All-In with Chamath, Jason, Sacks & Friedberg - E65: VC markup dynamics, Russia/US tensions over Ukraine, Altos Labs raises $3B, Stripe mafia & more

Episode Date: January 29, 2022

0:00 Chamath's preferred cosplay 1:35 Reflecting on bad investment decisions and markup dynamics 15:20 Rising tensions between US and Russia over Ukraine, Putin's demands, NATO negotiations as the underreported key piece, Obama's savvy Russia dealings 39:16 Bill Ackman buys the Netflix dip, Tesla and Microsoft crush earnings, the Fed signals rate hikes 55:18 Altos Labs raises $3B in the largest Seed round ever, incredible Yamanaka factors breakthrough, dynamics of a richly capitalized bio-moonshot 1:04:08 The Stripe Mafia, Bolt CEO punches up, reflecting on old emails 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.bloomberg.com/opinion/articles/2013-05-30/bitcoin-the-perfect-schmuck-insurance https://twitter.com/DavidSacks/status/1480716684038049796 https://medium.com/@jason/do-the-work-skip-the-party-8f2864560195#724a--share-10-78 https://www.nytimes.com/2022/01/16/world/europe/russia-ukraine-invasion.html https://www.defense.gov/News/Transcripts/Transcript/Article/2910061/pentagon-press-secretary-john-kirby-holds-a-press-briefing https://www.theatlantic.com/magazine/archive/2016/04/the-obama-doctrine/471525 https://www.history.com/news/nato-article-5-meaning-history-world-war-2 https://www.latimes.com/opinion/op-ed/la-oe-shifrinson-russia-us-nato-deal--20160530-snap-story.html https://www.worldometers.info/gdp/gdp-by-country https://www.atlanticcouncil.org/blogs/natosource/obama-does-not-believe-invading-ukraine-or-saving-assad-makes-putin-a-player https://www.euractiv.com/section/global-europe/news/germany-agrees-to-axe-nord-stream-2-if-russia-invades-ukraine https://www.wsj.com/articles/william-ackman-takes-stake-in-netflix-11643236690 https://tesla-cdn.thron.com/static/WIIG2L_TSLA_Q4_2021_Update_O7MYNE.pdf?xseo=&response-content-disposition=inline%3Bfilename%3D%22tsla-q4-and-fy-2021-update.pdf%22 https://www.microsoft.com/en-us/Investor/earnings/FY-2022-Q2/press-release-webcast https://www.cnbc.com/2022/01/26/fed-decision-january-2022-.html https://www.tcv.com/tcv-insights/netflix-case-study https://www.cnbc.com/2021/11/16/peloton-files-to-sell-1-billion-in-stock-offering-shares-drop.html https://www.drugdiscoverytrends.com/biotech-altos-labs-emerges-with-3b-in-funding-to-focus-on-cellular-rejuvenation-programming https://www.biorxiv.org/content/10.1101/2022.01.20.477063v1.full.pdf https://twitter.com/theryanking/status/1485784823641755648 https://twitter.com/shaunmmaguire/status/1486082835974811650 https://twitter.com/Jason/status/1486113945790214146 https://twitter.com/shaunmmaguire/status/1486114773209006080 https://twitter.com/Jason/status/1486121975311339520 https://my.pitchbook.com/profile/107633-08/company/profile#deal-history/102358-00T

We don't want to talk about Andrew. I think that guy Palmer Lucky is super fascinating. The Oculus. Why do you want to talk about that company? Because I think an emerging syndicates. He's launching a syndicates soon. No. Are you an investor? Palmer Lucky hates me. He won't come on this week and start up. He literally hates me. What did you call him? Palmer Lucky?

Palmer Lucky. Cosplay Palmer. He's a cosplayer. I like the fact that he does cosplayer. What is that? That's when you dress up as comic book or like superhero characters and go to conventions. You know how you dress up in the clothes of old Italian women? You dress as up like a superhero. He's a cold open folks. I do dress like a matrona sometimes.

Yeah, right. I'm a djabad, I'm a make a new djabad. You want a rickadoni with the vodka, so I'm making a photo. In Italy, there's like a culture like in the olden days. Like it's like you used to have these things called Salotti, which basically meant like all the decisions of the country were made by these people

in the living rooms after dinner. And you know, the most powerful people in the Salotti were these women who were married to this men. And they would be the architects of all these decisions. Oh, the most salamiado to like in. And we never finished the past. were these women who were married to this men and they would be the architects of all these decisions. Oh, the Boceliniado the like and we never finished the past. The hero is a leave us so much on the plate and people would call them matronas. So I'd probably be a matrona.

I've always felt you were like the old Italian lady in our group. And I said we open sources to the fans and they just go to read. Hey everybody welcome to another episode of the All in Podcast. Yes, we're still publishing. Yes, we haven't been canceled, but it's early in the show. So you never know. With me again, the dictator himself, Chimoff, Paul Yoplatia, the Sultan of science, David Friedberg, whatever beverage you like, he'll make it for you right now in his replicator, and of course, yeah, the rainman himself, yeah, definitely gonna win the midterms. Yeah, David Sacks. Everybody have a great week getting their asses kicked in the market. I'm pretty good. You're okay. Everybody okay? Nobody. Check out the look. I can't look at my portfolio anymore. I just stopped. I, uh, not a fan of the color red.

I actually, um, I, I've been using this period to kind of desensitize myself. I went back and I started to think about all of the sort of errors of commission that I've done in the last decade. And I was able to look at four or five specific trading moments where I was like, wow, what did I do that for? And I came away with two things. One was if I confuse an investment with a trade, I'm done for, meaning like there are things

that you invest in that you just want to own forever. And then there are things that are trades that are just speculative. And at the end of the day, you have a sense that it could be up in the short term. If I confuse those two, I've made huge mistakes. And then the other one is I would always get really emotional and panic at the lows. And so I was like, you know, in early December or November, when I wrote that letter on

Twitter and we talked about it, and I sold a bunch of stuff after Jeff and Elon were selling, raised some cash, and I was like, okay, now I have enough buffer here. The whole point from here on out is to basically like insulate myself from my own emotional turmoil. Stocks go down. And so far so good. And my litmus test, if when I go home at the end of every day, you know, I check in with Nat and I'm like, am I an asshole?

Because if I, when I can, what does that have to do with the best thing? When I get questioned the market, I tend to take it out of my friends and my loved ones obviously because I'm just We got to your poker game when your socks are down and you're just like oh my god I'm not it once that's it I'm popping the blinds up. I can't take it anymore Do you remember last year to mop during the the market collapse When at the start of COVID and you decided you didn't care about having nice jeans anymore. And then you fast forward to December and you were proclaiming the virtue of a $5,000

fresh alpaca sweater or whatever. I think another indicator of sentiment in the market for you is you're clothing. Oh my gosh choice. But this is a really nice cashmere ribbed sweater from Lorda Piana. Okay. Well, we're back in the games. It's good to see we're back to normal now. Yeah, let me ask you then I'm going to put a couple of items out there. Is Bitcoin a trade for you or an investment for you? Or was it and is it now? Well, I invested it in 2011 at $80. Yeah, yeah, I'm, yeah. I wrote an op-ed in that same year in Bloomberg, which I hope at some point they take off the paywall. And the whole thing was you should have 1% of your net worth in this thing.

Yeah. It's remained an investment ever since. So still an investment? Yeah, I've structured it so that I don't hold any Bitcoin personally myself because I don't want to have the pressure and the risk of keys and coins and wallets and this and that. But I still really believe in Bitcoin in the long term. Sax, how do you deal with the emotional turmoil of opening up your stocks, crypto, whatever wallet

and seeing red and then going to work every day or you just curled up in a ball playing chess with Peter Till at this point? Yeah, I mean, you just got to try and ignore it. Okay. Try, try was a key word in that sentence. It doesn't really affect me that much. I mean, so I run the avoidance acceptance function. I have removed my emotions.

