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Besties are back. Let your winners ride. Rain Man David Sacks.
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And I said, we open sourced it to the fans and they've just gone crazy with it. Love you besties. Queen of quinoa. All right, everybody.
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Welcome to another episode of the All-In podcast episode number 70.
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We made it to 70 episodes.
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Which is just shocking to me.
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And we're recording a little bit earlier because one of our besties had to change their schedule. Chamath.
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And um it's um a crazy day to be doing this.
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Last night, Putin decided to invade the Ukraine um late Wednesday night early into Thursday morning.
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Putin uh started a special military operation in quotes to demilitarize the Ukraine.
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And uh we've been watching this build up for weeks. You're missing it.
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He said to demilitarize and denazify. And denazify. Yes, of course.
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Um because the Ukraine was filled with so many Nazis.
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Uh his trolling continues.
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I guess just starting it off.
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Um Sacks, you're a big Putin fan uh along with Chamath.
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Uh you're the right wing.
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So, tell us how glorious is uh this invasion for the Republican Party.
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Well, it's it's it's interesting what it it's well, that's funny, but it's also it's also kind of sad cuz what you're doing right there is exactly what the whole Twitter sphere is doing, which is anybody who wants to actually de-escalate and diffuse this war before it escalates and metastasizes into something much worse, gets denounced as a Putin apologist.
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I have no dealings in either you know, Russia or Ukraine for that matter.
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Ukrainian cash is not lining my pockets like many of our politicians, their families in Washington.
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I have no interest except preserving the safety of the United States of America.
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And the point is that I think Biden that the one clear lucid point that he made in his last speech, I know he's giving one today, is that the United States of America would not intervene militarily in Ukraine.
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We should all understand that. He made it very clear.
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The troops that were being sent over there were to defend our NATO allies. Ukraine is not one.
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We do not have a treaty obligation to defend them.
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What is happening right now is tragic. Putin is the aggressor.
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It's a humanitarian disaster.
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I do feel bad for the people of Ukraine.
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Our thoughts and prayers are with them.
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However, we are not going to intervene militarily in that conflict, nor should we because we cannot risk starting World War III.
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It is not a vital American interest who rules the Donbass in a way that it is a vital American interest to avoid a war with Russia.
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And the tragedy here, the second tragedy, is that we did not do everything we could to diplomatically try and solve this problem.
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And what do I mean by that?
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On this pod three weeks ago, I said that Ukraine was never going to be part of NATO. Why? Cuz Biden just said it.
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We can't defend them militarily against Russia.
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We are never going to admit them.
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Why didn't we give up that card?
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That I We don't know for sure what would have happened, but if we had been willing to basically affirm that we believe in Ukraine sovereignty, but they are not going to be part of NATO, that might have diffused this conflict. had consensus on that.
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We said like, "Hey, what if I think actually I suggested, what if we said a 5-year, you know, moratorium on them joining or something like that?" Absolutely. We put that out there.
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Can I just ask Sachs one question on this? Okay, yeah.
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Okay, yeah. Sachs, do you not think that the US, you know, regardless of the obligations under uh um NATO faces a little bit of an issue on a global stage where, you know, we we told this leader back down, don't do this, and then we don't respond militarily that that action effectively reduces America's influence and credibility when it comes to these sorts of defensive statements in this kind of global theater and our primacy is being
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challenged because we lay down the law we said this is not allowed you cannot do this there's going to be repercussions and then it happens and there are economic sanctions and you know maybe we'll talk in a second about some other
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potential repercussions but by not doing something militarily we weaken ourselves and we weaken our position and it gives permission to others to take action that may be counter ultimately to kind of the US interests abroad. Okay so in response to
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interests abroad. Okay so in response to I have to well quote what Barack Obama said and we we've mentioned this on our previous pod he said the fact is that Ukraine which is in this is back in the the Atlantic interview he gave the fact
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is that Ukraine which is a non-NATO country is going to be vulnerable to military domination by Russia no matter what we do this is an example where we have to be very clear about what our core interests are and what we are
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willing to go to war for the fact of the matter is none of us on this pod want to send our sons and daughters to go fight and risk their lives and die to determine who rules the Donbas or even Ukraine we sympathize with them we may
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impose sanctions on their behalf we may arm them militarily but we are not willing to fight and so therefore us trying to lay down this law to Putin was a bluff and he called our bluff and the smart thing we can do right now is not to escalate. Look we've already gone to
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Look we've already gone to the river he's called you know we basically tried to barrel and bluff him at every street we got to the river he has now invaded we're now in a showdown what do you want to do now you want to escalate this even more the only way that we can make this worse is to precipitate a world war.
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Now if Our absolute priority our absolute priority right now should be to make sure that this war doesn't spread.
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My prediction is as of right now it would be very unpopular to go to war or for the US to enter the war in a on the battlefield.
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I I do think and I don't know if we're going to hear more about this today, but I do think that the cyber war is beginning today.
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The United States has talked at length about having you know, tremendous cyber capabilities.
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And my understanding is as of this morning, a number of state websites were down in Russia and a number of um you know, Russian cyber interests were under attack.
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And so we may see the US kind of confront Russia on another battle stage, not on the you know, on the field, on the physical field.
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But if over the next couple of weeks this continues or days, and I was just looking at CNN this morning and BBC and there were these images that started to come out of like, you know, Ukrainian um airplanes that had been downed.
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And if you start to see images of children, you know, helpless children, buildings being bombed, bodies strewn on the street, does that not change kind of the American opinion on whether or not we should do something here?
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And will that not kind of lead us potentially into a war that, you know, today I think we all, you know, or many people would say strategically doesn't make sense, economically doesn't make sense.
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You know, we're only going to lead to kind of escalation, but don't you think that American opinion typically changes when imagery arises, when, you know, the sort of brutality of war Well, I mean, that's why we block images out of some wars and we have in the past, yeah.
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But even today, it's like the first day and there's like these really gruesome, awful photos coming out and I I could see people getting sympathetic to that and starting to kind of, you know, bang the the war drums saying this is ridiculous, we can't let this tyrant do this, it's awful.
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Well, it's already it's it's already happening, you know, but this is why we should not conduct foreign policy by Twitter.
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We should not twitterize the situation.
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Yeah, this is when this is when cooler heads need to prevail.
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The fact of the matter is when Soviet tanks, they rolled into Hungary in 1956 or Czechoslovakia in 1968 across the Prague Spring or Poland in 1981 across solidarity, we did nothing because avoiding war with the Soviet Union was more important even though we sympathized with those people and in 2008, we've been in this situation before.
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2008, Georgia, the Republic of Georgia, Putin invaded on behalf of these breakaway Russian sort of dissident uh provinces, South Ossetia and Abkhazia. Why did that happen?
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Well, if you remember back in 2008, there was a lot of talk about Georgia joining NATO and you had, you know, the war hawk Senator John McCain go over there and declare we're all Georgians now. And so what happened?
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All of a sudden these breakaway provinces, the Russified provinces of South Ossetia and Abkhazia, started rebelling.
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That gave Putin the excuse to roll in there and the tanks a year later, he left, but there was no more talk of Georgia joining NATO.
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So and again, we did George W.
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Bush was president at the time.
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We did nothing militarily.
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We just sent humanitarian assistance. That was it.
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So we've been in this situation before.
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We should not I keep hearing in the media on cable news and on Twitter, this is historically unprecedented. We must act.
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No, we've been in this situation before in 2008 and all those previous times.
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We were in this situation in 2014 when Putin invaded Crimea. you a question, Zach.
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Um we we had this concept of hey, maybe if we said hey, we won't admit them into NATO and uh do you think that if we had actually made that concession or said we're not going to let them into NATO for a decade and whatever, do you think that would have changed Putin's behavior? Yes or no?
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Well, it's it's honestly it's hard to know.
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I mean, I can't I can't prove a counterfactual.
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However, I think it was tragic not to try. Okay.
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I do think I think it I think it should be the goal of diplomats Sure.
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to try and and again, as I said on a previous pod, it was the sleeves off our vest.
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Ukraine is not going to be a member of NATO.
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So, to give that up would have was basically giving them nothing.
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It was almost meaningless to us.
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And instead of making that concession, what happened?
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Blinken came out with this statement, "NATO's door is open and will remain open."
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It was perhaps the most provocative thing he could have said in that situation.
