SPEAKER_03: I can't wait to talk about lab grown meat. I have been trying to get people to.
SPEAKER_02: Oh, please don't. Let's not get canceled. The four of us are functional.
SPEAKER_01: Again, we'd like each other. We enjoy, we look forward to doing the show again. Everything's dialed in.
SPEAKER_00: Is your lab grown meats that use hormones?
SPEAKER_03: My lab grown meat was a little.
SPEAKER_01: Let me ask you this about your lab grown meat. Do you have to say at this age?
SPEAKER_02: No, no, no, no.
SPEAKER_03: You know, I was told that my lab grown meat was a little. I've injected some flavors of tobacco, black cherry notes, some notes or Simmons.
SPEAKER_00: So let's go to big tech earnings.
SPEAKER_02: Google stock is up 5% after beating on the top line and bottom line estimates, some high
SPEAKER_03: level takeaways. Google announced a 70 billion dollar increase in the stock market. That's a lot of money. Google stock is up $2.5 billion.
SPEAKER_02: Google stock is up $2.5 billion. Google stock is up $2.5 billion. Google stock is up $2.5 billion. Google stock is up $2.5 billion. Some high level takeaways Google announced a $70 billion stock buyback plan and that their cloud unit was profitable for the first time in its history. As we mentioned last week, Sundar officially announced that deep mind was merging with brain. This is kind of controversial because it's really hard, according to some sources for Sundar to get all his lieutenants to work together and row in the right direction. Google's Q on search revenue up year over year 2% down 5% quarter of a quarter kind of to be expected because of seasonality and because we're in a down market right now obviously with the recession. YouTube down 2.5% year over year down 16% quarter of a quarter other bets which is like nest and some other products down 35% year over year net income $15 billion. Any thoughts, Freiburg on what is a mixed quarter by Google? And I guess, the wider macro environment.
SPEAKER_04: What was so striking about the earnings call is not necessarily what was presented but what was not presented, which was a stronger voice in a strategic plan going forward for dealing with two major issues of the company. One is the operating cost model and the second is the AI strategy and the response to this evolution in AI. I've heard from a lot of folks that the AI strategy in particular, it's almost like Google already has this in the bag, but they just haven't kind of let it out of the bag. It's like they've got a Tasmanian devil and they're ready to go with it. And there's from my read, an incredible amount of confidence that there's something that's going to happen. And a set of things that are going to happen, they're going to be very profound and powerful. I even heard some anecdotal stories about, hey, you know, we don't have this feature in this product, but chat GPT does. And then people basically showed up to this meeting. And there was all this debate about, well, we can't let it out because we're not sure you know that the classic kind of like we're scared of doing doing wrong versus leaning forward and taking risk. Don't be evil you're referencing.
SPEAKER_04: No, it was just more about regulatory concern and getting things wrong and making a mistake. And so there's this total fear of like, again, you know, regulatory and fear. So someone kind of slammed the table and said, let's just put it out. The next day, they put it out. So there's definitely a cultural change happening internally, is what I've heard anecdotally, but what was really missing, which is what Wall Street needed to hear what investors and shareholders needed to hear is what's the strategy there? How are you going to compete? How are you going to resolve what's going to go forward? And secondly, what are you going to do about the cost structure of the company because everyone else, you know, in contrast to meta being up 11 12% after hours with their cost cutting model and demonstrating that they're going to start pulling cash out of this business. Google's top, you know, kind of top story was, hey, we're stopped serving peanut M&Ms in the cafeteria or something ridiculous. And, you know, that doesn't really address the real structural question. So I think the stock buyback, the $70 billion stock buyback is an authorization to repurchase, it's not a plan to repurchase. So it's unclear if, when or how that capital does actually get deployed in the market to buy back stock. And so there is also this big kind of shareholder sentiment of being let down, that there isn't an improvement in either cash coming out of the business, or in cash being used in a smart way with the business. And it was the silence in the earnings call that I think really stunned a lot of people, which is why you didn't see a lot of stock movement, despite the actual business numbers being better than expected. And so there's a lot that Google, I think still has to catch up to with respect to their peers, both on a product and strategy point of view, but also on a cost cutting and a communication of that cost cutting point of view to the market and to the street. Otherwise, shareholders are going to start to lose faith if they're not already, and are going to start to put their capital with other folks who they feel are better leading and leaning into this new evolution of technology like Microsoft and Apple, and meta, which is really where those big capital allocators end up picking stuff to go. One final thing I'll say, it's extraordinarily important to note that I think Google has such an incredible AI advantage over Microsoft. And you know, Microsoft is almost solely dependent on open AI, this small startup company, and all of Bing chats is powered by it. And Microsoft hasn't built out the the infrastructure, the team, the rigor, the depth, the models that Google has, and Google made a few strategic blunders, you know, they shouldn't have been as open with the transformer work that they did and shared that publicly, it certainly enabled open AI and others to compete. But Google certainly has an incredible set of tools and capabilities that is leap years ahead of Microsoft, they're in a position to really compete, they just have to have the will and the leadership to do it, slam the table, say here's, we're going to stop wasting money. And we're going to start leading and driving this this industry forward. And this this could be a quick turnaround story for the stock and for this company. And I hope it'll happen. Chamath, what are your thoughts on Google's leadership
SPEAKER_02: specifically is Sundar the right person to run the company going forward? Does he have the founder authority to get the ship and to get the lieutenants all kind of rowing in the same direction? Does it need to be a leadership change, which is the big discussion of topic in Silicon Valley right now? I think he's very capable. That's an amorphous organization
SPEAKER_03: of so many different competing interests. The thing that doesn't add up about the Google earnings release, but then also what freeburg just mentioned is, there was this article that kind of tried to paint Sundar as sort of a caretaker CEO, right, where Larry was the actual shadow CEO. Well, if that's true, you know, Larry has more incentive than anybody else to kind of force change. And there was all these kind of like gripes and complaints that were articulated. And I don't put much stock in all of this stuff. I think that he is the right person for the job. And I think what they have to do is just do the simple basic things like it doesn't take a CEO change for a board of directors to have the emotional wherewithal to authorize a 15 or 20% reduction in force for a company that is so profitable, that clearly is not yet humming on all cylinders. And so you don't need to go through all of this drastic change to do these simple, obvious things. My takeaway across all of these four big companies is we are in a really unique moment to observe something that may sound controversial or hurt people's feelings that like these companies. But I think we're now well past peak big tech. Their valuations may still go up because they generate such an enormous amount of cash flow. But these are exactly those kinds of businesses. Now they are ex growth, large cash flow businesses, blue chip, you might say,
SPEAKER_03: while they were always blue chip, but the way that they grow is not through innovation. If you look at Google, Facebook, Microsoft and Apple, and ask yourself, when was the last hugely disruptive thing that they've created? You're hard pressed to find something that was even done in the 2010s. Yeah, actually, that's a good thought. I mean, the iPhone for
SPEAKER_02: Apple, iPhone was 2007. Yep. Microsoft was in the 1990s. Google was in
SPEAKER_03: 1998. With core search, maybe there was maps and Gmail and to the in the 2000s. Chrome, Android, they bought some of that Facebook, it was the core service that we built in the 2000s. And then they acquired brilliantly, right. So I'm not saying that they didn't acquire well. Yeah, my point is that core organic innovation hasn't been there for a long time. So this is a moment to just be reflective of the fact that these are some incredible companies with ginormous cash flows. But now you've had this foundational platform shift,
SPEAKER_03: which exposes the fact that they really aren't good at innovating. And at times when they've tried to organically innovate, they've massively misallocated capital.
