0:00
Captain Kalakanis is here, reporting for duty.
Search this video
0:02
Wait, is that Spirit Airlines, Cap? Absolutely. Spirit Airlines.
0:04
I just wanted to say All-In podcast, now sponsored by Moncler and Spirit Airlines.
0:12
Or now sponsored by The Village People.
0:16
YMCA Now, are you a pilot or a flight attendant, J Cal? He's a flight attendant.
0:21
I don't think he's thin enough to be a flight attendant. Are you fat-shaming me?
0:24
Are you body-shaming do that nowadays.
0:27
That'll get you canceled.
0:28
Get exact canceled that this point, like fat-shaming would be number 72 on the list.
0:32
He can't get canceled because all the libs have left Twitter.
0:36
There's nobody to There's no hall monitors left? That's not true. They all pretend.
0:41
No, they quit every week.
0:42
Yeah, it's like all the libs who said they'd move to Canada when Trump got elected.
0:45
Yeah, Canada immigration Go ahead. flat.
1:05
A hacker figured out a way to take all this data and track you know, people's yachts, people's planes.
1:13
Obviously, one of those people was Elon.
1:14
Elon had a security issue.
1:16
This is all public information.
1:16
So, the larger issue at stake here is the fact that the law allows for people to do this persistent tracking of planes, which then becomes persistent tracking of a person.
1:30
And what really is at stake here is how we define the term doxing.
1:35
For people who don't know the term doxing, it means giving a person's location. That could be your home.
1:38
That could also be you're at a location for some period of time.
1:41
You're you're at a hotel, you know, for a basketball game.
1:45
Uh and it's pretty clear you can take a picture of a celebrity, say there's a celebrity here.
1:48
Oh, Lady Gaga's at the farmers market.
1:51
What I object to here, uh we all understand doxing is dangerous and it in fact is against the law to just give people's addresses and stuff like that.
1:59
Um the issue here is a new type of doxing, which I I'll call, you know, persistent coordinated doxing, where dozens of times a month you're giving a person's location.
2:11
It may not be against the the First Amendment, Sax, I think you would agree.
2:15
But we have to ask ourselves, do we want to live in a world where whether a person's on an electric bicycle or an airplane or any device in between, somebody should be releasing dozens of times a month a specific dedicated feed of their location.
2:28
It is terrorizing as a parent when this happens.
2:30
I've had doxing, people on the call here have had various security concerns.
2:37
We don't want to live in a world with de facto doxing.
2:39
What these sites were doing was de facto doxing.
2:43
it was a bad decision, and I think that it um uh represented you on the least generous statement would be that it represents deep hypocrisy.
2:55
In the not just a few weeks ago did he say he would never delete that account, but he also said he was buying Twitter to enable freedom of speech and freedom of expression and that he wouldn't come in and do the same sort of content moderation that was done by the old regime.
3:07
And then he came in and did exactly what the old regime did, which is that he took the rules and he took the quote moderation policies and he found a way to use them to make some editorialized decisions that he thought was appropriate.
3:19
Now, the more generous thing is what you guys are saying, which I don't think is necessarily wrong, which is that he's trying to protect people where there's some loophole or some law that doesn't seem right morally, but it is the law, and it is what it is.
3:33
In those cases, I think you run into the exact same issue that the old guard at Twitter had, that the moderators and the executives at YouTube have dealt with, and that the executives at Google have dealt with, and that we sit here and we
3:45
criticize until you're on that side of the table, and you're forced to make these moderation decisions, you're forced to make these policy decisions, and you're forced to implement these policy decisions because of some moral framework that you now think is appropriate. And guess what? Some people And guess what?
3:58
Some people will say that's not freedom of expression.
4:01
That's not freedom of speech.
4:03
You're taking that away from some people.
4:04
You're taking this particular case away from a 15 or 16-year-old kid who's built a Twitter feed.
4:10
And so I think what it shows is just how hard it is to moderate these sites, these platforms.
4:14
And that there is no simple, easy, idealistic idealogue of hey, all these things are open, all these things can be used by anyone all the time because as soon as one of these edge cases start to happen, you want to come in and do something about it.
4:28
Chamath, what do you think?
4:28
What should happen going forward?
4:30
So I I have had these issues happen to me multiple times.
4:35
I'm not nearly as important as Elon is, but it feels the same when you're in the middle of it.
4:43
It feels pretty terrorizing.
4:45
That being said, uh I think the real decision for somebody like me is that if if it's too much is frankly just to get rid of it and you know, to find a different mode of transportation that's a little bit more anonymous.
4:56
And you're pragmatic about it.
4:58
And the And the reason I say that is that I just think that you you would have to go and get the government to basically change the law, which they're not going to do.
5:06
And so then as a result, your reaction will seem somewhat contrived and deeply personal.
5:12
And in that, I think you lose credibility.
5:14
Let me just summarize this and be the first one to just state this.
5:18
I think that if there's any person in the world that can figure out Twitter, it's probably Elon.
5:25
But man, has he taken on just a gargantuan battle.
5:29
And increasingly, I am not a fan of this battle. And I'll tell you why.
5:34
This is a man who has essentially proven that he can bend the laws of physics on behalf of humanity. He's done it twice.
5:42
Once in electric cars and once in rocketry.
5:46
The problem is that the realm of decision-making at Twitter has nothing to do with the laws of physics and is governed by emotions and psychology, in which there is no canonically right answer.
5:56
And so he's quickly finding out that half the population will always find fault with him, no matter what he does.
6:05
And now the implication of that becomes very important.
6:09
We saw yesterday that he had to sell another 3.
6:11
8 billion dollars of Tesla stock. Why is that?
6:16
It's because this transaction, which was, you know, very tight to get done, probably required lots of margin.
6:21
You know, there are I look, I have a margin loan at Credit Suisse, so I know how these things work and you can very quickly get margin called.
6:30
You have to sell down things that you own in order to maintain your collateral limits.
6:35
We've talked about this before.
6:35
He's had to do this twice now in the last few weeks and that's because, again, not because of the demand at Tesla, as far as we can tell, but because people believe he's distracted and so people are anticipating weakness at Tesla.
6:47
People are now shorting the stock.
6:51
Anyways, it's causing this downward spiral. And can he fix it? I think so. Can he pull it all out? Sure.
7:00
Is it just putting himself under an enormous amount of pressure that he could have avoided? Somewhat, yes.
7:05
And I think that this is sort of where we're at. Um six weeks in. My gosh. Totally.
7:14
Well, I mean, I was saying this guy learned in six weeks what it took YouTube seven years to learn how hard it is to moderate content.
7:20
And you know, I think the thing that this is where I disagree is you're you're you're attributing so much good faith to these content moderators at YouTube and Twitter when the Twitter files reveal that they made no effort to suppress their bias.
7:36
In fact, they were like pretty much Wait, can you before you Okay, before you react to that dancing in the streets every time they booted off someone they didn't like. Fair enough.
7:45
Before you react to what Freeberg just said at the end, that Coda, can you respond to what I just said? Isn't it true?
7:49
Like it's like Well, look, I mean, if you define what Elon is, you know, doing there as, you know, acting as a judge arbitrating on every little content moderation decision, is that a great use of his time relative to what he could be building at Tesla and SpaceX and doing on behalf of humanity, then no, clearly not.
8:10
But if you define what he's doing in the larger sense as restoring free speech to the most important town square social network, hopefully thereby inspiring other tech companies to move in the direction of opening things up, then I actually think it's a pretty good use of his time.
8:26
So, look, I think we can quibble about this or that decision that he makes or this or that tweet, but I think the overall thrust of what he's doing is very important for the country and for humanity.
8:38
So, I get where you're coming from.
8:40
Hopefully, he'll find some people at Twitter who he can empower and trust to make these content moderation decisions so he's not drawn into every single little battle, right?
8:48
We do want him focused on the highest priority problems.
8:53
My point is just that I get that.
8:53
I just think that what he's learning and what we're living and seeing in real time is that there is no canonically right decision ever in this space.
9:02
There's only a decision where some percentage will support and some percentage will always be against. That's my point. Correct.
9:11
He did say when he took over, he knew that would be the case.
9:13
He said, "You will know I'm doing the good job when both sides are equally upset."
9:19
Just to to put a pin in it, I think it's important for people to understand what the new policy is.
9:21
So, I'm just going to quickly read it just to put a pin Just hang on, hang on, sorry, hang on one sec.
9:26
Before you get to cuz I think the philosophical point rather than the specific one is is an important one and I just want to respond to what Chamath said and and and have Sachs respond to this.
9:35
In the case of the the points you make around the Twitter files, and by the way, I don't agree with any of the moderation decisions, personally.
9:42
So, I don't think that someone should be suspended for posting public information.
9:47
I don't think someone should be suspended for saying controversial things.
9:50
That's my personal opinion, just so I'm clear on that, cuz I know that, you know, that that's the question. a strong free speech.
9:57
Yeah, libertarian strong. Okay, got it. Sure.
9:59
And um and so in this particular case, I think what really hurt to me I was trying to identify why it made me so angry what you did yesterday.
10:07
It triggered me, it really did.
10:09
And I think the reason was that in the case of the Twitter file points, um it was a minority it was a minority that was affected.
10:15
It was one person that was affected because the majority wanted to do that thing to that person.
10:21
And I think in this case, it's that the minority wants to affect the majority in the sense that Elon has aggregated this control and this power over moderation, and he's benefiting himself and a few people that have private planes, and he's shutting down hundreds of tweet feeds, Twitter feeds, that are using publicly available information.
10:40
And so it feels even more onerous of a of a um a use of power um and influence because he's taking um he's doing something that benefits a small number and affecting a large larger number.
10:53
Whereas the Whereas the other one was affecting a small number that benefited a large number because that's what a lot of people wanted to see happen.
11:01
A lot of people wanted to see Trump suspended, and it wasn't right either. Okay.
11:04
I don't know if that if that makes sense.
11:07
Yeah, yeah, you know what, we understand your position completely.
11:07
I I just want to add to that.
11:10
In this policy, I think it's very important to understand what he is saying about this.
11:15
Accounts dedicated to sharing someone else's live location are going to be suspended going forward.
11:18
You can still share your own location, obviously.
11:22
Content required uh you know, content for public engagements, you know, the president is speaking somewhere, whatever.
11:27
You just really can't be persistently, consistently tracking an individual, otherwise known in, you know, plain speak as stalking.
11:34
But Jason, if NPR is live tweeting Sure.
11:40
Jerome Powell's speech Perfect. No problem. location. Not a problem.
11:45
If they do Jerome Powell's location for the next year for the next year, 10 times a week on his off duty, on duty, that's something we're talking about.
11:55
I'm just saying like let's just say he gives a speech every week. Is that illegal?
