my body is a wonderland if that wonderland is white soft and mushy sure and hairy too you know the worst thing about skin on skin sleeping with the newborn is that you know sometimes she roots and she goes after the man the male nip i know the problem is my nipple's covered in hair it's really awkward for everybody she start gagging i'll tell tally that
story when she's 18. we're at her wedding it'll be even better hey everybody welcome to another episode of the all-in podcast i am wearing a blue shirt i am a pasty white old greek man uh who's balding and obnoxious and uh with me today is uh no no no no no you have to you have to say your pronoun bro am i oh and my pronouns are uh oh wait what are my pronouns my pronouns
are beep beep and most people just call me a jerk with me today of course is my sri lankan urkel looking wearing a furry sweater hello everybody my name is chamath i have uh salt and pepper black hair brown eyes uh i am tall uh six foot two i go by the pronouns we king and stud muffin and uh uh i'm here to talk to you about uh internet security protocols
i look like article i think people should just come up and say well i don't look like girls i'm the closest i don't look like urkel i look like a bollywood when you put your glass about welcome to the all-in podcast two out of the four of us are cancelled next up for cancellation socks yes i'm coming to you here from the floor of the new york stock exchange
which was once land that belonged to the mohegan the montauk the oneida the erie and iroquois tribes you forgot the irish we own the seven points oh my god you literally did it you went for it saks i love you i'm uh isn't it important that at any moment that we're successful we have to flagellate ourselves and remind ourselves about that at one time
all this land was owned by somebody else we stole it and also the greeks conquered the romans and so on but you forgot to mention you're also wearing a other shirt that is four sizes too large this is my slim fit so that's slim fit oh no here we go again sax has been upgrading the wardrobe he's changing we wait before freeburg does the intro uh
jacob you want to tell them why we're we're doing these intros like this yeah i gotta pause before we get okay yesterday on the internet emerged a series of videos that were clipped of microsoft presenting their new suite of developer tools yadda yadda and corporate people got up and without any explanation started describing their physical appearance their pronouns their
ethnicity their skin tone and their hair styles and the entire internet was like oh my god this is crazy woke-ism like what what is happening here this no i thought it was a skit i thought it was a saturday on the livestream and so right and so then as soon as they got called out by the entire internet they claimed that they were doing this for
visually impaired people which kind of begs the question of why visually impaired people need to know what race you are like it's still playing into this like crazy weight race consciousness but then on top of it it wasn't just that we we know it's not that because then they start doing no no but hold on yeah also if you if you're blind and
technically can't see you may not even know what blue means because you will have never seen the color blue or blonde okay right right but they were also identifying their races which kind of begs the question of why that's important but if you were born blind you would not know what that means either you're literally colorblind on the same footing as people who are
not visually impaired what i'm saying if you're visually impaired you're using the wrong language that language is for the sighted people okay but i i'm just calling on their stated explanation that has anything to do with visually impaired because then they went on to basically recite the names of 10 tribes native american tribes that no one's
ever heard of on on which the microsoft campus it used to belong to so which is why i was kind of making fun of that in my initial statement but so look this is just woke capitalism this is woke-ism out of control obviously they didn't see the election results earlier in the week it's clearly there was some level of virtue signaling i think in their
defense they were trying to do it i think for the visually impaired the problem was they didn't explain the context and they didn't give instructions to the people on what to do so well but jake that video that was a clip pulled out of a broader context too right so like apparently this is common on campus or common there that this is happening all over so we just know it
isn't common because i asked people online well it was optional it was optional it's optional to the common point i think the reason the internet reacted the way it was was i asked every single person who came at me because the work left came at me i just said can you show me another clip of this on youtube of any event where this occurred and
nobody could so i think this was kind of a first when did you stop being a member of that that woke left jkl what was the mother like the hysterical side i've never been for bernie i've never been for elizabeth warren i've always been moderate always wait can i hear freeberg's intro yeah free bro can we hear yours my identity is an illusion
it's an illusion created by the viewer and you can call me whatever you want i sit on the ground where during the haitian period there was lava and magma and nothing but co2 and methane and i represent those gases that are now lost to the oxygenation and the cyanobacteria that swarmed over this earth and took everything over and led to the formation of eukaryotic
life and here we all sit today in our privileged existence thank you are you saying that you want to freeburger is just electrons hitting neurons in interesting ways yeah quantum foam is my pronoun so would you like to formally apologize for colonizing the dark matter during the big bang now or would you like to i feel it was inappropriate
it wasn't fair when the cyanobacteria took over the the face of the earth and sucked up all the co2 and created all the oxygen and for that we all apologize for the genocide of the for the genocide of co2 and methane i mean those molecules were really happy and you know they had a very kind of like peaceful existence on this earth and you know we just came in and ripped it away
just took it all away from them and you know and then the offspring ended up being us and here we are so apologies all right all right welcome to episode 54. everybody's canceled the final episode everybody's horrible i i don't think that the microsoft thing was bad and when you hear the broader context it was like you know that's just
you know i think it's a reasonable thing that visually impaired people heard i'm still long microsoft and google and short the rest of the big tech so i'm fine with it there you go back to the stock price actually jamal do you think that the google long netflix short play is the right play i think the best trade on the best trade on the internet the most obvious simple
money making trade is long microsoft google short big tech short the rest of the big tech short ibm short netflix no no no no short one meaning you can you can very comfortably short apple facebook amazon netflix and belong microsoft google so as a spread trade right right it's the most it's the best risk parity trade on the internet right now i mean period in the markets can you
explain explain a spreadsheet so look look i i tweeted this a while ago but it's like and and again the i i think like well let me be constructive and say the people on twitter that respond to these treads are not totally stupid although i think they're kind of idiotic um i said you know here's how you can effectively you know i i said something
about you know big tech and i said oh i can comfortably put my short on and i'm kind of trolling people when i do that because i'm not telling them the full trade and the real trade whenever you put anything on in my opinion is all about managing risk and the best thing about the internet and the stock market is that you know when you're betting on internet stocks
you don't necessarily have to be naked long or naked short which comes with a lot more risk than if your long one security and short another against it so for example over the last 10 years you would have made a lot of money by being long amazon and short a basket of traditional commerce companies offline commerce i'm going to make up a basket but macy's
jcpenney you know kmart sears right so if you're short those and long amazon that's what's called a spread trade you're you're basically playing the gap between your longs and your shorts it's independent of where the market generally trades it's one of the irrelevant of the market you're basically saying those stocks could go up but just not everything could work
near amazon yeah when you put that trade on for example it's i'm going to bet that if everything goes up amazon will go up more than kmart walmart sears and if the stock market goes down amazon won't go down that much but these ones will go down a lot and you you're playing the spread so just just to be very explicit you know there was a very and i talked
about this last week but uh i that this idea wasn't mine it's a borrowed trade from somebody who's a very well-known hedge fund manager who put it on in massive size and you know to be honest not knowing much of anything i just copied it but he's his initial trade was long google short facebook and that trade basically was at parity
which meant that the long and the short canceled each other out for about the last four years until the last year it completely blew out and it returned about 80 85 percent so if you had put 100 and you would have made about 85 uh 85 bucks on this trade by being long google short facebook the the bigger trade at scale is actually long google and microsoft and
short the rest of big tech and there's a lot of vague reasons why that this idea makes a lot of sense but what you're saying is they'll outperform the other basket of texas on a relative basis on a relative basis so so it's not like you're saying airbnb can't go up or facebook can't go up it could it's not going to go as well he's saying that the the trillion dollar
market cap companies yeah not the airbnb oh okay and the reason and the reason why focusing there makes sense is there hyper liquid markets they have tremendous ways in which you can have massive size on so you could put a trade of 10 billion long versus 10 billion short i mean you can put mega size on on these things if you if you have real
conviction and then the third thing is when the banks look at that kind of position they actually from a risk management perspective treat it differently than if you were just naked long any one of these things or make it long would be just making one bet yeah or you know or naked short which is even more dangerous so because if the market collapses by 30
both stocks might go down 30 roughly but one will go down 32 and the other one will go down 28 and so you're really only getting two percent two percent as opposed to the 30 percent of the so all the market risk is taken out when you make trades like that yeah the reason it's possible also today to do so at such a scale right chemoth is interest rates are so low
