All-In with Chamath, Jason, Sacks & Friedberg - E133: Market melt-up, IPO update, AI startups overheat, Reddit revolts & more with Brad Gerstner

Starting point is 00:00:00 I'm so fucking tired. I've slept six hours in three and a half days six hours. So wait, you went to the world Are you a poker with? Helm you so you spent no no first of all I flew public Took Southwest what yeah, cost me $49. Yeah, cost I got to take it for 49 bucks It's so fucking incredible. Did you sit and seat a one also known as Jake house reserve seat? It has my name on it. What was in the front row? Yeah, it's great. Like Southwest has these numbers.

Starting point is 00:00:29 And what do you do? It's your first class on Southwest. No, no, no, no, premium plus he was in the front row. No, there's like these signs that like have a number that attaches to your ticket. And then you stand in that line and then you go on in this orderly way. And so I was I had like a five or something so I was like the fifth person on and then I sat in the front and I put my bags up top. Yeah, you carried your bags yeah an hour later I was in Vegas it was so easy Southwest is phenomenal

Starting point is 00:00:56 and then I flew back anyways and after after losing as much money as I did it felt good to fly for $49 I got to be honest with you. Well I I'll Scarady measures have their mind. You can sleep better at night with our starry-d-measures and did you go to the all-you-can-eat buffet and take a to-go as well? No, I'm not gonna do that. Never know. And I said we open source into the fans and they just go crazy. WS high, Queen of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the King of the these tournaments. So let me tell you about these tournaments. The 100k is literally like the murderers row of like every great poker pro. So it was like 96 of us or something. I got to be honest with you. It was so much fun. So much fun. Why? How so? You know, we play 40 minute levels and you have to really get the chips moving, which means that There's only so much like you know game three optimal poker you can play and at some point you just got to gamble it up

Starting point is 00:02:11 And you got to take your shots and you have to be willing to bluff and you know you have to bet for the neck But it's so much fun and then you see some of these guys that just lose their minds Anyways, it was it was really really a lot of fun. I finished in the middle of the pack, like 42nd or something, so that was brutal. But then the thing that I'm the most proud of is, and I went from that and I hopped in the 3K, 6handed, right afterwards, and there was like, 1,250 people in that, and I got to 81st, and the problem was, I just couldn't get anything going, I couldn't get any real, like you need some car distribution, like you have to at some point. Yes. Make some hands. You can't just, you know, I could bluff my way to 81st, but I need it hands to really, to really, really have a chance to chip up and run it.

Starting point is 00:02:54 Then I played in the RAS, which is seven card stuff low. There's 126 people now when I finished in the middle of the pack there. And then this 10k bounty, there's about 600 people now when I finish in the middle of the pack there and then this 10 keep bounty There's about 600 people and I finished like 150 Those are all respectable. I mean, I know play tournaments I have no idea how to play tournament to be honest. I know how to play poker I know how to play cash games, but tournaments are very different So I feel like I was very ill prepared, but I had so much fun and you know the crazy thing is when you're playing for 12 hours a day you are focused for 12 hours a day, you are focused for 12 hours.

Starting point is 00:03:26 The thing that I forgot is that you end up, I ended up losing like two and a half pounds. Oh wow. If your brain is going, going, going, going, three hours a day. Three hours a day. Biggest fucking thing. And I was, I was mentally devastated

Starting point is 00:03:40 at the end of each night. You're just lying in bed, eyes awake. Yep. And then you can't sleep. And so then you go and you play crabs and buck rod. Break the casino for a couple of hundred times a night there. And then go back to bed, it's great. Grat sounds like a great week.

Starting point is 00:03:52 The good news is, as Phil was live blogging for you on your behalf from, from, from, from, yeah, from your show. Oh, by the way, the other thing was, I brought my phone, but I don't have anything on my phone. Like, I don't have Twitter, I don't have any of that stuff so I was just totally in the zone. It felt so great to not be connected to social media. Flow experience.

Starting point is 00:04:12 It's a flow experience. When you can turn it off and just be in the moment. Congratulations on the coming in the 10% of the field and the 3000 or 8% of the field. That's incredible, dude. If I really practiced at these tournaments, I think I would bink a couple, but I just don't have the time. The paradox there is that you did best in the largest field. If you can do this for three or four years, and you go into those RAS fields when it's 100,

Starting point is 00:04:33 or those 25K, 100Ks when it's 100, 200 people, in the 100K there's 95, 96 people. You really do have about a 1% shot of winning the thing, which is pretty incredible. Razz too. Razz is always a hundred. I love tournament poker. That was my game back in the day.

Starting point is 00:04:51 Well, it's because you're afraid to lose money. So it's a good for you. Put up a small amount of money and you can play for many hours. You're probably in your mind, you're probably dividing the number of hours by your buy-in so that you can think about what your hourly cost is. I actually like tournament poker because when you lose, you lose.

Starting point is 00:05:05 Like you can't just rebuke. And basically, and then there's a broader macro strategy. You start to play the chips against the other players because you know, however, everyone else is playing based on how many chips they have in front of them. It's a great point. This theory of ICM, which is like independent chip model

Starting point is 00:05:20 is exactly what you just said. The craziest thing for your brick happens right at the money bubble. These guys start, I've never seen this before. They all try tank. All try tank. Oh yeah. They go in the tank for two minutes and then they fold. So obnoxious. When I used to play Tournament poker, I'd fold Ace King suited. You'd fold pocket queens. You'd fold everything if you're on the bubble of getting into the money or you're on the bubble or getting to the final table, it just doesn't matter.

Starting point is 00:05:45 Because if there's three guys with you that have smaller chip stacks, let them get blind it off. And now you're in the money, you're now you're on the final table. And then you'll play poker. It's like, go get up, go have some dinner. I'm back in an hour. Don't even look at your cards. If you can cruise your way there, it's a totally different kind of game, totally different.

Starting point is 00:06:01 There's a guy that was tanking. He was a really lovely guy, a British guy. I offered him the min cash just to not take, I was like, please stop taking for four minutes. I'm full degree. I'll just need it as action. I just gave this in a tournament and I timed it with the rest of the table. I took out my phone, I timed it, and I said, whatever number of seconds you do, I'm doubling. And I just did that. It was so obnoxious that the entire table, like the guy finally stopped. Well, in the, in the 100K, we actually had a better setup, which is that we had these iPads on the table. And everybody gets a 30 second shot clock. So you can't really fuck around. But then in

Starting point is 00:06:39 these big field events, they're not going to have iPads on 100 tables, obviously. Yes. And so instead, people just tank forever, and then you have to call the floor, and you have to call time on these folks. The funniest thing, though, was the last term I bought in four was a 10K secret bounty, which means that on day two, when you knock somebody out, you actually, everybody stops the action. You go up on stage and you pull out of, it's like treasure hunting.

Starting point is 00:07:04 Some of these boundaries can be like a million bucks. And obviously there's a lot of people there that kind of recognize me. And when they saw me in the 10K secret bounty, there was like a movement. It was so funny. They were like, if you win the secret bounty and you win the million,

Starting point is 00:07:19 we're gonna revolt and burn the repair, spare us to the ground. I don't know if it been so, and I thought, you know, it's true, it'd be badly unfair if I was the one that won that $1 billion Zika about it. How many selfies did you take on Southwest? That's the question everybody wants to know. How many people recognize you on Southwest,

Starting point is 00:07:36 and what was the shame that you found? It was great. I felt great. I'm gonna fly Southwest the biggest all the time though. It's fucking great. It literally was honestly to get from my house to the gate where you stand to get into the plane. It was like plus or maybe 15 minutes more than just driving on the tarmac. Like it was a nothing burger. Check out. It's amazing what a down market could do to people.

Starting point is 00:07:57 What is it, Brad? This is the victory of the age of fitness. This is the victory of the age of fitness. Chimai. Chimai. It's a big thing. It's Southwest. You were in the first year of South West. You were in the front row of Southwest. All right, listen, there's a big docket today.

Starting point is 00:08:14 We've got a lot on the plate. David Sacks is busy in a star chamber right now, selecting the next president in the United States. He's picking a VP and the cabinet for wherever he's going to win. So he couldn't make it today. So we brought the fifth bestie, Brad Gerson, her back and great timing because the Fed decided to pause rate hikes in just yesterday, I guess.

Starting point is 00:08:32 And this would have been the 11th consecutive rate hike. Is that about right? That's right. And they anticipated two more 25 basis hikes before the end of the year. So here's just the Fed funds effective rate. So you can all concede here over time. And there was also some big news this week.

Starting point is 00:08:53 Couple of 20, 23 IPO candidates started to be floated. Obviously, we've been hearing about Reddit and Shripe for a while, but ARM, confidentially filed for an IPO back in April. And they're seeking to raise between eight and 10 billion later this year. And that would be a pretty big deal for Softbank, which owns the firm, and that could, I guess, save Softbank, which has had just a brutal run

Starting point is 00:09:19 with the two different operating funds. So, save Softbank, The ARM deal is being done. What's the valuation that's being done? Soft bank acquired ARM for 32 billion in 2016. They don't know the valuation right now. They haven't put that out there yet. I mean, they were originally looking for anywhere from 30 to 70, but I mean, Brad,

Starting point is 00:09:37 where do you think that comes out? I have no idea. I think that, you know, they're shopping to get these anchor tenants into ARM. If the IPO market was super hot, and this was really easy to get done, this would have been done. So I think they're tip to it now because they need to get it into the public market. But I think that anybody who does an IPO today is going to demand a rate of return into that offering. That is a significant margin of safety relative to all deals that were done in 2021.

Starting point is 00:10:18 What that means is on the road show, investment banks go and they try to drum up demand, they want to have anchors in the IPO book, they call firms like ours, they call strategic investors, they want to size up what that is. And they give you their expectation of fair value or where they think the IPO will trade to. Of course, you meet with management, you ascertain and develop your own expectations of fair value. What I'm saying is maybe in the peak, you know, in 2021 people were getting thinner and thinner

Starting point is 00:10:51 in terms of the margin of safety they demand. My expectations, whether it's arm, whether it's data bricks or other companies that are starting to queue up. And these are fantastic companies, right? Make no mistake about it. Nvidia tried to buy arm and, you know, Databricks is doing over a billion in revenue, growing extraordinarily fast, led by an incredible

Starting point is 00:11:09 team. But in order to get into the public markets, they have to, you know, step in with a bigger discount than they would of, you know, previous correction. And just to put some numbers on it, ARM had agreed to be acquired by Nvidia Nvidia 40 billion before the talks fell through. That was due to regulatory scrutiny. Bloomberg says ARM is aiming for evaluation of 70 billion, obviously, there's no confirmation about that. That's just the news, hopefully intelligently speculating about it. What exactly would you be buying for $70 billion?

Starting point is 00:11:38 Yeah. I thought they missed it. Yeah. ARM had a window where they had to make some really important product decisions to be able to actually have reference designs that actually made sense beyond just simple mobile processors and CPUs, and they don't have any of that. So they have a good cash cow business.

Starting point is 00:11:56 It's probably worth 25 billion. They paid 30 some odd. 32. They could have gotten it out for 40 something, but it's in mid-twenty's billion dollar company. No more. And if you buy it at the 20s, you're buying a casual yielding asset. And the good luck to all the players, I guess is what I would say. Clearly, it's a function of soft bank seeking liquidity, right? I mean, they had this position for how many years now?

Starting point is 00:12:24 Four years? No more. I think this was years now? Four years? No more. I think this was six maybe? Six years? Six years? When did they buy it? Was it 2016? I think it was longer.

Starting point is 00:12:32 Yeah, 2016. They bought it. So this has been a fast-moving. And in the fiscal year, ending March, the Vision Fund alone took a $32 billion right down. Obviously, Softbank has a big chunk of the Vision Fund. But this is not in the Vision Fund. It's not in the Vision Fund.

Starting point is 00:12:47 Exactly. This is a fun balance. It's not balance. Yeah. But it's clearly liquidity driver for them. I don't think that this is, you know, first of all, Jason, I don't think the point about Softbank needs saving is necessarily crudes. It's not a company that needs saving, but they've certainly taken some hits.

Starting point is 00:13:03 Well, they could use a win. This is what my point. Yeah. Well, they could use a win, this is what my point. Yeah. Yeah, they could use a win, but the last two quarterly calls, you know, Mashioshisan was pretty repentant and humble. Right. In fact, he used that exact line, which we talked about it here. So this big liquidity needed some point for the business. So they can get this thing out and get liquid on it. It would certainly support the balance sheet more than anything.

