do I care I'm coming in hot my quick time I told you seven times you Nick you don't work for me work first you're on your own good luck working for chal do not attack my employees Jason you guys are going to billionaire me and that's going to be the greatest revenge of all you want to run the show in year four go ahead chairman you guys won the vote guess what jal's goingon to do I'm gonna ski and you're going to
make my 25% worth 500 million get to work deal let's go deal Chamas title has been upgraded from dictator a chairman chairman dictator that is very funny chairman dictator chairman dictator he's got the super voting I have no say anything I built this entire Empire and I have nothing I built the Empire I came up with the name of the show I came up with the format I invited you miserable Pricks make me rich
let's go distribution checks Daddy needs new skis three two all right everybody welcome back to the all-in podcast if you can believe it we're almost at 4 years of this muga episode 158 today and we've got a full docket I'm at half speed I got a little bit of uh the sniffles but we're going to power through the docket with me again today you got the sniffles I got a little bit can I get you a tissue give me a little
tissue and some uh some juicy a juice box and I'll some cough drops I'll be fine I'll be fine you'll tough it out you'll tough it out well listen I just want say you can make it through this pod of course of course I'm professional with me again today the king of beep can't say what he's working on it's a I don't think people understand that like what the beep there were so many beeps last time that people couldn't even
understand beep out of the show it was crazy it's some C he's genetically engineering right but he's it's top secret which one is gonna they already figured it out in the comments by the way all the Fig I don't know what's so secret they they already figured it out so can we say what it is the horse out of the bar bar freeberg can we fit get through introductions go ahead keep going and chairman dictator chamath p
haaa is with us welcome back to the program thank you by the way I um I was feeling pretty bad about your sore throat so I was I went on Google and I found something that may be the cause of it Nick can you just throw up this AR pre strike let him land the joke come on Jesus this isn't a Cru movie you can't pre- strike go ahead I found an arle that made the Epic source of your god oh no I'm going to get cancelled let your winners
ride Rainman David and instead we open source it to the fans and they just gone [Music] crazy I am your bip chairman and I'm here to do the best job I caning what do you mean bip chairman explain to the audience what these two words mean person of color bro billionaire person of color oh is that what it is yeah soing to we checked the Dei Manifesto and it said we needed to make a chairman of the organization so uh saak is
leading the all-in Dei group and uh they vote Ved chamath to be the first chairman of Allin as we get our CEO ready to come on board and so you did A diversity token candidate saak explain the process well it's it's more like um you know tath was getting a little bit touchy about being called dictator all the time and you were kind of playing the Biden role of needlessly offending him he's kind of playing the Shen King
role so we've elected him chairman so that you can stop calling him dictator right because you want to more diplomatic more sensitive more yeah I think it's great I'm all about the Diplomatic listen and he there was there was a polit buau there was a process it was meritocratic chimney and now for year one there's a PA buau consisting of me freeberg and chamath and the PA buau has selected shth as chairman get to work get to work
let's make my 25% worth a billion dollarss please uh and of course with us hot off his hosting of the absolute best party of the Season well top two here at too man it was a top meat protein party shth and I went to sa I hope you got enough food I did it was good yeah I mean the dessert table was crazy the dessert table I had to I was like I found myself beside it and I was like why am I near this dessert Table after
the Fiasco at free birds so I had to go I had to go to the other side well here's what jamaath and I did we got in there and we sniffed out the caviar and this was Top Shelf caviar on potato chips fresh and also on bis we parked it there and then that actually is a great way to you know that those B are too like Brey I don't think it's a good combination with caviar but caviar chip high and low they call it high and
low in the business should always be served on Pringles the most important thing Nick I'm sure you have it queued up is our annual awkward hug this is a tradition amongst the all-in every year to celebrate the holiday seasons we engage in the awkward Allin hug let me explain how the hug went down we're at the caviar and chamath is on his eighth Pringle I'm I'm about 15 in I've eaten half the 10 of caviar at this point I'm
getting my money's worth uh for coming all the way up uh to the city and risking my life and then here it is we got to break this down first chamath is in a loving Embrace with Sachs what you see there from Sachs is not a cry of Joy fear it's it's Fe absolute fear abject fear going a little bit too long that was M shth refus they went on for a while that's what you guys don't AR because if you look at the you look at
the studies and freedberg can attested this when men hug for two minutes there's a release of oxytocin and it's an incredible anti-inflammatory anti-anxiety so I was I was giving you therapy that's like a therapeutic H it's a gift that that was your Christmas gift SX tell us what you're feeling here we see this blood curdling scream Endor Cry Of Joy what what were you what was going through your mind when you got to minute
two of the hug take us to the moment I'll show you what I was I was thinking of here hold on okay because you can see here also if we break this down freeberg comes in with an asperg or side hug I don't know if you can see that there in the photo but let's see the because you know he yeah you got to zoom over to the left freeberg looking at his shoes is like I'm going to express joy and love with my three besties through a man hug
and he he gets enough of the shoulder in there that he doesn't have to have technically part of the hug but he's not really cannot make eye contact and he says I have to it now me I'm like this is hilarious so I just jump and I grab all three guys and I just said that's just me pure joy hilarious friendship is great good to have good friends in Friendship is great I love you guys I love you guys too yeah back at you this
is what I was thinking this is what it reminded me of this is Sax's personal Vietnam this is oh yeah it's a great scene great scene great scene love that that's a great scene from fight from Fight Club that's meatloaf right that a great scene that's a great movie he on he's on estrogen therapy in the scene and he grows man boobs and then he stuffs Edward Norton into his man boobs it's a great scene we're men men is what
we are let's get to work we got a full docket here and uh the world continues to spin into chaos apparently members of the houti movement have been attacking commercial ships in the Red Sea with drones and with missiles this is largely underreported in the mainstream press so we thought we would tackle it here they are calling this revenge for Israel's uh military campaign in Gaza the houis say they will only stop once Israel begins
allowing food and medicine to freely enter Gaza think something we would all like to see CRI suggests this is a power play for more legitimacy in the reason us allies including the UK Canada France are reportedly preparing to deploy Naval vessels to the region to deter more strikes obviously there's a lot of geopolitics here and this is a business story we can link this back because the attacks have interrupted one of the world's busiest
trade routes as you know all five of the world's largest shipping conglomerates have paused transfers through the Red Sea and that that means they've got to go around Cape Horn they got to go around South Africa to get things to Europe uh from Asia thousands of extra miles from what I understand and this has caused oil and gas prices to rise and if this becomes acute it could be really really impactful to the
economy on a global basis so in order to understand what's happening of course we go to our foreign war correspondent yes he's got his military cap on he's now a total of zero tours of Duty SX can you please with your infinite wisdom and experience in the field tell us what is happening in this well you know um Matchbox situation yeah what's happening is um gee yeah what's happening um come on you're an expert yeah I'm really I'm
really struggling with this one jcal um can I use a [Music] Lifeline I'd like to phone a friend phone a friend tance for this one for the first time Sax is unable to give us a confident answer he's chosen to phone a friend which we allow here on the all-in podcast who would you like to phone have you thought about that who are you going to phone since this is uh involving impact on global trade
Zuckerberg no I'm I'd like to phone Ryan Peterson the founder of flexport all right here we go we're going to the AT&T phone call phone a friend zoom we're going to click through on zoom and can we get Ryan Peterson from flexport Brian Peterson you're [Music] here it's Jason calanis from the Allin podcast it's your boy jcal let's go skiing soon welcome back we're live we're live you're on the Allin podcast
live we've got an official phone a friend moment here you uh you understand what's going on there better than anybody uh Ryan obviously runs flexport and he is in the business of shipping containers so Sach you want to ask him for some help what is the impact on global trade here from what's Happening in the Red Sea well it's it's massive about 30% of all ocean container traffic flows through the flows through the Suz and through the Red
Sea most of that is going Asia to Europe so like the biggest impact here is going to be felt on those two areas it's going to make Chinese manufacturing that much more challenging you have to go around the southern tip of Africa it's adding about 20% 20 to 25% longer journey and now in a network business a longer Journey means less capacity uh so you're talking about a 20 25% cut in shipping capacity on the 30% of all containers so that's
containers I also understand that about 12% of global oil goes through and about 8% of liquefied natural gas and just to explain what we're talking about there can we zoom in there's a very narrow straight there called the Babel mandb straight I hope I didn't Massacre that pronunciation so you go around the Gulf of aen through that bob L MB straight into the red sea and then from there you can go through the sus Canal into the
Mediterranean yeah and so it's it's a maritime choke point by the way this is going back it always has been um you know there's there's documentation Caesar Augustus invaded Yemen in like 63 BC I forget 63 ad no I forgot the dates but it was during the reign of Caesar Augustus so it would have been right around the the birth of Jesus Christ and you're talking about thousands of years of this being a really important choke point
even the Egyptians actually built a canal the ancient Egyptians had a canal that connected the Nile River so this has always been the place to connect East and West uh an incredibly important Maritime choke point and uh the Reel forces in Yemen have been firing missiles at ships um and that what that does is Spike the insurance cost obviously it puts uh the crew lives in danger which they can't tolerate but it
also uh really spikes the insurance cost if you sail a ship into a region that's got missiles being fired the insurers just won't cover it and so you can't you can't operate a ship without insurance cuz if it sinks you go out you go bankrupt um and so they're just taking the long way around which as I said is a 20% reduction in capacity what we've seen remember with covid you had all the ships off the port you guys brought me
on to the show the last time I think was when that happened that was about a 20% reduction in capacity but at the same what happened during covid was there was also a 20% increase in demand so this time there's not an increase in demand so I don't think it's as impactful as what we saw to shipping prices during covid where you had like a 10x run up in price but you're already seeing prices are coming out now for January Freight
for ocean Freight Asia to Europe you're seeing about a 3X increase in the price of ocean Freight uh versus where we were a month or two ago which was very very cheap a month or two ago so I wouldn't read too much into this and frankly the Suez Canal is too valuable in my opinion too valuable to civilization to the modern world to believe that you know group of rebels no matter how well-funded they may be is going to be
able to disrupt that for any long period of time I think there's too many interests aligned here to say to keep this thing flowing well okay two points on that so we call them a rebel group and I guess they are it's a Shia group in Yemen that rose up in 2014 and deposed the Monarch there and they basically control large swwa of the country but they're not internationally recognized so that's why they're called