SPEAKER_02: Either through a list would be the example of either through a bloated balance sheet, so someone claimed that Google
SPEAKER_03: overspends, or through just pure misallocation by starting projects that just are not large, but consume large amounts of cash. That would be the Facebook VR example. But in all of this, I think, when you cut staff and expenses as a way to meet and beat, and top line growth is in the low single digits, it's an important moment to recognize that these companies have now transitioned to being cash cows. And if you look at sort of how financial markets value cash cows, they're very valuable. But it's not where you look for growth. And so in a world where rates eventually get cut, and we start to come out of a recession, it tends to be that other people get rewarded. So that's an idea that's adding to your point here, they're not allowed to acquire
SPEAKER_02: these Microsoft's thing dead, dead. So they're not going to be allowed to buy stuff. So then you're right, what is the growth here? They're not able to innovate. I think these companies are ex growth, which is why they use their cash
SPEAKER_03: flows to do what borrow money cheaply to buy back stock, to manipulate their equity, right, you can manipulate and overcome dilution, you can manipulate earnings per share, you can manipulate the number of shares outstanding. And so just by the nature of that whole game, a bunch of passive investors will end up buying more, which helps the active investors who own that stock. So it's a game. So if we're not in the world, financial engineering would be the I mean, the most charitable
SPEAKER_02: way to say it, we're in the financial engineering phase,
SPEAKER_03: which is fine. And by the way, you can make a lot of money, Facebook's up 90%. So there's a lot of there's a lot of meaning just this just this year. Oh, yes. So there's a lot of room for financial engineering. But it's not where you need to look to figure out where these big improvements and uses of this
SPEAKER_03: next generation platform technology are going to come from most likely, SACS, is this a fair assessment in your mind
SPEAKER_02: looking at, you know, the the major tech companies, the fangs? Yeah, I mean, their growth is down to single digits. So I
SPEAKER_00: think Microsoft had 7% year over year revenue growth. Google was at 3%. I think Facebook was for smaller sales rose three 3% from a year earlier, but at least that was an improvement because it's actually gone down for three straight quarters. So yeah, but you're down to, you know, single digit year over year growth rates. Nevertheless, most these companies beat expectations. So Microsoft shares rose 9%. Meta jump 12%
SPEAKER_00: might be up more now. And I guess Google got a little bit of a bounce and they all gave a pretty upbeat forecast. The only one that wasn't upbeat was Google where the CFO Ruth Porat said that the outlook remains uncertain. But all the other ones seem to indicate that things were going to get better. So I think what's interesting about that is just the mismatch that we have between how well these companies in this quarter versus how uncertain the rest of the economy is looking right now. And maybe the feds behavior. Yeah, so maybe this is
SPEAKER_00: the flip side, which Martha saying is they're not growing very fast, but they are profitable machines generating a lot of earnings. And they seem to be pretty immune from what's happening in the economy right now. release us what they're saying. Now, you're right in a parallel track, there was an interesting interview that pal did. So Jerome Powell gave an interview, it was actually kind of like one of these hoax calls were a couple of people pretending to be Salinski engagement and interview. Oh my god, that was crazy.
SPEAKER_01: You explained that reference. They've done this a number of times where they've gotten, you
SPEAKER_00: know, major leaders, I think they did this to McCrone, some other people where they pretend to be the loan scheme, they do an interview. It's like Ali G. Yeah, but they played it
SPEAKER_01: straight. I don't care that he was fooled into giving the
SPEAKER_00: interview. It's like, who cares. But some of the things he said were really interesting. I mean, number one, pal said that the economic outlook for the year was looking pretty uncertain. And he said the most likely scenarios were either sub 1% growth. So staying out of recession, but just barely or he said going into recession. So he thought that was roughly about equally likely he admitted that we had the worst inflation in 40 years. And that's why interest rates were necessary. And he said that it was necessary to slow the economy in order to combat inflation. And he then even went further and said that it was necessary to cool off the labor market, and even to cool off wages specifically, because that's how you combat inflation. That's the only thing we know how to do in a situation like this. So I think this is certainly a political mistake for pal to say that his objective here is to combat inflation. And his objective here is to hurt the wages, the American people, and to basically cause a recession. But that is his view, apparently. And I think that we are headed for it seems like a recession. I'm a little surprised that the earnings reports for these tech companies are so good, because or at least their forecasts are so good. Well, they can cut
SPEAKER_02: spending. And we talked about this last year when we were trying to predict what would happen. I remember saying, well, I think, and I were talking about this. And I said, well, it's about the saying, hey, earnings are going to go down. And there's a PE. And I said, what if they just stop spending? And they're like, well, here we are. People are just saying, you know what, we're going to cut our way to and do stock buybacks. And that's another way of financial engineering to route around the Fed, right? And to make the stock go up. Worked incredible for Facebook. I mean, my Lord, they were at $91 a share. And now they're over 200.
SPEAKER_00: Right, but just to bring it back to the economy. So look, I think tech companies seem to be pretty immune. They've got a large cushion in terms of their ability to continue generating earnings because of all the bloat that that actually gives them like a margin of error where they can just keep cutting to prop up earnings. I'm a little surprised that they think their revenue forecasts are going to be so positive because again, they were guiding upwards generally. So they seem to think they're not gonna be impacted by the recession. And maybe they won't be again, I think what was interesting from Powell is the way that he seemed to think that the only thing we know how to do this is basically what he said the only thing we know how to do in this situation with inflation is to kill the economy. It's a slow the economy, and specifically to kill jobs and wages. And that was pretty remarkable to me because there are other things we could do, such as Okay, well, one thing is that you don't have to print so much money cut spending austerity. So yes, our fiscal policy remains completely out of whack. We're running $2 trillion annual deficits right now past COVID. So he could have said, Listen, we could get off this reckless fiscal policy and be more restrained, but he didn't want to go there. The other thing you could have done was address the supply side. One of the ways that you can reduce
SPEAKER_00: inflation, it's not just to kill demand, you could actually affect supply chains. So like cost of energy, for example, energy is a huge input into the economy. And one of the things that happened at the beginning of this administration is they made it much harder to drill for oil and gas. And I think Biden sort of reversed course on that at the State of the Union. Remember, he had that line where he said, we can't get off oil and gas for 10 years, and the audience started laughing. But in any event, the point is just that it's too little too late, they could have done more on energy to keep costs low. And then there's a whole bunch of other critical inputs into the economy besides labor. And what you could do is, I think you could go category by category, and say, how do we get the price of these key inputs into our economy down? How do we resolve supply chain bottlenecks? How do we make it, you know, easier to get access to whatever the key commodity is? And I think there's things they could do if they're just willing to work at it. Maybe this isn't the Fed's job, this is more the administration. But what you could do is say, listen, we're going to make it easier for people to produce and create supply. And if you have a higher supply of goods and services, then you will start to bring inflation down because inflation is just the amount of money in the system divided by the amount of goods and services. And when the amount of goods and services hasn't gone up, but the money supply has gone up tremendously, you're gonna have inflation. And that's why I think it's a little bit misplaced to be killing demand the way they're killing it is because fundamentally, the problem here is they flooded the economy with money, both through government stimulus and through quantitative easing. And then also, they made it harder on the supply side to produce, certainly with energy. So it seems to me that the approach they're taking for us to get out of this, it's like taking a meat cleaver to the economy, or a sledgehammer, really. And it's the most violent possible way that they could solve the problem they previously created of too much inflation.
SPEAKER_02: And the other thing, obviously, is jobs, we're still sitting here with close to 10 million job openings. And the thing I'm hearing from the streets is that unemployment hacking is become a high art. And so labor force participation remains low. It's nowhere near the historic highs. We have been very permissive during COVID for good reasons to give people very extended benefits. People have now learned is my understanding. And this is something that's happening on a regional level state by state level. People are learning how to hack unemployment and not going to work and people are just not taking the jobs that are open, which are service industry jobs. Americans don't want to work them. We don't want to let people into the country got record low people coming into the country. It seems to me that would be a much more productive way to do this. Right? Yes, yes. I think it's an excellent point. Because
SPEAKER_00: exactly what you're doing there is addressing the supply side, which is you're unlocking the supply of a key input into the economy, which is all this unused labor. It's all these people aren't working. You're right, the labor force participation rate is still much lower than it could be. So if you get more people into the economy, then that helps alleviate the cost of labor. It helps fill these jobs, but it doesn't kill the economy. So it would be a much more positive way to address this. So I just think it showed a lack of creativity for him to say that the only thing we can do in this situation is not just to raise rates, he did say that but but to go further and cool off the job market, increase unemployment and cool off wages. I mean, that's gonna be a very unpopular thing to say, I think because we're basically saying is you're going to hurt the wages of the American people who wants that.