12:00
No, if you're giving a if you're giving a speech at a public place where you've announced that you're going to be appearing at a certain time and place, you've already made public where you're going to be.
12:10
What we're talking about is and what what what Elon Jet was showing was a live stream of precision GPS coordinates over a sustained period of time. Yes.
12:19
And not to be too dramatic about it, but if you look at like the weapons that are so successfully being used in Ukraine right now, they're all precision GPS guided.
12:26
Now right now you have to be a state actor to get a hold of those weapons, but you could imagine over the next decade that having someone's precise GPS coordinates over a sustained period of time, it would be pretty easy to target them for and not to be dramatic here, but for assassination. Yo. That is a security risk.
12:42
There's no way around that.
12:45
I brought this up with Palmer Lucky, man. I'm scared.
12:46
That dude could come at me anytime when I get my jet.
12:48
I don't want Palmer Lucky TAKING ME OUT.
12:53
YO, PALMER, I'M SORRY, DUDE. DO not take me out. I'm going to get my jet.
12:56
I'll be on my first flight and he's just going to send a drone in.
12:59
But look, let's talk about hypocrisy for a second, okay?
13:03
Because let's let's talk about CNN's hypocrisy and the media's hypocrisy.
13:06
Because earlier in the week, they were saying that any criticism of Yoel Roth, who was Twitter's former head of Trust and Safety, amounted to a threat to his safety.
13:17
And they had this like theatrical tweet where they claimed he was having to flee his house, which a lot of people found pretty preposterous.
13:25
They were basically saying that public criticism of someone who has put themselves out there to engage in a public debate, who's writing up it's New York Times, that is a threat to safety.
13:35
However, publishing someone's real-time location on a continuous basis, so they can be targeted.
13:41
intellectually consistent.
13:41
It's not intellectually consistent. I'm sorry.
13:44
If I If one of those two things is a threat to safety, it's the real-time doxing of somebody.
13:48
I think we now understand why Elon did what he did.
13:52
He basically had an incident in LA in which his kid was threatened because he's got stalkers coming after him.
13:57
So, his safety is a real issue.
13:59
It's not like a made-up issue.
14:00
But why should his Yeah, why should his personal experience affect the usage of the service that hundreds of millions of people use?
14:09
And that's the big issue.
14:10
The decision should not be based on what affects him personally.
14:12
There needs to be a principal basis.
14:13
There needs to be a principal basis for any decision about content moderation or censorship.
14:18
Maybe in the first few hours of that decision, it wasn't handled perfectly cuz there wasn't a principal basis, but since then one has been put in place.
14:25
The principal basis is what Jay Cal showed, and this applies to everybody.
14:31
And so, you know, now it's a debate about whether that policy makes sense.
14:34
Now, is Elon just as arbitrary and capricious as the former uh executives who were running trust trust and safety at Twitter?
14:41
I don't think so for two reasons.
14:42
Number one, he's promised transparency.
14:44
He said that when we ban or shadow ban an account, there has to be a reason for it, and you have to be alerted to it.
14:50
In other words, none of the shadow stuff. No shadow. You get informed.
14:53
You get your You get your speeding ticket, you get your ticket. It's It's there, right? No more shadow. That is different.
14:58
And then the second thing is that, and again, I think you could say that he didn't do this perfectly in the first few hours, but there needs to be a principal basis for a censorship decision, and it needs to be applied to everyone equally.
15:10
And so far, we haven't seen any basis for believing that he's not applying this principle equally.
15:13
I mean, it's still very early.
15:14
Whereas the former rulers at Twitter were indulging their personal bias and personal preferences in who or they were banning.
15:21
There were two standards of justice.
15:23
If you were someone who was allied with them, it was almost impossible to get censored, no matter how hateful your tweets were.
15:29
But if you were somebody on the other side of the political debate, they were eager to suppress you.
15:35
And I think that at least so far Elon has not shown that type of selectivity.
15:40
He selected against someone that put him at personal risk. He I think Yes. Yes.
15:50
If that's where the decision had stayed, Yeah.
15:51
then I would agree with you.
15:53
But I think that since then they've put in place they've undergirded that decision with a principled policy.
15:57
I think those sites are I think those tweet um streams are cool.
16:01
I think there's some cool tweet streams that some of these people run and there are hundreds of them and and they're actually kind of cool.
16:07
You can see where these different favor of people tracking people's planes. Air Force One is.
16:11
They show all these different planes.
16:12
It look and whether or not the FAA should be publishing this data is a separate question, but it's on the open internet. It is already there.
16:20
It's like turning off the RSS feed from the open internet to protect himself. Okay.
16:24
That's why it feels ownerous.
16:24
So here's the part I agree with, which is I think this policy with regard to plane specifically is going to be futile. Yeah.
16:32
It's going to be at best harm reduction because as long as there's many ways to publish this information, It's already it's on Facebook.
16:37
So listen, I think I think this whole I think this whole policy on Twitter is a little bit of a red herring.
16:43
I think the real issue the real underlying issue is that the FAA is publishing these ICAO numbers, thereby making every plane personally identifiable.
16:51
I don't think there's I haven't heard anyone explain why That's necessary.
16:55
I have a counter to it actually, Sax, if I may.
16:58
What we saw, whether you agree with it or not, with the mass banning of certain individuals did actually silence them and take them out of the public square.
17:08
One of the reasons in fact Elon wanted to buy Twitter.
17:10
So if you look at certain individuals, whether it's Milo, Alex Jones, Trump himself, right on down the line, when they got banned across all systems, it was dramatic in terms of the reach of the that information.
17:21
So, because of the size and scale of YouTube, Facebook, Twitter, etc.
17:25
, when they act in coordination, they can have a dramatic impact.
17:30
Not a perfect impact, but a dramatic, which is why we have this issue of, "Hey, should 230 be rethought?"
17:35
Because when they act en masse, it is extraordinary what they can do to an individual. They took Yeah.
17:44
Alex Jones How do you consume Alex Jones?
17:45
You have to seek that out in a major way.
17:47
It's It's distinctly different.
17:48
Chamath, last word, and then we're moving on to what could be the greatest science corner ever in the HISTORY OF ALL-IN POD. FINAL WORD, CHAMATH.
17:59
I THINK THIS IS THIS is a great transition.
18:00
We're about to talk about nuclear fusion.
18:01
And my point is, I don't care about any of this stuff.
18:04
Like I said, like This is my point is like the If you If you take like an average person, okay?
18:13
You know, we are, let's say, awake 16 hours a day.
18:15
And, you know, if you take out the time with our family, David, the family is people that are related to you. Um Look at that.
18:22
Can we DM Sachs those people one more time? So he has it. Yeah.
18:27
We'll send you their names.
18:27
Um But if you take that out, and you take out, you know, exercising, and, you know, bathroom time, explain that to Sachs?
18:34
That's when you increase your heart rate and sweat, Sachs.
18:38
The point is that you have, let's just call it, 12 hours, you know, of functional executive time that you can apply to a problem.
18:45
And you can break that down into these blocks, right?
18:49
I would really love what is basically the smartest human and the most productive human of our generation to be filling those blocks with things that sort of like really transcend and increasingly and I agree that freedom of speech is important, increasingly those buckets are being filled with things that are very low level and hyper tactical and are distractions at best to the to the path of free speech.
19:19
And so, I think that hopefully, he gets all this [ __ ] under control over there.
19:27
He finds a good executive team.
19:29
I would like to see him get back to landing rockets on barges, getting to Mars, getting I mean, finish self-driving. We're almost there.
19:39
Chamath definitely has a point.
19:41
But I I would just say one of the reasons why we don't care that much about this issue is because I think something to understand that's important is there are different kinds of speech and different kinds of speech deserve different levels protection.
19:51
The fact of the matter is like business advertising is not as protected as political speech.
19:56
Porn is not as protected as political speech.
19:57
Political speech, speech criticizing the people in power is the most protected category of speech because the founders of the country understood that the people in power will always try to insulate themselves from accountability by limiting that kind of speech.
20:11
But that is precisely the kind of speech that the former rulers of Twitter suppressed the most and showed the least sensitivity to. So, listen.
20:19
I mean, is Elon going to be the perfect content moderator? No. I mean, Nobody is. Nobody Nobody is.
20:23
But I do not believe that puts him in the same category as you know, Vijaya Gadde or Yoel Roth who showed no sensitivity for political speech.
20:34
He has indicated a desire to restore freedom of speech and I think they ultimately ended up in I want I want him to get us to Mars.
20:40
I want him to get us to Mars.
20:42
I don't care about move on to the best science corner ever.
20:47
So, uh according to sources, scientists working for the US government have achieved a net energy gain in a fusion reaction No. No. Not net energy gain. Get it right.
20:58
We had ignition energy, which is very different from net energy gain. Okay, hold on.
21:01
You know that you're in the anti camp.
21:02
Please let the science nerd have his you you to you have to say it correctly so that people understand what you're talking about.
21:08
Let let me just make it even simpler then.
21:11
Explain to us what fusion is, Dr.
21:13
Friedberg, and explain to us why this could potentially change everything.
21:17
We did this on a on a show once before, but I'll kind of do a quick kind of summary again.
21:23
Basically, if you take atomic nuclei, which are made of protons and neutrons, and they repel one another, right?
21:30
Because protons are positively charged, so they want to push apart from each other.
21:34
So, with enough and enough density, meaning that they're moving fast enough and they're close enough, they'll overcome their repulsion and and jam into each other.
21:42
When that happens, some energy is released because the total mass of the fusion of those those nuclei is actually less than those nuclei when they're on their own.
21:52
And so, some energy is released, and that energy drives a chain reaction.
22:00
And so, fusion is this concept that is fundamental to physics and fundamental to the energy driver of our universe.
22:07
So, the star in our in our sky, the sun, is driven by fusion, and only about 15% of the mass of the sun at the center is dense enough to actually drive fusion.
22:20
So, the big challenge with fusion is how do you get these these atomic nuclei close enough together and moving fast enough that they'll actually fuse and release energy. And that's super hard.
22:31
The reason it happens in the sun is because the sun has so much mass that the gravity pulled all those particles together.
22:38
They get close enough, they get hot enough, they move fast enough, and fusion happens.
22:41
Boom, all this energy comes out, and every day we're warm.
22:44
Now, to do it on Earth is very difficult, but if we can do it, what happens when you fuse nuclei together is you don't release any This isn't like a radioactive fission reaction.
22:58
You release energy that can be harnessed to drive our our our our How is it done? Yeah.
23:03
So, in the 1950s, you know, this was theorized, "Hey, we could do fusion on Earth.
23:06
We got to get a really, really dense plasma, meaning the atomic nuclei and the electrons have kind of gone off the atoms, and it's just the nuclei spinning apart.
