SPEAKER_02: So what I say were you writing last night till three in the morning? Oh, I was blasting people on Twitter yesterday.
SPEAKER_04: I was collecting scalps.
SPEAKER_02: What?
SPEAKER_04: I keep these receipts of people who attack me on Ukraine and then like six months later, you know, they all write a tweet admitting they were wrong. I'll rub it in their face. You have a little Google Doc and you just go, no, I just like Markham.
SPEAKER_02: You've let your kill Bill West.
SPEAKER_03: Yeah, you are so petty. Oh, God, I love all I mean, I love that about you. Some would say that's a good defense mechanism, right?
SPEAKER_04: Yeah, they got to know they're not going to take any free shots because if they do and then invariably I'm proven correct, then
SPEAKER_03: you're going to clap back.
SPEAKER_04: I'm going to smack them.
SPEAKER_00: Very Trumpian, isn't it? Yeah, it's a very hard burden for you to carry. It's just being right all the time. I respect the way you do it with such grace and magnanimity.
SPEAKER_02: Well, your winners, right? Rain Man David Sasse.
SPEAKER_03: And it said we open source it to the fans and they've just gone crazy. W.S. Queen of Kenwa.
SPEAKER_02: All right. Welcome back to the all in pod. Really excited to have a guest with us today, Jared Kushner. I'm sure everyone knows who he is. We obviously talked about Jared's interview with Lex Friedman on the pod a couple of weeks ago. And what happened to Matthew Diem, Jared, and started chatting and said, hey, would you be interested in coming to talk with us? Yeah, that is matters. Jared very kindly agreed to do it. So we're really excited to. Have Jared join us today, Jared, welcome.
SPEAKER_01: Thank you for having me.
SPEAKER_02: So I don't think you need much of an introduction. Obviously, you were a senior adviser to President Trump from 2017 to 2021. And you worked on the U.S. Mexico relationship as well as led the Middle East peace efforts, which I think is going to make up the bulk of what we're excited to talk about today. Just really briefly, since leaving office, you've been investing, running a firm called Affinity Partners. Is that right? Maybe you can share with us just a little bit about what you've been up to. And then we'll kind of get into it here. Perfect.
SPEAKER_01: Affinity Partners is a private equity firm that I started when we left doing growth investing, private equity investing globally. We raised just over $3.1 billion doing a lot of investments, trying to bring Gulf money into Israel, into the U.S., trying to figure out how through investments you could bring countries closer together, people closer together, looking at a lot of areas where there's structural transitions happening at large in the global economy, whether it's near shoring from offline to online software, a lot of different interesting areas, a lot of the fintech space and financial services right now. But, you know, enjoying it. And the goal is really to bring the experience that we had from the previously being an investor and then the time in government and then thinking through how you could use those macro learnings and connections and relationships and navigational skills to the investing side.
SPEAKER_02: Right. So we're going to try and talk later in the show about macro markets a bit, talk a little bit about some of the activity in AI this week. We think it's all pretty prescient and hopefully we can all dialogue about that. I think it'd be helpful when you and I talk just to get ready for the show today. You mentioned that you had a very liberal upbringing in the Upper East Side, New York, and your perspective began to shift as you started to travel the country. Then you were in the Trump White House and have become very active since. Would love to hear a little bit about how your perspective shifted in the time you spent, because you mentioned you started traveling the country and seeing things that you otherwise haven't seen living in the Upper East Side. Would love to hear that part of your story before we kind of get into things. If you wouldn't mind sharing.
SPEAKER_01: Yeah, sure. So one thing about my life is that nothing has gone according to the plan. I grew up in New Jersey, a really nice place in Livingston. My father was an entrepreneur in the real estate business. Banking, insurance, did a lot of different things. Really brought up me and my siblings to be focused on business. And it really for us was a good experience growing up. I actually went to Harvard and then after that chose to go to law school and business school where I was at NYU during that time. My my father had a legal issue and I was forced to take over the business. And so I got into the real estate business. And then after that, what a media company in New York. And that's really where I got exposure to a lot of what I call New York society. My wife and I, we met, got married. And through that experience, I thought we had a very expanded world view at our house in the Upper East Side. We have dinner parties. We have lots of banks and hedge funds and technology companies and fashion. And and then it was just, you know, really nice life. And then her father announced he was running for office. And that was an interesting experience for us as Republicans. We didn't know too many Republicans. Were you a registered Democrat prior?
SPEAKER_01: I was registered Democrat going up. My father was a big Democrat donor. We were, we'd have in our house, whether it be Chuck Schumer, Hillary Clinton. I think my father gave Cory Booker his first campaign donation. So I know Cory since I'm 15 years old. So really grew up around Democrat politics all of our life. But over time, I think during the Obama years, I changed my registration to an independent. I didn't feel like the Democrat party was fully representing my viewpoints. I felt more independent minded. And then during the time with my father-in-law, when he was running for office, he invited me to go with him to a rally in Springfield, Illinois. We flew out there. I got off the plane and, you know, we, we pulled to an arena and the guy comes up to Trump and says, congratulations, sir. You just broke the record for the arena for attendance. Then he says, well, who had the, who had the record before? And he says, well, it was Elton John 36 years earlier. And he says, Jared, look, I don't even have a guitar or piano. This is impressive, you know? So, you know, he gets up on stage and, and without really notes, you know, rest for over an hour. And it was interesting for me because I was watching, you know, CNN and the New York Times and all my friends in the media basically were describing his rallies as almost like KKK conventions. But I walked around the crowd. Nobody knew who I was then. And what I saw was that these were just, you know, they were people were old, young male, female, white minority. And and and it was just people who were hardworking Americans who, who, you know, really felt like Trump was giving them a voice. And what was interesting to me was a couple of weeks earlier, we'd been at the Robin Hood foundation, which is the big philanthropy in New York, where a lot of the hedge fund managers support. I remember the chairman of Robin hood getting up and saying, you know, if we want to save you know, the next generation, we want to save the kids in the inner cities. We have to we have to support common core. That's the way that we can save people. And I remember Trump gets up there and he says, you know, if we want to save education, we have to end common core and send it to the states. I'm saying, wait, I thought I thought common core was this great thing. And but why are all these people against it? And so it really just kind of piqued my interest and made me realize that maybe my aperture was was way smaller, way more closed than I thought it was. And it really led me to to seek out a lot of people who had different points of view than the people I'd been around before. I really opened my aperture, explored a lot. And over the years, I really got the chance to meet with people from both sides. So, you know, I have a lot of friends who are independent friends who are liberal friends who are very republican. And, you know, my personal view was I thought of myself more as a pragmatist, fact based and data driven. And based on that, I tried to pursue the different policies that I thought made the most sense in as unemotional a way as possible. How did you figure out that that moment in Springfield could translate all throughout the country?
SPEAKER_03: Like, was there a process that you guys went through to validate like, hold on, is this just a moment in time? Or is this just a specific area? Or what is how did you guys get to the ground truth of what the scalable, marketable candidate look like? Because I'm sure that was part of the calculus in what you did. Because it I think the to your point, maybe the media's perspective was hold on a second, this this guy is riffing. But it clearly went very quickly from riffing to a methodical plan. And I don't think that that's ever really been talked about. Do you want to just tell us a little bit about that? Sure. Well, I would say it was less planned and way more entrepreneurial.
SPEAKER_01: And I say entrepreneurial in two different senses. You know, one is the campaign was one was run incredibly entrepreneurially. People were told that if you work for Trump, you'll never get a job in Washington again, which is why he really wasn't able to hire a lot of people initially and why a lot of the responsibility for the campaign fell to people like myself who really just cared about him personally and wanted to make sure that he was able to do a competent job with the operations of a campaign that led to us doing a lot of things in an untraditional way. But we actually were able to make the dollars go a lot further, whether it was building a data operation or how we targeted advertisers or how we did our events, we were able to just do it in a much different way. But from a viability of the candidate perspective, I really give all the credit to him because what I saw with politicians is a lot of politicians will take polls and then moderate their perspectives. This is somebody who without pollsters and without any political experience really put forward a lot of points of view and keep in mind in a Republican primary, a lot of his viewpoints on trade were very heterodoxical. They were not what was conventionally thought of. What I saw with Trump was that he was able to move the polls to him. That was a talent and just a skill of persuasion and his willingness to stick to the issues. I mean, at that point in time, I remember seeing polls that illegal immigration was not a top five issue when he started the campaign. By the middle to end of the campaign, people were really seeing the craziness that was happening at the southern border and why that was critical to our national security. And so I think that for him, he found a lot of his message. And with him, he was not a perfectly always on message candidate. But what he did do was he was constantly evolving and learning and would learn from the different things that happened and constantly evolving to find ways to persist. Amazing.
SPEAKER_02: Like a startup finding a product market fit. Yeah. And what's he like as a father-in-law?
SPEAKER_03: I'm curious.
SPEAKER_01: As a father-in-law, he's been great. You know, that obviously brought us a lot closer together. You know, until that time, our time was mostly they're playing golf together. We'd be together at family events. Working together was a different element of our relationship. But I think one of the benefits I had with him was that he knew I was always going to tell him the truth, whether I agreed with him or not. I also, I think one of the things he liked about me was that I was not obviously worked hard. I gave him straight answers and I didn't opine on things where I didn't feel like I had an expertise. So if you would ask me a question and I didn't feel like I knew the answer, I would say, well, this is not my expertise. These are the people who I would recommend I speak to, to get perspective and let me bring you their opinions. And so I think he saw me as somebody who was competent, obviously had his best interests at heart. Again, I wasn't accepting money for any of these jobs, so it wasn't doing it for financial gain. And I just started to really believe in a lot of the policies that he was pushing and wanted to help him maybe translate it from a campaign speech to kind of technical policy. And then see once he got the opportunity to help him implement it as well. That's really cool. Why do you agree to do Lex and why are you doing the show today?
SPEAKER_02: We were kind of surprised to see you on Lex. And obviously, like Lex said, it was a very different conversation than I think any of us would have expected. Having the only exposure to you being through some sort of media channels. What's motivating you to kind of do this today before we get into it?
SPEAKER_01: So Lex again, him, my wife are friends. And I really follow and listen to what he does. I think in society today, the news is kind of just one person's point of view and they're picking and choosing and editing what they put into it one way or the other. But the medium of the podcast is something that my personal consumption was growing with. And I felt like it was a place where you could have real conversations. I think the people who are listening to podcasts are people who are looking to have a more nuanced perspective on something and really want to try to understand something deeper. And I respect Lex. I have all my private conversations with him. I really enjoyed. And I love that he was really trying to find perspectives from people that maybe others didn't understand to try to bring greater understanding across. And so I agreed to do it after a while. Was really, really glad I did. And based on the great feedback I got there, my sense is, is that the podcast format is something that you could have a real conversation. You can go back and forth. You could argue, you could disagree. I think that that's where people really want to get their information from. So I turned out a lot of cable news or different interview requests because I find that you can't have as nuanced a discussion. And I wish things were as simple as the black and white or the political slogans that people use. But the reality is things are a lot more nuanced. So when Shammoth reached out, I followed you guys and I've listened to you for some time. I was I was really happy to come do it. Awesome.
SPEAKER_02: Well, thanks for doing it. Sax, you want to kick us off on the Gaza conflict and framing up the present day?