SPEAKER_02: Here's the chart for job openings, we thought this would collapse, it went down, certainly, as we you know, I don't want to obsess over macro stuff, but it's still way up there. And so the fact that we can't get people to take these jobs, I don't know, Chumath, what do you think about the employment and participation situation and how that might unlock things I also wanted to know from you, Chumath, this concept of the Fed is reacting to data just so slowly, and then you have these companies that maybe are more nimble, and they have better data than the Fed.
SPEAKER_03: I think that that's a truism. And I don't think anything about that is going to change. I mean, I think we talked about how these folks calculate non farm payrolls or how they calculate CPI. It's incredibly outdated, right? It's people with clipboards, walking around talking to people and checking boxes and filling out forms. Can that change? Probably, it could. Will it change? It probably won't. And so they're going to focus on the most simple but most powerful measure that they have, which is controlling the money supply, kind of what Sax talked about. So they're going to manipulate the money supply to either put more liquidity in the system, in which case markets go up and asset prices go up, but then inflation goes up, or constrain liquidity, which then causes markets to go down, asset prices to go down and inflation eventually to go down. The thing that we're facing today, when you look at this labor market chart is a couple of things that I think we've talked about before. And I just want to reiterate them, which is, you have to remember that we are in this new world order, which is the ex China world order. And in that there is no more unitary economy that can do things cheaper, faster and better globally around the world. Right? So we're going to near shore or onshore all kinds of things that used to be done by the Chinese, they'll sit in Mexico, or they'll sit in Central America, maybe in some cases, they'll sit in Canada, and all of that will feed into the United States. The problem with all of that is that that will keep costs higher, because it'll be naturally more inefficient, it will naturally take more money. And that will naturally cause the prices of those things to be higher, which means that terminal inflation, I think is just roughly higher. As a result, I think that more power, if you will, goes to labor. So in this constant tension that we have in an economy between labor and capital, the people that own the factories, or the businesses and the people that run them and work inside of them, we've been in this position where the pendulum has swung so far towards capital, the owners, the shareholders, that all this financial engineering has tremendous upside, right? That's why companies engage in it. But when you show that chart, Jason, what it means is it's just really hard to find people. And so the only way you're going to get people off their butt to go into work to sit in a chair to do a job that you need them to do is to pay them more. And in finding that wages will have to go up. The counterbalance of that is what AI will do, which I think we all agree is... I was about to say... That is the key. Yeah. Which is massively deflationary. So that is going to be the tension that we're in now for a really long time as we explore this. I don't know if you guys saw today, but Sequoia led a $20 million round in this thing called Harvey.ai.
SPEAKER_02: The legal... Yeah, which is like a legal super wizard for law firms.
SPEAKER_03: Yeah, we knew that was coming. And my partners and I were debating it. And what we thought of was, well, how much do you pay out of the 800 or $1,000 an hour that you charge to Harvey.ai? Maybe you're willing to pay 5% or 10%. But then the reality is that one of the most powerful things it does is it's able to go into Westlaw, find all these cases, and say, yeah, this is germane to the thing that you're working on right now. That's a very useful thing. But the N plus first law firm will also use that tool. And instead of charging $800 an hour, they'll say, well, we'll charge 600 bucks an hour, and we're still willing to give you 5% or 10%. So I just don't see a world where, on the one hand, physical labor will continue to be more expensive. They'll demand more and more money to do the job that they're asked to do. And the knowledge work will become increasingly more deflationary, because so much of it will be automated by AI, that those folks will charge less and less. And there's going to be attention there. And I don't exactly know what's going to happen. I did a couple of experiments this week, I've been
SPEAKER_02: rolling up my sleeves and playing with these tools. It's pretty amazing. And I've been trying to use them for actual tasks in our companies. What have you learned? What did you
SPEAKER_03: do? And what have you learned? So I got on the open AI plugins,
SPEAKER_02: Greg, thank you, I sent him my email, and he got me onto that. And you can connect it to Zapier. So I have two projects I'm working on. Currently, one of them I was as since I'm raising so raising one from foreign and actually going out to people not just taking inbound. I was like, Hey, can I get the names of all the major LPS and start doing some research, they're putting a table stuff that's actually when he does blog posts. But then I started connecting it with finding people's Twitter handles, finding their LinkedIn profiles. And then the next piece I'm working on is automatically following them DMing them on Twitter, let's say, or following them on and doing an in message saying, Hey, we haven't met. Here's the deal memo for my next fund would love to, you know, get together this is sent from Jason's AI script, I was gonna like actually tell them but here's my real email if after you read the summary of the next fund you want to meet. And then I was going to pair that and this is a piece I'm going to probably need a developer to do with our internal LP database to not email people who are already duplicates. And then inside with newsletters, I have it building a database of every newsletter we've ever sent the writing style, and then I'm having it go find in real time news stories that we should be including in the newsletters, which I think will make the writers right now a third more productive. But these are things that would cost 4050 bucks an hour 30 bucks an hour for you know, college educated Americans and Canadians. And I have already figured out and I'm not a developer anymore. I had a script them and I'm actually thinking about learning to code again, just so I can do this myself. And so on Saturday, I'm going to do a little coding with a friend of mine and get back up to speed on that. I think about 30% of what knowledge workers do right now is possible. So I put every single person at both companies on chatgpt for and this the playground. About 30% of what knowledge workers at both firms can do currently is doable if you can figure out and this stuff is not perfectly scripted yet. So I've been doing some stuff in travel as well playing with the kayak interface, Expedia interface, etc. To look at travel planning, and it's pretty good as well. So it's, it's this is the real deal, folks. I think by the end of this year, 30% of knowledge work could be done by this. And then additionally, on Monday, I went back to work in person. And I went to I hosted our accelerator in person. And then I hosted found a university in person in the city, the city was absolutely dead. But we had 100 people fly in from around the world for our founding university, and a lot of them are working on AI projects. And what's very interesting is like, there's this big debate going on. freeburg between is this going to be built into chatgpt for or barred or, you know, po or whatever it is, or should I even bother? So should I bother building, you know, a verticalized app. And it turns out like, I think you should do the verticalized app. And you're going to be able to put together multiple of these AI's that have different specialities. So I'm super stoked about it. But I do think if you're not using this, if you hear my voice right now, and you're a white collar worker, a knowledge worker, and you're not using this this year and getting up to speed on it, I think you'll be out of a job within the next two. She's Wow. I just don't think you'll compete. It would be like trying to compete without knowing how to use micro soft office 20 years ago, right? Like, could you work and not know email? Remember when we came into the workforce 30 years ago, and some people knew office and email, and web research, and then other people didn't, those other people retired, they were phased out. If you didn't know how to use a computer, and type and use an Excel spreadsheet or do a PowerPoint, you were done.
SPEAKER_00: I think there's two possible ways you can interpret what you're saying. So in terms of the economic impact, so one is that you could say, well, AI is going to do 30% of the knowledge work, therefore, 3% of the knowledge workers are going to be put out of work. I think the different way to put it would be every knowledge worker can get 30% more work done. So if that's the case, then they're more productive. And we're just talking about the problem of how do you increase real wages in the economy without having inflation? Well, the way to do that is for every worker be more productive. So if every worker is 30% more productive, in theory, their wages should be able to go up by up to 30%. That's how you get wage growth. Now, maybe there will be some companies that don't need all those employees, because now they're able to get, you know, whatever a third more done. But there'll be other companies who can hire them, they can go off and do other jobs for other companies, especially when you've got this backlog of, like you said, eight or 10 million new jobs that are on those jobs are all service, though. You know, they're not you're gonna
SPEAKER_02: have this big group of knowledge workers, there's just nothing
SPEAKER_00: for them to do. Oh, no, no, I agree with you. But I think
SPEAKER_02: there's going to be a group of knowledge workers who do not embrace this and do not make the transition because it is, it's going to require an upscaling, like, I think you're actually going to need to know how to do some basic programming and coding to really take advantage of these at least like scripting level. So
SPEAKER_00: I don't know, it's pretty easy to use. I agree with you there. But writing blog posts, but the date the example I gave of like
SPEAKER_02: taking the LP database, sorting it, you know, it's not quite this is like a chatbot.
