all right everybody welcome to another edition of the all-in podcast we'll call this episode one we did a test and over a hundred thousand of you listened to the test podcast that we knew the audios if you did in a few days Tomas is already getting addicted to his statistics a new podcaster Lima to focus on something going up yes exactly our portfolios are getting crushed
but the podcast numbers are going up there with a meaningless victory to be sure but we got a lot of positive feedback and we're all sitting at home in quarantine as you can see I set up my home office I got our microphone here and Shema tha's in his bedroom and dear Freiburg I think is in his wine room or something in his uh in his compound are you in the safe room is this the safe
room Dave Freiburg is with us again he got a lot of great feedback and he's now on the Twitter you can follow him at Friedberg I don't know if he showed his Twitter down because he was getting harassed on Twitter welcome to the club are you in your safe room David yeah it's brutal on Twitter I don't know how you guys do it you put something up and everyone you know just goes after you
it's hard you out there in the Twitter world the Twitterverse basically you have to mute and block anybody who is under a hundred followers and being an absolute jerk because it's likely a Russian bot you know being run out of like Manila or something like that they've got all these like sophisticated
rings of people that they just hire for ten bucks a day to harass people online I mean I know it sounds like a crazy conspiracy theory but it's actually true this large groups of bots who go after people and try to kick create chaos but okay we're sitting here it's today's Wednesday we did
our podcast on Saturday the stock market has gone down another twenty percent since then I guess or so and we are looking like this is going to be a fifty percent correction or something like that we're now you know well past a 30 plus percent and on the good news front it looks like testing is actually occurring and that work on a virus work on treatments is occurring we can call them
cures but treatments is occurring and quarantine in place is being taken seriously and I guess the biggest thing is that Trump has basically admitted that this is a crisis and he's taking it seriously Friedberg what is your assessment of where we are today versus when we taped on Saturday in terms of the resolution to this we are we overreacting reacting just enough or not
reacting enough there's three things to consider the health the policy and then the markets on the health front it seems like we have done a lot in terms of containment and we're ramping up testing we are still not doing broad general general population testing which is necessary for us to truly understand the dynamics of this disease and also to understand the contagion of this disease
and we need to fix that problem there's a task force of a hundred people out of DC being led by Jared Kushner and a number of people from the tech industry that are working on ramping up testing and doing broader general population testing the policy decisions are what get quite scary and that is all of the containment shutting down travel shutting down borders shutting down
bridges and the economic ramifications of doing so are frightening I think I mentioned the other day that 48 percent roughly of the US workforce works in small businesses another roughly 10 percent work in travel another roughly 12 percent work in energy and you know you kind of add this up and you can quickly see why Steve Mucha and the US Treasury Secretary was saying that we
should expect 20 to 30% of the workforce to be unemployed by this summer if we keep this up so that is a frustrating and staggering statistic and something worth debating whether that policy decision is appropriate relative to the potential life and health and and Health System impact you know which one is worse and then the market question is just I don't know how to address
it but things go ahead afterwards I have eight things I want to say one more thing and it is I think the most important to come out today so the markets are [ __ ] we're all in trouble or you know yadda yadda the most scary thing is Ford and GM to shut down their plants today and the reason
they shut down their plants is because out of fear of coronavirus and Auto Workers and the UAW basically forced them to do it the world lives on a 30 day food supply so if you stop food production today there would only be 30 days of food for the whole world to eat based on our calorie consumption per day and especially with an isolated border and we import a lot of food
in the United States if that means that we are then going to shut down other factories the Ford GM shut down and we're going to shut down food production processing and distribution factories then we have a food security crisis and this becomes a real societal problem so the concern that I have with the factories being shut down today is the precedent it sets and the potential
follow-on from there in the food system and one thing we can't stop doing is making a distributing food to humans in the United States or else we are going to have problems you're right but before we go there the good news is that these directives don't apply to national critical infrastructure
and the food supply is covered within that so unless something cataclysmic happens those folks are still going to make sure that food supply is there I do agree with you that the issue that we have to contend with is that you know there may not be as much and in the you know 30th to 90th day that becomes a real issue if this thing becomes a very protracted problem this sort of
brings us back David without being too alarmist about how we started and how you started really importantly at the beginning which is there is a small but very credible body of evidence that is starting to show and this is what you put out on Twitter and part of why you got you know attacked
probably by the pharma Lobby but that shows that there is a there is potentially an enormous ly large asymptomatic spreader dynamic in this disease so can you describe that and what that may mean and why there's a lot of silver lining in good news that if it's true there are several data points that are showing us that there may be an unexpectedly high number of people that get this
disease and don't have any symptoms and show it the historical data that we've gathered to date has been largely symptomatic patients and in some places like in Korea asymptomatic patients that had really close contact with symptomatic patients that were confirmed to be positive and in Korea in
particular they found a large cohort nearly 40% of the infected population were people between 20 and 29 years old that did not exhibit any symptoms or had very mild symptoms had a runny nose and didn't even know that they were sick on the princess cruise ship it turns out that up to 50 percent may have been asymptomatic people were all tested on that cruise ship because there were so many
people that were positive and through that data set that cohort we found a very large asymptomatic population 50% roughly the NBA players have now been tested and out of seven players on five teams so out of seven players on those five teams that have tested positive it seems like none of them are having any symptoms there may be one person who's having a cough but generally
they seem one of I think it was Donovan Mitchell said I could go play a seven game series tomorrow so this data is really important and it hasn't been fully accounted for in the models and the predictions of the pandemic and the predictions of the fatality rate we're assuming that let's say 2% of people that get this disease end up dying and by the way that's also based on an age histogram
that may not be appropriate for our particular cohort in the United States if you took that data and then you just did it based on the fact that a large percentage of people actually don't die but they end up just being asymptomatic it really changes the denominator and it skews the results a paper published showed that in China up to eighty six percent of people did not realize
that they were sick or they were unreported they had mild symptoms if you take that high level you take that low level call it somewhere between twenty-five and eighty per se T six percent maybe even as high as eighty six percent of patients are asymptomatic which means that the actual fatality
rate is much much lower even in a large cohort that gets infected here so we should be mindful of this new data that's emerging and worse Racing and acting from a policy basis as if 2 percent of people 3 percent of people 4 percent of people that get this are gonna die and that may not actually be true based on what we're saying in the last week I have a comment in a statement
the comment is people will say David you can't extrapolate from an NBA player who may just be in peak physical fitness although I think your answer is going to be it's not clear that the that the disease is correlated necessarily with physical fitness for on physical fitness at all it just may be the strain and how your body processes but then the question is doesn't this mean that we
need to have broad-based massive testing not just of symptomatic populations so not just the PCR test that we've heard a lot about but also these antibody tests so that we've know that people have had it and what's the status of that David what's the status evidence that that's exactly right tomorrow and by the way on the healthy NBA player point it's absolutely true people that are between
20 and 30 the average age in the NBA is 26 years old people that are between 20 and 30 years old generally seem to have no to mild symptoms based on what we saw in Korea the other datasets need to be taken into account so the NBA is an interesting anecdote sure and you could discredit it all you
wanted saying that it's a highly correlated class and so on because everyone's together all the time but we could look at the data that came out of China in a paper that was published in the journal Science and a paper that was published in the journal Nature from Korea that showed very large percentages anywhere from 20 to 50 to 80% or 90% of people being completely asymptomatic
across an age spectrum certainly very heavier weighted towards the younger age bracket from you know children all the way up to 30 or 40 years old you can be completely asymptomatic and so these are really interesting discoveries that have happened and so to your point we need more data we need to confirm that hypothesis because that's how science works so we have a hypothesis let's
go test it the problem is we're not testing it and we should be as a priority right now because the policy decisions we're making are based upon a denominator that may be wrong so the correct action should be to go get those antibody tests go out into the population and start testing the unscented asymptomatic general population and see what percentage of people in these high-risk zones
like Seattle and LA and New York and SF already have the antibodies to this virus meaning they've been infected with this virus and have not or are not showing any symptoms and that gives us a better sense of a how widespread this infection is and B the true dynamics of the fatality rate and
