and get a drink and cool down. I'm not chastising you for feeling that way.
SPEAKER_14: I'm just saying this is what the culture does to folks. It makes you even afraid to hear people debate things and still have respect for each other. The way that he and Palmer dealt with that, that's incredible. The courage that Palmer had to say what he did and then for him to be the first guy to walk out and then to own that, I think those are really important moments. And you have 700 more people capable of being that way because of what just happened.
SPEAKER_14: So I think it's a slow march, but I think we're writing a small dent in a small way.
SPEAKER_07: Twenty years ago, every political show on TV was a debate format, like going all the way back to Willy Muth Buckley versus Gore Vidal or Pat Buchanan versus Michael Kinsley on Crossfire. I mean, they were all debates. Now, like none of them are debates. It's all just their own little echo chambers. I think it's one of the reasons why this pod is successful is we actually can have debates and there is a divergence of views.
SPEAKER_18: What do you think, Antonio? Is there some... Have you ever listened to this pod?
SPEAKER_08: I was on one once dancing in the background. Oh, that's right. Yes. Thank you, the dancing bear.
SPEAKER_18: I'm going to ask behind the camera. You did make it up here. I recorded an episode from his house. Yeah. When you look at politics, any interest there? Any behind the scenes work you've done? And how do you think about it just as we get into, as Gen Xers, boomers are going away? I mean, we're going to kind of inherit this whether we like it or not.
SPEAKER_08: Yes, I would say a couple of things. First, whenever you have time, if you look historically, I think it's important to contextualize this, when you have moments of large technological change, you always have political disruption. Because, the means of communication have changed. This Gutenberg press, the tall ship, and you just go back and look, it always leads to a lot of disruption and often to war. And so, the question of, are those of us who are technologists at the top of the system do have a responsibility to steward this technology responsibly? We absolutely do. I believe we do. And I think that has been forgotten. That's number one. Number two, I have been involved in campaigns. And it's interesting, right now, what I'm doing is supporting any centrist candidate that I think is good on either side of the aisle. I'm a registered Democrat. I support Democrats for most of my life. But the reality is now, all I care about is sensible people that I think are really good. And I'm engaging in micro targeting efforts across the spectrum in primary races. I would encourage all of you and anyone up here who cares about the American public system to engage in the primaries. Because the primaries are what determines the quality of the candidates that actually are up for election. And they're actually decided by very few people. Like how many of us actually voted in the primary? Like very few of you. Very few of you. Okay. So rather than us just complain about the divisiveness of American politics, next time, please go vote in the primary and go vote for the centrist candidate.
SPEAKER_07: By the way, did I hear a lot of support from Michael Shellenberger out there?
SPEAKER_02: Let's have him on the pod maybe. Hi, favorite bus is Chamath. I heard you speak with Vinod Khosla at Hack the North at the University of Waterloo. So my question is, Ammar talked about these startup journey systems like Stanford or PayPal. Over the pandemic, do you see any remote or distributed systems that have appeared? Or do you see any building that are not just centered in one geographical location? I'll be really honest.
SPEAKER_14: I'm not a huge believer in this whole decentralized work movement. I don't think any high quality work can get done on difficult problems. So I think that there are types of products and types of problems that can be solved in a remote way, certain forms of software for certain kinds of products. But for example, let's just say you're trying to engineer a pharma drug. I don't believe that unless you're sitting there collaborating, talking, debating, you can do that necessarily over a Zoom. If you're trying to build something physical, you know, we have a business that 3D prints rockets. Those guys can't do that by just, you know, Zooming around and having a couple calls. That doesn't happen. So I think it's too premature to kind of say working together has no value. I also think there's a huge cultural divide that will get created in America between these companies that come together and the companies that don't. And I think that the ones that come together have a chance of having more empathy in the end because there are moments where you can actually get to know the people you're working with every day. And I think that that gives you margin for error because everybody sometimes is a little, you know, dealing with their own things in their lives, sometimes can be a little rude. And we all have tolerances. Those tolerances are higher when you spend time with people. And they're much, much lower when you're just in a Zoom. So I'm, you know, I'd love to believe that everybody's going to be Airbnb-ing in a castle and a tent and a fucking treehouse. But I'm just not sure that that's realistic to really solve the big problems that America has.
