All-In with Chamath, Jason, Sacks & Friedberg - E132: SEC goes after crypto giants, Sequoia splits, LIV/PGA, Messi's deal + LIVE Q&A!

Starting point is 00:00:00 Hey everybody, welcome to the All In podcast. I'm your moderator for the week Dave Friedberg Not the world's greatest moderator. This show is going to be a bit of a shortened version at the back end of the pod today We actually are going to show some Q&A from Jason's launch summit which he held in Napa Valley this week great event Thanks for having us up there J. Cal thanks come speakers, great content. And we did a live Q&A for the All in Pod with the audience there, which will transition to about halfway through through the show today. Jake Al, thanks for your hospitality.

Starting point is 00:00:36 Oh, yeah. Thanks for coming. The fun birthday party, the poker night. We had a great time. I still don't know what I was doing there. You were meeting some of your LPs, or you never met before. It was like a dog and pony show.

Starting point is 00:00:48 Jake Helens was using us as some sort of dog and pony show to raise money. Taxid, you really have LPs there that you would never met? No. Yes. Hold on a second, I had one LP there who I have definitely met many times before. Okay, she told us she'd never met you.

Starting point is 00:01:02 She wanted an introduction. So maybe she was getting into the spirit of all in and joking with you, but you had a three-hour meeting with one of your LPs. I heard she talked about it the next step. Yeah, she said she had like two or three hours with you. Samantha, you with us today? What's going on here there, buddy? Shemoff was very drunk, by the way. He brought up his own wine. He started margaritas at two o'clock. He was drunk by the time we got there. What? He showed up the way to drinking Shemoff. He was day drinking margaritas in the sun. and then we showed up and he was like falling asleep by the time we were done with the state session And it said we open source into the fans and they've just got crazy with it. WS I.

Starting point is 00:01:45 Queen of the kid. I'm going down the lane. You know, by the way, politics is one of these incredible things where you see the meanest people come out of the woodwork when you even feign support for somebody that they don't support. Now that it's out there that Saks andony are doing this fundraiser for RFK. If you look at Twitter, some of the democratic surrogates are out just smacking me and Sax around. And it's incredible. These people are the biggest

Starting point is 00:02:21 imposter loser clowns. They've never literally done anything in their whole life. And then they show up and then they just, like how dare you work and help build a company? How dare you help build another company? How dare you help now fund other companies? I am a talking mouthpiece who's never done anything except work in one administration as a speechwriter. And now I think you guys suck balls.

Starting point is 00:02:44 It's like giving a break. So are you a little kind of emotional about that today? I actually, I love critiques actually because I think like you can learn a lot from critiques, but then when mids just spew, I just get annoyed. I think mids should not be allowed to talk. Yeah. Well, that's just my thought. There goes half the internet. Sex Are your Republican cohort friends upset about you hosting a fundraiser for our okay? I've gotten none of that. None of that That's interesting. What's your take on that? Yeah, do Republicans generally think that it's a good thing if

Starting point is 00:03:20 R.K. Junior gets the Democratic nomination because he will be easily beatable. I don't think they're thinking that way. I think that there's a respect for R.F.K. Jr. among many Republicans because he's speaking out on issues that they care about. Like I've talked about, he's denouncing censorship. He's in favor of free speech. He's in favor of civil liberties. And not this massive surveillance state, he's speaking out in favor of peace instead of war. He's speaking out on the border.

Starting point is 00:03:47 He had this amazing video. That was great. A couple of days ago where he went to the border in Yuma, Arizona at 2 a.m. in the morning. At 2 a.m. in the morning. And he shows, he shows where the border wall ends and where the border wall ends, the line begins. And people from all over the world are just entering

Starting point is 00:04:06 through this hole in the wall in a never ending stream of people and then they get loaded onto buses provided by the government and they get handed a ticket to supposedly appear in court to resolve their case in three or four years and they're never heard from again and they're dispersed all over the country what i don't understand is if the federal government can get its act together enough to provide buses, why can't they get their act together enough to plug the hole in the wall? It's absurd. This is like an act of sabotage against the United States. And so, he's there just pointing this out.

Starting point is 00:04:40 I've never seen anything like this before. It was interesting as a Democrat to do this because that's typically kind of a Republican point, right? And some of the commentary made about RFK Jr. I think it was in the New York Times this week, or someone that covered his candidacy, one of the big media companies, highlighted how much of his agenda seems to be a Republican talking point agenda. Does that sound accurate to you? I think even most people in the country who identify as Democrats would be against having an open border.

Starting point is 00:05:15 That's what we're talking about. When there's a hole in the wall and people can just start forming a line and then once they get through the line, they're literally just spur- hold on, they're basically distributed throughout the country on buses. I don't think most people in the country, even Democrats would support that. But what he's violating here is the press blackout on what's really going on at the border. So you're right. He went there. Yeah. But other Republican talking points. So the points around the vaccine, the public't know if that's a Republican. Well, he's expressed obviously concerns about vaccines

Starting point is 00:05:47 preceding the COVID vaccine. I don't know whether he's right about that or not, or not willing to say whether he's right or wrong about that, because I just don't know enough. I think he's definitely right about the inefficacy of the COVID vaccine. We've talked about this before, even Bill Gates admits now that the vaccine doesn't work.

Starting point is 00:06:02 It's too short-acting and it doesn't hold up against various. It's not a vaccine. Let's just call it another event you're from getting the illness. It's a death reduction shot. It was a revenue grab by Big Pharma plastered with non-scientific thinking from a bunch of people who should have known better. Wow. I think you just got our so much for You can't hold that. Hold on. What you're not to say is just like the factual reality.

Starting point is 00:06:32 And you can't get that from the mainstream media. Like there's no reevaluation. There's no appraisal. They control what we see in here. It's like Provda level in terms of the propaganda. And that's why I think RFK Jr. is so interesting is because he is blowing up what the mainstream media wants to control. The really interesting thing about him going to the border, I agree with SACs is, hey, let's just have a discussion about this and look at the actual facts on the ground

Starting point is 00:06:57 that we can agree on. And what he actually did was he pierced the veil of like, this is an issue about a certain group of people. He was there and there are people from Afghanistan, China, all over the world coming in. He made the point that this isn't just about one country and that these people are suffering. And that I thought was like another really important highlight.

Starting point is 00:07:14 These people are being trafficked, they're being abused at the border. And that it's gonna cost us 10 million a mile to secure the border. It's a huge way of talking about it. And he's done this with Ukraine as well, where he emphasizes the humanitarian aspect of it. Yes.

Starting point is 00:07:30 Which I believe. Which I believe. Which I believe. And I think Republicans should adopt some of that. You rhetoric. And to Jamat's point, I think it's, I think it's a money grab, Jamat. I do think it lowered death rates, but, you know,

Starting point is 00:07:42 I do think piercing the veil on this and. None of us are still getting boosted because we know they don't Guys guys, okay, let's keep moving on I'm not debating vaccines and politics we're moving on We're gonna talk about crypto. So this week the SEC there we go serious action Against Binance and Coinbase You know pretty significant pretty loud SEC file 13 charges against finance entities and the founders, C.C. Charges include operating unregistered, securities exchanges, broker dealers,

Starting point is 00:08:10 and clearing agencies misrepresenting their trading controls and their oversight on the finance US platform. And the unregistered offer and sale of securities. The next day, they saw the temporary restraining order to freeze finance as US assets, and then on Tuesday, the SEC sued Coinbase over their exchange and their staking programs. Stock dropped 12%.

Starting point is 00:08:34 The SEC said that the company was operating an unregistered exchange and broker and that 13 of their assets listed on their platform were considered crypto asset securities. Brian Armstrong obviously has been on the pod several times, said he's not shutting down his staking service and said regarding the SEC complaint against us today, we're proud to represent the industry and court to finally get some clarity around crypto rules. He's generally made the statement that he has tried multiple times to register with the SEC. They have not had a mechanism for him to register. They have tried to do everything by the book. And that the SEC approved their IPO filing, knowing full well the details of their business and their operating model and still allowed them to go public on a US securities exchange,

Starting point is 00:09:21 despite full knowledge about their business. Jemot, does anything change this week based on the SEC's action? Or is this just a continuation of, you know, crypto has been rolled back and will continue to roll back here in the US? Or is this something new and a new action and opens up a new front on the government versus crypto? It's a good question. I think there's two ways to look at this. One is the conspiracy theorist way, which you see a lot of on Twitter, which is this idea

Starting point is 00:09:55 that crypto is making all of these inroads as a replacement mechanism for fiat currency and so governments are really now invested in trying to shut it down. I think that's largely untrue and then there's the more simple basic reality, which is that there was one part of the SEC that frankly didn't do the job that they were supposed to by either allowing a few of these crypto companies or crypto businesses to go public either as standalone businesses or as part of other businesses, so Coinbase, Robinhood, etc. And then there's this part of the enforcement action after this FTX Fiasco, which is a lot of CYA covering your ass by the SEC, especially because it looked like they had some cozy relationships with them.

Starting point is 00:10:48 And so they're coming down hard and they're going to go and systematically dismantle the largest actors and they're going to go through the value chain. So I think the obvious place that they're looking now are the exchanges, they'll look at the custodial services, they will not approve any ETFs. And then eventually I do think it trickles into all of the staking services. And eventually I think it'll touch the venture community

Starting point is 00:11:16 and all of those firms and funds that had a huge robust business in staking these crypto projects in order to get coins like founding coins and then being able to sell them. Jekyll? I mean, I've been talking about this since the beginning because I bought Bitcoin and wrote about Bitcoin when it was maybe 25 cents and then again, when it was 100. So I've been following this for a long time and I think thinking from first principles

Starting point is 00:11:44 to stepping back for a moment, you know, what we do in technology is fundamentally disruptive. If it's at its best, if it's truly going to be important in the world. And when you hear that word disruption, you kind of file it as a buzzword. But what it really means at its core is like competition. And it's not just competition disruption. When you say disruption, you're talking about existential competition. Two people go in the ring, one person comes out. Like somebody's going to get really fucked up. And if you people keep bringing up, oh, you're an investor, at Uber, they broke the rules, they bent the rules. Uber was going against caps. Airbnb was going against like hotels. We work was going against like long term real estate

Starting point is 00:12:22 leases. When you look at all those disruptive technologies and what they did at their court, they disrupted on behalf of consumers and lowered prices, increased choice, et cetera. When you get crypto, the crypto crowd literally said, we are going to replace Fiat currency. Fiat currency is the government. So my thesis from the beginning was, if the government has a way to stop this, they do not want to be disrupted. What is a government at its core? It's a military, it's a bunch of rules, laws, and it's money. That's the kind of pillars of any government's power. We knew the government wasn't going to give this up. And, you know, they, they, after Round and found out, but the truth is the, and this is where I have

Starting point is 00:13:10 some sympathy for the crypto people, not the people who are just committing crime with the whole way and just dumping these bags on retail, et cetera. But we do want to have this innovation here. There are some innovative aspects to it. But Gary Gensers said, listen, you already have electronic money. It's called money in the United States. We already have these services. You don't need this. Consumers don't need it. And you have to understand the SEC's function in the world

Starting point is 00:13:31 to understand why they're taking this action. Their function is to protect investors. Investors lost a bunch of money. Therefore, they are going to retroactively inflict pain and whole people accountable for their mandate, which is to protect investors. You could have easily resolved this, the SEC. And the companies could have resolved this.

