you want to run a marathon at 57 years old 52 50 1 2 52. I'll be honest I miss you can you come back to the United States please I miss you I will I miss you too I mean the poker game can't by definition be as much fun if I'm not there it plays at bigger States and it's more challenging but it's not as much fun there's not as much laughing what's on the menu tonight for austerity 2023 the amuse bush is a madeleine with like
a terrina foie gras fantastic an honor of Freeburg and then rutabaga rutabaga salad and then some duck thing duck breast you know I loved her and then and then butterscotch panna cotta wow that is great lineup and it you know what I
like the idea we're doing some poultry Chef Sean is firing on all cylinders these days if he feels very like uh engaged he was very engaged yeah he's kind of going for it he's been on yeah that was quite nice the other day Brad
because it's austerity measures we had this incredible dish and we're eating it and then he said yours on the bottom bottom and I was like oh so we just we don't put the caviar in time the Market's down let's check my style austerity I'm not lying oh my God no he did say guys the caviar is on the bottom not the top this week [Music] let your winner [Music] of Rain Man Davidson we open source it to the fans and they've just gone crazy with them
[Music] all right sax is here everybody so that means we have a quorum hopefully the Sultan of science who is on Wall Street today uh taking a company public so congrats to our bestie Friedberg he couldn't make it he's at a dinner so with us the fifth Beetle as it were Brad gerstner is here to talk all things macro welcome back to the Pod how's life been good to be back a little domar agato to you Jason as you eat your way
through Japan yes I am on my culinary tour I'll be back Sunday but I am having the time of my life here are you running AdWords on your food blog that's what it's come back to back to the weblogs Inc days I'm just trying to make twenty six hundred dollars a day I noticed your Tick Tock got 22 likes yeah you know I'm trying to figure out Tick Tock I'm gonna but you know but right as they shut it down that's when I'll
figure it out well that rev sure buy you another Japanese pancake or no those pancakes man our next level the fluffy pancakes here everything actually with the exchange rate coming to Japan is so affordable it's nuts and this is a crazy week because it's a Tokyo Marathon but everything is so affordable the people are amazing it's the best country to visit in the world I think for me it's Italy but I would say Japan is like it's
definitely top two or three what do you love about it best food you know I went there I took the I took because like five years ago uh the older three at the time but they were younger and you know there's there's a negative birth rate in Japan and so number one when you have any kid but frankly multiple kids the the Japanese embrace you with so much love because they love seeing these big families yeah they're unbelievably kind
we went to Kyoto did the professors walk saw the Cherry Blossom Festival basically ate our way through Japan that was my that was my only vacation trip I've done like 10 or 12 trips for work once we I went with Reed Hoffman and
Reid set up this thing where we went through all these different parts of Tokyo and ate at this incredible sushi place you have to go with somebody who can dial it in yes and have all the hookups Brad you spend much time in
Tokyo and Japan um I haven't I've uh been there only twice and that was when I was poor and I stayed in a really small room and ate really shitty food oh all right so uh you're saying in 20 in 2022 when you became Oregon all right and with us of course the next Department uh what what cabinet position you're going for sacks which should we start floating here oh my God here you are with the disinformation starting already it's a
compliment Secretary of sash is with us DeSantis had a pretty great article on the Wall Street Journal oh really I missed I wanted it uh when they revoked the special administrative status for Disney he wrote an article I think it
was Wednesday Tuesday or Wednesday in the in the Wall Street op-ed what was his uh premise that they was it corporate or is it culture that wokism is basically modern Marxism and we have to defeat it this is his language not
mine at every turn and Disney needs to just be business people and not feed the vocal minorities inside of their company like every other company should they should be subject to shareholder concerns that apply to the majority of shareholders well I think this is why I think DeSantis is doing well with the Republican base and you know if you see polling if the Republican primary is he understands that it's not good enough just to have
this sort of reagan-ass totally hands-off government approach because the radical left is advancing its agenda not just legislatively but through corporations through ESG really through taking over key private sector institutions and so he's willing to use government to push back on that agenda on behalf of parents or on behalf of you know what he sees as the majority of the country and so it's a very different
approach than you know the Republican Party would have been 30 or 40 years ago this is why you know in the parlance of the base he understands what time it is and what's required here is not again this totally laser Fair approach but rather a much more energetic aggressive approach towards checking these bad ideas wherever they come from yeah it's not the only one I don't know if you saw this week Bill Maher went on
a bit of a press tour and he was on with Jake Tapper and uh he made a very interesting I think point about liberalism versus wokism and it was quite articulate you know he's a pretty good Observer of culture he said they're kind of casting out the Liberals in the party for this wokism and the intolerant nature of the woke movement versus the liberal movement specifically under the lens of trans rights but let's put that aside for now we got
a full docket before we get into the culture wars and the presidential elections let's start with uh we'll go private markets to public markets because they obviously dovetail so nicely item one on the DACA today there is just a massive AI fomo frenzy going on economists publish a piece this week about the insane fundraising in the generative AI space this is stuff like Chachi BT stable diffusion you've heard
these names and there are now 500 generative AI startups according to this report that tracks with what I'm seeing in the early stage and not counting the open AI 10 Billy from Microsoft investment donation rev share round trip whatever that is they have so far collectively raised more than 11 billion dollars the article included this chart uh which you can see if you're on our YouTube channel and just tons of folks working in audio image and
text so we're basically looking at the multimedia basically revolution of PCS in the 90s occurring again and a complete platform platform shift Doug Leone from Sequoia one of the greatest investors in history of Silicon Valley had this to say and we will comment on the other side of this 50 second clip from Doug I actually think that AI is the next platform shift in the same way that mobile was the one before internet was the one before so I
think AI is real but I said earlier we're going to overestimate it in a short term we're going to invest in everything in the same way that in 1999 we invested in everything but then Google came out of that or Facebook came out of that so I think you have to have a good head on your shoulder where you don't practice fomo where you don't chase every company AI is real AI is the next platform but how do we not invest
in everything that walks how do we make certain Investments based on Market Maps based on thought processes that are more rational and not do every investment just because every other Venture firm is doing everything best all right shamath what do you think of this massive influx I think it's important to think about what the incentives are as Charlie Munger says show me the incentive and I'll show you the outcome I posted it into our
group chat Credit Suisse sent all their private banking customers an offer they are now offering 6.5 for a three-month t-bill 6.5 percent and if you go back to what we talked about before when the risk-free rate is somewhere
north of five or five and a half percent and banks are willing to give you six and a half percent in the short term you have to generate more than three times that to make an investment make sense when you're investing in the long
term so if three month money is going to pay you six and a half or seven if you're going to invest for 10 15 years which is what you need to do typically for a startup you need to get 20 to 25 percent so there's going to be a lot of pressure for Venture investors to put the money to work because otherwise they're LPS they're limited partners the people that give them the money will have this attitude that goes
somewhere along the following lines okay I've committed to you why aren't you investing because otherwise I can get paid six and a half percent on the front end and so this is becoming very problematic what am I paying you for what am I paying you two percent a year in management fee for so I think what happens unfortunately is the opposite of what Doug says I think good investors will try to follow Doug's feedback and advice
and the ones that have a track record of distributions of DPI can do more of it than not but I think most people will be under pressure to deploy the capital and so the 500 odd companies Jason you mentioned we'll get a lot of it and it'll get torched because most of them probably won't amount to much of anything in the short term you will create way too much correlation and you will have zero time diversity which as we've
learned is a recipe for terrible returns time diversity being hey you deployed all this web 2 Capital web 3 Capital sorry crypto whatever in this very short period of time you overpaid Brad uh when you hear chamoth talk about
the 6.5 and then you look at private markets you uh invest across the life cycle of companies obviously you're in some private companies we all know very well famously snowflake I think your biggest win ever correct me if I'm wrong
uh in terms of a private how do you look at this when you're a steward of capital public markets private markets and then just YOLO just put it into you know some T bells or yeah bonds or whatever I mean first let's just frame right the chart that you showed I think you should it said you know X open AI I don't know something like 10 or 11 billion dollars have has been invested into some 500 AI companies I mean I happen to agree with
Doug that this is a platform shift on the same magnitude as the internet or mobile itself in fact it may be bigger than both of those but you know when I look at 10 or 11 billion dollars you know let's put it in context meta is going to spend 20 billion in one year alone on AR VR and this is on an entire platform so I I don't know I I I I think whenever you have something as tectonic as mobile or Internet it deserves a lot of
investment and yes it's going to be messy and yes chamat's right the cost of capital frankly is limiting the amount of money going into these businesses already so we see a lot of dry powder sitting on the sideline that's chasing new ideas I think one way one way to frame it as well is to think about in 2000 we all knew that the internet was going to be big we may have been lucky enough to conclude that search was going to be big
but if you invest in in Yahoo or info seat or AOL or excitement you tore all that money went to zero right so now think about just these large language models right the foundation models which are driving and enabling all of it open AI you've got
open AI you gotta drop it you got cohere you've got character you got stability you've got Lambda it is almost impossible to know within the certainty much like it was with the search engines in 99 2000 who's going to
emerge where the value capture is going to be it may all end up with Microsoft and Google I mean this may end up looking like IOS and Android at the foundation model level and so you know I think as investors for example on the
foundation model side I think it's very difficult to choose just one particularly with the largest one is frankly captive and a proxy to Microsoft and they're capping your upside return so like those are difficult investment
decisions that doesn't detract from the fact that I think it is as big as Doug suggests and I do think they're going to be applications and tooling layer to come out of this that's going to produce really big Winners I would say that we are spending an extraordinary amount of time in the space we haven't made a lot of Investments I think you have to study you have to get deep I mean certainly and I have been investing in
this space for at least a decade maybe 15 years but don't underestimate that the Transformer model really did change the game here and we're now producing impacts much larger sax uh last week you said we'll have three and crypto didn't kind of stick with you you didn't see the use cases and you in the first inning here or first at bat you rattled off three or four really compelling use cases from summaries to you know the the assistant
uh guide on your side concept is this Akin in your mind because Brad just said it could be bigger than mobile internet mobile AI Revolution if you were to look at those three do you think it's bigger than actually mobile and then we'll get into return profiles of 6.5 on cash versus whatever VC is going to be able to do in this kind of Market yeah I mean so I agree with Brad and and Doug that this is the next big platform shift
