All-In with Chamath, Jason, Sacks & Friedberg - E58: November's CPI, preparing for a downturn, macro outlook, Better.com's botched layoffs & more

Episode Date: December 11, 2021

0:00 Bestie Intro: Chamath's happy hour and sweater feud 7:11 Breaking down the new 6.8% CPI number, reflecting on old inflation takes, jobs report, understanding why CPI is misleading 23:05 How growth stocks got overblown, current valuation outlook, government as capital allocators 40:12 Deficit trouble: will another president ever try and balance the budget? Areas of positivity in the economy 50:29 Better.com's botched layoffs, impact of overcapitalization, macro outlook for founders 1:11:16 Lessons from the Jussie Smollett saga 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.cnbc.com/2021/12/10/consumer-price-index-november-2021.html https://www.bls.gov/opub/ted/2021/consumer-prices-increase-6-2-percent-for-the-year-ended-october-2021.htm https://www.marketwatch.com/story/what-powell-must-do-next-after-admitting-that-he-was-wrong-about-transitory-inflation-11638460995 https://www.cnn.com/2021/01/27/economy/inflation-federal-reserve-janet-yellen/index.html https://www.nytimes.com/2021/03/22/opinion/us-inflation-stimulus.html https://www.nytimes.com/2021/03/10/business/economy/inflation-markets-federal-reserve.html https://www.axios.com/inflation-consumers-survey-1932e8d0-b01b-4c39-8fb4-4fdb9a96958d.html http://cdn.cnn.com/cnn/2021/images/12/10/cbo.report.on.build.back.better.pdf https://www.politico.com/newsletters/playbook-pm/2021/11/10/does-the-wh-owe-larry-summers-an-apology-495052 https://www.cnbc.com/2021/12/03/jobs-report-november-2021.html https://twitter.com/BillAckman/status/1469438745791410183 https://www.cnbc.com/2021/06/10/stanley-druckenmiller-fed-lulling-investors-into-false-sense-of-security.html https://www.businessinsider.com/congress-progressives-back-bill-4-day-workweek-remote-work-2021-12 https://youtu.be/-_wvTa8aiu8 https://www.thebalance.com/deficit-by-president-what-budget-deficits-hide-3306151 https://twitter.com/Jason/status/1469370800771715073 https://www.forbes.com/sites/davidjeans/2020/11/20/mortgages-fraud-claims-and-dumb-dolphins-a-tangled-past-haunts-bettercom-ceo-vishal-garg/?sh=6ed46a0110f4 https://youtu.be/pXLx5OY21Bk https://youtu.be/wZXoErL2124

Actually, the funny story from the from our Basel. So I was hanging with with Jake Howe and we're talking to people. Yep. And for some reason, Jake Howe has been nice to me And he said to people he said, you know what this guy is? This guy is a legend in Silicon Valley You know he introduces me. Yeah, and then I said to Jason, I'm like, you know This is people and he who just sold like $260 million like NFTs. I'm like this guy's a legend too. And without missing a beat, J.Coult says, well, maybe for the next year. Oh, and it said we open source into the hands of an even just go easy. Love you, ass ice. Queen of the King of the King of the King of the King of the King of the King of the King.

Hey, everybody, welcome to episode 58 of the All in Podcast. Yes, the podcast. I don't know if you guys have been watching. I'm drinking, boys. I'm drinking. It's Friday. We're filming late on a Friday. You can tell from the backyard behind Jamoth that it's the evening. It's just. And he filming late on a Friday. You can tell from the backyard behind you. Moth that it's the evening and he's cracked open a little something something

a little little little delishy boobs. Oh, Bond. 2002. Same evening. That's a that's a label of Bond. Correct. Yes, sir. Bond, same evening, 2002. Oh, Pernas. Thanks for the invite. I'll be right over. Episode 58. Last week, episode 57, peaked at number 40 episodes in the world. So thank you to the fans. We broke 125,000 subscribers on YouTube and the pods over there are getting 150,000 views. So thank you to the fans. A lot of questions about the all-in summit I went to see the locations when I was in Miami We've got the location we want. We're working on dates and you'll have more information soon about that

So welcome back to the program with us today as always is the Sultan of science the Queen of Kenwa himself David Friedberg the rain men. Yeah, he's definitely back from our puzzle. Of course, he went to our puzzle and I don't know if he bought any art, but I was on his boat with him. Or as rented boat. David Saxon, I were on a boat and a boat. Well, he hasn't bought one yet, but I think he's moving there. And then of course the dictator himself, Chamali Polly Hoppatea here with Ed of Chimali, Polly Hopetia here. Chimali. With Ed, obnoxiously expensive sweater, tell us about that. Yes.

Yes. Can I tell everybody wants to know what animal is killed to make that armament? Adam was killed for that horrible, ernie sweater. This is a collection of the fourskins of some, I'm out. I mean, it is incredibly soft and smooth. I literally got a complaint like four skins are. Oh God. I guess we're really going to bad direction right? I'm literally going to complain. Freebrick and sacks are like, what are they talking about? I literally got a complaint

on DM about Shamaq's. What do they do with the four skin? Consumption of his sweaters. And she was like, listen, I don't mean to tell you your business, but I think Shama is turning off the audience with the sweaters. Was it an angry mid-level white? It was a white, but extremely successful one. I'll leave it at that. Anyway, really? Really?

It was just a certain, I think that every week, really? Really? Can we have to go through a small sweater Does she pay does she pay attention when I put in 700 million dollars a year to climate change? How has she put in that much? Beauty sweaters, okay listen enough Someone's checking Just checking if we're gonna start moral virtue signaling over here. All right. Well, this we got a lot to cover

I mean, this is just absolutely crazy. We're finishing glass of wine real quick and then roll into the show This is this is going to go off the ramp. I've already lost control of the show All right, we got to start with inflation and the economy while sax and I were in Miami for our Bazaal There was an absolute panic going on two, three in the morning, people checking their Robinhood and Coinbase accounts to figure out how much they had lost

in their crypto holdings, but today, I lost more in the Robinhood stock than I have in the Robinhood app. That's too soon, bro. That's too soon for me. I'm about to distribute. I'm like, do I distribute now or wait? That thing has been a stone seeking to the floor of the ocean. Well, I mean, it's pretty crazy.

No, I mean, listen, it's $17, 18 billion in pretty great valuation right now. I think it's an opportunity for people, but I'll leave it at that. Let's talk about inflation We're not I'm just before I I'm gonna just ask you don't show up drawn for the next episode I can't even get through the first story here. Okay inflation Does this woman even own a casual sweater that she can't get off of who is this person?

Oh please be better. God almighty. All right. What a fucking loser stop you. I'm glad to hear you're doing something with all those four skins because we don't want them to go to waste. I don't mind what they do with the four skins, all those circumcisions. I would love for you to just drive here and touch the sweater. I mean, I can't. I'm like, this is something to do on a Friday night. All right. Inflation numbers. This is important, folks.

Inflation, you're over a year. Sorry, but excuse me, but if you're if you're spending your time working in biotech, working in crypto and fighting climate change, it's wrong to be a cashmere sweater. Like all of a sudden, like you look like a homeless fucking, you know, the numbers was because we have to start the show because being ugly is so cool now. The idea was, do we have to start the show. Because being ugly is so cool now. The idea was, do we have to start the show with your fashion choices?

You started with that bullshit statement by this person who better be good looking or well dressed, otherwise they have no right to make this claim. All right, calm down, Trima. Let's get to the show. You insulted a sweater game. That's the definitely real one. Now we know he's most sensitive. Honestly, you might as well have called me a f***.

Oh, dude. You might as well. Dude, stop it. Just a sweater comment. And it's just a conspicuous consumption. Is that what she's really trying to say? Maybe she's trying to make a beat. No, because you brought it up.

Who is it? Outer. I'm not out. That's cancel her. Nobody's getting canceled for pointing out I'm not making a deal with you. No, because you brought it up. Who is it out her? I'm not out. That's cancel her. We're not getting, nobody's getting canceled for pointing out that you're talking about $4,000. She and she'll us matters.

I never said how much they cost. We beeped it out. I've never said how much this way. Do you want to sweater worth more than $4,000? Of course I do. I'm not going to risk my case. I risk my case. I own many. Give us the point.