No, look, there are, there are countervailing benefits. So when exit prices are great, entry prices are lousy. And when, when entry prices are great, entry prices are lousy, and when entry prices are great, exit prices are lousy. So there's an inverse relationship. So in other words, all the companies that, I mean, the public markets have massively corrected, and now finally, we talked about this few months ago, those new price levels have trickled their way down

into venture markets. And so finally, venture deals are starting to price at more reasonable prices. So in terms of harvesting gains from old investments, obviously it's not as attractive as it was three months ago, but in terms of making new investments is much more attractive. And for a relatively young venture firm, which is what we are, yes, we do have some investments that are kind of in the harvesting stage, but we're only a four or five year old firm. We're still the bulk of our activities making new investments. So, you know, it's not, it's, it's all just kind of part of the game.

And I'm not really that worried about it. Set another way. Fortunes are made in the down market. They're collected in the up market. It's the way I always phrase it, but it's true. Things are going to be on sale right now. We saw Bill Ackman, I think. I think it's a friend of the pod. I think he listens.

Yeah, super, super, super smart. Brilliant. Yeah, and I just want to emphasize because I don't want founders to get the wrong idea. It's not like we're trying to pull one over on founders and get some sort of sweetheart deal or something like that. My view of like our role as VCs is just to be a price taker of whatever price is the market sets. We don't try and negotiate something better than market really.

We just take the market price and we pick the companies we want to be in. So that's our job is really just to pick not really to negotiate that much. You're not able to haggle. It's not like you can go to like the supermarket. The supermarket is like, oh, bananas are a dollar a pound. I'll take them for 50 cents. They're like, oh, this is a whole foods. We don't negotiate prices. Right. So we're a price taker in good markets or bad markets. And it's just that I think that the prices now are coming down because what I've heard is that the crossover investors like Tiger, like Cotu, were deploying all

this money. They've really slowed down now. I think they're all kind of looking their wounds. So all this money that was flooding into the venture space is kind of on pause right now. That's caused the price levels to drop. The end of last year in Q4, my public portfolio really started to turn over. Took a huge amount of losses going into the end of the year. And then I took an accounting obviously of like the entire book. And the public portfolio, every single thing that I owned, ultimately basically broke even last year. Some were up, I made some early sales, some were way down by the end of the year,

net net, I kind of broke even. But my private book was up a billion dollars. And I told the team, I'm like, no, this is not real. So we have to take those marks because, you know, you have other venture firms that are pricing these deals and we get audited K1s. And so we have to take those marks because you have other venture firms that are pricing these deals and we get audited K1s and so we have to take the up billion but I told them you should consider this that we had basically a down. So net net our returns were like we were up like 15% and I said this is not real. We were at best breakeven probably we lost money but you can't you can't

not take these marks because like you because you have an entire fund complex that lives on these marks. It doesn't affect my compensation at all, but I have to take it. Freeberg, that sucks. Go ahead, freeberg. It's a really important point because I think we talked about this one or two episodes ago,

but there's a significant disincentive for venture firms to take mark downs, to raise capital into a private business at a price that's lower than the prior round. Because when they do that, the marked value of their portfolio goes down and that it makes it harder for that venture firm to go out and raise the next fund that they're going to try and raise from their LPs because it looks like they're not good investors. And the reality is, and so in every round, as everyone on this pod knows, there's always an incentive and a push to see, can you get the valuation higher, even if the business performance didn't meet the objectives of the prior round and things

have gone sideways a bit, doesn't necessarily mean that it's a bad business, but it doesn't necessarily mean that it should always be getting an up-round just because it's being kept alive. And there is this artificial pressure in private equity, in venture to always drive the value up or to run away from the company. Because otherwise you're gonna have this markdown and you don't wanna be putting money in at a markdown

that looks like a loser and so on. And if you look at the public markets, every successful company has had significant downturns in their stock for significant periods of time. From Facebook, Amazon, to Facebook, to Amazon, to Netflix. All of those businesses were sound businesses. It's just that for whatever reason, there were perturbations and markets, perturbations in the business. But the long-term value creation was still there. I think we need to be really thoughtful. Entrepreneurists to be really thoughtful.

Entrepreneurs should be very thoughtful not to give in to the venture mandate to always drive value up, but to be really thoughtful about getting the right valuation for your business and getting the capital you need with the right partners. Can I say something about this? It's so important what you said. One of the tactics that I started three years ago was I run my own shadow portfolio where I don't take the marks and I just keep them at my cost basis.

And I'm not allowed to use that for anything. I don't, you know, I can't use that obviously. I would never use that for compensation with my team or anything else, but I use it in my own head to say, okay, if I invested a dollar, let's not think about what somebody else may think about what that dollar's worth. Let's just keep it at a dollar unless it's impaired, but I don't take the markups and I look at my portfolio that way. But it's a very difficult thing to do and the reason I do that is because I don't have the pressure to raise incremental funds, but if I did, I wouldn't be able to play that game and I'd be

very focused on making sure other VCs marked up my deals. Because to your point, it takes 10, 12 years to drive liquidity, literally. That's the key here. And so what are you supposed to do if you're a venture business in year three or four, except raise money on markups? Paper markups are the, they're the, they're the, they're the, they're the,

they're the, they're the, they're the, it's the live blood of, of what's in the industry going. Yeah, totally. Well, I mean, the interesting thing for me is, I LP to a couple of these small, like emerging fund well, I mean, the interesting thing for me is I LP a couple of these small, like emerging fund managers, you know, microphones, 10 million or so, three million. And they were sending like a lot of updates. And so I'm in some top tier of entrepreneurs that some of you were

in. And they send you an audit every year. And they send you a distribution cash on cash, here's where you're at. And then I was getting like quarterly emails as everything was going up, these new fund managers are like, we're at 100 IRR, we're at 200% IRR because this crypto investment we did got marked up. And I was singing about what Bill Gurley would always say, which I think is a Howard Marx quote, you can't eat IRR. What are we doing here? Why is there such a focus on this?

It's because you want to raise your next fund. And then the other game people were playing was, and I got into this because people were like, oh, you're grossly undervaluing your funds, because Robinhood is trading at $30 a share on the private markets. Com is trading at this on the private markets. And the second people were using

secondary market transactions as their mark. So I'm curious, SACS, how do you think about if you invested in a company, the series B, was $100 a share, but then somebody bought it at 150 a share in the private markets. Where do you like to mark that in your funds, or how do you think about that, and getting ahead of your skis in terms of valuing your private funds? Well, to my point, we have accounting rules around this. So we can't subjectively decide what mark to set for each company for obvious reasons. RLP wants a predictable accounting. So, the way it generally works is that the mark is set by the most recent private financing.

This is the way it works. And if people want to discount it from there, they certainly can, you know. What about a secondary transaction? Is there any more complicated rules around that because it's a different class of stock. So it's some combination of sometimes we use a foreign INA, sometimes it's the latest preferred round. It's you know, it just there's like complicated rules around it. By the way, I'll just to rehash what was already said, and just to say it one more time. Chimac pointed out that it typically takes 12 years to liquidity from the time a startup is initially funded to the time that you sell it or go public.

Show me one public company that has had 12 years of consistent gain in its stock price. It doesn't exist. And so again, like this notion that, you know, every startup is seeing some perpetual persistent increase in value is an artifice that, well, it doesn't exist in tech, and that's a feature not a bug. Right.

Meaning, the things that can go up predictably for 10 to 12 years are not necessarily businesses that, they're not disruptive. They don't take risk. They're not dynamic. No. They don't take risk. Yeah. Saks, can you define perturbation for the audience? I heard Freiburg say that a couple of times.

Perteration would be... Perter-Basician? Changes. What, like volatility, basically, yeah, rapid change. Anxiety, mental, uneasiness? Hmm. Okay. A cause of anxiety or uneasiness. Okay, I got it.