whether it's as big as mobile or it's more like social or Cloud I mean those have been the big platform shifts over the last decade or two and I think this is definitely on par with those I think Brad's right we don't know where the value capture is going to be maybe it just all ends up accreting to the big companies who can make massive investments in this space you know one difference between the internet ecosystem today and 20 years ago is you
do have these giant companies who are not totally incompetent right I mean they are they do have lots of talents and engineers and you know like 20 years ago you'd have company you know the big companies would just sit on their hands in the face of a platform shift and then just be seeing Ducks who get disrupted that's not going to happen today that being said I do think that any new platform shifts creates opportunities
for startups and it may not be efficient the way that these opportunities get pursued in the sense that yeah Doug's right that this will be a lot of spray and pray but I think that it is kind of efficient for the ecosystem as a whole right because like any smart engineer with a half decent idea ends up getting funded and out of all of that you get kind of a pre-cambrian explosion where you know the ecosystem evolves a lot of different
types of businesses most of them don't work they get wiped out they go extinct but there'll be some good things that get funded so we're more like I think Doug and how we see it we don't want to spray and pray one be very selective we
want to put more money behind fewer opportunities that we think are are better and Doug Leone you know I think he generally gives good advice of the tough love variety and this is of a piece with that and so I I agree with
him that being said there is a certain value to the ecosystem and having all these seed funds to spray and pray right because this gets a lot it plants a lot of flowers and then you see what blooms I would say yeah to build on that sax this is a perfect inefficiency you know when you see it from the outside you're like well this is super inefficient why so many companies if you free your mind and just say their experiments two or three person
experiments 500k to a million and a half in that first stage when I invest right before you do when you do your series a is at five or ten million Milestone based funding is back in the tech industry and that was something chemath that we lost for a little while there people would just come out and they would raise a series B out of the gate no product Market fit et cetera now what we're seeing is people are raising
that 12 to 18 months they got their backs up against the wall speaking of tough love which you reference acts that tough love of hey you have to hit the next Milestone what did you accomplish with the 1.5 million in order to get the 10 million in order to get the 30 million that 500 is going to go 10x they'll be 5 000 of these startups but it'll quickly Whittle down winner chamata's people go through this Milestone based funding system in
Silicon Valley we haven't given enough time for a logical framework of investing to develop which also is tied to a logical framework for entrepreneurship to emerge we're just way way way too early so the thing with all of these language models is that they are Grist for the mill and we talked about this before if it was a highly proprietary asset you would have never sold 49 of it to Microsoft for 10 billion dollars because
you would assume that it was worth a trillion dollars so it's a huge tell on the part of open AI their deep understanding and they understand it better than anybody else that it's a bit of a capped upside so what is uncapped I guess is maybe the better question well if you look at the 1849 Gold Rush as an example the people panning for gold in my opinion are the people building language models today they're going to come and they're going
to go but who's going to win well the pick and shovel providers won Levi Strauss one so what is the equivalent of that today I think it's at the Silicon layer because you need to really re-architect how compute will actually work in a world of all of these models those folks will get paid if you look at AMD and Nvidia they've been getting paid for years they continue to get paid they probably will continue to get paid even more and
so folks that actually take a step into doing something hard and difficult in AI like custom silicon could get rewarded and then there's what I call the white truffles what are these unique Alba white truffles these singular sources of data that when used in reinforcement learning make your output just zing and that's where I think Facebook is an obvious white truffle Cora is a white truffle but there are a
lot of startups that could become white truffles if they gather enough data and that's like a pretty reasonable framework and so in that framework if you apply to today there's way few silicon startups and there's way few white truffles instead it's everything is the bologna in the middle which is random people talking about some random model that's just gonna again become highly commoditized you have to remember all these models are
open source and none of them mean anything in the absence of the data you give it to train on 100 Brad hey okay well I want to add one other piece of news that we saw this week which is open AI announced that it's developer AI they were cutting the tax on that or basically the metered rate they charge to use it by 90 percent so I think this is going to be a game changer I think this is based on the chat GPT 3.5 API and of course they're
coming out with 4.0 later this year I've already had explained to the audience what an API is and why this is important for those people who don't know just application programming interface it allows a developer of some other application to build on top of you so in other words like a developer wouldn't have to use this chat interface to get access to the large language model you could just submit your request through
the API and so give an example of what of like a popular app and how they might use it yeah API so I think like notion actually had a demo that they published where incredible it was a pretty incredible demo maybe we can find
it and it would do things they added actions in the demo like generate a task list so you could take like a document or a meeting summary and would spit out recommendations for next steps or tasks it could you know spit out a table
basically it's the autocomplete for everything that we talked about right so now notion doesn't need to build their own llm expertise they just don't use the API and then the notion app you say hey I'm building a marketing plan and you say well okay give me a list of things that should be on my marketing plan for my new app it sends a signal to the chat GPT API which will be on Azure Microsoft's platform and then it gives
you the data back you don't have to build the language model yeah incredibly powerful notion has all the content that they need but they don't have the AI expertise so now they don't have to generate your or create AI expertise in-house they just use the API it's really powerful and but just to finish the thought here I think that one of the things that's probably misleading about these stats around funding and the
there's like almost 600 startups already there are AI startups is that you know what happens when there's a new wave is that Founders are smart right and they know how to Market themselves in the way that is most compelling to VCS and they know that like VCS frankly are a little bit limiting in terms of their migration to the next wave and wanting to glom on to the next big wave so VCS are now looking for AI if you're a founder and
you're you build one feature on top of the you know open AI API now all of a sudden you're going to Market yourself as a AI company you're not going to Market yourself as just a SAS company and so that's valid yeah I mean it could
be named or it could be like a great pivot you know yeah and it's not it's not totally one or the other I mean it's just that if you have a plausible connection to AI as a Founder you're going to start marketing yourself as an
AI company and so that's how all of a sudden you can have 600 of these companies you know that are all of a sudden out there in the wake of of this sort of uh chat GPT is I think a lot of companies are recategorizing themselves I literally had this experience not three weeks ago right before I went to Japan serial founder and team that we've backed for that had an exit said can I show you something I said yep got on the
zoom showed me a little proof of concept using chat apt and he said this is my idea this is the vertical and I just said okay what do you want he said 500k for 10 I said okay done great let's learn and it's easy bet for us to make because we know it's a Serial team for open AI the way that it could become a trillion dollar company is actually by cutting the cost to such a low degree that nobody else can effectively compete with it and then
at that point they can become a small small tax you'd rather just pay it than try to compete with it and I think for open AI that's actually a very brilliant strategy so that's how they they could get to become very very large in valuation would be to become so pervasively relied upon and where they take such a minuscule take rate of their participation in you building a company that could be really effective for them
like cloud computing right like we're going to just take such a small tax yeah well that's not a small tax that's a large tax that's the picks and shovels play in a way to create the developer ecosystem for AI and it's about to your
point I mean I think you raise a good point that you know what was their motivation to take such a dilutive round you know the 10 billion that was evaluation at 30 30. yeah and does that imply that they're not confident I mean
the flip side of it could be maybe they know they want to compete on the basis of rapidly you know becoming the developer platform and so they're going to subsidize that developer platform you know with negative gross margins for some period of time and maybe that's why they need a lot of capital and they were in kind of a reflexive Loop of just cost of getting better versus the amount of money they had to get better and so
maybe they were forced to do it and then in that point how would you justify you would say well the other 50 is still hugely valuable so that's enough for us and I think that that's that's very logical as well Brad you have your finger on the pulse of LPS uh limited partners who back funds like Jamal's sax is mine and yours we heard 6.5 on your money for no risk well you in tremont's position is hey you have to Triple that if you want to
be a private Market investor that's about 20 20 Rule of 72 that means every three and a half years you got to double if you're doing that for a 10-year fund you're looking at a 5x fund because kind of table Stakes then I think just back in the envelope math what are LPS thinking right now are they looking at this world and saying I should just be all in cash or are they saying yeah everybody thinks we should
be all being cash therefore there's not going to be enough money in private therefore there's an opportunity there we know the 6.5 rate you know that's not going to be here forever it may be here for a little while but we need to we need to keep
investing in Venture uh or are they just Cutthroat about it like let's pause Venture investing private Market investing uh it's a it's a great question first when I look at the three-year treasury bill it's like 4.7
not to quibble here so I think Chamas getting a little goozy Goosey on the 6.5 but the the fact of the matter is what does that means you're super special your VIP maybe there's like some sort of like uh bond rate that included corporates or something maybe it was I'm getting my 5.2 from Robin Hood on my Robinhood account for Jay training so it's right what is in that what is in that Jason they probably got some junk bonds and
they're ripping you off whatever whatever it is I'm getting Five Points until you're not you are until you're not it's a 100 t-built parentheses and junk bond funds look at the fine print Jacob uh LPS have a 10-year View they understand like most people I mean listen if you look out at the tenure the reason the tenure is you know that we have real interest rates at about one and a half percent so that's the 10-year
less expected inflation when you look out is because it people expect inflation to come down and they expect rates to come down so if you were an LP and you said I'm not going to invest in Venture and the next two vintages which may be the best two vintages we've seen in a long time because prices are adjusting Etc and I'm going to move it all into some rate bet first it's just very difficult to do they don't move their allocations around
that quickly now a wealthy family as an LP could move their allocations around really quickly but if you're Texas or you're Ohio or you're a sovereign wealth fund you're betting on the Arc of value creation I would say this the consequence is they're narrowing their aperture as to the Venture funds they want to allocate capital okay explain that unpack who they are narrowing the aperture term two we've talked a lot on
this pod about uh the power law and the truth of the matter is whether we're talking about AI or software or anything else that you know people are are going to be funding it's 10 of the Investments that are going to yield 90 percent of the returns and so they're looking at that and saying who are the top 10 firms in Silicon Valley I either want to get allocation to those firms who are seeing the best deals converting the best deals and are