Starting point is 00:13:27 You know, the market is on a tear this year, Brad. Is there now that everybody's buying back into tech stocks? I guess two questions. Why is everybody suddenly buying into tech stocks? When people think there's going to be a recession and consumers have run out of money. And yeah, what's the thinking here of why so much money has gone to tech and this incredible rally. It's been great to watch, but people seem to be perplexed by the rally and then the Fed,

Starting point is 00:13:58 even though they didn't do a rate hike, seem to put cold water on and say, hey, listen, don't get ahead of yourselves, we're gonna probably do rate hikes later in the year. We all have short memories. You know, tech had a devastating year in 2022. So this is a bit of a reversion to the mean, right? If you remember the chart, we showed a lot on this pod last year at the end of the end of

Starting point is 00:14:19 2021 was that we were trading at multiples that were, multiples that were, you know, 50 to 70% above their 10-year average. And at the top, we were trading about 30 to 40% below the 10-year average, right? So the market corrected, it overshoots on the upside because rates went to zero. And by the end of 2022, when you had Larry Summers and others who were going out and saying we don't know what the upper bound of inflation and rates is that's really scary To the markets and so you had this overshoot to the downside. We're still trading below the 10-year average for internet and software companies based upon our numbers And so when you look at this as we said at the end of last year the framework changed early in this year at this, as we said at the end of last year, the framework changed early in this year. All of 22 was about two things, is inflation going higher and our rates going higher. And those

Starting point is 00:15:12 things are debilitating for growth assets and growth multiples. By the beginning of this year, we started to have confidence that inflation had peaked, which meant that rates were largely in kind of, you know, spitting distance of their final destination. And the framework shift to economy, are we going to have a hard landing? Now remember, at the start of the year, Mike Wilson from Morgan Stanley, who made, given credit, made the call in 2022, he said, 22 was going to be awful, he was right, but he stayed in that bearish position at the beginning of 2021 said the economy is going to hit the skids in Q1 and that we're going to revisit 3,000 or 3,200 on the S&P. Instead, we're sitting at 4,300. So he was

Starting point is 00:15:59 tragically wrong at the beginning of this year because again, he was fighting, I think, the last battle that he was one. As opposed to looking ahead and saying, this is no longer about rates and inflation. So the NASDAQ has moved 30% to start this year. The Fed said yesterday we're hitting pause. The quote from Chairman Powell that has everybody a little bit perplexed is on the one hand, he says, we're data dependent. On the other hand, he said we're likely to have more rate hikes,

Starting point is 00:16:31 right, and that rates are going to stay high for a couple of years. Well, if we're data, you can't have it both ways. If we're data dependent, we have a hard landing, like Stan Drucken-Miller thinks we're going to have in Q4 this year, then rates are gonna get cut. But the market seems to like this. And let's talk about where we are. The 10 years at about 3.7, the S&P's basically flat

Starting point is 00:16:54 in terms of where it was and where it was before and where it was after the rate hike announcement. The economy appears to be reasonably good. 80% of earnings in Q1B, the guides hike announcement. The economy appears to be reasonably good. 80% of earnings in Q1B. The guides were okay. Stan Druckimiller said, I shifted. You know, he pulled forward when he thought we're gonna have a hard landing based upon the bank crisis,

Starting point is 00:17:17 which now feels like it's a distant memory for many. And he's now calling for potentially a hard landing in Q4. So the Fed just came out and said, no, we're not gonna have a hard landing in Q4. So the Fed just came out and said, no, we're not going to have a hard landing in Q4. We think we're going to have 1% growth. They think that inflation to end the year is going to be at 3.2% versus the 3.7% goldmine consensus. What I would say is, you know, we've moved,

Starting point is 00:17:41 but we're still below the 10-year average, but you have to start paying attention now to individual stocks that have likely gotten ahead of themselves or where they've taken out of. What's an example of that? Who's getting a lot of the returns? A lot of Apple. Microsoft.

Starting point is 00:17:56 No, Microsoft. Microsoft. You know, I think a lot of the AI-related stocks are not at or within 10% of our end-of-year price target. And when you see that, take something like Nvidia, if I'm playing at home or I'm a professional investor, I may say, oh, I'm going to sell some long-dated calls to buy a little protection to the downside.

Starting point is 00:18:18 I don't think there's any problems within Nvidia. I think they're going to continue to perform. I think they're beef their numbers for the balance of the year. But remember, at the start of the year, people thought they were going to miss their numbers for data center. People thought data center revenues this year were going to be negative. And they just revised their guide from $7 billion in Q2 to $11 billion in Q2. So they've absolutely blistered their numbers and the stock's gone from $125

Starting point is 00:18:47 to over $400. So when you have those parabolic moves, just like we did with rates last year, I think it's wise to say it's a fantastic company. We want to be involved. It's going to continue to be one of our larger positions, but if I can lock in 20% yield by selling calls six months out, I think that's a reasonable risk reward. So, you know, I think that's where we are.

Starting point is 00:19:12 And now the question really becomes and it's unknown and unknowable, right? Are we gonna have a soft landing, a medium landing, a hard landing in Q4 and rolling into next year? And I would say as an investor, I'm very data dependent, you know, we're talking to companies, we're looking. Data point, should we all be looking at it at this point, Shamaafi, think jobs, unemployment,

Starting point is 00:19:31 just the stocks in their multiples, and how are you looking at it as a capital alligator, Shamaafi? Still on the sidelines? What have I said, like a broken record? Rates are gonna be higher than you want, and they're gonna be around for longer than you like. And now Powell is basically telling you the same thing.

Starting point is 00:19:49 So we're almost at the end of I think the bottoming though. I don't agree with Dr. Kim Miller, I think he's wrong. On which part? That does be a hard landing and two four. Yeah. And the reason there's not going to be a hard landing is you just thought China today basically say we're going to start to rip in trillions of dollars. They're going to stimulate the economy.

Starting point is 00:20:10 You can't have a hard landing when China's printing trillions of dollars, not possible. So I think that what Powell was forecasting is that if China starts to basically turn on the money printer and go through a huge spade of quantitative easing, it's going to just inflate everything because they're just such a critical artery to the world economy. And so you just have to get prepared for rates just being sticky and inflation being sticky. And I think that that's probably the most reasonable base case for the rest of the decade. Rest of the decade, seven more years now. Yeah, yeah.

Starting point is 00:20:46 And so in that environment, the problem is that now you have the seven or eight most valuable text talks priced to perfection yet again. If you look at their enterprise value over their net income, these things are trading at astronomical yields that are less than half of the two-year note and now approaching sometimes less than half of the ten-year note government bonds that makes no sense and If you subtract out those seven or eight biggest companies in the S&P 500 the S&P has not been a great asset So the I think the equi-weighted index pride you probably know So I think the equi-weighted index, Brad, you probably

Starting point is 00:21:26 know the exact number. The equi-weight index is just shit. So what is all this mean? I think it means that people are psychologically exhausted with having lost money. They are psychologically wanting to will the market up. They want to psychologically believe whatever will allow them to influence rates getting cut. But I think the most reasonable bear cases rates aren't getting cut. And whatever hope you had of rates getting cut just went out the window today because there is no world in which you cut rates when China is going to print a trillion dollars or more. Freeberg, a lot of people seem to think that this big run up in the markets is AI related. Everybody has got an AI angle for their company.

Starting point is 00:22:06 Some of them super valid, like Microsoft and Google. Other ones feels kind of speculative. We talked about Buzz, we talked about having AI journalists and their stock, which looks like it's gonna be delisted. Got a quick pop. Do you think the AI, AI actually coming to market, driving efficiency, driving revenue for companies is going to happen in the short to midterm or is it more like midterm to longterm?

Starting point is 00:22:33 In other words, is the AI rally overheated and fake? I don't know if I would assume that the pricing of equities is entirely driven by AI. I think there's a lot of factors including a lot of folks maybe being on the sidelines for too long and needing to come and buy in at the same time. But I do think that there's a radical realization underway that a lot of businesses that are dependent on services that might be replaced by AI don't necessarily have the longevity today.

Starting point is 00:23:11 Those are businesses that have been severely hurt by the point of view of what AI could bring to market and bring to industry. So there's a lot of stuff happening on the short side. On the long side, I think it's a distribution curve on how quickly different industries will be affected in a positive way by AI. Certainly the most obvious is demand for chips because all the sin-first-yard juice being built out. So that's the first.

Starting point is 00:23:38 And so, you know, with a high discount rate, which is the environment we're in today, you can more quickly bet on those opportunities. And so you see a disproportionate bubbling and valuation in multiples on businesses like that. There are other businesses that are further down, like services businesses. How long until lawyers are able to leverage AI? How long until banks, investment banks are going to be leveraging AI, to create new products and improve their margins. There's a lot of speculation and a lot of ideas, but the discount rate is quite high right

Starting point is 00:24:09 now. That's probably a few years out to the point that the fuzziness wipes out the potential value there. What are you doing by the discount rate in this context? Let's say that investment banks are going to be severely changed in seven to ten years. That's the time horizon. I think that their business is going to improve because of AI as an example, or factory machinery,

Starting point is 00:24:31 automation, manufacturing businesses, probably 10 to 15 years. So I can't really give them that much credit today. And so I apply a higher discount right there, but there are other industries that are certainly being affected much more quickly. And I'm sure Brad and his team of finance, whether it's probably a board, you know, where they have this list of all the industries that are going to be affected

Starting point is 00:24:53 in what time horizon. I mean, that's the way you could kind of think about this. And over different time horizons, you could kind of accrue some net improvement to earnings and say, okay, you apply a discount rate to that. Here's how much the stock should trade up. And that's one way to think about this. I don't think it's everything everywhere all at once. Great drop.

Starting point is 00:25:12 Great reference, Brad. Great. By the way, I got to tell you, I just saw that movie to reference it because I saw it over the weekend. Have you seen that movie? Of course. Of course. Yeah.

Starting point is 00:25:20 What we should tell you. What an unbelievable film. I had not seen that film. I had credit postponing it. Incredible. Anyway, what is it? What movie? It's everything everywhere all at once.

Starting point is 00:25:31 It won best picture at the Oscars last year. I don't trust that best picture of words at the Oscars. For a few years, I've just been duped by that award. You get some really crap ass movies that are like, watch this movie and then report back well let's I won't even say more politically correct or whatever and then they get this a little or a little hurt your signaling they were doing a little catch up because of Oscar so white the movement to try to balance things out in fact people well that doesn't exactly reinforce trust

Starting point is 00:25:59 that actually destroys complete trust and reputation credibility yes they're virtuous and, that was something people said that everything everywhere all at once was possibly because it's an Asian cast. I don't even know what it is. What is it? It's a sci-fi, adventure, surrealist kind of rom. Michelle, yo, is in it. She's very famous. From Crouching Tiger Hidden Dragon.

Starting point is 00:26:22 Correct. Exactly. She kick ass and I'm going, Quann is in it who played short round in Indiana Jones. Indiana Jones. In Indiana Jones. Okay. And I don't do my impersonation, but I would get canceled for doing the impersonation

Starting point is 00:26:35 of him in that film. In that film. It must be like fucking 70 years old now. Yeah. Yeah. No, he's like 50 or something, but it's pretty great because he also won Best actor best supporting actor and there are all these pictures of him with Harrison for it and Steven Spielberg They got to be the guy's that made it are like music video directors. You got to go see this film. It's really good It's a really good

Starting point is 00:27:00 They have to go to a theater you have to go to Watch it on Apple TV and one of your theaters tonight go They have to go to a theater you have to go to see No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no Italy, so I'm taking my time and I see that ASSupSope that I can't afford. It's like a hundred. It's yeah, that one. So I see that and I'm like, wait a second. So I look in the cabinet underneath. I'm like, if there's two up here, there's got to be six down below. So I check in the galley.

Starting point is 00:27:37 Of course there's six down there. I put two. I boost two on my bathroom, which I'm still not good at in my bathroom here. I spend about 200 bucks. I'm like, oh, well, I check here. That's about $800 a month. And I go, and I check out, he's got a TV set up. So I'm like, oh, I wonder what movies are on here. And it's Netflix. He's got so much bandwidth on that freaking plane

Starting point is 00:27:55 that you can show on the plane. You don't have to download your movies before you take off on Shema's plane. All right, let's get back to work here. Have you seen it? By the way, have you seen that movie? Yeah, incredible movie. He's got to watch it. It's not the best film of the that was tarp. I don't want to get into it with Jamaat. Oh my god, I tried to watch tar. That movie sucks balls.

Starting point is 00:28:17 It was so boring and fucking self-absorbed and can try. It is a little self-absorbed, darling. But I'm not asking about it. For anybody that has sleeping issues and otherwise needs to use a sleeping aid, I would just put that movie on because, you know, once you see Kate Blanche had blathering on and walking back and forth from her kids' fucking school and then some crappy piano play,

Starting point is 00:28:38 you'll fall asleep and then I think you'll be in the morning. What puts you to bed faster, Chema? Ambien? Tar or science corner? I don't take science. Cornel, which one? I actually love science. I don't take. I don't take, I don't take sleep aids. I've taken

Starting point is 00:28:52 ambient three times in my life. Yeah, but that was recreationally during the day. That's the thing. It was prescribed to me because I wanted to try it. I also tried Lunesta once. They were, they're both like, be careful with that stuff. Man, you'll start tweeting weird shit. Be careful. I tried those sleeping aids four times in my life.

