All-In with Chamath, Jason, Sacks & Friedberg - E120: Banking crisis and the great VC reset

Episode Date: March 17, 2023

(0:00) Bestie intro! (1:35) Recapping the events of the past week (5:39) Understanding the banking crisis (32:55) Solving the global debt problem, righting the ship (54:20) VC market update: Founders Fund splits its eighth fund in two, Sequoia's reported returns, YC cuts its growth-stage team (1:08:36) Science corner: Superconductors (1:24:56) DeSantis update, Ukraine spending run rate, bestie wrap! Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect Referenced in the show: https://seekingalpha.com/article/4565388-svb-financial-blow-up-risk https://www.wsj.com/articles/easy-loans-great-service-why-silicon-valley-loved-silicon-valley-bank-6b3f203e https://www.wsj.com/articles/the-silicon-valley-bank-bailout-chorus-yellen-treasury-fed-fdic-deposit-limit-dodd-frank-run-cc80761e https://www.bloomberg.com/news/articles/2023-03-16/credit-suisse-got-its-lifeline-now-it-needs-to-win-back-clients https://www.bloomberg.com/news/articles/2023-03-15/credit-suisse-top-shareholder-rules-out-more-assistance-to-bank-lf9gfhbr https://www.nytimes.com/live/2023/03/16/world/france-pension-vote#france-pension-vote https://www.politico.eu/article/police-fire-dutch-farmer-protest-nitrogen-emission-cut https://www.bbc.com/news/uk-england-london-64968795 https://www.treasurydirect.gov https://www.axios.com/2023/03/03/founders-fund-slashes-vc-peter-thiel https://www.axios.com/2023/03/15/stripe-50-billion https://www.businessinsider.com/sequoia-capital-venture-capital-returns-university-of-california-2023-3 https://www.wsj.com/articles/tiger-global-writes-down-venture-funds-bets-by-33-in-2022-3f9f6ade https://techcrunch.com/2023/03/13/y-combinator-cuts-nearly-20-of-staff-scales-back-growth-stage-investments https://twitter.com/Jason/status/1633570102326202368 https://www.nature.com/articles/s41586-023-05742-0 https://youtu.be/4lE8QWtrEvQ https://www.theatlantic.com/ideas/archive/2023/03/desantis-ukraine-pro-russia-position-gop-presidential-nomination/673392

All right, everybody, welcome to the all in podcast and with me again this. At least one bestie showed up for you. Wonderful, wonderful dinner. I sat as far away from the Luropianos people as possible in the arranged seating. Thank you for that. I guess maybe you were like, I'm going to contain the damage. Bernard Arnose had put the all caps on at the end and I said, okay, yeah, he still hurt me. I was like, come on. What's the amuse, booge?

Jake Al is joking. At dinner, every time he said something, he yelled like he was in all that. He's like, I want another butterscotch pudding! The butterscotch pudding is delightful, Sean! Sean's like, I'm four feet away from you, Jake, how you can take the cab slot? Sean was so embarrassed. Chef Sean crushed it. Chef Sean crushed it once again. Were Sean Christy. Chef Sean Christy.

Sean Christy once again. Were you sounding alarms when the restaurant like almost ran out of something? Alert, alert, alert. Restaurant is running low on coffee. We're dangerously low on caviar on this one. This is the hardest. I'm like your winner's ride.

Rainman David's side. I'm going home. And it said we open source into the fans All right, everybody. Welcome to the pod. Where we, you know, try to inform you. We try to make some jokes here. I just want to make what is a little bit of an opening statement here. It's not an apology and it's not a victory lap in any way. But there's been a lot of attention, I think, on the last episode of the pod and perhaps some tweeting from two of the four besties this past weekend. I saw, and I'll let you speak for yourself, your sacks, and we're going to get into the timeline of what's occurred and then what are potential outcomes here in solutions to the banking issues that we've witnessed in.

What is a week since the bank run on Silicon Valley Bank and the shutdown on Friday? But what I saw, and again, speaking only for myself here, was absolutely terrifying, up close and personally watching people pulling money out of banks and watching people have to set up loans to hit their payroll. And this was like one of those surreal moments in a movie where like a meteor is coming towards Earth and you see it in the telescope and nobody else sees it or only a small number of people in the observatory see it. And I think part of the reason people listen to this podcast is because we are insiders and speaking again just for myself, I'm always trying to be exceptionally candid and transparent with the audience. Additionally, I make jokes. So sometimes you might laugh during this podcast

or you might laugh when you're reading my tweets and that's part of what I do. Now, I also realize that we have an audience now that is larger than I think any of us expected for this podcast. I certainly am magnitude larger than I expected. And frankly, I didn't know if this podcast was gonna make a past 50 or 100 episodes

and my Twitter following count doubled since we started this podcast. And I think it's 80% to do this. That's because you tried to ruin the plot. I think it was because of the caps lock, but anyway, putting on that aside, what I would like to say as well is like, we are living in a situation that is unprecedented.

I think the alarm bell I sounded was because I saw a fire. We'll get into the timeline here, but I sounded that alarm bell after Silicon Valley bank was put into receivership, and when I saw additional bank runs occurring, I wouldn't change it. I think these were the right thing to do was to inform folks. Now, I did use all caps. Perhaps a little too much. That was a little bit of a bit.

If people didn't understand that, maybe I need to adjust my communication style. Now that this thing is so popular, but I stand by my mode of operating in the world, which is I always want to be candid with people. I always want to tell the truth. And yes, sometimes I make jokes about life and dealing with

these stressful situations. That's it. It's not an apology. It's more of an explainer. And yeah, maybe I need to adjust the caps lock or how I deliver stuff, but I stand by the message of what I said. And I think it's important for us to maybe look at the series of events and misinformation that has spread because there are people literally blaming venture capitalists for the bank run. That is now systematic and the balance sheets of multiple banks around the world. And I think that should be great for you to maybe

just comment on the week that was and the timeline of events. Yeah. So as usual, you're not apologizing. No, absolutely not apologizing, but we'll recognize that this platform is bigger and that maybe on the margins I could adjust my communication strategy.

But Chris, there's a lot of people who don't know that I make jokes and maybe people don't understand when I'm joking and when I'm serious, right? And so Jason, what would you change? Would there anything you change? Come on, I think I might not have used a Mad Max image and gift about the end of the world because people are too stupid to understand that's a joke and a fictional movie.

I see. So you find yelling effective? It depends. Well, Jake, I agree that I don't think you have anything to apologize for in terms of the substance of what you're trying to get across. I personally could have done without the all caps. It was a bit. Yeah, what you're basically saying is,

no one should listen to you because you're not that important. And I wholeheartedly agree with that. No, I'm saying, understand I might make a joke. Consider me more in the... Of course, of course. ...of course, category. Alright, let's go back and look at the timeline, because there are now serious accusations,

and I would call it really scapegoating, and it wasn't just you, it was me and Bill Ackman. In fact, the Wall Street Journal editorial board, which I respect a lot, mischaracterized what me and Ackman were trying to do in terms of drawing attention to a regional banking crisis in progress. I run on the banks, they called it spreading panic. I don't know how you tweet or publicly discuss a run on the bank that's currently happening

and needs to be addressed with an immediate federal intervention. I don't know how you can discuss it without then having someone else mischaracterize it as trying to spread a panic. But Jake, how the Wall Street Journal terrible didn't mention you. So you're off the hook. They didn't know who you were. Thank you. Thank you.

Thank you. But seriously, so I went back and looked at the timeline of all of this. And so first of all, we have to understand that this banking crisis now has swept in five banks, five bank failures. First, there was silver gate, but everyone dismissed that because it was some weird crypto bank. Then it was silver gate, but everyone dismissed that because it was some weird crypto bank.

Then it was SVB, but everyone sort of dismissed it because they said it was based on Panic EVCs rather than a systemic problem in the banking system. Then it was signature bank, which got seized on Sunday, which I think utterly refuted the idea that this was just a Silicon Valley problem. Then you had the Fed step in and backstop first republic, which would have been the next dominant of fall if it wasn't backstop.

Then five, you had Credit Suisse, basically, again, avoid an outright failure because they got backstop by the Swiss government. We now have five banks in roughly a week, and these are not small banks. Credit Suisse is a GCib, a globally systemically important bank, and the other ones are top 20, top 30 type banks, we're talking about hundreds of billions of dollars in deposits. So clearly, there's a larger phenomenon going on here, and frankly, it's being caused not by anything VCs did because VCs are just depositors. Where does one class of depositors?

And depositors are not to blame for what's going on here. What's going on is that these banks have huge unrealized losses on their balance sheet. And the losses have come from the Sun's spike in interest rates. That's what's going on. The Sun's spike in interest rates is because we've had the most rapid fed tightening cycle in our lifetimes. In the last year, the fed funds raised gone from roughly zero to almost 5%. That has broken a lot of things. And the banks which have broken first are the ones that had

pre-existing problems, and they had horrible risk management. But that's who gets broken first in a stress test, right? It's the most poorly run banks, the ones with pre-existing issues. But just because they went first doesn't mean that others don't have similar kinds of issues. Now, I'm not saying this in any way to be panicking, we were those banks will be fine, but there are larger issues in the banking system that are worth talking about in to the point about whether VCs could have spread this. Jake, how you're absolutely right about the timeline.