SPEAKER_04: Sure. Based on what I've read, it seems like Israel has now formed a perimeter around Gaza City. They've sort of bisected Gaza between this north and south. And they've been trying to bomb entry or exit points from the Hamas tunnel network. And it seems like their strategy is to kind of gradually close in on that tunnel network and basically try and eliminate Hamas from sort of this northern part of Gaza. And then one assumes they'll move to the south. And I guess one other element to add to it is that, you know, while Israel is doing that, you're seeing protests both in the west and in the. Arab or Muslim world, you're starting to see statements condemning Israel by leaders of these other countries in the region. I'd say the one by Turkey, by Erdogan was notably harsh and threatening. But you're starting to see again, as Israel proceeds with this operation, you're starting to see more and more condemnation from various parts of the international community. So let's start with that is, you know, how do you assess what's happening on the ground? What do you think the prospects for success are? And how do you assess the risk that this sort of escalates horizontally in ways that are kind of hard to predict and could spiral out of control?
SPEAKER_01: Yeah, so there's a lot of different ways you can go with that. But I'll start with kind of the first question, which is in the immediate aftermath of the attack, my biggest concern was that Israel was clearly caught off guard from intelligence and military perspective with the attack. And the attacks were. They shook a lot of people. They were very, very heinous beyond really comprehension. It's crazy. The more and more stuff that comes out. And we were seeing a lot of in real time, thanks to the fact that right now with X and what Ilan's done there to not try to censor things in the way that it was happening before. So we were all getting a lot of information real time, and it was really pulling at a lot of people's heartstrings. My big fear initially was that Israel would react emotionally as opposed to pragmatically. And I think that the steps that they've taken since then have been very wise. I think the fact that they took their time and have been very methodical about getting their supply lines ready about working, how to garner as much international support. I mean, you have to remember these weren't just Israeli citizens that were killed. These were American citizens. They were German citizens. They were Thai citizens. They were UK citizens. And the hostages as well are not just Israeli citizens. So I think that Israel took its time to get the military operation set. I've seen them go slowly, methodically. I mean, Gaza is a very, very complicated place. I mean, we studied it for four years. We were very closely watching all the different incursions. We managed Hamas and their malicious activities very, very closely to avoid situations like this. And the place is booby-trapped like crazy. And so I do think the fact that the Israelis have taken their time and been very methodical and have come up with a strategy has given me more hope. I mean, every morning I wake up and I look to see, you know, praying there hasn't been more casualties in Israel. And the hope is that they continue to do it in the best way possible. So I think that the goal for them is really the elimination of Hamas. I think that, you know, the big point that I really want to make in the Lex podcast, which is why I went back to really do the point, was that the people who are protesting in favor of the Palestinians, a lot of the Israelis and the Palestinians want the same thing. Which is they want security for Israel and a better life for the Palestinians. And I think what people have failed to really grasp for a long time is that Hamas has been the root cause of a lot of the bad lives for the Palestinians. If you think about Gaza before this recent, for October 7th, I mean, over half the population lived under the poverty line. You know, people were really trapped there and people would blame Israel for the blockade. But what's also happened over the last 30 days is a lot of the worst fears that we had during the administration or things that Israel would be saying have totally been proven true. I mean, you've seen now them going to some of these schoolhouses where there's, you know, there's 500 or 50 different rocket launchers in the schoolhouses, the hospitals, all the terrorists that they've captured that they're interrogating are saying, well, that's where the military headquarters are. You know, now we're learning about this tunnel network, which they're saying is hundreds of miles of tunnels underground. Well, that's why, you know, Israel wasn't allowing cement and a lot of these materials and the cement that went in, which was supposed to build houses for the people of Gaza was then stolen by Hamas to build these tunnels. The pipes that went in to fix the water were then taken and turned into rockets. The fuel was stolen and not used for the hospitals or for people to have better lives. It was stolen for them to operate their tunnel network and then to fuel the rockets. So it's a situation that really does have to be dealt with. Again, Israel, you guys are, I know, poker players. So Israel definitely has the stronger hand to play here. So I think time is on the one hand in their favor. But on the other hand, obviously, you know, the international community has historically been very anti-Israel and anti-Semitic in the way that they've approached a lot of these skirmishes to date. But I will say, I think there's been more international support for Israel this time than I've ever seen. And I do think that that's a very important thing. So that's maybe general if there were some of the specific questions that you want to get to in there. I can. What about the risk of horizontal escalation?
SPEAKER_04: Let's just talk about that for a second. Because you do hear, I think, a growing chorus of countries who are denouncing Israel. They're saying that this is collective punishment, that the bombing of Gaza is indiscriminate. They want it to stop. There's genocide. Genocide. But yeah, I'm not saying I agree with that rhetoric, but you do hear it.
SPEAKER_04: You know, there's an effort at the UN to pass a ceasefire resolution. So there's a lot of people who want the ceasefire, and there's a lot of growing international pressure for that. And then you've heard threats from, you know, again, Erdogan in Turkey, that if there's not a ceasefire, at some point, they're gonna have to get involved. They're gonna have to act. Iran has said similar kinds of things, although I think it's pretty clear they don't want to get involved. They don't want this to escalate into a wider regional war, but they've sort of intimated that if the bombing continues, that they might have to take action. They might feel pressure to do that. So I guess one question there is, is time on Israel's side? It does seem like, again, there's more pressure to stop the military operation over time, as opposed to less.
SPEAKER_01: Yeah, so the answer is, is everyone's talking their book, and that's what they should be doing. They're talking to their populations. The question is what people will actually do. I would say that, you know, the hardest thing for us all is obviously you see civilians in Gaza who are being used as human shields. And the last thing that anyone wants is for more civilian deaths to occur. It's funny, this morning, I was speaking to a friend in Israel who was telling me that yesterday there was a major evacuation of civilians in Gaza. And a lot of people were surprised that the Israeli defense forces were basically putting themselves in between the Hamas militants and the Gaza civilians to protect them and open up a corridor. And again, one thing that Israel has done, I think a good job of is getting out a lot of the facts about how they've been warning the Gaza civilians to flee, asked them to go. And what happened was Hamas was, you know, shooting them down with snipers and trying to prevent them from going because they wanted that to stay in place as human shields in the schools and the hospitals where they were conducting their terror activities. And so what was interesting to me was, my friend was telling me, is speaking to a friend of his who was a soldier, was that a lot of the civilians are really thanking them for liberating them from Hamas and for risking their lives to help them get out of Gaza. And a lot of these people, again, they've been prisoners to Hamas more than anything else for a long time, and they want to see themselves out of there so that they can perhaps have a better opportunity to live a better life. And so I think that the current region, I think the biggest immediate threat is from Hezbollah, the north. I think that's been, I think Israel going to full ready alert was a really smart thing. I think the US moving the battle carriers there, I think was also good. I think the statements from the US administration were strong up front. Again, whether people believe that they'll back up those statements is another thing because they do have a little bit of a credibility deficit in the region based on what they've done over the last couple of years. But I think that's all been very helpful in kind of pushing Iran back and sending a strong message to Hezbollah, which is if you want to attack Israel, don't do it when they're at full military readiness. Israel is a nuclear power. And I think everyone is starting to realize that this has been Iran trying to manipulate things. And as long as they think there's a threat that you're not going to go after one of their proxies, but you may go after them, that's been the best way of keeping de-escalation. I think with Turkey and others, I've spent many hours with Erdogan personally talking about Gaza. And I know that he has a big heart for the Palestinian people. He hates to see their suffering. And it's also good politics from him. You know, he's also from a Muslim Brotherhood leading party. But I think, you know, it is hard to part. He does have to acknowledge that a lot of their plight is led to by bad governance. He may not want to admit it publicly, but the reality is, is the best way to improve the lives of the people of Gaza is to eliminate Hamas and put in place a structure where people can finally have the opportunity to live more freely and make better lives for themselves. Jared, you said something that I think is really interesting.
SPEAKER_03: You said Erdogan has a soft spot for the Palestinians. Can I just take that concept and just, can you explain the historical context of Arabs, the Arab world and their relationship with the Palestinians? Sort of, because it's definitely had its ebbs and flows over the arc of history. And so how do people think about it as just broadly speaking, just in terms of like the big historical arcs that have kind of shaped this relationship between Arabs and Palestinians specifically?
SPEAKER_01: Well, that's a question we could spend about three days talking about, but I'll try to give you kind of a very quick version of it. So I think that, you know, a lot of this goes back really to, people say it goes back to a lot of times, but I think that we have to probably go back to, and I'll try to do this very quick, is really in 1948, which was a complicated time. It's post Holocaust, post World War Two. You know, again, the Middle East, really in the early 1900s was created by a lot of arbitrary lines drawn by foreigners. And you had a situation where Israel, the UN puts forth the partition plan, Israel, they're willing to recognize Israel as a state for the Jewish people and also give a state to the Palestinians. The Arabs reject that and attack Israel. There's a whole war during that war. It was flared up really by General Nasser from Egypt, who at the time was the leader of the Muslim world. During that war, Israel was able to defy the odds and win. And a lot of Palestinians were either forced from their homes or displaced from their homes. You know, there's versions where they say the Arabs said, leave your homes. And then, you know, when the war is over, you're going to come back and take everything. Some Arabs stayed in their homes and actually today they're Israeli citizens with full, you know, equal rights as other Israelis. And so that happened. Then in 1967, that's when Egypt attacked again. And during that war again, Israel miraculously won. And that was really kind of the time where Israel was able to expand their territory. They took over the West Bank at the time, which didn't belong to the Palestinians as much as it belonged to Jordan. It was part of Transjordan at the time. And then they also gained control of the Gaza Strip, which also was previously administered by Egypt. Although when Egypt was administering it, they didn't take it as their territory. They never granted citizenship to the people who were there. So between 1948 and 1967, when the Six-Day War occurred, most of the leaders in the Arab world enjoyed leaving this issue out. It was a great way to stoke nationalism. And it was a very easy political issue for them to have to say, well, we need to do this and to fight for the Palestinian people. So in a lot of ways, there's a way to deflect their shortcomings at home and to justify certain actions they were taking because they were fighting for this group of people. Then it gets really interesting after the Six-Day War. So this was the second time that the Arab countries had failed to destroy Israel, which is what they had promised they would do. So there's a young terrorist at the time named Yasser Arafat, and he was part of a party called Fatah. And what he said is, you know what? All these Arab leaders they're lying to, they're failing you. I'm going to be the one to start creating a liberation and opportunity for the Palestinian people. So he took on this mantle, was able to use his Fatah group and some pretty thuggery ways to take over the Palestinian Liberation Organization, which is the way that he got some international acclaim. And at the time he was doing that from Jordan. So this about 1968, 1969, they caused so much trouble in Jordan that King Hussein at the time, who was King Abdullah's father, who really was a very, very special diplomat and leader in the Middle East, got so fed up with Arafat. I mean, at the time he was causing trouble. It was steering people in. People wouldn't invest there. They wouldn't, it was hurting tourism. And then they took a little further and they tried to assassinate him, which was probably the final straw. So the Jordanian leader said, get these people the hell out of my country. It was a big clash between the PLO and Fatah terrorists and then the Jordanian police and military. And they were able to expel them. And then the Palestinians went to Lebanon. That's where Yasser Arafat was. So they were there for about 12 years. Again, they went back to their old ways of fermenting radicalism and finding ways to cause trouble. When Israel invaded Lebanon in 1982, then Yasser Arafat fled again, this time to Tunisia. In Tunisia, they were living pretty well as a beachfront place. They're in these beautiful villas on the beach and they kind of became a little bit disconnected from the Palestinian people, but there was a lot of resentment of the broader Arab world because they felt like, again, the Arab world didn't really. They would say they were for the Palestinian people, but never really stood up for them in the way that they felt like they deserved. So it took until about 1988 that finally, this is 40 years after 1948, the war of independence, where the PLO was finally able to get the Arab league to say, and this is really because Jordan was just like done with this issue to say, okay, we're going to acknowledge that this land here should become a Palestinian state. So the notion of a Palestinian state really didn't emerge till about 1987, 1988, which is the same time that Hamas actually came about. And they came about really from, they were an offshoot of the Egyptian Muslim Brotherhood. And their whole thing was basically we're going to do full terrorism in order to prevent any compromise or any deals with Israel. So then you go to 1991, which is a very, very important time for the Palestinians, mostly because Saddam Hussein in Iraq invades Kuwait. And that was very scary for a lot of the Arab leaders, right? They didn't want, they did fear Saddam. He was seen as the radical Arafat and the Palestinian leadership bats Saddam Hussein, mostly because they knew that he was seen as the revolutionary and popular with the more common man. And this pissed off every single golf leader because they basically said, wait, this guy, if he's going to take over Kuwait, he could come for Saudi Arabia. He'd come for UAE. So they were all very against that. And at the time there's about over 200,000 Palestinians in Kuwait. What happened at that time though, was that that made the Palestinian leadership so weak because a lot of the Arab countries cut off the funding. It was just done with them. And that's really what led to the Oslo Accords. So the Oslo Accords happened, not because Arafat necessarily, you know, all of a sudden said after, you know, 37 or 27 years of trying, you know, terror and pushing forward, he basically ran out of other options. And this was his only way to get some form of legitimacy. So they dropped from their charter, the whole notion of destroying Israel and said, let's try to create this area where we can have governance and try this whole effort for a Palestinian state. So that's really kind of a long short version of kind of how we got to then. And then in the last, I'd say 30 years, the big change that I would say between then and today is that you have a lot, you have a new Middle East forming and a lot of the work we did in the Trump administration was really to help what I'd call the new Middle East emerge, where you have a lot of economic opportunities now happening in Saudi Arabia, UAE, Qatar. There's been a massive mind shift where if you go kind of post Arab spring, a lot of these leaders are saying, you know, how do we create opportunity for our people? When I got into my job in 2017, all the experts were saying to me, the big divide in the Middle East is between the Sunnis and the Shias. And when I got there, I said, no, no, no, the divide is between leaders who want to give opportunity and betterment of life to their people and people who want to use religion or whatever issue they want to hold on to from the past in order to deflect from their shortcomings and justify bad leadership. So I think what's happened today is you have a lot of the Gulf countries really wanting to see this issue get resolved, which is different than you had in Camp David in 2000 when Bill Clinton was getting close to a deal with Yasser Arafat. I think the Saudis and others at the time didn't want this issue to go away. But now the issue is really no longer useful for the Arabs. The only people it's useful to, quite frankly, is Iran. And that's why they've been backing Hamas and Hezbollah and all these other functions in order to continue their project of instability. So the way I kind of view this period right now is that the Middle East today is way stronger than it's been in the past. And this is what I would say the last gasp of Iran and those who have pushed for destabilization and kind of this whole Islamist jihadist project at the expense of kind of a collaborative Middle East, which which would then will create a lot of opportunity for the next generation to really thrive.