the symptomology of this disease and how it may affect the people those IgG tests are being made on mass in China today they're being shipped to countries like Italy where they are in fact being used on the frontline they involve a blood draw and then they have this lateral it's there called a lateral flow assay in terms of how they're kind of tested the blood runs across a strip and you
see a value and you have a pretty good sense at that point those kits cost a couple of pennies to make in China we could probably get a couple million of them I don't understand why we're not I don't understand why someone in the federal government isn't begging China and apologizing and appeasing to them to send us those kits there are a lot of people I know that have bought them
on the Internet I have a bunch of people that I know have bought them they have been shipped in through brokers and they are not FDA approved they cannot be used for diagnostic purposes because of FDA guidelines that have the FDA regulates these things they can be used for research purposes but
they may not be very sensitive and very specific and they don't have great testing on them so we don't estimate the sensitivity and the specificity to be 90 percent roughly 10 percent false positive roughly 10 percent false negative but for what we're trying to accomplish that's good enough we're not trying to give people a diagnosis of disease we're trying to run an epidemiological
study and we should on the general population to figure out how many people out there are asymptomatic and have been infected that it's an important statistic that's missing and to your point if we find out that there is a large population of people that have actually felt this disease passed through them it's faster that we can sort of get people back to work out in
the streets which is now probably going to be the most important thing we can do to just prevent a complete economic calamity yeah yeah there are there are Jason and sorry treatments Jim ops all right interrupt you but treatments are the other thing I think you're going to talk about that treatments are interesting let's talk about that right now because to me what's incredible
is the again now what is emerging and and its small and scale relative to how amplified it may may should or should not be is you know Ren des vir is very different but it just seems like prophylactically even there's some data that's showing out of France that chloroquine seems to be effective these are these are solutions that are pennies to make and some of the some of the
feedback that I've heard is that part of why the FDA the CDC the the federal apparatus is reluctant to embrace these things is in part because of pressure from those lobbies but that seems to me unfathomable in a moment like this so why do you think the government hasn't put out the CDC has
zero directive right now on the management and efficacious management of this disease why is that okay what say you Qi and others have said and doctors around the country echo is that these treatments have not been clinically tested through a blinded controlled study and that is a very fair assertion generally speaking for doing good medicine but we are in a crisis state and
in a crisis state you have to triage and you also have to triage policy and we should be considering creating policy and changing the way that we do policy under these extenuating circumstances if doing treatment can reduce fatality rates by up to 4x as Korean doctors have claimed it is worth
taking the risk or perhaps it is worth letting the FDA say renessa vehicle Etra chloroquine and others are being widely produced widely distributed the government is mandating it and doctors and their patients can decide if and when they want to use it and let them take the risk without clinical trials and without data and the typical process of the FDA what's the downside
of taking these drugs are they particularly dangerous I mean I've heard the colloquy gnomic perhaps incorrectly Cola quint chloroquine I've heard that this can be a little bit nasty in terms of side-effects so is there some major downside that I mean it's kind of like an off use of a drug right like this is an off use of a drug as opposed to it's an off use of a drug and
some of the antivirals aren't even fully tested in humans so we don't yet know what the side-effects may be and also remember side effects can change based upon your health condition so someone that's in respiratory distress may have different side effects than someone who's taking it in a healthy controlled clinical trial so we're not really sure that's the argument that doctors would make is you
know our first mandate is to do no harm and so they don't want to apply a medicine that might do harm and so that is the standard protocol and practice and process however again in a crisis state China and Korea said guys we're trying this thing and it's working and we're adopting it let's go for it and they race forward it could be that this is a good time for the United States to
consider an emergency policy action where we make a lot of this stuff make it available and simply like doctors use their best judgment rather than have the FDA be the paternal state that makes a decision for the doctors or makes a recommendation to the doctors well what do we think the fatality rate actually is like David if you were looking at this and you had to place a bat and put a hundred
percent of your net worth on it and be all in and have massive skin in the game where do you think the fatality rate here in the United States winds up being overall because the data that came out of Wuhan has been markedly going down as they get the numbers corrected who knows Chinese numbers you
know censored by the government and maybe perhaps massaged - it's gonna be hard to tell what do you think the real fatality rate is the first fatality rate I heard was 5.8 percent out of China though based on the paper that came out in science over the weekend the wu hand data was estimated to be
1.4 percent and Wu hen was the worst data out of China the quote-unquote rest of China is still estimated at about 0.15 percent or 0.1 6% 0.14 percent something like that where's that versus like the flu every year or something or the normal flu 1.1 percent roughly yeah and so you know if you're looking at somewhere between 0.2 and 1.5 percent now in Italy I think they're at over 7
percent we talked about this on the last show but Italy is a much older population and their health system is completely overwhelmed so there's some confounding data that's confounding variables there that may be making Italy a very you outlier on a distribution of what's gonna happen here the
United States has a population that's a little bit older than China but much younger than Italy so our health system is and our health system is generally more ICU beds per capita than Italy so so we should be in a better place the thing we don't know that does concern me about the health system the United States and the population in the United States is it seems that there may be
a high correlation with severity of disease and a1c levels and and as a result the US has one of the highest obesity rates of any country in the world and highest diabetes rates and so we may have a population that has a very high percentage of people with a high a1c that may be at higher risk than say people in other countries I don't know that for sure but that is those are two kind
of confounding statistics that may kind of make things a little bit worse if I were to put my money on this look I'm a betting guy I would be a little bit nervous at this point but I'd say it's probably somewhere between 0.15 and then call it 1.8% you know call it that's that's an order of magnitude I know so you know but you could do the math that's probably somewhere between
one and ten times as bad as the flu and so that again leads to the big policy question about are the actions warranted is it let the health system crash so that's imperfect then flipped to you Cho moth you've heard his basically his line at you know 0.12 ten times the flu one point eight or something you know if we split the difference of those two it's 0.5 it's a point six point
seven fatality rate is the reaction of sheltering in place and the economic turmoil it's causing worth it yes or no right now you guys need to keep talking I need to jump off for two seconds and I'm gonna run right back okay no problem and so what do you what do you think now if we were to look at
your estimate David is it actually worth what's happening would we if you and I were making the policy or you I and a Chamath were you know the cabinet members as it were making this decision is this decision and the economy crashing and a potentiality of ten fifteen twenty percent unemployment and all the downstream effects would it be better to do what the UK was originally do
which is just a bad let's get the herd mentality going and let's get the herd immunity immunity go I know this is like the most difficult question in the world but like we're here so let's look it's not binary right it may not lock everyone up and let everyone out the door it may be that
you have a more nuanced policy where you say let's keep people over 65 years old give them the strong recommendation to stay home and make sure that you distribute chloroquine to doctors around the country so as soon as elderly people start having symptoms they maybe get some treatment but you know that's kind of an option you keep 65 year olds at home you do random general population
antibody testing and once you hit a certain percentage of the population having been exposed to this thing it may be that at that point you say okay you know the over 65 limit is lifted or it may be that you know you do something similar to that at different age brackets have different containment recommendations you also do it with with random gen-pop screening you also do it with
medicine being distributed so there's a nuanced answer to that where the policy should be a little bit more directed it should be a little bit more involved in terms of treatment testing and containment strategy and it doesn't need to be so binary right it doesn't have to be everybody stay at home if we get to the point where a population has very few people have had it then more people
should stay home so it doesn't spread or and then if more people have it so if 50 percent of young people in San Francisco have it already we've got herd immunity then maybe we can start saying hey if you're over 65 you can go out but just stay out of restaurants or something is that what you're
saying yeah once you hit like 50 to 60% of the population having antibodies to a particular virus you you know or like a flu for example you'll see that our not number drop well below one and then explain or not to everybody again just so yeah it's basically like the viral coefficient like for every one person that's infected or not tells you how many other people will get infected
after them and so if it's 2.5 which is what some estimates say it is for coronavirus right now then for every one person that gets infected roughly two and a half people get infected and that number goes down as more people get infected because there's more people get infected there's less people to infect and the rate at which you can then infect other people also drop so your
