SPEAKER_09: All right, everybody, welcome to the 54th annual World Economic Forum here in Davos. You guys didn't know this, but as elites ourselves, we were invited to kick off the festivities. Surplus Elites. Yeah, you know, the All In Podcast, very popular. And so they wanted us to come and represent the pod and our audience there. And it's been amazing if you haven't seen some of the great musical performances this year. I mean, they're so notable. Let's just start off here. I mean,
SPEAKER_09: guys, we were here for this live.
Soak it in. I mean, there's the air flute.
SPEAKER_09: Wait, wait, there's a moment when she really starts vibing. Wait for the head shake.
SPEAKER_09:
Eyebrows are great, but the head shake comes in and about there. There it is.
There it is. I like your Moomoo. I like her Moomoo.
SPEAKER_04: Have you ever played the air flute or just the skin flute?
SPEAKER_09: But guys, guys, this isn't it. There were other there was a witch doctor or something. I'm not sure exactly what's going on here. I'm going to just apologize in advance for mocking this. Look, I'm a hooey. Or for sax.
SPEAKER_05:
SPEAKER_09: This was incredible. I don't know exactly what's going on here with the blowing of the hair,
SPEAKER_04: but it's come a long way from that's for sure. So they're blowing the covid on each person's
SPEAKER_09:
forehead here to spread the covid. They've all taken the M.R.N.A. vaccine. But, you know,
SPEAKER_04:
SPEAKER_09: we each have a speaking gig. Each of us is speaking. And so I thought to kick this off here, gentlemen, instead of us just telling everybody our schedule, I would sing our schedule.
And so let me just grab let me see if I got my guitar here. Hold on.
Let me grab it here. Oh, here it is. OK, hold on. It's happened to have the guitar,
the guitar or real guitar. Oh, no, it's actually a real guitar here. So but I thought,
SPEAKER_09: you know, everybody is really excited about each of our speaking gigs. So I thought we would just kick it off here. Let me just see if it's in tune. You guys hear that? Oh, OK.
SPEAKER_08:
All right. Was that I think we got it. Kumbaya, my lord.
Kumbaya.
SPEAKER_08: Sax is interviewing Putin, my lord. Kumbaya. In the dictator lounge at noon.
SPEAKER_08: Conquering Europe. Kumbaya. And now I'm going to is a little audience participation in here,
besties. I need you each to sing with me. OK, it's we're going to start here. It's going to be
just listen one time and then you're going to repeat. OK, here we go. Oh, Davos Kumbaya.
So just oh Davos Kumbaya. Ready? Three, two. Oh, Davos Kumbaya.
OK, very good. Very good. OK, now go to the next verse here.
SPEAKER_08: Chimaat sin loro Piana Kumbaya. Hosting Steve Bannon at one p.m. Kumbaya.
SPEAKER_08: Free of Bergs at two p.m. Kumbaya. Billionaire bunker panel Kumbaya. Atil just bought one Kumbaya. Hunter Biden after party at one a.m.
SPEAKER_08: Eight balls and escorts for everyone brought to you by barisama.
SPEAKER_08: And now you all sing. Oh Davos Kumbaya.
Wow. Fabulous. You really are the world's greatest moderator.
SPEAKER_09: All right, everybody. Yes, the World Economic Forum is wrapping up in Davos. If you don't know what the WEF is, I'll just give you the brief overview. 3,000 people, five days, tons of parties happens in Davos, Switzerland. It's run by a foundation. They call these non-government organizations, NGOs. You can think of it kind of like the TED conference topic this year was rebuilding trust. It's politicians, business leaders, economists, journalists, all the elites,
the mission statement of the WEF, improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas. It's a money printing machine. I'll give you a funny backstory later if you care to know, but basically they try to shake it down for about 40 grand a year to go to this thing. Tons of notable moments that we can get to on the docket here. Freebreak, any highlights for you watching this, you know, get mocked on social media this year? It's been a slow unraveling
from this being something that people used to flex about going to Davos. Now people are literally apologizing on social media, X, Twitter, et cetera, explaining why they're going because they're kind of feeling shame and going to this event. So what are your thoughts on the sort of whole flipping of this from being a flex to requiring an apology in advance? You guys know
SPEAKER_07: Andrew Ross Sorkin, the journalist for CNBC, I think he posted on Twitter, you know, I know, I know, forgive me, I got to go to Davos. It's almost like embarrassing now that you are associating yourself with the elite cabal in the Swiss Alps during a time of rising global populism and all the criticism that's been rained down on Davos in the last couple of years. And Davos is trying to adapt by trying to be more cool and appeal to the populist notions that have criticized them. Thus the flute playing, thus the shamanism, you know, and thus, I think a lot of what Javier Millay has called general economic support for what he defines as collectivism, which I'd love to talk about, but why don't we just say that? So I think there's generally been like a response from the community that attends to all those. But there's a lot of conflict here with the fact that folks are flying in on private jets and telling everyone to stop producing carbon, the fact that they're all dining and spending lots of money and telling everyone that we should move to more towards socialist conditions and higher taxation. It's all a lot of irony wound up in this whole thing. It's almost like a like a like a Simpsons show is what it's become. Well, and the
SPEAKER_09: theme rebuilding trust is kind of insulting at its face, at least to me, like, we don't trust you.
You don't need to rebuild trust with us. We're not going to trust you. There's no way for you to do that, especially after what happened with COVID. Sax, did you have any sort of reaction to this year's Davos and just how people are reacting to it? You heard free break sort of thoughts on
it? Well, Davos has become a parody of itself. And that's why you saw these clips go viral of
SPEAKER_03: ridiculous antics of the priestess doing I don't know what she was doing. But the only two sets of marks that actually were taken seriously on their own terms was the speech by Malay from Argentina, and then also comments by Jamie Dimon. And the reason why they went viral is because they were actually saying sensible things that contradicted the sort of established wisdom or consensus at Davos. I mean, they were effectively sub tweeting the other elites Davos, I mean, melee gets up there. And I think he was introduced by Klaus Schwab. And he immediately starts denouncing collectivist experiments, and says that the West is in danger because its elites have been co opted by a vision of the world, which leads inexorably to socialism, and thereby to poverty. So melee basically says is right in front of Klaus Schwab. I mean, he's describing
the the people at Davos. That's why that took off and went viral. It was incredible. I mean,
SPEAKER_09: yeah. Yeah. In a similar way, and he flew their commercial. I didn't know that. Yeah, kudos to
SPEAKER_03:
him. Jamie Dimon gave this interview, I think it was on CNBC, where he basically went full
chamath. You know, he basically admitted that Trump had been right. And that, you know, a lot
of the criticism of Trump and all the derogatory comments for years were were basically just lazy. And he said that, you know, Trump was largely right on NATO on immigration on tax reform.
He grew the economy, immigration, immigration, he was mostly right on China, he said,
SPEAKER_03: diamond said he didn't always like how Trump said things or talked about people, but he said his
policies were largely sound, and only look better in time, since we've abandoned them. And he's basically saying that, you know, look at where we are right now. And he questioned the kind of everything is hunky dory narrative that the Biden campaign is pushing out. So he really went off script there. And like I said, I think Jamal said it first here on the spot three months ago. And now Jamie Dimon is accepting that. So that was a huge sub tweet, you could say of all the elites Davos and the accepted wisdom and, you know, the narrative that they're all pushing out. So, you know, that was the other big interview that went viral. And I think that's really saying something
SPEAKER_03: that, you know, that the elites now have parodied themselves to the point where Davos has become a joke. And the only talks or remarks out of Davos that people pay attention to, are the ones talking sense to the people at Davos, because they're not listening.
SPEAKER_06: Chamath, your thoughts?
Look, everything has a season. And I think that when there was a much more singular hierarchy
of status, Davos played a very important role to signal to other people that you had made it.
But you know, these things come and go. And I think that this is sort of in the back half of its
usefulness and half-life. What is it probably more than anything else now, a glorified enterprise software sales conference, where the reason to go to these conferences for a lot of these companies, I suspect, is that it allows you to close very big deals, multi-million dollar licenses of this, that and the other thing, where you can get the leaders of that counterparty across the table from you and hammer out a deal. And I think you pay 40 grand a ticket for the right to get everybody together to do that. So I think they want to pretend that it's a lot more than what it is.
And I think what it is is that. And I think whenever you have the ability to convene people
to close business, that's valuable. Beyond that, I think it's sort of in the eye of the beholder. And it used to be that the beholder thought that this was important. And now I think we realize it's much of nothing. It's shame in and air flutes and all kinds of stupidity, which is why people have the courage to go and mock it. And I think that M'lai's comments and Jamie Diamond's comments
exemplify that. The only other thing I would say is that I had heard, although I haven't seen it,
so I don't know, is that Alex Karp apparently did a very thoughtful speech about antisemitism,
which was also very countercultural to the established logic that the surplus elites at Davos want to believe, which is the anti-Israel pro-Palestine line. I haven't
SPEAKER_06: heard it though, so I don't know how impactful that was, but those are the three things that I've just seen on Twitter. The M'lai speech, I think, is the one that everybody is keying on,
SPEAKER_09: and correctly so. Obviously, he's the new president of Argentina. And this speech was
amazing. People might not also know that he was an economics teacher. And so this talk about collectivism leading to suffering and regulatory capture and bloat, which we'll talk a little bit about when we talk about Boeing today, was incredibly powerful. It's super basic.
