All-In with Chamath, Jason, Sacks & Friedberg - E53: Wealth tax, dealing with inflation as a capital allocator, big tech earnings, Facebook's rebrand, paternity leave & more

Starting point is 00:00:00 Oh baby, no skin out skin. You just gotta keep the shirt on. Listen to me, only the best for my daughter. This is 100% L'Oropiana Vicunia. She's gonna puke on it. There is not a... You're using L'Oropiana to wipe her, when she wants. No, this is the sweater that she's got her face on,

Starting point is 00:00:18 but this is the softest material human, you know, I mean natural material on earth. Really? This is not subject to any supply chain constraints. Oh, in fact, when you buy one from Laura Piana, they'll fly one right to you. We open sources to the fans and they just go crazy. I'll be West. I'll be in one. I'm going crazy.

Starting point is 00:00:48 Guys, isn't it amazing how people in power cannot take any time off and still remain in power and engaged when you have a baby? J.K. What's the reference? Okay. Our friend, Joe Lonsdale, venture capitalist living in Austin had a tweet that when viral but maybe not for the best reasons He said in response to a Dan Primrak tweet Dan works at Axios who was talking about

Starting point is 00:01:18 Joe Rogan criticizing the amount of time booted Jag was taking on paternity leave and sizing the amount of time Buttigieg was taking on paternity leave and Joe Laans don't respond it. Wow great for father to spend time with their kids and sport moms But any man in an important position who takes six months of leave for a newborn is a loser in the old days Men had babies and worked harder to provide for their future That's the correct masculine response. Well, it was an opinion from 1957 And that's either it is or it is. I'm in the way back when she...

Starting point is 00:01:48 But Joe's old school, Joe is a unique individual, and he just happened to, I think, in this whole, like, not get canceled debate or don't let yourself get canceled debate, the right is now saying, like, I'm just gonna tell you how I actually feel. And so Joe told us actually how he felt. I don't think he said anything offensive. I think you can have a different opinion than what he said. But I don't think he said it shouldn't exist. He said, if you're in a position of power

Starting point is 00:02:17 and you check out for six months, it puts everything that you're doing under a lot of pressure. That's, I think, what he said. And he called those very specific people losers. The context is Joe Rogan called up Pete Buttigieg, because Pete Buttigieg had two kids via surrogate. And I guess it's taking six months,

Starting point is 00:02:38 or I don't even know how much time he's taking off. He's had three months, but nobody knows if he's like working half a time. But Rogan had an issue with it. And then Dan Premac basically said, what Rogan doesn't know is at his own company, IE Spotify, there's a six month policy. Which by the way, Joe Rogan does not work for Spotify based license to show. So there is no way for Joe Rogan to know the internal policies. He is not an employee. I mean, Jason, if you want, if you want to hang your hat on that little fig leaf, okay, no, I'm just saying

Starting point is 00:03:09 it's I'm not defending Joe, but I'm also saying like, how would he know? It's not like he went to HR and was like, Hey, what's our fraternity? He doesn't work there. Yeah. Fine. Well, six months is a long time, especially, I mean, that is a long time to take off. The word loser is a very strong word. Do you think man who take paternity are losers? No, no. I mean, there are choices. You think man who take six months of paternity are...

Starting point is 00:03:33 No, I wouldn't, I wouldn't just call him a loser. I do think that is a long time for somebody who prioritizes work. I mean, if an entrepreneur took six months of paternity, would that influence whether or not you invest in his business? Well, look, if you are the principal of a business and you just disappear for six months, that's not going to work.

Starting point is 00:03:54 I mean, let's be realistic. Unless it does in which case, then you have other problems. Well, or look, if you're at the stage that Google is at or whatever, the founders can disappear and move to islands and private islands and it doesn't matter. Absolutely what they did. But look, we all know that when you're a startup, you face existential decisions daily, weekly or monthly, you can't just disappear for six months.

Starting point is 00:04:17 It's not going to work. You might only have six months of runway. So if you did take six months of paternity, there would be no company when you came back and all that. Let me speak for myself. I couldn't ever take six months of paternity. There would be no company when you came back and I'll likely go. Let me speak for myself. I couldn't ever take six months. I'll probably take three weeks to a month. And honestly, I agree with David.

Starting point is 00:04:34 I really didn't do much of anything. That had to do, frankly, all of this by yourself. And so I'm there to just be moral support and help where I can. Baby needs a diaper change, I do that. I'll hand feed in a bottle because she's tired of pumping and breastfeeding. But I am so peripherally at the edges trying to help

Starting point is 00:04:56 and be relevant and try to give her a break here or there. That's my role. And at some point when the kid gets on a schedule, there's even less stuff necessarily for me to do other than, again, just be moral and emotional support. Then, of course, there's bonding and stuff, but, you know, to be honest with you, like, I have found as a parent,

Starting point is 00:05:14 the connection that I have with my children has gotten meaningfully better as they've gotten older. And maybe that's just a limitation that I have and my need to communicate and how I want to connect with my kids and how I feel like I'd feedback back that gives me energy to be apparent. It is much easier for me to find that equation with my 12 year old than it is with my two day old. So that's just me. I'm going to be out for three weeks to a month and...

Starting point is 00:05:44 Well, the other thing we're leaving out here is the question of resources. So Joe that's just me. I'm going to be out for three weeks to a month and... Well, the other thing we're leaving out here is the question of resources. So Joe Longstale, according to his podcast, is a billionaire, is podcast title. And so, if you're a billionaire and you have unlimited resources at home, and 24-hour night nurses, which, you know, we all know what those cost. You're talking about a thousand or two thousand dollars a day to have 24-hour coverage,, but that's nothing to a billionaire. So if you I don't make it about class but if you were to working parents and You didn't have the money to hire somebody This is actually practically the only thing you can do. Somebody has to be with the kid and it can one spouse be at home

Starting point is 00:06:21 You know, I'm more on twenty four hours alone with the kid all the time. As you guys know, I'm from Canada and Canada, we have a one year maternity and paternity leave policy. It can kind of go both ways. The, the basically the family gets it and you can allocate it as and how you need it. And in pace for the salary, the government basically guarantees your job. You go on effectively unemployment insurance after some period of time

Starting point is 00:06:48 where you go from 100% of your salary to about, I think it's 50%. Somebody will correct me if I get these details wrong. And then you go through the rest of the year. Now in both cases, my sister, you know, when she had both kids, you know, on the way in, she was like, I think I want to take the full year. And by the six month mark, she was losing her mind. And she's a lawyer at a really good research hospital. And she does work that's really valuable to her and that she finds really stimulating.

Starting point is 00:07:15 And she just needed more adult connection after six months. It was very hard for her to kind of be there. Yeah, I just think six months for the second parent is that seems like a long time. I don't think I could take six months off. But I also think if you have resources, there's pockets of time, even when I did stay home for, I don't know, the first couple of weeks after the kids were born. Yeah. They're asleep for three hours and then you clean the diapers, feed them, they play for an hour or two and then they go back on a nap.

Starting point is 00:07:46 It's constantly the stop and start. I mean, that's the thing that's hardest about it is the lack of sleep, I think. Oh my God. It feels like, I mean, it's funny, but I forgot what it's like, but you're reminded quickly. It feels like you're drunk. Yes. Two hours, you wake up. You get a 10 minute cat nap, you wake up.

Starting point is 00:08:04 And this is where, again, I go to, and I'm such a bit player in this play right now, you wake up. You get a 10 minute cat nap, you wake up. And this is where, again, I go to, and I'm such a bit player in this play right now, you know, at the edges, when I'm like not sleeping, I can take care of Tali, but I don't know how women do it. It's incredible. And for those of you listening, Chimoff has got his newborn on his chest

Starting point is 00:08:21 and swallowed quite nicely there. This is why you should subscribe on YouTube. You can see. You can see the video. That's easy to see the new daughter getting YouTube subscriptions up. This is condition blow as fast as 100,000 times. How do you feel?

Starting point is 00:08:35 It's so special. I feel so lucky. I feel so, so lucky. This is gonna be the most popular cameo on the pod since Freiburg's dog. Yeah, I mean, this chick is so lucky. This is gonna be the most popular cameo on the pod since Freiburg's dog. Yeah, I mean, she, this chick is so delicious, she's so delicious. And I forgot how beautiful the sounds that girls makes versus boys, having three boys and two girls now.

Starting point is 00:08:57 I remember the boys, they make kind of interesting noises, but not really, but my gosh, like little baby girl noises. And you guys, sex as two girls, you have three free bird girl girls. It's girls are incredible. I was basically girl dads like, oh, so what a blessing.

Starting point is 00:09:14 What a blessing. I feel really lucky. Any news on your front? Well, we had a baby the day after tomorrow, had a baby. There were, Oh right, I did see the best. Congratulations.