are not collapses and so at a certain point you have this kind of basis for saying hey guys what some okay now I got to step off sorry guys yeah no problem do you think so sure my team is incredible I mean what you are seeing in real time as we're doing this is literally like I've never seen this
before we we should probably explain what what is going on so what is going on in the background is the markets are just completely torn now why are the markets important many people aren't invested at all in the stock market I get it but it is where liquidity and capital markets function and derived out of those capital markets is the money that then kids startups it hits the banks which
then lend to small businesses it is the functional machine the undergirding of the US and the world economy and we are in a moment that I have really not seen since o8 where there are seizures in this market in extremely violent ways and so when I had to jump off the phone it was me trying to do
my part to kind of help but also trying to make sure that you know we maintain full liquidity in times like this it's incredible now Jason on the assumption that you know Friedberg mahir may not come back I mean what dramatic podcasting we're dealing it I know well you know I mean people also have their kids at home so you know I might have to jump out and take care of the twins or are
old so it is definitely having a psychological impact on everybody being home you've been home for over two weeks I've been home for a week I went out once to do a podcast on my office with just one person there what I said I wanted to do was start at sort of the ten foot level and I'd like to build up to the hundred thousand foot level and I think that'll be a good way of talking
about what we teased and talked about a little bit in episode zero which is sort of these second and third-order dynamic befo before we go to that let me just I want to wrap up with David saying about what the change in policy should or could be so right now we haven't we're having you know this
basically quarantined in some cases it's a hard quarantine some cases a little bit softer it's a recommendation and you know people are being told to you know stay at home it should this change and if under what conditions do we start going back to normalcy because I think that's what people want to know is when is this gonna end and under what circumstances I'm just talking about you
know staying home well look if it were me I think what we would do is adopt some of the mitigation strategies of China and Korea and Singapore all of these countries have kind of showed us a way to deal with it now we have to decide that a short-term suspension of typical civil liberties is worth the trade-off now it's not worth it under the normal course under any any any imaginable way
but if we had to trade off some of those civil liberties in the short course so that we could get back to normalcy I think most of us at this point and definitely all of us after another week or two of home isolation will do it and what I think it would entail is setting up zones that we would understand to be uninfected and what that means are people that don't have it or people that
have antibodies and eventually allowing those zones to reopen so that we can actually have some amount of economic activity and what that will require is massive testing of the entire population testing testing testing I mean there should be lines and lines and lines it should be you know how we would have and we know by the way how to mobilize this it is no different than when
we would go to vote right and you know we could all be told based on birth year right everybody go based on birth year your local voting facility there are phlebotomist there they can run these lfi A's they can and they can they can allow you to be in a safe zone or not a safe zone if you're found to be an asymptomatic carrier then you can self quarantine and socially distance and we can
really you know nip this thing in the bud in a you know four or five six week time frame and yeah because these tests are available at such large scale and because these tests are so insignificant ly cheap if it were up to me I would mobilize the military in the National Guard I would mobilize
or voting infrastructure I mean another way to do this with me why don't we just have the National Guard or doctors or whatever just go to everybody's mailbox put in the kits and then say you know we have your kit in here on this date and we'll go pick up the kids the problem with these lfi A's is that the amount of blood that you need you cannot draw by yourself it's not a
what about the swab stuff I mean if we just did the swab testing we just said hey why your house the swab is a PCR test that's looking for RNA and the problem with that is that it's effective in a window it's uncomfortable to administer and less to be done right away for those that are in the process of viral shedding god if you are not in the process of viral shedding then that PCR test
is effectively ineffective and what I'm advocating for is move past the PCR testing that should be done in an acute situation if you come into a hospital where you're exhibiting symptoms the more important thing right now is to find people that don't have it or people who are asymptomatic aliy spreading or those people that are immune because if we can re baseline the denominator as
Friedberg said we may find some good news in that it's very much like the flu in terms of numerical distribution in which case we can make some policy changes and reestablish economic activity if it turns out that it's not at least we know that - hmm but right now we're in the worst place which
is that we are in a situation of isolation and confinement in the absence of data and this is I think what's so what's so infuriating to folks is that we you know it's like Winston Churchill said America will do the right thing it's just that they'll try everything else first and I think that
we are clearly on that path to trying everything until we do the right thing everything okay and I think it's political I think it's political poker as the reason one Freiberg everything okay just market trades really he's like literally you're trying to cover stuff and just it's a great time to tax law tax harvest losses man yeah if you've got companies that you're really religious about
that you would love to own for a long time and you're underwater on them it's a great time to sell them take the loss harvest it and then buy him back in the next 30 days so David I have I have a list of eight things and what I told Jason is I wanted to start at the 10 foot level and end at the hundred thousand foot level okay and so I'm gonna tee up the first question for both of
you guys and I have a view but all I'll save it to the end so question number one of these eight lists of interesting things to talk about which may be relevant for the folks listening what does this mean for startups and what should you do if you are a unprofitable I mean by definition these these companies are default dead what if what do you do if you're a startup CEO today yeah I
think it's a great question I'm dealing with it like with about a dozen companies a day who are in this very acute situation you have to figure out how you have to look at the instrument panel and then try to like a pilot I use the analogy understand exactly how much altitude you have where the nearest airport is how much fuel you've got onboard so I literally told folks
listen if you can close this money because a lot of people were in the middle of doing deals close it immediately so that's number one if you're if you got a deal on the table take the money number and some people do but most people don't and I'm already seeing people reach rating deal terms based and cut and backing out so I had one person back out of a deal on the syndicate calm an
angel investor said because the market conditions I'm backing out and they had made the commitment they're backing on so you can see commitments broken so assume it's gonna that no money's gonna get raised for the next three or six months at a minimum and then you have to ask yourself well
how do I keep this company alive I have people who are founders taking 80% salary cuts and then giving their staff 50% salary cuts and then that takes their six months of runway makes it nine so that's number one you have to just make the cuts and if you've chosen to be the founder of the company that that's that's your job is to get everybody to safety and better to have four
out of five where three out of five employees lose their job and the company be alive to come back and maybe get some stimulus later then to have the company go out of business because you wouldn't make the cuts so you got to just take the medicine and that's really with first-time entrepreneurs they don't understand that and if they have an every business is different we
have some companies that are subscription-based business or delivery based businesses they're actually seeing an increase in utilization increase of people trialing their software so I have one company that's a consumer subscription they had more trials this week than ever because people have free time so that company is going to be fine but you got to make the cuts David
I'm not sure what your advice is or what you're doing in your portfolio yeah I mean look I'm on 12 boards four companies have been or are in the middle of term cheat or closing a deal so it's been an unfortunate timing for all this stuff what happens to those four companies key difference the
term sheets yeah yeah very different things I mean we've got one that I hope we close on Friday we signed on fright last Friday that the final Doc's and money is not in the bank account yet I've got another one that's had a bunch of offers that got rescinded but they weren't like signed yet it's just all over the place and and I think you know one thing that's that's worth kind of paying
attention to for every company is you've got to ask yourself firstly the hard question of going into this and coming out of this era that we're kind of now entering that is a very bleak and dark era economically where's your customer gonna be and what is your customer gonna be doing the customer model is changing overnight if you're a company that that's sold you know software
into restaurants and restaurants are about to potentially go bankrupt or suffer absolutely loss of revenue and get you know debt payments restructured they're not going to necessarily be rushing to spend more money each month unless you can help them immediately save money if you're a company selling to consumers and you're selling to consumers that are gonna lose their jobs in
the next three months or lending to consumers they're gonna be losing their jobs in the next three months you've got to be asking yourself the question what can I be doing with my business so you got to start with your strategy question and you got to make sure that your custom you got to think about where your customer is going to be and how you can adjust your strategy as a result
the second thing I'd say is and I sent out a note to my CEOs and I was like guys you gotta you know cut your burn and then you got to cut your burn and you got to cut your burn if you've got burned you got to do everything you can to give yourself the greatest chance of survival and I think on the