I mean, I went back and checked. I personally never tweeted anything about SVB until Friday afternoon when SVB was already in receivership and the run on the bank had already started with signature and first public and we could see it with our own eyes. And then this pod didn't drop. The one where we talked about this problem didn't drop until Saturday morning

when the banks were already closed. And by Sunday night, the Fed had acted and basically implemented our recommendations which was to basically intervene. So I don't know how you can blame this search for scapegoats, I think, is getting out of control, and it's just not factually accurate. And it's convenient to make tech, which is hated right now, Chimoff and Friedberg. You know, the scapegoat, venture capital, obviously, the part of tech that people might hate the most or the easiest target. But let's talk about the Fed raised those rates because of inflation and inflation happened because of out of control spending due to COVID and then the second administration. So you had a Republican administration that spent a lot of money and then a democratic

administration, Shemat, that spent a lot of money. So maybe we could even go backwards from Fed, fun rate, going, you know, what looks like parabolic when you look at the chart. Maybe you could speak to what got us to the Fed making those decisions, schemalt or freed burn. Maybe I can just do a little cleanup on what SAC said. I think the issues at Credit Suisse are different than the issues at First Republic.

And the issues at First Republic are different than those other three banks. The other three banks David that you mentioned signature Silicon Valley bank and sober gate all had very traditional liquidity crises right we talked about this last week which is duration mismatching where you have depositors who want their money today, but you have assets that mature in 10 years. And as a result, you have huge unrealized losses if you all of a sudden cash them out today versus waiting 10 years. I think what's happening at first for public is really just about making sure that that loan book and the depositors can get parked into a combination set of banks

that can take care of the balance sheet so that there are no more liquidity issues. At Credit Suisse, they have an enormous amount of liquidity. What that was was, I think, a lot of speculation around whether they would default on their bonds or whether they would theoretically need more liquidity. But the balance sheet itself was not only liquid, but also very solvent. So I think that was just more of a Hanaki reaction to comments from a 9.9% shareholder who just said that they can't put in any more equity. But even then, I went back, this is the chairman of the Saudi National Bank,

he was asked on Bloomberg, would you give credit to swiss more money? And he had a very reasonable answer, but it was snapshotded in a very awkward way. The first sentence was under no circumstances. Would he do that? Okay. Now if you stop there, you could be panicked, but the rest of it made a lot of sense, which is he said, look, in Saudi Arabia, if we go above 10%, we have to go through regulatory approvals domestically, and there are regulatory approvals abroad. That's a big hill to climb, and all

of a sudden, it no longer becomes a financial investment, it becomes a somewhat political investment. And so we're very happy at 9.9%. That was the totality of the statement, but if you just cherry pick the first 45 seconds and ran with it, which people on the internet did, this is sort of what caused that second level wave panic at a g-sub. And then the Swiss national bank stepped in and I think that that panic has largely gone. Okay, so what is the real issue? The issue again is I think we have had a bit of supervisory failure here, right? Because we all know this in any industry.

If you let capitalism go totally unchecked, shareholders will demand immediate profits today. It happens in every industry, except in ones where you can basically gamble on future profits. And that's what tech does. But every other shareholder in every other asset class demands money today, and that's the same for banks.

The problem is the banks are a highly regulated business. They are supposed to be supervised by the regulators. And this is a very clear example where why is there not a real-time spreadsheet? I mean, this is not complicated stuff where assets and liabilities and duration mismatching can be known on a real-time basis where the San Francisco Fed, Mary Daly, should have a report that's escalated to her when SBB got over their ski tips, which they did in Q4 of 2022. So, I think the real question that has to be examined is where were these folks for the last four months when they could have done something, not just about this, but rules in general for all banks that are not the

G-Sypses. I think that's a very important question that politicians need to get to the root of. Friedberg, we discussed this article from Seeking Alpha, which came out on, let me get the exact date here, December 19th. Title of this seeking alpha story is SVB financial colon blow up risk. And the summary in three bullet points says bullet point one potential losses in loan portfolios could severely impair book equity. Number two, unrealized losses in whole to maturity portfolio already equal to book equity. Number three, funding environment for startups were pressured to posit base. And even more pressure to the balance sheet.

In other words, startups spending money to cover their burn rate. FreeBurt. And obviously we had the Dodd-Frank rules lessened or loosened under the previous administration. And that specifically was driven by Silicon Valley bank that had a big part in that. So looking back on this and people do want a place blame, let's talk about the effects that occurred because this was hiding in plain sight, literally in December, in an article

that looks like it was written by somebody who went into a time machine and said, how do I warn people in December about this? Maybe you could talk about the feds interest rates, the spending and what led up to this, look issue with the banks. You guys remember when we started this podcast three years ago, we were like,

they're gonna shut down the economy. There's gonna be crazy second and third order effects of doing that. No one knows what they're gonna be. Here they are. And I think that's like the root of what is a rippling effect. You can't shut down the global economy and stop trade and stop people and have the government step in to write a giant check and not expect that you're going to have to cash that check at some point. That's effectively

what I think we've been kicking down the road here. the way we initially tried to resolve the problem was to drop rates to zero, and then spend our way back to a growing supported economy and then overshot, ended up with too much stimulation, too much stimulus, too lower rates for too long, responded too quickly with flashback. At the end of the day, there was a giant gaping hole blown into the global economy. When we shut down the world from COVID,

there's no blame. It's just what happened. And when that happened, there was a massive cost that had to be born at some point. And it's gonna get born at some point. And the rippling in a pond, you don't know where the ripple is going to hit, what part of the pond leaves it's going to hit. That's what's going on still. And it's such a

dynamical system. It's so hard to say with linear certainty, this is what should be done and what could have been done and what they should have done at the time. No one had that predictive capacity back then. They did what they needed to do. People thought that they should have stinted drop rates. They said we should have written do. People thought that they should have dropped rates. They said we should have written all these big stimulus checks. Some people said you shouldn't. Some people said you did. Certainly, some people are being proven right and some people are being proven wrong. But at the end of the day, the economic loss that was realized at that period of time, we're still trying to get out of it and we're still recovering from it. And I think that's a big part of what's

being eaten up right now. And you're going to see it in the wipe out of certain equity. You're going to see it in the wipe out of these banks, of the assets that they hold and these portfolios and the effects of that are obviously still being felt. Sacks, do you agree that mistakes that this, there isn't somebody to blame because it is clear that the Fed said inflation is transitory, that was wrong. And then they went faster than in history to raise the rates. Those seem like two glaring mistakes. And then the Todd, the Dodd, Frank loosening under Trump and with Silicon Valley bank pushing them, that seemed like a really big mistake. By the way, I wasn't saying the Fed's not to blame for not raising rights fast enough.

That was because you guys remember, I was the first person to talk about what Stan Druckenmiller had said that they're not raising rights fast enough that we've got massive inflation. We should have been raising rights. I was the first person on this show to be, you know, barking that. So don't, don't forget, like I was there. Okay. Like pretty early, what I was pointing out was like we shut down the economy during COVID. The global economy. Yeah, I got just that is the main cause. That is the cannonball that got blown through the ship. Got it. And everything else is plumbing and patching and work to try and keep the ship afloat. And we're still dealing with that. And at the same time as you guys know, we've been loading the ship up with debt, the global ship, the global economy

with debt, 360% global debt to global GDP ratio right now. And as that ship has gotten heavier and heavier to have a giant hole blown in the side while you're trying to do all this patchwork with all this debt weighing on it, it's a critical challenge. And the ship is feeling acutely here. They're feeling it in Europe now. And we're certainly going to see the global ramifications as we try and fix this economic catastrophe that was caused by COVID at the same time that we've been spending our way into a happier future that it turns out we have to pay the bills for at some point.

Sacks, your response. The question of who you blame for this banking crisis has really become a political Rorschach test, and I've seen that there are six different parties that people want to blame in this situation. And there's some merit to all of them, but the degrees are very different. Number one, you got the bank. Let's go through them. Okay, number one, the bank management of all these different banks. Clearly, very poor risk management didn't do a good job.

They are to blame. However, and Timothy is right about these banks, they differ in the details. But the point is that they're all operating under conditions of extreme stress Where did that come from number two the feds rapid rate tightening cycle clearly? I think that the combination of poor risk management with the spike in interest rates that basically has precipitated this larger problem number three is I think the Biden administration's spending, which in fairness started with COVID before Biden, the Biden really intensified it. And then I think it really compounded the problem in the summer of 2021 by claiming that inflation was transitory when it

wasn't, that allowed them to keep spending and keep printing money and kept QE going for another six months. That created the bubble of 2021. Everything got super frothy and then that made the rate height cycle even more vicious because you started six months later. They could have started six months earlier and it could have been more gradual. I think that really was a disaster for the economy. Number four, the D-reg in 2018. I think Elizabeth Warren and Rokana have made what I would call a compelling case that the D-Rag in 2018 have contributed to this problem. I think in hindsight

creating a two-tier system of banks where one tier are the systemically important banks who are completely guaranteed and backed off by the federal government and then a sort of a lower tier or second tier of regional banks was a poison chalice for the regional banking system. Because in the short term, it meant they were more lightly regulated, which may be appropriate for smaller banks than aren't these mega banks. However, it has also now, I think, created a situation where people are less confident about them.