Rebels but make no mistake they basically control the vast majority of of Yemen it's a Shia group they're you could say sponsored by Iran but I'm not sure they're controlled by Iran people call them proxies and that's true to some degree but they also have agency like you said uh jcal they are doing this they say in solidarity with the Palestinians when the invasion of Gaza first began they were firing rockets at
Israel but they had to go all the way over Saudi Arabia they didn't make it so now they've started firing on ships that are going through the straight they started mining the straight and so like Ryan's saying this is basically put a damper on on Commerce unless you're a country that the hoodies like apparently Russia's been able to move its ships through still they claim they're only targeting ships that are transacting
with Israel but that's not true I mean a lot of ships have been targeted that don't have a relationship with Israel so let's just say broadly speaking for Western ships they can't get through now what the US is done in response to Ryan's point if is that we've announced this operation Prosperity Guardian which is to restore the flow of trade through you know the Red Sea but the question is what that's going to involve and I think
we are bracing now for the us to start taking military action against the houes the problem is I think Ryan when you're saying this is going to be resolved maybe quickly is that the US was already backing the Saudis in a war against the houes that started in 2015 it only got sort of resolved with a ceasefire that's still pretty fragile last year and so the hooes have already survived almost a decade of Western sponsored attacks on
them it's not clear what we have to do to basically stop them from taking these actions and I think if the US starts a war basically against the houes in Yemen we're talking about an expansion of this conflict in the Middle East from you know beyond what's happening in Gaza to now another front uh that directly involves the US moreover uh this is I think very underreported but there have been almost 80 attacks on us bases in
Syria and Iraq by Shia militias again sponsored by Iran over the last couple of months so this whole region is a powder keg and it's not clear to me that if the US attacks the hooes that this is going to lead to a quick resolution so I guess my question back to Ryan is let's say there is a war here let's say the hooes don't stop I don't think they will um and let's say the US gets in a war there
but isn't really able to bring it to decisive conclusion um and let's say that this blockade of the Red Sea continues for all of 2024 what does that do to Global prices because I think right now the market is pricing in rate Cuts next year on the theory that inflation is coming down and is a solved problem it's the right question it'll be a big impact um and if you listen to like retailer earning call earnings calls they're all talking about
hey we've had six 12 months of deflationary environment prices are coming down a lot of what they site is the lower ocean Freight prices and if and if that goes back and it if it goes back anywhere near I mean we're already seeing a 3X but even that 3x is sort of well is this going to last do I need to price it all in do I need to uh and it hasn't really uh taken hold of like that's not a true market Dynamic of what
is the supply and what is the demand and Freight is very inelastic like you're going to ship the product regardless of the price of freight you know unless your business model has the tiniest of margins the price of freight goes up it doesn't impact how many products you ship you're going to go sell as many products as you can does it impact America as much as it impacts Europe absolutely not um now this is the the
fastest route for many parts of Asia to the east coast of the United States and especially with the Panama canals also congested at the same moment right now because of they say it's because of a drought but actually they built a bigger canal and it's just draining the lake faster and that's my hypothesis but I'd like to look into it a little further but uh the the Panama Canal is only going at about two-thirds capacity so if
you're going Asia to the east coast those are your options but it to go around the southern tip of Africa around the Cape of Good Hope to get to the East Coast it's like an 8% increase in transit time versus 20 to Europe and there's Alternatives so definitely impacts Europe much more it impacts China like the reason I think that this there there's so many people lined up here like this is not
good for China China wants to be able to ship stuff quickly to Europe and get it to Market um so to the extent that they have any impact I think they're going to be clearly on the same side as the United States here Europe obviously has a thing and the other thing I haven't heard anyone talk about is like you look at that map they're blockading not just the Suez but they're blockading Saudi Arabia the saudi's biggest Port is in
Jedi right up there well I think they're going to tolerate being cut off from the world taking on Saudi seems like an unwise idea well they've been at war in the past as as David pointed out so um and I'm not I'm certainly no expert by the way I find this ship to be amazing it's since it's since transited but this is one of the ships that was there yesterday just going for it uh and if you look at the destination it says
armed guard on board as they set that in the AIS G GPS transponder so that if anyone comes after him you know what you're going to get I have two comments when I look looked at this in the last couple of days that was sort of my takeaway which is that the the really significant impacts are Downstream to Europe consumer prices so I think like European inflation has more chance of up ticking again than America does because I think the Practical
reality is what you said Ryan you'll just this the need to ship is in elastic and so they'll just pay 8% more and they'll just go to the east coast in a more in a longer way through the Cape of hope or whatever the second comment I think to me is a little bit more macro in nature which is if you look at what's happening now there's a hot war in Israel and Gaza and theoretically now there's a hot war in Yemen I think the positive take on
this is that it actually puts the Middle East in a position to resolve all of these things and what I mean is the following if you're Saudi Arabia or if you're the UAE or if you're Qatar what you really want to do is build for the next 30 to 40 years they've said it as much they want to pull trillions of dollars of oil and that gas out of the ground they want to monetize it and then they want to invest
in their people the last thing they need is to be bookended by two hot Wars largely propagated by a third party actor in Iran and so I think if there was not resolve for them to get aligned I think that the resolve now really amps up Saudi Arabia doesn't want to be in the middle of this nonsense Qatar doesn't want to be in the middle of this nonsense UAE does not and then the fact that Canada America
Britain France are now all of a sudden pulled in and China as you said Ryan I didn't even think about the implications to China as a supplier of record for most of these Goods all roads I think lead in my opinion to a coming together of folks to say okay let's use this as a definitive moment to just clean the Dex here and I I think that that'll put a lot of pressure on Iran a lot of pressure on the money flows I suspect that both of
these two hot Wars get resolved quickly because the larger multi-decade implications for the Middle East are too big to Let It Be subsumed by the houti rebels or Hamas it's interesting here um how you see like Israel is a relatively small economy in the world and the and and you know you start to see in the same way that Ukraine is not a big economy Russia is not that big but it has a massive the war there has just a
massive impact via the Commodities markets because Russia is such an important supplier of Commodities and now you see what you know Israel and Gaza are relatively small potentially a small regional conflict big Global implications because of everything that goes behind it but now you see this spread to something that really could impact if this is an extension of that conflict now you're seeing wow this actually has the ability to extend to
Global markets in a way that's similar to what happened in Russia and Ukraine where all of a sudden commodity markets are impacted and you're seeing that inflation but I I I don't know chamant if your your view is hey we're going to have progress because progress is good or something I don't know that that's necessarily the direction that the world follows like you could have sitting in Dubai or Saudi or Qatar you're thinking
this is the last thing we need for sure well I think that's definitely true multi-decade multi-trillion dollar investment plans and we're going to let the hotti rebels derail that and literally on ports like saudi's trying to build a big Port as part of the neon project there in the in the northwest of the country on the Red Sea which would be cut off I mean it's not going to fly yeah look Saudi Arabia is in a really
tough spot here because what happened is after the houes deposed the Monarch there in 2014 Saudi Arabia started fighting a war to restore the the leader in 2015 and that war went on for almost a decade created a huge humanitarian crisis really underreported compared to other crises there were hundreds of thousands of civilians who were killed millions of people displaced went hungry finally that war again got paused by a fragile
ceasefire that was negotiated I guess in the last year or so and then simultaneous to that there was a reproach M between Saudi Arabia and Iran that was brokered by China and so the last thing Saudi Arabia wants to do is get involved in restarting this war or restarting hostile relations with Iran I mean they would like to move beyond that which is why they're not participating in this operation Prosperity Guardian
the problem they have is that the htis aren't going to stop doing what they're doing until Israel's war in Gaza stops and Netanyahu just in the last 24 hours made it clear that Israel won't stop fighting they will not agree to another ceasefire until Hamas is eliminated so chath I think you're right that if there were a ceasefire that this situation would go away very very quickly and shipping normal shipping would be
restored however I'm not sure you're going to get the parties to agree to a SE fire anytime soon I mean the Israelis seem pretty determined not to agree to a ceasefire I think the Biden Administration clearly would like that I think they would like this problem to be over but with the continuation of hostilities in Gaza you continue to have the potential for the second order effects these kind of knock on effects
and like I mentioned one is the is the houes and other are all these American bases that are under attack right now by these GM militias so I think this has the potential to be a Black Swan in 2024 meaning that some how the Israel Hamas War spirals into a larger Regional war that pulls the US in I'm not saying that's going to happen but I think the potential is there the longer this goes on and I think that if that does happen
there could be the potential for an oil Shock by the way the hotis have said that if the US attacks Yemen they will light the Saudi oil fields on fire now I'm not sure they have the potential to do that I mean presumably if they had the potential to do it they would have done it during their long War so that probably is just you know hyperbolic rhetoric but there's so many ways for this to somehow turn into a larger
Middle Eastern War to your point shth I think you know I've been meeting with folks in DOA and Riad and Abu Dhabi and Dubai for the last six months and I was talking to people this past weekend you're absolutely right there are a group of people with an agenda uh which is to modernize the economies there to move off Pro and to move into technology and to move into Hospitality with the neon project uh as you're pointed out
Ryan and that's not going to get derailed and those are the most powerful you know deep pocketed uh influential forces there and so yeah they're working with the United States and any of these Rebels Etc I think they're going to be
dealt with because people want prosperity and they want to keep evolving these societies and moving them and normalization normalization yeah I mean have you ever have you guys who's been to Riad here I have yeah I think
freeberg or sax have have you been to Riyad ever freeberg ever I mean no it's beautiful and it's changing rapidly massively and and obviously Dubai's already been changing then do and I'm not arguing that yeah Saudi Arabia isn't a great place and and they want to do the right thing here but you're acting like the hotis can just be dealt with what what does that mean to you well I I think that the larger forces are united in wanting to
have prosperity for their people education for their people uh and to build deep ties with the west and the East to do Commerce and so I think those forces are greater than maybe some of the traditional forces that are at work and and these longer term conflicts maybe are not as important to the leaders and the citizens of these countries as Prosperity is and so when I say dealt with I think they're going to