Guilty for all charges. Good to make you as consumption. CPI the past three months, today was 6.8 year over year. The largest increase since 1982, we're getting back to the post Jimmy Carter era. And when Reagan got in there and herded that mess, September was.4 October 6.2 November 6.8. Point up. Point 6 or approximately 10% over October 1.4% over September. And here's the chart for those of you watching on the YouTube channel. This all started in March of 2021. That was the

first month with a CPI rose over 2%. And who was wrong on inflation with a Fed chairman, Jerome Powell, called a transitory numerous times over the past two years, Treasury Secretary Janet Yellen, in her Senate, confirmation hearing in December of 2020. Yellen said she believed the Fed and Biden had been could take advantage of interest rates being year zero and spend more on stimulus. Conor was Paul Krugman, the owner of his transitory in his op-ed, how not to panic about inflation. That did not age well. Quote, our business is actually starting to set prices and wages based on the expectation of high future inflation. If they aren't and my bet is they won't be,

then the lesson of 2010 to 2011 will remain don't panic. My God, he could not have been more wrong. Who's right on inflation? Jamie Diamond in March, I would suspect there is a pretty good chance you're going to see rates going up and people are starting to worry about that. The American public, specifically Gen Z has been on top of this issue. 77% of Americans were either somewhere, or somewhat were very concerned about inflation back in March. And Gen Z people aged 18 to 24 had the highest rate of very concerned about inflation at 52%.

Larry Summers also got this, right? Sachs, what are your thoughts on inflation, which now seems acute and permanent. Right, well, it's definitely not transitory. Remember when it was at about 5.1% over the summer that the administration said, no big deal, this is a transitory, don't panic. Then it went to 6.2, now it's 6.8, looks like it's headed to 7%.

And the real problem here is that these guys, the administration have not adjusted course in light of this data. What they've tried to instead is now, speciesly claim that the same bills that they had written and conceived, the bill back better bill, somehow, even though it was conceived at a time that was really deflationary, that somehow this is going to fight inflation. They're essentially repurposing. They're just changing the arguments they're using as opposed to changing their legislative priorities. And just today, we got a report from CBO saying that this bill back, better bill wasn't going to cost two trillion, like the administration said, it's going to

cost five trillion and add three trillion to the deficit. Over 10 years, correct? Over 10 years, if those programs are not sunsetted, so there's a bunch of budgetary gimmicks that were put in the bill. Basically, a lot of the programs would sunset after one year or three or six years. So that's the only way they've gotten it to this $1.9 trillion price tag. The reason why that's a gimmick is because once the programs are created, it will create a special interest

or constituency who is now dependent on those programs and no one's ever gonna wanna cut them. Milton Freeman famously said that there's nothing quite so permanent as a temporary government program. So that is the game that progressers are playing, is they're gonna create the dependency, the dependency, the constituency who once they receive the program is never gonna wanna give it up.

And they're counting on the fact that these programs will not sunset, which means they will cost five trillion and it will add three trillion to the debt to the deficit. So, you know, the problem is it'd be one thing if we were in a deflationary environment if the economy was in the tank, but these guys are continuing to pump more and more stimulus into an economy that has enough. And really, Larry Summers made this point all the way back in February. I think this is worth reading what he said.

He said there's a chance that macroeconomic stimulus on a scale closer to war or two levels and normal recession levels were set off inflationary pressures of a kind we have not seen in a generation. He said this in February, everyone in the administration dismissed him, all the liberal economists that you mentioned, basically derided him. He turned out to be exactly right. And he was just saying this about the one point, roughly two trillion they passed back in February

for a COVID stimulus. And since then they passed a one point two trillion for infrastructure, and now it's this another 5 trillion for bill back better. So, you know, the real problem here is that they are not adjusting course in light of this data that keeps coming out that inflation is a bigger and bigger problem.

So what's the right thing to do in your mind's acts? And then when you're checking on it, can this bill? We don't need it. And this is not what Biden was elected to do. You know, he was elected to provide normalcy, stop the chaos, and he never got a mandate for this kind of whatever, $10 trillion. We've been wanting to do an infrastructure bill for a long time, but that was prior to pumping so much stimulus into this. It's just done the infrastructure bill and not the

bill back better. It would have been one thing. But this is basically the third hyperstimulatory bill that they've sought to pass. First, they did the COVID release bill at a time when really the economy didn't need that stimulus. I mean, just dovetailing this. Yeah. I'm off involved in this is the jobs report. November, non-FARM payrolls increased only 210. They expected it to be 573. So it's a big mess. However, kind

of a miss bag because there's over 11 million job openings. And we're now at 4.2% unemployment rate, which is the lowest, which is getting towards the pandemic lows. And this is like before the 2008 financial crisis, Chimap, how do you reconcile inflation along with this crazy, bizarre job situation where people will not go back to work, people are planning on resigning, there continues to be resignations,

and there's too many job openings, and people are raising salaries and still can't hire people. Well, I think we did a pretty good job of unpacking the great resignation. I think it was last pod. So right, remember like, yeah, there are three structural issues at play in the jobs front. One is that you have this really meaningful under-immigration that's happened because of Trump.

The second was you've had a big mismatch between the degree classes in America and the jobs that they can have for what they think they should earn, meaning you go to school, you get into all this debt, you try to become a teacher or something, and then you realize you can make more at an Amazon warehouse. Crazy. Strange. And then the fourth is you have all these boomers with an enormous amount of savings, $30,

$40, $50 trillion, who are pulling forward their retirement and also subsidizing their kids. You put it all together, there's less of an incentive to be in the job for us unless you pay higher wages. Now, let's just put a pin in that for a second. I think the thing that SACS talked about is really important, which is that we have to really figure

out whether inflation is transitory or it's persistent and it's here. And I just want to bring up, I'll, Nick, I'll send you these text, the Twitter links to this, but Bill Ackman tweeted out these two things today, which is that if you, Van of the pod, brilliant investor, by the way, great human being, brilliant investor,

two very specific things. He actually called out something that we've, we also mentioned before, which is that CPI is horribly calculated and it's really imprecise and If you unpack CPI there's something index the consumer price index There's something in there a component of it. That's very important Which is called the owner's equivalent rent right how much can somebody basically charge rent to other people? The way that they calculate that, which is 30% of the calculation, is they just survey

a handful of people. The problem is you don't need to survey because the actual exact data is available from single-family rentals that report this number. So their survey showed basically a much, much smaller increase than what the actual increase is. And let me just give it. So the largest owners of nationwide single-family rentals are reporting a 17% year-over-year rent increase. The OER that was calculated, quote-unquote, by survey, and the CPI was 3.5 percent. If you flow that through, it means that core CPI actually went from 4.9 percent today to actually 9 percent. And the CPI print, which was 6.8 percent, was actually 10.1 percent.

which was 6.8% was actually 10.1%. So it just goes to show you, we have sources of data that the government is not in a position to collect or measure. We have horribly inaccurate econometric models that we use. You know that phrase sort of shit in, shit out. So unfortunately you get very bad. Carva juice, you get very bad crappy data. And now all of a sudden, we're printing numbers.

We're supposed to make policy against those numbers. But the numbers that underlie this decision making is fundamentally flawed. And it's flawed in the wrong direction. Okay. Let's bring freeberg and freeberg. What do you think is happening here? Vis-V also the creation of companies and entrepreneurship. Because one of the weird things that's occurring is we're starting to hit a record number of LLCs, S-Corp, C-Corp's being created. It seems like a lot of people are becoming freelance nation. Hundreds of thousands of new companies during the pandemic were started. That is probably one of many places where the water is flowing when you fill my cup and it shall overflow with. I was talking to a guy this week who...

juices slowly. With not that sense. Oh come on, come on. Go on down. No, no, let him drink. And drink fast. This guy has a multi-billion dollar consumer credit portfolio in subprime, which means, you know, he's got the, a bunch of consumers owe him money.

That, um, generally, there's going to be a high default rate. And his, no comment. Not. And, um, he said that this year, the portfolio performed beyond, like, the one percentile of the model distribution of what they expected to happen. They had the yield on the portfolio be 40% higher than they thought it would be, because there's so much liquidity in the hands of individuals. And so I think, Jason, while you might make the argument that companies and jobs are

be created, that is one of many places where you overflow a river and lots of streams start to flow. We're seeing asset bubbles everywhere in NFTs, in crypto, in startups, in new startups, and new ideas, in home prices, in everything. Sneakers. Now the problem with inflation is, it's a, definitionally, we all use this term and we throw it about,

but inflation is really the measure of price going up over a period of time and Generally you want to have inflation of some amount that allows you to see economic growth and expansion that allows you to fund The debt that you used to create that growth in the first place and so without in flip without some sort of an inflationary Pressure which is the output of economic growth, you end up being unable to meet your debt obligations, and then things get really ugly. And the system, as it was constructed, because most of these governments and systems like we have today are funded by debt. So, you know, Stan Druckenmiller gave

a good interview in Q2. He was kind of on a road show, you know, sounding the alarm bells around what was going on. He was saying the market is not speaking right now because basically the Fed kept canceling the market signals with their interest rate policy. And by canceling those market signals, it seemed like we had a free for all at the government level to keep spending. And so I do think that these two are pretty interrelated. The fact that we've kept interest rates low have allowed policymakers to say, you know

what, the cost of debt for this government is zero, we can do anything we want. Just like consumers are saying, we can do anything we want, we can buy anything we want, we can spend anyway we want. And as a result, we're kind of seeing this inflationary pressure persist. Now, the problem is, if you then raise rates and you can't borrow that money and suddenly people have to start to pay that debt down without economic growth having occurred the business goes the whole system goes bankrupt. So the challenge that the Fed has is how do we raise rates without triggering an economic recession? And if people are now have overspended and are overleabored once again and rates go up,

it's going to get really ugly, really fast. And so this is a first derivative bouncing act. And yeah, there's no simple and easy solution. Unfortunately, meanwhile, technology is causing deflationary pressures, which is exactly, you know, maybe what you don't want to see happen when you're trying to realize economic growth. And that's the other thing that we talked about is that the Fed basically changed the government changed the rules on the percentage, basically what qualifies as a conforming mortgage.