And so the money flows are going from the regional banks to the systemically important banks, the SIP. So like I said, it might be a double-edged sword. And I think we're going to have to look at those regulations and figure out what's the right regulatory regime to create confidence in the regional banking system. We want to thriving regional banking system. And so the question is, what's the right regulations that get us there? And then that is the final two that we can talk about later are I'm hearing Wokeness getting blamed, which, listen, I think that Wokeness was a distraction. There were a lot of crazy programs happening

at these banks, but listen, if Wokeness was the key factor, the whole Fortune 500 would be out of business because they all do this stuff. They all do this stuff. So I think we're going back to the well a little too often on that critique. And I don't want to burn that critique out because I think that wokeness is bad, but it's not the key reason why this stuff happened.

And then the last group that gets. For wokeness, we could also maybe frame it as ESG more broadly as the distraction. Because wokeness is charged. ESG is real. Yeah, what I would say for sure is that if these banks have spend as much time on risk management as they did on ESG or on Woke then this crisis would happen. So definitely a distraction but not not the thing that like specifically caused it and then just the final thing is VCs And I just can't fathom at this point

Given the multiple bank failures given that we see the larger problem of unrealized losses on bank balance sheets that somehow any Class of depositors would be blamed for this. That just makes no sense to me. Jamoth, I think the VC, the critique is specific to Silicon Valley bank because I think and this article was in the Wall Street Journal, but what it shows is a really complicated intertwined relationship between VCs and Silicon Valley bank where, you know, VCs were given very cheap, interest rate loans. They were given GP call lines of credit.

They were given LP lines of credit. And then those same VCs would be directing their companies to put their deposits inside of SVB, who would then take those deposits and buy, perhaps, and buy risk. And while the reality is all of this stuff will come to light because I think it will get exposed as we go through congressional hearings on all of this But I think the I think pointing the finger at VCs in this specific case is somewhat warranted because there was a little bit of People working in lockstep together and there was a lack of functional responsibility around how to be a true fiduciary so if you come to a board and your founder is 22 years old and you give that person 15 or

20 million dollars, I think it makes a fair amount of sense that you are supposed to be the more sophisticated financial person in that room. And if you have incentives that aren't properly disclosed to that CEO and now a set of decisions are made, I think that that there should be some accountability for that or at least some exploration of why that happened. I just want to make sure the audience understands this because it is a bit in the weeds and it's a bit inside baseball. What you're saying, Chimoffe is, if I can summarize it, there are people who are the adults in

the room, venture capitalists. They have deposits at Silicon Valley Bank. They also might have loans that are fantastic with Silicon Valley Bank. They also might have loans that are fantastic with Silicon Valley Bank. I had a mortgage for this office from Silicon Valley Bank and I talked about how on the last episode, how great it is. They come, they open wine with you,

it's a white glove service that you wouldn't get at another bank. And then they might have loans against what's called the GP carry or the GP share or they might have mortgages. And so there's a conflict there. If you're a venture capitalist and you're directing a 22 year old CEO to Silicon Valley bank, maybe you're doing that is a guess. You're saying you could be bored. No, the big conflict of interest.

And in some cases, Silicon Valley bank is a limited partner in all of these funds. My point is that all of these things, okay, hold on. We have to explain that. So imagine a situation. You go and start a fund. Silicon Valley bank comes to you and says, let me be a limited partner and invest with you. Let me give you some amount of money. I don't know where that money comes from from Silicon Valley bank. But they, well, let's be realistic. More like 25, 50 million, 100 million. Okay. This is a lot of money. Okay. So a million kind of is whitewashing this problem.

So you give them a reasonable amount of money. They're like, wow, I have tremendous loyalty for you. Thank you. Well, do you need anything else? Do you need personal loans? Do you need lines of credit for your business? Sure. Why not?

I take those two. And invariably on the back end, now your loyalty obviously builds up. Again, none of this is wrong, but this is what's happening. And then you tell your companies to keep your deposits there. Maybe the cash management program is not as strong as it would have been if you were more circumspect and you didn't have those incentives to direct people to one institution only. In any other part of the market, so in the public markets as an example, there is such a

bar for disclosure. Okay, and I cannot stress this to you enough. Related party transactions, all of this stuff, we have to tell everything, not just for us, but even if our like sister or brother or mother may have a transaction with an entity that we're doing a deal with. And it just isn't the case in private markets. And so it's not to say that anything untoward happened, but when people point the finger at VCs, I think they are pointing to this whole set of issues and asking the question, shouldn't there have been more disclosure and transparency around it? And now that this has come to pass, shouldn't we explore it?

And I think that's what the Wall Street Journal did. They started pulling on this sweater thread. And my guess is that you're going to find a whole ball of yarn at the end of it. Sax, what do you think of this? I think Jamoth makes a fair point that if VCs have SVB as an investor and then they're directing startups to use SVB, that is a conflict that should be disclosed. By the way, we never did either one of those things. We never had SVB as a limited partner, and we also never directed our starts to bank

at SVB. I don't know why we'd ever do that. Moreover, I always try to talk founders out of taking venture debt, whether from SVB or elsewhere. Listen, we'd be clear about that. I never directed anybody to a specific bank. I know. I was told people to get two or three banks and have redundancy.

Totally. Yeah, totally. Yeah, totally. Yeah, totally. And look, founders have multiple VCs, typically, on their board. So the idea that like anyone VC directs them, which bank to use, this is not, that's not realistically what happens at these startups. But look, I think, Chimath is right that when there is a bank failure or any kind of failure of this big, then all the practices are going to be under a microscope and there's

going to be some scrutiny of things. Yeah, so. And maybe there should be. But my larger point is we're now operating in an environment in which clearly there's a larger set of stresses on the banking system. We've already had now five bank failures or near failures. Moreover, do any of us believe that this is over or do we believe there are more shoots to drop? If we believe that there are more shoots to drop, we may not know exactly what they are, but I think all of us probably

believe that we're not at the end of this, but but but but just finished the thought. If we believe there will be more shoes to drop, then clearly the issues cannot just be limited to Silicon Valley. They have to be a larger set of issues. I think that it's important to understand the facility that the Fed created. So what the Fed did this weekend is essentially create a buyer of last resort again. Now how do they do this? So all of these banks basically have assets that they bought for a dollar and are now worth 95 cents.

And that's what's creating this whole issue or 80 cents or 85 cents, you pick the number. But they're not worth the dollar that they bought. What the Fed basically said is, okay, give me that asset, give me that bond. I will value it at a dollar and I will give you a dollar as a loan and you will pay me interest. And the interest rate, I think, is what's called OIS, and they added 10 basis points on top. So I think it's about 4.9%.

So what it allows all of these banks, and if you take all of the banks that are not the top four in America, so the top four are JP Morgan, B of A, City, and Wells, so just ignore those for one second. The other end banks, if you look at all of the assets that are underwater because of all the rate hikes that SACs talked about. And you add up all those losses. That is about $2 trillion. And the Fed didn't denounce that there was a beginning and an end to this program other than saying these would be one-year loans.

And so I think the exposure for the American banking system at a minimum is going to be this $2 trillion. Because now the incentive, if you're a banker right now running one of these banks that has not gone under, is to immediately go to the Fed, put all of those assets to them, get alone, and now take that and buy different assets, different bonds, different US treasuries that are yielding much more than what your old treasuries were yielding. And I think that's the arbitrage that we've unfortunately created. And the other question now, though, however, is what does that mean for the top four banks?

Right? Because if it's two trillion for everybody else but the top four, what's the gap for the top four? That looks like it's somewhere between a trillion's two trillion for everybody else but the top four, what's the gap for the top four? That looks like it's somewhere between a trillion and two trillion. So that's another amount of money we're going to have to cover. The Fed will have to backstop. And then, as Friedberg said, these checks always come to what do we do in a year? Because in a year, the problem is the only way to make the banks in a position

to repay this much money in one year is to cut interest rates so massively that these assets massively inflate and now all of a sudden you're in a position to cover this. So it's a great deal to it. So it's about, they're down 15%, 10% in book value these Long return security again, it depends on what they bought

We don't really know enough details so I don't want to guess But if you own these 10-year treasuries you could be off 10 or 15% if you own mortgage-backed securities it could be off a little bit more if you own short-term securities They're off a little bit less, but these are with the government you get a loan trim securities, they're off a little bit less. But these are with the government. You get a loan collateralized by these assets. So you still holding them, right? Yes. And they mature. So if the Fed takes an emergency posture and says, Okay, guys, we want to avert a crisis in a year from now. And we're going to cut rates. These assets that these banks own will be worth more, which will allow them to repay the loan. As far as I can tell, all we've done is we've kicked the can down the road for a year,

but I do think it's important for people to realize this doesn't solve the problem. It just means that Mark your calendar for a year from now, we have a problem on March 15, 2024, because all the folks that took money, what do we do? Yeah, and so a year to work it out, freeberg would seem like a good idea because the Fed is fighting inflation. They seem to have gotten some portion of it under control. It's not out of control, right, inflation.

And maybe if they can slowly, you know, either start rate cuts or pause. So let's shift the discussion to, hey, what are the changes we need to make to the system? And how do we think this plays out over the next year? Freeberg, Shemoth had one suggestion, which was all of these banks should have a disclosure statement, mark to market every day, week, month, quarter, whatever it is, just like circles USDC, their stablecoin has a page with their disclosures of all their holdings.

So that seems to be a very productive one. We should have them mark to market the Dodd-Frank stuff. As SAC said, Elizabeth Warren probably correct, we need to reverse that. So those are two very tangible suggestions. We need to have a real-time dashboard. We need to have a real-time dashboard at every single Fed that allows them for every bank that they supervise to know in real-time. They should ignore it.