so when you borrow on margin to go long the rate is very low and when you short the stock if it's a highly liquid stock it doesn't cost a lot to borrow too short that's so your actual you know uh carrying cost on that trade ends up being pretty low relative to the upside you expect so just to just to give you a sense of it my um you know when i
tweeted that tweet out to complete the picture i was actually long something against my proposed short and i put it on in pretty meaningful leverage and um it's worked out really well because i was playing the spread i was basically betting that you know the the safest company on the internet today is google because they're both a platform company and to the extent that
they're at risk at being an app company the risk is to apple but because they pay apple so much for search they're inoculated and so in many ways google is the safest and it's also as we've said before the purest money making machine on the internet you're referring of course to google paying apple 10 billion dollars to be the default search they own
android so one platform and on the other platform they they pay them so much that they're going to be always protected and the second best company is microsoft and you we even saw it by the way this past week i don't know if you guys saw that but microsoft decided to take a broadside attack against notion yeah which is a productivity app that's been
growing very well i felt this when i was on the board of slack when microsoft put its gun sights on us we always thought that they could not out compete with us and what it turns out is when you have a massive distribution advantage feature parity is enough and you can actually be slightly less than good enough on the features because distribution and
bundling and packaging overpower a customer's desire to adopt a product so in the case of slack it was very difficult i think for us to compete against microsoft's bundling of teams with all this other software that they were selling and all the discounting that they could do made it very difficult for us to compete because we had a single product and lo and behold
18 months later the only real long-term protective solution for slack shareholders was to basically get bought by salesforce so that you could be part of a bigger hole this past week microsoft decided to go after notion and it's going to be i think a very similar story where you know once they decide to sort of go after this a product experience
they only need to be eighty percent as good and then the distribution and bundling and packaging will take care of the other twenty percent it doesn't kill the other company but it creates headwinds that massive headwinds because because a company like notion cannot be fully valued over long periods of time simply being an smb company at a minimum
you'll have to move into the mid-market you may necessarily never have to go to the enterprise but you probably have to go to the mid-market and in that is a very troublesome path because microsoft has so much you know uh so many tentacles inside of those businesses so anyways basically microsoft long google is a pretty obvious kind of like monopolistic you know
pair trade the question is what do you short against it so that you can take up the market volatility and you can play spread again apple has severe you know headwinds with respect to inflation pressures um and margins and supply chain issues amazon has pretty meaningful headwinds now relative to uh pricing power and competition facebook has pressure with
respect to regulatory oversight i just came up with one what about airbnb versus the airlines you're talking about small or rinky dink ideas well listen i'm not playing the same chip stack issue i wasn't there on tuesday night i'm on a thursday night so no no that'll be a good spread for me no that's a stupid idea and i'll tell you why okay if
you're gonna put these things on go to where the deepest liquid markets are because those are the safest okay right like like don't try to be different being the same here tell me why airbnb which is a incredible margin business that's incredibly well run and growing versus airlines which are horribly run and low margin why wouldn't that be a good spread trade i'm just thinking
i think it's a very very too you're picking two random companies out of a hat well no they're both in uh transportation and vacation and traffic they're completely different businesses with completely different motivations with different capital pools with different people that own the stock there's no point trying to get cute on these things my point is if you really
want to be hedged against market risk got it go to where it's safest find the simplest most obvious thing don't overthink it or don't put it on so another obvious one here's here's so obvious is within big tech figure out which ones you want to be long which ones you want to be short that's a spread trade that over the next four or
five years where if you expect a lot of market volatility it makes sense to maybe put some of this kind of stuff on right a different version of this idea which makes sense is in autos again trillions of dollars of market cap and you can make a decision do i want to be long tesla lucid and rivian and short the traditional autos that could be a trade
you know but trying to like trying to go after like let me pick airbnb versus united airlines is too random for me and i don't think they're correlated enough for it to make any sense right speaking of the stock market uh saks um you've got the background of the new york stock exchange as your zoom background today what's that about yeah so bird listed on the new york
stock exchange today this is a company that i've been involved in pretty much since the beginning we led the series a round back in 2017 it was actually the first check i wrote as a vc to lead around at kraft and four years later public company on the new york stock exchange is pretty amazing and so you're literally at the new york stock exchange we speak first remote
bestie yes and you can see behind me um that is the floor of the new york stock exchange it's not like you know if you see the movie trading places it's not like that anymore there are no stock brokers there's no like paper flying around got it i'm not really sure what the purpose of all those monitors are down there it feels to me a little bit
like a movie set yeah it's like a movie setting yes yeah and some people guys come here to record things but as we all know the all the trades are really happening inside giant machines can you turn around and just start yelling booyah and let's see if security comes and no i remember i'm in i'm i'm elevated above the floor no one could really hear
me here i'm in like this sort of broadcast booth uh so take us behind the decision to go public as a four year old company we were expecting you know uh airbnb ubers and lyfts took over 10 years to go public now here we are sitting on a four-year-old public company is that a good thing a bad thing something in between and how does the
board and the management team make that decision to go public i think it's a good thing um because the company well the company wanted to i think it had the opportunity to it um it grew very very quickly before covid then you had covid was like sort of a huge setback they i mean basically the scooter industry just stopped for at least six months because of lockdowns
but then coming out of kova they bounced back really strongly they kind of pivoted their model to what's called a fleet manager model where basically they're putting a business in a box for a local operator a local entrepreneur to buy the scooters with financing and manage the fleet themselves so it's a much more highly virtualized model
and so as a result of that in q2 they just did 60 million in revenue in the last quarter and i think it was a gross profit of something like 27 and uh it was had a loss of like 12 million so they're very very close to getting to profitability and uh you know the company's only four years old you know it took uber 12 years or whatever to get through public so
it's been pretty it's been a pretty amazing ride there's been a lot of big ups and downs but uh so it's kind of a pretty sweet event what is it i know it was switchback was like the spat name right so it's it today was the first day it started trading under the ticker symbol brds i guess all birds took bi rd so we took brds and um you know if there's a total number of
shares outstanding of i want to say roughly 300 million so it's about a 2.4 uh billion dollar market cap you know as it stands right now which you know for a series a investor is pretty great really happy for you sex yeah congratulations it's great congrats dude we heard last week sequoia is going to do the sequoia fund this evergreen fund keep owning shares now as a vc
um do you distribute after four years of this investment and you made multiple investments or do you make the decision hey we think it's undervalued we have you know conviction in the company we were going to be in it for 10 years or do you just take the quick win and give everybody their shares well i've i'm gonna i've agreed to be on the board for
the next year so you know i'm planning to do that and we have a traditional six month lockup and so at that point we'd have to make a decision about when or how much to distribute the shares and this is the first time we've been confronted with the decision i mean craft ventures is only a four-year-old firm and like i said this is actually the first
round that i led as a vc so it's the first time we've been confronted with a distribution of this magnitude we've had some smaller distributions so yeah we still have to make those decisions we haven't decided yet what we're going to do if you if the stock is up let's say meaningfully in the next six months and you get to that you know six months and a day and you have the
ability to distribute and it's up 25 and you're looking at it business is thriving you're on the board do you consider holding for a year or two so that you can distribute it at 16 25 or whatever your price target is maybe i mean we haven't we haven't gotten to that point yet so yeah i mean i guess what i would say is that our bias would be to distribute
shares to our lps so that they can make their own decisions about whether to hold it or not um as long as we think the stock is you know priced fairly if for some reason we thought it wasn't then would there be an additional reason to hold on to it and make the distribution later chamoth what are your thoughts on this given it's come up before
and a number of us are going to be faced with this decision and then we see sequoia has got lp buy-in for an evergreen fund well i think an evergreen fund is different from having to figure out how to do distributions so um they're they're solving for two different ideas the evergreen fund is really good because you don't have to do this continual
fundraising process and you can basically roll gains back into the next tranche of invested companies in an easier way i like that idea it was pretty rare at the time i remember when i was starting social capital the only fund that did it really well was sutter hill um and for a whole host of reasons i decided to not do an evergreen fund in hindsight i think for me
