All-In with Chamath, Jason, Sacks & Friedberg - E55: Valuing crypto projects, Rivian worth $100B+, inflation: causes and corrections and more

Episode Date: November 13, 2021

0:00 Bestie intro and Solana Breakpoint talk 4:43 Covering the censored segment from last week, how to value crypto projects and general investing, what to take away from the podcast 30:45 Rivian's >$100B valuation, greatest CNBC hit of all time 42:06 Inflation: reacting to the CPI number, problems with MMT, strategies to curb it 1:01:34 Xi Jinping becomes China's "Supreme Leader" 1:08:35 GE, Toshiba, and J&J break up into separate businesses: is this the end of the conglomerate? Insights from PayPal breaking off from eBay, what buybacks signal 1:24:44 Besties wrap the show Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect Referenced in the show: https://www.wsj.com/articles/us-inflation-consumer-price-index-october-2021-11636491959 https://twitter.com/denverbitcoin/status/1458900776747737093/photo/1 https://www.dtnpf.com/agriculture/web/ag/crops/article/2021/11/10/nitrogen-fertilizer-prices-shatter-1 https://www.wsj.com/articles/u-s-tests-israels-iron-dome-in-guam-as-defense-against-chinese-cruise-missiles-11636455224 https://twitter.com/Sen_JoeManchin/status/1458443966135902221 https://fredblog.stlouisfed.org/2017/02/two-tales-of-federal-debt https://www.wsj.com/articles/chinas-xi-gains-power-as-communist-party-designates-him-historical-figure-11636635312 https://www.cnbc.com/2021/11/09/ge-to-break-up-into-3-companies-focusing-on-aviation-healthcare-and-energy.html https://www.wsj.com/articles/toshiba-like-ge-plans-to-split-into-three-parts-11636700609?st=e6zgv5yq433lvr3&reflink=article_imessage_share https://investor.pypl.com/news-and-events/news-details/2021/Response-to-Market-Rumors-of-Discussions-Between-PayPal-and-Pinterest/default.aspx https://www.marketwatch.com/story/apple-spent-nearly-20-billion-on-stock-buybacks-in-q4-at-average-prices-below-the-vwap-2021-10-29 https://www.nasdaq.com/articles/which-companies-spend-the-most-in-research-and-development-rd-2021-06-21

Saxx is all to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to do to robot to do to do to do to do to do to do he's a robot Don't quit your day job to mouth. That's all I can say bro. You don't remember baby shark I mean how many no he doesn't know his kids first names for birthdays. How does he know baby? Hey everybody, welcome to episode 55 of the All in Podcasts. With us again this week, the dictator himself, Chimalpali Haapatia, the queen of Kinwa, David, Friedberg, and coming back from Portugal and the Salana conference, riding his... Where heroin and prostitution are legal. David, we're gonna double click on that, but you jumped the gun here on the docket.

So David, how was the heroin in Portugal? Right. Great, okay. I was fully drinking the Kool-Aid at the Solana conference. It wasn't heroin. It was Kool-Aid. It was literally Kool-Aid. How many people were at the Solana conference in Portugal? Why is it in Portugal? What happens at a Salana crypto conference? I think there were thousands of people there, and it was, I mean, easily. And I mean, it was kind of a madhouse. When people were trying to get in last minute, nobody could get in because the conference was like totally sold out, it was a lot of crypto developers, a lot of people with projects.

And why Portugal? I think because there's a lot of conferences having in Portugal right now because they are easier on the COVID restrictions in a lot of other countries so you can actually get in there and host a conference. What was it indoors with no masks? For masks, actually. I can't remember if like masks were required, I did see people wearing mass indoors. So, were you required to be vaccinated? Did I do, I think I did show a vaccine pass that we were pulling when I checked in. I just did my booster.

I'm gonna do my booster. It kind of, it was a little, I would say, the same kind of shitty feeling as the second one. Which kind of, I just got, I mean, I had the first two or Pfizer, so I took Pfizer. She was, the nurse actually gave me a choice. She's like, you can do whatever you want. Pfizer, Moderna or J&J, I just, I didn't know any better.

I texted my doctor. So I just took Pfizer. Although the interesting thing is, Moderna is the only one that's dose regulated for the third dose. So there's a, they actually give you less specifically, but Pfizer is the same for all. I think we talked about this on the pod. There's one theory, which they told you get whatever one you can get was the instructions, because it's more important to just get one than

which one you get. But they said there's a swish cheese theory, which is if you took two slices of swish cheese from two different bricks of it, the holes would not be the same. And therefore you overlap them. So whichever deficiencies each one had, maybe the other one doesn't. So I should have gotten Moderna's what you're saying. That would be, if you believe in the Swiss cheese there, I don't know, free burger or science guy, I should ask here in Rogers what he thinks. I mean, he just straight up lied about being vaccinated, huh? I think so. And I think the NFL's not doing anything about it. Yeah. That's not cool. I, why would you lie about it? I mean, NFL's not doing anything about it. Yeah. That's not cool. Why would you lie about it? I mean, he would have still been allowed to play.

So there was no reason to lie about it. I'm not totally up on that story. The rumor is that Kyrie is gonna be playing basketball soon. Because you are. The Adam's is gonna lift the vaccine restrictions. You will not need to be show a vaccine card or a mask. Rowie, I don't think it's gonna matter because the warriors are shooting the lights out and Clay hasn't even come back yet and so The second you see Gary. Did you see Gary Payton? Yeah, Jr These clips all the second. I mean, I mean he's like living above the rim and just trying and wise men, his wise men back.

And then Wiggins is playing great basketball. I mean, Warriors are gonna win this year. I don't know. Steph is otherworldly right now. Yeah, I think Steph's got something to prove, even though he doesn't, but he's playing like it's got something to prove. Okay, so do we want to just cover the elephant in the room?

The last episode, I think we should just get out of the way because it relates to Salana, there was, we took something out of the last podcast so people understand we have an agreement between the four of us. If there's something that somebody doesn't want in the pod after we record it, we'll take it out because we don't want anybody.

I mean, I think the philosophy, we haven't said this out out because we don't want anybody. I mean, I think the philosophy, having said this out loud is we don't want anybody to say something they regret that could cause damage to other people or to themselves. So if they want to take something out that they said, that's fine with all of us. And basically each of us has veto right on something. So last week, two people took their veto right on something and we took something out. You want to explain our thinking on that, Sax, and why we're reversing. Yeah. Okay.

So a few weeks ago on the pod, there was no bleak reference between me and Chema, so regarding Salana. And so some internet theorists that claimed that we were trying to engineer a pump and dump in Salana, which if you actually listen to what we said, it certainly is not a pump. Let me explain what it was. So craft is the beneficiary because we invest, we're the first investors in multi-coin. We were kind of like, they're seeing investor invested and they're put in something like

40% of the money for their special opportunity fund. They were one of the first investors in Solana. So we are the beneficiary of about a billion dollars of Salana. So thank you, Multicoin. At some point, well, so they have started doing distributions. But at the time I texted Jamath, they hadn't really started doing distributions. I didn't know how deep and liquid the market for Salana was. I just asked Jamath, like, I'd heard Jamath may have said something that he was long Slana and wanted to accumulate. So I sent him a text saying, hey, are you interested? You know, I

thought maybe we could do a no TC transaction at some point when we get our Slana. He basically, you know, we had a brief exchange about that and then he mentioned on the pod. That was the extent of it. What I didn't know at the time, but learned subsequently, is that the market for slotted is very deep. About three and a half billion, notional is traded every day. So, there's no need, even if we wanted to fully get out of our slotted position, which, by the way, we don't even have, you know, multi-quinced still has most of it. It's not necessary to do an OTC transaction. We could just sell it. Explain what OTC transaction is. Oh, it just means over the counter. It just means that instead of going to like an exchange, you would deal with like a trading

desk or it could just be direct like for me to Tremoth. So that was basically the exchange. It, Tremoth and I talked about it for maybe two minutes and then it came up on the pod for 20 seconds. So in some internet theorist basically clipped it and tried to accuse us of organizing a pump and dump. Well, obviously if you're talking about selling something, it's not a pump. It's also not a dump either.

So anyway, the reason why we said cut it out last week is because we didn't want to give oxygen to this stupid conspiracy theory that somebody had invented on the internet with no basis whatsoever, because you could spend all day trying to like shoot the stuff down. But then at the Salana conference,

enough told me, enough people told me that this was becoming a meme that I thought was worth addressing. And what, and look, what you have to understand with crypto is that for every cryptocurrency like Salana, there are haters because they're invested in that's their own, or condoms or whatever. It's very tribal, everybody's talking up their books, there's haters because they're invested in. It's very tribal or kind of whatever. Everybody's talking up their books.

They're all pump and dumps. And there are armies of anonymous Twitter accounts that will coordinate attacks and or memes, etc. Right. So they're trying to spread the rumor that like VCs are big holders in slana and are going to dump it. The reality is that multi coin has a large position, but they have LPs. They are slowly distributing their positions to LPs. We know that-

In the forms of the tokens. They're not selling them and giving you cash. They're giving you the tokens. You have to sign what you're doing. Yes. And by the way, that's what we'd like to do as well. We're currently working through those mechanics because it's actually complicated for a VC firm to distribute in kind through tokens, but... If you had to give them to your LPs, that's what I would like to do. Exactly. People are doing that with Coinbase. Coinbase is providing that as a service now, for my understanding. We have to work through with our LPs,

but that's what we're going to try to do, is distribute it in-kind, so everyone can make their own decision. I have a couple things to say. I've only been a buyer. I've never... I haven't sold a single salana token. And so we are, you know, net buyers and we're buying a bunch of stuff.

But I hate acknowledging that. And this is why, you know, my tone was more non-committal when we did the pod, is that I really don't like this culture that's emerged via Twitter mostly, where you all of a sudden have to be this maximalist that basically falls on their sword and never sells in order to be legitimate. And I think that that's a really dangerous place to be. So look, if I take a much, much, much, much, much, much, much, much, much,

much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, November of 2021. We have the stock market at absolute all time highs. Ripping. We have crypto at absolute all time highs. Ripping. We have the art markets. I don't know if you guys saw Phillips and Christie's in Southern Beas this past week at absolute all time highs. So the another people for 25 million. We have inflation at a 30 year high, we have 10 year break evens at a 25 year high.