I thought you were saying another word. You don't use the word perturbation. I thought you said another word. What was in your brain? I thought I heard masturbation. That was a master bit. But that's what exactly did he say about the markets? Speaking of markets, we were on a text on our text thread talking about if we're about to have the start of World War III and then maybe this is not in the news now. How do we look at the UK Russia situation in the UK and obviously 100,000 troops are messing on a border? And what is the goal here? Because Biden is saying, hey, listen, if anything happens, we're going to go to war.

And there's a lot of saber rattling here. I don't exactly understand what Putin's goal or motivation is. And that's, I think, what I'm not hearing in the news is exactly what is his goal. What are your thoughts on what's happening in the Ukraine and Russia, sex? Okay. Well, I think, first of all, we have to kind of level set into historical terms about how unusual and unprecedented it would be for us to send troops to fight, you know, potentially Russia in a border conflict with Ukraine.

And by the way, the Biden put 8,500 troops on alert for deployment this week. It's really without historical precedent. During the Cold War, you know, in 1956, Soviet tanks rolled into Hungary to crush Rebels Air. Eisenhower did nothing. 1968, Soviet tanks rolled into Czechoslovakia to crush Rebels Air. Eisenhower did nothing. 1968, Soviet tanks rolled into Czechoslovakia to crush the Prague Spring. LBJ did nothing. 1981, the Soviets crushed the Solidarity movement in Poland, Ronald Reagan did nothing, even though he had campaigned

not getting tough with the Soviets. And then in more recently, in 2008, when Russia invaded Georgia, at George W. Bush did not intervene militarily. And then in 2014, when Putin occupied Crimea, Obama did nothing. And so this idea, and the reason for that in all those cases, is because America has a vital national interest in avoiding war with a nuclear armed Russia, and we did not have a vital national interest in defending the territorial sovereignty of those nations. That's the bottom line. And so for us to be now beating the drums of war and talking about sending troops into a war zone with Russia is just it's unbelievably irresponsible. Friedberg, one might speculate if they were cynical, some sort of wag the dog situation

here, Biden's not doing well, he's lowest popularity ever, midterms are coming up. Is there any political motivation here, do you think, and what Biden's actions are, given the context of what a sexist outlined? I think that there's, this is like showing up to the, you know, the last 20 minutes of a two hour movie, and then saying, oh my gosh, what's this guy doing? He's so crazy. There's a long narrative that precedes the current new cycle on what's happening with Putin and the Ukraine. You know, in large part, the United States helped to start the fuel,

the expansion of NATO in the 90s. And the intention was to make NATO as a Western Allied kind of organization contain Russia. Step up right to their borders, get very close, and ultimately make these kind of, you know, areas free liberal democracies that are aligned with the West, and put them right on Russia's border. And that is obviously antagonistic.

If anyone tried to do that to the United States, like Russia did with the Cuban Missile Crisis, we would view that as a hostile act and we would react accordingly. And for years, the pressure has been building and has been mounting, as Putin has started to kind of solidify his political power at home and his allies abroad in trying to figure out ways to push back on this wall that has been built around him and his nation. And to some degree, I think we look at this as like his aggressive

behavior, but to some extent, it is a defensive behavior over a very longer cycle when viewed that way. And again, like, remember, the US had this Monroe doctrine, which President Monroe put in place in, I don't know, 18, 1800 something that said, you know, anyone that comes into our territory and tries to influence nations around us to be hostile towards us is a hostile act in and of itself. Any time someone tries to influence our politics, it's hostile. And I think Russia views our behavior and NATO's behavior this way. And so his primary demand is and has always been that the Ukraine cannot and will not and

should not join NATO. And the US response has and continues to be and the EU and the EU and we're saying, look, we believe in the sovereignty of the Ukraine and we want the Ukraine to make their own decision about where they go and what they do. But the reality is for us, this is a key part of a very long-term strategy to keep Russia contained. Now meanwhile, there's this beautiful backdrop of what's going on with China. And if I'm China, I would love to see the US and Russia in conflict because it will weaken the US. And if I'm Russia, I would love to see the US and China in conflict because it will weaken

the US. The US is in a very precarious situation right now. For us to actually end up in conflict, it's going to weaken our position with one of these other two emerging, you know, challenging, you know, superpowers. And this is a really precarious time. I think to SACS' point, it's highly unlikely we're going to end up sending military, but the posturing is such that we need to kind of hold our line until the very last minute. We'll see what happens. I did say, you know, at the end of the year, I do think that we're in this kind of economic status right now that if there were an opportunity for conflict, we're

probably more likely to want to engage in conflict than not because it does create something that we all get behind to create kind of a political unity, it creates economic unity, it creates driving forces that maybe might help us through what is clearly a very volatile and difficult time at home. So let's see what happens. I think Obama's already given us the end game. I just think we have to go through the machinations to get there. He said to the Atlantic, I think it was in 2016 or 17, he said, the fact is that Ukraine, which is a non-NATO country, is going to be vulnerable to military

domination by Russia, no matter what we do. And you know, every time there is this brinksmanship, we effectively blinked and rightfully so because it didn't necessarily make sense to all of a sudden engage the war machine to go to war in Eastern Europe. The thing that's interesting about what happened here though was that this was a slow moving train wreck that was really visible years and years ago. Why is that? Well, if you look at what was really happening, this is really a European issue. And you gotta think, well, why is America being the leading actor here when, where's Europe in all of this? Well, it turns out that, you know,

the strongest power in Europe, Germany, isn't a really difficult situation because they rely on Russian energy. 50% of the Nat gas that comes in, or 50% of the energy, I think, that comes into Germany is from Russia. And they've, in fact, been building an entire pipeline system from Russia that bypasses the Ukraine and goes straight to Germany. And so when all of this saber rattling was happening, Germany basically had to blink because they need Russia's energy. And why because they need Russia's energy.

And why did they need Russia's energy? Well they needed Russia's energy because 20 years ago the environmentalists in Germany won and they started decommissioned all their nuclear reactors. So it was no. So at summer along the way nobody took a science class in Germany and figured out that nuclear was both safer and cleaner instead burning fossil fuels as the answer. Wiser to not have a dependency. And after the Fukushima, they went, turned them all off. They accelerated it.

Yeah, it made more sense to burn fossil fuels, number one. And then to get those fossil fuels from Russia. So unfortunately, we are in the state of affairs where, you know, Germany has said, at least that's been reported, that they would shut down this pipeline Nord Stream 2 if Russia did something. But the reality is, I think Obama basically told us that it's going to be very difficult for us to justify an act like this, especially against somebody who

is fortified and clever and smart. This is not like invading them at least. This is a massive plan. If this happens, the stock markets will just go absolutely to zero. I mean, if you could have negative stock prices, this may be a good catalyst to take these Netflix shares. Please. It's unbelievable. It's really, really crazy. This seems like a situation where we're assured not to get into to mix it up with him. Like, I don't understand Putin. I don't understand Biden saying that he's absolutely going to react to this because we're not. We

can't afford to get into a war right now. That's right. And if that is true, then you know, US dominance, the US ability to hold the line starts to decline. And I don't know if I agree with that, because I think we could diffuse this crisis very easily. Yeah, what's the exit ramp? Yeah, tell us. Well, the exit ramp here is what is Putin demanding? Putin is demanding that we affirm that Ukraine will not be part of NATO. In my view, that's giving him the sleeves off our vest

because we should not want to add Ukraine or Georgia to NATO. In my view, that's giving him the sleeves off our vest because we should not want to add Ukraine or Georgia to NATO. That would do nothing to enhance the security of the United States. We wouldn't get anything out of it, but we would be obligated under Article 5 of exactly to defend them. So admitting Ukraine or Georgia or Moral Dova could ultimately bring us into a war with Russia. Exactly. So to free, to freeberg's point earlier, we have been poking the bear for two decades with our expansion of NATO right up to Russia's front porch. And if you go all the way back to 1990 when Georgia Herbert Walker-Busch was president James Baker was Secretary of State. There was an assurance made by James Baker

that basically they had gone to Gorbachev and said we wanna, for help in reunifying Germany and the promise made that famously that James Baker said is what Gorbachev said is we don't want NATO expansion and Baker apparently said not one inch eastward was the line. And we think back to how well Herbert Walker Bush and James Baker managed the end of the Cold War, how do they do that?