Remember that? And so now that's basically at a million dollars. And if you think about it, most Americans, most Americans, 80 to 90% of their true underlying wealth is their home to the extent that they built a positive net worth. And if you all of a sudden push up the upper bound on what a conforming mortgage is to a million dollars, that effectively means, it's roughly about 20%. That effectively means that you're moving people's net worth

up by about four or five percent But that's right. And so and so if they take that and then they take that money out of their home via a he lock or an equity line of credit Right, oh my great line of credit and then you know to your point freeberg they spend it or they invested or they you know It could be a real disaster scenario In five or six years. No the way, no, no. This is more like 1929 kind of. Yeah. By the way, if you go back to the, remember when we were in like the depths of the market

collapsing and everything when basically the economy shut down with lockdowns when COVID started? And I was speaking to a senior banker at that, like that day and he told me, look, it's pretty simple. What's going to happen? The Fed's going to drop interest rates to zero and they're going to pump money into the system because that's the only way you're going to be able to keep asset prices from collapsing and we're going to artificially inflate asset prices and we're going to do it for a long

time because then people look at the stock market and they say, oh my gosh, stocks are going up. Oh my gosh, revenue is going up. Everything gets inflated by pumping money into the system. And the problem is, while there's a perceived, you keep saying the home price goes up and I keep saying stocks go up, but the purchasing power that arises when the inflation is higher than what those things are going up at indicates economic recession underlying that inflationary bubble. And the circumstance needs to be analyzed, unfortunately, a little bit more deeper than that, which is it's not just about inflation. It's about, have we pumped enough money into

trigger economic growth that we can come to balance where the growth can outpace the inflation? And we're not there. Well, superimposed on this. Because I think about it. Sorry, let me just say one simple analogy. Let's say I've got 50 clams, and you know, there's suddenly a bunch of clams come into the clam market and now I got a hundred clams And if the number of clams has gone up by 3x my purchasing power is actually gone down by a third Well, it might look like I've now got twice as many clams I can only buy one third as much as I could buy before because there's so many more clams flowing around and that's the problem Clams, you look like a clam so you like them just

Listen I did a little bit of math. I've been watching the price to sales ratios of some of the top companies. We can pull this up on the screen. And the price to sales of companies, including Zoom, obviously, was ridiculous during the pandemic. That was a pandemic stock. So on top of all of this money being printed into the system, you had the participation of a bunch of stonk traders, you know, in that whole movement, buying up meme stocks or others, we had the price sales ratio of Zoom. In other words, the value of the enterprise versus their actual

sales was at 123. It's now at 14.7. Palatine was another one of those at 23 now down to 3x, down 87% Coinbase, Square also. It drops off pretty significantly here. But you can also, we looked at the peak price to sales and how much larger it is then. And so some of these are now off 8x, 4x, and then it drops off to 2x, 1x. But quite a, I don't know if you guys are looking at the numbers or if you have any thoughts on this, but where we, it seems like there was a mispricing of certain equities. It wasn't a mispricing. The Federal Reserve forced a lot of institutional investors to be out as long dated as possible in buying earnings. Because if you have to

remember, it's not just that real rates were effectively zero, but if you wanted to own inflation protected securities, it was actually a negative yield. So we were destroying people's savings. And there are a lot of individuals, sorry, well not individuals, institutions that must own some of these inflation protected assets. So we were already in a negative yield environment. What are those folks supposed to do if they have to fund an 8% return a year to pay the pensions of, you know, good people, firefighters, teachers, it's you name it, policemen, etc.

right? They were forced to invest in the kinds of funds that would then go out further and further out into the future to buy the promise of future cash flows. And when all of a sudden, a whole bunch of other assets that they held, which were supposed to be safe, implodes on them, right? Because all of a sudden inflation changes, and the front end of the yield curve goes, woo, and all of a sudden, all these assets,

when yields go up, prices go down. Now the fireman's pension is like, oh my gosh, we just lost all this money, we never thought we were gonna to lose. And we're long all these crazy text docs. And so then they're forced to sell so that their overall exposure goes down. That's called degrosing. And we've been going through a very painful process of this degrosing.

Headphones are doing it in droves. Can I ask you a question, then, Trimoff? I'm sorry, I interrupt, but should they not have looked at these multiples and said, you know what, maybe this one's out of whack and I should buy the ones that are not as out of whack because this simply seems not really because for the last 15 years, if you had, you know, the problem with being a value investor over the last 15 years since 2008 is you're basically a dumpster diver and you got paid absolutely, you didn't make anything because they misunderstood what value was. Value isn't necessarily things that are cheap. Value is things that are things that are valuable. And over the last 15 or 20 years, what was once a question is now

definitive, which is that the things that are valuable tend to be technological, because they're super high margin, they grow really quickly, they compound, they create enormous cash flows at scale. So the point is you couldn't own that stuff. And if you sat on the sidelines, you weren't meeting your 8% hurdle. You were all of a sudden looking at some risk of defaulting on your pension obligations. So this is how this whole cycle brought us to today. So there was nowhere, what you're saying is if I can summarize, there was nowhere else

for them to put their money. Sachs, price matters, though. So is this just bad capital allocation people weren't thinking about the entry price of their investments? We're giving too much credit. Well, I think, I think what happened is that you had a liquidity fuel boom going on. So what we've seen over the past four or five weeks, about the first week in November, the market basically peaked and at least gross stocks did and SaaS companies did. If you

look kind of, November 8 was sort of the beginning of the downturn. And since then, most of these growth stocks are down about 30% plus. Crypto is down now. I mean, it's sliding as we speak, 30%, 40% off a peak around the same time. What happened around the first week in November? Well, you had three Fed governors come out and make very hawkish statements about the fact that the Fed was going to need to double the speed of its taper and that you're going to have two, three rate increases next year. And so basically, we went from being in a low interest rate environment, which has been the case, not only just low interest rate environment, low interest rates with massive, stimulus and pumping out of Washington by both the Fed and by Congress.

Okay. And so you went from that environment to all of a sudden an environment of now we're expecting to have rate increases and that's going to suck the liquidity out of the system. The amazing thing that I'm seeing right now is that every investor I know is having the same conversation. It doesn't matter whether you're a SaaS investor or a real estate investor or a crypto investor, they're all having the same conversation, which is what are interest rates going to do? How much liquidity is that going to suck out of the system? And how much of the boom that we've experienced

over the last couple of years has been because of this unnatural liquidity has been pumped into the system. And so I've never seen, I've never seen it be the case that investors across every asset category are having that macro conversation as opposed to talking about like micro stuff, right? Like which company, the earnings, the product the product who they're beating the market share? Nobody's talking about that.

Like, what building do I buy or what's sass going to invest in? It's all about what is happening in the macro picture. And this is where I think what Biden is doing is so unbelievably off base is, okay, look, he didn't start trillion dollar deficits. You know, that happened in the previous president. I'm not saying that was good, but now we have a situation here of the Fed is getting extremely hawkish of tightening. We're seeing inflation now out of control.

And yet there's been no adjustment whatsoever on a policy basis. Can we just say we have would be able to choose? Wait, let's just call a spade of spade at this point because I think we can. I think, and I think Biden was, is and will ever be a really moderate down the middle centrist. I don't think there's ever been an extreme bone

in that man's body. He has always come off at, like, you know, the word that I think when I've always thought of Biden even now is equanimity. The guy is a really down the middle person. He's not an extreme individual. I think that's the only kind of personality, by the way, that could have thrived for eight years as a VP with Obama and had been in every room and every meeting. The problem, Saks, and tell me if you think this is totally off-base, is that there was a head fake after he won the presidency, where there was this fake lurch to the progressive

left. And it turned out that it was a complete head fake because that whole cohort of people just totally jumped the shark. Because all that rhetoric then, unfortunately, turned out to be not worth much, it started to blow up in their face in every single election that's happened since then at the local level in cities, at the state level in places like Virginia. And in the middle of all of that, I actually think what happened was that faction tried to push an extremely aggressive legislative agenda to paint Biden as an ex-Rosevelt, which maybe he didn't even have the desire to be because I think that he seems a very low-ego kind of person.