You know, listen, free markets work. There are people opting into either side of it. He went over essentially, without saying it, the rule of 72 and like 200 years of GDP growth and how GDP growth under capitalism rises everybody up and then collectivism, aka socialism,
is a bit of a disaster. But it's well worth watching it. There was a really cool
thing that a company called Hey Gen did H-E-Y-G-E-N with their AI tool. They just immediately took his speech, put it in his own words, and published it and translated it as if he was speaking English
because he was he was speaking in his native tongue. So really worth checking it out. And
yeah, it was super notable. It's very basic. But I think it's everybody wants to hear this right now, which is, if you're picking collectivism and socialism and redistribution of wealth,
SPEAKER_09: Argentina has like a really good history of watching this fail. And now they're in the process of dismantling. Don't say something else before free bird says something here,
SPEAKER_06: which I think is going to be very thoughtful. Jason, the other reason why Argentina is a really good example to use is that what does Davos represent at a different level? Well,
what it is, is old Europe getting together in a way that allows them to continue to coalesce power. And what's interesting is if you had presented the case of any other country,
trying collectivism and failing, it wouldn't get nearly the same attention as Argentina. And the
reason is that Argentina has so many ethnic Europeans. And I think that's another reason, which is like, when you present people that are telling you it didn't work, that frankly look like you speak the same language as you, I think it actually goes further in making the point than if you found somebody in South Asia or Africa that said the same thing to these folks, which they have, which they've not listened to. And so this is why I think Malay is so interesting and important because he looks the part of a Western leader. And I think that that unfortunately, is what it's going to take for some of these folks to listen.
SPEAKER_07: Yeah. And everyone's acutely aware. I mean, I'll say three things on this. One is just talking to your points, about the history of Argentina and how it relates to this position that Malay holds
and being able to speak credibly to this. Second is what he said, which I think is really important. And third is how it relates to the United States. But this was clearly to my, from my view, one of the most important media events of the year. I do think that anyone that's listening to us right now should go watch it and go listen to the entirety of the speech. It is so important. I hope everyone really takes in what he said. Just briefly on Argentina in the mid 19th century, Argentina was a colonial nation, very agricultural, but a lot of free market
pioneerism going on. Businesses were built, and an economy flourished in Argentina. This photo I put up here is from 1913, Buenos Aires, which at the time was called Paris of the West. I was about to say it looks like Paris, right? The architecture and everything. It's beautiful,
SPEAKER_07: but here's some statistics. A lot of people don't know Argentina at this time was wealthier than France or Germany, twice as wealthy as Spain, and had one of the top 10 highest GDP per capita of any nation on earth in 1913. And so it was this flourishing, vibrant economy with a lot of
innovation, a lot of arts, a lot of building, a lot of employment, a lot of immigration. And then as the series of military coups began, I don't know if you guys are aware, but there was a military coup in 1930, 1943, 1955, 1962, 1966, 1976. And in every one of these cases, the essence
of the coup was one of relativism, which is some people have benefited more than others. As a result, we need to change the way that the government and the social structure is functioning, and it has to be taken by force. And I think this is the big story of Argentina that says so much more than any other nation of the past century, century and a half, which is that these cycles
happen based on not absolutism, but on relativism. And I'll just give you what I mean by that. Millay made this point, which is so important. From the year 1800 to the year 2020,
in the year 1800, we saw 95% of the world's population in extreme poverty. By 2020, it was less than 5%. And this was driven by free market capitalism, democracies that allowed
people, individuals to pursue their own self-interest and as a result, deliver products into a marketplace that people wanted and were willing to pay for. And that incentive, that market-based system allowed the entire world to move forward. The relativism problem is that some people move forward faster than others. And that causes this great cycle of what some people might call envy or jealousy. And Millay said it best, the West is in jeopardy, which is the key statement he was trying to make in his point that countries are no longer defending free markets. This is a quote, private property and other institutions of libertarianism due to errors
in their theoretical framework and ambition for power. Opening doors to socialism and condemning
us to poverty, misery and stagnation, socialism has failed in all countries where it was attempted. And then he started to harp on about neoclassical economic theory and the issues of that. But I want to show you one last image, which speaks so clearly to the point that he's making, which is as these governments that are well-intentioned and the people that elect the governments and put them in power are well-intentioned, then try to redistribute wealth by getting the governments to step in and play a market role. The market role that they play causes inflation, causes
degradation in economic opportunity, economic mobility and prosperity for most people. And you can see this in this chart, which we've looked at many times, but everything on the top of this chart, this is a chart that shows the 20 years of price changes of various goods and services in the United States. Everything that's gone up in price is something that the US
government has a role in buying or paying for. Yeah, controlling. Yeah. And everything that's
SPEAKER_07: gone down in price is where there is a free market that has allowed people to access goods and services at a lower price over time as opposed to a higher price over time. And while the intention is that the government is doing good for people by making education, healthcare and other goods and services available to them, the government stepping in and intervening in the free market causes the price to go up. And ultimately you end up in a really negative cycle that resolves in this collectivism approach that he's talking about. And that's why I just wanted to tie back what he said to what's going on in the US today. And the grand I've harped on this a lot, but the growing role that the federal government is playing, and the intention is good, but the impact is bad over time. And that's really, I think why it was such an important speech. He was so clear, it was so important for me to hear it. I'm sorry, I harped on but I just really know it's the highlight. The key of his speeches, hey, good intentions can lead to a bad
SPEAKER_09:
outcome here. Yeah, you want everybody to have health care, you want everybody to have education, the government is providing it. And there's no customer and there's no market, there's no competition. And the products and services that you are referring to, they include medicine, they include college, they include tutoring, they they don't just include any include air conditioning, they include refrigerators and televisions, smartphones, all of that. And picking which system and which set of problems you want to have, I guess, is what societies need to do. And free markets. It's a weird reflexive loop, though, for
SPEAKER_06: governments, because these people, what he also said was, these aren't just well-intentioned people. They're also a small class of elites that wanted to feel like they were better than
SPEAKER_06: everybody else by implementing things at work. And so there is a dark part of this as well, which is their desire for power. And I think it's important to not gloss that over. So this wasn't just a bunch of bumbling do-gooders that screwed things up. This was also a bunch of folks that,
that irrespective of the data, had an opportunity to gain influence and power. And I think that that's an important thing to acknowledge, because it created a very negative reflexive loop that governments used. Meaning, if you look at Freeburg's charts, why did that happen? Well,
part of what happened was the administrative state became more and more powerful. They were
able to pass laws. They were there to decide who the winners and losers were. That is a drug,
and that drug is very addictive. And so what happened as this happened was the laws went and reinforced those dynamics of those people being able to decide winners and losers.
The thing that has not happened yet, though, and maybe we're beginning to see it in some of these markets that the government is too involved in, is that it has bred a level of incompetence and incapability that we now have to unwind, because the average everyday citizen's lives are either
at risk, or these services are just so expensive that it's just untenable. And I think that's where
we are now. It's a great segue, I think, into this Boeing issue that we've seen, because here's an
SPEAKER_09: issue of regulation and safety, where you want the government and you want safe planes, and you want some level of regulation, but then you get regulatory capture. So maybe the government,
SPEAKER_06: the government has not been the supporter of the safety agenda that citizens think. Yes. Meaning,
when you look at what has happened in the US airline industry, there are a handful of
SPEAKER_06: end user providers, but those are all using OEM equipment from one of two vendors, Boeing or Airbus. So it's a duopoly, but in many ways, it's a monopoly, the way that these folks fight with respect to tariffs and imports and incentives. So the United States airline industry is a monopoly of one company. Now, if you look at what's happened, what they would say is, well, planes
have become safer and safer and safer. Yes, but they've become safer in some ways, in the most
simple and obvious ways, but they've become unsafe in that you have these fleets of planes that are now behaving very unpredictably. And if you look under the hood, what happens is, Boeing, as an
example, in like the last four years, how much money do you think they've spent on lobbyists
and PACs? I'll tell you $65 million. How much have they spent just in the last year, almost $11 million. They're like the 15th most active spender in politics in Washington. Now, what did they use that money for? Well, that's also documented. See, the crazy thing is, this stuff happens in plain sight. So they were able to water down the safety regulations. What does that allow you to do? It allows you to have a situation like this unfold. And then on the other side,
the pilots unions can lobby those same politicians who are taking money from Boeing
and prevent systems that would actually make these planes safer. You can have more improvements in
the guide by wire technology, you can have more improvements in GPS, you can have more improvements in a computer's ability to help improve and augment the capability of the pilot. Unfortunately, that would result either in fewer pilots, or less pay. And so that doesn't happen nearly as fast and obviously as it should. It's the same for air traffic control. And all of these issues build up because we've allowed monopolies to build up. So as much as we think we are a capitalist society, we have veered into this collectivism in certain markets and where it's measurable and obvious, we need to point at it and say, let's go fix. Yeah. And this would be let me just
SPEAKER_09: tee up a little bit of what you're referring to in case people don't know. But everybody probably saw the news that on January 5, the door blew off of one of these Boeing 737 Max jets. If you've heard that name before, it's because this isn't the first time that the max jets have had problems. This plane safely landed, thank God, and there was nobody sitting in the row with the door blew off.
And this has to do with some bolts on the doors. But this is just the start of problems with the
737 Max. There's an incredible documentary if you haven't seen it, we'll put it in the show notes, Boeing's fatal flaw. And the version before this, the 737 Max nine is one that had the bolts come off. The max eight, if you remember, there were two really harrowing instances where tragically,
346 people died in these two instances because the plane, literally the software on the plane,
SPEAKER_09: which is called max maneuvering characteristics augmentation system, which was designed because they were trying to get more fuel efficiency and they had positioned the engines
in a weird way on the wings. So they had to kind of help pilots level this stuff into your point about regulatory capture, there was all this behind the scenes manipulation of the market to
try to get these planes built to try to get them out the door because there was so much money at stake. Well, on these two terrible accidents, the plane the nose literally dove and the pilots were fighting it in both cases, right? They just crashed and everybody on board died. And for 20
SPEAKER_09:
months, the 737 Max models were grounded. And that cost the company over $21 billion. So there is no
competition to your point. And then in a free market, if there were 10 providers, would this be much different from off and absolutely, yeah. So I mean, that's what you have to realize here is that these duopolies you'd think there's competition in a duopoly there isn't competition. No, I mean,
SPEAKER_06: like, for example, like, if you look at the car market, how many instances I think the last big incidents that I remember was, I think, Ford had an issue with the fuel tanks of some cars that were exploding, right? Yeah. But the reality is, when that happens, there are alternatives. One is
that there's legal requirements for Ford to just fix these things quickly. There are lawsuits that
happen, there was class actions, there was settlements, but there's also the ability for
folks that can afford it is just to switch vendor and of which there are 50 other vendors to choose from. That is a healthy dynamic. So today, when you look at the auto market, what do you see a
plethora of choice. And when you see fatalities or safety issues, they are overwhelmingly driver error. And we assume that and we get insurance to deal with that. When you look at airplanes, you
have these three sections of risk that each are compounding because there is no competition. Number one is that the monopoly vendor has zero pressure to actually test these things adequately. Because on the other side of building something well, is shareholder pressure to deliver something sooner and faster so that they can reap more profits. Then second is you have a regulatory infrastructure
that puts rules on top of rules, but then will bend the rules if you donate to them.
