All-In with Chamath, Jason, Sacks & Friedberg - E29: Coinbase goes public, direct listings vs. IPOs, portfolio management, unions & more with Bestie Guestie Brad Gerstner

Episode Date: April 17, 2021

Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg https://twitter.com/altcap Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Referenced in the show: Statista - Death rates from coronavirus (COVID-19) in the United States https://www.statista.com/statistics/1109011/coronavirus-covid19-death-rates-us-by-state Tweets: https://twitter.com/bgurley/status/1382737752794353664 https://twitter.com/DavidSacks/status/1382874547179950082 https://twitter.com/DavidSacks/status/1382466963885199362 https://twitter.com/DrewHolden360/status/1382477293797400581 https://twitter.com/chamath/status/1383073577386201094 Show Notes: 0:00 Bestie intro & crowning a new SPAC king 3:01 Coinbase's direct listing, comparing vehicles to go public & lockup periods, Sacks on Coinbase vs. NYT 12:06 David Sacks on running for governor 15:21 Brad & the besties react to the crazy Q1 in the markets, a16z's savvy buying moves with Coinbase, issues with short-term behavioral lock-in 32:37 Top insights from Bezos' letter to shareholders, Amazon employees reject the union in Alabama 50:27 Reacting to Drew Holden's recent thread on media double standards in covering each party 54:28 Federalism's benefits throughout COVID, State-by-state results reveal lockdowns didn't work, vaccine incentives and PR due to J&J decision 1:04:20 Degradation of faith in institutions accelerated by COVID 1:09:26 Republican Senator Josh Hawley calls for big tech antitrust reform, bypassing institutions for progress

Any word from the dictator should we just do? I don't know man. I got I can't I cannot spend my whole day sitting on zoom waiting for Chimac or I could have Brad Gershner come on and sit in for isn't he richer than Chimac? He is now largest back of the world. Should we do that? Should I just have Brad come on the pod? Oh my god Started now get him on Tomorrow, it's like what the fuck we're like we're replaced you with the new spack king. Oh my god. Oh my god, get him on. Is this like a kidnapping and you guys are gonna take me

out and drop me off behind the railroad cars? What's going on here? Okay. Good. There we go. Is it how's the game? Game is great. Good.

Game three. Game two. One. One. One. You're like your winner's ride. Brain man David's act. I know it all. And it said we open sources to the fans and they just go crazy.

WS Ice, Queen of kilowatt. I'm going all in. Hey everybody, hey everybody. It's another episode of The All in Podcast. We took last week off because it was spring break And we all needed a break. Hope you had a great one too with us today. Of course the queen of Kenwa from an undisclosed Sunny location David Friedberg. It looks like a good city. Is it Redwood City? A rainman himself. David Sacks ready for governor sacks.com and of course the king of all spacks red

Gersner is with us again the new dictator filling in for Jamoth Polly Hoppati the dictator oh wait, Jamoth Polly Hoppati the dictator is here as well and special bestie Jason Jason Jason Jason not when you I don't know what that means but we're editing that out of the show. That's a bunch of beeps But welcome Brad sitting in just for a moment here because Chimoff was gonna Blow it up. Yeah, he was a no show. We needed a spacking. Sorry guys. I have a new spacking

Emergency, it's just it's just a little flattery for Jamath. The truth of the matter is, Jamath is pioneering here. And I think it's been incredible to watch the competition and choice. And as Jamath knows, I participated in a couple of the deals that he's done. And I think we all share the same feeling, which is, there's been a system that is pretty Byzantine that wasn't serving the founders who we all care deeply about. And so I'm thrilled whether it's direct lists,

like Roblox did a few weeks ago that we helped do, and whether it's Chimoff and the incredible innovation that he's helping to do, or we're lucky we've invested in building a capital markets business on top of this back and then worked with Grav to bring a great public company out this week. Let's get to the direct listing. Good segue. Clearly, The biggest news of the week is coin based, the largest direct listing ever. Bill Gurley somewhere is smiling. And

that's on top of Roblox, which I think was the second biggest 2020 revenue, 1.2 billion. Sorry. But I did did snowflake direct list or that was a traditional idea. No, that's traditional idea. Tradition. I don't know who got their bet week, their, what their beaks on this one. Sax, did you have a little bit? I had a little tasty poo. Little tasty poo. I had, I had a lot showered upon me. Explain, boy.

Because you're, because you're in ribbit, right? I am, I was Mickey's one of Mickey's largest LPC. Who's Mickey? Who's Mickey? For the audience who doesn't know? Mickey Malca who runs a ribbit capital who owns 7% or 10% or 7 or 8% of Coinbase. And what was incredible was I got distributed all of it yesterday.

Which by the way, I think for a direct listing, the strategy to me makes a lot of sense. I made a mistake in hindsight, if I think about my distribution strategy because myself excel in Andreessen When we did the slack direct listing we distributed probably 5 10% and then we waited and then we trickled it out over time But by definition, I think the price action on direct listings shows you that you top tick the top price at and the moment on the open print and so You know if you're going to sell, you're probably better off selling absolutely right away. And if you look at the price action on

direct listings, it's basically been one way direction down from the point of the direct listing. Spotify did that for two years, it kind of languished, you know, slacked it that until the Salesforce acquisition. So in general, I think if a direct listing happens, when you get distributed the stock, you should probably sell it right away. And that means it was priced correctly as opposed to underpriced. Is that what we should take from that? Well, no, because I think that's what's TBD is. What is the morale hit to the company to see a one-way direction down in a stairway

down on the stock price. So maybe it was good for selling shareholders. It's not necessarily good for the morale of employees, which then could impact the long-term enterprise value that's being built at a company. So I think there's a bunch of TBDs. I do think that direct listings are administratively clean in some ways, but company building may not necessarily win. But to my view at a point of view, I think it was last year or two years ago about how, you

know, and I read some papers that one of the analysts at Wall Street put out showing that there isn't much of a benefit to lockups with respect to short or long term price volatility. Do you still hold that point of view? I think lockups are really unfair because they are attacks on the people that have been there the longest, which are the employees. So, the idea that somebody that comes in at the absolute last minute, Brad and I have done a bunch of IPOs recently where you get allocations in a book.

He and I had nothing to do with companies, but we get it shares and we sell it day one. Then there are people that have been in that company for six, seven, eight, nine, 10 years who sit around, you know, twiddling their thumbs, watching all these other people make money. One day returns. There was a tweet that Bill Gurley had yesterday that says, there's a well-known crossover fund that over the last year has printed a billion dollars of one-day share gains. Well, that's crazy. So I think that lockups are kind of a regressive tax on the people that do the work. And they are just rewarding people

that have nothing to do with companies. Brad, what did you do in grab? Because you locked yourself up, right? For a couple of years. And is there a lockup for the existing shareholders in grab? Yeah, so first I totally agree with Shamath. Lockups are one of the most insidious things I think about the traditional IPO process.

The fact that DoorDash employees are sitting there watching the stock out from 100 to 200 and then all these other folks are selling while they'll watch the stock out from 200 back to 100. I would think it's incredibly demoralizing. And here's the thing, it doesn't need to exist. In Roblox, there was no lockup. The employees were free to sell, but guess what?

A lot of them chose not to sell, right? It's fair and quicker price discovery when you actually allowed the supply and demand to exist in balance. So what we did at Grab was we fought hard for the most open, unlocked, right, day one we could possibly get. In that case, there are a lot of big shareholders who are on the board. So they're deemed affiliates under section 16 of Security Law. So they can't sell, right? They're deemed to be insiders, right? And, but we, at the end of the day, all employees can sell. There is a group of senior management that said, hey, we want to voluntarily lock.

It's a signal to the market. But all other employees in the company can sell. So there are over 5,000 employees in the company. And all of the early shareholders can sell on day one. And I think this was the first time I've seen this in this alternative IPO. So we have almost a third of the entire share base of the company that is available for sale on day one.