that turned out to be better because then it was easier for me to wind down and have a clear demarcation of when it was just myself and other lps versus when it was just my capital but there were some really good reasons to do it the hardest thing i think that sequoia is going to find in this new iteration is at some point somebody's reputation will
be on the line for judging public equities and it's still not clear to me that people who live and breathe venture can context switch well enough to then live and breathe public equity so just the best example i would say is like tiger global when you look inside that organization which is incredibly well run there are two superb investors that
carve the universe up right you have chase coleman that runs the public book and you have scott schleifer that runs a private book what does it prove to me it proves that it's just very hard to find a person that can do both and the context switching is very complicated so maybe sequoia finds an incredible public market strategist that can then manage these positions
otherwise but they've done this for a few years right they've um sequoia i don't know people realize this they set up the heritage fund and they set it up with only gp's money it's got billions under management and it's been making late stage private but mostly public equity investing i know but that's a fun to fund what i'm saying is
i'll be very honest with you if i was an lp of sequoia i would want the money back and the reason is i'm not sure that sequoia can compound money in the public markets anywhere near what i could so do you buy the point that they make that like exiting some of these left most of the you know kind of value creation on the table i think what
they're saying something much more subtle which is they exited and they have regrets for selling you have to remember when sequoia distributed google every single partner got google shares now had they held those shares they wouldn't be saying any of this and famously i'll tell you when they held their shares i actually do fair enough but maybe they did maybe
they didn't but let's just let's just put it out there that for example i know explicitly when i almost merged social capital with kleiner perkins like six years ago i spent so much time with john dore the most incredible thing that i was so impressed with dora was he was he told me he had never sold a single share of amazon that was distributed to him and
he had only sold a handful of shares of google only to fund future capital requirements at kleiner at the time so i just think that ultimately i think probably what sequoia was saying is man i wish i had not sold my google shares when they were distributed to me because otherwise they wouldn't make that claim no i think what they're saying is more subtle i think they're
saying you as our lps should have held them we are on the board of these companies from day one we have better insights in the second decade than in the first production board uh founder david friedberg how do you think about early exits distributing capital because you do have also with a startup studio structure which you should explain to
the audience how a startup studio works because you create companies which is you know was a terrible place to be maybe five or ten years ago but it turns out you're in the best place because zero to one is where all the values created explain the two things what a startup studio is for people who don't know and then what's your view of selling early if a company of yours goes uh
publicly i think there's a big um there's a bigger kind of framing here which is a lot of um investors you know professional money managers have tried to find ways to create what is called permanent capital which is a vehicle whereby they can continuously make investments decide when to sell those investments and recycle the capital into new investments
with the idea being that over time they're not at risk of capital outflows meaning investors pull their money out and they're not at risk of uh you know needing to kind of go out and raise more money and they can they can share in the value creation as they grow their book value over time years ago a bunch of hedge funds set up public reinsurance companies
dan loeb did this um uh what's his name einhorn did this blackman did it and basically bill ackman did it what they did is they set up a public company a new public company a reinsurer and then they used that that reinsurer to underwrite reinsurance and when you underwrite reinsurance you get all this capital that you can then go invest and
then the hedge fund manage that investment and because it's actually a public company it's got a balance sheet the um the shareholders can't pull their money out right it's just got a balance sheet and the hedge fund was managing that balance sheet and you know generating good returns and this is effectively what warren buffett does and everyone looks to berkshire
hathaway and warren buffett it's kind of the you know the the the key kind of long term here um which is uh hey look if you can keep investing and keep compounding value this thing can grow you know exponentially over time so you know the way we set up the production board i had the option of raising a fund and being a fund manager i chose to set up the production board
because i was much more interested in i think the similar sort of vein of what sequoia is saying which is like how do you become a longer term uh builder and a longer term holder and where you don't have these incentives to return capital because you only get paid if and when you return capital and um you know and then you're kind of making
these decisions to you know because your shareholders are saying well you had a good return quickly give me the shares back and let me and mark your profit and take your share and i was also more interested in look the fact is over time there's always going to be opportunities to chase with the capital so if we have a great gain if something works out
really well we can take the the gain and we can reinvest that capital in building new things there's no shortage of opportunities to pursue for the rest of my life so that's why i set up the production board initially in partnership with alphabet and then later on we brought in you know bill gates and other allen and co and other kind of investors that have
a similar sort of mindset which is like let's just if we have an exit recycle that capital and continuously they're not looking for a quick win they don't have pension payments to make right they don't have a reason to distribute cash and so same with me like i don't have a reason to take cash out so the objective was just build this thing over time and
grow value over time and that's why i set it up the way i did and i think it allows us to make you know really long-term bets that are super risky most of what we're doing is super technical and and difficult and maybe very hard to pull off uh many of which are still after many years in a very early you need very patient capital patient capital and also the you know
the preference for not trying to find exits but i have found this i'll tell you one thing i have been through a number of circumstances where i have seen businesses i've been an investor in or involved in that have traded long-term value for short-term opportunity meaning there's an opportunity to make a business that you can then go raise capital against you change your strategy
to do that then you go raise vc funding and now the business looks like it's working but the 10x or 100x opportunity was taken off the table because you ended up going down this different path that was a sure thing that was more likely to work that created value in the short term that allowed you to mark up your investment or raise capital against
that but you gave up the big long term thing and i think that's something i've been trying to avoid with the structure and it certainly makes sense with some of these other folks and what they're trying to do so what we're getting at here saks is decision making by capital allocators and on behalf of their lps or letting the lps make those decisions inevitably
the crypto world says well why aren't you just doing this in a dow and you know having some decentralized authority make the decisions i had vanillin i've had a conversation with our friend vinnie lingam uh after the solana stuff and and multi-coin capital and we were talking about dows for early stage investing or syndicates and just
brainstorming hey is there a way to do this and the problem i came to every time was should a bunch of folks be making decisions who are not meeting with the companies or meeting with 2000 companies a year what are your thoughts on a dao representing sort of what we collectively do but we all do it obviously in different flavors this actually exist yep
well there have been dows that have existed to vote on buying nfts so yes for collectibles i mean i kind of feel like i'll let you know when it actually gets here so open-minded to it but who knows yeah but i mean we talk about these things as if they already are here and they're not quite here i mean technically i know they they exist but people haven't
really figured out how to use them to you know to be a fund manager for example i think david's right i think the look i i there there are these three immutable features of web 3.0 that we're going to have to figure out over the next few years so the obvious ones are decentralization right that makes sense the second obvious one is the level of
composability which means that you're plug and play with everything um but the third one is this idea of democratization and governance right and that's where dows come in and david's right we don't really know what the boundaries of that feature is i think it exists in some small level scale but we need to have many iterations of companies get built
to figure out what it'll mean so i don't know i'm taking a pretty traditional approach jason which is that you know it's kind of like a crawl walk run strategy right now i'm in the crawling phase and i'm kind of saying how did web 1.0 and web 2.0 develop and i'm trying just copying it so you know in web 1.0 and 2.0 you needed companies like sun
microsystems and cisco and you know all of the plumbers foundational stuff to build plumbing for the internet to allow the thousand flowers to bloom at the application level and you know we had a very good reference model by the way for web 1.0 for most people if you want to look at it it's called the osi reference stack and if you actually look at that osi
stack you can translate that to all kinds of value creation over the first you know two arcs of the internet over 20 years trillions of dollars was created by just following each of those substrates um and in those transitional layers was where these great beautiful companies were built and i think similarly we're going to do that again but we need a different stack
to represent what web pre is so yeah you know this week we did something which was pretty straightforward which was this idea that if you're going to build all these apps you're going to need a distributed compute infrastructure which means you're going to need very simple building blocks like remote procedure calls rpc that exists in web 2.0 it's kind of a