23:14
You got to get them to move super fast, like tens of millions of degrees Celsius, and you got to get them really close together.
23:19
So, how the heck can you do this?"
23:21
So, there's a couple of um concepts to do this.
23:23
One of which is called inertial confinement, which is where you basically create a little pellet of the uh the material you're going to try and get to fuse, and you put a ton of energy on the outside, you compress it really hard, really fast.
23:38
And when you compress it really hard, really fast, and you can get it to be done in a perfect sphere, and you can get it to collapse on itself very quickly without, you know, kind of shooting all over the place, enough of those particles will come close enough together, fast enough, hot enough, and they will start to fuse.
23:52
Another way is through uh magnetic confinement, where you use magnetic fields to create a really hot plasma, get it to spin around or to move, and then the magnet brings that super hot plasma closer and closer and closer together until all those particles are moving fast, and they're dense enough that they start to fuse.
24:11
So, you know, one is called magnetic confinement, the other one's inertial confinement.
24:14
And so, what we saw happen this week is at the National Ignition Facility, which is a facility that was built starting in 1997, and they've spent about 3 and 1/2 billion dollars to date, they demonstrated a net energy output from the fusion reaction of our inertial confinement system.
24:30
And what that means is they took a little pellet, and that pellet was made up of uh deuterium and tritium.
24:37
The atomic nuclei that they used, the particles that they used, are deuterium, which is a proton and a neutron stuck together, and then tritium, which is a proton and two neutrons stuck together.
24:47
And the reason they used those two combinations is of all the different ways you could fuse um nuclei together, this has the best energy output of any kind of reaction. Free bird. Yeah.
24:58
What actually happened this time that made this work for what apparently only three billion dollars you said?
25:03
You didn't say three trillion, you said three billion.
25:06
About a third of Yeah, about a third of what Sam Bankman-Fried stole.
25:11
We have done something here, yeah, allegedly.
25:13
So, what actually happened that is so dramatic that we have a press conference and everybody's losing their mind.
25:19
So, yeah, I just wanted to highlight one more thing about why this is so hard.
25:22
You have to get such an incredible density.
25:24
You have to get an incredible energy.
25:27
So, high temperature and high density that confining those atoms and not letting them escape and and, you know, um basically dissolve before they fuse is super difficult.
25:37
It requires so much energy in such a controlled way, in such a perfect and precise way that all of the digital technology, the magnets, all the measurement systems, all the software, it's taken us decades to get everything that allows us to do this today.
25:53
And now we're at the point that we may be able to start to realize production scale kind of versions of this.
26:00
So, what they did is they had a small deuterium and tritium pellet and they shone 192 lasers onto this container that held that little fuel. Okay.
26:11
With 192 lasers, the whole thing happened in a billionth of a second.
26:13
The lasers pulsed, boom, here's an image of it.
26:18
And as they did that, they, you know, basically x-rays kind of hit the sphere, this little BB, if you will, Mhm.
26:23
BB kind of thing and compressed it.
26:26
And it compressed so quickly and with such heat and it didn't dissipate because it was done so precisely.
26:31
All the lasers hit at the exact right time.
26:34
Boom, this thing compressed and then energy came out and the energy that came out that was measured was one and a half times the energy that kind of went into that reaction.
26:43
And here's a chart that that I'll show you from the National Ignition Facility, which shows just how inefficient the system and is.
26:51
And this isn't even speaking to um to Chamath's point, but basically these guys um lose 90% of the energy that they put into the the center of the system.
27:00
Only 10% is actually used to drive the compression.
27:05
The rest of it is lost and there's a lot of ways to improve the efficiency of the system from here.
27:08
But basically they put 2 MJ in, they got 3 MJ out.
27:15
And so it was the first proof point, production proof point in the 70 years that we've been theorizing about nuclear fusion here on planet Earth, that this is possible and it's real.
27:24
Now, this is these kind of inertial confinement systems.
27:28
There are 33 private technology companies today that have raised about 3 to 4 billion dollars so far this year to pursue several other technologies besides what the National Ignition Facility is showing to try and build production-ready versions of nuclear fusion.
27:47
And so these 33 companies are using a bunch of different types of tools, one of which is the tokamak.
27:51
If you show the image, I'll show you this one. There it is. Yeah, tokamak.
27:54
This is what we talked about, you know, the coil spinning thing that looks like Iron Man's uh arc reactor.
28:01
Yeah, and so this one based it on, yeah.
28:03
Yeah, you create a plasma.
28:03
You you basically speed up the hydrogen nuclei super super fast, these these deuterium and tritium nuclei super super fast, and then you use magnets.
28:12
And the magnetic field has to precisely squeeze the plasma, squeezing it, squeezing it, squeezing it.
28:18
And if it's slightly off in even the tiniest way, think about a a balloon, right?
28:22
If you put a pinhole in a balloon, everything escapes from the balloon.
28:25
Yeah, you got to do your part.
28:27
That's how technically hard this is.
28:29
You're basically trying to create a balloon with a magnetic field and you're trying to keep the gas and you're trying to make it smaller and smaller and smaller.
28:35
And if any tiny hole emerges, the entire plasma shoots out and it stops.
28:39
that, is that what happens in Uranus?
28:42
Like when you're trying to hold in the Wagyu.
28:45
Anyway, uh let me ask this question then um about the consistency of this and then we'll go to Chamath.
28:54
Can they do it consistently or do you think this is like they got lucky once uh or are we going to be sitting here a year from now and they're like, "We put in two and we got out six."
29:01
So, they and we did it five times.
29:03
Yeah, so so now we've proven that humans can do this, okay?
29:07
Which is look, I mean I I want to give you guys some uh and I I know kind of some of Chamath's concerns, which is how production recreate the sun is what we this comes down to. No.
29:16
Yeah, but but guys, I I want to just say one like I'm not even close.
29:20
I want to say one important thing from a historical context.
29:25
All breakthrough technology starts out seeming impossibly large, impossibly expensive, and impossibly slow.
29:32
The human genome project 20 years ago cost $100 million to sequence the human genome.
29:38
Today, we can do it in a couple of minutes for $100. Okay? Incredible.
29:44
The first computer, the ENIAC computer, had 500 flops of compute capacity. It filled a room.
29:49
It cost $8 million to build.
29:51
20 years later, we had a mainframe.
29:53
You're using all the wrong No, this is all this emotional [ __ ] You're using the wrong examples.
29:57
Okay, let him finish, then you go, Chamath. Good.
30:01
Finish your sentence, Friedberg, and then we go.
30:02
And today, we have an iPhone that can do 2 trillion flops of compute in your pocket.
30:06
I think that what we're seeing with um fusion today is similar to what we saw with the ENIAC computer in the 1950s, which is the demonstration that compute is possible, and now we're seeing a demonstration that fusion is possible. Okay.
30:19
And a lot of folks have anticipated this moment, and they've invested ahead of this.
30:23
Now, I don't know if any of these companies that are currently kind of being built are going to be production ready anytime soon.
30:29
My estimate is that we will see production demonstration Okay. in the 20 in the 2030s.
30:35
So, call it 8 years from now plus, and then you'll see grid scale scale up in the 2040s.
30:40
So, this isn't something that's going to happen next year or 2 years. It's already happening.
30:45
What are you talking about?
30:47
Okay, now, Chamath, your rebuttal? Oh my god.
30:50
Knowing you're a huge fan of solar.
30:50
This is the most navel-gazing, head-up-your-ass scientific [ __ ] I've ever heard. okay. Couple points.
30:57
Let's start with the basics.
30:58
The first is that there was no previous technical analog.
31:04
Why like Why are you angry at me? I'm not angry.
31:06
I find this so tiring hearing this It's all serious a little triggered. He's He's right.
31:11
Yeah, why are you so angry?
31:11
Like I don't get Cuz I find it because I don't find this intellectually honest. Okay.
31:17
it It's not really intellectually dishonest.
31:18
But let's keep it moving. What what Let me finish. Let me finish. Okay.
31:24
When you talk about sequencing the genome, there was no alternative. So, you're right.
31:28
It was an enormous technical leap forward.
31:30
When we built a computer, there was no analog.
31:33
It was an enormous technical leap. And so, you're right.
31:38
We have a cost curve we don't understand.
31:40
And then we iterate as rapidly as possible in all these innovations where we built an entire infrastructure to ride down the cost curve.
31:49
The thing is, fusion energy exists today. It's called the sun.
31:53
We actually know how to capture it at virtually no cost right now.
31:58
So, according to the IAEA, today you can capture grid-level solar energy for about 3 cents a kilowatt-hour.
32:05
That's as close to zero as we've ever been.
32:08
And over the next 10 years, their forecast is it's going to get to 1 and 1/2 cents.
32:12
If you then want to store it, and you layer in storage costs, we'll be at a whopping 3 cents a kilowatt-hour.
32:21
That's where we are today.
32:24
And so, I think that fusion does exist.
32:28
I do think that this is an incredible technical leap to replicate something that exists.
32:33
And I think that's where the intellectual dishonesty is. It It does exist. It has been captured. It can be harnessed.
32:40
And there is a positive energy equation just in a different modality that doesn't speak to these technically minded individuals.
32:47
A couple of other points about what I saw.
32:48
I think it's incredible what happened, okay?
32:52
But just to make sure we're clear.
32:55
This is 192 lasers the size of three football fields that consumed 322 megajoules of energy, which then ultimately delivered two megajoules to a target, which then released three.
33:08
So, this is why I'm saying we had positive what's called ignition energy.
33:11
We did not have positive electrical energy captured.
33:13
So, yeah, could we figure this out? Absolutely.
33:17
Can we then shrink the three football fields down to something that looks the size of a a laptop? We possibly could.
33:24
Will it take 20 or 30 years? Possibly.
33:26
But in the meanwhile, if the goal is unlimited costless energy you're on that cost curve already.
33:32
But why can't it be both?
33:35
So, you you said I was being intellectually dishonest.
33:36
What was I What's dishonest? What's dishonest? Yeah.
33:39
You're comparing this saying what what you're saying is right.
33:43
Yes, you can get What you seem to be in agreement I I I just think that I think that you're trying to say that this is an entirely new thing.
33:49
No, it's a different approach to a thing we've already beaten and and basically captured. Hold on.
33:56
I mean what I what I would argue to Moth, and I think this is important, be the net energy you can capture on, say, a football field-sized facility from solar is, you know, a tiny fraction of the energy you could generate from a football field-sized fusion reactor.
34:11
And that's why the argument would be like, "Hey, you know, when we were developing computers, hey, we have abacuses, we shouldn't be developing computers."
34:18
And I think that's that's the analogy I would use here.
34:20
This is why the cost per kilowatt hour is what the the levelized cost of energy tries to do.
