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E103: Tech layoffs surge, big tech freezes hiring, optimizing for profits, election preview & more — Transcript

by All-In Podcast · 17,222 words · 2,509 segments · language en · Watch on YouTube

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0:00what the f what are you wearing Jason
0:02what oh Uber had a big week so this is
0:05the Uber Montclair crossover hat oh look
0:07at that all right and I also bought a
0:08Montclair shirt you bought that or I
0:10sent it to you oh what oh you got the
0:12watch in the mug oh you don't know about
0:14the Apple Montclair
0:15watch
0:18or the commemorative mug
0:21or the new tech you don't know about the
0:24new neckties that are coming from
0:25Montclair it's actually nettec oh my God
0:29oh so good I'd just say somebody got
0:32their be quiet I'm not saying that I got
0:35a hundred thousand dollar sponsorship
0:37but we don't have a rule in the
0:40agreement about logo placement do we
0:43listen Jay Cal if anyone was willing to
0:45sponsor you every square inch your
0:47clothing will be covered in ads like a
0:49race car driver it is look you'd be like
0:52wearing a jumpsuit every day you know
0:53Montclair sponsorships are great this is
0:55five five dollars plus 17 of shipping
0:58from France on its Etsy I'm ready to go
1:02[Music]
1:06Rain Man David
1:10said we open source it to the fans and
1:13they've just gone crazy
1:15[Music]
1:18how was everyone's week what'd you guys
1:20do this week ah just busy working
1:23um trying to be helpful where I can and
1:25that'll be the extent of my comments
1:27today how is Market Street this time of
1:29year look there's all sorts of wild
1:30report I've gotten all sorts of inbound
1:32from people asking me if I'm like
1:34leaving craft Ventures to do something
1:35at Twitter no it's not true we're just
1:37Jason and I are just pitching in and
1:39helping out while Elon establishes his
1:41permanent team at that company elon's
1:44the CEO he's running it he's the decider
1:46he's making the decisions and that some
1:48of us are just kind of helping out in
1:50any way we can and that's really the
1:51extent of it it's a
1:53you know very much part-time thing we're
1:55just helping a friend but it's been like
1:57blown up in by the media into something
1:59much more than it actually is it is a
2:02hundred percent accurate I am still
2:03doing my day job podcasting investing in
2:06100 companies a year just helping out on
2:08the margins uh that's it the end I do
2:10want to try talking about one issue
2:12that's already public because it's
2:13already been tweeted so Elon had a tweet
2:16this morning about how there's now like
2:17an Advertiser boycott going on
2:21and This falls on the heels of a bunch
2:23of reports that came out over the last
2:24couple of days that supposedly there's
2:26been a big influx of like racist tweets
2:30and Jason I actually saw what was really
2:33going on which was it's all not true I
2:35mean what happened is that within hours
2:37of Elon taking over the company on
2:38Friday there was a 4chan attack where
2:41basically people from this message board
2:42created Bots to post hundreds of
2:45thousands of spam messages that
2:47contained racist words and epithets and
2:50within hours this has been detected and
2:53Yol who runs the the trust and safety
2:55implementation he met with
2:58me and Jason and Elon directed him to
3:00shut it down and he UL actually posted a
3:03tweet story about it that's the only
3:04reason I feel comfortable talking about
3:05it is because you already
3:08posted a tweet storm but maybe people
3:09don't haven't seen it or they haven't
3:11connected all the Dots here but what's
3:13really I think unfair about this is that
3:17as you've as you've seen it's not like
3:19your feed was all of a sudden filled
3:20with racist things these were spam
3:22accounts or bot accounts that were
3:24posting to zero followers they generally
3:26have zero followers or if they do have
3:28followers it's other bot accounts right
3:30so they're posting racist tweets Into
3:32The Ether so to speak it's not degrading
3:34anyone's experience it was shut down
3:36promptly but then what happens is these
3:39activist groups they're monitoring the
3:41fire hose right and so they publish a
3:43report saying that racist tweets have
3:45gone up 500 since Elon took over Twitter
3:48the truth is Elon hasn't even had a
3:51chance to change anything about the
3:53content moderation policies he's posted
3:55that like guys I haven't even I haven't
3:57changed anything about content
3:58moderation whatever the rules are
4:00they're the same rules that existed
4:02prior to him taking over and this is
4:05just an organized operation by people
4:08who want to create that report so then
4:11these activist groups basically publish
4:13this report they feed it to news outlets
4:14and then somebody then takes those those
4:17reports and then feeds them to
4:18advertisers and you get a boycott but I
4:20think the point here is that Elon didn't
4:23do this this is being manufactured by
4:25people who are not operating in good
4:27faith they are trying to manufacture an
4:29incident that they can then use to hurt
4:31the company yeah and it was thwarted
4:33immediately and fixed have you guys seen
4:35episode 333 of the Lex Friedman podcast
4:38he um he interviews Andre carpathy who
4:42is really I mean one of the great minds
4:44of our of our time particularly around
4:46Ai and ML and the question that Lex
4:50asked which Andre
4:51expounded on which I think is really
4:53interesting is
4:55what is the next generation of bots look
4:57like and
5:00I think where the problem gets very hard
5:02for all platforms so this is not a
5:04Twitter Twitter specific discussion is
5:06that you can now generate such real life
5:10like human images that are unique and
5:13you can also generate high quality text
5:16to things like gpt3 that's also you know
5:19that can offense essentially push the
5:21boundaries of you know a low-level
5:24Turing test
5:25I think the real problem over time for
5:28Bots
5:29for spam for coordinated attacks on any
5:32platform is that when you use these
5:35tools you're going to have to become
5:36very sophisticated in how you try to
5:39detect them and then to block them it's
5:43a really interesting discussion between
5:45you know two pretty meaningfully smart
5:47people carpathy was the head of uh
5:49autopilot at Tesla right autopilot
5:52Vision yeah so he's really smart yeah I
5:54have no doubt that Elon is going to do a
5:57much better job stopping bots on Twitter
5:59once he has a chance to do it because
6:01he's got this amazing team
6:03of AI engineers and and he's just going
6:07to be more focused on it you know what I
6:08like the most about
6:10what I heard this week is the idea that
6:12you can do either micro payments or
6:14subscription to third-party content
6:16providers because I think so much of my
6:17news feed is delivered to me through the
6:20Twitter app and then I click on an
6:22article and then it's like a paywall or
6:25it's some sort of difficulty in kind of
6:27accessing the content having some
6:29integration there or some ability to
6:30kind of make a micro purchase to read an
6:32article it's going to be I think a super
6:35feature the other thing that I would
6:36love Twitter to experiment with is if
6:38you have a micropayments model to
6:40Publishers it would be great if you
6:42could publish content without a byline
6:44allow The Economist and see what that
6:46does to information quality right you
6:49know if you if you if you do not get any
6:51credit to your individual name for
6:54writing stuff but instead it goes to the
6:55Masthead publication whatever it is the
6:57times
6:58the post I think it could have a really
7:01important Behavior change in how
7:03journalists cover the news it's worth
7:05experimenting with at least and if
7:07you're paying them enough money I think
7:08that you could probably demand that
7:10Facebook could probably demand that
7:11today you know strip the byline away and
7:13just it just says New York Times just
7:15like today it just says The Economist
7:17yeah it is a um The Economist is a very
7:20polarizing gig in journalism for that
7:23reason uh there are going to be actually
7:25a lot of journalists who would prefer to
7:28have their byline taken off one of the
7:30problems with journalism today is even
7:32if you're doing reporting in good faith
7:34tramoth and you put your byline on there
7:36harassment you know threats Etc can
7:39become very acute if you're just
7:40covering certain topics and so I
7:42actually think a lot of you know writers
7:45and journalists would opt into this they
7:46might prefer it I think they should
7:48because I think the two ends of the
7:49spectrum are better than this you know
7:51Gross Middle that we have the end of the
7:53spec one end of the spectrum is you have
7:55the New York Times The Washington Post
7:57and the economists with no byline and no
7:59attribution to reporters the other end
8:01is if you want to build a brand that's
8:03based on your name go start a sub stack
8:06yeah and I think that there's a very
8:07good balance there and the New York
8:08Times could Syndicate that as well but
8:10if you separate the two all of a sudden
8:12the news becomes more likely to be
8:13truthful news versus
8:15you know well disguised opinion the the
8:19other issue is you know for readers if
8:22you do choose to do a no byline
8:23publication you're really going to need
8:25time to build trust and for people to
8:27understand what you're doing because
8:28they will think you're taking the byline
8:30off in order to pursue a certain agenda
8:32right so that is the the that is the
8:35suspicion that can build up The
8:36Economist has been able to do this over
8:37decades with trusted reporting yeah and
8:40sub stack proves that you can have no
8:42reputation whatsoever and if you're
8:43publishing great content you can build a
8:45great business from scratch so yeah
8:48you don't need to pay your dues quote
8:50unquote by getting a byline at the New
8:52York Times to be a clever writer
8:54you can start that business today and
8:56get paid so I think the New York Times
8:57should just focus on being the New York
8:58Times and sub Stacks should focus on
9:01individual people and I think if you
9:03could clean up the middle that would be
9:05much better for all of us anyways I'm
9:07excited for you guys to help out and
9:08pitch in I hope you guys do some good
9:10with it I'd love to come back and use
9:11Twitter more often can we talk about the
9:14reporting that happened
9:16with the two guys that trolled the
9:18journalists and pretended to be fired
9:20employees because I actually thought
9:21that was such an interesting moment this
9:24week that all the journalists
9:25immediately parroted it because it fed
9:27their narrative Johnson checking done
9:30there was no reporting done and then
9:32several of them including I think
9:33Deirdre Bosa from CNBC came out and
9:35publicly apologized for that report and
9:38if folks uh listening aren't familiar
9:41with what happened these two guys came
9:43out they pretended to be fired Twitter
9:44employees on Monday walked out with a
9:46box
9:48up and they were like hey we just got
9:50fired it's terrible life is awful no
9:51it's even worse husband and wife you
9:53know the guy's name was one guy's name
9:55is Rahul ligma and the other guy's name
9:58was like Mike Johnson so the whole thing
10:00was ligma Johnson so I now here's what's
10:03so funny about due diligence hold on I
10:06read this story without giving away that
10:09punch line to my kids
10:11all of my kids immediately started
10:13howling they're like Dad if you say
10:15these two names are ligma Johnson and I
10:18was like oh my God and so you know when
10:20when like you know pre-teens can figure
10:22this out but the journalism industry
10:25could not that is kind of a very telling
10:27sign Friedberg made the key observation
10:28which is they didn't figure it out
10:30because they didn't want to because it
10:31fit their narrative so they don't they
10:32don't fact check things that fit their
10:34narrative this was my point about
10:36journalism I it just it was so poignant
10:38to me this week when this happened
10:40particularly as it relates to Twitter
10:43and the importance of call it open
10:45journalism or citizen journalism and the
10:47Integrity of kind of you know of the
10:50voices that we all kind of trust as our
10:52our kind of journalistic authorities
10:53that these guys came out and they were
10:55pawned right outside Twitter's offices
10:57into telling a story that fit their
10:59Sensational narrative and it was really
11:01a kind of poignant moment for me well do
11:03you remember that story I think it was
11:04originally a rolling stone and then
11:06Rachel maddowell Amplified it where it
11:08was in Oklahoma City where supposedly
11:10all these Mega Republicans were eating
11:11horse Pace because Trump told them to
11:13and they were and this is basically I
11:15thought it was like a coveted therapy
11:16and then they were going to the
11:18emergency rooms of all the hospitals and
11:19then they were turning away heart attack
11:21victims because there are so many of
11:22these these people going to the
11:23emergency room anyway it all turned out
11:25to be like a made-up story like a hoax
11:28but the media reported it because the
11:30story was too good right it just it fit
11:32too many of their preconceptions there's
11:34also one there's another Vector sex
11:36which is live coverage is
11:39um you know you really have to to be
11:41careful because when doing live people
11:42will call in and say oh they're at the
11:44scene of an accident and then they will
11:46do a baba buoy or whatever you know kind
11:48of Charades and so without fact checking
11:51and without saying hey we haven't
11:53confirmed this yet but these two
11:55employees are claiming this people want
11:57to get real-time coverage it's fine to
11:59do real-time coverage I think everybody
12:01in the audience has to understand so
12:03much credit what about the editor there