not something you don't really think about but in web 3 doesn't exist and so it's all this aws you know gcp like infrastructure that has to get built and that's what syndicate does and i almost i think that's um a really very interesting uh observation there because everybody is trying to go to the application level and talk about the consumer experience
but before you even have the ability you know we're talking about cars before we've even made a transmission or you know that's exactly right this is why crypto comes across as so delusional and strange sometimes they wrote 000 ico papers none of them were about infrastructure they were all about some sort of end game but the thing is it's a very
delicate balancing act right you need a handful of companies that capture consumer imagination right that then incentivize all of the plumbing companies to come in and build underneath it right so it's a customer it's a very delicate balancing act right so you needed compuserve in order to enable a bunch of companies then you needed aol in order to enable
another set then you needed yahoo then you needed google and in all of that what happened was people were pulled through right you needed amazon commerce to justify aws so we're in that world where it's going to be a little back and forth where the pendulum will swing back and forth between consumer experiences that capture imagination get to some level of
scale that then create incentives for the developer ecosystem and the technology infrastructure to catch up uh zillow which we talked about previously became an eye buyer what's an eye buyer that means you buy a bunch of single family homes in all likelihood like open door and redfin have been doing and then you hope to flip them uh maybe improve them and uh maybe lower
cost to the consumers by taking out real estate brokers this has created a lot of bad feelings amongst real estate brokers a tick tock video trended a couple of months ago where a broker said or accused zillow of buying up these homes in order to do price fixing and to corner the market on homes well uh it turns out that zillow which has an
incredible ceo uh in rich barton and has done tremendously over the decades according ahead of their earnings call this week bloomberg reported zillow is trying to offload seven thousand seven thousand homes for 2.8 billion that's about a 400k average per home and zillow shares dropped 37 this week alone from 100 to 66. their market cap
has dropped nine billion throughout the week uh and they're down 70 from a peak valuation of 48 billion just in february about six months ago zillow is going to reduce its workforce by 25 over the next few months i'm assuming that's all those eye buyers anecdotally a lot of what i'm hearing is they bought homes indiscriminately the anecdotal stories that are breaking on
twitter and other forums with real estate brokers are they would look at a home they didn't know that it had a noisy neighbor or it was near power lines or whatever the people who came in bought them indiscriminately maybe too fast whereas some other companies maybe open door or redfin were more considered i actually had glenn from redfin on the
pod not long ago and he said it's a very hard operational business you have to be very careful on what you buy in your entry price that seems to have turned out to be true what do you think friedrich rich barton who runs zillow is considered a legend in silicon valley you know he um uh has been involved in some of the most successful internet companies um and you know when he
stepped back in as the founder of zillow stepped back in to run the business a few years ago it was viewed as kind of a second you know resurrection of this business and he was going to take it into new areas and then three and a half years ago he announced the cyber program which everyone thought was such a you know incredibly strong move and obviously
chased open door which champ is involved in and i'm sure we'll share more on but it was such an obvious opportunity that if you could add liquidity to the real estate market the residential real estate market there's an incredible amount of value to be had now the way that they wrote about it when they talked about it initially and then the way that they've kind of talked
about in their earnings report this week was that they were trying to be a quote market maker in the business and it turned out that what they were really doing was being more of a speculator right a market maker looks at bids and asks in the spread and then tries to to create a gap in that spread and make and take some share of it and by adding that liquidity the idea is
the spreads can narrow and they can make money in this case they were looking at the historical velocity of selling prices of homes and using that as a way to kind of project what was going to happen which makes them much more of a speculator than a market maker and they clearly got this wrong and their kind of quote-unquote models on
you know where prices headed ended up getting them in trouble there's also the inherent conflict where they are now competing in a way with the brokers that generate a lot of revenue for them and are a big part of their core business and they were clearly um you know cannibalizing their own business where the zestimate and some of the other scoring that they provide as a
data and analytics platform to both sides of the existing market starts to get blown up because they're coming in and saying we're going to put our you know our foot down and say this is what the value is and it inevitably kind of cannibalizes the core product that they provide to both sides of the market so you know one could argue this
was flawed from the beginning the execution clearly was way off and it begs the question you know where was leadership and kind of tracking what was going on here is these guys were buying homes at market prices that are well above what they were actually selling for in the market no one was actually doing on-the-ground work they were all
doing kind of speculative models and saying this is what we think will happen and then they woke up way too late and um lost way too much money i think they lost 300 million dollars in the quarter so um you know really a lot of questions and a lot of challenges on this um i'm sure chemat has a point of view on you know what makes opendoor distinct from
from zillow um but there's a really important kind of you know um underlying here you know yeah the maturity of a silicon valley uh entrepreneur who's crushed it so many times uh doesn't mean that they're perfect and you know this was a big mess you can go really too fast into a turn here and clearly they flip the car chamoth i i don't know how comfortable
you are talking about this interesting very comfortable okay well then here we go number one you know i'm not on the board um of open door of open door maybe tell us about your history with open door chim off would be super look i look i am one of the largest individual shareholders of that company i think somewhere between three and four percent of the business i own
we you know i came to own those shares with a large investment uh as well as through the transaction uh where we merged one of our specs into it and took it out ipob yes couple things to say the first is about the ceo and founder of opendoor eric wu is special special special so let me just leave it at that on that topic the second is i think that
rich barton is very special but it speaks to two big mistakes that zillow made the first is that catching a wave of disruption is very difficult when you have an old line business that is fundamentally competitive with the new line of business and zillow as david said had this thing called zestimate whose entire job was to directionally drive
top of funnel traffic into the rest of their media business now imagine you go to a website to look up your house value or somebody else's house value accuracy is a bug the feature that makes this estimate work is a highly inflated house price right like if you go and you see a crazy house price number that's interesting that's more um click-worthy than if you go in there and
it shows some depressed value you think the sight sucks that's the unfortunate psychological reaction so i think whether we believe it or not or whether zillow knew it or not zestimate over time basically calcified this idea of price inflation so the accuracy was never a goal so then if you take that business and then you try to orient it towards home
buying and you use probably zestimate or some version of it to underpin how you buy and take risk it creates a lot of risk and i think this is essentially what played out where they were over buying homes and they didn't know how to price this stuff accurately so you know my partner ravi tweeted this out but you know uh the open door margin on
average is about ten percent the zillow margin on average was three percent so they had a much more razor thin margin of safety here which again speaks to pricing and then it speaks to this third thing which is that if you start doing one thing and do it really well with software the gains over years really compound and so when somebody else shows up and tries
to pivot their business to try to copy it it's very very difficult the classic example is google versus yahoo yahoo had a beautiful directory driven business but when larry and sergey really larry invented pagerank and then invented that first version of a google search index as we saw it play out over the next 10 or 15 years it was impossible for yahoo
to really invest the technology the technical capital necessary to catch up with google and every day and every week and every year as friedrich talked about last week those technical gains compound and compounded now google is completely unassailable with respect to search i suspect we will look back and the ability to accurately forecast price and volatility
and the ability to sell these assets at a defined margin of safety in a predictable way is something software can solve and it seems that open door is the first it doesn't necessarily mean it'll be the only one but it has an enormous head start now and as long as they can keep iterating those gains will compound um so that's what i think i just think
this is a wonderful business run by an incredible ceo to wrap up this uh zillow story saks uh any thoughts on you know jamaat's point here you know you're the rating agency and you add this business and the business it might be orthogonal to the existing money printing machine on a strategic basis what do you think any lessons or mistakes here uh in terms
of when you handicap zillow or do you want to just move on to truck politics i mean look i'm a i was a c investor in open door because rabbi invited me to the seed round so you know i'm a little biased here but i think it's pretty obvious what happened zillow tried to copy them the business is much more operationally complicated than they realized it's a low business
low margin business with the which requires a ton of capital so if you're off a little bit the losses can be huge and zillow couldn't figure it out they underestimate the difficulty that's what frequently happens when a big company tries to copy a smaller sort of upstart company so i mean that to me is what happened in a nutshell quite frankly we're an hour