last all-in podcast Jason you mentioned having a you know 36 months of cash that's ideal but if you can get your cash back your cash to get you to an 18 month runway 18 I average Jim you should be you should be doing everything you can to number one kind of give yourself that breathing room even if that means creating milestones trading features creating revenue goals trading all the things
that you're expecting to do survival matters more than growth right now David Sinclair who wrote the book lifespan and as a Harvard biochemists has highlighted that there's basically a gene the circuit genes as about seven of them in humans and the circuit genes get turned on or off and it turns out every biological organism on planet Earth has a circuit the circuit gene
tells the organism or tells the cell to either grow or heal and this is a time for everyone to activate their circuit genes and stop focusing on growth and focus on healing it's really important to optimize your unit economics to make sure you know where your customer is to really reduce the burn to reduce the spend to reduce the push for growth and expansion and just make sure you've
got a core business that you have a customer that you can make money from that customer that you've really got unit economics right and reduce your burn and give yourself that runway and extend your life so that's my that's my kind of well I think we got question one out of the way let me let me
give you my my advice which is building on the the back of both of what you said but I'm gonna take it from a different perspective so let's look inside of a VC firm VC firms have limited partners and those limited partners are the most sophisticated financial institutions in the world family offices of well renowned individuals foundations university endowments nonprofits
you name it and all of them are allowed to invest in this asset class because they themselves can prove that they're sophisticated and one way in which they do it is they they have what's called portfolio allocation theory they construct a portfolio of every hundred dollars they have and they say well I'd like to have you know 70% of that in liquid instruments and that I'm gonna
have 60% in bonds and you know 40% in equities and then that 30% they'll take and they'll say you know I want to have a mixture of all kinds of different stuff some real estate some hedge funds some private equity and eventually when all of those allocations are done there's an allocation
to venture now in the last few years what happened is all of these folks you know move the dial they push the risk meter so that the allocation into venture was upwards of seven eight nine percent of their overall portfolio now just to remind you guys you know basic theory monetary theory would tell you when you put money in into an illiquid instrument remember venture doesn't
return money until thirteen years after it's done and you can't get it out it's not like a bond where you can go and instantaneously sell it in a second you have to get returns that are much better than the market because you need to be rewarded paid back for that illiquidity now in the last month what you've seen our portfolios get completely turned upside down if your bonds
and equities before were worth $60 or $70 of that hundred it's now worth $56 it could be worth $40 what that means is that that other $30 needs to be worth much much less otherwise your portfolio model is completely upside-down and all of these limited partners become forced sellers as well so
that can't happen so what is the my understanding is the last time this happened in 2008 LPS kind of winked to the GPS and said listen it would be good if there wasn't a capital call right now and then GPS not wanting to piss off their LPS the VC firms not wanting to piss off the endowments as
an example said okay we're just gonna not make any capital calls right now while the market recovers so that your equities go up and the percentage of venture goes back down is that is that the likely scenario is LPS it's worse than that it's worse than that because right now these foundations and sovereign wealth funds are trying to just stay above water and as we get to the ten thousand a
hundred thousand foot view I'll give you the picture of what's happening in their offices and again it's important because it is what make sure we come out of this reasonably well which is a properly functioning capital market and right now it is the most precarious that I have seen in 20 years so basically these LPS are gonna have to portfolio rebalance and they're gonna have to
force venture capitalists to mark down their books so these are just gonna make that decision to say hey my investment in Airbnb slack or uber is worth X now I mean when they were private companies so not slack and not uber cuz they're public no but previously private yeah but but Airbnb can it be
marked at thirty or forty billion dollars the auditors will probably say no the LPS will say that it's not the GPS will want to because it'll allow them to maintain their IRR as their rates of return and so what you're gonna have is when these when these markdowns are forced to happen which will take another six months venture capitalists returns will look terrible and
so their propensity to be able to add bad dollars after good quote unquote you know to defend every company is going to go to zero right and and as you said Jason there's gonna be a pall on on activity so I don't think 18 months is sufficient I think you need at least 36 months w need to have three years of capital in the bank the worst thing that'll happen if you have 36 months is you think
to yourself wow I was really conservative the best thing that happens with 36 months is you survive the distribution of outcomes would tell you there is zero point in taking the risk if you don't have to and this is why unfortunately it's going to be a very difficult process of recalibrating all of
this stuff so for folks that are in these startups we're gonna have to go through an unfortunate period of pain and you know as as Buffett said you know rule number one of our business is to not go out of business rule number two is not to forget rule number one yeah all right I think it's well said and is there any chance well we're sort of at this you know street level on the front lines is
there any chance that we contain this very quickly let's say under 60 days and that it looks like this virus mitigation through the various drugs we talked about actually starts to work if that happens in the next six days what what will happen to the markets it's gonna come there's a chance it could come roaring back what are the chances of a roar back it cannot come roaring back so let
me explain to you what's happening right now in the capital markets so let's take a step back and first look at what what the Fed has announced over the last couple of days so and and here's why the Federal Reserve is important so the Fed basically acts as a market making and liquidity function in
what's called the overnight repo market now that's an obscure market for the average individual on Main Street but let me roughly explain why it's and and at the end of it you're probably gonna have the same reaction as me which is what the [ __ ] [ __ ] what the [ __ ] [ __ ] okay but I'll explain it in English first you're an LP a limited partner and you give a hedge fund $1 and
very much like last episode how I explained why hedge fund run levered the hedge-fund says well if I take this dollar you know the bank will give me some some amount of leverage on it but it would be much better if I if I was able to basically you know give them a an instrument like a bond
or some sort of short-term commercial paper and then they'll give me more because they'll believe in the quality of the instrument okay so they go in the repo market and they basically do a transaction overnight where they basically you know buy some short-term commercial paper they use it as collateral and then they lever it up and then they go put it in the market that
entire dynamic works as long as the repo function works every day every night you kind of go and you clean up your balance sheet you look at how much leverage you have you look at your leverage ratio you make sure that you have enough money and you go and you refinance your short term paper that keeps you know JPMorgan Goldman Sachs Morgan Stanley lending to you but if that market ceases
when the repo market ceases and there's no way for you to either buy or sell commercial paper buy or sell short term money market instruments and on the other side the markets are whipsawing up and down and so you're being margin called not being margin called being margin called not being margin called the markets start to really seize and capitulate and everybody is just losing enormous
amounts of money and what I mean by everybody it's everybody it's hedge funds it's sovereign wealth funds its foundations its central banks everybody is losing money and if we don't figure out how to bring some calm into the financial markets it will leave all of these limited partners and all these
other people with not just a lack of liquidity and a lot less money than they had before but this psychological pain of remembering what they just went through and that'll prolong what we have to deal with to get out of it right so you know this is why I think it's really important to understand that if we can nip the you know stage zero of this which is the disease itself in the
bud and I don't mean by curing it and I don't mean with a vaccine I mean by testing and data yeah if we can understand and bound it then everybody's psychology can move to fixing the capital markets and right now how close we need it to be fixed how close do you think we are to having that mass testing done and then I think we all think we're gonna have a low mortality rate and then go back
to normalcy is that something that's happening in 10 days 30 days or 60 days if you had to pick a number the the march back to normality David I don't see any action to get the testing done that needs to get done right now my mom got tested yesterday it seems like there are more tests out there this week than oh yeah Stanford Oh clean up the testing there's definitely PCR
testing available now and you can probably get your results in three to four days on average although some labs are super backed up yeah my mom said she's gonna take three days or four days yeah but the the stuff that we're talking about which is the general population testing I'll keep saying it it's so critical that we do this to figure out how many people have already been infected
and didn't know it we don't have that data that we don't even have a plan for and it's not on the radar the task force in DC is focused right now on increasing the throughput and the availability of PCR or just in time you know PCR test blood testing that's yeah yeah it's all blood testing
it's just a matter of like like let me explain the the PCR test involved the RT PCR test involves taking blood and then there's basically six steps that you have to go through with it in a lab and it's done on like three different machines and the actual cycle takes 30 to 60 minutes at 30 to 45 minutes so by the time you have that backlog and you can multiplex it but meaning you can do