We have, you know, one point somewhat trillion dollars that we just approved last weekend, we're still horse trading on another three, you know, one point eight trillion dollars of stimulus that we're going to put in. And so when you, and then you have, and I think the most important thing, which is the two most important founders of our generation, the two smartest people who have really consistently won, Elon Musk and Jeff Bezos, have collectively sold more than $11 billion of their holdings this year alone. And if you can't take all of that and decide for yourself what's right for you and your family,

you're doing yourself a disservice, I think it's important for me to never sort of like, you know, be forced to tell folks whether I'm buying or selling, although I'm willing to do it in moments where I think it's important. But I think it's really important to understand the context. And so I think like these folks that like think derisively about individuals who are managing risk, I think it's really naive. And I think it's, it creates a lot of missed opportunity for them as well. If the smartest people in the world are now selling their core holdings that they told you they would never sell and you are not reconsidering your position on things, you're either much smarter than them, or you're being really, really reckless.

All right, there you have it. Yeah, no, you know, we, just the people also know inside baseball, we have a docket of stories that we talk about on our group chat that make up the docket for the show, but I'll bring stuff up, and I didn't bring that up in some way to cause trouble or anything. I thought you guys would want to clear the air about it. And I understand your mouth's position of, hey, you don't want to give these oxygen or whatever, but I think that's all I do. I didn't even know that we needed to clear the air until, you know, I went to the conference

and enough people mentioned it. So. But what's so funny is half the people on Twitter spend all their time in crypto land saying things like, never going to make it have fun staying poor. They're extremely Jason, as you said, tribal. I'm not sure that they're doing first principles analysis of these things. They've got exceptionally lucky. Some of them are exceptionally good, but many people broadly speaking have gotten exceptionally lucky. And I think a little bit of it is getting to their head where they become very virulent against people that they think whose perspectives may actually be negatively affecting their

position without actually understanding what David said, which is these are incredibly deep liquid markets. And one person's opinion is can't do much of anything. Right. I mean, it's a really good point. I mean, I'd like to give my opinion on Solana, but the thing or just crypto in general, the thing that's like hard about it is that it's hard to talk about the benefits

of say the Solana blockchain without being seen as a bumper of soul or a dumper of ether, whatever, because all these things are so intrinsically connected. I mean, I learned a lot of really bullish things about Solana at this conference. I mean, the biggest thing is, I mean, there's basically a battle for the hearts and minds of developers going on right now between Salana and Ethereum. That's why

Salana has raced up to, you know, over 200. I don't know what, like, 7,000 percent increase or something incredible like that. The reason is because Salana, as a blockchain, gives confirmations back in something like 400 milliseconds, whereas Ethereum takes minutes and transaction that might cost tens of dollars, 10, 20, 30, $50 of gas on Ethereum costs pennies on Solana. And so that's revenge. Yeah, exactly. It's also a lot of developers feel like the tools,

the developer tools that they've created are easier than building on. Solidity, the thing that Solana gives up, the trade off that it makes is decentralization. There's basically that transactions are processed by 20 validators and they're a top 20 based on holdings of souls, it's kind of like this proof of stake model.

So, anyway, there's some tradeoffs there. I can tell you that it's the view of, our friends at Multicoin and I heard a lot of this views at the conference, although obviously you have to take it with a grain of salt because these are the biggest believers, but their view is that Slana over the next year will flip Ethereum based on developer activity. That there's real, the point is being created. I think we spend a lot of time actually before we do anything is that's the only thing we've been looking at you know and

syndica fractal A lot of the stuff that we've done D so is purely driven by developer interest when we see developers In the open source ecosystem building things on top of the stuff making stuff that's composable and usable by other people and building infrastructure You know, we don't really second guess that because they are spending their most important currency, which is not monetary capital, but human capital. Yeah, there's time and there's skill and there's a lot of application and other projects.

Yeah. And so when enough developers, so I, I've always thought you just follow the developers and as more and more projects get started, you just have to unemotionally support that. I think the writing is on the wall, which is Bitcoin is gold. Ethereum looks like it's trending to be silver. And Solana could be the first, but there will be others that come after it of real developer ecosystems that can be built on top of it. The other thing that I would offer up to people for them to think about is, before you blindly

go in Russian to crypto, one way in which I try to think about these things is in the following way. You see these projects get started all the time, and I would view each of these projects as a mini economy and really try to think, what is the economic value of what's happening under the hood? So simple example, helium is an interesting project that's trying to build a completely decentralized 5G infrastructure. Render is a really interesting project that's trying to build a completely decentralized

graphical processing infrastructure, GPUs essentially. In both of those things, you can quantifyably, economically measure what the value is that people get, right? In the case of Render, you're basically displacing an AWS instance. And so that has a price and a value. And so, for Render to be valuable, there's an economic value that it replaces. If you're joining a hotspot that has an economic value where you had necessarily have to pay, to get Internet connectivity, if you all of a sudden are on the Healing Amnet work, that displaces a measurable economic quantum.

Understanding that is probably and taking the absolute value that is the best way of really understanding which projects have potential. So if you take those two ideas and marry them together, where is their developer interest and where is their measurable economic activity? At the intersection of those, I think are the really compelling projects that can win. Well, the thing that complicates all of this is that the developers are not just picking based on which language or technology or stack they think has the most potential. They also have acquired economic stakes in it. So a developer who might be objective and say, Hey, this new platform is better than Ethereum might be sitting on millions of dollars in Ethereum. And they're

like, I want to keep my back going here. And I'm going to keep talking my book. Possibly, but I do think that developers in general will choose the platform that's easiest and cheapest and fastest for them to develop on, which would mean the list on CoinMarketCap of market cap ones that has been static for a decade of crypto almost, you know, or largely the top 10 doesn't change that much. It's XRP at Stellar, Ethereum, Bitcoin, Tether. That could be up for grabs. That whole thing could change now that people are actually building projects and the projects

are getting competitive with each other. And that's that flippeting we're talking about, correct, Zach? Yeah, I think that what's tricky here again is I never want to give anyone an investment advice. I mean, that's just not my job. And if there's anyone out there listening to the show because they're trying to get tips or tricks where for investment, like I'm not really comfortable telling people what to do. Sure. So, you know, everyone just has to understand that.

I do feel like what I saw at this conference over the past week in terms of developer, enthusiasm, activity was very bullish. Actually, it was a lot like I went to the Ethereum conference I think was back in 2017 several years ago. And it felt a little bit like that, although I would say that this time it felt less academic. Like several years ago, it felt less academic. Like several years ago, it felt more like white papers. Now it actually feels like real projects and businesses. The people are trying to create so- Still infrastructure and less applications or more applications in infrastructure. Well, I mentioned a couple of them. So there's Helian, which is

creating a decentralized network for Wi-Fi. There's a Render, which is creating a decentralized network for GPU. There's one called HiveMapper, I'm at the founder. there's a render which is creating a decentralized network for GPU. There's one called HiveMapper, I met the founder. It's a decentralized network for people to map the world. You can think of the concept of a miner that Bitcoin invented. Think of them more as a resource provider to a network. So with Bitcoin, we call them miners, but they're the validators of transactions, and we're trying to incentivize them through block rewards, basically through small bits of Bitcoin that get released to provide these valuable computing resources to the network. People are figuring out now how to create massively decentralized networks where you have thousands

or millions of resource providers provide a little bit of something to the network for everyone's benefit in exchange to get some coin. That's like a really interesting model that couldn't exist before crypto. And so, yeah, I mean, I think it's very interesting. But, you know, in order for that to work, you have to have like very, you need fast, efficient, scalable blockchains. And the feeling, I mean, I'll give credit here to Tushar, who's one of the GPs of multi-coin. His view is that this was the iPhone moment for blockchain, that what's long has built because it's massively scalable and also very cheap.

I mean, again, you can run a lot of transactions for pennies. Now, all of that is obviously very bullish first of all. And the thing I wrestle with is, and Jamal kind of alluded to this, is I think everything's kind of in a bubble right now because of monetary and fiscal policy. And so, you know, I guess I, you could say that I'm long Solana versus E, but I do kind of worry that the whole world right now is very bubbly.

And so as a GP, like what do you do about that? I can tell you right now, like this second, we are sitting on Solana that we have not sold. So, you know, I am long in that sense, however, sometime over the next, whatever number of years, we will distribute out our position of Solana to LPs. And the LPs will make their decisions. And then they'll make their decisions.

Might specialize in crypto and want to keep it. Other ones might not want to hold assets and need that money to fund their endowment to give scholarships to students or whatever your LPs particularly do. Right. Well, yeah, I mean, and so I guess to the issue of, hey, we're not giving investment advice here, we are all capital allocators and startup creators. So we're talking about our day-to-day lives here.

Nobody should interpret this as investment-ish vice. And especially not in a world now. I don't know if you guys saw what happened with Rivia in this week. I don't know how we don't talk about a company with essentially no public sales. They've sold 148 cars to their employees. It's worth $120 billion. Any freeberg? Did you see this IPO? Any thoughts on it?

Um, seems like you have investment advice for the audience that you'd like to give. Tell me what Rivian does Can you play that video that you found that you shared with everyone you have that video? Okay, well, I we do have it. I can we queue it up. Did you see this yet? So I don't want to beat this point to death But I just see it's so important for the audience that what they should be getting out of the show if their fans is maybe like advice on how to think or like critical thing. Critical thinking and how we think about invest first, not principle tips.