34:26
It tries to to normalize that argument away because everybody would say that. Hey, hold on a second.
34:33
You're going to need plainfuls of this or boatloads of that and people said, "No, what's the level eyes cost of energy?
34:39
How what is the cost per kilowatt hour to generate energy and what I'm saying is that is an absolute scale and free is zero and we're at 1. 5 cents already.
34:51
here's what I would say what's Jake out one sec. Okay.
34:52
Chamath, the opportunity here is not necessarily about cost reduction. It is about scalability.
34:59
And if hydrogen is abundant, which it is on this planet, it is nearly infinitely abundant.
35:04
We can take that hydrogen and we can scale up energy and electricity production in a way that is unimaginable compared to solar.
35:11
And I don't think that solar should be excluded.
35:12
Solar is key today and should be scaled up and I'm 100% agreement with you.
35:17
But the scalability to go 100x, if we want to make 100 times more electricity, I think we need fusion and I think that it's feasible.
35:25
So, I think we have reached a good settlement here.
35:29
Chamath, you're saying, "Hey, listen, we're getting solar down so cheap we can solve this problem." forms of energy. Okay, great.
35:35
We we are solving that so for our needs today.
35:36
And then what Friedberg is saying, "But what if you had unlimited, a thing that we can't even imagine." Beautiful.
35:44
Now, watch as I get Sachs involved in a science conversation he has zero interest in. Mr.
35:53
David Sachs, if in fact there was 100% more free electricity available in this time frame, the next 10 to 20 100x the available energy.
36:02
In other words, supply of energy just becomes flooded.
36:08
And it's free essentially.
36:08
What would be the geopolitical reaction on planet Earth in terms of this incredible rivalry rivalry we have with China and for humanity on a political basis?
36:20
Such a good question, Jake out. Go ahead, Sachs. Good question. Here we go. Thank you.
36:26
World's greatest moderator team.
36:27
Why don't we let Freeberg answer?
36:27
No, no, I want to hear the politics guy. Get in there.
36:31
Take a second to think it through.
36:31
I think he's already thought about this.
36:33
Let's I want to hear his answer.
36:35
No, no, I want to hear I actually want to hear your answer.
36:36
Like, you know, in in a world where, you know, energy becomes more abundant, more affordable, more available. attention, guys.
36:42
This is what he's trying to say.
36:47
By the way, CAN I CAN I JUST SAY JAKE, I'LL I'LL I'LL call your intellectual dishonesty and raise you a steel man. Go ahead. Go ahead. I LOVE YOU. I LOVE YOU, Sacksy Phil. You know I do.
36:59
Sacksy, I had a great night out Monday night uh Sunday night. Let's talk later.
37:05
I just want to be very clear.
37:05
I I want to get together.
37:07
Last week he called me petty, too.
37:08
I think we're Well, here's what I want to be clear.
37:09
I I think that I'm just glad that you guys are fighting, not me and Sacks.
37:13
Guys, please let me finish.
37:14
I think that this breakthrough is really valuable.
37:16
I think it's interesting to see that these kinds of scientific breakthroughs continue to happen in government-sponsored facilities and not private companies.
37:23
Um and I think that that's probably where a lot of these innovations will continue to come from because look at the scale of what had to be built.
37:31
Three football fields and 322 megajoules of energy and 192 lasers.
37:36
This is really complicated, expensive stuff.
37:38
I'm an enormous fan of these kinds of scientific breakthroughs, I want to be clear.
37:43
I think that where I struggle is translating this into actually an investable area.
37:51
And I worry that this is going to consume lots of money by folks that could otherwise put money to work in things that will actually pull forward our energy independence and energy abundance sooner and faster.
38:02
So, for example, you know, there are all kinds of things that we could do to secondary, ternary, third, and fourth, and fifth generation batteries that aren't happening today.
38:12
There are a bunch of things that we could do to actually create an infrastructure of green hydrogen.
38:17
And the the simplistic answer is we could do it all.
38:20
But the reality is money is finite and we can't.
38:25
And all I'm observing is I do think that more practical things that do have geopolitical ramifications sooner are not going to get funded because people do get enraptured by this and my skepticism is that this is still in the realm of government-sponsored research and is not really an area that for-profit private companies can tackle.
38:47
And so I would rather those for-profit companies, for example, Y Combinator just today put out something where they were, you know, call to action, a request for startups in climate.
38:57
And when you look at that list, those are really practical investable areas.
39:00
And I just want to make sure that the capital allocators that listen to this weigh those equally.
39:06
I am glad I'm glad that the US government did this.
39:08
I hope they do more of this.
39:11
But if you're asking me, quite honestly, I would rather the next $10 billion go into energy-efficient HVAC than fusion because A, fusion exists and B, I think it's going to happen at an innovative bench-scale level by the government and not by a private company.
39:28
let me just let me just respond to that real quick.
39:30
Chamath, I I think that the idea of allocating our resources as a society should be done on kind of you know, on a portfolio basis.
39:38
80% on the pragmatic near-term, 15% on the kind of next gen, and 5% on the moonshot.
39:44
And this maybe go starts to shift from the 5% to the 15% maybe it's still in the 5%.
39:49
But I don't see kind of overfunding happening.
39:54
So I'll tell you guys there was a survey done.
39:55
There's 33 private companies in fusion that are kind of fusion companies today. Uh VC-backed. Eight new this year.
40:02
So the number's kind of increased by 33% this year.
40:04
And um so far this year those companies have raised around 3 to 4 billion dollars.
40:10
Which by the way is a fraction of what was done by 15-minute delivery companies from convenience stores. my point.
40:17
And and by the way, the biggest funding is happening in ITER, which is the largest construction project in Europe.
40:22
And this is a $30 production scale fusion demonstration system that should be online by the end of the 2020s. Government sponsored. Government sponsored.
40:31
Yeah, and so to your This is my point.
40:32
I'm a huge fan of government sponsored research.
40:36
get finally the first science corner.
40:37
Everybody brace themselves.
40:39
It's the first science corner.
40:42
Where David Sacks has an opinion. cherry, Sacks. Here we go. Come on, you can do it. You can do it. Mr.
40:45
David Sacks, what are your thoughts on this big Your question.
40:48
Your question was a little bit was was not a very Let me rephrase, okay? Hold on, I'm coming in.
40:53
What's the geopolitical impact if this does happen?
40:55
100x energy is available.
40:57
it's fantastic for the United States if it actually happens.
40:59
And the reason is, if you look across the world, there's this thing in politics known as resource curse.
41:07
Where the worst governments, the most despotic governments tend to be in the countries that have the biggest natural resources, ironically.
41:15
So, the countries that have huge amounts of petroleum or other kinds of minerals, they've tend to have pretty corrupt governments.
41:25
And the reason for that is that if you're sitting on a giant oil reserve, you don't need to make anything else work.
41:31
You just fight over who gets to control that oil reserve, and that's what politics ends up being.
41:34
You don't need to create policies that foster innovation or attract knowledge workers, right?
41:42
You just basically mine that oil.
41:45
So, if all of a sudden you're talking about turning energy into a software problem or an innovation problem, that looks a lot more like the software industry, that's an area where the United States has a huge advantage.
41:56
And yeah, I think it would pull the rug out from under many countries all over the world in favor of the United States.
42:02
I mean, it's a big if because where I agree with Chamath is this stuff still seems pretty far off, and it's still pretty unproven from a commercial standpoint, but I agree with Freeberg, why not try investing in it and cultivating it and see where it goes. Okay, fantastic.
42:18
This was a fantastic science corner where we actually engaged David Sacks.
42:23
Which country uh Did you find anything to disagree with there J Cal? All right, take it easy.
42:29
This I just want to let people know I think you you liked that answer, right?
42:33
Uh well, I I love all of your intellectual for you or was it more like intellectually.
42:38
Was that more like copper or steel?
42:40
No, it was I thought it was a steel person. It felt silverish.
42:42
It felt silver silver manny.
42:44
But I love when you're intellectually honest. personing. Yeah, you're silvering. You're silver ing. You're silvering.
42:50
Was that a plat- was that platinum, gold, or silver?
42:53
I think that's your you're in platinum with some diamond dust.
42:57
the fact that you guys have Can I just say spent a couple nights together this past week has really improved the mood of the show.
43:01
I mean, when you guys go out and drink together and have fun and you guys are Sacks and I laughed our asses off Sunday night.
43:07
Can I just say we Sacks and I had the best 48 hours together in a decade. This is Sunday night.
43:16
It turns out Chris Rock and Chappelle are playing at the Chase Center where um Chamath used to own a piece of the Warriors, right?
43:23
And this incredible arena has this incredible show.
43:26
And you know, me and Sacks and some friends, we'll leave it at that, go to the show.
43:31
Our our bestie Draymond is at the show.
43:33
So, I text Dray and I'm like, "Hey, you going to see Chris Rock by chance tonight with uh Chappelle?" He said, "Yes, sir."
43:38
I said, "Hey, we're going to go with a couple friends.
43:40
Maybe we roll together, hang out after the show." We go.
43:47
And after the game after the show, which was incredible, we go backstage, and I'm sorry, to the to the uh practice court.
43:55
And we're hanging out with Draymond in the practice court with Dave Chappelle.
43:58
Dave Chappelle and I start shooting hoops.
44:02
David Sacks is talking to Chris Rock about free speech.
44:05
Steph Curry comes out and starts giving Dave Chappelle and J Kyle uh shooting lessons.
44:12
Where Chappelle and I are bricking like old men, you know, you know, uh on a concrete court.
44:17
All of a sudden Steph says, "Hey J Kyle, you got it."
44:21
And by the way, he's a fan of the show.
44:23
He says, "You're short every time and uh just, you know, hit the backboard. You got to go long."
44:27
Then he tells Chappelle, "You got to change this."
44:28
All of a sudden, we start hitting shots like, you know, we're on the Warriors. You're raining threes.
44:33
Wait, are you shooting It was literally like cut into here.
44:37
mid-range jumpers or threes?
44:37
I was uh free throw line extended.
44:39
Free throw line extended.
44:42
Cut into here, Rain Man and Rain Dance from along Camp Polly. Rain Dance, Rain Man. LET IT RAIN. RAIN DANCE. LET IT RAIN. LET IT RAIN.
44:59
I WAS HITTING BRICK AFTER BRICK.
44:59
REST IN PEACE, Philip Seymour Hoffman. So, then we're chilling.
45:04
And uh Sachs and I are talking to Dave Chappelle.
45:09
Joe Lacob, owner of the Warriors, is there, the majority owner, uh you know, as opposed to you being a minority owner.
45:15
That's the only person who draws more names. No, no, no.
45:16
I was speaking at The only person who draws more names is Phil Hellmuth. I mean Absolutely. I'm trying to catch up. No, he is.