just focus on developing their economies over you know these skirmishes but are you saying there's going to be a diplomatic solution here because I don't see it I mean here's the problem Israel's not stopping its war in Gaza the htis aren't going to stop until Israel stops so how do you make him stop that's a great question I containing these conflicts is probably the likely scenario when I I've asked that same
question to the people who are in those regions and when I spoke to them they they're all about containment they don't think there's a resolution like we might think about it here in the west that you know there's not going to be a conflict between Palestinians and and Israelis they just think containing it and having it not be an allout war is Success what do you think is gonna happen I mean at some point us we have two sides who are
implacably resolved the Israelis to continuing their fight against Hamas and the htis to continuing to lash out at Israel or the West in general until that stops the likely scenario is that Netanyahu is losing support that's what every Israeli and every person in the region says is that Netanyahu is not going to last long term so and what have you heard sex what do you think the resolution well I think
it's interesting if you look at Israeli domestic politics it's true that Netanyahu is unpopular but something like 90% of the Israeli public favors the continuation of this war until Hamas is eliminated I mean the Israeli people are really I think hardened on this question those tapes of Hamas atrocities on October 7th were compiled into a film they were recorded by the Hamas Fighters own GoPros and the Israeli people have
watched all of those things and they are resolved to destroy Hamas now you can argue with their tactics and I'm just stating the fact okay I'm not judging it and the point is just whether Netanyahu survives or not I think the Israeli public wants to eliminate Hamas so I think they are resolved I think the hoodis are resolved and the hooes control this choke point so they can stop or interfere with global trade and
I think look there could be a ceasefire I mean I think Biden clearly would like there to be a ceasefire certainly before the election and that would bring all this to a rapid end but if there's not a ceasefire I don't understand how you just stop the hoodies I mean the only way to stop them is if you want to go to war with them that's what we're talking about so we're talking about the US using its Naval assets to go get the the
regions chth mentioned could use diplomacy Andor Financial measures and so those are other options that's not going to work with the hoodies well uh no easy solutions here Ryan thanks for jumping on the Pod with us once again one question how how much more resilient postco if at all are Supply chains because you talked about wanting to make them more resilient and that was a major Focus for flexport H is it better now
postco have we done any I think at the physical infrastructure layer nothing's really changed uh I don't think you know the the bottlenecks have gone away just because demand went back down us had like a 20% increase in container volume it created all these bottlenecks we couldn't process that many containers in our ports uh and then the containers now are back at 2019 levels and everything's flowing normally but I wouldn't say that
makes us more resilient it's the same as before um and situations like this you learn just how amazing and resilient the global trading network is the global logistics infrastructure but also it's pretty fragile if a small group of rebels can fire missiles and you go well even the US Navy what are we going to do I mean it's kind of an asymmetric Warfare type thing they they shoot they shoot a $20,000 drone and we we need a $2 million
missile to shoot it down like it's not a it's not a great setup uh and it's not clear that firing missiles back is going to open it back up um and so yeah I think I think it's much more fragile than we realize as civilization always has been you know it takes takes a hundred years to develop a civilization and and an afternoon to go back to barbarisms and uh Air Freight you had talked about previously that's still
four or five times more expensive than SE Freight is that about right that multiple uh in general that's a yeah reasonable assumption is about four five times more the airf freight networks are very small in proportion to give you a sense like one of these container ships that flows through that ever given is the world's most famous containership that got stuck in the soos canal a few years ago that one holds about 10,000 40
foot containers uh 747 which is basically the biggest cargo plane out there can hold 7 40 foot containers uh and so if you have a diversion of global ocean Freight will rapidly flow over to it doesn't take a lot of freight going hey I'm going to ship this by Air instead to suddenly have the air freight markets get impacted so um it hasn't yet the air the airlines are a little bit less connected to this market and
haven't instantly said hey we're raising prices in January but I suspect if this lasts another week or two you're going to see big run-ups in Air Freight prices and these are Global markets the price of freight from Asia to the US gets impacted because they're pulling ships off the supply gets redirected the planes get rerouted um it is a global market so an impact here will affect price prices of shipping Asia to us as
well thanks so much for coming back on the program Ryan Peterson great to have you here and oh congratulations on being CEO of the company you found at flexport again we didn't get a chance to talk about all the craziness with the CEO and turnover but you're back you're back in the home and running back it's amazing it's amazing having the time of my life back here and uh work at the flexport office every day all right we'll see you
soon and thanks for coming on uh as Sax's Lifeline well done all right guys take care Ryan did bring up really interesting point there that you don't hear enough which was the asymmetry of the Warfare that the hoodies can launch a drone or a cheap missile that costs thousands of dollars and it costs us millions of dollars to shoot it down yep that is just not sustainable for the us we see this happening in Ukraine as well
all these you know multi-million dollar expensive tanks get taken out by a land mine or by a cheap you know RPG or something like that that cost a few thousand dollars it's also the fact that if you send a drone and it blows up on a ship and it cost you a couple thousand bucks to do that the lack of risk tolerance the fact that the insurance companies won't insure the ship anymore means that now that ship can't travel
and that's tens of millions of dollars of you know Commerce that get shut down off of a few thousand investment so there's there's a deep asymmetry in the sensitivity we also have to loss we you know we won't take hey well maybe one in 10 ships can blow up let's keep going it's the fact that there's no margin for loss there's no allowance for loss as a result any sort of threat of loss means that the whole system shuts down I'm not
advocating that we should but it's just the condition we're in I also think the other point I didn't make I would imagine that this Behavior with the houthis is driven in part by the embolden that arises following October 7th and the the praise um that Hamas has received globally and if you believe that to be true there are many other groups uh like this that may get emboldened and you start to see more
activity in other regions as well that you can have these kind of outsized impacts and uh folks suddenly you know start to take action but I think that's why we're between a rock and a hard place here is that on the one hand if we don't do anything then you're emboldening that behavior and if you do do something you're escalating the war yeah and to your point you know saying like hey the us is going to enter the
war I I think that there may be this moment where it's not even an option that the US is being provoked in a way that you can't say no you have to you know maybe they end up having to act the Guerilla Warfare aspect of this is super fascinating because you can really do incredible damage to very expensive airplanes with hypersonic missiles that go incredibly fast or like mach five or something insane and they're cheap so
a100 million or $20 million fighterjet can just be annihilated by a couple of hundred thousand in you know Hypersonic missiles all right there's been a ton of m&a activity and m&a deals that have been cancelled Adobe figma has been called off and alumina and growl has been Unwound as well the big headline is that after a 15-month review process adobi and figma called off their merger we talked about it here multiple times it
was a$ 20 billion cash and stock merger that was agreed to back in September of 2022 um and there's tons to unpack here shareholders employes the startup uh ecosystem and of course uh limited partners who were expecting huge paydays from figma being sold uh to Adobe are now back to a waiting game of figuring out if this company can go public Etc chamath you had tons of thoughts on this and maybe you could
educate everybody on the alumina growl deal since I don't think people understand that I think there are three Deals or almost deals that got essentially called off or cancelled or never consummated in the last few weeks which show a pretty interesting Trend so the first as you said Jason was Adobe figma the second was siga and human they were proposing a multi- decillion dollar merger and it was very clear that the FDC was going to have a
huge fit around it so they said that we're not even going to do it and then Signa just said they'll do a$1 billion buyback instead and then in the craziest example alumina and Grail so alumina makes these Gene sequencing machines and Grail makes one of the leading tests for free DNA cancer detection and at the time alumina owned almost half the company they bought the other half they merged it in even though
the Regulators said hey hold on we have an issue with this and now they're being forced to unwind the merger so to to pull this company back out out and divested I think the point of this is two things one is that there is no viable m&a path for early stage Venture Capital businesses so if you can't have a$ 20 billion merger or a $40 billion merger or a 15 or 20 billion m&a with a high degree of confidence then the path
to liquidity through m&a is less than 20% of the outcomes which means that the overwhelming path to get liquid is what you said Jason which is IPO but the problem is the second part which is that the capital markets in the United States are not ready or not in a position to support all this IPO liquidity why the banks won't underwrite there aren't enough researchers research analysts that'll cover these
stocks the ways in which the banks make money have become so constrained and so I'm kind of left pondering to myself how do you go back to a world of like the 9s where startups four and 5 years old would go public to raise Capital um I don't think that that's going to happen so I don't know exactly what happens to us except that we'll have companies just shading for 15 and 20 years and I think that just has a chilling effect because
it's like what investor wants to put money away locked up in highly liquid stuff for 20 years what rate of return do you need to give them that makes them want to do that so something has to change because if the m&a market can't exist then we need to change the rules of the Capital Market so that there's incentives for these Banks to underwrite these companies to go public well I guess there's two things saxs that could
change this dramatically one is if we put in more um Conservative Republican libertarian Etc uh less regulatory regime in Washington that could open up m&a you know as soon as 2025 perhaps uh and then the second is direct listings um D I say spaxs and alternative ways to get companies public it may not be um the gold standard as a traditional IPO but at least it we get those liquidity started and I guess third sax and I'll
get your your thoughts on this for private investors and their LPS everybody seems to be focused on building strong stable cash flowing businesses and we've seen all the companies that went public whether it's Airbnb or Uber are now focused on ringing the cash register and being profitable so ultimately maybe this Log Jam and m&a blockage makes everybody focused on sustainable profitable companies and that's a good thing long
term what do you think sex look like I said last week in relation to the figma Adobe deal the fact that Regulators took 15 months to analyze the deal only to come to the conclusion that they basically weren't going to allow it and then Adobe finally killed it is going to have a chilling effect on m&a and Silicon Valley I mean if acquirers and targets can't have confidence that the deal will be approved and in fact
they're going to be left in limbo for over a year waiting for speculative approval they're going to be less likely to do deals in the first place and I'm sure adobe's not happy about the fact they got to pay a billion dollar breakup fee which by the way was a really smart thing for figment to negotiate I mean if you're if you're a company the startup that's going to get acquired you need a pretty big breakup fee now as insurance
