SPEAKER_00: I want to play the theme music for this episode, okay? Hold on one second. Here we go.
SPEAKER_03: If you let the Indian government plant spies in your office, give a little whistle. If you have too many bots, you can come up with your own metric, MDAUs. MDAUs. When you want to incent your staff to not look at the bots, give them bonuses based on DAOs. Based on DAOs. Always let your bonus be your guide. When you're on the board and you see metrics that you don't like, turn a blind eye. Turn a blind eye. I just got subpoenaed.
SPEAKER_03: This is Jake Cal at his best.
SPEAKER_01: We gotta stop. We're getting ourselves into too much trouble.
SPEAKER_03: Rain Man David Saks.
SPEAKER_01: We open source it to the fans and they've just gone crazy with it. W.S. is queen of Kinwah.
SPEAKER_03: This is going to be the story of 2022 for sure. Before I guess the big case between Elon and Twitter is about to happen I guess in October at some point. A Twitter whistleblower has come forward and dropped a nuke into the middle of what was basically the story of the year in business I think. The former head of security hired by Jack himself and incredibly well respected Peter Mudge. Zatko he's referred to as Mudge. One of the most respected people in the security industry. Again recruited by Jack in 2020 after a team of hackers you may remember took over all these verified accounts. Obama, Biden and any alliance account as well. And he was head of security until January of this year, eight months ago. And he claims through explosive documents, a huge document dump that Twitter execs ignored these Twitter executives ignored multiple security vulnerabilities. Now why is this important? Well obviously if Obama, Biden and other heads of state have their Twitter handles they could say something that could cause an international incident and that's actually happened with hacks before. He also says they were not following even the most basic security protocols like safeguarding staff access to core software. Of course all this comes after there were Saudi infiltrator spies essentially inside of Twitter. I mean the list of things here that he is alleging is truly colossal. He dumped these documents to the Department of Justice, the SEC, Congress and the Washington Post. He alleges that the vulnerabilities make Twitter extremely vulnerable to foreign spies hacking and disinformation campaigns. And perhaps most importantly to the acquisition. The complaint also adds that Twitter's policy towards fake accounts incentivize quote deliberate ignorance by undercounting spam accounts and giving bonuses to execs for increasing users but not finding bots. Sax your thoughts I mean on this we talked about your subpoena or whatever that was. I don't know it's a subpoena. I'm being depositioned.
SPEAKER_00: It's so you're having a deposition. Yeah, they want to they want to dip it definitely to which is kind of amazing. But let's let's save that because I think this is more more newsworthy. So you recall on a previous show we talked about this idea that if Twitter sues Elon to go after the kill fee or to go after damages. The question will very rapidly become about whether Twitter has a bot problem and will discovery reveal documents that show that Twitter executives knew or should have known there was a problem.
SPEAKER_00: And so I said you know the question will very rapidly become what did Twitter executives know and when did they know it. Now I couldn't have predicted that this whistleblower would come forward but what he's basically saying is not only is there a bot problem. There is a cover up of the bot problem he's accusing the company of positively Nixonian tactics here. So just to build on what you said J. Cal. He said that Twitter executives don't have the resources to fully understand the true number of bots in the platform and their executives are disincentivized to count them properly because doing so would negatively affect their bonuses. So I didn't know that their bonuses were in any way tied to this bot issue. So he's basically he's making the Upton Sinclair argument that it's hard to get a man to understand a problem when his salary depends on not understanding it. So that's part of what he's saying. He's also saying that he's accusing Twitter CEO Peraga Agarwal directly. Let's just say these are allegations right. These are not proven yet. But here's what he's saying. Basically he's saying that Peraga and his lieutenants repeatedly discourage him from providing a full accounting of Twitter security problems to the company's board of directors. They basically prevented him from producing a written report. He also says that the company's executives ordered him to knowingly present cherry picked and misrepresented data to create the false perception of progress on urgent cybersecurity issues. He also alleges that they went behind his back to have a third party consulting firm. Their report scrubbed to hide the true extent of the company's problems. And as a result of this, he's basically saying that Twitter executives committed securities law violations by making material misrepresentations and omissions and SEC filings. And this is what got Elon to sort of commemorate Zako's revelations with one of his trademark memes, which was the meme of Jiminy Cricket singing, give a little whistle from the film Pinocchio. Which I think becomes a cold open here. Which just became our cold open. So yeah, look, these are very serious allegations. They're not proven yet. He's working with the same group who worked with Frances Hagen. And I certainly question some of the things she was saying, so I'm not going to automatically accept on faith everything he's saying. But I think by the same token, because he's working with groups that back Frances Hagen, who was very much not on the free speech side of this debate. I also think you can't just accuse this guy of being an Elon Stuge. This guy is a respected cybersecurity authority. He's one of these like white hat hackers. He's somebody who was an early hat. Literally, if you were to ask before all of this before he worked at Twitter, like, who would you want as your chief security officer, you know, give me a shortlist, he'd be on it for any company.
SPEAKER_03: Right. One of the most respected people who points out vulnerabilities. And I have a question about corporate governance and what seems to be a dysfunctional relationship here. You have jack hire somebody to solve the security problems. Then when presenting to the board, he's not allowed to tell the truth. And they, the board has given incentives to the management team. He's a top five top seven member of the management team. And he's gone here with this dysfunction where he's hired to tell the truth, to fix the problems. The board is turning a blind eye to it.
SPEAKER_03: And maybe the management team is not giving the board the data they need to make better decisions. Who, how do you game theory this? Yeah, I'm not sure that it's, you can come to all those conclusions.
SPEAKER_03: Yeah, I'm not coming to the conclusion. I'm just my mind is wandering of how this I read the, I read parts of, of his whistleblower. I can't claim to have read it all.
SPEAKER_01: It actually isn't super supportive of Elon's case. The most problematic thing that he points out is the following. And this is a quote from his complaint. He said, Twitter, quote, already doing a decent job, excluding spam bots and other worthless accounts from its calculation of em down. At best, he's alleging that Twitter omitted details, not that it lied directly. So if you kind of take that, I think what he's really pointing his sights on are, as you said, disclosures that have nothing to do with the spam issue, but have a lot to do with security. And that is something that typically in a in a public company board, filters up through the audit committee typically that gets a readout, right once a quarter from the rep from the right people who talk about, here's our cybersecurity threats and vulnerabilities. And then there is a readout from that committee chair to the board. And then those are noted in your quarterly in your quarterly reports that the secretary writes down. So I think part of why this guy may not have had the audience is it was also written that he was a pretty terrible manager. And there were hundreds of people in his organization who were just kind of running here and there. And so, you know, you guys have all been in the situation where we hire somebody who is an exceptional performer. And then we miscast that person by putting them in a point of leadership and being a team manager versus, you know, a single kind of like product or engineering expert. And it seems that there is a part of that at play as well, which decayed the ability for management to actually have enough faith and trust in this guy to put him in front of the board. So and that's all that's just come up in the last few days. So I don't know my, my reading of the whistleblower claim is really that this is the kind of thing that companies like Facebook and Google and others have had issues with the FTC in the past. They typically settle those claims, they pay a fine snap. But those things take three to five years to play out. So I suspect that this body of content more leads to that outcome, then is a smoking gun that really helps you on in fact, this, the fact that he's actually affirmatively stating that their calculation of em dow is actually pretty decent actually hurts the claim that he is making.
SPEAKER_00: I don't know if I agree with that, actually. Okay, go ahead, sex.
SPEAKER_03: So I agree with with Jamaa that the claims he's making are far broader than the bot issue, and far broader than the issues that Elon's raised.
SPEAKER_00: So I agree with you about that, Jamaa. However, I don't agree that what he's saying isn't specifically helpful to Elon's case. So what he said is, so this is from a CNN business article, he said, Zachos disclosure argues that by reporting bots only as a percentage of em dow, rather than as a percentage of total number of accounts on the platform. Twitter obscures the true scale of fake and spam accounts on the service, a move Zako alleges is deliberately misleading. And then see what you're saying here, sex, it just to do the math, the denominator matters here, if the denominator was all accounts, the percentage of bots would be much higher.
SPEAKER_03: If the denominator is monthly em dow, whatever they created, it would be a much lower denominator. And the percentage would change, I think is I'm just I'm just reporting what what CNN is reporting in terms of what Zachos alleging I just want to get on the table.