45:24
I'm leaving out 10 names.
45:24
I'm literally three names, J Sachs, am I leaving out 10 names?
45:28
He wants to say it so bad, but he's not going to say it. Not doxing anybody. You're so brutal. doxing.
45:34
Oh, now he's getting uncomfortable. So, we I kid you not.
45:39
Chappelle comes over says, "J Kyle, Sachs, you guys want to go to after to do a go go see me do a show at like 1:00 a. m.
45:47
at this like local comedy club with 70 seats?" I said, "Word?" Yes. We go at 1:00 a. m.
45:52
Chappelle sits on stage smoking cigarettes and doing 90-second pauses and then having a beer and interacting with the audience and does a two-hour set after doing the set with Chris Rock at the Chase Center.
46:12
Me and Sachs and Draymond hilariously laughing.
46:17
The The stuff Chappelle is a genius.
46:20
And when you see his show and Chris Rock, by the way, he puts a tight set together.
46:24
I mean, Chappelle's got this storytelling thing where he kind of meanders a little bit and then he he hits you with it.
46:28
But Chris Rock is just bang bang bang bang bang bang bang. Extraordinary.
46:33
Just two incredible minds at the top of their game. Artists.
46:38
Artists at the top of their game doing what society needs.
46:43
But more importantly, doing what David Sachs and I needed.
46:45
Which was to laugh our asses off together and remember our friendship.
46:50
So it was a great night out.
46:52
I want to say to bestie Draymond, Dave Chappelle, and Chris Rock, thank you.
46:56
The David Sachs J Cal bestie friendship has never been stronger.
47:00
I don't know about Freeberg and Chamath, that seems to be on the rocks. Yeah, it's weird.
47:04
We'll be in We'll be We'll be We'll be vacationing together next week, so we'll I I love I love Freeberg. Yeah.
47:11
We'll Well, we are going to be Whatever Whatever's going on, we'll take a walk and figure it out.
47:14
Well, I just want to say the alliances amongst the besties I got mad, I'll be honest.
47:18
I got mad at Freeberg when he edited that Google bit to say the exact opposite of what he actually said.
47:24
Oh, yeah, don't bring that up. That's dishonest. Don't bring that up. That's disingenuous. Yeah, just beep that.
47:27
That That is the thing that bothered me. I have to be honest.
47:30
That's you playing to the crowd versus you being honest and telling what you think.
47:33
Freeberg Freeberg can I Let me if put that in the form of a question.
47:37
Freeberg, has your fame as the Sultan of Science Cuz listen, you nobody knew who you were outside of Silicon Valley before this.
47:45
Has it impacted your ability to speak? No, no, no, not my fame.
47:47
I Look, I I'll be I'll be honest.
47:52
And I'll speak openly about this.
47:52
I had said that there could probably be a significant head count reduction of like 75% at Google and the business could keep operating. And I took it out.
48:03
And I took it out because I have a lot of friends that work at Google.
48:05
Google's a close partner of mine.
48:07
They're an investor of mine.
48:08
And frankly, I just want to be careful about that.
48:12
It's not something I commonly do.
48:14
You know, as you guys know, I usually speak my mind pretty clearly, but I was just trying to be respectful.
48:17
That's the reason I did it.
48:18
You know, so now it's out there.
48:20
I think that that was fine.
48:20
What I'm saying is not that.
48:22
It's just that the part that you edited in actually made it seem like you were not saying that at all, but the opposite.
48:28
I think if you had cut the whole thing, it would have been more honest.
48:32
But to keep that other thing in actually led the perception of the opposite.
48:37
So you were triggered by that? No, no, no. I'm not triggered.
48:39
I'm saying I think we should have a principle. Hold on. Hold on, guys.
48:44
You know, I think that we should just have a principle to not play to what the perception of what we say should be, especially if it means we could be saying the opposite of what we actually mean. That's solved.
48:55
Intellectual honesty is a bestie tenant. It's a bestie tenant. so. Absolutely. Bestie tenant.
48:59
Always And the other bestie tenant, besties always come back together.
49:03
If we have a fight, we always come back together.
49:06
Sacks, can I I'm still mad at you. A little bit? No, I'm just kidding.
49:10
Did Okay, we just But talking about hypocrisy, I mean, so Chris Rock gets up there and he gives like right How great was Sunday gets up there and he gives like right out of the gate, he's attacking woke. Right out of the gate. Swinging.
49:20
Came out swinging like Will Smith. Choke Smith, you mean? Choke Smith. He took down Will Smith.
49:30
The I mean, the Will Smith takedown, which you will see in this special, is so complete. It is just chef's kiss.
49:36
But how great was his set?
49:39
Let's say just give Chris Rock his flowers.
49:41
Did he fillet and fricasee Will Smith?
49:46
He He did, but I thought the more important part of the set was the he came right out like calling out all this you know you know holier than thou woke stuff yeah.
49:56
And and there was that undercurrent to Chappelle's set as well.
50:00
And also he said listen words can't hurt you unless you write them on a piece of paper and tie them to a brick.
50:08
These a bigger point right now and this does tie into our first story is I think comedians look at Twitter as a place to get cancelled not a place to be part of the discourse and that's a huge loss that's indicative of our society being broken and it's incredibly important that these comedians be allowed to mock and to speak and to step over the line and challenge us as citizens in a free society.
50:37
And we should cherish them and we should not even try to cancel them. Let them cross the line.
50:41
Let them say things that make us uncomfortable so that we can understand ourselves and our society better and I just want to say Why can't you include who lives off TikTok in that?
50:52
Do we want to have a discourse about it?
50:53
I can't Let's go to the next conversation about it.
50:55
I'm not What's the next topic? What's the next topic? Please no don't start.
50:57
You guys you did so well. Come on man. HERE WE GO. NO JK I'LL CUT it out.
51:02
All right well we have two more science corners to get to. All right.
51:08
If you know what I mean I just want to say talk about the Coupa deal and Sachs this is right up your alley.
51:12
Have you I haven't paid a lot of attention to it to be honest. Oh really?
51:15
The thing you guys asked is like you know what signal will Elon's moves at Twitter be for the rest of the tech industry?
51:24
I think the biggest wake up call is to actually PE companies.
51:29
So if you play this out and you think that Coupa is you know Explain what Coupa is to them please.
51:38
Coupa is a is a software as a service company that does revenue management I guess or expense forecasting or some something in the financial realm.
51:47
I don't particularly know to be honest.
51:50
But anyways, this is a company that, you know, was off 70 or 80% from the high, like a lot of SaaS companies were when rates started to go up.
51:57
And they got this offer from from Thoma Bravo.
52:00
But here's what's so interesting about this deal.
52:04
If you think that, you know, these guys bought a company, I'm just going to make up a number, at 20 times EBITDA, right?
52:14
And and you see Elon at Twitter and you think, well, wait, maybe we can't cut 75%, but maybe we can cut 50% of head count and the company can still do well.
52:23
And you know, you take half of the expenses out of the business, all of a sudden, you know, if your EBITDA doubles, you're actually buying it at 10 times.
52:31
So, I think the thing that is the that is the real insight here is twofold.
52:36
Private equity um can still put out a lot of private credit to fund these deals.
52:41
And SaaS companies are perfect because they have huge free cash flow, fund it based on ACV and ARR.
52:50
So, private equity will be super active.
52:52
And two, all these RIFs basically show what the efficient frontier is for the number of employees you need to run a company.
53:00
And if you can cut 50% of the head count, private equity folks will do that.
53:05
And so, I think Coupa is like the canary in the coal mine.
53:07
It is the beginning of what I suspect is a tidal wave of PE-sponsored deals in tech companies, largely SaaS, but may go into other realms.
53:20
Yeah, recurring revenue that can go public. of these two things.
53:22
Tap the private credit markets and finance it based on ARR, and then fire 50% of the team and double earnings capacity. Sacks, your thoughts?
53:31
So, on on Coupa, I thought the most interesting thing was just the we we got a public comp.
53:36
Well, we got a comp on what private equity is paying for public companies right now.
53:40
So, the deal happened at an $8 billion valuation.
53:45
That was a 31% premium to the public price. It was 8.
53:48
4 times next 12 months revenue.
53:52
And on a trailing basis, it was about 10.
53:55
4 times the last 12 months revenue.
53:59
And by the way, all the comments were around how what a rich price Thoma Bravo was paying.
54:03
People generally thought they were paying a premium to the valuation.
54:08
So, I think this Zach, it was 77% premium before the rumors came out that this was happening.
54:14
So, it was a pretty good premium.
54:16
And there was And there was a there was a bidding war with Vista.
54:20
And so, it was a it was a really rich kind of deal that that got done here. Right.
54:24
So, so my my point is that people thought this was a really rich deal, and yet the valuation multiples are so much lower than what private company founders expect.
54:34
So, remember last year at, you know, the peak, founders were thinking 100 times ARR was normal. 100 times.
54:40
And you know, you could roughly say, you know, ARR is is roughly equivalent to next 12 months revenue.
54:46
It's not perfect, but it's roughly the case.
54:48
So, these founders were expecting a valuation multiple 10 times what the public markets are paying.
54:56
And the public mar And and and actually the the public markets are are are half of where Thoma Bravo was in this particular deal.
55:02
So, the public markets right now are valuing the median SaaS company at about five and a half times.
55:10
And a high growth, would that be for like a 20% year-over-year growing company?
55:13
And they're valuing the high growth companies at maybe eight times.
55:16
You know, and Thoma Bravo did this at 10 times.
55:20
So, that gives you a sense of what the ballpark is.
55:22
And these are companies that are already public, they're at scale, they're doing roughly a billion dollars of ARR.
55:27
They have already kind of won their category to some degree.
55:33
Whereas private companies are subscale, they're, you know, typically you're talking about companies with 1 5 10 usually under 20 million dollars of ARR.
55:41
They are they're not de-risked, there's still a ton of risk.
55:46
We've seen many many SaaS companies fizzle out and plateau at 20 million of ARR, never get to 100 million, never mind a billion.
55:54
And yet these founders think that they're entitled to you know, even in this market 30 to 40 times ARR. No way.
55:59
I mean, like it's getting to the point now where, you know, maybe it should be 10 times 20 times like max for and that'd be for a company that's growing two and a half three x year over year.
56:12
So I still think that like so I think basically what we're seeing here is even a good scenario like a Coupa acquisition that was done at a premium, like it's still a wake-up call to the private markets that the valuations are still completely and utterly out of whack. Yeah.
56:26
Let me ask you a question, Sacca.
56:28
This company was growing 45% last year, they're growing 35% this year and they got this multiple.
56:33
Why is it not worth a significantly higher multiple if a company's growing two and a half to three x, which is 250% 300% and these guys are only growing 35%? Sure.