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And they they would have had to be voted in.
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That would have hap- wouldn't have happened anyway.
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Let me ask you this question.
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You've been complaining about the media and Democrats uh banging the drum of war and you're saying they're more hawkish.
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On the other side of the table, you have uh Trump came out and said that Putin's move on the Ukraine is genius and the guy is very savvy.
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And then you had Pompeo saying, "I have enormous respect for him."
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And that he's a very talented statesman, has lots of gifts.
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And he knows how to use power. We should respect that.
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So, your party uh your crew is praising Putin.
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Do you think the praising of Putin is wise in this kind of situation? No, look.
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He He Here's what's going on.
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First of all, the the the war hawks and the people beating the drums of war is happening on both sides of the aisle and on both both both sets of cable news.
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I was watching Fox last night and they were all but, you know, cheerleading for war, basically saying, "We have to go on offense." I watched it, too. Yeah, it was crazy.
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saying, "We have to go on offense.
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Uh what what is Biden doing saying that we're not going to intervene militarily?"
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I'm like watching these people who are acting, you know, it reminded me of um Dr.
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Strangelove where you have Slim Pickens, the cowboy, riding the atomic bomb in the way out. They were excited.
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And I'm watching the cable news and all these people are acting this way and I'm like, "What in the world is going on?"
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You know, it's a It's all This is a big part of what I tried to point out our prediction show at the end of last year, you know, that the if a country is happy, if the economy is growing, if there isn't significant risk of inflation, no one wants to go to war.
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When those are not the case, there's a tendency to say we got to do something.
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And if you don't you're you're anxious.
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And if you don't have anything to do and some conflict arises, that's a good place to kind of apply your energy and your pressure.
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Let me bring the dictator himself into this.
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Chamath, you've been silent thus far.
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Any thoughts on what we're seeing here?
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letting the proletariat speak. Okay.
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Are you the bourgeoisie or or what?
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That sweater is very bourgeois, I have to say.
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I mean I mean sweater Karen right now is drafting multiple emails. She's melting. She's melting.
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I think there's going to be a GoFundMe to revoke that sweater from you.
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What is the story with that sweater?
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That's what That's what Trudeau Trudeau Trudeau will revoke a state of emergency to stop that from happening. Yes.
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You know, probably the seeds of a GoFundMe.
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I mean, this feels like we're processing this, Chamath, so quickly that the Ukraine just asked on Twitter today for everybody to tell at Russia how they feel about what they're doing.
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And the Ukraine I I I This is happening in real time.
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is tweeting memes now about Putin.
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Uh this seems almost surreal and is getting very strange in terms of how we're interpreting it.
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I mean, is there an off-ramp here or we're just going to have to deal with Putin doing this every number of years and this is just going to be, you know, a year or two of, you know, conflict? I don't know.
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But here's what's important to um two points.
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One is the economic sanctions have begun and the economic damage to Russia have been starting to be inflicted, right?
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I think Germany basically suspended the certification of Nord Stream 2.
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That is a huge economic impact to Russia, right?
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I think the ruble against the dollar was off 9 or 10% this morning um when I woke up here in Europe.
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So it So it's down even more.
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So um now the interesting thing about that was that I read an article in the The Street Journal.
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Maybe Nick you can dig this up, but this is a few years ago.
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Uh preceding this Russia had built massive amounts of US dollar reserves.
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In fact, they had been depleted over like the last little crisis that they went through and then they had rebuilt all these dollar reserves.
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So, in some ways it made them the case that these guys had this plan all along and they put some, you know, they built up their bank accounts just in case because they knew that this could happen.
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The other thing is there's a quote from H. R. McMaster.
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He said that deterrence is a is a is a simple equation.
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It's it's the product of will and capability, right? Will times capability.
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And so, you know, if you're going to be a a deterrent on the world stage militarily, not only do you have to have an incredible military capability, you also have to have the will to go to war is what he said.
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And I think in America, you know, what Feeburg said is I think if you pulled a lot of people, um you know, people are pretty exhausted after all of these different conflicts.
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And so, I'm not sure that the will is there to go to war.
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And so, the best off-ramp is to try to find some amount of uh economic pressure points and then negotiate some sort of, you know, um release valve from all of that economic pressure in return for some normalization of behavior.
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I think that's really the best chance.
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But, you know, I have to be honest with you and I was thinking about the odds of this just from a financial perspective and you know, whether I should be doing something different putting something on.
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I thought that there was zero chance that this would happen.
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Literally, I I put it as close to zero as possible because I thought in 2022, it just didn't seem like this could be possible.
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And here we are and it seems like it is.
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Um I hope everybody in Ukraine is safe.
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Um But, I think that Biden's going to announce some pretty crippling sanctions and I think the West is going to be very punitive financially.
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Um and that's probably the off-ramp.
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But, it depends on it depends on how long that stuff will last because again, like I said, I think Russia's foreign currency reserves are pretty strong going into this conflict.
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Let me let me then uh pass the ball to you, Sachs.
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There's there's going to be a lot of people who are going to die, both Russians and Ukrainians sadly, if this thing keeps escalating.
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Uh there's 190,000 Russian troops on the border or making their way into the Ukraine.
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Is there an off-ramp here in your mind in any way?
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Do you think the sanctions will work and and God, these the the poor citizens of Russia, I mean, are they going to crack at some point and is this going to blow back onto uh Putin because what should they seem to get out of this, I guess, is a question.
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Do Do the Russian people support this?
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And will they support it on an extended basis?
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Well, okay, so there's a few questions there. Yeah.
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Okay, so the the fact of the matter is So, so I think you're right that Putin has bought himself a headache here, right?
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I mean, the the the eastern parts of Ukraine that are, you know, ethnically Russian, the areas of the Donbas, they will those people will support him, but the western part of Ukraine that wants to be free, that's not ethnically Russian, that is going to be a headache for him to manage.
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I don't think he wants this problem long term.
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It's probably going to be more like the situation we had in Georgia in 2008.
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He goes in for a year, he institutes perhaps some sort of puppet government or some government that's more favorable to him, and then he gets out, probably.
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This is if there's no escalation.
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I think it's very important, I keep making this point.
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The most important thing Biden can do is to make sure that this does not escalate militarily and that we do not get militarily involved.
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I think sanctions will happen, I mean, that's pretty clear, probably we have to move forward with that, but but at the same time, do well sanctions work in terms of being a strong deterrent? No, I don't think so.
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There was a very good article by Neil Ferguson and Ken Griffin actually in the Wall Street Journal talking about what we should do.
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They made the point that sanctions don't usually work.
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However, what we should really be striving for is energy independence.
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So So yes, but the crazy thing is America despite having these huge natural gas reserves, 7% of our natural gas is coming from Russia right now. So why?
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Cuz we stopped fracking, we stopped the you know, Biden canceled the Keystone pipeline and then in Europe the situation is even worse, which is they're completely dependent on on Russian natural gas.
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Germans are and the UK am not France.
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The op-ed made the point that we could be investing in liquefying natural gas and exporting it to Europe to create more energy independence and that would remove their dependency on Putin.
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That energy independence here Problem with energy independence is it takes too long and we went through a massive capital under investment cycle over the last six or seven years.
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And so you know, in the order to start this up, you need to get started actually putting money in the ground six or seven years ago.
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And the problem today is if you put money into the ground now, that's not going to yield any sort of return on invested capital for another six or seven years.
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And so when you look at these net gas companies, every single one to a name has basically said we are not going to put every any incremental capital into US domestic net gas or shale or even offshore.
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The real solution is that you go fully alternative and to go to renewable energy because you can today, right?
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Deploy solar vastly more aggressively in the United States.
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Look, at the end of the day the thing that is completely abundant and has the best implications all around is solar.
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And it's gotten cheaper than coal and and And and and you're asking stuff like why why are we only 3% penetrated in the United States, right?
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We can manufacture these panels, we can deploy them broadly.
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Right now, you know, we're in this situation where California is actually revisiting the ITC credit or the the net metering law, sorry rather, which would have huge implications for the California solar market.
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It could actually destroy that whole market.
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And so you know, we have to get really organized David to your point, but there is a path to energy independence.
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I think it's alternative energy, it's wind and solar.
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Um because we can do it today and you can do it really quickly and you can basically leapfrog the entire capital investment cycle that you need to do for natural gas.