SPEAKER_00: CNN broke the story along with one other news Washington Post, Washington Post. Yeah. Basically what happened is this guy got fired in January and started working with these whistleblower lawyers. They put together a big report and then that report got leaked to The Washington Post and CNN as well as people on Capitol Hill. So that's kind of what happened here. So CNN goes on to say, Zachos says he began asking about the prevalence of bot accounts on Twitter in early 2021 and was told by Twitter's head of site integrity. That the company didn't know how many total bots are on his platform. He alleges that he came away from conversations with the integrity team with the understanding that the company had, quote, no appetite to properly measure the prevalence of bots, end quote, in part because if the true number became public, it could harm the company's value and image. So this is, again, the Upton Sinclair problem that they're I mean, at a minimum, David, you have to agree this guy is basically speaking on both sides of his mouth.
SPEAKER_01: I mean, these are both direct quotes from his complaint. So his complaint at best is very confusing and a little schizophrenic.
SPEAKER_03: Well, it's also just coming out. So there'll be more data that comes from. By the way, I don't I'm not saying that I believe him or disbelieve him, but I'm saying if you if you look at the quotes, the quotes aren't the smoking gun one would want if one was trying to look, I think we have to remember the the lawsuit has really nothing to do with this problem.
SPEAKER_01: The lawsuit really boils down to one very specific clause, which is the pinnacle. Question at hand, which is there is a specific performance. Clause that Elon signed up to. Right, which, you know, his lawyers could have struck out and either chose not to or, you know, couldn't get the deal done without and that specific performance clause says that Twitter can force him to close at 5420 a share. And I think the issue at hand at the Delaware Business Court is going to be that because Twitter is going to point to all of these, you know, gotchas and disclaimers that they have around this bought issue as their cover story. And I think that really, you know, this kind of again, builds more and more momentum in my mind that the most likely outcome here is a settlement where you have to pay the economic difference between where the stock is now and 5420 which is more than a billion dollars, or you close at some number below $54 and 20 cents a share. And I think that that is like, you know, if you had to be a betting person, that's probably and if you look at the way the stock is traded, and if you also look at the way the options market trades, that's what people are assuming that there's a seven to $10 billion swing. And if you impute that into the stock price, you kind of get into the $51 a share kind of a an acquisition price. Again, I'm not saying that that is right or should be right. That's just sort of what the market says.
SPEAKER_03: And how damaging Do you think this is to Twitter, independent of the deal to sell the company? I think there's two tests. One is the materiality of what they've reported. So and really, that comes down to just the the endow reported numbers. So if there really is some misstatement knowing misstatement based on what he's saying, that's an issue. The other one is the duty of care, responsibility of the board meeting, did the information that he's
SPEAKER_02: providing actually find its way to the board? If it was blocked by management? You know, it's a judgment call on, you know, whether or not management was trying to deceive or whether they were trying to investigate and identify more. If the information was brought to the board, and the board did not act, then there's an issue with the board's meeting their duty of care, responsibility as fiduciaries of the company. And that's really what he did pitch the board at some point, or explain this, but not in writing. Yeah, if what he's
SPEAKER_03: claiming did not make its way to the board, then it's hard to say that the board was in breach of their duty of care. If the CEO blocked it, then there's a question on what then the CEO can be fired, right? Then there's a good case for the CEO to be fired. I see. So I see, you know, probably one of three scenarios here. One is, you know, nothing happens to is that the board is actually violating their which I doubt knowing this board. I mean, knowing who's on this board.
SPEAKER_02: It's probably more likely that the CEO or some executives that block this information from getting to the board, the board then has to act now that they have the information and they say, Hey, you block this information from getting to us, we need to act. And maybe they remove the leadership that was responsible for that sex in terms of board governments. How much of this has to do with the fact that nobody really owned on the board any significant equity in Twitter? Is that true? Yeah, I mean, I think I mean, on the board was the highest, right? He owned two or 3% much
SPEAKER_03: it's Silver Lake on jack own Silver Lake egon's on the board. I mean, they're they're their owners on the board, right?
SPEAKER_02: The board. Yeah, we're low.
SPEAKER_00: To be clear, Zaco doesn't seem to be pointing his finger at the board. In fact, quite the contrary, he's saying he wasn't allowed to present to the board in the amount of detail that he wanted in written form like he wanted. So in a way, he seems to be exonerating the board, he is pointing the finger at Twitter executives. And the timeline here is instructive. Basically, what happened is, he was hired by jack Dorsey back when jack was CEO. This is in, I think, November of 2020. And at that time, jack had Zaco report directly to him. He actually took responsibility away from these issues away from Prague, who was running engineering, gave it to Zaco, Zaco reported directly to him. Now, fast forward about a year later. And jack steps down, Prague's become CEO. And then two months later, Prague fires Zaco. And it's in that time period that couple of months, where Zaco alleges that he's prevented from providing a written report to the board that Twitter executives instruct him to cherry pick that they basically try to amend this third party consulting firms report in order to make the situation look better in order to hide the extent of the company's problem. So I think this is I think the allegations as far as they go, are mainly a problem for Twitter executives. And look, I you know, I don't know the truth, these things are just allegations. I think this guy is a respected super sort of white hat hacker in the cyber community. At the same time, I don't know, maybe is a bad manager. Maybe there are other reasons for removing him could be a bad manager. And also, yeah, and you can't ignore the fact that under whistleblower laws, if Twitter gets fined as a result of these allegations, he could get 30%. So listen, we don't know the truth of it. However, I do think that this whole thing is a windfall for Elon's case. Because it does seem to provide substantiation for Elon's assertion that there's a bot prom at Twitter now and a cover up about it and a cover up about exactly yes, and a cover up that would basically potentially invalidate the company's SEC disclosures on the subject. Now, there's a question there's a question of law and a question of fact with regard to Elon's case. So in other words, at the end of the day,
SPEAKER_03:
SPEAKER_00: what they're going to be litigating in Delaware is a contract dispute is Elon contractually required to close and Elon's assertion is I'm not because this bot issue. So there's a question of law where if everything Elon says about the bots is true, is he required to close and I don't know what the legal ramifications that are. But I think with respect to the question of fact, which is is Elon right about the bot issue? There's no question that this is a bombshell that can only help his case. By the way, to your point, the the the stock was kind of pricing in a 70% likelihood of this thing closing if you looked at just how all this stuff was trading and it went down to 60% once that whistleblower report came out and people had a chance to digest it. So to your point, it definitely moved the goalposts a little bit towards to what in Elon's favor. There is a you know, an important thing to point out here, which is actually touched on, there is a whistleblower program that was created in 2012. And by the end of the
SPEAKER_03: SEC, as part of Dodd Frank, I believe we're in part of the evolution of Dodd Frank. And they've given out now over $1 billion in whistleblower awards, these awards come out of the SEC fines, you often wonder like, hey, they give this huge se see fine, who got it? Well, it turns out whistleblowers now are massively incented. Because if you're a whistleblower, it's a career ending. But basically, Jason, you're not you're not seeing the other part, which is when you go to these organizations to now help develop a whistleblower lawsuit, what has actually happened is you're not whistleblowing moral or ethical breaches, you're whistleblowing things that can come back to an issue that the SEC and the FTC can make an issue of because that's where the financial fines come. And that's where the remuneration and motivation. So for example, like you could have a company that's illegally, I don't know, killing dogs, horrible. But
SPEAKER_01: you know, the whistleblower claim will be about, you know, their disclosures in a 10k of how many dogs they killed to the SEC, right? In this case, you know, how many What did they tell the Yeah. And that's why he gave this to the SEC DOJ. The other interesting wrinkle here, and by the way, there's been two the whistleblower program, I did a bunch of reading on it this week. They also don't disclose who the whistleblowers are. So this isn't a case where you have to come out like Francis did, or Mudge did you a lot of these awards are being given quietly. So there and there's been two rewards over
SPEAKER_03: $100 million. And they don't say what the award was based on, you know, who did who, who the whistleblower is, or who the company is, they've been doing this in a very stealthy way. And it seems to be highly effective. The big difference, I think, with Francis, compared to this one is Francis just a PM, you know, who was not a top five or 10 employee, not even close to that. This is a top five, top seven employee who had access to the board and was giving reports to the board, at least orally. The final point on this, I would like to get everybody's commentary on if it is true, that they essentially were forced to Twitter was forced by the Indian government to put a government agent on the payroll, I think agent means spy, how explosive is that? And then how many that to me, that to me is the most important thing that is not getting nearly enough coverage. It's like you had a government come to a company that's based in America. And it's not it's not the United States government that did it. And basically said, we need you to place an agent of our
SPEAKER_01: intelligence services inside of your company. And it seems like they were like, Okay, where do you want them to sit?