on the deal because there's a very good chance that Regulators aren't going to allow it so yeah absolutely the fact that Regulators got in the way of the Adobe deal and moreover the way that they did it with this protracted delay is absolutely going to have a chilling effect on m&a in Silicon Valley and look there are only two good outcomes for a startup you can either IPO or you can get acquired that's it the third is
basically you go out of business that's the third outcome so when you take half the potential exits off the table you're absolutely making it tougher for VCS and Founders to get a good return it's that simple and that is going to have a depressing effect on you know the investing of risk capital in Silicon Valley I don't think it's a good thing for anyone and by the way even if the US sort of fixes this even if we get a
regime that's more friendly towards m&a you still have the EU to worry about and you also have the UK to worry about because they're not part of the EU thinks to brexit the UK like I said last week they're like the Chihuahua who's leading the pack they're the smallest Market but they're the most aggressive on antitrust enforcement tax they may just be the beard for the US and the Europeans it's possible but in any event
now you got three Regulators to worry about not just one and you know like I said last week I think if you're a St up and you're trying to consider where to put your Europe office I would not choose the UK anymore I used to think that the UK was number one because it was so easy but you don't want to create that Nexus if you can help it it might subject you to a competition Authority you don't want to deal with later when
you get acquired yeah I would have just opted out of the UK I would have called their Bluff as I said last week freeberg any solutions here you think to solving this problem in VC land or do we just have to build stronger more profitable companies and be more patient about taking them public since m&a is not on the table I don't know if I'd take the anti-rust regime as being the core driver of m&a not being on the table I
mean there there's a couple of these examples but I don't think there's a predominance of this going on I think that there's a lot of smaller deals that still end up being good outcomes I mean we've we've also talked a lot about the lower cost of capital in starting software businesses and the era of AI type tools and that leads to you know being able to hit 100x if you put you know small enough amount of capital in and
have a decent outcome where you're not building the market Monopoly in some particular Market it doesn't feel to me like that's the biggest driver of concern here the biggest driver of concern is just all the return on Capital metrics that the big buyers are having to face you know return on invested capital is becoming more important than it's ever been because we're talking about trillion dollar market cap buyers and so that's how
they're measured and so they have to be really thoughtful about how they're deploying capital in a high interest rate environment that's there's a greater sensitivity to a faster path to cash returns than there has been historically so it feels to me like that's and I would imagine if I'm Adobe and I'm looking at this figma deal do I keep fighting it or at this point paying a billion dollars is probably net
accretive to them I think the stock price went up when they called the deal off which highlights that it was probably a better investment for them to say I'm going to pay a billion dollars to actually get out of this deal at this point and I think we see more of that happening which is this rationalization of you know timelines to roic and a high interest rate environment Cham deals do get done there's a lot more tolerance
for smaller deals obviously yeah I mean Salesforce was able to acquire slack that was 2020 Amazon was able to acquire Whole Foods Walt Disney 21st Century Fox with the X-Men so those are a different era I I I really think are all 2016 to 2020 you're right those are all those are very different era I don't think that that's what you can expect anymore I don't think you can underwrite to get a billion deal done in any industry yeah
remember met Facebook buying what's up for what was it 17 billion I mean that was one of the biggest Venture returns ever yeah today that could never happen today that could never happen that figma adobe deal it was a 20 billion deal but with the rise in Adobe stock it's really a 30 billion dollar deal if it would have been consummated because half the consideration was an adobe stock and that has basically doubled so all of
those investors and employees were looking at a $30 billion exit and look figma's going to do great I think the numbers that came out about figma where they're going to do about 700 million of ARR growing 40% so I don't know they'll be able to IPO anytime based on that but what's the multiple they're going to get probably 12 to 15 times so 8 to 10 maybe it's like A10 billion do company in the
public markets I mean growing nicely but it's just not as good an exit I mean it's a big big haircut the positive to this is consumers or retail investors haven't been able to buy IPOs and get in on companies earlier so if people build stronger companies that aren't that are more Capital efficient then companies can go public earlier as you alluded to chth where Microsoft Apple a lot of these companies back in the PC era they
used to go public in under a decade and now it's always over a decade so maybe this will make stronger companies that go public and then if there's a regime change and maybe people feel more they still have to get through Europe but you know biotech is the only Market that's always viewed going public as a transitory Capital raising moment right every biotech company that goes public in America at least are startups they're
pure startups it's pure risk Capital but the the technology side has viewed it very differently it used to be the same right but and then it went to like Oh we must be mature and then it has to be growing really fast and it has to be profitable there were so many ANS ands ANS that the that at the end of all of that there were just very few companies that qualified and then by the time they did go public they're 12 13 14
15 years in they're so long in the tooth that their best growth periods are Beyond them now a couple of companies have bucked that Trend but by and large that's that's the case and I don't think that's to to support what David what sack said it's that's just unsustainable you cannot you will not have risk Capital flow into the United States if if this is going to continue yeah this is going to be super challenging for Founders you got to
build companies that are sustainable and can go public because that's really the only path right now and it's exacerbated by what freedberg said which is then that that family office or that endowment who can rip in a check as an LP to a fund can still get five six s% can get corporate bond at corporate yields at like 8 9 10% why take on 15year illiquidity for often times funds that return less than the S&P which is the Dirty Little Secret of
Silicon Valley it makes no sense it is going to be a challenged environment for some time to come I think as we work this out I mean the thing that I find super interesting with the spaxs was like you got to invest in some companies that were very early and speculative like Joby now how could a consumer ever make that kind of bet your mouth to bet on and that wasn't one of yours I know but it it was one of these like
incredible moments where you could bet on flying cars literally as a consumer and I think they're actually going to figure it out I was tempted to buy it and I've been tracking the stock and I'm like wow if they actually make air taxes work and it's kind of cool that the public can participate in that and that's what they were saying when there weren't enough IPOs and we had half the number of public companies so I don't
know if you have thoughts on it the number of public companies I think has haved in the last 20 years so are more public companies better than less I don't know I think that's kind of like a random statement I think what is true is that the public markets used to be used for raising risk Capital but the public markets at the time also had a ton of research analysts there would be a lot more coverage of these companies
there would be a lot more visibility a lot more checks and balances because people would be meeting with Management on a regular basis writing thoughtful research reports all of that is constrained as the as the business of being on Wall Street has changed so it's not enough to just all of a sudden have a bunch of companies go public if all of that supporting infrastructure isn't there so this is what I mean by it's a catch22 on the one
hand there's not there's there's no m&a so you need to have more IPOs but the banks will need to hire more people that comes at a cost which means that they're going to have to generate more Revenue somehow that comes at a cost to somebody else and until that's figured out you're not going to solve this problem and instead what's going to happen is folks will be less motivated to invest in The Innovation economy
because there'll be no path to liquidity and when you do invest you'll invest much smaller amounts of money and you'll make it as part of your risk allocation a smaller piece of the overall pie what it also means is that if you're an entrepreneur and you haven't started a company yet you may want to seriously consider raising a friends and family round using these AI tools and trying to build a very different kind of business
slow and steady profitable from day one and that's never been rewarded by Silicon Valley VCS but if the reward for VCS don't exist then the VCS themselves won't exist and so you may want to start thinking about different ways to capitalize your business and it's interesting point you make that is very subtle so I just want to restate it here the analysts who are covering companies like say Joby I'm just picking this air
taxi company because I'm obsessed with it if there's not an infrastructure those analysts act in a way as a back stop or a bit of pressure on management I think is what you're saying to hey perform and we're checking on you and we're meeting with you so without that there's just a company sitting out there and nobody is asking them hard questions and then making decisions to put a buy or a sell rating on it is that correct
maybe you could B on that missing piece there was an evolution in the public market so look the public markets back in the90s was a bit of a rigged game where you could call a CEO if you had his or her number and they could tell you things that they didn't tell everybody else and when you look at the folks in their 60s and 70s and 80s who really tund it I'm sorry folks but they profited massively from that information
Arbitrage and that changed when there was a regulation called reg FD that got passed In America which said regulation full disclosure what you tell one you have to tell everybody right and that was an attempt by the SEC to level the playing field it was a very smart piece of legislation but what that did was it constrained the touch points that a company would have with the public markets to a few organized events right analyst
conferences research days actually banks are allowed to organize formal company dinners and you'll get all these people together analysts across the entire Spectrum from Fidelity to Goldman Sachs to Morgan Stanley and the company has to perform to them and those folks will write both internal and external reports that say buy neutral or sell right that became the only check in Balance to make sure that management was held
accountable to the large swwa of public shareholders because otherwise it's not Jason you as a shareholder of Joby quite honestly have any say right you you exert your pressure through through the analyst who then represents the ability to influence your buying and selling decision but if those analysts don't even exist there is no feedback loop between management and the people that own the stock and that's the
problem we have today there's not enough research coverage there's not enough analysts there's no organized way to keep companies held accountable and so if you have a bunch more companies that go public without that infrastructure it's very difficult seems like there's an opportunity somewhere in there you know the big opportunity that that I that I think should happen is that a bunch of these Banks should actually use
these AI tools Jason to be crawling all these 8ks and 10ks and all these filings and generate statistical measurements of all of these public companies that they make free and available to everybody these things should be a bunch of dashboards and charts that are just out there for anybody to subscribe to so that you can just do the initial work of having to parse through all of these filings have it done by an AI by an
agent from a bank who can train it properly I think that would be an immense value to all shareholders and I don't think it costs that much money and I think it would be Goodwill Robin Hood could do this it would be great Goodwill to build a lot of trust and and credibility with investors so now that you're CEO of a company how do you look longterm at potential exits going public what what is the the thoughts you have