56:45
I mean it it it is and that's what you're paying a premium for.
56:48
But so the so the the here's the theory of it is that if you can invest in a private company that's say tripling year over year and they can do that for another five years or whatever Yep.
56:59
You're paying for that you're paying for that outcome in a couple years, right?
57:00
Yeah, basically well think about it if You're getting a discount to the outcome in a couple years.
57:04
Well, if you're paying 30 times today and it triples next year, you're only paying 10 times next year and if it triples again, you're only paying three times.
57:10
So if that keeps going, that's where your arbitrage is.
57:13
But here's the thing you have to weigh against that is that these early-stage private companies many things go wrong. Yep.
57:19
And they hit a plateau, they fizzle out or their growth rate starts to the bigger they get the harder it is to grow.
57:27
be priced at a discount not a premium because there's risk.
57:30
There's more risk, they're growing faster, but there's more risk.
57:34
But also, it's very hard once you get to a bigger number of ARR, 50 100 million of ARR, it's extremely difficult to be doubling or tripling year-over-year.
57:43
Let me just point one thing out.
57:43
So, I looked at the numbers on Coupa.
57:44
I think they had about 170 million of stock-based comp expense in the last 9 months.
57:52
So, those are employees that are getting 170 million dollars in compensation in the form of shares.
57:58
So, they get those shares, they can then sell those shares and get cash for them on the public markets.
58:04
And then on the public markets and pay their bills.
58:07
So, when a company like this goes private, for those employees to just remain at their baseline comp, that stock-based comp needs to be replaced with something else, or else they're seeing their salaries reduced.
58:18
So, you know, there's this balancing game when these companies go private in terms of how do you give them the comp that they're earning to keep them engaged in the business? The answer is you don't.
58:30
Versus No, but versus how do you keep them quit cuz you want to do a riff anyway. Right.
58:36
So, I mean, do you But for the people that stay, right?
58:39
So, so there's a balance because it's not just, "Hey, cut the opex."
58:41
You have to cut the opex including stock-based comp.
58:44
And this company generated about 100 million dollars, sorry, 210 million dollars of free cash flow or operating cash flow in the last 12 months. Yeah.
58:56
So, if you if you take out the stock-based comp, these guys are actually breaking even or losing money, roughly.
59:00
Um and so, yeah, and breaking even roughly.
59:03
So, there's a real question mark on this business and businesses like this that go private, where if you actually cut the opex and you cut the salaries and you cut the head count, but you have to find new ways to pay people because you've been paying them with stock in the past, how do you kind of bridge that gap?
59:18
And I think that's probably a little bit of the balance and the art of what these guys do well.
59:21
Chamath, if I may, can you explain to the audience uh what a private equity firm's expectation is in terms of return when they buy a company like this and then Sachs, I saw your tweet that you want to feature and you'll go next. Go ahead, Chamath.
59:35
Well, I think it's changed over time and this is what's so powerful about the private equity industry.
59:39
Um, look, you have to think about what their incentive is because it kind of guides the outcome.
59:46
Um, early on, they were very much like venture capitalists.
59:49
They were out in the, you know, edges of risk-taking, um, doing all kinds of very difficult, gnarly deals.
59:57
So, if you look back in the history of private equity, you know, these huge, crazy deals like RJR Nabisco or TWA Airlines were the first um, of the industry and they reaped enormous returns, but there was a lot of risk and it required very heavy-handed management.
1:00:14
Often times, what that meant was firing a lot of people.
1:00:18
Over time, private equity's gotten institutionalized and they don't generally feature themselves as a place to get the best necessarily returns, but they are places where you can put enormous amounts of money where the the likelihood of loss is extremely zero and you generate very good rates of return.
1:00:43
Now, again, this depends on whether you want to look at IRR or DPI, right?
1:00:44
So, a lot of people will market IRR, which, you know, I think it's kind of like a gameable metric, but, you know, those IRRs can be 20, 25%.
1:00:58
If you look at DPI, which is really how much cash you get back, you know, private equity firms can generate one and a half to two X of the money you give them, um, but they do it consistently and they very rarely lose money.
1:01:11
So, all of that is important into understanding what's going to happen in this cycle.
1:01:15
These folks are going to buy a ton of these private software companies.
1:01:21
I think that they are going to fire lots of people.
1:01:25
I think they are going to make these companies run hyper-efficiently.
1:01:29
And they will make sure that they generate that 1. 2 to 1.
1:01:31
7 X that has been historical.
1:01:34
Very rarely will they lose money in these things.
1:01:38
By the way, that's going to mean that a lot of these other companies will have to reset valuations.
1:01:42
So, you saw yesterday checkout.
1:01:43
com went from a $40 valuation down to 11.
1:01:50
You're seeing some companies only go down 10 or 15%. But, it's all happening. isn't it, Chamath?
1:01:55
Isn't this just like what happens in real estate where of this process.
1:01:59
Yes, cuz in in real estate, my understanding, having lived through these boom-bust cycles, is the person living in the home still believes their home is worth, you know, this incredible valuation.
1:02:07
And then the people who want to buy it are like, that doesn't match reality.
1:02:10
And then the real estate brokers go back and forth trying to get people to, you know, go through this messy middle and come to true price discovery.
1:02:18
A private company is hard to get true price discovery until they're on the brink of insolvency. Well, right.
1:02:23
Well, we we just got some data on that, actually.
1:02:26
Can we pull bring this Cooley data in? Let's do it. Yes.
1:02:28
Yeah, so Cooley looked at in Silicon Valley.
1:02:32
Yeah, they're a prominent Silicon Valley law firm.
1:02:33
They looked at a thousand deals over the last three quarters of this year.
1:02:37
And what they saw is that you're the later the stage, the bigger the valuation correction.
1:02:43
So, series D rounds went from 3 and 1/2 billion to 527 million. That's an 85% Oh.
1:02:49
Yeah, that's an 85% drop.
1:02:49
Series C went from 502 million to 130 million. That's a 74% drop.
1:02:55
Series B went from 164 to 90. That's a 45% drop.
1:02:58
And then series A went from 58 to 45. That's only a 22% drop.
1:03:04
There's just less room to compress there.
1:03:07
But, the point is that series B, roughly a 50% drop.
1:03:10
Series C, roughly a three quarters drop.
1:03:13
And series D, roughly a um I said 85% 1/7 drop.
1:03:20
So I think founders right now are they're just like a little bit delusional about this money they raised last year.
1:03:28
They're still way too anchored on last year's valuation.
1:03:31
And if only they would think in terms of this capital they raised last year in terms of of its real dilution in terms of what the company is worth now, I think they'd be treating it more more precious. So for example Yes. But but Sachs, yeah. hold on.
1:03:46
If you raise the lottery and they don't want to they don't realize they won the lottery.
1:03:49
I had this conversation with the founder.
1:03:52
This is the only money they're ever going to see is the bottom line.
1:03:53
And they're spending it like they're going to win the lottery every year.
1:03:56
So for example, let's say you take a company Yeah, let's say you take a company that raised 200 million last year at 2 billion. So it was 10% dilution.
1:04:03
So in their heads they're thinking, oh well this isn't that expensive.
1:04:07
Like 10% dilution's a rounding error.
1:04:10
But really probably the company is worth maybe 400 million now. Right? Cuz it's gone down 80%.
1:04:16
This 200 million of your 400 million is half the value of the company. Yes.
1:04:22
squandering it you're squandering it at a rate of 100 million a year.
1:04:24
So you're basically burning up 25% of the value of your company this year and then next year and then by the way you're going to be in crisis after that cuz you're probably not going winner buying like a giant super yacht.
1:04:36
I had had an observation that a lot of the investors that sit on the boards of these companies they have an incentive to not see those valuations come down too quickly, do they not?
1:04:47
And so there is this sort of like interest in hey, I don't want you to have to go reprice the company or do a down round because then my portfolio gets written down and then I'm in the middle everyone's always in the middle of a fundraising cycle with LPs and then I'm going to have a tough conversation with my LPs about my my value.
1:05:02
So do you not see VCs and investors playing an active role in trying to keep the valuations propped up to some extent, particularly where they have big markups, 100% either by extending bridge rounds or doing other sorts of, you know, uh Look, nobody nobody likes to go through a down round and that includes founders and existing investors in the company.
1:05:26
That being said, we're not talking here about new financing conversations.
1:05:27
What we're talking about is advice that are is happening in board meetings.
1:05:34
And, you know, maybe other VCs aren't pushing as hard as we are, but you the advice I'm giving in board meetings is what I'm telling you publicly today, which is this is the last money you may be able to raise on attractive terms, if at all.
1:05:47
You need to treat it much more preciously.
1:05:48
The world has fundamentally changed.
1:05:50
And by the way, we haven't even gotten into what's coming, the demand contraction that's coming next year.
1:05:57
Explain what demand contraction is for the audience, please. Thank you.
1:05:59
Okay, look, there's going to be three major sources of slowdown for software companies next year.
1:06:04
Number one, new business is going to dry up.
1:06:07
Companies are just going to be spending a lot less money next year because they're all cutting costs.
1:06:13
So, you should expect your new business to be roughly 50% of what it was next year, it'll be 50% of of what it was last year.
1:06:21
That's my rule of thumb for most companies. New business down 50%.
1:06:25
Number two, churn is going to be higher.
1:06:27
We haven't seen that much logo churn yet, but next year a lot of companies are going to start going out of business and it's going to happen over the next two years.
1:06:34
So, you're simply going to see logo churn rates, say among small businesses, go from like a historical norm of 15% to maybe 25 or 30.
1:06:44
In other words, your customer, the logo, goes poof. Yes.
1:06:47
That's what a logo means, yes.
1:06:50
Yes, and the third major source, yes, logo churn means the entity doesn't exist.
1:06:54
Then you've got seat contraction, which is these companies are not hiring as fast.
1:07:01
In fact, they're doing layoffs.
1:07:01
So, they're simply not going to buy as many seats of your software as you need to in the past.
1:07:06
For the last decade, we've had a tailwind, an enormous tailwind for software companies of seat expansion, which is every year your existing customers would buy more seats of your product for their new employees.
1:07:16
Now, they're actually going to have fewer employees or maybe head count freezes.
1:07:22
So, they're actually going to buying fewer seats.
1:07:24
By the way, if you if you take all those three things, the deal of the century was Figma selling to Adobe for 20 billion.
1:07:31
Because if you take those three things, I mean, oh my god, they just absolutely top-ticked before any of this stuff was known.
1:07:39
So, today Adobe could probably buy this thing for like 7 billion instead of 20 billion.
1:07:45
So, does that mean they tried to do a breakup thing and get out of the deal?
1:07:49
I don't know, but if I was if I was Figma, I'd try to close this thing ASAP and get that money in there. Yeah. Yeah.
