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All right, everybody. Welcome to 2023.
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Everybody's well rested and ready to take on 2023.
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Yes, Chamath, how was your break? Amazing. Okay.
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Saxi poo, I know you don't go to temperatures that are under 57° anymore.
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Did you have a nice break?
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Did you go somewhere warm? Yes.
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Okay, that's a confirmation.
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Wow, man of so many words. And Freeberg.
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I'm over cold weather vacations.
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Yeah, that does happen at a certain point.
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Actually, we went to Florida.
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Went to the the free state of Florida. Oh, really? Yeah.
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What what's going on in Florida at the turn of the new year, I wonder, that drew you down to the great state of Florida.
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We're just freeing it up in the free state of Florida.
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We have our 2023 predictions now.
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I'll play some music and all that kind of stuff.
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Producer Nick at this point, let's get to it.
1:04
Last year, we did By the way, did you guys do you guys notice that every time we talk about something, somewhere between sort of 2 months to a year later, the Wall Street Journal ends up writing a big think piece about it.
1:15
Think piece about it, yeah.
1:15
So, I tweeted into the group chat, like last year we all talked about Sequoia and distributing public equities and Yeah.
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how it's very fraught and difficult.
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And then today they write this big article about how people have just burned enormous amounts of billions of dollars that they could have returned to LPs, like these venture investors, by not distributing. It makes sense.
1:38
3 weeks ago when we did our end of the year wrap-up, my big winner for 2022 were the pot shops, right? Citadel.
1:47
And today in Wall Street Journal, an article lands that these guys with 56 billion of AUM over the last 2 years have made almost 45 billion dollars of revenues. Isn't that incredible?
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And this is what happens, Chamath.
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Usually They are These guys are just crushing it and then Citadel Securities did like almost, you know, 7 and 1/2 billion of revenue.
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I mean, it's unbelievable these businesses, how good they are. Yes.
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So, let's get into This is typical, Chamath.
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If you think about journalists, they're trying to get into the conversations that are occurring at the bar after the event, the late night conversation, the group chats.
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Well, and that's what this podcast is.
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It's the exposed backchannel, right?
2:27
And so, if you listen to this pod, you got the backchannel of Silicon Valley politics, tech, science, etc.
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So, let's do our predictions.
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In 2020, we said our biggest political winner would be Sax and I both said DeSantis, Chamath said Xi Jinping, and Freeberg said Putin.
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Who do we think is our biggest political winner going forward? Who do you pick, Sax?
2:48
Biggest political winner for 2023.
2:50
Who will be your biggest political winner for 2023?
2:52
Well, I went a little bit outside the box here because I think we're going to have gridlock in Washington, so I'm not expecting a ton to be coming out of Washington over the next year.
3:02
My pick for biggest political winner is Asian American college applicants.
3:08
There are two Supreme Court decisions that the court heard on Halloween last year.
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There was a lawsuit against Harvard and another lawsuit against UNC by a group called Students for Fair Admissions.
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And that they maintain that Harvard and UNC violate Title VI of the Civil Rights Act because Asian American applicants are far less likely to be admitted than similarly qualified applicants from other groups.
3:36
And the the federal courts in Boston and North Carolina rejected this argument, but the Supreme Court took up the cases.
3:44
So, they kind of went out of their way to hear this, and I think that they are going to They're going to repeal affirmative action.
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the majority will rule to strike down these policies that really discriminated against Asian Americans.
3:57
And I think they're the last group in America where it seems to be okay to discriminate against.
4:02
And uh I think the Supreme Court is going to is going to find that unconstitutional.
4:09
Chamath, any thoughts there?
4:09
You have brought this up multiple times on the podcast over the last 2 years.
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I have said that this was unfortunately affirmative action when it started, I think had very, very good intentions.
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And I still think that there's a place for it.
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The problem is that these very liberal institutions decided to play judge, jury, and executioner on which minorities counted in affirmative action.
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And that's not what the intention was.
4:39
The intention was to look at the establishment and their ability to get their progeny into these incredible schools even when they didn't deserve to be there.
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And so, I think this was always an issue of classism that was disguised as racism.
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And people who are in the upper classes of society have always had an edge.
5:03
You had the legacy admissions into Harvard.
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You had people the Kushners very famously, right?
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Like the $5 million check from the father that got the son into the school.
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All of this stuff, it's all it's been well written about.
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And whether or not those things are right isn't the point.
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I think the point is that there are folks in emerging lower middle classes who have the potential to crush.
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And those kids should have a chance.
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And you can't just decide who those kids are based on the color of their skin.
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And in this case, what happened was some blacks were still allowed in, some Hispanics were allowed in, but Asian Americans broadly were discriminated.
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And that was a really stupid outcome.
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You cannot punish kids for willing to work their ass off.
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And I think that that was the unfortunate outcome of what affirmative action has become by 2022.
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So, it is going to get repealed.
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The reason it's going to get repealed is that you know, we have case law that very clearly states that that any institution that accepts federal funds cannot have any form of discrimination.
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And this is how these folks who have tried to repeal affirmative action have taken up this lawsuit.
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And hopefully the outcome is a more meritocratic system that also tries to create a plurality of different people from different backgrounds. Freeberg, any thoughts?
6:27
Uh if not, your biggest political winner for 2023.
6:29
Uh my biggest political winner for 2023 is um MBS. Mohammed bin Salman.
6:36
I think that Saudi Arabia will have the most important year in kind of the modern era in terms of their role.
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I don't know if you guys saw this Reuters report from a few weeks ago, but there's kind of a deepening discussion about the oil yuan trade in that um Saudi would sell oil to China, and they would get paid in yuan.
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Saudi Arabia sits at the intersection of the United States, Russia, and China.
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They have relationships with all three nations.
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And in the kind of conflict and power struggle that is underway, I think that ultimately the direction of where global currency kind of reserves will be taken, um and the importance of these great nations and who sits atop whom can actually be dictated and significantly influenced by MBS this year by some of the deals and trades he might put in place and the and the the the kind of partnerships he might forge.
7:39
I think as a result, you will see him kind of rise in terms of influence, not in terms of, you know, hey, the world has accolades for this for this guy.
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But I think in terms of global influence, he will rocket ship to kind of the top because of this this kind of jockeying he can now do between these three great nation states in defining you know, what's going to happen with the US and what's going to happen with China and what's going to happen with currency reserves. Great Great selection. I mean, great selection.
8:05
The shitty The shitty thing by the way about your selection is that Biden our explicit stance is unfortunately quite confrontational with MBS. And Yeah.
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you saw that play out in Q4.
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We asked them to ease up on OPEC plus to introduce supply cuts, and they did some nominal 100,000 barrel per day cut.
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Didn't do much of anything.
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There was an article, to your point, Freeberg, just recently about Saudi really doubling down on getting the oil out of the ground and monetizing their petrochemicals.
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So, there's just going to be a glut of supply in the market.
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And we have the least amount of influence with Saudi Arabia than we've ever had.
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And it seems like we could change that if we decided to, but I think Biden has taken this very confrontational approach, which doesn't seem to make And remember, a lot of sense.
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Their stated intent is to diversify away from oil and into technology and other kind of emerging growth economies.
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That's why they funded the Vision Fund.
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That's why MBS made that big kind of visit to Silicon Valley a few years ago.
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And there is technology that they want to import into Saudi Arabia, and they want to have ownership in around the world.
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And if the US is creating a barrier for them to import US tech into Saudi or for Saudi to kind of invest in the US, but China and Russia have open arms, and all they want is for Saudi to start doing trades in yuan, it's going to happen.
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And I think that's where this guy has kind of a real opportunity to shift the global economic dynamic.
9:40
Say what you will about Trump, he had open dialogue with North Korea, China, Russia, MBS. enemies close. Sure.
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to be able to talk to anybody, and he was able to talk to anybody.
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Now, you also want to be able to say, "Hey, listen, you can't dismember a journalist like Khashoggi."
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And you need to be able to have both of those ideas in your head.
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You can't be rigid in foreign policy.
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You have to be fluid and keep people at the table talking.
10:06
Chamath, who is your big political Who do you predict will be the big political winner of 2023?
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Chamath's prediction, everybody. Go ahead.
10:13
I really like spread trades, right?
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Where you go long something and short another.
10:18
So, I'd like to pair my biggest political winner with my biggest political loser for 2023. Okay.
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And I am going to focus on the Republican nomination, and I am going to go long Nikki Haley, and I'm going to go short Ron DeSantis. Now, let me explain. Sachs hat.
10:37
You If you're wa- If you're not watching Sachs right now, he is ready to interject. Go, Chamath.
10:41
So, I think that all of this nonsense, for example, in the House Speaker race, all of the midterm results, what it really speaks to are is people are getting exhausted with the lunatic fringes of both parties. That's point number one.
11:01
And point So, that favors moderates as an emergent class.
11:06
And point number two is that if you look back through many, many cycles of Republican and Democratic nominations, it is a very negative thing to be in the lead so early going into the Iowa caucuses in January.
11:20
And so, if you put those two things together, the risk is that DeSantis decays, things emerge, people attack him because he's the clear front-runner.
11:30
And the opportunity, just like it was for Trump in '16, or for Clinton, or for George Bush, not Herschel Walker, but, you know, W, is to emerge from the back.
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And so, if I think about a moderate person who can emerge from the back, who can consolidate the ranks, they should probably be from the south.
11:51
They will have a lot of these purple compromises that Sachs mentioned in their policy program.
11:58
And they will have a history of winning and a history of normalcy.
12:04
And so, I think that of all of the places where you could ever elect a woman as president of the United States, I think it will come from the Republicans before it comes from the Democrats.
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I mean, the Democrats are unfortunately increasingly judgmental.
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And I think it's very difficult for a woman to emerge there.
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But, I do think that Nikki Haley has a shot.
12:23
So, I'm going to go long Nikki Haley, and I'm going to short Ron DeSantis. Okay. I like it.
12:27
A spread trade for his prediction. Well done.
12:29
Before Sachs, you interject, let me just do mine, and then because then you'll have two to interject, too.
12:35
Uh I was looking uh at Biden and Trump and thinking, "Hmm, which one of these is going to have the big win in 2023 since they're two biggest, I think, uh players?"
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I have a prediction for Trump.
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I think he's going to lose 50 lb on the Ozempic.
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Everybody loves a weight loss story.
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I think he is going to be indicted by Garland. Is he on Wait a minute. Sorry. He's on Ozempic?
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No, I'm predicting an Ozempic run.
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And he's going to drop 40, 50 lb.
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Then we're going to have a svelte Trump get indicted by Garland.
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And the debates and the and the and the rigmarole with DeSantis.
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I think he's going to go after DeSantis based on weight and height.
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And then he's going to win the nomination in '24, and we're going to have Trump versus Biden.
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But, this is a crazy prediction here.
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I think we're going to have a settlement.
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I think he's going to agree to not run and get the pardon.
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This is a crazy prediction, I know.
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But, I think he loses the weight. He wins the nom.
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He gets indicted, and then he gets the Richard Nixon pardon, global pardon for all of the [ __ ] he's done.
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Sachs, you can reply now to these two crazy predictions, this spread trade of mine.
13:49
I mean, this is like proof positive that everything you have to say about Trump is an act of projection. Go ahead. Like, Ozempic?
13:56
I mean, I mean, are you talking about yourself or Trump? Strike. Boom.
14:02
Yeah, tell us about your Ozempic story, Jake.