SPEAKER_18: You believe in the work from home, Antonio? Or you have a strong feeling one way or the other?
SPEAKER_08: I'm more a Chavas camp than not, but I will say we have some great companies that are fully remote. We have a kind of a coalition example in cybersecurity. It's fully remote, run by wonderful CEOs under the age of 35. And he's found a way to make it work. And I've learned a lot from him. And so I'm trying to be very open algorithm about this. And I think there are people who make it work. I can't make it work. I want my people in the office. We invest in pharma. We invest in biotech. And we have some biotech companies that have made it work remotely and some that insist on bringing back people back. If you're in a lab, obviously, you have to be back. But I think there'll be a mixed environment. And I also think there's an interesting retooling going on in productivity. I think the productivity numbers in America that we're seeing today are wrong because they're not capturing what's happening underneath with technology because these remote environments. So I don't know yet. I think it's going to depend on the CEO and how good people are and the type of industry you're in.
SPEAKER_18: Yeah, I'm keeping an open mind towards it. I know that for investing, it was so much more efficient. People could do 20 minute zooms instead of two hour meetings.
SPEAKER_14: But I mean, think of the problem that that created. Look at the overhang when you could raise tens of billions of dollars over Zoom. That turned out to not be a good thing.
SPEAKER_18: But also, if you're a capital allocator, being able to meet with three times as many people, you could find more companies. This is my point.
SPEAKER_14: So I talked to a friend of mine who raised billions of dollars over the last couple of year cycle. And he said, I was able to raise 50 million dollar checks in 30 minute meetings. Now it's spending five hours for a 10 million dollar check. And my reaction to him in the back of my mind was, that's probably how it should be.
SPEAKER_08: Well part of that's the core of the cycle too. That makes the entire system a little bit healthier.
SPEAKER_08: Yeah. I think the other way is to one point send their fund during COVID and it was all done doing Zoom. We're using new fund now and I'm flying around the world taking meetings. But part of that just because people are coming back to the office and liquidity cycle has gotten, is reversed on us now, right? So the denominator has gotten, it's gotten harder to be capital. But for sure, I think I agree with you, Mathieu, like being able to allocate 10 million dollars in a venture fund in two years over Zoom and think that's on just the metrics and not see people. I think that's a bad idea.
SPEAKER_18: Yeah, I'm talking about 250K, 500K checks. Yeah, that's probably okay. It might be okay. Take another question here.
SPEAKER_04: My name is Kenneth Brown III and my favorite bestie is J. Cal. The charisma is legendary. He's my favorite bestie too, by the way.
SPEAKER_04: Don't be offended. And then my question is what advice would you give to non-tendical people trying to fit into the tech-oriented startup venture world? I'm an econ major but this just seems exciting. Like how do I become a part of it?
SPEAKER_18: And Tony, you have thoughts?
SPEAKER_08: I think that the best way to do this is to find a company you think is great and get a job. That's the reality. I would associate myself with a business that I really respect, you'll respect. And if the job is in the mail room, if the job is a janitor, whatever, just figure it out because what happens to high-growth companies is they need good people. And you'll be surprised how much being the first person in and the last person to leave if there's an office and doing the work that people ask you to do with a smile and a great attitude, like those people, they move up fast. So I would just find a way in man, wherever it is, however it is, make it happen and start moving up.
SPEAKER_13: By the way, you're not non-technical. You're not yet technical.