multiple at the same time and you can kind of do different things but generally these machines are not highly automated there are new machines that are allowing us to automate more of these steps and making them go a little bit faster and do more multiplexing but it is still a multi step cycle to
take the blood and turn it into a test result once you've and and try to measure it's available it's a it's content and so this takes this takes some time and so it's a chemistry lab it's doing this work so until we have a point-of-care solution which is like a test strip or something else and and these are technically possible it's just that they're not FDA approved and so they're not
getting made and distributed here whereas China and Korea and Italy are using them out and they're made in factories in China even though they're not tested and approved in the normal way these in the plan though to have these untested tests online this week it's not what they're saying yeah but
you people are buying them yeah but so I guess the question is when do you think we will have these you know the general population taking tests and we get like a large-scale testing like South Korea did I think I'll agree that's the part of the solution when does that happen unfortunately we're not parallel passing it we've put all of our resources into increasing the availability and
throughput of the rt-pcr tests for acute infection cases and as a result we have everyone focused on this there was some lab work and some research departments I won't name them that we're working on doing this general population testing but they got yanked into the be getting the rt-pcr scaled
up because oh my god were behind the curve we got to fix this thing so we got to get over this first hump I think once we get over this first hump then you're gonna see people distribute and work on this and I think getting over the first hump is happening in the next call at seven to ten days and so then it's probably another 30 to 45 days before we get these tests for general population
testing more broadly distributed so call it 45 days out why don't we do this at the same time I mean why can't we parallel this this makes no sense to me we're there with similar tests and so many entrepreneurs in Silicon Valley that are banging their head on the wall asking this question I've done so many phone calls over the last few days of people being like what can we
do how can we get these things made where can we go and everyone's just like flustered it's really frustrating anyway we've got a lot of individuals that we're trying to kind of collect together to do this work some folks are calling China today we're trying to see if we can get big bulk orders out of China we're just going to pay for it ourselves and then try and get some research labs
to run that you know research universities around the country to run the experiments for us using these untested unproven you know not have you run one of these on yourself yet one of these unproven tests yet I haven't I actually a friend of ours I did one with video on with him this morning
and so yes a mutual friend of ours a mutual friend of ours yeah and so and then I know lots of people that have them and have used them and I've seen them and I've gone through like you know I bought a bunch of them they arrived tomorrow and so I see you know we see we know how these things work they're actually from a reliable source you know these are not we know no one's actually done the
testing to prove the specificity and sensitivity we're relying on a third party you know tested we don't really know but comfortable I keep hearing they're uncomfortable what's uncomfortable then they stick it very far up your nose is that they what people are or your you're referring to the rt-pcr test so what you're trying to do they're you're trying to get a sample of living virus
on a swab and the best place to get that living virus for this particular virus is in your nose or in your backyard throat so they're taking a long q-tip and they're sticking it up your nose and they're sticking the back your throat then they put it in a little solution that will keep the viral RNA alive and then that's what they're shipping to the lab and that's what then
gets so it's uncomfortable to have it that far up your nose is what they're saying that's why I keep saying it's uncomfortable I've had more uncomfortable things up my nose I'm sure it's fine you know it's a q-tip in your nose yeah yeah it's a q-tip way up in your nose so we actually think that math testing is a thirty to sixty day I think it math testing if in the worst case is
30 is 30 to 60 days of what I'm imploring anybody with any influence is we need to get this starting to happen in the next two to three weeks it needs to start happening in the next two to three weeks and you know this is this is where I would say there are a lot of other people other than David
myself you Jason the people on our group chat buying tests for the mass population you know I just I just want to say something here which is it is incredible to see guys like Jack Ma step up and you know do what he can to send stuff here but I would say that thus far there's largely been an inverse correlation of contribution and wealth during all of this and folks that are in
a position to help I think need to be more vocal you know we all can't just participate when the times are good take advantage of the bully pulpit when the times are good and then when times are complicated disappear and become anonymous its part in why I think you and I decided to just do these as often as we can yeah because at least we can think through the problems so that at
least people can hear our voices and understand that we are thinking through as much as possible what to do I am literally calling folks in Wall Street all the time because what little I can do to assure them or be a market participant right now to maintain liquidity I need to do because
in the absence of that participation we're gonna just create more and more havoc and I think it's important for other people who are in a position either monetarily or through influence or both to be out there right now doing something you know just called Friedberg right now they should give Freiburg a hundred billion dollars we'll go to China we'll get the test and we can do our own
broad-based population study right now I would jump on that right now looking at the statistics as of today we obviously the total cases in China hit 80,000 with 3237 deaths they had only 11 new deaths yesterday and Italy 35,000 total cases 4,200 new cases and they added four hundred seventy five deaths yesterday with a total death count of two thousand nine hundred seventy
eight so that is just stunning what's happening in Italy and it seems I don't know if the trendline is it's getting worse or not but it's it's a it's a horrific and awful situation they're completely out of beds their their triaging elderly people and letting them die in the hall so that younger people who have a higher chance of surviving can actually get oxygen it's just awful and they're
having 3,500 new cases or they're at 3,500 yeah there are over 3,000 cases but added yesterday so there's really it's it is flattening but who knows if that's because they're just overwhelmed and they can't do the testing but the debts are something that seems to come down the last three days we're looking at different time series the number of people that died yesterday are in fact
the number of people that died yesterday the number of people that tested positive yesterday doesn't tell you as much because the test results may be four days delayed and they may be ten days into their symptoms by the time they get tested and so on and so forth so the testing data significantly lags the infected population count likely and may not represent much of
anything right so there it's very and it's also hard to know what the average fatality timeline looks like there are published reports now out of China and Korea that start to try and specify this a little bit but we are looking at different time series when we try and compare these things and so everyone be cognizant of that as you look at these numbers it's not simple apples
and apples let's let's move to a slightly second and third-order Jason I think if we say sure that disease is just gonna be a [ __ ] mental quagmire we're gonna jump out the window yeah okay let's let's talk about something that Mark Cuban said which I really agree with which is that if we're
gonna do bailouts they can't come where we also do things like you know allowing these companies to do buybacks where a CEO pay isn't curtailed you know it turns out that the airline industry which looks like is gonna be first in line for a bailout spent ninety six cents of every single dollar free
cash flow they had on buying back stock which is only used to drive up earnings per share which is only relevant for CEO pay so they have you know they don't have the cash buffer they don't have the thirty six months of operating you know window that you know everybody should have their anomaly on trying to hit they blew it on trying to have their earnings per share go up by reducing the
number of shares in existence errors exactly just so people understand if you can't if you can't earnings per share you know do you take earnings you divide it by the number of shares so if earnings can't go up just divided by the number of shares and earnings per share goes up lowering the number of shares yeah if you had a million dollars from earnings a million shares
it was $1.00 per you get rid of half the shares it now goes up and and so now you know you have CEO P go through the roof but these companies are not any more resilient than they were before and so now they're in line for a bailout and I think the a large caucus of people across files are very clear that these things need to be wipeouts of the equity versus bailouts where you
know folks who took advantage of the financial system here continue to get rewarded what do you guys think about that totally to me if you wipe out the equity though just pausing for a second and taking the other side of the argument I'm not saying this is the site I would take if you wipe out the equity would not some of the people who would hit that pain are shareholders
from a retirement home or a retirement plan like CalPERS maybe own tension funds yeah pension funds etc so you know it does seem like if you wipe out the equity you could have some unintended consequences was eques holders but I think what the other side of the argument is we're gonna have to have there be repercussions for people running companies so close and recklessly to the
cliff and there has to be some pain not reward for doing that and a bailout is a reward for operating your responsibly is that what you're saying Jamaa yeah I I think that actually you have to wipe out the equity and I think the reason why wiping out the equity is important is that it overwhelmingly
does not punish the you know retiree in their who owns you know Boeing stock in their 401k Boeing has not been held by retirees in their full run case for years as a cohort of impactful investors massive large institutional pools of money on these companies these are the balance sheets of governments these are the balance sheets of foundations these are the balance sheets of a