Starting point is 00:13:51 The companies could have followed these things as securities and only allowed accredited investors. Top 5% of the country people will make over 2 inch K here. They didn't do that. They said anybody can buy these. Well, that's just not how it works in America. And it should change. I think everybody should be able to buy any security they want in America,

Starting point is 00:14:09 just like anybody can go play Blackjack. And the easiest solution for this, just passing Congress this week, and we'll go to the Senate and be a law soon, I think, allowing every American the other 94% to take a test and become accredited. If that happens, it take a test, just like it take a driver's license test.

Starting point is 00:14:23 I know what diversification is. I know how risky these are. Once you take that 50 question test, you become a credit it, and then you can buy these coins if you want to. And that's really the easiest path to resolution here. So we don't have Brian Armstrong move his company to the Middle East or, you know, an island in the Caribbean, which is what he's going to do. I predict. So, okay. Well, look, we've seen this bill make its way, I think, through, is it going to the Senate next or is it going to the Senate? Yeah, going to the Senate next. So let's see if it gets done.

Starting point is 00:14:53 I think it's a good point. One thing I'll point out when individual investors were making money because all of these asset values were inflating, all of the coins were growing or climbing and value, everyone felt good. There was an emergent cry that we all want to have access to these new instruments. We all have a right to make these investments and to own these assets. And then as the asset values declined, and individual investors began losing money, the emergent cry is where was the government to help save and protect us.

Starting point is 00:15:30 So the SEC I would argue was probably a little bit hindered when the market was inflating in being able to step in and take action because that would have been counter to the cries of the retail market. But as the retail market took their hits, the SEC has to step in and Congress steps in and everyone starts to say, it's time to act. We should have acted sooner. And this was fairly predictable. I think what's happening is more nefarious than that. So the SEC is doing two different things. There are alleging two different kinds of crimes. One set has to do with protecting investors from having their funds stolen on these exchanges

Starting point is 00:16:13 or at least commingled. FTX did that, where they basically took customer deposits and stole them. What Binance is accused of is taking customer deposits, maybe not stealing them, but commingling them with company funds. That should be looked at and I think crypto customers should be protected against that. However, the case against Coinbase, they're alleging a completely different set of facts,

Starting point is 00:16:32 which is effectively what Gensers and the SEC are saying is that it is not legal to operate a crypto exchange in the United States. That is what the SEC is saying, because Coinbase is basically doing everything right. And I believe that Gensler is far exceeding his authority and stating something like that. It is not up to the chairman of the SEC to say that Americans should not be holding crypto. Why as a free people should we not be able to buy crypto if we want to? You know, why shouldn't we be able to buy Bitcoin? Now, maybe you apply

Starting point is 00:17:05 rules around accredited investor status, there should be protections against unsophisticated investors buying stuff or getting defrauded. That's fine. That's the framework that Ryan Armstrong is asking for. But everyone should understand what the SEC is doing right now is basically usurping congressional authority. It should be Congress that makes the law. If Congress wants to ban, crypto exchanges in the United States and prevent the citizens of the United States from owning crypto, let Congress do it.

Starting point is 00:17:33 It should not be up to Gensler to do that. And the question is, why is Gensler going this far? When previously he had relationships in the industry, apparently he was a consultant to finance, and even worse, he was talking to FTX about giving them some special status. And I think the reason is the scuttlebot is that he has an alliance with Elizabeth Warren, and the rumor is that, you know, she will make him treasury secretary if he basically destroys crypto in the US. Sorry, where is the evidence for that? That's just someone's rumor and speculation.

Starting point is 00:18:04 Is the scuttlebot in the industry? Okay, so it's the back channel. The back. So this is in fact the back channel. So just to be clear rumor and innuendo is what you're saying. No, look, what I would say is clear is that Gensler and Elizabeth Warren have an alliance to destroy crypto in the US. This was speculated about before with Operation Choke Point, but now it's clear. They're trying to shut down. We've talked about on the show before, it was a series of actions taken. What you do when you're in a hotel at night.

Starting point is 00:18:30 Oh! No. Operation Chokepoint was a series of actions by the US government to basically destroy all the on-ramps to crypto. So you couldn't get money into the system. Now they're going further, and they're basically saying it is illegal to operate a crypto exchange in the United States. So, Gensur is not exactly this car. Yes, it's not a Gensur is playing a car. I can explain why you're wrong. What they're saying is it's

Starting point is 00:18:53 not just the exchange. It's that the exchange contains unregistered security. So it's a more nuanced point. I think the I agree. Security, could you trade? Well, if it passes the how we test or it is registered, and there are people who have actually registered their crypto passes the how we test. Nope. They're going back on that. You could pass it if you limited it to accredited investors. And the fact is, Brian Armstrong, Binance, and a lot of crypto projects refused to exclude non-accredited investors. And I watch this happen up close in person.

Starting point is 00:19:27 Well, this is not a lot of money. You're right about the unregistered securities thing. They're trying to say that all crypto is unregistered securities. No, they said they can't run that by being a friend. No, they literally, they named them SACs in the lawsuit. They named the 16 or 13. What was it? Freeberg. So they, they know how to, it was 13, they know how to craft this. They're saying for the specific 13, now the industry does feel your correct and the backshadow is everybody's against us. But if they had just registered these, they would not have problem. I don't think they're going to be. I think wasn't Bitcoin is not included in this. But each of them is not included. He doesn't

Starting point is 00:20:00 have a way of registering. They do. They don't want to. So they claim they don't have a way of registering. They could register it just like we all do. We have private securities. There are a lot of people tweeting about this. The SEC has put out statement saying, our door is open. Come talk to us. There is no open door. There is no one to talk to.

Starting point is 00:20:17 They have no idea how to get registered. How do you think this is going to get resolved? Armstrong's talked publicly about going to Congress to try and get some clarifying law passed. Are you familiar with any of the drafting that might be going on to support his cause here? Or do you think it's going to get settled in the courts? First of all, I think Brian Armstrong is a really, really, really good entrepreneur.

Starting point is 00:20:42 And I'm a really big fan of his. That said, I just don't think that there's a lot of political support to visit this issue right now. And so unfortunately, I'm pretty skeptical that you're going to see any form of legislation pass. I unfortunately think that the SEC has by and large put the entire sector into mate. And so I think that what Jason said is largely right, which is that it's going to force these companies to preserve enterprise value, to leave the United States, and to jurisdictionally operate from a different place, and to basically IP block and IP gate, US residents from using their products and services. I also think that they're going to have to pay large fines.

Starting point is 00:21:40 And so the only thing that'll be left is to adjudicate all of the staking stuff that happened to do, whether that was right or wrong. So the court, it'll get settled, it'll get decided. I agree with that. And I think that when you start talking about minutiae like, well, these 16 cryptos are okay or not okay, no, look, you're kind of missing the point. The government led by Gensler is in a full assault on crypto and the goal is basically to either destroy in the u.s. or drive it off shore.

Starting point is 00:22:09 Jamat is right about that and the question is why and i think jaykau you made the point that progress is like a list of warren c crypto as competition to fiat currency and they do not want there to be a competitor now what is the reason for that i think it's because of their radical spending schemes. Remember, in the first years of the Biden administration, the progressives wanted a $4.5 trillion bill back better bill. Remember, Larry Summers told them that you're going to cause inflation and even the $750 billion scope down version that they ultimately passed, caused a lot of inflation and it caused the problems that we have now that we're seeing in the economy. But they wanted four and a half trillion. And when people were opposed to and said we couldn't fund this, they were in favor of

Starting point is 00:22:52 minting trillion dollar coins. Yeah. So these are people who don't want any check on their ability to spend down the full faith and credit of the United States. They would basically spend all the money that we have, they would basically eat the seed corn. Or don't have. That we don't have, that I think you guys agree we should not be spending. And that is why there are the faction in our political system who are most against crypto.

Starting point is 00:23:17 Okay, two things can be true. I got to respond to it. Two things can be true. One, the government doesn't want to give up control of fiat. I agree with that. The second thing that's also true is that this group of people did not want to play by the rules. They knew the rules. They explicitly broke them for profit. That's why they have them dead to rights. You can name this operation choke point. You can brand it. You can put out any conspiracy theory you want. They did have the option. Why is it a conspiracy theory? You agree,

Starting point is 00:23:43 they're trying to run these guys out of the business. I said two things can be true at the same time, David. This is a tolerance for ambiguity. Being able to hold two thoughts at the same time. Let me give you a broken divorce. And they don't want to give up control. Okay. That's what's happening.

Starting point is 00:23:56 That's the rule. You have to file a security. You have to only allow a feds and vases. I'm pretty sure you've got that. Coinbase was a good actor. I believe they have good intentions. Yes, I don't believe the other people do. I do believe that.

Starting point is 00:24:06 So now you believe that Coinbase is in violation of the law. I believe the securities they're trading are in violation of law. And that's obvious. But I believe that law should change. Let me give you a security. The securities are. Securities.

Starting point is 00:24:17 Jake Al, let me give you a third point and sex. Elizabeth Warren, she may be motivated by the intention to preserve the authority of the fiat. But is it not also possible that a large number of people lost a lot of money that they worked hard for and they used to buy crypto assets and then the value of those assets went down and those people lost a lot of value? I had, there was a group of guys that are house painters that painted my house two summers ago, and they painted the whole house.

Starting point is 00:24:50 They were here every day for hours every day. So I got to speak to these guys. And these guys were house painters. You know, they worked for an hourly wage. They do fairly well, but every lunch break, every break they got, all that they would talk about with one another, was what cryptocurrency they're buying and trading in and out of, with the whole intention

Starting point is 00:25:10 of making money. They all believed that they had a good point of view because they read something on the internet, got some tweet, or got some text, or saw something on TikTok about this one crypto asset, or this crypto asset, and they were trading in and out, and all of the money that these guys worked hard for was being invested in crypto assets. You're right, that set of facts is not great. However, I don't think that's the motivation. I think the motivation is to basically end crypto as a potential competitor to fiat money in the United States. That's the motivation. And they're going to use those fact patterns to basically build public support that because look, because we could handle that, okay?