Right. And that's measured and known. And then the third are the folks that actually operate the planes, who have this actual incentive to not see technical improvements because it defends their job for longer. And in all of these cases, there isn't enough competition to shine a light on this
to say, how does society actually want this market to operate? This is collectivism, it's not working.
Freiburg, you have thoughts on this Boeing regulatory capture and the issue of only having
SPEAKER_09: two vendors there. And the complexity of these machines now in relation to that, Nick, you can
SPEAKER_07: pull this up. This is an audit of the business model for a company called trans time group.
trans time group is a aircraft aerospace parts manufacturer. They sell certified, regulated
aircraft parts to aviation companies, as well as to airlines, private pilots, and also the government. And they do about 7 billion in revenue, three and a half billion in EBITDA.
So to your point a couple of weeks ago about what's the appropriate competitive EBITDA margin
that a company can ultimately achieve, their EBITDA margins 53%. This comes in better than
SPEAKER_07: Facebook. Insane on 7 billion of revenue and growing. Nick, if you want to pull up their
SPEAKER_07: stock chart, and you guys can see how the business has performed over the years and their business model has been relatively simple. They've acquired aerospace companies got that have certified parts, they drop the cost and raise the price. They have they do that over and over again. And here's the business over the last 10 years. This thing is, you know, roughly 10 bagger, eight to 10 bagger
in the last 10 years. The market cap is 60 billion today. No end in sight. And so there
was a government audit done of the business by using uncertified cost data, which is one of the most reliable sources of information to perform cost analysis, we found that trans time earned excess profit profit of at least $21 million on 105 spare parts on 150 contracts. So they're
selling spare parts into the government. The government auditor came in, audited them and identified because there's no real audit, there's no real accountability in government as purchasers, but there is regulatory authority on deciding who are the winners and who are the losers in the market. trans time has been elected a winner, because they have regulatory approval to make and sell these parts. The cost to get approval to make and sell these parts is so high, that it makes it prohibitive for startups to come in and compete in this marketplace. And now that they're a preferred supplier, and they get these single contracts, where there's no competition to be a supplier, they can raise the price every year. Multiple audit reports over the last 23 years have highlighted the problem of the Department of Defense paying excess profits on sole source contracts, where cost analysis was not used to determine fair and reasonable prices. And this problem continues to occur. Now, I'm not necessarily saying that this is a negative on trans time. It's a fantastic business. It's well run. It's one of the best run public companies with a multi $10 billion market gap in the world. But the condition is that the US government comes in and picks and
chooses through its regulatory authority, which companies can make products, the cost to enter and compete becomes prohibitively high. And then the company has complete pricing power, and there's very little accountability in the overall system. And I think that this plays out not just with this company, but obviously also with Boeing and the fact that we've narrowed down the competitive market space to just a few sole source providers that have very little accountability. And eventually, these sorts of conditions arise, either prices get too high quality degrades, all the other things that natural market forces would keep a check on. Yeah. And in terms of competition,
SPEAKER_09: Chamath, the, I guess the only thing you could say is consumers could potentially maybe try to avoid the 737 Max. I know I did when all these accidents happen. I just told you know, my person who books the flights, hey, do not put me on a 737 Max period, full stop. And you know what, you're going
to wind up paying a lot more, you're going to have a hard time getting certain routes, you're going to reduce it because, you know, most airlines, I think, have these 737 Maxes in there. So you,
when you have such a few number of providers, to your point about it's not like cars, it's not fragmented like that you can't avoid a certain car type, a plane type the way you can avoid a car
type. So just wrapping up here, Chamath, what changes should we see in terms of late stage
capitalism, something the example like air travel and manufacturers? Is there any way to unwind this reasonably? Or is it too late? Because we're at this?
SPEAKER_06:
I go back to some of the examples that we've made fun of before, you have to rely on the government
to actually be competent. In key moments in time, I think this is one of them, the organization that
could do something about it, for example, take the FTC, or even take the DOJ, we are investigating
Amazon's purchase of the portable vacuum cleaner Roomba. Right? Critically important issue. And
that is apparently for the American people, higher than the sclerosis that the government has enabled,
in the airline industry, which affects everybody. So could the right government agencies choose to
actually focus on something important here and actually figure out why is this happening?
Because I think the door plugs issue is endemic of a much bigger problem. This is a company that's rotting because there is no accountability. And the reason there's no accountability is there's no real functional competition. And I have not seen any good answer to accountability other than
competition. Yeah, I mean, the the good news is the FAA really took quick action to ground these
SPEAKER_09:
171 Boeing 737-9 MAX airplanes. But they don't they do not understand the scope of the problem
SPEAKER_06: if they let them back in the fleet and this is happening. The bigger picture problem of lack of competition. Yeah, they're no no no. My safety of these. My point is like, you have to adjudicate
SPEAKER_06: the interaction of very complicated hardware and software in that first go around. Here is just a
SPEAKER_09:
SPEAKER_06: pure systemic hardware failure. So the point is that whether it's them or their suppliers,
there's just a some complacency that sets in when you know you will always have the business to Friedberg's point. It is a very corrosive thing in running a business, trying to have
motivated employees, when they know on the back end of it that they could make anything in the
world. And they'll just be able to sell it to somebody and they'll have to take it. That's that example that Friedberg just cited. 20 odd million dollars for just random stuff for what is it? 15
pieces. That's crazy. That's just straight up theft. And so when you have that, how do you
expect the employees of that organization to give a I don't see how I don't see how you could expect
that. And so my point is the FAA has a much bigger problem. So for example, like the do E has a loan program to try to create a diverse energy infrastructure in the United States. Maybe we need to look at some of these sectors and instead of building the administrative state, take some of that money instead and just create programs to get more competition. All right. In other news,
SPEAKER_09: Adam Neumann, you remember from we work infamy slash fame, is has a new startup, you may have heard of it flow, they've raised a ton of money, he started buying a bunch of apartment buildings, the idea, people can rent nice apartments in cool cities, that focus more on social interaction, and hacking out common spaces, all that great stuff. And there's also allegedly or reportedly some sort of rent to own where renters can receive equity in the company over time. And I don't think this has ever been released. But the idea would be maybe you own shares and flow,
flow manages around 3000 units, most of which were purchased by Newman after he left we work. You know, he took down a windfall as an exit package. And so according to the real deal, this real estate publication, Newman had a 60 million variable rate mortgage on one of these properties in June. Sax, maybe you could explain to us what's going on here since you have a lot of experience in real estate. Well, it's pretty simple. He can't make his interest
SPEAKER_03: payments. Okay, so the reason is, is because he had floating rate debt. So if he had locked in
SPEAKER_03:
his debt over, say, 10 years back in when he bought this building in 2021, or whenever it was, when interest rates were extremely low, you know, that was during the desert period, probably could have locked in long term debt at maybe even 3%, three or 4%. And instead, he got floating rate
debt. And if you look at where commercial debt is now, I mean, it's 789%. If you can get it,
which is pretty hard. So he maxed out on debt when he bought these buildings, he bought them top of market. It sounds like in 2021, because real estate, like a lot of things moves inversely
to interest rates. So when interest rates spiked over the last year or so, then real estate
valuations went down. So he bought a bunch of buildings, top of market using a lot of debt that was floating rate, interest rates spike perfect storm, now he can't make his interest payments.
SPEAKER_09: Crazy part about this when I was watching it happen, Shambhath, and we talked about it, I think on the program at the time was Andreessen Horowitz put in like, over 300 million at a billion dollar valuation, but they didn't do that in PXR. They did that in 2022. And the writing was on the wall. What are your thoughts on why they would make a bet like that? And yeah, just tech VCs betting on real estate for a second time? How does that occur?
SPEAKER_06: Well, I don't think it occurs because they cared about real estate. I think it allows them to
take $300 million of committed capital and put it out there so that they're $300 million less available, which means that they're $300 million closer to raising a new fund, which means that they can raise they can charge 2% on more money. That's why they did it.
Got it. Yeah. So just keep the money train deploying capital. It's a place where you
SPEAKER_09: can put a big huge check. And you can raise your next fund. And yeah, why not? Okay, well, they
SPEAKER_09: have let me let me let me offer. I mean, I don't disagree. I think that candidly, what you've said
SPEAKER_09: is exactly how mega funds are thinking about it, we have to deploy capital to raise our next fund. And if we still have capital in our last fund, then we can't put free work.