selective like Saks talked about or we just don't want to allocate and so I think you know what we saw over the last two years Jason was an explosion of new funds an explosion of new uh you know first time second time funds I think subscale small funds with no DPI uh they're going to find a really really tough time to Chamas point about DPI raising capital and you're going to see the scale player scale so part of that uh is
clearing out the inventory from the last cycle two new stories this week about companies you know maybe struggling Sequoia got off the board of Citizen if you don't know citizen that's that app that tells you where crimes are happening in your city very popular in San Francisco uh it's literally goes off every 90 seconds it's pretty dystopian that company citizen which is a pretty cool app uh has raised 130 million today Sequoia led
the series a in 2017. uh they did a pay to play around if you don't know what that is um basically if you don't invest you get crammed down how does the cram down work well your shares in the company went down ten to one
and you probably got moved to uh common shares as opposed to as opposed to Preferred which has a series of protections they get their money out first yada yada but Sequoia refused to participate according to this ft story again Sequoia
did not comment on this it's it's kind of something you don't do as a VEC when something goes bad at a company and you leave the board you generally don't want to say uh bad things or taint the company uh any more than leaving the board does so a bunch of cram Downs happening and then dovetailing with that instacart according to the Wall Street Journal had a big Q4 As It prepares to go public instacart if you remember we talked
about it on the show cut its internal evaluation 75 percent last year from 39 billion to 10 billion according to sources instacart's Q4 results uh according to the Wall Street Journal up more than 50 even though order volume grew only 16 percent why they turned advertising on the app just like uber and Amazon a lot of these Commerce folks folks are building add business inside of theirs so what do you think about what's happening as we
clear out this private anybody have thoughts on instacart or the cram down rounds go either way with this and then we'll go to I wouldn't Focus too much on those two companies I think we're going to see in the second half of 23 and all of 24 is a lot of medicine being taken a lot of down rounds a lot of structure is going to be A Tale of Two Cities the hot area you know AI is going to continue to receive new investment and all these
companies that you know that receive peak valuations in 2021 are gonna have a Day of Reckoning either you know if they're lucky maybe they have a flat round or modestly up round but a lot of them are going to have down rounds or restructurings and this is going to be going on for the next year and a half what's your philosophy Saxon leaving a board this is a really dicey issue when you give up on a company what's the best
practice there how do you do it without damaging the company obviously the founder relationship is going to be hard what have you learned about this as a private Market investor well I think I think that sometimes we like flip uh board members internally at craft just because people have different amounts of capacity that's not a statement at all about the way craft feels about the company it's just a reflection of our
individual bandwidth or whose expertise are needed at that time but when the firm itself quits a board I think there's no way to read that of and you know a statement of protest and I don't know what happened with that company but it seems to me that you know again it could be a sign that the Venture firm isn't happy with the way that they're being treated the cram down uh Chama that's that's a bitter pill to swallow why would
Founders do this cram down instead of just adding a little more to the top and is there a way to do this without you know going scorched Earth or poisoning the well as it were we I mean again putting this app and Sequoia aside this is happening all over the ecosystem so is there a way to do this gracefully or is it just going to be messy I think it's going to be really messy I mean to State the obvious no no Venture Capital investor ever quits
the board voluntarily of a great company that's doing well that would be dumb so as David said sort of like the proof is in the pudding there and at the same time there are a lot of in companies who don't want to see the writing on the wall and we'll do all kinds of gymnastics to try to stick a landing on a contorted financing and sometimes those things have real consequences to other investors who just don't think it's the right thing to
do I wouldn't read too much into this except that good Founders have a responsibility to do what's right for themselves and their employees nobody else and the thing to keep in mind not the investors really no and I think you I think you absolutely have to prioritize the people doing the actual work and if and if you actually did prioritize them what you would probably say to yourself is oh my gosh there are
people who I work with who I look in the eye every day because investors you'll see once a quarter but I have my fellow employees as a Founder that I look in the eyes every day who've been toiling with me for umpteen hours a day every day for years and they are now totally underwater what is the right thing to do for them and I think if you just answer that question you wouldn't do all these contorted things you would just reset the
valuation you would refresh the equity pool you would issue options back out to those employees and you would move on it's all these other things that get in the way of answering that simple simple question where people it up I've and I've done that before you sex if you don't have a team and you don't have a motivated team you have nothing I've done that before I don't want to rehash one of my more miserable experiences but
I was dealing with a company that had a grossly inflated evaluation it was a total problem case we voluntarily slashed the valuation in half and reissued options to the employees to keep him motivated no big deal yeah yeah exactly and it's not that it's no big deal but it requires some amount of fortitude and like you know understanding your priorities I guess what do you think you know like first I think it's revealing that we
think what happened here is so out of the ordinary I mean you flash back to 2001 to 2004. Sequoia I don't think funded a single loser in their portfolio right like that's a time where you walked away from the ones that weren't
winning and you fed the ones that were because you have limited capital and you don't know when you're going to raise your next Capital this idea that you have unlimited Capital you can give money to anybody no matter what they're
doing with respect to their plan I think is a function of the last 10 years but to jamas points the idea of tough talk you know either out of CEOs or out of board members has been in short supply in Silicon Valley this idea that saying the truth just speaking the words about needing to get fit or needing to lower the valuation that somehow that is found or unfriendly is nonsensical the truth is founder friendly by definition and I think to Chamas
point the less complicated you make this right you reset the valuation you re-up the option pool and then everybody has a choice to make and if the people who are on the board and backing the company choose not to re-up for whatever reason they no longer believe in the path forward for the company that's incumbent upon the founder to go find people who will that's not abandonment as it's Being Framed in this story it is a trade
and I think maybe if you look at Public Market investors Brad nobody gets upset by a trade trades a trade but in the private markets there's a lot more emotion involved a lot more relationship material and this founder friendly concept of like you're abandoning me it's like no the the trade here it makes no sense for this firm and for this fund and for these LPS right well sometimes sometimes the founder needs to have the
courage to look in the mirror and say what I'm doing is not working I had a plan I missed the plan by 70 I'm lighting capital on fire this is a charity not a business it's best to say it didn't work shut it down and move on
and do something else okay so of course you're referencing Salesforce so we'll pivot to that I'm joking uh it's not that bad uh but I think this is a good time to maybe talk about the public markets and inflation and what we're
seeing in macro so can I set up a question for Brad actually sure go ahead yes yes so so on a previous podcast I laid out my theory of how you could just use the two-year bond rate relative to the FED funds rate to understand where the bond markets sort of prediction Market about inflation is going and a month ago the the two-year bond rate was at 4.1 percent relative to 4.5 percent fed funds rates in other words the bond market was betting that
interest rates would go down between now and two years from now relative to where the FED had it so therefore it believed that inflation had been conquered now fast forward just one month later and the two-year bond rate said about 4.9 percent you know the FED funds rates about four and a half percent that is a massive swing basically 80 basis points swing in the I guess the tier bond rate and so the market seemed to be saying
all of a sudden not just that they expect rates to be higher longer but also that the FED needs to keep raising and that is a big change so Brad what is the basis for that and what do we now believe about inflation I think just a few weeks ago we were thinking that this problem was licked and the market took off like a rocket it ripped now all of a sudden it seems like investors are really worried that inflation is not over so where does
this stand right now well I think when we started the year you know the the tenure was close to 3-2 we're now we're closer to four percent the 10 minus 2 is is negative as it's been in the last uh probably 10 years so the market is clearly saying you know we saw some inflation prints that came in hotter I think it's now consensus which you guys have been saying on the Pod that you know although the second
derivative is slowing that we're it's sticky right we're going to get stock at this four or four and a half three and a half and it's the slope of the curve down where it is going to be slower um we've gone from thinking we're going to have 225s to now thinking we'll have three or four you know and so I think everybody is now bracing for more inflation but remember when we started here on January 1st the consensus wisdom was we were going to
retest the s p at 3200 we're going to have an earnings recession and that inflation was going to continue to run hotter the only surprise in my mind so far this year is how well the equity markets have held up in the face of a tenure that's gone parabolic right and a natural earnings recession right and you you know you you posted you know in our Thread shamath about just quality of earnings you know even the earning
speeds are pretty low quality and so I think you know we now are going to have a couple inflation prints coming up over the course of the next couple weeks that are going to be important my hunch is you know everybody has
tilted again on you know what we saw in the last couple prints my suspicion if you look at Morgan Stanley and Goldman Sachs the consensus view is that we're still heading in the direction of four percent faster than I think people
emotionally think so I would say there's maximum uncertainty in the world the fear that inflation is uncapped the way Larry Summers was articulate in November and December is less today than it was but what's emerged is this idea that we're going to have higher rates for longer and we're going to have higher inflation for longer now the the question I'd throw back at you is the market abhors uncertainty the Market's done totally fine during
periods where we had three percent inflation and five and a half percent rates right when when the internet boom that was you know 2000 to 2005 rates were a hell of a lot higher than the rates are today so I don't think that higher rates and higher inflation means that we can't you know invest in venture-backed companies that have huge secular growth the world doesn't end but what I do think it means is like if
there's massive uncertainty in the world if allocators of capital don't know whether rates are going to double again whether inflation is going to double again then everything just shuts down and that's really bad for the economy I don't see that happening right now but I do think that the prince over the course of the next eight weeks are going to be important Tremonti have any macro that's here at the same time this is happening we saw
rents broke in the last month so rents got cheaper yeah a governing principle I think I probably said it too many times but I'll say it again rates are going to be higher than we like and they'll stay here longer than we want so if you use that as a principal whenever the consensus thinks we're done it's been pretty profitable to be on the other side of consensus and so I still kind of maintain that we're probably going to have a five and
a half percent fed funds rate which means that I don't know maybe Credit Suisse will offer me seven and a half percent soon on three month T bills but we're going to have higher rates and I do think Brad's right though in the sense that as long as we know that then that's it and we can forecast it into the future without it changing too much it'll be okay but right now what you're seeing is a lot of Make-Believe going on in in the