Exactly. So look, if you want to invest in crypto, first of all, like go understand like what all these different projects or blockchains do and figure out what is the purpose of the token in that system. What are the token economics? Yeah, does it even make sense or is it just a scam? Then if it's something like a blockchain, go research, how many projects have developers on them

and how much code is being checked in? And maybe open a wallet and buy some NFTs and buy some ETH and transfer it and learn just how to set up your internet connection. Right, right. It was 1995. Right, exactly. And then on top of all that you got to consider macro forces because, I mean, and I

think, you know, my friends at Multicom would fully concede this that, you know, it could be the case that if there's a crypto bust over the next year, and this thing, you know, crypto has gone through boom and bust cycles for many, many years, you could have. That's a standard. It's a standard. So you could have a situation in which, for example, many years. You can have it. That is standard. It's a standard. So you could have a situation in which, for example, Solana flips ETH and yet still goes down in value because there's an overall bus cycle.

So you have to conserve the macroeconomic factors as well. So there's a lot of things to consider here. And then you also have to consider your own risk tolerance and what is appropriate for your portfolio and it may be different. When do you need your money? Are you a 25-year-old? Everything is at all time highs, and the two smartest men in the world are selling. Not just them, by the way.

There are other guys that are heavily on the other side waiting for this whole thing to go. Like, Drunken Miller has been very vocal about this. And he's been the best macro trader in the last 30 years. So. And what was his position as what exactly? That we're printing too much money, and we trader in the last 30 years. So... His position is what, exactly. That we're printing too much money and we're in a lot of trouble. So, you know, look, I mean, generally, there is, I think, a good point of view being shared

here, which is, you know, understanding how to think about what you're investing in and what your expectations are versus relying on someone's advice or opinion on what to do. If you have to rely on someone else's advice or opinion on what to do, you're going to eventually lose money. You should not be in that investment capital. You should not be in the market. Because guess what? Anyone that's giving you advice or opinions is going to make money if you do what they tell you to do, if you do what they tell you to do. End of story. So at some point, they're gonna all make money and you're gonna end up losing money.

And it's a better game to play, to learn how to kind of be thoughtful about where's your money going, what are you investing in? And it takes a lot of time and a lot of money. I've been sitting here silently as you guys have been talking deeply about Salana and Ethereum and Bitcoin and the crypto markets because I realized so much of what's needed

to be successful in entering this market is a depth of understanding and a depth of knowledge. My time is highly limited. I have spent no time understanding crypto markets because it's so deep and it's so fluid. It's changing every day, it's changing every week. So if I can't get smart enough to feel confident about the opinions and decisions that I would be making as an investor

I decide not to invest and I stay out and so I'm not an active crypto investor And you're a specialist and you're on the racer's edge on synthetic biology and so many other Whatever there are other areas where it's better for me to spend my time in my energy And I chose him to do that versus being drawn into what feels like a very exciting kind of turbulent time. There are other areas that I kind of spend my time on and I just kind of try to recognize that maybe I don't know what I'm doing if I were to try and get involved here. So I'd rather stay out.

And I think that's counsel for anyone. If you're going to make an investment, it's important to feel confident about the knowledge and the depth needed to kind of be different. I'll build on your point. confident about the knowledge and the depth needed to kind of be different. Yeah, the, share it to other people, a starting point. As David said, a journey where they should then, if they're curious, go and do their own work. It turned out not enough people were doing the work. So then I had to start adding disclaimers to these things, saying, hey, guys, I'm not telling

you to buy this. Please be abundantly clear. These next backs that I will eventually launch, you're going to see an entire like in bread block letters, like please don't buy this. Right? Because to your point, it doesn't matter what you say, people want a lazy, easy way out. And so I just want to reiterate what all of you guys said. None of us are dispensing advice. We are not telling you to do anything. Please do your own work. And please come to your conclusion. It is your responsibility and if you're not sure go and look at your children in the face or your significant other in the face, you are responsible to them. And so do your own work.

I'll say one more point on where I sit as an investor, I choose to only participate in investing in what I call productive assets. That is, you put some money into something and whatever that thing is, is generating money in some way or is trying to generate value through a set of activities like a business or owning an apartment building where you're making rent. Anything that, or, you know, a group of people that are trying to have some breakthrough or some discovery, those are productive assets.

There's a lot of what's going on now that is what I would call speculative assets, which is the only way you make money is if someone else pays more in the future versus what you're paying and there isn't an underlying productive asset to what you're putting money into.

Are describing every ICO or every ICO, every NFT and the art market, right? These are examples of unproductive assets. There are speculative assets in the sense that you're speculating that at some point the price of them are going to go up and someone, somebody wants that NFT more than you. Someone down the road will pay more for that asset than what you paid, but that underlying asset, that capital that you just put in, didn't go in to build something. It basically went in your generation. When do I pee?

It went into someone else's pocket that sold that asset to you, and you're eventually going to try and sell it to someone else. So, there's a real attraction here, because what we just talked about is really hard to do. Having fundamental analysis and understanding of businesses and a fundamental understanding of what's working and what's not and when to shift and oh my gosh, you know, are things different or are they not? To do that is really hard. So people end up relying on opinions of others or they end up running into speculative markets and the speculative markets are easy to understand. Someone just paid more for X than the other person did. Therefore, there's a trend line. It's going up. It's like playing roulette and, you know, black keeps coming

up and you're like, okay, it's going to be black again. It has to be black. There were seven crap. There were seven blacks. And so I think that that's a really important kind of take away for folks that might be new as investors. We're all susceptible. We're all susceptible to this. Like I was just looking, you know, at my own performance coming into the end of this year. I did a lot of spacks this year, but I also did these pipes, which are these third-party deals. Private investment in public entities. Exactly. Other people's deals that they were bringing to the market where they said, Jamath, do you want to be a part of it? And, you know, and I did. And part of it was I was looking at these things and, you know, free bird doing my work,

but in the end it turned out, I didn't do nearly as much as I probably should have, because I ended up sitting on top of other people's work versus the original or underwriting that I would do if it was my own deal itself, right? Anyways, the net net of it all, it's like, you know, that was very inefficient capital deployment. And as I look at it now, it's like, you know, I'm down, well, I'm technically up 19%,

but that's really because of one deal. If I take that one deal out, which was a total outlier, I'm down 17% on about $200 million of investment. When you are a fast follower, not the originator, it wasn't your idea, this is critically important. There are many different ways to make money, but you have to specialize and you have to first put in your knowledge. I trusted other people. I did the same thing that I'm saying to other people about to do. Do not just copy other people. You have to do your own principal work. And even when

you do your own principal work, it may not be enough, and you have to be willing to basically see the forest from the trees and walk away. And so all these pipes, I'm in the midst of sort of cleaning up and selling down, and they've been just a kind of a disaster for me. You know, hold on, I'm going to build on this for a second because I think it's critically important what you said as well, Friedberg. You have to be comfortable with the investment you're making. I look at these companies and I look at the underlying customer, the product, you know,

and what kind of revenue it's going to generate. People thought I was dunking on Rivian yesterday, and I said, listen, when Tesla went public, people forget their valuation was 1.5 billion. 1.7 billion. So 1.7 billion when they went public. Now, they already had thousands of roadsters and they had already had the... No, they had 93 million of revenue in year one. So this was dramatically different than what Rivian had.

Rivian is being valued at, you know, whatever that is, 120 billion, I think yesterday. Rivian has 17 billion in cash. Somebody asked me at the poker game last night, what I value. Rivian at, I said, 17 plus 3, 17 million in cash plus 3 billion, double roughly what Tesla's was, the market's hotter right now, whatever. But I put them at $20 billion and people were giving a hard time about it. I said, I think that's actually the realistic valuation for this company.

And we are in a very dangerous moment in time right now where I think people are, whether it's meme stocks or crypto or NFTs, suspending disbelief in some cases, SPACs, because they're not all created equal. And certainly in private companies, we're seeing this, where people are giving people an amount of credit which makes no logical sense. And it is getting further and further disconnected in from reality.

So as an investor, you have a choice. Either you have your fundamentals, which I'm not going to change my fundamentals. I'm going to focus on the fundamentals that got me where I am. And I'm not going to be involved in a $100 billion market cap company that hasn't launched to product yet. Let alone a $120 billion one.

I'll stay focused on startups. But what you're saying is also important because you're highlighting how you value that company. You individually said, I think that company's worth some multiple of how many cars have been sold in the past. Elon sold thousands of cars. He was worth 1.7 billion. These guys have sold.

And other people are coming in and looking at this company and saying they've built facilities, they've built assembly lines, and they've got pre-orders and bookings for lots and lots of cars down in the future. And clearly, they've gone in and some people have gone in and seen these plants and seen these cars actually working. So it's really important to take note that your point of view is one point of view in a very diverse market with many points of view. And everyone's going to come into this market.

And that's why, unless you individually as an investor have a strong point of view and can show that you can apply your unique insights to consistently beat the market making decisions, investment decisions like that, you're eventually going to lose because those other points of view will be a bigger view of the truth and you'll lose money. And that's why, and that, by the way, that's why picking stocks is ultimately a loser's game unless you have some unique ability and insight for most people historically. And in an upmarket, everyone looks like a judge, right? You need to have an edge.

And the public marks are hard to say that there's some, there's some, there's some unique confidence. Yeah, there's some unique competency that you need to have an edge and the public mark's a hard to say that there's some There's some unicompetency. Yeah, there's some unicompetency that you need to I mean if we double click on what you just said as the things that would be reasons to embed on Rivian number one they have 48,000 orders of pickup trucks Against the f150 which is now electric from forward and a million I don't know why you're arguing this right like you're just making a point that we don't have someone on the panel right now, but someone else could come in and argue.

Okay, sorry, Matt. And I would just say this is a part of the conversation to be honest, Jason, to give you feedback I don't like because Rivian, it's just in defensive Rivian for a second. What I have heard is that it's a, it's a well engineered car truck, rather. They've done a very smart path to market, which is essentially to build these delivery trucks from a zone that allowed them to even frankly

be default alive, versus to use the polygram term instead of default dead. I think the point that's more important here is that it doesn't affect you. So let Rivian do well, you know? And this is part of the... Scycling should have an opinion, probably. No, no, no, I'm just saying this is the part of the cycle

that I don't understand where people legitimately have these zero sum points of view about companies. And this is where I think freeberg is more right than anybody else, which is the market is the sum of all these collective points of view. Sure. And I think it's fine to have one. I think it's a little superficial

your point of view, because it's not really sitting on top of a model or anything else. And I think it's the same kind of superficiality that the Tesla Q guys had about Tesla for many years as well. It takes a long time, has somebody that does this every day. And I just want to point this out, it takes an enormous amount of time and an enormous amount of work to be 75% right. I'm not interested in 350 companies. I meet with two companies.