SPEAKER_07:
If you're going to have to deploy large amounts of capital, wouldn't you feel better deploying
that capital with an entrepreneur who's actually run a big business before even though the business failed? No, no, no. If you're if you if you are not optimized for fees, you would do what Peter
SPEAKER_06: Teal did and just have the fund and return the money. Right. And for for that, because he's
SPEAKER_06: already won. But for everybody else that's trying to win the only way to win in a world where your your exits are not that great is to actually generate money via fees, even though that fees are taxed at current income. That's the way to win in venture is not carry, it's by fees. And so
SPEAKER_06: it's and I don't blame Andreessen. I think like that's that's smart for them to do. And if they have folks that are willing to enable that by giving them money, they should do it. But are they going to generate huge rates of return? Probably not, because that's not what real estate is known for real estate is known for long, steady tax arms. That's slowly compound for the for the owner of the company over 20 or the owner of the business over 25 to 35 years. That's not what a venture fund is supposed to be doing for a 10 year or 12 year return cycle. So obviously, they're doing it for fees. That's okay. I think that's capitalism. What are the LPS then think sacks if
SPEAKER_09: we look at this, you know, you're an LP and a technology firm, I'll take Andreessen out of it for a second. But let's just say some giant LP gives giant amounts of money to a venture capital firm, and then they're deployed in real estate. What happens, you know, in their minds, and is there any kind of tension that would occur? Well, handicap in the situation, you can never judge a
SPEAKER_03: VC based on one investment. If we were to do that every VC would have a lot of egg on their face, because we're supposed to take big swings and swing for the fences and trying to hit home runs and grand slams. And a lot of them are gonna make you look foolish, you have to look at an investment portfolio and track returns over time. So I wouldn't judge any particular investor based on one investment. So I don't think that's fair. Now, in the case of this investment, if you want to explain what I think went wrong. I think Adam Newman had a compelling vision, his vision was to
create a new experience in in, I guess you call it apartment living, and that people would be willing to pay more for that, because he would create this national brand in apartments. And right now, apartments are super local. And there's there is no brand in, you know, apartment living. So I think as a entrepreneur, as an operator, he had a great vision. And I think he actually achieved his vision. If you read these articles carefully, what they say is that his occupancy was high, and people were willing to pay at least a little bit more for the experience of being in a flow apartment. The problem for Adam Newman is that at the end of the day, his plan to raise rents by creating experience, even though it worked, it just didn't raise rents that much. And what ended up being much more important were the moves in interest rates, and how he capitalized these acquisitions and the price he paid on the acquisitions. So there's an old saying in real estate that you make money based on the buy, not on the sell, meaning that, you know, when you go and sell your apartment building, office building, or whatever, you're monetizing
an acquisition that you did correctly. And if you don't buy at the right price, you're never going to be able to make money on the sale. And I think this is a really good example of this where he bought top of market, his capital stack was over reliant on debt, and he had floating rate debt. I mean, those are just financial mistakes and timing mistakes that you can't make up for, no matter how good an operator you are in real estate. And in a way, I mean, this is the same thing that happened with WeWork, which is he delivered an excellent product. I mean, people love WeWork offices. Absolutely. Yeah, they pick them over other offices because of the vibes,
SPEAKER_09: because of the culture, because of the community. So he has some mastery of that. But to your point, entry price matters. And the economics matter. If you look at WeWork, it didn't fail because the
SPEAKER_03:
product wasn't good. It was because he didn't pay enough attention to the financial aspects of the business. With WeWork, he leased a bunch of offices at the absolute top of the market, and then over invested in TI's tenant improvements. With Flow, he bought a bunch of real estate at the top of the market and sort of did it with the wrong capital stack. So this is the problem is that when you get into a real estate business, it doesn't really matter
how great you are as an entrepreneur operator, if you're not good at like sort of the legacy, old school, real estate part of it. And the old school real estate guys were saying during WeWork, this is not going to work. This is Regis, but with a bad capital structure. And the old school real estate guys were saying something similar about this. And it just goes to show that if you are going to try and disrupt a legacy industry, you do have to kind of understand the ins and outs of that legacy industry. And the great paradox of this sax was when he did Green Desk,
SPEAKER_09: which was the precursor to WeWork, when he did the first WeWorks in San Francisco and other places, his playbook was find a building that's empty, that cannot be leased. So he got 25 Taylor Street,
like sixth and market, the worst area by the Tenderloin. And we had an office there for a little bit. And I had my podcasting studio there for a little bit. This was a terrible off, this
was a terrible area, but he made it hip and cool. And it was really cheap. And man, it sold out. And it was packed. And the vibes were great. But then as you're saying, then he moved all of a sudden to
Soma. And he started opening up these glass filled ones. And, you know, the he was renting them for less with all their giveaways and six months free and all this stuff, then they could ever afford so right. He kind of had mission drift, right, the playbook, they just they changed the playbook. And it economically was not viable. Well, the timing, the timing got really bad. And
SPEAKER_03: again, they didn't pay attention to the financial aspects as much as they should. In this case,
I think that if he was trying to execute this play today, and doing his acquisitions today, he could actually make it where he wouldn't, you need a lot more equity, because you wouldn't be able to get as much debt financing. But if he had the equity and could do more of an acquisition based on equity, the prices he had paid right now would be much lower. And then as interest rates come down, he could ride that wave, he could refi pull his equity out and put debt on it, that is cheaper as the price goes down. So there was a way to maybe make this work. But you know, with real estate, the timing is just so important. Again, your cost basis of when you get in the investment is probably the most important thing in terms of whether you make money or not.
SPEAKER_09: Did you see this by chance, the real estate piece in 60 minutes, the package they did last week, sacks? It was basically what we were talking about here a year ago, super compelling. If you haven't
seen it, it's basically the podcast from 12 or 18 months ago, has anything changed on the field in terms of commercial real estate? Or is it just continuing to change? I think that the all the
SPEAKER_03: commercial real estate guys, the sponsors and the dealmakers and so forth, they're all kind of
hanging on by their fingernails, waiting for interest rates to come down. And all the leases
SPEAKER_09: are still coming off, right? Like people are still who had 678 year leases that were signed pre COVID before depends on the market. I mean, some of the some of the markets are coming back. But again,
SPEAKER_03: what this flow news show this Adam Newman news shows is that you can be fully occupied. And you
SPEAKER_03: could still default. And the reason is because your capital structure, the interest rates have
spiked up, you're now paying, you know, all of your operating income is being eaten up by your
SPEAKER_03: debt service. The only way to make it through that is you go to your bank is one of these regional banks, and you work out a deal to extend, you know, they call it pretend and extend. And
they let you hang on there, you'll like, you know, extend the term of your kick the can down the road. Yeah, yeah, they'll lower your debt payments in exchange for more term and you just try to get
SPEAKER_03: to the other side of these high interest rates. And then once you get to the other side, you again, you're hanging on, you're not defaulting. That's what everyone's doing. So if rates don't come down as expected this year, you know, I think the markets expecting 150 basis points of rate cuts, if that doesn't actually happen, there's a lot of real estate sponsors who are in trouble. And in turn, there's a lot of regional banks who are in trouble because they're the ones who made all these loans to the sponsor. So everyone's trying to, like you said, kick the can down the road.
SPEAKER_09: Yeah, and the 60 Minutes piece also talked about how there's some emergency rezoning going on in New York specifically, where they take the floor plate in the middle, which I think you talked about sacks, you have to have windows if you want to convert to residential, and they just make an
empty space, the void, they call it in the middle of the building that you know, they'll deal with in the future, but they just have this empty space in the middle of the building, that's not going to get used. And then the rest that has windows gets used to be converted into loss, etc, in New York. So people are starting to think creatively, if people don't come back to office, okay, let me ask you a question just based on that comp, the set of comments, given Adam Newman's
SPEAKER_07: experience as an investor in this space, and this general opportunity, wouldn't you rather back and known someone who knows and has been through the market and has experience versus some founder who shows up and has never run a business in this space? I mean, there's more there. You it's such a great point. Well, here's the thing, freeburg. The great point about that is,
SPEAKER_09:
you don't see a lot of founders who explicitly come out and say, I want to build $100 billion business, I want to build a giant business, they're so rare, that VCs who have a lot of chips, they would like to back those, you know, swing for the fences, folks. And so I do understand why people would back him again. And they've run out of before they've done it to some degree. I mean, learn mistakes, and this time around, he is the exact same mistake. So therefore,
SPEAKER_09: they made the bad bet. I'm not advocating by the way. I understand. But to your point,
SPEAKER_09: freeburg, I can understand people want to bet on somebody who is crazy and swings for the fences. This entrepreneur clearly does not learn from their mistakes. I think both of those things
SPEAKER_09: could be true. Right. What I would say is that I think that where I've made the biggest mistakes in
SPEAKER_06:
my investing career, is when I confused what I was investing in, for one thing, when it was
the other. And so when I look back, and I had a small dally ounce in biotech, because I thought,
Oh, this is going to be more computational biology. And I understand computation. So
this gives me an edge turned out, I was wrong. There was another time where I've invested in
SPEAKER_06: certain sectors of the economy, because I thought they were technology businesses. And at best, they were tech enabled versions of an existing industry. And when I look at those investments,
the thing that I got wrong, was not listening to the very experienced investors in those sectors
and why they passed. And that has caused me no shortage of headache and grief. And so if I had
to learn anything from all of this, it would be that if it looks like a duck, and it quacks like
a duck, it's a duck, it's not a tech company. And so if that duck means it's a real estate business,
I would talk to a real estate investor and wonder to myself why they wouldn't have done this deal.
Similarly, you know, when it's a biotech business, I have to ask myself,
why wouldn't they have done it, they know more than I ever will in this space. And so similarly, I kind of look at this as an example of that, which is, could be a very talented person in an
industry. I think just think it's important for us to be very clear and lucid and intellectually honest about what industry that is. I think it's a great point. I mean, look, I think whenever
SPEAKER_03: you're dealing with a tech enabled business, which I would define as a more traditional business model, with some sort of software layer, you know, on top of it, you have to kind of assess
like, how much of a difference does that software really make at the end of the day, in this case, this is a real estate business with a very thin kind of software slash technology of it. Yeah, the experience layer is a very small part of the overall, let's call it P&L of this business. Such a great point. Sax I mean, the perfect analogy
SPEAKER_09:
would be like if you have if you're taking a flight on United, the United app is delightful. Now it's really good app. I don't use this as a commercial airline. It's called United Airlines, you pay for one ticket instead of the whole plane. But have you been to McDonald's recently actually went to McDonald's? Yeah, you order through an app now. And there's a big screen. The point is you walk in there, and it's probably not the McDonald's you knew 15 or 20 years ago.
