look at John Quincy Adams here yeah hey hey Quincy how you doing that hair look look at that hair John Quincy Adams needed a wig to achieve this look he did he did I did it all natural I mean it's a lot it's a it's a look you're like some movie star from the 1970s you're still working do me a favor pull up a picture of Grayden Carter for a second and then put that side by side with sax let's see just say
I zoom in on that facts this is where you're headed by the way you're headed to Crazy Town this is where you're headed you can just poof it out on the sides and you get a little woof swoop on the top this is where you're headed eccentric Stacks pull up a picture of Steve bannon's hair he's a wise Statesman I think this is what happens when you get too close to power you get more
eccentric with your hair so like too much power equals crazy hair now look this is my theory great and Carter too much power Vanity Fair he went hair crazy now you look at Bannon you get me a Bannon photo here you start to see they go longer they go wafty they just they get volume and they're just like [ __ ] it I'm just I'm not gonna cut it I'm gonna let it go wild and of course
the the old I mean he's the penultimate but you look at Trump's hair this is where it gets truly crazy this is where you're headed sax you keep getting this close to power this is where your hair is headed I'm so glad this podcast never broke up because where would we get this amazing Insight from jaycal if not for keeping this all together this makes it all worth it it's very true it is true you get like
eccentric and you get crazy hair this is men get too close to power and the hair gets wild unchecked Power unchecked hair we had a good meeting last night we had an all-in-summit meeting let's see Freeburg give me a call let's catch up on this stuff he's like oh I'm in the bath right now with my candles and I'm like yeah okay whatever that's cool he's like no no and
he presses the video button and then I'm exposed I kid you not to the most bubbles I've ever seen in a bubble bath I like bubbles and he is peeking his head out from Over the bubbles and he's like look which exactly and then he flips he flips the camera around and I got his toes pointing out and I kid you not there's six candles around the bathtub I'm like this is like the prince of panic attacks
he had to come down for his phone call with me so now when he has a phone call with me it's so intense and everything's getting so intense with the summit that he has to do self-care yeah that could be emotional emotionally ready he's self-caring your wife wasn't anywhere to be found in the bathtub with the candles I take a bath every night who are you Romancing yourself or what yeah I think
he was romantic the spreadsheet with the prophet life of all in Summit I have about 18 minutes of self-care every day 18 seconds a minute all right let's get the show started in three two let your winners [Music] we open source it to the fans and they've just gone crazy [Music] hey everybody Welcome to episode 130 maybe of the all in podcast we're still here cooking with oil with me of
course the dictator himself chamath Pali hopatia Prince of panic attack Sultan of science the queen of quinoa David Friedberg and the power broker himself the emperor the Emperor of his new Republic anybody have any interest anything going on interesting this week any interesting moments for people on the national stage no okay well let's get right into the docket first around the docket Ron
DeSantis Governor Ron DeSantis announced his bid on the internet yeah on something called Twitter spaces and it looks like almost 10 million viewers have seen it so far across all the different spaces and Donald Trump wasn't too pleased he said Rob my big red button is bigger better stronger and it's working truth because when Elon fired up the Twitter spaces it went to 650 000 viewers in under five
minutes and then blew up everybody's phones my phone was melting I could have cooked an egg on the back of it the Twitter app crashed so many times but then sax with his meager following of a half million people or something then restarted the stream and so 15 minutes of technical snafus were relieved and then there was a announcement and I'll let you take it from their sex
you want me to take you behind the scenes I guess behind the scenes how did it come together sex oh yeah even better yeah the way it came together is I think the DeSantis team were interested in potentially you know doing something different for their announcement he also did an appearance on Fox News afterwards and I think he did a town hall but I think they saw an opportunity to break new ground here in
terms of presidential announcements by doing it on Twitter spaces and so the DeSantis campaign connected with Twitter and Elon and I agreed to kind of co-host the space and with him and he did his announcement now you're right we had about 15 minutes of technical difficulties because the interest was so intense at the time the the room crashed it had over 700 000 people in it and
there were it crashed because so many people were trying to get in it I think there was well over a million people trying to get in it so you normally don't have this kind of Interest I think this is by far the biggest Twitter space the engineers there told me that the previous order of magnitude was more like a hundred thousand not a million and then you combine that with the fact
that elon's account has over 100 million followers and that basically led to a new level of scale and you guys understand that when you get to a new level of scale as a platform there's always going to be some yeah some challenges so hey event the engineers were there trying to figure out how do we you know solve this and we realized the simplest thing to do would be to
restart the room on my account instead of elon's and then Elon joins the co-host and we brought to Santa sin and it all worked perfectly at that point the audio was pressed we had over 300 000 people in the room there was also another room that had been set up by Mario nawal who's like a big Twitter spaces host and he had hundreds of thousands of people on there and then he had live commentary from people he
invited and so this ability to Fork Twitter spaces into many different rooms and each room gets to decide who they want to be their hosts and their speakers allows you to do live commentary and in a way that you could never have done before so it was really Innovative I think super Innovative and for people who don't know Twitter spaces was really a rushed job at Twitter they did that in reaction to clubhouse they
it's it's still basically a beta product that predates Elon being there and it doesn't have yet the infrastructure or scale of the code base I don't think like YouTube and twitch do which you know have been working on this problem for I don't know 15 years maybe the live products observations yeah go ahead the first is I thought DeSantis did a really good job just rolling with the
punches okay because I think whether he wins you're not going to look back on this moment as the defining moment of the campaign nor whether he loses will you say that this was where it was it all the beginning of the end instead what this was was a really seminal moment I think in further divorcing ourselves away from the mainstream media and you know that it was that important
because Biden tried to troll the whole thing Nick you can show this link this link works and I actually think this is a really terrible idea by the Biden team because never this basically acknowledges how important the moment was and the fact that even the president of the United States was grinding the link and couldn't get in because there was so much interest is really important and I think what it
speaks to is the fact that we are now showing credibly that you don't need to listen to four channels to shape your Consciousness and you can just go straight to the source and what Zach said is right if you now have a moderated forum that then gets put out to 50 or 60 different Twitter spaces all at the same time Framing and reframing it gives people a chance to come to their own conclusion in a totally
unique way so I think it was really really an important moment for citizen journalism and podcasting and audio formats and all of the things that I think we've been a small part of but I think that it's really must have tilted the mainstream media and it tilted The Establishment and you can see that in Biden's tweet yeah I'm going direct yeah so that was the first thing second thing
I think DeSantis did a really decent job enrolling with the whole thing and being super cool and just being committed to the process and I think that says a lot about him as well which was again it's a question mark and I've said this before the Big Money guys got close and then took a step back so this could be a very good moment for them to reevaluate because I thought he
did a very good job so I agree so you know I was there I was live I was seeing what was happening behind the scenes when DeSantis came on after we you know had 15 minutes of technical difficulties there wasn't a hint of anger there wasn't a trace of irritation there wasn't any freaking out that we were potentially ruining his presidential announcement the guy was completely calm
and more than that he was in good spirits I mean if you listen to the recording you know he's happy he's tone was great his tone was really good I mean and then of course it was very substantive he spoke in a very articulate way about all the issues uh when Congressman Thomas Massey came on to make a a commenter question he was telling a kind of amusing anecdote about when they were in
Congress together and Massey was one of the only members of Congress who uh had a Tesla but he comes from Kentucky so I think his license plate said Kentucky coal on it KY Cole so anyway you know the guy was in good spirits and so I think it does say a lot about what he would be like as a president cool Under Fire doesn't get thrown off his game you know again not an angry guy you know
which I think will be a real contrast with let's say some of the other people in the race you know Trump was sort of angrily truthing during the whole thing you know so I think it was a pretty strong improving the act of posting to truth social exactly so the contrast between the personalities could not have been stronger now to the other point the charmath about the traditional media
you're right about what they're saying if you look at that the headlines this morning from traditional media Outlets that really started within minutes of the the technical difficulties the New York Times called the announcement of fiasco NBC News called it a meltdown Politico called it horrendous and you know why I mean if you you know what I call that winning I mean if they are losing their cool
that's clearly they feel threatened by the fact that a major presidential candidate chose to go directly journal the Wall Street Journal headline is DeSantis looks to rebound after botch Twitter announcement but again what they failed to acknowledge is and I'm not a DeSantis supporter per se I'm open-minded to him but I haven't decided one way or the other but this is a guy
that managed to get millions of people in a nanosecond to be activated to hear what he had to say that is different than basically giving talking points and having surrogates blather through fox or CNBC or CNN to hundreds of thousands of people this is a really important moment I think what happened okay we got all the positive just to finish that point so if this was a political rally a
traditional political rally that had started 20 minutes late would anybody have said that was a disaster that happens all the time no it was the crashing that made people be like oh my phone crashed you know I was using the app I got crashed out of the app but I my phone did not crash so no yeah that's what I'm saying the app crashed a couple of times because yeah your phone did not crash yeah but anyway
look this was at the end of the day this was a an event that started 20 minutes late once we started it on my Twitter account in my Twitter space it worked perfectly there was no problem and that's the recording that you can go on Twitter now and listen to we had about 300 000 people contemporaneously in my Twitter space I think Mario had a couple hundred thousand but if you look at the