stock market so Nick if you want to just throw up that image so this is a really this is the chart of uh Cash Flow versus earnings yeah so this is something that I saw in Bloomberg which I thought was really interesting and if you focus on the period of 2020 to 2024 what you see is the white line which is net income adjusted for depreciation and amortization and the blue line is cash flows from operation so what does that mean
and this is for uh S P 500 firms this is the best 500 companies in the world yeah and the white line is what you tell Wall Street in terms of what you make on paper the blue line is what actually appears in the bank account so why could there be a gap between what you tell somebody you made I made a dollar versus what's in the bank 50 cents well the reason is that there's all kinds of accounting tricks that you can use accruals inventories
and all of these things allow you to present a healthier earnings report than is actually true and so right now we have the worst earning situation so the worst Gap between what we are telling people versus what is actually in the bank account that we've had for 30 years since 1990. and so it just brings into Focus the fact that we may be in the last few innings of trying to make sure this all looks okay in which case one faction of the
investing world who thinks that this earnings recession is actually at hand would be kind of right and then what they would say is that once we all realize that these earnings are fake and you reset down 15 that's where you get to the mid 3000 in in the S P 500 right now it's around four thousand I don't know if that's true or not but there's more and more evidence that would support that the way that they see the world
could be credible the other side says Hey listen this is a bump in the road we're getting a handle on things and it's stabilizing so even though it's higher than we'd like it's not going to change that much so now just think about 10 15 years from now and let's go and those are the folks that want to rip the money into growth stocks and tech stocks again how does the consumer play into all this record low unemployment like it's one percent
in Utah three and a half percent for the country two and a half jobs for every American who's unemployed and then these rents coming down but consumers have seemed to have burned off all that extra money they had so Brad when you look at the consumer-driven economy that the world lives in that's not true because you have to understand stimulus is still entering the economy it's just harder to measure so for example take Social
Security you have cost of living adjustments in Social Security that's lifting payments by 10 and 15 percent because it's backdated for what was going on last year and remember last year we had two three four five percent inflation rates so there is more and more money coming into people's pockets that we don't realize and we're all on the hook for that as U.S taxpayers so I think it's very dangerous to kind of look at
one data point and try to pick off what's happening in consumer land because there's all kinds of hidden ways in which money gets back to people Brad you have thoughts on the consumer because you know I test it does seem like consumers are still spending money but the cost of goods in some cases is coming down I mean how do you look at the consumer and try to make sense of what's going on here because it does seem the United States is in its own
little bubble here world of just over employment still even though we're seeing these layoffs in town well I would say number one uh that the pop we've seen in rates which impacts consumers by way of higher mortgages higher variable expenses on their credit cards was offset over the last few months by lower energy costs so their cost of gasoline went down add in the things that chamat's talking about and I'm not sure you took a lot of money
out of people's pockets I would say this that again what we're talking about here retail sales have continued to do really well e-commerce sales in January were quite strong that would all be consistent with this off Landing but here we are you know again talking about macro I think when you spend this much time talking about macro doing what we do you know like last year I'll be the first to raise my hand and say you know like our friend
Bill Gurley would say it leads you in the wrong direction the fact that the matter is it's totally unknown and unknowable where we're going to go over the course of the next three or four months I think there's a better ability to predict maybe over the course of the next couple years um but the fact is if you would have told any I was just with a bunch of uh investors you probably represent a trillion dollars of public market demand
10 uh or so long only investors if you would have told any of them that the tenure was going to be at 396 they would have told you that the NASDAQ would be down 10 to start the year and it did just the opposite so I think you got it you know you're you have a much better chance particularly if you're playing at home right than trying to to guess the direction of that find five companies that you think are going to grow uh and
earn more money irrespective of the direction of rates and inflation own those and enjoy your life I'm looking at the world and going sax my Lord I'm seeing great Founders great companies and five to ten million dollar valuations and I can buy five ten fifteen percent of these companies uh this feels like the best uh it's been for me as an angel investor seed investor or seed fund for a long time this is fantastic uh great deal flow the
deals are taking six weeks to close we're having very thoughtful discussions people are taking a real focused approach to how they deploy the capital it is not YOLO people are building models again people are showing their CAC they're being thoughtful about how they spend the money they're being thoughtful about salaries and hiring so what what's your you seem to think that you know what we're seeing here is challenging or a problem
what are your thoughts on how it's affecting your day-to-day business as somebody who's a company Builder well let's separate two things so there's the tech ecosystem and then there's the economy as a whole the fact of the matter is that Tech already had its bubble in 2021 it had its crash in 2022 and now we're largely on the other side of that there's still a lot of companies like we talked about that are going to
need to restructure who raised during the bubble and may not have come to grips with that but if you're talking about new investment new rounds new companies are starting with a clean sheet of paper and a blank slate you're right things seem good and normal right people are making intelligent Investments and obviously the Innovation cycle doesn't have anything to do with the macro picture I mean technology wants to evolve and it's great engineers
and product people who drive those ideas forward and they're not thinking about interest rates I never thought about the FED funds rate at all when I was a Founder Running Company so let's just put that aside and acknowledge that great Innovation is going to keep happening no matter what the macroeconomic picture looks like that being said I mean just for the you know listeners of the show who aren't startup Founders I tend to be a little bit
gloomy about the macro picture right now because yeah it's true that what Brad said that we've had good economies with five percent rates before but I think you also have to look at the pace of change or the rate at which the the FED funds rate has been going up and if you look at the chart of rate increases it is a very steep chart of rate increases and I just think that for the last decade or so we've been operating
in this like zero interest rate or Reserve environment with loss of monetary stimulus and I think a lot of companies a lot of parts of the economy got addicted to that stimulus they got hooked on drugs now all of a sudden you're putting them through withdrawal very very quickly and obviously the withdrawal pangs are going to be worse if you can't taper off slowly so it looked like just a few weeks ago that the Fed was done raising rates now we
know that they're not we don't really know when they're going to stop so I tend to be a little bit gloomy with respect to the the big macro picture because I just don't see how you can change rates this fast and I mean you look at like real estate for example we just saw the first year over year decrease in the housing market in a while and again that's all driven by rates the cost of mortgages going up and two big defaults in the first two big
defaults yeah so I I think that there's going to be some pain ahead now you know ironically from the standpoint of the tech ecosystem we may have already taken our medicine and we may already be on the other side actually that is a good way to to look at as we took the medicine it's painful and here Jason maybe maybe that's the segue to uh talking about benioff I would say we haven't took it we're taking it we're
starting to take our medicine well that makes sense that Benny off with his you know very loving family kind of approach to running the company might actually it might take them a little while to become a bit Cutthroat so
as everybody knows Benny off and Salesforce have had a lot of turnover a lot of senior Executives have left voluntary or involuntary but shares were up 11 on Thursday after reporting their Q4 earnings they're up 14 year over year
small net loss but the company bought back 2.3 billion dollars worth of its stock we're going to see more of that for sure and they're going to be increasing its share buyback program to 20 billion dollars going forward and like meta which suddenly got fit and got religion benioff is now basically with all these activists I guess on on his ass he says uh and this is the quote from the earnings call we're more closely scrutinizing every dollar of
investment in resource and very focused on driving operational excellence and automation across our business focusing on 4K eras stronger moves expense for structuring employee productivity uh there it is product Innovation and building relationships with shareholders profitability is are truly our number one strategy and that's my number one strategy that's the number one thing we talked about at the start of every
meeting we have in this company quite a turnaround your thoughts Brad I don't think the story is that you know that benioff you know made these cuts and that activists are around the rim what was significant was his comments uh that he made and I tweeted about it today you know he said every CEO in Silicon Valley has looked at what Elon Musk has done and asked themselves do they need to unleash their own Elon within them and you know
listen we've been talking about this for nine months the reality is if you look at the employee count at Salesforce in 2015 they had 19 000 employees as of last year they had 80 000. in seven years they 4X the number of employees they were a mature Company by 2015 their employees catered at 23 percent you know we don't talk about it in this way but these large companies these employee bases they're not unions but they may as well be
there is during this Age of Excess where it was just easy for people to hire more people and build more things not to make tough choices Etc right we just had an explosion like we've never seen in Silicon Valley in the number of employees in these businesses Meadow went from 10 000 to 80 85 000 Google went to 185 000 and at those levels it's very difficult to govern them and when the CEOs went to make decisions into
businesses there would be protests revolts within the business 30 or 40 000 people with scientific back to the office no we're not going to work three days a week no you can't name our AI bot uh what you want to name it because it offends us and so to me what's more significant is over the last six months we've seen courage gain momentum in Silicon Valley right what's deeply under-appreciated about meta and the changes they made it
would be one thing if it was just window dressing we cut 10 percent of the workforce kind of tighten our belt a little bit but Zuckerberg got on his call and he said we only have two priorities in 2023. one is efficiency
and he went into depth about once they started cutting people how the company got faster the product release cycle sped up the employees got happier and now it's an end in itself to delayer the business that's what we're hearing out
of benioff as well and I think it's you know people can quibble with how Elon went about the change which you and you and uh David are very familiar with at Twitter but the reality is he lit a fuse in Silicon Valley that is giving courage whether it's private companies series B companies pre-ipo companies public companies I've had that conversation more times uh than you can imagine over the course of the last six
months and I think it's a really important change because I think it breathes new productivity into all these businesses and importantly it unleashes these Engineers back into the ecosystem to start the next wave of companies yeah so Jason I mean you and I got to tag along with Elon during that transition phase at Twitter and the thing that I took away from it was just how much agency you know CEOs have that they're not using I mean Elon went
in there and he basically changed whatever he saw that he didn't like I mean unsentimentally and quickly and you know and so you look at all these other companies you talk to CEOs sometimes and they act like they're prisoners of their companies like I can't change this I can't change Stockholm syndrome yeah yeah it's like you know I've got all these employees and all these layers and but I can't you know there's always some