Starting point is 00:25:47 We could do the accredited investor test. There should be a framework or set a guidelines under which it is legal for people to buy and hold or trade crypto in the United States. And there's all that Brian has been asking for, is give us a framework and Gensur is not giving a framework. He's just trying to basically put them out of business. Okay, look, I think we've gone around this topic. This has been a great conversation. I'm going to move forward to the next topic, which I think is really interesting in the vein of both de-globalization,

Starting point is 00:26:18 but also the scale at which venture firms have gotten to Sequoia decided this week and announced publicly that they're splitting off their China and India slash Southeast Asia funds. As you guys obviously know, Sequoia capital is a venture capital firm. And within that firm, they manage multiple funds. Some of the funds that they've raised and managed have been specifically targeted in China

Starting point is 00:26:44 where they have $56 billion. I don't know if this number is accurate, but that's an incredible number. $56 billion of assets under management focused just in Sequoia, China. And then they have a Sequoia India fund, which has about $4 billion of capital raised in just the last three years. And now they are separating the management company on the oversight of those funds into separate management company. So Sequoia capital will no longer oversee those China funds. A new firm has been formed called Sequoia China

Starting point is 00:27:16 that is now owned and run by a separate management team based in China. And Sequoia India is now called Peak 15 Partners, which is owned and operated by a separate team of managers out of India. Roll off both though, we'll manage the US and European Sequoia capital. Neil Chen will oversee Sequoia China and Shalendra saying Neil Chen. I'm sorry, Neil Chen.

Starting point is 00:27:38 And Shalendra saying we'll oversee Sequoia India. I guess this is a question of did Sequoia get too big or are they caving to pressure of the political issue the rising with having deep relationships and ties with China or as they have said, a lot of competition between these different portfolios and companies within these portfolios amongst each other. Chamath, what's your read on the action?

Starting point is 00:28:00 Is there anything to read into this and anything to extrapolate from it? Well, it's been a parade of missteps for Sequoia in the last couple of years. I'll let Sequoia figure out who to blame for this, but the reality is they, I think, felt a lot of FOMO post-soft bank. They raised this large mega-fund that kind of straddled all of the sub-funds and straddled all of the regions. And so they dangled the carrot of trying to get into the early stage US fund by investing

Starting point is 00:28:31 in this big megafund that also had China and India exposure and growth exposure. Then they tried this like very convoluted evergreen structure right before the market fell apart where you could basically become a permanent capital vehicle. And as far as I can tell from the outside looking in, it just seems like a taxed tax play for the GPs to not have to sell and realize capital gains. But that only works when the stock market keeps going up, which it didn't, and then it's summarily crushed tech stocks 80 or 90 percent, so that was a misfep. And then when you put all these things together, now that China is contracting, and we said this before, I think China is largely uninvestable for the next 30 or 40 years, it just makes sense to jettison. Now, I will say, though say though that Neil Shen is elite.

Starting point is 00:29:26 If you consider in investing, I would say I have a simple rubric. Anybody who's made more than a billion dollars for themselves as an investor, I consider elite. Neil Shen is elite. And so he'll do just fine. Running that Sequoia China business. I was surprised about why they would allow India to leave. There's nobody that elite at Sequoia India by that rubric,

Starting point is 00:29:52 but India is a country growing at 6% a year. It literally looks like China in 2008 and 2009. And so I'm not sure why you would let them leave. I think that you would want to attach them to yourself because it makes the US business look better. You probably gets differentiated and smoothed up returns. But I think this is a little bit of a part of you of competition, Tomat, that there was competition between the different portfolio companies. And it was leading to the conflict.

Starting point is 00:30:24 I mean, that's dumb. That happens in the United States. Sequoia has always been known to fund everybody that they think will make money, no matter how much they compete, no matter where they are. So when they back YouTube and more it's with sitting on the board at Google and. Sure. Look, Sequoia, Sequoia as an organization is a leap. They're there to make money for their LPs, period and story.

Starting point is 00:30:44 And so all of the other words that can go in any press release, basically I think try to hide the fact that this is an organization that's had some missteps. They're not on solid ground. They've lost a lot of money. And they are trying to figure out what to do next. I, however, if I was running that organization, would have probably done nothing

Starting point is 00:31:07 and just let the dust settle. And I think that all of these actions are too close together and it's a little bit to me of flailing in the water. And so I don't think it was a good idea to let India leave. I think it made a ton of sense to cut China, but I think all of this stuff started happening a few years ago, starting with that $8 or $9 billion megafon that they raised to try to compete with soft bank.

Starting point is 00:31:33 So, actually, read on this? Yeah, I mean, I think it's a problem, an example of decoupling and globalization going on. So I agree we have to treat India and China separately. With respect to China, I just think it to treat India and China separately. With respect to China, I just think it's become harder and harder for Americans to do business in China both because we don't really have the visibility into that system. And there's too much political uncertainty. So kind of touch on the point about it being increasingly uninvestable. But I also think that geopolitical

Starting point is 00:32:05 concerns, it's just very hard to straddle those concerns now because the geopolitical competition is heating up so much. I think it's investible for people like Neil Shen who are insiders in that system. So I think elite Chinese investors can, I'm sure make money in China over the next few decades, but I think it's just too hard for Americans to figure that out. So I think them parting ways makes a lot of sense. I think it's going to simplify Sequoia's life a lot. India, I agree with Jamal that that's sort of a different question because India is going to be a huge growth economy over the next few decades and they are a US ally. So it doesn't pose the same geopolitical risk. But my guess is that it was just kind of unwieldy. That it's too unwieldy to kind of merge funding sources and firm management across two firms that are really pretty different, right? The US agreement firm and then this

Starting point is 00:33:02 Indian firm. So my guess is they just decoupled because it was just going to our to manage. And if you're an LP, don't you just want the ability to say, okay, I'm going to allocate this much money to India. I'm going to allocate this much money to the U.S. I think LP is probably like it too. Sequoia China is frankly over the last 15 or 20 years as good and probably is numerically better than Sequoia US. So that was an elite organization just by itself. Sequoia, India, I don't think has much to talk about. And so maybe what Rolloff decided is this team is just not very good, so it matters all just cut it and we can revisit it later.

Starting point is 00:33:40 They probably have some number of years of a non-compete and then they could come back into the market five years with a totally new team and that may be easier So it may be easier just as just maybe the team they actually wanted to eat separate look It's hard to cross returns from two totally different funds, right? Because one side one side can be unhappy with the trade right? Yeah, I can I can give you the J. K. Health got actual information to share well No, I mean I have a closest I think I have the closest but they were in give you the J.K.L.s got actual information to share. Well, no, I mean, I have the closest I think I have the closest

Starting point is 00:34:07 But they were in the investor in your company, right J.K.L.? Well, I'm an LP and they're funds Yeah, they're printing money for me. They back my second startup rule off on the board of that company and still with me and I was their first scout when they started the scouts program, which is the highest percentage performing fund I think they ever had It's quite clear. You you're our resident captain America. So as a patriot, how do you feel about the... Well, they are, put that aside. Squarespace 20% of an Aztec.

Starting point is 00:34:32 This is the greatest venture firm of all time, hands down. And the Squarespace fund, which Jimoff referred to. You mean companies they've invested in? Companies in the account are 20% of the Aztec. And so the reason the Squarespace fund came out, this Evergreen fund, was because a lot of their LPs wanted Sequoia to manage the public equities going forward, because they didn't want to sell them,

Starting point is 00:34:54 because they realized that the massive gains, the gains from Google, Apple, et cetera, of these investments that they did when they were private companies Cisco, the gains from public forward were greater than the gains in private. And I've been in on these presentations. I've sat through them with the Sequoia team. And so when you manage those public ones, we've all talked about the denominator problem

Starting point is 00:35:21 here. The denominator problem is, hey, are they venture returns or are they part of the public equity? So in a giant endowment, they want to put them into the equity's bucket, get them out of the venture bucket. It's a co-history and opportunity there to manage this evergreen fund. I'm sure there are tax advantages to it, of course. But with relation to what they did in China and India, these were incredibly pressient and innovative things they did in 2005 when they started India and then China was 2005, I believe.

Starting point is 00:35:51 They found domestic teams. You need domestic teams to do this properly, especially in places with different governance and different regulations. And it gives them autonomy. They were incredible investments. But what's happening right now is all venture investments because of AI and chips and the decoupling with China are now under massive scrutiny.

Starting point is 00:36:12 So they can say there's brand confusion. You can talk about the collisions and who's going to back this Chinese entrepreneur and Indian entrepreneur who also is operating in the U.S. These businesses operate in the US. And so what really is happening is the government is going to stop all US venture investing in China. That's what's going to happen in the coming months. And so they're just getting ahead of that.

Starting point is 00:36:36 And now they will compete. And it really has to do with chips and AI. You may have seen these stories and nobody's going to invest. If an American invests an AI in China, That's going to be bad and the same with chips. Yeah, you're right. There are a bunch of stories about whether US investors should be investing in AI in China And people are saying this was un-American because it was basically going to give China an advantage against us in this key industry and I think that point is a good example of what I'm talking about with the geopolitical concerns. It's just getting too complicated.

Starting point is 00:37:08 Yes. For Americans to invest in China, it raises too many geopolitical concerns. And I think Sequoia is mostly simplifying its life by disciplining these things up and being out. Did you see Keith for boys tweets on this? Yeah, that's what we're referring to. Yeah, Keith for boy tweeted basically,

Starting point is 00:37:23 it's un-American to invest in China at this point. Yeah, we've talked about this before. I mean, look, the Chinese relationship primarily used to be seen as an economic relationship and people were looking for win-win basically trade scenarios. And it was not seen as a moral to invest in China. Now the relationship is primarily seen through a geopolitical lens, which is to say the balance of power,

Starting point is 00:37:44 which is a zero-sum game. It's about, you know, how much better is the US doing? How much more powerful is it than China? And anybody who's perceived as helping China in that rubric now is looked on skeptically within the United States. What do you think about that? Well, I don't think that's going to change. So I think Sequoia is doing the right thing to kind of, like I said, simplify its life.

Starting point is 00:38:04 But what's your personal opinion of Curious? I think that it should be possible to do business with China without it being seen as either unpatriotic or immoral. However, there are strategic technologies that are just going to be, I think, it's too hard and too risky to be supporting China. Chips in AI? Yeah, I mean, look, if somebody is using Chinese manufacturing to make toys or clothes,

Starting point is 00:38:32 I don't think that's fundamentally strategic in a geopolitical way. But if you're helping them make the next generation of chips, that's gonna raise a lot of questions. So a VC firm, Freiburg can't take out chips and AI from their investment. the next generation of chips, that's going to raise a lot of questions. So a VC firm, Freiburg can't take out chips and AI from there. Invest Hold on, I want to say something. This reminds me of when benchmark actually had benchmark Europe and then they cut it. Do you guys remember that?