numbers today there's already 10 million views for this thing three to ten million on the replay and that's what you have to look is replay because the world has moved to asynchronous like this was three o'clock in the afternoon in Silicon Valley and six o'clock in the afternoon in the afternoon so you have a Hysterical overreaction by the traditional media simply don't like a
that Elon is disremediating them by letting the politicians go direct and then B he's restored the platform being a free speech platform so they jumped on this the first second they could to try and portray as a disaster but you know there was an article in political this this morning and they were asking voters in Iowa what they think about it and they're like huh what you know it's not
it's an elite thing that's not yeah it's not even on the radar Freeburg we heard all the positive here any the constructive feedback on it or thoughts on it generally now look I mean I would love to see all the political candidates engage in long-form discussion like this so that an audience can really get a sense of who they are and what they think in a direct way and uninterrupted way
and in a deeper way sort of like the conversation we all had with RFK last week and Zach did with DeSantis yesterday and I would love for the voters who engage in that content to better understand the candidates rather than key off of short talking points and short ads I think one of the saddest commentaries on Modern democracy is that you can spend a dollar to buy a vote that all of these campaigns functionally
try and raise Capital to go and do advertising and that the advertising creates these little 30-second sound bites that actually change people's opinions and it's a really sad it will they otherwise they wouldn't spend the money and I think it's a really sad State of Affairs that we spend money to change people's opinions by shortening everything to a sound bite instead of doing what maybe
would have happened a long time ago you know we often talk about the Town Square if you lived in a village with 60 people and someone was going to run for the mayor of that Village you'd all go to the Town Square you'd hear that person have a debate have a discussion you talk with them and that dialogue would inform your decision about who you're going to vote for but
you know with 300 million people in this country and you know short attention spans and jumping around from one thing to another there aren't a lot of great forums for any of us to really engage with candidates particularly on the national level and make a better informed decision hearing from that person directly instead everything is about driving narrative and chopping
things up and getting the sound bite and driving the emotional reaction and I think one of the the greatest things that's happening right now that you know could be a great benefit for this modern democracy is the sort of stuff that we've been doing on our podcast and RFK coming on board like last week and what sax did with Twitter and I really hope that more politicians do that and that more people
engage and consume that sort of content to make their decision and ignore the idiotic sound bites and the stupid 30-second ads and the nonsense that you know third parties use to try and drive narrative so yeah look I mean I think that's generally the positive trend that that I took away from it Jacob what do you think I have some notes for sacks I'm always you know careful not to be too
critical you know in the moment because I don't people will weaponize them as oh Jason said this because you know it's Elon and he's team Elon or he's friends with sax but I think everything said so far just tweak the media a great start the thing that I think was there were probably one or two misses here that I think you can build on sax since you were very involved in
the campaign with DeSantis I think it wasn't the free-for-all that Elon had said it would have been right so he pitched it as like hey this is going to be uncensored and everybody's gonna get to ask hard questions and that didn't happen and you know I think that is in stark contrast to what Trump did because I was doing the media analysis of this and so I think the follow-up
needs to be where he actually takes questions not from fans not from people who are already voting for him but really you know a little bit more of the cantankerous people the people who maybe are voting for Trump the people who are maybe in the Biden camp and that's what was the master stroke of Trump's CNN Town Hall he went into the you know the Lions Den or what most people perceived was going
to be the Lions then and he took on all comers he fought hard and that one was I think a bigger win I don't think DeSantis that was not a presidential announcement so just to be clear yes this was a launch event declaring that he's running so in that context yeah so you want to compare it to what these things usually are which is a guy standing at a Podium yes in front of his supporters compared to that this was
much more interesting Dynamic and engaging I agree with you that at some point he's going to step into the lion's den do a town hall on a place like CNN and I think he probably will in fact I think he did yeah I think he did a town hall we're here I think he actually did a town all in Florida later that night so yeah I agree with you it just wasn't that kind of event now to the point
about involving more people you know one of the things I learned hosting this thing is there were literally thousands of people raising their hands yes you can't store I was scrolling through this in real time in the app I wanted to call them more people but it was just there was no way to do it this is something at scale they need to add to the interface which is maybe pre-populating a list
sorting it by the number of followers whatever and this is my second point about this so I agree with you as an announcement this was Lightspeed ahead as like a full court you know like sharp elbow thing it didn't hit that note but it can that's what I think the follow-up you know having if DeSantis wants to come here and have like a two-hour discussion we kind of get into it a
little more that would be I think really good for him because I think he's got the potential to win over moderates and I don't think this one over moderates didn't win over anybody who was in you know the left or in the you know moderate left and that was one of the things I noticed is my second point about it is what a great group of listeners if you look at who showed up to listen
Bill Ackman Michael Dell no you Source by your followers so but I think it sorted by the number of uh followers they have it's certainly by your followers who then have the most followers so you're gonna see it's a bit of a echo chamber that way okay okay sure but they were still very prominent people in them because prominent people follow you okay but they weren't coming to follow
me they were coming to listen to this my point is still the same Bill Ackman were coming so but that's why you saw them because they're your followers I we all understand that they still showed up for this in the middle of the day I think that is really interesting and that yeah yeah yeah that's yeah that's what my point is it's really interesting that powerful people showed up for it full
stop sucks I have a question for you sorry Jason whenever you're done oh yeah and then I just had a couple of other ones Elon was a bit underutilized in this format and that's you know a challenge when you have Elon in the room because people want to ask Elon questions so this is something I think he's going to have to you know contend with people wanted to hear Elon asked questions than the
people who are were asking the questions wanted to ask you a long question so you do get like a little bit of how to utilize Elon in this format I heard a lot of back channel from important people like I wanted to Elon ask a question or maybe the two of them get into it so for a follow-up one getting some people you know who maybe don't traditionally get to ask questions because let's face it in traditional
media the only people get to ask questions are these anchors on news channels I want to hear Michael Dowell or Bill Ackman ask a question that's the opportunity in Twitter spaces maybe letting Elon ask a tough question then a follow-up or you know like we did here with RFK I would have been totally open to that I just couldn't manage it there was just so many people in the room I
didn't see Ackman actually I mean I totally believe he was there but I didn't see it the only criticism people had of use access you're a major donor and you stack the deck was the most cynical version of it with like five people who were just super effusive but this is his launch party so I think in that context I would have called on Bill Ackman if I'd known he wanted to speak but I
couldn't see whether he raised his hand or not no I didn't see him in the room so what am I supposed to do call on Bill Ackman and he's like uh guys I don't want to talk I don't want to put him in that spot can we get him on this pod so we can Grill them about fortune and fiscal policy who Bill Ackman I don't know look I don't speak for the campaign but I can put in the requests
you put 150 dimes in get them on hold on can you can you tell us the actual Tick Tock of how this whole thing came to be the campaign within the last week or two had the idea of should we explore doing it on Twitter spaces and I think they were open to doing it and sax didn't know about it when I put it in our group chat Zach was like he is yeah you found out about it okay all right I thought you didn't good
no sometimes Elon will just tweet something without telling anybody or to just go directly no I mean I I help look the the census people reached out to Elon and Twitter they also reached out to me about it and we discussed it and they were excited breaking the ground he's something different and I think they deserve credit for that can I ask a follow-up question just on the DeSantis
thing himself because you've seen him up close do you know why Schwartzman Griffin Peter fry stepped in took a half step back and do you know what it's going to take for them to just lean in and just make this effect to complete so that he's really well financed to be Trump I don't know what their issues are but I did see I I don't know this what's his name Peter fry or whatever yeah yeah I don't I
don't know him but I did see a press article and he was referencing book Bannings so that to me just showed that he was buying into some you know crazy left-wing kind of narrative that was the best part of that I asked this answer about that so by the way for people by the way that was the one thing that was new news uh for a lot of people was the book Banning can you explain the
issue and the spin and the clarification on book Banning in Florida it's very simple they haven't banned any books in Florida but the question is what books are taught in the curriculum and what's in the school library and some of these books were positively pornographic I mean they had someone DeSantis have an event where somebody was actually reading what was in these books and the
mere reading of what was in the books actually got labeled on social media by the algorithms so there was a lot of stuff that's just not appropriate for kids no one is restricting your ability to buy or read whatever books you want in the State of Florida is ridiculous there's a legitimate question about what's in the curriculum by the way I remember when we had debates on campus
about this is back a long time ago like the late 80s early 90s when they were throwing dead white males out of the curriculum you know Plato Aristotle Shakespeare people like that the people on the right who were opposing that never made the argument that this was censorship everybody understands that when you're dealing with a curriculum you have to make choices you can't teach
everything so the question is what are you going to limit it to God I think that when people actually dug into some of these books they realized that they're not appropriate so any of that his answer was along those lines that you know you should go listen to it for yourself but I think that he did address that issue I think he's kind of exposed it as a you know left-wing media narrative and I think he deconstructed