SPEAKER_03: Now, sacks, if that's true, with I wonder if they would be required to tell the CIA and our government that their arms being twisted. Like, this seems unprecedented to me. And if they didn't, well, I think this is all alleged. So but if you sacks, what I think the bigger but no Jason, you should also ask the next one, which is, if they did it to Twitter, which is kind of small, what about the big honeypots of users? Google, Apple, Google, Facebook,
SPEAKER_01: Tiktok snap? And what about countries outside of just India? What about the United States? No, I mean, what about the United States? Well, yeah, we have access to the stuff, you know, through the courts,
SPEAKER_03: especially a process. So yeah, we have one is the process is you go to court and you get a warrant, not that it's a high bar, but a prosecutor has to go show probable cause and get a search warrant presented to the company. And then they turn over the data. This, you're right. It's explosive in the sense that what they're saying is that these government agents, this is what Zaco says, according to Time magazine, the purported agents had direct, unsupervised access to internal information.
SPEAKER_00: So I think means DMS when the accounts are created, who owns which account the IP addresses, that's what I'm guessing. They had access to which is you do not want to trust guessing, guessing what don't put anything in your DMS folks guessing what it doesn't mean is the Twitter menu in the cafeteria. Yeah, no.
SPEAKER_03: Yeah, not that I mean, not that anybody's been to that cafeteria in three years anyway. I mean, there's literally $47 all of that direct unsupervised access to the salad bar.
SPEAKER_01: I think I think you can. I think you have to make an assumption that if if what I should have governments are doing this to one company, they're doing it to all companies. Yeah, but you would think, right, then I know, but Google would put up a fight or Apple would put up a fight
SPEAKER_03: but who knows, you think they probably fight when they went into China, the opposite. Don't you think they do the opposite? Well, actually, what they did was there's actually even sneaker way to do it. What Apple did when they went there is they said, we're not providing cloud services in China. But all the cloud services are provided by this third party company. So then they could have plausible that I know what this is about. This is an example of how this is. But I'm asking you a question. Do you think that foreign governments have put pressure on the
SPEAKER_01: largest American tech companies to place agents and do you think they exist in there? They've definitely put to the first part, they've definitely put pressure. We see that obviously, then the question is, would our would the would Apple or Google do this and not inform the government or not put up a fight? I don't know. Well, I think it's fair to say that the the Senate Intelligence Committee is going to hold Twitter and have like a closed door meeting. And then the question is, you know, will they haul everybody else? And it's just is I think what what is what is an important question is, is
SPEAKER_01: this a dirty girl kind of business tactic at the highest levels of every company? And we just don't know it and are typically not read into it. And we would never know in the absence of this whistleblower thing. And my question is, do does our government know that our companies are acquiescing to these governments? Well, that's been a problem for a long time, actually. So there was a op ed by a Microsoft executive talking about this a number of months back where the argument was, well, the government has to go get a search warrant to get your data from these companies. But these companies don't put up a fight like they don't.
SPEAKER_00: They don't challenge the warrant at all. And why? Because they don't have an interest. They have an interest in being cooperative, right? The article is basically saying that if you're the subject of a search warrant, meaning they're going to Google to get information about Jason, the government should have a duty to inform Jason so that your lawyers can go challenge it. And that was the legal change that needed to be made. We had this conversation, I think last year. That is a change that should be made because in the old days, we were talking about the government being the government's in the old days when the government would present you with a search warrant, they'd have to go to you because all of your documents were in your possession. There would be at your office, that be your house. So they would come knocking on your door, give you the search warrant, you could give it to your lawyer, they could challenge it. That doesn't happen anymore. Now the government just goes and gives a search warrant to a big tech company because your data is in the cloud. But their argument is you don't own that data. The big tech company does. The big tech company has no incentive to fight the government, and they just get access to all of your data. And you don't even know you're being investigated. It's not an argument. You agree to that when you sign their terms of service. Yeah, the current situation is bad enough that essentially, you have very little protection and rights over your data. But what's happening here, the allegation is even worse, which is that government operatives are working with the company in a way that provides them access and even getting a search warrant. Yeah, they just buy on their ex girlfriend, their, you know, brother in law, whoever, they can just spy on a celebrity do whatever they want.
SPEAKER_03: I always, I'd always assumed that this was happening covertly, meaning like, look, if you're a tech company, and you know, you have a very bright, I don't know, PhD on a visa, and you hire that person to work in computer vision, I'm just making this up. How do you really know that that person is not an agent of another foreign country? And obviously, the overwhelming majority are not. But once you have hundreds or thousands of people, you know, you're not going to be able to get a job.
SPEAKER_01: You know that that you brought into your company, all it takes is one person, you know, for example, we just saw I think, in Apple, there were two people that were just recently arrested for stealing all of Apple's autonomous auto data and documents and design schematics and all of that stuff. And one of the guys was arrested right before he was trying to fly back to China. And so somehow they figured it out, they were able to get him he was not a US citizen. But then another guy that did it was a US citizen, but both were of Chinese origin, it just goes to show you that the covert nature of industrial espionage is probably at an all time high. Right. And I think that's that's a risk that every company has to manage and do the best that they can. But this is different. This is an overt risk. This is just an overture and saying, open the door, give us a badge, we're coming in, and we're going to get you. And this is why I think you have to deal with this case very delicately and in a different way. Yeah. And for people who don't know, Google does what's called the transparency report, Twitter also has one. So they they do try to put out by category search warrants, subpoenas, etc. Exactly how many warrants they're getting and the tech companies are at least trying to be transparent about it to the extent they can, but this is going to lead to a lot of people moving off of the cloud, I predict.
SPEAKER_03: We're seeing, and in fact, Apple is now storing your data. And a lot of your privacy information locally on your phone. And if it's encrypted, they can't hand it over, as we saw with the the terrorist shooting, it was in San Bernardino, where they couldn't unlock the phone, and they went to the Israeli spy company to do it. So, you know, I think I think the companies here, at least in the United States want to defend their users. But this is could be make people rethink the cloud. And I've seen a couple of pitches from startups, I think you're confusing issues. Of course, they're going to try to
SPEAKER_01: defend their users in the United States. But what if you have if you let somebody into a different country and that it's not as if it's not as if those servers are not accessible. Yeah, I'm not confusing this. I'm just talking about the United States here for a minute. I do think you're going to see people buy many servers to put or rent their own cloud services that are encrypted and impossible to unlock. And so look for that trend to come or more companies to encrypt it and say we don't have the keys chima. So isn't it crazy that like, you know, we spent the last 20 years
SPEAKER_01: pushing the cloud and the thing that may actually unwind the cloud is just the utter lack of privacy that we all have now. I've just had like, we've just created these massive honeypots, where, you know, any state or non state actor can essentially just have an incredibly detailed understanding of who you are. And why because we weren't willing to pay five bucks a month for storage. Everything needed to be free. Isn't this part of isn't this part of the
SPEAKER_02: philosophy behind decentralized services that, you know, crypto is distributed? Yeah, I mean, I don't like using that term, but just decentralized services where the data doesn't sit on some centralized, enterprise controlled servers. But the data is distributed either on a chain or in your phone or in some way. You know, your identity, your information, your content isn't isn't centrally controlled. And that that fundamental principle may actually come to kind of bear over the next couple of years and decades that a model, that model is more appropriate for us for me. And therefore, the services that are built that way are going to win in the market. The challenge is ultimately how do you finance those because those services, right? I mean, they they don't have as much of an You have to pay for them, you know, if you're willing to pay $5 or $10 a month for your privacy, consumers are doing it free. But I use the brave browser and VPNs. And these are becoming a major category. You hear it on podcast advertising all the time. DuckDuckGo brave VPNs are like VPNs aren't just for hackers anymore. They're like real, like,
SPEAKER_03:
SPEAKER_02: you're bringing up something that I think that's really important, which is that, you know, over the last 20 years, for all of us, we've been building these products on the internet, we've actually done a little bit of a disservice, because we've basically created these expectations of consumer surplus. And we've never given people true sets of trade offs, we've always said, Oh, you'll get more. And it's essentially free, because we'll back into an advertising model that that supports us being able to give you more and more for free. But it turns out that if you're going to be able to give us more, you're going to be able to give us more.