SPEAKER_02: Jared, isn't there like at this point then, like, is it hard or easy to create an objective target? We call individuals that Israel wants to target Hamas, but there's no card carrying members of Hamas. You don't wear a jacket that says I'm a member of Hamas and walk around with an ID card. And there are some folks who are sympathetic, who believe that Hamas represents a resistance movement. There are some folks who obviously feel. Terrorized and ruled over, and there are some folks who support the cause, but don't pull the trigger. There are some folks who pull the trigger but don't want to support the cause, but are being forced to by some reports. How easy and how hard is it to really direct a military operation at such a fluid population that it's very hard to ID and target? And as we've seen in years past, there's always another group that seems to emerge. You cut off one group, you get rid of Al Qaeda, ISIS emerges. And there's this almost like, you know, fluid transition of this intention. And particularly in this Gaza community, it's very difficult perhaps to distinguish between who's Hamas and who's not Hamas. So how do you actually achieve the objective there? And you know, how does the military target?
SPEAKER_01: Yeah, so that's probably the most important question that I think people have to really be thinking about as we kind of enter this phase, right? So it's both how do you do this in the short term and then the long term? And so you can't kill your way out of an ideology. But there obviously are some bad leaders at the top who are culpable, who are military targets. And I imagine that it's really, you know, knowing the capabilities of Israel and the facade, it's just a matter of, you know, when and how as opposed to anything else. But then you have a lot of mid level and younger members of this group. And I do think that a lot of these people are in this situation more circumstantially. I think this is what they've been taught to believe. I think this is really the place they were. And this was the system in Gaza, where if you wanted to advance and live a better life, then you really had to succumb to this tiered system. So how deep the ideology is, people will debate that in different ways. If you go back to 2016, the campaign, we were dealing with ISIS, the talking point that everyone used was you have to defeat the territorial caliphate of ISIS, and then you have to win the long term battle against extremism. One of the things that President Trump did when he went to Saudi Arabia in 2017, the reason we went there was that the Middle East was basically on fire. I mean, if you had ISIS had a caliphate the size of Ohio, they were ruling over 8 million people. They were beheading journalists and killing Christians. Syria was in a civil war where 500,000 people were killed, a lot of Muslims, and you didn't see the same protests on college campuses when that was happening as Assad was gassing his own people. Libya was destabilized, Yemen was destabilized, and Iran was on a glide path to a nuclear weapon, having just been given $150 billion in cash through the disastrous JCPOA deal that Kerry and Obama negotiated. So it was a mess. And so Trump went there and basically was pretty tough with what he said. And he said, this isn't our problem. This isn't your problem. This is all of our problem. And we need to root this ideology, get it out of your homes, get it out of your mosques, get it out of this earth. And the King of Saudi Arabia stood up at the time and said, there's no glory in death. And that was really important. Two of the big deals that came out of that, people talk about the big investments, did over $500 billion of investments in arms sales with Saudi Arabia that created a lot of US jobs. But the two agreements we made that didn't get a lot of coverage during that time was that we did a counter-terror finance center that we set up where we got all the Gulf countries to really allow Treasury to work closely with their banks to stop a lot of the funding to the terrorist organizations. And then these kind of borderline organizations. And then the second one was in Saudi Arabia, which is the custodian of the twoest holy sites in Islam, Mecca, Medina. They started a counter-extremism center where basically they were combating online radicalization that was occurring. And if you remember, in the US in 2016, we had the San Bernardino shooting, we had the Pulse nightclub shooting, and a lot of people being radicalized online. One of the things that I'm very proud of from the Trump administration is the work that we did to really help Saudi Arabia change their trajectory. And what I realized quickly was that in the US, we just did not have the capabilities to win the long-term ideological battle ourselves. So we could be mad at Saudi for some of the things that they've done in the past, but they were the most powerful partner we could have in order to try to combat the radicalization that was occurring, both in terms of stopping the funding, but also replacing the clerics who were doing the radicalization with the clerics who were restoring Islam to a more peaceful and more proper place. So that was something that's really occurred and it's made a big difference. I was just in Saudi Arabia a couple of weeks ago at their big investment conference. And what was really exciting to me was I was meeting with a lot of the younger Saudi entrepreneurs. And I did a conference in Bahrain to talk about the Palestinians in 2019. And one of the big challenges we had when we were putting that together is we were thinking about who are the role models for these young Palestinian kids. And in the Muslim world, they had some sports stars, they had some business leaders, but it wasn't really people who were necessarily relatable to a lot of the younger generation. In Saudi, I was at an event with all these young tech entrepreneurs there who are building amazing companies. There's a lot of unicorns there. They're doing a lot of the companies that are dominant in the US and in Asia, and now they're building them for the Middle East there. And it's very, very exciting. And these really are the next generation of role models for a lot of these kids. So that's a long way of saying that, obviously, you have to do what you have to do from a military perspective. And the hope, obviously, is that it could be as quick as possible and that as few civilians as possible are hurt by this. But the notion is that once that's completed, you need to then create a framework where people don't just have more despair. Because in an area where there's no hope and opportunity, then obviously the radicalists and the jihadists, that's really where they do their best recruiting and they flourish. So once this occurs, there needs to be a paradigm created where the next generation feels like it's better for them to get a job, be part of the economy, and where they can live a better life through capitalism than by going to these jihadist groups.
SPEAKER_02: But it's leadership targeting right now. That's the objective, effectively. I mean, that's what I'm hearing. I think it's leadership and then degrading of capabilities.
SPEAKER_01: Right. So because, again, what you've seen as well, you've seen this with cartels in South America and you've seen this with terror organizations. You kill the top guy and sometimes you cut the head off the snake and the snake dies. And sometimes it just scatters into a lot of little pieces. Then it ends up becoming more complicated, not less. But I think here, obviously leadership, but significantly degrading the capabilities for anything in Gaza to threaten Israel. And then actively build a better way, actively build a better solution.
SPEAKER_01: That's the only way. And by the way, even today, it's much more easy to visualize that than it was in 2019 when I was talking about this, because you're seeing the economic project in Saudi Arabia, you're seeing what they're doing in UAE. I mean, the fact that Saudi shifted so much in five years should give you hope that it's really, really possible. And they've been pushing the rest of the countries to try to emulate and compete with them, which is also an amazing thing.
SPEAKER_03: I'd love to get your reaction to the difference in tone and messaging from Western governments versus what you're seeing sometimes on the ground with some of these protests and just how almost diametrically opposed the language and the rhetoric and the point of view is. How is it that, and sort of this is why I kind of asked you just for a little bit of a history. How is it that people aren't taking all of these views in? How is it that there is this radicalization that may not be happening in the same level in the Middle East, but is maybe happening actually in the West, whether it's in our universities or other ones?
SPEAKER_01: Yeah, so that's something like my friends in the Middle East, a lot of them are laughing at the West, because they're basically saying, you know, we got all these Islamist radical Muslim brotherhood people the hell out of our countries, you don't see the same protests in those places that you see in the West. And, and I think that in in in the West, what's occurred is people, I saw this a lot when I dealt with the Europeans were people's understanding of the issue is more with their heart than it is with their head. And obviously, nobody wants to see any suffering of any human beings. But the reality is, is that, you know, the the solutions that they've proposed for the last 75 years have all been just nonsensical. They've more often than not perpetuated the problem that they've been solutions to the problem. And, you know, I faced tons of criticism when I was, you know, in my role working on this issue. And mostly because I kind of looked at all the things that have been done in the past and keep my being asked to work on, you know, the Middle East, it's like, it's almost like a joke, right? It's it's the hardest problem set you can get in the world. And I think we almost made it look too easy getting the results that we did. And we left it very quiet. And I think now people are starting to appreciate that it wasn't that easy. And it's not it's not a simple problem set to deal with. And, but I think that a lot of people were were were kind of looking at at what they thought was wrong, but looking at the wrong root causes for how it got there.
SPEAKER_03: I have a question for you and sacks. I'd love to get your guys opinion on this. India dealt with a terrorist attack when Manmohan Singh was Prime Minister. And basically it was an extremist Muslim group from Pakistan, Lakshad, Taiba that came in and killed a lot of Indians, but a lot of foreigners as well, right attacked some of the major hotels in Bombay, etc. And what happened was Manmohan Singh didn't do anything. And in hindsight, when he was attacked, he was attacked.