SPEAKER_13: And I think that's the opportunity that sits in front of everyone that you can become technical. I had a cousin who was a music major at UCLA, worked in music. And then he came back from COVID and he started learning how to program online, taught himself, spent six months in his parents' basement teaching himself how to retool his life and got some contract jobs on Reddit and boards and other stuff. And he got this amazing full-time job offer a few weeks ago. And it was really amazing that I got to watch him transform himself and his life over the last year and a half just by taking that on himself. And he became technical. It wasn't that he had a non-technical degree. It's that he just wasn't yet technical. And I think everyone has that opportunity.
SPEAKER_14: I'll tell you a great quick story. He's a minority guy, grew up in Houston, really wanted to work at Tesla, couldn't get a job, couldn't get a job, couldn't get a job. Finally got a job on the line. He was making 16, 20 bucks an hour, worked there, did well, transferred, worked there, did well, transferred, ends up in the supply chain group, ends up working in battery supply chain, ends up basically being two layers between him and Elon, gets into an MBA, goes there for a few years, works on the side, and he ended up raising a bunch of money to start a battery business recently. And this is an example of what he just said, which is, you know, there are these jobs available, and then it's just, you know, is your chutzpah and your hustle. And he's an example, but it's a very motivating example to me because it just shows it's so possible. You know, and there are phenomenal organizations that identify talent and will move you up really quickly.
SPEAKER_13: Knowledge is literally free, and experience is up to you.
SPEAKER_18: Yeah, the overriding, I think, advice you're getting here is that skills are acquirable, and my lord, getting to 50, 60 percent proficiency on a skill, just given what's on YouTube or MIT OpenCourseWare, any number of websites, you can do it in a matter of weeks. Now of course, going from 60, 70, 70 to 80, that might take months and then eventually years. But startups are looking for generalists. They're looking for people who can say, I need somebody who's going to do the accounting and figure out how to do an email merge and build a mailing list, and then I need somebody to help with recruiting. If you could just become 30, 40, 50 percent as good at each of those things, at a startup, you know, before people get specialized, eventually you'll have 10 people doing recruiting. But in the beginning, it's one third of somebody's job. So I love startups for that.
SPEAKER_14: The sign of a great culture of a company is how little the obvious labels matter once you're inside of it.
SPEAKER_14: And the best companies, like a Tesla, can become a trillion dollar market cap because they find the kid working on the line and then four years later is running the battery supply chain. How does that happen? It happens because you're looking at the quality of the individual and their potential. Where they went to school doesn't matter, their gender doesn't matter, their ethnicity doesn't matter. None of it matters because the people don't see it. They see work ethic, they see results.
SPEAKER_18: They see integrity.
SPEAKER_14: So that's another litmus test for you is like in the companies, even if you're a CEO and if you're building, if every other day you're reminding everybody else of like where people need to have gone to school and where they should have been, that's a road to nowhere. Let's give Antonio a big round of applause.
SPEAKER_16: Very nice. Thank you.
SPEAKER_27: I appreciate it. I'll see you later. Thanks. Thank you. Thank you very much. I appreciate it.
SPEAKER_08: Thank you. Good to see you too. Thanks. My brother.
SPEAKER_18: Thank you. I love you.
SPEAKER_15: Talk to you soon.
SPEAKER_25: Thank you, Susan. Thank you. Next question. Thank you.
SPEAKER_15: Over here. Yeah. Sonny Lambe. We kept Antonio here for like two hours. I know. I feel bad.
SPEAKER_18: He's like I've never been on a show before. He's like an LP meeting. He's like I don't know. All right. We're going to just take 14 to 20 more questions.
SPEAKER_25: Go. Sonny Lambe here. Chamat's my favorite bestie. There you go.
SPEAKER_15: There you go. Huh? There's a little dry spell for you there.
SPEAKER_17: A little dry spell. A little dry spell, huh? Because of him I shop at lower piano only.
SPEAKER_25: So thank you. So I just got a question for Friedberg. I know that you wanted to talk about this yesterday about this sort of consumer credit crisis on the horizon that you see as potentially like the next shoe to drop. So I think you wanted to mention something yesterday about it, but because of time and stuff. I mean I don't have anything more to add than what I said on the pod.