Starting point is 00:29:09 And you wake up, I wake up with them. It has a really bad tail effect. So like you wake up, I wake up super grog. I only get five or six hours of sleep with it. So anyways, I do take melatonin and that's really good. That works. It kinda does the trick for me and then I try to just... I use everybody on melatonin all of a sudden. Like everybody, I gotta take melatonin and that's really good. That works. It kinda does a trick for me and then I try to just... I use everybody on melatonin all of a sudden.

Starting point is 00:29:27 I get everybody, I go, takes melatonin. Are you just a natural way to ease into sleep? Yeah, for me, what I do is I use it as part of a routine where typically around 10, all the devices, things get silenced and do not disturb mode and I'm in a really restful place by 10 o'clock. I mean, usually by 10, 15 to 10, 30, I'm out like a light. I'm out like a light. I just like this infrared sauna. You guys have infrared

Starting point is 00:29:51 sonas. This is like the new hotness and man, that is incredible. You get a heart rate goes way up and you sleep like a baby. Okay, let's get back to AI. Brad, are people getting too much credit in their stock prices and is the do contrast therapy after the infrared sauna? I don't know what contrast therapy is, what is that? Meaning when you do the hot, then you jump into like an ice bath. No, I'm getting an ice bath. Of course he is. Next for my little outdoor sauna area,

Starting point is 00:30:17 and I'm gonna start doing that. I did that with my friend Antonio, Antonio, friend of the pod, Antonio Gracias, he's got one of those cold plunges. We jump in the cold plunge together. He's got this thing at 45 frickin' degrees. He says, don't try to do too much. You'll have a heart attack.

Starting point is 00:30:29 So I go in, I get 45 seconds in, I start breathing, like, really heavily, and I'm like, I gotta get the hell out of here. He does six minutes. The man is an animal. I do four minutes, three times a week. What temperature? What temperature? What temperature?

Starting point is 00:30:45 42 to 44. The research paper that everybody references now, I think her name is Suzanne Soderberg or something like that. She's the Swedish researcher. Huberman did it on his podcast that Rogan did it. Anyways, the data is like a little less than an hour of heat and 11 minutes of cold per week per week was shown to be physiologically optimal So I do it three times a week 20 minutes of heat followed by four minutes of cold plunge three times a week Do you have like a cold plunge where you set the dial on it or is it no?

Starting point is 00:31:18 No, no, I just I just cold watering no, I do old school. I I use the Megaline steam in my bathroom Because I after I'm done working out, the last thing I want to do is schlep outside, find my slippers, put on a robe. I'm not going to do any of that. So I walk upstairs, I do the mystery steam with like 110 degrees.

Starting point is 00:31:34 And then while I'm working out, somebody just makes an ice bath for me. And put a bunch of ice in the tub, fill it with water and just jump in it. So they do, did they carve like a bunch of baby seals in ice? And then they just, when you get in of ice in the tub, fill it with water and just jump in it. So they do it. Do they carve like a bunch of baby seals in ice and then they just when you get in and push the ice cubes were made to look like my face. So I have these shapes of your ice of yourself.

Starting point is 00:31:54 So I'm like looking at myself. Yeah. No, infrared gets up to like 130, 140 degrees and your heart rate will go up to 140, 150 degrees in this. It's a whole different experience than the mystery. Starrsta. I was recently on a ski trip Yeah, and it's a this extraordinary sauna. It's wood fired Okay, tell me about this so that so the lead guide on this trip we go down there He gets the thing heated up before we show up right and I show up with this great athlete down there

Starting point is 00:32:24 I would go in the hot box because you know, this is the thing heated up before we show up, right? And I show up with this great athlete down there. I would go in the hot box because, you know, this is the thing to do. And I look at the thermostat, I think it's a broken. It shows like, it's hard pegged at like 225 degrees Fahrenheit. That's a lot of you walk in. You're, I mean, you slow cook meat at 225 degrees Fahrenheit. That's the thing. My lip's are burning, You know, and this person sitting in there is like, now this is the way you do it, right? Tough guys, you know, do it at this temperature. We're like, all right, so, you know, we sit in there for like 10 minutes and then we go and we jump in, you know, in a frozen lake. And about 10 minutes later, we're taking off. We had to leave this particular place and, you know And people are waving goodbye,

Starting point is 00:33:06 and they're looking, they have to look over the sauna, as they're waving goodbye. And they notice that the sauna is on fire. Ah, yeah. That's basically what happens when you go to two-to-one. I'm unbelievable. Unbelievable. Yeah, people are taking this a bit to the excess.

Starting point is 00:33:22 It's a little crazy. All right, so back to the docket here. AI, people getting too much credit in public markets, running with this before it's actually ready for prime time, just to add to Freeberg's point here. There are a lot of people talking about doing things in startups. I see people actually doing things. I would say four out of five startups that we've invested in and the majority of them that we're being pitched on right now

Starting point is 00:33:45 are not only talking about AI, which they were all talking about a three years ago. They're actually implementing it now because the tool sets are available. I just had a call. Thank you, Freeberg, for putting me in touch with the Google people. I just did a call this past week with Google

Starting point is 00:33:58 and they gave me some previews of what they're working on. I can't say anything about it, but it's mind-blowing. I think Google's not as far behind closed AI as you think. I think you read on Google now. We had a little curve-fuffle when I talked about Sundar's reaction to AI and the concerns

Starting point is 00:34:14 that others might have on folks talking about the company. I mean, what's your point of view on Google today? I don't know if you talked about this. Yeah, yeah, no. Well, I mean, I think, I had, I had this, I had this dinner, this incredible dinner, actually, Thursday at the pub and, you know, it's, it's how I know Silicon Valley is back because it was just like Sarah Dippadus, we threw it together in the afternoon. You had this like, or extraordinary, you know, CEOs there and, you know, you had Mustafa,

Starting point is 00:34:41 one of the co-founders deep mind there, and Rick Barton from Expedia and so it's just an incredible group. And the $20 trillion question is how does the entire open architecture of the web get re-architected in the age of AI? Another way of asking the question, because we're all kind of playing small ball, right? We're all talking about, oh, you know, our, GPUs, what cloud is going to get accelerated? That's kind of the small ball. The big ball here, the $20 trillion question that is defined the entire internet for our

Starting point is 00:35:13 entire careers has been web search. I will tell you the conversation around that table, there's increasing confidence that whatever comes next, right? The top of the funnel is up for grabs and all of those dollars over a period, again, a five years, seven years is going to get redistributed. And make no mistake, Google is well positioned to make its claim for that. But its claim is going to come at the expense of search. And so Google may create the best AI in the world, but it's going to have to fight off the cannibalization of

Starting point is 00:35:52 core search. And the question is in this new thing. And so Rich Parton, you know, an incredible product founder, right? Think about Expedia. C.O. Zillow. Yes. And Zillow. So he's founder of Expedia and founder Zillow, two vertical search engines that dominated right, their particular verticals. And the topic of the conversation was that the new UI, right, the new way you interact with your customers, right, is not optimizing a web page. It's not optimizing an application.

Starting point is 00:36:23 He calls it the race to intimacy. The race to intimacy that you have to build a Conversational UI. I've run that race a few times. No, and it's related race. I think that was sprint, not a marathon. Sometimes it's been a marathon. And the penultimate question is not your attention. Who ends up the top? Yeah, you won't. You won't. Yeah, that's the.

Starting point is 00:36:47 I run a really good middle distances. And then if I need to just make it, you know, run a boss in marathon, I can't if I want it. But I don't want it. Oh, okay. Yeah, sure you can. Yeah. But I think, you know, I took a poll around it.

Starting point is 00:36:58 Does he think, sorry, does he think Zilla was dead? No, he's not allowed to be a real drunk. I'm guessing. I mean, don't you see? No, he's the CEO. He's the chair. Sorry, not Zilla. Sorry, not Z you see? No, he's the CEO, he's the chair. Sorry, not Zill, sorry, not Zill, uh, Expedia, pardon me. What does he think about Expedia and travel?

Starting point is 00:37:10 Well, you know, you and I had this conversation, girly chimed in, the cash chimed in on Twitter, well, you're not on Twitter, but they chimed in. You know, about the conversation from last week's pod, every vertical search engine, and Google itself, that architecture is suspect, right? The question's just over what timeline is it suspect? But the world is moving past 10 blue links.

Starting point is 00:37:34 Information retrieval that look like a card catalog is not where we're going. You no longer need an index. You need someone to do the retrieval from the index for you. That's the new server. And it extracted the knowledge.val from the index for you. That's the new service. And extracts the knowledge. And that's what a new person lies to you. But I think one of the questions that's still outstanding

Starting point is 00:37:50 from an architectural point of view in terms of your interaction with all the data in the world is, are you as a user going to have a number of independent relationships with your travel search engine, your travel agent, or are you going to have a relationship with your doctor, medical office, and you're going to have a separate relationship with your financial advisory type service. Or are you going to end up seeing, similar to the challenge we have in search versus vertical search today, an aggregator of services because there's value in cross-populating the data and the knowledge about you across those services.

Starting point is 00:38:26 So, you know, it's going to be the former. Because obviously, there's value to the company because every company wants to profit here from you and monetize you in nine different ways and maximize the equity for their employees and their founders and their board and their shareholders. But that's not what people want, right? So, want. For example, when you go to a doctor, would your doctor be better off? If she also had all of your data from, I don't know, pick your other service providers, of course,

Starting point is 00:38:56 maybe you could make a claim that if they had all of your personal information and they understood your risk factors, they could do a much better job. But the reason you don't do that is you want some segregated relationships, A, it gives you some level of privacy, but mostly it gives you control. In a world of AI where you can be more conversational, the idea that humans will want to get reduced to talking to one thing for everything, I think is wrong. I think instead it's actually going to be high future augmented. Because the best in class use cases are going to be the things that people want.

Starting point is 00:39:30 And then B, it gives the user control. The one thing I would tell people is, do not give up all of your data to one thing who's professing to be at all. They are going to lie to you and trick you. And you're going to have a social media problem writ large all over again. There's another way to think about this, which is the reverse of the client server model,

Starting point is 00:39:49 where today you are the client, you are the node on the network, and you're communicating with the center of the network, which is the server, which is the service provider. All the data sits there, and you're getting data in and out of their product to suit your particular objectives. But the future may be that more data is aggregating and accruing about you, you end up becoming a server, you then have the option, and just this speaks to kind of the architecture on the internet. Imagine if every individual had their own IP address and that individual's IP address had behind it, behind your ability to control lots of information and lots of output about

Starting point is 00:40:24 all your interactions across the different network of service providers that you use. had behind it, behind your ability to control lots of information and lots of output about all your interactions across the different network of services providers that you use. That's a very smart framework, I think. And ultimately, what you would agree, you want to be able to rent that data to services in a way that you can't even think it's about rent. Yeah, as much as it is about you should have the reason rent, well, then you have to rent it. You can't give it to them because that's be stupid. That's right. So your goal, your usage, like let's say the doctor says,

Starting point is 00:40:49 hey, can I, can I get access to your health data? Or sorry, your Apple watch activity data for the last year. You then have the option to provide that data to them through some permission type service that you then make available. So there will be interconnectivity amongst the service providers, but entirely gated and controlled by the user. Look, you're seeing this upfront now with Reddit.

Starting point is 00:41:09 When in this world, the people that create the content are actually in control of the data. And if you try to like mod tries an API without paying the people that created it or giving them control, they'll revolt. And you're seeing it happen. Now Reddit lost what, 90 some odd, X percent of all of their content because the mods were like, fuck you to Reddit. Well, think of that writ large where everybody is asked, hey, I'm this great service. I can solve X, Y, and Z problem for you,

Starting point is 00:41:37 just give me all your data. And then if you're not asking, well, what do I get? And they're like, well, you're gonna get a whizz-bang service. And that's all they say, you're going to get a whiz-bang service. And that's all they say you're being tricked. It's already happening. I mean, there's an open-source lawsuit against Microsoft's GitHub Co-Pilot, and you have the Getty Law suit. And, you know, it, there's also a corollary for this Google tried to kill Expedia already. They tried to kill Yelp, and it didn't work. Folks use both services. And, you

Starting point is 00:42:03 know, if you, if you are trying to boil the ocean like Chatchy PT might, I think it's not going to work because there's going to be so much innovation, so much community, brand and all that kind of stuff. And these LLM seem to be trending towards good enough or some kind of parity that I think you're right to mouth people are just not going to give their data over wholesale. I've been using the Zillow plugin to get exact. And the Zillow plugin sucks on Chatchee P. It's getting slightly better. But it's a wrong model. It's going to let me. It will exist on Zillow site. Zillow will not let Chatchee P. Take their business. You're going to go to Zillow site and you're going to say, hey, show me homes that have Asana and an ice plunge and that are four bedrooms

Starting point is 00:42:43 and that are, you and that are you know Fixer-uppers or are not fixer-uppers and have in-suite bathrooms and whatever and it's just gonna give you that list Why would they give that business to close down? Can take a crack just it summarizing what we all just said because your initial question was Prieberg was like what is this me for Google well, we all just said That what we're certain of is there's not gonna be 10 blue links and a model of search that they have monetized in a way that has been the most prolific business model

Starting point is 00:43:12 in the history of capitalism, right? So that's a problem for them, you know, from a business model perspective. So they're gonna have to reinvent their business. That's gonna be hard to do. It's like rebuilding the plane on the fly. But then if you just go to the two models that we outlined here, on the one hand, Shema said, you know, you're going to work with all of these agents. That's exactly what Mark Zuckerberg said on Lex.