Starting point is 00:38:56 Yeah, I do. And kind of retrench. They weren't retrenching from a position of strength. They were retrenching to reestablish themselves after a bunch of missteps. So I think typically these retrenchments happen when there's a little bit of internal chaos and mismanagement and underperformance. That's not the case here, I can assure you.

Starting point is 00:39:14 Yeah, but I actually think retrenching is good because it simplifies things. You want to be a fan of it. You want to be a fan of it? Yeah, I totally agree with you. My point is when I saw that overlay fund, I was like, this is questionable, but then when I saw that overlay fund, I was like, this is questionable. But then when I saw that weird evergreen fund,

Starting point is 00:39:29 that to me just seemed like a tax arb. And I thought to myself, as a person who's looked at this exact stuff for my own stuff, what I did was I just converted it to a family office. And from a tax perspective, it was much simpler, but that exact same structure I looked at for myself. And the reason that that structure exists, and Jason, I know you want to think, it's because these endowments want them to manage public equities.

Starting point is 00:39:53 I still work with a few endowments and pension systems. They don't, and the reason they don't is they're not allowed to. They're not allowed for concentration purposes. They pay other people to manage it. They have these outside consultants. And for fiduciary perspective, you have to do all of these things with respect to managing risk. And one of the most obvious things that these foundations do is they get distributions

Starting point is 00:40:13 and they sell. They don't hold. And so the reason why you'd want to look at the long-term gains of a stock that you distributed is because the GP sold to early, not the LP. And I just don't, I'd think that you should not just be a blind surrogate on this topic and actually really think about. Well, I mean, I don't think you need to, well, I'm not, I'm not and, you know, square,

Starting point is 00:40:35 if you look at something like that, you know, rule off still on the board of square, I believe. So they, Sequoia has realized over time, you know, as it's been explained to me as an LP, that, you, that these companies grow the outliers, continue to grow massively when they become public. And Sequoia is now staying on the board of those companies. And so they actually have the most insight into it because they backed it when it was two

Starting point is 00:40:56 people. And then they're still on the board. That's not the point. That's not the point. Money is not infinite. And if you're a foundation and you're legally obligated to distribute some percentage every year, you need the money back. And the foundations do get to choose. Some foundations want to go long. Harvard or whoever, I'm just picking one of the large ones. If somebody's got $30, $40 billion,

Starting point is 00:41:14 they may not need to liquidate that and they might very much want to hold the long term. I'm just telling you the only person that is in a position to actually hold for the long term because it's so tax advantageous is the GP. That is why that fund was created and I will bet you if you ask him under oath, why they did it, I'll tell you it was for themselves. I will have the truth. I bet you a million dollars for charity. Whatever you want to do, I bet you if you put them under oath and you subpoena him and you ask him why he did it, he'll say he did it for himself and that's fine. All I'm saying is that's the kind of complexity that Saks is talking about that does not add to success.

Starting point is 00:41:49 It is over-complexifying something that doesn't need to be complicated. Yeah, disagree with you, but we can just move on. Well, we agreed to disagree sometimes here on the all-in podcast. We're going to move on for our last topic today with the announcement. Can we talk Messi? No, no, no, we're going gonna do one last topic, which I think is And messy go together. Yeah, so let's just talk about the PGA. No, we don't have time guys. I appreciate the messy interest, but we're gonna talk about something less messy

Starting point is 00:42:15 Or even more messy. Okay, I actually think it's pretty interesting for a couple of reasons. So as you guys know, the PGA Tour has been around since 1930. I think the PGA tour makes 1.6 billion dollars a year if reports are correct I make 1.6 billion here boring. That's I mean depends on the year All of the players on the PGA tour are Independent contractors so Saudi Arabia's public investment fund and this is what I think is one of the more interesting aspects of this story. And maybe speaks to a broader kind of set of geopolitical transitions that are underway. The Saudi-Rabian public invention, public investment fund started LIV golf as an alternative to the PGA tour. Live golf. Liv Gulf, they invested $2 billion of capital and offered guarantees to golfers to come and get on their tour.

Starting point is 00:43:11 They ended up offering at one point Tiger Woods reportedly got at $800 million guarantee to join their tour, which he turned down. Phil Mickelson got a reported $200 million guarantee, which he took to join the tour. Hidaki Matsuyama got offered $750 million. $750 million. So, seven of the ten top paid golfers in the world actually signed up.

Starting point is 00:43:34 And it caused obviously significant disruption to what has effectively been a monopoly, which is the PGA tour in golf, in professional golf. And here we are two years later, and it was announced this week, that live in PGA are merging. And the current PGA tour commissioner, Jay Moynihan, will serve as CEO of the new entity. Just by way of reference, Jay Moynihan makes a reported $14 to $15 million

Starting point is 00:44:00 a year in salary as CEO of the PGA tour. He will now be CEO of this combined organization. One big question mark is how much is he getting paid and did that help secure and solidify this deal getting done? But I think another big question is, do we think this will actually close? Will this face regulatory and antitrust scrutiny? Will this face syphias?

Starting point is 00:44:21 Because it is the Saudi Arabian public investment fund that is effectively taking a large stake in the PGA tour. Let's go to our resident professional sports team owner or former minority owner, Jamal. Any takes on this announced merger? What does it say about the PGA's ability to hold action? This is what's so crazy about your topic selection. Messi was offered $1.6 billion personally by the Saudis, and you don't want to talk about that because you want to talk about a whole organization playing an antiquated sport that itself generates $1.6 billion.

Starting point is 00:44:58 Welcome to being the moderator. Tech-monitor's topic. What's your point? I don't care about golf. I don't care. The reason this is so controversial is that they're calling it sports washing, trying to make the reputation of Saturday more palatable in the West by using sports, things people love. The reason this has become controversial is because of the hypocrisy of it. The PGA fought against Liv. And this guy, Jay Moynihan, who is the CEO of this, he basically evoked the 9-11 families

Starting point is 00:45:34 and went on a whole thing about how Eva Liv was only to then secure the bag. And then there's some back time here about, well, there was a lawsuit between the live golfers who are now banned from playing the PGA when they signed up and anti-trust off. And so the hypocrisy of the group is being pulled into question here. This is why it's important because the players who took the money were ostracized as supporting an evil regime.

Starting point is 00:46:03 Right. And now it's clear that they were smart. And Tiger should have taken the money. And actually the guy who said as much at the time was Trump. You know, he, you know, so yeah, he nailed it. It's like one of these. Once again, the surprise.

Starting point is 00:46:19 It's it. And once again, he's, it's not. No, he said, he's basically said that take the money from Lyft, because eventually Lyft and PGA are gonna merge. And then the guys who stuck with PGA are gonna get nothing. He said, what's the get? He's basically said that take the money from Liv because eventually Liv and PGA are gonna merge and then the guys who stuck with PGA are gonna get nothing and they're gonna feel like idiots. He was totally right.

Starting point is 00:46:32 He's split the money. Come on, come on, you don't think that that's insane? I mean, come on, it's pretty amazing. Tell me when you get to messy. I'm the fact that these guys were proclaiming that if you're gonna go join this tour, you're joining, you know, you're lining up.

Starting point is 00:46:45 I don't understand whether you're naive or dumb. This is like about money. It's always about money. Professional sports is money. It's always been about money. What are we talking about? Money, money, money, money, money. There's your answer.

Starting point is 00:46:58 Money drove the answer. Money drove the split. Money drove the deals. Now money drove the merger. I don't understand. Can we talk about messy, please? It's so much I don't understand can we talk about messy please it's so much more interesting okay go talk about messy to my I mean the messy thing is so incredible because Chris General Ronaldo went to a team in Saudi to play in the August of his

Starting point is 00:47:16 career the last two or three years and this has been a thing that started with Pele in the 70s Pele came to the New York Cosmos and played. Beckham famously did it as well, came to the LA Galaxy. But Beckham did this one interesting thing, which is he said, okay, I'm going to come to playing the MLS on one condition, really, which is I'll take a huge pay cut and all of this stuff. But I want an option to buy an expansion team for 25 million bucks. Fast forward, he ended up buying Inter Miami. That team is now worth $585 million. So Messi is 36 years old. He's about to enter the August of his career. He's won everything. He's done everything possible. He is so incredible.

Starting point is 00:47:58 I mean, I love him. I love him. He gets offered $ hundred million dollars a year for four years to go play in Saudi Arabia, a 1.6 billion dollar deal. And you know, there's no income tax here. So that's like 1.6 billion dollars right in his pocket. Except the deal that he did, which was for a lot less upfront, is really interesting. He basically said, I'll come to the United States and play an inter Miami for the Miami Football Club, but I am, you know, basically I'm not sure he said this, so I'm using my own words. I'm the greatest player in the world. Every time I do something magical on the field, I'm creating content that will sell tickets and create brand awareness and move

Starting point is 00:48:45 the interest level of soccer in the United States. I'm a content creator, so I want a piece of this content. And so Apple, who signed a $2.5 billion 10-year license for the MLS said, you're right, you're probably going to sell more subscriptions for me. I'll give you a piece of the revshare. And then Adidas said, you know what, you're right. You're probably going to sell more shoes for me. I'll give you a piece of those shoes. So in one fell swoop, I think what's amazing is, Messi is not an athlete in this deal. I think going back to a theme that we've talked about a lot is, he is this ultimate pen

Starting point is 00:49:23 ultimate, whatever, he's an elite content creator. He's the equity. Who is now creating incredible, who will come to the United States to create this incredible content that will move viewership, move merchandise. And he's gonna monetize that. So it's effectively like becoming the Jordan brand,

Starting point is 00:49:42 getting a piece of Netflix all in one. He has the equity in those businesses, basically. Yeah, this is a subtle point, Shaman's making. In the deal, you have the person who's responsible for distribution. So this would be the same as the NBA on ABC ESPN or TNT. And TNT or ESPN saying, you know what? You're so important, LeBron James, to play in this or Steph Curry. We're going to give you a piece of the subscriptions

Starting point is 00:50:05 to ESPN. So Apple is giving him revshare on their Apple TV league pass for MLS. That's nuts. And this is, I think it goes back to the live deal with PGA, which is people are looking at these sports leagues and saying, let's get creative. It goes back to a different one. The NBA just signed a new collective bargaining agreement that they're going to ratify. I always thought that the real thing that the NBA players association should be asking

Starting point is 00:50:33 for was equity. And that equity could be fentom equity in the teams because it's clear that in the absence of the players, there's no viewership and there's no appreciation in the value of those franchises. And so the idea that LeBron, you know, Steph, Dre, KD, don't own a huge piece of the underlying equity gains that they're creating in the period in which their players is pretty crazy. Now, the ownership, their perspective is while we translate that in terms of revshare, but it's really not true. Because if you look at the Kager, the IRR of the franchise values versus the Kagering

Starting point is 00:51:12 of the salaries, they're not equivalent. So I just think it has huge implications to all the professional sports leagues because these big stars should be asking their agents and their managers, how do I do a deal like message? I am the ultimate content creator in my league. The dynamics are changing. It will no longer be an employee capital labor situation, but capital is merging with labor. Labor is basically becoming the equity in the equation and they are going to proceed

Starting point is 00:51:42 the business. Just like the Silicon Valley. And by the way, the reason we see it happening so much is because of the social media agent. It's really incredible. It's, but it was like, I know you have more to say, we all have more to say, I just want to highlight, I need to go. I have to go to a kindergarten graduation.