reason I'm afraid of the bad PR or you know whatever it is and I you know the thing I came away realizing is just how much agency particularly founder CEOs have that they just don't use you know they're always like hemming and hawing and ringing their hands and acting like they're tied down by this or that and the reality is they can do whatever they want just about um you know within the bounds of what's what's legal and
and I think they're starting to realize oh wait a second like I actually can do that you know I can walk into my company one day and if there's a team that's not performing that's giving me answers that don't make any sense I could start over wait I'm just going to start over yeah I mean if you can't get it done then we need to have somebody who can do it and it's it's incredible like we were doing an analysis on this week in startups of
the you know employees per company and the revenue per employee per head count and I got roasted for having this com even having this conversation and now here we are chamoth people are looking at efficiency we're looking at you know really uh how efficient can these companies uh be run is there a limit to where this is going and and if we were to look at this as a process where are the Fangs the Amazons the Googles
Facebooks where are they at in terms of percentage to being at Elon if you if you were to put Twitter and Elon as the the goal where are these companies and I don't know that that is the goal maybe maybe he's cut too much who knows we'll find out I think it's a it's a it's a pretty radical experiment he's doing there yeah yeah I don't think that's a reasonable or an achievable goal for a public company okay I mean I think the
thing we have to keep in mind is elon's also capable of doing that because he paid 44 billion dollars of his own money to buy something that he owns alt right that no longer has Revenue pressure to outside stakeholders different circumstance Revenue went down 70 at Twitter well that only affects him and and his ability to pay whatever he borrowed in order to buy that company and as long as he's willing to fund that somehow he's literally
allowed to do whatever he wants that's no longer the case when you're borrowing money from other people to build your business which is what every other Capital Market participant does public market participant does and private Market participants so I think that that distinction is just a little bit important because it probably means that there is a shadow of what Elon is doing that's probably the threshold of what's possible
and it's probably you know sort of 50 percent head count reduction that's probably the the Bound in which things break because I think the thing to keep in mind is that over time this stuff is like collagen in
the body it's just like it creates these interconnected webs of just very difficult stuff that you send you that you cannot tease apart so even if you try to go in and cut 50 of a company like Facebook or Google or Microsoft or apple or Amazon
it would be so difficult because all of a sudden the coordination that happens at that scale I think would get lost so I'm not sure if it's possible you kind of have to do what they're doing which is cut five percent then cut ten percent then cut five percent then cut five percent and I know it frustrates people on the outside looking in but I think it's the it's probably the only way it can be done without torpedoing
the company what does that do on a culture basis then because that is the big critique hey you're creating now this culture of fear I guess the opposite of that is your grand and culture of performance and expectation so how do you think about it on a culture basis because that keeps coming up from Founders to David's point it depends because I think companies when they're smaller I mean I can tell you when I was a part of the Facebook senior
management team we would rank all the employees so we had a very good sense of who was the best and the most performant all the way down to who was not and we were able to do that probably up to two or three thousand employees that's not possible at fifty thousand and nor is it fair so because you don't know who these folks are the real contributors are you have to do what Elon did which is literally go person to person and say
who is unbelievably performant or critical yeah in the absence of doing that you just don't know who to let go and so you have no choice except to bleed down the question that I have and Brad maybe there's a smart analyst on your team that can do it is right and it's more of a statement as well can you imagine the totality of stock based comp that's been given out by all these companies since 2015 when they were catering their
employee bases by 25 a year I bet you it's a trillion and a half dollars at least you think it's that you think it's in that order magnitude 100 this has been the greatest grift in the history of Silicon Valley for sure let's pause for a second can you explain what we're talking about here stock based compensation obviously is the stock given to employees it's generally not counted well let's do it right let's do it this way
let's just say that you believe in capitalism okay yep so if you if you believe in capitalism let's say the the four of us start a company and there's a dollar of profit and we each own 25 of the company got it normally what you would say is each of us get 25 cents right reasonable we own 25 each there's a dollar profit we each have 20. so that means that in four years right we each will have made a dollar because so let's
just say it cost a dollar to get off the ground or four dollars to get off the ground all in Summit budget We believe We all would have been made whole we all would feel great and then now every year afterwards that 25 cents we get is
profit now let's say that Jason you add a fifth person and Brad and David and I can't say anything about it okay and that fifth person now gets a fifth of it right and so now all of a sudden our 25 cents goes down to 20 cents
then let's say you add five more people now all of a sudden our 25 cents went to 20. and then it went to 10 10. yeah and at some point Brad and David and I raise our hand and say hey this is not the deal we signed up for and you say well too bad because Revenue would not be what it is and profits would not be what it is without these extra six people and that's effectively what everybody debates when they own a stock the shareholders
want that number to be as small as possible and I think what Brad is observing is that in Silicon Valley what has happened is there's been poor accountability for what all of those extra people do and profits haven't written risen fast enough to make the existing three people on the cap table feel okay about it and that instead of talking about three people and six and a dollar you're talking about trillions of dollars and hundreds
of thousands of extra shareholders I know we have some charts here so we can do some fun with numbers I think taking a step back I think it's very important to realize that stock as a form of compensation to create alignment excitement in the early stage of venture capital is part of the true magic of Silicon Valley you know you're starting a company you ask somebody to go on this adventure take a bunch of risk they often have to
cut their pay they could get at Google by half to join your adventure it's only fair that you give them stock in the company and they share in the ups and if the company smokes it uh they get rich for taking that incremental risk on their
behalf and on their family's behalf what's happened over the last 15 years is something totally different which is this stock as a form of early stage compensation right continued and there's a feature in Silicon Valley
as companies came public one way to kind of hide an expense in a business is to bury it in SBC so let's say Google wanted to hire somebody for four million dollars which they're doing today in AI but instead of paying them 4 million in cash which would all count against their operating profit they give them 500 000 in cash and three and a half million dollars in stock and let's say they make all that stock vegetable immediately
Jason in this year it's obvious to you and I that's just cash the person turns around and sells it it's a real expense of the business real expense to the shareholders but when they report their earnings and they report adjusted ebitda they adjust out the three and a half million dollars that they gave by way of SBC why did stock based comp SBC get excluded from accounting what is the history of that and is that going to
change now are people going to say and shareholders demand in this new economy in this new you know sort of reality hey you know what you can't play fun with numbers here stock base comp has to come out what would you like to see Brad it's fairly esoteric but they're back in the mid 2000s 2004 2005 there was a and a county there's a big debate about this Warren Buffett was famously saying listen it doesn't matter whether you pay
in stock whether you're paying cash whether you're paying cans of beers like it all costs the same he's right and so there was a debate we had a statement an accounting statement fasbi 123 and in that statement it said Gap ebitda must include the cost a stock uh based compensation so all of a sudden if I'm reporting Gap ebitda I got to include the cost of stock comp which it does today but what but but but what did everybody do
but what happened they started adjusting it out right because they said hey this is a real expense right because we're not it's not cash we're giving out what are they solid do they come up with a term for this adjustments the crime here
is that when rates fell to zero and everybody was making money on tech stocks nobody wanted to rock this boat and everybody just said you know like adjustedy but uh kind of ignored I can I can model it into my future dilution so
we Model A Share account uh over the course of the next three years but this literally over the last five years went parabolic because I just shared with you the number of employees exploded the amount of share-based compensation exploded because of competition for those employees coinbase I think just reported SBC which hold your hat sax was 70 of Revenue not 70 of their earnings 70 of their revenue just for coinbase we're talking
about here that's for coinbase and so you know last week there was something that I thought was pretty brave booking.com on their earnings call really called this out and what they said is listen we've been playing by the rules we understand that stock based comp is cash and they say every every metric we report includes the impact of stock based compensation and if you look over the last 15 years if I'm an owner of
booking.com I was only deluded by about five percent if I was an owner of Salesforce or Expedia I was deluded by about 25 percent that's 25 of percent of my ups were given away right but yet those things were adjusted
out when they reported earnings and so you know what's become in Vogue today is CFOs get on their calls and they say no no no don't worry we're gonna buy back a lot of shares so we won't have much dilution okay but if you take my two
billion of profits that jamacha's talked about and it goes right out the door just to buy back the shares you just issued you're effectively round tripping that money then it just proves the point it's cash it's an expense to shareholders and my biggest problem with it is it's led to the bloat because if companies actually had to account for this as cash they wouldn't hire as many people they wouldn't pay as much in stock comp and
I'll end with this because I want to end with a solution every comp committee on every board frankly their heads spin when you start talking about this subject they bring in a comp consultant and the comp consultant they is really the cya for the comp committee because they want to approve a comp plan that's been recommended by the management team and they just want to know is this what everybody else is doing okay so
everybody's doing it so the comp consultant looks around and says yeah all your peers are doing this this is why Charlie Munger said I'd rather throw a pit viper down the front of my shirt than hire a comp consultant right what is going on on these comp committees if you give bonuses to anybody in your business that are that is based on an adjusted ebitometric rather than free cash flow per share per share is the key here it's
negligence it's negligence so if comp committees just walk in and they say the gold standard as a public company is 50 basis points annual dilution that's Apple that's booking.com Visa Mastercard or even below that that's the gold standard once you're in the public market and we will never instead of is our employ our employees on the basis of anything that excludes .com and it has to be on a per share basis that would be a massive Leap
Forward for public company account seems reasonable anybody have any other thoughts on that stock base comp no all right sax where do you want to go you want to go Fox I'm willing to do foxes I mean Fox is kind of crazy uh okay so Rupert Murdoch had been uh deposed here with this Dominion voting system lawsuit they're suing Fox for 1.6 billion in Damages over claims made on air that we all know around technology-enabled election fraud we
remember this wild period at the end of the last election cycle with this incredibly false claim that the election was stolen something you know both sides of the aisle said did not happen however it seems that the hosts on Fox knew it wasn't happening it knew it wasn't true but were engaging uh in entertainment of allowing these people to come on air and say the election was stolen so Murdoch said I would have liked us to be stronger in