SPEAKER_06: It's not about waiting in line, and ordering and that's not how it works anymore there. So the point is, is that a tech enabled business? Or is that still a restaurant? Well, if you spend a lot
of your time intellectually contorting yourself, to try to justify why the next version of
McDonald's is a tech enabled business, you're just going to lose a lot of money. It's a restaurant.
Now, all restaurants need technology. And what you see by McDonald's is even the oldest and most established are running forward very quickly to implement technology because they know that it creates efficiency, which then flows to the bottom line for them. Yeah. So the reality is that we
have lived in this Wonderland, where we've looked at the software businesses that have 80 and 90%
gross margins and impose that expectation on other markets, and then made investment decisions by trying to justify how that it's a tech enabled real estate business, a tech enabled healthcare business, a tech enabled energy business without being honest with ourselves that those businesses have over decades because of lots of competition, found a consistent and
reliable resting place in terms of gross margins far below 80 and 90%. And so instead of willing
tech enabled businesses to be at 80 and 90 and tricking oneself, I think it's more realistic to ask yourself, why aren't 80 and 90% gross margin businesses decaying to 30 and 40% gross margins
like every other part of the economy, when everything will be technology enabled? I think that that's a very reasonable question. And I think the answer is, there is no safe place. I don't think that you can justify 80 90% gross margin software, when you can use a model and whip up a competitor. I just think that we are all going to a place where everything is a tech
enabled version of some marketplaces would be a notable exception there with network effects.
SPEAKER_09: So door dash versus the tech enabled restaurant, asset light marketplaces, you and I and sacks have been involved in a bunch of different marketplaces together. Sometimes they're asset heavy, sometimes
they're asset light when they're asset heavy, man, it's really hard to make those businesses work on sacks. Yeah, I mean, I think we should differentiate between gross margin and then the net
SPEAKER_03: operating margin or profit, right. And so, you know, gross margin is what is the cost on the margin of providing one incremental unit. And the thing about pure software businesses is that on the margin, you can provision other instance, the product almost free, I mean, there's a little bit of hosting cost at AWS or whatever. So on the margins, it's, you know, it's like the perfect gross margin business, as opposed to a hamburger, as opposed to a restaurant is going to have
SPEAKER_03: very large costs of goods sold or cogs. The simple heuristic that I use is just does this company have large cogs, costs of goods sold and are they physical world cogs? If they are, it's not
a software business, it's best a tech enabled business. So just look for that. You know,
does this business have large physical world cogs? Now, what I would say is, if the cogs are virtual, like, you know, it could be hosting costs, or it could be paying Twilio for telephony
or something like that, then at least it's still not like as good a business because the margins aren't as good but it's very scalable, right? Because you're not you don't have that like huge
friction of needing to scale up physical world infrastructure, physical world, supply chains, that kind of stuff. So I like virtual cogs a lot better. There are digital cogs a lot better than
SPEAKER_03: physical cogs. I love it when marketplaces though, I mean, we could speak to that too, you know,
SPEAKER_09: when I had Dara on the pod the other week, and when he launches an adjacency, hey, we're going to sell alcohol, hey, we're going to sell groceries, hey, we're going to add this thing that's right next to the already you know, portfolio of Uber offerings doesn't cost them much, right? They just have to get the supply side up and running, but they already have the demand side. And I think that's where like these super apps are doing really well. Or Airbnb adding, you know, some inventory in a new city that they unlock, right? Well, true true marketplaces are
SPEAKER_03: perfect gross margin businesses as well, because they don't have a school inventory that they themselves own. What you'll see is with a lot of marketplaces, they'll cheat by buying the inventory themselves, at least to jumpstart the market and then selling it. Yeah. And so when you see that line item on the P&L, the you know, that they have real cost of goods sold, you know, oh, wait a second, this isn't a true marketplace. They're providing the service. Yeah. And so again,
SPEAKER_10:
SPEAKER_03: it's just a way to like catch whether the business is truly one of these great high gross margin
businesses, or whether it's more of a tech enabled business that's pretending to be a pure software business. Yeah, direct consumer got people in a lot of trouble during the last cycle in venture
SPEAKER_09: capital. If you look at a lot of these companies, even the best SaaS businesses have seen their
SPEAKER_06:
gross margins erode by about 15 to 20%. It used to be that best in class software business can generate 9091% 88 high 80s to low 90s gross margins. Now that's not true. You see a lot of
these best in class companies that are in the high 60s, low 70s. So it already just shows you that that pressure has has come upon the market. And so is it that the software enabled business
goes towards 85? Or is that the 85% gross margin business goes towards 30? It looks like it's the latter. That's just what the data says. Well, man, I'm just categorizing certain costs different
SPEAKER_03: Lee than you are. But I don't know why a software business would go all the way to 30. Right? Because again, sales and marketing don't count in the gross margin. G&A doesn't count even R&D doesn't count in the gross margin has to be, you know, a unit cost that you can attribute on the margin to that incremental instance of the product. So things like, again, paying Twilio for meter telephony or paying open AI for like meter to API access, all of that is definitely in cogs. And I think some customer support costs that can be attributed on kind of a per instance basis that goes in there. But if if sales and marketing and R&D and G&A aren't going in there, I mean, I don't know why you go all the way to 30. I guess I'm just saying that I still think software businesses, and marketplaces for that matter are still the best kinds of businesses on a margin profile basis. The problem is that there's a lot of fake software businesses or fake
marketplaces out there that are pretending to be pure tech businesses when actually, they're more like old school businesses that have the veneer of technology.
SPEAKER_06:
And I think, to your point, they're like the trick of saying I'm an 80% gross margin business,
but having no profitability is then who cares? So when you look at the profitability of these
businesses, again, you'll be in the 20 to 30%. That's why when you see companies that are in the
SPEAKER_06:
high 30s to low 50s, they're a very unique and B, you should expect that there is something
fundamentally monopolistic about them. And that is a seamless way to filter out these companies
SPEAKER_06: because in a highly competitive market, you cannot extract those kinds of profit dollars. Capitalism says you can't do that. So you can only do it when when you have an end of one or end of two kind of competitive dynamic where there's essentially a mutual to talk with your biggest competitor. Yeah, it is it is a good point that just because you have good, you know, economics
SPEAKER_03: or good gross margins doesn't mean that the business is profitable at the end of the day. Yeah, it could be 80% gross margins and still be losing a ton of money because you've got too much
SPEAKER_03: overhead. You've got too much sales and marketing. You've got too much R&D. Yes. So you're selling
SPEAKER_09:
to customers who don't really need it, and then they eventually cancel, right? Like we see that a lot. Look at the streamers. Look at the streamers. That's just a big recycling exercise. It's just
SPEAKER_06:
like people come to the top of the funnel, they use the product, and then they leave and then you
SPEAKER_06: have to reacquire them over and over again. And it and it could be the case that SAS actually looks a little bit like that too. At the bottom line level. When you hit your natural audience, it does
SPEAKER_09: get challenging. Well, this is why in SAS, there's a heuristic called the rule of 40, which is for
SPEAKER_03: public market SAS companies, you want to see that their operating margin plus their growth rate equals 40 or is greater than 40, ideally. So in other words, you could have a SAS business with a 20% operating margin and a 20% growth rate, and that would hit rule of 40. And that would be a very attractive business. Or you could have, I don't know, it could be growing 50% year over year,
and its operating margin could be negative 10%. And that'd be okay too, because they're losing money, but at least the investment is leading to a well above average growth, you know, or you could be growing, you could you'll be growing slower, you could have a 10% growth rate, and have a 30% operating margin. And that would also be hitting the rule of 40. So it's just a simple way of like tracking whether this is a good business at scale. I don't think startups have to worry about this
until they get to kind of the later growth stage. Yeah, when you're in your BC round, you're making
SPEAKER_09: 50 100 million. Yeah, you got to be really thoughtful about this. In the beginning of trying to get product market fit and triangulate on something. So Chamath just mentioned streaming
NBC Universal, if you didn't know it paid the NFL $100 million for the exclusive streaming rights
to one that's right one first round playoff game for the NFL that happened last weekend between the Chiefs and the Dolphins. That was on their service peacock, NBC's app, basically their version of
Netflix or Disney Plus, it garnered 23 million viewers, which makes it the most streamed live event in US history. Even so, that's almost half of what the Packers and Cowboys had about 40 million lines versus Rams, same weekend 36 million. And so this has brought into question what's going on with streaming have these businesses gotten ahead of their skis just give you a couple of charts. Disney Plus took off like a massive rocket peaked in Q4 of 2022 at 164 million subscribers are now at 150 million years a chart. I mean, just amazing how quickly they got to Netflix ish numbers. Here's Netflix's chart. Again, this is quarterly. They're up to now an all time high 247 million subscribers, and the annual growth rate all the way back to 2001 still pretty spectacular and their revenue also very respectable for Netflix. However, they overspent massively during
the peak streaming era 2019 to 2022. And that's when subscriber growth started to slow. Obviously,
they were spending way too much and other entrants came in like Apple Plus and Amazon Prime where they really didn't even think that they had to make a profit. They were using streaming maybe
to sell more iPhones or to get more Amazon Prime subscribers. So here is the major problem. Here's the churn chart. Basically churn means people cancel, right. And so as these services have cut what they're offering the number of Marvel shows or Disney, you know, having Star Wars shows the
churn goes way up. People are also having subscription overload. I don't know how many of these I subscribe to, but I think it's all of them. Or maybe out of these 123456789 on the chart, I think I have seven of these. So there is definitely some unbelievable subscription burnout.
And the streamers in order to get these businesses above water have raised their prices. We all know that you've probably seen your streaming bills, you know, have three, four or five bucks added to them every month. And at the same time, they're cutting how much they're spending. So you're paying more for last month, your thoughts on this dynamic. If you bring the chart back up, here's
SPEAKER_06: the most important thing that's worth noting. Let's take stars as an example, it turns 12% of
their users every month, which means that over a year, they've turned 144% of their user base.