SPEAKER_01: And I think that it has some real consequences. And I do think that not enough of us actually understand why privacy is important. But when you start to hear these examples, and it'll be important to see what what the true details of this Twitter situation are. I think that the pendulum starts to swing in the other direction where we say, Okay, you know what, I'll eat out at Chipotle one night a week less. And instead, I'm going to reallocate that money to making sure that I have, you know, some amount of privacy, you can do it for 25 bucks a month, you know, two or 300 bucks a year, which is a big number for, you know, maybe the average Joe, but it's, it's, it's, it's being packaged and bundled right now. So you're seeing the VPNs, the anonymous search engines,
SPEAKER_03: the browsers all starting to bundle, they're bundling a set a suite of services. And so I think this is upon us now and consumers get it, and they want to protect their privacy. So and Apple has said this is going to be our reason for you to choose our cloud is that we're going to put the local settings, we're gonna put your data on your phone, encrypt it, we don't have access to it, use use Apple for this reason. Of course, they're also building a multi billion dollar ad business at the same time in Apple news. And so I think that's a really important thing. And there app store. So there's that I guess we should move on here. Well, we'll see what happens with this. The other big news story that people are talking about this week, and we talked about I guess last year was student loan debt relief. Interestingly, about 85 days before the midterms. Joe Biden has decided to unilaterally give 10 to 20k of debt relief to people who have student loans, you have to have under 125 k in yearly income as an individual to 50 as a household. And the student loan pause program, which happened during COVID has been extended to the end of this year. I'm not sure why. There's about they explained why. Apparently, it takes four months for them to turn on their cobalt written software that runs these loans.
SPEAKER_01: mighty change takes four months gonna take it's gonna take four months to restart the software that that calculates your loan balance and is able to print a bill. We're so incompetent. Okay, anyway, you have to apply for this. And as we know, student loan is student loan debt is 1.75 trillion.
SPEAKER_03: This is gonna cost us another 300 billion. Can't imagine what's going to happen with this 10 20k people buying NFTs and stocks and housing and we're going to hit the I guess we're going to Bloomberg Bloomberg had a report that said that, look, we we passed the inflation reduction act, we talked about it last week, but one of the key pillars of that is that there's a 300 billion of expected revenues coming in. And we essentially turned around and just gave that back to a very, very small segment of the American population.
SPEAKER_01: And Bloomberg's analysis was that it's going to create somewhere between point one and point 3% extra inflation on top of all of that. And so, you know, you really have to ask yourself, like, what, what was the White House trying to accomplish? I think number one, they made a campaign promise. And so, you know, I think Biden needed to make sure that he fulfilled that. But nobody was really happy, right? The progressives wanted something extreme. Everybody else said, you know, this is not really the right thing to do. Because it doesn't really solve the same, the the root cause of what we're dealing with, you know, if it would have been much better if you had said, Hey, listen, you know, we're going to make this stuff expungible on bankruptcy, that would have been really useful. What happens if you actually tried to, I don't know, you were from the inner city, and you worked your ass off, you became a doctor, you have 300,000 in debt, but now you're, you know, a resident and you make 126,000? Well, now you're, you know, you're kind of SOL here. So there's a lot of folks that they probably wanted to help that they didn't help. Then there's all the blue collar folks who are like, why this giveaway only to these folks? Then there are the people that paid off their loans thinking, why did I pay my loans off? Then there's the incentives that it creates for colleges, which is, well, I'm just going to keep jacking up tuition, because if they did it once, they may do it again. So all of these things, I think are sort of a little bit of, you know, it's a little bit of a head scratcher. And then the last thing, which we can talk about at the end is, I don't think this is what gets people out to vote. And I don't think it's what people care about ultimately at the polls, which if there was a political calculation to make, that's important. And specifically, when you look at what happened last night in a bunch of these districts, every progressive candidate got absolutely shellacked. They lost across the board. And so the progressive talking points around this stuff, fundamentally, when push comes to shove, doesn't work for Democratic voters. And then second is there was a really hotly contested seat, which was a Democrat versus a Republican. I think it's Pat Ryan, versus this guy, Mark Molinaro, the Republican, he was leading the entire way, and then this guy won 51 49. And this is a very centrist down the middle. Damn. So all the signs are like, this may not have been the smartest thing to do. But I don't think Joe Biden had a choice because he made the promise and he had to live up to it.
SPEAKER_03: Gary Berg, is this a fair thing to do a smart thing to do a cynical thing to do to buy votes? Where do you fall down on this issue? This is absolutely moronic. I think that the fact that 8 million households are eligible for this relief. And 10 to $20,000 is relief is provided to a minority of Americans is exactly what Chammat said, which is kind of distorted politics at its worst.
SPEAKER_02: This is a $300 billion bill to the US taxpayer. And the ultimate beneficiary of that bill, while we all might want to say it's the people that are getting debt relief that have taken out these student loans, that money was transferred to somewhere. And you know where it was transferred to? University endowments, and the pockets of for profit educational institutions. If there were a free market for education in the United States, and the government was not involved in the process of funding and supporting the educational infrastructure in this country, individual citizens would have the right and the obligation to make decisions about whether or not the money that they're spending on tuition actually has a positive ROI for them. By spending 10,000 or $100,000, am I going to make more than that much money back when I graduate? And unfortunately, we've lulled our citizenry, we've lulled our country into complacency, where that decision and that calculus is no longer required. Because Uncle Sam is there to give you all the money you want to go to college. And the hungry, money hungry institutions that are there to educate you are taking that money, putting it in their endowments or in the pockets of their shareholders. And at the end of the day, it turns out that that decision may not have been the best decision. And we're no longer holding ourselves individually to take responsibility for the decisions that we've made. And we're creating misincentives because of the government programs that have been created by telling people you need to get a higher education, the government is going to pay for it for you. And it doesn't matter if it does or doesn't work, because at the end of the day, if it doesn't work, we're just going to pay it back for you anyway. We'll bail you out. And there's a middle class in the United States of America that is going to end up paying the tax bill primarily, because that's where most tax dollars come from, for the minority of people that made a bad decision. And it's not necessarily their fault. They made that decision because the infrastructure and the system was set up to tell them, go to college, get a good degree, you'll end up having a good life, you'll make more money. And the reality is that they aren't, and that they don't. The ROI for many of these degrees has been negative. You make less money than you would have if you were actually in the workforce, earning an on the ground experience and progressing your career. You do not need a degree in philosophy or history or German studies to be able to go and be effective in the technology workforce or in the services workforce. And I think that we're seeing that play out. The biggest challenge now is if we're going to provide this loan relief and not reform the educational infrastructure and the requirements for whether or not an educational system is eligible for support from the federal loan program, we are not actually solving the fundamental problem. We are keeping this gravy train running, and we're not actually getting to the root cause of where this money is flowing. And this is exactly what happens. I will rehash my point that I've made 100 times at the end of empires. Everyone sees that the money train is leaving the station, and everyone jumps and grabs what they can. And that's exactly what's going on. We think that we're a rich nation, but we're becoming complacent. And this is unfortunate. And it's a really sad sign. I think we need to fix this educational infrastructure. We need to make eligibility requirements for whether or not loans are actually going to have a positive ROI for students. And then individuals ultimately need to be educated on that and held accountable to whether or not they're making the right decisions for themselves. Saq, should each American pay $1,000 to let these 8 million people off the hook? Because that's what this is going to cost.
SPEAKER_03: No, of course not.
SPEAKER_00: People say I don't like you. I just gave you the softball of all softballs. Go.
SPEAKER_03: No, I mean, look, I think this is an issue where all four of us are on the same page. I agree with everything that Jamal said and what Freeberg said. I mean, this bill is unfair. It rewards relatively well-off college grads over working class people.
