SPEAKER_10: Hey everybody, welcome to the All In Podcast. I'm your moderator for the week, Dave Friedberg, not the world's greatest moderator. This show is gonna be a bit of a shortened version. At the back end of the pod today, we actually are gonna show some Q&A from Jason's launch summit, which he held in Napa Valley this week. Great event, thanks for having us up there, JCal. Thanks for coming. Great speakers, great content, and we did a live Q&A for the All In pod with the audience there, which we'll transition to about halfway through the show today. JCal, thanks for your hospitality. Oh, yeah, thanks for coming. Thanks for throwing the fun birthday party, the poker night, we had a great time.
SPEAKER_05: I still didn't know what I was doing there. You were meeting some of your LPs who you'd never met before. It was like a dog and pony show. JCal was using us as some sort of dog and pony show to raise money.
SPEAKER_10: Zach, did you really have LPs there that you had never met?
SPEAKER_05: No. Yes. Hold on a second, I had one LP there who I have definitely met many times before.
SPEAKER_08: Okay, she told us she'd never met you, she wanted an introduction. So maybe she's getting into the spirit of All In and joking with you, but you had a three hour meeting with one of your LPs, I heard. She talked about it the next day. Yeah, she said she had two or three hours with you. Chamath, are you with us today?
SPEAKER_10: What's going on? You there, buddy?
SPEAKER_08: Chamath was very drunk, by the way. He brought up his own wine, he started margaritas at two o'clock. He was drunk by the time we got there.
SPEAKER_10: What? He showed up late in the afternoon. He was day drinking margaritas in the sun, and then we showed up and he was falling asleep by the time we were done with the stage session. I love you guys! Let's go!
SPEAKER_06: I'm here. I'm here. I'm here.
SPEAKER_08: I'm here. I'm here. Let your winners ride. Rain Man David Saks.
SPEAKER_06: And it said, We open source it to the fans and they've just gone crazy with it. Love you, Westy. Queen of Kinwah. You know, by the way, politics is one of these incredible things where you see the meanest people come out of the woodwork when you even feign support for somebody that they don't support. Now that it's out there that Saks and I are doing this fundraiser for RFK. Oh yeah? If you look at Twitter, some of like the democratic surrogates are out just smacking me and Saks around. And it's incredible because. Well, that's my world. These people are like the biggest imposter loser clowns. They've never literally done anything in their whole life. And then they show up and then they just like, how dare you work and help build a company? How dare you help build another company?
SPEAKER_06: How dare you help now fund other companies? I am a talking mouthpiece who's never done anything except work in one administration as a speech writer. And now I think you guys suck balls. It's like, give me a break.
SPEAKER_10: So are you a little kind of emotional about that today? I actually, I love critiques actually.
SPEAKER_06: Cause I think like you can learn a lot from critiques, but then when mids just spew, I just get annoyed. I think mid should not be allowed to talk.
SPEAKER_08: Yeah. Well. That's just my thought. There goes half the internet.
SPEAKER_10: Saks, are your Republican cohort friends upset about you hosting a fundraiser for RFK?
SPEAKER_05: I've gotten none of that.
SPEAKER_10: None of that.
SPEAKER_08: That's interesting. What's your take on that?
SPEAKER_10: Yeah. Do Republicans generally think that it's a good thing if RFK Jr gets the democratic nomination because he will be easily beatable? I don't think they're thinking that way.
SPEAKER_05: I think that there's a respect for RFK Jr among many Republicans, cause he's speaking out on issues that they care about. Like I've talked about, he's denouncing censorship. He's in favor of free speech. He's in favor of civil liberties and not this massive surveillance state. He's speaking out in favor of peace instead of war. He's speaking out on the border. He had this amazing video. That was great. A couple of days ago where he went to the border in Yuma, Arizona at 2 a.m. in the morning. At 2 a.m. in the morning, yeah. And he shows where the border wall ends. And where the border wall ends, the line begins. And people from all over the world are just entering through this hole in the wall in a never ending stream of people. And then they get loaded onto buses provided by the government. And then they get handed a ticket to supposedly appear in court to resolve their case in three or four years. And they're never heard from again and they're dispersed all over the country. What I don't understand is if the federal government can get its act together enough to provide buses, why can't they get their act together enough to plug the hole in the wall? It's absurd. This is like an act of sabotage against the United States. And so he's there just pointing this out. I've never seen anything like this before.
SPEAKER_10: It was interesting as a Democrat to do this because that's typically kind of a Republican point, right? And some of the commentary made about RFK Jr., I think it was in the New York Times this week, or someone that covered his candidacy, one of the big media companies, highlighted how much of his agenda seems to be a Republican talking point agenda. Does that sound accurate to you? Or is that just kind of a- Well, I think even most people in the country
SPEAKER_05: who identify as Democrats would be against having an open border. That's what we're talking about. When there's a hole in the wall and people can just start forming a line, and then once they get through the line, they're literally dispersed- Hold on, they're basically distributed throughout the country on buses? I don't think most people in the country, even Democrats, would support that. But what he's violating here is the press blackout on what's really going on at the border. So you're right.
SPEAKER_08: He went there.
SPEAKER_10: But other Republican talking points, so the points around the vaccine, the points around- The Republican, well, he's expressed, obviously,
SPEAKER_05: concerns about vaccines preceding the COVID vaccine. I don't know whether he's right about that or not. I'm not willing to say whether he's right or wrong about that, because I just don't know enough. I think he's definitely right about the inefficacy of the COVID vaccine. We've talked about this before. Even Bill Gates admits now that the vaccine doesn't work. It's too short acting, and it doesn't hold up against variants. It's not a vaccine. Let's just call it what it was. It's not a vaccine. It doesn't prevent you from getting the illness.
SPEAKER_06: It's a death reduction shot.
SPEAKER_06: It was a revenue grab by big pharma, plastered with non-scientific thinking from a bunch of people who should have known better.
SPEAKER_10: Wow. Okay, I think you just got our- So much for- YouTube channel sensor. But this is just the truth.
SPEAKER_05: Hold on. What Chamath just said is just the factual reality, and you can't get that from the mainstream media. There's no reevaluation. There's no appraisal. They control what we see and hear. It's like Provdell level in terms of the propaganda. And that's why I think RFK Jr. is so interesting is because he is blowing up what the mainstream media wants to control. The really interesting thing about him going to the border,
SPEAKER_08: I agree with Sax, is, hey, let's just have a discussion about this and look at the actual facts on the ground that we can agree on. And what he actually did was he pierced the veil of like, this is an issue about a certain group of people. He was there, and there are people from Afghanistan, China, all over the world coming in. He made the point that this isn't just about one country and that these people are suffering. And that I thought was like another really important highlight. These people are being trafficked. They're being abused at the border. And that it's gonna cost us 10 million a mile to secure the border. It's a humanitarian crisis. He had a really good way of talking about it.
SPEAKER_05: And he's done this with Ukraine as well, where he emphasizes the humanitarian aspect of it. Yes. Which I believe. And it's a good way of talking about it. And I think Republicans should adopt some of that rhetoric.
SPEAKER_08: And to Chamath's point, I think it's a money grab, Chamath. I do think it lowered death rates, but I do think piercing the veil on this and-
SPEAKER_05: None of us are still getting boosted because we know they don't work. Guys, stop. Okay, let's keep moving on.
SPEAKER_10: I'm not debating vaccines and politics. We're moving on. We're gonna talk about crypto. So this week, the SEC- Here we go. Serious action against Binance and Coinbase. You know, pretty significant, pretty loud. SEC filed 13 charges against Binance entities and the founders' CC. Charges include operating unregistered securities exchanges, broker dealers, and clearing agencies, misrepresenting their trading controls and their oversight on the Binance US platform, and the unregistered offer and sale of securities. The next day, they sought a temporary restraining order to freeze Binance's US assets. And then on Tuesday, the SEC sued Coinbase over their exchange and their staking programs. Stock dropped 12%. The SEC said that the company was operating an unregistered exchange and broker, and that 13 of their assets listed on their platform were considered crypto asset securities. Brian Armstrong obviously has been on the pod several times, said he's not shutting down his staking service, and said, regarding the SEC complaint against us today, we're proud to represent the industry in court to finally get some clarity around crypto rules. He's generally made the statement that he has tried multiple times to register with the SEC. They have not had a mechanism for him to register. They have tried to do everything by the book, and that the SEC approved their IPO filing, knowing full well the details of their business and their operating model, and still allowed them to go public on a US securities exchange, despite full knowledge about their business. Chamath, does anything change this week based on the SEC's action, or is this just a continuation of, you know, crypto has been rolled back and will continue to roll back here in the US? Or is this something new and a new action and opens up a new front on the government versus crypto?
SPEAKER_06: It's a good question. I think there's two ways to look at this. One is the conspiracy theorist way, which you see a lot of on Twitter, which is this idea that crypto is making all of these inroads as a replacement mechanism for fiat currency, and so governments are really now invested in trying to shut it down. I think that's largely untrue. And then there's the more simple basic reality, which is that there was one part of the SEC that frankly didn't do the job that they were supposed to by either allowing a few of these crypto companies or crypto businesses to go public, either as standalone businesses or as part of other businesses, so Coinbase, Robinhood, et cetera. And then there's this part of the enforcement action after this FTX fiasco, which is a lot of CYA, covering your ass by the SEC, especially because it looked like they had some cozy relationships with them. And so they're coming down hard and they're going to go and systematically dismantle the largest actors and they're going to go through the value chain. So I think the obvious place that they're looking now are the exchanges, they'll look at the custodial services, they will not approve any ETFs. And then eventually I do think it trickles into all of the staking services. And eventually I think it'll touch the venture community and all of those firms and funds that had a huge robust business in staking these crypto projects in order to get coins, like founding coins and then being able to sell them.