Starting point is 00:09:23 Thank you. Free bird, where's your swan old infant? You're letting your letting Shamaath win sweep suites here. What's going on? Yeah, his vacuini is on the way I haven't been here. Are you in the Joe Lonsdale? You you did one day off and the one we're back to work She's in the the place where you drop the kids off to get raised and then you pick him up in a year Okay, you're like, oh, you mean like Vulcans? You're like Vulcans? We have Vulcans. You have Vulcans. You have Vulcans.

Starting point is 00:09:47 You have Vulcans. You have Vulcans. You have Vulcans. You have Vulcans. You have Vulcans. You have Vulcans. You have Vulcans. You have Vulcans.

Starting point is 00:09:55 You have Vulcans. You have Vulcans. You have Vulcans. You have Vulcans. You have Vulcans. You have Vulcans. You have Vulcans. You have Vulcans.

Starting point is 00:10:03 You have Vulcans. You have Vulcans. You have Vulcans. You have Vulcans. You have Vulcans. You have Vulcans. I really don't think that what he said was altogether that like vilifiable, if that's the word you want to use. I think that there's a lot of reasonable points of view. He could have maybe used better language, but I think where he was coming from, I think a lot of us probably wouldn't do it ourselves. We may never judge anybody else. I would never judge anybody who wants to take six months.

Starting point is 00:10:19 I know that I could not. I would just, I think, either I'm too selfish or whatever, but I'm not sure there's just, I think me either I'm too selfish or whatever, but I'm not sure there's just that much to do as the secondary. And today, it's point, if I was asked to be the primary, I think I could probably step in and do 10% of what Nat would do. But here's Joe Lonsdale's super blind spot. He made this very gender specific with men and women in certain roles. And he basically is saying, you know,

Starting point is 00:10:46 a man who takes six months off is a loser. So he is not just giving his opinion, he's attacking people who do take the time off. And then he says, Listen, in the old days, men had babies and worked harder to provide for the future. That's the correct masculine response. So I think what triggered people about his response

Starting point is 00:11:04 and perhaps rightfully so is that, this is just a view. But Jason, here can I say something? This is a great man who take time to take care of their kids. But look, we've talked about this a lot. There's an opportunity for folks like us to take a step back and slow down in how we interpret a tweet that's written at 8 a.m. in the morning super quickly. I'm not advocating he be canceled. And not just him but everybody else, but there's an opportunity to teach empathy here where I'm not saying you have to agree with him, but you can also choose to see what he's trying to say

Starting point is 00:11:37 through the exact words that he used, decide that you agree or disagree, and then just move on. Of course, you know what I mean? And I think that the reason why folks may want to do that in this case but in most other cases is eventually it will be you that makes a mistake. Sure. And you want to be let off the hook by other people that are empathetic enough to say, I really disagree with what you're saying, but you don't deserve to be punished beyond disagreement. I love what Jamoth just said,

Starting point is 00:12:08 the mistake that we might even be on this part today. I might have already made it. I'm ready, I'm ready, I agree that we should all just be a little bit less judgmental. And there is a judgmental element in Joe's tweet, that's probably the part I don't agree with, And there is an element, there is a judgmental element and Joe's tweet that's probably the part I don't agree with is, look, if someone wants to do that, fine, take the time,

Starting point is 00:12:32 doesn't just make them a loser, but it's not a choice that I would realistically make. Yeah, it's totally unrealistic. It's not even startups. Like, you know, I'm getting these, I'm getting put to these multi-hundred million dollar decisions a day, I can't, you know, I could pause the business, but that'll have so many downstream vocations.

Starting point is 00:12:49 Unfortunately, I picked a job where I'm in a position where I can't check out even if I want to do. So I try to do my best. That's the point you were trying to make that wasn't that well articulated. I don't think any of us are in a situation where we can straight up walk away from work for any meaningful time. I mean, on a daily basis. It would destroy my business.

Starting point is 00:13:05 Yeah, we get texts, we get emails, we get phone calls, that we have to answer. And so it's not, you know, almost definitionally isn't an option to just walk away, but for those who it is, and that's their choice, that's what it is. The great thing about freedom isn't that you can say whatever you want, it's that you don't have to listen

Starting point is 00:13:24 to what anyone else is saying. And you know, for the people that disagree with Joe, I feel like you always have the option to not listen and you always have the option to walk away. Unfollowing. And yeah, unfollow. And the whole idea of cancel culture and punishing people for the things they say

Starting point is 00:13:41 regardless of what they say and the censorship and all the shutdown of voices and channels for people to have a voice, I think it takes the freedom away that's inherent in the idea of your choice to not listen. Yeah, and it's almost always totally hypocritical. So this is a post script on the whole Sheppell debate. It turns out that the leader of the anti-Shipell protest,

Starting point is 00:14:05 who've been trying to get him canceled in Netflix, it turns out this person has like a treasure trove of the most angry, hateful, vile tweets that I already had. I just got everybody has ever seen. When you put it in the group chat, I thought that that was a joke. The things that she wrote were so beyond the pale. Beyond.

Starting point is 00:14:29 Oh my God. They're like the worst tweets. We can't twit them on the show. No, we can't. I don't even want anybody to speak these things. I don't want to include it in the show notes. They're literally the worst tweets I've ever seen. They're the worst tweets seen.

Starting point is 00:14:41 Seriously. The most horrible racist. Like, I've never seen such explicit racism in the 21st century, basically, aside from these tweets, and this is the person who's trying to cancel Chappelle was out there with the megaphone, and who the press was faunting over. By the way, and she said, in her thing,

Starting point is 00:14:59 yeah, those were from a long time ago, I've already owned up to those, so let's move on. Oh, wait. Oh, I've to owned up to those. So let's let's own up how, owned up how. And it's kind of like, you know, let me play the empathy card on me. But then, you know, I, so meaning I expect you to see through what I'm going through. And that those expressions were in a moment in time. So see past them and see my true character. That's what she's asking, that's what she's asking the world to do, you know, about her. But then you're not willing

Starting point is 00:15:28 to do it to any for anybody else. And that's where I think that double standard just doesn't work anymore. And I think this is what people are getting really fed up with. Yeah, yeah, and I would also say that her tweets weren't funny. They weren't attempting to be funny. Oh my god. They are so gross. They're they were. They're gross. I have a customer service problem with this beeping beep. There's so bad. Yeah, I want to bash this beeping Asian or whatever over the head, blah, blah, blah, like a lot of racism towards Asian people.

Starting point is 00:15:57 No, there was homophobic tweets. There was Asian hate tweets. I mean, it Latina, Hispanic, I mean, I mean, she wasn't even trying to be funny. That's the thing. It wasn't even a failed attempt at humor. So here you have Chappelle who I think is dishing it out in an equal opportunity way, making funny observations about really he's criticizing

Starting point is 00:16:19 our culture, not specific groups. And he's being deliberately misinterpreted by the people who want to cancel him. They're really to think that Chappelle's stand-up routine is hateful, really requires, I think, deliberate obtuseness. You have to deliberately misinterpret what he's saying. And so you have these people out there trying to do that. And meanwhile, they are guilty. It's a total active projection because they are guilty of everything they accused of hell of. Well, not all of a misperson in particular. The leader, the leader. And of course,

Starting point is 00:16:52 the press doesn't dig any of this up. It all happens through the through kind of internet sluice. That would be a narrative violation, David. If somebody is virtue signaling, and they are leading a cancellation movement, it's kind of a narrative violation to David, if somebody is virtue signaling and they are leading a cancellation movement, it's kind of a narrative violation to say, well, maybe they should be canceled by the same standard or, you know, quite easily. I think the thing that I don't think she should get canceled. Let's just, let's, there you go. Yeah, yeah, yeah.

Starting point is 00:17:16 I don't think she should be canceled, but I, and this lady, when she said when she was drunk, and she had a nervous brain, I can only imagine that the difficult path that this lady has gone through. And on the off chance that she's listening, I'm totally cool with your journey. I understand you made some mistakes. We've all, I'm going to let you off the hook. Can you please try to let the next person off the hook? I think that would be a nice place for everybody to aim to go.

Starting point is 00:17:39 And then just to circle back with Joe, when he started explaining himself in the thread when it became a conversation with a wider group of people, the journalist went on the pure dumb cancellation route, but then there was actually a productive discussion about between CEO's, et cetera. And I thought it was very interesting about it. It was he started talking to Gary Tan, who was like, listen, we have a four-monthly practice

Starting point is 00:18:02 at our venture firm. And Joe said, do you really take a hundred percent cold turkey or did you work part-time and stay in touch like a responsible leader of your firm? And of course, Gary did just that, right? And then Joe says, you know what, I shouldn't have written loser and appreciate the push-pack. In more intensive operational context, losing key leaders, cold turkey for six months seems unnecessary. But I respect the different tastes here.