Incredible. Hey Brad, can I ask one more question? The economics for grab, are they better under your structure than they would have been for a traditional IPO to get the same amount of capital and they're paying 7% to the underwriting banks? As we all know, Bill Gurley has laboriously pointed out and documented that there are two expenses to a traditional IPO. There's the upfront fee, 5.5%, 6% whatever they're paying on the amount of capital raised. But he would argue the much bigger expense is right, is the indirect cost of the structural underpricing. Right. So in a traditional IPO, let's say you have a $10 billion

enterprise value raising a billion dollars. If it's being underpriced, he would argue structurally by 40%. We can all debate that, but that's $400 million of delusion to employees and to existing shareholders. I think everybody in the grab process, both the buy side portfolio managers from Fidelity, Janus, T-Roy, et cetera, as well as the company believe

that we got a 20 to 30% higher price than a bank would have got because of the conviction the portfolios managers had as a result of the significant investment we are making in the company. As a result of the significant investment we are making in the company. As a result of the fact that we were locking up our promote shares, our sponsor shares for three years. And so if you say it's 30% on a $4 billion raise, that's over a billion dollars of savings,

right? Over a billion dollars of indirect cost savings to the employees and the shareholders. And like for me, our North Star is founders. And so we literally have deconstructed the IPO at every step of the value chain. And to say, you know, like Rich Bart and my my thought partner in this, he's taken it's on the board of Netflix

when I went to public, to Xilopublic, took Expedia public. And he said like we can make this better at every step of the value chain. And so we've thought about it like a product and we build into capital markets business. It says part of it, right, is eliminating the commission. Part of it is getting a fairer price. But part of it is curating that day one cap table, right? Because these companies are stepping into the public markets. And you know, as Rich has said, and others have said,

think about all the curation that goes into a private cap table. Now when Rich has said, and others have said, think about all the curation that goes into a private cap table. Now when you go public, Rich calls it a cap table randomization event. You lose total control over your cap table. Whereas in the case of Grab, we hand selected what we think are the world's best public market shareholders to be their day one cap table. So it's a very different different outcome and it's not just about cost savings. It's not just about trying to get a fairer price. It's actually making the process better at each step of the value too. All right, so we were talking about Coinbase last year when they had a big brew ha ha and Brian Armstrong said, we are not going to talk about politics inside the company. You could

have political views, but not inside the company. So actually, did some tweets about this? What are your thoughts? Yeah. I mean, apparently, Coinbase's ban on politics in the workplace and their refusal to submit to New York Times interviews did not prevent them from creating an $85 billion company. I'm shocked that they were able to do that. That's basically what I tweeted. And it just shows the founders can do things their own way. They don't have to submit to the woke mob.

That's basically what I tweeted. And then, of course, well, it's been interesting to see the reactions the first day. I got like 10,000 likes. And then the second day, it seemed like some sort of SOS went out. And now I've been sort of surrounded. There's been this like outcry. And my takeaway is that the Woke Mob really doesn't like to be called out as a Woke Mob. And there's sort of surrounding me with pitchforks now, saying, how dare you call us a mob.

Sax, are you running for a governor? Because it looks like you've taken the talks. You're doing what he did with the talks? Did you take Botox? He's in Miami, so it's probably what he's going on with your late Simons, your late Simons on the boat. He's also wearing his lips. Your lips are incredibly swollen.

I mean, they look very succulent. It's unbelievable. I've got a new lens I've got five different technologies making me is slimming me here But you do have your pen on today and you do look very Governorial and I noticed that you bought I'm wearing my Miami pen. This is my city of Miami pen Francis gave you that P Francis gave me the pen. That's fantastic. Did you tell you never call me Francis? you that. Francis gave me the pin. That's fantastic. Did he tell you never call me Francis? What is the big announcement today? We're really excited to hear it. Yeah, tell us, governor sacks.com. What do you got on deck? There's nothing. This is a, this is a Jason

construction. I don't want to get through. Do we have the, do we have an exploratory committee set up yet? Let's get sacks out of the game. I need that deal. I mean, guys, guys, obviously, if this comes to pass, we're gonna rewrite history as David Sacks was our Venturian candidate. I floated the trowel in. There was a layup for David Sacks to come and alley-oop and dunk on Gavin Newsom. No luck.

No luck. No luck. The world needs. Well, I tell you, Newsom is doing everything in his power to blow this recall. Because I mean, timing is working in his favor. I mean,, Nusin is doing everything in his power to blow this recall. Because I mean, timing is working in his favor. I mean, he's done a horrible job

on everything vaccine related, but the reality is, COVID is winding down. It's gonna be over. So even though he delayed, everyone getting the vaccine by weeks, if not months. Months.

Probably, yeah, by months. We've got seven million unused doses sitting on the shelf in California because of all of his crazy eligibility requirements despite all of that by the time we actually get around to the recall which will be in about five or six months the recall election you know the economy is going to be booming again and we're going to be over people will probably forget but but for the fact that he is now saying that he cannot guarantee that schools were reopened in the fall

So we now have we now have schools reopen in You know every public schools reopen basically in every other state You know private schools are all reopened in California and he still cannot guarantee that schools will be reopened Not not now, but in the fall David throw down the gauntlet not now, but in the fall. David, throw down the gauntlet. Yeah, make the guarantee. You made it enough money. You will open all the public schools.

Why do they open a fall day one? Yeah. Well, I'm not, I'm not saying. This is the window, David, now or never. I'm not, I'm not saying that, that I'm running, but one thing I would say is that whoever does, what about if you rent? If I, if I rent, I would 100% absolutely guarantee

that school is open in the fall. What we need, what we need is a governor who will go to the teachers unions and say, listen, you will either report for duty the first day of school five days a week, no exceptions, or you will look for another career. That is what we need. David, sex.

David, sex. More, more, more. More, more, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Dave, Can we go back to the to the markets just for one second? Because I just want to I want to ask a couple questions. Brad, Q1 was nuts. Let's get some color commentary from a big player in the capital markets. You talk us through us, talk to us through what factor rotation was. Talk to us about your reactions to this archaicos capital thing about inflation. Also, got check. Like, what is the rest of the year look like? Just how, what's your sentiment, how are you feeling?

Just give us a reaction on just the economy. And the got check, Brad, on, weren't you like the biggest shareholder united at some point? And that was a bad way to start off 2020. Yeah, I want to hear about that. It was a bad way to start off 2020. Yeah, I want to hear about that. Bad way to start off 2020. However, I would say that it ended up being the best year in the history of the firm. And so, you know, like we like everybody else had to reinvent a lot of things about our business last year. And we learned a lot from that moment. And the courage that a lot of

people at United showed through that period of time without a lot of help, a lot of people think the government was helpful. There's a lot of unhelpful things that were being done, but notwithstanding that fact, to Chimaz point. Chimaz, I think I went on CNBC and November and just said, like, when we normalize, there's no reason that the tenure shouldn't be back at the level it wasn't January 20, right? And for every one percent move in the tenure, you've got to tend to a 20 percent drawdown in growth multiples. And the reason for that is very simple. They're long duration assets, you discount them back at a higher rate. And so you have multiple compression. And so we were starting

at an all-time high in terms of growth equity multiples for both software and internet when you look at October, November of last year. We've seen about 30 to 40% retracement or give back in terms of those multiples, right? And some names it's bigger and some names it's less. I suspect that there's another 10 to 20% to go, right? For a 10 year, that's going to be sitting here at 1.8. I just got done talking as part of this road show. As you know, to all the biggest growth equity portfolio managers on the public buy side, I can tell you, they're all de-leveraging growth. They are not adding.

They're not looking to add dollars to growth. And these are the biggest managers in the world. And so we're not through that process. There are some people who have anchored themselves to the fact that Zoom was just at 500. They're like, oh my God, it's going straight back to 500. You're like, no, 500 was the outlier event. That was the all-time high, multiple event. It will get there in the fullness of time, but it's going to have to get there through earnings. So, what do you think then happens in the

privates? And, you know, there's a lot of talk about certain firms, some of your competitors in the growth stage side, ripping capital into companies every 24 hours or 48 hours. Where does that been normalized? Because aren't we setting up a dynamic where, if you have a bunch of growth firms pricing crazy rounds, whose valuations can then will not be able to be held up in the public markets.