And now we're actually realizing, oh my gosh, this makes no sense. And so, the part of why I think the markets are kind of like hand-dreaming is you would expect at this point the federal bureaucracy to actually step in. But I think there's like a real lack of confidence because for example, today when there's a CPI print of somewhere between seven and 10%. The only democratic sounding, you know, the talking point was one of the squad proposing a four-day work week. I mean, that is insane. That's like you're in crazy debt and you're like, you know what we should do. We should spend more money and work less. When the CBO says, we're about to go three more trillion

into debt. The solution isn't to fort, well, I actually think if you want to work less, work less. You know, maybe you're lucky and your boomer parents can give you money. But there's a bunch of us like me who had to grind. I didn't have anybody to fall back on. And if you all of a sudden passed the law, that's

at HMOT, you can only work four days a week. I would be really angry, because you're depriving me of 20% more of a chance to beat all those other soft candy asses that went to all those fancy schools that weren't willing to work. Yeah, ignore. That's a stupid suggestion. Me work. So I think this proposal that came out to, basically, this was a new proposal that they were going to limit the work week to four

days a week, wouldn't let people work five days a week. The reason why it's, well, it's a bad idea in general, but it's a particularly sort of a branded idea to propose during a high, you sort of this inflationary period, because, again, inflation is caused by too much money chasing too few goods. Well, so do you have a demand component from the pumping and the stimulus, but you also have the supply component, which is we don't have enough goods and services. Why?

Because we've been, you know, passing out these stimulus checks that, that disincentivized people from working. We have problems with the ports. We have these COVID restrictions have all gone the way. Rest rates are closing three days a week because they can't buy. Right, so we've had a shortage of goods and services. The last thing we need is a 20% reduction in the number of work days and work hours that are available. So it just shows like how out of touch these progressives are. But look to Jamal, to your point about Biden, I look, I don't know

exactly what's in Biden's heart. To me, it doesn't really matter. I actually think he's pretty liberal. He's not all the way out to where AOC is fine, fair enough. But look, at the end of the day, I think this idea of Biden being a moderate, the moderate is as moderate does. He has not governed like a moderate, whether that's because, you know, this moderate thing was just a marketing stick on his part and he's actually more liberal or whether he's been cropped and taken over by the progressives. I don't really care what the reason is. The fact of the matter is he has not governed like a moderate. At least we pull back the spend, David. I mean, the spend.

No, we have not pulled back the spend. No, no, no, no, the original, remember the original, uh, bill was maybe two or three times. We just loaded loaded that we put the bullet in the chamber and loaded for mansion. This bill is not going to happen, David, with the $30,000 deficit increase. Oh, not, I mean, but the point is that it, look, if, if, if people like us don't speak up and say this is a reckless

humphooly, crazy. Yes, exactly. Then you can only fly the plane so fast before the wings come off. This is too much speed for the airframe. Let's go to a clip over a friend. Elon talking trillion dollar bill. Let's go to this clip of Elon talking about capital allocation.

It's a couple of it's like 30 seconds and then freedberg. I'd like you to comment on the other side. Let's go. You know, it's a point really what you're doing is capital allocation. So you're not, it's not money for personal expenditures. It's what you're doing is capital allocation. So, you're not, it's not money for personal expenditures, it's what you're doing is capital allocation. And it does not make sense to take the job of capital allocation away from people who have demonstrated great skill

in capital allocation and give it to an entity that has demonstrated a very core skill in capital allocation, which is the government. Yeah, freeberg your thoughts on. Look, I've said it in the past. This is at a Wall Street Journal conference, by the way. You can think of a government or a nonprofit or a corporation as an organism, as a living organism. And each living organism wants to eat and grow.

And there is no such thing as an organism that says, over time, I want to shrink and shrivel away and die. So the organizing principle of the people in the government is to do more for their constituents, for their owners, which are what they believe to be the taxpayers or the folks that elected them to office. The politicians themselves, I would argue, are more actors in the Ouija board of behavior that's going on here, and less kind of the mental designer of a system that they're trying

to use to infiltrate change in the world individually and conquer and gain individual power. There may be some degree of motivation there, but I think largely it's more about the fact that that organism, that government wants to grow, wants to spend more, wants to do more over time, not less. And this is true of any business. Every business wants to grow. If you're not growing, you're dying.

And every non-profit, there's no such thing as a non-profit that says, let's not fundraise and let's spend all our money and then shut down. And so I just think like, you know, as much as we want to kind of sit here and rationalize a way to better politicians that are going to better serve us, that are going to think smarter, the reality is every government, every, you know, institution of government in the history of human kind has tried to grow. And eventually they cycle back, you know, The United States, like I said last year, may be going out with a little bit of a whimper, less of a bang, and that's going to be a function

of the devaluation of currency, or having less of a place in the global stage, and so on. But I think Elon's right. He feels, and many people in business feel, like they're in competition with the government for capital. Yeah. And that capital is the only difference is that the government can force that capital, can force that revenue and no business can't. And so they've got an unfair advantage in that stage of playing for capital. And this is where Bitcoin feels to a lot of people like a great equalizer. And I'm not a huge like, I'm not a Bitcoin Maximalist or anything,

but I think that's where the appeal arises, which is, as Jefferson said, like every generation needs a revolution. And I think that this is the revolution that folks are looking for, which is how do we get this big monopolistic player off the playing field to let us do what we want to do? Well, I mean, it's so easy. I mean, all Biden has to do is what he was elected to. You never had a mandate for this $10 million of spending. I mean, the guy ran a basement campaign. I mean, he was elected to not be Trump, okay?

He was elected to stop the chaos. Yeah, not to engage this $10 trillion. To know, you see, adult progressive agenda. You know, Elon, I think made a really good point about the couple of occasions there. You know, people think, okay, Elon's got all this money. So he must be enjoying this like incredible lifestyle. Look, he's right, that once you have that much money,

you can't spend it all on personal consumption. You invest it. And so the question is who's going to make that investment? Is it who's going to be better at it? Elon or the federal government, we know Elon is better at it. He creates incredible innovations. He's going to put people on Mars. I mean, he can do incredible things with that capital.

A million dollars a government disbanders it. You know, there's another, Elon on another really good, I think Elon actually understands economics at a macro level really well. He had a really good, there's an equally good snippet of him on the Rogan show. Corner plenty. You all are going to plenty.

Where he says, look, there's a lot of people out there who think the economy is just like this, hornet plenty that produces all these goods and the goods just magically appear in a matter of what we do. Okay, and so if some people have more goods than others, it's just because they stole them from the Hornet Plenty. What he actually, but he said is,

no, this is not the way the economy works. People actually have to make this stuff. You know, if people don't make this stuff, there is no stuff. Okay, this stuff doesn't just magically appear. And the way the stuff gets made is you have people making smart capitalization decisions and engaging in hard work work and that's what actually produces the stuff and it's not a

zero sum game. So if you think about like this agenda that we have in Washington, it really flips this on its head. It's doing everything it can to stop the production of the stuff, whether it's the Stimichex or the COVID lockdowns or, you know, the foreman. Yeah, you know, or the foreign, the foreign,

or just confiscating the earnings of people so that they can spend it on whatever they want. Exactly. It's actually putting constraints on the production on the supply of this stuff. And then meanwhile, it's just printing all this money, so then we wonder where does the inflation come from? Well, obviously it's coming from printing more money

for fewer goods. That's basically the problem with the agenda. We have in Washington right now. The increase in the deficit is just getting stunning. If you look back on the five or six last presidents, Reagan 142% increase. He got us up to 1.4 trillion. He had to obviously combat what happened

under Jimmy Carter. George Bush, George HW Bush, 36 percent increase. President Bill Clinton, a 1 percent decrease. The first time we've had a stimulus, I'm sorry, a surplus in a long time, and then Bush the second, 57 percent increase. No, the economic results of the bill Clinton were amazing. I've been talking about it on the show before. Amazing. I was just about to say he's a goat. Yeah, but I mean, at the time what was very interesting is politicians actually took this issue

of balancing the budget very seriously. Seriously, seriously. Deadly, seriously, and thinking about how we would pay for things. And now we don't seem to think about who is going to pay for these things. Yes. Which is going to screw our children. Okay.