it and I think that was helpful because I think there are a lot of centrists who all they've heard about DeSantis is that he's Banning books or you know or the Disney issue which we also asked them about and you recovered that I think so um yeah the yeah we talked about some of these controversies the issue here just to summarize it is the left is framing the Banning quote unquote but just the not
inclusion of certain books which are graphic that have sex in them from certain age groups in schools as part of a curriculum so they're saying these books are banned in Florida the more accurate way to say it is these books are not being used in curriculum you know for these age groups parents if they want to buy them can buy them and then can read them so this is where this
conversation is kind of breaking down and I think is a complete waste of time all parents want control over at what age or what stuff their kids are exposed to and so there is a thoughtful discussion to be had there and maybe the discussion is this is something your parents should decide right well yeah of course but it's not even a conversation it's a hoax it's a it's a fake media
narrative they're trying to pin on him and DeSantis has been the the subject and victim of these types of fake median narratives which are deliberate the media's not trying to have a conversation they're trying to disqualify the guy and they did this this goes all the way back to covid when he opposed lockdowns and kept schools open and they called him death santis so
the media has had it in it for this guy since the beginning because he refuses to go along with their narratives on things this is the same reason that he hate Elon is Elon is defying their narrative control so you put you put these two guys together okay hold on even before the technical difficult let's be clear the media's heads were exploding that DeSantis and Elon were
going to be in the room together look at the Vanity Fair article the headline was DeSantis announcing with Elon because David Duke wasn't available okay the Atlantic was saying that this whole uh Twitter space was a hate group I mean literally so these people were losing their minds before we even got into the technical difficulties and then they pounced on that that there was a 20-minute delay
they pounced on that as some sort of fiasco which it wasn't will DeSantis cut spending and cut our taxes well we cut spending we didn't get into that so have you ever had a conversation with him about balancing the budget and federal debt do you know his position on cutting like uh long-term capital gains and taxes let me give you the elevator pitch I mean the nutshell for DeSantis is he
calls it the Florida blueprint he's saying look at what we've done in Florida look at what we've achieved at Florida let's take Florida Nationwide Florida has had a great economy Florida Tax budget zero time because I don't that's a state that's because if you have zero talks you have my book oh the dictator has spoken if people want to look up this issue there's a book called genderqueer and there's a story
about it in the New York Times and it's um you know it's a graphic novel about coming of age for a non-binary person which is fine great but it's it's very graphic it's a graphic graphic novel it has explicit scenes and these kind of books most parents would say I would like to wait on cutting my taxes to zero okay there you go it's called uh just to write it come on guys overall great job and yeah get
him on the Pod here and we'll have a great discussion with him yes great job great job please invite him to to our paw to I think you know we each have our own issues or else we're just gonna go with the other Republican candidates Nikki history and I'm proud of you we're also voting for yes I don't know I mean all right well thanks guys I think it'd be great to get Nikki Haley
that's a no that's a no just say no no no I'm going to put in the ass to this answers for sure all right well that's great yeah it would be great people want to hear for more folks so a lot of other news going on I think a good place for us to go to next maybe do we want to do the debt ceiling defense spending or in videos let's go together in my opinion okay great we'll go with the Sultan of science U.S debt
ceiling is at 31.4 trillion currently uh Treasury Department recently won the federal government could be unable to pay its bills as soon as June 1st Fitch put the US credit rating which is the highest rank of Triple A on negative watch so negative watch means it's trending towards bad and that it's imminent that they might lower it due to this debt limit deadline it seems like
we're not making much progress every couple of days we seem to swing one way or the other the stock market has kind of shrugged it off and the last time the U.S credit was downgraded was in 2011 but we avoided that chamoth what's going on here what do you think the eventual outcome in is there a chance that these Knuckleheads who represent us are going to default and
cause chaos or do you think this is all Kabuki theater and we're going to wind up in the same place which is they raise it and make some modest concessions August 5th 2011. the s p downgraded the United States from AAA to double A plus you know what happened absolutely [ __ ] nothing okay so I do think that this is another opportunity for the Little Red Riding hoods to get their panties in a bunch
but these downgrades don't mean much difference talking about I think that these third-party credit rating agencies are not particularly that accurate and sophisticated they don't know anything that you don't know they're not getting access to Moody's gave svbn a rating the week before it went into receivership this is my exact point well done none of these because you know what
they're doing these companies are in the business of putting a letter on a document and then selling access to that document so if you're going to trust these guys to know what they're saying either right or wrong independent of what side you are Outsourcing your decision making to the wrong body so whether it's s p Fitch or Moody's I would tell you to ignore it and come to your own conclusion I think
that this budget ceiling thing is happening now every couple of years and it seems like the real thing we should be talking about is whether Biden's going to use the 14th Amendment and just Ram a budget through and I think that that's yeah so under under the 14th Amendment the president of the United States has in their discretion the ability to make sure that the United States can pay their debts
and that wasn't necessarily thought of as a way to work around the debt ceiling impasse but because Congress refuses to pass any structural laws that allow the budget to ebb and flow with tax receipts we get in caught in this situation again roughly every handful of years so what Biden could do is he could say the 14th Amendment gives me the right I'm going to pass a
budget via executive order from a game theory perspective what that does is it forces Republicans to sue Biden take him to the Supreme Court and say this is unconstitutional the problem with that is that that probably really does tank the economy in the way that it creates enough uncertainty where Capital markets freeze up and liquidity just absolutely goes away and again liquidity has been
shrinking for the last 18 months anyways so it'd get even worse so I think the brinksmanship right now between McCarthy and Biden is basically that Veiled Threat if Biden effectively isn't going to get something done I think he's going to test the 14th Amendment now if the 14th Amendment turns out to be a reasonable way in order to pass a budget the good news is not just for Biden but for any future
president including Republican presidents will not have to be held hostage by Congress they will in the 11th Hour be able to pass a budget that works the implications of that though is that now you will not get consensus and whatever's happening in that moment you'll see more of so if you have a spending president they'll just continue to spend and if you have an austerity president they'll continue to
cut and that'll have implications on either side you think this is over issues the 14th Amendment or do you think it's a valid use of it no I it's not going to fly I mean it's true that the 14th amendment has some language about the full faith and credit the U.S shall not be compromised uh however it's never been tested or tried so no one exactly knows what it means progressives are now
saying that the language means that Biden could just keep spending without the debt limit being raised but find himself through cold water on this he said that he didn't think he had that Authority and even Lawrence O'Donnell the other night who's a big Progressive on the media he was saying that the Dems were going to take this tack they needed to do it months ago before they started
negotiating on a debt limit increase so it's too late now in other words if you're going to take that position why would you have negotiated that you're you the president are effectively conceding you don't have that Authority when you start negotiating so I think it's too late to invoke the 14th Amendment they're going to have to raise the debt ceiling that being said I think they're
going to be able to Reuters had a report this morning that they're only 70 72 billion apart now in their positions which is a relatively small amount so my guess is they're gonna they're gonna work this out now what should the fate of the debt limit be moving forward I mean the thing that's so stupid about our budget process is we spend the money and then argue about whether we're going to pay
the credit card bill the way that the debt limit should work is you raise the debt before you spend it Congress should have to vote first on whether they want a deficit or debt spend then you decide how much you're going to spend so this thing this vote needs to be moved up before they spend it and I think if you did that it'd be a lot harder for the politicians to spend
money because you know if you had an up or down vote very early on saying should we even be in deficit I think a lot of people would say no we're not we're not in a war so why why would you deficit spend if we bring any thoughts in the debt ceiling if not we'll go on to the government accountability vis-a-vis the defense spending I mean look we're running a two trillion dollar a year
deficit and it's forecast to continue to be at that level for several years and it's going to take pretty radical changes in how we tax and spend to make up that Gap so you know this is a problem that is going to continue and repeat and it does beg the question you know would you want to buy bonds from an entity that's generating 4 trillion in revenue and spending Six Trillion and has a plan to
do that for the foreseeable future and it's only you know seeing its economy or its underlying Revenue base grow by two percent a year it seems like you know that would be a very hard startup to fund and it would be a very difficult growth investment to make particularly in an environment like this so I'm just pointing out that this is a becoming a more kind of systemically risky situation for the U.S
that you know we spend the way we do and we have to keep coming back to having these debates about it's appropriate or not and now they've narrowed down the way that the Republicans seem to be kind of going about getting this done this deal done is they're only focusing on the you know roughly 15 percent of the overall federal budget and they're saying we'll kind of make some tweaks in
in that in that little range there and save some save some pennies save some nickels but uh we've got a much more fundamental problem to deal with which is how do we stop running these deficits and running the data but I mean yeah I'm gonna sound like a friggin no I think you're right at some point yeah the inflation is here and the crowding out of private investment and private
borrowing is now occurring because the government borrowing is so big I mean our our treasury our government debt of what 32 trillion that has to be financed somehow and all that money is going to finance government instead of being put to other uses so I think that the downside's already here you can't run two trillion dollar deficits every year that's unsustainable now I think that