Aren't we creating a different kind of problem? Well, you know, you and I have watched this dynamic play out probably four or five times over the course of the last 15 years where there is this inversion private capital markets. Private markets are actually overvalued relative to public markets. I just look at a few IPOs this week over the last couple weeks, Deliveroo, Hot Private Company down 30% in the IPO, App Loven came out this week, 20% down in the IPO. Right, at the end of the day, the great thing, as Munger likes to say, the markets are a voting machine and the public markets are a brutal voting machine. And so, it just is going to take. Remember when Groupon got done that last private round at 20 billion, and then about nine months later, trading at 5 billion or Zinga, I mean, you know, we've watched this, you know, so it just takes one side, right? This is a temporary dynamic markets will clear.

I think it is possible. You referenced, you know, a good friend of mine, you know, who's supposedly writing a term sheet every two days, you know, at Tiger, the truth of the matter is you can hop, you can hold simultaneous truths. You can believe the next three months that we're likely to have more multiple compression in the public markets, right? You could hedge your public book in a

variety of ways against that, like we did an announced last December. And at the same time, you can believe that the secular trend in technology has never been more potent, right? And I believe that if you own an index of the top 30% of technology companies in the world today, and you're willing to hold them for five to 10 years, you will be incredibly well rewarded. The most asymmetric bet, maybe in the history of all of investing, is having a golden ticket to have access to the best technology companies in the world today. It's like unfair play. And everybody on this call is playing in what is a highly asymmetric and unfair game stacked in our favor. Now, we can screw that up by trying to

think we're good at short-term trading or doing a bunch of other stuff. We can get individual things wrong. But if you bet on the top core tile of technology companies on a global basis, like Tiger and others are doing, and you have time on your side, you're going to be well rewarded. We talked about the mid market late stage venture space being a no man's land of vortex, the value being created in the late stage and value being created in the early stage. But the money in the middle becoming a commodity because of Tiger code to another's coming in and just coming over the top. Do you subscribe to that? Brad, do you think that's just a financial

transaction in the middle and not a lot of value to be made there? Or do you think? No, I mean, I, you know, listen, it doesn't matter in snowflake whether you invested in the $100 million around the $200 million around the $500 million around, the billion dollar around where Sequoia came in. If the company is going to $2, $300, $400 billion, all of those are extraordinary returns. Automator has described itself often as a life cycle investor. I represent the biggest portion of the capital in the firm, some long-term endowments, or number two, and number three, and we have a multi-decade view on the world. Our view is the one that I just articulated. I want to have maximum dollars.

I don't care that it's all in the B or the C or the D or the IPO or, you know, I want to have maximum dollars behind our best ideas. And I want to be an incredible partner to these companies as they move through the lifecycle. And part of the reason we build a capital markets business to help founders in a better way step into the public markets is it's part of our mission, right? Like I want to, you know how frustrating it was to me Jason to be pre-IPO and Mongo or Twilio or Octa.

And then when it came to the IPO, I have to go to the banks and gravel, right? And gravel for an allocation and they dribble five or 10 million, and I see them handing big, you know, big allocations to people who I know we're gonna flip it, and I actually wanna own this stuff, it's very frustrating. And so we think there's a better way, and when those companies come public in the future.

You said something which I wanna use as a question to Friedberg and Sachs and Jason, because these guys are involved very since in one way and what I'm going to say, which is you said gross tonnage of dollars. One of the most incredible things that I thought about the coin base S1 was the amount of unbelievably smart buying that Andresin did. And I thought to myself, Andresin just out Sequoia, Sequoia. And what do you guys think about sort of how they've been able to actually execute?

It just seems like Andreessen is done an incredible, incredible job. I don't want to, I mean, Jason, you're close to Sequoia, so are you free, Brooke? I just want you to react to that. No, you got to get, you got to give them credit on coin base because I think they made the, they made the most money. I guess, um, ribbit and Gary Tannen initialized may have made the highest ROI because they invested a smaller amount of dollars earlier. My return, my return in ribbit, uh, uh, uh, uh, my, uh, for my connoctomy was 506 times.

Right. Exactly. So, so, so Ribbit made the 500X, and I guess, and Dreson, but it Dreson made like 20 billion of returns of which, you know, they're probably getting 25, 30%. So they made the most money. I mean, I'd have been the highest IRR, but it was the most money. And you're right, they doubled down in this like 2018, 2019 period. It sounded like they were doing a bunch of secondary buying. They were buying the stock at 25 bucks. They bought it all for Fred Wilson and Union Square. Right, they were buying it from other investors.

Yeah, they did what Sock did with Twitter, right? And with Uber and started buying out of the business. But they did it, but they did it at a time where people were losing faith in crypto. There was like, you remember there was this big crypto boom. The crypto winter. Yeah, there was a big crypto boom. And like I'd say December of 2017, January 2018, and then it kind of collapsed.

And the, you know, mirrors the price of Bitcoin. You had Bitcoin reach a peak of about 20,000 that crashed all the way down to three or 4,000. Obviously that was the great time to buy Bitcoin, but it sounds like these guys are also buying Coinbase at that time. So that was a pretty, that was a remarkable doubling.

By the way, it's a good validation of Brad's point about market perturbations being fairly independent of value creation over the long run. And if you have faith that this is where value will be created over a period of 10 plus years You know you're when you have an opportunity to buy in buy in and don't let the market perturbations drive your decision making Or else you end up in this market trading trap Yeah, I think I think we've talked about this a lot Warren Buffett talks about it a lot

I think Chimoff you've made the point about Not timing the markets, but your time in the markets. This notion that when you have conviction in a business or an idea or a thesis, you can continue to double down on that conviction regardless of whether you think relative valuations are appropriate or you're kind of disjointed at the time. It's even more acute because what happens is we make short-term decisions. And then those short-term decisions oftentimes to prove to be right in the short-term. And let me give you an example.

Yeah, right. And then it leads to behavioral locking. Right. So at the end of 2014, Bitcoin's at $1,100 a share. We get, I get very interested in crypto. I think this is one of the most asymmetric bets I see in the world, right? I have, I think it's a low probability event. But if you win the size of the prize

is absolutely gigantic. We're looking at a deal with Andrew reason because I thought Balaji was one of the smartest people in the space. The company was called 21.co. Idea of mining for Bitcoin on a chip. On the eve of the deal, my partner and I say, you know what, I believe that we should place our bet in Bitcoin because I'm not sure whether or not this mining company is actually going to work out, okay? So we pass on the deal. Crypto Bitcoin goes from 1200 to 300 in like a straight line down. And what was my take away? My take away is like, man, I'm so smart. I'm so smart. We passed on that deal Okay, rather than being curious rather than learning more rather than developing it and what in recent did during that period of time is they stuck to

Their belief that this could be a highly asymmetric outcome Ultimately, I ran into Katie Hawn board member at Coinbase tonight of the IPO And she said Brad, you know, um, do you remember? You Ultimately, I ran into Katie Hawn, a board member at Coinbase tonight of the IPO. And she said, Brad, do you remember 21.co? I was like, yeah, she goes, those were some of our original shares in Coinbase. We sold that company to Coinbase. Wow. Right. And it's just for me, I sent this note to our team because I said, you know what, guys, in the face of having some good wins I want to remind you of some really potent near near wins and misses And my mistake at that point in time was I lacked mental flexibility

I got locked into this idea that I was really smart by having missed 21 dot Co rather than learning from that moment and saying, listen, when I started to see it move and then it moved pretty quickly and I was like, oh, I missed it. It's just like a stock. We do the same thing. The reality is you should allocate to things that you think are thematically highly asymmetric and great ideas and this was one of them and one we missed. Can I just ask that something of that? I was in 21, this is 21.06. I don't remember getting any Coinbase shares, so.

I hate that. All right, so somebody, somebody, you did not own the preferred. Yeah, I did. You got it in the preferred. You got it in the preferred. You did not invest in the preferred. I did own preferred. I invested in the preferred.

