0:00
I now have a chief of staff. He's pretty great.
Search this video
0:01
He's worked for me for a while and he's he's doing a great job.
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But it's actually really helped. I will say that.
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And then I started a family office. Wow. Congrats. What does that mean?
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You have a place in your home that you call an office?
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Yeah, you don't like to bring by your refrigerator there's an office?
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IS THAT THE FAMILY OFFICE?
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YEAH, SO THE FAMILY GOES IN THERE TO TALK about office stuff.
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Where does Jade put the stickies that say we're out of granola bars? In the family office.
0:43
Hey everybody, welcome to another episode of the All-in podcast episode 72 part deux.
0:48
With us today again, the prince of panic attacks, the sultan of science, DAVID FRIEDBERG.
0:59
UH YES, AND ALSO the zephyr of Zoloft.
1:03
Uh and also as you're hearing cackling, the duke of degeneracy, uh the dictator himself, Chamath Palihapitiya.
1:08
And of course, everybody's uh favorite, the rain man himself, the drunk history channel uncle, David Sacks.
1:17
I mean, David, I I follow you on Twitter.
1:20
You're tweeting 50 times a day.
1:23
Oh, I was thinking the same thing. When do you work?
1:25
What has happened to you?
1:27
You you won't meet with startups anymore.
1:29
I I bring you startups, you say, "You know what?
1:30
I'm no longer going to be meeting with startups."
1:32
me like stuck in your room tweeting all the [ __ ] time. do first meetings.
1:36
That is the end of your career. Huge mistake.
1:40
No, it preserves it preserves my energy.
1:42
There's nothing more draining than endlessly spending your day in first meetings.
1:45
No, why don't you just have a short first meeting?
1:47
Like a 15-minute first meeting.
1:50
Well, that's what you know, we have a team for.
1:50
Oh, they have a bad joke. I love it.
1:53
They don't because we know exactly what we're looking for.
1:56
SaaS investing is very metrics-driven and so the first meeting That's a Yeah, exactly.
2:00
So it's like No, yeah, the first meeting we just find out do they meet our basic threshold for Love it.
2:06
for growth and Yeah, exactly.
2:06
Yeah, so we run the numbers and then I I will meet with them if they look good. I love this.
2:12
I would like all VCs to take the same approach and I will let everybody know my DMs are open. Jason@calacanis. com.
2:19
I will take the first meeting.
2:21
Sacks, I need to call you after this.
2:23
One of our businesses which is not in SaaS has started to sell SaaS software and we've already booked 40 million dollars of [ __ ] ACV by complete accident from zero. Wow. You stepped in it?
2:35
Uh and I need some advice. Okay. Yeah, let's talk. All right, everybody.
2:39
Uh it's been a bit uh of a crazy couple of weeks here and I we have to start with the war in Ukraine and and do a bit of an update. It's been over 20 days.
2:50
The death toll continues to climb.
2:53
We don't know exact numbers here.
2:55
It's very hard to get information. We're not experts.
2:56
We don't have boots on the ground.
2:58
Uh but according to uh the New York Times, 7,000 Russian troops have been killed.
3:06
And Zelenskyy said on March 12th, 1,300 Ukrainian troops have been killed.
3:09
I I think we've got three or four angles we need to talk about here.
3:13
One, I want to talk about food supply uh with Friedberg since you ran climate.
3:17
com and have a lot of expertise in that.
3:19
And of course, Ukraine and Russia are the breadbasket of the world.
3:25
Chamath, I want to talk about markets, of course, but let's go to our history channel uncle first.
3:29
Uh Sacks, you have been going down the rabbit hole looking at the history of this.
3:34
Let me just ask you a just a pointed question.
3:40
Is Russia losing the war?
3:44
And if they are losing the war, if that is a poss- Is that even a possibility that they're losing the war? Are they losing the war?
3:48
And then what is the exit ramp here and what does it mean on a go-forward basis? Right. I think great question.
3:53
So here's where I think we stand three weeks into the war is that Putin clearly miscalculated.
3:59
He thought this would be a cakewalk.
4:01
Obviously it's turned out not to be.
4:03
The Ukrainians have put up very fierce resistance.
4:04
The Russians have taken very serious casualties and losses.
4:08
Um and so the war is very much, you know, up in the air.
4:13
It's the the outcome is very much in doubt.
4:15
So I think, you know, Putin was overconfident, uh made a political, economic, and you know, obviously humanitarian mistake.
4:22
But I think three weeks in, here is where I would characterize things is it feels to me like the West might be making a similar mistake of sort of excessive overconfidence and triumphalism, meaning that we think the rest of this war is going to be a cakewalk.
4:38
And the reason I say that, let me just give you some examples and then tell you why it may not be a cakewalk.
4:43
So you've got Francis Fukuyama had a piece this week.
4:46
Basically, he's back with the end of history.
4:48
He predicts that, you know, imminent Russian defeat and that there's going to be a new birth of freedom uh for the West.
4:54
It's going to be like the Bush doctrine and 20 years of failed policy in the Middle East never happened.
4:58
You got David from, you know, all about predicting mission accomplished just like the Iraq war.
5:02
He said the springtime's going to be bad for anyone who bet on Putin, his words, which in his view is anyone who isn't a basically a a neocon who favors regime change.
5:12
You had a piece get a lot of circulation over the last week in the US-China Perception Monitor by um by I think a former Chinese um observer named Hu Wei.
5:23
And he basically predicted that China would be under so much pressure by what the the Russians have done, you know, in terms of humanitarian uh losses that they would come out basically denouncing Russia and support the West.
5:38
And then of course, I think the final example of what you might call Western triumphalism right now is that absolutely no one in Washington seems to be pushing for a ceasefire.
5:47
They're all, you know, they're all paying lip service at least to this no-flo- no-fly zone idea.
5:51
Biden and the squad seem to be the last holdouts uh for the idea of not imposing no-fly zone.
5:57
So I would say right now the West seems to be very confident about the way the this war is going and not inclined to make any compromise or concessions.
6:06
I just want to flag quickly why you know, why there might be some clouds on this silver lining.
6:12
So you had a Washington Post article first of all warning.
6:14
It was very interesting that Ukrainian military progress may not be as great as their quote stratcom, their strategic communications, you know, aka propaganda.
6:24
So in other words, the Ukrainians are very effective at fighting the information war, but the the Russians are still making progress on the ground.
6:33
You also had this um Washington Post story about neo-Nazis flocking from all over Europe to Ukraine to fight for the cause.
6:40
Again, that story got It's it's very troubling and it got no likes or retweets because it just doesn't fit the great narrative here.
6:47
You've got the slow-motion humanitarian true?
6:50
Like Yeah, let's but let's come back to Let me lay out all the issues and we can come back to it.
6:52
You've got the slow-motion humanitarian of, you know, a billion people across the world potentially starving if the spring planting doesn't happen, which we should let Friedberg speak to more.
7:01
You've got the fact that Russia can still escalate this war.
7:05
I mean, they could still rubble cities.
7:08
Uh Belarus could enter the war and, you know, God forbid they could even use WMD.
7:12
And then we you have this idea, this dream of toppling Putin.
7:15
Probably Look, it could happen, but probably a fantasy.
7:18
You had 200,000 protesters, pro-war protesters turn out in Moscow today.
7:23
Nationalism is still strong in Russia.
7:26
Yes, there's anti-war protesters there, but the Russian people at the moment seem to be still behind Putin.
7:33
And then I think you had today um the uh foreign minister of China came out with a statement really throwing cold water on the idea that they support the West.
7:42
They basically denounced the West for NATO expansion.
7:43
So this whole idea of of the Chinese bowing to Western media pressure, which they in other contexts call the buy-out influence, I think that's a fantasy that is not going to happen.
7:54
So look, I think that, you know, you know, we all support the Ukrainian cause.
8:01
Uh we all support their desire for freedom, to their freedom from domination from this um this Russian war of aggression.
8:08
But what I wonder about is whether this would be the opportune time to for Washington to try and push for a ceasefire instead of a no-fly zone.
8:17
And we should talk more about what that might look like.
8:21
Can I give you a psychological assessment of I think what's happening right now? Yes, great.
8:24
Just as somebody who as as you know, you guys and I were just joking, but six days just being mostly off the grid with my notifications off.
8:36
I was really like honestly like you you you kind of like go through this dopamine fast and what it actually helps you do is pick out better signal.
8:42
And you know, with all respect Sacks, I think like a lot of what you said is not really a has meaningful signal as the following.
8:53
Which is the most important thing that happened was both sides basically said the surface area of a deal was very much in sight.
8:59
And that they were down to three or four points.
9:01
And I think that that didn't get reported nearly as much as it probably should have.