SPEAKER_03: And what was written is, you know, they debated what to do they debated, do we go after this group? Do we show some proactive demonstration of force? Do we invade Pakistan? Ultimately, they went on a more covert path to sort of dismantle that terror network. And there was just a lot of international support that came around it. Can we steel man whether it would have been possible for Netanyahu to take that path? Or was it really not even reasonable? Just curious what you guys think about that. Do you want to go first?
SPEAKER_04: No, you should go for care.
SPEAKER_01: Okay, so look at anything's possible, chamath. And I think that there's different ways. Look, I think the big fears initially were that going into Gaza, number one, you'd be walking into a big trap. And number two is you would be inviting major escalation in the region. The third fear was obviously the degradation of the Israeli economy. When we did the Abraham Accords, one of the big, attractive things to a lot of these countries to be partners with Israel was their massively robust economy, and what could happen if they go to war, and it's a prolonged war is that economy can go off track. I think GDP will take a big hit there in Q4. But obviously, you know, in Israel, they do have a history of coming back right away. But if this is a prolonged war effort, there could be big hits. And then you also think about the age of, you know, AI and software development losing, you know, a day of productivity is the equivalent of losing, you know, a week or a month, and, and they don't want to fall behind in what they're doing. So there is an argument to be made for doing that. But I do think that from Israel's perspective, I do think that they understand this threat. I think that they want to eliminate this threat. And I think their view is, is we can't live like this anymore. We underestimated it before. And we will not let that happen again. And I think also the psychology of really the Jewish people is, you know, it was funny, once I was sitting with with Prime Minister Netanyahu, and one of the generals and, and Bibi was basically saying, like, you know, if Iran gets too close, this is what I'm going to do, we're gonna take matters to our hands. And the general basically said to me, said, you know, I get it, you know, you guys aren't going back to the ovens. And I was just like, wow, you know, so it was a real acknowledgement of like, the way that Israel operates with kind of no margin for error. And I would always say, when I'm negotiating with the Israelis that, you know, sometimes you do a contract, and there's like, you know, there's, there's two issues that are a 10. And like, a couple issues that are five, and like a whole bunch, you know, a whole bag of issues that are like twos and threes. And when I would negotiate with the Israelis, like, they would treat every issue like it was like a 10, you know, I mean, in the sense that like, they just operate like there's no margin for error. And, and I do think that obviously, there was some complacency and the internal division, you know, led to them being caught off guard here, but I think that they're gonna do what they're gonna do to make sure this happens. And I think there's also a way where Israel feels mentally like we have to show that we're strong, or else people will will go after us. And I think that that's what they've done. And I will say, you know, the fact that Israel has gone from being completely divided to now fully united in this effort, I mean, even the people on the far left, in Israel, who are all peace, who were, you know, funding, you know, jobs with the Palestinians, and you know, housing them in their homes, I mean, they're basically saying they want to go to war. So the mentality there is very much we need to do what we need to do now to keep ourselves safe. People are very, very heartbroken for those who are who are past them, they're they're they're praying very closely for the hostages. And but they've given a lot of latitude to their government to do what it needs to do to make sure this this is this is not this does not occur again. And I will say to like, Israel also recognizes that I think now they have the world more on their side than they have in in in past conflict. And I think their view is to their view is to do it while they have that situation.
SPEAKER_04: I mean, I think we know we would turn Gaza into Fallujah, or Mosul, Russia would turn into Grozny. So I think Israel is taking the response that I think most countries would take, given their situation. The thing I worry about is that Israel is not the United States. I mean, the United States, because it's so powerful, can act largely with impunity. We don't have to worry as much about blowback. And Israel does, because at the end of the day, they're a small country in a very, very hostile region. And so I do worry about the potential for unintended consequences here. One potential consequence is horizontal escalation. Does this war somehow spin out of control? And it could lead to a much wider regional war that would not be in Israel's interest. The other is diplomatic isolation, because I do think that Israel is taking a big hit right now on the information war, the war of republic opinion. And then finally, you do have a lot of civilian casualties, and those civilians have brothers and sisters and cousins and so forth, and that's going to lead to the next generation of terrorists. And so even success in this operation against Hamas doesn't solve the long term problem. I mean, it just kind of keeps it going. So I think all of those things are potential problems. But at the end of the day, if Israel can have a successful military operation here that significantly degrades or destroys Hamas, without this thing spiraling out of control, that buys them time to find a political solution, then maybe it will be worthwhile. I mean, I think a lot depends here on what the outcome ultimately is. I think it's like a very tough thing to judge without knowing what the outcome is going to be. The king of Jordan a couple
SPEAKER_02: of weeks ago gave a speech. And in the speech, he said there is no peace possible in the Middle East without the emergence of a Palestinian state, with a two state solution being the only path forward. A Palestinian independent and sovereign state should be on June 4 1967 lines with East Jerusalem as its capital. And so that the cycles of killing whose ultimate victims are innocent civilians and is this the only path to stabilization? Jared? And is that where we're headed?
SPEAKER_01: So that statement is the same throwaway statement, right? That's the safest statement for anyone to say, because that became the international consensus. So, you know, one thing that was super interesting to me when I was working on this was, I kind of said to my team was like, where does the Palestinian claim for East Jerusalem as the capital come from? And I had a guy on my team who was a military guy who actually worked for John Kerry, and I'd always have him in the room because he would represent the Palestinian perspective. See, I made a bunch of Orthodox Jews, and, you know, we tried to be impartial, but you know, we did the best we could to have, you know, all perspectives represented. And, and he came to I actually don't know. And then what's interesting is, you know, when, when the West Bank was actually governed by Jordan, the capital at the time was a man. And so it really wasn't till the 1988 launch of this right for a Palestinian state that they self declared that the capital should be East Jerusalem. And so that was actually an interesting notion as well. And I think that, you know, everyone knows that that's not going to be the case. And I asked one of the leaders once why they say that. And they said, well, it's a cliche. And I said, well, maybe we need a new cliche. And he says, Yeah, that's a good idea. Let's come up with a new cliche. So I think whatever solution is going to occur has to be pragmatic, right? You you the reality is, is that if we're going to learn from Gaza, there's a couple of lessons to learn, right? Number one is, you know, Israel withdrew from Gaza in 2005, or 2006. They forcibly removed 50,000 Israeli settlers from Gaza, all those people, they left their their homes, they left their businesses, thinking that would be peace, they transferred governance of Gaza to the Palestinians, the Palestinians then had an election again, it was, you know, the PA at the time convinced the Bush administration to allow for Hamas, even though their charter called for the destruction of Israel to participate in the election, and they won in a democratic election. Since that time, there's been no improvement in the economy. It's become a real security risk for Israel. And so Israel withdrew and then let them govern themselves. And now you have what's happened today be the case. So I think the reality is, is that, you know, if you look at the historical maps and the historical lines, I mean, there's really no making a claim. There's no other example in history where somebody's lost three offensive wars, and then has been able to maintain their claim over a territory that they had before. But I do think that there is an international consensus. And I do even think in Israel, there's consensus to give the Palestinian people the ability to kind of have their own land and then also to govern themselves. So the word state is a very loaded term, because it comes with a lot of definitions to different people. But I think the constructs of what's achievable is, is in the West Bank or Gaza, there can be no security threat to Israel. This is something that they were insisting on before and I was sympathetic. This was even before October 7. And if you go back and look at the work we did, and what we put out, we had a security regime that we designed with US intelligence and military and Israeli intelligence and Israeli military, that we thought actually gave a lot of autonomy from police force perspective to the Palestinians allowed them to build their capabilities and they kind of like earned their way into more and more security control, which I thought was the right way to do that. You don't want to take a ton of risk there. The other part of it, though, in any state is you need a functioning economy. Otherwise, obviously, you have a big grievance party. The biggest problem the Palestinians have faced over the last call 25 years since since Oslo, I guess almost 30 years now since Oslo is is just bad governance. So the problem with the PA is they were elected, I think in 2005. And they haven't another election since I think President of Boston in the 16th, 17th, 18th year of like a four year term. Very not popular. He's more popular in Washington and in the United Nations than he is, you know, in his own country. He's there. It's a very corrupt system. Again, a lot of the money is gone for for the leadership, their family for the top people, but not to the hasn't trickled down to the people. And so there's not a lot of trust on it. You know, I held a conference in Bahrain where I brought all the top investors in the Middle East. I brought Steve Schwarzman from Blackstone came. We had Randall Stevenson came from from AT&T. And everyone came and said, you know what, we actually would love to help the Palestinian people. We'd love to invest here. And then they looked at the magnitude of it. I mean, it's 3 million people, which is like a small state in the West Bank and 2 million in Gaza. Again, it's like a small state in the US. And obviously, to build things, it's much cheaper. I mean, the GDP per capita, there's about 3000 per person. So, you know, it's it's it's cheaper labor, it's it's it's connected right to Israel, right, which is like, you know, California not being connected to Silicon Valley. So the prospects for prosperity spillover are are massive, being sandwiched between the rich Gulf and the growing Israel. So but the thing that's missing in for the Palestinians is very basic things, right? There's no fair judiciary, there's no rule of law, the governance is terrible, the institutions are incredibly opaque. And what all these people were saying is, we'd love to invest here, but it's just not an investable place. And so the thing that's been holding back the Palestinian people has not been Israel, it's been their bad leadership. And again, you're seeing in other places in the Middle East that with the proper leadership, investments can come and those investments will actually lead to people living a much better life. How does that leadership change in your view? So the way that I would think about this is
SPEAKER_01: that if you're waiting for a solution to come to you, you're not going to find it right. If you say, Okay, let's go back to the UN, well, they have a perfect track record of failure. Let's go back to the PA, well, they have a perfect track record of failure, you're definitely not going to go back to a mass. So you need to find something different. So I think you either need to create something new, or you need to look at what's working and put it together. So some places that could do with me, the World Bank has a lot of good institutional knowledge, they helped us work on the plan, the World Bank and the IMF, you know, some of the other regional governments, I mean, Jordan, their government is pretty, pretty capable. I mean, they're, they're better at military than economy, but I think they're they're starting to focus more on economy, as they realize that that's necessary. If you look at the benefits of that area, the Palestinian people are like a 99% literacy rate, again, through the taxpayer, US taxpayer dollars and international donations, we've paid them to become very educated, unfortunately, I think we've poisoned their minds with a lot of what's been taught in their curriculums. They have a pretty good health care system there. Again, I think it could be improved, because it's been done very kind of piecemeal versus holistic. And then in addition to that, they obviously have a tremendous amount of tourism sites, I mean, you know, Jewish, Christian, Muslim tourism sites. So if they ever get their acts together, I mean, the boom in that area can be unbelievable. And I think it could work very, very well. There was one time where the Palestinian economy was working, I think it was in 2007, there was a guy named Salaam Fayyad, who was the first time somebody came in who was he was not corrupt, things were happening, you know, wages were rising, projects were moving, the money was actually getting to the people. And he became so popular because he was doing such a good job administering that, that the President got rid of him, that Abbas got rid of him, because he saw him as a threat to his power. So, you know, what's happened is not different, right? You always have kind of a tyranny of the minority in some way, with most forms of government. And so what happened was, is that he was starting to gain popularity, he became a threat to kind of the cronyism that occurred. And so I think that the international community, if they're gonna put money into this, again, to either rebuild, number one, it has to be conditions based, again, we've put 10s of billions of dollars into this situation, right? I mean, this this refugee group has gotten more money over time than any refugee group in history by a factor of maybe 100. Right? And then, you know, you you've none of it's been conditions based. And it has to be in a set where people are trying to create outcomes. I think one of the problems is, a lot of the people working on this don't have business backgrounds, they understand, you know, human rights, or they understand politics, but they don't understand capitalism, and they don't understand what kind of framework you need in order to allow a society to thrive.