Starting point is 00:18:23 And I think that really is an actual good discussion about this is, hey, well, maybe if you're an intense leader and you don't have the ability to take a couple of months off, well, maybe you should take a couple of Fridays off. And then there was a really interesting discussion. What's better for a leader to do, spend a little more time every every year or to spend three or four or six months in the beginning when you're, as you just said, Jamaat on the periphery here and trying to be helpful on the margins, maybe for the secondary person, if it is in 50, 50 sacks, it is actually better for you to pick up some Fridays or whatever and take over the whole.

Starting point is 00:19:00 I'm glad you read that clarification by Joe because I think what he basically is saying is that yeah he the initial language he used he would he basically clarified that and it sounds like what he's saying is listen if you're on a high performance team and you're the star player and you disappear for six months that's gonna cause your team to lose so I think that's maybe what he was saying. That's a perfect analogy sax because if we were looking at LeBron, James, you're Kevin Durant, and they had a baby midseason or Dreymon had a baby midseason, which I'm sure has happened to folks.

Starting point is 00:19:31 It's not like they say I'm not playing the next six months of games. They miss one game, maybe two. They go back on the road, and I think everybody understands. Like, yeah, you can't give up one of your 10 primary years or three years left. That LeBron and KD have left. I'll give you one final anecdote to end this chapter of our discussion today. 2007 at Facebook,

Starting point is 00:19:52 at one point in like one of the umpteen reorgs we were doing as we were trying to get out of the primordial ooze, I was in charge of HR. And everybody at that company was young except for a handful of people. And then there was finally a person. And I think it was this HR person that at some through some weird convolution of events reported to me who got pregnant, who was pregnant. And we didn't have a policy because nobody had ever gotten pregnant before. And I remember saying, oh, we have to come up with a policy. And what I did was I was like, well, what would I want? Which is the easiest way for me to

Starting point is 00:20:30 answer most questions. And I came up with four months for either the father or the mother irrespective of the context. And that's how we started the original policy. Four years later, though, when I had my first kid, I took like three weeks and it came back because the grind was too hard. Yeah. All right. I think where we have to go is it's been a crazy week of the reconciliation bill, the infrastructure bill, and how to pay for this incredible spending. It's been a meta week. It's been a meta week. I mean, and this builds on top of our discussions about inflation, as well as the supply chain issues that builds on the conversation we had about COVID and the new president.

Starting point is 00:21:08 So we're trying to get the wealth, we're trying to get the reconciliation bill done. And part of that is, hey, how is this going to get paid for? And in the course of one week, we've seen the tax proposals flip, I think multiple times to ones that have never been tested and may not even be legal in the United States. Of course, I'm referring to a billionaire tax, which was proposed, which would be a penalty or a tax on assets that are liquid, but that have not yet been sold. It would look back three years, essentially going after Bezos or Elon, Larry Sergei, basically

Starting point is 00:21:45 going after the top 10 billionaires in the world and then maybe it was going to be the top 700, then it became a millionaire tax, all of this to try to pay for these bills. While so much money has been poured into the system that, you know, NFTs and stocks are going through the roof, where do we want to begin, gentlemen? Does anybody have thoughts on this brief billionaire tax that was floated and what that says about where we are as a country in terms of how we think about the success of our greatest entrepreneurs? We want to talk about what's fair or the process. Well, I thought the process was insane. And what was crazy was that, you know, Ron Wyden had been working on this proposal theoretically for the past two years.

Starting point is 00:22:30 And at no point did he bother to float the triobaloon with his colleagues in the Senate to even see whether these people actually supported it. Beyond some folks on the progressive left who are ideologically fixated on, you know, this confiscatory way of running the country. The funniest thing about that bill to me, and I let the powers that be know this, is, hey guys, I've always been on the record. I'm happy to pay whatever tax you want. I feel super blessed to be in America, whatever. You know, I'm going to pay 30%, 80%, I don't care.

Starting point is 00:23:03 But I had a real issue with the way that Bill was written because I'm like, the Democrats are writing a bill that will disproportionately tax democratic, successful billionaires. And it'll even tack the coax, who is literally the boogie man to the progressive left who wants to write this bill. And I thought, how could you even write this bill this way? It is so stupid. You're saying because those people own private assets and this goes after us. Guys like me would have been paying billions of dollars and the coax would not have paid

Starting point is 00:23:37 zero. Because their entities are private and the rest are public. Yes. Just so the audience understand. Yes. How insane is that? And yet we are the ones that have been. That so the audience understand. Yes. How insane is that? And yet, we're the ones that have been made a great second order observation.

Starting point is 00:23:49 So that was clearly didn't think through. That was my only issue with the thing. It's like, if you want to try to ram and jam this thing through, go ahead and try. I'm not going to be the one that, you know, files a lawsuit the day after it's passed and takes it to the Supreme Court, which will get heard. And, you know, this conservative Supreme Court would not have allowed this tax to stand.

Starting point is 00:24:09 You can't target 700 people. But by the way, the reason you can't target 700 because there's a slippery slope from 700 to 7 million to 70 million. And what it does is it allows tax and spend politicians a blank ledger to go absolutely crazy and just fund every single hair-brained pork barrel scheme that they can come up with. And that's really what we stopped was an important slippery slope. And then in its place, I think is a tax that is fair. A simple surtax on adjusted gross income, if you're above X, you pay 5 million, and if you're above Y, you pay another 3, so 8%.

Starting point is 00:24:47 5%? 5%? 5%? 5%? 5%? 5%? 5%? 5%?

Starting point is 00:24:55 5%? 5%? 5%? 5%? 5%? 5%? 5%? 5%?

Starting point is 00:25:03 5%? 5%? 5%? 5%? 5%? 5%? was it targeted democratic, successful people and left alone Republican, successful people, written by the Democrats. FreeBur, what are your thoughts on the confiscatory nature of this? And I heard the word used that way, confiscatory, where we're going back and saying, listen, you won so much, we're just going to take 20 or 30% of it. We all pay property taxes. So we, there is a experience we've all had with paying a percentage of some of assets that we own, people of all income brackets every year, to the your local government, to fund local services that everyone participates in. So you know, I don't

Starting point is 00:25:38 think it's unfounded. Now, if you look at history as a guide, France introduced a wealth tax to people making over, I think it was 1.3 million euro per year. And it was shut down and came back basically 1999-2000. And between the year 2000 and the year 2016, 25% of millionaire households emigrated out of France during this period. And the amount of tax revenue that was lost during that period of time was greater than the new revenue generated from the wealth tax that was introduced. And so France ultimately scrapped the wealth tax.

Starting point is 00:26:19 And there have been a number of other reasonably good examples of European countries putting in place these wealth taxes and then kind of removing them later. So, you know, on the one hand, I think that we've all seen this experience, and Switzerland does this, I think you get taxed on your total assets, and Switzerland, you have to go negotiate every year with respect to how much you pay. It's a very weird process. So, on the one hand, there is this kind of experience and precedent for paying some percentage of assets.

Starting point is 00:26:47 Sometimes it's a targeted asset and sometimes it's not. But the longer range consequences that we've seen is like, you know, immigration and people realize there's always a better choice. The question we have in the United States is if we introduce a wealth tax like this, where will successful Americans immigrate to? You can see how people could leave France and go to Belgium or go to the UK or go to Switzerland or go somewhere else where they might be better off.

Starting point is 00:27:11 Where are Americans gonna move to? Canada. You're successful. Canada? Are you gonna move to Vancouver? You're from Canada, but Zach, would you move? Where would you move to? It's almost like there ends up being this kind of,

Starting point is 00:27:26 I think, really interesting experiment that'll be run here. Now, remember, this wealth tax was introduced by Warren and others last year. So this wasn't some new concept that was fly by night. This has been one of those things that's been on the shelf for a while. What happened is they pulled it down from the shelf and said, let's try to understand. Yeah, they've never, they've never had committee hearings on it. They've never had committee markups on it. It's been tried and repealed in European countries. And like you said, they pull it down to the 11th hour. Why?

Starting point is 00:27:53 Because they're carefully laid plans, which they've been concocting for three months, were thrown overboard when cinema said she wouldn't support the rate increases. Now I don't know why they wouldn't go to her at the beginning of the process, instead of waiting till the end of the process. But so because of that, they're scrambling around trying to find any source of revenues. So it's, oh, will a billionaire tax work? No. Well, what about a corporate AMT? How about that? No. What about a millionaire search charge? These guys are like burglarers, ravaging through the house. They hear the sirens coming. And they're like, what can we take?