SPEAKER_08: J. Cal? I mean, I've been talking about this since the beginning because I bought Bitcoin and wrote about Bitcoin when it was maybe 25 cents. And then again, when it was a hundred. So I've been following this for a long time. And I think thinking from first principles to stepping back for a moment, what we do in technology is fundamentally disruptive if it's at its best, if it's truly going to be important in the world. And when you hear that word disruption, you kind of file it as a buzzword, but what it really means at its core is like competition. And it's not just competition disruption, when you say disruption, you're talking about existential competition. Two people go in the ring, one person comes out, like somebody is going to get really fucked up. And if you, people keep bringing up, oh, you're an investor at Uber, they broke the rules, they bent the rules. Uber was going against caps. Airbnb was going against like hotels. WeWork was going against like long-term real estate leases. When you look at all those disruptive technologies and what they did at their core, they disrupted on behalf of consumers and lowered prices, increased choice, et cetera. When you get crypto, the crypto crowd literally said, we are going to replace fiat currency. Fiat currency is the government. And so my thesis from the beginning was, if the government has a way to stop this, they do not want to be disrupted. What is a government at its core? It's a military, it's a bunch of rules, laws, and it's money. That's the kind of pillars of any government's power. We knew the government wasn't going to give this up. And they f'ed around and found out, but the truth is the, and this is where I have some sympathy for the crypto people, not the people who are just committing crime with the hallway and just dumping these bags on retail, et cetera. But we do want to have this innovation here. There are some innovative aspects to it, but Gary Yancer said, listen, you already have electronic money. It's called money in the United States. We already have these services. You don't need this. Consumers don't need it. And you have to understand the SEC's function in the world to understand why they're taking this action. Their function is to protect investors. Investors lost a bunch of money. Therefore, they are going to retroactively inflict pain and hold people accountable for their mandate, which is to protect investors. You could have easily resolved this, the SEC, and the companies could have resolved this. The companies could have followed these things as securities and only allowed accredited investors, top 5% of the country, people who make over 200K a year. They didn't do that. They said anybody can buy these. Well, that's just not how it works in America. And it should change. I think everybody should be able to buy any security they want in America, just like anybody can go play blackjack. And the easiest solution for this just passed in Congress this week, and will go to the Senate and be a lawsuit, I think, allowing every American, the other 94%, to take a test and become accredited. If that happens, you take a test just like you take a driver's license test. I know what diversification is. I know how risky these are. Once you take that 50 question test, you become accredited, and then you can buy these coins if you want to. And that's really the easiest path to resolution here. So we don't have Brian Armstrong move his company to the Middle East or an island in the Caribbean, which is what he's gonna do, I predict.
SPEAKER_10: Okay, well, look, we've seen this bill make its way, I think, through, is it going to the Senate next, or is it- Going to the Senate. Yeah, going to the Senate next. So let's see if it gets done. I think it's a good point. One thing I'll point out,
SPEAKER_10: when individual investors were making money, because all of these asset values were inflating, all of the coins were growing, were climbing in value, everyone felt good. There was an emergent cry that we all want to have access to these new instruments. We all have a right to make these investments and to own these assets. And then as the asset values declined and individual investors began losing money, the emergent cry is, where was the government to help save and protect us? And so the SEC, I would argue, was probably a little bit hindered when the market was inflating in being able to step in and take action, because that would have been counter to the cries of the retail market. But as the retail market took their hits, the SEC has to step in and Congress steps in and everyone starts to say, it's time to act, we should have acted sooner. And this was fairly predictable. I think what's happening is more nefarious than that.
SPEAKER_05: So the SEC is doing two different things. They're alleging two different kinds of crimes. One set has to do with protecting investors from having their funds stolen on these exchanges or at least commingled. FTX did that, right, where they basically took customer deposits and stole them. What Binance is accused of is taking customer deposits, maybe not stealing them, but commingling them with company funds. That should be looked at and I think crypto customers should be protected against that. However, the case against Coinbase, they're alleging a completely different set of facts, which is effectively what Gensler and the SEC are saying is that it is not legal to operate a crypto exchange in the United States. That is what the SEC is saying, because Coinbase has basically done everything right. And I believe that Gensler is far exceeding his authority in stating something like that. It is not up to the chairman of the SEC to say that Americans should not be holding crypto. Why as a free people should we not be able to buy crypto if we want to? Why shouldn't we be able to buy Bitcoin? Now, maybe you apply rules around accredited investor status there should be protections against unsophisticated investors buying stuff or getting defrauded, that's fine. That's the framework that Brian Armstrong is asking for. But everyone should understand what the SEC is doing right now is basically usurping congressional authority. It should be Congress that makes the law. If Congress wants to ban crypto exchanges in the United States and prevent the citizen of the United States from owning crypto, let Congress do it. It should not be up to Gensler to do that. And the question is why is Gensler going this far? When previously he had relationships in the industry, apparently he was a consultant to Binance and even worse he was talking to FTX about giving them some special status. And I think the reason is that the scuttlebutt is that he has an alliance with Elizabeth Warren and the rumor is that she will make him treasury secretary if he basically destroys crypto in the US. Sorry, where is the evidence for that?
SPEAKER_10: That's just someone's rumor and speculation?
SPEAKER_05: This is the scuttlebutt in the industry. Okay, so it's someone- The back channel.
SPEAKER_10: This is in fact the back channel.
SPEAKER_08: So just to be clear rumor and innuendo
SPEAKER_10: is what you're saying.
SPEAKER_05: No, look, what I would say is clear is that Gensler and Elizabeth Warren have an alliance to destroy crypto in the US. This was speculated about before with Operation Choke Point, but now it's clear. They're trying to shut down. What is Operation Choke Point? We've talked about on the show before, it was a series of actions taken- It's what you do when you're in a hotel at night.
SPEAKER_06: Oh!
SPEAKER_05: No. Operation Choke Point was a series of actions by the US government to basically destroy all the on-ramps to crypto. So you couldn't get money into the system. Now they're going further and they're basically saying it is illegal to operate a crypto exchange in the United States. So Gensler has not played his cards. Yes it is. Gensler has played his cards.
SPEAKER_08: I can explain why you're wrong. What they're saying is it's not just the exchange, it's that the exchange contains unregistered security. So it's a more nuanced point. I think, I agree- What security could you trade?
SPEAKER_08: Well, if it passes the Howey test or it is registered, and there are people who have actually registered- They're saying that no crypto passes the Howey test.
SPEAKER_05: Nope. You can't work on that.
SPEAKER_08: You could pass it if you limited it to accredited investors. And the fact is, Brian Armstrong, Binance, and a lot of crypto projects refused to exclude non-accredited investors. And I watched this happen up close and personal, David. I had many- Wait, wait, wait.
SPEAKER_05: You're right about the unregistered securities thing. They're trying to say that all crypto is unregistered securities. No, no. They said very specifically it was 16. You can't get around that by being a crypto-
SPEAKER_08: No, no, they literally, they named them SACs in the lawsuit. They named the 16 or 13. What was it, Friedberg? So they know how to, it was 13. They know how to craft this. They're saying for these specific 13. Now the industry does feel you're correct. And the back channel is everybody's against us. But if they had just registered these, they would not have a problem. I don't think they're gonna- Well, I think, wasn't Armstrong's point- Bitcoin is not included in this. Ether here is not included.
SPEAKER_10: He doesn't have a way of registering. They do.
SPEAKER_08: They don't want to. So they claim they don't have a way of registering. They could register it just like we all do when we have private securities. No, no, no, no.
SPEAKER_05: There have been a lot of people tweeting about this that the SEC has put out statements saying, our door is open, come talk to us. There is no open door. There is no one to talk to. They have no idea how to get registered.
SPEAKER_10: Chamath, how do you think this is gonna get resolved? Armstrong's talked publicly about going to Congress to try and get some clarifying law passed. Are you familiar with any of the drafting that might be going on to support his cause here? Or do you think it's gonna get settled in the courts? First of all, I think Brian Armstrong
SPEAKER_06: is a really, really, really good entrepreneur. And I'm a really big fan of his. That said, I just don't think that there's a lot of political support to visit this issue right now. And so unfortunately, I'm pretty skeptical that you're gonna see any form of legislation pass. I unfortunately think that the SEC has by and large put the entire sector into mate. And so I think that what Jason said is largely right, which is that it's gonna force these companies to preserve enterprise value to leave the United States and to jurisdictionally operate from a different place and to basically IP block and IP gate US residents from using their products and services. I also think that they're gonna have to pay large fines. And so the only thing that'll be left is to adjudicate all of the staking stuff that happened and whether that was right or wrong. So the court, it'll get settled,
SPEAKER_10: it'll get decided in the courts. I agree with that.
SPEAKER_05: And I think that when you start talking about minutia, like, well, these 16 cryptos are okay or not okay. No, like you're kind of missing the point. The government led by Gensler is in a full assault on crypto and the goal is basically to either destroy it in the US or drive it off shore. Chamath is right about that. And the question is why. And I think J. Cal, you made the point that progressives like Elizabeth Warren see crypto as competition to fiat currency and they do not want there to be a competitor. Now, what is the reason for that? I think it's because of their radical spending schemes. Remember in the first two years of the Biden administration, the progressives wanted a four and a half trillion dollar build back better bill. Remember Larry Summers told them that you're gonna cause inflation and even the $750 billion scoped down version that they ultimately passed caused a lot of inflation and it caused the problems that we have now that we're seeing in the economy. But they wanted four and a half trillion. And when people were opposed to it and said we couldn't fund this, they were in favor of minting trillion dollar coins. Yeah. Well, look, these are people who don't want any check on their ability to spend down the full faith and credit of the United States. They would basically spend all the money that we have. They would basically eat the seed corn. Or don't have. That we don't have that I think you guys agree we should not be spending. And that is why they're the faction in our political system who are most against crypto. The two things can be true, Freeburg.
SPEAKER_08: Hold on, I gotta respond to it. Two things can be true. One, the government doesn't want to give up control of fiat. I agree with that. Second thing that's also true is that this group of people did not want to play by the rules. They knew the rules. They explicitly broke them for profit. That's why they have them dead to rights. You can name this Operation Choke Point. You can brand it. You can put out any conspiracy theory you want. They did have the option to file for these. Why is it a conspiracy theory? You agree they're trying to run these guys out of business.
SPEAKER_05: I agree.
SPEAKER_08: I said two things can be true at the same time, David. This is a tolerance for ambiguity. Being able to hold two thoughts at the same time. They broke the rules and they don't want to give up control of fiat. That's what's happening. That's the rule. You have to file as a security. You have to only allow credit investors. On previous podcasts, you said that Coinbase was a good actor.
SPEAKER_08: I believe they have good intentions, yes. I don't believe the other people do. I do believe Coinbase says good intentions. So now you believe that Coinbase is in violation of the law.
SPEAKER_05: I believe the securities they're trading
SPEAKER_08: are in violation of the law. And that's obvious. But I believe that law should change. Let me give you a third point. So the securities are securities.
SPEAKER_10: Okay, J. Cal, let me give you a third point on Saks.
SPEAKER_10: Elizabeth Warren, she may be motivated by the intention to preserve the authority of the fiat. But is it not also possible that a large number of people lost a lot of money that they worked hard for and they used to buy crypto assets and then the value of those assets went down and those people lost a lot of value? I had, there was a group of guys that are house painters that painted my house two summers ago and they painted the whole house. They were here every day for hours every day. So I got to speak to these guys. And these guys were house painters. You know, they work for an hourly wage. They do fairly well. But every lunch break, every break they got, all that they would talk about with one another was what cryptocurrency they're buying and trading in and out of, with the whole intention of making money. They all believed that they had a good point of view because they read something on the internet or got some tweet or got some text or saw something on TikTok about this one crypto asset or this crypto asset and they were trading in and out and all of the money that these guys worked hard for was being invested in crypto assets.