Starting point is 00:51:58 Oh, congratulations. Congrats. I'll close it, Chef. I love you guys. I'll see you later. I'll see you later. Congrats to your kid. Thank God.

Starting point is 00:52:06 But what's really interesting, Chimoff, to your point about the CBA, is they're going to make these huge salaries. They're not going to give them the equity as part of their five-year deal. They make the money. They then have the ability to invest in a team. So you could be LeBron and you could be investing in the NICS, maybe, if somebody wanted to sell a percentage of it. You can invest in any NBA team, any sports betting team, any sports betting.

Starting point is 00:52:30 I actually think there's a simpler way to do this, which is it's, I think it's fair to say that when you join a team, it's like joining a company. Yeah. And you can create shadow equity. And that shadow equity says you came in at this point, right? You left at this point. Here was the delta of the value. And I think a good agent should be negotiating on behalf of a player. Most players will not

Starting point is 00:52:51 get that much. A few basis points of that value. Yeah. But the idea that a LeBron James can go to a Miami and double the franchise value double. Yeah, right? From, you know, one to call it. Or stuff. Stuff. Stuff's a better, okay, great. stuff comes in at 480 million and is now 5.3 billion So that's a 10x-ing plus of value, you know is step responsible for 10 or 15% Should a billion dollars of that go to step dre and clay? I think you can make a great claim that it could yeah Absolutely put them on the map. So yeah It would be and it would be pretty easy to do and what this might do is keep people on the same team longer, which is what fans want exactly why people moving around. That's a great point and private companies like cargill or coke industries. They have the shadow equity programs that they've had for years for decades that they run on behalf of their employees so we know how to run.

Starting point is 00:53:43 on behalf of their employees. So we know how to run Phantom equity programs in private businesses. And I just think the leadership of the NBA players association, the NFL players association is right now still lacking the sophistication to understand this well enough to then propose when the next time it is to negotiate this kind of a deal. But when you see things like this messy deal, I think it's a game changer. It is a game changer. And I think for sports, I don't know if you saw Adam Silver gave, you know, a little press conference with the finals and everything.

Starting point is 00:54:19 He was talking about the J morant situation with the guns. It's just a lot of like topics coming up. But one of the topics that was probably underappreciated was he was talking about the bundle, the cable bundle is going away, and that people can't watch like the NBA on TNT, whatever that is with Charles Barkley, et cetera. And he wants that to be available for free.

Starting point is 00:54:40 So he's gonna challenge people in the new TV deal. If you wanna have the NBA, you have to have it available to everybody, because the number of people who can see NBA games has been going down. I have a question for you. Because if you think more people, do you think more people would pay for a subscription to watch the next games, wherever they happen to be all over the world, or a subscription to watch step curry, no matter what TV plays on. The old generations are loyal to the teams, the new generation as well as the players. The new generation is loyal to players. So it's a generation.

Starting point is 00:55:06 A numerical question. Which one's great? It's probably a jump ball right now, but it will eventually be the fall of the players. Because this new generation follows players. Our kids like, I don't think they're all abroad from our team to team. I think you could probably sell a few hundred thousand subscriptions to the Nix and I think you'd sell mid-millions for stuff. What's gonna happen now is i think they're going to they just want this to be ad-based and to directly subscribe so i directly subscribe to the mba get every game for two hundred dollars a year

Starting point is 00:55:34 with no ads i love it you know what we should do i actually have a great idea what we should do is we should we should what live did to the pga we should do to the NBA. Let's get together 20 billion dollars. Let's start a competitive NBA league where we give the players a structured phantom equity plan. Pay these guys a hundred million bucks a year. Get all the big guys to come. Everybody else will come and just blow the whole thing wide open. By the way, that's the blueprint now. If you want to really compete with the with the NFL or the NBA or the NHL, this is what you should do. Put together 20 or 30 billion, which is not that much money and go for it.

Starting point is 00:56:10 You only need to get a couple of stars to blow it up. And if you give stars the equity and the league, they'll convince all the other players to come. Let's give Saks some red meat here. Saks will give you a little red meat. You want Tucker on Twitter. There's your red meat choices as we wrap. You want Tucker on Twitter. Here's your red meat choices as we wrap. You want Tucker on Twitter.

Starting point is 00:56:25 You want a Russian controlled dam being destroyed for a major flood. Or do you want Chris Christie joining the race? Which red meat would you like? Which red meat we put in front of crazy hair? Well, I mean, what's happening in Ukraine is really the big news this week. I mean, do you really think that our offensive has... Well, the Ukrainian counteroffensive has started well, the Ukrainian counteroffensive has started in earnest.

Starting point is 00:56:48 And yes, in conjunction with that, you had the destruction of that major dam, which it's not clear who did it. I mean, both sides are pointing the finger at each other. So and there are reasonable arguments for why either side may have done it. In terms of who benefits, it seems to benefit the Ukrainians more because the destruction of the dam washed out a bunch of Russian defensive fortifications and villages of Russian speakers. On the other hand, the Russians were in control of the dam, so it would have been easier for them to carry it out if they had wanted to.

Starting point is 00:57:24 We just don't know But I think you know events have now moved beyond that and we are now probably in the third or fourth day of the Ukrainian counteroffensive Of course has not been officially declared, but there is major major fighting happening now where Ukrainian armor divisions are seeking to You know penetrate Russian defensive lines around Zapparicea. So the long way to Ukrainian counter-offensive has certainly begun. How does the dam relate to the Nord Stream pipeline? Because these are both situations where people are like, who actually did it?

Starting point is 00:57:59 What's their motivation? And let's face it, these are chaotic actors at times and figuring out who has the motivation to do these things seems like a leveling up kind of game because you can't put it past either party in some cases, but in the case of Nord Stream, people saying, hey, it was the Ukraine, but then there's this argument that the Ukraine's not capable of doing it or maybe it was sanctioned by the US or the West

Starting point is 00:58:23 and then executed by Ukraine. Where do you wind up with all these? So on Nord Stream, we're now on our third cover story, the CIA sourcing their stenographers at the Washington Post have now claimed that it was six Ukrainian dudes in a yacht who blew up Nord Stream. No, seriously, and if you look at this boat, I'll put a photo of the boat on the screen. It's pretty silly. It's 10 great.

Starting point is 00:58:46 Yeah, the Italians do not have a Navy, and they certainly don't have Navy seals. I don't believe they have the capability to, by the way, this destruction of Nord Stream was this huge underwater steel and concrete structure. It's not that deep, though, because it's only 150 or 200 feet deep at the lower point. It's deep enough and it took a lot of explosives. So they had to know what they were doing. So I do have 120 feet one. So it's not that. But the point is that when Nord Stream was first destroyed, the media rushed out to say, well, the Russians did it, even though the Russians had no motive to do it. It was their pipeline. As their pipeline, they could just turn it off. They

Starting point is 00:59:24 wanted to. But this is what we hear is that every time something destructive happens, it's the Russians did it. Why would they attack themselves because they're so crazy? We heard this with Nord Stream. When Belgorod, which is a Russian district just across the border from Ukraine, was attacked, it was claimed that the Russians did it. These were Russian insurgents. No, that's pretty silly. It was Ukrainians dressed in Russian uniforms. And just recently when they were drawn to attacks on Moscow, we were also told that it wasn't the Ukrainians who did it.

Starting point is 00:59:53 It was Russian dissidents or something, which again makes no sense. So this is not to say that the Russians didn't blow up that damn. It's just to say that whenever the story is rushed out that the Russians did something highly destructive, you have to, we need to see some evidence here and we just don't know. It's just hard to know. The fog of war is thick. All right. What did you think of Tucker's first show?

Starting point is 01:00:17 And we're not getting sued, but he got, the tweet got at least like 90 million views, which means the video probably got 10% of that or something. So probably. Video yesterday was a 17 million views and I thought some shirts more today so no he's getting huge distribution a through Twitter arguably it's more distribution that's almost certainly more distribution than he got through Fox Fox was 3 million right he has that's how many viewers he gets on Fox yeah well Fox is half of that now because they've. They've attritted so much viewership after Tucker left. But look, the only thing that I think Tucker got through Fox

Starting point is 01:00:50 was access to frankly a viewership base that's not very online. There are a lot of old people who watch Fox who just are on social media. That's it though. Everybody else can see it on Twitter and he's getting more distribution on Twitter. Super distribution is the way to go. He's going to get 25 million people. Of course, monetizing it is the hard part because Fox is subscription revenue and everything else is advertising.

Starting point is 01:01:16 He's creating a list. He advertises the website, Tucker Carlson.com at the end of his video and you can go there and sign up for you subscribe direct and get it on his website well i don't think he's monetizing it yet but you can sign up for alerts and so forth so he's clearly creating a list of some kind uh... that's probably because he yeah with his contract is still getting paid and so he's like daily wire is the model i mean they they've got well over a hundred million in revenue i understand and they have a massive subscription business. So there's a clear path. All right. Hey, listen,

Starting point is 01:01:48 for the world's greatest moderator living in the Bay Area, David Friedberg, and the Dick Kitter himself, Chimapala Patia, and the architect hosting any number of fun razors for any number of politicians. David Sacks, the rainman. I am the world's greatest moderator taking a week off. We'll see you next week. Oh, and enjoy some Q&A here from the live angels summit, 100 people in Napa. Thanks for coming. Besties, I appreciate you. Love you boys. We're in the event. Love you, besties. See you next time. Bye, bye. Bye, bye. All right. Welcome to a baptism. John the Baptist. Are you ready to accept Christ,

Starting point is 01:02:29 Freyberg, into your soul? I honestly have no idea what I'm doing here. I have no idea who these people are or what this is, or why you're all wearing white. I mean, seriously, I'm sure you're very nice people, but I have no idea what this is. Have you seen the wicker man? Jake Al is like, we're taping an episode in Napa,

Starting point is 01:02:52 and I'm like, what? On an off day, what was this? Today's Monday. It's Monday. Are you okay, buddy? Yeah. You low blood sugar? Yeah, actually, I do bring us like a cheese plate or something.