12:05was a picture and it said ligma Johnson
12:12why are you covering for these people
12:14I'm not covering I'm just trying to
12:16explain it no you're gonna even let me
12:18unpack the whole point let me unpack the
12:19whole point there's also you interrupted
12:21me well here's the thing there is a
12:23different standard for live news
12:24coverage and then there we've ripped out
12:26fact checking from a lot of these
12:27Publications and basic fact checking and
12:29a little bit of time I'm explaining why
12:31they make this mistake I'm not
12:32protecting them you want to know the
12:34reason they make it that's part of it
12:36but they've also ripped out fact
12:37checking and then they are in such a
12:39race to get the clicks on social media
12:41no no here's what's going on if the
12:43story fits their priors they run with it
12:46immediately and they don't do any fact
12:47checking because they don't want to know
12:49that it's not true that's what's going
12:51on there is an element let's check a
12:52story if it's a narrative they don't
12:54like because they're gonna they're gonna
12:56try and make sure it's not true yeah
12:57that's true of both sides and they'll
12:58use proxies this thing there's only one
13:00mainstream media this is the mainstream
13:03media who's the alternative
13:06Fox is uh the the number one network the
13:09alternative to the number one network is
13:11do you think journalists do this tell me
13:15the writer tell me the writer on sub
13:16stack wow there's a lot of different
13:18ones there so I who got fooled what sub
13:20stock writer got fooled by ligma Johnson
13:28fooled by ligma Johnson I don't think so
13:31I'm not defending don't make me just
13:33defend ligma I'm not defending we are
13:37both sidesing it I'm not both sizing it
13:38I'm telling you what is happening in
13:40journalism today they have ripped out
13:42fact checking and they are in a race to
13:44beat each other because the first person
13:45to get the story up gets a clicks that's
13:47the dysfunctional thing they try to
13:49create a story when there was no story
13:50there they agree with that as well they
13:53went and camped out outside of an office
13:54mid-market Street yes and they said hey
13:56there's this Sensational thing happening
13:58and there was no Sensational thing
14:00happening correct and so the little drop
14:02that fell into their laps the little
14:04thing that fell into their laps became
14:06the story because that's the story they
14:08wanted to see created there was no story
14:09beforehand that then that there were all
14:12these people being fired walking out
14:13with boxes and then they said let's go
14:14send live TV producers down there they
14:16sent the live TV producers down there
14:17and then the same things
14:20they did the same thing in New York at
14:23Bears to read the cover when they had
14:25other major layoffs at Bear Stearns and
14:27stuff like that during the financial
14:28crisis of course they sent people to do
14:29live coverage there not defending it I'm
14:31just explaining to you what's going on
14:32in the background as well with live TV
14:34and and the gutting of newsrooms and
14:36having no fact checking a lot of these
14:37stories go out but what about 20 years
14:39ago my 11 year olds and 10 year olds
14:43better copy editors than these adults at
14:46these that's crazy incredible
14:48Publications my kids started howling
14:50they were like Dad do you understand
14:52what you just said there's a league
14:54budget yeah I mean awesome I mean come
14:56on this is like prepubescent humor that
14:58these people fell for it it's ridiculous
15:01it's embarrassing it's certainly
15:02embarrassing yeah it is embarrassing and
15:05this connects with the 4chan board it's
15:06the same problem this is a grievance
15:09industrial complex right they're
15:11manufacturing grievances it's funny in
15:14the case of ligma Johnson it's not funny
15:16in the case of the 4chan board but these
15:18are people who are inventing stories
15:19because
15:21yeah to manipulate media because they
15:23know it's so easy to manipulate the
15:25media right anyways big shout out to
15:26Rahul ligma that was a great stunt well
15:29played sir it happens to be a huge fan
15:31of the all-in podcast apparently sir
15:33come on as the bestie guesty anytime he
15:35wants oh no well no definitely not
15:37please all right we should talk about
15:39layoffs and Tack lift 13 riff 700
15:43employees let go yesterday
15:45stripe 14 riff a thousand employees open
15:48door chime Dapper Labs all hundreds of
15:51employees Open Door the most significant
15:53they're 550 18 percent
15:56Dapper 22 percent uh and Twitter we'll
15:59see what the Riff winds up being but
16:01that's occurring as we're taping here so
16:02and then Jason Apple did a pause Amazon
16:05did a pause
16:07right and Google and Facebook
16:10yeah maybe trying maybe signaling a
16:14pause but haven't they've been hiring
16:15like in absolutely uh at a crazy crazy
16:19pace and we'll pull up the chart here
16:20actually it's instructive to look at
16:22Facebook and Google because they have
16:24not slowed down by any stretch of the
16:26imagination
16:28just by the raw numbers uh this all
16:30started to Peak in June and now it's
16:33starting up again so there's a website
16:35uh layoffs.fyi that's been tracking all
16:38these layoffs you can see the number of
16:40layoffs these are kind of major layoffs
16:42and the number of employees impacted
16:44been pretty consistent in the third
16:48quarter it started to die down in
16:49September
16:51from the Peak in May and June and now
16:55right yeah it feels like this is the
16:57double dip we were talking about I think
16:59this is the beginning this is not even
17:01unpack it well I think that we had if
17:03you take a very balanced view of what
17:04happened this week
17:06you have to start I think with the
17:08Federal Reserve and really what they
17:10said is rates will probably be higher
17:13than all of you think
17:14and they'll be higher for longer than
17:16all of you want
17:18and again without debating whether you
17:22know that's going to come to pass or not
17:24the thing that you can do is you can
17:26build a little sensitivity model to
17:29understand the mathematical implication
17:31of it and basically what it means is
17:33that the dollar that's right in front of
17:35you
17:36is now meaningfully more important than
17:38the dollar that's far far away from you
17:40so let's just assume
17:43that you know the FED funds rate goes to
17:45five and a half percent or so
17:47even five let's let's go to the
17:49optimists and say it's only going to go
17:51to five
17:52tech companies have to achieve 500 basis
17:54points above that minimum
17:56so we all have to generate 10 to 11
17:58percent returns for us to be on a
18:00risk-adjusted basis better than a
18:03Government Bond
18:05the problem with that is all of a sudden
18:06you know if you're trying to generate
18:08cash even three or four years from now
18:11it's not worth that much you need to
18:13generate dollars today and so you know
18:16they are really re-prioritizing the
18:19value of short-term profits and that's
18:21going to affect how companies get money
18:24the cost of capital so how much dilution
18:26you have to take so I think this is what
18:29companies are now bearing down for
18:31they're realizing oh man I need to get
18:34my cost structure way in line it is way
18:37better now just to put think about this
18:39contrast it's way better to grow at 20
18:41and be profitable
18:43than it is to grow at 100 and burn money
18:45because it's not clear where that second
18:47company is going to get the incremental
18:49dollars they need for growth and that's
18:51just a mathematical realization when
18:53rates are five percent risk-free rates
18:55are five percent so I think this is this
18:56is that moment where you see that pivot
18:58from pivot growth to profit yeah yep
19:01we've been talking about it for six
19:03months but this is this is this is how
19:06it is Manifest in Silicon Valley
19:08companies is of scale is through layoffs
19:11and cost reductions and cost savings
19:14so the investments in future growth are
19:17reduced and the timeline to drive
19:20greater profits
19:22is improved I think what if what Elon is
19:25going to do at Twitter
19:27or what is reported so this is nothing
19:29to do with anything anyone told me just
19:31what I've read in the reporting
19:33it's accurate that he's going to cut so
19:34deep he's going to cut 30 40 50
19:36potentially of the employee base
19:39it really sets a new standard for how
19:42profitable a tech company can get and
19:44again I'll give credit to a Twitter
19:46poster named post Market who I didn't
19:48give credit to a few weeks ago when I
19:50read this tweet
19:52which I think was a good one which was
19:54that elon's really going to show
19:55everyone just how profitable these tech
19:58companies can be just how lean they can
19:59be run
20:01and you know when you're doing a 10 riff
20:03or a 13 riff you may or may not even be
20:06getting to profitability with that riff
20:08when you cut 30 40 50 deep and you can
20:12actually turn a real profit on a
20:14business an Enterprise scale business
20:15like a Twitter or like many other
20:17enterprise software companies that are
20:19out there right now
20:20it really kind of sets a new standard
20:22that a lot of folks might then end up
20:23saying you know what maybe we should go
20:25deeper and there could be the case that
20:28private Equity firms take a look at this
20:29and there's a lot of these distressed
20:31mid cap and small cap software companies
20:33out there that private Equity firms now
20:35realize wow you don't actually need 50
20:38of the workforce in order to keep the
20:41product running and to drive to
20:42profitability and you could see a bit of
20:44a flurry of buyout activity
20:46as more folks come in and maybe try and
20:49mimic the Elon Playbook so you know
20:52that's one kind of prediction I think
20:54may arise if Elon is successful in
20:56making Twitter a much more profitable
20:58Enterprise it could set a new model that
21:01catalyzes a lot of other M A activity a
21:03lot of other buyout activity of these
21:05distressed small and mid-cap companies
21:06uh by uh by other actors can I build on
21:09what you're saying Nick could you please
21:10just
21:12throw up that tweet that I sent just for
21:14all of these guys to look at because I
21:15think it's incredible so to your point
21:16this is an incredible uh slide just an
21:19incredible slide and essentially what it
21:21shows for those folks that are not
21:22watching this on YouTube is it
21:25essentially shows the private software
21:27universe and then the public software
21:30Universe at different levels of
21:32valuation so as an example right now
21:35there are 15 companies private companies
21:38that are valued greater than 10 billion
21:40dollars
21:41and there are 40 public ones that are
21:43valued greater than 10 billion there are
21:4550 companies between you know
21:48more than 5 billion but only 60 that are
21:52public that are valued more than five
21:53and here's what's crazy there are 400
21:56companies
21:58who have an average valuation of 3
22:00billion
22:01and then there are already 70 companies
22:04in the public markets where they have a
22:06billion dollars of next 12 months of
22:09Revenue and it just goes to show you to
22:12your point freeberg
22:13if these folks have to generate an 11
22:16hurdle rate their cost of capital is 11
22:19percent
22:21the companies on the left will have to
22:23go through a lot of very difficult cost
22:26cutting potentially head count
22:27reductions
22:29you know repricing of the product
22:32all kinds of things
22:33yeah no not none of them have oh of
22:37these many of these are the left tracker
22:39you're on the Left Right 400 there
22:41there's almost 500 companies here that
22:43have to do an enormous amount of work so
22:45that they have a chance to be on the
22:46right hand side of this chart the point
22:49is that you didn't have to do this when
22:51rates were zero there was just an
22:53abundance of free money and risk seeking
22:55and duration
22:56that is now out of the market I think
22:59there's also a story that of the 200
23:01companies that are software public
23:03software companies that you see on the
23:04right
23:05some number of them will need to go
23:07private in order to do the restructuring
23:09that the market is demanding that they
23:10do in order to get rightly valued and to
23:13your point it will happen at
23:14meaningfully lower valuations than where
23:16they probably went public or their last
23:18drive around which will you guys as you
23:21guys enormous instructions yeah if you
23:23guys look at these 200 companies on the
23:24right how many of them do you think go
23:26private over the next 18 months to get
23:28restructured Allah what Elon is showing
23:31everyone is possible on Twitter 18 is 18
23:34months is hard to predict but to your
23:35point Freeburg I think if you look at
23:37the number of them that are unprofitable
23:40at least half of them will have
23:42difficulty and about so I think about
23:44two-thirds of these companies really
23:46have no line of sight to profitability
23:48in the next two to three years and again
23:50if you if you layer in this cost of
23:52capital argument
23:54all of those companies David will have
23:56to raise money at very egregious terms
24:01in order to keep themselves going as a
24:03public business in which case their
24:05alternative is to go private in a PE
24:07transaction so it's probably at least
24:10half these businesses I mean it's a lot
24:12there's 100 PE deals to be done yeah 100
24:15wow Stacks what do you think
24:17because you know these businesses and
24:19the models I mean some of them it's hard
24:20to get profitable if you're a scaling
24:22SAS business right like you have to get
24:24to a certain scale before it's possible
24:26well I don't I don't that's like a very
24:28specific question of like how many of
24:30them are gonna get acquired by pe firms
24:32versus going public or going private