No, in the public market. Jason, it's different in the public market. My companies are going public now. So I take exception to what you're saying. I know a fraud when I see it. I've seen them before. Oh, that's a really big thing. That's not a fraud No, but the distance between the valuation and reality is in the 15th century, but that's not in control of reviews. That's not in their control Okay, that's in a bunch of external market participants control so you can't pin that on them My point is,

I would pin it on is the market right now seems dysfunctional and it's not properly measuring things. I know, but throwing shade, that you then you should throw shade at T-Row, Fidelity, all these people that are bidding up your companies by the way because they are the ones that are taking Reveon to 120 billion, it's not Reveon's fault. And Jason, what's really going on in the market

was public speculators. No, what's really going on, it's not Rivians fault at Jason what's really going on in the market was public speculators No, what's really going on? It's not you can't sell 16 billion dollars of in an IPO to speculators This is a much lower price, but these are These are institutionally placed trade orders, but regardless the market is clearly right now in productive assets businesses The market is looking at a time horizon that it has never looked at before, which is making bets that are at 10, 15, 20 years in the future. And that's because of the condition that we're in right now from a monetary policy point of view, interest rates are so low, there's nowhere to get yield in other assets.

So you have to look further and further out to find value. So the market is making 10-year bets, which is like a VC time now. It's more than a 10-year bet bet bet bet bet. And Jason, sorry, can I just finish my last point because before you interrupt me, my issue Jason is, I think you are an exceptional angel investor, but just the same way you derided a bunch of lay stage guys, remember last night at poker,

when we were talking about lay stage folks entering into the angel market and the series A, you were extremely dismissive because you know what the job is to be done to do that job well and they have a different skill set. Similarly, what I would just offer for you to think about is the people that really underwrite public market stocks well do things and have a skill set that is extremely specific

and it is well trained as well. And I think that, okay, no, I think that, okay. No, I accept that people are gonna... I'll just send it to me. Let me jump into the J-Cals. If you wanna defend me, that's the people are in shock right now.

So I'm gonna be like, you're saying, okay, we're gonna get yourself back in the game. It's guys, purple! It's guys, purple, the moon is set. Yeah, hell is freezing over right now. Hell is freezing over. So here's where I think J-Cals, I don't know anything about the Ziruvian company,

but where I think J-Cals ride I don't know anything about the derivative company, but where I think Jake Hals, right, is we've seen over and over again, that when a company gets, when a startup gets a billion dollar plus valuation without a product invariably, it ends up somewhere between a disappointment and outright fraud. Jason's law.

Whether, you know, it was Theranos or Magic Leap or Quibi or whatever. I'm not saying they're all frauds. I mean, I think just Theranos was one. Tyracts frauds. Tyracts frauds, whatever. So, I think it's reasonable for any, let's say, seed or early venture investor to develop the heuristic that I'm not going to invest in anything with a billion dollar, with basically unicorn valuation without seeing the product first. Because we've learned, we've got our hands burned so many

times from these over-hyped companies. And here's where I agree, if I can't see and use the product, I'm not an investing. I'll invest in a seed stage, but I will not invest in a unicorn stage in a way. I agree with that, but what I'm saying is when a company is going public like that, there is demonstrable proof of concept there, okay? The only market in which that's not true is in biotechnology. Well, I would say for Fisker and Nikola, two related companies, those ones seem very, very shaky.

You can debate about the scalability of these things and you can debate that people didn't do the diligence, but they had to at least put a proof of concept out there for you to judge. If people don't do the work, I agree with you. Like if you're rolling it up down a hill, sure. Yeah. Out right, fraud. No, but my point is if you were there and you did your work, you would have seen what you needed to see. What I have heard from people who were investors in both Lucid and Rivian is that they have sat in the cars. They've driven the cars. They've

spent time with them. They've seen the factories and it's very much real. Now what they're debating is ramp and velocity and scale. I don't know. I don't have a position in either. I have the bigger macro point of view, which is important to me, which is it's just because these things are in the public markets. I think people think it's easy to judge and I think actually modeling them and making good decisions is just as hard as it is for private companies. Okay. actually modeling them and making good decisions is just as hard as it is for private companies. Okay, we need to roll this clip because there is somebody who is giving exceptional advice

on CNBC. Let's roll the clip. Yeah, so well, up starts up about 25% just in four days, since we've, since we've bought it, we've bought it on about four days ago. So that's actually made a nice little move in the short term. Probably a little extended right now, but longer term, a nice little move in the short term, probably a little extended right now, but longer term, that's a good looking name. Very powerful, very strong earnings. These stocks are... How do they do that? You don't even know them. What do they do? Excuse me? What does upstart do? Well, I'm sorry. What kind of company is it? Yeah, I'm not, you're breaking up. Oh, I just want to put that on the phone. I'm sorry.

Fucking God. Brutal. Who is this guy? Who is he? I have no idea. Take out, is that, is that like your uncle or something? Who's that guy? I listen.

Yeah. I, I, I, I, I, I, we just, what the guy wants to see? I see. Well, you know, the guy's been on many times, but isn't this proven we were saying, which is that you gotta do your own principal work here? That is why we wanted to play. Here's a talking head who's probably getting paid

for selling some books and giving advice, who knows nothing about what he's telling you. You can join his membership club for 1,000 a month. Yeah, I'm sure he's publishing lots of papers that show that he's a highly successful profitable investor and look how smart he is. You haven't even know the company you just promoted on CNBC. It's incredible.

On a mechanical basis here at Traumaath, you and I have been on CNBC many times. In that moment, what is going on? What do you think is going on in the host's mind? And the producer who has to dump this call. Let's move on. Let's move on. I just, the breakdown when he says, I'm sorry.

I have no idea. What do they do? I think the point's been made. I think the point's been made. Oh my lord. Everybody should do their own work. Yeah. All right, let's keep going.

So actually look like you want to say something. I mean, I just chose the agenda. Yeah, look, I mean, there is a massive agenda in corporate journalism. There's an agenda by the people on these shows to promote positions. There's an agenda by the reporters themselves and on and on and on. I go. So it's Jamal's point. If you just take a cell, you, you're and you don't do your own work, then you're buying into someone else's agenda.

Trust yourself. Okay, one thing that we are trying to all understand is inflation. This CPI has gone up 6.2% in October. The highest jump in 31 years since 1990, according to the Wall Street Journal, fifth largest straight month, fifth straight month of inflation above 5%.

Somebody tweeted out, we'll pull it up here, Denver, Bitcoin, put out a year over your commodity chart. We get to throw up on the screen. And then I think, Friedberg, you shared in the chat, the average weekly retail prices around fertilizer, what are our thoughts on the nature of inflation and how that affects our investment? I think it's persistent. And the reason I think it's persistent is that there's a, all of these things are intertwined.

And so, if you want to just bear with me for a second, like when the, let's just go to the entry level economic job, right? So you're a barista at Starbucks or you work at McDonald's and you're making $17 to $20 an hour. What that does is it shifts labor. And eventually there are other people that are entering the workforce or, you know, may shift jobs. And essentially it just causes this leaky bucket effect

where everybody else has to then accommodate itself. So you have a guy like, you have a company like Amazon which is now gonna pay $25 or $30 to keep folks, right? Because otherwise they may say, oh, you know, if I make $15 or $16 an hour, I'd rather work in McDonald's. It's simple. It's not back breaking work, blah, blah, blah.

So then they start to increase the amount that they pay, they increase their benefits and the like, I saw this thing this week, there's a crazy thing that's happening, though, which is it's now pulling people from non-traditional job classes into those jobs. There are teachers that are leaving teaching to go to work at an Amazon warehouse. There are firefighters that are quitting being a firefighter to go work at an Amazon warehouse. There are firefighters that are quitting being a firefighter to go work at an Amazon warehouse because you make the same or more, plus you have all of these other benefits and the job is structurally a lot easier and so people are making different optimizations. And to that point, I think we talked about this in Nick, you can put it in the group chat.

In Reddit, as an example, there is more engagement in the subreddit around having a simple work life than there is now in Wall Street bets. There's been a structural, cultural change where people need to get paid more to do the same amount of work. Then at the same time, you have all of the supply side getting more expensive. Fertilizer makes corn more expensive, lumber makes house prices more expensive, chip prices makes the iPhone and cars more expensive or completely backlogged. You know, yesterday, a poker sunny was showing us he bought a Tesla and the

delivery period is October of 2022. Yeah. It's freaking crazy. So I think that it's a, it's this is the beginning of a persistence. I think those are all like really valid points. The thing I'm seeing now is I think we've moved into what I'll call a contagion phase of inflation,

which is people are hearing about inflation. They're seeing it in some places. My gas went up a little bit, my milk went up a little bit, whatever. And they're saying, well, I guess if everybody's raising prices, I need to raise the prices as well of whatever I provide in the world. So I can just keep up with everybody else. And they're not looking at their inputs necessary and saying, I need to charge more, or that's the best business decision.

They're just saying, everything's going up around me. And so they raise prices. I literally have this happen three or four times. And I went to buy a car and they wanted 15K oversteak around. I didn't buy it based on principle, but I'm sitting here going, like, maybe I'm an idiot. Maybe I should just pay the 15K oversteak

and where do you have thoughts on inflation? And they can take you to the other. My thoughts are, I told you guys, like six months ago about this. Can we just replay what I said on episode 32? It's got as researchers in the background giving it written down what you said on the episode. Absolutely. No, this guy's in the fucking debate club. Stanford debate club over. Some of us, when we make predictions, take him seriously. So, you know, was that a dig at Professor Ice Coletace? I'll give you guys a link to a prediction that was made.