you guys referenced what happened in 2011. that's worth this discussing for a second because I actually think that what was agreed to in 2011 was excellent Obama and the republicans in Congress agreed to a thing called the sequester where they agreed that they would freeze both defense and non-defense discretionary spending until they could get their act together and agree on what
the budget should look like and so the theory was the Republicans agreed to the pain of freezing defense Democrats agree to the pain of freezing non-entitlement social spending and that's how the deal was cut I actually think that made a lot of sense and I think we should have kept operating under the sequester until we got to a balanced budget but the reason that broke quite frankly is because of
the lobbying power of the military industrial complex is so great in both the Republican and Democratic parties that they basically wanted the sequester overseas keep raising the defense budget I think it's just that there's never been a degree of accountability for the spending that's being done because of this assumption that we'll always be able to pay our debt and we'll always be
able to take on more debt and I think that you see the other conversation the other topic that we were going to talk about was this lack of accountability and defense spending that you know we should play the Jon Stewart clip you know where I think who does he interview the under Secretary of Defense or something what is her title deputy secretary of defense Kathleen Hicks was
discussing in the defense budget when I see a state department get a certain amount of money and a military budget be 10 times that and I see a struggle within government to get people like more basic Services I mean we got out of 20 years of war and the Pentagon got a 50 billion dollar raise like that's shocking to me now I may not understand exactly the ins and outs and and the
incredible magic of an audit but I'm a human being who lives on the earth and can't figure out how 850 billion dollars to a department means that the rank and file still have to be on food stamps like to me that's [ __ ] corruption I'm sorry and then there was a story that came out this week according to Bloomberg the government accountability office disclosed that the Pentagon is currently
unable to account for hundreds of thousands of spare parts for for the F-35 Jets the pentagon's never passed pentagon's never passed an audit and it's accepted and it's acceptable in the same way that it's acceptable to never balance the budget to always spend and give everyone what they want and to find ourselves in you know this kind of late stage problem where we've gotten away
with it for so long that both of those factors whether it's the the downgrade on the rating whether it's the fact that we end up in these battles over whether to raise the debt ceiling every couple of years or whether we can't pass an audit all of these factors are symptoms of the same underlying problem which is that there is no accountability for you know how we operate the you know the kind of fiscal condition of
the the federal government you know the other thing it leads to is all these optional Wars so let me give you an example so all of these wars are always they're all free yeah they're all off book so take Ukraine we've appropriated what 130 billion that's not part of the defense budget we have it or a billion in the defense budget but then we just stacked the 100 billion or so for
Ukraine on top of that and it's off book now if we said the reason we're funding Ukraine is because it improves the National Defense of the United States why wouldn't that just come out of the defense budget if you force people to make actual choices actual decisions and they could say okay we could spend 100 billion on Ukraine or we could spend 100 billion on stockpiling tanks or f-35s or
whatever for the United States now you actually Force some prioritization decisions but because the wars are always off book they're just additive you just tack them on and we did that within Afghanistan we did that in Iraq but we spent something like eight trillion dollars and that was just added to the national debt yeah we can't afford these anymore it's becoming clear to everybody that there
has to be some accountability and chamoth I guess is it seems like there's a couple of unpopular stances to take when you're running for office one of them is social security retirement age as we saw it in other countries like France where people are arguing over 62 64 years old whatever it is yeah and so these entitlements job requirements if you want to get
unemployment and then of course defense spending you seem Un-American if you don't want to take care of old people you seem un-American and you know week if you don't want to support the government is there a path towards celebrating an administrator as CEO an executive who tells honest truth to the American people which is hey we we've been on a binge we've been going on vacation
nobody's looking at their the bills and we need to have a staycation we need to cut costs we need some austerity here is there a path for somebody Ron DeSantis Chris Christie RFK whoever it is to win over the American public to win over moderates with an austerity and they balance the budget message or is it just too unpopular to even bring that up I just think that you guys don't psychologically understand how to get
what you want I think the best way to get what you want which I would want too which is a healthy economy where there's accountability for spending is to not look at expenses and all of this talk is always about expenses but to look at revenue and limit Revenue more drastically and I think the best way to limit Revenue dramatically at the federal and state level is to just minimize taxation as
much as possible and I think that is something that Democrats and Republicans have a hard time fighting nobody wants to raise their hand and say I want new taxes nobody says that right and I think that if you attach that to some sort of spending guidelines like what David says with a sensible foreign policy you just end up spending a lot less you want to fight a foreign
war okay great well you know what it's part of the existing budget let's go figure out why we want to do it we want to have more accountability in defense spending okay well look the defense budget is a half of what it used to be because we just have half the revenue I think that if you start to go and talk about austerity and cutting Social Security and health care benefits it's
literally a non-starter people close their eyes they plug their ears and you get nowhere now separately I think the step even before you look at taxation so minimizing government revenue is to figure out how to refinance so if you're a homeowner and you got a mortgage in the 80s you were paying 12 14 15 16 if when rates kept going down you or the people around you didn't have the common
sense to refinance that that was negligence similarly we're in a position today to refinance our debt wall and push out these maturities past 100 plus years we are the only country that has a viable stable economy that looks like it can still continue to thrive at scale take advantage of that you lose Nothing by giving us the optionality generating some Hundred Year debt refinancing a
bunch of this short-term stuff and then second inflation helps us and it helps us because it allows us to inflate the value of these dollars that allows us to pay off our short-term maturity so these are two practical simple things that are uncontroversial that should happen today and then separately I think you need to look at minimizing Revenue and then you can cut expenses but if you
flip them around I'm just telling you it's not like I want any of this to happen but I'm telling you nothing will change and you guys will still be crying wolf in five years it'll still be the same it'll just be a different debt to GDP number that gives you anxiety speaking of anxiety free break your response I don't agree I think we need to balance the budget and I think that
if we don't we what can you agree with financing pushing out hundred years no no reducing Revenue solves the problem I think that and by the way one of the problems with a democracy Chapman is that you speak about it as if everyone benefits from a tax cut generally there's some disproportionate benefit to a tax cut and that's why it's less likely to happen because the majority will benefit by keeping taxes
high for a minority whether that's some corporate minority or whether it's um wealthy individual minority and that's why I think the opposite is more likely to happen which is we're more likely to see taxes go up in order to bridge the gap to continue to fund programs that everyone wants to everyone wants an and they don't want an or and as a result they'll kind of continue to seek Revenue because there are other
places to get Revenue that don't affect me meaning it doesn't affect the majority and I don't mean me personally I'm just speaking about a voter and a voter would say if there's a way to tax other people for me to get the things I want they will vote Yes for that and that's ultimately what the system ends up finding and I think that's what's more likely to end up happening that's
awesome yeah look I mean I agree with part of both of what you're saying which is I agree with Schubert that we need to balance the budget there's no excuse for running peacetime deficits this large we're really going to regret this one day on the other hand I agree with Jamal that if you just try to solve the problem by raising taxes the politicians will just keep spending I mean you have
to starve the Beast I think in order to control it at least that's been a view I think for a long time you agree with your mouth on that point here's the thing you cannot solve this problem by raising up to 70 tax rates like we had in the 1970s and I can prove it pull up this chart France is a good example of this too so what you see in this chart here is this is federal assistance
percentage of GDP what I see when I eyeball this is if you were to put a regression line on that it'd be around 17 and with a plus or minus of two percent and the times when you get up to 19 percent are a little bit close to 20 or when we have great economic conditions or money printing so the Clinton era from was it 92 to 2000 was an economic boom and we got up to almost 20 percent but we've
never ever been able to get more than 20 percent of GDP and federal tax receipts even during the 1970s when the top marginal rate was 70 percent doing economic activity no it curtails investment in economic activity this is yeah that was recommended for hundreds of years taxation doesn't solve this problem I don't disagree they shouldn't disagree I just you can only get so much
blood from a stone and the reality is is that when you try to tax rich people in a confiscatory way they spend a lot more on lawyers and accountants to figure out where they tap out you know like if you're paying 50 60 taxes like what's the incentive to go to work and if you're sitting on a big nut you can just be like no you know what I'll just I'll just enjoy my life a little bit more
because each incremental dollar 50 60 is going to taxes and then I have to pay my team and you just sort of yeah I asked a question on Twitter you know because we all talked in our group chat about the the concept of passing a balanced budget amendment which would be an amendment to the U.S Constitution that says you know Congress has an obligation and the the executive branch has an obligation
to generate a budget surplus you know every uh every year and you could have a balanced budget amendment that provides certain exemptions to this like in in a year of of War for example where Congress declares an emergency or declares a war and in those cases theoretically like if there's some sort of emergency that we have to address and and over fund you can kind of resolve to this but man I so might
you know we've been we've been at War for something like two out of every three years since the Cold War ended how many of those Wars sacks were voted on by Congress is the other issue you know well what happened is we did the the authorization for the use of force I think goes all the way back to was it like 2001 whereas basically we declare a war on terrorism in response to 9 11 and