I'm not sure that should be true, but they are their supervisors. They should see it. They should choose to ignore it, but they should not not have it. Freeberg, what are your suggestions going forward as to how we can learn from the situation? Forget about the cannibal as you vividly express there, I think very well, a great analogy. But just going forward, how do we keep the ship from taking on water if we do have a cannibal hit it again? Now, we got a hard, that's a hard equation to solve.

We got a lot of demands. That's why I'm asking you. We got a lot of demands for money. You guys see, I think there's a lot of things that are team unrelated that are all pretty related right now. There's a massive protest underway by labor in France. There's a massive protest underway in the Netherlands. There's strikes on the underground in London. When we talk about global debt and US debt, we often, I don't think account for all the

debt, which also includes promissory obligations made to a workforce, global workforce that's been working for decades, individuals that have spent their whole lives committed to some company or to some government working with the expectation that they're gonna retire and have some benefits paid to them. And there's this massive underfunding of those benefits and those pools of capital.

We very quickly talk about unfunded pension liabilities. But when you actually kind of account for the number of people and the amount of capital that those people are expecting, that the workforce, the global workforce is expecting to be paid to them in retirement, both public and private, it's a massive amount of money that's not funded today. And you start to see the cracks in the system when that population says, my pension payments are not keeping up with interest with inflation.

Or when there's a threat that pension payments or retirement benefits are going to kick in at a later age, or you're not going to get them fast enough, you're not going to get as many as you thought you were going to get. We have that problem in the United States and the form of social security and these underfunded pension liabilities. That is the critical macro attention in this equation that I think drives the real problem

that's going to come to a head at some point. We blew a hole in the boat, but we're also forgetting that there's a massive amount of weight that's going to drop on the boat. And I think that it's a really hard equation to solve. We can talk about keeping banks solvent and all this sort of stuff. At the end of the day, the central bank, it appears in the United States and probably

globally, it's going to be one big bank, right? They're basically going to take on the whole balance sheet themselves. And at the same time, you've got a lot of folks saying, I want to get paid more. I have obligations due to me. And guess what, Jason, here, important statements historically about the importance of democracies, ultimately, the members of that democracy are going to say, this is a benefit that the majority are owed. And that's going to pull things out.

I think the only stop gap, I'll just say one thing, the only stop gap in the next decade is going to be significantly higher tax rates in the United States. I don't see how you're going to fulfill the tension gap that's underway right now with respect to where productivity is going and where capital markets are going and where the demands are on the system from people requiring additional capital to come out to them without taxing assets away from the asset holders. So this would be corporations and high net worth people. And I think that's why you see this fight in proposal. We may not like it, but at the end of the day, it's going to be the only way to create a stop gap that's going to avoid massive inflation in the near term. I use that cell, I use it by a proposal.

Hold on, hold on. Let me just say the only other way, the only other, I'll just say one more thing, Jake, I'll let you go. The only other way, besides, you know, a massive long-term tax regime to fill the whole, would be some extraordinary productivity gain. And this is where we can all have a hope and a dream, an investment, an effort around technology. AI, automation, people think that they're threatening some job, energy. But if you can get energy down below a three cents a kilowatt hour and you can scale its

production by tenfold, if you can automate a lot of labor, if you can get AI to do a lot of stuff that we do today, productivity will go through the roof. The economy will grow fast enough to get out of the debt bubble and meet all of these liability obligations. So there are three ways. Yeah, just to summarize. So to me, to me, that's the long term. The medium term is going to be this tax stop gap. It's very high tax stop gap. And then the short term is going to be all the shenanigans that we're talking about.

Okay, I'll go to you in a second, SAC. So just to recap, there is actually a third way too. There are three ways productivity as you very stutately point out, and we just highlighted some of the ways productivity could help, whether it's energy, AI, etc. The second is, of course, increasing taxation on the people who are at the top of the pile would be the likely solution. The third is also austerity, cutting spending in some way, but let me also propose one thing here. As we look forward to what do people want out of a bank and how should startups or just individuals deal

with bank runs and their trust in banks to Tremots Point, I was thinking about this over the weekend and this discussion that we would have based on a lot of things you said, SACS, which was people just deposited their money and they don't have the ability to assess if a bank is solvent because the FDIC can't do it and it's their full time job, it's their mandate to make sure these banks are solvent.

So how is a consumer going to be able to do that or even a startup founder or even a sophisticated investor like Ackman or any of us before you infest sophisticated. So let me pause for a second here and pause at something. We don't want a bank. We want a bank vault. Consumers do not want their deposits to be used for shenanigans. Just like many people with rather pay for a social network than have their privacy data sold.

So I think we should bifurcate banks into bank vaults and banks. Banks can do what they want with your deposits. You get free checking. we should bifurcate banks into bank vaults and banks. Banks can do what they want with your deposits, you get free checking. But what I want in a bank, what I want my startups to use, what I want my venture firm to use, is I want to pay the bank for services. Whether it's 10 basis points, 25 basis points,

$500 a month, I would rather see my startups, pay $1,000 a month in banking fees, $2,000 a month on banking fees for $2 dollars, whatever it is, and pay for each check, pay for wires, pay for a white glove service, whatever they choose, but not allow the banks to take that money and loan it out or do things with it. I just want to vault, and I think a vault service is what the majority of consumers want, and given what we're seeing with two insane bank run bailouts in our lifetimes as adults for those of us who are in gen X 2008 and now we would

rather pay for services on a leave it to you sacks is this a potential solution because I don't hear anybody saying give me a bank fault and why does that service not exist in the world. Yeah, look what people really want are they want a service provider who gives in the world. Yeah, look, what people really want are, they want a service provider who gives them the ability to make payments, which if you're a small business is payroll and payables, things like that, they want a money market fund to basically earn interest. And they want all that to be safe. I mean, it's, it's very simple.

The idea that when you go open a checking account at a bank that you are making an unsecured loan to that bank, that is not something that any consumer of small business understands. That whole model, I think, is completely obsolete and outdated. And what I heard so many people say, and I think this is not sincere. I think it's because they hate tech, is that depositors should take it on the chin because somehow they made a stupid decision when they opened a checking account. It's like, are you kidding me?

Listen, what do you want the process to be? You want consumers and small businesses when they open a bank account, have to review the financial statements of that bank, try to figure out all their disclosures, where their assets are, whether they have toxic assets on the books, and if they don't do a good enough job doing that, if they're not smart enough to do that, then you want them to be disciplined. This is the word that I kept heard being used

as we need to discipline the depositors. The depositors are not in a position to evaluate the balance sheet of these banks. That's what the feds are supposed to do. That's what the regulators are supposed to do. That's what the regulators are supposed to do. That's what movies is supposed to do. And you're telling me that a bank that had an A rating from Moody's the week before,

and had an FDIC seal of approval, that somehow they got it wrong, and the feds got it wrong, but the cost-related news is supposed to get it right. I mean, come on, that's ridiculous. In related news, Tremoth, I would like an airbag in my car is to protect my family,

but I don't want to evaluate the airbag technology and unpack it and make sure that it's got the right right. Yeah, let me finish the point. It's about consumer protection here. And I don't care who the depositor is. If the banking system is going down because the feds haven't done their job, I mean, pal, two days before the bank failures was testifying that he didn't see stress in the banking system. So either he was lying or asleep at the wheel. Sleep at the wheel, like I said.

And they're gonna say the feds had given the seal approval to SVB and all these other banks. They had all passed the regulatory exams. And so to now put it on the deposit when the fed screws up and the regulators screw up and Washington screws up by printing all this money and creating this inflation that we've had Again out of all the six parties that you could blame. I just think it's the least culpable Chimoff should there be a service

That provides no interest but is just a custodian of money That is absolutely protected. Where is the bank vault product in the world? Does it exist? Because I can't seem to find it. Some people seem to say, I think Freeberg, you alluded to this maybe in the group chat, that if you have a brokerage account, that's kind of similar to what I'm saying, but it doesn't have it.

I don't want any interest. I don't need any interest for putting this money in the bank for a startup. They're not in the business of making one to five percent and optimizing for that. I have founders who are now sending me five page memos. If the bank can't use your money, they're gonna charge you. So remember, I want to be charged. That's the service I want.

But I think this is an important point. A bank is a service provider. They spend a lot of money building technology, having people that work there providing service and infrastructure. So for the services that they're offering, if you're not going to let them use your money to make investments with your money and they can participate on that gain, they have to charge you. They charge you. And I think that's really worth it. But if that's the case, freeberg, freeberg is not a service provider under the current laws.

You understand how it works now is that what we're being told is that when you went to the bank thinking you were just getting a service provider and frankly largely a commodity service provider. understand how it works now is that what we're being told is that when you went to the bank thinking you were just getting a service provider and frankly largely a commodity service provider. You're getting a phone manager. You're getting an instant manager. Yes, and you're being told that you actually made a risky investment decision.

Think about that. When you open a checking account, you weren't just trying to, you know, again use a vendor, you were actually making a risky investment decision. That's what they're trying to say. And you deserve to lose your money if you chose poorly, even though nobody else could figure it out. And on the extra to figure out, you should go to the right.

You should talk about the challenges of your system to someone who lives in Argentina. It's far worse in other parts of the world. And we've come a long way in the last 100 years. We talked about 500 or 600 bank failures on average per year in the 1920s. So I'm not saying that, hey, that's not the case, but there's always been to some degree risk when people are giving their capital over to someone else. And we've certainly made huge strides in progress,

but I think J. Cal to your point, there is a point of privilege now that people are saying, I wanna have a position where I know that my money's not gonna get used, not gonna get moved, gonna be completely safe. In a democracy. And what would you pay for that? What's the price free, Burke? What would you pay for that? What's the price free, Burke?