14:05
I did Well, my weight loss journey has been Ozempic and super good.
14:08
Yes, both of those things and fasting.
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Have you, Sachs, done any Ozempic?
14:11
Yeah, I've I've tried it. Yeah.
14:14
Um I think everybody should be looking into this if you're uh have weight issues.
14:16
It's a It's a It's a great new We'll go over it.
14:19
I would say it even more broadly.
14:19
I've been reading a lot about these GLP-1s, and I I got to tell you, statins are a clear wonder drug. Yes. Okay?
14:24
I think that the 50-year longitudinal data on its value is pretty unimpeachable.
14:34
Metformin, even taken prophylactically, has shown incredible benefits for cell regeneration, longevity, and glucose management.
14:42
And the Look, the reality is, let's just take a step back.
14:45
The American diet, we're all pre-diabetic, okay?
14:47
So, let's just let's just not beat around the bush.
14:49
The way that Americans eat and our food supply, and also probably in Western Europe, is pre-diabetic by definition. It's [ __ ] It's trash.
15:00
So, Metformin makes a lot of sense.
15:00
And again, its longitude data is incredible.
15:04
But, I got to tell you, the early data on these GLP-1s are unbelievable.
15:10
It's extraordinary, and I can tell you from first-hand experience, I would lose half a pound a week when I would diet.
15:16
No, but what I'm saying is just it's it's beyond that.
15:17
And what I'm talking about is insulin response. It's cardiac health.
15:21
And so, if this data tracks like this, man, you just going to want to put everybody on these GLP-1s.
15:26
want to also put a disclaimer out here. Do your own research.
15:28
Work with your doctors, whether it's for Metformin or Ozempic.
15:30
But, I had great results on it.
15:33
I recommend if you're struggling with weight loss like I did for many years, you talk to your doctor about it.
15:36
That said, it's not a commercial for Wegovy or Ozempic.
15:39
But, I do think these things are going to change Or Mounjaro.
15:41
Well, and they're getting better, and it seems like dia- People with diabetes are on them for life.
15:46
So, if your question is, like, if I could do this for a year to lose weight, you know, I think diabetics are on it for life.
15:51
So, when I made my decision, again, work with your doctors, not random podcasters or venture capitalists for your health advice.
15:59
I was like, "Well, if all of these people have diabetes are going to on it for years, unless it's non-toxic, go get a PreNuvo scan.
16:03
Just make sure you Absolutely. All right. So, there you have it. There's our predictions.
16:09
Sachs, did you want to respond to any of I I want to I want the Sachs to react to my spread trade. Yeah.
16:14
So, so, so, look, I think, you know, if you're going on a betting site, I think that um you could place that bet that Chamath made pretty cheaply, and probably it's like has some good upside to it.
16:23
So, I don't criticize it as a bet.
16:24
Do I think it's actually going to happen? No.
16:26
And I I think the reason is is this, that if you look at what's happening right now with the speakers' race, there's two very clear wings in the Republican Party.
16:35
There's the establishment wing, and then there's kind of this populist MAGA wing.
16:37
And the candidate, whoever it is, in '24 needs to unite those two wings.
16:43
And I think this is really the best argument for DeSantis is he's widely accepted by both.
16:49
I think Nikki Haley's problem is that she's very well regarded within the uh establishment wing of the Republican Party, but she has no meaningful support within the populist wing.
16:57
And so, I don't think she's capable of bringing the party together, at least at this point in time.
17:02
She would have to prove, let's call it, populist bonafides that she just doesn't have right now.
17:08
So, this is why I think, you know, DeSantis even He does have front-runner risk.
17:12
You're right that people are going to keep taking shots at him as long as he's the front-runner, but All right.
17:17
Let's rip through He's capable of uniting the party in a way that it desperately needs right now, as we're seeing with the Kevin McCarthy thing playing out. Yeah.
17:24
Okay, let's go for our biggest losers. We'll rip through this.
17:29
Last year, I said Biden and Trump in the extremes.
17:33
Chamath said the progressive left, again, the extremes.
17:34
Sachs said Pelosi, who just wrapped up her tenure, and Freeberg said US influence globally was the biggest political loser.
17:44
Let's get our predictions for the biggest political loser of 2023.
17:47
Freeberg, who do you think would be the biggest political loser of 2023?
17:51
The world wants to know, Freeberg.
17:55
I would continue my US influence, but I I am going to shift.
17:59
Here's what I think's going to happen this year.
18:00
My my big prediction is based on um I think the world has too much debt.
18:06
I think that the economic slowdown, coupled with rising interest rates globally and a and a dearth of uh kind of asset uh capital inflows, means that there's going to be a lot of issues with a number of debt markets around the world, particularly kind of emerging sovereign debt.
18:22
Just to give you guys a sense, global debt is about $235 trillion in public and private.
18:27
Um you know, that's somewhere between 5 and 15 trillion dollars of interest payments a year, depending on what the net rate is on $96 trillion global GDP.
18:34
And there's another trillion and a half of unfunded liabilities in the US and pensions and social security and all this other stuff.
18:41
I think this is the year where a lot of the debt markets start to unravel.
18:44
The The primary entity that steps in or a political loser.
18:48
I'm going to tell everyone second.
18:49
This is the political Yeah, so, the political ramifications So, the political ramifications for me, I think that the um the entity that steps in to try and support these um unwinding moments is the IMF.
18:59
And I think that no matter what the IMF does, they're going to look bad.
19:03
I think that the you know, it's sort of like like Jerome Powell this this past year, right?
19:08
Like, you you raised rates too late, you raised rates too quickly.
19:10
No matter what you do, it has some adverse effect and impact.
19:13
It's either inflationary or it impacts growth.
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And so, I think the IMF is going to get a lot of heat for either acting not too soon or sorry, not fast enough or or acting too aggressively and causing inflation as a bunch of these markets face credit risk this year.
19:30
So, my big bet is the IMF is going to play a major role, and we're going to be talking a lot about the IMF later this year.
19:35
I think as a result, the IMF will get a lot of heat, and you'll end up seeing a lot of pressure and political you know, just like we blame NATO, just like we blame Jerome Powell and the Fed, we'll end up blaming the IMF for a bunch of problems that will arise.
19:48
But, the natural physics of what's going on is the world has too much debt and not enough growth to cover the debt, the cost of debt. That's it. Okay.
19:58
And the IMF will be the political kind of, you know, hit that'll that'll result.
20:00
A little complicated of a point of view, but I think, yeah.
20:05
And who do you have as your biggest political loser prediction for 2023, Mr. David Sacks?
20:11
Well, I mean, Kevin McCarthy may not survive the week.
20:13
So, let me go in a different direction.
20:17
I think California is my big political loser, and I would say in particular the city of San Francisco.
20:21
Both are going to have gigantic budget shortfalls.
20:24
You may remember that this is back in 2021 when we had that asset bubble, California had a surplus of 76 billion. Insane. insane.
20:36
And then 2022 happened, and now the state is looking at a 24 billion dollar deficit.
20:42
Well, if we had taken, say, a third of that surplus from '21 and put it in a rainy day fund, we wouldn't have to worry about this deficit, but that was never done.
20:51
Newsom started handing that money out like candy to the electorate to goose his election his reelect numbers and to get him past the that recall, remember? Okay.
21:03
So, the the state never got its fiscal outlook in order, and now I think it's going to be even worse in 2023.
21:10
And San Francisco, the city, very similar kind of problem where it's tax base is heavily dependent on commercial real estate, which is really suffering.
21:19
So, you know, the city of San Francisco and the state of California, they've moved their tax base to to highly volatile capital gains.
21:25
And with a really lousy stock market, I don't know how these guys are going to meet their budgets.
21:30
So, a lot of pain coming.
21:32
a lot of austerity and pain coming, that's for sure.
21:34
And these people do not know how to manage a budget. They're incompetent.
21:39
So, you say California, Freeberg says IMF.
21:40
Chamath, who do you think the biggest political loser for 2023 will be? gave you DeSantis, Okay.
21:45
And I'm in alignment with you.
21:48
I think DeSantis peaked a little too early, and the forever Trumpers and the and the chaos is going to be a little too much for him to handle. Okay.
21:56
Now we get into what everybody wants, business, business, business.
22:00
Biggest business winner for 2023, who do you have, Chamath, for your biggest biggest business winner of 2023?
22:07
I'm going to pick something out of my portfolio. Mhm.
22:08
I think I'm the only non-trivially large investor in both SpaceX and Relativity Space.
22:19
Relativity Space has a huge SpaceX is clearly just crushing on all cylinders.
22:26
And they're really the only game in town with respect to launch capability.
22:28
And if you just Google it, you'll see that the Europeans, you know, have a hit or miss capability on launch.
22:36
The Russians are completely unable to do launch now because of all of these sanctions.
22:43
The private companies in New Zealand or the United States have also had fits and starts, really incapable.
22:51
Relativity, which is really which is now the second most highly valued space business, is about to do a launch in the third week of January.
23:01
And the big difference between it and SpaceX, which is sort of why we did it.
23:06
This is a early YC company.
23:08
I did the series A and kind of went along the whole way.
23:10
They have 3D printed everything.
23:12
And the reason why 3D printing is interesting is you take a So, if you if you think a rocket costs 5 billion dollars if built by NASA, Elon was able to take that to 100 to 500 million.
23:27
And if you 3D print everything, you can take that cost to like 5 to 50 million.
23:33
And so, it allows you to just have this repeatability and manufacturability.
23:36
Now, SpaceX also has a lot of 3D printed parts, but Relativity's entirely 3D printed.
23:42
It has a launch in 3 weeks at Cape Canaveral, I think.
23:49
And we have a like a 10 billion dollar order book that gets unlocked.
23:53
So, I don't know how to see beyond a lot of these market forecasts right now.
23:56
So, I'd rather pick a company, I'll pick something in my portfolio.
23:59
If the rocket does not blow up, there's a 10 billion dollar order book, and this company is now on a trajectory to be as valued as SpaceX.
24:09
All right, talking his book times two.
24:11
And if it doesn't it it goes to zero.
24:14
Freeberg, go ahead and talk your book times two or three.
24:16
Let's see if you can one-up Chamath.
24:20
Which one of your investments will be the biggest business winner of 2023, Freeberg? I'm not an investor. My big bet is OpenAI.
24:26
It's just way too obvious to be anything else this year.
24:28
As you guys know, there are dozens of startups that are being started right now based on an OpenAI's demonstration of Dolly and ChatGPT.
24:37
I think we're seeing this in the enterprise and consumer markets.
24:38
I think OpenAI will become to some degree maybe they could be, there's many paths they could take, the AWS providing tooling and infrastructure to all these startups that are building applications for consumers and and business users.
24:52
Or they will end up doing a massive deal with Microsoft.
24:53
I think it's inevitable they're going to get a billion dollar plus investment this year.
24:56
They could power, you know, AI-driven Bing search and voice-driven search.
25:02
They could build their own products and their own tools, and they're becoming great investors.
25:05
They invested in Descript, which is a product company we use here for our podcast, which is an incredible product.
25:10
And I think that Sam Altman is a very smart and and shrewd investor as well.
25:14
So, for a lot of reasons, I think OpenAI could Mhm.
25:16
end up having an amazing year this year and a lot of different paths they could walk, and we're going to come out of this year and say they're one of the top tech companies in the Valley. Okay.
25:26
Sacks, OpenAI has, of course, increased your ability to talk to other humans.