9:05
And what I thought was psychologically interesting was that as soon as that was said, the next few days was when the rhetoric got ratcheted up extremely aggressively on both sides.
9:18
And the way that I interpret that typically is having done deals, that's typically when you're closest to a deal and you're trying to get the last few Ts and Cs.
9:24
And in that same construct as applied to Ukraine and Russia, I suspect what's happening is they both put out the trial balloon.
9:31
It was well received on both sides.
9:33
The surface area is now down to a few points.
9:35
I'm not saying that those are justifiable in the end, but I think that if both of these two folk parties want to come to a ceasefire, which I think it does, we're probably much much closer than anybody thinks.
9:45
And right now all of this rhetoric is meant to basically try to get the other side to budge a little bit more.
9:50
And so I suspect, and you know, I could be completely wrong, um is that we're much closer to a ceasefire than anybody thinks and I suspect that you could see something in the next two to three weeks.
10:02
And I think that that's really hopeful cuz you want this thing to come to an end.
10:06
The thing I'm trying to parse here and I don't know if anybody here can even answer this is how did how did we either underestimate or over estimate depending on the time Russia's ability to invade another country?
10:20
I think I think the thing is we we have we can't even estimate correctly.
10:25
So for example, there was something that said there was a hundred out of a hundred Russia has a hundred and seventy battalions apparently.
10:32
I don't know if that's true or not.
10:33
Of which a hundred were sent in.
10:35
We don't know if that's true or not.
10:37
Of which Ukraine apparently destroyed fifty.
10:39
Of which we don't know if that's true or not.
10:41
So we're left to guess and unfortunately what that does is it people psychologically then fit as David is using in the past your priors. What are your biases? Right?
10:51
What narrative fallacy do you want to believe?
10:53
And then you're going to fit.
10:54
So the pro-Russian factions will say that's entirely not true.
10:56
The pro-Ukrainian factions will say actually it's even greater than that.
11:00
Huge sustained military losses.
11:04
The truth is somewhere in the middle that will only get accounted for after a ceasefire is in place.
11:07
So I think we almost need to again we can get caught in this fog of war and and talk about the stuff in ways which we don't accurately know or we can level up and say the thing that we both know is there was on the record statements by the foreign minister of Russia and the president of Ukraine that a ceasefire and the surface area of that ceasefire is within sight.
11:30
And unless something is materially changed and then in the last three days which it hasn't it means we are really really close to this being done.
11:38
So I I agree with a lot of what Chamath said.
11:40
I don't think contradicts anything I said before.
11:41
I I agree that there was a big piece of news this week that caused markets to rally for three days which is the announcement of a proposed 15 point peace deal.
11:49
And the we do know sort of the key features of that deal.
11:54
It means that the three big features are Ukrainian neutrality so they don't become members of NATO.
11:59
You had Zelensky saying that NATO membership was off the table.
12:03
Ukraine can't host foreign troops bases or weaponry.
12:05
There'd be limits on Ukraine's military but they would get security guarantees from the allies.
12:10
So it wouldn't be a complete demilitarization.
12:13
And then the the other pieces of it were Ukraine recognizing Russia's control of Crimea, recognizing that's not coming back and then some sort of independence recognized for the disputed territories in the Donbass.
12:24
So I think you're right Chamath that everybody now knows the broad contours of what a peace deal would look like.
12:34
And the markets are starting to price in them getting to that peace deal.
12:37
But I'm worried that if you look at it from the point of view of what people in Washington say that there's no pressure here coming from Washington for Zelensky who's basically our client.
12:51
He's an American client to make a deal.
12:55
You know, if you compare this to say the 1973 Yom Kippur War where the US was on the side of Israel but still acted as a peacemaker and got a ceasefire done.
13:03
You know, Kissinger got that deal done even though we were on the Israeli side.
13:07
You don't really hear anyone in Washington saying let's get a deal done.
13:11
So I I hope you're right but you're not we're not talking about the elephant in the room which is that in the Yom Kippur War the unitary resolve and the military dominance of America was undisputed and so as a result its ability to be the mediator was also undisputed.
13:28
We've already talked about this.
13:30
When Biden called the UAE and Saudi they wouldn't even pick up the phone.
13:34
The people that are negotiating this peace peace peace treaty right now are Naftali Bennett and Emmanuel Macron.
13:40
So we're not at the table so I think a lot of what we're hearing as well is just a lot of the rejection and the psychological you know kind of anger that we have to not being even part of the process.
13:51
Maybe the world doesn't want us to have such an outsized role.
13:53
It's we've we've we've moved past that.
13:55
Whether you wanted us to be involved in it or not we're not involved and we are not the principal mediators in this and we I hope to God that Israel and France and whoever else is at the table gets this done.
14:07
Yeah, I I agree with that but here's my concern is that I think everyone knows the broad contours of the deal but if you're Russia or you're Ukraine you're getting daily reports of what's happening on the battlefield and if you think you're winning you have an incentive to stall the peace process to cement greater gains and get more leverage for those remaining details and negotiating points.
14:27
And so if Zelensky thinks that the Ukrainians are making progress on the battlefield he's going to wait.
14:32
And so neither one of them I think left to their own devices can be fully trusted to make a deal.
14:37
I think you need the US applying some pressure or acting in a in a constructive way towards the process.
14:47
And I think it's a huge problem that the US is not viewed as a peacemaker.
14:52
We're basically viewed as so partisan and on the side of Ukraine that no one wants us involved.
14:57
we've talked on this pod about us not being the global police officer of the world and that other people need to stand up.
15:03
So maybe the lesson here is you know, maybe strategically it's not like we were called on and we didn't stand up. We weren't called on. Well, okay. That's we assume that.
15:11
I mean we we don't have perfect information either.
15:14
But let's let's get to Friedberg here.
15:15
I think the other wrinkle in all of this and I think it's quite positive is sanctions are seeming to have a profound impact here and people are looking at them as potentially maybe cyber warfare and just you know, actual tactical warfare on battlefields is less important than economic warfare and Russia has been essentially canceled from the global economy from Visa to McDonald's to exports and these sanctions are not just government sanctions.
15:46
These are people opting into them whether it's corporations and other entities saying we're just not going to do commerce with Russia.
15:57
Unfortunately and this is something you have great expertise on and so we're lucky to have you here to talk about it.
16:03
People may or may not know this I'm happy to be here.
16:06
This is the breadbasket of the world.
16:08
They export more wheat than anybody and they also export fertilizer, soybeans and some other inputs which we've talked about previously that provide meat for the world.
16:20
So what can you tell us about the downstream effects of there not being potentially or half as much crops coming out next year and what would happen in places that are the beneficiaries or dependent on wheat and fertilizer from Russia?
16:39
So there's a number of first order and then second order effects that are not just about sanctions but also about export controls by Russia that are creating swings in food markets like we've never seen and will almost certainly lead to widespread famine by the end of this year at this point.
17:00
So the first important point to note is about 15% of the world's calories come from wheat.
17:06
About a third of that wheat comes from Russia, Ukraine.
17:08
Russia has banned export of wheat.
17:12
And the the wheat spring planting season is like now this week.
17:17
And there's not a lot of planting going on.
17:19
You know, a lot of commodity folks are in the field trying to figure out who's actually going to go to field and plant.
17:25
But no one's making you know, the concerted effort that they normally would under normal circumstances.
17:30
So not only is the current wheat supply in Russia, Ukraine blocked up and cannot make its way to countries like Africa or countries in Africa and elsewhere but the future planting season is now significantly at risk.
17:43
And again, that's 15% of global calories.
17:47
And I just to take a step back the whole planet Earth operates on a 90-day food supply.
17:52
So once we stop making food humans run out of food in 90 days.
17:55
So another way to think about that is our food supply excess our capacity global production.
18:05
So if our global production goes down by 12% we've lost half of our global food supply.
18:09
And that's not just linearly across all nations.
18:11
What happens is the most vulnerable nations lose their food supply first and the richer nations buy that food supply to secure their population calories.
18:19
And so you very quickly see a bifurcation happen when you have a shortage in a food supply like this of just a few points where suddenly famine is a real risk.
18:27
And we already have about 800 million people on Earth that are subsisting on below 1200 calories a day.
18:35
So this very quickly tips the bucket in a significant way in a number of countries that's going to be really awful.
18:43
And that's just on the wheat supply and wheat planting problem.
18:45
The bigger problem is the energy price plot problem and the phosphorus and potassium problem.
18:52
All fertilizer is made up of nitrogen, phosphorus and potassium.
18:56
Those are the three major types of fertilizer that farmers around the world have to use every year in order to grow that crop.
19:02
Without fertilizer plants don't grow.
19:04
Nitrogen is made from natural gas.