SPEAKER_02: It is like I think it takes like level two programming skills. No, it doesn't. No, you don't know how to program you just
SPEAKER_00: have to know how to prompt it in natural language. It's the opposite of need to learn how to code. The thing that makes coding hard is that you have to learn the specific commands. It's like its own language, you have to learn a new language. With this you don't. In fact, one of the cool things about some of these open AI API's is that you just tell it what you want it to do. There's not even like a scripting language, a lot of it's in natural language. And that makes it incredibly easy to use even for developers. So I don't think this is a hard technology to use. I agree with you. There may be people who are resistant to it, because there's always people who are resistant to change and new technology and you're right, if they don't adapt, they're going to be dinosaurs. But I don't think this is a hard technology to grok how to use and get benefit from.
SPEAKER_02: You might be right. I mean, right now, it's so new, that the glue between systems is just not there yet. And maybe you'll be able to talk to chat GPT for and it'll connect your database on notion, it will take a type form and a SurveyMonkey and put it all together and figure that all out for you. Oh, yeah. That's the whole game right now is people connecting
SPEAKER_00: all these things.
SPEAKER_02: And that's what I'm talking about. And like, that's kind of not there yet. But in the auto GPT stuff, you need a developer right now. But anyway, I'm deep in it. And I am more excited right now. This feels to me like 2005 to 2012 period, when you just saw Ajax and the web and speed, just all coming together so quickly. And the rapid iteration is just unbelievable. I every day I find a new use for it. I have made my default web page opening. Like when I open a new page on my PC, it just opens chat GPT for now, just so I'm forcing myself to use it for every possible task. And the people who work for me, some of them are doing it's most of them are not and I'm just trying to drag everybody along. And then you have at the same time, this remote work thing happening where salaries I'm finding are starting to normalize not across cities, but across countries. So you know, hiring somebody in Canada, Estonia, San Paulo, and then you add this AI to it. The cost to do things is this is like, I don't know, I think everything's gonna cost about 10. All this knowledge work is going to be 10% as expensive to do. I don't think it's 10% less chamath or that, you know, I think it's like 90% 10 cents on the dollar. I agree.
SPEAKER_03: I agree. And it's not this is not a five year 10 year
SPEAKER_02: prediction. This is like, five quarter 10.
SPEAKER_03: We said that the first organizations to use this like the canary in the coal mine would be the consulting organizations. And today when Harvey got announced, one of the things that that right on the heels of that price Waterhouse Cooper's announced like a billion dollar investment into AI, which makes sense, because as a consulting organization full of lawyers and accountants and IT folks, those are the services jobs that you get tremendous leverage. If you were to use these tools, free bring any thoughts?
SPEAKER_04: I don't know. I mean, I think we kind of beat this horse to death. We've talked about it for a couple of months. And I think we just keep repeating ourselves.
SPEAKER_02: Are you doing anything when you're firsthand? Are you playing with it yourself? Yeah. Look, tell us about that. By the way, one thing I will say, we all talk about cost
SPEAKER_04: reduction, and then oh, you know, knowledge work is dead, and we're going to save money and all this stuff. What that is always the first reaction to any new point of leverage realized from some novel technology. The second is suddenly people start doing things that use that leverage to do things that they couldn't have done before. So it's not just about dropping costs, it's about enabling new things that does 100 times more or unimaginable things prior. And I think the next phase of this AI shockwave that that kind of hit us and hit the world and you know, kind of hit enterprises is going to be the evolution of integrating those tools in a very unique way with other tools to drive very novel things forward to create new things, new projects, new progress that was unfathomable before. So it's not just about cost savings, it's going to be about new stuff. I shared a link on Twitter yesterday, there was some guy I want to quote him correctly. His name is McKay Wrigley. So shout out to McKay on his Twitter page. It says that he didn't know how to code. In 2019, he learned how to code for the first time he taught himself. And he put together an object recognition tool with chat GPT. I saw this video crazy with his webcam. And basically he holds up like a Diet Coke. And he's like, you know, tell me how many calories What is this? And how many calories are in it? And it's like, oh, there's no calories in it. It's a Diet Coke. And he does this three different times with three different objects. And he hacked this thing together in a couple of hours. That is a product that was like, theoretically unfeasible, or, you know, kind of very, very difficult to kind of see how you would put that piece together quickly and easily with one person in a room in a few hours, a year ago. And here you see a demo of this person who didn't know how to code not too long ago, putting it together and creating this product that would have been such a profound startup. Imagine if you went to VCs 18 months ago, and we're like, look, I've got this thing and I hold stuff up in front of it, and it tells me all about it, and it talks to me. And I literally use my voice to talk to it. And he basically strung together a text to speech, chat GPT, an object recognition tool, all of this stuff completely open source, and a plugin that does web browsing. And the whole thing is basically like your own interactive visual robot. It's it's an incredible product demo. And I thought it was so amazing and profound. I sure it's a prototype and it's and it's kind of janky, but it was done in a few hours on almost a no code basis. It's incredible. So what's going to come from that is a whole set of new products and ideas and things that we are certainly not thinking about today, but in six months is going to become almost mainstay. And many new categories of products, many new industries, many new businesses are going to emerge that we're not even thinking about. So the Luddite argument of Oh, this is going to destroy jobs and destroy the economy and drop costs by 90% lawyers are going to get cheaper, etc, etc. I think that doesn't even matter. It's the tip of the iceberg. What's more exciting is all the new evolutionary stuff that's going to hit the market that's really going to transform the things that we can do and that we didn't realize we could do. There's an incredible analogy for this because what you're
SPEAKER_02: really talking about is more people being able to use tools and be creators. And what happened in the 80s and 90s when the NBA started playing exhibition games around the world was more people around the world started playing basketball and then you started seeing people like Luca, or before him Yao Ming, Mutombo, you start to have people from around the world who had never been exposed to basketball, just incredible porzingis, incredible talents emerged, because you just had more people playing with the basketball, I think you're gonna have more people playing with code and building products. So you're going to have incredible amounts of creativity from people who maybe you didn't expect, because they didn't go to school for coding, or have that opportunity. Hey, I mentioned I was in Phi Di. And I was at Fenwick's office and then Wilson Cincini's offices to law firms being the law firms in the financial district in the Embarcadero. It was an absolute ghost town. And when I say ghost town, I mean, like serious ghost town like weird like this is still like being in some dystopian science fiction. We're the last man on earth. And then we saw in the group chat today. 350 California Street was worth $300 million for years. Oh, that's a 22 story glass and stone tower picture of it. It's going up for sale. And they believe according to the Wall Street Journal, that bids will come in at $60 million, an 80% decline. And we talked about this commercial real estate would have this moment, a lot of the banks, the smaller regional banks own this debt. Sacs, what do you think is going to happen here? Who is the person who would buy an office tower in downtown, even at an 80% discount, knowing that you have to pay all those carrying costs. And there's so much vacant office space, and it's only increasing. Right? What's your who buys this? It's called land banking. Okay, explain. So in other words, okay, what I mean
SPEAKER_00: is, you're right, there's 30% vacancy in San Francisco right now, maybe going up even more in the next few years, as Lisa's role, and people take less space, you may have a countervailing effect, in terms of new companies moving back because of AI or expanding. So it's possible you start to see some growth in the office market in San Francisco. But the bottom line is 30% plus vacancy is going to take years and years of growth in order to absorb. So you're right, this building, they can slash its rent, but they still probably can't fill it. I mean, there's just no there's just no demand. So you're gonna be sitting on that property for five years, 10 years before the market comes back the way that you need it to. But there's so yeah, right. Oh, it's gonna trade way below its replacement costs, right? If you were to build that building today, it would cost you many times what they're going to pay for it. The problem is you can't finance that purchase with debt, because the bill is not going to generate enough revenue. So that's what I mean by land banking, it's gonna be a equity investor, who's willing to think long term, and say I'm gonna buy this at a super distressed price, and I'm just gonna sit there and hold it and wait. Carry it, like you said,
SPEAKER_00: bear the carrying costs until the market comes back. But JKL, I want to say something, I think it's a great
SPEAKER_04: analogy, because public growth stocks have declined 70 plus percent, right since the the market started to decline. And we've talked a lot about the statistic that I've shared a bunch publicly on how 70% of publicly traded companies that have gone public since 2020 are trading below their total cash invested since since founding, which should translate to an estimate that call it somewhere on the order of 70% of private companies are probably worth less than their preference stack. And so they're not worthless companies, they just have a capital structure that is upside down. Those companies are making products for customers as product those customers are paying money for those products, there's value there. And so it's interesting, it's not just the asset class of growth stocks and the asset class of private companies or private tech. It's also, you know, in commercial real estate, we, we try and treat each of these as if they were in isolation. But the problem is many of these assets were funded with some degree of leverage preferred stock is leverage. And, you know, it is a form of debt, because it has a preference over the shareholders to get it. And so it's interesting, because it's not just a form of debt, because it has a preference over the shareholders, they're the common shareholders, the equity holders. And the same is true with this commercial real estate market that there was a certain amount of debt. So the availability of low cost capital, securitized against them asset in the form of debt or in the form of preferred stock in a private company has the same effect, which it allowed the valuations to balloon on the equity. And now that the market has re rationalized the prices down 70 plus percent across all three of these connected but you know, somewhat disparate asset market, you know, having this big reset moment. And funny enough, the other statistic is the cell phone traffic down 70% in downtown SF right. So it's funny, all four of these numbers are pretty much on track. Yeah, this chart is crazy. It's literally like, you have some
SPEAKER_02: cities that have more cell phone traffic than they did last year, or a couple years ago. And this is downtown, by the way, not the
SPEAKER_04: whole city. Yeah. And Sam, I mean, the wider Bay Area is is
SPEAKER_02: I don't wanna say booming, but it's vibrant. Yeah, I said on the show, I was looking for a place to host the accelerator in San Mateo area, I got dozens of people contacting me hundreds of locations, and offers at 25% of what their carrying cost is or like that the current cost the rent was, and people offering the major companies offering the free space, just because they would like to have founders hanging around. And there was one project that I was like, I'll give it to you for whatever reason, because I want to get more people to downtown San Mateo. So that does sort of prove the point that there is a what I saw this in New York City during the 90s. When things were so cheap, people just got creative with space, it inspired people to say, I'm going to create an art gallery, I'm going to create a performance space. And I don't know when that happens in San Francisco with these spaces, but feels like it's going to be a while. I don't know what you when do you be demand for this space sex? If you had to pick a year over and give us an over under?