Starting point is 00:28:26 Oh, the TVs are pulled to down. Take it that. Where's the jewelry? What can we take? And it's just for you can't set, you can't set tax policy this way. And this whole idea that we can set tax policy based on our intuitions of fairness without having hearings to ask the question, what will this do to the economy? How much damage will it cause? This is absurd. I'll say it's really important to note The market is telling Congress something here and the market is members of Congress informed by their their constituents. The market is saying maybe we shouldn't be spending this much because there isn't a place to fund it and no one's raising

Starting point is 00:29:05 their hand and saying, this is something we can all line on. And so I think the more important fundamental question is, are we really equipped and do we really have a general economic interest, economic interest, meaning people measure things and vote with dollars to support these sorts of social programs? And it seems to me the indication is no. And this seems to me to be primarily a response of the pendulum swinging the other way, post the Trump era, where the Trump era was all about blowing up these ineffective, over-regulated, bloated government infrastructure and programs and people

Starting point is 00:29:40 and bureaucracies. And now we've kind of found ourselves through our voted representatives, swinging this other way, but it turns out maybe we swung too far and the market is now voting and saying, this just isn't a playing field we should be on. And so, where they end up here, I think, regardless it's gonna end up needing to be

Starting point is 00:29:57 some sort of reconciliation on spending to make this all work. Let's be honest, Bernie Sanders and Elizabeth Warren were, did not win the nomination. The country specifically wanted a moderate. Biden was sold as a moderate, go back to the way it was. Moderate Dems, like Clinton, like Obama, this is the classic Coca-Cola, this isn't new Pepsi nonsense.

Starting point is 00:30:21 And we got hoodwinked, basically, and I think what a lot of Democrats are seeing now, especially the moderate ones, is, hey, wait a second, Biden is Warren and Bernie and she's clothing, perhaps. And we didn't want this. We didn't want Trump. He was too hot.

Starting point is 00:30:36 And we don't want this to left. Crazy. Let's just take everybody's money, randomly change the tax code. I don't think American citizens want to live in a world where we change tax code at the 11th hour. That is scary to people, all people, people who have savings. If you care about the economy, but these progressives, I think these progressives, so it used to be that taxation was a necessary evil. You tax people because you got to pay for government and government programs.

Starting point is 00:31:05 Everybody hates it, but you do it and you try to figure out the way of achieving the revenue government needs in the least destructive way possible. But I think progressives now, they are so focused on monomaniacal about this issue of income inequality. The fact that there's some people who have gotten richer than everybody else, that I think they're willing to tax those people. I mean, they would like to siphon off money from those people. I think they're willing to tax those people. I mean, they would like to siphon off money from those people. I think they would siphon off to sell it on fire, just to level people. And so they don't really care what the impact

Starting point is 00:31:32 is gonna be on the economy. Well, I mean, and there actually was, in fact, ban the billionaires. That was their roof. But, you know, before we get to that, I just want to say, these rules, I think Americans want the rules to be simple. And I don't think people want you changing the rules in the last minute

Starting point is 00:31:46 And then making them retroactive. I think all Americans want taxes to be predictable and simple Not just change them willy-nilly because you change the budget. This seems so unthoughtful and crazy Chimac at your point. I have two points to make. The first is that I don't think anybody really knows what's in these bills and to make. The first is that I don't think anybody really knows what's in these bills. And as a result of nobody really knowing what's in these bills, they're used as negotiating chips. So case in point, when Biden came out and said, you know, we have a 1.85 trillion dollar bill now and we're ready to get this done so that he could, to Europe and fly to COP26 and declare victory. Unfortunately, the progressive wing of the Democratic Party in the House said, no, I'm not ready to dance yet. They have consistently refused to sign an infrastructure

Starting point is 00:32:39 bill until they got what they needed from this other bill. And so when Pelosi called the vote, she had to pull it because they weren't going to get the votes necessary to get this bill passed. So what this says to me is that even with spending, it doesn't matter whether you're spending five, because that's, I think it's a trillion dollar bill, right? That's a one trillion dollar bill. This is a 1.875 trillion dollar bill. Nobody cares about the quantity and nobody cares about the details. They care about some perceived moral victory. This is the only reason why we're seeing

Starting point is 00:33:11 this, you know, Mexican standoff that we're seeing today. If these things were so substantively important, we would have passed the first bill. We would have negotiated this reasonable second version and passed that too. Instead, we're here going through the end of the year with nothing done. And I just want, you know, the Democratic leadership who listens to this because we know a lot of people in Washington listen to this podcast. You guys got to get something done because if you go into the midterms with nothing done with the Democratic president, Democratic Senate, Democratic House, this is going to be a bloodbath. Well, this is why something will get done, but I think the political realities are that at the end of the day, the Democrats will come together and pass something.

Starting point is 00:33:57 But it's concerning that we're just talking about doing something because it will help you in the midterms. You know, in the mortal words of Nancy Pelosi, you have to vote for the bill in order to find out what's in it. I mean, at the end of the day, we're not even going to know what's in this thing. And, you know, we're spending another, it'll probably end up being a $1.75 trillion bill. It'll be stacked on top of the spending that's already happened. One point, remember, Biden already passed 1.9 trillion of COVID relief. Another 1.2 trillion of infrastructure. No, that hasn't passed yet.

Starting point is 00:34:27 Well, it's going to along with this now 1.75 million, sorry, 1.75 trillion of this new social spending bill, assuming it's about $5 trillion. 5 trillion of wealth. And progressives will have set the stage for this to be perceived as some sort of failure. It's a fall. By the way, David, if you go back then, if you take that five trillion and add it to the all the COVID before and all of the fed buying, we've probably had one entire turn of GDP.

Starting point is 00:34:58 So call it 20 to 22 trillion dollars of money created in the last three or four years. Right. Now go back j so now so now you go back to Jason What you started the thing that I have struggled with the most in these last few weeks is trying to come to a conclusion on inflation My worry is that it's here and it will be persistent and inflation comes in two ways Way number one is if you massively increase the supply of money. Why? Let's just say the economy had $100. And now, all of a sudden, you just print another hundred, so another is $200. What will happen is all of the goods and services that make up that

Starting point is 00:35:36 100 will get reprised to absorb the 200. So prices go up, inflation goes up. The second way that inflation can happen is if middle and lower income people buy and spend. Because when rich people have extra money, they just buy financial assets. That's why you get financial bubbles. But practical goods and services are bought by average everyday normal working folks. And their wages are going up. normal working folks. And their wages are going up. And so I think what we've created is a really distorted inflationary cycle that's going to really hurt the United States because as SACs talked about, we cannot print enough money to pay for the debt when interest rates go up. This is the number one thing causing me concern as well is that you look around. It's all time highs for everything.

Starting point is 00:36:29 It's all time best everything. NASDAQ and S&P, all time highs, crypto markets, all time highs, Shibu, Enu, worth $30, $40 billion bubble. I'm seeing SaaS multiples. Real estate. Real estate. I'm seeing SaaS multiples. Real estate. Real estate. I'm seeing SaaS multiples at all time highs. So you have to wonder, is this a new normal? Is this sustainable or is it some sort of inflated bubble?

Starting point is 00:36:52 Then you look at the inflation rates 5.1% to Chemos Point, it might be persistent. You look at Treasury, the Treasury interest rates, the yield, is 1.6% on the 10-year T-bill. Okay, so effectively your real interest rate for savers is 1.6% minus the 5.1% inflation rate. You're at negative 3.5%. If you just save your money in T-bills, in sort of risk free, you take the risk free return, negative 3.5%.

Starting point is 00:37:23 So now you have everybody going out there trying to chase the yield because how do you earn to return on your money? You don't want it to be a- You buy Steve I stocked your NFTs or has- So people start going into riskier and riskier assets to basically try and make up for the loss of inflation. And so you have to-

Starting point is 00:37:40 They're trying to hit the one outer. Yeah, so then, okay, so you have to ask yourself, okay, so back to this point about all time highs. Is this because everything is really this great or how much this is driven by these sort of distortions? 50, 50. I mean, I'm just putting a number on it. Like obviously the industry and economy is doing fantastic,

Starting point is 00:38:00 but it seems 50, 50. Here's the other thing that I wanted to make and just the last portion, which is, I think what we've realized as well at the end of this is I actually again, now, to use this empathy card. I'm going to give the progresses my empathy card and say, I understand what you're trying to do. And I believe in a lot of what you're trying to do is to even the starting line for everybody. Right now, a lot of what you end up proposing even the starting line for everybody. Right now, a lot of what you end up proposing distorts that goal by trying to, you know, even out the outcomes and even the finish line. But I really do think they want to even the starting line. But here's the thing that we all have

Starting point is 00:38:34 to realize now. All the things that the progressists want to tax and fund are actually being done by private corporations. And I think we just have to acknowledge that and make a decision about whether as a society, that's okay or not. I'll give you two examples. Number one is the federal minimum wage. We have tried for years and we have debated raising this minimum wage.