They did that by making assurances to Russia that we would not bring NATO up to the front porch, which is what we did. In 2000, we've now added something like 14 countries in Eastern Europe to, you know, to NATO, including in 2004, the Baltic countries. And that decision by George W. Bush really is the thing that pretty much severed our relationship with Putin. You have to remember that Putin is, he is fairly popular in Russia because he stokes Russian nationalism. And what is the source of that nationalism? It is because a single tree organization NATO now has this huge, contiguous border with

Russia. They now feel encircled. And if we were to add Ukraine to that organization, there'd be a 1200 mile, again, border, which that Russia would have with just this one alliance. It would be akin to, imagine if we were still in the Cold War and Canada were added to the Warsaw Pact, right? I mean, we would be incredibly threatened by that. So, but you know, you never hear, Jake, how you never hear any of this on the news.

All you hear is the beating of the war drums, and Poon is portrayed as this mad dictator. He has no legitimate concerns. Now, look, Poon is an authoritarian, and you could describe him as a bully and a thug, and he has provoked this situation, certainly. Okay, but, you know, we treat him as if he has no valid concerns, whatsoever.

And I think the simplest thing to do to diffuse this crisis was simply be to say yes we have no intention of adding you crane to nato and then we will find out if pune is a liar or not well that would be a great move that that would be like let's take a five year pause okay you know what will negotiate with you will take five years we will put a minute give give a little bit of a concession, because their country is not doing well. They're GDP trails China and the United States. They're GDP per, you know, each citizen is incredibly low compared to the West. And then we could just work with Germany to get on sustainable, which is what their goal is. And we could economically continue to trounce them, because as you point out every week, Chimoff, they're not an important economy. Here's what Obama said about Putin. Obama said the truth is actually Putin in all of our meetings is scrupulously polite, very frank.

Our meetings are very business-like. He never keeps me waiting two hours like he does a bunch of these other folks. He's constantly interested in being seen as our peer and as working with us because he's not completely stupid. He understands that Russia's overall position in the world is significantly diminishing. interested in being seen as our peer and as working with us because he's not completely stupid. He understands that Russia's overall position in the world is significantly diminished. Yeah, he's not crazy. He's not dumb. And by the way, nationalism, as SACS points out, which is a primary drum call for Putin, is not a novel sense. We are a nationalist country. Nationalism is pride and wanting

to make sure that your country is treated with respect and has sovereignty. And so I don't think that Putin is an irrational actor. His behavior is very rational in response to what's gone on for 30 years. And his requests are that he is feeling threatened and he is trying to avoid military conflict as much as he can. And we portray him as being an aggressor that's demanding military conflict. And at the end of the day, our behavior over a long period of time as a country has driven us to the brink care. And I think Saks is right. You know, the right decision may very well be to kind of, you know, leave the region alone and focus on issues that matter more deeply to us and our higher priority rather than more deeply to us and are a higher priority

rather than drawing us into this. But a better investment would be in sustainable energy. I think the economic seed is planted for us to be in some sort of conflict this year. So, explain to me about that free-barric, economic seed to be in some sort of conflict. I think that, generally, if you're not going to see homegrown economic productivity gains and you're suffering trade issues, we're going to suffer this year, given the supply chain problems globally, we're going to look for some place to manufacture growth. There's no better way to manufacture growth than through the Doug, through conflict.

The foreign policy establishment in Washington, the Neocons, the so-called Washington blob. Here they are being the drums for war. We haven't been in a war for what, six months, we just got out of Afghanistan, and now they want us back in another war. And the media just keeps fueling and fomenting this. And they don't, their coverage of it is, well, it's exactly what we talked about last week,

Jake, when I pointed out that you're rhetoric, you're humanitarian rhetoric, as nobles as sentiments are, when it gets whipped up into a lather and a frenzy by the media, it blunders us into a bunch of stupid foreign interventions. I would not call it a rhetoric, well, let's call it beliefs. My beliefs are not rhetoric, but I get your point.

Is there anything? But here we are one week later. And exactly what I said, the risk of this is, has now materialized. So clearly you're blaming my position on human rights. No, what I'm, the risk of this is has now materialized. So clearly you're blaming my position on humor. No, what I'm saying is that, but I'm saying is that this type of rhetoric is used by the military industrial complex and the washer blob

and the neocons to stampede us into wars that don't make any sense. That's where I predicted a week ago, that's where that was my concern. Well, the death that would occur in a year or a while later and we're in exactly that situation. It is our most successful export. It is our most successful export.

It is our most successful export. J. Cal really important. There's a difference between, there's a difference between belief and how do you act on that belief and what are your actions based on that belief? Yeah, and I think that a big part of what's gone on and this harkens back to a few episodes ago when we all got in trouble. There was an attempt to canceling us after we spoke about this, but when those beliefs are at a sex point, it outharmed us in a way that is ultimately co-opted in a way to fuel and to drive

conflict. It obviously goes beyond belief and it starts to move into an area where there is a very wide spectrum of action. And it's very easy to tip yourself onto the one side of the spectrum. And as a result, cause a lot of harm and a lot of damage. Like we've done in Afghanistan, like we've done in Iraq. And so on. And so on. Here's a great lens.

What is the cost of going to war in the Ukraine versus whatever human rights or sovereignty issues they have? Hundreds of thousands of troops going to war is going to result in more human suffering than what's currently happening. Including for Ukraine. Exactly. They're going to be in the middle of a war is going to happen on their turf. The humanitarian interest isn't defusing the situation. Exactly. And the way to do it in a way is to, is to, you know, exceed to this one demand that Putin has about not emitting Ukraine to NATO,

which just to say something more about why we shouldn't want that. The problem in Ukraine and Georgia and Moldova, first of all, these are not North Atlantic countries, right? This is mission creep by NATO. They're in the Caucasus. And the problem they have is they're sort of these breakaway, you know, Russian republics, but inside of these countries, there's breakaway provinces, you know, they're ethnically Russian areas within these countries that want to break away from them. So you have a breakaway within the breakaway.

And so you've got these powerful forces. It's complicated. It's very complicated. So for example, in Georgia in 2008, when there was a war there, and Russia did invade Georgia, but it was on behalf of these breakaway provinces of South Ossetia and Abkazia. And then in Ukraine, they've got the Donbass and Kremlin. It was now been annexed by Russia, which are these at majority ethnically Russian areas, you know, and same problem in Moldova.

So the problem is you've got these like incredibly complicated border disputes within these countries based on ethno-nationalist tribalism. And, you know, the US does not have a vital national interest in getting involved in those disputes. And by admitting these countries into NATO, they could pull us into those disputes because the key provision, Article 5 of NATO, says an attack on one is an attack on all where obligated to go to the defense of those nations. How is the security of the United States enhanced by that requirement? They get a lot out of it.

We don't get anything out of it. This is a distinctly different than say Taiwan is an issue, but let's put that aside and we'll get to that in a second. If China and Russia and the United States are in this very complicated chess board, is there a way not only to diffuse this situation, but is there a way, and I know this sounds like

a crazy Hail Mary, to deepen the relationship with Putin and make the Russia and the United States in some way allies against this relationship with China, because the Russia-China relationship is also very complex. Is there some path to us having a general relationship? She is holding a summit. The last person he saw in real life was the leader of Pakistan in 2020 before the pandemic started. You know who he's meeting with in two weeks before the Olympic starter in a week.

It's put in person. And then there's gonna be a tripartite alliance conference between China, Russia, and Iran. Right. So, I think this idea that all of a sudden, somebody's going to found some holier-than-thou perspective on what the right thing to do is for other people is going to be challenged. So those guys are going to think about themselves.