SPEAKER_03: Has Treasury ever tried to trace these dollars or some other organization to just show where the theft happened and where these pools of money have gone to?
SPEAKER_01: There's some intelligence on it that I can't go into. But, but I think most people don't want to know, to be honest, I mean, you could just look at it in a couple of ways. Like, you know, you look at, you know, we would meet with Prime Minister Netanyahu in Washington, and he would take a commercial LL flight to come meet us. And he runs a military superpower and economic superpower in the region. President Abbas would come visit us in Washington, and he obviously represents a refugee group. And he would fly in a $60 million Boeing business jet, private jet to Washington, and I'd meet with him. And we'd be sitting around and, you know, he'd put a cigarette in his mouth, and then somebody would come over and they'd like the cigarette for him. And I'd be like, am I meeting with the head of a refugee group?
SPEAKER_00: I mean, it was a different situation. And, but I think people just
SPEAKER_01: He's the reasonable one, right? The alternative is Hamas and those guys. I mean, those are
SPEAKER_04: billionaire hypocrites who live in Qatar at the Four Seasons, right?
SPEAKER_01: Yeah, but but my sense is, is you're gonna get what you demand, right? And I think that from the US's perspective, right, we give about $4 billion a year in foreign aid to the PA, to UNRWA, to Jordan, to Egypt, and, and we've, we've tolerated, you know, status quo, that's not acceptable. And, you know, one of the differences, again, Trump had a lot of tension with the foreign policy, you know, establishment, and it was over a lot of things, right? Obviously, he wanted to end the forever wars, he felt like we should get some return on the investments we were making, he felt like USAID wasn't an entitlement. But I think the biggest difference was they wanted to all maintain the world, they wanted just to manage it, and he wanted to change it. And, you know, what we did by the by the time again, this was one of the disagreements I had with the incoming administration, is that when we turned over the Middle East to them, again, we spoke earlier about what a mess you know, we kind of inherited when we started, but we had five peace deals between Israel and majority Muslim countries. Iran was totally broke again, under Obama, when he left, they were selling about 2.6 million barrels of oil a day under Trump when he left office, they were selling 100,000 barrels of oil a day, they were out of foreign currency reserves, they were dead broke. Now they're back up to 3 million barrels a day of sales, they've done over $100 billion of oil revenue since we left office, the Palestinians, you know, one of the things we did after I think the first year is we cut the funding to UNROWS very controversial, we say, Oh, this is for refugees, we said it's not for refugees, it's to build terror tunnels and rockets. And they say, No, it's for schools and hospitals. And we were saying those are the military bases. And they were saying, you guys are crazy, you're cruel. And our whole thing. And so when we left, the PA was was basically broke, the Arabs had kind of lost interest in that cause. Because they kind of saw that it was it was morally bankrupt, and that every time we gave Abbas the opportunity to do something better for his people, he refused. And they kind of saw that, you know, we kind of we smoked him out a little bit. And so we kind of took the issue and we shrunk it tremendously. And the final deal we did was between Qatar, Saudi Arabia, UAE, Egypt and Bahrain. And that was a critical deal to do because that was what really made it possible for Saudi and Israel to then do the deal. And that was really on the table, right when we left, but it took too much time, they allowed Iran to get too strong, they started allowing Iran to get money, they started funding the Palestinians and UNRWA again. And and now you have a situation where it's just become, you know, a mess, it can be fixed, it definitely can be fixed if you're strong, and if you're smart, but if you're going to go back to kind of the old ideas, you're gonna get the old results, you need new ideas, you need to create the ideas and force them, you can't just wait for them to occur and then go back to the old institutions and the old people who have failed before.
SPEAKER_02: Who do you think should be Secretary of State in the next administration? I think Jared should.
SPEAKER_04: Let me ask you about the two state solution. Let's just double click on this. I mean, my view on this, and I think by the standards of Israeli politics, I'd be a liberal there is that the only solution, the only way out of this is the two state solution. You know, we can't have a situation of indefinite permanent occupation of the Palestinian people. At some point they developed a national consciousness. And if you have conditions of permanent occupation, they're going to resist and you're going to have outbursts of terrorism. At the same time,
SPEAKER_04: if Israel just outright annexes these territories, or continues on a program of call it creeping annexation where it keeps building settlements in the West Bank, and you have a greater Israel, that eventually Jews in Israel will not be the majority of the population. I think if you look at kind of greater Israel, there's about 7.3 million Jews, there's about 7.3 million Palestinian Arabs. So if the plan is a single greater Israel, it's either going to stop being a Jewish state because, you know, the Palestinians will vote for something different or it'll continue being the Jewish state, but there's going to be some sort of two tier system where a lot of Palestinians won't have the vote. And so eventually a greater Israel will have to choose between whether it wants to be democratic, or whether it wants to be Jewish. And that seems like a very bad choice. It seems like we want both those things to be true. So again, that kind of brings you back to a two state solution as the only option here. And yet it seems to me that the two state solution has never been further away. It seems like it's never been further away in terms of Israeli domestic politics, and it's never been further away in terms of having a negotiating partner to negotiate something like this with. So that would be sort of my pessimistic outlook. I mean, I know you're pretty optimistic about the situation. Do you see it differently than that? Is that framing wrong somehow? How would you how would you see it?
SPEAKER_01: So number one is I'm naturally optimistic. And I just find it's more fun to be optimistic than pessimistic. But I'll say everything I'm saying in the context of the fact that this is a really, really, really, really hard problem set, right? So I'll try to say this in the right order. So number one is I don't think there's any viability to a one state. And I don't think that that's something that will ever occur. Number two is, and I'll actually, you know, what's interesting, one of the problems is a lot of the the Arabs and the Palestinians would actually prefer to be part of Israel than a Palestinian state. So right before COVID, we released the Trump peace plan, which, which again, you can you can still find online. And I think the political part of it was about 54 pages, the economic part and the political part, but 181 pages in detail. We at the time got the right wing and the left wing. Again, it was they were in the third election. And we had Prime Minister Netanyahu and Benny Gantz, who's also an amazing person came in, they all endorsed it. And so what I would find what I tell you is that semantics, you know, state has to do a lot with semantics. So you can definitely give them a state The question is, is, you know, you have to give Israel certain overriding security controls so that set the state cannot be a threat to them. And then you can let them kind of earn their way out of that with good behavior and showing that it's a true partnership. But what I will just tell you is that whatever you call it, you give them a flag, you can give them whatever you want, unless there's a system where people can live a better life, then the grievance will overtake will overtake whatever independence they have. And it will just become a problem again. And so, so I do think a two state solution is possible. Again, what you do with Gaza is very much, you know, TBD. But I do think especially in the West Bank, there, there's definitely possibility to do and I think that from Israel, they'd like to see that happen where they'd like the Palestinians be able to govern themselves, but it's a couple big gifts, if it's not a security threat, and if they can have a viable economy that's gonna happen. One of the big things that's happening now that I'm hearing about is that I think the number was like 250,000 Palestinians who had work visas from the West Bank to go into Israel. And now with the threat, there's just such a great distrust that as that has occurred, that those are now not being renewed. So I think Israel is gonna have to bring in workers from other parts of the world. But that was an amazing thing, right? You had Muslims and Jews, you know, working together, you had, you know, Palestinians whose lives were better off because they're working with Israel. So the vast majority of the Palestinians, maybe not the vast, I don't know, it's people have different perspectives on this. But I just believe that fundamentally, human beings want to live a better life. I don't think our natural status is to hate each other or to be or to not be together. Again, if you look at the Middle East for, you know, 1000 years before the Second World War, I mean, Jews and Muslims and Christians, they lived very peacefully together. So, you know, what I've seen with the Abraham Accords and what I was hoping would occur would really be a reversion to the pre World War Two era where people were starting to live peacefully together. But there's been a lot of hate that's been fermented and manipulated over over this time. But the best way to start it is just, you know, take it one day at a time, you know, we used to say in government, we get a hard problem. You know, used to say, you know, how do you eat an elephant, you know, one bite at a time. And so just have to kind of outline where you want to get to put in place the right system, and then just start, you know, step after step after step, and then you get to a place and maybe you're able to do something that becomes viable with time.
SPEAKER_02: Jared, did you see the debates last night? Did you watch him? No, I did not. So did you watch him?
SPEAKER_04: I didn't watch the whole thing. I've seen clips on social media. Do you have any takeaways? I mean, was it even worth watching?
SPEAKER_03: Yeah, I thought I thought the clips did a pretty good job of actually showing some of the punchier moments. But the crazy thing is that the the mainstream media has completely erased Vivek's candidacy. I don't even think it exists in the eyes of the mainstream media. But if you look on on x, all the posts were like he clearly won. And he was basically throwing fireballs everywhere. But then if you go to, you know, CNN or Fox, you don't even hear his name. Right. So it's it's a real, real difference.
SPEAKER_04: The mainstream media coverage is what they want you to believe. And social media is what actually happened. It's what people actually believe. And I think that if you look at social media, what it shows is that Vivek dominated the debate, and he was throwing fireballs. And he was slamming the neocons on the stage and showing that there's been, I think, an irreparable break between the neocon establishment wing of the Republican Party and the more populist maga wing. So I think that's, that's kind of what social media is showing. And then, you know, if you listen to mainstream media, they they they simply talk about Vivek it said he had some sort of meltdown and he insulted Nikki Haley's daughter or whatever, something like that.
SPEAKER_03: But her TikTok usage. By the way, all he said is that they he was being berated for why he created a TikTok
SPEAKER_04: account. And he's like, I want to reach young people, you know, like your daughter who's on there. And, yeah, that's what he said. And Nikki Haley called him skunk. Scum for that. Well, no, but she also she also pulled like the Will Smith line, like,
SPEAKER_03: get your my daughter's name out your mouth. Did she slap him? No, she didn't. It's a pretty
SPEAKER_04: good point. There's like 75 million young Americans on TikTok. If you want to reach them, that's where you post your messages. I have seen the vakes stuff on there. I've seen RFK juniors videos on there. Like everyone uses TikTok now if you want to reach people. This is reality. Nikki Haley doesn't. I'm not sure I don't know that she has much of
SPEAKER_04: a social media following because I don't think her campaign inspires any real grassroots. I think her campaign is supported and propped up by the GOP establishment wing. I don't think there's any market for what she's selling among the grassroots. So social media is kind of pointless for her. But if you actually want to reach people, especially young people, you social media, most pretty intense when the VX said that the the head of the RNC
SPEAKER_03: should just be fired for all the losing and kind of went through every single election in the midterms and whatnot that they've lost since she became the head of the RNC. And apparently on social media, she mouthed something to the effect of this guy's an a hole. He's not gonna get a single cent for months.