24:35after being public that's that's like a
24:37very specific question I think the
24:38larger point is just that it feels to me
24:41like the economy is headed off a cliff
24:42right now I mean I can tell you within
24:44our larger portfolio of companies
24:48like I can see the trajectory so after
24:50q1 board meetings I would say about
24:53two-thirds of portfolio companies were
24:55hitting their numbers and one-third were
24:57missing and it still appeared to be like
24:59problems related to those specific
25:01companies not a macro Trend I would say
25:04after Q2 board meetings two-thirds were
25:06missing and one-third were hitting their
25:08numbers and it you could start to feel
25:09okay maybe there's like a macro Trend
25:11here and I would say after
25:13Q3 board meetings like now
25:15the entire portfolio is is reforcasting
25:18uh maybe there's like a handful of
25:20companies here or there that aren't if
25:22you're one of those congratulations but
25:24like even the best companies our
25:26portfolio now are seeing major headwinds
25:28and this is just I think an economy-wide
25:30slowdown do you think there's
25:31restructuring possible I mean can these
25:33companies yeah because let me just ask
25:36in the public markets do you think those
25:37public companies can get restructured as
25:40public companies in order to yeah it
25:42just yes it will yes of course it is
25:44extremely expensive well it's expensive
25:46I don't even think it's will I think
25:48it's just expensive
25:49yeah I mean coinbase as an example like
25:51look take coinbase versus carvana right
25:54these are both businesses that issued
25:58convertible debt sort of right before
26:00things got very very hard and if you
26:02look at where their convertible debt
26:04trades it's trading basically at an
26:06implied yield of about 12 or 13 both
26:08companies now one is probably you know a
26:12legitimate bankruptcy risk which is
26:14carvana that's what the market would
26:15think whereas the other one you know I
26:17think it has a very fortified balance
26:19sheet and could weather the storm
26:20coinbase but unfortunately in a moment
26:23where you know rates are again the
26:26risk-free rate goes to five five and a
26:28half our cost of capital to do business
26:30goes to 10 or 11. these guys have to pay
26:3312 or 13 my gosh it's really really
26:36deluded to be in business right now so
26:39it just goes to show you that you can
26:41stay public but if you want to get
26:44incremental money to cover your burn the
26:46only way you can do it without really
26:48you know blowing up your cap table and
26:50doing a massive recap
26:52will be through convertible debt but it
26:55has a huge overhang and you risk turning
26:58the keys over to the debt holders of the
27:00company
27:01so the alternative for that business is
27:03to go into the hands of private equity
27:06and get out of the spotlight of these
27:08public markets but public private Equity
27:11is very smart and the thing that's
27:14happened to them is they can't raise
27:16debt
27:17right so what do you think they do they
27:18just have to pay 50 less than what they
27:20would be willing to pay before because
27:21they have to write you know 100 Equity
27:24check so right there is no free lunch
27:27anymore I think is the big is the big
27:29point to to point out anywhere in the
27:31market right now I think one of the
27:33things I'm most concerned about or would
27:35be is I was talking with a friend who
27:37works at a private you know unicorn
27:40software company any we talked about the
27:43numbers of the business and I was like
27:44oh that company's probably worth X and I
27:46gave him a number and then I asked him
27:48how much money they've raised and
27:49they've raised more than x so I was like
27:52dude your options are worthless like you
27:54know this is a real problem I think
27:56that's probably going to become very
27:57systemic
27:58for scaled unicorn software companies
28:01what happens to these businesses sacks
28:02in the market
28:04you know as they kind of need another
28:06round but the value of the company is
28:08now less than the total cash that
28:09they've raised that all is sitting as
28:10preferred stock
28:12listen it's it's survival of the
28:14quickest those who are most willing to
28:17adapt the most quickly are going to
28:19survive and the ones that are stubborn
28:20and refuse to accept the new regime the
28:23market regime are gonna die we showed
28:25that chart remember that chart from
28:26Sequoia months ago on this podcast
28:29remember that where it basically showed
28:31what happens if you're a company that
28:34doesn't cut burn until the very end then
28:36you're still going to run out of money
28:37and die but if you make the cut right
28:39away quickly you you have enough Runway
28:42to weather the storm and I think that
28:44what we've seen is you know at my firm
28:47craft yeah this is exactly it yeah we
28:49showed This months ago we've been
28:50begging our Founders to embrace this we
28:52did a portfolio a review with our entire
28:56set of founders of our portfolio
28:58companies we did one in February when we
29:00felt the markets were changing and we
29:02did another one in May and we showed the
29:04slide and this is the most important
29:06thing for Founders to internalize is you
29:08have to make the changes quickly you
29:10know one way for them to think about it
29:12is let's say say you're a unicorn
29:13company okay and you raised at the peak
29:16let's say second half of 2021 you raise
29:18100 million dollars at a billion dollar
29:20valuation and let's say you've got 50
29:22million left in the bank right so you've
29:23burned 50 million a lot of these
29:25Founders are thinking that 50 million
29:27they've got left is only 5 dilution but
29:29that's what it was historically if you
29:31were to raise a new round today you
29:33might only be valued at 250. so that 50
29:36million you have left is actually 20
29:38dilution and that's if you could even
29:40raise which might be very very hard the
29:43most important thing Founders can do is
29:44forget about the historical terms on
29:47which you raise that money forget about
29:49how much money you were burning in the
29:51past just think about how much money you
29:53have in the bank today impute evaluation
29:56to it so you really internalize how much
29:58dilution that money represents and then
30:01create a new plan moving forward to
30:03preserve that cash as long as possible
30:04can I say something else quickly on top
30:06of this that's I think that's really
30:07good advice
30:10the thing that again people should do is
30:12you should just build a little
30:14spreadsheet for yourself to understand
30:16what the alternative financing options
30:19are for people who are in the business
30:21of investing so David to your point the
30:23current three-month t-bill rate is four
30:26percent
30:26you know you can buy munis now between
30:28four and five percent that are that are
30:31Triple Tax advantaged right you can buy
30:33uh high quality corporate bonds that are
30:36six seven eight percent
30:38and so it's stocks that have a dividend
30:40yield of five percent of growth growing
30:43Market leading growing and so all of
30:45them dividend yield exactly and so all
30:48of a sudden like turning around and
30:49giving it to a company where there is no
30:51end in sight in terms of it doesn't get
30:53you to profitability
30:55is a really really hard thing to do I
30:57was talking to an entrepreneur David
30:59soloff just yesterday
31:01and he said it really well he's like
31:04listen you know I'm not a macro
31:06Economist I'm not trying to forecast but
31:07he's like what I
31:09understood yesterday this is David
31:11talking about the FED as an entrepreneur
31:13the angle of attack has changed the FED
31:16has said this is not going to be some
31:19triangle Sawtooth it's not going to go
31:21up sharply and then come back down
31:23sharply which is what we would all want
31:26if we wanted things to get back to
31:28normal sooner
31:30the angle of attack is now a little bit
31:32slower which means it's going to take
31:34longer to get where we need to be
31:36and then we're going to stay there for a
31:37lot longer than we want and when you
31:39roll those two things together a lot of
31:42companies may run out of money
31:44and so if you can't get to default alive
31:46you have to look at your cost structure
31:48and figure out how to right size this
31:50thing because
31:51the cost of capital is just going to be
31:54really really expensive and this was the
31:56fed's goal right they wanted to take
31:57away this free Capital they want to slow
31:59the economy down and it seems like
32:01they're making progress they did the 75
32:03basis point
32:04hike this week but
32:06we're adding jobs to the economy we have
32:08more job openings and we had 2.6 percent
32:11GDP growth so I guess my question to the
32:13to everybody here is
32:15what is the Fed gonna have to do or can
32:18they stop this consumer and this growth
32:22it's very strange right Powell Powell
32:24said he'd rather over correct
32:27and break things because he has a
32:29toolbox to fix the broken bones but he
32:32doesn't have a toolbox to fix if they
32:34under correct and they have rampant
32:36inflation
32:38I mean not more explicit you can't get
32:40Jason so he's going to take rates until
32:42demand is destroyed and enough demand is
32:45destroyed such that inflation is tamed
32:48but that has huge implications to all of
32:50us because we all have to do our job
32:52trying to build a company trying to
32:54raise money trying to invest money
32:56it's just getting much much much harder
32:59than I even thought so like you know for
33:01me I'm like wow I thought that we could
33:04get through the worst of this by mid-23
33:06but now you have to plan for the worst
33:08which means okay now I'm thinking that
33:10man rates could be higher for much
33:13longer which means you know we could be
33:14in this market until early 25 and you
33:17may say hey that's way too conservative
33:20yeah but you have to plan for
33:22conservatism in this point so how do I
33:24invest money right now honestly I'm like
33:27hmm I should just put more into T bills
33:29isn't that crazy if a company's like
33:31hmoth can have another 10 15 20 million
33:33bucks I'm like wow I mean I don't think
33:35that that gets you anywhere and oh by
33:37the way that 10 or 20 million dollars I
33:39can generate four percent
33:40what a what a tough trade-off right for
33:43well for somebody who has access to
33:44private markets which should be high
33:46growth companies to take the guaranteed
33:48four over the 50x 25x10x whatever we're
33:52trying to bet on here yeah that's not
33:54it's not just the guaranteed four but if
33:56you want to take Tech risk then you
33:58could go buy the corporate bonds of some
34:00high quality companies for the 10 or 11
34:01so you take moderate risk so you're also
34:03competing with that not to zero risk can
34:05you explain that for the listeners what
34:06that corporate debt is and why it you
34:08know pays more sure there are there are
34:10you know high quality public companies
34:12tech companies that have bonds and
34:14that's corporate debt and they obviously
34:16have to pay a higher rate than what the
34:18treasury pays because the treasury is is
34:21risk-free and corporations could default
34:23so there is some risk to it it's not
34:25zero risk but you know it's like if
34:27you're willing to take Tech risk then
34:29why wouldn't you buy a bond at 10
34:30meaning the equity always has to beat
34:32that threshold return but but hey can we
34:36just go back to the jobs report for a
34:37second I mean the U.S government could
34:39default but it's considered the least
34:41likely to default of all issuers of debt
34:44in the world and that's right
34:47yeah that's why people call it the
34:49risk-free rate because it is the least
34:51risky the U.S can always repay its debt
34:53because the debt is denominated in
34:55dollars and the treasury can always at
34:57the end of the day print more money that
34:58would just be monetizing the debt other
35:00countries that owe money in dollars and
35:03obviously don't control the U.S mint
35:05they can't do that so they could
35:06actually default but since we're the
35:08world's Reserve currency we're never
35:10going to default however the dollars
35:12that you get paid back by the US
35:14government might be worth a lot less in
35:16the future because of inflation and
35:17that's the real risk you have to think
35:19about but there's no default risk right
35:21whereas with corporate debt there is but
35:23let's just go back to this the Jaws
35:25picture for a second Jason you asked
35:27about this so there is news this morning
35:30that we added 261 000 jobs in October
35:32and obviously given that there's an
35:33election in a few days then you know the
35:36administration is eager to point to this
35:38but if you dig a little deeper in the
35:40report I just posted the link there you
35:42see in the Raw numbers that there's
35:43actually 328 000 fewer employed
35:47Americans and the number of unemployed
35:50Americans actually increased 36 000. so
35:53and the labor force participation rate
35:55declined for the Third
35:56consecutive month to 62.2 percent so
36:00like I don't really understand like how
36:02all these numbers add up but the point
36:03is like the data is very mixed our new
36:06and and this very definitely negativity
36:08in there
36:09and this feels to me like the last gasp
36:12of the bull market where there's like
36:14this residual job creation but you look
36:18at like just what's happened in the last
36:19week where it's stripe cutting I mean
36:21Stripes probably the single highest
36:24quality I think it's probably the most
36:25valuable private company
36:29okay but but like software pure software
36:31company they had a 14 cut you're
36:33starting to see now the riffs really
36:35start to pile up so I think we're at the
36:38beginning now of a long cycle of the
36:41unemployment rate going up I mean it
36:42just feels like the economy is slowing