So you have to remember that Bill Clinton was the president who said the era of big government is over. And when he left office, he actually bragged about reducing the federal government's share of the economy from 22% to 18.5%. You would never hear a Democratic president. You'll never hear a Democratic president. Well, first of all, they wouldn't do it. But second, they wouldn't brag about it.

You can't even say something like that. Do you mean that in the dark? Let me ask you, do you think a Republican president would? Because I'm not convinced that any party matters at this point. It feels to me like the incentive structure is such that the individuals who are representing constituents who get them elected and they can pass more dollars back to those constituents

drives a systemic model of growth for the government and therefore the government is competing as a monopoly on the field for capital. Yeah, look, I think I see that. You thought Trump was gonna be this guy and Trump came in and he ended up spending more and I recognized they were Extenduating circumstances and so on, but I thought he was gonna go in. I thought the premise was blow up the government You know cut all this nonsense and the deficit kind of shot up. You're right that Republicans have a very spotty record on government spending and we

did have trillion dollar deficits pre-COVID under Trump and that was not good. But what Biden is doing now in the face of inflation is worse. And look, I mean, historically the best, the only time that you really have, it seems like fiscal responsibility, is when you actually have, the best track records have been when you have Democratic presidents or Republican Congresses, and the Republicans suddenly find their principles on spending when there's a Democrat in the White House. You're right that when Trump was in office and had Congress and George W. Bush had Congress, there's a Republican spent a lot of money too.

So it's absolutely a bipartisan problem. But what's happening now in Washington is under Biden is unprecedented, is a breaking of the bank. They're talking about minting trillion dollar coins. So yes, it was a problem under Republicans, but this is even worse. And here's another thing, is the Fed is now saying that they're projecting two to three

rate increases next year. So let's call that 75 basis points. Multiply that by the close to 30 trillion of government debt that you're talking about, Jason. That's about 150 billion a year of interest payments on the debt of debt service. Okay, 150. Extra extra extra extra that is not fixed right by the service. Okay, 150, extra. Extra, extra. That doesn't exist today. And it's not fixed right by the way.

This is very, very important. That's what I call short term rates. It's all short term rates because yes. So you're looking at 150 billion of incremental debt service costs, right? So multiply that over 10 years. That's 1.5 trillion over 10 years. That's your build back better right there.

Where is this money for build back better and it comes from? Well, we have 1.5 trillion of increased interest rate costs starting next year. And how do we get the cycle of people wanting to go back to work and be productive? It feels to me like this could be a great way. It's crazy. Which is what's happening, but people are still not going back to work. Have you been watching that the people that you bring $70,000 to be a manager of a Taco Bell and people want to understand? Well, then offer $75,000 to be a manager of a Taco Bell and people would understand.

I understand. Well, then offer $75,000. I still don't think they fell it. No, I think that model is dead. I think low cost labor is inevitably the estate. Well, some low cost if they're making $70,000. Well, I mean, I think in order for people to have a function, it needs to be labor. But it's like, I don't think Taco Bell is gonna sell burritos if they cost $6.

So if they're gonna have to raise labor costs, people aren't gonna be buying Taco Bell, they're gonna go somewhere else. So the low cost model of consumerism in the United States, which has been a stronghold for our economy for a hundred years at this point, may be coming to an end, or it will accelerate the implementation of automation

across that sector of the economy. That's more likely. that's more likely. That's more likely. By the way, if you read the press release for the four days a week, I'd pay for all of this for talking about Brita though. God will be good. God will be good.

In the four days a week thing, it said workers for far too long have been forced to work very long hours and not get paid. And, wait, wait, they were not paid. And so the idea is just like, you know, opt out, but then if you opt out, you'll make even less.

No. In a moment where you can actually make more. Yeah. These idiots who are coming up with these ideas. The Chinese must be looking. The Chinese is looking at the Chinese. Looking at the buys-outs of reckoning American economy.

Oh my God. In terms of, they don't need to do anything. We're destroying it from the inside. Yeah, exactly. So just in terms of what we should do here, I actually think there's a lot of strength in the economy right now.

It's not all negative. I mean, the unemployment rate is down to 4.5%. The labor participation rate, yeah. I think it's quite low. I mean, it was 3.5% before COVID. So we're getting close to where we were before COVID. The labor participation rate's not great. I think it's like 61%. It was5% before COVID, so we're getting close to where we were before COVID. The labor participation rate is not great. I think it's like 61%.

Salary is our... Salary is our... Salary is our... It was 63% before COVID, so we need to get more people working. We could do that by ending the Stimichex, okay? But the most important thing we could do right now is, Manchain would do Biden the biggest favor by just putting a bullet in this build back better plan. But I actually think there'd be a massive relief rally, and the economy would take off like a rocket next year.

If you just got government out of the way, they have printed enough, the best thing that could happen is they stop this pumping and stimulus and then the Fed doesn't have to raise rates as aggressively next year. And we could let things have more of a soft landing as opposed to the Sun-Nostrality,

which is whoops on the economy. So just slow the plane down and then maybe break this bill into 20 component parts and just try to get a couple of things down. He spent all the money, he spent all the money, it spent. I mean, this is a vendor of all vendors and if people are refusing to go back to work, we're going to have to, we talked about this in the last episode, we're going to have to think about that. It's a generalization.

Jason, I think it's a generalization to say people refuse to go back to work. I think the jobs that people had when their options open up to them, you know, may not be jobs they want to go back to. Correct. I think that there's going to be a larger, significant growth in a services economy that didn't exist before. Think about how many yoga instructors there are today that didn't exist 20 years ago. How many, you know, people doing their YouTube creators, creators, creators, the creator

economy alone, right? Like Hollywood no longer has a monopoly on content. And people are spending more time consuming content than ever before. So, you know, there's a services economy that I don't think we really predicted or modeled and we all assume, oh my God, we're not going to, no one's going back to work. It's like, guess what? People are spending money and they're going to spend money on new stuff and these new industries are going to emerge. We know creators and those creators are gonna create jobs around them. You know, one amazing creature will hire 100 people

to, you know, staff his videos and make his music and edit his stuff, and, you know, run his business, and so on. Like, it's just, it's just the way that the economy shifts. There's been a moment here that is like a Cambrian explosion of new species of industry, where, you know, this meteorite of COVID came and hit planet Earth, there was an eradication of the old species,

minimum wage jobs for crappy labor work that people don't wanna do. And all of a sudden, the sun came out and new stuff is emerging and new life forms are emerging, new jobs are emerging. And I think we're going through a really ugly transitory period, but I think like SAC said, it could be really great on the other side.

And there's also, yeah, sorry, there's one more argument to be made, which is our friend Brad Gerson, or Semi, you know today who's saying, I know you guys are gonna rant on your all-in pod today about inflation. I want to remind you about the deflationary effect of technology,

and it is really being felt in the economy. I think we all see it. How software alone can reduce the operating cost and the labor cost of businesses, drive up margins, increase growth. And so, you know, there's a number of tailwinds here. But I think Saxx is right. There's a masking going on with respect to the capital that's just being bandied about right now. And it's a risky nasty kind of, you know, maelstrom of a sea we're trying to cross right now. I want to point out two positive things to build on sex as positivity.

Number one, I don't know if you guys are following Omicron in the UK. They have record cases right now, but deaths, and they're also done great with the vaccine, obviously, a small country with a lot of resources. So they're hitting record cases for this last cycle, but deaths and hospitalizations are down and they say upward 25-50% is part is now moved to Omicron and it seems like that this could be the end game maybe and did you ever see the end of was it outbreak where they like drop that bomb and it was like the massive bomb that takes all the air out of the room is like shocked shocked everything and then they're like,

okay, it's over. You know, there could be this thing happening where Omicron is the, you know, the air bomb that gets dropped clears the room and then it's all over, you know? Well, and then here's the other thing. I don't know. I'm seeing the salaries going up faster than inflation. People are raising people's salaries, you know,

in double digits to try to get them to come to these jobs. So the people who are choosing to go back to work and people are eventually choosing that and switching jobs to Schumacht's point, I think they're going to be making more money and they're going to be more resilient and they are going to be a little more empowered. And that could end up being a great thing. And then finally, in terms of technology, I have one robotic company that serves coffee and they had a record week bump it. They pump it.

Pump it. Pump it. Pump it. Pump it. No, no, they broke $11,000 and people ordering from a robotic coffee machine previously the record was like seven K a week. So people tell you, tell your stupid lady friend, I have an $11,000 sweater. Oh no. Please. no, please stop it.