Then you did not clear the press stack. You did. You were on the wrong series. One thing I'll add to that is you have to look at the mandate of these funds. If you're an early stage fund and you have the ability to sell at 500X or 1000X or 2000X, sometimes you've got to lock that in

and give something to your LPs. And I think this is where, you know, thinking full life cycle, you said, Jamal, like, what did you learn from all this? Well, if you're building a business, right? Well, I mean, one of the things I learned is I didn't even know what ProRata really was when I started my career.

I didn't do ProRata in Uber or anything. And now my position is I am going super ProRata in our winners. So not only holding winners, I'm trying to get to 10, 15% ownership in these companies. And it's starting to happen, you know, with companies that are worth 500 or 700 million. And so that is the, that's the change in behavior

I'm doing, which is, you know, to your point, if you bought Snowflake at any time, you feel great about it. But then you have to have buy-in from your LPs that they agree with that. And that they're okay with you taking a longer strategy. And then at some point, you wanna return capital. And that becomes super problematic.

You're in 7, 8, 9, 10 of your funds. You want to take some chips off the table. And so what I'm going to do now is, I think I'm going to try to do both, where I have a group of LPs who want to buy shares, and I don't know how to figure this out, and maybe somebody could advise me here, because I have had other venture firms

who had this challenge where the growth grew. I don't want anything you owe. Well, no, no, I know that. I don't want anything you owe. Well, no, no, no, no. I know that. I don't want anything you owe. I don't want anything you owe.

Well, no, no, no, no, no, no. I don't want anything you owe. I don't want anything we go. Yeah, we So if you had a cephalol seed about your house, the process. Sorry, I'm an idiot. Nubo rich, but here's the issue. Can I be an angel investor in Uber and then be selling shares in Uber to my other LPs and creating that sock a secondary market where is that conflicted? You know what I'm saying? Well, I'll tell you know, I think this is public. I don't know if it's public, I will say it anyway because I think it's well known, but

Founder's Fund had early SpaceX shares that they thought it was prudent to sell in the early funds, those SpaceX shares, the later fund was buying SpaceX shares in that round. And so they were in a circumstance where they had such a big markup on the early round, the early fund that they had to kind of distribute and liquidate those SpaceX shares. Meanwhile, there were some of the good overlap of LPs were buying in the other fund at that higher price. You are speaking to something I lived out in the early venture funds of social capital because when it was not entirely my own capital base, I felt that pressure and I did similar things because I was like, oh, wow, we're in year 7, 8, 9, you know, I had and I had

great LPs. It's like, wait, how can I not give capital back to the Broad or Mayo? These are phenomenal institutions. They weren't pressuring me at all, but I felt internal pressure. And I started to make suboptible decisions for myself. I couldn't make really clearly the best optimized decision, which would have been to hold everything as long as possible. To your point, like if you're in the top quartile of things, the best thing is to never

sell. And it's an incredibly special place where you can actually have that freedom to do it. What's interesting is I actually think the folks that are in the best position to do are actually employees. And I actually think that they're randomly doing this when you look at the churn rates of employees today. Like I saw this crazy stat. The average tenure at Uber is 1.8 years. That's crazy. The average tenure at Tesla is 2.1 years The average tenure at Google is 3.2 years So if you think about a traditional 10-year career in the valley you have somewhere between You know 3.5 3.5 different baskets of shares that you're getting and you know

Those are those are costless options effectively That's actually an incredible form of portfolio construction for these people, because if you never have to sell those things, you can wait till they go public and you can undrite them forever. That's probably what a lot of employees in Silicon Valley have figured out implicitly. I have a question I want to ask you guys as well, which is, I just want to go back to the public markets for a second. I tweeted out some of these amazing things I learned from the Bezos. Oh my gosh.

This is demented. Did you guys see what I tweeted? I saw your tweet nice, and I've been reading it. It's unbelievable. It's been, do you have it in front of you, Jason? I do. I'll just give you the Chimaltz tweet here, high level. 28% of purchases on Amazon are completed in less than three

minutes. I think we've all done that. 50% of purchase is on Amazon are completed in less than 15. And if you actually look at that,, I think we've all done that. 50% of purchase is on Amazon, are completed in less than 15. And if you actually look at that, and I think this is a really, I don't know if you made this calculation or this is Bezos wrote it in the letter. All of these things are. So if you value your time at $10 an hour, a very low one, that's $750 a year. And that means your prime is free of $120 a year. So let me say 130 in profit. Let me say differently.

The average trip to the store, driving, buying, coming back is an hour. So what Bezos said is that typically we will save you 75 hours because we can make all of that more efficient for you. At 10 bucks an hour, that's worth $750. We only charge you 120 for prime, which means you get $630 of savings.

But then he goes on to say, and we have 200 million customers on prime. So we're saving them $126 billion. My instant reaction was two things. And so the last two points in that Twitter mine. One is, holy fuck, that's more in one year than what most companies are worth in their entire lifetime. And the second is that you can buy Amazon for 13 times, one

year's worth of savings for a customer. It's just if you look at Prime. Which makes Amazon seem exceptionally cheap. But I've reason I brought up Amazon is he also wrote in there about his responsibility to his employees, and we were just talking about employees in churn. And this was incredible to me that 70% of their employees voted down the unionization effort in Alabama, and I just wanted to get Saxi Poo. Red Pillet, Crush It, snored it, what do you got to say? Yeah. Well, I mean, what happened is you had in Alabama, there's a Amazon plant there that where they basically was an election to decide whether they would go union or not.

And there were 2,536 workers who voted in this union election. About 1,800 voted against unionization versus 738 who voted two union eyes. And then ballots from another 505 workers were either were challenged by either Amazon or the union. So we don't know yet what they mean, but those votes won't change the outcomes the election is over.

Now this was a heavily lobbied election. I mean, Amazon was lobbying employees, but so were the unions and it looks like the unions at the end of the day were lost and the employees voted to remain unionless. Brad, what do you think? I thought it was a beautiful defense of capitalism that's very much needed right now. It reminded me a lot, frankly, of the Gates Foundation and your letter, where Bill Gates is saying, you know, capitalism is far from perfect, but it's resulted in the most important era of prosperity and health and wellness in the history of the planet. And, you know, as I said on CNBC this week, you know,

we live at a moment where capitalism is absolutely under attack. And I truly believe it's the greatest force, the greatest potential force for good in the world. It brought us a vaccine, right? It brings us innovation that pulls people out of poverty, that makes people healthier, that edge, gives an opportunity for people in rural areas that are impoverished to be educated. But I do think it's incumbent upon Bezos. I think this was very much a rubber bearing sort of defense of building railroads. And I thought it was brilliant in its execution. But I think it's important for all of us to stand up, not defensively, but to say, what are our obligations to make capitalism the greatest force for good? You know, Chimath, whether it's you and I talking about Invest America on CNBC and giving every child in this country

participation in the ownership society. Right. Right. Or all the other initiatives that we need to work on to you know, to make the case. We need to make it better. And I think one of the issues here is, you know, what we see on Twitter being part of the Twitter Rotti is, you know, people who are super woke, socialists, whatever, talking about this. But in reality, the workers don't want it. And I was talking to somebody in the media, sorry. No, hold on, can I just say something slightly different, Jason?

I think what workers don't want is the version 1.0 of unions. Okay. Because I think what they see that as is a tax that then goes and fills the coffers of certain people. I think you've seen like, you know, a bunch of waste, a bunch of graft, a bunch of corruption, people have been arrested. Unions are not effective anymore in collective bargaining. They are not. They don't have any data. they don't have any facts, they're not.

They don't have any power, but they're not set up to win. So I think, in my opinion, I think unions have an important role, but you need a version 2.0. You need some young, smart, bright people to reframe what unions are. And then I think you would see everybody collectively organized, which is it's not about dues. You don't need hundreds of millions of dollars to all of a sudden like use to then elect certain people. And that old model is breaking. It's breaking every day.

Instead I think what people need to do is like if you come together and like you understand what are the products we make? What are the margins we have? How is my contribution measured? And then you're able to use data in fact to really collectively bargain. That hasn't happened yet. So I think what it works is, or it could be a free market and people could go work at Starbucks or for post-mails.