they use that authorization to go into Afghanistan which I think was understandable then they use that same one to go into Iraq then they use it to go into Syria and only recently only a few months ago did they actually repeal that use of force as a way to keep authorizing new Wars so they really should go back to Congress for every new war but the problem is you know Freeburg
I agree with you that we need to have a balanced budget amendment but it's going to contain a caveat or exception for war and we're just in at War all the time now sure but I think that there's ways to create some mechanism that forces that issue to actually come front and center as opposed to being what you're arguing which is hey it's always on the back road therefore it's always bubbling
over and maybe you draft it in that way but what was surprising to me was just the incredible negative sentiment I got from so many people who were so deeply have this deeply held belief that the only way to support growth in our economies through federal spending and that that has become the driver that has become the handicap of our country it has become the handicap of our economy
it has become the handicap of our people and as a result is it a handicap because it means that we now have this instead of having an incentive to drive productivity through private commercial and economic activity through Innovation through productivity gains through business building it's now dependent on what we have now identified as a highly unaccountable system of spending and
that unaccountable system of spending ends up putting a lot of dollars into the pockets of cronies and the the pockets of folks that aren't actually driving job growth or aren't driving productivity there are certainly programs that work but overall there's no level or degree of accountability that asks the question did that program work did we spend a dollar and get more
more than a dollar back for what we spent there's no assessment of that whether it's a war or whether it's defense spending there's always some kind of intellectual argument that's true I don't think that's true I think the OMB releases report after reports saying that all of this stuff sucks and doesn't do anything just nobody actions no one cares right yeah you're right you're right I don't
care I think what you're saying is inaccurate this is my point I think it's important to get the facts right what you are saying is not true they do do an accounting that accounting sucks it shows that there's tons of ways nothing changes so now what do you want to do David it's the real question what do you want to do knowing that we shouldn't spend on things that don't have a
positive return this is my point that's why we're now in this very difficult situation that's not happening now what would you like to do well the reason it doesn't happen is because the way that politics decides things has nothing to do with the merits of it it has to do with special interests debating that I agree I'm just saying betrayed the country because we just keep teaching people that somehow the
government's going to solve all these problems when really it's just a product of special interest lobbying for things and that's why we perpetuate these programs that don't work I think the best way to think about government spending is that in every dollar there's probably 15 or 20 cents that actually does some good there's probably 15 to 20 cents that's like on the margins break even
and then the rest of it which is half of it is wasted that's probably roughly accurate right you get things like tarp which turned out to be a pretty decent program there were things like the doe loans that you know got things like Tesla into the marketplace right there's things like the IRA today that'll delever ourselves and create a peace dividend because we won't need to fight
over resources and oil from other countries but the problem is that that represents a minority of the dollars okay now that we know that that's true and we've known that that's true for decades I guess again I'm just asking a practical question what do you guys want to do now play the ball where it lies what do we do today there's a couple things you can do first of all one of the points I'd
make is I think you you're probably right in your assessment that 50 cents that's what you're calling wasted that money does end up somewhere it ends up in someone's Pockets probably the pockets of the shareholders of some contractor or the daughters of individuals or employees well there's also there's also individuals that that benefit but functionally what's going on
is it's a system of wealth transfer and that's not necessarily bad the question is is the transfer of wealth happening to the right groups that we intend to support with these social programs or is it not and I think Sax's point which I think we could all probably align on is it's not and I think that's probably a set of standards for accountability that we should probably try and create but
where where does that where does that money end up it ends up buying homes feeding people they're going to restaurants you're buying cars not like there's like a fleet of Mega yachts in America well I I guess what I'm asking is where where even that leakage of 50 doesn't that just end up in the normal economy yeah it ends up supporting individuals and maybe yeah so why is that so bad here is what I'll say well
that's what I'm saying it is a wealth transfer it is a system of wealth where it ends up in people's pockets and that that system ultimately benefits a lot of people in need and a lot of people that we as a society intend to support here in the U.S I don't think it just goes to poor people yes there's so much corporate welfare I mean come on it's not all just going to needy
people it's giving to your special interests on some level we can accept the inefficiency of government I like your idea of constraining how much of a canvas they have to paint with and how many how how much revenue they bring in and I think what we have to accept is that the reason this country gets bailed out is because we have tremendous entrepreneurs an amazing Capital allocation system a
very fluid market for building corporate corporations and capitalism is so vibrant here that no matter what happens we always seem to make the next Google Uber Nvidia whatever it is Airbnb and I can tell you you know I'm spending a lot of time traveling meeting with people in Japan in UAE Etc they're all looking at the massive entrepreneurial drive that we have in the United States to build
global companies and how we do it over and over and over again and the only countries that seem to be able to do this at scale you know maybe Sweden and some of the nordics obviously China but other countries have not figured out how to build Global corporations and and that is what bails us out every time is entrepreneurs check how the deficit's getting so big that we can't bail out
that way think about it we have 2 trillion in deficit every year that is two Googles yeah it's an apple everywhere there's money in apple every year we have to we have to address it but the point is that's bailed ourselves out historically is massive capital education and Entrepreneurship I want to remind you guys what happened at the end of the 70s we had all these inflationary problems
we had all of these taxation problems where people thought all of a sudden 70 tax rates were going to solve the problem what you guys talked about and instead the exact opposite thing happened which was the guy that got elected Ronald Reagan I just want to remind you what the Electoral College was between him and Jimmy Carter 489-49 like a bigger just shellacking I don't think we've seen in modern U.S
politics to the guy that basically said enough with this we're going to tone it all down and we're going to cut revenues so I do think that people have an appetite for them and I think that people you know the debt to GDP in 1980 was only 30 percent so we just have a lot less driving lots of work to do we got a lot of work to do but let me say this look I actually agree with what
you're saying in this sense okay if you look at my simple chart of federal tax receipts as percent of GDP okay the highest it's ever been in the history of the United States is 19.75 in 2000 we had the.com bubble okay that's the highest ever been and we had periods of high tax rates and low tax rates it never went above 20 so the simple math here is you do a forecast of what do you
think GDP is going to be over the next year you get independent economists to do it and you say the federal government can't spend more than 20 percent of GDP because we've never extracted that we've never figured out a way to accept it's perfect your logic is perfect out of the economy the logic is perfect there your aggression is so it's it's very important because what your aggression
says is we're actually spending a lot of energy fighting over two to three hundred basis points at any given time right yeah and what we should be focusing on is more important why are we doing that why are we spending so much time getting our pennies in a bunch over two to three hundred basis points and we need to stop Wars increase our education system stop the wars by the way and
inspire people to start companies and make it easy to start companies the bil the IRA and the chips act all three the biggest components in all three bills this is Biden's signature legislation is creating energy Independence for America which will have an enormous peace dividend you will not fight these stupid endless Wars every single one of them goes back to oil right like with the
exception of it's always about resources yeah what has it never been about resources in modern history well and now it's going to be chips is the modern resource Nvidia shares jumped as much as 30 percent after reporting huge Revenue guidance due to AI demand q1 Revenue 7.2 Bill up 19 quarter over quarter not year over year quarter of a quarter Revenue beat annual assessments by more
than 600 million for people who don't know Nvidia is working on gpus as opposed to CPUs the graphic processing units that are being leveraged in Ai and there is a massive cycle going on there's a line out the door to buy these when you see Twitter going into AI Facebook Google and obviously Microsoft all the cloud infrastructure is moving from CPU to GPU yes uh Freeburg well I mean I was talking with the CEO
and CFO of a major data center wreath and they shared with me that they're seeing more demand in the last couple of months than they've seen in the prior 10 years almost all of that data center build out demand so they'll build data centers for software companies for internet companies it's coming from you know GPU racks and these GPU racks are much more energy intensive much more
costly but it's a pretty uh kind of significant shift underway that businesses that historically didn't even operate their own data centers are now building out their own data centers have their own Training Systems to have their own infrastructure to be able to run AI applications and tools so it's uh it's a pretty significant shift underway all of the growth that Nvidia is projecting and
highlighted in this earnings report yesterday is coming from their their data center line of products and it's a pretty significant I mean I don't know people have said they've never seen a beat like this or never seen enough a guidance update like this of the scale where I think the the street was looking for maybe a seven billion dollar guide and on revenue for this and they
basically came out and said they're going to guide to 11 billion next quarter which is just an insane bump for a 90-day Outlook I was told from one of their major customers that they had to beg uh like get on their knees and bag for thousands of gpus and like the lobbying effort he said there's a line around the corner to buy these and you you need only use chat GPT or any uh stable diffusion Etc and you see how
long it takes to do uh generative AI to use these products it's like we're back to dial-up modems act we're literally we're waiting for a computer to give us an answer when's the last time that happened that we had to sit there and wait for it to do its job and I think this is the great renewal for America another amazing American company it's only three decades old it's it's best