SPEAKER_00: I mean, five years plus, I mean, just to give you some numbers, I think a healthy vacancy rate and the office market is five to 10%. A high vacancy rate in a city was considered like 15%. Like you wouldn't want to be an office investor in a market that have 15% vacancy five to 10% was sort of the normal range. If you're under 5%, it was a super hot market. And then 10 to 15 was sort of a not great market from an investor standpoint. So they're at 30% plus. And like I said, it could get worse before it gets better. Because as leases roll, people are going to shed more space that they might not already be subleasing. So the real number might be like 40%. So I don't know. I think it's like, yeah, it doesn't seem like a decade. It's a decade assuming that San Francisco gets this house in order. And companies come back speaking of and new companies are created. And they don't completely wreck it. It's not clear to me that like things will go in the right direction.
SPEAKER_02: I mean, speaking of that, do we want to bring up this horrific bear spray attack now? You want to cue that upsocks? I mean, we're like in full on Gotham City now. Now we have vigilantes.
SPEAKER_00: There was a story of a fire commissioner named Don Carmaniani, who was beaten with a metal pipe by a gang of homeless addicts who were encamped in front of his mother's house. And apparently, they were harassing her and they were doing drugs, smoking drugs or whatever, right in front of not pot. It was like, fentanyl, whatever, fentanyl, or meth or crack something like a hard drug. And so what we know is he went down there, had words with them. But a beat but a boop, you
SPEAKER_00: know, and they bashed him upside the head with a pipe. And now it turns out that he was accused by the defendant's lawyer, the one who assaulted him, so we don't really know what's true here of using bear spray on them first. So the DA dropped charges. The lawyer for the defendant in that case is saying that he apparently was the perpetrator of these bear spray attacks on on homeless people going back a number of years, I guess there's a, like you said, pretty gnarly video of we don't know that.
SPEAKER_00: But obviously, the DA thought something was kind of hinky because they dropped charges against the guy who assaulted him. Shouldn't the person who sprays the bear spray and the person who
SPEAKER_02: beat somebody with a pipe shouldn't both people?
SPEAKER_00: Yeah. Yeah. Yeah, of course. Listen, there's video of somebody bear spraying homeless people. That's clearly wrong. However, that was from a couple of years ago, the one that was released from 2021. We have video from the night that carbon yani was assaulted, that they were chasing him down there chasing him down. Yes, this is a metal pipe. And even even if they're acting in self defense, you can't go chasing the guy to that's not self defense or damage on it. Exactly. That's vengeance. That's not self defense. Yes. So they took it out of that zone of self defense. And they were chasing after him. And if you saw what he looked like after the attack, beat using deadly force, he could have been killed. And you know, if Donna gotten killed by the metal pipe, I don't think it'd be a defense that he bear sprayed them first. No, it just seems to that it would have been an excessive use of force. So yeah, but in any event, I mean, where the DA ended up on this, it was just a drop charges from that night. But they're gonna
SPEAKER_02:
SPEAKER_02: drop those charges. I think that that's gonna be untenable. No, they already dropped the charges. They have to. I mean,
SPEAKER_02: justice has to be blind, correct? I mean, you're you're a trained lawyer here, we have to apply the law equally to the sadistic insane person who, wait a second, they arrested the guy who hosed the person down, didn't they arrest them as well? I remember seeing a perp walk. Talk about that on a previous show. Anyway, it's Gotham City, folks. This has gone to pure disproves anything. I mean, again, what they're trying to
SPEAKER_00: say now is that because of the actions that Don took that San Francisco is safe, and there's nothing to worry about. And these addicts people who are encamped on the sidewalks doing drugs, doing hard drugs, there's nothing to worry about. Because somehow they were provoked by Carmen Yanni. And I just think I agree with you that this is part of an overall pattern of chaos and lawlessness in the city. It is like Gotham City. So you know, it doesn't make me feel a lot better about what's happening on the streets. It's nuts.
SPEAKER_02: Chumath, you want to add something? I want free bird to
SPEAKER_03: Oh, riff on lab meat. Yes. Well, there was actually a story about
SPEAKER_02: this. I guess there's two types of lab. There's two types of mock meats. I've had the impossible burger. I've never craved an impossible burger. There's so many great burgers, you can get out there Shake Shack five guys in and out. Why would I go to get this impossible burger unless I was doing like vegan stuff, but then there was also supposed to be 3d printed meats. And this stuff seems to be taking forever. Where's this at? Because there was a story in the Wall Street Journal about how poorly this is apparently going. So there's three categories of these alternative proteins to
SPEAKER_04: traditional animal protein. The first is these, call it alternative proteins where you use things like soy protein, or pea protein, beyond burger is a good example. They have a pea protein based burger. And so that category was kind of hot for a minute where everyone was like, Oh, it's a it's an eco conscious decision, people will make the shift. And you know, beyond meat had this massive IPO and the stock went crazy. And I someone said it was the biggest return ever for Kleiner Perkins, but it really was just taking plant protein, processing it and trying to make it sort of mimic the texture and flavor and taste of animal protein. And it's more expensive. So I've generally been fairly negative on whether that really moves the needle, right? The needle for me is can you replace animal proteins traditionally, and stop using all this land and putting all this carbon into the atmosphere and all this water and all these resources that we use to make all these animal proteins, which I think is both kind of ethically incorrect, but also extraordinarily environmentally costly. Sorry, can I ask you a question qualifying? Do you
SPEAKER_03: think it's also important for it to not just replace natural products, despite all of those externalities you talked about with artificial products with chemicals and sugar? So, first
SPEAKER_04: of all, everything is a chemical. So that, you know, I think the categorization of you know, all chemicals are bad and silly, because everything is made of chemicals. I think it's a question of are there bad things that are being put in there? That's not good for your health to make it flavorful or whatever. And that that may or may not be the case. It's really product dependent. I don't think it's a good generalization. But
SPEAKER_03: do you so you think when I eat a salad, I'm just eating chemicals? It is chemicals. Yeah. Got it. But healthy ones,
SPEAKER_04: right? Healthy chemicals are in a salad. There's good or bad.