on this as you architect the company freedberg as the CEO do not care about exits don't care about expand on that yeah explain I just want to build a great business that makes great products for our customers that's it so if you do that all these discussions around you know giving shareholders liquidity I'm the I'm the main shareholder so I don't need liquidity I just want to build the business so you think about
profitability then because if you have to fund it or funding might be harder to come by how do you think about funding over the next decade this Vision you have it freaks me out you got to keep businesses capitalized
so there's definitely across businesses I'm on the board of or involved in universally a bias towards profitability I've seen a couple of decisions we've made at some companies to shift from making longer time Investments that may not pay
off for many years where you had the luxury of doing that in a Zer environment and you could always get Capital to fund anything that's multiple years away from realizing any sort of return to shifting towards a bias towards making things that can generate real revenue and real profitability in the near term keeping costs low and building from there so it it's definitely I'd say been a flip-flop in
the environment it's why the biotech landscape has largely kind of dried up the funding landscape has dried up sign significantly because most of the investment opportunities are those multi-year out before you know if you have a return on your investment kind of investment cycles and so the ones that do get funded are those that have a nearer path to profitability and where you can build some sort of cash generative service in
the near term on the path to building a bigger product down the road so as you're strategizing you're thinking how can we get to cash flow positive Break Even whatever quicker you're not strategizing how do I get a huge multiple and get some dumb tiger money whatever no no dick to Tiger but they paid the highest prices at the end of the cycle I've got enough wisdom at this point to tell you that if you don't have
to raise Venture Capital you're better off so yeah shath you also became a CEO you have the I think it's hustle is your company and that's profitable and you're running it I I'm assuming for growth but maybe profit first then growth how how do you think about those two dials how much growth how much profits we have the same belief that freeberg has which is our job is just to make really great products for for our
customers when I took over the business we had to go through a difficult layoff and a rebasing of the business but it's it's a business that's growing kind of 45% a year and it's profitable and and what I talked to the team is that you know we will reinvest our profits and so we have an ambitious plan and as long as we meet that we'll take some percentage of that profit and reinvest it but I like freeberg also have no plans for
liquidity I just want to build this thing to be as big as possible and I don't want one single shred of pressure that isn't defined by our customers and so by being profitable we have complete control of the cap table we can do whatever we want and the people that benefit frankly are the employees because they can get paid and our ability to hire people without being subject to like pressure to raise a new
round and set a new random valuation so no unnatural acts just customer profits and so by the way if I can grow for 10 years years if we can grow for 10 years at 40% a year this will be a ginormous business so trying to 3x and do it on naturally yeah Jason just just to chim back on the the question you asked a couple minutes ago I number one if you can avoid raising Capital you're better off because then you don't have any
shareholder pressure to get liquid and that can create contortions in what you do and how you operate the business and second is if you're going to raise Capital if you set too high value if that becomes the bogey you set yourself up for challenges because now you've got to have a multiple on that valuation to satisfy investor return hurdles and the higher the the valuation the and you apply a multiple to that the higher the
exit has to be and suddenly all the options start to fade away you can no longer have a modest exit that can do really well for employees and the founders and early investors and it becomes a necessity that you have a massive outcome and by the way we see this now in this post Zer environment that a lot of businesses that raised a lot of capital at a very high valuation and then you have this multiple compression that's just happened in the
last two years their valuation effectively if they were to go public today or get sold is less than the capital they've raised and that's the most extreme scenario where you know suddenly all the common shareholders get wiped out in terms of their return it's such a great Point like the thing that people used to say was oh it's a tech company so we need to give it a premium the problem is now everything's a tech
company to say you're a tech company is a meaningless statement that means nothing you're a company so that you're a company so then there's no premium for being a company no there a premium for profits well there's a premium based on quality of Revenue which has to do with gross margins I mean obviously ecomics and un economics obviously a company that has 80% gross margins is different than a company has 20% gross margins not
if it's unprofitable no no I I totally get that I'm just saying that you can normalize based on gross margin as opposed to the type type of company it is sometimes we'll see a company that markets itself as a tech company and only has 20% gross margins that's an indication that something is wrong usually or it's not truly a software company it's just a company that's just a company yeah I think that's the way to
look at it high gross margin versus lower gross margin margin just to go back and answer your question jcal about how do you decide how much money to put into growth versus being profitable I think the right answer to that is not to say there's some absolute amount of money you should burn given your round it's to look at growth on an Roi basis or Union economics basis what is the return on the growth dollars you're
spending and probably the best way to do that is to look at the payback on customer acquisition how long does it take you to payback your customer acquisition costs and I think a lot of people don't do that analysis correctly because they just look at the revenue they make from that customer but you actually have to look at the marginal profit so this is how the gross margin ties in Easy example is something like
Spotify Spotify it cost $100 a year and they were to acquire somebody for $100 a year hey they get to year two it looks like you made $100 except Spotify has to pay a massive amount to the record label so their margin isn't as high as maybe a SAS company and that's where the devil's in the details yes and overhead and overhead you got to look at churn as well so if that customer only lasts two years and half the margin goes to the
record companies well you can't count 100% of Revenue now you're looking at I don't know what's that's like you're dividing by two twice so it's effectively you know a quarter 50 bucks of the 200 let's say what are you seeing in your in the companies you're funding you're seeing profitable companies or Revenue generating companies what like are you telling folks you got to grow and raise a big series a or are you
telling folks hey take your time and yeah great question we invested in 100 companies this year it's more than I've ever done that's the same amount I did in first seven years of my career and 100% of the time they are not expecting to raise like some giant seed or series a they're raising just the amount of money they need need and they're keeping their expenses absurdly low the biggest Trend I'm seeing is outsourcing of
talent and so Americans and I'm not going to make this like a huge anti-American thing but the level of entitlement and the effort Americans are putting into jobs expecting 150k let's say and then offshoring a developer Latin America Portugal keeps coming up Canada they're all looking for what's the most efficient way for me to build a 10 person team and then I'll see a burn rate of 30 ,000 with 10 people I'm like
how's that possible like oh our developers cost 22,000 our you know sdrs are 10 I'm like how is that possible oh we have two people in Manila Etc long way of saying efficiency efficiency efficiency we have to get to break even with the money we just got we're not expecting a second round of funding and a lot of them are raising but 500k to 1.5 million and if this was 2020 it would be 3 to 10 we talk about like AI
is like a big disruptor to like the big companies and this and that but AI may be the biggest disruptor to VC in the end explain what you mean I know what you mean but I want the audience to understand let's just say you raise a $2 million seed round in in the past what you would do to your point Jason is you would hire seven people at $200,000 each right so now you have a $1.4 million burn so you basically have and let's just say
you co-work someplace you have a year and a half and so you're pedal to the metal right you're basically trying to throw as much spaghetti against the wall as possible see what buy as many ads do whatever it takes the money basically goes to AWS and Facebook and a couple of other companies to Google and then you hope that there's enough traction where somebody then writes you a 10 or 15 million series a
check now if you take that same $2 million you could have a threers team four-person team half of them offshore where they also use things like co-pilot which is like a 2 to 3x lever now all of a sudden they have the same 10 person team and it costs $40,000 exactly and so now all of a sudden they have four years so why wouldn't they do that where they would still own 80% of that company and all of a sudden there is a potential
to exited for 50 million or 100 million and they've made more money than in a traditional outcome if you sold it for two billion precisely the case this is literally what Founders are modeling right now they previously wanted to beat the record of the person in their cohort Who had who raised the most money at the highest valuation now they're just like how do I get to profitability and and how do I own as much of my companies possible so
Sachs you've got under over a billion dollars under management you've been one of the most successful new Venture firms in Silicon Valley in the last decade you got a lot of cash you could deploy and how do you deploy it intelligently intelligently given the circumstance of people maybe raising less or being more efficient and what do you think of the ai's impact on Venture well the most important thing is
to have opportunities to invest in and the fact is that before this AI wave the whole Cloud Social Mobile wave had kind of petered out I mean the pond of opportunities had kind of been fished out and AI is great because it restocks the pond I mean there is a lot of new ways for Founders to use these advancements to solve problems that they weren't addressing before so I think you guys are being a little too gloomy I
mean I think that the impact on Capital efficiency will take some time to play out but I think that for the first time in a number of years it feels everything's feeling fresh again and there's just I think a lot more
opportunities for Founders to go after now it's the begin it's like this at the beginning of any big new tech wave right is this is a new platform opportunity same thing was true with the App Store when the iPhone launched same thing was
true when the internet launched now I understand a lot these opportunities are going to be taken by big companies that already exist but there's always going to be an opportunity for Founders when you have a big disruption David I agree with you my comment is less about the the pond I agree with you that the pond is getting restocked my comment is that the economic impact of AI is so massively deflationary it may be an
order or two orders of magnitude more deflationary than AWS was and that was massively accretive to the startup economy so if this is a a 10 Xing or 100 Xing of that economic impact my only point is that the break even threshold for a Founder will have gone way down and then as a result it's only a matter of time until they can put two and two together in a Excel spreadsheet to figure out that owning 50% of aund
million company is greater than owning 18% of you know some other company when you're massively diluted or 8% or whatever it's just like that's all I'm saying is is like the the effective Break Even goes way down in a world where Ai proliferates and I think that's positive what do you think yeah sex it's just positive for Founders if you look at what Founders do with the money when we invest in a series A or B the number one
thing is go to market right so they want to basically triple their sales let's say they want to grow from 5 million of AR to 15 million of AR they have to staff up the quota capacity to hit that number and you know for every AE you're going to need some number of FDR some sort of management you're going to need some sort of operations overhead so you've got to hire all of that and then there they want there to be a cushion in