SPEAKER_13: I'm not like I don't think this is like a high certainty. I'm just concerned there's a lot of loans out there, a lot of buy now pay later, a lot of stuff that has floating rates attached to it. If we're going to have a recession, we're going to see job loss. You're going to see these. And by the way, these auto loan portfolios have like crazy outperformed over the last few years. And now that these and a lot of those auto loans are floating rate, those asset values are inflated. People are losing jobs. You could see a bunch of these things start to create a bit of a cascading effect over the next couple of quarters, depending on how this all goes. So I'm not going to put my foot down on the ground and say, oh my God, consumer credit bubble, we're totally fucked. It's going to lead to the next great recession. But I do think it's going to be pretty kind of surprising. Buy now pay later, I saw stat, I don't know if you guys saw this this week on how a lot of the people that are going on buy now pay later sites are actually maxed out on their credit cards. And so they're actually fully credited out. And then all the smart algorithms are like, oh yeah, you're a good credit risk. Here's $1,800 to buy a fucking Peloton or whatever.
SPEAKER_18: Lightning round, five questions and we're done. One bestie will answer each question. Go. Cool.
SPEAKER_13: Dave Freberg, you're my favorite bestie. What problem do you most want to solve right now?
SPEAKER_18: Oh, binary lifters, actually.
SPEAKER_17: Edible quinoa.
SPEAKER_16: Actually, I've been working on the...
SPEAKER_13: So look, I've spoken about this publicly. I think it's a big problem. I was going to talk about it in the talk that we scrapped, but I'll do it another time, which is really the opportunity for biomanufacturing as a way to replace a lot of traditional food systems, including all of ag, all of animal agriculture, and a lot of the systems that we use to basically make our food. It's a big infrastructure play. You know, a couple square miles, using Elon's analogy, you could basically recreate all the food on earth. You could distribute those systems. And so I think that it can be extremely carbon negative. It sucks carbon out of the atmosphere. It would create incredible jobs. It's an incredible infrastructure opportunity. It would return billions of acres of land back to kind of, you know, whatever form, natural form we want them to be. So that's an area that I'm spending a lot of time in and that I'm particularly excited about. Awesome.
SPEAKER_01: Thank you. Okay, number two. Hi there. I'm Katie Croft. Nice to meet you all. Imagine a parallel timeline where I say you're all my favorite, because it's all true. So I'm curious, kind of an extension of the media question. Have you given much thought to forming a consortium or community with the All In podcast and kind of what further applications of that? Because if you think about the force multiplicity of like any number of these minds in the same room working towards the problems we've talked about from education to on-shoring energy, it could probably be pretty considerable the impact there. Because we have such respect for what you guys do and how you're doing it and the discourse you're having that, you know, we're clearly all diehards here. So I'm just curious if you thought about it. I'm kind of trying to inception you here. Jake, you want to take that?
SPEAKER_18: Yeah, I think so. I mean, this is a shit ton of work. But I think it is and we all have day jobs. You know, step one was to try to just see and I told the best is let's just see if we can each make getting to the pot each week a priority and a habit and that took the first year or so. So now it is a habit. We all value doing this. It has had tremendous impact on our lives personally and professionally. It's been very inspiring for each of us. So we had to lock into that first. Doing this, you know, was a ton of work and we'll see if it's sustainable. And we have some other ideas. We wanted to do a college tour was the other thing we were considering, which would be like 3000 seats or 4000 seats and just an episode of the pot in Q&A. So I think that could be the next card to fall. And then maybe hiring Tim Urban and Nate Silver and then having them build a media company to take on CNN. We haven't really given it much thought, but you never know. They were here totally randomly. They were here totally randomly. We're not recruiting or anything, but you know, anything's possible. Hi besties again, I'm Rejoice.
SPEAKER_21: I run a talent marketplace for early entry workers. We use gamification to accelerate their upskilling. The question is about the great resignation, which we believe is the half-told narrative. So how can small businesses, which are most sole proprietors, democratize their own labor supply and demand?