very few very very wealthy people and the reality is that for the broad-based population for the 350 odd million Americans in the United States how many of them do you think are really active market participants meaning for every dollar of value creation or destruction how much do they actually see I would guess it's less than 10 percent meaning 90 cents of every dollar are
nameless faceless organizations in a financial infrastructure I think the lesson we have to we have to we have to tell and the place we have to move to is one of compassion of capitalism which is that we have been so hell-bent on the use of leverage on the use of these financial gimmicks
on the use of accounting tricks to enrich a few at the sake of the many and this is the right time where you should nationalize some of these businesses and when they eventually do get taken back out and floated publicly all of those proceeds should go back to the United States Treasury who should then use it to reinforce Social Security and Medicare and everything
else because we are going to run a Multi multi trillion dollar budget deficit to get out of this and to just give people some context here that the u.s. national debt is at 23 trillion dollars which is seventy two thousand dollars per citizen and one hundred eighty nine thousand dollars for each citizen who pays taxes and we've run our spending our D budget deficit is ability is a
trillion dollars a year we're gonna talk about here I think a two to three trillion dollar stimulus package which will increase the national debt load by only ten percent so it does seem like we can manage that but boy was this a strategic mistake for us to run up a day during good times was it not it's it's it's even simpler than this like and and I hate to say this so bluntly but
this eurozone is gonna collapse okay Japan is finished so there are two economies that matter there's China and the United States as of today and the great thing about that is in a set of two there's only one instrument of safety which is the United States dollar thank God in that world the
United States has exceptional leverage exceptional exceptional leverage it is and it has always been you know the beacon the light on the hill etc now in a moment like this the United States has the most ability to reset how we think about things it could run five trillion dollar deficits tomorrow it could run ten trillion dollar deficits because it is still the backstop I'm not advocating for
that but this is where I think you need bold decisive action and not piecemeal strategies I don't think a trillion dollars is enough I really think that if you think about what the eurozone will have to do and what's gonna happen to the US dollar we should be basically saying right off the bat at a minimum anyone who makes less than you know pick your number a million dollars
a year every man woman and child every or every eighteen-year-old American man and woman should immediately get five thousand dollars forget one thousand two thousand five thousand and next month if we're still out of business five thousand and all of that does is just it's a trillion dollars it's two trillion dollars over two months and then you add another trillion dollars in all
this you know small business loans and all the other things that's three trillion dollars that you can deal with because we're the United States and I think it's really important to keep it in mind I know that sounds crazy well I mean um people don't think oh you know blah blah blah you know budgets and deficits but it's not because everybody else is just as [ __ ] if not
more [ __ ] well let me give you it let me give you an another perspective the GDP of the United States is twenty trillion dollars roughly every MutS assume the whole economy shuts down every month that were shut down costs us 1.5 trillion dollars so if we're gonna have the country shut
down for say three months we're losing four and a half trillion dollars right there the problem is economic growth of the economy is actually a first-order function right so the the movement of cash drives the the future economy and so if we were just needing to fill that hole you would need to come up with a couple of trillion dollars and you would have the government going
out and buying ice cream cones and paying Hair Salons and paying for dog walkers and you know paying for construction workers and paying for oil rig workers and basically basically employing and buying all of those goods and services for that functional equivalent of a twenty trillion dollar
GDP that's what it would take to just fill the hole well that's if you're assuming no economic activity I mean we we don't think there's gonna there's going to be no economic continue with maybe let's say it's a third less act economic education in the shoe guys the shoe that hasn't dropped is this idea that everybody is at home working nobody's at home working that's a joke
that's a lie okay because as David said companies are not you know self-contained units very few are many of them and most of them operate in a very interconnected socially dependent way with other companies they're your customers you are their customers nobody is doing anything right now there's nobody there's nobody evaluating the next great SAS tool guys come on and the other
issue is just it's just leverage Jason right so we've also got to remember that a big chunk of the economy is levered meaning that there's debt and debt payments that need to be paid and so those income streams are now gonna be absent and so there's there's a there's a multiplier effect when revenue goes down the economic impact is actually multiplied and so you can't just fill
the hole so and so it becomes a very complicated nonlinear kind of system that you have to try and fill the holes and you got to find the places where cash is missing and it's not moving the fastest and that's where you got to throw the money in the first like these repo markets and so on well and there's no doubt that the we all agree bottom-up is the way to do this so if we
have three hundred thirty million Americans if you just have the bottom half get a thousand dollars a month that's call it a hundred sixty billion dollars a month it's only over the year two trillion dollars so if we just did that it gave everybody a thousand dollars a month that's twelve thousand dollars for the bottom half they're not saving that money they're gonna use it to still
go to spend it in the market correct they're gonna pay their rat they're gonna go get dinner I don't think so where people are gonna who are laid off right now are gonna save the money well if you gave me $1,000 or you know somebody $1,000 when they're in their house on the sixth week of their
home confinement what what you think they're I'm assuming that we're in week ten and we're we're not in stuff confinement anymore we agreed in the first third of the program that we're gonna get there in whatever it is 60 days 90 days yeah you know what I realized after wearing the same pair of jeans four days in a row I have too many jeans that's what I've realized and you know what I've
also realized that the cotton shirts that I buy from H&M are [ __ ] perfect and I've complicated in my life with all kinds of [ __ ] that I've been buying because I thought it meant something and right now it means absolutely jack [ __ ] yeah I'd agree I'd agree with that perspective that's what's really interesting when you see your entire portfolio collapse when you see this belt
tightening it's happening even amongst and we have you know what all three of us are lucky enough to be at the you know in the top of our careers on top of our income at this point in our lives but we all came from humble beginnings as well and if if the people at the top are belt-tightening
and saying you know what I don't need to buy a $60 t-shirt I'm gonna buy a sixteen dollar t-shirt boy does that have ramifications across the entire economy and this reminds me very much of the recession they say as luxury goods would never rebound and sure enough the last ten years luxury rebound luxury has rebounded massively because it was not a psychological broad-based
impact to people's philosophy and framing of how they viewed the world you think so I thought after the economic crisis last time people did say there would never be people specifically said there would never be luxury goods again and that these young people buying a condition I'm not talking about some prognosticating analysts you know the analyst is only is you know good as their
own biases what I'm saying is the average person didn't really have to internalize a broad-based impact to their way in which they view what's important in their life this touches everybody and I think that there is an opportunity for us to really recalibrate what's important I think conspicuous consumption is unimportant you know helping each other is important taking you know
unnecessary vacations because it drives your Instagram follower feed is [ __ ] stupid making sure that we can contribute the incremental dollar we have so that other people could get tested and get back to work that seems like a better use of your money in time yeah so no go ahead David good
enough I think that there yeah there's just great perspective setting that that's that's happening that and is gonna happen broadly across the economy we've been fat and happy for a long time and at least a sub-segment of the population has been but we also have it really really well really good here in the United States there's a website I just recommend everyone check out and
spend some time on it's called Dollar Street and you can go to gapminder.org slash dollar - Street and check out the the website it is unbelievable and it is probably my favorite website on the internet and Dollar Street is a project of Ola Rose Ling's wife all as the son of Hans Rosling that the great visual economist who told people's stories with visuals unlike the world and income
and population and growth and so on and she went around and she photographed families all over the world and showed how much money they make each month and then showed all these common household activities and goods brushing your teeth the oven how do you what kind of clothes you have what in
your closet look like what do you sleep on and it's pretty striking that half of the people don't have a toothbrush a quarter of people use mud off the floor to brush their teeth most people don't have a bed on planet earth right only the top 1% have a kitchen right I mean there's like these amazing statistics with photos that really help kind of illustrate this point and I think that
I'm not saying that the extreme demonstration of humanity and the distribution of wealth income and prosperity and humanity is as relevant here but in all these photos everyone's very happy and they live a happy life and there's a great reset happen that that's happening that's underway happiness eventually finds itself when the Delta goes from being negative to being positive again when the
Delta is flat or the Delta is negative people are getting into a worse condition things are bad so we're gonna bottom out here and then we're gonna you know no matter what state we find ourselves in we'll very quickly find ourselves back in a state of happiness and we'll all reset with respect to Jamal's point on hey maybe I don't need all these genes maybe I don't need all this and