Starting point is 01:03:03 Can we get a cheese plate or something? We're gonna get cheese plates, please. And guacamole and chips. Please. But honestly like I didn't sign up for this. I thought we I thought we disagreed to a podcast and somehow we've been roped into doing some dog and pony show for J.C.L.P's. By the way. Is that true or what, these are a bunch of your LPs as well. You just have never met them. Literally. Okay, I'll drink it.

Starting point is 01:03:31 Yes, sir. Literally, someone's like, Jake, I'm with this incredible endowment where incredibly successful. I'm like, oh, that's great. Yes, you heard I'm raising a fund. They're like, no, no, no, no. We heard, Saks is going to be here. I'm like, yeah, you want to meet him in the festivities fund.

Starting point is 01:03:43 Oh, no, we've invested in all this funds. We just never met him And so wow that's one way to do it. That's how successful Sax is pretty funny two things they've never seen Sax and a distribution Great fucking decision wherever you are you're a real fucking genius back there Except for the fun we already paid back. Oh my god. I lost control of it in the first 90 seconds. Why should tonight be any different?

Starting point is 01:04:17 Except for the five-year-old fun that's already fully returned. Of course. All right, whoa, easy. So welcome to the angel summit. These are my besties. We do a podcast called All In. We thought we'd do it live. This is the fourth time we've ever appeared on stage together.

Starting point is 01:04:34 The first two times we're at freeberg's LP conference in the Presidio, yeah. I resented that one too. We know you have our first time coming out to see humans. Yes, COVID. I think he met in his mask, he took his gloves off, it was very uncomfortable for him, but he eased into a seat. And then of course we did the all-in-summit last year in Miami, and this is the fourth time. So it's great to be out here.

Starting point is 01:04:59 We have a couple of news items on the docket we could start with, or we can go right to Q&A with these many audience members who have a lot of questions. What would you gentlemen like to do? Simoth has a few words he'd like to say go ahead. What do you guys want to do? Simoth is drunk by the way. He texted us. You can see that grin on his face.

Starting point is 01:05:18 That's the Simoth grin he gives when he decided, like ex-tap it all, that he would not have LPs and he would just invest his own money, he does not care. So it's the gloves are off. Let's do Q&A, J. Levy is his sex. What's the path for DeSantis to win the nomination and get the base of Trump? Oh, red meat. Oh, good. I think the path basically is he has to win Iowa and or New Hampshire. This is that simple. But keep in mind that Trump did not win Iowa last or in 2016 tech cruise did. Iowa tends to be more religious.

Starting point is 01:05:57 I think to Sanchez is trying to outflank Trump on the right actually on certain issues. And so he's on the ground there campaigning. I, from what I understand, he's generating a lot of interest and enthusiasm, and he's going to keep plugging away at it. I think he's going to out hustle Trump. I'm not saying he's going to win, but I think he's going to work harder. And the path would be that over the next, what is it like, nine months that Trump's style and message, which is admittedly much more entertaining

Starting point is 01:06:28 than DeSantis, but kind of fatiguing, whether that kind of gets old and DeSantis is more like discipline messaging, people just kind of wake up and say, you know what, like, I don't really want to go back to the chaos of the whole Trump show, and this seems like better to me. So that's basically what I think has to happen

Starting point is 01:06:49 is Trump fatigue has to set in and people realize that there's a different way. Was that CNN town hall assigned that some group of people find him incredibly entertaining and the media themselves want him back because it's great for ratings, Allah, Mankin on session, or is it a sign that like, my God, that's so fucking exhausting like you're saying, Zach,

Starting point is 01:07:10 what do you think? I think that the pace like the town hall because it was Trump walking into the lion's den, standing up to the mainstream media, which is what they like, but I don't think you did anything to help him in the general, because I think that viewers who don't like Trump or aren't entertained by Trump, I mean, there's nothing there to really grab onto, I don't think. So, but look, I think your point about who does the media want to get the Republican nomination? Definitely Trump, because

Starting point is 01:07:40 he's good for ratings. And really is that simple. And they think they can beat him. So right now, the Biden people, the Trump people, and the media all want Trump over to Santas. And that is why like, to Santas is getting dispatched by everybody right now is because everyone's kind of aligned on this. But the minute that Trump gets the nomination, it's all gonna turn.

Starting point is 01:08:03 The media all of a sudden is gonna turn on Trump, and then we're going to see what the real campaign is going to be about. DeSantis isn't show business as they said on succession. Was that the quote? He's show business. He's box office. He's not box, yeah. DeSantis isn't box office.

Starting point is 01:08:16 He's somebody who actually can execute running. Right. But also that's why he would be a good move for Republicans, I think, is because he doesn't give the Democrats as much to work with. Yeah. From entertaining, but he gives his enemies so much to work with. All right. Another question from the back.

Starting point is 01:08:31 Go ahead, stand up. Tell us your name. Yeah. Sal Dahar from Boston. And the question is much less exciting. Regarding sort of in the problem of bank runs and bank insurance by the Fed and bailing out, average people bailing out wealthy people.

Starting point is 01:08:55 I've heard a lot of solutions about this. I've been in some careers in banking for a while. The idea of having senior management in the board have direct liability if the feds have to step in to rescue the bank. Do you think that that could be a step in the right direction in preventing banks from taking risks they really shouldn't have taken? I mean, the 2008 disaster, the subprime crisis could have been addressed with this. I think this crisis with SBB could have been addressed with this. I think this crisis with S.V.B. could have been addressed with management just having a lot more to lose.

Starting point is 01:09:27 Okay, so let me just first take issue with the terminology of bailout. I know that's what everyone calls it. A bailout in my mind is when the shareholders or the bondholders of the bank get bailed out by taxpayers, that happened in 2008. It did not happen here. Here the question was whether depositors get made whole or not. I personally don't consider that a bailout I understand that there are people who do, but it is a slightly different issue. As to the bank management, you know, you're talking about like a strict liability standard here that I mean, basically you're talking about piercing the corporate veil and making the bank executives

Starting point is 01:10:05 and their director is liable for mismanagement of the bank. And that is... That's a pretty high bar. That's a really high bar. And the problem with it is that I would never serve on the board of a bank. I mean, I probably wouldn't anyway, but if you told me that I could be liable... Yeah, piercing the bell. Yeah.

Starting point is 01:10:23 For that even though... Right. We have a thing called the business judgment rule, you know, in Delaware, where if directors and officers of the company perform their job in a good faith way, making the best decisions they can, and it goes wrong, they're not typically liable for that. Maybe the corporation's liable, they're not personally liable liable. I'd look, if you did that, the managers wouldn't invest the cash in anything because they wouldn't want to take any risk of loss. And in order to operate the business,

Starting point is 01:10:54 which has a bunch of people working there and a bunch of banks that they got to operate, they're gonna charge you a fee to hold your money for you. And so what happens is interest rates turn negative and you basically have to pay someone to hold your money for you. And that's what's a little bit messed up about the way the banking system works today is you're effectively giving a money manager the right to invest your money for you.

Starting point is 01:11:11 They take your money, they pay you a low interest rate, they go invested in high interest rate stuff by taking on risk with your capital and ultimately they can take losses on that. And if you want it to make them liable for those losses, they're not going to take that risk and the bank is going to have to change its business model from being an arbitrage business to being a service fee business. And they're going to have to figure out other ways to charging service fees, including charging you to hold your money in order to make money. And that's what a lot of the banks are now doing.

Starting point is 01:11:36 First for public and others have now proclaimed that they're going to start charging a lot more service fees to hold your money and they're going to start taking a lot less risk. So we're already headed in that direction. But that's fundamentally what I think would be to take another question from the audience. Good evening. I'm Lisa Song Sutton, Las Vegas, Nevada, GP in the veteran fund. As investors, you all invest in entrepreneurs. Beoretically you support American entrepreneurship.

Starting point is 01:12:01 What role, if any, do you think VCs should have in shaping, advocating, supporting, conservative economic policy in the country? Shemoff? Zero. I think that we have to know the role that you're doing if you're a venture investor, which is you're buying a deep out of the money option. And I think that you want to motivate the people that you are partnering with to take really thoughtful but outsized risks. And so I don't think there's a lot of room for conservativism. I do think that there's room for misallocation of capital. And I think that there's people that can help guide that. But the reality is that when you start a company, it's 95% likely to fail. And the venture

Starting point is 01:12:51 investor is signing up for a 70 or 80% probability that they lose capital, maybe a 10 or 15 or 20% chance that they get their money back. And then the small 5% chance that it becomes reasonable. So in that lens, I don't think that's where conservative economic policies really should play a role. I think you just kind of got to go for it. And if it's going to win, it's going to win big. And if it doesn't, you lose one extra money. I think like where

Starting point is 01:13:25 you want conservative economic and rational thinking is when you go to the extreme other end, which is just like the large scale decisions that affect the economic vibrancy of the country in which you live. And there on the margins, you probably want to be more rational than irrational, irrational. But as a venture investor, I think you want to be irrational. But I also think you have to be very judgmental. And the reality is that most companies aren't going to work. And most people, this may seem controversial. Most people actually, when push comes to shove, are a little afraid of the decisions they

Starting point is 01:14:02 need to make to be truly successful. They're not willing to fire the people that they need to fire. They're not willing to be extreme in the product they want to build. They're not willing to price it. They're not willing to go to market in an extreme way. And it tends to be that these companies fail because of that. A lack of courage. A lack of conviction. I was just a lack of courage or conviction because that's a very heightened word. I just think that when push comes to shove, most people implode with the pressure of making a very,

Starting point is 01:14:27 very hard decision. Interesting. All right. In my experience, it could be yours. It could be yours. No, I mean, I agree with you largely when a startup does fail, if the experienced people around it are watching and can't get through to the founder of the founding team,

Starting point is 01:14:42 it's typically they are blocking their own success, they're unwilling to fire their co-founder, their CTO as the example you're alluding to, perhaps, or raise the price of the software and lose some customers, or to drive people to work harder because you've got to compete in the space. And that's why you see extreme people win in our pursuit.

Starting point is 01:15:01 And I think there's been just a great fallacy that's gone on that you can have live work balance or life work balance, and you could have this Nirvana where you have it all. The fact is, the great companies are made by people who make great sacrifices, period full stop. And if you're not willing to make the great sacrifice, you're not going to have great outcomes. Hi, David Samuel. Earlier today, Jason, you had kind of a doomsday or AI panelists. And my question is, you guys have been thrust into the public spotlight. And we look at deep fakes in the next year or two, as you talk about, you know, tweeting on Friday versus Wednesday. How do you think about somebody having each of you saying things that you did not say?