SPEAKER_14: Wow. I think that's a very difficult problem to solve. I think, again, if as a supporter of capitalism, I think one of the biggest things that we don't get right is how money gets to the right problems. I've said this roughly before, but like money is really just a voting way of deciding what you think is important in the world. And that's why the accumulation of money as just a practical matter, forget moral or physical law, philosophical is so important because you can vote what you want. The thing is that aggregation happens easily. Distribution is terribly broken. And so the ability for folks to solve practical problems is very hard because the ROI isn't obvious. And getting money from capital pools like us to individuals and sole proprietors is a basic, I think it is a very broken problem. A, because the systems don't exist. B, because the laws don't allow it. And until that gets solved, I'm not exactly sure how a business who can actually build for the future well or solve their supply forecasts or demand forecasts can actually get the capital you need because the lubricant that allows you to solve that problem is money, has always been, will always be. But getting it to those people is legally hard and it's organizationally impractical. I don't know if you saw the last spot I mentioned this thing. We tried this thing called capital as a service. Doesn't get to the sole proprietor level, but it gets to like small five to 10% companies. We would send 50, $100,000 checks. Here's how hard it is. The cost of getting a $50,000 check, we did this fishery in Indonesia. It cost us 125,000 to give them 50,000. We still did it because I just wanted to prove the point. They ended up tripling our money, so we barely kind of like broke even, but it just goes to show you how really complicated. A lot of friction in the system.
SPEAKER_18: Okay, fourth question and then one more after that.
SPEAKER_11: Hey, I'm Prem. As a Waterloo poker player, favorite bestie is Chamath. I'm very into next gen manufacturing, but as a pre-seed investor, my concern is follow on financing. How do we get more investors interested in investing in the physical world because at least in Canada, it seems like most investors only want to invest in software?
SPEAKER_14: No, I think this is what I'm saying. I think there's a very broken part of the capitalism right now, which is that technology investors by and large, and I don't mean to disparage anyone here, are not well rooted in the principles of math and finance. I think that that's a real problem because in a moment like this, that is where you can actually make safe investments of capital. You can structure the money in so that you are capital protected. You have assets to back these things. And the reason why folks don't do it is they don't understand how to put together a model to demonstrate it. And then the person that is then receiving that information is unfortunately not as well instructed as they should be to understand how to make a decision from that. That's what we have today. So it's a little bit of a miseducation problem. And it's going to affect the non-sexy areas. Pockets will always get money, but 3D manufacturing at scale may not because of this exact issue because people don't know what Roik means. Sir, you have the final question.
SPEAKER_09: Favorite best is Friedberg. And hate to end on a recession question. What a fucking crisis.
SPEAKER_15: Never asking that question again.
SPEAKER_13: Why do you guys think it upsets you so much?
SPEAKER_15: Well because you're the biggest pain in the ass. You are the most fucking neurotic person. Every time we post an episode, we should cancel the episode.
SPEAKER_16: We fucked everything up again. Why do we keep screwing up? We're going to destroy the pod. I read the first nine comments and the down vote rate is 14%. I was on YouTube. Somebody sent the volume. They'll keep going, but go ahead. I mean the amount of noise we deal with from this one person. They're not going to stop. It's like literally his inner monologue. He does not. You should not reward him. It's like his inner monologue is crazy.
SPEAKER_15:
SPEAKER_16: You are feeding a beast. You know if you had a two year old child who you've given too much candy to, he's kicking
SPEAKER_15: and screaming. Can you shut him up please? Unbelievable.
SPEAKER_16: This is my final question. If one guy can shut your mouth up, it's Phil Deutch everyone.
SPEAKER_09: It seems like a common theme on this stage these last couple of days is you all feel like we're in a recession or heading towards a recession, but I get a feeling that you have the confidence that this is going to be a quick recession, like a year. My question would be why do you feel after 13 years of market manipulation by the Fed that it's going to be cured in under a year?