19:04
98% of the world's ammonia is made from natural gas.
19:08
Natural gas prices as you guys know have doubled and the and the futures market looks like in some places natural gas prices going up like 4x.
19:17
As a result the price of ammonia fertilizer nitrogen based fertilizer has gone from $200 a ton to $1000 a ton.
19:21
So it's five times as expensive to buy basic ammonia fertilizer today than it was a few weeks ago or a few months ago.
19:31
And so this is now leading a lot of farmers around And then the other big problem is phosphorus.
19:34
So phosphorus you know, by some estimates I mean you know, there's a little variation around here but about 10% of the world's phosphate comes out of Russia.
19:47
And about you know, call it 25% of the world's potassium comes out of Russia but the potash.
19:53
Both of those markets are blocked up.
19:55
They they are they are sanctioned and they may have banned exports Russia has through the rest of 2022.
19:59
So around the world the cost to make nitrogen fertilizer has skyrocketed because of natural gas prices because of the Russia problem and Russia is not exporting potassium and phosphorus and as a result the price of nitrogen has gone from 200 to 7,000.
20:11
The price of potassium has gone from 200 to 700 and the price of phosphorus has gone from 250 to 700.
20:19
So now it's so expensive to grow a crop that a lot of farmers around the world are pulling acres out of production and they're actually going to grow less this year than they would have otherwise because it is so expensive and they cannot access fertilizer locally to plant crops.
20:34
So not only do we have the the wheat problem we now also have the fertilizer problem and the acres coming out of production problem and so food supplies are going to go down even further and this is going to become even more catastrophic.
20:47
And so there's a scrambling going on right now.
20:49
You know food prices around the world as a result everyone starts buying up all the commodities.
20:52
They buy up all the corn.
20:53
They buy up the soybeans.
20:54
They buy up the wheat and the price for corn has nearly doubled whereas you know from where it was in July of 2020.
20:59
The price of soybeans, the price of wheat are all skyrocketing and in a lot of countries they cannot afford to acquire and individuals cannot afford to to buy food with the skyrocketing commodity prices around Can I ask you a question?
21:15
Uh I think it's estimated that the US food supply if you could axe out the waste would actually feed most of the developing world cuz I think 30 to 40% of all of our food is wasted.
21:26
Can you do something with that?
21:28
Yeah that that is actually true.
21:30
A lot of that happens at the point of consumption so it's in people's homes.
21:34
So it's a reverse supply chain problem where you know we throw away a lot of like stale bread and cereal that goes bad or whatever.
21:44
There's some in the fresh vegetables market but generally the core calorie producing commodities are rice, wheat, potatoes and corn.
21:55
Those commodities don't go bad in the supply chain.
21:57
They end up getting tossed out at the end of the supply chain which is at the point of consumption at at home.
22:01
So you know I'm not sure there's a real solution there right now.
22:02
The the bigger issue is like how do you get bulk commodities to the places that are going to need them over the next 12 months.
22:08
So look right now we're reducing food supplies stocks around the world.
22:11
There are strategic reserves that are getting opened up and being released.
22:17
As that starts to get the planet diminished and as the production kind of numbers start to come out it looks like less acres are in production.
22:26
You know and God willing we have a good weather year everywhere this year because you know a bad weather year in some markets could completely decimate the remaining supply that's coming out this year.
22:34
Regardless it is going to be a humanitarian disaster within a year and we will see hundreds of millions of people go starving and there will be potentially I think said hundreds of millions of people are going to starve?
22:46
of people will go starving.
22:47
happened in the history of the world.
22:49
people already live on below 1200 calories a year right now.
22:52
So you're predicting that a hundred over a hundred million people will die because of this?
22:57
I don't know about death famine.
22:57
Like famine is this like you know short of calories.
23:00
You know within the within a market it's not like hey there's no food like you know there will be strategic reserves released.
23:05
There will be stuff but it won't be enough.
23:06
We just don't have enough in the way supply chains are set up.
23:09
set up. There just isn't enough and so So once again we found another supply chain weakness like we did in COVID over and over again and strategic supplies will be released but then hoarding is starting so David you take it after this but the one
23:25
question I had was maybe talk to me about this concept of hoarding because there seems to be a cascading effect and you you kind of Well yeah it's not just hoarding is as with any market guys as you know when there's scarcity people come in and buy at a at a faster pace. You know
23:38
You know everyone and so this is a market dynamic.
23:43
It's not like people are physically hoarding loaves of bread but commodity traders, countries, strategic reserves they start buying up what they can get to prepare for the famine that's coming.
23:51
Then prices go even higher and then it kicks other people out of the market that couldn't afford to buy it and the whole thing gets really ugly really fast. no off ramp here.
23:59
There's no way to solve this.
24:00
Well what Freeberg yeah the thing I want to ask you is if we had a peace deal right now a ceasefire would we avoid this outcome?
24:06
I mean like how long how long do we have to avoid this?
24:10
Russia to reopen fertilizer export markets now.
24:12
We need natural gas prices to come down now and we need them to plant the spring wheat.
24:17
Those are three things that need to happen to solve this problem.
24:20
If those three things don't happen we're going into spring right now.
24:24
So around the world in the northern hemisphere farmers are making plans. They're planting.
24:29
They're deciding how much fertilizer to use and so as this market starts to kind of work itself out over the next few months a lot of the commodity traders and the the ag departments they publish these planting reports and they talk about how many acres of what were planted and then everyone forecasts how much of the supply will be and we're going to start to see these uglier numbers come out over the next few weeks and months.
24:49
Meanwhile we're seeing supplies dwindle and Russia's holding all this stuff.
24:51
So you know they're holding hostage phosphorus potassium and the natural gas pricing is just what it is.
24:59
Remember there there are ammonia plants everywhere.
25:01
There are ammonia plants that I and all ammonia plants use natural gas to to you know to create this nitrogen based ammonia.
25:08
Let me make a statement and I'd love your reaction.
25:14
We're finding out all of these externalities that was made with underlying poor scientific rat reasoning that has caused these issues to be exacerbated.
25:23
So we know for example that our over reliance on Russian hydrocarbons could have been mitigated with nuclear but we fell for shotty science and we fell a bunch of uninformed people who ran this banner of like you know environmental protection right? So they screwed us. Okay?
25:41
And those people now have meaningfully less credibility.
25:43
Let me give you another cohort Freeberg and you tell me.
25:47
All the people that pushed back on GMO and said GMO was unacceptable. It could never happen.
25:53
It has to be X Y and Z way and there are ways where we could have been working on plants that had different mechanisms of action in order to actually absorb and retain nutrients from the soil in different ways that would have made us less reliant in exactly the way in which fertilizer works. True or false?
26:14
Yeah GMO technology as a former Monsanto executive so you can call me a Monsanto shill here.
26:19
Um but yeah GMO technology has been hindered globally by a challenge to adopt it and there are techniques and technologies that have not been aggressively developed because of the concern on approvals.
26:35
Just to get a single GMO trait approved in the United States today and get it to market can take 7 to 13 years.
26:42
And even then you have to still go get China to approve it cuz they're the biggest importer and you have to you know get all these other market participants to approve it and there were multiple agencies to get to approve it.
26:52
Europe is finally the EU is finally coming back to the GMO problem and saying you know what precision gene editing can actually be beneficial to growing that more stuff.
27:02
Now wouldn't have solved this particular crisis Sorry can I can I just say what's so ridiculous about this?
27:06
The fact that we have a modern agrarian economy is because we actually did figure out a way to do GMO except we used the punnett square and we used successive iterations.
27:17
But the minute that you try to scientifically scale it in a lab all of a sudden that same process is not does not make any sense.
27:22
To me that's it's just intellectually so inconsistent.
27:27
Yeah the thing that really scares people about GMO look I mean I've spent a lot of time on GMOs and the reason people are upset.
27:33
I I have a broader philosophical point. in that?
27:36
Do you believe in that inconsistency that intellectual inconsistency?
27:38
Like how do you think somebody from you know pre BC today I think that agriculture No I think agriculture itself is technology. Think about it.
27:46
Humans humans used to go out and just eat whatever was lying around what nature gave us.
27:51
Then we started making rows in the ground and putting seeds in the ground and putting water on the ground.
27:57
We engineered the earth to make stuff for us. breed the plants.
27:59
And then we started to breed the plants.
28:00
And then we started to breed And then Norman Norman Borlaug saved the world.
28:04
It's genetically modifying things. It is.
28:07
And then what we did with GMOs which is the distinction just to be really clear about the definitional distinction between GMO and traditional plant breeding.
28:13
GMO is when you take DNA from another organism and you put it in the plant's DNA to get that plant to do something very specific.
28:19
And Jason you came with me to Monsanto.