Here's, I mean, I just want to replay the 20 seconds I've got about the chicken. Here we go. The two David's dueling again, just like in the group chat. I'm not doing it. Here's Friedberg January 1st, 2021. If you don't think inflation is already here, you missed what happened to the stock market. Companies aren't performing better. We're just inflating everything.

Financial assets first. Everything also follow. That was a good one. So act, just make your point. Just make your point. This ad that clip, I'm beginning to wonder if Biden's going to be a Jimmy Carter here, that's first, everything also follow. That was a good one. Zach, just make your point. Just make your point. Just add the clip. I'm beginning to wonder if Biden's gonna be a Jimmy Carter here because frankly, all he had to do was leave things

well enough alone. COVID was winding down. We had a vaccine. All they had to do was distribute it to as many people as possible and COVID, let the recovery take shape. And instead, they push this insane $10 trillion agenda. He's going to backfire massively.

Look, if the economy turns, we were set for a post-COVID boom. And right now, that is all at risk because, Jamal, like you're saying, they're keeping the economy closed or parts of it way too long. They then overcompensate for that by printing a ton of money and then they overcompensate for that by raising taxes too much. Just to build on that. That second step of their overcompensating, their inability to open with money is so true.

Because then what happens is your labor force stays impaired because people make enough money by not working. It was true when I said it, man, it's even more true now. He said there was inflation. Okay, so there's inflation. So now, great, good job. So money and prediction, do it's proven true. Yeah, I mean, one in January that said the same thing.

Now look, you can do three things to curb inflation. Raise rates, right? When you raise interest rates, you slow spending. Prices come down, inflation slows, but the issue when you raise rates is obviously you see things like job loss and economic growth declines, and it can very quickly spiral the other way. This is the big challenge of Fed tapering. The other option, as we've seen, a significant attempt at lately is to raise revenue, right?

So increase tax rates, tax of broader swath of people at a higher rate or broader swath of business at a higher rate. So it's very likely that, you know, tax revenue could kind of present itself again as a driver if inflation continues to spiral up. And the third, which is the least likely, is cut spending, right? The federal government spending the way it does right now makes a very inefficient way of kind of putting capital into the system and inflating it. We've seen historically that anything the federal government spends money on like healthcare and education, the cost very quickly spiraled out of control.

Super inefficient. Why not just give that money to the free market to make decisions on how to spend it? It would be more efficient, etc. And the market would effectively find balance where buyers and sellers are equivalent as opposed to having the federal government driving the price of everything up. The fourth option that people don't talk about, which I think may end up becoming an important option, not kind of oblique option, but more kind of backdrop, is to start a war. And you know, when you start a war, when you start a war, you stimulate the economy without needing to pump additional capital

in so you can increase growth and avoid the risk of stagnation. You can source resources that otherwise wouldn't be flowing in a trade or in a land-grad type situation. It doesn't necessarily mean that policymakers would say, hey, let's go start a war to decrease inflation. Taiwan. But the premise that conflict can improve the economy is an important backdrop that starts to play into policy decisions that might get made over the next couple of months and quarters.

And that's really important, whether or not the posturing is one of partnership and reducing the tension with foreign nations or one of increasing the tension, it's more likely that we would want to increase the tension when we're in an inflationary environment. That's quite a conspiracy. There's where do you think, Saks? Okay, we got to go back first principles on this thing. We're not going to start a war to tame inflation.

Okay, but let me just explain what inflation is because I'm not sure people like fully understand how this works. Okay, but let me just explain what inflation is because I'm not sure people like fully understand like how this works. Inflation is very simple. It's too much money chasing too few goods, okay? And we have both sides of the equation going on right now. On the supply side, on the good side, we've got shortages. We've got the ports backed up,

where we've got paying people not to work. We still have the two trillion of COVID relief past earlier this year, which was responding to a problem that was largely winding down. So we have these labor shortly. We have people dropping out of the workforce and record numbers in the number that just came out showed, and more people quitting their jobs never before. So we have a shortage in terms of the production

of goods and services that people want. At the same time, we have this montory and fiscal expansion coming out of Washington. You've got, again, they did the 1.9 trillion of COVID relief. They did 1.2 trillion of infrastructure, Biden's still talking about another 2 trillion of social welfare. You have the Fed still printing money with QE. So, you've got this massive expansion in the amount of money. So look, too much money chasing too few goods creates this problem. And it was

very predictable. And so what I said back in May, this is what I was warning about. And it goes back to the drunken Miller clip that we that we were talking about all the way back in May. He said the same thing that we had a reckless fiscal, a monetary, expansionary policy coming out of Washington at a time we didn't need it because if you looked at like retail spending back in May, it was back to above trend. So in other words, there was no demand problem. The economy was back and they've just been pumping and pumping out of Washington. We made a, we had a good intent. We wanted to make people not suffer. We wanted to get the economy

on tap. We may have just made a bigger bet than we needed to. We overdid it. We overdid it clearly. But look, who wants to be the politician? Quite frankly. Yeah, if I could get you, who ends the eviction moratorium, right? The great retrain. Yeah.

Well, nobody wants to be the politician who says, okay, now you suddenly have to pay your rent. But obviously people have to pay their rent. And we're taking away your bonus unemployment. People have to go back to work at some point when there's 10 million jobs open. Just as I've been watching the Taiwan situation like a hawk, and I don't know if you saw this this week

to go off on another tangent, but the US is testing Israelis, Iron Goam, and Guam, as a defense against Chinese cruise missiles, obviously for possible deployment in Taiwan. And I don't know if you're watching, and it's can't turn the NBA, but he has been going on CNN and stuff like that now, talking about China. Pretty amazing. I predict escalating global conflict.

That'll be my prediction to mark the Q4. Well, I think that's I think actually that's a pretty valid prediction, but I just think it's a little bit separate than inflation. Like I said, it's not an explicit decision, but I do think that in the backdrop of an inflationary environment where you have something that can temper the condition at home that at the same time, you know, might sell politically. that can temper the condition at home, that at the same time might sell politically. But it's not going to solve anything politically. Okay? I mean, War II famously got us out of the Great Depression because that did stimulate

demand. But in the situation we're in today, we have too much demand. We have retail is trending way above curve. We have as a supply shortage and devoting resources, taking them away from the productive economy to go to war would only exacerbate the problem and make it even worse. as a supply shortage and devoting resources, taking them away from the productive economy, to go to war would only exacerbate the problem and make it even worse. What we need right now actually is for Washington to back off, to stop pumping demand with this, you know, now they're still talking about the future.

The money printing. That's what we need. We need the big family and to stop these disincentives for production and work. So you have, I mean, Manchin was exactly right about this, okay? Do you remember when Manchin, when he was resisting this $2 trillion social welfare bill? I mean, the things he said are already coming true.

I mean, he said this months ago, he said that we should take a strategic pause because he said, this is a quote, by all accounts of threat posed by record inflation to the American people is not transitory and is instead getting worse. From the grocery store to the gas pump, Americans know that the inflation taxes are real and DC can no longer ignore the economic pain Americans feel every day. That's when he was saying this past summer, several months ago, and they rolled right over

him. The psychology of this could be self-fulfilling as well because what's going to happen is you're going to have everybody raise prices because it's now become an escalation, you know, your hair dresser, you know, whatever, you know, services you're using, whatever product you're buying, whatever restaurant you're going to is going to put two dollars on every appetite is going to be five bucks on every entree. Everything is just going to keep going up. And then what happens is people who in the middle class

or who are consumers of products in a large way will say, you know what, I'm gonna put off buying a car. Then we're gonna be driving all this supply up and then people are gonna say, you know what? Fuck it, I'll just drive this one for two more years. And that's gonna cause stagnation. And this big inflation. It's what we have in the 1970s and you're right.

It's called an inflationary spiral, which is the future expectations of increasing prices means that people start increasing them now and that feeds on itself. Yes. And that's what we had in the late 1970s and the thing that broke that was Paul Volker, Jack Ampe, interest rates. It was very painful, it caused a very severe recession in the early 1980s, but then the economy came roaring out of that by

83. It got Reagan elected in 1984. And you had 33 years of declining interest rates, and that led to a stock market boom. So the problem we have now, okay, here's the problem we have is there's going to be no poll, Volker. Why? We can't afford to jack up rates because the federal government's debt is so much bigger than it used to be. We are not on a fixed rate, we're on a variable rate. All of the debt we take. The average maturity of government debt right now is five years. Okay, so that means the whole debt rolls over within five years. So if they jack up interest rates, we have almost 30 trillion of US federal debt right now. So every one percent that they increase interest rates, that means another 300 billion a year of debt service

programs. Exactly. So where is it? Exactly. So there's going to be enormous pressure on the fed not to raise rates. You already are hearing Biden rattling the saber saying that Powell may not be as choice for a second term. By the way, Powell is very dovish. He's basically saying we can't raise rates right now because of this and that. So, and the Biden administration, nobody in Washington ever wants rates to go up, right? They want to keep these low rates forever. This is the problem is, look, at the end of the day, I don't know what the inflation picture is going to look like next year, but what concerns me is we don't have effective tools to fight it anymore, because we've given up our ability to raise rates because it would increase the cost of the debt so much.

And I mean, so just one article just to share with you guys is this, again, my favorite source of economic information is the Fred blog, which is from the St. Louis Fed. Super eroded blog talking about two tales of federal debt, okay. And the article is about, here's why there's so much disagreement on whether the federal government debt is too high. So the first chart shows debt to GDP. This was always the way of looking at government debt was simply looking at the ratio of debt to GDP. It's now something like 125% in peacetime. I don't think we've had a higher peacetime ratio.

That would tell you things were out of control. But for the last decade while this has been going on, you had this whole school thought, the MMT, modern monetary theory, all these economists and experts and politicians in the media were eager to buy in because they wanted to spend the money. Okay, and what they said is, no, it's not debt to GDP. You should look at debt service to GDP. This is the second chart on that blog. And so debt service to GDP was staying constant or even going down as the debt to GDP was going up. Why? Because interest rates were so low.