years it's best decades are in front of it obviously this is going to be a massive Boon for yeah not only Nvidia but for America or as I say America yeah Nvidia has basically joined the trillion dollar club now in terms of market cap companies it's really amazing I mean I'm kind of kicking myself because this was the easiest buy ever launched on November 30th we all saw that that immediately ushered in a whole
new era in Silicon Valley there's a ton of VC funding that's poured into AI startups they all need to train models and those models need to use gpus so we all saw this coming and yeah I'm kind of annoyed with myself let me ask you let me ask you a question so you say that you kick yourself obviously the general statement that you know AI is coming and Nvidia is going to be a
beneficiary or nvidia's product you're going to see a boon make sense but when you look at the valuation of the business they are currently trading at 70 times the next 12 months ebitda so how do you think about valuation even at a trillion dollar market cap at a trillion dollar market cap they're trading at 70 times next 12 months even uh you know this seems like they're
doubling Revenue every six months though dude they're doubling Revenue here how high does it go because at a trillion dollars what's the right ebitda level for a business to be worth a trillion dollars is it a hundreds right is it 100 but I mean what's the number and then the question is if it's 100 billion how many years does it take them to grow into that and you know are you
really paying the right price are you paying a premium to get you know it's a momentum establishment and we'll be determined if they have competition so is is there a competition for this company chamac you'd think there's a competitor that will emerge that you know I mean it's important to understand what a GPU is maybe so sure Intel had the run of the place for the first 40
Years of compute because it turned out that most of the things that we used it for Excel Microsoft Word a browser operated well on a CPU which essentially think about it as like a factory that takes in the first order and then puts it up first and first up and the great thing about gpus is that it can take multiple streams of work at the same time and work on them at the same time
right so it's very parallel and has this level of parallelism that makes it very well suited for AI applications I think the thing to keep in mind is that it is a byproduct of a GPU that tries to also do other things and so as a result of that you're now seeing a lot of companies building their own silicon and most importantly all the big tech companies now have some pretty well-evolved efforts underway so a lot
of these companies have figured out how to do custom Asics that can do this massively parallel processing and what you're now seeing is chips that are designed against specific models that are optimized for them the other thing that you're also seeing is that some people are saying well you know what for these massive models actually you should just run it all in memory and so
you're having folks that are doing it in in massive arrays of fpgas that was Microsoft's first attempt at all of this so what is the point of me telling you this I think that again we talked about this last week the biggest cheerleaders of this first point of value creation has really been Wall Street and family offices that wanted to front run where the value creation was going to
initially go and they've been right which is around chips but there was a tweet and Nick I posted maybe you can throw it up here that shows that if you compare this to the mobile internet there's always this phased approach in terms of value creation where let's just say initially in a New Market Mobile a decade ago in AI today the first dollar of profits tends to go to the chip companies that makes a lot
of sense right because they're the ones that are in the bowels of making the elemental capabilities possible and then you transition that value and what freebrook says is people realize hey hold on the profit dollars are not going to accrue there because again this beautiful principle of capitalism is that you can only over earn for a certain amount of time because then
competitors emerge and say hold on I want to steal those profit dollars from you and take them for myself so margins compress right so in the end nvidia's gains today will be then spread across Nvidia Facebook will have their own chip Amazon will have their own chip Google already does papa will have their own chip all the memory companies will be in this space right so then the profits get smeared
there multiples compress then where does the value grow to the device companies in the mobile internet here I think we still have to debate what is a device company in the world of AI but the most important thing I think to remember is that where the real value gets accrued is five six seven years later when the software and services companies show up and create a huge moat and those in the
Googles and the Facebooks and the apples of the world and so it's a really Dynamic moment I think it's wonderful for NVIDIA it's an amazing story for Jensen who's been really at this game for a very long time by the way there's a Jensen has a law of his own that is a sort of companion to Moore's Law called Wang's law named after himself which you can read about which just talks about the variability
of the compute capabilities of gpus versus CPUs so if you want to know that he should get some credit for that but I think it's great I think we're in the another one apple is also making their own gpus that's what when you hear the M2 that has gpus in it so yeah you're absolutely correct anyone so we're gonna purchase a few years we're gonna have a few quarters for sure of
this hype and then the smart money will probably figure out where the next the lily pad is and then they'll go to the next beautifully said beautifully said any other thoughts uh free burgers we wrap up on that I wanted to show this AI demo from Adobe Photoshop you know every week or so we see something that's this is incredible and this one was we shared in the group chat but for those guys put
this out shout out to belski yeah so what we see here if you're listening is uh you know taking a Photoshop creating an area and then instead of like cutting in Paces pasting it or refining it you're putting in a text prompt and saying oh put um expand the and make this wide screen or let me grab this deer out of a forest and then put it on a wet alley at night and uh then you know let me highlight
this wall over here and put a sign and put a red arrow sign and it just generates it and it's doing this they made specific note when they launched this that all of this is done with stock Photography they have the complete license too so they can monetize this without getting sued like Microsoft is currently being sued and Microsoft actually in addition to the GitHub lawsuit
it turns out Twitter sent a letter over 2 Microsoft as well so incredible demo The Producers here at all in as our production team grows producer Brian made a little video here here's chamothin before the Laura Piana days that's that's Tom Ford yeah that's it's Tom Ford this is Wendy's terrible the hair is terrible you look tired uh the watch is great that night my God I played poker
literally I walked into that to that CNBC right you went straight from the poker table to the squad wait no tie but he's wearing a title that's a Tom Ford yeah he said to you he said try this without the without a tie I said okay when you were talking to Tom Ford great what a flex yeah you know Tom Ford has said me twice in my life I can tell you both stories okay hold on a second so we're degenerative AI add uh
make a yellow sweater is the prompt here let's see if he goes to Bert from Ernie to Bert there he is Sri Lankan Bert as we call him in the um it doesn't quite get the borders right but it's terrible it looks like a Warriors jersey oh there you go right yeah pretty bad yeah yeah I think the demo was [ __ ] can we change his hair can we can we have the hair be less in sync less Hassan Minaj
and more I understand why they call you Aziz Ansari I think the you had the you're going there the hair yeah it's a lot of lift and what was that day it's honey what is that is it putty this is like eight years ago is that what are you using clay or putty yeah it's like it's like a stiff it's like a stiff hair wax I think it's kind of a hair wax oh got it yeah I've come
such a long way since now you have much more much more stylish I mean look at Sax's crazy hair as we as we probably did in the cold open my thought on the Adobe thing for what it's worth is like I mean do they want a mulligan on this 20 billion dollar figma thing or um do they get to see the ongoing revenues that figma's generating uh all kinds of stuff it's a different product though I mean the AI stuff
certainly has had an impact but I mean so much of the benefit of figma as it's web-based it's collaborative it's like people kind of use it online to make stuff together it's a little different than the other tools that they offer today so you don't think it from September to now like nothing changes they should just close this thing at 20 billion or or they're half they're half page do you
think that they should pay a billion break it up and then redo the deal at 10 and then remember not all breakup fees mean that you can break up for any reason so there's only there's limited outs on what you can pay a breakup fee to get out of it one of which could be anti-drugs to regulatory but otherwise you may be forced to close in court if you don't have a valid reason for
terminating the deal their only hope is to get lean a content muck it up yeah some weeks is your argument more that they bought figma top of market pricing which no longer makes sense or is your argument that they're innovating so well that they don't need it I think it's a little bit of both but it's it's more that I think this generative AI stuff allows you to refresh I tweeted this out so
Nick maybe you can put it up there but I think the first thing is that your feature set can catch up pretty quickly so even if you set out a team and said just copy exactly what figma has with a co-pilot enabling 50 Engineers that's like 500 Engineers cranking on something I would be surprised if they couldn't just replicate the product n10 that's the first thing then the second thing is I
think that you've seen VC funding basically crawl to a halt and so the question there is how many of those companies are just going to stop spending because they're just not going to exist and then the third thing is if we're sort of hashtag austerity people are going to look at everything they're spending money on and try to be really disciplined about it if you roll all those things together sax my thought
is maybe the deal still makes sense but does it make sense at 20 billion and does it then just create a whole Suite of shareholder lawsuits after the fact that are just going to say these three things and regurgitate them Ad nauseam that's the Curiosity I had well so we're here let's talk a little bit about the state of Silicon Valley sacks we were talking offline after the show last week
you've slowed down investment at your firm craft you're being thoughtful you're working on the existing portfolios how would you describe your activity so far in the first half of 2023 as a firm if you're so willing to share them my take on what's Happening is Silicon Valley right now or Tech more generally is It's A Tale of Two Cities it's the best of times for AI startups
and the worst of time show everybody else the AI startups there's a lot of interesting things happening there and money is being pushed at them by VCS it's very frothy arguably bubbly but then at the same time if you're a pre AI company maybe the one that raised a lot of money at a big valuation in 2020 or 2021 it's a pretty tough time I don't know of any startup especially
like later stage startups who are hitting their numbers everyone is reforcasting down everyone's missing I think that speaks to the larger economy is not doing that well I think the economist a year from now may say that their recession had already begun certainly fails like that yeah that's what druck said at the Zone conference and I think that starts are absolutely seeing that in their sales right now