Stop it. All right, listen, I don't know if you guys saw this better.com layoffs viral video, but it can you can you break this down? J. Cal I was not following this. Very simple. There's a company called better.com. They get rid of origination fees or whatever in commissions. They try to get you faster mortgages, insurance, whatever. They were going to SPAC. Soft bank was going to put in 1.5 billion in the pipe. Everything was going according to the plan. So it was already in the company, right? So they were trying to get their own company out. Yeah. So obviously the market corrects. Everybody always asks us as a group, what happens when the market corrects? We'll hear you're about

to see it. This guy decides I got to cut 10% of the company instead of having his managers go to each group and have a logical small discussion about how they're gonna correct things and maybe some sort of thoughtful process. He decides he's gonna get on Zoom to the entire 900 people who are fired and in a very bizarre way.

So, 900 people were fired. 900 people were fired. Over zoom. Over zoom. But how big is this company? 10,000 employees. And he says to them that the last time I had to do this, I laid people off, I was, I cried and I'm going to try to do better this time. But if you are on this call effective immediately, you're fired.

It's just another one of these crazy clips we have to see it. 30 seconds, Traumat Gimir D me your thoughts on this. Thank you for joining. I come to you with not great news. The market has changed as you know and we have to move with it in order to survive so that hopefully we can continue to thrive and deliver on a mission. This isn't news that you're gonna want to hear, but ultimately it was my decision, and I wanted you to hear from me. It's been a really, really challenging decision to make.

This is the second time in my career I'm doing this, and I do not want to do this. The last time I did it, I cried. This time I hope to be stronger. Okay, then here's the second clip where he basically tells everybody over Zoom that you're not gonna be able to log in and you got two weeks, seven, three weeks,

but for a month, seven, and it's like three weeks before Christmas, go ahead. We are laying off about 15% of the company. We're in a number of reasons. You're the market, efficiency, and performance and productivity. If you're on this call, you are part of the unlucky group. You, dude.

That is being laid off. Your employment here is terminated effective immediately. Are you kidding me? What does this mean for what's next? You're gonna get an email from HRaskhr.batter.com to your personal email address Garning details of your severance and your benefits for all US employees We're providing for weeks of severance one month of full benefits and two months of cover up for which we will pay the premium So three months total

Benefits if you're left for coke. All right. I mean, for we've all operated business before, I mean, I've had to do layouts before. It is the most fucking brutal thing. Yeah, this is the exact wrong way to do it though. Terrible. I remember an AOL. There's no right way to do it, but I think the question with this guy

is to examine, you know, the growth incentive that got him to this point. He took Softbank money, Softbank, as you guys, as we all know, creates a very strong incentive and capitalizes businesses to go after kind of ultra-perhaps unnatural growth. And there's almost always shocks that occur after they do that. And the circumstance, I think, could have been avoided. Maybe he built a business a little more steady, but then his valuation would have been lower and he wouldn't have been able to access as much capital. And so, unfortunately, the loss of jobs is the cost of capital with these ultra-high growth

incentives that are kind of being structurally built into the fundraising rounds in these later stage deals lately. I don't know if you guys agree, but it's just sacks and then schemoff. Okay, so how would you do this sacks? You're an operator. Yeah, I mean, so I've had to lay people off before, but never in this era of COVID remote work. So the question and look, it is miserable.

And I think that it is the right thing to do for him to take responsibility if this restructuring was caused by a strategy that was, you know, overly prioritized growth. I think he could say something like, look, this is my fault, the company's fault, you know, not your fault.. I think he could say something like look this is my fault the company's fault You know not your fault. So I think he could it's I think he could have couched that I think you could have taken responsibility that being said I Don't think he owed the groveling apology that he was forced to make because look here's the thing How do you lay 900 people off in this era of remote work? I mean they're all working from home There's no office for them to go into

where you can sit them down one on one like a human like you used to be able to do and have a conversation. So they are laying people off by a Zoom now and it's unfortunate, but I think it's just this new world that we're in and I don't know that there's a much better way to do this. I think the words could have been better,

maybe it could have been more organized, but how do you lay off people who are working from home? I have an idea, but you go first and you thoughts, you want to add, and I'll tell you how I would have done it. I remember when I had to do my first layoff at AOL, of course, when I'm there. And there was a lot of those riffs, and I remember the first one I was in my early to mid-20s as a manager. And we had three or four people or whatever. And I remember distinctly that AOL had this policy at the time,

because I guess they had maybe like better, like tens of thousands of people, employees, lots of call center as an example, and they've had to have rifts before, they would have security guards. And they would be a security guard outside the meeting room where you would bring somebody in and talk to them.

And I just remember being serious in my mind because never having done it before, I was like sweating profusely, really nervous. I didn't know what to say. I felt really bad. I felt very guilty. And then you learn how to do these things and there is a very humane way to try to do these things. It's never the best thing to do, but you try to give people a fair exit package and all of these things. It's never the best thing to do, but you try to get people a fair exit package and all of these things. Let me put that aside, because I think what Freedbrook said is so good and so important. The root cause of why this is here, as far as I can tell, is not a company that doesn't have consumer demand. It's a company that may have been mismanaged for growth to meet the consumer demand because of too much money. And this is a thing that isn't a voidable mistake. And this is where you have to figure out how much you want to basically swim with the tide and

be like everybody else, which is to be able to go to the dinner party, say I raised X amount of dollars at Y valuation and just keep taking it up and taking it up. Or to actually have the discipline to hit the brakes and say I don't need it I don't know what to do with it I'm not ready to take it I need to figure out my business model. Those are two different kinds of decisions there's gonna be layoffs in both. But if he actually came at it from the perspective of listen guys, we've been growing methodically and there's just been a structural change or for example, rates are ticking up, there's a lot less demand and we have to right size the company. That's a very different statement than maybe we over grew because we were drunk on free

money and now we have to realize that we actually have too much capacity for the demand that actually exists. And those are avoidable mistakes, frankly. Yeah, I've had to do live off. So obviously it's not fun. This was executed terribly to your point, sacks. I think a much easier way to do this would have been to go to the leaders in each group and say, Hey, listen, we're going to have to do these layoffs. It's going to affect different groups. So you take your group into a subset of zoom You explain to those people and you do it. Hey listen, we're reorganizing because of these reasons Shamaos had some good language there other people did but this idea of mass firing 900 people with right person I think that's the critical

Here it was either that's a little megalomaniac Almost like he wanted to talk about himself in this as opposed to taking responsibility to unpack it. Obviously, when something like this happens, then the floodgates opened Forbes got a 2020 email leak where he called his own employees, dumb dolphins. In the email that's been leaked since this came out. You are cap locks on, two damn slow. You are a bunch of dumb dolphins and dumb dolphins get caught in nets eating my sharks. So stop it.

Cap locks on. Stop it. Stop it. Right now, you are passing me. Okay, but this is the pile on. This is the pile on where now for 24 hours. I know, but this person is going to be really slow. Yeah.

No, for 24 hours, he's the incarnation of evil in the eyes of the media and that they're going to move on to a new person in a couple of days. So I mean, look, I think- Have you ever wrote in that tone, please? Do we have an email coming out from my room? I wrote all caps. Guys, I quit the group chat for a day. You're doing great.

I all caps. I all caps you guys this week. I'm so hilarious. Rage quit. But can I connect with something that Jamal said about- Sure. Rage quit. But can I connect with something that Jamal said about? Sure. Okay, so you have this larger question about, or did the company grow too fast and our

founders asking the right questions about growing too fast? Let me connect that with the first conversation we had about the macroeconomic situation. I think every startup board right now probably needs to be having a conversation about the macro picture because there's one of two possibilities happening right now probably needs to be having a conversation about the macro picture because there's one of two Possibilities happening right now. We've already seen in the past five weeks. We've seen 30 to 40% correction in the public markets for growth stocks and SaaS companies. That is absolutely gonna trickle down to Venture valuations. I think it already has if you look look at the crossover guys, like Tiger and Cotu and D1, I guarantee you, they're all updating their models,

their valuation models based on the public comps. So, we are now in a slightly different environment. I don't know that a hundred times ARR is the metric anymore as it was, say, two months ago. I don't know where the new metric is gonna land. We're gonna have to see some deals get done post correction. But you know, we could be in a very different environment here. And I think there's two possibilities either. The rate increases that are coming next year are now priced in. And we're going to go back into, you know, a mode of going back up into the right. And especially, I think if

this BBB belt gets killed, we'll go back and back to the right. Or this could be the beginning of a protracted slide, as more and more market participants realize that we're in a very different kind of environment. And we may not have seen the bottom yet. If you were running a company, Sachs, and you had just raised that $100 million crazy round at a hundred times, what do you do? Well, I just had this conversation with one of our SaaS founders. dollar crazy round at a hundred times. What do you do? If you're running a SaaS company, what would you do? I just had this conversation with one of our SaaS founders. They just closed a monster