The problem is, well, it's so foolish about this point of view is it is assumed that interest rates were going to last forever. Well, if that was your point of view, why didn't you do what Trump actually suggested several years, going to be suggested having 100-year T-bills? They should have locked in much, much longer duration, maturities on the federal debt. Instead, and Yellen rejected this, okay?

And so you've got a five-year-average duration, which means that if interest rates go back up, the debt service cost is going to explode. Yeah. During 1980, we changed the goalposts for CPI. So even as a measurement to know what we look at, then I think Jack Dorsey tweeted this out so Nick, you may be able to find this tweet. But we changed the measurement of how CPI measures.

And so if you go back to the original measurement, it looks like inflation in CPI is much more pernicious than we would otherwise think if we just look at the new CPI that we started to look at as of 1980. So that's another sort of like point. We did the same thing with, I just go back to what I said earlier, I give it up to the two smartest people that we both know are net sellers. Well, there's something so, I mean, I'm just saying that do as

smart as people we know. I mean, we don't want to get financial advice here, but should everybody be moving to cash? No, what do you put your money? I'm just saying I'm totally confused. This is, I think, the admission just by productive assets, great businesses that have durability, and let them ride for 20 years. I like your answer. The fact is we're all confounded as to what to do at this moment in time. We're all trying to figure this out and we do this for a living.

But then you're trading the market like everyone else all the time. Like, you know, why trade the market when you can just buy great businesses on stakes in them and let it rest. I'm just talking about that. You can't get a lot of money. So, I mean, my practical issues

that I don't have infinite money and so in order to put my money into productive assets, I have to sell other productive assets. Well, you've got other productive assets. Leave them in. Why sell? Well, then it's like, then I'm basically, you know, doubling down on a world view that may be old and dated, right? So if I'm long a bunch of software companies and I really want to do something in

climate science or biotech, what am I supposed to do? Don't try, don't try and time the market shift your assets, right? Why do you care what the... No, no, I'm not trying to try. I'm not trying to time the market. I'm just saying, if my world you shifts to really want to double down on climate science or alternative finance or biotech, I have to raise capital to do that. I have to raise capital to your saying. Right, but for me, I'm not raising it from other people. I'm raising it from myself. So I have to something to do. To me, the best place to be right now is in the company formation space, because when you create a company like Friedberg does every three months, there

is so much value being created at that moment in time and so much further capital getting poured into it, that if you are the originator of the company and you get some big slice of the capital for doing that, which is completely valid, you originated the company, whether it's unique or call in or whatever it is. Man, that is a great moment of creation and when you're the person putting the money in at the billion dollar valuation before the company, whatever call in, I'm sorry, Clubhouse, went from 100 million to 4 billion with no revenue. I don't know what's happening in the world,

but pretty crazy. Do you wanna go on to Xi Jinping and his, he's gonna be speaking with Biden on Monday. It's done, he got it done before his video, his zoom with Biden. Oh yeah, so they're doing that. He's from out of the Supreme Leader. Xi Jinping hasn't left has left. He's now the supreme leader. Explain what this means. Jamal from the story. I mean, I think the basic, the basic takeaways that they've been working

inside the body politic inside of China to basically reflect G on the same level as Mao. And effectively, what this means is that it allows him to remain the leader of China indefinitely. And so there is no transition of power. Typically, what had happened was there were these 10-year windows and you go to Jiang Zimin, Hu Zhintao, 10-year cycles cycles and they passed the baton. But it now looks like we'll be living with Xi Jinping until, you know, he joins the afterworld. So he's ruler for life of China, basically. Crazy. I don't think that's exactly right.

What an incredible feat of political maneuvering without judging it, just to say, how, what a complicated, Byzantine political infrastructure he must have had to navigate. I don't know how he played the three-dimensional chess with all these people, the slow, systematic dismantling of the old guard, placing all of his people in, and slowly moving towards this kind of recognition. He's not admiring Shama.

Yeah, no, the dictator got his name for a reason. Somewhere Donald Trump and Steve Van and are like, what did we do wrong? We were so close January 6th, we almost if Pence would have just played ball, Sacks, you'd still be in power. Your guys dropped the ball and we wouldn't have inflationary. Just think it was needed for life.

You know, Jason, given how accurate my predictions have been, you should have a little bit more respect for my political positions. What do you guys think happens now that G basically is ruler for life? You know, he I think the Chinese term for it is historic figure, which is yeah, that's a lot of things saying, you know, you're but you're basically You're a made man. Basically you can't get whacked. Nobody can touch you. You're good for life. The end. Nobody can question you. I mean, can you imagine Mao Zedong, you know, Deng Xiaoping and how Xi Jinping incredible like he is at that level? Well, it means if you start a war and a serious military conflict that nobody can question you, right? You're the supreme leader. So it's

sort of like Putin and MBS, like MBS can go kill a journalist and he's got nobody to answer to. I mean, yeah, nobody. I was a dog initiated the revolution. And you know, Dungshopping was really the architect of free markets that has made China the economic powerhouse that it is today. Their internal reflection as Xi Jinping is on the same scale of that. Now, I mean, I can't claim to know that. But what is the occasion for the future of China? Well, what, yeah, what is the accomplishment that's going to really put him in that league and you'd have to say it's the annexation of Taiwan?

I mean, that's the thing that he must be looking to do before, you know, his time to reunify China. That's the thing that could put him in that league. And so that is the tripwire that to Freiburg's point that could lead to a conflict. I think they, I hate to say that Freiburg is wrong because I don't think in this case I can. I do think that there is some left-tail risk for like a crazy wag the dog moment in Taiwan. It would be really scary, really scary.

Right now, I was looking at the sizes of the Navy, as people don't know this, Japan actually has a very large defensive Navy, the UK and the United States, obviously have very large ones. China's is large, but not on a tonnage basis. They have a lot of ships. But together, I don't know if you saw the military exercises going on, but New Zealand, Australia,

the United States, UK, and Japan were basically, I think South Korea were basically driving their ships around the South China Sea. This is gonna be, I think. Yeah, so I did, I did a really interesting interview with the historian and commentator Neil Ferguson, who is also a pretty avid China watcher. And I did an interview with him actually on, on my app. You don't want me to say that. He had a really great line,

which is he said that the, that the, the issue of Taiwan, it's basically like the issue of Cuba and Berlin and the Persian Gulf all rolled into one. So it's like Cuba and the Cuban Missile Crisis because it's right there off the shore of China. It's like Berlin because that was basically the dividing line between freedom and totalitarianism, where the Berlin Wall got built. And it's like the Persian Gulf, because the new oil are the semiconductors, the chips that are fabbed in Taiwan, at CSMC. And so all the resources that were dependent on for the new economy are all right there.

So super smart framing. Yeah, I thought it was a cover line. The thing we have to remember about G is that his father was, was a commander, a foremow, and was an advice premier. And so, you know, his historical, he is the original princelain, right? Remember, you know, there's this context of these Chinese princelains,

but he is, he is one of these originalists. And so his motivation will be, it seems, at least, to bring China back into that spectrum of power, which is really about a consolidated country and a single nation state. And that has to include Taiwan. It can't not. So to your point, David, it's almost more motivation for him to go off on some crazy adventure and try to reclaim it. That's going to be impressive. That's going to be impressive. It's really interesting to look at the tonnage of ships and the number of ships.

The United States has over 6,000 tons of ships, 949 according to globalsecurity.org. China has only 2,000 tons and 1,000 ships. They have a lot of smaller ships. And then Russia, UK, India, Japan, France, Indonesia, Turkey, Germany, Italy, all these warships. Jason Orer. Yeah, this is their Navy warships. And so they're fighting.

But Japan has a very large one. I wasn't aware of this because I thought they were not doing military build up, but they have what's called a defensive Navy, which can do offensive stuff. So this is, I think this is really problem. How many of these ships are smaller than Saks's yacht that he rented this. Yeah, Saks's tonnage would kind of put the United States over the top, I think in the top.

The growth shortage of Saks's yacht. The sales is gonna be donating. Has New Yorkshire? No, for sure it's bigger than Indonesia. I see Indonesia on this list. Turkey, I mean, how big could that be? Yeah, it might defense. It was a starter yacht.

It was a starter. It wasn't. It might indef yacht. It was a star. It was a star. It was a... It was my indefensible. Next one will be better. Yes. Salana is going to make sure of that, right? You can buy yachts with Salana.

All right. I think we covered enough. G in Toshiba can't run their businesses. So they're each separating into three separate yachts. Let's talk about that. That's interesting. And Johnson and Johnson. Yeah, we should talk about it today.

All right. So on Tuesday, G announced they were splitting into three separate companies, aviation, healthcare, and energy, Toshiba reported a similar plan. Johnson and Johnson today. Johnson and Johnson was today. This is in direct conflict with the consolidation and the creation of conglomerates. And they're not conglomerates.

I think this is an important point, Jake, out in the 80s and 90s, it was cool to create conglomerates. But not conglomerates. I think this is an important point, Jekyll. In the 80s and 90s, it was cool to create conglomerates, meaning you would kind of stick businesses together that were part J.R. somewhat disparate, because you could financially engineer a way to do it that would juice shareholder returns. You could borrow money, add lots of scale.

The cost of debt goes down. You could increase your debt load, et cetera. And the challenge is when you're scaling a business, lots of scale, the cost of debt goes down, you could increase your debt load, etc. And the challenge is when you're scaling a business, you either need to grow your revenue organically or you need to acquire. And when you're acquiring, you're either acquiring horizontally or you're acquiring vertically, meaning you're kind of integrating your supply chain or you're integrating or you're adding and silvery businesses that you can cross sell.