this and this but there's certainly like critical you know needs that people have and it's gonna be pretty apparent pretty quickly you know how the economy and people are gonna adjust to this this new world but there's gonna be a judgement the part of this that I think is actually constructive
is I do think that we're gonna swing the pendulum back towards nationalized economies and and away from global economies because I think this is a way that politicians all around the world they'll characterize it in different political language you know some people will call it you know sort of like American exceptionalism if here on the right if you're on the Left you'll describe it
in much more social terms but they all lead to the same outcome which is that what we have seen is that in the push to globalization we have created too much brittle infrastructure that doesn't work and that we are not resilient enough men we are hyper efficient and we are just in time and all of that is great and everything is super cheap but when we really need infrastructure to work
whether it's tests or whether it's the government or what-have-you it just doesn't and I think resiliency will force us to be more nationally attuned and I think it'll be the right thing it'll cause all governments to think about their own food supply differently to think about their own supply chains differently it'll demand companies to be less profitable if it means that they can
withstand these kinds of shocks and it's one thing to say that we could never have modeled you know sort of like this two or three sigma event we're dealing with but after the fact it's no longer a two or three sigma event and governments have to now internalize this and companies have to internalize it we are not going to act the same well just will be different look think about the
iPhone and obviously medicine and respirators we've been talking about these things over the last you know couple of weeks as this happens we if if we do have a breakdown in relations with China if we let's say we stop importing stuff what would happen to Apple the most powerful and valuable company how would they ever be able to make iPhones again in the United States are they
capable of making them now it depends it depends on who you're answering it for on behalf of the u.s. customer Apple should probably be forced to bring a lot of their production capacity back into the United States they should find a diversified global supply chain so that you have multiple
suppliers in many countries in the world but they should rely more on America it will be less profitable but it'll be okay and it's the right thing yeah it's a hundred dollars what I read in the estimates was an iPhone would cost a hundred or a hundred and change more to make in the United States but if they did they wouldn't away have this imagination they make 5 600 oz per my phone
anyway well by the way the real outcome is that you know and we were gonna do this anyways after this which is I don't think people are lining up to buy you know kind of irrelevant products anymore in a way where we are just slavish to things I mean I think it's important to ask ourselves like this is probably the most socially impactful world event the globe has had to deal
with since World War two and it's probably really important to talk to somebody you know and if you don't know you can document and you can easily find the documents of people who survived the Holocaust or lived through the bombings in London etc their mentality was different as a result of it it changed their behavior in very positive ways right it was like the great advances in
humanity happened after that would get refocused yeah you're less focused on things that are not core or critically important and Freiberg what do you think about that what this is showing in the healthcare system and the holes in the healthcare system the fact that we couldn't mobilize to deal
with this after we did scenario planning about this after SARS we've done scenario planning we've had you know I sent to our group list the link of Bill Gates talking about this four or five years ago and how this would be an issue I sent a couple of links to people writing about closing the wet markets in China after the SARS outbreak I'm curious David what you'd think the
holes in the healthcare system are that need to be fixed and what we can learn from this because I think we're now coming into the you know as we as we got through the virus we got through the economic second-order effects let's talk about positively what we're gonna learn because I think that's what's getting at is that there's a personal recalibrating of what matters maybe
morality ethics focus in our lives David what can we learn from this on a health perspective what should we do when this ends there's no easy answer to that right nationalized health care systems in some countries you could say they're great my brother my family lives in London I was my brother yesterday and you know they tried to go down and get tested for a a tooth infection
yesterday and like it's just brutal dealing with NHS in the UK you know people aren't telling great stories about NHS and they're not saying oh my god it's the best health system I love it health care is hard people want personalized care they want a lot of attention there's only so many doctors
there's only so much beds when you start giving people good care costs a lot solving this stuff and and the R&D dollars required to enter markets is so you know so extraordinarily high you end up charging a lot for products and services on the back end it's a very complicated system and there's no simple answer I do think that we're learning and realizing pretty quickly that the US
and we're gonna we're gonna do some post-mortems on this obviously as a world as a society one thing that's clear is the Chinese response in part was driven by a lack of bureaucratic red tape and an ability to manifest action and an ability to produce and distribute drugs and produce and distribute tests without needing approvals I think that's something that's gonna change in the
United States it has to be regulatory burden on health care companies and pharmaceutical companies on testing and Diagnostics companies is extraordinarily high but the objective in the United States has been do no harm which means don't let anyone die through the action but it may be that many people are dying through the inaction and I think we're gonna maybe see a
big shift in policy and allow right to try laws that are gonna be federalized so you know States can make decisions about right to try laws and doctors and patients can try drugs on their own discretion without having a federal oversight body perhaps the same will happen with Diagnostics and testing and you know that with respect to what the what services the government provides and
doesn't provide you know I I'm not sure there's a lot of data on either side here that nationalized health care systems do and don't work so it's it's very hard to say what the right solution is is here you know and I don't think that you want to try and take R&D and put it in the government I
think that's a terrible idea I think that there's a financial and a capitalistic motivation to find discover molecules get them tested and proved that they have a positive effect in human health and we need to move this toward personalized medicine which actually changes the construct and probably
increases the cost of doing this about 10x we're already seeing this with stem cell therapies and CRISPR based gene therapies is they're so much more expensive in order to get that stuff moving faster we need to remove the regulatory burden and allow companies the ability to move quickly and make this stuff more affordable the more we the more barriers we put in front of companies
the harder is going to be and if we try to do this with a top-down approach with the government deciding what did you are and beyond and what not to do R&D on we're gonna be in a [ __ ] mess so it knows that some of my points yeah I would say as well I think that there has to be you know after the great financial crisis we we smartened up about what the banks were allowed to do
unfortunately we didn't really smarten up about what other financial participants were allowed to do and a lot of what we're seeing here is our excesses around leverage and credit and I think we need to fix those we need to tell companies that you know you can't put out certain amounts of debt we need to be a little draconian actually to reset this properly we need to tell you know market
participants that you can't run 10 or 13 times levered you can't take a hundred billion dollars and make it act like 1.3 trillion and then blow a 50% hole in it you just you're just not allowed to do that I'm just sorry but nobody should be allowed to do that okay so if we look now on to
politics which is the least fun to talk about in many ways but just on international relations I think it's worth discussing there's been a bit of a debate about what we call this virus and the relationship between the United States and China China went on a little bit of a propaganda campaign in the last couple days saying the u.s. that the u.s. created the virus Trump has now been
trolling them actively talking about the Chinese virus I used the other day the one hand virus I didn't realize that that people consider that racist to say woman virus because we called it the Spanish flu we called it the German measles but I guess people are particularly sensitive to this topic now and I think there's a critical issue here that I don't understand why we're not
talking about this but wet markets specifically trade in exotic animals the these viruses are contained in certain animals like bats which are you know together in flocks of like thousands and the viruses and then these animals in wet markets people don't know what that is you can you can google it if you've got if you're not squeamish but essentially in Chinese culture as I've read
it in the Wall Street Journal and in the World Health Organization's advisements to cancel and to shut down wet markets and there's you nana team United Miss agreement on this and from the health officials that these have to be shut down the Chinese culture says we don't want to see meat in a package because we believe it's counterfeit and it's been frozen and then won't be as tasty and it
won't have the same nutritional properties so you must slaughter the animal in front of us at least for some significant percentage of the population there it's a tradition and this is where these viruses have uniformly been generated from and now we have the President and China going at each
other and we have to have this very delicate conversation I think David and I'm curious as to your position on this because it's now hitting like a ratio and you know in a and a bias against a certain culture is how this is being framed by the left which is just maddening because it's
actually a culture it is a cultural issue that has to end just like our cultural tradition of shaking hands obviously needs to end or be deprecated in some severe way so David maybe you could talk a little bit about what you think the outcome here is on a political basis in relation to those wet markets and China and us relationships look I think China suffered heavily I'm sure they're