SPEAKER_14: I think you're right. The huge recession as measured, like if you look back historically, is two quarters. The problem is that we've never really figured out what it's going to take with the distortion of money that never should have been in the system. Because if you think of a supply demand imbalance as being a naturally self balancing phenomenon, if you perturb one side of it by an enormous amount, exactly to your point, I think the open question that the world has right now is, is that really a two quarter problem? Well, the Fed has told you that they're going to take three years to get three trillion. You've heard from David that 10 trillion was put in. Probably another three or four trillion was productively used. But that still leaves another three trillion of sloshing around money that we don't know. So I think it's an open question. I don't know what you guys think. Friedberg, how many months?
SPEAKER_18: How many quarters? Sachs, how many quarters? If you had to guess. Again, I just hate this definition of recession where it's about GDP decline when we had a
SPEAKER_13: lot of the underlines in those numbers for GDP that I feel were artificially inflated for a couple of quarters because of a bunch of the structural stuff we've talked about. So I don't know, if you look deeper at economic growth, companies signing up more customers, a lot of technology companies are about increasing productivity with their tools, with what they're selling. And those businesses are going to continue to do well and to grow and to increase customers increase revenue. And I don't think that there is necessarily a lot of the structural stuff that we saw with the GFC. The one thing I am concerned about, which I've highlighted, is this consumer credit risk. And besides that, it seems like things are on good footing. So I don't know, the technical recession definition, probably a couple of quarters.
SPEAKER_07: You never know. And I think the best way to look at the future is by doing scenario planning. So basically we could say this could be a short, medium, or long recession. Short would be six months, medium might be 18 months, and long might be two years plus. And we just say, I don't know, say one third, one third probability. And that kind of gives you some picture. Put your 13 to 14 months. Exactly. So now what we're telling our portfolio companies is you want to have two and a half years of runway right now because you've got to go raise six months before you run out of cash and you really want to have two years of cushion because things could be choppy for two years. I'm not saying they're going to be, but they could be. You don't want your company to run out of money and die just because of macroeconomic conditions that are no fault of your own. So if you can try to engineer that amount of runway, that's better. I also think that, here's the thing about a quick recession is, or the prospect for one, we don't know what other shoes are going to drop. For credit, it's still a shoe that we don't know if it's going to drop. Look, six months ago, did we think we'd be talking about Tiger Global or SoftBank for that matter, potentially teetering on the verge of being redempted out of business? Or Coinbase and Peloton just withering to nothing.
SPEAKER_07: Things can change fast. We don't know what systemic risk is in the system that hasn't been flushed out yet. And we won't be out of this until it feels like everything's been flushed out and then the market's back and things are sort of in an upward trajectory again. Clearly we're not there yet.
SPEAKER_18: Real estate and crypto doesn't feel like that's rushed out yet either. Do we have a clip to play as an outro? I don't know. Was this the cut clip? Before we go, can we please say thanks to the team that works here and the team, Jason,
SPEAKER_15: your team at All In. Incredible team. Thanks to everybody. All of you guys have worked so hard.
SPEAKER_16: They really put a lot of effort into this. Pretty incredible. I guess this is a lost clip of us from last week.
SPEAKER_14: You did not have like a Dungeons, Dragons sleepovers in grade seven and grade eight. I was actually programming Pascal and we made a water moisturizer and it was a binary lifter
SPEAKER_17: much like the ones you have on Tatooine. To complete replica of Uncle Owen's water vaporizers on Tatooine. And that took six years, but it was great. And that I went hilariously as C3PO.
SPEAKER_17: I went as C3PO to our science fair. You should have seen the look on our teachers faces.
SPEAKER_13: Okay you guys have your cold open. Let's go.
SPEAKER_18: We'll let your winners ride. Rain Man David Sattel. We open source it to the fans and they've just gone crazy with it.
SPEAKER_15: Love you Wes. I'm going all in.