Starting point is 01:15:40 And like how might we know whether Chimoff said that or it was a deep fake singing? I already have that problem. Yeah Business insider last week where somebody was saying I had a phone call I never had so how do we solve this? Especially for you as public as public two things one I don't think people can say more outlandish and damaging things in AI than we say ourselves On this podcast at times. But number two, as we've discussed many times on this podcast, we have rebooted our trust in institutions, what we read, what we see.

Starting point is 01:16:18 And I think people are now assuming they're being manipulated, assuming something might be fake news or doctored. And I think it's like people are building up a much higher resiliency to bullshit, lies, manipulation. And if I were to ask 100 people, what is the bias of CNN, New York Times, Fox, MSNBC, NPR, 90 out of 100 Americans could describe it almost exactly. People are not dumb.

Starting point is 01:16:46 This is another fallacy I think we have in this country is that people are dumb and they're going to get suckered. People are kind of figuring it out. And we've seen deep fakes for what, five years, ten years now. And they're like, yeah, you know, Luke Skywalker didn't look really good in the Mandalorian, but there's a kid who redid it. And now, Dolly too is doing it. I think we're kind of inoculating ourselves, too.

Starting point is 01:17:05 What do you think, Freeberg? Deep fakes and truth. When the Gutenberg press was invented, a bunch of fake shit was printed and people believed it. I don't think the current iteration with deep fakes is very different from any form of mass media being used to help people. I'm going to call it crusades. What's that?

Starting point is 01:17:29 Healthic crusades. Yeah, no, I mean, but look, I mean, you're 100% right. But I don't want to speak about religion negatively in that way. It is one of many institutions of power that leveraged mass media historically to get people to believe things, to do things, and to ultimately be able to tax people and get them to provide capital and labor in the interest of those who are in power. of using the current toolkit to take mass media and follow that same track. So, it will be dealt with in the same way that things have been dealt with, that have been fake news in the past, which is that there will be an opposing voice and there will be counter arguments and there will be debate and it will be rancorous and it will be noisy and it will

Starting point is 01:18:19 be hard to discern and alternatives will emerge and tools that identify deep fakes will emerge and it will be the same ongoing battle and seeking of the truth that humanity has tried to do since the dawn of mass media, you know. Yesterday's conspiracy theories or like tomorrow's Pulitzer Prizes, I always say, like if you look at Shinino Khan or ripping up the Pope's picture on Saturday Night Live, in protest and saying like this is the true enemy, up the Pope's picture on Saturday Night Live, in protest and saying like, this is the true enemy. They're molesting children and then the Boston Globe and the movie spotlight is about them. A decade later, winning a Pulitzer for uncovering what anybody who's in the room who's Catholic in the 70s and 80s knew or had heard was going on. And so, you know, maybe the time

Starting point is 01:19:02 frame is shortening between when we're being lied to and when we figure it out. I actually think it's interesting and good because it forces us to find ways to find the truth more effectively. And, you know, it kind of, without the antagonism, I think it's, you know, it's absent. What is the truth? You don't force that debate, you don't force that question, and this will start to reveal ways that we can kind of find things that are actual evidentiary things versus things that someone told me with either historically anecdote or innuendo

Starting point is 01:19:33 or I'm a person in power or I'm an authority or I'm an expert. And nowadays it's like I'm a piece of media you should believe me. Or here I'm an image of a person. And that's not gonna be the case anymore. Hi, I'm Jeff, a full-time corporate VC and part-time angel. My question is about AI and higher education and it's actually some covert parenting advice

Starting point is 01:19:52 so you can decide who's that relevant for. My son just finished his freshman year of college and I'm questioning what the future is for him in higher education given all the change that AI is going to, gonna have on every career and every profession. And I'm wondering what advice you'd give to your child or someone who's in college right now, for what's an area of study that won't maybe won't be disrupted by AI or an area that AI will get leverage

Starting point is 01:20:25 from your education through AI. I think the reality is that most of the existing jobs that we have in the United States are going to go to lower cost locations that have that tool chain to accelerate their capability. So we are gonna have to reinvent the work force and the things that we do over the next 30 or 40 years to stay relevant. That's probably like I think that should just be the operating principle. If you think about it, we used to run great call centers. Okay, those call centers were outsourced to the Philippines in India.

Starting point is 01:21:06 But in the next, you know, five or ten years, you'll have this flawless, unaccented English, or even more eerily, perfectly accented English for the zip code of the person that's calling in so that it sounds like they're talking to somebody that's literally their neighbor. That's like just makes so much sense, right? So it's like all this stuff is going to happen where like all these classes of jobs are going to go away. I saw this article where a lawyer, two lawyers used chat GPT to submit a legal brief. The problem was that it cited cases that didn't

Starting point is 01:21:38 exist and now they're going to be disbarred. So this is like serious business, right? Like you can't do that. Like that's like real legal malfeasance. So what are your kids doing? Practice in college. You know, if I had to choose something from my kids, I would probably, I would probably tell them to do something mathematical or biological. The reason I would point them to math is that I think that it's irrefutable. There's this great clip between Ricky Jervase and Stephen Colbert. You guys should go and Google this.

Starting point is 01:22:14 But it's a clip where he's on the Colbert show and Colbert is a deeply devout Catholic. And he's offended by the fact that Ricky Jervase doesn't believe in God. And he asks him, why don't you believe in God? And Ricky Gervais says, look, if we wiped out all the books in the world, in a thousand years, everything that scientific and mathematical would be reestablished. But everything that is religious or theoretically not, you know, mythical, if you want to say, would look very, very different. And that's why I don't believe in God.

Starting point is 01:22:45 I'm not trying to question that, but it's a way of answering this question, which is I would try to point my children to the body of knowledge that's largely irrefutable, which is biological and mathematical, versus belief-oriented, because I think these tools will change one's beliefs. I've been thinking about this a lot too.

Starting point is 01:23:02 I think teaching them to be entrepreneurial, resilient, worldly, ability to communicate, ability to lead other people in teams, that stuff's not going to go away, communication skill, et cetera. And I'm encouraging everybody who I work with to just use chat, GPT-4 and Bard every day for every single thing that they do, my base thesis right now is that the job freezes, the hiring freezes that are all these companies is indefinite. I'm assuming it's indefinite

Starting point is 01:23:35 because the amount of work it takes to write a job requisition is more work in some cases than actually automating with AI already, the job function. And so I think 20 person companies might, you know, double in size in the next two or three years, but still have 20 people. This is going to be a big challenge for the first society. And if that does come to pass, there's just going to be large swaths of people who are not going to be able to get job interviews for anything other than service jobs. We need a lot more plumbers, electricians, waiters, et cetera.

Starting point is 01:24:10 Those probably jobs won't go away, especially if we don't let people immigrate. I am super enthusiastic about that efficiency, but I think it also means you have to be entrepreneurial because if you can't get a job and you can't get mentored, you better create your own opportunity. You better create your own company. You better create your own company. And that's what I'm seeing. That's the game on the field right now. Two or three people who don't have job offers from Uber and Airbnb and Google

Starting point is 01:24:32 and Facebook just saying, fuck it, let's start a company. Because there's nothing else for us to do. And those are highly skilled people right now doing that. I'll say two quick things about this topic. So one is, I think there's a lot of AI fear porn out there right now, and I just think that like all of these tumor scenarios are, they're not going to play out overnight. I mean, this is going to take a while. Second, if you think about like job elimination,

Starting point is 01:24:59 it's going to be some super specialized jobs. So for example, I wouldn't want to be a radiologist right now, but doctors will be fine. I think if you're thinking about going into a job category that's super specialized and clearly in the way of AI, then that probably is not a good idea. Most general skills, like you're talking about, and most job categories, are going to be fine. There's just going to be some specialities within them that may get dislocated. I wouldn't want to be a truck driver either, because of self-driving, but transportation companies are still going to exist.

Starting point is 01:25:40 I think you just want to be careful about super-specialization, I think. But building general skills is always really good. That really should be the point of college. Where would you put lawyers and accountants on that I'm curious? There's sufficiently general that I don't think they're going to be eliminated. But will they be able to do five times the amount of work, therefore we won't need as many? They may be able to get more done, yeah. I would expect them to get more done. Yeah, but I don't think necessarily think that means we'll need less of them. I mean, the old story about lawyers is that there was one lawyer in a town had no business. Second lawyer came to town and they were both

Starting point is 01:26:14 more busy than they knew what to do with. So, you know, lawyers get 30% more productive. They file 30% more lawsuits and, you know, yeah. Well, let's take another question. These are great questions, so for. Hey guys, Rick Spencer, I hope Chimath gets to choose the wine this evening for dinner. I did not get to choose your wine, so I apologize in advance. What kind of a trick? Yeah, this is the last. The 2018 Chateau con la Fong. I love the best. Okay, question. So you've talked recently in an episode about the speed of AI, the adoption, and how the winners are still unknown. That was reinforced in the sessions today,

Starting point is 01:26:51 a room full of investors. How are you thinking differently about your investment, you know, your strategic investment decisions and your strategy? Are there opportunities to look at venture investing differently like venture studios, you know, in the future of AI? I had this conversation earlier today.

Starting point is 01:27:06 I think I started a company in 2006 where we took large data sets and we built predictive models from those data sets. And we use those predictive models to make analytical tools available to a specific vertical in our case agriculture farmers. And the models were both deterministic, meaning there was definitions,

Starting point is 01:27:27 algorithmic definitions of physical parameters, and there was all the statistical inference that you get from large data sets. And it made recommendations for farmers. What a lot of people are calling AI today is fundamentally a predictive model on text, on language. I am making a language predictor that gives you a sentence. And it seems so profound because it is how we all interact with computers and interact with one another. And as a result, it is kind of

Starting point is 01:27:58 viewed as the sea change across all of these industries instantaneously. It's this whole new era. But the fact is that generally speaking, the digitization of things and the amount of data that's being generated on Earth is going up by some order of magnitude every number of months, and our ability to make predictions and build predictive models that are useful to specific vertical segments is improving every sequential cycle that this is happening across every vertical. And it has continued and it hasn't changed and it's not any different. So, there's in this area of genomics and bioinformatics, there is an absolute sea change happening in human health in synthetic biology.