SPEAKER_05: You're right, that set of facts is not great. However, I don't think that's the motivation. I think the motivation is to basically end crypto as a potential competitor to fiat money in the United States. That's the motivation. And they're gonna use those fact patterns to basically build public support that. Because look, because we can handle that, okay? We could do the accredited investor test. There should be a framework or a set of guidelines under which it is legal for people to buy and hold or trade crypto in the United States. And that's all that Brian has been asking for is give us a framework. And Genzer is not giving a framework. He's just trying to basically put them out of business.
SPEAKER_10: Okay, look, I think we've gone around this topic. This has been a great conversation. I'm gonna move forward to the next topic, which I think is really interesting in the vein of both de-globalization, but also the scale at which venture firms have gotten to. Sequoia decided this week and announced publicly that they're splitting off their China and India slash Southeast Asia funds. As you guys obviously know, Sequoia Capital is a venture capital firm. And within that firm, they manage multiple funds. Some of the funds that they've raised and managed have been specifically targeted in China where they have $56 billion. I don't know if this number is accurate, but that's an incredible number. $56 billion of assets under management focused just in Sequoia, China. And then they have a Sequoia India fund, which has about $4 billion of capital raised in just the last three years. And now they are separating the management company and the oversight of those funds into separate management companies. So Sequoia Capital will no longer oversee those China funds. A new firm has been formed called Sequoia China that is now owned and run by a separate management team based in China. And Sequoia India is now called Peak 15 Partners, which is owned and operated by a separate team of managers out of India. Rolof Bothe will manage the US and European Sequoia Capital. Neil Chen will oversee Sequoia China. And Shailendra Singh. Neil Chen. I'm sorry, Neil Chen. And Shailendra Singh will oversee Sequoia India. I guess this is a question of did Sequoia get too big or are they caving to pressure of the political issues arising with having deep relationships and ties with China, or as they have said, a lot of competition between these different portfolios and companies within these portfolios amongst each other? Chamath, what's your read on the action? Is there anything to read into this and anything to extrapolate from it? Well, it's been a parade of missteps for Sequoia
SPEAKER_06: in the last couple of years. And I'll let Sequoia figure out who to blame for this. But the reality is they, I think, felt a lot of FOMO post SoftBank. They raised this large mega fund that kind of straddled all of the sub-funds and straddled all of the regions. And so they dangled the carrot of trying to get into the early stage US fund by investing in this big mega fund that also had China and India exposure and growth exposure. Then they tried this like very convoluted evergreen structure right before the market fell apart, where you could basically become a permanent capital vehicle. And as far as I can tell from the outside looking in, it just seems like a tax play for the GPs to not have to sell and realize capital gains. But that only works when the stock market keeps going up, which it didn't, and then it summarily crushed tech stocks, 80 or 90%, so that was a misstep. And then when you put all these things together, now that China is contracting, and we've said this before, I think China is largely uninvestable for the next 30 or 40 years. It just makes sense to jettison it. Now, I will say though that Neil Shen is elite. If you consider in investing, I would say I have a simple rubric. Anybody who's made more than a billion dollars for themselves as an investor, I consider elite, Neil Shen is elite. And so he'll do just fine running that Sequoia China business. I was surprised about why they would allow India to leave. There's nobody that elite at Sequoia India by that rubric, but India is a country growing at 6% a year. It literally looks like China in 2008 and nine. And so I'm not sure why you would let them leave. I think that you would want to attach them to yourself because it makes the US business look better. You probably get differentiated and smoothed out returns. But I think this is a little bit of a take- What about the point of view of competition, Chamath,
SPEAKER_10: that there was competition between the different portfolio companies and it was leading to conflict? No, that's stupid.
SPEAKER_06: I mean, that's dumb. That happens in the United States. Sequoia has always been known to fund everybody that they think will make money no matter how much they compete, no matter where they are. It was controversial when they backed YouTube
SPEAKER_10: and Moritz was sitting on the board at Google. Sure.
SPEAKER_06: Look, Sequoia as an organization is elite. They're there to make money for their LPs, period, end of story. And so all of the other words that can go in any press release, basically, I think, try to hide the fact that this is an organization that's had some missteps. They're not on solid ground. They've lost a lot of money and they're trying to figure out what to do next. I, however, if I was running that organization, would have probably done nothing and just let the dust settle. And I think that all of these actions are too close together and it's a little bit, to me, of flailing in the water. And so I don't think it was a good idea to let India leave. I think it made a ton of sense to cut China, but I think all of this stuff happened, started happening a few years ago, starting with that eight or $9 billion megafund that they raised to try to compete with SoftBank.
SPEAKER_10: Saks, any read on this?
SPEAKER_05: Yeah, I mean, I think it's a prominent example of decoupling and globalization going on. So I agree we have to treat India and China separately. With respect to China, I just think it's become harder and harder for Americans to do business in China, both because we don't really have the visibility into that system and there's too much political uncertainty. So kind of to Chamath's point about it being increasingly uninvestable, but I also think the geopolitical concerns, it's just very hard to straddle those concerns now because the geopolitical competition is heating up so much. I think it's investible for people like Neil Shen who are insiders in that system. So I think elite Chinese investors can, I'm sure, make money in China over the next few decades, but I think it's just too hard for Americans to figure that out. So I think them parting ways makes a lot of sense. I think it's gonna simplify Sequoia's life a lot. India, I agree with Chamath that that's sort of a different question because India is gonna be a huge growth economy over the next few decades and they are a US ally. So it doesn't pose the same geopolitical risk. But my guess is that it was just kind of unwieldy, that it's too unwieldy to kind of merge funding sources and firm management across two firms that are really pretty different, right? The US Sequoia firm and then this Indian firm. So my guess is they just decouple because it was just getting too hard to manage. And then if you're an LP, don't you just want the ability to say, okay, I'm gonna allocate this much money to India and I'm gonna allocate this much money to the US? I think LPs probably like it too.
SPEAKER_06: Sequoia China is frankly over the last 15 or 20 years as good and probably is numerically better than Sequoia US. So that was an elite organization just by itself. Sequoia India, I don't think has much to talk about. And so maybe what Roloff decided is this team is just not very good, so we might as well just cut it and we can revisit it later. They probably have some number of years of a non-compete and then they could come back into the market five years with a totally new team and that may be easier. So it may be easier just to just- I can give you the actual information. Maybe the team there wanted to be separate. Look, it's hard to cross returns
SPEAKER_05: from two totally different funds, right?
SPEAKER_05: Because one side's gonna be unhappy with the trade, right? Yeah, I can give you the-
SPEAKER_08:
SPEAKER_10: JCal's got actual information to share? Well, no, I mean, I have the closest,
SPEAKER_08: I think I have the closest. But they were an investor in your company, right, JCal? Well, I'm an LP in their funds and they're printing money for me. They backed my second startup. Rule Off's on the board of that company and still with me. And I was their first scout when they started the scouts program, which is the highest percentage performing fund I think they ever had.
SPEAKER_10: Sequoia's- And you're our resident Captain America, so as a patriot, how do you feel about the- Well, they are, put that aside.
SPEAKER_08: Sequoia's 20% of the NASDAQ. This is the greatest venture firm of all time, hands down. And the Sequoia fund, which Chamath referred to- You mean companies they've invested in?
SPEAKER_10: Companies they've invested in are 20% of the NASDAQ, yes.
SPEAKER_08: And so the reason the Sequoia fund came out, this Evergreen fund, was because a lot of their LPs wanted Sequoia to manage the public equities going forward because they didn't want to sell them because they realized- Bullshit. That the massive gains, the gains from Google, Apple, et cetera, of these investments that they did when they were private companies, Cisco, the gains from public forward were greater than the gains in private. And I've been in on these presentations. I've sat through them with the Sequoia team. And so when you manage those public ones, we've all talked about the denominator problem here. The denominator problem is, hey, are they venture returns or are they part of the public equity? So at a giant endowment, they want to put them into the equities bucket, get them out of the venture bucket. And Sequoia saw an opportunity there to manage this Evergreen fund. I'm sure there are tax advantages to it, of course. But with relation to what they did in China and India, these were incredibly prescient and innovative things they did in 2000 and 2005 when they started India. And then China was 2005, I believe. They found domestic teams. You need domestic teams to do this properly, especially in places with different governance and different regulations. And it gives them autonomy. They were incredible investments. But what's happening right now is all venture investments like the use of AI and chips in the decoupling with China are now under massive scrutiny. So they can say there's brand confusion. You can talk about the collisions and who's going to back this Chinese entrepreneur or an Indian entrepreneur who also is operating in the US. These businesses operate in the US. And so what really is happening is the government is going to stop all US venture investing in China. That's what's going to happen in the coming months. And so they're just getting ahead of that. Now they will compete. It really has to do with chips and AI. You may have seen some of these stories and nobody's going to invest. If an American invests in AI in China, that's going to be banned. And the same with chips.
SPEAKER_05: Yeah, you're right. There were a bunch of stories about whether US investors should be investing in AI in China. And people were saying this was un-American because it was basically going to give China an advantage against us in this key industry. And I think that point is a good example of what I'm talking about with the geopolitical concerns. It's just getting too complicated for Americans to invest in China. It raises too many geopolitical concerns. And I think Sequoia is massively simplifying its life by just splitting these things up and being out. Did you see Keith Verbois tweets on this?
SPEAKER_05: Yeah, that's what we're referring to. Yeah, Keith Verbois tweeted basically like
SPEAKER_08: it's un-American to invest in China at this point.
SPEAKER_05: Yeah, we've talked about this before. I mean, look, the Chinese relationship primarily used to be seen as an economic relationship and people were looking for win-win, basically trade scenarios. And it was not seen as a moral to invest in China. Now the relationship is primarily seen through a geopolitical lens, which is to say the balance of power, which is a zero sum game. It's about how much better is the US doing? How much more powerful is it than China? And anybody who's perceived as helping China in that rubric now is looked on skeptically within the United States. What do you think, Sax, about that?
SPEAKER_05: Well, like I said, I don't think that's gonna change. So I think Sequoia is doing the right thing to kind of, like I said, simplify its life.
SPEAKER_08: What's your personal opinion? I'm curious.