25:32
So, you're seeing a lot of big wins there, I know.
25:35
Um He's How do I talk to a child about their college hopes and aspirations? No, no, no.
25:44
How do I talk to a child about their day? Hello. He is poor. Hello, progeny of mine.
25:52
How are you faring today in this complicated ChatGPT, write me a script of talking to a 12-year-old about their hopes and dreams. Say it in English.
26:01
Using GPT for talking points on different topics.
26:04
I should try that for the pod, you know. Oh, okay. Here we go.
26:08
have actually had a chat on the GPT predictions. That would be great.
26:10
Have GPT make its answer to these categories.
26:14
Sacks, as a person on the spectrum, yeah, how delightful is this ChatGPT and, you know, your treatment of your condition? It's great.
26:22
Let me let me get to my answer here.
26:24
So, my answer for the big business winner of the year is America's natural gas industry.
26:32
And I have to admit, this is an aspect of the Ukraine war that I didn't fully appreciate until I read this New York Times article the other day about how natural gas prices in Europe have now fallen to the level they were at before the war.
26:46
And everyone thought that there'd be this huge shortage, and they wouldn't be able to heat their homes. Well, what happened?
26:51
The The answer is that Europe completely cut off their dependence on Russian gas, and in fact, the Nord Stream pipelines were blown up.
27:01
So, physically they separated.
27:01
But then on top of it, they basically started importing liquefied natural gas from the US.
27:09
And here's the key paragraph in this article from the New York Times is that Europe rapidly built terminals to receive liquefied gas, sweeping away many of the usual bureaucratic obstacles and environmental objections.
27:22
So, in other words, what would normally would have taken decades to get approvals, now was all put on a fast track, and Europe is now completely dependent on American natural gas.
27:36
And I think this is again the thing maybe I underestimated, the cold, hard American interest in this war is to basically turn Europe into a vassal of America's natural gas industry.
27:50
Previously, they were about to be dependent on Russia, and Nord Stream was going to make that situation permanent.
27:55
We've, you know, somebody blew up Nord Stream, now they're dependent on American LNG.
27:59
They're going to pay higher prices for that.
28:03
But it's it's been a pretty impressive win for the American natural gas industry.
28:08
And I think Biden has really pulled a 180 here because you remember when he first came into office, he canceled Keystone, he canceled drilling.
28:16
He was very tough on the oil and gas industry.
28:18
I think after he then delivered the hundreds of billions for the climate special interest and the Inflation Reduction Act, now he has taken care of the oil and gas industry. I love it. Here we go, Matt Gaetz. 180 by Biden.
28:31
Yeah, and that and so, what you're saying is Biden dynamically changed course based on inputs like a great leader would. Okay, well done, Sacks.
28:39
Well, I don't I don't Listen, I don't know if this Well, no, listen, I think Biden has done something politically smart here.
28:45
There's no question about it. I am giving him Okay. credit.
28:48
Does it mean that this war was worth it?
28:50
No, I don't I don't think we should be engaging in oil wars like we did in the Middle East. We are great.
28:56
not justifying this war, but I am saying that there is a cold, hard American interest undergirding the our position, which is it's about LNG.
29:03
It's not it's not just about moral platitudes.
29:06
Yeah, well, I mean, listen, Strong start to 2023, vassal and undergirding.
29:13
Uh my biggest predictions, I I'm working backwards from two here.
29:15
I think the DoorDashes, Airbnbs, Ubers, Etsy's of the world who need entrepreneurs, they need workers, they need supply.
29:22
They've always been supply constrained.
29:26
As unemployment becomes, let's call it what it is, sticky, you're going to see a lot more people participating in gig platforms or entrepreneurial platforms that enable them to make money.
29:34
So, I think they will be huge beneficiaries, especially if they continue to lay off employees like DoorDash and Airbnb did to right-size their businesses.
29:42
But my first one, my number one, is laid-off tech workers.
29:48
I think laid off tech workers who uh get together in groups of two, three, or four, uh developers, product managers, people who actually build stuff, and start companies together are going to become extremely successful, and they're going to make incredible lemonade from these lemons of these big tech layoffs.
30:06
So, I think the startup space is going to And these laid off tech workers who choose to take control of their destiny and start companies are going to be the true big winners.
30:12
If you do it, do it with two or three friends because you're going to need developers, you're going to need those those talented people in the startups that have three founders get funded faster than the ones with one.
30:25
Uh so, those are my two winners. All right.
30:26
Oh, yeah, and last year our biggest business winners were uh Chamath said SMBs, Sachs said Rise of the Rest, uh Friedberg said Stripe, and I said Disney Millennials and Gen Z.
30:33
Let's go on to biggest business loser for 2023, Friedberg.
30:38
Who do you think will be the biggest business loser in '23 this year, in fact?
30:44
Okay, so my biggest loser is the general category of capital-intensive Series B through D growth businesses in the startup landscape, private companies.
30:53
Um as you guys know, there's been a big shift in capital allocation.
30:58
A lot of the folks who were writing big checks into growth rounds are retreating back to writing smaller checks in seed and A rounds.
31:05
They don't want to write the $20 million Series B.
31:06
They want to write the $5 million seed and A round.
31:10
Uh no one wants to kind of follow the valuation.
31:12
No one wants to set the valuation for these growth businesses, particularly if after this round you know you need another big round of capital, and no one's sure if someone's going to be waiting on the other end.
31:21
As a result, we're seeing tons of these businesses run into capital infusion walls. They can't pivot.
31:26
I think we'll see what we saw in the dot-com bubble, where 99 and a half percent of these companies actually die.
31:33
The half percent that win are going to emerge as the next hundred billion-dollar enterprises, the Googles and the Amazons of the world.
31:39
So, there will be light at the end of the tunnel for the winners, but generally there are hundreds of companies in hardware, in synbio, in biotech, in high-growth enterprise uh software that require significant sales investment expense.
31:50
A lot of these businesses where the capital-intensive nature of the business just doesn't have the market for it right now, uh and there and and investors are are all retreating and they're going to be selective.
32:01
So, that that's where I think there's going to be more pain um in so By the way, seed seed and A investing, hot as a button.
32:06
Uh B plus That's That's Yeah, that's it.
32:09
Okay, Sachs, biggest business loser for 2023.
32:15
Well, I just by the way, I 100% agree with what Friedberg said, but my my biggest loser for business in '23 is the consumer.
32:21
I just don't understand how the consumer isn't going to finally tap out in this economy.
32:26
I mean, they they have a mountain of personal debt, credit card debt's at all-time highs.
32:31
I think the average credit card rate hit 19.
32:32
6% last week, and it's expected to rise even further.
32:38
Uh the mortgage rates are above 7% now, so forget about trying to buy a new home or uh sell your home, and your stock portfolio is down, too, and now layoffs are starting to pile up.
32:48
So, I just don't understand how we're going to avoid a recession, and you saw, you know, Kashkari saying that right the Fed's going to keep raising, 5. 4% is his prediction.
32:58
Uh you know, I don't understand how if if rates are at 5 and 1/2% that doesn't finally break the back of this economy, and uh we go into recession.
33:07
So, Sachs, that the economy is actually broken right now?
33:09
We just don't have the data cuz the data lags 60 days in in most people's minds cuz it does feel like the consumer is just and real estate has just broken at this very moment. It seems like it.
33:19
I mean, the pain is very unequal, right?
33:20
But in the tech industry, we've been in a recession for a year.
33:24
I mean, like the growth stocks are down 80%.
33:25
What Friedberg said is true.
33:28
No one's going to fund these, you know, high-burning companies.
33:30
There's an enormous amount of retooling that has to happen.
33:33
Look, I think the recession is here.
33:35
It's just very unequally distributed. Distributed, exactly.
33:39
Yeah, well, I mean, if you look at it, uh buy now, pay later, that's a category starting to break.
33:43
Credit card debt, as you're saying, hitting, you know, uh big um a bad records in terms of how much people are spending.
33:52
Also, people's um savings are going down.
33:54
So, the consumer's back has been broken.
33:56
I think we're just going to feel it in the in the first and second quarter.
33:59
Chamath, who's your biggest business loser prediction for 2023? The world wants to know.
34:04
Let me just build on what Friedberg and Sachs said for a second before I give you my pick. Sure.
34:08
I I This is the conversation you and I had when we just got on.
34:12
Guys, what I was telling Jay Cal is at the end of Q4, I did five deals, and four were pro ratas, one was a new deal.
34:22
And they were all clean markups, so the four deals that other people put money into.
34:30
And I was looking at them, and I was trying to figure out, okay, what differentiates these things?
34:32
And Friedberg, to your point, these were super clean startups with very clean cap tables that had clear progress.
34:40
And then conversely, I had seven converts showed to me for companies whose valuations were anywhere between three and I would say 12 billion, and I did none of them.
34:50
And not only did I do none of them, nobody else did any of them.
34:56
And the problem was the real market clearing price was 80 to 90% down.
35:02
And so, I was like, what is going on here?
35:04
So, Friedberg, to your point, I don't even think it's just cash-intensive startups.
35:06
I think it's like all growth companies are in a really bad place.
35:10
I thought that this growth stuff would get sorted out in two to three months, and now I'm worried it's two to three years.
35:16
I think it's Here's the toxic. Toxic.
35:20
Here's the definition, Chamath, what what I think has happened, and where I think the cutoff is, is when the valuate the implied market valuation of the company based on where public comps are trading is less than the total capital preference in the company, the total preferred stock. Wow.
35:34
And there's so many companies now that raised $400 million at a $2 billion valuation, but the company is actually worth $300 million now based on public market comps.
35:41
So, they're worth less than their preference stack.
35:43
So, how do you sort through that massive amount of capital?
35:46
No, that This is why I think all these converts are getting done.
35:51
That's where the rubber meets the road on all these deals. Yeah, that's right.
35:53
Who does the convert benefit?
35:53
The convert benefits the VCs who want to maintain the illusory valuation that they had before.
36:04
They do that They do that to assuage the limited partner who gave the money that the marks aren't as bad as they thought.
36:13
But the people that really get screwed, as Jason said, are the common shareholders because eventually those converts deals that do get done, those people will end up owning the company.
36:22
The cap table gets completely flushed and reset.
36:24
And the employees get wiped up. Yeah.
36:27
And then you got to basically take all the employees who were there previously who now hate the founder, and you got to start all over, and give everybody all the Yeah, they're wiped.
36:35
The people that do all the work get [ __ ] and the people that do none of the work, and who just want to maintain this shell game, gets to basically live another day.
36:42
Basically, people are investing, as you gave in the example earlier, like, hey, if it's a $3 billion company, but it's actually worth 750, people, instead of taking the valuation from $3 billion to 750, will say, okay, buy one share at the $3 billion price, and we'll give you three or four shares for free, or for a penny, warrants they're called, typically, or, you know, just different ways to structure this.
37:03
And then all of a sudden, nobody knows the actual denominator.
37:05
They may own them 10,000 shares, but they don't know how many shares are actually issued because the warrants are not on the cap table.
37:11
They're in some side document in a folder in a lawyer or CFO's office.
37:15
So, let me let me tell you my biggest business loser. Yes, please.
37:19
I think that the biggest potential business loser this year is Google Search as measured by pure profitability and engagement.
37:32
I think it's easier for me to see where the the usage comes from as opposed to picking Open AI or ChatGPT in terms of where the usage goes to.