What would you pay for that? Because right now we're basically giving every crypto entrepreneur, and zealot, you know, basically the high ground, because they could make this product. I would pay 10 basis points, literally $10,000 a year per million. Is that right? Yeah. Remember when you thought Jeff Bezos was going to be president? I still think it's a distinct possibility.

Anyway, what would you pay for this product? Just like Shamaath or like Bloomberg or Bezos. I don't want to speculate on new products. It's kind of a dumb tangent. I think the thing that you're bringing up though is dumb tangent. Why doesn't a product like this exist? And I think that it was very well explained.

It's that every for profit business is in the business of making money. And there are physical costs that you have to bear. In the case of a bank, there is physical infrastructure, literally bricks and mortar, that go into making the branches. There are lots of people. There is lots of software.

There's lots of complex back office and middle office things that banks have to do in order to accept money. That has a cost. So I don't see how it will be very easy for somebody to create a bank that just stores your money for you without you being charged quite a lot of money. Unfortunately, I think that there has to be a different way to solve this problem. Unfortunately, I think that there has to be a different way to solve this problem. And I think that what we did after the great financial crisis was the regulators wrote down all kinds of new rules. But the crazy thing in 2008 were those rules were written on paper.

And now we're in 2023 and these rules can be written in software. And so I think what it requires is some amount of tactical real-time intelligence that regulators need to have over those that they regulate. And I don't know why we're so afraid of demanding that the next time some of these complicated real-time laws are written in law that they also need to get written in code. And I think that that's a practical solution. It should be the case that every bank that's supervised by the Fed has a dashboard that has all of the key levers that allows what you said,

Jason, to happen, which is a real-time market. Should those or should those be, or should they not be disclosed to shareholders? That's a different discussion. But the regulators should have a hundred percent transparency into how these organizations run. Because as SAC said, they are an enormously critical institution that at best case after this fiasco, what we've realized is very poorly misunderstood by consumers. And that at the worst case, is being mis-marketed to us. And I think that that shouldn't be allowed.

We're also missing the other side of the balance sheet. We haven't talked about it at all. But banks play a really critical and important role as lenders. Banks act as the channel for lending capital to small businesses, for lending capital to individuals to buy homes. It's the primary for lending capital to small businesses, for lending capital to individuals to buy homes. It's the primary place where capital is provided

to help fuel economic growth and prosperity, particularly in the United States, where we have such a liquid fluid and available mortgage market to support home buying in America. And the absence of, you know, Jason, what you're talking about, having the ability to use deposits to make loans

and have what banks have fundamentally been in this country for over 100 years, which is taking short-term deposits to make long-term loans and making sure that there's some degree of balance and availability of liquidity to support transactions. And ultimately, mortgage securities came out of the need to generate more liquidity by banks to support depositors. And obviously, there was all these inflationary things that happened in the market and bubbles

that happened. But it's an important role that banks play. And the lending aspect of banks, if it gets stifled too much because we swing too far the other way, it can actually have a really adverse effect on economic growth and prosperity and the ability for people to afford homes in this country. So that's the other side of the coin on where things can go back. So this is where I find like the current banking model to be sort of like weird and maybe obsolete

and definitely not what consumers expect. So for example, if you go to a bank and you put your money in a deposit account and then they loan it out to make mortgages, do you realize that you're an investor in those mortgages as the depositor? I don't think you do. I mean, what they do an investor in those mortgages as the as the depositor? I don't think you do. I mean, what they what they do is they take those mortgages stocks, they package them up, they sell them and they get an origination fee and they

get the money back. Not always. They're not. They're not always. Maybe they should be. Maybe they should have to be. The B of A Wells Fargo do not exactly. So B of A Wells Fargo, for example, they do a lot of that. But if you look at first for public, they have a $90 billion loan portfolio on their balance sheet that they've not packaged up and sold. So the packaging and selling of mortgages generated the liquidity that the banks needed, but there's a cost to that. So a lot of banks will try and balance out their loan portfolio where they'll package

some of it up and sell it. But when they do that, they take a loss or they pay a fee. Maybe they should be required to do that. Because, yeah. Because, I mean, look, to the point about market to do that because it's very hard to mark an asset to market unless it's liquid and publicly traded. Let me give you an economic point. I think that there's about $7 trillion in deposits in banks.

What you guys are saying happened, you're basically sucking $7 trillion out of the system that's being used to fuel purchasing in the form of loans. You're taking that set or call it a 10% discount to that. So about, call it $6 trillion. And you're saying, we got to go find a market for $6 trillion of loans. And then we're going to have $6 trillion of cash sitting in a bank account doing nothing. And that, that challenge is the way of thinking. No, that cash will go into money market funds.

So in other words, like you'd package up all those mortgage bonds, you create a mortgage bond security. And then if consumers, if depositors want that product, they'll just buy They'll just but they'll just buy it. It's not as much as a money market. Yeah, but what is a money market? It's it ends up being the same thing where money is you earn interest on cash that's being used to make investments elsewhere So ultimately if you want to earn interest on your cash It has to be loaned out somewhere to someone I understand but what I what I'm saying is, look, I'm just brainstorming here. I don't have the answer. I don't have the answer.

No, it's more like a spitballing. Yes, exactly. I'm not saying this is what should be done. I'm just kind of asking whether it might make more sense. What if on the depositor side, all of the things you put your money in are money market funds? And then when the bank goes out and does its lending business, it does ultimately, at some point, have to package those up and they get turned into securities.

You know, but money market funds, you know where that cash goes. And when you invest in a money market fund, you're giving back money to someone who's using it to make a loan. Like it is also. I understand, but then the deposit will never be a risk. But it wouldn't be marked to market as sex as a point. The deposit would never be a risk of being a risk of bank failure. I just want to give you're shifting the risk

equation to the fund manager, the money market instead of the manager of the bank and at the end of the day, the money is just the owners of the owner of that security, that money market fund, that would take the hit. Okay, just as we wrap here because I'm going to talk on some other issues as well, there's two things that are super tangible that founders can do right now are people who want to mitigate against these kind of issues. There's something called ICS, insured cash sweeps.

These are accounts that automatically will put your money into multiple FDI insured institutions, 250K at a time. We talked about this previously. There's a bunch of folks doing that in Fintech. I won't give any of them free plugs here, but you can just go look and search for ICS. At the time, we talked about this previously. There's a bunch of folks doing that in Fintech. I won't give any of them free plugs here, but you can just go look and search for ICS. There is also maybe some thought here that the FDIC 250K limit. Maybe that's outdated, certainly for businesses it is. So maybe that should double or triple, and obviously that cost would be spread out.

And then finally, you can go to treasury direct.gov right now now by short term government debt and i literally have startups doing this we have major treasuries they're going there and buying short duration stuff themselves holding it themselves so they don't have to worry this is part of the provided by the government is my understanding and uh... people are buying direct from the government i personally am not a fan of start of spying T-bills because of the duration mismatch problem.

They always underestimate when they're going to need their cash. And so I don't like tying up cash in the bonds. This is if you had a giant treasury. Yeah, but this is for giant treasury. They always get it wrong. I see this all the time. Whenever they try to, let me just say, when starts trying to create laddered bond portfolios, they end up needing the money sooner than they thought. What I'd much rather see start of do is buy a 100% UST bill backed money market fund run by the absolute biggest to the big

financial institutions because you can get in and out of it at any time you want. And without paying a fee, and that's so much better than trying to manage your own bond portfolio. Let a professional fund manager do it. Well, there are people who do provide these kind of bond ladders. I'm just telling you what the best practice advice going around is. Why don't you buy a ticker symbol through like a brokerage account? Sure. Or multiple ones, right? But now this is, I think, speaks to Chimoff.

The fact that we have startup founders and people having to measure, manage a treasury, this granularly, is this a failure or is this what should be happening? Should we have to have treasuries in the $10 million or $20 million range be this granularly managed or should this just be FDIC rates, you know, should be just a 10x? Well, in the absence of regulatory changes that protect this money, you need to have a financially sophisticated actor on the board. And again, I go back to that should be your venture capitalist. And that person should not have conflicts of interest with the banks that they direct

you to. I mean, I don't think that that's a very controversial statement. Yeah, it's just not happening. And I am just flabbergasted that people are not even doing the basic blocking attack on here of having three or four accounts. I've always had three or four banking relationships, always had it split up. Should we move on to some of the other pressing issues there was a a really interesting Founders Fund story about them breaking their latest fund in half? And then there is Stripe closing their funding. Which one would you gentlemen like to go to or a

different story on the docket? I think there are there are four things that are very interrelated. Okay. In startup plans. So Founders Fund took there just to make the math simple. Because I'm going to get the numbers not exactly right, but it's like a $2 billion fund that they're gonna break into $21 billion funds. I think that's one story. It's a $1.8 billion fund. They're gonna break it into $200 million funds.

It's their eighth fund. It's being cut in half and it'll become eight and nine. I think what that speaks to is valuations and the marks that we think we have for existing companies and the future value that smart investors like the C all roads lead to, we're in for a slog. And so trying to put a $2 billion fund to work doesn't seem to make a lot of economic sense to some of the smartest people in the room. So that's that.