SPEAKER_00: It's going to add 300 billion to the deficit. I mean, Joe Manchin should feel like a sucker right now because they just spent the 300 billion of supposed savings that he just agreed to. Just to add, it's unconstitutional. I mean, the Constitution expressly says no money shall be drawn from the Treasury, but in consequence of appropriations made by law. So I don't understand how Biden can even do this by an executive order. I expect this to be challenged and taken to the Supreme Court. And I think there's a very good chance it'll end up like Biden's other executive orders that were ruled unconstitutional. Remember, there was the vaccine mandate that he tried to do and there was the eviction moratorium that he tried to do and they're both ruled unconstitutional. I think there's a good chance that this will also be ruled unconstitutional. And like you guys mentioned, it's inflationary. I mean, these are basically STEMI checks, which we don't need right now. And it's going to make tuition go up because the more government subsidizes something, the more those providers have an incentive to raise the cost. So this is just a jump the shark moment, I think, for policy making. The question is, why are they doing it? And I think it really speaks to the nature of the Democratic Party today, which is the Democratic Party has shifted from being a blue collar, sort of more economically populist party, economically left party to being a professional class that is college educated, culturally left, more woke party. And this is the ultimate example of that, where the Democratic Party is basically passing this payoff and giveaway to their sort of woke college graduates at the expense of their blue collar, the blue collar part of their coalition. And, you know, a Democratic political scientists that I like to read Roy Tushara just today, he had a blog post called the Democrats Shifting Coalition, where he pointed out that if you look at polling, if you look at the generic ballot among white college graduates, they favor Democrats by 12 points, whereas the white working class, which is say non college voters, they favor Republicans by 25 points. So one of the biggest gaps in the electorate is college versus non college, that is the fundamental gap. It's bigger than even, you know, than any other gap than racial gaps or anything like that. This is really the key gap in the electorate. And this is a payoff to the basically to the foot the new foot soldiers of the Democratic Party. If you think about it, the old stereotype of a foot soldier of the Democratic Party would be a union representative, they were the ones getting out the vote. That person has been replaced with sort of a woke college graduate who joins the Democratic Socialists America, and they go out and they're the ones pounding the pavement and doing the ballot harvesting. So there's been a real change in what this party is about. And I think that's the explanation for why they're passing this. The MFAs, Chamath and then we'll go to you, Freiberg. The MFAs from Sarah Lawrence College have taken over the Democratic Party.
SPEAKER_01: Well, let me ask you guys, let me ask you guys a question. Yeah, when you guys graduated, everyone went to undergrad, Chamath you went to undergrad in Canada, right? I have no grad degree. Right. But when you guys graduated college, what do you think the ratio 80 20 90 10 50 50 0 100 was the first two years of experience in the country?
SPEAKER_02: Two years of experience you guys had in the workforce versus the education and knowledge you garnered in college? How important was it? 90% workforce. 90% workforce. First college I went to school at night, so I was working while I was at school.
SPEAKER_03: Right. I was a hundred and zero. I went to school, University of Waterloo, that has a program called co-op where you have to alternate school and work. It takes an extra year to graduate. But you end up getting 24 months of full time work experience.
SPEAKER_01: And you graduate with a lot less debt. I graduated with half the debt I would have otherwise. Sax, I mean, do you feel the same? I mean, you went and got a law degree. That's different.
SPEAKER_00: I mean, I think one of the things that I think is really important is that the debt forgiveness part, we haven't really touched on. There's another provision that caps repayment levels. So basically it says that the monthly payments on undergraduate loans will be limited to 5% of monthly income. Now, who is that the payoff to? That is the payoff to the art history major from Amherst who ends up being a barista at Starbucks, you know, or the democratic political operative who works for the DSA gathering votes. I mean, that is who the or the or the or the or the let me give the let me give the counter argument to you, Sax and I want to hear your response to this. So the counter argument is, hey, listen, the airlines got bailed out for a trillion dollars, you know, cumulatively 2008 financial crisis 700 billion or something to that number. I'm going to
SPEAKER_03: respond to that, which is, we actually made money on that bill. I'm gonna respond. Yeah. Okay, great. And then number three, hold on. And number three, me to airlines, banks, and then the Trump tax break 1.5 billion. So why can't a bunch of students get but 300 billion? That is the counter argument, everybody, we don't complain when, you know, the rich people get bailouts and the rich corporations and airlines do but now we're suddenly complaining about this little pittance here. What's your best response to that freeburg? Well, my position, my summer's former Treasury Secretary of the United States had a tweet storm about this. And he said, you know, the student loan issue arises arouses passion. Here are some observations and some responses. There is no analogy with bank bailout, student loans or grants that cost the government money. The bank bailouts were loans at premium interest, in which the government actually turned a profit. And it's important to think about all government services, because they're not going to be able to do that.
SPEAKER_02: I think the most important thing is the government services being infrastructure funding, where you are funding some underlying tubing or mechanism that allows society and the economy to progress versus making up for the dollar mistakes or decisions that were made in the past. I also have issues not just with this, but with the issues of people buying homes in coastal cities, that they get bailed out at the price of that home at the fair market price when a hurricane hits, because they paid a premium taking on the risk of a hurricane or a flooding event hitting their homes. And so, you know, I think that's a big problem that we generally have is we try and use the government as a system for providing bailouts to make up for past investment mistakes made by individuals and businesses. And I think that there's a very clear distinction that you can make when you decide whether or not a and we use the term bailout anytime we're spending money. And the reality is, if you're making an investment that has some payoff for economic growth and for people and for this country to progress in some measurable way, that is a good way to assess whether or not that is a reasonable investment versus saying, you know what, I'm covering someone else's liability. And if you do that, we're actually burning money, and we're putting ourselves deeper in a hole as a nation and making it harder to do the former to make the infrastructure investments and make the investments that allow us to move forward. And I think that that's a really good way to clarify these things. And frankly, the list of things that people say, this is fair, this is not fair, yada yada, go down that list and ask yourself that question. Is it a positive ROI to progress our country forward? Or is it a bailout for people that had some liability they took on that they can't cover? And I think for all those things that are unfair, a really important point, we cannot get caught up in the endless cycle of making up for other people's unfair benefits that they got from this government. Because at the end of the day, that's a road to nowhere. We will burn through everything we have, and everyone will scramble for money. And that's the state that we're in right now where everyone's raising their hand. And they're seeing $800 billion bills, $600 billion bills, COVID relief, pandemic relief, PPP loan relief, and everyone says, Well, what about me? And at the end of the day, everyone's what about me is going to drive us into an infinite black hole that we will never get out of. And we have to change our mindset and take individual responsibility and recognize that the dollars that we're spending have to have an ROI for progression of us as a whole. And this is a really dangerous place that we're in right now. So if the if the education comments, okay, can I make sure it makes you come to the next question to sex? Am I monologue? You today? I feel like I'm very past. No, no, you're doing great. I mean, the fact that you're passionate about something video game. Yeah, that almond milk gave you a little those cashews.
SPEAKER_03: Maybe four cashews going forward. Guys, this stuff really bugs me. I'll be on the jigs. Yeah, I'm like, dude, like, this stuff just makes me feel like what are we doing? It's just Did you put chia seeds in your seat? And I said it was the goji Was it the goji berries? The goji berries?
SPEAKER_03: The goji berries. That's a superfood right there. If you if you have if you have chia seeds in the morning, this is a huge bm that's about to hit. It's just you're just waiting for the wave. Yeah, step mean, for sure. I have two comments. Comment number one is, I think the thing that shows that this could have been better is that it was completely silent on the ability to expunge your student loans in bankruptcy, the ability to discharge that is the single biggest change you could make to the system to be fair to everybody.
SPEAKER_01: And introduce a better ROI risk scoring calculation mechanism. Why? Okay, so great. So this is an agreement, but go ahead, explain it. Okay, in all debt markets, right? Whenever you lend money, there is an assumption of risk that you're taking. And that fits on a curve of highly likely to default zero likelihood of default. And that manifests in a risk scoring. So FICO score, but in the debt markets, right, and there's these companies that provide that Moody's and S&P, they say, you're an investment grade debt, you know, you're a triple A plus, you're a junk debt, so that you're, you know, you're a triple B minus or whatever. And depending on where you are, you pay different rates. This is the same in car insurance. It's the same in home insurance. It's the same in health insurance. But in all of those cases, if you go upside down, you can declare bankruptcy, and you can discharge those debts. Here, we don't have that idea. So if you go bankrupt, you can get a lot of debt. So if you go bankrupt, for whatever reason, this debt will stay with you forever, which is deeply unfair. Second, is if you actually flipped it, and you could allow it to be discharged, then the companies that provided these loans would be forced to risk score you. And the reason why that would be so powerful is that that would then create the forcing function for universities to actually deliver what they promise. And so who do you think is really against the ability to discharge in bankruptcy? It's the universities and the university endowments. So you know, if I were progressives, the thing that I would have pushed more than a handout to a few people, which by the way, didn't even, you know, really scratch the surface of the debt that they had anyways. And it also served to piss off everybody else. I would have focused on this bankruptcy issue, because that is a meaningful lasting change. And the second is, why don't you go and actually get a large portion of this money from all these university endowments, because the longer that these folks run what is effectively a multi trillion dollar asset management business, they're always going to treat education and the ROI that comes from it as a second class citizen.