Starting point is 00:38:57 It still sits today at $7.25. Just this week McDonald's moved their minimum wage up, Starbucks moved their minimum wage up Starbucks moved their minimum wage up We're talking about you know entry-level quick service jobs that now pay 17 to $25 per hour Right some two and a half to three plus times the proposed federal minimum wage The free market and so and so and so what government didn't and wasn't able to do, the free markets have done. Second example, we tried to get free community college inside of one of these bills. It was a drops. Now, depending on where you go, the nation's largest employer, Amazon, actually will just pay you

Starting point is 00:39:41 to go to college. So they are replacing that intention and a version of the GI bill, but as a private organization. So I think what we also have to realize is that maybe some of these policy decisions is actually a little bit of getting tilted by the fact that private organizations are acting more nimbly to actually implement this progressive agenda because it actually exists in America if you're willing to take the time to look. Let me ask a question about inflation. If who is inflation going to hurt the most and who's going to gain the most from it because it does seem like consumables, gas station, supermarket trips, etc. are going through the roof. In that case, you know, that's going to have no impact on the top third of people because Gallon and milk at $3, $6,

Starting point is 00:40:29 $9 doesn't matter. But then you look at inflation on stocks, it's going to make it go up. So a rich person isn't impacted by their gas or their groceries, but somebody in the middle class or who's poor, that's going to dramatically impact them. So if we spend more, does that actually create a larger wealth gap, sacks? Look, inflation is devastating for the middle class. If you have savings, if you can afford to put all of your savings to financial assets the way that the super wealthy can, then your financial assets will go up. But if you have a good, you sort of

Starting point is 00:41:06 middle-class income and you don't have your savings or something more conservative, you're going to get absolutely eroded by inflation over time. It's going to kill you. And, you know, housing prices will go up. The middle-class young couple that wants to buy a house for the first time, that's going to be much harder to achieve because housing prices will inflate away. So I think, you know, there are some effects that are a wash, so for example, prices go up and then wages go up at the same time,

Starting point is 00:41:37 but savings can really get hammered if you're not in financial assets. It hurts the middle class first, but it also hurts. It hurts everybody because again, unless you're perfectly hedge going into a rising rate environment, you will own assets that are just speculative and good. Freeberg a scientific question here. Are we starting to go into a self-fulfilling prophecy around inflation?

Starting point is 00:41:58 Allah, what happened in the 70s, which is we've been talking about it so much that anybody who is thinking about raising prices says, well, everybody else is raising prices. So even if my grilled cheese sandwich hasn't been impacted by all of this, and I didn't have to give raises to my employees, they're happy at the current salaries, I'm just going to put $2 on my grilled cheese. And we just get the cycle of everybody saying, how much can I add to the cost of something? I am kind of remember there's an earnings interview I saw yesterday. God, which was the company? Anyway, their company in the industrial supply chain,

Starting point is 00:42:32 and he said that they're raising rates to get ahead of the supply cost going up for them, so that their margins won't get squeezed. And I think that's, it's almost like that, what you're referencing is a little bit of a run on the bank mentality, where those with pricing power raise prices, and as a result, you end up kind of seeing the trickling effects

Starting point is 00:42:54 because competition can't catch up. So if everyone's kind of raising rates and it's not enough competitive advantage, the one thing that's making this even harder right now is the gluts in the supply chain, which are reducing the competitive market dynamics that we might normally see, where one company raises rates and another company says, wait, our rates are going to stay the same, but because so many people are challenged by getting product, there's enough demand for their

Starting point is 00:43:18 product, everyone can raise rates together. We're seeing this in the energy markets now. So yeah, I mean, this is kind of part of the scary scenario that everyone's trying to manage against I don't know what the science is and I'm not an economist, but it certainly seems to me like the psychology of managers and business owners and boards is such that they're saying let's get ahead of the curve Let's raise rates and as a result you're seeing the trickling effect of inflation throughout the whole economy.

Starting point is 00:43:46 So, um, both scary. Sex, what do you think? Psychologically is going on with raising prices, yeah. So, so expectations are definitely part of the inflation game. People raise prices if they expect inflation in the near future. And then that feeds on itself and that's how, if you look at countries that have had hyperinflation, that's how you get a spiral. Now, I don't think we're going to have hyperinflation here, but we're at 5.1% now, and if people think it's going to be worse next year and the Fed's not going to raise rates, it could even be higher next year. And I think people are going to start getting upset about this, you know, when they buy their Thanksgiving turkey and their Christmas ham, and those prices are way higher than they think, and're ready paying gas prices that are a lot higher than they're used to. I think you could see a lot of unhappiness out there. One of the things I'm thinking about is the logical thing for a person to do

Starting point is 00:44:35 in this hyperinflationary market is to say, you know what? I went to look at a car and I wanted to get to driving the snow and I was like, you know what, I'm just gonna hold off buying this because I'm not paying 15K over sticker. So, and I can pay 15K, so I was like, ah, do I wanna do that? Ah, the other car is okay, I'll just put snow tires on it. So, or a lot of people,

Starting point is 00:44:55 Chimoff, and as part of this psychological, spiraling out of control situation, then some group of people might say, you know what, I'm gonna opt out of consumerism, and I'm just gonna lower my burn rate and stop consuming, which is also bad for this. Hey, you're gonna stop consuming food. I mean, food prices are going to be the worst.

Starting point is 00:45:12 Yeah, you're gonna be the worst. Instead of getting, you know, filet mignon, you might get chicken. Okay, well, there's gonna be a lot of unhappy people who are eating chicken for Christmas instead of filet. I mean, serious. I'm coming to your house. I'm getting filet.

Starting point is 00:45:24 So I'm good. I'm gonna go your house. I'm getting flanged. So I'm good. I'm gonna go your house for lunch and I'm going to show mods for the surf and turf after. Guys, rich people don't create inflation. The middle class and lower middle class create inflation. There's just not enough rich people to matter. They're irrelevant.

Starting point is 00:45:38 So when you look at the last two or three spikes and waves of risk that we've seen globally, they've come from large, multi-hundred million person cohorts of people, right? Those could be in Asia, those could be specifically in China, those could be in the United States plus all around the world because of certain loose monetary conditions. That's what we have now. We have a multi hundred million probably approaching more than a billion person strong liquid buying pool of people that are again, as I said, if the lowest on the pecking order is now making 17 bucks an hour, we all know this guys. It's not as if the inflation stops at 50,000 bucks a year. Everybody's wages rise. So consistent and persistent wage inflation will allow you to spend more because that's just

Starting point is 00:46:28 what people do. We also have high savings rates so people will feel more flush with money. The point is that everybody will spend, they will spend more, you know, you can't get cars, you can't get this, you can't get that. All this pent up demand will get fed. And the downstream implication as I think that prices will rise, but it will disproportionately hurt the middle class and the lower middle class. And then these asset bubbles will probably deflate, or they'll have to get re-rated.

Starting point is 00:46:57 And if the Fed stops tapering and hikes rates two or three times over the next 12 or 18 months, man, this is an ugly, ugly stock market. One of the things people have been asking me to ask all of us on the pod is, what are our strategies right now given the turmoil we're in? So maybe we can go around the horn and what we're thinking about in terms of our strategies to deal with inflation while maybe not getting ahead of our skis and being the bag holders. Anybody have, I'm not going to answer this question. You know why?

Starting point is 00:47:32 Because I can't got it. Because of the public, I don't want to even answer this question yet. Okay. Well, can I further describe the problem? So this happened in the late 1970s. We had stack flation. We had sort of every year we had increasing inflation because the expectation game. And the thing that broke it was you had Paul Volker come in at the Fed and he jacked up interest rates. And he actually caused a pretty

Starting point is 00:48:00 severe recession in like 80, I think it was like 82, 81, 82. I think by 83 we were coming out of it and then the economy absolutely boomed. Interest rates came way down because he broke the back of inflation and actually interest rates came down for, you know, as a result of Volcker and the Fed controlling inflation,

Starting point is 00:48:20 they came down for 40 years basically. And that decrease in interest rates fueled everything. It made debt a lot cheaper. It made the stock market boom because the net present value, the discount rate went down, so the net present value of all those future earnings went up. So you had, it set the stage for the boom and the Reagan era and beyond, and the Clinton era as well.

Starting point is 00:48:44 Now, what's the difference between that and now? Well, for one thing, the government debt as a percentage of GDP when Reagan took office was around 31%. Okay. So when Volker jacked up interest rates, it didn't really create that much more of a debt service cost for the United States for the federal government now today the The government debt is a

Starting point is 00:49:11 125% of GDP So if and this goes back to the to the drunken Miller point from previous pod if The the Fed were to jack up interest rates to say the historical norm of 4.9 percent the Fed where to jack up interest rates to say the historical norm of 4.9 percent debt service would go from 2% of the federal budget to 30 percent. You would have a massive crowding out of government programs So how we fund all that debt service very unclear. So we're caught between a rock and a hard place. The rock is we have inflation that could be persistent. The hard place is the debt service. So, you know, the tools for controlling this aren't exactly clear.

Starting point is 00:49:49 So this, I think, is fundamentally the problem is, it's not clear whether we're gonna have, you know, interest rates going up or persistent high inflation. Those are the threats to the sort of economic boom we're seeing. Now, the full side of it is that the reason why the stock market is one of the reasons it's at an all time highs because earnings right now are fantastic.