37:43
And the reason is because I think a lot of people don't still fully understand how machine learning and AI work, but just 30-second primer, there's two big buckets of work.
37:54
There is what's called learning, which is how you learn how to make predictions.
37:59
And then there's what's called inference, which is when you actually type something into the search box, you get the answer.
38:05
The thing with learning, and what ChatGPT is showing, is that they have learned by crawling the entirety of the web.
38:13
There are five or six other organizations that are capable of crawling the entire web in terms of cost, in terms of compute, in terms of the quality of the transformers, and the quality of the AI.
38:24
And so, I find it easier to predict the decay in the quality of Google Search as that much better than everybody else than I find it is to predict who will win because I think that with enough time and money, Oracle, Microsoft, Google, the Chinese internet companies can all compete. Facebook.
38:47
And so, I think that you'll converge on the same training, which will lead to the same inference, and so I think consumers end up getting confused, and will end up being able to get high-quality search results from many places versus today, you know, you wouldn't only think that Google is the only game in town, quite honestly, for most people.
39:04
So, I think that Google could lose 10 or 15% of usage to all these other sites, and that may not make any of those sites that relevant, but it'll have a material measurable impact to Google and Google's bottom Fantastic prediction, and I think, you know, ChatGPT and these other ones are going to have a very interesting marketing attack that they can do on Google.
39:25
It's why search when you can get an answer, right?
39:29
Hey, we'll just give you the answer, you don't have to search.
39:31
I had so many losers that I went through here.
39:33
I'm just going to run backwards through them.
39:35
Number five, I thought founders who refused to downsize in 2022 could be big losers in 2023, obviously.
39:40
you get to have five, and the rest of us are just We left just telling you my thought process.
39:43
I This was the one I had a long time number four.
39:45
I thought VC funds founded in 2020.
39:48
Then I thought crypto cuz Gary Gensler says it's all a stock.
39:50
Then I went with you, Chamath, number four, Google.
39:53
My God, they got so many headwinds against them with the chat GPT, but I wound up on white collar workers with no hard skills Twitter going down to I think, you know, Elon said a couple of hundred people is all you need to run Twitter and I think he said he has 2,000 employees or something like that.
40:09
He has shown everybody, you know, hey, listen, these more can be done with less or these things are overstaffed in a massive way.
40:17
I think white collar workers now, the idea that you're going to have four offers and you're going to be able to play them off each other is over.
40:21
When we take the show you're saying surplus elites.
40:25
Sure, white collar workers aka surplus elites, people who actually, you know, are mid-managers who don't who don't actually code or don't actually build a product or sell a product, don't actually do real work as as I think many people would frame it in the managerial class or the CEO class.
40:43
Man, they're going to have a hard time and this week Andy, Amazon Andy, cut 18,000 white collar workers, not the blue collar, the white collar workers at Amazon.
40:50
That was a big turning point and Benioff you know, he's Ohana, he is Mahalo, he is Aloha, he does not like to lay people off, he considers Salesforce a family, he laid off 8,000. I predicted that.
41:05
Yeah, and I mean that is to me about that.
41:07
Well, I mean the reason is pretty simple, right?
41:08
Their growth slowed down by 2/3 in the most recent quarter, but they were still spending the same amount on sales and marketing.
41:14
So, when that happens, your CAC payback explodes, right?
41:17
You go from 3 years payback to like 10 years.
41:20
So, they have to cut costs in order to rationalize their unit economics.
41:24
So, and now it it cascades, right?
41:27
Because all of Salesforce's vendors are going to be getting less money from Salesforce because they're tightening their belts.
41:35
So, then those companies are going to have to cut and the cycle just keeps going and going. Right.
41:38
And everybody tightens their belts at the same time, freezes the economy aka recession and and and possibly worse.
41:45
So, that mine was a surplus elite, so that's a nice little quartet.
41:50
In 2022, just so you know, I picked crypto, Freeberg also picked crypto, Chamath said Visa Mastercard, and Sachs said asset classes that benefit from government dumps and and pumps. liquidity Yeah.
42:02
All right, let's go to biggest business deal of 2023. It's a prediction.
42:05
What do we think could be the biggest business deal? Easy. Easy, this one is easy. Chamath, go.
42:09
Oh, let's go lightning round here. Go, Chamath, quickly. Starlink will go public.
42:12
Oh, SpaceX will cut and paste the cap table and we will take Yum, yum.
42:18
Yum, it'll be yummy and delicious and my prediction is that the Starlink valuation will be at least half of SpaceX's current private market. 75 billy. 75 billion. It will be phenomenal.
42:31
And I think the reason why is that I think in order for Elon to have complete financial flexibility and do what he needs to do and, you know, he talked about this on our pod about the difficulties and the dangers of margin loans and all of that stuff. Yes.
42:45
He's going to create breathing room for himself. Ah.
42:49
This is the simplest and most obvious way for him to do it.
42:50
It'll give him a ton of more dry powder. Sure.
42:54
So, I think that this is an obvious outcome in 2023.
42:59
They already have a million subscribers in their better than nothing beta as they call it. I have two of them.
43:02
I think this is a great great prediction.
43:08
I was the first one to get it for for the global 7500.
43:11
So Okay, I I got it for, yeah, Tahoe, so yeah, similar.
43:18
They're playing in your house at the same size. Yeah, exactly. So, there you go. There is a point here.
43:22
People are underestimating the TAM, I think, of this product.
43:26
The TAM is not existing broadband connections, it's second connections, it's connections where connections didn't exist.
43:31
It's all just just so you know the the best in class the best in class broadband connection for a plane is called KA band and it costs 500 grand a year. That's ridiculous.
43:43
And you can replace it for, you know, a tenth of the cost and Starlink on a plane is dramatically better bidirectionally.
43:54
So, I think Starlink is going to go public and I think it's going to be a it's going to be the best chance that we have of opening up the capital markets in 2023.
44:00
It's another way of saying people who own private jets, if they are flying 250 hours a year, which will probably be a reasonable number, 2 to 300 hours a year, they're paying $2,000 an hour for their internet service. That is bonkers.
44:13
Okay, Sachs who is your big deal?
44:15
Biggest business deal prediction for 2023?
44:19
deal 23 prediction is there will be a deal between Putin and Xi.
44:26
And they met by satellite late last week to discuss ways to further help each other in 2023.
44:34
Putin characterized it as a no limits partnership.
44:36
You may remember that the two of them inked a $175 billion gas deal in early February last year.
44:42
That was 3 weeks before Putin invaded Ukraine.
44:46
I think now Russia is even more dependent on China.
44:51
We've really driven Russia into China's arms and I think there will be a big deal not just on energy, but on agricultural products, mineral products and rare earth minerals that, you know, Chamath likes to talk about.
45:04
I think there could be a trillion dollar deal between Russia and China this year.
45:10
I'm just going to go out on a limb and make a prediction.
45:12
Okay, so there is your 2023 prediction of the biggest deal, the Legion of dictators is forming.
45:19
I do think it's it is like you know, the axis of evil.
45:22
This is more Legion of dictators like, hey, let's do business together.
45:26
Freeberg you got a prediction for the biggest business deal of 2023?
45:28
This is really going out on a limb here. I'll do two real quick.
45:30
The first was the similar to what Sachs said, but it's kind of echoing what I said earlier, which is the petroyuan trade.
45:40
I think that's the Saudi China trade.
45:41
If this happens and oil is sold in yuan it marks the beginning of I think um the end of the assumption that the US dollar is the global reserve and the risk-free currency in reserve for the world.
46:01
So, I think the petroyuan trade, if you guys here's the Reuters article covering Xi's visit to Saudi Arabia last month uh first or second week of December.
46:13
Once this gets inked and signed, it's a real shift globally.
46:16
I think the other one that I'm that I'm going to point out that I think is a bit of a out of left field one maybe and maybe I'm just going to look like a total idiot at the end of the year, but do a wild card. I like it. This is my wild card.
46:28
So, my wild card is I think Apple ends up buying something completely out of the ordinary. And here's why.
46:33
I think Apple's core business, they're facing significant pressure with respect to their relationship and ties to China.
46:38
As you guys may have seen last week, Foxconn announced that they're actually going further downstream in terms of their production model and they're trying to diversify away from being kind of the sole service provider to Apple.
46:51
Apple, as you know, is under such pressure to get out of China politically that they've started to try and invigorate activity in Vietnam and elsewhere.
46:59
So, a lot of pressure on their relationship with their low-cost producer and low-cost production partner.
47:08
They're also under a lot of political pressure because of the App Store revenues.
47:11
You guys know this 30% App Store vig that they take.
47:12
A lot of people are calling it monopolistic and anti-trust is getting involved, so they're feeling that pressure.
47:17
There's also the pressure with respect to the you know, waning consumer demand for high-end electronics.
47:24
Samsung last yesterday or last week and or yesterday, I think, announced significant declines in consumer demand for electronics or their forecast is such.
47:32
That has to impact Apple as well.
47:34
So, when you put all of this together, right?
47:36
They're they're they're they're being pressured to get out of their low-cost manufacturing center, they're being pressured to stop making money on the App Store, they're being pressured because the demand may be waning.
47:45
They have to do something big to kind of diversify the business.
47:48
So, I think they might end up doing something like buying a real content company.
47:51
Maybe they do something like buy a Disney.
47:53
Maybe they do something like buy an automotive company like Fiat Chrysler.
47:59
I think there are a number of these kind of like what may seem today outrageous deals that Apple might end up kind of being pressured into doing so that they can get ahead of their forecast of the impact that all these pressures are going to have on their core business.
48:12
And so, I think this is something interesting to kind of think may happen this year.
48:15
I I certainly have no insight or intel on on anything or I could be completely wrong on this one, but it feels like they've got to do something this year I mean, listen.
48:21
I think this is I think I love your MBS China trade and that relationship, sure. Legion of dictators.
48:30
But, this one is really good.
48:32
It's hard to buy Disney, monopolistic issues.
48:35
But, buying a car company, pretty easy because that's a fragmented market. I love this prediction.
48:42
I mean, now with Tesla with this depressed stock price, Apple can make a run at Tesla.
48:45
They have They could almost buy it with cash.
48:48
Let alone BMW, Volvo, one of those brands they could buy easily.
48:52
What a great prediction for me?
48:54
The prediction is Amazon's three-legged stool grows into a sturdy chair chair with a fourth pillar.
48:59
For those folks who are not familiar with how Amazon has built their businesses, there are three pillars in their stool e-commerce, obviously, when you buy stuff, Prime memberships, which is kind of considered a separate revenue stream and of course AWS cloud computing.
49:14
I think the fourth is going to be this continuation of following the health stream, not advertising cuz that's not a consumer-based product, that's just a way they make money.
49:23
Health is going to be a big one for them.
49:25
They obviously acquired One Medical, which was a small purchase.
49:29
I think they're going to buy Roman Hims, they're going to buy Peloton, they could buy a Whoop, and they're going to go all in on health and you know, that three-legged stool becomes a very sturdy chair.
49:41
And my runner-up is TikTok is going to divest under duress.
49:43
I think that it's going to have to go public and the Chinese are going to divest their interest in it and just take their chips because they're going to be faced with the existential threat during the political debates of the next 2 years.
49:57
There will be unanimous support from Democrats and Republicans to get TikTok out of the US. Therefore, they divest.
50:02
Can I just test that Sure.
50:04
with you guys cuz we've talked about this a lot that hey, we're going to ban TikTok. Yes.