SPEAKER_01: Okay, and that is what I think is wrong. And if you were to just fix this one thing, and then even the threat of actually confiscating some of the $50 billion that Harvard has, or the $49 billion that you Timco has, you would start or the UT system as you would start to see the seeds of change, where administrators would think to themselves, I have to deliver something of value, because these kids are getting loans, they're going to be risk scored. And I don't want to be the person. And I don't want to be the person that's like a low end borrower, right? I'm not serving junk paper to the market. I want to serve people that are going to go and really drive a huge ROI. So then sacks, you'd have an alignment between the people
SPEAKER_03: giving the loan and perhaps the value of the degree. And so you could say, hey, we'll give loans to STEM degrees at a different rate, or a different number of them or a different amount of cash or a different interest rate than we would for I don't know, you're getting a degree in philosophy or like I did psychology, right? Just give a different one based on the outcome. That makes total sense to you. Yes.
SPEAKER_00: Yeah, I've said for a long time that we should be allowing student debt to be discharged in bankruptcy, just like any other type of debt, just like credit card debt, just like other types of debt. Jamal's right, that would create some risk to the underwriter, so that they would have to actually assess whether this person getting that degree would be able to repay the debt. But you have to ask the question, is it a bug or a feature that they're trying to remove market forces? And I would argue that this is deliberate that progressives in the Democratic Party don't want there to be accountability for what you learn in college. Why? Because as I mentioned, it's these colleges that are putting out the foot soldiers of the Democratic Party. I mean, listen, there's a 37 point gap in party preference, just based on one variable, which is whether you are professional class or working class, meaning college degree or no college degree. And that spans across different racial groups and other party lines. So the fact of the matter is that if you go to college and get a degree, you are much, much more likely to become progressive. Now, why is that? I think it's because a lot of these colleges have basically become reeducation camps. I mean, these are the woke madrasas of cultural. Wow. A woke madrasa kind of like
SPEAKER_01: Harvard has. Who wrote that one for you? I see that. Yeah.
SPEAKER_00: In fairness came out with that line. Yes. These places are woke madrasas. And what do they do? They gradually new clerics of our woke theocracy. These people go on and then they go blow up building for sirs. Hold on. Come suicide bombers. Yes, exactly. It's not it's not like violent like that. But listen, we look down on some of these theocratic societies and we don't realize how like them we are. I mean, look, these kids who graduate from these woke madrasas, they go off to become the speech police. I mean, they go enforce community moderation and social networks. They become the foot soldiers. All right, let me just make
SPEAKER_02: let me say one thing. It's true, right? How do you explain it? 37 point gap.
SPEAKER_00: Okay, so if you're the Democratic Party, listen, if you're the Democratic Party, which is run by woke progressive political operatives, why would you want to defund the factories that are brainwashing more young students to basically join your ranks? Okay, I want to say two things. I want to say two
SPEAKER_02: things. One is, I think that the university and the college degree has been used as a heuristic for progression out of blue collar to white collar. It says if you get a hollow and J Cal, you know, I know you can speak to this because, you know, you come from a family that that works blue collar, and you know, you got a college degree, but I think there is this, you know, kind of assertion in the United States and it has now become one could argue a meme that if you get a college degree, you're no longer blue collar, you're now white collar. And the reality is that the quality of that degree varies greatly based on where you go, the major and the experience you get to accompany that degree. And as a result, you may not necessarily transfer from blue collar to white collar, but you have the degree you say you're now white collar and then you're working a blue collar job with $120,000 a debt. And so that's the tragedy that heuristic isn't true. And what we need to examine is why that heuristic is no longer true. And what we can do about it. Yeah, I mean, it's pretty good. Secondly, secondly, I do want to make a defense for college. I think that there there is a incredible benefit to broadening individuals exposure to topics, research, and areas that they may not have naturally been interested in, or that they will not necessarily get trained in. And there's an important role that that educational infrastructure has in allowing us to be a more enlightened populace, meaning we can understand history, we can understand philosophy, we can understand the things that shaped our world, and our livelihoods and what makes us who we are today. And we can understand the sciences and the maps that affect us. So we can better understand the world and the people around us. So there is a role. But the real question is, how do you integrate that educational role into a technical training program, or into a real world development program skills that basically make an educational system more than just a checkbox that doesn't actually do anything for you, but gives you that exposure accompanied by maybe that's the requirement with you know, with federal loans, is that there should be some skill or some, I think, I think the minute I think the minute I don't want to lose the important breadth of exposure that college is meant to bring to people. Yes, and then that's valid. Go ahead, Chamath. And then I'll
SPEAKER_03: wrap up my final comment. No, I was just gonna say, I really think people do not
SPEAKER_01: understand how, how meaningful of a change it would be if you were able to discharge your student debt and bankruptcy. It is the most powerful market function we could create to make these universities more accountable. And I think if you guys look at my annual letter, I put a chart in there. But, you know, part of the problem that we have in these universities, these leading universities is that these have become graveyards. Okay, there is a gerontocracy that runs these things with an iron fist. And as these folks have stayed in these jobs for enormous amounts of time, now 4050 plus years, the average person is in their mid to late 70s. Now, who are who are the administrators of our leading institutions, they are focused on running up endowments, and they are focused on the power and the influence that comes with their position. So I implore anybody who has any ability to to actually achieve this change, there should not be a single logical person that should not support the ability to discharge student debt and bankruptcy. And you will identify the insider establishment by those that try to stop you, you will expose
SPEAKER_03: them 100%. And I just want to put a closing thing here for the people listening who have young people making these decisions. When we all went to college as Gen Xers, college was 910 $11,000 a year in tuition. And if you came out with 10 or 20k, and you had an average job or salary of double or triple that when you graduated, it seemed like a good deal. The ROI broke. Now, market forces are at work here, I just want to point out two of them. Number one, there is a website grow with Google, you can just look up right now. They're allowing people to get professional certificates. And this is free. And if you could pull up grow with Google, they've identified five different paths to jobs. One of them is digital marketing and e commerce ones, it support data analytics, project management and UX design. They have essentially looked at what's needed in the world and aligned a three to six months online course for fucking free. That'll get you a job. And you if you have executive function, the ability to sit down, shut up and learn can do this first before you make the decision to go $100,000 in debt, and then get a $50,000 a year job. Here are these jobs average, you know, 60 7080 k a year, and you can do it for free. The next piece that the private market is doing you and I looked into this chamath actually together ISAs income sharing agreements. We were lucky enough to invest in a company called Maritas. They are providing ISAs for a college Colorado Mountain College for nursing. What this means is, they will give you your tuition for free. It's educate now pay later. You go to one of these colleges for nursing, you get educated and then you pay it back and you're capped at paying back like two times whatever the loan is one and a half whatever the college decides, but they take the risk as opposed to Harvard with 40 billion that takes no fucking risk. And so the free market I think can also solve this but you have to sit down with your kids and say let's have an ROI calculation at 20k in debt, you know, okay, fine. You got a philosophy degree. By the way, sad off, sacks final question for you. I posted this thing in the group
SPEAKER_01: chat. But what do you guys think about this? You know, Republican tidal wave becoming a Republican ripple. That's what that's what that's it was. It was an odd set of outcomes, don't you think for Russian? I mean, Biden look Biden has had a good run
SPEAKER_00: over the last few weeks. I'm sorry, my audio cut out one more
SPEAKER_03: time. So I'll say it again. I'll say it again. The report says that the red wave looks more like a red ripple. No, I think
SPEAKER_01: it's right. Well, look, I think a couple of things happen. So
SPEAKER_00: first, Biden has got some wins legislatively. I don't think it's good policy. I don't think this executive order is good policy. I don't think the 750 billion is good policy. I don't think it's good policy. I don't think it's good policy. I don't think it's a good plan of climate that pretends to be an inflation reduction act. I don't think that's good policy. But nonetheless, he has delivered some goodies for his his base for his donors. And that has basically ameliorated the story in the press that Democrats are in disarray. So you're not hearing that. In addition, I think Biden's got two things going for him Dobbs and jobs. I mean, Dobbs, there's no question Dobbs has helped the Democrats quite a bit, certainly I think overall, the economic data is mixed. Real wages are not keeping up with inflation. But jobs have so far been strong. So yeah, there's no question that Democrats are in a materially better position they were in June, when it looked like a tsunami. That being said, the election still 10 weeks away. And I think we'll have to see what happens. And I think the economy is still in a pretty fragile state. So 10 weeks is a long time. But yes, you're right. Yeah, for wax, more things are looking right now. Things are a lot better for Biden. And by the way, I do think the Republicans have some issues with candidate quality. And so there's a couple of races
SPEAKER_00: that, you know, should have been more slam dunks and that are not. But first word you use there, you said Dobbs and jobs.