Starting point is 00:50:09 So the economy is doing very, companies are doing very well, but we just had for Q3 that GDP growth was at 2% annualized which was sort of an anemic number. It's a low, it's been since this COVID recovery started. So it's, you know, it's interesting. We're at all time highs, but there's also these like major storm clouds on the horizon. And I'm not going to like pretend like I know what's going to happen. I just, you know, when, when things are this good, I start getting nervous. When it's this easy to make money across everything, the stock market, the crypto

Starting point is 00:50:43 market, the SaaS investing we're doing. We know that. Can I say that's the part that really scares me. So for example, when everybody gets tilted because there's some Shiba wallet where 8,000 turns into 5.7 billion, right? So for those that don't know, there was a Shiba Inu coin, which is a shit coin, which was basically there to ape.

Starting point is 00:51:05 The other shit coin, doge coin. Doge coin, right? A meme coin. All of a sudden, some guy, 13 months ago, put 8K into it, because the whole market cap was 80K. And then all of a sudden, over the course of these 400 days, that wallet holds $5.7 billion of value or 10% the entire market cap of Shiba. People get tilted by that. Then there was an article today in Bloomberg where

Starting point is 00:51:31 there's a gentleman, a 66 year old man in Singapore, who's a billionaire, right? So he was successful in his own right. However, he had made in his entire career about one or two billion. And he has made seven billion in the last two years speculating on Tesla call options. I'm not kidding. So buying short dated calls, right, writing the way of making money, allocating the gains, buying the underlying Tesla security over and over and over again. And so, you know, I was talking to Nat about this, and I was telling her these examples, and she's like, that's what sounds like a bubble. Because it really is very difficult to be in business,

Starting point is 00:52:12 and to make these decisions and to be reasonable. But also, if you're a capital allocator, or you're building companies, like how do you know if you're doing a good job, if everybody just is... I'm gonna be right back, guys. I have to do it with the goods. Yeah, okay.

Starting point is 00:52:26 We've got a quick baby change. I think what's hard about this is, okay, so one of the areas where it's sort of like best times ever is the SaaS market, which is where I invest in. And I'm obviously investing in very, very early stage companies, but we're seeing valuations now go to multiples of ARR that we've never seen before. 50, 70, follow. valuations now a go to multiples of ARR that we've never seen before 50 70 follow I would say 100 times I'd say 100 times ARR is sort of the rule of thumb right now and you're seeing what scale a $5 million company is worth 500 million anywhere from one million to 10 million I mean absolutely

Starting point is 00:52:59 but it's worth between a hundred and a billion dollars which is no sense well no it does if well he let me give you the argument for why it could make sense. Okay, let's say the company is expected to go 3.3x this year and 3x next year. That's basically a 10x over the next two years. So that 100x in two years will only be at 10 times error multiple. And by the way, if you look at the comps for the companies that have gone public, the SaaS companies have gone public, like look at toasts being worth what,

Starting point is 00:53:28 30, 40 billion. So they're trading at 30, 40, 50, 60 times ARR in the public markets on big, big numbers. So, my point is, how hard is it to go 3X, 3X? That is, I mean, going 3X is hard. Going 3X, 3X back to back, that's like winning two and you

Starting point is 00:53:46 know NBA championships are being the final it's all I don't think it's that hard I mean it's not for you but you're the king of sass I know I'm being dead serious for it for a sex founder with a million to go from one to three and then three to nine how many out of a hundred actually go from one to nine yeah I'll tell you ever trajectory and this is, this is over a decade old. We went from one million in our first full year selling the product to, well, back in those days, we looked at total contract value, a seven million of TCV, those about five million of ARR, and then it tripled the year after that. So, you know, and then we tripled the year after that.

Starting point is 00:54:23 Well, category defining SaaS companies. And then we got a partner on Microsoft, but I'm just saying that it's entirely possible. There's a lot more Yamers today, or companies that growth trajectory. So, I mean, but look, this is what's led to, you know, our fund too, which we started investing in 2019, which has a SaaS focus already has five unicorns in it,

Starting point is 00:54:44 from companies that we invested in the C2C. It's crazy. So, but look, I mean, when you're seeing results that good, where my head goes is, okay, this is too good. You know, what am I missing here? Or like, what's the downside? And how long will this sustain? Well, just to build your point,

Starting point is 00:55:00 there are these businesses that have, I would say interesting products that are growing well, but they may not actually be very important companies, yet they trade at enormous valuations. And then you have these companies that are just so superb, and I'm talking about Microsoft Google Apple and Facebook, now trade in many cases at some pretty deep discounts to their intrinsic value. But this is the sign of this histrionic behavior that I think embellishes the end of a bubble. Right?

Starting point is 00:55:39 It's this thing where you look at a growth rate and you don't even ask the structural questions about business quality, viability, sustainability, competitive, and you're like, oh, well, it's going from 300 percent to the market. It's only decaying to 200 percent. I buy. Well, it's like, but yeah, but what are you buying? And is there any longevity and staying power? This is why, I think there are some great businesses in SaaS, but I also think there's a lot of headfakes. In the public markets, particularly people just want to buy that growth as David said because they're chasing yield. Do they really understand, am I buying this

Starting point is 00:56:16 company because I really believe in this database technology versus that streaming technology versus this container technology? They don't know any of those things. Well, so this is the conundrum. I actually do believe, so I believe my own portfolio and I'm doubling down on all these companies and I do believe in SaaS. And I think the reason why these SaaS companies get such great multiples is because they're pure software businesses, very high gross margins, 80% plus gross margins. Once the flywheel gets going, they're very hard to display.

Starting point is 00:56:45 So, I mean, they have, it's not just a recurring revenue subscription type business, but you get expansion out of your current customer base. So, you know, on January 1st of a new year, you're starting with 120% and 150% of last year's revenue just from your existing customers. And then you're stacking the new revenue courts on top of that. So, I am a believer in SaaS, but when I see everything going so well, it's SaaS and NASDAQ and SAP and crypto, and then I see 125% debt to GDP and the sort of radical spending that's coming out of Washington. I just start getting nervous and I don't know if I have like a

Starting point is 00:57:26 prescription for people out there. I would just be a little bit cautious right now and Temporary your enthusiasm, but look at the flip side of it is we could keep having a boom for five more years, you know, and so the more you do You can't sit out, but you know, but on I was listening to Vinnie Liggum's show on, uh, beep, on call-in. It's called, it's called Crypto Musins. There we go. No, he and Sonny Mauder do a great show that you guys- I think we all just got 25 bips.

Starting point is 00:57:58 So, you guys saw all this into the show. It's called Crypto Musins. They were talking about all the, the dog coins the other night. It was Shiba Inu and Dogecoin and there's a couple others. Vinnie made a great point. He said, listen, if you're out there listening and you're sitting on life changing money and Shiba Inu sell, take it off the table. If you can, keywords being if you can. So look, I, you know, this boom could last for another five years. It could last for another 10 years and the value eight, valuation is keep going up,

Starting point is 00:58:27 the earnings could keep going. You don't want to miss out on that bull run, but if you've got life changing money in a highly risky position, that's your own diversified. I'm amending my advice of let your winners ride to take some chips off the table prudently. Doesn't mean you sell everything,

Starting point is 00:58:43 but just take some chips off the table. To diversify specifically. To you sell everything, but does take some chips off the table. To diversify specifically. Yeah, I mean, I think it's absolutely. I mean, I got to say, when you saw these quarterly earnings, there is no better business in the world than Google. Single-handedly, par excellence, the most incredible money-making machine that's ever been created, and a close second, as it turns out, is Microsoft. Unbelievable. I mean, just to, which is now the most valuable company

Starting point is 00:59:09 in the world, greater than Apple. Well, and Friedberg's been saying this on the podcast forever, but just to give people an idea, Qthe revenue at Google was up 41% year over year, to $65 billion in a quarter. And by the way, that is high margin. High margin. The incremental revenue on the core Google products generated an increment, operated an incremental 50% even to margin.

Starting point is 00:59:38 Six. And they just adjusted their cap ex depreciation and amortization schedule. Because they realized that their computers that they use in their data centers last four years and set a three and the networking equipment last five years and set a three. And I've been saying this since the beginning

Starting point is 00:59:56 because I worked at Google and Earth is still there. And he runs all the data centers and the networking infrastructure. When I worked at Google, there was this amazing project where we built a 10,000, we didn't build a bay built it, a 10,000 port switch called firehose, which helped increase the throughput of the data centers and have these massively paralyzed indexing and production servers. And there was so much investment made from the beginning in building the infrastructure stack, the flywheel continues to move, spin faster and faster and faster.