denouncing it in hindsight and when asked if he could have stopped the host from highlighting these allegations these false allegations on air that were obvious to everybody he said I could have but it didn't he said
the truth he's not allowed to lie in court yeah just on air I mean uh sax to be fair like um you uh really care about freedom of speech you really care about the libel laws you really care about the GOP obviously you bring it up every week
here so when you looked at and but you were very clear you were not happy about the election denial all that like false claims that Trump made and these insane people he put around himself so how do you look at these foxhoes and listen you've been on Tucker and other things knowingly spreading lies about something as important as the election and then doing it in the most cynical ways we we sit here and every week we
roast the media the mainstream media you particularly go after the Dems and the left and the media Elites how do you feel about these media Elites who are part of the GOP machine lying incessantly about something as important as the election Integrity of the United States of America first of all you're trying to tee this up as some giant dunk on me Jay Cal I am not no I'm not you said from the beginning you didn't believe in this exactly let's
go back to December of 2020 on this show because there may be a lot of parts of the audience that weren't watching back then I was really clear that I said Sydney Powell and 100 and Rudy Giuliani I thought they were wackos and this whole idea that the Dominion voting machines have somehow been rigged and somehow it involved Hugo Chavez was a wild conspiracy theory so I said at the time 100 and I also said that I
thought that once the Supreme Court denied certiorio Trump yeah I said that he had his right to have his day in court and to challenge the election in court but once that the court threw out his claims and the Supreme Court denied sir shiori that that whole thing needs to stop and it didn't stop and that's why the Republicans lost that uh Purdue runoff seat in Georgia on January 5th and you had January 6th so you know I've
been warning against this for a long time Jake owl now with respect to to Fox I think you need to basically get a little bit more nuanced in what you're saying there because I think within Fox there were actually two groups of hosts so there is one group of hosts that I think you could say were Trump Loyalists and they basically not only platformed the Sydney Powell lies but also endorsed them and Rupert Murdoch admitted that
they went too far and actually endorsed and so you had Hannity and a couple other hosts do that even though Hannity had some text messages that indicated he didn't believe it so I think he came across the worst however there were within Fox Skeptics of the Sydney pal Theory and so I put Tucker Carlson in that camp I put Laurie Ingram in that camp and Tucker had Sydney Powell on his show on I think it was November 19th I
think this was 16 days after the election it was a 20-minute interview in which he grilled her and he kept coming back to what is your evidence what is your proof and if you were paying attention he demolished her I mean I
remember that notable yeah exactly so I mean honestly no one looks great when all of your text messages come out and you can nitpick about this or that text but the bottom line is I think Tucker did his job you know yes he platforms
Sydney Powell but he platformed her in order to dismantle her and you kind of have to be pretty Dopey not just to see that she was dismantled after the appearance be liable for knowingly platforming these people and endorsing them in some way or is it their freedom of speech in your mind as an attorney here uh or somebody with that uh you know legal degree where does it stand like put aside if this was if this was CNN doing it MSNBC
we'll switch what publication if this was the New York Times and they knowingly lied knowingly platformed some Kooks with a conspiracy theory what should the price they pay for and then how does that affect the freedom of speech that we all think I think universally on this podcast especially and in Silicon Valley or at least we used to that freedom of speech is really important do you have the freedom to lie and platform Kooks like this let me
answer you directly Jason I think this would be a better world if Fox reliable but I don't think they're going to be because that's not the legal standard I believe that if a television network knowingly spreads and endorses baseless accusations against somebody which they know or should know is basically untrue I think they should absolutely be liable for libel or defamation but that is not what the law requires under New York
Times versus Sullivan you're required to show that that they knowingly spread misinformation but in addition you have to show that they had actual malice which is that their intent was malicious and I think you know Rupert Murdoch is a Wily old dog because he admitted on the stand everything but the thing that was most important for the plaintiffs to prove which is actual malice he admitted that they platform things that they you
know knew or should have known were false he admitted that he should have put a lid on it sooner he admitted that he knew it wasn't true but he said the reason they did it is because they're afraid of Their audience or a portion of Their audience going to some rival Network so basically what he said is in not so many words is that his motivation was greed and in our system of law that is a complete offense against claims of
deformation now I think what we need here is to rewrite the defamation laws I think the Supreme Court needs to overturn New York versus Sullivan Clarence Thomas is basically uh intubated that he would support that I
think that would be a great thing to do I think actual malice should not be the requirement if reliable I think of a television network or a publication puts out information they know is false they should absolutely be liable for it and
that is enough to show and if we did that by the way it wouldn't just be fox in this particular case it'd be CNN and MSNBC we have to completely revise their coverage and all of these Tech reporters who do nothing but to fame the tech industry the entire Tech press just about is a slow moving defamation lawsuit Elon Musk would probably be the richest man in the world just based on all the defamation lawsuits he could
bring if we were to overturn New York Times versus the richest richier guy yeah because all they do is to fame Elon Musk every week which claims that are ridiculous there you go folks very very intellectually honest I like it David so
what you're saying is you expect the Dominion lawsuit to fail can it be appealed all the way to the Supreme Court can this be the case that rewrites New York versus Sullivan good question that's a good question I'm not
sure I mean I think that'd be great if it did just be clear listen I think that if Fox Were Somehow found guilty I think one and a half billion is a kind of a ridiculous amount of Damages I don't think Dominion was damaged to one half billion but do I think that it would be a good thing if this lawsuit were challenged all the way Supreme Court and they overruled New York Times versus Sullivan let's fund the lawsuit I would fund that lawsuit
is not is is Sue MSNBC and CNN for all the nonsense they spread every night yeah just to be clear I have a couple things that I would want to go and um get correct clean up I just want to be clear here though Brad David's guy
Tucker he did the right thing that's the most important part of the story isn't it David that you're still listening you're not being Nuance you want to throw a Tucker under the bus I think Tucker did his job I think Tucker did
his paradoxical job yes yeah I think the guy who looks a little worse is Hannity because the Hannity in the text admitted he didn't believe the story but as a trump loyalist he endorsed the Theory that's really good Brad you we uh you know you you come on the show every couple of episodes and pitch in here as our fifth Beatle would you like to touch the third rail what are your thoughts and uh would you like to get some
incoming email from all your LPS about your position on Fox News and I mean we just I just feel like I sat through a University of Chicago Law School class it was awesome and great I think we have some good issues here that we still got to tick off on jaycal yes okay well we gotta talk just for a second about China as it relates to tick tock because because all right here we go this Holly hearing that's coming up so we've got a hearing
in Congress let's start with you are a shareholder a significant shareholder in bike dance the parent company of tick tock we have to say that correct correct correct you started that position and my kids use reels and everybody you and I have had a spirited debate on yes you're a shareholder okay about this so I so I haven't you want me to Tee It Up you want to see it but hold on a second here like because just like sax had to defend
himself before he even got started otherwise I have to do the same okay here we go shareholder of meta who stand s to do incredibly well if Tick Tock in the US is banned so you have a spread wait you win either way I've got a hedge on good okay you know if Tick Tock in the U.S gets banned but you know the con the context here is the tick tock band debate is heating up right and it's all in a March up to the
Holly hearing I think it's on March 23rd and there's real like we we spent a lot of time at the start of this pod on inflation I think a much bigger issue right now I was just with all these investors the main issue on their mind was Global decoupling between China and the United States we're going to see a level of Chinese hate leveled out of out of Congress both sides I mean we heard it chamoth at dinner at your place not so long ago
that this hearing is drawing more demand for speakers from both sides of the aisle than any such conference uh in a long time but there's a lot of there's a lot of heat now around tick tock should it be banned and when I when I look at the situation if you frame it for bike dance because Shema talked about this a couple weeks ago it's been reported bite dances revenue is about 120 billion dollars it's been reported their profits are
about 25 billion dollars that is almost identical in size to meta meta's worth about 450 billion so 120 billion Top Line it's also been leaked that in that Tick Tock is about 14 billion of that and that U.S Tick Tock is three to four billion U.S Tick Tock three to four billion of a hundred and twenty and it loses money so there's a lot of debate should we ban it should we not ban it is it going to go public and what should happen what do
you think what do you want to ask and as a shareholder listen I think it's about an American I think this is a puppet debate over a much bigger conversation that's going on one of the things I've urged the company to do over the course of the last several years is parental controls my kids use tick tock they use reels and what I want is to be able to set effective time limits and I also want Tick Tock has incredible uh video
content in math in science and history I want to be able to set a slider and say 20 of the videos that get shown over this one hour period have to include some of these math and science videos for my 12 year old then he can elect and not watch at all or watch it they announced those product changes yesterday um so they're teeing up those product changes I don't happen to think there's a nefarious plot but I also understand
that people might not want this and so like listen I think we should have a debate I think that the CEO of tick tock should show up he should speak the the truth at the Holly hearing and if the U.S Congress wants to ban Tick-Tock in
the U.S or force a spin or a sale I think we should do it and stop debating it but the much larger conversation is whether we have a hard or a soft decoupling with China and I think this is just Canary in the coal line all
right so let me just tee up also uh and chamoth I'll get your reaction on Monday the White House gave government agencies 30 days to remove tick tock from all federal devices all federal agencies must lead Tick Tock from phones and systems and prohibit internet traffic from reaching the company this is following moves by Canada in the EU and Taiwan and uh obviously there is a bigger house committee focused on China that held its
first meeting this week so there is the bigger picture but let's start with the smaller picture number one do you think it's a security risk to have a Chinese company have this kind of access and influence with Tick Tock specifically and what do you think the remedy should be for that and then we'll get big picture and we'll get snacks involved in this as well should it be banned should they have this kind of access to Americans and influence
should it be banned no because I believe in a free market will it be banned yes because it's the most obvious cultural way to pick a fight with China without actually picking a fight with China so yeah I think it's going to be the most obvious
victim of all of this and so I don't know my advice to my friends who are shareholders not just Brad but others is sell sell it move on it's in the Warren Buffett what Warren Buffett calls the two hard bucket
sax uh do you think that this is a national security issue do you personally believe Tick Tock should be banned or do you like me believe that we should just do a reciprocation test in order for tick tock to be allowed here in the United States then Twitter Facebook meta Instagram LinkedIn Etc need to be allowed in China and you have this many days to reciprocate or else it's banned I don't think Jamal is right