into this pod we haven't discussed issues any issue that i think is broadly relevant to most americans i think this is one of our worst episodes we're going to bore everyone to tears i frankly don't understand what the you're doing i don't even know why we have a topic list when you start pulling it out of your ass like dolls and i don't know what the else all right all right
fine we'll talk about politics i thought the dow question sucked all right i'm just giving you the opportunity that we shouldn't even be talking about cut it out of the show this whole episode should be cut jesus christ episodes yeah i agree i think we should cut all that it's going great what do you know jason jason i agree that that part where we
cut it that's all right fine you got some loser i'm trying to give you guys the benefit of the doubt to just because it was like no one cares all right fight calm down everybody you want to talk about politics we talk about politics okay saks go ahead tell us about the election okay i'll just rattle off some of the key results here
from blue states we have a woke lash going on all across the country that's the important thing in virginia a state that biden one by ten he's cranking a huge upset republican glenn younkin beat terry mcauliffe a former governor there he was this was a huge upset mcauliffe was supposed to win younkin won 51-48 so that's a 13 point swing uh versus where biden was
just a year ago in new jersey a state that biden won by 16 points the democrat held on to it but only by 1.5 points and i bet you anything the rnc is kicking itself they didn't give any money to chaturelli who's the challenger who i think almost became very very close and there were down ticket seats that went republican so the the um this is really interesting in
south jersey which is a blue-collar bastion for democrats sweeney versus burr that's right the democratic state senate leader steve sweeney lost to a truck driver named ed durr who spent a grand total of 153 dollars on his campaign okay so those were some and then we had someone say write in like he was printing on others to say write me in i
think i don't think he's a writer but but any event so so implications for 2022 dave wasserman of cook political report calculates somewhere between a 44 and 51 c game from the gop they only need five seats to win the majority so it's looking very bleak for the democrats in 2022 and then i think you also had some very interesting local elections in minneapolis voters rejected
a proposal to defund the police with 56 percent of the vote uh they there was a ballot proposition to change the police department into some sort of larger public safety group voters were having none of it in seattle which is a very liberal city they voted for a literal republican as city attorney which is the office that prosecutes misdemeanors so
against a police abolitionist who said she would stop prosecuting misdemeanors you're forgetting that in virginia it wasn't just glenn younkin that won but basically it was terry mcauliffe and then a lieutenant governor who is some milk toast individual and an attorney general candidate who was caught in blackface which by the way there is no more racist
thing you can do just to let you guys let everybody in all the non-colors okay that guys please don't do blackface or brown face it's such a bad it's it's not it's not you're right it was a sweep so the lieutenant and junkin and it was a it was a black female lieutenant governor and a latino attorney general that's right and they swept right so that's right that's right
so the lieutenant governor was winston sears uh she's a a black woman republican if you've seen the photo of her she's frequently photographed with a giant assault rifle in her hands uh that's her and then the hispanic attorney general jason miyari's uh one as well so yeah it was a huge sweep and then you know in long island and staten island which again are blue
counties you had two republican prosecutors beat the local sort of incumbent democrat decarceration rad just i think i think this is very clear which is um trump was behaviorally extreme and after four years people were sick of it nobody wanted that behavioral extremism because it was unpredictable and people felt frankly in danger and i think that
that was legitimate he also turned out to be extremely lazy and probably pretty dumb now what we're realizing is the different form of extremism which is policy extremism will also be met with the same response which is that you you can't sustain election results and wins right so people care consistently about three things they care about the economy
they care about the education of their children and they care about safety and the thing that glenn younkin did which i thought was at least a playbook for centrists and the right and it's also a playbook for the democrats if they choose to embrace it is to understand that these things are reaching a tipping point where you know again we've said
this before it is possible to live in a state of mind where you believe in black lives matter and you believe in law and order right and and when you try to pit those two things against each other for example like you would have thought the one place where they would have basically defunded the police in its entirety would have been minneapolis after george floyd but
instead even they drew the line and said no or new york or new york there was a there was a really compelling quote actually by this woman i think it was in the new york times um and what she said was i didn't elect joe biden to be fdr i elected him to tack to the middle and just calm things down so that everybody could exhale so that we
could reset same with me and what's up that was abigail spamberger actually she's a virginia democrat yeah she's a virginia democrat who won a seat in one of those blue counties that just flipped red to vote for yunkan and since she got elected i guess she got elected last year she's been telling the democratic party she's the one who called out pelosi
in that you know caucus meeting saying i don't ever want to hear the words defund the police again that is electoral poison and then she said yes nobody elected biden to be fdr they elect him to be normal and stop the chaos and so certainly my vote yeah yeah there's a big backlash going on because biden has decided to start governing like bernie sanders no one elected him
to do that so sax is the lesson dems learned this time around is it's very easy to beat trump but it's very hard to beat a moderate republican no no it's not that it's that you just have to be a rational normal person that's what i mean by a moderate republican well you just have to be moderate i don't think it matters when this is but this is the key to the
condems it was so easy for them to use trump you know but these three topics are not a republican tent pole nor are they a democratic temple they are the tentpole of reasonable people yes meaning which most people are reasonable hey guys get out of the way so that we can you know have a reasonable life in an economy hey folks please make sure my kids when
i send them to school for eight hours a day come back reasonably educated and please keep my streets safe and i'm not really willing to decarcerate ad hoc to such a degree that all of a sudden crime gets out of control those are not democratic or republican tent poles those are just moderate centrist rational things to believe in yeah being and also behave normally like i i think
whatever happened with these progresses where they couldn't pass you know the stimulus bills and things that almost everybody agreed on glenn younkin was not behaviorally extremist yes and and from a policy perspective was pretty much down the middle eric adams eric adams is not behaviorally extreme and he is politically down the middle the mayor
of buffalo who got reelected is not behaviorally extreme and he's politically down the middle do you start to see a pattern here yeah nobody wants aoc bernie elizabeth warren or trump i think it's not it's not a question of aoc or bernie or trump it's just that right now the temperature of america is let's just all exhale and just re-center ourselves
as a country yeah and so moderation and centrism is actually what calls for today i don't know how to predict what happens in 15 or 20 years and maybe aoc is the canary in the coal mine for where the country goes by a plurality of people in 15 or 20 years but what's clear is it's not where it goes today and i think that we it all behooves us
to just take a real step back and exhale and just read the tea leaves because every single thing that the democrats tried to do to sort of like make this extreme really didn't work the race-baiting all of that stuff really kind of failed and i think that that's important to listen to you know because you had a lot of black indian chinese families that just showed up
hispanics you know that again reliable democratic voters and voted for glenn younkin in a way that was surprising to me right and then so if you compare new jersey and and um virginia biden won virginia by 10. he the the democratic nominee lost biden won new jersey by 16 and phil murphy barely sweeped by it was like 10 000 votes here she's always had
a a republican kind of uh leaning group uh they're very uh tuned in one by 16. this should have been a cakewalk yeah but i think that's 16 how much of that is get trump out of office is what we i think the democrats need to parse we're repudiating behavioral extremism and policy extremism so i think we just need to realize rational normal chill people
who can do reasonable things get our kids educated so for example on the education front i don't know if you guys saw this because i tweeted and you can put this nick in the group chat but in california right now there's a battle over math class ridiculous right where the title i'm just going to read the title because it sets it up california tries to close
the gap in math but sets off a backlash proposed guidelines in the state would de-emphasize calculus reject the idea that some children are naturally gifted and build a connection to social justice critics say math shouldn't be political well of course the way that those articles are always written it's always about the backlash you know they don't
talk about what what the people in charge are trying to do to basically degrade the curriculum of course there's a backlash because parents don't like what the people on these school boards are doing this was the sleeper issue in virginia was the school board issue you had you know parents were already angry that the teachers unions had kept the schools
close for a year and a half during covet and while their kids were at home you know work doing classes over zoom parents got a good look at what some of their kids were learning and then like what they saw i mean we're talking about lessons plans that incorporated crt and you know the 16-19 project view of america singling out kids by their race
making them focus on difference and then there were some you know rather explicit materials at young grade levels about you know lgbt issues and so this led to a whole bunch of confrontations that school board memes were parents of all races objected to you know the lease lesson plans for for their kids and the school boards and administrators just dismissed