And they're creating alliances to basically further advance their own objectives. And so I think we have to as well. The thing here, I think what de-escalates all of this is economic sanctions and monetary impact. Because if Nord Stream 2 doesn't get turned on, which is in Germany's control, that has a huge economic impact to Russia. Explain what it is. Nord Stream 2 is that pipeline that I just talked about, the Nat gas pipeline that basically

doubles the amount of Nat gas flowing from Russia into Germany and essentially into all of Europe. But has in Germany said if they invade the Ukraine, they haven't set it on the record. It is thought that Chancellor Schultz, that it's theoretically on the table, but it hasn't been officially declared. Biden today said that he's talked or somebody in the White House has talked to all the major banks in the US about crippling economic sanctions. So I do think the way this gets de-escalated is through money. And if you severely impinge rushes ability to sort of grow their economy, that foments a lot of anger at home. And I don't think that that

will probably weaken and destabilize Putin more than trying to have a, I don't know, some kind of get together and hug it out session with him. Yeah, I mean, so Jason, you're a good point with, you know, can we improve our relation with Putin? Obama tried, right? We had the whole reset. And ultimately, it wasn't tremendously successful, but I think a lot of it has to do with the way that the foreign policy established from Washington sort of reacts. And Obama had some really good quotes about this. I think it was in that Atlantic article where, you know, first he described that, you know, that Russia has a vital interest in Ukraine in a way we don't because it's right there.

It's on their border. They've been attacked. Russia has through the Ukraine, you know, throughout history. So again, it's just a primary interest of theirs. And so after saying that, Obama then, you know, he basically got attacked, you know, by, you know, in a, but it was some of it was partisan, but and then he responded to the attacks by saying if there's someone in this town, Washington, DC, that would claim that we would consider going to war with Russia over Crimea and Eastern Ukraine, they should speak up and be very clear about it,

the each challenge. And then he said, so, so the, and no one did, right? No one was willing to just come right out and say that we should go to war over this. And that's how he diffused the attacks on himself. And then Obama continued, he said there's a playbook in Washington that President is supposed to follow, and the playbook describes responses to different events. And these responses tend to be militarized responses. You're judged harshly if you don't follow the playbook, even if they're a good reason.

So what Obama is saying is that no one would defend a more militarized posture and going to war against Russia over the Crimea. Yet, he was somehow portrayed as suspect by not being tough enough on Russia. If you're Putin and you see constantly the foreign policy establishment reacting in this way, it's not a problem that even one president can just fix overnight. You know what would change this is if when we send 100,000 troops over there, it's a draft and you know, it's not a at all paid military. The fact that these people in Washington who got their kids in Georgetown or Harvard or wherever they are, Stanford don't

have to send their kids over that if I this war is one of the reasons they can write these documents and have these doctrines that hey, you got to send all these troops into harm way, harm's way. Like if they had to send their sons and daughters, it would be a much different discussion of like where we're going to start a war, whether it's Afghanistan or the Ukraine. All right, let's go to markets. Bill Ackman came over the top. He's buying a ton of Netflix and Tesla just absolutely flipped to becoming a money printing machine and had a ridiculous quarter revenues up to 53 to 53 billion, up

71% year over year, Q4 revenues, 17 billion, 65% year over year. And they increased their delivers by 71% and now you're all the sudden to start to see some, you know, income coming into the company. So flipping from money losing to break even to now printing a ton of money, Microsoft had an absurd quarter. Their revenue hit 51.7 billion up 20% in the quarter, 20% year over year, pays for $200 billion in revenue in 2022 and their net income was also up 20 plus percent at 18.8 billion. So the money printing machine in these companies is just extraordinary. Shemoth, what are your thoughts? I think you forgot a couple of key things, which is that the FOMC meeting happened this week and Powell basically said, look, we're going to start tightening in March.

I think the way that he said it, all of these words tend to be so scrutinized and overanalyzed, but instead of figuring out what people thought, I think their actions post the FOMC are important, which is that we effectively now started to price in about five rate hikes this year. So probably five, 25 point rate hikes effectively. That's what the yield curve tells us. If you take a big step back, I just want to remind people it's really hard to live through volatility. Right? And we're in the phase of it now. But typically, these big drawdowns, so like, you know, when stocks go down, it actually precedes, so it comes before the actual starting of a rate hike cycle. And so if you go back to the, you know, from 1950 onwards

today, every time the government has started to raise rates, or the Federal Reserve has started to raise rates, the stock markets have actually rallied. Now, why is that? It's typically that they see through the end of the rate hike cycle and they start to price the business as if these rate hikes are done and to rebase things. And on average, I think the stock markets go up between 7 and 8%. So, call it 7.5, 8.5%. And so what's interesting to me is now we're finally starting the process of these hikes. And the real question is going to be how data dependent do these guys get. And what I mean by that is, so we talked about this before, but China cut rates. This past, we can't actually Germany decrease their GDP forecast.

And so you're starting to see two huge countries already say, hey, wait a minute, we need to be more realistic about what long-term growth looks like here. It's inconceivable in my mind that those countries are slowing down and we won't. And so I think what happens in these other huge GDP drivers of growth GDP will affect us. And so, you know, Saxony, I've said this before, but the marginal risk will be that we overcorrect and actually create a recession that doesn't need to be one. So we slam on the brakes too hard, and another way of saying it is, the rate of...

The rate of... The market is a leading indicator of what's going to happen post the rate hike. We had a nice relief rally going until, I think some of the works that Paul used was that there was plenty of room for rate hikes. Meaning that because unemployment is at 3.5%, that we're at full employment and that means that the Fed can, you know, has this dual mission of keeping inflation low and keeping employment high. So if employment is high, then they've got more room to raise rate.

Anyway, it was that language around the plenty of room that freaked markets out and they triggered a huge sell-off. I think to Jamas' point, I don't see how you can have this much wealth destroyed so quickly and have it not impact the real economy. There's a lot of people out there who feel a lot poorer because their portfolios have gotten slashed in value. So they'll felt tightening, they'll clench, not spend as much money on a vacation, not buy a TV or a car.

So these wait lists for cars might get, you know, become sales. The luxury markets of the economy, the optional purchases start to really slow down. And so I think that the risk of recession now is much higher than it was even a month ago. Now, you know, it's gonna be hard to know. So basically, I think what we're saying is, it's gonna be very hard for the Fed to engineer a soft landing here, where we don't trigger a recession

in the process of stopping inflation. And look, well, Judge Powell's performance, you know, at the end of this, you know, we're not gonna know, I think it's, but I think that he's turned out to be much more hawkish in his statements than markets were expecting. Again, and in 2018, you know, he was probably overly hawkish

and he actually created effectively, a little mini recession. We didn't pay attention enough to it because Trump made it impossible to see the signal from the noise, but it did happen and it was Powell being a little too trigger happy. And so we have to remember that the Fed has $9 trillion of assets on their balance sheet. And so if they start to take $9 trillion of cash out of the system by selling these assets into the market, right, you're taking the money out, right, because you're getting money back. That's going to have an enormous huge impact as well. So if you

think about- You have a question, Shabbat. What happens when we just finish? One second. One second. Let me finish please. So, you know, so when you have these two things happening at the same time, you have a potential rate hike cycle, which makes the cost of a used car more expensive, the cost of your credit card balances more expensive. The obligations you have to pay just become naturally more expensive. You feel poor, so you spend less. And then separately, in the financial markets, you actually take liquidity out of the system. And so people value liquidity more, it becomes worth more.

You value current cash more. I mean, we're putting ourselves in a really delicate position. So he's got a delicate balancing act here. He is definitely on a tight row. So if we pull 9 trillion out, we've been talking about this deficit. If he starts selling all of those assets, does that mean on the United States balance sheet that will reduce our national debt? No, let me get it. We're getting nine trillion of cash, right? You sell an asset, you get cash for it.