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We've we've already missed the train.
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Well, and also you could have Germany could start turning back on nuclear power plants if they could get their citizens to pick nuclear over war.
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And that seems like a pretty easy choice. It takes too long.
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Look, Germany has been shutting down their nuclear power plants for 20 years.
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No, they've been doing it for 20 years.
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They've been turning them off for 20 years.
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I know they could That means they don't have to rebuild them, Chamath.
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They could just turn them back on.
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That's not No, but that's not how it works. It's not a light switch.
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I know, but it's not the same as building a new one in the US. That's the point.
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They could put them back on.
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it's still year It's still years to turn these things back on. It's not a light switch.
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it But you got to think, Chamath, the threat of doing it would terrorize the Saudis and the Russians if all of a sudden the EU said, "We are going to go massive solar, massive nuclear, and we're going to be energy independent."
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I'm not sure any I'm not sure any country is going I'm not sure any country is going to have a dramatic effect.
20:14
I'm not sure any country is going to is going to really uh all of have a massive reaction to any other country talking about a multi-year investment cycle.
20:21
I do think, Jason, to your point, solar is not a multi-year investment cycle.
20:24
It can literally happen in months.
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Yes, and it's cheaper now.
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And that is much more disruptive.
20:30
So, for example, you could If you took $3 trillion of Build Back Better and instead said, "You know what?
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We're just going to actually put solar everywhere." Everywhere.
20:35
That would be If you took $3 trillion of solar and you put it literally everywhere in the United States, I think everybody would support it.
20:42
You would have domestic job creation like nobody's business.
20:44
You would take so much carbon out of the air and you would have enormous energy independence.
20:51
Well, it would give you a degree of freedom so that the next time you're pushed to war, you can actually evaluate it under very different um you know, risk calculus than if you actually need the energy from the country you have to go to war with. Yeah, that's the point.
21:02
And just for um a fact check here, nuclear power in Germany accounted for 13.
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3% of German electrical supply in 2021.
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Uh France, by the way, 70-80%.
21:10
Um and that was generated by six power plants, of which three were switched off at the end of 2021.
21:16
They literally just turned these off, Chamath.
21:20
And the other three I know, but the decision was not made yesterday, Jason.
21:25
My point is this is These are 20-year decisions.
21:26
No, it was Fukushima that pushed them, actually.
21:28
And the sentiment of And they also had 70% of their electricity on a couple of weeks come from renewables.
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So, the Germans suddenly thought that they didn't live in a shady area and they could get by with just solar, which was a big mistake.
21:42
Uh this turning these off Germany, if they didn't turn these off, they would have a different approach here, too. You can be sure of that.
21:47
So, look, I'm I'm a fan of solar, but I'll just make the point that natural gas burns from a climate standpoint, it burns much cleaner than oil, and oil burns much cleaner than coal.
21:56
So, natural gas is a way better than a lot of the alternatives.
22:00
And the main problem with it is that when you frack, you can get the release of Well, that, but that's in the ground, but in terms of the release of methane, which is a greenhouse gas, that's actually worse than CO2.
22:12
And so, you can actually get you know, methane released, but in the US, we have techniques for recapture of it, whereas I don't think Russia cares about that.
22:21
So, we'd be a lot better off.
22:23
I think solar's part of the answer, but I don't think we should be turning our backs on the enormous reserves of natural gas that we have here in this country.
22:32
Friedberg, what are your thoughts?
22:33
You're hearing three of us talk about energy.
22:37
Give us your science boy superpowers here and what what do you think is the clearest shot on goal here for energy independence as an option to war?
22:46
I'll just point out that the notion that there are countries that are jockeying or positioning to stop the train towards renewable alternatives for energy production this century, uh the number of countries in that bucket are close to zero.
23:03
You know, Saudi Arabia took Saudi Aramco public specifically so that they under kind of MBS's strategic direction diversify away from uh you know, the fossil fuel dependency of their economy and diversify into other assets.
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So, they are going to sell down their equity interest in in Saudi Aramco over time and invest in things, you know, they probably made their first bet and regret it with SoftBank, but they'll probably make other bets to try and invest in kind of next-gen uh industries.
23:32
And so, you know, we if you look at the money that's going from even Exxon and you know, there's a guy locally here in San Francisco who ran a very significant uh board proxy fight to get on the board of Exxon and he won.
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Um and he's jockeying for continued and increased investment from an R&D perspective in uh renewables and alternatives.
23:52
Uh and we're seeing this across the board.
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There's going to be in the next couple years if not already, many of these fossil fuel-dependent businesses and countries have or are making a massive shift towards alternative renewable sources of energy.
24:07
So, I don't think that there's any enemy here. There's no evil.
24:09
Like, all the folks that have been dependent on in the past are aware of the fact that this is not where the future is.
24:13
We do have to transition.
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So, the reason I bought energy stocks in December and the reason I made this point was threefold.
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One is because we have, as a result of this general consensus view, underinvested in energy infrastructure.
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And the demands that are going to come out of the ex-COVID um economic growth cycle cannot be met with the current energy infrastructure and you are going to see energy prices continue to climb coupled with the fact that when war or conflict arises, typically you see um stockpiling uh and you see trade routes being shut down and you see energy prices climb.
24:49
And so, you know, I think generally we're in a little bit of a transitionary state.
24:52
Everyone knows where the puck needs to be. Everyone's headed there.
24:56
But um for now, I think everyone's trying to navigate how do we get through the next couple of years.
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And in this particular year, you know, get through the season of uncertainty.
25:06
You know, what how how fast is the economy growing?
25:07
How much have we actually under invested in infrastructure?
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And how much renewables do we have coming online?
25:11
Now, I think the right answer, if I were to be president of the world, I would um immediately uh deregulate uh nuclear um uh and make nuclear uh fission reactors a mainstay of energy production here in the US.
25:26
And I think that there are a number of techniques we could undertake uh for safer um uh uh con- um uh building without all the regulatory cycles and process needed to get these things stood up.
25:39
You know, China, as I've mentioned in the past, is over the next 30 years committed to building, check this number out, I think we talked about this, 140 nuclear power stations.
25:50
Um their estimated cost, I believe, is on the $3 billion per station range.
25:55
They are um going to increase their total uh energy production capacity with these nuclear power stations um on the order of 15 to 20%.
26:04
So, they will take coal offline as they bring those online, um or they will kind of start to have a cleaner mix of energy rather than building an extra infrastructure.
26:15
So, um you know, if we as the United States intend to be an economic challenge to China this century, if we intend to compete effectively with them, we are going to have a really hard time with energy prices being what they are here in this country.
26:30
China is already 30 to 40% cheaper than us on an industrial scale basis with their current energy infrastructure.
26:35
And when their nuclear comes online over the next decade, their prices are going to drop even further.
26:41
Nuclear should be in the 4 to 5 cent per kilowatt hour range.
26:43
Today, China's in the kind of, you know, uh 7 to 8 cent per kilowatt hour range.
26:48
The the for industrial, I think is in kind of a 9 cent 10 cent range, 8 to 10 cent depending on where you look.
26:55
So, you know, they're already cheaper, they're going to get even cheaper.
26:58
And so, not just from like what's the right transition from a security point of view, but energy is going to be so critical in this next century for us to maintain our footing as a competitor to China, particularly as Think Think about this for a second.
27:12
If automation is the future of manufacturing, then electricity and energy ends up being the biggest cost driver for And if our if everything is on parity and everyone's got the same automation systems, whoever's got the cheaper energy wins.
27:25
And to dovetail you and Chamath's both positions, a friend of ours said, "Hey, you know, nobody wants to live near nuclear power plants."
27:32
And they've already got the grid going there because it has to be there.
27:37
Surround the nuclear power plant with a solar farm because it's the most efficient way.
27:42
So, actually pairing these two things, perhaps even with some batteries, solves the entire problem.
27:50
And and what do we think, Sachs, is the eventuality here in terms of the relationship between Russia and China now that we've wrapped up the energy and then, you know, all of us, I think, don't want to go to war here.
28:05
Um so, I guess there's two questions here of escalation.
28:07
And I'll I'll I'll I'll let you pick which one you want to go for.
28:10
Escalation with Taiwan or does uh if Putin is not held We don't hold the line here, you know, Putin picks another country to uh or another region to go after in 2023 2024.