SPEAKER_03: Yeah, for sure. And then bad chemicals are in like sugary cereal, like refined sugar is bad for sure. Right? That's a
SPEAKER_04: bad chemical. And I know I'm just I just want to understand
SPEAKER_03: how you just viewed as a spectrum of chemicals, some good, some bad. Yeah, there's things that are good for you.
SPEAKER_04: There's good fats, there's bad fats, there's there's, you know, and even in the category of sugar, some people say all sugars are bad. Some people say some sugars are better than worse. Others, as measured by the glycemic index, all you know, there's a lot of ways to kind of look at this stuff is
SPEAKER_02: beyond meat and these p ones. They're all processed, highly processed. They got a lot of salt, they got a lot of fat, right? They're not good for you. So the way that beyond and
SPEAKER_04: impossible and others have tried to make it taste good for people is they've added a lot of, you know, saturated fats, which is a way to drive the mouthfeel and make it taste good. But then a lot of doctors, the American Heart Association came out and said that those fats are really bad for your heart and you shouldn't eat them. And also, there's been a general kind of consumer sentiment shift. So a couple years ago, these were the hottest products. It was like all the food ingredient companies were shifting to plant based proteins, and they were building plant based protein business categories. And it was this big, hot thing. And then they came out and they're like, wait a second, this isn't going as we thought. What happens is people try them out. And they're like, yeah, that's a cool thing. I want to do good for the planet. But would I rather pay five bucks for a do good for the planet burger that kind of doesn't taste that good? Or would I rather pay three bucks for a burger that tastes really good? And what happens is, be B,
SPEAKER_03: I choose option B. Yeah. And so to most people, right. And so
SPEAKER_04: almost all people and I that's the point of view, I've always shared, I said, it's just, it's not going to win the hearts and minds of the world unless it's cheaper, and it's tastes better and healthier. And it's identical. Yeah, and doesn't damage your health doesn't make you worse. Exactly. So the more challenging technical solution is the other two categories. The second category is can you synthesize animal proteins using recombinant DNA. So this is where you take the DNA that codes for the protein, whether it's the milk protein or the egg protein or the cheese protein, and you put it in a bacterial cell or a yeast cell that are used to ferment that we used to make wine that we used to make beer, and they eat sugar, and then they spit out a product. And in the case of wine and beer, they eat sugar from grapes or from from malt or whatever, and they spit out alcohol ethanol. And Genentech was the first company to really pioneer recombinant DNA at a mass scale. They basically use recombinant DNA to make insulin. So they took the DNA from humans that that codes for insulin, the gene for insulin, they put it in E. coli bacteria, and then they put the E. coli bacteria in a big tank, and the E. coli start to duplicate and they make all this insulin. And that's how we make all the world's insulin today is using that bio manufacturing process. And it's how we make all of biologic drugs, all antibody drugs are made this way. It's a $300 billion a year market just in biologic drugs. So when CRISPR kind of came about, in 2012, suddenly the toolkit to go in and do a much better job and a much cheaper job of editing the genomes of the little microbes to make them more efficient at making these proteins became standard. And everyone said, let's go use this new category of what's being called synthetic biology or sin bio, to make all these animal proteins that we use animals to get today. So can I just ask a question is the idea that if you
SPEAKER_03: use recombinant DNA in this process, it would taste better and be healthier and all this chemically identical. So it's
SPEAKER_04: the exact same protein as you get. I understand. I understand
SPEAKER_03: it'd be the exact same under a microscope or whatever, but would it taste the same case? exact same, totally exact same.
SPEAKER_04: So that's the whole point. Do we know that or was that that was
SPEAKER_03: the guess? No, we know that it's the same protein, so whether you
SPEAKER_04: get the protein from the cow, you get the protein from the yeast cell, what's the issue is too expensive to do this process. So the key metric in that second category is productivity grams per liter per day, how well can you get that little microorganism to make that protein, the more protein it makes per day, the cheaper the price per protein. And we're still far ways off from getting this to be price competitive. So that's a challenge category right now. There's a lot of I'm invested in a couple of companies in the space where we're trying to make it faster and cheaper to do that strain engineering to edit the genome upfront and make them make those little cells more productive to bring the price per gram down, and hopefully make it compete ultimately, with the traditional market for eggs, cheese, milk, etc. But what is the constraint?
SPEAKER_03: Is it an energy constraint? Or is it natural biological incapability? No. So the great thing is our first principles
SPEAKER_04: basis, the biophysics indicates that this should make proteins cheaper. And that is good for the planet. It's good for human health, it's good for everything, we should be able to make eggs, cheese, milk, all this stuff exactly the same as what you get from an animal without the animal, because the biophysics of a single cell making it is better than the biophysics of a whole animal. Think about a chicken, it grows feathers, it clocks, it walks around, it has energy, it makes heat. So the chicken as a system is not that energy efficient. But a little cell that just eat sugar, and it's programmed to do one thing and one thing only eat sugar, make protein, each sugar make protein and spit as much of it out, you theoretically can make it way more efficient. Exactly. Now, we're making great progress, but we're not there yet. We're not a commodity price points, why I'm trying to ask why where's the failure point?
SPEAKER_04: There's two failure points. Sorry, I should I should say there's three. The first is strain engineering, which is you want to shuffle all the other genes in the organism to stop doing things like growing a bigger cell wall, or you know, taking your time to duplicate, you want to change the genome of the cell to get it to do stuff faster. The second stage is process engineering. When you put that cell in a tank, you're changing the sugar, the methanol, the co2, the oxygen, the pH, everything about that tank and the condition of the tank has to be adjusted. So there's about 60 variables. And those 60 variables all need to be tuned and tweaked before you optimize the performance of production. The third category is the hardest, which is scale manufacturing. There's about 100 million liters of bio manufacturing capacity on earth today. 95 million liters is owned and operated by companies that use and when I say bio manufacturing capacity, I'm talking about big stainless steel tanks, you pour water, you pour sugar, you pour your cells in, they make copies and they make your stuff. Of that 100 million liters 95 million is owned and operated by companies. 5 million is available for rent of that 5 million liters. 4 million is rented for its entire lifespan by some company, usually a biologic drug company, because very little of this is being done in food today. So there's only a million liters left to rent. And there's 200 sin bio startups trying to make animal proteins. And they've all competed for this this capacity. So the capacity cost has gone up by about fourfold. But it sounds like the the latter two, you can
SPEAKER_03: overcome with capital. But the first one is really bounded by science. It's more engineering because what you track is kind
SPEAKER_04: of what's called the tighter curve, which is grams per liter. And the more experiments you do, the higher that number goes. And so if you can increase your experimental rate, and the few the few grams that it does produce today, when when a
SPEAKER_03: normal person tastes it, they're like, yep, this tastes the same as a wagyu ribeye. No. So remember, I'm talking about
SPEAKER_04: proteins right now. I'm not talking about cellular meat, I want to talk about cellular meat last, which is the hardest category, which is what you're talking about. I'm talking about taking that protein and then using it to make a product like a like a cheese, or you know, using it as an egg replacer, that kind of stuff. It's the same protein as what you would get from eggs or milk or what have you. This all just sounds
SPEAKER_03: so hard. Well, it's a big problem. And it's a lot of
SPEAKER_04: money. So is it a problem? eggs alone are $200 billion a year. I mean, the methane released from cows is one of the largest contributors to global warming. It's a it's a real problem. Also, we're gonna need to solve this to math if we're going to
SPEAKER_02: allow resource constraints. We're going to colonize Uranus. We're going to need to get food there. I just asked
SPEAKER_03: question like if you if you go after the high emission categories first, do you give yourself room to leave these things because you're doing so much already? Just a question animal agriculture emissions are one of the largest and
SPEAKER_04: unfortunately, one of the biggest drivers because as people's GDP per capita increments, the first thing they spend money on is I get it. I'm saying something different, which is if we just
SPEAKER_03: invented better heat pumps, you'd have industrial heating and cooling, which represents like almost a third of all greenhouse gas emissions, you get that off, and you give yourself a lot of time and space and room. And maybe you'd let the cows roam and belch and burp because the tape the meat just tastes better and you don't have to spend a bunch of time and effort. I don't think it's an or I think it's an answer math. I