Right. And so it pulls money out of the economy in the same way that it created liquidity when they were buying assets, right? When they're buying this debt, it would put push money out. If they're selling the debt, it pulls money back in. What happens to those dollars is my point. Like what? What is the dollar? The dollar, the dollar stays in the USA's bank account, but the obligation, the note, it exists in some financial intermediary that holds it. Clearly, Powell does not want to be remembered as the Fed chief that let inflation slip the leash, right? I mean, he's gotten religion now around the idea that this inflation is not transitory, which was his position for months. I think that now

bit him. And the risk is potentially an over correction, but he's not going to let inflation up. He'll be the first Fed governor to have caused two recessions. I think it's like a serious risk. And by the way, these market levels that we're at right now, we look 60% correction and gross stocks. Okay. But this is with, that's still in a good economy in peacetime conditions. And now we have a risk of recession and war. So you know, there's still room for, you know, a lot more

negative news here is kind of my point. And, um, but, look, sentiments also very negative. So when sentiment is this negative, there's also the potential for markets to quickly recover if there's positive news. But the sentiment is there for the wrong reasons, I think. I don't think people are thinking recession. I think people are thinking, my gosh, these rate increases, my gosh, I can't own these high growth stocks anymore. And none of those things are true. Those are just perceptions that get amplified by one's emotions when you're getting punched

in the face, which is what happens when you make a prevey day and you're performing it by five or six percent. It generates incredible opportunity. The idea that markets bucket, quote unquote, growth stocks together, I think kind of obfuscates an important point, which is that some of the businesses in that category are real businesses that are going to succeed over the long run, and some of them are speculative and are likely to fail over the short run. And, you know, as you saw, Netflix sell off the Lackman very smart, came in and bought a bunch of a stock. I don't know if you guys remember this, but in 2011,

TCV, which is traditionally a private equity investor at the time, and there wasn't a lot of crossover and public market stuff happening. Jail? They were a private investor and Netflix. Netflix stock tanked from, I think it was around $220 a share down to $70 a share in a couple of months. And TCV did a $200 million pipe into Netflix. And everyone was like, oh my God, what are they doing?

It's incredible. And by the way, that was on an adjusted basis. That's $10 a share in today's share price. So that $200 million investment that they made went up 60X at the peak of Netflix a few weeks ago. And so seeing Bill Akman come in and underwrite Netflix again and make a big investment at its current market price. So J-Hogue, I think it really highlights

that just because the market price is down doesn't mean that a business isn't fundamentally valuable and going to grow and going to generate significant returns over time as an operating business. And that distinction starts to present significant opportunities in a market condition like this. And the business is, we all talk about generally growth stocks are down 60%. But maybe most of them shouldn't have even been public companies in the first place. Maybe they should have been speculative private investments where more than two thirds of them were likely to fail. They shouldn't be failing as public companies. And the few that are getting damaged and hit with this market sentiment shift can be picked up cheap.

And there's a lot of opportunity. And so I wouldn't view the market condition to be necessarily reflective again of the economy or the condition of businesses in general. J. Hogue was a partner at TCV. He's a founder at TCV that did that deal. And he's also the one that participated and led the billion dollar round into Peloton before they with Gernings and got and got decapitated. But he's an incredible investor. That trade is probably one of the best trades of all time. So let's look in the good news column, wages way up, earnings way up, 10 million job openings in the United States, pretty close to record low unemployment

and the pandemic ending, ending, and people having record savings in their bank accounts and personal balance sheets. So how does all that good news, the pandemic has ended? It's ending for people. I think it's over for people. I'll tell you the thing I'm most concerned about,

there's a reverberation that persists in supply chains. I don't know how much hardware, lab, biotech, consumer goods, businesses you guys are involved in. I'm involved in a number of them. Every single one of them are crippled in some way right now by supply chain issues. I mean, I'm talking about businesses that have been operating at steady state

for many, many years. When did those get worked out? We don't know. And everyone's getting surprised and hit upside the head every week with some new supply chain shortage, whether it's some chemical you need for some lab equipment or the delivery

of some big piece of equipment, or even plastic bottles that we use as a kind of fill up our beverages that we ship. That's a pretty sizable business. We've never had supply chain disruption like we're seeing right now. I'd like to bleep out the name of that company. Yeah, beep. But it's a bleep this out.

But it's a significantly sized business that have never had supply chain issues. It's all US-based. But some of the suppliers of the suppliers have had complete supply chain issues. It's all US based, but some of the suppliers of the suppliers have had complete failure and delivery and all of a sudden it's now reverberating through the supply chain. You guys saw that GM didn't deliver

a single friggin' electric vehicle last quarter because they couldn't actually get the chips that they needed to make cars. So the real risk to the economy in my opinion right now is when and how we're gonna work our way through the supply chain issues and it is so complex and there's a myriad of problems and it is a global problem that it's really unclear how this is going to play out over the next six months.

And what will happen is this quarter and next quarter businesses that you didn't realize and didn't expect are going to get hit with supply chain problems are suddenly going to say guess what our revenues off by 20 30% because we couldn't sell this product because and half our shelves are empty, because product didn't show up or whatever the narrative might be. And it's a real problem. I think it's a great point because

you don't solve the supply chain issues with rate hikes, right? It's like nothing to do with that. Nothing to do with that. So the rate hikes, slow the economy. That's why I'm way more worried about this than rate hikes. Right. What does clean it up is capitalism, the end of the pandemic time, unless duration.

And the reason unless worried is when you actually talk to the companies that that are spending enormous amounts of money on capex, they've actually guided to the fact that by the end of this year and the beginning of next year, most of these things will be worked out. And to jish, so I think I jash, so I think we're dealing with a six to nine month issue of having turned things off and now we're now rapidly trying to turn things back on. And we can't necessarily get that timing right.

But I do think it'll work itself out faster than people expect personally. That's what I think. Because the cost of Apple and Tesla specifically guiding to that is too enormous. You're talking about collectively almost four trillion of market caps, so they're not going to get something like this wrong. And they were pretty clear in the last few days that this will be done by 2023. Early 2023. So, Saks Orchemoth, I just listed all the good news to counter the slog and the bad news.

How do you account for record low unemployment, record number of jobs, record wages going up, massive cash on people's personal balance sheet, massive amounts of sideline cash, massive amounts of venture funds being raised that have to be deployed in the next five years. All that good news, where does that on this balance sheet of good versus bad,

you know, work out for you sex? Well, the negatives are that, yes, the unemployment rate is very low, but a lot of people have dropped out of the labor force, so the labor participation rate is still quite low. Because of? Well, because I think a lot of people dropped out because of COVID, everyone went to remote, and I think they got these stimuli checks, and I think a lot of people got used to not working. You know, maybe you had a household with two people used to work.

And now only one of them's working. You know, maybe they moved to a cheaper part of the country. So, I mean, maybe it's a good thing, right? But a lot of people dropped out of the labor force and they haven't come back. And so that's the negative. And then, you know, the fact that wages are going up is is good but we don't know how much that's inflation right so You know those would be the negatives

But there was a report that inventory levels did rise in Q4 and so The supply chain issues do seem to be immediately relating to some, I was looking at cars and now a lot of the people who had, you know, there's no way to get this car. Now they're like, Hey, we got a couple of these cars available. If you want them. And then if you look at the housing inventory, it does seem that maybe that's taking a plus two and people couldn't find houses.

And now maybe even though it's still a housing crisis, maybe there's more available or they're staying on the market a little bit longer. Yeah, I mean, it's, I think it's still a housing crisis, maybe there's more available, or they're staying on the market a little bit longer. Yeah, I mean, I think it's pretty clear that economic activity is slowing. And again, things like rate increases, it increases the cost for mortgage, right? So that could affect house prices. I think there's an interesting startup story. There's a private company that's doing essentially life extension that a bunch of rich people put $3 billion into.