round at a great valuation and I literally a few weeks ago and they have some interest for more people going to get into the round. I just pointed out, listen, we may be going into a very different environment and I think the the company is worth evaluation we got. But, you know, if you just look at the public comps, valuations are down 30, 40%. So if we were to take more money into the round at the same valuation, that's kind of a good deal for the company. And it gives us more runway, gives us more insurance. Secure the bag, don't be sad. Secure it. Yeah. So we, those are the types of conversations, I think, is prudent to be

having right now and frankly There's a lot of investors and certainly a lot of founders who never lived through the dot com crash and down markets And they don't know how bad it can get they've only seen good times right what 18 months of nuclear winter No, no checks being written Yeah, I mean whatever you got whatever you have in the cupboard is what you're reading for the next 15,000 to 2003, you had three years of nuclear winter pretty much, but you know in 2008, 2009 was about 18 months of nuclear winter. I mean, yeah, it's just it wasn't even it wasn't even that cold, but you want to hear a great 2008, 2009 fundraising story? Sure. I'm at Facebook, market just implodes,odes, and we decide that we need to raise some insurance,

just a little insurance policy, little money, little downside protection. And I remember that we were having all these conversations with TCV, and they're a really good firm, very smart. And basically, you know, we told them what the price was. I think it was like $7 billion pre. Right? Like $7 billion, we want to raise $500 million. Just please, just do it. We just went with a little margin of safety. And they came back with their model

and they updated their model, David to your point. And they came back at their model and they updated their model David to your point and They came back at like 6.8 or 6.7 something like that 6.5 And we were like my god what the fuck is this like this is not Seven we just like we just want to raise some money at seven and seven was it down around because we had already taken money for Microsoft at 10 billion no. No, at $15. So we had thought we'd hit the jackpot a year ago, a year earlier, we raised $249 million for Microsoft. Now, by the way, why $249? Because at $250 million, Bomber would have to go to the board.

So he goes $1 million under the number where Bomber can sign the check himself. So we get Bomber in for $249.15 billion. A year later, the great financial crisis happens. We are raising money. We tell TCV, please just give us 500 million at seven or eight. Some number. They come in 700 million under, because their models is whatever.

And I will never forget this. It was a Saturday afternoon, I was on the phone, and I think it was with like 10 all year, at our general council at the time. And we got a term sheet from a certain person Yuri Milner at DST and Yuri came in a Throws the high heater at like eight and a half or nine no board seat all common. I mean a completely disruptive mood mood and move And all I just remember asking Ted Elliott was, does he vet, meaning like, will the wire clear? Well, just to just let the money come into the United States, not knowing, right?

Because we had heard, you know, anyways, the money cleared, we took the check and the rest of history. I have a good story about that. But when you are, when you are facing an enormous downturn, When you are facing an enormous downturn, you have a fiduciary responsibility, David to your point, to make sure you're well capitalized. But then on the other side, you have a really important fiduciary responsibility to you and all the employees and everybody else to run this thing properly. And you cannot get confused that value and valuation are not the same thing. Absolutely not. And so the minute you can flake the two and you're like, I'm an ex-billion dollar company

and start behaving that way, you're dead. By the way, there's a big difference. I think it's important to note. I know it's been said many times before, but I'll say it again. There's a difference between what your responsibility is as a board and as a fiduciary to the shareholders of that individual company and what the incentives and motivations are for the big investor that just put all this money into your company for their portfolio as a whole. For their portfolio as a whole, they would rather tell everyone, go hard, go fast, spend

as much money as you can, and they hope that one out of 10 companies becomes a hundred X from there, and it's okay if nine out of 10 die. So they don't care if you die. They care if one out of 10 companies goes a hundred X. You have a different incentive and a different motivation, because if the company dies, your shareholders, you as an entrepreneur, your team, lose out. And that tension needs to be understood really clearly by entrepreneurs and executives that

are taking money under these conditions. Tiger Global, SoftBank, Co2, they're great people, there's good people investing there, but the incentive for them is quite different than it is for you. They're betting on a big winner. Yes. Do not expect that just because they're betting on a big winner, that they're expecting you will be the big winner. They're indifferent.

As long as they have one, go 100 acts. It's fine. Doesn't matter what happens to you. When I met Yuri Milner, he came to a certain poker game. Not to play, but just to say hi. And I said to him, I said, you put all that money into Facebook. There's like a week or two after it happened. I said, why didn't you take a board seat?

That's never happened. And he looked at me because Justin Calicanas, you don't need to have a board seat to be influential. He didn't take the code. I think this guy's going to like whack me any minute. The rest of the history. I'm't know why I'd ever heard. You'll do not need the board seat to be influential. I was like, what do they use? The Compromise? What a, I don't want to know. Compromise.

The Donium Compromise. He's got guys. And someday I'll tell the story of the three hour alleged. I have what you're in there. All right, listen, for, I don't know if we have anything else to clean up here. Lucy Spoulet. Yeah, we're talking about juicy. He's supposed to be a juicy. Is it Jesse? All right, listen, they're famous French actors. As Dave ship alcoholism, the famous French actor, juicy

Spoulet. Listen, I don't even want to go there, but I there is a person who pretend this, I mean, I think it's actually worth talking about since we do go to yeah, we do talk about race sometimes. There's an actor who faked that he was attacked in a bias attack. He was found guilty of doing this. It's deranged. It's sad. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I'm hanging up. I What else do we got on the duck? I don't want to lose freeberg so. I'm just, I miss freeberg. I gotta, I gotta get a come to the party tomorrow. I want a hug freeberg's bony body. Why don't you come to the party tomorrow?

Yeah, why don't you come to the party tomorrow? Coming, what are you, where are you? We're all like in trouble. Guys, boys, I was in f***ing, I did the thing with the thing of the fucking duck show. That's f***ing okay. And then I was in f***ing, do another thing. Alright, that's all good, okay, so don't show up. Jake Alcetti was gonna go skiing, I said you go show. That's fucking okay. And then I was in the ****. Do another thing. All right, that's all good.

Okay, so don't show up. Jake Alcetti was gonna go skiing. I said you go skiing. Have a good time. No, I'm showing that for a while. Look at this. This is like the Beatles. And you know what?

A Shamaat's turning into John Lennon. He's gonna hang out. He's got some, we got some buddies there. We got a show up. Well, a record. He's gonna be there. Saks are going. Guys, you know how far it is from where I live from.

I know because I play I come to your house every week. And I love you for that. Yeah. Are you gonna go sax? What's the chance of sax shows up? He RSVP. Are you gonna go sax? Should I pick up the one?

The RSVP, he didn't even do. One of his... Oh, one of his three works holiday party? Yeah. Well, I have a conflict. He came to your birth. Oh, you have a call. Oh, my God. holiday party. Yeah. Well, I have a conflict. You came to your birth. Oh, you have a cause. Oh, my God.

What is the conflict? You need to drink some papi. Oh, they party tomorrow night. Oh, you're going to wait. Let's go. You're going to have to wait for his party. Can I go? I'll skip freed birch for that.

Yeah, yeah. You're all right. Fine, sorry, free bird. We're selling you out. Wait, why are you going? It's all good besties. Why are you halfway to second? You're picking over Friedberg.

I mean, I've got a, all they party for like the last five years or whatever it is, maybe more years than that. It's always a good party. Tell us what it's like. Tell us what it's like. When you see him, do you look him in the eyes and say, what have you done for me lately? The two of them,

the two of them haven't looked each other in the eyes and the eyes. Never looked in the eyes. Never looked in the eyes. I was like, accidently, when they first met accidentally. Okay, I gotta run. I was like, actually, when they first met, accidentally. Okay, I got to run. Wait, wait, wait, wait, wait.

We have anything else. We're supposed to do the jussies small-out thing quickly. No, we do it last because you don't want to talk about it. Better last thing, guys. What else do we have? What else do we have? New bank IPO was huge. Who cares?

Who cares? Who cares? Who cares? Who cares? Who cares? Who cares? Who cares? Who cares? Who cares? Who cares? Who cares? Disaster 80% of people already in their back Buzzfeed is circling the drain. What a disaster the end? Thank you for tuning in to the all-in pod. No, that's all we have on the doc today

Tomorrow is ready man only chama. I Luce Lucy. He's a little loose. He wasn't gonna I've been working. I've been working so well. I am working hard. I know I am like this week I was traveling always I got people in town. I got run Okay, well, hey burger. We'll just go for five minutes. I'm gonna, this week I was traveling all the time. I got people in town, I got to run. Okay, we'll let me, we'll just go for five more minutes. I'm gonna go tomorrow, free burger. I'm not selling you out like these other two. I love you, Jake, I'll go and love you, free burgers.