case they miss their numbers right because there's no guarantee you're going to hit that so you know Founders still need to raise the money to staff up to go after that opportunity now does sales become more efficient over time because of AI or does lead genen yeah I think that's possible but in order for that to happen you're going to need to see a rise in Quota capacity right I mean that's what we're talking about is
that that same AE can now hit you know a greater level of sales because they have better tooling we're just not there yet maybe that happens over time but I think you know your typal inevitable maybe it's inevitable but I just think your typical SAS start right now is spending the money on more prosaic things I mean yeah yeah no I think you're right I all all I'm saying is I think what it means is that the $200 million fund today
becomes 50 the $500 million fund needs to be 100 and the billion doll fund needs to be 200 it's basically Back to the Future it's like back to the 1990 style 2012 by the way I'll I'll show you a table here Nick I need you to blur out the names okay I just think it's super interesting I watched freedberg through this but this was like a list of all these funds that I've invested in these are Venture funds you've invested in
these are all the Venture funds I've invested it if you look at this what do you notice about like the mega funds that just clock out DPI look this is a100 million fund right look at look at clocked it this was a $220 million fund my point in all of this is like if I look at my returns as an LP I've never had success when I've invested in big funds I've only had success in small funds it's true that smaller funds do perform better and
larger funds become more of an index and achieve more average returns when you got a multi-billion dollar fund it's way harder to achieve a you know outsize return so yeah I agree with you I think this Dynamic would be healthy I mean our funds actually are not that big in the grand scheme of things it's definitely the game is changing dynamically and this podcast is going to be great in 2024 because we went from four Capital
allocators to two Capital allocators myself and Sachs to two in the arena CEOs so we're going to be having this discussion I think in a very granular way now that we got two players on the field sacks that we can watch what they're doing well I've got a new incubation that's going to be launching soon ooh but I'm not going to be CEO of it but you know I'm kind of executive chairman oh oh yeah SAS company what kind of company
is SAS it's it's basically Yammer you have attention 2.0 yeah I thought that was slack so this 3.0 yeah yeah Yammer 3.0 okay let's go let's get a we'll get a little uh yeah we I think we had a push on call-in so now we need to get our 50x on uh yeah 3.0 give us a little tasty poo for your best you're right we sold Colin so now you know we've cleared the decks and um I can't work on multiple incubations I
can only work on one at a time can you have your person that runs that sasd thing email me because I want to onboard my company into sasd so I it's so good well by the way that was the last one so I've done I guess three of these now there's Colin sasd so sasd is now spun out completely of craft and the the founder of sasd was our VP of analytics at craft and now he's going full-time to SAS grid so I think be very successful
great but can I get on board it and can I get a family discount let's explain this concept to the audience since it's Unique in the world and we should maybe double click on the economics not on a specific company saxs but just generally of why VCS are doing this you're incubating a company you're a former founder you have that itch you have ideas so instead of investing in a company you say hey let's all get to the
office I have an idea let's make this ourselves as craft and then we'll put some of Craft's LP's money into it and then there's some slug of capital saved for the new team that comes so how does the economics on something like this work and why do LPS love it or do they love it and then why is it good for your internal team or for you to incubate a company as opposed to just find them set up craft we actually wrote into
our LPA that we had the ability to incubate companies and we had a pre-arranged economic deal with our LPS on those incubations cuz I didn't want it to come up later and then there's some conflict of interest between the management company and the lp so it's a predetermined deal and we don't do a lot of these like I said I guess there's been three there's been SAS grid Callin and out this Yammer 3.0 we're talking
about but really I got to give the credit for SAS grid to our vpm analytics who really I think pushed this idea and it started with a simple way for us to analyze deals and dashboard deals it started as a spreadsheet that we would give Founders that would crank out their charts and then we turned it into a website that was free and then you needed as an investor right you needed as an inv an investor and then what happened is that we saw
Founders started using SAS grid as their dashboard to manage their companies between funding rounds and we're like oh okay that's a big aha moment so basically there was no dedicated verticalized business intelligence tool or dashboarding tool just for SAS companies and the advantages of verticalization boo out of the box and the all the formul is going to be calculated exactly the right way is going to be less room for error they
don't have to reinvent the wheel use or looker or whatever you're Reinventing the wheel you're writing all the formulas yourself it doesn't make sense back to the deal yeah you prid the deal so LPS wouldn't be surprised that's awesome so the management there's a determined valuation I guess at that seed stage a certain amount of money goes in and your holding company gets some equity which is like a nice little
extra icing on the cake for incubating it and then the LPS get a sweetheart deal or a better deal is that why they would be in favor of it yeah the LPS get like basically a vig in the startup got it we kind of modeled it after YC's original deal right where YC got was it 7% for $100,000 yeah and then on top of that the fund can invest in the seed round at the market valuation whatever the market ah okay so
they get basically 7% for free or something in% for 100,000 then plus whatever the seed round's going to be brilliant yeah yeah I think it's a good deal for them and and also it's good for you because you have to want to come to work every day and this keeps you mentally engaged like shamat said he felt like he was becoming a talking head and just not I don't know how you phrase it exactly in your newsletter but well
like you said scratches an itch it's nice to be able to if you have an idea for a product you can work creatively on it yeah I don't want to run companies anymore I don't have any desire to be CEO but it is fun to work on products if you have an idea Jamal how's it been for the first couple of uh months now are you really feeling more intellectually curious and challenged is it annoying to deal with employees and you know
customers and and all that kind of stuff what's it what's it been like I think you've been at six months I think it's been really challenging the first part of it was quite honestly we had to rebase the the cost basis of the company and get costs under control that's hard and you had to we had to lay some good people off and then we had to kind of like reset the strategy write goals get our values kind of in a good
place reorient the organizational design like who will do what right all of these things require just enormous amounts of time that where you don't see necessarily the obvious impact in a metric or a dashboard right away and so you just have to commit to this process and really follow through in it you have to find the people that have this real potential Elevate them make decisions quickly find out you made some wrong
undo them find out you made some Right double down on them so it's been a real learning process the the thing and then on top of all that I've tried to start coding again Sunny helped me a lot I built you were PA programming yeah and then but then I did that to go back into our All Hands which we do every week and I wanted to demo some stuff mostly just to set the values that we're all grinding here you know and I'm here grinding and
learning this stuff like anybody else and it's embarrassing because like it's janky code it doesn't work and blah blah blah it was but it's been really I think in the long run it's I think the company is a lovely business and I and I want them to be successful because I think they deserve to be successful and for me it's been a great Outlet to just get back to the basics of like what really matters in running a company in 2023 I
don't think I really knew the details that's good and I'm finding a little humbling perhaps a little humbling to get in there and be in the cockpit really really humbling yeah it's good yesterday we were sitting there in E team which is our executive team and we're in the middle of a big deal and the seven of us were redlining a contract back and I know that may sound like really tactical stuff but it was for me
it was amazing I'm like this is great work and I felt like I accomplished something when it was done and maybe the deal gets closed today the team is on the call and I just think it's wonderful I I get it real awesome yeah all right listen there's another story that is under reported we try to find these underreported stories things people are talking about in their group chats but maybe not reading about or hearing about
in the mainstream Media or even on social media there are a couple of unbelievable bombshell class action lawsuits that are dropping in the United States regarding our real estate industry in October a federal jury in Missouri found the N that's the National Association of Realtors and several of the brokerages that have those Brokers working for them guilty of conspiring to artificially inflate commissions for
home sales they now have to pay at least $1.8 billion in Damages to sellers of more than 260,000 homes between 2015 and 2022 this could bankrupt the n and if you don't know what a racket this is people selling homes in the United States pay 6% commissions on average 3% for the seller that's if you own the home and you're selling it you give them 3% of the sale and then the buyer you also give them 3% and there have been a number of
companies like redin who have tried to change this I actually used RFID on a transaction and tried to use them on a sale and I was faced with brokers who I kid you not literally said I'm not going to show your home because it's a lower Mission rate and they have been working in unison to try to stop this kind of innovation but the 6% is a tradition it's not a rule you can actually negotiate it and now uh since
this case got one another couple of cases have been dropped and these new class action lawsuits all put together could be $13 billion in Damages I don't know who's been following this in the group but I have a lot to say about it but yeah freeberg I spent a bunch of time looking at this because I've done several no broker real estate transactions oh so lawyers yeah just lawyers and then in the in California I don't know if you
guys know this thing called MLS the multiple listing service yes which feeds the data into redin and Zillow and in order to list a property on MLS you have to have one of these real estate licenses and be a member of of National Association of Realtors part of the monopolistic racket that goes on is that you have to be a licensed broker in order to list your home on the service that is the Monopoly in the
listing of homes which everyone looks at so there's a bunch of folks who have set up a a listing service where you can list your home directly on MLS and basically it's a guy who has a brokerage license and you pay him a 100 bucks and he just has a website set up and then you list it and so uh you can kind of just list your own home post the photos and all the docks and then when the agent asks for disclosures every
disclosure they want to see on a National Association of Realtors form and the N forms are only available if you're a member so there's a whole bunch of ways that they've tied up the market and made it impossible for the system to operate without the N members being a key principle in the transaction process when at the end of the day having gone through this a number of times myself there's just all these templates and
data that flows into this there's no reason why you necessarily need to have an individual that that to be involved here but if you did it's actually a data entry service the process of entering this data could probably reduce down to a fixed fee of call it a couple thousand bucks per home rather than a percentage of the home value and by the way think about the craziness around this if you buy a home and you sell it in most parts of the
United States you actually have a tax that you have to pay that's a percentage of the gross and most people have most of their net worth tied up in the real estate so it's one of the few places where you will actually see a large chunk of your net worth actually taxed on a gross basis and taken away from you if you end up selling it rather than on a net basis meaning net of the profit you make and then the Brokers want to