1:07:55
Yeah, you're right about that.
1:07:55
And and by the way, what I'm seeing from founders is that they still want to grow 100% plus over the next year.
1:08:01
The problem is that the headwinds are going to be intense.
1:08:05
So, if if you're applying a plane and the headwinds are extremely intense and you try to maintain your speed, you're going to burn an enormous amount of fuel.
1:08:14
You're going to be incredibly inefficient.
1:08:15
It's better to basically just moderate your speed, let the headwinds basically pass.
1:08:21
We're going to have major economic headwinds for the next four to six quarters, call it a year and a half.
1:08:27
It's okay to have a slower growth rate. Preserve your cash. Don't burn up your fuel. down.
1:08:32
So, what I'm we're trying to do is we're trying to give permission to our founders to grow at a slower rate because they feel this enormous pressure from their VCs to grow at at at insane rates. Can I build on this?
1:08:44
I think Freeberg said it very well.
1:08:45
The scam in venture capital is demonstrated in the following chart.
1:08:49
This is using Cambridge and our friend Brad Gerstner helped put this together. So, what is this?
1:08:53
This goes back all the way to 1997 and the gray bar is what venture capitalists share with their limited partners as to how well they are doing.
1:09:07
What the top quartile of venture capital And this is the top 25% okay.
1:09:11
So this is this is a venture capitalist and you know our our returns have been consistently top quartile so instead of cherry-picking anybody else I'll just use us but it could be Sequoia, Benchmark, you name it. Launch, we're in there.
1:09:23
Launch, you would go back to folks craft we go back to folks and say hey guys the total value of our portfolio is three times your money in 1997's vintage, okay?
1:09:34
It it was uh four times your money in the 2010 vintage. Feels really good.
1:09:41
But again the job of the venture capitalist is to convert the gray bar into the purple bar.
1:09:50
And historically there's been a decay.
1:09:53
So for every dollar of gray bar that you show you typically only get 73 cents actually returned to people. Okay.
1:09:58
The paper value the book value just to be clear the the valuations that you get when you sell your company or goes public end up being 73% of what you marked at the peak what you said they were worth. Exactly right.
1:10:12
And the actual value of this purple bar going back you know 30 years is 1. 7X.
1:10:21
So just to put numerical numbers on this if you were a venture capitalist you would raise a $100 fund at the peak you would actually show that that $100 became 200 and about $28.
1:10:36
But when when push came to shove and when it was all said and done you would return $170 back to your investors.
1:10:43
That's the rough equation. So what's the problem?
1:10:45
Well the problem as you can see in this chart is right around 2015.
1:10:52
Which is all of a sudden you know what we've started to see are these continually elevated gray bars.
1:11:01
Yes, this stuff is worth seven times, six times, five times.
1:11:06
But we have not seen the purple bars catch up.
1:11:09
Now, some people will say, "Well, yeah, but you have to give it time and you know, this is probably what other vintages look like."
1:11:14
And all you And all you need to do is do what's called a regression.
1:11:18
And you need to regress these things to the mean and make the following assumption.
1:11:24
Assume for a second that this time is not different.
1:11:28
Assume that these historical averages, 2. 2x, 1. 7x holds.
1:11:34
Well, that's what the the black line here shows.
1:11:36
You can calculate the area above the curve as the value at risk, right?
1:11:41
The amount of money we will destroy because of all these shenanigans that Freeburg just talked about.
1:11:47
Propping up marks, not willing to look at actual market clearing prices.
1:11:53
Well, if you do the math, the sum of the area above this black line is almost a trillion dollars around the world and it is about 600 billion dollars for US venture capitalists.
1:12:06
This is the dynamic that the private equity industry is going to prey on.
1:12:08
So, if you saw Thoma Bravo just close the 32 billion dollar round, you know, Vista's raising a 20 billion dollar round, everybody's stepping into tech, they are going to destroy those gray bars.
1:12:20
describe that as bottom feeding? No.
1:12:20
No, by the They are they are the rational actor who is finding the true market clearing I think the private equity industry is unbelievably precise and talented in being dispassionate and telling us what these things are worth. They're cutthroat. They're logical.
1:12:38
No, no, it's not cutthroat. They're just smart.
1:12:41
That opportunity for the private equity industry is going to be created by profligate founders.
1:12:44
And look, you could blame VCs for the high marks last year as well.
1:12:49
They were profligate, too.
1:12:51
But look, if you're a founder, if you don't start acting in a more capital efficient way and preserve your cash, your company's ultimately going to be owned by a private equity firm and they're going to make all the money.
1:13:02
Well, here's an here's Because because because hold on because when you sell to them at a low price, all you're going to end up doing is paying back the liquidation preference.
1:13:09
And then that private equity firm that was willing to do or less, but that private equity firm will be willing to do what you were not willing to do, which was simply act cut your burn, cut your costs and act in a more capital efficient way.
1:13:22
And they will end up making all the upside for your decade of hard work because you got uh basically addicted to venture capital and the high valuations and refused to again, adjust to the regime change that works for them.
1:13:35
I'll give you an alternative.
1:13:35
I'll give you an alternative.
1:13:36
The alternative is that the majority of acquisitions made by private equity firms are not actually pure acquisitions, they're bolt-on acquisitions.
1:13:44
Meaning that they're either companies that are added to existing platforms that they own.
1:13:47
So, this acquisition they're doing of Coupa, I think it's very likely over the next couple of years you will see like the playbook in private equity includes not just cost-cutting, but also synergy building.
1:13:58
And they typically do bolt-ons and add-ons and this happens across all private equity platform deals of new products and services that can be sold through the existing sales channel, the existing customer base, um and as an add-on to the existing service or product that's already offered.
1:14:12
So, one of the one of the things that I think you may see in Silicon Valley over the next couple of years is a rationalization away from funding feature companies and thinking much more carefully about what can be true stand-alone product companies. Sure.
1:14:26
And many of these companies that have raised a ton of capital um and have gotten crazy valuations, at the end of the day they're more likely better equipped to be a feature of another platform than they are to be a stand-alone platform company of their own.
1:14:38
And that's where the majority of these acquisitions will likely end up going um in in in the private equity landscape.
1:14:44
And they will be vacuumed up and attached to existing platforms that these private equity guys are building out.
1:14:49
And by the way, just look as an example of what Oracle did over the years, what Salesforce did over the years, what Google did.
1:14:54
So many of these companies were built by bolt-on acquisitions, by building a a sales channel, building a platform, and then adding on top of that.
1:15:02
And I think that's what a lot of these guys are going to try and mimic. Two critical points.
1:15:06
Number one, what about the bottom 75% of VCs? Oh, wait.
1:15:08
If you show that chart just for one more second, I just want to remind everybody that is the absolute cream of the crop VCs.
1:15:15
This is the best of the best.
1:15:18
These are folks, I mean, again, I'll just say us, Sequoia, Benchmark, we've consistently been Launch craft. Thank you. Launch craft.
1:15:25
These are These are top four top return streams. the lord.
1:15:27
What about the bottom 75%?
1:15:30
to be able to raise funds, man. It's over.
1:15:31
They A lot of these people who raised first-time funds in the last three or four years it's also the companies as Sachs said, because like like it's like the Today is the Now is the moment for the sober founder and the sober venture capitalist to sit and say, "What is the real valuation?
1:15:46
What do we What do we need to do to make sure that this company has a chance?"
1:15:49
Because what Sachs said is so true.
1:15:50
Otherwise, all these profit dollars will be made by the private equity firms.
1:15:56
In order to win today, you're going to have to grind.
1:15:59
You're going to have to work 50, 60 hours a week.
1:16:00
You're going to have to be absolutely embrace the age of austerity, and you're going to have to focus on your customer, your product, and your bottom line.
1:16:09
The age of excess is over.
1:16:11
If you're not working 50, 60, 70 hours a week, you're not going to cut it in Silicon Valley.
1:16:15
Also, key second point, profligate.
1:16:17
Extravagant or wasteful in the use of resources.
1:16:20
Just so we get the word of the day from David Sachs.
1:16:24
That's David Sachs's word of the day.
1:16:25
After a a very powerful bull wave, it was This is a bull wave. That went crazy.
1:16:29
Did you see the Chamath bull wave? It went uh Bull wave.
1:16:31
Bull wave went uh we we we we went viral.
1:16:36
This is, I think, Elon's biggest uh non-obvious impact in this moment.
1:16:41
here's your uh one answer to your question about what happens to the the the bottom 75% of venture firms.
1:16:46
It's equivalent to what happens with the you know, kind of this is the bottom of the top.
1:16:52
The slide that I just shared it's the one we looked at a few weeks ago and I keep referring to it cuz it's just such a staggering like demonstration of what people call the power law, which is how you know, kind of excess returns accumulate to minority of investments.
1:17:07
So uh just a few investments make up the bulk of value that the you know, market cap of 43% of companies that have gone public since 2020 uh is $750 billion.
1:17:22
The market cap of three the other 300 is only $26 billion.
1:17:25
And the cash that went in to the $750 billion is $136 and the cash that went into the 26 is 107.
1:17:35
And so the cash that went in to generate that 26 billion, that 107, that's your bottom 50%.
1:17:40
And the top 50% put in 136 to make 750.
1:17:44
And I think it gets even narrower as you move further up to that top quartile.
1:17:48
So, you know, it's just I can tell you what LPs are saying cuz I'm It's a hard business to try to just is this is the companies that went public.
1:17:56
So, this is also of the top company of the top funds and the top companies that were actually able to IPO.
1:18:02
And so it highlights how much of a power law actually plays through.
1:18:04
And so the majority of these companies as you in Chamath, even in your chart, you showed the top quartile.
1:18:10
The bottom uh 75% or the bottom 50%, I've looked at this data as well uh of those various vintages are below 1. 0.
1:18:17
They lose money for their LPs. Oh, consistently.
1:18:20
And it's just it's it's a cycle.
1:18:22
And so what ends up happening is the next generation comes through and LPs, they make a portfolio of bets and they hope that they make enough bets in the right VCs that their portfolio generates greater than you know, market returns, greater than call it 15, 20% target, 15% target.
1:18:38
Um but they're going to expect that the majority are not. I I have an LP report.
1:18:41
I'm I'm out there raising launch fund four right now and I moved from like the accrediteds, the individual investors. that?
1:18:47
Oh, yeah, cuz you're allowed Yeah, I'm on 506D. Yeah, yeah.
1:18:48
So, I'm I'm publicly raising it and I've moved on from individual investors.
1:18:54
$45 million in commits after five webinars. Amazing.
1:18:56
Now, I'm talking to No, it was amazing.
1:18:59
It's just 506D is going to change the entire industry.