Both are good. I've paid more. But if capitalism allows both to exist. Yeah, if you think about what a union is, you can almost make an argument that it is the ultimate manifestation of a free market system because it is basically like a bunch of people spinning out to have their own startup. And so that group of people are saying, we're not charging enough for our product or service today, the value that we are creating is worth more.

Therefore we should go create a different business and charge more and effectively compete in the marketplace with a higher quality product at a higher price point. And I think that that may be kind of the distinction between what people kind of view to be regulatory capture around unions where there has been government involvement in the past versus what may be possible. I think I've heard some people talk about how you know at some point in the world We end up with you know at some point the evolution of capital is in the end up in a place where there are no employees There's just a ton of independent contractors doing independent work

And maybe there is an organization of people around doing the same work over and over together as a group Where you charge one kind of you know aggregated fixed rate for that service the other the other thing to me was like all of a sudden It brought into such a stark contrast. This was not like 55, 45. This was 70, 30. Probably it could have been 80, 20, or 90, 10. And so it said to me, wait a minute, there's a very small vocal group of people who are screaming for the mountain tops about this level of unionization and organization.

And then the people that are actually the participants of that system are like, no thank you. Yeah, well, I mean, it shows that Amazon does a great job managing, right? I mean, they create enough value and they've bit enough for the service that people don't feel like they're being under a bit. Media companies have been going through a unionization process

from Gawker to Vox, the New York Times has already had one, and you're starting to see a bunch of folks voting on that. I was speaking to somebody who runs one of these companies, and they said, in the short term, it's fabulous because they set the prices of employees. So when somebody comes to you and says, I want to raise, they say, well, we can't because here's the pay scale that you negotiated. So we have to stick to that. And I can't give you more than other people because one of the things you fought for as a union was pay parity. And so you've got five years here is what it says on the chart five years. So it made everything predictable. And they

said they like that. They said the problem is over the long term, when you get to your 10 of a union in order to fire somebody who's not doing a great job, you have negotiate with a union that they have to get all these warnings. And it's uncomfortable uncomfortable so then the managers don't do the performance plans they don't do that and then eventually who's left in the organization the lower performers and then who leaves the higher performers who can command more money so once you get this union then going inside of a media company in the short term it controls controls costs in the long term, it kills excellence. This was what somebody told me. Have you guys seen the movie American Factory? I think this was on Netflix. It was actually created by, it was a first film produced by

Barack Michelle Obama's production company, but it's a very interesting film about there's a Chinese billionaire who goes to kind of the rust belt to out so a little city outside Dayton, Ohio. And there is and basically opens a factory producing glass windshields for cars. And this factory had been shut down. The whole town was kind of out of work. They were kind of down in the dumps. So this crazy Chinese billionaire comes in there and reopens the factory. All he…

It creates like 2,000 jobs for people in this town. Everything starts off great. There's these really interesting culture clashes between the American workers and the Chinese executives and some of it's kind of comical and they showed in the movie. But then about halfway through the movie and by the way, like these are people who are out of work and you know this Chinese company comes in and they do things kind of their way, but they pay people pretty well and creating a lot of jobs. And initially everybody is very happy with it and the politicians are all encouraging it. And then about halfway through the movie, the unions come in and the unions start agitating

and they start telling all the workers that you're underpaid, you're mistreated, they start, you know, there's sort of intimidation tactics being used and then the politicians come in and you know, these politicians are sort of, you know, this is Ohio, right? And so the politicians start telling the workers at this plant that they should get unionized. And it turns into this giant battle because, and the Chinese company basically threatened

to leave because they came into this town and made something like a $500 million investment in this plant based on an understanding of a certain cost structure. Now all of a sudden, the union wants to change that. It turns into this giant conflict. You realize that, look, that workers in this town had a good deal. Then the unions are about to blow the whole thing and wreck it. They're about to drive this Chinese company out of the town. Then they do this election, like what Amazon did. Ultimately, the Chinese company wins of the town and then they do this election, kind of like what Amazon did,

and ultimately the Chinese company wins and the voters choose not to go with the union. But you just feel like you can, it's just so frustrating to see this because it's not like this particular union is benefiting the workers. It's about benefiting these union representatives. Or then paying off the politicians, which gets back to our discussion in your little speech for your governoral run, that you're gonna fire all the teachers come September 1st if they don't show up for work.

No, but look, it's a really interesting movie because I think what it does is it highlights that what's in the interest of these labor union leaders is not necessarily what's in the interest the employees. Anybody want to know this guys look that this is like the simplest form of incentives to understand you pay dues as a union member. Those revenues get allocated and controlled by a handful of people in union leadership. So this is this shouldn't be a surprise that their incentives get misaligned, especially

when you go from a small effective union to a broad union that represents all kinds of different workers, it's an impossible infrastructure to manage, and it becomes unwieldy. Unions can be effective, there is a value in a place for them. They need to get reinvented. By the way, I look this up, you know, the average wage, the average fee is to be in a union across all unions in the United States as a percent of labor. And you're in the job. One and a half percent. Yeah. I said too. Yeah. So the argument is if they can increase wages net to those employees by more than one and a half percent, it pays for itself.

Right. That's the argument. They're incentive. I totally get it. They are a startup in and of themselves. They are an asset manager, right? They're goal is the real asset. Yeah, and so the more assets they grow, you know, the bigger their business. The way in which, you know, relating this back to a basis as annual letter, right?

We've been presented this false choice for two decades between some form of an Iranian capitalism and an anti-state. Right. Right. Right. The either everything's unionized or we have no intervention at all. What I love about this moment in time, what I love about the leadership of Benioff or Bezos or Gates or even Anthony Tannis, incredible mission values driven leaders who's using the power capitalism to uplift tens of millions of people in Southeast Asia is that I see a totally new generation of leaders that understand the responsibility, like they're charting the middle way, right? And we can equally reject Lorraine Gonzales, right? And we can equally reject Lorraine a Gonzalez, right? And at the same

time, we want to have $15 minimum wage in the state of California, like those two things are mutually compatible. And so that's why Sacks has to run. He's got to chart the third way. Let me ask you this, Brad, would you put up $250K for an exploratory fund, Brad? Zach, do you believe in a $15 minimum wage? Oh. I'd be fine with this. That's not, that's, that's, Oh, it's on. He took a blue pill.

He took a blue pill. Give everyone everything. Certainly in the state of California, I think that makes sense. You know, I think, look, there might be some parts of the country where the standard of living is much cheaper. I mean, I think probably the middle wage should be a state issue because there's such a disparity in different costs of living in different states. So I'm not sure I'd federalize it, but I'm certainly in California, I think 15 bucks may

be. I mean, what about 20 bucks, David? Yeah, David. 20 bucks in California. Yeah. Why not a thousand? Yeah. David, you're a thousand.

I love that. Can everyone get a free Tesla? No, can I make the point about unions in California? I think there's a huge difference between private sector unions and public sector unions. So look, I'm not against collective bargaining when it comes to these private sector unions. Because the workers do have, these plants can involve very tough working conditions, it's physically dangerous. You know, before there were labor reforms,

they were working really long and say, hours or safety issues. Okay, I think it makes sense to have some sort of collective bargaining. And there's somebody to negotiate with. There's the management of the company has an incentive and so you have some give and take and you have a negotiation that produces an outcome. Public sector unions are completely

different, right? Because when the teachers union goes to negotiate, who are they negotiating with? The negotiating with Gavin Newsom and the teachers union is his biggest contributor. So who has an incentive to oppose their demands it's a market there's no market and so it at a minimum takes a politician who has a lot of integrity to stand up to the teachers unions because he did it in the blue bloomberg did do it by the way that by the way this is this is a true market dynamic for everything that relates to it to government spending if you think about when when the government says it's going to spend something on something,

legislation passes and it mandates that something needs to be bought. When that happens, there is no negotiating power because there is no marketplace to achieve that objective. They have to spend the money on the thing that they said they were going to spend it on. And at that point, there is a seller who sells that thing who says, oh shit, these guys have to buy it. I'll double the price. Okay, great. That's just the natural law of government inflation that happens.