The second thing is there. It's according to Axios. Peter Tio led this charge and he is the the the Contrarians Contrarian. He was the one according to Axios that led that cut of the fun size with Summit Founders Fund according to the reports. I'll say the more important thing, which in Peter and I are in the same were the largest Alps in our funds. And so, you know, as the largest Alpeas in our funds, I think this is a no brainer decision. Number two, Stripe basically takes a 50% haircut, which is the single best run, most highly valued company in Silicon Valley.

Again, that's going to eviscerate. Try the company. A lot of TbPI and a lot of people's portfolios, a lot of theoretical money that LPs were going to get. I think the third thing is there's a person that went and filed a FOIA request that you see Berkeley to get Sequoias returns and it turns out that the best investor in the game, quote-unquote, since 2018 has not really done that well. And I think in the University of California invested over $800 million in Sequoia since 2018, and I think has returned what some 40 million bucks on that number.

And then the fourth which just came out today is that Tiger wrote down the value of their private book by 33% For 2022 and so you know, I think Tiger's a UN basically has gone from a hundred billion to 50 billion In a year there's one more no to add to that. Why see basically leko of their growth team this week. Why combinator For people didn't know how what was called the continuity fund. They were doing late stage investing and that got cut, which is a signal and the 17 employees are gone now. And Gary Tan, I think, is making the right decision.

They have to focus on what they're great at, which is the earliest stage of the company. And they had confidence with this one. Look, this is the most interesting thing for me in the following way. I think the Y-combinator Unicorn Hit Rate is 6%. So every 100 companies that come out of Y-C, which costs only about $10 million to seed, 6 of them become worth a billion dollars or more, and obviously some become worth much, much more. And so if you see how difficult it is is even for a growth fund that's attached to

that funnel to be successful and make money, because obviously if this thing was tending cash, you would not have cut it. I don't think anybody would do that. So I think it was a very challenging strategy at a challenging moment in time. And so I applaud these guys for having the discipline to do it. But if you take them all in totality it is a complicated place in venture capital and startup blend Holy macro like it's a reset a it's tough to make money be a lot of folks may not know exactly what they're doing see a bunch of valuations are totally wrong and D we're gonna have to start doing the cleanup work now of resetting of it, which just takes years, as you guys remember, in 2009.

It took us five years to fix this. It's a hard reset, SACS. When you look at these in totality, what would you say? Well, I agree with what Jamal has said. I mean, it is going to be a hard period with a lot of resets, a lot of restructuring, a lot of cap tables, there's a lot of mess to clean up. All of that being said, I think I'd rather be an investor today than an investor two years ago or one year ago, because at least the valuations have corrected

to some degree. And then also we have this really interesting AI wave happening now. And there's a lot of opportunities to invest in that new cycle. So at least there's like an interesting product cycle. It's getting me excited to go to work and see these new demos from all these different companies, whereas you go back a year or two and just the product innovation doesn't seem as world-changing as it does now. So I think that as bad as things are,

my guess is that the new ventages of VC are going to be better than, you know, call it 2021 for sure. That's not going to be a high bar. It's not a high bar, but still. That's the thing. But actually, Timothy, this is a contradiction. Trash.

Trash. This is the contradiction. Is that it felt better to be a VC in 2021, but in hindsight, we know that the vintage is going to be not good. 2021, but in hindsight, we know that the vintage is going to be not good. We're asking how many... David, how many... Hold on, but today, it feels not great to be a VC, but I think the vintage will be a lot better. But anybody would tell you that at some point, you're going to have to divorce yourself from

emotion to be a reasonably good investor over long periods of time. How many data points do we need to realize that too many people were put into this game that may not have known what they were doing? And we're going to have to go and work through all of those excesses. And I think it's just going to take a lot of time. US limited partners are in a really difficult spot. European investors, I think are probably in a pretty difficult spot. There are a couple of bright points around the world, the folks that are still optimistic and doing well. I think Middle East is one.

Southeast Asia is another. But other than those, it's just a whole group of folks that just have to get completely re-underwritten from first principles. Even when you have an incredible platform like Sequoia, five years of no returns on $800 billion for somebody like UC Berkeley, what it really means without commenting on Sequoia's performance is that UC Berkeley is effectively out of business in being a limited partner for the foreseeable future.

Well, and I think that that has implications. So even if you think these ventages are great, I don't think they're open for business. And frankly, even if they wanted to be open for business, how do you go to an IC when they look at all of the totality of those dollars that have not made anything, how do you justify the next 800 billion? I just think it's very hard. While I agree that LPs are out of it, I think the story was garbage because it all funds go through a J curve and they're literally talking about the majority of the funds in that vintage, 2008, 2019, 2021, they're all, literally, the definition of the J curve, the third, fourth, fifth year. One of the most important things you need to be able to do is measure how long does it

take the Delta T to 90% of calling committed capital and how long does it take the Delta T to return onex DPI? I can tell you Jason, if you're a reasonably good fund, those numbers should be between five and seven years for both, which none of those funds I've had, the average for a normal venture fund is around five to seven years to call 90% of the capital and around five to seven years to call 90% of the capital

and around five to seven years to return one XTPI. I'm just telling you, that's what the average is. And if you talk to firms. So all I'm saying is there was a period of time where in the absence of getting money back again, this is not a secoy of it. It just means that there was an entire cohort and years of capital allocation that is not necessarily in a J-curve,

it's impaired. Because if after five years, you've returned nothing, sometimes you just have to see the writing on the wall. Sax, explain the J-curve one more time for folks, and then what is your analysis of that Sequoia story? Well, the J-curve, the theory behind it is that when you start deploying a new fund, you're drawing fees down to pay for the firm, and the investments you've made have not been marked up yet. So the value of the fund is actually going down because some of it's going to eat up and fees, and you haven't really had a chance for any of those investments to be successful.

And then what happens- And shut down tapin' early, right? Well, I don't even know about that. I just think they have an chance to get marked up. But then what happens is you start getting markups, and now, at least on paper, the value of the fund goes up. And then hopefully, those markups eventually turn into distributions, or DPI like Jamoth is talking about. Yeah, we have a vintage 2017-2018 fund that's actually

fully returned at this point. You exited some secondaries for acquisitions? No, we just had some exits. But look, I think that is a little bit on the early slash luck side. But we haven't really seen much of the J because you know, you should be getting markups within two years, I think, on your investments if the companies are looking good. At least historically, that was the case.

Freeberg, any thoughts on this collection of stories with venture, basically having the great venture reset? The end of the super cycle, the beginning of the next. It's happening. Okay, we're in the thick of it. But by the way, I would just go back to the point that with all the problems Tremoth is talking about, the reset and the wipeout that needs to occur. I think that's part of what makes this a better time. Absolutely. To be an investor. This is what I'll say about that,

SACs. I think I agree with you. I disconnect asset values and asset prices from fundamental business value being created. So the market bid stuff up, prices went up. That doesn't really mean that businesses aren't fundamentally good, that there aren't amazing technology businesses being built today that are going to affect billions of lives tomorrow. If you are tracking a public company stock

and you like the business, you spend time with management, you see what they're building. You see their revenues growing. Their profits are growing. They're making great products. People are happy with what they're doing. But the stock is really expensive. You don't want to buy the stock. Suddenly, the stock drops by 80%. Nothing about the business has changed. It's just that the market is paying less to own shares in that company. That's a great time to buy that stock. I think that's the moment we're in in Silicon Valley. Everyone's like, oh my god, it's over. There's a, things are terrible. Just because the asset prices of the shares in companies has gone down does not mean that the

quality of the businesses has changed or that there isn't fundamental value being created in Silicon Valley. In fact, the contrary point to SACS' comment is that it is a great time to be buying these shares. And it is a great time to be investing. And it is a great time because, as we've talked about countless times, there are extraordinary technologies from AI to biotech becoming software to fusion to novel applications with AI and SAS and on and on and on. Many of the amazing things we've talked about that I think can and will affect many industries and billions of lives are being built today and they're not going to stop being built.

And you can now buy the stock at 80% off. So, you know, if you're investing today and if you're a builder today, as long as the capital keeps flowing to support the building work, which I think to some degree it will, because there's still enough of it sitting there, you're not going to have a lot of these crazy growthy rounds with high prices and all the nonsense that went on the last couple of years, but there's certainly a lot of opportunity to create real business value. And right now, an opportunity to buy shares pretty cheap and participate meaningfully in that value creation.

I'll tell you the thing I'm seeing on the field and like playing the game on the field is something we've been talking about for the last year. We started a program called Founder.University and it's basically like a 12-week course on like how to build your MVP. We had 350 people join the last one. What's the discount code people can use to? This is not discount code. It's free for founders, basically. If it's free for founders, if they come to the 12 weeks. But anyway, what I did was go to the W. No, it's Founder.University because it's an extension. But in the words of of sacks, let me finish. Please, let me finish. What we did was we just said anybody who gets to an MVP and it's two or three builder co-founders will give them a 25 K check. And

I did 20 or 30 of these 25 K checks in the last couple of months of just the founders right now who have been laid off by other companies their dog-id pragmatic Absolutely customer-centric product-centric founders whereas the last five years have been filled with theatrics and white papers and ICOs and just nonsense and absurd valuations and people wanting credit for work not done. And now people are actually building MVPs and their dogged product driven founders, customer centric mission driven founders. And it feels to me like 2010 all over again.