28:21
I mean you took the tour years ago. cautious.
28:23
We should be cautious about anytime we're doing stuff like that. Right.
28:27
But And then there's generally like a very visceral reaction when I make that statement and people are like wait you're taking the DNA from bacteria and putting it in plants and how do I know that's going to work and so there's these layers of concern which you know are deeply psychological layers but we can you know scientifically resolve this over time.
28:43
But look at the end of the day humans today you guys remember last year how much I was talking about that starch synthesis paper and how important it was?
28:51
We don't need to grow plants to make the stuff we need to consume.
28:54
If every city around the world had a starch synthesizer and it took CO2 from the atmosphere and water from the ocean and had this technique developed out it could synthesize its own calories in a physical device without needing to rely on the ammonia supply chain and the phosphate supply chain and all of the systems that we rely on that are super outdated that are all a scaled up industrialized version of old school agrarian techniques.
29:20
Humans today I think have the ability to synthesize and print food and over the next couple of decades particularly catalyzed by what's going on in Russia Ukraine today we're going to see these technologies accelerate.
29:30
It's obviously where I spend a lot of my time but I'm super excited about it. Yeah.
29:34
I think we suffer from a very insidious kind of plague in the world which is the plague of over educated dumb people.
29:43
And it's it's almost as if you know because of their degree and the school you give them inordinate power to make value judgements. Yeah.
29:50
That really put the world in a very difficult position.
29:52
And so when you have something like a war in Ukraine, it just lays everything bare.
29:56
And you find you find all these things like, you know, another another version of this example.
30:03
How did an entire continent, and specifically I mean Europe, abdicate their entire energy security to the group of to a group of environmentalists and to you know, to a 16-year-old girl without even thinking about what the right answer was for themselves from first principles.
30:19
That's really crazy that that happened.
30:21
And you need a war, you know, where tens of thousands of people have to die to realize that that was a really bad set of decisions that have been compounding for decades.
30:30
Here's another example where food security is yet another one where, you know, we weren't able to think cleanly from first principles and so depending on who had more money or who was able to create more psychological guilt or fear was able to get an outcome that fundamentally puts the world at a 100 million person plus famine.
30:47
So somehow we need to rethink how our institutions work because we are giving folks who haven't proved that they can handle power the ability to influence outcomes um for the wrong sets of reasons.
31:01
What's even worse, Chamath, these people you're talking about who are smart dumb people, they're so privileged that they're living in some bubble making decisions for people who have food insecurity or energy insecurity.
31:13
And it's only when COVID showed, "Hey, oh semiconductors, I can't get my car that I want cuz it doesn't have the chip in it or I can't get drugs or I can't get PPE."
31:22
Then all of a sudden they see the value in redundancy and supply chain.
31:26
Uh but when they were living high on the hog and had nothing to worry about in 20 different flavors of Captain Crunch, they you know, they can't even think about people in Africa.
31:36
Jko, I think it's really important to speak to the capitalist incentive and how you get there. So, Okay.
31:41
you know, we've globalized supply chains because as a business, it doesn't make sense for me to do every step of the thing that I want to do because you can get better utilization out of capex if a system is running all of the time to make stuff.
31:54
So if one step of the system doesn't need the other system running 24/7, it's going to outsource that.
31:59
And that's kind of think about like semiconductors, think about food manufacturing.
32:02
Right, it doesn't make sense for a farmer today to make his own ammonia.
32:06
So there's an ammonia plant that centrally makes that stuff 24/7, distributes it out to a bunch of farmers.
32:11
That brings the cost down per unit of production.
32:13
And so these systems have existed because we've had less capital with a higher ROI on capital invested at every point in the system by, you know, distributing and have a having a kind of, you know, centralized supply chain system like this.
32:26
Now, what we're looking at today is what happens when one part of that system fails.
32:32
And now I think the big trend for the next decade or two, everyone's going to have like a institutional memory of this.
32:40
And you're going to see companies that are going to start to vertically integrate supply chains.
32:43
They're going to vertically integrate their um their manufacturing.
32:46
We're going to see a lot of businesses make what traditionally would have been really {quote} {unquote} bad capex decisions and bad investment decisions.
32:53
And they're going to say, "You know what, we need to have redundancy because we cannot face the cataclysmic kind of circumstance that we faced in the past."
32:59
I also think those are by the way the easy decisions.
33:01
I also think that there are some more complicated ones of morality that we um may have also misappropriated.
33:08
I'll give you one example.
33:10
So, if you think about energy independence of America, I think there's there's not going to be there's not going to be many who think that it's not critically important.
33:17
Well, then you go and say, "We have a short-term bridge with hydrocarbons and the long-term solution is renewables."
33:26
But underneath renewables is the idea that you have to store these things, right?
33:30
You have to store the energy you make, whether it's from wind or solar, even if it's from nuclear, okay?
33:35
And all of that results in us needing batteries.
33:37
Well, batteries need lithium.
33:39
There's enormous lithium deposits in the United States that today can never get access because we've decided that the, you know, the upper land grouse of a state is more important than America's energy independence. Right?
33:53
So when push comes to shove, a small rat-like creature is prioritized more importantly than America's energy independence.
33:59
The downstream implications of that are now obvious.
34:02
Rising costs, inflation, unemployment, potential recession, war, death, famine.
34:08
Is the upper land grouse that fundamentally more important than all of these systemic risks to humankind?
34:15
And the thing is for a long time we would never even think about the tradeoffs to actually think about why that decision should be made that way.
34:23
And now we actually have the ability to remake these decisions.
34:24
So it's going to be really interesting to see whether we upend all of these existing frameworks, you know?
34:31
And there there's enormous environmental lobbies that have been created that have crazed hundreds of millions, billions of dollars to fight these battles systematically wherever they come up.
34:42
And in some ways now what people will say, "Well, you really prevented progress and you've actually done more damage."
34:47
That's going to be a really interesting point in our evolution.
34:52
Good intent, save the environment and then there are downstream impacts.
34:54
Let's go to Sachs about the sanctions.
34:58
We saw a level of sanctions we didn't expect. They were ferocious.
35:03
They were, you know, lateral.
35:05
They they they're, you know, undeniably having an impact.
35:08
Do you think Putin would be at the table?
35:10
Do you think these sanctions are really having a dramatic impact?
35:15
And do you think that they will be a tool that we should use in the future?
35:18
Or do you think maybe we need to be more thoughtful about them?
35:23
In other words, it cancel culture comes up as a an analogy here.
35:25
People are saying, "Oh, it's like cancel culture for a country."
35:30
I think it's pretty great that a country that is murdering their neighbors doesn't get to participate.
35:34
But obviously, you can have some serious concerns if fertilizer and supply chain issues, as we just discussed, are going to cause famine.
35:43
So, what's the balance here?
35:46
Yeah, I think I think it's a a great another great example of um you know, we're not thinking through the second and third order consequences of what we're doing. We're just reacting.
35:55
And so to to Freeberg's point, um so, you know, first of all, we have to realize this was more than just sanctions.
36:01
This was a complete severing of economic ties.
36:04
I mean, basically every Western country pulled up stakes out of Russia.
36:11
They I mean, they did it on their own, too.
36:12
I mean, they did it because for the reasons you said, because they wanted to make a statement that what Putin did was wrong.
36:18
So every Russian who was working for one of these companies basically got fired and all the stores closed and and so on.
36:24
So I think I think it is the repercussions of it are going to be severe.
36:28
However, these things the economics of it take time to play out.
36:33
And so do I think it creates pressure on Putin to make a deal? Yes.
36:35
But, you know, if the if this is going to be determined on the battlefield one way or another in the next month, do I think it has time to operate in that time frame? Probably not.
36:47
And I think what's likely to happen here is that um in the same way that the real repercussions of this war are going to be felt in grain production in 6 months, you know, there is an economic tsunami headed for our own economy as a result of the blowback from basically severing, you know, 144 million Russians from the global economy.
37:13
Um it's also going to be geopolitical uh blowback.
37:15
I mean, you know, I think it's very likely that the way this is going to play out geopolitically is that Russia will become a Chinese client.
37:25
And, you know, all of those natural resources that China produces, the the the gas, you know, all the the mineral wealth, that those resources are going to flow on a conveyor belt on a Belt and Road conveyor belt from Moscow to Beijing and they're going to fuel the Chinese economy.
37:44
Yeah, yes and no, because the reality is the the the the thing we have to remember is China is still a fundamentally export-driven economy of which 35% just alone goes to the United States.
37:56
When you add in Europe and other OECD countries, it's almost 60%.
37:58
So I think the idea that all of a sudden you Russia will be able to backdoor all of these things through China into the rest of the world, I think is not really realistic.