It's happened with everything that we've seen inflate in this country, education, healthcare, is all because it's a government mandated service. And so then the service providers to the government have a single captive customer who have to spend the money. And so the same is true of education. The government has to spend the money. And so the same is true of education, the government has to educate. Therefore I can show up as an education union and say, I'm going to double my price to educate your people because you have to do it by law.

And you've passed all these laws that say you have to do it. And there is nothing the government can do about it. And so I think it is worth highlighting that the lack of a marketplace, meaning if you were to negotiate with a company, let's say a company had to buy productivity software for its employees, it could decide whether or not buying that productivity software generated a positive return at the price point that the sellers are negotiating against them and they could say, no, you know what, I'm not going to buy it, everything's too expensive, I'm going to go find another way. The problem is governments are mandated to spend that money on that particular service

and therefore there is no room. So unions are a manifestation of this fundamental problem with giving government's large budgets and relying on the government to provide the service to us outside of a market-driven context. So I think the question really is, can health care, can education, can be seen, that have been inflated, with the government having such an active role, be provided in a way that the government facilitates their provisioning without the government being the customer.

This is a good jumping off point to one very to the next then topic. There's a bunch of things happening in government that I just want to get your guys' reaction to. One, which was the crazy summary that somebody did about the reaction to Biden pulling out of Afghanistan. The second is, unfortunately, Biden reiterated Trump's decision on refugee numbers just today. So he had a pledge that he would go back to the original numbers, the Obama level numbers, and he said he's not going to keep it at the Trump level, which basically says very nominal

refugees. And then the third is the growing frustration and perceiving competence of the CDC. And now you have the entire business community starting to push back. Those are three completely different things, but they just speak about some government things I'm curious about your reactions to anybody. Everybody. I mean, the thing that highlights for me is the media double standard. And I think this is why a lot of people are going to centrism and why this podcast has

become a purple podcast and a rational podcast because AOC was going down to the border, hysterical crying. You remember the photos they were all dressed in white? And is there any difference between what Trump did at the border and what's happening now? Doesn't feel like it feels like it's a problem that they're both trying to solve it. It's 90% the same outcome. And then you look at Afghanistan,

Trump's like, we gotta get out of here and then the press dunks on him, like how could you do that? And now Biden's doing it and he's getting high fives. And so I would just like to see some consistency from the press and the reaction and Americans on these issues which seem to be non-winnable or you know, how much do you lose in these instances? Afghanistan's a lose-lose and the border is a lose-lose.

Like there's no winning I don't think in these in some situations that a president has to face. I'm interested in success to say. Well, yeah, I saw that I saw that tweet storm on the media double-stand around Afghanistan We should show that and and linked to it in the show notes because whoever it was incredible. It's incredible. Incredible. This is like definitive proof of the media double standard where he goes literally, he does a side by side of every single major prestige media outlet, their coverage on Trump

versus Biden's drawdown in Afghanistan. Trump did the major drawdown, and I think got us down to maybe like 1,500 troops there. I think he missed a political opportunity, not to just go all the way down to zero, then he could have taken credit for ending the war, which I think he wanted to do for whatever reason he didn't get it done.

And he basically handed Biden a beautiful opportunity just to kind of end the war once and for all. I think it's very popular. People are, we've been there for 20 years. I think people want to get out. So I think Biden's decision was politically correct. And I think it was the right decision as well. I think it's time to be out of there.

But yeah, the coverage in the press was just completely hysterical about Trump doing it. It was predicting all sorts of negative consequences. And then when Biden did it like Jason saying, it was predicting all sorts of negative consequences. And then when Biden did it like Jason's saying, it was nothing but kudos. So not only is a press not objective and not impartial, but they changed their mind about a particular issue based on which team is doing it. Yeah, I mean, if you look at the two quotes, they have a CNN tweet that they just screen grab CNN on the

same issue. He says, this is reckless and it's really risky of Trump's plan to withdraw troops. And then the next CNN tweet from this administration, President Obama praised President Biden's bold leadership to withdraw from Afghan Afghanistan by September 11th. And there's dozens of these NPR, CNN, New York Times, Washington, and over and over again. And then I think this is why Americans hate the media. Absolutely. I mean, this is the, you know, what the, what the conservatives, I would call the mainstream media, you know, MSN, I mean, but they are proving their bias right here.

I mean, and they're increasing our relevance. This is why the American public don't trust them, don't listen to them, and don't care what they have to say. Brad, what do you think? Well, I wanted, you know, at a federal level, we really can't opt out of any of this, right? We're not going to leave the country. We got an election every four years. So we're just talking about market failures in the state of California.

And one of the most beautiful designs of our system of federalism back to this idea of markets, right, is the fact that you get to choose what state you want to live in. And in a post-COVID world, we have the greatest A.B. testing in the history of federalism. Because now you can live and work from anywhere. And the differences between state policies have never been greater. And so we've never had this incubation that we can all watch and live tweet about on Twitter. And so now Texas and Florida, they get to make choices, California gets to make it's choices, and then we get to see.

And political scientists are going to have a field day in five to ten years. And people are voting with their wallet today, the AB test in real time, we have the largest economic migration in the history of this country occurring right now. And Gavin Newsom and Lorraine Gonzalez, they're going to have to be held accountable for the conditions in San Francisco, for the decisions with respect to companies leaving the state, people leaving the state. And frankly, it's not about lower taxes. I would contend that even bigger issue is the contempt for capitalism, the contempt for

entrepreneurialism and innovation that exists in California. And I have no intention to leave, but I will tell you this, I'm going to fight like hell for a third way. The actually says capitalism can be a force for good in California. And that's why Sax needs to run. Well, the fact is in my way. I love this idea of a state by state AB test.

I mean, what was the old line? I get it was the it was FDR's line that, or federalism is the laboratory, the state's the laboratory of democracy. Yeah, great. So I wanna show this, I just posted a link in the chat of COVID death rates in the US by state.

And it's really remarkable because every state has, we've seen a lot of very different COVID policies by state. What we see is that California and Florida have almost the same death rate. I think California is like 154 per 10,000 and Florida is like 159. It's a very, very small gap.

Despite the fact that California has had the longest of most severe lockdowns in the country and California and Florida has been the most open. And then meanwhile, you look at states like Michigan, which has also had very severe lockdowns and has had a much higher death rate. And so you see that there's really no correlation between death rates for COVID per capita

and the severity of lockdowns. Basically, the data shows that lockdowns don't have an impact on a state success in battling COVID. And, you know, it's just remarkable that we still aren't despite this data, despite the fact that, you know, science is now showing us, we still have lockdowns in the state of California. We've loosened up a little bit, but we're still talking about orange tears. And it's just, and I'm here in Florida right now,

they're, it's open, it's open. And you know, Florida has a lot more old people than California. And the death rate is just about the same as California. So it's just remarkable to me that we are stuck in this mentality of lockdown. And I think it's because Newsom has bought into this savior myth that he has I think he's remembering all this press that he and Cuomo got at the beginning of COVID about what great Saviors they were and how they protected the population from from COVID

But it's also been compounded by federal failure because the CDC basically said or not said they revealed themselves to be incompetent. The same person that we all thought was an incredible genius, Fauci, increasingly looks like somewhat of an idiot and not completely informed on the topics that he should be informed about. And then you have these federal agencies, so for example, when you put the CDC and the FDA together, some of their decisions are just complete head scratchers, like for example, when you put the CDC and the FDA together, some of their decisions are just complete head scratchers like for example, this past week, you know, the FDA stopped the use of the Johnson and Johnson vaccine because seven women

between the ages of 18 and 48 got a blood clot and one passed away. And if you think of doom over seven million doses, right? And so one million. What it's it's literally one in seven million for a towel. Right. And actually, here's the crazy thing about that. More people died in car accidents on the way to getting those vaccinations and actually died from a blood clot. And so, more enlightening shrinks.