SPEAKER_05: I think that it should be possible to do business with China without it being seen as either unpatriotic or immoral. However, there are strategic technologies that are just gonna be, I think, it's too hard and too risky to be supporting China in. Chips and AI? Yeah, I mean, look, if somebody is using Chinese manufacturing to make toys or clothes, I don't think that's fundamentally strategic in a geopolitical way. But if you're helping them make the next generation of chips, that's gonna raise a lot of questions.
SPEAKER_08: So a VC firm, Freiburg, can't take out chips and AI from their investment pieces.
SPEAKER_06: Hold on, hold on, I wanna say something. Because, sure, this reminds me of when Benchmark actually had Benchmark Europe and then they cut it. Do you guys remember that? Yeah, I do. And kind of retrench. They weren't retrenching from a position of strength. They were retrenching to reestablish themselves after a bunch of missteps. So I think typically these retrenchments happen when there's a little bit of internal chaos and mismanagement and underperformance.
SPEAKER_08: That's not the case here, I can assure you.
SPEAKER_05: Yeah, but I actually think retrenching is good because it simplifies things. You wanna simplify your, yeah.
SPEAKER_06: I totally agree with you. My point is when I saw that overlay fund, I was like, this is questionable. But then when I saw that weird evergreen fund, that to me just seemed like a tax arb. And I thought to myself, as a person who's looked at this exact stuff for my own stuff, what I did was I just converted it to a family office. And from a tax perspective, it was much simpler. But that exact same structure I looked at for myself. And the reason that that structure exists, and Jason, I know you wanna think it's because these endowments want them to manage public equities. I still work with a few endowments and pension systems. They don't. And the reason they don't is they're not allowed to. They're not allowed for concentration purposes. They pay other people to manage it. They have these outside consultants. And for fiduciary perspective, you have to do all of these things with respect to managing risk. And one of the most obvious things that these foundations do is they get distributions and they sell. They don't hold. And so the reason why you'd wanna look at the long-term gains of a stock that you distributed is because the GP sold too early, not the LP. And I just don't, I think that you should not just be a blind surrogate on this topic and actually really think about it. Well, I mean, I don't think you need to,
SPEAKER_08: well, I'm not, and Square, if you look at something like that, Rulof's still on the board of Square, I believe. So Sequoia has realized over time, as it's been explained to me as an LP, that these companies grow, the outliers continue to grow massively when they become public, and Sequoia is now staying on the board of those companies. And so they actually have the most insight into it because they backed it when it was two people, and then they're still on the board when it's public.
SPEAKER_06: Money is not infinite. And if you're a foundation and you're legally obligated to distribute some percentage every year, you need the money back. And the foundations do get to choose.
SPEAKER_08: Some foundations wanna go long. Harvard or whoever, I'm just picking one of the large ones, if somebody's got 30, $40 billion, they may not need to liquidate that, and they might very much wanna hold for the long-term. I'm just telling you, the only person
SPEAKER_06: that is in a position to actually hold for the long-term because it's so tax advantageous is the GP. That is why that fund was created, and I will bet you, if you ask him under oath why they did it, I'll tell you it was for themselves. I will bet you. People have the choice. I'll bet you a million dollars for charity, whatever you wanna do, I bet you, if you put him under oath and you subpoena him and you ask him why he did it, he'll say he did it for himself. And that's fine. All I'm saying is that's the kind of complexity that Sax is talking about that does not add to success. It is over-complexifying something that doesn't need to be complicated. Yeah, I disagree with you, but we can just move on.
SPEAKER_10: Well, we agree to disagree sometimes here on the All In Podcast. We're gonna move on for our last topic of the day with the announcement- Can we talk messy?
SPEAKER_06: Can we talk messy?
SPEAKER_10: No, no, no, we're not, because we're gonna do one last topic, which I think is- Well, PGA and messy go together. Yeah, so let's just talk about the PGA. Let's do messy and the PGA. No, we don't have time. Guys, I appreciate the messy interest, but we're gonna talk about something less messy or even more messy. Who the fuck cares about the PGA? Who cares what the PGA's called? I actually think it's pretty interesting for a couple of reasons. So as you guys know, the PGA tour has been around since 1930. I think the PGA tour makes $1.6 billion a year, if reports are correct. I make 1.6 billion a year. Boring. I mean, it depends on the year. All of the players on the PGA tour
SPEAKER_10: are independent contractors. So Saudi Arabia's Public Investment Fund, and this is what I think is one of the more interesting aspects of this story, and maybe speaks to a broader kind of set of geopolitical transitions that are underway. The Saudi Arabian Public Investment Fund started LIV Golf as an alternative to the PGA tour. Live golf. Live golf. They invested $2 billion of capital and offered guarantees to golfers to come and get on their tour. They ended up offering, at one point, Tiger Woods reportedly got a $800 million guarantee to join their tour, which he turned down. Phil Mickelson got a reported $200 million guarantee, which he took to join the tour. Hideki Matsuyama got offered $750K, $750 million,
SPEAKER_06: which he turned down.
SPEAKER_10: So seven of the 10 top paid golfers in the world actually signed up. And it caused obviously significant disruption to what has effectively been a monopoly, which is the PGA tour in professional golf. And here we are, two years later, and it was announced this week, that Live and PGA are merging. And the current PGA tour conditioner, Jay Moynihan, will serve as CEO of the new entity. Just by way of reference, Jay Moynihan makes a reported $14 to $15 million a year in salary as CEO of the PGA tour. He will now be CEO of this combined organization. One big question mark is how much is he getting paid, and did that help secure and solidify this deal getting done? But I think another big question is, do we think this will actually close? Will this face regulatory and antitrust scrutiny? Will this face CFIUS? Because it is the Saudi Arabian Public Investment Fund that is effectively taking a large stake in the PGA tour. Let's go to our resident professional sports team owner, or former minority owner, Chamath. Any takes on this announced merger? What does it say about the PGA's ability to hold action? This is what's so crazy about your topic selection.
SPEAKER_06: Messi was offered $1.6 billion personally by the Saudis, and you don't wanna talk about that because you wanna talk about a whole organization playing an antiquated sport that itself generates $1.6 billion.
SPEAKER_09: Welcome to being the moderator. It's actually a moderate topic. What's your point?
SPEAKER_06: Welcome to my world. I don't care about golf, I don't care.
SPEAKER_08: The reason this is so controversial is that they're calling it sports washing, trying to make the reputation of Saudi more palatable in the West by using sports, things people love. The reason this has become controversial is because of the hypocrisy of it. The PGA fought against Liv, and this guy, Jay Monahan, who is the CEO of this, he basically evoked the 9-11 families and went on a whole thing about how evil Liv was only to then secure the bag. And then there's some back-channel here about, well, there was a lawsuit between the Liv golfers who are now banned from playing the PGA when they signed up and antitrust stuff. And so the hypocrisy of the group is what's being pulled into question here. Chumad, this is why it's important because-
SPEAKER_10: Well, they ostracized.
SPEAKER_05: The players who took the money were ostracized.
SPEAKER_10: As supporting an evil regime. And they said, oh, look who these guys are.
SPEAKER_05: And now it's clear that they were smart and Tiger should have taken the money. And actually the guy who said as much at the time was Trump. Yeah, he nailed it. It's like one of these idiot Saphon tweets. Once again, Saphon hits it.
SPEAKER_09: Once again, he splits the arrow.
SPEAKER_05: He basically said that take the money from Liv because eventually Liv and PGA are gonna merge and then the guys who stuck with PGA are gonna get nothing. And they're gonna feel like idiots. He was totally right. He split the arrow again.
SPEAKER_10: Chumad, come on. Chumad, you don't think that that's insane? I mean, come on. It's pretty amazing. Tell me when you get to Messi. And the fact that these guys were proclaiming that if you're gonna go join this tour, you're joining, you're lining up with the evil regime.
SPEAKER_06: I don't understand whether you're naive or dumb. This is like about money. It's always about money. Professional sports has always been about money. What are we talking about? Money, money, money, money, money. There's your answer. Money drove the answer. Money drove the split. Money drove the deals. Now money drove the merger. I don't understand. Can we talk about Messi please? It's so much more interesting.
SPEAKER_10: Okay, go talk about Messi, Chumad.
SPEAKER_06: I mean, the Messi thing is so incredible because Cristiano Ronaldo went to a team in Saudi to play in the August of his career, the last two or three years. And this has been a thing that started with Pele in the 70s. Pele came to the New York Cosmos and played. Beckham famously did it as well, came to the LA Galaxy. But Beckham did this one interesting thing, which is he said, okay, I'm gonna come to play in the MLS on one condition really, which is I'll take a huge pay cut and all of this stuff, but I want an option to buy an expansion team for 25 million bucks. Fast forward, he ended up buying Inter Miami. That team is now worth $585 million. So Messi is 36 years old. He's about to enter the August of his career. He's won everything. He's done everything possible. He is so incredible. I mean, I love him. I love him. He gets offered $400 million a year for four years to go play in Saudi Arabia, a $1.6 billion deal. And there's no income tax here. So that's like $1.6 billion right in his pocket,
SPEAKER_06: except the deal that he did, which was for a lot less upfront is really interesting. He basically said, I'll come to the United States and play in Inter Miami for the Miami Football Club. But I am, you know, basically, I'm not sure he said this, so I'm using my own words. I'm the greatest player in the world. Every time I do something magical on the field, I'm creating content that will sell tickets and create brand awareness and move the interest level of soccer in the United States. I'm a content creator, so I want a piece of this content. And so Apple, who signed a $2.5 billion 10-year license for the MLS said, you're right. You're probably gonna sell more subscriptions for me. I'll give you a piece of the rev share. And then Adidas said, you know what? You're right. You're probably gonna sell more shoes for me. I'll give you a piece of those shoes. So in one fell swoop, I think what's amazing is, Messi is not an athlete in this deal. I think going back to a theme that we've talked about a lot is he is this ultimate penultimate whatever. He's an elite content creator. He's the equity. Who is now creating incredible, who will come to the United States to create this incredible content that will move viewership, move merchandise. And he's gonna monetize that. So it's effectively like becoming the Jordan brand, getting a piece of Netflix all in one.
SPEAKER_10: He has the equity in those businesses basically.
SPEAKER_08: Yeah, this is a subtle point Shimon's making. In the deal, you have the person who's responsible for distribution. So this would be the same as like the NBA on ABC, ESPN or TNT. And TNT or ESPN saying, you know what? You're so important, LeBron James to play in this or Steph Curry. We're gonna give you a piece of the subscriptions to ESPN. So Apple is giving him rev share on their Apple TV league pass for MLS. That's nuts. And this is, I think it goes back to the live deal with PGA, which is people are looking at these sports leagues and saying, let's get creative. It goes back to a different one.