Starting point is 01:00:28 And here they are building their own servers, building their own racks, their own data centers, literally the most, they have their own fiber across the oceans. Literally the most vertically integrated business in history with a moat that no one will ever be able to catch up on. And I read all these nonsense comments on the internet about people being like, why doesn't someone else go after search? It's so crazy to me. People fail to recognize that what we see

Starting point is 01:00:49 is the tip of the iceberg at Google. And this flywheel is built by layers and layers of monopolistic in a good way, monopolistic technical advantages that they've built into this business over the period of the past two decades. And it is extraordinary beyond anything we've ever seen in human history,

Starting point is 01:01:07 how well this commercial enterprise is run. And the reinvestment of capital has been extraordinary. They, if you look at YouTube in the quarter, YouTube generated, this is insanity. YouTube is now operating in a nearly $30 billion revenue run rate. And that's just like pure margin, incremental revenue for Google layered on, you know, built

Starting point is 01:01:27 off of the same ad network that they were originally running on Google. Obviously they have a different ad team now at YouTube. But YouTube now has more revenue than Netflix and is growing at likely 40 to 60 percent year over year revenue growth rate, whereas Netflix is, you know, considered one of the fang stocks, you know considered one of the fang stocks, one of the top stocks. And Netflix is only growing at 22%. Sure, we're moving Netflix and just put Google twice.

Starting point is 01:01:51 It should be. And then you look at Google Cloud. There's a good cloud. YouTube in there. And Google Cloud is now operating at a 20 billion dollar run rate. And they can just throw these services on top of all these flywheels that they've built and they become massive enterprises unto themselves. I mean, it is a behemoth that is effectively not a tax in a bad way, but a tax on the

Starting point is 01:02:12 internet because they are core infrastructure to service almost everything that we all consume and use over the internet. But they give it to everybody for free. And they build the internet for everybody. They have been extremely smart about competitive pricing. As we saw recently, they dropped the commission in the Play Store to 15%. If I'm making an app and I'm giving Apple 30%, now I give Google 15%. I'm more inclined to promote my Android app and that's going to affect users.

Starting point is 01:02:36 And they're putting out this Pixel 6 phone that looks like an incredible piece of equipment. That's cheaper than I thought. They're an incredible company. Everything. Everything. Everything. Everything. Everything. Everything. Everything.

Starting point is 01:02:50 Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything.

Starting point is 01:02:58 Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. Everything. somebody and one really interesting thing that this organization did was a couple of years ago, they basically went long Google and Microsoft and they shorted Apple, Amazon, and Facebook against it.

Starting point is 01:03:19 And I asked them why and they said, it's the best inflation hedge we could come up with at massive scale that could work in a way where, you know, we're long growth, but we're hedged where, you know, the types of supply constraints that could come in and, you know, kick us in the ass would never affect Microsoft and Google the same way that it would affect Apple and Amazon, which, by the way, in their earnings results, they said, right? Amazon has huge issues on the supply chain side, Apple has huge issues on the supply chain side. Amazon was up 15%, they missed their numbers. Although Amazon Web Services is a 40% year over year, also on a big number, $16 billion in AWS revenue for Q3. So that as a standalone company is now on a...

Starting point is 01:04:07 What did you guys think about Metta? $60 billion. Oh my God. I mean, that was, did you watch the video? I watched the whole thing. I watched two minutes of it and then I stopped watching. PTSD. I mean, it's basically, you have Facebook in the face

Starting point is 01:04:24 of all of the things, all of the times they got their hand caught in a cookie jar saying, this is going to be the new world, but instead of us doing everything wrong and screwing the users and their privacy and democracy and creating strife in the world, this time we're going to make it open source, this time we're going to build a coalition in partnership. And this time it's going to be awesome. And it's like a dystopian SNL skit where Zuckerberg is describing the future. And he literally describes how proud he is that you're going to be able to play Grand Theft Auto. And Nick Clegg is like, yeah, this is going to be amazing. This time we're going to bring all the regulators and the scientists in to

Starting point is 01:05:03 tell us how to build it and we'll have consensus of how to build the future. And you're like, do you just say that everybody in 3D is going to be in a virtual space beating each other up with bats and guns and killing police officers in Grand Theft Auto? Luckily they didn't show a clip of it. But it was basically Zuckerberg taking credit for every single virtual reality or augmented reality thing you've seen over the last 20 years. He literally took everything from education to hollow lens to poker games and he took basically credit that this is going to be the future in that instead of this time it being a closed ecosystem it would be an open one that supports NFTs and don't worry this time.

Starting point is 01:05:45 I think any developer who puts any amount of their effort into supporting in any way Zuckerberg's view of the metaverse is crazy. When they could do it on a distributed, decentralized, crypto-based, open source platform, you do not wanna give Zuckerberg any more power and if there is even a 10 or 20% chance that this is the next big compute platform, Zuckerberg needs to be stopped from doing it by the market.

Starting point is 01:06:10 J.K. I think you're crazy. I think you've lost your mind. I haven't. Yeah, I think you've lost your mind. Oh my God. I have a counter argument too. Okay, David, you start. Well, I don't even know if I could categorize what I'm going to say as a counter argument. I don't even know how to counter that. All I'm going to say as a counter argument. I don't even know how to counter that. All I would say is look, I think it's really great that Facebook is spending all this R&D money on MetaVirtual Reality. Oculus is a really cool product. I think Jason, you've made the observation that people use it once say it's the coolest

Starting point is 01:06:42 thing ever, never use it again. There is that element to it. They have to solve that. Using Oculus for the first time was one of the most unique experience I've ever had with computing, but I admit I don't use it anymore. It's just not something I... Better or worse than porn hub the first time. But anyway, look, I think the first... Where's the fact that... That's his way of saying worse.

Starting point is 01:07:06 I think that the fact that Facebook wants to do all this R&D and virtual reality great. Changing the name of the company, however, at this point in time, it felt to me like a little bit like Philip Morris changed his name to Altrier Group. And by the way, I don't buy the idea that Facebook is like cigarettes, I don't believe that at all.

Starting point is 01:07:24 I don't think it's bad for people in the way that it's been hyped up to be. What you were saying, this is a PR marketing strategy. But it feels like they're running from their name. And basically, it's almost like saying, you know, this whole business of social networking has been so sullied that we need to appear to be a diversified portfolio of companies

Starting point is 01:07:43 of which social networking is just one small piece. A deprecating piece. Yeah, exactly. I don't really buy into that. And I think if that was any part of their motivation, it's a mistake because I think the only thing Facebook should do about all these accusations is get up on their hind legs and fight because I think like all of these leaks from the so-called whistleblower, I think this is a completely orchestrated political hit.

Starting point is 01:08:09 And they should just fight back and push back on it. I think the dangers of social networking have been vastly exaggerated. So it seems to me like they're buying into that nonsense by running from their name. So I at least would not have done this right now. I would have won that battle. And then if it was still important to change their name, then I would have changed the name. Well, the losing young people at an extraordinary rate

Starting point is 01:08:31 on Facebook, US teenagers were projected to degrees by 45% over the next two years, young adults between the ages of 20 and 30. Yeah, because they're going to insta. We're expected to decline by 4% or TikTok, I think is probably more accurate. Yeah, TikTok is big, yeah. Yeah, during the same timeframe,

Starting point is 01:08:44 via leaked memo obtained by the fridge. By the way, I mean is probably more accurate. Yeah, TikTok is big. Yeah, during the same timeframe, via leaked memo obtained by the way. By the way, I mean, how in the world is Facebook or Instagram more dangerous than TikTok? I don't get it. No, TikTok is drenched. Which, but by the way, our Stan making our Henry Belkasser of TikTok is reporting that we have like millions of views over there.

Starting point is 01:09:03 So there's some rogue. Oh, I love TikTok. I love TikTok. I love TikTok. He's building a world. Is reporting that we have like millions of views over there. So there's some rogue I love tiktok Tiktok You're right. You're right the tiktok account that there's an all-in tiktok account done by a fan And we got like two million views in the last week. It is absolutely We just passed Rachel Madddo and a bunch of folks. You were more popular than all of MSNBC. Yeah. Well, I mean, come on.

Starting point is 01:09:28 Wait a second, the benchmark. Friedberg, you guys remember a year ago, Larry Ellison, negotiated this deal with Trump to buy TikTok for like Trump. Yeah, you just got thrown in Lennie. Friedberg is a lot of some of us on was supposed to be on TikTok's port. Yeah, that's by the way. Xi-Shing Ping is on the Nye right now and Larry Ellison got ticked to their trade. Nobody talks about the Billy that Ellison kicked into Tesla right before

Starting point is 01:09:55 he made like a bus. He made like $12 billion. $15,000. $15,000. He's such a bus. He put a billion dollar investment, joined the board. He's such a boss. He's so sick.

Starting point is 01:10:09 Zip, talk all the snack you want about this guy, but he's landing spaceships on a drone ship in the middle of the ocean. What do you do? He'll figure it out. He'll figure it out. And 15x. It's insane. But wait, I have one question for Freeberg.