You want to tell us Friedberg and your science segment, what is this going to make us live longer or not? Well, I think I mentioned this company a few episodes ago, but I think they just announced their $3 billion investment. And again, this goes back to the point I made on the prediction show. So last week, ALTO's labs announced that they've landed $3 billion in funding. And this has been an ongoing funding that's been going on for quite a while into this business. But this business was set up to commercialize Yamannaka factor-based cellular reprogramming for age reversal. And there was a paper published just yesterday. I'll put a link in the show notes that if people are interested in reading a scientific

paper, they can take a look. Incredible results. Scientists took mice, gave those mice short bursts of these yamenachifactors, and then measured all the biomarkers, all of the chemical signatures in the blood of those mice to determine their age, because there are known ways that we can measure the age of an organism by looking in their blood at measuring certain biomarkers. With just a few short bursts for about a week of these drugs, these these Yamannaka factors. The mice, all of their age signals reversed to making it look like they were very young again. And it did not

do what the challenge has been with Yamannaka factors in the past, as if you put too much of it in a body and an organism, the cells rejuvenate to becoming stem cells, which is kind of like what a fetus might have, and starts to grow a lot of tumors. They were able to avoid having tumors show up in the mice, and the mice, in fact, all looked extremely young from a biomarker basis. So an incredible result, an incredible paper, whether or not it gets repeated and shown by others,

but I think the speaks to the quality of the science that's underlying the $3 billion investment that was just made in all those labs, which is probably one of the biggest seed investments ever. And clearly it's the biggest seed investment ever in a startup. And I think it speaks to what I've highlighted as what will be the new frontier in biotech

and will completely rewrite the course of humanity is if we can take drugs and for a short period of time, completely reverse the age of ourselves. And it sounds so crazy and so wacky, but it's being now proven in a single week, we've now had an amazing paper published, and we've seen the startup announce their $3 billion of funding to pursue commercialization

of this technology. And this is gonna be the year. I think this will be the front cover of a lot of magazines this year as people realize that this is real and that it's getting commercialized. So why do you think they have to start with $3 billion? And I'll tell you why I asked the question. Yeah.

Whenever I see these grandiose prognostications of future progress and then see these companies raise exorbitant amounts of money, I have never found a single example words ever word. Ever. In fact, every time I see a company raise an exorbitant amount of money in a series A, I write it off in my head. Yeah, sure. Yeah. So why should I not in this case? So or it's actually actually a better question. Why would somebody listening to this pod go work there? And to say, by the way, by the way, the same has been done and can be said about Calico, which is alphabet subsidiary that's that's pursuing similar research, where billions of dollars have gone into that business.

And there's a similar sort of research track underway. And I think the general principal, Chimath, is they don't know what the product is. They don't know the way to market. They don't know what area they need to explore. But the underlying principle is proven. The underlying principle is something that people believe in. This science is proven, this science is real. We don't know the commercial path, and we have to try lots of different things

and run lots of different research programs in parallel to figure it out. And each of those research programs is like a hundred million dollar biotech startup. And so I think that the principle is, let's put a lot of shots on goal all at once in parallel and make sure, because if any of these shots on goal work, this is going to be worth many, many billions of dollars. So I think that's generally the idea. It's almost like having a $3 billion venture fund, but the venture fund is targeted at one core area of interest that we believe is real.

And I think that's the way a lot of these things are being set up. But I'm asking this question, have you ever seen a company try to do 30 different things and it works? No. No. Yeah, I mean, it's not the typical capital allocation, milestone-based funding scheme.

I have it there in that. But it's not a product market fit thing, right? It's a research program and it's a series of research programs. But I mean, look, let me reframe it for you, Timoth. Have you ever seen a $3 billion venture fund that makes 100 bets with smart people at the helm, with smart people working at the individual businesses fail, right?

Like, yes. And in fact, I've never seen a three billion dollar venture fund do much more than return to XMoney. Yeah. Well, look, let's see. I mean, it's a big bet. And obviously, some people make a nice management fees and nice carry on this thing. I'm not trying to be a web blanket.

I'm just curious, you know, why do it that way? Meaning, you know, every startup, let's get Bob Nelson on. He'll talk about it. Yeah. So every startup, I think is forced in some ways by the market to make an educated guess about where product market fit lies and to try to build some minimum viable product that that tends to be how value is created. I mean, you could have said that, could have had 90 different algorithms, but Larry Page started with backroom. That's how it started. He had to make an educated guess that he had to make decisions and that's what startups are about.

You have to make decisions in your office. Well, you have to make a bet on your own into a total of our office. But why don't you put all your capital into one company? Oh, because mostly the companies won't let me, but I would if I could. Oh, interesting. So I think that what's happening here to be your capital into one company. Oh, because mostly the companies won't let me, but I would if I could. Oh, interesting.

So I think that what's happening here to be in your office, if I could, I would, but they don't let me. You could buy, you could put all your money back in a Facebook or back in a forget Facebook, I know you got issues, what about alphabet or Amazon, just put all your capital in one bed and just write it out.

Right, but then it comes to what I think where I can generate the best return. Meaning, I think that I could generate much higher returns than what I think Google will give return. Meaning, you know, I think that I could generate much higher returns than what I think Google will give me. Yeah, that's why I do it. Well, here's what I think's happening here. There are a lot of rich people who are going to die soon and they're counting down like Bezos

and they're saying, if why not, if I'm worth a hundred billion, put one, two, three billion into this and have them go for it, because I've got nothing to lose, because I'm dying 100 billion, put one, two, three billion into this, and have them go for it, because I've got nothing to lose, because I'm dying in 20 years. This is a fear of death by billionaire bet, which is exactly what I think happened with the Google guys. I'll also say that the team involved in these projects are not first-time founders or people that are great pitchmen. It's people that are repeated, tried and true, entrepreneurs, success

stories that have done this over and over in biotech, and they're the ones that are being drawn into working on these projects. And they're saying, look, because we've got the people that have done it over and over, give them the capital. I mean, I believe in argument. No, I believe in Yamannaka factors, and I believe that there will be innovation. My only question is, is the innovation going to come through a small team that raises a small quantum of capital with one very focused idea that gets it right, or this sort of, you know, money carlo simulation approach to product innovation. And all I'm saying is just an observation that historically,

it's been very difficult for these money carlo simulations to ever work either to generate product market fit and an innovation and to make money. Now, hopefully these guys are the exception that proves the rule because I think we'd all want this to work. No, it's a great point and I hope you're right and I hope to start that small project. But now you're saying the key thing because despite the $3 billion, you're still going to go after it, which implicitly is your way of saying, I'm short that company and I'm long my own company. And this is the point I was trying to get to, which is when it was really, really smart people

see these things, they tend to look at it with a grain of salt thinking, it's very difficult to build a startup as it is. Yeah. Sometimes it's kind of like growing great wine. You need to have a little pain in suffering along the way. And when you have $3 billion, it's the opposite of pain in suffering. Totally true.

And I'll also say, let me just support your point, which is the people I see get hired to big projects like this. And there are a number of them that get funded, not just also in other kind of deep tech stuff. They hire the tried and true experienced executives who generally have older kids and live in a nice house and have made a bunch of money and the earnestness, the motivation, the hunger, the fuel, the creativity because they know what they know and they're not willing to accept it, they

don't know what they don't know. Those folks generally are less likely to succeed than the folks who are doing this maybe for the first time for that very, when you're doing something innovative. So I totally support your point, and I really do hope you're right. But I thought, I thought Jason, when you were talking about talking about startups, I thought we were gonna talk about bolt in the Stripe Mafia,

if you ask of this one. Well, that's a good story. It's a pretty crazy story. What does everyone follow? What side does everyone follow on that? Oh, great, does anybody have any equity positions in either company? Let's start there.

No. Stripeholders, SACs, SACs, you put it in LP in any firms that have a, I am an LP, I am an LP in funds that have exposure to it. Absolutely. I am an LP and a fund that has exposure to it. I am as well, but it doesn't, but it doesn't affect. Miniscule, doesn't matter.