SPEAKER_04: think we should be doing all these things. And I think that I'm a big believer as you guys know in markets, so I'm not a believer in transition for the sake of you know, carbon saving because people aren't going to pay a premium as we've seen with the kind of alternative meat market. $15 people some
SPEAKER_02: hamburgers are not just one cheaper, cheaper, cheaper. So if
SPEAKER_04: you can make proteins cheaper, it's also a great ROI, you can make money doing this. And the market will buy it because it's cheaper protein. I just want to I just want to hit on this because we keep sidetracking a little bit. The third category is the one that the article was about, which is cellular meat. So cellular meat is where you're trying to make your wagyu or your shrimp or your fish, you're trying to make cells, not just proteins, but entire cells. And those cells stick together and they look and cook and feel and taste like cellular meat like like muscle, like what you eat when you eat fish or beef or whatever. And the problem there is you're trying to take a cell
SPEAKER_04: and cells normally grow on, you know, bones and on tissue. And so there's scaffolding and all these systems that hold all the cells together. And so to get cells to grow in a tank, and stick together and replicate without other cells signaling them turns out to be really expensive. There was an executive at Merck I spoke to a few months ago, and he said, we're going to sell fetal bovine serum, which is basically like this liquid that they get from the fetuses of cows. And this is how cellular meat started. They took a cell from a cow and they put it in a tank with fetal bovine serum, and the cell started to replicate and duplicate. And then they could take those cells and try and turn them into a beef into a burger and sell it or try it. That was the million dollar burger if you remember that a couple years ago. And fetal bovine serum market has gone through the roof because so many companies are trying to make cellular meat. And the Merck exec was like, we're going to sell a billion dollars of fetal bovine serum and then we're going to sell zero because no one's going to be able to make money doing this. It's just impossible. You're not going to sell $500 burgers. So the technical challenge there is you have to edit the cells to get them to duplicate, you have to get them to grow in suspension, meaning in a tank, instead of growing on bones and growing next to each other and scaffolding. And then you have to change the feedstock so that you're creating all these other proteins and signaling factors and hormones that you pour into the tank that trigger those cells to grow. Is there any
SPEAKER_03: chance that after all this, it's it actually just tastes slightly different or better? It may. Yeah, it may but likely not. I
SPEAKER_04: mean, let's be honest, either you're taking a cow cell or a salmon cell. The reason I say this is that I don't know if you
SPEAKER_03: I mean, you don't eat meat. So maybe you don't know this. But depending on where the water that they drink, the actual grass that they eat, the meat does taste different. And that's part of the whether the cow is massage.
SPEAKER_03: I mean, look at the acorn fed cows that we used to have at poker before austerity measures life was so good in
SPEAKER_02: 2021. Well, that's that. No, we can't get it anymore. Yeah, I
SPEAKER_03: know. We're on a budget. I get it. No, not us. We can't get it
SPEAKER_03: anymore because they sell it through one channel. But yeah, like I think the base is so good. Yeah, the variation you're
SPEAKER_04: talking about is obviously at an echelon and a class of eating chamath. It's probably not mainstay like, you know, the $30,000 a year McDonald's burger and chicken nugget eater is probably happy to take. No, I disagree with you chicken nugget that tastes I disagree with you because if you go into Whole
SPEAKER_03: Foods and you actually buy like a USDA top sirloin, there's a certain taste that it has that things that are not USDA don't have. So even even at like the most basic layer of the food pyramid, you can differentiate on taste based on the same. This is why I'm saying I think it's just a very complicated, long drawn out process. And I just wonder if the people that are in these businesses, if they actually love food or not, I understand why they love the science, I get it. And why they would love to save the planet. I get that too. But unless some of these people are are also food lovers, they're going to miss I think the thing where it all dies anyways, I just want to
SPEAKER_04: restate again, for the final time, these are these are identical cells and identical proteins to what you're getting from the animal. So they are not like what we talked about in that first category, where you're trying to get other stuff to sort of taste like meat, you're literally trying to create the meat and create the protein using these systems. And we're just trying to tell you that salmon, two pieces of
SPEAKER_03: salmon can taste totally different depending on where it swam. Right? I guess what I could say is same protein. Yeah,
SPEAKER_04: you could probably adjust the conditions in the tank if needed to change the characteristic. This is my point. Like you don't
SPEAKER_03: even know where to start. How is it the fucking kelp in the Atlantic Ocean? Like what are you changing? Look, I don't know
SPEAKER_04: what kelp effects on the salmon. I don't know if salmon, but this is my point. Nobody does Atlantic Ocean. This is why we
SPEAKER_03: pay so much for the acorn fed beef. I get it. But most beef is
SPEAKER_04: not kelp from the Atlantic Ocean fed salmon. It's animals grown in very large feedlots fed corn and water. That's it. Let me just say that again. 90% 95% of animal protein consumed is cows, pigs and chickens grown in feedlots fed corn and soybeans and water and that's it right but if you if you go to
SPEAKER_03: different countries and taste the meat that's fed in that exact same way it tastes different. So for example, if you go to Argentina, I appreciate what you're saying but the point you can recreate whatever the system is that
SPEAKER_04: you're talking about. So I want to just get back to the unit economics, the cost per kilogram or the pot cost per gram of the protein. We are still many orders of magnitude away on cellular meat. So the problems you're laying out are really down the road problems of optimization right now we've got more fundamental problems on how do you actually get this stuff to be cost competitive. Now fortunately, the tools of CRISPR and since CRISPR-Cas9 came out 10 years ago, there are now hundreds of variants that are open source, IP free, royalty free, and used very broadly and generally and DNA sequencing costs continue to decline. Those are the two basic tools that are being used by biochemists and engineers to do rapid evolutionary iteration needed to produce the recombinant production of proteins to produce the new cells to produce the feedstock for those tanks. And there's a cost curve that we're trying to get over. It's not happening overnight, hundreds of millions of dollars and in several cases, billions of dollars have gone into these systems. And it's very likely that these companies may need several more years and several billion dollars, we are going to get there, the technology is progressing, the rate of progress is a little slower. And it's a little more challenged, I think, than the first round of investors had hoped. But I do think that scientifically and first principles, it is absolutely feasible. It's a function of engineering our way there to giving Chamath and everyone else that eats burgers and chicken nuggets, everything that they want, hopefully at a lower price. If you put it on the curve of self driving cars, you
SPEAKER_02: know, we have crews doing some automated taxis in like a very constrained area in San Francisco, but we don't have it everywhere. Where do you put this on the curve? It's a great question. So what's happened, by the way, as we've gotten down
SPEAKER_04: the cost curve, we are unlocking new markets. So new products are being produced existing proteins that are come from animals. There's a good example of a product called pepsin. It's it's extracted from pigs today. It's very expensive, similar to how we used to make insulin. And we're replacing the sourcing of that product, we replaced insulin, which we used to get from pig spleens. We now make it recombinant Lee, we're now replacing pepsin, we're replacing the the rennet that's used to make cheese. So as we move down the cost curve, these high what are called high value proteins are the first to fall, those markets collapse because we now make them recombinant Lee, they were sorry, they collapse in price, because they're now cheaper using recombinant systems instead of taking them from animals. And eventually we'll get to that cost curve where they're ubiquitous for all proteins, or for all types of cells. In the meantime, there are pretty sizable markets to go after these are multi billion dollar markets that are getting knocked down. We don't talk about it every day doesn't show up in the news. But it's really profound and interesting to see that this technology is working. It's overturning multi billion dollar markets. It's making progress. And you know, hopefully it'll, it'll get to the point that you know, everything from the chicken nugget to the kelp fed salmon can have you guys tried to be on burger or an impossible
SPEAKER_03: burger? I've had it. I've tried them a long time ago, but I've not tried them recently. They're like, it's like eating something
SPEAKER_02: mushy. That's 60% of average hamburger. It's not worth paying double for certainly for somebody who's a hamburger eater. So while we were talking, by the way, Amazon's results came out, they crushed it. Earnings per share of 31 cents, versus 11. And stocks are 10% 10% off hours, and it was up 4% today, where the insider traders will make tax, how do you feel about your recession prediction?