36:45so fast the markets are you know they've
36:48been puking now for six months it just
36:51feels like this is the beginning of a
36:53like really serious recession yet we had
36:54GDP growth yet we had job uh openings we
36:59had two quarters we had two quarters of
37:00net negative GDP growth this is when we
37:03had the debate about what our recession
37:04is it was true that if you looked at
37:07growth in nominal terms that appear to
37:09be strong and then it was net negative
37:11once you subtracted the inflation rate
37:12you know we said several months ago my
37:15prediction was a double-dipper session
37:16where you had this shallow technical
37:18recession then it bounced back in Q3 but
37:21now I think we're headed into the second
37:23part of it which is the real recession a
37:24recession characterized by joblessness
37:26and you're starting to see economists
37:28say we're going to go from three point
37:29something percent unemployment rate to
37:31say five or six percent unemployment
37:33next year so I think we're just
37:36beginning to see the the job Cuts start
37:38to add up
37:39this is I think this is what Powell met
37:42which is you know he'll take it as far
37:44as it takes and then he can fix it on
37:46the back end by reintroducing
37:48you know quantitative easing and
37:50reintroducing lower interest rates to
37:52stimulate demand
37:55but there's what are the odds he gets
37:57this right it seems to me that the FED
37:59has a habit of reacting too slowly they
38:01were too slow to react to inflation my
38:05guess is that they'll be too slow to
38:06react to the recession so we'll end up
38:09with a period of rates being higher than
38:11they should too long and then they will
38:13correct they'll drop rates but that
38:15could be two years from now and
38:16meanwhile we could be in a pretty deep
38:17recession two charts for you to look at
38:20the GDP uh by quarter and then after
38:23that the labor participation rate so
38:26there's your GDP q1 Q2 being negative Q3
38:29bouncing back we'll see what happens in
38:30Q4 here's your fed Force participation
38:33rate for labor as we discussed the thing
38:36with the labor participation rate that
38:37we're still not sort of like truly
38:39factoring in is like you know we had a
38:40million Americans die because of covid
38:42and you know starting in that Trump
38:45presidency we lost like seven or eight
38:47million immigrants
38:48so those eight million people have a
38:50huge effect on this number yeah right
38:52and it's not properly really factored in
38:54because if if you see that at the start
38:56of the Trump presidency it's just it's
38:58it just fell off a cliff basically
39:00and you also have people who retired
39:02early that was a big Trend and this all
39:04peaked in 2000 labor participation
39:06hitting that like 67 68 I think it's the
39:09peak
39:11and just slowly going down as Boomers
39:13retire early because they made so much
39:15on their 401ks and homes
39:17and then you're right your mouth we've
39:19had negative we've really cut
39:21immigration in the last whatever five
39:22six years I think there's an element in
39:24here that's missing on how much people
39:27individually are finding other ways to
39:29earn income that doesn't qualify and
39:31show up in the labor force numbers
39:33people
39:35have set up Etsy stores Shopify stores
39:38have tripled since covid
39:40people are making more money on YouTube
39:42on Instagram on Tick Tock than ever
39:45before there's a whole new class of work
39:47that revolves around the individual
39:50creating their own business creating
39:53their own income stream
39:54that's simply taken off
39:56and have taken off it was it was kind of
39:58a trend pre-covered but it really took
40:00off during covid and there's an element
40:02of this that's really more about the
40:04transition of how people work and how
40:05they earn
40:06that isn't reflected in these numbers I
40:08don't think that the idea that everyone
40:09should go be an employee at a company is
40:12necessarily the right way to think about
40:13Labor going forward the amount of money
40:16that individuals are earning is probably
40:18the better way to frame this up going
40:20forward and as really thinking about the
40:22earning power and the economic health of
40:24this country
40:25this is something important you're
40:26bringing up here gig workers are about
40:28nine percent of the uh Workforce and uh
40:31Uber and Dara had um
40:33they they grew over 70 this year but I
40:36think the big number that I watched for
40:37was drivers are making 36 dollars an
40:40hour in the United States working for
40:42Uber so you're exactly right people are
40:43finding other options whether it's
40:45doordash or Uber and that doesn't
40:46qualify in labor force right because
40:48they're no contract independent
40:51contractors are counted yeah they are
40:52counted I that's based on my preliminary
40:55research if somebody wants to fact check
40:56us that'd be great but my understanding
40:58is independent contractors which is what
41:00gig workers are classified under are
41:02counted in labor participation I don't
41:04know how they're counted so uh we'll
41:06we'll look that up and figure that out
41:09there was a story in BBC that the bank
41:12of England has now warned that the UK is
41:14facing its longest recession since uh
41:17Records began some of this is getting to
41:19be fear porn yeah but look here's what I
41:23think is scary about going into a
41:24recession is number one you don't really
41:26know how long it's going to take to get
41:27out we know the average recession lasts
41:29about 18 months but the truth is once it
41:31starts you just don't know and the
41:32second thing is you don't really know
41:34who's been stress tested people claim
41:36that they can weather the storm but the
41:38truth is that there's no there's no way
41:41to simulate truly simulate a stress test
41:43they claim they can but the only way is
41:46to really subject you know an
41:48institution to that pressure and that
41:49stress and then you see if they come out
41:51the other side so that's the issue is
41:53you're just going into this it's there's
41:55there's all there's a lot of unknown
41:57unknowns and
41:58and this is why I would just urge
42:00Founders to be cautious is because if
42:03the recession ends up being shallower
42:04and shorter than people expect great
42:07you'll be surprised to the upside but if
42:09the recession ends up being deeper and
42:11and longer than expected you don't want
42:13to go out of business you want to be
42:14protected against that so again you know
42:17we've been saying this since February
42:18and may but again I just reiterate I
42:20think it really makes sense for Founders
42:22to be conservative prioritize your
42:26survival above all else you know this
42:29recession probably will last about two
42:30years you want to make sure you survive
42:32it and to shama's point if you survive
42:34it with lower growth that's fine you can
42:36keep growing on the other end of this
42:37thing but if you go out of business
42:39because you grew too fast then you're
42:41not going to get the chance to fix that
42:42problem when the recession is over I
42:45just don't see anybody rewarding hyper
42:48growth that is burning a ton of cash
42:50where you have to be back in Market
42:52every year
42:53because it's it's just very hard to feel
42:56comfortable that the conditions on the
42:59field aren't going to be drastically
43:01different a year from now right it's not
43:02like we know that it's going to be
43:04better or worse and I think that that
43:07uncertainty is actually really bad for
43:09companies so to your point it's just
43:11like
43:12a lot of folks have tried to shy away
43:14David from actually revisiting their
43:16valuations they've done these
43:18complicated converts and they've tried
43:20to basically you know
43:23it's I think it's sort of like managing
43:25their ego or the board's ego and I think
43:28like the next shooter drop has to be
43:30these Founders and these boards just
43:33saying okay let's just take the hard
43:34medicine what's the real you know market
43:36clearing price and valuation let's get a
43:38third party to price it and let's get
43:40new fresh equity and then move forward
43:41because if you don't do that and you
43:44wait until everybody's trying to do it
43:46then it's going to be a really tough
43:47scenario so better to your point you
43:50know this is why I like stripe it's so
43:52smart better to cut now
43:54again it's always hard to let people go
43:56but it's better to do that now than 18
43:59months from now because you just have no
44:02idea how much more expensive or hard
44:04it's going to be then
44:06and who's going to even be in the
44:07business of lending money or investing
44:09money in 18 months
44:10and you know that that sounds pretty
44:12crazy but it's it's like I think that
44:13that's that's the moment that we're in
44:15to your point uh Friedberg I did a
44:17little research here and um
44:19according to the FED of St Louis if you
44:22accounted
44:24uh casual workers informal workers
44:28over doing over 20 hours a week of
44:31informal work AKA gig work you would
44:33increase labor participation between a
44:35half point and a point if you counted
44:37all of them maybe even uh slightly more
44:40than two percentage points higher so
44:41probably about a point uh seems like a
44:43realistic way to look at Labor
44:45participation and of the eight points or
44:48maybe now the six or seven points the
44:50ten percent
44:51it would then account for 10 to 20 of
44:53the 10 drop in labor participation it's
44:57just alarming statistics because if most
44:59people have most of their
45:02personal net worth tied up in their home
45:04asset and their home values are
45:06declining are going to decline
45:09and we're seeing this dramatic spike in
45:11Consumer Credit in the U.S it paints a
45:14really ugly picture for the next two
45:15years wow guys I'm just looking at I'm
45:17just looking at the markets today git
45:19Labs down 15 snowflakes down 13
45:23Mondays down 14 percent uh at least down
45:2730 percent in one day a Yelp is down 17
45:30percent
45:31is down 16 percent
45:34so it's just a horrible oh my gosh the
45:36cloud computing index wcld has hit a new
45:40low for the year it's down to 23 bucks I
45:43think the previous low was 25 is down
45:45almost eight percent today and this is
45:47on a day in which the NASDAQ is down
45:48less than one percent so the point is
45:51they're rotating out of growth stocks
45:53yeah it's just brutal and so listen if
45:56you're a startup founder you got to
45:57realize these are like some of the
45:58highest quality public so Leo's down 40
46:01today twilio is down 37 in a day today
46:05whoa but guys this is this is just math
46:09you know it's not a judgment on any of
46:12these companies it's just pure math this
46:14is why I think you have to be utterly
46:15unemotional in this moment and if you're
46:18if you're a CEO running a company
46:20particularly a SAS business
46:23you have to really figure out how to
46:26how to right size your cost basis and
46:28make this money last profitable
46:30industrial companies are Bill Gurley had
46:32a tweet a tweet about this a few months
46:34ago about how the biggest mistake people
46:36make in riffs is they just do like a
46:38tepid riff like a 10 ish riff and they
46:41have to come back and they do it again
46:42and they do it again this is what I
46:44think the the Elon action this week
46:46really sets a standard he shows the
46:48entirety of Silicon Valley that you can
46:50cut deep and you can turn a profit and
46:52you can do it fast and it could set a
46:54new standard for how folks are managing
46:56this Jack Welch used to in his
46:58management principles recommend dropping
47:00the bottom 10 of people every year and
47:02so you know the 10 13 Cuts don't really
47:05pass muster as a public market investor
47:07kind of looks at the the management
47:09across these different companies to turn
47:11a profit they're going to say the folks
47:13that are making the deepest cuts the
47:14fastest are the ones that are going to
47:15get valued it's unfortunate and it's a
47:17difficult circumstance for everyone in
47:19Silicon Valley to deal with from the
47:21employees to the investors to the public
47:23and private shareholders it's really
47:25brutal one quick question for you guys
47:26really it's really just this kind of
47:28Market motivation that's underway right
47:29now here's the chart uh and my question
47:31for you is when do Google and Facebook
47:34stop this I mean if you look at the
47:36number of employees being added it is
47:39truly extraordinary here's the chart and
47:40this includes the latest quarter so they
47:43are
47:45not turning off hiring yet what do you
47:49think hold on didn't they announce a
47:51hiring freeze
47:52they announced that they were at Google
47:54they announced that they were going to
47:56hold people accountable to better
47:57performance and they were going to go do
47:59more with less and then they added more
48:00people Facebook said that they would do
48:03a hiring three percent today yeah
48:04Facebook said it would do a hiring
48:06freeze
48:07well whatever jobs last quarter yeah
48:11well you're right they just announced
48:12the hiring freeze you look at Apple
48:14Apple just announced in non-r D
48:16functions a hiring freeze this is Apple
48:18like the most valuable most profitable
48:21company in the world so if Apple
48:23basically is putting the brakes on
48:25non-engineering hiring that tells you
48:27something about how fast the economy is
48:29slowing down I think that was a huge
48:31signal yeah the point Freebird makes is
48:33so correct which is if you're doing a
48:36riff obviously there's a reason why but
48:38I think we we're seeing too many riffs
48:40where the details of the Riff and the
48:43magnitude of the Riff don't match up
48:44with what the objective of the Riff is
48:46the objective of the Riff for a lot of
48:48these companies should be to get them
48:51cash flow positive or at least to put