We're waiting for some. So it's bad risk assessment, but it's also been very bad PR for the vaccine. So in the wake of that, the polling on vaccines went down by like 15 points. And so they're scaring people away from getting vaccines. I don't know if that polling was just on J&J or whether it applies to other vaccines as well. But the most important thing that the health officials could do

is just convince people to get vaccinated. And the decision they made on rolling back J&J has really hurt that. And then also the Fauci comments that even if you're vaccinated, And the decision they made on rolling back J&J has really hurt that. And then also the Fauci comments that even if you're vaccinated, you can't go to movies, you can't go to sporting events, you still have to wear a mask, you still can't get together and groups and indoor spaces. Well, then why would you get vaccinated?

Why would you take that chance? That is so critical. Friedberg, do you think if you get a vaccine, you should be allowed to take the mask off? Like, that could be a reward? Look, I mean, it's a bigger question than the science question, right? But I certainly don't think that there's any risk to you or people around you once you've been vaccinated with respect to your wearing a mask. And so, the mask mandate, I think, if you guys pointed out, is a little bit more political

and social posturing than it it is kind of scientifically reducing the spread of the virus once you've been vaccinated. Once you've been vaccinated, you're in the clear, theoretically, can do what you wanna do. Of course. So let me just be really clear. Once you get vaccinated, there's no reason to wear a mask. Remember, the reason for the mask mandates was source control, right?

That's right. To prevent other people from getting the virus. Well, if you're not carrying the virus and you're not admitting the virus, there's no need for you to wear a mask. And to insist that people wear a mask, after they've been vaccinated, is performatively anti-vax, because you're sending the message

that the vaccines can't be trusted. You agree with that, Freiburg? Yeah, it's a fair point. I totally. I mean, I think it's a really fair point. And the whole counterargument to that, which is counterfactual, is, hey, you can still transmit the virus. We don't know that you can't transmit the virus, but you could theoretically say that about anything. We know, deterministically, we don't have empirical evidence that we can say statistically, here's how likely you are to transmit the virus. But we know deterministically, this is the process by which a vaccine works. You're not going to be having replicating viral

loads in your body. Therefore, you're not going to have a high viral load coming out of your nasal passages of your mouth. Therefore, you know, and this is the case with all these kind of vaccines, like the flu, you know, you shouldn is the case with all these kind of vaccines, like the flu, you know, you shouldn't be needing to wear a mask. So like, you know, it totally makes sense. And what's the upper bound freedberg of the number of people that are gonna get vaccinated? Yes, are we gonna get to 60% or anything?

I think 60% probably. Yeah, I would guess 60, 60, 65%. I mean, because remember, what percent of people under 60 and 20% I think, is that right? Yeah, I would guess 60, 60, 65%. I mean, because remember, what percent of people under 60 and 20% I think, is that right? Yeah, yeah. I think we've really botched this. I think we've totally botched this vaccine roll out. But as-

By the way, I will tell you, because of the upper bound being where it is, I still think we'll end up at a point where we're gonna have a lot of people that are gonna be immune because they already had COVID coupled with the vaccine. We're going to have extremely low numbers. But the reality is the numbers are not going to get to zero. And we talked about zeroism a couple of podcasts ago. Because we're not going to get to zero,

I think this is a really important thing to remember. The way that we've tuned ourselves to react to COVID, it was initially, remember, it was initially about, you know, minimize the surge. And by minimizing the surge, we will keep the healthcare system for being overwhelmed. Now we've transitioned into the, we can't let COVID spread. But as we've seen, the reality is, cannot stop COVID from spreading no matter how many lockdowns you put in place.

Society people still get together in their homes and they'll give each other COVID. And because some number of people will continue to have COVID, we're going to have COVID in the United States for years to come. It is not going to go to zero. And the question we have to ask ourselves is how are we going to allow ourselves to operate? How are we going to live our lives if the COVID risk is non-zero? And it will always be non-zero. And by the way, the measles risk is non-zero, the chickenpox risk is non-zero. There are already non-zero, you know, transmissible infectious diseases out there that have some degree of fatality rate to them. But I think the biggest thing

we should all be concerned about is this notion that we are like shifting into a new normal that will last for many years because we will never be at zero. So can I just add to this? I'm moving out of this. If that's the case, I'm literally going to text. There will be mutinies. There will be mutinies. I'm done. I got my case, I'm literally going to text. There will be mutinies. There will be mutinies. I'm done.

I got my vaccine. I'm going to. People that nobody's going to stand for that. We already see it. You know, Chesky went on CMBC this morning and you know, basically said, you know, they are batting down all the hatches because there's no like the demand for travel is literally going to blow the roof off the building. Totally. Right.

Like people are too smart. People make risk reward decisions in their personal lives every day. And if the government tries to lock them down, they're going to tear down the gates. Like it's not going to happen. But what you're saying, though, is that what the implicit thing about what you're saying, which is scary is unlike times before about measles or chickenpox, you, we now are basically debasing the credibility that these government institutions

have about anything they say. That's the real enemy in the room and this is all said and done. So now you have people that are acting on their own. So, the CDC says, you can't fill the middle seat, the airline say, now go fuck yourself, we're gonna fill whatever seat we want. And nobody's gonna complain back to what Brad said because they're risk underwriting for themselves and saying, wait, you don't know what you're talking about anymore. And so where does it leave us?

Is that a good thing or a bad thing? You know, one of the ways states, even to other, even to other, the accuracy is maintained power, was information control. Right. Right. There is no information control today. Anywhere. In fact, we have frictionless information, which means that by definition, I think there's greater chance for decentralization. I mean, remember, you know, the Arab Spring governments were overthrown on the basis of Twitter. Right. I don't believe we live in a Hobsy and State, you know, of suffering in the natural order of things, right?

But I certainly believe that government has a role to play to help organize us, and because there are big issues that we face in the future, and I just hope we can find a balance in the path forward. But I think, Tremont, this is an inoculation, I think, to bad institutions. If you look at people who spent $250,000 going into debt at some big expensive college,

these young folks are saying, I'm not going to do that anymore. Now, those colleges have to react and change. And now we're seeing it with the teachers. But I think Jason, it's actually more extreme to that. Like, we're learning that institutions aren't reliable, number one. And then the second is that we're learning that those institutions are static. So, meaning, like, today, there's, I think that there's a lot, there's a big case to be made that the CDC doesn't really know what they were doing. And that, in some cases, the FDA has been a little overreactive. Now, what can we do about these things? It's not like we can have a new CDC that we all

create and believe in or a new FDA. These are the laws of the government. Those laws won't change because there's a bunch of incentives for folks who are currently in power that oversee those things to remain that way. So now, you know, exactly as SAC said, on the whim of, frankly, like, you know, maybe in overreaction, we pull vaccines off, then we pull them back on, then we pull them off. You know, the reaction to the AstraZeneca vaccine was kind of a little awe-inspiring. You know, oh, it's bad. No, it's okay. Oh, it's good.

No, it's bad. Take it off. Take it on. Put it on. And that's been a global reaction. So you add all of these things up. I think the takeaway is what Freebrook said. Institutions are broken because the incentives of the people that run them are not aligned

to the people that actually expect output from them. I'll say two things to this. That's an important point. One is institutions to me are like, like any living organism. They want to grow and So you know every government wants to add laws spend more money grow its budget Every company wants to have more power grow its top line even every university Harvard's endowment wants to grow over time It wants to do more research. It wants to have more classes. It wants to have the bigger campus. Every institution as a result is then trying to aggregate more resources and more power

and more authority. And so, you know, then when you have these moments where the institution doesn't serve the stakeholders that it is meant to serve, you have this breakdown of trust in the institution and institutional fallout begins, whether that's the financial system and the evolution towards decentralized finance and Bitcoin and so on, or the failure of government and the ignorance against laws and what the government is telling us to do and so on, or in companies. And so the big question for this century is going to be, are we going to allow that to happen? Now, I mentioned this a few pods ago.