28:23
At what point do you say, "We got to hold the line?"
28:26
Well, I mean, I think the line is that we have existing NATO treaty obligations to protect the members of NATO under Article 5.
28:33
We have to come to their defense.
28:34
Ukraine is not one, Georgia is not one.
28:36
So, to me, that's the line or is our existing treaty obligations.
28:38
And this is why we should not want to add some of these countries to NATO is because it involves us in their disputes and drags us into war.
28:47
You know, on Twitter all I hear is that this is 1938 all over again and we cannot appease a dictator.
28:54
And that is one lesson of history and it's an important lesson.
28:58
However, there are other lessons of history and it seems to me that the situation we're in could be more like 1914, which is World War I.
29:04
What happened in World War I?
29:06
Basically Basically conflicts between minor powers dragged major powers into wars and basically Germany gave Austria the so-called blank check war guarantee and then that led to a war with Russia and then that dragged the you know, Britain and France in and eventually the United States.
29:25
So, you know, it was a case where nobody none of these powers wanted to be in a war with each other and yet somehow inertia and threats and escalations and miscalculations and folly all sort of tumbled their way into it.
29:40
And that I think may be the historical precedent here that we want to avoid.
29:45
We need to be very careful not to let, you know, every conflict all over the world drag us into these these types of um wars and disputes.
29:54
Sacks, do you think American primacy is coming to an end?
29:57
I hope not, but if if our goal is to preserve American primacy, which I think it should be, then we need to be smart about how we use our strength and we don't want to fritter it away.
30:08
And what have we been doing for the last 20 years?
30:11
Frittering away our strength in wars we didn't need to be in.
30:13
In the Middle East we spent how many trillions on nation building there that all turned out to be a total folly and waste of money.
30:22
Uh look at this and we have a $30 national debt.
30:25
If we want this century to be an American century like the last one, we need to preserve our strength and use it wisely and not involve ourselves in every conflict and um you know, so look, we need to protect our NATO allies.
30:39
I agree with that, but we don't need to be creating disputes and and evolving ourselves in wars that we have no obligation to get involved in.
30:48
We need energy independence and then we need to deliver our balance sheet and deliver American finances to you. Absolutely.
30:54
And it's possible, but it's going to require a lot of focus and sacrifice.
30:55
I really think this thing that I just made up is actually really quite genius, which is redirect that $3 trillion Build Back Better bill to just pure solar everywhere in the United States. It would be genius. So disruptive.
31:07
I mean, it would just be so disruptive.
31:11
Can you imagine electricity for everybody? It becomes a dividend.
31:13
It's like it's UBI in a way.
31:16
Everybody gets no electrical bill.
31:16
I I I I don't think it would allow people to have free electricity forever, but I do think it would subsidize basically the deployment of energy infrastructure to every single household in America in a way that would just completely shake up uh frankly the political world order because you know, what you guys said is so true.
31:34
A lot of this stuff rests on, you know, the politics around natural resources, right?
31:39
resources, right? So, you know, today it's oil, um tomorrow it's going to be some rare earth, you know, in 10 years it could be copper and lithium and we want to find ourselves with the ability to be clear-eyed and focused in our response to these issues, but if we need critical
31:57
resources that can only come from one other place or two other places and we don't have the engineering ingenuity to have figured out how to, you know, delever our reliance, then we're going to get dragged into not just this conflict, but a whole bunch of other conflicts going forward. I'd say yes and
32:10
I'd say yes and we could be energy independent for free right now if we were just to repeal some of these executive orders.
32:17
I mean, we were energy independent like a year or two ago until we banned fracking.
32:24
Why why do the fracking when solar's available?
32:26
It seems to me like we want to actually preserve the environment, stop global warming.
32:31
So, if solar is available and nuclear is available, why would you advocate for fracking and ripping up the earth and you know, polluting it? I'm a fan of solar.
32:39
It's really just about cost and time to deployment. Got it.
32:43
Okay, so you see it as a bridge.
32:44
Hey, maybe we do it for 5 years, 10 years.
32:46
Long term, I think solar is the answer, but I think that's a long term strategy.
32:50
The other thing that is confounding is like Americans and this is another thing I was just watching the media and I did exactly what you did David is I put on Fox.
32:57
I was like, let me get their interpretation of this because the Trump folks are praising Putin and then these guys are wanting to go to war.
33:03
So it feels like there's some inner conflict or civil war going on in in the Republican side of things, but even on the on the Yeah, and then on the left you have this craziness.
33:12
Uh they were I mean, Wolf Blitzer and everybody was so excited about this war.
33:17
They were like stay tuned and oh my god, we're going to be 24/7 coverage.
33:20
They were like orgasmic in in their coverage of it.
33:25
Remember CNN got their got their big um start with the war with the Gulf War. That was it. Wolf Blitzer. his moment to shine.
33:29
I remember being a kid watching that.
33:31
That is the language Freeburg is using.
33:33
I mean, that that was the language they were using.
33:34
So Don Lemon was saying, "And we have the full resources to give you blow-by-blow coverage of everything happening. Stick with CNN.
33:41
This is where we do our best work."
33:44
And it was literally like war porn and it was really uncomfortable to watch combined with Sax.
33:49
And this is what I wanted Well, maybe Freeburg, I'll throw this one to you.
33:54
They kept talking about how Americans were going to suffer at the pump.
34:00
And I just thought, this is so crazy and it's stupid.
34:02
There's 190,000 young Russian men who are going to die, countless Ukrainian civil civilians who are going to die potentially.
34:09
And this thing could escalate as Sax said, you know, you can't play games with war.
34:12
It could the dominoes can fall in all directions.
34:15
You don't have no idea when you light off these grenades.
34:20
And and we're talking about our pain at the pump? Very weird. Very weird times. Freeburg, any thoughts? America's weird. It's weird.
34:29
want to if if if if Freeburg doesn't want to respond to that, I want to I want to talk about the media coverage. I'll add to that.
34:34
I mean, you flip over to MSNBC, John Bolton is on MSNBC.
34:38
And one of the weirdest things happening in our politics now is that all the neocons who used to be members of the Republican Party who worked for George W.
34:45
Bush and got us into the Iraq war have now all become Democrats and they're all over there they're supposedly the the conscience of the country over on CNN and MSNBC and beating the drums of war.
34:57
It's absolutely unbelievable.
34:58
And one of the the one of the tactics they use that I think we should talk about is and this goes all the way back to the Vietnam war is that anybody who merely tries to let's say understand the other side or wants to de-escalate or get out of a conflict, they try to portray as unpatriotic.
35:17
I mean, this again this goes all the way back to the Vietnam war where the Vietnam protesters were portrayed as un-American and unpatriotic.
35:23
Well, it turns out they were right.
35:24
That was a mistake for us to get embroiled in Vietnam.
35:26
And similarly, the Iraq war, it turns out that was a gigantic mistake.
35:31
But in 2003, David Frum who's like one of the leaders of this group wrote an article called Unpatriotic Conservatives in which he attacked and sort of maligned the there were, you know, conservatives like Pat Buchanan and Robert Novak who were against the Iraq war and he called them unpatriotic and implied that they were un-American because and somehow in the pocket of Saddam Hussein because they were against us our involvement in the Iraq war. Well, they turned right.
35:56
They turned out to be right and yet they were demonized and called unpatriotic. And where are we today?
36:01
Those same people I'm seeing David Frum on Twitter now impugn the patriotism of people who merely want us not to escalate this, not to get involved and maybe to try and understand our enemy.
36:13
Because you mean this is one of the problems with Twitterizing our foreign policy is look, we can see Putin as an aggressor.
36:20
We can see him as a thug or an authoritarian or as a dictator.
36:23
But nonetheless, we should still try and understand our enemy and anybody who tries to promote a greater degree of understanding or diplomacy gets attacked by these people as being Putin apologists.
36:34
Chamath, you said you didn't see this coming.
36:36
You thought this is a very small probability.
36:38
I think we all felt it was a pretty small probability that Russia would actually go through with this.
36:43
You thought it was actually something Actually, I do Freeberg, you did think it was going to happen. It's a certainty.
36:48
Yeah, well wait a minute.
36:48
You thought it was a certainty that America would get involved because of the wag the the dog scenario or that Putin would do it because Both. Both. Okay.
36:55
Yeah, but this is not like a surprise that Putin did this.