That means that they have to basically turn their entire membership base one and a half times in
order just to tread water. Right. So if you start with 100, it's a lot of money that you have to
spend to make sure you end the year at 100. Forget about growing. If you look at Peacock,
they're going to lose 100% of their subscribers in a year. If you look at Discovery, they're going to lose 75%. If you look at Max, they're going to lose 50 odd percent. Apple TV, same. Hulu and Disney Plus will lose 60%. Netflix will lose almost 40%. So the only winner in all of this is Facebook and
Google. The only winners are Facebook and Google, because that's where the ads will appear to try
to reacquire these folks, right. So I guess that's a positive indication. But the reality is that
money isn't infinite. And so what happens in a dynamic where you have a category where there's just a lot of consumer churn, I think what happens is it evolves in phases. And in phase one,
which is sort of where we are now, where there's a bunch of relatively well established folks, is that they are going to initially overspend on content, because they are going to try to differentiate the cost of acquisition based on content, right, which makes sense. I have a tent pole, come and watch it here. You can't watch it anywhere else. And I think that was the Peacock
example, where they had this football game and all these people showed up. And they thought this is exactly why we're paying so much money for these rights, because people will show up. I think the
problem is that when everybody is doing it, everybody's doing it. And so you don't know how
to differentiate even in our group chat. Look at the number of times when somebody randomly says, Is there something to watch? And everybody's got 50 recommendations. Guess what I do? I tune it all out because I'm like 50 across six different services, I have no way to track it. And then I lose interest. And I'm like, you know, I'll just stick to YouTube. So I think what happens is in phase one, folks spend a lot of content in phase two, they realize that actually what you need to
do is spend on a long tail of content in a much more disciplined way. So there's a company that I know about, for example, they just signed a pretty big deal with Amazon,
hundreds of millions of dollars. And I was trying to figure out is that a lot or a little? And it
turns out that Amazon's trying to get three or four or five versions of these going.
Which means that before we probably could have gotten five or 600 million and instead you get two or 300 million. Still an incredible thing. But it just goes to show you that there's a lot of competition. And so instead of having a single mode, right, if you were to graph something
where there's a few pieces that just get all the money, now you're smearing this content across all kinds of stuff. And I think that that makes it very difficult to keep folks. So I
suspect that you're just going to see a lot of churn. I don't like this category at all as an investor. Clearly there's been an overspend here, but consolidation is coming. Freeberg,
SPEAKER_09: any thoughts on the streaming space? I just think this is the opposite of what we were talking about
SPEAKER_07: earlier, where there's a free market competing, and it's benefiting consumers. I mean, the point that you made is a really good one that there's a lot of great content to watch. Folks that raise prices, people cancel. So you got to drop prices, you got to offer good content. And I actually think this is a really good and healthy thing to see happen is competition that benefits consumers, and there'll be some set of winners here and some set of losers. But I think ultimately, it's just really good to see how it all shakes out. Who's willing to put up the big bucks? Who's got the smarter algorithm that predicts how fresh your content has to be and how unique it has to be relative to other platforms to keep the audience attention? I would argue if you look at those numbers and you look at the performance over time, Netflix absolutely rules the roof in the sense they're an incredible operating team. They have an incredible capability of predicting what content will work, how quickly they have to refresh content, how much they should be investing in content per quarter per month, and they're clearly retaining users and making money.
And others maybe that are newer to the game haven't figured that out yet. But it's just very good to see the competition. So I don't know how to predict what's going to happen here. But it's good to see. It's clearly going to be massive consolidation. Also, these folks are launching
SPEAKER_09: advertising based versions. So you probably saw Netflix has an advertising tier. And so a lot of these folks didn't have those Disney Plus, I think is going to have one as well. You know what, no
SPEAKER_07: one's paying attention to is YouTube TV. I don't know, you guys subscribe to YouTube TV. I'm a Hulu
SPEAKER_09: person. Yeah, I think it's fantastic. If you look at some third party data on YouTube TV, the
SPEAKER_07: subscriptions are going through the friggin roof. And it's really interesting to see because with YouTube TV, you're basically rebundling the unbundling that happened in cable, except you're doing it over the internet, you can access it anywhere. So they've basically converted the pipe as the value to the service itself as the value which you can access anywhere you want on any TV in any room without boxes while you're on the road on your phone on your laptop. And it seems
SPEAKER_07: to be kind of highlighting that maybe it wasn't necessarily the bundling that was the problem, but the way that the service was being offered. So who knows maybe bundling versus all of this part
and parcel, you got to pick five different providers and buy content on the fly. Maybe that's not what consumers want. Young people don't care about the live channels. Old people do. But
SPEAKER_09: yeah, Hulu and YouTube TV are really wonderful products because they work really well on Apple
SPEAKER_09: TV. The apps work great, but they also work great on your iPhone, your iPad. So yeah, you know,
they're really spectacular in that way. Sax. Well, this is this conversation back to what
SPEAKER_03: you're talking about with margins and SAS and tech enabled versus real software businesses. I personally have never seen a B2C subscription business that works. The churn is just too high. What I've seen is that the monthly churn rates on a software subscription for consumers is somewhere in the five to 10% range. So on a full year basis, you're attaining maybe 50% of your customer base, you're effectively rebuilding your business from scratch every two years. It's a very tough place to be. This is why I basically skewed towards B2B SAS is because a good B2B SAS business will have net expansion, instead of 50% churn, you'll do 120% expansion. And so you're actually building a subscriber base with long term value.
SPEAKER_03: Now, how did Netflix do it? I mean, Netflix avoided that prohibitive level of churn by spending literally billions of dollars on content, and original programming. And again, it goes back to the point, this is not a pure software pure tech business. It includes an old
school studio, which is very capital intensive. And they financed a lot of the content acquisition,
with billions and billions of dollars raised during that ZURP period from I think, both equity and debt. And you have to wonder if that could be done again, in this post ZURP period, where
capital is just a lot scarcer. I think this is going to work really well, though, for Netflix
SPEAKER_09: and Disney man, these huge archives that they own these libraries are going to get them to
three, four or 500 million global subs, and has become money printing machines that I don't think they're going to need a ton of new content. The question is whether you could recreate an archive
SPEAKER_03: of that level today, given how much more expensive capital is my point is that ZURP helped Netflix catch up to these studios and create this huge library. But still, I think that what the streaming services have shown in their churn is that if you don't provide original content and original programming, then users will turn off that. So you have to kind of have both you kind of have like the library as filler. But if you don't have a hot show, come along every so often the subscribers will turn off that you need to have some new content, depending on how deep the libraries feels
SPEAKER_09:
like Netflix and Disney plus have done a great job with our libraries just to give you an idea.
Revenue for Netflix for 2023 33.5 billion 247 million subs, that's our poo yearly revenue for those folks. 136 bucks a year. Now the reason you're seeing that number not make sense if
you're paying 15 bucks a month is because internationally Netflix is a lot lot cheaper.
But I love those two businesses. I think they're going to be extraordinary over time. Netflix has
SPEAKER_06: to acquire 100 million people a year just to stay even. What's their churn rate? 4% a month?
SPEAKER_03: I think it's fine, right? So they're turning half their customer base every year. That's my point. 100 million people, they're rebuilding their customer base from scratch every two years. How does that make sense? It's totally fine. Because what happens is you have people coming
SPEAKER_09: off their parents plan, getting their own people go through a bad beat. They don't like it, you know, whatever they unsubscribe, but they all come back, back and forth, back and forth. And then it just keeps growing over time. I think you're describing something that's true. I think
SPEAKER_06: David is describing why it's a shit business. I mean, if they if they make more money than they
SPEAKER_09: spend, and I don't think they need to do a ton of advertising. Eventually, you turn through so much
SPEAKER_03: of the market that actually you can't maintain that growth rate. I mean, if you reactivate, maybe you can do it. But I think that's what's happening. From a business perspective, the only
SPEAKER_06:
logical thing that I would do if I was running one of these businesses is attach it to another business where you can think about it in terms of LTV. So the only obvious example of that, I think,
is Amazon Video, because you can stick it beside Prime and a bunch of other things. And now you have a very different way of justifying LTV and minimizing churn. And that
seems like a I buy that argument, Jason, I don't buy like a standalone business like this trying to do it. Yeah, yucky. I know. Sorry, real quick. Have you guys dug into Netflix's business?
SPEAKER_07: I mean, they're still growing top line, the EBITDA margin continues to expand. I mean, all those facts might be true. But that churn engine and that recapture engine seems to be working in a way that they're printing cash and growing. It's pretty impressive. I don't know if
SPEAKER_07: there's a limit there. But I mean, I haven't looked at the analyst. I think that is the key.
SPEAKER_09:
Yeah, to the bundling point, Apple Plus, which is the TV component, not the hardware product.
is bundled as part of this Apple one program, which is kind of like Amazon Prime. And so I think you're seeing a little bundling there. Netflix also added video games to make it even more sticky. So I think there's like a subscription super app coming, which the New York Times is kind of done right with wordle crosswords, the athletic wire cutter and the New York Times. So I think you're going to start to see. Honestly, you just had a jumble of names that went in one year and
SPEAKER_06: out the other. I don't remember a single one. You said this is my point for most people, Jason, not a media aficionado, like New York Times is doing fantastic doing this bundling. Some people come
SPEAKER_09:
for the crosswords and wordle. And that's why they subscribe and they like the news. Other people come for the news, they discover crosswords and wire cutter and the athletic and they stay for that. So I do think there's going to be an incredible business here. I'll take the other side
of it. Yeah, they spent a lot on content though, during that period where Disney Plus came in, I think everybody's now has a little more discipline and the budgets came way down. If you didn't know the Hulk cost 250 million or something. The she Hulk rather that cost 225 million for nine episodes. What's the first offenders? 225 million? Wait, sorry. 225 250 million for nine episodes
SPEAKER_09:
of the she home. People criticize it for having bad CGI. So it's I think there's like new discipline coming to us. It's a Netflix show. A Disney Plus show a Disney Plus show. Yeah,
SPEAKER_07: I don't know about you guys. I've been rewatching the sopranos I find some of the content on HBO Max to be the best content out there. Oh my god. I've watched it so much. Watch ability on it. Disney doesn't have that much rewatch ability. I don't know. The only reason I keep my max description
SPEAKER_09:
SPEAKER_03: is I'm waiting for House of the Dragon season two. I mean, they didn't have that one show. I'd
be like, Yeah, cut it. You know, yeah, I do think this could help Netflix because a lot of these
SPEAKER_03: streaming services came along. We had way too many right? We got saturated with streaming services. And most of them you subscribe to you may not even remember subscribing. You may just subscribe to a free trial to get an NFL game. And then you get billed because you forgot to cancel it. By the way. Yeah. Have you guys ever gone into Apple iCloud settings and looked at your
SPEAKER_06:
subscriptions? Oh boy. Yeah. Get in there guys. Just go if you have like an extra five minutes,
SPEAKER_06:
you will save so much money by going into subscriptions in your settings and just turning them all off. I was shocked. I was shocked. I mean, this is part of your austerity measure.