What I'm most concerned about is the absolute alternative to an institution as a mob rule. A mob rule, as we've seen, where you get cancel culture and you get game stop going through the roof and you get trial before without a jury and trial without a judge, can be really ugly and can be really nasty. The original intention of many of these institutions was to create a system by which there are rules and Values that we all ascribe to and those values go out the window when those institutions fail So the big the big challenge, you know, we as a as a as a humanity are gonna face this centuries This this this dichotomy between the failure of institutions and the need for institutions to constantly grow

Versus the challenge of not having institutions with respect to how do we operate societally with mob rule and distributed rule. And it's going to be interesting to kind of see that there's going to be a lot of back and forth over the next couple of decades I would imagine with respect to how do we make economic, government, and business decisions and how they play and whether institutions or kind of distributed decision making plays a role. I thinkmaking plays a role in that oversight. Good segue here to Europe, Josh Hawley, Sachs. I never thought I would see the day that a Republican wanted to bust all the big companies,

but he says no acquisitions by companies with a market cap over a hundred billion, putting aside the fact that this wasn't Elizabeth Warren or Bernie Sanders proposing this, this was your bestie, your Josh Hawley, Sacks, have you met him or donated to him? I haven't met him, I haven't met him. I take the second question,

you make a little donation there to Hawley? Maybe one day, we'll see, you know, we'll see. What do you think about this concept? Two points, okay, number see, you know, let's see. What do you think about this concept? Two points, okay. Number one, you're right that this is showing, there's a big political realignment underway. This legislation could have come from Elizabeth Warren or Bernie Sanders.

I think they would have justified it in different ways. I think what Halley's concerned about is a concentration of power by big tech companies who are then using that power to censor people. So that's kind of the impetus there. I think Sanders and Warren, their impetus would be around more of a concentration of wealth and money and the power that that creates.

So slightly different motivations, but I think they're probably on the same page here. It's kind of this populist wildfire that's kind of birding in both parties. So I think that's sort of the first observation is kind of this new populist re-alignment of our politics. The second point I'd make about this

is that this legislation is what I would call sort of performative legislating. I mean, I don't think this bill is a serious proposal to become law. It's too much of a sledgehammer. I think that, you know, if the goal here is to try and rein in big tech, I think just banning any acquisition by firms

over $100 billion market cap, it is way too much of a, it's just not crafted enough. I mean, what happened? Is there any merit to it and how would you change it, Sacks? It would have tons of unintended consequences for what we do. I mean, we've talked about this before.

Isn't it good for what we do, though? I mean, if companies stop selling early, if Instagram and YouTube stayed independent, wouldn't this have been much better for them? It was a blanket statement that said any company can't do it if they were over a hundred billion. Right. So, Berkshire Hathaway's business, boop, done, gone to zero. Right.

I mean, it's too much of a blunt instrument. And look, even for us, right? There's only, you know, three, I guess two or three good outcomes, right? There's IPOs, direct listed, just spats. Let's put them in a category of a company going to a world. Secondary sales, yeah. Then there's M&A, okay? And then the third outcome is basically the company goes under, it goes bankrupt, right?

So if you take M&A off the table, you are basically denying a lot of attractive exits for risk capital, and that's going to ultimately hurt the returns for risk capital and leads a less of it. There are a lot of companies where founders create a technology that's valuable and interesting, but it can't monetize, and it needs to be part of something larger. And if you deprive every, I guess big company, of be able to buy, of R&D acquisitions, it's sort of crippling the economy for no reason. I don't think it really addresses the issue that Holly really wants to address, which is censorship. So my point is, I would find a different way to address it. I think that at the end of the day, this

legislation is not meant to become law. is meant to make a statement, and to be a warning to big tech, and to get, and Holly's trying to appeal to a constituency on his side of the aisle, and I think it's sort of as performative in that regard. I mean, Holly, like he votes against the election, he comes out with this Asinine solution to his censorship beef.

You know, like this is the problem, the grandstanding of these politicians on both sides that aren't focused on like, how do we make sure that everybody's participating in the ownership society? How do we deal with, you know, issues of diversity. It's, you know, it's so far removed from actual pragmatic solutions to the real problems facing us that it just drives me insane. And so he will most certainly not be getting a donation from the warehouse hold.

And, you know, like, but what I am gonna invest aggressively in, you know, and what I think we ought to be doing and I hope Chimath will take me up on this. Right, I don't want to go spend 10 million in Washington to lobby them to create the Invest America account. Let's you and I put up the money, let's incubate this, let's hire a CEO, let's put up 10, 15 million bucks,

let's distribute it to families, 2000 bucks at a pop, let's build a proof, 10, 15 million bucks, let's distribute it to families, 2,000 bucks at a pop, let's build a proof of concept, higher grades, you know, that's what we do and prove that it works. Yeah, that's better. That's actually a more practical giving pledge than the giving pledge. Oh my God, what a great idea, Chimoff. Yeah, we should, if we should just do that right now and basically name and shame everybody that doesn't want to contribute who's made money because the reality is we all have been extraordinarily lucky.

Yes, we've worked hard, but frankly, none of us deserve any of this. We've been lucky. And so whatever representative share that you could contribute and what it does, it gives a low income person of color, a minority person in America, somebody who's disadvantaged, a $2,000 head start when they're born is a fucking amazing. We could raise $100 million in the next three months. Because do you know the reason people, people are like, I don't want to pay taxes because

they don't believe government is going to use the money wisely. If we went out and told all these folks that we're going to use it to give $2,000 directly right, to create a sense of ownership and participation in the American Dream, their little slice of Tesla of Walmart, of Amazon, of Google. Like the money will come in from all the folks that you mentioned, and I would love to see this crew get on board with that.

Yeah, I think we could do it over the course of next six months. Lumin, let's do it. The audience who doesn't understand what we're talking about. Imagine we put $1,000 into a 401k or $2,000 401k for an American, every American born. What would that look like when they're 65 years old? And what if 500 of the 2000 was in a 529? What would that look like when they're 18 years old in New York College?

So that was my little punch up gym office. You know, put half of it in a retirement half, half an education. It turns out if you put your stimulus check out each of the last three stimulus checks into Dogecoin you would have $300,000. Okay. So there may be there may be alternative investment accounts that. Absolutely. Yeah. All right. Listen. There's been another amazing. Sorry. Just so you know the $2,000 by the time you're 65 at 8%, which is if you just buy the S&P TF, would be about $300,297,000. So more than enough to comfortably retire in style, and if you were to put 500 of it into an account for college,

maybe you get 25K or something, I'm not sure what it equals in 18 years, but. As Buffett has talked about in snowball, the behavioral economics are, if you have savings, you save more. Right, with this is a much more educational, yeah, people feel part of the system, feel like they're part of the game.

All right, listen, another amazing episode. Thanks, man, thanks for coming on. Thanks for coming on. We don't have a nickname for Brad. We never nicknamed Brad. King of specs. Oh, just kidding. King of specs.

Oh, I'm happy to have the crown. I just want to be called king. Five boys, somebody pick me up and let's go have a guy's trip. What are we doing here, guys? Where are we going? I just want to say, well, since David is in Miami. Since David's in Miami I'm going to tell you guys that my favorite prime number has always been We don't know what it means. What's the joke?

That's in my Next I love you besties love you Brad love you Brad Brad say love you to sac see what happens good We're going to Miami, let's go. Love you, Bats. Love you, Brad. Love you, Brad. Say, love you to Sacks. See what happens. Good job. Keep an eye out.

Brad, say, love you to Sacks. See what happens. Love you, Sacks. Back at ya. See you on the next time on the Ironpock. See you on the next time on the Ironpock. Bye-bye. I'm going to the toilet Besties are gone, go through it. That's my dog, take a minute, wish you're driving. Sit next.

Wait at all. Oh man, my ham is a bit asher, we meet the athletes. We should all just get a room and just have one big hug, because they're all just like this sexual tension that we just need to release that out. What, your, that beat, what, your, your, your, your beat. Beat, beat, what? That's good for you. We need to get merchies aren't there. What you're the beef? What you're the beef? Beef? What?

We need to get merchies aren't there? I'm doing all this! I'm doing all this! you