good I've heard they're gonna shut down the wet markets but all I know is what I've read on the internet so you know I think they're [ __ ] awful and stupid and they should be shut down cultural you know dependence aside there's another issue in China apparently there's a huge amount of the
impoverished communities in China are encouraged to actually grow and harvest rats I don't know if you guys are aware of this but there's a bamboo rat business when you grow these rats inside of bamboo and then you kill them and you sell them and so the the poorest people in China make money growing and selling rats rat meat and the Chinese government just in the last week have told them
to stop which actually is a huge effect on many millions of families who are growing these rats so there's an economic effect but it's obvious that it's a terrible health effect but I'm not sure that getting rid of the wet markets truly eliminates or Radek AIT's the risk of a new viral outbreak right like I think I mentioned to you guys on our text stream the other day you know
40% of the bacteria in the oceans are killed every day by viruses this is a great stat that Jennifer Doudna uses in her book that on the discovery of CRISPR and there's 10 to the 28 bacteria in the oceans so half of them they all get killed every other day every two days by viruses there are viruses everywhere they are going to emerge they're gonna hit us the issue isn't necessarily
where the source of the virus is coming from it's just that we have to have better testing and diagnostics and preparedness and treatment plans and an ability to motivate and mobilize ourselves to address pandemics like this in the future with respect to the relationship with China I'm not an
economist I'm not a trade guy I don't really know the nature of the relationships though I'll leave that my might know my thought my thought on this is that this is not a question of you know what markets are no wet markets I think this is a question of if you are a an anchor participant of globalization in a global economy is there an expectation to have a common set of behaviors the
lowest common denominator set of behaviors and high genes that everybody signs up for to be a you know fully fledged global market participant now the the pros of that is that maybe everybody decides to be a participant and to have lacks borders and you know free trade agreements that there can be no wet markets and a whole host of other things we all agree on you know whether
we are ok with shaking hands or maybe it's namaste from now on or maybe it's bowing the problem with that on the other side is that all of a sudden you create a monoculture that strips away the individuality and the richness of every country and you know I I kind of think like like you know we could have attacked wet markets when HIV started to spread because it was you know as
we understand it it was the emergence of the you know bush meat and raw bush meat and the killing of monkeys that had this virus that was then passed to humans etc etc that started the HIV epidemic so these things have happened before and it's not as if we shut down you know all of those
markets in Africa they still exist in some form or fashion and as David said there are huge economic ramifications to to having these cultural edicts and it's very difficult I think for an American to demand China to do it when we're not willing to step up just like in other ways you know countries can demand us to lower our carbon emissions and we say we're not going to do it so there
are implications and very difficult issues all over the place but I do think in general that if we move towards a more nationalistic economic dependency interdependency I think that it's probably the right thing to allow more resilience to exist and for cultural diversity to continue to compound because the world of just-in-time efficiency I think we're learning now was
the wrong optimization for the world we need to optimize for resiliency and that means some amount of inefficiency it means more mom-and-pop shops I think that that's a good thing it doesn't mean everything is Amazon Prime now and Walmart I think that's ok it means that the iPhone is a little bit more expensive which means you upgrade every other year that's ok it means that companies like Google
and Facebook and others are less profitable in the short term that's also ok all of these things are ok we just need to decide and now we need to move forward mm-hmm when do we what's our best estimate of when people will be allowed to go to a restaurant I think it's you know again getting back to what the people listening to this podcast probably care about most as we wrap up here in the
in the second hour and thank you for tuning into the all in pod Freiburg is with us from what's the name of your incubator again David that production board the production board previously met Romano climate dot-com and shabbath property of social capital partnership when do we suspect people
will be allowed to go back to work in the Bay Area in New York when will people be able to go and have a meal in a restaurant do you think this is May June or July or August when will maybe at equality of you I'm going crazy I'll give you my optimistic you know and then we can give the final word to David here's my optimistic view please I think that the emerging evidence will soon be hard
to ignore that we have a denominator problem which means that we're not testing enough and that these IgG and IgM tests will come online at scale in the next two weeks and that we will establish DMARDs zones within cities and towns green zones if you will where people who are either negative or who
have already gotten it have tested positive for the antibodies will be allowed to interact so I am telling you that it's within six weeks from now six weeks from now we'll be in restaurants and we may have to show our papers to somebody to get in or have our foreheads tested no no your Jews have
to show your test result and have your passport or driver's license yeah I mean I know this sounds crazy I would much rather go to a restaurant in the next six weeks where I had to show my papers a little bit draconian sounds a little dystopian I would much rather go back to taisho couldn't have my goddamn ramen would show my papers and know everybody else did and then have everybody go
through the you know a very simple temperature test on their forehead like I give to my kids when they're sick David you taking me over where the under at six weeks for when we'll all be at taisho can have me ramen I'm taking the under I'm taking April 7th or 8th April 7th or 8th and we're recording this I think on the 17th or the 18th I think and so you're saying we're just gonna
be whatever 20 days out I - I'm taking the under but apparently I think it's uh neighbor four or five weeks David explained the under case just so and we can end on that but what's the under case because that's a great note den done yes so as we see the number if you look at the UW virology website and I've shared this with people on my Twitter account which I started doing yesterday
which is at freezing have Friedberg I'm not sure I'm gonna stick with it I don't know if I have the stomach for it like you guys do but basically they're showing you know steady case loads of positives per day which again is delayed and if you look at the ICU availability in the emergency room wait time data which I think are better leading indicators of where we are in the cycle
New York is about two weeks behind us New York is gonna be [ __ ] for a little while but I do think that the West Coast and with some travel restrictions is going to be able to reopen for business probably around April 7th or 8th because we're gonna see a dramatic decline at that point and we're gonna see a lower fatality rate than everyone's predicting and we're gonna start to
have measures around washing your hands and masks because you can't keep station shut down for that long without literally never being able to open again so I'm kind of balancing the economic need against what I think the data is starting to show that hopefully we are seeing the second derivative
turning negative now and so we start to see a slowdown in new cases and then we see a reduction in cases and I think that you know there's a huge distribution and what that model can tell you but I feel really good about Ghana April 7th or 8th I was getting enough confidence there ok it's safe to go outside again and by the way if we don't open up for [ __ ] business everyone's done
forever alright that's what that's where I get the number and most importantly when do we feel comfortable playing cards again in person because I'm I'm starting to think that I want any other sounds crazy but at this point if the three of us were positive and we'd gotten through it already I
would like to know that I think the entire poker group needs to get tested and the best possible scenario is that we're all inoculated we're not carriers anymore what blockers in the system and we can get back to playing cards because I am and I'm being a little facetious here but the chances are we might all have it right I mean it's it's a possibility it I am going bonkers being at
home I am not designed for social isolation I'm going crazy Tomas do you like it yeah I mean I'm a pretty isolated person as a matter of course anyway so other than work and you know my doing this or TV I'm always at home yeah and but the one thing that I cannot live without is Monday pokers and I'll really tell you why it's like in a moment like this here's here's what I've
realized I've realized just how much extraneous stuff I have in my life how much I don't need it how much I paid my time with things that are just not important and it's really allowed me to clarify like you know working on the next deal not important thinking about my status in society not important thinking about what other people think of me not important my health important
my family and their health important and my friends I love my friends yeah and we're very blessed I I mean I I love the both of you that group saved me in some really tough moments in my life yeah and I hate not seeing you guys and being able to you know just touch and feel you on once a week it's that to me is brutal just to be clear this is a group when we define touching
and feeling it we're talking about Kovach's love it's fine we make man love and make man love over the poker table and that's how men commune is by just shifting large amounts of money across the table I miss you guys too I'm going crazy I'm not gonna be high I don't think like you're gonna see me after this said and done I can't take seriously buying things I just think it's
like what the [ __ ] is the point yeah I really take seriously that we need to fix the social infrastructure of the United States and in part do or do what we can to help as many people as possible right they had folks Jamaa Friedberg 2024 hey Dave free Bob you both thanks a lot for doing
this Jamar thanks a lot for doing this follow at your mouth follow at Freiberg if you want to help out the podcast well there's no ads to click on because Tamar wants me to go broke on this no ads but I will say if you write us a five-star review on iTunes I guess that means we'll get indexed and follow Friedberg follow our mouths follow out Jason we'll see you all next time bye bye