38:09
And this is actually why I think the rhetoric is so high because those two countries specifically are put in a very difficult situation.
38:15
Like what do you think the China calculus on Taiwan is looking what's happening to Russia?
38:19
Has it completely export-driven economy?
38:22
It's completely off the table.
38:24
Completely off the table.
38:25
They would never consider invading Taiwan knowing that it would put Apple in a position or other companies that are intertwined in the Chinese economy.
38:33
I think what's again pull out.
38:36
Everybody has was always, you know, sort of like lambasting economic sanctions, you know, even on this pod people are it's never going to work, it doesn't do anything.
38:44
And it turns out it's just not true.
38:44
To be clear, I think sanctions are an appropriate way to create economic pressure so that we can get a ceasefire and a peace deal made, okay?
38:52
So, I do believe in the same way that I believe we should arm the Ukrainians so they can defend themselves, but I'm against the no-fly zone.
39:00
The the issue is just are we actually using the leverage that we're creating to drive this process to a success I'm talking the ceasefire process to a successful resolution?
39:14
Because if we just make this the new normal, which is, you know, a basically an insurrection in Ukraine that drags on forever and uh the China and Russia cut off from the global economy and becomes a client of China, I think there's a parade of horribles that flow from that and Freeberg just outlined one of them, which is hundreds of millions of people across the world potentially starving.
39:35
So, my point about sanctions is not that we shouldn't have done them, but there are going to be big repercussions for our economy if we don't resolve the situation in Ukraine.
39:48
Let's do best case, worst case with these new this new economic order here and economic sanction ability that the West has now demonstrated, um you know, quite effectively.
39:59
I For me, the best case scenario here is if you want to participate in the global economy and global is in two global globalization 2.
40:06
0 means you're going to have to be hit some base uh behavioral level of being a good actor in the world if you want to participate in the wider economy.
40:18
Therefore, as Chamath just pointed out, I think quite correctly, Taiwan's off the table.
40:21
I mean, China does already is having massive uh economic downturn and and headwinds.
40:26
The The idea that they would face what Russia's facing right now in terms of sanctions globally would be cataclysmic for them.
40:34
So, do we think What's the What's the best case in your mind, Friedberg?
40:39
The worst case of this new economic sanctions that we've just outlined. Best case, worst case.
40:42
Much of this is driven by um Russian decision-making, not just our decision-making.
40:50
And so, you know, there there's a lot of question marks around what they're going to They've said definitively, "We are banning all fertilizer exports through 2022."
41:02
Okay, so like does changing a sanction model at this point get enough resolve for them to kind of come back to the table?
41:09
Do we need to kind of weave that into some discussion peace discussion that they're having with Ukraine?
41:16
I think there's going to need to be this multilateral like global either support or or partnership model that's going to have to kind of emerge for this to all get resolved positively.
41:26
I don't think that it's just about Russia and Ukraine agreeing to a bunch of terms.
41:29
We're all going to be affected by what's going on and what Russia has chosen to do back to us.
41:35
And we all think we're in the power and we've blocked them and destroyed the ruble and you know, knocked them back to the Stone Age, yada yada, but like we're hurting ourselves far more than we realize and we have to go get something back from Russia in order to resolve this. So, nuanced.
41:49
I'm not sure I totally agree with that.
41:51
I actually think that, you know, necessity What is it?
41:55
The necessity is the mother of invention.
41:56
Um I think that this has the ability, just circling back to what we said before, for us to rewrite all of these other decisions that were frankly not necessarily rooted in either first principles or long strategic thought in a way that can actually improve the state of play for everybody, not just including us, for the next 50 or 100 years.
42:17
So, I'm not completely convinced that this is catastrophically bad as you think.
42:22
Well, what about this uh Friedberg?
42:22
If If we were thinking about food stability.
42:25
You mentioned your slurry and, you know, being able to make these calories without actually planting any food.
42:33
If we Am I correct in saying that?
42:35
if you call it a slurry, but yeah. Okay.
42:37
Let's call it a protein bar.
42:37
You know, like Like ultimately, Jason, we can actually create pasta, bread, rice.
42:41
I mean, that's where this all goes cuz By the way, just so you guys know, I I want to frame this up. It's super important.
42:50
60% of the world's calories come from carbohydrates, which are basically two molecules, amylose and amylopectin. Okay.
42:57
That That's what makes up starch.
42:57
So, if we can synthesize amylose and amylopectin, we can make it into any would it take? How long would it take?
43:03
What would it cost to build your pasta-making machine and rice-making machine, you know, uh to have more food decades-long scale-up problems, right? Okay.
43:14
not like This is like, "Hey, we got a Apollo mission to the to nuclear or solar and batteries? Exactly. Yeah, yeah.
43:20
But there are solutions to this.
43:20
I Look, I mean, this is why I keep coming back to saying like we're evolving the the global economy and planet Earth away from this model of centralized industrial manufacturing into a production system that looks more distributed, more decentralized, with better technology.
43:37
And that that's really a big trend for the century for for our global economy.
43:41
And that's why right now, I think the near-term trend is in deglobalization.
43:44
People making less capital-efficient decisions that create redundancy in supply chains.
43:48
And there's a lot of ways as investors to play that, by the way.
43:53
Sacks, what are your thoughts on maybe the the high order bit for the West being a race to resiliency or a race to redundancy in energy, in semiconductors, this race to resiliency in food supply?
44:06
Yeah, I mean, look, trade creates economic wealth, but it also creates dependency.
44:09
And we're realizing the downsides of having that dependency.
44:11
If we're dependent and or Europe is dependent on Russian gas, or, you know, you saw during COVID, we've become dependent on uh Chinese pharmaceuticals.
44:21
All the pharma companies have moved their manufacturing over there.
44:22
And then, you know, that got when China was rattling the saber uh because we were blaming them for COVID. This is back in in 2020.
44:31
They all of a sudden started implying we might not get access to pharmaceuticals.
44:34
So, look, we are going to have to rethink all those trade relationships.
44:37
You can't have trade without trust because again, if you if you you are empowering the producer to cut you off when you make yourself dependent on that. Yeah.
44:47
So, so look, I think we're going to have to rethink all of that.
44:49
But can I go back to your best case, worst case question?
44:52
Yes, I was trying to get somebody in there on that.
44:53
I think that's a good question.
44:55
And I, you know, I Here Here, let me lay out the best case and then the worst.
44:57
So, the best case, look, the the best case is the sort of the Fukuyama argument, the sort of uh the Fromm argument.
45:04
It's this Western triumphalism, which is, "Look, sanctions are going to drive the Russians into submission.
45:10
They're going to topple Putin.
45:12
The people are going to rise up.
45:14
They're going to lose this war.
45:16
We are going to strike a great blow against autocracy and liberal democracy is going to win."
45:20
Okay, I understand that argument.
45:22
Okay, now, what's the the worst case scenario?
45:25
Worst case scenario is Friedberg's right.
45:29
We end up with hundreds of millions of people starving.
45:31
The war drags on because the Russians aren't going to give up.
45:33
So, the sanctions, you know, while be while hurting the Russians, don't end the war and in fact drive them into the arms of the Chinese.
45:43
You know, the Russians have been called a big gas station with nukes.
45:44
That gas station will now fill up the Chinese economy henceforth, worsening the balance of power in Cold War II.
45:53
And then, there's a big, you know, tsunami or boomerang headed for the US economy.
45:57
We We have a recession later this year as gas prices go to $7 and $10 a gallon.
46:04
And so, it ends up hurting us.
46:04
And so, I don't I I I I certainly see the case for sanctions, um but um but I wonder if people are really thinking through the downside scenarios.
46:17
And what what I what I do think is that if that that the removal of sanctions should be certainly something we're affirmatively putting on the table in these ceasefire negotiations.
46:26
And And that sounds obvious, but I saw a tweet from Ian Bremmer, who's sort of part of the foreign policy establishment. Think tank guy.
46:34
Who He's been pretty good on like He's smart.
46:37
He's smart and he's been good on no-fly zone.
46:38
He's been saying the same things I've been saying like, "Guys, this is tantamount to a declaration of war.
46:42
We're not going in there."
46:44
Uh also basically saying that, "Listen, no matter what the Russians do, we are not going to get into World War III here."
46:49
He's been cool-headed about that.
46:52
But he also tweeted that, "Listen, as long as Putin's in control of Russia, we can't ever do business with them them again.
46:58
Sanctions are sticking around basically forever."
46:59
And I just wonder if that is an overreaction.
47:05
If If we're going to make that policy, I'd rather see us as America be willing to put economic relations back on the table as, you know, in this peace process as opposed to saying the Russians are cut off forever.
47:19
Because otherwise, they're just going to become a Chinese client state.
47:23
I don't see how that benefits us long-term.
47:25
Well, again, I But again, David, what do you think they do with China?
47:28
China What are they going to do?
47:31
Take 60% of their goods and still export them to us even though it just contains Russian materials that are now considered contraband?
47:36
They So, they can't absorb it economically is my point.
47:41
There's not enough demand outside these OECD countries to absorb all of that.
47:45
Well, here's what I think is It's just mathematically not possible.
47:50
I think So, so look, I think you you make a point, but I think if you're going to look at this from like a 50,000-ft level, I think there's like two grand narratives about what is happening in the world.
47:58
One narrative, sort of the neocon sort of liberal hegemony narrative is that we're in a great battle between democracy and autocracy.
48:06
The other narrative is that we're in Cold War II.
48:09
Is that it's more of a great power rivalry between the US and China.
48:13
I tend to think that the latter is where we're really at in the world.
48:17
And the reason why I say that is you look at There's a lot of autocracies who, frankly, we support because we want them on our side.
48:24
For example, you know, Turkey is run by an autocrat.
48:30
Um you know, Erdogan is becoming more autocratic.
48:33
In Egypt, we had sort of democracy there for a brief moment.
48:39
When Mubarak got overthrown, guess what?
48:41
They elected the the um the Muslim Brotherhood.
48:43
And we didn't like that too much and now we got General al-Sisi uh in charge.
48:47
We like that a lot better.
48:49
You know, we are still allies with the the Saudis and they're they're more autocratic government.
48:54
And so, I tend to think that, you know, the better way to describe what's happening in the world is a balance of power rivalry between the US and China, which is only going to pick up momentum in the current in the coming decades.
49:08
And we have to think about who's on our side of the ledger and who's on their side of the ledger.
49:12
And, you know, I think at this point, it's we've pretty much driven Russia completely onto the Chinese side of the ledger.
49:20
And um I think it's going to have like very bad consequences for us. All right.
49:24
Let's segue from here into uh the economy, inflation, and markets.
49:32
In the previous episode, Chamath, you talked about the the psychological cycle of you know, ignoring good news then accepting it, being outraged by it, and then maybe not taking the good news.
49:45
In the bad news column, obviously inflation continues.
49:48
Uh last 6 months of CPI numbers year-over-year, obviously. Uh September 5.
49:54
4, I'll fast forward to November 6. 8, January 7. 5, February 7. 9.
50:00
Excluding food and energy, core inflation still rose 6.
50:01
4% That being said, um we have 11.
50:06
x million jobs available for Americans, five or six million people unemployed who are looking for work.
50:13
Obviously, there will be some uh mismatch in terms of geography and skills there.
50:19
Uh and then corporate earnings, great, but a recession possibly looming.
50:21
Where are you on this uh and and obviously the markets bottomed out.
50:26
So, where are you at with the economy, hope, fear, and otherwise?
50:32
Um well, I think that we're in the midst of what I would call a melt-up.
50:35
So, you know, probably the next month, month and a half, there really isn't much {quote} bad news that hasn't been priced in.
50:46
The The thing that I've learned over the last few years is that markets don't actually care what the news is.
50:56
They They can process good news and bad news equally well.
51:01
What they despise is the uncertainty of what the news could be.
51:06
And so, this week was really important because we had two huge buckets of uncertainty taken out of the market.
51:14
So, the one we've already talked about, which is when when the market saw that there was a surface area of a deal between Ukraine and Russia, that was really constructive.
51:24
Because neither side would have signaled something if both parties were very far apart.
51:29
So, that that meant to the markets we're a few weeks out from something getting done.
51:34
And then the second thing was Jerome Powell and the Federal Reserve.
51:38
They finally had their meeting.
51:38
They raised rates 25 basis points, but even more importantly, they gave you a very prescriptive forecast of what the next year will look like at a minimum, and possibly even 2 years.
51:52
And once you could have that, you were able to then go and redo all of your expectations, and what people realized was, "Okay, you know, inflation may actually start to get tamed in the back half of the year.
52:06
The economy is still quite strong, and we could actually support two 2.
52:08
5% interest rates and still actually grow really well."
52:14
And so, what you've seen in the last three or four days is a reaction to the loss of uncertainty.
52:21
And so, there really isn't, you know, the only thing the fly in the ointment could be if the war all of a sudden escalates, not that it gets dragged on, because at that point that's also I think been priced in.
52:34
But if something very meaningfully different and some and and Russia in this case ratchets up the intensity by going, you know, nuclear or something else.
52:44
Although, I think that's a very long tail.
52:45
Chemical weapons seems a possibility or carpet bombing.
52:48
I think these are all very, very low probability events.
52:52
But in the absence of these things, you basically have really constructive dynamics right now for at least the next month and a half, maybe even 2 months.
53:00
How much of this has to do with retail investors who were YOLO, HODLers, speculators, stimmy checks, and super active for 2 years and then maybe getting super spooked right now, and maybe needing the money to deploy in their lives?
53:14
Look, the thing to remember, and and and I hate to be this blunt, but it's true.
53:21
Retail is not a very good signal of anything.
53:24
In fact, if you actually look at retail flows, typically you will make money by doing the exact opposite of what retail does.
53:34
And I posted this in the group chat to you guys, you know, every single day of since the beginning of this year, retail was a net buyer.
53:41
In all of those days, the market got punched in the face.
53:47
Finally, at the beginning of March, retail capitulated. Right?
53:51
And I posted that same day and I said, "Guys, this is the moment to buy."
53:55
And it lo and behold, what happened?
53:55
The markets rallied meaningfully from that point.
54:00
And the reason is because they were going into the end of Q1, you have a huge tax bill due in April 15th, people were starting to just finally give up.
54:08
They were buying every single day and they finally gave up.
54:10
But that capitulation was the moment that that you buy.
54:13
So, if anything, retail is is is the You know, you know, I've said before you fade your fade list.
54:17
You know, retail flows are something you typically will make money by fading, by doing the exact opposite of whatever retail is doing.
54:26
Um and you just need to have access to that information.
54:28
If you have access to it, you can kind of um you know, profit from it.
54:31
So, where are we going from here? Probably up.
54:36
David, you've been pessimistic.
54:36
Uh we're seeing a lot of changes in the private market, funding rounds taking longer, a lot of funds getting closed, uh you know, venture funds that is.
54:45
Uh but seems like a lot more diligence is being done.
54:49
The time meantime to closing a deal has uh definitely extended massively.
54:54
What's your betting strategy now as a venture capitalist?
54:57
I think that there's going to be a trickle-down effect of what's happening in the market to to privates, and the valuations are going to go back to their pre-COVID levels.
55:05
I mean, ARR multiples pre-COVID were like 20, not 100.
55:07
So, we're seeing a massive repricing of deals, and that's going to continue.
55:15
And I don't think it's just going to be this like transient effect and everything's going to bounce back in a few weeks.
55:21
On the public markets, the defining characteristic of these markets is volatility.
55:24
I mean, the VIX, which is the measure of volatility, is at one of its all-time highs.
55:28
And so, it's true that over the past week we saw a nice sort of melt-up or rally because there was speculation about this peace deal.
55:39
The Financial Times had that article on the 15-point plan.
55:43
Chamath is right that if that peace deal gets signed, I think the market rallies strongly because, you know, it went up considerably just on hopes that it might be signed.
55:53
But on the other hand, if this peace process falls apart, I think the market will give back all those gains and then some.
56:01
I think we are nowhere near out of the woods on all the risky scenarios that could develop from this war.
56:08
I think that if there is no peace deal, I think you can almost expect Russia to escalate in the war.
56:15
They have said this is an existential issue for them.
56:18
I think that would mean at a minimum, you know, heavy bombing of Ukrainian cities, and then that will step up the pressure even more on Biden and Washington to get militarily involved.
56:30
This situation could still spin out of control.
56:31
So, you know, I think in the absence of peace deal, and then finally, we have all the risk of recession.
56:35
We We definitely are seeing a slowdown in the economy right now.
56:39
And I think if this war continues, and we don't get the spring planning, and things keep, you know, deteriorating, I think we're headed for a very serious um recession in this country.
56:49
I think we'll go from slowdown to recession.
56:50
So, if I were advising Biden, of course no one's listening to me, but if I were advising Biden, I would be telling Biden, "Listen, Mr.
56:59
President, we are going to have a horrible midterms in November, and, you know, we are going to have a really hard time in 2024 if this war continues, and, you know, we head down into recession, or any of the other catastrophes that could happen.
57:11
We need to push for a peace deal right now.
57:13
And the US should be playing a constructive role, and we should be applying pressure wherever we can to make a deal, because the broad contours of this deal, to Chamath's point, have been set.
57:28
I don't think any of the details, now that we know, look, it's about Crimea, it's about Donbas, it's about neutrality.
57:34
None of the details that we're still fighting over are more important than getting a peace right now.
57:37
And if I were in the White House, I'd be singularly pushing for that.
57:43
Yeah, it's uh it's complicated.
57:43
There are the the counter to that, obviously, is this could be, you know, the beginning of the end for Putin.
57:51
And, you know, even if that's a 10% chance or 20% chance, the possibility that in our lifetime, you know, Russia could have a leadership change could be tremendous.
58:01
Obviously, it's a coin toss which way it goes, uh but change could be phenomenal.
58:06
So, look, that's certainly in the cards.
58:08
And And look, if somehow magically Putin got toppled and replaced with a Democrat, that would be a wonderful thing. Um However, we before.
58:16
It's rare, but it happens. Yeah.
58:18
Uh well, tell me, when when does it happen? Uh East Germany. Right? We tore down the wall.
58:24
Yeah, I mean, that was a reunification.
58:26
Here Here's the basic problem is is we we we understand the Russians In the Russian system, you've got all these oligarchs who are basically like bosses or mob bosses.
58:33
And then Putin's like the boss of bosses, right?
58:35
So, what are the odds if you take out the boss of bosses that he's replaced with someone who's a Democrat versus the next biggest, baddest boss?
58:45
Um I I think, you know, look, that that's certainly a possibility, but my concern is that when you play for maximalist upside like that, you're also taking maximalist downside.
58:53
And a lot of people have made this point that, "Look, if Putin's life is on the line, he's going to be more willing to do anything."
59:00
And I think the the better approach, and you've you've heard people mention this idea of the golden bridge from Sun Tzu, which is give your enemy a golden bridge to retreat it.
59:11
so that he's not fighting for his life.
59:13
That was that was a that was a really clever um framework, J Pow, I think.
59:18
I I mean, there there must be an outcome from If you guys went and created a tally, and I'm not trying to be Debbie Down here, but, you know, since the advent of the CIA, the number of times that we have tried to incite regime change, and then the number of times it's been successful, what is that percentage?
59:32
I mean, we don't know cuz we don't know how many times we've tried.
59:35
Well, we know we know of many attempts.
59:37
And I mean, we've changed a lot of two-outers.
59:41
We've just Jay, Jay, Jay, every time we try it, we either get the same or worse.
59:44
So, for example, Syria, we tried to get rid of Assad, he's still there and now it's worse.
59:48
Uh Afghanistan, we tried it, the Taliban back in power.
59:51
Well, no, but what we have to take into the calculation is what if it does change?
59:55
Hold on, Iraq, we got rid of Saddam and now we've handed that country to uh Iran on a silver platter.
1:00:00
The Ayatollahs control it.
1:00:04
Gaddafi in Libya, we got rid of him cuz he was so horrible and now that country is in chaos.
1:00:08
You've got we tried in Israel.
1:00:10
We tried in um in Ukraine.
1:00:14
We tried in Ukraine in 2014.
1:00:17
So, our our track record is not super good. Yeah, I know.
1:00:21
I mean, I I think regime change is like chasing someone out or something, you know?
1:00:25
If we were a company at some point, we would have been pipped for our ability to do regime change.
1:00:29
I don't I don't think it's a great strategy.
1:00:32
I'm not necessarily advocating for it, but Well, what what I'm I'm not saying that.
1:00:37
I'm saying whether or not it's a good strategy.
1:00:38
I think that we are particularly not good at it.
1:00:39
Yeah, we need a performance improvement plan on that front.
1:00:42
Well, we should just I think we should just stop trying that.
1:00:44
We shouldn't be going for a regime change.
1:00:47
We should be Well, this is a good you and I had this thing where I said I you and I are in sync that we both want to contain dictators and maybe isolation and you were like, I'm not into isolation.
1:00:55
So, I think a definition of like what is the strategy for containment going forward post a peace deal with Russia and isolationism, you know, I I guess is a bit of a trigger word and it's loaded, but Well, yeah, I'm not an isolationist. person.
1:01:09
I would describe my strategy as selective engagement, meaning that we still engage internationally on behalf of vital American interests and our core interests, but we don't stick our fingers in the pie of the internal affairs of all these countries all over the world to try and ferment regime change.
1:01:25
So, for example, like what's an example of a vital American interest?
1:01:27
I would say standing up to to China in the sense that we do not want them dominating Asia and becoming a peer competitor to the United States that can then challenge us all over the world.
1:01:38
So, So, more pragmatist on it and we can be isolationist with North Korea because there's literally nothing they can do for us.
1:01:45
And and look, I would not be throwing countries like Turkey and Egypt and Saudi Arabia out of our coalition in Cold War because we don't like the the nature of their governments.
1:01:57
And I'm not saying I support autocracy. I don't.
1:01:58
But, the reality is dialog is reasonable cuz if you don't, then the other side will.
1:02:04
The foreign policy playbook is going to get fundamentally rewritten after this Russia-Ukraine war in large part because of the effectiveness of government sanctions plus corporate social responsibility, whatever you want to call that, CSR function.
1:02:24
sentiment, wokeness, woke culture, whatever you want to call it. Yes. I agree.
1:02:28
But, the combination of these two things has proved to be incredibly effective at setting the stage for some sort of compromise or regime change.
1:02:38
The spectrum of outcomes is there, but the point is that's an incredibly unique set of circumstances where before we never would have thought an economy that large or a country that important on the world stage would ever have compromised in the absence of military intervention and I think that that's important to think about as we think about what our forward-going China policy looks like.
1:02:56
I think really like the the importance of like the OECD, right?
1:03:02
The importance of all these organized nations that consume from China um becoming more organized now probably makes more sense.
1:03:11
I said this before in a tweet, but the importance of the US dollar has become completely primary, which has been an incredible benefit, you know, benefit of what has happened because of this war.
1:03:22
You know, very small silver linings in the grand scheme of all of this humanitarian crisis, but those are going to be really important things that the United States can seize on.
1:03:29
So, you know, we may in some ways have have had some diminished power in order to facilitate peace in this in in this conflict, but the downstream capital that we could accumulate by organizing these countries more effectively, I think could be really important.
1:03:44
And then separately, we have to have a moral conversation in the United States about all these things like environmental laws, like our approach to agriculture that may have been underwritten Absolutely. Yes. with faulty logic.
1:03:55
A little more pragmatism would go a long way. Yes, it would.
1:03:59
I'm a little more pessimistic about our foreign policy establishment and part of the reason I say this is because I'm very disappointed in the Republicans.
1:04:05
The Republicans used to be the party of vital national interest, meaning America did not get involved all over the world unless we had a vital national interest.
1:04:16
You just never hear them making that case anymore.
1:04:17
It's all the way back to sort of Bush doctrine.
1:04:19
And you know, as an example, they're all pushing for the no-fly zone.
1:04:23
They're all pushing for the delivery of the MiGs despite They want war. Just say the words. They're weird.
1:04:29
I mean, those right-wingers are crazy.
1:04:32
Why are they so I've been very critical.
1:04:34
I mean, I've been on this.
1:04:37
I don't understand their anxiety, their machismo, Anxiety.
1:04:44
I think I think there's two possibilities.
1:04:45
I think What is it, Freeburg? What is it? Anxiety. Yeah.
1:04:49
And this is why I predicted war at the end of last year, but you know.
1:04:50
I think that's not a great prediction.
1:04:53
I look, I've been I've been very disappointed in the Republicans and I think I think here's what I think is going on.
1:04:57
I think if any of those Republicans, like say a Mitt Romney or something.
1:05:01
I look, I think Lindsey Graham is just a crazy sort of warmonger, but but you take someone like Mitt Romney who's basically saying all of these um sort of more uh bellicose and escalatory things.
1:05:13
If he was actually in Biden's shoes, I bet he'd be making the same decisions as Biden uh because he would not want to risk war three.
1:05:22
But, it's such a cheap, easy, partisan political attack to say that Biden is being weak and he's not doing everything he can.
1:05:29
I don't think he's being weak at all.
1:05:30
I think history will look back and think two things about about this whole thing with with the American lens.
1:05:35
The first thing was for whatever set of reasons, we lost it and we diminished some stature in the world as a perceived arbitrator and mediator in these kinds of conflicts.
1:05:47
But separately, I do think Biden has done a very good job in seeing the forest from the trees.
1:05:50
He held the line on military intervention and he has really ratcheted up the ability for others to impose economic sanctions beside and behind the United States and I think that will turn out to be a masterstroke. I give him credit.
1:06:04
And I think that that he deserves to be acknowledged for that. He did a very good job.
1:06:07
because I I think the Biden has done an amazing job of just saying outright, we're not going to war.
1:06:14
We are not starting war with Russia.
1:06:16
That takes a lot of courage.
1:06:16
And he he has not even I mean, in fact, you've lauded him.
1:06:21
I think that shows some intellectual honesty on your part.
1:06:22
And to your point, Chamath, there's a reason why we lost our credibility.
1:06:25
These misadventures, as Sax calls them, in the Middle East have been disastrous.
1:06:29
We made huge mistakes and we need to take a different approach.
1:06:34
I'll I'll give a Trump a compliment.
1:06:36
He didn't start any wars.
1:06:38
And if you look at every president who came before him in our lifetime, every time they start two or three conflicts and he was like, we're going to have a no war policy.
1:06:45
And now you got Biden saying, we're not going to go to war either.
1:06:48
This could be a tipping point and our focus, I think the ultimate checkmate should be Biden coming out and the EU coming out saying, we are going to start a race to resiliency and here's how it's going to look.
1:07:00
Jason, it's an incredible point that you just made.
1:07:02
I just want to reiterate it.
1:07:03
Since Reagan, I can I can explicitly point out incremental conflicts that the president of the United States has approved and greenlit to get us into since Reagan.
1:07:17
So, we've been we've been in seven wars we've been in seven wars since the end of the Cold War. It's amazing.
1:07:21
The American people don't want these crazy wars.
1:07:24
They are sick of all these wars.
1:07:25
It is the foreign policy establishment You you want to know why?
1:07:26
Cuz he was a populist and the people of the United States of America don't want these crazy wars.
1:07:31
They are sick of all these wars.
1:07:34
It is the foreign policy establishment that is pushing for all of these wars.
1:07:39
And listen, why And Obama the same way.
1:07:41
Obama Let's just go back.
1:07:43
Obama beat Hillary Clinton for the Democratic nomination because he was against the Iraq war and she was for it. Yeah.
1:07:49
Obama had the right instincts on Ukraine.
1:07:51
He did not want to escalate the situation.
1:07:53
Remember in 2014 when they took Crimea, he said, "America does not have a vital national interest that justifies us going to war." He was right.
1:08:02
that tried to incite regime change. It's It's It's Right.
1:08:04
And you you you want to know why? You want to know why?
1:08:07
Because because the State Department lifers.
1:08:10
You know who institu- who incited that?
1:08:14
Our Under Secretary of State for Russian Affairs was Victoria Nuland who was a foreign policy advisor for Dick Cheney.
1:08:21
And these people boll weevil their way into the foreign policy establishment.
1:08:25
They're in the think tanks.
1:08:25
They're in the State Department.
1:08:27
what did you just use boll weevil?
1:08:27
They they like boll weevil.
1:08:30
They they are the permanent Hold on a second.
1:08:33
They are the permanent establishment of Washington.
1:08:37
The presidents come and go. They stay forever. Yeah.
1:08:39
She was there She was caught on a phone call basically picking the new leader of Ukraine after a coup in 2014.
1:08:47
She Is she the one that had that famous quote that said "Putin, [ __ ] Putin"?
1:08:52
Was that No, he said he said Yats She said "Yats is our guy" basically picking Yatsenyuk to be the new leader.
1:08:58
And she said "Fuck the EU" when the EU wanted to take a more temperate approach, okay? Okay. Okay. F. Buckley. Here you go, and Sax.
1:09:05
I think the mistake Biden made.
1:09:07
Listen, I think Biden has good instincts on this.
1:09:11
I think he had good instincts last year in June when he called for basically an emergency summit with Putin to dial down the tensions and I think that summit was successful. So, what happened, okay?
1:09:20
The Intercept just had a great article talking about how tensions ratcheted down after that June summit, but they picked back up in October and November.
1:09:30
What happened between June and October? I'll tell you what.
1:09:32
On September 1st, Zelensky met with Biden in the White House and the State Department issued a joint statement, basically reaffirming that Ukraine would be part of NATO.
1:09:41
They would reaffirm military ties, economic ties, and then on November 10th, they published a giant charter agreement between the United States and Ukraine that was signed by Blinken.
1:09:52
Now, look, did Biden know about this?
1:09:54
Yes, but this is the State Department agenda.
1:09:56
And it was on the heels of this charter agreement that the Russians basically said they had reached the boiling point.
1:10:05
They basically delivered the ultimatum to the US in December and precipitated the crisis that preceded this war.
1:10:10
So, my point is just listen, we have a State Department with its own agenda. It loves regime change.
1:10:17
It loves having clients all over the world and inserting its fingers in the pie.
1:10:22
And unless Biden Hold on.
1:10:25
If unless Biden stands up to his own State Department, we will not get a ceasefire and we will not get a peace deal, and that will be disastrous for his presidency.
1:10:32
What I will say is um I think Biden has done a very good job.
1:10:36
And uh I know Tony really well and I think Tony's trying to do the best job he can.
1:10:42
I think he's done a pretty good job all things considered as well. That's awesome.
1:10:45
Freeberg, any final final thoughts here on uh you know, uh a very difficult time period we're living through.
1:10:51
The global order is being restructured. It's predictable.
1:10:56
I think again, if you read Ray Dalio's book, which I recommended heavily last year, um it's surprising how much of that simple um rubric uh is playing out uh today uh exactly as that rubric kind of estimated it would.
1:11:12
Um and you know, the look, I mean, by the way, one way to think about the China-Russia-US dynamic, you know, you got a one, two, and three player.
1:11:20
Game theory, number one wants two and three to be at it cuz then they'll you know, end up diminishing value.
1:11:25
Number two wants one and three to be at it.
1:11:28
Number three wants one and two to be at it.
1:11:29
And so, we're seeing that um that multi-party game theory play out right now.
1:11:34
Um and you know, again, based on that rubric, you could probably predict where this is all going to end up. Brilliant point.
1:11:40
Listen, if you're to look at this from the Chinese standpoint, they must be loving what's going on. Loving it.
1:11:45
Old saying, I think Napoleon said it, never interrupt your enemy when he's making a mistake.
1:11:49
Why is China so quiet right now?
1:11:52
Well, yeah, I mean Because they love their dream.
1:11:55
Their dream is the US and Russia attacking each other. Yeah.
1:12:00
We have to implement energy independence writ large, and we have to make sure that it is very clear we have influence amongst all these OECD countries, because if China takes one foot over the line, we have to have the ability to do to them what we've done to Russia economically.
1:12:20
It's the only way in which we can ratchet down all this tension and find peace.
1:12:25
Yes, the new war is the war on our dependency on dictators.
1:12:28
We must must must have a race to resiliency.
1:12:33
We're going to talk about this and more at the All-In Summit, May 15th, 16th, and 17th. No more.
1:12:38
Uh May 15th, 16th, and 17th, All-In Summit, Miami.
1:12:41
Uh 500 of the 700 tickets are gone.
1:12:45
If you want to apply for a scholarship, you can apply.
1:12:46
Tell us how much you love the show at the website.
1:12:49
Just do a Google search for All-In Summit.
1:12:50
Really excited to announce Keith Rabois will be joining us.
1:12:54
Uh one of Sachs's besties, a very iconoclastic person.
1:12:56
We're going for iconoclast.
1:12:58
Next up, Brian Peterson, friend of the pod from Flexport, uh talking about all these supply chain issues.
1:13:03
The number of speakers we're going to have is going to be extraordinary.
1:13:06
Brad Gerstner, friend of the pod, is going to come talking about markets, education.
1:13:09
Joe Lonsdale is uh halfway in.
1:13:12
Again, another iconoclastic, controversial person, and that's what we're going for. day and out. Yeah.
1:13:17
And uh um We'll keep announcing more.
1:13:21
We'll keep announcing more every week.
1:13:22
Uh apply for a scholarship if you like, and uh we'll see you all there for Love you guys.
1:13:28
Salt and a Science, The Rain Man and The Dictator. I'm Jake Auchincloss. Love you, bestie. Bye-bye. Bye-bye, bestie. Love you, Sachs. Love you, Sachs. Love you, Freeberg. Back at you.
1:13:38
Those are good feelings for you to have. Let your winners ride. Rain Man, David Sachs.
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And I said, we open sourced this to the fans and they've just gone crazy with it. Love you, bestie. The Queen of Quinoa. Let your winners ride. Besties are gone.
1:14:04
That is my uh dog taking a dump in your driveway, Sachs. Oh, man.
1:14:09
My bestie will meet me at the All-In Summit.
1:14:11
We should all just get a room and just have a one big huge orgy cuz they're all just useless.
1:14:14
It's like this like sexual tension that they just need to release somehow. Wet your beer feet. Wet your beer feet. Wet your beer feet. Wet. We need to get merch. gone. I'm going all in.