50:07
How many of your friends' kids or your kids do you guys know spend hours a week on TikTok? It's a lot. 90%.
50:17
How do you get over the political mountain of trying to ban TikTok?
50:23
If you try and ban TikTok, whoever raises their hand and says we should ban TikTok and actually gets it done, they're out of office.
50:28
There is going to be so much pressure and backlash because people are hooked and love that app and use it all the time.
50:34
To take that away from people will feel like this kind of Young kids that don't have phones actually get everything that TikTok has on YouTube shorts.
50:44
So, I don't think TikTok is that important because it it is not actually there is no sticky network effect inside that app.
50:50
So, there isn't usage that's dependent on people you know or a graph that you build.
50:54
It's a lot of passively consumed content and so, you know, you're you're getting pushed a lot of algor- algorithmically defined content.
51:02
You can do that on YouTube.
51:02
And so, I actually don't think it's that meaningfully important if TikTok goes away.
51:06
I think the content creator stays.
51:10
It's harder for them to build a business on YouTube shorts, but if you look at the and measure the density of content inside TikTok, it exists almost one-to-one on YouTube. Mhm. That's interesting.
51:22
It's an interesting point.
51:24
you think it'll you think it'll be okay if we if we cancel TikTok in the US and we say that's it, you can't have TikTok anymore.
51:29
Everybody moves to YouTube and Instagram.
51:31
but people will just go to YouTube and Instagram.
51:33
It's not that big of a deal.
51:34
In fact, a lot of the my favorites, if there was a network effect inside there, then I think people would have a reason to complain to somebody whether it's your representative or whether it's somebody else to say, "Hey, don't do this.
51:46
This would have a deleterious impact on my quality of life or my quality of experience."
51:50
And you could make that clear claim on Instagram, Facebook, you know, Google, YouTube.
51:58
But TikTok is is much more brittle that way and that's why they need to get public sooner and monetize this bloody thing because I think that it's very easy actually to deconstruct TikTok's value into these other places.
52:13
I can tell you my favorite TikTok is Chef's Reactions and I consume him now on Instagram because he posts he just copies one to the other and So, Chef's Reactions is a great example where he actually got banned by TikTok and then diversified on his own and now what he does is he publishes across multiple streams.
52:29
And if you look at all the big creators, they all do that because it makes no sense to actually give the power to any one of these things. Why have a dependency? Why have a dependency?
52:38
All right, let's keep the trains moving.
52:40
Most contrarian belief, this is the Peter Thiel award.
52:43
Your chess partner, Sachs.
52:47
Who's winning in 2022 in chess?
52:47
How many chess games do you have going with Peter Thiel right now?
52:51
And who's higher rated, you demolished me with your Queen's Gambit.
52:54
I played one game, I got killed in seven moves.
52:56
I'm I'm I'm ranked at 800, 900 right now.
52:59
Sachs is at 1800, he just walloped me.
53:01
Who's higher rated right now, you or Peter Thiel? the Queen's Gambit.
53:04
Well, you know, I just I I don't even know what it was.
53:06
I was like, "What opening is this?"
53:08
You're like, "Queen's Gambit, you're dead." And boom.
53:12
Queen's Gambit is not a good opening.
53:14
You don't want to accept the Queen's Gambit.
53:14
It's a very pleasant game for white.
53:17
I'm going to go on a limb here, you know, and and risk being wrong.
53:20
Uh my my prediction or most contrarian belief is that the bromance between Biden and Zelenskyy comes to an end at some point in 2023.
53:32
And uh let me state the the part that I think is uh conventional wisdom and everyone agrees with, which is there's going to be a massive Ukrainian counteroffensive in the spring.
53:40
And I think that could go one of two ways.
53:43
Either it could make limited gains, basically the Russians fight them to a stalemate, or it could be successful.
53:50
And they could basically push the Russians back to the February 23rd lines and then make a play for Crimea.
53:54
I predict that in either one of those circumstances, Zelenskyy's interests and Biden's interests will start to diverge.
54:02
So, in the case of a stalemate, which I think is probably 50/50 here, Biden's got to start getting into election mode for 2024 and I think we're saying that we're going to be in a recession.
54:13
So, I think that if there's a a stalemate, I think Biden's going to tell Zelenskyy, "Wrap this thing up. It's time to negotiate.
54:19
We need to get this over with."
54:21
By the same token, if the counteroffensive is successful, I think that the administration, hopefully cooler heads will prevail and not let them take Crimea.
54:29
That's basically what they're gunning for is they not only want to get back to the February 23rd lines, they want to go all the way back to the 2014 lines of retaking Crimea.
54:36
I think that's extremely dangerous.
54:40
I think that could precipitate a nuclear war.
54:44
And I think that the cooler heads in the administration will tell Zelenskyy to stand down and that's the right time to make a deal.
54:49
So, I think in either one of these scenarios, I think you will start to see a divergence between the Ukrainian and the American interests and that could create a rift.
54:57
And I think no one's really predicting that. I I think this is great.
55:01
This is kind of what I thought the plan all along was, which was to deplete Putin of resources, distract him, and then get the West off of his oil and and and try to do regime change, but do it by bleeding him.
55:13
This would be uh proof positive of that strategy, which is bleed him to the end and then sell Zelenskyy out.
55:20
I think that's actually I know that's I know it's cynical, but I think that's what we're doing.
55:25
I think Ukraine is a tool to deplete Putin and then maybe get to regime change.
55:29
I'm cynical as it gets with this, Chamath.
55:32
What's your most contrarian belief of 2023?
55:35
I will go and pick that inflation, which people expect to fall off a cliff, doesn't fall off a cliff as fast or as meaningfully as people want.
55:47
And so, I will explain inflation as three different chapters and we've seen the first two chapters play out.
55:55
So, 2021, chapter one was all about energy inflation.
56:00
And you know, we all talked about having almost $10 gas at the pump and what does it mean for everybody and it caused that initial spike in inflation.
56:13
And then we had it come off and Sachs called this he said, you know, we're going to have this sort of double hump.
56:19
And 2022 was really the story of goods inflation, right?
56:22
All these prices and all of these things went up because the input costs went up and we all had to bear the implications of that.
56:31
But then that started to ebb.
56:34
And now, if you look at the tail end of 2022, what I found super interesting was the number of articles I saw about wage inflation.
56:44
Whether that was Biden using an 1800s era law to prevent a railroad strike, the number of states that increased minimum wage, the trend around unionization.
56:56
So, in general, my thought is that the pendulum is swinging very markedly away from capital and towards labor.
57:05
And as the labor participation rate stays low and continues to go down, and also it's compounded by an unemployment rate that may go up, right?
57:15
People are it's going to be harder and harder to get people to do the work you need at the company you have unless you pay them more.
57:24
And if that gets exaggerated, then inflation will stay where it is.
57:26
It won't be as muted and it won't fall off a cliff as people want.
57:31
So, that's my big contrarian That's my big contrarian Got it.
57:36
wager for this year is that we see inflation we see wage inflation that keeps inflation not going down as much as people want.
57:43
This is contrarian because everybody's saying, "Hey, it's over."
57:47
The consumer's back has been broken, the credit card debt is high, and everybody's being laid off, yada yada yada.
57:53
Therefore, goods and services, there'll be more supply than demand and the prices will lower. Very contrarian.
57:59
Free break, do you have a contrarian belief for 2023?
58:01
I think my it follows my earlier points about the Saudi China Russian Russia trade this year exiting 2023.
58:17
It may be the case that, you know, there's historically been this belief and this continuing belief that the US dollar will always be the de facto global reserve currency.
58:26
And the current mantra is that it's better than the rest.
58:28
Everyone else is worse off than the US, Western Europe is in trouble, Japan is in trouble, China is in trouble, everyone's in trouble.
58:34
But if there was a coalition, an economic coalition, a a scaled economic coalition that starts to shift the balance of power a little bit and the US meanwhile is taking on extraordinary debt load, spending $1.
58:49
7 trillion in an omnibus bill, you know, has this massive unfunded social security problem coming down the pipe and are trying to manage multiple funded conflicts around the world, it could be that the US dollar coming out of 2023 starts to trade more like a risk asset and less like a risk-free asset.
59:08
And so, I think that that's my big contrarian bet is that maybe this year marks the beginning of the end of the US dollar as the kind of global de facto reserve currency based on some of these big trades that I talked about happening. Unbelievable.
59:24
that that would be my um my big kind of contrarian. Perfectly said.
59:26
That's your contrarian bet, the ax- the legion of dictators, the MBS's, etc.
59:31
They become they form a new global currency. My turn, not your turn.
59:36
I'm not calling it a Yeah, I wouldn't say a legion of dictators and I wouldn't say form a new global currency, but I do think that the fact that that large economic trading models start to be done in non-dollar denominated form Got it.
59:52
you know, weakens the the kind of reserve status of the dollar to some degree, not fully, right?
59:55
It doesn't happen in a binary way.
59:56
And then the dollar starts to trade more like asset like other currencies do to some degree, not fully.
1:00:03
So, maybe maybe this is the year we start to see that shift.
1:00:04
Once again, I take the exact opposite of your contrarian belief.
1:00:08
I believe American exceptionalism continues to soar as Russia, China, Saudi Arabia to a lesser extent continue to self-sabotage themselves with insane wars like Putin has done or cutting off the heads of entrepreneurs in China, figuratively I'm saying here.
1:00:26
I think you cannot have exceptionalism without entrepreneurs, without people having freedom, and I think that means American exceptionalism based on freedom is going to continue and the legion of dictators, I believe, are going to stab each other in the back before they change the world or move the currency. You can't trust them.
1:00:46
They'll they'll snip at each other.
1:00:47
And or they'll self-sabotage themselves like Putin did in Ukraine. What do you fall on? Our opposite here.
1:00:52
I think that America is really feeling its weedies right now.
1:00:54
I think that American power is immense.
1:00:56
I think that the superiority of our weapons in Ukraine has been one of the big surprises of the war. Let's go Chamath Lucky.
1:01:05
I don't see the world in the simplistic good guys versus bad guys frame that Jake out does.
1:01:10
However, America is on turbo right now and yes, it is true that the BRICS would love to get off of the dollar because we are now using the dollar and the financial system and Swift as a as a geopolitical tool and a weapon and they would very much like to be off of our dependence on our currency, but I don't think they're anywhere close to be able to do that yet and like I said, America is on turbo right now.
1:01:37
Now, I one thing one thing I want to mention, this statistic came out, White House correspondent named Jennifer Jacobs just reported that the US has agreed to send Bradley armored vehicles, basically our best tanks, to Ukraine.
1:01:51
Previously US officials had balked at sending armored vehicles saying heavier weapons be too difficult for Ukraine to operate and maintain, but allies are moving to provide such weapons.
1:01:58
So, we keep providing the Ukrainians with more and more sophisticated weapons, more and more support.
1:02:05
Like I said, this is leading up to a huge Ukrainian counteroffensive in the spring.
1:02:10
And I really don't know what's going to happen at that point.
1:02:12
I do think that the Russians will escalate.
1:02:13
I don't think they can afford to lose this war.
1:02:17
They view it as existential.
1:02:19
And I like I said, I hope cooler heads will prevail and if the Ukrainians are successful at breaking through, I hope that the Biden administration will shut this down before they try to take retake Crimea because you know, we've discussed this before.