SPEAKER_03: What was the first job jobs abortion? Ah, the Dobbs case?
SPEAKER_00: Yeah. Got it. Got it. Okay. Okay. I just didn't hear it
SPEAKER_03: perfectly. weren't a lot of these wins for Biden bipartisan? Well, no, the inflation reduction act was passed on
SPEAKER_00: straight party lines. This this college loan forgiveness is something they can't even get through the Senate. It's being done as a as an executive order. The things that were bipartisan and all the things that were bipartisan, there was that chips act, where they got some votes. That's great. And then there was the guns bill. So yeah, look, he did get some bipartisan wins. There's no question about it. I think the Republicans, I think the Republicans got hoodwinked. Basically, the Republicans, foolishly went along with infrastructure and with the
SPEAKER_00: chips act, they should have forced Biden to use up reconciliation on one of those bills, and then they wouldn't have been able to get through the 750 billion inflation reduction act. So Republicans, you know, as much of a sort of master strategist, as McConnell is reputed to be they really got snowed on this one. If it's possible for somebody to masturbate themselves from the
SPEAKER_01: inside out, Jason's doing it right now. No, no, no. There's a reason why we do this from the chest up. Okay, I think
SPEAKER_03: what's likely to happen in November is still that the Republicans win one of the chambers, probably the house. I
SPEAKER_00: think the Senate is still up for grabs. I don't think it's over. I think that'll be important because Biden won't be able to pass some of this legislation that's I think, destructive from a deficit standpoint, from an economic standpoint, and we've talked about on this pod, I don't think you guys are too excited about most of the legislation he's passing. So, quite frankly, I'm just hoping for gridlock. I'd like to get back to the situation of gridlock. Less spending would be certainly great at this point. I mean, well, the federal government, inflation here while we keep
SPEAKER_03: spending money over here. It's challenging him. If you want to get back to fiscal responsibility, you got to vote
SPEAKER_00: for gridlock, or hopefully moderates come. All right, well,
SPEAKER_03: we'll let Saks go anyway, we're gonna go to science anyway. And Saks checks his email during that segment. So by the way, there's there's an article now, you know, when we talked about quiet quitting, it's now become this huge thing that everybody's
SPEAKER_01: talking about. Yes. And and what's so funny about quiet quitting is just yet another example of Gen Z again, co-opting something we've already done. When we used to do it, it was called coasting. And you just be resting, resting, resting. Yeah, but now it's called quiet quitting. Yeah, they're all up in their feelings. Do we want to talk about the gut bio? I want
SPEAKER_03: to hear about the gut bio. So there was a there was a paper published in. So the journal cell, the paper was done by a
SPEAKER_02: research team out of Hertzel. Yeah. So I'll take a step back. The human body is made up of roughly 10 trillion cells. And there are also somewhere between 10 and 40 trillion bacterial cells that live in your body, primarily in your small intestine, in your in what people call the gut biome. And so this is a population of microbes, bacteria, that are basically chemical factors, they eat stuff up, and they spit out chemicals, and those chemicals end up in our body. And it turns out that the gut biome, the bacteria in our gut, can actually regulate our health in a very significant way. So this was the basis of our company, Munique, you guys can bleep that out if you want, which is now called Supergut. And Jake, I know you've tried the product, which was awesome. Thank you sent me I bought Munique that helped me with my
SPEAKER_03: weight loss. And then I just got Supergut bar. The principle of that business is that there is a known product, a molecule
SPEAKER_02: amylose, that you can feed the gut biome, it doesn't get absorbed by the human body, it sits in the gut biome, and the bacteria in your gut, certain types of bacteria will eat it, their population will grow, and other population of bad bacteria will shrink. And the good bacteria release chemicals called short chain fatty acids that go into your blood and reduce your blood sugar and have a profound effect on on your metabolism. And there are also known gut bacteria that can regulate your sleep, your mood, your anxiety, your energy levels and your glycemic control the control of blood sugar. So it's an incredibly you're telling me, are you telling me that Cialis is a natural compound? Is it
SPEAKER_01: bacteria? Are you saying we have to cancel our Cialis prescriptions? Oh,
SPEAKER_03: no. So guys, there's there's a known there's a known principle that's
SPEAKER_02: really deeply studied now in neurology, in neuroscience, called the gut brain axis that you can actually profoundly affect disease and the condition of the brain, which is a natural compound, and the condition of the brain, and neuro conditions by changing the gut biome. And so this is this is something that's just being studied. The reason it's all it's all coming to light in the last few years, is because of the cost of DNA sequencing. We used to be very, very expensive to sequence the DNA from your gut biome, which you do by looking at your poop, and then you know, looking at all the DNA that's in the poop, and that tells you what your gut bio, what bacteria in your gut that used to cost 1000 bucks, now it costs five bucks. And so in the last couple of years, we've been looking at the explosion in research into the gut microbiome, and more importantly, how the gut microbiome affects human health. So this particular paper looked at the effect that eating artificial sweeteners had on the gut biome and on human health. And so what these researchers did is they they took 120 people, they gave them nothing or gave them sugar, or gave them saccharin or sucralose or aspartame or stevia, the four most popular diseases. And then they looked at how their gut biome changed. And importantly, they looked at how their glycemic control or ability to control blood glucose changed blood glucose, as you guys may recall, you know, you always have glucose in your blood, the more if you have over, you know, a level of 100, you know, and it persists, you can actually have really bad health effects. And it causes high A1C over time, which is diabetes. And so high stores more fat when you're spiking.
SPEAKER_02: And so you get when when you have high blood glucose, it's damaging to organs, it's damaging to cells. And over time, it can cause very significant deleterious effects to the human body. That's what the disease of diabetes is and does is it's about high blood, blood, high blood sugar, blood glucose. So what these guys did is they gave people saccharin, sucralose, aspartame and stevia, and then measured their blood glucose and their ability to convert sugar in the blood and absorb it and use it. And that's called glycemic control. The way you guys you guys have probably done this in the doctor, you take a glycemic control test, you drink a bunch of sugar water, and they measure your blood sugar every couple of minutes. And then they show the curve on how effectively your body can metabolize that glucose. And if it cannot metabolize that glucose, well, you have bad glycemic control. And ultimately, that is diabetes. And what they found was that if you eat saccharin and sucralose, which we always assumed were better than sugar, they actually adversely affect your ability to control blood glucose. Saccharin and sucralose in particular, drive up your blood glucose, and makes it harder for your body to metabolize glucose out of your blood. Aspartame and stevia were relatively benign. Oh, really? Because that's what's in Coke Zero. That's what I
SPEAKER_03: drink. There you go. And so so that was kind of the
SPEAKER_02: realization. And then they went deep, and they actually analyzed the microbiome. And they showed that there were profound differences in how these compounds affected the microbiome. It turns out that sucralose, for example, is more likely not being absorbed by your intestine. So it's sitting in the intestinal walls, and the bad bacteria are eating it. And the good bacteria that are supposed to be making short-chain fatty acids, and all these chemicals that regulate blood sugar have a lower population. And so we actually see a profoundly negative effect from eating certain compounds. Have you shipped your poop to test
SPEAKER_03: these? Like, we just did a clinical trial at Supergut, by
SPEAKER_02: the way, and we found, and we published it. So it's public. But wait, just the audience doesn't even know this stuff
SPEAKER_03: exists in all likelihood. You basically take a poop, and you put it in a vial and you send it and they analyze your poop. I don't mean to be graphic here, but have you done this before? How does this work? I do it. I've done it. Yeah. And I think
SPEAKER_02: it's um, look, here's here's the issue, Jason. Think and I
SPEAKER_02: want to I want to say two things that I think are really important to say. Number one is, we know very little about what bacteria do what in your gut. How which we're starting to understand which ones are beneficial, which ones make good chemicals that your body use and regulate your cells and regulate your health. And remember, we have a symbiotic relationship with the bacteria in our gut. They're making chemicals and they're eating chemicals. The chemicals they make affect our cells. The chemicals they eat affect our body. So the way that we evolve our health is actually profoundly affected by our gut biome. So we don't know enough yet to say definitively, this bacteria is good. This bacteria is bad. We're starting to have a good sense of that. The second way just say, yeah, just so you know, just to double down on
SPEAKER_01: this, like, there's a form of therapy, it's experimental, but it's called fecal microbiome transplantation, FMT heard about this. But you know, we are finding now that you can take feces from healthy individuals that have good, you know, gut biome and good bacterial counts. And if you put it, you know, injected into people that are suffering from a bunch of different diseases, it actually is looking like it's curative. So Parkinson's, MS, IBS, colitis. So it just goes to show
SPEAKER_01: you that this that somebody would go by, but there's
SPEAKER_03: bacteria really understood into another person really intestines. Where do you put it? No, you go through the bum.