get paid a percentage of the gross as well these are the commissions they get paid from a first principal's perspective it doesn't make sense that we're paying a percentage of the gross to agencies to to transact this volume the total volume in the US is an incredible number it's a hundred billion dollar a year in residential real estate commissions and there's 1.6 million folks who are real estate agents that
are licensed making their living doing this so it's not an inconsequential industry and it's not an inconsequential verdict Nick if you could pull up that chart of the different countries here's a good comparison so in the US we pay about five and a half% brokerage commission split between the buyer and the seller's broker and again legally you don't need a buyer's broker you don't need a seller's broker you're
allowed to sell your home without a broker there's nothing in the law that prevents you from doing that so this is just an industry that's popped up to service this need and their pricing model is to take a percentage of the gross and that's just the way the Market's developed but in a competitive market that should be competed away and it hasn't been because of this this Behavior that's gone on with institutions like the n and you can see
across different countries different pricing systems as a percentage of grow in the UK you only pay about 1.3% total brokerage Commission on buy side and sell side in China 2 and a half% in Russia three and a half% some countries like Japan and Argentina are comparable to the US at 6% France is at 5 % Germany's at 4 and a half can I ask a question freeberg yeah I only own one house so I don't I've never gone through
this experience really that I can remember because that was more than a decade ago but today if I wanted to sell a home okay I could sell it to you right but if you have a broker do I have to pay you 3% as well no you could sell your home to me and then if I have sign who pays your broker's 3% I seller pays the buyer's broker but they don't have to yeah no here it's really important to understand this if you're going to go
buy a home yeah you're typically not signing a contract with an agent when you go home hunting the seller has an agent and in the agent listing they say hey if you're a buyer's agent you show up we'll give you 3% commission and so the buyer agents who don't actually have a contract with the buyer are like well let me show you R homes let me show you R homes and then they get to a home and they're like okay this home's let's buy
it and they're going to make a 3% commission which by the way I just want to point out the disincentive there they're not looking out for my best interest as a buyer they're looking out for their commission and the higher the price they get you to pay the more they make the more money they make what I want to understand though is if I'm going to sell my house to you guys and you guys have a buyer agent and I just
ref can I just refuse to pay the 3% no one gets paid because there's no the buyer agent has no contract with anyone yeah you can just refuse and you don't have a contract with anyone the place where you end up paying a commission as a seller is if you sign a seller agent listing and where you sign a contract that s to the seller's agent I'll pay you 3% and I'm also going to pay a buyer 3% if they show up with an AG how do I
list my house on MLS without a seller's agent you cannot in California I mentioned I just I recently went through this I paid $99 I did it all myself and I listed on MLS without an agent I've done a bunch of person-to person sales of real estate where I haven't had any agents involved but I knew the people on both sides and we just did a transaction so what was your legal cost per transaction oh like like 15 Grand you
know to do that that was my exact number it was 15,000 so just to give you a comparison here chth if you were to have a million dooll house that would be 6% it' be $60,000 so that's 15,000 in legal cost for you to sell it right if I wanted to sell it to you directly and that's what happened my friend owned a really nice house we did it off market and now all the brokers in my neighborhood hate me like they are really upset about it
imagine it was a $5 million house or a 10 million or $20 million house is it true for commercial real estate as well this is this how it works I don't know commercial commercial real estate is the same situation so there's an agent that represents the building the landlord it's actually going to talk about this then the buy side agent so Buffet Buffett owns Berkshire realy what is that that's just basically it's a
residential broker just like Coldwell Banker 24 just like all these other so it's sweeping up this 6% Vig yep they were part of the the lawsuit they were named yeah they were named and if you look at listen to Buffett's earnings reports often talks about how many sides of a transaction they were on and that's kind of the key measure of Revenue in the in that piece of the business and he was super ecstatic I think in 2020 or 21
when Real Estate boomed and he's like we got this many sides of the business it's a great business you know it's cash generative such a great business but that's the business you want to be on both you want to get as many sides as you can you want to get on a sell side and buy side uh in the market and you just get 3% depending on which side you're on but now the courts basically said hey this is illegal here's how
you'll know that the Monopoly has ended is when the buy side commission goes away yeah yeah I mean the sell side 3% may be excessive but I do think that the sell side Brokers do work in terms of having to market the property whereas on the buy side the vast majority of the value is created by MLS like you're saying freeberg I think it's flipped but in terms of where the value is but anyway go ahead no you have to Stage the
house take pictures yeah as a buyer I just want someone to look out for me and make sure I'm not like all the diligence that goes into res searching a home and reading all the disclosures and going through them I don't know if you guys have gone through this hundreds of gone through it but I he's a lawyer for that stuff who I pay by the hour right that's what I do I'm not saying that the buy side broker does nothing but I'm saying
that most of what they do is just schedule appointments for tours for you after you've gone through MLS yourself and picked out what you want to see you give them the list and then they give the list put on your calendar you know what I would analogize it to is travel agents I don't know if you remember like I mean most people watch the tri probably don't remember but in order to book an airline ticket a long time ago
before the internet you call up a travel agent because they have bring it to your house they have proprietary access to saber which is the online ticketing system totally totally what happened is with the internet you had sites like Expedia just give you direct access to saber and so you can book the ticket yourself there's no reason to have a travel agent same thing has happened with MLS it used to be proprietary
access by the Brokers to MLS you couldn't even see it then had sites like Zillow basically give you direct access to MLS so you can just go on there and find what you're looking for and again the main thing that the the buy side Brokers do is to schedule the appointments because you can't get a tour typically unless you're represented and if you're not represented and you reach out then the sellers agent will
try to basically enlist you have you done a direct transaction sex I'm curious you can I don't think you can residentially I mean it's very hard I've done it yeah I mean if you know if you happen to already have pre-identified the buyer then yeah I guess you could do it but basically happened in our case in free I'm curious how yours went down I had told the person or my wife had told the person we love your home if you ever
sell it let us know and then they let us know and then we bought it with them off market and they said we don't want to use Brokers we don't want to pay this huge commission which would have been hundreds of thousands of dollars and uh would you agree to this price and we're like yes and then done how did yours come about freeberg how did you find a buyer if you were on the sell side this is all like relationship driven people that I
know and that kind of stuff so it's like hey I think this is the future if two of the four people here have done it I think this is the future I don't know if that's I don't know if that's the common model I don't I don't think that's true I do think Market you need a Marketplace and the Brokers control the marketplace it's a one-off it's a fluke when you actually buyer the the MLS is the deao market because I mean ask
anyone in the country who's bought a home in the last year five years almost everyone I'm sure went on Zillow or red or truly unlooked at homes and the the place that those you know marketplaces get their data is from MLS they sweep the MLS so the real kind of you know monopolistic breaking is can you break that Marketplace can you break MLS and can you get some other alternative listing services going that you know
enable this to this this brokerage commission to get competed away because it's currently locked up in the Monopoly they have on the MLS what's so perverse here's where the Monopoly comes from is that if the buyer had to pay the 3% directly to the buyer's agent and that was a choice you could make nobody would pay that much of course I'm not saying that the buyer's agent doesn't provide some value but there's no way you pay 3%
but the reason they get it is because the Brokers tell you well you're not paying that the seller's paying that but of course you're indirectly paying that because the transaction fees are so much higher and when the seller goes to list their house if you tell your seller's agent hey I don't want to pay the buyer's agent 3% make it half a percent they won't do it you know they they will always make it equal so this is the game
this is where the Locking comes from is the buyer doesn't have a choice and the seller doesn't really have a choice either as we wrap here just real quick pull up that uh link Nick and go to number five so that is the key issue I don't have a horse in this race I don't own redin stock or anything but here's red fin explaining exactly what you talked about it's fsbo for sale by owner and there's now these third party sites
and they kind of allude to it there but you know what those are those FS sites are actual real estate agents that are registered in the state and are members of N and so they have a right to list on MLS so what they're doing is they've basically set up a super simple website and then they're posting your listing on MLS for you for a FL without you for a flat fee rather than getting a commission on the sale awesome yeah and
and that's that you know that's kind of interesting but for most PE most people they're like well I don't know now I don't want to disparage the value of folks that are in this industry there's obviously a lot of value for agents and brokers in this industry but the real point is that if the Monopoly breaks on the marketplace then the business model will get competed away and there will start to be a change here and I think
that this lawsuit and the settlement ultimately leads to a change a shift in the industry that would certainly benefit consumers but could have a negative economic impact because of the number of people that depend on brokerage fees as their as their job the likely to be that when you hire a broker they will give you a form and you'll pick what percentage you want to pay I'll pay you 2% and I'll pay the the
buyer's agent 1.5 I'll pay you 1.5 I'll pay the buyer's agent two or there should be caps on it right or you should have because of the incentives it doesn't matter if I sell my home if it's a $5 million home it may matter to me 5 million 5.5 or six it doesn't matter to the broker their commission they just want to sell it as quick as possible if it sells for 4.5 5.5 It's relatively the same commission so it really should be
based upon a flat rate up to a number and then a percentage above that number to Align interests anyway keep an eye on this one folks because it's going to have a massive impact all right Colorado Supreme Court has removed Trump from the state's presidential primary ballot this was decided in a split 4 to3 decision by the court it's worth noting that all of the justices were appointed by Democratic governance it's a democratic
State the court based its decision on section three of the 14th Amendment this bars anyone from joining Congress the military or any federal state off off is if they have previously taken an oath to support the Constitution then engaged in Insurrection against the US this is the first time in US history that the 14th amendment has been used to legally disqualify a presidential candidate the 14th amendment was originally passed
after the Civil War and was aimed at former Confederates I'll say a couple things the first is that I thought that the Democrats were going out of their way to give Trump the election with the documents case but now I think that they've basically made his winning the Republican nomination of foregone conclusion and he is the overwhelming favorite to win the presidency after this and the reason is pretty simple