that tick tock's going to be GPC roadkill and GPC stands for great power competition you're going to start hearing that term more and more it's going to become the organizing principle of American foreign policy and I just think that Tick Tock is Tick Tock is all caught up in that and you know personally I'd like to understand what it is exactly that they're doing with Tick Tock and instead of just having
these vague accusations I actually really like to understand yeah I'd like to know a lot more about that but in any event I just think you're going to get caught up in this this again GPC that's going to be the the dominant organizing principle of our foreign policy I think that people are coming around to realizing that it's China not Russia that is the central Global competitor and adversary of the United States it's the only country in
the world that's a potential pure competitor to the U.S this economy is roughly the same size as the U.S it's got four times the population it's the one that we really need to watch out for I think there's growing realization in Washington that the Ukraine war is a little bit of a misdirect and that we need to basically get back to doing what we were doing before the war which is pivoting to Asia and by the way thinking about
that just for a second in I think David you're totally right because the game theory now to me makes a lot more sense in the frame in the framing of GPC so for example if you think about what the chips act does right the chips Act basically says we are going to near shore or onshore every capability we need so that we can make and manufacture all the critical semiconductors for all of our interests technological business military Etc
but what is that really what that is is an option to not have to defend Taiwan and why is that important it's because today if Taiwan were invaded by China we get pulled into a conflagration that we don't know how it ends we don't know what the beginning middle of end of it looks like it's extremely dangerous and precarious so spend a couple trillion dollars create Financial incentives build a bridge to Korea and to Japan so
that they bring onshore into Mexico all the capabilities we need with Western Europe who are already our allies already along with Japan and Korea and now all of a sudden we have complete optionality and now we can deal with the
greater Chinese hegemony in a much more balanced way so I think the GPC framing is shared by the way between the Democrats and the Republicans so this is why it's so much bigger than one single company that's why I think I think tick
tock's roadkill Brad if you frame it as a competition we're not framing it as a war we're in competition and part of that is going to be this decoupling is this decoupling helpful to America is it helpful to humanity is it better that we decouple a bit this interdependency maybe got a little too deep as we saw during covid with uh Supply chains well I mean it's a great in a great power struggle it is what the words imply right
so I don't you know part of the reason you want to have trade uh with China and part of the reason we don't want to have a hard decoupling is uh you know a long-standing theory that company countries that trade together are less likely to go to war so you know I think if you listen to what's coming out of this you know these uh Select Committee this week that held its first hearing is on the on the extremes you hear people
saying hard to coupling right and in the middle you have people saying listen we need to define a circumference around National Security and we need to decouple as to all things that are within that circumference now I will tell you that the debate is about how large is that Circle so it starts off as for example sophisticated computer chips out of Nvidia so China you know can't compete with us in the AI arms race but
it's quickly emerged into you know batteries energy food supply chains the circumference has now become almost as large as the economy itself I would argue that it's not just the chips act it's also Ira which is another trillion
dollars of funding for uh basically onshore and Supply chains vital materials to build batteries Etc you know so I think it's a very reasonable policy by both parties to pursue it's clear that we're going to have some decoupling
I think it's a it's a it's going to lead to an interesting question on the part of China you know she was out last week saying you know I'm going to make a speech about peace with Russia you know this is more David's territory but my hunch is that there may be you know if China China thinks it's going to be a hard decoupling from an economic perspective this is bad for global economic growth this is bad for China's
growth I don't think it's bad for growth I think it's bad for inflation explain well because I think that we'll have many versions of everything everywhere so we will some more redundancy yeah more redundancy we're
going to rely on Central and South America in a meaningfully bigger way and what that'll mean is that there'll be more jobs in economic prosperity for those countries they'll feed the United States China will feed it less and as a result
there'll be more inflation because you won't have the cost advantages by the way China is not just going to sit there and take this line down they've already punched back a few times so for example on the middle of the summer China introduced a tariff and slowing the export of certain materials and Technology to make solar Wafers now why is that critical well again talked about this before but we are going to take the
marginal cost of energy to zero in this country and the levelized cost of energy particularly via solar is the cheapest it's ever been and so what China sees is oh my gosh if the United States has abundant free energy now all of a sudden a huge component of what drives costs is gone yep so now the United States could partner with El Salvador Mexico Honduras you know Argentina Brazil it's happening here too yeah no but I'm just saying it's close
by yes right and if you can deliver zero cost energy to those places now the manufacturing capability could exist there my point is it's such a complicated chess piece so China is not taking any of this line down but I think
that what David's framing is totally accurate this is the beginning of a GPC and it's an economic Tit for Tat that we're going to play out we tax chips they tax solar panels we go after tick tock just as a confusion maker right
yeah I can tell you the the there's a very easy test for if China sees Tick Tock as a strategic asset and that's it's going to create more shareholder value Brad if they were to spin it out and make it a publicly traded American company with American sharehold it would create more shareholder value for bike dance therefore if they don't spit it out that means they're not acting in the interest of shareholders and shareholder value
they're acting the interest of their National Security pretty clear reciprocation and collaboration would be a much better model I think for for working with the Chinese and hopefully we can find some things and we can collaborate on Brad raised the the Chinese peace proposal in Ukraine which I think said an interesting topic can we do you guys want to go there for a minute sure uh yeah all right can I take a shot
explain what the Chinese were doing I think it was a clever diplomatic maneuver by the Chinese to try and grab the moral High Ground here they're basically saying listen we're interested in peace we're going to put forward a
proposal the Americans fell into the Trap of basically dismissing it right away throwing cold water on it the U.S state department has done this twice before remember back in March of last year enough tolly Bennett from Israel
tried to negotiate a peace deal and he himself said that it was the West the Americans who rejected it he thought it had a 50 50 chance of succeeding you then had the peace process in Istanbul Turkey with erdogan presiding over it you had the the Istanbul communique which again they were very close to having a peace deal and blinking in the U.S threw cold water on it so what's happening here is that the U.S is not
playing its traditional role as Peacemaker where we try to go in and mediate these conflicts we're doing the opposite of that we're throwing cold water in the peace process now why are we not acting as the mediator I'll tell you why but because we are a co-belligerent this is an American proxy war that we're fighting against Russia so we have no interest in mediating a peace process and moreover we're not trusted to mediate a peace process
because we're one of the effectively strategy by Xi Jinping yes to take the global moral High Ground I I agree with that no no I said it on Twitter a couple weeks ago like this this is amazing that he's starting the peace process we want regime change we want to deplete and we want to ankle Putin they want to keep him in the game the more despots there are the the worse the better it is for them they would like to keep the Legion
of Doom uh going they don't want to see regime change in democracy in Russia eventually I don't think that's how they view it but listen Jake how is very close to getting it but here's where I would disagree with you a little bit let me explain okay go ahead so from the Chinese point of view the war in Ukraine is like Mana from Heaven okay they love this war number one okay because it's interfering with the US's pivot to Asia
we were basically in the process of redeploying all of our force all of our military to containing them in East Asia and now we're bogged down in Europe okay so that's number one number two we are massively depleting our stockpiles of of
weapons we've used something like nine years of stingers and five years of javelins and we're running out of ammunition I can't believe we're running out of artillery the Russians actually have a six to one artillery Advantage
which is why they're actually doing much better in this war than people are acknowledging we should come back to that the last thing is that the Chinese now are benefiting from the economic sanctions on Russia because Russia is now selling them oil and gas and all their minerals so it's been this has been a wonderful thing from the Chinese standpoint so this is the problem with us thinking in this Marvel movie Way of the World in
which we're the Super Friends and we're against the Legion of Doom okay is because there is no natural Alliance in the real world between China Russia and Iran these are three very different regimes with different types of governments who naturally would not get along they would be adversaries naturally they'd be suspicious of each other as China and Russia were during the Cold War but we have pushed them closer
together this is the problem with having this overly moralistic view of foreign policy over to you Jason what do you think is there a question is there a question what's the question yeah I mean you frame it as the Legion of Doom so just explain well it's the axis of Evil the the the 50 uh Brainiac would not be working together if it weren't for us declaring a war on both of them actually Pakistan Iran and and China work together on
nuclear technology so they do when it's convenient for them work on things like nuclear bombs so uh there is an affiliation but you're correct they're they're the 50 of the planet of humans on this planet who live under authoritarians and so they they're authoritarians they're always going to think in their own interests they're always going to think in their own interests above their own peoples let alone the people of another country they
don't care they don't care about human rights if they don't care about the rights of humans and they certainly don't care about the rights of humans in another country and the West is uh on a noble mission to spread democracy in the world and that is a noble Thing Worth Fighting For and is worth defending free countries from despots I know that you are a fan of these folks sacks apparently and you think they should be
able to run amok I will take the other side of it I think the West should act in unison the only criticism I have is that we are not acting in unison I would like to see the West instead of sending Biden to Ukraine hold on we've talked enough you just accuse me of somehow being fans of these people where did I ever say that I was a fan of XI and China or Putin or the ayatollahs in Iran hold on you said we provoked
Putin Putin invaded another country hold on we caused it hold on a second I am arguing for a geopolitical strategy that benefits the United States I'm on Team America and your policy of driving these people into an axis of Evil is
foolish for the reason I said which is we are going to power up the Chinese economy so they are a much more formidable enemy to the United States that is the last thing we need to do now with respected hold on a second let me
finished you had a chance with respect to Ukraine and Putin there there's no question that Putin invaded okay he is the aggressor however the question you have to ask is why and the fact of the matter is that first of all we fermented a coup in Ukraine in 2014 this is your democracy spreading that you like is all of a sudden we got these ngos and we got Victoria Newland from the state department in there basically
fermenting these coups it doesn't work out quite the way you think Jay Cal that's problem number one okay then we try to run NATO right up to Russia's border okay and you expect them just to accept that because we're a benevolent
superpower that's not the way the real world Works Putin was tremendously threatened by that and it wasn't just him it was all Russian Elites read the bill Byrd's member from 2008 yeah it means that he explains that even the