SPEAKER_06: The NBA just signed a new collective bargaining agreement that they're gonna ratify. I always thought that the real thing that the NBA players association should be asking for. Equity. Was equity. And that equity could be phantom equity in the teams because it's clear that in the absence of the players, there's no viewership and there's no appreciation in the value of those franchises. And so the idea that LeBron, Steph, Dre, KD, don't own a huge piece of the underlying equity gains that they're creating in the period in which they're players is pretty crazy. Now, the ownership, their perspective is, well, we translate that in terms of rev share, but it's really not true. Because if you look at the CAGR, the IRR of the franchise values versus the CAGR-ing of the salaries, they're not equivalent. So I just think it has huge implications to all the professional sports leagues because these big stars should be asking their agents and their managers, how do I do a deal like Messi? I am the ultimate content creator in my league.
SPEAKER_10: The dynamics are changing. It will no longer be an employee capital labor situation, but capital is merging with labor. And labor is basically becoming the equity in the equation and they are getting a piece of the business. And by the way, the reason we see it happening so much is because of the social media age and it's really incredible. It's, but one thing guys, Jake, I know you have more to say. We all have more to say. I just want to highlight, I need to go. I have to go to a kindergarten graduation. Congratulations.
SPEAKER_08: Congrats. I'll close this up for you. I love you guys. I'll see you later. Adios. Bye. Bye. Well, what's really interesting, Chamath, to your point about the CBA is they're going to make these huge salaries. They're not going to give them the equity as part of their five-year deal.
SPEAKER_08: They make the money. They then have the ability to invest in a team. So you can be LeBron and you could be investing in the Knicks maybe if somebody wanted to sell a percentage of it. You can invest in any NBA team, any sports betting team, any sports betting.
SPEAKER_06: I actually think there's a simpler way to do this, which is I think it's fair to say that when you join a team, it's like joining a company, and you can create shadow equity. And that shadow equity says you came in at this point, you left at this point, here was the delta of the value. And I think a good agent should be negotiating on behalf of a player. Most players will not get that much, a few basis points of that value. But the idea that a LeBron James can go to a Miami and double the franchise value, double, from one to call it- Or Steph. Steph, Steph's a better, okay, great. Steph comes in at 480 million and is now 5.3 billion. So that's a 10X-ing plus of value. Is Steph responsible for 10 or 15%? Should a billion dollars of that go to Steph, Dre and Klay? I think you can make a great claim that it could. Yeah, absolutely.
SPEAKER_08: Put them on the map, so yeah. It would be, and it would be pretty easy to do. And what this might do is keep people on the same team longer, which is what fans want. Exactly. They don't want people moving around.
SPEAKER_06: That's a great point. And private companies like Cargill or Koch Industries, they have these shadow equity programs that they've had for years, for decades, that they've run on behalf of their employees. So we know how to run phantom equity programs in private businesses. And I just think the leadership of the NBA Players Association, the NFL Players Association, is right now still lacking the sophistication to understand this well enough to then propose when the next time it is to negotiate this kind of a deal. But when you see things like this messy deal, I think it's a game changer.
SPEAKER_08: It is a game changer. And I think for sports, I don't know if you saw Adam Silver gave a little press conference with the finals and everything, and he was talking about the Jay Moran situation with the guns, and just a lot of topics coming up. But one of the topics that was probably underappreciated was he was talking about the bundle, the cable bundles going away, and that people can't watch the NBA on TNT, whatever that is, with Charles Barkley, et cetera. And he wants that to be available for free. So he's gonna challenge people in the new TV deal. If you wanna have the NBA, you have to have it available to everybody because the number of people who can see NBA games has been going down. I have a question for you. Do you think more people would pay
SPEAKER_06: for a subscription to watch the Knicks games wherever they happen to be all over the world, or a subscription to watch Steph Curry no matter what team he plays on?
SPEAKER_08: The old generations are loyal to the team, the new generation is loyal to players. So it's a generational-
SPEAKER_06: Numerical question.
SPEAKER_08: Which one's great? It's probably a jump ball right now, but it will eventually be they'll follow the players because this new generation follows players. Like our kids like LeBron from team to team.
SPEAKER_06: I think you could probably sell a few hundred thousand subscriptions to the Knicks, and I think you'd sell mid-millions for Steph.
SPEAKER_08: What's gonna happen now is I think they're going to, they just want this to be ad-based and to directly subscribe. So I directly subscribe to the NBA. I get every game for $200 a year with no ads. I love it.
SPEAKER_06: You know what we should do? I actually have a great idea. What we should do is we should, what Liv did to the PGA, we should do to the NBA. Let's get together $20 billion. Let's start a competitive NBA league where we give the players- No, I'm serious. A structured phantom equity plan. Pay these guys a hundred million bucks a year. Get all the big guys to come. Everybody else will come.
SPEAKER_06: And just blow the whole thing wide open. By the way, that's the blueprint now. If you want to really compete with the NFL or the NBA or the NHL, this is what you should do. Put together 20 or 30 billion, which is not that much money, and go for it. You only need to get a couple of stars to blow it up.
SPEAKER_08: And if you give stars the equity in the league,
SPEAKER_06: they'll convince all the other players to come.
SPEAKER_08: All right, let's give Sax some red meat here. Sax will give you a little red meat. You want Tucker on Twitter. Here's your red meat choices as we wrap. You want Tucker on Twitter. You want a Russian-controlled dam being destroyed for a major flood. Or do you want Chris Christie joining the race? Which red meat would you like? Which red meat we put in front of Crazy Hair?
SPEAKER_05: Well, I mean, what's happening in Ukraine is really the big news this week. I mean, the Ukrainian counteroffensive has- Well, the Ukrainian counteroffensive has started in earnest. And yes, in conjunction with that, you had the destruction of that major dam, which it's not clear who did it. I mean, both sides are pointing the finger at each other. So, and there are reasonable arguments for why either side may have done it. In terms of who benefits, it seems to benefit the Ukrainians more because the destruction of the dam washed out a bunch of Russian defensive fortifications and villages of Russian speakers. On the other hand, the Russians were in control of the dam, so it would have been easier for them to carry it out if they had wanted to. We just don't know. But I think, you know, events have now moved beyond that. And we are now probably in the third or fourth day of the Ukrainian counteroffensive. Of course, it has not been officially declared, but there is major, major fighting happening now where Ukrainian armored divisions are seeking to,
SPEAKER_05: you know, penetrate Russian defensive lines around Zaporizhia. And so the long-awaited Ukrainian counteroffensive has certainly begun.
SPEAKER_08: How does the dam relate to the Nord Stream pipeline? Because these are both situations where people are like, who actually did it? What's their motivation? And let's face it, these are chaotic actors at times. And figuring out who has the motivation to do these things seems like a leveling up kind of game, because you can't put it past either party in some cases. But in the case of Nord Stream, people saying, hey, it was the Ukraine, but then there's this argument that the Ukraine is not capable of doing it, or maybe it was sanctioned by the US or the West and then executed by Ukraine. Where do you wind up with all these? So on Nord Stream, we're now on our third cover story.
SPEAKER_05: The CIA sourcing their stenographers at the Washington Post have now claimed that it was six Ukrainian dudes in a yacht who blew up Nord Stream. No, seriously, and if you look at this boat, I'll put a photo of the boat on the screen. It's pretty silly. Yeah, the Ukrainians do not have a Navy and they certainly don't have Navy seals. I don't believe they have the capability to, by the way, this destruction of Nord Stream, Nord Stream was this huge underwater steel and concrete structure. It took a whole- It's not that deep though,
SPEAKER_08: because it's only 150 or 200 feet deep at the lower point. It's deep enough and it took a lot of explosives,
SPEAKER_05: so they had to know what they were doing.
SPEAKER_08: I dove 120 feet once, so it's not that deep. But the point is that when Nord Stream was first destroyed,
SPEAKER_05: the media rushed out to say, well, the Russians did it, even though the Russians had no motive to do it, it was their own- It's their pipeline. It's their pipeline, they could just turn it off if they wanted to. But this is what we hear, is that every time something destructive happens, it's the Russians did it. Why would they attack themselves? Because they're so crazy. We heard this with Nord Stream when Belgorod, which is a Russian district just across the border from Ukraine, was attacked. It was claimed that the Russians did it. These were Russian insurgents. Now that's pretty silly. It was Ukrainians dressed in Russian uniforms. And just recently when there were drone attacks on Moscow, we were also told that, oh, it wasn't the Ukrainians who did it, it was Russian dissidents or something, which again, makes no sense. So this is not to say that the Russians didn't blow up that dam. It's just to say that whenever the story is rushed out, that the Russians did something highly destructive, you have to, we need to see some evidence here, and we just don't know.
SPEAKER_08: It's just hard to know. The fog of war is thick. All right, what did you think of Tucker's first show? It was incredible. And he's getting sued. But he got, the tweet got at least like 90 million views, which means the video probably got 10% of that or something.
SPEAKER_08: So probably 10 million views. I think the video yesterday was at 17 million views
SPEAKER_05: or something like that, so I'm sure it's more today. So no, he's getting huge distribution through Twitter. Arguably, it's more distribution, it's almost certainly more distribution than he got through Fox.
SPEAKER_08: Fox was three million, right? That's how many viewers he gets on Fox?
SPEAKER_05: Yeah, well, Fox is half of that now because they've attributed so much viewership after Tucker left. But look, the only thing that I think Tucker got through Fox was access to, frankly, a viewership base that's not very online. There are a lot of old people who watch Fox who just aren't on social media. That's it though. Everybody else can see it on Twitter, and he's getting more distribution on Twitter.
SPEAKER_08: Super distribution is the way to go. He's gonna get 25 million people. Of course, monetizing it is the hard part because Fox is subscription revenue and everything else is advertising. Yeah, but apparently he's creating a list.
SPEAKER_05: He advertised the website, TuckerGrelson.com at the end of his video, and you can go there and sign up for-
SPEAKER_08: You can subscribe direct and get it on his website. Well, I don't think he's monetizing it yet,
SPEAKER_05: but you can sign up for alerts and so forth. So he's clearly creating a list of some kind.
SPEAKER_08: Oh, that's probably because he, yeah, with his contract, he's still getting paid. And so he's like, yeah. Daily Wire is the model. I mean, they have got well over 100 million in revenue, I understand, and they have a massive subscription business. So there's a clear path. All right, hey, listen, for the world's greatest moderator living in the Bay Area, David Friedberg and the dictator himself, Chumak Pohapitiya, and the architect hosting any number of fundraisers for any number of politicians, David Sacks, the Rain Man. I am the world's greatest moderator taking a week off. We'll see you next week. Oh, and enjoy some Q&A here from the Live Angels Summit. 100 people in Napa. Thanks for coming, besties. I appreciate you- Love you, boys. Exploring the event. Love you, besties. See you next time. Bye-bye.