Starting point is 01:28:37 And our ability to understand and predict the biological world and make changes in creating new drugs, creating new systems for producing molecules, for producing things that humans consume. And it is all buoyed by machine learning applied to large data sets in genomics and other metadata associated with human health and biology. And we're seeing the same thing in other areas, whether it's chemistry, material science, industrial application, consumer markets, and so on. The era of what people are now calling AI is an interface layer of language that's

Starting point is 01:29:10 really creating transformational opportunities on how these tools, how these systems, how these models can be utilized and provided to all these different verticals and allows us to rethink business models, to rethink interaction models, and to really change the economics of different businesses and the utility change the economics of different businesses and the utility and the productivity of humans because it is about speech, it is about communication, it is about what we fundamentally do as a species. So I would argue that the general trajectory of machine learning, the general trajectory of data generation and our ability to make predictions generate value across all these

Starting point is 01:29:43 different markets is continuing in the way that it has been continuing for the last 20 years and it is profound in its own right and I wouldn't say that there's a massive sea change in that evolution because of large language models large language models create another set of opportunities So I would kind of create a distinction and make sure that the categorization of the investment opportunities in So I would kind of create a distinction and make sure that the categorization of the investment opportunities in large language models be assessed on its own And everyone's all over the place as you guys probably heard today foundational models are getting disrupted every other week. They're being decreased in size parameters are being reduced They're being commoditized. You can run these things on M2 chips Everything is up in the air right now and it's friggin nuts

Starting point is 01:30:21 You're gonna invest in a company at a 500 million dollar valuation and six weeks later It's gonna be worth zero, because someone opens source the exact same thing that you can now do for a hundred K. So that's very difficult and very different than, but there are still like these incredible points of inflection happening across all these other industries with respect to machine learning.

Starting point is 01:30:39 And that's where I spend my time. Chimathi wanna add what you're looking at? I think this is gonna be the big question, yeah. Six or seven years ago, there was a Google earnings release where they talked about building their own silicon. I've told this story before, but I pinged those guys and I was basically like, I just wanted to meet the team that built the TPU.

Starting point is 01:30:59 Long story short, a year later, I put them in business. And, you know, we've been building silicon for this moment for years. It's been really really hard. And the reason it's been really really hard is that Nvidia is just really really good. CUDA is very very complete and it's just very difficult to justify why one would build once you have something that you think is profound through you know implement multiple It's just very difficult to justify why one would build. Once you have something that you think is profound, through, you know, implement multiple SDKs to like multiple points of silicon, just doesn't make any sense.

Starting point is 01:31:34 That being said, I still think you need to be at the absolute bottom of the stack and the absolute top of the stack. I think I'm a little too biased for saying the former, which is, I'm hoping that there's vendor diversity and silicon diversity, because I think it's going to be really important. I don't think we want to have a world where Nvidia runs away with it. So I think there's investment opportunity there just because I think everybody should want that to happen.

Starting point is 01:31:58 And then at the absolute top, Freeberg's right that all these foundational models I think are changing so rapidly that the thing that you want to figure out is like, what are you seeding it with to drive learning that's unique and that's a data problem. So there's an example that I've given. This was an example given to me by Nick Hescher-Wara. So I'm not going to take credit for it. He's a CEO, Paul Alton Networks, but he was telling me, you know, when you look at travel,

Starting point is 01:32:29 the travel space, all the public travel companies are like $300 billion of public market cap, Expedia, travel velocity, all these companies, but they're pure middlemen. And they sit on top of the data feed that comes from a handful of companies. One of them is Saber. And so I went and I looked at Saber.

Starting point is 01:32:49 Saber is like a $1.3 billion company, a small little company. But they are the ones that go into all the airlines, extract all this gobbledygook data, normalize it, and allow Expedia Travelosity Booking.com to exist? In a world of machine learning, where an AI, where theoretically, you can have conversational languages inside of WhatsApp or Messenger or Instagram, you see this beautiful picture. You're like, book me a ticket to that place. Well, Sabre is actually the key value creator there. And all these Expedia examples that are plug-ins at GBT make no sense.

Starting point is 01:33:28 They make no economic sense. Those companies should go to zero. So I've used that as a way of forcing function for me to try to prove that there's really these two barbells. It's a barbell. Bookends. One is a silicon and one of these sort of like data providers. That's probably an investable thing

Starting point is 01:33:46 That's defensible everything in the middle. I think what what freeberg said is true Which is today it looks like it's worth a couple billion dollars tomorrow's words on nothing And I so I think you have to be very careful if you listen to There's an interview that Stephen Wolfram did with Lex Friedman if you guys listen to it a few weeks ago I had him on my pot the look up the weeks we've been having with the free. Yeah, he's incredible. Yeah, he's incredible. If you listen to that interview,

Starting point is 01:34:08 I think Wolfram does a great job of describing the difference between inferential models or statistical models and computational models. Statistical models are where you take large data sets and you build statistical models that infer and predict things in the future or predict things that you ask it to predict from the data set that it's trained on.

Starting point is 01:34:29 And then it creates a statistical representation and has a probability of being right or wrong in every prediction it makes. And it creates a distribution of outputs from the model. And you can train a model from nothing today using a bunch of tools that are open source and generally available and a bunch of great Silicon and all this amazing stuff that's now out in the world.

Starting point is 01:34:49 But there's a bunch of things that you can't generate data and you can't necessarily train models on. And that requires computational models. Models where you actually have to build some system that creates a deterministic outcome. And a deterministic means that it doesn't have a distribution of things that could happen It has one thing and it calculates it like two plus four is six. There isn't a probability distribution on it being six two plus four is Computable it is calculable it is six The great unlock that I think is ahead of us still

Starting point is 01:35:22 Generally speaking with respect to large language models, is the connection back to computational models, is the connection back to structured data, where you can make requests and integrate structured data into the output, combined with inferential output, and computational models where you can take the inference, you can take the request and figure out

Starting point is 01:35:42 what computational models can I now run in addition to making a prediction about an output. And that's where so much of the value is going to lie. And it's going to require incredible software engineering talent, applied math, statistics, all the stuff that's made data science generally speaking so successful over the last two decades is going to continue. And it's going to be this integration between computation and inference, and it's going to be applied in lots of different markets,

Starting point is 01:36:09 and it's going to be really powerful, and we're all going to have our minds blown. Just in terms of the seed stage, or super early pre-seed stage, two or three people who are obsessed with this technology, who are playing with it every day, who are keeping up to speed on it, and who understand some customer base, whether it's delighting themselves or delighting some other customer

Starting point is 01:36:28 base, I'm willing to take that small bet on, that 100K to 250K bet, because in the previous paradigm shifts, or platform shifts, cloud computing, apps, and before that desktop computing and the web, you saw people start tinkering with stuff and whatever their first two ideas were are long forgotten because they figured something else out. And I kind of feel like that's the stage ran. There were a lot of people who were playing with iPhones in the App Store and they made a calculator

Starting point is 01:36:58 or a flashlight that got built into the operating system as I think Freeberg is specifically pointing out. You could just be part of the model in your whole business as wiped out. We have one company that's trying to make itineraries for travel. And I looked at what they're building, and then they're figuring out prompts,

Starting point is 01:37:15 they're figuring out the interface, they're figuring out what people want. And I did the same searches on Chatship ED4, and I was like, it's not that much better what you're doing. But it's better and your ideas are better. And so I think that the win the race and they only have to please, you know, whatever number of users.

Starting point is 01:37:32 And this company could wind up being, like I said before, a 20 person company that does 50 million in revenue. And I think that's gonna be a very interesting future. And it reminds me of the app economy. There were a small number of acts, things like distro kid or Instagram, where small teams built things that printed money

Starting point is 01:37:49 and had incredibly high margins. So I think that's part of the opportunity here. I do agree with Schemaot's point, data's the new oil, whatever data set you have that you have that's unique is incredibly powerful in terms of defensibility and could help you to outpace one of the generic models. This dude's been waiting. Okay dude, who's been waiting? All right, thank you.

Starting point is 01:38:10 Lightning round. Thanks David for the mic. My name is Raad Mosry, a Transform VC in San Francisco. My question is for you, Shamath. The last... Finally, Jesus Christ of Mosry. What the fuck these guys in the universe? What the fuck these guys in here? So, and the last one or two episodes of Canva call, you brought up this whole idea is how do we get non-US-born American patriots to run for president? So, as the growth hacking, drunken master,

Starting point is 01:38:42 what do you recommend? How do we propel this idea? How do we have it pick up Steve and not have to wait 25 years or whatever, you know, it can't happen in the next few years. I do think there's a small probability it could happen in 25 to 30 years, but like the problem is that the people that would take out can be president on the stage. Yeah. The three of us are more important. This is, but I'll put you guys in my cabinet.

Starting point is 01:39:09 But this is the, I think the how is that you have enough bottoms up citizen journalism and opinion formation that people can independently decide that on the margin, this is a good idea. Like, look, I, I'm not interested in running for government, but if David were in charge of something very important, treasury or state, I would have immense confidence. If Freeburg were in charge of something, I would have immense confidence. So the idea that guys like this, the idea that guys like this, and oh, because I'm born here, so you don't have to say that. Yeah, no, you'll get the department of sanitation over a couple of years.

Starting point is 01:39:52 No, so for sure I get away. I do think it's a little, it's a little crazy that guys like these two get disqualified just because they emigrated when they were like four and six. That's insane. So I think that if we're in the business of actually deciding that you want the best people for this country on the court so that we keep winning championships, you don't tell Johnis, oh, you know, you're born in Greece, so chow chow, you don't get to play. That's crazy. Put them on the court and let them win. So I do think it takes 25 or 30 years, though, of us saying this because it has to be a

Starting point is 01:40:35 grounds full of people that say, I just want to win because I'm seeing all these other countries starting to win more. And I don't think I want that for my children. I do think it takes a generation. I don't think it happens that for my children. I do think it takes a generation. I don't think it happens today. Alright guys, in a couple of hours it will be the Sultan of Sciences birthday. And Alan Keedings. And Alan Keedings. And Alan Keedings. So I thought it would only be fitting if 100 all-in super fans took a moment, I'm gonna sing an Italian and song

Starting point is 01:41:07 Happy birthday to Dave Freiburg three two one Happy a birthday Are you happy a birthday? Happy a birthday to you. Happy birthday to you. Happy birthday to you. And many more. All right, Sultan of Science.

Starting point is 01:41:38 I know your wish was to be a top 10 podcaster. It's come true, finally. I'm like, I got to go into podcasting. Yes Like your winners ride Brain man David We open source it to the fans and they've just gone crazy with it. I'm going to the toilet! What? What?

Starting point is 01:42:09 What? What? What? Besties are gone. Go through the toilet. That's my dog taking a wish. You're driving away. Sit next.

Starting point is 01:42:18 Wait at all. Oh man. My ham is the actual meat. We should all just get a room and just have one big hug or two because they're all It's like this sexual tension that we just need to release that house What your beef? What your beer of beef? Beef, what?

Starting point is 01:42:35 I can't be a whore We need to get my veggies already I'm going to leave I'm going on with it!

All-In with Chamath, Jason, Sacks & Friedberg - E132: SEC goes after crypto giants, Sequoia splits, LIV/PGA, Messi's deal + LIVE Q&A!

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