48:54them on a Runway or a trajectory where
48:57they can get cash flow positive with
48:58their existing cash on the balance sheet
49:00right they won't need to raise money
49:01again and we're seeing a lot of
49:04companies where they don't achieve that
49:05and they have to come back again and
49:07again and hit it again and that creates
49:10more turmoil for the company and it's
49:12more unfair for the employees by the way
49:15sex to that point I'll just say
49:17how deep these come these companies are
49:18cutting and how you management is
49:20expressing shareholders how they're
49:22going to turn a profit becomes a signal
49:25for those shareholders on whether or not
49:26they want to stay in that stock and the
49:28companies that are doing it fast and are
49:30doing it deep the investors and the
49:32shareholders say you do actually have a
49:33path that makes sense here I'm going to
49:35stay in the stock cash today versus cash
49:36in the future sure off let me ask you a
49:38question in terms of strategy for one of
49:40these companies let's say the Facebook
49:42Corporation or
49:44perhaps even Google
49:46or apple even if they were to cut their
49:49expenses which might take obviously a
49:51riff and then because their stock prices
49:54are so depressed right now maybe even a
49:55mid cap one like a twilio or an Uber or
49:58an Airbnb if they were cut costs and
50:01then start buying back their shares
50:02which some companies have been doing
50:04what would that do in terms of the
50:06Market's appreciation of those stocks or
50:07management teams I think it's hard to
50:09tell I think that
50:11the if you have not lost investor trust
50:15I think it would be really well rewarded
50:18if you have become unreliable
50:22and undisciplined
50:25even those cuts I think would be met
50:27with some amount of excitement but
50:31but probably not a broad base support so
50:33you know it then it just goes to
50:35narrative meaning if Google did it I
50:38think that people really trust Sundar
50:40and Ruth
50:42and I think the stock would go Bonkers
50:44they would they would probably move very
50:46quickly into the echelon of apple and
50:49apple is sort of
50:51a first among equals like they're just
50:53they're just in a different class unto
50:55themselves
50:56Facebook I think is a little bit harder
50:58because I think folks have gotten burned
51:00and you know they would have to make
51:02some really really deep Cuts but then
51:04you know where do you do it you can't
51:06capitulate on this meta strategy
51:08but then the other part is where you
51:09make all the money
51:11and so you have this huge morale issue
51:13that you have to manage so it's just a
51:15really hard game to play just one more
51:17thought on on
51:19um on the rift stuff I think one thought
51:22experiment for Founders is to think
51:24about what was your plan at the end of
51:262019 why do I say that because 2020 and
51:292021 were two of the most distorted
51:32years ever in the history of financial
51:33markets and the economy because we had
51:36covet and then we had the reaction to
51:38covid right and so you saw there was
51:40this um you know zooms market cap hit
51:42100 billion all the e-commerce companies
51:44were doing extremely well you you know
51:46you had all this money printing you know
51:48you had zero interest rates and so on
51:50you had SAS companies hitting all-time
51:52Highs at the end of 2021 so we lived
51:55through this incredibly distorted time
51:57so as a thought experiment go look at
51:59what your plan for 2020 was supposed to
52:02be when you created it at the end of
52:042019 because that was the last time that
52:06you were thinking without any
52:08distortions you know that were then
52:10created and I think if you were to go
52:12back and look at your 2020 plan again
52:15created it at the end of 2019 you'd
52:18probably see that you could get by with
52:20half the head count you have now because
52:22probably you doubled your head count
52:23during the last two years during these
52:25heady heady times and yet I think
52:27Founders start thinking oh I can't go
52:29back to operating you know I can't
52:31operate at half the level of head count
52:32but you were you were operating with
52:34half the level of head count by death
52:36definition at some earlier point I also
52:39think sometimes I think what Founders
52:40say is what will people think if I cut
52:4350 meaning all of a sudden the perceived
52:46success of my business would be
52:47different and I think that this is where
52:49you have to realized no like there's a
52:51lot of ego tied up in these things which
52:54slows people down from doing the thing
52:55that they need to do
52:57yes it's a really it's a really it's
52:59hard to do I mean look at Airbnb as an
53:02example I mean they did this ginormous
53:04riff
53:05during covid because they had no choice
53:07I mean they're they're Revenue went
53:09essentially to zero and now the business
53:11is incredibly strong it's throwing off
53:13massive amounts of free cash flow and
53:15the stock market seems to really love
53:16what Airbnb has done uh and a similar
53:19story over at Uber in terms of having
53:21done significant riffs and probably
53:22could
53:25is still down almost 75 off its high
53:29right so when you say the stock market
53:30love it so they're they're up today
53:32three percent so meaning they're not
53:34down 30 in one day but they have gone
53:37down with the rest of the market they
53:38have gone down with the rest of the
53:39market
53:40but it feels like the business I'm
53:42talking about the business fundamentals
53:43when you're throwing off almost a
53:44billion dollars yeah now you're going to
53:47start people are going to perceive that
53:48business maybe as uh of this cohort the
53:51flight to safety right or same thing
53:53with Uber throwing or free cash flow now
53:54I think a lot of these names are gonna I
53:56don't know Airbnb right now but they do
53:58on Uber I think the people throwing off
53:59the free cash flow are going to look
54:00pretty attractive
54:02and be able to buy their stock back
54:03maybe all right let's talk about the
54:06midterms
54:08a lot of big uh Senate races and
54:11obviously Governors uh Pennsylvania
54:13Georgia Arizona Wisconsin Ohio all
54:16really important races sex what do you
54:19think
54:20well it looks to me like there's going
54:22to be a republican wave there was an
54:24interesting article actually on CNN
54:25where they it's called five scary
54:27numbers for Democrats and what they
54:30point to is that Biden right now has a
54:3542 percent approval rating 61 percent of
54:38the American people say he hasn't
54:39focused on the key problems so this is
54:41called the out of touch index 51 say the
54:44economy is number one issue compared to
54:45only 15 for abortion and then 78 say
54:48we're on the wrong track I don't think
54:49I've seen a right track wrong track
54:51index that was so negative and 75
54:54percent of the country says we're in a
54:56recession so you know when you look at
54:58polling numbers like that it must
55:00translate I think into a republican wave
55:04and you have now Real Clear Politics
55:05currently has the GOP gaining four
55:08Senate seats so winning in the Arizona
55:10Nevada Georgia and New Hampshire that's
55:12a big change from just a couple weeks
55:14ago and winning 31 House Seats so
55:17this is this is kind of what it's
55:19looking like right now but look the the
55:21margin is still within the
55:23within the margin of error on the
55:25polling so Nate silver has pointed out
55:27that within one standard deviation you
55:30could either have a republican wave or
55:32you could have basically the Republicans
55:35fizzle out so it's going to be very
55:37close but ultimately I think this breaks
55:39Republican yeah the to me the way that
55:43I've I'm looking at it right now is that
55:45it seems like most scenarios the
55:48Republicans will have the majority in
55:50the house
55:51and the real question is what happens in
55:53the Senate it's really really kind of a
55:55coin flip
55:57and that's going to be really
55:58interesting to see so you know things
56:00where I thought would break Republican
56:02in the Senate like Pennsylvania are now
56:05back to almost a you know a statistical
56:07Dead Heat
56:08so it's a really interesting moment
56:10actually it's uh but most scenarios
56:13David I think you'd agree is that the
56:15Republicans win the house and then
56:17there's a non there's a plurality of
56:19scenarios where they also win the Senate
56:21the house will almost certainly go
56:22Republican but I think the Senate now
56:24the the official percentages are 55
56:26percent likely to tip Republican but I I
56:29just think that in a wave year like this
56:31where the wrong track sentiment is so
56:34high I think all these races that are a
56:36dead heat they're more likely to break
56:38in One Direction as opposed to like a
56:40random distribution which is why I think
56:42you could just as easily end up with and
56:45you know instead of it being a 5149
56:48Senate it could be 55 45 because all
56:52these things could break the same way so
56:53right now so I I would slightly disagree
56:55in Pennsylvania I think Oz has improved
56:58as a candidate fetterman did that debate
57:00and since he suffered that stroke he
57:02kind of came across as somebody how do
57:04we feel about that I I I had very very
57:07hard to watch that happen and yeah I
57:10mean the guy the guy has suffered a
57:11stroke and is sad but he you know he
57:13doesn't present as someone who can be a
57:15senator right now I think what does the
57:17science say about that like a re as a
57:20society is this a good idea to have
57:22somebody post-stroke be in office I'm
57:23not picking any political side here I'm
57:24just talking about the the medical issue
57:26Alice is actually doing the right thing
57:28right now which is he's not actually
57:29focusing on that issue because it's so
57:31obvious he doesn't want to be seen as
57:33beating up on fetterman and instead he's
57:35a human he's focusing on the issues and
57:38actually fetterman's issues are very
57:40unpopular in a state like Pennsylvania
57:42so I actually think for both reasons Oz
57:45is going to win that I think fetterman's
57:46manifestly unqualified but also I think
57:49his positions are fairly unpopular so I
57:52think Pennsylvania will will almost
57:53certainly tip so let me pull up the
57:55chart here just so people can see Ohio
57:56is going Republican and then Arizona I
57:59think is really the interesting one
58:00where Blake Masters is now tied after
58:03being behind Mark Kelly throughout this
58:05campaign he is now tied in New
58:09is popular your guy is really unpopular
58:12and now he's tied
58:16interpretation it's the Peter too he was
58:18he was doing really poorly I think
58:20because
58:21I think listen I think that I think that
58:23Arizona is probably gonna be the closest
58:25race in the country I think it's gonna
58:26be a nail biter but I think Blake's
58:28gonna pull that out
58:29sex what do you think are the biggest
58:31policy shifts that take place in this
58:34country Host this predicted Red Wave is
58:38there anything that changes so just you
58:40know talk to folks about what's on the
58:42docket from a legislative point of view
58:44going into the next congress with all
58:48these new candidates the reality is we
58:49have a separation of powers in this
58:51country and you're gonna have to divide
58:53a government the Republicans will will
58:54control Congress the Democrats will
58:56control the presidency and so as a
58:58result you're going to be largely in a
59:00gridlock situation but gridlock may be a
59:03lot better than what we've had over the
59:04last couple of years so you know you've
59:06had basically this orgy of spending and
59:09money Printing and I think that's going
59:10to stop obviously
59:12the other thing that's going to happen
59:13is Republicans may not be able to pass
59:15much legislation but they're going to do
59:16investigations and there's a lot of
59:18questions that need to be answered I
59:19think about still about covid you know
59:22these lockdown policies that we had that
59:24started at the top at NIH why did they
59:26happen we need to start having
59:27accountability for some of these
59:29horrible decisions that were made during
59:30covid and there's been no willingness in
59:33Washington to hold anyone accountable at
59:34a minimum they need to have some
59:36Congressional investigations and find
59:38out why we pursued such bad policies
59:40over the last couple of years by the way
59:42did you see did you see what happened
59:43this week where the CDC
59:46you know after this entire opioid
59:48epidemic and all of these lawsuits the
59:50CDC came out and actually said Hey
59:52listen we need to really make sure that
59:54we're getting access
59:57putting opioids in the hands of
59:58Americans who are really suffering with
1:00:00pain management and whatnot and I didn't
1:00:03read the article to really understand
1:00:04the details but I just thought it was an
1:00:06incredible headline where it's like it's
1:00:08just it's so counter to The Narrative of
1:00:10what we've been told is happening which
1:00:11is like you know over prescription and
1:00:13misprescription if we learned anything
1:00:15during Covetous to question every
1:00:17organization everybody and to really
1:00:19collect your own information while you
1:00:22know looking at these organizations we
1:00:25trusted over time I know I look at the
1:00:26world differently now that you couldn't
1:00:28say covid was possibly a lab leak
1:00:31without having your podcast taken down
1:00:32or being banned on YouTube and now
1:00:35propublica has done an investigation and
1:00:38they're saying along with Vanity Fair
1:00:39and they're going to win a Pulitzer for
1:00:40this I bet
1:00:41that this conspiracy theory from two
1:00:43years ago is probably actually the
1:00:45leading theory and that the the Wuhan
1:00:49lab Lab was showing if you didn't see it
1:00:52reporting an incident in late November
1:00:54of last year uh before covet broke 2019.