SPEAKER_10: Bye-bye. All right. Welcome to a baptism. John the Baptist.
SPEAKER_08: Are you ready to accept Christ, Friedberg, into your soul?
SPEAKER_05: I honestly have no idea what I'm doing here. I have no idea who these people are or what this is, or why you're all wearing white. I mean, seriously, I'm sure you're very nice people, but I have no idea what this is.
SPEAKER_08: Have you seen The Wicker Man? Jake Alazay, we're taping an episode in Napa,
SPEAKER_05: and I'm like, what? On a, you know, off day? What is this? It's Monday. It's Monday. Are you okay, buddy?
SPEAKER_09: Yeah. You low blood sugar?
SPEAKER_05: Yeah, actually, I do. Bring us like a cheese plate or something. Can we get a cheese plate? Can we get a cheese plate? And guacamole and chips?
SPEAKER_05: Please? But honestly, like, I didn't sign up for this. I thought we... I thought we disagreed to a podcast, and somehow we've been roped into doing some dog and pony show for Jake Al's LPs. By the way-
SPEAKER_08: Is that true or what? These are a bunch of your LPs as well. You just have never met them.
SPEAKER_08: Literally. Okay, I'll drink it. Yes, yes, sir. Literally, somebody's like, Jake Al, I'm with this incredible endowment. We're incredibly successful. I'm like, oh, that's great, yes. You heard I'm raising a fund. They're like, no, no, no, no, no. We heard Sax is gonna be here. I'm like, yeah, you wanna meet him and invest in this fund? Oh, no, we've invested in all his funds. We just never met him. And I said, wow, that's one way to do it. That's how successful Sax is.
SPEAKER_06: Pretty funny. Two things they've never seen, Sax and a distribution.
SPEAKER_09: We're off to a hot start. Great fucking decision, whoever you are.
SPEAKER_06: You're a real fucking genius back there.
SPEAKER_05: Except for the fund we already paid back.
SPEAKER_09: Oh my God, I lost control of it in the first 90 seconds. Why should tonight be any different?
SPEAKER_05: Except for the five-year-old fund that's already fully returned.
SPEAKER_09: Okay. Of course. Whoa, easy. So welcome to the Angel Summit.
SPEAKER_08: These are my besties. We do a podcast called All In. We thought we'd do it live. This is the fourth time we've ever appeared on stage together. The first two times we're at Freeburg's LP conference in the Presidio, yeah?
SPEAKER_05: I resented that one too.
SPEAKER_10: We know you are- Sax's first time coming out to see humans since COVID. I think- He came out in his mask. He took his gloves off. It was very uncomfortable for him, but he eased into a seat.
SPEAKER_08: And then of course we did the All In Summit last year in Miami. And this is the fourth time. So it's great to be out here. We have a couple of news items on the docket we could start with, or we can go right to Q&A with these many audience members who have a lot of questions. What would you gentlemen like to do?
SPEAKER_10: Chamath has a few words he'd like to say. Go ahead.
SPEAKER_06: Whatever you guys want to do.
SPEAKER_08: Chamath is drunk, by the way.
SPEAKER_09: He texted us. You can see that grin on his face.
SPEAKER_08: That's the Chamath grin he gives when he decided, like tax capital, that he would not have LPs and he would just invest his own money. He does not care.
SPEAKER_08: So the gloves are off. Let's do Q&A. Jay Levy says, Sax, what's the path for DeSantis
SPEAKER_04: to win the nomination and get the base of Trump?
SPEAKER_08: Oh, red meat. Oh, good point. Red meat. Here we go.
SPEAKER_05: I think the path basically is he has to win Iowa and or New Hampshire. It's just that simple.
SPEAKER_05: But keep in mind that Trump did not win Iowa last or in 2016, Ted Cruz did. Iowa tends to be more religious. I think DeSantis is trying to outflank Trump on the right, actually, on certain issues. And so he's on the ground. They're campaigning. From what I understand, he's generating a lot of interest and enthusiasm and he's gonna keep plugging away at it. I think he's gonna out-hustle Trump. I'm not saying he's gonna win, but I think he is gonna work harder. And the path would be that over the next, what is it, like nine months, that Trump's style and message, which is admittedly much more entertaining than DeSantis, but kind of fatiguing, whether that kind of gets old and DeSantis is more like disciplined messaging. People just kind of wake up and say, you know what? Like, I don't really want to go back to the chaos of the whole Trump show. This seems like better to me. So that's basically what I think has to happen is Trump fatigue has to set in and people realize that there's a different way. Was that CNN town hall a sign
SPEAKER_08: that some group of people find him incredibly entertaining and the media themselves want him back because it's great for ratings a la Mencken on session? Or is it a sign that like, my God, that's so fucking exhausting, like you're saying, Sax. What do you think?
SPEAKER_05: I think that the base liked the town hall because it was Trump walking into the lion's den standing up to the mainstream media, which is what they like, but I don't think it did anything to help him in the general because I think that viewers who don't like Trump or aren't entertained by Trump, I mean, there's nothing there to really grab onto, I don't think. But look, I think your point about who does the media want to get the Republican nomination? Definitely Trump because he's good for ratings. And they think they can beat him. So right now the Biden people, the Trump people and the media all want Trump over DeSantis. And that is why like DeSantis is getting dispatched by everybody right now is because,
SPEAKER_05: you know, everyone's kind of aligned on this, but the minute that Trump gets the nomination, it's all gonna turn the media, all of a sudden is gonna turn on Trump. And then we're gonna see what the real campaign is gonna be about.
SPEAKER_08: DeSantis is in show business, as they said on secession. Was that the quote? He's show business, he's box office. He's not box, yeah. DeSantis is in box office. He's somebody who actually can execute running.
SPEAKER_05: Right, but also that's why he would be a good move for Republicans, I think is because he doesn't give the Democrats as much to work with. Yeah. Trump's entertaining, but he gives his enemies so much to work with.
SPEAKER_08: All right, another question from the back. Go ahead, stand up, tell us your name. Yeah, Sal Dahr from Boston.
SPEAKER_00: And the question is much less exciting. Regarding sort of the problem of bank runs and bank insurance by the Fed and bailing out, you know, average people bailing out wealthy people, I've heard a lot of solutions about this. I've been in several careers in banking for a while. The idea of having senior management and the board have direct liability if the Feds have to step in to rescue the bank. Do you think that that could be a step in the right direction in preventing banks from taking risks they really shouldn't have taken? I mean, the 2008 disaster, the subprime crisis could have been addressed with this. I think this crisis with SVP could have been addressed with management just having a lot more to lose.
SPEAKER_05: Okay, so let me just first take issue with the terminology of bailout. I know that's what everyone calls it. A bailout in my mind is when the shareholders or the bondholders of the bank get bailed out by taxpayers. That happened in 2008, it did not happen here. Here the question was whether depositors get made whole or not. I personally don't consider that a bailout. I understand that there are people who do, but it is a slightly different issue. As to the bank management, you know, you're talking about like a strict liability standard here that, I mean, basically you're talking about piercing the corporate veil and making the bank executives and their directors liable for mismanagement of the bank and that is. That's a pretty high bar. That's a really high bar and the problem with it is that I would never serve on the board of a bank. I mean, I probably wouldn't anyway, but if you told me that I could be liable. Yeah, piercing the bow is really dangerous. Right, we have a thing called the business judgment rule, you know, in Delaware where if directors
SPEAKER_05: and officers of the company perform their job in a good faith way, making the best decisions they can, and it goes wrong, they're not typically liable for that. Maybe the corporation's liable, but they're not personally liable.
SPEAKER_10: Look, if you did that, the managers wouldn't invest the cash in anything because they wouldn't want to take any risk of loss and in order to operate the business, which has a bunch of people working there and a bunch of banks that they got to operate, they're gonna charge you a fee to hold your money for you and so what happens is interest rates turn negative and you basically have to pay someone to hold your money for you and that's what's a little bit messed up about the way the banking system works today is you're effectively giving a money manager the right to invest your money for you, they take your money, they pay you a low interest rate and they go invest it in high interest rate stuff by taking on risk with your capital and ultimately they can take losses on that and if you wanted to make them liable for those losses, they're not gonna take that risk and the bank is gonna have to change its business model from being an arbitrage business to being a service fee business and they're gonna have to figure out other ways to charge you service fees, including charging you to hold your money in order to make money and that's what a lot of the banks are now doing, First Republic and others have now proclaimed that they're gonna start charging a lot more service fees to hold your money and they're gonna start taking a lot less risk so we're already headed in that direction but that's fundamentally what I think would be the net result. Let's take another question from the audience.
SPEAKER_02: Good evening, I'm Lisa Song Sutton, Las Vegas, Nevada, GP in the Veteran Fund. As investors, you all invest in entrepreneurs, theoretically you support American entrepreneurship. What role, if any, do you think VCs should have in shaping, advocating, supporting conservative economic policy in the country? Shammaf?
SPEAKER_06: Zero. I think that you have to know the role that you're doing if you're a venture investor, which is you're buying a deep out of the money option and I think that you wanna motivate the people that you are partnering with to take really thoughtful but outsize risks and so I don't think there's a lot of room for conservativism. I do think that there's room for misallocation of capital and I think that there's people that can help guide that but the reality is that when you start a company, it's 95% likely to fail and the venture investor is signing up for a 70 or 80% probability that they lose capital, maybe a 10 or 15 or 20% chance that they get their money back and then the small 5% chance that it becomes reasonable. So in that lens, I don't think that's where conservative economic policies really should play a role. I think you just kinda gotta go for it and if it's gonna win, it's gonna win big and if it doesn't, you lose one extra money. I think like where you want conservative economic and rational thinking is when you go to the extreme other end which is just like the large scale decisions that affect the economic vibrancy of the country in which you live and there on the margins, you probably wanna be more rational than irrational but as a venture investor, I think you wanna be irrational but I also think you have to be very judgmental and the reality is that most companies aren't gonna work and most people, this may seem controversial, most people actually when push comes to shove are a little afraid of the decisions they need to make to be truly successful. They're not willing to fire the people that they need to fire, they're not willing to be extreme in the product they wanna build, they're not willing to price it, they're not willing to go to market in an extreme way and it tends to be that these companies fail because of that.
SPEAKER_08: A lack of courage, a lack of conviction. I don't wanna say it's a lack of courage or conviction
SPEAKER_06: because that's a very heightened word. I just think that when push comes to shove, most people implode with the pressure of making a very, very hard decision. Interesting. All right. In my experience, yours could be different.