36:58
I mean, this has been a long time coming.
37:01
Yeah, I mean, it just felt like I thought that he would saber rattle and we come to some resolution here. But what does he want?
37:07
It seems like nobody and and this is what everybody keeps saying.
37:12
I think that's a really By the way, I think that's a really complicated question.
37:14
I I feel like there's decades of and layers of like um to this story.
37:19
It's like, you know, war and peace and then you read like one half of the final chapter and you're like, oh yeah, okay.
37:24
Like there's a lot to the story that's going to be really hard for us to unpack.
37:27
Um so, you know, I'm not sure there's a very simple like, what does Putin want as much as there is a a significant narrative that that that backs the history, you know, post-Soviet history with Ukraine and the relationships.
37:41
I mean, you you guys may remember that there was a president a presidential candidate or a president that was poisoned by Putin at some point.
37:48
I mean, there's been like a long history to this that I don't think is something that we can Well, the reunification is what most people would put that under is this kind of a re- there are social, you know, there are individuals, cultural motives.
38:02
I mean, there's a lot driving this.
38:04
There's a lot of influence within that country that I don't think we really fully grasp within the country of Russia, I mean, that we don't fully grasp related to some of the cultural relationships with some of the population in the in the Ukraine.
38:15
Uh and so, you know, it's a very difficult question to simply answer. Can I take a shot at it? Yeah. Sure.
38:21
Okay, what does Putin want?
38:24
So, I want to there's an article by Peter Beinart who was an editor of the New Republic.
38:28
He's not, you know, some far-right conservative or whatever.
38:32
He published this quotes from a memo that was written by Bill Burns back in 2008.
38:37
So, Bill Burns is the current DCI, he's the director of Central Intelligence, the head of the CIA.
38:41
He is also a Russian expert.
38:43
He speaks Russian fluently.
38:45
He is the He and he spent many years over there in our government and he works for Biden.
38:51
He's Biden's head of the CIA.
38:53
So, he is the highest ranking Russian expert in our government.
38:55
In 2008, he wrote a memo to Condoleezza Rice, who was then the Secretary of State.
39:01
And what he said is, this is about Ukrainian entry into NATO.
39:03
He said, "Ukrainian entry into NATO is the brightest of all red lines for the Russian elite, not just Putin."
39:09
He says, "In more than 2 and 1/2 years of conversations with key Russian players, from knuckle-draggers in the dark recesses of the Kremlin to Putin's sharpest liberal critics, I've yet to find anyone who views Ukraine and NATO as anything other than a direct challenge to Russian interests."
39:28
So, Burns pointed out to the then Secretary of State that this was a huge red line.
39:32
And since then, since 2008, Putin has been very consistent that Ukrainian entry into NATO has been a red line.
39:40
And even in the speech that he gave last week, he talked about he talked about this.
39:47
And he said that I'm quoting Putin from his speech.
39:50
He says, "If Ukraine was to join NATO, it would serve as a direct threat to the security of Russia."
39:56
So, you know, in response to Putin's speech and on Twitter, I keep hearing that Putin is this madman, we can't understand what he wants, that the only possible explanation for his behavior is either senility, he's gone crazy, he's gone mad.
40:12
And, you know, I'm looking at this and I'm like, okay, maybe those things are true, but you can't say that he hasn't been clear about what his red lines are.
40:21
He's been saying this for 20 years that Ukraine joining the NATO alliance is an absolute red line.
40:26
And I you know, I mentioned before on this pod that imagine if the Cold War was still going on and the Warsaw Pact still existed.
40:34
And you know, Justin Trudeau was going to lead Canada into the Warsaw Pact.
40:36
We would absolutely be up in arms about that.
40:40
We would not have let that happen.
40:42
It is that kind of issue for Putin.
40:42
And we just act like this guy is insane and has no point of view.
40:49
I'm not We don't have to believe he's right, but to basically say that his he has no interest uh in Russian security that we need to give any weight to, that we just need to dismiss all of his concerns out of hand.
41:03
It just you know, this is not the history of the situation. Yeah.
41:08
Did you read Anybody read Madeleine Albright's um New York Times piece?
41:12
It was pretty interesting.
41:12
Cuz she was uh in the position when they first met him and he's been talking about the Ukraine and reunification for 20 years and uh it's probably a good lesson for the entire planet uh that dictators are going to you know, they they have a certain to your point Chamath of like having will and capabilities.
41:33
A lot of people have capabilities.
41:33
A lot of people don't have will to start wars anymore on this planet and and he clearly is in that group.
41:38
I think as hard as it is but but Jason, we we don't know Here's the thing.
41:42
By not taking NATO off the table as an issue, we don't know whether his true aim here is the restoration of the Russian Empire or merely to avoid, you know, this border country being part of a military alliance that he views as a threat.
41:58
So, I don't know what the answer is.
42:00
part or door number three. He wants more attention.
42:03
He wants to be more globally relevant.
42:04
Right, but we made the mistake of not taking this issue off the table.
42:08
And so, if we had taken the issue off the table, then we could get to the real heart of the issue.
42:13
Maybe it would have diffused the situation.
42:15
Or if the EU and NATO had done it, right?
42:17
It's not just us in this the people in Europe have a big say here.
42:18
As we're discussing this on a on a Thursday, February 24th, uh Biden has announced a coalition of partners, EU, Australia, others are doing uh pretty uh significant sanctions, it seems, limiting uh Russia's ability to do business in dollars, euros, and yen, imposing major sanctions on the Russian banks, trying to the ruble, blocking four major major Russian banks, freezing all of their assets in America, adding sanctions to Russian elites.
42:45
I guess that's the oligarch uh class.
42:49
And uh Russia's largest state-owned enterprises will no longer be able to raise money from a coalition of governments.
42:55
Biden assumes this will degrade their military advancement.
42:59
And uh I have a funny Russian story to tell. So, um right.
43:03
When I was when I was still running when I was managing uh not just my money, but other people's money and I was raising funds, uh eventually, you know, you uh you get uh LP commitments um from all kinds of people interested in investing with you if you're generating great returns, right?
43:19
Meaning, you know, rich family offices all around the world want to give you capital.
43:23
And there's a very strict process in America where when you get capital in, um you have to make sure that those folks basically pass uh uh you know, an anti-money laundering check and a know-your-customer kind of check.
43:35
And one of these checks And one of these checks is actually a gray list and a blacklist that Treasury and the DOJ kind of manage.
43:44
Um and every now and then they'll put people on and off the list.
43:49
And there's a very famous person in Russia um who I will not say.
43:50
When I was raising money for my last fund, this is probably in 2014 or 15, he was on the um he was not on the list and, you know, very well-known person.
44:01
And I thought, "Wow, this is a great opportunity to get somebody who seems to be doing a lot of interesting good work in the And not less than two or three weeks after we had signed our LP agreement, I think it was DOJ or Treasury put him on this list and we get a we get a you know, an email basically saying, "Hey, tear up the LPA and you can't take the capital."
44:19
And we had to undo the entire limited partner agreement and Um, crazy. Yeah.
44:26
What percentage of the fund would that person have been involved in?
44:31
I I don't I don't remember, but he was a he's a significant person investing a pretty significant amount.
44:35
5 10% or something, so I would guess. Yeah.
44:37
Hey Jason, I just want to going back on a point I made about energy and energy independence earlier cuz I actually pulled up the numbers.
44:45
So, you know, the average cost per kilowatt hour uh in the uh in China right now is about 9 cents for um for energy production.
44:56
It is estimated uh that um nuclear power production should drop to about 4 cents, but could be as low as 1 cent per kilowatt hour if operated at scale with perfect efficiency.
45:09
Just to give everyone a sense of where um not just security risk and kind of, you know, the the green opportunity lies, but also where economic advantage lies uh in investing in nuclear infrastructure.
45:20
And so, as China builds out 140 nuclear plants here over the next two to three decades, they are going to see their energy cost decline from about 9 cents for industrial use um potentially, you know, into the sub 5 cent per kilowatt hour range, which makes them tremendously competitive on a manufacturing point of view.
45:37
So, a lot of Bitcoin servers, that's a lot of hash.
45:41
I think it's never going to happen.
45:43
Um I'm not I I love nuclear energy. Nuclear?