SPEAKER_03: Yeah, that's Ronna McDaniel. Who I know. I mean, I like Ronna, but I mean, she done a
SPEAKER_03: good job. Sax. Look, it's hard for me to speak to the job she's actually done because I don't
SPEAKER_04: know the activities are actually involved in being RNC chair. So but I mean, the VX point is look at the results. So we were on the board of a company that kept missing quarter after quarter. And the CEO said, No, look at all the good things I'm doing, we would probably still fire that CEO, just because you're like, how do things get worse, right? You just take the chance that you bring in a new CEO, they're gonna do better. So the reality is our results in the Republican Party have been shitty lately. Now, is that all Ronna's fault? No, it may not be much for our fault at all. But how do you do worse? I think a big reason for the crappy results have been the abortion issue. We've now had this issue on the ballot in at least six states, most of which were red states, a couple of them are purple states. It's lost every time the anti abortion or pro life side has lost decisively every time. And I think there's a lot of reasons to vote Republican, I think Republicans have the advantage on the economy, on border, on anything related to woke on prime and homelessness. These are all issues that should be big winners for Republicans. But the public by I think probably a two thirds majority does not want to ban abortion. And as long as that issue is in the forefront, Republicans are going to lose. And actually was Ann Coulter who just said this, Ann Coulter had a really good blog post about this saying that the pro life. Yeah, I retweeted it. By the way, she's very pro life. I mean, she's a social conservative, but she says that pro lifers gonna wipe out the Republican Party, they need to focus on non political activities, which is winning over hearts and minds, they have to make the case to the country that to persuade more people, because they're not in a position they are not popular enough to actually win elections. You concur, Jared,
SPEAKER_02: you think the Republican Party is going to change their position or need to change their position to win elections? presidential election aside? Well, ultimately, if you don't win,
SPEAKER_01: then you can't govern and you can impact the changes you want to do. So I do think that people are definitely paying attention, you know, the results are the results. I will say that, you know, one thing with with Trump, he won, you know, with his operation, we're able to overperform our polling, I think, here, in these last times, there's been underperformance of polling. And so that's something that obviously you have to look at, which is very troubling. But I'll also say that with what I found, again, you know, I'm not really, as somebody who was newer to the Republican Party, what I found is that, you know, both parties are really, I would say, collections of tribes, right, you have different tribes that kind of make up the party. But what I found in the Republican Party was that there was a ton of infighting and finger pointing and purity tests. And, you know, instead of saying, like, you know, you know, I'm happy you agree with me on 70%, or 80%, it was basically saying, well, if you don't agree with me on 100%, then then then you're a bad Republican. And I think that that's a that's a culture that's going to lead to you having very strong opinions, but having no ability to effectuate things. I think that people have to, you know, say, where do we agree on different issues? That? Where do we agree on issues? How do we work together to do it, but if you don't win, then you're not going to be able to effectuate the things you want. And even worse, the other side is going to be effectuating the things they want. And you look at where the world is today. Because of that,
SPEAKER_04: there's a lot of internet seen fighting in the Republican Party. I think Trump's instincts on abortion actually have been very good. I said this a couple of months ago, there was kind of a brew ha ha on the right, when Trump gave an interview in which he said that that actually went to Santa's have done in Florida with the six week ban was a mistake. And that he sort of upleveled the issue and decided I'm going to find a compromise that makes everybody happy. And this created a lot of upset people on the right because they thought that Trump was kind of selling them out on the abortion issue. And I made this case on Megyn Kelly a couple months ago that I thought that what Trump was doing was pretty smart because he doesn't want to get pinned down on an issue that's going to hurt him in the general. And I think part of the reason why he was being a little bit cagey on that issue is because he knows it would hurt him in the general. And he's starting to think about that. And I think the results that we just had the other day are strong vindication of that. And just to say just more generally that whenever Trump has opposed Republican groups think on an issue, I think he's invariably been proven correct. If you go all the way back to 2016, you know, think about all the heresies that he committed in the Republican Party. He spoke out against the forever wars against Bush's forever wars. I think he was right about that. At the time, the Republican Party either wasn't talking about immigration or didn't really seem to care. He basically made the border a huge issue. I think it's proven right about that. The issue of China and China trade was not an issue in the Republican Party. If anything, it was sort of this the sort of unreconstructed free trade, total free trade issue. Brian was pushing the TPP value. Right, exactly. So Trump defied the
SPEAKER_04: orthodoxy on that I think is proven correct. Paul Ryan also wanted to ratchet back entitlements, like Social Security, Medicare, and Trump thought that was suicidal for the GOP. So he opposed that. I think on all these issues, whenever he has defied the orthodoxy, he's been proven correct. And, you know, I don't know if it's a conscious thing, or it's just that he's got tremendous gut instincts as a politician. Be curious to get Jared's take on that, like how much of this is sort of him working things out and how much of it is just his gut. But I think this is why he's still the candidate to beat for the Republican nomination is at the end of the day, for all of Trump's issues. He's actually the best politician in the Republican Party. And I would see the way that he would work on trade.
SPEAKER_01: And again, you know, trade deals usually take five, six years. And you know, his attitude on trade was that whenever there's a multilateral, it's the the weaker countries all ganging up on the stronger party. And so he says, like, I want to do them bilaterally. So he withdrew from TPP, which everyone went crazy and said it was a disaster. Well, we ended up negotiating with Japan and Korea and everyone and we got basically 95% of the market access that was in TPP without giving up any of the things that would have absolutely decimated our auto industry. We renegotiate the NAFTA, which you know, everyone said Obama said they would push that he wanted to fix it. Meanwhile, Trump came in in a year and a half, we renegotiated NAFTA and it got over 80 votes in the Senate. It was a bipartisan win. And it set the highest standards for labor protection. It did a lot of great things that I think make America way more competitive. And hopefully will reduce our trade deficit. So these were all things that he took on that people weren't willing to add again, he said, Look, if I'm wrong, you know, putting tariffs on these different countries. I remember people coming into him saying, say, if you put these tariffs on the whole world's gonna explode, the US economy's gonna blow up. And I remember sitting with him privately. And he said to me, you know, we had a year debate, and we had some people who were more religious about this issue than anything else. And he says, You know, Jared, I've been saying this for 30 years, I believe it, I campaigned on it, I won on it, I have to see it, like, I have to see it through it, you know, it turns out, it's a big disaster, I can always take them off, you know, and so that was kind of like his way of thinking about it, where he had his instinct, he followed his instinct, but he knew he could always back off. And I think his flexibility and unpredictability were some of his greatest assets. And I think also on the border and immigration, again, it's an issue with somebody, you know, grew up, you know, in New Jersey, and then was living on the Upper East Side that I didn't have a lot of resonance for, but now you're seeing my friends in New York, now they're getting a taste of what it can do, you know, to the country, they're they're becoming, you know, big immigration hawks like Trump.
SPEAKER_03: The thing that the Republicans need to realize right now is that if you pick these topics that go down a rabbit hole, you're going to be in a really tough spot in the general because the economy is also going to be in reasonable shape. Now, if we were going to go into an November election where there we were going to be in a recession, that's very bad for Biden. But sort of the tea leaves, for whatever it's worth all the predictions, all the predictive markets show that we're going to be in a reasonable place. And so the Republicans get need to get very, very focused acts, as you say, on the real issues list here, right, because they're not going to have the benefit of the tailwind of a bad economy to say, President Biden has done a bad job necessarily. And so the message will need to be even more precise and focused. And so I think that that's going to be an important thing. I did a little tea leaf reading on macro if you guys want it, I have some charts. Yeah, just let me just give you a little rundown of because I went and I you know, look, we used to talk about these things when I was when we were doing a lot of forecasting going into this cycle.
SPEAKER_03: But so here's like a couple of really interesting observations. So the first one is, when you look at this M2 money supply, look how much it's actually shrunk. Now, why that's interesting to me is that you have these two forces that are opposing each other. One is we have these huge deficits. So we're technically still, frankly, issuing a lot of money, right. But then on the other side, where we have QT, so when debt rolls off, we're not re issuing it. And the balance of that is still a really constructive thing where now you can see that you know, M2 has materially started to shrink. And I think that that's a really positive thing because now what that does is it combats inflation in a good way. Unfortunately, for all of us, it hurts financial assets, which is not so good. I think we've all felt that pain but the reality is that that's been working. So then Nick, if you go to the second chart, so what you see now is like, we are in a really decent place with inflation. And if you think about what's going to happen over the next six months, it's mostly in the bag. And meaning, we talked about this before, but there's a lag effect on a handful of components, specifically rents, which when you roll them into this inflation rate, you're going to see it really, really turn over very quickly. Right. So we know that inflation is falling, it's going to fall even more. The second thing, Nick, the third chart here is you can see that now validated in these 10 year break evens. Remember, this was the chart we used to look at when we were like, holy mackerel, something's gonna break in November of 21. I think we probably should have just sold everything we had in November 21. We didn't do it. But the point is, now we know. And what you see here is the 10 year break evens are also telling us, okay, guys, we're going to be in a pretty decent place. And so I think the setup is basically the following. There's less money in the system. That's a positive. Nick, if you show the last chart, there's more money on the sidelines. And this is just a picture of I mean, look at the amount of money in money market funds, 6 trillion and growing. So that's a really positive sign, which is that money will need to find a home. Once we have... Once we... No, even just now, because you're gonna be in a situation where, and I'll get to this in a second, but companies are now starting to perform because they've been able to re-baseline against very, very lowered expectations. Right. And money managers have to do their job and deploy capital.
SPEAKER_03: And that's something we mentioned, I think last week, but this is now the beginning of the new fiscal year for the entire mutual fund complex. So that's trillions of dollars that have to get deployed because even though you pay them a very small fee per year, you're not paying them to hold cash. You're paying them to make decisions and own assets. And then as you said, Freebird, the last part of this is now you introduce rate cuts and that's a real accelerant. Now, more than likely, I think what that means is that markets are set up to do pretty well, equity markets specifically. And so I went and I said, well, how can we see some data that proves that this is happening? And what's amazing is if you look at the performance of what I would call the most risk adjusted seeking companies, so those are tech businesses that have been absolutely hammered. What you see in the last month is they have gone just nuclear. Adyen up 30% in a matter of a week. DoorDash is up, you know, 25, 30% in a matter of a week. DataDog up 30% in a matter of a week. These are the businesses that were just completely decimated. So what is all of this saying? I think what it's kind of saying is inflation is very much in the rear view mirror. Rates are going to get cut by the middle part of the year. The economy looks like it's going to be a soft landing. That is actually very beneficial for the sitting president. It's also good for equities. It's good for us. So it's really interesting, actually, I think we've had a fundamental kind of now change. Jared, do you think this will have an effect on the election cycle?