liberal elements within Russia were tremendously threatened by NATO expansion that is what basically poisoned diplomatic relations between the United States and Russia and it was a major cause of this war now listen just because you don't think it's provocative doesn't mean that the Russians don't think it's provocative you have to be able to put yourself in the other guy's shoes for just one second and the fact that matter is is
there are diplomatic steps that we could have taken to defuse this crisis in this war and we didn't do it and now look what's happened hundreds of thousands of people have been killed and Ukraine's been destroyed it's been absolutely destroyed and let me tell you right now it looks like they're losing this war so I don't see where your superhero policy has gotten us except to make China richer and more powerful and to destroy
Ukraine that is where your naive idealism has gotten us yeah and I would say if you if if left to your devices and you are not engaging and not presenting a united front against Putin he will invade country after country the West must fight for democracy we must fight for human rights even if it's uncomfortable and you seem to think we provoked him to invade this country he's a murdering dictator authoritarian who
has been murdering his own people I'm saying other people for his entire career and he will continue to do so let me clarify because you're putting words in my mouth okay when you say that I think that we believe
believe what I believe is that we took actions that in Russian eyes were provocative I'm saying that from their subjective point of view they saw these actions as provocative they said so listen the Russian which is what I said we provoked
it is your position no yes I just explained that's not the words hold on his position is that in their eyes they were pretty much Jason we're talking about and no why oh oh boy you're like what you're doing right now is like dishonest I just explained the language that I would use yes yes we provoke them we took actions that in Russian eyes were provocative there's a difference provocative provoked yes the act of provoking stop
lying okay it's getting too much okay let's move on we're gonna we're never gonna agree on the sax okay and I mean in the audience that nobody on this podcast is an expert on foreign policy sax is not Henry Kissinger you know I'm
not Obama show you had come around to my point of view you said this war was a mistake on the very last show you said it was a disaster and now no I believe the West should present a united front and we should hold the line
with Russia invading other countries that's my belief I do not think we should be doing this solo I think we should not be sending Biden we should be sending 15 liters of countries to Ukraine we should be sending people in
and we should be doing a peace process and I think the military industrial complex largely driven by the GOP is what's at fault here they want to use these weapons they want to replenish the supply and they want to regime change I
don't think we should be going for regime change I think we should be building bridges so my point is a little more subtle you're doing it right there you're basically engaging in this ridiculous rhetoric that we've seen in the media which is that if you simply want a more realistic American strategy because you believe it benefits America that you're automatically accused of not being a Putin sympathizer no you're
doing what the mainstream media has done I just said to you it should be the entire West as a group as a block negotiating with Putin what do you think what do you think to be part of that I I welcome Xi Jinping Germany and the United States
and France and the UK all getting together and trying to get these two parties to settle what do you think what do you think we're doing right or wrong with China right now yeah what do you think we're doing right
and wrong or right wrong or I think we should be in discussions with them consistently I don't believe we should be isolating them I think we should be looking for areas we can collaborate on the environment technology you agree you agree with the chips act you agree with basically onshoring and you're showing all the critical infrastructure we need is that I think we should not be dependent on any foreign we should have energy security
we should have uh methodology security technology of course yes but I think every country should I think China should have that we should have it every country should aspire to be resilient and not be dependent on another country and being dependent on a dictator like Germany was on Putin or we were with China for medicines or for you know medical equipment or chips we do not want to be in that position ever that's
one question just on Ukraine just for a second Jay Cal would you be willing in order to achieve a peace deal for Ukraine would you be willing to agree to two things number one that Ukraine would be a neutral country instead of part of NATO and number two that we would recognize for Mia being part of Russia would you be willing to give those two things I think that's up not up to me I think it's up to the people of Ukraine and Russia to sort
this out and it's up for the West to set the table for them to do it and part of setting the table for them to do it is to make it more painful for them to stay at this war so if they are told if you keep fighting over these things and you don't come to a resolution between those two parties who have to live with that resolution that is the uncomfortable thing that will force them and that could be China us and India all working
together all of us working together to force those two parties into a solution that works for them we have Brad for 10 minutes I want to move on I want to show you guys a tweet about Harvard students and I want you guys to react to draymond's comments because they're just incredible I don't know if you guys saw this but isn't that unbelievable it says there was a study at Harvard that found that 43 percent of white students there are Legacy
athletes or related to donors or staff that's unbelievable is that public knowledge or is that like kind of leaked information I wonder this is from Dolores handy I don't know who that is maybe we could click on who the source of that is legacy's gotta go right that that concept should I just go away yeah is there a valid reason to have a legacy is there a valid reason to have Legacy it feels unfair it feels Un-American
that these important institutions give preference to people who are stupider and Achieve less if this is an achievement based uh system it just feels unfair yeah I mean well we know we know that the first class had zero percent the trend line looks like so at some point we're approaching 100 I think we're just debated one question right one of the things I would like to see chamath is what's the relative performance 10-years after graduation
between the legacies and the kids who had to scratch and fight to get into the place oh my God yeah I mean I think we know the answer well you would think they would be higher performers the latter group but you would also think that if Legacy got you into Harvard then the Legacy your group is going to get you into other things right you'll have the end in other places they're the ones who are miserable and walking around you know
rich and haven't achieved anything yeah well some sacks didn't get into Stanford uh based on his stats buying a building right well that's for sure okay so uh here is a video from Draymond Green what I do want to go back to is uh uh Black History Month this is actually the first time you've seen me in a Black History Month uh shirt all black history month and it's very intentional and I really just threw this shirt on because
I didn't have another shirt to throw on but black history month at some point can we get rid of it like at some point why why we got to keep getting the shortest month to celebrate our history you got Governors want to take our history out of schools and I'm not going to be the fool to go say yeah we get celebrated for 28 days so at some point I'd like to get rid of it it's you know we're making all these changes
in the world can't talk about these people can't talk about those people can't say this can't say that at some point it's time to get rid of Black History Month I get rid of black history like they're trying to do but Black History Month
nah teach my history from January 1st to December 31st and then do it again and then again and then again and then again that's what I like to see strong so good he's the best you need to clip the last 10 seconds of
that that we all need to tweet that there was a a correction we needed to make about the stripe chart last week go ahead yeah so you have the floor we talked about some stripe stuff last week and my analyst came to me after the show was published and there was a couple of Miss calcs in the spreadsheet that generated the graphic which big up to him for calling it out very quickly anyways I just wanted to show you the updated one
just so that we could make sure we get that on the record I guess this would be a purple color is that purple yeah that's actually when you calculate net revenue and I think what did was calculated gross revenue which
is in the red so we showed this but it actually should be purple so that's the updated accurate version of the analysis so there you have it what does that mean for stripe versus ad gen in terms of just which is a better business just to
summarize it no I mean I mean to be honest with you it doesn't it it's it says what we said before which is that the the previous valuation was very expectation heavy and the new valuation is definitely more in line but still very rich relative to other companies who have large profitability and large growth rates and I think that's the key takeaway which is it's very hard to both have huge margins and grow it
mediumly High double digit rates and the few that can Visa Mastercard and adjen tend to trade it a very different valuation set than everything else and so I think that's the challenge for stripe if they can do
it they'll be in that class okay for the Sultan of science doing his spack in New York having an incredible dinner in at Carbon right now can I say it can I say Enjoy the vegetarian I pre-tilted him he texts he texts into our group oh don't
do it don't do that and he said uh let me know if you want me to dial in and save the episode my insta reply gerstner is on fire we're also he's Irreplaceable except you know this episode is pretty good pretty good pretty good we love you we love you oh my God it wasn't a bad episode until Jay Cal started words in English that you can't strike a single word you struck my single word last week when I called under pressure
in a debate he falls back on all the usual virtue signaling and oh yeah yeah okay who did you vote for in 2016-2020 be honest see like you're doing right now look at this oh God did you vote for Hillary and Biden Legion of Doom they're the Legion of Doom [Laughter] you know there's actually a meme there's a meme on Twitter that anyone who disagrees with me is Russian disinformation or Pro Putin I haven't seen that one yet that's pretty funny
that's basically you I don't think here I don't think you're probably knife during this entire year of Ukraine UK Ukraine I say every time to be clear you're not saying Putin is right for invading Ukraine and you're like no of course the dogs it just stop no no thank you for saying that no thank you for saying that I appreciate that I always try to say that's making it correct so it's a very nuanced discussion it's a
very nuanced discussion like we could nobody's in favor of this war nobody nobody's in favor of it everybody's trying to resolve it I think we just have different views of what resolution looks like did you guys read this crazy
article in Bloomberg businessweek about proz Michelle the founder of the co-founder of the Fugees and his entanglement with the one MDB Scandal did you read this article no I have no idea article Stars I like the culture at
the end let's put the tinfoil hats on and do culture his phone rings and it's a Chinese woman that says something like you know your cousin wants to meet you he goes to the Four Seasons where he gets a note that says walk around the building twice to make sure you're not followed goes back into the Four Seasons gets a key card goes upstairs into a room where they then escort him to a different room in a penthouse take all
of his phones and he meets with the vice chairman of security for China where that guy is asking for an introduction to trump it is that's how the article starts it is incredible reading the incredible incredible reading I encourage all of you to read it it's so uh what is it called juicy it's so juicy spicy if you want to read some crazy story there is a company called wirecard in Germany and there's a New Yorker article about the biggest
fraud in German history I highly recommend reading this one we didn't get to it today but oh my God if we had like a long reads post show it'd be incredible I personally don't think we should promote any stories by the
mainstream media we have no idea whether it's true or not I mean seriously we'll see you soon thank you so much for filling in love you bro thanks bro yeah pretty pretty good love you guys for the Rain Man David sacks the pacifist of
Peace the Sultan of science Brad gershner the dictator chamoth I'm the world's greatest moderator and speaker at your corporate event for 50 75 dimes Jake out talk to my speaker Bureau let's get this grip done people we'll see you next week bye-bye we'll let your winners ride Kim [Music] besties [Music] it's like it's like sexual tension that they just need to release somehow [Music] we need to get Mercies [Music]