45:47
I I think America America's a America's ability to scale nuclear, I think, is a very difficult proposition and I think our real solution is solar. Is solar? It's practical.
45:54
It can be done today and it can be done right now.
45:58
And just to look at the EU versus the US in terms of gas mileage which is just stunning.
46:03
The EU has mandated average America doesn't have to America doesn't have to resolve.
46:09
It's like it's like we have to we have to cross so many bridges and you know, we have to really confront a bunch of issues that we that have been riddled with so much inaccuracy.
46:20
You know, for example with the environmental impact, the understanding of how nuclear energy works, you know, the NIMBYs and Jason that you referred to about not being able to build these things all around the country.
46:30
And so reducing the form factor in my opinion is a technical challenge that I think we can overcome, but it still leaves the policy and the societal level challenges that I think are very difficult to overcome because you're talking about rewriting history in many ways and and convincing, you know, hundreds of millions of people that things that they had thought were true were no longer true.
46:49
And I think that's much much harder than we give it credit for.
46:52
And cars is a perfect example.
46:54
Americans now we're averaging 24 miles to the gallon.
46:56
The EU has mandated 57 miles per gallon in 2021.
47:02
They're getting it done in the EU.
47:04
They're twice as effective.
47:04
I tweeted, "Hey listen, Americans, we we need to buy better gas mileage cars and move to EVs."
47:09
And I was faced with quite a backlash. I mean, it was insane.
47:12
That's totally true because California did pass their own legislation. Yes.
47:18
And then there was this issue because the car companies pushed back and said, "You know, it's too expensive for us to build two different SKUs, one for California and one for the rest of America."
47:26
They're already building ones for the EU.
47:28
Just to give you one counterpoint to your statement about energy independence arising potentially from solar.
47:32
To generate a gigawatt of capacity and industrial scale solar farm would take about 7,500 acres.
47:40
You know, so that's about 30 don't think that's how it's I don't think that's how it's done.
47:43
I I I think a very simple solar installation in everybody's home with a simple battery is more than enough to basically give people the power they need.
47:50
And then these big C&I installations that's happening on top of all these big buildings will cover the rest.
47:55
And I think that you'll still have some amount of natural gas peakers usage.
48:01
Um and maybe you can have some amount of solar or hydro or wind.
48:02
Um but people are experimenting and figuring out the battery storage capabilities to supplement this.
48:09
I think what we don't have is that that 3% resident solar, we don't have a credible alternative.
48:14
But at, you know, 80% resident solar um with battery systems in everybody's home, which is a tractable solution that costs thousands of dollars per home, which the government could subsidize, would be a great use of capital.
48:27
I think it would be transformational for energy.
48:30
It would completely rewrite the energy calculus.
48:32
So So again, to do that today would cost uh cuz when you do something on a residential roof, it costs a lot more than doing it on industrial scale.
48:40
So when you build out a 7,500 acre solar facility, you get economies of scale, you get single tubes, everything can run off one wire.
48:46
When you build it on a roof, you need contractors to come in, you got to wire the home, you got to put batteries in.
48:50
So the actual amortized cost over the lifetime of that solar installation works out to something on the order of 15 cents a kilowatt hour.
48:58
Whereas if you do it on industrial scale, it works out to about 3 cents a kilowatt hour.
49:01
So, you know, your your point makes sense, but it it it makes things more expensive.
49:05
So then the question is who's going to fund the delta?
49:07
And is someone actually going to pay for that delta to make this Yeah.
49:11
We're going to We're going to I'm sure I'm sure over the next few years we're going to spend trillions and trillions of dollars on nothing.
49:16
Those trillions and trillions of dollars could probably, whatever your gap is, I don't know whether your math is right or wrong, but whatever the gap is that gets us to China as an example in terms of the cost per kilowatt hour, the government could subsidize.
49:27
And there is a quantifiable number, and if we had if we decided whether it was worth it or not, we could decide.
49:33
Uh I I All I'm saying is it it's it's something that we need to put on the table because every time a new president comes into town and gets elected, they generally get this one big shot on goal.
49:44
You know, the last few presidents have tried to either, you know, cut taxes or basically give these massive um economic stimulus packages.
49:54
And the net dollar effect of these things is now measured in the trillions of dollars.
49:57
And I suspect that the net, you know, cost of subsidizing enough solar energy that you could probably deploy is also in the trillions of dollars.
50:04
And we should just decide whether that is a better use of the money.
50:06
All right, just to do some quick math here.
50:07
Um, to uh, boost your Chamath's point, he almost nailed it exactly.
50:13
There are 85 million standalone homes in the US, Chamath.
50:17
I'm just going to assume none of them, for the sake of this argument, have solar on them. But 3% do, I think.
50:21
Um, average cost of putting solar on homes, 20 to 35,000.
50:27
I picked the number 30,000. Yes. Yes. Hold Hold on a second.
50:32
But But in Australia, it costs 5,000.
50:34
Okay, they have a cheaper system or something?
50:35
No, it's because of all the nonsense that exists in the United States. Subsidized, yeah.
50:39
So, but just to give the raw cost here, if it was $30,000 to put on 85 million homes, You can do it for $5,000 a home because Australia, which is 1/6 the size of America, is able to do it with no subsidies direct to the consumer for $5,000 an installation.
50:54
So, that price is possible.
50:57
I'm going to pick the $30,000 crazy price in America. Fine. $2.
51:01
5 trillion to put solar on every home. The end.
51:06
Like, we're you we're 30 trillion dollars in debt.
51:08
10% of our debt would make us energy independent forever.
51:11
The The The plan gets better when you do math. Sorry.
51:15
And think of Think of the amount of savings you do to the environment.
51:20
Think of the lack I don't know if you saw this, but there was a UN report about the criticality and importance of emerging wildfire threats to our ecosystem and our ecology.
51:27
I don't you know, for all of us that lived in California, do you guys remember how the sky was orange and red 2 years ago or those Yes.
51:35
crazy pictures from Los Angeles?
51:35
So, if you if you have a have less of a reliance on these aging utilities and these utilities infrastructure, there'll be less forest fires, the air will be cleaner, um, people will be more resilient.
51:46
Think of the times that for example in Texas where there was that massive freeze, right?
51:52
Where people were shut out of power, they couldn't have power because the actual traditional utilities were shut down. If it's only $2.
51:58
5 trillion, I think we should have done this yesterday.
51:59
I can't believe the number is that low, actually.
52:03
Considering the things that when we put $2.
52:05
5 trillion price tags on things and spend them.
52:06
The cost of upgrading, I'm just pulling some numbers here off of the internet, but replacing our electrical grid would be 5 trillion.
52:16
So, if you think about the replacement cost of the electrical grid, which we're going to have to do at some point, and the upgrade cost of 500 billion a year, or the maintenance of 500 billion a year, this actually starts to seem very reasonable and achievable if we had the will, which means we need to have some politicians who actually aren't in the pocket of big oil.
52:34
of jobs that Biden would create if he actually ran with this, then and because you do need a lot of local installation capability and other jobs, you would create hundreds of thousands, maybe even millions of jobs in the United States.
52:47
They would be really well-paying, and you would be pushing us towards a completely energy-independent, clean energy, you know, zero-carbon future.
52:55
That That'd be transformative.
52:57
Yeah, I wonder how many hours of work it is to install, you could actually do that math as well and figure out how many jobs you create, and then how much tax those people pay and then how much they spend of that money to put it back into the economy.
53:12
You're probably getting a 30-40% rebate on that $2. 5 trillion.
53:14
So, it becomes even better because of the high-paying jobs.
53:18
All right, the markets are tanking, obviously, over the last couple of months.
53:25
Dow is down 11% year-to-date.
53:29
And of course, a lot of the growth stocks, we've talked about this over and over again, from Zoom to Netflix, Facebook, Spotify, Coinbase, Twilio, all down over 50%.
53:38
Today, the market went down 5-6% on the news and then rebounded.
53:41
Is this all priced in and is this the bottom of the market?
53:47
Cathie Wood is supposedly um buying and I don't know if it's net buying or she's just reallocating, but uh are we now in the bargain hunting period of the market and and we've bottomed out?
54:03
The smart folks that I talked to who I really, you know, uh look up to and respect think that the bottom of the S&P is around 3,800.
54:12
And that um what we still need to do is this one last flush.