1:00:58it's really it's really incredible there
1:00:59was an article in the Atlantic
1:01:01that came out over the past week called
1:01:03let's declare a pandemic amnesty no yeah
1:01:07investigation right so basically at
1:01:10everything yes all the experts who told
1:01:13us Jason that we weren't allowed to have
1:01:14an opinion because we weren't expert
1:01:16enough that if we raise any questions
1:01:18about the origin of the virus that it
1:01:20might have come from a lab that that
1:01:21basically needs to be censored the
1:01:23people who said we had to do lockdowns
1:01:24and implemented all these authoritarian
1:01:26tactics now they're saying that they
1:01:29need an amnesty that what that really
1:01:30means no one's looking no one's looking
1:01:32to criminally prosecute them what we're
1:01:34looking to do is have some
1:01:35accountability around the public policy
1:01:37what they want is they want to pull the
1:01:39expert card to say that they're the only
1:01:41ones who get to have an opinion and make
1:01:42a decision but then when it all goes
1:01:44horribly awry they basically want to be
1:01:46completely insulated and unaccountable
1:01:48no account in their decisions no way no
1:01:50way we're not going to give you full
1:01:52investigations we're in alignment on
1:01:54this side by the way can I just yes hold
1:01:55on I just want to say sex we're in
1:01:57alignment on this for a rare moment of
1:01:59Peace on this podcast the same thing
1:02:01after 9 11 shouldn't all Americans
1:02:03understand what happened after 9 11 and
1:02:05what the failures were in our
1:02:07intelligence just so we can get better I
1:02:09I'm not picking a political horse here
1:02:10but it's kind of crazy that you could
1:02:13people said to our podcast and other
1:02:15people who were questioning it forget
1:02:17about what political party you're in
1:02:19just want to understand how the world
1:02:20Works what are the chances that this
1:02:23breaks out in the one or two places
1:02:24where they're studying the coronavirus
1:02:26that you have a lab leak it was so
1:02:28obvious to everybody the other reason
1:02:30why you need to have accountability for
1:02:31this is that there are still a long tail
1:02:33especially around the damage that we did
1:02:36to our kids educationally yes and now
1:02:38and now the over prescription of
1:02:40stimulants and so if you don't
1:02:41depression sensors you can't go after
1:02:43these problems like there was a there
1:02:46was like
1:02:48stimulant prescription is now the single
1:02:51biggest epidemic in children it is now
1:02:53twice as prescribed as contraceptives
1:02:56and Asthma drugs and why chamoth why are
1:02:59we doing this to get them to score
1:03:01higher on a test to be more attentive in
1:03:02school well it's it's actually this
1:03:04negative feedback loop where these
1:03:06children were miseducated during covet
1:03:12it had huge psychological and
1:03:15academic damage to them
1:03:18our test scores have fallen off of a
1:03:20cliff relative to how we used to do
1:03:21relative to other countries
1:03:24I think the teachers unions have found a
1:03:26way to try to explain it
1:03:29to basically Shield themselves from any
1:03:31sort of critique
1:03:33and so the loot and then part of that
1:03:35Loop is then to look at a bunch of kids
1:03:37that are underperforming in school and
1:03:39instead of saying well maybe these
1:03:41lockdowns and masking and all of these
1:03:43things that we implemented actually had
1:03:46a huge impact they say uh you know
1:03:47you're misbehaving so let's put you on a
1:03:49stimulant yeah it's crazy we're in that
1:03:51Loop right now just so you guys know the
1:03:53data is outrageous twice as many
1:03:56prescriptions for stimulants as the sum
1:03:59of contraceptives and Asthma drugs for
1:04:02All American Kids yeah it's not that
1:04:04suddenly everybody's got ADHD so we
1:04:07failed them we failed our children and
1:04:10and we're going to use stimulants to
1:04:11have them ketchup weeks but we should be
1:04:12doing Summer Schools after school
1:04:14programs
1:04:16we failed them because of our response
1:04:18to covet that is why we need answers to
1:04:20all that stuff because you need to link
1:04:21these things together to have some real
1:04:23accountability absolutely here is the uh
1:04:26just so we have the people see the
1:04:27numbers here's the 538 poll of uh how
1:04:30Joe Biden's popularity has switched this
1:04:32is uh 654 days into
1:04:35his presidency started out really strong
1:04:3754 and now a little rebound since the
1:04:41summer obviously that uh dip started uh
1:04:45with the economy it's the economy stupid
1:04:46and if we go down a little bit on the
1:04:49same page and you zoom in on the left
1:04:50there you can see compared to Donald
1:04:51Trump
1:04:52uh he started out much more popular than
1:04:54Donald Trump day by day and now he's
1:04:56just as unpopular as Donald Trump was at
1:04:58this point in his presidency well look I
1:05:00mean look the setup is really
1:05:01interesting for 2024 because it's
1:05:03probably going to be the case that we're
1:05:04in the middle of a recession going into
1:05:06that election cycle maybe we'll be sort
1:05:09of like getting ourselves out of it but
1:05:11there'll be a lot of economic damage
1:05:12high unemployment
1:05:14and you know typically
1:05:16folks in power will have to sort of be
1:05:18held accountable for that it's a really
1:05:20interesting setup that both Gavin Newsom
1:05:22and Ron DeSantis have to figure out now
1:05:25and navigate if they're going to get the
1:05:27nomination on each side and breaking
1:05:29news today sax would love to get your
1:05:31thoughts on this axio says uh and we'll
1:05:34go to science Corner next that Trump's
1:05:36going to announce on November 14th that
1:05:39he is running for president look I I
1:05:41kind of have the Joe Rogan philosophy on
1:05:43this which is why I give it oxygen let's
1:05:45just wait and see there's certainly no
1:05:46needs to talk about it before it happens
1:05:48you know we're not even past this
1:05:50election yet but but hey I want to go
1:05:52back to the the Biden popularity because
1:05:54I think part of the issue here is what
1:05:57are the arguments that Biden is making
1:05:59to the country about why people should
1:06:01vote Democratic and he gave another
1:06:04speech on Wednesday night where he
1:06:07basically claimed that if you vote for a
1:06:10different party that that is a threat to
1:06:12democracy in other words the
1:06:13perpetuation of single party rule is
1:06:16what you must do if you care about
1:06:17democracy that is a sales pitch that's
1:06:20not going to appeal to anybody outside
1:06:21of the viewers of MSNBC it's just not
1:06:24he's not talking about the issues that
1:06:25really matter to the country you know
1:06:27what the country wants to know is that
1:06:29he's focused on the economy he's focused
1:06:31on inflation he's focused on crime he's
1:06:33focused on the schools and fixing this
1:06:36learning loss that Jamal was just
1:06:37talking about he's not doing those
1:06:39things instead he's basically saying
1:06:41that the Democrats should be kept in
1:06:42power forever because there was a riot
1:06:45at the Capitol on January 6 and look
1:06:46that was a stain on the country okay it
1:06:49was terrible that that happened
1:06:50disgusting that is not a reason hold on
1:06:52a second that is not a reason to keep
1:06:53Democrats in power forever and actually
1:06:56there's a
1:06:57um a liberal guy a liberal Democrat
1:06:59named Josh Barrow who wrote a pretty
1:07:00good blog about this and what he said is
1:07:03the message is that there's only one
1:07:05party contesting this election that is
1:07:08committed to democracy the Democrats and
1:07:10therefore only one real Choice available
1:07:11if voters reject Democrats agenda or
1:07:14their record on issues including
1:07:16inflation crime and immigration they
1:07:17have no recourse to The Ballot Box they
1:07:19simply must vote for Democrats anyway
1:07:21and that argument is just not flying and
1:07:23actually he's a a Democrat who is
1:07:26pointing this out but I don't think that
1:07:28Democrats are getting the message on
1:07:30this but I think they will after this
1:07:32election and they're gonna have to find
1:07:34a new sales pitch to The Country well
1:07:35you know and he does have a good sales
1:07:37pitch doesn't each a month with these
1:07:39major bipartisan uh wins he had the
1:07:41infrastructure deal got done the
1:07:43technology bill and the chips you got
1:07:45gas prices going down yeah GDP growth
1:07:47you got job growth the problem is that
1:07:50those things happened frankly too early
1:07:52in his presidency and things are getting
1:07:54materially worse so I just sent you a
1:07:55link can you just throw this up here for
1:07:57a second you know Jason you mentioned
1:07:59this cheaper gas thing yeah but the
1:08:01reality is um if you look at this we
1:08:04have now depleted our strategic goal
1:08:06Reserve by almost 50 percent yep so we
1:08:09are running out of
1:08:10oil that we can introduce into the
1:08:12market at effectively zero cost to bring
1:08:15the price down and because we've lost
1:08:17our relationships with folks like Saudi
1:08:19Arabia there's no way to influence them
1:08:22in order to produce more in fact they're
1:08:24going to cut Supply so that they can
1:08:26control the prices that they have which
1:08:29that they can sell into the market and
1:08:32so now what are we left with well the
1:08:34only three places where you can have
1:08:35incremental supply of energy which the
1:08:38country still needs is from Russia Iran
1:08:41and Venezuela
1:08:43and so you know all of these things
1:08:45Jason I think come back
1:08:47and really put Biden in a tough place
1:08:48because as as Sac says he does have to
1:08:51answer to all of these things because
1:08:52these are his decisions
1:08:54look I still believe in the Democrats
1:08:56you know I I'm hoping I gave a million
1:08:59bucks uh to the Senate pact trying to
1:09:01sort of tip the Senate I really think
1:09:03it's important that we have a split
1:09:05government because I've kind of I gave
1:09:06up on the house I think it's clear that
1:09:08the Republicans are going to win but the
1:09:10Senate is still is still up for grabs
1:09:12and the reason is because I think that
1:09:14we need to sort of have stasis so that
1:09:17nothing bad happens between now and 2024
1:09:20because I think the economic conditions
1:09:22on the ground are going to be bad in and
1:09:24of themselves
1:09:27and then just the one last thing I'll
1:09:29say is
1:09:30the instructive thing that I think we
1:09:32should look at is what happened in
1:09:33Germany
1:09:34because what happened in Germany is
1:09:36really interesting when the economy
1:09:37turns and inflation is out of control
1:09:39and energy is out of control
1:09:42what they basically did was they
1:09:43sidelined
1:09:45the European Central Bank they stepped
1:09:48in with their own balance sheet and said
1:09:49you know what we're going to nationalize
1:09:51assets and I know that this sounds crazy