SPEAKER_02: No, no, no, you Yeah, you could do it there. Or you can take a pill. So there's a little pill and it's got the fecal stuff in it and you swallow it and it needs somebody else's poop. You
SPEAKER_01: can fix your I said, I said it in a way so that we could see his reaction to in the bum and Jason was like this. How does
SPEAKER_03: this impact Uranus? That's what the audience wants to know. Freiburg. Uranus. Here's the other point that I wanted to
SPEAKER_02: make, which ties to what you said. This is really important Jake out. So the gut biome is an ecosystem like a rainforest. There are trees that grow monkeys climb the trees, they poop, there's jaguars, jaguars eat the monkeys, the trees grow because of the monkey poop. It is a whole ecosystem. All these organisms, all these microbes regulate one another and feed one another. And this is why probiotics do not work. Probiotics are single microbes, single bacterial strains or fungal strains that we put into a pill and we swallow it. And just because that microbe happens to have some beneficial effect, you know, on its own in a petri dish, it does not survive in your gut biome because it's like putting a housecat in a rainforest. The jaguar will eat the housecat. The housecat has nothing to eat, etc. It doesn't inoculate inoculate means that it survives thrives and the population grows. So when we take probiotics, it's just passing right through our gut. It doesn't stay there and doesn't change anything. And it turns out that the reason fecal microbiome fecal transplants work is because you're taking the whole microbiome from someone else's gut, and you're putting it in your gut, the whole rainforest, the whole rainforest. And so all the organisms that are needed that self that regulate one another, all of the small molecules that regulate that cross regulate each other, they all go in your gut, and then they actually change your entire gut, and your gut becomes the rainforest of someone else's gut. And so if someone else has a healthy gut, meaning my anus, my anus
SPEAKER_01: can be your anus, Jason. So we put our anuses together and then
SPEAKER_03: a monkey goes between them. And then the rainforest is well, let me ask you the FDA has not approved any of this yet. When will the FDA be approving these treatments, etc. There are a lot of there are a lot of clinical trials going on for
SPEAKER_02: fecal transplant. UCSF has a huge clinical trial for MS, as Chamath pointed out right now, where they are actually doing fecal transplants on patients without MS into people with MS. And significant, you know, the early data of these sorts of treatments has indicated that there can be a very profound effect on the frequency of lesions appearing on the brain, which is one of the primary symptoms of MS. And so these organisms we don't yet know why, but some of them will we
SPEAKER_03: understand this is a five year 10 year startups, there's
SPEAKER_02: billions of dollars invested, we know when will we know when half like a game plan. So it's already coming out. There's no it's not like a binary switch, we're discovering new things. There's a comp, there's a set of companies that are discovering what are called small molecules. So they're finding what are the little chemicals that those good bacteria are making in your gut? And what can we turn those chemicals into drugs. And so they're trying to turn those into drugs. Other companies are saying, you know what, this is a set of good bacteria, let's just put them in your body and figure out a way to get them to inoculate and stay. Other companies are saying let's do fecal transplants. And other companies are basically just saying let's change this is what we do at super gut. Let's just change the feedstock for your gut biome. And you can actually evolve the rainforest into a different state by changing what you're feeding the bacteria in your gut. And there's certain molecules, you can feed the gut bacteria, and then the populations will change into a more beneficial state. Why are people saying
SPEAKER_03: like eating drinking kombucha and fermented vegetables, pickles, whatever, apples are like great at fixing your biome and then taking sugar out is good for your biome. This is another thing I keep hearing like people are making single
SPEAKER_01: point claims like that because they have invested in a lifestyle and they want to defend their choices. It's not to say it's not to say that those things are bad. Those are all good. But I think what we know and the fecal transplantation is the most simple way of pointing this out is that it's a broad scale holistic approach that gets the best results. So as you know, like if you if you had if you've had a kid that's had you know, diarrhea, for example, right, you know, sometimes what we'll do now is instead of giving the kid some sort of diuretic suppressant, what you actually give them is probiotic, right. And what you're trying to do is to reintroduce healthy bacteria into that child's stomach in a way that allows them to self manage and self heal, while the bad, you know, diarrhea causing stuff kind of gets washed away as an example. So will one thing be a cure all for you? No, I think that you should be very skeptical of those claims. That's why everybody says, a healthy, well balanced diet is really important, because we do not know conclusively. This is why, you know, I tend to believe that the broad holistic diet works the best in moderation. Yeah, because you just don't know what you're not getting. We don't know that, you know, we don't know, you can't say conclusively that there isn't a form of bacteria that is created specifically when you consume animal protein, that is extremely helpful to you. We don't know that that's not true. Not now. We don't know that that is true either. Right. And there's a ton of research going
SPEAKER_02: on to try and figure that out right now. Have we figured out
SPEAKER_03: any of it though? Like, yeah, yeah, this whole generic ginger movement, we could we could do 12 episodes on this. There's so
SPEAKER_02: much amazing discovery happening. This is a good paper to highlight that, which is like, hey, maybe avoid products that have saccharin and sucralose in them. But my my big
SPEAKER_01: thing is there is no diet, whether it's keto, whether it's the South Beach diet, whether it's specific vegetarianism, whether it's veganism, nothing is a cure all for what ails you. There is nothing. And by the way, one important point in this
SPEAKER_02: paper, one of the points that these guys highlighted, which we see all the time in microbiome research, is that there are what are called responders and non responders, that within a population, it's not like everyone that eats sucralose has the same negative effect. Some people have a really negative effect. And some people have a mild to moderate to neutral effect. And so there's a range of your particular physiology, your particular gut biome, that will respond differently to different inputs into your body. That's the most important thing to figure out because people
SPEAKER_01: need to spend time eating and sampling to understand what makes you feel better or worse. This is why I have an issue with, you know, the broad based claims of this path will solve all your problems. It's just not true. You have to solve it for yourself. And it's, it's through iteration. And then the the Yeah, anyways, it does seem like non processed foods,
SPEAKER_03: whole foods, things that exist in nature. That seems to me directionally correct as the way to go and then the fake stuff. And the process stuff may be less good for you agree with that? This is why I think like there there is a little
SPEAKER_01: bit of a scan being run on people who want to be healthy. Like for example, have you guys looked at the ingredient list on Oatly? You know, everybody loves oat milk, but have you looked at the ingredient list? Are you really telling me conclusively that that is healthier than milk? Since all
SPEAKER_02: I mean, I could I could argue both ways. But yeah, I mean, look at the chemicals. Look at the chemicals in a box of
SPEAKER_01: Oatly. I mean, just drink water. I can also tell you the
SPEAKER_02: chemical name for every chemical that's in milk, which is all chemical, like all everything around us is chemicals. So I understand I understand natural chemicals, but you understand synthetically made manmade chemicals that are explicit that
SPEAKER_01: have to be put on an ingredient list because of its danger in high quantities should be treated slightly differently in my opinion. Yeah, Oatly's just gave us three subpoenas. We're
SPEAKER_03: all fucked for being deposed by Oatly now. Alright, everybody, we'll see you next time on the All In Pot. Love you boys. Love you. Bye. Bye. Bye. Bye.
SPEAKER_02: Oh, man. Oh, man. We should all just get a room and just have one big huge or because they're all just like this like sexual tension but we just need to release them out.