Starting point is 00:43:33 He's like, you're not going to have one super agent. You're going to have, you know, hundreds of agents, and he thinks of what's happened. All of his platforms is the new open web where all of these agents will live, and you'll interact with them. You'll interact with your Zillow agent there, you'll interact with your booking agent, your Expedia agent there, etc. On the other hand, chat GPT, high inflection, read Hoffman and Mustafa and many others think that the benefits of general intelligence, this will be the first time that we solve vertical problems horizontally, right? And their metaphor, the compare there is we all don't have a hundred personal assistance in our office. You have one that gets to know you really well. They get to know what you like to wear,

Starting point is 00:44:17 how you like to travel, the things you like to eat, the things you like in your house, how many kids you have. So there's a real leverage in that in that horizontal knowledge that can then be applied to these different verticals. I think the answer lies in between. Your personal assistant will do a lot of the general stuff. Okay, whether it's pie, chat, GPT, whatever googes comes up with, etc. But I think they will subcontract the work, whether they chain it out via behind the scene mechanism to other agents. So for example, if you're interested in traveling to this undisclosed location that I'm at in

Starting point is 00:44:56 Europe right now, my assistant doesn't know anything about this place. So she may interact with a specialist for this particular place to get you that magical experience. So, you know, I don't think you have to pick one or the other, but architecturally, $20 trillion of value on the web is built around webpages, advertising, and e-commerce, right, and sending traffic to those other places. And what we're all saying unequivocally is it's moving to knowledge extraction and intelligent agents. And I think that's tech time. But I still think there'll be clicks.

Starting point is 00:45:36 I, you know, I have been using Bard a whole bunch and they have made massive rapid progress just to give you but one example here I'll share on my screen. It is pretty extraordinary how quickly they're figuring this out and I did this just to the search while we were talking with the five best Greek restaurants in the Bay area obviously came up with Cokari and you know other ones. And then I asked it like, hey what are the top items on each of these menus? They started putting images in and linking to Yelp. And then I said, hey, tell me the most expensive wines. And it actually got that from Kokari. They have a Chateau Margot 2009 for 1500 Shamaaf. I don't think it's good enough for you, but-

Starting point is 00:46:14 What year is it? It looks like 2009. Yeah. They have screaming eagle 2013. I don't know if that's a no go Harlan 2014. No go. go no the reach yeah, yeah, anyway, Harlan is good Harlan is good. Well, you're okay. Okay, good. So we got to save anyway. This I did the same exact search like four weeks ago. It didn't have images and it couldn't get me the items on the menus and these could all

Starting point is 00:46:37 be links and these could all be paid links. So in these results, there's nothing to stop Google from saying, hey, help, if you want, we'll put your information here or not up to you, you choose do robots.txt, except we're going to call it AI dot txt. You tell us what you want to be included. And if you want to be included, we want, you know, it's a marketplace for clicks. We'll include three of your images with clicks and we'll call it sponsored. They are going to be able to insert ads into here that are better than the current ads and that will prefer to higher. And they're going to know us. This could actually be the reverse of what everybody's thinking. This could lead to higher CPMs and higher cost per

Starting point is 00:47:11 click because of intent. By the way, I mean, the 2014 is actually, I think, underrated and it's very highly rated, but I think it is an excellent one. That's an excellent year. Okay. Jason, as to your point, I think all of that, I mean, that's impressive. It's true. You can also do it on chat GPT. I'll just say the number of people I interact with on a global basis who talk about chat GPT versus Bard is like 10 to 1 today. Now Google has got massive distribution power.

Starting point is 00:47:43 Let me tell you what I also think. But to your point, Brad, about this part, I just want to, I want to respond to your card versus the GPT-4. That's people are not paying attention. And when Google puts this on the homepage and starts sending 5% of users to it, I mean, obviously it's expensive to do it.

Starting point is 00:48:00 People are going to have their eyes jump out of their head. I think Google's going to be, chat GPT-4, I'm saying it right here right now, I think they're going to beat them because I think that they're better at indexing all this information and understanding it than anybody on the planet and they have the largest ad network. If they get this done in the next six months, I think it's going to increase the cost per click because they're going to know so much about each user, continue bread. I know I'm in the minority. Well, I know I mean listen, I think a lot of Google's revenue comes from

Starting point is 00:48:29 de facto navigation of the web. They term they turn the URL into a navigation box. There are a bunch of ads that, you know, people click on, they don't even know they're clicking on ads and you know, they generate a lot of revenue off of that. But let's be clear. Google is firing at this. I just don't think it's going to be as monopolistic as they are in search.

Starting point is 00:48:50 I think there are going to be other competitors who are going to be wealth and answer, going to have access to the data. And today, you have well north of 100 million people who are paying to a huge percentage of those to use chat GPT. And I think this, you know, it's the first competition. But, you know, Friedberg knows he and I had the back and forth.

Starting point is 00:49:12 They reported earnings, stock was flat. I said on CNBC that we had sold our shares. We bought back some of the shares around Google I.O. Because we do think they're going to be a player. We think they're going to be a beneficiary. But I would say as I sit here today, the distribution of potential for them is less than it was before chat GPT, you know, the distribution of upside. They have some competitors now who are going to be vying for this next new thing.

Starting point is 00:49:44 And I wonder whether or not, you not, as they try to navigate, you're saying they're gonna take some of this traffic from search and feed it into this other thing. This other thing better monetize as well as search or by definition that means revenue goes down. It feels like Google is so close to figuring this out. I mean, I've been doing some bar searches. Thank you.

Starting point is 00:50:03 How much Google do you own? How much Google do you own? Not enough, not enough. I've just been playing with the JTRADING.com. He's thinking of adding his data. I think I've had him 10,000 dollars in the last day. Like a buy-in or two. But let's pivot over to this red thing because it's super important that people understand this. I'm going to buy 17 more shares. I'm going to buy like a Harlan 2014 equivalent in terms of my J trading is up right now. J trading.com shadow to my trades. I did it as for fun. I'm at like 20% return.

Starting point is 00:50:33 I can really. I can really. Well, J. You want to quiet for a while. So when you're down, you don't talk about it. No, I had to think of it. I blocked all the stocks. I liked it.

Starting point is 00:50:41 And I didn't want to change them. Do you track them and exit or what do you do with the antitrust? I'm going to track the exits, but I haven't exited any. If you go to jtrading.com, you can play along. But how can you only be up 20% when Facebook has doubled? Oh, sorry, 22.43. Yeah, but Facebook doubled off the bottom. The whole goal of trading, J.K.O.

Starting point is 00:51:02 is to maximize your high conviction. Max, your highest conviction. What did you do? Put a nickel to put 5% into Facebook. I don't know. I just, I just bought companies as they went by in the group. When you talked about it on group chat, I made the companies. You got to put a lot of chips on the table. I mean, you have black and white.

Starting point is 00:51:19 That's I think what's the optimal number as a day trader, Brad? What's the optimal number of names I should have? You're not a day trader, you don't trade. As a long trader, what's the optimal number of names I should be? You have too many. I think with your level of insight, you know, on the things that you really believe in, there was such asymmetry in that position at the time

Starting point is 00:51:43 that you bought it, it was your best idea. You should have put at least 30% of of whatever you were going to allocate to this That's what I'll do. Yeah, I mean it's done. Okay. I mean listen up What did I buy it but 500 shares and my basis is 47 and I'm at 140 so it was a good trade Yeah, now imagine if you could you know 10 or 20 exit. Yeah, that's what I should have done Yeah, all right, Jason how how wait hold, how much have you put into all those stocks? 1.5 million. I, I basically took, I had some money in an index fund laying around and I was like, let me do this. I did J trading as a blatant attempt to get a sponsor for this week and start up. So I was like, maybe Robin Hood or E-Trade will sponsor this and make it like a segment.

Starting point is 00:52:24 I was like, let me do like a segment where I trade and see if I can secure the bag. And the markets are so crushed that nobody is spending advertising from Robinhood or E-Trade or interactive brokers or Bloomberg. But I also did because I wanted to become better at public market trading

Starting point is 00:52:39 to your point last week's conversation to mom is understanding when to sell and when to go long when you get distributions as a VC. That was really the reason I tried to do it was just to try to have skin in the game, you know, just like learning to play PLO or you playing the RAS tournament. I just wanted to. It's very easy. Once you get shares distributed to you immediately sell them. And then, and then hold on. And then reunderwrite from scratch from there. Okay.

Starting point is 00:53:07 Once the money is sitting in your account, even if it takes a day, a week, a month, it's not like the stock's gonna rip and triple on you over the next 30 days, reunderwrite it from scratch, and then see if you have that much conviction when you see the money in your bank account. Mm, I like it. I would just tell you guys, the distributions, you know, there were a lot of firms that

Starting point is 00:53:29 rode, you know, a lot of these big names, right, all the way down. You know, they got public, but they didn't distribute much if any. And it's really, don't say the names, but what do they rhyme with? I'll start. I'll start. I'll start. But what's more? Yeah, go ahead. You go you go now. You pick one. Not doing it.

Starting point is 00:53:52 Bliger, Bliger. Okay, Drieson, borrow its mlewnder's on freebergers dropped off. I'm sorry. I'm sorry, Danny, with this conversation. All right, listen, we all got our asses kicked.

Starting point is 00:54:06 Except for me, Uber's up 67% this year. Oh, come on, come on. Let me, what I was meant to do is what I was saying, Blurowitz. It's just right. All of the things that happened is things hit the bottom. They've bounced a little bit and people are so relieved that they bounced a little bit.

Starting point is 00:54:24 They immediately start distributing, because LPs are hammering them. LPs are like, why did you not send us this, snowflake when it was at $400 a share? Why did you not send us this door dash? Why did you, you know, go through any name, you know, that you can think of? But then people compound the mistake, I think,

Starting point is 00:54:44 that as soon as they get a little relief, boom, it's out the door. And then they think doubles on them. And I just think, you know, part of the benefit of me having to get up every day, five a.m. deal with public markets and think about longer short. It's what we're talking about in the fall of 2021 around the table before the poker games, which is the public market is tilty, it doesn't feel good, and that, we stopped making venture investments in October of 21,

Starting point is 00:55:14 principally because of how we felt about public markets at that point in time. And so I think a discipline, in fact, I was meeting with a managing partner of a very big venture firm in Silicon Valley this week. They just started about a year ago, or six months ago, doing public market investing and they said it was incredibly valuable

Starting point is 00:55:34 to how they think about distributions and what they're doing in the venture business. That's what it's been for me. I have now started to learn how these things are priced and I just think it's great as a learning thing for me. I have to make two decisions. One, to distribute to my LPs, which I just give them the shares, the second I have them, and let them make the decision. But then it's also personally for me, do I want to hold it or

Starting point is 00:55:51 do I not? I like your suggestions, nice punch up, Shemaath, of looking at the cash and then deciding if you want to re-align it. Did you guys see this crazy thing from CalPERS where they were like, they were down like horrible returns on the venture side and so their decision was to double down Well, they didn't have they took like a decade off from venture the returns of what they did invest in venture were Atrocious to be fair. I don't know how the board has changed the Calipers But Calipers brought in and a new CIO an entire new team and so they can't be held liable for You know that track record. I did kind of see something on Twitter about I was shocked.

Starting point is 00:56:28 It would be very difficult to manufacture that about a track record, if what I saw was accurate. However, I would say the team that is there now, the portfolio that they're putting together, and doubling down where I think venture is kind of at the bottom or bottom third. And I think, oh, this is the bottom or bottom third and oh this is the bottom you know bottom third I don't know bottom half you know listen in venture you got to find three things you

Starting point is 00:56:52 got to find you know you don't want to invest all your money at the top so you got to get the bottom you know bottom third none of us can call the bottom but you know last year at the end of 22 we were certainly in the bottom third evaluations. Then you wanna be early in a major platform disruption. I think we all agree we're early in a major platform disruption is probably the third of our careers. And then you wanna back one of the best firms, best brands, and Silicon Valley. Like if you do, like if people know who those are,

Starting point is 00:57:19 if you do those three things, you know, simultaneously like you got a good shot at producing really incredible vintage. Just a bit some numbers on the CalPERS thing so you can respond to it. Yeah. America's public, largest public pension, CalPERS, it's the California's, manages some 444 billion in capital on behalf of California's 1.5 million state school and public agency employees is leaning into venture. After years of bringing down its VC exposure to 1% target, the institution investor is now looking to increase its allocation more than 6%. Obviously, 6% from 800 million to 5 billion. The Financial Times reported. So, thoughts on that, Shabbat?