their complaints out of hand and you know their message was we're not teaching cr teacher kids uh but if we were it's a good thing and only white supremacists would object so you know that was sort of what was happening in the background and then mcauliffe comes along and makes this gigantic gaffe in the last debates about two weeks before the election where he says i
don't think parents should be telling the schools what to teach and what yes this is the customer no he said that he said that on a debate and he said that debate about two weeks for the election mcauliffe was leading through this whole thing until that debate where and this was sort of a kinsley gaffe in the sense that you know michael
kinsley set a gaffe is when a candidate inadvertently uh says something true you know this is mccalla's view is that the teachers union should be controlling the schools not the parents well um yes so this is what yanking uh jumped all over all of his ads in the last weeks of the campaign really focused on this issue you know poured gasoline on a fire and
then the most tone-deaf thing mcauliffe did is he had randy weingarten who was the head of the the big teachers union come in and campaign for him at the 11th hour well of course that's not going to save him because people are sick and tired of the teachers unions so you know this was basically the big sleeper issue crt and the schools in virginia and
you know this is this i think specifically is what the democratic party has to wake up to is that these progressive ideologies are not popular the other thing i'll say about glen yonkin is that this is another thing that the that the republicans should hopefully pay attention to which is you can look normal act normal be normal you know this is not an extremist in any
way this guy was the co-ceo of carlisle which is a huge and very successful private equity firm so this is a very rational reasonable person who um you know didn't embrace anything that was really that pro-trump and that should be a real wake-up call to the republicans which is hey let's just run a fleet of normal people i think what you saw i think chamath is
right that what you saw in virginia is that the playbook that gavin newsom just used to defeat the recall in california did not work in virginia which is he tried to paint yunkan as a trump proxy and young can very definitely you know avoided that he got trump's yes he got trump's endorsement but very early in the process he did not have trump come
to the state um and you'd have to say it also helped younken a lot that social media that trump wasn't all over social media because he's been banned so you know in a weird way facebook and twitter deserve an assist here because they help keep trump out of the virginia race so you know this playbook that that newsom defined that would work very
effectively from california which is simply to keep running against trump i think democrats thought they'd be able to win elections for years based on that that playbook didn't even last two months so you know so i think democrats are gonna have to find a new playbook here okay so friedberg on this california issue around education one of the key or
most controversial concepts is detracting in other words instead of having high performing students go to a high performing track and then everybody else stay behind maybe keep in not all cases but keep some of the students together because there is some research that shows if done right if you track people together the higher performing students will pull up the
ones who are slightly behind other people say we're basically uh throttling people who could be the next einstein or the next world-class leader in science math etc uh any thoughts on the concept of detracting since i'm assuming you were in the high-speed track in science and math maybe we should get rid of like jv and varsity sports teams as well and you
know triple a baseball and major league baseball as well and you know any distinction of performance um or exceptionalism goes away you know and and that is kind of the the key social question is are we going to give up exceptionalism um to minimize uh the distance uh between the exception on the average and that seems to me if it makes people it
makes people feel bad but i've said this point before you know we're doing it when we try and think about you know the billionaire attacks or what have you as soon as you start to limit progress um you reduce inequality but you limit progress and the same will be true not just in science not just in business uh but also in sports and athletics and
um and any other kind of system where you will have exceptionalism you will have an average you will have a distribution amongst human performance and as soon as we try and limit the difference in that distribution um we move the entire curve to the left here's the uh counterfeit bird what some studies have shown is yes you will uh throttle the high performers but
we're seeing uh along race lines certain demographics being left behind other ones excelling and that you can get yeah it's an ethics and values question right like do you think that individual freedom and the opportunity to pursue your opportunity your your exceptionalism um should be taken away from you such that others who aren't as exceptional as you
are given um you know greater progress than they would have had on their own um and that's the key crux of what all of these social systems are grappling with whether it's in sports or business or finance or or um or education is what's the right thing to do and that ethics question is going to be defined by the social agenda of the moment and you know the means of the
moment and what we all think is is the right thing to do and it's different all over the world and it's different within political systems but it's a very divisive point that i think folks who find themselves on one end of that exceptional spectrum in different aspects are going to have one point of view and folks on the other end of that exceptional spectrum are
going to have other points of view and everyone's going to be sensitively tuned to where they fall in that spectrum i will say one thing though on that spectrum exceptionalism is rarer than the average therefore it is likely the case that over the next years and decades we will see the um the idea that we should remove exceptionalism in business and
exceptionalism and education and exceptionalism in sports because it benefits the majority and um and no one kind of recognizes and a lot of folks don't recognize the progress that is made by exceptionalism and um and that's and then we're gonna wake up one day and be like oh wait a second we don't have the the best sports teams winning all the gold medals we
don't have the smartest kids we don't have the best businesses china and europe and brazil and whoever else the emerging markets are gonna india are gonna start to have them such a good point i think this is a very old debate it's the debate between a quality of opportunity and a quality of results yeah and the progressive left is
absolutely obsessed with a quality of results or outcomes which they now call equity which is we're going to take people at the finish line and we're going to move them around we're going to redistribute the outcomes to achieve a more proportional representation or something more fair as opposed to giving everybody as much opportunity at the outset as possible that is the
fixation right now that is why they're taking out advanced math in the schools they're trying to level people it's not going to work it doesn't lead to a more we want to have an exceptional society where i think we should be focusing is creating as much opportunity for everybody the way to do that would be to let every child go to the school of
their choosing so that we would stop trapping kids in bad schools but back to kind of to bring this back to the election for a second because i think it was a very clear repudiation of this progressive mindset and i think there's essentially two sets of reactions to it if you look at sort of all the left-wing commentators the the one who i thought
seemed to get it the most was cnn's uh van jones actually had i thought you know a rare moment of introspection where he said this was the the results were a five alarm fire he said it was a big big wake-up call for the democrats to stop annoying voters with woke hectoring um he actually advised biden to start triangulating against awoke left in the
way that bill clinton did i mean which is something that i've been suggesting on this pod so you're saying something super important the game theory now is for biden to put to the test the progressive left because now he can go firmly to the center and he can put all of the pressure on the progressive left in the house and uh warren and
bernie sanders in the senate well he's right that's the first thing he should do is he should he should pull a sister soldier on bernie sanders he can't keep delegating the domestic agenda to bernie sanders he if he wants to save his presidency he'll start triangulating in the way that bill clinton did i'm not sure he's going to i think there's already a misperception
that the reason why they lost selection is because they didn't deliver the goodies in this house reconciliation bill um that in other words i don't think the public cares about the goodies i mean they care about this normalcy and centrism yeah there there's a part of the democratic base that does want the what's in that house reconciliation bill
but but here's the thing democratic turnout in this election was extremely high the democratic turnout for mcauliffe was higher than the democratic turnout four years ago for the democrat who won the turnout that in new jersey was higher than what murphy got four years ago when he won the problem that democrats have is that republican turnout was extremely high
even without trump showing that trump doesn't matter that much to turn out and the independence came out in a big way for republicans so this idea that democrats can just win elections by delivering you know programs for their base that's not going to work so i think that's a misperception i think van jones has the right idea they need to triangulate but you turn the channel to
msnbc and they were just blaming the whole thing on white supremacy basically hysterical um just on the de-tracking thing this shows to me a severe lack of creativity you if you look at what happened in the nba they had this developmental league which they didn't kind of run then became the g league they now have the ability to bring players fluidly
from the warriors g league team up to the warriors or the next team up to the knicks what this means is you don't have to say there's two different tracks and the the two never shall meet in the season they can move up and down in math a very easy solution to this would be to have the high track for high performers have the regular track and then spend
with all this money we have say hey every school is going to be open from three to five o'clock four days a week if anybody wants to attempt to get into a higher track of math just stay after school for two hours anybody can go and get one-on-one tutoring and just don't change the number of teachers the whole country wants excellence they don't want