sales are slipping it's taking longer buyers are sharpening their pencils it's a really tough environment I think for software startups that are actually trying to make sales AI starts are a little bit exempt for that because people are still investing based on the dream not based on the metrics and I would say that we're very interested in Ai and we're starting to make some
Investments but we also like to invest based on metrics not just on a dream and so we're being somewhat cautious about how we approach it so you make a small seed bat in somebody who has a dream if I can translate here but if you're going to make a bigger battery series a series B you're going to want to see some numbers on the board you're going to want to see some product in mind I think
that's a really good way of putting it because I think the standards change at each round and then at the seat stage you can absolutely just make a bet based on the dream or just based on a Founder sure great founder going after the AI space idea still a little bit to be fleshed out you can make that bet but 500k 750 yeah or even even like 3 million will do as a big seed round but um but then when you get to series a
and you want us to write a 10 12 50 million dollar check we kind of want to see some Revenue yeah and certainly by the time you get to series b or series C we want to see like all the standard metrics we want to see net dollar retention expansion all that kind of stuff yeah it's it's really hard for the later stage startups because they raised and this is the lesson if you're raising
at three four five hundred million sax correct me if I'm wrong here you're not you have to build into that valuation and let's face it that valuation a was never realistic it was overpriced and then B you got the headwinds and your customers are saying oh you want 40 000 a year for this SAS product we'll give you 12. and what position are you in to turn down the 12. you got to take the 12. and because you
got three competitors who are going to roll up and take the 12. so it's hard actually can I give you an update please remember I mentioned there was a startup in my portfolio um actually my my angel portfolio yes that that way to play around the cram down and I think it's absolutely tragic because of what I learned which is the founders got crammed down too because a year ago they
brought in a professional CEO and I think as a result of this they're probably going to get nothing for 10 years of work whereas if they had just cut costs damn it and you know the the company has 32 million of ARR so imagine if they cut their Opex to a million a month they could have run 20 million dollars of ebitda pivot to basically private Equity model sell that company
for 150 million half would have gone to pay off the investors in the other half would have gone a lot of would have gone to the common they probably would have made 10 million dollars each and now they're going to get zero because they burnt too much money didn't want to cut costs they bought into the dream of bringing in the professional CEO is going to re-accelerate growth it's never
done out never does and so it's like so frustrating to me because I like feel so bad for these Founders I wish they had called me a year ago and I would have been one of the guys pounding on the table just cut costs and then control your desk because listen yes and here's the thing is if you're only growing 10 15 20 or even 50 a year you're not a VC backable startup you're a private Equity
place you got to Pivot to that model of making your business work as a cash flow positive business yeah that's how you're going to get an exit and you know if you're growing 100 plus a year you can continue to be VC back so it's so important for Founders to understand whether they're even eligible for Venture Capital anymore and if they're not you have to make a different kind of
model work if you want to see a return yeah and when this happens a cram down round those Founders if they want a refresh they have to prove their worth they're not just going to get a refresh to keep the relationship going this is 30 million dollars in Revenue they don't need the founders anymore look these guys been working for 10 years so even if they got a refresh they had to put in
four more years of work and the other thing is the scram down round I think was way too big they raised 25 million with a 3X lick pressure 75 million off the top off the top then you've got to repay vague is triple yep oh my God who this is where board governance is so important tremath huh like I mean who is on the board of these companies of these companies these are about people had to build a company
and they may be educated or they may have been an exec at a company and then some VC who was feverishly raising funds just hired some dope put them on the board of this company and then just the stupidity compounds and trickles down it's so frustrating compounding stupidity this is the beginning of the beginning all of these people who have zero judgment are gonna [ __ ] so many companies up
it is the beginning of the beginning well it's your mouth it's not just the the bad board members it's the view for so many years that who you put on your board didn't matter remember there was all these VCS who had a model where it's like well we don't take a board seat and they were selling that to Founders as a positive as a feature as a feature not a bug and the reality is for a lot of VCS
actually not being on the board probably is the best they can offer but you know that that model works that model works when everything is up and to the right where like this model of board seats don't matter governance doesn't matter that is a model in a boom where everything just keeps going upward to the right but when you hit a tough time that is when you need a board member
who's seen this movie before who knows what a cram down round is who knows what's going to happen to you a year hence when you get screwed into taking a threes where you want the gray-haired pilot you know in the right time to say Hey listen here you want that hair you want that sex here all right Freebird you are always candid about your own Journey you've had huge wins climate.com
from Billy raising funds but you know sometimes things don't work out what are you what's your take on some of these hard lessons of great ideas you know spun up during this really hard Market I mean I think just to Echo the point you guys are making in the last 15 years we've been in a college structurally inflated environment because of the zero interest rate policy since the 08 financial crisis and
everything's been up into the writer so much it's been so easy to kind of inflate Things fill up hot air balloons and go up into the right and unfortunately most folks who are working in the investor community that are sitting on boards weren't around for the.com crash the last time this happened and I think you know just to kind of echo your point why it's so challenging
I think right now to figure out a way out there are there's a lot of failure going on in in Silicon Valley right now you know sax you talk a little bit about having pads for exit and options for SAS companies but there are many sectors in startup land that don't have those sorts of options in biotech in sinbio in fintech and direct to consumer e-commerce there's a lot of markets that
a lot of types of businesses that feel like there isn't a great way out and it's having a deep psychological toll on entrepreneurs on Founders on CEOs and everyone is experiencing some degree of failure in this environment there are very few folks who aren't feeling this acute pressure in this acute pain you know I heard some pretty uh horrific stories this week from a friend of mine
and someone who ended up in the hospital because of the pressure he was under hmm and it's really trying and you know even within our friend group I mean not not our direct friend group within our broader community of investor friends there are very few people who aren't feeling this extraordinary pressure that they've got a book that is declining in value and they don't know how to get out
of the hole and you know that pressure is like is generates deep questions about one's ability and generates deep existential thought for entrepreneurs and investors about what the hell am I good at and no one's really talking about this out loud but it is a happening across the valley we all have these thoughts we all have these dialogues as the failure begins to set in in the slow motion train wreck of a
market that we've all been talking about for weeks and months how do you deal with it look I mean I just think that number one it's worth acknowledging and it's worth having the conversation that no one is alone going through this pain it is not a one-off that these companies are failing it is that we are all dealing with failure right now and we are all trying to figure out what is the
best path forward and it is the kind of thing that you just have to work your way through and you have to persist through this pain but this existential question of am I good enough do I have the skill set I thought I had am I just an idiot did I blow it up Emperor has no clothes all the kind of interfere and turmoil that everyone's dealing with you're not alone going through it a lot
of entrepreneurs a lot of investors are in the exact same place now with respect to going forward I think having Integrity with respect to how you handle these situations and having thoughtfulness about you know your reputation because this is not a one and done environment here in Silicon Valley failure is part of the process and how you deal your deal deal with people deal with investors deal
with entrepreneurs deal with each other deal with your employees during these difficult times says a lot about your character and your ability that when you do this the next time it will set you up for success and you know as any great athlete will tell you you build muscle during the times that you're failing and then you're ready to go and execute the next time around so
you know let's save it for the next quarter but let's play well as best we can right now through this quarter clearly you want to jump in here what are your thoughts on separating your identity from your startup from your work and having a more balanced view of yourself so that when things go wrong maybe you're not as devastated you don't wind up in a hospital bed when things go
wrong they go wrong in bunches just like when things go right they tend to go right in bunches I called free bird last week and I was telling him a story about two or three of my businesses just all just pounding eating dirt and what I said to him was and then we have a mutual investment that's doing pretty well and I needed to use the one that was doing well to make myself feel better
about the three that were eating dirt and I said to him something he's effective it's just like nothing is working I feel like literally nothing is working it's a tough place to be the only thing that you can do in those moments is just realize it would be so much worse to just be on the sidelines oh I like it and I think that's all you can do then you go and hang out with your friends
go hang out with your family kiss your wife have as good of a time as possible outside the context of work and then you just start the grind again but yeah we are in a moment where in most companies there is something pretty wrong it's either your burn and by the way that's always the problem but it tends to be balanced by a few things in your portfolio that are always going well so that as an investor you can
maintain some Equanimity through the whole process but Freeburg is right when there aren't enough of these positives and there's just a parade of Terribles you're just like wow this whole portfolio is it all about to fail and then I get a massive wave of imposter syndrome of like what am I doing here and then I have to recognize holy [ __ ] this is my 24th year take a deep breath and it's great that
it's that that exhilarating where I think it's back to 2000 and I just emigrated here the conversation were talking about like a string of difficult things we were all dealing with you know a couple weeks ago we announced that we returned all the money to all our all our customers at Canada which was this molecular beverage printer company I've been working on for