Starting point is 00:57:57 Well, I mean, this is the moment. There's a lot of venture firms that are hard up for money. And so, they may have a shot. They can get allocations now. In order to get into these funds, the problem that they have to realize is they may be buying a bunch of toxic assets or a bunch of toxic partners in the sense that a lot of these people have been getting run over for the last four or four years. We don't know. Again, we've said before, most venture investors are probably unprepared for the shock because they've never lived through one.

Starting point is 00:58:28 There's been a lot of junior marketing mucks that were hired because they were XYZ middle-level exec at Randall Company means nothing. So I don't know, I think it's smart that they have to be thought first of all taking managers. How is it that the California, like literally it's like, I know. It's incredible. Trillions of dollars being made in your backyard

Starting point is 00:58:51 and some genius was like, well, the thing that's creating all the wealth in the world, which is in our backyard, where we probably have the best picture in order to get into this one. Let's do it. We're going to reject. Hey, you just cut Delgoyleonian, say, hey, who are that?

Starting point is 00:59:03 Give me the list of 10 and put money on those 10 and call the day. Oh my God. That's unbelievable. That's unbelievably derelict. That's unbelievably sloppy and emotional. Sorry, that's it. Sorry, let me just finish. That's actually, that's the best word to use. When you look back on a decision like that, there's no numerical justification that one could have made in the 2000 teens to have made that decision decision except that that was an emotional decision. And when you're running a half a trillion dollar fund, there is no room for emotion. You should not be allowed. There should be some, so I think that shows a very hollowed out and at a minimum, imbacillic

Starting point is 00:59:43 risk management infrastructure at CalPERS, it needs to get fixed. So whether the allocation goes up or down, if I was a teacher and my money was being managed by them, I'd say, man, these people, I would want to understand how they're making decisions because I don't, I would want to see the investment memo that got them to decide as an investment committee that 1% in the most important asset class It's in your backyard that's making all the money in the world made any sense. I just want to read that memo and see could I agree with that? Because then I would want to read the investment memo that says we're gonna change course and get back to 5 or 6% Because if that process isn't fixed these decisions are just going to be equally bad. You're just going to compound bad on

Starting point is 01:00:28 top of bad because, again, they clearly did a terrible job. And then on top of that, they had horrible partner selection because the people that they did invest in, because the data's public have performed horribly. So what changes now all of a sudden, right? Because if the best firms still don't want you in, increasing it from 800 million to 5 billion just means you're going to lose 4.2 billion more than you would have otherwise it 800 million. Says here they made two bets. They had bet on looks like light speed in the last couple of years, light speed and TPG.

Starting point is 01:01:03 So we'll see how those go. And what I would say, those can beG. So we'll see how those go. And I'm saying, what I'm saying, those can be tough. I do have some data on this. Because we've spent a lot of time talking with them, and as you know, Jason, we were just talking, you know, like talking to folks like Mabadala,

Starting point is 01:01:15 who are, yeah, California is one of the largest sovereign wealth funds in the world, right? This is not just a state. This is bigger than most countries, right? This is one of the biggest economies in the world. I would say that what my interactions with the new team have been very impressive.

Starting point is 01:01:32 And I will tell you, they're not just looking at funds and building a new portfolio. I think they are thinking about doubling down at the right time. And they're thinking about thematic, bets against super cycles like AI. To say, let's allocate this much money, who are the three or four deep strategic partnerships

Starting point is 01:01:50 that we can have to drive, you know, return on that. So I think they're on their way, but I agree with you. They're the sovereign, well-funded of the most prolific state in the world, and they should have outside returns, not trailing with us. I just want to point out one thing here is the power of writing. Chimoff, you decided to write your annual letter a couple years ago.

Starting point is 01:02:10 Brad, you also will write a letter, famously the Facebook getting fit one or the meta getting fit one. The power of writings, and I just did this for the launch one for, and when you write a deal memo, compared to doing a deck, the questions you get are so qualitatively different and the people you attract are so different. It is extraordinary. I am advising startups across the board to write really tight deal memos because we might these deal memos internally when we make an investment. But man, is it great for clarity of thought and for the person on the other side to just stop and read a thousand words or two thousand words as opposed to go through some stupid performative deck. It's just such a better process. Maybe you could both could speak to that or a freedberg. I don't know if you've been writing deal memos, but maybe for people who are listening

Starting point is 01:02:58 or capital allocators and founders. I've been writing for years. Why? And what is the, what is it, what does it do for you? Well, it allows you to actually find people who will critique things in a thoughtful, intelligent way. It's hard to critique decks because you use broken English, you use fancy graphics, all of a sudden somebody that's very good at like graphical layout can dop somebody else. And so you don't get to good outcomes

Starting point is 01:03:22 because this weird group think effect sets in when you look at decks. So I'm not a fan of decks. I use them, but they need to be a companion to some sort of long form narrative document. And I just think it's more useful. You get people who can really think about what they agree about, what they don't agree about. It shows the intellect of the person writing it quite honestly. I just think it's like a basic skill that people should have. It's a useful skill to teach people as well.

Starting point is 01:03:52 Decks are very dangerous, I think. If you're gonna make decisions, I would encourage you the bigger the decision, a deck is insufficient. It can be a companion piece, but it needs to be attached to long-form documents. But the long-form documents don't need to be long either. Two, three, four, five pages, but it needs to be attached to long form documents. But the long form documents don't need to be long either. Two, three, four, five pages, but without it, I think you're going to allow some really

Starting point is 01:04:10 bad decisions to creep into some good ones. Freeberg any writing from you? For deals? Okay. You have. You've read. You're going to talk about writing. All right.

Starting point is 01:04:21 As everybody knows, Reddit is on strike right now. I should say the mods who run Reddit are on strike. 95% of reddits went dark. They basically turned off new posts or they just went private basically. Nobody could join. Nobody could see the content. I believe is what that means between Monday and Wednesday. And the reason they're doing this is because Reddit decided it would start charging for

Starting point is 01:04:44 its API. So who gets impacted by using the API? It turns out apps. We saw this at Twitter as well. When Twitter started changing its pricing for its API. And this means that some of the really high-end Reddit apps would have to pay $20 million a year for access to Reddit's data. Now they originally had said they were changing this pricing

Starting point is 01:05:07 because they were gonna train AI models. And they wanted anybody using that data, i.e. Google BARD or ChatGPT4 and closed AI, they wanted them to pay for it. And Steve Huffman was explained all this in a New York Times profile in April. You can go search for that, Reddit wants to get paid for helping to teach big AI systems. The largest app is called Apollo. Just so you know, if you're not into those, Reddit really came out with their app really late. This was a function of the 2005

Starting point is 01:05:36 to 2015 time frame back then Web 2.0 startups didn't have a lot of capital. So they let other people build on their APIs and build apps. Some of those apps caught steam and are actually better than the apps developed at least for a while. It was better than the Twitter app and the Reddit app. So thoughts on this freeberg. There's a history here is mimicked at both Facebook and Twitter, both of whom had open APIs that provided access to third-party app developers to build tools on top of the platform by accessing either user data or content off of the network, and then making that available via some different product functions, some different UI, than the native tools allowed.

Starting point is 01:06:21 If you'll remember, Facebook started to kill off its API, and in the process killed a number of these third-party app developers, the most prominent of which was Zingha. I think this was around the 2012 timeframe. You guys know if I'm right on that, I think it's right. Sounds right. And we saw the same thing happen in Twitter where, if you guys remember in the early days, a lot of users accessed tweets from people that they followed through third party apps and third party apps all competed for the user. And ultimately, Twitter's management team

Starting point is 01:06:51 realized that having direct access to the user, being able to control the UI, the UX, and not just become a data network, but to actually become a service for users made a similar sort of change. So, you know, Reddit's motivation around AI training is an interesting one, but it does speak to this idea that these social network companies,

Starting point is 01:07:12 social in the sense that the users themselves are creating the value, they're creating the content at both Facebook, at Twitter, and at Reddit. Ultimately, the company loses the value if that data, that content gets extracted, and they can't monetize it or capture the value somehow. And it's a lot different. Every company ultimately wants to become a platform company,

Starting point is 01:07:36 meaning that they can offer multiple products or services to users that sit on top of some network that they've created. And in the process, create a network effect because more products, more apps, creates more users, more users, begots more apps and so on. That works well in some contexts like an Apple App Store context, but in the context where there

Starting point is 01:08:00 is a network unto itself, like Facebook, Twitter, and Reddit, meaning that there is already a user network that is generating value in the form of the content that's being produced and consumed. You don't necessarily gain anything by then building an app network on top of it. I think that's been one of the kind of key learnings that's repeated itself over and over with Twitter and Facebook. The thing about Reddit, it's always been a community service.

Starting point is 01:08:23 If you guys remember, like in 2014, 2015, Ellen Powell stepped down after there was a Reddit revolt. She was the CEO at the time. And she fired an employee at Reddit that ran the Q&A site for Reddit's mods and their users. And the network, the community was super pissed off when this happened and they all revolted and they were going to shut down the service. and ultimately Ellen got removed from her role as CEO when this happened. So because so much of the value of Reddit isn't in the management team, it's not in the work that the software engineers do that run the company, it's not the VCs or the shareholders, the value of Reddit is inherent in the community. It's inherent in the individuals that build the content on that platform.

Starting point is 01:09:05 And that community has convened many times in the past at Reddit to change the rules, to say, this is what we want this community to become. And this is how we want this management team to operate. And so it's a really uniquely positioned business. It says a lot about how social networks in this kind of modern era are operating. It really speaks to how much of the value ultimately

Starting point is 01:09:24 accrues to the shareholders in a business like this. When the users themselves can step in and unionize and say, hey, you know what, we're not gonna allow this much value to be pulled out of the network in this way, we want this to change. So I think it'll have a lasting effect in terms of investing in social network or social media type businesses

Starting point is 01:09:41 where the users are generating so much of the value and have the ability to kind of communicate with one another and control where value ultimately falls. Traumat, you were at Facebook, I think, when Zuckerberg realized enabling a bunch of folks to use the API wasn't as good as controlling the user experience, having a uniform user experience. And it got deprecated. And I remember Zinga and a bunch of other people had games

Starting point is 01:10:06 and were sucking users off the platform. There was a LinkedIn competitor at one point that was growing at a credibly violent pace. And I guess you all made a decision. We don't want you sucking our user face off the platform. Maybe you could expand on what the decisions were at Facebook at the time. That was one of the things I ran.

Starting point is 01:10:22 I think one of my teams was responsible for Facebook platform. Yeah, it was one of the things I ran, I think one of my teams was responsible for Facebook platform. Yeah, it was just a very clinical decision around enterprise value. Look, the thing with Reddit is that it's a hot mess. And in order to try to create enterprise value, they decided to really leverage the mods so that there was some level of control

Starting point is 01:10:48 and that control was necessary so that they could basically sell ads. That's how this thing moved and locked step because the minute that there was corporate venture investors and other investors and a need to generate enterprise value and is it worth $2 billion or $5 billion or $10 billion, whatever the number was that they thought they were worth they had to make money right and Huffman was very straightforward about that and wanting to

Starting point is 01:11:11 go public in the whole nine yards but because it was such a hot mess the mods became this integral part of the ecosystem so that they could actually drive reasonable revenue but then what happened was it also allowed them to basically take over. And I think that it was a pretty significant miscalculation, because I think that what they needed to do was really redefine the economics of how revenue generation splits would work before they could do all of this stuff to try to monetize the APIs. So I think like they got the order of operations wrong. But I also think it's very fixable. And I think that they have some very smart people around that table. So as long

Starting point is 01:11:54 as they're again willing to be clinical and unemotional like we were, they'll get to the right answer, which is give them a healthy rev share. That's the future. Freeberg, you know, what version of what Freeberg said is true. The content creators need to get paid, you's the future, freeberg, what version of what freeberg said is true. The content creators need to get paid. Why you see content creators now on YouTube making tens of millions, hundreds of millions in a few unique cases, billions. And then we are all content creators,

Starting point is 01:12:19 yet most of us on these old legacy platforms make nothing. So that exchange has to change. Brad, any thoughts with us to rail the IPO? Not on that, but I mean, I think you bring up this thing about meta. Did anybody pay attention to Zots launching Project 92, right? And Project 92 is going to take on Twitter. It's a text-based social network that's going to pay creators,

Starting point is 01:12:45 and they're courting, apparently, over Winfrey, the Dalai Lama, and all of their creators that are already on their current sites are saying, we will use this thing to interact, and we will compensate you. And then on Lex Friedman's podcast, he mentioned something about, you know, having been inspired a little bit by what was going on with Blue Sky. So I'm super intrigued. He talked about it at this all hands meeting. I think Chris Cox talked about it.

Starting point is 01:13:14 So it looks like Meta may be revisiting some of these things that they shelved a while back. It doesn't have any direct implications on the Reddit front, but I think there's a suggestion here that it may be more about putting the control back in the hands of the user from a data perspective and a monetization perspective. That would be a pretty gangster move, you know, and interesting way to leverage the platform. And I don't really hear anybody talking about it. There's a really easy solution here for reddit those mods.