1:09:53to say but if it can happen in a place
1:09:55like Germany I know most people would
1:09:57say it'll never happen in America but
1:09:59I'm not so sure and I think that you
1:10:02want to make sure that there's a split
1:10:04government so that these things are
1:10:06never possible and so hopefully there's
1:10:09some you know Common Ground in a
1:10:11Democratic Senate and a republican house
1:10:13and we just kind of get through 24 and
1:10:15see where the chips land and I still
1:10:17think it's going to be uh DeSantis
1:10:19versus uh Newsome Freeburg any final
1:10:21thoughts here on politics my first um
1:10:24observation is that I think it's funny
1:10:25that chamoth and sax are funding
1:10:27opposite uh sides of the uh
1:10:30yeah why don't you just guys just give
1:10:32the money to me and Friedberg to get a
1:10:34plan each other's money up yeah I could
1:10:37think of other ways for you guys to use
1:10:38that money but David and I may have
1:10:39canceled each other out you're right I
1:10:41mean yeah so far Peter Thiel made the
1:10:43better trade he's it looks like the teal
1:10:44wave in the Senate so look I would say
1:10:46my very broad statement is
1:10:49democracies evolve in a cyclical nature
1:10:52over time right you often see swings
1:10:55from one political party to the other
1:10:58and um it's just the nature that once
1:11:00someone's been in office they form the
1:11:02new establishment and then folks in the
1:11:05next election cycle want to vote against
1:11:06that establishment because there are
1:11:08things that they want that they aren't
1:11:09being given today and therefore the
1:11:11Democracy forces a change from what is
1:11:14the current establishment back to the
1:11:16other side and generally political
1:11:17parties seem to kind of adopt whatever
1:11:19the other side is and that's how the
1:11:21cyclical evolution of democracy seems to
1:11:23play out the recent Trend that has been
1:11:25more alarming which I think we can kind
1:11:27of take pause to notice is the rise of
1:11:30populism where populism is this really
1:11:32kind of vehement Die Hard opposition to
1:11:35elitism and the establishments that
1:11:37everyone feels kept down by and everyone
1:11:39feels taken advantage of by
1:11:41and um the the rise of trump the rise of
1:11:44bolsonaro the rise of Boris Johnson and
1:11:47I would argue even the rise of AOC
1:11:49Bernie Sanders and Elizabeth Warren all
1:11:52similarly speak to the the crying voice
1:11:56of the the Democratic
1:11:59populations that they want to see these
1:12:03establishments taken apart they don't
1:12:06feel like they're Fair they don't feel
1:12:07like they're just they don't feel like
1:12:09the institutions that oversee us and are
1:12:11meant to service us are servicing us
1:12:14um and so there was this big rise the
1:12:16problem is like a normal pendulum would
1:12:18swing back and forth between one side
1:12:19and the other with the rise of populism
1:12:21you get such a strong push of that
1:12:23pendulum it can knock through a wall and
1:12:25I think we saw that on January 6th and I
1:12:27think it gave a lot of people pause we
1:12:29saw the the motion of brexit knocking
1:12:33through a wall and we saw these kind of
1:12:35very radical outcomes and then the cost
1:12:38of those outcomes
1:12:40blow up in our face and as a result I
1:12:43think we're seeing a bit of a receding
1:12:45of the tides right now away from
1:12:46populism during this current electoral
1:12:49cycle where folks are saying you know
1:12:51what maybe we just need to have some
1:12:52sort of an establishment so I can feel
1:12:54safe and secure less than the volatile
1:12:56volatility that I've experienced of late
1:12:58look I think you look at the economic
1:13:00mess we're in okay populist did not
1:13:02cause that okay populists did not cause
1:13:0410 trillion dollars of money printing it
1:13:06was Modern monetary Theory and the
1:13:08experts the FED who did that it wasn't
1:13:10populous who created the great financial
1:13:12crisis of 2008 that caused the zurp and
1:13:14we're still living with all the
1:13:16downstream effects of that it was the
1:13:18experts on Wall Street who said they
1:13:20could manage all these derivatives and
1:13:22the collateralized mortgage obligations
1:13:24and all that stuff that they lost
1:13:26control over I would argue hold on
1:13:32it was not populous who caused the
1:13:36horrible handling of that pandemic even
1:13:38though they were blamed for remember we
1:13:39were told it was a pandemic of the
1:13:41unvaccinated then it turns out the
1:13:42vaccine doesn't stop it it was not
1:13:45populous who caused the reaction to the
1:13:46pandemic it was the experts the CDC and
1:13:49falching people like that who shut down
1:13:51our economy who caused the learning loss
1:13:54it was those experts so Freeburg listen
1:13:56you may not like this populist waiver
1:13:58that we have in the country and I get
1:13:59that but it's in reaction to something
1:14:01real which is the failure of this expert
1:14:04class and if you want to stop having
1:14:07this populist wave rise up we need to
1:14:10start having experts in position of
1:14:12power who actually know what they're
1:14:13doing well one way to say that sorry
1:14:15Jake out hang on a second I don't have
1:14:16any opposition to the populist wave I'm
1:14:19making the observation that the uh the
1:14:21effects of some of the populist
1:14:23movements have started to become too
1:14:25volatile for people to feel like they
1:14:27should continue forward with that
1:14:28electoral path that was my observation
1:14:30okay I'm not kind of criticizing the
1:14:32populist movement I'm just saying that
1:14:34events like January 6th and the
1:14:36conditions in the UK for example are
1:14:38making people say wait a second maybe I
1:14:40need to take pause on the extreme the
1:14:42bond market basically fired list trust I
1:14:44mean she's not a populist and you know
1:14:46in Bolson bolsonaro in Brazil he
1:14:49actually just lost and there was this
1:14:51big narrative that somehow he was gonna
1:14:53not relinquish power and he just
1:14:55announced that he will relinquish power
1:14:56right so you know some of the stuff that
1:14:59is about how populists pose this great
1:15:01danger I think is threat inflation and
1:15:04that the threat is magnified by Elites
1:15:06who want to stay in power and the truth
1:15:08of the matter is we need accountability
1:15:10for the people in power and when they
1:15:12set the wrong policies and decisions
1:15:13they need to be replaced no more no more
1:15:16unaccountability yeah I
1:15:19just just to my personal belief 100
1:15:21agree
1:15:23that's all of these institutions
1:15:26accountability maybe competence and also
1:15:28transparency and accountability like I
1:15:30think that's what the public wants I
1:15:31mean competencies
1:15:35there's no way to perfectly react to the
1:15:38pandemic but in your mistakes owning
1:15:41them and explaining them would it be
1:15:43much better than trying to obscurify it
1:15:45and asking for amnesty chamoth you're
1:15:47not um if you want to hear an incredibly
1:15:49interesting interview
1:15:52because it's very thought-provoking of a
1:15:55modern Progressive uh but with a very
1:15:57different mindset or sorry you know
1:16:00maybe you don't want to call him a
1:16:01progressive but is the president of El
1:16:04Salvador naive bouquelli and he did this
1:16:06incredible interview with Tucker Carlson
1:16:08on Fox News I encourage everybody to
1:16:10watch it on both sides of the political
1:16:12Spectrum
1:16:13that man is impressive
1:16:15did we just get an admission that your
1:16:17mouth watches Tucker I watch I watched
1:16:19that interview you watch the talker oh
1:16:21my Lord Jason's head's explode you know
1:16:23because I I try not to be against the
1:16:25moment ignoramus it's an Entertainer I
1:16:27like to watch things on both sides but
1:16:29that interview is incredible He is
1:16:31unbelievable impressive and it's a it
1:16:33double clicks into you know the
1:16:35skepticism that smart people like him
1:16:38the outsider class has with The Insider
1:16:41expert class in a nutshell if you want
1:16:43to see it I would encourage you to watch
1:16:45this interview because it's it's
1:16:46incredible incredible really really
1:16:48Jason The Peasants with pitchforks are
1:16:51rising up against this Elite Class who
1:16:54put themselves up they've set themselves
1:16:55up as Lords they want exclusive control
1:16:58over their blue checks and we're about
1:17:01to overturn this establishment because
1:17:04it is corrupt and it is incompetent
1:17:08be great if the people who worked for us
1:17:09were confident back on Megan Kelly owned
1:17:12and we're transparent you know I think
1:17:14that's why people are opting out of this
1:17:16is they don't feel
1:17:18that there's a level of competence in
1:17:20these institutions nor ownership and
1:17:22transparency and it really is
1:17:24frustrating whether it's education or
1:17:26it's health or
1:17:28you know any of these topics we've
1:17:31talked about here on the show let's go
1:17:32to science corner and we can rap
1:17:34what do you got free bark for us to mock
1:17:36I think we were going to cover the
1:17:39Facebook meta announcement that their AI
1:17:42research team had generated the physical
1:17:45structure of 617 million proteins
1:17:49from these metagenomic data sets and so
1:17:52remember Alpha fold made this big
1:17:53announcement that they had highly
1:17:56um accurate predictions of protein
1:17:58structure the three-dimensional shape of
1:17:59proteins and remember proteins are kind
1:18:01of the Machines of biology that do
1:18:03everything from catalysis to enzymes
1:18:05where they break stuff down and they're
1:18:07like you know they have all this
1:18:09structure that allows them to do
1:18:10specific physical things and proteins
1:18:12are coded in DNA every three letters of
1:18:14DNA codes for an amino acid a string of
1:18:16amino acids makes a protein
1:18:19and so you know we have about a million
1:18:21species
1:18:23where we've sequenced the entire Genome
1:18:25of those species only about 3 000
1:18:27Animals by the way including humans
1:18:29half a million from bacterial species
1:18:31and then a bunch of viruses and other
1:18:34stuff but but call it about a million
1:18:35species that we've sequenced and so
1:18:38you know earlier this year
1:18:40Google's Alpha fold project published
1:18:42the 3D structure of 200 million proteins
1:18:45that they had derived from the whole
1:18:47genome databases that existed where
1:18:49we've gone through and figured out
1:18:50what's the full DNA sequence of all
1:18:52these different species
1:18:53now
1:18:55when you look at the DNA in the
1:18:56environment around us you were just to
1:18:59take the DNA out it turns out that we
1:19:01have seen very little of that DNA the
1:19:04vast majority of DNA that you would find
1:19:07in a teaspoon of soil for example we've
1:19:10never classified it's not part of a
1:19:12species that we've actually built the
1:19:13whole genome around we may not even know
1:19:15what species that DNA is from and so