So you're either reducing your costs or increasing your cross selling ability. So there's some inherent synergy in the acquisition. The problem with conglomerates is there is very little synergy, meaning like when you acquire a new business like an aviation business, it doesn't create synergy for your healthcare business. And you know, there was always a rationalization that these managers of these big conglomerates had, which was like, oh, well, we could do this and we could do that. At the end of the day, it was financial engineering,

where they simply kind of used debt to reduce the cost of capital and increase the shareholder returns. And now everyone's kind of waking up to the fact that you're actually decreasing value because an investor that wants to own an aviation company doesn't also want to own a healthcare company, so the investor doesn't buy those shares. And the investor that wants to own the healthcare company doesn't want to own the aviation company so they doesn't buy those shares. And the investor that wants to own the healthcare company

doesn't want to own the aviation company so they don't buy those shares. So the way the increased shareholder value is to actually split those businesses up. And then the investors that want to own the aviation business will pay more and the investors that want to own the healthcare business will pay more. And the overall value of those two businesses

goes up by having them be separate. And that's what the market's kind of waking up to. And this is kind of a trend that's been going on for years now, you know, going back to kind of 2013, 14, where the market started to kind of rationalize some of these silly conglomerate business ideas and break them apart into more kind of, you know, targeted businesses that can actually,

spin out or, yeah, or break off. Or break ups. That can basically attract shareholders to bid on each one of those businesses individually and drive value up. One business I was close to that I saw this with Dow DuPont, where they down merged with DuPont, and then they split into several businesses that each were focused on a particular vertical, and it made a lot of sense to drive value for the overall shareholders. So at the end of the day, these conglomerates are about kind of driving economic outcomes.

And the only folks that you see doing this well are folks like Warren Buffett, where the job is really about capital allocation, where you can allocate capital to the best business, and that business on its own will grow organically, versus taking a bunch of crappy low growth, no growth businesses, leveraging them up to kind of juice their returns

on each other. And we're seeing this slow unwinding happening. So I think it'll continue to, and you could probably go and pick a bunch of these conglomerates and you'll see the activist shareholders doing this. They'll buy a bunch of shares, they'll instigate and say, hey, you guys should break up.

The share price will go up by 20, 30%. So if you want to start for the day, go find the next set of conglomerates that are going to get effective. I mean, it's interesting, Chamoffa, and with public markets, Dell is spinning out VMWare, and that's going to create a massive amount of cash and shareholder value that they're doing a huge dividend.

So I guess my question to you, Chamoffa, is when do we start to see this hit not from a point of weakness, but from companies that are strong and see this as, hey, this is a way to just unlock shareholder value. Will we see an Amazon spend at AWS, a YouTube or an Instagram come out of their apparent companies? I think it's very rare that these things happen on the offensive foot. I think it's typically a defensive maneuver that's driven by really poor returns over long periods of time or activist investors who want to push the wall.

Totally. Totally. He's like eBay, Bob. Totally. I was about to ring that up. Do you remember how hard that eBay, and I remember like John Donnell was the CEO, he thought that so hard. I remember getting a phone call from him asking if I would support them.

He had rounded up read off and other people support eBay. And I'm like, no, I can't. No, wait, wait, no, do you remember this? We were in Vegas and Donohoe called and we were working on a plan. And then you went and walked Donohoe through the plan. Do you remember this thing? We were in. No, what happened?

We were in Vegas. You were going to try to do it in Vegas and spin out of. No, I can't, I can't, no, no. Donna, who either called you or called me and I said, you should talk to Sacks. Okay. You sketched out a plan for what PayPal should do. I remember that. Oh, yeah, yeah, I do remember that.

And I got Saturday afternoon, we sketched out this plan. Yeah, yeah. So I told John, no, I'm sorry, I can't support you because I believe it should be spun out. And so in the only two, the only two people from the original PayPal team who said that publicly were me and Elon. And we said that if you could get PayPal out from under, you know, this, you know, this sort of eBay bureaucracy, it could be a hundred billion dollar plus company. The bar for acquisitions is extremely high.

Like, I think the last really two acquisitions that were really done well was Zuck's acquisition of what's happened in Instagram. But since then, the bar is extremely high for these conglomerates. So as an example, PayPal was rumored to be buying Pinterest. And there was such an incredible shareholder revolt that they had to put out a press release saying we have absolutely no interest in acquiring Pinterest. But what that all that did was just, you know, accelerate the bleeding because then people were saying, wait a minute, how strategically lost must you be that you would wanna buy Pinterest as, and so then it has a result that the PayPal stock price

has gotten absolutely completely over. Completely over. And it lost the entire value of Pinterest, basically. Here's the big issue that I think we have in American economics and company building. We've gone through 20 or 30 years of really under investing in R&D at the sake of share buybacks,

at the sake of market consolidation, private equity driven take privates. And so all of this capital misallocation has really put us on the wrong foot and the pandemic basically showed that we were really ill-positioned. So a lot of these conglomerates, it doesn't make sense that it because we've proven

that the compensation schemes for CEOs, the incentives for executive management are way too perverted. And they just create horrible outcomes. A different example I saw. In the last, I think, 15 or 20 years, IBM's market cap has gone down to $113 billion. In the meantime, they've bought back $132 billion of stock. What? Could you imagine the kind of R&D that IBM could have affected with that $132 billion

and where they could be? So we have... Well, they're not good capital allocators. Well, we have horrible capital misallocation. So... Well, look at capital. I mean, they're not spending money on R&D. Yeah, they're not good at it. ThatD. Yeah, they're not good at it. That's the point. They're better off taking those massive, they're better off taking those massive R&D budgets

and putting it into M&A budgets, not for like a $50 billion Pinterest acquisition that doesn't make any sense as those synergies, but on smaller acquisitions of teams that have built really into technology. I mean, IBM could have bought a lot of different data that's under the energy that I older, innovative, or operate. Those guys don't seem to know how to do anything.

So like, my point is now we're in this cycle where these conglomerates will get ripped apart so that a brighter, fresher, and probably younger group of executive management can take a different spin on these companies and actually do some. For example, the J&J spin out is really exciting because you take med devices in Pharma and you separate it from a really struggling, complicated consumer goods package business, the shampoo, the Q-tips, the listarene, get all that off balance sheet.

Now you can actually make drugs and med devices, and that's a really interesting business at the right CEO can really do a lot of interesting things with. I heard an interview with us, then CEO of GE, I think Colp who was putting forward this plan, the line that I remember that kind of resonate with me, he said, the benefits of focus are immediate. The benefits of synergy is hypothetical. And I think that's really the key point here.

And what's going to fuel all this sort of decongalameration is that the benefits of focus to a company are so huge that, you know, but the reason why it doesn't happen is because of this instinct that all these managers have for empire building, right? So when times are good, they can keep building their empires and then something bad has to happen to force them to focus and By the way, the motivation. They're not they're not owners

They're typically not founders and so what you end up seeing is their comp goes up linearly with market cap So the big is definitely not right and this is just a just a close of the thought out on the whole eBay PayPal thing I mean it was so obvious that eBay should spin out PayPal But. But the management, the management resisted it and it took an activist shareholder. I think Icon came in there. It was icon who came in there. Yeah, but in the lobby, you're fucked. Well, but Icon shouldn't have to come in there. The reason why there's opportunities is the managers want to do the right thing. He unlocked a quarter trillion dollars of value. He was incredible. No, I mean, they spent that out for 40 or 50 billion.

Now it's worth five times that amount. It's a quarter trillion dollars. Yeah, it's crazy. And just to put this all in perspective, the stock buybacks that are going on right now, Apple did almost $20 billion less where they've done 77 billion last year. And you want to talk about the impact of tax policy

on innovation. Well, you've got on one hand here, Apple is looking at, well, I'm going to have to pay all these taxes. I might as well just increase the amount I'm buying back and be neutral. Why would I want to show any kind of a profit here? I'll just buy back as many shares as possible. The company will eventually be private. I mean, this is, you got to be really careful with how you do this because there's no incentive

for people now to put money into R&D or other stuff. They're just buy back the stock might be the most efficient thing to do, correct, in terms of like the share amount. If you don't know how to spend the money. It's a dumbest thing to do. It basically shows you're an idiot. Well, it shows you you got nothing better to spend the money on. So maybe that's, maybe buy back the stocks better than fluring it away. But yeah, it means you're out of ideas. It means you're out of ideas. Or a combination of, my God, this core business is throwing off so much money that we can't come up with enough ideas at that time. I think that's what you're not ambitious enough.

I mean, what would you spend 20 billion on? I mean, Zuck is having a hard time spending 10 billion on creating the metaverse a year. I mean, you're talking about 80 billion a year. What would you put that towards? What should Apple put it towards? No, Apple could even more aggressively double down to enter the car market. They could have done it much sooner than they have. They could spend 20 a year on that, sure.

You're right. You know, easily, they could actually enter, I don't know, power. They could. Yeah, I mean, but they're, but they're, you know, Apple, their, their culture is to have very few products as a company. They're always very proud of that.

It's the Steve Jobs focus thing. I mean, I think it's worked pretty well for them. I know you're second guessing it. The thing that I hear. You know, I just don't like buybacks because I think it comes at the sake of R&D for most companies. I think all these choice of the big tech companies are different. But everybody else, what you see as R&D is like one or two percent of their you know

Yeah, it's a shame look Apple could definitely be more aggressive But I wouldn't judge the Tim Cook era until we see what happens with glasses because this is the product that I hear is coming is gonna be They're you know their AR glasses and that's gonna be a new computing platform that they open up to developers and I guess Cook's been there for what a Decade But I think he doesn't want to retire until this comes out and you can see this is going to be his signature product, I think. But I'll tell you, just the other thought that this went

through my head as I saw this news about GE. I really was kind of the end of an era. You got to remember that back in the 80s, 90s, I think even as late as 2000, GE was the number one company in America by market cap. It was the top of the S&P 500. The later subsequently got kicked out of the Dow Jones. But the thing that went through my head is, you know, when I was a kid growing up, the only two business names that I even

knew were Jack Welsh and then Leia Cokka. You know, that was it. That was it. That was it. Remember the G.E. in Chrysler? Farrah's lost it in between the two of them. It was great Jack Welsh and Leia Cokka. And now you don't even know the name of the G.E. in Chrysler? Farrah's lost it in between the two of them. It was big Jack Welleshen and I had Coke. And now, you don't even know the name of the G.E. guy. I mean, I know it because I watched them interview and I saw them up there.