SPEAKER_08: I agree with you largely when a startup does fail, if the experienced people around it are watching and can't get through to the founder or the founding team, it's typically they are blocking their own success, they're unwilling to fire their co-founder, their CTO as the example you're alluding to perhaps or raise the price of the software and lose some customers or to drive people to work harder because you've got a competitor in the space. And that's why you see extreme people win in our pursuit and I think there's been just a great fallacy that's gone on that you can have live-work balance or life-work balance and you could have this nirvana where you have it all. The fact is the great companies are made by people who make great sacrifices, period, full stop. And if you're not willing to make the great sacrifice, you're not gonna have great outcomes. Hi, David Samuel.
SPEAKER_03: Earlier today, Jason, you had kind of a doomsday or AI panelist and my question is you guys have been thrust into the public spotlight and we look at deep fakes in the next year or two as you talk about tweeting on Friday versus Wednesday, how do you think about somebody having each of you saying things that you did not say and how might we know whether Chamath said that or it was a deep fake saying it? I already have that problem.
SPEAKER_02: Yeah. It'll be so good. There was an article in Business Insider last week
SPEAKER_05: where somebody was saying I had a phone call I never had.
SPEAKER_03: So how do we solve this, especially for you as public folks? Two things, two things.
SPEAKER_08: One, I don't think people can say more outlandish and damaging things in AI than we say ourselves on this podcast at times. But number two, as we've discussed many times on this podcast, we have rebooted our trust in institutions, what we read, what we see, and I think people are now assuming they're being manipulated, assuming something might be fake news or doctored, and I think it's like people are building up a much higher resiliency to bullshit, lies, manipulation. And if I were to ask 100 people what is the bias of CNN, New York Times, Fox, MSNBC, NPR, 90 out of 100 Americans could describe it almost exactly. People are not dumb. This is another fallacy I think we have in this country is that people are dumb and they're gonna get suckered. People are kind of figuring it out. And we've seen deepfakes for what, five years, 10 years now, and they're like yeah, Luke Skywalker didn't look really good in The Mandalorian, but there's a kid who redid it and now Dolly II is doing it. I think we're kind of inoculating ourself too. What do you think, Freeburg? Deepfakes and truth.
SPEAKER_10: When the Gutenberg press was invented, a bunch of fake shit was printed and people believed it. I don't think the current iteration with deepfakes is very different from any form of mass media being used to tell people on truth. It's called the Crusades.
SPEAKER_06: What's that? It's called the Crusades. The Crusades, yeah. No, I mean, but look, I mean, you're right.
SPEAKER_10: You're 100% right. But I don't wanna speak about religion negatively in that way. It is one of many institutions of power that leveraged mass media historically to get people to believe things, to do things, and to ultimately be able to tax people and get them to provide capital and labor in the interest of those who are in power. And the system of deepfaking is one of a long string of using the current toolkit to take mass media and follow that same track. So it will be dealt with in the same way that things have been dealt with that have been fake news in the past, which is that there will be an opposing voice and there will be counterarguments and there will be debates and it will be rancorous and it will be noisy and it will be hard to discern and alternatives will emerge and tools that identify deepfakes will emerge and it will be the same ongoing battle and seeking of the truth that humanity has tried to do since the dawn of mass media.
SPEAKER_08: Yesterday's conspiracy theories are like tomorrow's Pulitzer Prizes, I always say. Like if you look at Sinead O'Connor ripping up the Pope's picture on Saturday Night Live in protest and saying like, this is the true enemy. They're molesting children. And then the Boston Globe and the movie Spotlight is about them decades later winning a Pulitzer for uncovering what anybody who's in the room who's Catholic in the 70s and 80s knew or had heard was going on. And so, maybe the timeframe is shortening between when we're being lied to and when we figure it out. I actually think it's interesting and good
SPEAKER_10: because it forces us to find ways to find the truth more effectively. And it kind of, without the antagonism, I think it's absent what is the truth. You don't force that debate, you don't force that question. And this will start to reveal ways that we can kind of find things that are actual evidentiary things versus things that someone told me with either historically anecdote or innuendo or I'm a person in power or I'm an authority or I'm an expert and nowadays it's like I'm a piece of media you should believe me. Or here I'm an image of a person. And that's not gonna be the case anymore.
SPEAKER_07: Hi, I'm Jeff, a full-time corporate VC and part-time angel. My question's about AI and higher education. And it's actually some covert parenting advice so you can decide who that's relevant for. My son just finished his freshman year of college and I'm questioning what the future is for him in higher education given all the change that AI is going to have on every career and every profession. And I'm wondering what advice you'd give to your child or someone who's in college right now for what's an area of study that maybe won't be disrupted by AI or an area that you'll get leverage from your education through AI?
SPEAKER_06: I think the reality is that most of the existing jobs that we have in the United States are going to go to lower cost locations that have that tool chain to accelerate their capability. So we're gonna have to reinvent the workforce and the things that we do over the next 30 or 40 years to stay relevant. That's probably like, I think that should just be the operating principle. If you think about it, we used to run great call centers. Okay, those call centers were outsourced to the Philippines and India. But in the next five or 10 years, you'll have this flawless unaccented English or even more eerily, perfectly accented English for the zip code of the person that's calling in so that it sounds like they're talking to somebody that's literally their neighbor. That's like just makes so much sense, right? So it's like all this stuff is gonna happen where like all these classes of jobs are gonna go away. I saw this article where a lawyer, two lawyers, used ChatGPT to submit a legal brief. The problem was that it cited cases that didn't exist and now they're gonna be disbarred. So this is like serious business, right? Like you can't do that. Like that's like real legal malfeasance. So what are your kids' study? Not practice.
SPEAKER_10: In college.
SPEAKER_06: You know, if I had to choose something for my kids, I would probably tell them to do something mathematical or biological. The reason I would point them to math is that I think that it's irrefutable. There's this great clip between Ricky Gervais and Stephen Colbert. You guys should go and Google this. But it's a clip where he's on the Colbert Show and Colbert is a deeply devout Catholic and he's offended by the fact that Ricky Gervais doesn't believe in God. And he asks him, why don't you believe in God? And Ricky Gervais says, look, if we wiped out all the books in the world, in a thousand years, everything that's scientific and mathematical would be reestablished. But everything that is religious or theoretically not, you know, mythical, if you wanna say, would look very, very different. And that's why I don't believe in God. I'm not trying to question that. But it's a way of answering this question, which is I would try to point my children to the body of knowledge that's largely irrefutable, which is biological and mathematical, versus belief-oriented, because I think these tools will change one's beliefs.
SPEAKER_08: I've been thinking about this a lot too. I think teaching them to be entrepreneurial, resilient, worldly, ability to communicate, ability to lead other people in teams, that stuff's not gonna go away, communication skill, et cetera. And I'm encouraging everybody who I work with to just use ChatGPT4 and Bard every day for every single thing that they do. My base thesis right now is that the job freezes, the hiring freezes at all these companies is indefinite. I'm assuming it's indefinite because the amount of work it takes to write a job requisition is more work in some cases than actually automating with AI or ready the job function. And so I think 20-person companies might double in size in the next two or three years, but still have 20 people. This is gonna be a big challenge for society. And if that does come to pass, there's just gonna be large swaths of people who are not gonna be able to get job interviews for anything other than service jobs. We need a lot more plumbers, electricians, waiters, et cetera. Those probably jobs won't go away, especially if we don't let people immigrate. So I am super enthusiastic about that efficiency, but I think it also means you have to be entrepreneurial because if you can't get a job and you can't get mentored, you better create your own opportunity. You better create your own company. And that's what I'm seeing. That's the game on the field right now. Two or three people who don't have job offers from Uber and Airbnb and Google and Facebook, just saying, fuck it, let's start a company because there's nothing else for us to do. And those are highly skilled people right now doing that.
SPEAKER_05: I'll say two quick things about this topic. So one is, I think there's a lot of AI fear porn out there right now. And I just think that like all of these tumor scenarios are, they're not gonna play out overnight. I mean, this is gonna take a while. Second, if you think about like job elimination, it's gonna be some super specialized jobs. So for example, I wouldn't want to be a radiologist right now, but doctors will be fine. So I think if you're thinking about like going into a job category that's super specialized and clearly in the way of AI, then that probably is not a good idea. But most general skills like you're talking about and most job categories are gonna be fine. There's just gonna be some specialties within them that may get dislocated. Like I wouldn't want to be a truck driver either, because of self-driving. But transportation companies are still gonna exist. So I think you just want to be careful about super specialization, I think. But building general skills is always really good. That really should be the point of college.
SPEAKER_08: Where would you put lawyers and accountants on that? I'm curious. They're sufficiently general
SPEAKER_05: that I don't think they're gonna be eliminated.
SPEAKER_08: But will they be able to do five times the amount of work, therefore we won't need as many?
SPEAKER_05: They may be able to get more done, yeah. I would expect them to be able to get more done. But I don't necessarily think that means we'll need less of them. The old story about lawyers is that there was one lawyer in a town that had no business. Second lawyer came to town and they were both more busy than they knew what to do with.
SPEAKER_05: So, you know. Induced litigation. Lawyers get 30% more productive. They file 30% more lawsuits. We're good. Yeah.
SPEAKER_08: All right, let's take another question.
SPEAKER_04: These are great questions so far. Hey guys, Rick Spencer. I hope Chamath gets to choose the wine this evening for dinner.
SPEAKER_06: I did not get to choose your wine, so I apologize in advance. Well, we'll cut a lot of its record here. This is the 2018 Chateau Con Le Fan. Brazil.
SPEAKER_08: I love the best tea. Okay, question.
SPEAKER_04: So you've talked recently in episodes about the speed of AI, the adoption, and how the winners are still unknown. That was reinforced in the sessions today. A room full of investors. How are you thinking differently about your investment, you know, your strategic investment decisions and your strategy? Are there opportunities to look at venture investing differently, like venture studios in the future of AI?