1:02:31
I think the Russians confronted with a choice between a total defeat that includes losing Crimea and their naval base at Sevastopol and sees the Ukrainian flag flying over their base at Sevastopol.
1:02:44
If if it's a choice between that or potentially using a tactical nuke maybe at the mouth of the Crimean Peninsula as a firewall.
1:02:52
I think they could choose the nuke option.
1:02:54
So, it's a very dangerous situation and you know, very very dynamic.
1:03:01
There's a lot of possibilities.
1:03:02
All right, let's go on to best performing asset of 2023.
1:03:06
I'm going with seed stage investing again.
1:03:09
I don't think people want to get into these toxic cap tables at the late stages Chamath pointed out.
1:03:12
So, I go with seed stage and you know, and up to series A, the people brave enough to place bets, the founders brave enough to start companies.
1:03:18
I believe it's the best performing asset class of 2023.
1:03:20
Chamath, what do you got?
1:03:23
I think that there's still a lot of uncertainty in the world and in the markets.
1:03:27
And so, I'm generally concerned that there's a lot of chop.
1:03:32
And so, I pick something that's pretty conservative.
1:03:37
But, I would have a combination of cash and the front end of the yield curve.
1:03:42
So, T-bills all the way up to two-year bonds.
1:03:45
So, you can generate four and a half, probably by the end of this year, 5% pretty safely owning this stuff while you wait for things to become more certain.
1:03:57
And the way that I think about it is that I would rather miss the first 10 or 15% of a rally once we're really done with stuff than try to overcorrect and try to pick a bottom just because I think that you could lose a lot of money.
1:04:13
So, I think the goal for this year is to stay resilient and in the game.
1:04:18
And so, owning having a bunch of cash on the sidelines ready to pound it in.
1:04:25
Meanwhile, a portion of it collecting 5% is not such a bad thing while you wait for the bottom. Fantastic.
1:04:30
My answer was actually very very similar, which is if Kashkari is right that rates are going to 5.
1:04:34
4% in Q1, why wouldn't you just put all your money in short-term T-bills?
1:04:39
You earn 5, 5 and 1/2% risk-free. Yeah.
1:04:41
Like set it and forget it. Yeah.
1:04:44
And that's why capital flows are moving hugely right now from equities into bonds.
1:04:52
Especially if we're going to a recession, which is inherently deflationary.
1:04:56
What do you got, Freeberg?
1:04:58
Performing asset class of 2023.
1:04:58
One of the things So, I think it's inevitable that we continue to have significant infrastructure spending from both the stimulus and security point of view.
1:05:10
So, you know, we kind of want to continue to stimulate the economy and and support growth.
1:05:13
We want to continue to create jobs and support this transition in the if this if the recession predictions play out true and the job market does loosen, it's very tight right now.
1:05:24
There's going to be even more of an impetus to continue to do infrastructure investment, but I think there's also these big economic transitions happening underway right now with pharmaceuticals, with semiconductors, with energy.
1:05:38
There's a lot that we've talked about where there's a security problem and a redundancy problem.
1:05:43
And so, you know, there there are a couple of ways to kind of play this infrastructure spending thesis in each of those areas.
1:05:50
I've kind of highlighted four of them.
1:05:52
One is in semiconductor capital equipment.
1:05:53
So, okay, like Ten Core, Applied Materials, that that that range of businesses that provide and sell the equipment into the the fabs and the and the organizations that build semiconductor manufacturing facilities.
1:06:07
Uh the second is kind of an oil and gas services.
1:06:09
So, similar to what Sax said earlier, Schlumberger, Baker Hughes, that class of businesses I think benefit in this in this environment.
1:06:16
And this is independent of kind of economic conditions certainly cuz these are big multi-year spending projects.
1:06:24
The third is in the the equipment to support them.
1:06:25
So, Deere and Caterpillar.
1:06:27
And then the fourth I think is an important one.
1:06:28
I'll talk about this in a minute with respect to my biggest kind of anticipated thing for next year, which is in a pharmaceutical infrastructure.
1:06:35
So, Thermo Fisher and there's some company and others like them because there's a lot of buildout happening to support these big transitions happening in the modalities that are being used in pharmaceutical drugs and diagnostics.
1:06:47
And then I think that there's also a couple of these businesses that are diversified like Danaher, Honeywell.
1:06:53
Thermo Fisher is a good example that play across multiple of these um of these opportunities.
1:06:57
So, those are those are all great businesses to own and you don't need to worry about, you know, they're they're they're growing cash flow positive, dividend paying companies and you don't need to worry about, you know, am I getting 5% or 5 and 1/2% based on the equity price this year?
1:07:10
These are long-range businesses that are building real value, growing their top line and compounding value from within.
1:07:15
And then they're acquiring a lot of smaller businesses very cheap.
1:07:18
I'll say what it's an important trend I've seen across these companies, Danaher, Honeywell, Thermo Fisher.
1:07:23
They buy small companies.
1:07:26
They pay very little and they immediately get massive return on invested capital.
1:07:29
Like they're in the the high teens.
1:07:30
So, why get 5% on T-bills when you can get high teens ROIC uh on the management teams running these incredible platforms.
1:07:40
So, that's where I I'm most excited for this year.
1:07:45
That was like my mad that was like my my mad my mad money segment.
1:07:46
I've never done the mad money segment before, but there you guys go. Worst performing asset.
1:07:50
I I went with energy because not that I think it's not important, but it just feels like it everybody rushed into it in 2022.
1:07:56
So, it feels like it's overheated and if we are in a recession, people might lower consumption in terms of energy and be looking for cheaper alternatives.
1:08:04
So, it could be overheated. So, I went with energy.
1:08:07
Chamath, worst performing asset? You got one?
1:08:11
I think that if we've learned anything from the last three years, you have to separate the valuation of a company and how it performs in the stock market with its value in society.
1:08:20
So, for example, if you look at Zoom, Zoom's valuation has cratered, but its value in society has probably continued to go up.
1:08:28
It's still a massively relied upon tool.
1:08:32
The point is that markets do not give you credit for the value in society.
1:08:36
They will give you credit when you are about to overearn, but then they'll pull it all back when they think that you're going to under-earn.
1:08:44
So, in that lens, I think that tech will have a tough year.
1:08:49
I think energy will have a really [ __ ] year.
1:08:53
And probably the biggest asset class that is going to get pressured is going to be junk debt.
1:08:59
And the reason is a bunch of these variable rate loans when rates are at 5 and 6% that all of a sudden are like 11, 12, 13, 14% coupons, a a bunch of companies will have trouble meeting their debt obligations and will have to restructure the debt or will have to file.
1:09:17
So, Tech, energy, worst performing asset for 2023.
1:09:22
A subcategory of what Chamath just said.
1:09:24
I think office towers in San Francisco are that is some serious toxic debt.
1:09:26
27% vacancy rates and growing as leases roll.
1:09:33
Uh, I think that a lot of these buildings maybe virtually all of the San Francisco downtown is going to be owned by the bank soon.
1:09:40
Because no one can meet their estate in San Francisco and Well, specifically the office towers.
1:09:44
Specifically the office towers cuz no one wants to be in those those skyscraper buildings south of Market, you know, mired in homelessness. So, um, yeah.
1:09:52
I mean, I think that a lot of these buildings are going to be owned by the banks.
1:09:55
There's going to be some major fire sales.
1:09:56
Remember, this was the hottest commercial real estate market in the country a few years ago and now it's the worst.
1:10:04
Well, look what happened to Look what happened to BREET.
1:10:05
What do you think about that crazy thing that happened with the Blackstone REIT? I mean, that's nuts. Explain what happened. Yeah.
1:10:11
Blackstone has a product called BREET.
1:10:13
It's like a $70 billion exchange-traded fund effectively.
1:10:16
And what it is is the ability for individual investors to own access to Blackstone's, you know, commercial real estate portfolio.
1:10:26
And they had such a massive amount of redemptions that they had to close redemptions at the end of Q4.
1:10:32
And they were worried that the redemptions were going to continue to go up.
1:10:34
These are individual investors who basically sees the writing on the wall as David said and wants their money out.
1:10:41
And so they went to the University of California pension system and they essentially got a huge infusion of capital.
1:10:48
I think it was about $4 billion where they guaranteed 11 and 1/2% interest to these guys for the $4 billion.
1:10:56
And they also posted a billion dollars of their own equity in in the actual REIT to backstop it.
1:11:00
So, what does it show you?
1:11:04
I think what Sachs is saying is really right.
1:11:05
It's It may not just be in San Francisco, but, you know, with all of these people either getting laid off, with all of these people now working remotely, we may finally start to see the beginning of the reckoning in commercial real estate, which has been an unbelievably performant asset class up until right about now.
1:11:23
And And on top of that, you have to factor in these much higher rates and so these building owners, if they financed it, which they invariably have always financed, they have huge variable rate payments that are due on these buildings, the rent rolls are lower, even people like Twitter is just refusing to pay the rent.
1:11:39
So, you have to take them to court.
1:11:41
So, it it elongates when they have to pay.
1:11:44
And so you could miss a bunch of rent payments and all of a sudden the banks could just go crazy and take ownership of these things. Okay.
1:11:53
Do you have a worst performing asset class for 2023 prediction?
1:11:57
Sultan of Science, Queen of Quinoa, Dave Friedberg.
1:11:59
Uh, it's it's really simple.
1:12:02
I've mentioned it before. It's consumer credit.
1:12:03
We assumed that raising rising rates and inflation would taper down consumer uh, demand can meaning consumers buying goods and stuff and that certainly hasn't happened.
1:12:14
I would I'm in Vegas right now.
1:12:17
I was in the car yesterday and the driver grew up in Vegas.
1:12:18
Uh, he's like, I In all the I've lived my whole life in Vegas.
1:12:23
He's like, I've never seen a December like we just had.
1:12:24
It was packed the entire month.
1:12:27
He's like, normally in Vegas it's dead up until Christmas and then New Year's people come in for town, but it's normally dead.
1:12:32
He's like, I've never seen such a busy month.
1:12:33
And I think we see this in the numbers.
1:12:36
Consumers are still spending like it's 2021.
1:12:38
They're still spending like interest rates are zero.
1:12:40
As we talked about, um, consumer credit is skyrocketing while rates are skyrocketing.
1:12:45
Um, and so I think we're going to run into a real wall with respect to consumer credit in um, uh, sometime this year and you're going to see As As you guys know, this is such a complicated interwoven market of assets that the way that this this can be traded, there's a lot of different ways to trade it, but I think it's going to be in general, consumers are not going to be able to meet their debt obligations and it's going to be really ugly.
1:13:09
Could be mortgages, could be credit card debt. Defaults are coming.
1:13:12
Yeah, and Yeah, if you're putting So, the market's The market has priced in a bunch of this stuff.
1:13:16
Obviously, companies like Affirm and, you know, the the um, what are they called?
1:13:20
Buy now, pay later companies, but credit card companies, mortgages, there's a lot of assets that you can start to kind of pick apart.
1:13:26
Where do you think this unravels first?
1:13:27
How does it What gets hit hardest?
1:13:29
What's underpriced and overpriced?
1:13:31
Probably a lot of good pair trading to do as Chamath kind of loves to talk about uh, with respect to which of these are more likely or less likely to be sensitive to this dynamic, but there's I think it's pretty It's going to be a pretty ugly scene.
1:13:42
Uh, consumers just have way too much debt relative to their earnings right now and it's pretty nasty.