54:14
And that last flush will really touch the big cap um companies, but that uh growth is largely um done sort of getting taken to the woodshed.
54:27
So, um in general, I think that So, generally buyers have growth now, um sellers of value, and waiting for this one last, you know, 400-point move down the S&P.
54:37
And I think people think it's roughly right.
54:39
Now, if there's a world war, obviously, who knows?
54:41
All bets are off, but um you know.
54:42
So, Sachs, what's more shocking that we're almost at the bottom or there's people in the markets that Chamath really respects? Which is he?
54:52
Well, speaking Speaking of people that we respect, so I think uh Brad Gerstner has a really interesting take on this, which is that I I should I should also be clear that I'm recruiting this one person who I really respect. He knows who he is. they're poachable. Got it. Right.
55:05
So, uh Brad Gerstner's published a couple of charts showing basically multiples in the internet index and among SaaS companies over the last whatever dozen years or so.
55:15
And what you can see is that over the last 2 years during COVID, there was a huge spike in multiples for internet companies and for SaaS companies.
55:23
And that, over the last, really since November, last 3-4 months, has now come down.
55:28
And as of, I would say, last week, it was right at about the historical trend, and now it's starting to go under the historical trend.
55:37
So, from a bargain hunting standpoint, you'd have to say that this is the first time that we've been below the the average um for a few years.
55:44
Now, that's not to say it can't go down even more because in the same way that you can be above trend, you can also be below trend.
55:53
And if this war escalates and metastasizes, it will go down more, but if this conflict can stay localized um and the economy doesn't go into a recession because of everything that's happened, then yes, this might be bargain hunting.
56:07
Here's the chart for everybody to take a look at um from January '20 to January '22, the 2 years of the pandemic.
56:15
And I think this is Times' forward-looking sales if I'm if I'm reading it correct.
56:19
I don't have the full chart here.
56:20
I just have a a screenshot of it, a portion of it.
56:23
Yeah, I think it's enterprise value.
56:25
Yeah, it's enterprise value divided by like forward-looking revenue, which is you could kind of say is like ARR.
56:30
Yeah, it's sort of like ARR.
56:32
It's like recurring revenue.
56:33
Um and so, yeah, we we had this 15x, we went up to 40, 50x, private market deals going at 100, 200x. Mhm.
56:41
Um those days are over big time.
56:45
Uh and uh it's we've talked about that ad nauseam.
56:47
One of the interesting things that I'm seeing is I think people are looking at businesses that have been corrected and uh saying, "Hey, what is the true value of this?"
56:55
And the I think the best example is Peloton, new CFO the CFO of Netflix. got to go. All right. I got to go, Jacob. Stay uh love you guys. Love you, Chamath.
57:05
And stay safe and enjoy your vacation. Cheers now.
57:07
So, I just without Chamath here, I just want to talk a little bit.
57:10
Have you guys watched what happened with Peloton and the CFO coming in and just really revitalizing that business very quickly?
57:16
By the way, Jason, I'll say one thing.
57:17
I think um 2 weeks ago uh if you pulled the market, I they would probably have or if you looked at the the the trading prices of bonds, you probably would have assumed a 95% chance of a half point rate hike in March.
57:36
And um as of today, my guess is that the probability of that is below 5%.
57:43
And you're probably assuming, you know, um a quarter point rate hike or maybe even a deferral uh at this point.
57:49
And I think that's one of the things that's keeping the market up instead of tanking so much uh this morning.
57:56
predicting that it's been such bad news that they'll push it out.
57:59
Yeah, they're assuming that under the conditions of great uncertainty like this, the Fed cannot act as aggressively as they were planning to act. Interesting.
58:06
And as a result, that that rate hike um would be pushed out and it would continue to kind of keep prices uh somewhat inflated and continue to support the market with cheaper uh capital and and liquidity.
58:16
So, you know, a lot of uh capital around the world is going to get locked up as armed conflict kind of comes to bear.
58:22
Um and when that happens, you know, markets will tighten up and prices will be affected.
58:26
And so, the Fed in in traditional and typical times would want to have an incentive or or would have a motivation to uh you know, inject liquidity into the markets.
58:36
Um And so, this is not a great time to do a half point rate hike.
58:40
And so, it's almost certain at this point that they're not going to do a half point rate hike.
58:44
Feels to me like huge setup right now. People have capitulated.
58:46
The market's gotten demolished.
58:49
And these And these companies are still great.
58:51
Like Zoom is still a great company.
58:54
businesses out there and some great companies to invest in, some great stocks to buy for all the way from technology through to industrials uh through to um you know, even some of the energy companies that are going to benefit greatly from this commodity cycle we're we're kind of in the middle of.
59:08
Um and so, there there's going to be, you know, um I I think an opportunity to move away from uh speculative um behavior into real kind of cherry-picking productive cash-generating um businesses in the next um uh you know, or or or even growth businesses that are actual um you know value creators.
59:27
Uh so versus being like 10-year speculative kind of bets.
59:32
So, this is a great time to kind of be looking for businesses you really like to own uh to identify them, to make investments, and to hold those investments for a very long period of time.
59:41
Uh you know, you're not going to find a lot of market conditions like this.
59:42
I mean, if we all went back to March of 2020, and you remember the S&P was at 2300.
59:50
Yeah, I was going to buy Disney.
59:50
I never got around to it.
59:52
Yeah, so like if if if at that point you pick businesses that you knew were going to be durable businesses and that you loved and you thought were going to have legs to them.
59:58
You bought everything from Alphabet to Disney uh to Lockheed Martin.
1:00:01
Uh you know, you could have done um tremendously well.
1:00:05
So, now's a great time to kind of be looking for businesses that you really like and to buy a stake in them. Yeah.
1:00:10
Forget forget about trying to time the bottom. That's a fool's errand. Right. No, no.
1:00:14
If you want to buy stuff you want to hold for 10 years.
1:00:17
are relatively cheap relative to a time horizon as Sachs pointed out and um and Gerstner pointed out.
1:00:21
So, things are relatively cheap.
1:00:23
Find businesses you like to own and buy them cheap.
1:00:27
They could get cheaper, but they're kind of at the bottom end of the market.
1:00:31
I think the whole time frame around like speculative stuff is kind of wiped out.
1:00:34
Like I think that that that that era's gone now.
1:00:36
What do you think, Sachs?
1:00:36
Well, it's it's that plus I think one of the things that happened is that people are realizing now that the burst of activity, especially like in e-commerce type companies that happened during the pandemic, that was not ongoing sustainable growth. It was one-time growth.
1:00:53
In fact, in many cases, it was sort of worse than one-time growth, which is it was pull-forward growth, meaning that growth in the future will be lower because you pulled forward Exactly. revenue.
1:01:02
Well, I think Peloton might be a good example.
1:01:04
I mean, everyone bought them during the pandemic, but then after the pandemic, everyone who needs one has got one already.
1:01:10
So, Could also be cars, right?
1:01:11
Like people were desperate to buy cars, and now there's none available and Right.
1:01:14
So, what what happened is not only have multiples gone down, but these companies were being comped based on growth rates that were unsustainable.
1:01:21
And so now they're all revising their forecast down. So it's a double whammy.
1:01:25
And And Brad's made this point.
1:01:27
But what's interesting right now is the markets are actually rallying.
1:01:30
And um I think it might be because of this latest Biden news at this press conference.
1:01:36
So the important point here is that Biden did not sanction Putin directly.
1:01:42
There was talk about sanctioning him personally.
1:01:45
Or and he also did not remove Russia from the Swift uh system, which is like sort of the key banking system.
1:01:50
And I don't know if this is because Biden doesn't want to do it or because Europe won't support the move.
1:01:55
Pretty clear Europe doesn't want to do it.
1:01:56
So no one is willing to suffer too much economic loss here to defend Ukraine, never mind sending troops.
1:02:04
So it seems to me that the signal here is that um both militarily and in terms of economic interest, Europe does not want further escalation.
1:02:15
And that may be why the market is rallying.
1:02:18
Also, the Fed may hold off on interest rate increases while this is all going on.
1:02:23
So you know, sometimes markets can act in funny ways.
1:02:29
Well, they're forward-looking.
1:02:29
People are putting money at stake, so they have skin in the game.
1:02:34
So it's you know, they they people can talk all they want about um what's going to happen with the markets, but unless they're placing bets, that's kind of cheap talk.