But I mean, you can't think of a business leader today who's not in tech. And really a tech founder or somebody who's handed the ball by the tech founder. So we know Tim Cook because Steve Jobs handed him the ball. But otherwise, it's all tech, all tech founders. You don't hear about any of these old, like Dow Jones type companies anymore. Is this the business environment, the economy has changed so much since the 80s and 90s,

it's all totally dominated by tech now. But, Zach, I would argue that the disruptive business and the disruptive business leader are always the icons. Back in the day, the chemical companies were the icons and everyone knew the chemical companies and the guys running them. Then it was the industrial companies. You know, then it was kind of the financial,

you know, then it were these guys in the 80s and the 80s that did all the other of the other companies. Like, I work founders, you know. But they were in different ways. Tell me the, tell me the truth. Two companies on R&D spending. Top two companies without looking on R&D.

In the world. Yeah, global in the world. Number one, number two, give me number one, number two. Uh, I say, my class of there, no, it depends on classification, but I would say Saudi Iran code. Freeberg, what do you got? Yeah, I would probably put X on up there. You guys need to think about who was been some of the most innovative leaders, Amazon

42 billion in 2020. Oh, but Jason, that's an accounting thing. If you're saying in the world, Saudi Arabia, their exploration, their E&P budget is probably $200 billion a year. Okay. I guess maybe because that's not, is that a corporate entity technically would be on the list? Yes, a public company. Yeah. So Google's, Google's got to be spending 25 billion.

With 27 billion. Oh, off my two. Huawei is third, 22. Microsoft is 4th, 19. Apple is fifth. You're saying tech. No, this is all companies. Samsung, Facebook, some of this is just accounting categorization.

Accounting. That is anyone who, because the engineering budget is basically what goes into R&D. So the more engineers you have on staff, the bigger your R&D budget. It doesn't mean you're producing anything by the way. Bigger industrial companies, traditional companies that list things as R&D, you know, most of those dollars flow out to third party companies, like enterprise software companies, services businesses. So it doesn't end up, it gets accounted for, it's quote unquote R&D because they get

to capitalize it. But that spend is typically not paying in-house salaries to engineers. And that's the distinction between true tech companies and other companies that are quote unquote going through a digital transformation or, you know, have a quote unquote R&D budget. They're outsourcing R&D and typically paying three times as much and typically getting one tenth in the return. And I think that's maybe a good heuristic for how you might kind of want to look at what differentiates a tech company. Depending on accounting, Saudi Ramco spends 37.5 billion to 50 billion depending on hiring a accountant. All right, so put some that probably tied with Amazon for all intents and purposes. I just mean as I was right Jason,

that's what I care about. The reason I'm wondering, well, you know, the reason I think that you just might, they might not be listed as, because they're, no, no, it is, it's a really good. It's a chaos with reading a Buzzfeed article and he, not as parents, it was parents, but anyway, putting it aside, I think the issue might be that they're recently public, right? So maybe they're, you know, they've only been filing public for two years or something.

All right. I think that's everything. How's everybody doing otherwise? How's everybody's personal life or people losing their mind? What's people's plans? For the end of COVID? I'm gonna go have beer and pizza on the beach. Nicely done.

So I'm ready to get out of here. Nice. I mean, I'm exhausted. Are you guys exhausted? This has been a fucking crazy run. I don't know what day it is anymore. I'm like, I'm ready to wind the year down. I am so exhausted.

I mean, this has been the craziest pace I've ever experienced in my life. The number of deals going on. The amount of inbound. Oh my God, I tell you at that conference, every single, so I have all these founders come up to me and pitch me what they're doing. A couple of them, I'm like,

that sounds really interesting. Can we participate in that? I know the rounds are subscribed. I'm like, why'd you come up to me and pitch me what they're doing in a couple of them. I'm like, that sounds really interesting. Can we participate in that? I know, the rounds are subscribed. I'm like, why'd you come up to me and pitch me this then? How dare you? Yeah, so I can't. Rule number one. I tweeted a new terms of service.

If this is only from at a conference, okay, if you step in appointment of my office, it's fine. That's like an opt-in. But like, if you come to me to pitch me your idea at a conference, then, and I say, okay, I want to invest, like, give me an allocation. Like, don't come up to me and pitch me if you're not going to give me an allocation. Yeah conference, then I say, okay, I wanna invest, like give me an allocation, like don't come between pitch me if you're not gonna give me an allocation. Yeah, no, that's not cool.

That's like being like, oh my God, I know the best restaurant in the world, it's open tonight, they've got the greatest stake, and they're like, okay, I'll just go. Okay, no reservations. Guys, tell Sacks about the White Truffles from yesterday. No, we did, we had dinner at Timoth House last night. It was incredible.

He got these White Truffles from Alba. That's what I've had in a year. I mean, it was really incredible. I really appreciate it. It was incredible. He got these white truffles from Alba. I mean, it was really incredible. I really appreciate it. It was amazing. And it was in 1996, White Burgundy, LaRoye, and the White Burgundy 2009. There was not a wine drink. I'm not saying that your guy, your chef, beat Saksas from two weeks ago.

Saksas, wasn't Sakshef your old chef, Timoth? I think one of his... That's not the same. I dated him. I dated him. I dated him. I dated him. I dated him.

I dated him. I dated him. I dated him. I dated him. I dated him. I dated him. I dated him. I dated him.

I dated him. I dated him. I dated him. I that one. I don't know that term means what you think it means anymore. Sacks. But by the way, there was a dinner conversation last night, sacks, to your point. Chimoff, it's up to you to decide if you wanted to disclose the dinner conversation, guess. But this guy said that there was a guy that applied to Y Combinator that had $750 million in crypto. And so he's like applying to Y Combinator that had $750 million in crypto.

And so he's like applying to Y Combinator with a 750K to give up some percent of his company. And they're like, all these stories of these guys, they're like, I will pre-fund my own series A with $15 million to create this business inside of the YC machine, but that was incredible. There's such an incredible, inexplicable, undescribed, I think, in the mainstream media story of crypto wealth creation that's been going on.

And these crypto, these crypto 100 millionaires, billionaires, are emerging and doing their own kind of innovation completely under the radar right now. The smartest people that we know are selling right then. Yeah, and I think they changed their conversions for the YC safe. They're now getting preferred shares that used to do common. And they now, I think it happens post conversion. So they want their 7% fixed, you know, after your next round of funding is my understanding. I don't know if that's, but yeah, so they got a more aggressive, but that's brutal. It's that, you know, what's happening is like the accelerators have to move earlier back

to incubators. So the idea of somebody, you know, grand or some of the other companies we funded coming to the accelerator with 20,000 or 50,000 in revenue, in some cases, they may be able to raise money without, and certainly crypto companies are raising $25 million, so outpacing regular companies, regular startups, non-crypto startups.

And they raise it in 10 seconds from a bunch of eth for buying tokens. They've created a whole shadow economy. That doesn't have to play by any of the- Yeah, do you really need venture anymore? Like, well, if you want to bathe a law I guess you do but in a lot of these cases like I did this I'm I don't know this whole new economy could emerge completely offline right completely off the the current the S.E.I.I.

I guess or do you want to get this thing tightened up they don't want people doing this I'm not a pro 20 I think it was 2015 I presented Amazon at Irosone. And one of the things that I did was we calculated what Bezos' investment track record was, because he basically took all his free cash to unreinvested it in the business and you could measure what his return on invested capital was. And it was like 42% and on a really big number

on tens of billions of dollars. You're saying, is I RR on the money? Amazon deployed in R&D projects like the 10 dole or as a 40 42% over like a multi decade period and double what a venture firm would do or top. I mean, he's in a class by itself, but my takeaway in that moment was, wow, this is the, you know, smartest investor of our generation. That's what I said, a baseless at the time.

And you know, Bayesons had a track record of selling roughly a billion dollars at Amazon stock every year, and this year he, you know, snapped sold 6.6 billion. Which, you know, when we talk about the percentage of selling, we're talking about selling 5% 10%. So, you know, they're not diluting their whole positions, but these are big numbers, you're right. I think it's a signal. J.G.Y. You got to close this out. All right, everybody. It's been another amazing episode, episode 55 of the All-In podcast from...

Yeah, whatever. We're, you know, where people are coming from. The All-In summit will be in the spring at some point. I'm going to go to Miami and look at the locations. March 11 through 15th. I can't because I'm playing poker. Yes. Okay. You got your poker training undisclosed location. I can go listen. Is there any idea? Big, big, big, big poker poker. Big, big, big poker.

You need to have a funny guy there. I mean, I'm not a great dealer, but can I be a waiter or something? I mean, I think the game starts to 2000, 4000, but I could get a little spicier. Free spicy. That's a good, yeah. Maybe you should go.

Yeah, maybe you should. I salon apply. Cause get the salon. Oh, he can play David the Cooke. David's right. Oh, what a week. The beacons. What you do, you chip off 10 million Salona,

you put it in LLC and then you buy into the game and then you will be in the office. That may not be enough. All right, 20, whatever. 20's enough. For the Queen of Canva, the dictator, and Rainman, David Sacks, I'm Jay Kalim, we'll see you next time

on the All-In-Post Subscribe to the channel. What? What let your winners ride? Rainman David Sachs. What? I'm going home. And it said we open-store sit to the fans and they've just gone crazy with her.

Love you, that's nice. Queen of Canoe. I'm going home. What? What? What. What? What? What? What? What? What?

Besties are gone. I'm going through the sea. That is my dog. Can you give me a wish? You're driving away. Sit. Wait, I know. Oh, man.

I might have a jasher when we eat the apple. You should all just get a room and just have one big hug, George, because they're all just like this, like, sexual tension tension But we just need to release that house What you're that big what you're here for Be a good girl we need to get my cheese aren't you? I'm doing all it I'm doing all it I'm doing all the it