That first part is so well said, people wanted all this credit for work not done. And for progress not achieved. That game is over. Finished, finished. Which means if you are a product, let's CEO, and you're a mission driven CEO who actually built something, you stand out so much in this ecosystem and have people begging for money,

sending me long emails and decks and totally trustable market. I'm just like, can you just build a product and show me that you can actually deliver a product? And then we'll start the process of the rewards-based system here. The reward-based system in Silicon Valley is so magical when it works. You get money from Founder University or tech stars or Y-combinator, then go to a seed fund, then go to a series A fund.

That milestone-based funding was so broken and now it back, and it's so functional when it's working. It's just a magic of Silicon Valley is when people work and get rewards, work and get rewards. And it just creates this great pace and dynamic that I'm glad to see. Just as we wrap here, everybody's been begging for a science corner. Enough about the chaos in the world. Everybody wants the Sultan of science to tell us and educate us about something and Saks needs to use the Lou anyway. So let's do a science corner here. Room, temperature, superconductor, you sent me a link, I read the abstract of this paper and I don't know which language

I need to put this into Google translate but I couldn't understand any of it. So please, I literally read the app shi- that I was like, I couldn't get through the first two sentences without having to start to research. I'll start with just like the simple explainer on superconductors. Please. You know, materials that conduct electricity

are called conductors. So conductors, electrons move through them, like a copper wire. That's how electricity flows. And all conductors have some amount of resistance, meaning not all the electrons kind of flow through at a perfect rate, they bump into the atoms in the material in the wire, and they generate heat. You know, you've ever felt a wire while electricity flowing through, it gets hot, right? So that's because the conductor has some resistance,

which means the electrons bump into the walls of the atoms in the material, they generate heat and you lose electricity, you lose energy, you lose power. And so in 1911, it was discovered when mercury was reduced to a very, very cold temperature, that there was a point at which the material conducted electricity with absolutely no resistance. So the electrons flowed through the material, completely unbounding, un, you know, not bouncing

into the material, not generating any heat. And having no resistance mean you're losing no power in transmission of that electricity. But a number of other super interesting effects occur. Number one is that magnetic fields now reflect off of that metal perfectly. So if you put a magnet, you ever see that image of it and Nick, we could probably pull one up in the YouTube video. We put a magnet on top of a superconductor. It actually floats because the magnetic field, like the north and the north push against each other and it floats up. So superconducting materials kind of became this fascination in the early 20th century that, oh my god, if we can actually make materials that superconduct, there are all these amazing benefits.

One of the benefits is you could have no loss in electricity being transmitted. Today 15% of power is lost in the transmission from the power station to your home. You could also do interesting things like create mag-level frictionless trains that float, you know, like magnets floating off the ground on top of a superconducting track. And by having no friction, you could push the train once and you wouldn't need to use any energy to move it along. So you could have basically powerless transportation. You could have really powerful new microprocessors. So a superconductor microprocessor, instead of a traditional semiconductor microprocessor, would use just 1% of the energy of a semiconductor microprocessor.

Think about that. All the AI stuff we're talking about, all the chips that we're talking about, dropping the energy needs by 99%. If those chips were made from a superconducting material, and one of the more interesting applications of superconducting materials could be infinite battery storage, so you could take a superconductor, turn it into a coil, and the electricity

would just flow through it infinitely, because it would never turn into heat. And then when you're ready for that power, you just plug in and you get the power out. The actual loss of energy in a superconductor battery, less than 5%, and that's compared with, you know, significantly more energy loss used in chemical systems, and you wouldn't need to kind of get all the materials that we're struggling to get now to generate batteries. So the idea of generating like superconductors and industrial scale has always been super interesting. Today, the way that we generate superconducting materials is we have to make a material super super cold. In 1987, a physicist named Chu developed one of the first ceramic superconductors

where they discovered a new way of generating superconductivity. It wasn't just taking a metal and cooling it down very, very cold because when you get it very, very cold, the atom stopped moving and the electrons inside pair up and it's called cooper pairing and they flow through. And he said, we could actually do this with a hotter temperature. And he demonstrated this in a ceramic, Eatrium Barium Copper Oxide, super confusing name. But basically, he took a bunch of materials and baked them in an oven, and they turned into this really interesting material that became super-conducting.

And then the race was on. Because what he did is he made a super-conductor that could super-conduct at the temperature of liquid nitrogen. And liquid nitrogen is really cheap. So we can just use it. And that's actually how all MRI machines run today. As you have super-conductors that's actually how all MRI machines run today, is you have superconductors that reflect

the magnetic fields in the MRI machine, and they're using liquid nitrogen to stay cool. And so there's a lot of industrial applications today that use superconducting materials using liquid nitrogen. But in order for us to do all the stuff I mentioned, like maglev trains and infinite battery storage and superconducting microprocessors, we have to get superconductors.

We have to discover a material that can superconduct at room temperature so that we can sit with it in a computer on our desktop or we can have it run on a railroad track, or we can put it in our backyard to store energy. And there's been this race, and there's all these different classes of materials that physicists and material scientists have spent decades trying to figure out what can superconduct at room temperature. We started with metals, copper, and we tried carbon nanotubes and fullerane tubes. We had all these different ceramics like I talked about, and there have been literally

tens of thousands of ceramics that people bake in ovens and try and see how superconducting they are. Basically you take the material and you cool the temperature and you measure the resistance and as soon as it hits superconductivity, boom, there's this magic moment where it drops to zero and it becomes superconducting and there's this big change over effect. So everyone's trying to find that temperature which can happen at room temperature and people have found superconductivity on the surface of DNA and organic molecules, but you can't scale that.

People have found superconductivity on all these weird kind of material on the surface of things, but no one's ever been able to industrialize it. In 2015, there was a new kind of material called a hydride, which is basically taking a thin metal and putting it in hydrogen gas and kind of baking it for a couple of days, and the hydrogen sticks to the metal, and then you would use this hydride as a new kind of conductor, and hydrides it turned out had really good superconducting potential. They would superconduct at room temperature, but they needed super high pressure. So you'd actually have to leave them in like something that's like hundreds of times the pressure of the atmosphere. And so that that's not really technically an

industrially feasible either. So this guy named Ranga DS published a paper a couple of weeks ago that got a ton of press and a ton of controversy. And basically he said, look, I've got this new hydride and it's I've got this really, you this really weird metal that no one ever talks about. And I've baked it with this hydrogen gas and this hydride can actually superconduct at room temperature and at only one gigapascal, which is still greater pressure than room temperature. But it basically starts to show on the chart of are we getting there? Can we actually get there that maybe we are? And so this paper was published in nature

a couple of weeks ago, and it got a ton of coverage because everyone's like, oh my gosh, the problem is this particular individual, you know, the lead researcher, Ranga Diaz on the paper, he's pretty controversial because he made a room temperature superconducting claim back in 2020 in a paper he published

in Nature. And after he made that claim, a lot of scientists tried to replicate what he did and they were not able to. And then the journal retracted his paper. And he had a method that he took data noise out of the measurement system he was using. And the way that he took the data noise out, people said, actually skewed the results and made it look like it was superconducting when maybe it wasn't.

And he actually had a talk that he did that was published on YouTube a year later where he said he raised 20 million dollars from Sam Altman and Daniel Eck and a bunch of other investors. And it turns out that also wasn't true. And then he came back and said, well, I didn't actually raise the money. I was talking with them about raising the money. So this guy's kind of a sketchy character in the space. But the temperature at which he was able to generate or claims to have generated, and

he did get peer review and did get published. A superconductor is at room temperature. It's at slightly high pressure, but if it's real and it does get repeated, it's one of the next steps that we're almost going to be getting to this point of true room temperature superconducting materials. And then this whole industry will blow up. Transmission lines, battery storage, maglev trains, superconducting micro-processors. You know, many new industries can and will emerge from this material discovery if it's proven to be real. So, you know, it's a super interesting storyline. A lot of people in the material science world and scientists, chemists, physicists are kind of going crazy about this.

And there was a survey done by Quanta Magazine and half the scientists were like, this is bullshit. And the other half was like, this is going to change the world. So we don't really know yet where this is all going to settle out, but I thought it was worth kind of talking about and bringing it up because if room temperature superconductivity is really realized in the next decade, it's another one of these kind of black swan technology discoveries that none of us are thinking about right now, but it totally transforms all these markets and very quickly kind of increases like we were talking about earlier.

Productivity makes renewable energy super, super cheap, makes computing power 99% less power intensive, AI chips will explode using this technology. So a lot of super interesting applications, if room temperature super connectivity comes to light, super interesting story. I thought we should share it and talk about yeah, Shema. I would love to get your insights on it. And then Saks, I would like to understand how many emails and what you order from Uber Eats during that segment. Go ahead, Shema. Then caught this one, Nathan, who runs a battery group at Carnegie Mellon, introduced me to Ranga two years ago.

Me and my partner, Jay, we were like, holy shit, this is outrageous. And we tried to spin it out into a natural company, but the University of Rochester blocked it. And so we've been following this guy for two years and all the trials and tribulations, but it's a really, really exciting thing if it does come to us. You've got capital blocked. Explain why you would get capital blocked in a situation like that. Why wouldn't they allow you to spend it up? It is interesting because like typically universities have a tech transfer office and you can

do these deals pretty cleanly. So you know, when you go to Stanford, the tech transfer office is quite sophisticated at MIT. it's quite sophisticated. They're these pretty standardized deals and royalty percentages. Well, what is the standard deal? Explain to the audience how a tech transfer a deal would work. And how does the university make money from it?