1:19:02
Letting the the you know, the masses have some access to this capital and this opportunity, accrediteds and QPs is going to change the world, I believe.
1:19:09
Do you have to do deal with everyone one of them or is it easy to administer?
1:19:13
It's incredibly complex because you have a large number of people and they all want to talk to me.
1:19:18
So, I did webinars, five webinars and it resulted in 100 commits, uh hundreds of commits for $45 million for But you'll be able to pull you'll be able to get all those capital commitments drawn down when you need to.
1:19:28
Like you have to go ping a couple hundred people and get them all to wire money to you every time you get a deal.
1:19:32
people and we only do four We We let them know One thing you may want to do is like for for these smaller slugs, is you can pre-wire, you can set up an escrow account where you pre-wire 100% of the capital. Yes.
1:19:43
And then you also don't have to You take it down when you're going to deploy it, so you keep your IRR correct.
1:19:47
So, we're actually looking into those solutions.
1:19:49
I'll talk to you offline.
1:19:50
But I just did my first two meetings with endowments, etc. , fund-of-funds.
1:19:53
The entire discussions right now are around um what is your secondary strategy?
1:20:01
How are you getting in earlier, not later?
1:20:04
And how are you building a larger position?
1:20:06
It is And and even like some of the QPs were sophisticated and are, you know, are in over 10 venture funds.
1:20:12
The entire discussion, governance of these companies, are you taking board seats or not?
1:20:16
How early are you getting in and building a larger position over 10%?
1:20:19
And what is your secondary strategy?
1:20:22
When are you going to start taking some chips off the table?
1:20:25
So, the And and I got to say, if you're an LP who didn't sell into the up market at all, uh and you're on your first fund, you know, and you had all these great marks and they're getting they're coming crashing down they're not going to deal with you.
1:20:36
They just have too many options of top funds they've started to come down yet.
1:20:41
I don't think we know what the top quartiles really going to look like over these last few years.
1:20:46
I think that's going to take four or five years to really sort out. course. Yeah.
1:20:50
Um, so I think Explain why Chamath, just so people understand. Yeah, I understand.
1:20:54
Well, I I think I think that there are lots of valuations um, that have supported huge TVPIs these, you know, paper gains that have allowed venture funds to raise enormous amounts of incremental capital in new funds.
1:21:13
And so they are going to try to wait as long as possible before they're held accountable for that.
1:21:19
And the best way to do that is to not change the valuation.
1:21:22
And so it will happen slowly.
1:21:22
It'll be a trickle of these things.
1:21:25
Um, and I think that takes probably four or five years before it to really sort itself out.
1:21:31
But in the meantime, companies will still need to get financed.
1:21:34
Companies will still need to get built.
1:21:36
Um, that's why I think like the public markets, I think what Sachs says is true giving us a signal of what these true market clearing prices are will eventually slip into these, you know, series D or E companies because a venture capitalist who has now taken some big write-downs in one part of their portfolio I suspect will now be very open to selling to private equity for another part of their portfolio so that they can return capital. Totally. Totally agree.
1:22:02
Yeah, it's it's going to be rough out there.
1:22:04
You guys uh, watch White Lotus?
1:22:07
Any Yeah, I just started season one.
1:22:07
I'm uh, it's like the third episode in.
1:22:10
Okay, we won't say anything. a treat.
1:22:12
We won't say anything, but how great was uh, season two?
1:22:14
Uh, Oh, the rap was awesome. It's just incredible.
1:22:19
I'm not going to say anything.
1:22:19
the last two episodes were extraordinary.
1:22:21
Yeah, let's not ruin it for people.
1:22:21
Nat and I just finished watching all of Handmaid's Tale, which I will tell you is that is a [ __ ] stressful show.
1:22:29
Uh, it's like it's like you're putting in work.
1:22:31
When you're done those episodes you're like, "Oh my god." emotional labor.
1:22:34
You know when they said this emotional labor?
1:22:36
Watching that show is like It could could it could not be more sadistic and insane. Oh my god. Uh, it is brutal.
1:22:43
Uh, but you can't look away. Incredibly well done. Uh, all right, listen.
1:22:48
This has been an amazing episode and this is news for the other besties.
1:22:55
Friedberg and I have been secretly collaborating. No.
1:22:58
We have Do you have a plan? A plan?
1:23:00
We're working on a joint plan for All-In Summit 2023 because we are both helping each other out on a secret project. I'm ready to tip, guys. Ooh, I love it. The tip.
1:23:10
Are you Are you Ooh, the tip. I already know. That's it.
1:23:13
That's We don't need to Sachs. I'm a permanent no. That's all That's fine. We know that. You're allowed to know.
1:23:19
I love that I have Sachs as my anchor on this one.
1:23:20
I can always float back to that way if I need to.
1:23:23
flip, but Friedberg and I I'm like an octopus floating in the ocean. root of all evil. Totally.
1:23:29
case, but power and influence is something that that Friedberg and celebrity Friedberg had so much of a good time at All-In Summit 2022 that his hatred of my producer fee is less than his joy from the event.
1:23:42
And we are collaborating on Supergut.
1:23:48
Supergut I have made up for my producer's fee by using Supergut and becoming a big proponent it to the big I've announced it.
1:23:56
Use the promo code twist. He paid you for that.
1:23:59
That's the quid pro quo going on here. Yes.
1:24:00
You Listen, no conflict, no interest.
1:24:02
That's what's going on with the That's what's going on here. Supergut bars, amazing. So tasty. Use the double mocha.
1:24:08
The The only The only person that you haven't taken money from is SBF.
1:24:12
I mean, pretty much you're only shill for anybody else.
1:24:16
By the way, can I point out on the most loathsome person in tech uh, bracket Can we go through it? Do not name the company. Do not name the podcast.
1:24:27
I'm eliminated already in the first round?
1:24:29
This is [ __ ] Chamath lost. you win. NO, I THOUGHT YOU WON. NO, he lost. He lost. Impossible.
1:24:33
Okay, let's pull up the bracket.
1:24:35
Do not mention the podcast. Come on. Let's see.
1:24:37
How did Sandy get on here?
1:24:39
Do not I I only want the bracket.
1:24:42
Do not mention the podcast.
1:24:44
We're not giving them any.
1:24:44
Just black out that um in post.
1:24:48
I want you to black out the logo.
1:24:50
I don't want to give these guys any credit. So, here we go.
1:24:51
The worst person in tech. This is great marketing. Chamath and Sachs.
1:24:56
We won't say it's a B podcast um that's run by literal socialists. Oh, well, look.
1:25:01
Chamath got a very tough draw.
1:25:02
I mean, of course he's going to lose to SBF.
1:25:04
Of course I'm going to lose to him.
1:25:08
You went up against the Warriors with KD. It is no way to win.
1:25:10
That's a tough draw, Chamath. What about Sachs? Easy draw.
1:25:14
Sachs versus in the most hated person in tech. by 1%.
1:25:21
That's [ __ ] Nobody knows who Andy Jassy is.
1:25:22
I don't Andy Jassy is a complete gentleman.
1:25:24
Andy Jassy is delightful.
1:25:27
Sachs is a ho David Sacks is just in five.
1:25:34
That is I want a recount. No, I wanted to win. Sachs I want a recount.
1:25:36
This is election interference.
1:25:41
This is election interference.
1:25:41
Something you're a specialist in.
1:25:43
I guess it's worse to be a union busting Amazon CEO than a reactionary conservative investor. Yeah, I don't get it. This is ridiculous.
1:25:53
I just want to point out that the biggest travesty here is that I did not make the list.
1:25:58
There are And you know what?
1:26:00
These guys are trolling me.
1:26:04
These guys Shout out to producer Nick who just retweeted this.
1:26:08
with a really funny Basically you basically picked the what is it?
1:26:09
The 30 most relatively well-known people in tech.
1:26:14
That's what tilts Shake Out the Most. This is terrible. Worst person in tech. I don't make the list.
1:26:17
I'm going to double down this year. cow towing to the media. You're You're right. You're right. I need to be horrible. Stop it there.
1:26:27
I need to be a worse human like you, Sachs.
1:26:28
I'm going to try my best this year to work against humanity and society and be more loathsome than you.
1:26:35
I'm really going to redouble my efforts.
1:26:36
Obviously, I can't catch up with Chamath.
1:26:38
You buy into all their phony narratives. kind. I got a big heart. I care. I have empathy. the media.
1:26:43
You buy into all their my empathy. But here's the problem.
1:26:46
These guys left me off on purpose.
1:26:46
If you can pull up the replies Who wins between Andreessen and Bill Gates? Oh, Andreessen. That's a lock.
1:26:52
That's Andreessen, of course. Andreessen crushed him.
1:26:58
A16 co-founder and made a terrible tweet Marc Andreessen is a world-class [ __ ] poster.
1:27:03
And Bill Gates is hiding somewhere.
1:27:06
Nobody Bill Gates is doesn't tweet.
1:27:08
Marc Andreessen blocks, unblocks, he [ __ ] posts with the best of them. He's up there.
1:27:13
I mean, that guy's a a dark meme lord.
1:27:18
Any other I mean, I really I really sympathize with you, Chamath, that you got your ass handed to you there.
1:27:21
That's just That's like going up against the dream team. Hold on. Slow down, bro.
1:27:26
You're not even letting us read these things.
1:27:27
All right, give me a Twitter or look at this one.
1:27:30
Twitter former idiot CEO versus Airbnb CEO making Oh god, it's so brutal.
1:27:40
Oh my god, that's so well written. Brian Hold on. Slow down. this weekend. He's a great guy.
1:27:43
guy guy who really tried to make us believe Web3 was going to happen versus Worldcoin and Open AI. Chris Dixon wins.
1:27:50
Much more loathsome than Sam Altman. Okay, I got to run. Guys, this has been fun.
1:27:56
Freeberg, you didn't even come.
1:27:56
I want to just congratulate Freeberg on an amazing, the best science corner ever, an amazing product in Supergut that has helped me lose weight. I feel great.
1:28:09
And for uh you know, recovering from whatever illness you had. All right, everybody. I love you, besties.
1:28:15
Shout out to David Sacks.
1:28:15
Love you guys, and we'll see you all next time on the All-In podcast. Love you, besties. Love you guys. Bye.
1:28:25
We'll let your winners ride. Rain Man, David Sacks.
1:28:32
And I said we open-sourced it to the fans, and they've just gone crazy with it. Love you, besties. Besties are back.
1:28:48
That's why uh dog taking a dump in his driveway, Sacks. Oh, man.
1:28:55
We should all just get a room and just have it one big huge orgy, cuz they're all just useless.
1:28:58
It's like this like sexual tension that they just need to release somehow. What your big feet? What your feet? What?
1:29:09
We need to get Besties are back.