1:13:47
And they have some confidence that they'll always have a job or some way to pay their four easy payments for their Vegas trip.
1:13:53
I'd say it's it's hard It's Muscle memory is serious.
1:13:55
You know, you come out of 2021 when you had um, it's not just stimulus checks, it was the low interest rate and and easy credit availability everywhere and it's just easy to jump into getting new stuff and cool stuff.
1:14:06
And then when you get used to getting new stuff every week or every month, you kind of stick with it and you're like, I don't want to give it up just yet. I just I just yet. Not just yet.
1:14:13
You know, and so it's it's hard to kind of step back from spending when you have a new type of lifestyle and I think that's what's going on.
1:14:19
I think this is an incredible observation. Yeah.
1:14:20
There's a great TikTok of this guy that runs car dealerships and he sent them out unlike how much incredible money like what a significant percentage of people's income they were spending on their monthly car payments.
1:14:32
And people buy these cars that are well beyond what should be kind of a reasonable budget if you were to go to Suze Orman for advice.
1:14:39
She's like, you're not buying that freaking car.
1:14:40
They stretch and the the stretching is going to is going to snap this year. Yeah.
1:14:44
Absolutely, which brings us to the most anticipated trend. I love it. Great one.
1:14:48
Most anticipated trend of 2023 related to He was kind of an outcast when he got elected the first time and that may be the case now, but he still got elected because the population loved him. People loved him. Is that going to happen?
1:17:43
Do you think that means that the populism is kind of waning or the interest of the the voters is waning on him or is it just the political parties' alignment with only Boebert only won by a few thousand votes.
1:17:54
She didn't exactly crush it in Colorado.
1:17:56
I think a lot of this has to do with Trump's personal standing after the midterms.
1:18:00
The candidates that he personally picked that were all in tough races, they all basically lost.
1:18:04
It was about the distraction he caused by making the 2020 election such a big deal, constantly looking backwards.
1:18:10
So, I think the Republican Party doesn't like the antics.
1:18:14
It's not about the policies, I don't think.
1:18:17
I think it's 100% about the about Trump's electability and about his ability to get things done and it's not really about the positions per se.
1:18:26
So, I think, Friedberg, to answer your question, I think that the future of the GOP will incorporate this populism, but it's going to find a better integration with the establishment wing of the Republican Party and future candidates will have to basically satisfy both of those wings of the party.
1:18:43
Sachs, was it Was it a straw that were maybe the two straws that broke the camel's back for Republicans and Trump in that relationship?
1:18:49
Was it January 6th and the election denial?
1:18:53
Like for Republicans, is it just like, come on.
1:18:55
Those are the two things?
1:18:55
This constant focusing on the 2020 election.
1:19:00
First, it cost them the cost Republicans that Georgia runoff seat with Perdue against Warnock.
1:19:05
Perdue won on election night, didn't clear 50%, had to go to the runoff.
1:19:09
This was happened the day before January 6th.
1:19:11
This happened on January 5th of 2021.
1:19:13
That was the first race where Trump's antics cost him.
1:19:16
Then you had this midterm election where, you know, all the candidates who had to appease Trump by talking about again, the last election instead of looking to the future, they got punished by the the voters.
1:19:30
I think Republicans want to win.
1:19:33
I mean, they're tired of losing. It's that simple.
1:19:34
Yeah, the job of a politician is to win.
1:19:36
Freeberg, you got an anticipated trend of 2023.
1:19:42
I am excited about and want to share the point of view that I think I'm selling gene therapies are becoming more mainstream.
1:19:48
So, these are pharmaceutical modalities where we use uh gene editing systems where you can actually go in and change or add uh genetic material to cells in your body to resolve things like genetic diseases or change protein deficiencies or introduce new proteins.
1:20:04
And then cell therapies where we engineer cells, put them in the body, and those cells go and do things like attack and destroy cancer cells, for example.
1:20:13
There are currently 27 FDA approved cell and gene therapies on the market.
1:20:17
There are over a thousand in clinical trials, many of which are already showing extraordinary efficacy and benefit.
1:20:24
Today, these therapies cost upwards of a million dollars.
1:20:26
upwards of a million dollars. So, I think there's a massive, and talking about the infrastructure investment conversation earlier, because of the number of diseases, and the number of conditions, and the number of people that these therapies can treat, I think there's massive infrastructure
1:20:38
investment opportunity coming forward this year, but also seeing these come to market, come out of the clinical trials, get FDA approved, we have to ramp up and build up the infrastructure needed because it's not traditional where you make a drug in a factory and send it to people and they get it injected. These
1:20:50
These are much more complex.
1:20:53
They require a much more complicated delivery mechanism.
1:20:54
You have to have systems to engineer cells and edit them and put them back in your body.
1:20:59
Those systems today take days or weeks and cost, you know, as a result, a million dollar plus per treatment.
1:21:04
So, I think that um the cell and gene therapy opportunity, you know, the JP Morgan Healthcare Conference starts this week.
1:21:11
Uh it's the biggest biotech and healthcare conference in the world.
1:21:14
Starts in San Francisco on Monday.
1:21:17
This is uh one of the biggest areas of interest and and one that everyone's investing against.
1:21:20
Um but as these come to market, there's, you know, we talked about this last week, genetic diseases, types of cancer that are going to be addressed, and I'm really excited about seeing more of these products come to market and seeing the whole kind of infrastructure and delivery system change.
1:21:32
All right, sorry to interrupt.
1:21:34
Trying to keep the trains moving.
1:21:34
Gene editing, very good choice. All right. We end with this. It's a little bit fun.
1:21:40
Most anticipated media for 2023.
1:21:40
These are things we like to talk about the media here sometimes.
1:21:44
We talked about White Lotus season 2, amazing season, and maybe what you're looking forward to next year.
1:21:54
I am really looking forward to in film, Oppenheimer, Christopher Nolan's movie about the Manhattan Project.
1:21:58
That should be extraordinary.
1:22:01
I loved uh was Dunkirk his as well? I loved Dunkirk.
1:22:03
I like everything he does.
1:22:05
And when he this is him becoming like a history uncle, I I'm here for it.
1:22:09
I'm here for Nolan becoming our history uncle instead of Batman.
1:22:11
What was the one after Inception though that was really confusing?
1:22:15
The one with Denzel Washington's son, with John Washington.
1:22:19
Uh yes, um it was um I couldn't finish it. I tried twice.
1:22:22
I I got I got to stop I got to go a third shot on that one.
1:22:24
It was Oh, yeah, it was it was his worst film.
1:22:27
What's the name of the film? I can't remember. It was called uh Tenet. Tenet. Tenet.
1:22:32
Yes, about like time in reverse in this.
1:22:34
It was a It was impossible to follow.
1:22:36
Did you guys see his original film, which was incredible, Memento? Of course. Memento was fantastic. Yeah, Memento was great.
1:22:42
And it was like it was enough it was enough mind mind Yeah, it was mind-bending enough that you're like, "Oh my god, incredible."
1:22:48
And then I think they took it too far.
1:22:50
Tenet, I tried to watch it three times.
1:22:51
I'm generally pretty good with these sorts of films and love them, but oh my god, it was impossible to follow. He he took it too far. Okay.
1:22:58
So, hopefully he goes back to his roots.
1:23:01
In terms of TV series, I'm looking forward to Succession coming back, Ahsoka, who is uh Anakin Skywalker, aka Darth Vader's uh Padawan, Ted Lasso season 3 coming up.
1:23:11
Those are for me incredible.
1:23:13
And then on the book front, man, the Michael Lewis book about SBF is going to be next level. I cannot wait for that.
1:23:18
Sachs, you're a media junkie.
1:23:20
What do you got on your list of things you're looking forward to?
1:23:22
Or should I say what does Tucker's writers, what do they put down for you?
1:23:26
Well, J Cal, I thought you were going to pick I I thought that for movie you were going to pick Cocaine Bear.
1:23:32
I can't wait for Cocaine Bear.
1:23:32
Cocaine Bear does look really amazing.
1:23:36
Cocaine Bear does look good. Extraordinary.
1:23:39
A bear is in the woods and a I guess people who are trafficking in cocaine drop their or crashes and the bear eats the cocaine and then goes on a rampage.
1:23:49
It's kind of like a a genre film like in the Crocodile way.
1:23:53
By the way, I'm I'm listening to Quentin Tarantino's book, by the way, of criticism. Get the audio book. You'll like it, Sachs.
1:23:59
He talks about all the films in the '70s. Very good. Shout out to Quentin. What do you got?
1:24:02
What do you got on your short list? Uh history uncle. Me? Yeah, what do you got?
1:24:08
Well, I I just gave you one.
1:24:08
Okay, Cocaine Bear top of your list.
1:24:12
Oppenheimer was on my list, and I think uh Marvel is doing a good job developing a new villain to rival Thanos with this with Kang.
1:24:21
I don't know what phase they're on now, but Loki season 2 and then the new Ant-Man movie and you know, I thought after Thanos you wouldn't really be able to top that, but they've come up with a really good concept, I think, for the next, you know, 20 Marvel movies.
1:24:35
Well, and then it will eventually become Galactus, yeah.
1:24:38
You guys have completely [ __ ] up.
1:24:40
You have missed the most obvious slam dunk. Sade's new album, go. Dune part two.
1:24:46
Oh, I haven't watched number one yet.
1:24:50
I got to watch Wait, what?
1:24:52
You know, I what happened was wasn't it?
1:24:54
My wife wants to watch it.
1:24:56
It is so stylistically beautiful. It is a little boring.
1:24:58
There's not a lot going on. But it's so well shot.
1:25:05
It's a It's visually just stunning.
1:25:05
I mean, if you need to watch it on a big screen with big speakers and uh but part two comes out in November this year. Absolutely. Okay.
1:25:12
Freeberg, tell us what documentary on veganism do you recommend and you're anticipating for 2023?
1:25:17
What vegan documentary or animal abuse documentary I am excited about the generative AI-based media that I think is going to start to kind of rocket this year.
1:25:29
We could see, for example, the first, you know, AI-written symphony, the first kind of AI-written published novel.
1:25:38
How interesting would that be, like a full novel published by AI?
1:25:42
And and more, maybe short films based on an AI-driven script.
1:25:46
And maybe even, what what I'm really excited about is these AI-based interactive video games or um kind of experiences where you, the user, kind of get to create and live your own world uh through some sort of video game type uh modality.
1:25:57
So, um I think AI-driven media All right.
1:26:00
There you have it, folks.
1:26:02
There are Speaking of pop culture chaos, I guess Prince Harry has a book coming out that's called Spare. Despair? Spare.
1:26:11
You know, like pick up a spare when you're playing uh bowling?
1:26:16
No, but you know, like in in the English monarchy, they there's the heir and the spare.
1:26:22
Uh So, he's calling himself spare.
1:26:22
But to me, that's like a weird self-description.
1:26:25
Yeah, like that's that's how you see yourself as just self-deprecating. He didn't pick that.
1:26:31
They They paid him so much money.
1:26:31
I I heard they have to sell 1.
1:26:33
7 million books to break even.
1:26:34
But you know what it reminds me of is um when Leonard Nimoy wrote a book, I think he wrote a book called I Am Spock, and then he wrote a book called I Am Not Spock. Nice.
1:26:45
He could never get comfortable with the fact that he was just Spock. Yeah.
1:26:49
And there's something weird about calling yourself spare, like, you know, you're clearly not comfortable with It's like everything Yeah, everything they taught you everything I learned at Harvard Business School and everything they don't teach at Harvard Business School.