Love you guys, we'll see you later. I'm gonna go over here. I'm gonna be a call. I'm gonna be a table by Poker Game on Monday. Oh my God. I'm not a poker game, that's what I'm gonna invite. Oh my God, it, we lost our minds. Oh no. And there was there was some big out story. There was some enormous carnage. Oh, wires were initiated today. So

everything is settled. I you carnaged. Nope. Oh, I did a little bit of this. I did a little chewing of the carcasses. You're like one of those, was there a whale and you're just like a great white shark just taking bites after the whale's dead of the blubber? We quit at 3 a.m. and it was, it was nice. That is crazy. Alright, so for Jesse Smell, and now that, Fred Brooks, you got Jesse Smell. Yeah, Jesse Smell.

I mean, it's just very weird. I mean, I think on a race issue, this is like the worst possible thing to happen because we do have instances of Asian hate, people being beaten up before the color of their skin, for their sexual preference, whatever it is. And then this person is so mentally deranged that they set up a bias race attack, apparently am I correct that he did this in order

to get sympathy so that his acting career would do better or do we know? I'm fairly interested in negotiating his contract. He's worried about getting cuffed from the show. What? He was on the show Empire and he's worried about getting cut from the show. But look, I to me, this is- So this hold on, explain that to me.

He's worried about getting cuffed from the show. So the logic jump is if I had a race attack, they can't fire me? No, I play the sympathy card. Sympathy card. I got it. Yeah, I just want to make sure I'm understanding it and I'm not crazy. He made himself into a causal lab of the woke left. This is in early 2019 when everyone was worried about, you know, Trump.

So he claimed that he was beaten by two MAGA, you know, haters who tied a new surround his neck and poured bleach on him. I'm not sure what the bleach was about. I think maybe that was to make it. I'm like, I'm gonna wire something. So what it was? Two white dudes, okay. And then at one point, in the interview,

when the inter-gators or the investigators were pressing, are you sure they were white? He said, well, I don't want to be racist. I can't compare it to light. And then it turned out the two dudes were black, like I mean, like from the audience. But I can't hear you. Yeah, he hired them.

He hired them and they paid them by checks. So this is not like a master criminal. There's no Lex Luthor. No, no. But look, I think this story, what it's really about, it's not just a story about one sociopath doing this crazy thing. It's really more a media story. This is about how the media covered it. They loved it. And I think this is all to all news. All to all coverage. And I think this reflects all the worst qualities of the media. Number

one, rush to judgment. They immediately bought into the story and they were attacking the Trump administration for creating the hate and the Maga people so there was a feeding frenzy. Number two, there was no and this goes with the Russia judgment. They didn't do any fact checking whatsoever, right? Because the story was too good if it all their priors Just like the Rolling Stone, Ivermectin hoax about you know the Maga people, you know in Oklahoma hospitals Whatever that story was too good and Rolling Stone and Rachel Maddow bought the hoax. The hoax hookline sinker because they didn't do the fact checking. At the number three, no corrections.

None of these sources ever apologized to the May at Culpa issued a correction. There's just an eerie silence coming out of all the sources who pumped the story like crazy. You have to, Nick, please put it in the show notes. There's gotta be a YouTube clip of the Chappelle joke around juicy Smoley. And the basic joke is like every colored person states silent, all the blacks, all the browns. And the joke, the punchline of the joke is because we were all like, we spread out of the

blue dinner. You know, like, why aren't you defending juicy spoulet and the whole point is, nah, he looks kinda guilty to us. Well, I mean, hold on a second. It's incredibly funny. If you, let's just play 15 seconds of this, a deep link to his first interview.

I think this is his first full interview. Just play 10 seconds of that, because this is of Jesus' play. Yeah. I noticed the rope around my neck and I started screaming and I said, there's a f*** rope around my neck. Did you get any kind of description of the attack? I gave a body description and I, you know,

because I saw this, but, and, you know, right here or whatever, but I didn't see, I can't tell you what color their eyes were, I can't tell you. And I did not see anything except the second person I saw running away. And the first person, yeah, I saw his stature. I gave the description as best as I could. You have to understand also that it's Chicago in winter.

People can wear ski masks and nobody's gonna question that. It's just so deranged. I mean, the poker towels are flying off of him. He's like thinking, this is making him a bad actor or a character. I just want to know David as a producer. Are you hiring him now or not? Yeah, maybe. Maybe I will hire him actually.

I think you're working for the Chief. I think you're probably got his Emmy. Oh my God, sorry too soon. But the crazy thing here is that a lot of people, all the liberal elites basically fell for this hook line sinker president Biden, vice president Harris, the Losings. They all jumped the gun on this

and were basically denounced, they bought into the story, they were denouncing this racist attack and blaming Trump and the administration for it. Or the new policy. I wait until the court case is over to comment on these crazy things. I don't want to comment on a Twitter. I don't want to like it or retweet it.

We have a justice system. If this stuff is hitting the justice system, just let the process happen because the velocity of social media is such that, when we talk about algorithms all the time, that if something like this happens, it's going to become the number one of serenity billion people are gonna see it, and then there's fallout,

and the fallout here is just devised, everybody shut up and wait. The same thing happened on the written house case, right? Absolutely, just wait. Massive rush to judgment, they keep this kid as being a white supremacist, an attacker who basically like a school shooter, it turn out to be totally false.

But, you know, the court systems have been doing an amazing job. When you think about the cases, I think the courts have been on quite a run in, I think contra-distinction to the media keeps getting it wrong, right? So you think about it. So Derek Chauvin convicted, Jesse Smollett convicted, the three killers of a mod are brief convicted. Okay. But, Cal Redden House, not guilty, Kenneth Walker, not guilty.

This was Breonna Taylor's boyfriend, who killed a cop when they killed her, when they busoned the apartment. He basically pledged, his case, he pledged self-defense, because he didn't know who was shooting at them. And he got off just, not just just, he got off just like how we're in the house did. So, you know, people, I think, are jumping the gun on a lot of these cases.

Actually, an enormous amount of justice America is an incredible country. We don't get that mostly finds a way to get to the right place. Obviously, there are moments where we completely get it wrong. But David, to your point, those are some where we completely get it wrong. But David, to your point, those are some really powerful examples in modern history with a lot of scrutiny where our peers, American jurors, found the way to get to the right answer. Yeah. Feels great.

Bravo to America. Bravo to those folks. Good job, man. By the way, the Breonna Taylor example is a really wonderful example. And the moderate everything was really important to me as well. Thank you for bringing it up. I appreciate it. Yeah. Well, you know, because I think, you know, when the written house verdict came down, a lot of people were saying, well, look, if, if Cal written house had been black, he wouldn't have gotten the self-defense as just as well. Kenneth Walker, actually, that

case was a self-defense case. he killed a single article in the mainstream media to basically actually defend Kenneth Walker. Yeah. And he actually shot a cop, right? And, but, and he still got off because when they bust into that apartment, the jury thought it was reasonable. Very, very, very, very tracking self-defense. Very tragic that that that the officer died. And I'm sorry for the fan, but, but I really hope that Kenneth Walker has a, a really amazing productive life from here. Yeah, I mean, it's a terrible situation. Probably in the lesson of like, are these no knock warrants even warranted?

Like, what are we doing? Like, I don't know, but it's necessary. If Kenneth Walker lives a productive life and does good in the world from here, he does a small up out to kind of make up for that injustice of Breonna Taylor and probably kind of creates and positive karma for the family of the officer that passed away. And that's the best that you can do. We just be great.

As Americans, we could start looking at these issues and saying like, justice is worth pursuing. The truth is worth pursuing. And we're all in it together. The United States, like we talked about in the economy. Also, we got it right in places that the elite coasts kind of point to and look down on. We got it right in places like Georgia and deep parts of Georgia, you know, and I think that that's something for us to also think about. It is the a virulent strain of the liberal elite

that really do judge the rest of the country for being in a way that is actually not true. They got it right in Kenosha. Georgia can tuck Illinois just to be, just to put it on the record. We'll see you all next time on the Olin podcast for the dictator, Rainman and the Queen of Canoas. See you all next time. Bye bye. I know, I know! What? What? What? What? What? What? What? What?

Besties are gone! That's my dog taking it away. She's right, wait. Wait, I don't think it is. Oh, man. My amazement is actually a bit weird. We should all just get a room and just have one big hug or two. Because they're all just like sexual tension

that we just need to release that out. What? You're the bee! What? You're the bee! It's like this like sexual tension that we just need to release that out What you're that beat? What you're that beat? Where be your beat? Beat your beat? Let's get it real quick We need to get merch Besties are in the house

I'm going on li- What? I'm going on li- No, Lin