Starting point is 01:10:22 Is Zuckerberg pulling a Larry page? IE somebody else become CEO of the Facebook collection of companies and then he becomes the chief product officer and then doesn't have to go to Senate hearings. No, I think he's way more active and driven in terms of product direction than Larry ever was. So I don't think they're the same person and I wouldn't like him these two.

Starting point is 01:10:41 What about the meta strategy of changing the company name? By the way, my prediction was that they were, I should have done this on the pod a month ago. I said they were gonna change their name to meta. I think that at some point as you diversify these businesses away from your core and you have this core engine driving the business, you know, you have to make it look like these businesses can

Starting point is 01:11:04 and will operate independently. While they might get some leverage off of one another and one might feed into the other, they need to be able to operate independently from a kind of public perception, operating a management perspective. That's what Alphabet did. It's a natural progression of states. As you start to do things that are too far distinguished from one another. And so it feels reasonable. I think, you know, is this a whole PR rebranding? Maybe to some extent, that's helpful. But I do think that this idea that we need to do more than we're doing today,

Starting point is 01:11:32 and we need to make a big hard cold bet on it, is what this represents. Now, the important psychological question, is he doing it out of a matter of defense, meaning, like, does this signal fear about the core business, or is it about ambition and aggression and rebets on new opportunities and emerging opportunities that he thinks? And that's the big debate that I think is kind of going on right now. It's how much often when you see people make big moves like this, it's either out of greed

Starting point is 01:12:00 or out of fear. And I think some people are asking the question, how much should we be afraid of the core business being eroded based on his making the sort of a big bet? Or you think this could perpetuate that or it's a bit of a tell about this is happening. A tell. A tell. Right. And I'm not saying that's the case. I'm saying that's the question. Right. And that's the question a lot of people are asking, is this a tell that the core business is at serious risk? Why do he's putting 10 billion into it this year? For example, this Apple ad revenue business I think is climbing by billions of dollars

Starting point is 01:12:32 while Facebook's core business is being affected by the cookie tracking policy change on Apple iOS. So at the same time that Apple's reaping these benefits from the changes that they've made in iOS, people don't really have great visibility into how much it's really affecting Facebook's ad revenue at this point. This could be, as you point out, the tell that maybe things aren't that good and he needs to diversify and he needs to make a big, aggressive bet elsewhere.

Starting point is 01:12:57 We'll see. We'll see. I'm pouring question, Shamaat. Are we going to celebrate the birth of both you and Friedberg's daughters with a poker game. Yes. Yes. Do you want me to give you my thoughts on that? Or no, you don't care.

Starting point is 01:13:13 No, I was a joke. Can you take a paternity to go to? I'm gonna listen. I got a board meeting, I gotta go, bye. All right, for the queen of Kenwa. Wait, wait, don't you wanna know what I think? I think on the meta thing, I think the risk is if Google and Apple take the hard work costs to zero, because I think there's an incentive in a highly fragmented ecosystem. You have to remember when Apple introduced the iPhone, there was nothing that came before it,

Starting point is 01:13:40 so it was completely groundbreaking. And I think what Facebook has to figure out is how to make their VR experience so revolutionary that it before it. So it was completely groundbreaking. And I think what Facebook has to figure out is how to make their VR experience so revolutionary that it attracts developers. And in the meantime, if Apple and Google figured out how to kind of give it away for free and just kind of make it a low-cost hardware game where everything else Jason, as you say, is this kind of open-source thing where it's like a browser. Yeah. Right. Where everything just exists in a DeFi kind of world. Like the web and the internet. Then it's a little bit more problematic for all the money spent.

Starting point is 01:14:10 That's what they have to figure out. If you think the taxes are going to be VR or AR, what wins the day with consumers? Well, it's a good question. I mean, they're very different experiences. Both can win. But if're not, we're talking 20 years from now, which one will be used more? We're 10 years from now, 10 to 20 years from now, which one will make more money be more relevant, be more utilized? Well, I mean, AR, the dream there is that you were these glasses that have like the Terminator view,

Starting point is 01:14:40 where it's like scanning the world and giving information, you'll never forget anyone's name again, stuff like that. That would be kind of useful, maybe. VR, I think, is more about immersion. It's really like a gaming experience, I think, at least now. I think it's all about AR. Basically, what he was saying there, he was talking about VR, I think VR let you make the worlds. And then AR let you experience them

Starting point is 01:15:03 concurrently with the real world. And it's the same tools and libraries and kits as a developer making it for VR AR is going to be pretty, I think seamless. And so I think Apple has skipped VR on purpose and they're going to AR. I think Google is basically going to go directly to AR. And then Microsoft already has HoloLens that they've been investing in heavily. And I think they got the biggest lead that least we publicly know about. So I think it's going to be a race for who can

Starting point is 01:15:32 get AR to work. And VR is just like kind of a waypoint on the way there. There's a lot of stuff going on. And I'm sure that people will want to check out of the real world for some amount of their life. But they'll probably also want to be in the real world for some part of their life and. At some point maybe if those two things merge that distinction what matters much and I think if the experience is compelling enough. It can happen. Why me think about us playing poker on the poker, one of those poker apps, if we could put our glasses on, sit in our room and see each other at a poker table, you

Starting point is 01:16:10 know, like if Bogue wanted to play from Australia, it was, you know, projected into the seat on the game and we all saw them there with glasses, AR glasses, that would be amazing, wouldn't it? Sure. Be able to, you know, have two of the people at the game be projected in as it were. It could be, especially if it was Diego, I mean, that would be pretty great. I mean, for the, I'm talking for the good of the game. I did a tweet where I said this in VR, people leave it on the shelf and I, you know,

Starting point is 01:16:34 Ponga Lucky and a bunch of people got in my face about it. And then we had like a actually really good discussion. And I said, well, what about serious gamers? Because I'm talking about serious gamers, they all buy it and then they never use it. They said, yeah, it, what about serious gamers? Because I'm talking about serious gamers. They all buy it and then they never use it. They said, yeah, it's not for serious gamers. I said, okay, well, what about iPad gamers and casual gamers and bejeweled and candy crush?

Starting point is 01:16:52 They're like, oh, yeah, they're not interested in it. And I'm like, well, who are the gamers then? Is it the intense ones or the casual ones? They said, no, there's a new category. The number one game like Rec Room, Beat Saber and Golf are like crushing it with a million users a month in some cases. You know what they all have in common?

Starting point is 01:17:09 They're physical activities where you get some amount of exercise and it would be very difficult to coordinate in the real world. I know, but Jason, when you look at things like like Axi Infinity where there are play to earn movements that are happening in sort of this layer three kind of DeFi world where yeah, you're getting paid to basically, you know, play games, that could be a job. And then you

Starting point is 01:17:30 will spend eight to 10 hours in a metaverse of some sort. So these things are very possible. I find it so dystopian. That's true. But I'm sure that our parents find some parts of our life about dystopian. And, you know, we find certain parts of our kids' lives the Stopeian, it's just what happens. Yeah, I don't know. All right, everybody. We will play poker. We will play poker.

Starting point is 01:17:52 Yeah, we got to play poker at some point. I mean, we'll play poker. Either Tuesday or Thursday. Okay, yeah, well, that's good. Perfect, babies will be like almost, or we both are. Which days are you gonna flake Tuesday, and what?

Starting point is 01:18:03 Yeah, which day will you flake Tuesday and Thursday? Yeah, Thursday, Saturday. Let's see, two days off. You want to come pick and which day will you flake Tuesday and Thursday? Tuesday, and Thursday, and Thursday, and Thursday. Let's see, two days off. I mean, do you want to come pick you up? I can play on Tuesday. All right, everybody, four, the Queen of Kenwa, the Rain Man and the Dictator, I'm Jason Calcans. We'll see you all next time.

Starting point is 01:18:16 All in, lovely bussies. What? We'll let your winners ride. Rain Man, David Sack. I'm doing all the And it said we open source it to the fans and they've just gone crazy with I love you, I just we know I'm doing all the

Starting point is 01:18:34 I'm doing all the I'm doing all the I'm doing all the I'm doing all the I'm doing all the I'm doing all the I'm doing all the I'm doing all the I'm doing all the I'm doing all the I'm doing all the I'm doing all the I'm doing all the I'm doing all the I'm doing all the

Starting point is 01:18:43 I'm doing all the I'm doing all the I'm doing all the I'm doing all the I'm doing all the I'm doing all the I'm doing all the Besties are gone, go through it. That's my dog, take it away. It's your driveway. Sit next. Wait, I don't think it is. Oh man, I'm gonna have to get out of your room. You should all just get a room and just have one big hug. Or two, because they're all just like this sexual tension that we just need to release that house.

Starting point is 01:18:58 What, you're the big, what, you're the purest. Big, what? We need to get merch. Besties are gone. I'm going on a league!

All-In with Chamath, Jason, Sacks & Friedberg - E53: Wealth tax, dealing with inflation as a capital allocator, big tech earnings, Facebook's rebrand, paternity leave & more

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