1:19:18when you take a teaspoon of soil you'll
1:19:20get about 100 billion microorganisms in
1:19:22that soil from about a million unique
1:19:24species but you don't see those species
1:19:26because the way DNA sequencing or
1:19:28shotgun sequencing works is DNA is
1:19:30chopped up into little 250 base pair of
1:19:33Lights little 250 strands and those 250
1:19:36letters are read at a time and then
1:19:38statistically bioinformatics puts
1:19:41together all of that little DNA segments
1:19:43and tries to create long strands of DNA
1:19:45to figure out what the genes are or what
1:19:47the whole genome is and so shotgun
1:19:49sequencing gives us kind of a snapshot
1:19:51of the DNA but until we've done the hard
1:19:54work of figuring out the whole whole
1:19:55genome we don't know what species that
1:19:57DNA comes from so when you take a sample
1:20:00of soil or you take a sample of human
1:20:02poop and you sequence it or even a
1:20:04teaspoon of ocean water and you just
1:20:06sequence the DNA in it you get all of
1:20:09these little segments of DNA that we've
1:20:10never seen before and you can string
1:20:12them together statistically because you
1:20:13get lots and lots of copies of them and
1:20:15you can figure out the overlap and then
1:20:17you can create these genes and a gene is
1:20:19a segment of DNA that codes for a
1:20:20protein and those genes make up the
1:20:23metagenome or the combination of all the
1:20:25genes that we find in a in a piece of of
1:20:28the environment and that meta genome
1:20:31comes from millions of species that
1:20:32we've never seen before so what Alpha
1:20:35what they did at meta is they took all
1:20:36of those genes that we pull out of the
1:20:39soil or we'd pull out of the ocean and
1:20:40they picked a bunch of random samples
1:20:42and they then predicted the physical
1:20:44structure of the proteins from just
1:20:47those genes without knowing what
1:20:50organism they came from and this gives
1:20:52us a whole new universe of proteins that
1:20:54we've never classified before or never
1:20:57seen before now I will just kind of
1:20:59speak a little bit critically about it
1:21:01number one they didn't do what Alpha
1:21:03fall did what Alpha full did is they
1:21:04took 3D structures from typically x-ray
1:21:07crystallography then they took the the
1:21:09DNA code and they built machine learned
1:21:11models to figure out the 3D structure
1:21:13from the DNA code what these guys did at
1:21:16meta is they took the 3D structures and
1:21:19the code and they basically did a fill
1:21:21in the blank they found all the
1:21:23metagenome data out of these samples and
1:21:25a lot of it was missing and they filled
1:21:27in the missing blanks using kind of
1:21:29common protein structure that existed
1:21:32out there in the wild that we already
1:21:33knew from the alpha full data and so
1:21:35they kind of did a fill in the blank and
1:21:37as a result it allowed them to very
1:21:38quickly build these 3D models versus
1:21:40doing the hard and rigorous work that
1:21:42Alpha fold had to do so they claimed
1:21:43that it was 60 times faster but it's
1:21:45actually an entirely different technique
1:21:47and the second thing is that they
1:21:49represent that only about a third of it
1:21:50is high quality meaning only about a
1:21:52third of the proteins that they've
1:21:54created structure for are really useful
1:21:56or or that could be kind of Applied uh
1:21:58in terms of this is the real
1:21:59representation now why is this
1:22:01interesting and important proteins can
1:22:03form the basis of new medicines so you
1:22:06know we can find proteins in the soil a
1:22:08genomes in the soil and proteins in the
1:22:10soil that can kill certain fungal
1:22:12pathogens that can kill bacteria and
1:22:14those can be turned into fungicides they
1:22:16can be turned into antibiotics we can
1:22:18find proteins that bind to specific
1:22:20things we can find proteins that fix
1:22:22nitrogen from the atmosphere and those
1:22:24proteins can be turned into new types of
1:22:25fertilizer so you know searching through
1:22:28this universe of proteins that exists in
1:22:31the metagenome will allow us to find new
1:22:33molecules to do new and interesting
1:22:35things with in the applied engineering
1:22:38world
1:22:38and I will say like this is what would
1:22:40the output of these be is what
1:22:41everybody's going to be thinking
1:22:42antibiotics fertilizers I mean the idea
1:22:45of the metagenome is rather than start
1:22:47with the species and then take the genes
1:22:49out of it just go get the genes the
1:22:51genes are already there they're in this
1:22:52they're in the ocean they're in the soil
1:22:53and there's millions of genes hundreds
1:22:55of millions billions of genes that we've
1:22:57never seen before therefore there's
1:22:58billions of proteins now we could
1:23:00randomly create proteins but the number
1:23:02of proteins that could exist is more
1:23:04than the number of atoms in the universe
1:23:05because remember there's 20 amino acids
1:23:07so 20 to the 200th power or 20 to the
1:23:10300th power or 20 to the thousandth
1:23:12power meaning how many different
1:23:13combinations of amino acids can you make
1:23:15that's more than there are atoms in the
1:23:16universe so the best place to start is
1:23:19what evolution has already given us all
1:23:21the proteins that exist in the
1:23:22environment so let's go find those
1:23:24proteins in the environment and then
1:23:26let's figure out what do we think they
1:23:27can be used for can they be used in
1:23:28industrial applications in medicine can
1:23:31they be doing them in Material Science
1:23:33you're saying Material Science and so
1:23:35you know a lot of drug Discovery mines
1:23:38proteins it tries to find proteins and
1:23:40figure out what can these proteins be
1:23:42used for and now we have all these new
1:23:44data sets of proteins that are being
1:23:46generated from these metagenomes and so
1:23:48it's amazing I mean you know look at the
1:23:50world around you look everywhere up and
1:23:52down on the walls on the ground below
1:23:54you there are billions of species of
1:23:57organisms that we've never classified
1:23:58before that are making billions of
1:24:00unique proteins that we've never
1:24:01classified before and any one of them
1:24:03could unlock an amazing commercial
1:24:06opportunity
1:24:07for industry so and for medicine and for
1:24:09human health that's what's really
1:24:11exciting about this ability to kind of
1:24:13mine the metagenome silly question for
1:24:15you or maybe not silly uh we have gotten
1:24:19the precursors to DNA for meteorites if
1:24:22I understand correctly
1:24:24what do they call them nucleobases
1:24:26nucleic acids yeah yeah
1:24:30um thymine Etc like things that exist in
1:24:33DNA
1:24:34that are precursors we've never had DNA
1:24:37from space obviously but we could at
1:24:40some point start to find DNA out there
1:24:42in space and this could have an even
1:24:43crazier impact on what we built here
1:24:46is that the next card to turn over after
1:24:47we every human gene home what's here no
1:24:50I wouldn't say so I like I think look if
1:24:52there's DNA that's coming to us for
1:24:54meteorites call it a couple hundred
1:24:55genes you could pick up a piece of uh
1:24:58soil and find over a billion genes in
1:25:00that teaspoon of soil right so uh we
1:25:03have far more to mine here on Earth and
1:25:05the low cost of DNA sequencing and
1:25:06shotgun sequencing coupled with
1:25:08bioinformatics where we take all that so
1:25:10just to give you guys when you take a
1:25:12teaspoon of soil and you get the DNA out
1:25:14and you read the DNA out of it sequence
1:25:16the DNA that's potentially tens of
1:25:18gigabytes of data and then you could do
1:25:21that millions of times over and then you
1:25:22statistically can find genes and then
1:25:24statistically estimate what they
1:25:26physically look like what those proteins
1:25:28look like and then you can start to
1:25:29build models around which ones do we
1:25:31want to try and use for drug
1:25:32applications which ones do we want so
1:25:34there's so much work to do
1:25:36it just in terms of what we have here on
1:25:38Earth and the tools are getting so cheap
1:25:40and so available there are Labs that are
1:25:42all over the world starting to kind of
1:25:44spring up to do this work it's super
1:25:45exciting
1:25:46adults
1:25:48it's kind of it you know just to put two
1:25:50ideas together I've said before like the
1:25:52two big investable themes that I'm
1:25:55orienting my organization around is this
1:25:57one is that the marginal cost of energy
1:25:59goes to zero and the second is that the
1:26:01marginal cost of compute goes to zero
1:26:03and the second one is really about
1:26:04shifting compute to more parallelism on
1:26:07gpus and Asics and fpgas but that's why
1:26:10all of this stuff is possible the fact
1:26:12that you know meta can do this and
1:26:14Google can do alpha fold is largely
1:26:17because the cost of all of this stuff is
1:26:20you know trivial for these kinds of
1:26:21companies so it's really exciting it's
1:26:23going to move science
1:26:25in my opinion out of this in Vivo in
1:26:28vitro experimentation model into silica
1:26:31and so those who can actually build
1:26:33learning machines will solve some of the
1:26:35most important biological problems so I
1:26:37I'm a real believer in this stuff I
1:26:39think it's super exciting when do you
1:26:41think this stuff actually hits Friedberg
1:26:43our life that's always when people talk
1:26:46about these discoveries yeah a lot of
1:26:47people don't realize it but so many um
1:26:49molecules that that are used in
1:26:51agriculture like fungicides to to kill
1:26:53fungus in the fields those are derived
1:26:56from this sort of work a lot of
1:26:58antibiotics a lot of medicines are
1:27:00already derived from mining genomes
1:27:02finding new proteins and seeing what
1:27:04those proteins can do because these
1:27:06proteins didn't evolve in the
1:27:07environment randomly they evolved to do
1:27:09something and in many cases we can take
1:27:11that thing that they do and then harness
1:27:13it into a product and that's what's so
1:27:16exciting and this this affects
1:27:17everything Material Science
1:27:19you know agriculture human health
1:27:22it's uh it's a food it's really profound
1:27:25awesome all right everybody there you
1:27:27have it that's another all in podcast in
1:27:29the camera by the way so many so many of
1:27:32Freeburg stands were afraid Jay Cal that
1:27:33you and I were gonna make some joke and
1:27:35we didn't no we didn't and so for all
1:27:37these fans I just I hope you guys can
1:27:39exhale
1:27:40take a deep breath man have some you
1:27:42know eggless mail and uh enjoy your
1:27:45weekend
1:27:46uh enjoy your week bye bye everybody see
1:27:48you next time love you besties love you
1:27:49guys
1:27:51we'll let your winners ride
1:27:54Rain Man David's side
1:27:59we open source it to the fans and
1:28:01they've just gone crazy with it
1:28:05[Music]
1:28:08besties
1:28:10[Music]
1:28:30is
1:28:34[Music]
1:28:40[Music]

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