which is if you take Donald Trump out of this the idea that you haven't been convicted of a crime but now a government agency or government Court in this case can deprive you of what really is like a pretty momentous sign of Liberty and freedom which is to run for president of the United States to deprive an American citizen unconvicted of that crime of that right I think is really a bad step in the wrong
direction and so there there just needed to be a lot more prudence and thought about this and I think that it will do nothing except embolden the base it'll get Republicans out to vote I think it creates a deep wave of momentum in the direction of of Donald Trump and so this to me was just an absolute complete head scratcher that makes no sense and I think will is surely to get overturned in the Supreme Court freeberg your
thoughts okay for those of you not watching freeberg put both hands up in the gave a shrug like a shrug Emoji so if you want to understand freer's position on trump it is shrug Emoji coming around the horn Sachs red meat what are your thoughts on the Colorado Supreme Court Banning Trump from the ballot I agree with what jamas said democracy now means the right of the people to vote for candidates approved by liberal
judges uh and yes jcal all these judges were Democratic appointments I think this case makes clear that the point of all of this lawfare against Trump is to keep him off the ballot until now they've been pretending it's about something else and I think this decision rips the mask off all the legalistic that we've heard throughout 2023 I mean Democrats don't really give a damn whether he paid off a porn star or kept classified documents or
supposedly led a a racketeering conspiracy they just don't want him standing for a vote that he might win and I feel like all the time we spent on this pod earnestly debating the details and legalities of the documents case it was a total suckers game that's the narrative they want us engaging in it never had anything to do with documents they just want to keep them off the ballot and I think that by being so
naked about this by ripping the mask off what they're trying to do the Colorado Supreme Court has really done us all a favor I mean the Supreme Court of the United States is surely going to reject this decision but the lasting impact is going to be in revealing liberalism's true fath they are the real authoritarians and while restricting the right of the people to vote for the candidate who is leading the polls right now they
Proclaim that they're saving democracy I mean they they self- glorify and engage in this self-righteous rhetoric that they're saving democracy I mean the rest of the country any normal person is looking at this and saying these people have completely lost touch with with reality completely lost touch the other unfortunate outcome of this is that there will be a wave where people will talk about the big steel as this and
what people will say is that there was an attempt by the Democrats to really roadblock Trump's ability to be voted up and down by the American people and that's disenfranchising the the ability for people to vote and and I think that that's really unfortunate and I and I wish that the Democrats would have thought about that in their calculus before engaging in what is really a a deeply partisan thing to do that that this will will this will get
overturned but their damage will be longlasting unfortunately that's a shame totally and I mat mat Tai had a good line he said that only people who live in a bubble within a bubble within a bubble could ever think a decision like this is a good idea here are the three bubbles number one all of these judges were Democratic appointments because so living within the Democratic part is the first bubble the second bubble was the fact that they
all went to Ivy Le schools this was actually a 4-3 decision the four justices who went to the IB leagues all voted for it they thought this was a good idea the three that went to Denver law school The non- Ivy Le School were all against it and wrote scathing descents against it so that tells you the second bubble is the IV League the third bubble is people who've been totally marinating in the mainstream
media and their coverage of this because they think that they can just conclude that Trump is guilty of an Insurrection because it's just a fact according to the media they listen to Trump has never been convicted of that crime he's never even been charged with it right so I think that's a an important distinction that you know the the the 14th Amendment which my understanding came about to keep members of the Confederate Army out
of Congress because they had rebelled against the government and so the whole point was this amendment was passed to keep um anyone who' no that's right who engaged in Insurrection or Rebellion or given Aid or Comfort to the enemies there of it may not be elected a member of Senate Congress or president or vice president so sax if that's the case that that is still the 14th Amendment that's the claim being made
here it doesn't define whether or not there needs to have been a conviction of a charge of insurrection is that what will ultimately be the Supreme Court decision do you think is that he was or wasn't actually found in a court of law to have been guilty of insurrection no it's that the actual article three of the 14th Amendment doesn't doesn't even Define the presidency as applying in terms of where this applies so even before you
get to that legal threshold of the fact that he's never been tried for this thing there is a simpler threshold which is most legal Scholars say it doesn't even point to the fact that you can actually hold the president to that standard so there's like all all these layers what do you mean it says no person shall be well it's unclear it's unclear if officers of the United States includes the presidency I think that's
one way you could overturn this another way is to point out that there was no due process the desense really harped on this issue of due process you had a District Court decide after a 5-day Hearing in which Trump was not allowed to subpoena no subpoena power no calling of witnesses no cross-examination they basically just looked at tape of the January 6 hearing which was itself bias because the Republicans didn't even get
a chance to cross-examine so basically they just looked at MSNBC coverage and this District Court concluded on that basis that Trump was guilty of an Insurrection again that is a crime for which he's never been convicted and he's never even been charged with and he's never even had the chance to answer those charges in court and there was a special counsel at the federal level that declined to prosecute that's right
that's exactly right so sack if a prosecutor had taken up the case and he had been convicted would you support him being disqualified from the state ballots for being the nominee of for party for president well there was a very simple way to disqualify Trump from running again which was to impeach him was to convict him in the impeachment trial remember the second impeachment was all about January 6 and he was
courts I'm talking about the he was exonerated that was the time to do it now I don't know if you know if a conviction for inment to Insurrection would hold up in that way freeberg I don't know but the point is they didn't even try and the reason is because when merri Garland first came in they actually did an analysis of January 6 and there was a memo written and it said that if we the doj try to prosecute Trump for either incitement or for
Insurrection we will lose that case and so mer Garland didn't bring those charges then there was a story in the New York Times saying that Biden reacted really negatively to that and he told his inner circle that Garland needed to stop acting like a ponderous judge this is the New York Times words and that he needed to take decisive action and Biden made clear to his inner circle I'm going to provide the receipt on this that he
thought Trump should be prosecuted so all of this lawfare ultimately flows from that it flows from the top Biden is the most vindictive president we've ever had I cannot think of another time in American history where a president incited his own AIDS and advisers to basically go prosecute the leading alternative for the presidency that he's likely to face in four years that is what happened by the way we've seen this
behavior before remember this is also the president who said we need to go look at this guy meaning Elon I mean I can't believe that this behavior is just accepted by so many Americans This is petty vindictive unamerican behavior and it's anti-democratic and the people who are engaging in it the most again are are glorifying themselves as somehow standing up for democracy this is a joke and I think the average American is
going to rebel against this and I said I think it was like last year that all this lawfare all these tactics and shenanigans that the Democrats were trying it's either going to put Trump in the big house or the White House and I think said it for the White House on this basis right now I agree you would say that it's reasonable that if he got convicted in a court of law for charge of insurrection that he should not be
allowed on the ballot if the Supreme Court then decided that that's what the 14th Amendment meant sure but that's not what happened here there's zero due process I get it I'm just trying to understand where your threshold is so you think he'll certainly this will certainly go to the Supreme Court and they'll adjudicate what the the 14th Amendment really means because it's never been tried the 14th Amendment at
the cour was written think about why that statute came about chath is right it was written for the Confederacy right the only other time it was used was in 1919 against one person that was about to enter Congress who was who had given Comfort to the Germans in World War I that's the only time we've actually invoked article three section three of the 14th Amendment were they allowed to run no person they were not allow they
were not allowed to take the seat now that's at the federal level and at and and at the state level it's been used a couple of times the the the point of this is for me again take Trump out of it you do not I think I'm pretty sure we do not want to find ourselves in a country no of course where you can all of a sudden be deprived your Liberty and your rights for Random Acts where somebody
believes that you are a threat to them and that person in a is in a position of power to affect your Liberty that can't happen vote the men up or down yeah and I agree with that and I would say that I mean what you're speaking to is due process these judges basically believe that because the mainstream media says something is the case that we don't need to go through a legitimate Court procedure to determine that as a legal
finding they just declare that okay he's guilty of insurrection that was never proven people don't realize you can this thing can go the opposite direction so quickly imagine that there's a Democratic candidate that is running against a Republican incumbent is this the standard we want to create where there's this political Warfare that happens where each party is trying to essentially prevent the leading candidate of the other party from
running in every election from here on out because that's the precedent that is being created that's why that's why I have such an allergic reaction to this that's totally true why wouldn't every president from here try to do this I mean it's already the case that every president that loses Congress is probably going to face an impeachment hearing I mean that's happening too and now we're going to have a situation
where every presidential candidate can be potentially excluded from the ballot based on you know a local Court's findings from the Democrats point of view this was deeply shortsighted and I think it has a very high chance of blowing up in their face we haven't heard from jcal I get my information from two really good sources the first one I recommend for our listeners is cafe.com it's a podcast by pre verar fantastic he does really deep Dives on
these yeah cafe.com is his podcast.com it's it's a paid podcast but it's really detailed and then there's actually speaking of law fair there's a lawfare podcast and so I listen to those and it's they're they're covering this but and also the two other cases that are of note the federal election interference case and the Georgia case highly recommend that our listeners go to those experts and get a really well balanced
view of the cases against the 45th president all right for chairman Jam poap the new chairman of the all I like chairman dictator I don't want to lose chairman dictator authoritarian no no J bipac chairman bipac chairman of the poit bureau dictator of the all-in Pod you have my proxy vote too all hell the chairman dictator and for the king of be and Rainman himself I am the world's greatest moderator love you boys we'll
see you next time let your winners ride Rainman David and instead we open source it to the fans and they've just gone crazy with it love you queen [Music] of Besties that's my dog taking a your driveway ta oh man my meet me we should all just get a room and just have one big huge orgy cuz they're all this useless it's like this like sexual tension that we just need to release [Music] Som we need to get [Music] merch