Miniscule for me too. Okay, here we go. So, for people who don't know, Bolt does like one-click check-out software. They compete in some ways with Stripes Payment API. The CEO Ryan Bresslaw did a tweet threat, basically saying that YC and Stripe are the mob bosses of Silicon Valley. It was pretty charged.

Obviously, Stripe and YC work together. Stripe is the biggest company to come out of YC ever, I guess, along with Airbnb. He claims that a lot of the top VCs were blocked as a strategy by Stripe. I think there is some truth to this when you invested in one company, you don't invest in the competitor. I don't know if that happened here as a strategy, but it is a viable strategy that other people have used where Bolt claims Stripe got all the top investors. Therefore they couldn't raise money. He also was saying they were voting things up and down on Y-combinators hacker news as

if that matters. Yada, yada, yada. It was kind of a weak argument in my view. I'll give you my Houtique. Hold on. Hold on. Hold on. Hold on. Hold on. Hold on. of a weak argument, in my view, I'll give you my show that in a bunch of VCs, I'll give you my huttick. So first of all, Bolt is now a $14 billion company or something. Okay. So, you know, these guys, I think this was a very brilliant

PR strategy, and it worked. What do I mean by this? This was a company that most people didn't know about until this past week. They went and they punched up, which is a pretty tried and true PR strategy. Always fight up. Always fight up. You pick the big guy who's an incredibly pristine, extremely well-run company that is sucking up most of the talented, you know, people in Silicon Valley to work for. It is a, you know, centricorn could be a trillion dollar company over some lifetime. So they went and they punched up. And what happened? Everybody fell for it. They baited all of these folks and then all of these folks had to come out on Twitter and landbast them. And basically the net result of it is if one person knew about bolt before, now hundreds and thousands of people know about bolt afterwards.

So not only do they not know them, they're now their contemporary. Just in terms of the practical reality, they are now part of the discussion and in a free work of companies in this space that they were never a part of before. So it's Steve Jobs is moved with the 1984 commercial. He said IBM and then Microsoft our big brother, we're gonna attack them, join the Rebel Alliance,

be part of Apple and of course Apple and IBM responded. And that was the big mistake in Mark and Dresan, Sequoia, a bunch of different venture firms responded, sax, what's your take on this? I see your chopping at the bit or maybe you're biting your tongue, which is... No, I agree with Jamoth that it was kind of a brilliant few arm move if that's what it was. I do like starts punching up. And he took a punch at Stripe, which is the big company in the space.

And then, yeah, Stripe didn't respond directly, the call since it didn't respond, but their surrogates did. And then that looks like punching down, and it draws more attention to it. So I get the PR strategy. I would say that as to the merits of the allegation, I do, it's interesting that he didn't get into YC because I think that he is a very talented founder.

We looked at this company pretty early on. It was for a mid-stage growth round. It was one of the toughest decisions. I'd say the toughest decisions as a VC are when you actually want to invest in the company, but the valuation is like 2x what you think it should be. And that was kind of the situation at the time when we looked at it is, I think we actually would have invested, this is the valuation was too high. It would have been a great bet for you.

Yeah, he grew into it. And so it would have been a great bet. So it was a bad decision on your part. Yeah, yeah, clearly we should have invested. It's just that, you know, at the time you invest, you have to have some basis for valuation. And that's the sense in which I think, you know, maybe Ryan's accusations don't totally make sense is that he's been able to raise a lot of rounds

at really high valuations. So he hasn't had a problem raising a lot of money at great prices. And it almost feels like a slap in the face to his investors where, like, what's the complaint? I didn't get any tier one investors. Or that it was just hard to meet with investors. And that strike called the investors and told them not to invest. That was the allegation. Yeah, no, I mean, yeah, I can't really speak to that, but I mean, he was clearly able

to raise great rounds. So can I read to you an email exchange between me and Ryan Breslow? Oh, dramatic reading from 2015. Oh, here we go. HMath hopes all all as well. Um FYI, things fell to rush on RN. So we're toning down our series A discussions for a couple months. And this was this was in July of 2015. I'm reading you my answer because it's so fabulous. Hi Ryan. After a wholly unsuccessful few weeks of attempting to win a world series of pokerelet. I'm back at home licking my wounds. How about we talk in a week or two? So not only did I have a chance to win a World Series of Poker Bracelet according to this exchange, which I didn't win obviously. I had a chance to do the Series A in a $14 billion company and screwed that one up too. Big dummies. I mean the things we miss miss are things like 20 things you miss as an investor for everything

you hit. So I've interacted with Ryan back in the day and I just remember him being super, super smart. And I do think that, you know, there's a lot of very smart people now around the table at Bolt, including Joanne Bradford. So I don't think that this was something that wasn't planned and I just think that they executed it well and it worked. And I think a lot of people know this company that didn't know before. Now, they still have to execute and build a product and scale it and do all of these things. But... Yeah, and I think that the response you provoked, I mean, since I was a little bit

critical of what he said, let me just say, that one of the VC's who responded said that the reason they didn't invest was because the numbers weren't good. That was not my experience. When we looked at this company, they had great numbers. This is the valuation was ahead of those numbers, but the numbers were always great. I actually responded to that, and that was Sequoia Partnershawn Maguire who said that. And I responded to him like, hey, dude, VC code is you don't reveal the numbers on things you learn confidentially. What are you doing? Like, and he's like, well, they said some BS about

Trev, I was like, yeah, still doesn't change VC code that if you learn something under NDA for NDA, essentially, in a meeting, you're not supposed to weaponize that. Unless, unless, unless you have a $30 billion position. I still think, whatever, I still think it's like, never seen a VC. I mean, honestly, it's the first time I've ever seen a VC. Jason, Jason come on. I don't, I think it's pretty, I think we all knew where he was coming from.

He's defending an enormous position of his and seclusion. You've always been an air cow. You've been air cow. Yeah, but I never released inside information. You didn't say the inside information. I would have been into information. He's a general statement. He made a general statement. He made a general statement.

He met with them. But he was conflicted out. So why would he meet with them? Hey guys, Nick just texted that I had I had I found a way to get off my lazy ass not be playing poker and do that deal. I would have generated a 222 X on my investment. Which would have been 15 million times 222. Well, we started up too.

I think I think when we looked at when like a 400 million dollar evaluation or something like that or something in that range. And so, well, the series A of it, I mean, the series A would have been like 20 years ago. 60 3 million according to pitch book. Oh, 60 3 million. You know, it was one of those meetings we came out of where it's like, that's a super interesting founder. So, that's what I remember too, from Ryan.

Yeah, super super interesting. Super interesting founder, So we do. That's what I remember to from Ryan. Yeah. Super super interesting founder right the check. I said earlier in the program that like our philosophy now is just to be price takers and just to pick the companies that we want to be in and then the market sets the price. That's the biggest mistakes that made as an investor. Yeah. We should have done that with both. This was the decision we faced was like a few years ago. And so we just shouldn't have worried about valuation. By the way, sorry, Jake Al, as soon as you said, it was 63 million. You know what?

My reptilian brain said, oh, that feels so expensive. Even now, you know, the outcome is pretty billion. And so to your point, David, it's a really good lesson for, for investors to learn is just your price taker. Totally. Get behind these really interesting people that are world beaters and just let them do this. Place the bet. Yeah. All right. So there you have it. Get behind these really interesting people that are world beaters and just let them do the worst place the bat

Yeah, all right, so there you have it. This has been another amazing episode of the all-in-pod cast Bye-bye I'm going home, yeah! And it said we open-store-set to the fans and they've just gone crazy with it. I'm the U.S. Queen of Kenwai! I'm going home, yeah! What? What? What? What? What? What? What? What? I'm going home, yeah! Besties are gone!

That's my dog, take it out, wish you drive away. Six! Get it off! Oh man, my hand is the ass are immediately escalated. We should all just get a room and just have one big hug or two because they're all kids. It's like this sexual tension that we just need to release that out. What, you're the B. What, you're the B.

You're the B. What? We need to get merged. I'm going on, Lee. I'm doing all it!