SPEAKER_00: I'm sticking by it. I think we're still gonna recession, but it is an interesting paradox here. So I think there's only a couple possibilities. Either tech is sort of immune, or they forecast down so much. They were so conservative in their forecast thinking we're going to be in a recession that it was easy to beat. Or look, I could be wrong about the recession. But Powell is saying it. And Powell is saying if it's not a recession, it's gonna be less than 1% growth. It's gonna be a rounding error to recession. So it's not credible. So I'm not
SPEAKER_00: revising my forecast. Well, I think pal is credible when he's giving us bad news, because their incentive is always to fluff it up and make it sound better than it is. So when he's telling you things look bad, maybe they're looking really bad. I don't know, man. But look, it's a tale of two cities right now. I mean, the big tech companies seem to be doing really well. So it's it's definitely a paradox.
SPEAKER_02: Yeah. All right, everybody.
SPEAKER_00: Well, the whole RFK thing. Okay, that's a good topic. Yeah,
SPEAKER_02: great topic. Go ahead. I think we should tell people like what
SPEAKER_00: he's about. Where are all yours? I think he gave a terrific announcement speech. Okay. And just to give you some background for the younger viewers who may not know. So Robert F. Kennedy his father ran for the Democratic nomination in 1968, after his brother john F. Kennedy had been president was assassinated as we know, in the early 1960s. What happened is at this time, before the 1968 election, Lyndon B. Johnson was the incumbent Democratic president. And everyone thought that he'd be the party's nominee, and he was going to get reelected. And he was brought down by an extremely unpopular war, the Vietnam War. And it was RFK Junior's father, who was a great critic of the Vietnam War, and he ran for the Democratic nomination. And I think that he very likely would have gotten it on the night that he won the California primary. He was assassinated by Sirhan Sirhan, right? Yeah, if you go back and
SPEAKER_00: look at the things that he was saying in that campaign, he really was saying a lot of beautiful things that are in his son's ad that I think would be worth playing here. But I think you have maybe the setup for a similar situation here. You've got an incumbent Democratic president, who is sort of not that popular. He's sort of old and out of it and incoherent. He's presiding over a war that is rapidly becoming a debacle. You don't hear so much about the spring counter offensive anymore. These new Pentagon papers that were leaked show that the Ukrainian casualties are at least five times greater than they've been publicly admitting. It looks like Russia is certainly not losing the war the way they used to be. They've captured 90% of Bakhma, which has been the most violent, bloody battle of the war. And Biden at this point has no strategy to bring that to an end. In fact, he's rejected multiple attempts at a peace deal. And so now it looks like it's the Chinese who are in the driver's seat, potentially putting together some sort of dramatic settlement. So I think, listen, if the economy ends up going into recession, and this war ends up becoming the fiasco that it's increasingly looking like, you could have a setup like 1968, where people are wondering why the hell is this guy our nominee? And let me tell you, RFK Junior's already pulling at 19%, which I think is pretty good, considering he just came out of the gate. And people don't even know the substance of his campaign yet. Marian Williamson's at 9%. So if she dropped out, you'd be at 28% for the alternative. And I think he could go up from here. And I think if you if you watch the speech he gave, I thought there was a lot of really beautiful sentiments in there. He's very good. He said that Biden has made Ukraine a pawn in a
SPEAKER_00: geopolitical battle that has put the flower of Ukraine's youth into an abattoir of death. In order to exhaust Russia. He channeled America's anti war traditions. He quoted john quincy adams, that America should not go abroad in search of monsters to destroy. He quoted Martin Luther King Jr. There is a direct link between poverty and violence and oppression at home and war abroad. He talked about the role of the CIA during his uncle's administration where he said that john F. Kennedy eventually realized that the purpose the CIA had become to create a steady pipeline of wars to feed the military industrial complex. And he talks about how JFK came to distrust the CIA and realize that it was lying to him. And the biggest applause on of his speech was when he quoted JFK approvingly saying that he wanted to take the CIA and shatter it into 1000 pieces and scatter to the winds. And this very same week that he gave the speech, we found out that five former CIA directors had participated in a giant hoax on the American people by claiming that this hunter Biden story was Russian disinformation. They knew it was not they knew it was not the information on the hard drive was real. It showed that hunter Biden received multimillion dollar payments from foreign governments, including China and Ukraine. Okay. And regardless of what you think of that story, it should not have been suppressed by social media. And it certainly should not have been suppressed in a psy op by 51 former intelligence officials, including five former directors of the CIA. And if that's the way they're going to behave, they're going to meddle in American politics that way. I think we do need to start over, we do need to ask what's going on with the security state, they're not supposed to be meddling in American politics that way. So I think if this is the way they're going to act, I say shatter away, scatter that thing into 1000 pieces. Hey, Catholic, I'll vote for
SPEAKER_02: and he's called out the insanity of COVID lockdowns and man
SPEAKER_00: that's the thing that he's I guess that's the big controversy is he's anti he's an anti vaxxer. I guess that's the
SPEAKER_02: one thing they're trying to position him as and he does a little bit of conspiracy theories. So listen, if you go back and look at his record, he was an
SPEAKER_00: environmental activist, most of his big time. He did the Washington Project in New York where they basically bought the
SPEAKER_02: land along the Hudson. I remember I've said some of events for it. They wanted to clean the Hudson up. And they just bought the land and then people donated the land and they bought it, they raised money. And the Hudson today has like, you know, it's flourishing amazingly, and he's directly responsible for that. He was a big critic of the way that corporate greed could lead
SPEAKER_00: certain big companies to engage in environmental pollution. And at a certain point, he realized that big pharma had a similar incentive. Now, I don't know if he was right about those vaccines. But I do know that he's right in the case of COVID. They had an incentive to push this dubious mRNA shot on us, so that we get boosted a zillion times. And he's right about that. He was right about the fact that this should never have been mandated, we should not have the lockdowns. And you know what, in his nomination speech, or his declaration, the word vaccine was only mentioned once. So this is not what his campaign is about. I look forward to having him on.
SPEAKER_00: Yeah, and to be honest, I mean, look at all the other things that were deemed to be conspiracy theories that ended up being true. Oh, yeah. Monster.
SPEAKER_00: Not that he go either way. It could be embarrassing. Let me ask you this, X, if it was him
SPEAKER_02: versus Trump, who do you vote for?
SPEAKER_00: Well, I'm gonna I'm gonna reserve. versus Trump sex.
SPEAKER_02: I'm not gonna take position on the general yet. But but in the
SPEAKER_00: Democratic primary, I'm definitely endorsing RFK Jr. in the Democratic primary. Okay, I'm voting the Democratic primary.
SPEAKER_02: What if I could I'll do an event.
SPEAKER_00: All right, everybody. All right to all the amazing people who
SPEAKER_02: got together for the episode. Unbelievable over 40 or 50 of them ray. Great job. Shout out to Ray shout out to Ray and we dialed into a bunch of them and
SPEAKER_04: I think it's great Europe and I don't know all over the place.
SPEAKER_00: No one got robbed or mugged or bear. Hopefully, I don't know if they did any in San Francisco. There's no bear
SPEAKER_02: spraying since that's good. They had a big turnout to the marina. For the Sultan of Science, the dictator himself and the
SPEAKER_02: mouthfeel.
SPEAKER_03: And Rain Man. I am the world's greatest moderator. We'll see
SPEAKER_02: you next time, everybody. Love you boys. Bye bye. Let your winners ride.
SPEAKER_02: Rain Man David Satterthwaite Rain Man David Satterthwaite. We open source it to the fans and
SPEAKER_00: they've just gone crazy with it. Love you, West. I'm the queen of Kinwah. I'm going all in.
SPEAKER_00: Let your winners ride. Besties are gone. That is my dog taking a notice in your driveway. Oh, man. Oh, man. We should all just get a room and just have one big huge door because they're all just useless. It's like this like sexual tension, but they just need to release them out. Let your beat be. Let your beat be. We need to get merch.