SPEAKER_10: I had this conversation earlier today. I think I started a company in 2006 where we took large data sets and we built predictive models from those data sets. And we used those predictive models to make analytical tools available to a specific vertical, in our case, agriculture farmers. And the models were both deterministic, meaning there was kind of definitions, algorithmic definitions of physical parameters, and there was like all the statistical inference that you get from large data sets. And it made recommendations for farmers. What a lot of people are calling AI today is fundamentally a predictive model on text, on language. I am making a language predictor that gives you a sentence. And it seems so profound because it is how we all interact with computers and interact with one another. And as a result, it is kind of viewed as this sea change across all of these industries instantaneously. It's this whole new era. But the fact is that, generally speaking, the digitization of things and the amount of data that's being generated on earth is going up by some order of magnitude every number of months. And our ability to make predictions and build predictive models that are useful to specific vertical segments is improving every sequential cycle that this is happening across every vertical. And it has continued. And it hasn't changed. And it's not any different. So in this area of genomics and bioinformatics, there is an absolute sea change happening in human health, in synthetic biology, and our ability to understand and predict the biological world and make changes and create new drugs, create new systems for producing molecules, for producing things that humans consume. And it is all buoyed by machine learning applied to large data sets in genomics and other metadata associated with human health and biology. And we're seeing the same thing in other areas, whether it's chemistry, material science, industrial application, consumer markets, and so on. The era of what people are now calling AI is an interface layer of language that's really creating transformational opportunities on how these tools, how these systems, how these models can be utilized and provided to all these different verticals. It allows us to rethink business models, to rethink interaction models, and to really change the economics of different businesses and the utility and the productivity of humans because it is about speech, it is about communication, it is about what we fundamentally do as a species. So I would argue that the general trajectory of machine learning, the general trajectory of data generation, our ability to make predictions, generate value across all these different markets is continuing in the way that it has been continuing for the last 20 years. And it is profound in its own right. And I wouldn't say that there's a massive sea change in that evolution because of large language models. Large language models create another set of opportunities. So I would kind of create a distinction and make sure that the categorization of the investment opportunities in large language models be assessed on its own. And everyone's all over the place as you guys probably heard today. Foundational models are getting disrupted every other week. They're being decreased in size, parameters are being reduced, they're being commoditized. You can run these things on M2 chips. Everything is up in the air right now and it's frigging nuts. You're gonna invest in a company at a $500 million valuation and six weeks later it's gonna be worth zero because someone open sourced the exact same thing that you can now do for 100K. So that's very difficult and very different then. But there are still like these incredible points of inflection happening across all these other industries with respect to machine learning. And that's where I spend my time. Chamath, you wanna add what you're looking at?
SPEAKER_08: I think this is gonna be the big question, yeah.
SPEAKER_06: Six or seven years ago, there was this Google earnings release where they talked about building their own silicon. I've told this story before but I pinged those guys and I was basically like, I just wanna meet the team that built the TPU. Long story short, a year later I put them in business and we've been building silicon for this moment for years. It's been really, really hard. And the reason it's been really, really hard is that Nvidia is just really, really good. CUDA is very, very complete. And it's just very difficult to justify why one would build, once you have something that you think is profound, through implement multiple SDKs to like multiple points of silicon, just doesn't make any sense. That being said, I still think you need to be at the absolute bottom of the stack and the absolute top of the stack. I think I'm a little too biased for saying the former, which is I'm hoping that there's vendor diversity and silicon diversity because I think it's gonna be really important. I don't think we wanna have a world where Nvidia runs away with it. So I think there's investment opportunity there just because I think everybody should want that to happen. And then at the absolute top, Freeberg's right that all these foundational models I think are changing so rapidly that the thing that you wanna figure out is like, what are you seeding it with to drive learning that's unique? And that's a data problem. So there's an example that I've given. This was an example given to me by Nikesh Arora. So I'm not gonna take credit for it. He's the CEO of Palo Alto Networks. But he was telling me, when you look at travel, the travel space, all the public travel companies are like $300 billion of public market cap, Expedia, Travelocity, all these companies. But they're pure middlemen. And they sit on top of a data feed that comes from a handful of companies. One of them is Saber. And so I went and I looked at Saber. Saber is like a $1.3 billion company, small little company. But they are the ones that go into all the airlines, extract all this gobbledygook data, normalize it, and allow Expedia, Travelocity, Booking.com to exist. In a world of machine learning where, and AI where theoretically you can have conversational languages inside of WhatsApp or Messenger or Instagram, you see this beautiful picture. You're like, book me a ticket to that place. Well, Saber is actually the key value creator there. And all these Expedia examples that are plugins of GPT make no sense. They make no economic sense. Those companies should go to zero. So I've used that as a way, a forcing function for me to try to prove that there's really these two barbells. It's a barbell, bookends. One is a silicon and one of these data providers. That's probably an investable thing that's defensible. Everything in the middle, I think what Freebrook said is true, which is today it looks like it's worth a couple billion dollars, tomorrow's worth nothing. And so I think you have to be very careful.
SPEAKER_10: If you listen to, there's an interview that Stephen Wolfram did with Lex Friedman. Have you guys listened to it a few weeks ago?
SPEAKER_08: I had him on my pod a couple weeks ago but haven't heard the Freebrook. Wolfram? Yeah. He's incredible, yeah. He's incredible.
SPEAKER_10: If you listen to that interview, I think Wolfram does a great job of describing the difference between inferential models or statistical models and computational models. Statistical models are where you take large data sets and you build statistical models that infer and predict things in the future or predict things that you ask it to predict from the data set that it's trained on. And then it creates a statistical representation that has a probability of being right or wrong in every prediction it makes. And it creates a distribution of outputs from the model. And you can train a model from nothing today using a bunch of tools that are open source and generally available and a bunch of great silicon and all this amazing stuff that's now out in the world. But there's a bunch of things that you can't generate data and you can't necessarily train models on. And that requires computational models. Models where you actually have to build some system that creates a deterministic outcome. And a deterministic means that it doesn't have a distribution of things that could happen. It has one thing and it calculates it. Like two plus four is six. There isn't a probability distribution on it being six. Two plus four is computable. It is calculable. It is six. The great unlock that I think is ahead of us still, generally speaking with respect to large language models, is the connection back to computational models. Is the connection back to structured data where you can make requests and integrate structured data into the output combined with inferential output. And computational models where you can take the inference, you can take the request and figure out what computational models can I now run in addition to making a prediction about an output. And that's where so much of the value is gonna lie. And it's gonna require incredible software engineering talent, applied math, statistics, all the stuff that's made data science, generally speaking, so successful over the last two decades is gonna continue. And it's gonna be this integration between computation and inference and it's gonna be applied in lots of different markets and it's gonna be really powerful and we're all gonna have our minds blown. Just in terms of the seed stage
SPEAKER_08: or super early pre-seed stage, two or three people who are obsessed with this technology, who are playing with it every day, who are keeping up to speed on it, and who understand some customer base, whether it's delighting themselves or delighting some other customer base, I'm willing to take that small bet on, that 100K to 250K bet, because in the previous paradigm shifts or platform shifts, cloud computing, apps, and before that, desktop computing and the web, you saw people start tinkering with stuff and whatever their first two ideas were are long forgotten because they figured something else out. And I kind of feel like that's the stage we're in. There were a lot of people who were playing with iPhones in the app store and they made a calculator or a flashlight that got built into the operating system as I think Freeberg is specifically pointing out. You could just be part of the model and your whole business is wiped out. We have one company that's trying to make itineraries for travel. And I looked at what they're building and then they're figuring out prompts, they're figuring out the interface, they're figuring out what people want. And I did the same searches on ChatGPT-4 and I was like, it's not that much better, what you're doing, but it's better and your ideas are better. And so I think that they'll win the race and they only have to please whatever number of users. And this company could wind up being, like I said before, a 20 person company that does 50 million in revenue. I think that's going to be a very interesting future. And it reminds me of the app economy. There were a small number of acts, things like Distrokid or Instagram, where small teams built things that printed money and had incredibly high margins. So I think that's part of the opportunity here. I do agree with Chamat's point, data's the new oil. Whatever data set you have that you have that's unique is incredibly powerful in terms of defensibility and could help you to outpace one of the generic models. This dude's been waiting. Okay dude, who's been waiting? All right, thanks. Lightning round.
SPEAKER_01: Thanks David for the mic. My name is Raed Masri, with TransformBC in San Francisco. My question's for you, Chamat.
SPEAKER_06: Finally, Jesus Christ, I'm not so far. Yeah. What the fuck these guys? Go!
SPEAKER_01: So on the last one or two episodes, I can't recall, you brought up this whole idea as how do we get non-US born American patriots to run for president? So as the growth hacking drunken master, what do you recommend? How do we propel this idea? How do we have a pick-up steam and not have to wait 25 years or whatever? You know, we have to wait.
SPEAKER_06: No, it can't happen in the next few years. I do think there's a small probability it could happen in 25 to 30 years, but the problem is that the people that...
SPEAKER_10: Only Jay Cal can be president on the stage, by the way. Yeah, the three of us are foreign. That's how fucked up this is.
SPEAKER_08: But I'll put you guys in my cabinet. You've all got positions.
SPEAKER_06: I think the how is that you have enough bottoms up citizen journalism and opinion formation that people can independently decide that on the margin, this is a good idea. Like, look, I'm not interested in running for government, but if David were in charge of something very important, Treasury or State, I would have immense confidence. If Freeberg were in charge of something, I would have immense confidence. So the idea that guys like this... The idea that guys like this and... Oh, cause I'm born here, so you don't have to say that. Yeah, yeah, yeah. Don't worry, you'll get the Department of Sanitation
SPEAKER_10: and I'm definitely gonna win. For sure I'm gonna win. Perfect job, Postmaster General.
SPEAKER_06: I do think it's a little crazy that guys like these two get disqualified just because they emigrated when they were like four and six. That's insane. So I think that if we're in the business of actually deciding that you want the best people for this country on the court so that we keep winning championships, you don't tell Janus, oh, you were born in Greece, so ciao ciao, you don't get to play. That's crazy. It's crazy. Put them on the court and let them win. So I do think it takes 25 or 30 years though of us saying this because it has to be a groundswell of people that say, I just wanna win because I'm seeing all these other countries starting to win more and I don't think I want that for my children. I do think it takes a generation. I don't think it happens today.
SPEAKER_08: All right, guys, in a couple of hours, it will be the Sultan of Science's birthday.
SPEAKER_06: And Alan Keating's, and Alan Keating's.
SPEAKER_08: And Alan Keating's birthday. So I thought it would only be fitting if a hundred all in super fans took a moment. I'm gonna sing in Italian. And sung happy birthday to Dave Freberg. Three, two, one. Happy birthday to you.
SPEAKER_09: Happy birthday to you. Happy birthday dear Freberg. Happy birthday to you. And many more. All right, Sultan of Science.
SPEAKER_09: I know your wish was to be a top 10 podcaster. It's come true finally. I gotta go into podcasting.
SPEAKER_10: Yes.
SPEAKER_09: Whoa! You're on to big crowds. Amazing. Thank you, Ashley.
SPEAKER_09: Oh, man. My podcaster will meet me at... We should all just get a room and just have one big huge orgy because they're all just, it's like this like sexual tension that they just need to release somehow. What the beep? What the beep? What the beep? What the beep?
SPEAKER_05: What the beep? What? We need to get merch.