SPEAKER_06: Absolutely. You know how many subscriptions to Disney plus I had? How many? This is what's so
SPEAKER_06: gross is why they even let me do this. I had three. What? Three. How's it even possible?
SPEAKER_07:
One for the plane? One for the kids? I had three. I had three. I had two HBOs. I had
SPEAKER_06: two Netflix. Oh, no, Netflix keeps sending you message saying, Hey, you need to update your payment information. But then I'm watching Netflix on my Apple TV. So I'm like, I'm clearly playing for paying for it somehow. It's so confusing and I have the perfect solution
SPEAKER_09:
for you. There are credit cards now where you can set a spending limit. And so what I do is every year, I just turn off the limit on that credit card. I just take it from unlimited or uncapped
down to zero. And I do this for business as well. And then all the subscriptions time.
SPEAKER_06:
You know what I call that? What? Jeff. Jeff does that.
SPEAKER_09: But I mean, having somebody go in there. I have a Jeff. I have a Jeff. You know, but it's very simple. You only use one card for subscriptions, and then you turn it off every year. See which ones you want to keep going. It works really well. And then you move the other
SPEAKER_06:
ones to a new car. I don't even want to say how many thousands of dollars I was wasting on like, dual lingo. I was like, I'm paying for dual lingo. And then I was paying for Italian is still terrible. Yeah, terrible. And then I had I had like a case against them. No, then I have dual
SPEAKER_06: lingo. And I had Babel and I had Rosetta stone. So I'm like, my Italian is not improving because of any of these three apps, but I was paying them collectively like $400. I had a whoop subscription. I don't even have a loop. When Rick Thompson started manscaped, I was I signed up for manscaped.
SPEAKER_06: I get all this ball deodorant I've never used it once. We know we know we sit next to her in poker.
SPEAKER_10: We know it's not working, bro. Just a message to manscaped. I have tried to cancel. I have called
SPEAKER_06:
I emailed I took it upon myself to try. It's impossible to cancel. They won't even let you
SPEAKER_06: reset your account so you can get a link to cancel. It's so hard. And still your balls are terrible.
SPEAKER_06: Yeah. My balls are phenomenal. I've sat next to him poker man. Not really. Okay, let's get into
SPEAKER_09: plastics and get off chamath balls. I mean, how did we get here? Subscription services,
SPEAKER_06: subscription services. Yes. Streaming is at a crosswords crossword. Apparently,
SPEAKER_09: so they're really trying to make that ball deodorant happen, aren't they? They're trying
SPEAKER_03: to make it happen. Well, they're trying to make Fetch happen. Ball deodorant is not happening. I'm sorry. What are you supposed to do? Squat and swipe? Is it a spray? Are you lifting and spraying?
SPEAKER_03: Trying to create like a new thing. But yeah, I was trying to support my friend in signing up for a
SPEAKER_06: subscription service. And now I can't cancel. That's my problem. That's my predicament. Could
you also take a shower? So I don't know, just bro putting it out there. I it's what's going on there.
SPEAKER_06: It doesn't have to do with the product. I signed up because Rick was the venture investor that seeded it and started I supported my friend. Yes. And now I want out and I cannot get out. Every time I try to get out, they pull me back in. I'm just gonna say when it comes to manscaped,
SPEAKER_09:
no, no testimonials, please, no testimonials. The worst part is like, you know, it comes to the
SPEAKER_06: house. And Oh, somebody opens your ball deodorant and puts it on your desk. They do. And no, they
SPEAKER_06: put it right on the kitchen counter. So as I walk through the library, I grab it and I'm like, who
SPEAKER_10: seen this bottle? Oh, my God. How do you apply it? Is it just a little dabble? Do you know? I mean,
SPEAKER_04:
SPEAKER_09:
it's apparently an ointment. Sax. It's an ointment. This is far too much information.
SPEAKER_09: I'll try it.
SPEAKER_09: For 10% off your use the dictator you get
SPEAKER_03: 10% off your ball deodorant at manscape. All right, freeburg. It's your turn to shine. No,
SPEAKER_09: not ball deodorant. We wanted to talk about micro plastics. A study came out. It's terrifying. We've known plastics have been terrible for years. I was turned into some sort of political discourse with straws and everything but plastics are horrible. We shouldn't be using them. But this study confirms a bunch about drinking micro plastics educate us on this study that everybody's talking about right now. Dr. Friedberg, I wouldn't start with the statement that plastics are awful.
SPEAKER_07:
plastics are polymers, which are long chains of what are called monomers. This is hydrogen, carbon and oxygen that comes together to form these specific molecules. And then we can kind of
bake them into crystal like structures. And the reason the plastic industry took off is because it ended up being very cheap to create materials that we could turn into chairs that we could turn into bottles to move stuff around. A lot of applications, everything from solar photovoltaics to our computers, to our laptops, to our phones, everything has some form of these polymers in it.
The polymers that are commonly used for making bottles that we consume beverages out of are a PET plastics. These PET plastics are made from a combination of natural gas and crude oil. So we kind of have a production process where we get the carbon, hydrogen and oxygen that's naturally found in natural gas and crude oil converted into these molecules that we turn into long chains and we turn them into bottles and fill those bottles and they end up being a lower carbon footprint
than using glass about 5x the carbon footprint to use glass instead of plastic in making a bottle to store stuff and move liquids around. 40% cheaper and a lot of other kind of reasons why
the industry and the world adopted plastics not just for bottle beverages but for other applications. So in bottle beverages because these are polymers there are these long chains of little molecules that are stuck together. Some of those chains break and then some of those
little chunks of those molecules end up floating around in the liquid that we're consuming.
What this study did that kind of highlighted a set of data that hadn't really been studied well before is they used a form of spectroscopy, so kind of a multi-spectral light system shining light at different wavelengths on the liquid in a bottle, in a plastic bottle, to figure out how many of these little plastic particles there were in the liquid. In doing that they found that there
was on the order of 10,000 little plastic particles per liter of water or per liter of
soda or drink or Gatorade or whatever the beverage is that you're drinking. The real question then is well how risky is that? So if you look at a lot of the the health agency studies, the kind of
well adopted and well researched efforts on is there toxicity associated with PET plastics on its own, they find that there's very little genotoxicity or no genotoxicity meaning it doesn't change your DNA, there's no carcinogenicity so it doesn't cause cancer. But there are other studies recently that have shown different mechanisms by which these little tiny microplastics might end up in your cells because they absorb into your body and they're small enough that they can cross into barriers, they can get into your brain, they can get into your cells when they're in your cells. There are other mechanistic studies that are done in a petri dish as opposed to being studied in the body where they've demonstrated that they could actually disrupt the function of organelles like mitochondria, endoplasmic reticulum, so all these little things that operate in your cell, they can cause irritation, they can trigger chemicals to be produced that might cause allergies, that might cause inflammation, and so on and so forth. So while the general molecule of PET itself isn't known or shown in any way to cause cancer or to cause changes in your DNA, there are other mechanisms by which these little tiny plastics might be disrupting cellular function, might be causing other health issues, and that's now going to open up a big area of research that's going to be
predicated I think on the fact that this study now shows that there are thousands, hundreds of thousands of little pieces of tiny plastic in these plastic bottles that we're drinking water and soda and juice from that are getting into our body and into ourselves. 240,000 little pieces in
SPEAKER_06: the average one liter plastic bottle. It's a pretty scary statistic when you hear that number. Small
SPEAKER_07: enough to cross the blood-brain barrier. Right, and in rats and mice they've shown that these
SPEAKER_07: little microplastics can actually accumulate in the brain if they consume enough of them. Now the reason this hasn't been well understood or studied in the past is we kind of look at the aggregate amount of plastic that's in a liquid and it's like oh the amount is so small it doesn't matter, but when you start to look at how small these little pieces of plastic are and add them up the cumulative effect over time that they can actually cross into cells, cross the blood-brain barrier, maybe are not getting removed from the body. That's opening up a whole lot of research because there's no easy way to just scan a body and say is there plastic in it, how much plastic is there, because there isn't a good chemical signature for it. And what these guys did is they used light to look in the liquid to find the plastics which we can't easily do in the body today. So Frejberg are you going to drink plastic bottle water anymore? I'm not. Okay, Jamal? I've
SPEAKER_06:
already stopped. This started for me about four months ago. My wife basically said we're getting rid of all plastic and at first I really pushed back and I'm like this is crazy. And she just kept talking to me about it and showing me all this data and yeah about a month ago I would say I switched so now I use glass and a carafe like this. Yeah much better. We got rid of all of the plastic in our in our house in the gym, no more bottles. It's wasteful anyway like why not if you
SPEAKER_09: have beautiful filtered water at home put it in a carafe. Sure but the scary thing I mean it's a
SPEAKER_06: little bit more inconvenient I'll be honest with you but it is very scary and I think that it does
alter the phenotype of the human body over time and I think you'd have to be insane to bet against
that. And I suspect when you look at the rates of depression and autism and Alzheimer's and dementia and autoimmune diseases, Crohn's, rheumatoid arthritis, to think that all of these environmental factors have no impact I think is is taking a very scary bet. Here's what I do. I buy these glass
SPEAKER_09: bottles on Amazon you know two or three cases of them I have the best water filter system at home
we fill them we put them in the refrigerator and we haven't bought plastic in years. Wow. In years? In years only because I care about the environment because I'm a good person. Good for you.