a few years I plowed north of 30 million dollars of our Capital into building this business we had two term sheets last year both of which vaporized as the markets that degraded it was really a brutal experience for me and these were very high valuations and we were we needed funding to get the production line stood up to manufacture that device so we were that close I
ma'am and as the market went South pre-revenue Hardware companies became less fundable and despite our reputation and a great working product and a pro and a manufacturing ready prototype we couldn't get it done it was a really kind of brutal experience to go through the nodes even after you've had a lot of success in your life believe it or not you still get a lot of freaking notes
and you get a lot of I don't believe Youth and then to just have to get to a point with this one was really difficult and there's you know been other kind of frustrating experiences of late and then you know you kind of have a call one day with another investment and you're like oh my God this thing could be a home run and that just comes out of nowhere and you know as long as we kind of stay in
it as an investor and you keep you know as a builder and you kind of keep building you don't know when that good knock on the door is going to come yep you got to stay in the game you got to start building a business and one day you just nail a sale that you just weren't expecting or a partnership or an m a inbound or something that happens that you weren't expecting it pays for all
the pain and all the loss and all the turmoil and all the downside I always used to tell people for every you know four days I'd be failing I'd have one day of success but that one day of success will get me slightly ahead of where I was at the start of the week but 80 of it was failing I mean right now it's like 19 days of failure and one day of success but that one day of success
the goal is you used to have a couple of those punctuated moments that are big enough that make up for all this stuff if you just keep grinding and if you just keep grinding as an entrepreneur you keep grinding as an investor and stay in the game you're describing living with the power law there's a very relatable poker analogy in this there's a there's a guy that makes Poker content his name is
Jonathan little he's great who he's wonderful I've been thinking about hopping into one tournament at the WSOP this year it's one of the big buying tournaments so I'm like let me just take a little tournament Refresher and I was just looking for any content and I found his and he had this beautiful slide which he said if you are a mid-level poker player you should expect to final table
every one in a hundred tournaments roughly and I thought about that for a second and I was like that's a one percent success rate now if that is your 99th tournament you have to be pretty resilient to go through 98 losses where you don't cash you don't make the money and you're just putting money out you're deep in a J curve and you're like is this ever going to work out for me and so it's a really
really good reminder that it is the grind yep and I thought that was really interesting so you had a you had a single or double I guess with call-in maybe you could talk a little bit about that experience and what decision you made there we were obviously investors so we're a bit conflicted but I'd love to hear your candid thoughts on why you decided to sell yeah we put together a
great team and they built an amazing product I think it's by far the best sort of social audio product and then actually they added a video to it as well and podcasting features so it's kind of the synthesis of video and audio podcasting with social audio we got acquired by Rumble it's sort of like a base hit type acquisition it's it's a small deal relatively speaking but the
team wanted to do it and then the main reason is because we got to hundreds of thousands of users but in the consumer space you really need to get to millions and frankly tens of millions is what it takes to have a successful consumer product Rumble does have tens of millions of users so the team wanted to find a home and there's a lot of synergy with Rumble both companies have a
Mission that's aligned around Free Speech rumble's sort of the call it free speech alternative to YouTube it's a video platform and what Colin will do is give Rumble Studio capability so it'll be very synergistic for all their creators to be able to create content in-calling and then post it in Rumble so it's not you know a huge outcome for anyone but sort of a push for the investors depending on what Rumble stock
ends up but look it's just you can build a really great product and a great team but unless you hit that Lighting in a bottle with distribution you know you won't get to the next level so I'm happy about the deal I think the team's happy about the deal and it's a good outcome for for everybody involved but it's not you know it's not a home run it's just it's more of a base hit and that's what
most these things are yeah getting used to a high failure rate and living inside the power law where one investment out of 30 or 40 or 50 results in ninety percent of your funds returns for you know that specific fund or so or maybe two wins represent 95 that's a hard thing for the human brain to handle as is the J curve estimov you know points out correctly man you invest for two
three years and then you watch the all those things go down in value for two or three years or the value I'm sure of the portfolio go down for two three years before it actually rebounds and goes back up I remember man I had a run where everything I touched turned to gold and then Mahalo hit 10 million in revenue and then boom Panda update and it just goes up and smoke and you're like what
what just happened I I sold web logs 18 months after starting it I you know had the Silicon report I just Uber investment everything I touched went to the Moon it was working yeah yeah and then it's just a very frustrating experience where you can't make something work and you know like I should be able to make this work why isn't it working there's a very heavy blanket of humility setting over Silicon
Valley right now and I think all of us who have had strings of successes and repeat successes and you know things that we touch have worked and we do all the same things and we do the right things and we do them the same way in the right way and it doesn't work and then it doesn't work again and then it doesn't work again it creates a very different psyche whether you're an
entrepreneur building a business or an investor investing in businesses that what used to be the case isn't the case anymore as the tides have shifted it's uh it's it's it's a daunting challenge to work your way psychologically through this moment but you know progress doesn't change Innovation isn't going to stop technology isn't going to keep shifting forward and uh the opportunities to
continue to build and innovate are not going away so I for want am deeply optimistic and excited about what the future holds but man you got to put your freaking game face on right now to get through this yeah for sure well yeah and I would say there's one other exogenous variable here which is I don't think any of us realized how much our sentiment was affected by one guy's decision at
the FED like what interest rates yeah because you know what when there's a lot of money in the system everyone feels great totally and all the portfolios look great and when the money is being sucked out of this the buyers are buying and you know oh my God like when the money is being sucked out of the system everyone's results look terrible yep it's you know what it's like before a tsunami the big wave gets
pulled out and then this tsunami comes in yeah the money is being sucked out of the system like the tie before tsunami and tsunamis give me all the failures and bankruptcies but what I would say is just in the same way that things weren't as good as they appear to be during the asset bubble they're probably not as bad as they appear to be now however you have to give yourself time to get
through this certain recessionary cycle and it's so frustrating to me when founders don't want to cut their person the burn is the one thing they totally control and they have all these excuses for why they can't cut to an earlier level of spending that they were the company was working fine at and we can't get them to go back to cut back to some earlier state of being
if Zuckerberg can do it they can do it and you know after seeing what Elon did at Twitter where he reduced the staff by 80 I'm like I realize there's no good excuse anymore for not giving yourself the maximum chance of survival and if you overcut like he admits he probably did he literally in the the Dave Farber great interview he did with him he said you know like we probably overcut
we cut people who were great and we hopefully can welcome them back to Twitter as we get this thing unstable footing but we're gonna make mistakes because we had an existential crisis Elon Musk cut too many people admits it and says he's going to bring them back it's no fault of theirs and he said he's going back into growth mode so you know like sometimes you cut you might cut too deep is the point and
you know that sets you up for growth in the future you had something you wanted to add I have two shout outs okay here we go the first is to one of our besties got a text from Jason [ __ ] he banked the main event at the Triton for two and a half million yeah be incredible who I mean he's so strong he's a guy's a beast so it's so great to have a professional poker player in our Circle finally like
somebody consistently over time but he's so open and he teaches stable rational humble humble professional poker player like happens to basically be the best poker player in the world but you could you would never know it you'd never know he'd never bring it up like he is literally the greatest and he won the Triton 2.5 Milli yeah the second the second shout out is okay here we go to the model y team at
Tesla I have been a die-hard model X User from the beginning right I think I have here we go number 13. so I've been I've been I've had three or four of these things and I was like wait a minute maybe this why is really all is cracked up to be and I'm a bit of a curmudgeon and I have high expectations but I just want to say that car kicks absolute ass it is perfect incred no it
is incredible that model Y is going to be the best selling car yeah it's going to be the best-selling car in America if you get the base level it's actually cheaper than the average car in America now with incentives yeah it's so so good so huge shout out 300 miles range which is a huge huge shout out to the model y team at Tessa you guys nailed it yeah incredible product and we I love it I
don't want to diminish the ax is the best yeah it's a great car it's a great great car I can't wait for the Cyber truck that thing looks like a beast I can't wait to pick that up on top of the Roadster I want the Roadster you know I've been taking my uh 12 year old uh Roadster app and my kids love going for ice cream in the the original Roadster 1.0 so I've been taking it out
every weekend or two number one number 16 of the Roadster which somebody offered me a quarter million dollars for I paid 160 for it I have number one of the model S Signature Series so I have signature 16 of Roadster they did 100 signatures and they did a thousand signatures of the model S and I have number one of that and somebody offered me a million dollars for that I have a
number of the founders Edition number 13 of the X yeah that's pretty special yeah I'd hold on to that yeah there it's a special vehicle all right listen everybody all in Summit is uh basically so how are we doing how's the all in Summit doing guys we're starting to do our Outreach and to figure out yes yeah so it's exciting all right everybody for the Sultan of science the dictator and Steve
Bannon 2.0 David sax the architect the architect the architect I like that I remain even after Sax's triumphant spaces I remain the world's greatest moderator so excited for this weekend boys see you tomorrow at the tarmac on the tournament bye-bye love you bye Rain Man [Music] besties [Music] it's like this like sexual tension that we just need to release somehow [Music] [Music] I'm going all in