SPEAKER_02: I think it definitely could. But I do think a lot of people are still very concerned. I know the
SPEAKER_01: inflation, the wages, wage inflation is still about 4%. I think that people are still just nervous about what could come. I think there's been a lot of shocks and there's been a couple of times where it's felt that way. And I think that election years traditionally bring a lot more volatility to the market because there's unpredictability about what the policy will be going forward. So I think that of people who have kind of been a little whiplash from the transition of over the last year to 18 months, see that they're going into another cycle of uncertainty. I do think that now you're actually getting paid to not do anything with your money in those money market accounts. So there's less of a, maybe less of a FOMO to kind of go out and do something there. So I think that a lot of people are still going to be very much in kind of wait and see mode and obviously look for special opportunities, which I think will only further exacerbate a potential decline as well. Jared, last week we talked about real estate,
SPEAKER_03: you used to be in the real estate business. Do you have any thoughts on commercial real estate and how good, bad average things are? So I still have a lot of exposure to commercial real estate
SPEAKER_01: through my family's company. And we're mostly in the multifamily space. I think the office space right now is in for a massive change in the industry. I think you're going to see a lot of the older buildings get transitioned. A lot of them are trading now for below land price, which is pretty remarkable. I think you have, you also have a transition and kind of what are the cities of growth, right? So you look at a place like San Francisco and there's a big debate over whether you know, AI is going to save, you know, the office market there, or whether it's kind of like the Detroit of this industrial revolution and it's just never going to come back. And then you're seeing a lot of these San Francisco companies move to New York and the New York people are saying, Oh, there's too much crime and homelessness. And they're saying, compared to San Francisco, this looks like a, you know, a super clean, it's a beautiful place. And so, you know,
SPEAKER_01: New York is still doing, I think, okay, but you're seeing a lot of places throughout the country that are, but the fundamental with real estate is it's correlated to interest rates. And so, you know, if interest rates, you know, right now, I think the 10 years of like four and a half, if it goes up to six, and you're just going to see a repricing and real estate assets, if it settles at, at four and a half, five, then you'll, you'll probably see more stability and what that will be. But ultimately real estate has become much more institutionalized over the last, call it two decades. And it's really a function of, you know, what are your, your rent and expense growths, and then what kind of, what can you borrow at? And can you create, you know, a positive yield that's hopefully a good hedge against inflation. So I think net net, it will be a great asset class. I mean, it's probably one of the biggest asset classes in the world. I think right now, though, a lot of people are just holding back because they're not certain what the, what the what the multiples or cap rates as they call them in real estate are going to be on a forward basis, but they're really going to be a function of, of what's the growth in the economy going to be. And then also what the forward interest rates will be.
SPEAKER_03: That's fair. I think that everything's challenged in real estate. I mean,
SPEAKER_04: the demand size challenge, because you've had the whole work from home COVID disruption, and a lot of cities haven't fully come back. I think New York's come back at this point, but like San Francisco definitely hasn't. I think New York is something like 95% of workers are back in the office, I think in San Francisco, it's only like 45%. So you've got demand issues, then you've got financing issues, you know, refinancing is much more expensive, because interest rates are higher. And then you've got these cap rate issues where no one knows what the long term valuations are going to be. So everything's a mess.
SPEAKER_01: And by the way, that gets compounded by the fact that now banks that have office exposure are pulling back their lending. So you have a combination of, you know, cost of borrowing being higher, and then the availability of liquidity going lower. And that could further compound a lot of these refinances. But a lot of what the people I know in the industry are telling me is that they're able just to work with existing lenders and just do some kind of extension and, you know, just kind of live to fight for another day to get through the cycle. And I will say in New York that the rental rates for residential, I think, are at historic highs. And actually, what my family's seen in their portfolio is that their properties in Jersey City, which is basically like the sixth borough of New York, are just absolutely on fire, because it's basically, you know, you go in New York, now you go to a CBS, everything's locked up, you can't buy anything, it doesn't feel necessarily like the safest city, you go to Jersey City, they actually have like, you know, law and order and rule of law. And so, so you still take a train to New York. And that's actually been a place that's done incredibly well. So you always have micro markets, and you have different trends that work and don't work. But, but I wouldn't bet against New York, it's still an amazing city. And one thing about New York is, every time I'm there, I always talk with some of the cops. And I basically asked him, I say, if you had a mayor that said, go be cops, go be cops, nobody's gonna, you know, hold you back, you know, get out of the car, do what you do, we got you back, how long would it take you to clean this place up? And the answer I get is usually anywhere from like three months to six months, like we could have this place fixed. So clearly, these have to let us be cops again. And, and so I am hopeful that, you know, eventually, there'll be the political will to just, you know, let New York be what it has the potential to be. It's such an amazing dynamic place.
SPEAKER_04: It's such a good point. I mean, it really is, is just a matter of political will. Yeah. If you hire more cops and let them do their job, that will stop the crime, or certainly the incentive for crime. Right now, people think they can get away with this stuff. And they don't get prosecuted when they get caught. The jails are like a revolving door. Yeah, they have plenty of cops, they have to let them do their jobs. And then the prosecutors who
SPEAKER_01: will who will do their jobs as well. I worked at Manhattan District Attorney's Office when I was at NYU law for the summer. I mean, you have amazing people there. And if they are allowed to kind of follow the procedures and just just do the job in the way it's been done before, you can make that city very, very safe very quickly.
SPEAKER_04: We actually have a cop shortage in San Francisco as well. It's not just a matter of not letting them do their job, we actually have a massive shortage. The city needs to hire a lot more, they allowed a pretty high rate of attrition in the role. I don't think there's a lot of people who want to be cops in San Francisco, it's a pretty tough job, and they'll get a lot of support. So yeah, we actually have a shortage here. And that's a big problem. But it's very solvable, as you say, I mean, just hire more, train them, let them do their jobs. Jared, how much do you think federal deficits and the federal debt matters going into this
SPEAKER_02: election cycle? Is it going to be a top topic? Or is it not really going to matter? And then more importantly, how consequential is it? In reality?
SPEAKER_01: I think in reality, it's it's massively consequential. I think in the election cycle, I think both parties are going to probably try to avoid talking about it. Because I think that, you know, everyone knows, you know, I find in politics is when some things are really big issue, people try not to talk about it that much. And the top is gonna have to get cut, right? The hope is, is that, you know, once you get through the election, things can be done to have to deal with it. But it's definitely an issue that needs to be dealt with. Uh huh. What do you think that is raising rate raising revenue or cutting expenses or both?
SPEAKER_00: Growth, growth is the answer. That's the political cop out answers growth, 6% economic GDP growth.
SPEAKER_02: How about we free spending until till the denominator can grow big enough to reduce the
SPEAKER_02: I mean, balanced budget amendment, etc. But But speaking of GDP growth, I mean, do you guys want to cover tech stories and AI this week real quick before we were I mean, it's really, can I get can I just, I got I can't resist getting Jared on the record about the
SPEAKER_04: Russia Ukraine war. So I mean, this is a war that I thought was very easily avoidable. You have a one minute budget, one minute budget. That's all I need. I'm starting the shot clock.
SPEAKER_03: Chamath is gonna ring the gavel. I'm gonna take a break. Oh, you got 60 seconds.
SPEAKER_03: Well, I think I think David's happy to have somebody who agrees with him on most of what
SPEAKER_01: he's been saying. So, yeah, we worked with with Ukraine, and we worked well with Russia during our four years, I like to point out to people that when we were in kind of our worst moments in COVID, the second country that sent us a plane load of supplies and ventilators when New York looked like it was, you know, on the verge of going under was Russia. And that was because we were offering them the possibility of working together. We armed Ukraine, but we also told Ukraine, you know, don't even think about raising NATO as a membership as a way to go. I think what happened was, as the Biden administration, you know, had conversations with Ukraine about joining NATO, Russia basically pushed their their military to the front line to say, we are never going to let this happen. If you go through kind of the geography and the history, you understand why Russia, you know, will never let that occur. And I think it was right after, you know, the embarrassment of what happened with our withdrawal in Afghanistan, where they thought that we had a weak America that was going to come and do much to it. So I think it was all very, very avoidable. I think that, you know, from what I read, and again, I wasn't involved in these conversations, it did feel like there were some off ramps, initially. But I do think that from our perspective, I think the number one interest has always been how do we avoid a nuclear war? I don't think that that's, that's something we want to see happen. And I do think that I do think that hopefully, they'll be able to find some kind of resolution to, to not have that be a problem. And I will say to that that's impacting the Middle East. I mean, right now what's happening with, with Israel and with the Palestinians and Iran is basically a proxy war for Russia. I mean, if America decided tomorrow, let's change and support the Palestinians, then Russia would come and be for Israel. I mean, there's not a lot of ideology for them in that. But I think Russia and China want to see the US stretched and distracted so that we're less focused on kind of the areas where we're more directly in, in conflict with them. And so I think that that's a very major thing. And I will say to like, I think that, you know, I don't believe that the countries have permanent allies or permanent enemies, you know, during my time in government, we deal with the Germans and the Japanese who were vicious in World War Two, and we'd be against the Chinese and we'd be against the Russians who were basically our allies in World War Two. And so I don't think countries really have friends, I think countries have have interests. And I think that with with most countries, you have areas of overlapping interest. And I think that you can find those even with countries where you're in opposition for. So, you know, one of the the operating principles I brought to all the different foreign policy problem sets I was given was don't condemn tomorrow to be like yesterday, because you think it has to be. And so I would always look at something I try to pull whatever optimism I could find and then say, you know, what's the best case scenario from a first principles perspective, I'd start there, and then I'd work through all the problems that you had to try to get there. So, so, so, David, I think you've been way more right on Ukraine than than others. And I do think there's been a tremendous amount that's been mismanaged by by the US and by the world in that in that scenario. And I think it's unfortunate, too, because I think a lot of people have been killed in that war. And I do think that, obviously, the invasion of Ukraine was was was a terrible thing, it should never have happened. But I do think there's a lot of acts by leaders that could have been done in order to either prevent it or minimize it. And I still think that that's the job of leaders in the world is to try to do the hard things and try to do the things to make the world a less volatile and dangerous place. You think it's coming to an end?
SPEAKER_02: It's definitely lost its prominence, it does seem militarily. Again, I'm sitting here in Miami,
SPEAKER_01: you know, reading, you know, you know, x and newspapers and talking to folks. So I'm not going to apply like I'm a general on the front lines. But but it does seem like it's kind of reached a point where it's not much is going to change militarily. And, and, and, you know, again, like every day that goes on, there's just more life that's being lost. And again, I said the same thing with Israel that I'd say here, I mean, Russia, Ukraine, both have, you know, unbelievably brilliant people, if you take all these young men, and you take them off the battle lines and put it back into their jobs of creating things, I just think that net net, that's just a much better thing for the world. So my hope is that, you know, the leaders involved try to find a way to get to a resolution. Again, I think that, you know, both sides have maybe over promised their people what victory looks like. But that's the job of negotiation, right? You need to, you know, you need to find an off ramp for everyone and get them to a place where we can, you know, start focusing on how to make tomorrow better instead of litigating grievances from the past.