Starting point is 01:13:54 Most of them do it for fame glory and affiliation community. But if some number of them wanted to monetize their activity there why not allow people to subscribe to subreddits and pay a membership fee. And split it with the mods that that seems like it would be a high-scale move, adding Patreon subscription services to let them make a little bit of money. And then with these, it's only three apps that are being affected. They should just either buy those apps and bring those teams internal or I think it's not about the apps. Or they could split revenue with those apps. They could tell those apps that that's the key issue. It's like, if you're going to try to monetize APIs on user generated content, I think what's happening here

Starting point is 01:14:29 is the internet is saying, OK, that's enough, because we're going to leak our activity someplace else where we can directly monetize it. So that's the whole point, I think. In this current version of the internet, the value is going to go, and again, further, further, further, erode away from the centralized apps and more towards the individual people or in this case these Hubbard spokes, these mods and not

Starting point is 01:14:53 to the centralized organization that has the housing, the Reddit, the Facebook of the world. So that's just a trend that's happening, the Instagram, so the world. And there's nothing wrong with that. YouTube as well. It's just where the pendulum is swinging. So I think that thread it just has to cut a medial. Pretty easy to do. Speaking of AI funding, there was a breaking new story. Just in the last 48 hours, a startup named Mistro AI has raised 105 million seed round. They're calling it Should be at about a 240 million valuation according to reports

Starting point is 01:15:31 One of the co-founders is a deep-mind researcher. I guess people are saying this is insane because they haven't written any code yet And they've been working on the company for a couple of why these rounds are so big is I guess that you have to buy All these H100s and they're expensive and these rigs are very expensive I mean you guys saw this that nat freedman basically published that he Spent 75 million dollars on a bunch of hardware and if you were one of his portfolio companies you could use it So getting these H100s and A100s to train on seems to be a non-trivial task. And so, and they're very expensive, even if you can't get a hold of them. So I think what we're talking about is basically that these rounds have to go up. My and because if you notice, like the post, you had to raise the post so that it wasn't so utterly

Starting point is 01:16:19 dilutive as to completely disincentivize the employees. But let's speak on this here. Nobody's writing a $105 million seat check. That $105 million is chopped up probably 10 ways to Sunday. So there's a bunch of people putting in five, 10s, and 15s. I'll just be honest with you. They put in the round and they said it was massively over-subscribed. Yeah, so it's everybody taking a little teaser bet.

Starting point is 01:16:41 The problem with these teaser bets is they never hit in the way that you think. Maybe you'll get your money back with all the dilution that's gonna happen, etc., etc. This is not the way to make money, guys. I'm just gonna be honest with you. So whoever's putting money in thinking they know what the fuck they're doing you might as well just light it on fire, go to Vegas and have some fun with it because you will make more. You'll get more enjoyment from that than you will from making these kinds of investments. Where do you think that's dumb? Stupid. Stupid bet? Brilliant bet. from that than you will for making these kinds of investments. Where do you think Brad? Stupid. Stupid, Pat?

Starting point is 01:17:05 Brilliant, Pat. Well, not to mention, by the way, this has nothing to do with the company, nothing to do with the idea. I'm guessing, just talking about that. We're not using it. We're not using it. We're not using it. We're not using it.

Starting point is 01:17:15 We're not using it. We're not using it. We're not using it. We're not using it. We're not using it. We're not using it. We're not using it. We're not using it.

Starting point is 01:17:23 We're not using it. We're not using it. We're not using it. We're not using it. We're not using it. We're not using it. We're not using it. So again, Mr., there are going to be a couple of monster rounds I think announced next week. Like, did I go to make this one look like kids play. So a lot more of this is coming. You're exactly right. This is about buying H100s and compute. Everything we're talking about, right, and essentially ingredient is compute and it's a scarce resource.

Starting point is 01:17:40 My God, these people that put the money in the seed round should have just bought Nvidia. But some call options. Like, you make your money. Well, and there's downside. And since media has a floor. And by the way, because in just in case mistral doesn't work in video, we'll sell those H100s to somebody else. The reason. Yeah, they probably have the option to resell. I do think you're right on these teaser bats. This is a power law business. these teaser bets. This is a power law business. There's a massive pressure on young junior partners, principles within these firms to do something. Fire them. It's not just teaser bets. What happens in these fire them? Fire them. Fire them. They want to get the low

Starting point is 01:18:18 lives because they need to explain to the audience. No, actually, no, that's even worse. The GP that can't manage their fucking principle should be fired. Right. So people should, the young people should shut the fuck up. Okay. Be lucky you have a job, learn the craft, it'll take you a decade. And if you are proposing stupid bets like this, again, sizing matters. Again, I'm not talking about the company here. I'm just saying, when you make a $5 million, $3 million deal memo for $105 million around, that is stupid, okay? And so if you're the partnership that allows

Starting point is 01:18:55 those kinds of things to leak through, you don't know what you're doing. So at some point, somebody should be held accountable for this. And I guess what's going to happen is, the returns of CalPERS are gonna cascade through everybody else, and well, at least I own some, you know, H100s for a minute.

Starting point is 01:19:10 So let me see, I think this could, do you want to take the other sidebrow to that? No, this is just an incredible team that's gonna do, you know, this may turn out to be a fantastic bet or I don't know, light speeder, whoever led this round. Let me say something different. In 1997, 98, we had a similar phenomenon. Everybody thought internet search was going to be huge.

Starting point is 01:19:31 There was massive thermal and chasing. And everybody scrambled to get a search logo. Altavista, infosy, Likos, Go, plan it all. Geosidys, just go through the list, you know, that people were scrambling after. And the truth of the matter is almost all those companies went to zero, even though you got a couple bets right, you got the internet right, you got search right, but you didn't have to invest a dollar in search until 2003, and you would have captured 98, 99 percent. Do it again. Do it again. And now for social networking.

Starting point is 01:20:05 Same thing. Do it again for social networking, Brad. Say all the names. Say all the names. It's the same thing. Same thing. And so, you know, when I look at it today, we have a huge anti-portfolio for AI. It's painful.

Starting point is 01:20:21 We've said no to over 60 companies. Right. We you know, but when we look around I see a lot of our competitors doing a lot of these deals Maybe they're teaser bets. I don't really know the size. They're putting into those companies But I suspect that if we believe this is as big as is is is is going to be and going to play out over decades Then putting a bunch of really small bets in order to buy a network or buy relationships or buy logos, etc. I don't think it's going to work any better this time than it worked than around social networking.

Starting point is 01:20:55 But to be clear, there are going to be some people who lead these deals, who help these companies build incredible businesses, and those will, you know, there are going to be some winners here. I think there's time to participate in the winners right now. Now, a lot of this is unknown and unknowable. It will become more clear in the one, two, three years ahead. The problem is for the LPs. Like, if you are the LP, I am an LP in a bunch of entry funds. This stuff really turns my stomach because I'm like, wow, I am losing money every day.

Starting point is 01:21:24 When I see these things, that's why I get so emotional about this. I think to myself, if the GPs that I've given money to are doing these kinds of deals, I'm screwed. At best, maybe I'll get back 50 or 60 cents on the dollar. And I immediately start thinking to myself, I really need to write this down. And I'm re-underwriting that person and that organization because I'm wondering how can you let these things happen? Because if you just look back in history, you have to be really, really negligent to not learn that these things never work out the way that you think they are. And especially these kinds of rounds and this nominal ownership, the

Starting point is 01:21:59 inability to defend ownership, it's just not a path to success. I mean, also, if you think about this, Tramah, what company in recent history that got overfunded actually used that money logically, the magic of Silicon Valley is the milestone-based funding system, and whenever you short-circuit that, this money becomes a huge distraction to founders. If they were to receive $10 million, $25 million, work for a year or two, then raise another 25 or 50 million. They don't need to raise all this money at once. This is like taking your ABC round, putting it all in one.

Starting point is 01:22:30 100%. And all it does is distract founders and then everybody coming for a salary says, well, you got a hundred five million in the bank. I want three million dollars. I want five million dollars. What's the best example, guys, of a huge financial winner

Starting point is 01:22:42 that raised these ginormous amounts of money? What's the best example? Three launch of a product, Jamaat. Thereous amounts of money. What's the best example? Free launch of a product, Jama. There's no product here. What's the best example? Magic leap? What is it? Uh-oh, of disasters that actually...

Starting point is 01:22:54 Oh, no, no. What is the best example of a great company? Qu- I'm putting great qu- Great qu- That raised these kinds of amounts so early in the site. Quibi. No, Brad, do you have an example? I mean, what's made?

Starting point is 01:23:07 I think there are people who raised a lot of money over the lifecycle like an Uber. I don't know, I'm not talking about that. I'm not talking about that. I'm not talking about three rounds at once. What was your first C check in Uber? What was the total seed rate? I'm not talking about that.

Starting point is 01:23:19 I can tell you what Facebook's was, it was $500,000. It was $1.25, I think. Okay, Facebook's was $ hundred thousand dollars. It was one point two five I think. Facebook's was five hundred thousand dollars. We needed a lot of money later. We needed a lot of money later, but no it's five million. Sorry, five hundred thousand, safe at five. Five. Here's a five million dollar valuation for we're in one point two five I think. Here's another thing everybody walks in they say well I have to raise this much money. And it's good. This is a circular logic.

Starting point is 01:23:48 I have to raise this money because I have to have all this compute. And I say, well, okay, we want to have a vertically integrated model. We want to train them on. I say, okay, so there's a huge upfront cost. And they're like, but I don't want to take a lot of delusion. So I have to raise it at a really high price. And so you say, okay, well, that's a challenge for you, not necessarily a good thing for us.

Starting point is 01:24:12 And then they say, oh, and if you ask the question, is this an ongoing expense? They're like, oh, yeah, we're gonna have to retrain. Like we're gonna have to continue to spend this money. And I'm like, well, so if you're a software company, for example, and you say, well, what's my cogs? If all of a sudden you have an embedded cogs that's massive and recurring, right, for your

Starting point is 01:24:33 compute cost that we haven't had in the past, then the revenue on the other side of that's got to be a multiple of what a traditional software company might have in order to get back to that set of economics. So I think there's a scramble, and understandably so, if you think the big win, AGI, or this autonomous agent that's going to be the top of the next funnel, that thing is gonna be worth a lot. But to me, those are lottery tickets at this stage.

Starting point is 01:25:05 Can I tell you a little secret? Here's a little secret. When you put in $100 million into a startup to buy compute, you are not buying WhizBang next-generation IP. You are subsidizing capex. And that is a job that many, many other people do at a very low hurdle rate. And so it is a law of capitalism that it could be the most incredibly innovative company in the world. But if you are offering money to them, to fulfill a low yield thing, you are just not going

Starting point is 01:25:48 to make a lot of money. When you put money into a startup that is their writing code to build groundbreaking IP, you own something that's really real. But that's because 80 cents on the dollar is going to core critical R&D in that point in time. And then they raise a lot of money at a lot less delusion when 80 cents on the dollar goes to sales and marketing. Then they raise a lot of even more money at an even smaller, smaller amount of delusion. You start to get to scale internationally. So you start to see, right, more dollars, less return, right? You're owning less of the critical differentiation.

Starting point is 01:26:26 So if everybody is like, oh, it's so expensive for a compute, I need to raise 100 billion. Well, buddy, you know, that's like a leasing function. You know, you're like all of a sudden, like the best VCs in the world have become like Comerica Bank. Yeah. I mean, they could have done it with the same structure, right? Comerica could have given them 50 million to buy these machines. And maybe they should. And Comerica and JP Morgan and somebody else should basically say, hey, you know what?

Starting point is 01:26:52 Here's a lease line for your H100s because I know they're worth so much. And I'll just write it at 10%. And my point is that the fact that people don't understand this is why the money will get torched. I would love a critique that says actually, to my Thurenitiate, I'm right, I know that that's happening, but here's why I still see it happening.

Starting point is 01:27:10 I don't hear any of that. Here's the problem with that critique. Okay, so you ask, like, what are the biggest projects in history, you know, around startups? Think about AWS. I don't know, they spent 400 million probably in order to get AWS off the ground, but it wasn't done by a startup, right?