1:02:43
And here people are actually placing bets on stocks they think will do well in the future. Skin in the game.
1:02:48
People look, the their economic interests are skin in the game.
1:02:53
Having people's sons and daughters go off to fight and die in a some foreign war, that is real skin in the game.
1:03:00
What is not skin in the game is people tweeting, you know, their moral outrage and condemnation and whipping things up.
1:03:06
And you know, we should not be listening to the And calling everyone who disagrees with them traitors, because that's happening, too.
1:03:14
You know, this is a time for cooler heads prevail.
1:03:17
I I you and I are going to actually agree on this and we're both going to agree that Trump and Pompeo should not be fawning over Putin.
1:03:26
Yeah, but Jason You never commented on that.
1:03:27
Let's get people want to hear us get into it.
1:03:29
Well, I mean, you can't support them fawning over Putin like that. You do you?
1:03:34
I can't imagine you Look, I I heard I heard what what Trump said when he was saying I didn't hear the Pompeo quotes. I can't speak to that.
1:03:41
The the Trump Look, listen, you know, sometimes Trump is being sarcastic when he says things like, "Oh, what a beauty."
1:03:49
You know, he means the opposite and I think the point Trump was making wasn't really about Putin being so great.
1:03:54
The point I heard Trump making was that if he were president, this wouldn't be happening.
1:04:00
Now, you can disagree with that.
1:04:00
It may be true or untrue, but that was the real point he was making.
1:04:04
I think that you're letting, you know, the political partisans try to whip this thing up and as part again, it's part of this meme of anybody who doesn't support what I want must be a traitor or must be in the pocket of truth of Putin.
1:04:18
We have to use this meme warfare to get people free bird to shame these politicians into backing like the solar plan and doing something meaningful like this like in backing nuclear.
1:04:33
How do we get the politicians to reflect energy independence as a priority?
1:04:38
It feels like that it's not a priority for them.
1:04:42
Well, I mean, the one one of the good things about American democracy is that politicians are generally pretty responsive to what their constituents want and believe.
1:04:53
So, they use polling data and that polling data drives, you know, if if they want to get reelected, they better do what the polls are telling them people want them to do.
1:05:03
And so ultimately if you can kind of influence people broadly in the United States and that can that can go both ways by the way.
1:05:10
We you interest too and and you have people with weird ideas, right?
1:05:14
Like getting rid of the electoral like if something is deeply unpopular, uh politician risks not getting reelected, they're not going to kind of run to do that.
1:05:20
And if something is very popular, even though it may not be the right thing by some objective framework, uh you know, they would still run to do that.
1:05:28
So, you know, I do think that there's you know, some degree of of work to be done around, you know, framing for people broadly, you know, via the work maybe that we do on our podcast, but I think more importantly on a repeated way and in a way that's kind of inspiring, um uh and inclusive, uh will drive people to kind of want to see these changes happen, and ultimately politicians should respond.
1:05:53
Can I make one other point to to your to your thing about um you know who who today would be considered, you know, in the words of Jen Psaki, parroting Russian talking points? Barack Obama.
1:06:02
If Obama today were out there saying exactly what he told the the Atlantic magazine back in I think it was 2012 or or 14, if he was saying that today, he'd be accused of being in Putin's pocket and being a Putin apologist and a traitor and all this kind of stuff, because he said that in that interview, he said, "Listen, Putin was always very businesslike. He was punctual. He showed up.
1:06:28
He wanted to negotiate and deal."
1:06:30
Basically, he sounded like a guy who, "Look, we may disagree with him about everything, but he wasn't a madman.
1:06:34
He was someone you could talk to." actor.
1:06:38
He was a He was a coldly ruthless, but rational actor.
1:06:41
And that's basically what Obama said.
1:06:43
He's someone you could talk turkey with.
1:06:45
And if you say that today, that, "Hey, maybe we could negotiate our way out of this with Putin," you're accused of being, you know, uh a puppet of his. Yeah.
1:06:55
Well, the concept of starting a war uh in this day and age is just it's crazy.
1:07:02
Like and it is crazy that he's starting this war and putting all these people at risk, and we don't even know what the goal is.
1:07:08
You guys uh And he's not even asked for anything.
1:07:11
Like, what is he exactly asking for?
1:07:11
So, he may not be He may have been rational then, or maybe Obama was trying to steer him towards rationality, and praising him publicly to get that more rational Putin to show up.
1:07:22
This feels like irrational, that we don't know what his goal is.
1:07:25
Like, the fact that the world can't say if we gave him X, he would do Y, is I think his strategy.
1:07:31
Putin's always liked to be this like unpredictable madman, right?
1:07:37
No, I mean, we just said that he's a coldly ruthless rational actor.
1:07:38
That's sort of the opposite of a madman.
1:07:40
I mean, his red lines have been clear.
1:07:44
He's been stating them for for years.
1:07:44
Um the the problem is that, again, we're conducting him to murdering opponents of his and Oh, there's no question that he's ruthless. He's an authoritarian.
1:07:53
Call him a dictator if you want.
1:07:55
I've tweeted in support of Alexei Navalny. Yeah.
1:07:59
So, I get it, but that doesn't mean he's a madman.
1:08:01
Um he has desires and interests.
1:08:04
And it's the job of diplomats to figure out how to conduct diplomacy and negotiation with people you disagree with.
1:08:11
And one of the problems we have today is, again, we've twitterized everything.
1:08:15
So, you know, we basically figure out the first step is who are the people who should be canceled?
1:08:20
You know, who's wearing the white hat?
1:08:22
Who's wearing the black hat?
1:08:24
Let's all rise up and virtue signal and moral denunciation, and, you know, stick our fingers in our ears and not listen to the other side, and um And listen, that that is the way to find yourself in greater conflicts, not avoid them. Yeah.
1:08:39
All right, so just wrapping up here, let's uh let's wrap with Sax's favorite part of the show.
1:08:45
Sax's favorite moment, where he's super engaged in learning.
1:08:47
He's got his thinking cap on. He's taking notes.
1:08:49
And that is the science corner.
1:08:52
No, not What about the there What about vendetta corner?
1:08:58
I thought you were going to say vendetta corner.
1:08:59
Yeah, what about you, anything on your vendetta corner this week?
1:09:02
Vendetta corner is actually my favorite part of the show. It is.
1:09:04
Now, people love vendetta corner in the Twitter community spaces.
1:09:07
Who you who you Twitter loves it because Twitter is all about vendettas, but I have no vendettas this week. Vendetta free week? A vendetta free week?
1:09:16
What are you doing with your time? Yeah.
1:09:19
I'm I'm trying to advocate that this is time for cooler heads prevail, and so um Oh, for sake, start a fight with somebody.
1:09:24
Aren't you fighting with Paul Graham?
1:09:25
Is nobody you're you're throwing a pie at this week?
1:09:30
Are you guys taking a week off for ski week?
1:09:32
I don't think we're fighting over anything.
1:09:33
I just not I can't not that I can think of. All right.
1:09:36
For the dictator Chamath Palihapitiya, the sultan of science David Friedberg, and the Rain Man himself David Sacks.
1:09:45
I'm J Cal, and we'll see you all at the All-In Summit in May 15, 16, 17.
1:09:51
You can go to the website summit. allinpodcast.
1:09:53
co, or you can just type All-In Summit the All-In Summit into Google and find it.
1:09:57
May 15 to 17 in Miami, Florida.
1:09:59
We're doing it at the New World Symphony, and we have a page there where you can vote on speakers.
1:10:05
It's going to be 3 days of fun.
1:10:07
We have a scholarship there if you can't afford the regular ticket, and you can apply for a scholarship if you're a super fan, and we'll look forward to seeing you there, and go vote for some speakers. Bye-bye. Love you, besties. Let your winners ride. Rain Man David Sacks.
1:10:27
And then it said we open sourced it to the fans, and they've just gone crazy with it. Love you, besties. The queen of quinoa. Besties are gone.
1:10:43
That is why your dog taking a dump in your driveway, Sacks. Oh, man.
1:10:51
We should all just get a room and just have a one big huge orgy cuz they're all just useless.
1:10:54
It's like this like sexual tension that they just need to release somehow. Wet your feet. Wet your Wet your feet.
1:11:03
Wet We need to get Mercy's on the beat. I'm going all in. I'm going all in.