leveling they don't want equity they don't want a quality of results they want to have a quality volunteer david wants people to move up they do want to see that's true and brown students and immigrants do better at math that's what you're missing yes and that's about a quality of opportunity absolutely no it's not just about equal opportunity
they're so far behind statistically that you need to do something new what we're doing is not working david that's why people are picking this bad they're they are eliminating advanced math because they don't want to actually look at the the problem what do you see the problem is well if there's another performance a certain group then you should work harder to raise them up not
eliminated give me a suggestion it's charters and school choice okay look i mean if you're if you if you're gonna define structural racism as conditions that that trap people of color in poverty across generations seems like a pretty fair definition then you have to say the number one cause of structural racism is the school system
school system education yeah it's the school system because we know poor kids are trapped in schools that aren't very good why because they're controlled by the education unions they don't have your choices so who is making that argument uh on the on the side of the left no one why because everyone knows the unions especially the education unions are the
number one donor to the democratic party so the democrats won't even look at this problem although this is the way white supremacy could build their base is by saying we want to fix education that would be if you've seen education what do you think young industry in virginia by the way 55 of hispanics in virginia voted for yunkan so minorities are shifting on this
issue and school choices these are the new quality of life issues if yunkan has a a good four years in virginia he can run for president and crush this thing can i show you just one one chart and then we can get off the politics thing which is it was this chart from this guy patrick uh raffini who's a pollster and i think it really illustrates the problem that progresses
the democratic party for the listener okay so what this chart shows is it basically shows where the democratic the democratic party is and the senate republican party is in relation to the center of the country okay and basically as you'd expect in a democracy whichever party is closer to five wins okay so in 1994 when bill clinton was president
the democratic party the center of it was smack dab as five the republicans weren't that far away they were six so the party even though there is a lot of partisan warfare the the political differences actually weren't that great and clinton i think more accurately found that dead center okay fast forward to 2004. so george w bush is president now the democrats are
at four republicans are at five that's why republicans won okay now go to 2017 these poll numbers he did and this is a few years ago the democrats are all the way at two okay and the republicans are at six and a half so it's true that both parties have moved away from the center but republicans are one and a half points away from the center whereas democrats
are three points away so the democrats have actually moved further away from the center if you look at who are the activists in the democratic party who is the base who is the energy who does all the work who does the contributions it is the progressives right this is why mcauliffe ran as mcauliffe is not a progressive he was the clinton democrat
you know going way back to the 90s okay he was bill clinton's you know uh right-hand man in the party back in the 90s but he nevertheless ran as a progressive in virginia who supported the teachers unions why because he was appealing to the base of the party gavin newsom did the same thing in california gavin was never a bernie bro i mean he's always been
liberal but he he has moved very far left and biden has moved very far left as president why is that because the base of the party has moved very far left so unless that gets fixed i see maybe it's going to the party's base but not the countries exactly so you're going to need a strong democrat who can basically give the heisman to that part of the base
or they're going to keep losing elections i think this could be a republican decade i know it doesn't seem like it right now because you had trump and the republicans lost but look how quickly the republicans turned around their electoral fortunes so with trump on the sidelines then that's just a huge trump is the nominee in 2024 all bets
are off but in 2022 he's not the nominee he's still censored from social media he's really nowhere in sight and people people have a very short um memory it turns out they've moved on very quickly young can check the box because he felt he had to to get the nomination and to run on the republican platform but then you think yunkan's going to talk to trump once no
not once and i think and i honestly think this election is going to help republicans move past trump because what republican believes in um in like that the electoral system is rigged now right i mean all these blue cities and states just delivered big results for republicans so where exactly is the ballot stuffing where exactly is the stall where are the stolen
elections that's going to that's going to stop now too they're going to stop it's going to stop overnight right because i mean by the way kristen cinema probably knows this like you know the the the funny thing about all of this is when peter thiel put in 10 million dollars into this pack for blake masters who used to work for him and said you
know in arizona i'm going to run this guy against you cinema attacked heart to the center instantly so she she knew too yeah well so so just this small point of course so blake is running against uh the other guy um the astronaut guy i'm spacing on his name but but yeah but but cinema is up so to speak uh in the next election cycle so she got a little bit more time but
you're right like cinema is attuned and mansion is attuned there are some of the few democrats that are attuned to where the center of the country is you heard a mansion in the wake of this election said this is a center-right country these guys better wake up um you know they should really now look i think i think what's going to happen in the wake
of this election is that this infrastructure bill is going to sail through because one of the crazier things that the progressives were doing was holding that bill hostage it might have helped mcauliffe i don't think would a i don't think mcauliffe would have won but it might have helped him by a point or two if they had gotten that infrastructure bill done because a
lot of those programs are going to be popular in a state like virginia okay but i mean but but i think that you know this house reconciliation bill they just seemed hell-bent on jamming it through with all these tax increases i don't think that's not popular you know what the big issue in new jersey is for them yeah one of the big issues in
new jersey where you almost had this upset within one point was taxes you know um there was a a gaffe by murphy who said something like you know he said he said that if if taxes are someone's chief concern he said quote maybe we're not your state can you imagine that wow and he almost lost the election because of that so i don't think all these big
tax increases are what the country wants and you know if biden insists on allowing bernie to dominate the agenda and warren i think it's gonna you're gonna see 40 to 50 seat losses by the democrats in 2022 okay moving on to our final topic crazy update out of china a research team has developed a method of converting carbon dioxide into starch science
magazine published this paper from a research team 100 grams of catalysts converting 5 grams of co2 per hour into starch and freeberg i'm sure you tweeted that this is 10 times more efficient than corn plants uh what's the impact of something like this could it hit scale would it have an impact on food security carbon global warming yeah so i tweeted this
paper app because it's just it's a fantastic demonstration of what's possible in this new emerging not emerging it's been around for a long time but kind of you know in the state of art in um in biomanufacturing you know photosynthesis is the system by which most starch is produced on planet earth today that is plants convert sunlight and use water and carbon dioxide to make
uh starches and starches um and sugars which are what carbohydrates are account for 60 of human calories and we get all those calories from rice wheat potatoes which you know are grown on about 60 of our acres uh that we farm on planet earth so you know in in plants there's a series of these chemical reactions and what these guys did is they um
isolated and created a couple of specific proteins um which are a class of proteins called enzymes and what an enzyme is is it's a protein that can take different molecules and combine them and re enforce them to react and make something new and they identified a couple of enzymes and engineered a few enzymes and put them together in a cell-free system
meaning there's no cells involved it's just a tank with a bunch of fluids in it and and they stick in some carbon dioxide that they can suck in from the atmosphere and they um they can and they have to drive it with some hydrogen gas which we can just get from water and the system basically converts that carbon dioxide into starch which is uh being done at a rate that's
almost 10 times higher than what we see with with corn plants so it's it's an incredible demonstration there's there's several steps to this system like six steps and i did some back of the envelope math and my back of the envelope math on what they've demonstrated and by the way everything they did is publicly available for reproducibility so people
are going to try and resource open source so people going to try and copy this now but my back of the envelope math is um you know this system can produce about 10 grams of starch per liter per day which would mean it would take about 2.7 trillion liters to suck up all of the carbon dioxide that all of humans are putting in the atmosphere every year from all of
industry that would require um about 27 million tanks that are about 40 feet tall and about 8 feet wide that whole all of those tanks could fit in an area about 25 by 25 miles you could attach one nuclear reactor to it to suck up the uh the water and convert it into hydrogen gas and feed the system and those tanks 25 miles by 25 miles would take out all
of the carbon dioxide on planet earth and convert it into usable starch and that starts by the way that system could be tuned not just to make starch for consumption it could be used to make biofuels it could be used to make bioplastics it could be used to make anything that's hydrocarbon-based um and so you can kind of think about
this being the entry point to a series of production systems that we could use to make stuff why freeberg why did they open-source it so they're a research team of scientists from china and they've been iterating on this this process this isn't the only process right and so what they're showing is that this is possible and what i think we will see is a lot of