Starting point is 01:27:25 You think about what Zuck's spending on the metaverse, it's not being done by a startup. The truth of the matter is the high. Right, so you go back to AWS. AWS was dog fooded on Amazon retail. Of course, of course. And Oculus was done on Kickstarter, and the cash flow of Amazon retail fed the development of AWS. Correct. My point is that when you think about what these hyper scalers are going to do, they're not going to spend a billion, they're not going to spend 10 billion, they'll spend a hundred billion dollars, right, in order to be in this race. And so if you're backing a startup that says I'm going to build a better chat GPT,

Starting point is 01:28:03 right, just like OpenAI discovered themselves, they sold 51% for 50% of the company to Microsoft for a reason. They had to. They had to have the data and they had to have the compute. This is a nuclear arms rate around compute. But I think it's, it's financially illiterate for someone to think that they are actually doing anything other than subsidizing catbacks when you're giving a hundred million dollars to a startup to literally buy chips and

Starting point is 01:28:31 servers and rack and stack up 40% of their equity. That's the other thing. This equity is so valuable. Why would you want to give 40% of it when you can get an equipment lease and keep it up to 20% of your company? You can't get those. You can't get those. If the VCs put in 50 million instead of 105, you don't think co-America would come on the back end with 25 million? Of course they would. Brad is right. This happened in 98, 99, 2000, where all of this money was getting flushed down the drain, going into buying data center capacity, where I remember even at Facebook, we were racking

Starting point is 01:29:01 and stacking our own servers. And then we ultimately got big enough where we actually built out our East Coast and West Coast data centers and data centers all around the world. But it was very expensive. And in that moment, again, all of those companies just lit all that money on fire. They torched it. There was no remnant equity value for that capital. And I guess, I guess I'm just questioning just questioning like what does a GP think they're

Starting point is 01:29:26 actually buying? Well 80% of it's going to hardware. I mean they're buying the other 20% buying chips. I mean it doesn't make it. And that's going to get obsolete. I want to make one point here and not freeberg. I want to get your input on this as well. It constraint is important for founders. And the thing that I find really troubling about this is, and putting this start-up aside because crypto people also went through this for the last three, four years where they were overfunded.

Starting point is 01:29:53 How did that turn out? It was tens of billions of dollars burnt of LP monies, people's retirements, and college endowments, and it's gonna be quite a post-mortem. But look at, you invoked Meta. It's important for people who don't know this to know that that was a Kickstarter. Shout out to Palmer Lucky.

Starting point is 01:30:12 He raised a couple of million dollars in 2011. And I think it was on a Kickstarter, pre-selling the devices, right? Constraint makes for great art. Constraint makes for great startups. You need to have pressure on a startup for them to deliver. You cannot give startups five years of runway and expect it's going to work. It just doesn't work. I've never seen this movie so many times.

Starting point is 01:30:35 But now we've gone through 18 months of nobody doing anything, I guess, in VC land. So folks on Santa Rotor. Are itchy. They want to justify why they should still be drawing 2% on the full fund. They want to try to show activity so that they can raise the next fund and continue to stack fees. And all of these sort of leads to these suspension of financial logic, but it gets replaced with financial illiteracy, which is really there's an optimal fund size, right, Shumaf?

Starting point is 01:31:01 And this is why the people that pay the price are ultimately the LPs. And it may be the case that CalPERS may be actually avoids a lot of these pitfalls because by missing, yeah, they missed all the returns, but then they missed writing the mega follow-on checks for all of these folks that they, and then they would have torched many billions more. I'm going to take the other side of that. Go ahead, Brett. I think it's nearly impossible to conceive that all of these bets that are currently

Starting point is 01:31:24 being made are bad bets. I think it's nearly impossible to conceive that all of these bets that are currently being made are bad bets. I think it's a major platform disruption. But I, you know, instead, I think the right way to think about it is it's about pacing. And if you're trying to, if everybody thinks they're going to build the next Google, they're going to build the next autonomous agent that's going to sit on top of the funnel, that's going to be worth a trillion. And therefore, they can burn a billion dollars training miles. We're not going to have 10 of those winners.

Starting point is 01:31:52 But at the same time, there's a lot of stuff getting funded that is in the application layer, that is in the tool layer. These are not the big headlines that you're reading about, but these are really interesting businesses that are solving real problems in the software and tooling layer here, you know, in the smaller model layer, vertically oriented things around life sciences or, you know, targeting, you know, financial services, or things in the application layer, you know, like character.ai, etc. So I do think there are a lot of good things getting funded that will deliver real value, but I agree with you.

Starting point is 01:32:31 There's a second problem to this, if you drop a billion or two billion or three billion into something, you have not only a product challenge, you have a distribution challenge, right? We know all the hyperscalers are going to play. Google is going to play. Meta is going to play. And so you've got to compete and then beat them. And it used to be that you would say, well, if I get a lot of traction, they'll buy me. If I'm Instagram or WhatsApp, like they'll buy me. Well, we have such a regulatory BIME. Well, we have such a regulatory nightmare in Washington, D.C. today. No hyper-scaler can spend over a billion dollars to buy any AI company. Not even that 400 million gift. What is it, Giffy? I mean, it was even not my best. Unfortunately, in the United States today, we replace mergers and acquisition, right, with copy and compete. Because we've said to hyperscalers,

Starting point is 01:33:26 you're not allowed to acquire any of these companies. So the unintended consequence of the regulation in Washington is that entrepreneurs and founders and venture capitalists, who might otherwise have had a good idea, built something with some traction, they can't find a home for it in the way, you know, that WhatsApp found a home or a... Isn't that a good thing to Instagram?

Starting point is 01:33:49 Isn't that a good thing to come down? I don't think I know that. Because they know public and be independent is a better for the market. And the three supposes that everything can become a big and profitable business. They're not. But net net can,

Starting point is 01:33:59 was it better for the neighbor become a big and profitable business now? On its own, no chance. Well, it's still not a big and profitable business now on its own no chance Well, it's still not a big and profit So maybe I should have died. I mean, maybe it's be kept alive But I mean it's I actually don't think it's better for the market that I think it's great at it got it It was it was innovative technology. It was yeah, you know You you were able to to back it with some good funding and I think what's coming is gonna be really exciting But it took a really long runway a lot of capital a lot of intelligence in order to build You were able to back it with some good funding, and I think what's coming is going to be really exciting.

Starting point is 01:34:25 But it took a really long runway, a lot of capital, a lot of intelligence in order to build. Unfortunately, we've killed that. So you have a two-sided problem. We're spending more than ever to fund and start these companies, and we have undermined a lot of the downside protection. Freiber, you're thus. So if you look at how the capital is being deployed, if it's mostly being deployed to train models, then the question has to be, is there really a sustainable advantage that arises

Starting point is 01:34:54 by being the first to train the models and then being able to persist an advantage by training new models from that foundational model going forward? And the reason that that matters so much is because you have to really have a deep understanding, if you're gonna invest a lot of capital here, you have to have a deep understanding for how quickly model development and training is accelerating and how quickly the costs are reducing. So something that cost, like we said,

Starting point is 01:35:20 open AI spent $400 million training models for GPT-4. If they spend $400 million in the last couple of years, you could probably assume that doing the same trading exercise could be done for $5 to $10 million, 18 months from now, to generate the same model. That's a 100x cost reduction. And I'm just ballparking it here. But if that's really where things are headed,

Starting point is 01:35:44 then does the $100 million to train models today really make sense? If trading those same models can be done for $5 million in 18 to 24 months. And that's where it becomes a really difficult investment exercise. And one that you have to really critically understand how cost curves are moving in AI. The same thing was true in DNA sequencing in the early days. It's following, by the way, a similar cost curve is DNA sequencing, which is actually greater than more is log greater than a 2X cost reduction every 18 months. We're seeing something much greater than that in machine learning right now

Starting point is 01:36:15 in terms of cost reduction in model training. Ultimately, the business model has to have some advantage that by being the first to market, you can then generate new data that gives you a persisting advantage and no one can catch up with you. And my guess is if you get under the hood of the business models, it's unlikely going to be the case. And it's very likely going to be the case that you don't know when the market advantage will lie, when you will be able to kind of create a persisting mode, a mode that expands as you get more data and can train more. This is why it's so hard to invest generally in technology. It's because you don't know the point at which the market tips relative to the point at which

Starting point is 01:36:52 the technology tips. There's a moment where the technology gets so cheap. The market may be adopt after the technology gets cheap. At that point, it's a totally different game. Remember in the mid-2000s where we had memory shortages and we used to have to buy RAM. Yeah, I mean, it's all this stuff and it's like if VCs are funding this stuff, just like the equity on fire, guys. Not going to be worth anything. Brad's point is right, which is the question is what's possible now? Where can you build the sustaining advantage now? Rather than go after big model development cycles where the cost curve is going to come down by 100 fold

Starting point is 01:37:27 in some period of time in the near future, is there a business model advantage you can build by being in the market first, building a customer base, accelerating your features, getting user feedback, and that certainly exists in the application and the tools layer as Brad is talking about. That seems like such a no-brainer for disruption across many different segments,

Starting point is 01:37:46 many different verticals, many different markets right now, versus trying to be further down the stack where it takes hundreds of millions of dollars of capital and in a couple of months, that hundred millions of dollars of capital can be replaced with five million bucks of training exercise and compute. Can I take the other side of that?

Starting point is 01:38:03 All that coordination makes no money today. So to your point, when you cut the actual input cost by 100 fold, the coordination cost goes from being zero to being worth less than zero. Right. I don't see any money being made there either. And all the people that say, I'm sure there's going to be some genius in the comments.

Starting point is 01:38:19 But what about open source? And it's like, what about it? Open AI also just gave an update on their cost structure for their API and they just dropped it 25 to 75%. Again, this is after the 10 fall drop they did last year. Play this out. A hundred million dollars of capital spent training today is a million dollars spent doing trading in 18 years.

Starting point is 01:38:39 Yeah. Three years. 18 to 36 months. Somewhere in that time frame is likely the time frame. So why would you spend all this money today when an 18 to 24 month things are gonna get so much cheaper? I think the further up the value stack you go, the more of an opportunity to truly kind of innovate,

Starting point is 01:38:54 disrupt and make, what on a capital is possible? What happens in 24 months? So when you've made a bunch of $100 million investments and they're all zeros? You get fired? Maybe? Unfortunately. As an investor, Shemaab, is that what you're asking?

Starting point is 01:39:11 At some point, you don't get invited to join the next fund. Think about the alternative investment strategy with lots of capital, where the cost curve is not coming down as quickly in terms of where that capital is being deployed. For example, building rockets to go to space or building infrastructure to transport power or building roads. You could raise a billion dollars to build a whole booth system or a port. Let's use a port. A shipping port is a good example.

Starting point is 01:39:38 You could spend a billion dollars to build a shipping port. It's not that the cost of building a shipping port is going to come down by 10X in 18 months. So it makes sense to raise a billion dollars and build a frigging shipping port. And it's my point to coming out. VCs thought they were underwriting IP and said they're just actually subsidizing catbacks. It's a crazy thing. It's the craziest thing. Brad, is this a problem of the optimal venture fund size that Fred Wilson talks about that Bill Gurley talks about? A lot of the optimal venture fund size that Fred Wilson talks about, that Bill Gurley talks about. A lot of the OGs say, hey, $250, $400, $600 million, there's an optimal size here for four or five partners in a venture fund to put money to work. Is this part of the problem right now, which also happened in crypto, is you had $1 billion or $2 billion fund sitting around and different venture brand names

Starting point is 01:40:23 having four or five of these multi-billion dollar funds burning a hole in their pocket and getting frisky over this, you know, 18 month pause. Is this about optimal fund size, making bets? You know, we have over a billion dollar fund. So if I take the other side of that, the people are going to say you're talking your book, but I don't think this is about large funds. I think this is about good and bad decisions. At the end of the day, some of these decisions will pay off. Like, for example, the largest bet size from a billion dollar fund that you've made or will make. I think out of that fund would be a hundred million dollars most likely, but we may cross it

Starting point is 01:41:03 over other funds and have bigger bets. Certainly. Would that happen two or three times, though? Would you do it all at once like this, or might it happen over a Series A, B, C kind of situation where you build a position? Well, I would say we're not writing. We haven't written $100 million check into a Series A, and I don't think most of people to Chimaz point that you're talking about are writing 100 million dollar checks into those series A's.

Starting point is 01:41:27 The Mistral round that you referenced, I imagine the lead check into that was maybe 50, maybe 50. So listen, larger fund size is enable you to participate in companies that require more capital. And these companies do require more capital. So, you may take the position that all these companies are going to zero. That's not my position. My position simply is that I do believe there is a bit of over-exuberance that too many

Starting point is 01:41:57 things are getting funded, right? And that some, you know, like the margin of safety, the margin of return being required is probably lower than it should be. But there's no doubt out of this vintage in my mind that you're going to have some epic companies. Now, I don't know if what Mustafa and Reid Hoffman are doing at inflection is, you know, building pie to take on Chatchee PT and to take on bar to be the intelligent assistant. The ambition is extraordinary.

Starting point is 01:42:28 The cost of compute is high, but the first mover advantage is also high, right? Because whoever secures this position, Bill Gates said he's been playing around with it. It's one of his favorite agents or whatever. That's an interesting comment. I think it's pretty good, but I think chat GPT is out in front in this regard.

Starting point is 01:42:47 I think a lot of people are gonna try to compete for that space, but I can't imagine that all of these researchers leaving deep-mind are going to be able to compete for the most sophisticated model to answer general purpose questions. So I don't think it's the large fun size. I think it's just a lot of

Starting point is 01:43:05 exuberance to participate in what everybody perceives to be a massive platform disruption i think that can be true just like the internet was in nineteen ninety seven and a lot of these bets can you can and will likely go to zero how great is america you just rent other people's money they pay you two percent and then you're allowed to get exuberant yet keep your job when you lose it. God bless America. Well, I mean, the issue to Tremoff is it takes 10 years to prove you're bad at this job. For a good now? No, no, no. It takes 10 years to prove you're good and it takes 20 to prove that you can be consistently good and didn't get lucky. But in a few years, you can tell that somebody sucks.