If you're a prof and you invent something, or even if you're a student, it's technically owned by the school. And so if you want to commercialize it, you go to them and you basically say, here's a capital partner of mine and we want to go and start a company around it. And what they will normally say is, okay, great, give us a piece of equity and give us some royalty in some cases, depending on what it is. How much?

The equity tends to be in the mid-single digit percentages. The royalties tend to be in the mid-single digit percentages. It depends on how. Okay. Yeah, call it 5, 5, 6, 7. But it can be a lot when you think about a, you know, a school like Stanford who's spinning out hundreds of these things a year. But if you're a school that doesn't historically do a lot of tech transfer or has a lot of cutting edge R&D, you wouldn't have that team. And so, Rochester didn't necessarily have it. Now look, Runga's probably getting bombarded by 30 other people who'll pay 10 times more

than what I was trying to pay 18 months ago. It's a really interesting thing, and I think there'll be some, there'll be some, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there's, there Like, because PayTrack was out of the, what it's

Stanford, no, yeah, Larry and Larry and Sergey gave Stanford, I think one. But they give Stanford, yeah, they give them a percent. Yeah. Yeah, that's unknown. Yeah, because back rub, because back rub was written while Larry was a PhD there. So technically, they, you know, they had some part of it.

Carnegie Mellon ranked as top tech transfer university I'm just seeing here in terms of the rankings, University of Florida, Columbia, Stanford, Harvard. Does anybody have some of them are terrible? And some of them are crony as them. So you go to some of the universities and the tech transfer offices have deep relationships with certain VCs and investors that they'll only work with. And they always get first picks and first tips and they're super tight with them.

They don't run a real market process. And then some tech transfer offices just give away the farm for nothing. And then some tech transfer offices think that they own it and they should get paid 60% royalties for the thing. It's all over the map. And some of them are sophisticated and some of them are not. So it's actually quite surprising, J.K.L.

how different all the universities are in terms of their level of sophistication and the types of deals they'll do. But I will say this work in superconducting research, it's another good example going back to the point a couple episodes ago about the importance of fundamental research and the importance of, you know, the support from academic institutions and governments and other aspects, when you're still not sure what the technology is, that to do that fundamental discovery work, I think is a good collective social benefit. And then to industrialize it and commercialize it,

requires I think a market based approach, which is you take that capability, try and build a business, find customers, make money, and that's really how you get it to be funded, to be scaled. Because you're never going to, you shouldn't have to put, you know, government and academic money behind that sort of effort, but private market participants should. And so, you know, it's interesting. I mean, I think I'm not holding my breath. I've been, you know, I did a science project

in 1993 when I was probably 12 or 13 years old on superconductors. And I got a E3mbarium copper oxide disc and I got some liquid nitrogen from UCLA and I poured it on the disc and I floated a magnet above it. I had a poster board and a computer presentation back then and I was super enthralled about the future of superconductors. And exactly what I said today is what I said back in 1993. So you know 30 years ago, it was so busy dating. I didn't think you had time for superconductor experiments. Yeah, look, I don't think, I don't think that this stuff has really, it's been, it's been like fusion. It's always been a promise around the corner. Physicists have always had hope. We've taken incremental steps towards it. But it's always felt like one of those

things where you're always getting 50% closer to the wall. It's like you're never actually reaching the wall. And so, it's a dream. Yeah. By By the way, I will say one area that that a lot of people think holds a lot of promise for superconducting research is in quantum computing, because you can actually model on a molecular level what might be going on. Right now, the BCS theory is the theory on co-preparing that happens in ceramics is the only way that we really understand how superconducting actually works, why it works, why there's no resistance at certain temperatures for certain types of materials. For most materials, we have no frigging clue why it happens. We don't understand the physics of it. There's something going on on a quantum mechanical level that we just don't get.

And so if we can understand it better through quantum modeling using quantum computers, all of a sudden we may be able to actually start to come up with ideas for molecules and crystal structure that would allow us to make superconducting material that we simply don't have enough time in our lifetime to run all the experiments in a lab today, and we can simulate it. And so that's why quantum computing could play a real role in advancing our ability to discovery and superconducting materials. And like I talked about, these are not just one, but two or three order of magnitude

improvements in the efficiency of certain systems of industry on Earth today. So it shows how the compounding benefits of technology and things you cannot see around the corner can suddenly cause these explosive growth moments in technology and in industry. I don't know what went quantum computing gets here. When it gets here, it might discover superconducting. And then when that gets discovered, boom, energy cost dropped by 99% computing goes up by 100 fold. So there's these amazing things that are still in front of us that each one of which And then when that gets discovered boom energy cost drop by 99% computing goes up by 100 fold

So there's these amazing things that are still like in front of us that each one of which could be you know Really great exponential triggering events and we're seeing a little milestone today, but yeah, I don't know Sacks reaction Sounds good Sacks how many moves did you play in your 12? Chess games Guys I got stuff to do How many moves did you play in your 12 chess games with Peter? Guys, I got stuff to do. Freeberg was talking about superconductors.

How many points did you go up? All right, look, I got shit to do. Come on, let's go. Oh, sacks. All right, listen, this has been a great episode. Hey, sacks, thanks for the best of you. Give a comment on the Atlantic article that says Ronda Santas has peaked already.

Don't drink that. Don't drink that. Uh-oh, if you don't Uh oh, don't do it. Don't do it. Why you got to troll him? I didn't see that, but it's in the Atlantic. Oh, you want to know why the Atlantic suddenly has turned on him is because of the biggest backers of the war.

They, those guys have all these like neocons over there. And so he gave a statement saying that, you know that our support for Ukraine shouldn't be a blank check and some other comments expressing, let's say skepticism of what we're doing over there. And that was totally inaccessible to them. So all these Neocons are registering disappointment. But I would argue that's an electoral asset, not a liability. I have a prediction. Given what's going on with these banks and what's going on in this kind of, I think we all

agree, the soft landing concept is over over we're going to be in a recession the war is going to end there because we're not funding this in American the American public is not going to want to see tens of billions of dollars going to Ukraine and to fight to fund this war in year two or three hundred billions every month yeah I know this spending run rate of this war is actually greater than what we did in Afghanistan and Afghanistan ended up being a 20 year multi trillion dollar operation that just flushed all that money down the drain. So yeah, I mean, we're in a greater run rate than Afghanistan.

Yeah. Do we know what the monthly run rate is for this? Oh my God. How is it possible? We've appropriated over 130 billion, Jamath. Do we know what the monthly run rate is for this? Oh my God. How is it possible? How is it possible? We've appropriated over 130 billion, Jamoth, and Afghanistan, we spent two trillion over 20 years. So there's 100 billion a year run rate.

Yeah, this is... Think about what a monumental waste of money that was. And now look at the financial crisis we're in. Can you imagine if we could have two trillion back? I mean, all these trillions that we just squandered. We would take it back instantly. We would take that back. Just all those trillions and trillions we squandered on stuff that didn't matter.

And now we're paying the price for it. That could be education, could be universal health care, could be paying down the debt. How about paying down the debts that we don't have all this inflation? Exactly. Let's think logically here of the number one issue for this country in the next election. I am with Friedberg, his great prediction from the year end show is we need a president and we need an administration that is fiscally responsible and controls the balance sheet in a logical fashion like the last two administrations have not seem capable of doing. I am with freeberg single-ish

of voter, balance the budget, get spending under control, austerity measures, hashtag. All right, four, the Sultan of science. Sorry, what's that? Can you repeat that? What I wanted to show you, Shamaat, is there any plugs for the remaining part of the episode? Mr. Beast is curing blindness and buying people's shoes. Has he been canceled yet? Yeah, tax.

Aren't you excited about superconductors and the benefit for AI and energy storage and energy costs and humanity? Yeah, what does it do to burn rate of assassins? Yeah, but I'm not, I'm not like an expert at assessing like hard science or hard tech. I mean, I'm a software investor. I'm just a simple man.

I'm just a software investor. All right, everybody, for the rainman himself, David Sacks, the dictator, Tremoff, Polyhapatia, and the Sultan of science, the Prince of Panic attacks, no more. Mr. David Friedberg, I'm the world's greatest moderator, undisputed. Congratulations, everybody, on another successful episode. And Friedberg, when are we locking in the date for all in summer 2023?

My replies, my DMs are filled. People want to know. Do you have the date? I've locked it down. And we had a parking issue where they don't want us parking there. So as soon as we get the two. That's fine, we don't need to park there. Everybody, so now they've gone back to their committee to get approval for us doing it without parking

and just doing some over or walking. Shuttle or sort of people. So yeah, Uber, Uber, Uber, Uber. Let's get that issue back for some. Hopefully if they accept it, then we are okay. How many shuttles do we have to take to your rings? You're. Yeah, exactly.

How am I the Prince of Panic attacks? I think you're the King of Caps Locks at this point. They were called me J-Caps. J-Caps was the best one I heard. Talking about panic attacks. J-Cell this weekend, man. Panicking. Panicking. I was a sheer terrorist.

Sure, Kar, I have literally gotten rid of the caps lock. Everybody relax. You can follow me twitter.com slash Jason. We'll see you all next time. Bye-bye. Bye-bye. the caps lock everybody relax you can follow me twitter.com slash Jason we'll see you all next time bye bye bye I'm going on a leash What? What? What? What? What? Besties are gone

Go thrift That's my dog taking a wish You're driving away So sex Get it on Oh man My ham is the actual meat We should all just get a room

and just have one big huger because they're all It's like this like sexual tension but we just need to release that out I'm doing all the...