1:27:04
You can You can do both books. All right, listen. This has been great.
1:27:07
Breaking news as we're talking here, ChatGPT OpenAI doing a tender offer at 29 billion.
1:27:15
With no revenue, losing 3 billion a day.
1:27:18
Oh my god, who is buying Well, it's it's it's Founders Fund well, reportedly, according to the Journal, it's Founders Fund and Thrive Capital.
1:27:24
So, Founders Fund does not generally do super overpriced deals. Yeah.
1:27:28
I I Yeah, I would buy that. That's a silly bet. I mean, come on.
1:27:33
That I mean, dude, are you kidding me?
1:27:34
That's That could be a 300 billion dollar company. That's a 10x.
1:27:35
Right, but that Yeah, it's You think it's a 10x from here?
1:27:40
I wouldn't I wouldn't not. Totally could be.
1:27:42
By the way, do you guys remember that the um the origin of OpenAI?
1:27:43
I don't know what the current situation is, but it was a non-profit where they said investors put money in, but the investors' maximum return was a 100x on the dollar invested.
1:27:53
So, it's a non-profit, but it's a profit up to 100x.
1:27:57
No, no, that happened afterwards.
1:27:59
It's when they converted original model.
1:28:00
No, the No, the original model was a pure They converted it to a for-profit.
1:28:04
No, no, the the original model was a pure non-profit where there was no cap because there was no concept of equity. Yeah.
1:28:09
When they flipped, they capped everybody to a 100x on the return.
1:28:14
So, the original money But not anymore or still?
1:28:16
But you know, the original money, which was like Elon's money, who else put in money? Reid. Yeah.
1:28:22
All that money came in as a as pure non-profit.
1:28:26
So, I don't know how it converted, but that's when they Or did it convert?
1:28:29
Did those people who funded it originally get any shares in the for-profit?
1:28:32
We could We could find out. Probably they did.
1:28:34
I mean, it would make sense that they would. We'll find out.
1:28:36
We'll eventually find out.
1:28:36
But I mean, wait, if this is a tender offer for 1% of the company billion?
1:28:40
You wouldn't buy shares at 27 billion?
1:28:42
So, again like the the thing that I want to impress upon you is like there is an enormous amount of work that they do that what their biggest gap to monetizing this will be finding unique content that they learn on that nobody else has access to.
1:28:58
And this is why I I really think it's important to understand, if you have enough compute, these all of these unsupervised learning models, if you run them on the same training set, will converge to the same answer.
1:29:12
So, you're just getting there first.
1:29:12
So, in In to be really defensible, you have to get there in a unique way.
1:29:16
And so either you're going to hand tune or you're going to have inputs that are different.
1:29:24
So I don't know I don't know the answer.
1:29:26
That's why like they they have to answer that question in their fundraising and I'm sure that they did because these are smart investors.
1:29:30
But that's the big idea that you have to overcome.
1:29:33
And again, you have to think like you think Google is sitting on their hands? No.
1:29:36
Google is sitting on a competitor they haven't launched. billion?
1:29:41
Like what fundamentals is that based on? Like why not 5 billion? Why not 3 billion?
1:29:44
I mean like why not 10 billion?
1:29:46
Like what makes it their last valuation. That's what it is.
1:29:49
It's all this is all momentum.
1:29:52
It's had nothing to do with reality, right?
1:29:53
I mean It this would imply at a 30 the public comps of the Google trades at what? 25 or 30 times EBITDA?
1:30:02
So this would imply a billion dollars in EBITDA.
1:30:05
A billion dollars in EBITDA, 3 million dollars a day.
1:30:08
They're losing 3 million dollars a day on computer reportedly, 3 million dollars a day in profit on what product? I don't know.
1:30:14
They have a I think that's not the issue.
1:30:16
I mean look, I mean my point was if these guys open up a set of tools that support all these applications and services to emerge on top of what they've built and they're getting rev share, getting payments out of that, it's going to very quickly turn into a real Here's the problem for you, this is why that can't happen.
1:30:32
They don't have the rights to the data they built the training set on and the second they commercialize it, the second anybody pays them, whoever they based this on, they're going to get sued into oblivion.
1:30:42
I predict sued into oblivion.
1:30:46
Let's talk Let's Let's actually Let's talk about that in the next show cuz I think that's a like the the way that AI works and we should probably bring someone like Sam on to talk about it.
1:30:54
But the way that AI works on training data and now people are making claims that the training data is copyright, therefore the model output is protect protects that copyright is I think worthy of a good conversation.
1:31:06
interesting is you know, the early the early version of the of the internet was very simple.
1:31:10
It's like you had a this file called robots.
1:31:11
txt and you would basically be open to a crawl or not and that's what would allow Google to basically go and spider your pages. Right.
1:31:18
And so we have to replace this concept of that with this ai.
1:31:20
txt Well, you could make a claim that this is no different than you know, a spider crawling a webpage except that in the in the search case, it was much cleaner, which is we're just going to index your page and redirect people to you.
1:31:38
Uh here it's we're actually going to create a derivative work because of you in part.
1:31:43
And I do think that that's going to be a very interesting legal threshold that has to get figured out.
1:31:46
Well, here it is, Chamath.
1:31:47
You're you're you're nailing it exactly.
1:31:49
It's a derivative work and they did not have permission to use it and it impedes upon the original authors, whether it's a photo, it's a song, it's a piece of code, it impedes upon their ability to do commerce in the world.
1:32:02
You are interfering with their ability to monetize their content and the percentage you're using is 100%.
1:32:06
So when you get to fair use, non-commercial use is very protected.
1:32:10
Parody's protected, education's protected, but when you dip into using the entirety of the work, which they're doing and you impede upon the person's ability to do commerce and you confuse the public.
1:32:23
Well, this is why I think that most people don't understand what AI is.
1:32:27
They don't even understand the difference between training and inference.
1:32:29
So hopefully there is some more understanding of this, but if you use the same data set you will eventually converge to the same outputs absent of hand tuning weights which has its own issues and absent any asymmetrically different data that you have that nobody else has. Absolutely. Yes.
1:32:52
So if you are Apple and you have the watch data or you're Google and you have the search data or you're a weather company, you have the weather data and it's your proprietary, of course.
1:33:01
There's a very easy solution to this, Chamath. Number one, citations.
1:33:04
When the algorithm gives you an answer, it should say what were the top percentage sources of this information?
1:33:11
How did the AI Jason, look at the people's Look, if you look inside of a transformer, the problem is, okay, that you're going to have trillions of ranks, trillions of weights, trillions. Yes.
1:33:22
And so how are you going to decide how to basically draw a line under a threshold?
1:33:25
This was actually a useful input and this was not.
1:33:30
So again, I I just think that It's hard.
1:33:32
a very few small class of people actually understand this.
1:33:34
Like the great person to actually bring in to talk about this would be Andrej Karpathy, not and I think cuz Andrej was there Sure.
1:33:41
and at Tesla and he but he can say it in a very dispassionate way to explain this to people.
1:33:45
I think it would be useful. it.
1:33:47
We should We should ask him to come on. Yeah, for sure. I mean I can ask him. I can ask him.
1:33:50
I mean this is brand this this the law, Sachs, you're an attorney, you understand fair use, copyright, all this stuff.
1:33:57
The law, correct me if I'm wrong here, Sachs, does not anticipate this.
1:34:01
Look, this is a highly specialized area.
1:34:02
I don't want to pretend like I understand the law in this area.
1:34:03
You know, I'd want to talk to a specialist. Yeah, okay.
1:34:08
So anybody this conversation cuz I think yeah, this is a great I think there's more work for us to talk about because uh All right.
1:34:14
This is probably why, by the way, they started as open source cuz it was like a slam dunk thing to make this a nonprofit and open source everything maybe in part because of these issues, but if you just let the code run free you probably don't have to even deal with these issues, right?
1:34:32
Well, they they closed it.
1:34:34
Remember their claim, the claim was this is too dangerous.
1:34:38
Their original claim was it's too dangerous for people to not see the code.
1:34:41
Then Sam flipped on that and he said it's too dangerous for people to see the code and it started out as a nonprofit where the idea was the way to keep this safe is for everybody to see the code.
1:34:52
But they didn't make any money.
1:34:52
Then they went private and they flipped the decision.
1:34:55
So keep that in mind as well.
1:34:57
He's a He's a very very very clever business person. He's savvy.
1:35:02
And You know, Paul Graham, when Paul Graham picked Sam to run YC, Paul Graham said that this is the most impressive person I've met since Steve Jobs. Yeah. Remember that? the pod. I I do remember that.
1:35:12
And he said something similar about Garry Tan is now running YC starting this week.
1:35:18
Sam Altman, friend of the pod, come on All-In anytime.
1:35:19
And has played in our poker game several times. Many times. Yes. Yes.
1:35:22
We we we had a tough situation there where you interfered in a hand, if you remember. All right, listen. This has been What up?
1:35:30
There was a Sam and I were in a hand of poker. He raised.
1:35:34
I had two pair and I'm trying to figure out does he have a set or is he bluffing me?
1:35:38
I think he's got top pair and you were like, "Oh, look at this."
1:35:41
and you started commenting on the hand.
1:35:42
Oh my god, I remember this.
1:35:42
Yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah.
1:35:45
And I'm like And I'm like, "Chamath, for my little bush, let's let's stop talking here because I'm trying to I'm playing a hand.
1:35:51
I'm like, "Okay, Sam would get And I basically came to the conclusion Sam would get the light great delight bluffing me off a hand and he's a risk taker.
1:35:57
He knows I'm conservative.
1:35:59
He knows he's a risk taker.
1:35:59
I'm going to call here with my I had bottom two."
1:36:03
I'm like, "Does he have a set?"
1:36:03
And there was also a straight on the board. I'm like, "Fuck it.
1:36:06
I I I I at best I'm you know, even money here.
1:36:10
And there was a lot in the pot.
1:36:11
So I was just doing the pot odds.
1:36:12
While I'm doing the pot odds, you were like which is usually me.
1:36:17
I'm usually the one being reprimanded for talking for a hand. But it was notable. All right, listen. Love you, besties.
1:36:22
Why don't you tell people that there's no comments?
1:36:26
And just as a programming note, we turned off comments for a couple of weeks on the YouTube just to see how it psychologically affects me and for Chamath to just f with all you brigadooners. We love you, besties.
1:36:38
This has been a great episode.
1:36:41
Two great and his Twitter is @chamath and he does it with Just so everyone listening knows, Sachs Sachs and I voted against turning off comments. Just just as a heads-up.
1:36:50
in favor of whatever got Chamath's vote for the All-In Summit 2023. So That's how I vote.
1:36:54
This is horse trading now, but the podcast has never been better.
1:36:59
Besties spending time together on the slopes is the cure to all evils. We'll see you next time. Love you, besties. Bye-bye. Love you, guys. Bye-bye. Let your winners ride.
1:37:11
Rain Man David Sacks And I said, "We open sourced it to the fans and they've just gone crazy with it." Love you, besties. I'm queen of quinoa. Besties are back.
1:37:31
That is my dog taking a dump in your driveway, Sacks.
1:37:38
We should all just get a room and just have a one big huge orgy cuz they're all just useless.
1:37:41
It's like this like sexual tension that they just need to release somehow. Wet your feet. Wet your bare feet. Wet. We need to get merch. Besties are back. I'm going all in.