people rattling their brains now saying not only do we use proteins and enzymes that we find in nature but we're going to start to engineer our own proteins and our own enzymes that are even more efficient than what we see in nature and that's what's starting to happen this system alone what i just described this 25 mile by 25 mile system which is tiny
is the equivalent of starch production from 42 u.s corn belts if you took all the corn growing in the united states it's 42 times that um is what it would produce that's my back of the envelope map of kind of what these guys did um and so i think what they're showing is this is what's incredibly yeah yeah and and the implications we could go in
100 directions and we could talk for an hour about what this means and what you could do with it but i think it it really catalyzes this point that that that we're kind of everyone's always like how are we going to get all this carbon out of the atmosphere what are we going to do with this where there's a will there's a way the science is here today
27 million tanks made out of plastic you could probably get that stuff produced you know a couple billion dollars find a piece of land that's 25 by 25 miles it's near some water and put a nuclear power plant there and you could suck up all the co2 in the atmosphere anybody want to take anyone would want to take a guess of how many people on the team were in advanced math courses
the funny thing about this that i think is really interesting is that it came at the same week where we were ending you know what was this political theater of cop 26. you know greta thundberg uh who's you know how dare you how dare you she had this very funny comment which is like uh you know it was a bunch of corporate nonsense and the same old blah
blah blah what's your description of cop 26. you know we had this great trickle of like you know agreements there was like on monday there was an agreement to stop deforestation uh and then you realized it's a non-binding agreement and you're like oh okay well i guess we're not gonna stop deforesting we're just gonna keep you know doing that
and all of this stuff just kind of like took a lot of my enthusiasm um and i was a little despondent about what was going on and then when i saw this thing i was i was really quite impressed i will say that there's a very tricky thing happening right now which is that developing countries basically said listen if you want us to go after climate change
um we want 1.3 trillion dollars in here to support us and so you know the western world will have to figure out whether we're willing to pay you know what is the equivalent of you know six or seven percent of us gdp to a whole bunch of other countries every year for them to slow down and if we don't make these payments to india and china and a bunch of other developing nations
they they have said we're just going to continue to do what we're going at here's an idea take half of that money and put it towards science yeah take half that money and go build a plant that uses this system that was just demonstrated and put it in south texas and suck up ocean water and convert that ocean water into hydrogen gas by the way ocean water can be turned
into hydrogen gas by running electricity through it so you're putting a nuclear power plant to make the electricity you run it through ocean water you create hydrogen gas you pump it into these friggin tanks and it sucks up all the co2 and it makes stuff that humans can consume and that we can use and suddenly you have this abundance of material you
have this abundance of food and you can turn this in jobs and you can turn this into a lot of different things and you know this kind of goes to the point i've been making for a while if we want to invest in infrastructure this is the sort of thing that both solves climate change creates jobs and has extraordinary economic return potential
built into it so how do you get politicians re-elected you know i think the private market may come after this stuff i'll be honest i'm you know i'm like i'm talking to people looking at this being like why don't we make a plant that we can make biofuels and bioplastics and food and other stuff out of this this technique and there's going to be other iterations of this
technique um but it's such a no-brainer cost like a functional prototype of this like a small prototype nothing right i mean couple million bucks yeah like nothing so um you know the other thing that happened this week beyond this request for 1.3 trillion dollars is that you know we're now seriously considering carbon tariffs and we talked about this on a pod before
but you know i've said i think this is the most disruptive thing in the capital markets and and geopolitics that can happen in the next 10 or 20 years is an effective carbon tariff which is to say that when a good or service enters the borders of a country they will levy some tax that they think represents its drag on the environment
and so you know the simple example would be a car you know you make a car you make a tesla in texas but the minute it crosses the border to canada canada says well here's the true carbon intensity of this car all of the energy that you put into the aluminum to the batteries you know to the to the buildings where the engineers sat that were that were
building fsd and uh you know i'm gonna charge an eight thousand dollar tax on this car or iphones coming out of china yeah that's happening i think that's coming so i think that you know the combination of tariffs and these transfer payments is going to create a real economic incentive for folks to make these kinds of big technological leaps so i'm pretty
bullish on all of that i'm less bullish on politicians ability to organize because unfortunately again this is the first time i really paid attention to cop and it just looked like a bunch of really you know useless political theater it's just a lot of political theater saks does this uh science conversation about saving the planet do anything for
you would you like to get back i mean i think it's the way to solve the problem is you have to figure out new technologies to actually take carbon out of the atmosphere because you're not going to do it through you know these political programs i mean you know china india paying them and and other developing nations 1.3 trillion a year i mean foreign aid
already is one of the least popular parts of of the uh government's budget you're going to now pay 1.3 trillion to these countries so that they it's nonsense and you're gonna pay put that money into our education system nobody's creating science and technology that solves the problem nobody's gonna stand for that yeah and you know the the the tactical education system right pour it
in yeah i don't think there's a political solution to this problem that's gonna be palatable to people i think it's gonna have to be solved through new technology now let me ask you a question freeburg you said there's a six step process given your experience building science and technology products is it possible for each of those six steps to get but
20 percent more efficient a year yeah look i mean um i just say that to describe that there's a series of steps in the system it you know um but uh at the end of the day this is a demonstration of science that has been you know probably funded to some small amount but you know if you start to iterate on this approach and think big picture and think
infrastructure solution here uh there's a lot of room for improvement i'm sure so in other words you're back of the envelope 25 by 25 mile if this is getting 50 more efficient 25 more efficient year over year we could see it becoming you know uh twice as efficient every two to three years and your 25 mile might be a five mile radius city i
mean think about going to mars right what are we going to do in mars we're not going to grow friggin fields of corn and grow cows and stuff right you're going to need a system that literally takes the molecules that are in the atmosphere there uses some electricity that's probably going to be produced by a nuclear power plant and convert those
molecules into what you want to make and consume and that's what we can do on earth today the systems are going to get better they're going to get cheaper they're going to get faster and that's why i'm highly optimistic about solutions to climate change in the century it's not about an if it's about a when and you know the when is going to be defined by the willpower of how we
are going to allocate our people and our capital resources to solve these problems and then your term we have the tools to do it i love the fact that we're sort of hitting this fork in the road where it's like do we just want to give the money to a bunch of governments to pretend they're going to solve this and grifters or do we want to put it
into science technology innovation and entrepreneurial entrepreneurship that execute execute right yeah let's give it to politicians who don't know what the they're doing i mean it really is like when you know i don't know if you saw elon say like yeah if you want to solve world hunger can you make us can you oh my god let's talk about that that's just so
beautiful i thought that was like the greatest that's dunk of the week nothing nothing gets me up in the morning like funding shenanigans right go ahead jake out tell the stories i mean just somebody was like oh elon you know made more money tesla stocks no not an article it was an article that was written sure and then he's like well if you want to solve world hunger i'm
willing to sell sheriff jason can you describe it you're doing such a shitty job today as a moderator what are you talking about all i did was put a sis in your hands you guys dunked everything but dude yeah uh hey guys and there was an article there was an article that was written that basically said you know um you know 6.8 billion dollars uh which is
you know what elon made like in a day or something could cure world hunger and then the head of the you know uh un world food program retweeted that again trying to further dunk on elon and then um elon responded well if you can just show me a plan and just please reply online here on twitter and it's credible and detailed i'll just sell this talk and i'll give it to you
and uh everybody was like oh my god there was this oh my god moment like wow can this really happen ending world hunger sounds like a beautiful idea it can only only cost you know 6.8 billion dollars and obviously it went nowhere because the guy didn't have a plan and it was just a complete joke but that's what happened yeah and he's like yeah just put all of
your uh put all of your expenses out there show us your plan and it was like oh crickets nothing all right everybody on behalf of the dictator chamoth paulie hoppetea the queen of quinoa the sultan of science david friedberg and for the rain man himself reporting from definitely reporting from yeah he's reporting from the new york stock
exchange congratulations again my bestie david sacks on the triumphant ipl of bird we'll see you all next time on the allman podcast bye bye and they've just gone crazy with it oh we should all just get a room and just have one big huge orgy because they're all just useless it's like this like sexual tension that they just need to release your feet we need to get back