SPEAKER_03: Do you guys see that Sunny, Sunny tweeted this thing he had dinner last night with Farhan Thawar, who is the VP of engineering at Shopify, she see his tweet? Now, can you find it? He said that Shopify has written more than a million lines of code with copilot already. Oh, wow. I was like, what? Yeah. I mean, I don't exactly know how much there's your GDP growth, Jared. Well,
SPEAKER_03: that's definitely growth. I wonder whether it'll be it'll be GD. I mean, I think it will. I think
SPEAKER_02: a lot of product and productivity gains are going to drive the economy forward. Historically, I was just talking with someone this past week about over the last couple of decades, we've seen a massive shift on GDP growth being driven largely by labor, the labor force growing and labor participation. And increasingly in the last couple of years, there's been this tremendous shift that all GDP growth is predominantly driven by productivity gains and productivity gains, you know, economically net their way through the system. And you see the total GDP growth. This is the whole argument for AI, particularly at a moment like this, that if you're having a declining population, you're having declining labor participation, people want to work fewer hours. If you want to keep growing the economy in order to sustain the debt and the services that you provide through government infrastructure, you have to grow the economy and you have to increase productivity. It's the only way forward. So I mean, like you could have one, it's not like you're going to fire engineers, you're just going to have one engineer do five times as much. If you just solve the whole budget deficit and debt issue, you found
SPEAKER_01: the answer. It's productivity driven by the AI advancements, which, by the way, there is a lot
SPEAKER_01: of tremendous productivity gains that will occur because of this. I always give people the example
SPEAKER_02: of the tractor. Like when the tractor came around, it's not like, you know, people were like, hey, we're going to make less food now. Or, you know, what happened was we were able to farm 10 times as much and, you know, total output increased. And when total output increased, there was an abundance of surplus of food, of calories that fed people, population grew, the overall economy grew. There's no point in history that we've had a productivity gain through technology that didn't ultimately grow the economy. Like it's never ever gone the other way. In 1900, I think about 50% of workers
SPEAKER_04: in America were somehow involved in agriculture. By 2000, it was down to like 2%. It's not like we had a 40% unemployment rate. All these other figures figure it out a way to do new and productive things. And that led to more wealth. That being said, it did cause a lot of social disruption. And I think certain job classes went away, it had to get replaced by others
SPEAKER_03: that had to be invented. If you think about a world where there's a million little companies or 50 million companies or 500 million companies that exist because there are one and two person teams that can build stuff, that seems pretty reasonable and logical as the outcome. There's a lot of sort of like financial engineering that kind of goes away in that world, right? I think the job of the venture capitalist changes really profoundly. I think there's a reasonable case to make that it doesn't exist. It's more of an automated system of capital against objectives, right? And that you want to be making many, many, many small 100,000, $500,000 bets. And then you get to this much larger scale where then once you get someplace, you can go and get the 100 and $200 million checks. I don't know how else all of this gets supported financially. Well, so there were a couple of big news stories this week. One was Elon
SPEAKER_02: launched Grok, which is a chat GPT, call it competitor. It took them about under his XAI business unit, took them about eight months to train Grok one, which is the model. And by many measures is as performative as GPT three and a half GPT four at the same.
SPEAKER_03: No, no, no. Grok zero. It took three months to train Grok zero. He's still training Grok one. Sorry. Three months to train Grok zero. Kai-Fu Lee. You guys know Kai-Fu.
SPEAKER_02: He was at Google. He was at Microsoft. Yeah. And he is in China and built
SPEAKER_02: his business starting eight months ago. And in those eight months, he's now delivered a 34 billion parameter model that he's completely open source that he shows by, again, some performative metrics outperforms Lama two. And again, doing it from China speaks, I think really clearly and importantly, to the point we talked about last week about if the U S tries to overregulate AI model development, there are alternatives out there, particularly open source alternatives that will continue to proliferate and improve. And again, this was done in eight months. And then it's almost like the timing was perfect because in the same week, open AI responds with developer day. They didn't necessarily respond, but they had developer day on the books for a long time. And at developer day, open AI released a number of really powerful tools for developers that allow them to build really powerful applications and infrastructure on top of open AI platform. So they released APIs for Dolly three, four cents to generate an image using the Dolly three API. They launched a tool to create your own GPT, which can actually leverage proprietary data. So from within your own database, you're in your own data lake, you can build a GPT that you can then integrate into applications and GPT for turbo with two versions that have, you know, pretty powerful pricing improvements. All of this being said, it's a it's a big leap forward in what feels like a low cost, low friction multimodal developer friendly set of tools from open AI, that allows them to move away from having the quote best model to now having what feels like much more of a platform business that as more applications, and more developers start to utilize open AI toolkit, and services, a real ecosystem starts to develop. And that creates a sustainable business mode, rather than just the technical mode that open AI started with. So I think the big point is that we're seeing the technical gap narrow between the best and the average are the worst and the median in model development. We're also now seeing that the evolution for a lot of these businesses is through open AI, trying to build, you know, applications on top of a platform and build a business mode. And so there's a real shift underway. But net net, I think what the market's forcing everyone to do is really compete and build these incredible capabilities that are really going to launch a number of new business models, new innovations. The question is, are we building
SPEAKER_03: apps for the iOS App Store? Are we building web pages for the open internet? And I think open AI's hope is that it's apps for the App Store, because it's proprietary, and they own it, they could take a share. I think the reality is, it's going to end up as the open web. And again, I think it's mostly because everybody else just can't afford to let one company run away with it. And so, you know, whether it's Llama or Mistral, or even Grok when Elon open sources it, it's going to allow people to have access to these tools, basically for free. The problem that I think it creates is, you know, we had a, you know, when I first came to the United States, my, the company that I worked at, AOL, they were the ones that believed in a fundamentally closed internet, right? And you had this service and you went into the walled garden of AOL. And then the pendulum swung over the last 20 years, and we opened it up at Facebook and at other places. And now we have this fundamentally open architecture. The problem now is these models will not get better, unless you have fine tuning that happens by yourself, or these reinforcement learning loops that come from data that you control. And you can see it with Grok Zero. Part of what makes Grok really successful is that Elon and only Elon can give access to the X fire hose to Grok. Now that's a ginormous repository of proprietary data that they're going to be able to train on. So then the question is, well, obviously then Facebook will want to train their models on Instagram and their models on WhatsApp. Google will want to train Gemini on Gmail. None of those companies will want to make that available to any other model. So the unfortunate byproduct of foundational models that are more pervasive is going to be that the internet gets a little bit more closed in the short term. And we're going to have to really figure out what the implications of that are. So I think what that means economically is there's just going to be a lot more small companies and a lot fewer of these ginormous outcomes. And that's on balance probably better for innovation and the economy probably. Yeah, data is the advantage, not the model itself.
SPEAKER_03: You have to own some data asset that is unique so that you can train these models. And then you have to close it off so nobody else can have access to it. And that has to be an explicit business decision, because it would be foolish for you to not do that.
SPEAKER_02: Saks, did you take anything away from this week's announcements with Kai-Fu, Elon and OpenAI's Developer Day? Grok is interesting as an AI because it has a sense of humor. I mean, that's what's kind
SPEAKER_04: of interesting about the user experience is it tries to be funny and has a sense of irony. It's also willing to be more politically incorrect. And I think one of the concerns about ChatGPT early on was that it was programmed to be woke. And that it wasn't giving people, you know, truthful answers about a lot of things that the censorship was being built in to the to the answers. And there was a lot of examples very early on where it seemed like there was some sort of trust and safety layer that had been built on top of the AI and sometimes it would intervene and not give you the true answer that came from the AI. It would give you kind of some made up boilerplate. And so having something like Rock Around will at a minimum keep OpenAI honest and keep, you know, keep ChatGPT honest because if it's willing to give you truthful answers about things that you compare to the ChatGPT answer, then we're going to know when these like so-called trust and safety interventions are happening. So I think that's kind of interesting. Separately, the OpenAI Developer Day shows that that company, if you want to call it that, I don't know if it's a company or foundation or what, but it's a complicated legal entity. I mean, those are details. Those are details. I mean, they are really trucking along at full
SPEAKER_04: speed. I mean, it is pretty impressive what they're shipping. Yeah. And even if the underlying language models get somewhat commoditized, it does seem like they're building a very robust developer ecosystem. So you could analogize it to something like Stripe where credit card payments are pretty much a commodity, but everyone uses a Stripe because their dev tools are so good. And then they're able to get to a bunch of scale network effects because, again, their developer platform is so good. So I do think that that's the advantage of OpenAI, may not be the model itself, although I think their model is actually pretty good at that. Is it that much better than Llama 2? Probably not, but the developer platform is getting really good. By the way, that's a really interesting analogy because if you play that out and you say,
SPEAKER_03: is AI like payments, well, what does the payments landscape look like in terms of companies that have real enterprise value? There are, I guess, three or four big ones. And then there's a bunch of long tail ones in specific geographies because there are these random rules in a country and you build something to be very specific to it and you have value in that market or in that use case. And maybe there's an analogy there in how this market develops in that sense. There's four or five big foundational models and then there's a bunch of small vertical use applications that you use depending on what the task is. Well, the time and the cost to build new
SPEAKER_02: foundational models seems to be shrinking at a pretty fast clip. So... And by the way, all of this happened on H100s. Yeah.
SPEAKER_03: And a bunch of these happened on A100. So we're still one generation of silicon behind. So to your point, this thing is going to be like, people will be training models in weeks. Yeah. So let's go ahead and track all the world's models and have a federal regulatory body.
SPEAKER_02: Oh, for seeing all of this. Well, I have a guy from the UK on H1B,
SPEAKER_03: so I'm still filling out the TPS report because he, I told him, don't touch the model. And he did. Yeah. Yeah, definitely following high level from my perspective. I think it's great,
SPEAKER_01: especially with what you mentioned about Kai-Fu Lee. It just confirms what we've thought, which is that America is definitely leading in this. And I think that it's just important to note that they're leading be really because of the private sector and the fact that the private sector has been allowed to do what they do. And as we start to think about the regulatory frameworks, I mean, you could think of a open AI as a company or a foundation, or even as a nation state with the amount of power that these things will have the ability to harness once they're fully scaled. And I just think it's going to be very interesting to see. I think the more competition you have here, I think the better. It will be very, very good. But I do think you want the most powerful models, the most powerful platforms to be in the hands of people who are going to try to apply it for all the right things for society. So I think that there's a lot of positive applications, there's a lot of negative applications that can come from this. And my hope is that the regulatory frameworks that are developed won't stifle innovation at the expense of allowing others to get ahead of us who will probably use them in in ways that we would not want to see them used. Right. Can I find a couple of features that open AI announced that
SPEAKER_04: I think are interesting? Yeah. Yeah. As long as you don't repeat what I said, because you weren't
SPEAKER_02: paying attention. But yeah, no, go for it. Well, did you mention the if I got this wrong, we'll delete it. But did you mention the 128 k context window? No, I did not. I did not know.
SPEAKER_02: It's kind of a big deal. What that means is you can have a prompt that has 300 pages of text in
SPEAKER_04: it. Yes, I'll tell you, like several months ago, I was trying to figure out like, is there a way where I could just put all of my blog posts in a prompt for chat GPT and have it turned into a book, for example. And I was kind of like a problem I just started working on. It was actually very complicated to try and solve that. Also, like also vector DBs were totally useless.
SPEAKER_03: intermediate, like that abstraction didn't need to exist. That's all gone now, too. They're doing those guys are firing on all cylinders. It's really, it's really impressive to see.
SPEAKER_04: Yeah, the other thing is multimodal. I mean, so they're really stressing the idea of combining texts with photos, I guess videos will eventually come later. Text to speech, but again, having multiple kinds of inputs, and outputs for the AI, I think it's kind of where impropriety where you can plug in your own proprietary data sources. I mean, it's just
SPEAKER_02: a game changer for a lot of enterprise customers. I think those developers are going to go nuts. I heard a lot of positive feedback from developer folks I know who attended and sounds like that it was very positively received. Okay, well, this has been great. Jared, thank you so much for joining us today. It was really great to spend time together. This is the point in the show where you tell David Sachs that you love him. And he says right back at you guys, I want to say
SPEAKER_03: stick in 153 episodes. But finally, there's a person that I can say I'm now the second best looking guy on this pod. So Jared, thank you for coming. You guys are the best. I'm going to come
SPEAKER_00: back more often than I get treated better here than I do in my home. So it's good. So
SPEAKER_01: thank you guys for having me on and really thank you for all the different, you know, important conversations you have. And again, I've met a lot of people who listen to you guys over the time. And they all find that you guys give them a lot of good input into a lot of the issues that are impacting our daily lives. So thank you for the opportunity to be with you. Thanks, man. Thanks for being here. Thanks for being here. Thank you very much.
SPEAKER_04: going we should all just get a room and just have one big huge door because they're all just useless it's like this like sexual tension but they just need to release these are