Starting point is 01:43:49 Can LPs tell? Well, I'm not sure that they get the visibility because when LPs interact with GPs, they're grin fucked for the most part. So I don't know, probably not. But when I interact with them, just as I'm pure to pure level, and I see the deals that could done is pretty easy to understand that some people just suck. They don't know how to make money. I guess is the point, which in the job, that's the job is to make money, to consistently make money. Okay, Brad, take care. And let's go to science corner. Bill Gates wants to genetically modify

Starting point is 01:44:21 mosquitoes. Is this fake news or real? Incorrect, fake news. It's fake news, okay. Explain. The reference is from RFK Jr's tweet that he sent out where he retweeted someone talking about this mosquito factory in Colombia. And this guy basically put out a tweet saying, look, Bill Gates has a mosquito factory in Colombia. It's the largest in the world. 30 million genetically modified mosquitoes are released every week into 11 countries, because

Starting point is 01:44:51 Bill knows better than nature. What could possibly go wrong? RFK Jr. then took it upon himself to retweet and say, should Bill Gates be releasing 30 million genetically modified mosquitoes into the wild? Part of the mentality of earth as engineering object, what could possibly go wrong. So I really wanted to take issue with this because I do think that this is the sort of misinformation that both creates scientific illiteracy and damages and impacts negatively. Some of the significant progress that can be made in medicine and in science. So I want to

Starting point is 01:45:24 speak very clearly as to what is going on, what the science is behind it, why this is super important. And then we can speak philosophically if you guys are interested on kind of should we be doing this sort of stuff and why. So what's real here? Like what are actual factors versus fake news? Maybe that's a good place to start. The most common disease carrying mosquitoes are called Edith's a gyptia. It's a species of mosquito that carry yellow fever, a dengue, a zika, a number of viruses that obviously are pretty adverse to human health. Each year about 400 million people are infected with dengue virus via this mosquito vector, 100 million become ill, and 21,000 deaths are attributed to dengue, globally 200,000 cases of yellow

Starting point is 01:46:11 fever each year, causing 30,000 deaths. These are pretty significant health concerns. And it turns out that in mosquito populations, not in this particular species that carry these viruses, but in other species of mosquito, there's a bacteria, a natural bacteria called Walbachia, and this bacteria exists in nature, and sometimes these mosquitoes get infected with this bacteria, so they carry this bacterial bug. And this bacteria is really interesting because it causes what's called cytoplasmic instability

Starting point is 01:46:41 in the mosquito cells, which actually makes the mosquito largely resistant to a lot of viruses. And there's a bunch of theories for this mechanism and why this is the case, but it causes the mosquito to not be able to carry and spread these viruses that are super adverse to human health. So number one, there's a natural bacteria that's found in nature and up to 40% of mosquitoes are already infected with it.

Starting point is 01:47:04 Number two is it's not common in the mosquito species that is common in these areas that are spreading these awful viruses to humans. And so there's been a project that's been going on now for 12 plus years where they're taking large amounts of mosquitoes and breeding them specifically to have this bacteria in the mosquitoes. And then they released those mosquitoes into the wild. And over time, the bacterial infected mosquitoes start to become a larger percentage of the population. And as a result, the vector of carrying

Starting point is 01:47:34 these awful viruses into humans goes way down. There was a study done in Indonesia where they took these Walbakia infected mosquitoes and they released them into the wild. And they looked at a population that was in a region where they released them in a population that they didn't. In the region where they didn't release them, 9.4% of people ended up getting infected with dengue fever and where they did release them, only 2.3% were infected.

Starting point is 01:48:00 So it was an amazing 75% reduction in the infection of people by these mosquitoes. And so the whole point is just to kind of move the mosquito populations in a way without doing any sort of genetic modification, but by exposing them to this bacteria so that they don't carry these viruses into people. But because people don't... That's a nuanced point there, Freeberg, it's not genetic modification or it is. It's not. I just explain it's a bacteria And they just expose them as kiddos they're exposing the so that they end up getting infected with this bacteria And then as they breed the mosquitoes breed in this facility

Starting point is 01:48:34 You have you have to have to an infected male and an infected female for the offspring to have the bacteria if you have an infected male They're actually infertile. They can only fertilize an infected female. So unless you do this breeding work, you don't end up seeing this happen naturally in the environment where the wall back here starts to spread widely. Why is it genetic modification, misinformation coming from them? Where is that also occurring? From the presidential candidate, RFK Jr., who just propagated it. And so this is why I want to make this point because this whole idea that, oh, should we be engineering the Earth?

Starting point is 01:49:07 Let me just say something about engineering the Earth. Humans used to wander around the Earth, or proto-humans did, without access to food, and until we realized that we could plant a seed in the ground and grow crops, and started to engineer the Earth in the form of farming, we did not have access to a reliable source of calories. Human ingenuity, human engineering gave us the ability to do this, gave us the ability to feed ourselves. Similarly, humans got infected by viruses, by bacteria, by fungus, and died at a young age,

Starting point is 01:49:36 over and over again. And when humans began to engineer medicine, an engineer, undennatural substances, because he makes this point, oh, should we be interfering in the natural world, what is natural is for people to get infected with viruses or bacteria and die. And if not for the advent of our engineering and our ingenuity and our ability as a species to create solutions through science, which allows us to do discovery, and then through engineering,

Starting point is 01:50:01 which allows us to make solutions that solve problems that humans face, we would all be dead at a young age and we would not have realized the progress that we've had as a species. So I really get ticked off when I see guys like RFK Jr. and others not just propagate this BS misinformation's feel about, oh, genetically modified this and that science is bad, but to then say, should we be messing with the natural world? Because I would say to him, what about when your kid got infected and you gave your kid antibiotics? Maybe you shouldn't have done that. And there is a group of people who are saying that you shouldn't do that, right? There is a movement to stop taking antibiotics because it's making because it's having an... I'll tell you a couple things. There are bad pesticides that impact human health and cause damage to our DNA.

Starting point is 01:50:46 There is bad sunscreen that is endocrine disruptors and can damage human health. There are plenty of chemical products that are made that we use in everyday products that cause cancer. There is an endless string of things that are wrong with the systems of engineering that we do use. That doesn't mean that they're all bad. That doesn't mean that we then say, hey, you know what? Let's not do anything. Let's not do any engineering. Let's not use any antibiotics. Let's not use any technology in food.

Starting point is 01:51:15 And that's the challenge is, you know, getting into the details on, like, I'll tell you, I don't use any sunscreen products with myself or my kids. I only use zinc. And I have a similar sort of nuanced approach to understanding what things we should or shouldn't use in our lives. Because of the data on the size of that. Yeah, boss, boss. Can you please explain that because I didn't know this. What am I doing? Am I going to explain? Yeah. So there's a number of substances which are known endocrine disruptors that are found in sunscreen. I think it's like one of the craziest things that we haven't made these products illegal at this point. But the only sunscreen that you should use is natural mineral sunscreen. Sorry, I shouldn't say that you should. I should say this is what I chose. Choose to do.

Starting point is 01:51:55 Based on the data that I've seen, what's a good brand? What brand? Any brand that just zinc sunscreen. Just look at the back. If there's anything but zinc in it, don't use it. Zinc oxide? Is that what you're talking about? Yeah, it's referred to. Totally. Zinc oxide. Zinc oxide sunscreen? Yeah. Okay.

Starting point is 01:52:12 That's the ingredient in it. So I don't know what you guys, but here, let me just send you this. Are you saying that you're not allowed to have any other ingredient? Like, there's no stabilizers. There's nothing else. No, no, it's the principal ingredient has to be zinc oxide versus some other chemical you're saying. Yeah, so oxybenzone, I don't use any product with oxybenzone, that's like the most common sunscreen ingredient.

Starting point is 01:52:39 Oxytin oxate is the other one, homosalate and the parabens. All of those product categories, which are the most common products used in sunscreen, they're absorbed by your skin. They go into your blood stream and they're endocrine disruptors. Now, the problem with the zinc sunscreen and the mineral sunscreen is it actually stays on your skin. So you look like you're wearing it's really hard to rub it in. You got to really, really rub it in. So they're actually not popular from a cosmetic point of view. People don't like wearing them because they look like idiots and it's really hard to-

Starting point is 01:53:05 Yeah, that's the stuff I use in the summer. That is, didn't it, drives me crazy because I look like this weird ghost, shiny ghost thing. I know, but I do use that. That's really hardcore about that stuff. That's an example of understanding nuance, right? It doesn't mean all sunscreens are bad and it doesn't mean that we shouldn't use sunscreen,

Starting point is 01:53:24 but understanding what the risk factors are that are associated with different ingredients or different engineering that's been done to make sunscreens available is important. But that's so many levels deep. It's a really difficult thing. So then people end up being scientifically illiterate and being wrong, because someone like RFK Jr. comes along and says, hey, should we really be engineering the Earth with genetically modified mosquitoes?

Starting point is 01:53:44 And then people have this called action, shut those things down, shut those things down. of K, junior comes along and says, Hey, should we really be engineering the earth with genetically modified mosquitoes? And then people have this called action, shut those things down, shut those things down. And they're incredibly beneficial and effective. They're not taking any sort of genetic editing to market. They're not doing anything that people might consider risky. And we can have a separate conversation about the risks and benefits of genome editing.

Starting point is 01:54:00 That's another topic. But how much of this freeberg archima, as we get ready to wrap here, is a reaction to what happened with COVID-19 and people's fear now of and getting sort of educated on gain a function research. And you know this sort of recent the effect of my lord doing some of the science feels like it's too dangerous certainly too dangerous to do inside a city. And what's the point of taking bats out of caves and doing gain a function research? How much of it has to do with that right now? And it's the sort of the downside to questioning that. Technology can be asymmetric. You can have nuclear weapons, can wipe out the world, they can wipe out the whole population.

Starting point is 01:54:41 You know, Tullab makes this point on his argument against GMOs, which I would argue against him on this point, but we could do that another time if he's willing to come on the show. I'd be super happy to debate him on this point. But the idea being that there's super asymmetric downside. And so, you know, what happens is people see incremental improvements from technology, and they don't really praise those incremental improvements. They assume that to be the case. It's a linear step function.

Starting point is 01:55:09 But when something goes wrong, it's a big step down. And then people are like, oh, wow. And then people get scared of technology. And then people want to step away from it. And this is true in anything that relates to your health, to food systems, to the environment now. Now, it doesn't mean that all technology is bad or all engineering is bad, but you know,

Starting point is 01:55:28 as mistakes are made in the system, as new things are discovered, we have to retrench and change what we're doing, but it doesn't mean that we should stop progress. And it doesn't mean that the whole system of humans figuring out how to engineer ourselves of the world around us to benefit the health, to benefit the planet, to benefit other species

Starting point is 01:55:44 on the planet, isn't a critical mission and effort that we should be undertaking. Well, the sunscreen thing is really tilting. I mean, I just, I need to make sure, I'm pretty sure we have a good one, but I don't, yeah, I'm on this right now. I mean, this has gotten a little nervous with my kids.

Starting point is 01:55:57 I like these, like, I have all my kids have long sleeve sun shirts and I try to just I tried it. I think is like the key thing and because I my family has skin cancer. I have to do that since I'm dark skinned freeberg. I mean, I don't know why skin cancer. I mean, I don't know. I don't know. I'm a rash guard thing. You know, you know, it's a summertime. You're in the bed. You know, you want to show off. Yeah, you want to show off your typical revenge body. I get it. I get it. Shema. All right, everybody. On behalf of sacks, let me just say Ukraine, Ukraine, Ukraine, Biden, Biden, Biden, and Francis. Mayor Francis is now in the race. I guess we'll have him on the pond. We really talked to him.

Starting point is 01:56:43 Oh, okay. So, yeah, at the summit last year. And also we're doing a survey for the podcast all in podcast.co slash survey all in podcast.co slash SURVY. If you got to this point in the podcast, please fill out our survey or listener survey. And we will see you all next time on the All In pod. Let's go bye bye. I love you, that's the most fun. We'll let your winners ride.

Starting point is 01:57:09 Rainman David Sack. We open source it to the fans and they've just gone crazy with it. I love you, that's the sweet of kinwa. I'm going all the U.S. What? What? What? What?

Starting point is 01:57:29 Besties are gone. I'm going to the U.S. That's my dog taking a wish and you're driving. What? I'm going to the U.S. Oh man, I'm going to have to do that. We should all just get a room and just have one big hug. George, because they're all going to be together.

Starting point is 01:57:43 It's like this like sexual tension that we just need to release them out What you're that big what you're here to be We need to get mercy aren't we? I'm doing all it.

All-In with Chamath, Jason, Sacks & Friedberg - E133: Market melt-up, IPO update, AI startups overheat, Reddit revolts & more with Brad Gerstner

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.