SPEAKER_07: Jason I'll also say like that that application is a pretty small like I think on the order if I'm right 80% of bottled beverages are drunk outside the home so people are buying stuff at convenience stores at gas stations at markets taking them with them to work and that's how a lot of plastic bottles are consumed. I carry a contigo with me. Remember the U.S. is such a small percentage of the global population you go to Africa you go to Brazil you go to China there isn't a great like people don't have these amenities that we have in our upper and middle class America that plastic bottles have provided access to products that consumers around the world otherwise wouldn't be able to afford so there's a reason they exist but by the way I also want to just be really clear there isn't conclusive evidence or science that shows these plastic micro particles or nanoparticles are causing these health effects there's certainly a lot of questions that it brings on well what is the cumulative effect of these little things getting into cells do they get into cells why they do when they're in there why would anybody bet that
SPEAKER_06: it's zero right so that's the reason what is the upside right well the upside is that people get
SPEAKER_07: to access cheap beverages on the street that otherwise people that are living on thirteen thousand dollars a year that can buy a you know a plastic soda for 25 cents you can also buy that's what in the candle yeah so that's that's definitely an alternative they're a little more
SPEAKER_07: expensive generally plastic just became the cheapest container sacks your thoughts sorry
SPEAKER_03: guys i stepped out to get a drink here did i miss anything it would be better if you had put a straw
SPEAKER_10: in your water bottle and we're drinking now i understand your level of depression
SPEAKER_10: it's actually just killing those arrow water bottles yeah did i miss something yeah there's
SPEAKER_03: a science corner i stepped out also i i use uh these beautiful contigos i think some people use
SPEAKER_09: yetis or other kind of things and i actually carry them with me only because i try to like think about the environment just the amount of plastics being created i don't know if you've seen this but like you go to whole foods now or you go to any supermarket and you see this wall
of salads freeburg like this is unconscionable like the we're literally giving people salad
in a giant plastic box yeah let me just say a couple things about this because there's this
SPEAKER_07: conception that this is just awful awful awful but plastics there there is a degradation of
these pets when they're exposed to sunlight there is a recycling system that many of much of this
material ends up in much of it yeah i mean i don't think that's actually correct not a lot but what
SPEAKER_09: would the alternative be right so the alternative is you put in a glass thing and you charge people
SPEAKER_07:
15 for a couple pieces of lettuce the reason the reason the plastic industry emerged is because it provided a low-cost way to transport materials and that we're all very wealthy so we have to just step outside of our bubble for a second and recognize that most people you know the dollar difference is a huge difference for most consumers they're not going to make that dollar leap so you know the fact that plastics emerged is to support a consumer market that's grown up all over the world yeah but how does this make sense look at these bananas just as an example to give people
SPEAKER_09: an idea bananas already come with a case called the peel and they're literally wrapping bananas
SPEAKER_09: in plastic now and you know i think this is where regulation makes sense no there must be a gas in
SPEAKER_07:
here or something because they're trying to keep the bananas from going bad that's why i just want to put in there i want to shout out like this is where i think regulations actually do work france
SPEAKER_09:
spain a lot of countries now are just saying you know what for fruits vegetables like yeah don't put them in plastic please we're not going to allow you to do that and and i think i'm not
SPEAKER_07: pro-plastic by the way i'm not drinking plastic from plastic bottles but we have to be cognizant of where this industry emerged from what the science says about it like i don't want to just be flipping about it what it's doing to all plastics what it's doing in the oceans freeburg
SPEAKER_09:
is unconscionable like this this is not like a do-gooder thing it's just thoughtful there's no reason that we need to have plastics as a standard it should be banned i'll give you some good
SPEAKER_07:
optimism around this there's a lot of efforts right now to develop microbes that can actually biodegrade these pet plastics so there's so we're engineering these microbes that will produce enzymes these are little bacteria that'll produce enzymes those enzymes can then be made in the plastic itself so then the plastic will biodegrade within a year after you use it so there's a lot of this kind of effort on how do you make naturally biodegrading plastics using biosources and biological molecules as part of the production process and a lot of big plastic packaging companies and industrial biotech companies are investing in this area this is where collectivism
SPEAKER_09:
can do good you know like if we actually as a society say we want to do sustainable packaging
like because of the tragedy of the commons like you're saying freeburg because it's cheaper capitalism like there's no floor here you know to stop people from doing this and stop from using plastics unnecessarily like wrapping bananas etc all right listen it's been an amazing episode of the all-in podcast for the dictator wish me luck today boys wish me luck use the promo code
SPEAKER_09:
dick we'll be following the live stream on the chat following the live stream use promo code
SPEAKER_09: dick to get 20 off your ball deodorant what do you guys think about actually like running some
SPEAKER_06: poker tournaments through the year called all in 100 that would be super fun no 100 i think we
SPEAKER_09: could replace the wsop pretty quick i mean it'd be pretty i'm not kidding we have still help you
on our school i think jason's right i'm not just tell me if i think you can get all the pros because
SPEAKER_06:
i think the problem is like those championships have been so watered down right there's 52 of them just in vegas in june and july and then now you have like these circuit rings so that there's bracelets and rings and then there's the european one then there's this one there's the the holling all of a sudden you you can't have i think you know you're gonna be a world champion can you really have like 150 winners a year sax are you bored with holden well i'll play with you
SPEAKER_03: guys but yeah i'm kind of bored with it yeah i played a tournament yesterday big o 37 players
SPEAKER_09: i came in first i don't know if you played where did you play i had a speaking gig yesterday in la
SPEAKER_09: after the speaking gig i was going to the airport i had a little time and i just stopped by hollywood park where i wanted to see the new one you're the best and i don't know there's nothing more boring
SPEAKER_03: always playing in a tournament with people you don't know oh it was great it was great there was
SPEAKER_09:
like a fight the tournament's last forever i mean i did the wsop a couple of times and you know i
SPEAKER_03: think i lasted like three days it's a long time to be playing poker this was one day people i got to the final table and they wanted to chop and i was the short stack i was like well you know my
SPEAKER_09: flights in for a couple hours i'd rather not chop and this woman i got in a fight at the casino almost this woman was wearing a mask and she goes this mother f-er won't chop and i said ma'am i
SPEAKER_10: it's my option to not shop madam madam i said madam madam whatever they them and she went crazy and
SPEAKER_09: the floor came over said ma'am you have to sit down she called me a mother f-er twice to my face you went on the way i was the short stack and i went on to win the tournament i kid you not how much did you win 1400 bucks so what is the hourly rate on that you make like 14 an hour it was a
SPEAKER_10:
SPEAKER_03:
hundred dollar buy-in so yeah it was uh 200 bucks an hour but here's what happened so i had this guy
SPEAKER_09:
massively for seven hours six hours maybe it was awesome it was great i was i had the time of my life it was the first time i played in a tournament for like since we played the one drop that time i haven't played in a tournament since then it was so much fun jason goes from playing the 100k
SPEAKER_10: to the hundred dollar i had a time of my life because i've never played big o before it's where
SPEAKER_09: you have five cards and it was high low it was so dynamic and oh yeah yeah big oh yeah yeah
SPEAKER_06: big oh is so fun i've never played whole cards and it's high low so i i was like i'll learn big oh
SPEAKER_09: i've never i've literally not played one orbit of big o i won the tournament it was awesome and so then it's me and this one guy and you know i've got like i've got him like three to one or
whatever and uh he's like listen i gotta go please i got my kids i was like no problem i'll chop it with you if we take 400 off the top for the deal there's a deal of cry she was like what and i was like yeah just i'll chop it with you evenly and so i won and i i just chopped it up and gave a big
tip what did you did you get like a certificate or like i think they put you on the website or
SPEAKER_09: something like that like yeah it's on the poker classic website that i i uh or i don't know if
SPEAKER_09: it's called the poker classic whatever it is but my point is we would have a great tournament we do each of the games each of us gets a free roll into the game and then everybody else buys it and i like it sax you like plo or you just like chess no no i like hold them but i'm just saying i
SPEAKER_03:
wouldn't play with a bunch of strangers yeah i like playing with friends you know but to goof
SPEAKER_09:
off and have fun yeah yeah yeah yeah like sitting the problem with tournaments you'll rsvp to my
SPEAKER_03: game show up at six and show up at 8 30 yeah and then listen to yourself on the pod and then leave
SPEAKER_06:
SPEAKER_09: yeah he's editing the pot at the table there's a lot of things you can do while at a poker game
SPEAKER_09: you can watch your podcast you can edit your podcast for the sultan of science the king of
SPEAKER_09:
david freiburg and yeah definitely the rain man himself we're live from davos we'll see you next year bye bye wait did you give me the shout out am i i did for the dictator himself use the chairman no chairman dictator chairman dictator use the promo code chair man or dick to get 10
SPEAKER_06:
SPEAKER_09: 20 or 30 percent off can somebody from manscape please let me cancel please please it's like 10
SPEAKER_06:
bucks a month it's just 10 bucks i'll give you the money i just don't want to get i want to be
SPEAKER_10: able to cancel you 10 bucks a month to not send all the odor
SPEAKER_00: rain man david
SPEAKER_01: and it said we open source it to the fans and they've just gone crazy with it love us
SPEAKER_00: besties are gone
SPEAKER_01: cold 13 that's my uh dog taking a notice in your driveway
oh
SPEAKER_05: we should all just get a room and just have one big huge orgy because they're all just useless it's like this like sexual tension but they just need to release them out
SPEAKER_04: what you're the bee
SPEAKER_02:
