All-In with Chamath, Jason, Sacks & Friedberg - E110: 2023 Bestie Predictions!

Starting point is 00:00:00 All right, everybody, welcome to 2023. Everybody's well-rested and ready to take on 2023. Yes, Chema, how are you? How are you, Bragg? Amazing. Okay. Saxipoo, I know you don't go to temperatures that are under 57 degrees anymore.

Starting point is 00:00:14 Chef, a nice break. Did you go somewhere warm? Yes. Okay, that's a confirmation. Wow, man, have so many words. And freeberg. I'm over cold weather vacations. Yeah, that does happen at a certain point.

Starting point is 00:00:25 Actually, we went to Florida. We went to the free state of Florida. Oh, really? What's going on in Florida at the turn of the New Year, I wonder, that drew you down to the great state of Florida? We're just freeing it up in the free state of Florida. What's going on in Florida? What your winter is right? Rainman, David, South. We have our 2023 predictions now.

Starting point is 00:01:00 Play some music and all that kind of stuff, producer Nick, at this point, let's get to it. Last year, we did all this. By the way, do you guys notice that every time we talk about something, somewhere between sort of two months to a year later, the Wall Street Journal ends up writing a big piece about it. Think piece about it. So I tweeted into the group chat,

Starting point is 00:01:18 like last year we all talked about Sequoia and distributing public equities and how it's very fraught and difficult. And then today they write this big article about how people have just burned enormous amounts of billions of dollars that they could have returned to LPs, like these venture investors by not distributing. That makes sense. Three weeks ago when we did our end of the year wrap up, my big winner for 2022 were the pot shops, right,

Starting point is 00:01:46 Citadel. And today in Wall Street Journal, an article lands that these guys with 56 billion of AUM, over the last two years have made almost $45 billion of revenues. Isn't that incredible? I mean, I mean,

Starting point is 00:02:03 usually these guys are just crushing in a Citadel securities, did like almost, you know, seven and a half billion of revenue. I mean, it's unbelievable these businesses, how good they are. Yes. So let's get into, and this is typical. Tremoth, if you think about journalists,

Starting point is 00:02:19 they're trying to get into the conversations that are occurring at the bar, after the event, the late-night conversation, the group after the event, the late night conversation, the group chat's well, and that's what this podcast is. It's the exposed back channel, right? And so if you listen to this pod, you got the back channel of Silicon Valley, politics, tech, science, et cetera. So let's do our predictions. In 2020, we said our biggest political winner would be sax and I both said to Santa's, Tchaatsa gson paying and freeberg said putin what do we think is our biggest political winner uh... going forward

Starting point is 00:02:48 who do you pick sacks biggest political winner for twenty twenty three who will be your biggest political in a twenty twenty three well i went a little bit outside the box here because i think we're gonna have gridlock and washington so not expecting a ton to be coming out of washington over the next year my pick for biggest political winner is Asian American college applicants. There are two Supreme Court decisions that the court heard on Halloween last year.

Starting point is 00:03:15 There was a lawsuit against Harvard and another lawsuit against UNC by a group called Students for Fair Admissions and that they maintain that Harvard and UNC Violate Title VI, the Civil Rights Act, because Asian American applicants are far less likely to be admitted than similarly qualified applicants from other groups.

Starting point is 00:03:36 And the federal courts in Boston and North Carolina rejected this argument, but the Supreme Court took up the cases. So they kind of went out of their way to hear this, and I think that they are going to find a permanent action. I think the majority will rule to strike down these policies that really discriminate against Asian Americans, and I think they're the last group in America where it seems to be okay to discriminate against. And I think the Supreme Court is going to find that a constitutional.

Starting point is 00:04:09 Tremont, I think that's there. You have brought this up multiple times on the podcast over the last two years. I have said that this was unfortunately affirmative action. When it started, I think had very, very good intentions. And I still think that there's a place for it. The problem is that these very liberal institutions decided to play judge, jury, and executioner on which minorities counted in affirmative action. And that's not what the intention was.

Starting point is 00:04:39 The intention was to look at the establishment and their ability to get their progeny into these incredible schools, even when they didn't deserve to be there. And so I think this was always an issue of classism that was disguised as racism. And people who were in the upper classes of society have always had an edge. You had the legacy admissions into Harvard, you had people, the Kushner's very famously, right? Like the $5 million check from the father that got the son into the school, all of this stuff. It's been well written about. And whether or not those things are right isn't the point. I think the point is

Starting point is 00:05:19 that there are folks in emerging lower middle classes who have the potential to crush. And those kids should have a chance. And you can't just decide who those kids are based on the color of their skin. And in this case, what happened was some blacks were still allowed in, some Hispanics were allowed in, but Asian Americans broadly were discriminated.

Starting point is 00:05:39 And that was a really stupid outcome. You cannot punish kids for willing to work their ass off. And I think that that was the unfortunate outcome of what affirmative action has become by 2022. So it is gonna get repealed. The reason it's gonna get repealed is that we have case law that very clearly states that any institution that accepts federal

Starting point is 00:06:06 funds cannot have any form of discrimination. And this is how these folks who have tried to repeal affirmative action have taken up this lawsuit. And hopefully the outcome is a more meritocratic system that also tries to create a plurality of different people from different backgrounds. Freebergher and Adults? If not, your biggest political winner for 2020-2013. My biggest political winner for 2023 is MBS.

Starting point is 00:06:36 Mohammed bin Salman. I think that Saudi Arabia will have the most important year in the modern era in terms of their role. I don't know if you guys saw this Reuters report from a few weeks ago, but there's a deepening discussion about the oil you want trade in that Saudi would sell oil to China and they would get paid in one. Saudi Arabia sits at the intersection

Starting point is 00:07:05 of the United States, Russia, and China. They have relationships with all three nations. And in the kind of conflict and power struggle that is underway, I think that ultimately the direction of where global currency kind of reserves will be taken and the importance of these great nations and who sits atop whom can actually be dictated and significantly influenced by NBS this year by some of the deals and trades he might put in place and the partnerships he might forge. I think as a result you will see him rise In terms of influence, not in terms of, you know, hey, the world has accolades for this guy, but I think in terms of global influence,

Starting point is 00:07:50 he will rocket ship to kind of the top because of this kind of jockeying he can now do between these three great nation states and defining, you know, what's gonna happen with the US and what's gonna happen with China and what's gonna happen with the election at currency reserves. Great selection, you mean, the prime minister with the election at currency reserves. Great selection. You mean, the shitty thing, by the way, about your selection is that Biden, our explicit

Starting point is 00:08:11 stance is unfortunately quite confrontational with MBS. And you saw that play out in Q4, we asked them to ease up on OPEC plus to introduce supply cuts and they did some nominal 100,000 barrel per day cut. Didn't do much of anything. There was an article to your point, Freeberg, just recently about Saudi really doubling down on getting the oil out of the ground and monetizing their petrochemicals. So there's just going to be a glut of supply in the market.

Starting point is 00:08:52 And we have the least amount of influence with Saudi Arabia than we've ever had. And it seems like we could change that if we decided to. But I think Biden has taken this very confrontational approach, which doesn't seem to make, and remember a lot of sense. Their state and intent is to diversify away from oil and into technology and other kind of emerging growth economies. That's why they funded the Vision Fund.

Starting point is 00:09:15 That's why MBS made that big kind of visit to Silicon Valley a few years ago. And there is technology that they want to import into Saudi Arabia. They want to have ownership in around the world. And if the US is creating a barrier for them to import U.S. tech into Saudi or for Saudi to kind of invest in the U.S., but China and Russia have open arms, and all they want is for Saudi to start doing trades in U.N. it's going to happen. And I think that's where this guy has kind of a real opportunity to shift the global economic

Starting point is 00:09:41 dynamic. Say what you will about. Trump, he had open dialogue with North Korea, China, Russia, MBS. If your enemy's close, sure. You want to be able to talk to anybody. And he was able to talk to anybody. Now you also want to be able to say, Hey, listen, you can't dismember a journalist like Kishogi and you need to be able to have both of those ideas in your head.

Starting point is 00:10:03 You can't be rigid in foreign policy. You have to be fluid and keep people at the table talking. Chamath, who is your big political? Who do you predict? We'll be the big political winner of 2023. Chamath's prediction, everybody. Go ahead. I really like spread trades, right?

Starting point is 00:10:16 Where you go long, something, and short another. So I'd like to pair my biggest political winner with my biggest political loser for 2023. Okay. And I am going to focus on the Republican nomination and I am going to go long. Nikki Haley. And I am going to go short. Ron DeSantis. Now, let me.

Starting point is 00:10:35 Oh, hmm. Sax. Again, if you're watching, you're not watching Sax right now. He is ready to interject. Go, Chimata. So I think that all of this nonsense, for example, in the House Speaker Race, all of the midterm results,

Starting point is 00:10:51 what it really speaks to are, is people are getting exhausted with the lunatic fringes of both parties. That's point number one. And point, so that favors moderates as an emergent class. And point number two is that if you look back through many, many cycles of Republican and democratic nominations, it is a very negative thing to be in the lead. So early going into the Iowa caucuses in January. And so if you put those two things together, the risk is that desantisticase,

Starting point is 00:11:26 things emerge, people attack him because he's the clear front runner, and the opportunity, just like it was for Trump in 16 or for Clinton or for George Bush, not Herbert Walker, but W, is to emerge from the back. And so if I think about a moderate person who can emerge from the back, who can consolidate the ranks, they should probably be from the south. They will have a lot of these purple compromises that SACs mentioned in their policy program.

Starting point is 00:11:58 And they will have a history of winning and a history of normalcy. And so I think that of all of the places where you could ever elect a women as president of the United States, I think it will come from the Republicans before it comes from the Democrats. I mean, the Democrats are, unfortunately, increasingly judgmental. And I think it's very difficult for a woman to emerge there. But I do think that Nikki Haley has a shot.

Starting point is 00:12:23 So I'm going to go long, Nikki Haley, a shot. So I'm gonna go long Nikki Haley and I'm gonna short-run Decentis. Okay, I like an spread trade for his prediction well done before SAC to interject. Let me just do mine and then you'll have to to interject too. I was looking at Biden and Trump and thinking, hmm, which one of these is gonna have the big win in 2020?

Starting point is 00:12:42 There are some, so they're too big as I think players. I have a prediction for Trump. I think he's going to lose 50 pounds on the ozampic. Everybody loves a weight loss story. I think he is going to be indicted by Garland. Is he on, wait a minute, sorry, he's on ozampic? No, I'm predicting an ozampic run and he's going to draw 40, 50 pounds.

Starting point is 00:13:03 Then we're going to have a shfelt. Trump get indicted by Garland and the debates and the and the and the rigamarale with the Santas. I think he's going to go after the Santas based on weight and height. And then he's going to win the nomination in 24 and we're going to have Trump versus Biden. But this is a crazy prediction here. I think we're gonna have a settlement. I think he's gonna agree to not run and get the pardon. This is a crazy prediction. I know, but I think he loses the weight.

Starting point is 00:13:35 He wins the norm. He gets indicted and then he gets the Richard Nixon pardon, global pardon for all of the shit he's done. Nixon pardon global pardon for all of the shit he's done. Sacks you can reply now to these two crazy predictions. This is right. I mean, this is like proof positive that everything you have to say about Trump is an active projection. I mean, like a Zempoot, I mean, like, I mean, you're talking about yourself or Trump.

Starting point is 00:14:02 I tried. I might be lost journey has been a Zempoot and super good. I mean, are you talking about yourself or Trump? I was trying. Boom. Don't say that. I think my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point of my point I've been reading a lot about these GLP ones, and I got to tell you, statins are a clear wonder drug. Yes. I think that the 50-year longitudinal data on its value is pretty unimpeachable. Metformin, even taken profilactically,

Starting point is 00:14:37 has shown incredible benefits for cell regeneration, longevity, and glucose management. And the reality is, let's just take a step back. The American diet, we're all pre-diabetic. Okay, so let's just, let's just not beat around the bush. The way that Americans eat and our food supply, and also probably in Western Europe, is pre-diabetic by definition.

Starting point is 00:14:56 It's shit, it's trash. So, Metformin makes a lot of sense, and again, it's laundry through data is incredible, but I gotta tell you, the early data on these GLP ones are unbelievable. It's extraordinary. And it's extraordinary. And it's your first-hand experience.

Starting point is 00:15:13 I would lose half a pound a week when I would diet. No, but what I'm saying is just, it's beyond that I'm what I'm talking about is insulin response, it's cardiac health. And so, if this data tracks like this, man, you're just gonna wanna put everybody on these GOP. Well, I just wanna also put a disclaimer out here, do your own research work with your doctors,

Starting point is 00:15:29 whether it's from meth, forimin or exemptic, but I had great results on it. I recommend if you're struggling with weight loss, like I did for many years, you talked to your doctor about it, that said, it's not a commercial for a wagovia or a exemptic, but I do think these things are gonna change the world. Yeah, moody jarra.

Starting point is 00:15:42 Well, and they're getting better, and it seems like people with diabetes are on them for life. So if your question is like, if I could do this for a year to lose weight, I think diabetics are on it for life. So when I made my decision again, work with your doctors, not random podcaster or venture capitalists for your health advice.

Starting point is 00:15:59 I was like, well, all of these people who have diabetes are going to on it for years, unless it's non-toxic go get a renewables can Just make sure absolutely you got So they have it there's are predictions So I think you want to respond to anything I want to I want the sacs to react to my spread trade Yeah, so so look I think you know if you're going on a betting site I think that you could place that bet that Jamal may pretty cheaply and probably it's like has some good upside to it

Starting point is 00:16:23 So I don't criticize it as a bet. Do I think it's actually going to happen? No. And I think the reason is this, that if you look at what's happening right now with the speakers race, there's two very clear wings in their Republican Party. There's establishment wing and then there's kind of this populist maga wing. And the candidate, whoever it is, in 24 needs to unite those two wings. And I think this is really the best argument for DeSantis, as he's widely accepted by both. I think Nikki Haley's problem is that she's very well regarded within the establishment wing

Starting point is 00:16:54 of the Republican Party, but she has no meaningful support within the populist wing. And so I don't think she's capable of bringing the party together, at least at this point of time. She would have to prove, let's call it populist bonafide, so she just doesn't have right now. So this is why I think, you know, DeSantis, he does have frontrunner risk.

Starting point is 00:17:13 You're right, that people are going to keep taking shots of him as long as he's the frontrunner. But, let's be careful. He's capable of uniting the party in a way that it desperately needs right now, as we're seeing with the government-carthee thing playing out. Yeah. Okay.

Starting point is 00:17:27 Let's go for our biggest losers. We'll rip through this. Last year, I said Biden and Trump in the extremes. Chimalt said the progressive laugh. Again, the extreme, sacs said Pelosi, who just wrapped up her tenure. And Freeberg said, U.S. influence globally was the biggest political loser. Let's get our predictions for the biggest political loser of 2023, freeberg.

Starting point is 00:17:50 Who do you think will be the biggest political loser of 2023, the world wants it out freeberg. I would continue my US influence, but I am gonna shift. Here's what I think is gonna happen this year. My big prediction is based on, I think the world has too much debt. I think that the economic slowdown coupled with rising interest rates globally and a dearth of asset capital inflows means that there's going to be a lot of issues with the number of debt markets around the world, particularly emerging sovereign debt.

Starting point is 00:18:22 Just to give you guys a sense, global debt is about $235 trillion in public and private. That's somewhere between $5 and $15 trillion of interest payments a year, depending on what the net rate is on $96 trillion global GDP. And there's another trillion and a half of unfunded liabilities in the US and pensions and social security and all this other stuff. I think this is the year where a lot of the debt markets start to unravel. The free-drication entity that steps in, or a political loser.

Starting point is 00:18:49 I'm gonna tell it in one second. This is the political, yeah, so the political ramifications, so the political ramifications for me, I think that the entity that steps in to try and support these unwinding moments is the IMF. And I think that no matter what the IMF does, they're gonna look bad. I think that the, you know,

Starting point is 00:19:05 it's sort of like like Jerome Powell this past year, right? Like you raised rates too late, you raised rates too quickly. No matter what you do, it has some adverse effect and impact. It's either inflationary or it impacts growth. And so I think the IMF is going to get a lot of heat for either acting not too soon, or sorry, not fast enough, or acting too aggressively and causing inflation as a bunch of these markets face credit risk this year.

Starting point is 00:19:32 So my big bet is the IMF is going to play a major role, and we're going to be talking a lot about the IMF later this year. I think as a result, the IMF will get a lot of heat, and you'll end up seeing a lot of pressure and political, just like we blame NATO, just like we blame Jerome Powell and the Fed will end up blaming the IMF for a bunch of problems that'll arise. But the natural physics of what's going on is the world has too much debt and not enough growth to cover the debt, the cost of debt. That's it. And the IMF will be the political kind of, you know, hit that'll result. You have a point of view, but I think, yeah. that'll result. You have a point of view, but I think, yeah.

Starting point is 00:20:05 And who do you have as your biggest political loser prediction for 2023, Mr. David Sachs? Well, I mean Kevin McCarthy may not survive the week. So let me go in a different direction. I think California is my big political loser. And I would say in particular, the city of San Francisco both are going to have gigantic budget shortfalls. You may remember that this is back in 2021 when we had that asset bubble, California had a surplus of 76 billion and then insane. And then 2022 happened and now the state is looking at a $24 billion deficit. Well, if we had taken, say, a third of that surplus from 21

Starting point is 00:20:47 and put it in a rainy day fund, we wouldn't have to worry about this deficit, but that was never done. Newsom started handing that money out like candy to the electorate to goose his re-elect numbers and to get him past that recall, remember. So the state never got a fiscal outlook in order. And now I think it's gonna be even worse in 2023.

Starting point is 00:21:10 And San Francisco, the city, very similar kind of problem where its tax base is heavily dependent on commercial real estate, which is really suffering. So the city of San Francisco and the state of California, they've moved their tax base to highly volatile capital gains and with a really lousy stock market, I don't know how these guys gonna meet their budgets. So a lot of pain coming.

Starting point is 00:21:32 It's gonna be a lot of austerity and pain coming. That's for sure. And these people do not know how to manage a budget. They're incompetent. So you say California, Freeberg says IMF, Jamoth, who do you think the biggest political loser for 2023 will be? Already gave a shit prediction.

Starting point is 00:21:46 I should predict this. Remember, I'm in alignment with you. I think DeSantis peaked a little too early and the forever trumpers in the chaos is gonna be a little too much for him to handle. Okay, now we get into whatever everybody wants business, business, business, business winner for 2023. Who do you have Jamoth for your biggest business winner for 20, 23. Who do you have, Jamoth, for your biggest

Starting point is 00:22:05 biggest business winner of 2023? I'm going to pick something out of my portfolio. I think I'm the only non-trivial large investor in both SpaceX and Relativity Space. Relativity Space has a huge SpaceX is clearly just crushing on all cylinders. And they're really the only game in town with respect to launch capability. And if you just Google it, you'll see that the Europeans, you know, have a hit or miss capability on launch, the Russians are completely unable to do launch now

Starting point is 00:22:41 because of all of these sanctions. The private companies in New Zealand or the United States have also had fits and starts really incapable. Relativity, which is now the second most highly valued space business, is about to do a launch in the third week of January. The big difference between it and SpaceX, which is sort of why we did it. This is an early YC company.

Starting point is 00:23:10 I did the series A and kind of went along the whole way. They have 3D printed everything. And the reason why 3D printing is interesting is you take a, so if you think a rocket costs $5 billion that built by NASA, Elon was able to take that to 100 to 500 million. If you 3D print everything, you can take that cost to like 5 to 50 million. It allows you to just have this repeatability and manufacturability. SpaceX also has a lot of 3D printed parts, but relativity is entirely 3D printed. It has a launch in three weeks at Cape Canaveral, I think. And we

Starting point is 00:23:50 have a like a $10 billion order book that gets unlocked. So I don't know how to see beyond a lot of these market forecasts right now. So I'd rather pick a company, I'll pick something in my portfolio. If the rocket does not blow up, there's a $10 billion order book. And this company is now on a trajectory to be as valued as basic. All right. If it doesn't, it doesn't. If it doesn't, it goes to zero. Freeberg, go ahead and talk your book times two or three. Let's see if you can one up, Jamath, which one of your investments will be the biggest business winner of 2023? Freeberg.

Starting point is 00:24:24 I'm on investor. My big bet is open AI. It's just way too obvious to be anything else this year. As you guys know, there are dozens of startups that are being started right now based on open AI's demonstration of Dolly and Chatchy PT. I think we're seeing this in the enterprise and consumer markets. I think open AI will become to some degree, maybe they could be, there's many paths they could take, the AWS, providing tooling and infrastructure to all these startups that are building applications for consumers and business users. Or they will end up doing a massive deal with Microsoft. I think it's inevitable they're going to get a billion dollar plus investment this year. They could power AI driven Bing search and voice driven search.

Starting point is 00:25:02 They could build their own products and their own tools. And they're becoming great investors. They invested in Des own products and their own tools and they're becoming great investors. They invested in Descript, which is a product company we use here for our podcast, which is an incredible product. And I think that Sam Altman is a very smart and insured investor as well. So for a lot of reasons, I think OpenAI could end up having an amazing year this year and a lot of different paths they could walk. And we're going to come out of this year and say they're one of the top tech companies in the valley. Okay, Saks OpenAI has of course increased your ability to talk to other humans. So you're seeing a lot of big wins there I know.

Starting point is 00:25:36 He's how do I talk to a child about their college hopes and aspirations? child about their college hopes and aspirations. No, no, no, how do I talk to a child about their day? Hello, hello, hello, progeny of mine. How are you fearing today in this complicated, write me a script of talking to a 12 year old about their hopes and dreams. That's interesting. Using GPD for talking points on different topics. We should try that for the pod, you know.

Starting point is 00:26:07 Oh, okay. We should have done the GPD predictions. The GPD answer. Great. For these categories. Sacks as a person on the spectrum. Yeah. How delightful is this chat GPD and, you know, your treatment of your condition.

Starting point is 00:26:23 It's great. Let me get to my answer here. So my answer for the big business winner of the year is America's natural gas industry. And I have to admit this is an aspect of the Ukraine war that I didn't fully appreciate until I read this New York Times article the other day about how natural gas prices in Europe have now fallen to the level they're at before the war. And everyone thought that there'd be this huge shortage, and they wouldn't be able to heat their homes.

Starting point is 00:26:51 Well, what happened? The answer is that Europe completely cut off their dependence on Russian gas, and in fact, the Nord Stream pipelines were blown up, so physically they separated. But then on top of it, they basically started importing liquefied natural gas from the US. And here's the key paragraph in this article from The New York Times is that Europe rapidly built terminals to receive liquefied gas sweeping away many of the usual bureaucratic obstacles and environmental objections. So in other words, what normally would have taken decades to get approvals now was all

Starting point is 00:27:30 put on a fast track. And Europe is now completely dependent on American natural gas. And I think this is, again, the thing maybe I underestimatedimated the cold, hard American interest in this war is to basically turn Europe into a vassal of America's natural gas industry. Previously, they were about to be dependent on Russia, and Nord Stream was going to make that situation permanent. We've, you know, somebody blew up Nord Stream. Now they're dependent on American LNG.

Starting point is 00:28:01 They're going to pay higher prices for that. But it's been a pretty impressive win for the American natural gas industry. And I think Biden has really pulled a 180 here because you remember when he first came into office, he canceled Keystone, he canceled Drilling, he was very tough on the oil and gas industry. I think after he then delivered the hundreds of billions for the climate special interest in the inflation reduction act, now he is taking care of the oil and gas industry. I love it.

Starting point is 00:28:30 When I eat, it's like Biden. Yeah. And so what you're saying is Biden dynamically changed course based on inputs like a great leader would. Okay. Well done. Well, I don't listen. I don't know if this is.

Starting point is 00:28:42 Well, no, listen, I think Biden has done something politically smart here. There's no question about it. I am giving him credit. Does it mean that this war was worth it? No, I don't really wish me engaging in oil wars like we did in the Middle East. We are good. So I'm not justifying this war, but I am saying that there is a cold, hard American interest undergirding our position, which is, it's about LNG. It's not, it's not just about

Starting point is 00:29:07 moral platitudes. Yeah, I mean, the wrong start to 2023, vassal and undergirding. My biggest predictions, I'm working backwards from two here. I think the door dashes, Airbnb's, ubers, etsy's of the world who need entrepreneurs, they need workers, they need supply. They've always been supply constrained. As unemployment becomes, let's just call it what it is, sticky, you're going to see a lot more people participating in gig platforms or entrepreneurial platforms that enable them to make money. So I think they will be huge beneficiaries, especially if they continue to lay off employees

Starting point is 00:29:39 like DoorDash and Airbnb did to right size their businesses. But my first one, my number one, is Latof Techworkers. I think Latof Techworkers, who get together in groups of two, three, or four, developers, product managers, people who actually build stuff, and start companies together are going to become extremely successful, and they're gonna make incredible lemonade from these lemons of these

Starting point is 00:30:06 big tech wayoffs. So I think the startup space is going to, and these laid off tech workers who choose to take control of the destiny and start companies are going to be the true big winners. If you do it, do it with two or three friends because you're going to need developers, you're going to need those those talented people in the startups that have three founders get funded faster than the ones with one. So those are my two winners. All right. Oh yeah, and last year our biggest business winners were a Chimaltz said SMBs,

Starting point is 00:30:30 Saks said Rise of the Rest, Freeberg said Stripe, and I said Disney Millennials in Gen Z. Let's go on to biggest business loser for 2020-23 freedberg. Who do you think will be the biggest business loser in 23 this year? In fact. Okay, so my biggest loser is the general category of capital intensive series B3D growth

Starting point is 00:30:50 businesses in the startup landscape private companies. As you guys know, there's been a big shift in capital allocation. A lot of the folks who were writing big checks into growth rounds are retreating back to writing smaller checks and seed an A rounds. They don't want to write the $20 million series B. They want to write the $5 million seed an A round. No one wants to kind of follow the valuation. No one wants to set the valuation for these growth businesses. Particularly, if after this round you know you need another big round of capital, and no one's sure if someone's going to be waiting on the other end. As a result, we're seeing tons of these businesses run into capital-

Starting point is 00:31:26 Right, Confusion walls. They can't pivot. I think we'll see what we saw in the dot-com bubble, where 99.5% of these companies actually die. The half percent that we are gonna emerge as the next $100 billion enterprises, the Googles and the Amazon's of the world. So there will be light at the end of the tunnel for the winners,

Starting point is 00:31:42 but generally, there are hundreds of companies in hardware, in SIN bio, in biotech, in high growth, enterprise software that require significant sales investment expense. A lot of these businesses where the capital intensive nature of the business just doesn't have the market for it right now. And investors are all retreating and they're gonna be selective.

Starting point is 00:32:02 So that's where I think there's gonna be more capital intensive. By the way, seed an A investing, hot as a button, beep, focus, that's it. Okay, SACs, biggest business loser for 2023. Well, I just by the way, a hundred percent agree with what Freeberg said, but my biggest loser for business in 23 is the consumer.

Starting point is 00:32:22 I just don't understand how the consumer isn't gonna finally tap out in this economy. I mean, they have a mountain of personal debt, credit card debts at all time highs. I think the average credit card rate hit 19.6% last week and is expected to rise even further. The mortgage rates are above 7% now, so forget about trying to buy a new home or sell your home.

Starting point is 00:32:46 And your stock portfolio is down to, and now layoffs are starting to pile up. So I just don't understand how we're going to avoid a recession. And you saw, you know, Kashkari saying that the Fed's going to keep raising 5.4% since prediction. You know, I don't understand how if rates are at 5.5%, that doesn't finally break the back of this economy, and we go into recession. Do you think, SACs, that the economy is actually broken right now? We just don't have the data

Starting point is 00:33:12 because the data lags 60 days in most people's minds because it does feel like the consumer is just, and real estate has just broken at this very moment. It seems like, I mean, the pain is very unequal, right? But in the tech industry, we've been in a recession for a year. I mean, like the gross stocks are down to 80%, but Freeberg said is true.

Starting point is 00:33:28 No one's gonna fund these, you know, high-burning companies. There's an enormous amount of retooling that has to happen. Look, I think the recession is here is just very unequally distributed. Distributed exactly. Yeah, well, I mean, if you look at it,

Starting point is 00:33:41 buy now pay later. That's a category starting to break. Credit card debt, as you're saying, hitting big, a bad records in terms of how much we love spending. Also, people's savings are going down. So the consumers back has been broken. I think we're just gonna feel it

Starting point is 00:33:58 in the first and second quarter. Chimoth, who is your biggest business loser prediction for 2023? The world wants to know. Let me just build on what Freeberg and Sachs said for a second before I give you my pick. Sure. This is the conversation you and I had when we just got on.

Starting point is 00:34:13 Guys, what I was telling Jay Call is at the end of Q4, I did five deals and four were pro-rata, as one was a new deal. And they were all clean markups. So the four deals that other people put money into. And I was looking at them and I was trying to figure out, okay, what differentiates these things in FreeBert to your point. These were super clean startups with very clean cap tables that had clear progress. And then, conversely, I had seven converts showed to me for companies whose valuations were

Starting point is 00:34:47 anywhere between three and I would say 12 billion. And I did none of them. And not only did I do none of them, nobody else did any of them. And the problem was the real market clearing price was 80 to 90 percent down. And so I was like, what is going on here? So free bird to your point, I don't even think it's just cash intensive startups. I think it's like all growth companies

Starting point is 00:35:10 are in a really bad place. I thought that this growth stuff would get sorted out in two to three months. And now I'm worried it's two to three years. I think it's toxic. It's toxic. Toxic. Here's the definition of Jamoth.

Starting point is 00:35:21 What I think has happened, and what I think the cutoff is, is when the implied market valuation of the company based on where public comps are trading, is less than the total capital preference in the company, the total preferred stock. There's so many companies now that raised 400 million or 2 billion valuation, but the company is actually worth 300 million now based on public market comps. So they're worth less than their preference stack. So, you sort of worth less than that. Paying capital. No, this is why I think all these converts are getting done. That's where

Starting point is 00:35:51 the rubber meets the road on all these deals. Yeah, that's right. Who does the convert benefit? The convert benefits the VCs who want to maintain the illusory valuation that they had before. They do that to a swage the limited partner who gave the money that the marks aren't as bad as they thought. But the people that really get screwed, as Jason said, are the common shareholders. Because eventually those convert deals that do get done, those people will end up owning the company. The cap table gets completely flushed and reset, and the employees get wiped out. And then you got to basically take all the employees who were

Starting point is 00:36:31 there previously, who now hate the founder, and you got to start over and give everybody, they're wiped. The people to do all the work get fucked, and the people do none of the work, and who just want to maintain this shell game gets to basically live another day. Basically, people are investing as you gave in the example earlier, like, hey, if it's a $3 billion company, but it's actually worth $750, people instead of taking the valuation from $3 billion to $750, we'll say,

Starting point is 00:36:53 okay, buy one share at the $3 billion price and we'll give you three or four shares, four free or four penny warrants, they're called, typically, or, you know, just different ways to structure this. And then all of a sudden, nobody knows the actual denominator. They may own them 10,000 shares, but they don't know how many shares are actually issued

Starting point is 00:37:10 because the warrants are not on the cap table. They're in some side document in a folder in a lawyer or CFO's office. So let me tell you my biggest business loser. Yes, please. I think that the biggest potential business loser this year is Google search, as measured by your profitability and engagement. I think it's easier for me to see where the usage comes from, as opposed to picking open AI or chat GPT in terms of where the usage goes to.

Starting point is 00:37:44 And the reason is because I think a lot of people don't still fully understand how machine learning and AI work, but just 30 second primer. There's two big buckets of work. There's what's called learning, which is how you learn how to make predictions. And then there's what's called inference, which is when you actually type something into the search box, you get the answer. The thing with learning and what Chad GPT is showing is that they have learned by crawling the entirety of the web.

Starting point is 00:38:13 There are five or six other organizations that are capable of crawling the entire web, in terms of cost, in terms of compute, in terms of the quality of the transformers, and the quality of the transformers and the quality of the AI. And so I find it easier to predict the decay in the quality of Google search as that much better than everybody else than I find it is to predict who will win because I think that with enough time and money, Oracle, Microsoft, Google, the Chinese internet companies can all compete Facebook. And so I think that you'll converge on the same training, which will lead to the same inference. And so I think consumers end up getting confused and will end up being able

Starting point is 00:38:56 to get high quality search results from many places versus today. You know, you wouldn't only think that Google is the only game in town, quite honestly, for most people. Well, I think that's a tip to that. Google could lose 10 or 15% of usage to all these other sites. And that may not make any of those sites that relevant, but it'll have a material measurable impact to Google and Google. Fantastic prediction. And I think, you know, Chachi, PTA, these other ones are going to have a very interesting

Starting point is 00:39:23 marketing attack that they can do on Google is why search when you can get an answer, right? I think, you know, Chatchee, PTA, these other ones are gonna have a very interesting marketing attack that they can do on Google is why search when you can get an answer, right? Hey, we'll just give you the answer. You don't have to search. I had so many losers that I went through here. I'm just gonna run backwards to them. Number five, I thought founders refused to downsize in 2022. Could be big losers in 2023. Obviously. Why do you have five in the rest of us, or just be all right? I'm just gonna tell you my thought process. I just want to have a long hair Your thought process. I thought VC funds founded in 2020 Then I thought crypto because Gary Gensers says it's all stock then I went with you trim off number four Google my god

Starting point is 00:39:54 They got so many headwinds against them with his shachi pt. But I wound up on White collar workers with no hard skills Twitter going down to I think you know think Elon said a couple of hundred people is all you need to run Twitter and I think he said he has 2,000 employees or something like that. He has shown everybody, hey listen, these more can be done with less or these things are overstaffed in a massive way. I think white collar workers now, the idea that you're going to have four offers and you're going to be able to play them off each other is over when we take these shots.

Starting point is 00:40:24 You're saying surplus elites. You're saying surplus elites. Sure. White collar workers, aka surplus elites, people who actually, you know, are mid managers who don't, who don't actually code or don't actually build a product or sell a product, don't actually do real work. As I think many people would frame it in the managerial class or the CEO class. Man, they're gonna have a hard time.

Starting point is 00:40:45 And this week, Andy, Amazon Andy, cut 18,000 white collar workers, not the blue collar, the white collar workers in Amazon. That was a big turning point. And Benny off, you know, he's Ohana, he is Mahalo, he is Aloha, he does not like to lay people off, he considers Salesforce or family, he laid off 8,000. I predicted that. Yeah, and I mean, that is to me. I mean, the considers Salesforce a family, he laid off 8,000. I predicted that. Yeah, and I mean, that is to me.

Starting point is 00:41:07 I mean, the reason's pretty simple, right? They're gross slowed down by two thirds of the most recent quarter, but they're still spending the same amount of sales and marketing. So when that happens, your CAC payback explodes, right? You go from three years payback to like 10 years, so they have to cut costs in order to rationalize

Starting point is 00:41:24 your Uniconomics. So, and now it cascades, right? Because all of sales forces vendors are going to be getting less money from sales force because they're tightening their belts. So then those companies are going to have to cut and the cycle just keeps going and going. Right. And everybody tightens their belts at the same time, freezes the economy, aka recession, and possibly worse. So that might be sort of closely, so that's a nice little quartet. In 2022, just so you know, I picked crypto,

Starting point is 00:41:53 freeberg also picked crypto, Chimacid, Visa, Mastercard, and SACS said, assets, classes that benefit from government, dumps, and punk. And quantity. Yeah. All right, let's go to biggest business deal of 2023. It's a prediction. What do we think could be the biggest business? Easy. Easy. This one is okay.

Starting point is 00:42:09 Jamath go. Let's go right here. Okay, Jamath quickly. Starlink will go public. Oh, SpaceX will cut and paste the cap table and we will take them. Yum. Yum. It'll be yummy and delicious. And my prediction is that the Starlink valuation will be at least half of SpaceX's current private mark 75 billy just for five billion it will be phenomenal and I think the reason why is that I think in order for Elon to have complete financial flexibility and do what he needs to do and you know he talked about this on our pod about the difficulties and the dangers of margin loans and all of that stuff. Yes. He's gonna create breathing room for himself. This is the simplest and most obvious way from to do it. It'll give him a ton of more dry powder. Sure.

Starting point is 00:42:55 So I think that this is an obvious outcome in 2020. They already have a million subscribers in there better than nothing beta as they call it. I have two of them. I think this is a great, great prediction. I was the first one to get it for the global 7500. Okay. I got it for, yeah, Taha. Yeah, similar. So, uh, there's my flight in your house in the same size. Yeah, exactly. So there you go. There is a point here. People are underestimating the tam, I think, of this product. The tam is not existing broadband connections. It's second connections. It's connections where connections didn't exist. It's on the long run. By the way, just see, you know, buses, the best in class. The best in class broadband connection for a plane is called KABend. And it costs 500 grand a year. That's ridiculous. And you can replace it for, you know, a tenth of the cost and start

Starting point is 00:43:48 a link on a plane is dramatically better by directionally. So I think Starlink is going to go public and I think it's going to be, it's going to be the best chance that we have of opening up the capital markets in 2023. There's another way of saying people who own private jets, if they are flying 250 hours a year, which will probably be a reasonable number, two 300 hours a year, they're paying $2,000 an hour for their internet service. That is bonkers. Okay, SACS. Who is your big deal? Biggest business deal, prediction for 2020. Biggest business deal, 23 prediction is there will be a deal between Putin and G. And they met by satellite late last week

Starting point is 00:44:30 to discuss ways to further help each other in 2023. Putin characterizes as a no limits partnership. You may remember that the two of them inked a $175 billion gas deal in early February last year, that was three weeks before Putin invaded Ukraine. I think now Russia is even more dependent on China. We've really driven Russia into China's arms. And I think there will be a big deal, not just on energy, but on agricultural products, mineral products, and rare earth minerals that, which Moth likes to talk about, I think there could be a trillion dollar deal between

Starting point is 00:45:10 Russian China this year, if I was going to go out and live and make prediction. Okay, so there is your 2023 prediction of the biggest deal, the Legion of dictators. It's for me. I do think it's, it is like, you know, that the access of evil, this is more Legion of dictators like, hey, let's do business together. Treeberg, you got a prediction for the biggest business deal of 2023. This is really going out on limb here.

Starting point is 00:45:30 I'll do two real quick. The first was the similar to what Saks said, but it's kind of echoing what I said earlier, which is the petro-yuan trade. I think that's the Saudi China trade. If this happens and oil is sold in Yuan, it marks the beginning of I think the end of the assumption that the US dollar is the global reserve and the risk-free currency in reserve for the world. So I think the petro you want trade. If you guys, here's the

Starting point is 00:46:06 Reuters article covering G's visit to Saudi Arabia last month. At first, second, we get December. Once this gets inked and signed, it's a real shift globally. I think the other one that I'm going to point out that I think is a bit of a out of left field one maybe and maybe I'm just going to look like a total idiot at the end of the year. Do a wild card. This is my wild card. So my wild card is I think Apple ends up buying something completely out of the ordinary. And here's why. I think Apple's core business, they're facing significant pressure with respect to their relationship and ties to China.

Starting point is 00:46:41 As you guys may have seen last week Foxconn announced that they're actually going further downstream in terms of their production model and they're trying to diversify away from being kind of the sole service provider to Apple. Apple, as you know, is under such pressure to get out of China politically that they've started to try and invigorate activity in Vietnam and elsewhere. So a lot of pressure on their relationship with their low cost producer and low cost production partner. They're also under a lot of political pressure because of the App Store revenues. You guys know this 30% App Store. They have to pay take. A lot of people are calling it monopolistic and antitrust is getting involved so they're feeling that pressure. There's also the pressure with respect to the you know, waning

Starting point is 00:47:23 consumer demand for high-end electronics. Samsung last yesterday or last week, or yesterday, I think, announced significant declines in consumer demand for electronics or their forecast as such. That has to impact Apple as well. So, when you put all of this together, right, they're being pressure to get out of their low-cost manufacturing center, they're being pressure to stop making money on the App Store, they're being pressured because the demand may be waning. They have to do something big to kind of diversify the business.

Starting point is 00:47:49 So I think they might end up doing something like buying a real content company. Maybe they do something like buy a Disney. Maybe they do something like buy an automotive company like Fiat Chrysler. I think there are a number of these kind of like what may seem today outrageous deals that Apple might end up kind of being pressured into doing so that they can get ahead of their forecast of the impact that all these pressures are gonna have on their core business.

Starting point is 00:48:12 And so I think this is something interesting to kind of think may happen this year. I certainly have no insight or intel on anything or I could be completely wrong on this one, but it feels like they've gotta do something this year. I can sort of keep that business growing. I think this is, I think feels like they've got to do something this year. I know. I know. I know. I know. I know. I know.

Starting point is 00:48:26 I know. I know. I know. I know. I know. I know. I know. I know. I know.

Starting point is 00:48:32 I know. I know. I know. I know. I know. I know. I know. I know. I know. I know.

Starting point is 00:48:40 I know. I know. I know. I know. I know. I know. I know. I know. I mean, now with Tesla with this depressed stock price, Apple can make a run of Tesla. They can almost buy it with cash. Let alone BMW Volvo, one of those brands they could buy easily.

Starting point is 00:48:52 What a great prediction for me. The prediction is Amazon's three-legged stool grows into a sturdy chair with a fourth pillar for those folks who are not familiar with how Amazon has built their businesses. There are three pillars in their stool. Ecommerce, obviously, when you buy stuff, prime memberships, which is kind of considered a separate revenue stream, and of course, AWS cloud computing.

Starting point is 00:49:16 I think the fourth is going to be this continuation of following the health stream, not advertising because that's not a consumer-based product. That's just a way they make money. Health is gonna be a big one for them. They obviously acquired one medical, which was a small purchase. I think they're gonna buy Roman hymns. They're gonna buy Peloton. They could buy a whoop,

Starting point is 00:49:35 and they're gonna go all in on health. And, you know, that three-legged stool becomes a very sturdy chair. And my runner-up is TikTok is gonna divest under duress. I think that it's going to have to go public and the Chinese are gonna divest their interest in it and just take their chips because they're going to be faced with the existential threat during the political debates over the next two years. There will be unanimous support from Democrats and Republicans to get TikTok out of the US. Therefore, they divest.

Starting point is 00:50:04 Can I just test that with you guys? Because we've talked about this a lot that hey, we're gonna ban TikTok. How many of your friends, kids, or your kids, do you guys know spend hours a week on TikTok? It's a lot. 90%. How do you get over the political mountain

Starting point is 00:50:22 of trying to ban TikTok? If you try and ban TikTok, whoever raises their hands as we should ban TikTok and actually gets it done, they're out of office. There is gonna be so much pressure and backlash because people are hooked and love that app and use it all the time to take that away from people. We'll feel like this kind of young kids

Starting point is 00:50:39 that don't have phones. Yeah. Actually, yet everything that TikTok has on YouTube shorts. So I don't think TikTok is that important because it is not actually, there is no sticky network effect inside that app. So there isn't usage that's dependent on people you know or a graph that you build. It's a lot of passively consumed content. And so you're getting pushed a lot of algorithmically defined content. You can do that on YouTube. And so I actually don't think it's that meaningfully important if TikTok goes away.

Starting point is 00:51:07 I think the content creator stayed. It's harder for them to build a business on YouTube shorts, but if you look at the measure, the density of content inside TikTok, it exists almost one to one on YouTube. That's interesting. It's an issue. You think it'll be okay if we cancel TikTok in the US and YouTube. That's interesting. It's an issue. You think it'll be okay. If we cancel TikTok in the US and we say that's it, you can't have TikTok anymore. Everybody burst to YouTube and Instagram. It'll be disruptive, but people will just go to YouTube and Instagram.

Starting point is 00:51:33 It's not that big of a deal. In fact, a lot of the favorites, if there was a network effect inside there, then I think people would have a reason to complain to somebody, whether it's your representative or whether it's somebody else to say, hey, don't do this. This would have a reason to complain to somebody, whether it's your representative or whether it's somebody else to say, hey, don't do this, this would have a deleterious impact on my quality of life or my quality of experience. And you could make that clear claim on Instagram, Facebook, Google, YouTube.

Starting point is 00:51:58 But TikTok is much more brittle that way. And that's why they need to get public sooner and monetize this bloody thing. Because I think that it's very easy actually to deconstruct TikTok's value into these other places. I can tell you, my favorite TikTok is Chef's Reactions, and I consume him now on Instagram because he posts, we just copies one to the other. And so Chef's Reactions is a great example where he actually got banned by TikTok and then diversified on his own. And now what he does is he publishes across multiple streams.

Starting point is 00:52:30 And if you look at all the big creators, they all do that because it makes no sense to actually give the power to any one of these things. Why have a dependency? Why have a dependency? All right, let's keep the trains moving. Most contrarian belief, this is the Peter T. L. Award, your chess partner, Sacks. Who's winning in 2022 and chess? How many chess games do you have going with Peter T. L. right now? And who's higher rated? You demolished me with your

Starting point is 00:52:54 Queens gambit. I played one game. I got killed in seven moves. I'm ranked at 800 and 900 right now. Sacks is at 1800. He just walloped me. Who's higher rated? You were Peter T. Excepted the Queens gambit. Well, you know, I just, I don, he just walloped me. Who's higher rated? You accepted the Queen's Gambit. Well, you know, I just, I don't even know what it was. I was like, what opening is this? You're like, uh, Queen's Gambit, you're dead. And boom. Queen's Gambit is like, that's right. But you don't want to accept the Queen's Gambit.

Starting point is 00:53:15 No, you're very pleasant game for white. I'm going to go on a limb here, you know, and, and risk being wrong. My, my predict, or most contrarian belief is that the bromance between Biden and Zelensky comes to an end at some point in 2023. And let me state that the part that I think is conventional wisdom and everyone agrees with, which is there's going to be a massive Ukrainian counter-offensive in the spring.

Starting point is 00:53:42 And I think that could go one of two ways. Either it could make limited gains, basically the Russians fight them to a stalemate, or it could be successful, and they could basically push the Russians back to the February 23rd lines and make a play for Crimea. I predict that in either one of those circumstances, Zelensky's interests and Biden's interests will start to diverge. So, in the case of a stalemate, which I think is probably 50-50 here, Biden's got to start going into election mode for 2024.

Starting point is 00:54:12 And I think we're saying that we're going to be in a recession. So I think that if there's a stalemate, I think Biden's going to tell Zelensky wrap this thing up, it's time to negotiate. We need to get this over with. By the same token, if the counteroffensive is successful, I think that the administration hopefully cooler heads will prevail and not let them take Crimea. That's basically what they're gunning for is they not only want to get back to the February 23rd lines, they want to go all the way back to the 2014 lines of retaken

Starting point is 00:54:39 Crimea. I think that's extremely dangerous. I think that could precipitate a nuclear war. And I think that the cooler heads of the administration will tell Zulenski to stand down, and that's the right time to make it deal. So I think in either one of these scenarios, I think you will start to see a divergence between the Ukrainian and the American interests, and that could create a rift. And I think no one's really predicting that. I think this is great. This is kind of what I thought the plan all along was, which was to deplete Putin of resources to extract him and then get the West off of his oil and try to do regime change, but

Starting point is 00:55:14 do it by bleeding him. This would be a proof positive of that strategy, which is bleed him to the end and then sells the lint scale. I think that's actually, I know it's cynical, but I think that's what we're doing. I think Ukraine is a tool to de-plie Putin and then maybe get to regime change. I'm cynical as it gets with this, Shemoff, what's your most contrarian belief of 2023?

Starting point is 00:55:35 I will go and pick that inflation, which people expect to fall off a cliff, doesn't fall off a cliff as fast or as meaningfully as people want. And so I will explain inflation as three different chapters, and we've seen the first two chapters play out. So 2021, chapter one was all about energy inflation. And you know, we all talked about having almost $10 gas at the pump

Starting point is 00:56:05 and what does it mean for everybody? And it caused that initial spike in inflation. And then we had it come off and Sacks called this. He said, you know, we're going to have this sort of double hump. And 2022 was really the story of goods inflation, right? All these prices and all of these things went up because the input costs went up and we all had to bear the implications of that. But then that started to ebb. Now, if you looked at the tail end of 2022, what I found super interesting was the number of articles I saw about wage inflation, whether that was Biden using an 1800s era law to prevent a railroad strike, the number of states that increased minimum wage, the

Starting point is 00:56:55 trend around unionization. So in general, my thought is that the pendulum is swinging very markedly away from capital and towards labor. And as the labor participation rate stays low and continues to go down, and also it's compounded by an unemployment rate that may go up, right? People are, it's going to be harder and harder to get people to do the work you need at the company you have unless you pay them more. And if that gets exaggerated, then inflation will stay where it is. It won't be as muted and it won't fall off a cliff as people

Starting point is 00:57:31 want. It'll be persistent. That's my big contrarian wager for this year is that we. That is quite concerned. We see wage inflation that keeps inflation not going down as much as people want. This is contrarian because everybody's saying, hey, it's over. The consumers back has been broken, the credit card debt is high, and everybody's being laid off, yada, yada, yada, therefore goods and services, they'll be more supply than demand, and the prices will lower. Very contrarian, free break, do you have a contrarian, belief for 2023? I think it follows my earlier points about the Saudi China Russian, Russia trade. This year exiting 2023, it may be the case that there's historically been this belief and this continuing belief that the US dollar will always be the de facto global reserve currency. And the current mantra is that it's better than the rest.

Starting point is 00:58:28 Everyone else is worse off than the US, Western Europe is in trouble, Japan is in trouble, China is in trouble, everyone's in trouble. But if there is a coalition, an economic coalition, a scaled economic coalition that starts to shift the balance of power a little bit. And the US meanwhile is taking on extraordinary debt load, sending $1.7 trillion in an omnibus bill, has this massive, unfunded social security problem coming down the pipe and are trying to manage multiple funded conflicts around the world. It could be that the US dollar coming out of 2023 starts to trade more like a risk asset and less like a risk free asset. And so I think that that's my big

Starting point is 00:59:10 contrarian that is that maybe this year marks the beginning of the end of the US dollar as the kind of global de facto reserve currency based on some of these big trades that I talked about happening. Unbelievable. That would be my big kind of contrarian. Perfectly said, that's your contrarian, bet the accent, the legion of dictators, the MBSs, etc. They become, they form a new global currency. Yeah. My term, not yours.

Starting point is 00:59:37 I'm not calling it, yeah, I wouldn't say a legion of dictators, and I wouldn't say form a new global currency, but I do think that the fact that large economic trading models start to be done in non-dollar denominated form, you know, we can't the kind of reserve status of the dollar to some degree, not fully, right? It doesn't happen in a binary way. And then the dollar starts to trade more like a risk asset

Starting point is 01:00:00 like other currencies do to some degree, not fully. So maybe once again, we start to see that shift. Once again, I take the exact opposite of your contrary and belief. I believe American exceptionalism continues to soar as Russia, China, Saudi Arabia, to a lesser extent, continue to self sabotage themselves with insane wars like Putin has done or cutting off the heads of entrepreneurs in China, figuratively, I'm saying here, I think you cannot have exceptionalism without entrepreneurs without people having freedom. And I think that means American exceptionalism based on freedom is going to continue

Starting point is 01:00:39 and the legion of dictators, I believe, are going to stab each other in the back before they change the world or move the currency. Can't trust them. They'll snip at each other. And all those self-sabotacists, I already fall out on these two. I mean, you fall on our opposite side. I think that America is really feeling its weedies right now. I think that American power is immense.

Starting point is 01:00:59 I think that the superiority of our weapons in Ukraine has been one of the big surprises of the war. Let's go, Pa-mo-lucky. I don't see the world in the simplistic good guys versus bad guys frame that Jacob does, however, America is on turbo right now. And yes, it is true that the bricks would love to get off of the dollar because we are now using the dollar and the financial system as swift as a geopolitical tool and a weapon and they would very much like to be off of our dependence

Starting point is 01:01:29 on our currency, but I don't think there are anywhere close to be able to do that yet. And like I said, America is on turbo right now. Now, one thing I want to mention, this statistic came out, White House correspondent named Jennifer Jacobs just reported that the US has agreed to send Bradley armored vehicles, came out White House correspondent, Jim Jennifer Jacobs, just reported that the US has agreed to send Bradley armored vehicles, basically our best tanks to Ukraine.

Starting point is 01:01:51 Previously US officials had balked at sending armored vehicles saying heavier weapons would be too difficult for Ukraine to operate and maintain, but allies are moving to provide such weapons. So we keep providing the Ukrainians with more and more sophisticated weapons, more and more support. Like I said, this is leading up to a huge Ukrainian counter-offensive in the spring. And I really don't know what's going to happen at that point. I do think that the Russians will escalate. I don't think they can afford to lose this war.

Starting point is 01:02:17 They view it as existential. And I, like I said, I hope cooler heads will prevail. And if the Ukrainians are successful at breaking through, I hope that the Biden administration will shut this down before they try to retake Crimea. Because, you know, we've discussed this before. I think the Russians confronted with a choice between a total defeat that includes losing Crimea

Starting point is 01:02:40 and their naval base at Sevastopol and sees the Ukrainian flag flying over their base at Sevastopol. If that's a choice-stream, that, or potentially using a tactical nuke, maybe at the mouth of the Kremlin Peninsula as a firewall, I think they could choose the nuke option. So it's a very dangerous situation and very dynamic. There's a lot of possibilities. All right, let's go on to best performing asset of 2023. I'm going with seed stage investing again. I don't think people want to get into these toxic cap tables at the late stage as Chimoff pointed out.

Starting point is 01:03:13 So I go with seed stage and enough to series A, the people brave enough to play spets, the founders brave enough to start companies. I believe it's the best performing asset in the last of 2023. Chimoff, who do you got? I think that there's still a lot of uncertainty in the world and in the markets.

Starting point is 01:03:27 And so I'm generally concerned that there's a lot of chop. And so I pick something that's pretty conservative, but I would have a combination of cash and the front end of the yield curve. So T-bills all the way up to two-year bonds. So you can generate four and a half, probably by the end of this year, 5% pretty safely, owning this stuff while you wait for things

Starting point is 01:03:55 to become more certain. And the way that I think about it is that I would rather miss the first 10 or 15% of a rally. Once we're really done with this stuff, rather miss the first 10 or 15% of a rally. Once we're really done this stuff, then try to over-correct and try to pick a bottom, just because I think that you could lose a lot of money. So I think the goal for this year is to stay resilient and in the game.

Starting point is 01:04:20 And so owning having a bunch of cash on the sideline is ready to pound it in. Meanwhile, a portion of it collecting 5% is not such a bad thing while you wait for the bottom. Fantastic. My answer was actually very, very similar, which is if cash car is right, that rates are going to 5.4% in Q1. Why wouldn't you just put all your money in short-term tea bills? You earn 5, 5.5% risk-free.

Starting point is 01:04:43 Yeah. Like, set it and forget it. And that's why capital flows are moving hugely right now from equities into bonds, especially for going to a recession, which is inherently deflationary. Where do you got, Freiburg? Froming asset class, 22 and a half. One of the things, so I think it's inevitable that we continue to have significant infrastructure spending from both the stimulus and security point of view.

Starting point is 01:05:11 So we kind of want to continue to stimulate the economy and support growth. We want to continue to create jobs and support this transition in the risk. If the recession predictions play out true in the job market does lose it. It's very tight right now. There's going to be even more of an impetus to continue to do infrastructure investment. But I think there's also these big economic transitions happening underway right now with pharmaceuticals,

Starting point is 01:05:33 with semiconductors, with energy. There's a lot that we've talked about where there's a security problem and a redundancy problem. And so there are a couple of ways to kind of play this infrastructure, spending pieces in each of those areas. I've kind of highlighted four of them. One is in semiconductor capital equipment, so K-like 10 core, applied materials, that range of businesses that provide and sell the equipment into the fabs and the organizations

Starting point is 01:06:03 that build semiconductor manufacturing facilities. The second is kind of an oil and gas services, so similar to what Sachs said earlier, Schlumberj Baker Hughes, that class of businesses, I think, benefit in this environment. And this is independent of kind of economic conditions, certainly because these are big multi-year spending projects. The third is in the equipment to support them, so deer and caterpillar. And then the fourth, I think, is an important one. I'll talk about this in a minute with respect to my biggest,

Starting point is 01:06:32 kind of anticipated thing for next year, which is in pharmaceutical infrastructure. So thermo-fisher, and there's some company and others like them, because there's a lot of build out happening to support these big transitions happening in the modalities that are being used in pharmaceutical drugs and diagnostics. And then I think that there's also a couple of these businesses that are diversified like Dan or Honeywell, ThermoFish is a good example that play across multiple of these opportunities.

Starting point is 01:06:57 So those are all great businesses to own and you don't need to worry about, you know, they're growing cash flow positive, dividend paying companies, and you don't need to worry about, you know, am flow positive, dividend paying companies, and you don't need to worry about, am I getting 5% or 5.5% based on the equity price this year? These are long-range businesses that are building real value, growing their top line,

Starting point is 01:07:15 and compounding value from within. And then they're acquiring a lot of smaller businesses very cheap. It's an important trend. I've seen across these companies, Dan and her, Honeywell, Thermo Fisher. They buy small companies, they pay very little, and they immediately get massive return on invested capital.

Starting point is 01:07:30 They're in the high teens. So why get 5% on T-bills when you can get high teens, ROIC on the management teams running these incredible platforms? So that's where I'm most excited for this year. Okay, now let's move on. That was like a mad, that was like my mad, my mad money segment. I've never done the mad money segment before, but there you guys go. Worst performing asset.

Starting point is 01:07:51 I went with energy because not that I think it's not important, but I just feels like everybody rushed into it in 2022. So it feels like it's overheated. And if we are in a recession, people might lower consumption in terms of energy and be looking for cheaper alternative, so it could be overheated, so I went with energy. Shemoth, where's performing asset? You got one? I think that if we've learned anything from the last three years, you have to separate the valuation of a company and how it performs in the stock market with its value in society.

Starting point is 01:08:22 So for example, if you look at Zoom, Zoom's valuation has cratered, but its value in society. So for example, if you look at Zoom, Zoom's valuation has cratered, but its value in society has probably continued to go up. It's still a massively relied upon tool. The point is that markets do not give you credit for the value in society. They will give you credit when you are about to over earn, but then they'll pull it all back when they think that you're going to under-earn.

Starting point is 01:08:44 So in that lens, I think that you're going to under-earn. So in that lens, I think that tech will have a tough year. I think energy will have a really shit year. And probably the biggest asset class that is going to get pressured is going to be junk debt. And the reason is a bunch of these variable rate loans, when rates are at 5% and 6% that all of a sudden are like 11, 12, 13, 14% coupons, a bunch of companies will have trouble meeting their debt obligations and will have to restructure the debt or will have to file.

Starting point is 01:09:18 So tax energy and- Of course, performing on set for 2023. Some category of Lechimons to set. What's the most performing asset for 2020? Subcategory of what Shmoth just said, I think office towers in San Francisco are that is some serious toxic debt 27% vacancy rates and growing as Lisa's role. I Think that a lot of these buildings maybe Virtually all of the San Francisco downtown is gonna be owned by the bank soon because no one can get there Merchael real estate in San Francisco Specifically the office towers because no one wants get there. Commercial real estate in San Francisco. Oh, specifically the office towers.

Starting point is 01:09:45 Specifically the office towers because no one wants to be in those skyscraper buildings, south of the market, you know, mired in homelessness. So yeah, I mean, I think that a lot of those buildings can be owned by the banks. There's gonna be some major fire sales. Remember, this is the hottest commercial real estate market in the country a few years ago. And now it's the worst. Well, look what happened to BeReat. What do you think about that crazy thing that happened with the Blackstone Re?

Starting point is 01:10:09 I mean, that's nuts. You know, this is what happened? Blackstone has a product called BeReat. It's like a $70 billion exchange traded fund effectively. And what it is is the ability for individual investors to don't access to Blackstone's, you know, commercial real estate portfolio. And they had such a massive amount of redemption that they had to close redemption at the end of Q4. And they were worried that the redemption were going to continue to go up. These are individual

Starting point is 01:10:35 investors who basically seized the writing on the wall as David said and wants their money out. And so they went to the University of California pension system, and they essentially got a huge infusion of capital. I think it was about $4 billion, where they guaranteed $11.5% interest to these guys for the $4 billion. And they also posted a billion of their own equity in the actual rate to backstop it. So what does it show you? I think what Saks is saying is really right. It may not just be in San Francisco,

Starting point is 01:11:09 but you know, with all of these people, either getting laid off, with all of these people now working remotely, we may finally start to see the beginning of the reckoning in commercial real estate, which has been an unbelievably performant asset class up until right about now. And on top of that, you have to factor in these much higher rates, and so these building

Starting point is 01:11:27 owners, if they financed it, which they invariably have always financed, they have huge variable rate payments that are due on these buildings. The rent rolls are lower, even people like Twitter, as you're just refusing to pay the rent. So you have to take them to court. So it elongates when they have to pay. And so you could miss a bunch of rent payments payments and all of a sudden the banks could just go crazy and take ownership of these things. Okay. Do you have a worse performing asset class for 2023 prediction?

Starting point is 01:11:57 Sultan of science, Queen of Kenwa, David Freiber. It's really simple. I've mentioned it before. It's consumer credit. We assume that raising rising rates and inflation would taper down consumer demand, meaning consumers buying goods and stuff. That certainly hasn't happened. I'm in Vegas right now. I was in the car yesterday and the driver grew up in Vegas. He's like, in all the, I've lived my whole life in Vegas. He's like, I've never seen a December like we just had. It was packed the entire month.

Starting point is 01:12:28 He's like, normally in Vegas, it's dead up until Christmas and the New Year's people come in for town, but it's normally dead. He's like, I've never seen such a busy month. And I think we see this in the numbers. Consumers are still spending like it's 2021. They're still spending like interest rates are zero. As we talked about, consumer credit is skyrocketing, wall rates are skyrocketing.

Starting point is 01:12:47 And so I think we're gonna run into a real wall with respect to consumer credit in some time this year and you're gonna see, as you guys know, it's such a complicated interwoven market of assets that the way that this can be traded, there's a lot of different ways to trade it, but I think it's gonna be, in general consumers not going to be able to meet their debt obligations. And it's going to be a real option.

Starting point is 01:13:10 Could be mortgages, could be credit card debt, defaults are coming. Yeah. If you're putting... The market has priced in a bunch of this stuff. Obviously, companies like Affirm and, you know, the, what are they called, buy now, pay later companies, but credit card companies, mortgages. There's a lot of assets that you can start to kind of pick apart Where do you think this unravels first? How does it what gets hit hardest? What's underpriced and overpriced probably a lot of good pear trading to do as Jamal kind of loves to talk about

Starting point is 01:13:35 With respect to which of these are more likely or less likely to be sensitive to this dynamic But there's I think it's it's gonna be a pretty ugly scene Consumers just have way too much debt relative to their earnings right now. And it's pretty nasty. And they have some confidence that they'll always have a job or some way to pay there for easy payment for his trust. I say it's it's hard. It's muscle memory is serious.

Starting point is 01:13:57 You know, you come out of 2021 when you had it's not just stimulus checks. It was the low interest rate and an easy credit availability everywhere. And it's just easy to jump into getting new stuff and cool stuff, and then when you get used to getting new stuff every week or every month, you kind of stick with it and you're like, I don't wanna give it up just yet, I just, not just yet, not just yet.

Starting point is 01:14:14 And so it's hard to kind of step back from spending when you have a new type of lifestyle. And I think that's what's going on. I think this is an incredible observation. There's a great TikTok of this guy that runs car dealerships and he sent them out, unlike how much incredible money, like what a significant percentage of people's income, they are spending on their monthly car payments.

Starting point is 01:14:33 And people buy these cars that are well beyond what should be kind of a reasonable budget if you were to go to Susie Orman for a nice... They stretch! You should have been up by that freaking car. They stretch. And the stretching is gonna snap this year. Yeah. Absolutely. Which brings. And the stretching is gonna snap this year. Yeah.

Starting point is 01:14:45 Absolutely. Which brings us to the most anticipated, I love it, great one. Most anticipated trend of 2023, related to yours, I went with austerity. I have a friend who sometimes flies private often. And I was talking to him about his Christmas vacation. This friend of mine, Sharmaf,

Starting point is 01:15:03 instead of flying private to his vacation, he had to pick up his kids, he had to go back and forth. He was driving his car. That was me, that was you. Oh, okay, I didn't want to, I didn't want to do a cook. Yeah. But he was so great. He was so great.

Starting point is 01:15:18 He would normally buy private to like Tahoe. And he's like, no, I can't go out with your skiing on Friday, I got to pick up my kids, and then I'm driving. I said, wait a second. How are you doing that? He's like, I'm driving a car. I said, what?

Starting point is 01:15:28 Who's driving the car? He said, I'm driving the car. And that's why I say austerity is my anticipated trend of 23 and 3. I agree with you. I actually think this is a really good opportunity to pull back on so much waste. I haven't really looked at my household budget in probably two or three years.

Starting point is 01:15:44 Didn't even bother. Why? And then when I looked at it household budget in probably two or three years. Didn't even bother. And then when I looked at it, I was like, wow, this is really inflated to a level that I didn't expect. Yes. But it makes a lot of sense to live in a more head-down, austere way. I don't know, yeah. Well, I mean, look at tonight's menu. You went with duck. I guess the olive fed, wagyu, everything's off the menu now.

Starting point is 01:16:06 No black truffles were having duck. We're down to poultry next week. We're gonna have pasta. It's okay. Chimoff. Oh, Steready measures for everybody. They call it, they call it foul for a reason, right? Oh, God.

Starting point is 01:16:17 Sax, do you buy into austerity where, Chimoff and I are austerity belt tightening as our trends? Well, where are you? What's your trend for? I think it's a pretty good trend. The trend that I am going to suggest will be to your great disappointment, Jake Owl, which is Trump's influence in the GOP continues to wane. You're seeing it in real time right now. The headline is Trump's endorsed and approved worthless to come McCarthy in the speaker bid.

Starting point is 01:16:43 is Trump's endorsement proves worthless to Kevin McCarthy in the speaker bid. Even the Maga faithful like Matt Gates, like Lauren Bobert, they are ignoring Trump's pleas to get behind Mike Kevin. And in fact, they're kind of not just defying him, but making fun of him. Matt Gates had a repost to Trump saying sad exclamation point, and Bobert was saying that Trump needed to get behind her movement. So we have now a level of open defiance to Trump and the GOP, his endorsements, just not, or not what they once were. And even if somehow Kevin McCarthy pulls us off,

Starting point is 01:17:19 I think all that means is that Trump gets blamed for every swampy rhino compromise that McCarthy has to make to keep the government running over the next two years. So it's a loose loose. Does that mean that populism is on the way? Do you think? Because it's the electorate that got him elected in the first place. He was not very popular with politicians.

Starting point is 01:17:36 He was kind of an outcast when he got elected the first time. And that may be the case now, but he still got elected because the population loved him. People loved him. Is that going to happen? Do you mean that means that the populism is kind of waning or the interest of the voters is waning on him? Or is it just the political party's alignment? Boburt only won by a few thousand votes.

Starting point is 01:17:55 She didn't exactly crush it in Colorado. I think a lot of this has to do with Trump's personal standing after the midterms. The candidates that he personally picked that were all in tough races, they all basically lost. It was about the distraction he caused by making the 2020 election such a big deal, constantly looking backwards. So I think that Republican Party doesn't like the antics. It's not about the policies, I don't think. I think it's 100% about Trump's electability and about his ability to get things done. And it's not really about the positions per se. So I think freeberg to answer your question.

Starting point is 01:18:30 I think that the future that GOP will incorporate this populism, but it's going to find a better integration with the established or wing of the Republican party. And future candidates will have to basically satisfy both of those wings of the party. Sax, was it, was it straw that were maybe the two straws that broke the camel's back for Republicans and Trump in that relationship? Was it January 6th and the election denial? Like for Republicans, is it just like, come on. Those are the two things. This constant focusing on the 2020 election. First, it cost them, the cost Republicans that George or Ranoff see with Purdue against War Knock. Purdue won on election night, didn't clear 50% had to go to the runoff. This was happened the day before January 6th, this happened on January 5th of 2021. That was the first race where Trump's antics cost them. Then you had this midterm election where all the candidates who had to appease Trump by talking about, again,

Starting point is 01:19:26 the last election. So looking to the future, they got punished by the voters. I think Republicans want to win. I mean, they're tired of losing. That's simple. It's that simple. Yeah, the job of a politician is to win. Freeberg, you got an anticipated trend of 2023.

Starting point is 01:19:42 I am excited about and want to share the point of view that I think cell and gene therapies are becoming more mainstream. So these are pharmaceutical modalities where we use gene editing systems where you can actually go in and change or add a genetic material to cells in your body to resolve things like genetic diseases or change protein deficiencies or introduce new proteins. And then cell therapies where we engineer cells, put them in the body, and those cells go and do things like attack and destroy cancer cells, for example. There are currently 27 FDA approved cell and gene therapies on the market. There are over a thousand in clinical trials, many of which are already showing

Starting point is 01:20:22 extraordinary efficacy and benefit today, these therapies cost upwards of a million dollars. So I think there's a massive and talking about the infrastructure investment conversation earlier because of the number of diseases and the number of conditions and the number of people that these therapies can treat. I think there's massive infrastructure investment opportunity coming forward this year, but also seeing these come to market, come out of the clinical trials, get FDA approved, we have to ramp up and build up the infrastructure needed because it's not traditional, we make a drug and a factory and send it to people and they get it injected. These are much more complex,

Starting point is 01:20:54 they require much more complicated delivery mechanism, you have to have systems to engine yourselves and edit them and put them back in your body. Those systems today take days or weeks and cost, you know, as a result, a million dollar plus per treatment. So I think that the cell and gene therapy opportunity, you know, the JP Morgan Healthcare Conference starts this week. It's the biggest biotech and healthcare conference in the world starts in San Francisco on Monday. This is one of the biggest areas of interest and one that everyone's investing against. But as these come to market, there's, you know, we talked about this last week, genetic diseases, types of cancer that are gonna be addressed.

Starting point is 01:21:27 And I'm really excited about seeing more of these products come to market and seeing the whole kind of infrastructure and delivery system change. All right, sorry to interrupt you. Keep the trains moving, gene editing, very good choice. All right, we'll end with this. It's a little bit fun.

Starting point is 01:21:40 Most anticipated media for 2023. These are things we like to talk about. The media here sometimes, these are things. We like to talk about the media here sometimes. We talked about white lotus season two, amazing season. And maybe what you're looking forward to next year, I am really looking forward to in film, Oppenheimer, Christopher Nolan's movie about the Manhattan project. That should be extraordinary. I loved, it was Dunkirk his as well.

Starting point is 01:22:03 I love Dunkirk. I like everything he does. And when he, if his is him becoming like a history uncle, I, I'm here for it. I'm here for Nolan becoming our history uncle instead of Batman. What was the one after inception? Oh, that was really confusing. The one with Denzel Washington son with John Washington. Uh, yes. I mean, it was, um, I couldn't finish it. I tried twice. I got to go with Thurchan on that one. It was his worst film. It was really different.

Starting point is 01:22:30 It was called Tenant. Tenant. About like time and reverse in this. It was impossible to follow. Did you guys see his original film, which was incredible, Memento? Of course. Memento was fantastic.

Starting point is 01:22:42 Memento was great. It was like it was incredible. It was mind bending enough that you're like, oh my god, incredible. And then I think they took a two far tenet. I tried to watch it three times. I'm generally pretty good with these sorts of films and love them. But oh my god, it was impossible to follow.

Starting point is 01:22:57 He took it too far. Okay. So hopefully he goes back to his roots. In terms of the TV series, I'm looking forward to Sesseshian coming back, Ashoka, who was an Anakin Skywalker aka Darth Vader's Patawan, Ted Lasso season three coming up. Those are for me, incredible. And then on the book front, man, the Michael Lewis book about SPF is going to be next level. I cannot wait for that.

Starting point is 01:23:19 Sacks, you're a media junkie. What he got on your list of things you're looking forward to, or should say what is Tucker's writers? What have they put down for? Well, Jacob, I thought you're going to pick it. I thought the for movie, you're going to pick cocaine bear. I can't wait for cocaine. Okay. Does look really amazing. It's extraordinary. A bear is in the woods. And a, I guess people who are trafficking in cocaine drop their, or crashes and the bear eats the cocaine

Starting point is 01:23:49 and then goes on a rampage. It's kind of like a genre film like in the crocodile wave. By the way, I'm listening to Quentin Tarantino's book, by the way, of criticism. Get the audio book. You'll like it, Saks. He talks about all the films in the 70s. Very good shout out to Quentin.

Starting point is 01:24:02 What do you got? What do you got on your short list, history uncle? Me? Yeah, what do you got? Well, I just gave you one. Okay, cocaine bear on top of your list. We'll watch it together. I'm a hop-and-hiker, it was on my list.

Starting point is 01:24:15 And I think Marvel is doing a good job developing a new villain to rival Thanos with the King. I don't know what phase they're on now, but Luke, season two, and then the new Ant-Man movie and you know, I thought after Thanos, you wouldn't really be able to top that. But they've come up with a really good concept, I think, for the next, you know, 20 Marvel movies. Well, and then it will eventually become Galactus.

Starting point is 01:24:38 Yeah. You guys have completely fucked up. You have missed the most obvious slam. There we go. Shoday's new album. Go. Dude, part two. Oh, I haven't watched number one yet. I gotta wait. What? You know, I was happy. It was. Wasn't my wife wants to watch it. It is so stylistically beautiful.

Starting point is 01:24:58 It is a little boring. There's not a lot going to slow, but it's so well shot. It's a fun. It's visually just stunning. I mean, if you need to watch it on a big screen with big speakers and, but part two comes at November this year. Absolutely. That's okay. Freeberg, tell us what documentary on veganism you recommend and you're anticipating for 20, 23. What vegan documentary or animal abuse documentary? I am excited about the generative AI based media that I think is gonna start to kind of rocket this year. We could see, for example, the first, you know,

Starting point is 01:25:33 AI written symphony, the first kind of AI written published novel. I'm interested in with that be like a full novel published by AI. And more, you know, these short films based on AI driven script. And maybe even what I'm really excited about is these AI based interactive video games

Starting point is 01:25:51 or kind of experiences where you, the user, kind of get to create and live your own world through some sort of video game type modality. So I think AI driven media, all right. There you have it folks, there are. Just speaking of pop culture chaos. I guess Prince Harry has a book coming out That's called spare

Starting point is 01:26:11 That's spare spare like you know like they say when you're playing Bullock, no, but you know like in in the English monarchy. They there's the air in the spare So he's calling himself but to me that's like a weird self-description. Yeah, like that's that's how you see yourself is just being self-deprecating. He didn't pick that. They paid him so much money. I heard they have to sell 1.7 million books to break even. But you know what it reminds me of is when Leonard Nimoy wrote a book. I think he wrote a book called I Am Spock and then he wrote a book called I Am Not Spock. Nice. He could never get comfortable with the fact that he was a Spock. Yeah. And there's something weird about calling yourself spare. Like, you know, you're not clearly not comfortable with.

Starting point is 01:26:56 It's like everything. Yeah, everything they taught you, everything I learned at Harvard Business School and everything they don't teach at Harvard Business School. You can do both books. All right, listen, this has been great. Breaking news as we're talking here, chat GPT, OpenAI, doing a tender offer at 29 billion. Obviously. With no reason to rebuild you today. Oh my God, who is buying a 29 billion? Well, it's Founders Fund, well reportedly according to the Journal, it's Founders Fund

Starting point is 01:27:24 and Thrive Capital. So Founders Fund does not generally do super overpriced deals. Yeah, I Yeah, I would buy that's a silly bad. I mean come on. I mean, dude, why are you kidding me? That's that could be a $300 billion dollar company. That's a 10x right? But that yeah, it's a 10x from here. I Wouldn't I would not totally could be by the way you guys remember that the I would not. Totally could be. By the way, you guys remember that the long way to go. The origin of open AI. I don't know what the current situation is,

Starting point is 01:27:48 but it was a nonprofit where they said investors put money in, but the investor's maximum return was $100x on the dollar invested. So it's a nonprofit, but it's a profit up to $100x. No, that happened afterwards. It's when they converted to a... That was the original model. No, the original model was a pure... Then they converted to a more profit.

Starting point is 01:28:04 I don't know, the original model was a pure nonprofit that makes a lot of money. Is that any more profit? No, no, the original model was a pure nonprofit where there was no cap because there was no concept of equity. Yeah. When they flipped, they capped everybody to a hundred X on the return. So the original money,

Starting point is 01:28:15 but not anymore, still. But no, the original money, which was like Elon's money, who else put in money? Read, read, read. Yeah, all that money came in as it has pure nonprofit. So I don't know how it converted, but that's when they... Or did it convert? Did those people who find it originally get any shares?

Starting point is 01:28:32 I mean, for profit? We could find out. Probably they did. I mean, it would make sense that they... We'll find out. We'll find out. But wait, if this is a tender offer, it's in one percent, I mean.

Starting point is 01:28:40 27 billion? You wouldn't buy shares at the 27 billion. So again, like, the thing that I want to impress upon you is like there is an enormous amount of work that they do that what their biggest gap to monetizing this will be finding unique content that they learn on that nobody how sass access to and this is why I really think it's important to understand if you have enough compute. These all of these unsupervised learning models, if you run them on the same

Starting point is 01:29:08 training set, we'll converge to the same answer. You're just getting there first. In order to be really defensible, you have to get there in a unique way. Either you're going to hand-tune or you're going to have inputs that are different. So I don't know the answer. That's why they have to answer that question in their fundraising. And I'm sure that they did because these are smart investors, but that's the big idea that you have to overcome.

Starting point is 01:29:34 And again, you have to think like, you think Google is sitting on their hands? No. Google is sitting on a category of one. Why do I have 29 billion? Like what fundamentals is that based on like, why not 5 billion? Why not 3 billion? I mean, like why not five billion? Why not three billion?

Starting point is 01:29:45 I mean, like why not 10 billion? Like what makes it double the valuation? That's what it is. It's all this is all momentum. It's said nothing to do with reality, right? I mean, this would imply at a 30, the public comps of like Google trades at what, 25 or 30, ebit times ebit, so this would imply a billion dollars in ebit. A billion dollars

Starting point is 01:30:06 in ebit, a three million dollars a day. They're losing three million dollars a day on computer for, for at least three million dollars a day in profit on what product? I don't know. To have a. That's not the issue. I mean, my point was if these guys open up a set of tools that support all these applications and services to emerge on top of what they've built. And they're getting red share or getting payments out of that. It's going to very quickly turn into a real scalable infrastructure. This is why that can happen.

Starting point is 01:30:32 They don't have the rights to the data they built the training set on. And the second they commercialize it, the second anybody pays them, whoever they base this on, they're going to get sued into oblivion. I predict, sued into oblivion. Let's talk about that in the next show, because I think the way that AI works, and we should probably bring someone like Sam on to talk about it,

Starting point is 01:30:53 but the way that AI works on training data, and now people are making claims that the training data is copyright, therefore, of course, the model output protects that copyright, is I think worthy of a good conversation. Well, it's interesting, you know, the model output is, protect that copyright, is, I think worthy of a good conversation. Well, it's interesting is, you know, the early version of the internet was very simple.

Starting point is 01:31:10 It's like, you had this file called robux.txt and you would basically be open to a crawl or not and that's what would allow Google to basically go and spider your pages. Right. And so we have to replace this concept of that with this, because- AI.TXT.

Starting point is 01:31:25 Well, you could make a claim that this is no different than a spider crawling a webpage, except that in the search case, it was much cleaner, which is we're just gonna index your page and redirect people to you. Here, we're actually gonna create a derivative work because of you in the cart. And I do think that that's gonna be a very interesting legal threshold that has to get figured out.

Starting point is 01:31:47 Well, here it is, Chimoff. You're nailing it exactly. It's a derivative work and they did not have permission to use it. And it impedes upon the original authors, whether it's a photo, it's a song, it's a piece of code. It impedes upon their ability to do commerce in the world. You are interfering with their ability to monetize their content, and the percentage you're using is 100%. So when you get to fair use, non-commercial use is very protected, parodies protected,

Starting point is 01:32:13 education is protected, but when you dip into using the entirety of the work, which they're doing, and you impede upon the person's ability to do commerce, and you confuse the public. Well, this is what I'm trying to say. These are the tests that they will fail, fail, fail. This is why I think that most people don't understand what AI is. They don't even understand the difference between training and inference. So hopefully, there is some more understanding of this. But if you use the same data set, you will eventually converge to the same output.

Starting point is 01:32:41 It's absent of hand-tuning weights, which has its own issues, and absent any asymmetrically different data that you have that nobody else has. Absolutely. Yes. So, if you are Apple and you have the watch data or you're Google and you have the search data or you're a weather company, you have the weather data and your proprietary, of course. There's a very easy solution to this, Tomoth. Number one, citations.

Starting point is 01:33:06 When the algorithm gives you an answer, it should say, what were the top percentage sources of this information? How did the AI, you saw the paper. Look, if you look inside of a transformer, the problem is that you're gonna have trillions of ranks, trillions of weights, trillions. And so how are you gonna decide how to basically draw a line under a threshold

Starting point is 01:33:26 This was actually a useful input and this was not So again, I just think that it's hard a very few small class of people actually understand this like the great person To actually bring in to talk about this would be Andre Carpefie not and I think his Andre was there Sure and a Tesla and he but he can say it in a very dispassionate way to explain this to people. I think we should ask him to come on. Yeah, for sure. I can ask him.

Starting point is 01:33:50 I can ask him. I mean, this is the law, Sachsurer and Attorney, you understand fair use, copyright, all the stuff. The law, correct me if I'm wrong here, Sachs, does not anticipate this. Look, this is a highly specialized area. I don't want to pretend like I understand the law in this area. You know, I'd want to talk to a specialist. Yeah. Okay. So anybody wants to have this conversation? Yeah. This is a great. I've discussion work for us to talk about because. All right. This is probably why, by the way, they started as open source,

Starting point is 01:34:18 because it was like a slam dunk thing to make this a nonprofit and open source everything, maybe in part because of these issues, but if you just let the code run free, you probably don't have to even deal with these issues, right? Well, they closed it. Remember, their claim, the claim was, this is too dangerous. Their original claim was, it's too dangerous for people to not see the code. Then Sam flipped on that and he said, it's too dangerous for people to not see the code. Then Sam flipped on that and he said it's too dangerous for people to see the code. And it started out as a nonprofit where the idea was the way to keep this safe is for everybody to see the code. But they didn't make any

Starting point is 01:34:53 money. Whatever it is. And they flip the decision. So keep that in mind as well. He's a very, very, very clever business person. He's savvy. And you know, Paul Graham, when Paul Graham picked Sam to run YC, Paul Graham said that this is the most impressive person I've met since Steve Jobs. Yeah. Remember that? Come on the pot. I do remember that. He said something similar about Gary Tan is now running YC starting this week. Sam Altman, friend of the pot, come on all in anytime. And has played in our poker game several times. Yes. Yes. We, we, we had a tough situation there where you interfered in a hand, if you remember.

Starting point is 01:35:28 All right, listen, this is getting... What happened? What happened? There was a Sam and I were in a hand of poker. He raised. I had two pair and I'm trying to figure out does he have a set or is he bluffing me? I think he's got top pair and you were like,

Starting point is 01:35:40 oh, look at this and you started commenting on the hand. And I had to make the call or not yet. Oh my god, I remember this. And I'm like, oh, look at this and you started commenting on the hand. And I had to make the call or not yet. And I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like,

Starting point is 01:35:50 and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like,

Starting point is 01:35:57 and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm like, and I'm gonna call here with my, I had bottom two. I'm like does he have a set and there was also a straight

Starting point is 01:36:05 on the board, I'm like, fuck it. At best, I'm, you know, even money here. And there was a lot in the pots. So I was just doing the pot odds, while I'm doing the pot odds, you were like, gah, gah, gah, gah, gah, gah, gah. Ha, ha, ha, ha, ha, which is usually me. I'm usually what a big rep or man, different top.

Starting point is 01:36:20 Right, yeah, but it was beautiful. I listen, love you besties. Why don't you tell people that there's no comments? And just as a program we note, we turned off comments for a couple of weeks on the YouTube just to see how it's psychological affects me and it's for Chimoff to just f with all you Brigha Duners. We love you. Basti's, this has been in a great episode.

Starting point is 01:36:40 So, two great, and his Twitter is at Shamaaf and he does it reading. Just so everyone knows, he knows, he knows, sacks and I voted against turning off comments. Just as I voted. I voted in favor of whatever got Shamaaf's vote for the Olens Summit 23. So, that's how I vote. This is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this is, this spending time together on the slopes is the cure to all evils. We'll see you next time. Love you besties. Bye bye. Love you guys. Bye bye. I squee-na-kin-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w-w- We just have one big huger because they're all just like this like sexual tension but we just need to release that out. I'm doing all it.

All-In with Chamath, Jason, Sacks & Friedberg - E110: 2023 Bestie Predictions!

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